ORGANISATIONAL

BEHAVIOUR
“One Course, which in retrospect, I feel, should’ve been taken more seriously
during my Post Graduate Course in Management was Organizational Behaviour,
especially, since, after a certain point, it’s all about managing people & that’s what
matters the most…”

– Mr. Bhargav Dasgupta – M.D – ICICI Lombard General

Insurance Company Limited – excerpts from a talk given at IIM-B -
courtesy – https://www.youtube.com/watch?v=Sh-0FPTrSL4

Prof. Girishchandran Pillai | IBS-Ahmedabad | July 10, 2020

Objective:
To give a brief summary of the covered topics for a basic level
understanding to students of IBS Class 2022 of some of the important topics
that were covered during the 10 sessions that were predominantly conducted
online, thereby to ensure an overall subject understanding to our students
across India.
Topics Covered:
1) Management Thought and OB
a. Definition of Management
b. Approaches to Management – Classical, Behavioral & other
Key approaches
c. Management Principles of Taylor, Weber, Fayol
d. Hawthorne Studies – Contribution to OB
e. Managers Roles & Functions
f. OB in context of Globalization
g. Workforce Diversity
2) Individual Learning and Behaviour
a. Definition of Learning
b. Theoretical Process of Learning
c. Application of Learning Theories for Behaviour Modification
3) Attitudes, Values and Job Satisfaction
a. The Nature and Dimensions of Attitudes
b. Components of Attitudes – Sources and Types
c. Cognitive Dissonance Theory
d. Values & the effect of Job Satisfaction on Employee
Performance
4) Perception
a. Factors Influencing Perception
b. Perceptual Selectivity
c. Rational Decision-Making Model
d. Linkage between Perception & Individual Decision Making
P.S : Additional Knowledge should be taken from Quicforce and
Synchronous Learning sessions undertaken by respective faculty

PAGE 1
 Management Thought & OB
 Definition of Management

Management is the process of planning, organizing, leading, and

controlling an organization’s human, financial, material, and other
resources to increase its effectiveness.

Manager is an individual who achieves goals through other people.

Organisation is a consciously coordinated social unit, composed of

two or more people, that functions on a relatively continuous basis to
achieve a common goal or set of goals.

Planning is a process that includes goals, establishing strategy, and

developing plans to coordinate activities.

Organising is determining what tasks are to be done, who is to do

them, how the tasks are to be grouped, who reports to whom, and
where decisions are to be made.

Leading is a function that includes motivating employees, directing

others, selecting the most effective communication channels, and
resolving conflicts.

Controlling is monitoring activities to ensure that they are being

accomplished as planned and correcting any deviations.
 Mintzberg’s Managerial Roles

 Field of Organisational Behaviour

Organizational Behaviour studies the influence that individuals, groups
and structure have on behaviour within organizations.
• Its chief goal is to apply that knowledge towards improving an
organization’s effectiveness.
• A field of study devoted to understanding, explaining, and
ultimately improving the attitudes and behaviours of
individuals and groups in organizations
• The study of what people think, feel, and do in and around
organizations

Organizations
• Groups of people who work interdependently toward some
purpose
• Collective entities
• Collective sense of purpose
 Workplace success depends on:

• Respect for people.

• Understanding of human behaviour in complex organizational
systems.
• Individual commitment to flexibility, creativity, and learning.
• Individual willingness to change.
Thus, ultimately, Organisational Behaviour is a study of human
behaviour in organizations & a multidisciplinary field devoted to
understanding individual and group behaviour, interpersonal
processes and organizational dynamics.

Background of Management Approaches

Let us first understand some Theories, to understand the background of
Management from its very root in the 19th Century.
What is a Theory?
Coherent Group of Assumptions put forth to explain the relationship
between two or more observable facts and to provide a sound basis for
predicting future events.
Management - Classical Approach:

Classical management theory is based on the belief that workers only have
physical and economic needs. It does not consider social needs or job
satisfaction, but instead advocates a specialization of labour, centralized
leadership & decision making.

Designed solely to streamline operations, increase productivity and enhance

the bottom line, this idea arose in the late 19th century and gained
prominence through the first half of the 20th century. While not widely
subscribed to in modern times, this theory offers some principles that remain
valid, to an extent, in small business settings in regards to manufacturing.
Concepts of the Workplace

The theory outlines an ideal workplace as one that rests on three main
concepts:

 Hierarchical structure – Under classical management theory,

workplaces are divided under three distinct layers of management. At
the very top are the owners, board of directors and executives that set
the long-range objectives for a firm. Middle management takes on the
responsibility of overseeing supervisors while setting goals at the
department level to fit within the confines of the managers’ budget. At
the lowest level of the chain are supervisors, who manage day-to-day
activities, address employee problems and provide training.
 Specialization – The classical management theory involves an
assembly line view of the workplace in which large tasks are broken
down into smaller ones that are easy to accomplish. Workers
understand their roles and typically specialize in a single area. This
helps increase productivity and efficiency while eliminating the need
for employees to multi-task.
 Incentives – This theory believes that employees are motivated by
financial rewards. It proposes that employees will work harder and be
more productive if they are awarded incentives based on their work.
Employers who can motivate their employees using this tactic may be
able to achieve increased production, efficiency and profit.

The autocratic leadership model is the central part of classical management

theory. In this system, there is no need to consult large groups of people for
decisions to be made. A single leader makes a final decision and it is
communicated downward for all to follow. This leadership approach can be
beneficial when decisions need to be made quickly by one leader, rather than
a group of company officials.
Strengths of the Theory

While not typically used in today’s workplaces, the classical management

theory does have some strong points. They include:

 A clear structure for management, its functions and operations

 The division of labor that can make tasks easier and more efficient to
accomplish, which can enhance productivity
 Clear definition of employee roles and tasks with little left to
guesswork
Flaws in the Model

When the theory is put into action, companies can see their production
numbers increase. There are, however, some flaws that make this particular
management model less than attractive in workplaces. These pitfalls include:

 By attempting to predict and control human behavior, this theory

overlooks the importance of human relations and creativity.
 In essence, this theory views workers almost as machines, but fails to
take into account what job satisfaction, employee input and morale
can bring to the workplace.
 The reliance on prior experience and the ability to apply it almost
solely to manufacturing settings is another drawback of this theory.

The classical management theory can help streamline manufacturing

operations where high productivity is a must. However, it fell out of favor
after the rise of the human relations movement, which sought to gain a better
understanding of the human motivation for productivity. Although some of
its facets are viable for certain circumstances, this theory generally does not
translate well to workplaces today.

Classical Theory consists of theories propounded by Taylor, Fayol, Mary

Parket Follet, Chester Barnard.
Classical Approaches to Management

Chester Barnard – “An Enterprise can operate efficiently and survive only
when the organisations goals are kept in Balance with the aims and needs of
the individuals working for it. A principle in which people can work in
stable and mutually beneficial relationships over time. Apart from this, one
also needs to have moral purpose in their employees and need to build
informal relationships.”
Criticism – Focussed on Production Efficiency, ignoring workplace harmony.

Behavioral School to Management

The alternative school of thought was to have people approach in
organizations, wherein the Sociology, Psychology aspects of Behavioural
science were also incorporated.
Hawthorne Experiments:
An experiment was done in Western Electric Company from 1924 to 1933
alongwith HBS. The methodololgy was to divide the shop floor workers in
to 2 different groups, one the control group & the other being of Test Group.

The studies originally looked into whether workers were more responsive
and worked more efficiently under certain environmental conditions, such as
improved lighting. The results were surprising: Mayo and Roethlisberger
found that workers were more responsive to social factors—such as the
people they worked with on a team and the amount of interest their manager
had in their work—than the factors (lighting, etc.) the researchers had gone
in to inspect.

The Hawthorne studies discovered that workers were highly responsive to

additional attention from their managers and the feeling that their managers
actually cared about, and were interested in, their work. The studies also
found that although financial motives are important, social issues are equally
important factors in worker productivity.

There were a number of other experiments conducted in the Hawthorne

studies, including one in which two women were chosen as test subjects and
were then asked to choose four other workers to join the test group.
Together, the women worked assembling telephone relays in a separate
room over the course of five years (1927–1932). Their output was measured
during this time—at first, in secret. It started two weeks before moving the
women to an experiment room and continued throughout the study. In the
experiment room, they had a supervisor who discussed changes with them
and, at times, used the women’s suggestions. The researchers then spent five
years measuring how different variables impacted both the group’s and the
individuals’ productivity. Some of the variables included giving two five-
minute breaks (after a discussion with the group on the best length of time),
and then changing to two 10-minute breaks (not the preference of the group).

The Hawthorne studies showed that people’s work performance is dependent

on social issues and job satisfaction, and that monetary incentives and good
working conditions are generally less important in improving employee
productivity than meeting individuals’ need and desire to belong to a group
and be included in decision making and work.

Behavioral Science Approach

Maslow Theory & Doughlas Mcgreror’s Theory

Self
Actualizatio
n Needs
Self Esteem
Needs

Social
Needs

Safety
Needs

Basic
Needs
Systems Approach
The systems approach is an old concept. The approach stands on the
assumption that breaking down of a complex concept into simple easy to
understand units helps in better understanding of the complexity.
Ludwig von Bertalanffy first proposed the systems approach under the name
of 'General System Theory'.
Even though he had orally created the notion of the general systems theory
in the 1940's he formally published it in 1968 (Ludwig von Bertalanffy
1968). He introduced system as a new scientific philosophy and defined it in
a formal manner. He noted that most systems (biological or physical) of any
practical relevance are open as they interact with the environment.
Therefore, to understand the system it has to be differentiated from the
environment, i.e., the boundary of the system has to be clearly defined along
with its interaction with the environment from within this boundary.
The approach concentrates on the holistic entity of the system without
neglecting the components. It attempts to understand the role each
component plays in the system while simultaneously understanding the
activity of the whole system. Major concepts of the systems approach are:
1. Holistic View: A change in any part/component of a system affects the
whole system directly or indirectly (Boulding 1985, Litterer 1973, von
Bertalanffy 1968).
2. Specialization: A whole system can be divided into granular (smaller easy
to understand), components so that the specialized role of each component is
appreciated.
3. Non-summational: Every component (subsystem/partial system) is of
importance to the whole. It is therefore essential to understand the actions of
each component to get the holistic perspective (Boulding 1985, Litterer
1973).
4. Grouping: The process of specialization can create its own complexity by
proliferating components with increasing specialization. To avoid this it
becomes essential to group related disciplines or sub-disciplines.
5. Coordination: The grouped components and sub components need
coordination. Without coordination the components will not be able to work
in a concerted manner and will lead to chaos. Coordination and control is a
very important concept in the study of systems as without this we will not be
a unified holistic concept.
6. Emergent properties: This is an important concept of systems approach. It
means that the group of interrelated entities (components) has properties as a
group that is not present in any individual component. This is the holistic
view of a system. For example, multicellular organisms exhibit
characteristics as a whole which are not present in individual constituent
parts like cells.
Contingency Approach

The contingency approach is a management theory that suggests the

most appropriate style of management is dependent on the context of the
situation and that adopting a single, rigid style is inefficient in the long term.
Contingency managers typically pay attention to both the situation and their
own styles and make efforts to ensure both interact efficiently.

The contingency approach contrasts with other forms of leadership, such as

trait-based management, whereby personality and individual make-up
predict patterns of management and responses to given situations over time.
Another management approach is style-based app.

Contingency theory is beneficial to organisations because of the potential for

learning from specific situations and using these lessons to influence future
management of the same or similar situations. The ability to adapt to
external pressures and changes is also an advantage. Contingency theory
may also
produce more well-rounded leaders who are able to develop their skills in
multiple areas.

Definition of Manager – “ An Individual who achieves goals through other

people.”

Definition of Organisation – “ A Consciously coordinated social unit,

composed of two or more people, that functions on a relatively continuous
basis to achieve a common goal or set of goals.”

Managerial Roles – as per Henry Mintzberg

Conceptual
Skills

Human Skills

Technical Skills

Organizational Behaviour
“ Organisational Behaviour is a field of study that investigates the impact
that individuals, groups, structure have on behaviour within the
organisations for the purpose of applying such knowledge towards
improving organizational effectiveness.”
Disciplines that Contribute to OB
The Goal of Study of Organisational Behaviour from a
Manager Perspective:

To Improve the
Performance of
Helps People to Organizations
work together
Knowledge Base

Three Level Analysis of Organizational Behavioral Studies:

Individual Level Group Level Organizational

Level
 Approaches to
Individual Learning &
Behaviour

Learning – “A Relatively Permanent Change in Behaviour that occurs in

behaviour that occurs as a result of experience.”

4 Theories of Learning:

 Classical Conditioning

 Operant Conditioning

 Cognitive Theory

 Social Learning Theory.

Learning is the individual growth of the person as a result of cooperative

interaction with others.

It is the advancement of understanding that enables the learner to function

better in their environment, improve and adapt behaviors, create and
maintain healthy relationships, and achieve personal success.

Learning has taken a place if an individual behaves, reacts, and responds

taken from others as a result of experiences change in behavior or formerly
behave.
 4 THEORIES OF LEARNING

1. Classical Conditioning

2. Operant Conditioning

3. Cognitive Theory.

4. Social Learning Theory.

These are explained below:-

CLASSICAL CONDITIONING

Classical conditioning is a type of conditioning in which an individual

responds to some stimulus that would not ordinarily produce such as
response.

It is the process of learning to associate a particular thing in our

environment with a prediction of what will happen next.

Classical conditioning, the association of such an event with another desired

event resulting in behavior, is one of the easiest to understand processes of
learning.

When we think of the classical conditioning, the first name that comes to our
mind is Ivan Pavlov, the Russian psychologist.

The normal stimulus for a flow of saliva is the taste of food. But often the
mouth waters at the mere sight of luscious peach, on hearing it described or
even thinking about it. Thus, one situation is substituted for another to elicit
behavior.

This is called conditioning. In the case of classical conditioning, a simple

surgical procedure allowed Pavlov to measure accurately the amount of
saliva secreted by a dog.
When Pavlov presented one dog with a piece of meat, the dog exhibited a
noticeable increase in salivation. When Pavlov withheld the presentation of
meat and merely rang a bell, the dog did not salivate.

Then Pavlov proceeded to link the meat and the ringing of the bell. After
repeatedly hearing the bell before getting the food, the dog began to salivate
as soon as the bell rang. After a while, the dog would salivate merely at the
sound of the bell, even if no food was offered.

In classical conditioning, learning involves a conditioned stimulus and an

unconditioned stimulus. Here, the meat was unconditioned stimulus; it
invariably caused the dog to react in a specific way.

The reaction that took place whenever the unconditioned stimulus occurred
was called the unconditioned response. Here, the bell was a conditioned
stimulus.

When the bell was paired with the meat, it eventually produced a response
when presented alone. This is a conditioned response.

OPERANT CONDITIONING
The second type of conditioning is called operant conditioning.

Here, we learn that a particular behavior is usually followed by a reward or

punishment. What Pavlov did for classical conditioning, the Harvard
psychologist B.F. Skinner did for operant conditioning.

Operant conditioning argues that one’s behavior will depend on different

situations. People will repeatedly behave in a specific way from where they
will get benefits.

On the other hand, they will try to avoid a behavior from where they will get
nothing. Skinner argued that creating pleasing consequences to specific
forms of behavior would increase the frequency of that behavior.

In one famous experiment displaying operant learning, the psychologist B.F.

Skinner trained rats to press a lever to get food. In this experiment, a hungry
rat placed in a box containing a lever attached to some concealed food.
At first, the rat ran around the box randomly.

In this process, it happened to press the lever, and the food dropped into the
box. The dropping of food-reinforced the response of pressing the lever.

After repeating the process of pressing the lever followed by dropping off
food many times, the rat learned to press the lever for food.

People will most likely engage in desired behaviors if they are positively
reinforced for doing so. Rewards are most effective if they immediately
follow the desired response. Also, behavior that is not rewarded, or is
punished, is less likely to be repeated.

For example, suppose you are an employee of ‘X’ Bank limited. Your
Branch Manager has announced in a meeting that you will get a bonus if you
can bring a $100,000,000 deposit for the bank.

You worked hard and found that you have done this successfully.

But when the time comes, you find that you are given no bonus for your
hard work which increases the bank’s deposit by $100,000,000.

In the next year, if your manager again says you about the hard work.

Maybe you will be stopped because last year you did not receive anything
for it. Many activities that we will engage in during everyday life can be
classified as an operant.

COGNITIVE THEORY

Cognition refers to an individual’s thoughts, knowledge of interpretations,

understandings, or ideas about himself, and his environment.

This is a process of learning through active and constructive thought

processes, such as a practice or using our memory.

One example might be that you were taught how to tell time by looking at a
clock.
Someone taught you the meaning of the big hand and little hand, and you
might have had to practice telling the time when you were first learning it.

This process of learning was entirely inside your mind and didn’t involve
any physical motions or behaviors. It was all cognitive, meaning an internal
thought process.

The theory has been used to explain mental processes as they are influenced
by both intrinsic and extrinsic factors, which eventually bring about learning
in an individual.

Cognitive learning theory implies that the different processes concerning

learning can be explained by analyzing the mental processes first.
It imagines that with effective cognitive processes, learning is easier and
new information can be stored in the memory for a long time.

On the other hand, ineffective cognitive processes result in learning

difficulties that can be seen anytime during the lifetime of an individual.

SOCIAL LEARNING THEORY

The social learning theory also called observational learning, stresses the
ability of an” individual to learn by observing what happens to other people
and just by being told about something.

One can learn things by observing models, parents, teachers, peers, motion
pictures, TV artists, bosses, and others.
Many patterns of behavior are learned by watching the behaviors of others
and observing its consequences for them. In this theory, it is said that the
influence of models is the central issue.

4 processes have been found to determine the influence that a model will
have on an individual.
 These processes are:

1. Attention process

People learn from a model only when they recognize and pay attention to its
critical features.

If the learner is not attentive they would not able to learn anything. We tend
to be most influenced by attractive models, repeatedly available, which we
think is important, or we see as similar to us.

2. Retention process

A model’s influence depends on how well the individuals remember the

models’ actions after the model is no longer readily available.

3. Motor reproduction process

After a person has seen a new behavior by observing the model, the
watching must be converted to doing. It involves recall the model’s
behaviors and performing own actions and matching them with those of the
model.

This process then demonstrates that the individual can perform the modeled
activities.

3. Reinforcement process

Individuals are motivated to exhibit the modeled behavior if positive

incentives or rewards are provided. Behavior that is positively reinforced is
given more attention, learned better and performed more often.

At last, we can say that social learning theory is a function of consequences.

It also acknowledges the existence of observational learning and the
importance of perception in learning.

In this case, a person who wants to learn should identify the target behavior
and select the appropriate model and modeling medium. Then he/she should
create a favorable learning environment and observe the model.
Here the learners will try to remember and use practically the observed
behavior if there is a positive reinforcement is related to this behavior.

Methods of Shaping Behaviour using Learning Theories

Till now we discussed about the causes of behavior and factors affecting
them. But in this chapter, we are going to study how to shape a person’s
behavior. We have five ways of shaping individual behavior with respect to
their original conduct −

 Positive reinforcement
 Negative reinforcement
 Punishment
 Extinction
 Schedules of reinforcement

Let us try to understand all these unique methods one at a time.

Positive Reinforcement
It occurs when a desirable event or stimulus is given as an outcome of a
behavior and the behavior improves. A positive reinforcer is a stimulus
event for which an individual will work in order to achieve it.
For example − A company announces a rewards program in which
employees earn prizes depending on the number of items they sold.
Negative Reinforcement
It occurs when an aversive event or when a stimulus is removed or
prevented from happening and the rate of a behavior improves. A negative
reinforcer is a stimulus event for which an individual will work in order to
terminate, to escape from, to postpone its occurrence.
For example − A company has a policy that an employee can have a
Saturday off only if he completes the assigned work by Friday.
Punishment
The creation of some unpleasant conditions to remove an undesirable
behavior.
For example − A teenager comes home late and the parents take away the
privilege of using the cell phone.
Extinction
The process of eradicating any type of reinforcement causing any undesirable
behavior.
For example − A child who crawls under the table to hide and seek attention,
gradually stops doing so when the attention is withdrawn.
Schedules of Reinforcement
The schedules of reinforcement can be of five types − continuous, fixed
interval, variable interval, fixed ratio, and variable ratio.
Continuous
A schedule of reinforcement in which every occurrence of the desired
outcome is followed by the one who reinforces. For example − Each time a
child puts Rs. 1 in a candy machine and presses the buttons he receives a
candy bar.
Fixed interval
Conduct of reinforcement with intervals but sufficient enough to make the
expected behavior worth repeating. For example − Working of washing
machine.
Variable interval
Conduct of reinforcement with an average of n amount of time. For example
− Checking e-mail or popping quizzes. Going fishing—we might catch a fish
after 20 minutes
Fixed ratio
Oversight of reinforcement when rewards are spaced at uniform time
intervals. For example − Salary.
Variable ratio
Oversight of reinforcement when rewards are spaced at unpredictable time
intervals. For example − Commission in sales.
 Attitudes, Values & Job
Satisfaction

Attitude are “ Evaluative Statements or judgements concerning objects,

people or events.”
Components of Attitude

Cognitive

Affective

Behavioural

Cognitive: Opinion or Belief segment of an attitude

Affective: Emotions or feeling segment of an attitude
Behavioral: An Intention to behave in a certain manner towards someone or
something
Attitudes determine our Behaviour towards something or someone.

Cognitive Dissonance Theory

Festinger's (1957) cognitive dissonance theory suggests that we have an
inner drive to hold all our attitudes and behavior in harmony and avoid
disharmony (or dissonance). This is known as the principle of cognitive
consistency.
When there is an inconsistency between attitudes or behaviors (dissonance),
something must change to eliminate the dissonance.
Notice that dissonance theory does not state that these modes of dissonance
reduction will actually work, only that individuals who are in a state of
cognitive dissonance will take steps to reduce the extent of their dissonance.
The theory of cognitive dissonance has been widely researched in a number
of situations to develop the basic idea in more detail, and various factors that
have been identified which may be important in attitude change.

What causes cognitive dissonance?

1. Forced Compliance Behavior,

2. Decision Making,
3. Effort.

Forced Compliance Behaviour

When someone is forced to do (publicly) something they (privately) really
don't want to do, dissonance is created between their cognition (I didn't want
to do this) and their behavior (I did it).
Forced compliance occurs when an individual performs an action that is
inconsistent with his or her beliefs. The behavior can't be changed, since it
was already in the past, so dissonance will need to be reduced by re-
evaluating their attitude to what they have done. This prediction has been
tested experimentally:

Decision Making
Life is filled with decisions, and decisions (as a general rule) arouse
dissonance.
For example, suppose you had to decide whether to accept a job in an
absolutely beautiful area of the country, or turn down the job so you could
be near your friends and family. Either way, you would experience
dissonance. If you took the job you would miss your loved ones; if you
turned the job down, you would pine for the beautiful streams, mountains,
and valleys.
Both alternatives have their good points and bad points. The rub is that
making a decision cuts off the possibility that you can enjoy the advantages
of the unchosen alternative, yet it assures you that you must accept the
disadvantages of the chosen alternative.
People have several ways to reduce dissonance that is aroused by making a
decision (Festinger, 1964). One thing they can do is to change the behavior.
As noted earlier, this is often very difficult, so people frequently employ a
variety of mental maneuvers. A common way to reduce dissonance is to
increase the attractiveness of the chosen alternative and to decrease the
attractiveness of the rejected alternative. This is referred to as "spreading
apart the alternatives."
Effort
It also seems to be the case that we value most highly those goals or items
which have required considerable effort to achieve.
This is probably because dissonance would be caused if we spent a great
effort to achieve something and then evaluated it negatively. We could, of
course, spend years of effort into achieving something which turns out to be
a load of rubbish and then, in order to avoid the dissonance that produces,
try to convince ourselves that we didn't really spend years of effort, or that
the effort was really quite enjoyable, or that it wasn't really a lot of effort.
In fact, though, it seems we find it easier to persuade ourselves that what we
have achieved is worthwhile and that's what most of us do, evaluating highly
something whose achievement has cost us dear - whether other people think
it's much cop or not! This method of reducing dissonance is known as 'effort
justification.'
If we put effort into a task which we have chosen to carry out, and the task
turns out badly, we experience dissonance. To reduce this dissonance, we
are motivated to try to think that the task turned out well.
How is Cognitive Dissonance to be reduced?
Dissonance can be reduced in one of three ways: a) changing existing beliefs,
b) adding new beliefs, or c) reducing the importance of the beliefs.
Change one or more of the attitudes, behavior, beliefs, etc., to make the
relationship between the two elements a consonant one.
When one of the dissonant elements is a behavior, the individual can change
or eliminate the behavior.
However, this mode of dissonance reduction frequently presents problems
for people, as it is often difficult for people to change well-learned
behavioral responses (e.g., giving up smoking).
Acquire new information that outweighs the dissonant beliefs.
For example, thinking smoking causes lung cancer will cause dissonance if a
person smokes.
However, new information such as “research has not proved definitely that
smoking causes lung cancer” may reduce the dissonance.
Reduce the importance of the cognitions (i.e., beliefs, attitudes).
A person could convince themself that it is better to "live for today" than to
"save for tomorrow."

Critical Evaluation
There has been a great deal of research into cognitive dissonance, providing
some interesting and sometimes unexpected findings. It is a theory with very
broad applications, showing that we aim for consistency between attitudes
and behaviors, and may not use very rational methods to achieve it. It has
the advantage of being testable by scientific means (i.e., experiments).
However, there is a problem from a scientific point of view, because we
cannot physically observe cognitive dissonance, and therefore we cannot
objectively measure it (re: behaviorism). Consequently, the term cognitive
dissonance is somewhat subjective.
There is also some ambiguity (i.e., vagueness) about the term 'dissonance'
itself. Is it a perception (as 'cognitive' suggests), or a feeling, or a feeling
about
a perception? Aronson's Revision of the idea of dissonance as an
inconsistency between a person's self-concept and a cognition about their
behavior makes it seem likely that dissonance is really nothing more than
guilt.
There are also individual differences in whether or not people act as this
theory predicts. Highly anxious people are more likely to do so. Many
people seem able to cope with considerable dissonance and not experience
the tensions the theory predicts.
Finally, many of the studies supporting the theory of cognitive dissonance
have low ecological validity. For example, turning pegs (as in Festinger's
experiment) is an artificial task that doesn’t happen in everyday life.
Also, the majority of experiments used students as participants, which raise
issues of a biased sample. Could we generalize the results from such
experiments?
Values
Values represent basic convictions that a “specific mode of conduct or end
of state of existence is personally or socially preferable to an opposite or
converse mode of conduct or end-state of existence.”
Values contain a judgemental element because they carry an individual’s
ideas about what is right, good, or desirable. They have both content and
intensity attributes. The content attribute says a mode of conduct or end-state
of existence is important. The intensity attribute specifies how important it
is.
Values tend to be relatively stable and enduring.
Value System is a hierarchy based on ranking of an individual’s values in
terms of their intensity.
Personality-Job Fit Theory
A Theory that identifies 6 Personality Types and proposes that the fit
between personality types and occupational environment determines
satisfaction and turnover.
Person-Organisation Fit
A Theory that people are attracted to and selected by organisations that match
their Values and leave when there is no compatibility.
Impact of Job Satisfaction on Employee Performance
- Job Performance – More Productive in their Roles – People who are
more satisfied with their jobs are more likely to be more effective in
their performance.
- Organisational Citizenship Behaviour (OCB) – People who are
satisfied are more likely to demonstrate citizenship behaviour,
including talking positively about the organization to the others at
large.
- Customer Satisfaction – Highly satisfied employees have
automatically had an impact on the Customer Satisfaction as per many
research.
- Life Satisfaction – Job Satisfaction is positively correlated with life
satisfaction.

Impact of Job Dissatisfaction on Employees

- Exit – The Exit Behaviour directs behaviour towards leaving the
organization, including looking for a new position or resigning.
- Voice – The Voice Response includes actively and constructively
attempting to improve conditions, including suggesting improvement,
discussing problems with supervisors, and undertaking union activity.
- Loyalty – The Loyalty Response means passively but optimistically
waiting for conditions to improve, including speaking up for the
organization in the face of external criticism and trusting the
organization and its management ‘to do the right thing.’
- Neglect – The Neglect Response passively allows conditions to
worsen and includes chronic absenteeism or lateness, reduced effort,
and an increased error rate.
 Perception

Factors Influencing Perception

Perception is a process which individual organize and interpret their sensory
impressions to give meaning to their environment.
Perceiver:
When you look at a target, your interpretation of what you see is influenced
by your personal characteristics-attitudes, personality, motives, interests,
past experiences, and expectations. In some ways, we hear what we ant to
hear and we see what we want to see – not because it’s the truth but because
it confirms to our thinking.
For eg: Research indicates that supervisors perceived employees who started
work earlier in the day as more conscientious and therefore as higher
performers; however supervisors who were night owls themselves were less
likely to make their erroneous assumption.
Target:
The Characteristics of the target also affect what we perceive. Because we
don’t look at targets in isolation, the relationship of a target to its
background influences perception, as does our tendency to group close
things and similar things together.
For eg: We can also perceive women, men, whites, African Americans,
Asians or members of any Group that has clearly distinguishable
characteristics as alike in other, often unrelated ways. This can turn out to be
positive as well as negative in some different contexts.
Context:
Context matters too. The Time at which we see an object or event can
influence our attention, as can location, light, heat or situational factors. For
Eg: We may not notice someone dressed up for a format event that we
attended on a Saturday night, however, we will definitely notice the same on
a Monday morning, if normally, students are not dressed formally in a
college premise.

Attribution Theory
An attempt to explain the ways we judge people differently, depending on
the meaning we attribute to a behavior, such as determining whether an
individuals behavior is internally or externally caused.
The Theory suggests that when we observe an individual’s behaviour, we
attempt to determine whether the behaviour was internally or externally
caused. That determination depends largely on three factors as below:
1) Distinctiveness
2) Consensus
3) Consistency
Internally caused behaviours are those an observer believes to be under the
personal behavioural control of another individual. Thus, internally caused
behaviors are said to be within control of an individual.
Externally caused behaviours are those an observer believes that the
situation forced the person to behave in a particular manner. Thus, externally
caused behaviours are said to be outside the direct control of an individual.
Distinctiveness refers to whether an individual displays different behaviors
in different situations. Incase, the behaviour is distinct every time, probably,
it is internal, however, incase it is not, the same is due to external factors.
Consensus means everyone who faces a similar situation would have reacted
in a similar manner. Incase everyone reacts the same manner, it is said to
externally driven if not, then its internally driven.
Consistency means there is a pattern of consistency in the behavior. Incase
the consistency is high, it is attributed to internal factors, if not, the same is
attributed to external factors.
Fundamental Attribution Error:
The Tendency to underestimate the influence of external factors and
overestimate the influence of internal factors when making judgements
about the behavior of others.

Self serving Bias:

The Tendency for individuals to attribute their own successes to internal
factors and put the blame for failures on external factors.
Linkage between Perception and Individual Decision Making
Decisions – Choices made between two or more alternatives
Problem – A Discrepancy between the current state of affairs and some
desired state.
Individuals make decisions, choosing from among two more alternatives.
Ideally, decision making would be an objective process, but the way
individuals make decisions and the quality of their choices are largely
influenced by their perceptions. Individual decisions Making is an important
factor of behaviour at all levels of an organization.
Decision making occurs as a reaction to a problem. That is, a discrepancy
exists between the current state of affairs and some desired state, requiring
us to consider the alternative course of action. If your car breaks down and
you rely on to get it work, you have a problem that requires a decision on
your part. Unfortunately, most problems don’t come neatly labelled. One
person’s problem is another person’s satisfactory state of affairs. One
manager may view her divisision’s 2 percent decline in quarterly sales a
serious problem requiring immediate action on her part. Her counterpart in
another division, who also had a 2 percent decline decrease, might consider
it quite acceptable. So awareness that a problem exists and that a decision
might or might not be needed is a perceptual issue.
Every decision requires us to interpret and evaluate information. We
typically receive data from multiple sources that we need to screen, process
and interpret. Again, our perceptual process will affect the outcome.

Rational Decision-Making Model

Steps:
1) Define the problem.
2) Identify the decision criteria.
3) Allocate weights to the criteria.
4) Develop the alternatives.
5) Evaluate the alternatives.
6) Select the Best alternative.
Bounded Rationality
A process of making decisions by constructing simplified models that
extract the essential features from problems without capturing all their
complexity.
Once, we have identified a problem, we begin to search for criteria and
alternatives. The criteria are unlikely to be exhaustive. We identify
alternatives that are highly visible and that usually represent familiar criteria
and tried and tested solutions. Next, we begin reviewing the alternatives,
focusing on choices that differ little from the current states until we identify
the one that is ‘good enough’ – that meets an acceptable level of
performance. Thus, ends our search. Therefore, the solution represents a
satisfying choice
– the first acceptable one we encounter – rather than an optimal one.

Influences on Decision Making: Individual Differences and

Organizational Constraints

Individual Differences:
 Personality – Specific facets of conscientiousness – particularly
achievement-striving and dutifulness -may affect escalation of
commitment.
 Gender – Who makes better decisions, men or women? It depends on
the situation. When the situation isn’t stressful, decision making by
men and women is about equal in quality. In stressful situations, it
appears that men become more egocentric and make more risky
decisions, while women become more empathetic and their decision
making improves.
 Mental Ability – We know people with higher levels of mental ability
can process information more quickly, solve problems more
accurately, and learn faster, so you might expect them to be less
susceptible to common decision errors. Once warned about decision
making errors, more intelligent people learn to avoid them more
quickly.
  Cultural Differences – Indians do necessarily make the decisions the same
way as Australians do. Therefore we need to recognize the differences of the
cultural background.

Organizational Differences:
 Performance Evaluation Systems – Managers are influenced by the criteria
on which they are evaluated. If a decision maker believes the manufacturing
plants under his responsibility are operating best when he hears nothing
negative, the plant managers will spend a good part of their time ensuring
that negative information does not reach him.
 Reward Systems – The Organisation’s reward systems influence decision
makers by suggesting which choices have better payoffs.
 Formal Regulations – All but the smallest organisations create rule and
policies to program decisions and get individuals to act in an intended
manner. In doing so, they limit decision choices.
 System-Imposed Time Constraints – Almost all important decisions come
with explicit deadlines.
 Historical Precedents – Decisions aren’t made in a vaccum; they have
context. Individual decisions are points in a stream of choices; those made in
the past are like ghosts that haunt and constraint current choices. It’s common
knowledge that the largest determinant of the size of any given year’s budget
is last year’s budget. Choices made today are largely a result of choices made
over the years.

1
 SESSION 10: Perception and Decision making
Attribution
Attribution theory is an attempt to explain the ways we judge people differently, depending on the
meaning we attribute to a behavior such as determining whether an individual’s behavior is internally or
externally caused. It tries to explain the ways we judge others behavior and come to conclusions.
Attribution theory suggests that when we observe an individual’s behavior we attempt to determine
whether it was internally or externally caused.
Internally caused behaviors are those an observer believes to be under the personal behavioral control of
another individual. Externally caused behavior is what we imagine the situation forced the individual to
do. If an employee is yelling at a woman on the streets, we attribute it as internally or externally caused
behavior. If it is internal, we say, this employee is an angry man. If it is external, we say, this woman
irritated this employee.
That determination, whether it is internally or externally caused, depends largely on three factors
 Distinctiveness
 Consensus
 Consistency

Distinctiveness: it refers to whether an individual displays different behaviors in different situations.

Example: Is the employee who yelled at a woman on the streets, yells at people generally on different
occasions such as during group meetings or at workplace?
If it is yes, we may conclude that the behavior is internally caused.
Consensus: if everyone who faces similar situation responds in the same way, we can say the behavior
shows consensus.
Example: Every person who encounters this woman is getting irritated? If it is yes, we may say, this
employee’s yelling behavior is externally caused.
Consistency: it shows the consistency in the person’s actions.
Example: He regularly shouts whenever he sees this woman

2
 Mr.Rex performed a difficult task of launching a new product during COVID and his actions were well
appreciated in the organization (internal attribution).
Distinctiveness: Mr.Rex does a good job with any work he gets, not just this product launch (Low)
Consensus: Lot of people tried but Mr.Rex was the only successful person (low)
Consistency: Mr.Rex is generally good with product launches (high)

However, attribution is not exempt from making errors. Errors and biases distort attributions. They are;
Fundamental attribution error: the tendency to underestimate the influence of external factors and
overestimate the influence of internal factors when making judgments about the behavior of others. This
can explain why a sales manager attributes poor performance of her sales agents to laziness rather than
to a competitor’s innovative product line.
Self-serving bias: the tendency for individuals to attribute their own successes to internal factors and
put the blame for failures on external factors. This can explain why students say, question paper is
difficult for low grades and attribution of hard work to good grades.

