Fifth Edition

Understanding and Managing

ORGANIZATIONAL BEHAVIOR

Jennifer M. George
Je5§e H. Jones Graduate School of Management
Rk:eUn~ty

Gareth R. Jones
Mays B!Js;ne5!; School
Texagl\&M Univen;ity

--
PEARSON

Prentice
Hall
Upper Saddle Ril'cr. NJ 07458
Lih .....)' or C"nl:""" Cntaluginl:.i".I'uhlkatin" L1ata
Geo.~" knnif,,' M.
Un&Nanding aoo managing organi'atio"al bcha' ior Jennif...\1, George.
Gareth R. JO""S,-51h ed,
p. c'nL
1""lude, bibliog,aphical 'd""""-'es aoo index.
ISBN 0-1 J-2J9457-X tall, pap'"rl
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Preface
OUf challenge in revising U/Jilrriil(lIulillg (/Ild Malltlgillg OrS(lII;;miOlw{ Bellm'jQT has
been (0 incorporate and i11lcgratc the latest advances in theorizing and research and provide
a thorough and contcmpomry account uf the factu,", thai innuence organiz.lliunallx:h.wiur.
lmportamly. we strived to convey this knowledge \0 s(udcms in a vcry rcad:lblc. applied.
handS-Oil fOllna! 10 inCf<.'asc their undcl'\tanding and enjoyment of the learning process.
Our imcmiol1 has been to provide studelllS with the most rc'ldable. succinct account of
urgani:wtional behavior on the markcl. Tu accomplish this we have unly drawn on the the-
ories and concepts that have received the Illost empirical rcscan.,h support and aCl:eplanCc
hy the academic cOlllmunity.
Once ag;lin. in terms of the way our book is organized. Chapter I discusses comem-
porary orgamzational behavior issues and dallenges: it also provides an approach to
understanding and managing organizational behavior that sets the scene for the rest of the
book. In Pan Om.... "Individuals in Organizmions," wc undcrscorc the many ways in which
people can contribute to organizations and how an understanding of factors such as per-
sonalit y. emotional intell igem:e. creativity. and motivatIon can help organ izations and the ir
members channel effort and behavior in ways that promote the achievement of organiz-<J-
tional objcctives and the well-being of all organizational stakeholders including employ-
ees. Chapters 2. 3. and 4 provide extensive coverage of person;llity. emotional intelligence.
mood and cmotion. values and ethics. and the pmadivc managemcnt of diversity: impor-
lantly. we link theSt." factors 10 important behaviors and determinalJls of organizational
cffcct ivcncss. Chaptcr 5 convcys thc v;lnety of ways in which organizat ional mcmocrs can
and do learn. with a new emphasis on continuous learning through cre.Hivity.
Our treatment of the important issuc of work motivation is dividcd into two chapters.
[n Chaptcr 6. W'C provide an imcgrated account of work motivation and the latcst dcvelop-
melH in motivation theory and research. Chapter 7 thcn focuses on how to crcate a moti-
vming ,",'olt environment through job design. organizational objectil'es. and goal selling.
Chapter 8 addresses the changing nmure of the employment relationship and the implica-
tions of factors such as outsourcing. pay diffcrelH ials. boundary less carecrs. and va lucs for
motivation and performance. Lastly. in Chapter 9. wc focus on the very real stressors peo-
ple face. how they c.m be effectivcly managed. and how to lind a balance between work
and other aspects of life. Overall. Part One retlects both contemporary theorizing and
rcsearch and thc challengcs and opportunities facing organizations and their members.
In Part Two. "Group and Team Processes:' we bring together the many ways in which
organizational members work together to achieve orgamz;ltional objectives. the challenges
they face. and how to achieve real synergies. Ch<Jptcrs 10 and 11 focus on the key fadol'S
thm lead to cffcctil'c work groups and teams. Chapter 12 provides an updated treatment of
leadership. particularly transformatiOIl;llleadership in organizations. Ch;lpter 13 contains
our discussion of power. pohtics. contlie!. and negotiation. [n Clwpter 14. we discuss how
the latest de\clopments in information technology have changed the nature of communica-
tion in and between organizations. The final chapter in this part. Chapter 15. provides
updated coverage of decision making. knowledge management. and innovation.
Part Three. "Organiwtional Processes:' separ-ltes our treatment of organizational
structure and org'Uliziltional culture to allow for an integrated treatment of organizational cul-
ture and to underscore the importance of ethics. Chapter 16 focuscs Oil organizational
desigll. structure. and cOnlrol and the factors thil11lffect important organiwtiOllal design
choices, Chapter 17 presents an integratt'il treatment of organ izmional cu hure aud eth ical
ochavior. [t focuses on the informal and formal social plUcesses in organizations that affect
the ways people behave. the sources of organiz-luional culture. including organizational
Clilies. and the n1lture. causes. and consequences of ethical betmvior. We also discuss the
factors that call lead to unethical behavior. Fin<Jlly. Chapter 18 provides updated coverage
of organizational change and development to reflect current realities in the very dynamic
cnvironment in which organiz.atiOlJs opcmte.

xix
xx PREFACE

The combined result of all the changes we have made to our book is a fresh approach
that builds on our cuning-edgc covemge of organizational behavior topics and i"ues that
our users have nppn....c iated in prior editions. For students. we provide n treatrncnt of orga-
nizational beh<lvH.>r that allows for self-assessment because it (I) is comprehensive. inte-
grated. and makes important theories and research findings accessible and interesting to
them; (2) is currcnt. up-to-date, and contnins expanded coverage of significant COlllcmpo-
rary issues including ethics. diversity. globalization. and infornwtion technology: (3) uses
rich. reaJ.life examples of people and urganllations to bring key concepts to life and provide
clear managerial implic<ltions: and. (4) is experiential and applied. Our end-of-chapter
cxpcriential exercises containcd in "Exercises in Understanding and Managing
Organizationnl Behavior" give students the oppot1unity to catch the excitemeOi of organi-
zational behavior as .1 fluid. many-faceted discipline, and they allow students to develop
and practice their o"'n ski lis.

Pedagogical Structure
We believe that no other organizational behavior textbook has the sheer rangc of learning
features for students that our blxlk has. These features-some integrated i1110 the te.\! and
some HI thc end of each chaptcr or part-engage studcnts' interest and facilitate thcir learn-
ing of organizmionnl behavior. The overall objective of these features is to help instructors
act ivcly inl'ol VI.' their students in thc dtapter content.

What's New In This Edition

[n responsc to the positi\'e commcnts and SUppOI1 of our uscrs and reviewcrs we have con-
tinued to refine nnd build upon the major revisions we made to the last edition of our book.
The revised cdition of Ullder.l/(/mlillg alld MWllIgill1l Org(lIIi::'lIIimw! Bdll/\'ior mirrors the
change, that arc taking place in the world today. blHh on a global dimension. and interms
of the ways the changing nature of work is affecting organizational behavior.
First. we h~I\'e extended our coverage of ethics. ethical behavior. and SOCi~ll responsi-
bility oc-<:ause of the continuing .:omro\'ersies and scand;lls that have involved a growing
number of wcll-known companies in thl." 2000s. We have morc in-depth coverage of l."thics
both in terms of new contl."nt arl."as within ehapteN and in the many kinds of company
examples we use to illustrate what org;lnizations .:an do to curb individual self-interest and
promote ethi.:al organizational behavior. Many spc.:i!k issues su.:h as ethical dilemmas.
cthicallcadership. huilding a socially responsible culturc. and the role of ethics officcrs arc
now included in the new edition.
Second. the incrc;lsing globalization of business and diversity of the workforce has led
us 10 extend our .:overage of the m<lny oppol1unities and challenges globalization and
divcrsity pose for understanding and managing organimtional behavior today. In addition.
we develop a new theme in this edition of global crisis tl1anagemcnt. which is carried on
throughout the book. A new section in Chapler I defines the rl<llure of natuml. man-made.
and geopolitical .:rises. Then in subsequenl .:hapters spe.:ifi.: organizational behavior
issul."s are discussed in detail. such as problems in creating tcams in crisis situations. crisis
leadership issues. and communication aud decision-making problems lhat llrise under cri-
sis. Finally. many of the N('ll' York 7111I('.1 Cllses at the end of cach chapter werc chosen
because thl."Y help provide further insights into global and divl."rsity themes developed in
thl." chapters.
Third. this edition continues to be the leader in describing the multitude of ways in
which continuing adl';lnces in information tc.:hnology are alltttrrlg all aspeds of behal'ior
in organizations. Wl." have cxpandl."d our already exll."nsi\'e .:o\'crage of the ways in which
digital and wirell."ss communication is transforming how J1'C'Oplc perform thdr jnhs. how
teams function. and how organizations achieve their goals. The continuing advances made
by org<lnizational behavior scholars and researchers as they develop new and improvcd
theories and models to explain why and how people and teams behavc as they do hlls led liS
 PREFACE XXI

to modify. updme. and refine our eOI'erage of many different aspects of organizmional
behaviur. Concepts like persunality. trust. creiltivity. muu<.!. emotion. continuous learning.
just icc. virtual teams. tran,formational leildeThhip. tclecommuting. and knowledgc man-
agemcnt arc now found in the celHml research arcas of organiVlIional behavior.
Finally, a major focus of this edition has been to build and extend the experienti;ll
exercises and instructor-support materials that come with our texl. We have refined many
of the,e exerciscs and now provide new Nell' )'t)rk Times CilSCS at the end of each chapter.
These articles provide illstructOTh with the opportunity to discuss organizmional behavior
issues 1hat are currently in the news. In add it ion. other experier\1 i<il exercises can be found
in the instructor's millilral.

Teaching Support
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If yuu ever n~d assistance. our d....dica1cd tcchnical support team is ready to help with
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to frequemly asked qucstions and toll-free user support phonc numbers.
The following suppiemen1S arc available to adopting instructors (fur detailed descrip-
tions. please visit wW"".prcnllall.l:uil1ilre):
• Instruclor's Resourcc Center with Pl'Ts lllld TestGen tl':'itogcnerllting SOflWllJ'C
(a\'ailable on the IRC Online or on CV-ROi\l-CD-ROM ISBN: O-13-239460-X)
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experientilll exercises~ ISBN: 0·13·239459·6
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Student Supplements
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Acknowledgments
Finding a way to coordinatc and integratc the rich and divcT-'C organizational behavior lit-
emturc is no easy task. Ncithcr is it easy to present lhe material in a way thm students can
easily understand <lAd enjoy. given the plethora of concepts. theories. and research find-
ings. In writing UIIlIt'r.llwufing and Mal/aging Orgalibl/iolla/Bl'lllll'ior. we hal'e bL.... n for-
tunate to havc lhe assistance of several people who havc cOlllributed greatly III the book's
final form. We arc I'cry gralcful to David Parker, our editor. and Denise Vaughn, assistant
editor. for providing us with timely feedback and information from professors and
XXII PREFACE

rcvicwcN that h:lI'c allowcd us to shllpe tllc book to mcctthc nccds of its imcndcd markct:
and tu Kcvin Hulm. productlun editur, for ably cuunhnllting the bouk's progress. We also
apprccime thc wOf{l-pmccssing and administrativc support of Patsy Hartmangruocr, Texas
A&M UnivCNity, and Elainc Morris. of Rice Univcrsity.
Wc arc very grateful to the many reviewers and colleagues who provided us with
detailed feedback un the chapters and for thcir perceptive comments lind suggestions for
improving thc manuscript. A special thank you goes to the following profcssors who gavc
us feedback during thc development of the 5th edition:
Nathan Podsakoff. UnivcNity of Florida
Tracey Rockctt. Univcrsity of Tcxas m Dallas
Hannah Ruthstein. Baruch College
Juseph SantorJ, New Jersey Institute of Technology
We would alsu like to acknowledgc the folloWing professors whu have rcvicwed
prcvious cd it ions of our book:
Cheryl Adkins. Longwood Univcrsity Sandra Hartman. University of
Deborah Arv'lllltcs. Villall\)\'a New Orle,llls
University Davc Hennessy. Mount Mercy College
Robert Augelli. Universily of Kansas Mary Hogue, Kent Slate University
Regina Bento. University of Baltimorc Stark Campus
Alicia Boisnicr. University of Buffalo Ronald Humphrey, Virginia
Commonwealth University
Robert Bontempo. Columbia University
Courtney Hunt. Northern Illinois
W. Randy Boa. University of
~'lississippi
Ulllversity
Bruce Johnson, Gustavus Adolphus
Dan Brass. Pennsylvania Slatc Univcrsity
College
Peggy Brewer. Eastern Kentucky
Univcrsity Eli Kass. Saint Joscph's UniveNity

Diane Caggiano. f'itchbtJrg Stme Mary Kernan. Universily of Delaware

Univcrsity
Elena Capella. University of San
Francisco
Russell Coff. Washington Umversity
Jeanene Davy. Wright State University
Dave Day. Columbia Collcge
Lucinda Down
Stcwart Edwards. MarYlllount
University and ","VCC
Mark Fearing. Universily of Houstun
Dave Fcaron, Cenwd Connecticut St,Hc
University
Dean f'rear. Wilkes University
Steve Gruver. Universily of Otagu
John Klocinski. Lourdcs College
Deborah Litvin. Merrimack College
Rosem<lfY Macllero. Univcrsity of
Dallas
Karcn Maher. UnivcfSlly of
Missouri-St. Louis
Stephen Marl.:ham. North Carolina State
University
Gary McMahan. University of
Te.\as-Arlington
Jeanne McNetL AS'lllllption College
Angela Miles. Old Dominion Universily
LaVelle Mills, West TC.\3s A&M
Univcrsity

Bob Gulbro. Jacksonvillc State Janet Ncar. Indiana Univcrsity

Univcrsity j\'!argarct Padgcll, Butlcr Unil'crsity
Jennifer Halpern. Cornell University Tim PClcrson. Univcrsity of Tulsa
Phyllis Harris. UnivefSlly of Cenlwl Allaync Pizzolalto. Nicholls Siaic
Florida Universily
 PREFACe xxiii

Peter Pook. Lehigh University Christina Stamper. Wcstern Michigan

Nancy Powell. Florida Intcrnational University
University Eric Stcphan.Brigham Young
Asha Rao. California Stale University University
Hayward Charlolle SUllon.Auburn University
Elizabeth Ravlin. University of South Brian Usilancr. University of Maryland
CaTolin;] University College
Diana Reed. Drake University Scan Valentine. Univcrsity of
Sandra Robinson. Univcrsity of Wyoming
British Columbia Bctty Vellhouse. Unil'ersity of Michigan
Chris Scheck. Northern Illinois Flint
University Sosan Washburn. Stephen F. Austin
James Schmidtke. California Slale Statc Univcrsity
University Frcsno Roben Whih:omb. University of
William Sharbrough. The Citadcl Wisconsin &IU Claire
Shane Spiller. ~'lorchead State Frank Wieoc. University of
University Mississippi

Thanks are also due to Ken Bcttenhausen. University of Colorado at Denver; David
BOII.'cn. Thunderbird: and An Brief. University of Utah.
Finally. wc arc gratcfullu two incredibly ",,'underful children. Nicholas and Julia. for
being an that they are and the joy they brillg to all who know them.
J.M.G.-G.RJ.
About the Authors

Jennifer M. George is the M~ry Gibbs Junes Prot"e>sor of Management and

Professor of Psychology in the Jesse II. Jones Graduate School of Management at Riel."
University. She received her B.A. in Psychology/Sociology from Wesleyan Univl."l"'Iily. her
M.B.A. in Finance from New York University. and her Ph.D. in Management and
Orgamzational BehaVIor from New York Umversity. Prior to joinillg the faculty at Rice
University. she W,lS a Professor in till.' Department of i\'lanagcmcnt at Texas A&M University.
Professor George specializes in Organiwtional Behavior and is well known for her
rescarch on n1{)<)(! and emotion in the workplace, their determinants. and their effeels on
various individual and group-level work outcomes. She is the author of many ~nicles in
le~ding peer-reviewed journ~ls such as the AnulelllY ofAll/llagelllflll JmIY/ull, the AC(ulelll.l'
of MmlUJ.:i?meli/ Re,·inl'. the JOlin/a! ofApplied PsydlOlog", O'-Xallbllio!/a! UdUl\'ior ami
HIII'wl! f)n;isio// l'meen'H. Jounw! of l'en'OJwlily (l1U1 Sot.'i(11 Psydwlogl' . •md
Psychological Bulle/ill. One of her pilpers won the ACildcmy of Man~gemenrs
Organizationill Behavior Division Oumanding COlllpetitive Papcr Award and another
paper won the Hllmall Re!al;om' Best Paper Award. She is, or has been. on tile editorial
review b<xlrds of the JOlin/a/ of App!ied l'sydwloJ.:y. Act/dellll' of Mmwgemt'lII Joul1lul.
Amdem)' of Mallagemelll Rt'riel\'. JOImw! of Mwlt/gemell/. Org(wi:alimwl Be/w\'ior alld
Hll/lltil! DI'l'isiO!l P/tWeJUS. AdmitlislrlIlil'e Sl'iellce Quorll'Yly. IlI/ema/iOlt(l! Journal of
Sfkcliolt anti ASSfSSlllfltl. and JOImwl of MWlIIl;eriul Issm>s. was a consulting editor for
the JOIlrl/a! of Orgau;:tII;ollol Behul'iol', <lnd was a member of the SlOP Ol'!:all;:m;ollal
Fromiers SerieJ ediwriaI board. She is <l Fellow in the Americ~n Psychulogical
Association. tile American Psychological Society. and the Society for Industrial and
Organizational Psychology and a member of the Society for Orgal1izational Beh~l\'ior.
Professor George is currently an Associate Editor for the Jout'ltal of AfJp!ied P!>JdlO!ogy.
She also has coauthored illcading textbook on COII/emfJomry Mmwgemelll.

Gareth Jones rel:eived both his B.A .•H1d Ph.D. from the University of Lmleaster.
U.K. He previously held te~ching and researl:h ~ppointments at the University of Warwick.
Michigan State University. and the University of lilinoi, lit Urbana-ehaillpaign. Prokssor
Jones Speci;llizes in ooth organizationall:lchavior and orgallizational thcory and is well
known for his research on socializ'ltion. culture. mld applying transaction cost ~nalysis to
expl<lin many forills of intrJorganiz;ttionill and interorganizational l:lchavior. He also h~s
published many articles in leading journal, of the field and is one of the most prolific
authors in the Amdemr of !l1w/tlgemellf Rt'I'it'lV. One of his articles won the Academy uf
Mwwgell!en! JOllY/wi Best Paper Aw;m.l. He is. or hilS been. on the editorial review boilrds
of the Awdemy of MWllIgelllclII Rcl';cw. the JO/lrnal of Mwwgemelll. and Mwulgl!/llem
Inquiry.
Gareth Jones is a l'rofessor of M~lnagemem i!l the Mays Business School at Texas A & M
University. where he IS actively involved in teaching and research in Org~nizational Behavior
and related field~.
 CHAPTER

1
INTRODUCTION TO
ORGANIZATIONAL
BEHAVIOR

WHAT IS ORGANIZATIONAl- BEHAVIOR'!

