week 7 mgt

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Nick Saban has lots of energy and puts in long hours as head football coach for the University of Alabama. He used to spend so much time traveling to evaluate high school players that the NCAA came up with the “Saban rule,” which pre- vents college coaches from travel- ing to high schools in the spring to watch players. Saban is also known for what people in Tuscaloosa call “the process.” 

How Does “The Process” Work? A Fortune reporter stated that Saban “defines expectations for his players athletically, academically, and personally.” He also “sets ex- pectations so that everyone understands what he wants, and then he can pull back.” For example, he wants to know players’ workout routines for each day, including the amount of weight they can bench-press. “If a lineman is above his target body-fat percentage, Saban wants to know what the staff is doing to fix it.”

Saban also is very supportive of his coaching staff. Once they make a game plan, he leaves its execution to them. He also takes ownership for mistakes or losses. Former defensive coordinator Kirby Smart told the Fortune reporter that Saban “has always taken the blame and never pointed at a coach or a person or a kid. And I think that helps the whole organization. It gives you confidence before the game that ‘Hey, we’ve got a plan. We’ve outworked everybody at this point. Let’s go execute it and do it.”

Saban has hired trainers to coach him and the staff. He believes you get better only by focusing on the small things that make a difference on game day. For ex- ample, he brought in a martial arts expert because he thought it would help play- ers gain leverage when blocking. He also added Pilates to the team’s workout after he experienced its benefits himself.47

YOUR THOUGHTS?

1. Do you think Saban’s “process” goes too far in its demands on college football players?

2. What aspects of Saban’s approach do you see as most applicable in a business organization?

3. What aspects would you rather see modified or abandoned in a business organization?

Nick Saban Uses Task-Oriented Leadership to Achieve National Championships in Football 

OB in Action

Alabama head coach Nick Saban hoists the 2016 College Football Playoff National Championship Trophy following his team’s victory over the Clemson Tigers. Alabama won by a score of 45 to 40. © Sean M. Haffey/Getty Images

515Leadership Effectiveness CHAPTER 13

Relationship-Oriented Leader Behavior The purpose of relationship-oriented leadership is to enhance employees’ skills and create positive work relationships among coworkers and between the leader and his/her employees.48 OB researchers have investigated the impact of four relationship-oriented behaviors:

• Consideration • Empowerment • Servant-leadership • Ethical leadership

Consideration Consideration  is leader behavior that creates mutual respect or trust and prioritizes group members’ needs and desires. Consideration promotes so- cial interactions and identification with the team and leader. In fact, researchers at Ohio State (who identified consideration) initially proposed that a high-initiating structure, high-consideration style would be the best style of leadership. While research results did not support this bold prediction, considerate leader behavior has a moderately strong pos- itive relationship with measures of leadership effectiveness.49

What use do you make of initiating structure and consideration when interacting with student peers or work colleagues? Which of these two types of leader behavior is a strength, an opportunity, or a weakness for you? You can answer these questions by tak- ing Self-Assessment 13.2.

Assessing Your Task- and Relationship-Oriented Leader Behavior Please be prepared to answer these questions if your instructor has assigned Self- Assessment 13.2 in Connect.

1. Are you better at using initiating structure or consideration?

2. Looking at your two lowest scores for each type of leader behavior, suggest ways to improve your leadership.

SELF-ASSESSMENT 13.2

Empowering Leadership To explain the positive effects of empowering leadership, we need to define two terms. Empowering leadership  represents the leader’s ability to create perceptions of psychological empowerment in others. Psychological em- powerment,  employees’ belief that they have control over their work, is believed to drive intrinsic motivation.50 

Amazon founder and CEO Jeff Bezos has learned to be an empowering leader. Patty Stonesifer, an Amazon board member for 19 years, has noticed a change in Bezos’s ap- proach toward leadership. “He was at the center of everything at the beginning. The lead- ership was Jeff Bezos. . . . Today it’s not a hub-and-spoke connecting to him. He has become a great leader of leaders,” she said.51 

Leaders increase their followers’ psychological empowerment by engaging in behav- iors that enhance perceptions of meaning, self-determination or choice, competence, and impact. Let’s consider how Bezos creates psychological empowerment at The Washington Post, the renowned daily newspaper he bought in 2013.

• Leading for meaningfulness. Managers lead for meaningfulness by inspiring their employees and modeling desired behaviors. One way to do this is by helping employees to identify their passions at work and creating an exciting organizational vision employees feel connected to. Bezos demonstrated this when Post correspon- dent Jason Rezaian was released from an Iranian prison after being held for

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18 months. Bezos flew to a US base in Germany to pick Rezaian up, saying, “What happened to Jason and his wife, Yegi, is completely unfair, unjust—outra- geous. I considered it a privilege to be able to go pick him up. I had dinner with them at the Army base the night that I got there, and then . . . I asked him, ‘Where do you want to go? I’ll take you wherever you want.’”  They flew to Key West. A photo of the event went viral within the company. Bezos told everyone, “We’ll never abandon anybody.”52

• Leading for self-determination or choice. Managers lead for choice by delegating meaningful assignments and tasks. Bezos told the staff at the Post that the paper needed to increase its web traffic, but he did not tell them how. He provided input but left the execution to his managers. Web visitors have jumped from 30.5 million in October 2013 to 73.4 million in February 2016.

• Leading for competence. Leading for competence means supporting and coaching employees. Managers first need to make sure employees have the knowledge needed to successfully per- form their jobs. Deficiencies can be handled through training and mentoring. Managers can also combine positive feedback and sincere recognition with challenging tasks to fuel employees’ intrinsic motivation. Rather than controlling the editorial product at the Post, says editor Marty Baron, “Bezos doesn’t suggest coverage.” 

• Leading for progress. Managers lead for progress by monitoring and rewarding others. Bezos meets with Post senior leaders by phone every other week. They discuss operations, web traffic, and other customer-oriented issues.53

Research supports the use of empowering leadership. It fosters psychological empowerment, which in turn improves outcomes such as intrinsic motivation, creativity, career self-efficacy and satisfaction, performance, and team collaboration.54

Servant-Leadership The term servant-leadership was coined in 1970 by Robert Greenleaf, who believed great leaders act as servants and make the needs of others, including employees, customers, and community, their first priority. Servant-leadership  focuses on increased service to others rather than to oneself.55 Because the focus of servant-leadership is on serving others, servant-leaders are less likely to engage in self-serving behaviors that hurt others. Embedding servant-leadership into an organization’s culture requires actions as well as words.

EXAMPLE Afni, Inc., a global customer contact services provider, launched a leadership de- velopment program aimed at enhancing both servant and empowering leadership. Heather Cushing, senior manager of leadership development, said the goal of the program is to help managers “exhibit an attitude of servant-hood, caring for the coaching and development of each level reporting up through them.” Afni wants managers to empower “others to reach their full potential, while also inspiring teamwork and loyalty and improving employee engagement.”56

Servant-leadership is expected to promote leadership effectiveness because it focuses on provid- ing support and growth opportunities to employees. As you may recall from our discussion of per- ceived organizational support (POS) in Chapter 2, people generally reciprocate with increased effort toward collective performance when they feel supported. Servant-leaders have the characteristics listed in Table 13.3.

Yegi Rezaian (far left) and her husband, Jason, sit with US Secretary of State John Kerry and Amazon CEO Jeff Bezos (far right) at a ceremony to dedicate The Washington Post’s new headquarters in Washington, D.C. © State Department/Sipa USA/Newscom

517Leadership Effectiveness CHAPTER 13

Does your current manager display the traits shown in Table 13.3? If yes, you are likely to be happier, more productive, more creative, and more willing to go above and beyond your role. This is precisely what researchers have uncovered.57  Self-Assessment 13.3 measures the extent to which you possess a serving orientation. Results from the assess- ment will enhance your understanding of what it takes to really be a servant-leader.

TABLE 13.3 CHARACTERISTICS OF THE SERVANT-LEADER

Servant-Leadership Characteristics

Description

1. Listening Servant-leaders focus on listening to identify and clarify the needs and desires of a group.

2. Empathy Servant-leaders try to empathize with others’ feelings and emotions. An individual’s good intentions are assumed even when he or she performs poorly.

3. Healing Servant-leaders strive to make themselves and others whole in the face of failure or suffering.

4. Awareness Servant-leaders are aware of their own strengths and limitations.

5. Persuasion Servant-leaders rely more on persuasion than on positional authority when making decisions and trying to influence others.

6. Conceptualization Servant-leaders take the time and effort to develop broader- based conceptual thinking. They seek an appropriate balance between a short-term, day-to-day focus and a long-term, conceptual orientation.

7. Foresight Servant-leaders have the ability to foresee outcomes of a current course of action or situation.

8. Stewardship Servant-leaders assume they are stewards of the people and resources they manage.

9. Commitment to the growth of people

Servant-leaders commit to people beyond their immediate work role. They foster an environment that encourages personal, professional, and spiritual growth.

10. Interest in building community

Servant-leaders strive to create a sense of community both within and outside the work organization.

SOURCE: Adapted from L. C. Spears, “Introduction: Servant-Leadership and the Greenleaf Legacy,” in Reflections on Leadership: How Robert K. Greenleaf’s Theory of Servant-Leadership Influenced Today’s Top Management Thinkers, ed. L. C. Spears (New York: Wiley, 1995), 1–14.

Assessing Your Servant Orientation  Please be prepared to answer these questions if your instructor has assigned Self- Assessment 13.3 in Connect.

1. To what extent do you possess a servant orientation? Are you surprised by the results?

2. How might you demonstrate more servant-leadership in your teams at work or school? Be specific.

SELF-ASSESSMENT 13.3

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Bono, lead singer of the Irish band U2, is a good example of a servant-leader. Here is what reporter Ellen Mcgirt had to say about him. 

EXAMPLE In 2005 he started the One campaign, a volunteer-led movement to in- fluence lawmakers to commit resources to funding programs that truly change the lives of the poor—from Pepfar (which continues to provide lifesaving antiretroviral drugs); to the Global Fund, the Geneva-based not-for-profit that finances select local programs fighting AIDS, TB, malaria; to Gavi, a public-private partnership that pro- vides needed vaccines to kids. Bono’s motto is adapted from St. Francis, who said, “Go into the world to preach the gospel, and if necessary, use words.” Bono com- mented that “It’s about being useful, and that’s what I want to be.”58

TAKE-AWAY APPLICATION

Increasing My Use of Relationship-Oriented Leadership

1. Think about the group projects you are currently working on. How might you use both empowering leadership and servant-leadership in team meetings?

2. How would you evaluate whether these leader behaviors are effective?

Ethical Leadership OB scholars are interested in studying ethical leadership. Ethical leadership represents normatively appropriate behavior that focuses on being a moral role model. This includes communicating ethical values to others, rewarding ethi- cal behavior, and treating followers with care and concern.59

Ethical leadership is clearly driven by personal factors related to our beliefs and values. It also has a reciprocal relationship with an organization’s culture and climate. In other words, an ethical culture and climate promote ethical leadership, and ethical leadership in turn pro- motes an ethical culture and climate. Although ethical leadership is a relatively new area of study in OB, research already shows that it is positively related to employee job satisfaction, organizational commitment, organizational citizenship behavior, motivation, and task perfor- mance. It also is negatively associated with job stress, counterproductive work behavior, and intentions to quit.60 It appears that ethical leadership has many positive benefits.

Passive Leadership Passive leadership is best illustrated by what OB scholars call laissez-faire leadership. Laissez-faire leadership  is a general failure to take responsibility for leading. Ex- amples include avoiding conflict, failing to provide coaching on difficult assignments, failing to assist employees in setting performance goals, avoiding performance feedback, ignoring bullying, and being so hands-off that employees have little idea what they should be doing. You can probably see that laissez-faire leadership prompts incivility among people (see the OB in Action box) and has an overall negative impact on employees’ per- ceptions of leadership effectiveness.61

What are the practical implications of research on passive leadership? Organization- ally, it would be valuable to use employee feedback to identify managers who lead with this style. Once identified, people can be trained to use behaviors associated with other forms of task and relational leadership. If the person does not change, then he or she should be removed from the position.

A leadership expert provided the following suggestions for personally dealing with a passive leader:

• Talk to your manager and discuss your need for more input, coaching, or direction.  • Sit down with your boss and establish SMART goals, as discussed in Chapter 6. • Consult with other members of your work group to find out whether you are the

only person who feels a need for more leadership. • Seek the assistance of someone higher in the organization.62 

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What Are the Take-Aways from Behavioral Theory? There are three points to remember about behavioral theory.

1. Behavior is more important than traits when it comes to leaders’ effectiveness.70 Our mantra for leaders is, “Every behavior matters.”

2. Leader behaviors can be systematically improved and developed.71 Organizations should continue to invest in leadership development programs.

3. There is no one best style of leadership. The effectiveness of a particular leadership style depends on the situation at hand.

Aldemir Bendine is CEO of Brazil’s state-run oil firm Petróleo Brasileiro SA, called Petrobras. He has displayed such passive leadership that he has earned the nick- name “TQQ.” In Portuguese, that stands for Tuesday, Wednesday, and Thursday, reportedly the only days he shows up at corporate headquarters in Rio. Bendine is criticized for spending too much time in São Paulo, his hometown, and not enough at corporate headquarters in Rio.63

Bendine was appointed CEO in 2015 by Brazilian President Dilma Rousseff, who believed he could help the oil company overcome a massive corruption scandal. “In- vestigators say that politicians, oil executives and businessmen conspired for a decade to siphon billions of dollars from the firm, channeling money to Swiss accounts and the slush funds of major political parties,” according to The Wall Street Journal.64

Unfortunately, other executives at Petrobas do not believe Bendine has “done enough in his first year to tackle the company’s myriad problems,” according to a Wall Street Journal reporter.65 Bidness Etc reported that these problems include “low crude oil prices, a multibillion-dollar corruption scandal, weak Brazilian economy, and the powerful workers’ unions. . . . The corruption scandal and the commodity market downturn have increased Petrobras’ debt burden to more than $130 billion.”66

The Wall Street Journal reports that “Bendine’s lack of industry experience has sparked grumbling by some Petrobras veterans that he doesn’t have the com- pany’s long-term interests at heart. He has clashed with board members on sev- eral occasions, and in October slammed the door after walking out on the board mid-meeting. . . . His people skills also were questioned during a November strike by oil platform workers that dragged on for several weeks, costing the company more than 2 million barrels of oil production. The workers also won a raise.”67

Rousseff, who has since been impeached by Brazil’s Congress, views Bendine as a loyal government solider. She herself is accused of violating “budgetary laws to cover shortfalls in Brazil’s deficit,” a charge she denies.68

One senior executive summarized the general view of Bendine as follows: “He doesn’t seem to want to have a career in the oil business. . . . It’s a part-time job for him.”69

YOUR THOUGHTS?

1. Why do you think Aldemir Bendine is displaying passive leadership?  2. Do you think Bendine’s relationship with President Rousseff is affecting his im-

age at Petrobas? Explain. 3. What are the outcomes of Bendine’s leadership?

Passive Leadership at Petrobas  OB in Action

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Contingency leadership theories grew out of the realization that there is no single “best” style of leadership. Contingency theories  propose that the effectiveness of a partic- ular style of leader behavior depends on the situation. As situations change, different styles become appropriate. As you will learn, however, the application of contingency theories is more complicated than it appears.

Let’s examine two contingency theories: Fiedler’s contingency model and House’s path-goal theory.

Fiedler’s Contingency Model The oldest contingency-based theory was developed by Fred Fiedler. He labeled the model contingency theory  because it is based on the premise that a leader’s effec- tiveness is contingent on the extent to which the leader’s style matches character- istics of the situation at hand. To understand how this matching process works, we’ll consider the key leadership styles Fiedler identified and the situational variables that con- stitute what he labeled situational control.72

Two Leadership Styles: Task Orientation and Relationship Orientation Fiedler believed leaders have one dominant or natural leadership style that is resistant to change—either task-motivated or relationship-motivated. Recall these two orienta- tions from our earlier discussion in this chapter. Task-motivated leaders focus on ac- complishing goals, whereas relationship-motivated leaders are more interested in developing positive relationships with followers. Fiedler developed the least preferred coworker (LPC) scale to measure the extent to which an individual takes a task- or relationship-based approach toward leadership. The scale asks you to evaluate a coworker you least enjoy working with on 16 pairs of opposite characteristics (such as friendly/unfriendly and tense/relaxed). High scores on the survey (high LPC) indicate that an individual is relationship-motivated, and low scores (low LPC) suggest a task- motivated style.

Three Dimensions of Situational Control Situational control refers to the amount of control and influence the leader has in her or his immediate work environment. There

M A J O R Q U E S T I O N

How Do I Know When to Use a Specific Leader Behavior?

T H E B I G G E R P I C T U R E

Proponents of contingency leadership believe the effectiveness of leadership behaviors

depends on the situation. Makes common sense! Contingency theories help managers

recognize when they should use particular types of leader behavior. Two that have been

widely researched are Fred Fiedler’s contingency model and Robert House’s path-goal

theory. 

13.4 CONTINGENCY THEORIES: DOES THE EFFECTIVENESS OF LEADERSHIP DEPEND ON THE SITUATION?

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are three dimensions of situational control: leader–member relations, task structure, and position power.

• Leader–member relations  describe the extent to which the leader has the support, loyalty, and trust of the work group. This dimension is the most impor- tant component of situational control. Good leader–member relations suggest that the leader can depend on the group, thus ensuring members will try to meet the leader’s goals and objectives.

• Task structure  measures the amount of structure contained within tasks per- formed by the work group. For example, a managerial job contains less structure than that of a bank teller. Because there are guidelines for the way structured tasks should be completed, the leader has more control and influence over employees performing such tasks. This dimension is the second-most important component of situational control.

• Position power  is the leader’s formal power to reward, punish, or otherwise obtain compliance from employees.

The dimensions of situational control vary independently, forming eight combina- tions in which control varies from high to low (see Figure 13.3). High control implies that the leader’s decisions will produce predictable results because the leader has the ability to influence work outcomes. Low control implies that the leader’s decisions may not influ- ence work outcomes because the leader has very little influence.

When Is Each Style Most Effective? No leadership style is effective in all situa- tions. Figure 13.3 illustrates when task- and relationship-motivated leadership are ex- pected to be most effective. 

• Task-oriented leadership should be most effective in either high-control (situations I–III in Figure 13.3) or low-control situations (situation VIII).

• Relationship-oriented leadership should be most effective in situations of moderate control (situations IV–VII in Figure 13.3).

FIGURE 13.3 REPRESENTATION OF FIEDLER’S CONTINGENCY MODEL

Situational Control

Leader–Member Relations

Task Structure

Position Power

Situation

Optimal Leadership

Style

Task- Motivated Leadership

Relationship- Motivated Leadership

Task- Motivated Leadership

I II III IV V VI VII VIII

Good Good Good

High High Low

Strong Weak Strong

Good Poor Poor Poor Poor

Weak

Low High High Low Low

Weak Strong Weak Strong

High-Control Situations

Moderate-Control Situations

Low-Control Situations

SOURCE: Adapted from F. E. Fiedler, “Situational Control and a Dynamic Theory of Leadership,” in Managerial Control and Organizational Democracy, ed. B. King, S. Streufert, and F. E. Fieldler (New York: Wiley, 1978), 114.

Bill Marriott Selects Arne Sorenson to Be CEO over His Son

Bill Marriot became CEO of the Marriott hotel chain at the age of 32. He was selected by his father after having worked in the company since he was 14. Under his leadership, the company’s revenues grew from $85 million in 1964 to $11.8 billion in 2012.

Bill’s Dilemma After suffering a heart attack at the age of 57, Bill Marriott began to consider a succes- sion plan. He wanted one of his four children to take over because the 85-year-old company had always been run by a family member.

Bill’s son John Marriott was the most capable to take over. John started as a cook in the kitchen and had gone on to work in every aspect of the business. Bill said John “spent most of his adult life prepar- ing to succeed me as CEO. He devoted his heart and soul to learning the business. . . . But as time went on, I realized that it wasn’t the right fit—not for John and not for Marriott.”

Bill’s Response Bill Marriott saw that the company needed a CEO with strong people skills. He noted that “our culture is focused on people, because treating one another well is essential to creat- ing an atmosphere in which everyone treats guests well, and that’s the most fundamental element of our business.”76

Marriott had hired lawyer Arne Sorenson to help represent the company in 1993. Bill thought Sorenson had great financial skills, so he hired him at a later time to head mergers and acquisitions. Sorenson became chief financial officer in 1998. Over time, Bill Marriott observed that his CFO had also developed very keen people skills.

Problem-Solving Application

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What should you do if your dominant leadership style does not match the situation? Then, Fiedler suggests, it is better to move to a more suitable situation than to try to change your leadership style. This response is different from that of the behavioral styles approach, which assumes we can learn different leader behaviors. Fiedler believes people cannot change their leadership style. Do you agree with this proposition?

Take-Aways from Fiedler’s Model Although research provides only partial support for Fiedler’s model and the LPC scale,73 there are three key take-aways.

1. Leadership effectiveness goes beyond traits and behaviors. The fit between a lead- er’s style and the situational demands is influential. For example, a recent study found that companies with task-oriented CEOs achieved greater financial perfor- mance (higher return on assets) when the company had a relationship-focused cul- ture, whereas firms with relationship-oriented CEOs had higher firm performance in task-focused cultures.74 

2. Organizations should attempt to hire or promote people whose leadership styles fit or match situational demands. Bill Marriott, Marriott’s executive chairman, decided to select the first nonfamily CEO because he felt his son John was not suited for the position despite having spent his entire life working his way up through the company (see Problem-Solving Application box).

3. Leaders need to modify their style to fit a situation. A recent study found that too much task-oriented leader behavior was viewed negatively by employees, whereas excessive relationship leadership was not. Leaders need to experiment with finding the appropriate amount of leadership to exhibit in different situations.75

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House’s Path-Goal Theory A second popular contingency-based theory, proposed by Robert House in the 1970s and revised in 1996, is path-goal theory,  which holds that leader behaviors are effective when employees view them as a source of satisfaction or as paving the way to fu- ture satisfaction. Leaders are expected to do this by (1) reducing roadblocks that inter- fere with goal accomplishment, (2) providing the guidance and support employees need, and (3) linking meaningful rewards to goal accomplishment.

As Sorenson’s task and relationship skills grew, John Marriott became unhappy working at head- quarters. He simply did not like managing the bureaucracy of such a large company. Bill concluded that his son was a “natural born entrepreneur” who did not have the personality to run a company like Marriott.

The Outcome Father and son agreed that John would be happier working in another role. In 2005, John became vice chair of the board, and he started a medical testing company. He also is CEO of JWM Family Enterprises, a family trust company. Bill turned over the CEO reins to Arne Sorenson in March 2012. The company has done very well since that time. The Washington Post noted in 2015, “The com- pany’s stock is on a tear, and Marriott is adding tens of thousands of rooms worldwide annually, putting it on pace to pass 1 million rooms open or on the way this year.”77

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problem in this case?

Step 2: Identify the cause of the problem. What leadership concepts or theories helped Bill Marriott make a decision about his successor?

Step 3: Make your recommendation. Do you agree with Bill Marriott’s decision? Explain.

The mountaineering guide (pulling the climber up) exemplifies path-goal leadership. His job is to reduce roadblocks during an ascent and to provide coaching and support during the journey. Of the two climbers, who do you think has the most fun? Who has the greatest sense of accomplishment? © Image Source/Javier Perini CM RF

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Putting the Theory into Action To better understand how these contingency factors influence leadership effectiveness, we consider locus of control (see Chapter 3), an em- ployee characteristic, and task structure, an environmental factor.

EXAMPLE Locus of control can be internal or external.

Internal. Employees with an internal locus of control are

• More likely to prefer participative or achievement-oriented leadership because they believe they have control over the work environment.

• Unlikely to be satisfied with directive leader behaviors that exert additional control over their activities.

External. Employees with an external locus

• Tend to view the environment as uncontrollable, preferring the structure provided by supportive or directive leadership.

EXAMPLE Task structure can be low or high.

Low. Low task structure occurs when

• Employees are not clear about their roles or performance expectations and have high role ambiguity.

Directive and supportive leadership should help employees experiencing role ambiguity.

High. High task structure occurs when

• Employees work on routine and simple tasks. Directive leadership is likely to frustrate such employees. Supportive leadership is most useful in this context.

FIGURE 13.4 REPRESENTATION OF HOUSE’S REVISED PATH-GOAL THEORY

• Path-goal clarifying • Achievement oriented • Work facilitation • Supportive • Interaction facilitation • Group-oriented decision making • Representation and networking • Value based

Leader Behaviors

General Behaviors Specifics of Situation Resulting E�ectiveness

• Employee motivation • Employee satisfaction • Employee performance • Leader acceptance • Work-unit performance

Leadership E�ectiveness

• Task structure • Work group dynamics

Environmental Factors

• Locus of control • Task ability • Need for achievement • Experience • Need for clarity

Employee Characteristics

House’s revised model is presented in Figure 13.4. You can see that leadership effectiveness is influenced by the interaction between eight leadership behaviors (see Table 13.4) and a variety of contingency factors.

What Determines Leadership Effectiveness? The Match between Leadership Behavior and Contingency Factors Figure 13.4 shows that two contingency factors— employee characteristics and environmental factors—can cause some leadership behav- iors to be more effective than others.

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Does the Revised Path-Goal Theory Work? There are not enough direct tests of House’s revised path-goal theory to draw overall conclusions. Nonetheless, the theory offers us three key points.

1. Use more than one style of leadership. Effective leaders use multiple types of leader behavior. Familiarize yourself with the eight types of leader behavior outlined in path-goal theory and try new behaviors when the situation calls for them.

2. Help employees achieve their goals. Clarify the paths to goal accomplishment and remove any obstacles that may impair an employee’s ability to achieve his or her goals. 

