Google management

xii Contents

Designing an Organizational Structure: Additional Issues to Consider 456

Formalization 456 Centralization 456 Complexity 457

Multinational Structure and Design 458 Virtual Organizations 460

The Realities of Virtual Organizations 462 Boundaryless Organizations 463

Summary of Key Points 464 Review and Discussion Questions 466 Exercise 466 Case 468

Chapter 17 Managing Organizational Change 471 A General Model of Organizational Change 472 Change Agents: Forms of Intervention 474

External Change Agents 474 Internal Change Agents 474 External–Internal Change Agents 475

Resistance to Change 476 Individual Resistance 476 Organizational Resistance 477 Strategies for Overcoming Resistance to Change 478

A Model of Organizational Change and Development 479

Forces for Change 480 Diagnosis of a Problem 482 Selection of Appropriate Methods 483 Impediments and Limiting Conditions 492 Implementing the Method 493 Evaluating Program Effectiveness 494

How Effective Are Change Interventions? 495 Summary of Key Points 496 Review and Discussion Questions 497 Exercise 498 Case 500

Appendix Quantitative and Qualitative Research Techniques for Studying Organizational Behavior and Management Practice 503

Glossary 513

Endnotes 525

Indexes 575

xiii

Preface Revising and updating this textbook is always an exciting and challenging job. In com- pleting this eleventh edition of Organizational Behavior and Management, we reviewed the most current theories, research, and organizational applications for pos- sible inclusion. We retained the classic, influential, and long-standing work in organi- zational behavior. Chapter by chapter, we made a concerted effort to add several more company and other real-world examples to make the content more relevant and inter- esting for students. Our own teaching of organizational behavior and many excellent suggestions from the reviewers of the previous edition were factored into each phase of the revision.

The major task of the author team was to produce a student-friendly, accurate, clear, and meaningful revision that will result in enhanced student learning. The student and the instructor were always in mind as we carefully revised the book.

We have reviewed and considered numerous suggestions and notes from current instructors and students who use Organizational Behavior and Management, as well as from colleagues, managers, and previous users of the text. The themes and tone of these excellent ideas was to keep this book relevant, add more company examples than in pre- vious editions, and help users apply the content to their own lives and job situations. The basic structure has been kept much as it was originally, but we have significantly updated, streamlined, and/or expanded the content of each chapter. We have, in each new edition, added more comprehensive treatment of the content base. The content in this revision has been related to events, activities, and decisions made in organizational life. We have updated all information that needed to be refreshed. Our intention in making these changes has been to offer an intensive treatment of organizational behavior that helps instructors teach easily and effectively. As dedicated teachers, we revise with fellow teachers and the student population in mind. This book was not written as a research message or as a new theoretical model. Like its predecessors, the eleventh edition of Organizational Behavior and Management contains knowledge that applies both inside and outside the classroom.

Can the serious theory and research basis of organizational behavior be presented to students in an exciting, fun, and challenging way? We believe it can. Thus, we expanded the theory, research, and applications of the subject matter in the revision of the book. The eleventh edition of Organizational Behavior and Management differs from the previous editions in these ways: 1. We continue to include more domestic and global organizational examples to help

students relate theory and research to actual organizations and current events. Here is a sample of the real-world organizations we added to this revision: Airbnb, Zappos, Nordstrom, Deloitte, Tesla Motors, Macy’s, Saleforce.com, Trader Joe’s, Google (and its parent company, Alphabet), Chicago White Sox baseball organization, Apple, Facebook, Underground Elephant, Huddle, Valve Corporation, Denver Broncos, Hyatt Hotels, Publix Super Markets, General Motors, Fiat Chrysler, Volkswagen (Germany), Tencent Holdings (China), Ericsson (Sweden), Nestlé (Switzerland), Kia Motors (South Korea), Cirque du Soleil (Canada), Virgin Group (Britain), and H&M (Sweden).

xiv Preface

2. Expanded coverage of topics relevant to managers in today’s business environment includes diversity statistics for the U.S. population and workforce over the next 40 years; the 2016 World’s Most Admired Companies; training areas where compa- nies spent the most money in 2015; top global cities and their importance in the worldwide business environment; how to retain Millennials who tend to switch jobs every two years; looking out for Generation Z, which will make its way to the work- force soon; Volkswagen’s emissions scandal; the best places to work in 2016; com- panies like Adobe and GE doing away with annual performance reviews; Wells Fargo’s support and inclusion of LGBT employees in its workforce; 2016’s most valuable brands; current statistics on workplace violence, sexual harassment, and discrimination cases; increasing numbers of telecommuters and “super-commuters”; the WeChat app revolution in China; using cloud computing to connect virtual team members across the globe; and CEOs using social media to communicate to employ- ees and customers.

3. Fundamental themes are woven throughout the book, including globalization, manag- ing diversity and demographic changes, technological changes, total quality, and eth- ics and social responsibility. These themes are consistent with the recommendations for balanced subject matter coverage made by the American Assembly of Collegiate Schools of Business/International Association for Management Education. This inter- nationally acclaimed accrediting body establishes the boundaries for appropriate topic coverage.

4. Most end-of-chapter cases have been refreshed. Two new cases have been added to replace previously used cases: Case 1.1, “REI Tells Employees to Go Outside,” and Case 10.1, “Zappos Eliminates Managers.”

5. Many of the book’s elements—Reality Check, Global OB, OB Matters, You Be the Judge, and Information You Can Use—have been updated or replaced with current top- ics and issues relevant to managers. The elements included in this edition are relevant, teachable, and comprehensive.

6. The complete set of materials—text, exercises, elements, and cases—stimulates stu- dents to think about how they would respond if they were in the situation being dis- cussed or described. Reading this new edition of Organizational Behavior and Management, students

become involved participants in learning about behavior and management within work set- tings. We have designed the book with instructional flexibility in mind. The book com- bines text, self-learning exercises, group participation exercises, and cases. These elements are directed at students interested in understanding, interpreting, and attempting to predict the behavior of people working in organizations.

Organizational functioning is complex. No single theory or model of organiza- tional behavior has emerged as the best or most practical. Thus, managers must be able to probe and diagnose organizational situations when they attempt to understand, interpret, and predict behavior. This edition of the text devotes considerable attention to encouraging the development of these probing and diagnostic skills. The first step in this development is for each reader to increase his or her own self-awareness. Before a person can diagnose why another person (a friend, subordinate, or competi- tor) is behaving in a particular way, he or she should conduct a self-analysis. This introspective first step is built into each chapter’s content and into the learning ele- ments found at the end of chapters. The content and these elements encourage the students to relate their own knowledge and experience to the text, exercises, and cases in the book.

Preface xv

Framework of the Book Organizational Behavior and Management is organized into five parts containing a total of 17 chapters, one appendix, and a comprehensive glossary. The framework highlights behavior, structure, and processes that are part of life in profit and nonprofit organizations. The five parts are as follows:

Part One: The Field of Organizational Behavior The first chapter, “Effective Managers Understand Organizational Behavior,” introduces the field of organizational behavior and explores the how, what, why, and when of organizational behavior as viewed and practiced by managers. Chapter 2, “International and Organizational Culture,” covers such issues as internal culture, cultural diversity, and cross-cultural research.

Part Two: Understanding and Managing Individual Behavior These seven chapters focus on the individual, including topics such as “Individual Differ- ences at Work” (Chapter 3), “Perceptions and Attributions” (Chapter 4), “Motivation” (Chapter 5), “Job Design and Performance” (Chapter 6), “Evaluation and Rewards Influ- ence Behavior” (Chapter 7), “Managing Employee Behavior” (Chapter 8), and “Managing Individual Stress” (Chapter 9).

Part Three: Group Behavior and Interpersonal Influence These two topics are explored in a three-chapter sequence: Chapter 10, “Groups and Teams”; Chapter 11, “Managing Conflict and Negotiations”; and Chapter 12, “Power and Politics.”

Part Four: Organizational Processes Part Four includes three chapters: Chapter 13, “Communicating Effectively”; Chapter 14, “Decision Making”; and Chapter 15, “Leadership.”

Part Five: Organizational Design, Change, and Innovation Two chapters make up the final part: Chapter 16, “Organizational Structure and Design,” and Chapter 17, “Managing Organizational Change.”

Features of the Eleventh Edition The “Reality Check” and “You Be the Judge” elements start and end each chapter and are helpful for reflective analysis and debate individually or in small in-class groups.

This edition includes many other teaching and discussion “elements.” We define a text element as a specific, content-based story, case, or example that is associated with and illustrates the chap- ter’s objectives and themes. The end-of-chapter elements include exercises and cases that were selected because of their relevance to the chapter content and because of feedback from adopters.

We have purposefully woven global events, situations, and examples throughout the book’s content, elements, and end-of-chapter material. Globalization is such a vital con- cern today that it must be presented and covered throughout the book.

Managing diversity in the workplace is an important topic, which is presented and dis- cussed throughout the book.

Ethical behavior and social corporate responsibility are topics of major concern throughout the world, especially in the wake of recent scandals. Examples, incidents, and debates that present ethical dilemmas are integrated throughout the chapters.

xvi Preface

The text emphasizes realism and relevance. Hundreds of real-world examples of decisions, business situations, problem solving, successes, and failures are presented. Fortune 1000 companies do not dominate this book. Smaller and medium-size firms that students may not be familiar with are also used to illustrate organizational behavior and management activities. Finally, we have taken the time and space to explain the concepts, frameworks, and studies presented in the text. It was not our intention to be an encyclope- dia of terms and references, but instead to use the ideas, work, and concepts of colleagues only when they add learning value to the chapter content. The goal of each presentation is to present something of value. A “cookbook” list of terms, names, historical points of reference, or empirical studies often becomes pedantic and boring. Comments on previ- ous editions of this text suggest that Organizational Behavior and Management is read- able and teachable. We believe this is so as we actively teach using this book.

The learning and knowledge enrichment elements, the Reality Checks, OB Matters, Global OB examples, Information You Can Use, You Be the Judge features, exercises, and cases, can be used by instructors in any combination that fits the course objectives, teaching style, and classroom situation.

OB Matters OB Matters features are interspersed throughout the text. They focus on ethical issues, global examples, and general organizational behavior and management activities. The encounters bring the concepts to life by presenting meaningful examples of activities that tie in with the chapter content.

Global OB Global OB features focus specifically on global issues, problems, solutions, and programs. These are based on a variety of individual, group, or organizational situations.

Information You Can Use Information You Can Use features appear throughout the text—with at least one in each chapter. This element explains, in straightforward terms, principles of how to manage and how to lead. These principles are easy to understand and use and are based on experience, theory, and empirical research.

You Be the Judge The “You Be the Judge” scenarios in each chapter present a particular problem, dilemma, or issue and require the student to make a decision and solve the dilemma, problem, or situation. These action-oriented elements are intended to increase student involvement. Our “Comment” on the dilemmas is found at the end of each chapter.

Exercises Organizational Behavior and Management also includes self-learning and group exercises. Some of the exercises allow the individual student to participate in a way that enhances self-knowledge. These self-learning exercises illustrate how to gather and use feedback properly and emphasize the uniqueness of perception, values, personality, and communica- tion abilities. In addition, a number of exercises apply theories and principles from the text in group activities. Working in groups is a part of organizational life, so these exercises introduce a touch of reality. Group interaction can generate debates, lively discussions, testing of personal ideas, and sharing of information.

Preface xvii

Furthermore, the exercises are designed to involve the instructor in the learning process. Student participation allows for trying out techniques and patterns of behav- ior  and integrating exercise materials with the text. None of the exercises requires advance preparation for the instructor, although some require returning to a particular section or model in the chapter for information. The main objective is to get the reader involved.

Cases The chapters end with full-length cases. These cases reflect a blend of old- and new-econ- omy examples, principles, and lessons. Lessons can and are still being learned from older situations, recent examples, and current front-page news incidents. These realistic, dynamic cases link theory, research, and practice. They provide an inside view of various organiza- tional settings and dynamics. The cases, like the real world, do not have one “right” solu- tion. Instead, each case challenges students to analyze the complexity of the work environment as if they were general managers. The cases also are an invaluable teaching tool. They encourage the individual student to probe, diagnose, and creatively solve real problems. Group participation and learning are encouraged through in-class discussion and debate. The questions at the end of each case may be used to guide the discussion. A case analysis should follow the following format: 1. Read the case quickly. 2. Reread the case using the following model:

a. Define the major problem in the case in organizational behavior and management terms.

b. If information is incomplete, which it is likely to be, make realistic assumptions. c. Outline the probable causes of the problem. d. Consider the costs and benefits of each possible solution. e. Choose a solution and describe how you would implement it. f. Go over the case again. Make sure the questions at the end of the case are answered,

and make sure your solution is efficient, feasible, ethical, legally defensible, and can be defended in classroom debate.

Other Learning Devices Learning objectives begin each chapter to help the reader anticipate the chapter’s concepts, practices, and concerns.

An important part of any course is vocabulary building. Thus, the book provides a thor- ough glossary of key terms at the end of the book, as well as key terms highlighted and defined in the pages of each chapter. Before a quiz or test, students can use the glossary to pick out terms that they will be expected to know and use.

We were determined to help the reader prepare his or her own portrait of organizational behavior and management. We hope the text, exercises, cases, and other learning and knowledge enrichment elements help each student become an adventurous explorer of how organizational behavior and management occurs within organizations.

Supplementary Materials The eleventh edition includes a variety of supplementary materials, all designed to provide additional classroom support for instructors. These materials are as follows:

xviii Preface

McGraw-Hill Connect®: connect.mheducation.com Continually evolving, McGraw-Hill Connect® has been redesigned to provide the only true adaptive learning experience delivered within a simple and easy-to-navigate environment, placing students at the very center. ∙ Performance Analytics—Now available for both instructors and students, easy-to-deci-

pher data illuminate course performance. Students always know how they’re doing in class, while instructors can view student and section performance at-a-glance.

∙ Personalized Learning—Squeezing the most out of study time, the adaptive engine within Connect creates a highly personalized learning path for each student by identify- ing areas of weakness and providing learning resources to assist in the moment of need. This seamless integration of reading, practice, and assessment ensures that the focus is

on the most important content for that individual.

Instructor Library The Connect Management Instructor Library is your repository for additional resources to improve student engagement in and out of class. You can select and use any asset that enhances your lecture. Instructor materials include the Instructor’s Manual, PowerPoint slides, and Test Bank and Videos.

The Instructor’s Manual is organized to follow each chapter in the text. It includes chap- ter objectives, chapter synopses, chapter outlines with tips and ideas, and project and class speaker ideas. Organizational encounter discussion questions and suggested answers, as well as exercise and case notes, are also provided to help you incorporate these dynamic features into your lecture presentations.

The Test Bank has been updated to complement the eleventh edition of the text. This testing resource contains approximately 100 true/false, multiple choice, and essay ques- tions per chapter. Each question is classified according to level of difficulty and contains a reference to the question’s accompanying learning objective.

LearnSmart®: The eleventh edition of Organizational Behavior and Management is available with Learn- Smart, the most widely used adaptive learning resource, which is proven to improve grades. To improve your understanding of this subject and improve your grades, go to McGraw- Hill Connect® connect.mheducation.com, and find out more about LearnSmart. By help- ing students focus on the most important information they need to learn, LearnSmart personalizes the learning experience so they can study as efficiently as possible.

SmartBook®: An extension of LearnSmart, SmartBook is an adaptive eBook that helps students focus their study time more effectively. As students read, SmartBook assesses comprehension and dynamically highlights where they need to study more.

Manager’s Hot Seat: Now instructors can put students in the hot seat with access to an interactive program. Stu- dents watch real managers apply their years of experience when confronting unscripted issues. As the scenario unfolds, questions about how the manager is handling the situation pop up, forcing the student to make decisions along with the manager. At the end of the scenario, students watch a post-interview with the manager to view how their responses

Preface xix

matched up to the manager’s decisions. The Manager’s Hot Seat videos are now available as assignments in Connect.

Self-Assessments Students can explore inclinations and preferences regarding organizational behavior topics such as active listening, creativity, decision making, and diversity.

Contributors The authors wish to acknowledge the many scholars, managers, reviewers, and researchers who contributed to every edition of Organizational Behavior and Management. In particu- lar, we would like to thank the following reviewers of this edition, whose valuable feed- back helped guide this revision of the book: James L. Hall, Santa Clara College; Debra D. Kuhl, Pensacola State College; David Robertson, Syracuse University and Le Moyne Col- lege; and William J. Waxman, Edison State Community College. We are indebted to those individuals who granted permission for the use of exercises and cases. In addition, adopters of former editions have made invaluable suggestions, offered materials to incorporate, and informed us about what worked well. These adopters are too numerous to list, but we appreciate the votes of confidence, the willingness to help us improve the book, and the obvious dedication each of you have to teaching.

Michael Dutch, professor of business administration at Guilford College, updated and revised the Instructor’s Manual that accompanies this edition. We appreciate his conscien- tiousness and high-quality work.

In addition, sections of the book were shaped significantly by two colleagues, James Donnelly, Jr., and James Gibson at the University of Kentucky. These two colleagues have shared and put into practice a common belief that teaching and learning about organiza- tional behavior and management can be an exhilarating and worthwhile experience. Roger Blakeney, Dick DeFrank, Bob Keller, Tim McMahon, Dale Rude, and Jim Phillips, all at the University of Houston; Dave Schweiger at the University of South Carolina; and Art Jago at the University of Missouri have exchanged materials, ideas, and opinions with the authors over the years, and these are reflected in these pages.

Finally, the book is dedicated to our current and former organizational behavior and management students at Texas State University, the University of Maryland, the University of Kentucky, the University of North Carolina at Wilmington, Florida Atlantic University, and the University of Houston. We also dedicate this textbook to the students who are becoming the managers and leaders so vital to the improvement of the overall quality of life in society in the 21st century.

Robert Konopaske

John M. Ivancevich

Michael T. Matteson

1. EFFECTIVE MANAGERS UNDERSTAND ORGANIZATIONAL BEHAVIOR

2. INTERNATIONAL AND ORGANIZATIONAL CULTURE

What really binds men together is their culture, the ideas and the standards they have in common.

Ruth Benedict, Patterns of Culture (1934)

© Shutterstock/Rawpixel.com, RF

P A R T O N E

The Field of Organizational Behavior

3

Tony Hsieh, CEO of Zappos, has built a thriving and successful online shoe and retail business by changing the rules of how to organize, motivate, and lead employees. Over the past 15 years or so, Hsieh and his team have built the online retailer into a major success story while having a lot of fun along the way. In 2009, nine years after he co-founded the company, Amazon pur- chased Zappos for $1.2 billion.1 Still at the helm of Zappos today, Hsieh’s effectiveness as a manager and leader derive partly from his knowledge and use of organizational behavior princi- ples. He understands how to inspire and motivate individuals, both employees as well as custom- ers. Hsieh and his team carefully select employees who fit well with and contribute to the firm’s high performance, fun team atmosphere. In those instances when any new employees want to leave the company after they complete training, they are offered a $2,000 “bonus to quit.”2 The organizational processes at Zappos are focused on empowering employees and giving them the tools and support to succeed. The company is flexible and adapts to the evolving needs of customers and the online retail market.

Hsieh believes in treating both employees and customers well, compared to many busi- nesses that place most of their focus on the customer. A major goal of Zappos is to treat its employees and customers with integrity, honesty, and commitment.3 Hsieh encourages employees to develop themselves by checking out books stored at the company, post ques- tions to the “Ask Anything” newsletter, make suggestions to improve how things get done, and contribute to Zappos’s fun and sometimes zany work environment. Employees have been known to volunteer to shave their heads (in a mullet style or in the shape of a “No. 1”), act in unconventional ways during job interviews, wear colorful wigs, and blow horns and ring cowbells to entertain tour groups who visit the company.4

Effective Managers Understand Organizational Behavior Learning Objectives

After completing Chapter 1, you should be able to:

Summarize key contributions from the evolution of management.

Discuss why it is important to understand organizational behavior.

Explain how systems theory relates to organizational effectiveness.

Analyze the environmental forces affecting today’s management practices.

Understand how to frame the study of organizational behavior.

C H A P T E R O N E

© Klaus Tiedge/Getty Images, RF

4

Employees aren’t the only stakeholders who benefit from Hsieh’s approach. Customers are spoiled when they call Zappos’s customer service representatives who are encouraged to give customers a “Wow!” experience. Surprisingly, customer service employees at Zappos aren’t told how long they can spend on the phone with customers. In a time when many call-in customer service operations are tightly controlled or outsourced, Hsieh encourages his employees to stay on the phone with a customer for as long as it takes to connect with them and make them happy (the longest recorded phone call lasted six hours). Employees have been known to give custom- ers free shipping both ways, send flowers and surprise coupons, write thank-you notes, or even help a customer find a pizza place that delivers all night.5

Compared to Tony Hsieh, some might see Jack Welch, former chief executive officer of General Electric, as a traditional hard-edge authoritarian manager. By all accounts, there seems to be some truth in that description. In his early days, Welch had a reputation for eliminating entire layers of employees. He was referred to as “Neutron Jack.” People were eliminated, but the firm’s buildings remained intact. Eventually, however, Welch learned that the human being is essential and the key to an organization’s success:

The talents of our people are greatly underestimated and their skills are underutilized. Our biggest task is to fundamentally redesign our relationship with our employees. The objective is to build a place where people have the freedom to be creative, where they feel a sense of accomplishment—a place that brings out the best in everybody.6

Reality Check How much do you know about organizations?

1. True or false: Eighteen of the top 25 largest (in market value) global companies are from the United States. a. True b. False

2. The first comprehensive general theory of management applied to organizations was offered by . a. Henry Ford b. Thomas Watson c. Henri Fayol d. Thomas Edison

3. An American icon who emphasized the importance of quality production and products was . a. W. Edwards Deming b. Walt Disney c. Sam Walton d. Mark Stine

4. The most publicized study of organizations is called the . a. Los Alamos Experiment b. Tavistock Studies c. Hawthorne Studies d. Dell Analysis

5. Organizational behavior as a field is considered to be . a. outdated b. same as management c. multidisciplinary d. only applicable in developed countries

Chapter 1 Effective Managers Understand Organizational Behavior 5

The key to managing people in effective ways that lead to profits, productivity, and innovation ultimately lies in the manager’s perspective. Pfeffer captured the importance of viewing people as assets by posing a number of questions and issues:

When managers look at their people, do they see costs to be reduced? Do they see reluctant employees prone to opportunism, shirking, and free riding, who can’t be trusted and who need to be closely controlled through monitoring, rewards, and sanctions? . . . Or do they see intelligent, motivated, trustworthy individuals—the most critical and valuable strategy assets their organizations can have? . . . With the right perspective, anything is possible. With the wrong one, change efforts and new programs become gimmicks, and no amount of consulta- tions, seminars, and slogans will help.7

Hsieh’s, Welch’s, and Pfeffer’s views about how to view and treat human talent are critical to the overall success of any organization. In addition to treating employees as assets (and not liabilities), managers and leaders will need other skills and competencies. The next generation of leaders will need to be fast, agile, continuously learn, and stay in front of their competition, whether it’s local, national, or global. Foreign language ability, an international business perspective, and a strong knowledge of technology and the law will also help. Since change is so widespread and constant, managers will have to be entre- preneurial. The core qualities needed to create the ideal work atmosphere begin with intel- ligence, passion, a strong work ethic, a team orientation, and a genuine concern for people.8 The OB Matters discusses further some major drivers of change that today’s managers must address to be effective.

The Evolution of Management The formal and modern study of management started around 1900.9 However, the manage- ment process probably first began in the family organization, later expanded to the tribe and community, and finally pervaded the formalized political units such as those found in early Babylonia (5000 B.C.). The Egyptians, Chinese, Greeks, and Romans were all noted in history for major managerial feats such as the building of the pyramids, organizing gov- ernments, planning military maneuvers, operating trading companies that traversed the world, and controlling a geographically dispersed empire. However, management as a pro- cess was based on trial and error in order to accomplish specific goals, with little or no theory and virtually no sharing of ideas and practices. This lack of sharing slowed the influence of management practices throughout the world.

This trial-and-error approach to management continued during the Industrial Revolu- tion in England that lasted between 1700 and 1785.10 As a nation, England changed dra- matically from a rural society to the workshop of the world. It was the first nation to successfully make the transition from a rural-agrarian society to an industrial-commercial society.11 Management of the workshops of England was characterized by an emphasis on efficiency, strict controls, and rigid rules and procedures.

A new industrial era began in the United States around the time of the Civil War. There was a dramatic expansion of mechanical industries such as the railroad. In addition, large industrial manufacturing complexes employed hundreds of thousands of workers and grew in importance. Attempts to better plan, organize, lead, and control the work of employees in these complexes led managers to discuss and write about their ideas and managerial problems in engineering journals.

In 1881, a new way to study management started with a $100,000 gift by Joseph Wharton to the University of Pennsylvania to establish a management department in a college.

6

CHANGING MARKETS REQUIRE AGILE MANAGERS In this fast-paced global business environment, managers must be ag- ile and flexible to help companies sustain competitive advantage and stay one step ahead. To be successful, managers will need to harness the power of information technology and human capital.

The competitive forces confronting managers include technologi- cal changes and increasing globalization. These driving forces are characterized by greater knowledge and the use of information, the liberalization of developing economies (e.g., India, China, and some African nations), and new economic alliances and regulations.

A good way to gain perspective on how quickly environmental and competitive forces change is to examine the video rental industry. Until a few years ago, large brick-and-mortar firms like Blockbuster and Hollywood Video stores dominated the industry. Customers drove to a local store, rented a video to take home and watch, and then drove back to drop it off within a day or two to avoid late fees.

Netflix changed the industry by offering a monthly fee-based mail exchange service, which allowed customers to watch more movies each month without having to drive to a store to rent them. Then Netflix went a step further, creating an online streaming service to complement its mail exchange service. Customers pay a monthly sub- scription fee to download movies, TV shows, games, and original pro- gramming. Competition in the video streaming industry continues to grow as Google Play, Apple TV, Amazon Prime, Hulu Plus, and others allow consumers to download content and stream it on a variety of devices, including TVs, PCs, tablets, and mobile devices. Estimates put annual revenues from video streaming at $14 billion by 2020.

As seen with video rentals, markets can change quickly. Start- ups, strategic alliances, mergers, and acquisitions are changing

how domestic and global markets operate. The key to competing globally is human capital. To attract, develop, and retain human capital, organizations must make continuous learning available to their employees. Companies must identify critical knowledge, transfer this information to employees, and update it on a continu- ous basis. Knowledge is critical on the job, working in teams, inter- acting with internal and external stakeholders, and learning more about competitors.

Knowledge sharing is another important component of staying competitive. Ericsson, a Swedish electronics firm with offices around the globe, encourages knowledge sharing through information tech- nology. Many of the company’s training programs provide creative learning tools and equip employees with the skills they will need to provide effective service to customers. The company has a technical certification program that ensures its people achieve or exceed in- dustry standards; a sales excellence program that allows customer- facing professionals to acquire a deep understanding of customers and their environment in three distinct training phases; and the Eric- sson Academy, which provides online learning opportunities that complement the company’s formal programs and everyday continu- ous learning.

Sources: Elena Holodny, “The 13 Fastest-Growing Economies in the World,” Business Insider, http://www.businessinsider.com, accessed February 12, 2016; Elyse Betters, “Which Is the Best Movie Streaming Service in the US?” Pocket- Lint, http://www.pocket-lint.com, accessed February 12, 2016; Felix Richter, “Online Video—A Billion Dollar Opportunity,” Statista, http://statista.com, accessed February 12, 2016; company website, “Training Programs,” http:// www.ericsson.com, accessed February 12, 2016; Thomas H. Davenport and Laurence Prusak, What’s the Big Idea? Creating and Capitalizing on the Best Management Thinking (Boston: Harvard Business School Press, 2003).

O B M A T T E R S

The management curriculum at that time covered such topics as strikes, business law, the nature of stocks and bonds, and principles of work cooperation.

Scientific Management In 1886, an engineer named Frederick W. Taylor presented a paper titled “The Engineer as an Economist” at a national meeting of engineers. This paper and others prepared by Taylor expressed his philosophy of scientific management.12 Taylor’s major thesis was that maxi- mum good for society can come only through the cooperation of management and labor in the application of scientific methods. He stated that the principles of management were to: ∙ Develop a science for each element of an employee’s work, which replaces the old rule-

of-thumb method. ∙ Scientifically select and then train, teach, and develop the worker, whereas in the past a

worker chose the work to do and was self-trained. ∙ Heartily cooperate with each other to ensure that all work was done in accordance with

the principles of science. ∙ Strive for an almost equal division of work and responsibility between management and

nonmanagers.

scientific management A body of literature that emerged during the period 1890–1930 that reports the ideas and theories of engineers concerned with such problems as job defini- tion, incentive systems, and selection and training.

Chapter 1 Effective Managers Understand Organizational Behavior 7

These four principles constitute Taylor’s concept of scientific management. Some regard him as the father of modern management. Regardless of the amount of credit he deserves, Taylor was a key figure in elevating the role of management in organizations. He has had a lasting impact on a unified, coherent way to improve the way managers per- form their jobs.

Administrative Management Henri Fayol, a French industrialist, presented what is considered the first comprehensive statement of a general theory of management. First published in France in 1916,13 Fayol’s Administration Industrielle et Générale was largely ignored in the United States until it was translated into English in 1949.

Fayol attributed his success in turning around and managing a large mining firm to his system of management, which he believed could be taught and learned. He emphasized the importance of carefully practicing efficient planning, organizing, commanding, coordinat- ing, and controlling. These five pillars of management (the modern term “leading” has replaced the term “commanding”) are frequently used as the foundation for most introduc- tory management and organizational behavior textbooks.

Fayol’s approach was a significant contribution in that it presented three important developments that have had a lasting impact on the field. 1. Management is a separate body of knowledge that can be applied in any type of

organization. 2. A theory of management can be learned and taught. 3. There is a need for teaching management in colleges.

Why Study Organizational Behavior? Why do employees behave as they do in organizations? Why is one individual or group more productive than another? Why do managers continually seek more effective ways to design jobs and delegate authority? Why are some organizations (e.g., Netflix) more innovative than others (e.g., Blockbuster)? These and similar questions are important to the relatively new field of study known as organizational behavior. Understanding the behavior of people in organizations— productivity, teamwork, work-life balance, job stress, and career progression—are top concerns of all managers and leaders. People make the difference.

Based on the fact that organizational behavior (OB) has evolved from multiple disci- plines, we will use the following definition of OB throughout this book:

Drawing on psychology, sociology, political science, and cultural anthropology, OB is the study of the impact that individuals, groups, and organizational structure and processes have on behavior within organizations.

This multidisciplinary view of organizational behavior illustrates a number of points. First, OB is a way of thinking. Behavior is viewed as operating at individual, group, and organizational levels. This approach suggests that when studying OB, we must identify clearly the level of analysis being used—individual, group, and/or organizational. Second, OB is multidisciplinary. This means that it utilizes principles, models, theories, and meth- ods from other disciplines. The study of OB is not a discipline or a generally accepted sci- ence with an established theoretical foundation. It is a field that only now is beginning to grow and develop in stature and impact. Third, there is a distinctly humanistic orientation within organizational behavior. People and their attitudes, perceptions, learning capacities,

organizational behavior Drawing on psychology, sociology, political science, and cultural anthropology, OB is the study of the impact that individuals, groups, and organizational structure and processes have on behavior within organizations.

8 Part One The Field of Organizational Behavior

feelings, and goals are of major importance to the organization. Fourth, the field of OB is performance-oriented. Why is performance low or high? How can efficiency and effec- tiveness be enhanced? Can training increase on-the-job performance? Practicing managers face these important issues. Fifth, the scientific method is used to study OB variables and relationships. As the scientific method has been used in conducting research on organiza- tional behavior, a set of principles and guidelines on what constitutes good research has emerged.14 Finally, the field is application oriented. It is concerned with providing useful answers to questions that arise in the context of managing organizations.15

Exhibit 1.1 offers a framework and overview of the multiple disciplines that have con- tributed to the study of OB and the application of OB principles in organizational settings.

EXHIBIT 1.1 Contributions to the Study of Organizational Behavior

Behavioral Concept Contribution Unit of

Analysis Output

Psychology

Individual

Group Sociology

Anthropology

Organization

Social Psychology

Political Science

Organizational Behavior

Values Self-concept Attributions Learning Motivation Personality Emotions Perception Training Leadership effectiveness

Group dynamics Work teams Communication Power Conflict Negotiations Intergroup behavior

Formal organization theory Organizational technology Organizational change Organizational culture

Behavioral change Attitude change Communication Group processes Group decision making

Comparative values Comparative attitudes Cross-cultural analysis

Organizational culture Organizational environment

Conflict Impressions Coalitions Alliances Joint ventures Intraorganizational politics Power

Job satisfaction Individual decision making Performance appraisal Attitude measurement Employee selection Work design Work stress

Chapter 1 Effective Managers Understand Organizational Behavior 9

Leaders and Organizational Behavior Changes occurring within and outside of institutions present major challenges to leaders, managers, and administrators in organizations. Terms such as social responsibility, cultural diversity, ethics, global competitiveness, social networking, and reengineering are used freely by experts and nonexperts. Each of these concepts reinforces the fact that leaders are being asked to perform effectively in a changing world.

Another challenge that leaders face is the increased emphasis that consumers are plac- ing on value.16 The trend among consumers is to consider the total value of a product or service. Today, more than ever, customers expect organizations to be responsive to their needs, to provide prompt service and delivery, and to produce top quality goods or services at the best price possible.

Along with an increasingly diverse workforce and demanding customers, leaders must contend with changes in both domestic and global markets and competition. The global market expects easy access to high quality products and services at a competitive price. Leaders are being asked to establish and manage effective employee teams, departments, or organizations that can respond and compete globally.

Everything facing a leader in organizations today is constantly changing. Properly align- ing the human resources of the organization with the changing conditions requires an understanding of such phenomena as the organization’s environment, individual character- istics, group behavior, organizational structure and design, and organizational change pro- cesses. The modern-day goal of aligning human resources with organizational factors was initiated with the Hawthorne studies.

The Hawthorne Studies From 1900 to 1930, Taylor’s concept of scientific management dominated thought about management. His approach focused on maximizing worker output. However, Taylor’s emphasis on output and efficiency didn’t address employees’ needs, leading some trade unions to resist implementation of scientific management principles. Mary Parker Follett was opposed to Taylor’s lack of specific attention on human needs and relationships in the workplace. She was one of the first management theorists to promote participatory deci- sion making and decentralization. Her view emphasized individual and group needs. The human element was the focus of Follett’s view about how to manage. However, she failed to produce empirical evidence to support her views. Industry leaders wanted concrete evi- dence that focusing on human resources would result in higher productivity. The Hawthorne studies, though flawed, provoked many managers and academics to focus on employees’ needs, attitudes, and behaviors.

A team of Harvard University researchers was asked to study the activities of work groups at Western Electric’s Hawthorne plant outside of Chicago (Cicero, Illinois).17 Before the team arrived, an initial study at the plant examined the effects of illumination on worker output. It was proposed that “illumination” would affect the work group’s output. One group of female workers completed its job tasks in a test room where the illumination level remained constant. The other study group was placed in a test room where the amount of illumination was changed (increased and decreased).

In the test room where illumination was varied, worker output increased when illumina- tion increased. This, of course, was an expected result. However, output also increased when illumination was decreased. In addition, productivity increased in the control-group test room, even though illumination remained constant throughout the study.

The Harvard team was called in to solve the mystery. The team concluded that something more than pay incentives was improving worker output within the work groups. After conducting

10 Part One The Field of Organizational Behavior

additional studies, the researchers uncovered what is referred to as the “Hawthorne effect” operating within the study groups.18 That is, the workers felt important (and increased their productivity) because someone was observing and studying them at work.

For another eight years, Elton Mayo, Fritz Roethlisberger, and William Dickson, leaders of the Harvard study team, continued their research of over 20,000 Western Electric employees at the Hawthorne plant. They found that individual behaviors were modified within and by work groups. In a study referred to as the “bank wiring room,” the Harvard researchers again faced perplexing results. The study group completed only two terminals per worker daily. This was considered to be a low level of output.

The bank wiring room workers appeared to be restricting output. The work group mem- bers were friendly, got along well on and off the job, and helped each other. There appeared to be a practice of protecting the slower workers. The fast producers did not want to outper- form the slowest producers. The slow producers were part of the team, and fast workers were instructed to “slow it down.” The group formed an informal production norm of only two completed boards per day.

The Harvard researchers learned that economic rewards did not totally explain worker behav- ior. Workers were observant, complied with norms, and respected the informal social structure of their group. The researchers also learned that social pressures could restrict output.

Interviews conducted years after the Hawthorne studies with a small number of actual study participants and a reanalysis of data raised doubts about a number of the original conclusions.19 The conclusion that supportive managers helped boost productivity is con- sidered incorrect by critics. Instead, the fear of job loss during the Great Depression and managerial discipline, not the practices of supportive managers, are considered responsible for the higher rate of productivity in the relay assembly test room experiments. Despite the criticism, the Hawthorne studies are still considered the major impetus behind the empha- sis on understanding and dealing with human resources.

Since the 1930s, the Hawthorne studies are perhaps the most-cited research in the applied behavioral science area, though they are not referred to as the most rigorous series of studies. Nonetheless, the Hawthorne studies did point out that workers are more com- plex than the economic theories of the time proposed. Workers respond to group norms, social pressures, and observation. These were important revelations that changed the way management viewed employees and paved the way for more modern ways of viewing the impact of individuals, groups, and organization structures and processes on organizational behavior. One of those modern views is systems theory, which is discussed next.

Systems Theory and Organizational Effectiveness Systems theory suggests that an organization is a managed system that changes inputs into outputs. It enables managers to describe the behavior of organizations both internally and externally. Internally, you can see how and why people within organizations perform their individual and group tasks. Externally, you can relate the transactions of organizations with other organizations and institutions. All organizations acquire resources from the out- side environment of which they are a part and, in turn, provide goods and services demanded by the larger environment. Managers must deal simultaneously with the internal and external aspects of organizational behavior. This essentially complex process can be simplified, for analytical purposes, by employing the basic concepts of systems theory.

In systems theory, the organizations are seen as one element of a number of elements that act interdependently. The flow of inputs and outputs is the basic starting point in describing the organization. In the simplest terms, the organization takes resources (inputs)

systems theory A theory stating that an organization is a managed system that changes inputs into outputs.

inputs Goods and services (raw materials, human resources, energy, etc.) organizations take in and use to create products or services.

Chapter 1 Effective Managers Understand Organizational Behavior 11

from the larger system (environment), processes these resources, and returns them in changed form (output). Exhibit 1.2 displays the fundamental elements of the organization as a system.

The concept of organizational effectiveness presented in this book relies on systems theory. Two main conclusions suggested by systems theory are: (1) effectiveness criteria must reflect the entire input-process-output cycle, not simply output, and (2) effectiveness criteria must reflect the interrelationships between the organization and its outside environ- ment. Thus:

Organizational effectiveness is an all-encompassing concept about how products or services are produced or provided.

Much additional research is needed to develop knowledge about the components of effectiveness. There is little consensus about these relevant components, about the inter- relationships among them, and about the effects of managerial action on them.20 In this textbook we attempt to provide the basis for asking questions about what constitutes effec- tiveness and how the qualities that characterize effectiveness interact.

According to systems theory, an organization is an element of a larger system, the envi- ronment. With the passage of time, every organization takes, processes, and returns resources to the environment. The ultimate criterion of organizational effectiveness is whether the organization survives in the environment. Survival requires adaptation, and adaptation often involves predictable sequences. As the organization ages, it probably will

pass through different phases. It forms, develops, matures, and declines in relation to environmental circumstances. Organiza- tions and entire industries rise and fall. Today, the mobile com- puting industry is on the rise, and the steel industry is declining. Marketing experts acknowledge the existence of product– market life cycles. Organizations also seem to have life cycles. Consequently, the criteria of effectiveness must reflect the stage of the organization’s life cycle.21 For example, a grocery store that has been in business for 30 years (maturity stage) needs to focus on being efficient in order to remain competitive and survive.

Managers and others with interests in the organization must have indicators that assess the probability of the organization’s survival. In actual practice, managers use a number of indicators of long-run survival. Among these indicators are measurements of productivity, efficiency, accidents, turnover, absenteeism, quality, rate of return, morale, engagement, and employee satis- faction.22 The overarching criterion that cuts across each effec- tiveness dimension is quality. Unless customers perceive quality

outputs The products and services (smartphones, food, social networking sites, etc.) that organizations create.

WAYS TO IMPROVE EFFECTIVENESS

Many high-performance, effective organizations engage in the following managerial practices:

1. Provide opportunities for training, development, and continuous learning.

2. Share information often with employees.

3. Encourage cooperation across teams, departments, and the organization.

4. Link compensation to performance.

5. Avoid layoffs.

6. Role model positive behaviors and attitudes.

7. Respect differences across employees.

8. Listen to employees’ and other stakeholders’ concerns and ideas.

Information You Can Use

ProcessInputs Outputs

Environment

EXHIBIT 1.2 The Basic Elements of a System

12 Part One The Field of Organizational Behavior

in products or services, there will be no survival. Any of these criteria can be relevant for particular purposes. For simplicity, we will discuss six popular criteria of effectiveness. They are quality, productivity, efficiency, satisfaction, adaptiveness, and development.

Quality J. M. Juran and W. Edwards Deming, in 1950, were prophets without recognition in their own country, the United States. These two Americans were pioneers in quality and empha- sized the importance of quality long before it was popular to do so.23 Deming is the most recognized guru of statistical quality control (SQC). He is the namesake of Japan’s most prestigious quality award, the Deming Prize, created in 1951.

Juran is best known for his concept of total quality control (TQC). This is the application of quality principles to all company programs, including satisfying internal customers. In 1954 Juran first described his method in Japan. He became an important inspiration to the Japanese because he applied quality to everyone from the top of the firm to the clerical staff.

Today is different. Inspired by the teachings of these two pioneers, many U.S. leaders and managers believe that to survive, organizations must provide high quality and reliable products and services, as well as treat customers in a close-to-perfect manner.24

More than any other single event, the 1980 NBC-TV White Paper, “If Japan Can . . . Why Can’t We?” introduced the importance of quality to the American public. The tele- vision program showed how, from 1950 to 1980, the Japanese had risen from the ashes of World War II to become an economic giant with companies like Toyota, Honda, and Sony turning out products of superior quality. Japanese organizational effectiveness cen- tered on the notion of quality. The Japanese interpret quality as it relates to the custom- er’s perception. Customers compare the actual performance of the product or evaluate the service being provided to their own set of expectations. The product or service either passes or fails. Thus, quality has nothing to do with how shiny or good looking some- thing is or with how much it costs. Quality is defined as meeting customers’ needs and expectations.

In today’s competitive global world, the effective company is typically the one that pro- vides customers with consistently high quality products or services. According to Fortune magazine’s 2016 list of the World’s Most Admired Companies in terms of quality, Apple, Alphabet (Google’s corporate parent), Amazon.com, Berkshire Hathaway, and Walt Disney earned the top five spots.25 These companies know that to stay in business (survival in effectiveness terms), the customer must be kept happy and satisfied.

In many organizations, quality is now the top priority.26 For example, Kia Motors’ fun and hip vehicle, Soul, won first place in the J.D. Power and Associates 2015 Initial Quality Study for the compact multipurpose vehicle segment.27 Kia Motors is designing and selling cars that are not only fuel-efficient and fun to drive, but also perceived as having higher levels of quality and reliability than in the past.28 Kia and its sister company, Hyundai, recently surpassed their Japanese counterparts in terms of vehicle quality.29 The companies are targeting an increase in global sales growth of about 2 percent in 2016.30

Productivity As used here, productivity reflects the relationship between inputs (e.g., hours of work, effort, use of equipment) and output (e.g., smartphones produced, customer complaints handled, trucks loaded). The concept excludes any consideration of efficiency, which is defined below. The measures of productivity, such as profit, sales, market share, students graduated, patients released, documents processed, clients serviced, and the like, depend upon the type of industry or institution that is being discussed. Every institution has

Chapter 1 Effective Managers Understand Organizational Behavior 13

outputs and inputs that need to be in alignment with the organization’s mission and goals. These measures relate directly to the output consumed by the organization’s customers and clients.

Efficiency Efficiency is defined as the ratio of outputs to inputs. The short-run criterion focuses atten- tion on the entire input-process-output cycle, yet it emphasizes the input and process ele- ments. Among the measures of efficiency are rate of return on capital or assets, unit cost, scrap and waste, downtime, occupancy rates, and cost per patient, per student, or per client. Measures of efficiency inevitably must be in ratio terms; the ratios of benefit to cost or to time are the general forms of these measures.

Satisfaction The idea of the organization as a social system requires that some consideration be given to the benefits received by its participants as well as by its customers and clients. Satisfaction and morale are similar terms referring to the extent to which the organization meets the needs of employees. We use the term satisfaction to refer to this criterion. Measures of satisfaction include employee attitudes, turnover, absenteeism, tardiness, and grievances.

Adaptiveness Adaptiveness is the extent to which the organization can and does respond to internal and external changes. Adaptiveness in this context refers to management’s ability to sense changes in the environment as well as changes within the organization itself. Ineffective- ness in achieving production, efficiency, and satisfaction can signal the need to adapt man- agerial practices and policies. Or the environment may demand different outputs or provide different inputs, thus necessitating change. To the extent that the organization cannot or does not adapt, its survival is jeopardized.

Development This criterion measures the ability of the organization to increase its capacity to deal with environmental demands. An organization must invest in itself to increase its chances of survival in the long run. The usual development efforts are training programs for manage- rial and nonmanagerial personnel. In 2015, U.S. companies increased spending on the following training areas (starting with the area with the greatest increase):31

∙ Management/supervisory training ∙ Onboarding (process of socializing new employees into organization) ∙ Customer service training ∙ Interpersonal skills (e.g., communication and teamwork) ∙ IT/systems training ∙ Sales training ∙ Mandatory/compliance training ∙ Professional/industry-specific training ∙ Executive development ∙ Desktop application training

There are several environmental forces that can influence a manager’s ability to achieve organizational effectiveness.

14 Part One The Field of Organizational Behavior

Environmental Forces Reshaping Management Practice A number of forces are reshaping the nature of managing within organizations. Organiza- tions that have recognized these forces are working to channel their managerial talents to accomplish goals by using their knowledge about each of six major forces.32

The first force at work is the power of human resources, or the organization’s ability to get things done in the way it wants them to be done. The way managers and employees work, think, and behave exerts a major influence on the overall effectiveness and success of an organization. Over the next several years as baby boomers (those born between 1946 and 1964) retire, organizations of all types will be facing a shrinking pool of skilled job candidates and a shortage of technically skilled workers. Some of the key human resource challenges will be in the areas of recruiting skilled talent, training and developing employ- ees, transferring knowledge from senior to junior employees through mentoring, and retaining high performing employees as job opportunities become more available.

To compete effectively in the 21st century, globalism must be understood and leveraged. Globalism is characterized by networks that interconnect countries, institutions, and peo- ple. Of the largest 25 global corporations in terms of market value in 2015, 12 are from the United States; 7 from China; 2 from Germany; and 1 each from Japan, the Netherlands, the UK, and South Korea.33 As a result of global integration, the growth rate of world trade has increased faster than that of world gross domestic product. That is, the trading of goods and services among nations has been increasing faster than the actual world production of goods. To survive the fast-paced changes in the global world, firms must make not only capital investments but also investments in people. How well a firm recruits, selects, retains, and motivates a skilled workforce will have a major impact on its ability to com- pete in the more globally interdependent world.

The Global OB feature describes the top worldwide cities as ranked by global consult- ing firm A.T. Kearney. The company looked at various metrics across several dimensions to determine not only the top-ranked cities across the globe in 2015, but also the cities that have the potential to exert their global influence in the near future.

As will be discussed in greater detail in Chapter 3, a diverse workforce is fast becoming a reality in the United States. As America’s workforce changes, managers and co-workers need to continuously learn more about each other so that a productive and respectful work culture can be created and nurtured. While Japan and China are basically homogeneous societies in terms of race, the United States is diverse and has been rapidly increasing its workforce diversity since the 1970s. Not only is racial and ethnic diversity growing, but also more women, older workers, and people with disabilities (including wounded veter- ans) are entering the workforce in increasing numbers. The workforce in 2014 was quite diverse with 47 percent being female, 16 percent Hispanic, 12 percent African American, and 6 percent Asian.34

From 2014 to 2024, older workers (aged 55 and over), Hispanics, and Asians are expected to be the fastest-growing groups in the U.S. labor force. About 40 percent of the U.S. work- force is likely to be nonwhite by the year 2024.35 The percentage of women in the workforce will remain relatively steady at close to 47 percent. This increase of diversity (older, minor- ity, and female employees) in the labor force presents several opportunities for U.S. organi- zations. However, unless they properly train, prepare, and compensate minorities and women for the highest-level jobs, organizations are not going to be competitive. Also, orga- nizations need to think of creative and flexible staffing approaches to retain experienced older workers who want to continue working while potentially dealing with health concerns or enjoying partial retirement.

power The ability to get things done in the way the organization wants them to be done.

globalism The interdependency of transportation, distribu- tion, communication, and economic networks across international borders.

diversity Refers to those attri- butes that make people different from one another.

15

The speed of change is another crucial force to recognize. Smartphones, PC tablets, social networking sites, the Internet, genetic engineering, space travel, and more demand- ing consumers who want better-quality products and services at lower prices and on time are some of the changes sweeping the world. Identifying, understanding, and responding quickly to changes in the environment are now a part of a manager’s job requirement.

The elements of change include almost instantaneous communication and computa- tion.36 Technology is facilitating online connectivity through such social networking sites as Facebook, Twitter, and LinkedIn that has resulted in the shrinking of space and distance. Intangible value of all kinds, such as services or products that “go viral” and reach millions of potential users, is growing at a rapid speed. The modern manager is going to have to be adaptable to such rapid change.

The worker–employer psychological contract is another force. Very few organizations still offer employees lifetime jobs, guaranteed advancement or pay raises, or assurance that their work roles will be predictable and stable. However, the most admired employers believe that openness, integrity, providing opportunities, and supporting the growth and development of their employees are top priorities. They believe this is an unwritten con- tract they have with their people. Employees believe that employers must be honest, open, and fair and also be willing to give employees a larger say in their jobs. Employees also want organizations to pay more attention to their family commitments and their physical

speed of change Rapid change is found in many areas of business, including technology, demographics, global- ism, and new products and services.

psychological contract An unwritten agreement between an employee and the organization that specifies what each expects to give to and receive from the other.

TOP GLOBAL CITIES TRANSCEND BORDERS Several events over the past few years demonstrate how global the world has become. For example, the refugee migration from Syria to European countries, the glut of oil, and the strength of the U.S. dollar against other world currencies affect people, financial markets, and institutions on a worldwide basis.

Tracking this “borderless” world, A.T. Kearney, a global manage- ment consulting firm, has developed an in-depth analysis of the top-performing cities today and those with the greatest potential for the future.

For the Global Cities Index, the study analyzed 125 cities around the world, measuring 27 metrics across five dimensions: business activity (flow of capital, market dynamics, and major companies present), human capital (education levels), information exchange (access to information via Internet and other media sources), cultural experience (access to major sporting events, museums, and other expos), and political engagement (political events, embassies, and think tanks). New York topped the list, followed by London, Paris, Tokyo, Hong Kong, Los Angeles, Chicago, Singapore, Beijing, and Washington, DC, round- ing out the top 10 cities based on current performance.

The Global Cities Outlook portion of the study measured 13 leading indicators across four dimensions to determine the likelihood of these cities becoming global hubs: personal well-being (safety, health care, inequality, and environmental performance), economics (long-term in- vestments and gross domestic product [GDP]), innovation (level of entrepreneurship through patents, private investments, and business incubators), and governance (proxy for long-term stability through

transparency, quality of bureaucracy, and ease of doing business). San Francisco ranked first, followed by London, Boston, New York, Zurich, Houston, Munich, Stockholm, Amsterdam, and Seoul.

Interestingly, 16 global cities placed in the top 25 rankings of both indexes and are considered “Global Elite”—well-known centers for commerce, culture, and politics. In the Americas, New York, Los Angeles, Chicago, Toronto, San Francisco, and Boston are considered elite. In Europe, five cities—London, Paris, Brussels, Berlin, and Amsterdam—made elite status. And in the Asia-Pacific region, Tokyo, Singapore, Seoul, Sydney, and Melbourne top the elite ranking for that area.

More cities around the world are making great strides to become global. Cities are becoming stronger and increasingly exerting influ- ence that transcends country borders. Much like countries that formed “power groups” like the G20 and NATO, cities are organizing into con- sortiums that will greatly influence business, politics, people, educa- tion, and the environment in the near future.

Sources: Mike Hales, Andrés Mendoza Pena, Erik Peterson, and Johan Gott, “Global Cities 2015: The Race Accelerates,” A.T. Kearney, http://www.atkearney. com, accessed February 15, 2016; “A.T. Kearney Global Cities 2015 Identifies 16 Elite Cities Based on Their Current Performance and Future Potential,” PRNewswire, http://www.prnewswire.com, accessed February 15, 2016; Scott Leff and Brittany Petersen, “Beyond the Scorecard: Understanding Global City Rankings,” The Chicago Council on Global Affairs, http://www.thechicagocouncil. org, accessed February 15, 2016; Laura Smith-Spark, “European Migrant Crisis: A Country-by-Country Glance,” CNN, http:www.cnn.com, accessed February 15, 2016; Parag Khanna, “When Cities Rule the World,” McKinsey & Company, http://www.mckinsey.com, accessed February 15, 2016.

G L O B A L O B

16

and mental health. Companies like Google, Netflix, Facebook, and Adobe Systems offer employees a wide range of benefits that help them balance work-life demands.37 As com- panies hire more workers and the unemployment rate continues to drop, people in the labor force are jumping ship to take new jobs, particularly millennials. The nearby OB Matters discusses how managers may need to adjust their approach to the psychological contract to retain this group of employees.

Another major force influencing management is technology. In a general sense, technol- ogy is the processes that convert raw materials or intellectual capital into products or ser- vices. Technology is more than just machinery. It also encompasses the design of practices that can be used to service customers, treat patients, and manufacture high quality prod- ucts. The technology of an organization influences the workflow, structure, systems, and philosophy of the organization to a significant degree. Today, computer technology is so pervasive and powerful that it needs to be well understood to be used effectively.38

The semiconductor pioneer Gordon Moore predicted in 1965 that chip density—and all kinds of computer power—would double every two years. (Some claim he said 18 months, but he denies the shorter cycle.) It is common to cite Moore’s law to refer to the rapidly advancing computing power-per-unit cost. His prediction has been right on target. Moore’s law highlights the speed-up in the general technological pace.

In the present information age, we use computer technology and human assets to oper- ate, maintain, and invent new computer systems that are more powerful than the previous computer generation. Organizations, in their quest for competitive advantage, must attract, retain, and recognize crucial human assets to continue advancing.

technology Refers to actions, physi- cal and mental, that an individual performs upon some object, per- son, or problem to change it in some way.

RETAINING MILLENNIALS Millennials, those born roughly between 1980 and 2000, currently make up the largest segment of the U.S. workforce, about 35 percent. By the year 2020, they will make up close to 50 percent of the working popula- tion. Much has been written about this group of workers, including what they think office life should look like, how growing up in a digital world allows them to navigate technology with ease, and why seeking infor- mation from many sources helps them problem solve efficiently.

Slowly recovering from an economic recession that happened less than a decade ago, companies are now poised to hire more workers and possibly experience business growth that hasn’t happened in quite a while. And, unlike their parents, millennials expect advance- ment to happen quickly, or they are willing to jump ship for a new op- portunity. According to current research, the average tenure for millennial employees in a job is two years, compared with five years for generation X workers (ages 36–52) and seven years for baby boomers (ages 52–70).

Managers may need to revisit the psychological contract between employees and the organization in an effort to keep workers, particu- larly millennials. Here are a few strategies to help managers retain this talented group of employees:

Give them more challenging work. If they feel management is in- vested in their personal growth, millennials are likely to stay put and cultivate strong personal and professional relationships with their colleagues, bosses, and senior leadership.

Foster a supportive work environment. Research reveals that the number-one reason these workers leave their job is because of their boss—not necessarily because they are unhappy with the company. Making millennials feel valued and supported may lead to increased productivity and longer tenure.

Provide ongoing feedback. Most millennials would be happy if annual performance reviews went away. Professional develop- ment is vital to their overall satisfaction, and millennials expect their managers to check in with them on a regular basis, evaluat- ing their work and giving them guidance and feedback about how they’re doing on the job.

The psychological contract between organizations and their employees is one of the forces that continue to reshape the nature of management. Understanding some of the motivations important to millennials may help managers keep them from looking elsewhere for their next career move.

Sources: Bill Conerly, “Recruiting and Motivating Millennials to Survive a Tight Job Market,” Forbes, November 11, 2015, http://www.forbes.com; Jeff Fromm, “Millennials in the Workplace: They Don’t Need Trophies But They Want Reinforcement,” Forbes, November 6, 2015, http://www.forbes.com; Hattie Bernstein, “Millennials Face Always Changing Job Market,” Boston Globe, September 26, 2015, http://www.bostonglobe.com; Roger Trapp, “Leaders Should Do More to Manage Workers of All Types,” Forbes, September 23, 2015, http://www.forbes.com; Rachel Graf, “Why Millennials Job Hop: It’s the Economy, Stupid,” Mashable, April 19, 2015, http:// mashable.com.

O B M A T T E R S

Chapter 1 Effective Managers Understand Organizational Behavior 17

Companies like Google, Apple, Amazon, Facebook, and Walt Disney’s Pixar are sought out by talented, technology-savvy job candidates. In examining the programs, practices, and approaches used by these and other firms, it is obvious that valuing those who have knowledge about how to use technology is a priority. Technology can yield competitive advantages only when it is utilized effectively.

The introduction of computer technology has fostered an era of information technology (IT). The IT era, combined with improved selection, training, and a positive and strong organizational culture, provides the potential for using information and technology in a more knowledgeable and effective way. The right information is a precious commodity that, when applied effectively, can result in higher growth and productivity.39

Information technology has changed the way managers act and perform. Before the IT era, subordinates gathered data and information and provided it up the chain of command.40 The manager (up the chain) analyzed what was provided, made a decision, and informed the subordinates to carry out the decision. This method had a high potential for errors of omission, delays, and miscommunication. IT today provides easier access to information (e.g., computer databases) and provides managers an opportunity to share, delegate, or oversee decision making by their team or unit. This enhanced access to information helped U.S. businesses respond faster to weaker demand for their products and services caused by the recent economic recession.41 Managers acted on accurate IT reports on sales and spend- ing by cutting payrolls, capital expenditures, and inventories. The effect of these steps led to an increase in national-level productivity of 3.2 percent (annualized rate) in 2009 and to better positioned businesses as the economy continues to recover.42

As illustrated in Exhibit 1.3, the six forces reshaping management practice—the power of human resources, globalism, diversity, the speed of change, a new worker–employer psychological contract, and technology—offer challenges to managers. Resisting the reality of these forces will likely lead to unnecessary conflict, reduced managerial and nonmana- gerial performance, and lost opportunities. In managerial terms, failing to cope and deal with these forces will likely result in job dissatisfaction, poor morale, reduced commitment, lower work quality, burnout, poor judgment, and a host of unhealthy consequences.

The purpose of this book is to help you learn how to manage and lead individuals and groups in organizations. These human resources are operating in a world impacted by pow- erful forces. Organizations are essential to the way our society operates in the world. In industry, education, health care, and defense, organizations have created impressive gains

Power of human

resources

Speed of change

New psychological

contract Diversity

GlobalismTechnology

EXHIBIT 1.3 The Six Forces Reshaping Management Practice

18 Part One The Field of Organizational Behavior

for the standard of living and prestige of entire nations. The size of the organizations with which you deal daily should illustrate the tremendous political, economic, and social pow- ers they separately possess. If a large firm announced that it was closing its plant in your community, the resulting impact might be devastating economically. On the other hand, if Apple announced it was opening a computer assembly plant in your community, the effect probably would be very positive.

Organizations are much more than only a means for providing goods and services.43 They create the settings in which most of us spend our lives. In this respect, they have pro- found influence on employee behavior. However, because large-scale organizations have developed only in recent times, we are just now beginning to recognize the necessity for studying them. Researchers have just begun the process of developing ways to study the behavior of people in organizations of all sizes.

Framing the Study of Organizational Behavior Exhibit 1.4 illustrates the flow of chapters in this book and presents a perspective on how to frame the study of organizational behavior and management within organizations. The book is divided into five parts: the field of organizational behavior; understanding and managing individual behavior; group behavior and interpersonal influence; organizational processes; and organizational design, change, and innovation.

The Organization’s Environment Organizations exist within societies. Within a society many factors impinge upon the effec- tive functioning of an organization, and management must be responsive to them. For example, the Patient Protection and Affordable Care Act of 2010 continues to cause changes to both the health care industry and the way employers provide health care bene- fits to their employees.44 In addition to complying with laws, managers must proactively monitor and respond to competitors’ strategic moves, the needs of customers or clients, political constraints, and economic and technological changes and developments. The model proposes that environmental forces exert an influence throughout every aspect of the organization.

Understanding and Managing Individual Behavior Individual performance is the foundation of organizational performance. Understanding indi- vidual behavior, therefore, is critical for effective management, as illustrated in this account:

Miguel Avila has been a field representative for a major drug manufacturer since he gradu- ated from college seven years ago. He makes daily calls on physicians, hospitals, clinics, and pharmacies as a representative of the many drugs his firm manufactures. During his time in the field, prescription rates and sales for all of his firm’s major drugs have increased, and he has won three national sales awards given by the firm. Yesterday, Miguel was promoted to sales manager for a seven-state region. He no longer will be selling but instead will be man- aging 15 other representatives. Miguel accepted the promotion because he believes he knows how to motivate and lead salespeople. He commented: “I know the personality profile of the successful salesperson. They are special people. I know what it takes to get them to perform. Remember that I am one. I know their values and attitudes and what it takes to motivate them. I know I can motivate a sales force.”

In his new job, Miguel Avila will be trying to maximize the individual performance of 15 sales representatives. Most of his interactions will be pleasant, but he is aware of some

Chapter 1 Effective Managers Understand Organizational Behavior 19

EXHIBIT 1.4 Framework for Studying Organizational Behavior

Environment Environment

Effective Managers Understand Organizational Behavior Chapter 1

The Field of Organizational Behavior

Individual Differences at Work Chapter 3

Perceptions and Attributions Chapter 4

Motivation Chapter 5

Evaluation and Rewards Influence Behavior Chapter 7

Managing Employee Behavior Chapter 8

Job Design and Performance Chapter 6

Understanding and Managing Individual Behavior

Groups and Teams Chapter 10

Power and Politics Chapter 12

Managing Conflict and Negotiations Chapter 11

Group Behavior and Interpersonal Influence

Leadership Chapter 15

Communicating Effectively Chapter 13

Decision Making Chapter 14

Organizational Processes

Organizational Structure and Design Chapter 16

Managing Organizational Change Chapter 17

Part Two

Part One

Part Three

Part Four

Part Five Organizational Design, Change, and Innovation

Managing Individual Stress Chapter 9

International and Organizational Culture Chapter 2

20

expense account padding that he intends to stop. As a manager, Miguel will be dealing with several facets of individual behavior. Our model includes three important influences on individual behavior and motivation in organizations: individual differences, individual motivation, and rewards.

Individual Differences Because organizational performance depends on individual performance, managers such as Miguel Avila must have more than a passing knowledge of the determinants of individ- ual performance. Social psychology and psychology contribute a great deal of relevant knowledge about the relationships among attitudes, perceptions, emotions, personality, values, and individual performance. Managers cannot ignore the necessity for acquiring and acting on knowledge of the individual characteristics of both their subordinates and themselves.

Individual Motivation Motivation and ability to work interact to determine performance. Motivation theory attempts to explain and predict how the behavior of individuals is aroused, started, sus- tained, and stopped. Unlike Miguel Avila, not all managers and behavioral scientists agree on what is the “best” theory of motivation. In fact, motivation is so complex that it may be impossible to have an all-encompassing theory of how it occurs. However, managers must still try to understand it. They must be knowledgeable about motivation because they are concerned with performance.

STRIKING A WORK–LIFE BALANCE The economic data churned out by the government every month doesn’t identify whether workers are working harder or smarter. But some part of productivity gains may be attributed to technology and working smarter.

When a Raleigh, North Carolina, Internet start-up downsized For- syth’s job, she was not too upset. She had developed an aversion to the 50- and 60-hour workweeks, the chaotic working conditions, and the lack of a job description. The mother of two now works in publish- ing, finds her current employer more “family friendly,” and enjoys keeping to a 40-hour workweek.

Jeff, an early member of the Netscape management team, left his position thanks to a nice nest egg generated from the sale of Netscape to America Online. Today, he works part-time as an investor and advisor to small Internet start-ups. He is able to play with his three children, make them lunch, and even tag along on school field trips. After his 18-hour days at Netscape, Jeff’s time with his children “seems like mun- dane stuff, but when you finally get a chance to do it, you appreciate it.”

Despite the fact that Americans have always placed great stock in hard work, there is growing evidence that “working hard” may not mean “working long.” According to the U.S. Bureau of Labor Statistics, the proportion of Americans working 49 hours or more a week has remained steady in recent years, after rising in the late 1980s and

early 1990s to approximately 29.5 percent. But in the past several years, the percentage of managers and professionals working 49 hours or more a week has begun to fall, reaching 27.9 percent.

It appears that America’s work ethic is changing from working hard to working smart. It is more than simply a work/life balance issue, however, in that a basic American social value of more hard work is being transformed into “work smart but don’t forget your other life obligations.” How will this change the workplace? Will hourly workers decline overtime opportunities more consistently? Will they move to ensure (through their union) that their workweek remains consistent and does not include continual overtime requests? Will the 40-hour workweek be challenged (as it has in some European countries)? How will this change the pace of productivity? Will face-time at the office continue to be important? Will HR professionals promote the firm’s use of flextime and telecommuting to attract and retain workers?

Sources: Jonathan Long, “5 Simple Ways to Improve Your Work-Life Balance,” Entrepreneur, March 31, 2016, https://www.entrepreneur.com; R. Burke, “Working to Live or Living to Work: Should Individuals and Organizations Care?” Journal of Business Ethics 84 (2009), pp. 167–72; Jason Desena, “While America Is Sleeping, Europe Is Catching Up,” Financial Times, July 17, 2007, p. 36; Eric Clarke, “Working Smarter, Not Harder,” Accounting Technology, April 2006, pp. 20–22; John W. Schoen, “Are We Working Smarter or Harder?” MSNBC, August 28, 2003, www.msnbc.com/news/954222.asp; Shel Leonard, “Is America’s Work Ethic Changing?” HR Magazine, April 2000, p. 224.

O B M A T T E R S

Chapter 1 Effective Managers Understand Organizational Behavior 21

Rewards One of the most powerful influences on individual performance is an organization’s reward system. Management can use rewards (or punishment) to increase performance by present employees. Management also can use rewards to attract skilled employees to join the orga- nization. Paychecks, raises, and stock options are important aspects of the reward system, but they are not the only aspects. Miguel Avila makes this point very clear when he states: “I know what it takes to get them to perform.” Performance of the work or job itself can provide employees with rewards, particularly if job performance leads to a sense of per- sonal responsibility, autonomy, and meaningfulness.

Misbehavior In a perfect world, organizations wouldn’t have to worry about preventing and managing the occasional (though often destructive) misbehavior of some of its leaders, managers, and employees. In recent years, we have witnessed countless questionable or unethical acts in business, including Volkswagen’s emissions scandal; Bernard Madoff’s $50 billion investment Ponzi scheme; and the long list of organizations that have either reported or been accused of “accounting irregularities.”45 Many companies’ and managers’ reputations have been damaged through misbehavior. Such damaging behaviors and actions need to be prevented whenever possible.

Stress Stress is an important result of the interaction between the job and the individual. Stress in this context is a state of imbalance within an individual that often manifests itself in such symptoms as insomnia, excessive perspiration, nervousness, and irritability. Whether stress is positive or negative depends on the individual’s tolerance level. People react differently to situations that outwardly would seem to induce the same physiological and psychologi- cal demands. Some individuals respond positively through increased motivation and com- mitment to finish the job. Other individuals respond less desirably by turning to such outlets as alcoholism and drug abuse. Hopefully, Miguel Avila will respond positively to the stresses of his new job as sales manager.

Handling the expense account padding misbehavior of one of his employees will pro- duce a form of stress that Miguel didn’t experience as a field representative. Management’s responsibility in managing stress has not been clearly defined, but there is growing evi- dence that organizations are devising programs to deal with work-induced stress.

Group Behavior and Interpersonal Influence Interpersonal influence and group behavior are also powerful forces affecting organiza- tional performance. The effects of these forces are illustrated in the following account:

Kelly Davis spent two and a half years as a teller in the busiest branch of a large national Bank. During that time she developed close personal friendships among her co-workers. These friendships extended off the job as well. Kelly and her friends were the top team in the bank bowling league. Two months ago Kelly was promoted to branch manager. She was excited about the new challenge but was a little surprised that she received the promotion since some other likely candidates in the branch had been with the bank longer. She began the job with a great deal of optimism and believed her friends would be genuinely happy for her and supportive of her efforts. However, since she became branch manager, things haven’t seemed quite the same. Kelly can’t spend nearly as much time with her friends because she is often away from the branch attending management meetings at the main office. A computer training course she must attend two evenings a week has caused her to miss the last two wine-and-cheese club

22 Part One The Field of Organizational Behavior

meetings, and she senses that some of her friends have been acting a little differently toward her lately. Recently, Kelly said, “I didn’t know that being part of the management team could make that much difference. Frankly, I never really thought about it. I guess I was naïve. I’m seeing a totally different perspective on the business and have to deal with problems I never knew about.”

Kelly Davis’s promotion has made her a member of more than one group. In addition to being a member of her old group of friends at the branch, she also is a member of the man- agement team. She is finding out that group behavior and expectations have a strong impact on individual behavior and interpersonal influence. Our model includes a number of impor- tant aspects of group and interpersonal influence on organization behavior: leadership, group behavior, intergroup behavior and conflict, and organizational power and politics.

Groups and Teams Groups form because of managerial action, and also because of individual efforts. Manag- ers create work groups to carry out assigned jobs and tasks. Such groups, created by mana- gerial decisions, are termed formal groups. The group that Kelly Davis manages at her branch is a formal group.

Groups also form as a consequence of employees’ actions. Such groups, termed infor- mal groups, develop around common interests and friendships. The wine-and-cheese club at Kelly Davis’s branch is an informal group. Though not sanctioned by management, groups of this kind can affect organizational and individual performance. The effect can be positive or negative, depending on the intention of the group’s members. If the group at Kelly’s branch decided informally to slow the work pace, this norm would exert pressure on individuals who wanted to remain a part of the group. Effective managers recognize the consequences of the individual’s need for affiliation.

Managing Conflict and Negotiations As groups function and interact with other groups, they develop their own unique set of characteristics, including structure, cohesiveness, roles, norms, and processes. As a result, groups may cooperate or compete with other groups, and intergroup competition can lead to conflict. If the management of Kelly’s bank instituted an incentive program with cash bonuses to the branch bringing in the most new customers, this might lead to competition and conflict among the branches. While conflict among groups can have beneficial results for an organization, too much or the wrong kinds of intergroup conflict can have very negative results. Managers need to develop and use a wide range of negotiation skills to keep groups functioning effectively. Thus, managing intergroup conflict is an important aspect of managing organizational behavior.

Power, Politics, and Empowerment Power in the context of group behavior is the ability to get someone to do something you want done or to make things happen in the way you want them to happen. Many people in our society are very uncomfortable with the concept of power, and some are very offended by it. This is because the essence of power is control over others. To many Americans, control over others is an offensive thought. However, power is a reality in organizations. Managers derive power from both organizational and individual sources. Kelly Davis has power by virtue of her position in the formal hierarchy of the bank. She controls perfor- mance evaluations and salary increases. However, she also may have power because her co-workers respect and admire the abilities and expertise she possesses. Managers, there- fore, must understand the concept of power and when to delegate it to others.

Chapter 1 Effective Managers Understand Organizational Behavior 23

Organizational Processes Certain behavioral processes give life to an organization. When these processes do not function well, problems can arise, as illustrated in this account:

When she began to major in marketing as a junior in college, Debra Chin knew that some day she would work in that field. Once she completed her MBA, she was more positive than ever that marketing would be her life’s work. Because of her excellent academic record, she received several outstanding job offers. She decided to accept the job offer she received from one of the nation’s largest consulting firms. She believed this job would allow her to gain experience in several areas of marketing and to engage in a variety of exciting work. On her last day on campus, she told her favorite professor: “This has got to be one of the happiest days of my life, getting such a great career opportunity.” Recently, while visiting the college placement office, the professor was surprised to hear that Debra had told the placement director that she was looking for another job. Since she had been with the consulting company less than a year, the professor was somewhat sur- prised. He decided to call Debra to find out why she wanted to change jobs. This is what she told him: “I guess you can say my first experience with the real world was ‘reality shock.’ Since being with this company, I have done nothing but gather data on phone surveys. All day long I sit and talk on the phone, asking questions and checking off the answers. In gradu- ate school I was trained to be a manager, but here I am doing what any high school graduate can do. I talked to my boss, and he said that all employees have to pay their dues. Well, why didn’t they tell me this while they were recruiting me? To say there was a conflict between the recruiting information and the real world would be a gross understatement. I’m an adult—why didn’t they provide me with realistic job information, then let me decide if I want it? A little bit of accurate communication would have gone a long way.”

This book includes discussion of a number of processes that contribute to effective organizational performance: communication, decision making, and leadership.

Communication Process Organizational survival is related to the ability of management to receive, transmit, and act on information. The communication process links the people within the organization. Information integrates the activities of the organization with the demands of the environ- ment. But information also integrates the internal activities of the organization. Debra Chin’s problem arose because the information that flowed from the organization was dif- ferent from the information that flowed within the organization.

The nearby You Be the Judge explains an unusual method of communication at New Hope Natural Media. This method can be used to acquire a sense of what employees are thinking, which can then be valuable to a manager in modifying the compensation system.

Decision-Making Process The quality of decision making in an organization depends on selecting proper goals and identifying means for achieving them. With good integration of behavioral and structural factors, management can increase the probability that high-quality decisions will be made. Debra Chin’s experience illustrates inconsistent decision making by different organiza- tional units (human resources and marketing) in the hiring of new employees. Organizations rely on individual decisions as well as group decisions, and effective management requires knowledge of both types of decisions.

The power of managers is clearly evidenced in making decisions about employees’ well-being, distributing organizational resources, and designing and implementing rules and policies. In Debra Chin’s case, she claims the consulting firm didn’t provide a realistic job preview. She is making a statement that suggests unethical behavior on the part of the

24 Part One The Field of Organizational Behavior

individuals who interviewed her for the consulting firm job. Was this the right thing for the company to do? Debra suggests that it was not the right thing or the ethical way to conduct an interview. Ethical dilemmas will be discussed throughout the book because managers and workers must make decisions every day that have an ethical component.46

Leadership Process Leaders exist within all organizations. Like the bank’s Kelly Davis, they may be found in formal groups, but they also may be found in informal groups. Leaders may be managers or nonmanagers. The importance of effective leadership for obtaining individual, group, and organizational performance is so critical that it has stimulated a great deal of effort to determine the causes of such leadership. Some people believe that effective leadership depends on traits and certain behaviors—separately and in combination. Other people believe that one leadership style is effective in all situations. Still others believe that each situation requires a specific leadership style. Are managers always leaders? Unfortunately, the answer is no, as will be found throughout this book.

Organizational Design, Change, and Innovation To work effectively in organizations, managers must have a clear understanding of the organizational structure. Viewing an organization chart on a piece of paper or framed on a wall, one sees only a configuration of positions, job duties, and lines of authority among the parts of an organization. However, organizational structures can be far more complex than that, as illustrated in the following account:

Dr. John Rice recently was appointed dean of the business school at a major university. Before arriving on campus, John spent several weeks studying the funding, programs, fac- ulty, students, and organizational structure of the business school. He was trying to develop a list of priorities for things he believed would require immediate attention during his first year as dean. The president of the university had requested that he have such a list of priorities available when he arrived on campus.

Y O U B E T H E J U D G E

RECEIVING FEEDBACK REGULARLY At New Hope Natural Media in Boulder, Colorado, a questionnaire is included in every paycheck asking for feedback in four key ar- eas: the employees’ feelings about their financial package, their feelings toward other employees, their feelings about the skills they are developing, and their overall feelings about their job. What is the company’s objective of receiving feedback in these four areas? How can this feedback be used?

Communication and feedback are considered the “breakfast of champions” at New Hope Natural Media. You be the judge. Do you think this is a good management approach? Why? These days it is common to read about managerial decisions that are considered un- ethical. It is now accepted that most decisions made in an organiza- tion are permeated by ethical implications. Managers are powerful, and, where power exists, there is potential for good and evil. Head- lines emphasize the ethical nature of decision making: “Ponzi Victims

Find Little Solace in Guilty Plea”; “Merrill’s $3.6bn Bonuses under Fire”; “Top Pain Scientist Fabricated Data in Studies, Hospital Says”; “Crisis on Wall Street: Ex-AIG Executive Is Sentenced to 4 Years”; and “Siemens to Pay €1bn Fines in Effort to Close Bribery Scandal.”

Sources: J. Rosanas, “Beyond Economic Criteria: A Humanistic Approach to Organizational Survival,” Journal of Business Ethics 78, no. 3 (2008), pp. 447–62; John L. Akula, “Business Crime: What to Do When the Law Pursues You,” Sloan Management Review, Spring 2000, pp. 29–42; Vita Bekker, Joanna Chung, Brooke Masters, Megan Murphy, and Alan Rappeport, “Ponzi Victims Find Little Solace in Guilty Plea,” Financial Times, March 12, 2009, p. 16; Sarah O’Connor, “Merrill’s $3.6bn Bonuses under Fire,” Financial Times, March 31, 2009, p. 2; Keith J. Winstein and David Armstrong, “Top Pain Scientist Fabricated Data in Studies, Hospital Says,” The Wall Street Journal, March 11, 2009, p. A12; Amir Efrati, “Crisis on Wall Street: Ex-AIG Executive Is Sentenced to 4 Years,” The Wall Street Journal, January 28, 2009, p. C3; Daniel Schäfer, “Siemens to Pay €1bn Fines in Effort to Close Bribery Scandal,” Financial Times, December 16, 2008, p. 17.

Chapter 1 Effective Managers Understand Organizational Behavior 25

During his first official meeting with the president, John was asked the question he fully expected to be asked: “What will be your No. 1 priority?” Rice replied: “Although money is always a problem, I believe the most urgent need is to reorganize the business school. At present, students can major in only one of two departments—accounting and business administration. The accounting department has 20 faculty members. The business adminis- tration department has 43 faculty members, including 15 in marketing, 16 in management, and 12 in finance. I foresee a college with four departments—accounting, management, mar- keting, and finance—each with its own chairperson. First, I believe such a structure will enable us to better meet the needs of our students. Specifically, it will facilitate the develop- ment of major programs in each of the four areas. Students must be able to major in one of the four functional areas if they are going to be prepared adequately for the job market. Finally, I believe such an organizational structure will enable us to more easily recruit faculty since they will be joining a group with interests similar to their own.”

As this account indicates, an organization’s structure is the formal pattern of activities and interrelationships among the various subunits of the organization.

Managers sometimes must consider the possibility that effective organizational func- tioning can be improved by making significant changes in the total organization. Organiza- tional change and development represent planned attempts to improve overall individual, group, and organizational performance. Debra Chin might well have been spared the disap- pointment she experienced had an organizational development effort uncovered and cor- rected the inconsistent communication and decision making that brought about Debra’s unhappiness. Concerted, planned, and evaluative efforts to improve organizational func- tioning have great potential for success.

Change and innovation are so vital to an organization’s success that managers must be prepared for reactions to them from employees. Change and innovation typically disrupt normal routines and patterns of behavior. When routines are disrupted, reactions can range from enthusiastic acceptance to covert sabotage.

RECEIVING FEEDBACK REGULARLY Receiving feedback from employees about their jobs, feelings, at- titudes, preferences, and impressions is invaluable. The feedback can be used to make specific modifications in financial packages,

social and interpersonal opportunities, skill development, and job characteristics. Feedback from trusted sources can result in noticeable changes and improvement.

Y O U B E T H E J U D G E C O M M E N T

∙ The key to an organization’s success is the institution’s human resources. Organizations need human resources that work hard, think creatively, and perform excellently. Reward- ing, encouraging, and nurturing the human resources in a timely and meaningful manner is required.

∙ A number of contributing disciplines stand out such as psychology, sociology, and cultural anthropology.

∙ The behavior of employees is the key to achieving effectiveness. People behave in many predictable and unpredictable ways. Each person has a unique behavioral pattern. Managers must observe, respond to, and cope with the array of behavior patterns displayed by employees.

Summary of Key Points

26 Part One The Field of Organizational Behavior

∙ The “effect” is the behavior or reaction of a person who is being observed. Individuals who are being observed are likely to react in a nonroutine way because they are being watched or are a part of an experiment.

∙ Employers and employees enter into psychological contracts. The employer believes that no worker is guaranteed a lifelong job or pay raise. If the worker’s performance is good and profit is earned, then employment continues and pay raises are provided. Employees today believe that employers should be honest, concerned about their fami- lies, and interested in their overall health. These assumptions are the basis of what is called the new psychological agreement or contract.

∙ Systems theory is used to integrate organizational effectiveness and time. Two main con- clusions of systems theory are: (1) effectiveness criteria (e.g., productivity, quality, adap- tiveness) must reflect the entire input-process–output cycle; and (2) effectiveness criteria must reflect the interrelationships between the organization and its outside environment. The organization is simply an element or part of a larger system, the environment.

1. Describe some of the innovative management practices that managers like Tony Hsieh of Zappos use to be successful.

2. What are the key principles of scientific management? 3. What knowledge about human behavior in the workplace was discovered during the

Hawthorne studies? 4. Why does the field of organizational behavior draw on so many different disciplines? 5. How would you determine whether a large public hospital in your city (community or

regional) is effective? 6. In today’s fast-paced, global, and technological environment, it is important for an

organization of any size to be adaptive. How do firms such as Facebook, Google, and Apple adapt?

7. What abilities will managers need to be successful in the 21st century? Which of these abilities do you have now? How do you plan to acquire the others?

8. The psychological contract between workers and employers specifies what each expects to give and receive from the other. What can you offer an employer, and what do you expect in return?

9. As a manager, what type of quality improvement results should you strive for in order to achieve success over both the short and long run?

10. What are five things that you, as a manager, can do to lead the way to higher levels of effectiveness?

Review and Discussion Questions

Now you have completed Chapter 1, which sets the tone for the book Organizational Behavior and Man- agement, complete the following exercise. This should

be used as your beginning baseline assumptions, opin- ions, and understanding of organizational behavior. Once you have completed the course (book), we will

Exercise

Exercise 1.1: Initial View of Organizational Behavior

Chapter 1 Effective Managers Understand Organizational Behavior 27

take another look at your assumptions, opinions, and understanding.

This exercise contains 20 pairs of statements about organizational behavior. For each pair, circle the letter preceding the statement that you think is most accu- rate. Circle only one letter in each pair.

After you have circled the letter, indicate how cer- tain you are of your choice by writing 1, 2, 3, or 4 on the line following each item according to the following procedure.

∙ Place “1” if you are very uncertain that your choice is correct.

∙ Place “2” if you are somewhat uncertain that your choice is correct.

∙ Place “3” if you are somewhat certain that your choice is correct.

∙ Place “4” if you are very certain that your choice is correct.

Do not skip any pairs. 1. a. A supervisor is well advised to treat, as much

as possible, all members of his/her group ex- actly the same way.

b. A supervisor is well advised to adjust his/her behavior according to the unique characteristics of the members of his/her group.

2. a. Generally speaking, individual motivation is greatest if the person has set goals for himself/ herself that are difficult to achieve.

b. Generally speaking, individual motivation is greatest if the person has set goals for himself/ herself that are easy to achieve.

3. a. A major reason organizations are not as produc- tive as they could be these days is that manag- ers are too concerned with managing the work group rather than the individual.

b. A major reason organizations are not as produc- tive as they could be these days is that manag- ers are too concerned with managing the individual rather than the work group.

4. a. Supervisors who, sometime before becoming a supervisor, have performed the job of the peo- ple they are currently supervising are apt to be more effective supervisors than those who have never performed that particular job.

b. Supervisors who, sometime before becoming a supervisor, have performed the job of the peo- ple they are currently supervising are apt to be

less effective supervisors than those who have never performed that particular job.

5. a. On almost every matter relevant to the work, managers are well advised to be completely honest and open with their subordinates.

b. There are very few matters in the workplace where managers are well advised to be completely honest and open with their subordinates.

6. a. One’s need for power is a better predictor of managerial advancement than one’s motivation to do the work well.

b. One’s motivation to do the work well is a better predictor of managerial advancement than one’s need for power.

7. a. When people fail at something, they try harder the next time.

b. When people fail at something, they quit trying.

8. a. Performing well as a manager depends most on how much education you have.

b. Performing well as a manager depends most on how much experience you have.

9. a. The most effective leaders are those who give more emphasis to getting the work done than they do to relating to people.

b. The most effective leaders are those who give more emphasis to relating to people than they do to getting the work done.

10. a. It is very important for a leader to “stick to his/ her guns.”

b. It is not very important for a leader to “stick to his/her guns.”

11. a. Pay is the most important factor in determining how hard people work.

b. The nature of the task people are doing is the most important factor in determining how hard people work.

12. a. Pay is the most important factor in determining how satisfied people are at work.

b. The nature of the task people are doing is the most important factor in determining how satis- fied people are at work.

13. a. Generally speaking, it is correct to say that a person’s attitudes cause his/her behavior.

b. Generally speaking, it is correct to say that a person’s attitudes are primarily rationalizations for his/her behavior.

28

Reality Check Now how much do you know about organizations? 6. Deming and Juran are considered world-class experts on .

a. organizations b. quality c. mathematics d. business planning

7. Psychology has made a major contribution to organizational behavior, especially at what level of analysis? a. system b. team c. individual d. organization

8. Most would agree that the most important long-run criterion of effectiveness is . a. efficiency b. satisfaction c. costs d. survival

9. The field of organizational behavior considers to be crucial for conducting research. a. cost factors b. scientific method c. board of examiners d. forensic accounting

10. Who was credited with introducing the concept of scientific management? a. Joseph Juran b. Henri Fayol c. Frederick W. Taylor d. Joseph Wharton

REALITY CHECK ANSWERS

Before After

1. b 2. c 3. a 4. c 5. c 6. b 7. c 8. d 9. b 10. c Number Correct Number Correct

14. a. Satisfied workers produce more than workers who are not satisfied.

b. Satisfied workers produce no more than work- ers who are not satisfied.

15. a. The notion that most semiskilled workers desire work that is interesting and meaningful is most likely incorrect.

b. The notion that most semiskilled workers desire work that is interesting and meaningful is most likely correct.

16. a. People welcome change for the better. b. Even if change is for the better, people will re-

sist it.

17. a. Leaders are born, not made. b. Leaders are made, not born.

18. a. Groups make better decisions than individuals. b. Individuals make better decisions than

groups. 19. a. The statement, “A manager’s authority needs to

be commensurate with his/her responsibility” is, practically speaking, a very meaningful statement.

b. The statement, “A manager’s authority needs to be commensurate with his/her responsibility” is, practically speaking, a very meaningless statement.

Chapter 1 Effective Managers Understand Organizational Behavior 29

20. a. A major reason for the relative decline in North American productivity is that the division of labor and job specialization have gone too far.

b. A major reason for the relative decline in North American productivity is that the division of labor and job specialization have not been car- ried far enough.

Source: Adapted from Robert Weinberg and Walter Nord, “Coping with ‘It’s All Common Sense’,” Exchange: The Organizational Behavior Teaching Journal 7, no. 2 (1982), pp. 29–32. Exchange: The Organizational Behavior Teaching Journal published by Organizational Behavior Teaching Society. Copyright © 1982. Reproduced with permission of Sage Publications, Inc. via Copyright Clearance Center.

The annual holiday shopping season typically begins on the Friday after Thanksgiving, known by retailers and consumers alike as “Black Friday.” In recent years, however, some retailers such as Walmart, Target, and Macy’s have moved up the start of their shopping sea- son to Thanksgiving Day, which has caused much de- bate about making employees work on a holiday typically spent with family and friends.

In 2015, specialty outdoor retailer Recreational Equipment Inc. (REI) bucked the holiday shopping trend all together. The company announced it would not only close its stores on Black Friday, but would also pay its almost 12,000 employees to take the day off and “go outside.” REI also told consumers that online purchases made on the company’s website would not be processed until Saturday of the extended holiday weekend, allowing all of its employees to #OptOutside.

Reaction to REI’s unusual strategy was overwhelm- ingly positive. And according to retail analysts, the company’s decision to close its brick-and-mortar stores on Black Friday increased its online traffic dramati- cally—26 percent from the previous year—a win–win for both the company and its employees.

REI has been ahead of the curve on sustainable business practices and exceptional employee benefits for many years. Based in Kent, Washington, the com- pany began in 1938 when Lloyd and Mary Anderson formed a cooperative to share outdoor gear with some of their mountain-climbing friends. A total of 23 people each paid $1 to join. Fast-forward 75 years, and the retailer is the nation’s largest consumer coop- erative. Consumers join as members (currently $20 for a lifetime membership) and receive 10 percent back on purchases they make in stores or online as part of an annual dividend. REI has more than

6  million active members and more than $2.4 billion in annual revenues.

The company’s employee-friendly culture is not new. In the early 1960s, the company began providing employees and their families with health care benefits and implemented a profit-sharing program soon after. By the mid-1970s, REI launched a philanthropy pro- gram to support outdoor recreation, donating more than $40 million to date to projects on public lands. More than 20 years ago, in 1996, REI launched the largest outdoor gear and apparel store on the Internet. And REI is one of only 12 companies that have made Fortune’s “100 Best Companies to Work For” list every year since it started back in 1988.

Several years ago, REI started giving employees two “Yay Days” on an annual basis. A “Yay Day” is an extra paid day off when employees are invited to try something new, challenge themselves in a favorite ac- tivity, or work on an outdoor stewardship project. This additional paid time off allows staffers to reconnect with the outdoors in an effort to gain knowledge they can share with REI customers. And sharing their “Yay Day” experiences on social media helps employees provide REI with great marketing exposure to attract more job seekers and potential customers to the com- pany and its employee-friendly culture. More than 1,200 photos were posted on Instagram tagged #REIYayDay.

Unlike some companies, REI works hard to retain its employees. The company would like employees to spend their entire working career with the organization. In 2015, REI funded $60 million in incentive plans and profit-sharing contributions, giving every eligible employee an automatic 5 percent company retirement contribution into their 401(k) accounts, along with an additional 7 percent profit-sharing contribution.

Case

Case 1.1: REI Tells Employees to Go Outside

30 Part One The Field of Organizational Behavior

These business strategies all support the company’s core mission of providing more people with greater ac- cess to the outdoors while promoting environmental and social stewardship. REI also gives back to the out- door community by investing millions of dollars in more than 300 nonprofit organizations around the country. The company’s CEO, Jerry Stritzke, says REI’s success reflects the appeal of life outdoors. “We have focused hard on giving our members great gear and expertise,” he says, “and we are saying a big thank you by investing more in the work our nonprofit part- ners do for our members and the outdoor community.”

Questions 1. How does REI leverage its social and environmental

stewardship to attract and retain top employees? 2. Explain how REI uses social media to communicate

its organizational culture to employees, co-op mem- bers, and potential new hires.

3. Why does giving “Yay Days” to employees help support REI’s overall business strategies?

Sources: Company website, “About REI” and “REI Membership,” https:// www.rei.com, accessed April 27, 2016; “REI: Celebrating 75 Years of Ad- venture, Employee Perspectives,” YouTube, http://www.youtube.com, ac- cessed April 27, 2016; “100 Best Companies to Work For: #26: Recreational Equipment, Inc.,” Fortune, http://fortune.com, accessed April 27, 2016; “Recreational Equipment, Inc.,” Great Place to Work, http://re- views.greatplacetowork.com, accessed April 27, 2016; Katie Boué, “Yay for Corporate Culture,” Outdoor Industry Association, https://outdoorin- dustry.org, accessed April 27, 2016; Janet I. Tu, “REI Reaches New Peak in Revenue and Dividends,” Seattle Times, March 29, 2016, http://www.se- attletimes.com; Nathan Layne, “U.S. Holiday Sales on Track amid Online Boost,” Reuters, November 30, 2015, http://www.reuters.com; Molly Brown, “REI’s Move to Close Black Friday Pays Off with 20 Percent Hike in Online Traffic,” Geekwire, November 30, 2015, http://www.geekwire.com; Lindsey Rupp, “Holiday Weekend Shoppers Skip the Store and Buy On- line,” Bloomberg, November 28, 2015, http://www.bloomberg.com; Matt Kates, “Banning Black Friday: REI’s Decision to Opt Out (and Why Others May Want to Follow),” Forbes, November 16, 2015, http://www.forbes. com; Andrew Burger, “REI’s Co-op Business Model Produces Record Results,” Triple Pundit, April 15, 2015, http://www.triplepundit.com.

31

To succeed in an increasingly global economy, managers need to understand that culture has a profound effect on behavior within organizations. A country’s culture affects how organizational transactions are conducted (e.g., marketing, hiring practices, reward pro- grams, supervisor–employee interactions, and use of technology). Knowledge of and flex- ibility regarding how to work productively with individuals from different backgrounds have become important factors for managers to consider as part of their daily work activi- ties. Learning to operate in a world influenced by cultural differences is a mandatory requirement for effective management in today’s global business environment.1

In addition to national culture, the culture within an organization also exerts influence over employee behavior. When a person moves from one firm to another or even from one department to another in the same company, he or she senses and experiences differ- ences between the environments. Attempting to adjust to these different environments involves learning new values, processing information in new ways, and working within an established set of norms, customs, and rituals. The adaptation to new environments is becoming a common occurrence and is likely to remain so well into the 21st century. Although adaptation is difficult, it can be better understood by learning about organiza- tional culture.2

This chapter begins by discussing how international cultures and societal values can influence managerial actions and employee behaviors. It then discusses organizational cul- ture and its effects, and how organizations sustain their culture through socialization. Cultural anthropologists propose that a national culture is learned, it is shared, and it defines the boundaries of different groups and various aspects of a country’s culture (e.g., aesthetics, religion, attitudes, legal factors, language, and education) that are interrelated.3 Thus, a national culture is the sum total of the beliefs, rituals, rules, customs, artifacts, and institutions that characterize the population of a nation.

Nation states such as Brazil, Russia, India, China, and the United States are created politically. They usually contain more than one culture. For example, Canada’s population is comprised of several cultures—Anglo, Quebecers (French-speaking), Asian, African,

national culture The sum total of the beliefs, rituals, rules, customs, artifacts, and institutions that characterize the population of a nation.

International and Organizational Culture Learning Objectives

After completing Chapter 2, you should be able to:

Give examples of how culture and values influence workplace behavior.

Describe the key components and levels of organizational culture.

Explain the various methods that managers use to influence culture change.

Identify ways in which socialization sustains organizational culture.

Compare the characteristics of effective socialization.

C H A P T E R T W O

© Klaus Tiedge/Getty Images, RF

32

Arab, and Amerindian. Iraq consists of Kurdish and Arab cultural groups—Shiites and Sunnis (different sects of the Islam religion).4

The values, norms, customs, and rituals of cultures do not simply appear. They take an evolutionary course and are influenced by politics, religion, language, and other cultural aspects. Individuals and groups in the society play a role in the course that a culture takes over time.

National Culture and Values Influence Workplace Behavior Organizations are able to operate efficiently only when shared values exist among the employees. Values are the conscious, affective desires or wants of people that guide behav- ior. An individual’s personal values guide behavior on and off the job. If a person’s set of values is important, it will guide the person and also enable the person to behave consis- tently across situations.

Values are a society’s ideas about what is right or wrong, such as the belief that hurt- ing someone physically is immoral. Values are passed from one generation to the next and are communicated through education systems, religion, families, communities, and organizations.5

One useful framework for understanding the importance of values in organizational behavior is provided by Hofstede. The result of his research on 116,000 people in

values The guidelines and beliefs that a person uses when confronted with a situation in which a choice must be made.

Reality Check How much do you know about culture?

1. An organization (also a smaller unit such as a department) has how many cultural levels? a. One b. Two c. Three d. Four

2. What process should a manager be familiar with in terms of transmitting cultural signals? a. Reorganization b. Delegation c. Reverse engineering d. Socialization

3. Which of the following company cultures include giving its customers a “Wow!” experience through service? a. IBM b. Zappos c. The Body Shop d. Facebook

4. True or false: Workplace spirituality is considered to be the same as religion. a. True b. False

5. A country with a high level of uncertainty avoidance is . a. France b. United States c. Japan d. China

Chapter 2 International and Organizational Culture 33

50   countries has been a four–value dimension framework.6 From this initial research, Hof- stede identified four value dimensions by which cultures can differ: (1) power distance, (2) uncertainty avoidance, (3) individualism, and (4) masculinity. A fifth dimension, long- term orientation, was added as a result of subsequent research.

Power distance is the level of acceptance by a society of the unequal distribution of power in organizations. The extent to which unequal power is accepted by subordinates in organizations differs across countries. In countries in which people display high power distance (e.g., Mexico), employees acknowledge the boss’s authority and typically follow the chain of command. This respectful response results, predictably, in more centralized authority and structure. In countries where people display low power distance (e.g., Norway), superiors and subordinates are likely to regard one another as equal in power, resulting in a more decentralized and less rigid management structure and style.

The concept of uncertainty avoidance refers to the extent to which people in a society feel threatened by ambiguous situations. Countries with a high level of uncertainty avoid- ance (e.g., France) tend to have specific rules, laws, and procedures. Managers in these countries tend to have a propensity for low-risk decision making, and employees exhibit little aggressiveness. In countries with lower levels of uncertainty avoidance (e.g., Hong Kong), organizational activities are less formal, more risk taking occurs, and there is high job mobility.

Individualism refers to the tendency of people to fend for themselves and their family. In countries that value individualism (e.g., the United States), individual initiative and achievement are highly valued and the relationship of the individual with organizations is one of independence.

In many Arab countries, where low individualism exists, one finds tight social frame- works and emotional dependence on belonging to the organization. These countries emphasize collectivism. Japan is a collectivist country in which the will of the group rather than the individual predominates. Collectivist societies value harmony, whereas individu- alistic cultures value self-respect and autonomy.

Masculinity refers to the presence of traditionally “masculine” values—assertiveness and materialism. In comparison, femininity emphasizes “feminine” values—a concern for relationships and the quality of life. In highly masculine societies (e.g., Switzerland), one finds considerable job stress and conflict between the job and family roles. In countries with low masculinity (e.g., Denmark), one finds less conflict and stress.

Several years after Hofstede’s original research was conducted, Chinese scholars identi- fied a fifth cultural dimension. They administered the Chinese Value Survey (CVS) to Chinese students in 22 countries across five continents. Long-term orientation, the dimen- sion identified, is defined as the degree to which members of a given culture value persis- tence, thrift (savings), and order in relationships.7 It has been argued that cultures with a long-term orientation are more likely to experience stronger economic growth and entre- preneurial activity. The opposite pole of this dimension, short-term orientation, is when a culture values respect for tradition, the exchange of favors and gifts, protecting one’s “face” (i.e., avoiding shame), and steadiness and stability.8 Both poles of this dimension can be traced to the teachings of the Chinese philosopher, Confucius; however, this dimension also applies to non-Confucian-influenced countries.9

The results of Hofstede’s research are shown in what he calls maps of the world. The maps reveal at a glance the similarities and differences in work values across nations. Exhibit 2.1 presents a sample of Hofstede’s research findings. The five cultural value dimen- sions are interdependent and complex.10 Consequently, the effects of values on workplace productivity, attitudes, and effectiveness are difficult to determine. Managers must be

34 Part One The Field of Organizational Behavior

cautious about grossly overgeneralizing. For example, not all Americans value individual- ism, masculinity, a low power distance, and moderate uncertainty avoidance.

A society’s values have an impact on organizational values because of the interactive nature of work, leisure, family, and community.11 American culture has historically given work a central place in the constellation of values. Work remains a source of self-respect and material reward in the United States. Work also serves as a place to achieve personal growth and fulfillment. As the demographics and makeup of the workforce become more culturally diverse, it will become extremely important for managers to learn about the value system and orientations of the changing workforce.12 Does the value mix change or is it different for African Americans, Mexican Americans, Asian Americans immigrants, and others who are increasing in numbers in the society and in the workforce? This is a question that researchers and managers will need to explore further in the next few decades.

Based on their studies and review of the literature, scholars such as Hofstede believe that managers’ national origin significantly affects their views and style of managing. Just as there’s an American bias in some managerial approaches, there’s a Brazilian, Chinese, or Indian bias in other management practices. No nation, group of managers, or set of researchers is perfectly free of any bias or ethnocentric tendencies. Cross-cultural under- standing will come about only if managers and researchers are willing to increase their global perspectives and knowledge bases about diverse groups of employees. Global approaches to managing organizational behavior will eventually become a top priority around the world. The era of domestically bound approaches to managing what occurs in organizations is ending.

Organizational Culture Matters When people walk into a Starbucks coffeehouse, call the customer service line of online retailer Zappos, or stop by to eat at a McDonald’s restaurant, they notice that there’s something different about each of these organizations. Starbucks’s associates and baristas go the extra mile to connect with customers and fulfill the company’s mission “to inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.”13 One of Zappos’s core values is to “deliver WOW through service,” and that’s what the customer service representa- tives try to do each time they talk with a customer.14 With more than 36,000 restaurants in more than 100 countries, McDonald’s has enjoyed considerable success as a result of its strong culture and unwavering focus on quality, service, and cleanliness.15 Although culture can’t be seen, it can be sensed or felt through employees’ attitudes, emotions, and perceptions. Organi- zational culture is like an invisible glue that holds an organization together.

EXHIBIT 2.1 Sample of Hofstede’s Research on Cultural Values

Sources: Adapted from “Cultural Tools,” www.geert-hofstede.com, accessed February 25, 2016; Geert Hofstede and Michael Harris Bond, “The Confucius Connection: From Cultural Roots to Economic Growth,” Organizational Dynamics 16, no. 4 (1988), pp. 4–21.

Hofstede Dimension High Medium Low

Individualism United States Austria Indonesia Power distance Malaysia Italy Israel Uncertainty avoidance Argentina Australia Hong Kong Masculinity Japan Brazil Sweden Long-term orientation China Netherlands Philippines

Chapter 2 International and Organizational Culture 35

Organizational Culture Defined Despite being an important concept, organizational culture as a perspective to understand the behavior of individuals and groups within organizations has its limitations. First, it is not the only way to view organizations. We have already discussed the Systems Theory without even mentioning culture. Second, like so many concepts, organizational culture is not defined the same way by any two popular theorists or researchers. Some of the defini- tions of culture are as follows: ∙ Symbols, language, ideologies, rituals, and myths.16 ∙ Organizational scripts derived from the personal scripts of the organization’s founder(s)

or dominant leader(s). ∙ Is a product; is historical; is based upon symbols; and is an abstraction from behavior

and the products of behavior.17

Organizational culture is what the employees perceive and how this perception creates a pattern of beliefs, values, and expectations. Edgar Schein defined organization culture as:

A pattern of basic assumptions—invented, discovered, or developed by a given group as it learns to cope with the problems of external adaptation and internal integration—that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.18

The Schein definition points out that culture involves assumptions, adaptations, percep- tions, and learning. He further contends that an organization’s culture such as that of Samsung, Citigroup, or Singapore Airlines has three levels. Level one includes artifacts that are visible but not often interpretable. A company’s annual report, approved dress code, and office layout are examples of artifacts within an organization. At level two are values or things that are important to people. Values are conscious, affective desires or wants. For example, a company’s plan to become more environmentally friendly in its day-to-day operations would occur at level two. At level three are the basis or unconscious assumptions that people make that guide their behavior. Included in this level are assump- tions that tell individuals how to perceive, think about, and feel about work, performance goals, human relationships, and the performance of colleagues. For example, if a company decides it needs to be more environmentally friendly, the unconscious assumption about that desire is that the company must also maintain profitability while trying to become “green.” Exhibit 2.2 presents the three levels of organizational culture.

Asking Twitter or IKEA employees about their firm’s organizational culture is not likely to reveal much. A person’s feelings and perceptions are usually kept at the subconscious level. The feelings one has about shopping at TJMaxx or at Macy’s are often difficult to express. The culture of a firm can be inferred by looking at those aspects that are perceptible. For example, four specific manifestations of culture at Disney are shared things (wearing the Disney uniform to fit the attraction), shared sayings (a “Mickey” is a compliment for doing a good job), shared behavior (smiling at customers and being polite), and shared feelings (taking pride in working at Disney). Such a pervasive culture is even more impressive when considering that Disney World in Florida employs more than 74,000 workers with an annual payroll of $2.4 billion, making it the largest single-site employer in the United States.19

Organizational Culture and Its Effects Because organizational culture involves shared expectations, values, and attitudes, it exerts influence on individuals, groups, and organizational processes. For example, members are influenced to be good citizens and to go along. Thus, if quality customer service is important

36 Part One The Field of Organizational Behavior

in the culture, then individuals are expected to adopt this behavior, and if adhering to a spe- cific set of procedures in dealing with customers is the norm, then this type of behavior would be expected, recognized, and rewarded.

Researchers who have studied the impact of culture on employees indicate that it pro- vides and encourages a form of stability.20 Organizational identity provided by an organiza- tion’s culture instills a feeling of stability. Disney is able to attract, develop, and retain top-quality employees because of the firm’s stability and the pride of identity that go with being a part of the Disney team.

It has become useful to differentiate between strong and weak cultures.21 A strong cul- ture is characterized by employees sharing core values and agreeing to the way things should be done within the organization. The more employees share and accept the core values, the stronger the culture is and the more influential it is on behavior. Religious orga- nizations and cults may be said to have strong cultures. Toyota and other Japanese firms have strong, influential cultures. Weak cultures are those in which members of the organi- zation do not share a core set of values, and as such, they are less likely to perform tasks in a manner that is consistent across the organization.

A U.S. company with a famously strong and influential culture is Southwest Airlines. Herb Kelleher, one of the founders and the former CEO, is largely responsible for the strong culture. Along with Roland King, Kelleher rather impulsively decided to start an airline in 1971.22 Kelleher helped create a culture of commitment by pitching in to help employees as he traveled around doing business. Stories about Kelleher’s pitching in are, even after his departure, still legendary at Southwest. One story tells of how Kelleher sat next to mail-room employees through one night and later into the morning doing the same work they did. He would often get off a plane, go to the baggage center, and pitch in handling bags. The day before Thanksgiving one year, which is the busiest airline travel day, Kelleher worked in bag- gage all day despite a pouring rain.23 At Southwest today, employees are hired if they possess the company’s core values, known as the “Southwest Way.” These values consist of three important elements:24

1. The warrior spirit: Work hard and desire to be the best. 2. A servant’s heart: Put others first and treat them with respect. 3. A fun-loving attitude: Enjoy your work and be a passionate team player.

EXHIBIT 2.2 Three Levels of Organizational Culture

Source: Adapted from E. H. Schein, “Coming to a New Awareness of Organizational Culture,” Sloan Management Review 25, no. 2 (Winter 1984), pp. 3–16.

Level 1: Visible Artifacts Office layout, dress code,

written documents.

Level 2: Values “We need to become a ‘green’

company.”

Level 3: Unconscious Assumptions

“But we have to be profitable.”

Chapter 2 International and Organizational Culture 37

Once the right people are hired, Southwest trains them how to do their jobs. The close- ness of the employees at Southwest is expressed as having fun and working hard. Fun involves flight attendants singing safety instructions to passengers and pilots telling jokes over the PA system. On some flights, attendants don masks of cartoon characters and entertain both children and parents. Making customers feel comfortable and helping them laugh are considered important at Southwest Airlines. The strong culture created by the company’s founders is still perpetuated today by the employees. They make it a distinct culture that influences everyone within the firm.25

Popular best-selling books provide anecdotal evidence about the powerful influence of culture on individuals, groups, and processes. Heroes and stories about firms are interest- ingly portrayed.26 However, additional theoretically based and empirically valid research on culture and its impact needs to be conducted. Questions remain about the measures used to assess culture, and definitional problems have not been resolved. Researchers have also been unable to show that a specific culture contributes to positive effectiveness in com- parison to less effective firms with another cultural profile. Comparative cultural studies are needed to better understand how culture impacts behavior.

Creating Organizational Culture Can a culture be created that influences behavior in the direction management desires? This is an intriguing question. Many years after its founding in Birmingham, UK, in 1824, Cadbury created a corporate culture that was linked to the Quaker beliefs of the Cadbury family.27 One of the hallmarks of the culture was how it preserved positive labor– management relations by treating employees like a family.28

Similar to the case at Cadbury, many leaders and founders of organizations believe they can create specific types of organizational cultures, including those focusing on cus- tomer service, ethical, and diversity cultures. Here are some examples of each type of specific culture: Customer-Service Culture Founded in 1901 by John W. Nordstrom, a Swedish immigrant who settled in Seattle, Nordstrom’s 116-year-old store culture rests on the principle that the customer should be offered the best possible service, selection, quality, and value.29 The company relies on experienced, acculturated “Nordies” to direct new employees on how to provide superb customer service.30

Nordstrom’s unique approach to customer service is legendary in the retail industry: ∙ A customer asked to see a particular pair of shoes, and was pleasantly surprised when

the salesperson brought out the shoes—plus five more pairs of similar shoes. When asked why he brought out five additional pairs, the salesperson explained that he wanted to provide the customer with more options.

∙ A Nordstrom customer lost the diamond out of her wedding ring while shopping at the store. When a store security employee saw her crawling around under clothing racks, he asked if he could offer assistance. When they couldn’t find the gem, the Nordstrom employee asked building-services workers to get involved. They opened up bags from the store’s vacuum cleaners and found the missing diamond. The founder started Nordstrom’s commitment to customers, and today’s employees

carry on this dedication. At Nordstrom the culture has evolved over time and is now embedded in the cultural fabric of the firm. Rituals, history, humor, and common sense have resulted in Nordstrom’s being recognized as a leader in how to treat customers. The culture reinforces this leadership role every single day.31

38 Part One The Field of Organizational Behavior

Ethical Culture Companies such as Johnson & Johnson, The Body Shop, and Patagonia have established credos or missions based on values and ethical principles that serve to project to others what they believe and to guide behavior. Research suggests that when ethics codes such as these are developed and enforced within an organization, they have a positive impact on job satisfaction, esprit de corps, and organizational commitment.32 The Tylenol incident more than 30 years ago and Johnson & Johnson’s proactive, ethical response still serve as a guide for other leaders and organizations that confront crises or difficult business deci- sions that have ethical implications. Patagonia is an example of an environmentally ori- ented firm that has achieved economic success while staying close to its core cultural values of preserving the environment. The nearby OB Matters presents excerpts of the credos of these three firms.

Diversity Culture One organization that is consistently in the Top 50 Best Companies to Work for Minorities is PepsiCo. Indra Nooyi, chief executive officer since 2006, leads this global food and beverage company with more than 271,000 employees in 200 countries and more than $66 billion in revenues in 2015.33 Given that the firm markets products to a widely diverse set of customers, PepsiCo believes its commitment to diversity makes it more competitive and successful: “Diversity isn’t just the right thing to do. It’s the right thing to do for our business. We’ve made it our commitment to make diversity and inclusion a way of life at PepsiCo.” The com- pany supports over 1,000 community organizations that promote diversity initiatives, devel- ops long-term relationships with minority and female suppliers, and creates an internal environment of inclusion for its minority and female employees. The following is a sample of the current diversity initiatives under way at PepsiCo:34

∙ Executives are dedicated to managing diversity within operating divisions. ∙ Multiyear strategic plans and goals are aimed at diverse recruitment, improved retention,

and fostering a more inclusive culture. ∙ Annual performance reviews rate managers on inclusion-related goals. ∙ External diversity advisory boards advise senior management at PepsiCo on diversity issues. ∙ Training is provided for employees to work in an inclusive environment. ∙ Networks are used to mentor and support diverse employees. ∙ Purchasing emphasized from women- and minority-owned suppliers and vendors.

Cultures seem to evolve over time, as they have at Zappos, Starbucks, McDonald’s, Disney, Nordstrom, Johnson & Johnson, The Body Shop, Patagonia, and PepsiCo. Schein describes this evolution as follows:

The culture that eventually evolves in a particular organization is … a complex outcome of external pressures, internal potentials, responses to critical events, and, probably, to some unknown degree, chance factors that could not be predicted from a knowledge of either the environment or the members.35

There are also times when leaders attempt to create or maintain a positive culture with the goal of increasing teamwork, information sharing, and employee morale.36 Tony Hsieh, CEO of Zappos (owned by Amazon), has created a positive, fun, and high- performance culture at the online retailer. He states: “At Zappos, our belief is that if you get the culture right, most of the other stuff—like great customer service, or building a great long-term brand, or passionate employees and customers—will happen naturally on its own.”37 Hsieh creates and maintains a positive culture by hiring only those individuals

39

who fit well with Zappos’s unique culture and by training all new hires in a similar man- ner, regardless of whether they are an accountant, lawyer, software developer, or a repre- sentative of the Customer Loyalty Team. As Exhibit 2.3 illustrates, Zappos’s culture is built on 10 core values.38

Related to the concept of a positive culture is that of a supportive organizational climate (SOC). SOC can be defined as the amount of perceived support employees receive from their co-workers, supervisor, and other departments that helps them successfully perform their job duties.39 Although research has not consistently found a direct link between SOC and individual performance, other research has reported that organizations with an SOC are more likely to have employees that are satisfied with their jobs and committed to the organization.40

supportive organizational climate The amount of perceived support employees receive from their co- workers, supervisor, and other departments that helps them successfully perform their job duties.

COMPANY CREDOS GUIDE BUSINESS PRACTICES

Johnson & Johnson, Our Credo We believe our first responsibility is to the doctors, nurses, and pa- tients, to mothers and fathers and all others who use our products and services. In meeting their needs, everything we do must be of high quality. We must constantly strive to reduce our costs in order to main- tain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportu- nity to make a fair profit.

We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly, and safe. We must be mindful of ways to help other employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, devel- opment, and advancement for those qualified. We must provide com- petent management, and their actions must be just and ethical.

THE BODY SHOP, OUR COMMITMENT

Enrich Our People We celebrate the diversity of people and reject a stereotype of beauty. Paying fair prices to our community trade partners is central to every- thing we do. We campaign for what’s right. We help our employees grow as people.

Enrich Our Products Our products nourish, enrich, and uplift but never make false promises and are never tested on animals. Our products are inspired by the di- versity of nature and customs of people around the world.

Enrich Our Planet The world is our source of beauty, but it’s facing devastation. We ac- tively help enrich the biodiversity where we grow our ingredients. We act and campaign to enrich and support threatened areas of outstand- ing natural value to the planet.

Patagonia, Our Reason for Being Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.

Patagonia grew out of a small company that made tools for climb- ers. Alpinism remains at the heart of a worldwide business that still makes clothes for climbing—as well as for skiing, snowboarding, surf- ing, fly fishing, paddling, and trail running. These are all silent sports. None requires a motor; none delivers the cheers of a crowd. In each sport, reward comes in the form of hard-won grace and moments of connection between us and nature.

Our values reflect those of a business started by a band of climb- ers and surfers, and the minimalist style they promoted. The ap- proach we take towards product design demonstrates a bias for simplicity and utility.

For us at Patagonia, a love of wild and beautiful places demands participation in the fight to save them, and to help reverse the steep decline in the overall environmental health of our planet. We donate our time, services, and at least 1% of our sales to hundreds of grass- roots environmental groups all over the world who work to help reverse the tide.

We know that our business activity—from lighting stores to dye- ing shirts—creates pollution as a by-product. So we work steadily to reduce those harms. We use recycled polyester in many of our clothes and only organic, rather than pesticide-intensive, cotton. Staying true to our core values during thirty-plus years in business has helped us create a company we’re proud to run and work for. And our focus on making the best products possible has brought us success in the marketplace.

Sources: Company websites: “Our Credo,” http://www.jnj.com; “Our Commit- ment,” http://www.thebodyshop.com; “Patagonia’s Mission Statement,” http://www.patagonia.com, accessed February 25, 2016; Marty Parker, “Credo Imperative in Corporate Culture,” Financial Post, http://business. financialpost. com, accessed February 25, 2016; Raymond E. Miles, Charles C. Snow, John A. Mathews, Grant Miles, and Henry J. Coleman, Jr., “Organizing in the Knowledge Age: Anticipating the Cellular Form,” The Academy of Management Executive, November 1997, pp. 42–45.

O B M A T T E R S

40 Part One The Field of Organizational Behavior

Influencing Culture Change Only a limited amount of research has been done on cultural change. The research themes that discuss how to bring about significant change include the following: ∙ Cultures are so elusive and hidden that they cannot be adequately diagnosed, managed,

or changed. ∙ Many leaders believe they can have a major impact on an already-established organiza-

tional culture, but such cultural change requires a major commitment of resources and an influential and powerful leader.

∙ Because it takes difficult techniques, rare skills, and considerable time to understand a culture and then additional time to change it, deliberate attempts at culture change are not really practical.

∙ Cultures sustain people throughout periods of difficulty and serve to ward off anxiety. One of the ways they do this is by providing continuity and stability. Thus, people will naturally resist change to a new culture.41

These four views suggest that managers who are interested in producing cultural changes face a daunting challenge. However, courageous managers can and do intervene and alter their organization’s culture. Possible intervention strategies include (1) changing people’s behavior, (2) justifying the new behavior, (3) using communications to support and motivate the new behavior, (4) hiring and socializing new members of the organiza- tion, and (5) removing members who deviate from the organization’s culture.42

A considerable body of knowledge suggests that one of the most effective ways of changing people’s beliefs and values is to first change their behavior.43 However, behavior change does not necessarily produce culture change unless supported by justification. Behavioral compliance does not mean cultural commitment. Managers must get employees to see the inherent worth in behaving in a new way, that is, justify the new behavior. Typi- cally, managers use communications to motivate and justify the new behaviors. Cultural communications can include announcements, e-mails, memos, rituals, stories, dress, and various other forms of communications.

Another set of interventions includes the socialization of new members and the removal of existing members who deviate from the culture. Each of these interventions must be done after performing careful evaluation of the organization’s culture. Although some indi- viduals may not perfectly fit an organization’s culture, they may possess exceptional skills and talents. Weeding out cultural misfits might be necessary, but it should be done only after weighing the costs and benefits of losing talented performers who deviate from the core cultural value system.

EXHIBIT 2.3 Zappos’ 10 Core Values

Source: Company website, “Zappos Family Core Values,” www.zappos.com, accessed February 25, 2016.

1. Deliver WOW through service. 6. Build open and honest relationships 2. Embrace and drive change. with communication. 3. Create fun and a little weirdness. 7. Build a positive team and family spirit. 4. Be adventurous, creative, and 8. Do more with less. open-minded. 9. Be passionate and determined. 5. Pursue growth and learning. 10. Be humble.

Chapter 2 International and Organizational Culture 41

Socialization Sustains the Culture Socialization is the process by which organizations bring new employees into their culture. There is a transmittal of values, assumptions, and attitudes from the older to the new employees. Referred to as person–organization (PO) fit, an analysis of 25 research studies on the topic found that employees who fit well with an organizational culture were more likely to be satisfied with their jobs, co-workers, and supervisors; be more committed to the organization; and be less likely to quit.44 Socialization attempts to make this “fit” more comfortable by reducing incoming employees’ uncertainty about their new jobs and roles for the benefit of both employees and the firm.

Two ways of analyzing how socialization works in organizations are the process and career stage models. The process model of organizational socialization presented in Exhibit 2.4 illus- trates how a new employee, through a combination of seeking information and experiencing socialization tactics from the organization, can adjust to his or her role and gain social accep- tance. Once adjustment and acceptance are achieved, the new employee may experience a variety of positive outcomes such as better job performance and perceived fit with the organi- zation, high commitment and job satisfaction, and lower intentions to leave the organization.

As the model in Exhibit 2.4 suggests, employees are more likely to adjust to the new job and be accepted socially if they take a proactive approach to learning about how things work, who makes the decisions, what the organization values, and so on. Also, new employees benefit from a well-organized company-sponsored socialization program. There are several ways in which organizations can structure the socialization process for new employees, including exposing them to a common set of experiences (e.g., luncheons, ori- entations, speakers, facility tours, etc.); establishing a fixed sequence of steps or timetable before the employee can begin the new job; and, assigning an experienced employee to serve as a role model or mentor for the newcomer.45

The opposite approach to socializing new employees is much less structured and infor- mal, whereby a new employee assumes the new job without meeting other new employees, attending social events, or being assigned to a mentor who can show him or her the ropes. This “sink or swim” approach may work but often results in poorly adjusted new employees

socialization processes The activities by which an individual comes to appreciate the values, abilities, expected behaviors, and social knowledge essential for assuming an organiza- tional role and for par- ticipating as an organization member.

person–organization fit The extent to which a person’s values and per- sonality are perceived to fit the culture of the organization.

EXHIBIT 2.4 A Model of the Process of Organizational Socialization

Sources: Adapted from Talya N. Bauer, Todd Bodner, Berrin Erdogan, Donald M. Truxillo, and Jennifer S. Tucker, “Newcomer Adjustment during Organizational Socialization: A Meta-analytic Review of Antecedents, Outcomes, and Methods,” Journal of Applied Psychology 92, no. 3 (2007), pp. 707–21; Blake E. Ashforth, David M. Sluss, and Alan M. Saks, “Socialization Tactics, Proactive Behavior, and Newcomer Learning: Integrating Socialization Models,” Journal of Vocational Behavior 70, no. 3 (2007), pp. 447–62; Alan M. Saks, Krista L. Uggerslev, and Neil E. Fassina, “Socialization Tactics and Newcomer Adjustment: A Meta-analytic Review and Test of a Model,” Journal of Vocational Behavior 70, no. 3 (2007), pp. 413–46; Blake E. Ashforth and Alan M. Saks, “Socialization Tactics: Longitudinal Effects on Newcomer Adjustment,” Academy of Management Journal 39, no. 1 (1996), pp. 149–78.

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42 Part One The Field of Organizational Behavior

who may end up being mentored by the “wrong employee,” getting frustrated, or quitting the organization in a short period of time. Such turnover has a negative effect on both the employee and organization, and it can often be prevented by a well-organized socialization program that helps new employees adjust successfully.

Not only for newcomers, the socialization process also goes on throughout an individual’s career. As the needs of the organization change, for example, its employees must adapt to those new needs; that is, they must continue to be socialized. But even as we recognize that socializa- tion is ongoing, we must also recognize that it is more important at some times than at others. For example, socialization is most important when an individual first takes a job or takes a dif- ferent job in the same organization. The socialization process occurs throughout various career stages, but individuals are more aware of it when they change jobs or organizations.46

Newcomers at Nordstrom encounter the culture norms at the initial employee orienta- tion meeting. They are given a five-by-eight-inch card that reads:47

Welcome to Nordstrom: We’re glad to have you with our company. Our number-one goal

is to provide outstanding customer service. Set both your personal and professional goals

high. We have great confidence in your ability to achieve them.

The career stage model of socialization coincides generally with the stages of a career. Although researchers have proposed various descriptions of the stages of socialization,48 three stages sufficiently describe it: (1) anticipatory socialization, (2) accommodation, and (3) role management.49 Each stage involves specific activities that, if undertaken properly, increase the individual’s chances of having an effective career. Moreover, these stages occur continuously and often simultaneously.

Anticipatory Socialization The first stage involves all those activities the individual undertakes before entering the organization or taking a different job in the same organization. The primary purpose of these activities is to acquire information about the new organization and/or new job.

People are vitally interested in two kinds of information before entering a new job or organization. First, they want to know as much as they can about what working for the organization is really like. This form of learning is actually attempting to assess the firm’s culture. Second, they want to know whether they are suited to the jobs available in the organization. Individuals seek out this information with considerable effort when they are faced with the decision to take a job, whether it is their first one or one that comes along by way of transfer or promotion. Although people continually receive information about this or that job or organization, they are more receptive to such information when faced with the necessity to make a decision.

Accommodation The second stage of socialization occurs after the individual becomes a member of the organization. During this stage, the individual sees the organization and the job for what they actually are, while attempting to become an active participant in the organization and a competent performer. This breaking-in period is ordinarily stressful for the individual because of anxiety created by the uncertainties inherent in any new and different situation. However, individuals who experience realism and congruence during the anticipatory stage have a less stressful accommodation stage.

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44 Part One The Field of Organizational Behavior

In working with younger or new employees, a mentor can satisfy his or her need to have an influence on another employee’s career. Some organizations use mentoring as a means of developing leaders. The nearby OB Matters discusses eight applied principles of mentoring that can work on the job or in the community.

Research has indicated that a majority of managers report having had at least one men- toring relationship during their careers.52 Companies also see the value in mentoring, evi- denced by the fact that 71 percent of Fortune 500 companies report they have mentoring programs.53 Allen and Eby define mentoring as a unique, reciprocal, learning partnership between two people that involves psychosocial and career support.54 Kram identified the career support functions as sponsorship, exposure and visibility, coaching, production, and challenging assignments and the psychological and social functions as role modeling, acceptance and confirmation, counseling, and friendship.55

Although mentoring functions can be important in socializing a person, it is not clear that a single individual must play all of these roles. New employees can obtain valuable career and psy- chosocial influences from a variety of individuals—managers, peers, trainers, and personal friends. At KPMG, for example, each new employee is assigned a “transitional coach” to help him or her adjust to working at the company. To reinforce the importance of mentoring at KPMG, mentors and mentees receive training, being a mentor becomes part of performance reviews, and the best mentors are recognized formally by senior managers at an awards dinner.56 Currently, there are 12,000 mentoring relation- ships out of a total of 23,000 employees in the United States.57

Most mentor–mentee relationships develop over time. There appear to be several distinct phases of mentor–mentee relation- ships. Exhibit 2.6 presents a four-phase model proposed by Kram. The reasons that cause movement in the relationship are described as turning points. Initiation, cultivation, separation, and redefinition cover general time periods of six months to more than five years.

The benefits that result from mentoring can extend beyond the individuals involved. Mentoring can contribute to employee motivation, retention, and the cohesiveness of the organiza- tion.58 The organization’s culture can be strengthened by pass- ing the core values from one generation to the next.

TIPS FOR SUCCESSFUL MENTORING PROGRAMS

A number of guidelines that can be useful in mentoring programs include:

1. Do not force mentoring relationships, but encourage leaders/managers to serve as mentors.

2. Train mentors in how to be effective.

3. Include in the firm’s newsletter or in other forms of mass communication (print and electronic) an occasional story of how mentoring helped an employee or executive succeed.

4. Inform employees about the benefits and difficulties of mentor relationships with individuals of different gender, ages, race, and physical abilities.

5. Make sure there is diversity among the mentors. All mentors should be trained in dealing with diversity.

Information You Can Use

EXHIBIT 2.5 A Checklist of Effective Socialization Practices

Socialization Stage Practices

Anticipatory socialization 1. Recruitment using realistic job previews 2. Selection and placement using realistic career paths 3. Provide detailed information about the organization:

history, founders, milestones, success stories

Accommodation socialization 1. Tailor-made and individualized orientation programs 2. Social as well as social skills training 3. Supportive and accurate feedback 4. Challenging work assignments 5. Demanding but fair supervisors

Role management socialization 1. Provision of professional counseling 2. Adaptive and flexible work assignments

45

HOW TO BECOME A GREAT MENTOR Mentoring is a set of skills for a special relationship, sometimes more honest and more intense than a marriage. To learn more about men- toring principles, Frank Horton is a good place to start. Frank was the Director of Training at a unique nonprofit employment training pro- gram called STRIVE (Support and Training Results in Valuable Employ- ment), based in East Harlem in New York City. Frank mentored thousands of women and men—many of whom have never held a job. Frank’s unique methods have been widely celebrated by The New York Times, The Wall Street Journal, and two profiles on CBS-TV’s “60 Minutes.” Here are Frank’s tips on how to have one of the greatest relationships in life: mentoring.

1. The most valuable technique? It’s to understand how much fear the person has. What are they afraid of? Authority figures? Their own inadequacy? That they don’t wear the right clothes or have the right background? I determine who they are by what they fear. Then I work on what their fear is.

2. Don’t be afraid to be honest. People don’t really like you unless you challenge them. I look for people’s sensitivities, stuff they thought they’d hidden, and I tell people exactly what I see in them. “Oh, you don’t do what you’re told,” I tell them. “Probably because you don’t know how to say no, because you grew up thinking that good people don’t question authority, they just don’t show up and/ or they turn passive.”

3. Get a mentor yourself. The best way to learn how to mentor is to be mentored. My mentor is my boss.

4. Get your mentees to agree with your style of intervention. What are the shortfalls in their skills or in their behavior? Then devise a plan, with or without their assistance, to move them forward. And they’ve got to buy into the plan. I tell my mentees, “This is what we’re going to do with you.” Make it precise. Don’t say, “We’re going to meet twice a week and talk.” Say, “We’re gonna meet twice a week, and we’re gonna talk about .”

5. Don’t keep your feelings bottled up. I don’t keep any of it inside. I talk. All the STRIVE mentors do; we dump it all out. I understand

that initially I have to provide the energy. I’m the source. I plug in and get them going.

6. Understand that mentoring is a very important relationship, not just for the mentee but for you. Sometimes the mentoring relationship is like a marriage. You think with a spouse you share everything? Never. You give people different parts of you. You’re different with your wife or your husband than you are with your friends or your family. So there are parts of people you are married to you’ll never get to know.

7. Work at building trust and at feeling it yourself. I didn’t trust peo- ple for years because as a child it seemed as if no one was there to help me. I was an angry individual. Coming into STRIVE has helped me channel that anger into what I do. People see it as pas- sion, which it is, but initially it was just anger at the shortcomings of the world.

8. Recognize this is a process that’s going to change both of you. A mentor needs to understand that in the process of mentoring she’s going to change as much as the person she’s mentoring. You can’t come in with this notion of, “Oh, I’m just going to mentor today. It’s not going to affect me.” It’s going to affect you—in a lot of different ways.

Frank Horton and the other key people at STRIVE understand how powerful mentoring can be. More than two decades after its start, the organization has expanded to 20 cities nationwide, as well as to inter- national affiliates in the United Kingdom and Israel. Collectively, the STRIVE network of community-based organizations has helped more than 50,000 individuals enter the U.S. workforce and continues its meaningful work today. Remember, being a mentor is not just work— it’s a relationship. With any real relationship, you’ll want to put your whole self into it.

Sources: Organization website, “Who We Are,” http://striveinternational.org, accessed February 25, 2016; Jacquelyn Smith, “How to Be a Great Mentor,” Forbes, www.forbes.com, accessed February 25, 2016; Jillian Jorgensen, “Could This Program Stem Surging Violence at Rikers Island?” The Observer, http://observer.com, accessed February 25, 2016.

O B M A T T E R S

The increasing diversity of the workforce adds a new dimension to the mentor– mentee matching process.59 People are attracted to mentors who talk, look, act, and communicate like them. Gender, race, ethnicity, and religion can all play a role in matching. If mentor–mentee matching is left to occur naturally, women, blacks, Hispan- ics, and Asians may not benefit to the same degree from mentoring relationships.60 The underrepresentation of these groups in management level positions is a potential obsta- cle when a firm is considering using mentor–mentee matching. In an effort to overcome this obstacle, the Executive Leadership Council (ELC) established a program that matches African American executives with African American mentees from different (noncompeting) organizations for a year-long mentoring program. Initial results from the program are positive in that mentees gained “access to influential mentors outside

46 Part One The Field of Organizational Behavior

the mentees’ organizations who can provide safe, honest, and confidential feedback that may not be available from internal formal mentoring relationships.”61

Spirituality and Culture A steadily growing number of organizations such as The Body Shop, Chick-fil-A, Tom’s of Maine, the YMCA, Kingston Technology, Ben & Jerry’s, and Southwest Airlines have embraced workplace spirituality. Some people are using the term spirituality to describe a firm’s cultural characteristics, while others are confused or freeze up and think the term means religion at work.62 Workplace spirituality is not the same as religion. Religion is a system of thought, a set of doctrines and beliefs, a prescribed code of conduct, and the product of a time and place. Spirituality is a personal and private path, contains elements of many religions, and grows from a person’s self-inquiry. Spirituality means that people (employees) have a personal or inner life that nourishes and is nourished by performing relevant, meaningful, and challenging work.63

EXHIBIT 2.6 Phases of the Mentor Relationship

Source: Kathy E. Kram, “Phases of the Mentor Relationship,” Academy of Management Journal, December 1983, p. 622. Reprinted with permission of Academy of Manage- ment via Copyright Clearance Center.

Phase Definition Turning Points*

Initiation A period of six months to a year during which time the relationship gets started and begins to have importance for both managers.

Cultivation A period of two to five years during which time the range of career and psychosocial functions provided expands to a maximum.

Separation A period of six months to two years after a significant change in the structural role relationship and/or in the emotional experience of the relationship.

Redefinition An indefinite period after the separation phase, during which time the relationship is ended or takes on significantly different characteristics, making it a more peerlike friendship.

Fantasies become concrete expectations.

Expectations are met; senior manager provides coaching, challenging work, visibility; junior manager provides technical assistance, respect, and desire to be coached.

There are opportunities for interaction around work tasks.

Both individuals continue to benefit from the relationship.

Opportunities for meaningful and more frequent interaction increase.

Emotional bond deepens and intimacy increases.

Junior manager no longer wants guidance but rather the opportunity to work more autonomously.

Senior manager faces midlife crisis and is less available to provide mentoring functions.

Job rotation or promotion limits opportunities for continued interaction; career and psychosocial functions can no longer be provided.

Blocked opportunity creates resentment and hostility that disrupt positive interaction.

Stresses of separation diminish and new relationships are formed.

The mentor relationship is no longer needed in its previous form.

Resentment and anger diminish; gratitude and appreciation increase.

Peer status is achieved.

* Examples of the most frequently observed psychological and organizational factors that cause movement into the current relationship phase.

Chapter 2 International and Organizational Culture 47

Y O U B E T H E J U D G E

STEREOTYPES AND ASIAN AMERICANS Asian Americans (Chinese, Filipino, Japanese, Korean, Asian In- dian, Southeast Asian, and others) must deal with many stereo- types and myths. They have been dealing with overt prejudice since Chinese immigrants first came to the United States more

than 150 years ago. Today, third- and fourth-generation Asian Americans tend to be very Americanized. As a group, they have higher educational achievement than average. Asian Americans also hold higher-status jobs than average, yet make less income. Why? You be the judge!