CIlAU.ENGt:S t'UR ORG,\NIZATIONAL. nl>IIAVIOH

CH.u.U:N(a: I: TilE CH.l.NI;ING SOCIAL AND CULTURAL ENVIRONMt:NT

CUALLENGI:: 2: TilE Evol. YI,"jG GI.OIIAL ENV'IWNMt:NT

CHAU.ENGf: J: ADVANCIN(; INH1RMATJON l):CIINOU}(;\'

SUMMAR\'

EU:RCISES IN UNIJERSTANI)ING AN!) MANAGING ORGANIZATIONAL BEHAVIOR

Al'l't:NIJIX I: A SnORT HISTORY 0.' OR(;ANIZATIONAL 8EIIAVIOII

Learning Objectives
After reading this chapter you should be able to:
Define organizational behavior and explain how and why it determines
the effectiveness of an organization.
Appreciate why the study of organizational behavior improves a person's
ability to understand and respond to events that take place in a work
setting.
Differentiate between the three levels at which organizational behavior is
examined.
Appreciate the way changes in an organization's external environment
continually create challenges for organizational behavior.
Describe the four main kinds of forces in the environment that pose the
most opportunities and problems for organizations today.
 Opening Case
HOW JEFF BEZOS MANAGES AT AMAZON.COM
What are the keys to Amazon.com's success?

n 1994, Jeffrey Sezos, a computer science and electrical engineering

graduate from Princeton University, was growing weary of working for a
Wall Street investment bank. His computer science background led him
to see an entrepreneurial opportunity in the fact that Internet usage was
growing at an accelerating pace. Bezos decided that the online book-
selling market offered an opportunity for him to take advantage
of his technical skills in the growing virtual marketplace.
Determined to make a break, he packed up his belongings and
drove to the West Coast, deciding while on route that Seattle,
Washington-a new Mecca for high-tech software developers,
and the hometown of 5tarbucks's coffee shops-would be an
ideal place to begin his venture,
Bezos's plan was to develop an online bookstore that would be
customer friendly, easy to navigate, and offer the broadest possible
selection of books at low prices. 1 Bezos realized that, compared to
a real "bricks and mortar~ bookstore, an online bookstore could
offer customers any book in print; his task was to provide online
customers with an easy way to search for and learn about any
book in print.
Working with a handful of employees and operating from his
garage in Seattle, Bezos launched his venture online in July 1995
with S7 million in borrowed capital. 2 Within weeks he was forced
to relocate to new, larger premises and hire additional employees,
as book sales soared. The problem facing him now was how to
best motivate and coordinate his employees to best meet his
Thc worl,J's largest Intcrnet ncw-product new company's goals. His solution was to organize employees
relai ler i, Ama~on.~'Om. Hcre it~ rounder into small groups and teams based upon the work tasks they
aOO CEO Jeff Scws is pictured jo~inl! needed to perform in order to satisfy his customers.
with an cmployee in onc or thc company's First, Bezos created the information technology (In team to
many tlugc. Sl,llc-of-thc·arl warehouses.
continue to develop and improve the proprietary software that
he had initially developed. Then he formed the operations group
to handle the day-to-day implementation of these systems and to manage
the interface between the customer and the organization. Third, he
created the materials management/logistics group to devise the most
cost-efficient ways to obtain books from book publishers and distributors
and then to ship them quickly to customers. As Amazon.com grew, these
groups have helped it to expand into providing many other kinds of
products for its customers such as (Os, electronics, and gifts. By 2006,
Amazon.com had 24 different storefronts, with operations in eight
countries, and it sold its products to customers around the globe.
To ensure that Amazon.com strived to meet its goals of providing
books quickly with excellent customer service, Bezos paid attention to the
way he motivated and controlled his employees. RealiZing that providing
good customer service is the most vital link between customers and a
company, he decentralized authority and empowered employees to search
for ways to better meet customer needs. Also, from the beginning, Bezos
 (HAPTER 1 • INTROOUatON TO ORGANIZATIONAL BEHAVIOR 3

socialized his employees into his company by encouraging them to adopt

his values of excellent customer service; he also established strong norms
about how employees' first task is to satisfy customers. All Amazon.com
employees are carefully selected and recruited; they are then socialized
by the members of their work groups so that they quickly learn how to
provide excellent customer service. Also, to ensure his employees are
motivated to provide excellent service, Bezos gives all employees stock
in the company-today employees own over 10% of Amazon.com's stock.
Finally, as a leader, Bezos is a hands-on manager who works closely
with employees to find innovative, cost-saving solutions to problems.
Moreover, Bezos acts as a figurehead, and he behaves in a way that
personifies Amazon's desire to increase the well-being of employees and
customers. Indeed, he spends a great deal of his time flying around the
world to publicize his company and its activities and he has succeeded
because Amazon.com is one of the most well-recognized of any dot.com
company. At Amazon.com, Jeff Bezos behaves in ways that help to
improve employees' work attitudes and increase their performance, which
improves the well-being of employees, customers, and his company.

Overview
Jeff Bezos has found a way to create a set of organi.wtional behaviors thm leads to a coop-
erative. win-win situation for the company mId its empluyees. Arnazon.com·s employees
wort hard. are happy working for their company. and are les, inclined to leave their jobs
than employees in many other kinds of rctail compan ies. 111is favorable work situation has
been created ~ausc Amazon.com:
• Strivcs to increasc cmployecs' skills and knowledge and cncouragcs thcm to take
responsibility and to work in ways thm lead to fast. helpful customer service.
• Provides employees with reward, to em;ourage high performance and makes sure
thm employees' contrihutions arc recognized.
• Creatcs a work sctting in which employees develop a longer-term commitment 10
their organization and are willing to cooperate and work hard 10 further their com-
pany's goals.
As Amazon.com's appro.teh suggests, creating a favomble work siluation III which peo-
ple at all levels want to behave in ways thm result in customers' receiving a high-quality
pn:xluct docs not happen by chance. It is the result of careful planning and a solid under-
,wnding ~tnd appreci,uion of ho,," people behave in of'';,llIizmions and ,,·hm kinds of things
\:ause them to behave the way they do. The best way to gain such an understanding of
people m work. and the forces that shape their work behavior. is to study orglllli~(l(iOltlil
bduwior-the subject of this book.
In this chapter. we first define organizlItional behavior and discuss how a working
knowledge of organizational behavior is essential for any person intoday·s complex.
global world. We then examine how changes taking place oUIIidc an organizmion in tht.'"
global. social. technological. and work or cmployment e1lVirOllmcms arc changing the way
people work together and cooperme imide an organiza1ion. The way rapid changes in an
organization's environment have posed challenges for the behavior of all the people who
work inside organizatio1ls is our focus. By the end of this chapter. you will understand the
cemral role that organizational behavior plays in detcrmining how effectivc an organiza-
tion mid all the men and women who are pm1 of it arc in ;Jehieving their goals.
4 CHAPTER 1 • INTRODUCTION TO ORGANIZATtONAl BEHAVIOR
ORGANIZATION
A mllcctioo Qf peQplc whe> wor~
1<J~clher ami coonbnme Iheir
",-'Iio", to achinc iadi,-idaal arid
organizmional goal>.
ORGANIZATIONAL
BEHAVIOR
1"" ,wd}' or facio", thai affect
he>w ,r!di,-Iduah"P<! group'
acl in organizatio", and how
organilalion, ",pond 10 lheir
cn,ironment>
What is Organizational Behavior?
To begin our study of organizational behavior. we could just say that it is Ihe study of
behavior in organiwlions and the study of the behavior of organil1ltions, but such a defini-
tion reveals nothing about what this study invol\'es or examines. To reach a more useful
and meaningful definition. let's first I()(lk at what an organization is. An orgllllizatiOIl is a
collcction of people who work together and coordinate their ,Ictions to achicve a wide vari-
ety of gQ;lls. The goals arc wh,ll iJl(hviduals arc trying to accomphsh by being members of
an organizat ion (earn ing a 101 of llloney. helping promote a worthy l:ause. al:hie\'ing l:erlain
le\'els of personal power and prestige, enjoying a satisfying work ex(X'rience, etc.), Thc
goals are also what the orgnnization as a wholc is tryillg to accomplish (providillg innova-
tl\'C goods alld services that l:ustomers want: getting l:andidates elel:led: raising money for
mcdical research: making a profit to reward stockholders. managers. and cmployees; being
socially responsiblc and protecting the natural environmelll: etc.). An elTc<:til'e organiza-
tion is onc that achieves its gools.
Police forces. for example. arc formed to achieve the goals of providing scl:urity for
law-abiding citizens and providing police, onkers with a secure. rewarding career while
they perform their valuable scrviecs. Pammount Pictures was formed to achieve the goal of
providing people with entertainment while nwking u profit. and in thc process, actors.
directors. writers. and musicians rCl:eivc well·paid and intercsting work.
Organizations exist to provide goods and services that people want. and the amount
and quality of thcsc goods and services arc products of thc behaviors and performance of
an orglmization's employecs-of its managcrs. of highly skilled employecs in snlcs or
research and develupmcnt. and of the employees who actually produce or provide the
go(x1s and services. Today. most peoplc make their living by working in or for some kind
of company or organization. Pcople such as a compuny's owners or managers~or com-
pany cmployccs who desire to become fulUre owners or managers-all benefit from study-
ing organizational behavior. Indeed. people who s\:ek to help or voluntccr their time to
work in nonprofit or charitablc organizmions also Illust leam the principles of organiza-
tional behavior. Like most cmployccs today. voluntccrs attend training courses that help
them understand thc many kinds of issues and challenges that arise when people work
together and cooperme in a company or organization to benefit others. sUl:h as when they
seck to aid ill. distressed. or homcless people.
The Nature of Organizational Behavior
O~ani1. 11tiolllll bchll,'ior (OB) is thc study of the many factors that hllve ,Ill impact on
how people lind groups ac!. think, fecI. and respond to work and organizations. and how
organ izmions respond to their environments. Understand ing how people behave in an orga-
niZalion is imponalll becausc most people work for an organizalion at some point in 1heir
livcs and arc affectcd-both positively and ncgativcly-by their experienccs in it. An
understanding of OB can help people to cnhance the positive. while reducing the negative.
elTects of working ill organizalions.
Most of us think we huve a basic. intuitive. commonscnse understanding of human
beh:ll'ior in organizations becausc we all UTe human and Imve been exposed to dilTerent
work experiences. Oftcn. howevcr. our intuition and common sense are wrong. and we do
not really understand why people aet and react the way thcy do. For example, many people
assullle that happy employees arc productive employees~that is. that high job satisfaction
causes high job perfonmlllce-or that punishing somcone who performs consistell1ly at a
low le\'el is a good way 10 increase perfonnance or that it is best to keep pay le"els st-.:rcl.
As we will see in later chapters. all these beliefs arc either false or are true ollly under \'cry
specific eonditiOlls. and applying lhese principlcs can have negative eonscquenccs for
cmployces ;md organizations.
The study of OB provides guidelines that help people at work to understand and
appreciate the many forces that alTer! behavior in organizations. It allows employees at all
lel'els in an organization to make correct dedsions about how to behave and work with
 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 5

EXHIBIT 1.1
Organi!ational behavior
What is Organizational
Behavior
P,..",.,Je•••,:< of too.
,hat 0110""

Pe<>flle to unde'''and,
.nalyze, .nd destn'"
beh."or In organization,
'0
Manage... improve, enhance,
0' ch.nge won: behovio... '0
,h.t Indi"du.I" group', and
,he whole org.nizat..,n c.n
.chl""," ,he" gool.

other people in order to aehie\"e organizational goals. OB replaces imuition and gut fecling
with a well-researched body of theories and systemmie guidelines for managing behavior
III organizations. The slody of OB provides a sel of touls-concepts <tnd theories-that
hcl ps people to UIIderst:lnd. analyze. and describe whm gocs on in organ izations and why.
OB helps people understand. for example. why they and others are motivated to join an
organiZ~llion: why they feel good or bad about their jobs or about being part of the organi-
zalion: why some people do a good job and others don't: why some people Slay with the
same organization for thi ny years <tlld others seem to be constaotly dissatisfied and ch<tllge
jobs el'ery two years. In essence. OB concepts and theories allow people to correctly
understand. describe. and unalyze how tile characteristics of individuals. groups. work sit-
uations. <tnd the organization itself aft'ect how members feel about and act within their
organiz:nion (see Exhibit 1.1).

levels of 08
In pr<tctice. there <trc three m<tin Icvcls m which OB is examined: the individu<tl. the gmup.
and the organiz<ttion as a wholl.'. A full understanding of OB is impossible without a thor~
ougll examination of the factors thm llft'eet bcllavior at each lel'el (sec Ex hibit I.2).
~'luch of the research in DB has focused on the way in which the characteristics of
individual, (,uch a, personality. feeling. and motivation) affect how well people do thcir

EXHIBIT 1.2
O,g.n".tlonall<vel
levels of Analysis in
Organizational Group Levd
Behavior

tnd,,,dual Le>-eI
6 CHAPTER 1 • INTRODUCTION TO ORGANIZATtONAl BEHAVIOR

EXHIBIT 1.3

Components of Organizational Behavior

Und....'.nding.nd m,n'gmg
org.ni",''on.lbth"io<
r<quir" Slud)"ng

)-----j-----)
P... O ... In<!;.idual .... o.-g...... booo. Group. WId T........ P"""..... P.rtTh<H O.g... ;",ionaI """'.....
Ch.p'''' 2 ".1
Ind ",id D,ff<r<n<'" P"",n.1 iry Th< N.,"" ofWor\( Group' Ch.p'''' 16 O'g.n,"',on.1 o.,ig" .no
.nd Abd,ry .nd Tum. ",,,,,,,U,,
Wort v.I...,. A,mudt,. Mood" Eff«tiw Work Gfouf" Chap'« 17 o.gan,... """,1 (uk""
.nd Em<>,,,,n. .ndT ,.,. .no E,h",.1 B.h."",
P"c"I"''''n, Amib"''on, .nd ,h, o..p'"12 lo.d nd lo.d.... hip Chap'''' 18 OrganlZ."on.lo.·"s<
M.n'g<m«" ofD1v<,."y Chopt" D P""""', Pob""" C<>nIlKt, .no o..d""m.n,
C p'.. 5 l<.rn;"g.nd C'UlI,"')' .nO N<&oti.,i""
C p'... 6 Th, N.,ur< ofWO<\< Mot",.,i"" Chopt<r 14 Commun,,,',,,,, ,n
C p''' 7 C...'ing' Mot,."ongWort e.g.n,"'''''n.
s<ning Chop'" 15 OK"",., M.long.nd
P'y. C"«n, .nd Ch.nging Org.",...,,,,,,,Il.<.m,,,s
Employm<l'It R.I.""",h,p'
C.... p'... 9 M.n.sms " .....no WO<l<_Uf<
&1.0""0

job,. whclhcr thcy likc what thcy do, whethcr lhcy gCl along wilh thc people thcy work
with. and so on. In Chaptcrs 2 through 9 wc cxaminc individual charactcristics that arc crit-
ical for understanding and managing behavior in organizalions: peNonality and ability:
alliludes. values. and moods: perception and attribution: learnmg; motivation: and stress
and work-Iifc linkagcs. (see Exhibit 1.3).
Thc cffects of group or tcam characteristics and proccsses (such as communication
GROUP and dccision making) on OB al>a nced to be undcrstood. A group i, two or more people
Two or more people who imern... t who interal:t to achiel'e thcir gO<lls. A team is a group in which mcmbers work together
to ",:hic"e their goals. imcnsively and dcvelop tcam-spedftc routincs to achicve a l:ommon gl\JUP goal. A \'j rlual
team is a group whosc mcmbers work togClhcr intcnsivcly via clectronic mcans using a
TEAM common IT platform, and who n11lY never actually meet. The number of mcmbers in a
A I'fflUp In whi<:h rnt:lnbe.... "ork group. the type and diversity of team members. the tasks Ihey perform. and the allractive-
togClher llllen,ivdy and dc'dop ncss of a group to its membeN all influcncc nOi just thc behavior of thc group as a "'hole
team sp"... ifK" muti"", 10 ",:hie"e but also the behaviors of individuals withinlhc group, For cxample, a tcam can influcncc
• "",nmon g""up goot, its members' dccisions on how diligenlly thcy should do their jobs or how often they :tre
absent from work, as happens at Amazon.com. Chapters 10 through 15 examinc the ways
VIRTUAL TEAM in which groups alTcd their individual mcmbers and thc processes innJlvcd in group inter-
A glOOp whose members 1'<"';' actions such as Icadership. communication. and dccision making,
together int~n'i'dy
"ia declnmil: Many studies have found th,1\ ChMaCterislics of Ihc organization as a whole (such as
tl1Can.~"d "Ill' ma}' ",,"cr its culturc and the design of an organization's >tructurc) havc import<lnt eflects Oil the
actuall} nw:e1.
behavior of individuals and groups. The valucs and belicfs in an organizmion's culturc
influence how pcoplc. groups. and managcrs intcract with each othcr and witli people
(such as cUSlomers or suppliers) oUtside the organization. Organizational culture
abo shapes and controls the atlitudes and behavior of peoplc and groups within an organi-
zation and thus inllucnccs thcir dcsire to work toward achicving organizational goals. An
organiwtion .s structure controls how pcople and groups coopcr:lle and interact to ac It icvc
orglll1izational goals. The principal task of organizational structure is 10 cncourage people
to work hard and coordinate their efforts to ensure high levels of org'lIlizational perfor-
m;lIlcc. Chaptcrs 16 through II! cxaminc the ways organizational structure and culturc
alTect performancc, and thcy also examinc how factors such as lhc changing global cnvi-
ronment. Icclmology. and ethics impaCt work attitudes and behavior.