TABLE 13.4 CATEGORIES OF LEADER BEHAVIOR IN REVISED PATH-GOAL THEORY

Leader Behaviors What It Means

Path-goal–clarifying behaviors

Clarifying employees’ performance goals; providing guidance on how employees can complete tasks; clarifying performance standards and expectations; use of positive and negative rewards contingent on performance

Achievement-oriented behaviors

Setting challenging goals; emphasizing excellence; demonstrating confidence in employees’ abilities

Work-facilitation behaviors

Planning, scheduling, organizing, and coordinating work; providing mentoring, coaching, counseling, and feedback to assist employees in developing their skills; eliminating roadblocks; providing resources; empowering employees to take actions and make decisions

Supportive behaviors Showing concern for the well-being and needs of employees; being friendly and approachable; treating employees as equals

Interaction-facilitation behaviors

Resolving disputes; facilitating communication; encouraging the sharing of minority opinions; emphasizing collaboration and teamwork; encouraging close relationships among employees

Group-oriented decision- making behaviors

Posing problems rather than solutions to the work group; encouraging group members to participate in decision making; providing necessary information to the group for analysis; involving knowledgeable employees in decision making

Representation and networking behaviors

Presenting the work group in a positive light to others; maintaining positive relationships with influential others; participating in organizational social functions and ceremonies; doing unconditional favors for others

Value-based behaviors Establishing a vision, displaying passion for it, and supporting its accomplishment; demonstrating self- confidence; communicating high-performance expectations and confidence in others’ abilities to meet their goals; giving frequent positive feedback

SOURCE: Adapted from R. J. House, “Path-Goal Theory of Leadership: Lessons, Legacy, and a Reformulated Theory,” Leadership Quarterly, 1996, 323–352.

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3. Modify your leadership style to fit various employee and environmental character- istics. Remember that a small set of employee characteristics (ability, experience, and need for independence) and environmental factors (task characteristics of autonomy, variety, and significance) are relevant contingency factors.78

Applying Contingency Theories Although researchers and practitioners support the logic of contingency leadership, its practical applications have not been clearly developed. A team of researchers proposed a general strategy managers can use across a variety of situations, however. It has five steps.79 To describe them, let’s use the examples of a head coach of a sports team and a sales manager.

Step 1: Identify important outcomes. Managers must first identify the goals they want to achieve. For example, the head coach may have games to win or wish to avoid injury to key players, whereas a sales manager’s goal might be to increase sales by 10 percent or reduce customers’ complaints by half.

Step 2: Identify relevant leadership behaviors. Next managers need to identify the specific types of behaviors that may be appropriate for the situation at hand. The list in Table 13.4 is a good starting point. A head coach in a championship game, for instance, might focus on achievement-oriented and work-facilitation behaviors. In contrast, a sales manager might find path-goal–clarifying, work- facilitation, and supportive behaviors more relevant for the sales team. Don’t try to use all available leadership behaviors. Rather, select the one or two that ap- pear most helpful.

Step 3: Identify situational conditions. Fiedler and House both identify a set of potential contingency factors to consider, but there may be other practical consid- erations. For example, a star quarterback on a football team may be injured, which might require the team to adopt a different strategy for winning the game. Simi- larly, the need to manage a virtual sales team with members from around the world will affect the types of leadership most effective in this context.

Step 4: Match leadership to the conditions at hand. There are too many pos- sible situational conditions for us to provide specific advice. This means you should use your knowledge about organizational behavior to find the best match between your leadership styles and behaviors and the situation at hand. The coach whose star quarterback is injured might use supportive and values- based behaviors to instill confidence that the team can win with a different quarterback. Our sales manager also might find it useful to use the empower- ing leadership associated with work-facilitation behaviors and avoid directive leadership.

Step 5: Decide how to make the match. Managers can use guidelines from either contingency theory or path-goal theory: change the person in the leadership role or change his or her behavior. It is not possible to change the head coach in a champi- onship game. This means the head coach needs to change his or her style or behav- ior to meet the specific challenge. In contrast, the organization employing the sales manager might move him or her to another position because the individual is too directive and does not like to empower others. Or the sales manager could change his or her behavior, if possible.

527Leadership Effectiveness CHAPTER 13

Transformational leadership represents a broad type of leader behavior that goes beyond task and relational leadership. Its origins date to the 1940s, when German sociologist Max Weber discussed the pros and cons of charismatic leadership.80 Charisma  is a form of interpersonal attraction that inspires acceptance, devotion, and enthusiasm. Weber’s initial ideas were examined and then incorporated into different models of trans- formational leadership during the 1970s and ’80s. The dominant model of transforma- tional leadership was proposed by a renowned OB scholar, Bernard Bass.81 Bass believed transformational leaders used key leader behaviors to influence others.

A Model of Transformational Leadership Transformational leaders  transform their followers to pursue organizational goals over self-interests. They do this by appealing to followers’ self-concepts—their values, motives, and personal identity. There are four key behaviors of transformational leaders: inspirational motivation, idealized influence, individualized consideration, and intellec- tual stimulation. Figure 13.5 provides a sketch of the way transformational leaders rely on the four behaviors. Let’s look at each in more detail.

Inspirational Motivation “Let me share a vision that elevates us to a greater good.” Inspirational motivation,  which includes the use of charisma, relies on an attrac- tive vision of the future, emotional arguments, and demonstrated optimism and enthusiasm. A vision is “a realistic, credible, attractive future for your organization.”82 According to Burt Nanus, a leadership expert, the right vision unleashes human potential because it serves as a beacon of hope and common purpose. It does this by attracting commitment, energizing workers, creating meaning in employees’ lives, establishing a standard of excellence, promoting high ideals, and bridging the gap between an organiza- tion’s present problems and its future goals and aspirations.

EXAMPLE Drugmaker Novo Nordisk inspires its US employees with videos of pa- tients who have benefited from its lifesaving products, including a NASCAR driver and villagers in Vietnam.83

M A J O R Q U E S T I O N

How can I use transformational leadership when working with others?

T H E B I G G E R P I C T U R E

Transformational leaders use a combination of charisma, interpersonal skills, and leader

behaviors to transform followers’ goals, motives, and behavior. Four key behaviors they

adopt are inspirational motivation, idealized influence, individualized consideration, and

intellectual stimulation. We discuss a process by which these behaviors help produce

positive outcomes.

13.5 TRANSFORMATIONAL LEADERSHIP: HOW DO LEADERS TRANSFORM EMPLOYEES’ MOTIVES?

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EXAMPLE Civil rights leader Martin Luther King Jr. had a vision or dream of racial equality. He both inspired a movement of people and helped the country envision a brighter future.

EXAMPLE Lloyd Dean, CEO of Dignity Health, has a vision of human kindness.84 He believes humanity is the core of health care.

Idealized Influence “Let me demonstrate how to work hard and do the right thing.” The focus of idealized influence  is to in- still pride, respect, and trust within employees. Managers do this by sacrificing for the good of the group, being a role model, and displaying high ethical standards.

EXAMPLE Donna Hyland, CEO of Children’s Healthcare of Atlanta, believes in idealized influence. She told Fortune, “At Children’s we believe that people have chosen professions they enjoy and desire to be great at them. Our job is to get out of the way and let them focus on the work they love.”85

FIGURE 13.5 A TRANSFORMATIONAL MODEL OF LEADERSHIP

• Traits • Inspirational motivation

• Increased self-e�cacy and collective self-e�cacy

• Increased individual, group, and organizational performance

• Positive work attitudes

• Increased individual and group creativity/innovation

• Reduced stress and turnover • Increased organizational citizenship behavior • Increased customer service • Positive perceptions of leader e�ectiveness

• Increased identification with the leader and work group members

• Increased perceptions of psychological empowerment and perceived organizational support

• Increased positive a�ect • Increased perceptions of task meaningfulness • Increased perceptions of organizational justice • Increased trust and liking with the leader • Increased perceptions of positive climates and work group processes

• Idealized influence

• Individualized consideration

• Intellectual stimulation

• Life experiences • Leader trait a�ect

• Organizational culture

Person and situation factors

Leader behavior

E�ects on followers and work groups

Outcomes

SOURCE: Adapted from D. A. Waldman and F. J. Yammarino, “CEO Charismatic Leadership: Levels-of-Management and Levels-of-Analysis Effects,” Academy of Management Review, April 1999, 266–285; and D. V. Knippenberg and S. B. Sitkin, “A Critical Assessment of Charismatic-Transformational Leadership Research: Back to the Drawing Board?” The Academy of Management Annals, 2013, 1–60.

Donna Hyland is known for her community involvement. She has over 28 years of business leadership and financial experience and has spent the bulk of her career focused on improving health care delivery to children in Georgia and beyond. She has served on multiple boards of directors and was recognized as one of the 100 Most Influential Georgians. © Moses Robinson/WireImage/Getty Images

529Leadership Effectiveness CHAPTER 13

Individualized Consideration “Let me provide tangible support to help you reach your goals.” The individualized consideration part of transformational leader- ship is about relationships. Specifically, individualized consideration  consists of behaviors that provide support, encouragement, empowerment, and coaching to employees. To enact these behaviors, leaders must pay special attention to the needs of their followers and search for ways to help them develop and grow. Spend time talking with people about their interests and identify new learning opportunities for them.

EXAMPLE CHG Healthcare Services, ranked the third-best company in the 2016 Training Top 125, has provided its employees with strong career and skill develop- ment by moving to a more people-driven, leader-guided, and core value-centered approach. The company instituted courses on servant leadership and mindfulness and implemented a formal mentoring program.86

Intellectual Stimulation “Let’s establish challenging and meaningful goals.” The in- tellectual component of transformational leadership is more task-oriented. Intellectual stimulation  behavior encourages employees to question the status quo and to seek innovative and creative solutions to organizational problems. If effectively challenged, employees are more likely to view organizational problems as “my problems” and proactively attempt to overcome performance roadblocks.

EXAMPLE At San Diego’s WD-40, maker of lubricants and cleaners, managers are asked to find creative ways to increase employee engagement. These efforts entail setting improvement goals based on employee surveys. Speaking of goals, CEO Garry Ridge said, “Our goals are tied not only to financial performance but to the cultural performance of our company, which includes the level of engagement scores.”87

How Does Transformational Leadership Work? Figure 13.5 showed on the left-hand side that transformational leader behavior is first influenced by both person and situation factors. On the person factor side of the equa- tion, research reveals that transformational leaders tend to have personalities that are more extroverted, agreeable, and proactive and less neurotic than nontransformational leaders. They also have higher emotional intelligence88  and tend to be female.89  Leader trait affect, which represents a person’s tendency to feel either positive or neg- ative, also influences how well we use transformational leadership, because positive people are more likely to engage in transformational leadership than negatively ori- ented individuals.90

Finally, Figure 13.5 also shows that organizational culture influences the extent to which leaders are transformational. Cultures that are adaptive and flexible rather than rigid and bureaucratic are more likely to foster the opportunity for leaders to demonstrate transformational leadership.

The third column from the left in Figure 13.5 reveals that the use of transformational leadership creates immediate positive effects on followers and work groups. These in turn generate the additional positive outcomes shown in the fourth column of Figure 13.5 like individual, group, and organizational performance; organizational commitment; organi- zational citizenship behaviors; reduced turnover intentions; and safety behaviors.91 By and large, research supports the linkages the figure shows.92

Have you worked for a transformational leader? Self-Assessment 13.4 measures the extent to which a current or former manager used transformational leadership. It also gives you a good idea about the specific behaviors you need to exhibit if you want to lead in a transformational manner.

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Assessing Your Boss’s Transformational Leadership Please be prepared to answer these questions if your instructor has assigned Self-Assessment 13.4 in Connect.

1. What could your manager have done to be more transformational?

2. What three behaviors can you exhibit to increase your application of transforma- tional leadership?

SELF-ASSESSMENT 13.4

Implications for Managers Support for transformational leadership underscores five important managerial implications.

• The establishment of a positive vision of the future—inspirational motivation— should be considered a first step in applying transformational leadership. Why? Because the vision represents a long-term goal, and it is important for lead- ers to begin their influence attempts by gaining agreement and consensus about where the team or organization is headed.93 It also is critical to widely communi- cate the vision among the team or entire organization.94 People can’t get excited about something they don’t know about or don’t understand.

• The best leaders are not just transformational. Effective leaders also rely on other task-oriented and relationship-oriented behaviors, and they avoid a laissez- faire or “wait-and-see” style. Use all types of leader behavior discussed in this chapter, when appropriate.

• Transformational leadership affects outcomes at the individual, group, and organizational levels.95 Managers can use the four types of transformational lead- ership shown in Figure 13.5 (second column from left) as a vehicle to improve a host of important outcomes. 

• Transformational leadership works virtually. If you lead geographically dispersed people, focus on how you can display the four transformational leader behaviors in your e-mails, tweets, webinars, and conference calls.96

• Transformational leaders can be ethical or unethical. While ethical transfor- mational leaders enable employees to enhance their self-concepts, unethical ones select or produce obedient, dependent, and compliant followers.

Managers need to be more like Optimus Prime and his fellow transformers. That is, managers can be more effective by morphing their leadership styles to fit the situation at hand. Why do you think some people struggle with changing their leadership style across situations? © Gustavo Caballero/Getty Images

531Leadership Effectiveness CHAPTER 13

Three additional perspectives on leadership deserve attention: • Leader–member exchange (LMX) theory. • The use of humility. • A follower perspective.

The Leader–Member Exchange (LMX) Model of Leadership Leader–member exchange (LMX) theory differs considerably from the theories already discussed because it focuses on the quality of relationships between managers and subor- dinates, as opposed to their behaviors or traits. It also does not assume that leader behav- ior is characterized by a stable or average leadership style. 

Leader–member exchange (LMX) theory  is based on the assumption that leaders develop unique one-to-one relationships (exchanges) with each of the people reporting to them. Behavioral scientists call this sort of relationship a vertical dyad (a dyad is something with two parts). The forming of vertical dyads is said to be a naturally occurring process, resulting from the leader’s attempt to delegate and assign work roles. Two distinct types of LMX relationships are expected to evolve, in-groups and out-groups.97

In-Group vs. Out-Group Exchanges LMX relationships are based on the leader’s attempt to delegate and assign work roles. This process results in two types of leader– member dyads.

• In-group exchange: Creating trust and mutual obligation. High in-group ex- changes, also called high LMX, are characterized by a partnership of reciprocal influence, mutual trust, respect and liking, and a sense of common fate. These re- lationships become more social over time.

• Out-group exchange: Creating more formality in expectations and rewards. Out-group exchanges, also known as low LMX relationships, tend to focus on the economic exchange between leaders and followers. They tend to  be more formal and revolve around negotiating the relationship between performance and pay. They do not create a sense of mutual trust, respect, or common fate.98

M A J O R Q U E S T I O N

How can more recent approaches to leadership improve my effectiveness at work?

T H E B I G G E R P I C T U R E

You are about to discover how leader–member exchange theory, humility, and characteristics

of good followers can help you achieve your career aspirations.

13.6 ADDITIONAL PERSPECTIVES ON LEADERSHIP

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Does the Quality of an LMX Matter? Whether an LMX is high or low influences many important outcomes contained in the Organizing Framework. For example, a high LMX is associated with individual-level behavioral outcomes such as task performance, turnover, organizational citizenship, counterproductive behavior, and attitudinal outcomes such as organizational commitment, job satisfaction, and justice.99 Differential treatment of team members (due to LMXs of different quality) can also be problematic. A team of researchers found that differential treatment among members of soccer, hockey, and basketball teams led to negative team atmospheres, which promoted poor perceptions of team performance.100 

The above findings underscore how important it is for you to have a high LMX with your boss. We’ll offer solutions for fixing a low LMX below, but for now let’s consider how LMXs are formed.

How Are LMX Relationships Formed? The quality of an LMX is influenced by three categories of variables: follower characteristics, leader characteristics, and interper- sonal relationship variables.101

1. Follower characteristics. Leaders tend to create higher LMXs with employees they perceive as possessing competence, positive personalities, agreeableness, conscien- tiousness, and extraversion. Do you possess these characteristics?

2. Leader characteristics. Leaders who use transactional and transformational leadership tend to have higher LMXs. Not surprisingly, so do extroverted and agreeable leaders.

3. Interpersonal relationship variables. Far too many interpersonal factors affect an LMX for us to discuss here, so we note three that have the greatest impact on a leader–member relationship. High LMXs tend to occur when the parties: • Trust each other. • Perceive themselves as similar in terms of interests (both like sports or action

movies), values (both value honesty), and attitudes (both want work–life balance). • Like each other. Your dyadic relationship with your boss changes over time. A team of researchers

concluded this happens because “the variables that affect LMX interact and accumulate over time.”102  For example, your authors have both had relationships with bosses that changed from good to bad, and then back to good. This tells us that you should not easily give up on trying to improve a low LMX.

Managerial and Personal Implications of LMX Theory Here are three important managerial and personal implications of LMX theory.

• Expectations matter. Leaders are encouraged to establish high-performance ex- pectations for all their direct reports, because favoritism and differential treatment lead to negative outcomes. Leaders should also communicate their view of rela- tionships with their team.103

These two photos illustrate a core aspect of LMX theory. Leaders and followers with a positive “in-group exchange” tend to get along better and experience less conflict. In contrast, out-group exchanges are more likely to have a negative tone and more conflict. (left): © Fuse/Getty Images RF; (right): © John Lund/Nevada Wier/Getty Images RF

533Leadership Effectiveness CHAPTER 13

• Diversity still counts. Personality and demographic similarity between leaders and followers may be associated with higher LMXs, but managers should avoid creating a homogenous work environment just for the sake of having positive relationships with their direct reports. Diversity’s many benefits are too powerful to be ignored.

• The initiative is yours. Positive actions can improve a poor LMX (see the Apply- ing OB box). Take the lead rather than waiting for your boss to change the relation- ship. Self-Assessment 13.5 will help you diagnose the quality of your relationship with a boss and discover how you can improve it.

Assessing Your Leader–Member Exchange  Please be prepared to answer these questions if your instructor has assigned Self- Assessment 13.5 in Connect.

1. Are you surprised by the results? Explain.

2. Based on your results, what do you think are the key causes of your LMX with your boss? Be specific.

SELF-ASSESSMENT 13.5

Applying OB

1. Stay focused on your department’s goals and remain positive about your ability to accomplish your own goals. An unsupportive boss is just another obstacle to be overcome.

2. Be careful about the emotions you show at work. Anger generally is not a good emotion to display. Too much positivity can also be interpreted as unrealistic or silly. Emotions should be appropriate for the situation at hand.104

3. Work on improving your relationship with your manager. Begin by examining the level of trust between you and then try to improve it by frequently and effectively communicating. You can also increase trust by following through on your commit- ments and achieving your goals.

4. Learn what your boss believes are the desired characteristics of a good per- former. Too many people fail to clarify expectations with their managers. For ex- ample, there are generational differences about what is appropriate dress at work. Violating these beliefs can land you in a poor LMX.105

Tips for Improving the Quality of a Leader– Member Exchange

TAKE-AWAY APPLICATION

Improving the LMX with My Boss

Using results from Self-Assessment 13.5 and the recommendations from the Apply- ing OB box, answer the following questions:

1. What aspects of your LMX relationship are most in need of improvement?

2. What do you think are the main causes of the quality of your LMX?

3. What are three things you can do to improve your LMX?

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The Power of Humility  Humility is a relatively stable trait grounded in the belief that “something greater than the self exists.”106 Although some think it is a sign of weakness or low self-esteem, nothing could be fur- ther from the truth.

Humble leaders tend to display five key qualities valued by employees: high self-awareness, openness to feedback, appreciation of others, low self-focus, and appreciation of the greater good.107  Lazlo Bock, Google’s senior vice presi- dent of people operations, said humility is one of the traits he’s looking for in new hires. “Your end goal is what can we do together to problem-solve,” ex- plained Bock, adding it is not just humil- ity in creating space for others to contribute, “it’s intellectual humility. Without humility, you are unable to learn.”108

Although the scientific study of hu- mility is relatively new, it has shown proven benefits for this trait. A Catalyst study of 1,500 workers in Australia, China, Germany, India, Mexico, and the United States revealed that employees felt in- cluded in their work teams when the boss was humble.109 Another study conducted in China demonstrated cascading positive effects of CEO humility across two organizational levels. CEO humility positively influenced employee engagement, commitment, and performance.110

What can we conclude about humility in the context of OB? First, try to be more humble by changing the focus of your accomplishment from “me” to “we.” Share credit with others. Second, a humble style is better than an arrogant or complacent one.111 Third, an organization’s culture can promote humility. Employee-owned construction company TDIndustries does so with its agreed-upon set of cultural norms: “No rank in the room, everyone participates—no one dominates, and listen as an ally.” Employees also strive to be on a first-name basis with everyone.112

The Role of Followers in the Leadership Process All the theories discussed in this chapter have been leader-centric. That is, they focused on understanding leadership effectiveness from the leader’s point of view. We conclude the chapter by discussing the role of followers in the leadership process.

To start, note how leaders and followers are closely linked. You cannot lead without having followers, and you cannot follow without having leaders. Each needs the other, and the quality of the relationship determines how we behave as followers. This is why both leaders and followers must focus on developing a mutually rewarding and beneficial relationship.

Let’s consider some possible types of followers and the steps you can take to be a better follower.

What Do Leaders Want from Followers? Followers vary in terms of the extent to which they commit to, comply with, or resist a leader’s influence attempts. For

We don’t tend to see professional athletes as humble, but this one surely is recognized for this attribute. Larry Fitzgerald is a wide receiver for the Arizona Cardinals. He was selected for the Pro Bowl nine times and currently ranks as fifth in all-time receiving yards per game in NFL history. He also was the youngest NFL receiver to reach 11,000 career receiving yards. Despite these achievements, he does not assume he is good enough for the Hall of Fame. He is recognized for continually working on improving his game, being “nice” to opposing players, and being involved with charity and community-based organizations. © Christian Petersen/Getty Images

535Leadership Effectiveness CHAPTER 13

example, one researcher identified three types of followers: helpers, independents, and rebels.113

• Helpers show deference to and comply with the leadership. • Independents distance themselves from the leadership and show less compliance. • Rebels show divergence from the leader and are least compliant.

Leaders obviously want followers who are:

1. Productive 4. Cooperative 2. Reliable 5. Proactive 3. Honest 6. Flexible

Leaders do not benefit from followers who hide the truth, withhold information, fail to generate ideas, are unwilling to collaborate, provide inaccurate feedback, or are unwilling to take the lead on projects and initiatives.114

What Do Followers Want from Leaders? Followers seek, admire, and respect leaders who foster three emotional responses in others:

• Significance • Community • Excitement

That is, followers want organizational leaders who make them feel what they do at work is important and meaningful, who foster a sense of unity that encourages people to treat others with respect and dignity and to work together, and who make them feel engaged and energized at work.115

How Can I Become a Better Follower? A pair of OB experts developed a four- step process for followers to use in managing the leader–follower relationship.116

1. Understand your boss. Gain an appreciation for your manager’s leadership style, interpersonal style, goals, expectations, pressures, and strengths and weaknesses. One way is to ask him or her these seven questions:117

a. How would you describe your leadership style? Does it change when you are un- der pressure?

b. When would you like me to approach you with questions or information? Are any situations off-limits (like social events)?

c. How do you want me to communicate with you? d. Do you have any preferred or unique ways of working? e. Are there behaviors or attitudes you won’t tolerate? What are they? f. What is your approach to giving feedback? g. How can I help you? 2. Understand your own style, needs, goals, expectations, and strengths and

weaknesses. 3. Conduct a gap analysis between the understanding you have about your boss

and the understanding you have about yourself.  4. Build on mutual strengths and adjust or accommodate your boss’s divergent

style, goals, expectations, and weaknesses.118 For example, you might adjust your style of communication in response to your boss’s preferred method for receiving information. Or if the boss prefers participative decision making, consult him or her in all decisions regardless of your own style. Most managers are pushed for time, energy, and resources and are more likely to appreciate followers who save rather than cost them these. Avoid using your manager’s time discussing trivial matters.

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You learned that being an effective leader re- quires appropriate leadership behavior that you can learn and develop. The integrated model of leadership allows you to understand the many factors contributing to leadership effectiveness. You also learned the importance of being a good follower. Reinforce your learning with the Key Points below. Consolidate your knowledge by us- ing the Organizing Framework. Then challenge your mastery of the material by answering the Major Questions in your own words.

Key Points for Understanding Chapter 13 You learned the following key points.

13.1 MAKING SENSE OF LEADERSHIP THEORIES

• You do not need to have a formal position of authority to lead.

• Figure 13.2 shows an integrated model of leadership. The extent to which people effec- tively use the four key leader behaviors— task-oriented, relationship-oriented, passive, and transformational—is a function of demo- graphic characteristics, intelligence and skills, task-oriented traits, and interpersonal attri- butes.

• Effective leadership requires effective mana- gerial skills at some level.

13.2 TRAIT THEORIES: DO LEADERS POSSESS UNIQUE TRAITS AND PERSONAL CHARACTERISTICS?

• Table 13.1 summarizes the positive task- oriented traits and positive/negative interper- sonal attributes leaders possess.

• Emotional intelligence contributes to transfor- mational leadership and is positively associ- ated with leader effectiveness.

• There are both similarities and differences in the leadership traits possessed by men and by women.

• Leaders need four key skills: cognitive abili- ties, interpersonal skills, business skills, and strategic skills.

• People hold mental prototypes of effective and ineffective leaders.

13.3 BEHAVIORAL THEORIES: WHICH LEADER BEHAVIORS DRIVE EFFECTIVENESS?

• Four categories of leader behavior are task- oriented, relationship-oriented, passive, and transformational.

• Task-oriented leadership includes the use of initiating structure and transactional leadership.