The story of Cirque du Soleil is an example of spiritual nourishment as practiced by its artists and performers and delivered to audiences around the world. Cirque du Soleil is entertainment that is worth experiencing to acquire a firsthand impression of the creative spirit of employees. (See the Global OB on page 48.)

The Person and Spirituality Over the past decade, theory and research in organizational behavior and ethics have begun to pay more attention to workplace spirituality. Although spirituality has been described as “soft” or “nonstrategic” by many academics,64 there is growing interest among many researchers and practitioners to explain, study, and analyze the role of spirituality in orga- nizations65 and its potential impact on employee performance.66

There is a long tradition in the United States of keeping religion and government sepa- rate. From this traditional separation it is a logical step to keeping religion and nongovern- ment organizations separate too. Although workplace spirituality is certainly not a religion, many observers use the terms synonymously and loosely.

Research on Spirituality and Work Dimensions The Academy of Management has recognized spirituality at work as a field of study.67 In addition, the academy created the Management, Spirituality and Religion Interest Group, which explores how spirituality and religion can influence organizational dynamics and affect management outcomes. Major areas of study include theory building and empirical research around the issues of faith, spirituality, and religion as they influence principles and practices in management.68

This recognition from the Academy of Management is an important step in gaining expo- sure and creating more research interest in the role that spirituality plays in work settings.

Research on workplace spirituality is still in its infancy, but some interesting find- ings have been reported to date. One study of the spirituality of medical units within a hospital system found that work units’ spirituality was associated with the unit’s per- formance, and unit leaders impacted the degree to which unit members expressed workplace spirituality.69 Another study reported that organizational spirituality was positively related to employee job involvement, organizational identification, and work rewards satisfaction.70

Researchers such as Mitroff and Denton report that many organizations are convinced that spirituality and workplace performance are linked.71 They studied spiritual beliefs and practices among managers and executives, interviewing more than 80 managers. They also conducted field surveys, and the researchers propose that the sensitivity of the subject and the length of the survey resulted in the low return rate of less than 7 percent. Despite the

48

research design limitations, the Mitroff and Denton study provided some interesting results. They found that: ∙ Employees who are more spiritually involved achieve better results. ∙ There was near-unanimous agreement about the meaning of spirituality: “the desire to

find ultimate meaning and purpose in one’s life and to live an integrated life.” ∙ Few respondents feel they can act on their spirituality in the workplace. ∙ Employees do not want to fragment their lives. They want to be acknowledged as whole

persons in the workplace. ∙ People differentiate strongly between religion and spirituality.

The results of the Mitroff and Denton research led them to identify a number of distinct models that describe how workplace spirituality can be practiced: recovery (e.g., Alcohol- ics Anonymous), evolutionary (evolved from religious to more ecumenical, e.g., YMCA), socially responsible (e.g., Ben & Jerry’s), values-based (e.g., Kingston Technology), and religion-based (e.g., Mormon-owned Ag Reserves, Inc.).72

These five models representing different kinds of spirituality in organizations suggest that spirituality can be productive, encouraging trust, work/life balance, empathy and compassion about others, the valuing of human assets, the full development and self-actualization of people, and ethical behavior.

Although the results of the limited number of research studies is encouraging, there is still much work to accomplish.73 Spirituality researchers need to develop research methods, designs, and processes that are acceptable in terms of reliability, validity, and response rates.74 Research must also include more consideration of moderating and mediating variables. What role does the manager, culture, or organizational system play?

There may also be a negative or dark side to workplace spirituality. Someone who is pro- moting and prodding others to show or be more spiritual may disrupt the work performance of colleagues.75 Is there a dark side of spirituality that should be considered? This and other questions need theoretical and research attention.

A CREATIVE FORCE THAT SOARS “Awe inspiring” are words often applied to Cirque du Soleil (“circus of the sun”), a business that exudes spirituality as we use the term in organiza- tional behavior. The business was started by about 20 Quebec street per- formers in 1984 who formed a touring company. The performances combine acrobats, clowns, music, and dance with a go-for-broke spirit that stretches to the limits of human ability, creativity, and style. Drummers de- scend from the ceiling seemingly suspended in midair; acrobats execute unbelievable moves with precision, power, and grace; while clowns per- form tricks that make audiences around the world erupt in laughter.

With close to 4,000 employees, the Cirque du Soleil experience has been enjoyed by more than 160 million people in more than 400 cities around the globe. The performers are constantly working on moves that exceed their wildest expectations and dazzle spectators. Their pride, connection to the audience, and feelings of exhilaration perform- ing at the highest possible levels evoke a spiritual aura and tone. Becoming a performer in Cirque du Soleil represents an honor, a fulfill- ment, and a membership in a loving family. There are no prima donnas, only family members helping, sharing, and trusting each other.

Every year, the audiences grow larger, the supply of new performers increases, and the morale of troupe members stays sky high. Recently, Cirque du Soleil invited several members of the Canadian national half-pipe ski team to train with its performers in an effort to exchange ideas about the commonalities between circus artists and extreme sports athletes.

Although not measurable, the creative spirit of Cirque du Soleil is a powerful force that has been share with many audiences and more than 36 million views on its YouTube channel. Its spirituality is evident to both performers and followers who have so much fun being to- gether and anticipating future shows.

Sources: Company website, “Cirque du Soleil at a Glance,” and “Sustainability Roadmap 2014,” http://cirquedusoleil.com, accessed February 25, 2016; “Work- shop: Russian Swing 1,” https://www.youtube.com/user/cirquedusoleil/featured, accessed February 25, 2016; Ian Austen, “Sale of Cirque du Soleil Aims to Open Doors in China,” The New York Times, www.nytimes.com, accessed February 25, 2016; Bernard Simon, “Steady Footing on Cirque’s High Wire: The Leaders of the International Circus Act Have Ensured That Creativity Remains at Its Core, Even When It Comes to Management,” Financial Times, July 1, 2008.

G L O B A L O B

Chapter 2 International and Organizational Culture 49

STEREOTYPES AND ASIAN AMERICANS This is a puzzling issue. The personality or style of Asian Americans may mean they do not use an assertive approach to secure what is fair or based on performance. Because Asian Americans do not promote themselves or attempt to

secure an explanation for rewards or performance informa- tion, they may not share in benefits in proportion to their achievement. Being humble and remaining in the back- ground for many Asians is something they have been taught since childhood.

Y O U B E T H E J U D G E C O M M E N T

Summary of Key Points

∙ Organizational culture is a pattern of assumptions and values that are invented, discov- ered, or developed to cope with organizational life. Socialization is the process by which organizations bring new employees into the culture.

∙ Simply declaring that “this will be the culture” is not realistic. Culture evolves over time. Organizational cultures can be influenced by powerful individuals such as Ray Kroc at McDonald’s, Walt Disney, or John Nordstrom. Typically, an organizational culture evolves and becomes real when people interact and work together to create one.

∙ Organizations can achieve effectiveness only when employees share values. The values of an increasingly diverse workforce are shaped long before a person enters an organization. Thus, it is important to recruit, select, and retain employees whose values best fit those of the firm.

∙ Spirituality in the workplace is beginning to be empirically studied and discussed. By spirituality most practitioners and researchers mean that employees have a personal concept or inner life that can be strengthened and nourished at work. Currently, most studies of spirituality use surveys and research designs that are being improved, but much work needs to be done in this area.

1. Organizational culture is a difficult concept to grasp. How would you describe the culture of an office or a manufacturing plant?

2. A growing number of Americans work for foreign-owned firms in the United States. Do you think that these American employees are being influenced by the approach to management and the culture of the country that owns the firm? Explain.

3. Identify the three socialization stages. Which of these stages is most important for developing high-performing employees? Explain.

4. Do you believe diversity plays a significant role in an organization’s culture? Why or why not?

5. How can a leader or founder help create a strong culture in an organization? Can a leader eliminate culture? Explain.

6. Hofstede’s research indicates that national cultures exist. Do you believe that in a hetero- geneous nation, such as the United States, a national culture that is shared by society does exist?

7. To what degree do you believe that workplace spirituality can enhance employee performance?

8. Point out three assumptions about the culture of the last (or current) firm at which you were employed.

Review and Discussion Questions

9. What can a leader do to promote cultural change that helps improve the overall effec- tiveness of an organization?

10. As millions of baby boomers continue to retire, to what extent will mentoring programs become more popular in organizations?

50 Part One The Field of Organizational Behavior

Listed below are what two researchers refer to as specific manifestations of organizational culture. Enterprises over a period of time illustrate or use these cultural factors to strengthen and perpetuate the cul- ture. Some of the widely publicized firms such as Harley-Davidson, Merck, Nike, Intel, Amazon.com, Oracle, Honda, Nestlé, Hershey, and Coca-Cola have distinct and strongly influential cultures. ∙ Rite—A relatively elaborate, dramatic planned set

of activities that combines various forms of cultural expressions and that often has both practical and ex- pressive consequences.

∙ Ritual—A standardized, detailed set of techniques and behaviors that manages anxieties but seldom produces intended, practical consequences of any importance.

∙ Myth—A dramatic narrative of imagined events, usually used to explain origins or transformations of something; also, an unquestioned belief about the practical benefits of certain techniques and behav- iors that is not supported by demonstrated facts.

∙ Saga—A historical narrative of some wonderful event that has a historical basis but has been embel- lished with fictional details.

∙ Folktale—A completely fictional narrative. ∙ Symbol—Any object, act, event, quality, or relation

that serves as a vehicle for conveying meaning, usu- ally by representing another thing.

∙ Language—A particular manner in which members of a group use vocal sounds and written signs to convey meanings to each other.

∙ Gesture—Movements of parts of the body used to express meanings.

∙ Physical setting—Those things that physically sur- round people and provide them with immediate sen- sory stimuli as they carry out culturally expressive activities.

∙ Artifact—Material objects manufactured by people to facilitate culturally expressive activities. The instructor will divide the class into groups of

five or six to discuss each of the manifestations in terms of: (1) a firm the students have worked in, and (2) a popular firm such as the widely publicized enter- prises listed above. The groups should also discuss the following: 1. How managers can influence the cultural factors

listed above. 2. Which of the factors listed apply to the school/uni-

versity they are now attending. 3. Why culture can influence the morale of employees.

The exercise can be completed in one or two classes (45–90 minutes). After the group discusses the questions and issues in the first class, a second class can be used to review each of the group’s considerations and findings.

Exercise

Exercise 2.1: Assessing and Considering Organizational Culture

Lee Gardenswartz and Anita Rowe are well-known and highly regarded diversity management trainers and ad- vocates. They have developed a number of interesting approaches to managing diverse work groups. Listed

below is a short, nine-item diversity quotient scale. Take the short questionnaire and score your own answers. The DQ could be used by the instructor as a discussion starter in class.

Exercise

Exercise 2.2: Determining Your Diversity Quotient (DQ)

51

Diversity Questionnaire Directions

Indicate your views by placing a T (true) next to any of these nine statements you believe is true. 1. I know about the rules and customs of several dif-

ferent cultures. 2. I know that I hold stereotypes about other

groups. 3. I feel comfortable with people who are different

from me. 4. I associate with people who are different from

me. 5. I find working on a multicultural team satisfying.

6. I find change stimulating and exciting.

Reality Check Now how much do you know about culture?

6. True or false: The Academy of Management has not yet recognized the increasing interest its members have in workplace spirituality. a. True b. False

7. A society’s concepts of what is right or wrong are reflected in what are called . a. values b. needs c. preferences d. opinions

8. The first stage of socialization is identified as . a. accommodation b. preview c. anticipatory d. uniform

9. The more intense awareness of the socialization process occurs when an individual . a. retires b. changes jobs c. receives job feedback d. is involved in training

10. The Walt Disney Company is considered to have a . a. strong culture b. weak culture c. unstable culture d. single-layer culture

REALITY CHECK ANSWERS

Before After

1. c 2. d 3. b 4. b 5. a 6. b 7. a 8. c 9. b 10. a Number Correct Number Correct

7. I enjoy learning about other cultures. 8. When dealing with someone whose English is

limited, I show patience and understanding. 9. I find that spending time building relationships with

others is useful because more gets done.

Interpretation

The more true responses you have the more adaptable and open you are to diversity.

If you have five or more true responses, you prob- ably are someone who finds value in cross-cultural experiences.

If you have fewer than five true responses, you may be resistant to interacting with people who are differ- ent from you. If that is the case, you may find that your interactions with others are sometimes blocked.

52 Part One The Field of Organizational Behavior

There are more than 5,600 hospitals in the United States that admit a total of approximately 35 million patients each year, so it is no surprise that there is a great amount of pressure on physicians, nurses, staff, and hospital administrators to provide top quality care with the utmost urgency and accuracy. The services these health care professionals provide are invaluable and the decisions they make can have a lasting impact on patients and their families.

What happens when nurses and physicians start to feel exhausted as a result of extended periods of work stress? Does this exhaustion impact the quality of their work? A 2010 research study focused on how job en- gagement of health care providers can affect the quality of care patients receive. A key finding of the study identified burnout as the primary cause of poor quality of care. Burnout is a condition characterized by ex- haustion, feelings of hopelessness, and increased chances of making a mistake. The study found that hospital staff were constantly pushed to their physical, emotional, and mental limits by exposure to chronic sleep deprivation, extreme demands on their time and attention, and long shifts in fast-paced, stressful envi- ronments. Add into the equation that any small error, miscommunication, or the overlooking of a piece of information can have deadly consequences. In order to avoid burnout, it is important for administrators and department (nursing, surgery, emergency room, ambu- latory services, intensive care unit, pediatrics, and so forth) leaders to create an organizational culture that fosters trust, open communication, support, and stress management education for doctors, nurses, and staff.

Each hospital has a unique culture that can either help or hinder employees’ ability to cope with the stresses of working in such a fast-paced environment. The follow- ing section provides a brief overview of how three hos- pitals in the United States are helping their staffs manage stress in a positive and productive manner.

Three Hospitals with Supportive Organizational Cultures Baltimore-based Johns Hopkins Hospital is a prime ex- ample of an organization that offers a supportive cul- ture for its doctors, nurses, and other health care

providers. U.S. News & World Report has ranked the hospital in the top 25 “Best Hospitals” for more than 25 consecutive years. The yearly rankings have consis- tently shown high levels of patient satisfaction as well as statistical data showing low levels of infection, pro- vider errors, and deaths. Even though Johns Hopkins is known for having some of the most gifted doctors and researchers in the world, it is continuously taking steps to nourish and maintain a supportive organizational culture. For example, a mentorship program encour- ages confidence, learning, and professional growth through strong communication between junior and se- nior level nurses, doctors, and administrators. There are many opportunities for employees to participate in team development, earn wellness incentives for a healthy lifestyle, and give back to the community by volunteering to work with students in the Baltimore area. Johns Hopkins also offers great benefits, strong job security, and financial help for registered nurses re- locating to work at the hospital.

Another example of a hospital with a supportive or- ganizational culture is the Armstrong County Memorial Hospital (ACMH) in Kittanning, Pennsylvania. With more than 850 employees, ACMH is a tight-knit and supportive community united in its goal to provide pa- tients with the best care possible. While offering its employees standard benefits such as medical, dental, and life insurance, ACMH also provides discounts at many local businesses, hosts annual dinners celebrat- ing employees’ dedication and service to the company, and holds raffles and pep rallies to boost morale and take employees’ minds away from the daily stress they encounter.

A third hospital, Akron General Medical Center (AGMC) in Ohio, helps its staff and employees manage stress by providing free medical services to employees and their families within the hospital system, tuition re- imbursement, on-site dry cleaning in the facility, op- tional pet insurance, discounts at local businesses and entertainment establishments, and financial assistance and flextime schedules to handle adoption-related ex- penses and activities. Akron General actively recruits a diverse staff to improve the quality of services they de- liver to patients. Not only does AGMC provide exten- sive on-the-job training, but it also offers a variety of

Case

Case 2.1: Organizational Culture Can Help Reduce Burnout in Hospitals

Chapter 2 International and Organizational Culture 53

educational and professional development classes that allow employees to learn about everything from sports and physical therapy to dealing with trauma.

Taken together, Johns Hopkins Hospital, Armstrong County Memorial Hospital, and Akron General Medical Center have created supportive cultures and work environments that help their doctors, nurses, ad- ministrators, and other staff combat job burnout, pur- sue a healthy work life balance, alleviate stress, and provide a higher level of quality of care for patients.

Intervention Points for Creating Culture The five intervention points for creating culture change discussed earlier in the chapter provide a helpful frame- work to understand how each of the three hospitals mentioned above creates and maintains their unique and supportive cultures. Hospital managers and depart- ment leaders communicate the desired behaviors (e.g., delivering high quality health care, being supportive of co-workers’ needs, balancing work-life priorities, prac- ticing stress management techniques, and so forth) through verbal and written communication of expecta- tions as well as by role-modeling the desired behaviors on a daily basis.

Not only is it important for managers and leaders to set clear expectations, but it is crucial that all hospital employees understand the reasoning behind them. When doctors, nurses, and other employees understand that the professional development opportunities avail- able to them will help the hospital better serve their patients and allow for high-quality care, they are more likely to take advantage of them. Behavioral expecta- tions are also communicated through performance re- views and verbal praise or constructive feedback.

Socialization is a key component of culture creation in all three hospitals. During the recruitment phase, ACMH makes it clear that they value diversity in their staff and each hospital provides realistic job previews that allow potential employees to reduce uncertainty and determine whether there is a strong person-organization fit (prior to accepting a position). The effective mentor- ing program established at Johns Hopkins encourages two-way communication and creates confidence in doc- tors and nurses early in their career. The socialization process is reinforced with the recognition dinners and parties given to ACMH employees who are celebrating professional and personal milestones. The variety of

perks offered by AGMC demonstrate the hospital’s ded- ication to ensuring all employees can maintain a great work-life balance. Employees whose goals and values no longer align with the hospitals’ are removed either vol- untarily (leaving for another organization) or involun- tarily (being fired due to performance levels that fail to meet company expectations).

In sum, managers and leaders need to continually in- tervene at key points to reinforce the positive aspects of their organizational cultures. The three hospitals above have positive and supportive cultures that help their doc- tors, nurses, administrators, and other employees man- age the stress that frequently accompanies their jobs of providing patients with excellent service and care.

Questions 1. Assume you are in charge of socializing the newly

hired nurses at a local hospital. What steps would you take to ensure that they understand the hospital’s organizational culture? How would you help them understand how to manage stress on a daily basis so as to prevent burnout later in their careers? Explain.

2. Hospital environments are more stressful in nature than the work environments found in many other or- ganizations. What are some of the unique challenges that hospitals face when attempting to create a sup- portive organizational culture that helps employees reduce and manage their stress levels?

3. Think about your university or an organization for which you have worked. Using the intervention strategies discussed in the text, provide examples of how the university or organization attempted to cre- ate a certain type of organizational culture. Was it successful (or unsuccessful) in creating the desired culture? Explain.

Sources: Written by Brittany Bowden, San Marcos, Texas (2012). Adapted from “Fast Facts on U.S. Hospitals 2016,” American Hospital Association, http://www.aha.org, accessed May 5, 2016; Avery Comarow, “The Honor Roll of Best Hospitals 2015–16,” US News & World Report, http://health. usnews.com, accessed May 5, 2016; organization website, “Akron General Career Opportunities,” http://www.akrongeneral.org, accessed August 1, 2012; Rachel Fields, “100 Best Places to Work in Healthcare,” Becker’s Hospital Review, April 25, 2011, http://www.beckershospitalre- view.com; Anthony Montgomery, Efharis Panagopoulou, Ian Kehoe, and Efthymios Valkanos, “Connecting Organisational Culture and Quality of Care in the Hospital: Is Job Burnout the Missing Link?” Journal of Health Organization and Management 25, no. 1 (January 2011), pp. 108–23.

3. INDIVIDUAL DIFFERENCES AT WORK

4. PERCEPTIONS AND ATTRIBUTIONS

5. MOTIVATION

6. JOB DESIGN AND PERFORMANCE

7. EVALUATION AND REWARDS INFLUENCE BEHAVIOR

8. MANAGING EMPLOYEE BEHAVIOR

9. MANAGING INDIVIDUAL STRESS

Be what you are. This is the first step toward becoming better than you are.

Julius Charles Hare and Augustus William Hare, Guesses at Truth (1827)

P A R T T W O

Understanding and Managing Individual Behavior

© Shutterstock/Rawpixel.com, RF

57

Why Individual Differences Matter Individual differences are important in studying organizational behavior and management because they have a direct effect on behavior. Every person is unique because of their back- ground, individual characteristics, needs, and how they perceive the world and other indi- viduals. People who perceive things differently behave differently. People with different personalities interact differently with supervisors, team members, co-workers, subordi- nates, and customers. Individual differences, for example, help explain why some people embrace change and others are fearful of it. Or why some employees will be productive only if they are closely supervised, while others will be productive only if they are not. Or why some workers learn new tasks more effectively than others. There is virtually no area of organizational activity that is not affected by individual differences. In a multitude of different ways individual differences shape organizational behavior and, consequently, individual and organizational success.

Each individual is different from every other individual in many respects. Effective managers need to ask how such differences influence the behavior and performance of employees. This chapter highlights some of the important individual differences that can help explain why one person is a significantly better or poorer performer than another person. Differences among people require forms of adjustments for both the individual and those for whom she or he will work. Managers who ignore such dif- ferences often become involved in practices that hinder achieving organizational and personal goals.

Individual Differences at Work Learning Objectives

After completing Chapter 3, you should be able to:

Identify the major individual variables that influence work behavior.

Explain how organizations can leverage employee diversity.

Differentiate between abilities and skills.

Describe what an attitude is and identify its three components.

Discuss the relationship between job satisfaction and performance.

Identify the Big Five personality dimensions.

Summarize the dimensions of emotional intelligence.

C H A P T E R T H R E E

© Ingram Publishing, RF

58

Individual Differences Influence Work Behavior A person’s behavior at work, in school, or at home is influenced by the variables depicted in Exhibit 3.1. This graphical portrayal of individual differences is only a starting point and shows some of the large number of variables that influence behavior. Exhibit 3.1 suggests that effective managerial practice requires that individual behavior differences be recog- nized and, when feasible, considered while managing organizational behavior. To under- stand individual differences, a manager must (1) observe and recognize the differences and (2) study relationships among variables that influence individual behavior. For example, a manager is in a better position to make optimal decisions if he or she knows what the atti- tudes, perceptions, and abilities of employees are as well as how these and other variables are related. Being able to observe differences, understand relationships, and predict link- ages can facilitate managerial attempts to improve performance.

Work behavior is anything a person does in the work environment. Talking to a man- ager, listening to a co-worker, creating a new method of following up on a sale, learning new computer software, typing an e-mail, researching a question using an Internet search engine, placing a completed unit in inventory, and learning how to use the firm’s account- ing system are all work behaviors. However, so are daydreaming about being at the beach

Reality Check How much do you know about individual differences?

1. The most discussed and publicized personality model is called . a. Richard’s Model b. Introversion Framework c. Big Five d. Cyber-personality

2. determines the degree to which individuals believe their behavior influences what happens to them. a. Leadership style b. Values c. Locus of control d. Happiness

3. The emotional component of an attitude is referred to as . a. intelligence b. stability c. dissonance d. affect

4. is a person’s belief that he or she has the competency to complete a job successfully. a. Self-efficacy b. Self-regulation c. Self-awareness d. Self-motivation

5. The four dimensions of emotional intelligence (EI) include self-awareness, social awareness, self-management, and . a. self-utilization b. relationship management c. self-development d. emotional avoidance

Chapter 3 Individual Differences at Work 59

or socializing with friends on Facebook while at work. Some of these behaviors contribute to productivity; others are nonproductive.

The individual variables presented in Exhibit 3.1 are classified as diversity, abilities and skills, attitudes, personality, emotions, and perceptions (covered in Chapter 4). These variables all impact key work behaviors such as employee productivity, creativity, and performance.

Diversity As defined in Chapter 1, diversity refers to those attributes that make people different from one another. The six primary (and stable) dimensions include age, ethnicity, gender, physi- cal attributes, race, and sexual/affectional orientation. Secondary (and changeable) dimen- sions include educational background, marital status, religious beliefs, health, and work experience.1

The United States is becoming increasingly diverse. According to the U.S. Census Bureau, the nation’s population will become older and more diverse over the next 50 years.2 Minorities, which now comprise more than one-third of the U.S. population, will become the majority well before 2060.3 The minority population (everyone except for non-Hispanic whites) is projected to reach more than 50 percent of the population. In contrast, non- Hispanic whites are expected to decrease from 62 percent in 2014 to 44 percent of the U.S. population in 2060. The Hispanic or Latino population will grow rapidly from 17 percent to reach almost 29 percent of the U.S. population over the same time frame. The African American population is expected to have modest growth from 14 percent in 2014 to 18 per- cent of the U.S. population by 2060. The Asian American population is projected to increase from 5.4 to 9.3 percent by 2060. In terms of age, the number of people aged 65 and over is expected to more than double from 46.2 million in 2014 to 98.1 million in 2060. This means that close to one-quarter of Americans will be aged 65 or older by midcentury.4

Diversity in the workplace is much more than understanding population projections based on age, race, and ethnicity. We hear a lot about diversity, but what it means is some- times confusing.5 Diversity is not a synonym for equal employment opportunity (EEO). Nor is it another word for affirmative action. Diversity is the vast array of physical and cultural differences that constitute the spectrum of human differences. As mentioned ear- lier, six core dimensions of diversity have a life-long impact on employee behavior and

EXHIBIT 3.1 Individual Differences Affect Workplace Behavior

Personality

Work Behavior

Attitudes

Abilities and skills

Diversity

Perceptions

Emotions

60 Part Two Understanding and Managing Individual Behavior

attitudes. Organizations that commit to diversity and create a culture of inclusiveness can gain several important benefits, including:6

1. Enhanced decision quality. Diverse board members, executives, managers, and employ- ees bring a wide variety of experiences, frames of reference, perspectives, professional contacts, and information networks to bear on complex problems. Retail giant Macy’s has a diverse board of directors: 30 percent of the 12 members are African American, Asian American, or Hispanic, and half of the board members are women. This brings Macy’s into an elite group of only four Fortune 500 companies that have achieved gen- der parity on their corporate boards.7

2. Better connection with customers. As the U.S. population becomes increasingly diverse, this means an organization’s customers (as well as other key stakeholders such as ven- dors, regulators, investors, etc.) are also becoming more diverse. By 2019, it is projected that Hispanics, African Americans, Asian Americans, and Native Americans’ combined buying power in the United States will exceed $4.5 trillion.8 This helps explain why DuPont Merck experienced a large increase in the sales of its anticoagulant drug to the Hispanic market. Sales increased after a Hispanic employee suggested that the drug should be labeled not only in English, but also Spanish.9

3. More creative innovation. Organizations that are diverse can “tap the creative, cultural, and communicative skills of a variety of employees and use those skills to improve company policies, products, and customer experiences.” At Colgate-Palmolive, a Global Innovation Fund has been established to fund new ideas from diverse employees that help the consumer products company tap into the global and multicultural marketplace. To date, Colgate-Palmolive has funded more than 400 new products.10

In addition to these important benefits, organizations with a strong commitment to diversity may also enjoy higher financial performance. A study that compared the DiversityInc Top 50 Companies with companies not on the list found that the top 50 companies (all strongly commit- ted to diversity) outperformed their peers on average on several financial measures.11 The authors suggested that other firms can increase their organizationwide commitment to diversity by linking diversity to the business strategy; encouraging line managers to own the diversity strategy of the firm; setting clear targets and specific action plans; treating human capital as a source of competitive advantage; being proactive in recruiting diverse employees; connecting with diverse consumer markets; cultivating diverse groups of suppliers; and emphasizing fair- ness of the diversity program to decrease any potential negative reactions from majority groups.12

Valuing diversity from an organizational and leadership perspective means understand- ing and valuing core and secondary diversity differences between oneself and others. An increasingly important goal in a changing society is to understand that all individuals are different and to appreciate these differences.13 The nearby OB Matters discusses how Wells Fargo supports employee diversity and inclusion as part of its core business strategies.

Companies are taking steps to manage this shift in employee diversity. For example, accounting firm Deloitte recently tapped Cathy Engelbert as the first female CEO of a “Big Four” accounting firm. Engelbert is committed to continuing to build a diverse workforce across the company’s various practices, including its growing advisor/consulting business. Over the past few years, women and minorities have accounted for more than 65 percent of Deloitte’s new hires. Engelbert encourages her colleagues to foster diversity and inclusion in their everyday activities by mentoring employees to help them develop leadership skills.14 Management at Deloitte understands the long-term benefits of retaining diverse employees. Although research shows that women comprise about 19 percent of corporate board members in the United States, evidence suggests that Fortune 500 companies with a higher percentage of female directors and managers perform better financially.15

61

Understanding diversity in the global marketplace is equally as important as under- standing it in the United States. As the Global OB on page 62 illustrates, global managers must develop a keen understanding of differences among cultures to be successful in their international business endeavors.

In addition to understanding the impact of racial, ethnic, and gender differences at the workplace, managers also need to be aware of these other ways that employee diversity can manifest itself: ∙ Generational diversity: Millennials or Gen Y (those who are in their 30s and younger)

are different in key ways when compared to Gen X (those in their 30s to late 40s) and baby boomers (those who are in their low-50s and older). Gen X and baby boomers, as managers, need to realize that millennials can be used to leverage their skills at online social networking to collaborations and teamwork on virtual team projects. Millennials tend to require more praise and short-term rewards than do Gen X and baby boomers, but they will put their own careers first and will look for organizations that provide meaning- ful training and projects to build their résumés. Managers need to assign mentors to help match organizational opportunities with millennial employees’ career goals and to help millennials understand the company culture, dress policies, office politics, and so on.16

∙ Disability diversity: The Americans with Disabilities Act (ADA) of 1990 and the ADA Amendments Act of 2008 prohibit discrimination against qualified individuals with dis- abilities. A disabled person is someone who has a physical or mental impairment that substantially limits one or more of his or her major life activities. Disabilities take many forms and affect all types of Americans. For example there were 3.9 million disabled veterans in 2014.17 Given that the ADA requires that organizations make reasonable accommodations for disabled individuals, managers may be called upon to make one or more of the following accommodations:18 ∙ Make existing facilities accessible. A manager may be asked to assist in the planning

and budgeting for a wheelchair ramp to be added to the front of the building.

WELLS FARGO CHAMPIONS DIVERSITY AND INCLUSION More than a decade ago, banking services giant Wells Fargo imple- mented diverse leadership programs for several groups, including Asian and Pacific Islander, Black/African American, Latino, and LGBT (lesbian, gay, bisexual, and transgender). More than 2,000 team mem- bers have participated in the three-day workshops, which allow at- tendees to practice leadership skills necessary for success in a diverse business environment. The company’s long-term commitment to diver- sity among its more than 260,000 employees consistently lands the firm on DiversityInc’s Top 50 Companies list.

In 2015, Wells Fargo garnered another diversity accolade: It was named the top firm for LGBT employees, an accomplishment CEO John Stumpf believes is a tribute to the company’s commitment of tapping cre- ativity and innovation from multiple perspectives within the organization.

In a recent address to the annual Out & Equal Workplace Summit in San Francisco, Stumpf told the audience that Wells Fargo has 10 em- ployee resource groups (called team member networks) throughout the company, including the PRIDE network for LGBT employees and their allies—more than 50 local PRIDE chapters with more than 6,000

members. He believes the company founders set the tone for serving people and advocating for inclusiveness, and it is his responsibility to be the keeper of the company culture by acknowledging—and em- bracing—the diversity of all employees. More than 20 years ago, Wells Fargo implemented a policy to provide benefits for employees’ do- mestic partners, which back then was considered a business strategy ahead of its time.

Stumpf personally chairs the company’s diversity and inclusion council and reports diversity results to the board of directors. In addi- tion, he requires all Wells Fargo managers who report to him to men- tor an employee from a traditionally underrepresented group. Stumpf says, “We want people, when they come work here, to have the free- dom to express themselves and to share what I call the plural pro- nouns: us, we, and ours.”

Sources: “2015 DiversityInc Top 50: #11. Wells Fargo,” and “The DiversityInc Top 10 Companies for LGBT Employees,” DiversityInc, http://www.diversityinc. com, accessed March 4, 2016; company website, “Diversity and Inclusion,” http://www.wellsfargo.com, John Stumpf: 2014 Out & Equal Workplace Summit, YouTube, https://www.youtube.com, accessed March 4, 2016.

O B M A T T E R S

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∙ Restructure jobs. A manager may purchase voice interface software so that a blind customer service representative can relate information from a PC to customers who call in with questions and problems. Basically, the PC speaks to the blind employee who then communicates that information to the customer.

∙ Modify work schedules. Some ill individuals have set days/times when they need to receive treatment (e.g., kidney dialysis, etc.) from medical providers. A manager may need to accommodate the employee by scheduling work around these medical visits.

∙ Reassign employees. A police officer, after being wounded in the line of duty, may need to be reassigned to a desk job for a certain period until able to assume full responsibilities again.

What are the implications of diversity differences in the global and domestic workplace? It is important to understand that even the perception that these differences exist influences the behavior of men, women, and minorities in the workplace. A male manager, for exam- ple, who assumes a female employee is less committed to the organization because of family responsibilities is likely—perhaps unconsciously—to behave differently toward her than he otherwise would. In turn, the female employee’s behavior will likely be influenced—again, perhaps unconsciously—by the manager’s behavior.

Abilities and Skills Some employees, though highly motivated, simply do not have the abilities or skills to perform well. Abilities and skills play a major role in individual behavior and perfor- mance.19 Ability is a person’s talent to perform a mental or physical task. Skill is a learned talent that a person has acquired to perform a task. A person’s ability is generally stable

ability A person’s talent to perform a mental or physical task.

CULTURAL DIFFERENCES THAT MANAGERS SHOULD KNOW When a manager is managing in another culture, a number of crucial cultural characteristics must be considered. A few pointers that apply to specific cultures could prove to be invaluable.

China Mandarin is spoken by over 70 percent of the population.

Although the government encourages atheism, Buddhism, Islam, and Christianity also are practiced in China. Confucianism, although not a religion, has a great influence on Chinese society.

As a collectivist society, individual rights and needs are subordi- nate to collective rights and needs.

Harmony and family must be respected.

Although women are purported to be equal to men, economic and work-related inequities exist.

India Hinduism and Islamic religions play a major role in the lives of most Indians.

Though hundreds of languages are spoken in India, Hindi and English are the most widely used.

A moderately collective culture exists. Friendships with co-workers play an important role in job satisfaction.

Punctuality is not a priority.

Being passive is considered a virtue.

Women have few privileges and male chauvinism is strong.

Russia Literacy is almost 100 percent.

Specialists with technical expertise are respected.

Sexual harassment is excessive in business organizations and in the government.

Compromise is viewed as a sign of personal weakness.

A high level of corruption continues to be a major issue.

Mexico Good impressions are made when foreign nationals are familiar with the nation’s history, customs, and arts.

General suspicion is directed at foreign nationals.

Time is a flexible concept.

Personal friendships and long-term relationships are very important.

Conversations occur at close physical distances.

G L O B A L O B

Chapter 3 Individual Differences at Work 63

over time. Skills change as one’s training or experience occurs. A person can be trained and consequently acquire new skills.

Mental ability and tacit knowledge have been identified as important factors in helping to differentiate between higher- and lower-performing employees. When selecting candi- dates for a particular position, one of the better predictors of training proficiency and job success is mental ability. Often referred to as intelligence, mental ability can be divided into several subcategories: verbal fluency and comprehension, inductive and deductive reasoning, associative memory, and spatial orientation.20

One of the more popular cognitive ability tests is the Wonderlic Personnel Test.21 Organiza- tions from the National Football League to American Residential Services (a home mainte- nance and repair company) give this 12-minute, 50-question test to aspiring recruits and job applicants to assess their mental ability. At American Residential Services candidates scoring in the lowest 10 to 15 percent are not hired. The company claims that this enhances the quality of new employees, ultimately improving customer service and cutting turnover.22

Tacit knowledge refers to work-related practical know-how that employees acquire through observation and direct experience.23 By gaining hands-on work experience, suc- cessful employees learn the ins and outs of their jobs, the norms of their work teams, and the values of the organizational culture. For example, a customer service representative from a large cable television company learned over the years that it’s best not to interrupt irate customers while they are upset and venting their problems. By showing the customer genuine concern and a willingness to listen, the representative could help the customer feel better, ultimately retaining his or her business. This skill was not learned from a manual or training session; it was developed by the representative through trial and error and experi- ence with hundreds of irate customers.

According to Robert J. Sternberg, people who develop and use tacit knowledge will increase their chances of success within organizations.24 He believes that leaders and man- agers with practical intelligence tend to:

∙ Capitalize on their own strengths and overcome their weaknesses. ∙ Realize they are not good at everything. ∙ Overcome negative expectations set by others around them. ∙ Learn from their positive and negative experiences. ∙ Have can-do attitudes.

Although far from conclusive, research supports such claims about the virtues of practi- cal intelligence. For example, in a study of the leadership effectiveness of 562 military leaders, those with higher levels of tacit knowledge were perceived as more effective than those with lower amounts of practical, experience-based knowledge.25

The presence or absence of various abilities and skills has an obvious relationship to job performance. Managers must attempt to match a person’s abilities and skills to the job requirements. This matching process is important since no amount of leadership, moti- vation, or organizational resources can make up for deficiencies in abilities or skills (although clearly, some skills can be improved with practice and training). Job analysis is a widely used technique that takes some of the guesswork out of matching. Job analysis is the process of defining and studying a job in terms of tasks or behaviors and specifying the responsibilities, education, and training needed to perform the job successfully. Job analysis will be discussed in more detail in Chapter 6.

mental ability Refers to one’s level of intelligence and can be divided into subcatego- ries, including verbal fluency and comprehen- sion, inductive and deductive reasoning, associative memory, and spatial orientation.

tacit knowledge The work-related practical know-how that employees acquire through observation and direct experience on the job.

DEVELOPING TACIT KNOWLEDGE

You can develop tacit knowledge at work by observing how more experienced employees handle challenging situations or tasks. Also, you can build your practical know-how by volunteering for additional assignments from which you can learn and gain valuable experience.

Information You Can Use

64 Part Two Understanding and Managing Individual Behavior

Attitudes An attitude is a mental state of readiness learned and organized through experience, exert- ing a specific influence on a person’s response to people, objects, and situations with which it is related. Each person has attitudes on numerous topics—online dating, jogging, restaurants, friends, jobs, religion, politics, elder care, crime, education, income taxes, and so on.

This definition of attitude has certain implications for the manager. First, attitudes are learned. Second, attitudes define one’s predispositions toward given aspects of the world. Third, attitudes provide the emotional basis of one’s interpersonal relations and identifica- tion with others. And fourth, attitudes are organized and are close to the core of personal- ity. Some attitudes are persistent and enduring. Yet, like each of the psychological variables, attitudes are subject to change.26

Attitudes are intrinsic parts of a person’s personality. A number of theories attempt to account for the formation and change of attitudes. One such theory proposes that people “seek a congruence between their beliefs and feelings toward objects” and suggests that the modification of attitudes depends on changing either the feelings or the beliefs.27 The theory proposes that cognition, affect, and behavior determine attitudes, and that attitudes, in turn, determine cognition, affect, and behavior. The cognitive com- ponent of an attitude consists of the person’s perceptions, opinions, and beliefs. It refers to the thought processes with special emphasis on rationality and logic. An important element of cognition is the evaluative beliefs held by a person. Evaluative beliefs are manifested in the form of favorable or unfavorable impressions that a person holds toward an object or person.

Affect is the emotional component of an attitude and is often learned from parents, teachers, and peer group members. It is the part of an attitude that is associated with “feel- ing” a certain way about a person, group, or situation. The behavioral component of an attitude refers to the tendency of a person to act in a certain way toward someone or some- thing. A person may act in a warm, friendly, aggressive, hostile, teasing, or apathetic way, or in any number of other ways. Such actions could be measured to examine the behavioral component of attitudes.

Sometimes there may be discrepancies between attitudes and behaviors. This kind of discrepancy is called cognitive dissonance. An individual who has the attitude that smok- ing is bad for one’s health but who continues to smoke anyway would probably experience cognitive dissonance. Such an inconsistency between beliefs and behavior is thought to create discomfort and a desire on the part of the individual to eliminate or reduce the inconsistency.

In terms of the smoker, this could mean changing beliefs about the negative health con- sequences (“I’m in good health—smoking isn’t as bad as they say”) or modifying the behavior (quitting, cutting back, switching to a “lower-tar” brand). The concept of cogni- tive dissonance is developed further in Chapter 14.

Exhibit 3.2 illustrates how a work environment factor (e.g., manager’s style) can influ- ence the three components of attitudes. This stimulus triggers cognitive (thought), affective (emotional), and behavior responses. In essence, the stimulus results in the formation of attitudes, which then lead to one or more responses.

The theory of cognitive, affective, and behavioral components as determinants of atti- tudes has a significant implication for managers. The theory implies that the manager must be able to demonstrate that the positive aspects of contributing to the organization outweigh any negative aspects of a situation. It is through attempts to develop generally favorable attitudes toward the organization and the job among employees that many managers achieve effectiveness.

attitudes Mental states of readiness learned and organized through experience.

cognition This is basically what individuals know about themselves and their environment. Cognition implies a conscious process of acquiring knowledge.

affect The emotional compo- nent of an attitude; often learned from parents, teachers, and peer group members.

cognitive dissonance A mental state of anxiety that occurs when there is a conflict among an individual’s various cognitions (for example, attitudes and beliefs) after a decision has been made.

Chapter 3 Individual Differences at Work 65

Attitudes and Job Satisfaction Job satisfaction is an attitude people have about their jobs. It results from their perception of their jobs and the degree to which there is a good fit between them as individuals and the organization.28 A number of factors have been associated with job satisfaction. Among the more important ones are these:

Pay—the amount of pay received and the perceived fairness of that pay. Work itself—the extent to which job tasks are considered interesting and provide opportunities for learning and accepting responsibility. Promotion opportunities—the availability of opportunities for advancement. Supervision—the technical competence and the interpersonal skills of one’s immediate boss. Co-workers—the extent to which co-workers are friendly, competent, and supportive. Working conditions—the extent to which the physical work environment is comfort- able and supportive of productivity. Job security—the belief that one’s position is relatively secure and continued employ- ment with the organization is a reasonable expectation. Many organizations recognize the importance of the potential link between job satisfaction

and a number of desirable organizational outcomes. For example, Airbnb, the San Francisco– based online lodging marketplace, was recently named the Best Place to Work in 2016 by Glassdoor, the online jobs and recruiting site. The poll, conducted by collecting anonymous employee reviews, revealed that Airbnb employees gave the company an overall rating of 4.6 on a scale of 5 for creating a great company culture, maintaining a workplace where employ- ees feel they belong, making a difference to the guests and hosts who use the service, and providing exceptional employee benefits—including quarterly vouchers to use Airbnb lodging themselves.29

Satisfaction and Job Performance One of the most widely debated and controversial issues in the study of job satisfaction is its relationship to job performance or effectiveness.30 Three general views of this relationship have been advanced: (1) job satisfaction causes job performance; (2) job

EXHIBIT 3.2 The Three Components of Attitudes: Cognition, Affect, and Behavior

Stimuli Work environment factors

Cognition

Affect

Behavior

Manager style Technology Noise Peers Reward system Compensation plan Career opportunities

Beliefs and values

“Having a fair supervisor is important to me.”

“My supervisor is unfair.”

“I don’t like my supervisor.”

“I’ve submitted a formal request to transfer.”

Feelings and emotions

Intended behavior

66 Part Two Understanding and Managing Individual Behavior

performance causes job satisfaction; and (3) the job satisfaction–job performance rela- tionship is moderated by other variables such as rewards. Exhibit 3.3 shows each of these viewpoints.

The first two views have mixed, but generally weak, research support. Most studies dealing with the performance–satisfaction relationship have found low association between performance and satisfaction. The evidence is rather convincing that a satisfied employee is not necessarily a high performer. Managerial attempts to make everyone satisfied will not necessarily yield high levels of productivity. Likewise, the assumption that a high- performing employee is likely to be satisfied is not well supported.

The third view suggests that satisfaction and performance are related only under certain conditions. A number of other factors, such as employee participation, have been suggested as affecting the relationship.31 Most attention, however, has focused on rewards as influenc- ing the relationship. Generally, this view suggests that the rewards one receives as a conse- quence of good performance, and the degree to which these rewards are perceived as reasonable or equitable, affect both the extent to which satisfaction results from performance and the extent to which performance is affected by satisfaction. This means that if an employee is rewarded for good performance and if the reward is deemed fair by the employee, job satisfaction will increase (or remain high). This in turn will have a positive effect on per- formance, leading to additional rewards and continued higher levels of job satisfaction.

There is a great deal we do not yet understand regarding the role of job satisfaction. It is clear, however, that it can affect a number of important performance variables. Absen- teeism and turnover, for example, have been frequently associated with satisfaction, although the relationship is not strong.32 Increasing job performance and employee

EXHIBIT 3.3 Satisfaction– Performance Relationships: Three Views

2. Job performance Job satisfaction

“The more productive worker is satisfied.”

3. Job performance Job satisfactionRewards

Perceived equity

1. Job satisfaction Job performance

Causes

“The satisfied worker is more productive.”

Causes

67

productivity will continue to be a major management focus in the 21st century. As long as this remains the case, it is unlikely that interest in job satisfaction will diminish among either organizational researchers or managers. The OB Matters box discusses how Generation Z employees will provide their own perspective on job satisfaction as they begin to enter the workforce.

Personality The relationship between behavior and personality is perhaps one of the most complex matters that managers have to understand. When we speak about an individual’s personality we are referring to a relatively stable set of feelings and behaviors that have been significantly formed by genetic and environmental factors. Although many aspects of personality formation, development, and expression are not perfectly understood, certain principles are generally accepted as being true. For example, personality: 1. Appears to be organized into patterns that are, to some degree, observable and measurable. 2. Has superficial aspects, such as attitudes toward being a team leader, and a deeper core,

such as sentiments about authority or a strong work ethic. 3. Involves both common and unique characteristics. Every person is different from every

other person in some respects and similar to other persons in other respects.

personality A relatively stable set of feelings and behaviors that have been signifi- cantly formed by genetic and environmental factors.

GEN Z GETS READY TO WORK Much has been written over the last decade about millennials, their traits, and their overall approach to work. But this demographic— roughly those in their mid-30s and younger—is about to take a back seat to the newest group entering the workforce: Generation Z.

Generation Z is comprised of young adults born in the 1990s, who will be the next big thing for marketers, cultural observers, and com- panies of all shapes and sizes. With the oldest member of this group barely out of high school, Generation Z will soon have an impact on organizational behavior. According to recent research about Gen Z and millennials, here are some interesting observations:

Gen Z is truly the first demographic group that can be called “digi- tal natives.” They have spent their entire lives online—cultivating relationships on Facebook, Twitter, and Instagram while learning about the world through mobile devices. Because of their digital know-how and what they have learned from the careless ap- proach to online behavior from older friends and family, they are wary about connecting online with just anyone.

Gen Z is more diverse and holds a more positive view of ethnic di- versity in America than prior generations. The Census Bureau esti- mates that by 2020, more than 50 percent of children under 18 will be part of a minority race or ethnic group.

Unlike millennials, whom they saw struggle through the recent recession, Gen Z-ers are concerned about financial stability and landing their dream job within 10 years of college graduation. In fact, their top concern is landing that first job out of college, followed by the high cost of education.

Flexibility is critical to Gen Z employees, and they will put intense pressure on companies to provide creative work arrangements. Remember, this group is tech savvy and sees no reason to be chained to a desk for eight hours a day.

Once Gen Z-ers settle into the workforce, it’s likely they will be managed by millennials, with whom they share several common characteristics: lots of self-confidence, a desire to learn new job skills, and a can-do attitude toward work. Where the two groups differ, however, is that Gen Z seems to be more realistic than mil- lennials regarding workplace expectations and has a stronger desire for management to listen to their ideas and value their opinions.

Like millennials, Gen Z-ers want to be their own boss, sooner rather than later. In addition, once they find that first job, research suggests members of Gen Z will think nothing of changing jobs after one year of employment—an ongoing challenge for compa- nies trying to retain top talent for the long haul.

Sources: Ananya Bhattacharya, “Get Ready for Generation Z at Work,” CNN Money, http://money.cnn.com, accessed March 4, 2016; Grace L. Williams, “Generation Z to Eclipse Millennials as Economic Force, Says Goldman Sachs,” Today, http://www.today.com, accessed March 4, 2016; Meg Osman, “How the Workplace Needs to Change for Generation Z,” Business Journals, http://www. bizjournals.com, accessed March 4, 2016; Alex Williams, “Move Over, Millenni- als, Here Comes Generation Z,” The New York Times, http://www.nytimes.com, accessed March 4, 2016; company website, “Infographic: The Difference Between Gen Z and Millennials in the Workplace,” http://www.adeccousa.com, accessed March 4, 2016; Bob Crouch, “How Will Generation Z Disrupt the Workplace? Fortune, http://fortune.com, accessed March 4, 2016.

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68 Part Two Understanding and Managing Individual Behavior

In the years following World War II, many researchers and managers believed that mea- sures of personality could predict job performance and other behaviors at work. It was common for companies to administer psychological inventories to job applicants to see if they were well suited to work in certain jobs and the organization’s culture. By the 1960s, however, the validity or accuracy of such personality tests was questioned.33 One of the main reasons for this concern was the fear that such personality tests would lead to the unfair treatment of minority groups commonly discriminated against in the past.

Myers-Briggs Type Inventory Despite the concern over the potential misuse of personality tests, more researchers contin- ued to ask the question, “Does an individual’s personality affect his or her behavior at work?” To many, the answer was “yes.” In addition, many companies today use personality testing to help make selection, career planning, training, and team assignment decisions. For example, one popular personality test, the Myers-Briggs Type Inventory (MBTI), is used by many companies to assist in team building, management development, decision making, leadership, and career development. For example, Southwest Airlines uses the MBTI as a diagnostic tool to help its employees and work teams communicate and work together more effectively.34 It has been reported that more than 3 million individuals com- plete the MBTI each year.35 Although the validity of some of the uses of MBTI has been questioned,36 the large number of companies and people using this personality test is indic- ative of the increasing popularity of personality tests in general.

This renewed interest and focus on personality as a key to understanding organizational behavior led to research in the following areas: the “Big Five” personality dimensions, locus of control, self-efficacy, and creativity. The following sections will discuss the research and managerial implications of each of these personality dimensions.

The Big Five Personality Dimensions Literally hundreds of personality dimensions or traits have been identified by psychologists over the past century. However, within the past 30 years or so, a consensus has emerged that, for the most part, the human personality can be described by five dimensions or fac- tors.37 The Big Five personality dimensions include: extroversion, emotional stability, agreeableness, conscientiousness, and openness to experience.38 Each of the five factors is briefly described below. As you read the descriptions, ask yourself the following question, “To what extent does this factor describe my personality?”

Extroversion refers to the tendency to be sociable, gregarious, assertive, talkative, and active. People high in extroversion tend to enjoy talking and interaction with co-workers, and they gravitate toward jobs that have a good deal of social interaction. Research indi- cates that extroverted people tend to perform well in sales and managerial jobs, tend to do better in training programs, and tend to have higher levels of overall job satisfaction.39 This suggests that organizations such as Avon and The Sharper Image, both of which rely heavily on the successful training and performance of their salespeople, would ben- efit from using a valid personality test to measure extroversion as part of an overall selection program.

Emotional stability is the tendency to experience positive emotional states, such as feel- ing psychologically secure, calm, and relaxed. Anxiety, depression, anger, and embarrass- ment are characteristics of low emotional stability. The low-stability individual is more likely to experience job-related stress, a topic discussed in detail in Chapter 9. Although the link between emotional stability and job performance does not appear to be a strong one, some interesting research findings relate to other important work behaviors.

extroversion One of the Big Five per- sonality dimensions; it is a trait that indicates a person’s outgoing, sociable behavior.

emotional stability One of the Big Five personality dimensions; it is the ability to be calm, relaxed, and secure.

Chapter 3 Individual Differences at Work 69

For example, a meta-analysis (a large research study that analyzes results from several previous studies) found that low levels of emotional stability were associated with low levels of employee motivation.40

Being courteous, forgiving, tolerant, trusting, and softhearted are traits associated with agreeableness. The employee described as “someone who gets along with others” is high on agreeableness. It is a dimension that can help make someone an effective team player and can pay off in jobs where developing and maintaining good interpersonal relationships and helping fellow employees is important.41 Individuals low on agreeableness are often described as rude, cold, uncaring, unsympathetic, and antagonistic. Jobs and professions that require individuals high in agreeableness include customer service, sales, auditing, nursing, teaching, and social work.

Conscientiousness is exhibited by those who are described as dependable, organized, thorough, and responsible. Individuals who are conscientious also tend to persevere, work hard, and enjoy achieving and accomplishing things. It is not hard to understand why this trait is highly valued by all organizations. Employees who are low in conscientiousness tend to be sloppy, inefficient, careless, and even lazy. From a research perspective, consci- entiousness is the most closely linked dimension to job performance. Put succinctly, con- scientious employees perform better across a wide variety of occupations. Emerging research also indicates that conscientious individuals tend to exhibit higher levels of moti- vation and job satisfaction,42 as well as other important work behaviors (retention, atten- dance, and fewer counterproductive behaviors).

The final personality dimension is openness to experience. This dimension reflects the extent to which an individual has broad interests and is willing to take risks. Specific traits include curiosity, broad-mindedness, creativity, imagination, and intelligence. People high in openness to experience tend to thrive in occupations where change is continuous and where innovation is critical. For example, people who create spectacular special effects for large-budget action films need to possess high levels of this personality dimension. This holds true for employees of Double Negative, the London-based special effects firm that created many of the cutting-edge special effects in such hit movies as Harry Potter and the Deathly Hallows, Iron Man, and Interstellar. Individuals low in openness to experience (i.e., unimaginative, conventional, and habit-bound) would not fit in well at Double Negative, where change and innovation are critical for organiza- tional survival.

As Exhibit 3.4 indicates, research on the Big Five personality dimensions is promising due to the evidence that shows personality does influence important work behaviors such as job performance, training proficiency, and job satisfaction. This personality model also has implications for global management and organizational behavior. The five factors have been found in different cultures and using different languages.43 So, it is not surprising that relationships among the Big Five dimensions and job performance also apply across coun- try borders. The existence of very similar relationships has been demonstrated in Great Britain, Germany, France, the Netherlands, Norway, and Spain.44

A review of the personality research suggests that even with the Big Five, not one trait or group of traits predicts with precision how well someone will perform on a particular project or in a specific job. In addition to assessing one’s personality, firms should use a variety of selection tools to try to match a person’s interests and skills with a particular job. These can include a structured interview, a cognitive ability test, and a work performance test. The individual job candidate or employee applying for an internal promotion also should be attempting to find the best fit for himself or herself in the job and organization. Using only the scores on a personality test will often lead to misalignment and poor person– job (and person–organization) fit. Once into a job, individuals who work hard at the “fit”

agreeableness One of the Big Five personality dimensions; it is the tendency to be courteous, forgiving, tolerant, trusting, and softhearted.

conscientiousness One of the Big Five personality dimensions; it is the tendency to be dependable, organized, thorough, and respon- sible.

openness to experience One of the Big Five personality dimensions; it reflects the extent to which an individual is broad-minded, creative, curious, and intelligent.

70 Part Two Understanding and Managing Individual Behavior

are likely to experience higher levels of job satisfaction, more positive attitudes, and better relationships among peers.

In addition to assessing applicants and employees on certain dimensions of the Big Five, organizations often choose a few relevant personality traits that they believe are closely linked to performance in certain jobs and in their organization. We now will look at three such personality traits of interest to many organizations: locus of control, self-efficacy, and creativity.

Locus of Control The locus of control of individuals determines the degree to which they believe their behav- iors influence what happens to them.45 Some people believe they are autonomous—that they are masters of their own fate and have personal responsibility for what happens to them. When they perform well, they believe it is because of their effort or skill. They are called internals. Others view themselves as helpless pawns of fate, controlled by outside forces over which they have little, if any, influence. When they perform well, they believe it is due to luck or because it was an easy task. They are referred to as externals. Some research suggests that externals score low on the Big Five dimensions of extroversion and emotional stability.46 If you believe that the grades you typically receive in school are due to the particular classes you take, the characteristics of your professors, or the type of tests given, you are probably an external. On the other hand, if you think your grades typically reflect the amount of time and effort you devote to a particular class and your knowledge of the subject matter, you are most likely an internal.

In organizational settings, internals usually do not require as much supervision as do externals because they are more likely to believe their own work behavior will influence outcomes such as performance, promotions, and pay. Some research suggests locus of

locus of control Specifies a person’s belief that he or she does or does not master his or her fate.

Associated with Dimension These Work Behaviors Managerial Implications

High extroversion Job performance of managers and Use personality assessment to identify salespersons; training proficiency extroverted individuals for jobs requiring large

amounts of social interaction. High emotional stability Overall job satisfaction; motivation Managers can only do so much to increase job

satisfaction and to motivate employees; employees low in emotional stability will be more difficult to influence in these areas.

High agreeableness Peer ratings of team members; Managers should try to include on interpersonal skills teams individuals who are agreeable because

they help the team to function more smoothly by using their good interpersonal skills to keep communication channels open and to work out intragroup problems.

High conscientiousness Job performance across most Personality assessments should be used to occupations; motivation; job select individuals with high levels of satisfaction; retention; attendance; and conscientiousness. fewer counterproductive behaviors Selections should include new hires and current

employees applying for internal promotions. Openness to experience Training proficiency Personality assessment should be used to

identify employees for key training opportunities.

EXHIBIT 3.4 The Big Five Personality Dimensions: A Summary

Chapter 3 Individual Differences at Work 71

control is related to moral behavior, with internals doing what they think is right and being willing to suffer the consequences for doing so.47

Self-Efficacy Self-efficacy relates to personal beliefs regarding competencies and abilities. Specifically, it refers to one’s belief in one’s ability to successfully complete a task. Individuals with a high degree of self-efficacy firmly believe in their performance capabilities. The concept of self-efficacy includes three dimensions: magnitude, strength, and generality.

Magnitude refers to the level of task difficulty that individuals believe they can attain. For example, Jim may believe he can put an arrow in the archery range target six times in 10 attempts. Sara may feel she can hit the target eight times; thus Sara has a higher magnitude of self-efficacy regarding this task than Jim. Strength refers to whether the belief regarding magnitude is strong or weak. If in the previous example Jim is moderately certain he can hit the target six times, while Sara is positive she can achieve eight hits, Sara is displaying greater strength of belief in her abil- ity than is Jim. Finally, generality indicates how generalized across different situations the belief in capability is. If Jim thinks he can hit the target equally well with a pistol and rifle and Sara does not think she can, Jim is displaying greater generality than is Sara.

Beliefs regarding self-efficacy are learned. The most important factor in the develop- ment of positive self-efficacy appears to be past experience. If over a period of time we attempt a task and are increasingly successful in our performance, we are likely to develop self-confidence and an increasing belief in our ability to perform the task successfully. Conversely, if we repeatedly fail in our attempts to perform a task well, we are not as likely to develop strong feelings of self-efficacy. Self-efficacy tends to be task specific; that is, a belief that we can perform very well in one job does not necessarily suggest a corresponding belief in our ability to excel in other jobs.

According to an analysis of self-efficacy by Gist and Mitchell,48 research on self-efficacy has led to several consistent findings. They indicated that self-efficacy is associated with work-related performance, career choice, learning and achievement, and adaptability to new technology, and they noted that certain training methods could enhance self-efficacy in individual trainees. A related large-scale research study found that individuals high in self-efficacy tended to perform at a higher level.49 Also supporting these conclusions is the research by Bandura and Locke, who found that, when combined with goal setting, indi- viduals with high levels of self-efficacy tend to display higher levels of motivation and performance.50

Thus, feelings of self-efficacy have a number of managerial and organizational implications: ∙ Selection decisions—Organizations should select individuals who have a strong sense

of self-efficacy. These individuals will be motivated to engage in the behaviors that will help them perform well. A measure of self-efficacy can be administered during the hir- ing/promotion process.

∙ Training programs—Organizations should consider employee levels of self-efficacy when choosing among candidates for training programs. If the training budget is lim- ited, then more return (i.e., performance) on training investment can be realized by sending only those employees high in self-efficacy. These individuals will tend to learn more from the training and, ultimately, will be more likely to use that learning to enhance their job performance.

∙ Goal setting and performance—Organizations can encourage higher performance goals from employees who have high levels of self-efficacy. This will lead to higher levels of performance from employees, which is critical for many organizations in this era of hypercompetition.

self-efficacy Designates a person’s belief that he or she has the competency to complete a job successfully.

72 Part Two Understanding and Managing Individual Behavior

Creativity Creativity is a personality trait that involves the ability to break away from habit-bound thinking and produce novel and useful ideas. Creativity produces innovation, and inno- vation is the lifeblood of a growing number of corporations. The 3M company is famous for its creativity and product innovations. Rubbermaid introduces one new product a day. These companies and others, such as Walt Disney company, Zappos, Google, IDEO, Tesla Motors, Salesforce.com, and Apple are well known for their efforts to stimulate creativity.

Creativity is a personality trait that can be encouraged and developed within organiza- tions by giving people opportunity and freedom to think in unconventional ways.51 For example, one major impediment to increasing creativity in work settings is the fear of failure. If an organization is intolerant of mistakes and failure, it should not expect employ- ees to take the risks often inherent in creative approaches to problems. At Heinz’s highly successful frozen foods subsidiary, Ore-Ida, management is aware that creative behavior will sometimes result in mistakes. They have defined what they call the “perfect failure” and have arranged for a cannon to be shot off in celebration every time one occurs. The cannon symbolizes that a failure has occurred, been learned from, and been forgotten. Because failures are openly discussed and treated positively, the creative risk-taking behav- ior that management attempts to nourish is continued.52

Emotions Why is it that some co-workers, customers, or managers always appear calm and rational, while others can get excited or angry at the drop of a hat? People are different in terms of how they experience and exhibit emotions. Are certain people—like airline pilots, ICU nurses, police officers, surgeons, and firefighters—supposed to be calm under stressful situations? The answer is yes. Defined as a state of physiological arousal accompanied by changes in facial expressions, gestures, posture, and subjective feelings,53 emotions play an important role at the workplace.

Research suggests that there are eight primary emotions: surprise, joy, anticipation, accep- tance, fear, sadness, disgust, and anger.54 Is it common to see these emotions at work? Abso- lutely. Perhaps you were surprised when you were given a prestigious employee award this year. Or, maybe a co-worker was angry about management’s recent decision to cut her depart- ment’s budget by 15 percent. Such emotional reactions are a normal part of organizational life.

Moods The mildest forms of emotions are called moods. A mood is a low-intensity, long-lasting emotional state.55 Moods act as subtle emotional factors that affect day-to-day behavior. For example, when a team member is in an irritable mood, he may react angrily to any request made to pitch in on a specific job task. When the same person is in a good mood he is more likely to help with the request.

Moods can be contagious. This phenomenon, known as mood (or emotional) contagion, is the automatic transfer of mood between persons.56 Research seems to support this notion.57 For example, one study found that when leaders were in a positive mood, indi- vidual group members were more likely to be in a positive mood.58 Groups with leaders in a positive mood worked better together and used less effort than groups with leaders in a negative mood.59 Other research studies have reported a similar link between leader and follower mood.60 This suggests that our moods matter and we should try to maintain a positive mood whenever at work. The nearby OB Matters discusses the importance of staying positive at work.

emotions A state of physiological arousal accompanied by changes in facial expres- sions, gestures, posture, or subjective feelings.

mood A long-lasting state of emotion.

mood (or emotional) contagion The transfer of mood or emotions from one individual to others.

73

Emotional Labor Managing emotions in order to perform one’s job is called emotional labor.61 In organiza- tions emotional labor may involve enhancing, faking, or suppressing emotions in an effort to keep them under control. The rules or norms regarding expectations about emotional expression may be acquired by observing colleagues or they may be stated in selection or training material.62 For example, an employee working in customer service may be encour- aged to smile, listen attentively, and show respect to even the most belligerent customers. On the other hand, a person attempting to collect an accounts receivable payment may be instructed to be firm, somewhat angry, but polite in attempting to secure the overdue pay- ment. In these cases the employee is managing and modifying the emotions that the orga- nization believes are most effective. While emotional labor results from modifying emotional expression in an interaction, this labor is also experienced through empathy. Employees observing co-workers being treated unfairly showed increased emotional labor even though they themselves were being treated fairly.63

Although emotional labor may be organizationally effective, employees may pay a price. Some researchers have found that managing emotions (e.g., emotional labor) is stressful and may result in burnout. The assumption is that managing emotions requires effort, time, and energy. Organizations that attempt to orchestrate emotions, something very personal, have found resistance, skepticism, and discomfort among employees.64

Individuals can manage their emotions in two ways: through what is called surface act- ing, where one regulates his or her emotional expressions, and through deep acting, where one modifies feelings in order to express a desired emotion. In both surface and deep act- ing, a conscious effort is being made.65

More emotional labor is likely in work settings that have a high frequency of negative events. And the more emotional labor, the more stress and burnout. The amount of emotional labor relates to increased stress because of the physiological demands for managing emotions.

Managers who are aware of the possible negative effects (e.g., withdrawal, poor atti- tudes, depression) of emotional labor are better prepared to provide necessary support, coaching, training, and guidance. Emotional labor is still a relatively new area of study, but it is already known that emotions play a significant role in an organization’s life.66

emotional labor The effort and work to manage your emotions to keep them under control.

BE POSITIVE, STAY EMPLOYED! Is a positive outlook good for your career? While most would agree it’s more pleasant to be around those with positive emotions, anecdotal evidence suggests that being positive may save your job. In a recent article on “fireproofing” your job in a time of layoffs, a positive attitude was listed as one of the best ways to be retained. The logic is simple: If you had to choose one of two comparable employees to lay off, would you keep the complainer or the employee with a positive atti- tude? The article also stated that socializing with those exhibiting negative attitudes could lead to your being labeled with that same at- titude. It suggests that if you find yourself in a negative conversation about low salaries, layoffs, poor supervision, and so on, break it off while trying to maintain a positive connection with the complainer(s). A similar article observes that while managers must maintain the bottom line, they also have a strong desire to maintain morale and don’t want people around that may cause trouble. Make it known that you are

willing to make a positive contribution to the organization. These arti- cles suggest that the employee perspective “the glass is half full” (ver- sus “the glass is half empty”) may become a self-fulfilling prophecy when it comes to staying employed during tough times.

Other than potentially making the workplace more pleasant, does a positive attitude impact business outcomes? Studies have found that a smile can lead to favorable interactions with customers. While the research on the impact of smiles has focused on retail, one could ex- pect similar outcomes with internal customers and maybe even a su- pervisor within an organization.

Sources: Caroline Ceniza-Levine, “Layoffs Coming? Seven Mistakes to Avoid,” Forbes, http://www.forbes.com, accessed March 4, 2016; Travis Bradberry, “How (and Why) to Stay Positive,” Forbes, http://www.forbes.com, accessed March 4, 2016; Tyler Cowen, “Strategies for Keeping Your Job,” CNN Money, May 5, 2009, http://money.cnn.com; Donna Rosato, “Smart Job Strategies to Avoid Layoffs,” CNN Money, January 15, 2009, http://money.cnn.com.

O B M A T T E R S

74 Part Two Understanding and Managing Individual Behavior

Emotional Intelligence Can managing your and others’ feelings make you a better manager or leader? What is the precise nature of this ability and how can it be measured accurately? Is managing emotions an innate ability or can it be learned on the job? These questions (and others) are at the core of a popular though controversial area of research known as emotional intelligence.67 Emotional intelligence (EI) is the ability to manage one’s own and others’ emotions in order to guide one’s behavior and achieve goals.68

EI has attracted a great deal of attention over the past 25 years from researchers, organi- zational managers and leaders, and consultants.69 A recent research study concluded that there is positive support for the validity of the EI construct and its relationship to a variety of outcomes, including social relations, workplace performance, and mental and physical well-being.70

In addition, research suggests that leaders who manage their moods and emotions may be more effective at developing group goals and objectives, motivating others, generating cooperation and trust, and encouraging flexibility in decision making.71 The ability to man- age one’s own and others’ emotions extends to anyone who works with other people in organizations, whether they are physicians, nurses, customer service representatives, team leaders, manufacturing operators, lawyers, or frontline supervisors. Emotions are a part of who we are and the ability to be aware of and regulate our feelings and moods can help make us more effective in the workplace.

While there are several different ways to conceptualize emotional intelligence, a popular approach suggests that EI consists of the following four dimensions:72

1. Self-awareness: Emotionally intelligent individuals have a greater awareness of their own emotions and feelings. By accurately assessing their feelings, these individuals are in a better position to act in a way that fits with their emotions. For example, if an employee has enjoyed working with a certain manager on successful projects in the past, then that employee can act on this awareness by volunteering to work with the manager again in the future.

2. Social awareness: Individuals with higher levels of EI are better at demonstrating empa- thy or relating to other people. They are more likely to meet other people’s needs and understand the needs of the organization. For example, a manager who is aware that one

emotional intelligence (EI) The ability to manage one’s own and others’ emotions in order to guide one’s behavior and achieve goals.

Y O U B E T H E J U D G E

CAN JOBS BE STEREOTYPED BY GENDER? One of the most important—and interesting—individual difference variables is gender. While many gender distinctions are more imagined than actual, there are some real differences. Men tend to be taller than women and women tend to live longer than men, to mention just a few. It is also true that there are some real differ- ences in the proportion of males and females in certain jobs. A majority of nurses are female, for example. Similarly, most electri- cians are male. There are, however, no true gender differences that would dictate that nurses had to be women, or that electri- cians had to be men. Still, many people believe that some jobs are “female” and others are “male.”

Such a person was a male manager for a Washington DC com- pany. When a receptionist position became available in his office, he instructed one of his female employees to fill the vacant posi- tion with a woman. The notion of having a male receptionist simply did not fit his stereotype of this category. In a number of different ways he made it clear that “men are not receptionists.” Clearly upset by this kind of thinking, the female employee who had been instructed to fill this position with a woman sued her employer for sex discrimination.

How would you have ruled in this case? Is this sex discrimina- tion? Do you think any laws were broken here? If not, should there be a law against such behavior?

Chapter 3 Individual Differences at Work 75

of her best employees is currently taking care of an ill parent may allow the employee to be on a flexible schedule so he can balance between work and caring responsibilities.

3. Self-management: An important aspect of having EI is not letting your emotions or mood swings disrupt your productivity or relationships with your supervisor, co-work- ers, or customers. Maintaining self-control, even when you feel like acting in a different manner, helps managers or leaders maintain a reputation for being adaptable, trustwor- thy, and good under pressure.

4. Relationship management: Maintaining positive and productive relationships with people at work requires that we listen to their needs, communicate in a positive manner, collaborate with them on projects, and support their ideas and initiatives. Feeling con- nected with others at work leads to a more productive and respectful work environment.

EI and Career Success A major reason EI interests people is that it has been proposed to be important for career success. Salovey and Mayer temper any claims about the link between EI and career suc- cess. They dispute the claim that “if intelligence predicts 20 percent of success, EI can fill in the 80 percent gap.”73

Even if EI is important for career success, it works in conjunction with other factors: integrity, persistence, passion, and general intelligence. Over the course of a career, EI seems to increase. Learning about emotional skills and how to apply them is an exciting idea. It suggests a maturation process: A person starting a career with moderate or poor EI can learn to improve his or her emotional management skills. Over time, better EI may indeed mean more career success. There is a caution regarding EI and career pro- gression. While increasing EI has been associated with increasing rank through middle management, EI has also been shown to decrease as one moves from middle to senior management. The drop does not mean EI is less important to senior management but may indicate that the stress and prestige of senior positions has led some executives to forget its importance.74

Each of the individual difference variables discussed here—diversity, abilities and skills, attitudes, personality, and emotions—impact organizational effectiveness and effi- ciency. Managers who ignore the importance of these variables do themselves, their employees, and their organizations a disservice. As we proceed through the next six chap- ters focusing on individual-level behavior, keep in mind how these individual differences help shape the behavior and performance of employees.

Y O U B E T H E J U D G E C O M M E N T

CAN JOBS BE STEREOTYPED BY GENDER? Unless the male manager can show empirical evidence that a man couldn’t perform the job, the woman who sued would win the case. Yes, it is sex discrimination unless empirical evidence shows other- wise. The male manager has applied a stereotype to the position. Can he support his thinking? Probably not for this type of job.

The Big Five personality model suggests that five dimensions are central to describing personality. These five dimensions

are extroversion, emotional stability, agreeableness, conscien- tiousness, and openness to experience. Every individual’s per- sonality reflects differing degrees of these five factors.

Numerous personality factors operate to influence behavior. Three that are frequently identified as important in explaining behavior and performance are locus of control, self-efficacy, and creativity.

76 Part Two Understanding and Managing Individual Behavior

Summary of Key Points

∙ Major individual variables that influence work behavior include diversity, abilities and skills, attitudes, personality, and emotions. These combine with various organizational variables (resources, leadership, rewards, job design, structure) to shape productive, nonproductive, and counterproductive work behaviors.

∙ The U.S. workforce is growing more diverse. Organizations that manage diversity and create a culture of inclusion are likely to experience enhanced decision quality, better connections with customers, and more creativity and innovation.

∙ An attitude is a learned predisposition to respond favorably or unfavorably to people, objects, and situations with which it is related. An attitude consists of a cognitive com- ponent (beliefs), an affect component (feelings), and a behavioral component, which consists of the individual’s behavioral intentions.

∙ Although the job satisfaction–job performance relationship is a complex one that is not fully understood, it seems clear that these two variables are related under certain condi- tions. One current view is that the rewards one receives as a consequence of good per- formance, and the degree to which these rewards are perceived as reasonable, affect both the extent to which satisfaction results from performance and the extent to which performance is affected by satisfaction.

∙ Personality exerts a strong influence on human behavior in organizations. Human per- sonality can be described by the Big Five personality factors: extroversion, emotional stability, agreeableness, conscientiousness, and openness to experience.

∙ Emotions or moods pervade every aspect of organizational life. Emotional labor is the effort required to manage your emotions at work to keep them under control. Managing emotions can be stressful and may contribute to burnout. Emotional intelligence (EI) refers to the ability to manage one’s own and others’ emotions to achieve organizational goals. One popular conceptualization of EI includes self-awareness, social awareness, self-management, and relationship management.

1. So many factors influence an individual’s behavior that it is impossible to accurately predict what that behavior will be in all situations. Why then should managers take time to understand individual differences?

2. What are some of the best ways to acquire tacit knowledge? How can mentoring help? 3. Have you ever had a “bad attitude” toward a situation, a certain course that you didn’t

like, or a boring job assignment? How did that attitude affect your behavior (i.e., per- formance, attendance, and so on)? How did you attempt to improve your attitude?

4. Think of an important attitude you have regarding a career. Identify the three compo- nents of that attitude and indicate what each outcome response would be.

5. As the U.S. workforce becomes much more diverse, what implications will that have for managers as they attempt to create and maintain a work environment that allows all types of employees to contribute to the organization? How should employees’ individ- ual differences be treated: accepted/valued or assimilated into the organization culture?

6. The text identified job satisfaction as an important attitude. What other attitudes might be important in work settings?

7. Are you an internal or an external? Would you rather have a boss who is an internal or an external? Why?

Review and Discussion Questions

8. Of the Big Five personality dimensions, conscientiousness is the most important fac- tor in predicting job performance across most occupations. How can a person develop a greater amount of conscientiousness in his or her work? What steps can you as a manager take to encourage employees to be more conscientious?

9. As a manager, how might you increase a subordinate’s feelings of self-efficacy regard- ing a job assignment? How might you attempt to increase the creativity of your subor- dinate?

10. What steps can you take to increase your level of emotional intelligence?

Chapter 3 Individual Differences at Work 77

The following 27 statements are designed to provide some insights regarding how you see yourself. In the blank space next to each of these statements, write the number that best describes how strongly you agree or disagree with the statement, or how true or false the statement is as it applies to you. The numbers represent the following:

5 = Strongly Agree, or Definitely True 4 = Generally Agree, or Mostly True 3 = Neither Agree nor Disagree, Neither True nor

False 2 = Generally Disagree, or Mostly False 1 = Strongly Disagree, or Definitely False

Example:

2 You enjoy playing “bridge.” (The “2” in the space next to the statement indicates that you generally disagree: you are more negative than neutral about enjoying “bridge.”)

1. In some circumstance in the past you have taken the lead.

2. Everyone should place trust in a supernatural force whose decisions he or she always obeys.

3. You like to perform activities involving selling or salesmanship.

4. As a rule you assess your previous actions closely.

5. You often observe those around you to see how your words and actions affect them.

6. What you earn depends on what you know and how hard you work.

7. Generally, those in authority do their share of the unpleasant jobs without passing them on to others.

8. The remedy for social problems depends on eliminating dishonest, immoral, and mentally inferior people.

9. Most people today earn their pay by their own work.

10. The lowest type of person is the one who does not love and respect his parents.

11. There are two kinds of people: the weak and the strong.

12. You are the kind of person who tends to look into and analyze himself or herself.

13. Your promotions depend more on whom you know than on how well you do your work.

14. All children should be taught obedience and respect for authority.

15. Those who are in public offices usually put their own interest ahead of the public inter- est.

16. Many bosses actually deserve lower pay than their employees.

17. Taking on important responsibilities like starting your own company is something you would like to do.

18. An insult to your good name should never go unpunished.

19. In a meeting you will speak up when you disagree with someone you are convinced is wrong.

Exercise

Exercise 3.1: Personality Insights

78

78 Part One The Field of Organizational Behavior

Reality Check Now how much do you know about individual differences?

6. is a personality trait displayed by an employee who is dependable, organized, respon- sible, and thorough. a. Conscientiousness b. Agreeableness c. Open d. Extroverted

7. The most important factor in developing positive self-efficacy is . a. Intelligence b. Past experience c. Attitude d. Self-concept

8. True or false: SAS offers a generous family-friendly package of benefits aimed to boost employee morale on the job. a. True b. False

9. Attitudes consist of three components. Two of these are behavior and affect. What is the third component? a. Style b. Response c. Cognition d. Impression

10. is a learned talent that an employee has acquired to complete and perform a task as expected. a. Ability b. Personality c. Mental trait d. Skill

REALITY CHECK ANSWERS

Before After

1. c 2. c 3. d 4. a 5. b 6. a 7. b 8. a 9. c 10. d Number Correct Number Correct

20. Thinking about complex problems is en- joyable to you.

21. Generally, people are well paid for their contributions to society.

22. It is better to work for a good boss than for yourself.

23. Many times you would like to know the real reasons some people behave as they do.

24. In the long run, we each get what we deserve.

25. Most organizations believe in paying a fair day’s wages for a fair day’s work.

26. Getting ahead is based more on your performance than your politics.

27. You can’t expect to be treated fairly by those above you unless you insist on it.

Enter your answers to the questions above in the appropriate spaces below. In those cases where there is an asterisk before the number, use reverse scoring by

Chapter 3 Individual Differences at Work 79

subtracting your score from six, that is, 1 becomes 5, 4 becomes 2, and so forth.

Group 1 Group 2 Group 3 Group 4

6. 1. *2. 4. 7. 3. *8. 5. 9. 17. *10. 12. *13. 19. *11. 20. *15. *22. *14. 23. *16. Total *18. Total 21. Total 24. 25. 26. *27. Total

Now take each of your totals and divide by the number of answers to obtain your average responses, that is, 2.3, 3.2, 4.1, and so forth. On a scale of 1–5, this mea- sures how you see yourself in each of these four areas.

Average Score

The four areas, represented by Groups 1–4, respec- tively, are:

1. Fair—this score measures the extent to which you see the world as treating you fairly.

2. Assertive—this score measures the extent to which you see yourself as aggressive.

3. Equalitarian—this score measures the extent to which you see yourself as nonauthoritar- ian.

4. Introspective—this score measures the ex- tent to which you see yourself as thinking about things that go on around you and try- ing to determine why they occur.

Source: This self-feedback experiential exercise is reprinted with permis- sion from the Subordinates’ Management Style Survey by Bernard M. Bass, Enzo R. Valenzi, and Larry D. Eldridge.

Mark, a project leader in Austin, Texas, needed a new software engineer for his eight-person team. He used his network, reviewed résumés, and invited 15 candi- dates for interviews. In addition he had the top three candidates complete the 16-Personality Factors Test. This was a general test that he believed would reveal personality characteristics that were important to know before making a job offer.

Personality testing is a relatively inexpensive method that helps managers make important hiring de- cisions. Tom, a member of Mark’s team, warned every- one about putting too much confidence into personality test results, however. Tom had read that personality tests were not reliable and could be faked.

Another team member, Mary, believed Tom to be correct and incorrect at the same time. Some tests are poor, while others have helped employers make good selection decisions, she said. She emphasized “helped.” Tests by themselves shouldn’t be the sole factor in hir- ing top performers. They are just one tool, she said. She had heard about other firms using different kinds of tests to assess emotions, intelligence, and interper- sonal style.

In fact, studies do indicate that good personality tests are more reliable predictors of performance than interviews and résumés. However, they are still contro- versial. Some employers have had to face lawsuits be- cause personality tests were used inappropriately. For example, Rent-A-Center, Inc., used a personality test to fill management positions. The U.S. Court of Appeals for the Seventh Circuit in Chicago ruled that the test qualified as a medical exam. The Americans with Dis- abilities Act prohibits requiring medical examinations before making a job offer.

Court rulings on and controversy about personality testing has not stopped employers from using such tests. In an effort to match the best-qualified person with the position, personality testing, although contro- versial, can be beneficial.

Employers are very interested in what differenti- ates one person from another in terms of behavior and performance. Personality testing attempts to provide quantifiable data that can make the differentiation easier. Such differentiation is still difficult. Some per- sonality researchers suggest there are regional differ- ences in personality. That is, a New York candidate

Case

Case 3.1: Personality Testing: Yes or No?

80 Part Two Understanding and Managing Individual Behavior

for Mark’s position would be different from an Ore- gon candidate.

Mark, after considering all the issues surrounding personality testing, decided he would not conduct or use such tests in the future. Questions 1. Is Mark making a good decision to drop the use of

personality testing? Why? 2. The better-quality personality tests are difficult to

fake. Other than attempting to land the job, why would a job candidate fake a personality test?

3. Could personality testing be used for management decisions other than hiring? Explain.

Sources: "The Big Five Project Personality Test," www.outofservice.com/ bigfive/, accessed March 4, 2016; Patrick D. Converse, Frederick L. Oswald, Anna Imus, Cynthia Hedricks, and Radha Roy, “Comparing Personality Test Formats and Warnings: Effects on Criterion-Related Validity and Test-Taker Reactions,” International Journal of Selection and Assessment 16, no. 2 (June 2008), pp. 155–69; Victoria Knight, “Personality Tests as Hiring Tools,” The Wall Street Journal, March 15, 2006, p. B3A.

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Continuing the discussion of individual differences at work (see Chapter 3), employees frequently use their perception and make attributions on a daily basis. Two employees who work next to each other in the same department may perceive the same event (e.g., a colleague is terminated) or comment from their supervisor (e.g., “we’re going to have to start working more efficiently”) in vastly different ways. Similarly, employees make differ- ent attributions when they try to make sense of why things happen or why people behave in certain ways. The ways in which employees perceive things can affect their behavior at work, including their job satisfaction, performance, and turnover. While managers cannot directly assess an employee’s perception or attributions, they can try to understand each employee’s perspective and view of the work environment. Understanding these individual characteristics helps managers perform their roles and jobs more efficiently and more effectively.

The Perceptual Process What would it be like to have your vision restored after a lifetime of blindness? In reality, a first look at the world would likely be confusing, disappointing, and not impressive. A newly sighted person would have to learn to identify shapes, read clocks, recognize danger, judge distances, and find a way to navigate across busy intersections.

One researcher describes a cataract patient as Mr. B, a 52-year-old, who had been blind since birth.1 After a delicate operation his sight was restored, but Mr. B struggled to use his new vision. One day Mr. B was found crawling out of a hospital window to get a closer look at the traffic on the street. His curiosity and unfamiliarity with judging distance cre- ated a dangerous problem. He left his fourth-floor room to get a closer look. Mr. B wasn’t familiar with judging distance. He had a size constancy perception problem. The perceived size of the cars remained the same, despite changes in their image as it was processed through the retina.

Perceptions and Attributions Learning Objectives

After completing Chapter 4, you should be able to:

Describe the different stages of the perceptual process.

Discuss the process of perceptual grouping. Compare the six potential inaccuracies that

can result from perceptual grouping.

Summarize how employees use attribution theory to explain the causes of events.

Explain why and in what contexts impression management tactics are more commonly used.

C H A P T E R F O U R

© Ingram Publishing, RF

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Perception is empirical in that it is based on prior experience. Mr. B had never before experienced seeing cars at a distance of four floors. Perception is defined as the cognitive process by which an individual selects, organizes, and gives meaning to environmental stimuli.2 Through perception, individuals (e.g., Mr. B) attempt to make sense of their envi- ronment and the objects, people, and events in it. Because each person gives his or her own meaning to stimuli, different individuals will “perceive” the same thing in different ways. When we comment to a classmate, “This course is exciting,” what we really mean is, “This class excites me.” While we think we are describing some objective reality, we are in fact describing our subjective reactions to that reality.3

Peter Drucker, who has been referred to as the father of modern management, remains prominent in the business literature even after his death.4 Through his many writings, he offered his subjective perceptions about a number of economic issues, some of which are presented in the nearby Global OB. An interesting cautionary perception of Drucker’s is that China has a small proportion of educated people, which could limit the country’s long- term economic future.

perception The process by which an individual gives meaning to environmen- tal stimuli. It involves observing, selecting, and interpreting information.

Reality Check How much do you know about perceptions and attributions?

1. Using sight, hearing, taste, and smell are part of the stage of the individual perceptual process. a. selection b. senses c. observation d. translation

2. A self-fulfilling prophecy that causes a person to behave in a negative manner to meet low expectations is called the effect. a. Pygmalion b. Golem c. perception d. attribution

3. refers to categorizing individuals (or events, organizations, etc.) on the basis of limited information or observation. a. Perception theory b. Stereotyping c. Consistency d. Attribution theory

4. When a person (e.g., manager) allows one important or noticeable characteristic of another person to bias the evaluation, perception, or impression of that person, it is called the effect. a. angel b. halo c. error d. evaluative

5. Ingratiation and self-promotion, frequently used by applicants in interview situations to gain favor with interviewers, are referred to as tactics. a. impression management b. perceptual stimulation c. attribution d. utilization

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Individuals are constantly bombarded by environmental stimuli that impact their senses of sight, hearing, smell, taste, and touch. Exactly which stimuli a person focuses on is determined by what he or she chooses to pay attention to at a particular moment. For example, a waiter may want to ignore an irate customer who’s yelling because his food doesn’t taste good. However, the waiter chooses to ignore the yelling and focus on the potential food quality issue. After speaking with the new cook, she discovers that the dish wasn’t prepared properly. The waiter apologizes to the customer and gives him a compli- mentary entree and dessert.

Exhibit 4.1 illustrates the basic framework and elements of perception operating as a cog- nitive process. Each person makes personal/individual choices and responds differently.

DRUCKER’S UNIQUE PERSPECTIVE Peter F. Drucker is considered one of the most influential forces that have shaped current thought on management, work, and globaliza- tion. Practicing into his 90s, he was considered a management “guru” who viewed the world in unique and interesting ways. As stated in this chapter, perception is an individual phenomenon. How one person views the environment, people, trends, or events is often quite differ- ent than someone else’s perceptions.

A few of Drucker’s perceptions have differed from other experts in a number of ways.

Drucker on the U.S. Economy The United States imports twice or three times as many jobs as are exported. He is referring to the jobs created by foreign companies coming into the United States. For example, the German company Siemens has 46,000 U.S. employees, and Swiss giant Nestlé has 23,000 U.S. employees. The United States is exporting low-skill, low-paying jobs and importing high-skill, high-paying jobs.

Drucker on U.S. Unemployment Problems The United States has the lowest long-term unemployment rate among industrialized nations (e.g., Germany, United Kingdom, Italy). Most of the nation’s unemployment is short term.

Drucker on the United States Setting the Tone for the World Economy The dominance of the United States is over. What has emerged is a world economy of blocks—the North American Free Trade Agreement (United States, Mexico, Canada), the European Union (28 countries), and the Association of Southeast Asian Nations (10 countries). India and China are rapidly becoming world powerhouses. However, the greatest weakness of China is its incredibly small proportion of edu- cated people. China has only 66 million college students out of a total population of close to 1.4 billion.

These examples recount a few of Drucker’s perceptions and opin- ions. They differ widely from those of a number of other experts. Each person’s perception is subjective, offering a view of reality as seen through his or her own cognitive filtering process.

Sources: Brent Schlender, “Peter Drucker Sets Us Straight,” Fortune, http:// archive.fortune.com, accessed March 9, 2016; “Number of University Graduates in China between 2004 and 2014,” Statista, http://www.statista.com, accessed March 9, 2016; “The World Factbook: China,” https://www.cia.gov, accessed March 9, 2016; company website, “Siemens in the USA,” http://www.usa. siemens.com, accessed March 9, 2016; company website, “About Us,” http:// www.nestleusa.com, accessed March 9, 2016; “Long-Term Unemployment Rates,” Trading Economics, http://www.tradingeconomics.com, accessed March 9, 2016; organization website, “ASEAN Member States,” http://www. asean.org, accessed March 9, 2016.

G L O B A L O B

EXHIBIT 4.1 The Perceptual Process: An Individual Interpretation

Response Needs Attitudes Feelings Motivation

Individual’s Perceptual ProcessWork EnvironmentStimuli Manag yle Technology Noise Peers Rewa stem Compensation plan Career opportunities

Observation Sight Hearing Taste Smell

Selection Intensity Size Impatience

Translation Stereotyping Self-concept Emotions

84 Part Two Understanding and Managing Individual Behavior

Learning about perceptual interpretation helps managers understand why individual differ- ences must be considered at work. People see the world around them in their own unique way and behave and respond according to their interpretation.

Individuals try to make sense of environmental stimuli by observation, selection, and translation. Applying our previous example to the perceptual process in Exhibit 4.1, as soon as the waiter heard (observation) the customer yelling, she focused on (selection) asking why he was so upset about his meal. Given that the waiter believed the customer was truly upset and not exaggerating (interpreting), she wanted to do something to fix the situation and restore the customer’s satisfaction. People tend to perceive stimuli that satisfy internal needs, attitudes, feelings, and motivations. In this example, perhaps the waitress was motivated to replace the entree (and give a free des- sert) because of a strong need to be perceived as an excellent waitress who cares about her customers.

There is always the possibility that a person’s perception is inaccurate. Misinterpret- ing stimuli can and often does result in perceptual errors. The research literature on interviewing suggests that interviewers rate candidates who are similar to themselves in appearance, background, and interests higher than candidates who are dissimilar.5 This is referred to as the similar-to-me perception error. Interviewers also tend to make quick first impression errors based on the first few minutes of an interview. Unfortunately, making first impression errors can eliminate many good job candidates, which is detri- mental to a firm.6 Pause for a moment and think about the last time someone was intro- duced to you. Did you shake the person’s hand? Did the firmness of the handshake suggest something about the person’s personality? While a firm handshake has been associated with an outgoing personality,7 could it have been due to other causes, and is such an instant assessment valid? Once formed, how long did you maintain this initial impression of this person, and after getting to know the person better was the initial impression accurate?

Each person selects various cues that influence his or her perception of people or events. To a considerable extent, people interpret the behavior of others in the context in which they find themselves. A classic study reported by Rensis Likert clearly illustrates this. He exam- ined the perceptions of superiors and subordinates to determine the amounts and types of recognition that subordinates received for good performance. Both supervisors and subordi- nates were asked how often superiors provided rewards for good work. Exhibit 4.2 presents the results.

The two groups perceived significant differences. Each group viewed the type of rec- ognition being given at a different level. The subordinates in most cases reported that very little recognition was provided by their supervisors and that rewards were provided

EXHIBIT 4.2 The Perceptual Gap between Supervisor and Subordinates

Source: Adapted from Rensis Likert, New Patterns in Management (New York: McGraw-Hill, 1961), p. 91.

Frequency with which Frequency with which Supervisors Say They Give Subordinates Say Various Types of Supervisors Give Various Recognition for Types of Recognition for Types of Recognition Good Performance Good Performance

Gives privileges 52% 14% Gives more responsibility 48 10 Gives a pat on the back 82 13 Gives sincere and thorough praise 80 14 Trains for better jobs 64 9 Gives more interesting work 51 3

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infrequently. The superiors, on the other hand, saw themselves as giving a wide variety of rewards for good performance. The two groups were looking at the same objective reality and very honestly reaching quite different conclusions. The situation was the same, but their interpretations of the situation were markedly different.

Managers and their employees “view” the world, stimuli, and organizational programs differently and from various perspectives. Understanding that subjective perceptions are going to differ must be understood within work environments. The manager has a respon- sibility to manage within a framework that permits and respects perceptual differences to be voiced without fear or impatience. The OB Matters illustrates how a manager’s positive or negative expectations can impact the performance of employees.

Perceptual Grouping Once relevant stimuli are selected, individuals categorize and group them so that they will make sense. The brain receives stimuli and seeks to recognize common patterns.8 This is a way of organizing sensations and applies to perceptions of people, objects, or events. Exhibit 4.3 presents the laws of perceptual grouping. ∙ The law of nearness—all other things being equal, stimuli that are near each other tend

to be grouped together.

Pygmalion effect A self-fulfilling prophecy that causes a person to behave in a positive manner to meet expectations.

Golem effect A self-fulfilling prophecy that causes a person to behave in a negative manner to meet low expectations.

A MANAGER’S EXPECTATIONS CAN INFLUENCE EMPLOYEE PERFORMANCE Perceptions do influence reality. This is the notion behind what is called the self-fulfilling prophecy or the tendency for someone’s expectations about another to cause the individual to behave in a manner consistent with those expectations. These expectations can be positive or nega- tive. The positive case is called the Pygmalion effect. A parent who expects her child to behave properly can subtly influence the child’s behavior so that the mother’s expectations are met.

Researchers have also found that the self-fulfilling prophecy can be negative—low expectations of success lead to poor performance. This is known as the Golem effect.

The lesson for managers is that the Pygmalion path is the one to take, practice, and refine. The excitement expressed by managers

who expect good results is picked up by employees. Because of their pride, employees strive to meet those expectations and they hope for good results as well.

Sources: Gregg Swanson, “The Pygmalion Effect: How It Drives Employee Performance,” LinkedIn, https://www.linkedin.com, accessed March 9, 2016; D. Eden, “Self-Fulfilling Prophecies in Organizations,” in Organizational Behavior: The State of the Science, ed. J. Greenberg (Mahwah, NJ: Lawrence Erlbaum, 2003); N. Kierein and M. Gold, “Pygmalion in Work Organizations: A Meta- Analysis,” Journal of Organizational Behavior 21 (2000), pp. 913–28; O.B. Davidson and D. Eden, “Remedial Self-Fulfilling Prophecy: Two Field Experiments to Prevent Golem Effects among Disadvantaged Women,” Journal of Applied Psychology 79 (2000), pp. 744–54; G. Natanovich and D. Eden, “Pygmalion Effects among Outreach Supervisors and Tutors: Extending Sex Generalizability,” Journal of Applied Psychology 96, no. 6 (November 2008), pp. 1382–89.

O B M A T T E R S

Pygmalion Effect

Supervisor expects subordinate to perform at higher level

Subordinate increases performance level and meets higher expectations

Supervisor’s expectations are confirmed

Subordinate raises own expectations and is more motivated

86 Part Two Understanding and Managing Individual Behavior

∙ The law of similarity—stimuli that are similar in size, color, shape, or form tend to be grouped together.

∙ The law of closure—the tendency to complete a figure, so that it has a consistent overall form. ∙ The law of figure and ground—the tendency to group sensations into figures and

backgrounds. A person who creates faulty groupings faces a number of different types of perceptual

inaccuracies or distortions. Individuals engaging in grouping also use what are referred to as schemas. A schema is a

framework embodying descriptions of people, situations, or objects. Like everyone, managers use schemas to make better sense of information. A number of useful schemas for managers are:9

∙ Person-based: Managers employ a profile schema of the characteristics of good, poor, and outstanding employees. The schema is used to compare current employees and job candidates.

∙ Role-based: These are judgments about the roles people play or can play. For example, some managers may perceive that an older employee doesn’t have enough energy to travel around the world overseeing various projects. This perception may be erroneous and biased. Certainly not all older people have low energy levels.

∙ Self-based: Individuals generalize about their own prowess, competencies, and prefer- ences based on a current or previous experience.

∙ Events-based: Managers develop a script or story about the events they are facing. For example, the creation of a script for conducting a difficult performance feedback session would help the manager prepare for the meeting.

Law of Nearness

Groups of six objects can be perceptually organized depending on spacing.

Law of Similarity

Group similar items. Do you see alternating rows of Os and Xs or columns of alternating Os and Xs?

Law of Closure

Fill in the gaps in incomplete stimuli. Do you see a triangle or three lines?

Law of Figure and Ground

Organize sensations into figures and backgrounds.

EXHIBIT 4.3 Four Different Types of Perceptual Groupings

X X X X X

X X X X X

Chapter 4 Perceptions and Attributions 87

Perceptual Groupings Can Create Inaccuracies Managers often use schemas or perceptual frameworks to think about a problem or prepare for a situation. The schema allows a person the chance to think and prepare before acting. Unfortunately, the process of creating schemas is open to the potential for inaccuracies and distortions (see Exhibit 4.4), such as prejudice resulting from inaccurate stereotyping; selective attention; the halo effect; similar-to-me errors; and others.

Stereotyping Stereotyping is a translation step in the perceptual process employed to assist individuals in dealing with massive information-processing demands. It represents a useful, even essential, way of categorizing individuals (or events, organizations, etc.) on the basis of limited infor- mation or observation. Stereotyping may occur not only as a result of direct interaction with an individual, but may also be the result of a reaction to a label or name. For example, a study found that work associated with names stereotypically connected with a particular race was evaluated differently from work associated with more general names.10 The pro- cess of forming stereotypes and placing individuals in certain categories on a shorthand basis of such stereotypes can be productive if we recognize its dangers and limitations. A prejudice is a stereotype that refuses to change when presented with information indicating the stereotype is inaccurate. Stereotypes can be helpful; prejudice is never helpful.

An extreme form of prejudice is scapegoating (blaming a person or a group for the actions of others or for conditions not of their making). Thus, scapegoating is a type of displaced aggression in which hostilities triggered by frustration are redirected at safe tar- gets. The 2009 H1N1 flu outbreak provided a modern and vivid example of scapegoating. With little information beyond the facts that the initial flu clusters originated in Mexico and the initial naming of the flu strain (i.e., swine flu), there were calls to ban Mexican pork from the United States and turn Mexican migrant workers away from U.S. hospitals.11 Some elements of the public, frightened and lacking information about the flu outbreak, lashed out in a prejudicial manner and used Mexican nationals as a scapegoat.

At times, the development of prejudice can be traced to direct experiences with mem- bers of the rejected group.12 An employee who is repeatedly belittled and embarrassed by

stereotyping A translation step in the perceptual process that people use to classify or categorize events, people, or situations.

prejudice A stereotype that doesn’t change even when information dis- puting it is presented.

EXHIBIT 4.4 Factors that Decrease Perceptual Accuracy

Factor How Decrease in Perceptual Accuracy Affects Manager Effectiveness

Stereotyping and prejudice Managers who rely on racial, gender, or ethnic stereotypes will not be able to capitalize on diversity management.

Selective/divided attention When managers are overly focused on one issue or are busy multitasking, they’ll tend to perceive less information and rely more on stereotypes.

Halo effect Managers’ evaluations of job applicants or subordinates’ performance may be biased leading to lower quality decisions.

Similar-to-me errors Managers who focus too much on employees who possess similar qualities may not use the employees in effective ways.

Situational factors Managers who hold certain attitudes or are under time pressures to meet deadlines may make quick judgments about people or situations.

Needs and desires Managers who have a high need for control, power, or recognition will tend to perceive events and others’ actions related to those needs.

88 Part Two Understanding and Managing Individual Behavior

members of a particular work unit might develop a dislike for all members of the unit. Once the prejudice is formed, positive experiences with the persons, group, or unit usually do not reverse the prejudice. Such contrasting information will produce what has been termed cognitive dissonance, a topic presented in Chapter 14.

Allport concluded that there are two sources of prejudice.13 Personal prejudice occurs when members of another group (e.g., work group, race, age cohort) are perceived as a threat to one’s own interest. Group prejudice occurs when a person conforms to norms of a group she belongs to. For example, key members of a work unit dislike managers. You may have no personal reason for disliking managers; however, your group expects you to follow the group’s position and you may go along.

Although it is often assumed that stereotyping is inherently bad or wrong, this is not always the case. Stereotyping can be a useful process in that it can greatly increase our efficiency in making sense out of our environment. Nonetheless, stereotyp- ing can and does lead to perceptual inaccuracies and their nega- tive consequences.14 To the extent that stereotypes create social injustice, result in poorer decision making, stifle innovation, or cause underutilization of human resources, they contribute to ineffectiveness and inefficiency. For example, employers’ ste- reotypes regarding disabled workers may be an important source of the employment problems these workers frequently experience. Inaccurate stereotypes include beliefs that disabled workers lack job-related abilities, have lower performance lev- els, and have higher absenteeism and turnover rates. Objective data, on the other hand, consistently reveal that these stereo- types are false.15

Selective and Divided Attention Selective attention refers to the fact that people give some messages priority and put others on hold. Psychologists refer to selective attentiveness as a bottleneck or narrowing in the information channel linking the senses to perception.16 When one message enters the bot- tleneck zone, it seems to prevent others from passing through. This may be why it is diffi- cult to listen to two or more colleagues talking at once. Divided attention occurs when a person must divide his or her mental efforts among tasks, each of which requires some amount of attention (multitasking). Research suggests that when individuals are distracted by multiple demands, they will be more likely to engage in stereotypes.17

Managers learn that some stimuli (e.g., employees) require more attention than others. Employees who make forceful requests, are superior performers, or are more respected capture the manager’s attention more quickly. An employee who keeps making a request for a transfer also receives more attention. This is because of the repetition of the request.18 Obviously the potential for error in selecting which stimuli to attend to is always present.

Halo Effect The halo effect occurs when a person (e.g., manager) allows one important or noticeable characteristic of another person to bias the evaluation, perception, or impression of that person.19 An employee who is always at work before everyone else arrives or after they leave may be assumed to be productive and hard working. On the other hand, employees with excessive body art and piercings may be perceived in a negative light.20 Both of these judgments made by a manager utilize the halo effect and may be erroneous.

halo effect In perception it occurs when a person allows one important factor or characteristic to bias his or her view, impression, or evaluation.

STEREOTYPES 101

1. Remember that stereotypes are by definition based on little or inaccurate information.

2. Always be willing to change or add information that will improve the accuracy of any of your stereotypes.

3. Understand that apply stereotypes rarely apply accurately to a specific individual. Judgments based on personal knowledge of a specific person are always more accurate than using a broad category to which that person belongs.

Information You Can Use

Chapter 4 Perceptions and Attributions 89

The key point is that one trait or characteristic can’t possibly predict with accuracy a person’s overall performance. To think so should raise an alarm in the mind of a man- ager. Research has found an individual’s physical attractiveness and looks can signifi- cantly influence managerial decisions. Attractiveness increased the evaluations, pay raises, and promotion for women in nonmanagerial positions. However, attractive women in management received lower performance reviews and pay raises, as well as a decreased number of promotion opportunities.21 Both of these outcomes stem from the halo effect. The halo effect isn’t limited to perceptions of people. Think of the last pur- chase you made; did you evaluate the product favorably because of a single attribute like a low price, attractive color, or established brand name? For example, in an annual survey conducted by Forbes magazine, Apple was named the world’s most valuable brand in 2016.22 Despite a recent slowdown in smartphone sales across the globe, Apple’s long history of creating innovative technology may have created a halo effect for itself, at least from the perspective of consumers.23 The halo effect can be a power- ful force in the marketing of products.24

Similar-to-Me Errors People frequently use themselves as benchmarks in perceiving others. This can give rise to similar-to-me errors. One’s own characteristics may affect the characteristics identified as present or lacking in others. Research suggests that knowing oneself well makes it easier to see others accurately. Also, persons who accept themselves are more likely to see the favor- able aspects of other people.25

Basically, these conclusions suggest that if managers understand that their own traits and values influence their perception of others, they probably can perform a more accurate evaluation of their subordinates. A manager who is a perfectionist tends to look for perfec- tion in subordinates, while a manager who is quick in responding to technical requirements looks for this ability in subordinates. This may not be appropriate to the situation.

Situational Factors The press of time, the attitudes of the people a manager is working with, and other situ- ational factors all influence perceptual accuracy. If a manager is pressed for time and has to immediately fill an order, then her perceptions will be influenced by these time con- straints. The press of time literally will force the manager to overlook some details, to rush certain activities, and to ignore certain stimuli such as requests from other managers or from superiors.

Needs and Desires Perceptions are influenced significantly by needs and desires. In other words, the employee, the manager, the vice president, and the director see what they want to see.26 For example, an employee who works only the hours required of her (and declines to stay late on weekdays or come in on weekends) may be seen as lacking commitment by a manager who frequently puts in extra hours. A co-worker who knows the employee is taking care of her elderly parents, sees her differently—as a hard worker who’s good at juggling work and home demands. The manager’s desire to get the most of her employees is shading her perception of the employee. The co-worker’s need to be understanding and supportive is influencing her view of the same employee. Whenever possible, managers and employees should realize that perceptions are influenced by our own needs.

similar-to-me errors Using yourself as a benchmark against which others are judged.

90 Part Two Understanding and Managing Individual Behavior

Attribution Theory It is often said that perception is reality. That is, what an employee perceives to be real is in fact real for that employee. Because behavior is greatly influenced by our personal inter- pretation of reality, it is easy to understand why our perceptual processes are potent deter- minants of behavior. One approach that provides a basis for understanding the relationship between perception and behavior is attribution theory. Attribution theory attempts to explain the why of behavior as based on people’s attributions of causes to events that hap- pen to them. Attribution theory views the process by which individuals interpret events around them as being caused by (attributed to) a relatively stable portion of their environ- ment.27 Exhibit 4.5 displays the attribution process.

According to attribution theory, it is the perceived causes of events, not the actual events themselves, that influence people’s behavior.28 More specifically, individuals attempt to analyze why certain events have occurred, and the results of that analysis influence their behavior in the future. As the example in Exhibit 4.5 indicates, an employee who receives a raise will attempt to attribute the raise to some underlying cause. If the employee per- ceives the explanation for the raise to be the fact that she is a hard worker and consequently concludes that working hard leads to rewards in her organization, she will decide to con- tinue working hard in the future. Another employee, however, may attribute his raise to the fact that he participates in the company’s bowling team and may decide it makes sense to continue bowling for that reason. Thus, in both cases the two employees have made deci- sions affecting their future behaviors on the basis of their attributions of the causes of events. Then, subsequent events will be further interpreted by these two employees based on their attributions of why these events happened, and their attributions will be either reinforced or modified depending on the future events.

The attribution process can be important in understanding the behavior of others. The behavior of others can be examined on the basis of its distinctiveness, consistency, and consensus. Distinctiveness is the degree to which a person behaves similarly in different situations. Consistency is the degree to which a person engages in the same behaviors at different times. Consensus is the degree to which other people are engaging in the same behavior. Knowing the extent to which a person’s behavior exhibits these qualities can be very useful in helping us better understand that behavior.

attribution theory A process by which individuals attempt to explain the reasons for events.

distinctiveness In attribution theory the degree to which a per- son behaves similarly in different situations.

consistency In attribution theory the degree to which a per- son engages in the same behaviors at different times.

consensus In attribution theory the degree to which other people are engaging in the same behavior.

EXHIBIT 4.5 The Attribution Process

Source: Adapted from Abraham Korman, Organizational Behavior (Englewood Cliffs, NJ: Prentice Hall, 1977), p. 273.

Event Analysis of what caused the event

Reinforcement or modification of previous assumptions of causality

Choices regarding future behavior

I received a raise I received the raise because I am a hard worker

Hard work leads to rewards in this organization

Since I value these rewards, I will continue to work hard in the future

Example:

Chapter 4 Perceptions and Attributions 91

Exhibit 4.6 casts these qualities in the form of questions, the answers to which can lead us to some conclusions about the behavior in question. Let’s look at an example. Caroline has done poorly on a test in her organizational behavior class and has expressed her con- cern to her professor. Her professor, in trying to understand the possible reasons for her behavior (doing poorly on the test), tries to determine its degree of distinctiveness, consis- tency, and consensus. If Caroline tends to also do poorly on tests in other courses (low distinctiveness), has performed poorly on earlier tests in the course (high consistency), and if no other students did poorly on the test (low consensus), the professor might make an internal attribution regarding Caroline’s behavior. That is, the explanation for the poor test is to be found within Caroline herself (lack of motivation, poor study habits, etc.). On the other hand, if Caroline does well on tests in other courses (high distinctiveness), the professor might make an external attribution about the behavior. That is, the explanation for the poor test result may be found in factors outside Caroline herself (the professor put together a poor test, used the wrong answer key, etc.). The important point here is that the attributions made regarding why events occur have important implications for dealing with a problem.

Not all attributions, of course, are correct. Another important contribution made by attribution theory is the identification of systematic errors or biases that distort attri- butions. One such error is called the fundamental attribution error. The fundamental attribution error is a tendency to underestimate the importance of external factors and overestimate the importance of internal factors when making attributions about the behavior of others. An example might be that of a shop floor supervisor who attributes a high injury rate to employee carelessness (a cause internal to the employees), instead of considering the possibility the equipment is old and in poor repair (a cause external to the employees). Another frequent error is the self-serving bias. This is reflected in the tendency people have to take credit for successful work and deny responsibility for poor work. The self-serving bias leads us to conclude that when we succeed it is a result of our outstanding efforts, while when we fail it is because of factors beyond our control.

The managerial implications of an attributional approach to understanding work behavior are important. To influence employee behavior, the manager must understand the attributions employees make. Further, a manager must be aware that his own attri- butions may be different from employees’. For example, if a manager perceives employ- ees’ poor performance to be the result of lack of effort, she may attempt to increase

internal attribution Tendency to assume that events are caused by factors within a person’s control.

external attribution Tendency to assume that events are caused by factors outside of a person’s control.

fundamental attribution error Tendency to underesti- mate the importance of external factors and overestimate the impor- tance of internal factors when making attribu- tions about the behavior of others.

self-serving bias Tendency to take credit for successful work and deny responsibility for poor work.

EXHIBIT 4.6 Internal and External Attributions

DISTINCTIVENESS Does this person behave in this same manner in other situations?

CONSISTENCY Does this person behave in this same manner at other times?

CONSENSUS Do other people behave in this same manner?

YES Low distinctiveness

NO High distinctiveness

YES High consistency

NO Low consistency

NO Low consensus

YES High consensus

INTERNAL ATTRIBUTION

EXTERNAL ATTRIBUTION

92 Part Two Understanding and Managing Individual Behavior

motivation levels. On the other hand, if employees perceive performance problems to be attributable to lack of managerial guidance, the efforts made by the manager are not likely to have the desired effect on performance. Managers cannot assume that their attributions will be the same as their employees’. Neither can they assume their own attributions are error-free. Knowing this, coupled with an effort to understand what attributions employees make, can greatly enhance the manager’s ability to have a posi- tive effect on employee behavior.

Impression Management Through actions, body language, and manner of speaking, individuals attempt to influ- ence the perceptions that others have of them. The attempt to influence others’ percep- tions of oneself has been called impression management.29 Managers manage impressions of themselves by how they talk, their overall style, their office location and furniture, and even by the individuals they select as employees. The range of managers’ techniques for creating and sustaining a particular impression of themselves is very wide.

Nearly everybody practices impression management. CEOs, physicians, managers, teachers, employees, and job candidates engage in impression management. While most people try to present themselves in a favorable light, candidates who use excessive impres- sion management techniques may decrease the effectiveness of employee selection deci- sions.30 However, one study found that job candidates could be coached to present a specific personality profile and score favorably on a variety of tests used for selection. The coaching allowed applicants to present an ideal impression and score higher than non- coached (but perhaps better-qualified) applicants.31

An Interpersonal Process Goffman proposed that impression management is a kind of theatrical process.32 When a person is in the presence of others, there is a reason to mobilize resources, style, and creativity to make a positive impression. The process occurs at first contact, but also over the course of a long-term relationship.

Individuals (managers and nonmanagers) engage in impression management for numer- ous reasons. First, to interact socially, impression management allows the person to com- municate a desired identity. Once the identity is established, the individual tries to remain congruent with the impression—or face cognitive dissonance. The audience (manager, col- leagues, or customers) respects the desired identity and attempts to comply with the impression being conveyed.

Some situations (e.g., performance feedback meeting, a meeting to discuss the theft of company property) elicit significantly different behaviors than others (e.g., a com- pany softball game). Some have defined norms while others are more ambiguous, pre- senting a challenge. Despite these differences all interpersonal meetings are “theater” that involves actors, audience, stage, and script. Organizations that interact heavily with the public always engage in impression management. For example, impression management is a stated policy at Disney World. All “cast members” are on stage per- forming for audiences and they use a script. The scripts are practiced and delivered to audiences.33 This is why the term dramatizing is used to describe impression manage- ment situations.

impression management The attempt to influence others’ perception of you.

Chapter 4 Perceptions and Attributions 93

A Model and Impression Management in Practice Organizational researchers have proposed various impression management frameworks.34 The one framework that has been carefully examined empirically is offered by Jones and Pittman. According to Jones and Pittman, individuals engage in five impression manage- ment tactics: 1. Ingratiation: They seek to be viewed positively by flattering others or offering to do

favors for them. 2. Self-promotion: They tout their own abilities and competence. 3. Exemplification: They seek to be viewed as dedicated by going above and beyond the

call of duty. 4. Supplication: They seek to be viewed as needing help because of limitations. 5. Intimidation: They seek to be viewed as powerful and threatening.

This model suggests a number of impression management tactics. However, not every- one practices impression management the same way. Some people are not accurate self- monitors of the impressions they make. They do not pay a lot of attention to what they say, how they dress, and how they interact with others.

Studies show that some employees attempt to create a bad impression.35 These individu- als create bad impressions to exercise power; to make someone look bad, get fired, or get suspended; to obtain a transfer; or to avoid additional work or job stress. Tactics to create a bad impression include withdrawing from work, losing one’s temper, communicating a lack of skills, and pretending to lack knowledge.

Generating a positive or a good impression is the preferred goal and strategy of most people. One opportune place for creating a favorable impression is during the employment interview. Exhibit 4.7 lists some popular impression management tactics used by job candidates. Note that self-promotion is the most common tactic used. In fact, every job

Y O U B E T H E J U D G E

PERCEPTIONS CAN GET THE WRONG PERSON HIRED Most job applicants try hard to make a good impression during in- terviews. Some applicants, by presenting themselves in a certain way, encourage hiring managers to perceive them as better quali- fied than other applicants competing for the same job. While some of these individuals are indeed better qualified, it is reasonable to assume that some of these applicants are simply better at “acting qualified” during the interview process.

What does the research say? Interviewees who are attractive and professional in appearance, engage in impression manage- ment tactics (e.g., self-promotion and ingratiation), and communi- cate well (verbally and nonverbally) tend to receive higher interview ratings, which presumably lead to more job offers. The problem occurs later when it becomes apparent that hiring man- agers allowed some of these individuals to talk their way into jobs for which they were not fully qualified. While self-presentation is a

strong predictor of higher interviewer ratings, it is only modestly predictive of job performance. When this mismatch occurs, the employee may end up leaving (or being terminated from) the orga- nization, which leads to a costly and time-consuming process to find a replacement.

What can hiring managers do to make better selection deci- sions? How can they decrease the amount of influence that appli- cants’ self-presentation and impression management tactics have on their selection decisions?

Sources: Laszlo Bock, “Here’s Google’s Secret to Hiring the Best People,” Wired, http://www.wired.com, accessed March 9, 2016; Paul Falcone, “How to Interview Job Candidates: Ask the Right Questions,” Monster.com, http:// hiring.monster.com, accessed March 9, 2016; M. Barrick, J. Shaffer, and S. DeGrassi, “What You See May Not Be What You Get: Relationships Among Self-Presentation Tactics and Ratings of Interview and Job Performance,” Journal of Applied Psychology 94, no. 6 (2009), pp. 1394–1411.

94 Part Two Understanding and Managing Individual Behavior

EXHIBIT 4.7 What Job Applicants Say to Generate a Positive Impression of Themselves

Source: Adapted from C.K. Stevens and A.L. Kristof, “Making the Right Impression: A Field Study of Applicant Impression Management during Job Interviews,” Journal of Applied Psychology 80 (1995), pp. 587–606.

IM Tactic Description Frequency of Use (%)

Self-promotion Positively describing oneself (e.g., “I work hard every day”). 100% Personal stories Describing the past in a puffed-up way (e.g., “I solved the most difficult problems”). 96 Opinion conformity Expressing beliefs that are assumed to be held by another person (e.g., “I agree with your statement”). 54 Entitlements Claiming responsibility for successful past events (e.g., “My work led to the securing of the contract”). 50 Enhancement of another Making comments that compliment another person (e.g., “I’ve been so impressed with your work accomplishments”). 46 Overcoming obstacles Describing success despite obstacles that should have lowered performance (e.g., “I won the award even though I had to work three different jobs”). 33 Justifications Accepting some responsibility, but denying the negative implications (e.g., “We lost over 30 percent of the market, but the economy went sour for everyone”). 17 Excuses Designating responsibility for one’s actions (e.g., “I missed the deadline because two of my team members had the flu”). 13

candidate promotes his or her skills, background, experience, and competence. Organiza- tions also engage in and encourage impression management in their employees. Stereo- typically, IT workers have been viewed as introverted, messy, and moody. Customers can

Hiring managers can avoid some of the perceptual pitfalls that occur when conducting interviews by being aware of how they react to applicants’ appearance and physical attractiveness, use of impression management tactics, and communication ability. For example, if you find yourself asking easier or fewer interview questions of physically attractive job applicants because you assume they’ll be good at the job in question, then you may be letting a halo effect influence your decision making. All applicants should be interviewed in a similar and consistent manner.

Hiring managers can increase the validity of their selection de- cisions by using structured interviews. Structured interviews are based on job analyses, ask the same questions of all job appli- cants, have benchmark scoring, and are more predictive of job performance. In contrast, research suggests that hiring managers who rely on unstructured interviews that vary from one candidate

to the next have a higher probability of being influenced by job applicants’ self-presentation tactics.

Another way to protect against perceptual bias is to use two or more interviewers when assessing the qualifications of job applicants. Multiple interviewers are beneficial because the per- ceptual “blind spots” of one interviewer can be offset by the other(s).

In addition to structured interviews, job applicants should be assessed on other valid predictors of job performance such as job experience, general mental ability, or conscientious- ness. Though they are a very popular method of selection, the results of structured interviews should be combined with applicants’ scores on these other selection methods. This mul- tiple hurdle approach should help improve hiring managers’ selection decisions.

Y O U B E T H E J U D G E C O M M E N T

Chapter 4 Perceptions and Attributions 95

1. Think back to a teacher, manager, or coach who believed in your ability and poten- tial. To what degree did a possible Pygmalion effect impact your behavior and performance?

2. Assume you have a team leader who always expects the worst from team members. To what degree can a possible Golem effect negatively impact team performance?

3. Why are the perceptions of your skills and abilities typically different from the percep- tions that others have of your skills and abilities?

4. What types of schemas do managers use to make better sense of information at work?

5. Give an example of a time when someone used a stereotype to describe you or something you did. Was the stereotype accurate? If not, explain why it wasn’t accurate.

6. In what ways does “information overload” (e.g., text messages, e-mails, search engine results, etc.) in today’s work environment affect employees’ attention? Does this divided attention impact their job performance? Explain.

7. Describe an instance at work when you allowed a person’s attractiveness or physical appearance to influence how you interacted with that person.

8. When a normally high performing employee makes a mistake or has a bad day, why should his/her manager not commit a fundamental attribution error when trying to understand the cause of the employee’s behavior?

9. Which impression management tactics, if any, have you used while interviewing for jobs? In what way did these tactics influence the interviewer?

10. As an interviewer, what steps can you take to decrease the influence of impression management tactics that are commonly used by interviewees?

Review and Discussion Questions

Summary of Key Points

∙ Perception is a process that involves selection, organization, and interpretation of envi- ronmental factors, from shapes to people and other stimuli. Through the perceptual process, individuals attempt to make sense of the stimuli they receive.

∙ Once stimuli are selected they are categorized into groups according to a number of laws: nearness, similarity, closure, simplicity, and figure and ground. Grouping makes the interpretation and sense-making process easier. It doesn’t, however, eliminate inac- curacies or distortions.

∙ Stereotyping can help a person organize perceptions. However, if it contributes to preju- dice, bias, or discrimination it can be problematic.

∙ Some of the distortions in perception occur because of selective and divided attention, the halo effect, similar-to-me errors, and situational factors.

∙ Attribution theory attempts to explain the relationship between perception and behavior by investigating how people attribute events to causes.

find such personalities hard to approach. To overcome this stereotype, Best Buy has engaged in impression management by presenting its IT professionals, the Geek Squad, as friendly, fun, and approachable.36

96

Reality Check Now how much do you know about perceptions, attributions, and emotions?

6. Employees who make attributions have the tendency to assume that events are caused by factors within their control. a. external b. inaccurate c. internal d. multiple

7. True or false: Selective attention refers to the fact that people give some messages no priority at all and emphasize selected ones. a. True b. False

8. A positive self-fulfilling prophecy is called the effect. a. bias b. stereotype c. Pygmalion d. Golem

9. The attempt to influence others’ perception of oneself is called . a. impression management b. assimilation c. integration d. attitude change

10. Some managers engage in a , which is the tendency to take credit for successful work and deny responsibility for poor work. a. self-serving bias b. fundamental attribution error c. self-fulfilling prophecy d. self-presentation tactic

REALITY CHECK ANSWERS

Before After

1. c 2. b 3. b 4. b 5. a 6. c 7. a 8. c 9. a 10. a Number Correct Number Correct

Stereotypes are one-dimensional portrayals of people—usually based on sex, race, religion, profes- sion, or age. To attempt to make sense of the world, all people engage in some level of stereotyping. The way individuals interact with others is to some extent af- fected by stereotypes.

Directions Use the rating scale below to provide a rating of the following categories of people based on your opin- ions of them and experience of working or interacting with them.

Exercise

Exercise 4.1: Your Impressions of Others

Chapter 4 Perceptions and Attributions 97

None/Not = 1 Somewhat = 2 Average = 3 Above Average/Very = 4 Significant/Highly = 5

Recent college graduate who is beginning a career Knowledgeable Intelligent Sensitive Open Conscientious Emotional Arrogant Boring

Internal Revenue Service accountant Knowledgeable Intelligent Sensitive Open Conscientious Emotional Arrogant Boring

Service mechanic in car dealership Knowledgeable Intelligent Sensitive Open Conscientious Emotional Arrogant Boring

Elected politician Knowledgeable Intelligent Sensitive Open Conscientious Emotional

Arrogant Boring

Experienced contract lawyer Knowledgeable Intelligent Sensitive Open Conscientious Emotional Arrogant Boring

Emergency room nurse Knowledgeable Intelligent Sensitive Open Conscientious Emotional Arrogant Boring

Police officer Knowledgeable Intelligent Sensitive Open Conscientious Emotional Arrogant Boring

Discussion Questions 1. Which category of persons received your most fa-

vorable and which received your least favorable rat- ings? Why?

2. Do your ratings show any type of stereotyping pat- tern? What sort? Why?

3. Have you had any experiences with any of these types of individuals that could be classified as hav- ing been influenced by management style, philoso- phy, or practices? When?

4. What other descriptors (other than the eight used in this exercise) would you add for these individuals? Add at least one per category of person.

98 Part Two Understanding and Managing Individual Behavior

Objectives 1. To examine the causes of a person’s behavior. 2. To develop an approach that’s best suited to improve

unacceptable behavior.

Related Topics The concept of perception plays a role in how each of us views other people. Making attributions in terms of dispositional or situational factors is based on how a person views the event, the behaviors of another per- son, and previous experience.

Starting the Exercise Carefully read the situation facing a manager. If you were this manager, what would you conclude about causes and how would you proceed? Why?

The Loss of Quality Don Dubose has worked for Maybrooke Manufactur- ing since its beginning 10 years ago. He has won four top performer awards during his tenure in the firm. The last award he won was presented to him with a $15,000 bonus check about three years ago. But in the past 18 months, Don’s relations with co-workers have become strained. He has never been talkative, but on occasion he has ordered co-workers out of his work area. Don has made it clear that tools have been miss- ing, and he wants to protect his area. His work’s qual- ity has also suffered. Until about a year ago, Don’s work producing generators was at the “zero-defect” level. Error-free, top-quality generators came from Don again and again. Today when random sample checks are made, Don occasionally produces genera- tors that must be reworked less than 3 percent of the time. He has gone from zero defects to 3 out of 100 defects. His co-workers average about 1.5 defects out of 100 for reworking.

What could be causing Don’s behavior changes? They could be caused by:

Not Very Likely Very Likely

1. Low motivation 1 2 3 4 5 6 7 2. Low self-efficacy 1 2 3 4 5 6 7 3. Physical health problems 1 2 3 4 5 6 7 4. Family problems 1 2 3 4 5 6 7 5. Poor management 1 2 3 4 5 6 7 6. Lack of creativity 1 2 3 4 5 6 7

Comment on each of your ratings: 1. 2. 3. 4. 5. 6.

Don’s behavior has become a topic of concern within the organization. An outstanding worker has become average. What actions would you take as the manager?

Yes No Why?

Transfer Don to a new job. Fire Don. Call Don in to discuss your observations. Suspend Don after informing him about your concerns. Ask Don’s co-workers why they believe his performance isn’t up to previous norms. Leave the situation alone for another six months. Contact Don’s wife to see if there’s a personal reason for the performance problem. Examine your own behavior (as manager) in working with Don. Send Don to a human resource management counselor to discuss his attitudes about the job.

Exercise

Exercise 4.2: Applying Attribution Theory

Continued

Chapter 4 Perceptions and Attributions 99

for suicides, in response to an employee suicide note stating that he jumped to help his family financially, was largely viewed as cruel.

While Foxconn has been in the news, few in the United States know about this global supplier of elec- tronics. Founded in 1974 by billionaire Terry Gou, Foxconn is a low-cost manufacturer of computer, com- munication, and consumer electronics products. Fox- conn controls its costs by providing low pay (from a United States perspective) to large numbers of low- skilled workers. Foxconn is the largest single private employer in mainland China with a staff of over 1.2 million working on multiple company “campuses.” The number of employees at the company flagship plant in Longhua roughly equals the population of Kansas City, MO. Though Foxconn may be best known for producing products for Apple, they in fact manufac- ture merchandise for all of the major United States electronics firms, including Dell, Hewlett-Packard, IBM, and Motorola, and their output accounts for approximately 40 percent (or $60 billion) of the world’s consumer-electronics revenue. While Foxconn builds high-tech items, its processes are notably low tech with much of its production being completed by hand.

Foxconn facilities are set in compounds that the company compares to college campuses. These facili- ties contain not only factory space, but also dormito- ries, cafeterias, restaurants, malls, medical care providers, entertainment and sports venues. Dormitory rooms typically house seven to eight workers. Like a college, Foxconn charges their employees for their housing and meals. The company’s compounds are enclosed, separated from their surroundings by fences and walls. Once on campus, employees never really need to leave.

The life of a Foxconn worker is hard to compare to what one would expect in the United States. Thoughts

The June 14 headline read: “New Foxconn Worker Com- mits Suicide, First in 2012.” While the proclamation of a worker suicide is tragic in its own right, the “First in 2012” may be even more troubling. The headline implies that suicides at Taiwan-based Foxconn Technology Group are, or at least were, typical and expected.

It was a rash of suicides that brought Foxconn into the public light. It was reported that between 2008 and 2010, 19 Foxconn employees “attempted suicide or fell from buildings in manners that suggested suicide at- tempts.” The electronics supplier has been accused of forcing its employees to work long hours under chal- lenging working conditions for low pay. Though wages have been raised on more than one occasion and work- ing hours curtailed, problems at Foxconn have contin- ued. In January 2012, approximately 150 Foxconn employees occupied the roof of their factory and threatened mass suicide over working conditions and wages. Local police and fire representatives talked down these employees after two days. All but 45 of the protestors returned to work. In June 2012, Foxconn was again in the news for an employee uprising. Employees rioted following an argument with a local restaurateur. Several new employees involved in a restaurant alterca- tion raced back to their worker dorms shouting “they are beating us,” inciting 100 of their coworkers to rush to their defense and throw bottles at the police and company security. Four employees were arrested as a result of the incident.

Foxconn’s responses to its unwanted notoriety have also brought it adverse press coverage. Pictures of the suicide nets the company installed around many of its buildings to dissuade (or save) potential jumpers are taken as evidence of a continuing problem. The com- pany’s requirement that employees sign an anti-suicide pledge was the subject of late-night TV jokes in the United States. Foxconn’s cancelation of death benefits

Case

Case 4.1: The Human Cost Associated with Our Electronic Gadgets

Promote Don since he has been in the present job for over six years. Other courses of action:

In Class After you’ve analyzed this situation, meet with class- mates to discuss their reactions. What did you learn about your attribution process? Are your reactions dif- ferent from your classmates’?

100 Part Two Understanding and Managing Individual Behavior

of a work compound may bring up images of a com- pany mining town, exploiting or at least restricting the freedoms of workers. Foxconn compounds were in fact built to help the plight of the Chinese worker. Com- pany founder Terry Gou saw workers in Shenzhen fac- tories living in shanties or even sleeping under their workstation. Gou was determined to improve condi- tions for his employees. His compounds were intended to give workers a better place to live than they could afford on their own, ensure they were well fed, and pro- tect them from city crime.

Foxconn, by Chinese standards, is a good place to work and its positions are highly coveted. Factory work, in general, is seen as a way to escape the poverty of rural China. Young workers seeking a way into the middle class are leaving their family farms and moving to the cities for these jobs. Foxconn wages are among the best in China, and Foxconn continues to address mandatory overtime and child labor abuses.

When one hears of 19 employee suicides since 2008, shock over the poor treatment of employees may be the appropriate emotion, but could further examina- tion of the data show a different side of the story? The suicide rate at Foxconn is less than one-tenth of the na- tional suicide rate in China. In the United States, work- place suicides are labeled as such only if they occur at work or during work time. As Foxconn employees live on campuses, any suicide is naturally related to the company, potentially inflating their numbers. It is also worth noting that the suicide headline reported at the beginning of this case involved a new employee. Also, the riot that took place on a Foxconn campus was sparked by new employees. At the Longhua complex alone, typically 5 percent of the workforce or 24,000 employees quit each month, all requiring replacement. Consequently, there is a steady stream of new employ- ees emigrating from rural China to Foxconn’s factory cities. These workers are leaving their families, friends, and lives behind, entering, perhaps friendless, what is

presumably a new and unfamiliar setting. Workers have died at Foxconn, but to what degree are these deaths due only to the working conditions and pressures of the job? Are other factors like the isolation, distance from family and friends, cultural factors, or even individual mental illnesses also contributing to this complicated and tragic situation? Questions 1. Think of the initial impressions you formed of

Foxconn as you read the case. To what degree did stereotyping influence your thoughts? How much did additional information about the firm change your initial impressions?

2. While the manual labor of assembling electronics is challenging for Foxconn employees, the workers may also face the emotional burden of being away from family and isolation from the outside world. How might management recognize and help em- ployees constructively cope with these challenges and emotions?

3. How has Foxconn engaged in impression manage- ment? Have their efforts been successful?

Sources: Written by Dr. Michael Dutch, Greensboro College, Greensboro, North Carolina (2012). Adapted from company website, http://www.foxconn. com; Victor Luckerson, “Another Worker Has Died at an iPhone Plant in China,” Time, http://time.com, accessed March 9, 2016; government website, “The World Factbook,” https://www.cia.gov, accessed March 9, 2016; “Foxconn Technology,” The New York Times, http://www.nytimes. com, accessed March 9, 2016; “New Foxconn Worker Commits Suicide, First in 2012,” Electronista, June 14, 2012, http://www.electronista.com; Peter Cohan, “23 Died Building Your iWorld: Time to Boycott Apple?” Forbes, January 26, 2012, http://www.forbes.com; Charles Duhigg and David Barboza, “In China, Human Costs Are Built into an iPad,” The New York Times, January 25, 2012, http://www.nytimes.com; Malcolm Moore, “‘Mass Suicide’ Protest at Apple Manufacturer Foxconn Factory,” Tele- graph, January 11, 2012, http://www.telegraph.co.uk; Angela Moscaritolo, “Foxconn Employees Threaten Mass Suicides,” PC Magazine, January 10, 2012, http://www.pcmag.com; Joel Johnson, “1 Million Workers; 90 Million iPhones; 17 Suicides; Who’s to Blame?” Wired Magazine, February 11, 2011, http://www.wired.com.

101

One story about the culture of IBM concerns a situation involving company founder Thomas Watson. One of his top senior managers made a very costly mistake costing IBM about $3 million. The manager started to clean out his desk to be ready for the inevitable “pink slip” firing. When Watson came to his office to talk, the manager started, “I know why you’re here. I’ll offer my resignation and leave.” Watson looked at the manager and warmly replied: “You don’t think I would let you go after I just spent $3 million to train you.” Watson valued the manager, knew the individual wanted to do well, but had failed.1

Although, the manager’s performance goal in this case was not achieved, he exerted every effort to do the job. Watson wanted to provide a positive motivation atmosphere at IBM. This IBM story has become part of the firm’s cultural history concerning motivation. The manager was an important part of IBM and despite his failure in this case, the leader of the firm was there to support the manager’s willingness to perform.

No one questions the central role motivation plays in shaping behavior and, specifically, in influencing work performance in organizations.2 Nonetheless, as important as motiva- tion is, it is not the only factor that determines performance. Over the years, a variety of other variables thought to play an important role in performance have been suggested. These include ability, instinct, and aspiration level as well as personal factors such as age, education, and family background.

One way of conceptualizing the various determinants of performance is illustrated in Exhibit 5.1. As can be seen from this exhibit, job performance may be viewed as a function of the capacity to perform, the opportunity to perform, and the willingness to perform. The capacity to perform relates to the degree to which an individual possesses task-relevant skills, abilities, knowledge, and experiences. Unless an employee knows what is supposed to be done and how to do it, high levels of job performance are not possible. Having the opportunity to perform is also a critical ingredient in the performance recipe. A researcher for a pharmaceutical drug company whose lab equipment is constantly breaking is unable to perform at the same level as a researcher who does not encounter those difficulties. Sometimes, employees may lack the opportunity to perform not because of poor equipment or outdated technology, but because of poor decisions and outdated attitudes.