Perception and Decision making: The link

Ideally decision making would be an objective process, but the way individuals make decisions and the
quality of their choices are largely influenced by their perceptions. Decision making comes as a reaction
to the problem. Problem is a state of discrepancy that exists between the current state of affairs and
some desired state, requiring us to consider alternative courses of action.
If your phone is damaged, you need to choose either a new phone or you need to get it repaired. Then
you have a problem of making a right choice for these options and which we call as the process of
decision making.
I. Common biases and errors in decision making

Decision makers tries to be rational in bounded sense, however, they tend to make lot of errors in their
judgment while making decisions. Some of them are;
1. Overconfidence bias: we tend to be overconfident about our abilities and the abilities of others;
also, we are usually not aware of this bias. When you are too confident, you may miss a few blind
spots as well. Overconfidence bias is a tendency to hold a false and misleading assessment of our
skills, intellect, or talent. In short, it's an egotistical belief that we're better than we actually are.
It can be a dangerous bias and is very prolific in behavioral finance when we study the psychology
of investors. This danger also includes the subsequent effects on the markets.

Example
The Challenger space shuttle ended in disaster on a fateful day in 1986 killing all seven crew members.
The disaster occurred due to the malfunction of a part called the O-ring. The manufacturer of O-ring had
recognized the risk of malfunction, but the group believed in the success of the mission. In a similar
case, space shuttle Columbia broke into smithereens killing all seven crew members when re-entering
the atmosphere. During the launch, NASA engineers noticed a piece of insulation foam breaking off the
tank and hitting the wing.

2. Anchoring bias

It is a tendency to fixate on initial information and fail to adequately adjust for subsequent information.
3
The mind gives a disproportionate amount of emphasis to the first information it receives in
employment interviews. Hence, advertisers, politicians and managers use anchors to persuade people.
Whenever you negotiate, you use anchoring too. Think about salary negotiation, whatever the package
you pitch in the beginning will have the biggest impact.

Example
Psychologist Robert Levine gave an example once, of how a cable provider leveraged anchoring to
influence their customers. The goal of the company was to raise prices on its monthly subscription
without losing subscribers whilst also making it appear that they were better off.
Initially, there was a rumor going around that the new monthly rates were going up by $10. But later, in
the company’s website, they denounced the rumor and added that their subscribers should relax
as ‘basic cable rates are only increasing by $2 a month!’ 
As a result, their subscribers who were already anchored on $10, did not view the $2 increment nearly
as catastrophic!

Some of them rationalized:

“A $2 increase isn’t so bad, let’s not forget it was supposed to go up by 10!”

3. Confirmation bias

It is the tendency to seek out information that reaffirms past choices and to discount information that
contradicts past judgments. It represents a case selective perception. We seek out and accept
information that reaffirms our past choices and current views and we discount information that
contradicts or challenges them. We even tend to seek sources most likely to tell us what we want to hear
and we give too much weight to supporting information and too little to contradictory.

Example

The confirmation bias affects the way people view political information. For example, people
generally prefer to spend more time looking at information which supports their political stance, while
neglecting information that contradicts it.

4. Availability bias

It is our tendency to base judgments on readily available information. A combination of readily

available information and our previous direct experience with similar information has a particularly
strong impact on our decision making. Also, events that evoke emotions are particularly vivid or more
recent tend to be more available in our memory. This can lead us to overestimate the chances of
unlikely events such as being in an airplane crash, suffering from complications from medical treatment
or getting fired. Availability bias can also explain why managers give more weight in performance
appraisals to recent employee behaviors than to behaviors of 6-9 months earlier.

Example

More people are afraid of flying than they are driving a car. But if flying a plane were as dangerous as
driving, things would have gone to a different level. It is just that media gives more attention than usual
traffic accident and it evokes fear among people.
4
5. Escalation of Commitment

It is an increased commitment to a previous decision despite negative information. It refers to our

staying with a decision even if there is clear evidence that it is wrong. Evidence indicates that it occurs
when individuals view themselves as responsible for the outcome. The fear of personal failure even
biases the way we search for and evaluate information so that we choose only information that supports
our dedication. It doesn’t matter whether we chose the failing course of action or it was assigned to us-
we feel responsible and escalate in either case. Also, the sharing of decision authority-such as when
others review the choice we made-can lead to higher escalation. The desire to consider yourself as a
good person can lead you to experience escalation toward a prosocial goal.

Example

Consider the Deep Tunnel project in Chicago, a plan to make a major addition to the city’s sewer system
that will eventually improve its capacity to handle major storms. Although the project has absorbed
millions of dollars, it won’t deliver any benefits until the entire new system is completed. Unfortunately, as
each year passes, the expected date of completion recedes into the future while the bill for work to be
finished grows exponentially. Of course, no one would have advocated the project if the true costs had been
known at the outset. Yet, once begun, few have argued to kill the project (HBR, 1987).

6. Randomness Error

The tendency of individuals to believe that they can predict the outcome of random events is randomness
error. Most of us like to think we have some control over our world. Decision making suffers when we try
to create meaning in random events, particularly when we turn imaginary patterns into superstitions.

Example

This can be completely unnatural such as “I never make important decisions on Friday the 13 th” or they can
evolve from a reinforced past pattern of behavior like “Tiger Woods often wears a red shirt during a gold
tournament’s final round because he won many junior tournaments wearing red shirts.”

7. Risk aversion

The tendency to prefer a sure thing over a risky outcome is risky aversion.

Example
A person is given the choice between two scenarios, one with a guaranteed payoff and one without. In
the guaranteed scenario, the person receives $50. In the uncertain scenario, a coin is flipped to decide
whether the person receives $100 or nothing. The expected payoff for both scenarios is $50, meaning
that an individual who was insensitive to risk would not care whether they took the guaranteed payment
or the gamble. However, individuals may have different risk attitudes. A person is:
 risk-averse if he or she would accept a payoff of less than $50 (for example, $40), with no
uncertainty, rather than taking the gamble and possibly receiving nothing.
 risk neutral if he is indifferent between the bet and a certain $50 payment.

5
  risk-seeking (or risk-loving) if the guaranteed payment must be more than $50 (for example,
$60) to induce him to take the guaranteed option, rather than taking the gamble and possibly
winning $100.
The average payoff of the gamble, known as its expected value, is $50. The dollar amount that the
individual would accept instead of the bet is called the certainty equivalent, and the difference between
the certainty equivalent and the expected value is called the risk premium.

8. Hindsight Bias
It is the tendency to believe falsely, after the outcome is known, that we would have accurately
predicted it. When we have feedback on the outcome, we seem good at concluding it was obvious.

Example
The original home video rental industry, renting movies at brick-and-mortar stores, collapsed as online
distribution outlets ate away at the market. Some have suggested that if rental companies like
Blockbuster had leveraged their brand to offer online streaming and Kisoks, they could have avoided
failure. While that seems obvious now in hindsight, tempting us to think we would have predicted it,
many experts failed to predict industry trends in advance. Though the criticisms of decision makers may
have merit, as Malcolm Gladwell, author of Blink and The Tipping Point, writes, “what is clear in
hindsight is rarely clear before the fact.”
II. Influences on decision making: Individual differences and organizational constraints

Decision making in practice is influenced by bounded rationality, common biases and errors and the use
of intuition. Individual differences such as personality also create deviations from the rational model.
Personality dimensions such as conscientiousness and self-esteem plays role in decision making.
Conscientiousness affects escalation of commitment as these people are driven by the fear of failure.
Also they tend to make lot of hindsight bias as they have compulsive need to justify their actions too.
People with high self-esteem tend to make lot of attribution errors such as self-serving bias.
When the situation is stressful, it is found that men takes egocentric and risky decisions while women
become more empathetic and they make better decisions. Women spend more time than men analyzing
the past, present and future. They are more likely to overanalyze problems before deciding and to rehash
a decision once made.
People with higher mental ability may be fast in making decisions but they are susceptible to make
errors due to overconfidence bias and anchoring. Even cultural differences have an impact in decision
making. Cultures differ in time orientation, the value they place on rationality, their belief in the ability
of people to solve problems, and their preferences for collective decision making. Example, mangers in
Egypt make decisions slower and more deliberate process they follow than their U.S. counterparts.
When it comes to organizational constraints that affect decision making, performance evaluation
systems, reward systems, formal regulations, system-imposed time constraints and historical precedents
plays a huge role. Organizations can constrain decision makers, creating deviations from the rational
model. Ramesh, a shift manager at a Domino’s restaurant in Ahmedabad, describes constraints he faces
on the job. “I’ve got rules and regulations covering almost every decision I make-from how to make a
pizza to how often the oven needs to be cleaned. My job doesn’t come with much freedom of choice.”
Historical or past decisions and the impact it created can influence present decisions.
III. Ethics in decision making

6
Ethical considerations should be important to all organizational decision making. There are three ethical
criteria which are significant in decision making. They are; utilitarianism, protection of human rights
and deonance.
Utilitarianism: this proposes making decisions solely based on their outcomes, ideally to provide the
greatest good for all. This view dominates business decision making and is consistent with goals such as
efficiency, productivity and high profits.
Another ethical criterion is to make decisions consistent with fundamental liberties and privileges, as set
forth in documents like the Constitution of India. It basically focuses on right to privacy, free speech
and due process. This criterion protects whistle-blowers when they reveal organizations unethical
practices to the press or government agencies using their right to free speech. This criterion protects
whistle blowers when they reveal an organization’s unethical practices to the press or government
agencies, using their right to free speech.
A third criterion is to impose and enforce rules fairly and impartially to ensure justice or an equitable
distribution of benefits and costs. This criterion is often approached from a deonance standpoint.
Deonance is a perspective in which ethical decisions are made because you “ought to” in order to be
consistent with moral norms, principles, standards, rules and laws. Some employees might feel as if
they should not steal from their workplace because it is ethically wrong by moral norms.
Decision makers, particularly in for-profit organizations, feel comfortable with utilitarianism. The best
interests of the organization and its stockholders can justify a lot of questionable actions, such as large
layoffs. This is where corporate social responsibility (CSR) comes into picture to bring positive change.
Researchers are turning increasingly to behavioral ethics- an area of study that analyzes how people behave
when confronted with ethical dilemma.
******************************************************************************
SESSION 11-12: Personality

Personality is the sum of ways in which an individual reacts to and interacts with others. This explains why
some are quiet and passive while others are loud and aggressive. We most often describe personality in
terms of the measurable traits a person exhibits.
Personality assessments have been increasingly used in diverse organizational settings. In India, several
companies like Cognizant, Ford motors, TVS Sundaram and Deloitte use psychometric assessments for
recruitment and competency mapping. The most common means of measuring personality is self-report
surveys in which an individual evaluate themselves on a series of factors such as “I worry a lot about
the future.”
However, generally, when people know their personality scores are going to be used for hiring decisions,
they rate themselves as about half a standard deviation more conscientious and emotionally stable than
if they are taking the test to learn more about themselves. Another problem is accuracy, a candidate who
is in bad mood when taking the survey may have inaccurate scores. In addition, cultural factors also
have influence while rating their personality.In that way, it will seem observer rated personality provide
anindependent assessment. However, research says, there is a strong correlation between observer rating
survey and self- rating. The research also states that observer rated personality predicts job performance
better than self-reported personality.

Determinants of Personality

An early debate centered on whether an individual’s personality is the result of heredity or environment.
Personality is basically the result of both; however, heredity has a slightly more significant influence
than environment as per researches.
7
Heredity refer to factors determined at conception; one’s biological, physiological and inherent
psychological makeup. Examples are physical stature, facial features, temperament, muscle composition
and reflexes, energy level and biological rhythms are completely or substantially influenced by
parentage. Ultimate explanation is the molecular structure of genes which are located in chromosomes.

Review of 134 studies found that there is some truth to this approach, with about 40 percent of personality
being attributable to heredity and the other 60 percent attributable to the environment.

What are personality traits?

When someone frequently exhibits characteristics such as shy, aggression, submissiveness, laziness and so
on and they are relatively enduring overtime and across situations, we call them personality traits.

Personality frameworks

Important theoretical frameworks and assessment tools help us categorize and study the dimensions of
personality.
The most widely used and best known personality frameworks are the Myers-Briggs Type Indicator
(MBTI) and the Big Five Personality Model. Both gives complete frameworks of the personality. Dark
triad and positive personality attributes are examples of frameworks that give explanation to a part of
the complete personality.

MBTI

It is the most widely used personality framework. It is a 100 question personality assessment instrument
that asks people how they feel or act in situations. Respondents are classified as extraverted
(extroverted) and introverted, sensing and intuitive, thinking and feeling and perceiving and judging.
Extraverted (E) VS introverted (I): Extraverted individuals are outgoing, sociable and assertive. Introverts
are quiet and shy.
Sensing (S) VS Intuitive (N): Sensing types are practical and prefer routine and order and they focus on
details. Intuitives rely on unconscious processes and look at the big picture.
Thinking (T) VS Feeling (F): Thinking types use reason and logic to handle problems. Feeling types rely on
their personal values and emotions.
Judging (J) VS Perceiving (P): Judging types want control and prefer order and structure. Perceiving types
are flexible and spontaneous.

The MBTI describes personality types by identifying one trait from each of the four parts. For example,
ISTJ or ENFP are MBTI personality types. Thus forms 16 different personality types using MBTI scale.

The bigfive personality model

The MBTI lack supporting evidence but big five personality has large body of evidence to prove it is right.
Big five model proposes five basic dimensions underlie all others and encompass most of the significant
variation in human personality. Test scores of these traits do a very good job of predicting how people
behave in a variety of real-life situations and remain relatively stable for an individual overtime with
some daily variations. Big five dimensions are;
8
Openness to experience: it addresses the range of interests and fascination with novelty. Open people are
creative, curious and artistically sensitive. Those at low end of the category are conventional and find
comfort in the familiar.
Open people tend to be most creative and innovative compared with other traits. Open people are more
likely to be effective leaders and more comfortable with ambiguity-they cope better with organizational
change and are more adaptable. While openness is not related to initial performance on a job,
individuals higher in openness are less susceptible to a decline in performance over a longer time
period. Open people also experience less work-family conflict.

Conscientiousness: it is a measure of personal consistency and reliability. A highly conscientious person is

responsible, organized, dependable and persistent. Those who score low on this dimension are easily
distracted, disorganized and unreliable.

They develop high level of job knowledge and show exceptional job performance. They are likely to
engage in organizational citizenship behavior and less likely to engage in counter productive work
behavior (CWB). However, high scores of conscientiousness can result in perfectionism resulting in
diminished happiness and performance. They might become less creative and so focused in finishing
routine work.

Extraversion: this captures our relational approach toward the social world. Extraverts tend to be
gregarious, assertive and sociable. They experience more positive emotions than do introvert and they
are more lore free to express their feelings. On the other hand, introverts (low extraverts) tend to be
more thoughtful, reserved, timid and quiet.

They perform better in jobs with significant interpersonal interaction. They are socially dominant, take
charge people who are usually more assertive than others. It is a strong predictor of leadership
emergence and behavior in groups. They tend to have high job satisfaction and burnout. Some negatives
are they appear to be self-aggrandizing, egoistic, or too dominating and they may not be suitable for
jobs with limited social interaction.

Agreeableness: It refers to an individual’s propensity to defer to others. Agreeable people are cooperative,
warm and trusting. Agreeable people are very slightly happier than non-agreeable people. When people
choose organizational group members, agreeable people are usually their first choice.

They are better liked than disagreeable people. They can perform well interpersonal jobs such as customer
service. They experience less work-family conflict and less susceptible to turnover. They also contribute
to organizational performance by engaging in Organizational citizenship behavior (OCB). However,
this dimension is associated with lower levels of career success possibly due to they consider
themselves as less marketable and are less willing to assert themselves.

Neuroticism: this taps a person’s ability to withstand stress. This dimension is otherwise called as
emotional stability. People with emotional stability tend to be calm, self-confident, and secure. High
scorers are more likely to be positive and optimistic and to experience fewer negative emotions; they are
generally happier than low scores. Emotional stability is sometimes discussed as its converse,
neuroticism. Low scorers are hyper vigilant and vulnerable to the physical and psychological effects of
stress. Those with high neuroticism tend to be nervous, anxious, depressed and insecure.

It is most strongly related to life satisfaction, job satisfaction and reduced burnout and intentions to quit.
9
 People with high emotional stability can adapt to unexpected or changing demands in the workplace. At
the other end of the spectrum, neurotic individuals who may be unable to cope with these demands may
experience burnout. These people also tend to experience work-family conflict, which can affect work
outcomes. Given these negative, straining effects, neurotic employees are more likely to engage in
CWBs, less likely to engage in OCBs and less likely to be motivated at work.

Big fives are OCEAN highlighted in rainbow colors above.

Positive personality attributes relevant to OB

Core Self-evaluations (CSEs)

Bottom line conclusions individuals have about their capabilities, competence and worth as a person.
People who have high positive CSEs like themselves and see themselves as effective and in control of
their environment. Those with negative CSEs tend to dislike themselves, question their capabilities and
view themselves as powerless over their environment. People who are high in CSEs find out
challenging and complex jobs. They perform better than others because they set ambitious goals, more
committed to their goals, and persist longer in attempting to reach them. They provide better customer
service, more popular co-workers and may have careers that begin on a better footing and ascend more
rapidly overtime. They perform especially well if they feel their work provides meaning and is helpful
to others.
If you want to measure your CSE, check out the image file.

10
Self-Monitoring
It is a personality trait that measures an individual’s ability to adjust his or her behavior to external,
situational factors. High self-monitors show considerable adaptability to adjusting their behavior to
external situational factors. They are highly sensitive to external cues and can behave differently in
varying situations, sometimes presenting striking contradictions between their public response and their
private selves. Low self-monitors cannot disguise themselves and they show their true dispositions and
attitudes in every situation; hence, there is high behavioral consistency between who they are and what
they do.
High self-monitors pay close attention to the behavior of others and are more capable of conforming than
are low self-monitors. High scorers show less commitment to workplace but obtain high performance
ratings and are more likely to emerge as leaders. They get more promotions and get to occupy central
positions in organizations.

Dark triad

11
Dark triad is the constellation of negative personality traits consisting of Machiavellianism, narcissism and
psychopathy. In big five, except neuroticism, we find all the four as desirable. Researchers have found
that three other socially undesirable traits which we will have varying degrees and also relevant to
organizational behavior. Because of their negative nature, researchers have labeled as dark triad.
These negative personalities may not hinder one’s daily life. This will be particularly manifested under
stressful situations and they become unable to moderate any inappropriate responses.

 Machiavellianism: The degree to which an individual is pragmatic, maintains emotional distance

and believes that ends can justify means is Machiavellianism. This characteristic is named after
Niccolo Machiavelli who wrote in the sixteenth century about how to gain and use power. An
individual high in Machiavellianism is pragmatic, maintains emotional distance and believes
ends can justify means. High Machs manipulate more, win more and are persuaded less by
others but persuade others more than do low Machs. They are more likely to act aggressively
and engage in CWBs as well. It doesn’t predict job performance in long term though short term
goals are achieved well.
 Narcissism: It is the tendency to be arrogant, have a grandiose sense of self-importance, require
excessive admiration and possess a sense of entitlement. They like to be center of attention.
They often look at mirror, have extravagant dreams about their future and consider themselves
as someone who got multiple talents. They often have fantasies of grand success, tendency to
exploit situations and people, a sense of entitlement and a lack of empathy. They are hyper
sensitive and fragile people. They may also experience more anger. It is one of the predictor of
CWBs in firms from individualistic cultures. Positive side of it is, some of the narcissists are
charismatic in nature. They are chosen for leadership positions and medium ratings of narcissism
are related to leadership effectiveness.
 Psychopathy: it is the tendency for a lack of concern for others and a lack of guilt or remorse
when actions cause harm. Measures of psychopathy attempt to assess the motivation measures of
psychopathy attempt to assess the motivation to comply with social norms; impulsivity;
willingness to use deceit to obtain desired ends; and disregard, that is, lack of empathic concern
for others.

To test your Machiavellianism, narcissism, psychopathy check out the links

https://openpsychometrics.org/tests/NPI/
https://openpsychometrics.org/tests/MACH-IV/
https://openpsychometrics.org/tests/LSRP.php
https://openpsychometrics.org/tests/SMS/
Nomothetic and Idiographic: Two Approaches to Personality
The Nomothetic and Idiographic approaches tackle Personality from opposing angles.

The idiographic approach to personality suggests that we each possess a unique psychological structure.
Certain traits, or combinations of traits, might be held by just one person, and therefore it is impossible
to compare people like for like. This approach nestles within the study of individual differences and
therefore relies on Case Study research. However, solely identifying and describing a personality
characteristic is not the same as explaining it, which can be a challenge for idiosyncratic researchers due
to the small sample sizes (of one ‘participant’).

12
The nomothetic approach looks for similarities between individuals. What is it that makes us (as a
species) human. Nomothetic researchers study traits, which are assumed to have the same psychological
effects for everyone; individual differences are accounted for as variations along a commonly shared
scale for each measurable trait or quality. Nomothetic researchers all share an assumption that
individuals share a series of traits in common, and therefore they aim to discover the basis of these
common traits, for example considering biological and environmental determinants and contributory
factors affecting personality.

SESSION 12: Personality and Emotional Labor

Emotional labor is basically an employee’s expression of organizationally desired emotions during
interpersonal transactions at work. It is a key component of effective job performance. We expect flight
attendants to be cheerful is an example of desired emotion in the context of organization.
The way we experience emotions is obviously not always the same as the way you show it. To analyze
emotional labor, we divide emotions into felt and displayed emotions. Felt emotions are our actual
emotions. In contrast, displayed emotions are those the organization requires workers to show and
considers appropriate in a given job. They are not innate; they are learned and they may or may not
coincide with felt emotions. Emotional labor is carried out in two ways;
Surface acting: hiding feelings and foregoing emotional expressions in response to display rules
Deep acting: trying to modify one’s true feelings based on display rules.
The employees feel a disparity when engaging in emotional labor and we call it emotional dissonance.
This is inconsistencies between the emotions people feel and the emotions they project. As a result,
bottled up feelings of frustration, anger and the resentment can lead to emotional exhaustion.
******************************************************************************
SESSION 13: Emotional intelligence

Emotional Intelligence is a person’s ability (1) to perceive emotions in the self and others (2) understand
the meaning of these emotions and (3) regulate his or her own emotions accordingly. Simply put the
ability to detect and to manage emotional cues and information. Unlike IQ, EQ (Emotional quotient)
can be greatly enhanced through practice. Emotional intelligence has become very popular topic ever
since Daniel Goleman published his book “Emotional Intelligence” in 1995. However the concept was
first put forward by Salovey and Mayer in 1990.
Characteristics of emotionally intelligent people
They are able to recognize and diagnose their own emotions. Try to identify the emotions you feel as
of now. Can you label it? Emotionally intelligent people are able to get in touch with and accurately
diagnose their own internal feelings.
Emotionally intelligent people are also able to regulate and control their own emotions. They are less
likely to blow up and lose control, less likely to experience debilitating depression and anxiety and more
likely to manage their own emotional states than those with less emotional intelligence. Think of how
you behave in a sporting event when someone yells at you or when someone appreciates you!!
Emotionally intelligent people remain in control of their emotions whereas less emotionally intelligent
people lose control. This ability does not mean being bland and indifferent. Instead, it just means that a
person can control his or her emotions so that they are not unrestrained.
Emotionally intelligent people are also able to accurately diagnose and empathize with the feelings
of others. They are sensitive to what others are experiencing and they can share in those feelings.
Empathy refers to the ability to understand and connect with others’ feelings. It doesn’t mean
sympathizing or adopting the same feelings and it is not based on a memory of having experienced the
same emotions. If someone has experienced a tragedy or loss, emotionally intelligent people can
13
empathize, share in, and understand those feelings even if they have never experienced something
similar.
Emotionally intelligent people also respond appropriately to the emotions of others. Their responses
match the emotions of other people feel, and they support and encourage emotional expressions. They
endorse the emotional expression rather than censoring or suppressing the emotions.
Why Emotional intelligence? Is it significant?
Several studies suggest that EI plays an important role in job performance. Some reviews suggest that
EI is related to groupwork effectiveness as well as deviant and citizenship behavior. South Korean
managers with high EI tend to have better sales figures than those with low EI because they were able to
create more cohesive stores and improved sales directed behavior. One study claimed that emotional
intelligence differentiated successful leaders from unsuccessful leaders.
One reason that EI is so important is that generally the scores of EI is gradually deteriorating generation
by generation, unlike the case of IQ. Emotional intelligence has also been found to be an important
predictor of managerial success. In a study of managers on three continents, 74 percent of successful
managers had emotional managers as their most salient characteristics whereas this was the case in only
24 percent of failure cases. A study at PepsiCo found that company units headed by managers with
well-developed EI skills outperformed yearly revenue targets by about the same amount (Goleman,
Boyatzi and Mckee, 2002).
How do you measure EI?
The number of instruments available to assess emotional intelligence is voluminous (more than 100)
although only three or four have been scientifically validated and used in any systematic investigations.
In particular, only Bar-On’s EQ-1measure (Bar-On,1997) is a self-report instrument that defines EI as
an array of noncognitie skills; Salovey’s Multifactor EI scale (Salovey and Mayer, 1990)- a behavioral
assessment that defines EI as “a form of social intelligence that involves the ability to monitor one’s ow
and others’ feelings and emotions, to discriminate among them, and to use this information to guide
ones’ thinking and action.” Goleman and Boyatzis’s Emotional competence inventory (Boyatzis et al.,
2000)-a 360 degree assessment that defines EI as “the composite set of capabilities that enable a person
to manage himself or herself and others,” These are the major scientifically validated EI instruments.
Some of the freely downloadable scales are in the link https://positivepsychology.com/emotional-
intelligence-tests/
Emotion regulation
If you ever have tried to cheer yourself up when you are feeling down or calm yourself when you are
feeling angry? Then you have engaged in emotion regulation. The emotion regulation is to identify and
modify the emotions you feel. Not all are good at emotion regulation. Individuals who are high on
neuroticism (emotional stability from Big five personality) have more trouble doing so. Similarly,
people who are low on self-esteem have issues with emotion regulation.
The workplace environment influences individuals’ tendency to regulate their emotions such as diverse
work context makes people regulate their emotions than homogenous workplace. While regulating
emotions may look beneficial, research suggests there is a downside to trying to change the way you
feel. Changing your emotions takes effort and this effort can be exhausting.
Techniques to do emotional regulation
1. Emotional labor
2. Emotional suppression: suppression initial emotional responses to situations (used in crisis
situations)
3. Cognitive reappraisal: reframing our outlook on an emotional situation (when there is no control
on sources of stress)

14
 4. Social sharing or venting: open expression of emotions can help individuals to regulate their
emotions as opposed to keeping emotions bottled up. (used only when people accepting as
venting affect people)
5. Mindfulness technique: receptively paying attention to and being aware of the present moment,
events and experiences. This has roots in Buddha philosophy.

************************************************************************
SESSION 14-15: Motivation

Motivation is a strong driving force. Hence, it is the most researched and worked topic in the organizational
behavior. Motivation is the processes that account for an individual’s intensity, direction and persistence
of effort toward attaining a goal.
Here the goal is defined in the context of organization.
There are three major points in the definition of motivation. They are;
Intensity: how hard a person tries?
Direction: how the effort is channeled?
Persistence: how long a person can keep trying for the goal?
Motivation is an intangible concept which requires you to look at various theories to understand it is better.
Classification of motives
1. Primary Motives

Primary motives are essential for survival. They must be satisfied first before we can take up any other
activity. Primary motives come to action when the physiological balance of the body is upset. This
balance is called homeostasis. Examples are hunger, thirst, sleep, sex, maternal drive and so on
2. Secondary Motives

Human life has not only just biological aspect but also social aspect. Hence human behavior is activated
by the following social motives. Achievement motive, Affiliation motives, Aggression motives, Power
motives, Curiosity motives are some of the examples. These are called social motives since they
develop as a result of relationships with people.

The approaches/theories of motivation is basically divided into two and they are; Content and process
theories.
Content theories of motivation deal with what motivates an individual
Process theories of motivation deal with the process behind the motivation. In essence, it says, how it
motivated someone.
Another way of classifying motivation is chronological mode; early theories and contemporary theories.
However, the note here takes the former approach of dividing it into content and process theories.

i. Content theories of motivation

1. Hierarchy of needs theory

The popular theory of motivation is Abraham Maslow’s hierarchy of needs. The theory postulates that
within every human being, there is a hierarchy of five needs. Recently, a sixth need has been proposed
15
 for highest level-intrinsic values. The original five needs are;
Physiological: Includes hunger, thirst, shelter, sex and other bodily needs
Safety-security-Security and protection from physical and emotional harm
Social belongingness-Affection, belongingness, acceptance and friendship
Esteem-Internal factors such as self-respect, autonomy and achievement and external factors such as status,
recognition and attention
Self- actualization: Drive to become what we are capable of becoming; includes growth, achieving our
potential and self-fulfillment.

The concept of satisfaction progression hypothesis-Moving up to higher-level needs based on satisfied

needs.

With Maslow, satisfaction-progression plays an important part. Individuals move up the need hierarchy
as a result of satisfying lower order needs. In Alderfer's ERG theory, this isn't necessarily so. The
progression upward from relatedness satisfaction to growth desires does not presume the satisfaction of
a person's existence needs.

2. ERG theory of Motivation

To bring Maslow’s need hierarchy theory of motivation in synchronization with empirical research,
Clayton Alderfer redefined it in his own terms. His rework is called as ERG theory of motivation. He
re-categorized Maslow’s hierarchy of needs into three simpler and broader classes of needs:

 Existence needs- These include need for basic material necessities. In short, it includes an
individual’s physiological and physical safety needs.
 Relatedness needs- These include the aspiration individuals have for maintaining significant
interpersonal relationships (be it with family, peers or superiors), getting public fame and
recognition. Maslow’s social needs and external component of esteem needs fall under this class
of need.
 Growth needs- These include need for self-development and personal growth and advancement.
Maslow’s self-actualization needs and intrinsic component of esteem needs fall under this
category of need.

Existence needs are the most concrete, and easiest to verify. Relatedness needs are less concrete than
existence needs, which depend on a relationship between two or more people. Finally, growth
needs are the least concrete in that their specific objectives depend on the uniqueness of each person.

Frustration-regression hypothesis- If a higher level need remains unfulfilled, a person may regress to
16
lower level needs that appear easier to satisfy.
Frustration-regression suggests that an already satisfied need can become active when a higher need
cannot be satisfied. Thus, if a person is continually frustrated in his/her attempts to satisfy growth,
relatedness needs can resurface as key motivators.

3. Two factor theory

It is a theory that relates intrinsic factors to job satisfaction and associates extrinsic factors with
dissatisfaction. It is also called motivation-hygiene theory.
What is intrinsic factor? Factors such as advancement, recognition, responsibility and achievement are
referred to as intrinsic factors. If you look at them, they are all part of the job itself and not external to
the job.
Extrinsic factors are the factors associated with supervision, pay, company policies, and work
conditions. The factors which are not job related but externally associated to the job is extrinsic factors.
Intrinsic factors are also called as motivators and extrinsic factors are also called hygiene/maintenance
factors.
The basic idea of two-factor theory is that, presence of motivator results in satisfaction/motivation and
absence results in no satisfaction/motivation but it is not dissatisfaction.
However, presence of hygiene factors results in no dissatisfaction (it is not satisfaction) and absence
creates in dissatisfaction.
Hence, satisfaction is not the opposite of dissatisfaction. Satisfaction is opposed to no satisfaction.
Similarly, dissatisfaction is opposite of no dissatisfaction.
The factors that lead to job satisfaction are separate and distinct from those that lead to job
dissatisfaction. Therefore, managers who seek to eliminate factors that can create job dissatisfaction
may bring about peace but not necessarily motivation. If we need to motivate people, we need to
provide an environment for intrinsic factors.
However, two-factor theory is not well supported with research. Because if someone finds both type of
factors are equally important, this theory cannot be applied.

17
 4. McClelland’s theory of needs (Early theories)

It is a theory that states achievement, power and affiliation are three important needs that help explain
motivation. Basically, the theory helps us understand what dominates in motivating an individual.
Need for achievement (nAch): it is the drive to excel, to achieve in relationship to a set of standards
Need for power (nPow): It is the need to make others behave in a way they would not have otherwise.
Need for affiliation (nAff): it is the desire for friendly and close interpersonal relationships
If you look at McClelland and subsequent researchers focused most of their attention on nAch. High
achievers perform best when there is a 50-50 chance for succeeding. Based on prior nAchreseach, we
can predict some relationships between nAch and job performance. They tend to exhibit positive moods
and be more interested in the task at hand. Employees high on nAch tend to perform very well in high-
stakes conditions on the job, like work walkthroughs or sales encounters. Like nAch, nPow and nAff
also has sufficient research support to understand the behavior. In fact, there are evidences to show that
the dominant need determines ones personality eventually. nAff results in more agreeableness and
neuroticism.
5. McGregor’s theory X and theory Y

Douglas McGregor, through his well-known “Theory X and Theory Y,” drew a distinction between the
assumptions about human motivation which underlie these two approaches, to this effect:

1. Theory X assumes that people dislike work and must be coerced, controlled, and directed toward
organizational goals. Furthermore, most people prefer to be treated this way, so they can avoid
responsibility.
 Theory Y—the integration of goals—emphasizes the average person’s intrinsic interest in his
work, his desire to be self-directing and to seek responsibility, and his capacity to be creative in
solving business problems.

It is McGregor’s conclusion, of course, that the latter approach to organization is the more desirable one
for managers to follow.

ii. Process theories of motivation

1. Expectancy theory
18
Best accepted theory of motivation is Victor Vroom’s expectancy theory. This theory claims that the
strength of our tendency to act a certain way depends on the strength of our expectation of a given
outcome and its attractiveness.

In practical terms, employees will be motivated to exert a high level of effort when they believe that it
will lead to a good performance appraisal, that a good appraisal will lead to organizational rewards such
as salary increases and/or intrinsic rewards and that the rewards will satisfy their personal goals. The
theory therefore focuses on three relationships:
a) Expectancy: the effort-performance relationship- the probability perceived by the individual that
exerting a given amount of effort will lead to performance.
b) Instrumentality: the performance-reward relationship-the degree to which the individual believes
performing at a particular level will lead to the attainment of a desired outcome.
c) Valence-the rewards-personal goals relationship-the degree to which organizational rewards satisfy
an individual’s personal goals or needs and the attractiveness of those potential rewards for the
individual.

Expectancy theories helps explain why a lot of workers aren’t motivated on their jobs and do only the
minimum necessary to get by. Let us look at the example;
First, if I give maximum effort, will it be recognized in my performance appraisal? For many
employees, the answer is no. why? Their skill level may be deficient which means no matter how had
they try, they are not likely to be high performers. Or the organization’s performance appraisal system
may be designed to assess nonperformance factors such as loyalty, initiative or courage which means
more effort won’t necessarily result in a higher evaluation. Another possibility is that employees, rightly
or wrongly, perceive the boss doesn’t like them. Thus, they expect a poor appraisal, regardless of effort.
These examples suggest that people will be motivated only if they perceive a link between their effort
and their performance.
Second, if I get good performance appraisal, will it lead to organizational rewards? Many organizations
reward things besides performance. When pay is based on factors such as having seniority, being
cooperative or “kissing up” to the boss, employees are likely to see the performance-reward relationship
as weak and demotivating.
Finally, if I am rewarded, are the rewards attractive to me? The employee works hard in the hope of
getting a promotion but gets pay raise instead. Or the employee wants a more interesting and
challenging job but receives only a few words of praise. Unfortunately, many managers are limited in
the rewards they can distribute, which make it difficult to tailor rewards to individual employee needs.
Some managers incorrectly assume all employees want the same thing, thus overlooking the
motivational effects of differentiating rewards. In these cases, employee motivation is not maximized.