• Relationship-oriented leadership includes the use of consideration, empowerment, servant leadership, and ethical leadership.

• Followers experience psychological empow- erment when leaders create perceptions of meaningfulness, self-determination or choice, competence, and impact.

• Servant-leadership focuses on increased service to others rather than ourselves. Servant-leaders display the characteristics in Table 13.3.

• Ethical leadership focuses on doing the right thing and establishing norms of ethical behavior.

• Passive leadership, also known as laissez-faire leadership, is demoralizing and makes employees feel unsupported. Avoid it!

What Did I Learn?

537Leadership Effectiveness CHAPTER 13

13.6 ADDITIONAL PERSPECTIVES ON LEADERSHIP

• The LMX model revolves around the development of dyadic relationships between managers and their direct reports. These leader–member exchanges result in either in- group or out-group relationships.

• Humility is a stable trait associated with the belief that something is more important than the self. Humble leaders exhibit five key qualities: high self-awareness, open- ness to feedback, appreciation of others, low self-focus, and appreciation of the greater good.

• It is hard for leaders to be effective if they have poor followers. Leaders want followers who are productive, reliable, honest, cooper- ative, proactive, and flexible. People are more likely to be positive followers when the leader creates feelings of significance, community, and excitement.

• To improve the relationship with a boss, followers should first understand the boss. Second, followers should understand their own style, needs, goals, expectations, and strengths and weaknesses. Third, they should conduct a gap analysis between the under- standings they have about their boss and about themselves. Finally, followers can build on mutual strengths and adjust to or accom- modate the leader’s different style, goals, ex- pectations, and weaknesses.

The Organizing Framework for Chapter 13 As shown in Figure 13.6, you learned a host of person and situation factors that influence the leadership processes identified in the figure. You also understand the breadth and power of leader- ship by looking at the Outcomes box of the frame- work. Here you see the individual-, group/team-, and organizational-level outcomes affected by leadership.

13.4 CONTINGENCY THEORIES: DOES THE EFFECTIVENESS OF LEADERSHIP DEPEND ON THE SITUATION?

• Contingency theories are based on the idea that the effectiveness of leadership depends on the situation at hand.

• Fiedler believes leadership effectiveness de- pends on an appropriate match between leadership style and situational control. Lead- ers are either task- or relationship-oriented, and the situation is composed of leader– member relationships, task structure, and po- sition power.

• House’s path-goal theory holds that leader behaviors are effective when employees view them as a source of satisfaction or as paving the way to future satisfaction. In this respect, leaders exhibit eight styles or cate- gories of leader behavior. In turn, the effec- tiveness of these styles depends on various employee characteristics and environmental factors.

• Researchers suggest a five-step approach for applying contingency theories.

13.5 TRANSFORMATIONAL LEADERSHIP: HOW DO LEADERS TRANSFORM EMPLOYEES’ MOTIVES?

• Transformational leaders motivate employees to pursue organizational goals above their own self-interests.

• Transformational leaders rely on four unique types of leader behavior: inspirational motiva- tion, idealized influence, individualized con- sideration, and intellectual stimulation.

• Person and situation factors influence the ex- tent to which people use transformational leadership.

• The use of transformational leadership has positive effects on followers and work groups. In turn, these positive effects foster positive individual, group, and organizational performance.

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2. How can I use trait theories to improve my ability to lead?

3. Do effective leaders behave in similar ways? 4. How do I know when to use a specific leader

behavior? 5. How can I use transformational leadership

when working with others? 6. How can more recent approaches to leader-

ship improve my effectiveness at work?

Challenge: Major Questions for Chapter 13 You now should be able to answer the following questions. Unless you can, have you really pro- cessed and internalized the lessons in the chap- ter? Refer to the Key Points, Figure 13.6, the chapter itself, and your notes to revisit and an- swer the following major questions:

1. How does having an integrated model of leadership help me become an effective leader?

FIGURE 13.6 THE ORGANIZING FRAMEWORK FOR UNDERSTANDING AND APPLYING OB

INPUTS PROCESSES OUTCOMES

Person Factors • Traits • Skills • Gender • Prototypes • Ethical beliefs and values • Experience • Self-concept

Situation Factors • Organizational culture • Organizational climate • Task structure • Work group dynamics • Leader’s personality and style • Trust between leaders and

followers • Quality of followers

Individual Level • Task-oriented leadership • Relationship-oriented

leadership • Passive leadership • Transformational leadership • Leader-member exchange

Group/Team Level • Task-oriented leadership • Relationship-oriented

leadership • Passive leadership • Transformational leadership • Leader-member exchange

Organizational Level • Task-oriented leadership • Relationship-oriented

leadership • Passive leadership • Transformational leadership

Individual Level • Task performance • Work attitudes • Well-being/flourishing • Citizenship behavior/

counterproductive behavior • Turnover • Career outcomes • Creativity

Group/Team Level • Group/team performance • Group satisfaction • Group collaboration

Organizational Level • Accounting/financial

performance • Customer satisfaction • Corporate reputation

© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.

539Leadership Effectiveness CHAPTER 13

IMPLICATIONS FOR MANAGERS There are seven implications for managers. First, take stock of the task-oriented traits and interpersonal attributes needed to lead. Second, find out how others are assess- ing your leadership. You won’t get promoted if people perceive you lack leadership ability. Third, experiment with a contingency approach toward leadership. This re- quires you to gain perspective about the different leadership behaviors your followers may need. Fourth, being mindful can improve your leadership. Revisit our discussion of mindfulness in Chapter 7 and incorporate mindfulness techniques into your leader- ship. Fifth, try to develop positive relationships with all your followers. Sixth, be a good follower to your boss. Finally, get feedback on your leadership. It’s the only way to improve.

IMPLICATIONS FOR ME This chapter underscores six implications for you. First, give some thought to whether you want a managerial or leadership role in your career. It’s not for everyone. For example, if you don’t like to participate in meetings, this role is not for you. Self- Assessment 13.1 was created to help with this decision. Second, the more you look and act like someone’s prototype of a leader, the more he or she will see you that way. This implies that you should seek to understand your employer’s expectations of leadership. Third, experiment with the full repertoire of leadership behaviors at school and work. If you reflect on the experience, it will help you understand the situational aspect of lead- ership. Fourth, try being more transformational at meetings. You can do this by demon- strating the four key behaviors underlying transformational leadership. Fifth, take responsibility for your relationship with your boss. You can improve this relationship by following our recommendations about being a good follower. Finally, get feedback on your leadership. It’s the only way to improve.

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shut down in a crisis and doesn’t want to be viewed as emotional, because “There’s a negative stereotype of women being overemotional and thus not able to lead.” Sullivan articulated her leadership strategy as, “Don’t overreact. Reason my way to a solution. And keep the good of the school in front of me.”122

SITUATIONAL FACTORS AFFECTED SULLIVAN’S LEADERSHIP Three significant events affected Sullivan’s leadership. The question is whether she used the best form of leadership in each situation.

1. UVA’s board asked Sullivan to leave. The board, which consists of members appointed by the state’s governor, elected a chair—Helen Dragas— who did not get along with Sullivan. Dragas, who has a BA and MBA, leads a real estate development company, is tough-minded, and according to Fortune possesses a personality that conflicts with Sullivan’s. Dragas was unhappy with Sullivan’s strategy for online education and pushed Sullivan to come up with a new plan. Sullivan resisted this pressure and failed to pro- vide a detailed plan, disappointing the board. In a sur- prise move, Dragas asked Sullivan to sign a resignation letter in June 2012. The board believed faculty and stu- dents disliked the president, and Dragas told Sullivan the board had lost confidence in her leadership. Critics also noted that the university’s ranking in U.S. News & World Report had dropped from No. 15 in 1988 to No. 25 in 2015; it dropped to No. 26 in 2016.123 Na- tional rankings are very important to most universities.

Ten days later, Sullivan was set to give her resigna- tion address to the board when a major protest devel- oped on campus. Thousands of people gathered to defend Sullivan and demand her reinstatement. The governor pressured the board to resolve the situation, and the board reinstated Sullivan as president. Dragas told Fortune that none of this would have happened had the president submitted “a concrete strategic and financial plan.”124 Sullivan decided to return as president and displayed no residual anger toward the board.

2. A student was murdered, and Rolling Stone published an article about alleged gang rape on campus. Sullivan learned in September 2015 that student Hannah Graham was missing. As police searched for Graham,

The University of Virginia (UVA) was founded in 1819 by Thomas Jefferson. The university’s current mission is as follows:

The University of Virginia is a public institution of higher learning guided by a founding vision of discovery, innovation, and development of the full potential of talented students from all walks of life. . . . We are defined by:

• Our enduring commitment to a vibrant and unique residential learning environment marked by the free and collegial exchange of ideas;

• Our unwavering support of a collaborative, di- verse community bound together by distinctive foundational values of honor, integrity, trust, and respect;

• Our universal dedication to excellence and af- fordable access.119

Teresa Sullivan became UVA’s first female president in 2010, taking over for John Casteen, a charismatic leader who was highly adept at fund-raising. Fund- raising is a key role for university presidents. Sullivan’s previous job was as provost of the University of Michigan. She had never before served as a university president, reported to a board of directors, or been re- sponsible for raising money, according to Fortune. For- tune reporter Patricia Sellers recently concluded that in her presidency, “Sullivan has been unspectacular when it comes to fund-raising, which is particularly cru- cial at a time of diminishing state funding.”120

Sellers described President Sullivan as “pleasant and plainspoken” and noted she came across “more like a grandmother than a chief executive.” During their interview, Sullivan said that the public places too much emphasis on leadership, which results in placing too much blame on leaders. She also commented that her goal is to be “a sustainable leader who builds a team and leads collaboratively,” and that she has “a burning desire to solve problems.”121

Others who work with Sullivan describe her as ex- tremely smart and analytical—she graduated first in her class in high school and obtained a PhD in sociology from the University of Chicago.

Sullivan described herself to Sellers as being “in- clined toward introspection and not letting the emotion overtake that.” She also admitted that she tends to

PROBLEM-SOLVING APPLICATION CASE 

The University of Virginia President Leads through Multiple Crises 

541Leadership Effectiveness CHAPTER 13

Students began protesting on campus within 24 hours of Johnson’s arrest. Sullivan responded by contacting the governor and asking for an investigation. She also released a statement about wanting to find the truth surrounding this situation. The new student council president said Sullivan “has struggled to provide the emotional leadership that the community needs.”130

As Sullivan reflected on the fact that the board was debating whether to renew her contract, set to expire in July 2016, she noted that it was a mistake to leave campus after the Rolling Stone article. She does be- lieve it was a good decision, however, to suspend so- cial activities within the Greek system. According to Fortune, Sullivan would like to remain as president of UVA, but “she doesn’t know if she has cemented enough board support to win a new contract.”131

APPLY THE 3-STEP PROBLEM SOLVING APPROACH TO OB

Step 1: Define the problem.

A. Look first at the Outcomes box of the Organizing Framework in Figure 13.6 to help identify the important problem(s) in this case. Remember that a problem is a gap between a desired and a current state. State your problem as a gap, and be sure to consider problems at all three levels. If more than one desired outcome is not being accomplished, decide which one is most important and focus on it for steps 2 and 3.

B. Cases have protagonists (key players), and problems are generally viewed from a particular protagonist’s perspective. Take the perspective of Teresa Sullivan.

Step 2: Identify causes of the problem by using ma- terial from this chapter, summarized in the Organizing Framework shown in Figure 13.6. Causes will appear in either the Inputs box or the Processes box. 

A. Start by looking at Figure 13.6 to identify which person factors, if any, are most likely causes to the defined problem. For each cause, ask yourself, Why is this a cause of the problem? Asking why multiple times is more likely to lead you to root causes of the problem.

B. Follow the same process for the situation factors.

C. Now consider the Processes box shown in Figure 13.6. Consider concepts listed at all three levels. For any concept that might be a cause, ask yourself, Why is this a cause? Again, do this for several iterations to arrive at root causes.

D. To check the accuracy or appropriateness of the causes, map them onto the defined problem.

Sullivan met with her parents. “There was no news I could give them that they didn’t already have. They wanted to talk about Hannah, and I wanted to listen,” she told The Washington Post. Sadly, Graham’s body was found off campus and a man was arrested and charged with her murder. John Graham, Hannah’s father, told the Post that “President Sullivan and other members of the University . . . were extremely supportive at the time of Hannah’s disappearance, and remain so.”125

Another crisis erupted when Rolling Stone published a story about an alleged gang rape at Phi Kappa Psi, one of UVA’s fraternity houses. The article stated that UVA “fostered a culture of rape” and that the gang rape was “part of an initiation ritual and the university offi- cials had actively tied to sweep it under the rug.”126 Sullivan left the country for Amsterdam a few hours af- ter the story erupted to attend an academic confer- ence. Three days later she suspended social activities at all fraternities and sororities. Some thought Sullivan’s response was an overreaction because the facts were still being investigated. Ultimately, Rolling Stone admit- ted the story had discrepancies and it was later totally discredited. The Charlottesville police department found no evidence of rape, and several lawsuits against the magazine are currently pending.127

While all this was going on, the Phi Kappa Psi house was vandalized and members were threatened. Dem- onstrators on campus also called for removal of the Greek system. Others felt Greeks had suffered be- cause of the manner in which Sullivan responded to the crisis.128

The alleged rape case also led to a change at UVA that was worked out by students and Sullivan’s staff. A collaborative agreement was developed that specified “at least three ‘sober and lucid’ fraternity members will monitor behavior at parties where ‘jungle juice’ and other potent alcohol punches will be banned along with beer in kegs. Guest lists are to be tightly enforced at the door. One monitor will be in charge of watching frat-house bedrooms with a sets of keys to guard against sexual assaults.” The New York Times con- cluded that “the new code focuses candidly on already well-known frat-culture excesses that for too long have invited uncontrolled and even criminal behavior on some campuses.”129

3. Race-related issues took the stage. In March 2015, an African American student, Martese Johnson, suffered head injuries while being arrested by white Alcoholic Beverage Control police officers outside a bar. The situation was inflamed by the fact that Johnson served as vice-chair of the student hon- ors committee, and racial unrest in the United States was high due to events in Ferguson, Missouri, and New York City. Johnson pleaded not guilty to charges of public intoxication and obstruction of justice.

542 PART 2 Groups

B. You may find potential solutions in the OB in Action boxes and Applying OB boxes within this chapter. These features provide insights into what other individuals or companies are doing in relationship to the topic at hand.

C. Create an action plan for implementing your recommendations.

Step 3: Make your recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recom- mendation is desirable and feasible? 

A. Given the causes identified in Step 2, what are your best recommendations? Use the content in Chapter 13 or one of the earlier chapters to propose a solution.

LEGAL/ETHICAL CHALLENGE

Martin Shkreli, former CEO of Turing Pharmaceuticals, Exorbitantly Raises the Price of a Much-Needed Drug

Martin Shkreli was CEO of Turing Pharmaceuticals when it purchased the 62-year-old drug called Daraprim and quickly raised the price of one pill from $13.50 to $750. As a result the average cost of treat- ment with the drug rose from about $1,130 to $63,000. Experts suggest it could rise to $634,000 for some patients.132

What is Daraprim? According to a Vanity Fair re- porter, “Daraprim is on the World Health Organization’s List of Essential Medicines because it treats toxoplas- mosis, a parasitic infection that is particularly danger- ous to pregnant women, people with compromised immune systems, and the elderly. In that vulnerable population it can lead to seizures, blindness, birth de- fects in babies of infected mothers, and, in some cases, death. For decades, there wasn’t any competi- tion to Daraprim for the simple reason that there wasn’t much money to be made selling it.”133

During a CBS interview Shkreli was asked why he raised the price of the drug so dramatically. He re- sponded, “Well, it depends on how you define so dras- tically. Because the drug was unprofitable at the former prices, so any company selling it would be losing money. And at this price it’s a reasonable profit. Not excessive at all.”134 He went on to say that he was be- ing altruistic because other pharmaceutical companies have not focused on this drug. He indicated that the profit would be spent on research into curing toxoplasmosis.

Dr. David Argus, an oncologist and CBS News com- mentator, disagreed. “Patients shouldn’t be taxed for and charged for future research and development. Pa- tients should pay for the drug they’re getting and what they need in the situation that they are in,” he said. Argus believed Shkreli was using a “predatory practice” that was “inappropriate.”135

The US government’s House Committee on Over- sight and Government Reform studied this case and concluded that Shkreli “purchased it [Daraprim] for the purpose of increasing the price dramatically and making hundreds of millions of dollars by exploiting monopoly before any competitors could enter the market.”136

Shkreli told the board chair at Turing that “Turing was making big progress toward acquiring Daraprim.” Shkreli was ecstatic, writing, “$1 bn here we come.” In another e-mail he wrote, “I think it [the acquisition] will be huge. We raised the price from $1,700 per bottle to $75,000. . . . So 5,000 paying bottles at the new price is $375,000,000—almost all of it is profit and I think we will get three years of that or more.”137

What Would You Recommend if You Were a Member of the US Government’s Oversight Committee? 1. The price rise is legal, but I don’t like it. It’s price

gouging and needs to be stopped. I would advocate for a national policy that regulates the pricing of specialty drugs like Daraprim.

2. Our economy is based on capitalism and Shkreli is not breaking any laws. The government should leave market forces to operate on their own.

3. I think Shkreli is trying to maximize profits while also being a servant-leader. After all, he says he wants to reinvest the profits into additional research and development. I think we should establish a policy that allows makers of specialty drugs like Turing a reasonable profit. This can be computed by considering the average levels of profit obtained at other drugmakers.

4. Invent other options.

Organizational Processes

pa rt

t hr

ee

14 ORGANIZATIONAL CULTURE, SOCIALIZATION, AND MENTORING

Major Topics I’ll Learn and Questions I Should Be Able to Answer

14.1 The Foundation of Organizational Culture: Understanding Its Drivers and Functions MAJOR QUESTION: What is culture and why is it helpful to understand its layers and functions?

14.2 The Impact of Organizational Culture Types on Outcomes MAJOR QUESTION: How are different types of organizational culture related to outcomes?

14.3 Mechanisms or Levers for Culture Change MAJOR QUESTION: What mechanisms or levers can I use to implement culture change?

14.4 Embedding Organizational Culture through the Socialization Process MAJOR QUESTION: How can I integrate the findings of socialization research with the three phases of socialization?

14.5 Embedding Organizational Culture through Mentoring MAJOR QUESTION: How can I use mentoring to foster personal and professional success?

How Can I Use These Concepts to Fit, Develop, and Perform?

The Organizing Framework in Figure 14.1 summarizes what you will learn in this chap- ter. Two person factors—human and social capital—and four situation factors—culture types, leader behavior, organizational climate, and human resource practices and policies—influence key processes at the individual, group, and organizational levels. In turn, these key processes support positive outcomes at all three levels. Concepts we discuss in this chapter have greater impact on individual and organizational outcomes than on group ones.

545

FIGURE 14.1 ORGANIZING FRAMEWORK FOR UNDERSTANDING AND APPLYING OB

INPUTS PROCESSES OUTCOMES

Person Factors • Human capital • Social capital

Situation Factors • Culture types • Leader behavior • Organizational climate • Human resource practices

and policies

Individual Level • P-O fit • Socialization • Mentoring

Group/Team Level • Group dynamics • Department/unit culture

Organizational Level • Culture • Socialization • Mentoring

Individual Level • Work attitudes • Employee behaviors • Career outcomes • Task performance • Turnover

Group/Team Level • Group/team performance • Group cohesion and conflict

Organizational Level • Accounting/financial

performance • Customer service/satisfaction • Innovation • Product/service quality • Operational efficiency

© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.

The Walt Disney Company was founded in 1923 by brothers Walt and Roy Disney. The company is much more than its theme parks. Today Disney is a diversified multinational mass media and entertainment company headquartered in Burbank, California. The company has a long reputation of having a strong culture aimed at being innovative and a fun place to work. In recognition of this theme, the Walt Disney Company was ranked as the 5th most Admired Company in 2016 by Fortune. Here we see a manifestation of the company’s culture in front of Cinderella’s Castle at Walt Disney World, Orlando, Florida. Thousands of families visit their theme parks to have fun and enjoy the outstanding service provided by employees. The strong customer-driven culture established by the Disney brothers is alive and well. This chapter will help you understand how companies like Disney create such cultures. © Ilene MacDonald/Alamy

Winning at Work How Would I Assess Person–Organization Fit (P-O) When Applying for Jobs?

What’s Ahead in This Chapter This chapter begins your study of macro-level organiza- tional behavior from the perspective of the organization as a whole. We start by exploring the foundation of orga- nizational culture so you can understand its drivers and functions. Next, we review the four key types of organi- zational culture and consider their relationships with various outcomes. This is followed by a discussion of ways managers can change organizational culture. Fi- nally, we discuss how socialization and mentoring serve to embed organizational culture, and we focus on how you can use knowledge of these processes to enhance your career success and happiness.

How Can I Assess P-O Fit? Assessing P-O fit will take some effort on your part. First, conduct an evaluation of your strengths, weaknesses, and values. Next, do the same for the company or department at hand by doing research about it online or talking with current employees. With this information you can prepare a set of diagnostic questions to ask during the interview process.4 For example, if you value recognition for hard work, ask a recruiter how the company rewards perfor- mance. If the answer does not support a strong link be- tween performance and rewards, you probably will have a low P-E fit and will not be happy working at this company.

A Take-Away Application later in this chapter will help you practice the process of assessing person–organization fit.

How Can I Improve My Level of Fit? • Find ways to build your strengths into your work

role. Talk to your boss about how to redesign or modify your job to incorporate your strengths.

• Decide whether weaknesses are affecting your per- formance. If they are, seek developmental opportu- nities, coaching, or mentoring. If that does not work, find another role.

• Assess any misalignment between your values and those endorsed by the company. You can do this by writing down your five most important values and comparing them to your employer’s stated values. If they don’t overlap and you can’t accept the discrep- ancy, it’s time to move on.

• If you don’t fit at one job or location, consider a lat- eral move to another department. You may just need a different role or boss.5

Fitting in is important to everyone. When I was 7, my father put me on a baseball team composed of 8- and-9-year-old boys. He thought it would be good for my development, but I was smaller and less skilled than the other boys, and they treated me like an outsider who didn’t fit in. It did not help that I was the coach’s son. I hated the experience.

I also experienced a lack of fit at some of my early job positions. I valued things others did not and believed people were engaging in counterproductive actions. Some of my peers loved the job, the boss, and the work environment. They could not understand why I wasn’t happy, but I felt dis- engaged and started looking for a new job. That experience opened my eyes to the importance of “fitting in” at work.

What Does It Mean to Fit? Person–environment fit (P-E)  is “the compatibility be- tween an individual and a work environment that occurs when their characteristics are well matched.”1 Although there are many types of fit, we are interested in person– organization fit (P-O),  which reflects the extent to which your personality and values match the climate and cul- ture in an organization. P-O fit matters because good fit is associated with more positive work attitudes and task per- formance, lower intentions to quit, and less stress.2 The process of assessing fit begins during the recruiting phase. Your goal should be to discover whether you and the job or the organization are a good fit for each other.3

546

Fitting in at work is like doing a puzzle. When the pieces fit in the right pattern, all is well. © Corbis/Punchstock RF

547Organizational Culture, Socialization, and Mentoring CHAPTER 14

The saying “Culture eats strategy for breakfast” was attributed to management expert Peter Drucker. But it really caught everyone’s attention when Mark Fields, CEO of Ford Motor Co., used it in 2006. The slogan currently hangs in the company’s “war room,” a meeting place where executives discuss  the execution of Ford’s corporate strategies. Ford’s former CEO Alan Mulally created the room, which contains charts, graphs, and lists of products. The culture slogan serves as a reminder of the impact of organizational culture on Ford’s success.6 Others agree with Ford’s emphasis on organizational culture.

Alan Murray, Fortune editor, studied the annual Best Companies to Work For lists and concluded that great companies don’t just provide “free food, generous benefits, and nap pods (although those clearly don’t hurt).” He believes that culture is the essence of what makes great companies. “Today’s workers are looking for a corporate culture that values them and their contributions,” he said.7  

Bruce Arians, head coach of the Arizona Cardinals NFL team, also believes in the power of corporate culture. When asked by a reporter to comment on the team’s success over two recent seasons—the Cardinals won 34 of 48 regular-season games—he said, “It’s the culture in your locker room. Culture beats talent anytime, and we have great cul- ture, great leadership, and great accountability in our locker room.”8

One of our primary goals in this chapter is to help you understand how managers can use organizational culture as a competitive advantage. We start by considering the foun- dation of organizational culture.

Defining Culture and Exploring Its Impact Organizational culture  is defined as “the set of shared, taken-for-granted implicit assumptions that a group holds and that determines how it perceives, thinks about, and reacts to its various environments.”9 This definition highlights four important characteristics of organizational culture:

• Shared concept. Organizational culture consists of beliefs and values shared among a group of people.

• Learned over time. Culture is passed to new employees through the processes of socialization and mentoring, discussed later in this chapter.

M A J O R Q U E S T I O N

What is culture and why is it helpful to understand its layers and functions?

T H E B I G G E R P I C T U R E

Although you may have a small impact on your employer’s organizational culture, you un-

doubtedly are affected by it. Culture affects outcomes at the individual, group, and organiza-

tional level. You are about to learn what creates organizational culture and how culture affects

other organizational processes. You also will identify the three levels that constitute culture

and the functions it serves for organizations.

14.1 THE FOUNDATION OF ORGANIZATIONAL CULTURE: UNDERSTANDING ITS DRIVERS AND FUNCTIONS

548 PART 3 Organizational Processes

• Influences behavior at work. Its influence on behavior is the reason “culture eats strategy for breakfast.”