MANAGERS
l'cN>n, woo SUpe,",'I'>C ttlc
iKli\ ite, of (>Ill' or more
emplo~I""
Sam Palmi~ano introduces the
companies new products 10
repollcrl; and an"I}',t, at tntde
meelings,
CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 7
08 and Management
The ability to usc Ihe tools of OB to HlI(lrrlilallrl behavior in organizalions is one reason for
studying this topic. A second rC1lS0n is to Icarn how to 11)(' and IIPI''-'' thcsc concepts, thco-
rics, and Icchniques 10 improvc, cnhance, or change behavior so thai employees, groups,
and the whole organizmion can all bener adieve thcir goals, For cxample, a salesperson
working in Neiman Marcus in Houston hm; the individual goal. set by his supervisor, of
selling $5.000 wonh of men's clothing per week, In addition. he 11nd the olher members of
the men's clolhing department have the group goals of keeping the depanmcllilooking
neat and attractive and of ncvcr kccping l:USlomers waiting. The ,lore as a whole (along
with all thc other stores in the nationwide Neiman Marcus chain) has the goals of being
profltablc by selling customers unique. high-quality clothes and ,lccessoties ,11ld providing
excellent service, If all these dill"erenl goals arc met. employ':'cs receive a large yearly pay
bonus and Neiman Marcus makcs a profit.
A knowledgc of OB can hclp Neiman Marcus cmployccs carn their bonuses, ror
cxample. OB rescnrch has found that organizations whose cmployecs hal'c been taught
how 10 work as a te<tm, and 10 lake pains 10 be helpful, courteous, <tnd agreeable to cach
other anti to customcrs will be morc cffectivc than thosc organizations whose cmployl.'cs
do not behavc in this way. At Nciman Marcus, cmployccs know what kinds of behaviors
result in satisfied cuslomers. They know that if thcy work hard 10 be courteous nnd
agrl-.::ablc to each other and 10 customers they will sell more dothcs and so Ihey (a) will
ach il.'vC thei r personal sales goal. (b) thci r dcpartmclll 's goal of ncvcr kecpi ng customcrs
waiting, and (c) the organiwtion's goals of being profltablc nlld prOl'iding exccllcll1
serVIce.
A working knowledge 01" OB is importantIU emploYl"Cs aI alllcveis in the organization
bel'ausc it helps them to appreeiatc thc work situation nnd how thcy should bchave to
achicve their own gOllls (such as promotion or higher income). But knowledge of OB is
~lniculnrly importanllo rmmagcrs, people who d,reci mid superl'ise Ihe activitics of one
or more employees. For c.\amplc, Sam Palmisano. chief exe\:utivc o!licer (CEO) of IBM,
and Anile Muleahy, CEO of Xerox, havc ultimate responsibility for all the hundrcds of
thousands of employccs who work for thcse companies_ Thc sales managers of 113M's or
Xerox's southcrn rcgioll. who conlrol hundrcds of salespeople. are nlso managers. ns arc
thc managers (or supervisors) in charge of thcscs \:ompanies' technk<tl servicc ccnters who
superv ise small tcams of service teclt nic ians.
Managcrs at all Icvels confroll1thc problem of understanding the behavior of Iheir
subordinates mId responding .Ipproprintely. Palmisano and Mulcnhy have 10 manage
8 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR
TOP-MANAGEMENT
TEAMS
H,gh·mnklng C\C';Ulivc, "ho
plan a ","l\P"l\~', 'Ir"legy 'Olhal
the mmpJll} ,'an ochieve iI'
g",,"-
ORGANIZATIONAL
EFFEalVENESS
n.., abilll}' of an o"!",,,i/auon 10
....·IIi<"c ,., goah
MANAGEMENT
TIle pmce" of planning.
organizing. leooing. and
<"Omrulling an o"!'ani/allOll"
human. financial. malerial. and
Olher ",,,,,,,e,,", 10 inc",a", iI'
efl..' {"1i\ cne",
PLANNING
Deciding how be" to aJlO<'ale
and "'C fe>our<-e, «) achlC' c
organ i"'l,o"ol g"",,-
lheir companies' lop·mlHlllj:lelllClll telllllS. high-ranking exeeulives who jointly plan
Ihe eumpany's eumpelilive slralegy so Ihal il can achieve its goals. The sales managers
have 10 manage their sales forces so thai they sell lhe mix of IT hanJware. soflware,
and services lhm best meelS cUSlomers' informmion-processing ne....ds_ The service
managers have to manage IT lechnki'll1s su Illal lhey respond promplly and courteously
10 cuslomers' appeals for help and qUIckly solve Iheir problems. (And IBM ami
Xerox, like Amazon.com. both make providing custom.... rs high-quality custom.... r >crvice a
principal goal.)
E;leh of these managers faces Ihe rommon challenge of finding ways 10 help lhe urga-
nization achieve liS goals. A manager who underslands how individual. group. and orgalll-
zational charanerislics affecl and shape work anillldes and behavior can begin HI experi-
ment 10 see whelher changing one or more of these charaCleriSlics mighl increase thl'
effecliveness of the organization-lind Ihe individuals and groups il eonsisls of.
Organj'wliunal crfeetiwlleM; IS the abilily of an organizalion tu achieve its goals. The
slUdy of OB helps managers meet lhe challenge of improving organizational effectiveness
by providing lhl'm with a SCi of tools_
• A manager can work 10 r.lise an employee's self-esteem or beliefs abuut his or lier
abili!y to accomplish a cenain lask in order 10 increase the employee ... prodUClivity
or job smisfaclioll,
• A managl'r cml change lhe reward syslem 10 eh:mge 1'l1Iployees' beitel's abuullhe
exlenllO which lheir rewards depend olliheir performance.
• A manager can change lhe design of a person's job or lhe rules and procedurcs for
doing the job 10 redllee costs. makl' the task more l'njoyabll'. or make the lask easier
10 perform.
Recall from the chaptl'r-open ing case !hm Amazon .COllJ .s goal is In :mraCi CUSlOml'rS
by providing thl'llJ wilh high-quality. affordable books. CDs. and other producls, To
achieve lhis go.tl Amazon.com·s founder crealed a work selllllg in which empluyees were
laughl whal kinds of OBs result in ecollomical. customer-friendly online operations,
Amazon .com succeeded because it chose a way 10 motivme and reward emplOYl'es lhm
encourages lhem 10 work hard and well and beh:lve in a way lhal benefils everyone. A key
challenge fur all organizations. and one lhal we address Ihroughuul this book. is how 10
encourage organizalionalmemben; 10 work effectively for their own benc!il. the benefil of
lhl'i r work groups. and thl' benefit of lhei r organ izmion.
Managerial Functions
The four principal functions or dOlies of lllilmigellll'ni are the processes of planni ng, orga-
nizing. leading. and COlllrolling an organizalion's human. financial. lll:lteriaL and olhl'r
resources tu incre,lse its effecliveness. 3 And. as our previous examples showed. m:lIlagers
who arc knowledgeable abuul OB arc in a good posilion 10 improve lheir ability 10 perform
lhese function.s (sec Exhibi! 1,4).
Planning. III planning. managers establish their organization's slrategy-lhat is.lhey
dedde how best 10 allocate and use resources III achieve organizalional goals. Al
Soulhwesl Airlines. for example, CEO Gary Kdly and President Coleen Barrell'S
slrategy is based on the goal of providing CUSlomers with low-priced air lrllvel. 4 To
accomplish this goal. SoulhweSI uses ilS resources efficienlly. Fur e.\ample. Soulhwesl
uses only one kind of plane, lhe Boeing 737,10 keep down operaling. training. and
maimenance costs: employees coopcrme and share jobs when necessary to keep down
eOSlS: flnd the eompany's websile is state of lhe arl and one of the easiesllo use in lhe
induslry.
Planning is a complex and difficuh task because a 101 of uncl'rtaiOly normally sur-
rounds the decisious managers need to make_ Because of lhis uncertainly. managers
face risks when deciding wlWl aClions 10 lake. A knowledgl' of 08 can help improve the

EXHIBIT 1.4
Four Functions of
Management
ORGANIZING
E'lahli'hing a ,truelUre of
relation'hip' thm d;"'tale, how
nlCmbc", of an Ol);anilation
work t"t:elher to ""hine
or~anizat>onalgoal"
LEADING
Encouraging and coonlin:lting
indi"jJual, and group' >0 Ihat
all Or!l,;mllutioIlJI memocr,
are w'orlioj: to achiest
<.>rgani,ational goa]"
SELF-MANAGED TEAMS
Grnu)"" of cmplo}'cc, who are
gi\Co the authority and
""pon,ibilit} to manage many
different a'pce" of lheir 01<'11
nrganil.ational bcha\ io..
CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 9
Planning Org;onizing
Decide on organi,ational goal, Establi,h the rule, and report"'g
and allocate and use ""ou<ce, relation,hlp> that allow pe<>ple to
to .chie.... those goal, .ch,,,,,, organizational goal,
1
Con.rolling
J
leading
Evaluate how well the organ",ation Encourage and coordinate
"achieYing its g=l, and take ",dl"dual, and group' 50
artlon to malnta", and Impr.",e that they work towan:!
performance or take correct'.... orgamzatlonal g=l,
a.. "on
quality of dccision making. increase the chances of success. and lesscnthe risks inher-
crn in planning and decision making, First. thc silJdy of DB rcvcals how dccisions gct
made in organizations and how politics and conflict affect the pl'1l1ning process.
Second. the way in which group decision making affects planning. and the biases thai
can influence decisions. arc revealN!. Third. thc thcories and concepts of 013 show how
the composition of an organization's top-managcment team can affect the planning
process. The sludy of OB. then. can lInpro\'e a nwnagers planning abilities and
increase organizational performance.
Organizing. [n orglln;zing. managcrs establish a structure of relationships that dictates
how members of an organization work together to achieve organizatIOnal goals.
Organizing invol\'es grouping workers imo groups. teams. or departments an:ordi ng to Ihe
kinds of tasks they perform. At Southwest and IBM, for example, service technicians arc
grouped into a service·operation departmcnt. ,lt1d salespeople are grouped into the sales
departmenl.
OB offers many guidelines On how 10 organize employees (the organization's
human resources) 10 make the best use of their skills and capabilities. In later chapters
we discuss various methods of grouping workers to enhance communication and
coordination while avoiding conflict or politICS. At Southwest Airlmes. for example.
although employees arc members of particular dcpartments (pilots. flight attendams.
baggage handlers), they arc expectcd to perform one anmher's nontcehnical jobs when
needed.
leading. [n leading. managcrs encourage workers to do a good job (work hard. produce
high-quality products) and coordinatc individuals and groups so that all organizational
members arc working to achie\'e organizational goals. The study of different leadership
methods and of how to nwtch leadership styles to the characteristics of the organization
and all its components is a major concem of OB. Today. the way managers lead employees
is changing because millions of employccs work in selr-man:lged teams-groups of
employees who are given both the authority and responsibility 10 m(lnage nmny different
aspects of their OWII OB. These groups. for example. arc oftcn responsiblc for interviewing
job applicants and for selening new team members, Team members thenlrJ.innew recruits
as well as hclpeach other improve their own levels of job skills and knowledge. They also
work together to del'elop new work methods and procedures that can increase their
c!Tectiveness.
The managers who used 10 actildy supervise the team now playa different mle -thal
of coaches or mentors. Thcir ncw role is to provide advice or support as nceded (lnd to
champion the team and help it toobt"in additional resources that will allow it to perform at
10 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR

a higher levclllnd earn grcmer rcw;lTds as well. The way in which a small company called
Dick"s Drive-In Rest;mrnnt chose and followed thIs approach to managing OB Illustrates
many of these issues as the following OB Today suggests.

OB Today
Dick's Restaurants Understands Its Employees

Dick's Drive-In Restaurants is a five-store, family-owned hamburger chain based in Seattle,

Washington. Founded in 1954, its owners have pursued an innovative approach to retain-
ing hard-working employees in the fast-food industry-an industry known for its high
level of employee turnover rates,s From the beginning, Dick's decided to pay its employ-
ees well above the industry average and offer them many benefits, too. Dick's pays its 110
part-time employees $8.75 an houLlt also covers 100 percent of the cost of its employ-
ees' health insurance and provides employees who have worked at Dick's for six months
up to $10,000 toward the cost of their four-year college tuition! Dick's even pays its
employees their regular wage if they perform four hours of voluntary work each month in
the local community,
Dick's competitors,
on the other hand-
national hamburger cha-
ins like Wendy's and
• McDonald's-pay their
parHime employees at
the minimum wage of
$5,85 an hour and offer
them no health insur-
ance and few other ben-
efits---(ertainly nothing
that can compare to
Dick's, When asked why
Dick's adopts this appro.
Dick's managers undersland how 10 lead and motivale re,lauranl erew,
ach, Jim Spady, its vice-
to obl:,in a high b'd of c111plol'~'C relent ion,
president. answered,
"We've been around since 1954 and one thing we've always believed is that there is
nothing more important than finding and training and keeping the best people you
possibly can "6
Dick's approach to OB begins when it re<:ruits new hires straight from high schooL Its
managers emphasize that they are k>oking for hard work and long-term commitment from
employees. They stress further that in return Dick's will help and support employees by pm-
viding them with above-average pay, health-care insurance, and tuition money while they
work their way through school Dick's expects its employees to perform to the best of their
abilities to get its burgers, and its customers, out the door as fast as they can. Employees are
expected to be able to perform any of the tasks involved in the Burger restaurant such as tak-
ing orders, cooking the food, and cleaning up the premises. When performing their work,
Dick's employees don't wait to be asked to do something: they know what to do to provide
customers with the freshest burger Seattle has to offer.

CONTROLLING
Monitoring and c,'a1~"li"g
indi,'i<l~"I. gro"p. and
Ol'l'ani/ahunal po;rforman,'c 10
"-'C "hclh;;r organizationat l'""h
are being achicved.
ROlE
t\ ""I of I>chaviul'" ur 1'1 'k- a
po;"on i, c\po;cl<:d ll> perform
becau-e of !he p,,,ilinn he or ~hc
hold, in" group ororgani7alion
SKill
An ubll il)' 10 11<;1 in a way 1n.,1
allo"', a pcr,on 10 pcrl<>tm "ell
t" hi, or ller role
CONCEPTUAL SKtLLS
The "bilil)' 10 "naly7e and
dial'n"", a ';I"alioo and to
di,lingul'h octw,,,,n "au,,"
and cfk<.'1
CHAPTER t • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 11
Although Dick's does not expect its employees to remain with the company after they
have graduated, it does, however, want them to stay with the company until they do. And
here lies the reason why Dick's can afford to revYard its employees with such generous
salaries and benefits compared to its competitors, Employee turnover at large national
burger chains is frequently more than 100 percent a year, meaning a typical burger
restaurant has to replace all its employees at least once a year, As a result, large chains
have to recruit and train new employees continually, which is very expensive and greatly
increases the costs of operating a restaurant. High employee turnover also makes it diffi-
cult for managers to develop close working relationships with employees and find ways to
encourage them to perform at a high level,
Dick's approach to OB leads to high performance and low turnover, which both keep
operating costs low, Furthermore, Dick's managers have discovered that if employees stay
for at least six months, its lower operating costs more than compensate for the extra pay
and benefits employees receive. Dick's approach has therefore created a win-win situation
for the company and its employees. If a person has to work their way through college
then Dick's seems to be a good place to do it.
Controlling. Finally. In cunirolling. managers monitor and cvaluate individual. group.
and organizational performance to see whether organizational goals arc being achieved.
If goals arc being Illel. managers can lake action 10 maintain and improve perfOllnance: if
g<X,ls ,Ire not being Illet. managers must take corrective action. The conlrolling function
also allows mnn~gers to evaluate how weilihey are performing their planning. organizing.
and leading function,.
Once agai n. Ihe tllCQrie, and concepls of 013 allow managel'j to under>\and and accu~
rately diagnose work situations in order to pinpoint where corrective action may be
needed. Suppose the members of a group arc Ilot working ellCClively lOgether. The prob-
lem might be due to per>onality confl iets betwecn individual mcmber> of the group. to the
faulty leadership approach of a supervisor. or to poor job design. 013 provides lools man~
agers Cilll use to diagnose which of these possible explanations is the source of the prob-
lem. and it enables managen; 10 make an informed dccision aoout how to corrcct the
problem. Comrol;n alllcveis of the organization is impossiblc if managers do not P""css
the nccessary organiZalional~bchavior tools.
Managerial Roles
Managers perfomltheir four functions by nssuming spttlfic roles in organizations, A rolc
is a set of behavior> or tasks a person is expttted to perform because of the position he or
she holds in a group or org;lI1izmiol1. One researcher. Henry Mintzbcrg. has identified ten
roles that lnalmger's play :IS thcy manage the behavior of people inside and outside the
org,ll1lzation (such as <,'uSlomers or suppliers).7 (Sec Exhibit 1.5.)
Managerial Skills
JUSt as the study of 013 provides lools thill man,lgers can use to increase their abilities to
perform their functions and roles. it can also help managers improvc their skills in
managing OB.A skill is an ability to act in a way thm allows a person to perform wcll in his
or her role. Managers necd thrce principal kinds of skill in order to perform their orgal1iza~
tional functions and roles effcctively: conceptual. human. and technical skills. 8
Concrphml skills allow a man~ger to analyze and diagnose a situation and to distill-
gui,h between cause and effcn. Planning and organizing require a high Icvel of mnceptual
skill. as do the dccisional roles previously discussed. The study of 013 provides managers
with many of the conceplual tools they need to analy7.c orgamzational scllings and to iden-
tify and diagnose the dynamics of individual and group behavior in these sellings.
12 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR

EXHIBIT 1,5

Types of Managerial Roles

Type of Role Examples of Role Activities

Figurehead Give speech to work force about future organizational goals and objectives;
open a new corporate headquarters bUilding; state the organization's ethical
guidelines and principles of behavior that employees are to follow in their
dealings with customers and suppliers.
Leader Give direct commands and orders to subordinates; make decisions concerning
the use of human and financial organizational resources; mobilize employee
commitment to organizational goals,
Liaison Coordinate the work of managers in different departments or even in different
parts of the world; establish alliances between different organizations to share
resources to produce new products.
Monitor Evaluate the performance of different managers and departments and take
corrective action to improve their performance; watch for changes occurring in
the industry or in society that may affect the organization.
Disseminator Inform organizational members about changes taking place both inside and
outside the organization that will affect them and the organization;
communicate to employees the organization's cultural and ethical values,
Spokesperson Launch a new organizational advertising campaign to promote a new product;
give a speech to inform the general public about the organization's future goals.
Entrepreneur Commit organizational resources to a new project to develop new products;
decide to expand the organization globally in order to obtain new customers.
Disturbance handler Move quickly to mobilize organizational resources to deal with external
problems facing the organization, such as enVIronmental crisis, or internal
problems facing the organization, such as strikes.
Resource allocatorr Allocate organizational resources between different departments and divisions
of the organization; set budgets and salaries of managers and employees.
Negotiator Work with suppliers, distributors, labor unions, or employees in conflict to solve
disputes or to reach a long-term contract or agreement; work with other
organizations to establish an agreement to share resources

Hunmn skills en~ble ~ Illan~ger to underslamJ. work wilh. lead. ~nd cOillrol thc
HUMAN SKILLS
11lC "~ili()' 1<) uoJc.... wod. "'''r\.. behaviors of other people and groulls. The study of how managers elm influence behavior
'" ;lh. lead. and control the is a principal focus ofOB. and the ability to learn and acquire the ~kills that arc needed (0
bchJ\';or of Olller people and cuordirwte and motivate people is a principal difference Ix'tween effeclive and ineffective
group', managers.
Tl'chnical skills arc the job-specific knowledge and techniques (hat a manager
require~ to perfom\ an organizational role- for example. in manufacturing, accounting. or
TECHNICAL SKILLS
Job ,pttifi,: I..I1l"...kdgc .,11,1 marketing. The specific technical skills a mana£er need~ dcpend on thc or£aniz.Hion thc
(cchn;q"",. mallager is in ,llld on his or hcr position in the organizalion. The m~nager of ~ rcstaur~ll1.
for example, nccds cook ing ~ki lis to fi 11 in for an abSC'nt cook. accounti ng and bookkeeping
~kills to keep track of receipts and eom and to administer the payroll. and anistic skills to
keep the rcst,wranllooking attractivc for customers.
Effcetive man~gers need allthrcc kinds of skills-l:ollCeplual. human. and technical.
The lack of one or more of these skills can lead to a manager's downfall. One of the bigge~t
problems that entrepreneurs who found their own bu~inesses eonfrolll-a problem lhat is
oflen responsible for their f:lilure-l~ lack of appropri:lle eoneeplrl:ll and human ~kills.
Similarly. onc of Ihe biggest problems that scientists. engint'efS. and olhers who swilch