19
2. Equity theory/Organizational Justice

It is a theory stating that individuals compare their job inputs and outcomes with those of others and
then respond to eliminate any inequities. According to equity theory, employees compare what they get
from their job (their outcomes such as pay, promotions, recognition or a bigger office) to what they put
into it (their inputs such as effort, experience and education). They take the ratio of their outcomes to
their inputs and compare it to the ratio of others, usually someone similar like a coworker or someone
doing the same job. If we believe our ratio is equal to those with whom we compare ourselves, a state of
equity exists and we perceive our situation as fair.
Ratio comparisons

Based on equity theory, employees who perceive inequity will make one of the six choices;
1. Change inputs-exert less effort if underpaid or more if overpaid
2. Change outcomes- individuals paid on a peace rate basis can increase their pay by producing
higher quantity of units of lower quality.
3. Distort perceptions of self- I used to think I worked at moderate pace, but now I realize I work a
lot harder than everyone else.
4. Distort perceptions of others- mike’s job isn’t as desirable as I thought.
5. Choose a different referent- I may not make as much as my brother in law but I am doing a lot
better than my dad did when he was my age.
6. Leave the field-quitting the job.

Concerns about equity theory

It is not a well-supported approach due to certain concerns. First, inequities created by overpayment do
20
not seem to significantly affect behavior in most work situations. Most cases, employees may
rationalize by saying they work a lot harder. Second, not everyone is equity sensitive. There are entitled
(I deserve more as I am worth it) and benevolent (people who prefer lower outcome-input ratios than
the referent comparisons).
Organizational justice
An overall perception of what is fair in the workplace, composed of distributive, procedural,
informational and interpersonal justice is organizational justice. It is broadly about how employees feel
authorizes and decision makers at work treat them. This concept of organizational justice has its roots
from equity theory.
Distributive justice is the perceived fairness of the amount and allocation of rewards among individuals.
Procedural justice is the perceived fairness of the process used to determine the distribution of rewards.
Informational justice is the degree to which employees are provided truthful explanations for decisions.
Interpersonal justice is the degree to which employees are treated with dignity and respect.
3. Goal setting theory

It is a theory stating that specific and difficult goals with feedback lead to higher performance. The
theory is put forward by Edwin Locke and comes up with impressive empirical support to his claims.
There are three personal factors influence the goals-performance relationship; goal commitment, task
characteristics and national culture.
Goal commitment-goal setting theory assumes an individual is committed to the goal and determined
not to lower or abandon it. The individual a) believes he or she can achieve the goal b) wants to achieve
it. Goal commitment is most likely to occur when employees expect that their efforts will pay off in
goal attainment, when accomplishing the goal is attractive to them and when they actively participate in
goal setting.
Task characteristics- Goals themselves seem to affect performance more strongly when tasks are
simpler than complex, and when the tasks are independent rather than interdependent. For
interdependent tasks, group goals are preferable.
National culture- setting specific, difficult, individual goals may have different effects in different
cultures. In collectivistic and high power distance cultures, achievable moderate goals can be more
motivating than difficult ones.
Application of goal setting theory
MBO (management by objectives) is a systematic way to utilize goal setting. It was an initiative more
popular in 1970s but still used today. MBO emphasizes participatively set goals that are tangible,
verifiable and measurable. Below figure to understand how MBO works on the concept of cascading
objectives.

21
The organizations’ overall objectives are translated into specific cascading objectives for each level
(divisional, departmental, and individual). But because lower unit managers jointly participate in setting
their own goals, MBO works from the bottom up as well as from the top down. The result is a hierarchy
that links objectives at one level to those at next. For the individual employee, MBO provides specific
personal performance objectives.
Four common features of MBO
1. Goal specificity
2. Participative decision making
3. A explicit time period
4. Performance feedback

4. Reinforcement theory

Goal setting theory is a cognitive approach while reinforcement theory is a behaviorist approach where
it says reinforcement conditions people behavior. Reinforcement theory sees behavior as
environmentally caused. Reinforcement theory ignores the inner state of the individual and concentrates
solely on what happens when she or he takes some action.
Operant conditioning and social learning theory holds true here. However, these theories are not strictly
motivational theories as it doesn’t talk about what initiates behavior but it does talk about what controls
behavior.
*****************************************************************************
SESSION 16-18: Groups
A group is two or more individuals interacting and interdependent who have come together to achieve
particular objectives. Groups can either be formal or informal. A formal group is defined by the
organization’s structure with designated work assignments and established tasks. In formal groups, the
behaviors that group members should engage in are stipulated by and directed toward organizational
goals.
E.g. Six members of airline flight crew
Informal group is neither formally structured nor organizationally determined. Informal groups in the
work environment meet the need for social contact.
E.g. Three employees from different departments who regularly have lunch or coffee together are an
informal group.
Stages of group development

The process of learning to work together effectively is known as group development. Research has
shown that groups go through definitive stages during development. Bruce Tuckman, an educational
psychologist, identified a five-stage development process that most groups follow to become high
performing. He called the stages: forming, storming, norming, performing, and adjourning. Group
progress through the stages is shown in the following diagram.

22
Most high-performing groups go through five stages of group development.

1. Forming stage

The forming stage involves a period of orientation and getting acquainted. Uncertainty is high during
this stage, and people are looking for leadership and authority. A member who asserts authority or is
knowledgeable may be looked to take control. Group members are asking such questions as “What does
the group offer me?” “What is expected of me?” “Will I fit in?” Most interactions are social as members
get to know each other.

2. Storming stage

The storming stage is the most difficult and critical stage to pass through. It is a period marked by
conflict and competition as individual personalities emerge. Group performance may actually decrease
in this stage because energy is put into unproductive activities. Members may disagree on group goals,
and subgroups and cliques may form around strong personalities or areas of agreement. To get through
this stage, members must work to overcome obstacles, to accept individual differences, and to work
through conflicting ideas on group tasks and goals. Groups can get bogged down in this stage. Failure to
address conflicts may result in long-term problems.

3. Norming stage

If groups get through the storming stage, conflict is resolved and some degree of unity emerges. In the
norming stage, consensus develops around whom the leader or leaders are, and individual member’s
roles. Interpersonal differences begin to be resolved, and a sense of cohesion and unity emerges. Group
performance increases during this stage as members learn to cooperate and begin to focus on group
goals. However, the harmony is precarious, and if disagreements re-emerge the group can slide back
into storming.
23
 4. Performing stage

In the performing stage, consensus and cooperation have been well-established and the group is mature,
organized, and well-functioning. There is a clear and stable structure, and members are committed to the
group’s mission. Problems and conflicts still emerge, but they are dealt with constructively. (We will
discuss the role of conflict and conflict resolution in the next section). The group is focused on problem
solving and meeting group goals.

5. Adjourning stage

In the adjourning stage, most of the group’s goals have been accomplished. The emphasis is on
wrapping up final tasks and documenting the effort and results. As the work load is diminished,
individual members may be reassigned to other groups, and the group disbands. There may be regret as
the group ends, so a ceremonial acknowledgement of the work and success of the group can be helpful.
If the group is a standing committee with ongoing responsibility, members may be replaced by new
people and the group can go back to a forming or storming stage and repeat the development process.
(Jennifer et al., 2014).

Punctuated Equilibrium model

Temporary groups with finite deadlines pass through a unique sequencing of actions (or inaction) called
the punctuated-equilibrium model. The first meeting sets the group direction. A framework of
behavioral patterns and assumptions through which the group will approach its project emerges in its
first meeting. These lasting patterns can appear as early as the first few seconds of the group’s life. Once
set, the group’s direction becomes ‘written in stone’ and is unlikely to be reexamined throughout the
first half of the group life. This is a period of inertia-that is, the group tends to standstill or become
locked into a fixed course of action. Even if it gains new insights that challenge initial patterns and
assumptions, the group is incapable of acting on these new insights in phase 1.

Each group experiences its transition at the same point in its calendar-precisely half way between its
first meeting and its official deadline-despite the fact that some groups spent as little as an hour on their
project while others spent six months. It was as if the groups universally experienced a midlife crisis at
this point. The midpoint appears to work life like an alarm clock, heightening members’ awareness that
their time is limited and that they need to ‘get moving.’

This transition ends Phase 1 and is characterized by a concentrated burst of changes, dropping of old
patterns, and adoption of new perspectives. The transition sets a revised direction for phase 2. Phase 2 is
a new equilibrium or period of inertia. In this phase, the group executes all the plans created during the
transition period.

The group’s last meeting is characterized by a final burst of activity to finish its work. To put it in a
nutshell, the punctuated equilibrium model characterizes groups as exhibiting long periods of inertia

24
interspersed with brief revolutionary changes triggered primarily by their members’ awareness of time
and deadlines. This model is applicable only to temporary work groups who work under a time
constrained completion deadline.

The stages in the model include the following;

1. The first meeting sets the group’s direction

2. The first phase of group activity is one of inertia and thus slower progress

3. A transition takes place exactly when the group has used up half its allotted time

4. This transition initiates major changes

5. A second phase of inertia follows the transition

6. The group’s last meeting is characterized by markedly accelerated activity

Why informal groups

Informal groups provide a very important service by satisfying their social needs. The members do
things together due to close proximity or increase task interactions. The type of interactions affects the
behavior and performance of group members. Why people join informal groups?
1. To protect themselves from being alone
2. To gain status (to feel significant)
3. Self-esteem
4. Affiliation: to fulfill social needs

25
 5. Power
6. Goal achievement

Group dynamics: both formal and informal

Groups are not just unorganized mobs. It has a clear structure. Let us look at the structural variables;
Roles, Norms, status, group size, degree of group cohesiveness
Role: A set of expected behavioral patterns attributed to someone occupying a given position in a social
unit. All group members will have a role and they tend to act accordingly. Example: A doctor plays the
role of a doctor in hospital, a spouse at home, a parent to the child and a social worker for an informal
charity organization.
Role identity: Certain attitudes and behaviors consistent with a role. People have the ability to shift roles
rapidly when they recognize that situation and its demands clearly require major changes. For instance,
when union stewards were promoted to supervisory positions, it was found that their attitudes changed
from pro-union to pro-management within a few months of their promotion.
Role perception: Our view of how we are supposed to act in a given situation is a role perception.
Where do we get these perceptions? We get the stimuli from all around us-friends, books, movies and
television. Many lawyers will be influenced by the series Law and order and The practice.
Role expectations: they are defined as how others believe you should act in a given situation. The role
of a high court judge is viewed as having propriety and dignity, while a football coach is seen as
aggressive, dynamic and inspiring to his players.
Role conflict: when an individual is confronted by divergent role expectations, the result is role conflict.
It exists when an individual finds that compliance with one role requirement may make it more difficult
to comply with another. You must be a senior manager at a popular MNC but you are the youngest
daughter at home and this can result in a role conflict as former role requires you to be authoritative
while the latter expects you to be respectful of authority.

Norms: All groups have established norms: this is acceptable standards of behavior that are shared by
the groups’ members. Norms tell members what they ought and ought not to do under certain
circumstances. From an individual’s standpoint, it tells what is expected of you in certain situations.
When agreed to and accepted by the group, norms act as a means of influencing the behavior of group
members with a minimum of external controls. Norms differ among groups, communities and societies
but they all have one.
Types of norms
Performance norms: explicit cues regarding how hard they should work in a group
Appearance norms: appropriate dress, loyalty to the organizations, when to look busy and when it is
acceptable to goof off.
Social arrangement norms: norms come from informal work groups and primarily regulate social
interactions within the group. With whom group members eat food, friendships on and off the job,
social games and so on.
Allocation of resource norms: these norms can originate in the group or in the organization and cover
things like pay, assignment of difficult jobs and allocation of new tools and equipment.

Conformity: Adjusting one’s behavior to align with the norms of the group. As a member you desire
acceptance by the group. So you are susceptible to conforming to the group’s norms. There is
considerable evidence that groups can place strong pressures on individual members to change their
attitudes and behaviors to conform to the group’s standard.
However, individuals will not conform to the norms of all groups they belong. They conform to the

26
norms of only reference groups. What is reference group?
Important groups to which individuals belong or hope to belong and with whose norms individuals are
likely to conform. Reference groups are the groups that are characterized as important for the person,
one defines himself/herself as a member or would like to be a member and feels this group is very
significant to the one.

Status: A socially defined position or rank given to groups or group members by others. Status is a
major motivator for human beings. Status has been shown some effects on norms say, high status
members enjoys a freedom from appearance norms or performance norms.
Size: the number of members in a group. Evidence says that smaller groups finish their job fast while
larger groups are better at innovating. However, groups of 7 members seem to be doing a good job.
One of most important drawback is found to be social loafing in group work. Social loafing is the
tendency for individuals to expend less effort when working collectively than when working
individually.
Group cohesiveness: it is the degree to which group members are attracted to each other and are
motivated to stay in the group. Groups differ in their cohesiveness. If the members have spent a great
deal of time together, or if the group size is smaller or if the group has faced external threats that have
brought the group members come together. Cohesiveness is important because it brings people together
and has a positive impact on productivity.

The studies show that the relationship of cohesiveness and productivity depends on the performance
related norms established by the group. If the performance norms are high, a cohesive group will show
high productivity. Also, if cohesiveness is high, norms are low, productivity will be low.The figure
shows all other scenarios.
Work groups and Work teams
Work group: a group that interacts primarily to share information and to make decisions to help each
group member perform within his or her area.
Work team: a group whose individual efforts result in performance that is greater than the sum of the
individual inputs.
Groups and teams are not the same thing. Groups was defined as a set of two or more individuals
interacting and interdependent who have come together to achieve particular objectives.
Workgroups have no need or opportunity to engage in collective work that requires a joint effort. So
their performance will be mere summation of each group member’s individual’s contribution. There is
no positive synergy that would create an overall level of performance that is greater the sum of inputs.
A work team generates a positive synergy through coordinated effort. Their individual efforts results in
27
a level of performance that is greater than the sum of those individual inputs.

Types of teams
There are four common types of work teams; problem solving teams, self-managed work teams, cross
functional teams and virtual teams.
Problem solving teams: Groups of 5-12 employees from the same department who meet for a few hours
each week to discuss ways of improving quality, efficiency and the work environment.
Here members share ideas or offer suggestions on how work processes and methods can be improved;
although they rarely have the authority to unilaterally implement any of their suggested actions. For
example; Merill Lynch created a problem solving team to specifically figure out ways to reduce the
number of days it took to open up a new cash management account.
Self-managed work teams: Groups of 10-15 people who take on responsibilities of their former
supervisors. Typically, that includes planning, scheduling, of work, assigning tasks to members,
collective control over the pace of work, making operating decisions, taking action on problems and
working with suppliers and customers. Fully self-managed work teams can select their own members
and have the members evaluate each other’s performance. As a result, supervisory positions take on
decreased importance and may even be eliminated.
Cross-functional teams: teams made up of employees from about the same hierarchical level, but from
different work areas, who come together to accomplish the task. The Boeing Company created a team
made up of employees from production, planning, quality, tooling, design engineering and information
systems to automate shims on the company’s C-17 program. Cross-functional teams are effective means
for allowing people from diverse areas within an organization to exchange information, develop new
ideas and solve problems and coordinate complex projects. But it goes through a difficult process of
group development because diverse views create a chaos.
Virtual teams: all the previous types of teams do their work face to face. Virtual teams use computer
technology to tie together physically dispersed members in order to achieve the common goal. They
allow people to collaborate online-using communication links like wide area networks, video
conferencing or email-whether they are only a room away or continents apart.
Best example is our classes now.
Group decision making
Many decisions in organizations are made by teams, groups or committees. Hence it is very important to
learn about the intricacies of it.
Pros and cons of group decision making
Pros
1. Groups generate more complex information and knowledge
2. Group bring more input into decision making process
3. Groups generate high quality decisions
4. Increased acceptance of solution since all are participated in arriving at the solution

28
 5. Better support for the decision made

Cons
1. Time consuming
2. Conformity pressures in groups
3. Group decision can be dominated by one or two members
4. Group decisions suffer from ambiguous (unclear) responsibilities

Group think and Group shift

Two byproducts of group decision making have received a considerable amount of attention by
practitioners and researchers because of its potential to affect a groups’ ability to appraise alternatives
objectively and to arrive at quality decision solutions.
Group think is related to norms.it is the phenomenon in which the norm for consensus overrides the
realistic appraisal of alternative courses of action and the full expression of deviant, minority or
unpopular views. It describes a deterioration in an individual’s mental efficiency, reality testing and
moral judgment as a result of group pressures.
Group think symptoms

1. An illusion of invulnerability: Members ignore danger, take extreme risk and are overly
optimistic.
2. Collective rationalization: Members discredit and explain away warning contrary to group
thinking.
3. Belief in inherent morality: Members discredit and explain away warning contrary to group
thinking.
4. Stereotyped views of out-groups: The group constructs negative stereotypes of rivals outside the
group.
5. Direct pressure on dissenters: Members pressure any in the group who expresses arguments
against the group’s stereotypes, illusions, or commitments, viewing such opposition as
disloyalty.
6. Self-censorship: Members withhold their dissenting views and counter-arguments.
7. Illusion of unanimity: Members perceive falsely that everyone agrees with the group’s decision;
silence is seen as consent.
8. “Mind guards” are appointed: Some members appoint themselves to the role of protecting the
group from adverse information that might threaten group complacency.

(source: Little book of behavioral investing by James Montier)

Examples: Columbia and challenger space shuttle disaster is an example of group think was
particularly evident.

Group shiftis a change in decision risk between group’s decision and the individual decision that members
within the group would make, can be either toward conservatism or greater risk.
What appears to happen in groups is that the discussion leads to a significant shift in the positions of
members toward a more extreme position in the direction in which they were already leaning before the
discussion.
Group shift can also be viewed as a type of group think. The shift can be seen as dominant group norm for
29
 decision making

Group decision making techniques

Brain storming: An idea- generation process that specifically encourages any and all alternatives, while
withholding any criticism of those alternatives.
• Generating as many ideas as possible, suspending evaluations until all of the ideas has been
suggested.
• Emphasis of imagination in the ideas generated.
• To overcome pressures for conformity (as conformity retards creativity).
• 6-10 people participates in the brainstorming
• the leader states the problem in a clear manner, then he/she records all alternatives for further
discussion and analysis.
• Drawbacks
– Production blocking-listening to others results in distraction from our point.
– Evaluation apprehension: fear that other group members might respond negatively.
– As a result, electronic brainstorming comes to place.

Nominal group technique: a group decision making technique in which individual members meet face to
face to pool their judgments in a systematic but independent fashion.
• Restriction of discussion and interpersonal communication during the decision making process.
• Members are physically present, but they operate independently.
• Steps;
– Individuals silently list their ideas
– It is collected by the leader and noted in a chart
– Discussion is allowed only to clarify the points. No criticism is allowed.
– A written vote is taken on those points.
• It avoids evaluative apprehension
• Promote independent thinking by avoiding production blocking

Electronic meeting: a meeting in which members interact on computers allowing for anonymity of
comments and aggregation of votes.
• Blend of nominal group technique with the sophisticated technology.
• Issues are presented to the participants and they respond on to the computer screen.
• Aggregate votes are displayed on to the screen.
• Advantages
– Anonymity is maintained
– Less of fake responses as the anonymity is maintained
– Time saving
• Disadvantages
30
 – Need to type fast their responses
– Thus, people with good ideas may not be able to shine

Delphi technique: itrefers to the systematic forecasting method used to gather opinions of the panel of
experts on the problem being encountered, through the questionnaires, often sent through mail. In other
words, a set of opinions pertaining to a specific problem, obtained in writing usually through
questionnaires from several experts in the specific field is called as a Delphi technique.

• In order to get opinions of experts related to the topic of discussion.

• It differs from nominal group technique as the physical presence is not required.

• Steps involved are:

– A questionnaire is distributed to the experts

– Responses are collected from the experts residing in various places

– Coordinator summarizes all the responses and sent back to them to get the final voting.

• Advantages

– Able to generate a number of independent judgments without meeting face to face.

– This method can be used for decision making among geographically scattered groups.

– Cost saving as we do not have to bring all the experts to a central location.

• Disadvantages

– Time consuming, not applicable for a situation where a speedy action is needed.

– They may not generate rich array of alternatives as in nominal technique.

Quality circle

• Small groups that voluntarily meet to provide input for solving quality or production problems.

• Quality circles are often generated as bottom up because they often advise to managers.

31
 • But top management still retains the decision making authority.

• Quality circles are not empowered to implement their own recommendations.

• Quality teams (unlike quality circles), they are developed as top down and are empowered to act
on their own recommendations. It is a part of total quality management in the organization.

******************************************************************************
SESSION 19 : Communication
Communication encompasses the transference of information and understanding the meaning of it.
Communication acts to control member behavior in several ways. It fosters motivation by clarifying to
employees what is to be done, how well they are doing and what can be done to improve performance if
it is subpar. It provides a release for the emotional expression of feelings and for fulfillment of social
needs. It facilitates decision making.
Process of communication
The steps between a source and a receiver that result in the transference and understanding of meaning
are;
1) the sender
2) encoding
3) the message
4) the channel
5) decoding
6) the receiver
7) noise
8) feedback

The sender initiates the message by encoding a thought. The message is the actual physical product
from the sender’s encoding. When we speak, the speech is the message. When we write, the writing is
the message. When we gesture, the movements of our arms and the expressions on our faces are the
message. The channel is the medium through which the message travels. It is selected by the sender
who must determine whether to use a formal or informal channel. Formal channels are established by
the organization and transmit messages that are related to the professional activities of members.
Other forms of messages such as personal or social follow the informal channels in the organization.
The receiver is the object to whom the message is directed. The message is decoded to make the
receiver understand the message. Noise represents the barriers of communication. Feedback loop is the
final lap of communication. It is a check of how successful we are in transferring the message.
Types of communication
Communication can be divided based on the direction and based on medium inwhich communication is
passed.
Direction of communication: they are downward, upward and lateral communication. Communication
that flows from one level of a group or organization to a lower level is downward communication. For
instance, boss communicating to the subordinates. Upward communication happens when the
information flows to higher level in the group or organization. Example would be grievance redressal
mechanism, employee feedbacks. When communication takes place among members among members
of the same work group , among members of work groups at the same level, among managers of the
same level or among any horizontally equivalent personnel, we describe it as lateral communication.
32
Medium: oral communication is in the form of speeches, formal one to one, group discussions, informal
rumor (grapevine) and so on. Written communication includes memos, letters, fax, e-mail, instant
messaging, whatsapp, and other social media means.
Nonverbal communication involves anything other than verbal. It can be glance, a smile, frown, a
provocative body movement, emoji and so on.
Organizational communication
The difference between interpersonal communications from organizational communication is the nature
of formality and the topic of the message. Some of the types of organizational communication involve
formal small group networks, grapevine, computer-aided mechanisms used by organizations to facilitate
communication and evolving topic of knowledge management.
Formal small group networks: this can include hundreds of people and a half dozen or more
hierarchical levels. There are three types of formal networks. They are; chain, wheel and all channel.
Chain rigidly follows the formal chain of command. This wheel relies on a central figure to act as the
conduit for all group’s communication. It stimulates the communication network you would find on a
team with a strong leader. The all channel network permits all group members to actively communicate
with each other. It is often characterized in practice by self-managed teams, in which all group members
are free to contribute and no one person takes on a leadership role.
Grapevine: it is the organization’s informal communication network. It has three main characteristics;
it is not controlled by management, second, it is perceived by most employees as being more believable
and reliable. Third, it is largely used to serve the self-interests of the people within it.
Computer aided communication: this involves E-mail, instant messaging, intranet and extranet links,
video conferencing.
Knowledge management: the process of organizing and distributing an organization’s collective
wisdom so the right information gets to the right people at the right time.
Barriers of effective communication
They are;
Filtering: A sender’s manipulation of information so that it will be seen more favorably by the receiver
is filtering
Information overload: a condition in which information inflow exceeds an individual’s processing
capacity.
Communication apprehension: Undue tension and anxiety about oral communication, written
communication or both.
Other than that, emotions, perceptions, language, gender differences, cultural impacts are also barriers.
***************************************************************************
SESSION 20: Leadership
What is leadership?
The ability to influence a group toward the achievement of goals is leadership. The source of influence
may be formal such as that provided by the possession of managerial rank in an organization. However
not all leaders are managers. However, all managers are not leaders too. There is a concept of no
sanctioned leadership where it reflects the capacity to influence beyond formal authorities.
Difference between leader and manager

When you are promoted into a role where you are managing people, you don’t automatically become a
leader. There are important distinctions between managing and leading people. Here are nine of the
most important differences that set leaders apart:

1. Leaders create a vision, managers create goals.

33
Leaders paint a picture of what they see as possible and inspire and engage their people in turning that
vision into reality. They think beyond what individuals do. They activate people to be part of something
bigger. They know that high-functioning teams can accomplish a lot more working together than
individuals working autonomously. Managers focus on setting, measuring and achieving goals. They
control situations to reach or exceed their objectives.

2. Leaders are change agents, managers maintain the status quo.

Leaders are proud disrupters. Innovation is their mantra. They embrace change and know that even if
things are working, there could be a better way forward. And they understand and accept the fact that
changes to the system often create waves. Managers stick with what works, refining systems, structures
and processes to make them better.

3. Leaders are unique, managers copy.

Leaders are willing to be themselves. They are self-aware and work actively to build their unique and
differentiated personal brand. They are comfortable in their own shoes and willing to stand out. They’re
authentic and transparent. Managers mimic the competencies and behaviors they learn from others and
adopt their leadership style rather than defining it.

4. Leaders take risks, managers control risk .

Leaders are willing to try new things even if they may fail miserably. They know that failure is often a
step on the path to success. Managers work to minimize risk. They seek to avoid or control problems
rather than embracing them.

5. Leaders are in it for the long haul, managers think short-term.

Leaders have intentionality. They do what they say they are going to do and stay motivated toward a
big, often very distant goal. They remain motivated without receiving regular rewards. Managers work
on shorter-term goals, seeking more regular acknowledgment or accolades.

6. Leaders grow personally, managers rely on existing, proven skills.

Leaders know if they aren’t learning something new every day, they aren’t standing still, they’re falling
behind. They remain  curious and seek to remain relevant in an ever-changing world of work. They seek
out people and information that will expand their thinking. Managers often double down on what made
them successful, perfecting existing skills and adopting proven behaviors.

7. Leaders build relationships, managers build systems and processes.

Leaders focus on people – all the stakeholders they need to influence in order to realize their vision.
They know who their stakeholders are and spend most of their time with them. They build loyalty and
trust by consistently delivering on their promise. Managers focus on the structures necessary to set and
achieve goals. They focus on the analytical and ensure systems are in place to attain desired outcomes.
They work with individuals and their goals and objectives.

34
8. Leaders coach, managers direct.

Leaders know that people who work for them have the answers or are able to find them. They see their
people as competent and are optimistic about their potential. They resist the temptation to tell their
people what to do and how to do it. Managers assign tasks and provide guidance on how to accomplish
them.

9. Leaders create fans, managers have employees.

Leaders have people who go beyond following them; their followers become their raving fans and
fervent promoters – helping them build their brand and achieve their goals. Their fans help them
increase their visibility and credibility. Managers have staff who follow directions and seek to please the
boss.

(Source:Forbes,n.d)

Leadership theories
Trait approach: Throughout the history, strong leader have been described by their traits. This trait
theory has set out to identify the differences between leaders from non-leaders. Trait theories focus on
personal qualities and characteristics.
The literature says that, extraversion is found to be most predictive trait of leadership. However, it is not
predicted to result in leadership effectiveness. Conscientiousness and openness to experience may seem
to predict leadership, especially leadership effectiveness. Achievement striving and dependability were
found to be related to effective leadership.
Regarding the dark triad, it seems to be good for leadership provided these traits are kept at moderate
level. A study in Europe and the United States found that normative (mid-range) scores on the dark side
personality traits were optimal, while low and high scores are associated with ineffective leadership.
EI is also found to be related to effective leadership since major concept of EI is empathy and empathy
makes leader sense other’s needs.
Traits can predict leadership and what it predicts is emergence of leadership than differentiating
effective from ineffective leaders. Also another drawback of trait theory is that, there is no common set
of traits among all leaders hence, it seemed to come up with a set of few leadership traits. Further, it was
criticized for the regressive approach of saying that leadership is a predisposition and not to be
developed.
Behavioral theories: These theories propose that behaviors differentiate leaders from non-leaders.
Since behavior can be trained, leadership can be trained. Studies from Ohio state identified that two
behaviors which are relevant for leadership. They are initiating structure and consideration.
Initiating structure is the extent to which a leader defines and structures his or her role and those of the
subordinates to facilitate goal attainment. Consideration is the extent to which a leader has job
relationships that are characterized by mutual trust, respect for subordinates’ ideas and regard for their
feelings.
The results of this behavioral theory studies have been positive. For example, one review found the
followers of leaders high in consideration were more satisfied with their jobs, were more motivated and
had more respect to their leaders. Both the behaviors, however, were found to be moderately related to
leader and group performance along with ratings of leader effectiveness. Also, there is a cultural
influence for these results.
Leadership studies undertaken at the University of Michigan came up with two dimensions of

35
leadership behavior; employee-oriented and production-oriented. Employee oriented leaders emphasize
interpersonal relations; taking a personal interest in the needs of employees and accepting individual
differences among members. Production oriented leader is who emphasize technical or task aspects of
job.
The conclusions arrived at Michigan researchers strongly favored the leaders who were employee
oriented. They were associated with higher group productivity and lower job satisfaction.
The managerial grid: Developed by Robert R Blake and Jane Mouton (1964), managerial grid (now
called leadership grid) is a graphic portrayal of two dimensional leadership styles. This grid is made
based on two leadership style; “concern for people” and “concern for production”, which essentially
represent the Ohio state dimensions and Michigan state dimensions.

The grid has nine possible positions along each axis creating 81 different positions in which the leader’s
style may fall. The grid doesn’t show results produced but rather, the dominating factors in a leader’s
thinking in regard to getting results.
Based on the findings of Blake and Mouton, managers were found to perform best under a 9,9 style as
contrasted to any other options. However, this grid lacks research evidence to support the claim.
Behavioral theories are successful in finding the link between leadership behavior and group
performance. However, situational elements are missing which can possibly influence the effectiveness
of the group.
Contingency theories: A leadership that works in tough times will not work when things are easy.
1. Fiedler’s model: According to Fred Fiedler, it appears that under certain conditions a
certain leadership style would be appropriate. Now let us look at the conditions;

Identifying the leadership style

Fred Fiedler developed the first comprehensive contingency model for leadership. The theory proposes
that group performance depends on the proper match between the leader style and the degree to which
the situation gives the leader control. According to the model, the individual’s leadership style is
36
assumed to be stable or permanent. Fred Fiedler begins his work by finding out what that basic style is.
The least preferred coworker (LPC) questionnaireidentifies whether a person is task oriented or
relationship oriented by asking respondents to think all the co-workers. The LPC questionnaire contains
sets of 16 contrasting adjectives (such as pleasant-unpleasant, efficient-inefficient). It asks respondents
to think of all the coworkers they have ever had and to describe the one person they least enjoyed
working with by rating him/her on a scale of 1-8 for each of the 16 adjectives.
Fiedler believes by the response to LPC scale, we will be able to find the leadership style of the person.
If the LPC score (a score given to the least preferred coworker) in relatively positive terms, then the
respondents is primarily interested in good personal relations with his co-worker. Then Fiedler will
label that person as relationship oriented. Otherwise, the person will be labeled as task oriented.
Defining the situation
After an individual’s basic leadership style has been assessed through the LPC, it is necessary to match
the leader with the situation. Fiedler has identified three contingency dimensions that define the
situational factors;
2. Leader-member relations: The degree to which members have confidence, trust and
respect in their leader
3. Task structure: the degree to which job assignments are procedurized (structured or
unstructured)
4. Position power: the degree of influence a leader has over power variables such as hiring,
firing, discipline, promotions and salary increases.

The next step is to evaluate the situation in terms of three contingency variables. Leader-member
relations are either good or bad, task structure is either high or low and position power is either strong or
weak. Fiedler states that the better the leader-member relations, the more highly structured the job and
the stronger the position power, the more control the leader has.
Matching the leader with situations
Fiedler concluded that task oriented leader tend to perform better in situations that were very favorable
to them and in situations that were very unfavorable. Relationship oriented leader would be better for
moderately favorable situation.

37
Overall, this model has positive results. There is good amount of research evidence to prove substantial
parts of the model. The major criticism is on LPC and logic behind LPC. It is also found, the leadership
style is not stable as Fiedler mentioned.
2. Robert House's Path-Goal Theory

The path-goal theory is a little easier to comprehend than Fiedler's model. House's theory is based on
the idea that a follower's motivations are based on three assumptions:
 If effort is given, the goal can be achieved (expectancy)
 If the goal is achieved, there will be a reward (instrumentality)
 The reward is considered valuable (valance)1
Leaders must be able to provide their followers assurance for their expectations. Differences in the
38
characteristics of followers, the type of situation, and the leader's style will all play in a role in the
effectiveness of the group to achieve their goals.

Four Styles of Leadership

The Path-Goal Theory identifies four styles of leadership:
 Directive - This leader provides direct and authoritative communication to his/her followers.
This is ideal for followers who may have less knowledge or experience.
 Achievement-Oriented - This leader sets high expectations for followers. He/she will challenge
their subordinates and show confidence in their ability to achieve good results.
 Participative - This leader works with his/her followers, considering their ideas and listening to
them.
 Supportive - This leader come alongside his/her followers showing care and concern for the their
needs and well being.
Each of these styles can be effective or ineffective depending on the situation and on the abilities and
needs of followers. According to House, leaders do have the ability to change styles and leaders should
attempt to change to best serve their followers.

3. The Situational Leadership Model

This last model places followers into four different groups based on their maturity and assigns a
particular leadership style to each group. The two different variables for determining followers' maturity
are:
 Task skills
 Motivation
Task skills represent the work ability and knowledge of followers. Do they have advanced work skills;
are they mature in the workplace? Or do they have limited knowledge in regards to their work?
Motivation, on the other hand, measures the desire of followers to accomplish a task and looks at their
psychological maturity.
Together, the various levels of follower's task skills and motivation form four levels of readiness (also
known as levels of maturity). See the table below for breakdown of readiness levels and the
corresponding leadership responses.
Readiness Levels and Effective Leadership Styles

Readiness Level (of followers) Leadership Style

R1 - Readiness Level 1: Low

S1 - Telling
Motivation and Low Task Skills

R2 - Readiness Level 2: High

S2 - Selling
Motivation and Low Task Skils

R3 - Readiness Level 3: Low S3 - Participating

39
 Readiness Level (of followers) Leadership Style

Motivation and High Task Skills

R4 - Readiness Level 4: High

S4 - Delegating
Motivation and High Task Skills

A grid visual of readiness levels.

Leadership Style Descriptions
Telling (S1)
Leaders give commands and specific instructions to followers.
Selling (S2)
Leaders provide direction and guidance, but there is more interaction between leaders and followers.
Participating (S3)
Leaders complete tasks by working with followers as a team and place high value on relationships.
Delegating (S4)
Leaders have confidence in the abilities of their followers. They empower followers by delegating tasks
and giving them more responsibility.

Leadership styles

Transformational Leadership

40
One type of effective leadership style is transformational leadership. Transformational leaders work
with the goal of transforming their teams and organizations so that they’re constantly improving. They
create a vision of the future that they share with their teams so that everyone can work together toward
that shared goal and vision. Transformational leaders are also often seen as authentic, self-aware and
empathetic. In addition, they handle conflict among team members well and hold both themselves and
their team members accountable.

Democratic Leadership
Democratic leaders include their team members in their decision-making process. While they are
ultimately responsible for making final decisions, they often ask team members what they think and try
to take their thoughts and opinions into account. This can help increase engagement among team
members, but it may not always be the best style for leaders who need to make quick decisions.

Autocratic Leadership
On the other end of the effective leadership styles spectrum, autocratic leaders make all decisions on
their own without consulting with team members. This can be a good system for making quick
decisions. However, it can make team members feel out of touch or dissatisfied with their working
environment if they don’t feel like their opinions or ideas are ever considered in those important
decisions.

Laissez-Faire Leadership
Leaders who practice this style are known for giving their team members a lot of freedom. They provide
support and resources for team members when it’s necessary, but they don’t constantly micromanage
employees. This can be an effective leadership style if you have a lot of trust among your team
members and you know that they do good work and manage their time well on their own. However, if
you’re working with newer team members or those who need more guidance or time-management help,
it may not be as effective.

There isn’t one style that works perfectly in every situation. But if you come up with a style that’s suited
to your business and your team, you could be well on your way to leading a successful team.

Bureaucratic Leadership
Bureaucratic leaders are all about rules. They may set strict procedures that they follow precisely, and
they expect their team to do the same. This usually isn’t the best leadership style for businesses or teams
that rely on innovation or creative problem solving. In those instances, you may want people to have a
little more freedom to think outside the box and not follow the exact same procedures from day to day.
But for more routine-oriented jobs, this leadership style could be a good fit. In those situations, many
workers could appreciate having a very cut and dry set of rules and procedures to follow so that they
aren’t left guessing about what you expect from them.