• Affects outcomes at multiple levels. Culture affects outcomes at the individual, group/team, and organizational levels.

Figure 14.2 provides a conceptual framework for understanding the drivers and ef- fects of organizational culture. Five elements drive organizational culture:

• The founder’s values. • The industry and business environment. • The national culture. • The organization’s vision and strategies. • The behavior of leaders.

In turn, organizational culture influences the type of organizational structure a company adopts and a host of internal processes (including human resource practices) it implements in pursuit of its goals. These organizational characteristics then affect a variety of group and social processes.10 This sequence ultimately affects employees’ work attitudes and behaviors and a variety of organizational outcomes. All told, Figure 14.2 tells us that organizational culture has a wide span of influence, ultimately influencing many individual, group, and or- ganizational outcomes.11 Once again, this is the reason culture eats strategy for breakfast.

The Three Levels of Organizational Culture Organizational culture operates on three levels:

1. Observable artifacts. 2. Espoused values. 3. Basic underlying assumptions.

These levels differ in their visibility and resistance to change, and each one influences another. Let’s look at them one by one.

Level 1: Observable Artifacts At the most visible level, culture consists of observ- able artifacts. Artifacts  are the physical manifestation of an organization’s culture. They include:

• Acronyms. • Manner of dress. • Awards.

FIGURE 14.2 DRIVERS AND FLOW OF ORGANIZATIONAL CULTURE

Organizational Culture

Organizational Structure and

Internal Processes

Group and Social

Processes

Work Attitudes and Behaviors Outcomes

• The founder’s values • The industry and business environment • The national culture • The organization’s vision and strategies • The behavior of leaders

Drivers of Culture

SOURCE: Adapted from C. Ostroff, A. J. Kinicki, and R. S. Muhammad, “Organizational Culture and Climate,” in Handbook of Psychology, vol. 12, 2nd ed., I.B. Weiner, N.W. Schmitt, and S. Highhouse, eds. (Hoboken, NJ: Wiley, 2013), 643–676. Reprinted with permission of John Wiley & Sons, Inc.

549Organizational Culture, Socialization, and Mentoring CHAPTER 14

• Myths and stories told about the organization.

• Published lists of values. • Observable rituals and ceremonies. • Special parking spaces. • Pictures and images handing on walls.

At Facebook, for example, the word hack is pasted all around offices. It symbolizes “the hacker way” of pursuing continuous improvement and challenging the status quo.12 Kayak.com, an online travel com- pany, uses a two-foot-tall stuffed elephant named Annabelle as an artifact. Annabelle sits in a specially designed conference room reserved for sensitive meetings or dis- cussions. Paul English, cofounder and chief technology officer, created the room be- cause Kayak’s open floor plan does not lend itself to discussions of touchy matters. Annabelle is the “elephant in the room,” the difficult topics discussed there. The company feels Annabelle and the confer- ence room have led to more honest and constructive communications among employ- ees.13 Artifacts are easier to change than the less visible aspects of organizational culture.

Level 2: Espoused Values Values were defined in Chapter 2 as abstract ideals that guide our thinking and behavior across all situations. In the context of organizational culture, we distinguish between values that are espoused and values that are enacted.

• Espoused values  are the explicitly stated qualities and norms preferred by an organization. They are generally established by the founder of a new or small company and by the top management team in a larger organization. Most compa- nies have a short list. For example, Ikea’s espoused values are humility, willpower, simplicity, togetherness, and enthusiasm.14 Google and Zappos each have 10 es- poused values.

Because espoused values are explicitly communicated to employees, managers hope they will directly influence employee behavior. But people do not always automatically “walk the talk.” Leadership at CVS Health recognized this gap and made a key strategic change to align its stated values with its actions.

EXAMPLE A landmark moment in the company’s transformation came early last year [2014] when [CEO Larry] Merlo announced that CVS would cease selling to- bacco products by October 1, 2014—a deadline it met nearly a month early. The decision meant sacrificing about $2 billion in sales. Led by Merlo, CVS’s executive team decided that continuing to sell cigarettes had become untenable for a company that was simultaneously trying to sell itself as a health care giant.15

• Enacted values  are the qualities and norms that are exhibited or converted into employee behavior. These are values employees ascribe to an organization based on their observations of what occurs on a daily basis. As at CVS, managers should reduce gaps between espoused and enacted values because they can signifi- cantly influence employee attitudes and organizational performance.

A survey from the Ethics Resource Center showed that employees were more likely to behave ethically when management set a good behavioral example and kept its

Annabelle the Elephant is an artifact of the corporate culture at Kayak.com, provided as a catalyst to make sure employees do not ignore an important but difficult topic, the so-called elephant in the room. Can you think of other artifacts that might prime people to give honest feedback? © photonic 2/Alamy RF

550 PART 3 Organizational Processes

promises and commitments.16 This finding was underscored by another study of 129 mergers. Employees were more productive and post-merger performance was higher when employees believed that behavior was consistent with the newly formed firm’s es- poused values.17 

Level 3: Basic Underlying Assumptions Basic underlying assumptions  are organizational values so taken for granted over time that they become assump- tions guiding organizational behavior. Underlying assumptions are employees’ deep- seated beliefs about their company and are the core of organizational culture. As you might expect, they are highly resistant to change. Consider the way Unilever CEO Paul Polman reinforces a core belief in sustainability (see the OB in Action box).

Sustainability  is “a company’s ability to make a profit without sacrificing the resources of its people, the community, and the planet.”18 Achieving sustainability is sometimes called “being green” and has become a priority for many companies.

When Paul Polman took over as CEO of Unilever in 2009, he told Wall Street analysts that the company would no longer provide earnings guidance and quarterly profit statements. This is unheard of! Analysts revolted and the stock price immediately dropped.

What Was Polman Trying to A c c o m p l i s h ? P o l m a n wanted to instill a deep- seated belief regarding sustainability within all employees at Unilever. He started this effort by establishing three key sustainability focus areas: improving health and well-being, reducing environmental impact, and enhancing liveli- hoods.19 The company also set a goal to “double the size of our business while reducing our environmental footprint and increasing our positive social im- pact.”20 The company wanted to (1) improve the well-being of 1 billion people by influencing them to wash their hands and brush their teeth and by selling foods with less salt and fat, and (2) improve “the lives of 2 million children and their mothers by 2016 by providing access to health workers, basic nutrition, and life-saving interventions.”21

Unilever also modified its sourcing policies—the requirements for doing busi- ness with the company. These now include the following:

1. Business is conducted lawfully and with integrity. 2. Work is conducted on the basis of freely agreed and documented terms of

employment. 3. Workers are treated equally and with respect and dignity. 4. All workers are of an appropriate age. 5. Workers’ health and safety are protected.

Unilever Promotes a Sustainability Culture OB in Action

Paul Polman, CEO of Unilever. © epa european pressphoto agency b.v./Alamy

551Organizational Culture, Socialization, and Mentoring CHAPTER 14

The Four Functions of Organizational Culture An organization’s culture fulfills four important functions (see Figure 14.3):

1. Establish organizational identity. 2. Encourage collective commitment. 3. Ensure social system stability. 4. Act as sense-making device.

To help bring these four functions to life, let’s consider how each has taken shape at Southwest Airlines. Southwest has grown to serve more customers domestically than any other airline and has achieved 43 consecutive years of profitability. The company has been on Fortune’s list of Most Admired Companies in the World for 22 consecutive years, and it was named 2015 Airline of the Year by Air Transport World.26

Function 1: Culture Provides Employees with an Organizational Identity The identity of Southwest Airlines employees is focused on the belief that employee sat- isfaction and customer loyalty are more important than corporate profits. Gary Kelly, Southwest’s CEO, highlighted this theme by noting, “Our people are our single greatest strength and our most enduring long-term competitive advantage.”27

Southwest reinforces this identity by demonstrating in a variety of ways that it truly cares about its employees. The company’s catastrophe fund, for instance, is based on

6. Land rights of communities including indigenous peoples will be protected and promoted.

7. Business is conducted in a manner which embraces sustainability and reduces environmental impact.22

Polman told investors, “If you don’t buy into this [sustainability], I respect you as a hu- man being, but don’t put your money in our company.” He believes shareholder return should not override nobler goals. He also said, “Our purpose is to have a sustainable business model that is put at the service of the greater good. It’s as simple as that.”23

What Are the Results of Unilever’s Push for a Sustainability Culture? Polman believes employees are now more engaged and the company is a more desirable place to work. The company is making money and contributing to the greater good. According to the Dow Jones Sustainability Report, in “2014 the company enjoyed its fifth consecutive year of top and bottom line growth. Since 2008, the company has reduced costs by EUR 400 million by cutting raw and packaging materials and reducing disposed waste. As of 2014, 33 percent of the company’s food and refreshments products met the highest nutritional standards for their re- spective product categories, based on globally recognized dietary guidelines, contributing to improved diets for 55 million people.”24

Employees at Unilever say that “doing good is in the company’s DNA.” This is what we call a basic underlying assumption!25

YOUR THOUGHTS?

1. What do you think was the driving force behind Polman’s desire to create a culture of sustainability?

2. Do you agree with Polman about the tangible business benefits of Unilever’s cultural values? Why or why not?

3. Whether you agree with Polman or not, was he wise to tell investors not to put money in Unilever if they did not also buy into its sustainability plan? Why or why not?

552 PART 3 Organizational Processes

voluntary contributions for distribution to employees experiencing serious personal difficulties. Its profit-sharing program paid out $620 million in 2016, adding about 15.6 percent to each employee’s compensation.28 Southwest’s people-focused identity also is reinforced by the fact that it is an employer of choice. The company received 371,202 résumés for 6,370 job openings in 2015. It also was rated as providing outstanding oppor- tunities for women and Hispanics by Professional Women magazine and Hispanic maga- zine, respectively, and the National Conference on Citizenship ranked Southwest as one of The Civic 50 for its use of time, talent, and resources in civic engagement.

Function 2: Culture Facilitates Collective Commitment The mission of South- west Airlines is to dedicate itself to “the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”29 This com- mitment to serving others is endorsed by the company’s nearly 49,000 employees. It was rated as providing the best customer service in 2014 by Temkin Experience Ratings, the fourth time it had received the top rating for an airline.30 Southwest also received the low- est ratio of complaints to passengers boarded of all major U.S. airlines, based on statistics accumulated by the Department of Transportation since September 1987. Commitment to service doesn’t just apply to customers at Southwest. Employees volunteered more than 130,000 hours to national and local nonprofit organizations.31

Function 3: Culture Promotes Social System Stability Social system stability is the extent to which the work environment is perceived as positive and reinforcing, and the extent to which conflict and change are effectively managed. Southwest is noted for its philosophy of having fun, holding parties, and celebrating. For example, staff in each city in which the firm operates are given a budget for parties. The company also uses a variety of performance-based awards and service awards to reinforce employees’ efforts. Its pos- itive and enriching environment is supported by the lowest turnover rates in the airline industry. In 2015 Southwest also was recognized as one of the best places to work in the Glassdoor Employees’ Choice Awards.32 

FIGURE 14.3 FOUR FUNCTIONS OF ORGANIZATIONAL CULTURE

SOURCE: Adapted from discussion in L. Smircich, “Concepts of Culture and Organizational Analysis,” Administrative Science Quarterly, September 1983, 339–358. Copyright 1983. Reprinted with permission of Sage Publications, Inc.

Act as sense-making

device

Encourage collective

commitment

Organizational culture

Establish organizational

identity

Ensure social system

stability

553Organizational Culture, Socialization, and Mentoring CHAPTER 14

Function 4: Culture Shapes Behaviors by Helping Members Make Sense of Their Surroundings Making sense of the surroundings is what helps employees un- derstand why the organization does what it does and how it intends to accomplish its long-term goals. Keeping in mind that Southwest’s leadership originally viewed ground transportation as its main competitor in 1971, employees understand why the airline’s primary vision is to be the best short-haul, low-fare, high-frequency, point-to-point car- rier in the United States. Employees know they must achieve exceptional performance, such as turning a plane around in 20 minutes, because they must keep costs down to com- pete against Greyhound and automobiles. In turn, the company reinforces the value it places on outstanding customer service and high performance by using performance- based awards and profit sharing. Employees own about 13 percent of the company stock.33

This photo demonstrates Southwest’s culture. Employees are having fun in an airport terminal to lighten what can be a frustrating experience for passengers. Do you think these employees can lift the spirits of the travelers in the background? © Denver Post/Getty Images

TAKE-AWAY APPLICATION

Assessing the Levels of Culture at My Current Employer

Answer the following questions by considering your current or a past employer. (If you do not yet have experience as an employee, substitute your current school/ university or a company you are researching as an employer of choice.)

1. What artifacts can you see at work? What do these artifacts tell you about your employer?

2. What are the company’s espoused values? Do you think management’s enacted behaviors are consistent with these espoused values?

3. Identify three key beliefs you have about your employer: You may want to ask a work colleague the same question. Are these beliefs consistent with the mean- ing of the artifacts you described in answering question 1?

4. How does your employer’s culture compare to that of Southwest?

554 PART 3 Organizational Processes

To learn how different types of culture relate to outcomes, we need a way to classify cul- ture types. While the complexity of culture makes agreement on a set of types difficult to reach, academics have proposed and scientifically tested three different frameworks. The competing values framework we discuss here is the most widely used. It also was named one of the 40 most important frameworks in the study of organizations and has been shown to be a valid approach for classifying organizational culture.34 We will also discuss relationships among culture types and outcomes.

Identifying Culture Types with the Competing Values Framework The competing values framework (CVF) provides a practical way for managers to understand, measure, and change organizational culture. It identifies four funda- mental types of organizational culture—clan, adhocracy, hierarchy, and market—all shown in Figure 14.4.35

The CVF was developed by a team of researchers trying to classify different ways to assess organizational effectiveness. Their research showed that measures of organiza- tional effectiveness varied along two fundamental dimensions or axes. One axis described whether an organization focuses its attention and efforts on internal dynamics and em- ployees, or outward to its external environment and its customers and shareholders. The second axis measured an organization’s preference for flexibility and discretion over con- trol and stability. Combining these two axes creates four types of organizational culture, each with different core values and different sets of criteria for assessing organizational effectiveness.

Figure 14.4 shows the strategic direction associated with each cultural type (collabo- rate, create, and so on), along with the means and goals it pursues. Each type has different characteristics, and while one type tends to dominate in any given organization, it is the mix of types that creates competitive advantage. We begin our discussion of culture types in the upper-left-hand quadrant of the CVF.

M A J O R Q U E S T I O N

How are different types of organizational culture related to important outcomes?

T H E B I G G E R P I C T U R E

Do you think companies rated on Fortune’s List of 100 Best Places to Work might have unique

cultures? How do we know what type of culture exists at these companies or your current

employer? In this section you will learn about the four types of culture defined by the compet-

ing values framework. You will also discover the extent to which these four culture types are

related to important outcomes.

14.2 THE IMPACT OF ORGANIZATIONAL CULTURE TYPES ON OUTCOMES

555Organizational Culture, Socialization, and Mentoring CHAPTER 14

Clan Culture A company with a clan culture  has an internal focus and values flexibility rather than stability and control. It resembles a family-type organization that achieves effectiveness by encouraging collaboration, trust, and support among em- ployees. This type of culture is very employee-focused and strives to instill cohesion through consensus and job satisfaction, and commitment through employee involve- ment and development. Clan organizations devote considerable resources to hiring and developing their employees, and they view customers as partners. Collaborating is this culture’s strategy.

EXAMPLE Fortune has rated Google the No. 1 place to work seven times between 2006 and 2016.36 Larry Page, Google’s cofounder and former CEO, describes the culture as a “family” environment. He said, “My job . . . is to make sure everybody in the company has great opportunities, and that they feel they’re having a meaningful impact and are contributing to the good of society. . . . It’s important that the company be a family, that people feel that they’re part of the company, and that the company is like a family to them. When you treat people that way, you get better produc- tivity.”37 Google holds weekly, all-hands (“TGIF”) meetings so employees can ask Page, Sergey Brin, a Google cofounder, and other executives questions about anything related to the company. This practice enhances employee communi- cation and morale, two aspects of a clan culture.

Clan Collaborate

Hierarchy Control

Market Compete

Adhocracy Create

Means: Capable processes, consistency, process control, measurement

Ends: E�ciency, timeliness, smooth functioning

Means: Cohesion, participation, communication, empowerment

Ends: Morale, people, development, commitment

Means: Adaptability, creativity, agility

Ends: Innovation, growth, cutting-edge output

Means: Customer focus, productivity, enhancing competitiveness

Ends: Market share, profitability, goal achievement

Flexibility and Discretion

External Focus and Di�erentiation

Internal Focus and Integration

Stability and Control

FIGURE 14.4 THE COMPETING VALUES FRAMEWORK Culture varies along two axes of competing values: flexibility and discretion vs. stability and control, and internal focus and integration vs. external focus and differentiation. This leads to four categories of organizations, each with its own unique character.

SOURCE: Adapted from K. S. Cameron, R. E. Quinn, J. Degraff, and A. V. Thakor, Competing Values Leadership (Northampton, MA: Edward Elgar, 2006), 32.

Google employees celebrate at the company’s annual Google Dance on the Mountain View, California, campus. © Martin Klimek/Zumapress/Newscom

556 PART 3 Organizational Processes

EXAMPLE Property and casualty insurance company Acuity, Fortune’s No. 2 best company to work for in 2016, strongly endorses a clan culture. CEO Ben Salzmann told Fortune “if employees are given a fun, rewarding place to work where they can express their creativity, in return the firm will get innovation, diehard loyalty, and world-class customer service.” Employees have generous perks and are empowered to participate in the way the company is run. The end result is profitability and an enviably low 2 percent turnover rate.38

Adhocracy Culture The term adhocracy reflects an organization with less structure and bureaucracy. It also reflects a management team focused on responding to problems rather than avoiding them. Companies with an adhocracy culture  have an external focus and value flexibility. Creation of new products and services is their strategy, which they accomplish by being adaptable, creative, and fast to respond to changes in the mar- ketplace. Adhocracy cultures do not rely on the centralized power and authority relation- ships that are part of market and hierarchical cultures (see below). They encourage and empower employees to take risks, think outside the box, and experiment with new ways of getting things done.

An article in The Wall Street Journal noted that adhocracy cultures are decreasing in the United States as many companies are becoming risk-averse. The downside of this trend is that a certain amount of reasonable risk taking is necessary to create new businesses, products, and ultimately jobs. On the positive side, however, risk taking is still occurring in industries such as technology and energy, and in coastal cities such as San Francisco and Boston and college towns like Boulder, Colorado, and Austin, Texas.39

EXAMPLE Former CEO David Brennan stated that biopharmaceutical firm AstraZeneca “is experimenting with new ways to organize research to improve pro- ductivity. Scientists now are responsible for candidate drugs until they begin the final human trials, ending a culture of handing off early-stage products to other research- ers as if on an assembly line.”40

EXAMPLE Ikea, the global Swedish home furnishing company, uses innovation to generate growth. Its product development process is based on extensive re- search. For example, the company studied 8,000 people to investigate their morning routines, hoping to understand how these practices could be enhanced by products designed to meet specific needs. One result was a new product called the Knapper, a freestanding mirror with a rack on the back for hanging clothes.41

Market Culture Companies with a market culture  have a strong external focus and value stability and control. Competition is their strategic thrust. They have a strong desire to deliver results and accomplish goals, and because they are focused on the external environment, customers and profits take precedence over employee devel- opment and satisfaction. Managers’ major goal is to improve productivity, profits, and customer satisfaction.

EXAMPLE Grupo Bimbo is the world’s largest bakery company. Bimbo managers operate in a low-margin business and thus focus heavily on execution. “Profits de- pend heavily on getting the right amount of highly perishable products to stores at the right moment and at a reasonable cost. . . . For instance, [the company] uses tri- cycle delivery bikes in urban areas of China where streets are too narrow for trucks, a practice it first implemented in Latin America,” according to a Harvard Business Review author.42 Grupo Bimbo operates 171 plants and delivers more than 10,000 products to 22 countries.

557Organizational Culture, Socialization, and Mentoring CHAPTER 14

Imagine having to deliver over 10,000 products to 22 countries. Do you think this takes a lot of planning and detailed execution? Bimbo’s market-based culture contributes to this effort. © Scott Olson/Getty Images

EXAMPLE Publix Super Markets, the largest employee-owned supermarket chain in the United States, was ranked Fortune’s 67th of 100 best places to work in 2016. The  company  is highly customer-focused and trains and rewards employees to provide friendly and helpful service.43 Business writer Vicky Applebaum noted “Publix also serves the consumer need for convenience. Con- sumers want the shortest route through a shopping experience and transaction, and Publix delivers.”44

Hierarchy Culture Control is the strategy within a hierarchy culture. The hierarchy culture  has an internal focus, which produces a more formalized and structured work environment, and values stability and control over flexibility. This orientation leads to the development of reliable internal processes, the extensive use of measurement, and the implementation of a variety of control mechanisms. Effectiveness is likely to be measured in terms of efficiency, timeliness, quality, safety, and reliability in producing and delivering products and services.45

EXAMPLE Amazon relies on the benefits of a hierarchcal culture to effectively man- age its vast shipping processes. A Harvard Business Review author commented that the company has achieved success by “sticking steadfastly—even boringly—to a few key principles. . . . Instead of focusing on competitors or technology shifts [a market culture orientation], they continually invest in getting a little bit better. In their core retail business, they grind out incremental improvements in delivery speed and prod- uct offerings while chipping away at prices.”46 

Consider the positive example of Mumbai’s dabbawalas, individuals who deliver pre- pared meals to customers’ homes or offices and then return the empty dabbas—metal lunch boxes—later in the day. To do their jobs effectively, dabbawalas rely on a hierarchi- cal culture (see the Problem-Solving Application box).

PART 3 Organizational Processes558

Apply the 3-Step Problem-Solving Approach

Step 1: Define the major problem dabbawalas want to avoid.

Step 2: Identify the causes of the problem. What OB concepts help explain why the dabbawalas are effective?

Step 3: Make your recommendation about whether a similar system would work for a comparable firm in the United States. Explain.

Dabbawalas Rely on a Hierarchical Culture to Efficiently Deliver Food

More than 5,000 dabbawalas in Mumbai, India, deliver 200,000 or more lunch boxes every day. The need for this service grew from the working population’s strongly embedded reliance on having a hot meal for lunch. The dabbawalas first pick up meals customers have prepared for themselves at home, then deliver them to offices in late morning, and after lunch pick up the empty containers and return them to customers’ homes for the next day. Workers are willing to pay for the service, and the dabbawa- las are so skilled in execution that the service remains affordable for many.

Each dabbawala belongs to a group, and the groups manage themselves “with respect to hiring, logistics, customer acquisition and retention, and conflict resolution.” Within each group individuals have a very clear hierarchical role to play. Despite a high degree of self-management, the independent groups must collaborate and coordinate to deliver lunch within the fourth-largest city in the world. Mis- takes are rare, even though these employees complete over 200,000 transactions a day, six days a week, 52 weeks a year.

How Does a Hierarchical Culture Help? The dabbawalas don’t use any IT system or cell phones. In- stead they have integrated organization, management, process, and culture to achieve their goals. It all begins with the Mumbai Suburban Railway. A worker picks up a dabba from a customer’s home and takes it to “the nearest train station, where it is sorted and put onto a wooden crate according to its destination. It is then taken by train to the station closest to its destination. There it is sorted again and assigned to another worker, who delivers it to the right office before lunchtime.” The process reverses in the afternoon when the dabbas are picked up and returned to customers’ homes.

The railway system’s schedule effectively sets the timing and speed of the process. For example, “workers have 40 seconds to load the crates of dabbas onto a train at major stations and just 20 seconds at interim stops.” This requires them to find the most efficient way to get these key tasks completed.

Some slack is built into the system. Each group has two or three extra workers who help wherever needed. This works because employees are cross-trained in the major tasks of collecting, sorting, trans- porting, and customer relations.

How Do the Independent Workers Communicate? The dabbawalas use a very basic system of sym- bols to communicate. Three key markings are included on the lid of a dabba. The first indicates where the dabba must be delivered. The second is a series of characters: a number to indicate which em- ployee is making the delivery, an alphabetical code (two or three letters) for the office building, and a number indicating the floor. The third—a combination of color and shape, and in some instances, a motif—indicates the station of origin. Customers also provide their own unique small bags for carrying dabbas, which helps workers remember who gets which one.

Does It Work? Yes. Not only does this work system result in the reliable distribution of lunches, but the dabbawalas tend to stay in the same work group their entire working lives. Employees genuinely care about each other.47

Problem-Solving Application

559Organizational Culture, Socialization, and Mentoring CHAPTER 14

If you like video games, you have probably played one from Activision Blizzard. The company is the leading developer and publisher of video games and has cre- ated blockbuster hits such as Call of Duty, World of Warcraft, and Guitar Hero. In 2015, the company’s games were played for more than 14 billion hours. Activi- sion was rated the 77th best place to work by Fortune in 2016 (up from 96th in 2015) and employs about 7,200 employees worldwide.

Activision’s culture appears to be a combination of all four culture types, but with an emphasis on clan and adhocracy (see Figure 14.5). One employee

Activision Blizzard Integrates Clan and Adhocracy Cultures

OB in Action 

Cultural Types Represent Competing Values The four cultural types include some opposing core values. The internal values associated with clan and hierarchy can conflict with the external ones associated with adhocracy and market cultures. Simi- larly, the flexibility and discretion associated with clan and adhocracy cultures are at odds with the stability and control values endorsed by companies with hierarchy and market cultures.

These conf licts matter because an organization’s success may depend on its ability to act on core values associated with competing cultural types. While this is difficult to pull off, it can be done. Video game developer Activision Blizzard is a good example.