OPEN SYSTEM
Ol}:anization> that 1Jl.~ in
r...",'''t<:~, from their e~tcmaJ
enVIronment.' and ,'on,,," or
tra"'form wm into good, and
-.en ice, lMt are ",nt b:l,'~ to
t~,rcn,·irunmenhwhere
~U,l<,nlC'" wi them.
ORGANIZATIONAL
PROCEDURE
A rul~ or routine an employee
follow, I" pcrfonn ,,,me t"'~
the ""'" "frectiv~ wa)
EXHIBIT 1.6
An Open System View
of Organizational
Behavior
CHAPTER t • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 13
c1,reers nnd go from resenrch ioto mnongemem coofrom is their Inck of effeCtive humnn
skills. M;magement functions. roles. and skills are inhmately rcl<tled. nnd in the long run
the ability to understand and manage behavior in organizations i, indispensable to any
actual or prospo..'Ctivc nmnagcr.
Challenges For 08
In the last few decades. the ehnllenges fncing organi:/:ations to effectively utilize nnd
del'elop the skills. knowledge. and "human capital" of their employees hal'e been increas-
ing. As we noted earlier. among these challenges. those stemming from changing pressures
or forces in the social and cultural. global. technological. and work environments stand
OUI. To nppreeiale the way changes ill the environmcnt affect behavior in organizations, il
IS useful to model nn organization from an open-systems perspective. In <1n open S,·Slclll.
an organization t<1kes in resources from its extental environment and convens or trans-
forms them into goods and services that arc sell! bad to that environmell!, where they arc
bought by customers (see Exhibil 1.6).
The activities of most organizations can be modeled using Ihe open-systems view. At
the infllll s/(/ge. companies such as Ford. General Elcrtric. Ralph Lauren. Amazon.com.
and Dick's Restaurants acquire resources such as raw l1Ialerials, compouell1 pans, skilled
employees. roools, <1ud computer-controlled lI1<lnufnClUring equipment. The eh<1llel1ge is to
create n set of OBs ;rnd proccdures that allow employees to idenlify and purchase high-
quality resources <lI a fa\'(}l<lbk price, An organizational pro,."cdurt' is a rule or routinc an
employee follows 10 perform some task in the most effective way.
Once Ihc orgnuization hns gathered the necessary resourees. conversion begills. Atlhe
in
COIl1't'rI;OIl liwge, the organization's workforce. using <tppropriatc skills. tools. tcch niques.
machinery. and equipmcnt. transforms the inputs into output, of finished goods and ser-
vices. such as cars. appliances, clothing, and hnmburgers. The challenge is to develop thc
set ofOBs and procedures thm results ill high-quality goods nnd services produced m the
lowest possible cost,
At the (JII/flll! slagi'. the organization releases finished glxxls and services to its exter-
nal environment where customers purchase and use them to satisfy their needs. The chal-
lenge is 10 develop Ihe sel of OBs ;U1d procedures that attract customers 10 a company's
prooucts and who come to belic\c in the value of a company's goods and services and thus
become loyal CU,lmners. The money the organization obtains fmm thc sales of its outpUls
ENVIRONMENT
Inpu.
s....g~ ,-"
- R..w ma••nal, • Machinery
- Monoy and cap"al _ _ -Compute",
• Human resou<c~ • Human 'kill'
Organization
Organl.."on Organl.. ~on
'"",'fonn< ,nput<
obtain, "'put< rei..... oU'put< to
and add. value
from '" .m"ronm.nl ," em'1ronment
'0 them
Sal~ of output>
ollow orgon"o"""
to obro'n new
.uppli •• of input<
14 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR
NATIONAL CULTURE
11>r "'I of ,'alue_ or belief. Ihm a
"",iell wn_,der, imponan! and
Ihc nom" of behav,,,, Ihal arc
apl"'l'ctl or ,,""'lioned in Ihal
"""cly.
ETHICS
The valuc,_ belief-. and mom!
role, Ihalll' maIWgc,", an(1
em!,lo}'''''' should u'" 10 anal} lC
or imerpret a ,iluali"n and lhen
decide "hal i_ the "right"' or
"Ppnlprialc "'a~ 10 beha'e
ETHICAL DILEMMA
The'luand:u) "",nage,",
e~pericnce when lhe} ha'e lO
decide if Ir.cy ,hoold acl in a way
Ihal mighl bendil Oilier people or
group', lind i, the "ri~ht"· Ihing
10 do. ",en lhough doing '0
migill go again'l tilcir own and
Ihcir organi,alinn', ,"lcr,,'t,.
to customers allows the organization to ncquire more reSOllrces so thal the cycle call
begin again.
The system just JescribeJ is said to be open because the organizalion draws from anJ
imemCIS with the external cnvironmcnt to secure rcsources. and thc n di sposes of its outputs
by selling its products to customers. Only by continually nhering and improving its OBs
and procedures to rcsponJ 10 changing envi ronmental forces can an orgamz<ltion adapt anJ
pmspcr over timc. Organizations that fail to recognizc thc many changing forccs in the
environmcnt lose their ability to acquire rcsources. to sell their products. and so they oftcn
disintegrate and Jisappear over time.
In the next scctions. we introduce the four major OB challenges coming from a chang-
ing cnvironment that the people who work in companies and organizations face ((xlay, We
then examine these challenges in more Jepth throughout the rest of the book to revealthc
many dramatic ways in which DB and procedures arc ehangiug today so organizmiolls can
adapt anJ prosper.
Challenge 1: The Changing Social
and Cultural Environment
Forces in the sOI:ial anJ ('ultural envimnmelll are those that arc due to ehanges ill the way
peoplc live and work-changes in values, attitudes. and beliefs brought about by changes
in a nation's CUltuTC and the characteristics of its people. Nlltiolllli culture is the set of val-
ues or beliefs that a society considers important and the norms of behavior that arc
approvcJ or sanctioned in that slx-icty, O"cr time. the culture of a nation changes. and this
affe<:ls the values and beliefs of its members. In the UniteJ States. for example, beliefs
about the roles and rights of women, minorities. gays. and the disabled. <lS well as feelings
alxlllt love. scx. m<:Hriage. war. and work. have all changed in each passing del:aJe.
Org;mizations must be responsive to thc changes that take place in a "Ol:iety. for these
affe<:t all a"pects of their operation". Change affects their hiring and promotion pmetices.
for one. as well as thc fonns ofOBs ;md procedures that :lre seen ;lS 'Ippropriate in the work
sclling. For example. in the last len years the number of women and minorities assuming
managerial positions in the work force has increased by ovcr 25 percent. As we Jiscuss in
detail in later chapters. organizations have had to make enonllOllS strides to prevent their
employees from diserimin<lling against othcrs bec:wsc of f<letors such as age. gender. or
ethnicit)'. and to work to prevent scxual harassment. Two major dallenges of imponanl:e
toOB today arc those that Jerive fmm a breakJown in ethical values anJ from the increas-
ing diversity of tbe workforce.
Developing Organizational Ethics and Well-Being
Recently. huge ethical seandnls hal'e plagued hundreds of U.S. companies like Worldeom.
Tyco. AJelphia. Enron. and Arthur Andersen. whosc top managers pUI personal gain ahead
of their responsibility towarJ their employees. customers. anJ investors. Many of these
companies stock prices have <:ollapsed. and ordinary Americans have seen the value of
their pension plans "nd investments plunge in value as ~I result. In light of these scandals.
the cllcl:t of eth ies- an important componenl of a nalion's soci,,1 and cu Itura I values - on
the behavior of organ ization" anJ their members has takcn center stage.9
An organization's ethics arc the values. beliefs, and morall1Jles that its managers and
employees should usc to analyze or interpret a situ:dion and then decide what is the "right"'
or appropriate way to behave to solve an cthil:al Jilemma. 1o An ethic'al dilemma is the
quanJary managers experience whell they have to dct'ide if they shoulJ art in a way that
might benefit other p,.'>()plc or groups. and thm is the "right'" thing to do. even though Joing
so might go against their own ,mol their orgnnization's interests. An ethical dilemma may
also arise whcn a manager has to dl'<:idc between two ditferent courses of action. knowing
thm whichever course he or she chooses will inevitably re,ult in harm to one person or
group even while it may benefit another. The ethical Jilcmllla here is to decide which
course of action is the "lesser of two evils:'

WEll-BE!NG
TIle Coooilion or beiog harr~.
beallhy. aod pr!»l"'roos,
SOCIAL RESPONSIBILITY
An organiulio"" obTigauOll~
lO"ard people or g"'''p' thai arc
di,.." tly afr"'tcd by i" actio",,_
The "Ililllate goa) or lhe f,m, is
10 make a profl!. SIIPPOse yOIl
were 0" lhe board or dire,'IIlr,;
for Melabolife I"ler"alio"al.
Would yOIl have advised lhe
compa"y to warn CO".\II"lCfS
aboul lile ad"e,."e eff~'{'( oflhe
compa"y \ diet pi lis ir il wel\''''1
rc411ircd by law?
CHAPTER I • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 15
Managers and employees know tlley are confronting an elhieal dilemma when their moral
scruples come mlo play ;md cause them to hesi"'tc. debate, and rencct upon the "rightllCss" or
"glxldncss" of a course of action. The elhical pmblem is 10 decide how a particular OB will
help or harm people or groups-bolh inside and outside the orga"ization-who will be
affected by it. ll Ethical OB is important becausc it can enh,lnec or reduce the well·bcin!t-
that is. the happiness. hc;lllh. amI prosperity -of a n;ltion and its citizens in several ways .12
First. elhies help man;lgers c,;wblish Ille goals thm Illcir organizations should pur,;ue and
the way in which people inside organizations should behal'e to achieve them. U For example.
one g0.11 of an organization is 10 make a profit so that it can pay Ille manager,;. employees.
suppliers. ,;harcholdcrs. and others who h;l\'e contributed their skills ;lnd rcsOlIH;es to the
company. Ethics specify what aClions an or<';;lniz;I! ion should l<lke 10 make a pmfit. Should ;In
organizmioo be allowed to hann its competitors by stealillg away their skilled employees or
by preventing them from oblaining access to vital inpllts? Should an organization be ;III()I.\'ed
to pr\lduce inferior gOllds that may endanger Ihe safely of l:ustomcr,;'1 Should an organ ization
be allowed to take away the jobs of U.S. employees aod lrallsfcr them overseas to employees
in countries where wages are $5 per day? What limilS should be pUI on organi7.:1tions' and
their manager,;' altempts to make a profll? And who should detennine Ihose limils?14
1lJc devastating effecl of a lad of organiz;llional ethics is iIIustrak-J by the behavior of the
compaoy Metabolife lntemmional thai mn and sold lhe drug Ephedr.l. which used 10 be a
widely used supplement taken for weighlloss or bOOy-building purposes. Although fears about
this drug's side effccts had lx.'C11 around for years. Metabolife ~sis!ed atlemp's by the Food
and Drug Admioistrmion (FDA) to obtain a list of CUSlomer l'llXlrts alxXltlhe enL~1S they had
cxpcrieoccJ from using its pills. After being th~atl."ned wilh a criminal inv!::Stigation. Memlxllifl."
released over 16.1XOcustornerrepoltS about its Ephedra products thm listed nearly 21XXl adverse
reactions induding 3 dealhs. 20 heart anacks. 24 strokes. and 40 seizurcS. 15 Metabolife did nOi
have to reveal thi,; negative infomlation alxlU1 the side c1feCls of it,; pr\lduCllx.~ausc lMl laws
cxisled !o force supplement makers 10 do so. although phamlaceulieal cnmpanies arc glwemed
by laws th,1I require lhem to reve;ll sille eft<">cts. lIS actions might have been legal but they were
unethical. and those woo had suffered adverse reactions from using its pills ex"gan to sue the
l:omp.1ny and win large scttlemems. 16 A national lobbying campaign lx.-gan to b,Ul EphLx1T<1 fmm
the market and in 2(X)4 lhe rDA gained the ]lO\\-'ef 10 ban the drug arid did so,
In addition to defining right and wrong ex"havior for employees. ethies also define an
organi/A1tion's soci:ll n.:sponsibilily, or its obI igations and duty tow<1rd prople or groups out-
side Ihe organiz;nion that are direclly affL~kx1 by it,; al1ions. 17 Orgaoi7~1tions amllllcir m,Ul-
agers must esmblish an ethical code Ihm describes acceptable ex"haviors aod Ihey must creme
a system of rewards 1lnd punishments 10 enforce lhis ethical code.
"" '
.-
16 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR

Different organizations haw Jifferent views about sodal re,;ponsibility. tS To some orga-
ni7Ations, being socially responsible means performing any action as long as it i." legal. Other
organiwtions do more lhan the IllW requires and work 10 advance the well-being of lheir
employt-es.customers. anJ ,;ociely in general. 19 Targt1. UPS. and Ben & Jerry's. for example.
each contribute a significant percemage of their profits to support charities anJ communilY
needs and eXJX'Ct their employees to be socially active and responsible. Starbuck's and Green
r....lountain Coffee Roasters seek oot colke-growing f;lnnerS and cooperatives lhat do not use
herbicides and pestiddes on their crops. thal control soil erosion. anJ Ihat treat their
employees fairly anJ with respe<:t in terms of safety and benefits. Swrbuck's also signs con-
tracts with small coffee grol'.'crs abroad to ensure they receive a fair price for their coffee crop.
even if world prices for coffee plunge-lhey wanl their growers 10 remain honest ,md loyal.
Not all organizations arc willing or able to undertake such programs. but all organiza-
tions need coJes of conduct that spell out fair and equitable behavior if they wall! to avoiJ
doing harm to people and other organizations. lXveloping a cooe of cthics hclps organi7.a-
tiolls prOlectlheir reputmions and maintain the gooJwill of their customers and employees.
TOOay. many companies are strcngthening their codes of ethics and making employees at all
levels sign off thm they underst;md them anJ wi II follow them. just as the Sarbanes-Oxlcy
Act forccs the CEO and chicf financial officcr (CFO) to sign a company's financial repolls,
indicaling lhey are true and ;lccurale.1O Companies 11wt have been found to act illegally arc
tOOay often forced to ;lgrce to supervision from an outside ethics monitor. put in placc to
e"alualc its managers· currem decision making-as has happencd to MCI and KPMG.21
It will also happen at Hoeing. which has experienced major cthical problems in rxent
years. In 2006. for example. Boeing agreed 10 pay $615 million 10 end a Ihree-year Juslit-e
Department invcstigation into reporteJ defense-contracting scandal,;. The de;ll wHulJ allow
Boeing to avoiJ criminal charges or any admission of wrongdoing. (loeing has been undcr
investigation for improperly acquiring proprietary competitive infonnation about rival
Lockheed Marlin·s bidding inlention for govcmment rocket-launching conlT:lets in order 10
win thc ;ludion. The government stripped Bocing of aboul $1 billion worth of rm;kct
laullches for its improper usc of the Lockheed Jocuments. Additionally. (loeing illegally
recroited senior Air Force Procurement Off,cer Darleen Droyull while she still had author-
ily ol'er billions of Jollars in other Boeing COnlT:lcts, Druyull rcpolledly also championed
Boeing's effolls to bypa,;s normal procurement procedures in oll"cring to pJUvide refueling
tankers to thc Air Forcc through a contmversial $20 billion leasing program. Druyun scrvcd
nine monlhs in prison in 2005 for violating federal COnfliCl·of-imerest laws. Michael Scars,
formerly CFO al Boeing. was fired ill 2003 and spent four months in federal prison for
illeg,tlly recroiting her. The scandal,; a],;o led to the re,;ignation of (loeing Chairman Phil
Condit. All this despite the faClthm thc Bocing supposedly had a strong codc of cthics!
The challenge is 10 cre,tle an organization whose members resist the temptation to
behave in illegal and unethil:al ways lhat promote lheir own inlereSls at the expen,e of the
ol';anizatioH or promote the organization·s interests at the expense of people anJ groups
otJI,idc thc organization. Employccs and managers havc to recognize lhm their behavior
has importmll effects not only on olher people ,Uld groups inside and oUlside the organiza-
lion bUI also on the organizalion ilsclf.!2 The well-being of org,ll1izations and lhe well-
being of the society of which they arc a pan are closely linked and arc thc responsibilily of
cvcryonc. 23 (How to crealC an ethical organization is an i,suc that we take up throughout
the tex!.) With lhis in mind. l,tke a look at the ethic,,1 exercise in "A Question of Ethics:·
whil:h is found in 08 in Aaivll. a l:ollcctton of experienti'll exercises 10l:ated at the end of
cvcry l:haptcr of this book. For an example of the way the i,;sue of sOl:ial responsibility per-
nlC'ates global issues, and how we are all im,truIlH;ntal in delermining wcll-being around
the world. consider the issue of rose growing discusscd in Ethics in Action.

DIVERSITY
Ind;\'idmd Jiffe"'nce\ re\uhing Dealing With a Diverse Workforce
fmlll agc. gCJ\lJer. r:><:c, clhn "'It}'. A scconJ slKial and cultural challenge is to unJerstand how the diversity of a workforce
",ligion. \exuaJ oriental ion . and
affects OB. Bil't:rsity rcsults from differcnces in age, gcnder, race. cthnicity, religion.
""'ioeconomic ba<"kground.
scxual orientation. socioeconomic background. and capabili1ies or disabilities. If an
 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 17

Ethics in Action
Everything is Not Coming Up Roses

Every year on Valentine's Day tens of millions of roses are delivered to sweethearts and
loved ones in the United States, and anyone who has bought roses knows that their
price has been falling steadily. One of the main reasons for this is that rose growing is
now concentrated in poorer countries In Central and South America. Rose growing has
been a boon to poor countries where the extra income women earn can mean the differ-
ence between starvation or not for their families. Ecuador, for example, is the fourth
biggest rose grower in the world, and the industry employs over 50,000 women who tend,
pick, and package roses for above its national minimum wage. Most of these women
are employed by Rosas del Ecuador. the company that controls the rose business in that
.r""", country.
The hidden side of
the global rose-growing
business is that poorer
countries tend to have lax
or unenforced health and
safety laws, something
that lowers rose-growing
costs in these countries,
And, critics argue, many
rose-growing companies
and countries are not
considering the well-
Somc of thc millioos of buoches of ""'" ,old cuch ycur arc ,old 00 being of their workers.
Valentioc's Day. M<IIty oflhe"" roses arc grown in less-developed For example, although
<"<lOotrics that huvc low hcuhh un<! sufdy laws 1o pmtccI the ""0,-1;1'''' the CEO of Rosas de
who grow them.
Ecuador, Erwin Pazmino,
denies workers are subjected to unsafe conditions, almost 60% of his workers have
reported blurred vision, nausea, headaches. asthma, and other symptoms of pesticide
poisoning 24 Workers labor in hot, poorly ventilated greenhouses in which roses have
been sprayed with pesticides and herbicides. Safety equipment such as masks and ventila-
tors is scarce and the long hours women work adds to chemical overexposure. If workers
complain. they may be fired and blacklisted, which makes it hard for them to find other
Jobs So, to protect their families' well.being, workers rarely complain and so their health
remains at risk.
Clearly. rose buyers worldwide need to be aware of these working conditions when
deckjing to buy roses, Just as buyers of inexpensive clothing and footwear became con-
cerned in the last few decades when they found out about the sweatshop conditions in
which garment and shoe workers labored Companies lik:e Nik:e and Wal-Mart have made
major efforts to stop sweatshop practices, and they now employ hundreds of inspectors
who police the factories overseas that make the products they sell In a similar way, the
main buyers and distributors of flowers for the US market also are beginning to consider
the well-being of the workers who grow them,
18 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR

org~nizmion or group is composed of people who are all of the same gender. ethnicity. age.
religion. ~nd so on. the <llIitudes and beh<lvior of its members <Ire likely to be very similar.
Members are lih"ly to ,hare the same attitude> or values and will tend to respond 10 work
simat ions (projccts. confl icts. new t<lsks) in simi lar ways. By com rast. if the mcmbers of a
group differ in age. Clhnieity. and other ehar~eteristics. their altitudes. behavior. and
responses arc likely 10 differ as well.
In the last twenty years. the demographic makeup of employees entering the work
foree and advancing to higher-level positions in org~ni7.ations has been changing rapidly.
Partly because of affirmiltive ~ction ~nd equ~l-Opporlunity-employment legislation. the
number of minority employees entering and being promoled 10 higher-Ic,'el posilions has
increased ,25 By 2005. African-American and Hispan ic employees made up over 22 percent
of the work fon:e. while the percentage of white males decreased from 51 pereent to 46
pereenl. 26 Atlhe same time. the number of women entering the work force has also been
increasing dramatically and they arc ascending 10 higher and higher posilions in manage-
melll n Finally. because of increased globalizmion. the diversity of the U.S. population is
increasing rapidly due to the large numbers of people bum in olher nations who immigratc
to the Uniled Simes 10 live ~nd work,
The increasing diversily of Ihe work force presents Ihn:e challenges for organizations
and their managcrs: a fairness and justice challenge. <I decision-making and pcnornmnce
challenge, and a flexibility challenge (sec Exhibit 1.7).