41
 Servant Leadership
Servant leaders work hard to meet the needs of their team. They’re often seen as charismatic and
generous. This often leads to high worker satisfaction rates since team members feel heard and cared for
in their work. It can also be beneficial in a working environment where you want everyone to see
themselves as equals who are working together or collaborating on an even playing ground, rather than
focusing on who is in charge of whom. However, it may not be a great model for someone who needs to
make quick or difficult decisions, since servant leaders might try too hard to make workers happy rather
than focusing on what’s actually best for the organization or team as a whole.

Transactional Leadership
Transactional leadership focuses on the idea that accepting a job is a sort of transaction. By agreeing to
take a job, workers have accepted that they have to complete the outlined task and follow their leader’s
instructions. This style can work in situations where you need to clearly outline a difficult job or task
before choosing someone to take on the role. It may also help ensure that everyone is very clear about
what is expected of them. However, it can seem cold or inflexible, which may lead to low job
satisfaction.

*************************************************************************

42
 LEADERSHIP
Trait Theory of Leadership

The trait model of leadership is based on the characteristics of many leaders - both
successful and unsuccessful - and is used to predict leadership effectiveness. The
resulting lists of traits are then compared to those of potential leaders to assess their
likelihood of success or failure.

Scholars taking the trait approach attempted to identify physiological (appearance,

height, and weight), demographic (age, education and socioeconomic background),
personality, self- confidence, and aggressiveness), intellective (intelligence,
decisiveness, judgment, and knowledge), task-related (achievement drive,
initiative, and persistence), and social characteristics (sociability and
cooperativeness) with leader emergence and leader effectiveness.

Successful leaders definitely have interests, abilities, and personality traits that are
different from those of the less effective leaders. Through many researches
conducted in the last three decades of the 20th century, a set of core traits of
successful leaders have been identified. These traits are not responsible solely to
identify whether a person will be a successful leader or not, but they are essentially
seen as preconditions that endow people with leadership potential.

Among the core traits identified

are:
Achievement drive: High level of effort, high levels of ambition, energy

and initiative Leadership motivation: an intense desire to lead others to

reach shared goals

Honesty and integrity: trustworthy, reliable,

43
and open Self-confidence: Belief in one’s self,

ideas, and ability

Cognitive ability: Capable of exercising good judgment, strong analytical

abilities, and conceptually skilled

Knowledge of business: Knowledge of industry and other technical matters

Emotional Maturity: well adjusted, does not suffer from severe

psychological disorders. Others: charisma, creativity and flexibility

Strengths/Advantages of Trait

Theory It is naturally pleasing

theory.

44
It is valid as lot of research has validated the foundation and basis of the theory.

It serves as a yardstick against which the leadership traits of an individual can be

assessed.

It gives a detailed knowledge and understanding of the leader element in the

leadership process.

Limitations of the Trait Theory

There is bound to be some subjective judgment in determining who is regarded as
a ‘good’ or ‘successful’ leader

The list of possible traits tends to be very long. More than 100 different traits of
successful leaders in various leadership positions have been identified. These
descriptions are simply generalities.

There is also a disagreement over which traits are the most important for an effective
leader

The model attempts to relate physical traits such as, height and weight, to effective
leadership. Most of these factors relate to situational factors. For example, a
minimum weight and height might be necessary to perform the tasks efficiently in
a military leadership position. In business organizations, these are not the
requirements to be an effective leader.

Implications of Trait Theory

The trait theory gives constructive information about leadership. It can be applied
by people at all levels in all types of organizations. Managers can utilize the
information from the theory to evaluate their position in the organization and to
assess how their position can be made stronger in the organization. They can get an
in-depth understanding of their identity and the way they will affect others in the
organization. This theory makes the manager aware of their strengths and
weaknesses and thus they get an understanding of how they can develop their
leadership qualities.

Behavioural Theories of
Leadership
Behavioural Leadership Theories are developed scientifically by behavior-
focused studies of a leader’s behaviour in a conditioned situation that one can
have a specific response to specific stimuli.

This behaviour-focused approach provides real marketing potential.

Behavioural Leadership Theories are developed by scientifically studying the

behaviours of leaders and the effects of them on the workforce and
environment.
Many behavioural scientists have attempted to identify appropriate
behavioural patterns of leadership styles.

Some of the important contributions in this regard include Michigan University

Studies and Ohio State Studies.

The behavioural scientists don’t concentrate on the traits of leaders; rather

they study the activities of leaders to identify their behavioural patterns.

What are the Behavioural

Leadership Theories?
The two most common theories will come up every time we talk about
Behavioral Leadership Theories, Michigan Leadership Studies, and Ohio State
Leadership Studies.

Michigan Leadership Studies

Michigan Leadership Studies is a behavioural Leadership theory that indicates
the Institute for Social Research at the University of Michigan conducted
empirical studies to identify styles of leader behaviour that results in higher
performance and satisfaction of a group.

The value of Michigan Leadership Studies lies in the analysis of 2 leadership

styles task and employee-oriented styles.

Instead of restricting to traits of leaders, they concentrated on the behavior of leaders.

Ohio State Leadership Studies

Ohio State Leadership Studies is Behavioral Leadership Theory.

A series of studies on leadership was done by Ohio State University in

1945 to identify observable behaviors of leaders instead of focusing on
their traits.

Ohio State Leadership Studies showed that initiating structure and consideration are
two distinct dimensions and not mutually exclusive.

A low score on one does not require a high score on the other. Consideration is the
people- orientation and initiating structure is the task orientation.The Ohio State
studies were conducted around the same time as the Michigan Leadership Studies,
which also identified as critical the focus on tasks and people.

1. Contingency Theory
What is the contingency theory of leadership?

The contingency theory of leadership supposes that a leader’s effectiveness is

contingent on whether or not their leadership style suits a particular situation.
According to this theory, an individual can be an effective leader in one
circumstance and an ineffective leader in another one. To maximize your
likelihood of being a productive leader, this theory posits that you should be able to
examine each situation and decide if your leadership style is going to be effective
or not. In most cases, this requires you to be self-aware, objective and adaptable.

Contingency theory of
leadership in the workplace
In the workplace, there are dozens of factors that can affect a leader’s
effectiveness. These include things like the size of the team, the scope of a project
and the expected delivery date for a result. Different leaders, each with unique
leadership styles, will respond to these variables in different ways. Contingency
theorists would say that no matter how successful a leader is, there will always be a
particular situation that will challenge them. Therefore, leaders must be willing to
acknowledge the fact that their success depends partially on their circumstances in
addition to their personal skills.

To lead their team well, managers and supervisors may need to either adapt their
leadership style to the current situation or delegate some of their leadership
responsibilities to a coworker.

a) The Fiedler Model:

The Fiedler Contingency Model was created in the mid-1960s by Fred Fiedler, a
scientist who studied the personality and characteristics of leaders.

The model states that there is no one best style of leadership. Instead, a leader's
effectiveness is based on the situation. This is the result of two factors –
"leadership style" and "situational favorableness" (later called "situational
control").

Fiedler argues that leaders should take a number of environmental or situational

factors into account before deciding on the appropriate leadership style: task-
oriented or relationship- oriented. Leaders would be very unlikely to be successful
if they cannot ‘match’ their personal leadership style to the demands of the
situation. As a result, the most effective way to handle the situation is to change the
leader itself based on the situational factors (leader-member relations, task
structure, and the leader’s position power) or to change the situation to suit the
leader. Fiedler’s Contingency Model can help assessing the appropriate leadership
style.

Situational Favorableness
Next, you determine the "situational favorableness" of your particular situation.
This depends on three distinct factors:

Leader-Member Relations – This is the level of trust and confidence that your team
has in you. A leader who is more trusted and has more influence within the group
is in a more favorable situation than a leader who is not trusted.

Task Structure – This refers to the type of task you're doing: clear and structured,
or vague and unstructured. Unstructured tasks, or tasks where the team and leader
have little knowledge of how to achieve them, are viewed unfavorably.

Leader's Position Power – This is the amount of power you have to direct the
group, and provide reward or punishment. The more power you have, the more
favorable your situation. Fiedler identifies power as being either strong or weak.

Situational Leadership theory:

Contrary to the Fielder model, the situational leadership model suggests that the
best option for leaders is to adapt their leadership styles to fit their team members
and their individual abilities. This model believes that leaders should first consider
the variables that affect their workplace and then decide the best tactic for how to
proceed.

Situational leadership also called the “Hersey-Blanchard model”, is primarily

concerned with the maturity level of a team’s members. High maturity team
members are experienced and able to make decisions independently. Moderate
maturity employees are capable, but lack confidence, or have confidence but are
not willing to complete the tasks they are assigned. Low maturity employees are
enthusiastic and willing but do not have the skills or experience to complete tasks.

The situational leadership model identifies four leadership styles, each of which
suits different levels of employee maturity. These styles include:

Delegating style: This style allows other team members to be responsible for
certain tasks or to lead subgroups. This style best suits a team of high maturity
employees because it requires team members to be both confident and capable.

Participating style: This style focuses on sharing ideas and decisions. Leaders
who use the participating style might apply it to moderately mature team members
who are capable but lack confidence and need one-on-one mentoring.

Selling style: This term refers to a style that involves the leader attempting to sell
his ideas to the group by persuasively giving task instructions. This also suits
moderate team members, but
unlike the previous style, it is best used with employees who are confident but
unwilling to complete tasks.

Telling style: This style is used by leaders who frequently give explicit directions
and who supervise all tasks closely. This style best suits low maturity followers
who are willing but unable to act independently.

PATH GOAL THEORY:

The Path-Goal model is primarily concerned with identifying processes (paths) that
will allow each team member to meet their individual objectives (goals). Leaders
who implement this model adjust their behaviors and expectations to positively
affect their team’s productivity. This goal requires the leader to be extremely
flexible in their leadership style. They will have to find a way to meet each team
member’s specific needs to assist them in reaching their daily or weekly goals.

The Path-Goal model focuses on improving employee motivation, autonomy and

satisfaction to increase their productivity within an organization. To accomplish
this, the model identifies four different leadership styles. These include:

The Directive Clarifying Leader: This style is used in situations where the leader
tells employees what is expected of them and instructs them on how to perform
certain tasks. The theory states that this style is the most effective when the
employees’ role and task are unstructured or ambiguous.

The Achievement-Oriented Leader: This behavior occurs in situations where the

leader sets lofty goals for employees, expects them to perform at a high level and
shows complete confidence in their capabilities. This style is productive in
environments that attract high-achievers, such as hospitals, scientific laboratories
and law firms.

The Participative Leader: Leaders who use this style consult with their employees
and ask for their input before making decisions. This behavior would be well-
received in a workplace where the employees are personally invested in the
outcome and results of their work.
The Supportive Leader: This style focuses on the satisfaction of employees’ needs
and considers their personal preferences. A supportive leader is as concerned with
their employees’ mental health and well-being as they are with their productivity.
This style is suitable for work environments that can be stressful or mentally
challenging.

b) LEADER PARTICIPATION
MODEL:
Leader-Participation Model is leadership theory that provides a set of rules to
determine the form and amount of participative decision-making in different
situations in the organization. Back in
1973, Victor Vroom and Phillip Yetton developed a leader-participation model that
related leadership behavior and participation to decision making in the
organization.

Recognizing that task structures have varying demands for routine and non-routine
activities, these i« searchers argued that leader behavior must adjust to reflect the
task structure in the organization.

Vroom and Yetton’s model was normative—it provided a sequential set of rules
that should be followed for determining the form and amount of participation
desirable in decision making, as dictated by different types of situations in the
organization.

The model was a complex decision tree incorporating seven contingencies (whose
relevance could be identified by making “yes” or “no” choices) and five alternative
leadership styles.

More recent work by Vroom and Arthur Jago has resulted in a revision of this
model without any barrier. The new model retains the same five alternative
leadership styles but expands the contingency variables to twelve, ten of which are
answered along a five-point scale. Table given below lists the twelve variables.

The model assumes that any of five behaviors may be feasible in a given situation
in the organization—Autocratic I (AI), Autocratic II (All), Consultative I (CI),
Consultative II (CII) and Group II (Gil):

AI:

You solve the problem or make a decision yourself using information available to
you at that time in the organization.

AH:

You obtain the necessary information from subordinates in the organization and
then decide on the solution to the problem yourself. You may or may not tell
subordinates what the problem is when getting the information from them.
The role played by your subordinates in making the decision is clearly one of
providing the necessary information in the organization to you rather than
generating or evaluating alternative solutions.

CI:
You share the problem with relevant subordinates individually, getting their ideas
and suggestions without bringing them together as a group. Then you make the
decision, which may or may not reflect subordinates’ influence in the organization.

CII:

You share the problem with your subordinates as a group, collectively obtaining
their ideas and suggestions. Then you make the decision that may or may not
reflect you subordinates’ influence in the organization.

LEADER MEMBER EXCHANGE

THEORY:
The Leader-Member Exchange Theory first emerged in the 1970s. It focuses on the
relationship that develops between managers and members of their teams.

The theory states that all relationships between managers and subordinates go
through three stages. These are:
Role-Taking.
Role-Making.
"Routinizatio
n."
Let's look at each stage in greater detail.

1. Role-Taking
Role-taking occurs when team members first join the group. Managers use this
time to assess new members' skills and abilities.

2. Role-Making
New team members then begin to work on projects and tasks as part of the team. In
this stage, managers generally expect that new team members will work hard, be
loyal and prove trustworthy as they get used to their new role.

The theory says that, during this stage, managers sort new team members (often
subconsciously) into one of two groups.
In-Group - if team members prove themselves loyal, trustworthy and skilled,
they're put into the In-Group. This group is made up of the team members that the
manager trusts the most. Managers give this group most of their attention,
providing challenging and interesting work, and offering opportunities for
additional training and advancement. This group also gets more one-to-one time
with the manager. Often, people in this group have a similar personality and work-
ethic to their manager.
Out-Group - if team members betray the trust of the manager, or prove that they're
unmotivated or incompetent, they're put into the Out-Group. This group's work is
often restricted and unchallenging. Out-Group members tend to have less access to
the manager, and often don't receive opportunities for growth or advancement.
3. Routinization
During this last phase, routines between team members and their managers are
established.

In-Group team members work hard to maintain the good opinion of their
managers, by showing trust, respect, empathy, patience, and persistence.

Out-Group members may start to dislike or distrust their managers. Because it's so
hard to move out of the Out-Group once the perception has been established, Out-
Group members may have to change departments or organizations in order to "start
over."

Once team members have been classified, even subconsciously, as In-Group or

Out-Group, that classification affects how their managers relate to them from then
on, and it can become self- fulfilling.

For instance, In-Group team members are often seen as rising stars and the
manager trusts them to work and perform at a high level. This is also the group that
the manager talks to most, offering support and advice, and they're given the best
opportunities to test their skills and grow. So, of course, they're more likely to
develop in their roles.

This also holds true for the Out-Group. The manager spends little, if any, time
trying to support and develop this group. They receive few challenging
assignments or opportunities for training and advancement. And, because they're
never tested, they have little chance to change the manager's opinion.

Using the Theory

Leader-Member Exchange Theory can be used to be aware of how we perceive
members of our own team.

1. Identify Your Out-Group

Chances are, you know who's in your Out-Group already. Take a moment to note
their names down.

Next, analyze why these people have fallen "out of favor." Did they do something
specifically to lose your trust? Do they exhibit bad behavior at work ? Are they
truly incompetent, or do they have low motivation?
2. Re-establish the Relationship
It's important that, as the leader, you make a reasonable effort to reestablish a
relationship with Out-Group team members. Research published in the Leadership
Quarterly journal in 1995 showed that team members who have high quality
relationships with their leader have higher morale, and are more productive than
those who don't. So you, and your organization, can benefit from creating a better
relationship.

Keep in mind that this group will likely be wary of any attention or support from
you; after all, they may not have had it in the past.

First, meet each team member one-on-one. Take the time to find out if they're
happy with their job. What are their career goals? What can you do to make their
work more challenging or engaging?

A one-on-one meeting can also help you identify that person's psychological
contract with you - that is, the unspoken benefits they expect from you, as their
leader. If they're in the Out-Group, they may feel that the psychological contract
has been broken.

Once you've had a chance to reconnect with your team members through one-on-
one meetings, do what you sensibly can to continue to touch base with them.
Practice management by walking around , or drop by their office to see if they need
help on projects or tasks. Work on getting to know these team members on a
personal level.

3. Provide Training and Development Opportunities

Remember, the biggest advantage to the Leader-Member Exchange Theory is that
it alerts you to the preference you might unconsciously - and possibly unfairly - be
showing some team members; this allows you to offer all of your team members
appropriate opportunities for training, development, and advancement.

Your Out-Group team members may benefit from a mentoring or coaching

relationship with you.

You may also want to provide them with low risk opportunities to test and grow
their skills. Use task allocation strategies to make sure you're assigning the right
task to the right person. Also, take our Bite-Sized Training session, Setting Goals
for Your Team , to learn how to set effective and realistic goals for these team
members.

You can also use the Nine-Box Grid for Talent Management to re-assess their
potential from time to time, and to give them the right development opportunities.
 Warning:
A problem with the Leader-Member Exchange Theory is that it assumes that all
team members are equally worthy of trust, prestigious projects and advancement.
Although we may like to think that everyone is honest, hard-working and worthy
of our esteem, the reality can be different!

Managers need to get the best possible results. This means putting the right people
in the right places, and it means developing and reinforcing success. Of necessity,
this means that talented people will get more interesting opportunities and may get
more attention than less-talented ones.

Use the Leader-Member Exchange Theory to make sure that you're objective in the
way that you deal with people, but don't be naïve in the way that you apply it.

Key Points
The Leader-Member Exchange Theory first appeared in the 1970s. It analyzes the
relationship between managers and team members.

Team members typically go through three phases in their relationship with their
manager: Role- Taking, Role-Making, and Routinization.

Typically, during the Role-Making phase, group members are classified into one of
two groups: In-Group, and Out-Group. In-Group team members often receive more
attention and support, and more opportunities, from their managers. Out-Group
members get very little face time, and few opportunities.

You can use the Leader-Member Exchange Theory to identify and validate any
perceptions that you might have of people on your team.

2. Charismatic Leadership
theories:
a) Characteristics of a Charismatic Leader,
Here are the five qualities that all great leaders possess:

1.Confidence

Leaders have powerful personalities that people are drawn to. Much of that
attraction stems from the fact that they exude confidence. Confident leaders have a
strong sense of self and rarely express self-doubt. They understand who they are
and are comfortable in their own skin.
Charismatic leaders are also optimists. They see the glass as half full instead of
half empty and are always looking on the bright side. To be a stronger leader, you
need to practice self- confidence. If you’re always second-guessing yourself and
feeling shy around your coworkers, they won’t follow you. If you aren’t confident
about your own actions, who will be?

2. Creativity

Charismatic leaders think outside the box and aren’t afraid to push the limits.
While others may see this kind of push as risky, these leaders are the ones leading
the way and driving innovation.

When a problem arises, leaders don’t see only the difficulties. Instead, they rise to
the challenge and see it as an opportunity. In business, this creativity can lead to
powerful change and transformation, which can inspire and motivate others.

3. Vision

Because leaders value innovation, they are focused on the future and how they can
improve it. They have a dream and direction that motivates and inspires others.
Share your ideas with others. When leader has have vision, others will take note.

4. Determination

Vision, in fact, becomes the drive and main purpose for many leaders. Everything
they do revolves around making their vision a reality. To achieve their dream,
leaders set specific goals and work to achieve them by bringing their teams
together, developing an organized strategy and working hard.

Leaders are focused on getting results and accomplishing what they set out to do.
They don’t give up when things get tough. Instead, they push through and continue
even when they encounter challenges.

5. Communication

When leaders speak, they communicate with confidence and charisma, which
makes people sit up and pay attention. They are clear and articulate with their
words and ensure that each statement has a purpose.

Leaders are also aware of their body language. They have good posture and
maintain eye contact with the people they are talking to. They are comfortable
speaking in front of large groups as well as one on one. No matter what the
situation, they articulate their goals and vision.
 TRANSFORMATIONAL
LEADERSHIP THEORIES:
Creating high-performance workforce has become increasingly important and to do
so business leaders must be able to inspire organizational members to go beyond
their task requirements. As a result, new concepts of leadership have emerged -
transformational leadership being one of them.

Transformational leadership may be found at all levels of the organization: teams,

departments, divisions, and organization as a whole. Such leaders are visionary,
inspiring, daring, risk-takers, and thoughtful thinkers. They have a charismatic
appeal. But charisma alone is insufficient for changing the way an organization
operates. For bringing major changes, transformational leaders must exhibit the
following four factors:

Inspirational Motivation: The foundation of transformational leadership is the

promotion of consistent vision, mission, and a set of values to the members. Their
vision is so compelling that they know what they want from every interaction.
Transformational leaders guide followers by providing them with a sense of
meaning and challenge. They work enthusiastically and optimistically to foster the
spirit of teamwork and commitment.

Intellectual Stimulation: Such leaders encourage their followers to be innovative

and creative. They encourage new ideas from their followers and never criticize
them publicly for the mistakes committed by them. The leaders focus on the
“what” in problems and do not focus on the blaming part of it. They have no
hesitation in discarding an old practice set by them if it is found ineffective.

Idealized Influence: They believe in the philosophy that a leader can influence
followers only when he practices what he preaches. The leaders act as role models
that followers seek to emulate. Such leaders always win the trust and respect of
their followers through their action. They typically place their followers needs over
their own, sacrifice their personal gains for them, ad demonstrate high standards of
ethical conduct. The use of power by such leaders is aimed at influencing them to
strive for the common goals of the organization.

Individualized Consideration: Leaders act as mentors to their followers and

reward them for creativity and innovation. The followers are treated differently
according to their talents and knowledge. They are empowered to make decisions
and are always provided with the needed support to implement their decisions.

The common examples of transformational leaders are Mahatma Gandhi and Obama.

Characteristics of
Transformational leadership:
1. Self
management
13
Leaders need to be very clear about the objective so that they can make others

understand. They need to be self-motivated and focused on the goal of the

organization.

The leader needs to evaluate their ego because this may lead to loss to the

organization. The leader should have positive body language and

confidence.

The leader should have the ability to complete the assigned task successfully.

2. Interpersonal skills

It is the responsibility of the leader to build strong co-ordination and communication

among employees.

The leader should have the skill of listening to others.

Leaders should frequently ask relevant questions to the employees and should
provide the necessary solution.

The leader should also make employees follow work ethic.

The leader should always ask for feedback to make things simple in the future.

3. Motivational and Inspiration

Leaders should always motivate their employees to have their focus on the goal.

They should give their time and meet personally because it will give more energy
rather simply communicating through social media.

Leaders should also try to conduct counselingprogrammes, it will create a great

impact on building focused working environment.

Leaders should always lead by true inspirational stories and examples.

14
4. Good judgement

This one is the most important characteristics of transformational leadership.

They should be able to predict risk factor involved in sensitive decisions.

Transformational leaders need to be proactive.

15
They should able to predict obstacles in advance so that any changes required in
the original planning can be done accordingly.

The leader needs to evaluate each and every step performed by their group member.

5. Organizational consciousness

Organizational conscious means that leaders should be aware of each and every
aspect regarding an organization. For example, regarding financial stability, human
relationship, social responsibility, best practices, etc.

Leaders should not only focus on technology upgradation or profit of the

organization but also focus on the growth of employees.

The leader should maintain the values, beliefs and behavior of the organization to
provide a safe working environment to their employees.

6. Diversity, Creativity and Adaptability

Transformational leaders should have a wide range of characteristics to deal with

any kind of difficulties. This diversity is apart from religious, political, gender and
socioeconomic aspects.

Creating innovative ideas is a part of employee job. Every employee should be

given time for creativity and innovation.

Creative environment makes employees more energetic towards their work. This
will help in dealing with an anomalous situation.

The leader should have capabilities to modify themselves and their group member
for the new changes.

Ethical Leadership:
But it’s not all negative. Studies have found practical, positive benefits too. For
example, one experiment at Cornell University found that “ethical leadership was
positively and significantly related to employee performance.”
Another study published in ScienceDirect showed that ethical leadership made
employees less likely to leave. Given the high cost of employee turnover, this is a
significant benefit.

As we’ll see in the next section, ethical leadership is about creating a culture in
which people do the right thing. So there are many benefits that flow from that,
from small things like employees
being less likely to steal the stationery to much larger things like treating customers
in the right way and making decisions for the long-term benefit of a wide variety of
stakeholders instead of for short-term personal gain.

Characteristics of Ethical Leaders

1. Justice

An ethical leader is always fair and just. They have no favorites, and treat everyone
equally. Under an ethical leader, no employee has any reason to fear biased
treatment on the basis of gender, ethnicity, nationality, or any other factor.

2. Respect others

One of the most important traits of ethical leadership is the respect that is given to
followers. An ethical leader shows respect all members of the team by listening to
them attentively, valuing their contributions, being compassionate, and being
generous while considering opposing viewpoints.

3. Honesty

It goes without saying that anyone who is ethical will also be honest and loyal.
Honesty is particularly important to be an effective ethical leader, because
followers trust honest and dependable leaders. Ethical leaders convey facts
transparently, no matter how unpopular they may be.

4. Humane

Being humane is one of the most revealing traits of a leader who is ethical and
moral. Ethical leaders place importance in being kind, and act in a manner that is
always beneficial to the team.

5. Focus on teambuilding

Ethical leaders foster a sense of community and team spirit within the organization.
When an ethical leader strives to achieve goals, it is not just personal goals that
they’re concerned about. They make genuine efforts to achieve goals that benefit
the entire organization – not just themselves.
6. Value driven decision-making

In ethical leadership, all decisions are first checked to ensure that they are in
accordance with the overall organizational values. Only those decisions that meet
this criterion are implemented.
7. Encourages initiative

Under an ethical leader, employees thrive and flourish. Employees are rewarded
for coming up with innovative ideas, and are encouraged to do what it takes to
improve the way things are done. Employees are praised for taking the first step
rather than waiting for somebody else to do it for them.

8. Leadership by example

Ethical leadership is not just about talking the talk, this type of leader also walks
the walk. The high expectations that an ethical leader has of employees are also
applicable on the individual level. Leaders expect others to do the right thing by
leading from example.

9. Values awareness

An ethical leader will regularly discuss the high values and expectations that they
place on themselves, other employees, and the organization. By regularly
communicating and discussing values, they ensure that there is consistent
understanding across the organization.

10. No tolerance for ethical violations

An ethical leader expects employees to do the right thing at all times, not just when
it is convenient for them. Don’t expect a leader of such high values to overlook or
tolerate ethical violations.

LEADERSHIP STYLES:
Democratic Leadership

Democratic leadership, also known as participative leadership or shared leadership,

is a type of leadership style in which members of the group take a more
participative role in the decision- making process.1 This type of leadership can
apply to any organization, from private businesses to schools to government.

Everyone is given the opportunity to participate, ideas are exchanged freely, and
discussion is encouraged. While the democratic process tends to focus on group
equality and the free flow of ideas, the leader of the group is still there to offer
guidance and control.1

The democratic leader is charged with deciding who is in the group and who gets
to contribute to the decisions that are made. Researchers have found that the
democratic leadership style is one of the most effective types and leads to higher
productivity, better contributions from group members, and increased group
morale.1
 Characteristics -
Some of the primary characteristics of democratic leadership include:

- Group members are encouraged to share ideas and opinions, even though the leader
retains the final say over decisions.
- Members of the group feel more engaged in the process.
- Creativity is encouraged and rewarded.

Good democratic leaders possess specific traits that include honesty, intelligence,
courage, creativity, competence, and fairness. Strong democratic leaders inspire
trust and respect among followers.

These leaders are sincere and make decisions based on their morals and values.
Followers tend to feel inspired to take action and contribute to the group. Good
leaders also tend to seek diverse opinions and do not try to silence dissenting
voices or those that offer a less popular point of view.

Pros and

Cons of

Democratic

Leadership -
 Pros -
 More ideas and creative solutions
 Group member commitment
 High productivity

Cons -
 Communication failures
 Poor decision-making by unskilled groups
 Minority or individual opinions overridden

Autocratic Leadership
Autocratic leadership, also known as authoritarian leadership, is a leadership style
characterized by individual control over all decisions and little input from group
members. Autocratic leaders typically make choices based on their ideas and
judgments and rarely accept advice from followers. Autocratic leadership involves
absolute, authoritarian control over a group.
Like other leadership styles, the autocratic style has both some benefits and some
weaknesses. While those who rely on this approach to heavily are often seen as
bossy or dictator-like, this level of control can have benefits and be useful in
certain situations.

When and where the authoritarian style is most useful can depend on factors such
as the situation, the type of task the group is working on, and characteristics of the
team members. If you tend to utilize this type of leadership with a group, learning
more about your style and the situations in which this style is the most effective
can be helpful.

Characteristics
- Some of the primary characteristics of autocratic leadership include.
- Allows little or no input from group members
- Requires leaders to make almost all of the decisions
- Provides leaders with the ability to dictate work methods and processes
- Leaves group feeling like they aren't trusted with decisions or important tasks
- Tends to create highly structured and very rigid environments
- Discourages creativity and out-of-the box thinking
- Establishes rules and tends to be clearly outlined and communicated

Benefits
The autocratic style tends to sound quite negative. It certainly can be when
overused or applied to the wrong groups or situations. However, autocratic
leadership can be beneficial in some instances, such as when decisions need to be
made quickly without consulting with a large group of people.

Some projects require strong leadership to get things accomplished quickly and
efficiently. When the leader is the most knowledgeable person in the group, the
autocratic style can lead to fast and effective decisions. The autocratic leadership
style can be useful in the following instances:
 Provides Direction
Autocratic leadership can be effective in small groups where leadership is lacking.
Have you ever worked with a group of students or co-workers on a project that got
derailed by poor organization, a lack of leadership and an inability to set
deadlines?

If so, the chances are that your grade or job performance suffered as a result. In
such situations, a strong leader who utilizes an autocratic style can take charge of
the group, assign tasks to different members, and establish solid deadlines for
projects to be finished.
These types of group projects tend to work better when one person is either
assigned the role of leader or simply takes on the job on their own. By setting clear
roles, assigning tasks, and establishing deadlines, the group is more likely to finish
the project on time and with everyone providing equal contributions.

Relieves Pressure
This leadership style can also be used well in cases where a great deal of pressure
is involved. In situations that are particularly stressful, such as during military
conflicts, group members may prefer an autocratic style.

This allows members of the group to focus on performing specific tasks without
worrying about making complex decisions. This also allows group members to
become highly skilled at performing certain duties, which is ultimately beneficial
to the success of the entire group.

Offers Structure
Manufacturing and construction work can also benefit from the autocratic style. In
these situations, it is essential that each person have a clearly assigned task, a
deadline, and rules to follow.

Autocratic leaders tend to do well in these settings because they ensure that
projects are finished on time and that workers follow safety rules to prevent
accidents and injuries.

Downsides
While autocratic leadership can be beneficial at times, there are also many
instances where this leadership style can be problematic. People who abuse an
autocratic leadership style are often viewed as bossy, controlling, and dictatorial.
This can sometimes result in resentment among group members.

Group members can end up feeling that they have no input or say in how things or
done, and this can be particularly problematic when skilled and capable members
of a team are left feeling that their knowledge and contributions are undermined.
Some common problems with autocratic leadership:

Discourages Group Input

Because autocratic leaders make decisions without consulting the group, people in
the group may dislike that they are unable to contribute ideas. Researchers have
also found that autocratic leadership often results in a lack of creative solutions to
problems, which can ultimately hurt the group from performing.Autocratic leaders
tend to overlook the knowledge and expertise that
group members might bring to the situation. Failing to consult with other team
members in such situations hurts the overall success of the group.

Hurts Morale

Autocratic leadership can also impair the morale of the group in some cases.
People tend to feel happier and perform better when they feel like they are making
contributions to the future of the group. Since autocratic leaders typically do not
allow input from team members, followers start to feel dissatisfied and stifled.

LAISSEZ-FAIRE
LEADERSHIP
Laissez-faire leadership, also known as delegative leadership, is a type of
leadership style in which leaders are hands-off and allow group members to make
the decisions. Researchers have found that this is generally the leadership style that
leads to the lowest productivity among group members.

However, it is important to recognize that this leadership style can have both
benefits and possible pitfalls. There are also certain settings and situations where a
laissez-faire leadership style might be the most appropriate. Knowing your
dominant leadership style can be helpful for understanding your own strengths and
potential weakness.

Characteristics of Laissez-Faire
Leadership -
Laissez-faire leadership is characterized by the following:

Hands-off approach

Leaders provide all training and

support Decisions are left to

employees Comfortable with

mistakes Accountability falls to

the leader

While the conventional term for this style is "laissez-faire" and implies a
completely hands-off approach, many leaders still remain open and available to
group members for consultation and feedback. They might provide direction at the
beginning of a project, but then allow group members to do their jobs with little
oversight.
This approach to leadership requires a great deal of trust.2 Leaders need to feel
confident that the members of their group possess the skills, knowledge, and
follow through to complete a project without being micromanaged.

Trust and Leadership :

Trust is the primary attribute associated with leadership, and trust that is broken
can have an adverse effect on a group’s performance. People are unlikely to follow
someone they think is dishonest, or someone they think will take advantage of
them. Conversely, when followers trust a leader, they’re willing to be vulnerable to
the leader’s actions.

What Is Trust?

three individuals putting their hands togetherWhat is trust? Trust is a positive

expectation that another individual will not act opportunistically at another’s
expense. Trust is dependent on history, based on relevant but limited samples of
experience. Trust involves five key dimensions:

- Integrity: the honesty and integrity of the individual.

- Competence: the knowledge and ability of the individual.
- Consistency: the reliability of the individual.
- Loyalty: the willingness of the individual to protect the interests of another.
- Openness: the individual’s willingness to be forthcoming with others.

In today’s world of business, there are plenty of reasons for trust to be

deteriorating. Wells Fargo took advantage of sales teams and, with them, their own
customers, and their predatory behavior was called onto the carpet in front of
Congress. Volkswagen’s faked emissions testing cost their business customers and
international relations. Facebook has been taken to task for lax security measures
around users’ personal information, and the lack of checks and balances in their
advertising policies may have influenced our country’s presidential election.

Whether trust is lost between a leader and a follower, or a customer and a

company, it costs the organization money.
 Types of Trust
There are three types of trust in organizational relationships.

Deterrence-based trust. Perhaps the most fragile of all the types of trust,
deterrence-based trust is based on the fear of reprisal if trust is violated. A new
employee might extend deterrence- based trust to his or her new manager,
understanding that there is limited experience on which to base any other trust. The
potentially harmed party must be willing to introduce harm in return if
the trust is violated. “I am willing to speak poorly of you if you do the same to
me,” is an example of that.

Knowledge-based trust. This trust is the most common, and it’s based on the
behavioral predictability that comes from a history of interaction. Even when an
individual can predict that another individual will be unpredictable or
untrustworthy, knowledge-based trust can still exist. “I know enough to know he
won’t show up on time and he won’t bring the pizza,” is what one might say in a
knowledge-based trust situation.

Identification-based trust. This is the highest level of trust achieved between two
individuals, because it’s an emotional connection between them. This trust is based
on a mutual understanding of each other’s intentions and appreciation of the
other’s wants and desires. A happily married couple exercises identification-based
trust, as well as two people in an organization who have worked together for a long
period of time.

Challenges to leaderships in
Virtual Teams
The growing demand for virtual teams

More than ever, businesses are hosting the majority of their infrastructure online.
This means that people across the world can simultaneously access the same
project and chat as easily as if they were in person.

Digital workplaces and virtual teams are now popular options for forward-thinking
employers. The idea of the digital nomad fairly new, but it points to a growing
need for flexibility within the workplace.

That’s why many companies opt for virtual teams over traditional brick-and-mortar
operations.
**************************************************
*
 Power and Politics
Power is one of the most controversial topics in the study of organizations and of
people therein. So much so that it has been termed the “last dirty word.” People are
often not comfortable discussing power. People who have power deny it; people
who seek power try to conceal their objectives from others; and those who secure
power, are secretive about how they secured it. Extensive research has been done
in OB on how people gain and use power in organizations. It has been observed
that most formal organizations are highly political and power plays an important
role in the way they work.

Power and politics are an important part of the dynamics of OB. Power
relationships are a natural part of any group or organization. It is important for
students of OB to know how power is acquired and exercised. Though there is a
popular saying that “power corrupts, and absolute power corrupts absolutely,”
power is not always a negative concept. Power is a reality of organizational life
and it is difficult to do away with it. Moreover, an understanding of how power
works in organizations can help one become a more effective m Power has been
defined in different ways by a number of scholars. Stephen P. Robbins defined
power as “the ability to influence and control anything that is of value to others.”