Flexible

Internal External

Clan Adhocracy

Hierarchy Market

50 50

5050 50

25 25

2525

Control

FIGURE 14.5 GRAPH OF ACTIVISION’S CULTURE

Based on multiple articles describing the work environment at Activision Blizzard.

560 PART 3 Organizational Processes

described it this way: “We are lucky to work in a business where imagination, cre- ativity, and play aren’t only encouraged, they’re required.”48 Bobby Kotick, Activi- sion Blizzard CEO, reinforced this belief by saying, “Everything we do starts with our employees’ talent, inspired creativity, and commitment to excellence.” The cul- ture is noted for being inspirational, creative, and fun.49

Clan Dominates One of the company’s mantras is “Gamers + gaming = fun.” “Activision Blizzard is a community of people who love to have fun together, and our employee camaraderie is fueled by our passion for gameplay,” accord- ing to the company’s website.”50 This cultural characteristic is reinforced via the Gaming Zone. Great Place to Work described the Gaming Zone as “the heart of Activision Blizzard’s headquarters. Employees are encouraged to play games during their breaks, and the company regularly hosts tournaments and biweekly get-togethers like Gaming Zone Game Night, where employees play video games together.”51

Personal development is encouraged. For example, Activision Blizzard Studio Summit is an annual event at which game development teams meet to discuss experiences and learn from each other. Great Place to Work noted that “develop- ment teams share their combined knowledge and annual findings across a variety of disciplines, including audio and talent, art, design, animation, programming, and production.”52 Other developmental activities include a Master’s in the Business of Activision (the company’s self-made MBA program) and Blizzard Academy, where experts teach specialized classes.53

Other clan-related characteristics include a host of positive employee perks such as company-paid health benefits, a wellness program, free food and bever- ages, massage therapy, and work–life balance programs.54

Adhocracy Dominates Creativity is at the core of Activision’s success. “Bring- ing Activision Blizzard’s franchises to our audiences is a massive, complex, and very creative process,” says CEO Kotick. “I think of our teams as symphony or- chestras, because they work hard to bring so many details together in perfect harmony.”55

The company uses its Cultural Enrichment Series to foster innovation and cre- ativity. Part of the series consists of TED-type talks called Activisionaries. “This speaker and concert series features inspirational leaders, entrepreneurs, world- class athletes, military leaders, best-selling authors, musicians, and others. The events not only provide intellectual stimulation and consistent opportunities for community-gathering, but also instill a sense of creativity that inspires and guides our culture.”56

YOUR THOUGHTS?

1. What is the cultural thread that enables Activision to have a culture dominated by clan and adhocracy?  

2. Do you think Activision’s cultural profile is the best one for a company whose strategic goal is to grow its business? Explain.

3. Would you like to work at Activision? Why or why not?

Are you curious about the type of culture that exists in a current or past employer? Do you wonder whether you possess person–organization fit? Self-Assessment 14.1 allows you to consider these questions.

561Organizational Culture, Socialization, and Mentoring CHAPTER 14

Outcomes Associated with Organizational Culture Both managers and academic researchers believe organizational culture can influence outcomes at the individual, group, and organizational levels of the OB Organizing Frame- work. A team of researchers tested this hypothesis by conducting a meta-analysis of more than 38,000 organizational units and 616,000 individuals: An organizational unit is either an organization as a whole or departments in different organizations. Figure 14.6 sum- marizes the findings.57

Figure 14.6 illustrates the strength of relationships among nine organizational outcomes and the four culture types. As you probably expected, culture is positively

What Is the Organizational Culture at My Current Employer? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 14.1 in Connect.

1. How would you describe the organizational culture?

2. Do you think this type of culture is best suited to help the company achieve its strategic goals? Explain.

SELF-ASSESSMENT 14.1

FIGURE 14.6 CORRELATES OF CLAN, ADHOCRACY, MARKET, AND HIERARCHY ORGANIZATIONAL CULTURES

SOURCE: Results were based on A. Ou, C. Hartnell, A. Kinicki, E. Karam, & D. Choi, “Culture in Context: A Meta-Analysis of the Nomological Network of Organiza- tional Culture.” Presentation as part of a symposium, titled “Connecting Culture and Context: Insights from Organizational Culture Theory and Research,” at the 2016 National Academy of Management Meeting in Anaheim.

Positive work attitudes

Positive employee behavior

Customer satisfaction

Market share

Operational e�ciency

Product/service quality

Innovation

Financial performance

Financial growth

Clan Adhocracy Market Hierarchy

Moderate StrongWeakNot significant

V ar

ia b

le s

Strength of relationship

562 PART 3 Organizational Processes

associated with a variety of outcomes. Most relationships were of moderate strength, meaning they are important to today’s managers. Closer examination of Figure 14.6 leads to the following six conclusions:

1. Organizational culture is related to organizational effectiveness. This means an organization’s culture can be a source of competitive advantage.

2. Employees have more positive work attitudes when working in organizations with clan cultures.  Employees clearly prefer to work in organizations that value flexibility over stability and control, and those that are more concerned with satisfy- ing employees’ needs than with customer or shareholder desires.

3. Clan and market cultures are more likely to deliver higher customer satisfaction and market share. We suspect this result holds because the positive employee atti- tudes associated with clan cultures motivate employees to provide better customer service.

4. Operational outcomes, quality, and innovation are more strongly related to clan, adhocracy, and market cultures than to hierarchical ones. Managers should avoid the use of too many rules and procedures—hierarchical characteristics—when trying to improve these outcomes.

5. An organization’s financial performance (profit and revenue growth) is not strongly related to organizational culture. Only market and hierarchy cultures were associated with financial outcomes. Managers should not expect to im- mediately increase financial performance when they try to change their organiza- tion’s culture. This underscores the conclusion that culture change needs time to take hold.

6. Companies with market cultures tend to have more positive organizational out- comes. Managers should make their cultures more market oriented.

Subcultures Matter  Thus far we have discussed organizational culture as if a company possessed a single homogeneous culture. Most don’t. Rather, organizations develop subcultures.58

Two OB scholars describe organizational subcultures as consisting of “distinctive clusters of ideologies, cultural forms [clan, adhocracy, market, hierarchy], and other prac- tices that identifiable groups of people in an organization exhibit.” They tend to vary from a company’s overall culture, “either intensifying its understandings and practices or diverging from them.”59 Subcultures tend to form along the following lines, often leading to noticeably different cultures.60

• Functional/occupational groups. • Geographical areas. • Products, markets, or technology. • Divisions or departments. • Levels of management—senior management versus supervisors. • Work role—firefighter versus emergency medical technician.

While subcultures develop naturally, senior leaders should link them with “common goals, common language, and common procedures for solving problems,” according to OB expert Edgar Schein.61 You don’t want highly different subcultures to develop, be- cause they can lead groups to focus on different goals, customers, or values, which lowers unit and organizational performance.62  Such culture clashes frequently happen when companies merge. Research shows that the failure to integrate cultures is a key cause of failed acquisitions.63

563Organizational Culture, Socialization, and Mentoring CHAPTER 14

Edgar Schein, who has written a great deal about organizational culture, believes the creation and management of culture is a leader’s most important role.64 We agree, because culture can be a source of competitive advantage. Consider companies like Apple, Google, and Facebook. As sug- gested by Figure 14.2, the cultures at these companies were first formed by their founders—Steve Jobs at Apple, Larry Page and Sergey Brin at Google, and Mark Zuckerberg at Facebook. Over time, the founders embedded or reinforced their de- sired cultures by adopting specific types of organizational structure and implementing a host of human resource practices, poli- cies, and procedures. It is not an easy task to change an organization’s culture, but let us look at how it can be done.

First let’s review four truths about culture change.

1. Leaders are the architects and develop- ers of organizational culture. This sug- gests that culture is not determined by fate. It is formed and shaped by the ongo- ing behavior of everyone who works at a company. Aileen Wilkins, chief people officer for H&R Block, believes creating a healthy culture starts with strong lead- ership. “The people at the top set the tone for behaviors all the way down the line,” she says.65

M A J O R Q U E S T I O N

What mechanisms or levers can I use to implement culture change?

T H E B I G G E R P I C T U R E

Some people suggest that culture change takes years, whereas others believe leadership ac-

tions can change culture more quickly. Yet others contend that culture evolves and managers

should not attempt to manage it. Where do you stand? We believe culture can and should be

nurtured and developed so it aligns with a company’s vision and strategic plan. You will learn

about 12 mechanisms or levers you can use to implement culture change. We discuss them

in the context of the managerial role, but knowing these techniques helps you at any level in

the organization.

14.3 MECHANISMS OR LEVERS FOR CULTURE CHANGE

Sergey Brin (left) and Larry Page met as Ph.D. students at Stanford. They created the first version of the algorithm underlying searches while students, and then incorporated Google after graduation. Today, Brin is president of Alphabet, Inc., Google’s parent company, and Page is the CEO. Although Google is somewhat secretive about the number of searches it conducts, the best estimate is more than 3 billion a day. © Matthew Staver/Bloomberg/Getty Images

564 PART 3 Organizational Processes

2. Changing culture starts with targeting one of the three levels of organizational culture—observable artifacts, espoused values, or basic underlying assumptions. The fastest way to start a culture change project is through the use of observable arti- facts. For example, if you wanted to foster a market culture, you could post graphs of performance metrics around the office to reinforce the value of high performance. That said, culture will not change in a significant way unless managers are able to change basic underlying assumptions.66 It takes time to alter this deep-seated component of culture.

3. The current culture probably closely aligns with the organization’s vision and strategic plan. Remember the quote “culture eats strategy for breakfast” whenever you pursue culture change. An organization’s culture must be consistent with its vision and strategic goals. A vision  is a long-term goal that describes what an organization wants to become. A strategic plan  outlines the organization’s long-term goals and the actions necessary to achieve them.

EXAMPLE Alan Mulally, former CEO of Ford, wanted to get management to work more collaboratively in pursuit of the company’s strategic goals. This change toward a clan culture was necessary to overcome the competitiveness and aggressive- ness—signs of a market culture—among senior managers. Among other changes, Mulally instituted weekly update meetings in which executives shared results about their units. The culture changed as executives became more collaborative, and prof- its rose.67

4. A structured approach works best when implementing culture change. Our ex- perience as consultants tells us that culture change frequently meets with resis- tance. People become accustomed to the culture they know and prefer to leave things as they are. Chapter 16 outlines several techniques you can use to overcome such resistance.

Let’s now consider the specific methods or techniques managers can use to change an organization’s culture.

12 Mechanisms or Levers for Creating Culture Change OB experts have proposed 12 mechanisms or levers for changing organizational cul- ture. These levers can be pushed to create a preferred type of culture or they can be pulled to reduce a particular culture type. Changing culture amounts to pushing and pulling these levers to create a culture profile that is best suited to help an organization achieve its goals. Any of these levers can be used to foster any of the culture types pre- viously discussed. Table 14.1 shows the relationship between these levers and the three levels of organizational culture.68 Let’s consider how these levers can be used to create culture change.

1. Formal Statements Formal statements of organizational philosophy, mission, vi- sion, values, and materials can embed culture when used for recruiting, selection, and socialization. They represent observable artifacts.

EXAMPLE Sam Walton, the founder of Walmart, established three basic beliefs or values that represent the core of the organization’s culture. They are (a) respect for the individual, (b) service to our customer, and (c) striving for excellence.

EXAMPLE Nucor Corp. attempts to emphasize the value it places on its people by including every employee’s name on the cover of the annual report. This practice also reinforces the clan type of culture the company wants to encourage.69

565Organizational Culture, Socialization, and Mentoring CHAPTER 14

2. Design of Physical Space, Work Environments, and Buildings Physical spacing among people and buildings and the location of office furniture are different ways to send messages about culture. For example, an open office environment is more appropriate for an organization that wants to foster collaboration and innovation.

EXAMPLE Facebook plans to put several thousand people into a single mile- long room. Samsung is building a new office in the United States that contains vast outdoor areas sandwiched between floors. Executives hope this design “will lure workers into public spaces, where . . . engineers and salespeople will actu- ally mingle.”70 

MECHANISM LEVEL OF ORGANIZATIONAL CULTURE

OBSERVABLE ARTIFACT

ESPOUSED VALUE

BASIC ASSUMPTION

1. Formal statements X X

2. Design of physical space, work environments, and buildings

X X

3. Slogans, language, acronyms, and sayings

X X

4. Deliberate role modeling, training programs, teaching, and coaching by others

X X X

5. Explicit rewards, status symbols, and promotion criteria

X X X

6. Stories, legends, or myths about key people and events

X X X

7. Organizational activities, processes, or outcomes

X X

8. Leader reactions to critical incidents and organizational crises

X

9. Rites and rituals X X X

10. Work flow and organizational structure

X X

11. Organizational systems and procedures

X X X

12. Organizational goals and criteria throughout employee cycle (hire to retire)

X X X

TABLE 14.1 12 MECHANISMS FOR CHANGING ORGANIZATIONAL CULTURE

566 PART 3 Organizational Processes

3. Slogans, Language, Acronyms, and Sayings Corporate slogans, acronyms, and specialized language often have a profound effect on the organization over time be- cause they are easy to remember and repeat.

EXAMPLE CEO Mary Berner wants to make a culture change at Cumulus Media Inc. Cumulus is the second-largest radio broadcaster in the United States and operates 454 stations. The company is experiencing declining revenue and is saddled with $2.5 billion in debt. Berner began the change process by circulating two slogans. The acronym HABU reflects the company’s focus on the “highest and best use” of resources. The slogan “The force” is short for “focused, responsible, collaborative, and empowered.” To model support for these slogans, The Wall Street Journal re- ported that Berner “sold the corporate jet, consolidated duplicate Internet-technology departments, and created a department to provide stations with market data and analytics on which to base local programming decisions.”71 What types of culture are reinforced by these slogans and changes?

4. Deliberate Role Modeling, Training Programs, Teaching, and Coaching by Others Companies such as Keller Williams Realty Inc., the largest real estate fran- chise in the world, use coaching and training to promote a culture focused on employee growth and development. According to CEO Chris Heller, “Our success results from a deeply ingrained culture of learning, innovation, and giving.”72

EXAMPLE Heller believes training is “critical to help- ing Keller Williams agents be more purposeful and pro- ductive, to providing clients with a better customer experience, and to building more stable and profitable businesses.” The KW Masterminds program is run three times a year as a vehicle to increase the sharing of best practices among employees. Executives believe these efforts are “one of the reasons Keller Williams is setting all-time records for productivity and profitability and growing three times faster than our industry.”73

5. Explicit Rewards, Status Symbols, and Promotion Criteria Because they are meaningful and visible, re- ward systems have a strong impact on employees and are one of the strongest ways to embed organizational culture. For example, team-based rewards reinforce a clan culture, while individual rewards are better suited for market cul- tures. Hamdi Ulukaya, the Turkish immigrant who founded Chobani, the largest seller of Greek yogurt in the United States, recently made a decision that will significantly af- fect the company’s culture. 

EXAMPLE Chobani’s 2,000 employees were sur- prised by the CEO’s decision to give them up to 10 per- cent of the company in the form of stock when Chobani goes public or is sold. The company is worth several billion dollars, and Ulukaya simply wants to pass along the wealth they have helped build. The number of shares employees receive will be based on their tenure with the company. “It’s better than a bonus or a raise,” said manager Rich Lake. He believes “the shares are an acknowledgment of what he and the other employees have put into Chobani.”74  What type of culture is pro- moted by this decision?

Hamdi Ulukaya was named the World Entrepreneur of the Year in 2013. Starting with the purchase of a defunct yogurt factory in New York, he created a yogurt empire with Chobani. Chobani is the largest yogurt brand in the United States. Ulukaya believes that companies prosper when they pay higher wages to employees. He also believes that companies should focus on improving the lives of their employees and the people in communities in which they operate. Do you agree with him? © Chris Ratcliffe/Bloomberg/Getty Images

567Organizational Culture, Socialization, and Mentoring CHAPTER 14

6. Stories, Legends, or Myths About Key People and Events Storytelling is a powerful way to send messages to others about the values and behaviors the organization desires. Stories reinforce characteristics of the desired culture.

EXAMPLE Jeff Bezos, Amazon CEO, told an interviewer from the Harvard Business Review, “There are stories we tell ourselves internally about persistence and pa- tience, long-term thinking, staying focused on the customer.”75 This practice rein- forces a market culture.

EXAMPLE In a story that has spread throughout Ed Doherty’s Panera Bread restau- rants, a customer drove to a store during a blizzard to place an order. He inadver- tently left his food there and called the store to inform the manager. The store was about to close as the snow piled up, so the manager delivered the order to the cus- tomer’s house.76 What type of culture does this action reinforce?

7. Organizational Activities, Processes, or Outcomes Leaders pay special at- tention to activities, processes, and outcomes they can measure and control. This behav- ior sends strong messages to employees about acceptable norms and behavior. For example. if you want to create an adhocracy culture, then managers would pay attention to innovation processes and outcomes such as number of patents or number of ideas sub- mitted to suggestion systems.

EXAMPLE Howard Schultz, Starbucks CEO, examines coffee-sales figures four times a day. This behavior, characteristic of a hierarchical and market culture, helps Schultz monitor the performance of the company’s nearly 12,000 stores.77

EXAMPLE GM CEO Mary Barra is trying to move the company culture toward a higher level of hierarchy and market. She started this change by establishing a vision of GM as “the world’s most valued automotive company,” and by measuring its achievement of this vision via strategic goals to improve customer satisfaction, qual- ity, and financial results. To reinforce this strategic and cultural shift, she told the company’s top 300 executives, “If you’re not in line with this vision . . . you don’t need to be here.”78

8. Leader Reactions to Critical Incidents and Organizational Crises Neuro- science research shows that people learn and pay attention to the emotions leaders ex- hibit. Positive emotions spread, but negative emotions travel faster and farther.79 Market cultures, for example, are reinforced by showing positive emotions after landing a new customer or negative emotions such as anger after losing a customer because of bad ser- vice. Consider how executives at Microsoft responded to a crisis eroding feelings of re- spect and inclusiveness, both of which reinforce clan cultures.

EXAMPLE Executives at Microsoft responded quickly to activities that occurred at an Xbox Division party held as part of the Game Developers Conference. The party featured dancers dressed as scantily clad schoolgirls.80  Kathleen Hogan, Microsoft executive vice president of human resources, sent an e-mail to all em- ployees saying:

This is unacceptable in terms of how we treat women and how we represent Microsoft, and it undermines the culture we are working so hard to cultivate—one that is diverse and inclusive and grounded in a growth mind-set.

“We are not going to tolerate this. I appreciate that we will be judged by our deeds, and not just our words. And yet every day, we see our people taking impor- tant and meaningful steps forward in our journey towards inclusion. . . . It is not a stretch to say the company as a whole is shocked and upset, and that we all are de- termined that this is never repeated.”81

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9. Rites and Rituals Rites and rituals  are the planned and unplanned activities and ceremonies used to celebrate important events or achievements. Consider how managers at Arnold Worldwide reinforce several culture types at once.

EXAMPLE Employees at Boston advertising agency Arnold Worldwide like to meet at a beer vending machine in the office, nicknamed Arnie, after completing the day’s meetings with clients. A Wall Street Journal report commented that “as they sip bot- tles of home-brewed beer, employees exchange ideas and chitchat, often sticking around the office instead of heading to a nearby bar.” While this ritual can surely fa- cilitate clan, adhocracy, and market cultures, organizations need to be careful about encouraging drinking at work. Employment lawyers caution that drinking at work “can lead to driving intoxicated, assault, sexual harassment, or rape. Plus, it may make some employees uncomfortable while excluding others, such as those who don’t drink for health or religious reasons.”82

Financial and human resources staffing firm Salo LLC, located in Minneapolis, uses a less controversial set of rites and rituals to reinforce its clan and market-based culture (see the OB in Action box).

When customer requests come in to a particular office at staffing firm Salo LLC, “they are posted on a wall-sized whiteboard, and can only be recorded, altered, or erased by the salesperson who landed the client.”

Whiteboard and Gong Used as Key Artifacts The whiteboards are visible to everyone and have become “a center hub of activity,” according to Adam Sprecher, a managing director at the firm. When a new client name goes up on the board, Sprecher says, “There’s a little anxiety of ‘OK, here we go! Now it’s time to per- form.’ It’s an adrenaline rush.”

Colored pens are used to indicate the status of a project. Clients are first listed in black and then updated in “blue or orange as candidates are added or elimi- nated. A red check mark means it is time to start thinking about new ideas.”

Another artifact, a big brass gong, is used to reinforce a market orientation. When a deal is completed, the salesperson rings the gong, and people cheer and clap. Other teams in the company replace the gong with chest bumps or victory dances.

Rituals Also Used to Avoid Jinxing a Deal Salo employees have developed ritu- als aimed at increasing sales. Managing director Gwen Martin said, “When we are about to lock a deal down, it’s bad luck to high-five each other, because you might jinx it.” But some acknowledgment seemed appropriate. “So you do a ‘pinkie-five’ instead.”83

YOUR THOUGHTS?

1. How are clan and market cultures being reinforced by Salo? 2. How comfortable would you be working at a company like Salo that so overtly

organizes culture around rites, rituals, and even the need to avoid jinxes? 3. Which industries are the best fit for Salo’s cultural approach, and why?

Salo LLC Uses Rites and Rituals to Embed a Clan and Market Culture

OB in Action

569Organizational Culture, Socialization, and Mentoring CHAPTER 14

10. Work Flow and Organizational Structure Work flow is the way work gets done—work flow and organizational structure are the way reporting relationships are organized. Both can become tools for changing organizational culture. For example, en- couraging brainstorming meetings to solve problems reinforces an adhocracy culture, whereas having weekly progress meeting encourages both market and hierarchy cultures.

Bedside meetings between nurses and doctors and their patients are becoming more commonplace as hospitals change their work flow to improve patient satisfaction. Hospitals are doing this in an attempt to provide better customer service and more effective treatments. © Pixtal/agefotostock RF

EXAMPLE Some hospitals are revising the way they handle nursing shift changes in order to improve patient safety, the quality of services, and patient inclusion and satis- faction. Traditional shift change meetings occur when “nurses going off duty typically confer in a hallway or at the nursing station with the nurse coming on for the next shift, giving a rundown of their patients’ status and needs. In some cases nurses may simply write up a report in the medical record for the next shift to read,” according to The Wall Street Journal. The new approach entails a bedside meeting in which nurses meet in the presence of the patient to discuss treatment plans. This approach has been shown to help “reduce the number of patient falls and catch safety issues such as an incompatible blood transfusion and air bubbles that form in arteries.” Patients also are more satisfied with this work flow.84 These work flow changes would serve to move the culture in the direction of hierarchy and market.

11. Organizational Systems and Procedures Companies are increasingly using electronic networks as a tool to promote different types of cultures. Disney, for example, has invested over $1 billion in big data technology to identify the best way to provide customer service, a characteristic of market cultures.85

EXAMPLE In San Francisco, Hearsay Social Inc., a social media software company, uses online technology to collect peer performance feedback, which can promote any of the four culture types in the competing values framework (CVF). The feedback is used as input to employees’ performance evaluations. Managers feel these evalua- tions are more accurate because they are based on information from several people.86

EXAMPLE LifeSize Communications, a video conferencing company in Austin, Texas, uses an internal online network to promote collaboration (clan) and increased sales (market). A salesperson recently wanted advice about how to sell a product against a competitor. To get ideas, the salesperson logged onto the network to ac- cess content posted by a LifeSize partner in South Africa. The content describes an approach the partner used to win business against that competitor.87

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12. Organizational Goals and Criteria throughout the Employee Cycle An organization’s culture is reflected in the goals it pursues. For example. the clan-type cul- tures in companies such as Google and Zappos are reinforced by goals like increasing employee development, satisfaction, or involvement. General Motors has decided to fos- ter more of an adhocracy and market culture in response to its strategic goal of growing revenue and market share.  

EXAMPLE GM and Lyft will begin testing a self-driving Chevrolet Bolt electric taxi in 2017. According to The Wall Street Journal, this strategic focus is directed mostly at challenging Google and Uber. “In addition to driverless cars, GM aims to use Lyft and its growing army of drivers as a primary customer for the Bolt, an electric car that is scheduled to launch later this year.”88 Getting the Bolt delivered on time may also require some improvements in GM’s operating processes, an aspect of a hierarchical culture.

Remember Person–Organization Fit Now that we have described the four key types of organizational culture and the mechanisms managers can use to change culture, it’s time to reflect on your person–organization (P-O) fit. Recall that P-O fit reflects the extent to which your personality and values match the climate and culture in an organiza- tion. Your P-O fit matters because it links to your work attitudes and performance.89

We have two activities for you to complete to measure your level of fit and see what you can do about it. The first is Self-Assessment 14.2, which measures your preference for the four types of culture in the CVF. The second is a Take-Away Application that asks you to compute the gap between your organization’s current culture and your preferred culture. You can use this gap to make a plan of action for improving your P-O fit.

What Type of Organizational Culture Do I Prefer? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 14.2 in Connect.

1. In rank order, what are your preferred culture types?

2. To what extent does your preferred culture type affect your job satisfaction?

SELF-ASSESSMENT 14.2

TAKE-AWAY APPLICATION

What Is My Level of Person–Organization Fit?

Use results from Self-Assessments 14.1 and 14.2 to answer the following questions.

1. Compute the gap between your preferred and actual culture types by subtract- ing your actual culture type score (Self-Assessment 14.1) from your preferred type score (Self-Assessment 14.2). Where are the largest gaps?

2. Make a plan to improve your person–organization fit. Focusing on your two larg- est culture type gaps, identify what is causing the gaps. You will find it helpful to look at the survey items that measure these types.

3. Now use the 12 embedding mechanisms just discussed and suggest at least two things you can do and two things your manager might do to improve your level of fit.