Fairness and Justice Challenge. Jobs in org~nizations .Ire ~ scarce resource. ~nd
oblaining Jobs and being promoled 10 ~ higher-Icvel job is a competitive process. M'lIlagers
are challenged to all(X'ale jobs. promotions. and rewards in a fai r <lnd equ ilable manner. As
diversity increases. achieving fairness can be difficult. at least in the shon TUn. because
many organizalions have tradition~lIy appointed white-mate employees to higher
organizational poSitions. Also. seniority plays a role and many minorities ilre recenl
hires. 28 Renifying this imbalance by anively recruiling and promoting increasing
numbers of women and minorities c~n le~d to difficult equity issues because this attempt to
fix the traditional imb~I'l[lCe reduces the prospect, for white-male employees. 29 An
increase in diversity canlhus strain an orgamzation's abilily 10 satisfy the aspirations of its
work force. creating a problem th~t. in tum. directly <lffccts the work force's well-being
~nd pcrformance JO Organi7.ations must le~rn to m~nage diversity in a way that increases

EXHIBIT 1.7

The Challenge Posed by

Diverse Workplace
 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 19

the well-being of all employees. bot deciding how 10 achiel'e lhis goal can pose difficult
ethical problems for milnagers. 31

Dedsion-Making and Performance Challenge. Anothcr importam challenge posed

by a diverse work force is how 10 take advantage of differences in the ,11liwdes and
perspective~ of pl:uplc of differenl age~. gender~. or races. in order to Improve decision
making and raise organizational performance. J2 Many organizations have found that
tapping into divcrsity. and taking advalllage of thc potcmial of diverse employees. leads to
new and improved OBs and procedures. 33 Union B:l1lk of California (VBe) is one exanlple
of a company thai has enjoyed huge success because of lhe way it ha~ developed an
approach to diversity thai reflects the needs of its employees. customers. and its
environmcnt )4
With assets of o\'er $35 billion. VBC. bllsctl in San Francisco. is the third large,l com-
mercial bank in Californill and among the 25 largest banks III the United Slates.J~
California is one of the most diver-;e states in thl." natioll and over half the population is
Asian. Black. Hispanic. and/or gay. Reeognil.. ing this fact. the bank always had a policy of
seeking to hire mtd recmit diverse employees. However. UBC also woke up to the fact lhat
it could u~e the diver,ily of its employee, to build it, customer base. Thl." proce,s slanl."d
when Goorge Ramirez. a VBC vice presidetH. suggested lhat the bank should create a mar-
keting group to develop a plan to anract customers who were Hispanic like himsclf. So
successful was this venture th:lt a group of African-American employees decided that Ihey
should create a marketing group to develop a marketing campaign \() attract new Africiln-
American custOillers. It was soon clear to UBC that it should usc the diversity of its
employees as a way of improving customer service so that. for example. if a customer
walks inlo <l bank branch in a predomimllely Latino neighborhood. they will be greeted by
a substall1ial numbers of Latino employee,.J'"'
The bank. like many other organizations. also discovered that as its reputation as a
good place for minorities to work increased. it began to attract highly skilled and motivated
minorily job candidates so 11I,lt il helped ilself. As Takahiro Moriguchi. its former CEO.
said in accepting a diversity award for the company. '·By searching for talent from among
the disablcd. bUlh gender-;. veterans. all elhnic groups. and all nationalities. we gain access
to a pool of idcas. energy. ,md creativity as wide and varied ,IS the human race itself. [
expect diversily will beL'Ome even more irnport,Ult as the world gr.ldually becomes a truly
global marketplace:· J7

Flexibility Challenge. A third diversity challenge is to be sensitive to the needs of

dlfTerent kinds of employees and to Iry to develop J1exible employment approaches lhal
increase employee weB-being. Examples of some of these approal·hes include the
following:
• New benefits packages customized to the needs of differelH groul's of employees.
such as single employees wilh no children :lIld families. gays in long-tcrm commilled
relationships. and employees caring for aged parentS
• Flexible employment conditions (such as Ilcxtime) that give employees inpul ill10 the
length and scheduling of their workweek
• Arrangemell1s that allow for job sharing so that two or more employees can share the
same job (10 take care of children or aged pm'cnts. for example)
• Designingjobs and the buildings that house organizations to be sensitive to lhe
special necds of handicapped employees (and customers)
• Creating managemcnt prograills designed to provide construct!ve feedback to
employees aOOllt their personal styles of dealing willi minority employeesJ~
• Establishing mellioring rl."lationships to support minority employces J9
• Establishing infonnal networks among minority cmployee.s to provide social
suppon.j(l

Managing diversity is an ongoing activily that has many important implications for
organiz:J1ions. We discuss di~'ersity in depth in Chapter 4.
20 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR
GLOBAL
ORGANIZATIONS
Compan i,,, lh~t prodoce or ,ell
their prodo<.:h;n coontries and
regions throoghootthc wortd.
GLOBAL lEARNING
Tbc pro,:eS\ of ''''<joiring and
learning the ,k,lls. knowledge.
and "'1;anllalinnal bell,,,,,,,,, and
procedore, thaI have helped
cornp"nles abroad becOlOC major
global WrnflCt;t"r"
Challenge 2: The Evolving Global Environment
The challenge of responding 10 social and cull ural forces increascs as organiwtions e~pand
their oper~tions globally and set up international opemtions III cOl'ntries throughout lhe
world. Global organizations. like GM. Toyota. Amazon.eom. Nokia. PepsiCo. and Sony.
are companic<; that produce or sell their products in countries and regions thmugllOUl the
world. E.1ch country hns a different nmional culture. and so when they e~pand their opera-
tions <ibro'ld global organizations they eneounler much greater differences in soci<1l and
I:uhural value,. beliefs. and attitudes. They therefore face the inneascd challenge of deal-
ing with ethical nnd diversity-rdmed issues acmss countries nnd national boundnrics. 4t
1\0,'0 import<lIlt ch<1l1enges facing global organiz.uions are to appreciate the differences lhat
exist between countries :md Ihen to benefil from Ihis new global knowledge 10 improve
OBs amI prol:edure~.~2
Understanding Global Differences
Companies must leam about many different kinds of factors when they operate glob<1l1y.4)
First- there are Ihe eon~iderable problems of understanding DB in differenl global SCl-
tjng>.4~ Evidence show, Ihat people in differell! coumries ha\'e differelll values. belief"
nnd nttitudes-not only about their work and organi7.mions. It has been argued. for exam·
pic. th.u Americans have an individu<1listic orientnlion toward work and Jap.1nese people
have a I:ollectivist orientnlion. These different orient~lions 10 work reneet I:ulhtral differ-
ences. which affect people's behavior in groups and their commitment and loyalty to an
org3l1i 7.ation .4~
OB becomes especi<1l1y complex at <1 glob<11 level because the allitudes. aspirations.
and values of the work force differ by country. For example. most U.S, employees are
astonished to learn that in Europe the average employee receives fmm four to six weeks
paid vacmion a year. In the United States, a comparable employee receives only one or two
weeks. Similarly. in some eounlries. promotion by scniorily is the norm. but in others. level
of performance is the main determinant of promotion and reward. Understanding the dif-
ferences between national cultures is imponalll ill any allempt to manage be.havior in a
globalorganization.46
Second. problems of coordinating the activities of an organization to match its envi-
ronment bel:ome mtKh more complex as an organization·s activities cxpand al:ross the
globe. 41 Decision making. for example, must be coordinated between managers at home
and thosc in countries abroad who are likely to h,l\'e different views about what goals an
organizmion should pursue. One of the most significant functions of global managers is the
way they organi7.c the company and dCl:ide how to all()(;ate ded~ion-making authority and
responsibility betweenmanagefS at home and abmad. 48
Third. in many cases global organizations locate in a panicular country abroad
~I:ausc Ihis allOWS them to oper~le Illore effectively. but in doing 50 this also has major
affL"\:ts on Iheir home operations. Today. for example. the nccd to reduce the eo~1s of mak-
ing and selling goods to stay competitive with companies from around the \I'orld has
pushed many U.S. companies to nmke most of their products abroad. They contract with
manufal:turers in countries where labor COStS are low to make their products. which are
then shipped bad 10 the U.S. for "tie. In the last dL"\:ade. for example. over 10 mill ion jobs
have been lost in the U.S. garment-making industry. Companies like u:\'i Slrauss. which
m<1de all their clothing in the U.S. twenty years ngo. now contract with foreign manufac-
tures and vHlually all their clothing is made abroad. The way IKEA has successfUlly mel
all these challenges u,ing its global approach 10 OB is instructive for global I:ompanies. as
the following Global View suggests.
Global learning
Although the changing global environment has been a major threm to U,S. organizations
and workers. it also offers Ihem many opponunilies to improve Ihe ways they operate. By
fo~tering global learning-the process of .\(;quiring and learning the skills. knowledge.
 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 21

Global View
IKEA's Worldwide Approach to OB

IKEA is the largest furniture chain in the world, and in 2006 the Swedish company oper-
ated over 231 stores in 33 countries. 49 In 2005 IKEA sales were almost S15 billion, over
20% of the global furniture market, but to its managers and employees this is just the tip
of the iceberg. They believe IKEA is poised lor massive growth throughout the world in
the coming decade because It can provide what the average customer wants: well-
designed contemporary furniture at an affordable price. IKEA's ability to provide cus-
tomers with affordable furniture is very much the result of its approach to OB, that is, to
the way it treats its employees and operates its global store empire. In a nutshell, IKEA's
08 approach revolves around simplicity, attention to detail, cost-consciousness, and
responsiveness in every aspect of its actions and behavior,
The origins of IKEA's successful approach derive from the personal values and
beliefs of its founder Ingvar Kamprad, concerning how organizations should treat their
employees and customers.so Kamprad, who is now in his 70s, was born in Smaland, a
poor Swedish province
whose citizens are well
known for being entre-
preneurial, frugal. and
hard working. Kamprad
definitely absorbed these
values, for when he
entered the furniture
business he made them
the core of his approach
to OB. He teaches store
managers and employ-
ees his values; his beliefs
about the need to oper-
ate in a no-frills, cost-
Ingvar Kmnpmd. fOllnder and CEO of IKEA. whose enlhnsiasm for
conscious way; and, that
mamging his compa"y and working Wilh IKEA"-, as-,,"-"iales 10
provide excellcm cnSlonlCr service has never waned. Today. he is one
they are all in business
of lhe ,ic'he,l people in lhe world "together,· by which he
means that every person
in his company plays an essential role and has an obligation to everyone else.
What does Kamprad's frugal, cost-conscious approach mean in practice) AIIIKEA's
members fly coach class on business. stay in inexpensive hotels, and work to keep travel-
ing expenses to a minimum. It also means that IKEA stores operate on the simplest set of
rules and procedures possible and that employees are expected to work together to solve
problems on an ongoing basis to get the job done Many famous stories exist about how
the frugal Kamprad also always flies coach class. and about how. when he takes a coke
can from the mini-bar in a hotel room. he replaces it with one bought in a store-and all
this despite the faet that he is a multi-billionaire ranked in the top twenty on the Forbes
list of the world's richest peoplet S1
IKEA's employees see what his approach to 08 means as soon as they are recruited
to work in one of its stores. Starting at the bottom of the ladder, they are quickly trained
to perform all the various jobs involved in operating the stores, They also learn the
22 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR
EXPATRIATE MANAGERS
The people who wor~ r"r a
rompan} o\'ersea, and are
",'pon'lble for developing
",lallO'''h,p, w ilh orgamut ion,
in ~"onlrie, around the globe.
imparlance IKEA attaches to them learning to take the initiative and responsibility for
solving problems and for focusing on the customer. Employees are rotated between
departments and sometimes stores, and rapid promotion is possible for those who
demonstrate the enthusiasm and togetherness that signifies they have bought in to IKEA's
approach, Most of IKEA's managers rose from its ranks and. to make sure top executives
are constantly in touch with stores, IKEA holds "breaking the bureaucracy weeks" when
they are required to work in stores and warehouses for a w~k each year, Everyone wears
informal clothes to work at IKEA, Kamprad has always worn an open-neck shirt, and
there are no marks of status such as executive dining rooms or private parking places.
All employees believe that it they buy into IKEA's work values and behave in ways that
will keep its operations simple and streamlined, and if they focus on being one step ahead
of potential problems, that they will share in its success. Promotion, training, above-
average pay, a generous store-bonus system, and also the personal well-being that comes
from working in a place where people are valued by their coworkers are some of the
r(",/\lards that Kamprad pioneered to build and strengthen IKEA's global 08 approach,
Whenever IKEA enters a n(",/\l country. or opens a n(",/\l store in a n(",/\l city, it sends its
most experienced store managers to establish its global OB approach in its new stores,
When IKEA first entered the U,S" the attitude of U.S. employees puzzled its managers.
Despite their obvious drive to succeed and good education, employees seemed reluctant to
take the initiative and assume responsibility. IKEA's managers discovered that their US,
employees were afraid mistakes would result in the loss of their jobs, so they strived to teach
employees the "IKEA way" and its approach to OB has prevailed. The U,S. has become its
second-best market and it plans to open many more US. stores over the next decade.
~nll OBs and proccllures Ihal h~ve helped l:ompanies abro.tll bel:omc major global
cOll1pelilors- U.S. CIlmpanie~ have also prospe~d.5! For example, U.S. companies have
been able 10 gain access to many kinlls of valuable resources presc III in companies abroall,
Forll .lOd GM have bought lhe design skills of Italilln companies like Fermri :lnll
L1moorghini. ell-<:Ironil: comlxments front Jllpancsc l:ontp~nics hke NEC ~nd Malsushil~
(well known for their qualily), anllmachine lools and manufacturing equipment from
German companies like Daimler-Chrysler anll BASF (well known for their excellent engi-
neering skills). Through global learning, companies ~lso leam how 10 beller serve the
neells of their customers ~nd of COUfsc they c~n ~ttrael more customers for Iheir goolls anll
services. For example, the potcntial size of the U.S. market for hamburgers is 265 million
people. but the~ are 3 billion pOlClllial borger-ealers in Asia alone. Thus il is not surprising
lhat McDonald's h~s exp~ndell glob~lIy. opening restaumnlS throughout Asia ~nd the reSl
oflhe world in order 10 take allvam~ge of lhe huge glob~l appelile for hamburgers, french
fries. and milk shakes. s3
To respond to lhe global challenge. more and more companies are rotating their
emplo)'I.'Cs aull mOl'ing them 10 tlleir o\'ersc~s opcr~lions so lhey e~n learn firslhanll the
problems and opporlunilies thai arise when working in l:ounlries overseas. Expatriate
managers arc Illosc who livc and work for c'ompanies in countries abroad. Thcre arc many
ways they can help their companies develop improved Olis anll procellurcs. Firsl. expatri-
~te managers c~n leam ~bout the sources of low·eosl inputs and the besl places 10 assem-
ble lheir prolluds throughoul the worili. Second, expalrime managers ill functions slll:h as
research and developmclll. manufacturing. anll sales can take advantage of Illcir prescnce
in a foreign eounlry 10 leam the skills and lechniques those companies in that counlry use,
They can .tpply this knowledge 10 improve lhe perfonn~ncc nOI only of Iheir opcrJtiolls
abroall bm also of their lIomestie or home operalions. Many companies ~Iso usc global vir-
tual tcams to incrcasc globallearning.5-l
After Worlll W~r [I. for example. many of Toyota's manuf~Cluring managers I'isited
lhe U.S. car p)~nts of GM .md Fortllo le~rn how lhese l:omp.mies ~ssell1blcd cars. Those
Japanese managers look lhal manufac'luring knowledge back 10 Japan, whcre Ihcy
 CHAPTER t • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 23

improved on the Americnn techniques nnd developed the lean manufacturing technology
thnt gnve Tuyotn amI other lnpanese automnkers their competitive ndvantnge over U.S.
companies in the 198Ck RITognizing the lead Japanese companies h:ld gained in quality
manufacturing techniques. GM. Ford. Xerox. Motorola. and many other U.s. companies
sent their managers to Japnn in the 1980s and 1990s to Jenrn ,Ioout the new techniques.
Thesc U.S. l:ompanies then incorporated the Japanese tel:hn iques into their manufaduri ng
operations. often improving on them in the prol:ess. so that in the 2000s companies like
GM and Ford havc sub!>lamially narrowed the cffkicncy gap, In this way. global learning
continunlly takes place as globnl organizations compete with one nnother worldwide for
l:ustomeP.i. Orgnnizationnl cJfectiveness m.:reases becnusc all global l:ompnnies arc forced
to learn aboU! rITem advanees in technology and adopt the best OBs and procedures if they
are to survive and prosper.