Motivation Learning Objectives

After completing Chapter 5, you should be able to:

Describe the role that need deficiencies play in motivating employees.

Compare the major differences between the four content approaches of motivation.

Give examples of how the three process approaches affect employee motivation.

Examine how the changing nature of the psychological contract influences employee motivation.

Summarize the action steps that managers can take to motivate employees.

C H A P T E R F I V E

© Ingram Publishing, RF

102

Reality Check How much do you know about motivation?

1. In general terms, motivation is made up of , intensity, and persistence. a. intelligence b. direction c. personality d. control

2. There are many steps in the motivational process. Which step follows after identification of need deficien- cies and searching for ways to satisfy those needs? a. Goal-directed behavior b. Performance c. Rewards or punishments d. Need deficiencies reassessed

3. Maslow’s needs hierarchy, Alderfer’s ERG, and McClelland’s learned needs theories can be classi- fied as . a. process theories b. content theories c. learning theories d. both a and c are correct

4. Herzberg referred to such components as salary, job security, and working conditions as and reasoned that these conditions were needed to keep employees from becoming dissatisfied. a. satisfiers b. motivating factors c. hygiene factors d. core benefits

5. occurs when an employee feels that the organization has failed to fulfill an unwritten exchange agreement between the individual and the organization. a. Expectancy contract violation b. Organizational justice retraction c. Judicial contract disturbance d. Psychological contract breach

EXHIBIT 5.1 Determinants of Job Performance

Source: Adapted from M. Blumberg and C. Pringle, “The Missing Opportunity in Organizational Research: Some Implications for a Theory of Work Performance,” Academy of Management Review, October 1982, p. 565.

Capacity to perform

Willingness to perform

Opportunity to perform

Job performance

Chapter 5 Motivation 103

The third factor, willingness to perform, relates to the degree to which an individual both desires and is willing to exert effort toward attaining job performance. It is, in other words, motivation, and it is what this chapter is about. No combination of capacity and opportunity will result in high performance in the absence of some level of motivation or willingness to perform.

From a managerial perspective, it is important to realize that the presence of motivation per se, coupled with a capacity and opportunity to perform, does not ensure high perfor- mance levels. It is a rare manager who has not at some point concluded that performance would be much higher “if I could just get my people motivated.” In all likelihood, those individuals are already motivated; what that manager really wants is motivation that results in more or different kinds of behaviors. To understand this distinction it is helpful to think of motivation as being made up of at least three distinct components: direction, intensity, and persistence.

Direction relates to what an individual chooses to do when presented with a num- ber of possible alternatives. When faced with the task of completing a report requested by management, for example, an employee may choose to direct effort toward completing the report or toward surfing the Internet (or any number of other possible activities). Regardless of which option is selected, the employee is motivated. If the employee selects the first alternative, the direction of his or her motivation is consistent with that desired by management. If the employee chooses the second alternative, the direction is counter to that desired by management, but the employee is nonetheless motivated.

The intensity component of motivation refers to the strength of the response once the choice (direction) is made. Using the previous example, the employee may choose the proper direction (working on the report) but respond with very little intensity. Intensity, in this sense, is synonymous with effort. Two people may focus their behavior in the same direction, but one may perform better because he or she exerts more effort and intensity than the other.

Finally, persistence is an important component of motivation. Persistence refers to the staying power of behavior or how long a person will continue to devote effort. Some people will focus their behavior in the appropriate direction and do so with a high degree of intensity but only for a short time period. Individuals who tackle a task enthu- siastically but quickly tire of it, or burn out and seldom complete it, lack this critical attribute in their motivated behavior. Thus, the manager’s real challenge is not so much one of increasing motivation per se but of creating an environment in which employee motivation is channeled in the right direction at an appropriate level of intensity and continues over time.

The Starting Point: Needs Motivate Employees Most managers must motivate a diverse and, in many respects, unpredictable group of people. The diversity results in different behavioral patterns that are in some manner related to needs and goals. This type of diversity makes the manager’s motivational work very challenging.

As can be seen in Exhibit 5.2, needs refer to deficiencies an individual experiences at a particular time. The deficiencies may be physiological (e.g., a need for food), psycho- logical (e.g., a need for self-esteem), or sociological (e.g., a need for social interaction). Needs are viewed as energizers or triggers of behavioral responses. The implication is that

needs The deficiencies that an individual experiences at a particular point in time.

104 Part Two Understanding and Managing Individual Behavior

when need deficiencies are present, the individual is more susceptible to a manager’s motivational efforts.

A study of about 4,000 employees found three main areas that affect employee motiva- tion: organizational issues such as compensation, benefits, career opportunities, and com- pany reputation; job issues including work schedules, opportunities to learn new skills, and challenging work; and leader issues such as whether their leaders/supervisors are trustwor- thy, good motivators and coaches, and flexible in solving problems.3

People seek to reduce various need deficiencies. Need deficiencies trigger a search process for ways to reduce the tension caused by the deficiencies. A course of action is selected, and goal-directed (outcome-directed) behavior occurs. After a period, man- agers assess that behavior, and the performance evaluation results in some type of reward or punishment. Such outcomes are weighed by the person, and the need defi- ciencies are reassessed. This, in turn, triggers the process, and the circular pattern starts again.

The importance of goals in any discussion of motivation is apparent. The motivational process, as interpreted by most theorists, is goal-directed. The goals, or outcomes, that an employee seeks are viewed as forces that attract the person. The accomplishment of desir- able goals can result in a significant reduction in need deficiencies.

Each person is attracted to some set of goals. If a manager is to predict behavior with any accuracy, he or she must know something about an employee’s goals and about the actions the employee will take to achieve them. There is no shortage of motivation theo- ries and research findings that attempt to provide explanations of the behavior–outcome relationship. Individual theories can be classified as representing either a content or a process approach to motivation. Content approaches focus on identifying specific motiva- tion factors. Process approaches focus on describing how behavior is motivated. Exhibit 5.3 summarizes the basic characteristics of content and process theories of motivation from a managerial perspective.

Both categories of theories have important implications for managers, who are—by the nature of their jobs—involved with the motivational process. We will examine several examples of both types, beginning with the content approaches.

EXHIBIT 5.2 The Motivational Process: A General Model

Employee

I. Need deficiencies

II. Search for ways

to satisfy needs

III. Goal-directed

behavior

IV. Performance

(evaluation of goals accomplished)

VI. Need deficiencies

reassessed by the employee

V. Rewards or

punishments

Chapter 5 Motivation 105

Content Approaches The content theories of motivation focus on the factors within the person that energize, direct, sustain, and stop behavior. They attempt to determine the specific needs that motivate people. Four important content approaches to motivation are: (1) Maslow’s needs hierarchy, (2) Alderfer’s ERG theory, (3) Herzberg’s two-factor theory, and (4) McClelland’s learned needs theory. Each of these four theories has had an impact on managerial practices and will be considered in the paragraphs that follow.

Maslow’s Needs Hierarchy The crux of Maslow’s theory is that needs are arranged in a hierarchy.4 The lowest-level needs are the physiological needs, and the highest-level needs are the self-actualization needs. These needs are defined to mean the following: 1. Physiological. The need for food, drink, shelter, and relief from pain. 2. Safety and security. The need for freedom from threat, that is, security from threatening

events or surroundings. 3. Belongingness, social, and love. The need for friendship, affiliation, interaction, and

love. 4. Esteem. The need for self-esteem and for esteem from others. 5. Self-actualization. The need to fulfill oneself by making maximum use of abilities,

skills, and potential. Exhibit 5.4 shows the hierarchical nature of Maslow’s theory. For each of the five need

levels, the exhibit provides examples of work-related factors that might be associated with need satisfaction.

EXHIBIT 5.3 Managerial Perspective of Content and Process Theories of Motivation

Theoretical Base

Theoretical Explanation

Founders of the Theories

Managerial Application

Content Focuses on factors within the person that energize, direct, sustain, and stop behavior. These factors can only be inferred.

Maslow—five-level needs hierarchy Alderfer—three-level hierarchy (ERG) Herzberg—two major factors called hygiene factors and motivators McClelland—three learned needs acquired from the culture: achievement, affiliation, and power

Managers must be aware of differences in needs, desires, and goals because each individual is unique in many ways.

Process Describes, explains, and analyzes how behavior is energized, directed, sustained, and stopped.

Vroom—an expectancy theory of choices Adams—equity theory based on comparisons that individuals make Locke—goal-setting theory that conscious goals and intentions are the determinants of behavior

Managers must understand the process of motivation and how individuals make choices based on preferences, rewards, and accomplishments.

106 Part Two Understanding and Managing Individual Behavior

Maslow’s theory assumes that a person attempts to satisfy the more basic needs (physiological) before directing behavior toward satisfying upper-level needs. Several other crucial points in Maslow’s thinking are important to understanding the needs- hierarchy approach. 1. A satisfied need ceases to motivate. For example, when a person decides that he or she

is earning enough pay for contributing to the organization, money loses its power to motivate. Large multinational corporations such as Walmart, Procter & Gamble, Veri- zon Communications, and United Parcel Service are trying to prevent such problems by offering flexible (cafeteria) benefits plans.5 Similarly, many small and medium-sized enterprises are also offering flexible benefits.6 By allowing employees to choose and change benefits over time, these firms let employees meet their changing needs.7

2. Unsatisfied needs can cause frustration, conflict, and stress. From a managerial perspec- tive, unsatisfied needs are dangerous because they may lead to undesirable performance outcomes.

3. Maslow assumes that people have a need to grow and develop and, consequently, will strive constantly to move up the hierarchy in terms of need satisfaction. This assumption may be true for some employees but not others.

flexible (cafeteria) benefits plans Plans that allow employees to choose benefits that suit them and to make adjustments to meet their changing needs.

EXHIBIT 5.4 Maslow’s Needs Hierarchy Related to the Job

SELF-ACTUALIZATION

ESTEEM

BELONGINGNESS, SOCIAL, AND LOVE

SAFETY AND SECURITY

PHYSIOLOGICAL

Starting a successful new business. Developing and mentoring others. Using business skills to start a charity that helps disabled veterans.

Winning a coveted award for performance. Receiving a high-level promotion. Earning an outstanding reputation among peers.

Being accepted by personal and professional friends. Working in groups that are cooperative. Having a supportive supervisor.

Receiving regular salary increases. Having medical and disability insurance. Working in a hazard-free environment.

Receiving a sufficient salary to live on. Having sufficient food and drink available. Working in a comfortable environment.

Chapter 5 Motivation 107

Mary Kay, Inc., uses the full range of Maslow’s needs hierarchy to motivate its 3.5 million independent beauty consultants in more than 35 markets worldwide. The company is still best known for its reward of the Mary Kay Pink Cadillac for outstanding sales and team building. Consultants report that they are motivated by commissions and incentives (pay), being a part of a team (belongingness and social), recognition (esteem), and the privilege to help others (self-actualization). Mary Kay management appears to understand motiva- tion and needs. Pay, incentives, recognition, autonomy, and helping others succeed are a combination of factors that the consultants seek.8

Several research studies have attempted to test the needs-hierarchy theory. The first field-reported research that tested a modified version of Maslow’s needs hierarchy was performed by Porter.9 At the time of the initial studies, Porter assumed that physiological needs were being adequately satisfied for managers, so he substituted a higher-order need called autonomy, defined as the person’s satisfaction with opportunities to make indepen- dent decisions, set goals, and work without close supervision.

Research studies have reported: 1. Managers higher in the organization chain of command place greater emphasis on self-

actualization and autonomy.10 2. Managers at lower organizational levels in small firms (less than 500 employees) are

more satisfied than their counterpart managers in large firms (more than 5,000 employ- ees); however, managers at upper levels in large companies are more satisfied than their counterparts in small companies.11

3. U.S. managers overseas are more satisfied with autonomy opportunities than are their counterparts working in the United States.12

Despite these findings, a number of issues remain regarding the needs-hierarchy theory. First, data from managers in two different companies provided little support that a hierar- chy of needs exists.13 The data suggested that only two levels of needs exist: One is the physiological level, and the other is a level that includes all other needs. Further evidence also disputes the hierarchy notions.14 Researchers have found that as managers advance in an organization, their needs for security decrease, with a corresponding increase in their needs for social interaction, achievement, and self-actualization. Despite these potential drawbacks, Maslow’s needs hierarchy has retained some of its popularity because it is easy to grasp and makes sense intuitively.

Alderfer’s ERG Theory Alderfer agrees with Maslow that individual needs are arranged in a hierarchy. However, his proposed needs hierarchy involves only three sets of needs:15

1. Existence. Needs satisfied by such factors as food, air, water, pay, and working conditions.

2. Relatedness. Needs satisfied by meaningful social and interpersonal relationships. 3. Growth. Needs satisfied by an individual making creative or productive contributions.

Alderfer’s three needs—existence (E), relatedness (R), and growth (G), or ERG— correspond to Maslow’s in that the existence needs are similar to Maslow’s physiolog- ical and safety categories; the relatedness needs are similar to the belongingness, social, and love category; and the growth needs are similar to the esteem and self- actualization categories.

In addition to a difference in the number of categories, Alderfer’s ERG theory and Maslow’s needs hierarchy differ on how people move through the sets of needs.

108 Part Two Understanding and Managing Individual Behavior

Maslow proposed that unfulfilled needs are predominant and that the next-higher level of needs isn’t activated or triggered until the predominant need is adequately satisfied. Thus, a person only progresses up the needs hierarchy once a lower-level need is ade- quately satisfied. In contrast, Alderfer’s ERG theory suggests that, in addition to the satisfaction-progression process that Maslow proposed, a frustration-regression pro- cess is also at work. That is, if a person is continually frustrated in attempts to satisfy growth needs, relatedness needs reemerge as a major motivating force, causing the individual to redirect efforts toward satisfying a lower-order need category.

Alderfer’s ERG explanation of motivation provides an interesting suggestion to manag- ers about behavior. If a subordinate’s higher-order needs (for example, growth) are being blocked, perhaps because of a company policy or lack of resources, then it’s in the man- ager’s best interest to attempt to redirect the subordinate’s efforts toward relatedness or existence needs by assigning him or her to projects with desired co-workers. The ERG theory implies that individuals are motivated to engage in behavior to satisfy one of the three sets of needs.

The ERG theory hasn’t stimulated a great deal of research, so no empirical verification can be claimed. Salancik and Pfeffer proposed that need models such as Maslow’s and Alderfer’s have become popular because they are consistent with other theories of rational choice and because they attribute freedom to individuals. The idea that individuals shape their actions to satisfy unfulfilled needs gives purpose and direction to individual activity. Furthermore, need explanations are also popular, despite little research verification, because they are simple and easily expressed views of human behavior.16

Herzberg’s Two-Factor Theory Herzberg developed a content theory known as the two-factor theory of motivation.17 The two factors are called hygiene factors (dissatisfiers) and motivators (satisfiers). Herzberg suggests that both hygiene factors and motivators need to be present in order for employees to feel motivated. Hygiene factors are extrinsic conditions from the job context and include salary, job security, working conditions, status, company proce- dures, quality of technical supervision, and quality of interpersonal relations among peers, superiors, and subordinates. When present, employees reach a point where they are “not dissatisfied” with their job; however, this condition is not sufficient to motivate high levels of employee performance. Motivators, on the other hand, are intrinsic conditions from job content that make the job meaningful and satisfying. Motivators include achievement, recognition, responsibility, advancement, the work itself, and the possibil- ity for growth.

These motivators are directly related to the nature of the job or task itself. When pres- ent, they contribute to satisfaction. This, in turn, can result in intrinsic task motivation.18 Referring to Exhibit 5.5, several important managerial implications of Herzberg’s two-factor theory include: 1. No job dissatisfaction, high job satisfaction. An employee who is paid well, has job

security, has good relationships with co-workers and the supervisor (hygiene factors are present = no job dissatisfaction), and is given challenging duties for which he is accountable will be motivated. Managers should continue to assign challenging tasks and transfer accountability to high-performing subordinates. Pay raises, job security, and good supervision need to be continued.

2. No job dissatisfaction, no job satisfaction. An employee who is paid well, has job security, and has good relationships with co-workers and the supervisor (hygiene

Chapter 5 Motivation 109

factors are present = no job dissatisfaction), but is not given any challenging assign- ments and is very bored with her job (motivators are absent = no job satisfaction) will not be motivated. Managers should reevaluate subordinate’s job description and enlarge it by providing more challenging and interesting assignments. Pay raises, job security, and good super- vision need to be continued.

3. High job dissatisfaction, no job satisfaction. An employee who is not paid well, has little job security, has poor relationships with co-workers and the supervisor (hygiene factors are not present = high job dissatisfaction), and is not given any challenging assignments and is very bored with his job (motivators are absent = no job satisfaction) will not be motivated. To prevent low performance, absenteeism, and turnover, managers should make drastic changes by adding hygiene factors and motivators.

Herzberg suggests that motivators (intrinsic conditions) and hygiene factors can be applied to understanding factory (extrinsic conditions) workers in most countries and cul- tures. The nearby Global OB feature, which combines the research and reports of a number of researchers, supports the application of Herzberg’s two-factor explanation across diverse cultures. For example, in Italy 60 percent of the workers indicated that motivators accounted for job satisfaction, while 90 percent of workers in Finland reported that motiva- tors accounted for job satisfaction.19 A related study of employees in Turkey, Cyprus, Nigeria, and Great Britain reported general support for Herzberg’s two-factor theory. Factors asso- ciated with the work attitudes of employees from these nations could be separated into two distinct categories: motivators and hygiene factors.20 Other recent research studies in Japan and Brazil are also generally supportive of Herzberg’s theory.21

EXHIBIT 5.5 Traditional versus Herzberg View of Job Satisfaction

I. Traditional Job Satisfaction Theory High job dissatisfaction High job satisfaction

No job satisfaction High job satisfaction

II. Herzberg’s Two-Factor Theory

High job dissatisfaction No job dissatisfaction

Based on Motivators v

work or adv

or growth

Based on Hygiene Factors

St

Working conditions ing

110

Herzberg’s model basically assumes that job satisfaction is not a unidimensional concept. His research leads to the conclusion that two continua are needed to correctly interpret job satisfaction. Exhibit 5.5 presents two different views of job satisfaction. Before Herzberg’s work, those studying motivation viewed job satisfaction as a unidimensional concept; that is, they placed job satisfaction at one end of a continuum and job dissatisfaction at the other end. This meant that if a job condition caused job satisfaction, removing it would cause job dissatisfaction. Similarly, if a job condition caused job dissatisfaction, removing it would cause job satisfaction.

One appealing aspect of Herzberg’s explanation of motivation is that the terminology is work-oriented. There is no need to translate psychological terminology into everyday language. Despite this important feature, Herzberg’s work has been criticized for a number of reasons. For example, some researchers believe that Herzberg’s work oversimplifies the nature of job satisfaction. Other critics focus on Herzberg’s methodology, which requires people to look at themselves retrospectively. Still other critics charge that Herzberg has directed little attention toward testing the motivational and performance conse- quences of the theory. In his original study, only self-reports of performance were used, and in most cases, the respondents described job activities that had occurred over a long period of time.

Although the list of criticisms for Herzberg’s model is long, the impact of the theory on practicing managers should not be underestimated. For example, one concept that emerged from Herzberg’s work is that of job enrichment. Job enrichment is defined as the process of building personal achievement, recognition, challenge, responsibility, and growth opportu- nities into a person’s job. This has the effect of increasing the individual’s motivation by providing her with more discretion and accountability when performing challenging work. Herzberg believed that job enlargement would improve task efficiency and human satisfac- tion. The topic of job enrichment is discussed further in Chapter 6.

job enrichment Increases motivation by building challenge, responsibility, recogni- tion, and growth opportunities into a person’s job.

MOTIVATORS AND HYGIENE FACTORS ACROSS CULTURES

Motivators Satisfying Job Events Dissatisfying Job Events

United States !!!!!!!!!!!!!!!80% !!!!!!!!!!!!!!!20% Japan 82 40 Finland 90 18 Hungary 78 30 Italy 60 35

Hygiene Factors

United States !!!!!!!!!!!!!!!!!!20% !!!!!!!!!!!!!!!75% Japan 10 65 Finland 10 80 Hungary 22 78 Italy 30 70

G L O B A L O B

Source: Adapted from S.A. Snell, C.C. Snow, S. Canney Davison, and D.C. Hambrick, “Designing and Supporting Transnational Teams: The Human Resource Agenda,” Human Resource Management 37 (1998), pp. 147–58; F. Herzberg, “Workers’ Needs: The Same Around the World,” Industry Week 234, no. 6 (September 21, 1987), pp. 29–32.

111

Many managers feel very comfortable about many of the things Herzberg includes in his two-factor discussion. From a scientific vantage point, this satisfaction presents some dan- gers of misuse, but this hasn’t stopped the theory from being implemented in numerous organizations. Google, for example, has earned the number-one spot (for the seventh time in 10 years) in 2016 in Fortune magazine’s “100 Best Companies to Work For” by drawing on some of the tenets of Herzberg’s two-factor theory.22 The company fulfills hygiene factors by offering employees competitive pay and a family-oriented workplace, as well as great perks like free gourmet meals, workout facilities, massages, and an onsite health clinic. To boost motivation and job performance, Google employees are encouraged to work on proj- ects that are important and meaningful. Larry Page, Google’s co-founder and now CEO of Alphabet, the corporate parent of Google and other businesses, sums up Google’s use of motivators this way: “My job as a leader is to make sure everyone in the company has great opportunities, and that they feel they’re really making a difference in the world.”23

With the amount of discretion increasing in many jobs, the opportunity also exists for employees to do more than what is expected. The nearby OB Matters feature describes how Trader Joe’s fosters an atmosphere of happiness and service for its employees and customers.

McClelland’s Learned Needs Theory McClelland has proposed a theory of motivation that is closely associated with learning concepts. He believes that many needs are acquired from the culture.24 Three of these learned needs are the need for achievement (n Ach), the need for affiliation (n Aff), and the need for power (n Pow).

HAPPINESS MOTIVATES EMPLOYEES AT TRADER JOE’S With more than 480 stores across the country, Trader Joe’s is a unique grocery chain in many ways. Employees wear Hawaiian shirts; man- agement rings a captain’s brass bell to communicate to crew mem- bers; and private-labeled, reasonably priced products from around the world line store shelves. But one thing that differentiates Trader Joe’s from other retailers is that employees always look and sound happy, routinely going the extra mile as part of their job.

Trader Joe’s consistently lands on the list of best customer service experiences—and that’s no accident. People who work for the com- pany want to be part of the Trader Joe’s community, which includes learning and doing just about every job in the store. Cashiers engage customers at the checkout, asking if they’ve ever tried the Trader José salsa and recommend ways to serve it. And they take great care to pack groceries carefully. Crew members routinely approach customers who look lost while searching for a particular item, ask how they can help, and then lead the shopper right to the product—even if it’s three aisles away. Another interesting strategy is encouraging employees to cook up tasty dishes in the store to share with their colleagues—a great way to motivate employees to show their enthusiasm for Trader Joe’s products and share that exuberance with customers. There’s nothing scripted about the Trader Joe’s shopping experience.

Several years ago, a Trader Joe’s employee in Pennsylvania took a desperate call from a woman worried her elderly dad wouldn’t have

enough food for the holidays with impending bad weather on the way. The woman asked if Trader Joe’s would deliver groceries to her father, and the crew member replied yes, even though the chain normally doesn’t offer delivery service. Thirty minutes later, the groceries were on the gentleman’s doorstep—free of charge.

Trader Joe’s takes hiring the right people very seriously and out- lines its expectations on a Careers website page. The company hires people who are totally engaged in what they are doing and who really care about their jobs—no matter what the job is. The company also fosters an environment where employees demonstrate a sense of en- joying what they do and treating colleagues and customers alike as family and friends. That’s why Trader Joe’s just might be one of the happiest places to work—and shop.

Sources: Company website, “Careers,” http://www.traderjoes.com, accessed March 17, 2016; David DiSalvo, “What Trader Joe’s Knows about Making Your Brain Happy,” Forbes, http://www.forbes.com, accessed March 17, 2016; Anna Hensel, “Trader Joe’s Ex-CEO on Solving Social Needs while Succeed- ing in the Marketplace,” Inc., http://www.inc.com, accessed March 17, 2016; Gregory Ciotti, “10 Stories of Unforgettable Service,” Entrepreneur, http:// www.entrepreneur.com, accessed March 17, 2016; Lee Breslouer, “Trader Joe’s Employees Dish on Their Secretive Employer,” Thrillist, https://www. thrillist.com, accessed March 17, 2016; Katherine Baker, “Why I Quit My Full Time Job to Work at Trader Joe’s,” Spoon University, https://spoonuniversity. com, accessed March 17, 2016.

O B M A T T E R S

112 Part Two Understanding and Managing Individual Behavior

McClelland contends that when a need is strong in a person, its effect is to motivate the person to use behavior that leads to its satisfaction. For example, having a high n Ach encourages an individual to set challenging goals, to work hard to achieve the goals, and to use the skills and abilities needed to achieve them.

Based on research results, McClelland developed a descriptive set of factors that reflect a high need for achievement. These are: 1. The person likes to take responsibility for solving problems. 2. The person tends to set moderate achievement goals and is inclined to take calculated risks. 3. The person desires feedback on performance.

The need for affiliation reflects a desire to interact socially with people. A person with a high need for affiliation is concerned about the quality of important personal relation- ships, and thus, social relationships take precedence over task accomplishment. A person with a high need for power, meanwhile, concentrates on obtaining and exercising power and authority. He or she is concerned with influencing others and winning arguments. Power has two possible orientations according to McClelland. It can be negative in that the person exercising it emphasizes dominance and submission. Or power can be positive in that it reflects persuasive and inspirational behavior.

The main theme of McClelland’s theory is that these needs are learned through coping with one’s environment. Since needs are learned, behavior that is rewarded tends to recur at a higher frequency. Managers who are rewarded for achievement behavior learn to take moderate risks and to achieve goals. Similarly, a high need for affiliation or power can be traced to a history of receiving rewards for sociable, dominant, or inspirational behavior. As a result of the learning process, individuals develop unique configurations of needs that affect their behavior and performance.

McClelland’s theory faces a number of criticisms. Not the least of these criticisms is that most of the available evidence supporting the theory has been provided by McClelland or his associates. McClelland’s use of projective psychological personality tests has been ques- tioned as being unscientific. Furthermore, McClelland’s claim that n Ach can be learned runs counter to a large body of literature that argues the acquisition of motives normally occurs in childhood and is very difficult to alter in adulthood. Finally, McClelland’s theory is ques- tioned on grounds of whether the needs are permanently acquired. Research is needed to determine whether acquired needs last. Can something learned in a training-and-development program be sustained on the job? This is an issue that McClelland and others have not been able to clarify.

A Synopsis of the Four Content Theories Each of the four content theories attempts to explain behavior from a slightly different perspective. None of the theories has been accepted as the sole basis for explaining motiva- tion. Although some critics are skeptical, it appears that people have innate and learned needs and that various job factors result in a degree of satisfaction. Thus, each of the theo- ries provides the manager with some understanding of behavior and performance.

Exhibit 5.6 compares the four approaches. McClelland proposed no lower-order needs. Moreover, his needs for achievement and power aren’t identical with Herzberg’s motiva- tors, Maslow’s higher-order needs, or Alderfer’s growth needs, although there are some similarities. A major difference between the four content theories is McClelland’s empha- sis on socially acquired needs. Also, the Maslow theory offers a static needs-hierarchy system; Alderfer presents a flexible, three-needs classification approach; and Herzberg discusses intrinsic and extrinsic job factors.

Chapter 5 Motivation 113

Each of the content approaches purports to present the clearest, most meaningful, and most accurate explanation of motivation. In reality, each has strengths and limitations that practicing managers need to consider; none is clearly inferior or superior to the others, especially in today’s diverse workplace. Smart managers will look to all of these approaches to provide insights that can be applied to specific challenges and problems.

Process Approaches The content theories we have examined focus mainly on the needs and incentives that cause behavior. They are concerned primarily about which specific things motivate people. The process theories of motivation are concerned with answering the questions of how individual behavior is energized, directed, maintained, and stopped. This section examines three process theories: expectancy theory, equity theory, and goal-setting theory. In dis- cussing each of these in the paragraphs that follow, we will show how the motivational process works in organizational settings.

Expectancy Theory One of the more popular explanations of motivation was developed by Victor Vroom.25 Numerous studies have been done to test the accuracy of expectancy theory in predicting employee behavior, and direct tests have been generally supportive.26 In addition, a research study that rated the overall importance, scientific validity, and practical usefulness of 73 organizational behavior theories reported that expectancy theory has high levels of impor- tance, validity, and usefulness.27 Vroom defines motivation as a process governing choices among alternative activities. In his view, most behaviors are considered to be under the vol- untary control of the employee and consequently are motivated. To understand expectancy theory, it is necessary to define the terms of the theory and explain how they operate. As seen in the general expectancy model in Exhibit 5.7, the four most important components of expectancy theory are expectancy, instrumentality, outcomes, and valence.

expectancy theory A theory of motivation that suggests employees are more likely to be motivated when they perceive their efforts will result in successful performance and, ultimately, desired rewards and outcomes.

EXHIBIT 5.6 A Graphic Comparison of Four Content Approaches to Motivation

MASLOW (needs hierarchy)

Self-actualization

Esteem

Belongingness, social, and love

Safety and security

Physiological

HERZBERG (two-factor theory)

The work itself Responsibility Advancement

owth

Achievement Recognition

Quality of inter- personal relations among peers, with supervisors, with subordinates

Job security

Working conditions Salary

ALDERFER

owth

Relatedness

Existence

McCLELLAND

Need for achievement

Need for power

Need for affiliation

Higher order needs

Hygiene factors

Motivators

Basic needs

114 Part Two Understanding and Managing Individual Behavior

Expectancy Expectancy refers to the probability that an employee’s effort will result in a desired level of performance. This expectancy represents the employee’s perception of how hard it will be to successfully perform a task or assignment (e.g., redesigning the company’s website or completing the budget on time). Employees who think they can get the job done well will have a high expectancy as opposed to those employees who have a low expectancy; that is, they may lack the skills, training, or time to successfully complete a given task or project. Managers should try to match the requirements of a particular task or project with qualified employees who have the potential to successfully complete the given assignment.

Instrumentality Instrumentality refers to the strength of an employee’s belief that her performance will lead to desired outcomes. For many reasons (e.g., a distracted supervisor), not all good perfor- mance is recognized. However, if the employee believes that her hard work on an impor- tant high-profile project will be noticed and rewarded with an outcome, her instrumentality expectancy will be high. Managers need to not only communicate to employees that suc- cessful performance on projects will be rewarded, but they need to reward high perfor- mance in a timely manner. This will strengthen instrumentality in the minds of employees.

Desired Outcomes and Valence Valence refers to the preferences for outcomes as seen by the individual. For example, a person may prefer a 10 percent merit raise to an extra week of paid vacation. An outcome is positively valent when it is preferred and negatively valent when it is not preferred or is avoided. The aforementioned pay raise is an example of a positively valent outcome, whereas a promotion to manager may be negatively valent to those employees who would rather not be in charge of other employees.

Managers also need to implement fair, meaningful, and easy-to-understand performance review and evaluation systems. It is important in applying expectancy theory to be able to recognize and use performance.

Adobe Systems, the global company that produces software including Photoshop, Acro- bat, and the Digital Marketing Suite, recently made a drastic change to the way it evaluates performance. Adobe switched from annual performance reviews to frequent “check-ins,” sessions where managers provide employees with targeted coaching and advice.28 There is

EXHIBIT 5.7 Expectancy Theory

Performance Desired Outcomes (e.g., pay raise, promotion, recognition)

Effort

EXPECTANCY Probability that effort will result in desired level of performance

INSTRUMENTALITY Probability that performance will lead to desired outcomes

VALENCE Preference for outcomes as seen by the individual

Chapter 5 Motivation 115

no set format or frequency for these sessions, and managers are not required to fill out forms or use technology to document what is discussed in these conversations. The only requirement is the “check-ins” must happen on a regular basis to discuss expectations, give and receive feedback, and help employees with growth and development plans. This infor- mal approach has helped managers hone their skills, and more than 75 percent of Adobe employees report that managers are more open to feedback from them.29

Equity Theory Equity theory explains how people’s perceptions of how fairly they are treated in social exchanges at work (e.g., amount of the pay raise this year, how well the supervisor treats them, etc.) can influence their motivation. The essence of equity (which also means “fair- ness”) theory is that employees compare their efforts and rewards with those of others in similar work situations. This theory of motivation is based on the assumption that individuals are motivated by a desire to be equitably treated at work. The individual works in exchange for rewards from the organization.

Four important terms in this theory are: 1. Person. The individual for whom equity or inequity is perceived. 2. Comparison other. Any group or persons used by Person as a referent regarding the

ratio of inputs and outcomes. 3. Inputs. The individual characteristics brought by Person to the job. These may be

achieved (e.g., skills, experience, learning) or ascribed (e.g., age, sex, race). 4. Outcomes. What Person received from the job (e.g., recognition, fringe benefits, pay).

Equity exists when employees perceive that the ratios of their inputs (efforts) to their out- comes (rewards) are equivalent to the ratios of other employees. Inequity exists when these ratios are not equivalent; an individual’s own ratio of inputs to outcomes could be greater than, or less than, that of others.30 Exhibit 5.8 illustrates the equity theory of motivation.

Change Procedures to Restore Equity Equity theory suggests a number of alternative ways to restore a feeling or sense of equity. Let’s assume you and your co-worker are both working as sales associates for a popular sporting goods company. You put in longer hours and have more sales than your colleague. To your shock and surprise, you have just found out that your colleague received a $10,000

equity theory A theory of motivation that examines how a person might respond to perceived discrepancies between her input/ outcome ratio and that of a reference person.

EXHIBIT 5.8 The Equity Theory of Motivation

A person (P) with certain inputs (I) and receiving certain outcomes (O)

OP IP

ORP IRP

= (equity)

OP IP

ORP IRP

<

>

(inequity)

OP IP

ORP IRP

(inequity)

or

or

IP—Inputs of the person OP—Outcomes of the person

IRP—Inputs of reference person ORP—Outcomes of reference person

Compares his or her input/output ratio to reference person

The person (P) then regards the reference person’s (RP) inputs (I) and outcomes (O)

and perceives

116 Part Two Understanding and Managing Individual Behavior

raise (compared to your $3,000 raise). Not only do you feel angry and frustrated, but you also feel unfairly treated.

In response to this underrewarded condition, equity theory suggests a number of alter- native methods to restore a feeling or sense of equity vis-à-vis your treatment (as compared to that of your colleague). Some examples of restoring equity are: 1. Changing inputs. You may decide to put less time or effort into the job. 2. Changing outcomes. You may decide to negotiate for a much larger pay raise (e.g., to

get at least $10,000 total). 3. Changing attitudes. Instead of changing inputs or outcomes, you may simply change

your attitude by convincing yourself that the money is less important than other out- comes (e.g., nice place to work, job security, etc.).

4. Changing the reference person. In this example, you can change the reference person to someone who received a raise that was similar to the one you received. This might allow you to restore equity by comparing your outcomes/input ratio to someone with a similar ratio.

5. Changing the inputs or outcomes of the reference person. Since the original reference person is a co-worker, you might encourage the individual to work longer hours and work harder to justify the larger pay increase (i.e., increase inputs).

6. Leaving the field. Due to the frustration and perceived unfairness of the situation, you may decide to simply quit your job.

Research on Equity Most of the research on equity theory has focused on pay as the basic outcome.31 The tendency to omit other relevant outcomes limits the impact of the theory in work situa- tions. A review of the studies also reveals that the reference person is not always clarified. A typical research procedure is to ask a person to compare his or her inputs and outcomes with those of a specific person. In most work situations, an employee selects the reference person after working for some time in the organization. Two issues to consider are whether comparison persons are within the organization and whether reference persons change during a person’s work career.

Several individuals have questioned the extent to which inequity that results from over- payment (rewards) leads to perceived inequity. Locke argues that employees seldom are told they are overpaid. He believes that individuals are likely to adjust their idea of what constitutes an equitable payment to justify their pay.32 Campbell and Pritchard point out that employer–employee exchange relationships are highly impersonal when compared to exchanges between friends.33 Perceived overpayment inequity may be more likely when friends are involved. Thus, an individual probably will react to overpayment inequity only when that individual believes that his or her actions have led to a friend’s being treated unfairly. The individual receives few signals from the organization that he or she is being treated unfairly.

Despite limitations, equity theory provides a relatively insightful model to help explain and predict employee attitudes about pay. The theory also emphasizes the importance of comparisons in the work setting. The identification of reference persons seems to have some potential value when attempting to restructure a reward program. Equity theory also raises the issue of methods for resolving inequity, which can cause problems with morale, turnover, and absenteeism. In recent years, the potential for employees to experience pay inequity has increased with the growing availability of salary information from websites like glassdoor.com and salary.com.

Chapter 5 Motivation 117

Organizational Justice In the 1980s and 1990s, equity theory inspired new streams of research to explain employee attitudes and behavior.34 As summarized in Exhibit 5.9, four dimensions of organizational justice have emerged: distributive, procedural, interpersonal, and infor- mational. The concept of organizational justice, or the degree to which individuals feel fairly treated at the workplace, attracted a considerable amount of research attention. The four components of this research domain are: distributive, procedural, interper- sonal, and informational justice.35 Distributive justice is the perceived fairness of how resources and rewards are distributed throughout an organization. This concept often deals with compensation and is closely related to the previous discussion of equity theory. However, researchers have applied the concept of distributive justice to a wide variety of workplace situations, including organizational politics, university tenure and promotion decisions, antismoking policies, mentoring, teams, and satisfaction with benefit levels.36

Related to distributive justice is the notion of procedural justice. Procedural justice refers to the perceived equity or fairness of the organization’s processes and procedures used to make resource and allocation decisions.37 That is, employees are concerned with the fairness of decision making in all areas of work, including decisions related to compen- sation, performance appraisal, training, and work group assignments.

Procedural justice has been shown to have a positive impact on a number of affective and behavioral reactions.38 These reactions include: ∙ Organizational commitment. ∙ Intrinsic motivation. ∙ Intent to stay with organization. ∙ Organizational citizenship. ∙ Trust in supervisor. ∙ Satisfaction with decision outcome. ∙ Work effort. ∙ Task performance.

organizational justice An area of organizational science research that focuses on perceptions and judgments by employees regarding the fairness of their organizations’ proce- dures and decisions.

distributive justice The perceived fairness of how resources and rewards are distributed throughout an organization.

procedural justice The perceived fairness of the processes used by the organization to arrive at important decisions.

EXHIBIT 5.9 Four Dimensions of Organizational Justice

Dimension of Organizational Justice Brief Definition Example of Dimension at Work

Distributive Perception of fairness of the resources and rewards in an organization.

I made higher sales than my colleague this year; but my colleague just received a higher bonus. This isn’t fair!

Procedural Perception of fairness of the process used to distribute rewards.

The way they make pay raise decisions around here doesn’t seem fair. The manager’s favorites always receive the largest pay raises.

Interpersonal Perception of fairness of the treatment received by employees from authorities.

I was amazed that my boss found each of us enough hours to work this past month. Business at the restaurant has been down and I didn’t think I was going to make enough in tips to be able to pay my rent.

Informational Perception of fairness of the communication provided to employees from authorities.

When I asked my boss about why I only received a 3 percent pay raise, she spent an hour with me explaining what areas I need to improve so I can earn a higher raise next year.

118 Part Two Understanding and Managing Individual Behavior

Positive consequences of procedural justice have been found in important organiza- tional decision contexts, including pay allocation, personnel selection, and performance appraisal. Since procedural justice can provide benefits to organizations, an important issue involves the types of decision-making procedures that people consider to be fair. People are more inclined to interpret decisions to be fair when they have a voice in the decision, there is consistency in decision making, and the process and procedures conform to ethical and moral values.

Two explanations have emerged regarding why procedural justice works. Self-interest theory proposes that people want fair procedures because such fairness enables them to obtain desired extrinsic outcomes. Although a manager may decide not to promote a per- son, if the process has been fair it will be accepted39 and the employee will be more likely to remain committed to the organization.40

Group value theory suggests that people value fairness as a means of realizing such desired intrinsic outcomes as self-esteem. People have a strong sense of affiliation with groups to which they belong. Fair group procedures are considered to be a sign of respect and an indication that they are valued members of the group. This results in a higher sense of self-esteem.

Treating employees and customers fairly, respectfully, and in a timely manner is a wor- thy managerial approach. First, managers must understand the importance of procedural justice. Second, managers can achieve good performance results when procedural justice is widely practiced for decision making. Finally, employee perceptions are extremely critical in identifying procedural justice. Determining these perceptions requires strong interper- sonal and observation skills on the part of managers.41

Related to procedural justice is the concept of interpersonal justice, which refers to judgments made by employees about whether they feel fairly treated by their supervisors and other authorities in the organization.42 Perceptions of interpersonal justice are higher when authorities are seen as treating employees in a dignified and respectful manner. How- ever, interpersonal injustice can occur if employees perceive that the authorities treat them in an insulting, embarrassing, humiliating manner in front of others or label the employees as racist or sexist.43

Unfortunately, poor treatment by authorities in organizations appears to be a common occurrence. In a random telephone survey of 1,000 working adults in the United States, about 45 percent of respondents reported that they work or have worked for an abusive supervisor.44 The researchers defined abusive behavior as verbal abuse, intimidation, and threatening gestures. Other researchers analyzed 110 research studies to compare the effects of sexual harassment and workplace bullying on employees.45 They defined work- place aggression as any behavior that included: ∙ Persistently criticizing employees’ work. ∙ Yelling. ∙ Spreading gossip or lies. ∙ Reminding employees of their mistakes. ∙ Excluding or ignoring workers. ∙ Insulting workers’ habits, attitudes, or personal lives.

The study found that employees who experienced bullying and incivility at work were more likely to quit their jobs and have lower levels of well-being and job satisfaction. Indeed, research suggests that abusive treatment from authorities and supervisors is associ- ated with lower job and life satisfaction, lower organizational commitment, conflict between work and family, and psychological distress.46

interpersonal justice Judgments made by employees about the perceived fairness of the treatment received by employees from authorities.

Chapter 5 Motivation 119

A final form of organizational justice, informational justice, focuses on whether employees perceive that decisions and other communication from authorities are explained in a fair manner.47 When important decisions are being communicated to employees, do authorities take time to explain their decisions in a thorough and reasonable manner? Or, do they send out a brief e-mail that announces major changes without adequate justification? The former approach will build a sense of informational justice among employees whereas the latter approach will erode it. For example, layoffs are a fact of life for many organizations. Unfortunately, evidence shows that companies that engage in layoffs may find that many “survivors” of the layoffs expe- rience lower morale and end up voluntarily leaving the company as well.48 Layoffs, combined with the loss of “good employees,” may leave the firm understaffed for when the economy picks up again. What can managers of a company do to lessen the negative impact of layoffs on those employees who survive the personnel cuts? One approach is to overcommunicate and tell the truth when communicating with employees. Managers should keep many channels of com- munication open and provide information about the organization’s financial condition and cur- rent/additional layoffs on a frequent basis. Here are some approaches that managers can take to promote high levels of informational justice during turbulent times:49

∙ Informal “chats” by top executives (via e-mail, in person, or by videoconference). ∙ Don’t sugarcoat bad news; employees will sense this and lose confidence in decision

makers. ∙ Set specific timeframes for delivering progress reports to employees in person, via the

company’s intranet or website, or by other communication channels. In addition, some CEOs communicate with their employees via blogs and other forms

of social media. For example, Richard Branson, founder of the Virgin Group, regularly communicates with employees and others via Twitter and his blog, while Jeff Immelt, GE’s CEO, writes his “On My Mind” blog for GE employees. Blogs and other communication channels are meant to convey a sense of trust and inclusiveness while decreasing secrecy and dishonesty when authorities communicate to employees.50

In sum, the organizational justice literature suggests that if authorities treat employees in what’s perceived to be a fair manner, then employees are more likely to trust their super- visors and organizations.

Goal Setting Interest in applying goal setting to organizational problems and issues has been growing since Locke presented what is now considered a classic paper in 1968.51 A goal is a result that a person, team, or group is attempting to accomplish through behavior and actions. Locke proposed that goal setting is a cognitive process of some practical utility. His view is that an individual’s conscious goals and intentions are the primary determinants of behav- ior.52 It has been noted that “one of the commonly observed characteristics of intentional behavior is that it tends to keep going until it reaches completion.”53 That is, once a person starts something (e.g., a job, a new project), he or she pushes on until a goal is achieved. Also, goal-setting theory emphasizes the importance of conscious goals in explaining moti- vated behavior. Locke has used the notion of intentions and conscious goals to propose and provide research support for the thesis that difficult and specific conscious goals will result in higher levels of performance if these goals are accepted by the individual.54

Descriptions of Goal Setting Some examples of goal setting at work include: developing a new software program within 4 to 6 months to detect malicious viruses that can harm e-mail and computer systems;

informational justice The perceived fairness of the communication provided to employees from authorities.

goal A specific target that an individual is trying to achieve; a goal is the target (object) of an action.

120 Part Two Understanding and Managing Individual Behavior

landing five new customers or increasing sales of existing customers by 10 percent over the next 12 months; and converting current buildings to meet green environmental standards over the next two years. Setting such goals is a process that includes the attributes or the mental (cognitive) processes of goal setting. The attributes Locke highlights are goal spec- ificity, goal difficulty, and goal intensity.

Goal specificity is the degree of quantitative precision (clarity) of the goal. Goal difficulty is the degree of proficiency or the level of performance that is sought. Goal intensity per- tains to the process of setting the goal or of determining how to reach it. To date, goal intensity has not been widely studied, although a related concept, goal commitment, has been considered in a number of studies. Goal commitment is the amount of effort used to achieve a goal.

Exhibit 5.10 presents a model of individual goal setting using available theoretical research, but illustrating a practical framework that managers can apply. The goal-setting model emphasizes that a goal serves as a motivator. It is important for any goal to be clear, meaningful, and challenging. When goals are not accomplished, an individual faces a sense of dissatisfaction. Whether there is a relationship between goals and job performance is moderated by a number of factors, including ability, commitment, and feedback.

A person’s ability can limit his or her efforts to accomplish goals. If a manager sets a difficult goal and a person lacks the ability to accomplish it, there will not be accomplishment.

A person who is committed to a goal has a drive, intensity, and persistence to work hard. Commitment creates a desire to reach the goal and overcome problems or barriers.

Feedback provides data, information, and facts about progress in goal accomplishment. A person can use feedback to gauge where adjustments in effort need to be made. Without feedback a person operates without guidance or information to make corrections so that goals are accomplished on time and at budgeted levels.

As goals are accomplished and this performance is evaluated, rewards are distributed. If the rewards are preferred, as discussed in expectancy theory, employees are likely to be satisfied and motivated.

goal specificity The degree of quantita- tive precision of the goal.

goal difficulty The degree of profi- ciency or the level of goal performance that is being sought.

goal intensity The process of setting a goal or of determining how to reach it.

goal commitment The amount of effort that is actually used to achieve a goal.

EXHIBIT 5.10 Goal Setting Applied to Organizations

Source: Modified and based on Edwin A. Locke and Gary P. Locke, A Theory of Goal Setting and Task Performance (Englewood Cliffs, NJ: Prentice-Hall, 1990).

Ability Commitment Feedback

Moderators

Prefer by

team

Rewards Clarity Meaningful Challenging

Goal Characteristics by

organization

Performance

Chapter 5 Motivation 121

Goal-Setting Research The amount of research on goal setting has increased considerably since Locke’s 1968 paper, which certainly contributed to the increase in laboratory and field research on goal setting. Another force behind the increase in interest and research was the demand of man- agers for practical and specific techniques that they could apply in their organizations. Goal setting offered such a technique for some managers, and it thus became an important management tool for enhancing work performance.55

Empirical research findings from a variety of managerial and student samples have pro- vided support for the theory that conscious goals regulate behavior. Yet a number of impor-

tant issues concerning goal setting still must be examined more thoroughly. One area of debate concerns the issue of how much subordinate participation in goal setting is optimal. A field experiment conducted by skilled technicians compared three levels of subordinate participation: full (the subordinates were totally involved); limited (the subordinates made some sugges- tions about the goals the superior set); and none.56 Measures of performance and satisfaction were taken over a 12-month period. The groups with full- or limited-participant involvement in goal setting showed significantly more performance and sat- isfaction improvements than did the group that did not partici- pate in goal setting. Interestingly, these improvements began to dissipate six to nine months after the program was started. Some research, however, has failed to find significant relationships between performance and participation in the goal-setting pro- cess.57 Not surprisingly, the necessity for and effectiveness of participatory management styles in any area of management is a much debated topic. This chapter’s You Be the Judge box briefly describes the issue.

Research has found that specific goals lead to higher output than do vague goals such as “do your best.” Field experiments

Y O U B E T H E J U D G E

SHOULD EMPLOYEES BE INVOLVED IN BUSINESS DECISIONS? Employee participation has become an integral feature of quality work life, quality circles, employee stock option plans, and work- place design. When used properly, participative management has been effective in improving performance, productivity, and job sat- isfaction. Employees—as members of a manager–employee team or as part of a group of co-workers—participate in decision mak- ing, goal setting, salary determination, and changing the organiza- tion’s structure.

Some believe that participative management is an ethical im- perative. Their argument is that research clearly demonstrates the effectiveness of participative management because it satisfies a basic human need.

Others argue, however, that job satisfaction is not an employee right and that an organization is not duty-bound to provide it. Is par- ticipative management the ethical way to manage? You be the judge.

Sources: Jim Stevens and Leo Giglio, “Six Benefits of Engaging Your Employees in Decision Making,” New York State Restaurant Association, http://www.nysra.org, accessed March 15, 2016; Richard L. Daft, “Theory Z: Opening the Corporate Door for Participative Management,” Academy of Management Executive 8, no. 4 (November 2004), pp. 117–21. The “ethical imperative” idea was introduced by Marshall Saskin, “Participative Manage- ment Is an Ethical Imperative,” Organizational Dynamics, Spring 1984, pp. 5–22, and elaborated on in “Participative Management Remains an Ethical Imperative,” Organizational Dynamics, Spring 1986, pp. 62–75. Arguments opposing the ethical imperative view can be found in Edwin A. Locke, David M. Schweiger, and Gary Latham, “Participation in Decision Making: When Should It Be Used?” Organizational Dynamics, Winter 1986, pp. 65–79.

IS GOAL SETTING FOR YOU?

Many successful managers rely on goal setting to in- crease their effectiveness. They continually write down goals and keep track of how they are doing. Is goal setting for you? Here are some questions that, once answered, can be converted into specific goals.

1. Is my knowledge of my job progressing?

2. How developed are my people skills?

3. Have I increased my network of contacts?

4. What other skills should I be working on (e.g., problem solving, managing time, negotiation)?

5. How does this period’s performance match up with similar periods of past performance?

6. Out of everything I’ve done at work in the past three months, of which three things am I the most proud? Least proud?

Information You Can Use

122 Part Two Understanding and Managing Individual Behavior

using clerical workers, maintenance technicians, marketing personnel, engineers, typists, manufacturing employees, and others have compared specific versus do-your-best goal- setting conditions. The vast majority of these studies support—partly or totally—the hypothesis that specific goals lead to better performance than do vague goals. The Weyer- haeuser Corporation, for example, used specific goals to improve an important aspect of the performance of its logging trucks. Traditionally, logging truckers had been operating under the instruction to “do their best” in terms of judging weight loads for their trucks in the field. Management decided that 94 percent of weight capacity was a difficult, yet attainable, specific goal for the drivers. This specific goal worked and became an effective motivator; in less than a full year, the company saved more than $250,000.

Certain aspects of goal setting need to be subjected to scientific examination. One such area centers on individual differences and their impact on the success of goal-setting pro- grams. Such factors as personality, career progression, training background, and personal health are important individual differences that should be considered when implementing goal-setting programs. Goal-setting programs also should be subjected to ongoing exami- nation to monitor attitudinal and performance consequences. Some research has demon- strated that goal-setting programs tend to lose their potency over time, so there is a need to discover why this phenomenon occurs in organizations. Sound evaluation programs assist management in identifying success, problems, and needs.

Goal setting can be a very powerful technique for motivating employees. When used correctly, carefully monitored, and actively supported by managers, goal setting can improve performance. However, neither goal setting nor any other technique can be used to correct every problem. Is goal setting for you? The Information You Can Use box “Is Goal Setting for You?” provides you with some questions to ask and answer.

Motivation and the Psychological Contract A conceptual framework that provides a useful perspective for viewing the topic of moti- vation is exchange theory.58 In a very general sense, exchange theory suggests that members of an organization engage in reasonably predictable give-and-take relationships (exchanges) with each other. For example, an employee gives time and effort in exchange for pay; management provides pleasant working conditions in exchange for employee loyalty. Schein suggests that the degree to which employees are willing to exert effort, commit to organizational goals, and derive satisfaction from their work depends on two conditions:59

1. The extent to which employee expectations of what the organization will give them and what they owe the organization in return matches the organization’s expectations of what it will give and receive.

2. Assuming there is agreement on these expectations, the specific nature of what is exchanged (effort for pay, for example). These mutual expectations regarding exchanges constitute part of the psychological

contract.60 As discussed in Chapter 1, the psychological contract is an unwritten agreement between the individual and the organization that specifies what each expects to give to and receive from the other. While some aspects of an employment relationship, such as pay, may be explicitly stated, many others are not. These implicit agreements, which may focus on exchanges involving satisfaction, challenging work, fair treatment, loyalty, and opportu- nity to be creative, may take precedence over written agreements.

Chapter 5 Motivation 123

In the ideal psychological contract, those contributions the individual was willing to give would correspond perfectly to what the organization wanted to receive; similarly, what the organization wanted to give would correspond totally with what the individual wished to receive. In reality, however, this seldom occurs. Additionally, psychological con- tracts are not static; either party’s expectations can change as can either party’s ability or willingness to continue meeting expectations. In more extreme cases, an organization may take actions (e.g., layoffs) that lead employees to perceive that a psychological contract breach has occurred. Such a violation in the psychological contract can negatively affect employees’ health61 and lead to decreased job satisfaction and citizenship behavior.62

When there are few or a decreasing number of matches between what each party expects to give and receive in the contract, work motivation suffers. The psychological contract provides a perspective for why this is true. Looking at motivation from a content theory approach, the psychological contract suggests that in return for time, effort, and other considerations, individuals desire to receive need gratification. Using Maslow’s needs hierarchy as an example, if an employee is operating at the self-actualization level and fails to receive a challenging job that allows for the application of all the capabilities that employee has, motivation will suffer. In other words, the satisfaction of needs is part of the contract; when the expectation of need satisfaction is not matched with the opportunity to achieve such satisfaction, the contract is violated and motivation is nega- tively affected.

The perspective on motivation provided by the concept of the psychological contract is not limited to content approaches to motivation, however; it is equally applicable to process explanations as well. Equity theory is, in fact, a form of exchange theory. The notion of inputs and outcomes within equity theory is very similar to expectations of giving and receiving in the psychological contract. In the context of an expectancy approach to moti- vation, performance-outcome expectancies relate directly to the exchange of performance for pay, advancement, satisfaction, or other outcomes in the psychological contract; like- wise, the desire to receive certain considerations in the context of the contract is analogous to positively valent outcomes in expectancy theory.

Managing the psychological contract successfully is one of the more important and challenging aspects of most managers’ jobs.63 The more attuned the manager is to the needs and expectations of subordinates, the greater the number of matches that are likely to exist and be maintained in the psychological contract. This, in turn, can positively impact the direction, intensity, and persistence of motivation in the organization.

Effective Managers Motivate Their Employees In this chapter, a number of popular theories of motivation are described. The theories typi- cally are pitted against one another in the literature. This is unfortunate, since each approach can help managers better understand workplace motivation. Each approach attempts to orga- nize, in a meaningful manner, major variables associated with explaining motivation in work settings. While none of the theories is flawless, they have survived over the years because they each offer a powerful lens through which to view employee motivation. The content theories are individual-oriented in that they place primary emphasis on the characteristics of people. Each of the process theories has a specific orientation. Expectancy theory places emphasis on individual, job, and environmental variables. It recognizes differences in needs, perceptions, and beliefs. Equity theory primarily addresses the relationship between attitudes toward inputs and outputs and reward practices. Goal-setting theory emphasizes the cognitive processes and the role of intentional behavior in motivation.

psychological contract breach Employee perception that the organization has failed to fulfill an unwritten exchange agreement.

124 Part Two Understanding and Managing Individual Behavior

This chapter suggests that instead of ignoring motivation, managers must take an active role in motivating their employees. Four specific conclusions are offered here: 1. Managers can influence the motivation state of employees. If performance needs to be

improved, then managers must intervene and help create an atmosphere that encour- ages, supports, and sustains improvement.

2. Managers should be sensitive to variations in employees’ needs, abilities, and goals. Managers also must consider differences in preferences (valences) for rewards.

3. Continual monitoring of needs, abilities, goals, and preferences of employees is each individual manager’s responsibility and is not the domain of human resource managers only.

4. Managers need to work on providing employees with jobs that offer task challenge, diversity, and a variety of opportunities for need satisfaction. In simple terms, the theme of our discussion of motivation is that the manager needs to

be actively involved. If motivation is to be energized, sustained, and directed, managers must know about needs, intentions, preferences, goals, and comparisons, and they must act on that knowledge. Failure to do so will result in many missed opportunities to help moti- vate employees in a positive manner.

SHOULD EMPLOYEES BE INVOLVED IN BUSINESS DECISIONS? The strongest argument for participation is that it’s natural for people to want to participate in those matters (e.g., goals for the department, salary increases, etc.) that impact them. When managers and supervisors make decisions without such input, employees often feel frustrated and powerless at the workplace, and in our opinion, this is an ethically undesirable situation. Those who argue

against employee participation in decision making point out that decades of research do not indicate that participation leads to improved employee morale and job satisfaction in all situations. In fact, they point out that in many cases authoritative methods lead to similar improvements in productivity. That being said, we still believe that participation is a “net positive” that has many beneficial effects not only for the employees but also for their organizations.

Y O U B E T H E J U D G E C O M M E N T

Summary of Key Points

∙ Motivation is made up of at least three distinct components. Direction refers to what an individual chooses to do when presented with a number of possible alternative courses of action. Intensity relates to the strength of the individual’s response once the choice (direction) is made. Finally, persistence refers to the staying power of behavior, or how long a person will continue to devote effort.

∙ Maslow’s theory of motivation suggests that individuals’ needs are arranged in a hierarchi- cal order of importance and that people will attempt to satisfy the more basic (lower-level) needs before directing behavior toward satisfying higher-level needs. Maslow’s five need levels, from lowest to highest, are (1) physiological; (2) safety and security; (3) belonging- ness, social, and love; (4) esteem; and (5) self-actualization.

∙ Alderfer’s ERG theory is a need hierarchy comprised of three sets of needs: existence, relatedness, and growth. In addition to the satisfaction-progression process Maslow describes, Alderfer suggests that if a person is continually frustrated in trying to satisfy one level of need, he or she may regress to the next lowest level need.

∙ Herzberg’s research suggests that there are two important sets of factors. Motivators are intrinsic conditions and include achievement, recognition, and responsibility. Hygiene

Chapter 5 Motivation 125

factors are extrinsic conditions and include salary, working conditions, and job security. In Herzberg’s view, it is only the motivators that contribute to satisfaction and thus have the power to provide motivation.

∙ McClelland has developed a descriptive set of factors that reflect a high need for achievement. These are: (1) the person likes to take responsibility for solving problems; (2) the person tends to set moderate achievement goals and is inclined to take calculated risks; and (3) the person desires feedback on performance.

∙ Key terms in expectancy theory include instrumentality, valence, and expectancy. Instrumentality refers to the strength of a person’s belief that performance will lead to desired outcomes. Valence refers to a person’s preference for attaining or avoiding a particular outcome. Expectancy refers to a person’s belief regarding the likelihood or subjective probability that a particular behavior will be followed by a particular outcome.

∙ The essence of equity theory is that employees compare their job inputs and outputs with those of others in similar work situations. Inputs are what an individual brings to the job and include skills, experiences, and effort, among others. Outcomes are what a person receives from a job and include recognition, pay, fringe benefits, and satisfac- tion, among others.

∙ Individual goals that are clear, meaningful, and challenging are likely to motivate employees to accomplish objectives that are important to the organization. This goal– performance relationship is stronger when employees have the ability and commitment to achieve goals, as well as receive feedback about progress toward accomplishing goals.

∙ Employee expectations of what the organization will give them, what they owe the orga- nization, and the organization’s expectation of what it will give to and receive from employees constitute the psychological contract. A psychological contract is an unwrit- ten agreement between the individual and the organization that specifies what each expects to give to and receive from the other.

1. Of the three components of motivation—direction, intensity, and persistence—which do you believe is the most challenging to maintain when it comes to keeping yourself motivated at work or in school? Explain.

2. Which of the content theories discussed in the chapter do you believe offers the best explanation of motivation? Which of the process theories? Overall, do you feel the content approach or the process approach best explains motivation?

3. Motivation is just one of several factors that influence productivity. What other factors were discussed in this chapter? What is the relationship between these factors and motivation?

4. What implications does Herzberg’s two-factor theory have for the design of organiza- tional reward systems? How can the theory be used to explain differences in the three components of motivation?

5. Assume you are a global manager responsible for an international subsidiary that has employees from many parts of the world—China, India, Morocco, Brazil, and Spain. How will you go about learning how to motivate these individuals to perform their jobs well? Which of the motivation theories discussed in this chapter can help you to understand their work attitudes and behaviors?

6. As a manager, would you prefer the people for whom you are responsible to be extrin- sically or intrinsically motivated? Explain.

Review and Discussion Questions

7. Think back to the last time you felt unfairly treated at work or at school. Which of the four components of organizational justice, distributive, procedural, interpersonal, or informational, best explains why you felt this way.

8. How important a role does perception play in determining whether an employee is receiving equitable treatment? What kinds of things might a manager do to influence those perceptions?

9. Goal setting can be a difficult system to implement effectively. What kinds of prob- lems might be encountered in attempting to install a goal-setting program in an orga- nization? As a manager, what would you do to minimize the likelihood you would encounter these problems?

10. Is there a psychological contract between the students enrolled in this course and the instructor? What are some of the specifics of this contract? How was the contract determined?

Each person is to work alone for at least 30 minutes with this exercise. After sufficient time has elapsed for each person to work through the exercise, the instructor will go over each goal and ask for comments from the class or group. The discussion should display the un- derstanding of goals that each participant has and what will be needed to improve his or her goal-writing skills.

Writing and evaluating goals seem simple, but they are often not done well in organizations. The press of time, previous habits, and little concern about the at- tributes of a goal statement are reasons goals are often poorly constructed. Actually, a number of guidelines should be followed in preparing goals. 1. A well-presented goal statement contains four

elements: a. An action or accomplishment verb. b. A single and measurable result. c. A date of completion. d. A cost in terms of effort, resources, or money, or

some combination of these factors. 2. A well-presented goal statement is short; it is not a

paragraph, but should be presented in a sentence. 3. A well-presented goal statement specifies only what

and when and doesn’t get into how or why. 4. A well-presented goal statement is challenging and

attainable. It should cause the person to stretch his or her skills, abilities, and efforts.

5. A well-presented goal statement is meaningful and important. It should be a priority item.

6. A well-presented goal statement must be acceptable to you so that you will try hard to accomplish the goal. The goal statement model should be:

To (action or accomplishment verb) (single result) by (a date—keep it realistic) at (effort, use of what re- source, cost).

An example for a production operation:

To reduce the production cost per unit of mint tooth- paste by at least 3 percent by March 1, at a change- over of equipment expense not to exceed $45,000.

Examine the next four statements that are presented as goal statements. Below each goal, write a critique of the statement. Is it a good goal statement? Why? Discuss your viewpoints in the class group discussion.

1. To reduce my blood pressure to an acceptable level. 2. To make financial investments with a guaranteed

minimum return of at least 16 percent. 3. To spend a minimum of 45 minutes a day on a doc-

tor-approved exercise plan, starting Monday, lasting for six months, at no expense.

4. To spend more time reading nonwork-related novels and books during the next year.

Exercise

Exercise 5.1: Goal Setting—How to Do It

126 Part Two Understanding and Managing Individual Behavior

127

Reality Check Now how much do you know about motivation?

6. motivational theories describe, explain, and analyze how behavior is energized, directed, sustained, and stopped. a. Current b. Process c. Developmental d. Content

7. True or false: According to Maslow, “safety and security” needs are higher in the needs hierarchy than “esteem” needs. a. True b. False

8. is a dimension of organizational justice research that focuses on the perceived fairness of how resources and rewards are given out within an organization. a. Procedural justice b. Distributive justice c. Interpersonal justice d. Informational justice

9. True or false: McClelland’s learned needs theory states that motivation is closely linked to learning con- cepts, and the three learned needs that individuals can possess are the need for achievement, affiliation, and power. a. True b. False

10. According to equity theory, if an employee feels that she or he is not being treated fairly (e.g., paid less than a co-worker who does not perform well), then this person will try to restore equity by . a. sabotaging the work of the co-worker who receives a higher salary b. changing outcomes (e.g., asking the supervisor for a pay raise) c. changing inputs (e.g., putting less time in at work) d. Both b and c are correct.

REALITY CHECK ANSWERS

Before After

1. b 2. a 3. b 4. c 5. d 6. b 7. b 8. b 9. a 10. d Number Correct Number Correct

Rigid rankings hinder the teamwork and risk-taking necessary for innovation. But what combination of methods works best?

Holiday shopping, year-end deadlines, and emo- tional family dramas aren’t the only stresses in December.

’Tis the season for some companies to embark on that dreaded annual rite, the often bureaucratic and always time-consuming performance review. The process can be brutal: As many as one-third of U.S. corporations evaluate employees based on systems that pit them

Case

Case 5.1: Companies Are Shifting from Evaluating Performance to Developing Talent: Will It Motivate Employees?

128 Part Two Understanding and Managing Individual Behavior

against their colleagues, and some even lead to the fir- ing of low performers.

Fans say such “forced ranking” systems ensure that managers take a cold look at performance. But the practice increasingly is coming under fire. Following a string of discrimination lawsuits from employees who believe they were ranked and yanked based on age and not merely their performance, fewer companies are adopting the controversial management tool. Critics charge that it unfairly penalizes groups made up of stars and hinders collaboration and risk-taking, a grow- ing concern for companies that are trying to innovate their way to growth. And a new study calls into ques- tion the long-term value of forced rankings. “It creates a zero-sum game, and so it tends to discourage coopera- tion,” says Steve Kerr, a managing director at Goldman Sachs Group Inc., who heads the firm’s leadership training program.

Even General Electric Co., the most famous propo- nent of the practice, is trying to inject more flexibility into its system. Former Chief Executive Jack Welch re- quired managers to divide talent into three groups—a top 20 percent, a middle 70 percent, and a bottom 10 percent, many of whom were shown the door. A few years ago, GE launched a proactive campaign to re- mind managers to use more common sense in assign- ing rankings. “People in some locations take [distributions] so literally that judgment comes out of the practice,” says Susan P. Peters, GE’s vice president for executive development.

Striking that balance between strict yardsticks and managerial judgment is something every company, from GE to Yahoo! to American Airlines, is grappling with today. But finding a substitute for a rigid grading system is not an easy task. It drives truth into a process frequently eroded by grade inflation and helps leaders identify managers who are good at finding top talent.

GE has removed all references to the 20/70/10 split from its online performance management tool and now presents the curve as a set of guidelines. Individual groups are freer to have a somewhat higher number of “A” players or even, says Peters, no “bottom 10s.” Even those low achievers are getting kinder treatment, from a new appellation—the “less effectives”—to more spe- cific coaching and intervention than in the past.

The changes are key for a company trying to evolve its culture from a Six Sigma powerhouse to one that also values innovation. Tempering such rigid perfor- mance metrics, says Peters, “enables individuals and organizations to be more comfortable with risk-taking

and with failure.” To drive that point home, the com- pany’s top managers were evaluated for the first time on five traits, such as imagination and external focus, that represent the company’s strategic goals. And more recently, GE announced plans to do away with annual performance reviews all together, focusing employee evaluations on frequent discussions and ongoing coaching by supervisors via a new app called “PD@ GE”—performance development at GE.

Separating stars from slackers remains a long- standing part of GE’s performance-driven culture. But for most companies, especially those without such cul- tures, the benefits of adopting a forced ranking system are likely to dissipate over the long term.

A recent study lends hard data to that theory. Steve Scullen, an associate professor of management at Drake University in Des Moines, Iowa, found that forced rank- ing, including the firing of the bottom 5 percent or 10 percent, results in an impressive 16 percent productivity improvement—but only over the first couple of years. After that, Scullen says, the gains drop off, from 6 percent climbs in the third and fourth years to basically zero by year 10. “It’s a terrific idea for companies in trouble, done over one or two years, but to do it as a long-term solution is not going to work,” says Dave Ulrich, a busi- ness professor at the University of Michigan at Ann Arbor. “Over time it gets people focused on competing with each other rather than collaborating.”

Yahoo!, too, was looking for better dialogue and less demoralizing labels when it substantially changed its rating system, which compared employees’ perfor- mance to an absolute standard rather than to each other. Libby Sartain, Yahoo!’s senior vice president for hu- man resources, knew that review discussions at the Sunnyvale, California, tech leader frequently included the wink-wink “I wanted to put you here, but I was forced by human resources to do something different” comment that discredits so many appraisals. Yahoo! stripped away its performance labels, partly in hopes that reviews would center more on substance and less on explaining away a grade.

But that doesn’t mean Yahoo! went all Pollyanna on its employees. To do a better job of finding and show- ering top performers with the rewards necessary to keep them from jumping ship in talent-tight Silicon Valley, the company also instituted a “stack-ranking” system to determine how compensation increases are distributed. It asks managers to rank employees within each unit—a group of 20 people would be ranked 1 through 20, for example—with raises and bonuses

Chapter 5 Motivation 129

distributed accordingly. During reviews, employees are told how their increases generally compare to those of others.

Some Yahoo! managers are livid about the new sys- tem. “It’s going to kill morale,” laments one senior en- gineering manager who says he’s getting a stronger message to cull his bottom performers. Yahoo! says its new program doesn’t automatically weed out a bottom group and was designed specifically to reward its stars.

Indeed, what Yahoo! has introduced in place of its old system shows how hard it is for companies to find ways to foster merit-driven cultures that coddle stand- outs while staying tough on low performers. Whether a company calls it stack ranking, forced ranking, or dif- ferentiation, “there’s no magic process,” says Sartain. “We just want to make sure we’re making our bets and that we’re investing in the people we most want to keep. That’s what this is all about.”

Best-Practice Ideas Review season is here, with all the time-consuming bu- reaucracy and stress that come with it. Here are five ideas to help put performance back into the process:

Meet More Often Time-strapped managers may sound a collective groan, but year-end reviews on their own are hardly enough. The best managers meet at least three times a year, if not four—once to set goals, once or twice for an up- date, and finally, to review—with many informal check-ins in between. In this quickly shifting economy, goals may change, and fewer surprises will surface at year-end.

Make Room for Risk As innovation trumps efficiency, some companies are putting some wiggle room into their rankings and rat- ings. But more flexible guidelines have to have teeth, too: Low-performing units shouldn’t get more than their share of top grades, for example. Exceptions

should go to people who set aggressive goals and come close to achieving them. Adjust Goals along with Grades While many companies use “calibration” sessions to check that performance assessments level out among different managers, less than 10 percent fine-tune up-front goals across groups, according to Hewitt Associates. Choose Words Wisely Whether or not you strip the labels off your perfor- mance reviews entirely, as Yahoo! has, faint-praise terms such as “fully satisfies” make essential B-players feel like also-rans. Try “strong” or “successful” to drive home their value. Build Trust With so much focus on the tools and tricks of perfor- mance management, it’s easy to lose sight of what re- ally matters: the conversation. The University of Michigan’s Dave Ulrich suggests putting three simple words—“help me understand”—in front of difficult feedback. Questions 1. What’s your opinion regarding forced ranking per-

formance appraisals? Do they motivate employees? Explain.

2. How would equity theory explain some employees’ negative reactions to forced rankings? Explain.

3. Based on Chapter 5, if you decided not to use forced rankings at your company, how would you motivate employees?

Sources: Max Nisen, “Why GE Had to Kill Its Annual Performance Reviews after More Than Three Decades,” Quartz, http://qz.com, accessed March 16, 2016; “It’s Official: Forced Ranking Is Dead,” The Wall Street Journal, http://deloitte.wsj.com, accessed March 16, 2016; Sarah Boehle, “Keep Forced Ranking Out of Court,” Training 45, no. 5 (June 2008), pp. 44–46; Paul Falcone, “Big-Picture Performance Appraisal,” HR Magazine 52, no. 8 (August 2007), pp. 99–100; Jena McGregor, “The Struggle to Measure Performance,” BusinessWeek, January 9, 2006, pp. 26–27.

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Earlier chapters have described several factors that may affect job performance: Skills and abilities, perceptions, attitudes, emotions, and personality characteristics are all examples of previously discussed individual differences that play a role in shaping performance. Additionally, the direction, intensity, and persistence of an individual’s motivation play a critical role, as does the evaluation and reward system that is used. In this chapter, we will examine another critical variable: job design.

The jobs that people perform in organizations are the building blocks of all organization structures. The phrase Let’s get organized! usually means that we need to clarify what job each individual should be doing. But we are also interested in understanding the causes of effective and ineffective job performance.

A major cause of effective job performance is job design, which refers to the process by which managers decide what job tasks and how much authority each employee will have. The well-being of organizations and people relates to how well management designs jobs. Jobs can be sources of psychological stress and even mental and physical impairment. On a more positive note, jobs can provide income, meaningful life experi- ences, self-esteem, esteem from others, regulation of our lives, and association with others.

This chapter describes some of the many theories and practices that deal with job design and redesign. We must understand the implication of the term job redesign in the context of our discussion. It means that management has decided it’s worthwhile to reconsider what employees are expected to do on the job. In some instances, the redesign effort may be nothing more than requiring the individual to use a smart phone rather than a desk phone to answer customer service inquiries. In other instances, the redesign effort may require the individual to work with other employees in a team effort rather than to work alone on the task. The contemporary trend in organizations is to redesign jobs that require individuals to work together in teams. In some instances, these are virtual teams whose members are located in different parts of the country and world.

Job Design and Performance Learning Objectives

After completing Chapter 6, you should be able to:

Describe the relationship between job design and quality of work life.

Summarize the key components in the general model of job design.

Identify the key elements linking job design and performance.

Compare the job design concepts of range and depth.

Give examples of how managers can influence how employees perceive their jobs.

Explain the differences among job rotation, job enlargement, and job enrichment.

Discuss how quality is being designed into jobs today.

C H A P T E R S I X

© Ingram Publishing, RF

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Reality Check How much do you know about job design?

1. Which of the following factors is not part of the job characteristics model? a. Skill variety b. Task identity c. Extrinsic motivation d. Autonomy

2. Intrinsic motivation refers to an employee’s to achieve outcomes from the application of individual ability and talent. a. goal-directed behavior b. willingness c. empowerment d. force of will

3. The Six Sigma quality standard permits no more than defects per million opportunities. a. 1.0 b. 2.8 c. 3.4 d. 4.4

4. True or false: “Job depth” is the number of operations that an employee performs to complete a job task. a. True b. False

5. Managers can help facilitate by providing employees with direct feedback and learning opportunities, while also offering them unique jobs and the chance to control some aspects of their schedule and control over resources. a. job enrichment b. job circulation c. job modification d. job rotation

In contrast to job redesign, job design refers to the first instance in which management creates a job by specifying its tasks, duties, and responsibilities. But with the passage of time and the development of new tools and processes, management’s expectations for that job will change (i.e., it will be redesigned). We should understand job design to be an ongoing, dynamic process. Thus, we will use the term, “job design” to refer to any and all managerial efforts to create jobs whether initially or subsequently.

We begin the discussion of job design by introducing the issue of quality of work life. As is apparent to anyone who has ever worked, what we do on the job plays a major role in our social, health, and psychological statuses as well as our economic standing. After intro- ducing the relationships between job design and quality of work life, we’ll address the more technical aspects of job design.

Job Design and Quality of Work Life The concept of quality of work life (QWL) is widely used to refer to “a philosophy of management that enhances the dignity of all workers; introduces changes in an organization’s culture; and improves the physical and emotional well-being of employees (e.g., providing opportunities for growth and development).”1 Indicators of quality of work life include acci- dent rates, sick leave usage, employee turnover, stress, and number of grievances filed.2 In some organizations, QWL programs are intended to increase employee trust, involvement, and

job design The process of specifying the tasks, duties, and responsibilities of a job.

quality of work life (QWL) Management philosophy and practice that enhance employee dignity, intro- duce cultural change, and provide opportunities for growth and development.

Chapter 6 Job Design and Performance 133

problem solving so as to increase both worker satisfaction and organizational effectiveness.3 Thus, the concept and application of QWL are broad and involve more than jobs, but the jobs that people do are important sources of satisfaction. It is not surprising to find that the quality of work life concept embodies theories and ideas of the human relations movement of the 1950s and the job enrichment efforts of the ’60s and ’70s. It also has been partially responsible for inspiring research and interest in work–family conflict issues in the 1980s to today.4

The continuing challenge to management is to provide for quality of work life and to improve productivity, quality, and efficiency through revitalization of business and indus- try. At present, the trade-offs between the gains in human terms from improved quality of work life and the gains in economic terms from revitalization aren’t fully known. Some believe that we must defer quality of work life efforts so as to make the American economy more productive and efficient.5 Others observe that the sense of urgency to become more competitive in domestic and global trade presents opportunities to combine quality of life and reindustrialization efforts.6 To those ends, job design can play a vital role.

Job design attempts (1) to identify the most important needs of employees and the organi- zation and (2) to remove obstacles in the workplace that impede those needs. Managers hope that the results are jobs that fulfill important individual needs and contribute to individual, group, and organizational effectiveness. Managers are, in fact, designing jobs for teams and groups. Some studies have reported that employees who participate in teams get greater sat- isfaction from their jobs.7 But other studies report contrary results.8 So we’re left with the uncomfortable, but realistic, conclusion that quality of work life improvements through job design cannot be ensured in specific instances. Obviously, designing jobs is a complex process. Recently, the Chicago White Sox baseball team faced a challenging situation regarding the quality of work life for its players. See the You Be the Judge feature for more details.

This chapter reviews the important theories, research, and practices of job design. As will be seen, contemporary management has at its disposal a wide range of techniques that facilitate the achievement of personal and organizational performance.

A General Model of Job Design The conceptual model in Exhibit 6.1 is based upon extensive research and practical experi- ence. The model includes the various terms and concepts appearing in the research litera- ture. When linked together, these concepts describe the important determinants of job performance and organizational effectiveness. The model takes into account a number of sources of complexity. It recognizes that individuals react differently to jobs. While one

EXHIBIT 6.1 A General Model of Job Design

Perceived job content

Job performance Objective Behavioral Intrinsic/extrinsic Job satisfaction

Individual differences

Social setting differences

Job design Job range Job depth

134 Part Two Understanding and Managing Individual Behavior

person may derive positive satisfaction from a job, another may not. It also recognizes the difficult trade-offs between organizational and individual needs. For example, the technol- ogy of manufacturing may dictate that management adopt assembly-line mass production methods and low-skilled jobs to achieve optimal efficiency. Such jobs, however, may result in boredom and worker discontent. Perhaps these costs could be avoided by carefully balancing organizational and individual needs.

The ideas reflected in Exhibit 6.1 are the bases for this chapter. We’ll present each important cause or effect of job design, beginning with the end result of job design, job performance.

Job Performance Outcomes Job performance includes a number of outcomes. In this section we’ll discuss performance outcomes that have value to the organization and to the individual.

Objective Outcomes Quantity and quality of output, absenteeism, tardiness, and turnover are objective outcomes that can be measured in quantitative terms. For each job, implicit or explicit standards exist for each of these objective outcomes. Industrial engineering studies establish standards for daily quantity, and quality control specialists establish tolerance limits for acceptable quality. These aspects of job performance account for characteristics of the product, client, or service for which the jobholder is responsible. But job performance includes other outcomes.

Behavioral Outcomes The jobholder reacts to the work itself. She reacts by either engaging fully in the job or by “going through the motions.” Moreover, physiological and health-related problems can

Y O U B E T H E J U D G E

QUALITY OF WORK LIFE IN THE DUGOUT Professional baseball player Adam LaRoche recently announced his retirement from the Chicago White Sox after club president, Kenny Williams, told him to limit his son’s time in the team club- house during the upcoming season. LaRoche, a 12-year veteran of Major League Baseball, brought his 14-year-old son Drake to the Sox clubhouse during last season without any issues. However, this year, Williams asked LaRoche to limit his son’s appearance in the clubhouse—and LaRoche walked away from $13 million on the last year of his White Sox contract.

Drake LaRoche has been a constant in several baseball club- houses as his dad’s career took him to six different teams. When LaRoche recently spent four years with the Washington Nationals, Drake was referred to as the “26th man” by a Nationals bench coach in a 2013 Washington Post profile.

Williams said he had to make a decision from a management perspective about allowing the teen to be a fixture in the Sox

clubhouse this season. “We went into this season saying we were going to commit and focus,” Williams said. Some suggest that Drake’s presence last year could have been a distraction not only to his dad, but also to other team members and White Sox staff.

Williams has taken a lot of heat in the media for his decision, striking a nerve in the ongoing discussion about bringing children to work, ensuring work–life balance, and treating all employees fairly. Do you think Williams made the right decision?

Sources: “Adam LaRoche Retires after White Sox Ask Him to ‘Dial Back’ Son’s Time with Team,” USA Today, http://www.usatoday.com, accessed March 24, 2016; “Adam LaRoche Retired over White Sox’s Request to Limit Son in Clubhouse,” ESPN, http://espn.go.com, accessed March 24, 2016; Colleen Kane, “Adam LaRoche Leaving after White Sox Sought to Limit Son’s Clubhouse Time,” Chicago Tribune, http://www.chicagotribune.com, accessed March 24, 2016.

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ensue as a consequence of job performance. Stress related to job performance can contrib- ute to physical and mental impairment; accidents and occupation-related health issues can also result.

Intrinsic and Extrinsic Outcomes Job outcomes include intrinsic and extrinsic work outcomes. The distinction between intrinsic and extrinsic outcomes is important for understanding people’s reactions to their jobs. In a general sense, an intrinsic outcome is an object or event that follows from the worker’s own efforts and doesn’t require the involvement of any other person. Contempo- rary job design theory defines intrinsic motivation in terms of the employee’s “empower- ment” to achieve outcomes from the application of individual ability and talent.9 Such outcomes typically are thought to be solely in the province of professional and technical jobs; yet all jobs potentially have opportunities for intrinsic outcomes. Such outcomes involve feelings of responsibility, challenge, and recognition; they result from such job characteristics as variety, autonomy, identity, and significance.10 The nearby Global OB highlights the desire of many employees to have significant jobs that allow them to make a difference in other people’s lives.

Extrinsic outcomes, however, are objects or events that follow from the workers’ own efforts in conjunction with other factors or persons not directly involved in the job itself. Pay, working conditions, co-workers, and even supervision are objects in the workplace that are potentially job outcomes, but that aren’t a fundamental part of the work. Dealing with others and personal interactions are sources of extrinsic outcomes.

Most jobs provide opportunities for both intrinsic and extrinsic outcomes, so we must understand the relationship between the two. It’s generally held that extrinsic rewards rein- force intrinsic rewards in a positive direction when the individual can attribute the source

HELPING OTHERS CAN MOTIVATE EMPLOYEES Most would agree that firefighters, teachers, and doctors make a differ- ence in the lives of others. What about managers and employees who work for businesses such as social networking websites, multinational banks, and global clothing manufacturers: Do they make a difference, too? Do they want to make a difference? Research suggests that many people want their efforts at work to make a positive difference in other people’s lives. For example, managers often feel good about “protecting” their subordinates from unfair decisions (e.g., layoffs) made by higher-level administrators in the organization. In essence, these managers engage in prosocial behavior by helping others. Another example would be if an employee goes “beyond the call of duty” to help a customer. A retail sales associate, instead of pushing a customer to purchase a suit at full price, whispers to the customer that she heard the suit will be on sale during the following week. The sales associate learned that the customer has just graduated from college and doesn’t have a job yet (and needs a suit for interviews). The salesperson feels like she “did the right thing” and helped out a customer who may not be able to afford the suit at full price.

How can jobs be designed so employees can help others? Jobs need to have task significance (or the amount an individual’s work

impacts the health and well-being of others) built into them. Research suggests task significance has a positive impact on job performance. In other words, employees who believe their work helps others are more likely to do their job well. Also, this relationship is stronger for employees with high levels of intrinsic motivation.

What can employees do to increase their motivation at work? They can think about their jobs from the perspective of “Who do I help by doing my job well?” By linking their work to the welfare of others— other employees, customers, their supervisor, and so on—employees are more likely to feel that they’re making a difference in the lives of others. This prosocial behavior can help increase the employee’s motivation and job performance.

Sources: Glenn Llopis, “The Top 9 Things That Ultimately Motivate Employees to Achieve,” Forbes, http://www.forbes.com, accessed March 23, 2016; Maggie Coffey, “Design a Job That Motivates Employees,” Hireology Blog, http://www.hireology.com, accessed March 23, 2016; Adam M. Grant, “Does Intrinsic Motivation Fuel the Prosocial Fire? Motivational Synergy in Predicting Persistence, Performance, and Productivity,” Journal of Applied Psychology 93, no. 1 (2008), p. 48; Adam M. Grant, “The Significance of Task Significance: Job Performance Effects, Relational Mechanisms, and Boundary Conditions,” Journal of Applied Psychology 93, no. 1 (2008), p. 108.

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of the extrinsic reward to her own efforts. For example, a pay raise (extrinsic reward) increases feeling good about oneself if the cause of the raise is thought to be one’s own efforts and competence and not favoritism by the boss. This line of reasoning explains why some individuals get no satisfaction out of sharing in the gains derived from group effort rather than individual effort.11

Job Satisfaction Outcomes Job satisfaction depends on the levels of intrinsic and extrinsic outcomes and how the jobholder views those outcomes. These outcomes have different values for different peo- ple. For some people, responsible and challenging work may have neutral or even negative value depending upon their education and prior experience with work providing intrinsic outcomes.12 For other people, such work outcomes may have high positive values. People differ in the importance they attach to job outcomes. Those differences alone would account for different levels of job satisfaction for essentially the same job tasks. For exam- ple, one company that has initiated management systems intended to provide employees with a great deal of opportunity for exercising judgment and making decisions has found many individuals unable or unwilling to work for it. The company, W. L. Gore & Associates, has been the subject of considerable interest among those who advocate employee empowerment.13 W. L. Gore encourages employees to spend “dabble time” on projects that they believe are interesting and promising. Employees name their own project leaders, who then go

job satisfaction The feelings, beliefs, and attitudes that employees have regarding their jobs.

SERVICE JOBS CONTINUE TO BE IN DEMAND Over the past few decades, the American economy has shifted from being manufacturing oriented to being dominated by services and knowledge management. This new economy is characterized by rapidly changing business and employment conditions, often brought about by intense pressure from domestic and global competitors; cost containment; down- sizing; and technological breakthroughs. Breakthroughs in automation, robotics, and computer-assisted manufacturing, coupled with U.S. compa- nies’ increased use of offshore manufacturing in countries with lower labor costs, have reduced the overall number of manufacturing jobs in the United States. Evidence of this shift from a manufacturing to service econ- omy can be found in analyses conducted by the U.S. Bureau of Labor Statistics, which report that approximately 2.6 million manufacturing jobs in the United States were lost from 2006 to 2010. In contrast, more than 18 million jobs in service and professional areas are expected to have been created during that same five-year period.

As the U.S. economy recovers from the recent recession, and the unemployment rate continues to stay low, several sectors will need more service workers, particularly in health care–related fields. The Occupational Outlook Handbook, published by the Bureau of Labor Statistics and updated every two years, projects at least a 30 percent growth between 2014 and 2024 in the following jobs:

Health care: Audiologists, optometrists, genetic counselors, physi- cian assistants, nurse practitioners, physical therapists, occupa- tional therapists, hearing aid specialists, home health aides, and ambulance drivers and attendants.

Research and data analysis: Operations research analysts, per- sonal financial advisors, and statisticians.

Energy and environment: Wind turbine service technicians, com- mercial divers, and cartographers.

In the new economy, the reliance on specific job descriptions may be altered significantly. Today an emphasis on speed, creativity, infor- mation processing, and the influence of computer technology has resulted in criticisms of passive job descriptions or broadly stated descriptions of what a person or team is expected to do to service customers, contribute to the firm’s profit, and gain market share. In the new economy, knowledge workers will be expected to do what is needed. Adhering to a narrow job description is not going to be sufficient in a world pressed by constant change.

Work gets done in cross-functional and/or virtual teams or parts of it are outsourced. The word job is too narrow. Many industries in which technology is rendering place and time less important are moving away from “job” identities to “work,” “project,” or “team” entities.

Sources: Jen Hubley Luckwaldt, “These 12 Jobs Will Grow 30% by 2024,” Money, http://time.com, accessed March 24, 2016; government website, “Fastest Growing Occupations,” Occupational Outlook Handbook, 2016–2017 Edition, http://www.bls.gov, accessed March 24, 2016; Josh Bersin, “The End of a Job as We Know It,” Forbes, http://www.forbes.com, accessed March 24, 2016; Kimberly D. Elsbach and Andrew B. Hargadon, “Enhancing Creativity through ‘Mindless’ Work: A Framework of Workday Design,” Organization Science 17, no. 4 (July/August 2006), pp. 470–85.

O B M A T T E R S

Chapter 6 Job Design and Performance 137

through a review process to determine which new projects receive funding. This employee-driven approach led recently to the development of a high-tech guitar string (using the same polymer from Gore-Tex fabric); this string is outselling the competitive brand by two to one.14

Other important individual differences include job involvement and commitment to the organization.15 People differ in the extent to which (1) they view work as a central life interest, (2) they actively participate in work, (3) they perceive work as central to self- esteem, and (4) they perceive work as consistent with self-concept. Persons who are not involved in their work or the organizations that employ them cannot be expected to realize the same satisfaction as those who are. This variable accounts for the fact that two workers could report different levels of satisfaction for the same performance levels.

A final individual difference is the perceived equity of the outcome in terms of what the jobholder considers a fair reward.16 If outcomes like pay and promotions are perceived to be unfair in relation to those of others in similar jobs requiring similar effort, the jobholder will experience dissatisfaction and seek means to restore the equity, either by seeking greater rewards (primarily extrinsic) or by reducing effort.

Thus, we see that job performance includes many potential outcomes. Some are of primary value to the organization—the objective outcomes, for example. Other outcomes (such as job satisfaction) are of primary importance to the individual. Job performance is a complex variable that depends upon the interplay of numerous factors.

Job Design: Range, Depth, and Relationships Job designs specify three characteristics of jobs: range, depth, and relationships.

Range and Depth Job range refers to the number of tasks a jobholder performs. The individual who performs eight tasks to complete a job has a wider job range than a person performing four tasks. In most instances, the greater the number of tasks performed, the longer it takes to complete the job.

A second characteristic is job depth, the amount of discretion an individual has to decide job activities and job outcomes. In many instances, job depth relates to personal influence as well as delegated authority. Thus, an employee with the same job title who’s at the same organizational level as another employee may possess more, less, or the same amount of job depth because of personal influence.

Job range and depth distinguish one job from another not only within the same organiza- tion, but also among different organizations. To illustrate how jobs differ in range and depth, Exhibit 6.2 depicts the differences for selected jobs of firms, hospitals, and universities. For example, business research scientists, hospital chiefs of surgery, and university presidents gen- erally have high job range and significant depth. Research scientists perform a large number of tasks and are usually not closely supervised. Chiefs of surgery have significant job range in that they oversee and counsel on many diverse surgical matters. In addition, they aren’t super- vised closely and they have the authority to influence hospital surgery policies and procedures.

University presidents have a large number of tasks to perform. They speak to alumni groups, politicians, community representatives, and students. They develop, with the con- sultation of others, policies on admissions, fund-raising, and adult education. They can alter the faculty recruitment philosophy and thus alter the course of the entire institution. The critical point is that university presidents have sufficient depth and range to alter the course of a university’s direction.

job range The number of opera- tions that a jobholder performs to complete a task.

job depth The amount of control that an individual has to alter or influence the job and the surrounding environment.

138 Part Two Understanding and Managing Individual Behavior

Examples of jobs with high depth and low range are packaging machine mechanics, anesthesiologists, and faculty members. Mechanics perform the limited tasks that pertain to repairing and maintaining packaging machines. But they can decide how breakdowns on the packaging machine are to be repaired. The discretion means the mechanics have rela- tively high job depth.

Anesthesiologists also perform a limited number of tasks. They are concerned with the rather restricted task of administering anesthetics to patients. However, they can decide the type of anesthetic to be administered in a particular situation, a decision indicative of high job depth. University professors specifically engaged in classroom instruction have rela- tively low job range. Teaching involves comparatively more tasks than the work of the anes- thesiologist, yet fewer tasks than that of the business research scientist. However, professors’ job depth is greater than graduate student instructors’ since professors determine how they’ll conduct the class, what materials will be presented, and the standards to be used in evaluat- ing students. Graduate student instructors typically don’t have complete freedom in the choice of class materials and procedures. Professors decide these matters for them.

Highly specialized jobs are those having few tasks to accomplish by prescribed means. Such jobs are quite routine; they also tend to be controlled by specified rules and proce- dures (low depth). A highly despecialized job (high range) has many tasks to accomplish within the framework of discretion over means and ends (high depth). Within an organiza- tion, there typically are great differences among jobs in both range and depth. Although there are no precise equations that managers can use to decide job range and depth, they can follow this guideline: Given the economic and technical requirements of the organiza- tion’s mission, goals, and objectives, what is the optimal point along the continuum of range and depth for each job?

Job Relationships Job relationships are determined by managers’ decisions regarding departmentalization bases and spans of control. The resulting groups become the responsibility of a manager to coordinate toward organization purposes. These decisions also determine the nature and extent of jobholders’ interpersonal relationships, individually and within groups. As we already have seen in the discussion of groups in organizations, group performance is affected in part by group cohesiveness. And the degree of group cohesiveness depends upon the quality and kind of interpersonal relationships of jobholders assigned to a task or command group.

EXHIBIT 6.2 Job Depth and Range

Low Range

High Range

High Depth

Low Depth

HOSPITAL Nurses

UNIVERSITY Department chairpersons

BUSINESS Maintenance repairmen

HOSPITAL Bookkeepers

UNIVERSITY Graduate student instructors

BUSINESS Assembly-line workers

HOSPITAL Chiefs of surgery

UNIVERSITY Presidents

BUSINESS Research scientists

HOSPITAL Anesthesi- ologists

UNIVERSITY College professors

BUSINESS Packaging machine mechanics

Chapter 6 Job Design and Performance 139

The wider the span of control, the larger the group and consequently the more difficult it is to establish friendship and interest relationships. Simply, people in larger groups are less likely to communicate (and interact sufficiently to form interpersonal ties) than people in smaller groups. Without the opportunity to communicate, people will be unable to establish cohesive work groups. Thus, an important source of satisfaction may be lost for individuals who seek to fulfill social and esteem needs through relationships with co-workers.

The basis for departmentalization that management selects also has important implica- tions for job relationships. The functional basis places jobs with similar depth and range in the same groups, while product, territory, and customer bases place jobs with dissimilar depth and range in different groups. Thus, in functional departments, people will be doing much the same specialty. Product, territory, and customer departments, however, are com- prised of jobs that are quite different and heterogeneous. Individuals who work in hetero- geneous departments experience feelings of dissatisfaction and stress more intensely than those in homogeneous, functional departments. People with homogeneous backgrounds, skills, and training have more common interests than those with heterogeneous ones. Thus, it’s easier for them to establish social relationships that are satisfying with less stress, but also with less involvement in the department’s activities.

Job designs describe the objective characteristics of jobs. That is, managers can design jobs in terms of required activities to produce a specified outcome. But yet another factor—perceived job content—must be considered before we can understand the relation- ship between jobs and performance.

The Way People Perceive Their Jobs The way people do their jobs depends in part on how they perceive and think of their jobs. Even though Taylor proposed that the way to improve work (that is, to make it more effi- cient) is to determine (1) the “best way” to do a task (motion study) and (2) the standard time for completion of the task (time study), the actual performance of a job goes beyond its technical description.

The belief that job design can be based solely on technical data ignores the very large role played by the individual who performs the job. Individuals differ profoundly, as we noted in the chapter on individual differences. They come to work with different back- grounds, needs, and motivations. Once on the job, they experience the social setting in which the work is performed in unique ways. It’s not surprising to find that different indi- viduals perceive jobs differently.

Perceived job content refers to characteristics of a job that define its general nature as perceived by the jobholder. We must distinguish between a job’s objective properties and its subjective properties as reflected in the perceptions of people who perform it.17 Managers can’t understand the causes of job performance without considering individual differences such as personality, needs, and span of attention.18 Nor can managers understand the causes of job performance without considering the social setting in which the job is performed.19 According to Exhibit 6.1, perceived job content precedes job performance. Thus, if managers desire to increase job performance by changing perceived job content, they can change job design, individual perceptions, or social settings—the causes of perceived job content.

If management is to understand perceived job content, some method for measuring it must exist.20 In response to this need, organization behavior researchers have attempted to measure perceived job content in a variety of work settings. The methods that researchers use rely upon questionnaires that jobholders complete and that measure their perceptions of certain job characteristics.

140 Part Two Understanding and Managing Individual Behavior

Job Characteristics The pioneering effort to measure perceived job content through employee responses to a questionnaire resulted in the identification of six characteristics: variety, autonomy, required interaction, optional interaction, knowledge and skill required, and responsibility.21 The index of these six characteristics is termed the Requisite Task Attribute Index (RTAI). The original RTAI has been extensively reviewed and analyzed. One important development was the review by Hackman and Lawler, who revised the index to include six characteristics.22

Variety, task identity, and feedback are perceptions of job range. Autonomy is the perception of job depth; dealing with others and friendship opportunities reflect percep- tions of job relationships. Employees sharing similar perceptions, job designs, and social settings should report similar job characteristics. Employees with different perceptions, however, report different job characteristics of the same job. For example, an individual with a high need for social belonging would perceive “friendship opportunities” differ- ently than another individual with a low need for social belonging.

Individual Differences Individual differences “provide filters such that different persons perceive the same objec- tive stimuli in different manners.”23 Individual differences in need for strength, particularly the strength of growth needs, have been shown to influence the perception of task variety. Employees with relatively weak higher-order needs are less concerned with performing a variety of tasks than are employees with relatively strong growth needs. Thus, managers expecting higher performance to result from increased task variety would be disappointed if the jobholders did not have strong growth needs. Even individuals with strong growth needs cannot respond continuously to the opportunity to perform more and more tasks. At some point, performance turns down as these individuals reach the limits imposed by their abilities and time. The relationship between performance and task variety (even for indi- viduals with high growth needs) is likely to be curvilinear.24

Social Setting Differences Differences in social settings of work also affect perceptions of job content. Examples of social setting differences include leadership style25 and what other people say about the job.26 Tony Hsieh, CEO of Zappos (a division of Amazon), is well-known for creating a fun and customer-oriented service culture at the successful shoe and online retailer. Hsieh’s vision of redeveloping an economically depressed area of downtown Las Vegas has been realized.27 In 2013, he moved the company from suburban offices into the for- mer City Hall Building. Part of the development includes a co-working space in which employees from other companies share workspace with Zappos employees. The hope is that as Zappos employees mingle with those from other firms, creativity and new ideas will be generated.28

In addition, as more than one research study has pointed out, how one perceives a job is greatly affected by what other people say about it. Thus, if a worker’s friends state their jobs are boring, he is likely to state that his job is also boring. If the individual perceives the job as boring, job performance will suffer. Job content, then, results from the interac- tion of many factors in the work situation.

The field of organization behavior has advanced a number of suggestions for improving the motivational properties of jobs. Invariably, the suggestions, termed job design strate- gies, attempt to improve job performance through changes in actual job characteristics.29 The next section reviews the more significant of these strategies.

Chapter 6 Job Design and Performance 141

Increasing Range in Jobs: Job Rotation and Job Enlargement The earliest attempts to design jobs date back to the scientific management era. Efforts at that time emphasized efficiency criteria. In so doing, the individual tasks that comprise a job were limited, uniform, and repetitive. This practice led to narrow job range and, conse- quently, reported high levels of job discontent, turnover, absenteeism, and dissatisfaction. As a result, strategies were devised that resulted in wider job range through increasing the requisite activities of jobs. Two of these approaches are job rotation and job enlargement.

Job Rotation Managers of organizations such as General Electric, PNC Financial Services, Verizon, Choice Hotels International, Ford, and Deloitte Services LP have utilized different forms of the job rotation strategy.30 Also known as leadership development, this practice involves rotating managers and nonmanagers alike from one job to another. Given the increased need to develop global experience, many firms are rotating managers to one or more inter- national postings.31 In so doing, the individual is expected to complete more job activities since each job includes different tasks.32 Job rotation involves increasing the range of jobs and the perception of variety in the job content. Increasing task variety should, according to recent studies, increase employee satisfaction, reduce mental overload, decrease the number of errors due to fatigue, improve production and efficiency,33 and reduce on-the- job injuries.34 However, job rotation doesn’t change the basic characteristics of the assigned jobs. Some relatively small firms have successfully used job rotation.

Critics state that job rotation often involves nothing more than having people perform sev- eral boring and monotonous jobs rather than one. An alternative strategy is job enlargement.

Job Enlargement The pioneering Walker and Guest study35 was concerned with the social and psychological problems associated with mass production jobs in automobile assembly plants. They found that many workers were dissatisfied with their highly specialized jobs. In particular, they disliked mechanical pacing, repetitiveness of operations, and a lack of a sense of accom- plishment. Walker and Guest also found a positive relationship between job range and job satisfaction. Findings of this research gave early support for motivation theories that predict that increases in job range will increase job satisfaction and other objective job outcomes. Job enlargement strategies focus upon the opposite of dividing work—they’re a form of despecialization or increasing the number of tasks that an employee performs. For example, a job is designed such that the individual performs six tasks instead of three.

Although in many instances an enlarged job requires a longer training period, job satis- faction usually increases because boredom is reduced. The implication, of course, is that job enlargement will lead to improvement in other performance outcomes.

The concept and practice of job enlargement have become considerably more sophisti- cated. In recent years, effective job enlargement involves more than simply increasing task variety. In addition, it’s necessary to design certain other aspects of job range, includ- ing providing worker-paced (rather than machine-paced) control.36 Each of these changes involves balancing the gains and losses of varying degrees of division of labor. Contem- porary applications of job enlargement involve training individuals to perform several different jobs, each requiring considerable skill, whether in manufacturing or service organizations.

Based in San Diego, California, Underground Elephant develops and manages digital marketing services, software, and platforms for insurance enterprises and their agents.

142 Part Two Understanding and Managing Individual Behavior

The company prides itself on a flat organizational structure and a strong emphasis on col- laboration. With close to 100 employees and poised for continued growth, Underground Elephant uses a three-layer approach to enriching and enlarging the job experience. The first layer involves each new hire shadowing multiple colleagues doing the same tasks, so she can see that tasks can be accomplished in different ways—which will help her under- stand how the team works as a whole.

The second layer involves each new hire being assigned a “buddy” from another depart- ment. This seasoned employee helps the new hire become acclimated to the company’s culture. Buddies meet over lunch on a weekly basis for a month to discuss early job experi- ences at Underground Elephant. This collaborative approach helps employees gain a better understanding of how departments work together to achieve greater company unity. The third layer involves dividing the company into nine teams across departments, job func- tions, and tenure to build a collaborative environment. Teams are given points for taking part in company discussions, contributing to blogs, and referring “all-stars” to work with the company.37

Some employees can’t cope with enlarged jobs because they can’t comprehend complexity; moreover, they may not have a sufficiently long attention span to complete an enlarged set of tasks. However, if employees are amenable to job enlargement and have the requisite ability, then job enlargement should increase satisfaction and product quality and decrease absentee- ism and turnover. These gains aren’t without costs, including the likelihood that employees will demand larger salaries in exchange for performing enlarged jobs. Yet these costs must be borne if management desires to implement the design strategy—job enrichment—that enlarges job depth. Job enlargement is a necessary precondition for job enrichment.

Increasing Depth in Jobs: Job Enrichment The impetus for designing job depth was provided by Herzberg’s two-factor theory of motivation. The basis of his theory is that factors that meet individuals’ need for psycho- logical growth (especially responsibility, job challenge, and achievement) must be charac- teristic of their jobs. The application of his theory is termed job enrichment.

The implementation of job enrichment is realized through direct changes in job depth.38 Managers can provide employees with greater opportunities to exercise discretion by making the following changes: 1. Direct feedback. The evaluation of performance should be timely and direct. 2. New learning. A good job enables people to feel that they are growing. All jobs should

provide opportunities to learn. 3. Scheduling. People should be able to schedule some part of their own work. 4. Uniqueness. Each job should have some unique qualities or features. 5. Control over resources. Individuals should have some control over their job tasks. 6. Personal accountability. People should be provided with an opportunity to be account-

able for the job. As defined by the executive in charge of a pioneering job enrichment program at

Texas Instruments (TI), job enrichment is a process that (1) encourages employees to behave like managers in managing their jobs and (2) designs the job to make such behav- ior feasible.39

As the theory and practice of job enrichment have evolved, managers are changing how they design work and jobs. Important changes include giving workers greater

Chapter 6 Job Design and Performance 143

authority to participate in decisions, to set their own goals, and to evaluate their (and their work groups’) performance. Job enrichment also involves changing the nature and style of managers’ behavior. Managers must be willing and able to delegate authority.40 Given employees’ ability to carry out enriched jobs and managers’ willingness to dele- gate authority, gains in performance can be expected. These positive outcomes are the result of increasing employees’ expectations that efforts lead to performance, that perfor- mance leads to intrinsic and extrinsic rewards, and that these rewards have power to satisfy needs. These significant changes in managerial jobs, when coupled with changes in nonmanagerial jobs, suggest that a supportive work environment is a prerequisite for successful job enrichment efforts.41

As illustrated in Exhibit 6.2, jobs can be designed on the basis of generally low range and significant depth (called job specialization), a moderate amount of range and depth (called job enlargement), and so forth.

Job enrichment and job enlargement aren’t competing strategies. Job enlargement but not job enrichment may be compatible with the needs, values, and abilities of some indi- viduals. Yet job enrichment, when appropriate, necessarily involves job enlargement. A promising approach to job design that attempts to integrate the two approaches is the job characteristics model. Hackman, Oldham, Janson, and Purdy devised the approach, basing it on the job diagnostic survey cited in an earlier section.42

The model attempts to account for the interrelationships among (1) certain job charac- teristics; (2) psychological states associated with motivation, satisfaction, and perfor- mance; (3) job outcomes; and (4) growth needs strength. Exhibit 6.3 describes the relationships among these variables. Although variety, identity, significance, autonomy, and feedback don’t completely describe perceived job content, according to this model they sufficiently describe those aspects that management can manipulate to bring about gains in productivity.

EXHIBIT 6.3 The Job Characteristics Model

Job characteristics

variety

Au y

F

Cr c states

wo

wo

w e

wo

P wo

wo

wo r

wo

ver

y owth h

144 Part Two Understanding and Managing Individual Behavior

Steps that management can take to increase the core dimensions include: 1. Combining task elements. 2. Assigning whole pieces of work (i.e., work modules). 3. Allowing discretion in selection of work methods. 4. Permitting self-paced control. 5. Opening feedback channels.

These actions increase task variety, identity, and significance; consequently, the “expe- rienced meaningfulness of work” psychological state is increased. By permitting employee participation and self-evaluation and by creating autonomous work groups, the feedback and autonomy dimensions are increased along with the psychological states “experienced responsibility” and “knowledge of actual results.”

Implementing the job characteristics model in a particular situation begins with a study of existing job perceptions by means of the job diagnostic survey. Hackman and Oldham have reported numerous applications of the model in a variety of organizations.43 They have also compiled normative data for a variety of job categories so that managers and practitioners can compare the responses of their own employees to those of a larger population.44 Although the track record of job design efforts is generally positive, some caveats are warranted.

The positive benefits of these efforts are moderated by individual differences in the strength of employees’ growth needs. That is, employees with a strong need for accom- plishment, learning, and challenge will respond more positively than those with relatively weak growth needs. In more familiar terms, employees with a high need for self-esteem and self-actualization are the more likely candidates for job design.45 Employees who are forced to participate in job design programs but who lack either the need strength or the ability to perform designed jobs may experience stress, anxiety, adjustment problems, erratic performance, turnover, and absenteeism.

The available research on the interrelationships between perceived job content and per- formance is limited. One survey of 30 applications of job design strategies confirms that failures are as frequent as successes.46 It’s apparent, however, that managers must cope with significant problems in matching employee needs with organizational needs.47

Problems associated with job design include: 1. Unless lower-level needs are satisfied, people will not respond to opportunities to

satisfy upper-level needs. And even though our society has been rather successful in providing food and shelter, these needs regain importance when the economy moves through periods of recession and high inflation.

2. Job design programs are intended to satisfy needs typically not satisfied in the workplace. As workers are told to expect higher-order need satisfaction, they may raise their expec- tations beyond what’s possible. Dissatisfaction with the program’s unachievable aims may displace dissatisfaction with the jobs.

3. Job design may be resisted by labor unions that see the effort as an attempt to get more work for the same pay.

4. Job design efforts may not produce tangible performance improvements for some time after the beginning of the effort. One study indicated that significant improvements in effective- ness couldn’t be seen until four years after the beginning of the job design program.48

Practical efforts by automobile companies such as Volvo to improve productivity and satisfaction through job design have emphasized autonomy and feedback. Relatively less emphasis has been placed on identity, significance, and variety.49 Apparently, it’s easier to

Chapter 6 Job Design and Performance 145

provide individuals with greater responsibility for the total task and increased feedback than to change the essential nature of the task itself.

Two general conclusions can be reached when considering the experience of job design approaches. First, job design approaches are relatively successful in increasing quality of output. This conclusion pertains, however, only if the reward system already satisfies lower-level needs. If it presently doesn’t satisfy lower-level needs, employees can’t be expected to experience upper-level need satisfaction (intrinsic rewards) through enriched jobs. In particular, managers can’t expect individuals with relatively low growth needs to respond as would those with relatively high growth needs.50

Successful efforts are the result of the circumstances that initiate the effort and the process undertaken to manage the effort. Organizations under external pressure to change have a better chance of successfully implementing job design than those not under such pressure. Moreover, successful efforts are accompanied by broad-scale par- ticipation of managers and employees alike. Since a primary source of organizational effectiveness is job performance, managers should design jobs according to the best available knowledge.51

Self-Managed Teams One approach to job redesign that has emphasized factors such as task significance and identity is the use of self-managed teams. Self-managed teams (SMTs) represent a job enrichment approach to redesign at the group level. An SMT is a relatively small group of individuals who are empowered to perform certain activities based on procedures estab- lished and decisions made within the group, with minimum or no outside direction. SMTs can take many forms, including task forces, project teams, quality circles, virtual teams, and new venture teams.52 Typically, SMTs determine their own work assignments within the team and are responsible for an entire process from inception to completion. It is not unusual for SMTs to select their own members and to evaluate their own performance, activities usually thought of as management functions.

Valve Corporation is a video game developer and digital distribution company located in Bellevue, Washington, which takes the concept of self-managed teams to a whole new level. Since its start in 1996, the company has been “boss free.” The company’s employees recruit colleagues to work on projects they think are worthwhile. In fact, the company val- ues this flexible approach to work so much that employees’ desks are mounted on wheels so they can move around the office to form work areas as they choose. Valve doesn’t believe in promotions, only new projects. To help decide on pay, employees rank their peers, voting on who they think creates the most value for the company. Any employee can participate in hiring or firing decisions, which are usually made by teams.53

The difficulty of switching from a traditional hierarchical structure to one in which work teams assume responsibility for their own decisions is not easy. Two notable barriers to SMTs are resistance and misunderstanding. SMTs require not only a new workflow and set of processes, but also new attitudes and behaviors. Team members may not like being responsible for goals that others on the team have not helped to achieve. Managers often fear loss of control and status.54

The implementation of SMTs causes changes in thinking about “yourself,” leadership, and organization. It is hard for employees to understand how SMTs apply to themselves. Also, managers are often not clear about what employees should be doing under an SMT arrangement.

Simply assuming that SMTs will work is not accurate since resistance and misunder- standings are obvious problems. Team leaders who strike a balance between too much

146 Part Two Understanding and Managing Individual Behavior

involvement and not enough are needed. As SMTs evolve, each member needs to acquire and develop the qualities of a leader and move from “I” to “we” thinking and behavior.

Alternative Work Arrangements Enriching the content of a job is not the only way to provide enrichment. Enrichment can also be achieved within the context of a job. One aspect of job context relates to when the job is performed, or the work schedule. Giving employees decision-making control over when they perform their work is an increasingly popular approach to job redesign. It has led to a variety of innovations we will collectively refer to as alternative work arrangements.

One of the earliest forms of alternative work arrangements was that of the compressed workweek. In its most popular form, employees are given an opportunity to work four 10-hour days rather than the more standard five 8-hour days. The 4–40 programs allow workers more leisure time, as well as permit them to travel to and from work during non- rush-hour traffic. While some employees may be able to opt for a compressed work schedule with others electing a standard one, typically everyone at the same location is on the same schedule.

An arrangement that provides employees even greater individual control over work scheduling is flextime. In a flextime arrangement, employees can determine, within some limits, when they work at the office and when they work from home or a cafe. Many com- panies, including IBM, UnitedHealth Group, AT&T, Verizon, PNC, GE, Cigna, Wells Fargo, and Apple, offer their employees flexible work schedules.55 As is shown in the two examples in Exhibit 6.4, employees are required to be present during the “common core” hours. They may make up the rest of their workday in any combination during flextime hours. In most flextime plans, employees may vary their attendance day-to-day, provided they are at work a specific number of hours a week. Some flextime plans allow employees to accumulate extra hours worked and exchange them for an additional day off each month. Two factors enable the increased use of flextime, namely technology (e.g., mobile computing and smartphones) and a shift to focusing on results, not hours (or “face time”) at work.56

Employees concerned about balancing personal and work life report that a flexible work schedule is high on the list of benefits that factor into job satisfaction. Aladdin Equipment of Sarasota, Florida, established a workweek of four 9-hour days and a half day on Friday. Its result has been a 50 percent increase in productivity. In a sur- vey of 6,000 workers by Randstad, an Atlanta staffing firm, 51 percent said they

EXHIBIT 6.4 Two Examples of Flextime Schedules

Flextime

6 a.m. – 10 a.m.

Common Core

10 a.m. – 4 p.m.

Flextime

4 p.m. – 8 p.m.

Common Core

9 a.m. – 11 a.m.

Flextime

6 a.m. – 9 a.m.

Common Core

2 p.m. – 4 p.m.

Flextime

11 a.m. – 2 p.m.

Flextime

4 p.m. – 7 p.m.

147

would stay with the firm even without a pay raise if Randstad offered flexible work hours.57 Some of the benefits of flextime schedules are presented in the nearby OB Matters feature.

Another approach that increases employee discretion is that of job sharing. In job shar- ing, two or more individuals share one job. One person might work from 8:00 a.m. until noon, and a second person may do the same job from 1:00 p.m. until 5:00 p.m. Or they might each work full, but alternate, days. Job sharing provides maximum flexibility for the employee. The payoff for the employer is being able to draw upon the talents of two individuals in one job. Job sharers Julie Levine and Julie Rocco at Ford Motor Company are typical examples. Each employee works three days on a support team tasked with rede- signing the Ford Explorer. Given that the job requires 70 to 80 hours of work per week, it was an ideal job to split up among the two job sharers. Levine and Rocco share all tasks as well as calling each other each night to receive briefings.58

Perhaps the ultimate in alternative work arrangements is telecommuting. Telecommuting involves working at home while being linked to the office via computer or other electronic device. While telecommuting emphasizes location rather than scheduling, most telecommuting jobs provide a high degree of flexible scheduling as well. Pacific Bell has been a pioneer in the use of telecommuting. In addition to experiencing increased productivity and improved employee morale, the company, with major offices in Los Angeles, has made significant con- tributions to reducing freeway congestion and smog.

FLEXTIME HELPS EMPLOYEES ACHIEVE BALANCE Companies such as Deloitte, PricewaterhouseCoopers, Chubb, JCPenney, Booz Allen Hamilton, and Motorola are helping their employees achieve work–life balance by allowing them to use flexi- ble scheduling. Often ranked as the most-desired benefit in job sur- veys, flexible scheduling comes in many shapes and forms. At the Chubb Corporation, employees can opt for working four longer shifts instead of five each week. At JCPenney’s Plano, Texas, telemarket- ing operation, 5,000 employees punch in their scheduling prefer- ences at a PC station/kiosk. This allows them to quickly add, drop, or trade shifts to accommodate their individual work–life balance needs. Nahan Printing Inc. in St. Cloud, Minnesota, offers an even more unusual flexible schedule. “We work three 12-hour shifts,” explains Judy Wehking, HR manager. “But then we also rotate this schedule every three weeks.”

What are the benefits of offering employees flexible scheduling? Companies can attract and retain talented employees. Most employ- ees want to work at a company where they have some control over their schedules. This need will increase as employees increasingly try to juggle work and life priorities such as a second job, providing care for children, a disabled spouse, or elderly relatives, spending quality time with friends and loved ones, pursuing volunteer leadership opportunities, engaging in hobbies, and so on.

Companies have learned that they cannot just create a flexible scheduling program that allows employees to come and go as they please. Firms must create and manage a program that encourages

employee flexibility while preserving accountability and cohesion among co-workers and supervisors. Here are some tips:

1. Survey employees to determine their scheduling needs.

2. Allow all employees to apply for flexible schedules.

3. Assign manageable workloads.

4. Encourage frequent face-to-face and virtual communication between the employee and his or her supervisor and co-workers.

5. Publish clear guidelines for developing flexible work arrangements.

6. Evaluate flexible arrangements on a quarterly to semiannual basis.

7. Assess job performance based on measured results, rather than hours worked.

Before implementing a flexible work schedule program, managers should research the specific state laws that may apply.

Sources: Kathleen Elkins and Skye Gould, “The Most Flexible Companies to Work For in America,” Business Insider, http://www.businessinsider.com, accessed March 23, 2016; company website, “Best List of Fortune 500 Compa- nies for Flexible Jobs,” FlexJobs, https://www.flexjobs.com, accessed March 23, 2016; company website, “Making a Flexible Work Arrangement Work for Your Company,” Insperity Blog, http://www.insperity.com, accessed March 23, 2016; Rebecca Borison, “Why Flex Time Is Right for Your Company,” Inc., http:// www.inc.com, accessed March 23, 2016; Mairead Walsh, “How to Use Flexible Working Arrangements to Benefit Your Business,” Softworks Blog, http://blog. softworks.com, accessed March 23, 2016; Sue Shellenberger, “Fairer Flextime: Employers Try New Policies for Alternative Schedules,” The Wall Street Journal, November 17, 2005, www.wsj.com; Nancy Hatch Woodward, “TGI Thursday,” HR Magazine, July 2000, pp. 72–76.

O B M A T T E R S

148 Part Two Understanding and Managing Individual Behavior

Employees like alternative work arrangements because they give workers the flexibility to balance their work–life demands. Companies, especially during an economic downturn, are increasingly experimenting with job sharing, reduced workweeks, sabbaticals, and telecommuting programs as a way to reduce costs and avoid layoffs that may lessen produc- tivity and motivation.59 An interesting twist is that although some companies are offering employees more flexible work options, some employees who engage in flextime and tele- commuting are fearful of being “out of sight and out of mind” and, thus, easy targets for layoffs. As a result, employees are less likely to take advantage of these alternatives during hard times. Recession-related pressures aside, the long-term trend is that flexibility at work is here to stay. According to consulting firm, Global Workplace Analytics, 64 million U.S. employees hold jobs that are compatible with telecommuting at least part time.60 Anecdotal evidence suggests that the Millennials (those born after 1981) will create a more open and flexible work experience than today. One Millennial project manager at Neon Enterprise Software summed it up this way: “We want to be successful in our jobs, but just in a differ- ent way. It doesn’t mean being in our office every day 9 to 5, it means getting our job done, whatever your job is.”61

Virtual Teams As organizations aggressively pursue ways in which to cut costs, decrease product cycle times, increase customer responsiveness, and integrate more fully with suppliers, many are creating and using virtual teams to help achieve those objectives. Other benefits of virtual teams include the ability to offer employees more flexible work arrangements (e.g., telecommuting), provide 24-hour-a-day, seven-day-a-week customer service for geograph- ically dispersed customers in different time zones, and decrease the amount of travel time and expenses that team members have to incur.62

Defined as “a team that relies on interactive technology to work together when separated by physical distance,”63 a virtual team can draw on a variety of interactive technology that includes traditional texting, e-mail, instant messaging, teleconferencing, videocon- ferencing, webcasts, meeting managers, white boards, and electronic bulletin boards.64 One company that uses virtual teams is Microsoft, which deploys virtual teams to provide sales and post-sales service to major global corporate customers.65 General Electric provides a variety of real-time collaboration tools to its 330,000 employees

and to several of its customers and suppliers.66 Virtual team members have access to the following tools: ∙ Engage in instant messaging and real-time conferencing and

application sharing. ∙ Create shared web workspaces among nontechnical users. ∙ Break down projects into tasks and track progress. ∙ Apply best practices from completed projects to new

projects.

In addition, customers and suppliers have access to real-time data and internal processes within GE’s intranet. Officials at GE believe that these features will help revolutionize the company.67

To successfully manage virtual teams, organizations may want to consider several factors. First, the technology should fit the purpose of the collaboration. If all members of the group need to receive the same information quickly, then a bulletin board or group e-mail is appropriate. If training

virtual teams A geographically distributed, functionally and/or culturally diverse group of individuals who rely on interactive technology such as e-mail, webcasts, and videoconferencing to work together.

TIPS FOR MANAGING VIRTUAL TEAMS

1. Match technology to the purpose of the collaboration.

2. Select virtual team members with the right skills, experience, and work ethic.

3. Use face-to-face time and team-building exercises to build trust early in the team development process.

4. Encourage teams to develop a sense of shared purpose and goals.

5. Team leaders must set a clear vision for the team and help resolve conflicts between members.

Information You Can Use

Chapter 6 Job Design and Performance 149

needs to be done, then a web conference with real-time white board and data sharing may be more suitable. Second, virtual team members must be carefully selected. Choosing members who have the necessary skills, experience, work ethic, and inter- personal skills is critical to effective team functioning. Third, trust between team members should be cultivated early in the process. Face-to-face meetings and/or team- building training exercises should be used during the initial periods of team formation to facilitate the development of trust. This trust will be critical later when problems, disagreements, and deadlines stress the relationships of members who can’t just walk down the hallway to discuss and resolve these issues. Fourth, teams need to develop a sense of purpose and shared goals. Last, leaders must be able to set a vision for the team and help resolve conflicts between members as well as assist members in over- coming obstacles.68

Special care needs to be taken when managing virtual teams whose members are from countries with distinct cultures and languages. Such team members can find communicat- ing and building trust more challenging.69 Cultural nuances that might be detected in face- to-face meetings may go unnoticed during a teleconference or webcast. As a result, virtual team members may experience misunderstandings and miscommunications while working on important projects. To decrease the risk of such problems, team members should be brought together for face-to-face meetings and cross-cultural training sessions in the early stages of the team-building process.

As companies such as GE, AT&T, Pfizer, Motorola, Shell Oil, and Sun Microsys- tems continue to experiment with and use virtual teams across their global businesses, such practices will become more and more common in organizations of all types and sizes.70 For example, Alcoa’s global virtual teams consist of employees from 20 differ- ent countries.71 To assist companies with their virtual collaboration needs, the com- pany Huddle offers a secure, cloud-based approach for virtual team members to manage projects, share files, and collaborate with individuals inside and outside their business. As of 2016, more than 160,000 organizations use Huddle’s collaborative and project management software, including Kia Motors, Panasonic, and the California Almond Board.72 The use of various alternative work arrangements is increasing. As the needs of an increasingly diverse workforce grow, alternative arrangements can have a positive appeal to both employers and employees. While more and better research needs to be conducted to determine the effectiveness of such plans, job redesign strate- gies for the future no doubt will include a multitude of these flexible scheduling arrangements.

Total Quality Management and Job Design Total quality management (TQM) refers to an organizational culture that is dedicated to con- tinuous improvement and the production of high-quality products and services, ultimately resulting in higher levels of customer satisfaction.73 TQM, according to those who espouse and practice it, combines technical knowledge and human knowledge. To deal with the inherent complexity and variability of production and service delivery technology, people must be empowered with authority to make necessary decisions and must be enabled with knowledge to know when to exercise that authority.

Two common techniques used in the implementation of TQM include benchmarking and Six Sigma. Benchmarking is the process in which organizations monitor and adapt the best practices of their competitors in order to make continuous improvements.74

total quality management An organization-wide management system that, using statistical process control and group problem-solving processes, strives for continuous improvement to achieve high quality.

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Whether it’s Subway’s decision to begin offering breakfast meals to compete with McDonald’s and Burger King, or two local universities comparing the success of their part-time graduate programs, all types of organizations use benchmarking as a way to become more efficient and competitive. Another popular TQM technique developed by Motorola in the mid-1980s, Six Sigma, is a quality standard and management process that specifies a goal of no more than 3.4 defects per million opportunities.75 At six sigma, a product or process has reached a high level of quality meaning that it is defect-free over 99 percent of the time.76 Six Sigma can be used to analyze any product or service defects—errors on billing statements, poor customer service, or faulty brake systems on automobiles—that result in customer dissatisfaction. Six Sigma has been used in many organizations, including General Electric, Raytheon, and Xerox.

Aspects of TQM job designs have appeared throughout this discussion. We’ve dis- cussed job enrichment, including provision of autonomy, creation of work modules, and development of trust and collaboration. We’ve seen these job attributes in the practices of organizations discussed throughout this chapter. But even as we close this chapter, we must raise a fundamental question: Can U.S. workers adjust to the requirements for working together in teams and in collaboration with management?77 Are the ideas of TQM totally applicable to the U.S. worker? Is TQM the wave of the future? Do U.S. managers have the ability and commitment to implement the necessary changes in jobs required by new technologies and new global realities?78 Many contemporary observers warn us that the answers to all these questions must be yes because no other choice exists.79

Job design strategy focuses on jobs in the context of individuals’ needs for economic well-being and personal growth. But let’s put the strategy in a broader framework and include the issue of the sociotechnical system. Sociotechnical theory focuses on interactions between technical demands of jobs and social demands of people doing the jobs. The theory emphasizes that too great an emphasis on the technical system in the manner of scientific management or too great an emphasis on the social system in the manner of human relations will lead to poor job design. Rather, job design should take into account both the technology and the people who use the technology.

Sociotechnical theory and application of job design developed from studies undertaken in English coal mines from 1948 to 1958.80 The studies became widely publicized for dem- onstrating the interrelationship between the social system and the technical system of orga- nizations. The interrelationship was revealed when economic circumstances forced management to change how coal was mined (the technical system). Historically, the techni- cal system consisted of small groups of miners (the social system) working together on “short faces” (seams of coal). But technological advancement improved roof control and safety and made longwall mining possible. The new technical system required a change in the social system. The groups would be disbanded in favor of one-person, one-task jobs. Despite the efforts of management and even the union, miners eventually devised a social system that restored many characteristics of the group system. This experience has been completely described in organizational behavior literature and has stimulated a great deal of research and application.

There’s no contradiction between sociotechnical theory and total quality manage- ment. In fact, the two approaches are quite compatible. The compatibility relates to the demands of modern technology for self-directed and self-motivated job behavior. Such job behavior is made possible in jobs designed to provide autonomy and variety. As worked out in practice, such jobs are parts of self-managing work teams responsible for completing whole tasks. The work module concept pervades applications of socio- technical theory.81

benchmarking The process in which organizations monitor and adapt the best prac- tices of their competitors in order to make con- tinuous improvements.

Six Sigma A quality standard and management process that specifies a goal of no more than 3.4 defects per million opportunities.

Chapter 6 Job Design and Performance 151

QUALITY OF WORK LIFE IN THE DUGOUT Adam LaRoche’s retirement from the Chicago White Sox over the team banning his son’s presence in the clubhouse has sparked comments from other players and managers, as well as discus- sions among fans and non-fans alike. While it seems as though this disagreement was between LaRoche and Williams, several players and staff members privately complained to White Sox manage- ment about Drake’s constant presence in the clubhouse.

By all accounts, Drake LaRoche is a good kid and well behaved. Nonetheless, some of LaRoche’s teammates were uncomfortable with his presence day in and day out. According to several sources, the teen was with the team last season for close to 75 percent of the regular season’s games.

Whether you agree or disagree with the White Sox decision, companies (including sports team) need to establish policies for children in the workplace. Companies should implement guide- lines that show flexibility but underscore the need to treat all em- ployees fairly—including those who are not parents. Addressing this issue in a formalized manner will help improve everyone’s quality of work life.

Sources: Bob Nightengale, “In LaRoche-White Sox Flap, Kenny Williams Acted on Behalf of Others, Too,” USA Today, http://www.usatoday.com, accessed March 24, 2016; Amy Joyce, “Taking Your Kid to Work, Adam LaRoche-Style,” The Washington Post, https://www.washingtonpost.com, accessed March 24, 2016; Alison Bowen, “Asking Your Boss about Bringing Your Kids to Work,” Chicago Tribune, http://www.tribune.com, accessed March 24, 2016.

Y O U B E T H E J U D G E C O M M E N T

Summary of Key Points

∙ Job design involves managerial decisions and actions that specify objective job depth, range, and relationships to satisfy organizational requirements as well as the social and personal requirements of jobholders.

∙ Today’s managers must consider the issue of quality of work life when designing jobs. This issue reflects society’s concern for work experiences that contribute to employees’ personal growth and development.

∙ Strategies for increasing jobs’ potential to satisfy the social and personal requirements of jobholders have gone through an evolutionary process. Initial efforts were directed toward job rotation and job enlargement. These strategies produced some gains in job satisfaction but didn’t change primary motivators such as responsibility, achievement, and autonomy.

∙ During the 1960s, job enrichment became a widely recognized strategy for improving quality of work life factors. This strategy is based upon Herzberg’s motivation theory and involves increasing jobs’ depth through greater delegation of authority to jobhold- ers. Despite some major successes, job enrichment isn’t universally applicable because it doesn’t consider individual differences.

∙ Individual differences are now recognized as crucial variables to consider when design- ing jobs. Experience, cognitive complexity, needs, values, valences, and perceptions of

Numerous applications of sociotechnical design and total quality management are reported in the literature.82 Some notable U.S. examples include the Sherwin-Williams paint factory in Richmond, Kentucky, and the Quaker Oats pet food factory in Topeka, Kansas. Both factories were constructed from the ground up to include and allow for spe- cific types of jobs embodying basic elements of autonomy and empowerment. Firms that don’t have the luxury of building the plant from scratch must find ways to renovate both their technology and their job designs to utilize the best technology and people. Some of the most influential industrial and service organizations have confronted the necessity to design jobs to take advantage of the rapid pace of technological advance. In the contemporary global environment, sociotechnical system design has been incorporated in the total quality management approach to management.

152 Part Two Understanding and Managing Individual Behavior

equity are some of the individual differences influencing jobholders’ reactions to the scope and relationships of their jobs. When individual differences are combined with environmental, situational, and managerial differences, job design decisions become increasingly complex.

∙ The most recently developed strategy of job design emphasizes the importance of core job characteristics as perceived by jobholders. Although measurements of indi- vidual differences remain a problem, managers should be encouraged to examine ways to increase positive perceptions of variety, identity, significance, autonomy, and feedback. By doing so, the potential for high-quality work performance and high job satisfaction is increased given that jobholders possess relatively high growth needs strength.

∙ Many organizations including Volvo, Citibank, General Motors, and General Foods have attempted job design with varying degrees of success. The current state of research knowledge is inadequate for making broad generalizations regarding exact causes of success and failure in applications of job design. Managers must diagnose their own situations to determine the applicability of job design in their organizations.

∙ Sociotechnical theory combines technological and social issues in job design practice. Sociotechnical theory is compatible with job design strategy and emphasizes the practi- cal necessity to design jobs that provide autonomy, feedback, significance, identity, and variety.

∙ Total quality management (TQM) combines the ideas of job enrichment and sociotechni- cal theory. Two popular TQM techniques are benchmarking and Six Sigma. Managers who implement TQM design jobs that empower individuals to make important decisions about product/service quality. The empowerment process encourages participative man- agement, team-oriented task modules, and autonomy.

1. Explain the differences between job enlargement and job enrichment and analyze the relative advantages of these two approaches in organizations you have worked for.

2. What is the significance of the idea of quality of work life (QWL)? In particular, what would seem to be the trade-offs between meaningful jobs and productive jobs during periods of declining economic activity and unemployment?

3. There is a distinct move away from a “job” emphasis in some industries. Why is this occurring?

4. Assume that you are a restaurant supervisor in charge of 10 servers. You notice that they appear bored with their jobs and that customer service is starting to decline. How can you redesign their jobs to make their work more interesting and more meaningful? Would you enrich or enlarge their jobs? Explain.

5. Describe the most meaningful job that you have ever had. Why was it meaningful? Do you agree with that part of job characteristics theory that posits that meaningful jobs tend to be more motivational?

6. Job enrichment is realized through changes to job depth. What changes can managers make to existing jobs that will provide employees with greater opportunities to exer- cise discretion?

7. Think about a current or previous job in which you were very motivated. What three factors motivated you the most about that job? Were they intrinsic or extrinsic outcomes?

Review and Discussion Questions

Objectives 1. To illustrate individual differences in preferences

about various job design characteristics. 2. To illustrate how your preferences may differ from

those of others. 3. To examine the most important and least important

job design characteristics and how managers would cope with them.

Starting the Exercise First you will respond to a questionnaire asking about your job design preferences and how you view the preferences of others. After working through the ques- tionnaire individually, small groups will be formed. In the groups, discussion will focus on the indivi- dual differences in preferences expressed by group members.

Job design is concerned with a number of attri- butes of a job. Among these attributes are the job it- self, the requirements of the job, the interpersonal interaction opportunities on the job, and performance outcomes. Individuals prefer certain attributes. Some prefer job autonomy, while others prefer to be chal- lenged by different tasks. It is obvious that individual differences in preferences would be an important con- sideration for managers. An exciting job for one per- son may be a demeaning and boring job for another. Managers could use this type of information in at- tempting to create job design conditions that allow organizational goals and individual goals and prefer- ences to be matched.

The Job Design Preference form is presented below. Please read it carefully and complete it after considering each characteristic listed. Due to space limitations, not

all job design characteristics are included for your con- sideration. Use only those that are included on the form.

Phase I: 15 Minutes Individually complete the A and B portions of the Job Design Preference form.