4. How would you assess whether the changes you identified in question 3 are working? Be specific.

571Organizational Culture, Socialization, and Mentoring CHAPTER 14

Organizational socialization  is “the process by which individuals acquire the knowledge, skills, attitudes, and behaviors required to assume a work role.”90 This definition highlights that organizational socialization is a key mechanism by which or- ganizations embed their cultures, particularly in new employees. In short, organizational socialization turns outsiders into fully functioning insiders by promoting and reinforcing the organization’s core values and beliefs. This section introduces a three-phase model of organizational socialization and examines the practical application of socialization research.

A Three-Phase Model of Organizational Socialization Anyone’s first year in a complex organiza- tion can be confusing. There is a constant swirl of new faces, strange jargon, conflict- ing expectations, and apparently unrelated events. Many organizations treat new mem- bers in a rather haphazard, sink-or-swim manner. A recent study of 1,000 employ- ees, for example, revealed that 33 percent had no formal socialization experi- ence.91  This is unfortunate because un- structured socialization is associated with decreased learning, performance, and satis- faction.92  It also leads to increased turn- over.93 There is a better way.

Organizational behavior researcher Daniel Feldman has proposed a three-phase model of organizational socialization that

M A J O R Q U E S T I O N

How can I integrate the findings of socialization research with the three phases of socialization?

T H E B I G G E R P I C T U R E

Organizational culture spreads by means of a learning process. That is, people teach each

other about the values and norms the organization values and rewards. Organizational

socialization is one mechanism underlying this learning process. All of us have been so-

cialized at one time or another. It’s a natural aspect of starting a new job at any company,

and it ultimately affects your work attitudes and performance. You will learn about a

three-phase model of organizational socialization and practical lessons based on social-

ization research.

14.4 EMBEDDING ORGANIZATIONAL CULTURE THROUGH THE SOCIALIZATION PROCESS

Imagine the feelings this new employee might have about starting a job. What emotions might he be experiencing? Excitement? Worry? Challenge? How can companies help new employees begin to fit in during the first few weeks of employment? © Oli Kellett/Getty Images

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promotes deeper understanding of this important process. As illustrated in Figure 14.7, the three phases are:

1. Anticipatory socialization 2. Encounter 3. Change and acquisition

Each phase has associated perceptual and social processes. Feldman’s model also specifies behavioral and affective outcomes that reveal how well the individual has been socialized. The entire three-phase sequence may take from a few weeks to a year to complete, depend- ing on individual differences and the complexity of the situation. Let’s look at each phase.

Phase 1: Anticipatory Socialization The anticipatory socialization phase  occurs before an individual actually joins an organization. During this phase people

FIGURE 14.7 MODEL OF ORGANIZATIONAL SOCIALIZATION

SOURCE: Adapted from D. C. Feldman, “The Multiple Socialization of Organization Members,” Academy of Management Review, April 1981, 309–381. Copyright 1981 by Academy of Management. Reprinted with permission of Academy of Management, via Copyright Clearance Center.

1. Anticipatory socialization Recruit learns about the organization prior to joining

2. Encounter Values, skills, and attitudes start to shift as the new recruit discovers what the organization is truly like

3. Change and acquisition Recruit masters skills and roles and adjusts to the work group’s values and norms

• Anticipating realities about the organization and the new job • Anticipating the organization’s needs for one’s skills and abilities • Anticipating the organization’s sensitivity to one’s needs and values

• Managing lifestyle-versus-work conflicts • Managing intergroup role conflicts • Seeking role definition and clarity • Becoming familiar with task and group dynamics

• Competing role demands are resolved • Critical tasks are mastered • Group norms and values are internalized

Phases

Behavioral Outcomes

• Performs role assignments • Remains with organization • Spontaneously innovates and cooperates

A ective Outcomes

• Feels generally satisfied • Possesses high internal work motivation • Is highly involved with the job

Outsider

Socialized Insider

Perceptual and Social Processes

573Organizational Culture, Socialization, and Mentoring CHAPTER 14

acquire information about different careers, occupations, professions, and organizations that can come from many sources. An organization’s current employees are a powerful source of information. So are the Internet, social media, internships, and job fairs.

Unrealistic expectations about the nature of the work, pay, and promotions are often formulated during Phase 1. Because employees with unrealistic expectations are more likely to quit their jobs in the future, organizations should offer realistic job previews. A realistic job preview (RJP)  gives recruits a realistic idea of what lies ahead by pre- senting both positive and negative aspects of the job.

EXAMPLE The Hilton Baltimore demonstrates to housekeeping job applicants how to make a bed. The company then asks the applicant to do it him/herself. Tishuana Hodge, regional director of HR, says, “We can see who is genuinely interested and physically up to the challenge” after the RJP.94

EXAMPLE AT&T, which has employed RJPs for over 20 years, uses face-to-face meetings and videos to provide applicants with RJPs. “One of its newer live realistic job previews gives insight to potential technicians responsible for installing AT&T’s fiber optic technology and computer networking. Technicians also teach customers how to use the merchandise,” according to HR Magazine. AT&T does this because it needs employees who have the technical knowledge to install the product and who can also deliver outstanding customer service.95

Research revealed that realistic job previews were related to higher performance and lower attrition from the recruitment process. RJPs also lowered job applicants’ initial expectations and led to lower turnover among those who were hired.96

Phase 2: Encounter The next phase begins when the employment contract has been signed. During the encounter phase  employees come to learn what the organization is really like. It is a time for reconciling unmet expectations and making sense of a new work environment. Many companies use a combination of orientation and training pro- grams to socialize employees during the encounter phase. Onboarding is one such tech- nique. Onboarding  programs help employees to integrate, assimilate, and transition to new jobs by making them familiar with corporate policies, procedures, culture, and politics and by clarifying work-role expectations and responsibilities.97 One cor- porate survey revealed that roughly 73 percent of organizations rely on onboarding pro- grams, but only 51 percent believe they are effective.98

There is no set way to onboard a new employee. The OB in Action box illustrates a variety of methods used at different organizations. Video gaming company Riot Games, Fortune’s 39th best place to work in 2016, has an interesting approach to onboarding. If within the first 60 days new hires decide the company is not a good fit, Riot Games pays them 10 percent of their annual salary, up to $25,000, to quit.99 Zappos similarly pays new employees $3,000 if they believe they are a bad fit after participating in the company’s four-week onboarding program.100

The first day on the job can be filled with boring paperwork regarding benefits and dull presentations about the company’s history, mission, and values. While these activities are important, some companies try to find more creative ways for em- ployees to spend their first few days and weeks at work.

Companies Use Different Approaches to Onboard Employees 

OB in Action 

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Facebook Uses a Boot Camp Facebook asks new hires to complete all neces- sary paperwork before starting work. This enables the company to send new en- gineering recruits right into its six-week “Bootcamp” program. A Fortune reporter described the program in this way. Bootcampers are first given a computer and desk and asked to open their laptops. They generally find six e-mails. “One wel- comes them to the company; the other five describe tasks they’re supposed to perform, including fixing bugs on the Facebook site.” The program has multiple goals. One is to establish the belief that employees “have the power to push changes directly onto the Facebook site. . . . Another is to foster independence and creativity. At Facebook there isn’t one way to solve problems; there are many—and everyone is encouraged to come up with his own approach.” Bootcampers also are paired with mentors who coach them on how to best get through the first few weeks.101

Consulting Firm Protiviti Puts New Hires in Groups A Fortune reporter stated, “The company ushers in new hires in batches, then sends them on a jour- ney through Passport to Protiviti, a program that integrates them into the environ- ment as they collaborate as teams, work with peer advisers, and meet regularly with leaders.”102

Apple Focuses on Secrecy Apple’s onboarding process is a combination of a standard orientation, challenges, secrecy threats, and peer coaching. For secu- rity reasons, Fortune noted “many employees are hired into so-called dummy positions, roles that aren’t explained in detail until after they join the company.” In their half-day orientation, these new hires are given very limited information beyond a welcome package containing all the paperwork to be completed. For example, they are not taught how to connect their newly issued computers to the network. It is assumed that this complicated endeavor is no big deal for tech- savvy individuals. Employees are also given a “secrecy briefing,” referred to as Scared Silent. They are warned about the importance of secrecy and security and told that swift termination comes to anyone who talks about Apple’s secrets outside work. Apple does help new employees in one important way. It assigns them an “iBuddy,” a peer outside the primary work team “who can serve as a sounding board, someone for the bewildered new employee to ask questions,” according to Fortune.103

NCR Corp. Relies Heavily On an Online Portal Electronics and computer hard- ware maker NCR Corp. has a year-long onboarding process that starts with an online portal. HR Magazine noted that this enables “new hires to interact with one another with built-in social networking capabilities tied to virtual learning platform CorpU. Managers can assign an onboarding plan for each new hire, track his or her progress, and solicit feedback about the individual’s performance.” HR also partnered with the company’s “marketing staff to make the portal design appeal- ing and fun, as well as to ensure a consistent branded experience for all employ- ees,” according to HR Magazine. Employees reported positive attitudes about their onboarding experiences.104

YOUR THOUGHTS?

1. Which of these onboarding methods is most appealing to you? Why? 2. Which of these onboarding methods is least appealing to you? Why? 3. What are the drawbacks of Apple’s approach of hiring employees into dummy

positions (for reasons of secrecy)? What are the trade-offs?

575Organizational Culture, Socialization, and Mentoring CHAPTER 14

Phase 3: Change and Acquisition The change and acquisition phase  re- quires employees to master important tasks and roles and adjust to their work group’s values and norms. Mastery will occur only when employees have a clear understanding about their roles and are effectively integrated within the work unit. Being successful in Phase 3 also requires employees to have a clear understanding of the use of social media. It is easy for you to create problems for yourself by not being aware of expectations regarding surfing, texting during meetings, and use of com- pany equipment for personal messages. Experts suggest setting ground rules on the first day of employment, coaching employees on norms, and discussing how guide- lines have changed.105 

Table 14.2 presents a list of paired socialization processes or tactics organizations use to help employees through this adjustment process.

To what extent have you been adequately socialized? If your socialization level is high, then all is well. If it is medium to low, you may need to find a mentor. We dis- cuss mentoring in the next section. Take a moment to complete Self-Assessment 14.3. It measures the extent to which you have been socialized into your current work organization.

Have You Been Adequately Socialized? Please be prepared to answer these questions if your instructor has assigned Self-Assessment 14.3 in Connect.

1. What is your level of socialization? Are you surprised by the results?

2. Based on your results and what you have learned about socialization, what advice would you provide to your organization to improve its socializa- tion process?

SELF-ASSESSMENT 14.3

Practical Applications of Socialization Research Research suggests four practical guidelines for managers.

1. Managers should avoid a haphazard, sink-or-swim approach to organizational social- ization, because formalized and proactive socialization tactics positively affect new hires.106

2. More organizations today use socialization tactics to reinforce a culture that pro- motes ethical behavior. Managers should consider how they might best set expecta- tions for ethical behavior during all three phases of the socialization process.107

3. Support for stage models is mixed. Although there are different stages of socializa- tion, they are not identical in order, length, or content for all people or jobs.108 Man- agers should use a contingency approach to organizational socialization. In other words, keep in mind that different techniques are appropriate for different people at different times.

4. Research finds that diverse employees, particularly those with disabilities, experi- enced different socialization activities than other newcomers. In turn, these different experiences affected their long-term success and job satisfaction.109

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ALTERNATIVE TACTICS AND DESCRIPTION

WHICH IS THIS AN EXAMPLE OF?

COLLECTIVE VS. INDIVIDUAL EXAMPLE

Grouping newcomers and exposing them to a common set of experiences.

Treating each newcomer individually and exposing him or her to more or less unique experiences.

All new hires attend an orientation session on the same day.

FORMAL VS. INFORMAL EXAMPLE

Segregating a newcomer from regular organization members during a defined socialization period.

No effort to clearly distinguish a newcomer from more experienced members.

Army recruits must attend boot camp before they are allowed to work alongside established soldiers.

SEQUENTIAL VS. RANDOM EXAMPLE

The newcomer completes a fixed progression of steps culminating in his or her new role.

No clear steps are given and progression is ambiguous or dynamic.

Doctors must follow a sequence from medical school to internship to residency before they are allowed to practice on their own.

FIXED VS. VARIABLE EXAMPLE

Management setting a timetable for the assumption of the role.

Management setting no timetable and relying on contingencies for assumption of the role.

American university students typically spend one year apiece as freshman, sophomores, juniors, and seniors.

SERIAL VS. DISJUNCTIVE EXAMPLE

The newcomer is socialized over time with the help of an experienced organization member.

The newcomer is not provided a role model.

A buddy system is used during orientation.

INVESTITURE VS. DIVESTITURE EXAMPLE

The affirmation of a newcomer’s incoming global and specific role identities and attributes.

The denial and stripping away of the newcomer’s existing sense of self and the reconstruction of self in the organization’s image.

During police training, cadets are required to wear uniforms and maintain an immaculate appearance; they are addressed as “officer” and told they are no longer ordinary citizens but representatives of the police force.

TABLE 14.2 SOCIALIZATION TACTICS Examples in each row illustrate one or the other of the alternatives. Which one appears in the example?

SOURCE: Descriptions adapted from B. E. Ashforth, Role Transitions in Organizational Life: An Identity-Based Perspective (Mahwah, NJ: Lawrence Erlbaum Associates, 2001), 149–183.

577Organizational Culture, Socialization, and Mentoring CHAPTER 14

Applying OB 1. Introducing yourself to strangers. Don’t assume others will not want to meet you

or are too busy to spend time with you. As a new employee you are expected to reach out and meet people. Gain confidence in this activity by practicing your opening lines. It helps to write them down, rehearse, and experiment with differ- ent approaches. Preparing a list of initial questions to ask people will help you demonstrate interest and motivation. When talking with others, try to make them feel heard, valued, and respected. People will remember this more than specific details about yourself. Finally, write down what you learn about others and consult it when you are next going to meet them.

2. Remembering people’s names. Neuroscientists have shown that we encode and remember names differently than other details about people, such as their faces, jobs, or family status. This tells us that weak neural connections exist between someone’s face and name. You can overcome this drawback by using a few key techniques:

a. Make a commitment to pay attention to people when you first meet them. b. Repeat the name in your mind several times and use it during the

conversation. c. Write down the name as soon as you can to increase recall. d. Create a mental picture that provides a clue to the person’s name, because

we remember things or objects better than names. For example, when meet- ing Angelo, picture an angel.

e. Use cheat sheets before going to events or meetings. Review the names and backgrounds of people you expect to see during such encounters.

3. Asking good questions. Research shows “the more questions new employees ask and the more help they seek, the better they perform . . . question askers are also more satisfied in new jobs and more committed to new organizations.”111 The learning point is that most new employees do not ask enough questions. Here are a few ideas for asking better questions:

a. Be clear in your mind about what you want. The clearer you are, the easier it is to ask the right questions.

b. Find the best person to answer your questions. If it is someone you just met, ask him or her whether you can contact them later for advice.

c. There are no dumb questions coming from new employees. Just ask what is on your mind.

d. Ask pointed questions. If you want a specific piece of information, ask a closed question such as, “When is the report due?” If you want more detailed information, ask an open-ended question such as, “What is the process for completing an expense report?”

e. Show appreciation and gratitude to those who answer your questions. f. Find a “newbie buddy,” a peer who can be your initial “go-to” person for

questions.

Key Skills Needed for Success in a New Job110

Regardless of how well your employee handles the socialization process, you can improve your own socialization experience. The Applying OB box provides recommen- dations for improving three skills essential for success at a new job.

578 PART 3 Organizational Processes

The modern word mentor derives from Mentor, the name of a wise and trusted coun- selor in Greek mythology. Terms typically used in connection with mentoring are teacher, coach, sponsor, and peer. Mentoring  is the process of forming and main- taining intensive and lasting developmental relationships between a variety of developers (people who provide career and psychosocial support) and a junior person (the protégé, if male, or protégée, if female).112 Mentoring can serve to em- bed an organization’s culture when developers and the protégé/protégée work in the same organization for two reasons. First, mentoring contributes to creating a sense of oneness by promoting the acceptance of the organization’s core values throughout the organization. Second, the networking aspect of mentoring also promotes positive in- terpersonal relationships.

Not only is mentoring valuable as a tactic for embedding organizational culture, but research suggests it can significantly influence the protégé/ protégée’s future career.113 This sec- tion reviews the functions of mentor- ing, the role of human and social capital in mentoring, and the personal implications of mentoring.

Functions of Mentoring Kathy Kram, a Boston University re- searcher, conducted in-depth inter- views with 18 pairs of senior and junior managers. As a by-product of this study, Kram identified two general functions of the mentoring process—career and psychosocial— that occur over four phases.

M A J O R Q U E S T I O N

How can I use mentoring to foster personal and professional success?

T H E B I G G E R P I C T U R E

Mentoring is another mechanism for embedding organizational culture because mentors

play a key role in socializing newcomers. This section can help you understand how to

benefit from mentoring, which ultimately should help you obtain career satisfaction and

promotions.

14.5 EMBEDDING ORGANIZATIONAL CULTURE THROUGH MENTORING

Big Brothers Big Sisters is the largest volunteer mentoring network in the United States. The organization has paired adults with children for over 100 years. A survey of adults who participated in the program as children revealed that 83 percent obtained values and principles that influenced them throughout their lives. © Connecticut Post, Ned Gerard/AP Photo

579Organizational Culture, Socialization, and Mentoring CHAPTER 14

Five career functions that enhanced career development were:

1. Sponsorship 2. Exposure and visibility 3. Coaching 4. Protection 5. Challenging assignments

Four psychosocial functions were:

1. Role modeling 2. Acceptance and confirmation 3. Counseling 4. Friendship

Four Phases of Mentoring The four phases of mentoring are initiation, cultiva- tion, separation, and redefinition. The initiation phase lasts 6 to 12 months and starts during the encounter phase of socialization. Mentors socialize new employees about the values, norms, and expectations associated with the organization’s culture during this phase. If you don’t get connected to a mentor during this period of employment, we suggest actively seeking someone out. The cultivation phase spans two to five years and entails the protégé/protégée receiving a host of career and psychosocial guidance. Your ability to learn the ropes and master the tasks during this phase is es- sential for future promotions. In the separation phase you detach from your mentor and become more autonomous. During the redefinition phases, you and your mentor start interacting as peers.114

Benefits of Mentoring Mentoring leads to more positive outcomes for the protégé/protégée when several conditions are present, some of which the protégé cannot control.

• Both mentor and protégé/protégée possess emotional intelligence. • The mentor is male and the protégé/protégée is a minority or non-Caucasian. • The mentoring relationship is formal rather than informal.115

• The mentor is skilled at coaching, is a good role model, and possesses social capital.116

• The protégé/protégée possesses high levels of human and social capital—discussed in the next section.117

Human and Social Capital Enhance the Benefits of Mentoring Human Capital Human capital  is the productive potential of an individual’s knowledge, skills, and experiences. Potential is the operative word in this definition. When you are hungry, money in your pocket is good because it has the potential to buy a meal. Likewise, a protégé/protégée with the right combination of knowledge, skills, and motivation to excel possesses human capital with the potential to give the organization a competitive advantage. Developing your human capital not only enables you to more ef- fectively do your job, but it also makes you more attractive to mentors, who have options when selecting protégé/protégées. You may find this surprising, but a recent study showed that lack of sleep depletes your human capital and lowers performance.118 Get the proper amount of sleep to perform at your best.

Scripps Health, a nonprofit health care system in San Diego and the 42nd best place to work in 2016 according to Fortune,  helps employees develop human capital by

580 PART 3 Organizational Processes

providing career coaching and up to $7,300 per year in tuition reimbursement and schol- arships. The company also offers a wide variety of internal courses that focus on em- ployee development.119

Social Capital Social capital  is the productive potential resulting from rela- tionships, goodwill, trust, and cooperative effort. Again, the word potential is key. Social capital helps you during the anticipatory phase of socialization. For example, a national survey of recruiters revealed that 74 percent found the highest-quality job ap- plicants were employee referrals. Referrals also tend to stay longer at their jobs, a result of better P-O fit.120

Social capital is beneficial beyond the early stages of your career, particularly when you are developing trusting relationships with others. Trusting relationships lead to more job and business opportunities, faster advancement, greater capacity to innovate, and more status and authority.121 Consider, for example, the experience of members from the Silicon Beach Surfers.

EXAMPLE Part professional association, social club, and networking group, the Silicon Beach Surfers group was formed by Rob Lambert. The group meets at a vari- ety of surf spots between Manhattan Beach and Malibu. Although members share a passion for surfing, they also discuss common experiences at work. “The idea is to build a rapport through surfing, and then those conversations can happen organi- cally,” said Lambert. Aaron Godfred found his job through the group, but he has also used it to hire others.122

The moral of the story is that it pays to have a rich network of good relationships. Social capital helps make that possible.

It’s no surprise that outdoor activities like surfing are great opportunities to build one’s social capital. You can build your social capital by making contacts with those you spend your leisure time. Both of your authors have made important contacts while golfing with others. © Royalty-Free/Corbis

581Organizational Culture, Socialization, and Mentoring CHAPTER 14

Assessing My Level of Mentoring Please be prepared to answer these questions if your instructor has assigned Self- Assessment 14.4 in Connect.

1. What is your level of mentoring?

2. After identifying your three lowest-scoring items in the survey, propose steps you can take to improve your level of mentoring.

3. How will you evaluate the success of these steps?

SELF-ASSESSMENT 14.4

Personal Implications Here are four key implications to consider:

1. Build a broad developmental network because the number and quality of your contacts influences your career success. In doing this, keep in mind the comments of two networking experts: “Relationships are living, breathing things. Feed, nurture, and care about them; they grow. Neglect them; they die.”123 Invest time in your devel- opmental relationships.

2. Seek consistency or congruence between your career goals and the type of devel- opmental network at your disposal. This alignment has a big influence on job and career satisfaction. For example, if you are interested in a job in finance, try to de- velop relationships with people with a finance background. If you want to start your own business one day, try to network with a diverse group of people. This should help broaden your understanding of what it takes to start a business.

3. A mentor’s willingness to provide career and psychosocial assistance depends on the protégé/protégée’s ability and potential and the quality of the interpersonal relationship.124 This point underscores the value of building your human and social capital.

4. Develop a mentoring plan. Experts suggest your plan should include the following steps:125

• Base your mentoring goals on what you want to learn, and then prioritize them.  • Identify people who are skilled or experienced in areas where you want to improve.

Don’t overlook your peers; they are a good source of functional, technical, and or- ganizational knowledge.

• Decide how best to build a relationship with your targeted individuals. • Figure out how you can provide value to your mentor. Because mentoring is a two-

way street, others are more likely to help you if they see some value in assisting you to pursue your career goals.

• Recognize when it is time to move on. Mentors are not forever. If you believe your mentor is ineffective or harming more than helping, find a new mentor. It’s easy to become stuck with one mentor. Expanding your horizons will not only benefit you, but it can help the mentor develop his or her mentoring skills as well.

Are you being adequately mentored? If not, you are more likely to experience adverse work attitudes, performance, and career outcomes. Self-Assessment 14.4 was created so you can take stock of your level of mentoring.

582 PART 3 Organizational Processes

You learned that organizational culture helps manag- ers to create competitive advantage. You examined the function and types of culture and considered how managers can change culture. Finally, you now know that socialization and mentoring are two pro- cesses organizations use to embed organizational culture. As an employee you realize how to use this knowledge to understand your employer’s culture and how best to fit in. Reinforce what you learned with the Key Points below. Then consolidate your learning using the Organizing Framework. Finally, challenge your mastery of this chapter by answering the Major Questions in your own words.

Key Points for Understanding Chapter 14 You learned the following key points.

14.1 THE FOUNDATION OF ORGANIZATIONAL CULTURE: UNDERSTANDING ITS DRIVERS AND FUNCTIONS

• Culture is a shared concept that we learn over time. It also influences our behavior at work and outcomes at multiple levels.

• The three levels of organizational culture are observable artifacts, espoused values, and basic underlying assumptions.

• Espoused values are the explicitly stated val- ues and norms an organization prefers. En- acted values, in contrast, are the values and norms we actually see in employee behavior.

• Four functions of organizational culture are to establish organizational identity, encourage collective commitment, ensure social system stability, and act as a device for sense-making.

14.2 THE IMPACT OF ORGANIZATIONAL CULTURE TYPES ON OUTCOMES

• The competing values framework identifies four types of organizational culture. A clan culture has an employee focus. Adhocracy

and market cultures have external foci that emphasize innovation/growth and market share/profitability, respectively. Hierarchical cultures are internally focused on efficiency and smooth functioning.

• There are six conclusions about outcomes as- sociated with organizational culture: (1) culture is related to the way an organization measures its effectiveness; (2) employees are more satis- fied and committed to companies with clan cul- tures; (3) clan and market cultures are more likely to deliver higher customer satisfactions and market share; (4) operational outcomes, quality, and innovation are more strongly re- lated to clan, adhocracy, and market cultures; (5) an organization’s financial performance is not strongly related to culture; and (6) compa- nies with market cultures tend to have more positive organizational outcomes.

• Subcultures should be integrated with a com- pany’s overall culture.

14.3 MECHANISMS OR LEVERS FOR CULTURE CHANGE

• Here are four key points about culture change. First, leaders are the architects and developers of organizational culture. Second, the process of culture change begins with targeting the three layers of culture. Third, culture needs to be aligned with a company’s vision and strate- gic plan. Finally, a structured approach works best when implementing culture change.

• Managers can change organizational culture in 12 ways.

• Good person–organization fit is associated with positive work attitudes and performance.

14.4 EMBEDDING ORGANIZATIONAL CULTURE THROUGH THE SOCIALIZATION PROCESS

• Socialization is a key mechanism organizations use to embed their organizational cultures. It turns outsiders into fully functioning insiders.

What Did I Learn?