Global Crisis Management

Today. global learning is also imponant to tackle another challenging issue. global crisis
m:ll1agemenl. Extensive global [e,lrning nllows for more dTective responses to the increas-
ing number of criscs or disasters thaI arc ol:curring from natural or man-made causes or
OCC<luse of imernational terrorism and geopolitical conflicts. Crises that arise occause of
natural causes include the wave of hurricanes. tsunamis. eanhquakes. famines. ,1Ild dis~
cases that have devnstated so mnny countries in the 2000s-hnrd[y any country has been
left untouched by their effITts. Man-made .:rises. such as those that arc the result of globn[
warming. pol [ut ion. and the destruct ion of the natural habitat or environmellI. also seem to
be increasing. For example. pollution has become an increasingly imponant problem for
companies and countries to deal with. Companies in heavy industries such as CO:I[ and steel
ha\'e po[[ult'd mi[[ions of neres of land around major l:ities in E.1Stern Europe and Asia. and
huge cleanups are necessary. DisasteP.i such as the Chernobyl nuclear power p[am melt-
down rele,lsed over [540 times as much radiation into the air as occurred at Hiroshima. and
over 50.000 people hnve died from this while hundreds of thousnnds more havc been
affected .~~ The nt-ed 10 avoid crises of this ki nd is of paramount importance.
Man-madc crises. such as global warming due to emissions of carbon dioxide and
other gases. may have madc the effects of n,llural disasters more serious. For example.
mcreasing globnl temperatures and acid rnin mny hnve mne<lsed the intensity of hurri~
canes. [cd 1O unu>ually strong rains and lengthy droughts. and l:auscd the destruction of
coral reefs. forests. and the natural habitat in llIany pans of the world. The shrinking polar
icecaps are expected to raise thc sea level by a few. but vital. inches.
Finally. incre<lsing geopolitical tensions thnt are the result of the spec{] of the process
of globalization itself have upset the global balance of power as differelll countries or
world regions try to protect their own economic and political intercsts. Rising oil prices.
for example. have strengthened the bargaining power of major oil-supplying countries.
whil:h hns led the Unitel! States to adopt gloNt[ politicn[ slrategies. including its war on
terrorism. to secure the supply ofoi[ that is vital to protect the national interest. In a simi-
lar way. countries in Europe have been forming COlliracts and allying with Russia to
oht;l;n ils supply of natural gas as Japan and China ll<lve been negotiating with [ran ,UIl!
Snudi Antbia.
OB has an important role to play in helping peop[e and organizations respond to
such crises. for it providcs lessons as to how to manage and organi7.c the resources needed
to responl!to a crisis. As wc l!iseuss in later chapters. crisis managcment inl'o[ves impor-
tanl del:isions such as ( I) creati ng teams to fnl:il itatc rapid decision making nnd communi-
cation. (2) establishing the organizational ch<lin of ,'ommand and reporting relationships
necessary to mobilize a fast response. (3) recruiting and selecting thc right people to lead
nnd work in such teams. and (4) dCI'e[oping bargaining nnd negotiating str;l1egies to man-
age the conJ1icts th"t arise whenever peop[e and groups ha\e dilTerent interests and objee-
th'es. How well managers make these decisions determines how quickly an effective
response to a crisis can be implemell1ed. and sometimcs can prevcnt or reduce the severity
of the crisis itself.
24 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR
WORLD WIDE WEB
A global 'lore of ioformalioo
th:n .00Ia;", lno prOdU,'I' of
TTl0'1 ~iod, of human ~nowkdg~
,uch a, wriling. mu,i". and art
INTERNET
The glob"lllClWorl or .olcrhn~cd
cumpule,,_
INFORMATION
A "'I of dala. rOCl>, numoe",. and
w<>n.i, lhal ha, tl<•.'en "'liUmled .0
,u"h a wal thai il prm ide- i1>
u",,, "nh ~""" ledgc,
KNOWLEDGE
Whal a p<'",,m Jl<'R:ei"c,.
=gnlle" idenliflC'. I,,"
di",,,,..,,, from analY',ing
dala and inloro,alion,
INFORMATION
TECHNOLOGY
1'ht: m""y d,ffen:m ~ind, of
"""'pIlle' and commun >L3!100'
h:o,dw= and ",fmart·. and
Ihe c~ill, of Iheir lk"I.HIC"'.
programmer<>. man"->,er'. and
t""hnieian,
ORGANIZATIONAL
LEARNING
The proc"" of m:maging
infollTwion"nd \..oowlcdge
{(, achieve 3 nolle' fit bel" cen
the organizati"n and ih
enVTronmcm,
INTRANETS
A """cork of .oform,""n
t<:chnolog)' ho~age' ,n,ide an
~""jzaiion Ihat ~"OIl""':" 0111
il< mcmbe",
Challenge 3: Advancing Information Technology
One kind of technology thai is posing a major challenge for organizations today is infor-
mationtechnology (IT). Just decades ago. science-fiction writers like Robert Heinlein and
Isaac Asimov imagined devices such as wri,;t-hehJ vi{k·ophones. virtual reality machine,.
and speech-programmed. hand-hcld computeN. Today. companies like Palm. HP. Nokia.
Sony. (lnd Microsoft are offering these devices to their customcrs. Evcn scicncc-fiction
writcrs did not imagine the development of thc Wodd Wide Wd, (WWW).aglobal storc
of informal ion Ihat conlai ns the products of most kinds of human knowledge such as wril-
ing. music. and an, Such knowlcdge can be accc_~sed and cnjoycd by anyonc conncrtcd to
the global network of illleriinked computers that is the IUlerllet. Wc live in a different
world than just a mere decade ago: advances in IT have changed the w:ly people think and
Ihc very nature of DB. To undersland how IT has changcd DB and the way companies
operate it is necessary to understand thc conccpt of information.
Suppose you add up the value of the coins in your pocket ;Ind find you h~l\'e S1.36 in
change. You have been m~lI1ipulating basic data. the numerical value of each individual
coin. to obtain informalion. the IOtal valuc of your {,hange. You did so because you nl-ocdcd
to know. for cxamplc. if you have cnough changc to buy a coke and a candy bar.
I,nforlllalion is a set of dma. facts. numbers. ;lnd words thm has been organized in such a
way Ihatlhey provide their uscr, wilh knowledge, Knowlcdgl· is what a person perceives.
recognizcs. idcnlific,_ or discovers from analyzing data and information. Ovcr time. Ihe
result of acquiring morc and bellcr information and knowlcdgc is learning. [n an organiza-
tion. the issue is to usc ;lnd develop IT that allows employ~s 10 acquire more and better
information Ihat increases an organizalion's ability to respond 10 ils environment.
Information lechno[og)' (IT) is the many differem kinds of mmplllcr and communi-
cations hardware and software. and the skills of their designcrs. programillers. managcr~.
:lnd technici~lIls. IT is used to acquire. define. input. arrange. organize. manipulate. store.
and tr.msmit facls. dal:l. and information to create knowledge and promote organizational
learning. Organizalionallcarning OCCuN whcn its IllCmOCN can manage information and
knowlcdgc to achieve a beller fit betwecn thc organiwtion and its environmcnt. In thc fol-
lowing. we examine the effect IT has on lWO imponant kinds of DB. First. those belwviors
Ihat increase efl"ectlvenes,; by helping an organization improve the qualily of ils products
;lnd lower their co,;t. Second.lhose behaviors that increase effcctivcness by promoting crc-
ativity and orgmlizationallcaruing and innovation.
IT and Organizational Effectiveness
lbe hucruet and thc growth of inlrancts-a nctwork of infomlation technology linkages
inside an organiz.uion that connects all its members-dramatically changed DB (lnd pro-
cedures. With information more accur.ttc. plcnliful. and freely available. IT allows for the
easy exchange of know-how and facilitates pmblem ,olving. 5li And as computeN increas-
ingly takc over routine work tasks. employces havc more tilllc to engagc in constrtJctive.
work-expmlding kinds of aClivities such as flllding beller ways of perfonning a task or pro-
viding customcrs bel1er service. 57
As an example of how IT can improve organizational effcctivencss consider what hap-
pened at the textilc fiocrs division of Dupont. the gillllt chcmical company. To reduce costs.
Dupont offered early retirement incentives to reduce its workforce. and ovcr half its middlc
managers dcrided to take the early rcliremenl package. AI firsl. Ihe division's lOp managers
panicked. wondcring how work muld get done if evcryone Icft ll1the ,ame time. But the
division had reccntly insw1!ed an e-mail systcm and a corporatc intranetthat supplicd its
remainmg employees with most of Ihe information they needed to perfOml their lasks.
Employee.> began to use il heavily. and Icarned 10 make their own decisions and ovcr time
the imranet actually specdcd communication ;lnd decision making.5~
IT has allowed organi7~1tions to lx'ColllC much Illore responsivc to the needs of their cus-
tomers, OrganizatIons like relail SIOres. banks. and hospitals depend entirely on their enlplo)"
l-OCS performing behaviors thai resu!l in high-quality servicc at rea,;onable CO'1. And. as the
Unitcd Statcs has mo"ed to a service-ba~cd ecollomy (in part because of the loss frOIll
 manufacturing jobs going abrood). advances in IT have made many kinds of service organiza-
tions more effeclive. Developing IT has also opened new opponunilies for entrepreneurs to
found small doLeom's to beller satisfy euslOmers as Ihe forrowing DB Today suggests. 59
Finally. inside companies. integrating and connecting an organization's employees
around the world through elec!follic means such as vidcn teleconferencing. e-mail. and
intranets. is Occoming increasingly imponant. Because the success of a global company
depends on communication between employees in its various oosiness operations both al
home and abroad. the importance of real-time communication through lhe lise of personal
digiwl assiswllts such as smartpnones (like tnc popular Blackberry. tablet PeS. and lap-
tops) and by video teleconferencing has grown. For example. tdeeonfcrendllg allows

DB Today
Entrepreneurs Found "Relationship" Dot.com's
The speed at which IT is changing the way people interact is nowhere more apparent than
in the way "dol.com" businesses come and go The early success of industry leaders such as
Amazon com and Yahoo I led entrepreneurs to start up thousands of new kinds of virtual
companies in the search-engine. retailing, and service businesses. Most of these collapsed
and went bankrupt during the dot.com crisis of the early 2000s. Only those dotcoms like
Amazon.com that enjoyed brand-name recognition and loyal customers were able to hang
on 01 course bricks and mortar companies such as
Barnes & Noble and J.e. Penny that had established
virtual storefronts had the resources to withstand this
crisis, but online grocers like Webvan, that had
invested billions 01 dollars in building a foocl-distribu-
lion network, had totally underestimated the costs
involved in delivering food to customers and thus
went bankrupt.
By the mid-200Os, entrepreneurs began to take
advantage of the growth in broadband internet ser-
vice to start sophisticated kinds of relationship-
building websites to better meet customer needs.
These websites aim to satisfy people's needs to talk,
share, collaborate, and swap stories and images; the
gOilI is to satisfy social facilitation-not just person·
specific-needs, These websites have proved to be
wildly successful. Some of the most notable of these
newcomers are myspace.com, the website hosting
PiClUrcd arc MySp:lce founders. Chris and social'group facilitator; YouTube,com, the video
Dc Wolfe and Tom t\ ndeNoo who ,old
hosting provider: Flick.-, the pidure sharing and swap·
their fast·growiog romp'llly to Fox for
S5RO million in 2005
ping website; and Rottentomatoes.com, an interac·
tive movie·review site. 60 For example, myspace.com,
founded by Chris DeWolfe and Tom Anderson, which employs only 919 people, provides
its users with the facility to post their personal bios, pictures, links, and so on. 61 Within a
few years it had over 60 million users! Similarly, YouTube has 30 million visitors a day who
watch videos and post over 50,000 new videos as well. All these sites took advantage of
the fact that their users supply the content, whether it be personal pages, pictures, or
videos. All these dol.coms do is provide the web servers to host this content and then
charge companies to place adds on their site where they will be seen by their millions of
users. The key to the phenomenal success of these companies is that they provide their
users with IT that ailOW'i them to meet, view, talk to one another, and collaborate and learn
as they share their experiences, knowledge, and beliefs
26 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR

m:lnagers in differenl couOlries to meet face-to-face through bro,ldband hookups. 11

reduL"Cs communicalion problems. allows decisions 10 be made qUickly. and facililales
Ie:lming when managers in domestic and overseas divisions meet to confrolll imporlanl
issues and to solve mutual problems. For example. Hitachi uses an online teleconferencing
systcm 10 eoordinmc its twenty-ciglH R&D laboratories worldwidc. and Ford uses one 10
\:oordmale Ihe aClivitics of its worldwide car-dcsign actIVities.

IT, Creativity, and Organizational Learning

Today. using new IT 10 help pcuplc. groups. ami organizalions 10 be crealive and enhan\:e
organ intional innovation and learning is a major challenge. Cre(l/; ("itl' is the generation of
novel and useful ideas. One of its outcomes is ;mwI'ol;ol/. an organiwtion's :lbility to make
new or improvcd goods and services or improvcmcnts in Ihc way Ihey .Ire produccd. Thc
United Stales is home 10 some of Ihe moSt innovative companies in Ihe world. and innova-
tion is the direct result or outcome of the le\'el of cremivity in an org3l1ization.
IT plays a major rolc in fostering creativity and innovation because it changes OBs
and procedures. Innov<ltion is ,In .ICt iv ity thai rcqui res ConSl,lr1l updating of knowlcdgc and
a \:onstanl sear\:h for new ide<ls and technological developments that \:an be llsed 10
improve a product over time. Typically. innovation wkcs place in small groups or tcams
and IT C:ln be uscd to crcmc virtu~ll teams that can cnh<lnce cremivity <lnd coopermioll
belween crnploy,--es. Developing an IT system thai allows sclcnlists and engineers from all
parts of a \:ompany \() \:(Xlperate by way of bulletin board,. chatr(Xll1\s. or tcieconferelKing
is also a way to usc IT to speed creativity and innovation. One good example of a company
using IT to promote creativity and innovation is IBM.
IBM's thousands of consultants are experts in particular industries su\:h as the <lulomolive,
finandal servin:s. or retail industries. 1lIcy have a dL"Cp understanding of the p;lniclilar prob-·
lems facing eomp;1J1ies in thosC' indllstries and how to solve them. Palmis<lno asked IBM's COli-
sul1a01s to work closely with its software engineers 10 find ways to incorporate lheir knowledge
mto advanL"Cd software that can be implanled inlo a eustomcr's IT systcm. IBM ha, developed
17 industry "expert systems:· wh ieh are industry-s(X>t:ific. problem-solvi ng software org<lni7-'l-
tions thm resc<lrehers and sciel1\ ists can usc to improve their ahil ities to innovate new products,
One of these eXfX'rt systcms was developed in tlJc phannaccutieal industry. Using IBM's new
software. ,I company can use IB'\'l's expert system to simulate and moJclthe potcnlial su(-cess
of its new drugs underdeveloplllCm. Curremly only 5 to 10 percent of new drugs make it to the
market: IBM'.> new software will increase sciC'miSis' ability to dcvelop innovative new drugs.
for they will now know ocHer where to focus tlJcir time ,lItd ctTOrt,
As this example suggests. Ihere are many. many ways in which IT can oc used at all lev-
els in the organization. between departmellls, and between its global divisions to enhance
1caming. speed decision making. and promote creativity and innovation. Throughout this
book. you will find many more examples of the importance of facilitating leaming and cre-
ativity in OB loday.

Challenge 4: Shifting Work

and Employment Relationships
In the I<lst few decades. the relationship between an organizmion <lnd its members h<ls been
changing bc<;;au.se of increasing glohali7.mion and the emergence of new information tech-
nologies. 61 The etTccts of these changes on DB twve taken many forms. and importaOl
de\'elopments indude a shortening employment relationship because of downsizing. the
growth in the nil mber of collli ngelll or temporary employees. and outsourci ng. 63
111 tile past it was quite comlllon for lllallY people to spend their whole careers at a
large comp,lny like IBM. Microsoft. or Ford, often moving up the organizational hierarchy
over lime to higher seniority and beHer-p<lying jobs. Througholl\ the 1990s. most compa-
nies have been pressured by global competition to find ways to reduce operming costs and
the result has hcclllhat tens of millions of employees have found themselves laid otT by
their companies and foreed 10 se:lrch for new jobs.

DOWNSIZING
The proce" by which
organization, lay' oil mana"..",
"nJ wort..er. to redu.e CO",.
EMPOWERMENT
l1>e pRICe" ot giving emplo)e""
throughout an ''lrI'"niZaUOl1 Ih<"
""tllonly to ma~e ,mpol1anl
<J.,,,j,inn, "II<! 10 be re'pon,jble
for their ,,,,t,'Olll<"',
CONTINGENT WORKERS
People employ cd for lemporary
pcrio,!> b~ an OI].ani'"lioll all<!
who rec..ive no """"Ii" ,,,,,II "-'
health ""ura""e or pen,ion',
You're t;he Management; Expert;
CHAPTER t • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 27
]>Owllsizil1lt is tile process by which organizations layoff managers and workers (Q
reduce COSIS. The size and scope of these downsizing efforts Ilave lx.-en enormous. It is esti-
mated tllat. in the laSt few Occades. Fonune 50) companies h<l\'e downsized so much that they
now employ aoout Is.-20 perccm feweremployccs than they used to. The drive to reduce costs
is often a response to increasing competitil'e pressures in the glob.11 environmenl.6-I While
companies often realize oonsiJerable cost savings by downsizing. the remaining employccs in
downsil.cd organizations often work under stress. both because they fear they might be the
next employees to be let go and because they are forccd to do the work that was previously
pcrfonncd by the lost employees-work that oflcmimes they cannot cope with.b.'i
The im;reasing tendem;y of comp<lnics to layoff hard·'>\ork IIlg. loyal employees when
the neeJ arises seems to be changing the employmelll relationship between employees and
the companies they work forf* Tod;ly. employees real ize thal to keep their jobs and to
advmlce 10 better oncs they need to invesl more in themselves mId m,lke sure th"t they keep
their job skills and knowleJge up to Jate. The also neeJ to sean:h for Ilew job opportuni-
tics. Some experts argue that people Slani ng their careers (oday can expect to make at least
six to eight job and organiZ;ltional changes OI'Cr the course of their working lives-some
beC:lUse of their own personal choice but also some because of layoffs.!>'
Other im]Xlrtall1trenJs that go hand in hanJ with downsizing are the im;reasing "sc of
empowered sc-If-managed teams. cOll1ingelll or temporary workers. anJ outsourcing.
Emllowcrment is the process of givillg employees througholll an organizatiOllthe lHl\hor~
Ity 10 make importanl decisions and to be res]Xlnsible for tlteir outcomes. Self-ll111nngeJ
teams are work groups who ha\'e been empowefl~ and given the responsibility for leading
themsel\'es and ensuring that they accomplish their goals.bll
As organizations have Jownsized. there has ;llso been all increasing trend for cornpa-
nics to employ contingent workers to keep co,ts down. Contingent workers are people
who are employeJ for temporary periods by an organization anJ who receive no bencfits
such as health insurance or pensions. COlllingent workers may work by the day. week. or
momh performing some function;ll task. or they m;ly comraet with the organization for
some fee 10 perform a specific service to the organization. TIws. for example. an organiza-
tion may employ ten temporary lKcountants to "do the books" when it is time or it may
COlllract with a software pmgmmmer to write somc specialized software for a fixed fcc.
1lle advantages an orgaoization obtains from cOlHingent workers arc that they cost less
to employ since they receive no benefits and lhey can be let go easily when their services are
no longer llC<.-dcd. It has been estimatcJ that 20 perL'Clll of the U.S workforce toJay consists of
part-time employees who work by the d;ly. week. mOlHh. or even year for their former employ-
Moving to Self-Managed Teams
Tony Norris is the owner of a large building.products supply company. He has decided
that he could operate more effectively if he organizes his 30 employees into three self-
managed work teams. Previously his employees worked separately to stock the shelves,
answer customer questions, and checkout customers under the supervision of five depart-
ment managers. Norris believes this system did not encourage employees to find ways to
improve operating procedures and raised costs. He believes he can offer better customer
service if he changes to team-based OBs and procedures.
Norris has asked you, one of his best managers, to think about the kinds of opportu-
nities and problems this shift to teams might cause. He also wanls your frank opinion of
his idea and whether you think it will increase the effectiveness of the company. When
you meet with him tomorrow, what will be your response to his ideas? Why?
28 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR
OUTSOURCING
TIle prlXe" of emplo)ing
I"'<.>ple. group,. or • ,pe(";.Ii'1
o'l!"''''alion 10 perform a 'p'-xili"
lype of wor~ aeli\ il)' or funclion
l/w "at prev;OlI'ly performed
in'ide ao \lr1'."nital ",n,
FREELANCERS
l\-<)pl<: who cont,acl w[(h an
nrgan "",,on 10 pcrfonn 'rccific
"',."K,-".
Frc.::-traoc around the globe
cUi' bOlh w~p. a.t lhe p"">ple
of Maurilius. a liny isltmd otl
lbe coasl of Afric~. d is("{)\'crcd.
For lwo occades. Maurilius'
cilizens m~nufaclur<.'<! dmhing
for U.S, dOlhing 1~lx:ls
OOIS<lUKing lhe wurt. !lui lhe
wumry"s prospcrily unmvclcd
when lowcr-cr"'l pn>du<:cr:s li~e
Chinn ,md Vieln~m c:'pwrcd
mud, of lhe bu~iTlcs,.
ers. Part-time employees pose a new OB challenge bc\:aose they cannot Ix 11lO1iv,ued by the
prospect of rewards such as job St:cunly. prolllOtlUn. or a career within an organizalion.
Finally. also as a way to reduce costs. org:mizations are also engaging in an increasing
amOUIH of oUlsourcing. Outsourcing is moving a specific type of work activily. proccss.
job. or function th,ll was performed inside an organization 10 outside. where it is carried
oul by another person or company. AI the indil'idual level. for example. companies may
outsource particular kinds of jobs sllch as IxKlkkeeping. nlmplller support. and website
dcsign 10 rreclllncers~independent specialists who COlllraet with an organization to
petform specific tasks. They oflen work from their homes and are connected to an organi-
zmion by eompuler. phone. fax. amI express package deli\'ery. Fn:elancers are simil'lr to
cOll1ingcnt workers except that they do not physically work insidc a company.
Sometimes an organization outsources a whole value·cremion adivily such as manufac·
turing. m'lrkeling. or lhe management of its IT to a specialist comp:my that can perfoml it at a
lowercoSllhan Ihe organizalion itsclf.ln this case. an organizalion stops performing lhe value-
creation itself. For example. a company may hire a specialist IT company to manage its
computer nelwork or a nalional diSlribulor to deli\'er its products to Slores or a specialist in
customer service 10 manage its customer call cemer, Dell. for ex:ullple. employs IODOCl pe0-
ple in India to manage rLXjuCS1S from customers around Ihe world for help wilh purchasing or
operating thcir coillpulers. It announced in 20Cl6 that it woold be adding 5.000 morc.69 The
huge wave of outsourcing by U.S. companies has resulled in the loss ofhundrcds of thousands
of call-center jobs atllUme. MiJlions more jobs have lx'Cn lost as comp;mies h:lI'e otltsourcoo
loci r manufacturing oper.ttions to companies in countries Iike Mc.'\ico. China. :Uld Malaysia.
While OlIL'>Ourcing has helped to change the nature ofthc employment rclationship in the
Uniled Stales. il is also having dramatic effects abroad, Today. many of the counlries that
gained the jobs IOSl by U.s. workers are experiencing the same problem themselves as other
countries usc their still/oH'cr labor costs 10 compete for manufacturing contracts. Take Ihc
exaJl1plc of Mauritius. a tiny island offtoc coast OfSoulh-East Africa famous for its white sand
beaches. 10 the 1980s 10 aJle\'iale its enormous roveny. Mauritius creale<! a 10w·laX export
lOne to elK"Ourage foreign c10lhing comp,mics to locale there and employ ils citizens who at
Ihat time worked for 10 celllS an hour or Ic.\s. For many ycars Ihis worked ,",'ell for the island.
tile incollle of its people dimlx:d stccply. and it Ix:camc onc Oflhc most prosperous countries
in Africa. More and more COmll1l1lies such as G:lp and The Limited had lheir clothing made in
Maurilius, and by 2000 it exported over $1 billion of low-cost c10lhing to the United Statcs.
After 2000. however. the picture was nol so rosy on Maurilius because ils lalxlr coslS
had increased and coulllrics like India and China. whose hillions of people still arc paid
some of the lowest wages in the world. now had the lowest costs. The resul1 was that U.S,
clothing companies shifted lheir business to India and China aOO unemployment inl:rease<l
 CHAPTER t • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 29

dnunntically in Mauritius. which has learned lhe hard way lhat g10b.11 competilion is a tierce
prUl:ess. And. unlike lhe Uniled Stalcs. whose vibranl <:conomy creales new jobs. its people
are struggling 10 copc wilh lhe new reality of a 10w-coSl global economy.
Downsizing. empowered self..managcd teams. the employmelH of pan.. time cOlHingent
workers. and outsourcing are ways in which organiZ<uions are changing OBs and procedures
10 baltic c!fectively agamsl domestic and glolxd compctilors. Se"eral OB researchers Ix:lieve
lhat organization, in the future will increasingly Ix:come l:llmJXlscd of a "'core" of organiza-
lional employecs who are highly tmined and rewardcd by an organization alld a "pcriphery"
of jmn-time employees or freelancers who are employed when needed but will nel'er Ix:come
lrue "organizational employees," The challenge facing people loday is 10 conlrnually
improve their skills and knowledge and build their human capital so that they can secure
well-paying and smisfying elllploymcru cilher inside or outside all organi:wtion.