Phase II: 45 Minutes 1. The instructor will form groups of four to six students. 2. Discuss the differences in the rankings individuals

made on the A and B parts of the form. 3. Present each of the A rank orders of group members

on a flip chart or the blackboard. Analyze the areas of agreement and disagreement.

4. Discuss what implications the A and B rankings would have to a manager who would have to super- vise a group such as the group you are in. That is, what could a manager do to cope with the individual differences displayed?

Job Design Preference Form A. Your Job Design Preferences Decide which of the following is most important to you. Place a 1 in front of the most important characteristic. Then decide which is the second most important character- istic to you and place a 2 in front of it. Continue numbering the items in order of importance until the least important is ranked 10. There are no right answers, since individuals differ in their job design preferences. Do not discuss your individual rankings until the instructor forms groups.

Variety in tasks Feedback on performance from doing

the job

Exercise

Exercise 6.1: Job Design Preferences

8. Employees are increasingly interested in jobs with flexible work schedules. What factors are driving this interest?

9. As you understand the idea and practice of total quality management, do you believe that it’s the wave of the future in U.S. organizations? Explain.

10. Why do you think Six Sigma helps many organizations improve quality, customer satisfaction, and efficiency? Explain.

Chapter 6 Job Design and Performance 153

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Autonomy Working as a team Responsibility Developing friendships on the job Task identity Task significance Having the resources to perform well Feedback on performance from others

(e.g., the manager, co-workers) B. Others’ Job Design Preferences In the A section you have provided your preferences. Now number the items as you think others would rank them. Consider others who are in your course, class, or program, that is, those who are also completing this

Reality Check Now how much do you know about job design?

6. True or false: Benchmarking is the process in which organizations monitor and adapt the best practices of their competitors in order to make continuous improvements. a. True b. False

7. An example of a job that is high in depth and high in range is . a. receptionist b. accountant c. president/CEO d. firefighter

8. True or false: Two popular TQM techniques are benchmarking and social networking. a. True b. False

9. occurs when management increases the number of tasks that an employee performs. a. Job enrichment b. Job connectivity c. Job attachment d. Job enlargement

10. For virtual teams to succeed, which of the following is true? a. Virtual team members must be carefully selected. b. Teams need to develop a sense of purpose and shared goals. c. Trust between team members should be cultivated early in the process. d. All (a–c) are correct.

REALITY CHECK ANSWERS

Before After

1. c 2. c 3. c 4. b 5. a 6. a 7. c 8. b 9. d 10. d Number Correct Number Correct

exercise. Rank the factors from 1 (most important) to 10 (least important).

Variety in tasks Feedback on performance from doing

the job Autonomy Working as a team Responsibility Developing friendships on the job Task identity Task significance Having the resources to perform well Feedback on performance from others

(e.g., the manager, co-workers)

Chapter 6 Job Design and Performance 155

Part 1 The Hovey and Beard Company manufactured a variety of wooden toys, including animals, pull toys, and the like. The toys were manufactured by a transformation process that began in the wood room. There, toys were cut, sanded, and partially assembled. Then the toys were dipped into shellac and sent to the painting room.

In years past, the painting had been done by hand, with each employee working with a given toy until its painting was completed. Most of the toys were only two colors, although a few required more than two. Now, in response to increased demand for the toys, the painting operation was changed so the painters sat in a line by an endless chain of hooks. These hooks moved continuously in front of the painters and passed into a long horizontal oven. Each painter sat in a booth designed to carry away fumes and to backstop excess paint. The painters would take a toy from a nearby tray, position it in a jig inside the painting cubicle, spray on the color according to a pat- tern, and then hang the toy on a passing hook. The rate at which the hooks moved was calculated by the engineers so that each painter, when fully trained, could hang a painted toy on each hook before it passed beyond reach.

The painters were paid on a group bonus plan. Since the operation was new to them, they received a learning bonus that decreased by regular amounts each month. The learning bonus was scheduled to vanish in six months, by which time it was expected that they would be on their own—that is, able to meet the production standard and earn a group bonus when they exceeded it.

Questions 1. Assume that the training period for the new job setup

has just begun. What change do you predict in the level of output of the painters? Increase, decrease, or stay the same? Why?

2. What other predictions regarding the behavior of these painters do you make based upon the situation described so far?

Part 2 By the second month of the training period, trouble de- veloped. The painters learned more slowly than had been anticipated, and it began to look as though their produc- tion would stabilize far below what was planned. Many

of the hooks were going by empty. The painters com- plained that the hooks moved too fast and that the engi- neer had set the rates wrong. A few painters quit and had to be replaced with new ones. This further aggravated the learning problem. The team spirit that the management had expected to develop through the group bonus was not in evidence except as an expression of what the engineers called “resistance.” One painter, whom the group re- garded as its leader (and the management regarded as the ringleader), was outspoken in taking the complaints of the group to the supervisor. These complaints were that the job was messy, the hooks moved too fast, the incen- tive pay was not correctly calculated, and it was too hot working so close to the drying oven.

Part 3 A consultant was hired to work with the supervisor. She recommended that the painters be brought together for a general discussion of the working conditions. Although hesitant, the supervisor agreed to this plan.

The first meeting was held immediately after the shift was over at 4 p.m. It was attended by all eight painters. They voiced the same complaints again: The hooks went by too fast, the job was too dirty, and the room was hot and poorly ventilated. For some reason, it was this last item that seemed to bother them most. The supervisor promised to discuss the problems of ventilation and temperature with the engineers, and a second meeting was scheduled. In the next few days the supervisor had several talks with the en- gineers. They, along with the plant superintendent, felt that this was really a trumped-up complaint and that the expense of corrective measures would be prohibitively high.

The supervisor came to the second meeting with some apprehensions. The painters, however, did not seem to be much put out. Rather, they had a proposal of their own to make. They felt that if several large fans were set up to circulate the air around their feet, they would be much more comfortable. After some discussion, the supervisor agreed to pursue the idea. The supervisor and the consul- tant discussed the idea of fans with the superintendent. Three large fans were purchased and installed.

The painters were jubilant. For several days the fans were moved about in various positions until they were placed to the satisfaction of the group. The painters seemed completely satisfied with the results, and the rela- tions between them and the supervisor improved visibly.

Case

Case 6.1: The Hovey and Beard Company Case

156 Part Two Understanding and Managing Individual Behavior

The supervisor, after this encouraging episode, de- cided that further meetings might also prove beneficial. The painters were asked if they would like to meet and discuss other aspects of the work situation. They were eager to do this. Another meeting was held and the dis- cussion quickly centered on the speed of the hooks. The painters maintained that the engineer had set them at an unreasonably fast speed and that they would never be able to fill enough of them to make a bonus.

The discussion reached a turning point when the group’s leader explained that it wasn’t that the painters couldn’t work fast enough to keep up with the hooks but that they couldn’t work at that pace all day. The supervisor explored the point. The painters were unanimous in their opinion that they could keep up with the belt for short periods if they wanted to. But they didn’t want to because if they showed they could do this for short periods then they would be expected to do it all day. The meeting ended with an unprecedented request by the painters: “Let us adjust the speed of the belt faster or slower depending on how we feel.” The supervisor agreed to discuss this with the superintendent and the engineers.

The engineers reacted negatively to the suggestion. However, after several meetings it was granted that there was some latitude within which variations in the speed of the hooks would not affect the finished prod- uct. After considerable argument with the engineers, it was agreed to try the painters’ idea.

With misgivings, the supervisor had a control with a dial marked “low, medium, fast” installed at the booth of the group leader. The speed of the belt could now be adjusted anywhere between the lower and upper limits that the engineers had set. Questions 1. What changes do you now expect in the level of out-

put of the painters? Increase, decrease, or stay the same? Why?

2. What changes do you expect in the feelings of the painters toward their work situation? More positive, more negative, or no change? Why?

3. What other predictions do you make about the behavior of the painters?

Part 4 The painters were delighted and spent many lunch hours deciding how the speed of the belt should be var- ied from hour to hour throughout the day. Within a week the pattern had settled down to one in which the first half hour of the shift was run on a medium speed

(a dial setting slightly above the point marked “me- dium”). The next two and a half hours were run at high speed, and the half hour before lunch and the half hour after lunch were run at low speed. The rest of the after- noon was run at high speed with the exception of the last 45 minutes of the shift, which was run at medium.

The constant speed at which the engineers had origi- nally set the belt was actually slightly below the “medium” mark on the control dial; the average speed at which the painters were running the belt was on the high side of the dial. Few, if any, empty hooks entered the oven, and inspec- tion showed no increase of rejects from the paint room.

Production increased, and within three weeks (some two months before the scheduled ending of the learning bonus) the painters were operating at 30 to 50 percent above the level that had been expected under the original arrange- ment. Naturally, their earnings were correspondingly higher than anticipated. They were collecting their base pay, earn- ing a considerable piece-rate bonus, and still benefiting from the learning bonus. They were earning more now than many skilled workers in other parts of the plant. Questions 1. How do you feel about the situation at this point? 2. Suppose that you were the supervisor. What would

you expect to happen next? Why?

Part 5 Management was besieged by demands that the inequity between the earnings of the painters and those of other workers in the plant be taken care of. With growing irrita- tion between the superintendent and the supervisor, the engineers and supervisor, and the superintendent and engi- neers, the situation came to a head when the superinten- dent revoked the learning bonus and returned the painting operation to its original status: The hooks moved again at their constant, time-studied, designated speed.

Production dropped again and within a month all but two of the eight painters had quit. The supervisor stayed on for several months, but, feeling aggrieved, left for another job. Questions 1. Once it was understood that painters’ earnings were

going to be higher than expected, what (if anything) should management have done to prevent the inevi- table complaints by other workers in the plant?

2. If you were the supervisor, would you have stayed longer with the company or quit like the one in the case? Explain your answer.

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Rewards are powerful and have a direct influence on the behavior and performance of indi- viduals, teams, and units or departments. Organizations use a variety of rewards to attract and retain people and to motivate them to achieve their personal and organizational goals. Managers must address almost daily how and when to distribute rewards, such as pay, transfers, promotions, praise, and recognition. Rewards also can help create a climate that results in more challenging and satisfying jobs. In this chapter, we are concerned with how rewards are determined (through evaluation) and distributed by managers. We discuss the reactions of people to rewards and examine the response of employees to rewards received in organizational settings. Additionally, we present the role of rewards in organizational absenteeism, turnover, commitment, and job performance.

Before individuals can be rewarded, there must be some basis for distributing rewards. Some rewards may accrue to all individuals simply by virtue of their employment with the organization. These are what are known as universal or across-the-board rewards. For example, a company may give all of its employees a 3 percent pay raise. Other rewards may be a function of tenure or seniority. Many rewards, however, are related to job perfor- mance.1 Instead of giving every employee a 3 percent pay raise, a company might give the higher performing employees a 5 or 6 percent raise, while the average performers receive a 1 or 2 percent raise. To distribute these rewards equitably, it is necessary to evaluate employee performance. Thus, we begin this chapter with a look at performance evaluation. Developing effective evaluation systems is just as critical to organizational success as developing effective reward systems. Both systems represent efforts to influence employee behavior. To achieve maximum effectiveness, it is necessary to carefully link employee evaluation systems with reward systems.

Evaluation and Rewards Influence Behavior Learning Objectives

After completing Chapter 7, you should be able to:

Describe the purposes of performance evaluation.

Explain how feedback is used to evaluate performance.

Summarize the basic principles of reinforcement theory.

Differentiate between intrinsic and extrinsic rewards.

Discuss how rewards affect important organizational outcomes.

Compare several innovative reward systems.

C H A P T E R S E V E N

© Ingram Publishing, RF

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Reality Check How much do you know about performance evaluation?

1. True or false: There are many different purposes for conducting performance appraisals, including the identification of high-potential employees and the evaluation of previous training programs. a. True b. False

2. Some performance appraisals have a ___________ orientation; whereas other performance appraisals have more of a(n) ___________ orientation. a. goal setting; empowerment b. judgmental; developmental c. perceptual; psychological d. None of the above (a–c) are correct.

3. Effort, self-motivation to adjust, and persistence are all elements of the ___________ component of the “cognitive model of feedback.” a. behavioral results b. mental processing c. cognitive evaluation d. individual characteristics

4. A ___________ feedback program can include evaluations about an employee’s performance from co- workers, supervisors, subordinates, and customers. a. global b. complete c. 360-degree d. certified

5. ___________ are behaviors that can be influenced by altering the consequences (rewards and punish- ments) that follow these behaviors. a. Outcomes b. Reinforcers c. Operants d. Conditions

Evaluation of Performance Virtually every organization of at least moderate size has a formal employee performance evaluation system. Assessing and providing feedback about performance is considered essential to an employee’s ability to perform job duties effectively.2 In discussing this topic, we will identify the purposes performance evaluation may serve and examine what the focus of evaluations should be. We also will look at a number of performance evaluation methods, examining their strengths and weaknesses.

Purposes of Evaluation The basic purpose of evaluation, of course, is to provide information about work perfor- mance.3 More specifically, however, such information can serve a variety of purposes. Some of the major ones are: 1. Provide a basis for reward allocation, including raises, promotions, transfers, layoffs,

and so on. 2. Identify high-potential employees.

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3. Validate the effectiveness of employee selection procedures. 4. Evaluate previous training programs. 5. Stimulate performance improvement. 6. Develop ways of overcoming obstacles and performance barriers. 7. Identify training and development opportunities. 8. Establish supervisor–employee agreement on performance expectations.

These eight specific purposes can be grouped into two broad categories. The first four have a judgmental orientation; the last four have a developmental orientation. Evaluations with a judgmental orientation focus on past performance and provide a basis for making judgments regarding which employee should be rewarded and how effective organizational programs—such as selection and training—have been. Evaluations with a developmental orientation are more concerned with improving future performance by ensuring expecta- tions are clear and by identifying ways to facilitate employee performance through training. These two broad categories are not mutually exclusive. Performance evaluation systems can, and do, serve both general purposes.

The general purpose for which performance evaluations are conducted will vary across different cultures, as will the frequency with which evaluations are conducted, who conducts them, and a variety of other components. The accompanying Global OB

CULTURAL DIFFERENCES IN PERFORMANCE EVALUATIONS Performance evaluations, like many other management procedures, are not universally the same across all cultures. The primary purpose served by evaluations, the procedures used to conduct evaluations, and the manner in which information is communicated are just a few of the components of performance evaluation that may differ as a function of the culture in which the evaluation is being conducted. Below are examples of some differences that exist between the

United States, Saudi Arabia, and Japan. For each country, the descrip- tions of the various components reflect usual or typical practice. Clearly, within any single country there will be variations between organizations and, less frequently, within organizations.

Sources: Melany Gallant, “The Business of Culture: How Culture Affects Man- agement Around the World,” Talent Space blog, http://www.halogensoftware. com, accessed March 30, 2016; P. R. Harris and R. T. Moran, Managing Cultural Differences, 6th ed. (Burlington, MA: Butterworth-Heinemann, 2004); report of the Association of Cross-Cultural Trainers in Industry, Southern California, 1984.

G L O B A L O B

Component United States Saudi Arabia Japan

Purpose Fairness, employee Placement Employee development development

Who conducts evaluation? Supervisor Manager several layers Mentor and supervisor higher

Frequency Once a year or Once a year Developmental appraisal periodically once a month; evaluation appraisal after 12 years

Assumptions Objective appraiser is Subjective more Objective and subjective fair important than objective equal importance

Manner of communication Criticism direct and Criticism subtle and will Criticism subtle and given and feedback may be in writing not be in writing orally

Rebuttals Employee will feel Employee will feel free to Employee will rarely rebut free to rebut rebut

Praise Given individually Given individually Given to entire group

160 Part Two Understanding and Managing Individual Behavior

illustrates some cultural differences in typical performance evaluations across three countries.

Focus of Evaluation Effective performance evaluation is a continuous, ongoing process and, simply stated, involves asking two questions: “Is the work being done effectively?” and “Are employee skills and abilities being fully utilized?” The first question tends toward a judgmental orientation, while the second is more developmental in nature. Generally, evaluations should focus on translating the position responsibilities into each employee’s day-to-day activities. Additionally, the evaluation should assist the employee in understanding these position responsibilities, the work goals associated with them, and the degree to which the goals have been accomplished.

Performance evaluations should focus on job performance, not individuals. If a software engineer’s work comes to her by electronic communication and she forwards the completed work via e-mail to persons with whom she has no personal contact, should the fact that she cannot express herself well when talking to someone be an important factor in judging her performance? If we focus on her communication ability, we are concerned about her as an individual and are evaluating her. But if we look at this in relation to its effect on how well she does her job, we are evaluating her job performance.

When evaluating employee behavior, it is necessary to ensure not only that the focus of the appraisal remains on job performance, but that it also has proper weighting of relevant behaviors. Relevancy, in the context of performance evaluation, has three aspects: defi- ciency, contamination, and distortion. Deficiency occurs when the evaluation does not focus on all aspects of the job. If certain job responsibilities and activities are not consid- ered, the evaluation is deficient. Contamination can be said to be the reverse of deficiency. It occurs when activities not part of the job are included in the evaluation. If we evaluate the software engineer mentioned in the previous paragraph on her verbal skills, this would be a form of contamination. Finally, distortion takes place in the evaluation process when an improper emphasis is given to various job elements. If, for example, organizing the nurses station desk at the close of each shift is only a small element of a nurse’s job, mak- ing that activity the major factor in evaluating his performance would be distorting that particular job element. Well-focused performance evaluations avoid deficiency, contami- nation, and distortion.

Improving Evaluations It has been suggested that performance evaluation is the most important employee-related function in an organization.4 Given that nearly all supervisors and managers evaluate the job performance of their employees, developing an effective performance evaluation system constitutes a critical and challenging task for management. This means, among other things, maximizing the use and acceptance of the evaluations while minimizing dissatisfaction with any aspect of the system. Not all performance appraisal approaches are well received by managers and employees. For example, the forced rankings approach (made popular when Jack Welch was CEO of General Electric)5 in which managers must place a certain percent- age of employees into each performance category (e.g., above, at, and below average) has been met with resistance at many organizations.6 Some managers have difficulty labeling some of their employees as “below average” even if they perform at a slightly lower capac- ity than other employees in the department. A full treatment of performance evaluation

job performance A set of employee work- related behaviors designed to accomplish organizational goals.

Chapter 7 Evaluation and Rewards Influence Behavior 161

problems and methods of overcoming them is beyond the scope of our discussion here. We offer, however, the following suggestions for improving the effectiveness of virtually any evaluation system. 1. Higher levels of employee participation in the evaluation process lead to more satisfac-

tion with the system. 2. Setting specific performance goals to be met results in greater performance improve-

ment than discussions of more general goals. 3. Evaluating subordinates’ performance is an important part of a supervisor’s job; manag-

ers should receive training in the process, and they should be evaluated on how effec- tively they discharge this part of their own job responsibilities.

4. Systematic evaluation of performance does little good if the results are not communi- cated to employees.

5. Performance evaluation feedback should not focus solely on problem areas; good performance should be actively recognized and reinforced.

6. Remember that while formal performance evaluation may take place on a set schedule (for example, annually), effective evaluation is a continuous, ongoing process. To the extent that performance is linked with the organization’s reward system, perfor-

mance evaluation represents an attempt to influence the behavior of organizational members. That is, it is an attempt to reinforce the continuation or elimination of certain actions. The basic assumption is that behavior is influenced by its consequences and that it is possible to affect behavior by controlling such consequences. Consequently, we begin our discussion of rewarding individual behavior by examining the topic of reinforcement.

Performance Evaluation Feedback Upon the completion of a performance evaluation, the manager (evaluator) usually is expected to provide feedback. The feedback session provides information concerning the rationale for the evaluation to the individual. If possible, objective information is used to guide the evaluated employee to improve or sustain performance. The need for feedback among people on and off the job is significant. People want to know how they are doing, how they are being perceived by others, and how they can make adjustments to perform better. Simply telling someone “you are doing OK,” “keep up the good work,” or “you’re too emotional” is too vague and subjective to be useful to bring about improvement.

One of the most dreaded experiences of managers is delivering feedback to a poorly performing employee. Telling a person that you have evaluated his performance as inade- quate, poor, or below expectations is difficult. Giving a person bad news is just not a com- fortable, enjoyable experience.

An illustration of how dreaded providing feedback can be is an exercise used at Price- waterhouseCoopers. Staff members sitting opposite each other in a meeting are told they are to form an impression of the other person in the next few minutes. When the time has expired, the participants are informed that they will not be required to provide feedback of their impressions after all.7 The exercise is designed to show how fearful people become when they are faced with informing someone about their impressions. Those dreaded feel- ings are a product of the top-down manner in which appraisal feedback has usually occurred. Managers typically tell subordinates what is wrong or right and how they should improve performance.

162 Part Two Understanding and Managing Individual Behavior

Purpose of Evaluation Feedback Performance evaluation feedback can be instructional and/or motivational to the receiver (the evaluated person). Feedback instructs when it points out areas for improvement and teaches new behavior. For example, a sales associate may be informed that his reporting of expenses is not organized and is not detailed enough. A new program for preparing sales expense reports could improve his reports. Learning how to use the program permits the sales associate to use his laptop and the program to prepare reports that are considered accurate, informative, and timely.

Performance evaluation feedback is motivational when it provides a reward or prom- ises a reward. A supervisor informing a technician that her report is superb and will serve as an example of an outstanding model is a form of reward via recognition. Receiv- ing a compliment or sign of excellent work from a valued colleague (e.g., supervisor, peer, or subordinate) can be very motivational and energizing. Unfortunately, a recent survey found that 66 percent of employees feel they do not receive enough positive feedback from their bosses. Additionally, just over half of employees feel that when their “bosses do praise excellent performance, the feedback is too vague to encourage repeat performance.”8

As Exhibit 7.1 illustrates, feedback is emitted from the person (self), others (supervi- sors, colleagues), and the job itself. This feedback impacts the person who processes the feedback before acting or behaving. Feedback does not simply lead directly to efforts to improve performance. The cognitive processing that occurs involves many characteristics and factors.

A Feedback Model Exhibit 7.1 presents a sample of feedback sources, individual characteristics, and cognitive evaluation factors that have an impact on the eventual behavioral outcomes. People who possess high self-efficacy are candidates for wanting feedback. They want to verify and validate their competency or self-efficacy.

As Exhibit 7.1 points out, feedback can result in greater effort, a desire to make correc- tive adjustments, and persistence. These can be very positive behaviors that ultimately result in better or improved performance. Another possible consequence of feedback is disregarding it or simply not accepting it as valid.

Research and the practical implementation of feedback provide ways feedback can improve performance.9 First, give feedback frequently, not once a year at a perfor- mance evaluation session. Second, permit the evaluated person to participate in

the feedback sessions. This serves as a two-way exchange, problem-solving approach rather than an “evaluator telling” method. When employees participate they are usually more satisfied with the feedback communication. Third, in provid- ing feedback, do not solely focus on ineffective performance or problems. Praise, recognition, and encouragement serve as a form of positive reinforcement. Fourth, address results, goals, and goals accomplished, and not performer chara- cteristics.10 A golden rule of gaining and maintaining the respect of subordinates (evaluated employees) is to not attack or discuss their personality, attitudes, or values. These four guidelines are not perfect, nor do they always work effectively, but they are supported by research and they are not difficult to implement.

TIPS FOR PROVIDING PERFORMANCE FEEDBACK

1. Give feedback frequently, not just once or twice a year.

2. Encourage the evaluated person to participate in the feedback sessions.

3. Mix positive reinforcement with constructive criticism.

4. Focus on performance and goals, not personal characteristics.

Information You Can Use

Chapter 7 Evaluation and Rewards Influence Behavior 163

Multisource Feedback: A 360-Degree Approach An increasing number of firms are using multisource feedback, instead of only a top-down feedback program. A recent survey suggests that 90 percent of Fortune 1000 firms use some form of multisource program. The increasing use of multisource programs is the result of calls for more fairness, clarity, and credibility in performance improvement programs.

In a 360-degree program, evaluators could include creditors, peers or team members, supervisors, subordinates, and the person. Anyone in the person’s full domain (his or her circle or 360-degree range) could serve as an evaluator. For example, Google allows its man- agers and employees to request reviews from anyone across the organization, including peers, supervisors, customers, and suppliers.11 It is assumed that this network has a truer picture of a person’s performance than just a supervisor or any other category by itself. Other compa- nies that use 360-degree feedback include HCL Technologies, Dell, and Unilever.12

As organizations attempt to improve the impact of their 360-degree feedback programs, several best practices are being used:13

1. Use 360-degree feedback primarily for individual development. This will help increase the acceptance of the program by employees.

2. Integrate 360-degree feedback with other activities. Assessment results can be followed by additional coaching and training, goal setting, and organizational development initiatives.

3. Link the feedback process with the overall strategy and direction of the firm. For exam- ple, build in customers if the firm’s strategy is to become more customer-focused.

4. Exert administrative control over every aspect of the 360-degree process. This includes helping to choose raters and training everyone involved in the process.

5. Make senior management role models. When employees see senior managers receiving and acting on 360-degree feedback, they are more likely to take the initiative seriously.

6. Use highly trained internal coaches to leverage the investment. Coaches can help employees interpret results and create action plans for improvement.

7. Evaluate the effectiveness or return on investment of the process. Measure outcomes associated with the 360-degree feedback program and make modifications as necessary. A comprehensive study that analyzed the results of 24 research studies on multisource

feedback reported modest (and positive) improvements in employee performance as a

EXHIBIT 7.1 Cognitive Model of Feedback: Sample of Sources, Characteristics, Cognitive Evaluation, and Behavioral Results

Sources: Based on A.N. Kluger and A. DeNisi, “The Effects of Feedback Interventions on Performance: A Historical Review, a Meta- Analysis, and a Preliminary Feedback Intervention Theory,” Psychological Bulletin, March 1996, pp. 254–84; R. Kreitner and A. Kinicki, Organizational Behavior (New York: McGraw- Hill/Irwin, 2004), pp. 325–26.

Behavioral Results

• Effort • Self-motivation to adjust • Persistence • Disregard or nonacceptance

Evaluated Person

Individual Characteristics

• Perceptual process • Values • Needs • Goals • Self-concept • Self-efficacy

• Credibility of feedback source • Expectancies • Personal standards • Form of feedback (Objective or subjective)

Cognitive Evaluation

Feedback Source

• Person

• Others

• Job

164 Part Two Understanding and Managing Individual Behavior

result of the feedback.14 Another study reported that 360-degree feedback of 428 retail associate store managers was more valid in predicting assessment center performance than using managerial ratings alone.15

Arguments in Favor of 360-Degree Feedback Research evidence is small but growing to support the use of a multisource, 360-degree performance feedback program. The constant concern about fairness and credibility in evalu- ation is the major argument in favor of 360-degree programs. Multiple raters have different viewpoints of a person’s performance. A supervisor has a single-person’s perspective or over- view. It is considered more thorough and credible to have multiple views being expressed.

Another benefit of using 360-degree feedback is that managers share the results of the assessment with others within the organization. Consulting firm Aon Hewitt reports that one-third of U.S. executives “share their 360 results with direct reports.”16 This transpar- ency builds trust with subordinates and makes the executive more human and accessible.

There also appears to be support among evaluated persons for a 360-degree program. Employee acceptance is important in using any management-initiated program.17

Arguments against 360-Degree Feedback When information is being used to pinpoint performance, feedback providers may be reluc- tant to provide true ratings for fear that negative comments might be used against the person’s career progress or salary progression. If feedback sources are concerned about the use of their ratings, they may inflate such ratings.18

Another argument against 360-degree programs involves the frequency of observation of performance. How often does a supplier or even a peer view, firsthand, the performance of a person? Differences in observation frequency across evaluators result in varying responses based not on actual or regular performance, but on what was observed on a limited number of occasions.19

In sum, the 360-degree feedback process, when developed, administered, and managed in a proper manner, offers promise to managers who are interested and brave enough to receive information on how they are doing. However, additional research is necessary to fine-tune 360-degree feedback programs and to determine whether they can make a major impact on employees’ job performance.

There are available 360-degree feedback approaches for teams, as well. A software product called TeamView 360 focuses on the team as a group, rather than on individuals. Each team member rates the team’s performance, then internal or external customers rate the team’s performance. The software is used to provide ratings on 31 behaviors within seven major competencies. All team members rate themselves on each of the behaviors. Team members can also evaluate other members of the team.20

A summary graph shows the team member how his or her self-rating compares with the views of other evaluators. In addition, the report received by a team member indicates the areas in which the member’s performance was most effective and the areas of least-effective performance.

Reinforcement Theory Learning experts believe that reinforcement is the most important principle of learning. Desirable or reinforcing consequences (e.g., recognition in the feedback program of doing an excellent job) will increase the strength of a behavior (e.g., high-quality performance) and increase its probability of being repeated. Undesirable or punishment consequences will decrease the strength of a response and decrease its probability of being repeated.

Chapter 7 Evaluation and Rewards Influence Behavior 165

Attempts to influence behavior through the use of rewards and punishments that are consequences of the behavior are called operant conditioning. Operants are behaviors that can be controlled by altering the consequences that follow them. Most workplace behaviors such as performing job-related tasks, completing sales reports, or coming to work on time are operants. A number of important principles of operant conditioning can aid the manager in attempting to influence behavior.

Reinforcement Reinforcement is an extremely important principle of conditioning. Managers often use positive reinforcers to influence behavior. A positive reinforcer is a stimulus that, when added to the situation, strengthens the probability of a behavioral response. Thus, if the positive rein- forcer has value (is desirable) to the person, it can be used to improve performance. Sometimes negative reinforcers may be used. Negative reinforcement refers to an increase in the frequency of a response following removal of the negative reinforcer immediately after the response. As an example, exerting high degrees of effort to complete a job may be negatively reinforced by not having to listen to the “nagging” boss (undesirable). That is, completing the job through increased effort (behavior) minimizes the likelihood of having to listen to a nagging stream of unwanted advice (negative reinforcer) from a superior.

Reinforcement is different from a reward in that a reward is perceived to be desirable and is provided to a person after performance. All rewards are not reinforcers. Recall that reinforcers are defined as increasing the rate of behavior.

Punishment Punishment is defined as presenting an uncomfortable or unwanted consequence for a par- ticular behavioral response. It is an increasingly used managerial strategy.21 Some work- related factors that can be considered punishments include a superior’s criticism or being demoted. While punishment can suppress behavior if used effectively, it is a controversial method of behavior modification in organizations. It should be employed only after careful and objective consideration of all the relevant aspects of the situation.

Extinction Extinction means reducing unwanted behavior. When positive reinforcement for a learned response is withheld, individuals will continue to practice that behavior for some period of time. However, after a while, if the nonreinforcement continues, the behavior will decrease in frequency and intensity and will eventually disappear. The decline and eventual cessa- tion of the response rate is known as extinction. For example, the continual telephone calls from a financial advisor that are not returned are eventually going to stop.

Reinforcement Schedules It is extremely important to properly time the rewards or punishments used in an organiza- tion. The timing of these outcomes is called reinforcement scheduling (see Exhibit 7.2). In the simplest schedule, the response is reinforced each time it occurs. This is called continuous reinforcement. If reinforcement occurs only after some instances of a response and not after each response, an intermittent reinforcement schedule is being used. From a practical viewpoint, it is virtually impossible to reinforce continually every desirable behavior. Consequently, in organizational settings, almost all reinforcement is intermittent in nature.

An intermittent schedule means that reinforcement does not occur after every acceptable behavior. The assumption is that learning is more permanent when correct behavior is

operant Behaviors amenable to control by altering the consequences (rewards and punishments) that follow them.

punishment Presenting an uncom- fortable consequence for a particular behavior response or removing a desirable reinforcer because of a particular behavior response. Managers can punish by application or punish by removal.

extinction The decline in the response rate because of nonreinforcement.

continuous reinforcement A schedule that is designed to reinforce behavior every time the behavior exhibited is correct.

166 Part Two Understanding and Managing Individual Behavior

rewarded only part of the time. Ferster and Skinner have pre- sented four types of intermittent reinforcement schedules.22 Briefly, the four are: 1. Fixed interval. A reinforcer is applied only when the desired

behavior occurs after the passage of a certain period of time since the last reinforcer was applied. An example would be to praise positive performance only once a week and not at other times. The fixed interval is one week.

2. Variable interval. A reinforcer is applied at some variable interval of time. A promotion is an example.

3. Fixed ratio. A reinforcer is applied only if a fixed number of desired responses has occurred. An example would be pay- ing a salesperson for an e-learning firm for each dollar of revenue above $6,000 for which she receives a 12 percent commission.

4. Variable ratio. A reinforcer is applied only after a number of desired responses, with the number of desired responses changing from situation to situation, around an average. Research on reinforcement schedules has shown that higher

rates of response usually are achieved with ratio rather than interval schedules. This finding is understandable since high response rates do not necessarily speed up the delivery of a reinforcer in an interval schedule as they do with ratio schedules.

EXHIBIT 7.2 Reinforcement Schedules and Their Effects on Behavior

Sources: Kendra Cherry, “What Is a Schedule of Reinforcement?” About Health, http://psychology.about.com, accessed March 30, 2016; O. Behling, C. Schriesheim, and J. Tolliver, “Present Trends and New Directions in Theories of Work Effort,” Journal Supplement Abstract Service, American Psychological Association, 1974, p. 57; C.B. Ferster and B.F. Skinner, Schedules of Reinforcement (New York: Appleton-Century-Crofts, 1957).

Schedule Description When Applied When Removed Organizational to Individual by Manager Example

Continuous Reinforcer follows Faster method for Faster method to Praise after every every response establishing new cause extinction new sale and behavior of new behavior order Fixed interval Response after Some inconsistency Faster extinction Weekly, bimonthly, specific time in response of motivated monthly paycheck period is frequencies behavior than reinforced variable schedules Variable interval Response after Produces high Slower extinction Transfers, unexpected varying period of rate of steady of motivated bonuses, time (an average) responses behavior than promotions, is reinforced fixed schedules recognition Fixed ratio A fixed number of Some inconsistency Faster extinction Piece rate, responses must in response of motivated commission on occur before frequencies behavior than units sold reinforcement variable schedules Variable ratio A varying number Can produce high Slower extinction Random checks for (average) of rate of response of motivated behavior quality yield praise responses must that is steady and than fixed schedules for doing good work occur before resists extinction reinforcement

LEARN HOW TO PRAISE OTHERS

Praising the performance of a person is often gratifying. In the best-selling classic The One Minute Manager, Ken Blanchard and Spencer Johnson provide straightfor- ward pointers that can be easily implemented by man- agement. Praise is a form of recognition that takes little time to provide. The power of such a reward is knowing that someone took the time to notice the achievement.

Inform people that you are going to provide them with feedback on how they are doing.

Praise people immediately.

Inform people in specific terms what they did that you like.

Praise people for going out of their way to help others perform their jobs.

Tell people that the organization is a better place because of their excellent work.

Remember when offering praise, use the person’s name. People like to hear their name.

If possible, say “thank you” in the praise message.

Information You Can Use

Chapter 7 Evaluation and Rewards Influence Behavior 167

Occasionally, however, reinforcement schedule research has produced unexpected find- ings. For example, one study compared the effects of continuous and variable ratio piece- rate bonus pay plans. Contrary to predictions, the continuous schedule yielded the highest level of performance. One reason cited for the less-than-expected effectiveness of the variable ratio schedules was that some employees working on these schedules were opposed to the pay plan. They perceived the plan as a form of gambling, and this was not acceptable to them.23

Using a praise program can serve as reinforcement. The nearby Information You Can Use feature provides some guidelines on how to use a praise program to reinforce desirable performance.

A Model of Individual Rewards The main objectives of reward programs are: (1) to attract qualified people to join the organization, (2) to keep employees coming to work, and (3) to motivate employees to achieve high levels of performance. Exhibit 7.3 presents a model that attempts to integrate satisfaction, motivation, performance, and rewards. Reading the exhibit from left to right suggests that the motivation to exert effort is not enough to cause acceptable performance. Performance results from a combination of the effort of an individual and the individual’s level of ability, skill, and experience. The performance results of the individual are evalu- ated either formally or informally by management, and two types of rewards can be distrib- uted: intrinsic or extrinsic.24 The rewards are evaluated by the individual, and to the extent the rewards are satisfactory and equitable, the individual achieves a level of satisfaction.

A significant amount of research has been done on what determines whether individuals will be satisfied with rewards. Lawler has summarized five conclusions based on the behavioral science research literature. They are: 1. Satisfaction with a reward is a function both of how much is received and how much the

individual feels should be received. This conclusion is based on the comparisons that people make. When individuals receive less than they feel they should, they are dissatisfied.

2. An individual’s feelings of satisfaction are influenced by comparisons with what hap- pens to others. People tend to compare their efforts, skills, seniority, and job perfor- mance with those of others. They then attempt to compare rewards. That is, they compare their own inputs with the inputs of others relative to the rewards received. This

EXHIBIT 7.3 The Reward Process

Feedback

Experience Extrinsic rewards

Motivation to exert effort

Individual job performance

Performance evaluation

Satisfaction

Intrinsic rewards

Ability and skill

168 Part Two Understanding and Managing Individual Behavior

input–outcome comparison was discussed when the equity theory of motivation was introduced in Chapter 5.

3. Satisfaction is influenced by how satisfied employees are with both intrinsic and extrin- sic rewards. Intrinsic rewards are valued in and of themselves; they are related to performing the job. Examples would be feelings of accomplishment and achievement. Extrinsic rewards are external to the work itself; they are administered externally. Examples would be salary and wages, fringe benefits, and promotions. The debate among researchers as to whether intrinsic or extrinsic rewards are more important in determining job satisfaction has not been settled because most studies suggest that both rewards are important. One clear message from the research is that extrinsic and intrin- sic rewards satisfy different needs.

4. People differ in the rewards they desire and in how important different rewards are to them. Individuals differ on what rewards they prefer. In fact, preferred rewards vary at different points in a person’s career, at different ages, and in various situations.

5. Some extrinsic rewards are satisfying because they lead to other rewards. For example, a large office or an office that has carpeting or drapes is often considered a reward because it indicates the individual’s status and power. Money is a reward that leads to such things as prestige, autonomy and independence, security, and shelter. The relationship between rewards and satisfaction is not perfectly understood, nor is it

static. It changes because people and the environment change. However, any reward pack- age should (1) be sufficient to satisfy basic needs (e.g., food, shelter, clothing), (2) be considered equitable, and (3) be individually oriented.25

One aspect of some reward programs that is not considered involves taxation. For exam- ple, announcing a $1,000 bonus could be great news by itself. However, if because of taxes the recipients get only $667, the news may be less positive. An important question to deter- mine is, “Is it possible to reward an employee without inflicting the burden of tax liabil- ity?” Yes, firms can either “gross up” cash incentives or put them into employees’ 401(k) retirement plans and health savings accounts.26 Firms that gross up cash incentives provide employees with the full value of the bonus. For example, instead of issuing the $1,000 bonus, a company provides the employee with a check in the amount of $1,333. Thus, although the $1,333 is taxed, the employee still pockets $1,000.

Intrinsic and Extrinsic Rewards The rewards shown in Exhibit 7.3 are classified into two broad categories: extrinsic and intrinsic. Whether rewards are extrinsic or intrinsic, it is important to first consider the rewards valued by the person since an individual will put forth little effort unless the reward has value. An intrinsic reward is defined as one that is self-administered by the person. It provides a sense of satisfaction or gratification and, often, a feeling of pride for a job well done. An extrinsic reward is initiated from outside the person. Receiving praise from a supervisor is extrinsic or initiated by someone other than the person. Both extrinsic and intrinsic rewards can have value. We will examine both types in the following sections. Extrinsic Rewards Financial Rewards: Salary and Wages Money is a major extrinsic reward. It has been said, “Although it is generally agreed that money is the major mechanism for rewarding and modifying behavior in industry . . . very little is known about how it works.”27 To really understand how money modifies behavior, the perceptions and preferences of the person being rewarded must be understood, a challenging task for a manager. Unless employees can see a connection between performance and merit increases, money will not

169

be a powerful motivator. Equally challenging is how motivation is affected after managers implement a pay cut during difficult economic times. The OB Matters discusses this issue in detail.

Many organizations utilize some type of incentive pay plan to motivate employees. Lawler presents the most comprehensive summary of the various pay plans and their effec- tiveness as motivators.28 Each plan is evaluated on the basis of the following questions: 1. How effective is it in creating the perception that pay is related to performance? 2. How well does it minimize the perceived negative consequences of good performance? 3. How well does it contribute to the perception that important rewards other than pay

(e.g., praise and interest shown in the employee by a respected superior) result in good performance? A controversial issue regarding pay systems centers on whether they are public or pri-

vate matters. Openness versus secrecy is not an either/or issue; it is a matter of degree. Some organizations will disclose the pay ranges, the pay decision criteria, and a schedule for receiving pay increases. Other organizations may present an entire array of employees

SAVING JOBS BY CUTTING PAY What do the city of Albuquerque, Sub-Zero Refrigerators, the Seattle Symphony, FedEx, Hewlett-Packard, CareerBuilder.com, and Capital One all have in common? In response to the recent worldwide reces- sion, each one of these companies chose to cut employees’ pay as a way to avoid layoffs. More recently, several businesses in the energy industry, such as Occidental Petroleum and Canadian Natural Re- sources, have followed suit in response to low oil prices across the globe—opting to cut pay instead of handing out pink slips.

Why try to avoid layoffs? Even though employees are very sensitive about their pay and generally hate the idea of going back to lower pay levels, most see an across-the-board pay cut as a necessary evil during tough times. No one wants to see a co-worker, many with mortgages, car loans, children in college, and so on, get fired. By instituting a pay cut that includes the CEO and executives, an organization is seen as being so- cially responsible and compassionate. Also, by keeping the workforce intact, the organization won’t find itself short-staffed when the economy picks up again. This will save the firm considerable time and money related to recruitment, selection, and training. A final benefit of the no- layoff approach is that customer service is preserved; in contrast, layoffs can lead to fewer and less-trained customer service personnel, ultimately reducing the quality of the firm’s customer service capabilities.

In tough times, when employees are giving back 10 or 20 percent of their salaries and bonuses are being drastically reduced or elimi- nated, how can employees be “rewarded” so they don’t leave the or- ganization? One approach is to use “customized” or “tiered” pay cuts whereby some employees don’t have to give back as much. This ap- proach allows managers to protect top performers or lower earners who are more likely to live paycheck to paycheck. At FedEx, salaried workers who earn $150,000 or more received a 15 percent reduction in their pay; salaried employees making less gave back 10 percent;

and hourly workers will go from a 40-hour to 32-hour workweek. Such a tiered approach allows managers to target pay cuts more precisely. A high-performing employee may be “rewarded” by receiving a small pay cut; it’s hoped that this gesture will help keep the individual from leaving the firm.

A second approach to rewarding employees during tough times is to implement a reduced workweek or ask employees to volunteer for unpaid sabbaticals. According to a poll conducted by the Society for Human Resource Management (SHRM), approximately 20 percent of U.S. companies have shortened the workweek as a way to reduce pay. Matt Ferguson, CEO of CareerBuilder.com, right after implementing a pay cut for employees, “rewarded” the employees with only having to work a half day on Fridays. Ferguson gave employees time off as a way to compensate for the recent pay cuts.

Finally, employees can be “rewarded” by not being laid off, having to give back any portion of their salaries, or reducing their work hours. According to the aforementioned SHRM poll, several organizations took a variety of steps to save money and survive during the economic downturn, including implementing budget cuts across the whole orga- nization (71 percent); not replacing employees who voluntarily leave the organization (63 percent); and implementing hiring freezes (52 percent). Many organizations and their employees hoped these steps would be sufficient to ward off any pay reductions and layoffs until the economy regained its health.

Sources: Chester Dawson and Benoit Faucon, “Cutting Staff Pay to Keep Workers,” The Wall Street Journal, http://www.wsj.com, accessed March 31, 2016; Steven Greenhouse, “More Workers Face Pay Cuts, Not Furloughs,” The New York Times, August 2, 2010, http://www.nytimes.com; Michelle Conlin, “Pay Cuts Made Palatable,” BusinessWeek, May 4, 2009, p. 67; Stephen Miller, “Employers Feel the Pain; More Staff and Pay Cuts Expected,” HR Magazine 54, no. 5 (May 2009), p. 15; Barbara Kiviat, “Do Pay Cuts Pay Off?” Time, April 27, 2009, p. GB.6.

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and the pay increases each received in a particular performance review period. Increas- ingly, the decision to share salary information is made anonymously by current and former employees who post the information on websites such as Glassdoor.com, Salary.com, and Payscale.com.29

Research indicates that a totally open pay system, in which there are no secrets about how much people are being paid, works best in organizations where employee performance can be measured in objective terms and there is low interdependence among employees. Organizations that specialize in selling to the public often employ individuals whose out- put can be measured and who do not have to work closely with other salespeople. A good example of this would be a personal selling organization such as Mary Kay Cosmetics, where the results of high-performing sales representatives, known as “independent beauty consultants,” are made known to other employees and the public; for example, Mary Kay rewards its high achievers by giving them use of a new pink Cadillac (or comparable cash compensation). Since 1969, more than 130,000 sales force members worldwide have qualified for this reward.30

For the open pay system to be motivational for employees, measures need to be avail- able for all important aspects of a job (e.g., number of new customers per quarter, increase in purchases by customer, etc.) and an employee’s effort must be linked to short-term performance. In other words, a salesperson (and his or her peers) must see a same-month increase in pay (e.g., $300 for each new customer identified) as a result of finding two new customers that month.

If these conditions can be met, an open financial reward system can be well received. If, however, these conditions can’t be met, the conflict, backlash, and hostility of an open system should be avoided with another system. Management in a less than fully open pay system should work at presenting information on how performance and financial rewards are linked. Illustrating that desirable job assignments, promotions, and results of perfor- mance appraisals are linked to improved financial rewards is an approach that takes on greater relevance when the pay system can’t be totally open.31

Financial Rewards: Employee Benefits According to the U.S. Bureau of Labor Statis- tics, organizations spend on average $10.52 per hour worked on benefits for each employee.32 This represents a little more than 31 percent of a firm’s compensation costs per employee. (The other 69 percent, or $23.06, is for wages and salaries.) Some benefits, however, are not entirely financial, but they do provide employees with valued rewards. For example, business analytics giant, SAS, provides a subsidized child care center, a 66,000-square-foot recreation and fitness center, and onsite health care services for employees at its North Carolina headquarters. The company believes in providing employ- ees with many benefits in exchange for high-level performance and commitment.33

A financial employee benefit in some organizations, particularly government and union workplaces, is still the pension plan, and for most employees, the opportunity to participate in a pension plan is a valued reward. Other employee benefits such as retirement savings plans, health care coverage, and paid time off are not contingent on the performance of employees but are based on seniority or attendance. Interpersonal Rewards The manager has some power to distribute such interpersonal rewards as status and recognition. By assigning individuals to prestigious jobs, the man- ager can attempt to improve or remove the status a person possesses. However, if co-workers do not believe that a person merits a particular job, it is likely that status will not be enhanced. By reviewing performance, managers can, in some situations, grant what they consider to be job changes to improve status. The manager and co-workers both play a role in granting job status.

Chapter 7 Evaluation and Rewards Influence Behavior 171

Lee Memorial Health System in Fort Myers, Florida, found out how powerful a simple recognition program can be. Lee Memorial received an award for being one of the top health care networks. Management wanted to thank its 5,000-plus employees for the reward the firm received. The firm decided that a customized key chain for each employee was the answer. The key chains had the words “Valued Employee Since ,” displayed on the top of the brass emblem with the employee’s year-of-hire date.

The excitement stirred by the key chains was stunning. Everyone was excited, talking about the key chains, and pleased to be recognized. The employees appreciated the fact that each employee was recognized by their hire date. The time and minimal cost of $4.50 per employee for the “key chain recognition” was well worth the gesture.34

Promotions For many employees, promotion does not happen often; some employees never experience it in their careers. The manager making a promotion reward decision attempts to match the right person with the job. Criteria often used to reach promotion decisions are performance and seniority. Performance, if it can be accurately assessed, is often given significant weight in promotion reward allocations.

Intrinsic Rewards Completion The ability to start and finish a project or job is important to some individuals. These people value what is called task completion. Some people have a need to complete tasks, and the effect that completing a task has on a person is a form of self-reward. Opportu- nities that allow such people to complete tasks can have a powerful motivating effect.

Achievement Achievement is a self-administered reward that is derived when a person reaches a challenging goal. McClelland has found that there are individual differences in striving for achievement.35 Some individuals seek challenging goals, while others tend to seek moderate or low goals. In goal-setting programs, it has been proposed that difficult goals result in a higher level of individual performance than do moderate goals. However, even in such programs, individual differences must be considered before reaching conclu- sions about the importance of achievement rewards.

Autonomy Some people want jobs that provide them with the right and privilege to make decisions and operate without being closely supervised. A feeling of autonomy could result from the freedom to do what the employee considers best in a particular situation. In jobs that are highly structured and controlled by management, it is difficult to create tasks that lead to a feeling of autonomy.

Personal Growth The personal growth of any individual is a unique experience. An individ- ual who is experiencing such growth senses his or her development and can see how his or her capabilities are being expanded. By expanding capabilities, a person can maximize or at least satisfy skill potential. Some people often become dissatisfied with their jobs and organizations if they are not allowed or encouraged to develop their skills. What is important to you in terms of rewards? This chapter’s You Be the Judge feature asks for your ranking of 10 rewards.

Rewards Interact The general assumption has been that intrinsic and extrinsic rewards have an independent and additive influence on motivation. That is, motivation is determined by the sum of the person’s intrinsic and extrinsic sources of motivation. This straightforward assumption has been ques- tioned by several researchers. Some have suggested that in situations in which individuals are experiencing a high level of intrinsic rewards, the addition of extrinsic rewards for good perfor- mance may cause a decrease in motivation.36 Basically, the person receiving self-administered

172 Part Two Understanding and Managing Individual Behavior

feelings of satisfaction is performing because of intrinsic rewards. Once extrinsic rewards are added, feelings of satisfaction change because performance is now thought to be due to the extrinsic rewards. The addition of the extrinsic rewards tends to reduce the extent to which the individual experiences self-administered intrinsic rewards.

The argument concerning the potential negative effects of extrinsic rewards has stimu- lated a number of research studies. Unfortunately, these studies report contradictory results.37 Some researchers report a reduction in intrinsic rewards following the addition of extrinsic rewards for an activity.38

Other researchers have failed to observe such an effect.39 A review of the literature found that 14 of 24 studies supported the theory that extrinsic rewards reduced intrinsic motivation.40 However, 10 of the 24 studies found no support for the reducing effect theory. Managers need to be aware that no scientifically based and reported study substantiates that extrinsic rewards have a negative effect on intrinsic motivation.

Administering Rewards Managers are faced with the decision of how to administer rewards. Three major theoreti- cal approaches to reward administration are: (1) positive reinforcement, (2) modeling and social imitation, and (3) expectancy.

Positive Reinforcement In administering a positive reinforcement program, the emphasis is on the desired behavior that leads to job performance rather than performance alone. The basic foundation of administering rewards through positive reinforcement is the relationship between behavior and its conse- quences. This relationship was discussed earlier in the chapter. While positive reinforcement can be a useful method of shaping desired behavior, other considerations concerning the type of reward schedule to use are also important. This relates to the discussion of continuous and inter- mittent schedules presented earlier. Management should explore the possible consequences of different types of reward schedules for individuals. It is important to know how employees respond to continuous, fixed-interval, and fixed-ratio schedules.

Modeling and Social Imitation Many human skills and behaviors are acquired by observational learning or, simply, imita- tion. Observational learning equips a person to duplicate a response, but whether the

WHICH REWARD MOTIVATES YOU? Many theories attempt to explain what motivates employees. Nu- merous experts believe that rewards can be very motivational and help encourage high levels of performance. Think about which of the following rewards would be most motivational for you at work (rank-order your top five choices). Would the same rewards moti- vate your colleagues? Your supervisor?

%%1. Pay, bonuses, and other pay incentives

%%2. Time off

%%3. Flexible schedule

%%4. Advancement and promotion opportunities

%%5. Recognition from supervisor, peers, etc.

%%6. Ownership or profit-sharing

%%7. Autonomy

%%8. Personal challenge and growth

%%9. Fun at work

10. Social support and friends

11. Job security

12. Interesting work

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response actually is imitated depends on whether the model person was rewarded or pun- ished for particular behaviors. If a person is to be motivated, he or she must observe models receiving reinforcements that are valued. To use modeling to administer rewards, managers must determine who responds to this approach. In addition, selecting appropriate models is a necessary step. Finally, the context in which modeling occurs needs to be considered. That is, if high performance is the goal and it is almost impossible to achieve that goal because of limited resources, the manager should conclude that modeling is not appropriate.41

Expectancy Theory Some research suggests that expectancy theory (discussed in Chapter 5) provides an important basis for administering rewards.42 From a rewards administration perspective, the expectancy approach, like the other two methods of administering rewards, requires managerial action. Managers must determine the kinds of rewards employees desire and do

modeling A method of administer- ing rewards in which employees learn the behaviors that are desir- able by observing how others are rewarded. It is assumed that behaviors will be imitated if the observer views a distinct link between performance and rewards.

PAY PARITY STILL AN ISSUE IN THE WORKPLACE Although the gap has narrowed, employed women on average still receive less pay than employed men. According to the Bureau of La- bor Statistics, women’s earnings were approximately 83 percent of men’s earnings in 2014. Although this finding represents some im- provement since 1979, when women earned 62 percent as much as their male counterparts, there remains a gender-based pay gap. Does this mean women are being treated inequitably or unethically? Or could this pay gap merely reflect differences in the types of jobs held by women and men or the differences in seniority between the two groups? Or could it be that some women do not negotiate as effec- tively as men for higher salaries? The cause for the pay gap can be explained by all of these factors. However, significant pay differentials can still be found when women’s pay is analyzed by age, education, and within occupation. This suggests that pay discrimination is occur- ring in many organizations.

In terms of age, the older a woman is, the less she makes relative to a man. Women in their peak earning years aged 35 to 44 and 45 to 54 make approximately 81 percent and 77 percent, respectively, as much as their male counterparts. This is an important issue when con- sidering the increasing number of female-led single-parent house- holds. When considering education, compared to men with a college degree, women with a college degree have seen their earnings grow at a faster rate. From 1970 to 2014, female college graduates’ earnings increased by 40 percent (compared to a 37 percent increase for male college graduates’ earnings), but this positive trend has not been suf- ficient to remove the male–female pay gap. According to the Institute for Women’s Policy Research, recent data suggest that women will not reach pay parity with men until 2059. Although more women than ever before are working in highly paid occupations (doctors, lawyers, busi- ness executives, etc.), there are substantial pay gaps within these and other occupations. While other gaps are somewhat smaller, they exist for virtually every job category. In addition, a larger percentage of women than men work in lower-paid occupations such as education and health care.

The 1963 amendment to the Fair Labor Standards Act known as the Equal Pay Act requires equal pay for equal work for men and women. Equal work is defined as work requiring equal skills, effort, and responsibility under similar working conditions. Since the passage of this legislation, the female–male pay gap has clearly narrowed. As the figures cited above indicate just as clearly, however, a great deal remains to be done.

In 2007, the U.S. Supreme Court ruling in Ledbetter v. Goodyear Tire & Rubber Co. made significant changes to how unequal pay cases would be interpreted under Title VII of the Civil Rights Act. Until then, the Equal Employment Opportunity Commission (EEOC) assumed that cases should focus on whether there are inequitable differences between the current pay of employees who are “similarly situated” (have similar jobs). The Supreme Court ruled that the focus should be on actual pay decisions such as the fairness of starting pay, merit pay increases, and promotional pay increases. This decision led to the passage of the Ledbetter Fair Pay Act by Congress in 2009 that modified a key compo- nent of the Court’s decision, basically extending the period in which employees can file a claim of pay discrimination against their employers. The full effect of these changes won’t be known for several years, but companies and hiring managers would be well-advised to make sure their pay decisions are not discriminatory against women.

While there are frequently legitimate reasons for pay differentials between women and men in comparable jobs (length of service in the position, for example), unfair differences still exist. To reward employ- ees differently based solely on gender is not only unethical and illegal, it is poor business practice as well.

Sources: Bureau of Labor Statistics, “Women in the Labor Force: A Databook,” December 2015, and “Highlights of Women’s Earnings in 2014,” November 2015, http://www.bls.gov, accessed March 30, 2016; Eric Morath, “Gender Wage Gap Smallest on Record, but Women Still Earn 21% Less Than Men,” The Wall Street Journal, http://blogs.wjs.com, accessed March 30, 2016; “The Uncomfortable Questions You Should Be Asking about Pay Equity,” Knowledge @ Wharton, http://knowledge.wharton.upenn.edu, accessed March 30, 2016; Society for Human Resource Management, “Managing Pay Equity,” April 10, 2012, http://www.shrm.org.

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whatever is possible to distribute those rewards. Or they must create conditions so that what is available in the form of rewards can be applied. In some situations, it simply is not possible to provide the valued and preferred rewards. Therefore, managers often have to increase the desirability of other rewards.

A manager can, and often will, use principles from each of the three methods of admin- istering rewards—positive reinforcement, modeling, and expectancy. Each of these methods indicates that employee job performance is a result of the application of effort. To generate the effort needed to achieve desirable results, managers can use positive reinforcers, modeling, and expectations.

What combination of methods to use is not the only issue in administering rewards. Organizational resources, competitive influences, labor market constraints, and govern- ment regulations are but a few of the many factors that must be considered in developing and maintaining reward programs. One particular issue that is receiving increasing atten- tion is that of gender equity in reward administration. The OB Matters box on page 173 illustrates that women’s salaries still trail those of men. To the extent that this reflects gender differences within the same jobs, this represents at least an ethical issue if not a legal one.

Rewards Affect Important Organizational Outcomes Rewards affect employee perceptions, attitudes, and behavior in a variety of ways. In turn, organizational efficiency and effectiveness are affected. Three important organizational concerns influenced by rewards are turnover and absenteeism, performance, and commit- ment. We will briefly examine each of these.

Turnover and Absenteeism Some managers assume that high turnover is a mark of an effective organization. This view is somewhat controversial because a high quit rate means more expense for an organiza- tion. However, some organizations would benefit if disruptive and low performers quit.43 Thus, the issue of turnover needs to focus on the frequency and on who is leaving.

Ideally, if managers could develop reward systems that retained the best performers and caused poor performers to leave, the overall effectiveness of an organization would improve. To approach this ideal state, an equitable and favorably compared reward system must exist. The feelings of equity and favorable comparison have an external orientation. That is, the equity of rewards and favorableness involve comparisons with external parties. This orientation is used because quitting most often means that a person leaves one organi- zation for an alternative elsewhere.

There is no perfect means for retaining high performers. It appears that a reward system based on merit should encourage most of the better performers to remain with the organi- zation. There also has to be some differential in the reward system that discriminates between high and low performers, the point being that the high performers must receive significantly more extrinsic and intrinsic rewards than the low performers.

Absenteeism is a costly and disruptive problem facing managers.44 It is costly because it reduces output and disruptive because it requires that schedules and pro- grams be modified. Absenteeism in the United States results in the estimated loss of more than $670 per employee.45 According to a 2012 study by the Integrated Benefits Institute, poor employee health costs the U.S. economy $576 billion a year. Of that amount, $227 billion is from employees who report to work but illness keeps them from performing at their best and $232 billion from medical treatment and pharmacy-related

Chapter 7 Evaluation and Rewards Influence Behavior 175

costs.46 Employee motivation will remain high if an individual feels that attendance will lead to more valued rewards and fewer negative consequences than alternative behaviors.

Managers appear to have some influence over attendance behavior. They have the ability to punish, establish bonus systems, and allow employee participation in develop- ing plans. Whether these or other approaches will reduce absenteeism is determined by the value of the rewards perceived by employees, the amount of the rewards, and whether employees perceive a relationship between attendance and rewards. These same characteristics appear every time we analyze the effects of rewards on organiza- tional behavior.

Job Performance Behaviorists and managers agree that extrinsic and intrinsic rewards can be used to moti- vate job performance. It is also clear that certain conditions must exist if rewards are to motivate good job performance: The rewards must be valued by the person, and they must be related to the level of job performance that is to be motivated.

Chapter 5 presented expectancy motivation theory, which stated that every behavior has associated with it (in a person’s mind) certain outcomes or rewards or punishments. In other words, an assembly-line worker may believe that, by behaving in a certain way, he or she will get certain things. This is a description of the performance-outcome expec- tancy. The worker may expect that a steady performance of 10 units a day eventually will result in transfer to a more challenging job. On the other hand, the worker may expect that a steady performance of 10 units a day will result in being considered a rate-buster by co-workers.

Each outcome has a valence or value to the person. Outcomes such as pay, promotion, a reprimand, or a better job have different values for different people because each person has different needs and perceptions. Thus, in considering which rewards to use, a manager has to be astute at considering individual differences. If valued rewards are used to moti- vate, they can result in the exertion of effort to achieve high levels of performance.

Organizational Commitment There is little research on the relationship between rewards and organizational commit- ment. Commitment to an organization involves three attitudes: (1) a sense of identification with the organization’s goals, (2) a feeling of involvement in organizational duties, and (3) a feeling of loyalty to the organization.47 Research evidence indicates that the absence of commitment can reduce organizational effectiveness.48 People who are committed are less likely to quit and accept other jobs.49 Thus, the costs of high turnover are not incurred. In addition, committed and highly skilled employees require less supervision. Close supervi- sion and a rigid monitoring control process are time-consuming and costly. Furthermore, a committed employee perceives the value and importance of integrating individual and organizational goals. The employee thinks of his or her goals and the organization’s goals in personal terms.

Intrinsic rewards are especially important for the development of organizational com- mitment. Organizations able to meet employee needs by providing achievement opportuni- ties and by recognizing achievement when it occurs have a significant impact on commitment. Thus, managers need to develop intrinsic reward systems that focus on personal importance or self-esteem, integrate individual and organizational goals, and design challenging jobs.

valence The strength of a person’s preference for a particular outcome.

commitment A sense of identifica- tion, involvement, and loyalty expressed by an employee toward the company.

176 Part Two Understanding and Managing Individual Behavior

Innovative Reward Systems The typical list of rewards that managers can and do distribute in organizations has been discussed. We all know that pay, fringe benefits, and opportunities to achieve challenging goals are considered rewards by most people. It is also generally accepted that rewards are administered by managers through such processes as reinforcement, modeling, and expec- tancies. Managers are experimenting with newer and innovative, yet largely untested, reward programs. Seven different approaches to rewards that are not widely tested are skill-based pay, broadbanding, concierge services, team-based rewards, part-time benefits, gain-sharing, and employee stock ownership plans.

Skill-Based Pay Skill-based pay is being used by a growing number of firms. In traditional compensation systems, workers are paid on the basis of their jobs. The hourly wage rate depends primar- ily on the job performed. In a skill-based plan, employees are paid at a rate based on their ability to develop and apply personal skills.50 Typically, employees start at a basic initial rate of pay; they receive increases as their skills develop. Their pay rates are based on skill levels, no matter which jobs they are assigned.

In conventional pay systems, the job determines the pay rate and range. In the skill- based plan, however, the skills developed by employees are the key pay determinants. The skill-based pay plan approximates how professionals are compensated. In many organiza- tions, professionals who do similar work are difficult to separate in terms of contributions made. Thus, surveys of what other firms pay professionals are used to establish pay grades and maturity curves. In skill-based plans, pay increases are not given at any specific time because of seniority. Instead, a raise is granted when employees demonstrate their skills to perform particular jobs.

Skill-based pay systems have at least four potential advantages:51 (1) Because employees have more skills, the organization increases its flexibility by assigning workers to different jobs. (2) Because pay is not determined on the basis of the classification to which the job is assigned, the organization may need fewer distinct job classifications. (3) Fewer employees are needed because more workers are interchangeable. (4) The organization may experience reductions in turnover and absenteeism. Skill-based pay has worked well for a division of Dow Chemical in La Porte, Texas. At this plant, employees learn all of the jobs to run a particular operation. The training takes about three years, and when it is successfully com- pleted employees make approximately $12,000 a year more than when they started.52

A good place to begin the search and identification of key skills to perform well is with the already-exceptional performers. LEGO Systems, Inc., identified the skills of its top performers: technical skills, team achievement skills, and personal skills. Then, through focus groups and interviews with these top performers, the skills were clarified. LEGO used this information to build a competency model that served as the basis for linking pay to specific skills/competencies.53

Broadbanding An element of financial reward that organizations are having problems with is the system of grading. Most systems have a large number of grades. The multiple grade approach is often out of alignment with the flatter, more team-oriented organizational designs institutions are moving toward. To counter this poor alignment, some firms are adopting what is called a banding or broadbanding approach. Broadbanding involves reducing numerous pay grades to a relatively few broadband grades. According to a recent survey, approximately 16 percent

broadbanding A pay system that reduces the actual number of pay grades to a relatively few broadly based pay grades. Places an emphasis on titles, grades, and job descriptions.

Chapter 7 Evaluation and Rewards Influence Behavior 177

of North American firms use broadband (or a combination of traditional and broadband) pay structures.54

An example of broadbanding would be placing all managers into one band; all techni- cians into a second band; all clerical personnel into a third band; and all part-time employ- ees into a fourth band. Broadbanding emphasizes titles, grades, and job descriptions as presented in Exhibit 7.4.

Rather than concentrating on moving up a series of pay grades in a vertical system, employees could spend most, if not all, of their careers in a single band and move laterally as they acquire new skills or improve their performance. This type of pay system allows a person who needs to develop new skills to be placed in a lower band, but continue to be paid more.

How many pay bands are needed? There is no correct answer. Surveys suggest that orga- nizations using broadbanding have from 1 to 18 bands.55 The number of bands might depend on the levels in the firm’s hierarchy, the key areas of accountability, or natural job clusters. General Electric has elected to use five bands for managerial personnel (professional, senior professional, leadership, executive, and senior executive). The results of GE’s approach have not been subjected to careful analysis. Some critics of broadbanding at GE claim it is too gimmicky and is not as good as a well-designed, multiple-grade pay system.

At Scottish Bank, broadbanding was introduced with changes initiated by the chief executive officer. Fifteen pay grades covering all white-collar staff up to senior manage- ment were replaced by five broadbands.56 Incremental pay progression and cost-of-living reviews were eliminated and totally flexible, merit-based increases were introduced. After about one year under the five broadband system, a number of modifications were made. Four distinct job family bands with levels in each were introduced. Also, pay progression to the band midpoint was guaranteed for effective performers within four years. The band also installed minimum pay increases for a growth in responsibilities and for the development of additional competencies. After these modifications, the broadband approach is now well received throughout the bank.

Broadbanding can make it easier to pay for skills and simplify the problem of placing employees and/or a job into a pay grade. It is easier because there are fewer pay grades.

EXHIBIT 7.4 Broadband Categories

Managerial

$40,000 $150,000

$50,000 $160,000

Clerical

$25,000 $60,000

$12,000 $90,000

Technical

Part-Time

178 Part Two Understanding and Managing Individual Behavior

If a firm has 70 pay grades, the differences between each grade are small. What is the difference between a person being a 42 or a 43 grade? Broadbanding appears to have more flexibility for a person to make a lateral career move without punishing him or her by reducing pay. Traditional pay systems usually give no credit for the skills a person learned in the previous job. The person is simply paid on the basis of the new job. Why would someone be interested in moving laterally when everything is not included in the pay calculation?

Concierge Services Employees at financial-services provider USAA don’t have to drive to the pharmacy after work or on the weekend to pick up their prescriptions; a concierge service will take care of it while they work.57 Similarly, S.C. Johnson helps its employees balance work-life activities by offering a variety of concierge services, from picking up grocer- ies to shopping for the best deals on car insurance.58 This kind of employee benefit reward is not new, but it is attracting attention because of labor shortages, the clamor to balance work and life, the evaluation in benefit programs, and the Internet’s ability to access services.59

The Society for Human Resource Management’s 2015 Benefits Survey found that only 3 percent of employers report that they offer concierge services. Nevertheless, Fortune magazine’s 2016 ranking of the 100 Best Companies to Work For includes 32 firms offer- ing concierge services, including Hyatt Hotels, Mayo Clinic, Nordstrom, and Google.60

In many cases employees still have to pay for the most lavish services such as massages, but employers underwrite the location of the concierge. The availability of a concierge service for a wide range of “must do” activities is considered an attractive part of working for a particular firm. Freeing the employee to concentrate on performance can be consid- ered an employer benefit worth the work and effort.

Team-Based Rewards Individual pay-for-performance reward systems do not properly fit an organization that is designed around or uses teams. W. Edwards Deming (an originator of the total quality management approach) and other reward experts have clearly warned against putting indi- viduals, who need to cooperate, under a reward system that fosters competition. Teams need to cooperate within the team structure and process. It is still difficult in a country that prides itself on individualism, such as the United States, to persuade employees to work together, to trust each other, and to be committed to group goals above individual work- related goals. People with strong individualism values become worried and skeptical about the so-called freeloader who doesn’t perform well but gets the same rewards as everyone else.61 It isn’t fair. There are ways, however, to encourage poor performers to improve or leave. There are also methods to give special recognition and show respect to outstanding team leaders and performers.62

The design of a team-based reward system should follow the groupings in the overall organizational design. In situations where teams are relatively independent and measurable goals can be set and evaluated, rewards can be based on goal accomplishment.

In situations where teams are interdependent, a plant, division, or area reward plan may be the best system. Management must carefully analyze the independence–interdependence conditions.

Providing rewards to project teams is somewhat different. Since project team perfor- mance is usually short term and a onetime occurrence, it seems more appropriate to provide

Chapter 7 Evaluation and Rewards Influence Behavior 179

members with bonuses instead of permanent, base-pay merit rewards. Managers need to be consistent about how these teams are evaluated and should try to unite these short-term teams through recognition.63

The U.S. steel company, Nucor, which produces about 27 million tons of steel annually, has been rewarding its employee teams since 1966. Organized into groups of between 12 and 20 people (including supervisors and maintenance workers), Nucor pays team members based on the team’s per- formance. HR managers at Nucor are careful to make sure the team-based pay supports the company’s business strategy and doesn’t undermine the individual employee’s initiative. Nucor’s team-based rewards program must be working; the company has been profitable each quarter since 1966 and fol- lows a no-layoff policy.64

Although teams are here to stay, companies need to be careful in how they reward teams. Recent research suggests that team members feel strongly about being paid in a fair manner vis-á-vis other team members.65 Companies need to apply team rewards consistently across team members and across time. Also, pay is not the only important motivator for team members; job security, challenging tasks, leadership style, and working with peers in a friendly working environment are important.66 In sum, more research is needed to understand how to develop and manage effective team-based rewards.67 Nucor’s methods to reward teams appear to be working. However, additional long-term research into how other organizations are using team-based rewards is needed.68 The Information You Can Use feature offers sound advice about team-based rewards systems.

Part-Time Benefits The talent shortage has resulted in more employers relying more on people who work part- time. The U.S. Bureau of Labor Statistics defines “part-time” as working less than 35 hours per week. The number of part-timers (and their share of the workforce) has been growing in recent years. In February 2016, there were almost 27 million part-timers in the U.S. workforce.69 About 78 percent of employers provide vacation, holiday, and sick leave benefits, while about 65 percent offer some form of health care benefits.70 Providing benefits to part-timers can be interpreted as a reward that is not mandatory. Companies such as UPS, REI, and Starbucks are among those firms building a reputation for providing part-time employees with generous benefits packages, including health insurance, as a way to attract and retain top talent.

Over the next several years, it is expected that many older workers will transition to part-time jobs. By 2024, the Bureau of Labor Statistics estimates that almost 40 percent of the workers in the United States will be 55 years and older.71 In order to prevent a major loss of experience and human talent, companies are offering older workers flexible work arrangements and benefits if they stay on as part-timers. For example, CVS Caremark provides benefits and flexible schedules to its older employees, who make up more than 18 percent of the firm’s workforce.72 Scripps Health offers some of its hard-to-replace employees, like nurses, programmers, and pharmacists, a phased-retirement plan that allows them to work part-time while drawing a salary and benefits.73

GUIDELINES FOR REWARDING TEAMS

1. Clearly identify the team.

2. Make sure the people on the team get along. If not, you will have ongoing problems.

3. Recognize individual contributions even in a team-based reward plan.

4. Be patient for the team-based approach to take hold. It is different than individual-based pay, and it takes time for the culture to change.

5. Clearly set team goals and link rewards to their accomplishment.

Information You Can Use

180 Part Two Understanding and Managing Individual Behavior

Gain-Sharing Gain-sharing plans provide employees with a share of the financial benefits the orga- nization accrues from improved operating efficiencies and effectiveness.74 Probably the best-known example of gain-sharing is the Scanlon plan, named after its devel- oper, Joseph Scanlon.75 A typical Scanlon plan measures the labor costs required to produce goods or services during a base period. If future labor costs are less, a portion of the savings realized is shared with the employees responsible for the cost savings. In some companies, bonuses paid to workers under a Scanlon plan can equal or exceed the employee’s usual salary. Scanlon plan companies typically rely on elaborate suggestion systems for receiving employee recommendations for operating efficiencies.

In a typical gain-sharing plan, an organization uses a formula to share financial gains with all employees in a single plant or location.76 The organization establishes a historical base period of performance and uses this to determine whether or not gains in performance have occurred. Typically, only controllable costs are measured for the purpose of computing the gain. Unless a major change occurs in the organization’s products or technology, the historical base figure stays the same over the duration of the plan.77 The organization’s performance is always compared to the time period before it implemented the gain-sharing plan. General Electric, Motorola, 3M, and TRW are among the thousands of firms using gain-sharing plans. GE has more than 10 gain- sharing plans in use.

Successful gain-sharing programs require a strong commitment to operating efficien- cies from both management and employees. In turn, such a commitment requires open communications, information sharing, and high levels of trust between all parties.

Goal-sharing is a follow-on to gain-sharing. Gain-sharing rewards employees based on financial performance. Goal-sharing has a broader approach. It refers to group incentive programs that reward employees for meeting specific goals. These goals often reflect job performance, quality, and service within a unit of a firm.78

At Weyerhaeuser in Federal Way, Washington, employees have no direct control over many of the financial aspects of the plant’s success. The employees can make a difference in nonfinancial areas such as quality, safety, and efficiency. The employees set goals in these areas. By accomplishing the goals, the Weyerhaeuser employees earn a bonus. At Corning, Inc., the goal-sharing bonus is paid at the end of the year with a check that is separate from the regular paycheck. Corning has calculated that it receives $7.87 per each goal-sharing dollar it pays to employees.

Employee Stock Ownership Plans ESOPs, as employee stock ownership plans are commonly called, are a relatively recent development in reward systems. They are somewhat like gain-sharing plans, a form of group incentive. Under ESOPs, companies make contributions of stock (or cash to pur- chase stock) to employees.79 Typically, but not always, individual employee allocation is based upon seniority. ESOPs can provide a substantial nest egg for employees upon retir- ing or leaving the company. Organizations can benefit from improved performance from employees who now have a very direct financial stake in the company. An increasing num- ber of organizations have instituted ESOPs, including Procter & Gamble, Lockheed, Brunswick Corporation, and Anheuser-Busch. Based in Lakeland, Florida, Publix Super Markets is the largest employee-owned company in the United States with more than 175,000 employees. Smaller firms, like Bob’s Red Mill Natural Foods and Zachary’s Chicago Pizza, also have implemented ESOPs.80

Chapter 7 Evaluation and Rewards Influence Behavior 181

Research on the effectiveness of employee stock ownership plans is mixed. Some com- panies, such as Brunswick, have attributed significant organizational performance improve- ments to the plans. Antioch Publishing Company has seen sales increase 13-fold since it instituted its ESOP. Company management reports that the ESOP has been important to that growth by making it easier to attract and retain good employees.81 Other companies, however, see no apparent benefit from their plans. Like any other reward system, results will vary as a function of how well management introduces and implements the plan. Adminis- tering rewards is perhaps one of the most challenging and frustrating tasks that managers must perform.

Line of Sight: The Key Issue Promotions, increased pay, recognition for a job well done, or the opportunity to own a part of an organization can be motivators if there is a clear line of sight between what the employee is doing and the reward. Line of sight means that the employee perceives that there is a “real” linkage between his or her performance and the rewards received. In the case of extrinsic rewards, organizations need to have systems that clearly tie rewards to desired performance.

Gain-sharing, stock options, and other extrinsic systems must be built around the line- of-sight concept. Unfortunately, accomplishing a clear line of sight is difficult. Merit-pay

WHICH REWARD MOTIVATES YOU? It’s safe to say that not all employees are motivated by the same rewards. However, decades of employee surveys suggest that several factors consistently play an important role when it comes to motivating workers: good wages, appreciation for work done, job security, promotion and growth within the organization, inter- esting work, and relationships with co-workers. The rank order of these factors has varied over the years. For example, a survey done in 1946 showed that “need to be appreciated for work done” was the top reward sought by respondents. A 1992 survey reported that “good wages” was the most important motivational factor at work. And a 2014 survey asked, “What motivates you to excel and go the extra mile?” and revealed some interesting results. More than 20 percent of the respondents named relation- ships with peers—not money—as the top motivating factor in their work life. Given the free market orientation of many employees today, and the recent trend of changing jobs frequently as the economy stabilizes, this increased emphasis on extrinsic rewards will continue.

Research suggests that the current workforce can be moti- vated in more ways than just good pay. The 5 Rs of motivation are

Responsibility

Respect

Relationships

Recognition

Rewards

One more reward needs to be added to the 5 Rs, and that is jobs that afford work–life balance and flexibility. For example, Millennial workers and employees with child care or elder care needs tend to be more motivated (and retained longer) by jobs that allow them to work hard on their careers but also pursue their family and life interests. Companies should design jobs that allow employees to “own” them and feel accountable for their results. Respectful organizations not only say they value employees, but also show it by having “pro-people practices” such as continuous learning, extensive training, empowered teams, and equity in pay and promotion decisions. Relationships such as coaching, teach- ing, and supporting employees can produce favorable outcomes. Hard work and results should be recognized with promotions and public accolades. Rewards need to be awarded and allocated to those employees who most deserve them.

Sources: Victor Lipman, “New Study Answers: What Motivates Employees to ‘Go the Extra Mile?’” Forbes, http://www.forbes.com, accessed March 31, 2016; Laura Fitzpatrick, “We’re Getting Off the Ladder,” Time, May 25, 2009, p. 45; Ann Pomeroy, “The Future Is Now,” HR Magazine, 52, no. 9 (September 2007), pp. 46–52; R. Brayton Bowen, “Today’s Workforce Requires New Age Currency,” HR Magazine 49, no. 3 (March 2004), pp. 101–7; Carolyn Wiley, “What Motivates Employees According to Over 40 Years of Motivation Surveys,” International Journal of Manpower 18, no. 3 (1997) pp. 263–80.

Y O U B E T H E J U D G E C O M M E N T

182 Part Two Understanding and Managing Individual Behavior

systems claim that they reward performance. Despite the notion of merit, employees do not always see or perceive the connection between rewards and performance. The practice of pay secrecy suggests that line of sight is difficult to achieve. Secret pay actions cloud any line-of-sight effort.

Intrinsic rewards are personal and come from the employee. However, organizations can influence intrinsic rewards and employees’ perception of them by providing jobs that are challenging and by providing clear feedback on job performance. The design of a job should be carefully weighed when considering the line-of-sight issue. When jobs are designed with these issues in mind, the intrinsic rewards of working on the job become a top priority. Not all jobs can be enriched so that desired intrinsic rewards are provided to the employee. However, when jobs can be designed and enriched to provide a clear line of sight for matching intrinsic rewards and performance, the results have been positive. For example, the Mary Kay cosmetics company has designed jobs by making them autonomous and responsible. Sales representatives in most cases have found the jobs intrinsically rewarding and have linked their intrinsic rewards with exceptional perfor- mance. The line of sight of the job, rewards, and performance is validated constantly at Mary Kay.82

Summary of Key Points

∙ Performance evaluation serves several major purposes, including (1) providing a basis for reward allocation, (2) identifying high-potential employees, (3) validating the effec- tiveness of employee selection procedures, (4) evaluating previous training programs, and (5) facilitating future performance improvement.

∙ Feedback sessions should use objective information to help guide the evaluated employee to improve or sustain performance.

∙ A 360-degree feedback program involves the use of multiple sources of evaluation information collected from a full circle of evaluators (e.g., supervisors, subordinates, peers, and others).

∙ Reinforcement theory suggests that behavior is influenced by its consequences and that it is possible to affect behavior by controlling such consequences. Desired behaviors are reinforced through the use of rewards, while undesired behaviors can be extinguished through punishment. The timing of rewards and punishments is extremely critical and is controlled through the use of various reinforcement schedules.

∙ A useful model of individual rewards would include the suggestion that ability, skill, and experience, in addition to motivation, result in various levels of individual performance. The resulting performance is then evaluated by management, which can distribute two types of rewards: intrinsic and extrinsic. These rewards are evaluated by the individual receiving them and, to the extent that they result in satisfaction, motivation to perform is enhanced.

∙ Organizational rewards can be classified as either extrinsic or intrinsic. Extrinsic rewards include salary and wages, fringe benefits, promotions, and certain types of interpersonal rewards. Intrinsic rewards can include such things as a sense of comple- tion, achievement, autonomy, and personal growth.

∙ An effective reward system would encourage the best performers to remain with the organization, while causing the poorer performers to leave. To accomplish this, the system must be perceived as equitable. Additionally, the reward system should mini- mize the incidence of absenteeism. Generally, absenteeism will be less if an

Reality Check Now how much do you know about performance evaluation?

6. According to the terminology associated with reinforcement theory, is the decline in a response rate because of nonreinforcement. a. eradication b. extinction c. destruction d. attrition

7. In the United States, the annual cost of lost productivity due to absenteeism is approximately $ billion. a. 415 b. 360 c. 576 d. 212

8. True or false: Research suggests that giving extrinsic rewards to an employee who already has a high level of intrinsic motivation may result in the employee being less motivated. a. True b. False

9. True or false: Companies are increasingly offering flexible work arrangements and benefits to experi- enced older employees who are willing to delay retirement and continue working on a part-time basis. a. True b. False

10. plans provide employees with a share of the financial benefits the organization receives from improved operating efficiencies. a. Variable bonus b. Cafeteria benefit c. Continuous suggestion d. Gain-sharing

REALITY CHECK ANSWERS

Before After

1. a 2. b 3. a 4. c 5. c 6. b 7. c 8. a 9. a 10. d Number Correct Number Correct

183

employee feels that attendance will lead to more valued rewards and fewer negative consequences.

∙ Both extrinsic and intrinsic rewards can be used to motivate job performance. For this to occur, certain conditions must exist: The rewards must be valued by the employee, and they must be related to the level of job performance that is to be motivated.

∙ In addition to standard organizational rewards such as pay, fringe benefits, advance- ment, and opportunities for growth, some organizations are experimenting with more innovative reward programs. Examples of such approaches include skill-based pay, broadbanding, concierge services, team-based rewards, part-time benefits, gain-sharing, and employee stock ownership plans.

184 Part Two Understanding and Managing Individual Behavior

Background Proper diagnosis is a critical aspect of effective motiva- tion management. Often managers become frustrated because they don’t understand the causes of observed performance problems. They might experiment with various “cures,” but the inefficiency of this trial- and-error process often simply increases their frustration level. In addition, the accompanying misunderstanding adds extra strain to the manager–subordinate relation- ship. This generally makes the performance problem even more pronounced, which prompts the manager to resort to more drastic responses, and a vicious, down- ward spiral ensues.

The performance diagnosis model in Exhibit 7.5 of- fers a systematic way for managers and subordinates to collaboratively pinpoint the cause(s) of dissatisfaction and performance problems. It assumes that employees

will work hard and be good performers if the work environment encourages these actions. Consequently, rather than jumping to conclusions about poor perfor- mance stemming from deficiencies in personality traits or a bad attitude, this diagnostic process helps manag- ers focus their attention on improving the selection, job design, performance evaluation, and reward allocation systems. In this manner, the specific steps necessary to accomplish work goals and management’s expectations are examined to pinpoint why the worker’s perfor- mance is falling short.

The manager and low-performing subordinate should follow the logical discovery process in the model, step by step. They should begin by examining the current percep- tions of performance, as well as the understanding of performance expectations, and then proceed through the model until the performance problems have been identi- fied. The model focuses on seven of these problems.

Exercise

Exercise 7.1: Diagnosing a Work Performance Problem

1. Evaluations can be either judgmental or developmental in nature. Give examples of when a manager should use each type.

2. When evaluating a person’s performance, who should be included in providing 360-degree feedback?

3. What intrinsic rewards are important to you personally as a student? 4. From a managerial perspective, why is it impractical to provide continuous reinforce-

ment in work environments? If it were practical, would it be a good idea? Explain. 5. The degree of employee satisfaction with the organization’s reward system will

significantly affect how successful the system is in influencing performance. Based on the research literature, what do we know about what influences whether individuals will be satisfied with the rewards they receive?

6. What are the most important extrinsic rewards you receive from a job you currently hold (or held in the past)?

7. The basic purpose of an evaluation is to provide information about work performance, but the information can also be used for other purposes. Name five other uses for an employee evaluation.

8. Why are team-based reward systems becoming more widely used? 9. This chapter discusses a number of innovative reward systems. Can you suggest other

innovative approaches organizations might use? Identify potential problems with the approaches you suggest and try to find ways of overcoming them.

10. The gap between women’s and men’s pay is still considerable. What steps should employers and managers take to close this gap in a fair and consistent manner?

Review and Discussion Questions

Chapter 7 Evaluation and Rewards Influence Behavior 185

A. Perception problem. “Do you agree your performance is below expectations?” A perception problem suggests that the manager and subordinate have different views of the subordinate’s current perfor- mance level. Unless this disagreement is resolved, it is futile to continue the diagnostic process. The

entire problem-solving process is based on the prem- ise that both parties recognize the existence of a prob- lem and are interested in solving it. If agreement does not exist, the manager should focus on resolving the discrepancy in perceptions, including clarifying cur- rent expectations (problem E).

EXHIBIT 7.5 Performance Diagnosis Model

No (Go to 5 or 6)

Yes

No (Go to 4 or 6)

Yes

No (Go to 4 or 5)

Yes

No (Go to 8 or 9)

Yes

No (Go to 7 or 9)

Yes

No (Go to 7 or 8)

Yes

Yes

Yes

No (Go to 3)

No (Go to 2)

Yes

No1

2

3

4

5

6

7

8

9

A

B

C

D

E

F

G

Is the lack of ability due to inadequate resources to do the job?

Is the lack of ability due to inadequate training?

Is the lack of ability due to inadequate aptitude?

Is the lack of motivation the result of poorly understood or unrealistic expectations?

Is the lack of motivation the result of rewards not being linked to job performance or not being fairly distributed?

Is the lack of motivation the result of rewards available to high performers not being salient to this person?

Do both the boss and subordinate agree that the subordinate’s performance needs to be improved?

Does this problem stem from inadequate subordinate ability?

Does this problem stem from inadequate subordinate motivation?

This is a TRAINING problem.

This is an APTITUDE problem.

This is a RESOURCES problem.

This is an EXPECTATIONS problem.

This is an INCENTIVES problem.

This is a SALIENCE problem.

This is a PERCEPTION problem.

186 Part Two Understanding and Managing Individual Behavior

B. Resources problem. “Do you have the resources necessary to do the job well?” (Ability has three com- ponents, and these should be explored in the order shown in the model. This order reduces a subordi- nate’s defensive reactions.) Poor performance may stem from a lack of resource support. Resources in- clude material and personnel support as well as coop- eration from interdependent work groups.

C. Training problem. “Is a lack of training interfering with your job performance?” Individuals may be asked to perform tasks that exceed their current skill or knowledge level. Typically this problem can be overcome through additional training or education.

D. Aptitude problem. “Do you feel this is the right job- blend of work assignments for you?” This is the most difficult of the three ability problems to resolve because it is the most basic. If the resupply (providing additional resources) and retraining solutions have been explored without success, then more drastic measures may be required. These in- clude refitting the person’s current job requirements, reassigning him to another position, or, finally, releasing him from the organization.

E. Expectations problem. “What are your performance expectations for this position? What do you think my expectations are?” This problem results from poor communications regarding job goals or job require- ments. In some cases, the stated goals may be differ- ent from the desired goals. In other words, the employee is working toward one goal while the supervisor desires another. This often occurs when subordinates are not sufficiently involved in the goal- or standard- setting process. When this results in unrealistic, imposed expectations, motivation suffers.

F. Incentives problem. “Do you believe rewards are linked to your performance in this position?” Either the individual does not believe that “perfor- mance makes a difference” or insufficient performance feedback and reinforcement have been given. The manager should also ask, “Do you feel rewards are being distributed equitably?” This provides an opportunity to discuss subordinates’ criteria for judging fairness. Often, unrealistic standards are being used.

G. Salience problem. “Are the performance incentives attractive to you?” Salience refers to the importance an individual attaches to available rewards. Often the incentives offered to encourage high perfor-

mance simply aren’t highly valued by a particular individual. The salience problem points out the need for managers to be creative in generating a broad range of rewards and flexible in allowing subordi- nates to choose among rewards.

Assignment Option 1: Read the case below, “Joe’s Performance Problems,” and privately use the diagnostic model in Exhibit 7.5 to pinpoint plausible performance prob- lems. Next, in small groups discuss your individual as- sessments, and list the specific questions you should ask Joe to accurately identify, from his point of view, the obstacles to his high performance. Finally, brain- storm ideas for plausible solutions. Be prepared to represent your group in role-playing a problem-solving interview with Joe.

Joe’s Performance Problems Joe joined your architectural firm two years ago as a draftsman. He is 35 years old and has been a drafts- man since graduating from a two-year technical school right after high school. He is married and has four children. He has worked for four architectural firms in 12 years.

Joe came with mediocre recommendations from his previous employer, but you hired him anyway because you needed help desperately. Your firm’s workload has been extremely high due to a local construction boom. The result is that a lot of the practices that contribute to a supportive, well-managed work environment have been overlooked. For instance, you can’t remember the last time you conducted a formal performance review or did any career counseling. Furthermore, the tradi- tion of closing the office early on Friday for a social hour was dropped long ago. Unfortunately, the tension in the office runs pretty high some days due to unbear- able time pressures and the lack of adequate staff. Nighttime work and weekend work have become the norm rather than the exception.

Overall, you have been pleasantly surprised by Joe’s performance. Until recently he worked hard and con- sistently produced quality work. Furthermore, he frequently volunteered for special projects, made lots of suggestions for improving the work environment, and demonstrated an in-depth practical knowledge of architecture and the construction business. However, during the past few months, he has definitely slacked off. He doesn’t seem as excited about his work, and

Chapter 7 Evaluation and Rewards Influence Behavior 187

Objectives 1. To illustrate individual differences in reward

preferences. 2. To emphasize how both extrinsic and intrinsic

rewards are considered important. 3. To enable people to explore the reasons for the

reward preferences of others.

Starting the Exercise Initially individuals will work alone establishing their own lists of reward preferences after reviewing Exhibit 7.6. Then the instructor will set up groups of four to six students to examine individual preferences and complete the exercise.

The Facts Presented in a random fashion in Exhibit 7.6 are some of the on-the-job rewards that could be available to employees.

Exercise Procedures Phase I: 25 Minutes 1. Each individual should set up from Exhibit 7.6 a list

of extrinsic and intrinsic rewards. 2. Each person should then rank-order from most im-

portant to least important the two lists. 3. From the two lists, rank the eight most important

rewards. How many are extrinsic, and how many are intrinsic?

Phase II: 30 Minutes 1. The instructor will set up groups of four to six

individuals. 2. The two lists in which the extrinsic and intrinsic

categories were developed should be discussed. 3. The final rank orders of the eight most important

rewards should be placed on a board or chart at the front of the room.

4. The rankings should be discussed within the groups. What major differences are displayed?

Exercise

Exercise 7.2: Making Choices about Rewards

EXHIBIT 7.6 Some Possible Rewards for Employees

Company picnics Smile from manager Manager asking for advice Watches Feedback on performance Informal leader asking for advice Trophies Feedback on career progress Office with a window Piped-in music Larger office The privilege of completing a job Job challenge Club privileges from start to finish Achievement opportunity More prestigious job Time off for performance More job involvement Vacation Use of company recreation facilities Autonomy Participation in decisions Pay increase Stock options Recognition Vacation trips for performance

several times you have found him daydreaming at his desk. In addition, he has gotten into several heated arguments with architects about the specifications and proper design procedures for recent projects.

After one of these disagreements, you overheard Joe complaining to his officemate, “No one around here respects my opinion; I’m just a lowly draftsman. I know as much as these hotshot architects, but because I don’t have the degree, they ignore my input, and I’m

stuck doing the grunt work. Adding insult to injury, my wife has had to get a job to help support our fam- ily. I must be the lowest-paid person in this firm.” In response to a question from a co-worker regarding why he didn’t pursue a college degree in architecture, Joe responded, “Do you have any idea how hard it is to put bread on the table, pay a Seattle mortgage, work overtime, be a reasonably good father and husband, plus go to night school? Come on, be realistic!”

188 Part Two Understanding and Managing Individual Behavior

Every Friday, Max Steadman, Jim Coburn, Lynne Sims, and Tom Hamilton meet at Charley’s after work for drinks. The four friends work as managers at Eckel Industries, a manufacturer of arc-welding equipment in Minneapolis. The one-plant company employs about 2,000 people. The four managers work in the manufacturing division. Max, 35, manages the com- pany’s 25 quality-control inspectors. Lynne, 33, works as a supervisor in inventory management. Jim, 34, is a first-line supervisor in the metal coating department. Tom, 28, supervises a team of assemblers. The four managers’ tenure at Eckel Industries ranges from 1 year (Tom) to 12 years (Max).

The group is close-knit; Lynne, Jim, and Max’s friendship stems from their years as undergraduate business students at the University of Minnesota. Tom, the newcomer, joined the group after meeting the three at an Eckel management seminar last year. Weekly get- togethers at Charley’s have become a comfortable habit for the group and provide an opportunity to relax, ex- change the latest gossip heard around the plant, and give and receive advice about problems encountered on the job.

This week’s topic of discussion: performance ap- praisal, specifically the company’s annual review pro- cess, which the plant’s management conducted in the last week. Each of the four managers completed evalu- ation forms (graphic rating scales) on all of his or her subordinates and met with each subordinate to discuss the appraisal.

Tom: This was the first time I’ve appraised my people, and I dreaded it. For me, it’s been the worst week of the year. Evalu- ating is difficult; it’s highly subjective and inexact. Your emotions creep into the process. I got angry at one of my as- sembly workers last week, and I still felt the anger when I was filling out the eval- uation forms. Don’t tell me that my frus- tration with the guy didn’t bias my appraisal. I think it did. And I think the technique is flawed. Tell me—what’s the difference between a five and a six on “cooperation”?

Jim: The scales are a problem. So is memory. Remember our course in human re- sources in college? Dr. Philips said that, according to research, when we sit down to evaluate someone’s performance in the past year, we will only be able to actively recall and use 15 percent of the perfor- mance we actually observed.

Lynne: I think political considerations are always a part of the process. I know I consider many other factors besides a person’s ac- tual performance when I appraise him.

Tom: Like what? Lynne: Like the appraisal will become part of his

permanent written record that affects his career. Like the person I evaluate today, I have to work with tomorrow. Given that, the difference between a five and a six on cooperation isn’t that relevant, because frankly, if a five makes him mad and he’s happy with a six . . .

Max: Then you give him the six. Accuracy is important, but I’ll admit it—accuracy isn’t my primary objective when I evalu- ate my workers. My objective is to moti- vate and reward them so they’ll perform better. I use the review process to do what’s best for my people and my depart- ment. If that means fine-tuning the evalu- ations to do that, I will.

Tom: What’s an example of fine-tuning? Max: Jim, do you remember three years ago

when the company lowered the ceiling on merit raises? The top merit increase that any employee could get was 4 percent. I boosted the ratings of my folks to get the best merit increases for them. The year before that, the ceiling was 8 percent. The best they could get was less than what most of them received the year before. I felt they deserved the 4 percent, so I gave the marks that got them what I felt they deserved.

Lynne: I’ve inflated ratings to encourage some- one who is having personal problems but

Case

Case 7.1: The Politics of Performance Appraisal

Chapter 7 Evaluation and Rewards Influence Behavior 189

is normally a good employee. A couple of years ago, one of my better people was going through a painful divorce, and it was showing in her work. I don’t think it’s fair to kick someone when they’re down, even if their work is poor. I felt a good rating would speed her recovery.

Tom: Or make her complacent. Lynne: No, I don’t think so. I felt she realized her

work was suffering. I wanted to give her encouragement; it was my way of telling her she had some support and that she wasn’t in danger of losing her job.

Jim: There’s another situation where I think fine-tuning is merited—when someone’s work has been mediocre or even poor for most of the year, but it improves substan- tially in the last two, three months or so. If I think the guy is really trying and is doing much better, I’d give him a rating that’s higher than his work over the whole year deserves. It encourages him to keep improving. If I give him a mediocre rating, what does that tell him?

Tom: What if he’s really working hard, but not doing so great?

Jim: If I think he has what it takes, I’d boost the rating to motivate him to keep trying until he gets there.

Max: I know of one or two managers who’ve in- flated ratings to get rid of a pain in the neck, some young guy who’s transferred in and thinks he’ll be there a short time. He’s not good, but thinks he is and creates all sorts of problems. Or his performance is OK, but he just doesn’t fit in with the rest of the department. A year or two of good ratings is a sure trick for getting rid of him.

Tom: Yes, but you’re passing the problem on to someone else.

Max: True, but it’s no longer my problem. Tom: All the examples you’ve talked about

involve inflating evaluations. What about deflating them, giving someone less than you really think he deserves? Is that justified?

Lynne: I’d hesitate to do that, because it can create problems. It can backfire.

Max: But it does happen. You can lower a guy’s ratings to shock him, to jolt him into performing better. Sometimes, you can work with someone, coach him, try to help him improve, and it just doesn’t work. A basement-level rating can tell him you mean business. You can say that isn’t fair, and for the time being, it isn’t. But what if you feel that if the guy doesn’t shape up, he faces being fired in a year or two, and putting him in the cellar, ratings-wise, will solve his prob- lem? It’s fair in the long run if the effect is that he improves his work and keeps his job.

Jim: Sometimes, you get someone who’s a real rebel, who always questions you, some- times even oversteps his bounds. I think deflating his evaluation is merited just to remind him who’s the boss.

Lynne: I’d consider lowering someone’s true rat- ing if they’ve had a long record of rather questionable performance, and I think the best alternative for the person is to con- sider another job with another company. A low appraisal sends him a message to consider quitting and start looking for an- other job.

Max: What if you believe the situation is hope- less, and you’ve made up your mind that you’re going to fire the guy as soon as you’ve found a suitable replacement? The courts have chipped away at manage- ment’s right to fire. Today, when you fire someone, you’d better have a strong case. I think once a manager decides to fire, appraisals become very negative. Any- thing good that you say about the subor- dinate can be used later against you. Deflating the ratings protects you from being sued and sometimes speeds up the termination process.

Tom: I understand your points, but I still believe that accuracy is the top priority in performance appraisal. Let me play dev- il’s advocate for a minute. First, Jim, you complained about our memory limitations introducing a bias into appraisal. Doesn’t introducing politics into the process further

190 Part Two Understanding and Managing Individual Behavior

distort the truth by introducing yet another bias? Even more important, most would agree that one key to motivating people is providing true feedback—the facts about how they’re doing so they know where they stand. Then you talk with them about how to improve their performance. When you distort an evaluation—however slightly—are you providing this kind of feedback?

Max: I think you’re overstating the degree of fine-tuning.

Tom: Distortion, you mean. Max: No, fine-tuning. I’m not talking about

giving a guy a seven when he deserves a two, or vice versa. It’s not that extreme. I’m talking about making slight changes in the ratings when you think that the change can make a big difference in terms of achieving what you think is best for the person and for your department.

Tom: But when you fine-tune, you’re manipu- lating your people. Why not give them the most accurate evaluation and let the chips fall where they may? Give them the facts and let them decide.

Max: Because most of good managing is psy- chology. Understanding people, their strengths and shortcomings. Knowing how to motivate, reward, and act to do what’s in their and your department’s best interest. And sometimes, total accuracy is not the best path. Sometimes, it’s not in anybody’s best interest.

Jim: All this discussion raises a question. What’s the difference between fine-tuning and significant distortion? Where do you draw the line?

Lynne: That’s about as easy a question as what’s the difference between a five and a six. On the form, I mean.

Questions 1. Based on your view of the objectives of perfor-

mance evaluation, evaluate the perspectives about performance appraisal presented by the managers.

2. In your opinion, at what point does “fine-tuning” evaluations become unacceptable distortion?

3. Assume you are the vice president of human resources at Eckel Industries and that you are aware that fine- tuning evaluations is a prevalent practice among Eckel managers. If you disagree with this perspective, what steps would you take to reduce the practice?

191

Managers often face problem behaviors in the work setting that must be addressed to prevent additional negative consequences. An understanding of managing workers is incomplete without studying, discussing, anticipating, and addressing what we refer to in this chapter as managing employee misbehavior (MEM). This chapter recognizes that the majority of employee behavior is positive and directed toward the accomplishment of meaningful goals. However, occasionally managers need to deal with MEM in an organized, systematic manner.

The chapter will explore some of the available theory and increasing research concern- ing negative behavior in work settings. Obviously misbehavior is costly, reduces perfor- mance, and can impact the entire organization negatively.1 Some organizational scientists have made recommendations regarding the management and analysis of misbehavior and its consequences. The chapter will explore a range of misbehavior from the minor to the most destructive; many forms will be omitted because of space limitations.

The Management of Employee Behavior Managing employee behavior requires an active role by managers, who are responsible for identifying, solving, and correcting problems. Some observers refer to workplace misbehavior as a serious form of antisocial behavior. Exhibit 8.1 lists misbehaviors in an organizational setting.

The list is only a partial presentation of misbehavior that needs management inter- vention. The popular press contains many stories and analyses of violent acts (e.g., shootings) in the workplace, financial fraud or malfeasance (e.g., Bernie Madoff, Volkswagen, Enron, and Lehman Brothers), and lawsuits filed and settled (e.g., BP, Pfizer, Tyson Foods, General Motors, and Target) involving identity theft, sexual harassment, and discrimination.2

Managing Employee Behavior Learning Objectives

After completing Chapter 8, you should be able to:

Explain why the management of employee behavior is an important responsibility that managers must address.

Describe some of the outcomes of misbehavior in terms of property, politics, performance, inter- personal relations, and intrapersonal relations.

Compare how sexual harassment, bullying, and incivility can affect employee productivity and performance.

Discuss the contrasting views that companies and employees have toward privacy at work.

C H A P T E R E I G H T

© Ingram Publishing, RF

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Reality Check How much do you know about managing employee behavior?

1. True or false: An employee’s work environment has no influence on whether he or she will engage in substance abuse. a. True b. False

2. and hostile work environment are the two primary types of sexual harassment. a. Universal b. White collar c. Quid pro quo d. Supervisor

3. According to researchers, what percentage of female employees report they have been the object of sexually harassing behaviors while working? a. 10 percent b. 20 percent c. 50 percent d. 70 percent

4. True or false: Employers can read e-mails sent over their computer systems even if employees are not informed of the policy. a. True b. False

5. True or false: Some companies ask employees to sign a “consensual relationship agreement” or “love contract.” a. True b. False

A number of major reviews of the organizational behavior literature suggest that organi- zational researchers tend to focus primarily on positive descriptions of what occurs at work.3 The positive aspects, of which there are many, of leadership, motivation programs, and change projects are studied and discussed. Fewer scholars address employee misbehav- ior as an important concern.

Although the majority of management researchers have largely ignored misbehavior in organizations,4 other disciplines have studied it for years. Studies of the impact of an occupational structure on criminal workplace behavior, embezzlement, vandalism, sabotage, restriction of output, and goldbricking have been conducted by sociologists, occupa- tional psychologists, criminologists, and anthropologists.5 In a presidential address to the

EXHIBIT 8.1 Examples of Misbehavior at Work

Arson Fraud Sabotage Blackmail Incivility Sexual harassment Bribery Intimidation Spying on co-workers Bullying Kickbacks Substance abuse Cheating Lying Theft Discrimination Misinformation Threats Dishonesty Privacy violations Withholding information (concealment) Espionage Revenge Withholding job effort

Chapter 8 Managing Employee Behavior 193

American Sociological Society, Sutherland introduced the notion of white-collar crime, defining it as “crime committed by a person of respectability and high social status in the course of his occupation.”6 Coleman proposed that white-collar crimes involve illegal acts, the identification of a beneficiary of the acts, and the social status of the actor (criminal). He further differentiated between occupational crime, or crimes to benefit the criminal conducted without organizational support, and organizational crime, which is conducted with the support of an organization.7

The Emerging Study of Misbehavior The concept of MEM has a cross-disciplinary theme. That is, a number of disciplines offer theories, research findings, and frameworks to examine MEM and its consequences. Vardi and Weitz discuss in detail a number of misbehavior categories including deviance, aggres- sion, and political behavior. In their framework, employee deviance is concerned with the social conditions under which certain behaviors are considered deviate. Workplace aggres- sion includes harmful and damaging behaviors. Political behavior is the misuse of power and influence. These three categories of misbehavior overlap and are interrelated in their framework.

The Vardi and Weitz framework has been adapted here to fit the goals of the chapter.8 It is multidisciplinary, thorough, empirically supported, and can be examined through further testing, which will likely result inevitability in some modification. Exhibit 8.2 presents an adaptive, yet representative version of the Vardi and Weitz comprehensive model of organizational misbehavior.9

The discussion that follows will focus primarily on selected outcomes and selected interventions. Exhibit 8.2 suggests that misbehavior is a purposeful action on the part of individuals that is mediated by a person’s beliefs and an organization’s expectations. The intention to misbehave can result in a number of financially and socially costly outcomes.

Antecedents Exhibit 8.2 displays four types of antecedents to misbehavior—individual, job, group, and organizational. The selection of characteristics displayed is based on available studies, frameworks, and discussions previously established on each of the factors. For example, when individuals perceive they are being mistreated by a manager, their preference for misbehaving may increase.10 This attitude can then become internalized and impact co-workers. If, for example, co-workers agree that mistreatment has occurred, they can join in with their own misbehavior. Hackett found a relationship between employee dissatisfac- tion and increased absenteeism.11 The intentional work misbehavior of the individual who perceives himself to be mistreated could have negative consequences for the person (dissatisfaction), the work group (dissatisfaction), and the organization (increased absen- teeism). The model displayed in Exhibit 8.2 assumes that all misbehaviors (outcomes) are voluntarily committed.

Mediators A core concept in the model presented in Exhibit 8.2 is the “intention to misbehave.” Acci- dental behaviors on the part of individuals are excluded. The intention to misbehave is defined as the behavior exhibited by an individual or group that is purposeful (intentional) and can be harmful to the person and others, as well as financially and socially costly.

194 Part Two Understanding and Managing Individual Behavior

The intention to misbehave is posited to mediate the relationship between antecedents and the outcomes that are expressions of the misbehavior.12 Intentions are assumed to be the result of a normative force, or the person’s expectations of how he or she is supposed to behave, and an instrumental force, which represents the individual’s personal interests

EXHIBIT 8.2 A Model of Organizational Misbehavior

Source: Adapted from Yoav Vardi and Ely Weitz, Misbehavior in Organizations: Theory, Research, and Management (Mahwah, NJ: Lawrence Erlbaum, 2004), p. 251 with modifications.

Individual alues ttitudes ersonality

Stress

Financial educed

wsuits e

Social

y ies action

Normative Force anizational

Instrumental Force

ersonal

s

Focus on Antecedents

Tr

Focus on Outcomes

Ter

Interpersonal Misbehavior

xual

iolence

Intrapersonal Misbehavior

Performance Misbehavior

Property Misbehavior

t

e

Political Misbehavior

r

Job

riety ask

Stress

Organizational St

e ry

Group No s

eness

Management Interventions

A B C

Chapter 8 Managing Employee Behavior 195

and beliefs. These two forces can influence a person’s intention to misbehave as well as what type of misbehavior will be engaged in. For example, an angry employee may attempt to hurt the organization by hiding a crucial set of data to satisfy his need to retaliate (instrumental force), restrict his attendance (normative force), or misbehave in both ways.

Outcomes The examples of misbehaviors (outcomes) presented in Exhibit 8.2 are some of the more researched, reported, and analyzed misbehaviors, but more examples exist. Five specific categories that are discussed in the literature are interpersonal, intrapersonal, performance, property, and political.13 Some specific misbehaviors in these categories will be discussed later in the chapter.

Costs The potential costs of employee misbehavior to individuals, groups, organizations, and other societal groups can be substantial. For example, the financial costs of the 2001 Enron scandal to employees (lost pensions and jobs), executives (imprisonment, lost careers), the community (Houston’s economic and business infrastructure), and society at large (legal expenses) have been estimated to exceed $100 billion.14 In addition to the financial costs of the Enron and other similar cases are substantial social costs (prema- ture illness, depression, suicide, family instability). Are managers responsible for these costs? Some believe that managers have been given a “free ride” in the social cost responsibility area. The OB Matters on page 196 illustrates examples of misbehavior in a number of organizations.

Management Interventions Management interventions are the actions taken by managers (representing the organiza- tion) to prevent, control, or respond to harmful misbehavior. Exhibit 8.2 displays three specific points for management intervention—A, B, and C. At point A, management can carefully screen and refuse to hire “risky” individuals. Management can also intervene at other antecedent points: job, group, and organization. The problem with interventions at these points is that the person is already employed. The most efficient intervention point is during the preemployment phase.15

The intervention at point B requires affecting the normative force, as well as the instru- mental force. The goal of this intervention point is to reduce the possibility of a job, group, or organizational antecedent to trigger misbehavior. For example, some organiza- tions use mentor programs to provide a role model of proper (normative) attitudes and behavior and communicate through mentor–mentee discussions the consequences of mis- behaving (instrumental).

The intention of an intervention at point C shifts from prevention to deterrence. The manager works to reduce the possibility of an employee’s intention to misbehave. A mem- ber of a team who values being part of the team may learn that misbehavior could mean being transferred (control) to another unit. She may decide that staying with the preferred unit is important and elect to behave properly. The threat of a transfer may be powerful enough to evoke a change in behavior.

These intervention points offer managers different opportunities to reduce the incidence or at least consequences or costs of misbehavior. Because every possible

196

misbehavior can’t be discussed, we select only a few. These have been selected because of the available literature and current discussion of them in the academic and popular press.

Selected Misbehaviors The list of potential employee misbehaviors faced by managers is extensive. As stated earlier, Exhibit 8.1 represents only a partial list of misbehaviors. We now discuss a number of significant and widely publicized and researched misbehaviors.

Sexual Harassment Sexual harassment is an important topic and has been the subject of a considerable amount of research in recent years.16 More than 70 percent of female employees report they have been the objects of sexually harassing behaviors while working. Sexual harassment is a form of aggression as well as unethical behavior.17 Broadly defined, this misbehavior is

sexual harassment Unwelcome advances, requests for sexual favors, and other types of verbal, psychological, or physical abuses.

EXAMPLES OF CORPORATE MISBEHAVIOR The reports of corporate crimes, fraud, and malfeasance continue to make headlines years after the Enron scandals hit newswires and tele- vision screens. Misbehavior is not gender, industry, country, or date specific. Managers and nonmanagers keep making headlines because they are alleged to have committed, have pleaded to committing, or have been convicted of a crime. A few samples of the carnage and misbehavior include:

Volkswagen: In September 2015, the German automaker admitted it had installed software on millions of its diesel cars that would trick the testers at the U.S. Environmental Protection Agency into registering a more environmentally friendly result from the cars’ engines. As a result of its tactics, Volkswagen lost an estimated $20 billion in market capitalization, its CEO and other top executives resigned, and many customers who were in the market for new autos looked to other car makers for their next purchase.

General Motors: More than 26 million vehicles were recalled in 2014 to replace an ignition switch that some people at the company knew was defective for more than a decade. The faulty switch caused more than 125 deaths and many injuries, and the U.S. Jus- tice Department fined GM $900 million for the problem—in addition to making the company set up a fund to compensate victims and their families. To date, no individual employees or executives at GM have faced criminal charges over the defective parts.

Target Stores: In 2013, retail giant Target suffered a massive data breach in its stores that affected the credit and debit cards of more than 40 million consumers during the height of the holiday shop- ping season. In addition, authorities estimate that an additional 70 million consumers had their personal information compromised as part of the hack. Target recently settled a $10 million class- action lawsuit with consumers whose information was breached.

BP: In April 2010, BP’s Deepwater Horizon drilling rig exploded in the Gulf of Mexico killing 11 workers and caused an oil spill that became the worst environmental disaster in U.S. history. For several months, billions of barrels of oil washed up on the pristine beaches along the Gulf Coast and brought the fishing, tourism, and oil-drilling indus- tries to a standstill—among other businesses. BP’s chief executive at the time, Tony Hayward, received widespread criticism over his han- dling of the oil spill and negotiated his exit three months after the devastating event. In addition to paying penalties of more than $18 billion to the U.S. government and five states, BP cleanup costs topped $35 million, and the company set aside a $100 million to pay lost wages to workers left unemployed by the disaster.

Bernard L. Madoff Investment Securities: The Securities and Exchange Commission (SEC) accused Madoff of deceiving investors to the tune of $65 billion. Engaging in a “Ponzi scheme,” he traded and lost investor money but still paid these investors a certain return on investment with the money given by other investors. In 2009, the 70-year-old Madoff was found guilty of fraud and sentenced to 150 years in jail.

Sources: “100 Days of the BP Spill: A Timeline,” Time, http://content.time. com, accessed April 7, 2016; “U.S. Judge Approves BP Settlement for 2010 Gulf of Mexico Oil Spill,” Reuters, April 4, 2016, http://www.reuters.com; Jackie Wattles, “Volkswagen America’s CEO Resigns,” CNN Money, March 9, 2016, http://money.cnn.com; Chris Matthews and Stephen Gandel, “The 5 Biggest Corporate Scandals of 2015,” Fortune, December 27, 2015, http:// fortune.com; Victor Luckerson, “GM near Settlement with U.S. over Ignition- Switch Scandal,” Fortune, September 17, 2015, http://fortune.com; Charles Riley and Jose Pagliery, “Target Will Pay Hack Victims $10 Million,” CNN Money, March 19, 2015, http://money.cnn.com; Diana B. Henriques, “Madoff Is Sentenced to 150 Years for Ponzi Scheme,” The New York Times, June 29, 2009, http://www.nytimes.com; Amir Efrati, Tom Lauricella, and Dionne Searcey, “Top Broker Accused of $50 Billion Fraud,” The Wall Street Journal, December 12, 2008, p. A1.

O B M A T T E R S

Chapter 8 Managing Employee Behavior 197

characterized by unwelcome advances, requests for sexual favors, and other types of verbal, psychological, or physical abuses. From a legal perspective, there are several types of sexual harassment, including:18

1. Quid pro quo. This form of sexual harassment occurs when an employee’s compliance with requests for sexual favors are linked to employment decisions (e.g., promotion or hiring).

2. Hostile work environment. This sexual harassment occurs when sex-related behavior interferes with an employee’s work performance or creates an intimidating, hostile, or offensive working environment.

3. Psychological. This sexual harassment occurs when an employee “feels harassed” regardless of whether or not the sex-related behavior is illegal. Sexual harassment occurs because of power differences, lust, and reasons that are not

entirely understood. It occurs across gender lines and across sexual orientations.19 It is not only misbehavior but is also illegal. Sexual harassment is a form of discrimination, but in addition, harassed employees can file claims for battery and defamation. According to the U.S. Equal Employment Opportunity Commission, there were more than 6,800 charges of sexual harassment filed in 2015 that resulted in companies paying out $46 million.20

Flirting, joking, bantering, and other sexual interactions are daily occurrences in work settings. Not all of these interactions constitute sexual harassment. Consensual sexual inter- actions are those that reflect positive expressions of workers’ sexual choices and desires. However, some workplace relationships can have a host of negative ramifications, including accusations of favoritism, decreased productivity, gossip, and in the case of a bad breakup, a strained work environment and even workplace violence.21 Some companies ask employ- ees to sign a “consensual relationship agreement” or “love contract.” This agreement has to be signed by both dating employees and typically includes the following provisions:22

∙ The relationship is consensual. ∙ What the dating employees will do if the relationship stops being consensual. ∙ Both dating employees verify that they are aware of the company’s policies on sexual

harassment. ∙ The dating employees are told what happens if one or both of the dating employees

break the contract.

O’Leary-Kelly and colleagues reviewed the research conducted on sexual harassment from 1995 to 2008.23 They summarized sexual harassment research in terms of the various definitions of sexual harassment, predictors (personal, situational, and organizational) of sexual harassment, responses to sexual harassment (target, organizational, and observer), and the consequences of sexual harassment (turnover, work group productivity, job with- drawal). These researchers made the following conclusions about the evolution of sexual harassment research over the past two decades: (1) There have been advances in theoretical models that guide research and empirical testing, (2) research is taking a broader focus to examine different types of harassers (e.g., clients) and a broader range of conduct (e.g., sexual assault), and (3) more has been learned about how sexual harassment is facilitated or inhibited by the organizational culture.24

Some individuals consider sexual harassment to be only of minimal concern or impor- tance, not recognizing the damage done by sexually harassing misbehavior. Pryor and Stoller found that men who scored high on a characteristic designated “likelihood to sexu- ally harass (LSH)” hold adversarial sexual beliefs, have difficulty understanding others’ perspectives, and endorse traditional male sex stereotypes.25 These high-LSH men view

198 Part Two Understanding and Managing Individual Behavior

many harassing behaviors as only expressions or hints of attraction and sexual interest. Convincing men with LSH tendencies that sexual harassment hurts another person is difficult because of their hardened view about others’ perspectives. For example, a recent study reported that males with high levels of LSH tend to give attractive females higher scores on performance appraisals.26 These upwardly biased ratings can create fairness issues in relation to less attractive females who perform as well or better than their more attractive peers. Theory and research have proposed that men and women often view alleged sexual harassment behavior differently. Research shows that some behavior men consider friendly women interpret as sexual. Women tend to classify a wider range of behavior as sexually harassing than do men.27 This stream of research suggests a basis for why men tend to be harassers more often than do women.

How can a manager recognize a behavior as sexual harassment?28 There are a few tests for focusing on and categorizing particular behaviors: ∙ The Family IQ Test. Would this occur if the sexual harasser’s child were present? Would

it be occurring if the spouse of the victim were present? Would you as an observer want the behavior or allow the actions to be done to your daughter?

∙ The Public Forum Test. Is this a behavior you would like to see in the newspaper or hear about in a radio broadcast or on a television news program?

∙ Dual Treatment. Is this done to other people, of both sexes, frequently? These are general rules to help managers assess the behaviors of others, as well as their

own behaviors. Considering the responses to these kinds of questions can help a manager govern his or her own behavior and decide how and when to intervene.

Aggression and Violence The word aggression is used to describe many forms of behavior. Concisely put, aggression at work is the effort of an individual to bring harm to others with whom the person has worked or currently works at an organization (i.e., current or past). The attempt to bring harm is intentional and includes psychological as well as physical injury. There are over 2 million workplace physical assaults annually. Workplace violence accounted for about 16 percent of all workplace fatalities in 2014. According to the Occupational Safety and Health Administration (OSHA), workers who do the following activities are at an increased risk of being victims of workplace violence: exchange money, make deliveries, work alone, work late nights, or work in settings/homes with extensive contact with the public. High-risk occupations include visiting nurses, psychiatric evaluators, phone and cable TV installers, retail workers, and taxi drivers.29

A review of the organization science literature suggests that aggression has only recently been considered worthy of study. Buss has categorized aggression along physical, verbal, active, passive, direct, and indirect dimensions.30 The Buss framework addresses interper- sonal forms of aggression. Buss asserts that the aggressor consciously intends to bring harm to another person or the organization. Physical forms of aggression could involve an attack with fists, pushing, slapping, or use of a weapon. Verbal aggression is inflicted by words, gossip, or innuendo.

Active aggression brings harm through a specific behavior, while passive aggression is accomplished through withholding of something desired (e.g., deserved praise, informa- tion, resources).

The direct form of aggression is found when the aggressor delivers harm personally. In indirect aggression another person produces the harm. Spreading a damaging rumor that harms an employee’s chance to be promoted is an example of indirect aggression.

aggression In the work setting this is behavior that brings harm to others with whom the aggressor works or has worked.

Chapter 8 Managing Employee Behavior 199

O’Leary-Kelly, Griffin, and Glew suggest that individual differences play a role in aggression at work; however, they discourage investigating individual differences.31 They contend that the best predictors of violence are demographic data, which are prohibited by law from being collected. Organizations rarely share information about worker aggression. The lack of individual-level research on aggression at work makes it difficult to determine with any confidence the role of individual differences in explaining workplace violence.

In the research attempting to find a link between individual differences and aggression, some of the individual differences studied include trait anger, negative affectivity, Type A behavior, attitude toward revenge, emotional reactivity, gender, and anxiety.32 For example, studies report that males are more aggressive than females and score higher on attitude toward revenge than females.

Other studies on workplace violence, physical or emotional, report it can occur between colleagues, customers, and management. It includes, but is not limited to, threats, bomb scares, obscene phone calls or e-mail messages, sexual and verbal harassment, beatings, and shootings. Data from the Bureau of Labor Statistics’ Census of Fatal Occupational Injuries reported that 8,666 workplace homicides occurred in the United States between 1997 and 2010 and averaged about 667 per year.33 In 2014, workplace homicide and road- way incidents tied as the leading cause of death for women who work outside the home.34

Nonfatal assaults result in millions of lost workdays and productivity and cost millions of dollars in compensation. More than 1 million people are assaulted annually while at work or on duty (including police officers and prison guards).

Although these data are alarming, they should not be exaggerated. The sensationalism of a disgruntled employee or ex-employee returning with a weapon and shooting people implies that there is an uncontrollable amount of rage and aggression in workplaces. There are surely too many misbehaving workers who resort to violence, but the majority of work- place homicides are the result of robberies and related crimes as opposed to co-workers settling differences.35

The increase in nonfatal violence and acts of aggression may be the result of downsizing, outsourcing, poor management observation and anticipation skills, increased insecurity, increased pressure for more productivity, and longer work hours. Employees now put in more time at work than they did 20 years ago. This extra push to work longer is assumed to be necessary to keep up with the competition. Management pressure to work harder and longer appears to be associated with increased levels of stress, burnout, frustration, anxiety, and fatigue. The possible implication is that employees resort to aggression and violence as the result of such pressures.

Bullying The notion of workplace bullying is being discussed and studied more frequently; however, still only a limited number of studies focus on bullying as misbehavior.36 Bullying is defined as repeated actions that are directed toward another worker, which are unwanted, which may be done deliberately or unconsciously, but clearly cause humiliation and distress, and create an unpleasant work setting. The behaviors of a bully are intended to be hostile actions or are considered by the victim to be hostile. Bullying differs from “normal” conflict with peers in that bullying is characterized by an imbalance of power, strong emo- tional reactions from the victim, a tendency to blame the victim, no effort to resolve the conflict, and an attempt to gain control through conflict.37

Organizational research on workplace bullying generally falls into two types: studies of the characteristics of victims and bullies; and studies that focus on the social context in which bullying occurs.38 Researchers have found that many victims perceive envy as the reason for the hostility directed at them; they also have inadequate coping skills, are

bullying Deliberate or uncon- scious repeated actions that are directed at another worker to cause humiliation or distress.

200 Part Two Understanding and Managing Individual Behavior

introverted, and have low self-esteem. Other researchers have found that overachievers are bullied more frequently than average performers.

Bullies have been known to possess high levels of aggression, but the research to develop a bully profile is sketchy, incomplete, and inconclusive.

Researchers have begun to consider the role of the social context and organizational struc- ture of the workplace to see how they influence bullying behavior.39 For example, lack of proper supervision, jobs done in isolation, social inequities in the workplace, and depart- ments with low morale all provide a social context for bullying to occur.40 Some believe that when high uncertainty exists, bullying is more likely to be present. The victim is the recipient of hostile acts more because of being a convenient target in a situation of uncertainty.

The role of an organization’s culture or climate in nurturing a bully’s behavior is captured by a number of examples of managers using intimidation, threats of firing, and promising disciplinary action “if performance is not improved.” This form of bullying can become expected since it is a part of accepted behavior in the organization. Before Enron’s eventual collapse, CEO Jeffrey Skilling was thought to have used bullying tactics to obtain higher performance ratings (and higher pay/bonuses) for his key people.41

Einarsen suggests that bullying is an evolving process, with humiliating or punitive behaviors over time becoming an accepted pattern. In this view, bullying can thrive only when it is supported by an organization’s culture.42 Victims in a culture that supports bul- lying accept their fate through fear. Those victims who can’t tolerate the continual bullying leave the organization through retirement, illness, or choice.

Some researchers believe that the proportion of bullied versus nonbullied employees acts as a measure of the mental health of an organization.43 The unhealthier the organiza- tion, the higher the proportion of bullied versus nonbullied employees.

Incivility Workplace incivility involves acting rudely, discourteously, or in a demeaning manner toward others. It is on the low end of the continuum of abuse. Incivility isn’t violence or harassment, but it is a lack of respect for others. Incivility appears to be proliferating outside and inside the workplace.44 It is important for individuals who are interacting, working together, to conduct themselves in a civil way. It is also important for employees to treat customers or external indi- viduals interacting with an organization with respect. Being civil or polite with regard to others in an organization constitutes what is called organizational citizenship behavior (OCB).45

Incivility includes condescending remarks, being disruptive in meetings, ignoring others, insulting another person, being abrupt, giving negative eye contact, not answering when asked a question, refusing to say “thank you” or “please,” interrupting others when speaking, and sending “flaming” e-mails, instant messages, or texts.

Co-workers are incivil at work for a number of reasons. Some have become so alienated that they feel no loyalty to their work, colleagues, or the organization.46 In addition, there may be fears of what the future holds. Will I even have a job tomorrow? Or the workload may be overwhelming. Downsizing, outsourcing, managerial expectations, and pressure to work harder and longer create an increased workload.

As will be illustrated in Chapter 9, workplace stress is at a significant level. Individuals attempt to better manage stress but sometimes fail. The result is more rudeness, impolite- ness, and improper etiquette. The concept of etiquette is ignored frequently (e.g., reading correspondence addressed to someone else, interrupting a colleague when it is not neces- sary, ignoring someone in your space or area, and simply bad manners).

When incivility is prevalent or becomes a part of the work culture, the effects can be costly. Conflict emerges, which detracts from productivity. According to recent research, employees who are the recipients of uncivil behavior experience the following:47

incivility In the workplace this type of behavior is designated as rude, discourteous, or demeaning toward others.

Chapter 8 Managing Employee Behavior 201

∙ Increased job stress and dissatisfaction. ∙ Lower levels of productivity and creativity. ∙ Cognitive distraction and psychological distress. ∙ Disrupted relationships at work. ∙ Lower commitment to the organization. ∙ Higher turnover.

A survey of executives from the largest 1,000 firms in the United States found that 13 percent of their time, or about six weeks a year, is spent resolving conflicts, many of which have a beginning in incivility.48

Some workers, after repeated incidents of incivility in the form of rudeness, become physically ill or suffer depression. These kinds of problems become costly in the form of increased sick days and high health insurance premiums.

To combat incivility problems, a growing number of firms are using training and educa- tion programs to involve participants in practicing civility and proper etiquette. For exam- ple, a recent research study of 1,173 health care workers found that a civility intervention (comprehensive employee-based civility training) helped improve several important health care provider outcomes such as co-worker civility, supervisor incivility, respect, job satis- faction, trust in management, and absenteeism.49 The intervention is called “CREW” and stands for civility, respect, and engagement in work. According to one of the authors of the study, “CREW is a program that focuses on courtesy, politeness and consideration, with the premise that respect leads to an environment of honesty and mutual trust.”50 Some firms have gone to what they refer to as a “zero-tolerance” policy regarding incivility.51 The policy is posted and communicated on the intranet explaining that poor behavior (e.g., incivility, rudeness) will not be tolerated. Infractions are linked to specific sanctions and these are part of the policy.52

A low-intensity form of incivility between colleagues can escalate to aggression or vio- lence. For this and other reasons, incivility should not be permitted. The notion of “spiral-

ing” from a slight, or something that was said, to violence has been studied by organizational researchers.53 There has, how- ever, been relatively little empirical attention to why some forms of incivility escalate (spiral) into something more serious and other forms do not. Even with limited research available it appears to be important for organizations to put a stop to incivil- ity quickly and fairly. Some recommendations for stopping incivility are discussed in the Information You Can Use feature.54 To ignore incivility because it is at the low end of the abuse scale is to allow it to become a part of the organization’s norms and culture.55 Neglecting incivility increases the chance that it will become more intense and perhaps more costly. Employees who indulge in incivility must be accountable regardless of their position and history in the organization.

Fraud Accounts of alleged and proven criminal fraud and unethical behavior involving organiza- tions such as Enron, Volkswagen, and BP and individuals such as Bernard Madoff, and Jeffrey Skilling have flooded the media.56 Over the past few years, several large U.S. finan- cial companies have been the subject of fraud investigations by the Securities and Exchange Commission. For example, several major banks, including Citicorp, JPMorgan Chase, and

WAYS TO PREVENT INCIVIL ITY AT WORK

1. Create and enforce a zero-tolerance policy.

2. Manage proactively the climate of the organization.

3. Have leaders set the tone and serve as role models.

4. Train employees on what is acceptable (and unacceptable) behavior.

5. Punish those individuals who engage in uncivil behaviors.

Information You Can Use

202 Part Two Understanding and Managing Individual Behavior

Barclays, agreed to pay more than $5.5 billion in 2015 to settle charges that stemmed from manipulating the world’s foreign-exchange market for their own gains.57 Investment firm Edward Jones & Co. agreed to pay $20 billion to settle SEC claims that it overcharged customers in sales of new municipal bonds in the same year.58 Fraud is defined as the inten- tional act of deceiving or misrepresenting to induce another individual or group to give up something of value. Managers and nonmanagers have been indicted and convicted of fraud. A study of over 12,000 employees found that 90 percent engaged at some time in work- place misbehaviors such as goldbricking, sick time abuses, and fraud. Surprisingly, about 33 percent of the employees actually stole money or merchandise on the job.59 The researchers concluded the most common reason for committing fraud was motivation.

The concept of “wages in kind” suggests the more dissatisfied the employee is, the more motivated the individual will be to engage in fraud.60 If an employee believes that fair treat- ment is not occurring at work or that compensation programs are unjust, he or she will take more risks to balance the scales.

Opportunity is another precondition of fraud. Research based on interviews of nearly 200 incarcerated embezzlers, including high-level business executives, revealed the majority committed fraud to meet their financial obligations.61 The opportunity to commit and conceal the fraud was thought to be present (incorrectly as it turned out) by the incar- cerated embezzlers. Such opportunity may partially explain the actions of the former cor- porate accountant for a Texas-based bakery. The accountant was recently sentenced to 10 years in prison for embezzling more than $16 million from Collin Street Bakery to fund an extravagant lifestyle for himself and his wife. According to federal authorities, the accountant wrote company checks to his personal creditors and then manipulated the firm’s computerized accounting system to show that the checks had been voided. The embezzler spent $11 million on a high-end credit card to fund his lavish lifestyle, which included more than 200 trips on private jets for almost a decade.62 As described earlier in the chapter, Bernie Madoff thought he could conceal his $65 billion Ponzi scheme from the SEC and his investors indefinitely. He was found guilty of fraud and will spend the rest of his life in jail.63

In a climate in which executive fraud appears daily in the media, experts believe that some degree of the big-stakes fraud engaged in by CEOs is caused by envy and jeal- ousy, the thinking being, when a CEO considers a colleague is making $10 million annually there is inequity if he or she is making less.64 The perceived inequity, the lack of discipline, and the ineffective application of laws encourage some CEOs to engage in fraudulent behaviors.

fraud An intentional act of deceiving or misrepresenting to induce another individual or group to give up something of value.

Y O U B E T H E J U D G E

IS TONY A SAFE EMPLOYEE? Tony works as a technician in a chemical plant in Gary, Indiana. He has worked exceptionally well after his release from a three-year prison sentence five years ago. As an ex-drug user who served his time, he thoroughly enjoys his job. In the past three months, for the first time in his work history, he has had a number of flashback seizures and inter- personal problems with a few colleagues. The flashbacks are a result of his use of the drug PCP years ago. The company’s medical staff states that flashbacks are experienced by some ex-addicts.

As a technician Tony mixes and tests various chemicals accord- ing to procedures that must be carefully and correctly performed. A life-threatening mistake in mixing and testing could harm Tony or his co-workers. Tony’s last seizure lasted a few minutes at the test- ing table. He had to be escorted from the test room.

The testing job is the only one available for which Tony is qual- ified. Should Tony be suspended? Fired? Are there other options that may be safe to take with regard to Tony?

Chapter 8 Managing Employee Behavior 203

Thus, fraud is a combination of motive and opportunity. The opportunity to commit fraud is typically addressed through internal control systems. If the proper checks and bal- ances exist, it is more difficult to defraud an organization. To deter opportunity, there should be a clear division of responsibility. If one person or group controls the financial and accounting books and the assets, the ability to behave fraudulently is limited only by the imagination.65

The use of internal controls is fine, but they can be overcome by strongly motivated people. Ensuring fairness, good working conditions, and sound leadership reduces the motivation to resort to fraud. The disgruntled, dissatisfied, and hopeless employee is a ready candidate for creating fraudulent schemes.

Substance Abuse at Work Substance abuse among workers represents billions of dollars in organizational financial loss. Research in the U.S. workplace suggests that alcohol use directly impacts approxi- mately 19 million people; and illicit drug use at work affects an estimated 4 million indi- viduals.66 Illicit drug use costs over $193 billion annually because of lost productivity, premature and preventable health problems, increased workers’ compensation claims, and behavioral problems.67

A survey of full-time workers reported illicit drug users were more likely than nonusers to have worked for three or more employers in the past year, taken unexcused absences from work, and either voluntarily left an employer or been terminated in the past year.

Some substances not only are addictive, but also may be dangerous to associated nonus- ers. Assembly-line workers, transportation workers (e.g., drivers, pilots, ship captains), and various professionals (e.g., physicians, pharmacists) are singled out for study because of their impact on others. The majority of research on these subjects focuses on how organizations can detect and intervene to treat any substance abuse among these classes of employees.

Some researchers have investigated the work context in alleviating the substance abuse problem.68 Is there a set of job-related stressors that contribute to substance abuse on and off the job? The results of investigating whether alcohol, marijuana, and cocaine use were related to working conditions or occupations were inconclusive. These researchers con- cluded that workers’ substance use and abuse is a personal characteristic and has less to do with working conditions.

However, another study analyzed data collected from 2,790 U.S. workers to explore whether two work stressors—work overload and job insecurity—contribute to employee alcohol and illicit drug use before work.69 The study found that these stressors do influ- ence alcohol and illicit drug use before work, during the workday, and after work. This lends some support to the idea that the work environment can also contribute to employ- ees’ substance abuse.