583Organizational Culture, Socialization, and Mentoring CHAPTER 14

and quality of your contacts influences your career success. Second, seek consistency or congruence between your career goals and the type of developmental network at your disposal. Third, a mentor’s willingness to pro- vide career and psychosocial assistance de- pends on the protégé/protégée’s ability and potential and the quality of the interpersonal relationship. Finally, develop a mentoring plan.

The Organizing Framework for Chapter 14 As shown in Figure 14.8, you learned that two per- son factors and four situation factors influence indi- vidual, group/team, and organizational processes. You now understand the power of organizational culture, having considered many outcomes related to it. The Outcomes box shows five individual-, two group/team-, and five organizational-level outcomes influenced by culture, socialization, and mentoring.

Challenge: Major Questions for Chapter 14 You now should be able to answer the following questions. Unless you can, have you really processed and internalized the lessons in the

• The three-phase model of socialization pro- poses that anticipatory socialization, encoun- ter, and change and acquisition take place.

• Six opposite pairs of socialization tactics are collective versus individual, formal versus in- formal, sequential versus random, fixed ver- sus variable, serial versus disjunctive, and investiture versus divestiture.

14.5 EMBEDDING ORGANIZATIONAL CULTURE THROUGH MENTORING

• Mentoring helps embed organizational cul- ture in two ways. First, it contributes to creat- ing a sense of oneness by promoting acceptance of the organization’s values. Sec- ond, the socialization aspect of mentoring promotes a sense of membership.

• Mentoring has two general functions: career and psychosocial.

• Mentoring occurs in four phases: initiation, cultivation, separation, and redefinition.

• The human and social capital of both parties enhance the benefits of mentoring.

• There are four important personal implications of effective mentoring. First, build a broad de- velopmental network because the number

FIGURE 14.8 ORGANIZING FRAMEWORK FOR UNDERSTANDING AND APPLYING OB

INPUTS PROCESSES OUTCOMES

Person Factors • Human capital • Social capital

Situation Factors • Culture types • Leader behavior • Organizational climate • Human resource practices

and policies

Individual Level • P-O fit • Socialization • Mentoring

Group/Team Level • Group dynamics • Department/unit culture

Organizational Level • Culture • Socialization • Mentoring

Individual Level • Work attitudes • Employee behaviors • Career outcomes • Task performance • Turnover

Group/Team Level • Group/team performance • Group cohesion and conflict

Organizational Level • Accounting/financial

performance • Customer service/satisfaction • Innovation • Product/service quality • Operational efficiency

© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.

584 PART 3 Organizational Processes

3. What mechanisms or levers can I use to im- plement culture change?

4. How can I integrate the findings of sociali- zation research with the three phases of socialization?

5. How can I use mentoring to foster personal and professional success?  

chapter? Refer to the Key Points, Figure 14.8, the chapter itself, and your notes to revisit and an- swer the following major questions:

1. What is culture and why is it helpful to under- stand its layers and functions?

2. How are different types of organizational cul- ture related to important outcomes?

IMPLICATIONS FOR ME This chapter highlights seven implications for you. First, person–organization fit matters. It’s important to assess your level of fit with current and future employers. Use the recommen- dations discussed in the Winning at Work feature at the start of the chapter to help in this effort. Second, departments or work units contain subcultures, suggesting that you should also assess the level of fit at this level. Third, awareness of the 12 mechanisms for chang- ing culture provides insight you can use to help your employer move its culture in a desired direction. Fourth, if you are not getting what you need to perform a new job, stop and ask for guidance. Too many companies take an ad hoc approach toward socialization, which adversely affects your level of success. Fifth, you can continually upgrade your human and social capital. Take ownership for enhancing your skills, abilities, and developmental net- works as well as your interpersonal relationships if you want to experience career advance- ment throughout your life. You get what you give. Sixth, don’t contact mentors only when you want something. Build and maintain relationships by continuing to have regular contact with people in your developmental network. Finally, proficiency with social networking tools such as Twitter, LinkedIn, and Facebook will help find jobs throughout your career.

IMPLICATIONS FOR MANAGERS There are six implications for managers. First, managing organizational culture is one of the most important aspects of your job. Remember, culture eats strategy for breakfast. Second, culture is important because it performs four key functions for employees. Use this knowl- edge to help employees reach their maximum potential. Third, consider the extent to which your unit’s culture is fostering the type of work environment needed to help you achieve department goals. If the culture is conflicting with your strategies or goals, consider using one of the 12 mechanisms for changing culture. Fourth, assess the extent to which your unit’s culture is consistent with the company’s overall culture. Make changes as needed. Fifth, take an active role in socializing employees. It’s good for you and your employer. Fi- nally, we all benefit from mentoring. Spend time developing your own human and social capital. You never know when a new opportunity will arise.

585Organizational Culture, Socialization, and Mentoring CHAPTER 14

David Sacks was hired in 2014 as the chief operating officer at Zenefits. He later was given the role CEO in 2016 after cofounder Parker Conrad resigned. Sacks faced a company struggling to meet its financial goals, a culture run wild, and a slew of formal investi- gations regarding the company use of unlicensed brokers to sell insurance. He now had to decide what to do.

PHASE ONE: GROW, GROW, GROW Zenefits was the brainchild of Parker Conrad. Conrad came up with idea while working at start-up SigFig. He also cofounded that company, but his college friend and cofounder/co-CEO fired him. The day he left SigFig in 2013, Conrad incorporated Zenefits with $20,000 of his personal savings.

Conrad had learned that small companies like SigFig do not have the people to handle the adminis- trative work that comes with having employees. Activi- ties like signing people up for insurance and tracking compensation took time and paperwork. Conrad thought much of the work could be automated, saving companies substantial money. This was the concept behind Zenefits, which he dubbed the “hub and spoke” business model.126

The core idea was to create software to do the hu- man resource paperwork and then give it away for free. Zenefits focused on small businesses because they were less likely to already have such software and they were too small to hire HR employees. The hub and spoke model relied on making the software very easy to use. The software was the hub and the spokes were related ways of making money, such as selling insurance. This would entice companies to “want to do everything through our system, including health insurance, other benefits, and payroll,” Conrad said. “Hey, we can actually make enough money on all of these spokes that it makes sense to give the hub away for free.”127 

Conrad knew that selling insurance was a very lucrative spoke in the model. He noted that “when companies use Zenefits to buy a group plan, we get a commission from the insurance carrier, like any other broker. . . . Zenefits also integrates with different pay- roll systems. We get a revenue share from the payroll companies on the clients we send to them.”128 The business model worked.

Eight months after launching, Zenefits achieved $1 million of run-rate revenue (run-rate revenue is an accounting measure used by subscription-based soft- ware companies). A year later, the company was at $20 million in run-rate revenue. By that time its base had grown to more than 2,000 small companies across 47 states. Conrad then decided to set a stretch goal of achieving $100 million for the next year. It appears he was interested in growth more than anything else. To fuel this growth, the company raised $581 million from venture capitalists. 

PHASE TWO: PROBLEMS ARISE Zenefits is one of the fastest-growing cloud compa- nies ever, according to a reporter from  Business In- sider.129 The company grew from 15 employees to more than 1,600 in three years. And although it booked $80 million in revenue in 2015, investors were not pleased that it missed the $100 million goal Conrad had announced. Fidelity Investments “had written down about half the value of its $10 million in- vestment in the company, indicating Zenefits valuation had tanked. Then The Wall Street Journal reported that Zenefits was running into ‘turbulence’ and had implemented some hiring freezes and cost-cutting measures.”130

These negative evaluations were also related to regulatory problems. The New York Times reported that “insurance regulators in California and Washington State have been investigating the company. According to people with knowledge of the investigation, at the root of the California inquiry is software that Mr. Conrad created to let Zenefits’ employees cheat on the state’s online broker license course.”131 Consider the issues behind these allegations.

“Insurance brokers must pass a state licensing exam before they can legally sell or advise people on insurance. Each state has a different exam and training requirements. In California, brokers had to spend at least 52 hours on an online training course. Zenefits says Conrad created a Google Chrome browser exten- sion that allowed people to bypass the 52-hour rule by making it appear as if they were working on the course when they weren’t.”132 The modification was referred to as “the macro” within the company, and Conrad ad- mits to creating it.133

PROBLEM-SOLVING APPLICATION CASE 

Zenefits Experiences the Pains of Growth 

586 PART 3 Organizational Processes

micromanaging the company’s HR decisions. “Zenefits uses its own product to manage its employees, and Conrad controlled the account, which meant he per- sonally approved every benefits change or vacation request” for more than 1,000 employees. HR employ- ees did not have access to the system.140

PHASE THREE: CONRAD RESIGNS AND DAVID SACKS BECOMES CEO  In 2016 the board asked Conrad to resign because of his role in the insurance allegations. One of Sacks’s first actions was to cut back on the party atmosphere—clan culture run wild—and instill some hierarchy. He immediately banned alcohol in the of- fice and communicated that a culture change was needed. A Zenefits spokesperson said, “As Zenefits’ new CEO has made clear, it is time to turn the page at Zenefits and embrace a new set of corporate val- ues and culture. Zenefits is now focused on develop- ing business practices that will ensure compliance with all regulatory requirements, and making certain that the company operates with integrity as its No. 1 value.”141

Sacks also has to deal with low employee mo- rale, decreased business valuations, and a bloated cost structure given the company’s lower run-rate revenue.

APPLY THE 3-STEP PROBLEM- SOLVING APPROACH TO OB

Step 1: Define the problem.

A. Look first at the Outcomes box of the Organizing Framework in Figure 14.8 to help identify the important problem(s) in this case. Remember that a problem is a gap between a desired and a current state. State your problem as a gap, and be sure to consider problems at all three levels. If more than one desired outcome is not being accomplished, decide which one is most important and focus on it for steps 2 and 3.

B. Cases have protagonists (key players), and problems are generally viewed from a particular protagonist’s perspective. Take the perspective of David Sacks.

Step 2: Identify causes of the problem by using ma- terial from this chapter, summarized in the Organizing Framework shown in Figure 14.8. Causes will appear in either the Inputs box or the Processes box. 

A. Start by looking at Figure 14.8 to identify which person factors, if any, are most likely causes to the defined problem. For each cause, ask

Nor did Zenefits properly track who was allowed to sell insurance in different states, so some people were likely selling insurance in states where they were not licensed. One employee who was licensed as an insur- ance broker told Bloomberg Businessweek that he was not allowed to sell insurance. Instead, he made cold calls and gave leads to other brokers who were supposed to close the deals. “I was giving [clients] to people who didn’t have their insurance license,” he said. “They were selling insurance illegally.” He also said he told his boss about these issues and nothing was done to correct the problem. BuzzFeed estimated that 83 percent of the sales in Washington State were made by unlicensed brokers. If true, this opens the company to fines of $20,000 for each violation.134

The Times noted that Zenefits’ focus on growth cre- ated other problems. For one, it resulted in the hiring of people with “little experience with software sales in a highly regulated industry. . . . To increase revenue, the company moved beyond small businesses to cus- tomers with hundreds of employees—and the software struggled to keep up. Instead of pausing to fix bugs, Zenefits simply hired more employees to fill in where the software failed, including repurposing product managers for manual data entry.”135

Quality problems arose because employees could not keep up with the workload. For example, custom- ers reported that employees’ insurance claims could not be processed because of errors in the forms, such as incorrect names and dates. It appears that Zenefits did not have effective quality control processes in place that could handle its growth.136

Employee morale began to deteriorate as a result of 15-hour days and a change that reduced compensa- tion for people in the sales development organization. The company lowered base salaries while increasing variable pay—the amount of pay tied to selling prod- ucts.137 The work environment also was lax about ad- hering to rules and norms for professionalism.

According to The Wall Street Journal, employees would gather and do shots of alcohol when someone signed a big new client. Sacks, the new CEO, was told by “building management and security [at the San Francisco office] that the stairwells are being used in- appropriately. . . . Cigarettes, plastic cups filled with beer, and several used condoms were found in the stairwell.” The Journal described the culture as having a “frat-house feel.”138 “Zenefits offered beer kegs in its offices, and in the Scottsdale, Arizona, office, people freely imbibed during the workday. According to one staff member, managers had to remind employees to turn their Zenefits T-shirts inside-out before partying at local bars, so their rowdiness didn’t reflect badly on the company.”139

Sacks and Conrad also had conflicting leadership styles. Sacks continually argued with Conrad about his

587Organizational Culture, Socialization, and Mentoring CHAPTER 14

solve it, or dissolve it (see Section 1.5). Which recom- mendation is desirable and feasible? 

A. Given the causes identified in Step 2, what are your best recommendations? Use the content in Chapter 14 or one of the earlier chapters to propose a solution.

B. You may find potential solutions in the OB in Action boxes and Applying OB boxes within this chapter. These features provide insights into what other individuals or companies are doing in relationship to the topic at hand.

C. Create an action plan for implementing your recommendations.

yourself, Why is this a cause of the problem? Asking why multiple times is more likely to lead you to root causes of the problem.

B. Follow the same process for the situation factors.

C. Now consider the Processes box shown in Figure 14.8. Consider concepts listed at all three levels. For any concept that might be a cause, ask yourself, Why is this a cause? Again, do this for several iterations to arrive at root causes.

D. To check the accuracy or appropriateness of the causes, map them onto the defined problem.

Step 3: Make your recommendations for solving the problem. Consider whether you want to resolve it,

LEGAL/ETHICAL CHALLENGE

Should the Citadel Change Its Socialization Practices?

The Citadel—The Military College of South Carolina— was founded in 1842. It has a student body of about 2,300 undergraduates (2,121 males and 171 females) and about 1,000 graduate students. The college’s vi- sion is “achieving excellence in the education and de- velopment of principled leaders.” Its “primary purpose has been to educate undergraduates as members of the South Carolina Corps of Cadets and to prepare them for post-graduate positions of leadership through academic programs of recognized excellence sup- ported by the best features of a military environment. The cadet lifestyle provides a structured environment that supports growth and development of each stu- dent’s intellect, discipline, physical fitness, and moral and ethical values.”142

In socializing new students, the Citadel uses the di- vestiture approach reviewed in Table 14.2. In this method, organizations attempt to strip away a new- comer’s existing sense of self and reorient it into one that conforms to the institution’s image. College Presi- dent Lt. General John Rosa said, “The cadet system is based on common uniform and standardization of ca- dets in appearance, actions, and privileges is essential to the military system.”143

A newly admitted female student requested to wear a traditional Muslim headscarf, called a hijab. President Rosa said the school respects students’ religious views, but could not accommodate a request that

would disrupt the school’s core principles. “Uniformity is the cornerstone of this four-year leader develop- ment model,” said Rosa. The school does make ac- commodations for prayer and dietary needs.144

The students’ parents are considering legal action because the Citadel is a public university.

Solving the Dilemma Assuming you were the president of the Citadel, what would you do?

1. The college has the right to determine its own mission, culture, and socialization techniques. I would deny the request because such action is consistent with the Citadel’s mission, culture, and method of socialization.

2. The college is a public institution and it needs to be more open-minded when it comes to supporting diversity. I would accommodate the woman based on religious considerations.

3. I would deny the request because the Citadel is a military school. The prospective student knew this coming in, and she should not have applied if she could not abide by the dress code for religious reasons.

4. Invent other options.

15 ORGANIZATIONAL DESIGN, EFFECTIVENESS, AND INNOVATION

Major Topics I’ll Learn and Questions I Should Be Able to Answer

15.1 The Foundation of an Organization MAJOR QUESTION: How can knowledge about an organization’s foundation help me in my career?

15.2 Organizational Design MAJOR QUESTION: What are the seven basic ways in which organizations are structured, and how do these structures relate to the organization’s purpose?

15.3 Contingency Design and Internal Alignment MAJOR QUESTION: How can I use knowledge about contingent organization design and internal alignment to improve my satisfaction and performance?

15.4 Assessing Organizational Effectiveness MAJOR QUESTION: What does its choice of ways to measure its effectiveness tell me about an organization?

15.5 Organizational Innovation MAJOR QUESTION: How can I support my employer’s attempts to innovate?

How Can Understanding These Key Processes and Outcomes Help Me Succeed?

The Organizing Framework shown in Figure 15.1 summarizes what you will learn in this chapter. The influences on key processes at the individual, group, and organi­ zational levels are three person factors (attitudes about freelancing, goal orientation and P­O fit) and six situation factors (organizational structure, organizational culture, organizational climate, organizational vision and values, contingency factors, and of­ fice design). The greater number of situation rather than person factors impacting pro­ cesses reveals that situation factors play a more important role in explaining the OB outcomes discussed in this chapter. However, OB processes affect outcomes at all three levels.

589

FIGURE 15.1 ORGANIZING FRAMEWORK FOR UNDERSTANDING AND APPLYING OB

INPUTS PROCESSES OUTCOMES

Person Factors • Attitudes about freelancing • Goal orientation • P­O fit

Situation Factors • Organizational structure • Organizational culture • Organizational climate • Organizational vision and

values • Contingency factors • Physical environment

Individual Level • Decision making

Group/Team Level • Postmortems of failure • Decision making • Communication

Organizational Level • Organizational learning • Human resource policies,

practices, and procedures • Communication • Balanced scorecard • Strategy maps • Innovation system

Individual Level • Job satisfaction • Performance • Creativity

Group/Team Level • Group/team performance • Innovation

Organizational Level • Accounting/financial

performance • Innovation

© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.

These two photos are great representations of how organizational design and innovation have changed over the years. The photo of workers on the left depicts a typical department in the early 1900s. Note the linear set of desks and the seriousness with which people are working. If you look toward the left edge of this photo you will see managers in the aisle watching over the workers. Organizations tended to be structured more hierarchically and relied on more managerial oversight. In contrast, modern day offices tend to be more open, which encourages more spontaneous interactions among coworkers. Research shows that creativity and innovation are enhanced by spontaneous interactions. SOURCE: (left): Library of Congress Prints & Photographs Division [LC­DIG­hec­29780]; (right): © Robert Daly/Getty Images

Winning at Work Working Virtually Takes Special Preparations

What’s Ahead in This Chapter This second chapter on macro OB highlights the way organizational structure and design affect organiza- tional-level outcomes. We begin by exploring the basic foundation of an organization and then review seven ba- sic ways organizations are structured. Next, we review the contingency approach to organizational design and four basic effectiveness criteria used by organizations. We conclude by exploring innovation and ways in which you can foster it.

to start your day, the trick is to remain consistent in your routine so you give your brain a signal it’s time to start the workday.”3

4. Set expectations with family and friends. Talk to fam- ily and friends about your need to minimize distrac- tions while working from home. You need to be left alone. It must be clear that working from home doesn’t mean you are available to answer personal questions any more than if you worked at an office. Interruptions should be allowed for important issues.

5. Establish goals and to-do lists. A list of things you need to get done will help you focus on the work and avoid distractions or the tendency to procrastinate. One of your authors, Angelo Kinicki, works virtually and starts every day with a prioritized list of things to accomplish.

6. Communicate with people in your professional net- work. Out of sight, out of mind. Proactive communica- tion with your network is essential if you are working virtually. This obviously includes your boss and cowork- ers, but also customers, vendors, and personal contacts. We recommend that you make an effort to lunch with work colleagues and others in your network.

7. Get the desired level of human interaction. Schedule time to meet face-to-face with coworkers and friends. You will have to make a special effort because you are the one away from the office.

8. Know yourself before saying yes. Working virtually is not for everyone. It takes self-motivation, flexibility, emotional intelligence, and sensitivity to what others need.4 If you don’t have these skills, it may be better to say no to telecommuting.

Advances in social networking, videoconferencing, cloud storage, and mobile technology have enabled more em- ployees to work virtually. Whether you work for a company such as FlexJobs, which has 43 employees who all work from home offices, or a company that prefers employees show up at the office, it is likely you will perform some of your work away from the office. An estimated 3.7 million employees, about 2.8 percent of the workforce, currently work from home about 50 percent of the time. Further, a national survey revealed that 85 percent of millennials, people born between 1980 and 2001, would prefer to telecommute full-time.1

Why Is It Hard to Work Virtually? Although you can work virtually from almost anywhere, most virtual work is done at home. Three primary issues make this challenging. The first is the need for personal contact and social interaction. Many of us enjoy the social contact and camaraderie that comes with working in an of- fice. Second, many people have difficulty creating bound- aries between their work and home life. Finally, it takes discipline to work from home. There are no managers or colleagues around to prompt you to get things done.

Tips for Working Virtually

1. Separate work life from home life. You need dedi- cated space to work, free of clutter and distractions (like the TV). It should feel like an office, be well lit, and allow for privacy. One expert suggested that you “es- tablish ‘do not disturb’ guidelines, work hours, break times, and a policy on handling personal matters . . . no doing dishes or laundry or taking out the trash during work hours . . . treat your home office as if it were a ‘real’ office located somewhere else.”2

2. Set your work hours. Too much flexibility can lead to distractions and wasted time. Commit to specific hours just as if you were going to an office. Otherwise you may find yourself putting off your work or working around the clock to make up for it.

3. Establish and maintain a morning routine. You want your morning routine to put you into a productive mind-set. Business writer Shannon Cyr recommends that virtual workers should “take a shower, get dressed, brush your teeth, make the bed, exercise, make coffee, eat breakfast, or meditate. Regardless of what you do

590

591Organizational Design, Effectiveness, and Innovation CHAPTER 15

What Is an Organization? From a design perspective, an organization  is “a system of consciously coordinated activities or forces of two or more persons.”5 Earlier in this book, the everyday under- standing of organization was adequate for our discussions. But this formal definition is especially helpful now because the phrase “consciously coordinated” underscores the im- portance of organizational design.

Embodied in the conscious coordination aspect of this definition are four common denominators of all organizations: coordination of effort, aligned goals, division of labor, and a hierarchy of authority.6

• Coordination of effort is achieved through formulation and enforcement of poli- cies, rules, and regulations.

• Aligned goals start with the development of a companywide strategic plan. These strategic goals are then cascaded down through the organization so employees are aligned in their pursuit of common goals.

• Division of labor occurs when the common goals are pursued by individuals per- forming separate but related tasks.

• Hierarchy of authority, also called the chain of command, is a control mecha- nism dedicated to making sure the right people do the right things at the right time. Historically, managers have maintained the integrity of the hierarchy of au- thority by adhering to the unity of command principle. The unity of command principle  specifies that each employee should report to only one manager. Otherwise, the argument goes, inefficiency would prevail because of conflicting orders and lack of personal accountability. As you will learn in this chapter, this philosophy of managing and structuring organizations has been replaced by more dynamic approaches.7

When operating in concert, the four foundational factors—coordination of effort, aligned goals, division of labor, and a hierarchy of authority—enable an organization to come to life and function.

M A J O R Q U E S T I O N

How can knowledge about an organization’s foundation help me in my career?

T H E B I G G E R P I C T U R E

Whether they are for-profit, nonprofit, or mutual benefit, organizations possess some com-

mon characteristics. The better you understand these foundations, the better prepared you

will be to perform at any level of the organization. You’ll explore these commonalities and

more, such as the difference between closed and open systems and the way organizations

can become learning organizations. As a necessary springboard for this chapter, we formally

define the term organization, clarify the meaning of organization charts, and explore two

open-system perspectives of organizations.

15.1 THE FOUNDATION OF AN ORGANIZATION

592 PART 3 Organizational Processes

Organization Charts An organization chart is a graphic representation of formal authority and division of labor relationships. Within each box is the name and title of a current position holder. Infor- mally, we can think of an organization chart as a family tree. To organization theorists, however, organization charts reveal much more. The partial organization chart in Figure 15.2 shows four basic dimensions of organizational structure: (1) hierarchy of authority (who reports to whom), (2) division of labor, (3) spans of control, and (4) line and staff positions.

Hierarchy of Authority As Figure 15.2 illustrates, an organization has an unmistak- able structure or chain of command. Working from bottom to top, the 10 directors report to the two executive directors who report to the president who reports to the chief execu- tive officer. Ultimately, the chief executive officer answers to the hospital’s board of di- rectors. The chart in Figure 15.2 shows strict unity of command up and down the line. A formal hierarchy of authority also delineates the official communication network and speaks volumes about compensation. Research shows that the difference in pay between successive layers tends to increase over time.8

Division of Labor Our sample organization chart indicates extensive division of la- bor. Immediately below the hospital’s president, one executive director is responsible for general administration, while another is responsible for medical affairs. Each of these two specialties is further subdivided, as indicated by the next layer of positions. At each suc- cessively lower level in the organization, jobs become more specialized.

FIGURE 15.2 SAMPLE ORGANIZATION CHART FOR A HOSPITAL (EXECUTIVE AND DIRECTOR LEVELS ONLY)

Board of Directors

President

Strategic Planning Adviser

Chief Executive O�cer

Executive Administrative

Director

Director of Human

Resources

Director of Admissions

Director of Accounting

Director of Nutrition and Food Services

Director of X-Ray and Laboratory Services

Director of Surgery

Director of Pharmacy

Chief Physician

Director of Outpatient Services

Director of Patient and

Public Relations

Executive Medical Director

Legal Counsel

Cost-Containment Sta�

593Organizational Design, Effectiveness, and Innovation CHAPTER 15

Spans of Control Span of control  describes the number of people reporting directly to a given manager. Spans of control can range from narrow to wide. For example, the president in Figure 15.2 has a narrow span of control of two. (Staff assis- tants usually are not included in a manager’s span of control.) Narrow spans of control tend to create “taller” or more hierarchical organizations. In contrast, a wide span of con- trol leads to a “flat” organization. The executive administrative director in Figure 15.2 has a wider span of control of five. Historically, spans of 7 to 10 people were considered best. More recently, however, corporate restructuring and improved communication tech- nologies have increased the typical span of control.9

Although there is no consensus regarding the optimal span of control, managers should consider four factors when establishing spans of control: organizational size, man- agers’ skill level, organizational culture, and managerial responsibilities. Let’s consider each of these factors.10

1. Organizational size. Larger organizations tend to have narrower spans of control and more organizational layers, whereas smaller ones have a wider span of control. Costs tend to be higher in organizations with narrow spans due to the increased ex- pense of having more managers. Communication also tends to be slower in narrow spans because information must travel throughout multiple organizational layers.