According to Max Weber, a pioneering sociologist, power is “the probability that

one actor within a social relationship will be in a position to carry out his own will
despite resistance.” The most important element in the study of power is
dependency. The greater the level of A’s dependence on B, the greater is B’s
power over A in that relationship. Further, dependence is the function of the
alternatives perceived by A and the importance given by A to these alternatives
that B controls. A person can have power over another only if he has control over
something that the other person desires. For example, if you need to acquire certain
skills in which your coach is the only expert available, then the coach has power
over you. Since the alternatives are limited and it is important for you to acquire
those skills, you are dependent on the coach. But once you have acquired those
skills, your dependency on the coach decreases and thus his power over you also
decreases.
Bases of Power: Power is of different types, depending on where it is sourced from
and how it is used. Social psychologists John French and Bertram Raven have
identified five sources of power: coercive, reward, legitimate, expert and referent

French and Raven identified five primary ways in which power can be exerted in
social situations.

Referent Power. In some cases, person B looks up to or admires person A,

and, as a result, B follows A largely because of A’s personal qualities,
characteristics, or reputation. In this case, A can use referent power to influence B.
Referent power has also been called charismatic
power, because allegiance is based on interpersonal attraction of one individual for
another. Examples of referent power can be seen in advertising, where companies
use celebrities to recommend their products; it is hoped that the star appeal of the
person will rub off on the products. In work environments, junior managers often
emulate senior managers and assume unnecessarily subservient roles more because
of personal admiration than because of respect for authority.

Expert Power. Expert power is demonstrated when person A gains power because
A has knowledge or expertise relevant to B. For instance, professors presumably
have power in the classroom because of their mastery of a particular subject matter.
Other examples of expert power can be seen in staff specialists in organizations
(e.g., accountants, labor relations managers, management consultants, and
corporate attorneys). In each case, the individual has credibility in a particular—
and narrow—area as a result of experience and expertise, and this gives the
individual power in that domain.

Legitimate Power. Legitimate power exists when person B submits to person A

because B feels that A has a right to exert power in a certain domain. Legitimate
power is really another name for authority, as explained earlier. A supervisor has a
right, for instance, to assign work. Legitimate power differs from reward and
coercive power in that it depends on the official position a person holds, and not on
his or her relationship with others.

Legitimate power derives from three sources. First, prevailing cultural values can
assign power to some group. In Japan and Korea, for instance, older employees
derive power simply because of their age. Second, legitimate power can be attained
as a result of the accepted social structure. For example, many Western European
countries, as well as Japan, have royal families that serve as a cornerstone to their
societies. Third, legitimate power may be designated, as in the case of a board of
directors choosing a new company president or a person being promoted into a
managerial position. Whatever the reason, people exercise legitimate power
because subordinates assume they have a right to exercise it. A principal reason
given for the downfall of the shah of Iran is that the people came to first question
and then denounce his right to legitimate power.

Reward Power. Reward power exists when person A has power

over person B because A controls rewards that B wants. These rewards can cover
a wide array of possibilities, including pay raises, promotions, desirable job
assignments, more responsibility, new equipment, and so forth. Research has
indicated that reward power often leads to increased job performance as employees
see a strong performance-reward contingency.

However, in many organizations, supervisors and managers really do not control

very many rewards. For example, salary and promotion among most blue-collar
workers is based on a labor contract, not a performance appraisal.
Coercive Power. Coercive power is based primarily on fear. Here, person A has
power over person B because A can administer some form of punishment to B.
Thus, this kind of power is also referred to as punishment power. As Kipnis points
out, coercive power does not have to rest on the threat of violence. “Individuals
exercise coercive power through a reliance upon physical strength, verbal facility,
or the ability to grant or withhold emotional support from others. These bases
provide the individual with the means to physically harm, bully, humiliate, or deny
love to others.”

Examples of coercive power in organizations include the ability (actual or implied)

to fire or demote people, transfer them to undesirable jobs or locations, or strip
them of valued perquisites. Indeed, it has been suggested that a good deal of
organizational behavior (such as prompt attendance, looking busy, avoiding
whistle-blowing) can be attributed to coercive, not reward, power. As Kipnis
explains, “Of all the bases of power available to man, the power to hurt others is
possibly the most often used, most often condemned and most difficult to control.”

Common Power Tactics in Organizations

As noted above, many power tactics are available for use by managers. However,
as we will see, some are more ethical than others. Here, we look at some of the
more commonly used power tactics found in both business and public
organizations.

Controlling Access to Information. Most decisions rest on the availability of

relevant information, so persons controlling access to information play a major role
in decisions made. A good example of this is the common corporate practice of pay
secrecy. Only the personnel department and senior managers typically have salary
information—and power—for personnel decisions.

Controlling Access to Persons. Another related power tactic is the practice of

controlling access to persons. A well-known factor contributing to President
Nixon’s downfall was his isolation from others. His two senior advisers had
complete control over who saw the president. Similar criticisms were leveled
against President Reagan.

Selective Use of Objective Criteria. Very few organizational questions have one
correct answer; instead, decisions must be made concerning the most appropriate
criteria for evaluating results. As such, significant power can be exercised by those
who can practice selective use of objective criteria that will lead to a decision
favorable to themselves. According to Herbert Simon, if an individual is permitted
to select decision criteria, he needn’t care who actually makes the decision.
Attempts to control objective decision criteria can be seen in faculty debates in a
university or college over who gets hired or promoted. One group tends to
emphasize teaching and will attempt to set criteria for employment dealing with
teacher competence, subject
area, interpersonal relations, and so on. Another group may emphasize research
and will try to set criteria related to number of publications, reputation in the field,
and so on.

Controlling the Agenda. One of the simplest ways to influence a decision is to

ensure that it never comes up for consideration in the first place. There are a
variety of strategies used for controlling the agenda. Efforts may be made to
order the topics at a meeting in such a way that the undesired topic is last on the
list. Failing this, opponents may raise a number of objections or points of
information concerning the topic that cannot be easily answered, thereby tabling
the topic until another day.

Using Outside Experts. Still another means to gain an advantage is using outside
experts. The unit wishing to exercise power may take the initiative and bring in
experts from the field or experts known to be in sympathy with their cause. Hence,
when a dispute arises over spending more money on research versus actual
production, we would expect differing answers from outside research consultants
and outside production consultants. Most consultants have experienced situations
in which their clients fed them information and biases they hoped the consultant
would repeat in a meeting.

Bureaucratic Gamesmanship. In some situations, the organizations own policies

and procedures provide ammunition for power plays, or bureaucratic
gamesmanship. For instance, a group may drag its feet on making changes in the
workplace by creating red tape, work slowdowns, or “work to rule.” (Working to
rule occurs when employees diligently follow every work rule and policy statement
to the letter; this typically results in the organization’s grinding to a halt as a result
of the many and often conflicting rules and policy statements.) In this way, the
group lets it be known that the workflow will continue to slow down until they get
their way.

Coalitions and Alliances. The final power tactic to be discussed

here is that of coalitions and alliances. One unit can effectively increase its
power by forming an alliance with other groups that share similar interests. This
technique is often used when multiple labor unions in the same corporation join
forces to gain contract concessions for their workers. It can also be seen in the
tendency of corporations within one industry to form trade associations to lobby
for their position. Although the various members of a coalition need not agree on
everything—indeed, they may be competitors—sufficient agreement on the
problem under consideration is necessary as a basis for action.

Although other power tactics could be discussed, these examples serve to illustrate
the diversity of techniques available to those interested in acquiring and exercising
power in organizational situations. In reviewing the major research carried out on
the topic of power, Pfeffer states:

If there is one concluding message, it is that it is probably effective, and it is

certainly normal that these managers do behave as politicians. It is even better that
some of them are quite effective at it. In situations in which technologies are
uncertain, preferences are conflicting,
perceptions are selective and biased, and information processing capacities are
constrained, the model of an effective politician may be an appropriate one for
both the individual and for the organization in the long run.

How do we know when a manager has power in an organizational setting? Harvard

professor Rosabeth Moss Kanter has identified several of the more common
symbols of managerial power.

For example, managers have power to the extent that they can intercede favorably
on behalf of someone in trouble with the organization. Have you ever noticed that
when several people commit the same mistake, some don’t get punished? Perhaps
someone is watching over them.

Moreover, managers have power when they can get a desirable placement for a
talented subordinate or get approval for expenditures beyond their budget. Other
manifestations of power include the ability to secure above-average salary
increases for subordinates and the ability to get items on the agenda at policy
meetings.

And we can see the extent of managerial power when someone can gain quick
access to top decision makers or can get early information about decisions and
policy shifts. In other words, who can get through to the boss, and who cannot?
Who is “connected,” and who is not?

Finally, power is evident when top decision makers seek out the opinions of a
particular manager on important questions. Who gets invited to important
meetings, and who does not? Who does the boss say “hello” to when he enters the
room? Through such actions, the organization sends clear signals concerning who
has power and who does not. In this way, the organization reinforces or at least
condones the power structure in existence.

The Ethical Use of Power

People are often uncomfortable discussing the topic of power, which implies that
somehow they see the exercise of power as unseemly. On the contrary, the
question is not whether power tactics are or are not ethical; rather, the question is
which tactics are appropriate and which are not. The use of power in groups and
companies is a fact of organizational life that all employees must accept. In doing
so, however, all employees have a right to know that the exercise of power within
the organization will be governed by ethical standards that prevent abuse or
exploitation.

Several guidelines for the ethical use of power can be identified. These can be
arranged according to our previous discussion of the five bases of power, as shown
in (Figure). As will be noted, several techniques are available that accomplish their
aims without compromising ethical standards. For example, a manager using
reward power can verify subordinate compliance with work directives, ensure that
all requests are both feasible and reasonable, make only ethical or
proper requests, offer rewards that are valued by employees, and ensure that all
rewards for good performance are credible and reasonably attainable.

(Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)

The Ethical Use of Power

Basis of Power Guidelines for Use

Source: Adapted from Gary A. Yukl, Leadership in Organizations, 8th edition 2013 (Englewood
Cliffs, N.J.; Pearson), pp. 44–58.

Treat subordinates fairly

Defend subordinates’ interests
Be sensitive to subordinates’ needs, feelings
Referent power
Select subordinates similar to oneself
Engage in role modeling

Promote image of expertise

Maintain credibility
Act confident and decisive
Expert power
Keep informed
Recognize employee concerns
Avoid threatening subordinates’ self-esteem

Be cordial and polite

Legitimate power Be confident

Be clear and follow up to verify understanding
Make sure request is appropriate
(Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)

The Ethical Use of Power

Basis of Power Guidelines for Use

Explain reasons for request

Follow proper channels
Exercise power regularly
Enforce compliance
Be sensitive to subordinates’ concerns

Verify compliance
Make feasible, reasonable requests
Reward power Make only ethical, proper requests
Offer rewards desired by subordinates
Offer only credible rewards

Inform subordinates of rules and penalties

Warn before punishing
Administer punishment consistently and uniformly
Coercive power Understand the situation before acting
Maintain credibility
Fit punishment to the infraction
Punish in private
Distinctions Between Power, Authority and Influence

Power itself refers to the ability of an individual or group to bring about a change
in some other individual or group in some way. Power may or may not be
legitimate, whereas authority is the source of power, and hence, is legitimate.
Authority has the willing acceptance of the person over whom it is exercised,
whereas power is (generally) unidirectional. It may or may not be liked by the
person over whom it is exercised. Influence refers to the ability to modify or
change people in general ways, like changing their performance and satisfaction. It
is a broader concept than both power and authority. Although both power and
influence are an essential part of leadership, influence is more closely associated
with the function of leading than power. Another difference between power and
influence is that power has more ‘force’ than influence. Power gives a person a
right to change certain relationships within an organization. It has the ability to
alter reality. Influence, however, can only alter a person’s perceptions about reality
and the relationships in the organization. Therefore, the difference between power
and authority is that authority has legitimacy and acceptance, whereas power may
or may not. And influence differs from power in terms of scope: it has a broader
scope than power. Though influence and power are different, the two are related
and sometimes the terms are used interchangeably. There is a subtle difference
between authority and influence. While authority generally flows from a higher
level to a lower level in a hierarchy, influence jumps levels and in many cases may
flow from a lower level to a much higher level.

Political Behavior in Organizations

Organizational politics is a reality in most organizations of reasonable size.

Researchers and practitioners of OB have also acknowledged the role played by
politics in organizational dynamics. It has been recognized that a certain amount of
political behavior is necessary on the part of managers to succeed in their work and
that politics is sometimes vital to the achievement of organizational goals. Politics
has been defined by a number of scholars of OB. Definition and Nature of Politics
Organizational politics has often been called ‘power in action.’ Stephen Robbins
has defined politics in organizations as “those activities that are not required as part
of one’s formal role in the organization, but that influence, or attempt to influence,
the distribution of advantages and disadvantages within the organization.” Robbins
has also differentiated between legitimate and illegitimate political behavior.
Legitimate political behavior is that which forms a part of the day-to-day work in
an organization. This includes forming organizational coalitions, networking and
developing contacts within and outside the organization, complaining to superiors
on routine matters, ignoring rules and procedures, adhering to rules strictly, etc.
Illegitimate political behavior, however, is extreme in nature and does not keep to
the accepted level of politicking. Protesting violently against rules, deliberately
breaking rules, not conforming to the accepted procedures, absconding from work,
sabotaging organizational activities, whistle blowing, etc., are examples of
illegitimate political behavior. Experts in OB feel that politicking can have
beneficial effects on an organization. For instance, when an
 employee develops a new tool to improve productivity, he may do politicking to
enlist the support of his superiors. If the new tool gets adopted by the organization,
the benefits accruing to the organization may be more than those to the employee.

We can identify at least five conditions conducive to political behavior in

organizations.

These are shown in along with possible resulting behaviors. The conditions include
the following:

1. Ambiguous goals. When the goals of a department or organization are ambiguous, more room is
available for politics. As a result, members may pursue personal gain under the guise of pursuing
organizational goals.
2. Limited resources. Politics surfaces when resources are scarce and allocation decisions must be
made. If resources were ample, there would be no need to use politics to claim one’s “share.”
3. Changing technology and environment. In general, political behavior is increased when the
nature of the internal technology is nonroutine and when the external environment is dynamic
and complex. Under these conditions, ambiguity and uncertainty are increased, thereby
triggering political behavior by groups interested in pursuing certain courses of action.
4. Nonprogrammed decisions. A distinction is made between programmed and nonprogrammed
decisions. When decisions are not programmed, conditions surrounding the decision problem
and the decision process are usually more ambiguous, which leaves room for political
maneuvering. Programmed decisions, on the other hand, are typically specified in such detail that
little room for maneuvering exists. Hence, we are likely to see more political behavior on major
questions, such as long-range strategic planning decisions.
5. Organizational change. Periods of organizational change also present opportunities for political
rather than rational behavior. Efforts to restructure a particular department, open a new division,
introduce a new product line, and so forth, are invitations to all to join the political process as
different factions and coalitions fight over territory.

Because most organizations today have scarce resources, ambiguous goals,

complex technologies, and sophisticated and unstable external environments, it
seems reasonable to conclude that a large proportion of contemporary
organizations are highly political in nature.

Factors Relating to Political Behavior

Political behavior is subjective, i.e., it differs from person to person and
organization to organization. Studies have shown that individuals differ in their
orientation towards politicking. Some tend to be more interested and capable of
politicking than others. Similarly, organizations
 differ in their political orientation. Individual differences in political behavior are
based on environmental differences and personality, whereas organizational
differences are based on the culture and the environment of the organization.

Individual Factors
Researchers have identified certain personality traits, needs, and other factors that
are likely to be related to political behavior.

 Employees who are high self-monitor, possess an internal locus of control, and have a high need
for power are more likely to engage in political behavior.

 The high self-monitor is more sensitive to social cues and is more likely to be skilled in political
behavior than the low self-monitor.

 Individuals with an internal locus of control are more prone to take a proactive stance and
attempt to manipulate situations in their favor.

 The Machiavellian personality is comfortable using politics as a means to further his/her self-
interest.

An individual’s investment in the organization’s perceived alternatives and

expectations of success will influence the tendency to pursue illegitimate means of
political action.

 The more that a person has invested and the more a person has to lose, the less likely he/she is to
use illegitimate means.

 The more alternative job opportunities an individual has, a prominent reputation, or influential
contacts outside the organization, the more likely he/she will risk illegitimate political actions.

 A low expectation of success in using illegitimate means diminishes the probability of its use.

Organizational Factors
Political activity is probably more a function of the organization’s characteristics
than of individual difference variables.
When an organization’s resources are declining, when the existing pattern of
resources is changing, and when there is an opportunity for promotions, politics is
more likely to surface.
1. Cultures characterized by low trust, role ambiguity, unclear performance evaluation systems,
zero-sum reward allocation practices, democratic decision making, high pressures for
performance, and self-serving senior managers will create breeding grounds for politicking.

2. When organizations downsize to improve efficiency, people may engage in political actions to
safeguard what they have.

3. Promotion decisions have consistently been found to be one of the most political in
organizations.

4. The less trust there is within the organization, the higher the level of political behavior and the
more likely it will be illegitimate.

5. Role ambiguity means that the prescribed behaviors of the employee are not clear.

 There are fewer limits to the scope and functions of the employee’s political actions.

 The greater the role ambiguity, the more one can engage in political activity with little chance of
it being visible.

6. Subjective criteria in the appraisal process; Subjective performance criteria create ambiguity.

 Single outcome measures encourage doing whatever is necessary to “look good.”

 The more time that elapses between an action and its appraisal, the more unlikely that the
employee will be held accountable for his/her political behaviors.

7. The zero-sum approach treats the reward “pie” as fixed so that any gain one person or group
achieve has to come at the expense of another person or group. If I win, you must lose!

1. This encourages making others look bad and increasing the visibility of what’ you
do.

8. Making organizations less autocratic by asking managers to behave more democratically is not
necessarily embraced by all individual managers.

 Sharing their power with others runs directly against some managers’ desires.

 The result is that managers, especially those who began their careers in the 1950s and 1960s*
may use the required committees, conferences, and group meetings in a superficial.
9. The more pressure that employees feel to perform well, the more likely they are to engage in
politicking.

 If a person perceives that his or her entire career is riding on the next “whatever,” there is
motivation to do whatever is necessary to make sure the outcome is favorable.

10. When employees see top management successfully engaging in political behavior, a climate is
created that supports politicking.

Impression Management

Impression management is sometimes referred to as “selfpresentation”. It is the

process by which people try to manage or control the perceptions formed by other
people about themselves. Often people like to present themselves in a socially
desirable way and impress others. However, such attempts by subordinates to
impress superiors can affect the validity of performance appraisal in organizations.

***************************
***************************
****************
 CONFLICT & NEGOTIATIONS

a) Sources of Conflict

Organizational sources of conflict are those events or factors that cause goals to
differ. Personality conflicts, irritating as they may be, don’t actually qualify as an
organizational source of conflict. They may be the most aggravating part of your
day and, certainly, they’re something organizations need to watch for if it interferes
with daily work, but these organizational sources produce much bigger problems.
Those sources are

- Goal incompatibility and differentiation

- Interdependence
- Uncertainty and resource scarcity
- Reward systems
- Goal Incompatibility and Differentiation

Organizational sources of conflict occur when departments are differentiated in

their goals. For instance, the research and development team at an electronics
company might be instructed to come up with the best new, pie-in-the-sky idea for
individual-use electronics—that thing consumers didn’t know they needed. The
R&D team might come up with something fantastic, featuring loads of bells and
whistles that the consumer will put to excellent use.

Then, the manufacturing team gets together to look at this new design. They’ve
been told that management likes it, and that they need to build it by the most
economical means possible. They start make adjustments to the design, saving
money by using less expensive materials than what were recommended by the
R&D team. Conflict arises.

Goal incompatibility and differentiation is a fairly common occurrence. The

manufacturing team disagrees with research and development. The sales
department feels like the legal department is there to keep them from getting deals
signed. Departments within the organization feel like they are working at cross-
purposes, even though they’re both operating under the assumption that their
choices are best for the company.

Interdependence
Interdependence describes the extent to which employees rely on other employees
to get their work done. If people all had independent goals that didn’t affect one
another, everything would be fine. That’s not the case in many organizations.

For instance, a communication department is charged with putting together

speaking points that help their front-line employees deal with customer questions.
Because the communications department is equipped to provide clear instructions
but are not necessarily the subject matter
experts, they must wait for engineering to provide product details that are
important to the final message. If those details are not provided, the
communication department cannot reach their goal of getting these speaking points
out on time for their front-line staff to deal with questions.

The same holds true for a first-, second-, and third-shift assembly line. One shift
picks up where another leaves off. The same standards of work, production
numbers, and clean-up should be upheld by all three teams. If one team deviates
from those standards, then it creates conflict with the other two groups.

Uncertainty and Resource Scarcity

Change. We talked about it as a source of stress, and we’re going to talk about it
here as an organizational source of conflict. Uncertainty makes it difficult for
managers to set clear directions, and lack of clear direction leads to conflict.

Resource scarcity also leads to conflict. If there aren’t enough material and
supplies for every worker, then those who do get resources and those who don’t are
likely to experience conflict. As resources dwindle and an organization has to
make do with less, departments will compete to get those resources. For instance,
if budgets are slim, the marketing department may feel like they can make the most
of those dollars by earning new customers. The development team may feel like
they can benefit from the dollars by making more products to sell. Conflict results
over resource scarcity.

Reward System

An organization’s reward system can be a source of conflict, particularly if the

organization sets up a win-lose environment for employee rewards. For instance,
an organization might set a standard where only a certain percent of the employees
can achieve the top ranking for raises and bonuses. This standard, not an
uncommon practice, creates heavy competition within its employee ranks.
Competition of this nature often creates conflict.

Other forms of rewards that might incite conflict include employee of the month or
other major awards that are given on a competitive basis.

Types of Conflict
Conflict can occur between two employees, between a team of employees, or
between departments of an organization, brought about by the employees, teams,
or organizations themselves.

Intrapersonal Conflict
Intrapersonal conflict takes place within an individual. The person experiences it in
his own mind. Thus, it is a type of conflict that is psychological involving the
individual’s thoughts,
values, principles and emotions. Intrapersonal conflict may come in different
forms, from the simple mundane ones like deciding whether or not to go vegan for
lunch to ones that can affect major decisions such as choosing a career path.

However, this type of conflict can be quite difficult to handle, if you find it hard to
decipher your inner struggles. It results in restlessness and uneasiness, or can even
cause depression. On such occasions, it is advised to seek a way to let go of the
anxiety by communicating with other people. Eventually, when the person finds
himself/herself out of the situation, he/she can become more empowered as a
person. Thus, the experience invokes a positive change which helps in personal
growth.

Intragroup Conflict
Intragroup conflict occurs among individuals within a team. The incompatibilities
and misunderstandings between team members leads to intragroup conflict. It starts
from interpersonal disagreements like team members have different personalities
which may lead to tension or differences in views and ideas. Say for example,
during a presentation, members of the team might find the notions presented by the
one presiding to be erroneous due to their differences in opinion.

Within a team, conflict can be helpful in coming up with decisions, which will
eventually allow them to achieve their objectives as a team. But, if the degree of
conflict disrupts harmony among the members, then some serious guidance from a
different party will be needed for it to be settled.

Interpersonal Conflict
Interpersonal conflict means a conflict between two individuals. Basically, this
occurs because of some differences in people. We have varied personalities which
usually lead to incompatible choices and opinions. So, it is a natural occurrence
which can eventually help in personal growth or developing our relationships with
others.
In addition, adjustments are necessary for managing this type of conflict. However,
when interpersonal conflict becomes too destructive, calling in a mediator helps so
as to have the issue resolved.

Intergroup Conflict
Intergroup conflict occurs when a misunderstanding arises among different teams
within an organization. For example, the marketing department of an organization
can come in conflict with the customer support department. This is because of the
varied sets of goals and interests of these different groups. In addition to this,
competition also contributes to intergroup conflict.
There are other factors which increase this type of conflict. Some of these factors
may include a rivalry in resources or the boundaries set by a group to others which
forms their own identity as a team.

Conflict should not always be perceived as a problem rather at times it is a chance

for growth and can be an effective means of opening up among groups or
individuals. However, when conflict begins to suppress or disrupt productivity and
gives way to more conflicts, then conflict management is what is needed for
problem resolution.

Conflict Management Techniques

We get into a conflict when the person opposite to us has a different mindset. It is
very common in a workplace to get into differences of opinion. Sometimes there is
a conflict between two or more employees, sometimes employees have a conflict
with their managers and so on. Now the question is, how can we manage
disagreements in ways that build personal and collegial relationships?

Here are five strategies from conflict management theory for managing stressful
situations. None of them is a "one-size-fits-all" answer. Which one is the best in a
given situation depends on variety of factors, including an appraisal of the levels of
conflict.

• Collaborating − win/win

• Compromising − win some/lose some

• Accommodating − lose/win

• Competing − win/lose

• Avoiding − no winners/no losers

Collaborating
This technique follows the rule "I win, you win". Collaborating means working
together by integrating ideas set out by multiple people. The objective here is to
find a creative solution acceptable to everyone. It calls for a significant time
commitment but is not appropriate for all conflicts.

This technique is used in situations where −

• There is a high level of trust

• We don't want to take complete responsibility

• We want others to also have "ownership" of solutions

• People involved are willing to change their thinking

• We need to work through animosity and hard feelings

However, this process takes a lot of time and energy and some may take advantage
of other people's trust and openness.

Example − A businessman should work collaboratively with the manager to

establish policies, but collaborative decision-making regarding office supplies
wastes time better spent on other activities.

Compromising
This technique follows the rule "You bend, I bend". Compromising means
adjusting with each other’s opinions and ideas, and thinking of a solution where
some points of both the parties can be entertained. Similarly, both the parties need
to give up on some of their ideas and should agree with the other.

This technique can be used in situations where −

• People of equal levels are equally committed to goals

• Time can be saved by reaching intermediate settlements on individual parts of complex

matters

• Goals are moderately important

Important values and long-term objectives can be derailed using this technique.
This process may not work if initial demands are high and mainly if there's no
commitment to honor the compromise solutions.

Example − Two friends had a fight and they decide to compromise with each other
through mutual understanding.
 Accommodating
This technique follows the rule "I lose, you win". Accommodating means giving
up of ideas and thoughts so that the other party wins and the conflict ends. This
technique can be used when −
• An issue is not that important to us as it is to the other person

• We realize we are wrong

• We are willing to let others learn by mistake

• We know we cannot win

• It is not the right time and we would prefer to simply build credit for the future

• Harmony is extremely important

• What the parties have in common is a good deal more important than their differences

However, using this technique, one's own ideas don't get attention and credibility,
and influence can be lost.

Example − When we fight with someone we love we choose to let them win.

Competing
This technique follows the rule "I win, you lose". Competing means when there is
a dispute a person or a group is not willing to collaborate or adjust but it simply
wants the opposite party to lose. This technique can be used when −

• We know you are right.

• Time is short and a quick decision is to be made.

• A strong personality is trying to steamroll us and we don't want to be taken advantage of.

• We need to stand up for our rights.

This technique can further escalate conflict or losers may

retaliate. Example − When in a debate the party with more facts

wins.

Avoiding
This technique follows the rule "No winners, no losers". Avoiding means the ideas
suggested by both the parties are rejected and a third person is involved who takes
a decision without favoring any of the parties. This technique can be used when −
• The conflict is small and relationships are at stake

• We are counting to ten to cool off

• More important issues are pressing and we feel we don't have time to deal with this

particular one

• We have no power and we see no chance of getting our concerns met

• We are too emotionally involved and others around us can solve the conflict more
successfully

Using this technique may lead to postponing the conflict, that may make

matters worse. Inter-group Conflict

Many times, groups inter-relate to accomplish the organization's goals and

objectives, and conflict can occur. Some conflict, called functional conflict, is
considered positive, because it enhances performance and identifies weaknesses.
Dysfunctional conflict, however, is confrontation or interaction between groups
that harms the organization or hinders attainment of goals or objectives.

Causes of Intergroup Conflict

One of the most prominent reasons for intergroup conflict is simply the nature of
the group. Other reasons may be work interdependence, goal variances, differences
in perceptions, and the increased demand for specialists. Also, individual members
of a group often play a role in the initiation of group conflict. Any given group
embodies various qualities, values, or unique traits that are created, followed, and
even defended. These clans can then distinguish "us" from "them." Members who
violate important aspects of the group, and especially outsiders, who offend these
ideals in some way, normally receive some type of corrective or defensive
response. Relationships between groups often reflect the opinions they hold of each
other's characteristics. When groups share some interests and their directions seem
parallel, each group may view the other positively; however, if the activities and
goals of groups differ, they may view each other in a negative manner. When
trying to prevent or correct intergroup conflict, it is important to consider the
history of relations between the groups in conflict. History will repeat itself if left
to its own devices.

Limited resources and reward structures can foster intergroup conflict by making
the differences in group goals more apparent. Differences in perceptions among
groups regarding time and status, when coupled with different group goals, can
also create conflict. Reorganization of the
workplace and integration of services and facilities can be stressful to some and
create negative conflict. Some individuals within the group have inherent traits or
social histories that impact intergroup conflict, but problems within intergroup
relations are not usually caused by the deviate behavior of a few individuals.

Conflicts within or between groups can be destructive or constructive, depending

on how the conflict is handled.

When an organization is creating a dispute resolution process, there are key factors to
success:

- A critical mass of individuals who are committed to the process;

- A leadership group who perceive it in their best interest and the best interests of the
people they serve;
- Strategic cooperation among historical enemies;
- Realistic and satisfactory outcomes;
- A moratorium on hostilities or conflict-seeking behavior.
- There also are barriers to success:
- Fear of losing power;
- Unwillingness to negotiate;
- No perceived benefit;
- Corporate philosophy;
- Top leadership reluctance;
- Lack of success stories.

Organizational Conflict

Organizational conflict alludes to the result of human interaction, that starts when
one member of the organization discerns that his/her goals, values or attitude are
incompatible, with those of other members of the organization. The incompatibility
in opinions can come into being, within a member, between two members, or
between groups of the organization.

Factors Influencing
Organizational Conflict
Unclear Responsibility: If there is lack of clarity, regarding who is responsible for
which section of a task or project, conflict takes place. And, to avoid this situation,
the roles and responsibility of the team members should be stated clearly and also
agreed upon by all.

Interpersonal Relationship: Every member of an organization, possesses

different personality, which plays a crucial role in resolving conflict in an
organization. Conflicts at the workplace, are often caused by interpersonal issues
between the members of the organization.
Scarcity of Resources: One of the main reason for occurence of conflict in an
organization is the inadequacy of resources like time, money, materials etc. due to
which members of the organization compete with each other, leading to conflict
between them.

Conflict of Interest: When there is a disorientation between the personal goals of

the individual and the goals of the organization, conflict of interest arises, as the
individual may fight for his personal goals, which hinders the overall success of
the project.

Causes of Organizational Confict

Managerial Expectations: Every employee is expected to meet the targets, imposed

by his/her superior and when these expectations are misunderstood or not fulfilled
within the stipulated time, conflicts arises.

Communication Disruption: One of the major cause of conflict at the workplace is

disruption in the communication, i.e. if one employee requires certain information
from another, who does not respond properly, conflict sparks in the organization.

Misunderstanding: Misunderstanding of information, can also alleviate dispute in

organization, in the sense that if one person misinterpret some information, it can
lead to series of conflicts.

Lack of accounhtability: If in a project, responsibilities are not clear and some

mistake has arisen, of which no member of the team wants to take responsibility
can also become a cause of conflict in the organization.

Ways to Manage Conflicts in

Organization
- Handle the conflict positively.
- Formation of official grievance procedure for all members.
- Concentrate on the causes rather than their effect, to assess conflicts.
- Parties to conflicts should be given an equal voice, irrespective of their position, term or
 political influence.
- Active participation of all the parties to conflict can also help to counter it.

In an organization, conflict is inevitable and so various means are to be discovered

to resolve them or use them in a way that can help the organization to increase its
productivity.

CONFLICT &
NEGOTIATIONS
Define Negotiations
Negotiation is a method by which people settle differences. It is a process by which
compromise or agreement is reached while avoiding argument and dispute.

In any disagreement, individuals understandably aim to achieve the best possible

outcome for their position (or perhaps an organisation they represent). However,
the principles of fairness, seeking mutual benefit and maintaining a relationship are
the keys to a successful outcome.

Specific forms of negotiation are used in many situations: international affairs, the
legal system, government, industrial disputes or domestic relationships as
examples. However, general negotiation skills can be learned and applied in a wide
range of activities. Negotiation skills can be of great benefit in resolving any
differences that arise between you and others.

Stages of Negotiation
In order to achieve a desirable outcome, it may be useful to follow a structured
approach to negotiation. For example, in a work situation a meeting may need to
be arranged in which all parties involved can come together.

The process of negotiation

includes the following stages:
- Preparation
- Discussion
- Clarification of goals
- Negotiate towards a Win-Win outcome
- Agreement
- Implementation of a course of action

1. Preparation

Before any negotiation takes place, a decision needs to be taken as to when and
where a meeting will take place to discuss the problem and who will attend. Setting
a limited time-scale can also be helpful to prevent the disagreement continuing.
This stage involves ensuring all the pertinent facts of the situation are known in
order to clarify your own position. In the work example above, this would include
knowing the ‘rules’ of your organisation, to whom help is given, when help is not
felt appropriate and the grounds for such refusals. Your organisation may well
have policies to which you can refer in preparation for the negotiation.Undertaking
preparation before discussing the disagreement will help to avoid further conflict
and unnecessarily wasting time during the meeting.

2. Discussion
During this stage, individuals or members of each side put forward the case as they
see it, i.e. their understanding of the situation.

Key skills during this stage include questioning, listening and clarifying.

Sometimes it is helpful to take notes during the discussion stage to record all points
put forward in case there is need for further clarification. It is extremely important
to listen, as when disagreement takes place it is easy to make the mistake of saying
too much and listening too little. Each side should have an equal opportunity to
present their case.

3. Clarifying Goals

From the discussion, the goals, interests and viewpoints of both sides of the
disagreement need to be clarified.

It is helpful to list these factors in order of priority. Through this clarification it is

often possible to identify or establish some common ground. Clarification is an
essential part of the negotiation process, without it misunderstandings are likely to
occur which may cause problems and barriers to reaching a beneficial outcome.

4. Negotiate Towards a Win-Win Outcome

This stage focuses on what is termed a 'win-win' outcome where both sides feel
they have gained something positive through the process of negotiation and both
sides feel their point of view has been taken into consideration.

A win-win outcome is usually the best result. Although this may not always be
possible, through negotiation, it should be the ultimate goal.

Suggestions of alternative strategies and compromises need to be considered at this

point. Compromises are often positive alternatives which can often achieve greater
benefit for all concerned compared to holding to the original positions.

5. Agreement

Agreement can be achieved once understanding of both sides’ viewpoints and

interests have been considered.
It is essential to for everybody involved to keep an open mind in order to achieve
an acceptable solution. Any agreement needs to be made perfectly clear so that
both sides know what has been decided.
6. Implementing a Course of Action

From the agreement, a course of action has to be implemented to carry through

the decision. Failure to Agree

If the process of negotiation breaks down and agreement cannot be reached, then
re-scheduling a further meeting is called for. This avoids all parties becoming
embroiled in heated discussion or argument, which not only wastes time but can
also damage future relationships.

At the subsequent meeting, the stages of negotiation should be repeated. Any new
ideas or interests should be taken into account and the situation looked at afresh. At
this stage it may also be helpful to look at other alternative solutions and/or bring
in another person to mediate.

Informal Negotiation

There are times when there is a need to negotiate more informally. At such times,
when a difference of opinion arises, it might not be possible or appropriate to go
through the stages set out above in a formal manner.

Nevertheless, remembering the key points in the stages of formal negotiation may
be very helpful in a variety of informal situations.

In any negotiation, the following

three elements are important and
likely to affect the ultimate
outcome of the negotiation:
- Attitudes
- Knowledge
- Interpersonal Skills
 - Attitudes

All negotiation is strongly influenced by underlying attitudes to the process itself,

for example attitudes to the issues and personalities involved in the particular case
or attitudes linked to personal needs for recognition.

Always be aware that:

- Negotiation is not an arena for the realisation of individual achievements.
- There can be resentment of the need to negotiate by those in authority.
- Certain features of negotiation may influence a person’s behaviour, for example some
people may become defensive.
- Knowledge
The more knowledge you possess of the issues in question, the greater your
participation in the process of negotiation. In other words, good preparation is
essential.