Supporting the notion that the work environment can influence substance abuse, Bacha- rach and colleagues used survey data from employees to identify drinking problems.70 It was found that a permissive workplace culture is the single most significant risk factor that drives employees to drink. When employees believe the organization will tolerate social drinking during work hours, there is a greater possibility that drinking will become a problem.

A study of experienced pharmacists provides an interesting view on the potential for substance abuse by knowledgeable professionals.71 Despite being knowledgeable about addiction and abuse, pharmacists may become prescription-drug abusers. Interviews with 50 recovering drug-addicted pharmacists revealed a picture of how abuse occurred. The researchers propose that drug knowledge and familiarity may have contributed to the phar- macists’ progressive prescription drug abuse. The pharmacists were deluded into believing they could overcome the addictive and harmful effects of the prescription drugs.

204 Part Two Understanding and Managing Individual Behavior

Organizations need to attempt to identify predictors of substance abuse before individu- als become employed. However, no test can accurately predict future substance abuse. Drug testing for prospective employees and employees under suspicion of impairment and postac- cident tests are used.72 A recent survey by the Society for Human Resource Management found that over 70 percent of respondents’ organizations screen job applicants for drug use.73 The Department of Defense requires noncommercial contractors to test some employ- ees. The U.S. Department of Transportation requires drug testing for drivers in interstate commerce, airline personnel, and railroad employees.74 These requirements cover preem- ployment, for-cause, postaccident, and random tests for sensitive positions. Improperly administered drug-testing programs can spell trouble for a company. The Federal Aviation Administration (FAA) recently announced penalties of close to a half-million dollars for three aviation companies for failing to administer their drug-testing policy properly.75

Cyberslacking The Internet continues to provide opportunities for many employees to slack off their daily work activities. Using the Internet for personal reasons continues to be a widespread diver- sion from work for employees and managers alike. According to recent research, more than 40 percent of workers spend time on the Internet instead of working.76 Lost productivity can be expensive. Some estimates put the cost to businesses of such Internet misuse well over $100 billion annually.77 Personal e-mails and texting, Facebook updates, tweets, and online shopping are some of the time-wasters performed when employees should be working.78

The use of the Internet for personal reasons is a form of cyberslacking. This costs organi- zations in lost time and energy being devoted to nonorganization matters. Personal cyber- slacking can also burden an organization’s computer network. Employees who access pornography sites in offices may also contribute inordinately to sexual harassment behaviors. The Nielsen Company, a media information firm, reported that 20.6 million Americans visited an adult website from a work computer an average of 8 times in April 2010.79

Cyberslacking has increased, and so has workplace surveillance of employees. Many U.S. organizations now practice electronic monitoring of employees on the job.80 E-mail, computer files, and interactions with customers are popular areas of monitoring. Electronic monitoring allows managers to review everything said, written, or read. Organizations have used electronic monitoring information to fire employees who mix personal and orga- nizational business. A recent survey sponsored by the American Management Association and the ePolicy Institute reported that more than one-quarter of employers have fired employees for the misuse of e-mail, and about one-third have fired employees for misusing the Internet.81 Misuse of the Internet was defined as: ∙ Viewing, uploading, or downloading offensive content. ∙ Violation of company policy. ∙ Excessive personal use.

Some organizations have barred the transmittal of pornography on their computers by using blocking software. Many organizations allow employees to send e-mail for some personal issues. These firms ease up on implementing a zero-tolerance policy because it appears to be too restrictive. Employees tend to respond coldly to zero-tolerance policies.

In addition to e-mail and Internet abuse, companies are increasingly monitoring employee blogs and social media posts that discuss organization or job-related informa- tion.82 Some employees are under the mistaken belief that what they write in their blog or Facebook account is private and protected by the First Amendment right to free speech. In most states, employers can fire workers “at will” except for discriminatory reasons.83

cyberslacking The use of the Internet during office or work hours for personal reasons.

Chapter 8 Managing Employee Behavior 205

Virgin Atlantic Airlines recently fired 13 cabin crew members after they participated in a post-flight venting session on Facebook in which they insulted passengers and disparaged the company.84

Exhibit 8.3 shows how cyberslackers use their surfing time. Being able to eliminate all cyberslacking is not possible. However, having regulations, communicating them, and using them are needed to discourage this type of misbehavior.

Sabotage A potentially costly form of misbehavior is sabotage that involves damaging or destroying an organization’s or colleague’s equipment, workspace, data or relationships with key stakeholders like customers. Sabotage is a tangible expression of aggression or violence. Increasingly, co-workers are purposefully erasing databases and destroying other items. Employee sabotage can range from simple, pranks to vandalism to computer bombs.85 A recent study of call center employees found that daily customer mistreatment predicted employee sabotage against customers.86 Sabotage behaviors included hanging up on cus- tomers, putting them on hold for a long time, telling customers the problem was fixed when it wasn’t, and so forth.87 A former IT staff member of the U.S. subsidiary of a Japanese pharmaceutical company was found guilty of remotely hacking and sabotaging the company’s technology infrastructure. The damage disrupted the company’s operations for days and cost the firm more than $800,000 in damages. Ironically, the former worker had resigned and was hired back by the company as a contractor, which gave him access to the company’s IT systems.88 Angry employees (and ex-employees) like this one covertly and overtly resort to sabotage to get even, to correct a perceived wrong, to take revenge, or to make a statement to others.89

Sabotage at its extreme is a form of violence. It has been described as misbehavior that includes a bit of revenge. The person resorting to sabotage is attempting to disrupt, destroy, or dismiss the organization.

Three types of sabotage targets exist: people, equipment, and operations.90 In sabotag- ing people, the objective is to destroy the person’s career, progress, reputation, or work area. The sabotage of equipment or operations involves physically destroying something.

The use of sabotage is usually the method of choice of people who are bored and not challenged, believe that something in their work history was very unfair to them, or want to gain an advantage over a colleague.

sabotage An extreme form of workplace violence instituted to disrupt, destroy, or damage equipment, data, a work area, or relationships with key stakeholders.

EXHIBIT 8.3 Personal Use of Social Media at Work

Source: Adapted from “Social Media Penetrating the U.S. Workplace but Impact of Productivity Is Causing Unease, According to Annual Survey by Kelly Services,” June 12, 2012, http://ir.kellyservices.com; and David Schepp, “Employees Admit Social Media Is a Waste of Their Time,” AOL Jobs Articles & News, June 13, 2012, http://jobs.aol.com.

Staffing company Kelly Services conducted a survey of 170,000 workers in 30 countries, including 23,000 from the United States. The results revealed the following opinions about using social media for personal use at work:

∙ 51 percent of workers believe using social media at work hurts productivity. ∙ 12 percent of workers think it is acceptable to use social media for personal use at work. ∙ 57 percent of workers think social media can cause problems with co-workers and supervisors when they mix personal and

professional lives. ∙ 24 percent of all respondents feel it is acceptable to share opinions about work on social media sites, even though workers have

been fired for doing so. ∙ 29 percent of workers believe it is important for their companies to have a presence in social media. ∙ 48 percent of workers in the Asia-Pacific region think it is acceptable to use social media for personal use at work (compared with

31 percent in Europe and 16 percent in the Americas).

206 Part Two Understanding and Managing Individual Behavior

There are no available centralized data collected on incidents of sabotage. Reports sug- gest an increase in computer-related sabotage. The list of successful sabotage now includes lost information, replacing equipment, and increases in health care costs. It is estimated that employee fraud and abuse cost nearly $4 trillion globally each year.91

Theft Theft is defined as the unauthorized taking, consuming, or transfer of money or goods owned by the organization. This definition of theft should indicate that stealing is not lim- ited to tangible property. Data, information, and intellectual property can and are stolen.

A few recent examples of theft in the workplace include:92 A Maryland man recently stole 32 laptops from his nonprofit employer and tried to sell them on eBay. A chief financial officer changed the numbers on a spreadsheet to give himself a larger bonus. A regional vice president used his corporate credit card for $4,000 worth of Victoria’s Secret lingerie. Theft by employees in any size organization is a serious issue that managers need to address. Theft costs money, is a specific act, and should be dealt with as soon as it is discovered. According to the Global Retail Theft Barometer, annual losses for the U.S. retail industry were a staggering $42 billion in 2014.93 It is estimated that U.S. employee thefts accounted for more than 43 percent of those losses.94

The Association of Certified Fraud Examiners and other experts have identified a num- ber of trends and facts that managers should consider.95 Exhibit 8.4 presents a few of these. The cost of theft points to the need for managers to intervene to attempt to control it through various programs. Electronic surveillance is increasingly used to stop or catch thieves. Organizations have also increased their use of honesty or integrity tests to point out theft-prone job candidates before hiring them.

The range of references to theft in both the law and research literature includes terms such as misappropriation, stealing, petty larceny, grand theft, and embezzling.96 In many cases the employees in question do not use these terms for describing their behavior. Cir- cumstances may be ambiguous. For example, an employee may make a long-distance tele- phone call on company time, equipment, and credit card. What is the motivation? Should this behavior be punished? Perhaps it was an emergency call and because of circumstances had to be made at the time. This may be hard to refute or establish.

Why do employees steal anything from their employers? This is a difficult question to answer. Some believe that people steal simply because they have an opportunity to do so. This perspective offers the employer the course of action to eliminate opportunities (e.g., implement inventory control systems, lock up merchandise, and install surveillance cameras). The elimination of all opportunities is problematic and likely impossible. The individuals who have the same opportunities as thieves and never steal are subjected to the same controls and surveillance.97 Is this fair? Employees are different and should be treated fairly. Eliminating all opportunities for theft across the board may violate basic fairness.

theft Unauthorized taking, consuming, or transfer of money or goods owned by the organization.

EXHIBIT 8.4 Facts about Employees Who Steal from Their Companies

Source: Executive Summary, “Report to the Nations on Occupational Fraud and Abuse: 2016 Global Study,” http://www.acfe.com, accessed April 6, 2016.

The average loss due to fraud was $150,000, but 23 percent of the cases included losses in excess of $1 million. Employee fraud is most commonly discovered from employee tips. Small businesses are more vulnerable to theft and fraud than large companies. More employee fraud originated in the accounting department (16 percent) than in any other business unit. Most employees who engage in fraudulent activities are first-time offenders with clean employment histories. In most cases, employees who committed fraud were found to be living beyond their means, having financial difficulties, maintaining very close relationships with customers or vendors, and/or displayed excessive control behaviors.

207

Another perspective focuses on individual differences and developing, testing, and using profiling of individuals who are “prone” to steal. Employee theft is assumed to be better controlled at the entry point or when a person is selected for employment.98 Although some promising research is being developed on integrity testing, the impact of trying to control the entry of individuals with a high propensity to steal is still debatable.99 Additional suggestions for reducing negative behaviors such as theft are discussed in the nearby Global OB.

There is no complete solution to employee theft. Recognizing the problem, attempt- ing to understand the motives behind theft behavior, establishing a culture of trust and respect, and using fair, predictive selection tools to minimize the entry of those candi- dates with poor integrity and high dishonesty tendencies are some of the legal actions managers can take.

Privacy Privacy in the workplace is an important issue facing managers and employees. The mana- gerial perspective on privacy includes the right to do drug testing, electronic workplace searches, surveillance by recording or video device, and monitoring off-duty conduct.100 The emergence and growth of the Internet have created the issue of how technology at work can blur the lines between personal and professional behaviors. Surveys suggest that a majority of employers use some form of electronic monitoring and/or surveillance to track employee activity.

Privacy rights for public employees are found in the U.S. Constitution and are generally broader than the privacy rights of employees in the private sector. Privacy rights stem from different parts of the Bill of Rights. The First Amendment protects an employee’s freedom

PREVENTING MISBEHAVIOR IN THE WORKPLACE How can such misbehaviors as sexual harassment, violence, bullying, incivility, theft, fraud, substance abuse, and cyberslacking be pre- vented in organizations in the United States and around the globe? There’s no “magic bullet” solution, but organizations can take steps to at least reduce the incidence of these counterproductive behaviors:

Step 1: Lead by example. Top leaders and managers should set the example by behaving in a fair, ethical, and courteous manner.

Step 2: Create an ethical climate. Ethical organizational climates can reduce certain workplace behaviors like bullying and increase positive outcomes such as employee engagement and organiza- tional commitment.

Step 3: Develop a companywide policy. A zero-tolerance policy that prohibits violence, fraud, and so on needs to be communi- cated to all employees.

Step 4: Train managers/employees. Training should focus on how to identify and report inappropriate workplace behaviors.

Step 5: Develop a crisis plan. To be prepared to react to certain misbehaviors, the organization needs to develop a plan that will allow rapid response and damage control.

In addition to these five steps, managers and leaders can also prevent many misbehaviors by being nice to employees. This com- monsense advice is based on the extensive research on organiza- tional justice (see Chapter 5). Positive behaviors can be enhanced in organizations when their leaders and managers do the following: distribute rewards (e.g., pay raises and promotions) in a fair man- ner; use procedures to make decisions that are unbiased and allow for corrections; are respectful and civil when interacting with and communicating decisions to employees; and reduce bureaucracy and increase the level of resources that employees need to do their jobs well.

Sources: Baird Brightman, “How to Overcome the 6 Most Toxic Employee Behaviors,” Fast Company, http://www.fastcompany, accessed April 6, 2016; Linnda Durré, “10 Signs of a Positive Workplace,” Monster.com, http://www. monster.com, accessed April 6, 2016; organization website, “ANA Sets ‘Zero Tolerance’ Policy for Workplace Violence, Bullying,” news release, American Nurses Association, August 31, 2015, http://www.nursingworld.com; Anka Wittenberg, “The Business Impact of Authentic Leadership,” Entrepreneur, April 20, 2015, https://www.entrepreneur.com; Tim Gould, “Dealing with Acidic Attitudes: Help for Your Managers,” HR Morning, March 25, 2015, http://hrmorning.com.

G L O B A L O B

208 Part Two Understanding and Managing Individual Behavior

of speech and association. The Fourth Amendment prohibits unreasonable searches and seizures. The Fifth Amendment ensures against self-incrimination, and the Fourteenth Amendment guarantees due process and equal protection. Various state constitutions also include a right to privacy.

Privacy violation through computer hacking is a worldwide problem.

E-Mail Privacy Electronic mail is used widely in organizations. Groupware, instant messaging, and e-mail allow employees to share information in real time.101 It has become a communication tool of choice. However, the proliferation of e-mail systems has brought about a number of issues that can create management–employee tensions. Pillsbury, UPS, and Intel have reserved the right to routinely inspect e-mail messages of employees.

The Fourth Amendment of the Constitution protects written communications from unreasonable searches and seizures. E-mail has the same immediacy as a telephone conver- sation, yet it has the permanence of a written document since these messages can be saved. These qualities have led the courts to regard e-mail as not being entitled to the same Fourth Amendment protection as telephone calls and written documents.

While the courts have generally reaffirmed that employers can read e-mails sent over their computer systems even if employees are uninformed of the policies,102 recent court cases have shown some limited support for employees who felt their privacy was violated when their companies read their e-mails, especially when sent via personal e-mail accounts.103 These recent rulings aside, the majority of previous court cases have viewed employee e-mails as if they were company property.104 Preventing misbehavior and unpro- fessional messages takes precedence over an employee’s privacy rights.

Despite its legality, some believe managerial review of e-mails is morally unacceptable. That is, management is misbehaving by snooping. Managers who indiscriminately inspect e-mails are violating the employee’s moral right to privacy.

Privacy is not an easy concept. It can be defined broadly as the right to be left alone and to have some solitude. A more focused view of workplace privacy is that it is a condition that limits others’ access to an individual’s words, writings, opinions, and attitudes. With- out privacy a person has no psychological solitude to plan, dream, or think.

The Organizational Threshold A controversial question is whether employees give up all civil liberties once they cross into the organization. Are there any workplace rights, and shouldn’t privacy be a top one? This question is more than a philosophical issue. There is a reciprocal aspect to privacy rights. The relationship between the employee and employer is reciprocal.105 An employer expects employees not to share proprietary secrets, yet unless the employer respects employee privacy the reciprocal relationship is broken or damaged.

Routine examination of employee e-mails damages confidentiality. The e-mail is no longer confidential since a third party (e.g., management) reads the message and knows who is involved. Is it worth it to access e-mails if confidentiality and the reciprocal relationship is damaged or broken? Some firms say yes and others no. Those in favor believe that proprietary secrets will not be given up if employees know they may be monitored. Also, the use of e-mails for fraudulent purposes is reduced because of the fear of being caught.106

Those who oppose contend that a strict e-mail privacy policy provides employees with a sense of autonomy, self-confidence, and empowerment. Many employees value these fac- tors, and they show it with higher morale and more loyalty to the organization.

privacy A situation or condition that limits or forbids another person’s access to an individual’s records, data, or information.

Chapter 8 Managing Employee Behavior 209

Testing Policy Organizations can utilize testing (e.g., medical, drug, psychological, or lie detector) if the test is designed to predict a person’s ability to perform, is relatively noninvasive, and the results are private.107 For example, the Americans with Disability Act (ADA) limits the use of medical testing. Employers can require a medical test only after a job offer is made. Also, the medical test results may not be passed on wholesale to the employer. Only the medical practitioner’s conclusion about the person’s ability to work without restrictions can be provided. Data on the medical test must be reviewed only by those with a “need to know.”

Once a person becomes employed, the employer can conduct a medical examination only to determine “fitness-to-perform.” Again only the examiner’s general conclusion is provided.

Testing of any form should be carefully weighed in terms of costs and benefits. The key rule of thumb is that there be a strong work-related reason to require employees to be tested. If the reason is not apparent and significant, then testing should not be conducted.

IS TONY A SAFE EMPLOYEE? Tony is doing exceptionally well, but there is a risk that one of his seizures may hurt himself or someone else. Tony should be reas- signed until the seizures are brought under control. Endangering

others is not an option for managers. Firing or suspending Tony is not a choice for a fair-minded, sensitive manager either. Find a job that Tony can accomplish until the seizure activity is corrected or stopped.

Y O U B E T H E J U D G E C O M M E N T

Summary of Key Points

∙ Misbehavior in organizations is exhibited in many different forms. In general, the man- agement of employee misbehavior (MEM) is the responsibility of managers in a formal sense. The groups to which misbehaving employees belong also have an informal role to play correcting or sanctioning misbehavior of colleagues.

∙ The MEM has a cross-disciplinary theme. A number of theories, studies, and models are available to trace antecedents, mediators, outcomes, and costs of organizational misbehavior.

∙ The intention to misbehave is proposed to mediate the relationship of antecedents and outcomes. These intentions are considered normative or instrumental.

∙ Management has a number of choices to intervene and correct or stop misbehavior. Included in the manager’s choice set are interventions at the hiring point (before entry), to impact normative or instrument behaviors, and to bring about deterrence.

∙ The possible misbehaviors confronted by managers and nonmanagers range from cyberslacking to sexual harassment to violence. If permitted to go unchecked, these misbehaviors result in lost productivity, higher costs, and lower morale.

∙ The consequences of misbehavior also include damaged, destroyed, or harmed equip- ment, information, and data. There can also be significant health costs.

∙ There is no “one best way” remedy for misbehavior. Individual differences, different goals, varied organizational cultures, and managerial knowledge and skill are all important factors to consider in coping with and attempting to correct misbehavior.

1. A scholar commented, “Workplace aggression is wasteful in terms of human and financial resources.” What is meant by this statement?

2. What roles do frustration, stress, and emotional disturbances play in the increase in incivility in organizations?

3. Some claim that white-collar crime is not as bad or harmful as nonmanagerial theft or sabotage of property. Do you agree? Why or why not?

4. When an employee is frustrated with a supervisor or colleague, do you think it is accept- able for this employee to “vent” his/her frustrations on a social media site like Facebook?

5. There are three specific points or phases at which management has the opportunity to head off workplace violence. What are the points, and what actions can management take?

6. Can a person be required to take medical tests to be considered for a new role or job? What restrictions, if any, are placed on use of the test data?

7. As a manager, why would you be interested in learning how to deal with episodes of employee misbehavior?

8. To what degree can employee and managerial misbehavior be prevented in organiza- tions? What steps would you take as a leader to curtail this negative behavior?

9. What legal protections does an employee have against the employer’s use of electronic surveillance?

10. In the near future, will organizations have at their disposal tests that can precisely identify job candidates with a high propensity to misbehave? Explain.

Review and Discussion Questions

210 Part Two Understanding and Managing Individual Behavior

Chief Executive Officers (CEOs) are responsible for the overall direction and performance of their organizations. Arguably, no one in a firm has a greater impact or accountability than its CEO and with very few exceptions, the road to CEO is a long one. A career-long vetting pro- cess is intended to allow only the most talented managers to rise to the top. While it is expected that CEOs be skilled and knowledgeable business people, it is also important to recognize that they are human. CEOs are not immune from poor judgment or behavior. The following CEOs resigned their positions partly due to allegations of engag- ing in inappropriate relationships. It should be noted that internal company investigations did not find that any of these individuals had committed sexual harassment.

Harry Stonecipher Following a successful 32-year track record in the aero- space industry, Harry Stonecipher’s career culminated when he was named CEO of The Boeing Company in 2003. Working for several different companies, Stonecipher

began as a lab technician and eventually worked his way up the ranks to engineer, program manager, division man- ager, vice president, chief operating officer, president, and eventually CEO. Prior to joining Boeing and while presi- dent of Sundstrand (now Hamilton Sundstrand—a United Technologies Company) he is credited with repairing strained relationships with the United States Department of Defense, forming an excellent rapport with the compa- ny’s labor force, and establishing unprecedented levels of product reliability. In his brief three-year tenure as presi- dent of McDonnell Douglas, the company’s stock price increased almost 300 percent and he led the effort to merge with Boeing. After that merger Stonecipher became presi- dent and chief operating officer of Boeing, holding that position until 2001. In 2001, he was elected vice chairman and held this position until his retirement in 2002.

Upon Stonecipher’s retirement Phil Condit became CEO and the company was soon embroiled in numerous scandals, one of which resulted in the chief financial officer being sent to jail. Phil Condit was dismissed and

Case

Case 8.1: The (Mis)Behavior of Successful CEOs Leads to Their Departures

211

Stonecipher, who was still on Boeing’s board of directors, returned as president and CEO in 2003. His task was to restore Boeing’s credibility. He introduced a new code of conduct that would apply to all of Boeing’s 150,000 employees. In short order, Stonecipher was successfully changing the image of the company and restoring trust in Boeing. Then the Board received an anonymous tip. In March of 2005, the Boeing board unanimously voted to remove Stonecipher on grounds that he had violated the Boeing code of conduct. The married Stonecipher was found to have had an extra marital affair with a female Boeing executive. The relationship was consensual; the ex- ecutive did not work directly for Stonecipher and it was not considered “harassment.” He did not fight the dismissal. The board thought that Stonecipher’s actions showed poor judgment and would weaken his credibility as Boeing’s

Reality Check Now how much do you know about managing employee behavior?

6. Sabotage often targets equipment, operations, and . a. people b. files c. systems d. work products

7. Research suggests that employees who are the target of uncivil behavior may react in each of the follow- ing ways except for . a. Lower levels of creativity b. Increased violence against the harasser c. Higher turnover d. Increased job dissatisfaction

8. The opportunity to commit fraud in an organization is typically addressed through . a. polygraph testing b. internal controls c. workshops d. strict budgetary modeling

9. Workplace bullies have been known to possess high levels of . a. self-confidence b. aggression c. sleep deprivation d. social problems

10. According to the majority of court rulings, employee e-mails are viewed as company property. a. True b. False

REALITY CHECK ANSWERS

Before After

1. b 2. c 3. d 4. a 5. a 6. a 7. b 8. b 9. b 10. a Number Correct Number Correct

CEO. Stonecipher was given an attractive severance pack- age and kept his nearly $700,000 a year pension.

Mark Hurd In 2005, Mark Hurd was chairman and CEO of Hewlett- Packard (HP), the world’s largest computer company. He joined HP after a successful 22-year career with global technology company, NCR. Hurd took control of HP after allegations that during the previous CEO’s tenure, individuals at the company engaged in spying to discover who leaked information from a board meeting to a reporter. The scandal led to the resignation of HP’s chair- woman of the board, the general counsel, and two inside investigators. Hurd did much to distance the company from that scandal. He is said to have brought stability to HP and introduced a by-the-book approach to operations,

212 Part Two Understanding and Managing Individual Behavior

uncompromising cost-cutting and an aggressive approach to acquisitions. In his five-year tenure Hurd is credited with increasing HP’s market capitalization by over $44 billion, to $108 billion, a 70 percent increase.

Although the company was financially successful, Hurd was forced to resign in 2010 due to allegations of sexual impropriety. An internal HP investigation found that there was no violation of their sexual harassment policy but the married Hurd had a “close personal rela- tionship” with a female contractor. According to a New York Times investigation, Hurd was also “accused of trying to hide an inappropriate relationship with [the contractor] by altering his expense reports.” Even though Hurd offered to repay the misfiled expenses, the board insisted he resign. Hurd acknowledged his poor judgment when he stated: “There were instances in which I did not live up to the standards and principles of trust, respect, and integrity that I have espoused at HP and which have guided me throughout my career.” Hurd was given a $12.2 million severance and stock benefits in exchange for his agreement not to pursue legal action against the company. Oracle founder Larry Ellison compared Hurd’s dismissal to Apple’s misguided firing of Steven Jobs and hired Hurd as co-president. Brian Dunn By most accounts former Best Buy CEO Brian Dunn was a classic American success story. Dunn had started as a sales associate in 1985 and worked his way to the top of the company; becoming Best Buy’s CEO in 2009. To the surprise of many at Best Buy, Dunn unexpectedly re- signed from the company in April 2012. While the rea- son for his departure was not initially shared, the married Dunn had been accused of having an inappropriate rela- tionship with a 29-year-old female associate. An internal audit committee investigated the allegations and concluded that Dunn “violated company policy by engaging in an extremely close personal relationship with a female em- ployee that negatively impacted the work environment.” While Dunn is alleged to have given the associate gifts, no misuse of company funds was found. As part of Dunn’s separation agreement, he was prohibited from working for a Best Buy competitor for at least three years and was given a $2.85 million severance payment, previ- ously earned bonus of $1.14 million, and previously awarded stock grants, valued at $2.54 million.

What Happened? Harry Stonecipher is quoted as saying, “Really smart people do dumb things sometimes.” The CEOs in this case were all highly successful managers at the pinnacle

of their careers. They were aware of the ethical expecta- tions of their boards, colleagues, employees, and other stakeholders, and in this age of information sharing should not have been surprised that their relationships came to light.

Employee misbehavior can occur at all levels of an organization and often the mere perception of misbe- havior can have a chilling influence on one’s career and a negative impact on the public image of a company. This case demonstrates that managing employee mis- behavior (and the perception of misbehavior) is an im- portant and challenging goal for managers and leaders. It goes without saying that CEOs should set the tone for what constitutes acceptable behavior. Questions 1. To what degree do you believe the behaviors of the

featured CEOs constituted “misbehavior” and that the reactions of the boards were correct?

2. If you were on a board of directors, what factors would you consider in the selection of a CEO to limit the potential of this type of misbehavior?

3. All three of the CEOs in the case were given large severance packages. What message does this send to future CEOs of these companies? If you were on the board of directors, would you endorse such sever- ance packages? What is the cost of not granting a competitive severance package?

Sources: Written by Dr. Michael Dutch, Greensboro College, Greensboro, North Carolina (2012). Adam Lashinsky, “The Redemption of Oracle’s Mark Hurd,” Fortune, June 8, 2015, http://fortune.com; “Former Best Buy CEO Brian Dunn to Chair Minneapolis Startup Upsie,” Tech.MN, May 6, 2015, http://tech.mn; company website, “Brian Dunn Joins Upsie as Chairman,” https://upsie.com, May 6, 2015; Erica Ogg, “HP CEO Hurd Resigns over Sexual Harassment Investigation,” CNET News, August 6, 2012, http:// news.cnet.com; Laura Cox, “Former Best Buy CEO Brian Dunn DID Have an Affair with a Colleague, Company Says, in Scandal That Forced Founder to Resign from Role of Chairman,” Mail Online, May 12, 2012, http://www.dailyma il.co.uk; Stephanie Clifford, “Chairman of Best Buy Resigns After an Internal Audit,” The New York Times, May 14, 2012, http://www.nytimes.com; Erin Carlyle, “Best Buy CEO Brian Dunn Gets $6.6 Million Severance Package After ‘Friendship’ with 29-Year-Old Employee,” Forbes, May 14, 2012, http://www.forbes.com; Jonathan Berr, “CEO Sex Scandals: A Rogues’ Gallery,” Daily Finance, November 24, 2010, http://www.dialyfinance.com; Ashlee Vance, “Despite H.P.’s Efforts, Spectacle of a Chief Goes On,” The New York Times, August 16, 2010, http://www.nytimes.com; Ben Worthen and Pui-Wing Tam, “H-P Chief Quits in Scandal,” The Wall Street Journal (online), August 7, 2010, http:// online.wsj.com; Charles Cooper, “Hurd Scandal the Latest Episode in HP’s Peyton Place Annals,” CBS News (online), August 6, 2010, http://www. cbsnews.com; “Boeing: History—Biographies,” Boeing: Harry C. Stonecipher, n.d., http://www.boeing.com/history/boeing/stonec ipher. html; Renae Merle, “Boeing CEO Resigns over Affair with Subordinate,” The Washington Post, March 8, 2005, http://www.washingtonpost.com.

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The experience of work and life stress is certainly not new. Our cave-dwelling ancestors faced stress every time they left their caves and encountered their enemy, the saber- toothed tigers.1 The tigers of yesteryear are gone, but they have been replaced by other predators—work overload, a nagging boss, demanding customers, deadlines, layoffs, out- sourcing, mergers, poorly designed jobs, work–life balance, financial crises, accelerating rates of change. These work and nonwork predators create stress for individuals on and off the job.

Most economists and experts agree that between 2007 and 2009, the world experi- enced the worst economic recession since the Great Depression.2 In the United States, the housing market collapsed and home foreclosures reached record levels, the banking system experienced tumultuous change and contraction, and companies laid off workers in the thousands.3 For example, Coca-Cola, Merck, and Chrysler all announced layoffs. The size of the layoffs worried many people. Hewlett-Packard laid off 24,600 employ- ees, General Motors released 47,000 employees, Citigroup fired 50,000 employees, and Dell let go 10 percent or 8,900 members of its worldwide workforce.4 These and other layoffs took a toll; the unemployment rate doubled over a two-year period to reach 10 percent in October 2009.5 The federal government responded to the banking and financial crisis with a $787 billion stimulus package, a restructuring plan for the finan- cial system, a housing recovery initiative, and an expansion of the role of the Federal Reserve.6 Even with this attempt to stabilize the economy, there was still a great deal of uncertainty on the part of businesses, consumers, homeowners, and employees as to when things would turn around. Such economic uncertainty, combined with the real threat of losing one’s job or home, left a lot of people feeling stressed and anxious. The saber-toothed tigers of yesterday have been replaced by new financial and job uncertain- ties, stress, and pressures.

Managing Individual Stress Learning Objectives

After completing Chapter 9, you should be able to:

Summarize what is meant by the term stress.

Describe the major components of the organi- zational stress model.

Compare individual, group, and organizational work stressors.

Discuss individual and organizational outcomes of stress.

Identify some variables that moderate the stress process.

Give examples of several different organiza- tional and individual approaches to stress prevention and management.

C H A P T E R N I N E

© Ingram Publishing, RF

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This chapter focuses primarily on the individual at work in organizations and on the stress created in this setting. Much of the stress experienced by people in our industrialized society originates in organizations; the stress that originates elsewhere often interacts with and affects our behavior and performance in these same organizations. One of the compli- cating issues in understanding stress is that it has been defined in many ways. We begin this chapter with our definition of stress.

What Is Stress? Stress means different things to different people. Many people describe it as feeling tense, anxious, or worried. Scientifically, these feelings are all manifestations of the stress experi- ence, a complex programmed response to perceived threat that can have both positive and negative results.

Stress is seen partially as a response to some stimulus, called a stressor. A stressor is a potentially harmful or threatening external event or situation. Stress is more than simply a response to a stressor, however. It is the consequence of the interaction between an envi- ronmental stimulus (a stressor) and the individual’s response. That is, stress is the result of a unique interaction between stimulus conditions in the environment and the individual’s predisposition to respond in a particular way. We will define stress as an adaptive response, moderated by individual differences, that is a consequence of any action, situation, or event that places special demands on a person. It is important to note that not all stress is bad; as a matter of fact, stress is needed to help all individuals function at a productive level.

stress An adaptive response, moderated by individual differences, that is a consequence of any action, situation, or event that places special demands on a person.

Reality Check How much do you know about managing stress?

1. Stress of a long duration is often referred to as . a. random b. prolonged c. chronic d. hassle-free

2. is a personality characteristic that buffers a person’s response to stress. This type of person assumes she or he is in control and treats change as a challenge. a. Introversion b. Neurotic c. Hardiness d. Intensity

3. True or false: Karoshi is what the Japanese refer to as working oneself to death. a. True b. False

4. Emotional exhaustion is a major concept in discussing . a. Type A behavior b. burnout c. depersonalization d. eustress

5. True or false: There are four different ways to categorize person–environment fit. a. True b. False

Chapter 9 Managing Individual Stress 215

This “good stress” (or eustress) occurs when the individual perceives or interprets an event or situation in a positive way.7

We thus think it is useful to view stress as the response of a person to certain stimulus conditions (actions, situations, events) or stressors. This allows us to focus attention on aspects of the organizational environment that are potential stress producers. Whether stress is actually felt or experienced by a particular individual will depend on that person’s unique characteristics. Furthermore, note that this definition emphasizes that stress is an adaptive response.

Stress is the result of dealing with something (e.g., a person, an event, a problem) plac- ing special demands on us. Special here means unusual, physically or psychologically threatening, or outside our usual set of experiences. Starting a new job assignment, making an important presentation, missing a flight, making a mistake at work—all of these actions, situations, or events may place special demands on us. In that sense, they are potential stressors. We say potential because not all stressors will always place the same demands on people. For example, having a performance appraisal meeting with the boss may be extremely stressful for Matt and not the least stressful for his co-worker, Sabrina. Such a meeting makes special demands of Matt; for Sabrina it does not. For Matt the meeting is a stressor; for Sabrina it is not.8

For an action, situation, or event to result in stress, it must be perceived by the individual to be a source of threat, challenge, or harm. If there are no perceived consequences—good or bad—there is no potential for stress. As Exhibit 9.1 illustrates, three key factors determine whether an experience is likely to result in stress: importance, uncertainty, and duration.

stressor An external event or sit- uation that is potentially harmful to a person.

Y O U B E T H E J U D G E

IS THE ORGANIZATION RESPONSIBLE FOR AN EMPLOYEE’S STRESS? The text refers to stress as an adaptive response to a situation that places special demands on a person. If those special demands are related to an employee’s job, should the employer be responsible? One employee thought so. Here’s what happened.

James Carter was an automobile assembly-line worker em- ployed by General Motors Corporation. At work he was having a difficult time keeping up with the speed of the production line. The line moved past his workstation faster than he was sometimes able to perform the operations for which he was responsible.

Making the situation even more stressful for James was the fact that his manager frequently criticized him for his failure to keep up with line speed. Eventually the stress became more than he could cope with and he suffered a psychological breakdown. He wanted to be compensated for his “mental injury” and receive worker’s disability payments. GM argued that it wasn’t the job that caused the problem; thousands of workers perform essen- tially the same job in assembly plants without problems. It was Carter’s reaction to the job, the company said, and thus GM was not responsible.

Was Carter’s stress an injury? Was GM liable? You be the judge!

EXHIBIT 9.1 Three Factors that Make an Event (or Situation) Stressful • I can’t afford to be laid

off. There are no jobs right now and I have to pay my bills.

How important is the event?

• The company isn’t telling us anything about the upcoming layoffs.

How much uncertainty surrounds the event?

• I hope these layoffs are done quickly so we can

focus on our work or on finding a new job.

What is the duration of the event?

216 Part Two Understanding and Managing Individual Behavior

Importance relates to how significant the event is to the individual. For example, sup- pose you are facing a job layoff. The more significant that layoff is to you, the more likely you are to find it stressful. If you expect the layoff to be followed by a period of prolonged unemployment, you will probably view it as a more important event than if immediate reemployment is assured.

Uncertainty refers to a lack of clarity about what will happen. Rumors of an impending layoff may be more stressful to some people than knowing for certain they will be laid off. At least in the latter case, they can make plans for dealing with the situation. Frequently, not knowing places more demands on people than does knowing, even if the known result is perceived as negative.

Finally, duration is a significant factor. Generally, the longer special demands are placed on us, the more stressful they are. Being given a difficult job assignment that lasts only a day or two may be mildly upsetting, while the same assignment lasting for six months could be excruciating. Most people can endure short periods of strenuous physical activity without tiring; prolong the duration, however, and even the fittest among us will become exhausted. The same holds true for stress and stressors. Stress of short duration is some- times referred to as acute stress. It may last a few seconds, a few hours, even a few days. Long-duration stress, on the other hand, is sometimes referred to as chronic stress. Chronic stress may last for months or years. It is the ongoing tension experienced by the people of the Middle East or the turmoil that ethnic rivalries have brought to the people of Turkey and Syria. It is the unrelenting pressure of a job one finds unsatisfying, the constant demands made by an unreasonable boss, or the never-ending struggle to advance in one’s chosen career.

Stress Model For most employed people, work and work-related activities and preparation time represent much more than a 40-hour-a-week commitment. Work is a major part of our lives, and work and nonwork activities are highly interdependent. The distinction between stress at work and stress at home has always been an artificial one. With the explosive increase of dual-career couples in the latter part of the 20th century, even this artificial distinction has become blurred. Our primary concern here, however, is with direct work-related stressors.

The model shown in Exhibit 9.2 is designed to help illustrate the link among organiza- tional stressors, stress, and outcomes. Recall from our earlier definition that stress is a response to an action, situation, or event that places special demands on an individual. These occurrences are represented in Exhibit 9.2 as stressors, divided into four main cate- gories: individual, group, organizational, and nonwork or extraorganizational. The first three stressor categories are work-related.

The experience of work-related and extraorganizational stress produces outcomes: behavioral, cognitive, and physiological. The model in Exhibit 9.2 suggests that the rela- tionship between stress and outcomes (individual and organizational) is not necessarily direct; similarly neither is the relationship between the stressors and stress. These relation- ships may all be influenced by stress moderators. Individual differences such as age, social support mechanisms, and personality are potential moderators. A moderator is a valuable attribute that affects the nature of a relationship. While numerous moderators are extremely important, we focus our attention on three representative ones: personality, Type A behav- ior, and social support.

The stress model provides managers with a framework for thinking about stress in the workplace. Consequently, it suggests that interventions may be needed and can be effective

Chapter 9 Managing Individual Stress 217

in improving negative stress consequences. Stress prevention and management can be initi- ated by individuals or the organization. The intention of most preventive programs is to reduce the occurrence, intensity, and negative impact of stress. The management of stress attempts to eliminate or minimize negative consequences of stress. Prevention and the management of stress are challenging, however, as will be illustrated later in this chapter.

EXHIBIT 9.2 A Model of Stressors, Stress, and Outcomes

Individual Level

Stressors

Group Level

Organizational Level

g P

Nonwork

V

Behavioral

Outcomes

A

Cognitive

Physiological

Moderators Individual Differences

A

Cognitive Appraisal Stress

Problem- focused coping Emotion- focused coping

218 Part Two Understanding and Managing Individual Behavior

Work Stressors: Individual, Group, and Organizational As we have said, stressors are those actions, situations, or events that place special demands on a person. Since, in the right circumstances, virtually any occurrence can place special demands on a person, the list of potential stressors is almost infinite. We will limit our examination to a small number of stressors that are relatively common in each of our model’s three work-specific categories.

Individual Stressors Stressors at the individual level have been studied more than any other category presented in Exhibit 9.2 Role conflict is perhaps the most widely examined individual stressor.9 Role conflict is present whenever a person receives conflicting messages about what she or he is expected to do in the job. Components of role conflict include being torn by conflict- ing demands from a supervisor about the job and being pressured to get along with people with whom you are not compatible. Regardless of whether role conflict results from organi- zational policies or from other persons, it can be a significant stressor for some individuals. A recent analysis of 137 research studies that gathered information from 35,265 employees found that role conflict has a negative effect on employee performance.10 Role conflict also leads to other problems for employees and organizations. A study at Goddard Space Flight Center determined that about 67 percent of employees reported some degree of role con- flict. The study further found that Goddard employees who experienced more role conflict also experienced lower job satisfaction and higher job-related tension.11 The researchers also found that the greater the power or authority of the people sending the conflicting mes- sages, the greater was the job dissatisfaction produced by role conflict.

An increasingly prevalent type of role conflict occurs when work and nonwork roles interfere with one another. The most common nonwork roles involved in this form of conflict are those of spouse and parent. Balancing the demands of work and family roles is a significant daily task for a growing number of employed adults.12 Pressure to work late, to take work home, to leave work early to care for a sick child, to spend more time traveling, and to frequently relocate in order to advance are a few examples of potential sources of role conflict between work and family.

Virtually everyone has experienced work overload, another common individual stressor, and the incidence rate is increasing.13 Overload may be of two types: qualitative or quantitative. Qualitative overload occurs when people feel they lack the abil- ity needed to complete their jobs or that performance standards have been set too high. Quantitative overload results from hav- ing too many things to do or insufficient time to complete a job. As organizations attempt to increase productivity, while decreasing workforce size, quantitative overload increases (and so does stress).14 The New York law firm Cleary, Gottlieb, Steen, and Hamilton was sued by the father of an associate at the firm. The associate, unable to cope with workload, committed suicide by jumping off the roof of the firm’s building.15 This suicide was not an isolated incident. In an analysis of workplace suicides committed between 1992 and 2014, the Bureau of Labor Statistics found that the largest number, 282, occurred in 2013.16

role conflict Arises when a person receives incompatible messages regarding appropriate role behavior.

RECOGNIZING THE WARNING SIGNS OF STRESS IN EMPLOYEES

As a manager you should be alert to warning signs of stress in your subordinates. One indicator is change in behavior. Some of the more common changes include:

1. A normally punctual employee develops a pattern of tardiness (or a pattern of absences in a usually reliable worker).

2. A normally gregarious employee becomes withdrawn.

3. An employee whose work normally demonstrates attention to detail submits messy, incomplete, or sloppy work.

4. A good decision maker suddenly starts making bad decisions (or seems to be unable to make decisions).

5. An easygoing employee who gets along well with others becomes irritable and discourteous.

6. A normally well-groomed employee neglects his or her appearance.

Information You Can Use

Chapter 9 Managing Individual Stress 219

From a health standpoint, numerous studies have established that quantitative overload can cause biochemical changes, specifically, elevations in blood cholesterol levels. One study examined the relationship of overload, underload, and stress among 1,540 execu- tives. Those executives on the low and high ends of the stress ranges reported more sig- nificant medical problems. This study suggests that the relationships among stressors, stress, and disease may be curvilinear. That is, those who are underloaded and those who are overloaded represent two ends of a continuum, each with a significantly elevated num- ber of medical problems.17 The underload–overload continuum is presented in Exhibit 9.3. The optimal stress level provides the best balance of challenge, responsibility, and reward. The potential negative effects of overload can be increased when overload is coupled with low ability to control the work demand.18 Research suggests that when individuals experi- ence high work demands with little or no control over these demands, the physiological changes that occur persist even after the individual has left work.19

Perhaps the most pervasive individual stressor of all is the unrelenting pace of change that is part of life today. At no other point in the history of industrialized society have we experienced such rapid change in the world around us. The last third of the 20th century included the advent of such wonders as communications satellites, moon landings, organ transplants, laser technology, nuclear power plants, intercontinental ballistic missiles, supersonic transportation, artificial hearts, and many other space-age developments. The pace of change within organizations has been no less remarkable at the start of the 21st century with two economic recessions, a global financial crisis, a major terrorist attack on U.S. soil, technological advances, and Internet-based phenomena like the explosive growth of social networking sites, cloud computing, and mobile computing.

Many people who experience a great deal of change at work or in life show absolutely no negative effects or health problems. For some reason, these people can withstand the negative consequences of large doses of change that others cannot. Why this is so is an intriguing question. One organizational researcher, Suzanne Kobasa, has proposed that individuals who experience high rates of change without consequently suffering health problems might differ in terms of personality from those who are negatively affected. She refers to the personality characteristic in question as hardiness.20 People with the hardiness

hardiness A personality trait that appears to buffer an individual’s response to stress. The hardy person assumes that he or she is in control, is highly committed to lively activities, and treats change as a challenge.

EXHIBIT 9.3 The Underload– Overload Continuum

hy

Underload Optimal Stress

Overload

Low Performance

High Performance

220 Part Two Understanding and Managing Individual Behavior

personality trait seem to possess three important characteristics. First, they believe that they can control the events they encounter. Second, they are extremely committed to the activities in their lives. Third, they treat change in their lives as a challenge. In a longitudi- nal study to test the three-characteristic theory of hardiness, managers were studied over a two-year period. It was found that the more managers possessed hardiness characteristics, the smaller the impact of life changes on their personal health. Hardiness appeared to off- set, or buffer, the negative impact of change.

It is proposed that hardiness is a factor that reduces stress by changing the way stressors are perceived. The hardy person is able to work through and around stressors, while the less hardy person becomes overwhelmed and unable to cope. The hardy respond by cop- ing, attempting to control, and taking on the stressors as a challenge.21 This type of response typically results in better behavioral, cognitive, and physiological consequences.22

Individual stressors abound. Not only can they cause stress but a number of other nega- tive consequences as well. As we will see later in the chapter, stress consequences can affect not only health but a variety of job performance variables as well.

Group, Organizational, and Nonwork Stressors The list of potential group and organizational stressors is a long one. In the next chapter, a number of group characteristics are discussed, including group norms, leadership, and the status hierarchy. Each of these can be a stressor for some group members, as can the differ- ent types of group conflict discussed in Chapter 10. One problem in discussing group and organizational stressors is identifying which are the most important. The paragraphs that follow briefly highlight the more significant stressors.

Participation Participation refers to the extent that a person’s knowledge, opinions, and ideas are included in the decision-making process. It is an important part of working in organizations for some people. Groups and organizations that do not encourage or allow participation will be a source of frustration to those who value it. Likewise, others will be frustrated by the delays often associated with participative decision making. Others may view shared deci- sion making as a threat to the traditional right of a manager to have the final say. Participa- tion will act as a stressor for these people.

Intra- and Intergroup Relationships Poor relationships within and between groups can be a source of stress. Poor relationships may include low trust, lack of cohesion, low supportiveness, and lack of interest in listen- ing to and dealing with the problems that confront a group or group member.

Organizational Politics High levels of political behavior in organizations can be a source of stress for many employees. Office politics are consistently cited as a primary stressor in organizations. Political activity, game playing, and power struggles can create friction, heighten dysfunc- tional competition between individuals and groups, and increase stress.

Organizational Culture Like individuals, organizations have distinct personalities. The personality of an organiza- tion is shaped largely by its top executives. A tyrannical and autocratic executive team can create a culture filled with fear. Ernest Gallo is credited with being the stress producer at Gallo Winery because of the culture he established with his hard-driving style, unrelenting insistence on superior performance, and low tolerance for failure.23

Chapter 9 Managing Individual Stress 221

Lack of Performance Feedback Most people want to know how they are doing and how management views their work. All too often, however, meaningful performance evaluation information is lacking, or the information is provided in a highly authoritarian or critical manner. Performance feedback information must be provided, and to minimize stress, it must occur in an open, two-way communication system.

Inadequate Career Development Opportunities Career development opportunity stressors are those aspects of the organizational environ- ment that influence a person’s perception of the quality of his or her career progress. Career variables may serve as stressors when they become sources of concern, anxiety, or frustra- tion. This can happen if an employee is concerned about real or imagined obsolescence, believes that promotion progress is inadequate, or is generally dissatisfied with the match between career aspirations and the current position.

Downsizing Downsizing is the reduction of human resources by layoffs, attrition, redeployment, or early retirement.24 As some organizations strive to cut costs, increasing numbers of employees are either downsized or fear being downsized. In either case, it is a potent stressor that can have negative effects for both individuals and organizations. 25 Studies have shown, for exam- ple, that disability claims increase dramatically in companies that have recently downsized.26 This increase comes both from employees who have been dismissed and from those who remain. When forced to lay off 8 percent of its employees due to the recession in 2008, online retailer Zappos conducted the layoffs in a transparent manner; the CEO tweeted and blogged about why the layoffs were necessary and how they were going to compensate each laid-off employee. The company treated the fired employees with compassion, providing them with severance packages and extended health insurance coverage.27

Nonwork Stressors Stress is also caused by factors outside the organization. Although the emphasis in this chapter is on work, nonwork stressors should not be ignored because they affect work. Raising children, caring for elders, volunteering in the community, taking college courses, and balancing family and work life are stressful for numerous people. The stress produced outside work is likely to impact a person’s work behavior and performance. The distinction between work and nonwork is blurred, and overlapping stressors are significant in any dis- cussion or analysis of stress.

The nearby Global OB illustrates nonwork stress referred to as work–life balance that “super-commuters” face around the world.

Cognitive Appraisal As presented earlier in the model of stress in Exhibit 9.1, individuals using their own view of the situation conduct a perceptual evaluation. This is their interpretation of the situation or stressors. This perceptual process explains why one person’s interpretation of stressors may be different from another person’s.

The appraisal process occurs in two steps: primary and secondary.28 A primary appraisal leads to categorizing a stressor as positive, negative, or meaningless. For example, a man- ager of a large retail store observes a 20 percent reduction in sales in November leading up to the holiday season. This is not good news given that many retailers earn the lion’s share of their sales and profits during the holidays. The secondary appraisal involves a determination

222

“SUPER-COMMUTERS” FACE FAMILY AND WORK STRESS The reality of globalization and the changing nature of work is forcing more and more managers from Europe, Asia, and the United States to take a close look at their expectations about employee performance. As jobs around the world are becoming more stressful, complex, and challenging, a renewal or regeneration time becomes an issue for managers to consider. Even the travel part of global jobs has to be carefully evaluated in terms of stress.

Gone are the days when a manager assigned or transferred to work in another country (e.g., expatriate manager) has the family automati- cally packed up and shipped out to join him or her in the new location. With many significant others and spouses now having their own careers and the importance of schooling for children, an overseas transfer introduces a form of stress trying to balance family life and work.

In Europe, the “eurocommuter” has become a common way of life. That is, the transferred manager may be from Lisbon and is assigned for a period to London. To minimize stress, the eurocommuter travels on Monday morning to the job location, the family stays at the perma- nent residence, and the manager returns home for the weekend.

The stress of relocation is assumed by eurocommuters to be more significant than the stress of travel and being away from the family during the week. Not having to relocate means less disruption for the family (and possibly a lower cost of living). However, this does not eliminate the stress. Some experienced eurocommuters contend that

about 12 months is the maximum time a manager should be expected to commute back and forth.

In the United States, “super-commuters” have become common- place, where a businessperson lives in one metropolitan area but works in another. In a recent study, 8 of the 10 largest metro areas showed explosive growth in “super-commuting” over the last decade. The most notable are the cities of Dallas, Houston, and Austin in Texas.

The commuting arrangement could be a positive approach for a short assignment. Individual managers have to decide for themselves whether it is best for them, their families, and their companies. Clearly, having managers who are willing to lead this type of lifestyle and travel back and forth can be beneficial to organizations. The stress of back and forth, being away from the family, and performing well on the job has to be compared to the stress of uprooting the family and relocating. There are no simple answers, but the “super-commuter” approach is one choice that some managers and companies in Europe and the United States have embraced.

Sources: Ian Mount, “Here’s Why Super-Commuters Are Traveling Five Hours to Work,” Fortune, September 16, 2015, http://fortune.com; Reenat Sinay, “Could Euro-commuting Be for You?” List for Life, September 9, 2015, http:// www.listforlife.net; Michael Harvey, Helene Mayerhofer, Linley Hartmann, and Miriam Moeller, “Corralling the ‘Horses’ to Staff the Global Organization of 21st Century,” Organizational Dynamics 39, no. 3 (2010), pp. 258–68; L. Dixon and M. Sim, “Short-Term Assignments Growing in Popularity,” Canadian HR Reporter 21, no. 5 (March 2008), p. 17; “Have Job Will Travel—The Life of the Eurocommuter,” MWorld (Europe), December 2002, pp. 1–3.

G L O B A L O B

of whether something can be done to reduce the stress.29 That is, is there some way I can fix the problem? The manager can’t change consumer confidence but can certainly decrease hiring, control wasteful spending, increase advertising, and run storewide sales.

Coping with Stress Through the primary and secondary appraisal, a coping approach is decided upon and applied. The two types of coping are: problem-focused and emotion-focused. Problem- focused coping is the actions taken to deal directly with the source of the stress. For exam- ple, workers facing a disrespectful manager may deal with his harassing style by being absent from work. This absenteeism enables the workers to be removed, some of the time, from the disrespectful manager.

Emotion-focused coping is the steps a person takes to address or alleviate stressful feel- ings and emotions. For example, employees who travel frequently as part of the job may alleviate their stressful feelings and emotions by exercising regularly or by reading light, nonwork related fiction or poetry. If these coping activities are successful, the frequent travelers’ feelings and emotions are kept in check.

Research illustrates that individuals use both kinds of coping approaches to deal with stressors. Some of the more popular problem-focused coping strategies include time man- agement, working with a mentor, and training to improve competencies. A few of the more popular emotion-focused coping strategies include meditation, biofeedback, exercise, joining a work support group, and personal days off.

problem-focused coping The actions taken by an individual to cope with a stressful person, situa- tion, or event.

emotion-focused coping The actions taken by a person to alleviate stressful emotions. The actions center on avoid- ance or escape from a person, problem, or event.

Chapter 9 Managing Individual Stress 223

Stress Outcomes The effects of stress are many and varied. Some effects are positive, such as self- motivation and stimulation to satisfy individual goals and objectives. Some stress consequences are disruptive, counterproductive, and even potentially dangerous. Additionally, as was suggested earlier (see again Exhibit 9.3), there are consequences associated with too little stress as well as too much. Not all individuals will experience the same outcomes. Research suggests, for example, that one of many factors influencing stress outcomes is type of employment. In one study, conducted at the Institute for Social Research at the University of Michigan, a sample of 2,010 employees was chosen from 23 occupations to examine the relationship between stress and stress conse- quences. The occupations were combined into four specific groups—blue-collar workers (skilled and unskilled) and white-collar workers (professional and nonprofessional).

Blue-collar workers reported the highest subjective effects, including job dissatisfaction; white-collar workers, the lowest. The unskilled workers reported the most boredom and apathy with their job conditions. They specifically identified a number of major stressors that created their psychological state: underutilization of skills and abilities, poor fit of the job with respect to desired amounts of responsibility, lack of participation, and ambiguity about the future. Skilled blue-collar workers shared some of these stressors and conse- quences with their unskilled counterparts, but not all; they reported above-average utiliza- tion of their skills and abilities but less responsibility and more ambiguity. White-collar professionals reported the fewest negative consequences. In all groups, however, there were indications that stress affected employees’ job performance.30

In examining stress outcomes, the distinction in our model between organizational and individual outcomes is somewhat arbitrary. For example, a decrease in job performance due to stress is clearly an individual outcome; it is the individual’s performance that is being affected. Just as clearly, however, the organization experiences important conse- quences from stress-related decreases in job performance.

Individual Outcomes The emergence or evolution of stress outcomes takes time to identify or pinpoint. For example, a promoted employee develops an uncharacteristic pattern of Friday and Monday absences. A salesperson begins to lose repeat business; former customers complain that he has become inattentive and curt in his dealings with them. A formerly conscientious nurse forgets to administer medications, with potentially serious patient consequences. An assembly worker experiences a significant increase in the percentage of her production rejected by the quality-control unit. A software designer displays sudden, apparently unpro- voked outbursts of anger. Each of these individuals is experiencing the effects and conse- quences of excessive stress.

Stress can produce psychological consequences—anxiety, frustration, apathy, lowered self-esteem, aggression, and depression. With respect to depression, a comprehensive survey of U.S. workers concluded that a third of them experienced job stress–related depression.31 Such consequences are not limited to U.S. workers, as the nearby Global OB demonstrates.

There is a stigma associated with depression.32 Part of the stigma comes because most people lack an understanding of depression and its frequency. Unfortunately, most manag- ers are not aware of these facts: ∙ According to Mental Health America (formerly the National Mental Health Associa-

tion), depression is as expensive as heart disease to the U.S. economy, costing more than $51 billion in absenteeism from work and lost productivity and an additional $26 billion in direct cost treatments.33

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∙ Research suggests that depression is one of the most powerful conditions in the United States that leads to higher absenteeism and decreased worker productivity.34

∙ The World Health Organization predicts that by 2030, more people in the world will be affected by depression than any other health problem.35

∙ Depression is difficult to detect, especially within the present health care system.36

The Diagnostic and Statistical Manual of Mental Disorders (DSM-5) is the diagnostic tool used to detect depression. The DSM-5 indicates that the diagnosis of depression requires the presence of either a depressed mood or diminished interest in all or most activities, marked psychomotor retardation, significant appetite or weight change, changes in sleep, fatigue or loss of energy, problems thinking or concentrating, feelings of worth- lessness, excessive feelings of guilt, or thoughts of suicide or death. These signs must be persistent over the course of two weeks.

Managerial understanding of these symptoms can help the organization, especially when the manager asks professional counselors to intervene. It would be unwise for man- agers to ignore depression or to attempt to counsel workers suspected of being depressed. Being aware of depression symptoms and situations that precipitate it is the first line of intervention. Unfortunately, the stigma of depression results in a lack of understanding of its pervasiveness, costs, and treatment possibilities.37

Some stress outcomes may be cognitive. Cognitive outcomes would include poor con- centration, inability to make sound decisions or any decisions, mental blocks, and decreased attention spans. Other effects may be behavioral. Such manifestations as acci- dent proneness, impulsive behavior, alcohol and drug abuse, and explosive temper are examples.

Finally, physiological outcomes could include increased heart rate, elevated blood pres- sure, sweating, hot and cold flashes, increased blood glucose levels, and elevated stomach acid production. One way to envision the physiological impact of stress is to imagine

WORKING TO DEATH IN JAPAN Have you ever felt or heard someone express the feeling, “This job is going to kill me!” Chances are you—or the person you heard—didn’t literally believe that. If you were a Japanese worker, however, you might be very serious. Polls indicate that over 40 percent of Japanese workers aged 30 to 60 believe they will die from the stress of over- work, what the Japanese call karoshi. The victims of karoshi are known in their companies as moretsu shain (fanatical workers) and yoi kigyo senshi (good corporate soldiers).

In 1990, the average Japanese worker put in 2,062 hours a year— over 500 hours more than the Germans and French and about 250 hours more than Americans. Following the passage of two laws aimed at reduc- ing the average number of hours worked by an employee, the Japanese figure had fallen to about 1,732 hours per year in 2014; however, this average is still above most other countries. At the same time, however, the nation’s economic slump heightened the level of workplace anxiety. Many firms have been forced to downsize for the first time since 1945.

A Japanese Health Ministry report called karoshi the second-leading cause of death among workers (the first is cancer). Fierce competition

among employees, as well as a strong sense of responsibility to their companies, leads many workers to stay at the office well into the night. When they do go home, they are tense and anxious because they feel that they should really be back at work. Some workers deal with the pressure by disappearing. As many as 10,000 men disappear each year, choosing to drop out rather than face the pressure of their jobs. Accord- ing to the Human Rights Report by the U.S. Department of State, there were 336 karoshi victims in 2013.

A karoshi hotline has been established that includes contact num- bers, doctor and lawyer names, and a brief history of the concept of “death from overwork.”

Sources: “International Comparisons of Productivity: First Estimates 2014,” UK Office for National Statistics, http://www.ons.gov.uk, accessed April 15, 2016; “Japan 2014 Human Rights Report,” U.S. Department of State, http:// www.state.gov, accessed April 15, 2016 A. Kanai, “Karoshi (Work to Death) in Japan,” Journal of Business Ethics 84 (2009), pp. 209–16; Daniel Gross, “Why ‘Steady’ Lost,” Newsweek, July 20, 2009; “Karoshi Hotline,” http:// karoshi.jp\english\index.html (accessed May 14, 2006); Boye Lafayette de Mente, “Karoshi: Death from Overwork,” Japan’s Cultural Code Words, May 2002, pp. 1–6.

G L O B A L O B

Chapter 9 Managing Individual Stress 225

oneself in a traumatic situation—your car is stalled on a railroad track and you hear the whistle of an oncoming train. This is the kind of sequence that occurs:38

∙ Steroid hormones and stress hormones are released by a signal to the brain area called the hypothalamic–pituitary adrenal (HPA) system. Cortisol is very important in mar- shalling systems through the body—heart, lungs, circulation, immune system—to deal with the stalled car and oncoming danger.

∙ The HPA releases neurotransmitters (chemical signals) called catecholamine. The cat- echolamine triggers an emotional response to the stressful situation—most likely fear of the danger.

∙ During the crisis, the catecholamine suppresses parts of the brain dealing with memory, concentration, and rational thought.

∙ Heart rate and blood pressure increase. ∙ The digestive system shuts down. These are only a few of the physiological effects of the stress caused by the stalled car and the oncoming train. Once the threat has passed and the car is moved safely off the tracks, the stress hormones return to normal. Other body systems also normalize.

Stress-related work conditions that can possibly produce physiological effects similar to the stalled car episode include: ∙ Pressure in front of colleagues from a manager to work harder, faster, and longer. ∙ Poor, hostile relationships with colleagues. ∙ An accident or violence at work that injures friends or other employees. ∙ Being required to complete work for which you know you do not have the skills or

competencies. ∙ Making an extremely important presentation to a group.

Some research shows that repeated release of stress hormones eventually produces hyperactivity in the HPA, and this can result in long-term sleep, anxiety, and depression problems.39 The physiological stress response is like a rocket ready to be launched. Virtu- ally all systems (e.g., heart, blood vessels, lungs, immune system, and brain) are altered to meet the perceived problem (e.g., danger, uncertainty, work-related problems).

Some stress outcomes combine effects from several of the categories of consequences described above. Consider, for example, the following two scenarios:

Bob is a teacher in an inner-city high school. He barely remembers the time when he could not wait for the start of each school day; now he cannot wait until each day ends. As much as he could use the money, he quit teaching optional summer school three summers ago. He needs that break to recharge his batteries, which seem to run down earlier with each passing school year. Many of his students are moody, turned off to society, and abusive to others. Paula works as an air traffic controller in the second-busiest airport in the country. Every day, the lives of literally thousands of people depend on how well she does her job. Near misses are an everyday occurrence; avoiding disasters requires quick thinking and a cool head. At 31 years of age, Paula is the third oldest controller in the tower. She knows there are few control- lers over the age of 40, and she is certain she will never be one. To make matters worse, she is in the final stages of a divorce. Paula was told after her last physical that she had developed a stomach ulcer. She is thinking of going into the nursery business with her sister; having respon- sibility for the well-being of shrubs and trees, rather than people, is very appealing to her.

Bob and Paula are both experiencing job burnout. Burnout is a psychological process, brought about by unrelieved work stress, that results in emotional exhaustion, depersonali- zation, and feelings of decreased accomplishment.40 Exhibit 9.4 displays some indicators

burnout A psychological process, brought about by unrelieved work stress, resulting in emotional exhaustion, depersonalization, and feelings of decreased accomplishment.

226

of these three burnout outcomes. A recent research study found that burnout is linked to several aspects of ill health, including sleep disturbances, systematic inflammation, impaired immunity functions, and blood coagulation.41 Burnout tends to be a particular problem among people whose jobs require extensive contact with and/or responsibility for other people. Indeed, much of the research that has been conducted on burnout has cen- tered on the so-called helping professions: teachers, nurses, physicians, social workers, therapists, police, and parole officers.42 The nearby OB Matters presents some of the myths that surround the burnout concept.

MYTHS ABOUT BURNOUT Christina Maslach is a leading expert on job burnout and author of the Maslach Burnout Inventory (MBI), the most widely used survey measure used in the field. The Wall Street Journal used its own survey to examine the concept Maslach clearly presented years ago. The Wall Street Journal interviewed managers in an attempt to understand managerial behavior that seems to push employees over the edge into job burnout. In the process, three myths were uncovered that organizations need to dispel if they are to reduce incidents of burnout among their staff.

Myth One: When a Client Says Jump, the Only Answer Is “How High?” Lawyers, accountants, and management consultants are particularly vulnerable to believing in this myth even when it appears to result in high levels of burnout and turnover within their staffs. However, the study reported that a few professional firms are taking steps to inte- grate personal needs and concerns with the work lives of their employees. For example, Deloitte & Touche has implemented a policy that limits employees’ travel time. It is no longer company policy for employees to spend all five working days of the week at clients’ offices. At a maximum, employees are to spend only three nights (four working days) away from home and work the fifth day in their own offices each week, even when on lengthy assignments.

Myth Two: Reining in Employees’ Workloads Will Turn Them into Slackers Managers often behave as though a reduction in work overload will cause productivity to drop. Yet, studies often show the opposite result.

Ernst & Young has a committee that monitors its staff accountants’ workloads to head off burnout situations. The company says that its policies are raising retention rates and improving client service. A  senior manager at Ernst observed that employees typically won’t admit to burning out; thus having some compassionate, objective overview is useful.

Myth Three: If Employees Are Working Themselves into the Ground, It’s Their Own Fault Although this attribution may sometimes be true for some people, it is far from true for most. At the International Food Policy Research Institute, a nonprofit research organization in Washington, D.C., consultants discovered that a “crisis mentality” was driving scien- tists and support staff to work incredibly long hours. Management of the institute assumed that either (1) employees wanted to work these hours or (2) employees were managing their time poorly. Neither of these assumptions was valid. Rather, a shift in research focus coupled with an increased emphasis on using research teams allied with groups from other agencies and organizations had cre- ated an inefficient pattern of work for many people. Meetings, phone calls, and other forms of coordinated activity were eating up the workday, driving more productive research and writing into the evening hours.

Sources: Adapted from Christina Maslach, “How to Prevent Burnout,” New Zealand Management, April 2005, pp. 43–48; Sue Schellenbarger, “Three Myths That Make Managers Push Staff to the Edge of Burnout,” The Wall Street Journal, March 17, 1999, p. B1.

O B M A T T E R S

Emotional Exhaustion Depersonalization Low Personal Accomplishment

Feel drained by work Feel fatigued in the morning Frustrated Do not want to work with other people

Have become calloused by job Treat others like objects Do not care what happens to other people Feel other people blame you

Cannot deal with problems effectively Do not have a positive influence on others Cannot understand others’ problems or identify with them No longer feel exhilarated by your job

EXHIBIT 9.4 Burnout Indicators

Sources: Jayson Demers, “10 Signs You’re Headed for Burnout,” Inc., http://www.inc.com, accessed April 14, 2016; Jan Bruce, “4 Signs You Are Headed for Burnout,” Forbes, http://www.forbes.com, accessed April 14, 2016; John M. Ivancevich, Michael T. Matteson, Sara M. Freedman, and James S. Phillips, “Workside Stress Management Intervention,” American Psychologist, February 1990, p. 253.

Chapter 9 Managing Individual Stress 227

A very important idea implicit in this conceptualization of burnout relates to job involvement. A high degree of involvement in, identification with, or commitment to one’s job or profession is a necessary prerequisite for burnout. It is unlikely that one would become exhausted without putting forth a great deal of effort. Thus, the irony of burnout is that those most susceptible are those most committed to their work; all else being equal, lower job commitment equals lower likelihood of burnout. Various individ- ual variables also affect the likelihood of developing burnout. For example, women are more likely to burn out than men, younger employees are more susceptible than older ones (particularly beyond age 50), and unmarried workers are more likely to burn out than married ones.

Organizations contribute to employee job burnout in a variety of ways. Research identifies four factors that are particularly important contributors to burnout: high levels of work over- load, dead-end jobs, excessive red tape and paperwork, and poor communication and feedback, particularly regarding job performance. In addition, factors that have been identified in at least one research study as contributing to burnout include role conflict and ambiguity, difficult interpersonal relationships, and reward systems that are not contingent upon performance.43

Organizational Consequences As illustrated in Exhibit 9.1, a number of the behavioral, cognitive, and physiological out- comes that are individually linked also have organizational consequences. While the orga- nizational consequences of stress are many and varied, they share one common feature: stress costs organizations money. Although precise figures are lacking, based on a variety of estimates and projections from government, industry, and health groups, we place the costs of stress at about $300 billion annually in the United States.44 This estimate considers the reductions in operating effectiveness resulting from stress. The effects include poorer decision making and decreases in creativity. The huge figure also reflects the costs associ- ated with mental and physical health problems arising from stress conditions, including hospital and medical costs, lost work time, turnover, sabotage, and a host of other variables that may contribute to stress costs. Because employers pay a substantial amount of most private health insurance premiums, and because workers’ compensation laws increasingly include provisions for awarding benefits for injuries stemming from stress in the work- place, it is clear that organizational consequences are significant.

Excessive stress increases job dissatisfaction. As we saw in Chapter 3, job dissatisfac- tion can be associated with a number of dysfunctional outcomes, including increased turn- over, absenteeism, and reduced job performance. If productivity is reduced just 3 percent, for example, an organization employing 1,000 people would need to hire an additional 30 employees to compensate for that lost productivity. If annual employee costs are $40,000 per employee including wages and benefits, stress is costing the company $1.2 million just to replace lost productivity. This doesn’t include costs associated with recruitment and training. Nor does it consider that decreases in quality of performance may be more costly for an organization than quantity decreases. Customer dissatisfaction with lower-quality goods or services can have significant effects on an organization’s growth and profitability.

Further examples of organizational costs associated with stress include:

∙ The American Medical Association claims that stress was the cause of 80 to 85 percent of all human illness and disease or at the very least had a detrimental effect on individuals’ health.45

∙ Stressed workers smoke more, eat less well, have more problems with alcohol and drugs, have more family issues, and have more problems with co-workers.46

228 Part Two Understanding and Managing Individual Behavior

∙ In Canada stress-related costs are estimated at $33 billion and in Great Britain costs are $9.2 billion annually.47

∙ Forty percent of employee turnover is due to excessive stress.48 ∙ More than 500 million workdays are lost annually due to stress-related absenteeism.

Estimates and projections such as these (including our own estimate of annual stress- related costs) should be treated cautiously. There are simply too many variables to measure costs precisely. There is no doubt, however, that the consequences of excessive stress are significant in both individual and organizational terms.

Stress Moderators Stressors evoke different responses from different people. Some people are better able to cope with a stressor than others. They can adapt their behavior in such a way as to meet the stressor head-on. On the other hand, some people are predisposed to stress; that is, they are not able to adapt to the stressor.

The model that we presented in Exhibit 9.2 suggests that various factors can moderate the relationships among stressor, stress, and consequences. A moderator is a condition, behavior, or characteristic that qualifies the relationship between two variables. The effect may be to intensify or weaken the relationship. The relationship between the number of gallons of gas- oline used and total miles driven, for example, is moderated by driving speed. At very low and very high speeds, gas mileage declines; at intermediate speeds, mileage increases. Thus, driving speed affects the relationship between gasoline used and miles driven.

Many conditions, behaviors, and characteristics may act as stress moderators, including such variables as age, gender, and the hardiness construct discussed earlier in the chapter. In this section, we will briefly examine three representative types of moderators: (1) per- sonality, (2) Type A behavior, and (3) social support.

Personality As discussed in Chapter 3, the term personality refers to a relatively stable set of character- istics, temperaments, and tendencies that shape the similarities and differences in people’s behavior. The number of aspects of personality that could serve as stress moderators is quite large. We will confine our attention to those aspects of personality previously identi- fied in Chapter 3: the Big Five model, locus of control, and self-efficacy.

As you may recall from Chapter 3, the Big Five model of personality is made up of five dimensions: extroversion, emotional stability, agreeableness, conscientiousness, and open- ness to experience. Of these, emotional stability is most clearly related to stress. Those high on this dimension are most likely to experience positive moods and feel good about themselves and their jobs. While they certainly experience stress, they are less likely to be overwhelmed by it and are in a better position to recover from it. To a somewhat lesser degree, those high on extroversion are also more predisposed to experience positive emo- tional states. Because they are sociable and friendly, they are more likely to have a wider network of friends than their introverted counterparts; consequently, they have more resources to draw upon in times of distress.

If you are low on agreeableness you tend to be antagonistic, unsympathetic, and even rude, toward others. You are also probably somewhat mistrusting of others. These attributes increase the likelihood you will find other people to be a source of stress, and since others are more likely to find interacting with you stressful as well, an interpersonal relationship environment full of stressful situations is created.

Chapter 9 Managing Individual Stress 229

Conscientiousness is the Big Five dimension most consistently related to job perfor- mance and success. To the extent that good performance leads to satisfaction and other rewards, those high on conscientiousness are less likely to experience stress with respect to these aspects of their jobs. Those low on this dimension, however, are more likely to be poorer performers, receive fewer rewards, and generally be less successful in their careers—not a recipe for low stress levels!

Finally, those high on openness to experience are better prepared to deal with stressors associated with change because they are more likely to view change as a challenge, rather than a threat.

Type A Behavior Pattern In the 1950s, two medical cardiologists and researchers, Meyer Friedman and Ray Rosenman, discovered what they called the Type A behavior pattern.49 They searched the medical litera- ture and found that traditional coronary risk factors such as dietary cholesterol, blood pressure, and heredity could not totally explain or predict coronary heart disease (CHD). Coronary heart disease is the term given to cardiovascular diseases that are characterized by an inadequate supply of oxygen to the heart. Other factors seemed to the two researchers to be playing a major role in CHD. Through interviews with and observation of patients, they began to uncover a pattern of behavior or traits. They eventually called this the Type A behavior pattern (TABP).

The person with TABP has these characteristics: ∙ Struggles to get as many things done as possible in the shortest time period. ∙ Is aggressive, ambitious, competitive, and forceful. ∙ Speaks explosively, rushes others to finish what they are saying. ∙ Is impatient, hates to wait, considers waiting a waste of precious time. ∙ Is preoccupied with deadlines and is work-oriented. ∙ Is always in a struggle with people, things, events. ∙ Displays or hides anger and hostility toward others.

Supporting the pioneering research of Rosenman and Friedman, who suggested that Type As have more heart attacks than do Type Bs, a recent analysis of data from 161 research studies conducted over the past 30 years found that Type A behavior (hostility and aggression) was associated with increased cardiovascular (heart rate or blood pressure) reactivity.50

In contrast, the Type B behavior pattern individual mainly is free of the TABP character- istics and generally feels no pressing conflict with either time or persons. The Type B may have considerable drive, wants to accomplish things, and works hard, but the Type B has a confident style that allows him or her to work at a steady pace and not to race against the clock. The Type A has been likened to a racehorse; the Type B, to a turtle.

Two major components of Type A behavior pattern are impatience and hostility. A study of 3,308 black and white men and women supported by the National Institutes of Health studied the effects of Type A, depression, and anxiety on long-term physical risk. Type A components were assessed at a baseline period and 15 years later. After 15 years, partici- pants in the highest quartile of hostility had an 84 percent higher risk of hypertension.51 No significant relationships were shown for the other factors. Results were similar for white and black participants.

A study of patients who underwent diagnostic coronary arteriography for suspected coro- nary heart disease illustrated involvement of hostility. Analysis showed that hostility was related to the presence of arteriosclerosis more than other Type A behavior pattern dimensions.52

Type A behavior pattern Associated with research conducted on coronary heart disease. The Type A person is an aggressive driver who is ambitious, competitive, task-oriented, and always on the move.

Type B behavior pattern The Type B person is relaxed, patient, steady, and even-tempered. The opposite of the Type A person.

230 Part Two Understanding and Managing Individual Behavior

Social Support Both the quantity and quality of the social relationships individuals have with others appear to have a potentially important effect on the amount of stress they experience and on the likelihood that stress will have adverse effects on their mental and physical health. Social support can be defined as the comfort, assistance, or information one receives through formal or informal contacts with individuals or groups. A number of studies have linked social support with aspects of health, illness, burnout, and stress.53

Social support may take the form of emotional support (expressing concern, indicating trust, boosting esteem, listening); appraisal support (providing feedback and affirmation); or informational support (giving advice, making suggestions, providing direction). People who can serve as sources of social support at work include supervisors, co-workers, sub- ordinates, and customers or other nonorganizational members with whom an employee might have contact. Nonwork support sources include family members (immediate and extended), friends, neighbors, caregivers (ministers, for example), health professionals (physicians, psychologists, counselors), and self-help groups (Alcoholics Anonymous, Weight Watchers).

A co-worker listening to a friend who failed to receive a desired promotion, a group of recently laid-off workers helping each other find new employment, or an experienced employee helping a trainee learn a job are all examples of providing support. Social support is effective as a stress moderator because it buffers the negative impact of stressors by pro- viding a degree of predictability, purpose, and hope in upsetting and threatening situations.

A number of studies reinforce what we know to be true for our own experiences. Social support has been shown to reduce stress among employed individuals ranging from unskilled workers to highly trained professionals; it is consistently cited as an effective stress coping technique, and it has been associated with fewer health complaints experi- enced during periods of high stress.54

Managing Stress: Individual and Organizational Approaches An astute manager never ignores a turnover or absenteeism problem, workplace drug abuse, a decline in performance, hostile and belligerent employees, reduced quality of pro- duction, or any other sign that the organization’s performance goals are not being met. The effective manager, in fact, views these occurrences as symptoms and looks beyond them to identify and correct the underlying causes. Yet most managers likely will search for tradi- tional causes such as poor training, defective equipment, or inadequate instructions regard- ing what needs to be done. In all likelihood, stress will not be on the list of possible problems. Thus, the very first step in any attempt to deal with stress so that it remains within tolerable limits is recognition that it exists. Once that is accomplished, a variety of approaches and programs for preventing and managing organizational stress are available.

Exhibit 9.5 presents how organizational stress management programs can be targeted. Programs are targeted to (1) identify and modify work stressors, (2) educate employees in modifying and understanding stress and its impact, and (3) provide employees support to cope with the negative impact of stress. In a rapidly changing work environment, this type of targeting is difficult to accomplish. However, a trained, educated, and knowledgeable workforce can make modifications with the help of management in how work is performed. Some of the targeted, corrective programs include: ∙ Training programs for managing and coping with stress. ∙ Redesigning work to minimize stressors.

Chapter 9 Managing Individual Stress 231

∙ Changes in management style to one of more support and coaching to help workers achieve their goals.

∙ More flexible work hours and attention paid to work–life balance and needs such as child and elder care.

∙ Better communication and team-building practices. ∙ Better feedback on worker performance and management

expectations.

These and other efforts are targeted to prevent and/or manage stress. The potential for success of any prevention or management- of-stress program is good if there is a true commitment to understanding how stressors, stress, and outcomes are linked.

There is a very important distinction between preventing stress and managing it. Stress prevention focuses on controlling or eliminating stressors that might provoke the stress response. Stress management suggests procedures for helping people cope effectively with or reduce stress already being experienced. In this concluding section of the chapter, we will examine orga- nizational programs and individual approaches to stress preven- tion and management, with the emphasis on management. First, however, we will look at a way of thinking about organizational stress prevention.

DEVELOPING SOCIAL SUPPORT

As a manager, you can take actions to help create a supportive work environment. These include:

1. Set an example by being a source of support for others, particularly subordinates.

2. Encourage open communication and maximum exchange of information.

3. Make certain you provide subordinates with timely performance feedback, presented in an encouraging, nonthreatening manner.

4. Arrange mentoring of the less experienced by more senior members of the work group.

5. Work to maintain and increase work group cohesion (see Chapter 10 for specifics regarding how to do this).

Information You Can Use

EXHIBIT 9.5 Organizational Stress Management Program Targets

Sources: Lesia M. Ruglass, “Workplace Stress: Sustainable Solutions for Stress Management,” Huffington Post, http://www.huffingtonpost.com, accessed April 14, 2016; Jenna Goudreau, “12 Ways to Eliminate Stress at Work,” Forbes, http://www.forbes.com, accessed April 14, 2016; John M. Ivancevich, Michael T. Matteson, Sara M. Freedman, and James S. Phillips, “Workside Stress Management Intervention,” American Psychologist, February 1990, p. 253.

31

2

Organizational Stress Management and Prevention Programs

Targeted at

Work and Nonwork Stressors

Workload

R v

P

Employee Perceptions/Experience of Stress

Outcome of Stress

232 Part Two Understanding and Managing Individual Behavior

Maximizing Person–Environment Fit In defining stress earlier in the chapter, we emphasized that stress is the consequence of the interaction between an environmental stimulus (a stressor) and the individual’s response. From this perspective, stress may be viewed as a consequence of the relationship between the individual and the work environment. While there are many ways of thinking about individual–organizational relationships and stress, the concept of person–environment fit is the most widely used.55

Person–environment fit occurs when there is compatibility between individuals and their work environments. When an employee perceives that he or she fits well with the organiza- tion, the employee is more likely to have higher levels of organizational commitment, job satisfaction, and adjustment, while experiencing lower levels of stress.56 Although originally thought of as a single dimension, researchers have identified several different types of P–E fit, including:57

1. Person–organization fit: Degree to which employees/applicants and organizations are compatible and meet each others’ needs. An employee who doesn’t fit with the organi- zational culture will experience stress and may end up leaving the organization.

2. Person–job fit: Extent to which an employee’s/applicant’s skills, abilities, and experi- ence match the demands and requirements of the organization. To the extent that the individual’s talents don’t match the job requirements, stress results.

3. Person–vocation fit: Degree to which an individual has chosen a compatible career. People pursue careers for a variety of reasons—financial, interest, parental pressure, luck, etc. When an individual questions a career choice and regrets it, he or she is likely to experience stress.

4. Person–group fit: Extent to which there’s interpersonal compatibility between individu- als and their work groups. An employee can perceive a good fit with the organization, job, and career, but can’t stand working with a certain group of co-workers, customers, or vendors. This misfit with the group will create stress for the employee. By improving the fit between the employee and the organizational environment, poten-

tial stressors are eliminated and stress is prevented. This P–E fit approach is related to the concept of the psychological contract that was developed in Chapter 5. Violations of the psychological contract represent breakdowns in P–E fit.

There are numerous strategies for maximizing P–E fit. Ideally, the process begins before an individual even joins the organization. Employee recruitment programs that provide realistic job previews help potential employees determine whether the reality of the job matches their needs and expectations. Selection programs that are effective in ensuring that potential employees possess the requisite skills, knowledge, experience, and abilities for the job are key elements in maximizing fit.

Job skills and knowledge are not the only important factors to consider in employee selection, however. Fit can be maximized by closely linking personal predispositions to relevant aspects of the work environment as well. For example, as was suggested earlier, individuals with a low tolerance for ambiguity who find themselves in jobs or organiza- tional environments in which there is little structure will very likely experience stress. Other examples include: An individual who is by nature authoritarian will experience stress in a participative organization; those who value intrinsic satisfaction will be  frustrated by an environment that provides only extrinsic rewards; those wishing autonomy will be distressed by tight controls; and individuals with a high need for perfor- mance feedback will be stressed by supervisors who never communicate performance information.

Chapter 9 Managing Individual Stress 233

Once a person is working in the organization, a critical variable in maximizing fit and preventing stress is effective socialization. Socialization is the process by which the indi- vidual learns and internalizes the values, expected behaviors, and social knowledge that are important for becoming an effective organizational member. The stages and characteristics of effective socialization were discussed in detail in Chapter 2, and you may wish to refer to that discussion in the present context of maximizing P–E fit.

Organizational Stress Prevention and Management Programs In addition to the variety of activities that may be undertaken to improve person–environment fit, an increasing number of organizations have developed very specific stress prevention and/or management programs. Some of these programs focus on a specific issue or prob- lem, such as alcohol or drug abuse, career counseling, job relocation, or burnout. Clark Nuber, a $33 million accounting and consulting firm near Seattle, has created a people- oriented culture that encourages its tax specialists to limit the amount they work each week to 55 hours (low for the accounting industry).58 The company’s approach to managing employee stress has led it to be named one of 2015’s Great Places to Work® and one of the top accounting firms in the country according to Accounting Today’s 2015 Top Firms sur- vey.59 Bandwidth, a communications technology firm based in Raleigh, North Carolina, provides its employees with guaranteed time to unplug and reduce work-related stress. A strictly enforced “vacation embargo” policy prevents any contact with employees while they are enjoying time off from work.60 PricewaterhouseCoopers offers a stress survival- training course which exposes employees to the causes and effects of stress, and how employees can develop effective strategies for managing it.61

A variety of organizations such as Verizon Communications, Accenture, Ernst & Young, IBM, Dow Chemical, and Microsoft are also helping employees avoid burnout (and in so doing increase retention) by helping them to change careers without leaving the firm.62 Verizon offers employees career-related courses and résumé-writing tips. IBM offers a skills-evaluation assessment to recommend career paths for which the employee might fit. Accenture assigns employees a career counselor and has a web page for employ- ees who are considering an internal career change. The web page even has video clips of individuals who have made career changes within the firm. Such career-assistance pro- grams are designed to reduce employee turnover and increase productivity.

Still other programs may target a specific group within the organization. For example, fourth-year students at New Jersey Medical School must complete a podcast-based course before they graduate, which is intended to help them make the transition to their residency programs. Topics include how to combat physical components of stress, as well as changing elements of their schedules to help address certain stressors.63 (For an example of a some- what unusual focus, see the nearby OB Matters on laughter.) Others are more general in nature, using a variety of approaches and geared to a cross-section of employees, such as the employee energy management program that is being rolled out to over 6,000 employees at Sony Pictures Entertainment. Tony Schwartz, CEO of the Energy Project, is helping Sony move away from treating employees like machines (that can continuously multi-task without needing time to re-energize) to meeting their core needs: (1) physical health, (2) emotional needs, (3) mental clarity and focus, and (4) spiritual significance.64 The basic idea is that employees will perform better and be more engaged in their work if they routinely “alternate between periods of focus and intermittent renewal” like taking a brief walk, turning off e-mail and smartphone alerts, taking a lunchbreak (not eating at your work station), and so forth.65 Two specific types of organizational programs have become particularly popular during the last two decades: employee assistance programs and wellness programs.

234

Employee Assistance Programs Originally conceived as alcohol abuse programs, most employee assistance programs (EAPs) are designed to deal with a wide range of stress-related problems, both work and nonwork related, including behavioral and emotional difficulties, substance abuse, family and marital discord, and other personal problems. According to the International Employee Assistance Professionals Association, more than 97 percent of large U.S. companies and 80 percent of mid-sized companies offer EAPs.66 B. F. Goodrich, IBM, Xerox, and Caterpillar have such programs. In the first of its kind in professional sports in the United States, the San  Francisco Giants baseball team has an EAP for use by its players, coaches, managers, scouts, retirees, and family members.67 EAPs have been based on the traditional medical approach to treatment. General program elements include: ∙ Diagnosis. Employee with a problem asks for help; EAP staff attempts to diagnose the

problem. ∙ Treatment. Counseling or supportive therapy is provided. If in-house EAP staff is unable

to help, employee may be referred to appropriate community-based professionals. ∙ Screening. Periodic examination of employees in highly stressful jobs is provided to

detect early indications of problems. ∙ Prevention. Education and persuasion are used to convince employees at high risk that

something must be done to assist them in effectively coping with stress.

employee assistance program (EAP) An employee benefit program designed to deal with a wide range of stress-related prob- lems, including behav- ioral and emotional difficulties, substance abuse, and family and marital discord.

USING LAUGHTER TO LOWER STRESS Stressed individuals have higher levels of the hormone cortisol. Laughter lowers cortisol levels. Children laugh about 400 times a day, while adults laugh about 15 times a day. Is it possible to get adults to laugh more at work and reduce those cortisol levels?

While passengers were preparing to board a Southwest Airlines flight, a Southwest customer service agent came over the public address system to announce, “Southwest Airlines would like to con- gratulate one of our first-time fliers who is celebrating his 89th birth- day.” This was a nice and fun announcement, typical of what the airline’s employees try to do on a daily basis. Southwest Airlines also established a Belly Laugh Day; at 1:24 p.m. on January 24, people are supposed to laugh out loud to celebrate the joy of laughter.

Employees of online retailer, Zappos (owned by Amazon), like to “create fun and a little weirdness” at work to keep the mood light and less stressful. Not only do Zappos associates dress in wigs and clown outfits, they also participate in “laughter yoga” where they get to act goofy and laugh at each others’ antics. Laughter yoga is designed to release endorphins which “boost positive state of mind, optimism, and help strengthen the immune system.” At Zappos, perhaps laughter is the best medicine for this successful company. The above typifies the Southwest Airlines and Zappos cultures, where it is believed that if employees are having fun they are going to do their jobs better and be less likely to experience dissatisfaction, stress, and burnout. Increas- ingly, companies are turning to humor as a way of improving employee

morale and combating stress. A growing number of “humor consul- tants” are being hired by companies nationwide to lighten up an overworked, anxious workforce. Research supports the conclusion that humor boosts the human immune system, reduces stress, and helps keep people well. Other research shows decreases in produc- tion of stress hormones while people are laughing.

One group of humor consultants is developing a program called Subjective Multidimensional Interactive Laughter Evaluation (SMILE), which will survey humor preferences and coping styles and help tai- lor a personalized humor approach to stress reduction. What kind of organization would use such a program, or hire a humor consultant? The answer seems to be companies suffering from low morale, cutbacks, or buyouts. Corporations undergoing downsizing are major users.

The rationale for these programs is that humor is a set of skills that some people have developed better than others. For those in need of skill development, humor programs can help people increase the tools they have to combat stress.

Sources: Company website, “About Zappos,” http://www.zappos.com, accessed April 15, 2016; Marla Tabaka, “Best Reason to Have a Belly Laugh at Work,” Inc., http://www.inc.com, accessed April 15, 2016; company website, “Belly Laugh Day,” http://blogsouthwest.com, accessed April 15, 2016; “Laugh- ter Yoga Hits Zappos HQ,” May 19, 2011, http://blogs.zappos.com; D. Kulisek, “Laugh It Off,” Quality Progress 41, no. 8 (2008), pp. 62–63; Charles S. Lauer, “Tracking Laughs,” Modern Healthcare 37, no. 13 (March 2007), p. 22.

O B M A T T E R S

Chapter 9 Managing Individual Stress 235

An increasing number of employers believe that good health among employees is good for the organization.68 Blue Cross/Blue Shield determined that every dollar spent on the psycho- logical care of employees with breast cancer saved $2.50 to $5.10 in overall medical expenses. The public school system of Orange County, Florida, found that the cost of medical claims dropped by 66 percent over five years for employees who used the EAP. At the end of five years, the same employees were taking 36 percent fewer sick leaves. At McDonnell Douglas (now Boeing), workers treated for alcohol and drug problems missed 44 percent fewer days of work after the EAP was set up.69

In addition to these health- and medical-oriented services offered through EAPs, the recent economic recession, where layoffs, salary reductions, home foreclosures, and other financial stresses have affected employees, has led some companies to offer a vari- ety of support services aimed at helping them through these difficult times.70 For exam- ple, Telemundo Network (a division of NBC Universal) offers on-site financial planning and stress management workshops throughout the country via EAPs and employee groups. Blue Cross and Blue Shield of North Carolina believes that sharing information about the health of the company is important to reduce employee stress; the firm holds town hall meetings and an executive blog shares “top level” information and invites employee feedback. Alcoa also believes in keeping employees in the loop and uses e-mail, daily management notes, a biweekly employee publication, and an internal TV system to communicate with employees about the state of the company. Despite these successful strategies, a 2016 trends report on employee assistance suggests that fewer than 7 percent of employees working for companies that offer EAPs will utilize these important programs.71

Crucial to the success of any EAP is trust. Employees must trust that (1) the program can and will provide real help, (2) confidentiality will be maintained, and (3) use of the program carries no negative implications for job security or future advancement. If employ- ees do not trust the program or company management, they will not participate. EAPs with no customers cannot have a positive effect on stress prevention and management.

Wellness Programs Wellness programs, sometimes called health promotion programs, focus on the employee’s overall physical and mental health. Simply stated, any activity an organization engages in that is designed to identify and assist in preventing or correcting specific health problems, health hazards, or negative health habits can be thought of as wellness-related. This includes not only disease identification but lifestyle modification as well. Among the most prevalent examples of such programs are those emphasizing hypertension identification and control, smoking cessation, physical fitness and exercise, nutrition and diet control, and job and personal stress management.

We include wellness programs in a discussion of stress management for several reasons. First, stress prevention and management are a vital part of wellness, and, as we have already noted, it is frequently a component of wellness programs. Second, many of the concerns of wellness programs are at least partially stress-related. Stress has been cited as the greatest cause of poor health habits,72 and poor health habits are what wellness pro- grams attempt to change. Third, stress management contributes to healthier, more produc- tive, and more effective employees, and consequently to healthier, more productive, and more effective organizations. Corporate wellness programs simply extend these payoffs. Fourth, it is impossible to divorce the topic of stress from health. In a sense, wellness pro- grams represent a broad-based, contemporary extension of stress programs; their focus is concern for employee health and quality-of-life issues.

wellness program An employee program focusing on the individ- ual’s overall physical and mental health. Wellness programs may include a variety of activities designed to identify and assist in preventing or correcting specific health prob- lems, health hazards, or negative health habits.

236 Part Two Understanding and Managing Individual Behavior

According to a 2015 report by the Society for Human Resource Management, 70  percent of U.S. employers offer a general wellness program, up from 58 percent in 2008. Examples of established wellness programs (all of which include a stress-reduction component) include General Electric, Kaiser Permanente, Whole Foods Market, Microsoft, Google, General Mills, SAS, Kimpton Hotels, Twitter, and KIND Snacks.73

Johnson & Johnson’s wellness program, which started more than 30 years ago, promotes a global culture of health to its 126,500 employees worldwide. Known as the Health & Wellness Program, its overriding goals are to “put the needs of individuals first, offer access to health care coverage, and provide support to help people remain healthy.”74 The program continues to work well. In 2015, more than 64 percent of all employees completed a health risk assessment, and 74 percent of all profiled employees are considered “low” health risk, which is better than national norms in the United States.75 Over the past decade, it has been estimated that the wellness program has saved Johnson & Johnson more than $250 million in health care costs.76

Roche Pharmaceutical of Nutley, New Jersey, found that it spent only 3 percent of med- ical benefit dollars on preventive health measures. This small expenditure was despite the fact that 39 percent of the health claims submitted were the result of preventable condi- tions. Roche management concluded that focusing on prevention would mean healthier, more productive, less stressed, more creative, and less absent employees. Roche named its wellness program “Choosing Health.”77

Choosing Health starts at the individual level by assessing employee health risks via a 76-item survey that takes 15 minutes to complete. A health profile is provided and sent directly to the employee’s home. All employee responses and profiles are confidential and not released to a third party. The company also provides on-site screening for such ailments as high blood pressure, high cholesterol, and breast and skin cancers. Roche’s Human Resource Manage- ment (HRM) group receives only aggregated data showing risks with the general population. HRM then patterns preventive health programs after the health risks and education needs of employees as a group. Almost 100 percent of Roche employees participate in Choosing Health.

The Roche program provides a $100 incentive for completing 100 sessions at a fitness facility or in a group exercise program. In the second year of the program, 23 percent of Choosing Health participants had reduced their health risks. A part of Choosing Health is an evaluation process to evaluate the impact of the program. In two years, the average life- style score increased from 63 to 68 (100 is the optimal score). Roche is constantly working to align prevention, intervention, employee health, and productivity.

Simply offering an EAP or wellness program does not guarantee positive results for either employers or the sponsoring organization. While many factors determine how suc- cessful any particular program will be, a number of recommendations, if followed, will increase the likelihood of achieving beneficial outcomes. Among the more important are: 1. Top-management support, including both philosophical support and support in terms of

staff and facilities, is necessary. 2. Unions should support the program and participate in it where appropriate. This can be

particularly difficult to accomplish. Many unions take the position that instead of helping employees deal with stress, management should focus on eliminating those conditions that contribute to the stress in the first place.

3. The greatest payoff from stress prevention and management comes not from one-shot activities, but from ongoing and sustained effort; thus, long-term commitment is essential.

4. Extensive and continuing employee involvement would include involvement not only in the initial planning but in implementation and maintenance as well. This is one of the most critical factors for ensuring representative employee participation.

Chapter 9 Managing Individual Stress 237

5. Clearly stated objectives lay a solid foundation for the program. Programs with no or poorly defined objectives are not likely to be effective or to achieve sufficient participa- tion to make them worthwhile.

6. Employees must be able to participate freely, without either pressure or stigma. 7. Confidentiality must be strictly adhered to. Employees must have no concerns that

participation will in any way affect their standing in the organization.

Individual Approaches to Stress Prevention and Management Organization members do not have to—nor should they—rely on formal organizational pro- grams to assist in stress prevention and management. There are many individual approaches to dealing with stressors and stress. A few of the more popularly cited and frequently used approaches for individual stress prevention and management are discussed below. These approaches may be included in the range of options available within an organizational stress management or wellness program. The effectiveness of these techniques varies greatly. What one person finds useful, another may not. There is still a great deal we do not know regarding the effects of individual differences on stress management outcomes.78

Cognitive Techniques The basic rationale for some individual approaches to stress management, known collectively as cognitive techniques, is that a person’s response to stressors is mediated by cognitive pro- cesses or thoughts. The underlying assumption of these techniques is that people’s thoughts, in the form of expectations, beliefs, and assumptions, are labels they apply to situations, and these labels elicit emotional responses to the situation. Thus, for example, if an individual labels the loss of a promotion a catastrophe, the stress response is to the label, not to the situ- ation. Cognitive techniques of stress management focus on changing labels or cognitions so that people appraise situations differently. This reappraisal typically centers on removing cog- nitive distortions such as magnifying (not getting the promotion is the end of the world for me), overgeneralizing (not getting promoted means my career is over; I’ll never be promoted in any job, anywhere), and personalization (since I didn’t get the promotion it’s clear I’m a terrible person). All cognitive techniques have a similar objective: to help people gain more control over their reactions to stressors by modifying their cognitions.79

Relaxation Training The purpose of this approach is to reduce a person’s arousal level and bring about a calmer state of affairs, both psychologically and physiologically. Psychologically, successful relaxation results in enhanced feelings of well-being, peacefulness and calm, a clear sense of being in control, and a reduction in tension and anxiety; physiologically, decreases in blood pressure, respiration, and heart rate should occur. Relaxation techniques include breathing exercises; muscle relaxation; autogenic training, which combines elements of muscle relaxation and meditation; and a variety of mental relaxation strategies, including imagery and visualization.80

Meditation Many of the meditative forms that have achieved some degree of popularity in this country are derivatives of Eastern philosophies. Included in this category are Zen meditation and Nam Sumran, or Sikh meditation. Perhaps the most widely practiced in the United States is transcendental meditation, or TM. Its originator, Maharishi Mahesh Yogi, defined TM as turning the attention toward the subtler levels of thought until the mind transcends the

238 Part Two Understanding and Managing Individual Behavior

experience of the subtlest state of thought and arrives at the source of thought.81 The basic procedure used in TM is simple, but the effects claimed for it are extensive. One simply sits comfortably with closed eyes and engages in the repetition of a special sound (a mantra) for about 20 minutes twice a day. Studies indicate that TM practices are associated with reduced heart rate, lowered oxygen consumption, and decreased blood pressure.82

Biofeedback Individuals can be taught to control a variety of internal body processes by using a tech- nique called biofeedback. In biofeedback, small changes occurring in the body or brain are detected, amplified, and displayed to the person. Sophisticated recording and computer technology make it possible for a person to attend to subtle changes in heart rate, blood pressure, temperature, and brain-wave patterns that normally would be unobservable. Most of these processes are affected by stress.83

The potential role of biofeedback as an individual stress management technique can be seen from the bodily functions that can, to some degree, be brought under voluntary con- trol. These include brain waves, heart rate, muscle tension, body temperature, stomach acidity, and blood pressure. Most if not all of these processes are affected by stress. The potential of biofeedback is its ability to help induce a state of relaxation and restore bodily functions to a nonstressed state. One advantage of biofeedback over nonfeedback tech- niques is that it gives precise data about bodily functions. By interpreting the feedback, individuals know how high their blood pressure is, for example, and discover, through practice, means of lowering it.

Biofeedback training has been useful in reducing anxiety, lowering stomach acidity (and thus reducing the likelihood of ulcer formation), controlling tension and migraine head- aches, and, in general, reducing negative physiological manifestations of stress. Despite these positive results, people looking to biofeedback for stress control should understand that success requires training and the use of equipment that may be very expensive.

IS THE ORGANIZATION RESPONSIBLE FOR AN EMPLOYEE’S STRESS? This case requires management to consider the consequences of Carter’s claim. If Carter is compensated because of his claim, other employees will likely also make claims. Management should determine if Carter can be transferred to a slower-paced job. They should also determine Carter’s history and record on

this job. Is his not keeping pace something new or has it been a chronic problem?

GM will have to examine its selection program to determine if individuals have to be better screened. This would be a difficult case for Carter to win in court. However, in some states his claim of stress as an injury would be heard and contested under workers’ compensation laws.

Y O U B E T H E J U D G E C O M M E N T

Summary of Key Points

∙ Stress is an adaptive response moderated by individual differences, that is, a conse- quence of any action, situation, or event that places special demands on a person.

∙ Stress can have psychological, behavioral, and physiological consequences. The relationship between stress and physiological consequences is complex and can potentially be serious to the health of individuals who can’t or don’t cope with the stressors linked to the stress.

∙ Major variables in the model of organizational stress presented in this chapter are: (1) work stressors (work environment, individual, group, and organizational); (2) stress

Chapter 9 Managing Individual Stress 239

itself; (3) stress consequences (organizational and individual); (4) stress moderators (personality, Type A behavior, and social support); and (5) stress prevention and man- agement (maximizing person–environment fit, organizational programs, and individual approaches).

∙ Stressors are actions, situations, or events that place special demands on a person. Three important categories of stressors are: (1) work environment (e.g., chemicals, radiation, temperature); (2) individual stressors (e.g., role conflict, work overload, change); and (3) group and organizational stressors (e.g., politics, culture, interpersonal relationships, downsizing).

∙ While some consequences of stress are positive, many are dysfunctional. Negative indi- vidual consequences include accident proneness, poor concentration, drug and alcohol abuse, and burnout. Organizational consequences may include absenteeism, turnover, increased health and medical costs, and quantitative and qualitative decrements in productivity.

∙ Some factors affect the nature of the stress response. These are called stress moderators. Three important moderators are personality, Type A behavior, and social support.

∙ Individuals take problem-focused and/or emotion-focused steps to deal directly with stress. In most cases a combination of these two types of coping strategies is used.

∙ Stress prevention and management strategies include (1) maximizing person–environment fit, (2) organizational programs such as employee assistance and wellness, and (3) individual approaches such as cognitive techniques, relaxation training, meditation, and biofeedback.

1. Describe an instance when you were experiencing “acute stress” at work. What was the cause of the stress and how did you manage it?

2. Why should managers not even attempt to counsel or provide advice to any employee suspected of being depressed?

3. The issue of who should be responsible for dealing with work stress—the individual or the organization—is an important one. What do you think? What are your argu- ments for and against each position?

4. Do you think some types of jobs or organizations attract Type A individuals? Do some attract Type B individuals? Why?

5. Why do you think so many companies offer employee assistance programs (EAPs) to their employees? Explain.

6. Work underload may be every bit as dysfunctional as work overload. Can you think of other work variables where “too little” may be as counterproductive as “too much”?

7. What are the different kinds of person–environment fit? What can employees and managers do to maximize these different types of fit?

8. What is the relationship between stress and personality? What aspects of personality might tend to increase stress? Decrease it?

9. Why are people in certain occupations more susceptible to burnout? What kinds of things might organizations do to reduce the likelihood their members will experience burnout?

10. Increasingly, some workers are being sent on overseas assignments. What stressors might be unique to such assignments? What might organizations do to minimize their impact?

Review and Discussion Questions

240 Part Two Understanding and Managing Individual Behavior

Each of us displays certain kinds of behaviors, thought patterns, and personal characteristics. For each of the 21 sets of descriptions below, circle the number that you feel best describes where you are between

each pair. The best answer for each set of descriptions is the response that most nearly describes the way you feel, behave, or think. Answer these in terms of your regular or typical behavior, thoughts, or characteristics.

Exercise

Exercise 9.1: Behavior Activity Profile—Type A Measure

1. I’m always on time for appointments. 7 6 5 4 3 2 1 I’m never quite on time. 2. When someone is talking to me, 7 6 5 4 3 2 1 I listen quietly without showing any chances are I’ll anticipate what they impatience.

are going to say by nodding, interrupting, or finishing sentences for them.

3. I frequently try to do several things 7 6 5 4 3 2 1 I tend to take things one at a time. at once.

4. When it comes to waiting in line – It simply doesn’t bother me. (at banks, theaters, etc.), I really get impatient and frustrated.

5. I always feel rushed. 7 6 5 4 3 2 1 I never feel rushed. 6. When it comes to my temper, 7 6 5 4 3 2 1 I just don’t seem to have one.

I find it hard to control at times. 7. I tend to do most things like eating, 7 6 5 4 3 2 1 Slowly.

walking, and talking rapidly. TOTAL SCORE 1–7 _____ = S 8. Quite honestly, the things I enjoy 7 6 5 4 3 2 1 Leisure-time activities.

most are job-related activities. 9. At the end of a typical workday, 7 6 5 4 3 2 1 I accomplished everything I needed to.

I usually feel like I needed to get more done than I did.

10. Someone who knows me very well 7 6 5 4 3 2 1 I would rather play than work. would say that I would rather work than play.

11. When it comes to getting ahead at 7 6 5 4 3 2 1 Many things are more important. work, nothing is more important.

12. My primary source of satisfaction 7 6 5 4 3 2 1 I regularly find satisfaction in nonjob comes from my job. pursuits, such as hobbies, friends,

and family. 13. Most of my friends and social 7 6 5 4 3 2 1 Not connected with my work.

acquaintances are people I know from work.

14. I’d rather stay at work than take 7 6 5 4 3 2 1 Nothing at work is important enough to a vacation. interfere with my vacation. TOTAL SCORE 8–14 _____ = J

15. People who know me well would 7 6 5 4 3 2 1 Relaxed and easygoing. describe me as hard driving and competitive.

241

16. In general, my behavior is governed 7 6 5 4 3 2 1 What I want to do—not by trying to by a desire for recognition and achievement. satisfy others.

17. In trying to complete a project or 7 6 5 4 3 2 1 I tend to take a break or quit if I’m solve a problem, I tend to wear feeling fatigued.

myself out before I’ll give up on it. 18. When I play a game (tennis, cards, etc.) my 7 6 5 4 3 2 1 The social interaction.

enjoyment comes from winning. 19. I like to associate with people who are 7 6 5 4 3 2 1 Easygoing and take life as it comes.

dedicated to getting ahead. 20. I’m not happy unless I’m always 7 6 5 4 3 2 1 Frequently, “doing nothing” can be doing something. quite enjoyable.

21. What I enjoy doing most are 7 6 5 4 3 2 1 Noncompetitive pursuits. competitive activities.

TOTAL SCORE 15–21 _____ = H Source: Copyright © 1982 by Michael T. Matteson and John M. Ivancevich.

Reality Check Now how much do you know about managing stress?

6. True or false: The typical Type A behavior pattern (TABP) is considered a moderator of the stressor, stress, and consequences relationship. a. True b. False

7. Stress is considered to be an response. a. environmental b. adaptive c. energy access d. obstacle

8. A person is in a state of when compliance with one set of expectations is in conflict with compliance in another set of expectations. a. eustress b. delegation c. role conflict d. status compliance

9. The underload–overload optimal stress continuum graphically represents . a. a negative threshold b. an equation c. biochemical changes d. an inverted “U”

10. True or false: Over the past decade, Johnson & Johnson’s wellness program saved the company more than $250 million. a. True b. False

REALITY CHECK ANSWERS

Before After

1. c 2. c 3. a 4. b 5. a 6. a 7. b 8. c 9. d 10. a Number Correct Number Correct

242 Part Two Understanding and Managing Individual Behavior

Impatience Job Involvement Hard Driving and Competitive Total Score (S) (J) (H) (A) S+J+H

The Behavior Activity Profile attempts to assess the three Type A coronary-prone behavior patterns, as well

as provide a total score. The three a priori types of Type A coronary-prone behavior patterns are shown:

Items Behavior Pattern Characteristics

1–7 Impatience (S) Is anxious to interrupt Fails to listen attentively Gets frustrated by waiting (e.g., in line, for others to complete a job) 8–14 Job Involvement (J) Focal point of attention is the job Lives for the job Relishes being on the job Gets immersed in job activities 15–21 Hard Driving/Competitive (H) Is hardworking, highly competitive Is competitive in most aspects of life, sports, work, etc. Races against the clock 1–21 Total score (A) Total of S + J + H represents your global Type A behavior

Score ranges for total score are: Score Behavior Type 122 and above Hard-core Type A 99–121 Moderate Type A 90–98 Low Type A 80–89 Type X 70–79 Low Type B 50–69 Moderate Type B 40 and below Hard-core Type B Percentile Scores Now you can compare your score to a sample of

more than 1,200 respondents.

Percentile Score Raw Score

Percent of Individuals Scoring Lower Males Females

99% ______140 ______132 95% ______135 ______126 90% ______130 ______120 85% ______124 ______112 80% ______118 ______106 75% ______113 ______101 70% ______108 ______ 95 65% ______102 ______ 90 60% ______ 97 ______ 85 55% ______ 92 ______ 80 50% ______ 87 ______ 74 45% ______ 81 ______ 69 40% ______ 75 ______ 63 35% ______ 70 ______ 58 30% ______ 63 ______ 53 25% ______ 58 ______ 48 20% ______ 51 ______ 42 15% ______ 45 ______ 36 10% ______ 38 ______ 31 5% ______ 29 ______ 26 1% ______ 21 ______ 21

Chapter 9 Managing Individual Stress 243

The severe economic recession in the United States that peaked with the near total collapse of the financial and housing markets in 2007–2008 has not only dealt a sig- nificant blow to businesses, but also has adversely affected most employees. Because of the downturned stock and housing markets and significant loss of per- sonal worth, many employees have been forced to re- duce spending and take a hard look at how to better manage their finances, a trend that continues to this day.

According to the Census Bureau, the poverty rate in the United States grew from 12.5 percent (or 37.7 million people) of the population in 2007 to 14.5 percent (or 45.3 million people) in 2013. In addition, nearly one- third of the families in the United States are character- ized as low income because their annual household income for a family of four totals less than $47,700. Looking at these statistics, it is clear that the recession has contributed to many employees feeling the effects of financial stress due to stagnant wage growth, de- creased hiring, and recurring rounds of layoffs, as well as the rising cost of healthcare, education, child care, and housing.

A 2011 survey conducted by the Society for Human Resource Management (SHRM) found that living ex- penses, medical bills, and debt (including credit card and student loan debt) were among the top financial concerns for employees. Recent college graduates who often fill entry-level positions have been especially hard hit—the average student loan debt was $23,300 per borrower that year. The total amount in outstanding student loans tops $1 trillion, and other debt, including credit card and auto loans, accounts for an additional $1.5 trillion. Add to that the stressors encountered in daily life such as relationships, commuting, work–life balance, and meeting the strenuous demands at work, and it is easy to see how individuals can be over- whelmed, which in turn, can have a profound negative effect on their performance, satisfaction, attendance, and overall productivity at work.

What can be done to help employees manage their stress about finances and increase their focus on job per- formance? Many companies have responded by offering education programs that focus on teaching employees about different aspects of financial and monetary res- ponsibility. Organizations tailor financial education

seminars to fit the particular needs of employees by of- fering such topics as basic budgeting and saving strate- gies, creating a plan to pay off debt, or providing the fundamentals of more complex issues such as investing, buying a home, or retirement planning.

Financial education seminars range from free work- shops presented by financial professionals and pro- grams conducted by community organizations such as the YMCA, to more extensive training sponsored by third-party financial institutions. The programs vary in their presentation methods. Some are offered weekly in a classroom setting during the evenings, lunchtime, or on weekends to accommodate varying work and per- sonal schedules. Others meet less frequently, but in- clude an online component for assigning homework and assignments for participants that bridge face-to-face sessions. Both techniques allow participants to get the most out of the training while fitting it into their busy schedules without adding extra stress.

For example, McLeod Health of Florence, South Carolina, implemented a 12-week financial education program comprised of a combination of classroom and online teaching methods. The program yielded a positive financial impact on both the company and its employees. A third party analyzed the results of the financial educa- tion program and found that the health care company had a return on investment of $6.60 per $1 invested in the pro- gram. The data showed a significant decrease in turnover, lost work time, and absenteeism of employees enrolled in the class while their job performance increased for a total return of $569,133. Soon, word spread of the value of the program, which led to strong demand from other employ- ees who wanted to enroll in upcoming sessions. In the four years the program has been offered, roughly 650 of McLeod’s employees have participated and have benefit- ted directly from the financial education training.

One aspect of financial education programs that has a profound effect on the results is the support that par- ticipants gain from other employees who have already received the training. Previous participants encourage employees (many of whom are struggling financially) to remain on their budgets and pay off debt. Employees who receive this support and reinforcement from fel- low employees are more likely to manage their finances (and related stress) in a better manner.

Case

Case 9.1: Alleviating Employee Stress Through Financial Education

244 Part Two Understanding and Managing Individual Behavior

At Therm-O-Disc, a manufacturing company in Ohio, employees that took advantage of the company-sponsored financial education programs were able to create a savings fund of $1,000 each and pay off a portion of their debt. Julie Buzzard, financial education coordinator of Therm- O-Disc, summarizes it this way: “Experienced partici- pants have been able to encourage those who are having a lot of difficulties, which helps to build teamwork across lines and departments that normally do not cross.”

In sum, financial education offers companies and employees a proactive method to cope with the chal- lenging economic conditions that continue to confront many Americans. From manufacturing to health care to technology companies, financial education programs create a win–win situation: employees can reduce stress (and focus more on their jobs) by improving how they manage their personal finances and debt, while companies show they care about their employees by providing them with a useful set of tools to manage their earnings, and ultimately, their stress. Questions 1. To what degree do companies have an obligation to

provide financial education programs to alleviate employees’ stress? Explain your answer.

2. Referring back to Exhibit 9.2, to what degree do you think an employee who is experiencing a considerable

amount of financial stress might exhibit some of the behavioral and cognitive outcomes listed in the far- right section of the model?

3. Though not extremely expensive, financial educa- tion programs still cost organizations money and resources to organize and administer to employees. In your opinion, why do organizations like McLeod Health and Therm-O-Disc offer these programs? What returns of investment can these two organiza- tions expect from having employees who become better at managing their finances?

Sources: Written by Brittany Bowden, San Marcos, Texas. Organization website, “Current Poverty Statistics,” http://kairoscenter.org, accessed June 17, 2016; Shelby Livingston, “Financial Education Works as Another Angle on Employee Wellness,” Business Insurance, http://www.businessinsurance. com, September 29, 2015; Julie Stich, “Want Savvier, Less-Stressed Employees? Provide Them with Financial Education,” Huffington Post, http:// www.huffingtonpost.com, January 19, 2015; Joanne Sammer, “Financial Education − Stress = Improved Productivity,” HR Magazine 57, no. 6 (June 2012), pp. 71–76; Floyd Norris, “The Number of Those Working Past 65 Is at a Record High,” The New York Times, May 18, 2012, http://www.nytimes. com; government website, “U.S. Census Bureau Announces 2010 Census Population Counts,” http://2010.census.gov, accessed July 22, 2012; government website, “Vintage 2007: National Tables,” http://www.census. gov, accessed July 22, 2012; Tim Worstall, “Well of Course 1 in 2 Americans Are Poor or Low Income, Naturally, It’s Obvious,” Forbes, December 16, 2011, http://www.forbes.com.

10. GROUPS AND TEAMS

11. MANAGING CONFLICT AND NEGOTIATIONS

12. POWER AND POLITICS

Coming together is a beginning; keeping together is progress; working together is success.

Henry Ford

P A R T T H R E E

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The existence of groups can alter a person’s motivation or needs and can influence the behavior of people in an organizational setting. Organizational behavior is more than simply the sum of the behavior of separate individuals, but rather a much more complex phenom- enon, a very important part of which is the group. This chapter provides a model for under- standing the nature of groups in organizations. It explores various types of groups, the reasons for their formation, their characteristics, and some end results of group membership. It also focuses on a special form of groups—teams—that is playing an increasingly larger role in current organizational processes. The current understanding of teams builds on theories, research findings, and applications of groups and their formation, maturity, and effectiveness.

Groups and teams are not the same. A group is two or more individuals interacting with each other to accomplish a common goal. Teams are mature groups that share a common purpose, responsibility, and accountability for achieving performance goals. Teams start out as groups, but not all groups become mature and interdependent or teams.

Teams and groups share many common characteristics. First, as already noted, they can be formed when two or more individuals interact. Second, both teams and groups provide structure for the work and interaction of their members. Third, their members can perform specific technical, leadership, problem-solving, and emotional roles. Last, members of groups and teams share a common goal(s).

Exhibit 10.1 presents some of the differences between groups and teams. Depth of com- mitment distinguishes groups and teams. Groups are accountable to a manager and are often randomly formed (e.g., hiring different people over time), resulting in a varied mix of skills. Teams are internally accountable to one another, and each member’s skills complement those of the other team members. Group members create and share norms of performance and behavior. On the other hand, teams share a culture, a set of rituals and processes, and a philosophy in working together.

Teams over time develop synergy or a special energy by leveraging the creativity, actions, and behaviors of members. A team’s work and performance are said to be synergistic, or greater than the work and performance of individuals working alone on the team.

group Two or more individuals interacting to accomplish a common goal.

team Group of individuals with complementary skills that share a common purpose, responsibility, and accountability for achieving performance goals.

Groups and Teams Learning Objectives

After completing Chapter 10, you should be able to:

Summarize the model of group formation and development.

Compare the differences between formal and informal groups.

Understand the reasons people form groups.

Explain the five stages of group formation.

Describe the major characteristics of groups.

Discuss relevant criteria for group effectiveness.

Differentiate among the different types of teams.

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For example, the now famous animation studio Pixar was so cash-strapped during its early years that it almost went out of business.1 What saved the company? A six-person team at Pixar created several high-quality short films (one was awarded an Oscar in 1988) and commercials that brought in $2.1 million in revenue and attracted the attention of execu- tives at Disney, ultimately leading to a joint venture between the two companies in 1991.2 Teams from both companies joined forces and released the blockbuster film Toy Story, which was the highest-grossing film in 1995 earning $362 million worldwide. Then, in 2006, Disney purchased Pixar for $7.4 billion but has been careful to preserve the creative team environment that has helped the Disney and Pixar partnership create such popular animated films as Toy Story 3, Inside Out, Finding Nemo, Up, The Incredibles, Cars, and Monsters University.3

Another example of synergistic teamwork and performance is the trauma team at Ben Taub General Hospital, Houston’s busiest emergency room that treats more than 100,000 patients a year.4 Physicians, nurses, aides, technicians, and specialists work on teams to treat life-and-death cases. Trauma teams are committed to saving lives under serious

Reality Check How much do you know about groups and teams?

1. A(n) is a group of subordinates who report to one particular manager. a. informal group b. command group c. task group d. formal group

2. Assigning group members to a secretive research and development project that operates outside of normal company operations in order to create innovative products is known as a . a. stealth operation b. skunkworks c. quiet development zone d. basement barrier

3. In a manufacturing setting, employees whose performance is similar to the standard performance of other employees (i.e., group norm) who perform similar tasks are said to be operating in the . a. zone of acceptance b. zone of accomplishment c. zone of goal achievement d. zone of agreement

4. Making a group more homogeneous and smaller are two steps that can group members. a. increase conflict among b. decrease the amount of communication between c. have no effect on d. increase group cohesion among

5. In a work setting, an employee who produces more than anyone else in the group is known as a .

a. zone hitter b. rate-buster c. norm expander d. None of the above (a–c) are correct.

Chapter 10 Groups and Teams 249

circumstances. Each member brings a special set of skills to the trauma patient. There is no time for conflict, since collaboration is essential for lives to be saved. Members of the trauma team depend on each other and are accountable to each other.

As a team, the Ben Taub unit has acquired a local and worldwide reputation for accomplishing exceptional results in saving patients. The synergistic results could be accomplished only by a committed and dedicated team of professionals.5 The trauma team is an actual example of the distinct characteristics and differences presented in Exhibit 10.1. Not all teams have such crucial life-and-death circumstances regularly facing them. Also, to effectively utilize teams in organizations, managers and leaders need to understand the distinctions illustrated in Exhibit 10.1.

The Nature of Groups Groups are a pervasive part of modern life. All of us have been—and are—members of many different groups—school groups, work groups, family groups, social groups, reli- gious groups. There are small groups and large groups, permanent groups and temporary groups, formal groups and informal groups. Some groups are successful, some are not. Some groups bring out the best in their members, while others may bring out the worst. These are just a few of the multitude of ways in which groups may be characterized.

As indicated earlier, the following definition of groups will be used throughout this chapter: two or more individuals interacting with each other to accomplish a common goal.

One way of viewing this definition is to think of it in terms of specifying three mini- mum requirements that must be met for a group to exist. The first requirement deals with size. There must be two or more individuals for there to be a group. One person does not constitute a group. Note that in this definition, while there is a minimum size requirement, there is no maximum.

The second requirement specifies that there must be some form of exchange or com- munication between these individuals. That is, they must interact with each other in some manner. We usually think of interaction between group members as occurring in a face-to- face verbal exchange, but that does not have to be the case. In nominal groups (discussed in Chapter 14), for example, the members might never speak with one another; their only interactions are typically in writing. Due to busy schedules, a student group may only meet face-to-face a few times during a semester; but its members may speak by phone, and

Dimension Formal Work Group Team

Goals Works on common goals Total commitment to common goals Accountability To manager To team members and team leader Skill levels Random Complementary Performance evaluation By manager By team members and team leader Culture Marked by change Based on collaboration and goal and conflict attainment Performance outcomes Positive, neutral, or negative Synergistic or greater than sum of members’ contributions Definition of success By manager’s aspirations By members’ and team leader’s aspirations

EXHIBIT 10.1 Comparison of Groups and Teams

250 Part Three Group Behavior and Interpersonal Influence

exchange ideas, research findings, rough drafts of their research paper or presentation via e-mail or other electronic communications multiple times until the project is complete. Though the students are working remotely, they are still a group.

The final requirement in our definition of groups is that of attempting to accomplish a common goal. If there is no common goal or purpose, there is no group by our definition. A common goal is a goal toward which individual members are willing to work. For example, a common goal of most sports teams is to achieve a high enough level of team- work to win the game. Yes, a team “star” can make a substantial contribution to that victory, but it generally takes a team to win a game. For example, before he led the Denver Broncos to victory in Super Bowl 50 in February 2016, Peyton Manning added more statistics to his NFL legacy: most career passing touchdowns, most career passing yards, the single season touchdown record, and most wins (including playoffs). Despite these amazing numbers, it was Manning’s teammates—particularly Von Miller and the Broncos defense—who helped him secure a second Super Bowl ring before announcing his retire- ment from the NFL.6

Although every group is different, possessing its own unique attributes and dynamics, it is also true that in many important ways groups tend to display similar patterns of evolu- tion. Exhibit 10.2 presents a model of group formation and development that we will follow in discussing this important organizational behavior and management topic. The model suggests that the end results of group activity are shaped by a number of antecedent variables, each category of which we will examine in this chapter. Each segment of the model can (and, in reality, does) influence each of the other segments.

Types of Groups An organization has technical requirements that arise from its stated goals. The accomplish- ment of these goals requires that certain tasks be performed and that employees be assigned to perform these tasks. As a result, most employees will be members of a group based on

EXHIBIT 10.2 A Model of Group Formation and Development

Feedback

Types of Groups

Formal

ask eam

ormal

Stages of Group Development

or

Nor

or

Some Group Characteristics

oles

Norms

End Results

or

Reasons for Group Formation

Chapter 10 Groups and Teams 251

their position in the organization. These are formal groups. Whenever individuals associate on a fairly continuous basis, there is a tendency for groups to form whose activities may be different from those required by the organization. These are informal groups. Both formal groups and informal groups, it will be shown, exhibit the same general characteristics.

Formal Groups The demands and processes of the organization lead to the formation of different types of groups. Specifically, at least two types of formal groups exist: command and task.

Command Group The command group is specified by the organization chart and is made up of the subordi- nates who report directly to a given supervisor. The authority relationship between a department manager and the supervisors, or between a senior nurse and her subordinates, is an example of a command group.

Task Group A task group comprises the employees who work together to complete a particular task or project. For example, when an emergency call comes in to put out a warehouse blaze, fire- fighters in a city fire department are trained to deal with the situation by performing a variety of tasks. These activities create a situation in which several firefighters must com- municate and coordinate with one another to address the emergency situation. These required tasks and interactions facilitate the formation of a task group.7 Another example would be the nurses assigned to duty in the emergency room of a hospital; they constitute a task group, since certain activities (e.g., taking a medical history, triage assessment, assisting the physician, comforting the patient’s family, etc.) are required when a patient needs to be treated.

Informal Groups Informal groups are natural groupings of people in work environments in response to social needs. In other words, informal groups are not deliberately created; they evolve naturally. Two specific types of informal groups are interest and friendship. The boundaries between these two types of groups often become blurred. For example, assume a group of employees from different departments of a company respond to a volunteer opportunity to serve the homeless at a nearby soup kitchen. This interest group evolves into a friendship group as a result of this bonding experience.

Interest Groups Individuals who may not be members of the same command group, task group, or team may come together to achieve some mutual objective. Examples of interest groups include employees grouping together to present a unified front to management for more benefits and waitresses “pooling” their tips. Note that the objectives of such groups are not related to those of the organization, but are specific to each group.

Friendship Groups Many groups form because the members have something in common such as age, political beliefs, or ethnic background. These friendship groups often extend their interaction and communication to off-the-job activities.

A distinction has been made between two broad classifications of groups—formal and informal. The major difference between them is that formal command and task groups and

formal group A group formed by management to accomplish the goals of the organization.

informal group A group formed by individuals and developed around common interests and friendships rather than around an organiza- tional goal.

command group A group of subordinates who report to one particular manager. The command group is specified by the formal organization chart.

task group A group of individuals who are working as a unit to complete a project or job task.

interest group A group that forms because of some special topic of interest. Generally, when the interest declines or a goal has been achieved, the group disbands.

friendship group An informal group that is established in the workplace because of some common charac- teristic of its members and that may extend the interaction of its mem- bers to include activities outside the workplace.

252 Part Three Group Behavior and Interpersonal Influence

teams are designated by the formal organization as a means to an end. Informal interest and friendship groups are important for their own sake. They satisfy a basic human need for association. If employees’ affiliation patterns were documented, it would become rapidly apparent that they belong to numerous and often overlapping groups. Why so many groups exist is the question to which we turn next.

Why People Form Groups As illustrated in Exhibit 10.3, there are many reasons why formal and informal groups form.8 One of the most compelling reasons people join groups is because they believe membership in a particular group will help them to satisfy one or more important needs. Social needs, for example, can be satisfied through groups that provide a vehicle for members to interact with one another. Indeed, it is difficult to imagine being able to fulfill general social needs without participating in at least some groups. Security needs may be partially met by membership in a group that acts as a buffer between employees and the organizational system. Without such a group, an individual may feel alone in facing organizational demands. This “aloneness” leads to a degree of insecurity that can be offset by group membership. Esteem needs may be partially met by belonging to a high-status or prestige group in which membership is difficult to obtain. An example would be the million-dollar roundtable in the life insurance business, or an honors orga- nization in college.

Proximity and attraction are two related reasons people form groups. Proximity involves the physical distance between employees performing a job. Walking distance, rather than straight-line distance, is a better predictor of the amount of interaction that will occur. It is much easier to interact with a co-worker 10 yards away and separated by two desks than it is to interact with someone 1 yard away but separated by a wall. Attraction designates the attraction of people to each other because of perceptual, attitudinal, performance, or moti- vational similarity. Proximity makes it easier to determine areas of common attraction. Thus, both of these factors work together to facilitate group formation.

Group goals, if clearly understood, can be reasons people are drawn to a group. For example, an individual may join a group that meets after work to become familiar with a new personal computer system. Assume that this system is to be implemented in the work organization over the next year. The person who voluntarily joins the after-hours group believes that learning the new system is a necessary and important goal for employees.

EXHIBIT 10.3 Five Reasons Why People Form Groups

Need satisfaction

Proximity

AttractionGoals

Economic benefits

Chapter 10 Groups and Teams 253

Finally, in many cases groups form because individuals believe they can derive greater economic benefits from their jobs if they organize. For example, individuals working at different points on an assembly line may be paid on a group-incentive basis where the pro- duction of the group determines the wages of each member. By working and cooperating as a group, the workers may obtain higher economic benefits. Or executives in a corpora- tion may form a group to review executive compensation in hopes of increasing their own economic payoffs. Whatever the circumstances, the group members have a common interest—increased economic benefits—that leads to group affiliation.

Stages of Group Development Groups learn just as individuals do. The performance of a group depends both on individ- ual learning and on how well the members learn to work with one another. For example, a new product committee formed for the purpose of developing a response to a competitor may evolve into a very effective team, with the interests of the company being most impor- tant. However, it may also be very ineffective if its members are more concerned about their individual departmental goals than about developing a response to a competitor. This section describes some general stages through which groups evolve and points out the sequential development process involved.9

One widely cited model of group development assumes that groups proceed through as many as five stages of development: (1) forming, (2) storming, (3) norming, (4) perform- ing, and (5) adjourning.10 Although critics of this model suggest that other factors such as time and deadlines are more valid predictors of group functioning, the five-stage model remains influential.11

Forming The first stage of group development is forming, and it is characterized by uncertainty (and, frequently, confusion) about the purpose, structure, and leadership of the group. Activities tend to focus on group members’ efforts to understand and define their objectives, roles, and assignments within the group. Patterns of interaction among group members are tried out and either discarded or adopted, at least temporarily. The more diverse the group is, the more difficult it is to maneuver through this stage and the longer it takes. That is why this is a particularly sensitive stage in the formation of multicultural groups. Generally, this stage is complete when individuals begin to view themselves as part of a group.

Student group example: After being assigned a semester-long group project by their professor, newly formed student groups meet to figure out how to get started on the project, who will do what task, etc.

Storming The storming stage of group development tends to be marked with conflict and confronta- tion. This generally emotionally intense stage may involve competition among members for desired assignments and disagreements over appropriate task-related behaviors and responsibilities. A particularly important part of storming can involve redefinition of the groups’ specific tasks and overall goals.

Individually, group members are likely to begin to decide the extent to which they like the group tasks and their degree of commitment to them. While members may accept the group at one level, at another level they may resist the control the group imposes on them. Some group members may begin to withdraw during storming, making this stage a particularly

254 Part Three Group Behavior and Interpersonal Influence

critical one for group survival and effectiveness. It is essential that the conflict that typifies storming be managed, as opposed to being suppressed. Suppression of conflict at this point is likely to create negative effects that can seriously hinder group functioning in later stages.

Student group example: Group members argue over what to do about one of the five team members who missed two early (and important) meetings and deadlines.

Norming While storming is marked by conflict and confrontation, norming is characterized by coop- eration and collaboration. It is also the stage where group cohesion begins significant development. There tends to be an open exchange of information, acceptance of differences of opinion, and active attempts to achieve mutually agreed-upon goals and objectives. There is a strong degree of mutual attraction and commitment and feelings of group identity and camaraderie. Behavioral norms are established and accepted by the completion of this stage, as are leadership and other roles in the group. (The specific important impact of norms on group functioning is addressed in a subsequent section on group characteristics.)

Student group example: Students have agreed upon key goals and objectives and have developed a true sense of “teamwork”; the leader is accepted and members have assumed their individual roles.

Performing The fourth, and what may be the final stage, is performing. Performing is that stage where the group is fully functional. The group structure is set, and the roles of each member are understood and accepted. The group focuses its energies, efforts, and commitments on accomplishing the tasks it has accepted.

For some groups, this stage marks the attainment of a level of effectiveness that will remain more or less constant. For others, the process of learning and development will be ongoing so that group effectiveness and efficiency continue. In the former case, group performance will be maintained at a level sufficient to ensure survival; in the latter case, the group will record increasingly higher levels of achievement. Which way any particular group will go will depend on a number of variables; in particular, how successfully the group completed earlier development stages.

Student group example: Group members and the group leader perform their tasks effectively and make a great deal of progress toward achieving their project goals and objectives.

Adjourning The adjourning stage involves the termination of group activities. Many groups, of course, are permanent and never reach the adjourning stage. For temporary groups, however, such as committees, project groups, task forces, and similar entities, this stage includes disband- ment. Customary task activities are complete and the group focuses on achieving closure. This stage can be marked by very positive emotions centering on successful task accom- plishment and achievement. It may also be a source of feelings of loss, disappointment, or even anger. The latter may be especially true in the case of permanent groups that fail to survive because of organizational downsizing, merging, or bankruptcy. Increasingly, adjournment is becoming an expected stage of group development, however. Many organi- zations are relying on temporary groups for problem-solving tasks and product develop- ment. Hewlett-Packard and 3M are two examples of companies using temporary groups. At these organizations, project teams may have a life cycle ranging from less than a month to several years.

Chapter 10 Groups and Teams 255

Not all groups progress smoothly and predictably through these stages. Numerous fac- tors can either hinder or facilitate the process. For example, if new members are constantly entering the group while others are leaving, the group may never complete the performing stage. Other factors that may influence the pattern of group development include the con- text or environment in which the group operates and group members’ awareness of time and deadlines.

Student group example: The group completes the assignment and submits it to the professor for a grade. After final exams are over, the group gets together for pizza to celebrate the successful completion of the project.

Characteristics of Groups As groups evolve through their various stages of development, they begin to exhibit certain characteristics. To understand group behavior, you must be aware of these general charac- teristics. Some of the more important ones are composition, status hierarchy, roles, norms, leadership, and cohesiveness.

Composition Group composition relates to the extent to which group members are alike. Members of a homogeneous group share a number of similar characteristics. Characteristics may be demo- graphic (race, gender, socioeconomic background, education, age, or cultural origin), person- ality, skills and abilities, or work experience, to name just a few. A heterogeneous group, on the other hand, is composed of individuals who have few or no similar characteristics.

Group composition can be extremely important because it can influence a number of other characteristics and outcomes. All else being equal, for example, homogeneous groups are likely to be more cohesive than heterogeneous ones. On the other hand, heterogeneous groups may outperform homogeneous ones in certain situations because they have a richer variety of knowledge, information, and experience to draw upon.12 As organizational diver- sity increases, at least with respect to demographic characteristics, groups will become more heterogeneous in composition. While this offers numerous opportunities for increas- ing group performance, it also makes the effective management of groups a more challeng- ing task.13 Sometimes explicit decisions to include individuals with certain characteristics in the composition of a group can have unintended consequences, as this chapter’s You Be the Judge demonstrates.