Summary
DB is a developing field of slUdy. Changes in lhe environment conslanlly challenge orga-
nizmions and their owners'. managers'. and employees' abilities to adapt and change work
Ix:haviors and procedures to increase lhe effectiveness with which they opemle. [II this
chapter. we made the following major points:
[. Organizmiolls exist 10 provide goods and services thm people wanl. and lhe mnOlllH
and quality of Ihese goods <lnd services are products of the Ix:haviors and perfor-
mance of an organization"s employees.
2. OB is the study of the many factors thm have an impact on how people and groups
ael. think. feel. and respond 10 work alld organi;wlions and how organiz,ltions
respond to Iheir erwironments. OB provides a SCi of lools-theories and concepls-
10 understand. analyze . descrilx:. and manage alliludes and behavior in organizations.
3. The study ofOB can improve and changc individual. group. and OB to attain indi..
vidual. group. ,Ind org,lnizmional go,ds.
4. OB \."an be analyzt-d:lt lhree levels: lhe individual.lhe group. and the organization as
a whole, A full underslanding is impossible wilhoul an examination of the factors
that affect behavior at cach levcl.
S. A signiticantlask for an organizalion's managers and employees is to usc the tools of
OB 10 in\."rease organizational effecl ivene" -lhal is . an org,ln izalion's abi Irly to
a('hieve its goals,
6. The activities of most organizations can be modeled as an open system in which
~ln orgill1ization takes in resources from ilS exteroal environment and convens or
lransforms them inlo goods and services that arc senl back to that environment.
where euslomer, buy them.
7. Changing pressures or forees in the social and cultural. global, technological. and
employment or work environment pose many challenges for OB. and organizations
must respond elTectively to those challenges if lhey arc 10 survive and prospcr.
S. Two major challenges of importance to OB today from the social and ('ullural
environlllellt are those that derive from a breakdown in ethical values. social
responsibility.. ,md from the increasing diversity of the workforce.
9. Three imponanl challenges fadng organizmions from the global environmenl arc to
appreciate the differences thm exist between countries: to benefit from this new
global knowledge to improve OBs and procedures: and 10 use globallearnillg to find
Ix:l1er ways to respond to global crises.
10. Changes in the K"Chnologi\."al environmenl. and p.1ni\."u[arly advances in information K"Ch-
nology (IT). are also having im[XlT1am effects on OB and procedures. IT has impnwed
effectiveness by helping an organization improve the quality of its products. lower their
costs. and by promoling creativily and organizational learning ,1I1d innovation.
II. Many changes have also been laking place in lhe employmenl or work erwironrnenl,
and imponant developments that have affected OB include a shortening employment
relationship Ix:cause of downsizing . the growth in the nUllllx:r of eomingent or
lemporary employees . and global olltsourcing.
30 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR
Questions for Discussion and Review
I. Why is ~ working knowledge of 08 important to
organizalions and thcir cmployccs'!
2. Why is it imponall1to analyze the behavior of
individuals. groups. and the organization as a
whole in order to undcrst~nd 08 in work sellings'!
3. Whm i, '1Il open systcm and why is it import~1ll
for an organization 10 be open 10 iI!, envimnmem'?
4. Select a restaurant. supenn~rkct. church. or some
other fmn iIi~r organ iZ~lion. and Ihink aboul whicl\
kinds of OBs and procedurc, arc tl\c most impor-
tam dctcrminam of its effcctiveness.
08: Increasing Self-Awareness
Behavior in Organizations
Think of an organilation~a place of employment. a club.
~ sports team. a musical group. an ac~dcmic socjcly~thal
providcd you with a signiticant work cxpericncc. and
answ'er thc following questions.
I. Whal are your aniludes and ft-clings toward the
organizmion? Why do you think you havc these
mtitudcs and fedings')
2. Indicale.on a scale from one 10 Icn (wilh one being
nUl ~t all and ten being extremely). how hard you
worked for this organization or how' intensively
you participatcd in the org'U1izalion·s activities.
Explain the reasons for your level of panicip~tion.
3. How did the organization communicatc its perfor-
mance cxpcctmions 10 you. and how did the orga-
nization monitor your perfonnance to evalu3le
whether you met Ihose expeclations? Did you
5. Whal arc org,lIlization,11 ethics. and why is ethics
such an important is,uc facmg organizalions
today?
6. WI\y is divcrsity an imponam challcnge being
organizations tooay?
7. What special challcnges docs managing behavior
on a global scale pose for organizations?
8. In what w~ys does IT changc OBs and
procedures'!
9. Why has thc employmcnt relationship been
shortcning?
receive more rewards when you performed at
a higher Icvel? WI\at happened whcn your perfor-
mancc was nOI as high as it ,hould have beeo?
4. How concerned was your org~oization with your
well-being'! How was Ihis concern rcfiecled? Do
you think thi, Icvel of conccrn was appropriatc?
Why or why not?
5. Think of your direct supervisor or Icader. How did
Ihis person's leadership sty Ie alfl'<:t your aniludes
and behavior,?
6, How did thc al1itudcs and behaviors of your
coworkers affect yours. particularly your level of
performance'!
7. Given your answers 10 thcsc questions. how would
you change OBs and procctlures to make this
organization more effective?
 CHAPTER t • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 31

Small Group Breakout Exercise

Identifying an Open System
Form groups of three or four people and appoint one mcmber as the spokesperson who will
communicate your conclusions to the rest of the c1ass_
I. Think of an organization you arc all familiar with. such as a local restaurant. store,
or bank, Once you have l:hosen an organization, model it from an open-systems
perspel:tive, For example, idem ify its input, conversion, and output processes,
2. Identify the spceific forces in the environment that have the greatest oppol1unity
to help or hurt this organiz'llion's ability to obtain resources and dispose of its
glx)(]s or services.
3. Using thc three views of effectiveness discussed in the chapter, discuss which
specific mcasures are most useful to managcrs in evaluating this organization's
effectiveness.

A Question of Ethics
Ethical versus Unethical Behavior
What factors determine whether behavior in organizations is ethical or unethic'al? Divide
up into small groups, and each JX'rson think of some unethical behaviors or incidents thm
you have observed in organizations. The incidents could be something you experienced as
an employee. a customer, or a client. or something you obsened informally.
Discuss these incidents with other group members. Then. identify three important
criteria to use to determine whether a pal1icular action or behavior is ethical, These criteria
need to differenti.lle between ethical and unethical OB. Be ready to describe the incidents
of unethical behavior and criteria with the rest of the class.

Topic for Debate

Now thm you understand the nature of OB and Illanagelllent, and the kinds of issues they
address. debate the following topic:
Team A. The beSt way to mcrease org;mizmional effectiveness is to clearly specify eal:h
employee's job responsibilities and then to closcly supervisc his or her work behavior.
Team B. The best way to increase organizationnl effectiveness is to Pllt employees in
teams and allow them to work out their own job responsibilities and supen'isc ench
other.

Experiential Exercise
Ethical Issues in Globalization
There arc many laws goveming tile way eomp.1nies in the United States should act to pro-
tect their employees and to treat them in a i;tir and equitable manner. However, many coun-
tries abroad do not have similar laws and trem emploYL'Cs in ways lhat would be seen as
unacceptable and unetllieal in tile United Slatcs.
Either indiv iduall y or in sm:111 groups. think about the followi ng issues ,lnd answer the
questions tlley raise.
I. In Pakistan and India it is common for children as young as eight years old to
weal'e lhe hand-madc carJX'ts and rogs tllm arc exponcd 10 Western countries_
Many of these children work for a pittance and arc losing their eyesight because
of the close attention they have to de"ote to their tasks. often for twelve hours a
32 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR

day. Do you think these children should be employed in such occupations'! Do

you Ihink it is ethical 10 buy Ihese mgs?
2. Mill ion, of U.s. worker, in manufacturing industries have lost Iheir jobs bL'GlUSC
companies have moved their operntions to low·c()<;[ countries overseas. There.
m:my women and children work long hours every day for low wages. perfomling
the jobs that used tu be dune by workers in lhe Uniled States, Do you think il is
ethical for mu hinat iOllals to operate jU>1 Oil the basis of where they can obtain low-
cost resoun:es~ Do you think laws should be passed to prevent glOMI companies
from reloc,lting abroad to protect the relatively high-paying jobs of U.S. workers')

Nevv York TiITles Cases in the News

For the Avon Lady, A World Beyond Ringing Doorbell's

By Jillie BOWUiIl, NYT, Ala.\' I, 2(}()(j. p. F.IO.

LUZ STELLA BONGIOV[ has <I job that
many people would envy, After 12 years
in the ~ame busine~s, she supervises
more' than 100 employee' and log, about
50 hours a weeL coming into work 'H
10 a.m, and often working at home. She
has been sent on junkets to Haw:lii. Las
Vega' and Poerlo Rico, Her <'almngs
lOtal nearly S 170JXlO a year.
Her job title: AHm lady.
The fol k~ at Avon. however. would call
h<'r a ,ale, n'presentati"e, the updated
term for the 46SiKXl people in the
co",pany's work force gennating more
th:1ll 95 percent of S'lles revenue. Btll to
the public, "A.,(m lady'" has ,tuck. evn
since the company's sales representatives
b..'g,m ringing dOOlocll, in 1886,
Ms. Bongiovi i, an nample of how
to ,ucceed the' old-fa.,hioncd way: she
~tarted smalr. workd hard and took
advantage of h,:r natural business sense to
build a living slowly by selling Avon to
htr ,'xttndtd net .....ork of family, friends
and a("qoaintances. But now. Avon is
trying to force itself to ,ttp into the
future-and bring the sales reps wilh it.
lUming its distinctly mid·20th-cent"ry
8ak8 model into a 2 I.'l-('CIl1Ury \'CCl'ion.
[n fact. A"on ..... ill announce a new
iniliative this month to en<'ourage more
busines> to mOW to the Internet, S:lid
Thomas Kelly, Avon', 'enior vi<'e
president for dlteet sell ing 111 the United
States ""We really arc guns hlazing with
our excItement about the Internet:' he
said. '"We'n' n"wing from ju,t ordering
online to supporting their cfforls to sell
online.""
The ("ompany is teaching its sales reps
10 file <'uslOmer ordcr' online: before.
rep' .....ould phone in their orders. Now.
more than SO p..;reent usc Ihe Int"rnet to
do busine". A>1m is abo en("our~ging its
sales reps to SCi up individual page, on
the <"mpany's Web sile for C0810m("rs to
mak" onlin" j)<lrdascs, For in~tanee, by
lyping in thdr ZIP <~Jdc.("u'lOmcr will he
directed to their sales rep's page.
But Avon i, ,till holding on to Ihe
fundament:ll pnrt of ils busines8 model-
a 'ale' force that i, paid only by
commissions. without salaries, health
<'ar~ or beneflt~. Signing up i~ simple: a
potential rep pays a SIO fC(:. fills out:l
foml "nd receives a slarter kit. Thorn it's
up to the newly minted representati"e to
go out 'md garner sales. Thai person is
also rc,ponsiblc for day-to-day opcnlting
expen>es ,tnd pnllnOlions.
M~. Bongiovi pay, for print :I(h'erti'iing
from her owl! budgd. For example, if a n,p
WIUllS business cards printed with her
namt, soc' pays f", themoc'rsclf. Asked 10
deiillC the employment st:,tus of sales rep,.
an A\'{)I\ spoke~wolTlen re.[Xmded. "Stlf-
employed:'
On a re<'tnt morning. r.-h. Bongiovi
wa, ,i11ing behind a de~k in her
offi("e in Bu~hwick, ..... hieh double' as
a retail space Wilh a 'ill'refront on
Myrtle A"enue, where she sells Avon
producl'i and perform, (}("casiona1 walk_
in makeovers. Avon began for her as it
had for many women_a 8ide job
for st'ly·al-home mothers who .....ant to
cam a little eXIra money. (The rep8 arc
predominantly female.) M,. Bongiovi
grew up in Colomhia. Her father owned
a sup~rmarket, and she often watched
him working in the 'tore and fama8ized
about hero..... n fulUrc.
'"I used 10 dream, ·Oh. I wanlt" have
a bminess when I grow up:" she said.
Marriage and th"-,,, chi kJrcn imervencd.
but one d:ly she sigllCd up for Avon 011 an
whim, getting her first order nK"tly fmm
fmnily and friends in her neighborhood.
'"".1y fir,t order was S500, and I
thought, ·Hmm. thi' is good: '" s<lid
M,. Bongi"vi. who w"'~ a neatly ("ut
blazer, "iolet-framed eyeglasses and
gleaming red nail poli'h.
Soon. she began recruiting other
people to become' 'ale' r~pre",ntati"es in
her ""down line:' Avon's term for 'ides
reps' own staff members whom thcy
personally recruit and sl'pervisc.
M,. Bongiovi', saks pitch to pOle'nti,,1
rep' rencets her OWI1 life story. When she
first 'larted ",I ling Avon, she had ehild"..n
:,t home and no in("ome of her own. Now
she OWnS a six-unit apartment building ill
Brooklyn and is going through a di\'on:e.
divide up aS8el'i and ill<:ome.
When talking to potential reps, she
'aid, "I t~1I Ihem: 'Wh:lt aboul if your
husband leaVe<; you'! What if you don'l
h'I"e 'I husband anymore?' I like to help
them. I like to give thelll SUppoM. I teach
them ho", 10 Cam money ..... ith A'·OJI.'"
 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 33

It is a pit('h lhat falh on wekom(' cars
to Mr. Kelly, the Avon ex«utive, It l11<1y
be partly a mmpal1y pilCh with a f"mini,t
slant, but lund'lment:t1ly, he si,id, the
busine" will always be about ser,'ing the
needs of women.
"Initially. Wb'lt dl'l>Ye uS to this place
is that WOmen would like a signifteamly
greater e"m ing opportunily," be s"id,
But the i'bility to earn money
throu)!h A",," may be gellin)! more
difficult as the one-on-one sales modcl
goes out of style, How many womt'n
loday would buy cosmetics from a
door-lo·door st'lIer? And in an er"
when In,,ny women buy m"keup at
sUpt'rstores like Sephora or buy online.
how docs the Avon s"les rep stand a
,'hanee?
i\bry Lou Quinlan, lhe ('hief
e,xeeuti\'e of Just Ask a Woman, a
marketing company in New York, said
she thought that many women were too
busy to Sil down and talk to salcs
representat,,·es.
Slill. "iI's amazing how women will
make the time for I'lce-to·faee, woman-
to-woman event.' when they want to."
she s'lid, "You do tend to buy more
wben you're buying fa('e to face witb
someone:'
/T.h. Kelly said lbat the indi"idual
sales representative was a retro image
that Avon WaS IKlt willing to let go of,
"1 reilily feel im obligation. like we're
a publi(' institution:' fie s"id.
Besides milking ilself more t«h,
profi('ient. Anm has also lried to shed its
fusty image by taking on lhe college
market. In 2003. the ('omIXmy introduced
Mark. a cosmetics line i,imed at teenagers
and WOm<:n in their 20's.
The pl"n was lwofold: to introduce
Avon to )'oun)!cr women who eonside ....'d
",id.
lhe br.lIld gra,",!tnother lerrilory: "fter
the"" women were establish",j eustomCTS,
encouraging lhelll to become sales reps
them",,'I,·cs.
Gyda Ardcr. 26. an aCtress who lives in
,\lanhallan. is one such wom",l. She
heea"'e aware of A'un lhrough a television
commercial for Mmk. While visiting
avon.com. and buying more than SI50 in
Mmt nleR'handisc, shc noticed all online
ad "" lhe site lhal Off"R'd 40 rc=m off a
pureh"sc. if you signed up to oc Wl A"on
",les ",presentative. M,. Art.Jcr signed up.
"LiVlllg HI Manh"uan. you don't run
into a 1m of Am)) ladieS:' she said. BUI
after she ocgan pitch,ng prodocts to her
friends "nd colleagues in ]0..."] the"ter,
shc fOlmd herself wilh a part,time job.
"Th('re have been pt'riods where iI's
becn 100 pt'rccnt of my income:'
/T.h. Arber said, <'iting the unpre-
d ict:<bi lity of her act ing work.
Ms. Arbcr "j,o giv" home parties
on("e or lwice " month. inviting friends
and a<'<juaimUl\('es,
11 is" t«hniquc th~l\ has heen bol'l'O"-'ed
by retailers mudl mOre fashionable lhan
A"on, T1lc Body Shop (r«ently :lCquircd
by L"()reaJ) has a feature on its Web site.
thebodyshop.colll, ~IlIowing customers
to host a "girls' nite out'" to scll produels to
friends al homc. T1lc Body Shop has also
begun a scrviee <'neoumgill)! cust<xners to
,ign up as "independcnt con,ultants:' "
sales model like Avon's.
Gelling advice from Avon .,ales
repr('sclltatives could be described as til<'
one-on-one co",uh"tion that m"ny
women want. albeit from a fri"nd or
acquaim"'lCe who i, considered more
trustworthy thml a stranger In " lab cOM
al a ('QsnlClics ("ounter.
"In an industry often focuscd on buzz.
the svrvice thaI Amn offers i, still abom
trust between sellers ,md consumers:'
,,,id Andy' Semovitz, chief executive of
Word of Mouth Marketing Associalion. a
tmd(' group in Chi('ago,

Questions for Discussion

1. How has the joh of an Avon I-lldy been "hanging:" For example. how have ('hanging tu,-
lOmer needs, demographics. IT. and so on affecled the job?
2. As a result of these chang"s, whm kinds of OB i,sue, must Avon's mallag"rs deal with to
nlotiv"le ill1d coordinMe ils 486.(J!Xl-slrong sale,foree today?
3. How wou Id you Ocscribe the kind of employment rclmionsh;p th"l exists betwccn A"011
and its , ..ksforc,,'1

ll!i)t ~t\U ljOtk ll!imts

"Outsourcers Struggling to Keep Workers in the Field"
By Sal"i/lla Ra;, NYT: Norem/h'l" 12, 2005,1'. CI J,