Approache

s to

Conflict

Manageme

nt Conflict

Manageme

nt Style

Each person brings his own innate style of conflict management to the party. Are
they all right or all wrong?.

The avoiding style of conflict resolution is one where one has low concern for his
or her ultimate goal and low concern for his or her relationship with the other. In
this situation, Heitor might avoid any discussion with Teresa, not wanting to start
any fights. He’s just not that kind of guy. But his idea isn’t getting furthered along,
nor is hers, nor is the company meeting its goals. The conflict hasn’t gone away,
and the job just isn’t getting done.

The accommodating style of conflict resolution is where one party focuses on the
needs of the other, and not the importance of the goal. If Heitor were one to adopt
the accommodating style, he might look at Teresa as a valued team player who
really needs a break after a couple of tough months. Without thought to the goal
and the outcome the company expects, he tells Teresa to go ahead with the direct
mail program.

The competing style of conflict resolution is defined by one party pushing ahead
with his or her own mission and goals with no concern for the other party in the
conflict. If Teresa were to adopt the competing style of conflict resolution, she
might move forward with the plan to use direct mail and ignore anything to do with
Heitor’s suggestion. She’d take her idea to their boss and implement and run right
over any objections Heitor had. As you might guess, this approach may exacerbate
other conflicts down the road!

The compromising style of conflict management. Here, moderate concern for

others and moderate concern for the ultimate goal are exhibited, and a focus is
placed on achieving a reasonable middle ground where all the parties can be
happy. For Heitor and Teresa, this might mean a joint decision where they devote
half of their marketing funds to the direct mail campaign that Teresa wants to do,
and the other half to the television spots that Heitor wants to do. Neither party has
gotten exactly what he or she wanted, but neither party is completely dissatisfied
with the resolution.

Finally, the collaborating style is one where there is high concern for
relationships and high concern for achieving one’s own goal. Those with a
collaborating style look to put all conflict on the table,analyze it and deal openly
with all parties. They look for the best possible solution: a win for each party in the
conflict. In this situation, Heitor and Teresa would sit down, look at the
possible conversion rate of each of their planned marketing campaigns. Perhaps
they would find that a third option—online advertising—would provide a more
targeted audience at a discounted price. With this new option that both parties
could get behind, conflict is resolved and both feel like the company’s goal will be
satisfied.

**************************************************
******
 STRESS MANAGEMENT
a )Causes of Stress

Stress is different for everyone. What stresses you out may not even bother your
best friend and vice versa.

Still, your bodies react the same to stressors. That’s because the stress response is
your body’s way of dealing with tough or demanding situations. It causes
hormonal, respiratory, cardiovascular, and nervous system changes. For example,
stress can make your heart beat faster, make you breathe rapidly, sweat, and tense
up. It can also give you a burst of energy.

This is known as the body’s “fight-or-flight response.” It’s this chemical reaction
that prepares your body for a physical reaction because it thinks it’s under attack.
This type of stress helped our human ancestors survive in nature.
b) Organizational and Extra Organizational Stressors

Extra organizational StressorsThese include: societal/technological changes,

globalization; relocation; the family;economic and financial conditions; race, class,
and residential or community condition. Societal/technological changeThe
phenomenal rate of change has had a great effect on people’s lifestyles and has
increased stress.A Person’s family– a family situation, either a squabble or illness
can cause stress tothe employee. Also the challenges of balancing the
responsibilities of their jobs and theneeds of their families are putting up pressure
on employees.Relocation, transfer, or promotion can also lead to stress. Expatriate
managers (thosewith responsibilities outside their home country) may undergo
cultural shock which is astressor.Sociologicalvariablessuch as race, sex and class,
which cause differences in values,beliefs, also cause stress.Financial situationof the
employee and the economic conditions in the country canalso cause
stress.89DistressEustressResults in distress. Results in Eurostress Behavioral
Psychological Medical Exhilaration Excitement Surprise

Str
ess

Ma

nag

em

ent

Gr

oup

Str

ess

ors
Group StressorsGroup stressors can be categorized in two areas:Lack of group
cohesiveness (or togetherness)- This can be caused by -task design-the supervisor
prohibits or limits togetherness or-other members of the group shut the person
outLack of social supportWhen social support is lacking (e.g. when an employee
does not share his joys,successes, problems, etc with his co- workers) this can be
quite stressful.5.6

Group stressors can be categorized in two areas:Lack of group cohesiveness (or

togetherness)- This can be caused by -task design-the supervisor prohibits or limits
togetherness or-other
members of the group shut the person out. Lack of social support. When social
support is lacking (e.g. when an employee does not share his joys,successes,
problems, etc with his co-workers) this can be quite stressful.

Individual Stressors
Individual Stressors Individual dispositions such as type A characteristics, personal
control, learned helpessness, and psychological hardiness may also affect the level
of stress in an90

Coping Strategy for Stress

Here are seven ways to deal with stress:
- Keep a positive attitude – sometimes the way you think about things can make all of the
difference. Your attitude can help offset difficult situations.
- Accept that there are events you cannot control – when you know there are times when
you have given all that you can to a situation, it allows you to expend energy where it can
be more effective.
- Learn to relax – purposeful relaxation, such as deep breathing, muscle relaxation and
meditation is essential in training your body to relax. Relaxation should be a part of your
daily regimen.
- Be active regularly – being active also helps your body more easily fight stress because it
is fit.
- Eat well-balanced meals – staying on track with healthy eating habits is a great way to
manage stress.
- Rest and sleep - your body needs time to recover from stressful events, so sleep is an
important part of caring for yourself.

**************************************************
********
 Organizational Culture

Why It Matters: Organizational Culture

Why learn about the impact organizational culture has on individuals and the workplace?

Organizational culture is present in our daily lives. Whether or not you recognize
it, organizational culture can be found in every family unit and in any group
dynamic you are a part of. Understanding how culture is developed can give
insight into each working part of an organization. There are both internal and
external factors that contribute to an organization’s cultural identity. Recognizing
these factors and learning how to adjust them to change culture is a valuable skill
to have, not only in your personal relationships, but also in your professional ones.

The ability to identify a positive or negative company culture can assist you when
applying for jobs and when deciding on a career path. While organizational culture
can change, there are a number of internal and external factors that need to be
considered and adjusted in order to successfully invoke change. Organizational
culture may seem like a fancy business term but you will soon learn that it plays a
role in your everyday life.

Organizational culture sets the tone for an organization. It depicts acceptable

behaviors and defines the appropriate way to act. Culture is formed by an
organization’s values and beliefs which are infused throughout the organization
from upper management through entry-level employees. Culture sets the stage for
everything an organization does and helps to outline their operational procedures.
Since there is such a wide variety of industries and organizations, there is no exact
right or wrong type of culture to have. Organizational cultures will differ from
business to business just as the organizational culture within family units can be
dramatically different from one family to the next.

So if there is no perfect, one-size-fits-all culture for an organization, how does

organizational culture impact a company’s success? In order to dissect this, we first
need to discuss the varying degrees of company culture. While every organization
has a culture all their own, some cultures are stronger or weaker than others. A
company with a stronger culture, centered around their values and mission, tend to
be more successful than companies with a lackluster approach to their values and
goals. It is not enough to simply establish a mission, values and goals; instead,
these components must be integrated into every daily process and ingrained within
every member of the organization.
Imagine a sports team where each player is focused on their own preferred way of
doing things. If everyone on the team is operating differently, will they be
successful in a game? Most likely not. If each player is focused on their own
objective as opposed to the mission of the team, it is evidence of a weak culture.
To help strengthen the culture, the coach needs to bring the team together and
realign everyone to the team’s mission. While there will still be players responsible
for different roles, by communicating a game plan and guiding the team along the
way, the coach has the opportunity to strengthen the culture and overall success of
the team. But it doesn’t end there. Culture is not something that can be changed
quickly. It requires constant follow-up and follow-through in order to both change
and maintain culture. Organizational culture needs to be nurtured and valued
throughout an organization in order to establish a strong and healthy culture.

Before we explore external factors that influence organizational culture, it is

important to mention that a strong culture can be a bad thing for an organization if
it is built on a corrupt foundation. Just as positive values and goals should be
infused in an organization, bad habits and condoned bad behavior can permeate
into the culture of an organization. If not handled in a quickly and timely manner,
unethical or corrupt practices may become part of an organization’s culture.

Organizational culture incorporates how a company operates on every level. In

order to truly understand an organization’s culture, you must be able to dissect
each component. The first step to a deeper understanding of organizational culture
is to define and understand external and internal factors that influence
organizational behavior. Let’s get started by exploring external factors and the role
they play in establishing culture.

Edgar Schein presented three levels of organization in his 1991 article, “What is
Culture?” He grouped organizational culture into three levels including artifacts,
values, and underlying assumptions. To recap, Schein created three levels of
organizational culture. First, at the top of the pyramid are artifacts. While they have
been defined as the visible part of an iceberg, they are hard to decipher. Artifacts
include organizational structures and processes that are apparent and visible. Right
below the top of the iceberg, in the middle of his cultural pyramid is the values
level. Values include the “why” behind why a company operates the way they do.
It includes company goals, strategies and philosophies that drive a company’s
mission. Finally, the level that is the hardest to understand is the bottom of the
pyramid which Schein labels “underlying assumptions.” These underlying
assumptions create the foundation for the values and artifacts levels. They take
time and energy to fully decipher and understand and include thoughts, beliefs and
perceptions that establish culture (Organizational Communication Channel, 2017).

There are two types of factors that influence organizational culture: internal and
external. External influences and factors play a large role in how organizations
choose to operate. Understanding these external factors and how companies need
to adapt to them will help explain the inner workings of an organization. While
there are a number of internal factors also at play,
external factors help to shape how organizations choose to manage and account for
internal factors.

External Factors
We experience external factors and regulations in our everyday lives. When we
drive, we follow speed limit signs to avoid a ticket. When we shop, we have to pay
a mandated sales tax. We can be refused service at a restaurant if we arrive without
our shoes or our shirt. These are all small examples of how external factors
influence our daily lives and the decisions we make. While external factors are
outside of our control, they still influence us and create boundaries in which we
need to operate. The same goes for organizations.

Organizations would prefer to control every aspect of their operations, and

rightfully so! However, there are a number of external factors at play which do not
allow organizations to have complete control over every piece. Let’s explore some
of these external factors and the influence they have on organizational culture.

Political Factors
There are a variety of ways in which politics can influence organizational culture.
On a large scale, Congress creates laws and regulations that may change the way
an organization operates. Even if the organization may disagree with a law, they
are still legally obligated to abide by it. On a smaller scale, relationship politics
may also influence culture. Competing against other organizations for clients or
market share can be political in nature and influence the way an organization
chooses to operate. Politics on a small or a large scale can change company goals
and objectives and the way they choose to work towards them.

Economic Factors
The economy plays a role in our everyday lives. How much money we make, how
much money we spend, wants and needs, competitive pricing, etc. are all factors in
financial decisions we make on a daily basis. Organizations are also heavily
influenced by economic factors. A market crash or a recession will directly impact
the sales of an organization. When people are no longer able to afford a product or
choose to spend their money elsewhere, companies are directly impacted. On the
other hand, companies are affected when the economy is good and people are able
to spend or invest more money. Adapting to the changes in the economy and being
able to adjust organizational strategies to accommodate for them, is essential to
company survival.

Industry Factors
In every industry, there are a number of competitors. The actions your competitors
take may influence the decisions you make within your own organization. Being
able to adjust company culture to adapt to your competition is necessary to ensure
company longevity. Other industry factors include updated industry standards and
safety requirements that change over time. Ensuring compliance with industry
standards requires adjusting company objectives to realign the business.

Social Factors
Public opinion and societal expectations are large external factors that force
companies to reevaluate how they operate. If the public has a negative perception
of your organization, it could have a detrimental impact on your company’s bottom
line. Society has high expectations for organizations to be socially responsible.
Social responsibility incorporates a wide variety of topics including community
outreach, diversity promotion, sustainability, and high ethical standards. Each of
these topics need to be incorporated into a company’s culture in order to be
successful. With the scrutiny of the public and instant access to information
through technology, companies are well monitored by society.

Technology Factors
Technology is a huge part of today’s workforce. It is constantly updating and
changing, making it challenging at times for companies and their employees to
keep up. Technology is an important external factor of organizational behavior. It
has dramatically changed how companies do business over the years and it
continues to make waves with every new technology innovation. Incorporating
technology into the organizational culture of every organization is important to
develop and maintain a successful, state of the art company.

Managing External Factors

Companies are not able to eliminate external factors but they do have the ability to
manage them. First and foremost, organizations need to stay well-informed on up-
to-date information. With daily changes within industry, the economy, and society,
there is a lot of information to keep up with. Establishing roles within a company
to research and report on new information is a great way to delegate a very
important task. For example, some organizations have a research and development
team that is responsible for researching and creating new products. Human
resource teams may be held responsible for keeping up-to-date with information
around hiring laws or wage laws. These individuals would be required to share
their findings and help to create a plan to accommodate for these changes. Without
a system in place to ensure the latest information is shared and discussed,
companies may face compliance issues or lose a competitive advantage.
Education is another way to manage external factors. For example, sustainability is
a popular topic in today’s society. If a company chooses to become a more
sustainable organization, it is important for them to establish a training and
development program. A training and development program can help instill
sustainability within the culture of an organization. An initiative like sustainability
needs to be instilled and enforced throughout every level of an organization in
order to be successful. The same goes for any new initiative a company would like
to implement. Training should accompany any new law or policy change that
changes how an organization operates. By educating all organization members,
companies can better implement change.

Managing relationships is another important part of managing external factors.

Developing healthy relationships with customers and suppliers is extremely
beneficial. Customers are at the heart of most organizations. Without customers,
most companies would not exist. Creating a good customer relationship allows
organizations to understand how they can better meet customer needs. Customers
are external factors that greatly influence the operations of an organization. Having
a strong relationship with suppliers is also an important way to manage external
factors. Providing clear expectations and needs to your supplier can alleviate future
problems. Regulators are another group of individuals companies should foster a
working relationship with. Examples of regulators include the health department,
the FDIC, and the local fire marshal. Having a working relationship with these
organizations and individuals can help organizations stay informed and aware of
new policy changes or current issues within the organization that need to be
addressed.

Introduction to Internal Factors

of Organizational Culture
There are many obstacles and challenges organizations face on a daily basis. This
section will explore a variety of internal factors and how they contribute to
organizational culture. Identifying these internal factors and understanding how to
influence them to change culture is a valuable life skill. Organizational culture can
be found within every family unit, every friendship, school system, corporation, or
wherever there is a group dynamic. Understanding factors associated with
organizational culture can help you to better navigate relationships in your
everyday life.

Internal Factors
The best part about internal factors is that organizations control them. In this
section, we will explore different types of internal factors and examine both how
they influence organizational culture and how an organization can influence them.

Employees
People are a huge internal factor that impact organizational culture. As we
discussed in previous sections, every individual has a unique set of personality
traits, backgrounds and experiences.
While organizations cannot fully control individuals and the way they act, they can
use guidelines and mandated expectations to help guide the behavior of their
employees. A mission statement, code of ethics, and policies and procedures
guidelines are among a large number of documents and standards organizations use
to help foster and direct their employees.

Organizations also have control over who they hire. Even one bad hire has the
potential to negatively impact organizational culture. By developing a hiring
process that focuses on making smart hiring decisions, organizations are better able
to hire individuals that embody the vision and mission of the company. This is
crucial to maintaining and promoting a strong culture.

Leadership
Organizational culture is outlined at the highest level of an organization and then
communicated, supported, and enforced throughout every other level. Therefore,
leadership is a big internal factor that drives culture. A poor leader can have a
detrimental impact on company culture. A bad leader who disregards the rules and
behaves as they please sets a terrible precedent and gives permission for other
employees to behave the same way. Leaders should lead their teams by example
and set the standard for expected behavior. In addition, they should be comfortable
to course correct employees who stray from the path of desired behavior and
performance.

Capability & Support

As we discussed in external factors, training and development is a big part of a
successful organization. The best way for a company to support their employees is
to provide them with the support and training necessary to complete their job
functions. Employees who are supported and have the capabilities to complete their
job are generally happier and more satisfied with their company. By hiring
qualified candidates and continuing to support their education and training,
organizations can have a positive impact on their culture.
 Nature of the Business
Each industry has differing focuses that help to shape their organizational culture.
An accounting firm will have different standards and expectations than an art
gallery. While certain ethical concerns may be universal, the nuances within each
industry will look different. These differences will help to shape the culture within
organizations.

Resources & Technology

Providing employees with the necessary resources to complete their job is a non
negotiable for a successful company. When organizations are unable or refuse to
provide their employees with necessary resources, they are met with disgruntled
and frustrated employees. A lack of resources
has a negative impact on company culture and can create an unsatisfactory work
environment. By providing resources, organizations can better support their
employees to complete their jobs more efficiently.

Technology can be considered both an external and internal factor. Internally,

technology can play many roles. Since technology is a large part of day-to-day
interactions, it is important for organizations to create policies and procedures to
clearly outline electronic communication expectations. In addition, technology is a
modern resource that is necessary to complete a number of job functions.
Providing employees with updated devices, software, technology support, etc. will
improve employee morale and create a happier and more efficient culture.

Dimensions of Culture
Which values characterize an organization’s culture? Even though culture may not
be immediately observable, identifying a set of values that might be used to
describe an organization’s culture helps us identify, measure, and manage culture
more effectively. For this purpose, several researchers have proposed various
culture typologies. One typology that has received a lot of research attention is the
Organizational Culture Profile (OCP) where culture is represented by seven
distinct values.

Source: Adapted from information in O’Reilly, C. A., III, Chatman, J. A., &
Caldwell, D. F. (1991). People and organizational culture: A profile comparison
approach to assessing person- organization fit. Academy of Management Journal,
34, 487–516.

Innovative Cultures
According to the OCP framework, companies that have innovative cultures are
flexible, adaptable, and experiment with new ideas. These companies are
characterized by a flat hierarchy and titles and other status distinctions tend to be
downplayed. For example, W. L. Gore & Associates is a company with innovative
products such as GORE-TEX® (the breathable fabric that is windproof and
waterproof), Glade dental floss, and Elixir guitar strings, earning the company the
distinction as the most innovative company in the United States by Fast
Company magazine in 2004. W. L. Gore consistently manages to innovate and
capture the majority of market share in a wide variety of industries, in large part
because of its unique culture. In this company, employees do not have bosses in the
traditional sense, and risk taking is encouraged by celebrating failures as well as
successes.Deutschman, A. (2004, December). The fabric of creativity. Fast
Company, 89, 54–62. Companies such as W. L. Gore, Genentech, and Google also
encourage their employees to take risks by allowing engineers to devote 20% of
their time to projects of their own choosing.
 Aggressive Cultures
Companies with aggressive cultures value competitiveness and outperforming
competitors; by emphasizing this, they often fall short in corporate social
responsibility. For example, Microsoft is often identified as a company with an
aggressive culture. The company has faced a number of antitrust lawsuits and
disputes with competitors over the years. In aggressive companies, people may use
language such as “we will kill our competition.” In the past, Microsoft executives
made statements such as “we are going to cut off Netscape’s air supply…
Everything they are selling, we are going to give away,” and its aggressive culture
is cited as a reason for getting into new legal troubles before old ones are
resolved.Greene, J., Reinhardt, A., & Lowry, T. (2004, May 31). Teaching
Microsoft to make nice? Business Week, 3885, 80–81; Schlender, B. (1998, June
22). Gates’s crusade. Fortune, 137, 30–32.

Outcome-Oriented Cultures
The OCP framework describes outcome-oriented cultures as those that emphasize
achievement, results, and action as important values. A good example of an
outcome-oriented culture may be the electronics retailer Best Buy. Having a
culture emphasizing sales performance, Best Buy tallies revenues and other
relevant figures daily by department. Employees are trained and mentored to sell
company products effectively, and they learn how much money their department
made every day.Copeland, M. V. (2004, July). Best Buy’s selling machine.
Business 2.0, 5, 92–
102. In 2005, the company implemented a Results Oriented Work Environment
(ROWE) program that allows employees to work anywhere and anytime; they are
evaluated based on results and fulfillment of clearly outlined objectives.Thompson,
J. (2005, September). The time we waste. Management Today, 44–47. Outcome-
oriented cultures hold employees as well as managers accountable for success and
use systems that reward employee and group output. In these companies, it is more
common to see rewards tied to performance indicators as opposed to seniority or
loyalty. Research indicates that organizations that have a performance-oriented
culture tend to outperform companies that are lacking such a culture.Nohria, N.,
Joyce, W., & Roberson, B. (2003, July). What really works. Harvard Business
Review, 81, 42–52. At the same time, when performance pressures lead to a
culture where unethical behaviors become the norm, individuals see their peers as
rivals, and short-term results are rewarded, the resulting unhealthy work
environment serves as a liability.Probst, G., & Raisch, S. (2005). Organizational
crisis: The logic of failure. Academy of Management Executive, 19, 90–105.

Stable Cultures
Stable cultures are predictable, rule-oriented, and bureaucratic. When the
environment is stable and certain, these cultures may help the organization to be
effective by providing stable and constant levels of output.Westrum, R. (2004,
August). Increasing the number of guards at nuclear power plants. Risk Analysis:
An International Journal, 24, 959–961. These cultures
prevent quick action and, as a result, may be a misfit to a changing and dynamic
environment. Public sector institutions may be viewed as stable cultures. In the
private sector, Kraft Foods is an example of a company with centralized decision
making and rule orientation that suffered as a result of the culture-environment
mismatch.Thompson, S. (2006, September 18). Kraft CEO slams company, trims
marketing staff. Advertising Age, 77, 3–62. Its bureaucratic culture is blamed for
killing good ideas in early stages and preventing the company from innovating.
When the company started a change program to increase the agility of its culture,
one of its first actions was to fight bureaucracy with more bureaucracy: The new
position of vice president of “business process simplification” was created but was
later eliminated.Boyle, M. (2004, November 15). Kraft’s arrested development.
Fortune, 150, 144; Thompson, S. (2005, February 28). Kraft simplification strategy
anything but. Advertising Age, 76, 3–63; Thompson, S. (2006, September 18).
Kraft CEO slams company, trims marketing staff. Advertising Age, 77, 3–62.

People-Oriented Cultures
People-oriented cultures value fairness, supportiveness, and respecting individual
rights. In these organizations, there is a greater emphasis on and expectation of
treating people with respect and dignity.Erdogan, B., Liden, R. C., & Kraimer, M.
L. (2006). Justice and leader-member exchange: The moderating role of
organizational culture. Academy of Management Journal, 49, 395–406. One study
of new employees in accounting companies found that employees, on average,
stayed 14 months longer in companies with people-oriented cultures.Sheridan, J.
(1992). Organizational culture and employee retention. Academy of Management
Journal, 35, 1036–1056. Starbucks is an example of a people-oriented culture. The
company pays employees above minimum wage, offers health care and tuition
reimbursement benefits to its part-time as well as full-time employees, and has
creative perks such as weekly free coffee for all associates. As a result of these
policies, the company benefits from a turnover rate lower than the industry
average.Weber, G. (2005, February). Preserving the counter culture. Workforce
Management, 84, 28–34; Motivation secrets of the 100 best employers. (2003,
October). HR Focus, 80, 1–15.
 Team-Oriented Cultures
Companies with a team-oriented culture are collaborative and emphasize
cooperation among employees. For example, Southwest Airlines facilitates a team-
oriented culture by cross-training its employees so that they are capable of helping
one another when needed. The company also emphasizes training intact work
teams.Bolino, M. C., & Turnley, W. H. (2003). Going the extra mile: Cultivating
and managing employee citizenship behavior. Academy of Management
Executive, 17, 60–71. In Southwest’s selection process, applicants who are not
viewed as team players are not hired as employees.Miles, S. J., & Mangold, G.
(2005). Positioning Southwest Airlines through employee branding. Business
Horizons, 48, 535–545. In team-oriented organizations, members tend to have
more positive relationships with their coworkers and particularly with their
managers.Erdogan, B., Liden, R. C., & Kraimer, M. L. (2006). Justice and
leader-member exchange: The moderating role of organizational culture. Academy
of Management Journal, 49, 395–406.

The growth in the number of passengers flying with Southwest Airlines from 1973
until 2007 when Southwest surpassed American Airlines as the most flown U.S.
airline. While price has played a role in this, their emphasis on service has been a
key piece of their culture and competitive advantage.

Source: Adapted from

http://upload.wikimedia.org/wikipedia/commons/6/69/Southwest-airlines-
passengers.jpg

Detail-Oriented Cultures
Organizations with a detail-oriented culture are characterized in the OCP
framework as emphasizing precision and paying attention to details. Such a culture
gives a competitive advantage to companies in the hospitality industry by helping
them differentiate themselves from others. For example, Four Seasons and Ritz
Carlton are among hotels who keep records of all customer requests such as which
newspaper the guest prefers or what type of pillow the customer uses. This
information is put into a computer system and used to provide better service to
returning customers. Any requests hotel employees receive, as well as overhear,
might be entered into the database to serve customers better.

Strength of Culture
A strong culture is one that is shared by organizational membersArogyaswamy, B.,
& Byles, C.
M. (1987). Organizational culture: Internal and external fits. Journal of
Management, 13, 647– 658; Chatman, J. A., & Eunyoung Cha, S. (2003). Leading
by leveraging culture. California Management Review, 45, 20–34.—that is, a
culture in which most employees in the organization show consensus regarding the
values of the company. The stronger a company’s culture, the more likely it is to
affect the way employees think and behave. For example, cultural values
emphasizing customer service will lead to higher-quality customer service if there
is widespread agreement among employees on the importance of customer-service-
related values.Schneider, B., Salvaggio, A., & Subirats, M. (2002). Climate
strength: A new direction for climate research. Journal of Applied Psychology, 87,
220–229.

It is important to realize that a strong culture may act as an asset or a liability for
the organization, depending on the types of values that are shared. For example,
imagine a company with a culture that is strongly outcome-oriented. If this value
system matches the organizational environment, the company may perform well
and outperform its competitors. This is an asset as long as members are behaving
ethically. However, a strong outcome-oriented culture coupled with unethical
behaviors and an obsession with quantitative performance indicators may be
detrimental to an organization’s effectiveness. Enron is an extreme example of this
dysfunctional type of strong culture.

One limitation of a strong culture is the difficulty of changing it. In an organization

where certain values are widely shared, if the organization decides to adopt a
different set of values, unlearning the old values and learning the new ones will be
a challenge because employees will need to adopt new ways of thinking, behaving,
and responding to critical events. For example, Home Depot had a decentralized,
autonomous culture where many business decisions were made using “gut feeling”
while ignoring the available data. When Robert Nardelli became CEO of the
company in 2000, he decided to change its culture starting with centralizing many
of the decisions that were previously left to individual stores. This initiative met
with substantial resistance, and many high-level employees left during Nardelli’s
first year. Despite getting financial results such as doubling the sales of the
company, many of the changes he made were criticized. He left the company in
January 2007.Charan, R. (2006, April). Home Depot’s blueprint for culture change.
Harvard Business Review, 84, 60–70; Herman, J., & Wernle, B. (2007, August
13). The book on Bob Nardelli: Driven, demanding. Automotive News, 81, 42.

A strong culture may also be a liability during a merger. During mergers and
acquisitions, companies inevitably experience a clash of cultures, as well as a clash
of structures and operating systems. Culture clash becomes more problematic if
both parties have unique and strong cultures. For example, during the merger of
Daimler-Benz with Chrysler to create DaimlerChrysler, the differing strong
cultures of each company acted as a barrier to effective integration. Daimler had a
strong engineering culture that was more hierarchical and emphasized routinely
working long hours. Daimler employees were used to being part of an elite
organization, evidenced by flying first class on all business trips. However,
Chrysler had a sales culture where employees and managers were used to
autonomy, working shorter hours, and adhering to budget limits that meant only
the elite flew first class. The different ways of thinking and behaving in these two
companies introduced a number of unanticipated problems during the integration
process.Badrtalei, J., & Bates, D. L. (2007). Effect of organizational cultures on
mergers and acquisitions: The case of DaimlerChrysler. International Journal of
Management, 24, 303–317; Bower, J. L. (2001). Not all M&As are alike—and that
matters. Harvard Business Review, 79, 92–101.
 Do Organizations Have a Single
Culture?
So far, we have assumed that a company has a single culture that is shared
throughout the organization. In reality there might be multiple cultures within the
organization. For example, people working on the sales floor may experience a
different culture from that experienced by people working in the warehouse.
Cultures that emerge within different departments, branches, or geographic
locations are called subcultures. Subcultures may arise from the personal
characteristics of employees and managers, as well as the different conditions
under which work
is performed. In addition to understanding the broader organization’s values,
managers will need to make an effort to understand subculture values to see their
effect on workforce behavior and attitudes.

Sometimes, a subculture may take the form of a counterculture. Defined as shared

values and beliefs that are in direct opposition to the values of the broader
organizational culture,Kerr, J., & Slocum, J. W., Jr. (2005). Managing corporate
culture through reward systems. Academy of Management Executive, 19, 130–
138. countercultures are often shaped around a charismatic leader. For example,
within a largely bureaucratic organization, an enclave of innovativeness and risk
taking may emerge within a single department. A counterculture may be tolerated
by the organization as long as it is bringing in results and contributing positively to
the effectiveness of the organization. However, its existence may be perceived as a
threat to the broader organizational culture. In some cases, this may lead to actions
that would take away the autonomy of the managers and eliminate the
counterculture.

How Are Cultures Created?

Where do cultures come from? Understanding this question is important in
understanding how they can be changed. An organization’s culture is shaped as the
organization faces external and internal challenges and learns how to deal with
them. When the organization’s way of doing business provides a successful
adaptation to environmental challenges and ensures success, those values are
retained. These values and ways of doing business are taught to new
members as the way to do business.Schein, E. H. (1992). Organizational Culture
and Leadership. San Francisco: Jossey-Bass.

The factors that are most important in the creation of an organization’s culture
include founders’ values, preferences, and industry demands.

Founder Values
A company’s culture, particularly during its early years, is inevitably tied to the
personality, background, and values of its founder or founders, as well as their
vision for the future of the organization. When entrepreneurs establish their own
businesses, the way they want to do business determines the organization’s rules,
the structure set up in the company, and the people they hire to work with them.
For example, some of the existing corporate values of the ice cream company Ben
& Jerry’s Homemade Holdings Inc. can easily be traced to the personalities of its
founders Ben Cohen and Jerry Greenfield. In 1978, the two high school friends
opened up their first ice-cream shop in a renovated gas station in Burlington,
Vermont. Their strong social convictions led them to buy only from the local
farmers and devote a certain percentage of their profits to charities. The core values
they instilled in their business can still be observed in the current company’s
devotion to social activism and sustainability, its continuous contributions to
charities, use of environmentally friendly materials, and dedication to creating jobs
in low- income areas. Even though Unilever acquired the company in 2000, the
social activism component remains unchanged and Unilever has expressed its
commitment to maintaining it.Kiger, P. J. (April, 2005). Founder values become
part of the corporate culture to the degree to which they help the company be
successful. For example, the social activism of Ben and Jerry’s was instilled in the
company because the founders strongly believed in these issues. However, these
values probably would not be surviving 3 decades later if they had not helped the
company in its initial stages. In the case of Ben and Jerry’s, these values helped
distinguish their brand from larger corporate brands and attracted a loyal customer
base. Thus, by providing a competitive advantage, these values were retained as
part of the corporate culture and were taught to new members as the right way to
do business.

Industry Demands
While founders undoubtedly exert a powerful influence over corporate cultures, the
industry characteristics also play a role. Companies within the same industry can
sometimes have widely differing cultures. At the same time, the industry
characteristics and demands act as a force to create similarities among
organizational cultures. For example, despite some differences, many companies in
the insurance and banking industries are stable and rule-oriented, many companies
in the high-tech industry have innovative cultures, and those in nonprofit industry
may be people-oriented. If the industry is one with a large number of regulatory
requirements—for example, banking, health care, and high-reliability (such as
nuclear power plant) industries— then we might expect the presence of a large
number of rules and regulations, a bureaucratic company structure, and a stable
culture. The industry influence over culture is also important to know because this
shows that it may not be possible to imitate the culture of a company in a different
industry, even though it may seem admirable to outsiders.

How Are Cultures Maintained?

As a company matures, its cultural values are refined and strengthened. The early
values of a company’s culture exert influence over its future values. It is possible
to think of organizational culture as an organism that protects itself from external
forces. Organizational culture determines what types of people are hired by an
organization and what types of people are left out. Moreover, once new employees
are hired, the company assimilates new employees and teaches them the way
things are done in the organization. We call these processes attraction-selection-
attrition and onboarding processes. We will also examine the role of leaders and
reward systems in shaping and maintaining an organization’s culture.
 Attraction-Selection-Attrition
Organizational culture is maintained through a process known as attraction-
selection-attrition (ASA). First, employees are attracted to organizations where
they will fit in. Someone who has a competitive nature may feel comfortable in and
may prefer to work in a company where interpersonal competition is the norm.
Others may prefer to work in a team-oriented workplace. Research shows that
employees with different personality traits find different cultures attractive. For
example, out of the Big Five personality traits, employees who demonstrate
neurotic personalities were less likely to be attracted to innovative cultures,
whereas those who had openness to experience were more likely to be attracted to
innovative cultures.Judge, T. A., & Cable, D. M. (1997). Applicant personality,
organizational culture, and organization attraction. Personnel Psychology, 50,
359–394.

Of course, this process is imperfect, and value similarity is only one reason a
candidate might be attracted to a company. There may be other, more powerful
attractions such as good benefits. At this point in the process, the second
component of the ASA framework prevents them from getting in: selection. Just as
candidates are looking for places where they will fit in, companies are also looking
for people who will fit into their current corporate culture. Many companies are
hiring people for fit with their culture, as opposed to fit with a certain job. For
example, Southwest Airlines prides itself for hiring employees based on
personality and attitude rather than specific job-related skills, which they learn
after they are hired. Companies use different techniques to weed out candidates
who do not fit with corporate values. For example, Google relies on multiple
interviews with future peers. By introducing the candidate to several future
coworkers and learning what these coworkers think of the candidate, it becomes
easier to assess the level of fit.

Even after a company selects people for person-organization fit, there may be new
employees who do not fit in. Some candidates may be skillful in impressing
recruiters and signal high levels of culture fit even though they do not necessarily
share the company’s values. In any event, the organization is eventually going to
eliminate candidates eventually who do not fit in through attrition. Attrition
refers to the natural process where the candidates who do not fit in will leave the
company. Research indicates that person-organization misfit is one of the
important reasons for employee turnover.Kristof-Brown, A. L., Zimmerman, R.
D., & Johnson,
E. C. (2005). Consequences of individuals’ fit at work: a meta-analysis of person–
job, person– organization, person–group, and person–supervisor fit. Personnel
Psychology, 58, 281–342; O’Reilly, C. A., III, Chatman, J. A., & Caldwell, D. F.
(1991). People and organizational culture: A profile comparison approach to
assessing person-organization fit. Academy of Management Journal, 34, 487–516.

Because of the ASA process, the company attracts, selects, and retains people who
share its core values, whereas those people who are different in core values will be
excluded from the
organization either during the hiring process or later on through naturally occurring
turnover. Thus, organizational culture will act as a self-defending organism where
intrusive elements are kept out. Supporting the existence of such self-protective
mechanisms, research shows that organizations demonstrate a certain level of
homogeneity regarding personalities and values of organizational
members.Giberson, T. R., Resick, C. J., & Dickson, M. W. (2005). Embedding
leader characteristics: An examination of homogeneity of personality and values in
organizations. Journal of Applied Psychology, 90, 1002–1010.

New Employee Onboarding

Another way in which an organization’s values, norms, and behavioral patterns are
transmitted to employees is through onboarding (also referred to as the
organizational socialization process). Onboarding refers to the process through
which new employees learn the attitudes, knowledge, skills, and behaviors required
to function effectively within an organization. If an organization can successfully
socialize new employees into becoming organizational insiders, new employees
will feel accepted by their peers and confident regarding their ability to perform;
they will also understand and share the assumptions, norms, and values that are
part of the organization’s culture. This understanding and confidence in turn
translate into more effective new employees who perform better and have higher
job satisfaction, stronger organizational commitment, and longer tenure within the
company.Bauer, T. N., Bodner, T., Erdogan, B., Truxillo, D. M., & Tucker, J. S.
(2007). Newcomer adjustment during organizational socialization: A meta-analytic
review of antecedents, outcomes, and methods. Journal of Applied Psychology,
92, 707– 721. Organizations engage in different activities to facilitate onboarding,
such as implementing orientation programs or matching new employees with
mentors.