Status Hierarchy Status and position are so similar that the terms often are used interchangeably. The status assigned to a particular position is typically a consequence of certain characteristics that differentiate one position from other positions. In some cases, a person is given status because of such factors as job seniority, age, or assignment. For example, the oldest worker may be perceived as being more technically proficient and is attributed status by a group of technicians. Thus, assigned status may have nothing to do with the formal status hierarchy.

The status hierarchy, and particularly the deference paid to those at the top of the hier- archy, may sometimes have unintended—and undesirable—effects on performance. A classic example occurred several years ago when a commercial jetliner ran out of fuel and landed short of the runway in Portland, Oregon, killing 10 of the 189 persons aboard. The plane ran out of fuel while flight members were preoccupied with a landing-gear problem that had forced them to circle Portland for some time. The Air Transportation Safety Board’s report of the accident showed that both the copilot and the flight engineer knew the fuel situation was becoming critical, but they did not do enough to warn the captain.

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A study of the transcript of the cockpit conversation that took place before the crash con- firms that warnings were made but were subtle, gentle, and extremely deferential to the senior captain in his position at the top of the status hierarchy.14

Roles Each position in the group structure has an associated role that consists of the behaviors expected of the occupant of that position.15 For example, the director of nursing services in a hospital is expected to lead, organize, and control the entire nursing department. The director is also expected to assist in preparing and administering the budget for the depart- ment. A nursing supervisor, on the other hand, is expected to supervise the activities of nursing personnel engaged in specific nursing services such as obstetrics, pediatrics, and surgery. These expected behaviors generally are agreed on not only by the occupants, the director of nursing, and the nursing supervisor, but also by other members of the nursing group and other hospital personnel.

In addition to an expected role there are also perceived and enacted roles. The perceived role is the set of behaviors that a person in a position believes he or she should enact. As discussed in Chapter 4, perception can be distorted or inaccurate. The enacted role, on the other hand, is the behavior that a person actually carries out. Thus, three possible role behav- iors can result. Conflict and frustration may arise from differences in these three role types. In fairly stable or permanent groups, there typically is good agreement between expected and perceived roles. When the enacted role deviates too much from the expected role, the person either can become more like the expected role or leave the group.

Through membership in different groups, individuals perform multiple roles. For exam- ple, first-line supervisors are members of the management team but also are members of the group of workers they supervise. These multiple roles result in a number of expected role behaviors. In many instances, the behaviors specified by the different roles are com- patible. When they are not, however, the individual may experience role conflict. In the case of first-line supervisors, for example, top management has a set of expectations that stresses the supervisor’s role in the management group. However, the supervisor is part of the group she is supervising and may have close friendship ties with the other members of the group, who may be former working peers. Similarly, a physician placed in the role of hospital administrator also may experience this type of role conflict. Sometimes, the conflict is between the individual’s role as a work group member on the one hand and a member of the larger organizational group on the other.

Y O U B E T H E J U D G E

USING GENDER TO INCREASE WORK GROUP DIVERSITY Southwood Psychiatric Hospital is a treatment facility with an emphasis on the treatment of emotionally disturbed and sexually abused children. When hospital management reassigned a female child care specialist to the night team (the night team works from 11 p.m. to 7 a.m.), she was very upset. The specialist characterized the new assignment as being less desirable than assignment to the day-treatment team.

Hospital management assigned her to the night team be- cause she was female and the night-treatment team was not very

diverse; in fact, it was made up of all men. Recently, some female patients had indicated they were uncomfortable asking male spe- cialists to assist them with certain needs during the night (e.g., going to the restroom, getting changed into pajamas, etc.). Hospital management, in an effort to make these female patients feel more comfortable, reassigned the female child care special- ist to night duty.

Was this a reasonable way for Southwood Psychiatric Hospital to increase work group diversity? Do you think that this transfer will affect the reassigned female child care specialist’s attitude toward her job, patients, or hospital management?

Chapter 10 Groups and Teams 257

Norms Norms are the standards of behavior shared by members of a group, and they have certain characteristics that are important to group members. First, norms are formed only with respect to things that have significance for the group. They may be written, but very often they are verbally communicated to members. In many cases they may never be formally stated but somehow are known by all group members. If production is important, then a production norm will evolve. If being creative and thinking outside the box are important, then an innovation norm will develop. Conversely, if these are not important concerns to the group, no standards for appropriate behavior in these areas will evolve; group members will be free to behave in whatever manner seems reasonable to them.

Second, norms are accepted in various degrees by group members. Some norms are completely accepted by all members, while other norms are only partially accepted. For example, research suggests that employees’ behavior can be influenced by an overly permissive group norm regarding absenteeism; basically, these employees will be absent more often than employees who are more concerned about the consequences of excessive absenteeism.16

Third, norms may apply to every group member, or they may apply to only some group members. For example, every member may be expected to comply with the production norm, while only group leaders may be permitted to disagree verbally with a management directive.

Groups develop norms for regulating many different aspects of their members’ behavior.17 For example, research suggests that positive feelings such as the joy and contentment of group members can create a group norm whereby the group is positive and upbeat.18 Positive group affect has been shown to reduce group members’ absenteeism and conflict while enhancing cooperation, performance, and member well-being.19 In work groups, however, the most common norm relates to productivity, and group productivity norms specify “acceptable” production behavior. It is important to understand that the group’s perception of what is an acceptable level of production may be significantly different from management’s perception. The group’s production norm may differ from management’s for a number of reasons, including a fear of rate-cutting if production is too high or a fear of reprisal if production falls too low.

Exhibit 10.4 illustrates where a group’s production norm might fall on a productivity continuum. The zone of acceptance depicted in the exhibit represents minor deviations above and below the norm that would be deemed acceptable to the group. Group members greatly exceeding the norm might be referred to as rate-busters, while those producing below group expectations are seen as social loafers. Social loafing is the tendency for indi- viduals to exert less effort in groups than when working individually.20 A more popular term for social loafer is slacker.

Norm Conformity An issue of concern to managers is why employees conform to group norms.21 This issue is especially important when a person with skill and capability is performing significantly below his or her capacity so that group norms are not violated. A number of variables may influence conformity to group norms. The personal characteristics of the individual play a role. For example, research indicates that persons of high intelligence are less likely to conform than less intelligent individuals, and authoritarian personality types conform more than do nonauthoritarians.22 Situational factors, such as group size and structure, may influence conformity. For example, conformity may become more difficult in larger groups or in those whose members are geographically separated. Intergroup relationships, which include such factors as the kind of pressure the group exerts and the degree to which the member identifies with the group, are another potentially important variable.

norms The standards of behavior shared by members of a group.

social loafing The tendency for individuals to exert less effort in groups than when working individually.

258 Part Three Group Behavior and Interpersonal Influence

The degree of conformity with group norms may also be influenced by cultural factors. Some cultures with a more collective tradition may place greater emphasis on the group and on conformity with norms than might cultures with a more individualistic orientation. Typical examples of these two orientations are China and the United States. Groups have traditionally played a far greater role in Chinese society than they have in the United States.

Leadership The leadership role is an extremely crucial characteristic of groups as the leader exerts influence over the other members of the group.23 In the formal group the leader can exer- cise legitimately sanctioned power. That is, the leader can reward or punish members who do not comply with the orders or rules. Sometimes, however, there is no single formal leader, even in a formal group. Such a condition may exist in the case of autonomous work groups. Self-managed teams, for example, may collectively share leader duties among the group members. Originating in the coal mines of Great Britain in the 1940s, self-managed teams have been used at such companies as Volvo, Procter & Gamble, General Foods, and

EXHIBIT 10.4 Hypothetical Production Norm and Its Zone of Acceptance

High Production Level

110

0

10

20

30

40

50

60

70

80

90

100

Group Norm

Low Production Level

Rate-busters (Producing above the group norm of acceptance)

Zone of Acceptance

Social Loafers (Producing below the group norm of acceptance)

X = Average monthly production of each member of the group

X

X

X

X

X

X

X

X

X

X

259

Motorola.24 The OB Matters describes how self-managed teams at Whole Foods Market and W.L. Gore & Associates perform the roles that are traditionally done by managers.

The leadership role also is a significant factor in an informal group. The person who becomes an informal group leader generally is viewed as a respected and high-status mem- ber who embodies the values of the group, aids the group in accomplishing its goals, and enables members to satisfy needs. Additionally, the leader is the choice of group members to represent their viewpoint outside the group and usually is concerned with maintaining the group as a functioning unit.

Cohesiveness Formal and informal groups seem to possess a closeness or commonness of attitude, behavior, and performance. This closeness has been referred to as cohesiveness. Cohesive- ness typically is regarded as a force. It acts on the members to remain in a group and is greater than the forces pulling the members away from the group. A cohesive group, then, comprises individuals who are attracted to one another. A group that is low in cohesiveness does not possess interpersonal attractiveness for the members.

Since highly cohesive groups are composed of individuals who are motivated to be together, management tends to expect effective group performance. This logic is not sup- ported conclusively by research evidence. In general, as the cohesiveness of a work group increases, the level of conformity to group norms also increases. But these norms may be inconsistent with those of the organization.

TEAMS THRIVE AT WHOLE FOODS AND W.L. GORE Many people know Whole Foods Market as a natural and organic foods grocery store. Founded in Austin, Texas, in 1980 with just 19 employees, the health food concern has expanded to 85,000 team members and 443 stores around the world. While many firms have employees, Whole Foods Market refers to (and treats) its people as team members. Departments—bakery, grocery, and meat and poultry—of each store are made up of small teams that have total con- trol over who joins the team. Here’s how it works. New applicants are screened and interviewed by store leadership or the human resources department. The best applicants are hired on a one- to three-month trial basis. At the end of the trial period, team members vote on whether the new hire can join the group on a permanent basis. The new hire needs to receive a two-thirds majority vote.

The power of team members doesn’t stop there. Whole Foods Mar- ket has a profit-sharing program in which members of high-performing teams earn up to $2 per hour extra in their pay. This program motivates experienced team members to spend time and energy to mentor, train, and collaborate with new hires so they can become successful con- tributors to the team effort. Whole Foods Market founder and chairman John Mackey summarizes the philosophy behind the firm’s extensive use of and reliance on self-managing teams: “humans flourish best when they are in small groupings of people they know well and who they come to love and trust.” Mackey’s vision certainly seems to be working; Whole Foods Market has been named to Fortune’s 100 Best Companies to Work For list each year for the past 18 years.

Another team-based organization that has also been named re- peatedly to Fortune’s list is W.L. Gore & Associates. Perhaps best known for GORE-TEX outerwear and footwear, the innovative firm has over 1,000 products, from guitar strings to surgical products. A pri- vately held company headquartered in Newark, Delaware, W.L. Gore employs more than 10,000 associates in more than 25 countries. Capping facility sizes to no more than 200 associates so that per- sonal communication and teamwork can thrive, the company “has no formal hierarchy, no bosses, few job titles, and offers associates (everyone is an owner) autonomy in choosing their work and negoti- ating roles within teams.” Associates do not have to consult with a boss or manager in order to undertake projects, but rather are encouraged to seek associates with the skills and experience needed to succeed. Every associate has the potential to be a team leader. The decentralized, self-managing team approach has earned W.L. Gore a worldwide reputation as a company whose “culture is a model for contemporary organizations seeking growth by unleashing creativity and fostering teamwork.”

Sources: Company websites, “Fast Facts,” http://media.wholefoodsmarket. com and “Gore at a Glance,” http://www.gore.com, both accessed April 21, 2016; Daniel Roberts, “At W.L. Gore, 57 Years of Authentic Culture,” Fortune, March 5, 2015, http://fortune.com; Polly LaBarre, “When Nobody (and Every- body) Is Boss,” Fortune, March 5, 2012, http://fortune.com; Charles C. Manz, Frank Shipper, and Greg L. Stewart, “Everyone a Team Leader: Shared Influence at W.L. Gore & Associates,” Organizational Dynamics 38, no. 3 (July–September 2009), pp. 239–44; Tamara Erickson, “What It Means to Work Here,” Harvard Business Review 85, no. 3 (March 2007), pp. 104–12.

O B M A T T E R S

260 Part Three Group Behavior and Interpersonal Influence

There are, of course, numerous sources of attraction to a group. These might include: 1. The goals of the group and the members are compatible and clearly specified. 2. The group has a charismatic leader. 3. The reputation of the group indicates that the group successfully accomplishes its tasks. 4. The group is small enough to permit members to have their opinions heard and evalu-

ated by others. 5. The members are attractive in that they support one another and help one another over-

come obstacles and barriers to personal growth and development.25

Cohesiveness and Performance The concept of cohesiveness is important for understanding groups in organizations.26 The degree of cohesiveness in a group can have either positive or negative effects, depending on

how group goals match those of the formal organization.27 In fact, four distinct possibilities exist, as illustrated in Exhibit 10.5.

Exhibit 10.5 indicates that if cohesiveness is high and the group accepts and agrees with formal organizational goals, then group behavior probably will be positive from the formal orga- nization’s standpoint. However, if the group is highly cohesive but has goals that are not congruent with those of the formal organization, then group behavior probably will be negative from the formal organization’s perspective.

Exhibit 10.5 also indicates that if a group is low in cohesive- ness and the members have goals that are not in agreement with those of management, then the results probably will be negative from the standpoint of the organization. Behaviors will be more on an individual basis than on a group basis because of the low cohesiveness. On the other hand, it is possible to have a group low in cohesiveness, where the members’ goals agree with those of the formal organization. Here, the results probably will be positive, although again more on an individual basis than on a group basis.

From a managerial perspective, it may sometimes be desir- able to alter the cohesion of a work group. If the group has high productivity norms, for example, but is not particularly cohe- sive, increasing cohesiveness can be very beneficial. Increasing cohesion may bring about increased performance, as well as contribute to group members’ satisfaction. The nearby Informa- tion You Can Use suggests ways to increase group cohesion.

Sometimes decreasing cohesion may be in the best interest of the organization. A group whose goals are counter to those of

EXHIBIT 10.5 The Relationship between Group Cohesiveness and Organizational Goals

Agreement with Organizational Goals

Low High Degree of Low Performance probably oriented away Performance probably oriented toward Group from organizational goals organizational goals Cohesiveness High Performance oriented away from Performance oriented toward organizational goals organizational goals

INCREASING GROUP COHESION

As a manager, you may find that members of your work group aren’t getting along as well as they should. To improve cooperation within the group and its overall productivity, you may want to increase the cohesion level of the group. Some strategies for increasing group cohesion include:

1. Reaching joint agreement on group goals.

2. Making the group more homogeneous in its composition.

3. Increasing the frequency of interaction among group members.

4. Making the group smaller (decrease number of members).

5. Physically and/or socially isolating the group from other groups.

6. Allocating rewards to the group rather than to individuals.

7. Giving the group and group members more responsibility and resources to accomplish its goals.

To decrease group cohesion, do the opposite of the strategies above (e.g., induce disagreement on group goals, make the group more heterogeneous, etc.).

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Chapter 10 Groups and Teams 261

the larger organization would be an example. This could occur during periods of labor unrest or while the organization is experiencing an external threat such as a hostile take- over. Or it may simply be a need to offset the negative effects of groupthink (discussed below).

Attempts to alter the cohesiveness of any group may not work; the opposite of what was intended may be the result. This is particularly true when reducing cohesion is being attempted. The group may see the effort as a threat, which may increase cohesiveness as the group unites to defend itself. Managers should exercise great care in deciding whether to influence the cohesion of work groups.

Groupthink Why did so many financial experts miss the signs of the collapse of the housing bubble and financial crisis that occurred in 2007 and 2008? With few exceptions, most of the key lead- ers and executive teams from large financial firms such as Bear Stearns, Lehman Brothers, Merrill Lynch (later purchased by Bank of America), AIG, Goldman Sachs, Fannie Mae, and Freddie Mac did not act on early information that suggested a major meltdown was imminent.28 In hindsight, early warning signs were there. For example, Warren Buffett, the investment guru, came out in 2002 against the use of complicated derivatives. Also, Edward Gramlich, the governor of the Federal Reserve in 2001, complained about preda- tory lenders who were giving mortgages to buyers who could not afford them.29 Unfortu- nately, financial service firm leaders and government regulators, as a group, decided to ignore these signals and to continue behaving as if the ride would never end.

Highly cohesive groups are important forces in influencing organizational behavior. One author has provided a provocative analysis of highly cohesive groups.30 In his book, Irving Janis analyzed foreign policy decisions by a number of presidential administrations and concluded that those made by such groups often included a decision-making process he called groupthink. Janis defines groupthink as the “deterioration of mental efficiency, reality testing, and moral judgment” in the interest of group solidarity.31 According to Janis, groups suffering from groupthink tend to display a number of common characteristics. Among these characteristics are the following:

Illusion of invulnerability. Group members collectively believe they are invincible. Tendency to moralize. Opposition to the group’s position is viewed as weak, evil, or unintelligent. Feeling of unanimity. All group members support the leader’s decisions. Members may have reservations about decisions but do not share these views. Rather than appearing weak, members keep dissenting views to themselves. This indicates how the pressure toward group solidarity can distort the judgment of individual members. Pressure to conform. Formal and informal attempts are made to discourage discussion of divergent views. Groups exert significant pressure on individual members to conform. Opposing ideas dismissed. Any individual or outside group that criticizes or opposes a decision receives little or no attention from the group. Group members tend to show strong favoritism toward their own ideas in the manner by which information is processed and evaluated, thereby ensuring that their own ideas will win out. The ramifications of groupthink can be quite severe.32 Some researchers believe that the

final “go/no go” decision at the time of the launch of the doomed space shuttle Challenger on January 28, 1986, was influenced by groupthink.33 The findings of other research contra- dict this belief and report that the tragedy had nothing to do with groupthink, but rather was a result of two key symptoms related to the tragedy: (1) excessive faith in the established system,

groupthink The deterioration of the mental efficiency, reality testing, and moral judg- ment of the individual members of a group in the interest of group solidarity.

262 Part Three Group Behavior and Interpersonal Influence

and (2) a short-range and self-interested preoccupation with meet- ing objectives and goals.34

Certainly, some level of group cohesiveness is necessary for a group to achieve often complex organizational goals and objectives. If seven individuals from seven different organiza- tional units are responsible for a task, the task may never be completed effectively.35 The point, however, is that more cohe- siveness may not necessarily be better. While members of task groups may redefine solving a problem to mean reaching agree- ment rather than making the best decision, members of cohesive groups may redefine it to mean preserving relations among group members and preserving the image of the group. Some research suggests that, even among highly cohesive work groups, groupthink is not a factor if the group is composed of highly dominant individuals.36

Janis suggests that groups can guard against groupthink in several ways, including: 1. Encourage the group to state objections and doubts. 2. Leader should avoid taking sides or (prematurely) endorsing

a particular course of action. 3. Break the group into subgroups to work on the same prob-

lem and then share the proposed solutions with the group. 4. Invite in outside experts to give feedback on group processes

and proposed solutions. 5. Assign a group member to play devil’s advocate so that

important objections are raised. (The nearby Information You Can Use feature provides tips for playing devil’s advocate.)

Group Effectiveness Groups exist to accomplish objectives. In the case of work groups, those objectives are generally related to the performance of specific tasks, which in turn are designed to result in attainment of formal organizational outcomes. Measurable production (e.g., number of units assembled, percent of market captured, number of customers served) is perhaps the most obvious, but certainly not the only, end result of work group activities.

While some form of production output (goods, services, ideas, etc.) is typically an important measure of group performance and effectiveness, it is not the only consideration. Organiza- tional researcher Richard Hackman identifies three important criteria of group effectiveness:37

1. The extent to which the group’s productive output meets the standards of quantity, qual- ity, and timeliness of the users of the output. For example, a group that produced a product that was unacceptable to a customer could not be considered effective no matter what the group or others thought about the product.

2. The extent to which the group process of actually doing the work enhances the capability of group members to work together interdependently in the future. This suggests that even though the group might produce a product meeting the standards mentioned in the first crite- rion, if that end result was obtained in a manner destructive to future working relationships, the group is not effective. The fact that a group is a temporary one, such as a task force or project team, does not negate the importance of this criterion of effectiveness.

TIPS FOR PLAYING DEVIL’S ADVOCATE

Every group can benefit from having one or more of its members play devil’s advocate. The advocate supports the less popular position or idea (or pro- vides constructive criticism regarding the popular position or idea) as a way to encourage the group to be more thorough in its decision making. Here are some tips for being a successful devil’s advocate:

1. Preface your constructive criticism or arguments with “Let me play devil’s advocate for a moment . . .” This will decrease the amount of resistance or defensiveness among team members.

2. Seek to understand others’ positions or ideas. Ask questions for clarification.

3. Do not exaggerate or lie. Be truthful and honest when presenting opposing arguments.

4. Maintain a respectful and neutral tone of voice. This will contribute to a respectful and trusting group climate.

5. Only play devil’s advocate for those topics on which you are well informed and knowledgeable. Otherwise, group members may dismiss your ideas as uninformed or off the mark.

Information You Can Use

Chapter 10 Groups and Teams 263

3. The extent to which the group experience contributes to the growth and well-being of its members. This criterion relates to the end results of development and satisfaction, which were specified in Exhibit 10.2. It is not necessary for a group to have member develop- ment and satisfaction as a stated objective for this to be a legitimate test of group effec- tiveness. When group participation does not contribute to personal or professional development and/or does not lead to any personal need satisfaction, this may have nega- tive consequences. It suggests group productivity may not continue over an extended period, and it may have implications for the quality of group members’ participation in subsequent groups. These criteria are important ones for virtually any work group. However, they are par-

ticularly relevant for assessing the effectiveness of self-managed teams (SMTs). It is criti- cal that SMTs enhance the capabilities of their members to work together interdependently in the future. Similarly, team members’ growth and well-being are equally necessary ingre- dients for SMT success.

Teams As indicated at the start of this chapter, a team is viewed as a mature group comprising people who share a common purpose, responsibility, and accountability for achieving per- formance goals. Admittedly, the distinction between a team and a group can be arbitrary and is sometimes vague. A total commitment to common goals and accountability to the team is what makes a team stand out and distinguish itself from immature, developing groups.

The use of teams has increased so significantly in U.S. organizations for a number of reasons. These include potential quality improvements; enhanced productivity gains from bringing individuals with complementary skills together; and organizational restructuring efforts, particularly those with the objective of flattening the structure. Finally, many com- panies are moving to teams in response to other firms’ success stories. The phenomenal success of Microsoft Corporation is attributed in part to its extensive use of software research and development teams, a point not lost on other firms in the industry that have implemented the same practice.

Types of Teams There is no standard classification system for describing different types of teams. Distinctions among teams can be made on the basis of size, composition, organizational level, duration (temporary versus permanent), objectives, and potential contribution to organizational performance, to name only a few distinguishing characteristics. We will use a number of these to categorize important types of teams in organizations today—problem-solving teams, research and development teams, and the previously mentioned self-managed teams (SMT).

Problem-Solving Teams As the name implies, problem-solving teams are formed to deal with problems. The prob- lem may be very specific and known, or the team may be set up to deal with potential future problems that have not yet been identified. In the former case, the team is usually of tempo- rary duration. It is put together to deal with a current problem and then dissolved. The life span of such teams may vary from a few days to many months, occasionally a year or longer.

Quality circles are examples of permanent problem-solving teams. A quality circle is a team of employees committed to recommending and implementing work and product improvements and solving quality-related problems. Circles typically comprise 6 to 12 employees who perform related jobs. Circle members are usually trained in group processes (e.g., structured techniques for diagnosing problems and brainstorming).38

quality circle A small group of employees who meet on a regular basis, usually on company time, to rec- ommend improvements and solve quality-related problems. Frequently a part of total quality management efforts.

264 Part Three Group Behavior and Interpersonal Influence

A recent analysis of 36 research studies that focused on quality circles found that such participative techniques have a positive impact on employee performance.39 Temporary or permanent problem-solving teams are increasingly being used by organizations that realize teams can significantly outperform individuals in many situations.40 AT&T, for example, has effectively used problem-solving teams to address customer needs, resulting in quicker response time and increased customer satisfaction.

Cross-Functional Teams A cross-functional team is one consisting of members from different functional departments (e.g., engineering, accounting, human resources, marketing). This type of team forms to address a specific problem. In most cases team members come from different departments and different levels (managers and nonmanagers). Organizations have used cross-functional, boundary-spanning teams for years. For example, at Caterpillar’s tractor division, cross- functional teams working on product design and testing include a product designer, engi- neers, purchasing and marketing members, assembly workers, and even suppliers.41

At Boeing, a cross-functional team of specialists is stationed in one location to oversee the global production network of the company’s twin-engine, long-haul 787 aircrafts. The supply chain originates in Japan and crosses North America, Europe, Russia, India, Australia, and ends in China.42

Using the skills, competencies, and experience of individuals from diverse areas within a firm can increase camaraderie, trust, and performance. However, cross-functional teams may take time to become effective. Building trust and commitment in cross-functional teams is challenging because of previous impressions, attitudes, and relationships that are formed before the team is assembled.

Virtual Teams A popular response to increasing competition, the need for faster decisions, the ability to employ talent anywhere in the world, and technological advancements has been the cre- ation of virtual teams. Working across distances via e-mail, desktop and real-time confer- encing, videoconferencing, electronic bulletin boards, and other technologies is challenging for leaders. Virtual teams can be connected via computer and telecommunications technology. A virtual team is defined as a number of people who use technology to work across loca- tion and time boundaries to accomplish an interdependent objective.43 A virtual team’s membership rarely meets face to face.

Virtual teams can meet without concern for space, time, or physical presence. Team members use communications links to perform their work, individual and team tasks, and roles. Companies such as Hewlett-Packard, IBM, and Procter & Gamble have partially or fully eliminated traditional offices for providing customer services. Other companies like USAA Financial Services, Amazon, and credit card companies Visa and American Express rely on virtual employee teams to provide customer service. Virtual teams work together to accomplish a wide range of tasks, including responding to customer requests, complaints, and suggestions.44

The efficient and successful use of technology is one of a number of important factors contributing to the success of virtual teams. Possible technologies to use with virtual teams include: groupware/shared services, instant messaging and chat, web conferencing, e-mail, telephone, and file transfers.45 Each technology needs to be evaluated in terms of its effec- tiveness and cost benefits regarding the generation of ideas and plans, solving routine and complex problems, and negotiating interpersonal or other forms of conflict.

As virtual team members interact, it is important for leaders to coach, build trust, evaluate performance, and provide feedback.46 Since the virtual team is geographically dispersed and uses technology links, leaders are challenged in performing their motivational team-building

virtual team A team whose members use technology to work across location and time boundaries to accom- plish an interdependent objective.

Chapter 10 Groups and Teams 265

supportive roles. Virtual team members performing work anytime, anyplace are difficult to lead and manage in the traditional sense.47 Those charged with leading virtual teams must be willing to permit a great deal of autonomy and decision-making independence to members.48 The hierarchical command and control process is minimized when using virtual teams. Virtual team members must be self-reliant but remain connected to and knowledgeable about the goals of the organization.

The dispersion of virtual team members creates a challenge for leaders in terms of creat- ing a sense of team.49 Something intangible is lost when team members do not have the opportunity to work and meet face to face. The use of IBM Notes (formerly Lotus Notes) as a collaborative tool helps bring about a sense of team among remote workers. Team mem- bers can connect and collaborate online from anywhere in the world in real time via chat, voice, data, video, meetings, and telephone.50 In 2013, IBM launched a new social edition of Notes to help businesses create a more effective workforce by integrating social and busi- ness information to engage expertise, share information, and improve decision making.51

An empirical study of the development of trust in 29 global virtual teams that were con- nected via e-mail provided interesting findings. The highest level of trust among virtual teams pointed to three traits. First, members began their interactions with nonwork social interactions, providing personal background information. Second, each member had a set of clear task roles. Third, all team members demonstrated positive attitudes. The study also illustrated that low-trust virtual teams were less productive than high-trust virtual teams.

The new competitive pressures and challenges for increased worker autonomy, empower- ment, and work–life balance suggest that virtual teams and telecommuting (work carried out in a remote location away from a main office, factory, or plant) are a reality. By permitting employees to telecommute, companies such as GE, Apple, Salesforce, and Intuit have saved costs either through lower turnover, higher productivity, or reduced real estate costs.52 The use of mobile computing (e.g., tablets and smartphones) and telecommunication technology is likely to increase the dispersion and connectivity of employees. Approximately 34 million Americans work from home at least once a month, and that number is expected to rise to more than 63 million in the near future.53 According to recent research, close to 90 percent of current workers express a desire to have the option of working from home.54 Virtual teams and virtual offices (usually at home) are very likely to become even more popular. For example, Deloitte LLP allows most of its 45,000 employees in the United States to telecom- mute up to five days a week.55 This move has allowed the firm to reduce office space and energy costs by 30 percent, an amount that totaled $30 million in 2008.56

The nearby OB Matters indicates that teleworking is not always easy or successful.

Research and Development Teams Research and development (R&D) teams are used to develop new products. Their use is most extensive in high-tech industries such as aviation, electronics, and computers. R&D teams are usually composed of representatives of many different departments or functions in the organization, making them cross-functional in nature. For example, a computer com- pany may form a cross-functional R&D team made up of representatives from marketing, sales, engineering, purchasing, and finance to develop plans for a new product. Such a team, representing expertise from all the relevant areas of the company, can significantly reduce the amount of time required to bring a new product to the marketplace.

In some organizations, R&D teams have been set up to expedite innovation and creative new product design. Originally coined by a Lockheed engineer during World War II, such groups are referred to as skunkworks.57 Such teams often have their own facilities, some- what isolated from the rest of the organization. This may facilitate prolonged team interaction without interruption by day-to-day routines and problems. Skunkworks team members often become almost fanatical in the extent to which they identify with their products.

skunkworks A secretive research and development project that operates outside of normal company operations to create innovative products.

266

Hasso Plattner, then CEO of SAP, a global German software company, recruited several university students to form a skunkworks team in a small city outside of Berlin. The stu- dents created HANA, a new software that could radically change the business analytics and applications market by performing data analysis (e.g., tracking retail sales and inventory) in a fraction of the time it normally takes.58 In 2016, SAP HANA is used around the world by many different organizations, including Procter & Gamble, Airbus, Cirque du Soleil, Stanford School of Medicine, and Adidas.59 Another example is when Ford Motor Company almost abandoned development of a new Mustang coupe because of cost considerations, it was a skunkworks team that over an eight-week period (with team members sleeping on the workplace floor in shifts) solved the engineering and related cost problems.60

ISSUES TO CONSIDER ABOUT TELECOMMUTING Virtual employees? They’re part of the mainstream now. But working from home hasn’t been the panacea for work–life balance that many of us thought it was going to be. A common issue related to working from home is that virtual workers may be perceived by supervisors as less dedicated or committed to the organization. Another issue, says Christena Nippert-Eng, an associate professor of sociology, is that some virtual workers are growing increasingly anxious about working from home. “We feel less able than ever to place appropriate boundar- ies around the workday, while at the same time, we realize the need for those boundaries more than ever before.”

Fascinated by the rituals of today’s overconnected and underrested workers, Nippert-Eng has been exploring the boundaries—or the lack thereof—of the American workplace. She has come up with a couple of new species. Are you an integrator? They’re the ones who have a single date book or e-calendar for their business and personal appointments and have desks littered with family snapshots. A segmenter? They’d rather be tortured than disclose the name of their cat to an office worker or have their work keys on the same ring as their home keys.

Overall, though, the new world of 24/7 work is becoming more in- tegrated, and that will have implications for people and companies. In an interview with Fast Company, Nippert-Eng talked about the future of the virtual workplace.

Why Don’t More People Feel Better about Working at Home? “Telecommuting is a move toward integration: the home broadband hookup to the office network and the wireless remote access to the e-mail server. But we are still a heavily segmenting culture. People are glad they are home when the kids get home, but few say that they are more com- fortable with their work–life balance today than they were five or six years ago. The only people I’ve talked to who don’t have these ‘boundary’ issues are the ones who don’t own a home or who aren’t married, or whose spouse works in the same kind of environment that they do.”

What Are Some of the Specific Sources of Anxiety? “When you’re in the office, no one ever doubts whether you’re working or not. You could be balancing your checkbook, but the fact that you’re there is a reassurance. When you work at home, people don’t really believe that you’re working. So a common reaction is to say, ‘I will re- spond to every e-mail within 30 seconds. I will be on my computer

again at the end of the evening, so that when people come in they will see stuff waiting for them.’ It becomes another source of stress.

“Another source of anxiety is that there’s no independent way for a manager to assess whether or not you’re doing a good job. ‘Being there when I need you’ is pretty much still the standard. I know managers who actually up the productivity ante for people who work from home.

“At the same time, how do you establish an appropriate boundary between home and work? Most people have no idea when they should start and end the workday. Their day turns into this incredibly frantic, highly insecure, fast-paced mode where all time is work time and every day is a workday. There’s no such thing as vacation anymore.”

What Will It Take for These Arrangements to Work Better? “From the point of view of the person working at home, do not ask your colleagues to do anything for you that they wouldn’t normally do if you were there in the office. I’m hearing about colleagues who actu- ally sabotage the work of teleworkers. These are people who choose not to do this boundary-blurring stuff and who resent office mates who do. Interview colleagues once a week early on, and keep asking them how it is working out for them.

“For an organization to be effective with people who work from home, supervisors must create arrangements that are as flexible as pos- sible—but they must also make sure that the workday ends. Companies also need to look closely at the norms and at the expectations they have for their workers. Some supervisors are uncomfortable managing home– work integrators. Plenty of managers still want instantaneous hand- holding from their subordinates. They need to understand their own home–work boundaries and how they assess who’s worthy of promotion.

“There’s one last thing that both sides need to understand: Yes, you are going to lose time that could be spent working on other mat- ters while you are duking out these issues. But if you don’t, you’ll run into bigger problems down the road.”

Sources: Val Matta, “All You Need to Know about the Downside of Telecommuting,” Career Shift, https://careershift, accessed April 21, 2016; Bridget Miller, “The Pros and Cons of Telecommuting,” HR Daily Advisor, http://hrdailyadvisor, accessed April 21, 2016; Kimberly Elsbach and Daniel Cable, “Why Showing Your Face at Work Matters,” MIT Sloan Management Review 53, no. 4 (Summer 2012), pp. 9–12; Kelley M. Butler, “Phoning It In: Survey Results Report Productivity Lag among Teleworkers,” Employee Benefit News, March 1, 2006, pp. 1–3; Jennifer Reingold, “There’s No Place (to Work) Like Home,” Fast Company, November 2000, pp. 76–77.

O B M A T T E R S

Chapter 10 Groups and Teams 267

Self-Managed Teams As discussed in Chapter 6, self-managed teams (SMTs) are small groups of individuals who are empowered to perform certain activities based on procedures established and decisions made within the team, with minimal or no outside direction. Organizations using SMTs include such industry leaders as AT&T, Campbell Soup, Chevron Chemical, Coca-Cola, Federal Express, General Electric, General Mills, Honeywell, Motorola, Procter & Gamble, Texas Instruments, and Xerox. As a result of global competition, multinational firms increasingly are using SMTs in their foreign affiliates as well.61

SMTs are not for everyone, nor have they been successful in every organization. When US West formed its teams, for example, the company sold the concept to employees prom- ising teamwork, empowerment, and no loss of jobs. Many employees later felt that was just a cover for downsizing. As one ex-employee put it, “We showed them how to streamline the work, and now 9,000 people are gone. It makes you feel used.”62

Before implementing SMTs, organizations should make certain such teams are consis- tent with the organization’s: (1) business requirements, (2) values and goals, and (3) com- petencies. Once implemented, success depends on management commitment, receptivity to change, and employee trust in management. Without all of these, both individuals and organizations are likely to find the effort unsatisfactory.63

Team Effectiveness Teams represent one form or type of group. As such, factors influencing the effectiveness of any group are important in determining team effectiveness. Previously discussed group characteristics such as composition, norms, leadership, and cohesion are examples. Some issues, however, are particularly important when it comes to developing effective teams. We will briefly examine four: training, communications, empowerment, and rewards. (The nearby Information You Can Use box suggests additional considerations.)

Training Effective teams don’t just happen. In addition to their individual task-related skills and abilities, team members must also know how to function effectively as team members. This almost always suggests training. Depending on the type and purpose of the team, training may be needed in problem-solving skills, cre- ative thinking, or interpersonal skills. Certainly, at the very least, team members must be well-versed in the company’s phi- losophy regarding teams, the team mission, and new roles and responsibilities individuals will have as a consequence of being part of the team. It has been suggested that without proper train- ing the only thing management gets from creating teams is a guarantee that more time will be spent making worse decisions.

Whether a member of a student project group or a self-managed work team in an organization, what does it take to be an excellent team member? Research indicates that the following seven skills are highly desirable for team members to be effective:64

1. Open-mindedness. New projects often require team members to be thrust into a new situation with new team members. Individuals who can keep an open mind will tend to be more successful in dealing with these changes.

self-managed team (SMT) Small group of indi- viduals empowered to perform activities with minimal outside direction.

HOW TO HELP ENSURE TEAMS WORK

As a manager, here are some steps you can take to increase the likelihood that teams for which you are responsible work.

1. Keep the team size as small as possible. The larger the size, the greater the potential problems in interacting and making decisions.

2. Make certain that a sufficient range of skills, information, and/or experience to do the task exists among the team members.

3. Instill in the team a sense of common purpose.

4. Give the team leeway to develop its own set of work procedures without outside interference.

5. Help develop a sense of mutual accountability. “We’re all in this together” thinking helps develop teamwork and improves team outcomes.

Information You Can Use

268 Part Three Group Behavior and Interpersonal Influence

2. Emotional stability. The more stable an individual is, the faster she is expected to adjust to the different situations confronted by teams.

3. Accountability. When individual team members accept responsibility for their own performance and contributions, team effectiveness increases.

4. Problem-solving abilities. Team members should be able to analyze problems and develop alternative solutions to those problems.

5. Communication skills. Such skills will facilitate an open exchange of ideas and the creation of better solutions to problems.

6. Conflict resolution skills. Some disagreement within the group is healthy and will lead to better overall group performance. Too much conflict can lead to breakdowns in com- munication and a decrease in group cohesion.

7. Trust. Perhaps the most important characteristic of a good team member, trust must be present for the group to function at a high level of performance.

Communications One of the more significant effects creating teams has on an organization’s management is an increased need for information. Team members need information to accomplish their objectives. Much of this is information that has traditionally been management’s exclusive domain. If teams are to be effective, however, full disclosure of formerly restricted infor- mation may be necessary. Management—particularly middle management—is often threatened by this, fearing a loss of decision-making power. The failure of many team efforts can be traced directly to management’s unwillingness to share information with the teams it has created.

Empowerment Along with information, teams must have the authority to make decisions and act autono- mously. Whether a problem-solving team, an R&D team, or an SMT, teams that lack authority are generally less effective. In addition to hindering taking action, lack of author- ity suggests to team members that management doesn’t really trust them in the first place, further reducing team effectiveness.

Being given insufficient authority is typically the root of team empowerment problems. It should be noted, however, that sometimes teams may be given too much authority. This is particularly a danger in the early stages of team involvement. Team members may be unaccustomed to making decisions and be overwhelmed by the degree of authority they sud- denly possess. This is another reason training is such an important factor in team success.

Rewards The reward system in most organizations is individually based. That is, organizational mem- bers are rewarded based on evaluation of their individual performance. While the individu- al’s contribution to team success is a legitimate part of the reward system, team success must also be factored in. To the extent that teams perform well, the team should be rewarded. Distribution of that reward to individual team members is an important, but separate issue. Rewards can be allocated to teams in a number of ways. With problem-solving teams, for example, an incentive system is frequently used, wherein the team receives a percentage of the savings realized by the organization. Many organizations using SMTs have modified their reward structure to include some form of profit sharing. Regardless, it is important that teams be rewarded for their contribution to organizational objectives.

Once teams reach a certain level of effectiveness through training, communications, empowerment, and rewards, many have the potential to become high-performing teams.

Chapter 10 Groups and Teams 269

High-performing teams like those at Google, Apple, General Electric, 3M, and others reach a level of effectiveness and success that serves as a competitive advantage in the marketplace.

High-performing teams share many traits.65 Health care company Kaiser Permanente conducted a research study of 16 of its high-performing teams in five different regions of the United States.66 The study found that the teams shared the following characteristics:

1. Strong leadership: Acting more like coaches than managers, team leaders share information—financial, performance, staffing, and so forth—with team members so that everyone is in the loop and understands the big picture. Also, multiple team mem- bers have the opportunity to rotate into the leadership role.

2. Line of sight: Team members have a clear understanding of how their actions influence the overall strategic goals of the organization. In support of this objective, performance metrics should be understandable and accessible to all team members.

3. Team cohesion: High-performance teams find ways to build cohesion among members, whether it’s through regular team meetings, posting summaries of meetings or announcements, or by e-mail.

4. Process improvement: High-performing teams use structured approaches to improving their performance, whether the “Plan-Do-Study-Act” approach or the use of “huddles” (i.e., short meetings without a formal agenda).

5. Infrastructure and support: Ongoing training is often used in high-performance teams to ensure a “shared language and set of expectations” among team members. Also, high-performance teams obtain the support of internal sponsors and mentors who can help the team obtain the resources necessary for the team’s success.

As we have noted throughout this chapter, the use of work groups and teams in organi- zations is rapidly increasing. Groups and teams hold the potential for simultaneously increasing both the productivity and satisfaction of their members. As organizations continue to compete on a global scale, it is difficult to overstate the importance of the role groups and teams are assuming in organizational life. Organizational structure, the design of work, performance feedback and reward systems, decision-making procedures, and organizational development strategies, to name a few, are all being profoundly affected by groups and teams. As we will see in the next chapter, group effects are not always positive.

Summary of Key Points

∙ Groups can be viewed from a number of perspectives, including perception, organiza- tion, and motivation. For our purposes, a group may be thought of as two or more indi- viduals interacting with each other to accomplish a common goal.

∙ Formal groups are created to facilitate the accomplishment of an organization’s goals. Command groups, specified by the organization chart; task groups, comprising employ- ees working together to complete a specific project; and teams, comprised of people interacting closely together with a shared commitment, are three types of formal groups. Informal groups are associations of individuals in the work situation in response to social needs. Interest groups and friendship groups are two types of informal groups.

∙ Formal and informal groups exist for a number of reasons. Need satisfaction may be a compelling reason to join a group. Security, social, and esteem needs are typical exam- ples. Proximity and attraction may be another reason. That is, people may form groups because their physical location encourages interaction they enjoy. People may also form groups to facilitate the accomplishment of common goals. Finally, some groups form because individuals believe they can derive economic benefits from group membership.

270 Part Three Group Behavior and Interpersonal Influence

1. Think of a formal group to which you belong. Describe the group in terms of the char- acteristics of groups discussed in this chapter.

2. Have you ever been part of a virtual team? Describe it. What are the advantages and disadvantages of virtual work arrangements?

3. Why is it important for managers to be familiar with the concepts of group behavior? 4. Are groups more effective in problem solving than individuals? 5. Why is groupthink something to be avoided? How might a manager attempt to ensure

that groupthink doesn’t occur in his or her group? 6. What is the relationship between group norms and group cohesiveness? What roles do

both cohesiveness and norms play in shaping group performance? 7. Describe a situation in which you were part of a formal work group (while working in

a job or as a student) and one of the members of the group did not contribute much work to the group effort or project. How did the other group members deal with this person? How did this person’s behavior affect the attitude of the other group members?

8. Thinking back to a recent student or work group project in which you participated, how effective were you as a team member? What behaviors did you engage in that contributed to your and the group’s effectiveness? (Refer to the seven characteristics of effective team members presented in this chapter.)

9. Is leadership a more or less important consideration in self-managed teams than in other types of groups? Why or why not?

10. If you were creating a research and development team for an organization, what kinds of factors would you consider in deciding the composition of the team? Would these factors be different if you were putting together a problem-solving team?

Review and Discussion Questions

∙ As groups form and develop, they tend to go through several sequential stages. These are: (1) forming, characterized by uncertainty and confusion; (2) storming, marked by conflict and confrontation; (3) norming, where group cohesion begins significant devel- opment; (4) performing, where the group becomes fully functional; and (5) adjourning, which involves the termination of group activities.

∙ The model of the process of group formation and development presented in the chapter has a number of elements. These include the different types of groups, the reasons groups are formed, stages in group development, important characteristics of groups, and end results of group activity.

∙ To understand group behavior, it is essential to be aware that formal and informal groups exhibit certain characteristics. These include the composition of the group; the status hierarchy that exists and the basis used for determining member status; the norms or behaviors the group expects its members to adhere to; the type of leadership in the group; and the degree of cohesiveness that exists within the group.

∙ Relevant criteria for group effectiveness include (1) the extent to which group output meets expected standards of quantity, quality, and timeliness; (2) the extent to which the group process enhances the capability of group members to work together interdepen- dently in the future; and (3) the extent to which the group experience contributes to the growth and well-being of the group.

∙ A team is a special kind of unit. Different types of teams include problem-solving teams, cross-functional teams, virtual teams, research and development teams, and self-managed teams.

271

271 Part One The Field of Organizational Behavior

Reality Check Now how much do you know about groups and teams?

6. Playing devil’s advocate and inviting outside experts to give feedback on group processes and proposed solutions are two ways to reduce the risk of . a. group collectivism b. group conflict c. groupthink d. group overlap

7. A is one consisting of members from different functional departments (e.g., engineering, accounting, human resources, marketing). a. problem-solving team b. research and development team c. cross-functional team d. self-managed team

8. A team is characterized by members who use technology to work across location and time boundaries to accomplish an interdependent objective. a. virtual b. matrix c. cross-regional d. high-tech

9. True or false: Communication, conflict resolution, and problem-solving skills will help a person be a better team member. a. True b. False

10. The “performing stage” of group development is characterized by . a. terminating group activities b. conflict and confrontation c. accomplishing accepted tasks d. developing group cohesion

REALITY CHECK ANSWERS

Before After

1. b 2. b 3. a 4. d 5. b 6. c 7. c 8. a 9. a 10. c Number Correct Number Correct ________ ________

272 Part Three Group Behavior and Interpersonal Influence

Objectives 1. To provide experience in participating in and

observing groups undertaking a specific task. 2. To generate data that can be the focus of class

discussion and analysis.

Starting the Exercise The Situation You are appointed to a personnel committee in charge of selecting a manager for the department that provides ad- ministrative services to other departments. Before you be- gin interviewing candidates, you are asked to develop a list of the personal and professional qualifications the manager needs. The list will be used as the selection criteria. The Procedure 1. Select five to seven members to serve on the committee. 2. Ask the committee to rank the items in the follow-

ing list in their order of importance in selecting the department head.

Source: Kae H. Chung and Leon C. Megginson, Organizational Behavior (New York: Harper & Row, 1981), pp. 241–44. Used by permission.

3. The students not on the committee should observe the group process. Some should observe the whole group, and others individual members. The observ- ers can use observation guides A and B.

4. The observers should provide feedback to the participants.

5. The class should discuss how the committee might improve its performance.

Selection Criteria Strong institutional loyalty Ability to give clear instructions Ability to discipline subordinates Ability to make decisions under pressure Ability to communicate Stable personality High intelligence Ability to grasp the overall picture Ability to get along well with people Familiarity with office procedures Professional achievement Ability to develop subordinates

Exercise

Exercise 10.1: Participating In and Observations of Group Processes

USING GENDER TO INCREASE WORK GROUP DIVERSITY Having a more diverse work group for the night shift at Southwood Psychiatric Hospital would help some of the young female patients feel more comfortable. This goal seems very positive, and the hospital administration would be on the right track in improving patient care at the facility. Unfortunately, the reassignment of a female child care spe- cialist from the day to the night shift (where she’d be the only female employee!) may have negative repercussions for her, the department, and the hospital. Because the specialist dislikes the “graveyard” shift and would miss her friends from the day shift, it is possible that the reassigned specialist will take out her frustration over the forced reas- signment by reducing effort on the job, being less likely to engage in those “extra” helping behaviors such as filling in for absent co-workers, staying late when necessary, and so on. She may even begin looking for another job where she can get back to working the day shift.

What should the hospital do differently to increase work group diversity on the night shift without forcing a female spe- cialist to transfer from day shift? The hospital should explain to the day shift specialists why female specialists are needed for the night shift. Next, the hospital should ask for female volun- teers from the day shift to transfer to the night shift. If necessary, higher pay could be offered as an incentive. If that doesn’t work, a rotation system could be implemented in which two or three female specialists are transferred to the night shift (as a team) for three to six months at a time, then return to the day shift after completing their tours of duty. At that point, a different team could be transferred temporarily to the night shift, and so on. In sum, Southwood Psychiatric Hospital needs to increase the gender diversity of its night shift, but needs to do it in a way that is perceived as fair to the child care specialists on the day shift.

Y O U B E T H E J U D G E C O M M E N T

Chapter 10 Groups and Teams 273

A. Group Process Observation Guide Instructions: Observe the group behavior in the following dimensions. Prepare notes for feedback.

Group Behaviors Description Impact

Group Goal: Are group goals clearly defined?

Decision Procedure: Is the decision procedure clearly defined?

Communication Network: What kind of communication network is used? Is it appropriate?

Decision Making: What kind of decision process is used? Is it appropriate?

Group Norm: Observe the degrees of cohesiveness, compatibility, and conformity.

Group Composition: What kind of group is it?

Other Behavior: Is there any behavior that influences the group process?

274 Part Three Group Behavior and Interpersonal Influence

B. Individual Role Observation Guide Instructions: Observe one committee member. Tabulate (or note) behaviors that he or she exhibits as the group works.

Initiating Ideas: Initiates or clarifies ideas and issues. Confusing Issues: Confuses others by bringing up irrelevant issues or by jumping to other issues.

Managing Conflicts: Explores, clarifies, and resolves Mismanaging Conflicts: Avoids or suppresses conflicts conflicts and differences. or creates “win-or-lose” situations.

Influencing Others: Appeases, reasons with, or persuades Forcing Others: Gives orders or forces others to agree. others.

Supporting Others: Reinforces or helps others to express Rejecting Others: Deflates or antagonizes others. their opinions.

Listening Attentively: Listens and responds to others’ Showing Indifference: Does not listen or brushes off ideas and opinions. others.

Showing Empathy: Shows the ability to see things from Self-Serving Behavior: Exhibits behavior that is other people’s viewpoint. self-serving.

Exhibiting Positive Nonverbal Behaviors: Pays attention Exhibiting Negative Nonverbal Behaviors: Tense facial to others, maintains eye contact, composure, and other expression, yawning, little eye contact, and other signs. behaviors.

Chapter 10 Groups and Teams 275

Objectives 1. Participating in a group assignment playing a par-

ticular role. 2. Diagnosing the group decision process after the as-

signment has been completed.

Starting the Exercise After reading the material relating to Johnny Rocco, a committee is formed to decide his fate. The chairper- son of the meeting is Johnny’s supervisor, who should begin by assigning roles to the group members. These roles (shop steward, head of production, Johnny’s co-worker, director of personnel, and the social worker who helped Johnny in the past) represent points of view the chairperson feels should be included in this meeting.

(Johnny is not to be included.) Two observers should be assigned.

After the roles have been assigned, each role- player should complete the personal preference part of the worksheet, ordering the alternatives according to their appropriateness from the vantage point of his or her role.

Once the individual preferences have been deter- mined, the chairperson should call the meeting to order. The following rules govern the meeting: (1) the group must reach a consensus ordering of the alternatives; (2) the group cannot use a statistical aggregation, or ma- jority vote, decision-making process; (3) members should stay “in character” throughout the discussion. Treat this as a committee meeting consisting of members with different backgrounds, orientations, and interests who share a problem.

Exercise

Exercise 10.2: What to Do with Johnny Rocco

Personal Group Preference Decision Worksheet

________ ________ Give Johnny a warning that at the next sign of trouble he will be fired. ________ ________ Do nothing, as it is unclear that Johnny did anything wrong. ________ ________ Create strict controls (do’s and don’ts) for Johnny with immediate strong punishment for any misbehavior. ________ ________ Give Johnny a great deal of warmth and personal attention and affection (overlooking his present behavior) so he can learn to depend on others. ________ ________ Fire him. It’s not worth the time and effort spent for such a low-level position. ________ ________ Talk over the problem with Johnny in an understanding way so he can learn to ask others for help in solving his problems. ________ ________ Give Johnny a well-structured schedule of daily activities with immediate and unpleasant consequences for not adhering to the schedule. ________ ________ Do nothing now, but watch him carefully and provide immediate punishment for any future misbehaviors. ________ ________ Treat Johnny the same as everyone else, but provide an orderly routine so he can learn to stand on his own two feet. ________ ________ Call Johnny in and logically discuss the problem with him and ask what you can do to help him. ________ ________ Do nothing now, but watch him so you can reward him the next time he does something good.

276 Part Three Group Behavior and Interpersonal Influence

After the group has completed the assignment, the two observers should discuss the group process using the Group Process Diagnostic Questions as a guide. Group members should not look at these questions un- til after the group task has been completed.

Johnny Rocco Johnny has a grim personal background. He is the third child in a family of seven. He has not seen his father for several years, and his recollection is that his father used to come home drunk and beat up every member of the family; everyone ran when he came staggering home.

His mother, according to Johnny, wasn’t much better. She was irritable and unhappy and she always predicted that Johnny would come to no good end. Yet she worked when her health allowed her to do so to keep the family in food and clothing. She always decried the fact that she was not able to be the kind of mother she would like to be.

Johnny quit school in the seventh grade. He had great difficulty conforming to the school routine— misbehaving often, being truant quite frequently, and engaging in numerous fights with schoolmates. On several occasions he was picked up by the police and, along with members of his group, questioned during several investigations into cases of both petty and grand larceny. The police regarded him as “probably a bad one.”

The juvenile officer of the court saw in Johnny some good qualities that no one else seemed to sense. This man, Mr. O’Brien, took it upon himself to act as a “big brother” to Johnny. He had several long con- versations with Johnny, during which he managed to penetrate to some degree Johnny’s defensive shell. He represented to Johnny the first semblance of personal interest in his life. Through Mr. O’Brien’s efforts, Johnny returned to school and obtained a high school diploma. Afterward, Mr. O’Brien helped him obtain a job.

Now, at age 20, Johnny is a stockroom clerk in one of the laboratories where you are employed. On the whole, Johnny’s performance has been acceptable, but there have been glaring exceptions. One involved a clear act of insubordination on a fairly unimportant matter. In another Johnny was accused, on circumstan- tial grounds, of destroying some expensive equipment. Though the investigation is still open, it now appears that the destruction was accidental.

Johnny’s supervisor wants to keep him on for at least a trial period, but he wants “outside” advice as to the best way of helping him grow into greater responsibility. Of course, much depends on how Johnny behaves in the next few months. Naturally, his supervisor must follow personnel policies that are accepted in the company as a whole. It is important to note that Johnny is not an attractive young man. He is rather weak and sickly and shows unmistakable signs of long years of social deprivation.

A committee is formed to decide the fate of Johnny Rocco. The chairperson of the meeting is Johnny’s supervisor and should begin by assigning roles.

Group Process Diagnostic Questions Communications 1. Who responded to whom? 2. Who interrupted? Was the same person interrupted

consistently? 3. Were there identifiable “communication clusters”?

Why or why not? 4. Did some members say very little? If so, why? Was

level of participation ever discussed? 5. Were efforts made to involve everyone?

Decision Making 1. Did the group decide how to decide? 2. How were decisions made? 3. What criterion was used to establish agreement? a. Majority vote? b. Consensus? c. No opposition interpreted as agreement? 4. What was done if people disagreed? 5. How effective was your decision-making process? 6. Does every member feel his or her input into the

decision-making process was valued by the group, or were the comments of some members frequently discounted? If so, was this issue ever discussed?

Leadership 1. What type of power structure did the group operate

under? a. One definite leader? b. Leadership functions shared by all members? c. Power struggles within the group? d. No leadership supplied by anyone?

Chapter 10 Groups and Teams 277

2. How does each member feel about the leadership structure used? Would an alternative have been more effective?

3. Did the chairperson provide an adequate structure for the discussion?

4. Was the discussion governed by the norms of equity?

5. Was the chairperson’s contribution to the content of the discussion overbearing?

Awareness of Feelings 1. How did members in general react to the group

meetings? Were they hostile (toward whom or what?), enthusiastic, apathetic?

2. Did members openly discuss their feelings toward each other and their role in the group?

3. How do group members feel now about their par- ticipation in this group?

Task Behavior 1. Who was most influential in keeping the group task-

oriented? How? 2. Did some members carry the burden and do most of

the work, or was the load distributed evenly? 3. If some members were not contributing their fair

share, was this ever discussed? If so, what was the outcome? If not, why?

4. Did the group evaluate its method of accomplishing a task during or after the project? If so, what changes were made?

5. How effective was your group in performing assigned tasks? What improvements could have been made?

Source: Adapted from David A. Whetton and Kim S. Cameron, Developing Management Skills 1e, © 1984. Reproduced by permission of Pearson Education, Inc., Upper Saddle River, NJ.

Online shoe retailer Zappos (an Amazon company) is known for its exceptional customer service, a strong culture based on 10 core values, and encouraging the individuality of employees. Tony Hsieh, Zappos CEO and co-founder, has become well known for his mantra of “delivering WOW!” to the company’s many satis- fied customers and recognizing employees as a key component of the firm’s overall success.

Typically earning a spot on Fortune’s annual “100 Best Companies to Work For” list, Zappos has recently been in the news for other reasons. Several years ago, Hsieh decided to implement a new business strategy called holacracy, in which management jobs and titles are eliminated, and self-managed teams are the core of a flat organizational structure.

Created by software engineer Brian Robertson, hol- acracy replaces a typical vertical hierarchy with a series of self-managed work circles that operate with a certain amount of overlap when it comes to employees’ roles. Each circle is led by people called “lead links,” responsible for making sure the team gets its work done; however, these leads have little or no formal authority and cannot force employees to do anything they don’t want to do.

In 2013, Zappos’ HR department was the first group to implement the new holacratic approach. But Hsieh thought the implementation process was too slow, and the company was left operating with both the old man- agement structure for some departments and new work teams in other parts of the organization. So Hsieh decided to “rip the band-aid off” and accelerate the implementation of holacracy throughout the entire organization. Effective April 30, 2015, in an effort to eliminate the company’s management hierarchy, there would be no more people managers, and certain de- partments within the organization (e.g., merchandising, finance, technology, and marketing) would be phased out and those jobs would transfer to roles in the appro- priate work circles.

As part of the process, Hsieh sent a lengthy e-mail to employees, explaining why he believed holacracy was important and how it would help spark innovation. Recognizing that not everyone would thrive in a team atmosphere, Hsieh offered employees the opportunity to leave the company with a minimum of three months of severance pay and paid health care benefits for a specific period of time. For some Zappos veterans, the offer was even more generous: one month of pay for

Case

Case 10.1 Zappos Eliminates Managers

278 Part Three Group Behavior and Interpersonal Influence

every year worked at the company. To date, more than 30 percent of the company’s 1,600 employees have either taken the offer to leave or left on their own to seek employment elsewhere.

Hsieh hopes holacracy will help employees operate more like entrepreneurs and less like cogs in a bureau- cratic structure. He also thinks this new team approach could help create unlikely collaborations that could lead to more innovation and creativity in the organization.

The changeover has not been without obstacles. In addition to losing experienced employees (including former managers), the new approach continues to cause confusion among employees who were use to seeking advice and direction from their supervisors—who are now gone or who are now co-workers in the flat orga- nizational structure. Also, in the coming year, former managers who have new roles at the company will, in all likelihood, experience pay cuts because their re- sponsibilities as managers have been eliminated in the new team approach. Some critics say there is little or no motivation for people to stay at Zappos if there is no opportunity for advancement up the corporate ladder.

Although he regrets not implementing holacracy sooner, Hsieh says it’s too early to tell whether the self- managed teams approach will be a success. (Holacracy’s creator says it takes between 5 and 10 years before a company will know whether the new team approach will be successful.) Hsieh firmly believes that the company’s core values and strong culture provide a solid foundation for such an exciting and bold move to self-managed teams. However, Zappos’ employees don’t seem convinced that

the team experiment will lead to success. In addition to losing nearly one-third of its employees, for the first time in eight years, Zappos did not earn a spot on Fortune’s “100 Top Companies” list in 2016, where employees’ positive evaluations of their company count heavily in the final rankings. Questions 1. Do you think the new self-managed team approach

at Zappos helps employees become more innovative in their new roles? Explain.

2. If you were Hsieh, how would you respond to critics who say people have little or no incentive to stay with Zappos because there is no opportunity for advancement?

3. If you were a manager at Zappos, would you take the offer to leave the company?

Sources: Organization website, “How Holacracy Works,” http://www. holacracy.org, accessed April 21, 2016; Jennifer Reingold, “How a Radical Shift Left Zappos Reeling,” Fortune, http://fortune.com, accessed April 21, 2016; “Zappos Tries Holacracy, 200+ Quit,” CNBC, http://video.cnbc.com, accessed April 21, 2016; Adam Lashinsky, “Why Amazon Tolerates Zappos’ Extreme Management Experiment,” Fortune, March 4, 2016, http://fortune.com; Ann Latham, “Why Pain Is Inevitable for Zappos and Holacracy,” Forbes, January 27, 2016, http://www.forbes.com; Gregory Ferenstein, “The Zappos Exodus Wasn’t about Holacracy, Says Tony Hsieh,” Fast Company, January 19, 2016, http://www.fastcompany.com; Rebecca Greenfield, “Holawhat? Meet the Alt-Management System Invented by a Programmer and Used by Zappos,” Fast Company, March 30, 2015, http://www.fastcompany.com; Rebecca Greenfield, “Zappos CEO Tony Hsieh: Adopt Holacracy or Leave,” Fast Company, March 30, 2015, http://www.fastcompany.com; Aimee Groth, “Holacracy at Zappos: It’s Either the Future of Management or a Social Experiment Gone Awry,” Quartz, January 14, 2015, http://qz.com.

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As discussed in Chapter 10, organizations like Whole Foods, Ben Taub General Hospital, W.L. Gore, and Pixar (Disney) rely on work groups and teams to be successful. In organi- zations such as these, employees and groups are dependent on one another for ideas, information, assistance, and other types of coordinated action. Such interdependence may foster either cooperation or conflict.

For example, the production and marketing executives of a firm may meet to discuss ways to deal with foreign competition. Such a meeting may be reasonably free of conflict. Decisions get made, strategies are developed, and the executives return to work. Thus, there is intergroup cooperation to achieve a goal. However, this may not be the case if sales decline because the firm is not offering enough variety in its product line. The marketing department desires broad product lines to offer more variety to customers, while the pro- duction department desires narrow product lines to keep production costs manageable and to increase productivity. Conflict is likely to occur at this point because each function has its own goals that, in this case, conflict. Thus, groups may cooperate on one point and con- flict on another.

Although some discussion of interpersonal conflict will be included, this chapter will focus primarily on conflict that occurs between groups in organizations. There will be greater focus on intergroup conflict due to the growing importance of the role that teams play in organizations today.1 Types and causes of intergroup conflict, results of intergroup conflict, and ways to manage intergroup conflict will be discussed in detail. Later in the chapter, we will cover negotiations from an individual manager perspective. We will include a discussion of negotiation tactics and interpersonal negotiation styles, as well as a comparison of cross-cultural differences in negotiation approaches. We end the chapter with a list of steps to improve negotiation effectiveness.

Managing Conflict and Negotiations Learning Objectives

After completing Chapter 11, you should be able to:

Explain the contemporary perspective on conflict.

Describe the causes of intergroup conflict.

Identify several consequences of dysfunctional intergroup conflict.

Compare approaches for managing conflict through resolution.

Summarize how organizations stimulate constructive intergroup conflict.

Understand the differences between win–win and win–lose negotiation.

Give examples of different types of negotiation tactics.

Explain how negotiation effectiveness can be increased.

C H A P T E R E L E V E N

© Purestock/Superstock, RF

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A Contemporary Perspective on Intergroup Conflict In the past many organizational practitioners operated on the assumption that any and all conflict was bad and thus should be eliminated. Today we understand that is not the case. A more accurate and enlightened view is that conflict is neither inherently good nor bad, but it is inevitable. It is true that too much conflict can have negative consequences because it requires time and resources to deal with it and because it diverts energy that could more constructively be applied elsewhere. Too little conflict, on the other hand, can also be negative in that such a state can lead to apathy and lethargy and provide little or no impetus for change and innovation. If everything is going smoothly, people may become too com- fortable to want to make changes that could improve organizational effectiveness.

Some conflict situations produce nothing positive. Other conflict situations, however, may be beneficial if they are used as instruments for change or innovation. For example, evidence suggests conflict can improve the quality of decision making and employee rela- tions in organizations.2 Thus, in dealing with conflict the critical issue is not so much the conflict itself but how it is managed. Using this perspective, we can define conflict in terms of the effect it has on the organization. In this respect, we shall discuss both functional and dysfunctional conflict.3

Reality Check How much do you know about managing conflict and negotiations?

1. Allowing another group to win is known as the approach to managing intergroup conflict. a. dominating b. problem-solving c. avoiding d. accommodating

2. True or false: The risk of intergroup conflict is low when two departments (e.g., manufacturing and shipping departments) in a company are sequentially interdependent. a. True b. False

3. In conflict situations where a group’s members feel threatened, a group is likely to do each of the following except . a. become more loyal to the group b. desire strong, autocratic leadership c. become more consensus-oriented d. become more task-oriented

4. occurs when a third party has the power (authority) to impose an agreement. a. Arbitration b. Reconciliation c. Litigation d. Remuneration

5. Distorted perceptions, negative stereotyping, and decreased in communication are changes and occur due to dysfunctional conflict.

a. between groups b. within groups c. Both a and b are correct. d Neither a nor b is correct.

Chapter 11 Managing Conflict and Negotiations 281

Functional Conflict A functional conflict is a confrontation between groups that enhances and benefits the orga- nization’s performance. For example, two departments in a hospital may be in conflict over the most efficient and adaptive method of delivering health care to low-income families. The two departments agree on the goal but not on the means to achieve it. Whatever the outcome, low-income families probably will end up with better medical care once the con- flict is settled. Without this type of conflict in organizations, there would be little commit- ment to change, and most groups likely would become stagnant. Functional conflict can lead to increased awareness of problems that need to be addressed, result in broader and more productive searches for solutions, and generally facilitate positive change, adaptation, and innovation.

Dysfunctional Conflict A dysfunctional conflict is any confrontation or interaction between groups that harms the organization or hinders the achievement of organizational goals. Management must seek to eliminate dysfunctional conflict.

Beneficial conflicts can often turn into harmful ones. In most cases, the point at which functional conflict becomes dysfunctional is impossible to identify precisely. The same level of stress and conflict that creates a healthy and positive movement toward goals in one group may prove extremely disruptive and dysfunctional in another group (or at a dif- ferent time for the same group). A group’s tolerance for stress and conflict can also depend on the type of organization it serves. Auto manufacturers, professional sports teams, and police and fire departments would have different points where functional conflict becomes

dysfunctional than would organizations such as universities, research and development firms, and utility companies.

A recent research study analyzed how an initial conflict between different groups at a community hospital in the Mid- west escalated into a full-blown “war.”4 The conflict began when physicians perceived that the hospital administration (i.e., the CEO and her administrative team) was ignoring or blocking recommendations that could improve the quality of patient care at the hospital. The physicians wanted to maintain control over decisions that could affect their patients. The administration responded to this perceived attack from the physicians by with- holding even more support for the physicians’ recommenda- tions. The physicians responded by launching a campaign to remove the CEO from her position. These retaliations and coun- termoves escalated, ultimately costing the administrative and medical groups countless hours of time, energy, and stress that could have been better spent on improving the quality of care for patients.5

Conflict and Organizational Performance As previously indicated, conflict may have either positive or neg- ative consequences for the organization, depending on how much exists and how it is managed. Every organization has an optimal level of conflict that can be considered highly functional—it helps generate positive performance. When the conflict level is too low, performance can also suffer. Innovation and change are

dysfunctional conflict A confrontation or interaction between groups that harms the organization or hinders the achievement of organizational goals.

functional conflict A confrontation between groups that enhances and benefits the organization’s performance.

AVOID “UGLY” CONFLICT STRATEGIES

When managers and employees repress conflict, it can lead often to higher (and uglier) levels of discord. Try to avoid the following ineffective conflict management strategies:

1. Nonaction: Occurs when managers avoid taking important action or making key decisions out of fear it will create conflict with others.

2. Administrative orbiting: Managers stall to avoid dealing with difficult situations by saying things like “we’re looking into it” and “we need to collect more data before we act.”

3. Secrecy: When managers keep potentially confrontational information (important to the group) to themselves to avoid conflict.

4. Law and order: Managers order people to stop arguing and to get back to work. The conflict doesn’t disappear, but rather goes “underground” and becomes more destructive.

Source: Robert Bacal, “Organizational Conflict—The Good, the Bad, and the Ugly,” The Journal for Quality and Participation 27, no. 2 (2004), pp. 21–22.

Information You Can Use

282 Part Three Group Behavior and Interpersonal Influence

less likely to occur, and the organization may have difficulty adapting to its changing envi- ronment. If a low conflict level continues, the very survival of the organization can be threat- ened. On the other hand, if the conflict level becomes too high, the resulting chaos also can threaten the organization’s survival. An example is the popular press coverage of the results of “dissension” in labor unions and its impact on performance. If fighting between rival fac- tions in the union becomes too great, it can render the union less effective in pursuing its mission of furthering members’ interests. The relationship between the level of intergroup conflict and organizational performance that is consistent with a contemporary perspective is presented in Exhibit 11.1 for three hypothetical situations.

What Causes Intergroup Conflict? Every group comes into at least partial conflict with every other group with which it inter- acts. This tendency is known as “the law of interorganizational conflict.”6 In this section we examine three of the more important factors that contribute to group conflict: work interdependence, goal differences, and perceptual differences.

Work Interdependence Work interdependence occurs when two or more organizational groups must depend on one another to complete their tasks. The conflict potential in such situations ranges from relatively low to very high, depending on the nature of the interdependence. Three distinct types of interdependence among groups have been identified: pooled, sequential, and reciprocal. Exhibit 11.2 provides a visual representation of these three types.

Pooled interdependence requires no interaction among groups because each group, in effect, performs separately. However, the pooled performances of all the groups determine how successful the organization is. For example, the staff of a Xerox sales office in one region may have no interaction with its peers in another region. Similarly, two Dick’s Sporting Goods or Starbucks stores will have little or no interaction. In both cases, how- ever, the groups are interdependent because the performance of each must be adequate if

pooled interdependence Interdependence that requires no interaction between groups because each group, in effect, performs separately.

Level of Probable Level of Intergroup Impact on Organization Organizational Conflict Organization Characterized by Performance

environmental changes

to environmental changes

EXHIBIT 11.1 Relationship between Intergroup Conflict and Organizational Performance

Chapter 11 Managing Conflict and Negotiations 283

the total organization is to thrive. The conflict potential in pooled interdependence is rela- tively low, and management can rely on standard rules and procedures developed at the main office for coordination.

Sequential interdependence requires one group to complete its task before another group can complete its task. Tasks are performed in a sequential fashion. In a manufacturing plant, for example, the product must be assembled before it can be painted. Thus, the assembling department must complete its task before the painting department can begin its work.

Under these circumstances, since the output of one group serves as the input for another, conflict between the groups is more likely to occur. Coordinating this type of interdepen- dence involves effective use of the management function of planning.

Reciprocal interdependence requires the output of each group to serve as input to other groups in the organization. Consider the relationships that exist between the anesthesiology staff, nursing staff, technician staff, and surgeons in a hospital operating room. This relation- ship creates a high degree of reciprocal interdependence. The same interdependence exists among groups involved in space launches. Another example is the interdependence among airport control towers, flight crews, ground operations, and maintenance crews. Clearly, the potential for conflict is great in any of these situations. Effective coordination involves man- agement’s skillful use of the organizational processes of communication and decision making.

All organizations have pooled interdependence among groups. Complex organizations also have sequential interdependence. The most complicated organizations experience pooled, sequential, and reciprocal interdependence among groups. The more complex the organization, the greater are the potentials for conflict and the more difficult is the task facing management.

sequential interdependence Interdependence that requires one group to complete its task before another group can complete its task.

reciprocal interdependence Interdependence that requires the output of each group in an organi- zation to serve as input to other groups in the organization.

EXHIBIT 11.2 Types of Interdependence

POOLED

SEQUENTIAL

RECIPROCAL Goals Goals

Goals

Goals

Group A

Group B

Group A

Group B

Group A

Group B

Group C

284 Part Three Group Behavior and Interpersonal Influence

Goal Differences Ideally, interacting groups will always view their goals as mutually compatible and behave in such a way as to contribute to the attainment of both sets of goals. Realistically, however, this is frequently not the case. Several problems related to differences in goals can create conflicts.

Groups with mutually exclusive goals can find themselves in conflict. For example, marketing departments usually have a goal of maximizing sales, while credit departments seek to minimize credit losses. Depending on which department prevails, different custom- ers might be selected. Some incompatible goals may be more apparent than real; in these situations, conflicting groups need to refocus on larger organizational objectives.

When limited resources must be allocated between groups, mutual dependencies increase and any differences in goals become more apparent. If money, space, labor, and materials were unlimited, every group could pursue its own goals. But in virtually all cases, resources must be allocated or shared. When groups conclude that resources have not been allocated in an equitable manner, pressures toward conflict increase.7 When the limited resource is money, conflict potential is particularly strong.

Finally, the different time horizons needed by groups to achieve their goals can be a source of conflict. Research scientists working for a pharmaceutical manufacturer may have a time perspective of several years, while the same firm’s manufacturing engineers may work within time frames of several months. A bank president might focus on 5- and 10-year time spans, while middle managers of the bank may concentrate on much shorter periods. With such differences in time horizons, problems and issues deemed critical by one group may be dismissed as unimportant by another, and conflicts may erupt.

Perceptual Differences Goal differences can be accompanied by differing perceptions of reality, and disagree- ments over what constitutes reality can lead to conflict. For instance, a problem in a hospital may be viewed in one way by the medical staff and in another way by the nursing staff. Alumni and faculty may have different perceptions concerning the importance of a winning football program. Many factors cause organizational groups to form differing perceptions of reality.8 Major factors include status incongruency, inaccurate perceptions, and different perspectives.

Status incongruency conflicts concerning the relative status of different groups are com- mon. Usually, many different status standards are found in an organization, rather than an absolute one. The result is many status hierarchies. For example, status conflicts often are cre- ated by work patterns—which group initiates the work and which group responds. Some sales departments are known for overselling the features of a given product or service. Once the sale is complete, the customer service department becomes frustrated at having to work with these new, upset customers. Academic snobbery is certainly a fact of campus life at many colleges and universities. Members of a particular academic discipline may perceive themselves, for one reason or another, as having a higher status than those of another discipline.

Inaccurate perceptions often cause one group to develop stereotypes about other groups. While the differences between groups may actually be quite small, each group will tend to exaggerate them. Thus, you will hear that “all women executives are aggressive,” or “all CEOs behave alike,” or “all professors think their course is the only important one.” When the differences between the groups are emphasized, the stereotypes are reinforced, rela- tions deteriorate, and conflict develops.

The example given earlier of alumni and faculty having different perceptions concern- ing the importance of a winning football program is an example of different perspectives.

Chapter 11 Managing Conflict and Negotiations 285

Alumni may wish for a winning football season because that shows a form of institutional success in a very visible public manner. Faculty, on the other hand, may see the football program as a distraction from the school’s primary objective of creating and disseminating knowledge. The two groups simply may have a different view of what is most important. Group goals, experience, values, and culture all may contribute to different ways of seeing the world. The different perspectives growing out of different organizational cultures can explain why conflict frequently results when companies are merged.

The Consequences of Dysfunctional Intergroup Conflict Behavioral scientists have spent more than six decades researching and analyzing how dysfunctional intergroup conflict affects those who experience it.9 They have found that groups placed in a conflict situation tend to react in fairly predictable ways. We shall exam- ine a number of the changes that can occur within groups and between groups as a result of dysfunctional intergroup conflict.

Changes within Groups Many changes are likely to occur within groups involved in intergroup conflict. Unfortu- nately, these changes generally result in either a continuance or an escalation of the conflict.

Increased Group Cohesiveness When groups are engaged in a conflict, their cohesion tends to increase. Competition, con- flict, or perceived external threat usually results in group members putting aside individual differences and closing ranks. Members become more loyal to the group, and group mem- bership becomes more attractive. This increase in cohesion is necessary to mobilize group resources in dealing with the “enemy” and tends to result in the suppression of internal disagreements. One can imagine that some managers from rival firms like Coca-Cola and Pepsi, Microsoft and Apple, Google and Facebook, and Starbucks and Dunkin’ Donuts have been tempted to increase group cohesion among their employees in this manner.

Emphasis on Loyalty The tendency of groups to increase in cohesiveness suggests that conformity to group norms becomes more important in conflict situations. In reality, it is not unusual for groups to overconform to group norms in conflict situations. This may take the form of blind acceptance of dysfunctional solutions to the conflict and result in groupthink, as discussed in Chapter 10. In such situations, group goals take precedence over individual satisfaction as members are expected to demonstrate their loyalty. In major conflict situations, interac- tion with members of “the other group” may be outlawed.

Rise in Autocratic Leadership In extreme conflict situations where threats are perceived, democratic methods of leader- ship are likely to become less popular. Group members want strong leadership. Profes- sional sports offer a number of examples, including the National Football League players’ strike in 1987 and the Major League Baseball Players Association strike in 1994, which led to cancellation of the World Series for the first time in 90 years. In this strike, Union President Donald Fehr had tremendous authority from the players to do what he believed was best. Another sign of strong leadership is the fact that the Major League Baseball players union was able to delay drug-testing programs until 2004 despite several years of suspicion that players were taking performance-enhancing drugs.10

286 Part Three Group Behavior and Interpersonal Influence

Focus on Activity When a group is in conflict, its members usually emphasize doing what the group does and doing it very well. The group becomes more task-oriented. Tolerance for members who goof off is low, and there is less concern for individual member satisfaction. The emphasis is on accomplishing the group’s task and defeating the “enemy” (the other group in the conflict).

Changes between Groups During conflicts, certain changes will probably occur between the groups involved.

Distorted Perceptions During conflicts, the perceptions of each group’s members become distorted. Group mem- bers develop stronger opinions of the importance of their units. Each group sees itself as superior in performance to the others and as more important to the survival of the organi- zation than other groups. In a conflict situation, nurses may conclude that they are more important to a patient than physicians, while physicians may consider themselves more important than hospital administrators. The sales group in a business organization may think, “Without us selling the product, there would be no money to pay anyone else’s salary.” The design group, meanwhile, will say, “If we don’t create a unique and reliable product, there is nothing to sell.” Ultimately, none of these groups is more important, but conflict can cause their members to develop gross misperceptions of reality.

Negative Stereotyping As conflict increases and perceptions become more distorted, all the negative stereotypes are reinforced. A management representative may say, “I’ve always said these union guys are just plain greedy. Now they’ve proved it.” The head of a local teachers union may say, “Now we know that what all politicians are interested in is getting reelected, not the quality of education.” When negative stereotyping is a factor in a conflict, the members of each group see fewer differences within their unit and greater differences between the groups than actually exist.

Decreased Communications Communications between the groups in conflict usually break down. This can be extremely dysfunctional, especially where sequential interdependence or reciprocal interdependence relationships exist between groups. The decision-making process can be disrupted, and the customers or others whom the organization serves can be affected. Consider the possible consequences to patients, for instance, if a conflict between hospital technicians and nurses continues until it lowers the quality of health care.

While these are not the only dysfunctional consequences of intergroup conflict, they are the most common, and they have been well documented in the research literature. Other consequences, such as violence and aggression, are less common but also occur.

Also, tension occasionally results in creativity among individuals and groups. The late Steve Jobs, co-founder of Apple, developed a reputation for being brutally honest and direct with those around him. Known for being a perfectionist, Jobs drove his highly talented employ- ees to reach high levels of creativity at Apple.11 Walter Isaacson, Jobs’s biographer, stated it this way: “It’s important to appreciate that Jobs’s rudeness and roughness were accompanied by an ability to be inspirational. He infused Apple employees with an abiding passion to create ground-breaking products and a belief that they could accomplish what seemed impossible.”12 However, in many companies, conflict usually requires some form of managerial intervention. How managers can deal with these situations is the subject of the next section.

Chapter 11 Managing Conflict and Negotiations 287

Managing Intergroup Conflict through Resolution Since managers must live with intergroup conflict, they must confront the problem of managing it.13 In this section we will examine several approaches to managing conflict. Exhibit 11.3 provides a framework, in the form of a conflict-resolution grid, for examin- ing these various approaches.14 As the exhibit suggests, one way of viewing conflict- resolution efforts between groups is to examine the extent to which a conflicting group has an internal and external focus with respect to resolution strategies. An internal focus represents the extent to which a group is intent upon addressing its own concerns in a conflict situation. An external focus reflects the extent to which a group is intent on addressing the concerns of the other group (or groups) involved in the conflict. From this perspective, internal and external foci are not opposite ends of the same dimension. Rather, they are two separate dimensions. Varying degrees of focus on these two dimen- sions lead to five approaches to resolving intergroup conflict. Depending upon the nature and conditions of the conflict, each of these five approaches can represent an effective approach for conflict-resolution management. We will examine each of these approaches separately.

Dominating A dominating approach to conflict resolution represents a group’s maximum focus on meeting its own concerns, coupled with a minimal focus on meeting the concerns of the other group. Dominating tends to be a power-oriented approach. That is, to be successful it requires that the using group have sufficient power to “force” its resolution on the other group. A group may hold the balance of power because it is higher up in the organiza- tional hierarchy (i.e., it has more authority); it controls critical resources (e.g., budgets, personnel, or important knowledge); it has allied with powerful groups; or for a variety of other reasons.

It is not unusual for both groups in a conflict to attempt a dominating approach to resolving their differences. Frequently in such cases, this means that one of the groups has overestimated its own power relative to that of the other group. In such cases, the outcome

EXHIBIT 11.3 Conflict-Resolution Grid

Compromising

Accommodating or

Smoothing

Problem Solving or

Collaboration

LOW HIGH INTERNAL FOCUS

DominatingAvoiding

HIGH

LOW

EXTERNAL FOCUS

Finding acceptable

solution so everyone

feels good

Allowing other group to win

Ignoring or steering clear of other group

Working to dominate and control

Working together to solve

problems

288 Part Three Group Behavior and Interpersonal Influence

can have negative consequences for one or both groups. In labor disputes, for example, both management and the union may adopt a dominating approach to resolving their differ- ences. The end result of this kind of power play may be a prolonged strike that is costly to both sides. The nearby OB Matters describes five different approaches that people use to handle conflict in a negotiating context.

Despite the potential problems associated with the use of domination as a means of resolving conflict, it may be very appropriate and useful in some instances. There are times (e.g., emergency situations) when differences must be settled quickly. When rapid and decisive action is important, dominating can represent the most time-effective means of resolution. Dominating may also be the best approach in resolving important issues when unpopular courses of action must be taken, such as layoffs, implementing new schedules, or enforcing unpopular policies and procedures.

Accommodating In many respects, accommodating is just the opposite approach from dominating. An accommodating party places maximum emphasis on meeting the needs of the other group, while minimizing its own concerns. Although accommodation may appear to be “giving in,” this may be an extremely beneficial approach for a conflicting group to use in some situations. For example, issues over which groups might conflict are not always of equal importance to each group. If the issue is critical to one group and of little importance to the other, obliging the first group through accommodating costs the second group little and may be seen as a goodwill gesture that helps maintain a cooperative relationship. Accom- modating may also purchase “credits” that can be used in subsequent conflicts when the issues are more important to the obliging group. Finally, there may be instances when preserving the peace and avoiding disharmony are more important than reaching a resolu- tion that maximizes a particular group’s concerns.

Problem Solving Problem solving represents what might appear to be the theoretically ideal or best approach to conflict resolution. However, it can be an extremely difficult approach to implement effectively. Problem solving, sometimes called collaborating or integrating, seeks to resolve conflict by placing maximum focus on both groups’ concerns. Successful problem solving requires that conflicting groups display a willingness to work collaboratively toward an integrative solution that satisfies the needs of all concerned. The greatest obsta- cle that must be overcome is the win–lose mentality that so often characterizes conflicting groups. Unless the parties involved can rise above that kind of thinking, problem solving is not likely to be successful.

The potential benefits of using a problem-solving approach are significant. When conflicting parties truly collaborate, this can result in a merger of insight, experience, knowledge, and perspective that leads to higher-quality solutions than would be obtained by any other approach. Additionally, because both parties’ concerns are incorporated into the resolution, commitment to the effective implementation of the solution is high. Sometimes the problem-solving process is aided by focusing on a superordinate goal. A superordinate goal is one that cannot be attained by one group singly and supersedes all other concerns of any of the individual groups involved in the conflict. For example, members of the United Auto Workers union at Fiat Chrysler agreed to eliminate a cap on the number of entry-level workers the company can hire while receiving signing bonuses and raises for both entry-level and long-time union workers in a recent four-year agreement.15

superordinate goal A goal that cannot be achieved without the cooperation of the conflicting groups.

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HOW DO YOU HANDLE CONFLICT? Are you the kind of person who thrives on arguing with other people, regardless of the topic being discussed? Or do you tend to shy away from disagreements to maintain harmony? Understanding your pre- ferred conflict management style can help you to be a more effective co-worker and manager. As a student, such knowledge will help you

work better with other students on group projects—especially at the end of the semester, when multiple deadlines can stress everyone’s patience.

Complete the following self-assessment by circling one of the numbers from the following scale to describe your reaction to each of the statements below:

O B M A T T E R S

1 = Never . . . 2 = Rarely . . . 3 = Sometimes . . . 4 = Often . . . 5 = Very often Statement Circle One

1. I work to come out victorious, no matter what. 1 2 3 4 5 2. I try to put the needs of others above my own. 1 2 3 4 5 3. I look for mutually satisfactory solutions. 1 2 3 4 5 4. I try not to get involved in conflicts. 1 2 3 4 5 5. I strive to investigate issues thoroughly and jointly. 1 2 3 4 5 6. I never back away from a good argument. 1 2 3 4 5 7. I strive to foster harmony. 1 2 3 4 5 8. I negotiate to get a portion of what I propose. 1 2 3 4 5 9. I avoid open discussions of controversial subjects. 1 2 3 4 5 10. I openly share information with others in resolving disagreements. 1 2 3 4 5

Scoring and Interpretation

Competing Q1 + Q6 = Total Collaborating Q5 + Q10 = Total Avoiding Q4 + Q9 = Total Accommodating Q2 + Q7 = Total Compromising Q3 + Q8 = Total Your preferred conflict-handling style is: (category with highest score). Your backup conflict-handling style is: (category with 2nd highest score).

Competing: style is to focus on winning in a negotiation setting. Conflict is seen as a part of the negotiation process, a means to receive what you desire. You enjoy the negotiation process. Trial attorneys fit this type of con- flict management style.

Collaborating: People who have high scores on Q5 and Q10 tend to enjoy the negotiation process because it gives them an opportunity to probe deeply into difficult problems and help produce solutions that are acceptable to multiple parties. Real estate brokers tend to handle conflict in this manner.

Avoiding: Scoring high on Q4 and Q9 indicates that you prefer to avoid conflict and opportunities to negotiate. Although avoidance of conflict can help keep teams functioning when interpersonal difficul- ties arise, it can also lead to a variety of problems and dysfunctional behavior if issues are left unaddressed and unresolved. Professional politicians tend to be avoiders.

Accommodating: People with high scores on Q2 and Q7 use their relationship-building skills and empathy toward other people’s emo-

place a good deal of emphasis on the needs of others. These types of

negotiators are good in sales-based roles where relationships are critical. An example of this would be the account manager of a large natural gas company who is assigned to one large account for a three- year period.

Compromising: - ferred conflict resolution style is to try to “close the gap” in two par- ties’ desires by using some type of fair criteria that appear reasonable to both sides. Compromisers tend to want to preserve the relationship between parties. An example of a compromiser would be a team leader who is trying to work out a problem between two of her direct reports. She wants to resolve the problem quickly and have both parties feel that the outcome is fair.

Sources: Society for Human Resource Management, July 13, 2015, https://www.shrm.org; G. Richard Shell, “Bargaining Styles and Negotiation: The Thomas-Kilmann Conflict Mode Instrument in Negotiation Training,” Negotiation Journal 17, no. 2 (April 2001), pp. 155–74; K.W. Thomas, “Conflict and Conflict Management,” in Handbook of Industrial Psychology and Organizational Psychology, Vol. II, ed. M. Dunnette

290 Part Three Group Behavior and Interpersonal Influence

Avoiding Frequently, some way can be found to avoid conflict. While avoiding may not bring any long-run benefits, it can be an effective and appropriate strategy in some conflict situations. Foremost among these is when avoiding is used as a temporary alternative. When the conflict is a particularly heated one, for example, temporary avoidance gives the involved parties an opportunity to cool down and regain perspective. Avoiding may also buy time needed by one or more of the groups to gather additional information necessary for a longer-range solution. Avoiding may also be appropriate when other parties are in a better position to resolve the conflict or when other matters that are more important need to be addressed. Unfortu- nately, people have a great temptation to overuse an avoiding approach; the number of situations where avoiding is the most effective strategy for dealing with a conflict is typically less than we would like it to be. Nonetheless, as a temporary expe- dient, avoiding can be a useful prelude to the implementation of a longer-range strategy.

Compromising Compromising is a traditional method for resolving intergroup conflicts. With compromise, there is no distinct winner or loser, and the resolution reached probably is not ideal for either group. Compromising can be used very effectively when the goal sought (e.g., money) can be divided equitably. If this is not possible, one group must give up something of value as a concession.

Compromising might be useful when two conflicting parties with relatively equal power are both strongly committed to mutually exclusive goals. It may also represent a way of gaining a temporary settlement to particularly complex and difficult issues. We saw earlier that problem solving was a desirable but difficult approach to conflict resolution. Compromise is a good “backup” strategy that conflicting parties can fall back on if their attempts at problem solving are unsuccessful. Sometimes, compromising may involve third-party interventions.16 Such intervention may take the form of appealing to a mana- gerial higher authority or a decision to submit the conflict to some form of mediation or arbitration.

Compromising is a middle-of-the-road approach. It typically involves giving up more than dominating, but less than accommodating. Additionally, it addresses issues more directly than avoiding, but with less depth than problem solving.

Each of these five approaches just discussed has assets and liabilities, and each is effec- tive or ineffective in different situations. The nearby Information You Can Use highlights when each might be most appropriate.

What this chapter has said thus far about intergroup conflict is summarized in Exhibit 11.4. The exhibit illustrates the relationship between causes and types of conflict, the conse- quences of conflict, and approaches to conflict resolution. Keep in mind that views of conflict and approaches to conflict resolution vary across cultures. Important aspects of conflict are viewed and experienced differently in different nations. The Global OB nearby illustrates this.

WHEN TO USE THE DIFFERENT CONFLICT-RESOLUTION APPROACHES

While there are many different situations in which each of the approaches is valid, keep these general points in mind:

Use a dominating approach on important issues where you are certain you are right and where the benefit of a resolution outweighs the drawback of possible negative feelings by the dominated group.

Use an accommodating approach in disputes that are of far greater importance to the other group than they are to your group.

Use a problem-solving approach when both groups are willing to invest time and effort to reach a resolution that maximizes everyone’s outcome.

Use an avoiding approach primarily as a temporary step to buy more time.

Use a compromising approach as a middle ground. It is a good backup approach when other approaches (mainly dominating and problem solving) fail to resolve the issue.

Information You Can Use

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CROSS-CULTURAL CONFLICT RESOLUTION Rensis Likert, the renowned social scientist and management expert, once observed that the strategies used by a society and its organizations for dealing with conflict reflect the basic values and philosophy of that society. In ideal circumstances, conflicts can be difficult to resolve; once the confounding variable of intercultural dif- ferences is added, conflict resolution becomes even more complex.

Consider, for example, Japanese and American differences in the table below.

These broad generalizations may not apply in specific situations or with specific individuals or groups, but they point out that intercultural conflicts— and successful intercultural conflict resolution—are affected by differing cultural perspectives, values, and styles of interacting. All of these are sig- nificant factors that cannot be ignored in the conflict-resolution process.

G L O B A L O B

Sources: Harvard Law School blog,

International Journal of Conflict Management Journal of Applied Psychology Training for the Multicultural Manager: A Practical and Cross-Cultural Approach to the Management of People

Experiencing International Management

Japanese American Japanese American

Resolution involves Short-term perspective Takes time; process is Time is money; win–lose long-term perspective important; win–win approach approach Cooperation based Spirit of competition Emotional sensitivity Emotional sensitivity on team spirit and rivalry highly valued not highly valued Disagreement with Disagreement with superior Good of the group is Profit motive or good of superior often, but polite seldom, but violent ultimate aim individual ultimate aim Disputes settled through Disputes settled through Face-saving crucial; decisions Decision made on cost– conferral and trust contracts and bringing often made to save someone benefit basis; face-saving arbitration from embarrassment not always important

EXHIBIT 11.4 An Overview of Intergroup Conflict

Action lines

Influence lines

• Accommodating

• Problem solving

• Avoiding

• CompromisingIntergroup conflict

CONSEQUENCES OF DYSFUNCTIONAL CONFLICT

CONFLICT- RESOLUTION APPROACHES

CONSEQUENCES OF FUNCTIONAL CONFLICT

CHANGES WITHIN GROUP

CHANGES BETWEEN GROUPS

• Increase in cohesiveness • Rise in autocratic leadership • Focus on activity • Emphasis on loyalty

• Distorted perceptions • Negative stereotyping • Decrease in communications

• Awareness of problem

• Search for solutions

• Change and adaptation

• Innovation

• Dominating

Positive movement toward organizational goals

Survival of organization

CAUSES OF INTERGROUP CONFLICT

• Interdependence Pooled Sequential Reciprocal

• Goal differences Mutually exclusive goals Limited resources Different time horizons

• Perceptual differences Status incongruency Inaccurate perceptions Different perspectives

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Stimulating Constructive Intergroup Conflict Throughout this chapter we have stressed that some conflict is beneficial. This point was first made in the discussion on the contemporary perspective on conflict and is noted again in Exhibit 11.4, which details some of the functional consequences of intergroup conflict. We have already examined the situation where conflict is dysfunc- tional because it is too high; we have said little, however, regarding situations in which there is an insufficient amount of conflict. If groups become too complacent because everything always operates smoothly, management might benefit from stimulating conflict. Lack of any disagreement can lead to suboptimum performance, including inferior decision making.

A variety of research supports this conclusion. In one study, experimental and control groups were formed to solve a problem. The experimental groups had a member, a confed- erate of the researcher, whose job was to challenge the majority view of the groups he or she had been planted in as the group attempted to solve the problem. The control groups had no such member. In every case, the experimental groups outperformed the control groups.17

While lack of conflict may prove beneficial in the short run, it can lead to situations where one group holds tremendous influence over another. For example, observers of the Japanese style of participatory management question whether the lack of conflict between managers and employees in Japanese firms is healthy.18 Toyota, previously known for having one of the best manufacturing systems in the world, has had to engage in several recalls of automobiles over the past few years.19 Though there were many reasons for these recalls, one was that senior executives did not pay enough attention to the early warning signals provided by lower level managers.20 The low conflict culture may have insulated the senior executives to the point where their reaction to the quality problems was delayed.

Raising conflict levels can yield a number of benefits. Some conflict is probably nec- essary to stimulate the critical evaluation of organizational policies and processes and to lay the groundwork for change. Lack of conflict leads to acceptance of the status quo and discourages innovation. Increasing conflict can be an effective antidote for groupthink (discussed in Chapter 10). As was suggested in Exhibit 11.1, organizational performance suffers not only when conflict levels are too high but also when they are too low.

What can management do to increase conflict to achieve functional consequences? Four possible strategies are discussed below.

Bringing Outside Individuals into the Group A technique widely used to “bring back to life” a stagnant organization or subunit of an organization is to hire or transfer in individuals whose attitudes, values, and backgrounds differ from those of the group’s present members. Many college faculties consciously seek new members with different backgrounds and often discourage the hiring of graduates of their own programs. This is to ensure a diversity of viewpoints among the faculty.

The technique of bringing in outsiders is also used widely in government and business. Recently, a bank president decided not to promote from within for a newly created position of marketing vice president. Instead, he hired a highly successful executive from the very competitive consumer products field. The bank president believed that, while the outsider knew little about marketing financial services, her approach to, and knowledge of, market- ing was what the bank needed to become a strong competitor. Several companies have followed the strategy of recruiting CEOs from outside their firms, including Target, Best Buy, JCPenney, 3M, and Wrigley.21

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Altering the Organization’s Structure Changing the structure of the organization not only can help resolve intergroup conflict, but it is also excellent for creating conflict. For example, a school of business typically has several departments. One, named the Department of Business Administration, includes all of the faculty members who teach courses in management, marketing, finance, production management, and so forth. Accordingly, the department is rather large, with 32 members under one department chairperson, who reports to the dean. A new dean recently has been hired, and he is considering dividing the business administration unit into several separate departments (e.g., departments of marketing, finance, management), each with five or six members and a chairperson. The reasoning is that reorganizing in this manner will create competition among the groups for resources, students, faculty, and so forth, where none existed before because there was only one group. Whether this change will improve perfor- mance remains to be seen.

Stimulating Competition Many managers utilize various techniques to stimulate competition among groups. The use of a variety of incentives, such as awards and bonuses for outstanding performance, often stimulates competition. If properly utilized, such incentives can help maintain a healthy atmosphere of competition that may result in a functional level of conflict. Incentives can be given for least defective parts, highest sales, best teacher, greatest number of new customers, or in any area where increased conflict is likely to lead to more effective performance.

Using Programmed Conflict Increasingly, organizations are turning to programmed conflict to increase creativity and innovation and to improve decision making. Programmed conflict is conflict that is delib- erately and systematically created even when no real differences appear to exist. It is “con- flict that raises different opinions regardless of the personal feelings of the managers.”22 One popular form of programmed conflict is devil’s advocacy (introduced in Chapter 10). In devil’s advocacy, someone or some group is assigned the role of critic with the job of uncovering all possible problems with a particular proposal. The role of the devil’s advocate is to ensure that opposing views are presented and considered before any final decision is made. Numerous organizations use some form of programmed conflict. Royal Dutch Shell regularly uses a devil’s advocacy approach. Before Anheuser-Busch makes a major deci- sion, such as entering a market or building a plant, it assigns groups the job of making the case for each side of the question. IBM has a system that encourages employees to disagree with their bosses. All of these companies have the same goal: to improve organizational performance by stimulating conflict.

Negotiations Frequently, an important part of the process of conflict resolution involves negotiations. Negotiations may be viewed as a process in which two or more parties attempt to reach acceptable agreement in a situation characterized by some level of disagreement. In an orga- nizational context, negotiation may occur (1) between two people (as when a manager and subordinate decide on the completion date for a new project the subordinate has just received); (2) within a group (most group decision-making situations); (3) between groups (such as the purchasing department and a supplier regarding price, quality, or delivery date), which has

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been the focus in this chapter; and (4) over the Internet. The Internet now serves as a place to negotiate jobs, consulting projects, training program prices, and supplier product prices. The one difference in negotiating on the Internet is that it is done with written communica- tion only. Many of the skills discussed in this section apply to both face-to-face negotiations and Internet transactions.

Regardless of the setting or the parties involved, negotiations usually have at least four elements.23 First, some disagreement or conflict exists. This may be perceived, felt, or manifest. Second, there is some degree of interdependence between the parties. Third, the situation must be conducive to opportunistic interaction. This means that each party has both the means and inclination to attempt to influence the other. Finally, there exists some possibility of agreement. In the absence of this latter element, of course, negotiations can- not bring about a positive resolution. Often, negotiation is required when it is least expected, as illustrated in this chapter’s You Be the Judge.

When negotiations are successful, each party feels that it has significantly benefited from the resolution. When they fail, however, the conflict often escalates.

Win–Lose Negotiating The classical view suggests negotiations are frequently a form of a zero-sum game. That is, to whatever extent one party wins something, the other party loses. A zero-sum situation assumes limited resources, and the negotiation process is to determine who will receive these resources. This is also known as distributive negotiating. The term refers to the pro- cess of dividing, or “distributing,” scarce resources. Such a win–lose approach characterizes numerous negotiating situations. Buying an automobile is a classic example. As the buyer, the less you pay the less profit the seller makes; your “wins” (in the form of fewer dollars paid) are the seller’s “losses” (in the form of fewer dollars of profit). Note that in win–lose negotiating, one party does not necessarily “lose” in an absolute sense. Presumably the party selling the car still made a profit, but to the extent the selling price was lowered to make the sale, the profit was lower.

In organizations, win–lose negotiating is quite common. It characterizes most bargain- ing involving material goods, such as the purchase of supplies or manufacturing raw mate- rials. Win–lose negotiating can be seen in universities where each college attempts to

LOWBALLING IN SALARY NEGOTIATIONS: HOW WOULD YOU HANDLE IT? Assume you have been interviewing with a company that you have wanted to get a job with for a long time. The interviews went reason- ably well and you like what you heard about the job itself, the orga- nizational culture, and the people with whom you would be working on a day-to-day basis. To be prepared and get the best possible starting salary, you’ve done some research and found that the salary range for this position is $35,000 to $40,000. You would like to earn more but figure that it’s worth paying your dues for a while to have this job and be with a good company with room to move up quickly.

you’re surprised and a little shocked. The starting salary is closer

to $30,000. You say you have to think about it. At home, you recall

the offer and move on to interviewing with other companies, you

or providing you with an extremely low offer as a way to lower sal- ary expectations.

If you are correct in assuming that this is merely a negotiation tactic, what should you do?

Should you submit a counteroffer in the amount of $45,000 and indicate that you believe this is more in line with your compen- sation requirements? Should you just forget the whole thing and move on to other employment opportunities? In either case, what’s

Chapter 11 Managing Conflict and Negotiations 295

negotiate the best budget for itself, invariably at the expense of some other college. Fre- quently, the most variable examples of distributive negotiations in organizations are those that take place between labor and management. Issues involving wages, benefits, working conditions, and related matters are seen as a conflict over limited resources.

Win–Win Negotiating Win–win, or integrative, negotiating brings a different perspective to the process. Unlike the zero-sum orientation in win–lose, win–win negotiating is a positive-sum approach. Positive-sum situations are those where each party gains without a corresponding loss for the other party. This does not necessarily mean that everyone gets everything they wanted, for seldom does that occur. It simply means that an agreement has been achieved that leaves all parties better off than they were before the agreement.

In order for conflict to be converted into a win–win situation, managers need to accept the idea that conflict is useful and encourage employees to engage in it. When done well, a conflict can be resolved effectively so both parties benefit. The win–win approach can be summed up this way: “I want a solution which achieves your goals and my goals and is acceptable to both of us.”24 An effective way to begin the resolution process is for both sides to state their goals or what they want to get out of the negotiation. For example, assume the leader of a student group project wants all group members to be thorough and complete their parts of the project in a timely manner. A student team member who has a full-time job wants a clear idea of what is expected of her so she can balance her time between the project, other course assignments, and her job. The student leader and team member can work on resolving their different goals by:25

1. Discussing and analyzing the problem to determine the basic issues. In this case, the leader wants good work done on time, while the team member wants clear directions so she can get her part done in an efficient manner.

2. Identifying the obstacles that might prevent the goals from being achieved. The team leader may need to be more organized and communicate more clearly what the team member needs to accomplish. The team member may need to improve her time man- agement skills and increase her commitment to doing a good job on her part of the project.

3. Depersonalizing the problem. Both parties need to focus on the problem, not the other’s personality. It would be easy for the team leader to think that the member is lazy or doesn’t care about the team project. The team member could just as easily think the leader is too rigid, autocratic, and uncaring. Staying focused on how best to get this project done will help both parties negotiate a win–win outcome.

4. Searching for solutions and evaluating each alternative. The two parties need to take enough time to consider several different solutions and alternatives. The team leader may work on identifying five specific tasks for the team member to accomplish with regard to her part of the project. The leader may also set a date and time for the two to meet to discuss those tasks. The team member may request a minor adjustment in her work hours so she can have some extra time to work on the project and meet the deadlines. It may seem as if a win–win approach is always preferable to a win–lose one. Why

should there be a winner and a loser if instead there can be two winners? Realistically, how- ever, not every negotiating situation has an integrative payoff. Some situations really are distributive; a gain for one side must mean an offsetting loss for the other. In the automobile purchase example cited earlier, it is true that both the purchaser and the seller can “win” in the sense that the purchaser obtains the car and the seller makes a profit. Nonetheless, this is

296 Part Three Group Behavior and Interpersonal Influence

essentially a distributive situation. The purchaser can obtain a better deal only at the loss of some profit by the seller. There is simply no way the purchaser can get the lowest price while the seller obtains the highest profit.

Even if the nature of what is being negotiated lends itself to a win–win approach, the organization of the negotiators may not. Win–win, or integrative, negotiating can work only when the issues are integrative in nature and all parties are committed to an integra- tive process. Typically, union and management bargaining includes issues that are both distributive and integrative in nature. However, because negotiators for both sides so frequently see the total process as distributive, even those issues that truly may be integra- tive become victims of a win–lose attitude, to the detriment of both parties.

Negotiation Tactics To achieve a win–win or win–lose negotiation outcome, a variety of specific negotiation tactics can be employed by managers.26 Some of the most frequently used tactics will be discussed next. 1. Good-guy/bad-guy team. Anyone who has read a detective story or seen a TV police

show is familiar with this tactic. The bad-guy member of the negotiating group advo- cates such extreme positions that whatever the good guy says sounds reasonable.

2. The nibble. This tactic involves getting an additional concession or perk after an agree- ment has been reached. An example would be the request for an additional point on an exam grade by a student after an agreement was reached with the professor that the student would receive three extra points.

3. Joint problem solving. A manager should never assume that the more one side wins, the more the other loses. Feasible alternatives not yet considered may exist. For instance, to decrease the hundreds of calls that the service department receives each day at a com- puter software firm, perhaps the website designer could add a list of frequently asked questions to the company’s website. This would decrease the number of calls and thus alleviate some conflict between the service and website design departments.

4. Power of competition. Tough negotiators use competition to make opponents think they don’t need them. A line manager may use this tactic by threatening that his group will procure computer services outside the organization if the headquarters’ computer staff doesn’t comply with its service demands. The most effective defense against this tactic is for the opposing manager to remain objective. Don’t commit quickly to unfavorable terms because of the fear of quick action on the other group’s part.

5. Splitting the difference. This can be a useful technique when two groups come to an impasse. Managers should be careful, however, when the other group offers to split the difference too early. It may mean the other group has already received more than it thinks it deserves in the negotiations process.

Increasing Negotiation Effectiveness Just as there is no one best way to manage, neither is there one best way to negotiate. The selection of specific negotiation strategies and tactics depends on a number of variables. The nature of the issues being negotiated is a critical consideration. For example, how one approaches negotiating distributive issues may be quite different from the strategy employed for negotiating integrative ones. The context or environment in which the negotiations are

Chapter 11 Managing Conflict and Negotiations 297

occurring may also be an important consideration, as may be the nature of the outcomes that are desired from the negotiating process. In many negotiating situations this last consider- ation may be the most important.

One useful way to think about desired outcomes is to distinguish between substantive and relationship outcomes.27 Substantive outcomes have to do with how the specific issue is settled. To strive to end up with a bigger piece of the pie than the other party is to focus on a substantive outcome. On the other hand, to negotiate in a manner designed primarily to maintain good relations between the parties—regardless of the substantive result—is to focus on relationship outcomes. While the two concerns are not mutually exclusive, the relative importance assigned them will affect a manager’s choice of negotiation strategies.

One model for increasing negotiating effectiveness is found in the work of the Dutch management practitioner Willem Mastenbroek. Although the model is extremely compre- hensive, the key focus is on four activities.28

1. Obtaining substantial results. This refers to activities that focus on the content of what is being negotiated. Desirable outcomes cannot be achieved if the negotiations do not stay constructively focused on the real issues. A judicious exchange of information regarding goals and expectations of the negotiating process is an example of this type of activity.

2. Influencing the balance of power. The final outcome of negotiations is almost always directly related to the power and dependency relationships between the negotiators. Neither attempts to increase one’s power through dominance nor responding with total deference to the other party’s attempt to increase their power represents the most effec- tive means of dealing with power issues. Achieving subtle shifts in the balance of power through the use of persuasion, facts, and expertise are almost always more effective.

3. Promoting a constructive climate. This relates to activities designed to facilitate prog- ress by minimizing the likelihood that tension or animosity between the parties becomes disruptive. Specific activities might include attending to each party’s opin- ions, acting in a predictable and serious manner, treating each party with respect, and showing a sense of humor. Being on different sides of an issue does not have to mean being at odds personally.

4. Obtaining procedural flexibility. These are activities that allow a negotiator to increase negotiating effectiveness through increasing the type and number of options available for conducting the negotiations. The longer a negotiator can keep the widest variety of options open, the greater the likelihood of reaching a desirable outcome. Examples include judicious choice of one’s initial position, dealing with several issues simultane- ously, and putting as many alternatives on the table as possible.

Using Third-Party Negotiations Negotiations do not always take place only between the two parties directly involved in the disagreement. Sometimes third parties are called in when negotiations between the main parties have broken down or reached an impasse. At other times, third parties may be part of the negotiation from the beginning. In some instances, third-party involvement is imposed on the disputing parties; in others, the parties themselves voluntarily seek out third-party assistance. In any event, the instances of third-party negotiations appear to be increasing.

There are different kinds of third-party interventions, and third-party involvement has been characterized in many different ways. One such typology suggests four basic kinds of interventions.29 Mediation occurs when a neutral third party acts as a facilitator through the application of reasoning, suggestion, and persuasion. Mediators facilitate resolution by

298 Part Three Group Behavior and Interpersonal Influence

affecting how the disputing parties interact. Mediators have no binding authority; the parties are free to ignore mediation efforts and recommendations. Arbitration occurs when the third party has the power (authority) to impose an agreement. In conventional arbitration, the arbitrator selects an outcome that is typically somewhere between the final positions of the disputing parties. In final-offer arbitration, the arbitrator is mandated to choose one or the other of the parties’ final offers, and thus has no real control over designing the agree- ment.30 Conciliation occurs when the third party is someone who is trusted by both sides and serves primarily as a communication link between the disagreeing parties. A conciliator has no more formal authority to influence the outcome than does a mediator. Finally, consultation occurs when a third party trained in conflict and conflict-resolution skills attempts to facilitate problem solving by focusing more on the relations between the parties than on the substantive issues. The chief role of the consultant is to improve the negotiating climate so that substantive negotiations can take place in the future.

It is not uncommon for managers to serve as third parties in negotiations. Situations in which this could occur would include two subordinates who are having a disagreement, an employee and a dissatisfied customer, or disputes between two departments, both of which report to the manager. As a third party, the manager could be called upon to assume any and all of these four types of roles.

Negotiating Globally The number of global negotiations is increasing rapidly. The global deals, markets, and relation- ships that organizations are forming require careful attention to culture’s impact on negotiation style.31 Individuals steeped in specific cultures negotiate differently. Labeling any culture’s negotiating style is too general and constraining. However, general characteristics and tenden- cies have been observed and noted. The former ambassador from Singapore to the United States noted that American negotiators generally (1) are prepared, (2) are plain speaking, (3) are prag- matic, (4) understand that concessions may be required, and (5) are very specific and candid. Others have described American negotiators as blunt, arrogant, and rushed.32 The weaknesses of American negotiators appear to center on impatience, legalism, and poor listening skills. The

strengths of American negotiators focus on friendliness, fairness, and flexibility. The Information You Can Use feature provides some tips on cross-cultural negotiations.

Exhibit 11.5 describes more than 300 negotiators from 12 countries.33 The Japanese emphasized a win–win or integrative approach more than any other countries’ negotiators. The results also indicate the direct communication styles used by Argentin- ean, American, and German negotiators. A recent research study that looked at cultural influences on negotiations in Finland, Mexico, Turkey, and the United States found that negotiators should not automatically assume that the process will be win– win or win–lose.34 Even though cultural differences in negotia- tions exist, each negotiator needs to “explore the attitudes of the specific parties with whom they are negotiating.” For example, Finnish negotiators are as likely to pursue a win–win approach as a win–lose approach. The American negotiator needs to be ready to adjust to the other party’s negotiation style.

The differences in negotiating style are extensive. Political systems, legal policies, ideology, traditions, and culture cer- tainly play a role. The international experience of the negotia- tors also has an impact on the style utilized. Being familiar with

Global negotiation expert Jeswald Salacuse suggests the following ways to improve your cross-cultural negotiation skills:

1. Learn whether the other party’s goal is to finalize a contract or develop a relationship.

2. Identify whether there is one decision maker or whether group consensus is required.

3. If your counterpart is risk-averse, take your time with the negotiation process, structure it in a detailed step-by-step process, and provide enough information to foster trust.

See Exhibit 11.5 for additional cultural effects on the negotiation process. Source: Jeswald W. Salacuse, “Negotiating: The Top Ten Ways That Culture Can Affect Your Negotiation,” Ivey Business Journal Online, March/April 2005,

Information You Can Use

Chapter 11 Managing Conflict and Negotiations 299

the communication style, time orientation, group versus individual orientation, religious orientation, and customs of the culture of the counterpart negotiator is an important step to take in preparing for global negotiations.35 Knowing something about another person’s culture is a sign of respect that is appreciated at the negotiating table.

Improving Negotiations In one form or another, negotiation is becoming an increasingly important part of the man- ager’s job. A review of the topic of negotiation by Wall and Blum concludes with a set of recommendations for managers on how to improve the negotiation process. They offer the following suggestions:36

1. Begin the bargaining with a positive overture—perhaps a small concession—and then reciprocate the opponent’s concessions.

2. Concentrate on the negotiation issues and the situational factors, not on the opponent or his or her characteristics.

3. Look below the surface of your opponent’s bargaining and try to determine his or her strategy. 4. Do not allow accountability to your constituents or surveillance by them to spawn com-

petitive bargaining.

EXHIBIT 11.5 Cultural Effects on Negotiating Style

Source: Adapted from J.W. Salacuse, “Ten Ways That Culture Affects Negotiating Style: Some Survey Results,” Negotiation Journal, July 1998, pp. 221–40.

NEGOTIATING ATTITUDE: WIN–WIN OR WIN–LOSE?

Win–Win (%) 100 82 81 80 78 71 59 5055 47 44 37

PERSONAL STYLE: FORMAL OR INFORMAL?

Formal (%) 53 47 46 42 35 35 27 27 22 22 20 17

COMMUNICATION STYLE: DIRECT OR INDIRECT?

Indirect (%) 27 20 18 12 11 11 9 5 4 0 0 0

AGREEMENT FORM: GENERAL OR SPECIFIC?

General (%) 46 45 44 30 27 27 20 22 20 17 16 11

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Summary of Key Points

∙ A contemporary perspective on conflict recognizes that conflict is neither inherently good nor bad but can be either depending on how it is dealt with. Rather than elimi- nating conflict, this view stresses that what is important is that conflict be effectively managed.

∙ A functional conflict is a confrontation between groups that enhances and benefits the organization’s performance. Functional conflict can contribute to creativity, innovation, and improved decision making, among other benefits. Dysfunctional conflict, on the other hand, harms the organization or hinders the achievement of organizational goals.

∙ Levels of conflict can be related to overall organizational performance. Too much con- flict can be disruptive, creating chaos and damaging interpersonal relations. Too little conflict can also detract from performance. If conflict levels are too low, innovation and change are less likely to occur. Each organization has an optimal level of conflict that can be extremely functional.

∙ Conflict is inevitable. Every group will sometimes come into conflict with one or more other groups. Numerous factors contribute to intergroup conflict. Three particularly important ones are (1) the interdependent nature of the relationship between work groups, (2) differences in goals, and (3) differences in perceptions.

∙ Groups involved in dysfunctional conflict tend to react in fairly predictable ways. Some changes occur within the groups involved in conflict; others take place between the groups. Within-group changes include increased cohesiveness, emphasis on group loy- alty, a rise in autocratic leadership, and a focus on task-oriented activity. Between-group changes include an increase in perceptual distortion, negative stereotyping of the other group, and decreased communication.

∙ One way of viewing conflict resolution is from the perspective of a conflict-management grid. Such a grid points out five distinct approaches to group conflict resolution: dominating, accommodating, problem solving, avoiding, and compromising.

∙ Sometimes conflict levels are too low, and the objective becomes stimulating functional conflict between groups. Techniques available for stimulating conflict include bringing outsiders into the group, altering the organization’s structure, creating competition between groups, and using programmed conflict.

∙ Win–lose negotiating is a form of zero-sum game. That is, to the extent one party wins something, the other party loses. Win–win negotiating is a positive-sum approach, wherein each party gains without a corresponding loss for the other party.

∙ There is an increasing use of third parties in negotiations. In some cases, third parties may be part of the entire process; in others, they may be called in only when an impasse is reached. Different types of third-party negotiations include mediation, arbitration, conciliation, and consultation.

∙ Negotiating with individuals from different countries and cultures poses a number of issues. Showing knowledge about a person’s culture is one way to establish rapport and respect with another negotiator.

5. If you have power in a negotiation, use it—with specific demands, mild threats, and persuasion—to guide the opponent toward an agreement.

6. Be open to accepting third-party assistance. 7. In a negotiation, attend to the environment and be aware that the opponent’s behavior

and power are altered by it.

Chapter 11 Managing Conflict and Negotiations 301

LOWBALLING IN SALARY NEGOTIATIONS: HOW WOULD YOU HANDLE IT? Because you think you’re going to like the job itself, the organi- zational culture, and co-workers, it’s worth trying to negotiate for a better starting salary. It wouldn’t make sense to walk away at this point and start the process all over again at another organi- zation (where the same thing could happen!). What’s your next step? If you’re annoyed and frustrated by the low initial offer, you might respond with a win–lose negotiation strategy by counter- ing with a salary request of $40,000 or higher. This might work, but chances are the HR manager will perceive you as unreasonable or out of his or her price range and will not meet your demand. The negotiation will likely be concluded and the offer withdrawn.

Another approach to the HR manager’s initial lowball offer of $30,000 is to use a win–win negotiation approach where you first explain how your skill set and education are appropriate for the job and that with time and effort, you envision making a meaningful con- tribution to the organization. Then, you can indicate that you heard the going rate for this position was between $35,000 and $40,000, and thus you would be willing to start at $37,500 (the midpoint). You can explain that the midpoint is fair because you already have some of the skills and the required energy to hit the ground running in the job (i.e., perform reasonably well soon after starting the job and get- ting to know the organization, co-workers, etc.), but will become even more productive over time as you gain experience in the posi- tion. Thus, if you and the HR manager agree to the starting salary of $37,500, it’s a win–win for the organization and you as a candidate.

Y O U B E T H E J U D G E C O M M E N T

1. Think back to a time in school or at work when a group of which you were a part expe- rienced dysfunctional conflict. Describe the conflict and the impact it had on group cohesion and productivity.

2. Can you think of situations with which you are familiar that would have benefited from more intergroup conflict? How could additional conflict have improved the situation?

3. When intergroup conflict occurs, changes take place within and between conflicting groups. What are these changes? Which changes generally are positive? Which are negative?

4. Is there a relationship between the level of intergroup conflict and organizational performance? How can an organization achieve optimal levels of conflict?

5. What are some of the major reasons intergroup conflict occurs? In your personal expe- rience, what is the most frequent reason?

6. If you were about to begin negotiating with a person from Brazil, what would you want to know about his cultural background? Would it make a difference in the knowl- edge you seek if the Brazilian negotiator were a woman? Discuss.

7. What are the possible consequences of dysfunctional conflict? Are some of these consequences more or less likely to occur in organizational conflict situations?

8. People handle conflict in different ways. Assume you are a team leader and two of your team members (who report to you) are trying to negotiate who will take the major share of the work on a new project. Both feel they are overworked already and neither one wants the additional responsibility. Assume one of the team members has a competing style of conflict resolution, while the other individual prefers a collaborative style. What do you think the outcome of this negotiation will be? Explain your answer.

9. What are the four elements that are typically part of all negotiations? Are there likely to be differences in these elements depending on whether the negotiations are of a win–win or a win–lose nature?

10. Think about the last time you had to negotiate something (e.g., a higher grade, the purchase of a new or used car, etc.). Which of the following negotiation tactics were used by you and/or the other party: good guy/bad guy, the nibble, joint problem solving, power of competition, or splitting the difference? Identify which tactic was introduced and explain how it was used.

Review and Discussion Questions

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302 Part One The Field of Organizational Behavior

Reality Check Now how much do you know about managing conflict and negotiations?

. a. intergroup conflict b. team-building exercises c. negotiation tactics d. dysfunctional conflict

7. interdependence requires no interaction between groups because each group can per- form its tasks separately. a. Pooled b. Joint c. Collective d. Unique

approach is when one group ignores or steers clear of another group. a. avoiding b. collaborating c. compromising d. dominating

9. True or false: The dominating approach to conflict resolution is appropriate to use when your group is certain it is right and where the benefit of a resolution outweighs the drawback of possible negative feel- ings by the dominated group. a. True b. False

10. Bringing outside individuals into the group, stimulating competition among groups, and using a devil’s advocate form of programmed conflict are all ways of . a. making groups fight with each other b. stimulating constructive intergroup conflict c. forcing one group to dominate another group d. None of the above (a–c) are correct.

REALITY CHECK ANSWERS

Before After

1. d 2. b 3. c 4. a 5. a 6. c 7. a 8. a 9. a 10. b Number Correct Number Correct _________ _________

Purpose To understand the criteria that third parties use when they intervene and attempt to resolve others’ conflicts.

Introduction In addition to being involved in their own conflicts, managers are often called upon to intervene and to settle conflicts between other people. The two activities in

Exercise

Exercise 11.1: Third-Party Conflict Resolution

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this section are designed to explore how third parties may enter conflicts for the purpose of resolving them and to practice one very effective approach to interven- tion. In the exercise, you will read about a manager who has a problem deciding how to intervene in a dis- pute, and you will discuss this case in class.

Step 1: 5 Minutes Read “The Seatcor Manufacturing Company” case.

The Seatcor Manufacturing Company You are senior vice president of operations and chief operating officer of Seatcor, a major producer of office furniture. Joe Gibbons, your subordinate, is vice president and general manager of your largest desk assembly plant. Joe has been with Seatcor for 38 years and is two years away from retirement. He worked his way up through the ranks to his present position and has successfully operated his division for five years with a marginally competent staff. You are a long-standing personal friend of Joe’s and respect him a great deal. However, you have always had an uneasy feeling that Joe has surrounded himself with minimally competent people by his own choice. In some ways, you think he is threatened by talented assistants.

Last week you were having lunch with Charles Stewart, assistant vice president and Joe’s second-in-command. Upon your questioning, it became clear that he and Joe were engaged in a debilitating feud. Charles was hired last year, largely at your insistence. You had been concerned for some time about who was going to replace Joe when he retired, especially given the lack of really capable man- agerial talent on Joe’s staff. Thus, you prodded Joe to hire your preferred candidate—Charles Stewart. Charles is relatively young (39), extremely tenacious and bright, and a well-trained business school graduate. From all reports, he is doing a good job in his new position.

Your concern centers around a topic that arose at the end of your lunch. Charles indicated Joe Gibbons is in

the process of completing a five-year plan for his plant. This plan is to serve as the basis for several major plant reinvestment and reorganization decisions that would be proposed to senior management. According to Charles, Joe Gibbons has not included Charles in the planning process. You had to leave lunch quickly and were unable to get much more information from Charles. However, he did admit that he was extremely disturbed by this ex- clusion and that his distress was influencing his work and probably his relationship with Joe.

You consider this a very serious problem. Charles will probably have to live with the results of any major decisions about the plant. More important, Joe’s sup- port is essential if Charles is to properly grow into his present and/or future job. Joe, on the other hand, runs a good ship and you do not want to upset him or under- mine his authority. Moreover, you know Joe has good judgment; thus, he may have good reason for what he is doing. How would you proceed to handle this issue?

Step 2: 5 Minutes Before discussing this case with anyone else, answer the following two questions: 1. Assume you were the senior vice president of opera-

tions. Exactly what would you do in this situation regarding the conflict between Joe and Charles?

2. Why would you take this action—i.e., what are your primary objectives by intervening in this way?

Step 3: 20–30 Minutes The instructor will discuss this case with the entire class.

Step 4: 10–15 Minutes The instructor will summarize the case discussion and present a framework for understanding how partici- pants analyzed the case and decided to intervene. Source: Developed by Roy J. Lewicki, The Ohio State University. Used with permission.

Step 1 The class is divided into two groups. The size of each group should be no more than 10. Those not in one of the two groups are designated as observers. However, groups should not have fewer than six members each.

The instructor will play the role of the referee/banker for the World Bank.

Step 2 Read the World Bank Instruction Sheet.

Exercise

Exercise 11.2: World Bank: An Exercise in Intergroup Negotiation

304 Part Three Group Behavior and Interpersonal Influence

Step 3 Each group or team will have 15 minutes to organize it- self and plan strategy before beginning. Before the first round, each team must choose (a) two negotiators, (b) a representative, (c) a team recorder, and (d) a treasurer.

Step 4 The referee/banker will signal the beginning of round one and each following round and also end the exercise in about one hour.

Step 5 Discussion. In small groups or with the entire class, an- swer the following questions: 1. What occurred during the exercise? 2. Was there conflict? What type? 3. What contributed to the relationships among

groups? 4. Evaluate the power, leadership, motivation, and

communication among groups. 5. How could the relationships have been more

effective?

World Bank General Instruction Sheet This is an intergroup activity. You and your team are going to engage in a task in which money will be won or lost. The objective is to win as much as you can. Two teams are involved in this activity, and both teams receive identical instructions. After reading these instructions, your team has 15 minutes to organize itself and plan its strategy.

Each team represents a country. Each country has financial dealings with the World Bank. Initially, each country contributed $100 million to the World Bank. Countries may have to pay further monies or may re- ceive money from the World Bank in accordance with regulations and procedures described below under sec- tions headed Finances and Payoffs.

Each team is given 20 cards. These are your weapons. Each card has a marked side (X) and an unmarked side. The marked side of the card signifies that the weapon is armed. Conversely, the blank side shows the weapon to be unarmed.

At the beginning, each team will place 10 of its 20 weapons in their armed positions (marked side up) and the remaining 10 in their unarmed positions (marked side down). These weapons will remain in

your possession and out of sight of the other team at all times.

There will be rounds and moves. Each round con- sists of seven moves by each team. There will be two or more rounds in this simulation. The number of rounds depends on the time available. Payoffs are determined and recorded after each round. 1. A move consists of turning two, one, or none of the

team’s weapons from armed to unarmed status, or vice versa.

2. Each team has two minutes to move. There are 30-second periods between moves. At the end of two minutes, the team must have turned two, one, or none of its weapons from armed to unarmed status, or from unarmed to armed status. If the team fails to move in the allotted time, no change can be made in weapons status until the next move.

3. The length of the 21/2-minute period between the beginning of one move and the beginning of the next is fixed and unalterable. Each new round of the experiment begins with all

weapons returned to their original positions, 10 armed and 10 unarmed.

Finances The funds you have contributed to the World Bank are to be allocated in the following manner: $60 million will be returned to each team to be used

as your team’s treasury during the course of the decision-making activities.

$40 million will be retained for the operation of the World Bank.

Payoffs 1. If there is an attack:

a. Each team may announce an attack on the other team by notifying the referee/banker during the 30 seconds following any two-minute period used to decide upon the move (including the sev- enth, or final, decision period in any round). The choice of each team during the decision period just ended counts as a move. An attack may not be made during negotiations.

b. If there is an attack (by one or both teams), two things happen: (1) the round ends, and (2) the World Bank levies a penalty of $5 million for each team.

c. The team with the greater number of armed weap- ons wins $3 million for each armed weapon it has over and above the number of armed weapons

Chapter 11 Managing Conflict and Negotiations 305

of the other team. These funds are paid directly from the treasury of the losing team to the trea- sury of the winning team. The referee/bankers will manage this transfer of funds.

2. If there is no attack: At the end of each round (seven moves), each team’s treasury receives from the World Bank $2 million for each of its weapons that is at that point unarmed, and each team’s treasury pays to the World Bank $2 million for each of its weapons remaining armed.

Negotiations Between moves, each team has the opportunity to com- municate with the other team through its negotiators.

Either team may call for negotiations by notifying the referee/bankers during any of the 30-second peri- ods between decisions. A team is free to accept or reject any invitation to negotiate.

Negotiators from both teams are required to meet after the third and sixth moves (after the 30-second pe- riod following that move, if there is no attack).

Negotiations can last no longer than three minutes. When the two negotiators return to their teams, the two-minute decision period for the next move begins once again.

Negotiators are bound only by: (a) the three-minute time limit for negotiations, and (b) their required appearance after the third and sixth moves. They are otherwise free to say whatever is necessary to benefit themselves or their teams. The teams similarly are not bound by agreements made by their negotiators, even when those agreements are made in good faith. Special Roles Each team has 15 minutes to organize itself to plan team strategy. During this period before the first round begins, each team must choose persons to fill the following roles. (Each team must have each of the following roles, which can be changed at any time by a decision of the team.) ∙ Negotiators—activities stated above. ∙ A representative—to communicate team decisions

to the referee/bankers. ∙ A recorder—to record the moves of the team and to

keep a running balance of the team’s treasury. ∙ A treasurer—to execute all financial transactions

with the referee/bankers.

Source: Adapted from John E. Johns and J. William Pfeiffer, eds., The 1975 Annual Handbook for Group Facilitators. Reprinted with permission of John Wiley & Sons, Inc.

Even in the midst of a severe recession in 2009 that depressed tourism and a digital revolution in the media business, the Walt Disney Company fared better than many of its rivals. Although spending at Disney theme parks was down and fewer consumers bought DVDs of its movies, Disney positioned itself well to ride out the recession by having a broad mix of businesses in its portfolio. For example, Disney’s sports cable network, ESPN, and ABC Family and Disney channels reported increases in operating profits in 2009. The creation and marketing of well-known franchises such as the Jonas Brothers helped fuel the company’s success. Also, in an attempt to capture a larger share of the growing on- line viewer market, Disney bought an equity stake in Hulu, the online video-streaming platform. In addition, the Disney Pixar creative partnership continues to pro- duce popular and profitable animated movies such as Toy Story 3 and Inside Out.

To what degree have these business decisions been successful? Disney was ranked 57th in the Fortune 500 list of largest companies in 2015. Also, it surpassed other media companies, including Time Warner and News Corp., in terms of its stock performance and re- turn on invested capital. Disney has become the largest media conglomerate in the world with a market value of about $49 billion.

Who has been the driving force behind many of these business decisions? Robert (“Bob”) Iger took over as CEO in 2005. Known to many as “hardworking and likable,” Iger has not only had to make a series of important busi- ness decisions regarding Disney’s current businesses and future direction, but he has also had to repair several im- portant relationships that the former CEO, Michael Eisner, strained during the later stage of his 22-year tenure.

Disney’s controversial ex-CEO, Eisner, was credited with helping to turn around Disney in the 1980s

Case

Case 11.1: Conflict at Walt Disney Company: A Distant Memory?

306 Part Three Group Behavior and Interpersonal Influence

and once again making it into a formidable American company. In the mid-1990s, Eisner astutely guided the company to add Capital Cities/ABC and ESPN to its theme park and film businesses. Following these and other well-received decisions, Eisner’s abrasive style and tendency toward micromanagement led to a series of public disputes and feuds with key players in the Disney world. Eisner fought with Miramax founders Harvey and Bob Weinstein over the financial details related to Disney’s purchase of Miramax films. Eisner and Steve Jobs, then CEO of animated film producer Pixar, bumped heads several times. While testifying in front of Congress about movie piracy, Eisner made some negative comments about Apple Computer (of which Jobs was also CEO). Jobs took this jab per- sonally and did not forgive Eisner for making these comments. This feud eventually culminated with Jobs threatening to not renew the Disney–Pixar partnership after the release of Cars in 2006 if Eisner was still CEO of Disney. Eisner had a long-running dispute with two (former) influential members of Disney’s Board of Directors, Roy Disney and Stanley Gold, both of whom were outspoken critics of Eisner and his management team. For several years, these long-standing board members repeatedly called for Eisner’s resignation.

Soon after Iger took over as CEO at Disney in 2005, he reached out and reconciled the company’s differ- ences with Roy Disney and Stanley Gold. They agreed to cease their “SaveDisney” campaign and work coop- eratively with Iger. The dispute with the Weinstein brothers was resolved by making a settlement payment of $100 million (Disney kept the Miramax name and film library estimated at a worth of $2 billion). Iger repaired the relationship with Steve Jobs and Pixar, ulti- mately paving the way for Disney to pay $7.4 billion in stock to acquire Pixar Animation Studios in 2006 and adding Steve Jobs to the Disney Board of Directors.

In sum, the change in leadership at Disney from Michael Eisner to Bob Iger seems to have been a prudent one.

Iger and his management team have made a series of good business decisions while systematically repairing key relationships that were strained during Eisner’s reign as CEO.

Questions 1. How would you describe the conflict between Mi-

chael Eisner and the Weinstein brothers, the two board members (Disney and Gold), and Steve Jobs? Was it functional or dysfunctional?

2. Think back to the stages of conflict described in this chapter. Which stage best described the conflict be- tween Eisner and Jobs? Was it perceived, felt, or man- ifest?

3. Which of the following best describes Michael Eis- ner’s and Bob Iger’s approaches to resolving con- flict: dominating, problem solving, avoiding, or accommodating? Explain.

4. To what degree do you think Iger’s calmer and less confrontational approach to running Disney helped the company survive a major recession and position itself for continued success?

Sources: Written by Robert Konopaske of Texas State University and adapted from “Fortune 500 2015: #57: Walt Disney Company,” Fortune,

Box Office Mojo, James Stewart, “Behind the Scenes at Disney as It Purged a Favorite Son,” CNBC,

The Wall Street Journal, October 4, 2014, http://www.wsj.com; Matthew Garrahan, “Box Office Flops and Weak DVD

Financial Times “Disney Succumbs to Recessionary Forces with Steep Falls in Profits,” Financial Times, February 4, 2009, p. 13; Richard Siklos, “Bob Iger Rocks Disney,” Fortune

Journal of the International Academy of Case Studies Patricia Sellers, “Disney’s Mr. Calm Unreels Miramax,” Fortune, March 21, 2005, p. 30; Christopher Parkes, “Eisner to Sever All Ties with Walt Disney,” Financial Times, September 21, 2004, p. 33.

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Power is a pervasive part of the fabric of organizational life.1 Managers and nonmanagers use it. They manipulate power to accomplish goals and, in many cases, to strengthen their own positions. A person’s success or failure in using or reacting to power is determined largely by understanding power, knowing how and when to use it, and being able to antici- pate its probable effects.2 The purpose of this chapter is to examine power and its uses in organizations. We will look at sources (bases) of power, how power is used, and the rela- tionship between power and organizational politics.