2. Skill level. Complex tasks require more managerial input, thereby suggesting a nar- row span of control. Conversely, routine tasks do not require much supervision, lead- ing to the use of a wider span of control.

3. Organizational culture. Narrow spans of control are more likely in companies with a hierarchical culture because they focus on internal integration and stability and control—recall Figure 14.4. In contrast, wider spans of control are more likely to be found in companies that desire flexibility and discretion, cultures characterized as clan or adhocracy. Wider spans also complement cultures that desire greater worker autonomy and participation.

4. Managerial responsibilities. The most senior-level executives tend to have narrower spans of control than middle managers because their responsibilities are broader in scope and more complex. It’s important to consider the breadth of a person’s respon- sibilities when deciding his or her span of control.

Line and Staff Positions The organization chart in Figure 15.2 also distinguishes between line and staff positions. Line managers such as the president, the two executive directors, and the various directors occupy formal decision-making positions within the chain of command. Line positions generally are connected by solid lines on organization charts. Dotted lines indicate staff relationships. Staff employees  do background re- search and provide technical advice and recommendations to their line managers. Line managers  generally have the authority to make decisions for their units. For example, the cost-containment specialists in the sample organization chart merely advise the president on relevant matters. Apart from supervising the work of their own staff as- sistants, they have no line authority over other organizational members. Modern trends such as cross-functional teams and matrix structures, discussed later in this chapter, are blurring the distinction between line and staff.

An Open-System Perspective of Organizations To better understand how organizational models have evolved over the years, we need to know the difference between closed and open systems. A closed system  is a self- sufficient entity. It is “closed” to the surrounding environment. In contrast, an open system  depends on constant interaction with the environment for survival. The dis- tinction between closed and open systems is a matter of degree. Because every worldly system is partly closed and partly open, the key question is: How great a role does the environment play in the functioning of the system? For instance, a battery-powered clock is a relatively closed system. Once the battery has been inserted, the clock performs its

594 PART 3 Organizational Processes

time-keeping function hour after hour until the battery goes dead. The human body, on the other hand, is a highly open system because it requires a constant sup- ply of life-sustaining oxygen from the en- vironment. Nutrients and water also are imported from the environment. Open systems are capable of self-correction, adaptation, and growth, thanks to feed- back from the environment.

Whole Foods Market’s approach to the growing and selling of organic food is good example of an open system. John Mackey, cofounder and co-CEO of Whole Foods Market, believes this indus- try can benefit from systems thinking. “Organic has grown stale. Its guidelines prohibit the use of synthetic fertilizers and pesticides, which is a good thing,” he says. But they don’t address all the burgeoning issues—from excessive water usage to the treatment of migrant laborers—facing agriculture today. And once farmers are certified as organic, Mackey believes they have little incentive to improve their practices. Mackey con- cludes, “Organic is a great system, but it’s not a complete solution.” Whole Foods thus decided to take a more open-systems approach by implementing a new system called Responsibly Grown. The program mea- sures factors such as energy conservation, waste reduction, and farmworker welfare. As you might imagine, many local organic growers are angry about these changes, claiming they will increase their costs. Whole Foods has made some small adjustments to the pro- gram based on this feedback, but Mackey is staying with it. He firmly believes an open- systems approach is better for consumers and the planet.11

Historically, management theorists downplayed the environment because they used closed-system thinking to characterize organizations as either well-oiled machines or highly disciplined military units. They believed rigorous planning and control would eliminate environmental uncertainty. But that approach proved unrealistic. Drawing on the field of general systems theory that emerged during the 1950s, organization theorists suggested a more dynamic model for organizations.12 The resulting open-system model likened organi- zations to the human body. Accordingly, the model in Figure 15.3 reveals the organization to be a living organism that transforms inputs into various outputs. (Notice the similarity to the Input, Process, and Outcome features of the Organizing Framework for Understanding and Applying OB.) The outer boundary of the organization is permeable. People, informa- tion, capital, and goods and services move back and forth across this boundary.

Moreover, each of the five organizational subsystems—goals and values, technical, psychosocial, structural, and managerial—is dependent on the others. Feedback about such things as sales and customer satisfaction enables the organization to self-adjust and survive despite uncertainty and change. In effect, the organization is alive.

Learning Organizations In recent years, organizational theorists have extended the open-system model by adding a “brain” to the “living body.” Organizations are said to have humanlike cognitive func- tions, such as the abilities to perceive and interpret, solve problems, store information,

Whole Foods Market is putting increased pressure on farms like this to produce products that are Responsibly Grown. This organic farm of green and red lettuce would need to meet Whole Foods standards if it wants to sell produce to the company. Do you think it is fair for chains like Whole Foods to create additional standards that increase a farmer’s costs? © Ingram Publishing RF

595Organizational Design, Effectiveness, and Innovation CHAPTER 15

and learn from experience. This realization has led to a stream of research that examines the process by which organizations learn. Peter Senge, a professor at the Massachusetts Institute of Technology, popularized the term learning organization in his best-selling book The Fifth Discipline. He described a learning organization as “a group of people working together to collectively enhance their capacities to create results that they truly care about.”13 A practical interpretation of these ideas results in the following definition. A learning organization proactively creates, acquires, and transfers knowledge and changes its behavior on the basis of new knowledge and insights.14

We want to understand how organizations learn because organizational learning is positively associated with organizational performance and innovation, a topic we discuss later in this chapter.15 Researchers have shown that organizations learn by using five inde- pendent subprocesses (see Figure 15.4): information acquisition, information distribu- tion, information interpretation, knowledge integration, and organizational memory.16 Let us consider how these processes work.

FIGURE 15.3 THE ORGANIZATION AS AN OPEN SYSTEM

SOURCE: This model is synthesized from Figures 5­2 and 5­3 in F. E. Kast and J. E. Rosenzweig, Organization and Management: A System and Contingency Approach, 4th ed. (New York: McGraw­Hill, 1986), 112, 114.

Technical

OutputsInputs

Subsystems

The Organization

StructuralPsychosocial

Goals and Values

Managerial

FIGURE 15.4 THE PROCESS OF ORGANIZATIONAL LEARNING

Organizational Learning

Information Distribution

Information Interpretation

Knowledge Integration

Organizational Memory

Information Acquisition

596 PART 3 Organizational Processes

Step 1: Information Acquisition Information acquisition, also known as scanning, is “the process through which an organization obtains information from internal and external sources.”17 Because this is the first step of learning, organizations should cast a wide net in their acquisition of information. For ex- ample, discussions about past success and failure, called postmortems, are critical sources of information.

Step 2: Information Distribution Information distribution consists of the processes or systems that people, groups, or organizational units use to share information among themselves. For example, Jill Nelson, the founder of Ruby Receptionists, a virtual reception service in Oregon, asks employees to discuss their mistakes at weekly staff meetings. Nelson commented, “We discuss the mistakes and what the employees learned from them. The sharing of this information sends the message that it’s OK to make a low-stakes mistake—as long as you learn from it and share your lesson with others.”18 

Step 3: Information Interpretation This step is all about making sense of the in- formation organizations have acquired and distributed. In this process people are affected by the perceptual biases discussed in Chapter 4 and the decision-making biases reviewed in Chapter 11.

Step 4: Knowledge Integration Knowledge integration occurs when information is shared and accumulated across different parts of an organization. This provides more and better information for making decisions. This step can be accomplished by having post- mortems in which different people or groups present their ideas about an opportunity or problem. The point is to seek consensus about what the learned information means.

Step 5: Organizational Memory Learning will not last unless the organization finds a method to save it. Knowledge needs to be put into some type of repository or or- ganizational memory if it is to be used in the future. Organizational memory is not an object. According to a team of OB experts, it is the combined processes of “encoding, storing, and retrieving the lessons learned from an organization’s history, despite the turnover of personnel.”19

What Can Be Done to Improve Organizational Learning? We have three rec- ommendations for improving organizational learning. 

1. Improve on the five steps just discussed. You might begin by using a survey to assess the extent to which your organization is already following these steps. Self-Assessment 15.1 was created so that you could make this assessment on a current or former employer. You can use the results to target organizational changes aimed at improving learning.

2. Realize that leader behavior, organizational climate, and organizational culture drive organizational learning.20 If leaders do not support a vision and culture that promote the value of learning, it won’t happen.

EXAMPLE Michael Molinaro, vice president of talent management at New York Life Insurance, understands this conclusion. He notes that the company fosters a learning climate and culture by “trying to make each moment about learning, about establishing

This unit of firefighters has to rely on organizational learning to effectively fight fires. It has to work as a team while adjusting to factors such as weather, temperature, and breadth of the fire. Fire units also are known for having postmortems after a fire to discuss the lessons learned. © Eric Schultz/The Huntsville Times/AP Photo

597Organizational Design, Effectiveness, and Innovation CHAPTER 15

the intention to learn in every interaction, every relationship and every chance to lead.” The company uses a biannual employee survey to assess its success at creating a learning­oriented climate and culture.21

3. We can all be role models of learning from failure. Failure  occurs when an activity fails to deliver its expected results or outcomes. Unfortunately, failure or mistakes are generally feared and penalized, which creates an environment of risk aversion. Bill Gates, founder and former CEO at Microsoft, concludes, “It’s fine to celebrate success, but it’s more important to heed the lessons of failure. How a company deals with mistakes suggests how well it will bring out the best ideas and talents of its people, and how effectively it will respond to change.”22

Are You Working for a Learning Organization? Please be prepared to answer these questions if your instructor has assigned Self­Assessment 15.1 in Connect.

1. To what extent is the company a learning organization? Are you surprised by the results?

2. Identify the three items receiving the lowest ratings. Propose solutions for improving on these three areas.

SELF-ASSESSMENT 15.1

Suggestions in the Applying OB box guide the way to learning from failure.

Applying OB

1. Conduct postmortems. Take the time to reflect on why a project failed or a goal was not met. Start from the beginning and consider everything that occurred during the course of working on the project. You can use the Organizing Framework to brainstorm the potential causes of the failure. You may need to collect data during this process. Be sure to reflect on what you learned regarding each of these factors:

a. Customers. b. The organization’s vision, strategy, culture, climate, and internal processes. c. Yourself and those who worked on the project. d. Group dynamics. e. Organizational leadership and politics.23

2. Share the learning with others. The real value of failure comes from sharing our experiences with others.24 This is a form of “sharing best practices” in which knowl­ edge about what led to failure identifies the best practice. Following this suggestion also destigmatizes failure and can reduce our fear of it.25 This lesson is valuable be­ cause self­preservation and fear of failure are big obstacles to innovation.26

3. Consider your goal orientation. In Chapter 6 we defined two goal orientations that influence the way we work and our willingness to learn from failure. A perfor- mance goal orientation is aimed at demonstrating competence or avoiding per­ ceptions of incompetence. People with this orientation are less likely to take the risks needed for innovation. In contrast, a learning or mastery orientation focuses on learning and growing. For those with this orientation, failure is just another way to learn and develop. Employees should adopt more of a learning goal orientation if they want to increase their learning from failure.27

Learning from Failure 

598 PART 3 Organizational Processes

Organizational design  sets “the structures of accountability and responsibility used to develop and implement strategies, and the human resource practices and information and business processes that activate those structures.”28 The general idea behind the study of organizational design is that organizations are more effective or successful when their structure supports the execution of corporate strategies. Keep in mind that there is no one best structure for a company. Companies tend to change struc- ture in response to changes in the marketplace or in their strategic goals. Consider the case of DuPont and Dow Chemical.

EXAMPLE DuPont Co. and Dow Chemical Co. decided to merge into a new company—DowDuPont. The merged company will be restructured around three different businesses. DowDuPont expects to reduce costs by $3 billion each year by using the following three­part structure:29

• A global agriculture company, with combined revenue of $19 billion. • A global material science company, with combined revenue of $51 billion. • A technology­ and innovation­driven company focused on specialty products, with

combined revenue of $13 billion.30

Our consulting experience tells us that too many companies attempt structural changes to solve performance problems. For example, Sony restructured nine times be- tween 1994 and 2009.31 A McKinsey & Co. survey of 1,890 executives supports a similar conclusion; only 8 percent experienced positive results after making structural changes. This finding is also consistent with a study of 57 reorganizations by consulting firm Bain & Co., which demonstrated that most reorgs had no effect, and some led to lower organi- zational performance.32

This section and the next provide information about how managers can increase their chances of choosing an effective organizational design. The same information will allow you to better understand which structure your employer adopts—and how you can better function and perform within that structure.

We begin by reviewing three broad categories of organizational structure and then turn to the seven fundamental types of designs found in the workplace today. The follow- ing section then identifies when these structures may be most effective.33

M A J O R Q U E S T I O N

What are the seven basic ways in which organizations are structured, and how do these structures relate to the organization’s purpose?

T H E B I G G E R P I C T U R E

An organization’s design or structure is like a fingerprint. It uniquely identifies an organiza-

tion and provides information about how things get done. You will learn about seven funda-

mental types of organizational structures, and the implications for you at any level of the

organization.

15.2 ORGANIZATIONAL DESIGN

599Organizational Design, Effectiveness, and Innovation CHAPTER 15

Three Categories Our changing world means businesses develop new forms of organization to respond to emerging business opportunities. Management professor Richard L. Daft defined three eras that each contributed its own broad category of organization and focus (see Table 15.1).

Traditional Design Organizations defined by a traditional approach tend to have func- tional, divisional, and/or matrix structures. Each of these structures relies on a vertical hi- erarchy and attempts to define clear departmental boundaries and reporting relationships.

Historical Forces: Industrialization, mass production, and related capitalization. Mid-1800s through 1970s.

Rationale: With industrialization and mass production, organizations were able to achieve great economies of scale by specializing the application of labor to specific and standardized functions.

Horizontal Design Organizations defined by a horizontal approach work hard to flat- ten hierarchy and organize people around specific segments of the work flow. A horizon- tal structure, sometimes called a team or process structure, relies on a horizontal work flow and attempts to dissolve departmental boundaries and reporting relationships as much as possible.

Historical Forces: Increased complexity and increasingly rapid development cycles for new products. 1980s.

Rationale: The traditional approach of dividing up work according to functions, products, and customers frustrates managers who want to focus on bringing people together, without internal boundaries keeping them apart. If you want people to share knowledge, collaborate, and continually improve the way things are done, a horizontal design is a good option.

Open Design Organizations defined by an open approach tend to have hollow, modular, or virtual structures. Each of these structures relies on leveraging technology and structural flexibility to maximize potential value through outsourcing and external collaboration.

Historical Forces: Rapid technological improvements (including the Internet and mobile phones) and the rise of emerging economies (China and India) with pools of skilled workers willing to work for less than those in developed economies. Since mid-1990s.

Rationale: Open designs help organizations respond more rapidly to customer and market changes. They also potentially reduce costs and increase innovation.

TABLE 15.1 CATEGORIES AND ERAS OF ORGANIZATIONAL DESIGN

SOURCE: N. Anand and R. L. Daft, “What Is the Right Organizational Design?” Organizational Dynamics, June 2007, 329–344.

Category ERA Focus Type

1. Traditional Mid­1800s through 1970s

Self­contained within organization’s boundaries

• Functional • Divisional • Matrix

2. Horizontal 1980s Team­ and process­ oriented

• Horizontal

3. Open Since mid­1990s Opened beyond organization’s boundaries

• Hollow • Modular • Virtual

600 PART 3 Organizational Processes

The rationale of open systems led Jack Welch, former CEO of GE, to coin the term boundaryless organization. A boundaryless organization is one in which “management has largely succeeded in breaking down barriers between internal levels, job functions, and departments, as well as reducing external barriers be- tween the association [organization] and those with whom it does business.”34 This type of structure is fluid and flexible and relies on telecommuting between geographi- cally dispersed people.35 It is most appropriate for businesses in fast-changing industries or environments.

All the structural forms outlined in Table 15.1 are in use today. Let’s consider each design and an illustrative example.

Seven Types of Organizational Structures The following seven types of organizational structure cover almost all organizations. We provide historical background, with examples and schematic diagrams for each.

Functional Structure A functional structure  groups people according to the business functions they perform, for example, manufacturing, mar- keting, and finance. A manager is responsible for the performance of each of these functions, and employees tend to identify strongly with their particular function, such as sales or engineering.

EXAMPLE The organization chart previously shown in Figure 15.2 illustrates a functional structure. Responsibility at this hospital is first divided into admin­ istrative and medical functions, and within each category, directors are re­ sponsible for each of the functions. This arrangement puts together people who are experts in the same or similar activities. As a small company grows and hires more production workers, salespeople, and accounting staff, it typi­ cally groups them with a supervisor who understands their function.

Some organizations have concluded that using a functional structure divides people too much, ultimately creating silos within the organization. This detracts from the extent to which employees collaborate and share best practices across functions.

Divisional Structure In a divisional structure,  employees are segre- gated into organization groups based on industries, products or services, customers or clients, or geographic regions. The divisional structure is some- times called a product structure or profit center approach.

EXAMPLE General Electric is structured around nine primary business divi­ sions: GE Power, GE Oil & Gas, GE Renewable Energy, GE Energy Connec­ tions, GE Aviation, GE Healthcare, GE Transportation, GE Capital, and GE Digital. These major business areas are subdivided further into either prod­ uct or geographic divisions.36 Typically, within each division it maintains its own internal functional structure.

As with functional structures, some organizations have concluded that using a divisional structure can also create silos within the organization.

Matrix Structure Organizations use matrix structures when they need stron- ger horizontal alignment or cooperation in order to meet their goals. A matrix structure  combines a vertical structure with an equally strong horizontal overlay. Functional and divisional chains of command form a grid with two command

F1 F2 F3 F4

FUNCTIONAL STRUCTURE Work is organized into separate vertical functions, such as finance, sales, production, and human resources.

DIVISIONAL STRUCTURE Work is organized into separate vertical divisions, which may focus on products or services, customers or clients, or even geography.

D1 D2 D3 D4

601Organizational Design, Effectiveness, and Innovation CHAPTER 15

structures, one shown vertically by function and the other shown horizon- tally by product line, brand, customer group, or geographic region.

EXAMPLE Pharmaceutical maker Bristol­Myers Squibb is highly commit­ ted to this structure. Jane Luciano, vice president of global learning and organization development, said, “We have the matrix every way it can be organized, including geographically, functionally, and on a product basis.” The company is very pleased with its matrix structure. Luciano noted, “The matrix has enabled us to upgrade and promote excellence around core capabilities, so we can be very purposeful in developing functional expertise in specific disciplines, such as marketing, medical, HR, or fi­ nance excellence.”37

A matrix structure can also provide a reasonable counterbalance among important stakeholders, but applying it to an organization is not easy. Matrix organizations can be complex and confusing without an extra layer of collaboration and integration to effectively implement the structure. Jay Galbraith, an expert on the subject, noted that matrix structures frequently fail because management fails to create complementary and reinforcing changes to the organization’s IT systems, human resource procedures (per- formance appraisals, rewards, selection criteria), planning and budgeting processes, organizational culture, internal processes, and so on. He con- cluded, “Organization structures do not fail; managements fail at implemen- tation.”38 This type of structure is increasingly being used by companies expanding into international markets.

Horizontal Structure In a horizontal structure,  teams or work groups, either temporary or permanent, are created to improve collaboration and work on common projects.

The horizontal approach to organizational design tends to focus on work processes. A process consists of every task and responsibility needed to meet a customer need, such as develop- ing a new product or filling a customer order. Completing a pro- cess requires input from people in different functions, typically organized into a cross-functional team (described in Chapter 8). W.L. Gore & Associates is a good example of a company that has successfully implemented this structure (see the OB in Action box).

MATRIX STRUCTURE The matrix can be used with a variety of vertical and horizontal elements. Shown here are four different functions (F1, F2, and so on) interlinked to four product lines (P1, P2).

F1

P1

P2

P3

P4

F2 F3 F4

HORIZONTAL STRUCTURE Several flexible teams— T1–T4—organize around the horizontal work flow or processes. Some vertical functions remain, but they are minimized.

F1

WF T1 T2 T3 T4

F2 F3 F4

W.L. Gore is a technologically driven company that focuses on product innovation. It develops and manufactures products that provide highly reliable performance in varied environments ranging from the surface of Mars to the inside of the human heart. Today, Gore has more than $3 billion in revenue and 10,000 employees working in offices in 25 countries.39 

The company has been profitable every year since its founding in 1958, and it has been ranked among Fortune’s 100 Best Places to Work every year since 1998. It was No. 12 in 2016.

W.L. Gore & Associates Operates with a Horizontal Design

OB in Action

602 PART 3 Organizational Processes

The final three types of structures are all examples of open organizations. Before learning about them in more detail, find out how well suited you are for telecommuting by completing Self-Assessment 15.2. Telecommuting is a common practice in companies that use open designs.

Culture and Values Founder Bill Gore wanted a company free of bureaucracy and a command and control style of lead­ ership. To support this culture, the com­ pany promotes the following values:40

• Belief in the individual—employees are encouraged to trust and believe in each other.

• Power of small teams—a team­ based structure with minimum hier­ archy is used.

• All in the same boat—employees are part owners through a stock plan.

• Long-term view—investments are based on long­term payoffs.

Organizational Structure Gore’s structure is consistent with its strategy and cul­ ture. It has a team­based “lattice” organization. The company website describes the structure as one with “no traditional organizational charts, no chains of command, nor predetermined channels of communication.” Employees, who are called associates, are accountable to the members of their multidisciplined teams. “Teams organize around opportunities and leaders emerge,” according to the corporate website.41

Associates are not hired for specific jobs. The corporate website indicates em­ ployees are “hired for general work areas. With the guidance of their sponsors (not bosses) and a growing understanding of opportunities and team objectives, associ­ ates commit to projects that match their skills. All of this takes place in an environ­ ment that combines freedom with cooperation and autonomy with synergy.”42

Sponsors help associates adjust to this flexible work environment by provid­ ing feedback on performance and by assisting in internal networking.

YOUR THOUGHTS?

1. What type of people would like to work at Gore given its structure and culture? 2. Would this type of structure enhance or reduce organizational learning? Dis­

cuss your rationale. 3. Do you think this type of structure would work in most organizations? Explain.

W.L. Gore links strategy, culture, and structure. © Roberts Publishing Services. All rights reserved

What Is Your Preference for Telecommuting? Please be prepared to answer these questions if your instructor has assigned Self­Assessment 15.2 in Connect.

1. Do you prefer telecommuting or a traditional work environment?

2. What bothers you most about telecommuting?

3. How might managers assess an employee’s preference for telecommuting during a job interview?

SELF-ASSESSMENT 15.2

603Organizational Design, Effectiveness, and Innovation CHAPTER 15

Hollow Structure A hollow structure,  also known as a network structure, is designed around a central core of key functions and out- sources other functions to outside companies or individuals who can do them cheaper or faster. An athletic shoe company, for example, might decide it can excel at developing new designs, owing to its design talent and knowledge of the market. Then it might find outsourcing partners to handle other activities such as manufacturing, order taking, shipping, and managing employee benefits. The more processes that are outsourced, the more the resulting organization is “hollow”—and focused on what it does best.

EXAMPLE Herman Miller, the furniture company, goes outside the orga­ nization for design expertise. CEO Brian Walker explained the advantages: “This external network ensures that we are always taking a fresh look at problems faced by our customers without subjecting [them] to our own filters. If you have only an internal design staff, even an enormously talented one, you are inherently limited by their existing world view and experiences. Our ability to tap into a broader outside network lets us . . . get a fresh perspective on existing or emerging prob­ lems.” The company also uses other organizations for manufacturing; Walker says the company is “more . . . an integrator than a manufacturer,” which makes it less resistant to new product ideas because it doesn’t have to change manufacturing processes itself.43

A hollow structure is useful when an organization is faced with strong price competi- tion and there are enough companies to perform the required outsourced processes.

The growing number of hollow structures has increased demand for freelance work- ers. This has created an online industry that helps companies hire people for micro-tasks or short-term assignments (see the Problem-Solving Application).

HOLLOW STRUCTURE Within the organization, a number of functions are outsourced.

F1 F2 F3

Freelancers Use the Internet to Obtain Work

TaskRabbit, located in San Francisco, operates like an eBay for odd jobs. The online service helps link people looking for short­term work with organizations or people in need of someone to complete spe­ cific tasks.

How Does It Work? Assume an individual has an errand he or she wants done but doesn’t have time to do, or a company wants a unique task completed and doesn’t have a skilled person to do it. The person or organization looking for help goes to TaskRabbit.com and posts the task and the amount to be paid for the work. Members of TaskRabbit, called TaskRabbits, then place bids to get the work. “Generally, the lowest bidder wins. TaskRabbit gets a cut of the transaction.”

The website “makes people undergo a rigorous process to become a TaskRabbit, including a video interview, federal background check, Social Security number trace, and, lastly, a test to see if applicants have what it takes.”44

Is the Concept Spreading? Yes, according to a study commissioned by Freelancers Union and Upwork. The findings revealed that about 54 million people, almost 34 percent of the US workforce, did freelance work in 2015. The majority are freelancers by choice because they prefer the freedom, au­ tonomy, and increased flexibility associated with this work role. Freelancers also report earning more income now than in the past, and the majority are optimistic about future job prospects.45 

Is There a Downside? Sara Horowitz, founder and executive director of the Freelancers Union, thinks a possible downside of freelancing is that sites like TaskRabbit will lead people to accept jobs with no benefits and poor work conditions.46

Problem­Solving Application