What Can Employees Do

During Onboarding?
New employees who are proactive, seek feedback, and build strong relationships
tend to be more successful than those who do not. Unwrapping the organizational
entry process: Disentangling multiple antecedents and their pathways to
adjustment. For example, feedback seeking helps new employees. Especially on a
first job, a new employee can make mistakes or gaffes and may find it hard to
understand and interpret the ambiguous reactions of coworkers. By actively
seeking feedback, new employees may find out sooner rather than later any
behaviors that need to be changed and gain a better understanding of whether their
behavior fits with the company culture and expectations.

Relationship building or networking (a facet of the organizing function) is another

important behavior new employees may demonstrate. Particularly when a company
does not have a systematic approach to onboarding, it becomes more important for
new employees to facilitate their own onboarding by actively building
relationships. According to one estimate, 35% of managers who start a new job fail
in the new job and either voluntarily leave or are fired within
one and a half years. Of these, over 60% report not being able to form effective
relationships with colleagues as the primary reason for this failure.Fisher, A.
(2005, March 7). Starting a new job? Don’t blow it. Fortune, 151, 48.

What Can Organizations Do

During Onboarding?
Many organizations, including Microsoft, Kellogg Company, and Bank of America
take a more structured and systematic approach to new employee onboarding,
while others follow a “sink or swim” approach where new employees struggle to
figure out what is expected of them and what the norms are.

A formal orientation program indoctrinates new employees to the company culture,

as well as introducing them to their new jobs and colleagues. An orientation
program has a role in making new employees feel welcome in addition to
imparting information that may help them be successful in their new jobs. Many
large organizations have formal orientation programs consisting of lectures,
videotapes, and written material, while some may follow more informal
approaches. According to one estimate, most orientations last anywhere from one
to five days, and some companies are currently switching to a computer-based
orientation. Ritz Carlton, the company ranked number 1 in Training magazine’s
2007 top 125 list, uses a very systematic approach to employee orientation and
views orientation as the key to retention. In the 2-day classroom orientation,
employees spend time with management, dine in the hotel’s finest restaurant, and
witness the attention to customer service detail firsthand. During these two days,
they are introduced to the company’s intensive service standards, team orientation,
and its own language. Later, on their 21st day they are tested on the company’s
service standards and are certified. Research shows that formal orientation
programs are helpful in teaching employees about the goals and history of the
company, as well as communicating the power structure. Moreover, these
programs may also help with a new employee’s integration to the team. However,
these benefits may not be realized to the same extent in computer-based
orientations. In fact, compared to those taking part in a regular, face-to-face
orientation, those undergoing a computer-based orientation were shown to have
lower understanding of their job and the company, indicating that different formats
of orientations may not substitute for each other.

What Can Organizational

Insiders Do During
Onboarding?
One of the most important ways in which organizations can help new employees
adjust to a company and a new job is through organizational insiders—namely,
supervisors, coworkers, and mentors. Leaders have a key influence over
onboarding and the information and support they provide determine how quickly
employees learn about the company politics and culture, while coworker influence
determines the degree to which employees adjust to their teams. Mentors can be
crucial to helping new employees adjust by teaching them the ropes of their jobs
and how the company really operates. A mentor is a trusted person who provides
an employee with advice
and support regarding career-related matters. Although a mentor can be any
employee or manager who has insights that are valuable to the new employee,
mentors tend to be relatively more experienced than their protégés. Mentoring can
occur naturally between two interested individuals or organizations can facilitate
this process by having formal mentoring programs. These programs may
successfully bring together mentors and protégés who would not come together
otherwise.

Research indicates that the existence of these programs does not guarantee their
success, and there are certain program characteristics that may make these
programs more effective. For example, when mentors and protégés feel that they
had input in the mentor-protégé matching process, they tend to be more satisfied
with the arrangement. Moreover, when mentors receive training beforehand, the
outcomes of the program tend to be more positive.Allen, T. D., Eby, L. T., &
Lentz, E. (2006). Mentorship behaviors and mentorship quality associated with
formal mentoring programs: Closing the gap between research and practice.
Journal of Applied Psychology, 91, 567–578. Because mentors may help new
employees interpret and understand the company’s culture, organizations may
benefit from selecting mentors who personify the company’s values. Thus,
organizations may need to design these programs carefully to increase their chance
of success.

Leadership
Leaders are instrumental in creating and changing an organization’s culture. There
is a direct correspondence between the leader’s style and an organization’s culture.
For example, when leaders motivate employees through inspiration, corporate
culture tends to be more supportive and people-oriented. When leaders motivate by
making rewards contingent on performance, the corporate culture tended to be
more performance-oriented and competitive.Sarros, J. C., Gray, J., & Densten, I. L.
(2002). Leadership and its impact on organizational culture. International Journal
of Business Studies, 10, 1–26. In these and many other ways, what leaders do
directly influences the cultures of their organizations. This is a key point for
managers to consider as they carry out their leading P-O-L-C function.
Part of the leader’s influence over culture is through role modeling. Many studies
have suggested that leader behavior, the consistency between organizational policy
and leader actions, and leader role modeling determine the degree to which the
organization’s culture emphasizes ethics.Driscoll, K., & McKee, M. (2007).
Restorying a culture of ethical and spiritual values: A role for leader storytelling.
Journal of Business Ethics, 73, 205–217. The leader’s own behaviors will signal to
individuals what is acceptable behavior and what is unacceptable. In an
organization in which high-level managers make the effort to involve others in
decision making and seek opinions of others, a team-oriented culture is more likely
to evolve. By acting as role models, leaders send signals to the organization about
the norms and values that are expected to guide the actions of its members.
Leaders also shape culture by their reactions to the actions of others around them.
For example, do they praise a job well done or do they praise a favored employee
regardless of what was accomplished? How do they react when someone admits to
making an honest mistake? What are their priorities? In meetings, what types of
questions do they ask? Do they want to know what caused accidents so that they
can be prevented, or do they seem more concerned about how much money was
lost because of an accident? Do they seem outraged when an employee is
disrespectful to a coworker, or does their reaction depend on whether they like the
harasser? Through their day-to-day actions, leaders shape and maintain an
organization’s culture.

Reward Systems
Finally, the company culture is shaped by the type of reward systems used in the
organization and the kinds of behaviors and outcomes it chooses to reward and
punish. One relevant element of the reward system is whether the organization
rewards behaviors or results. Some companies have reward systems that emphasize
intangible elements of performance as well as more easily observable metrics. In
these companies, supervisors and peers may evaluate an employee’s performance
by assessing the person’s behaviors as well as the results. In such companies, we
may expect a culture that is relatively people- or team-oriented, and employees act
as part of a family.Kerr, J., & Slocum, J. W., Jr. (2005). Managing corporate
culture through reward systems. Academy of Management Executive, 19, 130–
138. However, in companies in which goal achievement is the sole criterion for
reward, there is a focus on measuring only the results without much regard to the
process. In these companies, we might observe outcome-oriented and competitive
cultures. Whether the organization rewards performance or seniority would also
make a difference in culture. When promotions are based on seniority, it would be
difficult to establish a culture of outcome orientation. Finally, the types of
behaviors that are rewarded or ignored set the tone for the culture. Which
behaviors are rewarded, which ones are punished, and which are ignored will
determine how a company’s culture evolves. A reward system is one tool managers
can wield when undertaking the controlling function.
 Signs of Organizational Culture
How do you find out about a company’s culture? We emphasized earlier that
culture influences the way members of the organization think, behave, and interact
with one another. Thus, one way of finding out about a company’s culture is by
observing employees or interviewing them. At the same time, culture manifests
itself in some visible aspects of the organization’s environment .So lets look into
how a organization Develops and Maintains the Culture

Vision Statement
An organization’s vision statement is a broad explanation of what the organization
aspires to be. This is not the time to provide detailed goals or explanations but
rather a way to inspire
employees and customers alike to be a part of the journey. Vision statements are
directional and should give insight into where the company is heading. Check out
the examples below to gain a better understanding of the broad yet inspiring nature
of visions statement:[1]

 Google: To provide access to the world’s information in one click.

 AirBnB: Tapping into the universal human yearning to belong—the desire to feel
welcomed, respected, and appreciated for who you are, no matter where you might be.
 Toyota: To be the most successful and respected car company in America.
 Southwest: To become the world’s most loved, most flown, and most profitable airline

Mission Statement
There is a common misconception that vision and mission statements are the same
thing. However, unlike vision statement, mission statements should clearly define
the purpose of your organization. Mission statements focus on what the
organization needs to do in order to achieve their vision. While the vision and
mission statement work together, the vision statement is broader and focuses on the
future whereas the mission statement is more specific and focuses on the now.
Below are mission statements from the same four companies we discussed earlier.
Compare the vision and mission statements to see how they are closely associated
yet different all together:

 Google: To organize the world’s information and make it universally accessible and
useful.
 AirBnb: Belong anywhere.
 Toyota: To attract and attain customers with high-valued products and services and the
most satisfying ownership experience in America.
 Southwest: The mission of Southwest Airlines is dedication to the highest quality of
customer service delivered with a sense of warmth, friendliness, individual pride, and
company spirit.
 Both vision and mission statements mold organizational culture and provide parameters
and goals for employees and leaders to work towards.

Code of Ethics/Values Statement

Code of ethics and values statement are used interchangeably. The purpose
of a code of ethics is to clearly outline acceptable and unacceptable
behavior. Providing behavioral guidelines for employees helps companies
align their teams and streamline their processes. A code of ethics also helps
to ensure every member of an organization is acting ethically and
maintaining the organization’s brand.
In addition to setting guidelines, a strong code of ethics should clearly explain how
the organization plans to enforce it. The code of conduct should be followed and
exemplified in every level of an organization. There should be audits in place to
check for ethical behavior and correct any unethical actions immediately. This
audit system should be unbiased and consistent. If something is considered a
violation of the code of ethics, it is a violation no matter who commits it.
Consistency and follow-through are essential to creating a strong and ethical
culture.

A vision statement, mission statement, and values statement all work together to
align an organization. These three pieces play a crucial role in outlining acceptable
behavior and outlining organizational goals. Without these three things, an
organization would fracture and fall apart.

Policies & Procedures

Policies and procedures differ from one workplace to the next. Simply put,
policies and procedures are created to streamline processes and outline
expectations. These can be specific to certain departments or job titles and
should be a framework for employees to abide by. While the code of ethics
primarily focuses on ethical and unethical behavior, policies and procedures
focuses on how to complete important job functions. Watch the video below
to better understand why policies and procedures are so important!

Mission Statement
A mission statement is a statement of purpose, describing who the company is and
what it does. It serves an important function for organizations as part of the first
facet of the planning P-O-L-C function. But, while many companies have mission
statements, they do not always reflect the company’s values and its purpose. An
effective mission statement is well known by employees, is transmitted to all
employees starting from their first day at work, and influences employee behavior.
Some mission statements reflect who the company wants to be as opposed to who
they actually are. If the mission statement does not affect employee behavior on a
day-to-day basis, it has little usefulness as a tool for understanding the company’s
culture. Enron provided an often-cited example of a disconnect between a
company’s mission statement and how the company actually operated. Their
missions and values statement started with “As a partner in the communities in
which we operate, Enron believes it has a responsibility to conduct itself according
to certain basic principles.” Their values statement included such ironic
declarations as “We do not tolerate abusive or disrespectful treatment.
Ruthlessness, callousness and arrogance don’t belong here.”Kunen, J. S. (2002,
January 19). Enron’s vision (and values) thing. The New York Times, 19.
A mission statement that is taken seriously and widely communicated may provide
insights into the corporate culture. For example, the Mayo Clinic’s mission
statement is “The needs of the patient come first.” This mission statement evolved
from the founders who are quoted as saying, “The best interest of the patient is the
only interest to be considered.” Mayo Clinics have a corporate culture that puts
patients first. For example, no incentives are given to physicians based on the
number of patients they see. Because doctors are salaried, they have no interest in
retaining a patient for themselves, and they refer the patient to other doctors when
needed. Wal- Mart may be another example of a company that lives its mission
statement and therefore its mission statement may give hints about its culture:
“Saving people money so they can live better.”Wal-Mart Stores, Inc. (2008).

Rituals
Rituals refer to repetitive activities within an organization that have symbolic
meaning.Anand,
N. (2005). Blackwell Encyclopedic Dictionary of Management. Cambridge: Wiley.
Usually rituals have their roots in the history of a company’s culture. They create
camaraderie and a sense of belonging among employees. They also serve to teach
employees corporate values and create identification with the organization. For
example, at the cosmetics firm Mary Kay Inc., employees attend ceremonies
recognizing their top salespeople with an award of a new car— traditionally a pink
Cadillac. These ceremonies are conducted in large auditoriums where participants
wear elaborate evening gowns and sing company songs that create emotional
excitement. During this ritual, employees feel a connection to the company culture
and its values such as self-determination, willpower, and enthusiasm.Jarnagin, C.,
& Slocum, J. W., Jr. (2007). Creating corporate cultures through mythopoetic
leadership. Organizational Dynamics, 36, 288–
302. Another example of rituals is the Saturday morning meetings of Wal-Mart.
This ritual was first created by the company founder Sam Walton, who used these
meetings to discuss which products and practices were doing well and which
required adjustment. He was able to use this information to make changes in Wal-
Mart’s stores before the start of the week, which gave him a competitive advantage
over rival stores who would make their adjustments based on weekly sales figures
during the middle of the following week. Today, hundreds of Wal-Mart associates
attend the Saturday morning meetings in the Bentonville, Arkansas, headquarters.
The meetings, which run from 7:00 a.m. to 9:30 a.m., start and end with the Wal-
Mart cheer; the agenda includes a discussion of weekly sales figures and
merchandising tactics. As a ritual, the meetings help maintain a small-company
atmosphere, ensure employee involvement and accountability, communicate a
performance orientation, and demonstrate taking quick action.Schlender, B. (2005,
April 18). Wal-Mart’s $288 billion meeting. Fortune, 151, 90–106; Wal around the
world. (2001, December 8). Economist, 361, 55–57.

Rules and Policies

Another way in which an observer may find out about a company’s culture is to
examine its rules and policies. Companies create rules to determine acceptable and
unacceptable behavior and, thus, the rules that exist in a company will signal the
type of values it has. Policies about issues such as decision making, human
resources, and employee privacy reveal what the company values and emphasizes.
For example, a company that has a policy such as “all pricing decisions of
merchandise will be made at corporate headquarters” is likely to have a centralized
culture that is hierarchical, as opposed to decentralized and empowering. The
presence or absence of policies on sensitive issues such as English-only rules,
bullying and unfair treatment of others, workplace surveillance, open-door
policies, sexual harassment, workplace romances, and corporate social
responsibility all provide pieces of the puzzle that make up a company’s culture.
This highlights how interrelated the P-O-L-C functions are in practice. Through
rules and policies, the controlling function affects the organization’s culture, a
facet of organizing.

Physical Layout
A company’s building, layout of employee offices, and other workspaces
communicate important messages about a company’s culture. For example, visitors
walking into the Nike campus in Beaverton, Oregon, can witness firsthand some of
the distinguishing characteristics of the company’s culture. The campus is set on
74 acres and boasts an artificial lake, walking trails, soccer fields, and cutting-edge
fitness centers. The campus functions as a symbol of Nike’s values such as energy,
physical fitness, an emphasis on quality, and a competitive orientation. In addition,
at fitness centers on the Nike headquarters, only those using Nike shoes and
apparel are allowed in. This sends a strong signal that loyalty is expected. The
company’s devotion to athletes and their winning spirit are manifested in campus
buildings named after famous athletes, photos of athletes hanging on the walls, and
their statues dotting the campus. The layout of the office space also is a strong
indicator of a company’s culture. A company that has an open layout where high-
level managers interact with employees may have a culture of team orientation and
egalitarianism, whereas a company where most high-level managers have their
own floor may indicate a higher level of hierarchy. Microsoft employees tend to
have offices with walls and a door because the culture emphasizes solitude,
concentration, and privacy. In contrast, Intel is famous for its standard cubicles,
which reflect its egalitarian culture. The same value can also be observed in its
avoidance of private and reserved parking spots.Clark, D. (2007, October 15). Why
Silicon Valley is rethinking the cubicle office. Wall Street Journal, 250, B9. The
degree to which playfulness, humor, and fun are part of a company’s culture may
be indicated in the office environment. For example, Jive Software boasts a
colorful, modern, and comfortable office design. Their break room is equipped
with a keg of beer, free snacks and sodas, an Xbox 360, and Nintendo Wii. A
casual observation of their work environment sends the message that employees
who work there see their work as fun.Jive Software. (2008). Careers. Retrieved
November 20, 2008, from http://www.jivesoftware.com/company.
 Stories and Language
Perhaps the most colorful and effective ways in which organizations communicate
their culture to new employees and organizational members is through the skillful
use of stories. A story can highlight a critical event an organization faced and the
organization’s response to it, or a heroic effort of a single employee illustrating the
company’s values. The stories usually engage employee emotions and generate
employee identification with the company or the heroes of the tale. A compelling
story may be a key mechanism through which managers motivate employees by
giving their behavior direction and by energizing them toward a certain
goal.Beslin, R. (2007). Story building: A new tool for engaging employees in
setting direction. Ivey Business Journal, 71, 1–8. Moreover, stories shared with
new employees communicate the company’s history, its values and priorities, and
create a bond between the new employee and the organization. For example, you
may already be familiar with the story of how a scientist at 3M invented Post-it
notes. Arthur Fry, a 3M scientist, was using slips of paper to mark the pages of
hymns in his church choir, but they kept falling off. He remembered a superweak
adhesive that had been invented in 3M’s labs, and he coated the markers with this
adhesive. Thus, the Post-it notes were born. However, marketing surveys for the
interest in such a product were weak and the distributors were not convinced that it
had a market. Instead of giving up, Fry distributed samples of the small yellow
sticky notes to secretaries throughout his company. Once they tried them, people
loved them and asked for more. Word spread and this led to the ultimate success of
the product. As you can see, this story does a great job of describing the core
values of a 3M employee: Being innovative by finding unexpected uses for objects,
persevering, and being proactive in the face of negative feedback.Higgins, J. M., &
McAllester, C. (2002) Want innovation? Then use cultural artifacts that support it.
Organizational Dynamics, 31, 74–84.

Language is another way to identify an organization’s culture. Companies often

have their own acronyms and buzzwords that are clear to them and help set apart
organizational insiders from outsiders. In business, this code is known as jargon.
Jargon is the language of specialized terms used by a group or profession. Every
profession, trade, and organization has its own specialized terms.
 How Do Cultures Change?
As emphasized throughout this chapter, culture is a product of its founder’s values,
its history, and collective experiences. Hence, culture is part of a company’s DNA
and is resistant to change efforts. Unfortunately, many organizations realize that
their current culture constitutes a barrier against organizational productivity and
performance. Particularly when there is a mismatch between an organization’s
values and the demands of its environment, changing the culture becomes the key
to the company turnaround.
Achieving culture change is challenging, and there are many companies that
ultimately fail in this mission. Research and case studies of companies that
successfully changed their culture indicate that the following six steps increase the
chances of success.Schein, E. H. (1990). Organizational culture. American
Psychologist, 45, 109–119.

Creating a Sense of Urgency

For the change effort to be successful, it is important to communicate the need for
change to employees. One way of doing this is to create a sense of urgency on the
part of employees, explaining to them why changing the fundamental way in which
business is done is so important. In successful culture change efforts, leaders
communicate with employees and present a case for culture change as the essential
element that will lead the company to eventual success. As an example, consider
the situation at IBM in 1993 when Lou Gerstner was brought in as CEO and
chairman. After decades of dominating the market for mainframe computers, IBM
was rapidly losing market share to competitors, and its efforts to sell personal
computers—the original PC— were seriously undercut by cheaper “clones.” In the
public’s estimation, the name IBM had become associated with obsolescence.
Gerstner recalls that the crisis IBM was facing became his ally in changing the
organization’s culture. Instead of spreading optimism about the company’s future,
he used the crisis at every opportunity to get buy-in from employees.Gerstner, L.
V. (2002). Who says elephants can’t dance? New York: HarperCollins.

Changing Leaders and Other

Key Players
A leader’s vision is an important factor that influences how things are done in an
organization. Thus, culture change often follows changes at the highest levels of
the organization. Moreover, to implement the change effort quickly and efficiently,
a company may find it helpful to remove managers and other powerful employees
who are acting as a barrier to change. Because of political reasons, self-interest, or
habits, managers may create powerful resistance to change efforts. In such cases,
replacing these positions with employees and managers giving visible support to
the change effort may increase the likelihood that the change effort succeeds. For
example, when Robert Iger replaced Michael Eisner as CEO of the Walt Disney
Company, one of the first things he did was to abolish the central planning unit,
which was staffed by people close to ex-CEO Eisner. This department was viewed
as a barrier to creativity at Disney and its removal from the company was helpful
in ensuring the innovativeness of the company culture.McGregor, J., McConnon,
A., Weintraub, A., Holmes, S., & Grover, R. (2007, May 14). The 25 Most
Innovative Companies. Business Week, 4034, 52–60.

Role Modeling
Role modeling is the process by which employees modify their own beliefs and
behaviors to reflect those of the leader.Kark, R., & Van Dijk, D. (2007).
Motivation to lead, motivation to follow: The role of the self-regulatory focus in
leadership processes. Academy of Management Review, 32, 500–528. CEOs can
model the behaviors that are expected of employees to change the culture because
these behaviors will trickle down to lower-level employees. For example, when
Robert Iger took over Disney, to show his commitment to innovation, he
personally became involved in the process of game creation, attended summits of
developers, and gave feedback to programmers about the games. Thus, he modeled
his engagement in the idea creation process. In contrast, the modeling of
inappropriate behavior from the top will lead to the same behavior trickling down
to lower levels. A recent example to this type of role modeling is the scandal
involving Hewlett-Packard board members. In 2006, when board members were
suspected of leaking confidential company information to the press, the company’s
top-level executives hired a team of security experts to find the source of the leak.
The investigators sought the phone records of board members, looking for links to
journalists. For this purpose, they posed as board members and called phone
companies to obtain itemized home phone records of board members and
journalists. When the investigators’ methods came to light, HP’s chairman and four
other top executives faced criminal and civil charges. When such behavior is
modeled at top levels, it is likely to have an adverse effect on the company
culture.Barron, J. (2007, January). The HP way: Fostering an ethical culture in the
wake of scandal. Business Credit, 109, 8–10.

Training
Well-crafted training programs may be instrumental in bringing about culture
change by teaching employees the new norms and behavioral styles. For
example, after the space shuttle Columbia disintegrated on reentry from a
February 2003 mission, NASA decided to change its culture to become more
safety sensitive and minimize decision-making errors that lead to unsafe behaviors.
The change effort included training programs in team processes and cognitive bias
awareness. Similarly, when auto repairer Midas felt the need to change its culture
to be more committed to customers, they developed a program to train employees
to be more familiar with customer emotions and connect better with them.
Customer reports have been overwhelmingly positive in stores that underwent this
training.

Changing the Reward System

The criteria with which employees are rewarded and punished have a powerful role
in determining the cultural values of an organization. Switching from a
commission-based incentive structure to a straight salary system may be
instrumental in bringing about customer focus among sales employees. Moreover,
by rewarding and promoting employees who embrace the company’s new values
and promoting these employees, organizations can make sure that changes in
culture have a lasting effect. If the company wants to develop a team-oriented
culture
 where employees collaborate with one another, then using individual-based
incentives may backfire. Instead, distributing bonuses to intact teams might be
more successful in bringing about culture change.

Creating New Symbols and

Stories
Finally, the success of the culture change effort may be increased by developing
new rituals, symbols, and stories. Continental Airlines is a company that
successfully changed its culture to be less bureaucratic and more team-oriented in
1990s. One of the first things management did to show employees that they really
meant to abolish many of the company’s detailed procedures and create a culture
of empowerment was to burn the heavy 800-page company policy manual in their
parking lot. The new manual was only 80 pages. This action symbolized the
upcoming changes in the culture and served as a powerful story that circulated
among employees. Another early action was redecorating waiting areas and
repainting all their planes, again symbolizing the new order of things.Higgins, J., &
McAllester, C. (2004). If you want strategic change, don’t forget to change your
cultural artifacts. Journal of Change Management, 4, 63–73. By replacing the old
symbols and stories, the new symbols and stories will help enable the culture
change and ensure that the new values are communicated.

2. What is culture, and how can culture be understood through Hofstede’s cultural framework?

As the business world becomes more global, employees will likely face someone
from another country at some point in their careers, companies will negotiate with
companies from other countries, and even employees of domestic companies will
likely encounter someone from another country.

Furthermore, trends suggest that immigration, the movement of people from their
home country to other countries, will continue to grow worldwide, a process that
will contribute to making companies’ workforces increasingly diverse.
Additionally, many multinational companies rely on expatriates to run their local
operations. An expatriate is foreign employee who moves to and works in another
country for an extended period of time. All of these trends mean that during your
career you are likely to encounter someone from a different culture and that the
potential for cross-cultural tensions is high. It is therefore important for any
international management student to understand culture to better prepare for
dealing with such tensions.

According to Geert Hofstede,a Dutch social psychologist, culture is “the collective

programming of the mind which distinguishes the member of one group or
category of people from another.” It tells people who they are, which behaviors are
appropriate, and which are not acceptable in any society. It affects almost
everything we do, see, feel, and believe. In fact, if you have heard of the
“American dream,” where if one works hard, one can achieve one’s dream, you
are aware of one characteristic aspect of American culture.
Consider any aspect of your life, and it is likely influenced by your culture. The
food you eat, the clothes you wear, and even how you address your boss or teacher
are influenced by your culture. Societies develop cultural norms, values, and
beliefs to assist their members in adapting to their environments.

Why is an understanding of culture critical to a manager in a global environment?

As you have already seen, anyone from any country is likely to encounter someone
from another country at the workplace. Such interactions can result in
misunderstanding or tensions if not properly managed. Business magazines are full
of examples of cross-cultural misunderstandings that have doomed relationships
and business. For another example, U.S. managers sent to Beijing, China, get
frustrated because they find that their hosts are more interested in socializing than
concluding a deal. Understanding Chinese culture would have prevented the latter
misunderstanding because the U.S. managers would understand that it is very
important for Chinese companies to get to know who they are working with before
signing any deal. In this section, you will learn about one of the most powerful
tools for understanding cultural differences

Hofstede is a Dutch social scientist who developed his model by surveying over
88,000 employees in IBM subsidiaries from 72 countries. Hofstede developed this
cultural model primarily on the basis of differences in values and beliefs regarding
work goals. Hofstede’s framework is especially useful because it provides
important information about differences between countries and how to manage
such differences. Recent reviews of research have shown the utility of Hofstede’s
framework for a wide variety of managerial activities, such as change
management, conflict management, leadership, negotiation, and work-related
attitudes.

Cultural Dimension 1: Power Distance

Hofstede’s original survey of the more than 88,000 employees of the 72 countries
revealed four major cultural dimensions. The first cultural dimension is power
distance, the degree to which members of a society accept differences in power and
authority. In societies with high power distance, people are more likely to accept
that power inequality is good and acceptable. People in high power distance
societies are more likely to accept that there are some powerful people who are in
charge and that these people are entitled to special benefits. In contrast, societies
with low power distance tend to consider that all members are equal. (Figure)
shows the levels of power distance (and the other cultural dimensions discussed
later) in 15 selected societies. Hofstede’s scores range from 100 (the highest power
distance) to 0 (the lowest). In the table, we break Hofstede’s scores into high (70–
100), medium (40–69), and low (0–39).
Implications of Power Distance

Type of Work
High Power Distance Low Power Distance
Activity

Adapted from Geert Hofstede, “Culture’s consequences: Comparing values, behaviors and
institutions across nations,” 2nd edition, 2001, page 107-108, Thousand Oaks, CA: Sage
Publications.

Very centralized
Flat organizational hierarchies
Organizational Tall hierarchies with clear levels of
structures Decentralized structures
managers and subordinates

Concentration of authority at the top Dispersed authority

Managers rely on formal rules to Managers rely on personal
manage experience
Managerial authority
Authoritative managerial style and More consultative or collaborative
decision making forms of decision making

Subordinates expect to be told what

Subordinates often expected to be
to do
consulted
Perfect boss is seen as one who is
Relationship with Ideal manager is seen as a
an autocrat
supervisors democratic leader
Information sharing constrained by
Openness to sharing information
hierarchy

Wide salary gap between top and Low salary gap between top and
Other issues bottom of organization bottom of company
Managers often feel underpaid and Managers feel paid adequately and
Implications of Power Distance

Type of Work
High Power Distance Low Power Distance
Activity

dissatisfied with careers are satisfied

As (Figure) shows, many of the emerging markets in regions such as Asia and
Latin America, such as India, Brazil, and Mexico, all have high power distance
scores. In such countries, the concern for hierarchy and inequality in organizations
is rooted in early socialization in the family and school. In these countries, children
are expected to obey their parents and elders. When these children enter school,
teachers assume the dominant role. Children must show respect, and they seldom
challenge a teacher’s authority. As these individuals take on work roles, the
allegiance to teachers is transferred to bosses. Thus, people in high power distance
societies will seldom question their supervisors. In contrast, Anglo countries such
as the United States, Canada, and the United Kingdom have low power distance. In
these countries, people do not expect power differences, and everyone is seen as an
equal.

Management Implications of Power Distance

What are the implications of power distance for international management?

(Figure) shows some of the key differences between high and low power distance
societies for work-related issues. As you can see, it is important for managers to
express their authority and know-how in high power distance societies.
Subordinates expect clear directions from their managers and assume they will be
told what to do. In high power distance societies, employees will often equate age
with wisdom and seniority. For instance, if a multinational is sending people to
negotiate in a high power distance country, they should send higher-level and older
managers if they want to be taken seriously.
Cultural Dimension 2: Individualism and

Collectivism The second cultural dimension

we consider here is
individualism/collectivism. Individualism refers to the degree to which a society
focuses on the
relationship of the individual to the group. Collectivism refers to the degree to
which a society focuses on the relationship of the group as a whole.

In societies with high individualism (or low collectivism) scores, individuals are
valued for their achievements and are rewarded and recognized for such
achievements. In contrast, people who live in societies with low individualism
(high collectivism) are seen as being part of a wider group, known as the in-group.
The in-group includes the family, team, or social class, and how individuals relate
to such wider groups is seen as important to their success. In other words, people’s
success is gauged by how others in their groups view and support them.

(Figure) shows the levels of individualism in the same selected 15 nations. We

again see similar patterns whereby more Anglo cultures such as the U.S., Canada,
and the U.K. have relatively high levels of individualism. In contrast, Asian, Latin
American, and many emerging countries tend to have cultures that are either on the
medium or low range of the individualism dimension. (Figure) shows some of
the implications of individualism for management. The effects of most
management practices are determined by whether they are done at a group or
individual level. For example, in countries with low individualism, one will find
that employees are hired and promoted mostly on the basis of association with a
larger group, such as a university or high school. In such societies, emphasis is
placed on loyalty, seniority, and age. To operate smoothly in such societies,
companies need to appreciate the importance of the larger social group.
Additionally, as (Figure) also shows, care should be taken in terms of how rewards
are distributed. Rewarding individual team members in low individualism societies
can result in tensions because the individual team member may become
stigmatized. In such cases, rewards done on a group level may work best.

Implications of Individualism

Type of Work High Individualism/Low

Low Individualism/High Collectivism
Activity Collectivism
Adapted from Geert Hofstede, “Culture’s consequences: Comparing values, behaviors and
institutions across nations,” 2nd edition, 2001, page 169-170, Thousand Oaks, CA: Sage
Publications.
Implications of Individualism

Type of Work High Individualism/Low

Low Individualism/High Collectivism
Activity Collectivism

Employees act in their own

Employees act in the interest of in-group
interests
(members of the family or same university)
Employee commitment to
Employee commitment to company relatively
Relationship organizations high
low
with companies
Employee-employer
Employee-employer relationships is almost
relationship based on the
like a family link
market

Hiring and promotions based

Hiring and promotion takes in-group into on rules
consideration
Family relationships
Better to reward based on equality (give unimportant in hiring
Human
everyone the same reward) rather than equity
resource, Better to reward based on
(base reward on work effort) Relatives of
management equity
employees preferred in hiring
Training best when focused at group level Training done best
individually

Belief in individual decision

Belief in collective decisions making
Treating friends better than others is normal Treating friends better than
Support of teamwork others at the workplace is
Other issues considered unethical
Less mobility across occupations
More mobility across
Personal relationships very critical in
occupations within company
business
Tasks and company prevail
over personal relationships in
Implications of Individualism

Type of Work High Individualism/Low

Low Individualism/High Collectivism
Activity Collectivism

business

Cultural Dimension 3: Uncertainty Avoidance

Hofstede’s third cultural dimension is uncertainty avoidance, the degree to which

people in a society are comfortable with risk, uncertainty, and unpredictable
situations. People in high uncertainty avoidance societies tend to want to avoid
uncertainty and unpredictability. As a result, work environments in such countries
try to provide stability and certainty through clear rules and instructions. In
contrast, societies with low uncertainty avoidance are comfortable with risk,
change, and unpredictability. In these countries, risky and ambiguous situations are
less likely to upset people.

(Figure) shows details of the levels of uncertainty avoidance for the selected 15
countries. We see that Anglo and Scandinavian countries have relatively lower
uncertainty avoidance scores. In contrast, many emerging markets (such as Brazil,
Mexico, and China) have medium to high uncertainty avoidance scores. Such
findings suggest that companies should adapt their practices to conform to the
levels of uncertainty avoidance. In high uncertainty avoidance countries, for
example, managers are advised to provide structure and order to reduce uncertainty
and ambiguity for subordinates. Companies in these cultures have many written
rules and procedures that tell employees exactly what the organization expects of
them. Additionally, managers should give clear and explicit directions to their
subordinates about exactly what is expected of them in performing their jobs. By
reducing any ambiguity, subordinates are less anxious.

In contrast, in low uncertainty avoidance countries, subordinates are much more

comfortable and ambiguity. Managers can therefore give more flexibility and
freedom to employees. Design of organizations also allows for fewer rules and
regulations.

(Figure) provides more detail on the implications of uncertainty avoidance on

several managerial aspects.
Implications of Uncertainty Avoidance

High Uncertainty
Type of Work Activity Low Uncertainty Avoidance
Avoidance

Based on Geert Hofstede, “Culture’s consequences: Comparing values, behaviors and

institutions across nations,” 2nd edition, 2001, page 169-170, Thousand Oaks, CA: Sage
Publications.

Strong loyalty to employing

Weak loyalty to companies organizations
Average duration of employment Employment are long term
Relationship with shorter in duration
companies
Preference for smaller organizations Preference for larger
companies

Superiors optimistic about Superiors pessimistic about

subordinate ambition and leadership subordinate ambition
abilities Top managers often
Characteristics of Top managers usually involved in involved in operations
supervisors/managers strategy Power of superiors based on
Power of superiors based on control of uncertainties
relationships and position Hierarchical control roles
Transformational leaders preferred preferred

Innovators feel less constrained by Innovators feel constrained

rules by rules
Entrepreneurship and
innovation Renegade championing Rational championing
Tolerance for ambiguity in Formalized management
procedures and structures structures
Implications of Uncertainty Avoidance

High Uncertainty
Type of Work Activity Low Uncertainty Avoidance
Avoidance

Innovation welcomed Innovation resisted

Cultural Dimension 4: Masculinity

The fourth and final dimension we consider is masculinity, the degree to which a
society emphasizes traditional masculine qualities such as advancement and
earnings. In high masculinity societies, work tends to be very important to people,
gender roles are clear, and work takes priority over other aspects of a person’s life,
such as family and leisure. In addition, masculine societies emphasize earnings and
achievements, and employees tend to work very long hours and take very little
vacation time.

(Figure) shows the masculine scores for selected societies. As the table shows,
Anglo cultures such as the U.S. and Canada tend to have high masculinity. This is
not surprising given that both the U.S. and Canada tend to have some of the highest
number of hours worked. In contrast, Latin European countries such as France and
Spain have much lower masculinity as reflected in the importance of leisure in
these societies. Scandinavian cultures also reflect low masculinity, a characteristic
that is consistent with the preference for quality of life in such countries. We also
see that many of the emerging nations have medium to high masculinity.