The Concept of Power The study of power and its effects is important to understanding how organizations oper- ate. It is possible to interpret every interaction and every social relationship in an organiza- tion as involving power.3 How organizational subunits and individuals are controlled is related to the issue of power and influence. The terms power and influence are frequently used interchangeably in the management literature; however, there is a subtle, yet impor- tant, difference between them. Influence is a transaction in which person B is induced by person A to behave in a certain way. For example, if an employee works overtime at the boss’s request, that employee has been influenced by the boss.

Like influence, power involves a relationship between two people. Robert Dahl, a polit- ical scientist, captures this important relational focus when he defines power as saying “A has power over B to the extent that he can get B to do something B would not otherwise do.”4 What is the difference between this definition of power and our earlier definition of influence? Power represents the capability to get someone to do something; influence is the exercise of that capability. Another way of stating the distinction is to say that power is the potential to influence, while influence is power in action. Thus you may have power (the capacity to influence) but not use it; on the other hand, you cannot influence anyone (induce certain behavior in another person) without power.

influence Transaction in which person B is induced by person A to behave in a certain way.

power The capability to get someone to do something.

Power and Politics Learning Objectives

After completing Chapter 12, you should be able to:

Distinguish between influence and power.

Give examples of interpersonal and structural power bases.

Discuss why some managers resist empowering employees.

Identify the contingencies that influence subunit or interdepartmental power.

Explain what is meant by the term illusion of power.

Describe several frequently used influence tactics.

Summarize the criteria for determining ethical behavior.

Identify the considerations involved in using power to manage effectively.

C H A P T E R T W E L V E

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We frequently speak of someone having power over someone else. While this is correct, it is important to stress that power is not an attribute of a particular person. Rather, it is an aspect of the relationship that exists between two (or more) people. No individual or group can have power in isolation; power must exist in relation to some other person or group. If A has power over B, it is, in part, because B is willing for that to be an aspect of the rela- tionship between them. If and when B no longer desires that to be part of the relationship with A, A will no longer have power over B and no longer be able to influence B’s behav- ior. Thus, obtaining, maintaining, and using power are all essential to influencing the behavior of people in organizational settings.

Some power relationships in organizations are symmetrical. This means that both parties are equal, or have the same amount of power. Other power relationships are asym- metrical, meaning one person in the relationship has more power than the other. Symmetry is a property that can change over time, as a person or group gains or loses power.5 To understand how power can shift, it is important to know where power is obtained.

Reality Check How much do you know about power, politics, and empowerment?

1. Having influence over others (e.g., subordinates) based on the position within the organization that person holds is known as power. a. expert b. intense c. coercive d. legitimate

2. is sharing power and authority with subordinates to increase their confidence and effectiveness. a. Centralization b. Empowerment c. Rational persuasion d. Groupthink

3. True or false: Two of the reasons empowerment is not a universally accepted practice within all organiza- tions is: (1) not everyone wants to be empowered and (2) some employees are not able to make responsible decisions. a. True b. False

4. An example of coping with uncertainty that can ultimately lead to your department acquiring more power within the company is . a. being located at the center of the organization b. providing future-based predictions that are accurate c. possessing employees who have the only talent to complete the job d. None of the above (a–c) are correct.

5. Milgram’s experiment on obedience revealed that 65 percent of participants in his study were willing to administer shocks when asked to do so by the experimenter even though screams could be heard coming from the nearby booth where subjects were allegedly receiving the administered shocks. a. moderate b. very strong c. intense d. XXX (most severe)

Chapter 12 Power and Politics 309

Where Does Power Come From? Power is obtained in a variety of ways in an organization. Since power facilitates the orga- nization’s adaptation to its environment, the people and groups within the organization that are able to assist in that adaptation are the ones that will hold power. Two important cate- gories of power in an organization are interpersonal and structural. Within each of these two categories are several specific sources of power. Let’s look at these in some detail.

Interpersonal Power In what is considered a classic essay in the management and organizational behavior litera- ture, John French and Bertram Raven suggested five interpersonal sources, or bases, of power: legitimate, reward, coercive, expert, and referent.6 As we shall see, these sources of power are not equally available to all organizational members.

Legitimate Power Legitimate power refers to a person’s ability to influence others because of the position within the organization that person holds. Legitimate or position power, as it is some- times called, is derived from the position itself. That is, the organization has given to an individual occupying a particular position the right to influence—command—certain other individuals. This formal power is what we call authority. Orders from a manager in an authority position are followed because the manager has the legitimate power to command certain subordinates in lower positions. For their part, subordinates believe they ought to comply with the orders. Not following orders subjects the offender to dis- ciplinary action just as not following society’s legal directives subjects one to disciplin- ary action in the form of arrest and penalty. Organizational authority has the following characteristics: 1. It is invested in a person’s position. An individual has authority because of the position

she holds, not because of any specific personal characteristics. 2. It is accepted by subordinates. The individual in a legal authority position exercises

authority and can gain compliance because he or she has a legitimate right. 3. Authority is used vertically. Authority flows from the top down in the hierarchy of an

organization. Possessing legitimate power, or authority, does not mean that all orders will be followed

by those who are subordinate to the individual in authority. For a subordinate to comply with an order from a superior requires that the order fall within the subordinate’s zone of indifference. The term zone of indifference may be explained as follows: If all possible orders that might be directed to an individual from a superior were arranged in the order of their acceptability to the individual, some would be clearly acceptable while others might be clearly unacceptable. For example, a request by a manager that a subordinate complete her expense report might be an acceptable order. It would lie within her zone of indiffer- ence; that is, she is relatively indifferent to the request as far as the question of her boss’s authority is concerned.

However, if the boss were to request that she record expenses she did not incur, or that she otherwise falsify the expense report, such a request might well fall outside her zone of indifference. She may elect not to comply because she is no longer indifferent with respect to such an order. A person’s zone of indifference may be wider or narrower depending on a number of factors such as the extent to which the boss has a source of power other than authority.

legitimate power Capacity to influence derived from the position of a manager in the organizational hierarchy.

authority The ability to influence others based on the perceived power of one’s position and role within an organization.

zone of indifference When individuals accept orders from superiors without questioning their authority.

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Reward Power Reward power is based on a person’s ability to reward a follower for compliance. It occurs when someone possesses a resource that another person wants and is willing to exchange that resource in return for certain behavior. Reward power is used to back up the use of legitimate power. If followers value the rewards or potential rewards the manager can pro- vide (recognition, extra time off, a good job assignment, a pay raise, opportunity to attend a training program, etc.), they may respond to orders, requests, and directions. Note, how- ever, that if what a manager is offering as a reward has no value to an individual, it will not likely influence behavior.

Coercive Power The opposite of reward power is coercive power, power to punish. Followers may comply out of fear. A manager may block a promotion or criticize a subordinate for poor perfor- mance. These practices and the fear they will be used are coercive power. Of course, one need not be in a position of authority to possess coercive power. For example, fear of rejec- tion by co-workers for not complying with group norms (e.g., punctuality, reliability, or high performance) represents coercive power even though one’s co-workers have no formal authority.

Expert Power A person has expert power when he or she possesses special expertise that is highly valued. Experts have power even when their formal position in the organizational hierarchy is low. A person may possess expertise on technical, administrative, or personal matters. The salesperson who has a knack for landing new accounts, the IT support person who always solves computer problems for employees, the college dean who consistently raises the most money—all have enhanced ability to influence others because of their special expertise. The more difficult it is to replace the expert, the greater degree of expert power he or she possesses. Expert power is not unlimited, however; occasionally, individuals’ expertise does not bestow upon them as much power as they believe it does. Expert power is a per- sonal characteristic, while legitimate, reward, and coercive power are largely prescribed by the organization.

Referent Power Many individuals identify with and are influenced by a person because of the latter’s person- ality or behavioral style. The charisma of the person is the basis of referent power. A person with charisma is admired because of his or her characteristics. The strength of a person’s charisma is an indication of his or her referent power. Charisma is a term that is often used to describe politicians, entertainers, or sports figures. Some managers are regarded as extremely charismatic by their subordinates. Thomas Watson, Jr., ex-president of IBM; Jack Welch, former CEO at General Electric; Steve Jobs, former CEO of Apple; and Oprah Winfrey, CEO of OWN (Oprah Winfrey Network) are examples of charismatic leaders. Certain aspects of charismatic leadership will be discussed in more detail in Chapter 15.

The five sources of interpersonal power can be divided into two major categories: orga- nizational and personal. Legitimate, reward, and coercive power are primarily prescribed by the organization, the position, or specific interaction patterns. A person’s legitimate power can be changed by transferring the person, rewriting the job description, or reducing the power by restructuring the organization. Expert and referent power are very personal. They are the result of an individual’s personal expertise or style and, as such, are grounded in the person and not the organization.

reward power An influence over others based on hope of reward.

coercive power Influence over others based on fear.

expert power Capacity of influence related to some expertise, special skill, or knowledge.

referent power Power based on a subordinate’s identification with a charismatic superior.

Chapter 12 Power and Politics 311

These five types of interpersonal power are not independent of each other; a person can use these power sources effectively in various combinations. Some research has suggested, for example, that when subordinates believe a manager’s coercive power is increasing, they also perceive a drop in reward, referent, and legitimate power. Finally, different power sources are not always equally well received. Some types of power are more likely to engender positive responses than are others. The nearby Information You Can Use pro- vides further information.

Structural Power Power is frequently prescribed by structure within the organization. Structural sources of power result from the nature of the organizational social system rather than from attributes of an individual.7 The structure of an organization is the control mechanism by which the organization is governed. In the organization’s structural arrangements, decision-making discretion is allocated to various positions. Also, the structure greatly affects the patterns of communication and the flow of information within the system. Thus, organizational structure creates formal power and authority by specifying certain individuals to perform specific tasks and make certain decisions. Structure also significantly impacts informal power through its effect on information and communication flows within the system.

An example will help illustrate these concepts. At Bank of America, individuals in loan officer positions possess formal power and authority (e.g., the power to reject loan applications) by virtue of the role they play within the structure of the bank. Customer service managers perform different roles and, as such, they have different types of formal power and authority (e.g., the power to give a customer a refund for a bounced-check service fee). The power these employees possess is bestowed upon them by the organizational structure of the bank. In addition, both loan officers and customer service managers can develop their informal power by being plugged into the flow of informa- tion within the bank’s system.

Every organization has its own unique structure and, as such, power will be distributed in different ways. Organizations with very few levels of management between the customer and the top leadership are likely to see a more balanced distribution of power among their employees than are traditional multilevel organizations with several layers of management.

We have already discussed how formal position is associated with power and authority. Certain rights, responsibilities, and privileges accrue from a person’s position. Other forms of struc- tural power exist, however, because of resources, decision mak- ing, and information.8

Resources Kanter argues quite convincingly that power stems from (1) access to resources, information, and support, and (2) the ability to get cooperation in doing necessary work.9 Power occurs when a person has open channels to resources—money, human resources, technology, materials, customers, and so on. In orga- nizations, vital resources are allocated downward along the lines

SUBORDINATE RESPONSES TO DIFFERENT POWER SOURCES

Subordinates respond differently to different types of power. When using power, keep the following generalizations about the five sources of interper- sonal power in mind:

1. The use of legitimate or reward power will typically result in compliance. Compliance means that subordinates will obey your requests, but are unlikely to exert more than the minimal effort necessary.

2. The use of coercive power may result in resistance. Resistance means that subordinates may only pretend to comply with your requests, and they may openly resist.

3. The use of expert or referent power frequently results in commitment. Commitment means subordinates are likely to exert high levels of effort to accomplish what you ask, perhaps even exceeding what you requested.

Remember these are general findings, and each situation is different. Nonetheless, this suggests that even when you have the authority (legitimate power) to order something done, an expert- or referent- based influence approach is likely to achieve better results.

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312 Part Three Group Behavior and Interpersonal Influence

of the hierarchy. The top-level manager has more power to allocate resources than do other managers further down the managerial hierarchy. The lower-level manager receives resources that are granted by top-level managers. To ensure compliance with goals, top- level managers (e.g., presidents, vice presidents, directors) allocate resources on the basis of performance and compliance. Thus, a top-level manager usually has power over a lower- level manager because the lower-level manager must receive resources from above to accomplish goals.

Decision-Making Power The degree to which individuals or subunits (e.g., a department or a special project group) can affect decision making indicates the amount of power acquired. A person or subunit with power can influence how the decision-making process occurs, what alternatives are considered, and when a decision is made.10 Individuals who influence a decision-making process and its outcomes may or may not have formal authority. For example, research has shown that Eleanor Roosevelt, spouse of President Franklin Delano Roosevelt, exerted informal political influence over Congress even though she was not an elected official.11 She lacked formal authority but was adept at influencing certain decisions made by Congress. In other cases, individuals with formal authority have exerted decision-making power. When Richard J. Daley was mayor of Chicago, he was recognized as a power broker. He not only influenced the decision-making process, but he also had the power to decide which decisions would be given priority in the city council and when decisions would be made. He was a powerful politician because he was considered to be an expert at control- ling each step in important decisions. Another example of the power of politicians is the Chinese government’s censorship of U.S. Internet companies (see the nearby Global OB).

Information Power Knowledge is considered by some experts to be more powerful than any part or structure of an organization. Knowledge is defined as a conclusion or analysis derived from data and information.12 Data are facts, statistics, and specifics. Information is the context in which data are placed.

Microsoft, Facebook, Apple, Google, Walmart, Amazon, and Nestlé did not become prominent, profitable companies because they were richer than Chrysler, General Foods, or Sears. They were able to utilize and leverage their intellectual capital more effectively. That is, these firms used the knowledge, information, experience, and creativity possessed by employees to gain a competitive advantage in their industries.

An excellent television commercial featuring Federal Express illustrates how knowl- edge and information have become valued assets in organizations. In the commercial a ranting, scowling boss rushes into a room to reprimand an employee about a package that he has been informed has not arrived on time. A complaining customer triggered the rant- ing. The boss continues blasting the employee as she taps on her computer’s keyboard. The employee finally announces that her screen shows the package arrived and was signed for at a specific time. All of the employee’s colleagues cheer her result. She had relevant, up- to-the-minute knowledge and information that disputed the boss’s ranting.13

Having access to relevant and important knowledge information is power. Accountants generally do not have a particularly strong or apparent interpersonal power base in an orga- nization. Rather, accountants have power because they control important information. Information is the basis for making effective decisions. Sales people who have access to major customers also have power in organizations. The power emanates from knowing what these customers like and dislike regarding the company’s products, prices, delivery

313

terms, and so forth. Sales people may reject an idea from the production department by stating: “My customer won’t like the new packaging” or “if we do that, we’ll definitely lose business.” Thus, those who possess information needed to make optimal decisions have power. A true picture of a person’s power is provided not only by the person’s position but also by the person’s access to relevant information.

A number of organizational situations can serve as the source of either power or power- lessness (not acquiring power). The powerful manager exists because he or she allocates required resources, makes crucial decisions, and has access to important information.14

CHINA’S RESTRICTIONS ON U.S. TECH COMPANIES In an attempt to influence the powerful forces of global economic and social change, the Chinese government continues to restrict U.S. com- panies such as Google, Facebook, and Apple from competing in the Chinese market. Starting in March 2016, foreign companies or joint ventures are now restricted from disseminating content online, includ- ing text, maps, games, animation, audio, and video. The new regula- tions also apply to digitized books, art, literature, and science. Given the fact that more than half of China’s population (more than 700  million people) has access to the Internet, this represents a significant potential loss of business for these and other U.S. firms.

But one firm’s loss is another company’s gain. Tencent Holdings is China’s leading Internet company. With businesses ranging from in- stant messaging to online gaming, Tencent had a 2015 market capital- ization of more than $185 billion. Although a little more than half the value of Facebook, Tencent is changing the Internet landscape in China with its mobile messaging app—WeChat—that is poaching users from Chinese social networking sites like Renren (a Facebook com- petitor) at a rapid rate. Over a two-year period, the number of WeChat’s monthly active users went from 195 million to more than 650 million.

Google has been the recipient of direct influence from censors and others within the Chinese government. In 2006, Google launched a censored version of its search engine in mainland China. As part of the agreement to allow Google access to the massive market of Internet users, the Chinese government required that Google restrict certain types of information from Chinese users. At the time, Google agreed to censor search results in China, but the decision was not an easy one.

By March 2010, however, citing problems with censorship and on- going cyber attacks, Google closed its self-censored search service in China and launched an unfiltered version based in Hong Kong. By 2011, although still allowed to operate in mainland China, Google experienced a significant drop in its share of China’s search market— to less than 20 percent—while China’s home-grown search engine, Baidu, increased its market share during the same time period to 75 percent. Recently, Google announced plans to reenter the Chinese market to sell mobile services. The company is hoping to get govern- ment approval to distribute a special version of its Google Play mobile app store for Android smartphone users in China.

Google is not alone in its struggles to do business in China. The Chinese government has also exerted influence over other U.S.

information and technology providers—including Yahoo!, Microsoft, and even Apple. Until now, Apple seemed to have a good working relationship with the Chinese government and had introduced several new products to Chinese consumers, including Apple Pay, its mobile payment system. In April 2016, however, Chinese regulators demon- strated their authority by closing Apple’s iBooks Store and iTunes Movies services. The company hopes to make these services available again to Chinese consumers in the near future. China is Apple’s second largest market after the United States.

U.S. technology companies are trying to create a roadmap for do- ing business in countries like China that restrict free speech and free- dom of expression. These firms have endorsed the Global Network Initiative, which encourages technology companies to protect users’ personal information and privacy. The Initiative also pushes compa- nies to take a close look at a country’s track record in supporting free- dom of expression before deciding to do business there. Some critics, however, don’t believe the Global Network Initiative goes far enough toward curbing abuses of personal rights and freedoms.

In 2016, the Chinese government continues to exert a great deal of power and influence over foreign companies that want to do business in China while reaching the world’s largest population with their prod- ucts and services. Time will tell if these companies will be able to capitalize on their investments and maintain a solid working relation- ship with Chinese authorities in an effort to increase their business in the country.

Sources: “China Internet Users,” Internet Live Stats, http://www. internetlivestats.com, accessed May 4, 2016; Paul Mozur and Jane Perlez, “Apple Services Shut Down in Startling About-Face,” The New York Times, April 21, 2016; http://www.nytimes.com; Erik Crouch, “Why Did WeChat Succeed in China where Other Apps Failed?” Tech in Asia, April 11, 2016, https://www.techinasia.com; David Barboza and Paul Mozur, “New Chinese Rules on Foreign Firms’ Online Content,” The New York Times, February 19, 2016, http://www.nytimes.com; Kaveh Waddell, “Why Google Quit China— and Why It’s Heading Back,” The Atlantic, January 19, 2016, http://www. theatlantic.com; Shira Ovide, “Why Chinese Tech Doesn’t Need America,” Bloomberg Gadfly, November 15, 2015, http://www.bloomberg.com; Sue Chang, “China’s Tech Companies Gaining on U.S. Peers,” Market Watch, September 24, 2015, http://www.marketwatch.com; Amir Efrati, “Google Nears Re-entry to Mainland China,” The Information, September 24, 2015, https://www.theinformation.com; Jessica E. Vascellaro, “Google, Yahoo, Microsoft Set Common Voice Abroad,” The Wall Street Journal, October 28, 2008, http://www.wsj.com.

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314 Part Three Group Behavior and Interpersonal Influence

He or she is likely to make things happen. The powerless manager, however, lacks the resources, information, and decision-making prerogatives needed to be productive. Exhibit 12.1 presents some of the common symptoms and sources of powerlessness of first-line supervisors, staff professionals, and top-level managers. This exhibit indicates that a first-line manager, for example, may display a number of symptoms of powerlessness such as supervising very closely and not showing much concern about training or develop- ing subordinates. If these symptoms persist, it is likely that the individual is powerless.

Empowerment The chief of the Los Angeles Police Department directs approximately 10,000 sworn officers, 3,000 civilian employees, and an annual budget in excess of $1 billion. By any definition it is a powerful position. During his seven years in the job, William Bratton vigorously fought crime in Los Angeles and instilled this passion in the officer ranks of the LAPD. Promoting only those commanders who shared his vision of crime reduction, Bratton’s ideas, policies, and legacy led to a 53 percent drop in violent crime, 33 percent in property crime, and 34 percent in gang-related violence from 2002 to 2008.15 His pre- vious position as New York City police commissioner from 1993 to 1998 resulted in a similar remarkable reduction in violent crime.16 He didn’t accomplish that, however, because he had amassed a great deal of power; rather, he accomplished it because he gave a great deal of his power away by pushing decision-making authority far down the orga- nizational hierarchy. He empowered officers at the precinct to take actions that previously could only be done at the commissioner’s office level. Bratton returned to New York City in 2009 as the city’s police commissioner and continues today in this very important role—striking a balance between empowering officers and leading the police force in a challenging metropolitan area.17 Empowerment has been defined by Conger and Kanungo as “a process of enhancing feelings of self-efficacy among organizational members through the identification of conditions that foster powerlessness and through their removal by both formal organizational practices and informal techniques of providing efficacy information.”18

empowerment Sharing power and authority with subordi- nates to increase their confidence and effectiveness.

Position Symptoms Sources

First-line supervisors (e.g., manager) Supervise too closely; fail to train subordinates; not sufficiently oriented to the management team; inclined to do the job themselves

Routine, rule-minded jobs: limited lines of communication; limited advancement opportunities for themselves and their subordinates

Staff professionals (e.g., corporate lawyer, personnel/human resources specialist)

Create islands and set themselves up as experts; use professional standards as basis for judging work that distinguishes them from others; resist change and become conservative risk takers

Their routine tasks are only adjuncts to real line job; blocked career advancement replaced by outside consultants for nonroutine work

Top-level managers (e.g., chief executive officer, vice president)

Short-term horizon; top-down communication systems emphasized; reward followers to think like the manager, do not welcome bearers of bad news

Uncontrollable lines of supply; limited or blocked lines of information about lower managerial levels; diminished lines of support because of challenges to legitimacy

EXHIBIT 12.1 Symptoms and Sources of Powerlessness

Source: Reprinted by permission of Harvard Business Review. From “Power Failures in Management Circuits,” by Rosabeth Moss Kanter, July–August 1979, p. 73. Copyright 1979 by the Harvard Business School Publishing Corporation; all rights reserved.

Chapter 12 Power and Politics 315

Despite the commonsense appeal of empowering employees, empowerment is not uni- versally embraced for a number of reasons, such as:

1. Managers fear the loss of power, control, and authority. 2. Employees are not able to make responsible decisions. 3. Empowering employees was attempted before and it failed. 4. Sharing proprietary information means leaking ideas, plans, and knowledge to competitors. 5. Not everyone wants to be empowered. Those resisting empowerment become isolates, mis-

fits, and not team players in the minds and perceptions of advocates of empowerment.19

Despite the skepticism and resistance inherent in the five reasons above, learning to leverage empowerment as a means to strengthen the capabilities and commitment of employees is one of the most important challenges facing managers today.20 The empower- ment process is presented in a staged sequence within organizations. The first stage involves identifying the conditions existing in the organization that lead to feelings of pow- erlessness on the part of organizational members. These conditions could find their origin in organizational factors (such as poor communications or highly centralized resources), management styles (such as authoritarianism), reward systems (nonmerit-based rewards, low incentive value rewards), or the nature of the jobs (low task variety, unrealistic perfor- mance goals).

The diagnoses completed in the first stage lead to the implementation of empowerment strategies and techniques in the second stage. Use of participative management, establish- ing goal-setting programs, implementing merit-based pay systems, and job enrichment

through redesign are examples of possible empowerment activities. The use of these programs is designed to provide self-efficacy information to subordinates in the third stage. Self- efficacy describes a belief in one’s effectiveness. Individuals high in self-efficacy tend to be confident and self-assured and feel they are likely to be successful in whatever endeavors they undertake.

Receiving such information results in feelings of empower- ment in the fourth stage. This is because increasing self-efficacy strengthens effort–performance expectancies. You will recall from the discussion of expectancy theory in Chapter 5 that this means increasing the perceived probability of successful perfor- mance, given effort. Finally, the enhanced empowerment feel- ings from stage four are translated into behaviors in the fifth and final stage. These behavioral consequences of empowerment include increased activity directed toward task accomplishment.

Thus, by helping organizational members feel more assured of their capability to perform well, and by increasing the link- ages between effort and performance, empowerment can lead to what has been described as a “culture of contribution.”21 Such a culture can be found, for example, in Semco, a Brazilian indus- trial machinery manufacturer, which has only three layers of management. When Ricardo Semler, the son of the founder, assumed control of the struggling company at age 22, he decided to empower his employees as a way to save the family company. Semler eliminated most job titles and set up a system where the role of CEO would rotate among six or so senior managers

INCREASING YOUR EFFECTIVENESS IN EMPOWERING OTHERS

1. Delegate authority. When you delegate responsibility, make certain you are also delegating authority to go along with it.

2. Be a “partner.” Be prepared to give up your managerial “parent” role and assume a “partner” role.

3. Be supportive. Assure your subordinates through words and deeds that it is OK to make mistakes.

4. Share information. Empowered employees must have sufficient information to be able to see the “big picture.”

5. Provide training opportunities. Encourage employees to develop skills to successfully perform new job responsibilities.

6. Provide constructive performance feedback. It is particularly important for newly empowered employees. Feedback enhances learning and can provide needed assurance that the job is being mastered.

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316 Part Three Group Behavior and Interpersonal Influence

every six months. Also, Semco workers set their own hours and everyone in the company is shown how much other employees are compensated. Employees are asked to choose and evaluate their managers.22 Semler created a profit-sharing system for employees and pub- lishes internally the firm’s financial information so employees understand how the com- pany is doing. The empowerment strategy seems to be working: The company grew revenues from $35 million to $212 million in six years, and employment increased from several hundred employees to about 3,000 employees over the same period.23

As we have already noted in previous chapters, organizations are increasingly relying on a variety of team structures to complete a variety of assignments and tasks. One benefit of team approaches is the increased empowerment of team members.24 In the case of self- managed teams, for example, empowerment is fostered in at least two ways. First, addi- tional formal decision-making control is delegated to the team. This empowers the team to make decisions and take actions that previously were reserved for—or at least required the approval of—a higher level. Second, because team members usually have broader respon- sibilities, they acquire additional skills, knowledge, and experiences. This increased expertise makes them more valuable to the organization, effectively increasing their influence. The nearby Information You Can Use feature provides suggestions for successfully empowering subordinates.25

Subunit or Interdepartmental Power The primary focus to this point has been on individual power and how it is obtained. However, it is also important to consider subunit or interdepartmental power. A subunit (business unit or strategic business unit) is a semiautonomous part of an overall organiza- tion that is a center for coordinated actions. Its organization is usually based on a product line or product lines and it competes against specific competitors. Subunit power is the focus of the strategic contingency theory developed by Hickson. A strategic contingency is an event that is extremely important for accomplishing organizational goals.26 Crozier, a French sociologist, provided insight into the idea of strategic contingencies. He studied the relationships between workers in the production and maintenance departments of French tobacco-processing plants. Crozier found that the production workers enjoyed job security because of tenure, were protected against unfair disciplinary action, and were not replaced or transferred arbitrarily. The production workers were less skilled than the maintenance workers. The maintenance workers were highly skilled and were recruited and selected only after going through a rigorous screening process.

The production workers were dependent on the maintenance workers. This power dif- ferential was explained in terms of the control exercised by the maintenance workers over an important contingency. If machines were shut down, the entire plant came to a halt. Efficiently functioning machines were needed to accomplish output goals. Since the main- tenance workers, at the request of the production workers, repaired machines that were down, they possessed significant power.

When machines were down, the job performance of the production workers suffered. Stoppages totally disrupted the workflow and the output of the production workers. Crozier proposed that the maintenance workers controlled a strategically contingent factor in the production process. Crozier’s study provided clear evidence of subunit power differences. The study also stimulated other studies that eventually resulted in a strategic contingencies explanation of power differences.27

Using the work of Crozier and Hickson and their associates, it is possible to develop a concise explanation of strategic contingencies. The model presented in Exhibit 12.2

strategic contingency An event or activity that is extremely important for accomplishing organizational goals.

Chapter 12 Power and Politics 317

suggests that subunit power, the power differential between subunits, is influenced by (1) the degree of ability to cope with uncertainty, (2) the centrality of the subunit, and (3) the substitutability of the subunit.

Coping with Uncertainty Unanticipated events can create problems for any organization or subunit. It is, therefore, the subunits most capable of coping with uncertainty that typically acquire power. There are three types of coping activities. First is coping by prevention. Here, a subunit works at reduc- ing the probability that some difficulty will arise. One example of a coping technique is designing a new product to prevent lost sales because of new competition in the marketplace.

Second is coping by information. The use of forecasting is an example. Possessing timely forecasting information enables a subunit to deal with such events as competition, strikes, shortages of materials, and shifts in consumer demand. Planning departments con- ducting forecasting studies acquire power when their predictions prove accurate.

Third is coping by absorption. This coping approach involves dealing with uncertainty as it impacts the subunit. For example, one subunit might take a problem employee from another subunit and attempt to retrain and redirect that employee. This is done as a favor so that the other subunit will not have to go through the pain of terminating or continuing to put up with the employee. The subunit that takes in the problem employee gains the respect of other subunits, which results in an increase in power.

The relation of coping with uncertainty to power was expressed by Hickson as follows: “The more a subunit copes with uncertainty, the greater its power within the organization.”28

Centrality The findings of a number of research studies strongly suggest that centrality can be a sig- nificant source of subunit power.29 The subunits that are most central to the flow of work

• Preventing market share decline by product development • Providing future-based predictions that are accurate • Absorbing problems from other units

• Being in an urgent or immediacy position • Being located at center of work flow

• Possessing needed skills or expertise • Possessing only talents that are available to complete job

Coping with uncertainty

Power acquired by subunit and power differentials

EXAMPLESCONTINGENCY

Centrality

Substitutability

EXHIBIT 12.2 A Strategic Contingency Model of Subunit Power

Sources: This figure is based on the detailed research work conducted by D.J. Hickson, C.R. Hinnings, C.A. Lee, R.E. Schneck, and J.M. Pennings, “A Strategic Contingency Theory of Intraorganizational Power,” Administrative Science Quarterly, June 1971, pp. 216–29; C.R. Hinnings, D.J. Hickson, J.M. Pennings, and R.E. Schneck, “Structural Conditions of Intraorganizational Power,” Administrative Science Quarterly, March 1974, pp. 22–44.

318 Part Three Group Behavior and Interpersonal Influence

in an organization typically acquire power. No subunit has zero centrality since all subunits are somehow interlinked with other subunits. A measure of centrality is the degree to which the work of the subunit contributes to the final output of the organization. Since a subunit is in a position to affect other subunits, it has some degree of centrality and there- fore power.

Also, a subunit possesses power if its activities have a more immediate or urgent impact than those of other subunits. For example, Ben Taub General Hospital is a major public hospital in Houston. The emergency and trauma treatment subunit is extremely important and crucial, and it contains significant power within the hospital. Failures in this subunit could result in the death of emergency victims. On the other hand, the psychiatric subunit does important work but not of the crucial and immediate type. Therefore, it has signifi- cantly less subunit power than the emergency and trauma treatment subunit.

Substitutability Substitutability refers to the ability of other subunits to perform the activities of a particular subunit. If an organization has or can obtain alternative sources of skill, information, and resources to perform the job done by a subunit, the subunit’s power will be diminished. Training subunits lose power if training work can be done by line managers or outside consultants. On the other hand, if a subunit has unique skills and competencies (e.g., the maintenance workers in Crozier’s study discussed earlier) that would be hard to duplicate or replace, this tends to increase the subunit’s power over other subunits.

Hickson et al. capture the importance of substitutability power when they propose that the lower the substitutability of the activities of a subunit, the greater is its power within the organization.30

Obedience and the Illusion of Power Admittedly, some individuals and subunits have vast amounts of power to get others to do things the way they want them done. However, there are also illusions of power. Imagine that one afternoon your supervisor asks you to step into his office. He starts the meeting: “You know we’re really losing money using that Beal stamping machine. I’d like you to do a job for the company. I want you to destroy the machine and make it look like an acci- dent.” Would you comply with this request? After all, this is your supervisor, and he is in charge of everything—your pay, your promotion opportunities, your job assignments. You might ask yourself, “Does my supervisor have this much power over me?”

Where a person or subunit’s power starts and stops is difficult to pinpoint. You might assume that the supervisor in the hypothetical example has the specific power to get some- one to do this unethical and illegal “dirty work.” However, even individuals who seemingly possess only a little power can influence others. A series of studies conducted by Milgram focused on the illusion of power. In these studies, subjects who had been voluntarily recruited thought they were administering electrical shocks of varying intensity to other subjects.31 Ostensibly the experiment was designed to study the effects of punishment on learning. In reality, the studies focused on obedience to authority. Exhibit 12.3 displays the surprising results.

At the experimenter’s direction, 26 of 40 subjects, or 65 percent, continued to increase the intensity of the shocks they thought they were administering to another person all the way to the maximum voltage even though the control panel indicated increasing voltage dosages as “intense,” “extreme,” “danger,” and “severe shock.” Additionally, screams could be heard coming from the booth, and the subject allegedly receiving the shock

substitutability The ability of various work units to perform the activities of other work units.

Chapter 12 Power and Politics 319

begged the experimenter to stop the project. Despite this, and even though the subjects were uncomfortable administering the shocks, they continued. Milgram stated:

I observed a mature and initially poised businessman enter the laboratory, smiling and confident; within 20 minutes he was reduced to a twitching, stuttering wreck, who was rapidly approaching a point of nervous collapse . . . yet he continued to respond to every word of the experimenter and obeyed to the end.32

Why did the subjects obey the experimenter? Although the experimenter possessed no specific power over the subjects, he appeared to be a powerful person. He created an illu- sion of power. The experimenter, dressed in a white lab coat, was addressed by others as “doctor” and was very stern. The subjects perceived the experimenter as possessing legiti- macy to conduct the study. The experimenter apparently did an excellent job of projecting the illusion of having power.

Another famous experiment demonstrated how powerful perceived power can be. In 1971, Philip G. Zimbardo conducted the Stanford Prison Experiment in which college students assumed the roles of prison guards and prisoners. While the simulation was origi- nally planned to last two weeks, it had to be stopped after only six days because the “guards” became sadistic and the “prisoners” became depressed and showed signs of extreme stress.33

The Milgram and Zimbardo experiments indicate that possessing power in a legitimate way is not the only way power can be exerted. Individuals who are perceived to have power

51 10 15 20 25

Sh oc

k- ge

ne ra

tin g v

olt ag

e a nd

de scr

ipt ion

(5)

(1)

(8)

(26)

Number of subjects for whom subject administered shock

Slight 15 – 60

Moderate 75 – 120

Strong 135 – 180

Very strong 195 – 240

Intense 255 – 300

Extreme 315 – 360

Danger 375 – 420

XXX 435 – 450

EXHIBIT 12.3 Results of Milgram’s Classic Experiment on Obedience

Source: Based on descriptions and data presented in S.  Milgram, “Behavioral Study of Obedience,” Journal of Abnormal and Social Psychology, October 1963, pp. 371–78.

320 Part Three Group Behavior and Interpersonal Influence

may also be able to significantly influence others. Power is often exerted by individuals who have only minimal or no actual power. The “eye of the beholder” plays an important role in the exercise of power.

Jim Clark, an engineer, Stanford professor, and real estate developer, has created an almost cultlike illusion of power in Silicon Valley. His ideas and his involvement with Netscape, WebMD, and Silicon Graphics have helped reshape entire industries. He was the idea person behind each of these three companies. For example, at Silicon Graphics, Clark invented 3-D chips, which gave the firm a technological lead over other makers of high- priced workstations.34 The chips allowed for the creation of the digital dinosaurs in the Oscar-winning hit movie Jurassic Park.

Clark grasped the commercial power of the Internet ahead of other geniuses. Few peo- ple had heard of a web browser, which Clark’s firm Netscape commercialized. Clark has taken his seemingly far-out ideas and has converted them into billions of dollars, making a lot of investors and employees very wealthy. His commercialization of ideas has created a halo about Clark. The illusion is that he has the Midas touch. A closer examination of his history and background illustrates a mystique and some myth surrounding Jim Clark.

Clark has experienced a variety of ups and downs as a result of being a player in the Internet revolution. For example, he has admitted to losing money in the formerly billion- dollar firm Healtheon. The company was created to bring the efficiencies of the Internet to the medical world. After a time, the company was folded into another one of Clark’s ven- tures, WebMD. Clark also has experienced mixed results with his investments in other Internet firms, including an online photography website, Shutterfly, and a financial ser- vices company, myCFO.35 Yet, Clark still has power to influence investors. The mention of his name in a deal creates a buzz and interest in being a part of the next Jim Clark idea and business.

Political Strategies and Tactics Individuals and subunits continually engage in politically oriented behavior.36 By politi- cally oriented behavior we mean a number of things: 1. Behavior that usually is outside the legitimate, recognized power system. 2. Behavior that is designed to benefit an individual or subunit, often at the expense of the

organization in general. 3. Behavior that is intentional and is designed to acquire and maintain power.

As a result of politically oriented behaviors, the formal power that exists in an organiza- tion often is sidetracked or blocked. In the language of organizational theory, political behavior results in the displacement of power.

Research on Politics A number of studies have been conducted to explore political behavior and perceptions in organizations. A study that assessed the political skill of about 700 employees suggested that political skill can be accurately broken down into four distinct factors: social astute- ness, interpersonal influence, networking ability, and apparent sincerity.37 A related study found that of these four factors, social astuteness (i.e., being sensitive to others) is the stron- gest predictor of supervisor ratings and leadership effectiveness.38 Being sensitive to the needs and feelings of others is an important survival skill in today’s office environment.

Another study of political behavior was conducted in the electronics industry in Southern California. A total of 87 managers (30 chief executive officers, 28 higher-level

Chapter 12 Power and Politics 321

staff managers, and 29 supervisors) were interviewed and asked about a number of aspects of organizational political behavior.39 Among other questions, the managers were asked to describe the personal characteristics of organizational members who were effective “politi- cians.” These characteristics are presented in Exhibit 12.4, along with the percentage of each group of managers who thought the characteristic was associated with effective polit- ical behavior.

A total of 13 characteristics were identified as being important, headed by articulate- ness, sensitivity, and social adeptness. As Exhibit 12.4 shows, there was a fairly high level of agreement between the three levels of managers on what characteristics were regarded as important.

The managers in the study described above were aware of political behavior because it was part of their organizational experiences. As the researchers noted, the study was not designed to either praise or criticize organizational political behavior. Instead, it was intended to show that politics is a fact of organizational life. Politics and political behavior exist in every organization. In the next section, we will briefly examine a couple of differ- ent ways that the study of political behavior, or “playing politics,” has been approached in organizations.

Game Playing Political behavior in organizations has been described by many researchers in terms of game playing. Henry Mintzberg has identified several political games played in organizations.40 These games, played at all organizational levels by both managers and nonmanagers, are intended to accomplish a variety of purposes. Games are played to (1) resist authority (the insurgency game); (2) counter the resistance to authority (the counterinsurgency game); (3) build power bases (the sponsorship game and coalition-building game); (4) defeat rivals (the line-versus-staff game); and (5) bring about organizational change (the whistle-blowing game).

Let’s look at one of Mintzberg’s games. The insurgency game is played to resist author- ity, and there are many different ways to play. For example, suppose a plant foreman is

Personal Characteristics

Combined Groups%

Chief Executive Officers%

Staff Managers% Supervisors%

Articulate 30 37 39 13 Sensitive 30 50 21 17 Socially adept 20 10 32 17 Competent 17 10 21 21 Popular 17 17 11 24 Extroverted 16 17 14 17 Self-confident 16 10 21 17 Aggressive 16 10 14 24 Ambitious 16 20 25 4 Devious 16 13 14 21 Organization person 13 20 4 14 Highly intelligent 12 20 11 3 Logical 10 3 21 7

EXHIBIT 12.4 Personal Characteristics of Effective Organizational Politicians

Source: Adapted from R.W. Allen, D.L. Madison, L.W. Porter, P.A. Renwick, and B.T. Mayes, “Organizational Politics: Tactics and Characteristics of Its Actors,” California Management Review, December 1979, p. 78.

322 Part Three Group Behavior and Interpersonal Influence

instructed to reprimand a particular worker for violating company policies. The reprimand can be delivered according to the foreman’s feelings and opinions about its worth and legitimacy. If the reprimand is delivered in a halfhearted manner, accompanied by a sly wink, it will probably have an effect very different from what was expected. Insurgency in the form of not delivering the reprimand as expected by a higher authority would be diffi- cult for that authority to detect and correct. Technically, the foreman followed orders. Practically, however, he resisted those orders.

Insurgency, along with the rest of Mintzberg’s games, is practiced in all organizations. Games are played within and between subunits, and they are played by individuals who are sometimes representing themselves and sometimes representing their units. It is unrealistic to assume that game playing can be eliminated. Even in the most efficient, profitable, pro- ductive, and responsible organizations, political games are being played.

Political Influence Tactics Influence is what playing politics is all about. Individuals and groups engage in political behavior to influence the perceptions or behaviors of other individuals and groups. Accord- ingly, the means or tactics used to accomplish this have been the focus of much research. One particularly interesting approach has been refined over a period of many studies by several different researchers.41 This research stream has identified nine specific tactics used by individuals to influence their superiors, co-workers, and subordinates to do what they wanted them to do. These tactics are: 1. Consultation. Used to gain your support for a course of action by letting you participate

in the planning for the action. 2. Rational persuasion. Used to convince you that a particular course of action is “logi-

cally” the best course because it is in your best interest. 3. Inspirational appeals. Used to gain support by appealing to your values or ideals, or by

increasing your confidence that the desired course of action will be successful. 4. Ingratiating tactics. Used to create a sense of obligation because someone is doing

something nice for you. Designed to make it difficult for you not to support the course of action desired by the ingratiator.

5. Coalition tactics. Used to gain your support by seeking the help of others to persuade you, or by using the support of others as an argument for you to also give your support.

6. Pressure tactics. Used to gain your support for a particular course of action through demands, intimidation, or threats.

7. Legitimating. Used to gain your support by claiming the authority to ask for your sup- port, or by claiming that such support is consistent with organizational policies or rules.

8. Personal appeals. Used to appeal to your feelings of loyalty and friendship to gain your support.

9. Exchange tactics. Used to gain your support by the promise that you will receive a reward or benefit if you comply, or by reminding you of prior favors you must now reciprocate. Not all these tactics are equally effective in bringing about desired results. Exhibit 12.5

shows the results from one study that assessed the effectiveness of each tactic. More than 500 cases involving the use of influence tactics were analyzed in terms of leading to one of three outcomes: 1. Commitment results when you agree internally with the decision, action, or request, are

enthusiastic about it, and are likely to exert unusual effort to carry out the request.

Chapter 12 Power and Politics 323

2. Compliance occurs when you carry out the request but are apathetic about it and make only a minimal effort to do it.

3. Resistance results when you are opposed to the request and try to avoid doing it.42

As can be seen from the exhibit, inspirational appeals and consultation were more effective than the rest of the tactics, with inspiration resulting in commitment 90  percent of the time it was used. On the other hand, legitimating, coalition, and pressure were less effective than the other tactics. Variables other than the type of influence tactic used can impact the success of the influence attempt. Even the use of a tactic such as pressure can sometimes result in commitment. Likewise, any tactic may result in resistance if it is used in an unskillful manner or if the request being made is clearly objectionable.43

In a meta-analysis of how influence tactics relate to work outcomes, researchers ana- lyzed 31 studies that were conducted between 1973 and 2000.44 These studies were com- bined into one overall study to answer several questions related to employees’ use of influence tactics:

1. Do influence tactics result in higher performance assessments from supervisors? 2. Do employees who use influence tactics receive more pay raises and promotions? 3. Which influence tactics are most effective?

The researchers reported that those individuals who use ingratiating behaviors and who use logic to convince others of a particular course of action have a greater chance of succeeding at their careers than do those who do not use those tactics. Ingratiating and rational persuasion tactics have a stronger impact in terms of higher performance assess- ments (as opposed to pay raises and promotions) because supervisors have control over the employee’s performance assessment but often have little influence over pay raises and promotions. These latter outcomes are more related to the organization’s financial situation and market conditions.

Interestingly, the researchers noted that an individual’s use of pressure tactics resulted in both positive and negative outcomes. Their use had a negative effect on the individual’s supervisory assessment but a positive effect on the employee’s receipt of pay and promotions. It appears that individuals who aggressively seek out and ask for pay increases and promotions are more likely to receive them. However, those same behaviors are likely to lead the individual’s supervisor to give lower performance assessments.

Outcomes

Influence Tactic Resistance% Compliance% Commitment%

1. Consultation 18 27 55 2. Rational persuasion 47 30 23 3. Inspiration 0 10 90 4. Ingratiation 41 28 31 5. Coalition 53 44 3 6. Pressure 56 41 3 7. Legitimating 44 56 0 8. Personal appeals 25 33 42 9. Exchange 24 41 35

EXHIBIT 12.5 Frequency of Outcomes for the Use of Political Influence Tactics

Source: Adapted from Cecilia M. Falbe and Gary Yukl, “Consequences for Managers of Using Single Influence Tactics and Combinations of Tactics,” Academy of Management Journal, August 1992, p. 647.

324 Part Three Group Behavior and Interpersonal Influence

Impression Management Impression management refers to the actions individuals take to control the impressions that others form of them.45 Impression management is universal. Employers do it, as do employees; students do it with professors and professors do it with students; parents and children do it with each other. Research suggests that a significant part of behavior in orga- nizations is motivated by the desire of organization members to be perceived by others in certain ways.46 Virtually everyone makes a deliberate effort in some situations to create a desirable impression. Some of the political influence tactics discussed in the previous section represent attempts at impression management. Consultation, for example, is used to create the impression that you are participative and that you want, value, and respect input from the person you are trying to influence. Ingratiation is designed to project an impres- sion of you as a nice, thoughtful, or friendly person.

Impression management has increasingly gained the attention of organizational researchers. The desire to present ourselves in the best possible light when the stakes are high is a widely held desire. Effective impression management can be quite useful. An obvious example is the use of impression management tactics during the employment interview.47 For example, a recent research study found that interviewees who used self- promotion techniques were more likely to receive higher scores on interviews.48 It could be argued that at no time is successful impression management more important; if you fail to create a favorable impression, you’re not likely to be offered the job!

After reviewing 20 years of research on impression management behaviors, researchers found that effectively managing the way others see us is linked to a variety of favorable outcomes not just in job interviews, but also in performance appraisals and overall career success.49 These researchers identified and organized 31 impression management tactics that can result in either good or bad effects to an individual’s image.50 For example, an employee might use self-promotion during an interview to receive a job offer. Alterna- tively, an employee who uses intimidation to convince his or her teammates to pursue a certain approach to a project is likely to hurt his or her image as a team player.

Impression management does not necessarily imply that a false impression is being conveyed. Clearly, some impressions are designed to mislead. Creating blatantly false impressions, however, can damage your credibility and reputation.

Many impression management tactics are designed to emphasize the positive. Self- promotion, such as acclaiming your accomplishments, is an example. Flattering others is another example. Other impression management tactics may be aimed at reducing nega- tives. Providing an excuse for why you made a mistake, for example, may be designed to further the impression that the error was beyond your control. Or simply admitting responsibility for the mistake may be designed to demonstrate willingness to take respon- sibility. Former financial investor Bernie Madoff was an expert at deceiving his clients until his $65 billion Ponzi scheme was discovered; leading to his arrest and eventual incarceration.51

One very effective impression management technique, self-handicapping, is designed to make the best of an as yet undetermined outcome. Self-handicapping refers to any action taken in advance of an outcome that is designed to provide either an excuse for failure or a credit for success. A self-handicap provides a persuasive causal explanation for potential failure, while setting the stage for the individual to receive more credit for success than would otherwise be the case.52 For example, a quarterback who lets every- one know about his sore arm is not expected to have a good game. If he plays poorly, everyone attributes it to his sore arm rather than his ability or lack of effort; if he does well, he did so despite his handicap, suggesting truly extraordinary ability or effort.

impression management A political strategy that refers to actions individuals take to control the impressions that others form of them.

self-promotion An impression management tactic whereby individuals communicate their accomplishments to appear able and competent.

intimidation An impression management tactic whereby individuals use threats and harassment to appear powerful.

self-handicapping Any action taken in advance of an outcome that is designed to provide either an excuse for failure or a credit for success.

Chapter 12 Power and Politics 325

The employee who reports being up all night with a sick child on the day of a scheduled presentation to management is another example. If the presentation goes poorly, there is a reason beyond the employee’s control; if it goes well, the employee excelled under adverse conditions.

Ethics, Power, and Politics Issues of power and politics often involve ethical issues as well. For example, if power is used within the formal boundaries of a manager’s authority and within the framework of organizational policies, job description, procedures, and goals, it is really nonpolitical power and most likely does not involve ethical issues. When the use of power is outside the bounds of formal authority, policies, procedures, job descriptions, and organizational goals, it is political in nature. When this occurs, ethical issues are likely to be present. Some examples might include bribing government officials, lying to employees and customers, polluting the environment, and a general “ends justify the means” mentality. This chapter’s You Be the Judge discusses whether business schools can teach ethics to their students.

Managers confront ethical dilemmas in their jobs because they frequently use power and politics to accomplish their goals. Each manager, therefore, has an ethical responsibility.

Y O U B E T H E J U D G E

CAN BUSINESS SCHOOLS TEACH ETHICS? Easy credit, bankers’ relaxed attitude toward risk, predatory lending practices, and the failure of regulators to intervene are all major causes of the latest financial crisis. However, according to John C. Bogle, founder and former CEO of the Vanguard Group of Mutual Funds, more rudimentary underlying causes of the worldwide financial crisis were that “self-interest got out of hand” and “unchecked market forces overwhelmed traditional standards of professional conduct, developed over centuries.” Bogle is placing part of the blame for our current crisis on un- ethical leadership, poor decision making, and/or outright greed. Should business schools in the United States share in the blame? The issue at hand is whether business schools have a responsi- bility—and the ability—to teach ethical behavior to business stu- dents. This is not a new concept. Recent research suggests that a large majority of top MBA programs require students to study ethics or corporate social responsibility as part of their curricula. Harvard Business School offered its first business ethics course— “Social Factors in Business Enterprise”—nearly 100 years ago. Keeping pace with this tradition, starting in January 2004, Harvard Business School has required all students to take the ethics course “Leadership, Governance, and Accountability.” In 2009, Harvard business students took it a step further and created (and signed) the “MBA Oath,” which states that graduates will act ethically and refrain from pursuing greed at others’ expense.

Other schools, like Indiana University’s Kelley School of Busi- ness, are also taking steps to ensure that their students abide by ethical standards. Students of the Kelley School of Business must follow a 20-page code of conduct that prohibits cheating, fabri- cation, and plagiarism, while promoting professional conduct with recruiters.

Experts and professors differ in their opinions regarding whether ethical behavior can be taught. Some believe that stu- dents’ values are already formed and that no amount of classroom training will make an individual behave ethically. Others believe that by educating students on the severe consequences of unethi- cal business decisions, such teaching will help deter unethical behavior in the future. For example, at the Tuck School of Business at Dartmouth College, students attend a panel that features an ex-convict who was involved in a $100 million fraud.

Should business schools require all students to take a specific ethics course? Or is it better to add an ethics component to all required courses, like accounting, management, and marketing? You be the judge!

Sources: W. Pavlo, “An MBA’s Thoughts on Being Taught Ethics,” Forbes, January 13, 2014, http://www.forbes.com; John C. Bogle, “A Crisis of Ethic Proportions,” The Wall Street Journal, April 21, 2009, http://www.wsj.com; Michael Jacobs, “It’s about Getting a Better Job: Students Say Their Motivation for Taking an MBA Has Stayed Consistent for the Best Part of a Decade,” Financial Times, June 8, 2009, http://www.ft.com.

326

USING A DECISION TREE FOR ETHICAL BEHAVIOR Political behavior is pervasive. As the text indicates, such behavior is inherently neither good nor bad. In determining whether a particular choice of behaviors is ethical or unethical, based on the criteria discussed in the text, a manager might find the following decision tree useful.

Application of this decision-tree approach is certainly not a panacea. There may be situations in which one or more of these criteria cannot

be employed or in which there is a conflict among criteria. Making the ethically correct political behavior choice is neither always easy nor always possible. However, models such as this one can be of assis- tance to managers in their decision making.

Sources: Constance E. Bagley, “The Ethical Leader’s Decision Tree,” Harvard Business Review, https://hbr.org, accessed May 4, 2016; G.F. Cavanagh, D.J. Moberg, and M. Velasquez, “The Ethics of Organizational Politics,” Academy of Management Review, July 1981, p. 368.

O B M A T T E R S

No

No

No

Yes

Yes

Yes

No

No

No

Yes

Yes

Yes

Does the PBA respect the rights of all the affected parties?

Does the PBA (political behavior alternative) result in optimization of the satisfaction of interests inside and outside the organization?

Does the PBA respect the rules of justice?

Are there overwhelming factors that justify suboptimizing these goals and satisfactions?

Are there overwhelming factors that justify not respecting a right?

Are there overwhelming factors that justify the violation of a rule of justice?

Reject PBA

Reject PBA

Reject PBAAccept PBA

Chapter 12 Power and Politics 327

Researchers have developed a framework that allows a manager to integrate ethics into political behavior. These researchers recommend that a manager’s behavior must satisfy certain criteria to be considered ethical.53

1. Utilitarian outcomes. The manager’s behavior results in optimization of satisfaction of people inside and outside the organization. In other words, it results in the greatest good for the greatest number of people.

2. Individual rights. The manager’s behavior respects the rights of all affected parties. In other words, it respects basic human rights of free consent, free speech, freedom of conscience, privacy, and due process.

3. Distributive justice. The manager’s behavior respects the rules of justice. It does not treat people arbitrarily but rather equitably and fairly. What does a manager do when a potential behavior cannot meet the three criteria?

The behavior may still be considered ethical in the particular situation if it passes the crite- rion of overwhelming factors. To justify the behavior, it must be based on tremendously overwhelming factors in the nature of the situation, such as conflicts among criteria (e.g., the manager’s behavior yields both positive and negative results), conflicts within the criteria (e.g., a manager uses questionable means to achieve a positive result), or an inability to employ the first three criteria (e.g., the manager acts with incomplete or inaccurate informa- tion). The OB Matters presents a decision-tree approach to the application of these criteria.

With the increased emphasis on empowerment, ethical issues are even more preva- lent. In an empowered organization where decisions are forced down to the lowest levels, employees need to understand the importance of being constantly aware of the ethical implications of what they do.54 Many companies like Marriott International, Kellogg, Wipro (India), and H&M (Sweden) are instituting ethics training programs to assist newly empowered employees in making ethical decisions. For example, Marriott Inter- national expects its more than 180,000 employees to consult the Business Conduct Guide, which is available to its global workforce in multiple languages. In addition, the Marriott has initiated a business hotline to encourage employees to continue the compa- ny’s “tradition of integrity” by reporting business conduct policy violations. Marriott also adheres to a “no retaliation” policy, which means employees who report a possible ethics or business conduct violation in good faith cannot be subject to any type of adverse employment action.55

Using Power to Manage Effectively Nothing gets done in any organization until someone makes it happen. Making the right things happen is what a manager’s job is all about.56 To be effective a manager must suc- cessfully influence the activities of other organizational members. As we pointed out at the start of this chapter, influence requires the exercise of power. To influence successfully, power must be used effectively. Organizational theorist and researcher Jeffrey Pfeffer has identified several important considerations in using power to manage effectively. We close this chapter with a look at Pfeffer’s conclusions in this regard:57

Recognize that there are multiple interests in nearly every organization. Not everyone has the same interests, and not everyone’s interests are necessarily compatible with yours. It is important to understand the organization’s political landscape by knowing what inter- ests exist and to whom they belong.

Know what position relevant individuals and groups hold with respect to issues impor- tant to you. When this perspective is different from yours it is also important to understand

328 Part Three Group Behavior and Interpersonal Influence

the basis for the difference. It is much easier to influence those who agree with us than it is to affect the behavior of those who do not. Knowing why someone’s perspective is differ- ent from yours makes the task of exercising influence easier. Understanding why subordi- nates dislike a new incentive pay plan, for example, affords you a better opportunity to diagnose how they are likely to respond to different attempts you might make to sell them on the plan’s merits.

Understand that to get things done you must have power, and in the case of those who oppose you, you must have more power than they do. This means it is essential that you know where power comes from and how these sources of power can be nurtured. It is important to recognize that there is nothing wrong with the acquisition and use of power if it is done in a professional and ethical manner. However effective you are as a manager, increasing your influence will further increase your effectiveness.

Finally, recognize the strategies and tactics through which organizational power is developed and used. This includes understanding the importance of timing, the use of the organization’s structure, and the various forms of interpersonal power. As Pfeffer concludes, “We need to understand strategies and tactics of using power so that we can consider the range of approaches available to us, and use what is likely to be effective.”58

An organizational member does not have to be in a formal leadership position to possess or use power. Having and using power, however, is an integral part of leadership. In this chapter, we have examined the relevant aspects of power. In the chapters that follow, we turn our attention to the organizational processes of communication, decision making, and leadership.

CAN BUSINESS SCHOOLS TEACH ETHICS? There is considerable debate inside and outside business schools regarding whether (and how) ethics can be taught to college stu- dents who have long passed the “formative years.” As the debate continues, many schools are offering ethics both as stand-alone courses and as supplements to other business courses (e.g., ethical decision making in accounting). Students at the Haas School of Business at the University of California at Berkeley, at the University of Maryland, and at Pepperdine University have the opportunity to interact with convicted white- collar criminals in the hope that the students will learn from these individuals’ mistakes. A comprehensive ethics course at the University of California at Irvine evaluates the ethical, financial, and legal actions that contributed to Enron’s demise.

Many ethics experts agree that if a course or supplement is offered to college students, it requires instructors who have re- ceived adequate training in cases, theories, and other pedagogi- cal tools designed to convey a thorough grounding in ethical issues and decision making. Also, any instructor who plans on designing a course in ethics should address the following issues. (1) What are the objectives and learning outcomes of the course? (2) What kind of learning environment is necessary? (3) What

learning processes need to be used to achieve the outcomes? (4) What are the roles of the students in the learning experience?

In sum, teaching ethics in business schools is a challenging, but meaningful, goal that should be considered by university administration and faculty. Whether done as a stand-alone course or an integrated module to functional courses, proper training and pedagogical tools for instructors can increase the overall effectiveness of these courses.

Sources: Organization website, “MBA Oath: Responsible Value Creation,” http://mbaoath.org, accessed May 4, 2016; Rodrigo Canales, B. Cade Massey, and Amy Wrzesniewski, “Ethics: Promises Aren’t Enough, Business Schools Need to Do a Better Job of Teaching Students Values,” The Wall Street Journal, August 23, 2010, p. R.4; Carolyn Y. Nicholson and Michelle DeMoss, “Teaching Ethics and Social Responsibility: An Evaluation of Undergraduate Business Education at the Discipline Level,” Journal of Education for Business 84, no. 4 (2009), pp. 213–18; Lisa Jones Christensen, Ellen Peirce, Laura P. Hartman, W. Michael Hoffman, Jamie Carrier, “Ethics, CSR, and Sustainability Education in the Financial Times Top 50 Global Business Schools: Baseline Data and Future Research Directions,” Journal of Business Ethics 73, no. 4 (2007), pp. 347–68; Ronald R. Sims and Edward L.  Felton, Jr., “ Designing and Delivering Business Ethics Teaching and Learning,” Journal of Business Ethics 63, no. 3 (February 2006), pp.  297–312; and Mark C. Baetz and David J. Sharp, “Integrating Ethics Content into the Core Business Curriculum: Do Core Teaching Materials Do the Job?” Journal of Business Ethics 51, no. 1 (April 2004), pp. 53–62.

Y O U B E T H E J U D G E C O M M E N T

Chapter 12 Power and Politics 329

Summary of Key Points

∙ Power is the capability one party has to affect the actions of another party. Influence is a transaction in which one party induces another party to behave in a certain way. Another way of making the distinction is to think of power as the potential to influence, and influence as power in action.

∙ French and Raven introduced the notion of five interpersonal power bases: legitimate (position based), reward, coercive (punishment based), expert, and referent (charis- matic). These five bases can be divided into two major categories: organizational and personal. Legitimate, reward, and coercive power are primarily prescribed by an organi- zation, while expert and referent power are based on personal qualities.

∙ Organizational structure creates power by specifying certain individuals to perform certain tasks. Three important forms of structural power include (1) access to resources, (2) ability to affect decision-making processes, and (3) having access to relevant and important information.

∙ Powerlessness occurs when an individual has little or no access to the bases of interper- sonal or structural power. Empowerment refers to a process whereby conditions that contribute to powerlessness are identified and removed. Two important factors in empowerment are helping organizational members feel confident about their ability to perform well and increasing the linkages between effort and performance.

∙ The strategic contingency approach addresses subunit power. A strategic contingency is an event or activity that is extremely important for accomplishing organizational goals. The strategic contingency factors that have been disclosed by research include coping with uncertainty, centrality, and substitutability.

∙ Individuals with very little or no real power may still influence others because they appear to be powerful. This is the illusion of power that was clearly illustrated in the Milgram experiments on obedience.

∙ Frequently used influence tactics include consultation, rational persuasion, inspirational appeals, ingratiating tactics, coalition building, use of pressure, legitimating, personal appeals, and exchange tactics. A particularly important and frequently used tactic is that of impression management.

∙ A manager’s behavior should satisfy certain criteria to be considered ethical. These include the (1) criterion of utilitarian outcomes (the greatest good for the greatest num- ber); (2) criterion of individual rights (respecting rights of free consent, speech, privacy, and due process); and (3) criterion of distributive justice (respecting the rules of justice).

∙ Using power to manage effectively means (1) recognizing that there are multiple inter- ests in every organization, (2) knowing what position others hold with respect to issues important to you, (3) understanding that getting things done requires having and using power, and (4) recognizing the strategies and tactics through which organizational power is developed and used.

1. Think about a previous job you have held. Which, if any, were the sources of your power? Did you attempt to increase your power? If so, how?

2. What is meant by the term empowerment? Why is empowerment a concept that is resisted by some and rejected by others?

3. What is your opinion regarding whether ethics should be taught in business schools? Why or why not?

Review and Discussion Questions

4. Assume that the printing process is a strategic contingency for a publishing company, and that only one group of employees knows how to operate the printing press. How could the environment be changed to more evenly balance power within the printing department?

5. How the illusion of power can be just as effective as actual power was clearly illus- trated in the “obedience to authority” experiments conducted by Milgram. Can you think of other examples where people have responded to the illusion of power? Does this happen in organizations?

6. Political games are played at all organizational levels by both managers and nonman- agers. Identify the purposes for which these games are played.

7. A number of frequently used influence tactics were discussed in the text. How many have you witnessed being used in organizations of which you were a member? What other tactics have you seen used?

8. The use of power and politics often involves ethical issues. What are the criteria that may be used to determine the extent to which a manager’s behavior is ethical? Are there ever legitimate exceptions to these criteria?

9. Which power would you prefer to develop for yourself: expert power or legitimate power? What are the advantages and disadvantages of each of these sources of power? Explain.

10. When was the last time you engaged in impression management? Was it effective? Why or why not? How might you use impression management to get a promotion? To receive a better grade in a course?

Step 1 Complete the following questionnaire. For each of the following items, select the alternative with which you feel more comfortable. While for some items you may feel that both (a) and (b) describe you or neither is ever applicable, you should select the alternative that better describes you most of the time. 1. When I have to give a talk or write a paper, I . . .

a. Base the content of my talk or paper on my own ideas.

b. Do a lot of research, and present the findings of others in my paper or talk.

2. When I read something I disagree with, I . . . a. Assume my position is correct. b. Assume what’s presented in the

written word is correct.

3. When someone makes me extremely angry, I . . . a. Ask the other person to stop the

behavior that is offensive to me. b. Say little, not quite knowing

how to state my position. 4. When I do a good job, it is important to me

that . . . a. The job represents the best I

can do. b. Others take notice of the job

I’ve done. 5. When I buy new clothes, I . . .

a. Buy what looks best on me. b. Try to dress in accordance with

the latest fashion. 6. When something goes wrong, I . . .

a. Try to solve the problem. b. Try to find out who’s at fault.

Exercise

Exercise 12.1: Empowerment Profile

330 Part Three Group Behavior and Interpersonal Influence

331

Reality Check Now how much do you know about power, politics, and empowerment?

6. Which of the following factors is not one of the three most important personal characteristics of organizational politicians? a. Articulateness b. Logical thought c. Sensitivity d. Social adeptness

7. Consultation, ingratiating tactics, and personal appeals are all known as tactics. a. political influence b. developmental c. devil’s advocate d. compliance

8. True or false: Self-promotion and intimidation are two types of impression management tactics. a. True b. False

9. True or false: Referent power is based on a subordinate’s identification with a superior. a. True b. False

10. A lower-level employee can build his or her power by developing special skills and knowledge that are highly valued within the department or organization. a. legitimate b. reward c. coercive d. expert

REALITY CHECK ANSWERS

Before After

1. d 2. b 3. a 4. b 5. d 6. b 7. a 8. a 9. a 10. d Number Correct Number Correct

7. As I anticipate my future, I . . . a. Am confident I will be able to

lead the kind of life I want to lead. b. Worry about being able to live

up to my obligations. 8. When examining my own resources and capaci-

ties, I . . . a. Like what I find. b. Find all kinds of things I wish

were different. 9. When someone treats me unfairly, I . . .

a. Put my energies into getting what I want.

b. Tell others about the injustice.

10. When someone criticizes my efforts, I . . . a. Ask questions to under -

stand the basis for the criticism.

b. Defend my actions or decisions, trying to make my critic understand why I did what I did.

11. When I engage in an activity, it is very important to me that . . .

a. I live up to my own expectations.

b. I live up to the expectations of others.

332 Part Three Group Behavior and Interpersonal Influence

12. When I let someone else down or disappoint them, I . . .

a. Resolve to do things differently next time.

b. Feel guilty, and wish I had done things differently.

13. I try to surround myself with people . . . a. Whom I respect. b. Who respect me.

14. I try to develop friendships with people who . . . a. Are challenging and exciting. b. Can make me feel a little safer

and a little more secure. 15. I make my best efforts when . . .

a. I do something I want to do when I want to do it.

b. Someone else gives me an assignment, a deadline, and a reward for performing.

16. When I love a person, I . . . a. Encourage him or her to be free

and choose for himself or herself.

b. Encourage him or her to do the same thing I do and to make choices similar to mine.

17. When I play a competitive game, it is important to me that I . . .

a. Do the best I can. b. Win.

18. I really like being around people who . . . a. Can broaden my horizons and

teach me something. b. Can and want to learn from me.

19. My best days are those that . . . a. Present unexpected opportunities. b. Go according to plan.

20. When I get behind in my work, I . . . a. Do the best I can and don’t

worry. b. Worry or push myself harder

than I should.

Step 2 Score your responses as follows: ∙ Total your (a) responses: ∙ Total your (b) responses:

Step 3 Discussion. In small groups or with the entire class, an- swer the following questions: 1. What did you learn about yourself? 2. Would your closest friend agree with the scores or

the scoring for (a) and (b)? 3. How could an organization use information gath-

ered from this type of empowerment profile? Source: “The Empowerment Profile” from The Power Handbook by Pamela Cuming, © 1980. Reprinted with permission.

Exercise

Exercise 12.2: How Political Are You? Mark each of the following statements either mostly true or mostly false. In some instances, “mostly true” refers to “mostly agree,” and “mostly false” refers to

“mostly disagree.” We are looking for general tenden- cies, so don’t be concerned if you are uncertain as to the more accurate response to a given statement.

Mostly True Mostly False 1. I would stay late in the office just to impress my boss. 2. Why teach your subordinates everything you know about your job?

One of them could then replace you. 3. I have no interest in using gossip to personal advantage. 4. Be extra careful about ever making a critical comment about your firm,

even if it is justified. 5. I would go out of my way to cultivate friendships with powerful people.

Chapter 12 Power and Politics 333

Mostly True Mostly False 6. I would never raise questions about the capabilities of my competition.

Let his or her record speak for itself. 7. I am unwilling to take credit for someone else’s work. 8. If I discovered that a co-worker was looking for a job, I would inform my boss. 9. Even if I made only a minor contribution to an important project, I would get my

name listed as being associated with that project. 10. There is nothing wrong with tooting your own horn. 11. My office should be cluttered with personal mementos, such as pencil holders

and decorations, made by my friends and family. 12. One should take action only when one is sure that it is ethically correct. 13. Only a fool would publicly correct mistakes made by the boss. 14. I would purchase stock in my company even though it might not be a good

financial investment. 15. Even if I thought it would help my career, I would refuse a hatchet-man

assignment. 16. It is better to be feared than loved by your subordinates. 17. If others in the office were poking fun at the boss, I would decline to join in. 18. To get ahead, it is necessary to keep self-interest above the interests of the

organization. 19. I would be careful not to hire a subordinate who might outshine me. 20. A wise strategy is to keep on good terms with everybody in your office even if

you don’t like everyone.

Source: From Winning Office Politics, by Andrew J. DuBrin, Copyright © 1990 by Prentice-Hall, Inc. Used by permission of Portfolio, an imprint of Penguin Group (USA) Inc.

Facebook, with an estimated 1.6 billion monthly active users worldwide, SnapChat, with 150 million active users across the globe, and Twitter, with more than 310 million monthly U. S. users, are three of the most popular social networking sites around the world. These companies state that they do not distribute users’ infor- mation to third parties. However, advocacy groups concerned about online privacy rights and some users are increasingly wary about how these and other networking sites might be using and whether they are adequately protecting personal information. A common source of discomfort is whether users’ personal infor- mation will be used to generate targeted ads directed at them. A recent manifestation of this wariness occurred in 2009, after Mark Zuckerberg, CEO of Facebook, quietly changed the terms of use that govern how and for how long Facebook can use users’ information posted to the popular website. About two weeks later, the

consumer-advocacy blog Consumerist.com highlighted that the change in user policy would allow Facebook to continue to use information posted by users for market- ing, promotional, or other purposes even after users had deleted the information from their Facebook accounts. Consumerist.com stated that the change in policy would allow Facebook to do anything it wanted with posted content, for as long as it wanted (even after a user closed his or her Facebook account). Following this realization, many users and consumer privacy advocacy groups railed against the change in terms of use at Facebook. Presumably as a result of the public’s reaction, Zucker- berg declared two weeks after the initial change that the company would return to its original terms of use while the feedback was analyzed. Zuckerberg announced that the company would work on a major revision of the terms and invited users to provide ideas on its website: “Facebook Bill of Rights and Responsibilities.”

Case

Case 12.1: The Power and Politics of Privacy on Social Networking Sites

334 Part Three Group Behavior and Interpersonal Influence

This wasn’t the first time that Facebook experienced problems related to user privacy. In November 2007, Facebook launched an advertising program, Beacon, that was developed to track the purchasing and other ac- tivities of Facebook users on 44 websites and then send notifications of these activities to the users’ friends on Facebook. For example, if a user made an online pur- chase of a book on one of the 44 websites, this would act as an indirect referral to his or her friends on Facebook, which might spur additional purchases of the book. The problem started when a senior research engi- neer from a Palo Alto–based antispyware company, CA Inc., discovered that Beacon was also “tracking the ac- tivities of both members and nonmembers on Facebook and partner sites.” Moreover, the program was set up in such a way that a message would be sent to a user’s friends automatically unless the user figured out how to change his or her preferences on the Facebook website. Within two months of rolling out the Beacon software, CEO Zuckerberg apologized for how the rollout was handled and took steps to increase users’ privacy related to their activities on the partner sites.

Zuckerberg is at the cutting edge of the intersection between technology and online privacy. In a recent blog post, he complained that his Facebook users can be inconsistent; on one hand, they want continually ex- panded services (e.g., more relevant ads and informa- tion about their friends), but on the other hand, they expect that their privacy will be protected and their in- formation will not be shared with outside advertisers and third parties.

The battle over online privacy does not stop with social networking websites in the United States. Social network users in the 28-nation European Union are protected by strict privacy laws. The regulations “require websites to warn users of privacy risks and limit the sites’ ability to target advertising based on members’ race, religion or other sensitive categories.” In the United Kingdom, privacy activists have reacted to Google’s announcement that it would use “behav- ioral targeting” to generate display advertising when search results appear on users’ screens. And the British government recently announced it awarded contracts to seven companies to monitor social media platforms including Facebook, Twitter, LinkedIn, and other blogs to track keywords, hashtags, and phrases used

on these sites—particularly during “crisis situations” or events of heightened public interest.

In sum, the debate over online privacy is not going away anytime soon. Several politically influential and powerful stakeholders with different priorities have a stake in the outcome: Users want their personal informa- tion protected; social networking companies want to use personal information to generate advertising revenue; advertising firms want to target their products/services to specific market segments; privacy advocacy groups want to limit the disclosure of users’ personal informa- tion; technology companies want to facilitate greater in- formation sharing; and governments want to monitor networking websites for signs of malevolent activities.

Questions 1. What is your opinion regarding these online privacy

issues? To what extent are you concerned about how your personal information on websites such as Facebook, Twitter, or Google is used? Explain.

2. Looking back at the section on “political influence tactics” in this chapter, which tactics did Facebook’s CEO Mark Zuckerberg use after he changed the original terms of use in 2009? Describe.

3. Of the stakeholders listed in the last paragraph of the case, which group do you think is most powerful in terms of shaping the future direction of online privacy issues? Explain.

Sources: Written by Robert Konopaske of Texas State University and adapted from “Leading Social Networks Worldwide as of April 2016,” Statista, http://www.statista.com, accessed May 5, 2016; “Top 15 Most Popular Social Networking Sites in US: May 2016,” The eBusiness Guide, http://www.ebizmba.com, accessed May 5, 2016; Mark Scott, “Europe Approves Tough New Data Protection Rules,” The New York Times, December 15, 2015, http://www.nytimes.com; Katie Collins, “Government Pays Companies to Monitor You on Social Media,” Wired UK, June 8, 2015, http://www.wired.co.uk; Matthew Dalton, “EU Lays Out Web Privacy Rules,” The Wall Street Journal, June 24, 2009, p. B8; Richard Waters, “Facebook Politics,” Financial Times, April 28, 2009; Maija Palmer, “ Online Privacy,” Financial Times, March 27, 2009, p. 8; Frank Hayes, “About Face,” Computerworld 43, no. 8 (February 23, 2009), p. 40; Jessica E. Vascellaro, “Facebook Performs About-Face on Data,” The Wall Street Journal, February 19, 2009, p. B6; Randall Rothenberg, “ Facebook’s Flop,” The Wall Street Journal, December 14, 2007, p. A21; Heather Havenstein and Jaikumar Vijayan, “Facebook Fiasco May Lead to Closer Look at Online Privacy Issues,” Computerworld, December 10, 2007, p. 11; Kevin Allison, “Facebook in Apology over Controversial Ad Technology,” Financial Times, December 6, 2007, p. 26.

13. COMMUNICATING EFFECTIVELY

14. DECISION MAKING

15. LEADERSHIP

The real leader has no need to lead—he is content to point the way.

Henry Miller, The Wisdom of the Heart (1941)

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Communicating, like the process of decision making discussed in the next chapter, pervades everything that all organizational members—particularly managers—do. The managerial functions of planning, organizing, leading, and controlling all involve com- municative activity. In fact, communication is an absolutely essential element in all organizational processes.

Communication is the glue that holds organizations together. Communication assists orga- nizational members to develop long-range strategic plans, respond to changes in the organiza- tional environment, manage internal talent, goals, and engage in virtually all organizationally relevant behaviors. Yet, as important as this process is, breakdowns in communication are pervasive. This idea was demonstrated frequently by Michael Scott (played by actor Steve Carell) who was the kind-hearted, but bumbling boss on NBC’s The Office.1 We have all failed at communication from time to time; whether fumbling for the right words when asking your supervisor for a raise or having a negative exchange with a co-worker over something you wrote in a text message to him or her. Improving our ability to communicate effectively should be a top priority. Great communicators can achieve great things!

Organizations that foster communication among employees and managers are more likely to be effective. For example, in many companies, new-employee orientation programs represent the first important opportunity to begin the process of effective communication with employees. At Marriott International, the worldwide hotel and resort chain, 40 percent of new employees who leave the organization do so during the first three months on the job. At least that had been true historically. Recently, the rate of departures has been significantly reduced because Marriott has embarked on a con- certed effort to improve the content and manner in which it communicates with new

Communicating Effectively Learning Objectives

After completing Chapter 13, you should be able to:

Explain the elements in the communication process.

Compare the major directions of communication within organizations.

Discuss why face-to-face is a richer information medium than e-mail.

Summarize how technology is changing the way individuals communicate in organizations.

Describe the role played by interpersonal communication in organizations.

Give examples of differences in the way cultures communicate.

Identify significant barriers to effective communication.

Suggest ways in which communication in organizations can be improved.

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employees during orientation. In addition to formally providing more information, each new employee is assigned a “buddy” who serves as a vital communication link to which the newcomer has unrestricted access. Marriott helps ensure that its frontline service personnel communicate effectively with their guests by first ensuring that Marriott communicates effectively with its employees, starting from their very first day on the job.

It would be extremely difficult to find an aspect of a manager’s job that does not involve communication. Serious problems arise when directives are misunderstood, when exces- sive kidding in a work group leads to anger, or when informal remarks by a top-level man- ager are distorted. Each of these situations is a result of a breakdown somewhere in the communication process.

Accordingly, the pertinent question is not whether managers engage in communication because communication is inherent to the functioning of an organization. Rather, the perti- nent question is whether managers will communicate well or poorly. In other words, com- munication itself is unavoidable in an organization; however, effective communication could be lacking. Every manager must be a communicator. In fact, everything a manager does communicates something in some way to somebody or some group, but with what effect? While this may appear an overstatement at this point, it will become apparent as you proceed through the chapter. Despite the tremendous advances in communication and information technology, communication among people in organizations leaves much to be desired.2 It is a process that occurs within people.

Reality Check How much do you know about communication?

1. Communication that flows across functions in an organization is known as __________ communication. a. multipurpose b. cross-functional c. horizontal d. Both a and b are correct.

2. True or false: Nonverbal messages can be influenced by the gender and race of the sender of these messages. a. True b. False

3. ____________ refers to the amount of information that can be transmitted or communicated in an effective manner. a. Information loading b. Data allocation c. Message enlargement d. Information richness

4. True or false: The grapevine is a formal communications channel in organizations. a. True b. False

5. In the model of human communication, which of the following factors can distort the intended message? a. Information b. Rumors c. Spam d. Noise

Chapter 13 Communicating Effectively 339

The Communication Process Communication experts tell us that effective communication is the result of a common understanding between the communicator and the receiver. In fact, the word communica- tion is derived from the Latin communis, meaning “common.” The communicator seeks to establish a “commonness” with a receiver. Hence, we can define communication as the transition of information and understanding through the use of common symbols from one person or group to another. The common symbols may be verbal or nonverbal. You will see later that in the context of an organizational structure, information can flow up and down (vertical), across (horizontal), and down and across (diagonal).

The most widely used contemporary model of the process of communication has evolved mainly from the work of Shannon, Weaver, and Schramm.3 These researchers were concerned with describing the general process of communication that could be useful in all situations. The model that evolved from their work is helpful for understanding communi- cation. The basic elements include a communicator, encoding a message, a medium, decoding a message, a receiver, feedback, and noise. The model is presented in Exhibit 13.1. Each element in the model can be examined in the context of an organization.

The communication process works extremely well at the world’s largest food producer, Nestlé. The company, which has more than 400 factories in 86 countries around the world and 335,000 employees, sells much more than just chocolate, including coffee, ice cream, frozen foods, and pet care products.4 The company uses the web as well as other technolo- gies for continuous communication. Nestlé provides storeowners the option of ordering products via the web, a strategy that has all but eliminated the more than 100,000 phone or fax orders received annually. Company buyers were used to purchasing cocoa beans and other raw ingredients on a country-by-country basis—with little information about how their global colleagues were buying the same products. Now they share price and other information via the Internet and pick suppliers offering the best deals. The global giant recently announced plans to set up a digital innovation team in Silicon Valley, with staff from both its technology and marketing groups, in an effort to keep ahead of the technol- ogy curve while doing business across the world.5

Nestlé has traditionally processed its own cocoa butter and powder and manufactured most of its own chocolate. The web now lets Nestlé communicate regularly with suppliers, making outsourcing a viable option.

In the past, Nestlé guessed at how many Crunch and KitKat bars it might be able to sell in a promotion. Today, electronic links with supermarkets and other partners provide real- time feedback and information.

The Nestlé approach involves each of the elements in the communication process. The difference with Nestlé today and Nestlé yesterday is that some of the firm’s exchanges of messages and feedback are performed electronically. Nestlé believes that face-to-face and electronic communicators are needed to operate a profitable business around the world.

communication The transmission of information and under- standing through the use of common symbols.

EXHIBIT 13.1 A General Model of Communication

. . . . . . . . . . . . . . . .

. . . . = Noise

. . . .

Receiver

Feedback

Communicator Encoding message

Medium Decoding message

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The Elements of Communication Communicator In an organizational framework, the communicator is an employee, manager, or customer with ideas, intentions, information, and a purpose for communicating.

Encoding The communicator packages or encodes his/her ideas into a systematic set of symbols— into a language expressing the communicator’s purpose. For example, a manager often takes accounting information, sales reports, and other data and translates them into one message (i.e., an overall status report). The function of encoding, then, is to provide a form in which ideas and purposes can be expressed as a message.

Message The result of the encoding process is the message. The purpose of the communicator is expressed in the form of the message—either verbal or nonverbal. The message is what the individual hopes to communicate to the intended receiver, and the exact form it takes depends, to a great extent, on the medium used to carry the message.

Not as obvious, however, are unintended messages that can be sent by silence or inaction on a particular issue as well as decisions of which goals and objectives not to pursue and which method not to utilize. For example, a decision to utilize one type of performance evaluation method rather than another may send a “message” to certain people. Messages may also be designed to appear on the surface to convey certain infor- mation, when other information is what is really being conveyed. Related to this are messages designed to protect the sender, rather than to facilitate understanding by the receiver. The nearby OB Matters provides examples of these latter types of confusing messages.

CONFUSING PEOPLE WITH OBTUSE MESSAGES Unfortunately, not all organizational communications are meant to clarify; sometimes they are designed to confuse. At other times, pro- tecting the communicator may be the primary objective. Some words and phrases are so frequently used to convey a meaning other than the apparent one that their use has become institutionalized. Below are humorous examples of alternative interpretations to what other- wise appear as straightforward words or messages.

It is in process—It’s so wrapped up in red tape that the situation is hopeless.

We will look into it—By the time the wheel makes a full turn, we assume you will have forgotten about it.

Under consideration—Never heard of it.

Under active consideration—We’re looking in our files for it.

We’re forming a committee/task force—We need more time to think of an answer.

Let’s get together on this—I’m assuming you’re as confused as I am.

For appropriate action—Maybe you’ll know what to do with this. Note and initial—Let’s spread the responsibility for this. It is estimated—This is my guess. We are aware of it—We had hoped that the person who started it would have forgotten about it by now. We will advise you in due course—If we figure it out, we’ll let you know. Give us the benefit of your thinking—We’ll listen to you as long as it doesn’t interfere with what we have already decided to do. She’s in a conference—I don’t have any idea where she is. We are activating the file—We’re e-mailing it to as many people as we can think of. Let me bring you up to date—We didn’t like what you were going to do, so we already did something else. A reliable source—The person you just met. An informed source—The person who told the person you just met. An unimpeachable source—The person who started the rumor to begin with.

O B M A T T E R S

Chapter 13 Communicating Effectively 341

Medium The medium is the carrier of the message. Organizations provide information to members in a variety of ways, including face-to-face communications, e-mails, intranets, telephone, group meetings, memos, policy statements, reward systems, production schedules, and sales forecasts. The increased use of electronic media based upon computer and telecom- munication technologies has increased interest in the role of the medium in various aspects of organizational communications.6

Decoding-Receiver For the communication process to be completed, the message must be decoded in terms of relevance to the receiver. Decoding is a technical term for the receiver’s thought processes. Decoding, then, involves interpretation. Receivers interpret (decode) the message in light of their own previous experiences and frames of reference. Thus, a salesperson is likely to decode a memo from the company president differently than a production manager would. A nursing supervisor is likely to decode a conversation with the hospital administrator dif- ferently than the chief of surgery would. The closer the decoded message is to the intent desired by the communicator, the more effective is the communication. This underscores the importance of the communicator being “receiver-oriented.” Also, individuals who engage in active listening tend to be very skilled at decoding messages. Active listening is when the receiver uses effective verbal and nonverbal communication to understand and relate well to a communicator.7

Feedback Providing opportunities for feedback in the communication process is important. One-way communication processes are those that do not allow receiver-to-communicator feedback. This may increase the potential for distortion between the intended message and the received message. A feedback loop provides a channel for receiver response that enables the communicator to determine whether the message has been received and has produced the intended response. Two-way communication processes provide for this important receiver-to-communicator feedback.8

For the manager, communication feedback may come in many ways. In face-to-face situations, direct feedback through verbal exchanges is possible, as are such subtle means of communication as facial expressions of discontent or misunderstanding. In addition, indirect means of feedback (such as declines in productivity, poor quality of production, increased absenteeism or turnover, and lack of coordination and/or conflict between units) may indicate communication breakdowns. Some companies take employee feedback very seriously. DHL Express has created a “power line” for its 33,000 full-time employees and independent contractors to report complaints.9 Also, Cabela’s, a 19,000-employee outdoor outfitter, has set up hotlines so that workers can report complaints anonymously without fear of reprisal from their managers or supervisors. A similar hotline has been established to elicit complaints from its vendors. Such feedback from employees and vendors helps keep Cabela’s decision makers plugged into business in the field.10

Noise In the framework of human communication, noise can be thought of as those factors that distort the intended message. Noise may occur at any point during the communica- tion process and can refer to anything from physical noise (e.g., a ringing phone) to a receiver who’s too tired to concentrate on what’s being said. Noise reduces the quality of communication. For example, a manager who is under a severe time constraint may

active listening When a receiver uses effective verbal and non- verbal communication to understand and relate to a communicator.

342 Part Four Organizational Processes

send out a hastily written e-mail to his or her subordinates, only to discover that the wording in the e-mail angers several employees. They may think the manager’s e-mail is rude and pushy. In this case the subordinates have attached a different meaning to the message contained in the e-mail and have practically ignored the actual information sent by the manager.

The elements discussed in this section are essential for communication to occur. They should not, however, be viewed as separate. They are, rather, descriptive of the acts that have to be performed for any type of communication to occur. The communication may be vertical (superior–subordinate, subordinate–superior) or horizontal (peer–peer). Or it may involve one individual and a group. But the elements discussed here must be present if the communication process is to be considered successful.

Nonverbal Messages The information sent by a communicator that is unrelated to the verbal information— that is, nonverbal messages or nonverbal communication—is a relatively recent area of research among behavioral scientists. The major interest has been in the physical cues that characterize the communicator’s presentation. These cues include such modes of transmitting nonverbal messages as head, face, and eye movements, posture, physical distance, gestures, tone of voice, handshakes, and clothing and dress choices.11 Nonver- bal messages themselves are influenced by factors such as the gender and race of the communicator.12

Unique Qualities of Nonverbal Communication Some nonverbal messages are spontaneous and unregulated expressions of emotion, while others are conscious and deliberately presented.13 Through nonverbal behavior, particularly body movements, we communicate things like: “I don’t like this job,” “You’re not making sense,” or “You’re one of my favorite patients or customers.” We act out our state of being with nonverbal body language. We lift one eyebrow for disbelief. We rub our noses for puzzlement. We clasp our arms to isolate ourselves or to protect ourselves. We shrug our shoulders for indifference, wink one eye for intimacy, tap our fingers for impatience, slap our forehead for forgetfulness.14

Nonverbal messages may differ from other forms of communication behavior in several ways. For example, nonverbal behavior can be difficult to suppress (e.g., an involuntary frown indicating displeasure), ultimately contradicting the message the communicator is sending verbally. Also, nonverbal messages are more apparent to the people who observe them than they are to the people who produce them. This can make it very difficult for the sender to know how successfully she or he produced the nonverbal message that was intended. Finally, many nonverbal messages are susceptible to multiple interpretations. Even something as common as a smile may have many different meanings. Smiles may indicate genuine happiness, contempt, deceit, fear, compliance, resignation—even, on occasion, anger.

Nonverbal Communication Matters Research indicates that facial expressions and eye contact and movements generally pro- vide information about the type of emotion, while such physical cues as distance, posture, and gestures indicate the intensity of the emotion. These conclusions are important to man- agers. They indicate that communicators often send a great deal more information than is obtained in verbal messages. To increase the effectiveness of communication, a person must be aware of the nonverbal as well as the verbal content of the messages.

nonverbal communication Messages sent with body posture, facial expressions, and head and eye movements.

Chapter 13 Communicating Effectively 343

When verbal and nonverbal messages conflict, receivers tend to place more faith in nonverbal cues. When this type of conflict occurs, a judgment on what message to deci- pher is going to be made (e.g., “the customer said that price wasn’t important, but she looked away from me when she said it; I think it’s very important to her”). Thus, our co-workers, supervisors, and customers are constantly examining our nonverbal and verbal cues.

Being aware of nonverbal messages requires an awareness of their existence and impor- tance. A good way to examine your own nonverbal impression and presence is to videotape yourself making a formal presentation. A review of the videotape will help determine the alignment of verbal and nonverbal messages.

Communicating within Organizations The design of an organization should provide for communication in four distinct direc- tions: downward, upward, horizontal, and diagonal. Because these directions of com- munication establish the framework within which communication in an organization occurs, let us briefly examine each one. This examination will enable you to better appreciate the barriers to effective organizational communication and the means to overcome them.

Downward Communication This type of communication flows downward from individuals in higher levels of the hierarchy to those in lower levels. The most common forms of downward communication are strategic plans, memos and e-mails from the CEO, as well as companywide mission statements, hiring and operating procedures, manuals, and company publications. In many organizations, downward communication is often incomplete, inadequate, and inac- curate, as evidenced in the often-heard statement among organization members that “we have absolutely no idea what’s happening.” Such complaints indicate inadequate down- ward communication and the need of individuals for information relevant to their jobs. The absence of relevant company- and job-related information can create unnecessary stress among organization members.15 Employees go through four stages when high-level decisions are developed and implemented: first, employees speculate about what’s going to happen (e.g., I think there’s going to be a layoff); second, when the official announce- ment is made, employees digest the news and why the decision is being made (e.g., sales are down 30 percent so a layoff was inevitable); third, they deliberate by discussing the announcement with their peers; and, fourth, employees make a conclusion about the decision. This last step will lead the employees to “embrace, accept, endure, reject, or passively resist” the decision.16 Decision makers who communicate and respond to these stages will increase the likelihood that employees will accept and embrace the announced changes.

Upward Communication An effective organization needs upward communication as much as it needs downward communication. In such situations, the communicator is at a lower level in the organization than the receiver. Some of the most common upward communication flows are employee surveys, group meetings, and appeal or grievance procedures. In their absence, people somehow find ways to adopt nonexistent or inadequate upward communication channels.

downward communication Communication that flows from individuals in higher levels of the organization’s hierarchy to those in lower levels.

upward communication Upward communication flows from individuals at lower levels of the organizational structure to those at higher levels.

344 Part Four Organizational Processes

This has been evidenced by the emergence of “underground” employee publications in many large organizations.

Upward communication serves a number of important functions. Organizational com- munication researcher Gary Kreps identifies several:17

1. It provides managers with feedback about current organizational issues and problems, and information about day-to-day operations that they need for making decisions about directing the organization.

2. It is management’s primary source of feedback for determining the effectiveness of its downward communication.

3. It relieves employees’ tensions by allowing lower-level organization members to share relevant information with their superiors.

4. It encourages employees’ participation and involvement, thereby enhancing organiza- tional cohesiveness.

Horizontal Communication Often overlooked in the design of most organizations is the provision for horizontal communication. When the chairperson of the management department communicates with the chairperson of the marketing department concerning the course offerings in a college of business administration, the flow of communication is horizontal. Although vertical (upward and downward) communication flows are the primary considerations in organiza- tional design, effective organizations also need horizontal communication. Horizontal communication—for example, communication between production and sales in a business organization and among the different departments or colleges within a university—is nec- essary for the coordination and integration of diverse organizational functions.

Since mechanisms for ensuring horizontal communication ordinarily do not exist in an organization’s design, its facilitation is left to individual managers. Peer-to-peer communi- cation often is necessary for coordination and also can provide social need satisfaction.

Diagonal Communication While it is probably the least-used channel of communication in organizations, diagonal communication is important in situations where members cannot communicate effectively through other channels. For example, the comptroller of a large organization may wish to conduct a distribution cost analysis. One part of that task may involve having the sales force send a special report directly to the comptroller rather than going through the tradi- tional channels in the marketing department. Thus, the flow of communication would be diagonal as opposed to vertical (upward) and horizontal. In this case, a diagonal channel would be the most efficient in terms of time and effort for the organization. The nearby OB Matters describes how the direction of communication within teams impacts their overall ability to function.

Communicating Externally Organizations are involved in communicating externally to introduce products and ser- vices, to increase awareness of key brands, to project a positive image and reputation, to attract employees, and to gain attention.18 The typical external communication program includes four distinct programs: ∙ Public relations involves the communication of a positive image, exemplary corporate/

organization citizenship, and promotion of an identity as a contributor to society and the

horizontal communication Communication that flows between individu- als at similar levels in an organization.

diagonal communication Communication that cuts across functions and levels in an organization.

345

immediate community. If a full-time public relations staff is not used, some type of arrangement with an outside professional firm may be used.

∙ Advertising involves illustrating products or services in a positive manner and building brand loyalty. This form of communication is designed to attract customers, clients, or patients.

∙ Promoting the culture and opportunities available to prospective employees. This com- munication is designed to attract employee talent to sustain and grow the organization.

HOW COMMUNICATION “NETS” WORK IN TEAMS As organizational hierarchies become flatter and problems need to be solved more quickly, employee teams (see Chapter 10) continue to play a critical role in achieving organizational effectiveness. Depend- ing on the purpose and degree of centralization of a given team, a unique communication network or channel emerges. The following are two common team communication networks or “nets.”

The Wheel (or Star) Net: In this centralized approach to team communication, each team member (B–E) communicates only with the established team leader (A). The team leader serves as the “hub” for all information and has the ultimate responsibility for coordinating the team’s efforts and making decisions. Team mem- bers know what is expected of them and the communication process is clear and timely. While this network results in fewer errors with routine or less complex problems, it has the disadvantage of lower morale among team members and less creative problem solving. Examples of teams that rely on this type of team communi- cation network include certain military units, medical trauma groups, and sales teams.

A

C

B E

D

The All-Channel Net: In this decentralized, free-flowing approach to team communication, each team member is encouraged to connect directly with any other team member (A–E) at any time. Team mem- bers, with access to the same information, eventually reach a deci- sion or solve the problem. There is no formal leader, but rather responsibility and accountability are shared across all members.

Often used for teams that confront complex problems that require creativity and diverse perspectives, team members generally report higher levels of morale and job satisfaction in the All-Channel Net compared to the Wheel Net. However, the All-Channel Net has its disadvantages, including the potential to take longer to solve sim- pler problems because nonrelevant information needs to be teased out. Also, the lack of an established leader may encourage some team members to try to dominate or influence the direction of the team’s effort for selfish purposes. Examples of organizations that use this type of team communication network include Google and W.L. Gore.

A

C

B E

D

Sources: Tiffany McDowell, Dimple Agarwal, Don Miller, Tsutomu Okamoto, and Trevor Page, “Organizational Design: The Rise of Teams,” Deloitte University Press, February 29, 2016, http/dupress.com; Deborah Busser, “The Evolving Workplace: New (and Re-Emerging) Trends,” T + D 66, no. 5 (May 2012), pp. 44–47; Harold Guetzkow and Herbert A. Simon, “The Impact of Certain Communication Nets upon Organization and Performance in Task Oriented Groups,” Management Science 1, nos. 3–4 (April–July 1955), pp. 233–50; Harold Leavitt, “Some Effects of Certain Communication Patterns on Group Performance,” Journal of Abnormal and Social Psychology 46 (1951), pp. 38–50; Alex Bavelas, “Communica- tion Patterns in Task-Oriented Groups,” Journal of the Acoustical Society of America 22 (1950), pp. 725–30.

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∙ Customer/client/patient surveys are used to gather feedback about the experience of external constituents with the organization. This information is used to make modifica- tions or changes in service, products, or relationships. Each of these four communication programs is used to collect or disseminate informa-

tion. The internal and external communication programs provide ideas, information, con- nections, and insight into what individuals and groups are saying, what is important, and what needs modification.

Information Richness There are many different ways to communicate both within the organization, to supervisors and co-workers, and outside the organization, to customers and vendors. Communication media differ in their information richness. The richness of communication refers to the amount of information that can be transmitted in an effective manner.19 A medium that enables high richness, such as a face-to-face interaction, is more likely to result in common understanding between individuals or a group when compared to a low-in-richness medium, such as a generalized e-mail sent to all employees. Exhibit 13.2 provides exam- ples of communication media typically used by employees and the level of richness con- tained within each medium.

Face-to-face communication is high in richness because verbal and nonverbal cues can be exchanged and observed. This form of communication is also in “real time” and conse- quently permits on-the-spot feedback. If a person fails to understand a communication, a request for clarification can immediately be presented.

Information richness is low in the case of an e-mail to a general population (e.g., a department, the entire project team, a subsidiary company). The impersonal nature of this type of communication is obvious. A specific individual is not being addressed, so feedback is not likely to occur in this type of communication.

information richness Refers to the amount of information that can be transmitted or commu- nicated in an effective manner.

Media Richness Example Benefit

Face-to-face Very high Ask supervisor for a raise. Ability to adjust message according to real-time feedback. Telephone conversation, High Meeting with virtual Efficient, less costly, and less video conference group members. time-consuming than traveling to a central location. Memos, letters, faxes, Low Communicate a company Efficient and cost-effective personalized e-mail, voice mail service policy to a customer. way to communicate routine information. General e-mail, Very low Annual report to Standardized information financial reports, flyers, shareholders. for large audience. bulletin boards, computer reports

EXHIBIT 13.2 Common Communication Media in 21st-Century Organizations

Source: Adapted from Robert H. Lengel and Richard L. Daft, “The Selection of Communication Media as an Executive Skill,” Academy of Management Executive 2, no. 3 (1988), pp. 225–32.

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Technology and Communication

Internet, Intranets, and Extranets The Internet has become a very popular resource for millions of people throughout many parts of the world. Developed in the 1960s by the U.S. Department of Defense as a way to ensure that communications could survive a military attack, the Internet is an organization of computer networks connecting everything from large supercomputers at government agencies to mainframes at businesses to mobile devices used by individuals.20 Whether downloading music or apps from the iTunes store; posting on social networking sites such as Facebook, Snapchat, Twitter, or LinkedIn; or conducting research for a paper, Internet users in North America numbered more than 314 million in 2015.21 Some estimates sug- gest that worldwide Internet usage has grown from 361 million in 2000 to approximately 3.4 billion as of November 2015.22

An intranet is a private, protected electronic communication system within an organiza- tion. If it is connected to the Internet, it has its privacy protected by what are called fire- walls. A firewall is a partition within a computer system designed to block unauthorized access while permitting outbound communications to occur. Intranets are used to commu- nicate such things as proprietary organizational information, company plans, confidential medical records, training programs, compensation data, and company records.

For example, 28,000 employees of healthcare provider Kaiser Permanente registered with IdeaBook, the firm’s intranet-based social networking site.23 Since its launch in 2009, employees, physicians, nurses, and staff have formed 3,000 groups, posted 28,000 docu- ments, initiated 19,000 discussions, and created 7,000 blog posts.24

An extranet is designed to connect employees with individuals outside the organization, such as vendors, customers, and other strategic partners. For example, Walmart’s extranet, known as Retail Link, allows thousands of the retailer’s suppliers from around the globe to connect via the Internet to retrieve sales and inventory data about their products.25 This information helps suppliers become more efficient and innovative.26

Electronic Mail, Messaging, and Social Networking The use of e-mail continues to grow at a solid pace. Estimates indicate that the number of e-mail users worldwide will increase from 2.6 billion in 2015 to more than 2.9 billion by 2019.27 Recent research suggests that the average corporate employee sends or receives about 125 e-mails each day.28 In the past, some e-mail users sent out unedited, poorly written mes- sages on the fly. This type of sloppiness has been criticized and discouraged in organizations as e-mail has become a common communications channel in the business world.

The permanency of e-mail messages is another issue that savvy users of e-mail com- munications have learned to consider. Deleted messages can remain on computer hard drives, network servers, and social networking sites indefinitely. In the wake of the Enron case, e-mail storage and record keeping have become important issues for many companies. For example, federal regulators fined five Wall Street firms a total of $8.25 million for failing to adequately maintain e-mail files that adhere to record-keeping standards.29

E-mail is an effective way of communicating simple messages. Complex data and infor- mation should probably be sent in hard-copy documents attached to a brief e-mail mes- sage. Think simple. Secure your e-mails. Always use correct and professional language in preparing and sending e-mails.

intranet A private, protected electronic communica- tion system within an organization that allows certain stakeholders to gain access to internal organizational information.

extranet A private, protected electronic communica- tion system designed to connect employees with individuals outside the organization such as vendors, customers, or other strategic partners.

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In addition to e-mail, the growth of instant messaging (IM) continues to be on the rise. More and more organizations are installing IM systems such as IBM’s SameTime software and Slack’s office messaging app.30 Corporate use of IM is expected to grow rapidly because IM offers real-time communication among geographically dispersed employees; is an inexpensive alternative to multiple telephone calls and travel; creates a document trail for future reference; offers integration with voice and video; and demands the immediate attention of its users.31

Driven by the increased need to conduct business from anywhere at any time, text mes- saging from mobile phones is also gaining in popularity.32 Given that most employees, customers, and vendors have mobile phones in the United States, many companies are exploring ways to use text messaging to connect with potential customers, increase sales, and enhance customer satisfaction.33

Texting to reach customers has many advantages compared with the more traditional methods such as TV, radio, e-mail, newspapers, magazines, or direct mail, including:34

∙ Texting is less expensive than many other forms of advertising and marketing. ∙ Ninety percent of all texts are read within three minutes of being received. ∙ Texting is the favorite form of communication among young consumers, making them

an attractive target market. ∙ People read most text messages because they are generally from known sources and

friends.

Another way in which technology is transforming communication is with the explosion in popularity of social networking sites such as Facebook, Twitter, and LinkedIn. Serving a variety of human and business needs, social networking sites are rapidly becoming part of the communication fabric of organizations. From Facebook to LinkedIn to Twitter, com- panies are using social media to increase brand awareness, respond quickly to customer service issues, and target specific consumer segments of the population.35

Individuals, groups, and organizations use social networking sites and blogs for a variety of purposes. Current or former employees use these websites to discuss a company’s policy or an unpopular supervisor. A group of customers excited about a new product (e.g., the release of the latest iPhone) could create such a buzz around the launch of that product that its sales get a boost. Eepybird, the two guys from Maine who dropped Mentos candies into 2-liter bottles of Diet Coke, created a viral sensation on YouTube that featured the subsequent candy-soft drink explosions.36 Since that time, Mentos has more than 12 million “Likes” on its Facebook page, and Coca-Cola has more than 97 million Facebook followers.37

Risks are associated with the often informal and boundaryless world of social network- ing sites. For example, Virgin Atlantic fired a cabin crew for complaining on the Internet about passengers and making jokes about faulty jet engines.38 Employers are establishing guidelines to prevent public disclosures that could hurt an organization’s reputation or cre- ate a social networking scandal.39 General Electric has set up an internal “Tweet Squad” consisting of young hipster employees who help older employees and managers refine their social networking skills. Also, IBM has established the following guidelines to help its employees understand what they can and cannot say on blogs and social networking sites:40

∙ Employees are personally responsible for all content that is published online. ∙ What is published might become public for a long time. Keep this in mind. ∙ Employees should be transparent about their role at IBM in all posts. ∙ Employees should get permission before reporting on internal/private conversations. ∙ When necessary, employees should promptly correct mistakes and edit previous posts.

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E-mail, instant and text messaging, and social networking sites are powerful communi- cation tools; however, there is the potential that these same tools can contribute to lost productivity. Basex, a New York City–based business research company, estimated, “These distractions consume as much as 28 percent of the average U.S. worker’s day . . . and sap productivity to the tune of $650 billion a year.”41 Given the high stakes associated with these technology-based forms of communication, managers and employees will continue to explore and exploit them for the foreseeable future.

Smartphones According to research conducted by Pew Research Center, approximately 68 percent of American adults owned smartphones in 2015.42 The way people use their smartphones continues to evolve. According to recent research, more than 225 billion apps were down- loaded by iOS (Apple) and Android (Google) users in 2015.43 The five most popular apps in 2015 were Facebook, YouTube, Facebook Messenger, Google Search, and Google Play.44 Such growth reflects the need for managers to stay organized and connected with colleagues, customers, and other important stakeholders from virtually anywhere, at any time. Given such an expansive market, companies such as Google, Apple, Samsung, Verizon, and Microsoft are all competing to take as much market share as possible in the telecommunications sector.

Voice Mail The primary method by which employees communicate internally, leaving a recorded message, accounts for approximately 90 percent of telephone communication within orga- nizations today. Voice mail, more popular than e-mail, serves many functions, but one of the most important is message storage. Incoming messages are delivered without inter- rupting receivers and allow communicators to focus on the reason for their call. Voice mail minimizes inaccurate message-taking and differences in time zones.

Employees today are encouraged to develop the ability to leave concise, professional, and courteous voice-mail messages. Best practices include the following:45

∙ Organize your thoughts before picking up the telephone. ∙ Identify a specific, brief request that can be delivered via voice mail. ∙ State your name, the time and date, your company name, and the purpose of your

call. ∙ Be precise and keep the message simple. ∙ Say what you would like the receiver to do. ∙ Give a reason for the request. ∙ Say “thank you.” ∙ Finish with, “Feel free to call me at the following number . . . .”

Videoconferencing, Teleconferencing, and e-Meetings/Collaboration Videoconferencing refers to technologies associated with viewing, and teleconferencing refers to technologies primarily associated with speaking. These technologies allow mem- bers of virtual teams and other geographically dispersed individuals to interact without having to travel for a face-to-face meeting.

Videoconferencing, in particular, is being used by an increasing number of companies as they attempt to increase productivity and lower travel costs. For example, W. R. Grace &

350 Part Four Organizational Processes

Company, a $2 billion specialty chemical manufacturer, holds between 40 and 60 videocon- ferences per month. The firm’s $200,000 investment in videoconferencing equipment paid for itself within two months in travel savings.46

Another form of conferencing is web conferencing (or “webinars”) in which the Internet is used to conduct real-time e-meetings or presentations of geographically dis- persed participants. Participants connect to the web conference via a personal computer or other Internet-enabled device. In addition to presentations, web conferencing and online collaboration software allow voice, video, instant messaging, document sharing, and presentations among participants.47 These capabilities help facilitate online col- laboration on projects and other work assignments. Online collaboration services are offered by several companies including Citrix Systems’ “GoToMeeting” and Cisco’s “WebEx.”48

Electronic meeting software (EMS), or meetingware, uses networked computers to automate meetings. A large screen at the front of the room is the focal point. The screen serves as an electronic flip chart displaying comments, ideas, and responses of partici- pants. Meetingware allows facilitators to poll meeting participants, analyze voting results, and create detailed reports.

Advancements in information technologies continue to provide organizational members with additional ways to communicate. Technologies, however, will not solve all communi- cation problems. Overloading employees with new “toys,” additional information, and technologies to learn can result in less efficiency. Also, the social interaction and personal touch can be lost by relying solely on electronic technologies for communication. Electronic communication omits many verbal and most nonverbal cues that people use to acquire feedback. Guarding against anonymity and depersonalization are concerns when using many of the information technologies such as e-mail, texting, videoconferencing, and electronic meetings.

Interpersonal Communication Within an organization, communication flows from individual to individual in a variety of ways, from face-to-face and group settings to instant messaging and videoconferencing. Such flows are termed interpersonal communication and can vary from direct orders to casual expressions. Interpersonal behavior could not exist without interpersonal communi- cation. In addition to providing needed information, interpersonal communication also influences how people feel about the organization. For example, a research study found that interpersonal communication practices (e.g., praise, reasoning, sympathy) can make employees feel more fairly treated at work.49

The problems that arise when managers attempt to communicate with other people can be traced to perceptual differences and interpersonal style differences. We know from Chapter 4 that each manager perceives the world in terms of his or her background, experi- ences, personality, frame of reference, and attitude. The primary way in which managers relate to and learn from the environment (including the people in that environment) is through information received and transmitted. And the way in which managers receive and transmit information depends, in part, on how they relate to two very important senders of information—themselves and others.

In research involving interpersonal communication, it has been found that only 7 percent of the “attitudinal” meaning of a message comes from words spoken. Over 90 percent of meaning results from nonverbal cues.50 These silent signals exert a strong influence on the receiver. However, interpreting them is by no means scientifically based. For example,

interpersonal communication Communication that flows from individual to individual in face-to-face and group settings.

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does a downward glance during a brief encounter in an office mean modesty, embarrass- ment, a lack of respect, or fatigue?

Becoming an effective interpersonal communicator at work takes practice and effort. Jodi Glickman, author of Great on the Job, suggests the following strategies for developing strong communication skills in the workplace:51

∙ While online networking, e-mailing, and texting are very popular, important work- related activities like closing a sales deal, hiring a new employee, and building trust among colleagues is best done in a face-to-face manner. Work on being an effective listener and conversationalist.

∙ Don’t be afraid to ask for help and for the resources you need to complete a project or assignment. Phrase the request in a way that signals you are excited about the project but need X to get the job done well and on time.

∙ When beginning a phone or in-person conversation, always be courteous and ask: “Is this a good time?” or “Do you have a few minutes to chat?” When ending the conversa- tion, remember to thank the individual for his/her help or time.

∙ Keep the door open with people by saying things like: “Please let me know if you have any more questions for me.” or “If I have some more questions, do you mind if I follow up with you at a later date?”

Multicultural Communication Multicultural communication occurs when two or more individuals from different cultures communicate with one another, whether it is through a face-to-face meeting, an instant messaging exchange, or a videoconference. Cultural anthropologists Edward T. and Mildred R. Hall theorize that culture is communication and that communication can be divided into several culturally determined parts: words, space, time, and behavior.52 Within each of these categories, examples of the challenges of communicating across cultures are common.

Words An often-repeated and much-enjoyed joke in Latin America and Europe poses this question: “If someone who speaks three languages is called trilingual, and someone who speaks two languages is called bilingual, what do you call someone who speaks only one language?” The answer is “an American.” Although certainly not universally true, this story makes an important point. While the average European speaks several languages, the typical American is fluent only in English. In China, approximately 300 million people either are learning or have learned to speak English.53 In contrast, the number of college students in the U.S. who study Chinese is approximately 61,000.54 The Global OB feature illustrates how important it is to understand language in a cross-cultural context.

In the global business environment of today, foreign language training and fluency are a business necessity. It is true that English is an important business language and that many nonnative speakers have learned to conduct business in English. However, the vast major- ity of the world’s population neither speaks nor understands English. Nor is language per se the only barrier to effective cross-cultural communications; in fact, it may be one of the easiest barriers to overcome. In addition to verbal language issues, numerous other cultur- ally related variables can hinder the communication process, not the least of which are space and time.

multicultural communication This occurs when two or more individuals from different cultures communicate with one another.

352

Space Every person has an invisible boundary or bubble of space that surrounds his or her person. In some cultures (e.g., Northern Europe), the boundaries are large; whereas in other cul- tures (e.g., Middle Eastern countries), this space can be quite small.55 The amount of per- sonal space maintained by an individual can shift temporarily depending on his physical surroundings (e.g., a crowded elevator) or the degree of intimacy with the person he is interacting with (e.g., spouse). Misunderstandings can occur when a businessman from a culture where men touch and embrace one another as part of normal everyday life initiates physical contact with his counterpart from a culture where touching between men is rare and occurs only with family members. The latter individual will feel uncomfortable and may misunderstand the intent of the physical contact.

Time Individuals in Asia, the Middle East, and Latin America tend to view time as polychronic. Managers from such cultures do many things at once, are subject to interruptions, are committed to human relationships, change plans often, and base promptness on the rela- tionship. However, managers from monochronic cultures do one thing at a time, take time commitments seriously, adhere to plans, follow rules of privacy, show respect for private property, and emphasize promptness.56 The most common example of misunder- standings occurs with regard to appointment times. An American executive arrives at her Mexican counterpart’s office about 10 minutes before their scheduled meeting and dis- covers that the individual won’t be arriving for another hour or so. Infuriated by the lack of respect and casual attitude of the Mexican executive, she sits and fumes until the meeting takes place.

Despite innumerable differences, multicultural communication can be successful. Businesspeople from different cultures effectively and efficiently communicate with each other hundreds, perhaps thousands, of times every business day. By and large, the senders

CROSS-CULTURAL COMMUNICATION PROBLEMS Communicating exactly what you want to communicate, rather than more, less, or something altogether different, can be a chal- lenge when the communication occurs within a single culture. Achieving the desired results cross-culturally can present special problems.

Many of the difficulties encountered with cross-cultural commu- nications stem from the fact that different languages are involved and direct translation is not always feasible. American automobile manufacturers have learned this lesson. When Ford Motor Company introduced its Fiera truck line in some developing countries, it dis- covered that Fiera is a Spanish slang word meaning “ugly woman.” Chevrolet discovered that in Italian Chevrolet Nova translates as “Chevrolet no go.” Similarly, GM’s “Body by Fisher” logo translates in at least one language into “Corpse by Fisher.” Such problems are not restricted to carmakers. Coca-Cola, for example, has had its share of translation problems. In Chinese, Coca-Cola becomes “Bite the head of a dead tadpole.” In some parts of Asia the familiar Coke advertising

slogan “Coke adds life” is translated as “Coke brings you back from the dead.”

Language translation is not the only source of problems. Head, hand, and arm gestures may mean different things in different cultures. In some countries, for example, moving one’s head from side to side means “yes,” while bobbing it up and down means “no”—just the reverse of U.S. meaning. Or take the familiar A-OK hand gesture. In the United States it means things are fine, or everything is working. In France it simply means “zero.” In Japan, on the other hand, it is a symbol representing money. There it may be used to indicate that something is too expensive. And in Brazil, the gesture is interpreted as obscene.

Many other aspects of the communication process can cause difficulties. Different cultural interpretations of the significance of eye contact and the physical distance maintained between two people talking with one another and differences in accepted forms of address are but a few examples. Effective cross-cultural commu- nications require that we become less ethnocentric and more culturally sensitive.

G L O B A L O B

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and receivers of those successful communications exhibit some, or all, of the following attributes: 1. Preparation. They have made it a point to familiarize themselves with significant cul-

tural differences that might affect the communication process. They do this through study, observation, and consultation with those who have direct or greater experience with the culture than do they.

2. Flexible thinking. They make a conscious, concerted effort to lay aside ethnocentric tendencies. This does not mean they must agree with values, customs, interpretations, or perspectives different from their own; awareness, not acceptance, is what is required to facilitate communications.

3. Humility. Perhaps most importantly, despite their efforts at doing what is described in the above two points, they maintain a posture of “knowing they do not know.” This simply means that in the absence of direct, usually extensive, ongoing exposure to another culture, they may be unaware of nuances in the communication process. Rather than assuming understanding is complete unless demonstrated otherwise, they assume it is incomplete until shown otherwise. In the two chapter sections that follow, you will be able to identify barriers to effective

communications, which may be especially relevant in multicultural contexts, as well as find techniques for improving communications, which are particularly important in the same contexts.

Four Seasons, the luxury hotel chain, understands multicultural communication very well. In recruiting and selecting overseas managers, the Four Seasons profile includes strong listening skills, alertness to body language, and open minds.57 Four Seasons believes that culture is learned and that open-mindedness allows managers to learn new attitudes to deal with the diversity of customers.

Barriers to Effective Communication A good question at this point is: “Why does communication break down?” On the surface, the answer is relatively easy. We have identified the elements of communication as the communicator, encoding, the message, the medium, decoding, the receiver, and feedback. If noise exists in these elements in any way, complete clarity of meaning and understanding will not occur. A manager has no greater responsibility than to develop effective commu- nications. In this section, we discuss several barriers to effective communication that can exist both in organizational and interpersonal communications.

Frame of Reference Different individuals can interpret the same communication differently depending on their previous experiences. This results in variations in the encoding and decoding process. Com- munication specialists agree that this is the most important factor that breaks down the “commonness” in communications. When the encoding and decoding processes are not alike, communication tends to break down. Thus, while the communicator actually is speak- ing the “same language” as the receiver, the message conflicts with the way the receiver “catalogs” the world. If a large area is shared in common, effective communication is facili- tated. If a large area is not shared in common—if there has been no common experience— then communication becomes impossible or, at best, highly distorted. The important point is that communicators can encode and receivers can decode only in terms of their experi- ences. As a result, distortion often occurs because of differing frames of reference.

354 Part Four Organizational Processes

Frames of reference and one’s interpretation of events can vary based on one’s organi- zational experience and standing: manager versus employee, entry-level versus senior employee, staff versus line employee, accounting versus marketing department employee, headquarters versus affiliate employee, and so on. As a result, the needs, values, attitudes, and expectations of different individuals in the organization will differ, and this difference will often result in unintentional distortion of communication. This is not to say that one group is wrong or right. All it means is that, in any situation, individuals will choose the part of their own past experiences that relates to the current experience and is helpful in forming conclusions and judgments.

Selective Listening A vital part of the communication process involves listening. About 75 percent of com- munication is listening. Most people spend only between 30 and 40 percent of their time listening.58 This means that there are a lot of listening errors and deficiencies.

Listening takes place in four phases—perception, interpretation, evaluation, and action. Barriers can obstruct and block the listening process. The meaning attached to a manager’s request is colored by a person’s cultural, educational, and social frames of reference. Thus, interpretation of the manager’s meaning may be different because of frame-of-reference differences.

The method of evaluation used is influenced by attitudes, preferences, and experience. The type of action taken involves memory and recall. Sometimes memory failures do not permit the best actions.

Selective listening is a form of selective perception in which we tend to block out new information, especially if it conflicts with what we believe. When we receive a directive from management, we notice only those things that reaffirm our beliefs. Those things that conflict with our preconceived notions we either do not note at all or we distort to confirm our preconceptions.

For example, a notice may be sent to all operating departments that costs must be reduced if the organization is to earn a profit. The communication may not achieve its desired effect because it conflicts with the “reality” of the receivers. Thus, operating employees may ignore or be amused by such information in light of the large salaries, travel allowances, and expense accounts of some executives. Whether they are justified in their response to the notice is irrelevant; what is important is that such preconceptions result in breakdowns in communication.

A few worthwhile listening pointers can be learned from watching how Oprah Winfrey interviewed guests on her famous talk show. Oprah was very adept at blocking out distractions and focusing exclusively on her guests. She made a strong connection with her guests by maintaining eye contact, listening carefully without interrupting, and paraphrasing comments and ideas. She was a master at making sure the speaker is under- stood. Managers could learn a lot about listening in general, selective listening, and empathic listening from Oprah. Her style and approach made guests feel important, welcomed, and understood.

Value Judgments In every communication situation, value judgments are made by the receiver. This basi- cally involves assigning an overall worth to a message before receiving the entire commu- nication. Value judgments may be based on the receiver’s evaluation of the communicator or previous experiences with the communicator, or on the message’s anticipated meaning. For example, a restaurant manager may not pay attention to the complaints of one of her waitstaff if this employee is known as a “whiner” and a constant complainer. In essence,

Chapter 13 Communicating Effectively 355

the manager has categorized this employee’s communication style and will react to the complaints only if she hears the same complaints from other employees.

Source Credibility Source credibility refers to the trust, confidence, and faith that the receiver has in the words and actions of the communicator. The level of credibility the receiver assigns to the com- municator in turn directly affects how the receiver views and reacts to the words, ideas, and actions of the communicator.

Thus, how subordinates view a communication from their manager is affected by their evaluation of the manager. This, of course, is heavily influenced by previous experiences with the manager. Again, we see that everything done by a manager represents some form of communication. A group of hospital medical staff that views the hospital administrator as less than honest, as manipulative, and as not to be trusted is apt to assign nonexistent motives to any communication from the administrator. Union leaders who view manage- ment as exploiters and managers who view union leaders as political animals are likely to engage in little real communication.

Filtering Filtering, a common occurrence in upward communication in organizations, refers to the manipulation of information so that the receiver perceives it as positive. Subordinates cover up unfavorable information in messages to their superiors. The reason for filtering should be clear; this is the direction (upward) that carries control information to manage- ment. Management makes merit evaluations, grants salary increases, and promotes indi- viduals based on what it receives by way of the upward channel. The temptation to filter is likely to be strong at every level in the organization.

At General Electric, under the strong leadership of then-CEO Jack Welch, filtering was sometimes a problem. Welch had a reputation for being tough, aggressive, quick to fire employees, impatient, and intimidating, which led to his being both highly admired and feared.59 When employees (such as the GE senior executives under Jack Welch) are appre- hensive about communicating information to a superior, filtering can and does occur.

In-Group Language In-group language or technical jargon is not always easy to understand, especially for an outsider. Sometimes a company creates its own internal language as a way to differentiate its products, processes, or services from those of other companies. Starbucks, named to Forbes’ list of America’s Best Employers in 2016, is a prime example of how a company can create its own lingo or jargon; with its now ubiquitous “short,” “tall,” “grande,” and “venti” sizes of coffee that replaced the more pedestrian “small,” “medium,” “large,” and “extra large” sizes.60 In addition, customers can order any of the following drinks: an Iced Quad Venti with Whip Skinny Caramel Macchiato, a Tall Green Tea Frappuccino Blended Crème, or just a Tall Americano.61 To help customers learn the language of ordering, Starbucks published a 22-page booklet titled “Make It Your Drink.”62

In addition to individual businesses, occupational, professional, and social groups also develop words or phrases that have meaning only to members. Such special language can serve many useful purposes. It can provide members with feelings of belonging, cohesive- ness, and, in many cases, self-esteem. It also can facilitate effective communication within the group. The use of in-group language can, however, result in severe communication break- downs when outsiders or other groups are involved. This is especially the case when groups use such language in an organization, not for the purpose of transmitting information and understanding, but rather to communicate a mystique about the group or its function.

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Status Differences Organizations often express hierarchical rank through a variety of symbols—titles, offices, carpets, and so on. Such status differences can be perceived as threats by persons lower in the hierarchy, and this can prevent or distort communication. Rather than look incompe- tent, a nurse may prefer to remain quiet instead of expressing an opinion or asking a ques- tion of the nursing supervisor.

Many times superiors, in an effort to utilize their time efficiently, make this barrier more difficult to surmount. The governmental administrator or bank vice president may be accessible only by making an appointment or by passing the careful quizzing of an admin- istrative assistant. This widens the communication gap between superior and subordinates.

Time Pressures The pressure of time is an important barrier to communication. An obvious problem is that managers do not have the time to communicate frequently with every subordinate. How- ever, time pressures often can lead to far more serious problems than this. Short-circuiting is a failure of the formally prescribed communication system that often results from time pressures. What it means simply is that someone has been left out of the formal channel of communication who normally would be included.

For example, suppose a salesperson needs a rush order for a very important customer and goes directly to the production manager with the request because the production manager owes the salesperson a favor. Other members of the sales force get word of this and become upset over this preferential treatment and report it to the sales manager. Obviously, the sales manager would know nothing of the deal, since he or she has been short-circuited. In some cases, however, going through formal channels is extremely costly or is impossible from a practical standpoint. Consider the impact on a hospital patient if a nurse had to report a critical malfunction in life-support equipment to the nursing team leader, who in turn had to report it to the hospital engineer, who would instruct a staff engineer to make the repair.

Communication Overload One of the vital tasks performed by a manager in decision making, and one of the neces- sary conditions for effective decisions, is acquiring information.63 Because of the advances in communication technology, the difficulty is not in generating information. In fact, the last decade often has been described as the “Information Era” or the “Age of Information.” Managers often feel buried by the deluge of information and data to which they are exposed, and they cannot absorb or adequately respond to all of the messages directed to them. They “screen out” the majority of messages, which in effect means that these mes- sages are never decoded. Thus, the area of organizational communication is one in which more is not always better.

A frequently cited barrier to effective e-mail communication is spam, unsolicited com- mercial solicitations that enter a person’s e-mail in-box. Although estimates vary, approxi- mately 2.3 billion spam messages are sent in the United States on a daily basis. According to Symantec’s 2016 Internet Security Threat Report, approximately 53 percent of all incoming business e-mail is spam.64 The most common types of spam are newsletters, sex or dating related material, and pharmaceutical offers.65 While corporate e-mail filters block a considerable amount of these junk e-mails, it is estimated that 17 percent of all inbound corporate e-mail messages fall into this category. Identifying and deleting these e-mails wastes employees’ time and decreases their productivity. The spam problem costs U.S. organizations billions of dollars in lost employee productivity and IT resources to identify, filter, and remove it.66

spam A barrier to effective e-mail communication, this is unsolicited commercial solicitations that enter and clutter an employee’s e-mail in-box.

Chapter 13 Communicating Effectively 357

There is some relief due to the passage of a federal anti-spam law, “Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003” (a.k.a., “CAN-SPAM” Act). To address spam sent to mobile phones, the Telephone Consumer Protection Act established the Do Not Call Registry.67 But the laws still allow a large number of unsolic- ited e-mails and messages to get through.68 Filters, anti-spam services, and software can be used to decrease spam.69 Until spam is eliminated, employees need to develop fast and effective ways to block and delete spam without accidentally missing e-mail from real customers and co-workers.

The barriers to communication that have been discussed here, while common, are by no means the only ones. Examining each barrier indicates that they are either within individuals (e.g., frame of reference, value judgments) or within organizations (e.g., in-group language, filtering). This point is important because attempts to improve communication must focus on changing people and/or changing the organizational structure.

Improving Communication in Organizations Managers striving to become better communicators have two separate tasks they must accomplish. First, they must improve their messages—the information they wish to trans- mit. Second, they must seek to improve their own understanding of what other people are trying to communicate to them. As organizations become increasingly diverse, the oppor- tunities for communication breakdowns will most likely increase. Before examining the

general strategies managers can use to improve communication, consult the nearby Information You Can Use feature, which presents very specific ways to improve communication in diverse organizations. The bottom line of this final section of the chapter is that managers and employees must become better encoders and decoders. They must strive not only to be under- stood but also to understand. The techniques discussed here can contribute to accomplishing these two important tasks.

Following Up Following up involves assuming that you are misunderstood and, whenever possible, attempting to determine whether your intended meaning actually was received. As we have seen, meaning often is in the mind of the receiver. There’s an art to following up. You want to be perceived as helpful and not as a micro-manager. Try asking the receiver questions like: “Was there anything we covered here that wasn’t entirely clear?” or “I’ll check in with you later to see if you have any more ques- tions; I remember what it was like when I first started working with that customer.”

Regulating Information Flow The regulation of communication can ensure an optimum flow of information to managers, thereby eliminating the barrier of “com- munication overload.” Communication is regulated in terms of both quality and quantity. The idea is based on the exception prin- ciple of management, which states that only significant deviations from policies and procedures should be brought to the attention of

IMPROVING COMMUNICATIONS IN DIVERSE ORGANIZATIONS

Take a proactive approach to improve communica- tions in a diverse organization. The following ideas have been implemented successfully in such organi- zations as Avon, Apple, Coca-Cola, Digital Equipment, Johnson & Johnson, and Prudential Insurance.

1. Encourage employees to organize cultural communication networks. These networks help new employees adjust, arrange cultural events, and provide feedback to management.

2. Establish a managerial position, the responsibility of which includes developing multicultural and affirmative action programs. Companies like Raytheon, Best Buy, and American Express have a chief diversity officer.

3. Institute a mentor program whereby new minority employees are introduced to the company culture.

4. Celebrate cultural events such as Black History Month and Hispanic Heritage Week.

5. Conduct diversity-management workshops that allow managers and employees to explore the meaning of being a minority in a majority society.

Information You Can Use

358 Part Four Organizational Processes

superiors. In terms of formal communication, then, superiors should be communicated with only on matters of exception and not for the sake of communication.

Face-to-Face Communication Earlier in the chapter, feedback was identified as an important element in effective two- way communication. Face-to-face communication is still the best method for eliciting feed- back and interpreting whether the message was received as intended.70

In today’s hurried and fast-paced workplace, it’s often much easier to fire off an e-mail or text than to take the time to meet face-to-face with a colleague, customer, or supervisor. At times, however, it’s really important to make time to meet, if only for a few minutes, to discuss things in person. Face-to-face communication has been described as the “funda- mental building block of human communication.”71 This method is rich in feedback that is full of verbal (e.g., the receiver says things like “I understand”) and nonverbal (e.g., the receiver makes good eye contact and nods in agreement) cues.72 Managers and employees need to use active listening and observation to see how their messages are being received.

Empathy Empathy involves being receiver-oriented rather than communicator-oriented. The form of the communication should depend largely on what is known about the receiver. Empathy requires communicators to place themselves in the shoes of the receiver to anticipate how the message is likely to be decoded. Empathy is the ability to put oneself in the other

Y O U B E T H E J U D G E

MANAGING THE OFFICE GRAPEVINE There are those who believe that the grapevine—the informal infor- mation network in every organization—is the speediest, most effi- cient channel of communication in any office. Research also points out that it is accurate. At least 75 percent of the gossip, rumors, and information that travel through the grapevine is said to be true. Thus, many believe that the grapevine is a very useful channel of communication and should, therefore, be utilized by managers. It can serve as an early warning system for employees, serving up bad news long before any formal announcements are made. It can promote closeness among employees, allowing them to let off steam and alleviate stress. It provides managers the opportunity to float trial balloons (e.g., concerning a plan they’re considering put- ting into action) and thus receive early indications of people’s reac- tions. Finally, it can serve as a medium for building and maintaining a firm’s culture. Via gossip, the company war stories and those stories that communicate the firm’s values can be told.

On the other hand, there are those who believe that the grape- vine carries a very costly downside—a negative impact on produc- tivity. The argument is that gossip takes time and saps employee morale. While 75 percent of grapevine gossip and information may be true, it is the remaining 25 percent that carries false and destructive rumors that employees spend costly time worrying about. As a result, managers spend a disproportionate amount of

time trying to quell rumors and gossip, actions that often prove ineffective. Managers may also be held personally liable for defa- mation as a result of workplace conversations that may disclose confidential information or start rumors. Finally, while managers have used the grapevine for years as an early warning system or break-it-to-them gently tool, it can no longer even serve in this capacity in many organizations because younger employees disbelieve all company communication, whether by official memo or gossip.

Because the grapevine is not likely to go away, managers should acknowledge its existence in the day-to-day operations of any organization. What things can management do to dispel rumors and other information that travels via the grapevine?

Sources: Holly Green, “How to Prune Your Organizational Grapevine,” Forbes, http://www.forbes.com, accessed May 11, 2016; Annie McMindes, “Managing the Office Grapevine,” Above the Fold, http://abovethefold. com, accessed May 11, 2016; Travis J. Grosser, Virginie Lopez-Kidwell, Giuseppe Labianca, and Lea Ellwardt, “Hearing it through the Grapevine: Positive and Negative Workplace Gossip,” Organizational Dynamics 41, no. 1 (2012), pp. 52–61; A. Van Iterson and S. Clegg, “The Politics of Gossip and Denial in Interorganizational Relations,” Human Relations 61, no. 8 (2008), pp. 1117–37; Poul Houman Andersen, “Listening to the Global Grapevine: SME Export Managers’ Personal Contacts as a Vehicle for Export Information Generation,” Journal of World Business 41, no. 1 (February 2006), pp. 81–96.

Chapter 13 Communicating Effectively 359

person’s role and to assume that individual’s viewpoints and emotions. Remember that the greater the gap between the experiences and background of the communicator and the receiver, the greater is the effort that must be made to find a common ground of under- standing—where there are overlapping fields of experience.

Repetition Repetition is an accepted principle of learning. Introducing repetition or redundancy into communication (especially that of a technical nature) ensures that if one part of the mes- sage is not understood, other parts will carry the same message. New employees often are provided with the same basic information in several different forms when first joining an organization. Likewise, students receive much redundant information when first entering a university. This is to ensure that registration procedures, course requirements, and other key issues are communicated.

Encouraging Mutual Trust We know that time pressures often negate the possibility that managers will be able to fol- low up communication and encourage feedback or upward communication every time they communicate. Under such circumstances, an atmosphere of mutual confidence and trust between managers and their subordinates can facilitate communication. Managers who develop a climate of trust will find that following up on each communication is less critical and that no loss in understanding will result among subordinates from a failure to follow up on each communication. This is because they have fostered high “source credibility” among subordinates.

Effective Timing Individuals are exposed to thousands of messages daily. Many of these messages are never decoded and received because of the impossibility of taking them all in. While managers are attempting to communicate with a receiver, other messages are being received simultane- ously. Thus, the message that managers send may not be “heard.” Messages are more likely to be understood when they are not competing with other messages.73 On an everyday basis, effective communication can be facilitated by properly timing major announcements. The barriers discussed earlier often are the result of poor timing that results in distortions and value judgments.

Simplifying Language Complex language has been identified as a major barrier to effective communication. Stu- dents often suffer when their teachers use technical jargon that transforms simple concepts into complex puzzles. Universities are not the only place where this occurs, however. Gov- ernment agencies and the military are also known for their often-incomprehensible commu- nications. We already have noted instances where professional people use in-group language in attempting to communicate with individuals outside their group. Managers must remem- ber that effective communication involves transmitting understanding as well as information. If the receiver does not understand, then there has been no communication. Managers must encode messages in words, appeals, and symbols that are meaningful to the receiver.

Using the Grapevine The grapevine is an important information communication channel that exists in all orga- nizations. It basically serves as a bypassing mechanism, and in many cases it is faster than the formal system it bypasses. Because it is flexible and usually involves face-to-face

360 Part Four Organizational Processes

communication, the grapevine transmits information rapidly. The resignation of an execu- tive or a pending largescale layoff may be common knowledge long before it is officially announced.

On the other hand, the grapevine is not a formal channel of communication. Thus, there are those who believe that managers should avoid using the grapevine because it borders on being unethical as well as potentially dangerous. This chapter’s You Be the Judge exam- ines the issue of what to do about the grapevine.

Ethical Communication It is incumbent upon organizational members to deal ethically with one another in their communication transactions. Kreps postulates three broad principles applicable to internal organizational communications.74 The first is that organizational members should not intentionally deceive one another. This may not be as simple a principle to conform to as it may seem. While lying clearly violates it, is communicating less than you know to be true a breach of ethics? There is no hard and fast answer. The second principle is that organiza- tion members’ communication should not purposely harm any other organization member. This is known as nonmalfeasance, or refraining from doing harm. Finally, organization members should be treated justly. This too can be difficult, for justice is a relative principle that must be evaluated in a specific context.