(Figure) provides some more insights into the implications of masculinity

differences for work- related issues. As you can see, companies in high masculinity
societies can count on very work- oriented employees. Multinationals are therefore
advised to motivate their employees through pay and security. In contrast,
individuals in more feminine societies tend to prefer interesting work and more
leisure. Strong motivational policies in these societies emphasize a balance
between work and leisure, and multinationals in such societies tend to have
 stronger policies catering to both genders.

Implications of Masculinity
Type of Work
High Masculinity Low Masculinity
Activity

Based on Geert Hofstede, “Culture’s consequences: Comparing values, behaviors and

institutions across nations,” 2nd edition, 2001, page 318, Thousand Oaks, CA: Sage Publications.

Work in order to live

Live in order to work Preference for lower number of
Preference for high pay work hours
Relationship with
work Workers look for security, pay and Workers look for better working
interesting work conditions and relationships in
work

Managers are employees like

Managers seen as cultural heroes
others
Successful managers primarily exhibit
Successful managers are seen as
male characteristics
possessing both male and female
Managers need to be competitive, firm, characteristics
Managers’ aggressive, and decisive Managers are
Managers hold fairly modest career
characteristics very ambitious
ambition
Fewer women in management
More women in management
Managers prepared to move family for
Managers less prepared to uproot
career reasons
family because of career move

Large pay gap between genders Job Low salary gap between top and
applicants oversell their abilities bottom of company [what about
gender gap?]
Absences due to sickness lower
Other issues Managers feel paid adequately and
General preference for larger are satisfied
companies
Absences because of sickness
Conflicts are resolved through fighting higher
Implications of Masculinity

Type of Work
High Masculinity Low Masculinity
Activity

until the best “man” wins Preference for smaller

organizations
Conflicts are resolved through
compromise and negotiations

*******************************************************
 Organizational Structure

Organizational structure refers to how individual and team work within an

organization are coordinated. To achieve organizational goals and objectives,
individual work needs to be coordinated and managed. Structure is a valuable tool
in achieving coordination, as it specifies reporting relationships (who reports to
whom), delineates formal communication channels, and describes how separate
actions of individuals are linked together. Organizations can function within a
number of different structures, each possessing distinct advantages and
disadvantages. Although any structure that is not properly managed will be
plagued with issues, some organizational models are better equipped for particular
environments and tasks.

An organization is defined as a group of people working together to achieve

common goals. Organizational structure specifies the jobs to be done within an
organization and how those jobs relate to one another. In every organization, the
top management establishes organization’s goals which are redefined to obtain
measurable performance targets. Such measurable parameters help the
management monitor employees and ensure that they are aligned with
organizational goals. The management also develops strategies that will enable the
organization meet its goals. The implementation of these strategies requires a
formal structure of authority and responsibilities. In this chapter, the elements that
form the basis of organizational structure, widely used organizational structures
and the impact of organizational structure on employee behavior are explained

Understanding Organizational Structure

Organizational structure may be defined as the framework of tasks, reporting and

authority relationships within which an organization functions. According to
Stephen P Robbins, “An organizational structure defines how job tasks are
formally divided, grouped and coordinated.” Fred Luthans, however, defines
organization structure in terms of the behavior of individuals in an organization.
He argues that organization structure represents the holistic framework for
Organizational Behavior. The building blocks for designing an organization’s
structure consist of six elements.
Management experts use the six basic elements of organizational structure to
devise the right plan for a specific company. These elements are:
departmentalization, chain of command, span of control, centralization or
decentralization, work specialization and the degree of formalization. Each of
these elements affects how workers engage with each other,
management and their jobs in order to achieve the employer’s goals.
Departmentalization

Departmentalization refers to how the organizational structure groups the

company's functions, offices and teams. Those individual groups are typically
referred to as departments. Departments are usually sorted on the basis of the
kinds of tasks the workers in each department perform, but this is not the only
way to create a company’s departmental breakdown. You could also divide the
business into groups based on product or brand lines, geographic locations or even
customer needs.

Chain of Command

Most organizations, from businesses to nonprofits to the military, utilize a chain of

command. This helps eliminate inefficiencies by having each employee report to a
single manager, instead of to several bosses. In the corporate context, this type of
chain of command is reflected in the organizational structure and affects job
descriptions as well as office hierarchies. Managers assign tasks, communicate
expectations and deadlines to employees, and provide motivation on a one-to-
many basis.

When employees encounter obstacles or problems, they report back to the

appropriate manager. When necessary, the manager is then responsible for taking
the concern or issue up the chain of command to the next level, and so forth. This
chain of authority or command streamlines corporate operations and
communications for a more efficient and productive business.

Span of Control

An organization’s span of control defines how many employees each manager is

responsible for within the company. There is no single type of span of control
that’s ideal for all companies or even for all businesses in a specific industry. The
optimal span will depend on a number of factors, including the size of the
workforce, how the company is divided into departments and even the company’s
specific business goals and strategies.

Other factors to consider are the type of manager assigned to each specific
department and the job descriptions of the employees reporting to that manager.
Based on the manager’s individual style or approach, the span of control could
range from three or four to 15 or more. Of course, managers who are placed higher
up the chain of command typically have a tighter span of control, as they are
directly responsible for middle-manager or team leaders.

Centralization and Decentralization

Organizational structures also rest somewhere on a spectrum of centralization.

Generally, more conservative corporate entities adopt a centralized structure. In this
design, C-level managers
make all the decisions, management designs a plan for execution and front-line
employees carry out that plan. C-level officers are generally those at the
uppermost level of the organizational chart, such as the chief executive officer,
chief operating officer and chief marketing officer.

Centralizing authority in a business means that middle management typically is left

with little to no input about the goals the company sets. This system is typical in
larger corporate organizations, as well as at companies in more conservative
industries. On the other hand, a company could adopt a more decentralized
approach. A decentralized system allows all levels of management the
opportunity to give input on big-vision goals and objectives. Larger, company-
wide decisions are still generally reserved to C-level officers, but departmental
managers enjoy a greater degree of latitude in how their teams operate.

Work Specialization

In any business, employees at all levels typically are given a description of their
duties and the expectations that come with their positions. In larger companies, job
descriptions are generally formally adopted in writing. This approach helps ensure
that the company’s specific workforce needs are met, without any unnecessary
duplication of effort. Work specialization ensures that all employees have specific
duties that they are expected to perform based on each employee's work
experience, education and skills. This prevents an expectation that employees will
perform tasks for which they have no previous experience or training and to keep
them from performing beneath their capacities.

Formalization

Finally, organizational structures implement some degree of formalization. This

element outlines inter-organizational relationships. Formalization is the element
that determines the company’s procedures, rules and guidelines as adopted by
management. Formalization also determines company culture aspects, such as
whether employees have to sign in and out upon arriving and exiting the office,
how many breaks workers can take and how long those breaks can be, how and
when employees can use company computers and how workers at all levels are
expected to dress for work.
Types of Organizational Designs

The three most commonly used organizational designs are simple structure,
bureaucratic structure and matrix structure.

Simple Structure A firm with a simple organization structure has a wide span of
control, few departments, centralized authority and a low degree of formalization.
Simple structure (refer to refers to a “flat”organization with two or three levels of
hierarchy). In a firm with a simple
organization structure, the decisionmaking power for the entire organization is
vested in one person. This structure is generally used in small organizations like
retail stores and small consultancies. In this form of organization structure,
employees have clear reporting relationships, decision-making is fast, maintenance
costs are low and rules are flexible. But this type of structure is not suitable for
large organizations. In small organizations, it is possible for a single individual to
run the business, oversee all the functions and take all the decisions pertaining to
the business. But in large organizations, where a lot of information has to be
processed and many functions require to be managed, a single individual cannot
handle all the work and take all the decisions. A single individual, handling so
much work, will take a long time to arrive at a decision. This delay in decision-
making will affect the organization’s ability to compete in the market. Moreover,
as the entire power and authority is concentrated in a single person at the top,
death or disability of the person is likely to have a negative impact on the business.

The Bureaucracy Max Weber, one of the pioneers of modern sociology, formulated
the bureaucratic model of organizations in the early 1900s. Weber held the model
to be rational and regarded it as consistent with the values of Western culture
which emphasized rationality. He believed bureaucracy as an ideal structure for
organizations. Many organizations across the world, including leading global
companies like IBM had adopted the bureaucratic model. Unfortunately, when
organizations attempt to restructure, bureaucracy becomes a major barrier to
change.

The Matrix Organization Matrix structure is another modern organizational design.

It is a structure which combines the features of a project design with those of a
functional one. It is popularly used in sectors characterized by a high degree of
specialization along with emphasis on projects and other specific goals such as
R&D organizations, consultancies, advertising agencies, hospitals, universities, etc.
Functional departmentalization helps the organization gather specialized resources
from each function (finance, production, marketing, etc) and makes them available
for all the projects. Project design, on the other hand, facilitates coordination
among various specialists by identifying employees with the requisite skills and
bring them to work together to achieve on-time completion of tasks. The matrix
structure combines the strengths of the two designs while eliminating their
weaknesses. The main advantage of the matrix structure is that it facilitates
coordination between the various complex functions of the organization. It also
enables the organization to allocate functional specialists among different
departments in an effective manner. However, the matrix structure is not devoid of
weaknesses. The structure violates the principle of unity of command, due to
which the employees report to two (or more) bosses. This could give rise to
conflicts between the managers. For example, product managers have to fight to
get the best specialists allotted to their products. This may eventually end up in a
power struggle between two or more product managers. Sometimes such struggles
may also develop between the functional and product managers. The conflicts, if
allowed to continue without resolution, can demotivate employees, reduce
their loyalty and
preclude them from identifying themselves with the organization. Matrix design is
also criticized for the confusion it creates and the amount of stress it places on
individuals. Reporting to more than one superior leads to role conflict and
ambiguity among employees, which can increase their work-stress. As the superior
changes from one project to another, superior-subordinate relationships also gets
weakened. As the matrix structure embodies two structures, it often leads to
duplication of activities resulting in increase in costs. Despite its drawbacks, many
large organizations which use complex technology are increasingly adopting
matrix structure. It could be mainly because of the multiple benefits offered by
matrix structures. Matrix structures enable organizations to make optimum
utilization of employee skills, ensure that knowledge is available to employees in
all the departments and projects, facilitate quick response to changes in customer
demands and project requirements, and help organizations reduce costs and
improve performance. The success of the structure depends on how effectively
managers overcome its deficiencies and leverage its positive aspects

Organizational Designs and Employee Behavior

It is difficult to generalize the type of organizational structure that would lead to

better employee performance and increased job satisfaction. Job satisfaction varies
from individual to individual, depending on his/her personal preferences. Some
individuals prefer to be guided in their work by standard rules and procedures.
They are comfortable with tasks that require a low level of skills and can be
performed mechanically. Such employees are most productive in mechanistic
structures where there is a high degree of work specialization. But now-a-days, a
significant portion of the workforce is educated and desires jobs that facilitate
personal growth and provide individuals an opportunity to utilize their skills. A
relationship between employee performance and elements like span of control and
degree of centralization has not yet been established. Some employees are able to
work to their full potential only when they are under minimum supervision. They
are most productive in organization structures where there is a wide span of control
(supervisors who have several subordinates under them, who are not able to closely
supervise each subordinate’s work). Low level of supervision in these structures
gives these employees the freedom to plan their work. This freedom motivates
them and results in job satisfaction. But some employees like to be guided
constantly in their work by their superior. Such employees are more productive in
structures where there is a narrow span of control. Though it is generally agreed
that decentralization positively influences employee performance and job
satisfaction, there is no evidence to prove that it always improves employee
performance. It has been observed that some employees who have low self esteem
are not capable of taking independent decisions and prefer participative decision-
making because in such form of decision-making they are not held responsible for
any wrong decision. But employees who have high self-esteem and confidence in
their decision-making abilities prefer to take their own decisions.
 Organizational Change
Why is change management a topic in organizational behavior? Organizations
need to be able to adapt to different market conditions and customer needs and it
seems as though those kinds of changes are happening every day. When an
organization isn’t flexible, another business will swoop in and take those
customers and those profits away. But change management is definitely a behavior.
Organizations don’t have to change—people have to change. And that’s what
change management is all about.

“Organizational change” pertains to the altering of structures, strategies,

procedures or cultures of organizations (Quattrone and Hopper, 2001). The term
encompasses both the process by which this happens (i.e., “how”) and the content
of what is being altered (i.e., “what”). By definition, change implies a shift in the
organization from one state to another. This shift may be deliberate, with the aim
of gaining or losing specific features of the organization to attain a defined goal, or
it may be less deliberate, perhaps occurring as a consequence of developments
outside the control of the organization. Moreover, during the change process,
additional parts of the organization may be unintentionally affected, particularly
when change is experienced as excessive (Stensaker et al., 2001). Such unintended
repercussions of organizational change may be both positive and negative (Jian,
2007), and may be more likely when a large number of transactions are required to
implement the change decision and many specialized problem- solving capabilities
are invoked (Casa and Lodge, 2015). Thus, organizational change can be
experienced both as an opportunity to gain and as a risk of losing and may involve
redesign of tasks and responsibilities that alter existing work content and –
environment in various foreseen and unforeseen ways. Organizational change has
repeatedly been associated with adverse effects on employee health (Oreg et al.,
2011). Large-scale organizational changes, such as company restructuring,
downsizing and outsourcing have been linked to mental health complaints and
long-term sick leave (Kivimäki et al., 2001; Bamberger et al., 2012). Clarifying the
repercussions of organizational change for workplaces and employees is an
essential first step to preventing adverse health effects of and facilitating healthy,
successful change. Prior meta-analytic studies have shown a wide range of
psychological and social work factors, such as leadership, role conflict and
ambiguity, job demands, control and job insecurity to predict employee well-being,
health and sick leave (Viswesvaran et al., 1999; Stansfeld and Candy, 2006;
Nahrgang et al., 2011; Lang et al., 2012; Schyns and Schilling, 2013; Virtanen et
al., 2013; Schmidt et al., 2014; Theorell et al., 2015), as well as the change
process and end-result (Schuler and Jackson, 2001; Hoag et al., 2002).

Managers at an organization need to recognize problems as they occur and adjust

their processes accordingly to solve for them. Good change management skills
make this an easier process. Managers carrying out any of the P-O-L-C functions
often find themselves faced with the need to manage organizational change
effectively. Oftentimes, the planning process reveals the need
for a new or improved strategy, which is then reflected in changes to tactical and
operational plans. Creating a new organizational design (the organizing function)
or altering the existing design entails changes that may affect from a single
employee up to the entire organization, depending on the scope of the changes.
Effective decision making, a Leadership task, takes into account the change-
management implications of decisions, planning for the need to manage the
implementation of decisions. Finally, any updates to controlling systems and
processes will potentially involve changes to employees’ assigned tasks and
performance assessments, which will require astute change management skills to
implement. In short, change management is an important leadership skill that spans
the entire range of P-O-L-C functions.

Most leaders are responsible for some degree of change management. In addition,
as indicated in the introduction, organizational development (OD) is a specialized
field that focuses on how to design and manage change. An OD consultant is
someone who has expertise in change management processes. An internal
consultant is someone who works as an employee of an organization and focuses
on how to create change from within that organization. An external consultant is an
OD specialist hired to provide outside expertise for a short period of time, usually
for a major change effort. Leaders are more effective in managing change if they
understand the common practices for managing change as well as the perspectives
and practices used by OD specialists.

Change is the one of the most important and difficult problem with which
organizations is dealing. The ability to change rapidly, efficiently, and almost
continually is a major dilemma for organizations in today‟s rapidly changing
environment.

Types of Organizational Change The scale of change may be categorized as

wide-ranging, frame-breaking “transformational change” or small-scale and slow-
shifting in “incremental change" models.

Incremental Change / 1st Order Change Incremental change/1st order change is

generally categorized by changes in functional processes, including,
communication systems, recognition and reward programs, and decision-making
processes as shown in fig 1&2 in Appedix. 1st order change is considered part of a
continuous process. A low demand for change results in 1st order. [6].Incremental
models/1st order of change suggest that change should be implemented in a
gradual manner ,however ,Waterfield suggest that an incremental approach to
change „will not work‟ and did not deliver the required scale of change as the
focus on re-engineering and restructuring as ways of implementing change, citing
only small-scale improvements as a result.[7] It includes: Cost changes: These
changes are occur when organizations attempts to reduce costs in order to improve
efficiency or performance of organizations. Process changes: These changes are
implemented to improve efficiency or effectiveness of organizational processes
and procedures.
Transformational / Radical Change / 2nd Order Change The radical/2nd order
change is a multi-dimensional, multilevel, qualitative, discontinuous change as
shown in fig.1&2 in Appendix. These change involving a paradigmatic shift in
organization. It leads to a new identity of the considered organization. It is viewed
as deep structural and cultural change .A 2nd order change occur due to high
demand of change. Different researchers like Kleiner and Corrigan argues that
transformational change/2nd order can be described as radical, groundbreaking
alterations that exhibit a profound break with accepted patterns of organizational
behavior and operation It includes; Cultural changes: These changes are the least
tangible of all the types of change, but they can be are the most difficult changes.
An organization‟s culture is its shared set of assumptions values, beliefs, and
thoughts. Structural changes: In this change the structure of organization changes.
Mergers, acquisitions, consolidations, and divestiture of operating units are all
examples of attempts at structural change.

Planned and Unplanned

Change
To start, there are planned changes and unplanned changes. That might not sound
very significant or overwhelmingly important, but the distinction is definitely
worth pondering. Planned change is a change that occurs when managers or
employees make a conscious effort to change in response to a specific problem. An
unplanned change occurs randomly and spontaneously without any specific
intention on the part of managers or employees of addressing a problem.

Obviously, when change is planned, like a new information management system or

a different accounts payable procedure, change management can also be planned to
minimize employee resistance. When an unplanned change occurs, like a sudden
economic downturn or a shortage of resources, managers are taken by surprise and
adaptation may not be as organized.

Forces for change

Alfred North Whitehead was a philosopher and mathematician, but, with that kind
of insight on the subject of change, he could have been a CEO. Today’s business
leaders have to worry about addressing customer needs in a fast-paced
environment impacted by social, economic, political and cultural shifts. In today’s
business environment, the ever-looming presence of change is pretty much the
only thing that stays the same.

The problem is, no one likes change.

Change, like the passing of time, is unavoidable

Organizations and their managers have to learn how to anticipate and implement
change effectively. Managers need to find ways to overcome their employees’
natural aversion to change, because managing change effectively can mean the
difference between staying in business and becoming irrelevant to their customers.
The first step in managing change effectively is to understand what change is and
where it comes from.

Organizational change is the transformation or adjustment to the way an

organization functions. Organizations adjust to small changes all the time, possibly
looking to improve productivity, responding to a new regulation, hiring a new
employee, or something similar. But on top of these little adjustments we make at
work all the time, there are larger pressures that loom over us, like competition,
technology, or customer demands. Those larger pressures sometimes require larger
responses.

What forces create these

changes?
External forces are those changes that are part of an organization’s general and
business environment. There are several kinds of external forces an organization
might face:

 Demographic. A changing work demographic might require an organizational change in

culture. For instance, Avon built and grew their business around door-to-door cosmetic
sales, with the stay-at-home wife and mother as their primary front line employee. When
more women entered the workforce in 9-to-5 jobs, Avon had to shift gears and find new
ways to get their products in front of their customers.
 Social. Changing social trends can pressure organizations into making changes.
Consumers are becoming more environmentally conscious, a trend which has pushed fast
food restaurants to replace Styrofoam containers with paper. Manufacturers of cleaning
products changed product formulas to omit phosphorus and other environmentally
threatening chemicals. Tobacco companies have buckled under the changing image of
smokers, the dangers of their products, and some have started looking into eCigarettes and
other smoking alternatives to stay in business.
 Political. Government restrictions often force change onto organizations. This can be
something as simple as a change in minimum wage for employees, or as complex as rules
 and restrictions governing fair competition in business. For instance, when the Affordable
Health Care act was put into place, businesses had to change their operations and put steps
into place to confirm that all employees had healthcare coverage to comply with the new
law.
 Technology. Still have your VHS player? The founder of Blockbuster wishes you did.
Technological changes can make or break a business. Whether new technology is
introduced industry-wide, as when the laser was introduced to modern medicine, making
surgeries easier and safer; or when it’s introduced to end users, as when consumers
stopped renting videos to enjoy the cheaper, more convenient streaming services like
 Netflix, organizations must change to accommodate new technologies or
suffer the consequences.
 Economic. During the 2008 recession, consumers lost their jobs and cut back on their
spending. These economic downturns had a major impact on businesses. Banks failed.
General Motors and Chrysler filed for bankruptcy. Survival meant adapting to change.
Companies like Lego, who experienced stagnant U.S. sales during this time, took the
opportunity to build their markets in Europe and Asia. Netflix realized the potential of
providing in-home entertainment to families that had cut back their entertainment budgets
and grew their subscriptions by 3 million subscribers in 2009 alone. Meanwhile, in the
midst of spiking fuel prices, gas guzzling Hummers were no longer en vogue and quietly
went out of business.
 Poor Performance-Change can also occur if the company is performing poorly and if there
is a perceived threat from the environment. In fact, poorly performing companies often
find it easier to change compared with successful companies. Why? High performance
actually leads to overconfidence and inertia. As a result, successful companies often keep
doing what made them successful in the first place. When it comes to the relationship
between company performance and organizational change, the saying “nothing fails like
success” may be fitting. For example, Polaroid was the number one producer of instant
films and cameras in 1994. Less than a decade later, the company filed for bankruptcy,
unable to adapt to the rapid advances in one-hour photo development and digital
photography technologies that were sweeping the market. Successful companies that
manage to change have special practices in place to keep the organization open to changes.
For example, Finnish cell phone maker Nokia finds that it is important to periodically
change the perspective of key decision makers. For this purpose, they rotate heads of
businesses to different posts to give them a fresh perspective. In addition to the success of
a business, change in a company’s upper-level management is a motivator for change at
the organization level. Research shows that long-tenured CEOs are unlikely to change
their formula for success. Instead, new CEOs and new top management teams create
change in a company’s culture and structure.Barnett, W. P., & Carroll, G. R. (1995).
Modeling internal organizational change. Annual Review of Sociology, 21, 217–236;
Boeker, W. (1997). Strategic change: The influence of managerial characteristics and
organizational growth. Academy of Management Journal, 40, 152–170; Deutschman, A.
(2005, March). Building a better skunk works. Fast Company, 92, 68–73.
 Growth-It is natural for once small start-up companies to grow if they are successful. An
example of this growth is the evolution of the Widmer Brothers Brewing Company,
which started as two brothers brewing beer in their garage to becoming the 11th largest
brewery in the United States. This growth happened over time as the popularity of their
key product—Hefeweizen—grew in popularity and the company had to expand to meet
demand growing from the two founders to the 11th largest brewery in the United States
 by 2008. In 2007, Widmer Brothers merged with Redhook Ale Brewery.
Anheuser-Busch continues to have a minority stake in both beer companies.
 Globalization-Globalization is another threat and opportunity for organizations,
depending on their ability to adapt to it. Because of differences in national economies and
standards of living from one country to another, organizations in developed countries are
finding that it is often cheaper to produce goods and deliver services in less developed
countries. This has led many companies to outsource (or “offshore”) their manufacturing
operations to countries such as China and Mexico. In the 1990s, knowledge work was
thought to be safe from outsourcing, but in the 21st century we are also seeing many
service operations moved to places with cheaper wages. For example, many companies
have outsourced software development to India, with Indian companies such as Wipro
and Infosys emerging as global giants. Given these changes, understanding how to
manage a global workforce is a necessity. Many companies realize that outsourcing
forces them to operate in an institutional environment that is radically different from what
they are used to at home. Dealing with employee stress resulting from jobs being moved
overseas, retraining the workforce, and learning to compete with a global workforce on a
global scale are changes companies are trying to come to grips with.

Companies can also experience internal forces of change, which can often be
related to external forces, but are significant enough to be considered separately.
Internal forces of change arise from inside the organization and relate to the
internal functioning of the organization. They might include low performance, low
satisfaction, conflict, or the introduction of a new mission, new leadership. Low
performance within an organization must obviously be addressed with change that
facilitates higher performance. When low performance yields low quality or
inefficiencies, customers complain and organizations need to change. More often
than not, these forces of change are outside of an organization’s control, but,
without exception, they all must be managed if an organization is going to be
successful. In the next section, we’ll take these forces of change and dissect them a
little bit more, so we can get a better understanding of how we can successfully
manage them.

Resistance to Change
Ultimately, change is stressful, and people avoid it because they want to avoid the
pain, anguish, frustration and lack of confidence that goes along with it. Even a
positive change, like a promotion, can be met with stress as the employee marches
into their own new and uncharted territory. Even minor changes can require a brief
adjustment period, but large-scale changes can take a long time to adjust to.

Resistance to change is as much an organizational and group issue as it is an

individual issue.
Organizational Resistance
Organizational inertia is the tendency for an organization as a whole to resist
change and want to maintain the status quo. Companies that suffer from inertia
become inflexible and can’t adapt to environmental or internal demands for
change. Some of the signs that organizational inertia is in play are through internal
power struggles, poor decision-making processes and bureaucratic organizational
structures.

Organizational cultures and reward systems can foster resistance or acceptance of

change. A culture that promotes high levels of trust and cooperation lays the
foundation for employees and their acceptance and instigation of change. If
employees are punished for honest mistakes, if new ideas aren’t rewarded, and
managers aren’t prepared for daily issues with proper training, then that
organization is ripe for change resistance.

Timing of change can also play a role in organizational inertia. If the organization
is still recovering from a large-scale change in organizational structure, that would
not be the time to introduce a new information management system. Employees
will be likely to resist the change and turmoil that goes along with a second
change. Thinking about the order and timing of a planned change can help
managers avoid employee resistance.

Group Resistance
We talked about groups in an earlier module, and we learned that when groups
start to work well together, it’s because they’ve established norms and cohesion.
Central norms in a group can be difficult to change, because they involve the
group’s identity. Any change to them is likely to be resisted, as group members
will work to protect each other and preserve the group. If a group is used to
practicing centralized decision making and suddenly they’ve been told to use a
decentralized style of decision making, they’re likely to resist, because it goes
against their norm.

Group cohesion can affect the acceptance of change. If a cohesive group has been
disbanded in favor of a different kind of team structure, the group’s desire to stick
together may make them resistant to change. But just as group cohesion can work
against change, it can also work for change. A cohesive group looking to
implement change can typically overcome any one individual member’s resistance
to it.

Individual Resistance
People resist change because they fear the consequences. Change means learning
new habits and facing new situations. Learning new skills comes with the
uncertainty of being able to master those skills. It’s easy to see why change can
seem threatening. Furthermore, if individuals sense that there will be economic
insecurity or risk regarding the change, or if they don’t trust management, this
could further add to the resistance.
Sometimes, individual traits can make one change resistant. Culture, personality
and prior experiences can contribute to one’s level of acceptance where change is
That’s a lot of resistance to change. If organizational inertia, group resistance and
individual resistance can get in the way of initiating positive or necessary change,
how can managers make sure that they minimize change resistance and do the right
thing for the organization?

Here are some ideas and tactics that can help:

 Education and communication. If there is fear of the unknown, organizations shouldn’t

compound that with a lack of information. Face-to-face meetings, newsletters, and updates
can often help reduce those fears. A disadvantage of this, though, is the ability to
communicate to manage change effectively to large numbers of people.
 Participation and involvement. People who participate in change are less likely to resist
it. Managers can involve employees in the change process, creating an ownership around it
that minimizes resistance. The disadvantage of this approach is that it’s somewhat time
consuming and managers do have to relinquish some control over change implementation.
 Facilitation and support. Facilitation and support requires active listening and
counseling. These methods can be highly effective when dealing with individual
resistance, but are time consuming and run a high risk of failure.
 Negotiation and agreement. This approach recognizes the role and power of others in the
success of the change effort. Trade-offs and incentives are offered in exchange for
acceptance. This is a relatively easy way to deal with resistance but can be expensive and
lead to more negotiation.
 Manipulation and cooperation. Changing employees focus and attention to other issues
can be a quick and easy way to minimize resistance to change, but it can lead to mistrust
and resentment on behalf of those manipulated.
 Explicit and implicit coercion. If there’s no time and no choice, managers can rely on
force to push past change. This method is quick and effective, but it doesn’t build
commitment concerned.

Managers can implement change successfully by using a combination of these

methods. Understanding the source of resistance is helpful. But none of the
solutions above deal with organizational inertia, which requires a broader set of
organizational activities. We’ll talk about that, but first, let’s focus on models and
processes for introducing planned change.

100
 Is All Resistance Bad?
Resistance to change may be a positive force in some instances. In fact, resistance
to change is a valuable feedback tool that should not be ignored. Why are people
resisting the proposed

101
changes? Do they believe that the new system will not work? If so, why not? By
listening to people and incorporating their suggestions into the change effort, it is
possible to make a more effective change. Some of a company’s most committed
employees may be the most vocal opponents of a change effort. They may fear that
the organization they feel such a strong attachment to is being threatened by the
planned change effort and the change will ultimately hurt the company. In contrast,
people who have less loyalty to the organization may comply with the proposed
changes simply because they do not care enough about the fate of the company to
oppose the changes. As a result, when dealing with those who resist change, it is
important to avoid blaming them for a lack of loyalty.Ford, J. D., Ford, L. W., &
D’Amelio, A. (2008). Resistance to change: The rest of the story. Academy of
Management Review, 33, 362–377.

Models of Change Management

Navigating change is a constant organizational issue, whether it’s on a small or
large level. When it’s planned change, managers can stay ahead of change
resistance and create a calculated plan to put change in place. There are several
models and processes for managing organizational change. Let’s take a look at
them now.

Lewin’s Three-Step Model

Kurt Lewin, a researcher and psychologist we studied earlier when we talked about
leadership styles, proposed that successful change in an organization should be
conducted in three steps: unfreezing, movement, and refreezing.

In the “unfreezing” process, the equilibrium state can be unfrozen in one of three
ways. The driving forces, which direct behavior away from the status quo, can be
increase. The restraining forces, which hinder movement from the existing
equilibrium, can be decreased. Or, managers can put a combination of the two to
use.
The second part of the process, “movement,” is the actual implementation of
change. New practices and policies are implemented.

In the third step, “refreezing,” the newly adopted behaviors and processes are
encouraged and supported to become a part of the employees’ routine activities.
Coaching, training and an appropriate awards system help to reinforce.

Lewin’s model of change has four characteristics:

  It emphasizes the importance of recognizing the need for change and being motivated to
implement it.
 It acknowledges that resistance to change is inevitable.
 It focuses on people as the source of change and learning.
 It highlights the need to support new behaviors.

Action Research
Action research is a change process based on systematic collection of data and then
selection of a change action based on what the analyzed data indicate. The process
of action research consists of five steps, very similar to the scientific method:

In the diagnosis stage, information is gathered about the problem or concerns.

During analysis, the change agent determines what information is of primary
concern and develops a plan of action, often involving those that will be impacted
by the change. Feedback includes sharing with employees what has been
discovered during diagnosis and analysis with the intent of getting their thoughts
and developing action plans.

Finally, there is action. Employees and the change agent (this is a person who
champions and sees change management from start to successful finish) carry out
the actions required to solve the problem. Then, the final step is evaluation, where
the action plan’s effectiveness is reviewed and, if necessary, tweaked for better
performance.

This approach is very problem focused, where many people approach a problem
with a more solution-centered outlook. It also minimizes resistance to change
because it involves affected employees all along the process.

Organizational Development
Remember earlier when we said that these models for change don’t usually solve
for organizational inertia? To a certain extent, organizational development
addresses that. Organizational development is a collection of planned-change
interventions, built on humanistic- democratic values, that seeks to improve
organizational effectiveness and employee well-being.

The guiding principles of organizational development are:

  Commitment to long-lasting change
 Humanistic approach
 Action research tools
 Focus on process

Organizational development requires the organization to invest a good deal of time

and research and it isn’t as much a fix for organizational inertia as it is a prevention
of it. Some of the techniques and interventions employed by organizational
development departments include the following:

 Sensitivity training. This is training that seeks to change behavior through unstructured
group interaction. The objective is to provide subjects with increased awareness of their
own behavior and how others perceive them, to facilitate better integration between
individuals and organization.
 Survey feedback. The use of questionnaires to identify discrepancies among member
perceptions, with discussion and remedies following.
 Team building. High interaction among team members to increase trust and openness.
 Intergroup development. These are efforts to change the attitudes, stereotypes and
perceptions that groups have of each other.
 Appreciative inquiry. This process seeks to identify the qualities and strengths of an
organization, on which performance improvement can be built. The inquiry usually
involves strategizing with employees on performance improvement and “future state”
ideals.

Learning Organizations
Learning organizations are the result of looking for new ways to successfully
respond to a world of interdependence and change, and the ideal learning
organization has developed the continuous capacity to adapt and change. The
characteristics of a learning organization:

 There exists a shared vision which everyone agrees on

 People discard old ways of thinking and standard routines
 Members think of all organizational processes, activities, functions and interactions with
the environment as part of a system with interrelationships
 People openly communicate with each other across vertical and horizontal boundaries
without fear of criticism or punishment
 Personal self-interests and fragmented departmental interests are sublimated to the
organization’s shared vision
This is easier to say than it is to do, but I think we can agree that most of these
aspects of a learning organization are not in place where Amazon and Whole
Foods are concerned.

Typical organizations address problems with single-loop learning, where errors are
corrected using past routines and present policies. Learning organizations,
however, have adopted double- loop learning¸ where errors are corrected by
modifying the organization’s objectives, policies, and standard routines.

Furthermore, learning organizations are meant to be a remedy for three

fundamental problems inherent in traditional organizations: fragmentation,
competition, and reactiveness.

Fragmentation refers to the specialization within an organization that creates walls

and silos. This fragmentation separates different functions into independent areas
that often bicker with one another. Amazon is, in itself, a silo, with a rigid culture
based on discipline and prescribed rules and regulations. Rather than reviewing
and negotiating Whole Foods’ culture, they went about operating the grocery chain
with Amazon rules – including scorecards and regulations. Amazon has
inadvertently created an “us” and “they” with their actions.

Competition in an organization undermines collaboration. Managers compete to

show who is right, who knows more, who is the most powerful. Whole Foods
workers were used to having a lot of autonomy in their actions, negotiating face-to-
face with customers and making educated decisions about how to go about their
work. Amazon’s new rules and regulations will spike competition by presenting
these new measurements and regulations by which Whole Food employees are
evaluated.

Finally, reactiveness misdirects management’s attention to problem solving rather

than creation. It remains to be seen how Amazon will respond to their faltering
relationship with their adopted child. Experts agree that performance in 2019 will
be key to Amazon’s future success in the grocery space, but will they be able to get
this unstable ship moving in the right direction to do so? The managers of both
companies have the opportunity to create something new, but if they’re addressing
problems at every turn rather than innovating, reactiveness will thwart their efforts.
Organizations can make an effort to become a learning organization. Changing an
organization to be a continual learner includes:

 Establishing a strategy: a commitment to change, innovation and continuous

improvement
 Redesign the organization’s structure: formal structures can impede learning, so
flattening the structure and putting teams into place increase cross-functional
communication and eliminate boundaries
  Reshape the organization’s culture: management must change its behavior as
well as its strategy to embrace risk and change

Amazon isn’t going to wake up one morning, look at their faltering brick-
and-mortar grocery sales, and say, “Hey, let’s become a learning
organization and make this work.” Becoming a learning organization isn’t
the solution to their problem—skillful change management is what’s
needed. But organizations have thought about how to avoid what’s
happening with the Amazon/Whole Foods merger and concepts like
learning organizations are what results from it.

Organizational Change
Now we understand everything we can about change – the forces that push
for it, like technology and consumer demand; the types of changes we can
face, like evolutionary or revolutionary; the ways we can avoid resistance to
it and put it in place with the least amount of pain.

The thing about change is…it changes. In the 1800s, technological change
was certainly an issue, as the steam engine and the cotton gin were among
technologies introduced that had us looking at the ways we can do things
differently. But change today in that realm is so much quicker. New
technologies and apps are being invented daily, and industry disruptors have
organizations holding their breath and taking risks at speeds they never
thought possible.

Change has changed over the years in that it’s a global issue. Companies
like Daimler Chrysler or Anheuser Busch and Belgium’s InBev have
presented challenges on a cultural level. It wasn’t too long ago that mergers
like this were less common, but technology has made the world a smaller
place.

Organizations must manage and stay ahead of change every day if they’re
going to be competitive. But they also need to anticipate change, and what
it’s going to look like in years to come. They can push to innovate and drive
change. Lee Iaccoca was prophetic when he spoke on behalf of Chrysler,
telling us:

*********************************************
**************