In conclusion, it would be hard to find an aspect of a manager’s job that does not involve communication. If everyone in the organization had common points of view, communicating would be easy. Unfortunately, this is not the case. Each member comes to the organization with a distinct personality, background, experience, and frame of reference. The structure of the organization itself influences status relationships and the distance levels between individuals, which in turn influence the ability of individuals to communicate.

In this chapter we have tried to convey the basic elements in the process of communica- tion and what it takes to communicate effectively. These elements are necessary whether the communication is face-to-face or written and communicated vertically, horizontally, or diagonally within an organizational structure.

WHAT TO DO ABOUT THE GRAPEVINE? As a supervisor or manager, your essential first step in dealing with gossip and other rumors is to make sure you are plugged into the grapevine. You have to know what the latest gossip is before you can effectively deal with it. Try not to be so task-oriented that you miss hearing the rumors that have been making the rounds. For example, a subordinate might make a joke during a meeting or a hallway chat about a large customer that is thinking about pulling its account and going with a competitor. This is an obvious attempt by the subordinate to get more information about the rumor from you; in fact, she may be waiting to see if you confirm or deny it. When you start to hear similar comments or questions from other employees, it’s time to start dealing with the gossip.

Dealing with gossip can be done formally (e.g., official e-mail or announcement during a meeting) or informally (e.g., hallway or lunch conversations with key employees). Either way, supervisors or managers who want to try to influence the impact of these informal messages need to be proactive and address employees’ concerns. By not doing anything, managers are contributing to the unproductive time and energy that many employees will spend trying to gather and interpret information about the rumor. This is especially so if the rumors have job-related consequences such as a potential merger or layoff situation. In sum, it’s better to be a proactive communicator rather than a manager who allows rumors and gossip to undermine employees’ time, energy, and ultimately, productivity.

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Chapter 13 Communicating Effectively 361

EXHIBIT 13.3 Improving Communications in Organizations (Narrowing the Communication Gap)

• Encouraging mutual trust • Effective timing • Simplifying language • Utilizing feedback • Effective listening • Using the grapevine

• Following up • Regulating information flow • Empathy • Repetition

Field of Experience Field of Experience

ReceiverCommunicator Encoding Message Decoding

We have discussed several common communication barriers and several means to improve communication. Exhibit 13.3 illustrates the means that can be used to facilitate more effective communication. Often there is not enough time to utilize many of the tech- niques for improving communication, and skills such as empathy and effective listening are not easy to develop. Exhibit 13.3 shows that communicating is a matter of transmitting and receiving. Managers must be effective at both. They must understand as well as be understood.

Summary of Key Points

∙ Communication is one of the vital processes that breathes life into an organizational structure. The process contains five elements: the communicator, who initiates the com- munication; the message, which is the result of encoding and which expresses the pur- pose of the communicator; the medium, which is the channel or carrier used for transmitting the message; the receiver for whom the message is intended; and feedback, a mechanism that allows the communicator to determine whether the message has been received and understood.

∙ Communication flow moves in one of four directions. Downward communications are the most common and include job instructions, procedures, and policies. An upward flow can be just as important and may involve the use of employee surveys, group meet- ings, or grievance procedures. Horizontal and diagonal communications serve an important coordinative function.

∙ Information technologies such as e-mails, voice mails, videoconferencing, and online meetings are becoming common in organizations of all sizes. Caution must be taken in how, when, and where these technologies are used.

∙ Interpersonal communication flows from individual to individual in face-to-face and group settings. In addition to providing needed information, interpersonal communica- tion can also influence how people feel about the organization and its members. Inter- personal style is a term used to describe the way an individual prefers to relate to others in interpersonal communication situations.

362

∙ In the international business environment, needing to communicate with members of other cultures is common. In addition to obvious language problems, different cultural customs, values, and perspectives can serve to complicate effective communications.

∙ There are numerous barriers to effective communication. Among the more significant are frame of reference, selective listening, value judgments, source credibility, filtering, in-group language, status differences, time pressures, and communication overload.

∙ Improving organizational communications is an ongoing process. Specific techniques for doing this include following up, regulating information flow, utilizing feedback, empathy, repetition, encouraging mutual trust, effective timing, simplifying language, effective listening, using the grapevine, and promoting ethical communications.

362 Part One The Field of Organizational Behavior

Reality Check Now how much do you know about communication?

6. According to Shannon and Weaver’s and Schramm’s communication model, the communicator (or sender) a message that is later interpreted by a receiver.

a. encodes b. elaborates c. modifies d. None of the above (a–c) are correct.

7. When a subordinate communicates with his or her supervisor, this is known as communication. a. elite b. upward c. vertical d. developmental

8. Which of the following communication media is highest in richness? a. Voice-mail message b. Videoconference c. Business letter d. Computer report

9. True or false: Companies use texting to reach customers because it is less expensive than other forms of advertising and it’s a popular form of communication among young consumers. a. True b. False

10. A private, protected electronic communication system within an organization is known as an . a. extranet b. Internet c. intranet d. information-net

REALITY CHECK ANSWERS

Before After

1. c 2. a 3. d 4. b 5. d 6. a 7. b 8. b 9. a 10. c Number Correct Number Correct

Chapter 13 Communicating Effectively 363

1. Can you think of a communication transaction you have been part of when an encod- ing or decoding error was made? Why did it happen, and what could have been done to avoid it?

2. Why do you think that downward communication is much more prevalent in organiza- tions than upward communication? How easy would it be to change this?

3. Due to the increase in spam and other nonessential e-mail messages (e.g., jokes and chain letters) that employees receive, some claim that reading, processing, and responding to e-mail messages can drain employee productivity. What can be done to help employees better manage their e-mail communication?

4. In your experience, which of the barriers to effective communication discussed in the chapter is responsible for the most communication problems? Which barrier is the hardest to correct?

5. Discuss some of the advantages of using texting to reach customers as compared with the more traditional methods such as TV, radio, newspapers, magazines, or direct mail?

6. Can you think of reasons some individuals might prefer one-way communications when they are the sender and two-way when they are the receiver? Explain.

7. What steps can you take to become a more active listener? Why will better listening make you a better communicator?

8. “Organizations should be less concerned with improving communication than with reducing the volume of information they disseminate to employees.” Do you agree or disagree with this statement? Explain.

9. Think back to the OB Matters box’s discussion of the Wheel Net and the All-Channel Net. Which communication approach is better at solving complex problems? Why?

10. Think of a time when you were trying to communicate with someone from another culture who did not speak your native language well. What steps did you take to understand this person? What was the most difficult or challenging aspect of the situation?

Review and Discussion Questions

To determine your preferred communication style, select the one alternative that most closely describes what you would do in each of the 12 situations below. Do not be concerned with trying to pick the correct answer; select the alternative that best describes what you would actually do. Circle the letter a, b, c, or d.

1. Wendy, a knowledgeable person from another department, comes to you, the engineering super- visor, and requests that you design a special prod- uct to her specifications. You would:

a. Control the conversation and tell Wendy what you will do for her.

b. Ask Wendy to describe the product. Once you understand it, you would present your ideas. Let her realize that you are concerned and want to help with your ideas.

c. Respond to Wendy’s request by conveying un- derstanding and support. Help clarify what is to be done by you. Offer ideas, but do it her way.

d. Find out what you need to know. Let Wendy know you will do it her way.

Exercise

Exercise 13.1: Your Communication Style

364 Part Four Organizational Processes

2. Your department has designed a product that is to be fabricated by Saul’s department. Saul has been with the company longer than you have; he knows his department. Saul comes to you to change the product design. You decide to: a. Listen to the change and why it would be bene-

ficial. If you believe Saul’s way is better, change it; if not, explain why the original idea is supe- rior. If necessary, insist that it be done your way.

b. Tell Saul to fabricate it any way he wants to. c. You are busy; tell Saul to do it your way. You

don’t have the time to listen and agree with him.

d. Be supportive; make changes together as a team.

3. Upper management has a decision to make. They call you to a meeting and tell you they need some information to solve a problem they describe to you. You: a. Respond in a manner that conveys personal

support and offer alternative ways to solve the problem.

b. Respond to their questions. c. Explain how to solve the problem. d. Show your concern by explaining how to solve

the problem and why it is an effective solution. 4. You have a routine work order. The work order is

to be placed verbally and completed in three days. Sue, the receiver, is very experienced and willing to be of service to you. You decide to: a. Explain your needs, but let Sue make the other

decisions. b. Tell Sue what you want and why you need it. c. Decide together what to order. d. Simply give Sue the order.

5. Work orders from the staff department normally take three days; however, you have an emergency and need the job today. Your colleague Jim, the department supervisor, is knowledgeable and somewhat cooperative. You decide to: a. Tell Jim that you need it by 3 p.m. and return at

that time to pick it up. b. Explain the situation and how the organization

will benefit by expediting the order. Volunteer to help any way you can.

c. Explain the situation and ask Jim when the order will be ready.

d. Explain the situation and together come to a solution to your problem.

6. Danielle, a peer with a record of high perfor- mance, has recently had a drop in productivity. Her problem is affecting her performance. You know Danielle has a family problem. You: a. Discuss the problem; help Danielle realize the

problem is affecting her work and yours. Sup- portively discuss ways to improve the situation.

b. Tell the boss about it and let him decide what to do about it.

c. Tell Danielle to get back on the job. d. Discuss the problem and tell Danielle how to

solve the work situation; be supportive. 7. You are a knowledgeable supervisor. You buy sup-

plies from Peter regularly. He is an excellent sales- person and very knowledgeable about your situation. You are placing your weekly order. You decide to: a. Explain what you want and why; develop a sup-

portive relationship. b. Explain what you want and ask Peter to recom-

mend products. c. Give Peter the order. d. Explain your situation and allow Peter to make

the order. 8. Jean, a knowledgeable person from another de-

partment, has asked you to perform a routine staff function to her specifications. You decide to: a. Perform the task to her specification without

questioning her. b. Tell her that you will do it the usual way. c. Explain what you will do and why. d. Show your willingness to help; offer alternative

ways to do it. 9. Tom, a salesperson, has requested an order for

your department’s services with a short delivery date. As usual, Tom claims it is a take-it-or-leave- it offer. He wants your decision now, or within a few minutes, because he is in the customer’s of- fice. Your action is to: a. Convince Tom to work together to come up

with a later date. b. Give Tom a yes or no answer. c. Explain your situation and let Tom decide if

you should take the order. d. Offer an alternative delivery date. Work on

your relationship; show your support. 10. As a time-and-motion expert, you have been called

in regards to a complaint about the standard time it takes to perform a job. As you analyze the entire

Chapter 13 Communicating Effectively 365

job, you realize one element should take longer, but other elements should take less time. The end result is a shorter total standard time for the job. You decide to: a. Tell the operator and foreman that the total time

must be decreased and why. b. Agree with the operator and increase the stan-

dard time. c. Explain your findings. Deal with the operator

and/or foreman’s concerns, but ensure compli- ance with your new standard.

d. Together with the operator, develop a standard time.

11. You approve budget allocations for projects. Marie, who is very competent in developing bud- gets, has come to you. You: a. Review the budget, make revisions, and explain

them in a supportive way. Deal with concerns, but insist on your changes.

b. Review the proposal and suggest areas where changes may be needed. Make changes to- gether, if needed.

c. Review the proposed budget, make revisions, and explain them.

d. Answer any questions or concerns Marie has and approve the budget as is.

12. You are a sales manager. A customer has offered you a contract for your product with a short deliv- ery date. The offer is open for days. The contract would be profitable for you and the organization. The cooperation of the production department is essential to meet the deadline. Tim, the production manager, and you do not get along very well

because of your repeated requests for quick deliv- ery. Your action is to: a. Contact Tim and try to work together to complete

the contract. b. Accept the contract and convince Tim in a

supportive way to meet the obligation. c. Contact Tim and explain the situation. Ask him

if you and he should accept the contract, but let him decide.

d. Accept the contract. Contact Tim and tell him to meet the obligation. If he resists, tell him you will go to the boss.

To determine your preferred communication style, in the chart below, circle the letter you selected as the alternative you chose in situations 1–12. The column headings indicate the style you selected. Laissez Autocratic Consultative Participative Faire

1. a b c d 2. c a d b 3. c d a b 4. d b c a 5. a b d c 6. c b a b 7. c a b d 8. b c d a 9. b d a c 10. a c d b 11. c a b d 12. d b a c Total

Source: From Robert N. Lussier, Human Relations in Organizations, A Skill-Building Approach, 1993, pp. 153–56. Reprinted with permission of The McGraw-Hill Companies, Inc.

John Baker, chief engineer of the Caribbean Bauxite Company Limited of Barracania in the West Indies, was making his final preparations to leave the island. His promotion to production manager of Keso Mining Cor- poration near Winnipeg—one of Continental Ore’s fast- expanding Canadian enterprises—had been announced a month before, and now everything had been tidied up except the last vital interview with his successor, the able young Barracanian Matthew Rennalls. It was vital that this interview be a success and that Rennalls leave

Baker’s office uplifted and encouraged to face the chal- lenge of his new job. A touch on the bell would have brought Rennalls walking into the room, but Baker de- layed the moment and gazed thoughtfully through the window, considering just exactly what he was going to say and, more particularly, how he was going to say it.

Baker, an English expatriate, was 45 years old and had served his 23 years with Continental Ore in many different places: the Far East; several countries of Africa; Europe; and, for the last two years, the West Indies.

Case

Case 13.1: The Road to Hell

366 Part Four Organizational Processes

He had not cared much for his previous assignment in Hamburg and was delighted when the West Indian appointment came through. Climate was not the only attraction. Baker had always preferred working overseas in what were called the developing countries because he felt he had an innate knack—more than most other expatriates working for Continental Ore—of knowing just how to get on with regional staff. Twenty-four hours in Barracania, however, soon made him realize that he would need all of his innate knack if he were to deal effectively with the problems in this field that awaited him.

At his first interview with Glenda Hutchins, the production manager, the whole problem of Rennalls and his future was discussed. There and then it was made quite clear to Baker that one of his most impor- tant tasks would be the grooming of Rennalls as his successor. Hutchins had pointed out that not only was Rennalls one of the brightest Barracanian prospects on the staff of Caribbean Bauxite—at London University he had taken first-class honors in the B.Sc. engineering degree—but, being the son of the minis- ter of finance and economic planning, he also had political pull.

Caribbean Bauxite had been particularly pleased when Rennalls decided to work for it rather than for the government in which his father had such a prominent post. The company ascribed his action to the effects of its vigorous and liberal regionalization program that, since World War II, had produced 18 Barracanians at the middle-management level and given Caribbean Bauxite a good lead in this respect over all other inter- national concerns operating in Barracania. The success of this timely regionalization policy had led to excel- lent relations with the government—a relationship that gained added importance when Barracania, three years later, became independent, an occasion that encour- aged a critical and challenging attitude toward the role foreign interest would have to play in the new Barracania. Hutchins, therefore, had little difficulty convincing Baker that the successful career development of Rennalls was of the first importance.

The interview with Hutchins was now two years in the past, and Baker, leaning back in his office chair, reviewed just how successful he had been in the groom- ing of Rennalls. What aspects of the latter’s character had helped, and what had hindered? What about his own personality? How had that helped or hindered? The first item to go on the credit side, without question,

would be the ability of Rennalls to master the technical aspects of his job. From the start he had shown keen- ness and enthusiasm, and he had often impressed Baker with his ability in tackling new assignments and the constructive comments he invariably made in depart- mental discussions. He was popular with all ranks of Barracanian staff and had an ease of manner that stood him in good stead when dealing with his expatriate seniors.

These were all assets, but what about the debit side? First and foremost was his racial consciousness. His four years at London University had accentuated this feeling and made him sensitive to any sign of conde- scension on the part of expatriates. Perhaps to give expression to this sentiment, as soon as he returned home from London, he threw himself into politics on behalf of the United Action Party, which later won the preindependence elections and provided the country with its first prime minister.

The ambitions of Rennalls—and he certainly was ambitious—did not, however, lie in politics. Staunch nationalist he was, but he saw that he could serve him- self and his country best—for was not bauxite respon- sible for nearly half the value of Barracania’s export trade?—by putting his engineering talent to the best use possible. On this account, Baker found that he had an unexpectedly easy task in persuading Rennalls to give up his political work before entering the produc- tion department as an assistant engineer.

It was, Baker knew, Rennalls’ well-repressed sense of racial consciousness that had prevented their rela- tionship from being as close as it should have been. On the surface, nothing could have seemed more agree- able. Formality between the two was minimal. Baker was delighted to find that his assistant shared his own peculiar “shaggy dog” sense of humor, so jokes were continually being exchanged. They entertained one an- other at their houses and often played tennis together— and yet the barrier remained invisible, indefinable, but ever present. The existence of this screen between them was a constant source of frustration to Baker, since it indicated a weakness he was loathe to accept. If suc- cessful with people of all other nationalities, why not with Rennalls?

At least he had managed to break through to Rennalls more successfully than had any other expatri- ate. In fact, it was the young Barracanian’s attitude— sometimes overbearing, sometimes cynical—toward other company expatriates that had been one of the subjects

Chapter 13 Communicating Effectively 367

Baker raised last year when he discussed Rennalls’ staff report with him. Baker knew, too, that he would have to raise the same subject again in the forthcoming inter- view, because Martha Jackson, the senior drafter, had complained only yesterday about the rudeness of Rennalls. With this thought in mind, Baker leaned for- ward and spoke into the intercom: “Would you come in, Matt, please? I’d like a word with you.” Rennalls came in, and Baker held out a box and said, “Do sit down. Have a cigarette.”

He paused while he held out his lighter, and then went on. “As you know, Matt, I’ll be off to Canada in a few days’ time, and before I go, I thought it would be useful if we could have a final chat together. It is in- deed with some deference that I suggest I can be of help. You will shortly be sitting in this chair and doing the job I am now doing, but I, on the other hand, am 10 years older, so perhaps you can accept the idea that I may be able to give you the benefit of my long experience.”

Baker saw Rennalls stiffen slightly in his chair as he made this point, so he added in explanation, “You and I have attended enough company courses to remember those repeated requests by the personnel manager to tell people how they are getting on as often as the convenient moment arises, and not just the auto- matic once a year when, by regulation, staff reports have to be discussed.”

Rennalls nodded his agreement, so Baker went on, “I shall always remember the last job performance discussion I had with my previous boss back in Germany. She used what she called the ‘plus and minus technique.’ She firmly believed that when seniors seek to improve the work performance of their staff by discussion, their prime objective should be to make sure the latter leave the interview encouraged and inspired to improve. Any criticism, therefore, must be constructive and helpful. She said that one very good way to encourage a person—and I fully agree with her—is to discuss good points, the plus factors, as well as weak ones, the minus factors. So I thought, Matt, it would be a good idea to run our dis- cussion along these lines.”

Rennalls offered no comment, so Baker continued. “Let me say, therefore, right away, that as far as your own work performance is concerned, the pluses far outweigh the minuses. I have, for instance, been most impressed with the way you have adapted your considerable theoretical knowledge to master the

practical techniques of your job—that ingenious method you used to get air down to the fifth shaft level is a sufficient case in point. At departmental meetings I have invariably found your comments well taken and helpful. In fact, you will be interested to know that only last week I reported to Ms. Hutchins that, from the technical point of view, she could not wish for a more able person to succeed to the position of chief engineer.”

“That’s very good indeed of you, John,” cut in Rennalls with a smile of thanks. “My only worry now is how to live up to such a high recommendation.”

“Of that I am quite sure,” returned Baker, “espe- cially if you can overcome the minus factor which I would like now to discuss with you. It is one that I have talked about before, so I’ll come straight to the point. I have noticed that you are more friendly and get on bet- ter with your fellow Barracanians than you do with Europeans. In point of fact, I had a complaint only yes- terday from Ms. Jackson, who said you had been rude to her—and not for the first time, either.

“There is, Matt, I am sure, no need for me to tell you how necessary it will be for you to get on well with expa- triates, because until the company has trained up suffi- cient men of your caliber, Europeans are bound to occupy senior positions here in Barracania. All this is vital to your future interests, so can I help you in any way?”

While Baker was speaking on this theme, Rennalls sat tensed in his chair, and it was some seconds before he replied. “It is quite extraordinary, isn’t it, how one can convey an impression to others so at variance with what one intends? I can only assure you once again that my disputes with Jackson—and you may remember also Godson—have had nothing at all to do with the color of their skins. I promise you that if a Barracanian had behaved in an equally peremptory manner, I would have reacted the same way. And again, if I may say it within these four walls, I am sure I am not the only one who has found Jackson and Godson difficult. I could mention the names of several expatriates who have felt the same. However, I am really sorry to have created this impression of not being able to get on with Europeans—it is an entirely false one—and I quite re- alize that I must do all I can to correct it as quickly as possible. On your last point, regarding Europeans hold- ing senior positions in the company for some time to come, I quite accept the situation. I know that Carib- bean Bauxite—as it has been for many years now— will promote Barracanians as soon as their experience

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warrants it. And, finally, I would like to assure you, John—and my father thinks the same, too—that I am very happy in my work here and hope to stay with the company for many years to come.”

Rennalls had spoken earnestly, and Baker, although not convinced by what he had heard, did not think he could pursue the matter further except to say, “All right, Matt, my impression may be wrong, but I would like to remind you about the truth of that old saying, ‘What is important is not what is true, but what is believed.’ Let it rest at that.”

But suddenly Baker knew that he did not want to “let it rest at that.” He was disappointed once again at not being able to break through to Rennalls and at hav- ing again had to listen to his bland denial that there was any racial prejudice in his makeup.

Baker, who had intended to end the interview at this point, decided to try another tack. “To return for a mo- ment to the plus and minus technique I was telling you just now, there is another plus factor I forgot to men- tion. I would like to congratulate you not only on the caliber of your work, but also on the ability you have shown in overcoming a challenge that I, as a European, have never had to meet.

“Continental Ore is, as you know, a typical commer- cial enterprise—admittedly a big one—that is a product of the economic and social environment of the United States and Western Europe. My ancestors have all been brought up in this environment of the past 200 or 300 years, and I have, therefore, been able to live in a world in which commerce (as we know it today) has been part and parcel of my being. It has not been something revo- lutionary and new that has suddenly entered my life. In your case,” went on Baker, “the situation is different, be- cause you and your forebears have only had some 50 and not 200 or 300 years. Again, Matt, let me congratulate you—and people like you—on having so successfully overcome this particular hurdle. It is for this very reason that I think the outlook for Barracania—and particularly Caribbean Bauxite—is so bright.”

Rennalls had listened intently, and when Baker finished, he replied, “Well, once again, John, I have to thank you for what you have said, and, for my part, I can only say that it is gratifying to know that my own personal effort has been so much appreci- ated. I hope that more people will soon come to think as you do.”

There was a pause, and, for a moment, Baker thought hopefully that he was about to achieve his long-awaited breakthrough. But Rennalls merely

smiled back. The barrier remained unbreached. There were some five minutes’ cheerful conversation about the contrast between the Caribbean and Canadian cli- mates and whether the West Indies had any hope of beating England in the Fifth Test before Baker drew the interview to a close. Although he was as far from ever knowing the real Rennalls, he was nevertheless glad that the interview had run along in this friendly manner and, particularly, that it had ended on such a cheerful note.

This feeling, however, lasted only until the follow- ing morning. Baker had some farewells to make, so he arrived at the office considerably later than usual. He had no sooner sat down at his desk than his secretary walked into the room with a worried frown on her face. Her words came fast. “When I arrived this morning, I found Mr. Rennalls already waiting at my door. He seemed very angry and told me in quite a peremptory manner that he had a vital letter to dictate that must be sent off without any delay. He was so worked up that he couldn’t keep still and kept pacing about the room, which is most unlike him. He wouldn’t even wait to read what he had dictated. Just signed the page where he thought the letter would end. It has been distributed, and your copy is in your tray.”

Puzzled and feeling vaguely uneasy, Baker opened the envelope marked “Confidential” and read the fol- lowing letter:

FROM: Assistant Engineer TO: The Chief Engineer Caribbean

Bauxite Limited SUBJECT: Assessment of Interview Between

Messrs. Baker and Rennalls DATE: 14th August 1982

It has always been my practice to respect the advice given me by seniors, so after our interview, I decided to give careful thought once again to its main points and so make sure that I had understood all that had been said. As I promised you at the time, I had every inten- tion of putting your advice to the best effect.

It was not, therefore, until I had sat down quietly in my home yesterday evening to consider the interview objectively that its main purport became clear. Only then did the full enormity of what you said dawn on me. The more I thought about it, the more convinced I was that I had hit upon the real truth—and the more furious I became. With a facility in the English language

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which I—a poor Barracanian—cannot hope to match, you had the audacity to insult me (and through me every Barracanian worth his salt) by claiming that our knowledge of modern living is only a paltry 50 years old, while yours goes back 200 to 300 years. As if your materialistic commercial environment could pos- sibly be compared with the spiritual values of our culture! I’ll have you know that if much of what I saw in London is representative of your boasted culture, I hope fervently that it will never come to Barracania. By what right do you have the effrontery to conde- scend to us? At heart, all you Europeans think us bar- barians, or, as you say amongst yourselves, we are “just down from the trees.”

Far into the night I discussed this matter with my father, and he is as disgusted as I. He agrees with me that any company whose senior staff think as you do is no place for any Barracanian proud of his culture and race. So much for all the company claptrap and specious

propaganda about regionalization and Barracania for the Barracanians.

I feel ashamed and betrayed. Please accept this letter as my resignation, which I wish to become effective immediately.

cc: Production Manager Managing Director

Questions 1. What, in your opinion, did Baker hope to accom-

plish as a result of his conversation with Rennalls? Did he succeed? Why or why not?

2. Did nonverbal communications play a part in this case? Be specific and give examples.

3. What could Baker and Rennalls have done to improve the situation described in this case?

Source: Reprinted by permission of the Industrial Relations Center, The University of Chicago.

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Decision making is defined as the process of choosing a particular action that deals with a problem or opportunity. The quality of the decisions that managers make is the measurement of their effectiveness.1 Sometimes just one or two exceptionally good or exceptionally poor decisions can have significant effects on a manager’s career or an organization’s success. In 1982, seven innocent people died in the Chicago area after taking cyanide-laced capsules of Extra-Strength Tylenol. Without delay, Johnson & Johnson’s (the makers of Tylenol) leaders decided to recall and destroy (at a cost of $100 million) all 31 million bottles of the top-selling painkiller. Not only did the com- pany move decisively to recall a product that accounted for 17 percent of the company’s net income, but also then-chairman and CEO Jim Burke was forthcoming with informa- tion and held several news conferences to keep the public and customers in the loop as the tragedy unfolded. In the months following the crisis, Johnson & Johnson’s outstand- ing crisis management and decision making was rewarded when sales of the Tylenol brand rebounded to pre-crisis levels.2

An example of poor decision making can be traced to the executives at Ford Motor Company regarding the design of the Pinto. Faced with growing competition, Ford needed a small car in its lineup and rushed the Pinto through design and into production. In this rush to market, engineers made a fatal error; the placement of the Pinto fuel tank made it susceptible to rupture in the event of a rear-end collision. Testing revealed this flaw to engineers, but assembly equipment had already been purchased and replacing the fuel system with a safer alternative was considered to be cost-prohibitive. However, in an effort to fix the problem, the engineers worked within the existing design and developed a modi- fication. The cost of this fix, estimated by Ford to be approximately $11 per vehicle, was determined to be more than the payout for potential lawsuits related to the projected number of deaths per year (180) and the estimated settlement per death.3

Because decision making is so very important and can have such significant effects on employees, customers, shareholders, and a company’s reputation, as illustrated in the examples above, it has been suggested that management is decision making. It would be a mistake, however, to conclude that only managers make decisions. Increasingly, nonman- agers are making important decisions in organizations. Thus, while decision making is an important managerial process, it is fundamentally a people process.

Decision Making Learning Objectives

After completing Chapter 14, you should be able to:

Contrast programmed with nonprogrammed decisions.

Identify the steps in the rational decision- making process.

Describe the alternatives to rational decision making.

Give examples of behavioral influences on decision making.

Summarize the key attributes of group decision making.

C H A P T E R F O U R T E E N

© Fuse/Getty Images, RF

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This chapter, therefore, describes and analyzes decision making in terms that reflect the ways in which people make decisions based on their understanding of individual, group, and organizational goals and objectives.

Types of Decisions Managers in organizations may be separated by background, lifestyle, and distance, but sooner or later they must all make decisions. Even when the decision process is highly participative, with full involvement by subordinates, the manager ultimately is responsible for the outcomes of a decision. In this section, we present a classification system into which various kinds of decisions can be placed, regardless of whether the manager makes the decision unilaterally or in consultation with, or by delegation to, subordinates.

Researchers and experts in the field of decision making have developed several ways of classifying different types of decisions. For the most part, these classification

Reality Check How much do you know about decision making?

1. The first step in the rational decision making process is . a. establish goals and measure results b. identify and analyze the problem c. develop alternative solutions d. evaluate alternatives

2. The guidelines or beliefs that a person uses when confronted with a situation in which a choice must be made are known as . a. mission statements b. vision c. values d. ethical evaluation

3. is a concept that assumes that decision making is fraught with constraints and limitations. a. Information conception b. Groupthink c. Bounded rationality d. Psychological overload

4. A mental state of anxiety that occurs when there is a conflict within an individual after a decision is made is known as . a. thought disturbance b. cognitive dissonance c. mental misalignment d. None of the above (a–c) are correct.

5. While managers at all levels make various types of decisions, supervisors are typically confronted with decisions while executives focus their time on decisions. a. ethical, unethical b. nonprogrammed, programmed c. personnel, strategic d. programmed, nonprogrammed

Chapter 14 Decision Making 373

systems are similar, differing mainly in terminology. We use the widely adopted distinction suggested by Herbert Simon.4 Simon distinguishes between two types of decisions: 1. Programmed decisions. If a particular situation occurs often, a routine procedure

usually will be worked out for solving it. Decisions are programmed to the extent that they are repetitive and routine and a definite procedure has been developed for handling them. Examples of programmed decisions include where to seat customers in a restaurant so they’re distributed evenly among the wait staff or the process for registering for courses at a university. Companies like UPS and FedEx use mathe- matical and statistical models to make on-time delivery as routine, efficient, and reliable as possible.5

2. Nonprogrammed decisions. Decisions are nonprogrammed when they are novel and unstructured. There is no established procedure for handling the problem, either because it has not arisen in exactly the same manner before or because it is complex or extremely important. Such decisions deserve special treatment. A vivid illustration of nonprogrammed decision making can be seen in the actions taken by the I.H. Caffey Distributing Company in the aftermath of a natural disaster. In the predawn hours of a May morning, a tornado ripped the company’s distribution center in half. While Caffey had a disaster plan in place, this level of destruction was something the team had never dreamed of, and it happened as the company was entering its busiest time of the year. With over $100 million in damages, it was at risk of losing millions of dollars more in revenue. Quick and decisive decision making by company leaders allowed the com- pany to make 25 percent of its deliveries within three days and deliver 75 percent of its orders within the week.6 The decisions that helped this company recover quickly were nonprogrammed ones that the Caffey executives had never been faced with before. Managers at most organizations face great numbers of programmed decisions in their

daily operations. Such decisions should be treated as routine without expending unneces- sary organizational resources on them. On the other hand, the nonprogrammed decision must be properly identified as such, since it is this type of decision that forms the basis for allocating billions of dollars worth of resources in our economy every year. Unfortunately, it is the human part of this type of decision-making process that we know the least about.7 Exhibit 14.1 presents a breakdown of the different types of decisions, with examples of

programmed decisions Situations in which specific procedures have been developed for repetitive and routine problems.

nonprogrammed decisions Decisions required for unique and complex management problems.

EXHIBIT 14.1 Types of Decisions

Programmed Decisions Nonprogrammed Decisions

Type of problem Frequent, repetitive, routine, much certainty Novel, unstructured, much uncertainty regarding cause-and-effect relationships regarding cause-and-effect relationships Procedure Dependence on policies, rules, and definite Necessity for creativity, intuition, procedures tolerance for ambiguity, creative problem solving Examples Company: Periodic reorders of inventory Company: Diversification into new products and markets University: Admissions and registration University: Construction of new processes classroom facilities Health care: Procedure for conducting Health care: Purchase of cutting-edge outpatient surgery equipment Government: Merit system for promotion of Government: Reorganization of state state employees government agencies

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each type, in different kinds of organizations. The exhibit illustrates that programmed and nonprogrammed decisions require different kinds of procedures and apply to distinctly dif- ferent types of problems.

Traditionally, programmed decisions have been handled through rules, standard operat- ing procedures, and the structure of the organization that develops specific procedures for handling them. Operations researchers—through the development of mathematical mod- els—have facilitated the handling of these types of decisions.

On the other hand, nonprogrammed decisions usually have been handled by general problem-solving processes, judgment, intuition, and creativity. Unfortunately, the advances that modern management techniques have made in improving nonprogrammed decision making have not been nearly as great as the advances they have made in improving pro- grammed decision making.8

Ideally, the main concern of top management should be nonprogrammed decisions, while first-level managers are typically concerned with programmed decisions. Middle managers in most organizations also concentrate on programmed decisions, but will increasingly participate in nonprogrammed decisions. In other words, the nature, fre- quency, and degree of certainty surrounding a problem should dictate at what level of management the decision should be made.

Obviously, problems arise in those organizations where top management expends too much time and effort on programmed decisions.9 One unfortunate result of this practice is a neglect of long-range planning. In other words, so much energy and time is spent on making incremental improvements to current products, policies, and practices that impor- tant industry changes are missed or downplayed.10

Finally, the neglect of long-range planning usually results in an overemphasis on short- run control. This results in a lack of delegation of authority to lower levels of management, which often has adverse effects on motivation and satisfaction.

A Rational Decision-Making Process Decisions should be thought of as means rather than ends. They are the organizational mechanisms through which an attempt is made to achieve a desired state. They are, in effect, an organizational response to a problem. Every decision is the outcome of a dynamic process that is influenced by a multitude of forces. Exhibit 14.2 diagrams a ratio- nal decision-making process. The reader should not, however, interpret this outline to mean that decision making is a fixed procedure. It is a sequential process rather than a series of steps. This sequence diagram enables us to examine each element in the normal progres- sion that leads to a decision.

Examination of Exhibit 14.2 reveals that it is more applicable to nonprogrammed deci- sions than to programmed decisions. Problems that occur infrequently, with a great deal of uncertainty surrounding the outcome, require that the manager utilize the entire process. For problems that occur frequently, however, this is not necessary. If a policy is established to handle such problems, it will not be necessary to develop and evaluate alternatives each time a similar problem arises.

Establish Goals and Measure Results Goals are needed in each area where performance influences the effectiveness of the orga- nization. If goals are adequately established, they will dictate what results must be achieved and the measures that indicate whether or not they have been achieved. Goal setting is appropriate for individuals, teams, and both large and small organizations.

decision A means to achieve some result or to solve some problem. The outcome of a process that is influenced by many forces.

Chapter 14 Decision Making 375

One of the goals and core values of online retailer Zappos is to “Wow!” their customers with over-the-top, outstanding service.11 To ensure that the right employees are in place to support this goal, new hires who don’t fit well with the Zappos culture are paid $2,000 to quit the organization.12

Identify and Analyze the Problem(s) A necessary condition for a decision is a problem—if problems did not exist, there would be no need for decisions. Problems typically result from a determination that a discrepancy exists between a desired state and current reality.13 This underscores the importance of establishing goals and objectives. How critical a problem is for the organization is mea- sured by the gap between the levels of performance specified in the organization’s goals and objectives and the levels of performance attained. Thus, a gap of 20 percent between a sales volume objective and the volume of sales actually achieved signifies that some prob- lem exists.

It is easy to understand that a problem exists when a gap occurs between desired results and actual results. However, certain factors often lead to difficulties in identifying exactly what the problem is.14 These factors include: 1. Perceptual problems. As noted in Chapter 4, individual feelings may act in such a way

as to protect or defend us from unpleasant perceptions. Negative information may be selectively perceived in such a way as to distort its true meaning or it may be ignored. For example, a college dean may fail to identify increasing class sizes as a problem while at the same time being sensitive to problems faced by the president of the univer- sity in raising funds for the school.

2. Defining problems in terms of solutions. This is really a form of jumping to conclu- sions. For example, a sales manager may say, “The decrease in profits is due to our

EXHIBIT 14.2 The Rational Decision-Making Process

Identify and analyze the problems(s)

Develop alternative solutions

Select the best solution

Evaluate alternatives

Implement the decision

Follow up and evaluate the decision

Establish goals and measure results

376 Part Four Organizational Processes

poor product quality.” The sales manager’s definition of the problem suggests a par- ticular solution—the improvement of product quality in the production department. Certainly, other solutions may be possible. Perhaps the sales force has been inade- quately selected or trained. Perhaps competitors have a superior product.

3. Identifying symptoms as problems. “Our problem is a 32 percent decline in orders.” While it is certainly true that orders have declined, the decline in orders is really a symptom of the real problem. When the manager identifies the real problem, the cause of the decline in orders will be found. Problems usually are of three types: opportunity, crisis, or routine.15 Crisis and routine

problems present themselves and must be attended to by the managers. Opportunities, on the other hand, usually must be found. They await discovery, and they often go unnoticed and eventually are lost by an inattentive manager. This is because most managers spend more time handling day-to-day problems and putting out fires than pursuing important new opportunities. Many well-managed organizations try to focus managerial attention on longer-range issues through planning activities and goal-setting programs. Adam Brotman, chief digital officer of Starbucks, is in charge of all core digital businesses, including mobile and mobile payments, web, loyalty program, e-commerce, wi-fi, and the Starbucks digital network.16 Reporting directly to the company’s CEO, Howard Schultz, Brotman led a team that figured out how to help customers get through the stores faster. After adding cash to the free Starbucks app on their smartphones, customers can now pay by having the barista scan their phones.17 This “quick-pay” approach has taken hold at more than 7,400 company-owned stores in the United States. The company processes more than 9 million mobile transactions each week in U.S. stores—representing more than 20 percent of all U.S. store transactions.18

All problems are not created equal. Managers need to decide which problems need immediate attention. Determining prob- lem significance involves consideration of three issues: urgency, impact, and growth tendency.

Urgency relates to time. How critical is the time pressure? Dealing with an upset customer in a restaurant is more urgent than replacing some of the older tables and chairs. Impact describes the seriousness of the problem’s effects. Effects may be on people, sales, equipment, profitability, public image, or any number of other organizational resources. Growth tendency addresses future considerations. Even though a problem may currently be of low urgency and have little impact, if allowed to go unattended it may grow. The decision to cut back on routine preventive maintenance of plant equipment as a cost-cutting measure may not create a significant problem immediately. Over time, however, major difficulties may arise.

The more significant the problem, as determined by its urgency, impact, and growth tendency, the more important it is that it be addressed. A critical part of effective decision making is determining problem significance.

Develop Alternative Solutions Before a decision is made, feasible alternatives should be developed (actually these are potential solutions to the problem) and the potential consequences of each alternative should be considered. This is really a search process in which the relevant internal and

IDENTIFYING THE UNDERLYING CAUSES OF PROBLEMS

Searching for the real underlying causes of a prob- lem, like why sales dropped by 5 percent last month, is important but often challenging. One method that has been used successfully to find the underlying cause of a problem is the “Five Whys.” This approach simply directs the problem solver to repeatedly ask “why.” The “Five” in the method’s name reflects a general rule that after an individual asks why five times, he or she will have worked through the various outer layers of a prob- lem and found the true issue.

Source: Joan Adams, “The Five Whys,” Supply House Times 51, no. 10 (December 2008), pp. 16–18.

Information You Can Use

Chapter 14 Decision Making 377

external environments of the organization are investigated to provide information that can be developed into possible alternatives.19 Obviously, this search is conducted within cer- tain time and cost constraints, since only so much effort can be devoted to developing alternatives.

For example, a sales manager may identify an inadequately trained sales force as the cause of declining sales. The sales manager then would identify possible alternatives for solving the problem, such as (1) a sales training program conducted at the home office by management, (2) a sales training program conducted by a professional training organiza- tion at a site away from the home office, or (3) more intense on-the-job training.

Evaluate Alternative Solutions Once alternatives have been developed, they must be evaluated and compared. In every decision situation, the objective is to select the alternative that will produce the most favor- able outcomes and the least unfavorable outcomes. This again points to the necessity of objectives and goals since, in selecting from among alternatives, the decision maker should be guided by the previously established goals and objectives. The alternative-outcome rela- tionship is based on three possible conditions: ∙ Certainty. The decision maker has complete knowledge of the probability of the

outcome of each alternative. ∙ Uncertainty. The decision maker has absolutely no knowledge of the probability of the

outcome of each alternative. ∙ Risk. The decision maker has some probable estimate of the outcomes of each

alternative. Wouldn’t it be wonderful if on a particular day early in the morning you knew for cer-

tain what the New York Stock Exchange was going to do that day? Knowing exactly what the future will be would lead to decisions about stock investments that would always opti- mize the results. Of course, certainty in most decision making at work, home, and in the stock market is not possible. There are greater or lesser degrees of certainty.

The degree of certainty in decision making is expressed as a risk. When a decision maker lacks certainty about an outcome from a specific action (e.g., investment in a stock, receiving a promotion based on annual performance), there is a degree of risk. A probability expresses the degree of risk. One famous company that kept many investors and e-business experts in uncertainty was Amazon.com. For many years since it was founded in 1994, CEO Jeff Bezos worked hard to convince investors, critics, and his own managers that the company would eventually show a profit. Despite his optimism, many experts gave a low probability that Amazon.com would ever report a profit. Much to the delight of those investors and managers who rode out this risk, Amazon.com reported its first profit in the fourth quarter of 2001.20 Since then, the company has continued to show a profit and has passed $100 billion in revenues in 2015 for the first time in its history.21 Uncertain situations exist when managers have no or such little information that they are not able to even assign a probability to various decisions and their possible outcomes. By gathering information or studying a situation, the degree of uncertainty facing a decision maker can sometimes be reduced.

In evaluating alternative solutions, two cautions should be kept in mind. First, this phase of the decision-making process must be kept separate and distinct from the previous step, identifying solutions. This is particularly true in a group decision-making context. When alternatives are evaluated as they are proposed, this may restrict the number of alternative solutions identified. If evaluations are positive, the process may end prema- turely by settling on the first positive solution. On the other hand, negative evaluations

378 Part Four Organizational Processes

make it less likely for someone to risk venturing what may be an excellent solution for fear of being criticized or thought less of.

The second caution is to be wary of solutions that are evaluated as being “perfect.” This is particularly true when the decision is being made under conditions of uncertainty. If a solution appears to have no drawbacks or if, in a group setting, there is unanimous agree- ment on a course of action, it may be useful to assign someone to take a devil’s advocate position. The job of a devil’s advocate is to be a thorough critic of the proposed solution. Research supports the benefits of devil’s advocacy and the conflict a devil’s advocate may cause, thus forcing a decision maker to reexamine assumptions and information.22

Select the Best Solution The purpose of selecting a particular solution is to solve a problem to achieve a predeter- mined objective. This point is an extremely important one. A decision is not an end in itself but only a means to an end. The selection of an alternative should not be viewed as an isolated act. If it is, the factors that led to and lead from the decision are likely to be excluded. Specifically, the steps following the decision should include implementation and follow-up. The critical point is that decision making is more than an act of choosing; it is a dynamic process.

Unfortunately for most managers, situations rarely exist in which one alternative achieves the desired objective without having some positive or negative impact on another objective. Situations often exist where two objectives cannot be optimized simultane- ously. If one objective is optimized, the other is suboptimized. For example, when JPMorgan Chase & Co. was planning on outsourcing millions of dollars of additional work to India, it was called to task by more than three dozen members of Congress. The bank had just received $25 billion in taxpayer money as part of the government’s Troubled Asset Relief Program, an initiative intended to stabilize a troubled U.S. financial industry.23 Outsourc- ing to India was a means for the bank to reduce expenses and would help expedite its return to financial health. Congress wanted not only to ensure the continued solvency of the bank but also to stabilize U.S. employment. These simultaneous goals of Congress conflicted with the bank’s directive to regain its financial health by reducing expenses through outsourcing.

A situation could also exist where attainment of an organizational objective would be at the expense of a societal objective. The reality of such situations is seen clearly in the rise of ecology groups, environmentalists, and the consumerist movement. These groups question the priorities (organizational versus societal) of certain organizational decision makers. Whether an organizational objective conflicts with another organizational objec- tive or with a societal objective, the values of the decision maker will strongly influence the alternative chosen.

In managerial decision making, optimal solutions often are impossible. This is because the decision maker cannot possibly know all of the available alternatives, the consequences of each alternative, and the probability of occurrence of these consequences.24 Thus, rather than being an optimizer, the decision maker is a satisfier, selecting the alternative that meets an acceptable (satisfactory) standard.

Implement the Decision Any decision is little more than an abstraction if it is not implemented, and it must be effectively implemented to achieve the objective for which it was made. It is entirely pos- sible for a “good” decision to be hurt by poor implementation. In this sense, implementa- tion may be more important than the actual choice of the alternative.

devil’s advocate An appointed critic of proposed group actions whose role is to uncover underlying issues with the prevailing direction of the group.

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Since, in most situations, implementing decisions involves people, the test of the sound- ness of a decision is the behavior of the people involved relative to the decision. While a decision may be technically sound, it can be undermined easily by dissatisfied subordi- nates. Subordinates cannot be manipulated in the same manner as other resources. Thus, a manager’s job is not only to choose good solutions but also to transform such solutions into behavior in the organization. This is done by effectively communicating with the appropri- ate individuals and groups.25

Follow Up and Evaluate the Decision Effective management involves the periodic measurement and evaluation of results. Actual results are compared with planned results (the objective), and if deviations exist, changes must be made. Here again, we see the importance of measurable objectives. If such objectives do not exist, then there is no way to judge performance. If actual results do not match planned results, changes must be made in the solution chosen, in its implementation, or in the original objective if it is deemed unattainable. If the original objective must be revised, then the entire decision-making process will be reactivated. The important point is that once a decision is implemented, a manager cannot assume that the outcome will meet the original objective. Some system of con- trol and evaluation is necessary to make sure the actual results are consistent with the desired results.

Sometimes the result or outcome of a decision is unexpected or is perceived differently by different people, and dealing with this possibility is an important part of the follow-up phase in the decision-making process.

Alternatives to Rational Decision Making Decision makers do not follow to the letter the decision-making process that was presented in Exhibit 14.2. Time pressures, incomplete information, limited human resources, and many other factors may impact the decision-making process.

Administrative Decision Making March and Simon offer a descriptive approach that is described as the administrative decision-making model.26 In this model decision makers are depicted as operating with incomplete information and being impacted by their cognitive abilities and by psychologi- cal and sociological factors. Managers who are faced with limitations and restrictions often use what is referred to as the bounded rationality approach. In this approach the decision makers are assumed to have a limited or incomplete view of the problems or opportunities facing them. The number of solutions that can be implemented is limited by the capabili- ties of the decision maker and the resources that are available. Because the information, data, and knowledge are not perfect, which decision is best is unknown.

In the bounded rationality approach, the following assumptions are made: ∙ Managers (decision makers) rarely have all the information they need or want. ∙ Decision makers are not aware of all possible alternatives and are not able to predict

consequences. ∙ Early alternatives and solutions are quickly adopted because of constraints and

limitations. ∙ The organization’s goals constrain decision making.

bounded rationality approach This approach assumes that decision making is not a perfectly rational process, but rather one that is fraught with constraints and limitations. Though not optimal, decisions are thought to be satisfactory and acceptable.

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∙ Conflicting goals of different constituents (e.g., employees, suppliers, customers, and boards) can restrict decisions, forcing a compromise solution. These bounded rationality–type assumptions point to making decisions that are con-

strained, limited, but good enough. This type of decision is referred to as a “satisfying decision,” that is, making a decision that is acceptable and good enough, but if everything were perfect it might not be the optimal decision. Decision makers are satisfiers because of the circumstances and the need to move forward. For example, few people find their ideal, perfect, or optimal job. People need to earn a living, and, after what each considers to be a thorough search, a person takes an acceptable or good-enough offer. There is some degree of satisfaction in almost all decisions that people make.

Southwest Airlines offers no-frills, typically on-time, and competitively priced air travel. If a traveler wants an optimal experience with a good meal, refreshments, comfort- able seating, and quietness, then Southwest is not the way to fly. A traveler (decision maker) would be satisfied by electing to travel Southwest, but he or she may not be opti- mizing the travel experience.

Intuitive Decision Making Managers sometimes simply make decisions based on a “gut” feeling or intuition.27 An intuitive decision maker uses experience, self-confidence, and self-motivation to process information, data, and the environment to address a problem or opportunity. Intuitive decision making involves an unconscious process that incorporates the decision maker’s personality and experience in reaching a decision. Intuitive decision making occurs frequently because: ∙ High levels of uncertainty about a problem, the goals, and the decision criteria can exist. ∙ In some situations there is no history or past experience to draw upon. ∙ Time pressures are intense. ∙ An excessive number of alternatives can be difficult to analyze thoroughly.

These factors suggest that when uncertainty is high, time pressures are bearing down, and complexity exists, intuitive decision making is likely to be involved. The rational and administrative explanations of decision making are appealing because some logic and sys- tem are associated with each of these processes.28 However, in chaotic, rapidly changing, and pressure-packed situations, a lot of intuitive decision making is likely to occur. Perhaps it is best to combine the more systematic and intuitive approaches when attempting to reach decisions.29

Even when managers combine systematic and intuitive approaches, decisions can still turn out to be flawed and costly to the organization. The nearby OB Matters reviews some of these failed decisions and several causes that may have contributed to them.

Behavioral Influences on Decision Making A number of behavioral factors influence any decision-making process (e.g., rational, administrative, intuitive). Some of these factors influence only certain aspects of the pro- cess, while others influence the entire process. However, each may have an impact and, therefore, must be understood to fully appreciate decision making as a process in organiza- tions. Four behavioral factors—values, propensity for risk, potential for dissonance, and escalation of commitment—are discussed in this section. Each of these factors has been shown to have a significant impact on the decision-making process.

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Values In the context of decision making, values can be thought of as the guidelines a person uses when confronted with a situation in which a choice must be made. Values are acquired early in life and are a basic (often taken-for-granted) part of an individual’s thoughts. The influence of values on the decision-making process is profound: ∙ In establishing objectives, it is necessary to make value judgments regarding the selec-

tion of opportunities and the assignment of priorities. ∙ In developing alternatives, it is necessary to make value judgments about the various

possibilities. ∙ In choosing an alternative, the values of the decision maker influence which alternative

is chosen. ∙ In implementing a decision, value judgments are necessary in choosing the means for

implementation. ∙ In the evaluation and control phase, value judgments cannot be avoided when correc-

tive action is taken.

values The guidelines and beliefs that a person uses when confronted with a situation in which a choice must be made.

COMPANIES PAY THE PRICE FOR POOR DECISIONS As part of a research study on how company CEOs manage doubt, executive search firm Heidrick & Struggles identified four traits that can sabotage an executive’s approach to decision making: overconfi- dence, angst, myopia, and paralysis.

Overconfidence on the part of a CEO can destroy a successful busi- ness. Consider the case of Eastman Kodak and its former CEO, Walter Fallon. At one point in the late 1970s, Kodak was a hugely successful global business that had made its name focusing on film, cameras, and photography. By the early 1980s, however, internal company reports warned of the impending rise of digital technology and its imminent impact on film sales. Although a Kodak engineer had developed the first digital camera in 1975, Fallon’s hubris about the future of the com- pany caused Kodak to miss the digital revolution. Fallon ignored perti- nent information and maintained the status quo when it came to business strategies. By 2012, Kodak filed for bankruptcy protection.

Day-to-day stress can prevent CEOs and other senior executives from making important decisions in a timely manner. For example, Reddit, a popular social media site, has seen its share of recent CEOs who couldn’t take the heat and left the top position in a matter of months. In 2014, Reddit’s CEO Yishan Wong left the company and blamed the stress of having to decide where to locate Reddit’s new corporate headquarters as the final straw that hastened his depar- ture. Seven months later, Wong’s replacement resigned after a fire- storm of protest from employees who were angry that she fired a popular employee.

Sometimes, CEOs fail to recognize a changing business landscape. At the height of Blockbuster Video’s success in 2000, then-CEO John Antioco was approached by Reed Hastings, co-founder of a fledgling company called Netflix, with an interesting proposal. Hastings suggested

that Antioco buy Netflix for $50 million, with the idea that it would become Blockbuster’s content-streaming service. At the time, Internet connections ran through phone lines, and streaming was slow and the quality poor, so Antioco passed on the purchase. Blockbuster filed for bankruptcy 10 years later in 2010, while Netflix’s most recent worth is valued at more than $38 billion.

In business, the inability to make a decision can sometimes be far worse than making a wrong decision. Several years before the 2008 recession, U.S. automakers knew they were in an uphill battle. Ironclad contracts with auto dealerships made it difficult for the Big Three to get out of expensive business relationships. In addition, they focused on selling profitable gas-guzzling SUVs while making few advances in technology and innovation. At the same time, U.S. consumers were buying foreign brands that were more fuel efficient. U.S. carmakers’ inability to make timely business decisions ultimately cost U.S. tax- payers more than $80 billion in government handouts to keep the auto industry afloat during the economic downturn of 2008–2010.

Sources: Ryan Derousseau, “The Four Horsemen of Bad Decision Making,” Fortune, http://fortune.com, accessed May 18, 2016; “Netflix Market Capitalization,” YCharts, May 18, 2016, https://ycharts.com; Bonnie W. Gwin, “How CEOs Manage Doubt,” Heidrick & Struggles Knowledge Center, August 26, 2015, http://www. heidrick.com; Don Reisinger, “Reddit’s Revolving Door Swings Again as Head of Community Departs,” CNET, July 28, 2015, http://www.cnet.com; Celena Chong, “Blockbuster’s CEO Once Passed Up a Chance to Buy Netflix for Only $50 Million,” Business Insider, July 17, 2015, http://www.businessinsider.com; Joel Cutcher- Gershenfeld, Dan Brooks, and Martin Mulloy, “The Decline and Resurgence of the U.S. Auto Industry,” Economic Policy Institute, May 6, 2015, http://www.epi. org; Paolo Landoni, “Why Kodak Missed the Digital Revolution after Starting It,” LinkedIn, May 2, 2015, https://www.linkedin.com; Mona Zhang, “Reddit CEO Resigns over Office Plan Disagreement,” Social Times, November 13, 2014, http://www.adweek.com.

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It is clear that values pervade the decision-making process. As one example, consider the issue of ethics in decision making. An ethical decision can be viewed as one that is legal and morally acceptable to society; an unethical decision is either illegal or morally unacceptable.30 To a large extent, a decision maker’s willingness to make ethical or unethi- cal decisions will be influenced by his or her values. Well-publicized recent scandals include Bernie Madoff’s $60 billion Ponzi scheme,31 Volkswagen’s diesel emissions scandal,32 and corruption charges against officials of FIFA (the soccer international governing body)— accusations that soccer officials took millions of dollars in bribes in the United States to influence clothing sponsorship contracts and the selection process for the World Cup.33 These and other notorious ethical lapses, or even crimes, have heightened awareness of the critical role that values play in decision making.34 This chapter’s You Be the Judge presents another powerful example.

Ethical scandals continue to gain the public’s attention. Ethical problems are not just limited to business organizations; they also impact health care, the legal profession, and government organizations. The scandals are global.35 Why do some individual decision makers in every profession, occupation, and country resort to unethical choices? Philoso- phers and social scientists have studied this problem and found that no one set of explana- tions applies to all cases.

Y O U B E T H E J U D G E

ETHICS AND THE CHALLENGER DECISION Millions of Americans of all ages watched the live TV presentation of the launch of the space shuttle Challenger on January 28, 1986. Less than two minutes after liftoff, the Challenger exploded. All seven crew members perished. In hindsight, it became clear that the launch should have been canceled. The issue we are ex- amining here is, was it as clear before the launch? Consider the following:

During the evening before the launch, a teleconference took place between representatives of Morton Thiokol (manufacturer of the booster rocket), the Marshall Space Flight Center (MSFC), and the Kennedy Space Center. Morton Thiokol engineers expressed concern about the integrity of the O-ring seals at temperatures below 53 degrees (temperatures at the launch site were below freezing). The Thiokol senior engineer concluded the data sup- ported a no-launch decision. The director of space engineering at the MSFC indicated he was “appalled” by the Thiokol recommen- dation but would not launch over the contractor’s objections. At that point, the MSFC chief of solid rockets gave his view, con- cluding the data presented were inconclusive.

Based on NASA’s rule that contractors had to prove it was safe to fly, the statement that the data were inconclusive should have stopped the launch. However, a Thiokol vice president who was also on the line requested an off-line caucus to reevaluate the data. Dur- ing the caucus, two engineers attempted to make themselves heard as management representatives began a discussion. Their attempts were met with cold stares as management representatives

struggled to compile data that would support a launch decision. Returning to the teleconference, the Thiokol VP read a launch support rationale and recommended that it proceed.

NASA, for its part, accepted the recommendation without any discussion. It was consistent with its desires. Several delays had already occurred and it feared a loss of public and political interest. Besides, the president was giving his State of the Union address that evening and surely the launch would get a favorable mention.

What is your opinion on the ethics of the decision? Recall that the text defines an ethical decision as one that is both legal and morally acceptable to society.

Sources: Sarah Kaplan, “Finally Free from Guilt over Challenger Disaster, an Engineer Dies in Peace,” The Washington Post, March 22, 2016, https:// www.washingtonpost.com; Karl Tate, “The Space Shuttle Challenger Disaster: What Happened?” (Infographic), Space.com, January 28, 2016, http://www.space.com; “Washington Outlook,” Aviation Week & Space Technology 168, no. 19 (2008), pp. 23–26; Scott Richardson, “Our Destiny Is Out There,” Knight Ridder Tribune Business News, January 29, 2006, p. 1; Robert D. Dimitroff, Lu Ann Schmidt, and Timothy D. Bond, “Organizational Behavior and Disaster: A Study of Conflict at NASA,” Project Management Journal 36, no. 2 (2005), pp. 28–38; Mark Maier, “Ten Years after a Major Malfunction: Reflections on ‘The Challenger Syndrome,’” Journal of Management Inquiry 11, no. 3 (September 2002), pp. 282–94; M.P. Miceli and J.P. Near, “Whistleblowing: Reaping the Benefits,” Academy of Management Executive, August 1994, pp. 65–72; R. March, C. Stubbart, V. Traub, and M. Cavanaugh, “The NASA Space Shuttle Disaster: A Case Study,” Journal of Management Case Studies, Winter 1987, pp. 300–318; G. Whyte, “Decision Failures: Why They Occur and How to Prevent Them,” Academy of Management Executive, August 1991, pp. 23–31.

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Some of the most cited explanations of why decision makers still make unethical choices include: ∙ They feel pressure to perform exceptionally well. This pressure to produce top-level

results (financially) is continuous. ∙ They think since everyone else is doing it, so must they to remain competitive. This is

the keeping-up-with-the-Joneses explanation. ∙ The practice of being secretive and nonrevealing is considered important in some orga-

nizations. This results in the practice of stonewalling or willingly hiding or holding onto relevant data and information. Examples of hiding research and survey information include Dow Corning’s silicone gel used in breast implant studies, Ford Pinto’s rear gas tank defect problems (resulting in explosions and deaths), and employees at General Motors who falsified and withheld data about a defective ignition switch, which resulted in deaths, injuries, and massive recalls of GM automobiles.

∙ They fail to take responsibility for problems. ∙ They focus on cost before safety when there is a choice.

Improving the record of making ethical decisions is difficult.36 Values are difficult to change. Efforts to promote ethical decision making focus on training, preparation of a code of ethics, having top executives serve as proactive role models, and personally examining the situation or decision to be made. When examining the situation, the decision maker should consider doing what is legal, doing what is right, being fair, and answering the question, “Could the decision meet the ‘sunshine’ test,” or “if it is published in the newspa- per, would the reader consider the decision ethical?”

Ethical decision making starts with the values that guide an individual’s decision mak- ing. There are no simple prescriptions, but there are right, fair, honest, and open ways of making decisions. Many decisions have an ethical dimension that requires thought, reflec- tion, caution, and attention.37 Considering the rights of others, adhering to strong values, and living up to high standards of behavior are the starting points for facing inevitable ethical dilemmas when making decisions.

Risk Orientation From personal experience, you undoubtedly are aware that decision makers vary greatly in their willingness to take risk. This one specific aspect of personality strongly influences the decision-making process. A decision maker who is willing to take more risks will establish different objectives, evaluate alternatives differently, and select dif- ferent alternatives than will another decision maker in the same situation who is more risk-averse. The latter will attempt to make choices where the risk or uncertainty is low or where the certainty of the outcome is high. You will see later in the chapter that many people are bolder and more innovative and advocate greater risk taking in groups than as individuals. Apparently, such people are more willing to accept risk as mem- bers of a group.

Risk propensity is also affected by whether potential outcomes are characterized in terms of losses or gains. This, in turn, depends on how the decision maker “frames” the decision. Framing refers to the decision maker’s perception, in terms of gains or losses, of the decision’s possible outcomes.38 When the choice is perceived as being between losses, there is a greater propensity to take risks than when it is perceived as being between gains. For example, when a large number of individuals are confronted with the choice of losing $100 for certain or taking a gamble on a coin flip with an equal expected value (i.e., if it comes up heads you lose $200; if it comes up tails you

384 Part Four Organizational Processes

lose nothing), most people will choose the gamble. On the other hand, when con- fronted with the choice between a certain gain of $100 or a coin flip with an equal expected value (heads you receive $200; tails you receive nothing), most people opt for the certain $100.

Dissonance Much attention has been focused on the forces and influences affecting the decision maker before a decision is made and on the decision itself. But only recently has attention been given to what happens after a decision has been made. Specifically, behavioral scientists have focused attention on the occurrence of post-decision anxiety.

Such anxiety is related to what Festinger calls cognitive dissonance.39 Festinger’s cognitive dissonance theory states that there is often a lack of consistency or harmony among an individual’s various cognitions (attitudes, beliefs, and so on) after a decision has been made. That is, there will be a conflict between what the decision maker knows and believes and what was done, and as a result the decision maker will have doubts and second thoughts about the choice that was made. In addition, there is a likelihood that the intensity of the anxiety will be greater when any of the following conditions exist:

1. The decision is an important one psychologically or financially. 2. There are a number of forgone alternatives. 3. The forgone alternatives have many favorable features.

Each of these conditions is present in many decisions in all types of organizations. You can expect, therefore, that post-decision dissonance will be present among many decision makers, especially those at higher levels in the organization.

Dissonance can be reduced by admitting that a mistake has been made. Unfortunately, many individuals are reluctant to admit they have made a wrong decision and will be more likely to use one or more of the following methods to reduce their dissonance:

1. Seek information that supports the wisdom of their decision. 2. Selectively perceive (distort) information in a way that supports their decision. 3. Adopt a less favorable view of the forgone alternatives. 4. Minimize the importance of the negative aspects of the decision and exaggerate the

importance of the positive aspects.

While each of us may resort to some of this behavior in our personal decision mak- ing, it is easy to see how a great deal of it could be extremely harmful in terms of orga- nizational effectiveness. The potential for dissonance is influenced heavily by one’s personality, specifically one’s self-confidence and ability to be persuaded. In fact, all of the behavioral influences are closely interrelated and are isolated here only for discus- sion purposes.40 For example, what kind of a risk taker you are and your potential for anxiety following a decision are very closely related, and both are strongly influenced by your personality, your perceptions, and your value system. Before managers can fully understand the dynamics of the decision-making process, they must appreciate the behavioral influences on themselves and other decision makers in the organization when they make decisions.

While all leaders may face decisions that leave them second-guessing, the conse- quences of decisions that literally deal with life and death can leave them particularly susceptible to cognitive dissonance. Perhaps no individual has made a single decision

cognitive dissonance A mental state of anxiety that occurs when there is a conflict among an individual’s various cognitions (e.g., attitudes and beliefs) after a decision has been made.

Chapter 14 Decision Making 385

of greater impact on human life than President Harry Truman. Thrust into the Oval Office after the unexpected death of his predecessor, Truman was the president of a country at war. Rather than pursue a prolonged and bloody invasion of Japan to end World War II, Truman made the controversial decision to authorize the use of atomic weapons. This decision potentially saved the lives of hundreds of thousands of U.S. servicemen, but in doing so he also ordered an estimated 150,000 civilians to their deaths. This was not the last decision of grave consequence that Truman had to face. For example, he also involved the country in the Korean War, desegregated the military, and formed the North Atlantic Treaty Organization (NATO). It is interesting to consider how Truman weighed the costs associated with such decisions and managed the disso- nance he must have experienced while and after making such impactful decisions. Even though he surely felt he was making the right decisions, how did Truman balance the costs associated with these decisions? Truman is credited with saying the following, which may provide insight into how he viewed the president’s role in decision making: “Being a president is like riding a tiger. You have to keep on riding or be swallowed.”41 Perhaps Truman was saying that his focus on the present saved him from being con- sumed by the decisions of his past.

Escalation of Commitment Gamblers who place larger and larger wagers in an effort to recoup earlier losses are displaying a decision-making behavior called escalation of commitment. Decision mak- ers who are unclear about their goals, have a fear of failure, are feeling pressure, and work in a culture with low trust are likely to be candidates for escalation of decision making. Escalation of commitment refers to an increasing commitment to a previous decision when a “rational” decision maker would withdraw.42 It typically results from a need to turn a losing or poor decision into a winning or good decision. Examples of esca- lation of commitment abound in daily life. President Lyndon Johnson’s decision to con- tinue increasing U.S. troop involvement in the Vietnam War is a frequently cited example. The savings and loan crisis of the 1980s grew out of decisions made by loan officers to make increasingly riskier loans in an escalating effort to recoup losses result- ing from previous poor loan decisions. The decision made by Bureau of Alcohol, Tobacco, and Firearms agents to move forward with the raid on the heavily armed Branch Davidian compound outside Waco, Texas, also appears to have been an example of escalation of commitment.

Escalation of commitment can result from becoming too ego-involved in a decision process. Because failure is threatening to an individual’s self-esteem, people tend to ignore negative information. It can also be the result of peer pressure, which makes it difficult for a decision maker to reverse a course of action he or she has publicly sup- ported in the past. In either case, it involves loss of objectivity in the decision-making process.

A classic case of escalation of commitment may be seen as leading to the demise of the Joseph Schlitz Brewing Company. The brewer’s marketing slogan, “When you’re out of Schlitz, you’re out of beer,” correctly communicated the company’s level of market domi- nance. For several years, Schlitz had been the market leader in the United States but in 1957 fell to second place behind Anheuser-Busch. In 1970, Schlitz executives made a bold decision. Attempting to recapture their top market position, they altered the recipe and the brewing process so that they could make their beer more quickly and cheaply. They substi- tuted corn syrup for malt, changed the stabilizers in the beer, and decreased the brewing time from 40 to 15 days.

escalation of commitment An increasing adherence to a previous decision when a rational decision maker would withdraw.

386

While these innovations immediately decreased costs and increased output, not surpris- ingly, the taste of the beer was found to be inferior. Worse, the formulation tended to break down and the ingredients would coagulate and sink, looking disturbingly like mucus at the bottom of the can. Even after the brewery realized it was shipping what was perceived as “snot beer,” it decided to do nothing. Rationalizing that most of the beer would not be sub- ject to the conditions that promoted the coagulation, what executives benignly termed “hazing,” action was withheld for months before a massive recall of over 10 million cans was ordered. Schlitz never recovered and was eventually bought out by a smaller brewer. Schlitz’s commitment to its formula change caused its downfall. Interestingly, the current owner of the Schlitz brand name has reintroduced the original recipe, and it is being well received.43

Each of the behavioral influences just discussed—values, propensity for risk, poten- tial for dissonance, and escalation of commitment—are influenced by the culture to which the decision maker has been exposed as well as the cultural context in which the decision is being made. As organizational decision making transcends national bound- aries, cultural influences—and differences—become increasingly significant. Many cultural differences affect decision making. The Global OB feature provides some examples.

DECISION MAKING IN DIFFERENT CULTURES Organizational decision making in the United States is pre- sumed to be based on thorough and objective analysis of relevant information. Whether this is true in actual practice is arguable, but it does represent what is supposed to happen ideally. This is not the ideal in every society, however. In some countries, it is inappropriate for senior executives to consult subordinates before making a decision; in other countries it is equally inap- propriate for them not to consult subordinates. In almost every aspect of decision making, different cultural norms dictate dif- ferent ways of proceeding. A few examples follow:

1. In some cultures (e.g., the United States), problems are more likely to be seen as requiring solutions, whereas in others (e.g., Thailand), problems are more likely to be seen as situations requi- ring acceptance.

2. Americans value following the chain of command during the decision- making process. Swedes, on the other hand, will not hesitate to go around or over someone in the chain if doing so is helpful to the decision process. Such behavior would be viewed as inappropriate in American organizations and perfectly acceptable in Swedish ones.

3. Mexicans, who value tradition and history, will tend to adopt tried and proven solutions to current problems. Australians are more present-oriented—and more aggressive—and are more likely to try unique and innovative alternative solutions.

4. Germans tend to process their decisions through committees, fre- quently composed primarily of technical experts. The French, who tend to be highly centralized, would not likely use committees.

5. In high power-distance cultures such as India, decisions are made at the highest level of the organization. In a low power-distance culture such as Sweden, on the other hand, the lowest-level employees expect to make their own decisions.

The differences between Japanese and American management practices are often subjects of debate and discussion. Decision mak- ing is a part of management practice, and many differences in the decision-making process exist between these two countries. For example, the Japanese are much more consensus-oriented than are Americans. Japanese decision making is often described by the word nemawashi, which means “root-binding.” Each employee has a sense of running the organization because nothing gets done until everyone agrees. Many—if not most—American managers would find this approach frustrating and agonizingly slow. Japanese are also likely to spend much more time on deciding if a decision is even needed and on what the decision is about than their American counterparts. Because of this, they tend to direct their attention to major decisions, in contrast to American managers who often focus (by Japanese thinking) on minutiae.

These are only a few examples of the many cultural variations in decision making. They explain why cross-cultural decision making can be very difficult.

G L O B A L O B

Chapter 14 Decision Making 387

Group Decision Making In most organizations, a great deal of decision making is achieved through committees, teams, task forces, and other kinds of groups.44 Managers frequently face situations in which they must seek and combine judgments in group meetings. This is especially true for nonprogrammed problems, which are novel and have much uncertainty regarding the out- come. In most organizations, it is unusual to find decisions being made on such problems by one individual on a regular basis.

The increased complexity of many nonprogrammed decisions requires specialized knowledge in numerous fields, usually not possessed by one person. This requirement, cou- pled with the reality that the decisions made eventually must be accepted and implemented by many units throughout the organization, has increased the use of the collective approach to the decision-making process. Perhaps no organization models team effectiveness better than the U.S. Army Special Forces or Green Berets. These soldiers are expected to operate on missions that are “special” or outside of typical parameters. They are trained to ignore the “inept conventional mentality to find intelligent solutions to unconventional situations.” Green Berets are experts in multiple specialty areas. When teams are deployed, each soldier has a specific role; however, each person is also cross-trained in at least one other team member’s area. Teams are expected to operate in remote locations for extended periods with limited (if any) support or guidance from their command. Their success is determined by their ability to collectively and creatively implement solutions to novel situations.45

Individual versus Group Decision Making Considerable debate has occurred over the relative effectiveness of individual versus group decision making. Groups usually take more time to reach a decision than individuals do. But bringing together individual specialists and experts has its benefits since the mutually reinforcing impact of their interaction results in better decisions. In fact, a great deal of research has shown that consensus decisions with five or more participants are superior to individual decision making, majority vote, and leader decisions. Unfortunately, open discussion has been found to be negatively influenced by such behavioral factors as the pressure to conform; the influence of a dominant personality type in the group; “status incongruity,” as a result of which lower-status participants are inhibited by higher-status participants and “go along,” even though they believe that their own ideas are superior; and the attempt of certain participants to influence others because these participants are perceived to be experts in the problem area.46 Additionally, framing effects occur more frequently in groups.47

Certain decisions appear to be better made by groups, while others appear better suited to individual decision making. Nonprogrammed decisions appear to be better suited to group decision making. Usually calling for pooled talent, the decisions are so important that they are frequently made by top management and, to a somewhat lesser extent, by middle managers.

In terms of the decision-making process itself, the following points concerning group processes for nonprogrammed decisions can be made: 1. In establishing goals and objectives, groups probably are superior to individuals

because of the greater amount of knowledge available to groups. 2. In identifying causes and developing alternative solutions, the individual efforts of

group members are necessary to ensure a broad search in the various functional areas of the organization.

388 Part Four Organizational Processes

3. In evaluating alternative solutions, the collective judgment of the group, with its wider range of viewpoints, seems superior to that of the individual decision maker.

4. In solution selection, it has been shown that group interaction and the achievement of consensus usually results in the acceptance of more risk than would be accepted by an individual decision maker. In any event, the group decision is more likely to be accepted as a result of the participation of those affected by its consequences.

5. Implementation and follow-up of a decision, whether or not made by a group, usually are accomplished by individual managers. Thus, since a group ordinarily is not respon- sible, the responsibility for implementation and follow-up necessarily rests with the individual manager. Exhibit 14.3 summarizes the research on group decision making. It presents the rela-

tionship between the probable quality of a decision and the method utilized to reach the decision. It indicates that, as we move from “individual” to “consensus,” the quality of the decision improves. Note also that each successive method involves a higher level of mutual influence by group members. Thus, for a complex problem requiring pooled knowledge, the quality of the decision is likely to be higher as the group moves toward achieving con- sensus.48 The final section of the chapter examines ways to increase creativity in group decision making. Before progressing, however, examine the nearby Information You Can Use feature, which presents techniques to increase your individual creativity.

Creativity in Group Decision Making Since most decisions involve some degree of risk, there is a need for creativity to solve problems and seize opportunities. Creativity is a process by which an individual, group, or team produces novel and useful ideas to solve a problem or capture an opportunity. In orga- nizations, moving away from logical, linear, or “in the box” thinking describes creativity. This is called lateral thinking or a process of generating novel ways to solve problems faced by an individual or group.

creativity Process by which an individual, group, or team produces novel and useful ideas to solve a problem or capture an opportunity.

EXHIBIT 14.3 Probable Relationship between Quality of Group Decision and Method Utilized

High

Low

Individual Average individual

Minority control

Majority control

Consensus

Probable Quality of Decision

Method of Utilization of Group Resources

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Creative decision makers share some common characteristics such as: ∙ Perseverance. They stay longer at the task of attacking problems. ∙ Risk-taking propensity. They take moderate to high risks and stay away from extreme

risks. ∙ Openness. They are open to new experiences and are willing to try new approaches. ∙ Tolerance of ambiguity. They can tolerate a lack of structure, some lack of clarity, and

not having complete information, data, and answers. These characteristics of creative individuals describe many successful entrepreneurs,

including Jack Dorsey (Square, Twitter), Elon Musk (SpaceX, Tesla Motors), and Jessica Herrin (WeddingChannel.com, Stella & Dot).49 Their backgrounds and creativity charac- teristics are cited quite often. Another creative decision maker who personifies persever- ance, risk taking, openness, and an ability to deal with ambiguity is Meg Whitman. She has worked at Procter & Gamble, Bain & Co., and Disney searching for her ideal job.50

Meg Whitman joined FTD (flowers) as CEO and kept learning and making what colleagues call fast and no-nonsense decisions. She took an opportunity at eBay when it was a maze of

conflict, uncertainty, and risk. Whitman was open to new ideas, withstood unrelenting criticism for her decisions, and stuck to her plan. When the eBay system crashed and service was turned off, Whitman jumped in and corrected the problems. She persevered and creatively helped eBay achieve unheard-of success. She took risks, became wealthy, and is an example of an unrecognized (by most people) leader, serving as a role model of a creative decision maker.51 In September 2011, Whitman became CEO and president of Hewlett-Packard, hoping to turn around the struggling technol- ogy company.52 Encountering financial headwinds and lackluster stock returns, Whitman and the HP board decided to split the com- pany into two separate firms in November 2015. Hewlett-Packard Enterprise, which Whitman runs, focuses on selling hardware such as computer servers to businesses building data centers. HP Inc. sells PCs and printers to businesses and consumers.53

Groups and teams can have even more creative potential than individuals such as Meg Whitman. This is especially true when the task is complex and novel and there is uncertainty. Groups have creative potential because of combined expertise, resources, and experience.

But if groups are potentially better suited to nonprogrammed decisions than individuals are, an atmosphere fostering group creativity must be created. In this respect, group decision mak- ing may be similar to and may utilize brainstorming in that discussion must be free-flowing and spontaneous. All group members must participate, and the evaluation of individual ideas must be suspended in the beginning to encourage partici- pation, even though ultimately a decision must be reached.

Techniques for Stimulating Group Creativity In many instances, group decision making is preferable to individual decision making, but consider the statement, “A camel is a racehorse designed by a committee.” While the necessity and the benefits of group decision making are recognized, numerous problems

INCREASING YOUR INDIVIDUAL CREATIVITY

As knowledge-based organizations become the norm, creativity is a competence that these organizations need. The real value in such organizations is not in their physical assets but in their intellectual assets— the ideas and insights in the minds of their employees. Such organizations cannot survive without creativity and are discovering that it is a skill that can be devel- oped. Here are some tips for becoming more creative.

1. Get out of the office. A walk in the park or a trip to a toy store may be more productive than sitting at your desk with a pencil and pad.

2. Be childlike. Some believe this is the most important tip because creativity seems to be connected with age.

3. Be a maverick. The best ideas and decisions often come from those who don’t care what others are thinking or how they are doing things.

4. Sit on the other side of the room. Break your routine, drive to work a different way.

5. Ask “What if . . . ?” This question can stimulate thought for you and plenty of discussion in a group.

6. Listen. No one has a monopoly on good ideas. Ask others, and listen.

Information You Can Use

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also are associated with it, some of which already have been noted. Practicing managers need specific techniques that will enable them to increase the benefits from group decision making while reducing the associated problems. If problems are not addressed, then a group’s creativity can be substantially diminished.54

We shall examine three techniques that, when properly utilized, have been found to be extremely useful in increasing the creative capability of a group in generating ideas, under- standing problems, and reaching better decisions. Increasing the creative capability of a group is especially necessary when individuals from diverse sectors of the organization must pool their judgments and create a satisfactory course of action for the organization. The three techniques are brainstorming, the Delphi technique, and the nominal group technique.

Brainstorming In many situations, groups are expected to produce creative or imaginative solutions to organizational problems. In such instances, brainstorming often has been found to enhance the creative output of the group. The technique of brainstorming includes a strict series of rules. The purpose of the rules is to promote the generation of ideas while, at the same time, avoiding the inhibitions of members that usually are caused by face-to-face groups. The basic rules are:

∙ No idea is too ridiculous. Group members are encouraged to state any extreme or outlandish idea.

∙ Each idea presented belongs to the group, not to the person stating it. In this way, it is hoped that group members will utilize and build on the ideas of others.

∙ No idea can be criticized. The purpose of the session is to generate, not evaluate, ideas. Brainstorming is widely used in advertising agencies where it apparently is effective.

It has been less successful in other situations because there is no evaluation or ranking of the ideas generated. Thus, the group never really concludes the problem-solving process. Other issues that can decrease the effectiveness of brainstorming in teams include:55

1. Social loafing. Team members tend to not work as hard mentally or physically as they would alone, so social loafing can decrease the quality and quantity of ideas generated from the brainstorming session.

2. Conformity. If members of the team are overly concerned that their ideas and sugges- tions will be viewed critically by others, then they will be less likely to provide innova- tive and creative suggestions.

3. Idea production blocking. This occurs when a team member has to wait his or her turn to provide an idea that contributes to the brainstorming session. The delay may cause the individual to forget what he or she was going to say, or to not listen to what is being said by other contributors.

4. Downward norm setting. When a brainstorming session is not well managed, the lowest-performing members tend to pull down the overall performance of the team to their level. These problems can be minimized, and the performance of team members who engage

in brainstorming activities can be enhanced, by: (1) setting specific goals for the teams to achieve, (2) providing meaningful incentives for teams that perform well, and (3) having a skilled facilitator manage the process.

brainstorming The generation of ideas in a group through noncritical discussion.

Chapter 14 Decision Making 391

The Delphi Technique This technique involves the solicitation and comparison of anonymous judgments on the topic of interest through a set of sequential questionnaires that are interspersed with sum- marized information and feedback of opinions from earlier responses.56

The Delphi technique retains the advantage of having several judges while removing the biasing effects that might occur during face-to-face interaction. The basic approach has been to collect anonymous judgments by mail questionnaires though recent modi- fications to the approach encourage experts to respond via e-mail.57 For example, the members independently generate ideas to answer the first questionnaire and return it. The staff members summarize the responses as the group consensus and feed this summary back along with a second questionnaire for reassessment. Based on this feedback, the respondents independently evaluate their earlier responses. The underlying belief is that the consensus estimate will result in a better decision after several rounds of anonymous group judgment. While it is possible to continue the procedure for several rounds, studies have shown essentially no significant change after the second round of estimation.

The Nominal Group Technique (NGT) NGT has gained increasing recognition in health, social service, education, industry, and government organizations.58 The term nominal group technique (NGT) was adopted by ear- lier researchers to refer to processes that bring people together but do not allow them to communicate verbally. Thus, the collection of people is a group “nominally,” or in name only. You will see, however, that NGT in its present form combines both verbal and non- verbal stages.

Basically, NGT is a structured group meeting that proceeds as follows: A group of individuals (7 to 10) sit around a table but do not speak to one another. Rather, each person writes ideas on a pad of paper. After five minutes, a structured sharing of ideas occurs. Each person around the table presents one idea. A person designated as recorder writes the ideas on a flip chart in full view of the entire group. This continues until all of the participants indicate that they have no further ideas to share. There is still no discussion.

The output of this phase is a list of ideas (usually between 18 and 25). The next phase involves structured discussion in which each idea receives attention before a vote is taken. This is achieved by asking for clarification or stating the degree of support for each idea listed on the flip chart. The next stage involves independent voting in which each partici- pant, in private, selects priorities by ranking or voting. The group decision is the mathe- matically pooled outcome of the individual votes. Exhibit 14.4 illustrates the nominal group technique.

Both the Delphi technique and NGT have had excellent success records. Basic differ- ences between them are: 1. Delphi participants typically are anonymous to one another, while NGT participants

become acquainted. 2. NGT participants meet face-to-face around the table, while Delphi participants are

physically distant and never meet face-to-face. 3. In the Delphi process, all communication between participants is by way of written

questionnaires and feedback from the monitoring staff. In NGT, communication is direct between participants.59

Delphi technique Method of decision making that compares anonymous judgments on a topic of interest through a set of sequen- tial questionnaires.

nominal group technique (NGT) Method of decision making that occurs in a highly structured meeting; group decision is based on mathemati- cal assessment of votes.

392 Part Four Organizational Processes

Practical considerations often influence which technique is used. For example, such fac- tors as the number of working hours available, costs, and the physical proximity of partici- pants will influence which technique is selected.

Our discussion here has not been designed to make the reader an expert in the Delphi process or NGT. Our purpose throughout this section has been to indicate the frequency and importance of group decision making in every type of organization. The three techniques discussed are practical devices to improve the effectiveness of group decisions.

Decision making is a common responsibility shared by all executives, regardless of functional area or management level. Every day, managers are required to make decisions that shape the future of their organization as well as their own futures. The quality of a manager’s decisions is the yardstick of his or her effectiveness. Some of these decisions may have a strong impact on the organization’s success, while others will be important but less crucial. However, all of the decisions will have some effect (positive or negative, large or small) on the organization.

EXHIBIT 14.4 Four-Step Nominal Group Technique

Step 3: Each recorded statement is discussed, narrowing them down to the best set.

Step 2: Each group member in order records on a chart, whiteboard, or computer screen an idea, problem, or opportunity with no comments or discussion.

Step 1: Individual group members independently record ideas, problems to be solved, or opportunities.

Initiate Step 1 with different idea, problem, or opportunity with di

Step 4: Members vote/rank from best to worst the winnowed set of ideas, problems, opportunities.

Chapter 14 Decision Making 393

ETHICS AND THE CHALLENGER DECISION The explosion of the space shuttle Challenger and loss of seven crew members was a tragic event that stands in contrast to the many successful missions by the U.S. space program over the past 50 years. Unfortunately, the evidence suggests that the Challenger should not have been launched given that the data on the potential performance of the O-rings in tem- peratures under 53 degrees Fahrenheit were inconclusive. It appears that the political pressure was greater than the ability

of key decision makers at Morton Thiokol, the Marshall Space Flight Center, and the Kennedy Space Center to recommend that the Challenger launch be delayed again. It is likely that fear, pride, career considerations, organizational pressures to succeed, and/or the ever-present urgency for public and politi- cal support for the space program took precedence over the safety of the crew. With the advantage of 20–20 hindsight, the decision to “go” may have been a legal decision, but certainly not an ethical one.

Y O U B E T H E J U D G E C O M M E N T

Summary of Key Points

∙ Decisions may be classified as programmed or nonprogrammed, depending on the type of problem. Decisions are programmed to the extent that they are repetitive and routine and a definite procedure has been developed for handling the problem. Decisions are nonpro- grammed when they are novel and unstructured and there is no established procedure for handling the problem.

∙ Because not all problems are of the same importance, it is necessary to prioritize them. How significant a problem is depends on at least three attributes: urgency, impact, and growth tendency. Urgency relates to time and how critical time pressures are in dealing with a problem. Impact describes the seriousness of the problem’s effects. Growth tendency addresses the likelihood of future changes in problem urgency or impact.

∙ The relationship between alternatives and outcomes is based on three possible conditions. Certainty exists when the decision maker has complete knowledge of the probability of the outcome of each alternative. Uncertainty exists when absolutely no such knowledge is available. Risk is an intermediate condition, wherein some probable estimate of outcomes can be made.

∙ The decision-making process entails following a number of steps. Sequentially, these are: (1) establishing specific goals and objectives and measuring results, (2) problem identification and definition, (3) establishing priorities, (4) consideration of causes, (5) development of alternative solutions, (6) evaluation of alternative solutions, (7) solution selection, (8) implementation, and (9) follow-up.

∙ The decision-making process is influenced by behavioral factors. Different decision makers may behave differently at any step in the decision-making process. Behavioral factors include values, propensity for risk, potential for dissonance, and escalation of commitment.

∙ Research suggests that decisions made by groups are superior to those made by indi- viduals. However, some aspects of group decision making tend to have negative effects. These include pressure to conform and the disproportionate influence exerted by a dominant group member.

∙ One of the advantages of group decision making is that it can facilitate the identification of creative and innovative solutions to problems. Three specific techniques for stimulat- ing creativity in groups are brainstorming, the nominal group technique, and the Delphi technique.

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1. Risk is an inevitable part of decision making. Thinking back to an important career- related decision you made recently, how much risk was involved in the decision? How did you go about weighing the risks associated with the possible outcomes? How much risk are you willing to tolerate to be successful in your career?

2. Why is it important to establish priorities among different problems? Under what conditions might it be necessary to reevaluate priorities?

3. Increasingly today, decisions are made in a global context. Can you think of some techniques that might be employed to reduce the likelihood of difficulties when deci- sion makers from different cultures are working together to solve a problem?

4. How do you cope with cognitive dissonance after making a decision? Are you suc- cessful? By what criteria?

5. Think of a reasonably important nonprogrammed decision you made recently. Did you employ an approach similar to the decision-making process outlined in Exhibit 14.2? How good was your decision? Could it have been improved by using the decision- making process? Explain.

6. Given all of the corporate scandals (e.g., Volkswagen) that have been in the news, how important a role should ethics play in decision making? Should leaders and mana- gers—and organizations—be evaluated on the extent to which they make ethical decisions?

7. What role does personality play in decision making? Can you think of an example from your experience where the personality of a decision maker clearly influenced his or her decision?

8. Creativity requires nonconformity of thinking. Does that explain why so many organi- zational decisions are noncreative? Aside from the specific techniques discussed in the chapter, what can be done to stimulate creative decision making in an organization?

9. Bounded rationality appears to be a better explanation of how decision making actu- ally occurs. What makes this better than a rational explanation of decision making?

10. “Decisions should be thought of as means rather than ends.” Explain what this state- ment means and what effect it should have on decision making.

Review and Discussion Questions

Step 1 Answer each of the problems below: 1. A certain town is served by two hospitals. In the

larger hospital, about 45 babies are born each day, and in the smaller hospital, about 15 babies are born each day. Although the overall proportion of boys is about 50 percent, the actual proportion at either hospital may be greater or less than 50 percent on

any day. At the end of a year, which hospital will have the greater number of days on which more than 60 percent of the babies born were boys? a. The large hospital. b. The small hospital. c. Neither—the number of days will be about the

same (within 5 percent of each other). 2. Linda is 31, single, outspoken, and very bright. She ma-

jored in philosophy in college. As a student, she was

Exercise

Exercise 14.1: How Biased Is Your Decision Making?

395

395 Part One The Field of Organizational Behavior

Reality Check Now, how much do you know about decision making?

6. A is an appointed critic of proposed group actions whose role is to uncover underlying issues with the prevailing direction of the group. a. critical assessor b. devil’s advocate c. group disrupter d. counter-facilitator

7. Which of the following is a technique that promotes the generation of ideas in a group through noncritical discussion? a. Ethical decision making b. Brainstorming c. The normal group technique d. Utilization development

8. True or false: Managers rarely rely on “gut” feeling or intuition when making decisions. a. True b. False

9. True or false: When a group uses a consensus approach to decision making, the quality of the decisions it makes tends to be low. a. True b. False

10. Assume you have to choose between two good job offers. One provides a higher salary, but the other is located in a city that you really like. You’re anxious about the decision and not sure which job to accept. You are likely experiencing . a. decision shock b. cognitive dissonance c. repetitive information overload d. None of the above (a–c) are correct.

REALITY CHECK ANSWERS

Before After

1. a 2. c 3. c 4. b 5. d 6. b 7. b 8. b 9. b 10. b Number Correct Number Correct

deeply concerned with discrimination and other social issues and participated in antinuclear demonstrations. Which statement is more likely: a. Linda is a bank teller. b. Linda is a bank teller and active in the feminist

movement. 3. A cab was involved in a hit-and-run accident. Two

cab companies serve the city: the Green, which operates 85 percent of the cabs, and the Blue, which operates the remaining 15 percent. A witness identifies

the hit-and-run cab as Blue. When the court tests the reliability of the witness under circumstances similar to those on the night of the accident, he correctly identifies the color of a cab 80 percent of the time and misidentifies it the other 20 percent. What’s the probability that the cab involved in the accident was Blue, as the witness stated?

4. Imagine that you face this pair of concurrent deci- sions. Examine these decisions, then indicate which choices you prefer:

396 Part Four Organizational Processes

Decision I: Choose between: a. A sure gain of $240. b. A 25 percent chance of winning $1,000 and a

75 percent chance of winning nothing. Decision II: Choose between:

c. A sure loss of $750. d. A 75 percent chance of losing $1,000 and a

25 percent chance of losing nothing. Decision III: Choose between:

e. A sure loss of $3,000. f. An 80 percent chance of losing $4,000 and a

20 percent chance of losing nothing. 5. a. You’ve decided to see a Broadway play and have

bought a $40 ticket. As you enter the theater, you realize you’ve lost your ticket. You can’t remem- ber the seat number, so you can’t prove to the management that you bought a ticket. Would you spend $40 for a new ticket?

b. You’ve reserved a seat for a Broadway play for which the ticket price is $40. As you enter the the- ater to buy your ticket, you discover you’ve lost $40 from your pocket. Would you still buy the ticket? (Assume you have enough cash left to do so.)

6. Imagine you have operable lung cancer and must choose between two treatments—surgery and radia- tion therapy. Of 100 people having surgery, 10 die during the operation, 32 (including those original 10) are dead after one year, and 66 after five years. Of 100 people having radiation therapy, none dies

during treatment, 23 are dead after one year, and 78 after five years. Which treatment would you prefer?

Step 2 Your instructor will give you the correct answer to each problem.

Step 3 Discussion. In small groups, with the entire class, or in written form, as directed by your instructor, answer the following questions: 1. Description:

How accurate were the decisions you reached? 2. Diagnosis:

What biases were evident in the decisions you reached?

3. Prescription:

How could you improve your decision making to make it more accurate?

Sources: Stephanie Vozza, “5 Common Unconscious Biases That Led to Bad Decisions,” Fast Company, April 16, 2015, http://www.fastcompany.com; D. Kahneman and A. Tversky, “Rational Choice and the Framing of Deci- sions,” Journal of Business 59, no. 4 (1986), pp. S251–78; A. Tversky and D. Kahneman, “The Framing of Decisions and the Psychology of Choice,” Science 211 (1981), pp. 453–58; D. Kahneman and A. Tversky, “Extensional vs. Intuitive Reasoning,” Psychological Review 90 (1983), pp. 293–315; K. McKean, “Decisions, Decisions,” Discover Magazine, June 1985.

Purpose 1. Identify the pros and cons of group versus individ-

ual decision making. 2. Experience a group decision-making situation. 3. Practice diagnosing work-group effectiveness.

Introduction Much of the work that occurs in organizations is done in groups. In fact, the more important a task, the more likely it is to be assigned to a group. The belief is that groups make better decisions and are better at solving problems than individuals. However, the evidence on

this subject is contradictory and seems to suggest that “it depends.” Groups are more effective under some circumstances and individuals under others. Assets and liabilities are associated with both. Because so much important work is done in groups, it is necessary for group members to learn to minimize the liabilities and capitalize on the assets of the group problem solving.

Sources: Wilderness Survival is reprinted from: J. William Pfeiffer and John E. Jones, eds., 1976 Annual Handbook for Group Facilitators (San Diego, CA: University Associates, Inc., 1976). Used with permission. The Group Effectiveness Checklist is based on the ideas presented in I.L. Janis, “Groupthink,” Psychology Today, November 1971. N.R.F. Maier, “Assets and Liabilities in Group Problem Solving: The Need for an Integrative Function,” Psychological Review 74 (1967), pp. 239–49.

Exercise

Exercise 14.2: Group Decision Making

Chapter 14 Decision Making 397

Instructions 1. Read the directions below and complete the

Wilderness Survival Worksheet. 2. Form groups of five to seven people. 3. In groups, read the directions for and complete the

Wilderness Survival Group Consensus Task. 4. Calculate your scores using the directions. 5. Interpret your score. 6. Participate in a class discussion.

Wilderness Survival Worksheet Directions: Here are 12 questions concerning personal survival in a wilderness situation. Your first task is to

individually select the best of the three alternatives given under each item. Try to imagine yourself in the situation depicted. Assume that you are alone and have a minimum of equipment, except where specified. The season is fall. The days are warm and dry, but the nights are cold.

After you have completed the task individually, you will again consider each question as a member of a small group. Both the individual and group solutions will later be compared with the “correct” answers provided by a group of naturalists who conduct classes in woodland survival.

Your Your Group’s Answer Answer (a, b, or c) (a, b, or c)

1. You have strayed from your party in trackless timber. You have no special signaling equipment. The best way to attempt to contact your friends is to:

a. Call for “help” loudly but in a low register. b. Yell or scream as loud as you can. c. Whistle loudly and shrilly. 2. You are in “snake country.” Your best action to avoid snakes is to: a. Make a lot of noise with your feet. b. Walk softly and quietly. c. Travel at night. 3. You are hungry and lost in wild country. The best rule for determining

which plants are safe to eat (those you do not recognize) is to: a. Try anything you see the birds eat. b. Eat anything except plants with bright red berries. c. Put a bit of the plant on your lower lip for five minutes;

if it seems all right, try a little more. 4. The day becomes dry and hot. You have a full canteen of water

(about one liter) with you. You should: a. Ration it—about a capful a day. b. Not drink until you stop for the night, then drink what you think you need. c. Drink as much as you think you need when you need it. 5. Your water is gone; you become very thirsty. You finally come to a dried-up

watercourse. Your best chance of finding water is to: a. Dig anywhere in the streambed. b. Dig up plant and tree roots near the bank. c. Dig in the streambed at the outside of a bend. 6. You decide to walk out of the wild country by following a series of ravines

where a water supply is available. Night is coming on. The best place to make camp is: a. Next to the water supply in the ravine. b. High on a ridge. c. Midway up the slope.

398 Part Four Organizational Processes

Your Your Group’s Answer Answer (a, b, or c) (a, b, or c)

7. Your flashlight glows dimly as you are about to make your way back to your campsite after a brief foraging trip. Darkness comes quickly in the woods and the surroundings seem unfamiliar. You should:

a. Head back at once, keeping the light on, hoping the light will glow enough for you to make out landmarks.

b. Put the batteries under your armpits to warm them, and then replace them in the flashlight.

c. Shine your light for a few seconds, try to get the scene in your mind, move out in the darkness, and repeat the process.

8. An early snow confines you to your small tent. You doze with your small stove going. There is danger if the flame is:

a. Yellow. b. Blue. c. Red. 9. You must ford a river that has a strong current, large rocks, and some white

water. After carefully selecting your crossing spot, you should: a. Leave your boots and pack on. b. Take your boots and pack off. c. Take off your pack, but leave your boots on. 10. In waist-deep water with a strong current, when crossing the stream, you should face: a. Upstream. b. Across the stream. c. Downstream. 11. You find yourself rimrocked; your only route is up. The way is mossy,

slippery rock. You should try it: a. Barefoot. b. With boots on. c. In stocking feet. 12. Unarmed and unsuspecting, you surprise a large bear prowling around your campsite. As the bear rears up about 10 meters from you, you should: a. Run. b. Climb the nearest tree. c. Freeze, but be ready to back away slowly. Compare your answers to the “expert answers.” Number Number Correct Correct (individual) (group)

Wilderness Survival Group Consensus Task Directions: You have just completed an individual so- lution to Wilderness Survival. Now your small group will decide on a group solution to the same dilemmas.

A decision by consensus is difficult to attain, and not every decision may meet with everyone’s unqualified approval. However, there should be a general feeling of support from all members before a group decision is made. Do not change your individual answers, even if you change your mind in the group discussion.

Outcome Group 1 Group 2 Group 3

Range of individual scores (low–high)

Average of individual scores

Group score

Chapter 14 Decision Making 399

Expert Answers Below are the recommended courses of action for the scenarios on the Wilderness Survival Worksheet. These responses are considered to be the best rules of thumb for most situations; specific situations, however, might require other courses of action.

1. (a) Call “Help” loudly but in a low tone. Low tones carry farther, especially in dense woodland.

2. (a) Make a lot of noise with your feet. Snakes do not like people and will usually do everything they can to get out of the way.

3. (c) Put a bit of the plant on your lower lip for five minutes; if it seems all right, try a little. The best approach, of course, is to eat only those plants that you recognize as safe. But when you are in doubt and very hungry, you may use the lip test. If the plant is poisonous, you will get a very unpleasant sensation on your lip.

4. (c) Drink as much as you think you need when you need it. The danger here is dehydration, and once the process starts, your liter of water will not do much to reverse it.

5. (c) Dig in the streambed at the outside of a bend. This is the part of the river or stream that flows the fastest, is less silted, deepest, and the last part to go dry.

6. (c) Midway up the slope. A sudden rainstorm might turn the ravine into a raging torrent. The ridgeline increases your exposure to rain, wind, and lightning should a storm break. The best loca- tion is on the slope.

7. (b) Put the batteries under your armpits to warm them, and then replace them in the flashlight. Flash- light batteries lose much of their power, and weak batteries run down faster, in the cold. Warming the batteries, especially if they are already weak, will restore them for a while.

8. (a) Yellow. A yellow flame indicates incomplete combustion and a strong possibility of carbon monoxide buildup. This can be deadly.

9. (a) Leave your boots and pack on. Sharp rocks or uneven footing demand that you keep your boots on. If your pack is fairly well balanced, wearing it will provide you the most stability in the swift current.

10. (b) Across the stream. Facing upstream is the worst alternative; the current could push you back, and your pack would provide the unbalance to pull you over. You have the best stability facing across the stream, keeping your eye on the exit point on the opposite bank.

11. (c) In stocking feet. Here you can pick your route to some degree, and you can feel where you are step- ping. Normal hiking boots become slippery, and going barefooted offers your feet no protection at all.

12. (c) Freeze, but be ready to back away slowly. Sudden movement will probably startle the bear a lot more than your presence. If the bear is seeking some of your food, do not argue; let the bear forage and be gone. Otherwise, back very slowly toward some refuge (trees, rock outcrop, etc.).

Source: Adapted from Jack Gordon, ed. Pfeiffer’s Classic Activities for Building Better Teams (New York: John Wiley & Sons, 2003).

Netflix’s stock price was up 130 percent from the pre- vious year and almost 190 percent over two years. One can imagine smiling faces and high fives being given at the June 2011 shareholders’ meeting. Netflix has been credited with redefining the movie rental industry and bringing the previously dominant player, Blockbuster, to its knees and ultimately putting Blockbuster out of business. During the three months that followed the June 2011 shareholders’ meeting, the good times con- tinued and Netflix’s stock price increased another 15 percent peaking at $305 a share.

Fast-forward to the June 2012 shareholders’ meet- ing, where the mood was more somber. From its peak, the stock price plummeted to approximately $69 per share on June 19, 2012, a loss of $236 per share or 77 percent of its value. Given the concern over the company’s recent stock price performance, the shareholders passed a successful motion to put management on notice.

In an almost three-to-one vote, shareholders elected to change the structure of the board of directors to allow all board members to be simultaneously replaced.

Case

Case 14.1: The Netflix Decision That Could Cost the Company 800,000 Subscribers

400 Part Four Organizational Processes

Additionally, shareholders voted to make it easier to call emergency meetings. While top management was not replaced, the message sent by the majority of share- holders could be construed as “get your act together or else you’ll be replaced.” A key question is: What hap- pened to tarnish the previously stellar performance of this innovative movie rental company and cause a near mutiny by its shareholders?

There was a time in the not too distant past when rent- ing a movie necessitated driving to a video store to pick out and pay for in person (and return a couple of days later) a DVD. This method of renting was not only incon- venient but also expensive with a twice-a-week video habit costing in the neighborhood of $50 per month. This bricks-and-mortar business model was also expensive for companies like Blockbuster and Hollywood Video be- cause they had to purchase (or rent), stock, staff, insure, and maintain several buildings across many cities.

Netflix reinvented video rental by delivering DVDs by mail and allowing unlimited live online streaming of select content for one monthly fee. For less than $10 a month Netflix subscribers could access content 24/7. Netflix’s business exploded. Blockbuster, the previous industry leader, was slow to respond and when they did it was too late. Netflix had redefined entertainment rental and Blockbuster was on the road to bankruptcy, eventually closing its 4,000 retail outlets.

Management at Netflix came to view its two content delivery methods, mail exchange and online streaming, as distinct product lines and in September 2011 an- nounced they were forming a new brand, “Qwikster,” to facilitate the separation. This new company would handle the DVD mail exchange and the Netflix brand would be exclusively used for streaming online services. The split would unbundle the services, billing them separately and increasing the total price for those wanting both products by about 60 percent. The move would also require cus- tomers to manage their streaming and mail services through different accounts and separate Internet portals.

Many Netflix customers expressed outrage over the new plan to split the services, catching the company off guard. However, from the company’s perspective, it was a good decision. Management saw the DVD mail exchange business as underutilized, expensive to support, and close to obsolescence, like the storefront outlets it had largely replaced. The separation of services would help by allow- ing online-streaming-only subscribers to pay less while capturing additional revenue from the continuing DVD mail exchange business. There were also compelling cost issues that Netflix management was attempting to address. Content owners, such as movie and TV studios,

were growing more aggressive in negotiating their royal- ties and were demanding to be paid based upon the poten- tial number of streaming viewers rather than actual views. All Netflix subscribers, including those that received content exclusively via mailed DVDs were being counted as potential online streaming customers. Giving customers the option to be specifically DVD-by-mail-only customers would lower the royalties Netflix was required to pay.

The consumer firestorm in response to the announced change caused management to reconsider their decision. Reed Hastings, the CEO of Netflix, announced that the company had behaved arrogantly in their announcement and the company would not be separated. Quikster was never launched but the separate pricing for DVD by mail and online streaming would continue.

In the third quarter of 2011, Netflix lost 800,000 members, which was the first time the number of com- pany subscribers ever declined. Amazingly, net reve- nues increased and earnings per share increased that same quarter. Interviewed after the fact, the Netflix CEO stated he did not remember if consumer focus groups were used to gauge the potential impact of their decisions. Did the actions by Netflix strengthen the company or did they simply send 800,000 customers to competing content providers such as Hulu and Redbox?

Questions 1. Faced with the increased costs of delivering DVDs by

mail and streaming online content, clearly Netflix had to take some action. Describe the decision-making process you would have advised Netflix management to follow.

2. What values are reflected in the Netflix decisions presented in the case?

3. Think back to the chapter discussion about the con- cept of escalation of commitment. Was Netflix’s continuation with its pricing action (which resulted in a large loss of customers) reflective of escalation of commitment, or was it a rational plan? Explain.

Sources: Written by Dr. Michael A. Dutch, Greensboro College, Greensboro, North Carolina (2012). Troy Wolverton, “Longtime Netflix Customers Face Price Hike,” Silicon Beat, January 19, 2016, http://siliconbeat.com; Greg Sandoval, “Netflix’s Lost Year; The Inside Story of the Price-Hike Train Wreck,” CNET, July 11, 2012, http://www.cnet.com; Daniel Franke, “Netflix Shareholders Vote to Change Board Structure,” CNN Money, June 5, 2012, http://www.money.cnn.com; Mike Flacy, “Dish Network Shutting down a Third of All Remaining Blockbuster Stores,” Digital Trends, February 23, 2012, http://www.digitaltrends.com; Chip Cutter, “Behind the Increase: Why Netflix Is Raising Prices,” Yahoo! News, July 14, 2011, http://www.yahoonews. com; Nick Wingfield and Brian Stelter, “Netflix Lost 800,000 Members with Price Rise and Qwikster Plan,” The New York Times, October 24, 2011, http://www.nytimes.com.

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Is Jack Dorsey, CEO and cofounder of Twitter, a great business leader? How about Ginni Rometty, CEO of IBM? Do these and other top managers have what it takes to lead their organizations during good as well as challenging times?

Leadership has been a topic of interest, speculation, and debate since the time of Plato. In organizations around the world, from massive conglomerates to small custom fabrica- tion shops, the same lament emerges: Where are the leaders? Who are the best leaders? What are the attributes of the best leaders? The measure of effectiveness of leading that no one is tired of reading and reflecting about is results achieved.1

History has taught us a great deal about what leadership is—and about what it isn’t. Despite all the thousands of studies that have been conducted, however, there is still a great deal we do not know. In this chapter we will examine some of what we do know about leadership. We will provide a concise historical and contemporary overview of leadership, and we will focus on some current and emerging leadership concepts and consider applica- tions that provide value.

While a great many aspects of leadership have been studied, most organizational researchers and behavioral scientists have focused on two important leadership issues: (1) why some organizational members become leaders while others do not, and (2) why some leaders are successful while others are not. Both these issues are thought to be important because leadership is so vital and energizing. It has been suggested that when groups, teams, or organizations are successful, their leadership receives too much credit, and when they fail their leadership gets too much of the blame. Nonetheless, leaders do make a difference, and leadership is a critical variable in shaping organiza- tional effectiveness.

What Is Leadership? With so much interest in leadership, it might be assumed that everyone is in general agree- ment about what constitutes leadership. Such is not the case, as can clearly be seen in the diversity of whom we consider to be leaders. A 2016 Time magazine poll of the “100 most influential people” in the world included Sundar Pichai (Google), Tim Cook (Apple),

Leadership Learning Objectives

After completing Chapter 15, you should be able to:

Describe the concept of leadership.

Discuss several traits that are associated with leaders.

Summarize the two major behavior approaches to leadership.

Compare the situational approaches to leadership.

Identify some of the emerging perspectives of leadership.

Explain how leadership varies in cross- cultural contexts.

C H A P T E R F I F T E E N

© Fuse/Getty Images, RF

402

Reality Check How much do you know about leadership?

1. The theory of leadership attempts to identify specific characteristics (physical, mental, personality) associated with leadership success. a. whole person b. trait c. behavioral d. characteristics

2. The situational or contingency model that has been the most influential in stimulating research is that of . a. Drucker b. Maslow c. Fiedler d. Likert

3. Vroom and Yetton developed a leadership model. a. internal b. structural c. decision-making d. charismatic

4. is a behavioral approach to leadership characterized by friendship, mutual trust, respect, warmth, and rapport between the leader and followers. a. Initiating structure b. Transformation c. Task structure d. Consideration

5. A leader emphasizes employee growth and service to others as worthwhile ends in and of themselves, placing others’ needs ahead of their own. a. transactional b. servant c. charismatic d. utilitarian

Kathleen Kennedy (Lucasfilm, now part of Disney), Christine Lagarde (International Monetary Fund), and Mark Zuckerberg (Facebook).2 These individuals operate in distinct environments and toward divergent objectives. While most would agree that they are leaders, what leads to their success may not be as clear. Can one precisely define what allowed Ted Kennedy to be elected eight times to the U.S. Senate? If he had switched places with Steve Jobs, would those same characteristics and traits have led him to comparable successes in the global technology industry?

Leadership qualities important in one situation may be different from those required in another.3 It is unlikely that any of the individuals on the 100 most influential list would be equally successful in another’s context or industry. Leadership does not take place in a vacuum. Every leader must deal with three important variables: the people who are being led, the task that the people are performing, and the environment in which the people and the task exist. Because these three variables are different in every situa- tion, what is expected and needed from a leader will be different in every situation.

Chapter 15 Leadership 403

The fact that leaders and leadership situations differ has led to numerous leadership definitions. Some definitions of leadership are based on leader characteristics, some on leader behaviors, still others on outcomes or end results. A definition of leadership needs to be sufficiently broad to accommodate different theories, research findings, and applications. We define leadership as the process of influencing others to facilitate the attainment of organizationally relevant goals.4 Note that as specified by this definition you do not have to be in a formal leadership position to exert leadership behavior. The role of informal leader can be every bit as important to a group’s success as is that of the formal leader.

Differences in definitions, leadership expectations, and the three significant variables that are a part of all leadership situations (people, task, environment) notwithstanding, there are some leadership commonalities. For example, Warren Bennis, who devoted decades to researching leadership issues,5 concluded that virtually all leaders of effective groups share four characteristics: 1. They provide direction and meaning to the people they are leading. This means they

remind people what is important and why what they are doing makes an important difference.

2. They generate trust. 3. They favor action and risk taking. That is, they are proactive and willing to risk failing

in order to succeed. 4. They are purveyors of hope. In both tangible and symbolic ways they reinforce the

notion that success will be attained.6

The nearby OB Matters feature illustrates that successful companies look within to identify and develop leaders. Some individuals obviously possess characteristics that are so attractive to others that they are considered leaders.

Is Leadership Important? Most approaches and explanations of leadership assume that leaders are necessary in all settings and situations. However, some researchers propose that there are substitutes for leadership that can diminish or replace the influence of leaders.7 A related concept is a leadership neutralizer—something that makes it impossible for leadership to make a difference.8 For example, leaders tend to be less influential under the following circum- stances: (1) their subordinates have high levels of training and experience and are indepen- dent and professional; (2) subordinates’ tasks are routine, clearly defined, and intrinsically motivating; and (3) the organization is formal and rigid, subordinates are on cohesive teams, and there is special distance between the superior and subordinate.9

These situations may help explain why research has found that the effects of leadership on performance are modest.10 First, those selected as leaders are similar in background, experience, and qualifications. The similarity across selected individuals reduces the range of characteristics exhibited by leaders. Second, leaders at even the highest levels do not have unilateral control over resources. Major decisions require approval, review, and the use of modifications suggested by others. Third, many factors cannot be controlled by a leader. Labor markets, environmental factors, and policies are often outside a leader’s direct control. External factors may be overwhelming and uncontrollable, no matter how astute, insightful, and influential a leader may be.

Over the years researchers have continued to find only a modest effect of leadership on performance. One study of 167 firms in 13 industries over a 20-year period found that the administration factor (i.e., a combination of leadership and managership) had a limited

leadership Using influence in an organizational setting or situation, producing effects that are meaning- ful and have a direct impact on accomplish- ing challenging goals.

404

effect on sales, profits, and profit margins.11 Reanalysis of the same data found that leader- ship accounted for more variance in performance than did many of the other variables studied, but most of the variance is unexplained.12

Manz and Sims have clearly pointed out another wave of thinking that emphasizes the replacement of “bosses” with teams of employees who serve as their own bosses.13 The concept has been labeled variously as self-managing teams, empowerment teams, and autonomous work groups. The teams described by Sims and Manz may not have bosses, but they do have leaders. As these organizational researchers state, “No successful team is without leadership.” Manz and Sims have described “superleaders,” individuals who lead others to lead themselves to higher levels of performance. Team leaders sometimes emerge or are sometimes appointed. They can be called coordinators, facilitators, or coaches. They exert influence from a position of respect or expertise that is accepted by the other team members. The OB Matters shows that some companies work hard at grooming leaders for the future.

Trait Approaches: Leaders Are Born That Way Thinking and discussion about leadership have evolved over the years from a trait- based approach to the concept of teams without bosses. To understand this evolution in views of leadership, it is helpful to trace the historical foundations, some considered today to be rather simplistic and some so complex that practitioners now find little value in them.

Much of the early discussion and research on leadership focused on identifying intel- lectual, emotional, physical, and other personal traits of effective leaders. This approach

GE TOPS LIST OF BEST COMPANIES FOR LEADERS Chief Executive magazine recently announced its 2016 list of the Best Companies for Leaders, and for the second consecutive year, GE is at the top of the public company list, followed closely by EMC Insurance, Hitachi Data Systems, IBM, and Johnson Controls. For more than a decade, Chief Executive has surveyed both public and private compa- nies worldwide with questionnaires and interviews to learn what they are doing to identify and nurture potential leaders three or more levels down the organizational chart from the CEO.

Criteria considered in evaluating companies include having a formal leadership process in place; the CEO’s commitment level to the leader- ship program, as measured by time spent developing leaders; the depth of the leadership “pool,” as measured by the percentage of senior posi- tions filled by internal candidates; and the number of other firms that report recruiting employees from the company being evaluated.

Other key results from the 2016 survey suggest that more compa- nies continue to recognize the importance of developing leaders as part of their overall corporate strategy. In 2010, half of the firms sur- veyed said they had a formal leadership program in place. By 2016, 82 percent of the companies had formal leadership programs up and

running—a clear indication that organizations value leadership and are willing to invest in developing leaders.

For more than 60 years, global conglomerate GE has made a strong commitment to developing leaders—starting when it opened the first corporate university and central hub for innovation, ideas, and learning back in 1956. Today, the company offers onsite leadership development opportunities for its 300,000 employees in close to 200 locations in more than 50 countries. The company spends more than a billion dollars annually in employee development and leadership training. GE views leadership development as integral to the company’s culture and future. According to company CEO Jeff Immelt, “We try to create global leaders, people who can navigate the complexity of our times with clarity, courage, and integrity.”

Sources: Dan Weinfurter and J.P. Donlon, “2016 Best Companies for Leaders,” Chief Executive, http://chiefexecutive.net, accessed May 26, 2016; company web- site, “The Future of Leadership,” http://www.ge.com, accessed May 26, 2016; Jeff Immelt, “How to Differentiate Great Leaders from Good Leaders,” LinkedIn, https:// www.linkedin.com, accessed May 26, 2016; James Kosur, “GE Runs an Intense 5-Year Program to Develop Executives, and Only 2% Finish It,” Business Insider, October 5, 2015, http://www.businessinsider.com; Patricia Sellers, “The No. 1 Fortune 500 Leadership Trait Is…,” Fortune, June 5, 2015, http://fortune.com.

O B M A T T E R S

Chapter 15 Leadership 405

assumed that a finite number of individual traits of effective leaders could be found. To a significant extent, the personnel testing component of scientific management supported the trait theory of leadership.14 In addition to being studied by testing, the traits of leaders have been examined by observation of behavior in group situations, by choice of associates (voting), by nomination or rating by observers, and by analysis of biographical data.

Intelligence In a review of 33 studies, Ralph Stogdill found that leaders were more intelligent than followers.15 One significant finding, however, was that extreme intelligence differences between leaders and followers might be dysfunctional. For example, a leader with a relatively high IQ attempt- ing to influence a group whose members have average IQs may be unable to understand why the members don’t comprehend the problem. In addition, such a leader may have difficulty communicating ideas and policies. A research study examined the relationship between leader ability and IQ in a population of police officers and suggested that although IQ is important for leaders, emotional intelligence (covered in Chapter 3) is a better predictor of leadership ability in certain contexts.16

Personality Edwin Ghiselli reported several personality traits associated with leader effectiveness.17 He found that the ability to initiate action independently was related to the respondent’s level in the organization. The higher the person went in the organization, the more important this trait became. Ghiselli also found that self-assurance was related to hierarchical position in the organization. Finally, he found that persons who exhibited individuality were the most effective leaders. Studies continue to find a relationship between personality characteristics and leader effectiveness. A recent study looked at the “Big Five” personality traits along with leader self-efficacy (the belief in one’s potential for success) and several perceived job characteristics. The study confirmed a relation between personality characteristics and leadership assessments; most notable was a strong relationship between leader self- efficacy and leader performance.18

Physical Characteristics Studies of the relationship between effective leadership and physical characteristics such as age, height, weight, and appearance provide contradictory results. Being taller and heavier than the group average is certainly not advantageous for achieving a leader position. However, some organizations believe a physically large person is needed to secure compliance from followers. This notion relies heavily on coercive power. None- theless, Truman, Gandhi, Thatcher, Napoleon, and Stalin are examples of individuals of small stature who rose to powerful leadership positions. Even when the use of phys- ical attributes was being promoted as a principal technique to select leaders, the method was questioned. A 1944 book on selection stated, “Do not fall into the error of judging character from facial or other physical characteristics,” advocating instead other, more “scientific” approaches.19 While this decades-old advice is generally taken today as true, our understanding of scientific approaches has evolved to the extent that it may be questioned. In a study using pictures of company CEOs, subjects’ facial evaluations of CEOs were found to be related to company performance.20 This study suggests the need for further research on the relationship between physical appearance and leadership outcomes.

trait theory of leadership An attempt to identify specific characteristics (physical, mental, per- sonality) associated with leadership success.

406 Part Four Organizational Processes

Supervisory Ability Using the leaders’ performance ratings, Ghiselli found a positive relationship between supervisory ability and level in the organizational hierarchy.21 The supervisor’s ability is defined as the “effective utilization of whatever supervisory practices are indicated by the particular requirements of the situation.”22 Once again, a valid measurement of the concept is needed—and finding such precision is still a difficult problem to resolve.

Exhibit 15.1 summarizes a number of the most researched traits of leaders (traits found most likely to characterize successful leaders). Some studies have reported that these traits contribute to leadership success. However, leadership success is neither primarily nor com- pletely a function of these or other traits.

Although in some studies traits such as those in Exhibit 15.1 have differentiated effec- tive from ineffective leaders, research findings are still contradictory for a number of pos- sible reasons. First, the list of potentially important traits is endless. Every year, new traits—such as the astrological sign under which a person is born, handwriting style, and order of birth—are added to personality, physical characteristics, and intelligence. This continual “adding on” results in more confusion among those interested in identifying leadership traits. Second, trait test scores aren’t consistently predictive of leader effective- ness. Leadership traits don’t operate singly to influence followers, but act in combination. This interaction influences the leader–follower relationship. Third, patterns of effective behavior depend largely on the situation: Leadership behavior that’s effective in a bank may be ineffective in a laboratory. Finally, the trait approach fails to provide insight into what the effective leader does on the job. Observations are needed that describe the behav- ior of effective and ineffective leaders.

Despite its shortcomings, the trait approach is not completely invalid. Kirkpatrick and Locke found evidence that effective leaders are different from other people.23 Their review of the literature suggests that drive, motivation, ambition, honesty, integrity, and self- confidence are key leadership traits. Kirkpatrick and Locke believe that leaders don’t have to be great intellects to succeed. However, leaders do need to have the “right stuff” or right traits to have a good chance to be effective.

Behavioral Approaches: Leaders’ Actions Determine Their Effectiveness In the 1940s, researchers began to explore the notion that how a person acts determines that person’s leadership effectiveness. Instead of searching for traits, these researchers examined leader behaviors and their impact on the performance and satisfaction of followers.

EXHIBIT 15.1 Traits Associated with Leadership Effectiveness

Sources: Molly Owens, “Personality Traits That Make You an Effective Leader,” Entrepreneur, http://www. entrepreneur.com, accessed May 25, 2016; Peter Economy, “7 Traits of Highly Effective Leaders,” Inc., http://www.inc. com, accessed May 25, 2016; Bernard M. Bass, Stogdill’s Handbook of Leadership (New York: Free Press, 1982), pp. 75–76.

Intelligence Personality Abilities

Judgment Adaptability To enlist cooperation Decisiveness Alertness To inspire action Knowledge Creativity To make decisions Fluency of speech Personal integrity To communicate effectively Self-confidence To be social Emotional balance and control To use tact and diplomacy Independence (nonconformity)

Chapter 15 Leadership 407

Job-Centered and Employee-Centered Leadership In 1947, Rensis Likert began studying how best to manage the efforts of individuals to achieve desired performance and satisfaction objectives. The purpose of most leadership research by the Likert-inspired team at the University of Michigan was to discover the principles and methods of effective leadership. The effectiveness criteria used in many of the studies included: ∙ Productivity per work hour, or other similar measures of the organization’s success in

achieving its production goals. ∙ Job satisfaction of members of the organization. ∙ Turnover, absenteeism, and grievance rates. ∙ Costs. ∙ Scrap loss. ∙ Employee and managerial motivation.

Studies were conducted in a wide variety of organizations: chemical, electronics, food, heavy machinery, insurance, petroleum, public utilities, hospitals, banks, and government agencies. Data were obtained from thousands of employees doing different job tasks, rang- ing from unskilled work to highly skilled research and development work.

Through interviewing leaders and followers, researchers identified two distinct styles of leadership, referred to as job-centered and employee-centered. The job-centered leader focuses on completing the task and uses close supervision so that subordinates perform their tasks using specified procedures.

The employee-centered leader focuses on the people doing the work and believes in delegating decision making and aiding employees in satisfying their needs by creating a supportive work environment. The employee-centered leader is concerned with followers’ personal advancement, growth, and achievement. Such leaders emphasize individual and group development with the expectation that effective work performance will naturally fol- low. The Information You Can Use feature describes how managers can use more employee-centered behaviors.

Initiating Structure and Consideration One of the more significant leadership research programs that developed after World War II was led by Edwin Fleishman and his associates at The Ohio State University. This important research program yielded a two-factor theory of leadership.24 A series of studies isolated two leadership factors, referred to as initiating structure and consideration. Initiating structure designates behavior in which the leader organizes and defines the relationships in the group, tends to establish well-defined patterns and channels of communication, and spells out ways of getting the job done. The leader with a high initiating structure tendency focuses on goals and results. Consideration involves behavior indicating friendship, mutual trust, respect, warmth, and rapport between the leader and the followers. The leader with a high consider- ation overview supports open communication and participation.

These dimensions are measured by two separate questionnaires. The Leadership Opinion Questionnaire (LOQ) assesses how leaders think they behave in leadership roles. The Leader Behavior Description Questionnaire (LBDQ) measures perceptions of subordinates, peers, or superiors.

The original premise suggested by the Ohio State researchers was that a high degree of consideration and a high degree of initiating structure (high–high) was most desirable. Since the original research was undertaken to develop the questionnaire, there have been

job-centered leader Focuses on encouraging employees to complete the task and uses close supervision so that individuals perform their tasks using acceptable and timely procedures.

employee-centered leader Focuses on having people complete the work and believes in delegating decision making and aiding employees in satisfying their needs by creating a supportive work environment.

initiating structure Refers to behavior in which the leader orga- nizes and defines the relationships in the group, tends to establish well-defined patterns and channels of communica- tion, and spells out ways of getting the job done.

consideration Involves behavior indicating friendship, mutual trust, respect, warmth, and rapport between the leader and the followers.

408 Part Four Organizational Processes

numerous studies of the relationship between these two leader- ship dimensions and various effectiveness criteria. A review of the literature found that initiating structure was consistently associated with leader and group performance, and consider- ation was associated with follower satisfaction, motivation, and leader effectiveness.25

The OSU personal–behavioral theory has been criticized for simplicity (e.g., only two dimensions of leadership), lack of generalizability, and reliance on questionnaire responses to measure leadership effectiveness.

Critique of Trait and Behavioral Approaches Both trait and behavioral approaches to leadership have helped us better understand the dynamics of leadership situations. Trait approaches consider personal characteristics of the leader that may be important in achieving success in a leadership role. There is no doubt that certain characteristics may be helpful— even essential—in some situations. These same characteristics, however, may be unimportant—even detrimental—in other situ- ations. Similarly, the behavioral approaches attempt to specify which kinds of leader behaviors are necessary for effective leadership. And here again there is no doubt that certain behav- iors may be important in some situations, but may be irrelevant or damaging in others. Initiating-structure behaviors on the part of the leader, for example, may be critical to successful task completion in some situations; in others, where workers know

exactly what needs to be done, such behaviors may detract from employee performance and satisfaction.

At the start of the chapter, we suggested that leaders needed to deal with three important variables: the people being led, the task being performed, and the environment in which the work was occurring. Trait and behavior approaches fail to consider this interaction among people, tasks, and environments. All three variables are an important part of the leadership situation, yet trait and behavior approaches ignore task and environment considerations.

Situational Approaches: Leaders’ Effectiveness Depends on the Situation When the search for the “best” set of traits or behaviors failed to discover an effective lead- ership mix and style for all situations, situational theories of leadership evolved that sug- gest leadership effectiveness is a function of various aspects of the leadership situation. A number of situational approaches have been proposed and studied.26 We will examine several of the more significant ones.

Only after inconclusive and contradictory results evolved from much of the early trait and behavior research was the importance of the situation studied more closely by those interested in leadership. As the importance of situational factors became more recognized, leadership research became more systematic, and situational models of leadership began to appear in the literature. Each model has its advocates, and each attempts to identify the leader behaviors most appropriate for a series of leadership situations. Also, each model attempts to identify the leader-situation patterns or interactions for effective leadership.

INCREASING EMPLOYEE -CENTERED BEHAVIORS

Managers can increase employee-centered behav- iors in a variety of ways. Some possibilities include:

1. Whenever possible, use rewards rather than punishments for reinforcing and modifying subordinate behaviors.

2. Keep lines of communication open at all times. Share information in a manner that contributes to building and maintaining trust.

3. Listen. Employees want to feel that what they have to say matters.

4. Try to obtain positive outcomes for subordinates (e.g., special bonuses, attractive work assignments, time off).

5. Provide opportunities when possible for employees to accomplish personal career objectives.

6. Don’t be afraid to admit mistakes. It not only demonstrates to employees that you are human, but it also adds to creating a more supportive environment.

Information You Can Use

Chapter 15 Leadership 409

Fiedler’s Contingency Leadership Model The contingency model of leadership effectiveness was developed by Fiedler27 and postu- lates that the performance of groups is dependent on the interaction between leadership style and situational favorableness. Leadership style is measured by the Least-Preferred Coworker Scale (LPC), an instrument developed by Fiedler that assesses the degree of positive or negative feelings held by a person toward someone with whom he or she least prefers to work. Low scores on the LPC are thought to reflect a task-oriented, or control- ling, structuring leadership style. High scores are associated with a relationship-oriented, or passive, considerate leadership.

Fiedler proposes three factors that determine how favorable a leader’s environment is, or what is designated the degree of situational favorableness. Leader–member relations refers to the degree of confidence, trust, and respect the followers have in their leader. This is the most important factor. Task structure is the second most important factor and refers to the extent to which the tasks the followers are engaged in are structured. That is, is it clearly specified and known what followers are sup- posed to do, how they are to do it, when and in what sequence it is to be done, and what decision options they have (high structure)? Or are these factors unclear, ambig- uous, unspecifiable (low structure)? Position power is the final factor and refers to the power inherent in the leadership position. Generally, greater authority equals greater position power.

Together, these three factors determine how favorable the situation is for the leader. Good leader–member relations, high task structure, and strong position power constitute the most favorable situation. Poor relations, low degree of structure, and weak position power represent the least favorable situation. The varying degrees of favorableness and the corresponding appropriate leadership style are shown in Exhibit 15.2.

Fiedler contends that a permissive, more lenient (relationship-oriented) style is best when the situation is moderately favorable or moderately unfavorable. Thus, if a leader is moder- ately liked and possesses some power, and the job tasks for subordinates are somewhat

leader–member relations A factor in the Fiedler contingency model that refers to the degree of confidence, trust, and respect that the leader obtains from the followers.

task structure A factor in the Fiedler contingency model that refers to how structured a job is with regard to requirements, problem- solving alternatives, and feedback on how correctly the job has been accomplished.

position power A factor in the Fiedler contingency model that refers to the power inherent in the leadership position.

EXHIBIT 15.2 Summary of Fiedler’s Situation Variables and Their Preferred Leadership Styles

Situational Characteristics

Leader– member relations

Task structure

Position power

Situation

High

Good

I

High

Good

II

Low

Good

III

Low

Good

IV

Poor

High

V

WeakWeakWeak

Poor

High

VI

StrongStrongStrongStrong

Poor

Low

VII

Weak

Poor

Low

VIII

Task-Oriented Optimal leadership styles

Very favorable situation

Very unfavorable situation

Relationship-Oriented Task- Oriented

410 Part Four Organizational Processes

vague, the leadership style needed to achieve the best results is relationship-oriented. In contrast, when the situation is highly favorable or highly unfavorable, a task-oriented approach gener- ally produces the desired performance. Fiedler bases his conclu- sions regarding the relationship between leadership style and situational favorableness on more than two decades of research in business, educational, and military settings.28 The Information You Can Use feature suggests several steps leaders can take to modify various situations.

Fiedler is not particularly optimistic that leaders can be trained successfully to change their preferred leadership style. Consequently, he sees changing the favorableness of the situation as a better alternative. In doing this, the first step Fiedler recom- mends is to determine whether leaders are task- or relationship- oriented. Next, the organization needs to diagnose and classify the situational favorableness of its leadership positions. Finally, the organization must select the best strategy to bring about improved effectiveness. If leadership training is selected as an option, then it should devote special attention to teaching par- ticipants how to modify the environments and their jobs to fit their styles of leadership. That is, leaders should be trained to change their leadership situations. Fiedler believes that a lead- er’s style, whether relationship-oriented or task-oriented, is fixed or enduring. Altering the situation to fit the leader’s style is what he recommends. Fiedler suggests that when leaders can

recognize the situations in which they are most successful, they can then begin to modify their own situations.

Critique of Fiedler’s Contingency Model Fiedler’s model and research have elicited both support and criticisms.29 Some researchers have called attention to the questionable measurement of the LPC, finding its reliability and validity to be low. Others have criticized the fact that Fiedler’s variables are not pre- cisely defined. For example, at what point does a “structured” task become an “unstruc- tured” task? Still others feel that the model is flawed because it too readily accommodates nonsupportive results.

Despite supporters and detractors, Fiedler’s contingency model has made significant contributions to the study and application of leadership principles. Fiedler called direct attention to the situational nature of leadership. His view of leadership stimulated numer- ous research studies and much-needed debate about the dynamics of leader behavior. Certainly, Fiedler has played one of the most prominent roles in encouraging the scientific study of leadership in work settings. He pointed the way and made others uncomfortably aware of the complexities of the leadership process.

Vroom–Jago Leadership Model Victor Vroom and Philip Yetton initially developed a leadership decision-making model that indicated the situations in which various degrees of participative decision making would be appropriate.30 In contrast to Fiedler’s work on leadership, Vroom and Yetton attempted to provide a normative model that a leader can use in making decisions. The term normative refers to the fact that the model provides norms or guidelines leaders can

LEADERSHIP ACTIONS TO CHANGE SITUATIONS

To modify leader–member relations:

Request particular people for work in the group.

Effect transfers of particular subordinates out of the unit.

Volunteer to direct difficult or troublesome subordinates.

To modify task structure:

When possible bring new or unusual tasks or problems to the group (less structure).

Break jobs down into smaller subtasks that can be more highly structured (more structure).

To modify position power:

Show subordinates who’s boss by exercising fully the authority you have.

Make sure that information to the group gets channeled through you.

Let subordinates participate in planning and decision making (lowering power).

Information You Can Use

Chapter 15 Leadership 411

use for dealing with decision-making situations. Their approach assumed that no one single leadership style was appropriate; rather, the leader must be flexible enough to change lead- ership styles to fit specific situations. In developing the model, Vroom and Yetton made these assumptions: 1. The model should be of value to managers in determining which leadership styles they

should use in various situations. 2. No single style is applicable to all situations. 3. The main focus should be the problem to be solved and the situation in which the

problem occurs. 4. The leadership style used in one situation should not constrain the styles used in other

situations. 5. Several social processes influence the amount of participation by subordinates in prob-

lem solving. After a number of years of research and application, the original model has been revised

by Vroom and Jago to further improve its accuracy.31 To understand the Vroom–Jago leadership model, it is important to consider three critical components: (1) specification of the criteria by which decision effectiveness are judged, (2) a framework for describing specific leader behaviors or styles, and (3) key diagnostic variables that describe important aspects of the leadership situation.

Decision Effectiveness Selection of the appropriate decision-making process involves considering two criteria of decision effectiveness: decision quality and subordinate commitment. Decision quality refers to the extent to which the decision impacts job performance. For example, decid- ing whether to paint the stripes in the employee parking lot yellow or white requires low decision quality because it has little or no impact on job performance. On the other hand, a decision regarding at what level to set production goals requires high decision quality. Subordinate commitment refers to how important it is that the subor- dinates be committed to or accept the decision in order that it may be successfully implemented. Deciding which color paint to use in the parking lot does not really require employee commitment to be successfully implemented; just as clearly, setting production goals at a particular level does require employee commitment if those goals are to be achieved.

In addition to quality and commitment considerations, decision effectiveness may be influenced by time considerations. A decision is not an effective one, regardless of quality and commitment, if it takes too long to make. Even a decision made relatively quickly, if it is a participative one involving a number of people, may be costly in terms of total time spent. Thus, a decision made at a meeting of 15 department members and the department manager that takes two hours has used 32 work hours. In terms of over- all organizational effectiveness, this may represent a larger opportunity cost than can be justified.

Decision Styles The Vroom–Jago model makes a distinction between two types of decision situations facing leaders: individual and group. Individual decision situations are those whose solutions affect only one of the leader’s followers. Decision situations that affect several followers are classified as group decisions. Five different leadership styles that fit individual and group situations are available: two of the styles are autocratic (AI and AII); two are consultative

Vroom–Jago leadership model A leadership model that specifies which leader- ship decision-making procedures will be most effective in each of several different situations.

decision quality An important criterion in the Vroom–Jago model that refers to the degree to which a decision impacts subordinates’ performance.