Nm long "go, Sierra Atlanti ... , an
outsoureing compimy specializing in
writing business software. did something
unusu'll.
It invited "mployees at its Hydcr~b;Id
onil to bring lheir spouses to work.
Tht'r<'. counselors off,'",d sessions 0))
beller relationship, being beller p'lrent.,
and work-home bal,mce.
Sierm At]am;... ', "Bring Your Spouse
to Work'" ~lnd "Bring Your Parel1lS to
Work" pwgrams "re "mong the new
ocncilts and striltegies outsourcing ftrms
in lndi" "T<' using to hold on to wmters
in an increasingly <'{lm!"'1 itive market for
skilled English spt'akers.
Annual rai,,,s of 10 pt'reellt or
more arc 110'" the norm in India's
S I7,2-bi lIion-a-year omsoureing industry.
11 supplies workers who write software
<'o,k, anSwer euslOmn service calls, do
34 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR

legal and equ ily research and engioc"Cring
de,ign. among othn job~. for oVCfSeaS
CQrpor~tc CUS10tners.
But de-pite rising pay. outsourc'ing
f,rms face annual attrilion rates of 15 to
.J.O percent III their Indian labor foree.
compared with 10 percent in outsourdng
companies 1Il Eastan Europe and 7.5 to
15 percent in China. according h'
lIldustry experts.
Laoor shonages and turnover
problems are nff.xting India's olha high·
growth induSirie' li~e flllaoc'ial servic·e'.
retail and airhnes. but nowhere IS il as
pnHlou'l<"ed a., in outsourcing.
Employee chum in now OtIC of the
biggest .. halleoiles for tbe Indian
outsourcing indu,try. said N'lrIdan M.
Nilckani, c'bid ex<><:utiw of Info,ys
Teehnologies. one of htdi,,'s laT);cst
out,ourcing "olllpanics. ·'Tal.. nt aC'quisi-
lion. trJnsfommtion and management arc
nilieal anc'hor, for the growth of tbe
industry:' saki Mr. Nilekani. whose
mmpany addcod 8.026 employees in tbe
quaner ended in September, [nfosys has
46,1% emplo)'ees.
Competitioo has become mOTe intensc
as demand rise, faster Ihan lhe ~upply of
trained ,,"Otters, E"en with P,1Y increasing.
Indian engineers ,ore paid a <.juarter of what
their Amerkan CQunterpans earn, which
f"'-ods lhe outSOlJR'ing hlK>m.
According 10 Nass..om. tlte OIltsoUrc·
ing indu,tf)' traoc group in India. the
country produ..es three 'nillioll college
graduates ("\'c'ry year. and .>50.coo of them
arc engmeers. "It is great rJw malerial. oot
only .lO per"('nt of lhis pool is rc"dy to
plunge str~ight in and delic-cr:' said Kiran
Kamik, president of Nasscom. Improving
the quality ofth;'t pool. Mr, Kamik said.
i, cKI th.. industry's ",\-Ii,t of c'halkng"':'
The problem of churn is cven more
'lC"ut<' for outsoun'ing <:omPimies offering
lower-skilled back-office work like call
l'cnler servic'es. Once traincd. those
workers tend to hop from job to job.
Some OUtsoul'I:ing companies in that fidd
are reponing a complete turnover of
employl"Cs in thc span of a year.
"Emplo)"ee~ could leave t""..ausc the
.. hie-ken curry ;1\ the pla..c next door is
octter or Ihe girlfriend has mo,'cd 10
another company:' said Saura,' Adhikari.
vice president for c'orpurale stmtegy at
HCL Te.. hnologics. based in New Ddhi.
another largc outsourcing finn. WhIle
growth in oUl>ourcing will ..ontinue in the
ncar future, said Frances Kar:unouzi"
researe-h dire.:tor at Ganner. the attrition
problem "will oc looked upon 'IS the early
sign' of the limits and ooundaries around
lhe IOOia model."
Even f(.....omp;llli", lhat arc ,uc~e"ful
in aurae-tlltg ne'" workers. a!lr;lion is a
.. ballengc. Palni COmpU1Cr" another
leading outsoure"'g company, ba>cd lit
Mumhai. fur c-xample, has grown from
6.(((l employees lWO yems ~'go to nearly
double that numocr now. "We- cspc.. ially
feellhe p"in when employees in Hitical
projects and pmilion' de.. ide 1<> lea,'e,"
said Milind Jadh"v. scnior vke president
for human relalions at Palni.
Sm"ller operations feel the squeeze
partieularl)' ,<'Vcrely. In Hyderabad,
bigger outsollTcing oosinesscs like the
IOOian unit of the Oradc' Corl'0mtioo ha"e
an advamage in attracling employees, So
Sierra, with rearly 1.000 wor~ers world-
wide and headqu;lMers in Fremont. Calif..
ba' bad to try more inncwati"e pmgr.. m,
to ;'llr'lCt "nd rCH'in workers.
Sierra Allanti .. has adoptc'd rclen-
tion slnl1egics like permi1ting cru.. ial
employees to ('bange job, anos,
depanments within the company. Thc
('Omp'llly al,o offcrs top pNformas
oonuscs and llexibility in work arr~nge·
ment" As a re,ull, it has cut attrition
to 16 percent this year from 22 pere-ent
h"l year, c'ompany exce·uti...,s said.
Olhcr ..om panics. 100. are embr..cing
novd "pproa('hes. The Calcutt" offi..e of
Acdaris. which has headquaners in
Tampa. Fla.. hilS a ··..heif fun oniecr"
"'hose job is to alTange employee panics
and corne up with ilkas to liven up the
workday. One re..em ",'enl was a
rosSllgolla-e"ting "olllpctitioll (rossogollas
are a local oc,scrt made from milk). At
HCL Tec!Ulologics, whidl is Ixl'\Cd in New
Delbi and ha~ 26.000 employees. Shiv
Nadm. the chief exccuti"e, said the
c~,mpany followl"" an employee-fIrst
philosophy. A few months ago. Ihe new
president. Vinl"'t Na)'ar. flew to HCL
offices aeross India 10 sh"ke hands wilh
10.000 of the <"Ompany's employc'Cs. '1<,
cclebrate reaching ~, reVClllle mlicstollC
,,-'.:entl)", the mmpany had a party for nKln'
th"'t 900 employees in the New Delhi
,ubulb, at a nightc'lub lhat ad"eniscd
Mving the ..oumry·s bigh'CSt d'llIce tloor,
At top (lU!>ourc-ing companie' lik<'
Infosys. bcllCtit p,,,kages and retention
appmad><.'s haw bcc~,me more' sopbisti-
cated, Infosys. which was the fIrst Itldi:m
cx,mpany to starl an employcc ,to.:k option
pl:m, now offers variable wmpcn<'1tion
[",..!<ag.. ' a, ,,'ell as wbat it 'ays arc'
..uning-edgc training progr.mts.

Questions for Discussion

I. Why are Indian outsoun'ing compaoics having a diffie-ult time recruiling and relaining
emplo),ees'!
2. \Vh"t are some of th~ W~IYS in which they have u..:d OB to reduce employl"e turnover?
3. What arc some possible impli .. ations for the way U.S. comPo1nies will or£anile lheir out·
SQurcing activities in the future?
 CHAPTER t • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR
Appendix 1
A Short History of OB
The sy,tematic ,tuJy ofOB began in the closing Jecades of
the nineteenth century. after thC" indufitrial revolution had
swept through Europe aoo AmeriC"a. In the new economic
dimate. managers of all types of organizations-politic<tl.
educiltional. anJ economic-were increasingly turning
their focu, toward finding bettcr ways to satisfy customns
neeJs. Many major economic. techniC"al. anJ cultural
ch<tnges were t<tking place itt thi, time. With the introdllc-
tion of ste<tm power and the Jevclopmem of sophisticated
machinery ilnJ equipmC"nt, thC" industriill revolution
changeJ the way g()()(js were pnxluceJ. p.lrticularly in the
weaving and clothing inJustries. Small workshops run by
skilled employees who produced hanJ-manufactureJ prod-
ucts (a system cillled crafts production) were being repl<tced
by 1;lrge factories in which sophisticated machines
contrulleJ by hunJreds or even thou,and, of unskilleJ or
semiskilled employees milde products. For eXilmple. raw
COl1on ilnd wool that, in the PilS\' families or whole villages
working togClher had spun mto yarn was now shiPiX'd to
factorie, where employees operateJ m<tchines that spun and
wove large quantities of yam into cloth.
Owners and managers of the new factories found
themsell'es unprepared for the challenges accompanying
the change from small-scille cmfts production to large-
scale mechanized manufacturing. MorC"oyer. many of the
managers and supervisors in these workshops and factories
were engineers who had only a techniC"al orientation. They
were unprepareJ for the social problem, that occur when
people work 10gether in largC" groups (as in a factory or
shop system). Managers began to seilrch for new tech-
niques 10 manage their organizations' resources. anJ soon
they began to focus on ways to increase the efficiency of
the employee-task mix. They founJ help from Frederick
W. Taylor.
F. W. Taylor and Scientific
Management
Frederick W. Taylor (1856-1915) is best known for defining
the techniques of scientifiC management. the systematic
stUlly of relationship> between people anJ lasks for the pur-
pose of ~csigning the work process to increase cfflciern:y.
Taylor was a manufacturing manager who eventually
lx-came a consultant and taught other managers how to
apply his sl:ientific-management techniques. Taylor belieyeJ
that if the amount of timc and effort that cach employee
expends to produce a unit of output (a finished good or ser-
35
vice) can be reduced by increasing specialization and the
Jivision of labor. the produCiion process will become more
efficient. Taylor believed the way 10 C"TC.lle the mo,t efficient
Jivision of labor could best be detennincJ using scientific-
managemem technilJues. ralher than intuitive or informal
rule·of-thumb knowledge. Based on his expcrimCIllS anJ
observmions as a manufacturing mmtager in a variely of sel-
tings. he developed four prirn:iples 10 increase elliciency in
the workplace: 70
• Prindp!e /: SlIIdy lite way elllp/oyet'.~ pelform /!wir
I(lsh. Mil/her (ll/lhe iliforllla! job knOll 'If'dMe Ilwl
empfoyees f}()sse.IJ, mid (X/X'rimelll wilh ll'ayJ of
illlpml'illg Itmr /{lIb are performed.
To discover the most efficiC"Ilt mC"thod of per-
fonning specific tasks. Taylor studied in great detail
and measured the ways differenl employees wenl
aboUl performing lheir tasks, One of the main tlXlls
he used was a time and motion study. which
invol ves the careful timing and recording of the
aClions taken 10 iX'rfonn a particular lask. Once
Taylor unJer>tood the exisling methoJ of performing
a task. he then experimellled to increase specializa-
tion; he tried differenl methods of dividing up and
cuordinaling lhe various tasks lK-CeSSary to produce a
finished product. Usually lhis mealll simpl ify ing jobs
and having each employee perform fewer. more rou-
tinc tasks. as at lhe pin factory or on Ford'scar-
'lssembly line. Taylor also soughl to finJ ways to
improve each employee's ability to perform a particu-
lar task-for example. by reducing the number of
motions employees m~lde 10 COmplele the task. by
chnnging the laYOlll of the work are,) or Ihe type of
tool employees used. or by experimellling with 100is
of diffcrcnt sizes.
• Prilldple 2: Cudify lite new mnluxlJ' off't'lfOlming
wsb imo frriw'lI mil-ii alld .Hlmdcmf opera/illS
pro;;n/llrcJ.
Oncc thc best method of performing a panieular
lask was detemlined. Taylor specified that it should
be recorded so lhat lhe proceJure, could be laught 10
all employees performing the same task, ThefiC ru les
could be used to funhcr standilrJize and simplify
jobs-essettlially.lo make jobs even more routine. In
lhis way efficiency could be increased throughout <til
organ ization,
• Pr;lInpfe J: Carefulh se/eN employees so Illalliley
/mHeH' skil/!! I/Ill/ abi/i/ieJ /Iull lIIa/i'lI ,flc n('('ds of IfIe
36 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR
/list. 11/1(/ Imill Ih('''1 /0 pt>rfonll lilt' /(1st (Iccordi"g 10
Ih(' t'sll/bUs/lt'd m/t'S alld proudll"s.
To increase specialization. Ta} lor belicl'cd
emplO)ccs had 10 understand the tasls Ihal were
required and be thoroughly trained in onkr to per-
form the tasK at the required bel. EmplO)'ccs who
coold not be traillCd to this Ievd wert' to be trans-
ferred to a job where they were able to re:lC"h the min-
imum required level of prorlCiellC).ll
• Prillciplt'~: Establish a/air or lI('('t'I'Wblt' In·t'f 0/
Iwrfarm(l/Ic~JOr (/ tcl alld ,h(,11 d('w'lop (/ ptl.'· 5)'.1'
1('''1 Ih(l/ plVI'i(/t.f 0 ""'ord/or Iwr/omKIIICt t1/)o,·t lilt
tlCCtl'Wb!(' f('I·t'f.
To encourage emplO)'ees 10 perform at a high
lC\eI of etlkicncy. and to provide them with an incen-
tive to reveal the most efficienttcchniques for per-
forming a task, Taylor advocated tlml employees ben-
efit from any gains in performance. They ~houh.l be
pllid ~l bonus ami receive somc pereentage of Ihe per-
formance gains achic\"cd through the more efficicnt
w{lrk proces~.
Ily 1910, Taylor's syslem of scicmific management had
become nalionally known and in many insllUK:eS failhfully
and fully practiced.n HQ\\.el'er. rnana~;ers in rnanyorganiza-
tions chose to implement the new principles of ;,cicntific
management sclccliwly. This decisi()ll ultimately resulted in
problems. For e;c.ample. some managers using scicnlific
management obtained increases in periormance. but ralher
than sharing perfonnantt gains 100 ilh C'mplo}'ees through
bonu'>eS as Ta) lor had adnx::ucd. lhe'y simply increa'lCd the
amount of "ork thai each emplo}ee was C'Xpectcd to do.
...'!:tn} employC'C!i experiencing the n:orp.nized wott system
flXlnd Ihal. as their performancC' incTC'ased. managers
required them to do more wort for the' "3me pay. EmplO}'Ct:S
also learned thaI increases in perfonnanee often meant
fewer jobs and a g:reater threat of layolT~. because fewer
employees 100 ere needc:d. In addition. lhe' ~pecialil.ed. simpli-
fied jobs wcn: oFtcn I'ery monotOIMlUS and repetilive. and
many employees tx:came dissatisrtt.'d with lheir jobs.
Fruin II performance perspecri\'e. (he combin;lIion of
lhe two manllgemenl pracrices-( I) :lchiel'ing the righl
mix of employee-task specialil.aliOIl and (2) linking peo-
ple and Hlsks by the speed of the produclion line-resulted
in lhe huge s~lvings in cust and huge inl'Teases in uutpul
lhat (lCcur in large, organized work SCUillgS, For example.
in 1908, managers at the Franklin Motor Comp'llly using
scientific-management principles redesigned the "ork
process, and the output of cars increased from 100 car.; a
monlh to 45 C:lrs a day: employC'C's' lOo·ages. howe\'er,
increased by only 90 percenl.J3
Ta) lor's wort has had an enduring effect on lhe man-
agC'ment of produdion systems. Manage!") in C'''ery organi-
z.ation. IOohcther it produce; goods or sen·ices. now carcfull)'
analp.e the' basic lasks thai employees must perform and try
to creale a '" ort: en"irollment thai will all(\\lo' their organi7.3·
lions to opC'Tllte most efflcienlly. We discuss this imponant
iSSlr in ChaptC'rs 6:1nd 7.
The Work of Mary Parker Follett
Much of Mary Pa!tC'f FolJelfs (1868--1933) lOo'riling about
managelllC'nt. and the: way managers should bC'hal"C tOlOo"ard
emplO)'CCS, was a response 10 her concern that Ta) lor was
igTlOfing the human side of the organization.'~ She poinled
oot thai management often OIeriooks the multitude of ways
in "hich C'mployees can comrioole 10 the organi7.3tion
when managers allow them to panicipate and exercise ini-
tialive in their e\eryday work lil'es. 73 Taylor. for example,
never proposed lh~l\ m~ll1agcrs should invoh'e empluyees in
analyzing their jobs to idcntify better ways 10 perform
lasks. or e\"ell ask employees how lhey fell :looutilleir jobs.
Instead, he used lime MId motion expert> 10 analyze
empluYL"Cs' jobs for them. Follett. in conlra,;t, argued thm
Ixxause employees know the most alxlUl their jubs, they
should be involvcd in job analysis and managers should
allow them to paniciP'lte in Ihe \\'ork-de\"elopment process,
Follen propoM'd that "Aulhurily should gu with
knowledge, .. '" helhcr il is up the line or down:' In olher
words. if employees hal"(' lhe relel'ant knOWledge. Ihen
emplo)"ccs, rather lhan managers. should be in conlrol of
the work process itM'lf. and managers should bC'hll\"e as
coaches and facilitators-OOI: as monitors and supervisors.
In making this Slatement, Follen anticip'lled thC' current
inleTC'SI in self-managed tC'ams and C'mptJ"'C'mlCnt, She
also rcomgniud the' importance of ha\'ing managers in dif·
ferent dcpanments communicate diTC(."tl} with each other
to speed decision making. She advocated" hal .she called
"cross-functioning": members of different departmenls
working together in cross-depanmenlal teams to accom·
plish projects-nn approach that is increasingly utilized
today.'/) She proposed lhat knowledge and expertise, and
not managers' formal authority deriving from their posi-
tion in lhe hierJrchy. should decide who would lead :It any
panicular moment. She believed, as do many OB
rese'lrchers today. that power is fluid and should now 10
the JX:rsun whu Clm bc~l help the organil.alion achie,"e its
g{)al~. Fullen lOok a horizonlal vicw of power and muhor·
ily, ralhcr than viewing the \'enieal chain of command as
being mosl es~ell1ial to effeclive management. Thus.
Fulleu's appro.'lch was very radical for ils time.
The Hawthorne Studies
and Human Relations
Probably l:N:1;ause of its radical nallln:, fullcu's wort went
unappreciated by managers and researchC'rs until quile
TC(."ently. Most COTItinucd to foll()\ll' in the footsleps of
 CHAPTER t • INTRODUCTtON TO ORGANIZATIONAL BEHAVIOR
Taylor and. to increase efficiency. they studied ways to
Improve various charaCleristics of the work sel1i ng. SllCh as
job spedalization or the kind, of tools employees used,
One series of studics was conducted from 1924 to 1932 al
the Hawthorne Works of the Western Electric Company.77
This research. now known as the Hawthorne studies. was
initiated as an atlempt to investigate how characteristics
of the work SClling~specifically the level of lighting or
illumination-affect employee f,ltigue and performance,
The researl:hers conduCled an experiment in which they
systematically measured employee pf(x1uctivity at various
levI." Is of ilIumi nation.
The experiment produced some unexpected results.
The researl:hers found thai regardless of whether they
raised or lowered the level of illumination. pnxluctivity
increased. In fact. productivity began to fall only when the
level of illumination dropped to the level of moonlight. a
level at whid presumably employees could no longer see
well enough to do their work efficiently.
As you Clln imagine. the researchers found these
results very pUZZling. They invited a noted Harvard psy-
I:hologisl. Elton Mayo. to help them. Mayo proposed
lInothl."r seril."s of l."xpl."riments to solve the mystery. These
experiments. known as the relay assembly test experi-
ments. were designed to invesligate the effects of other
aSpL"l:ts of the work context on job perfnrmalll:e. such liS
thl." !."ffect of thl." number and Icngth of rl."Sl perilxls and
hours of work on fatigue and monotony.7 8 The goal was to
raise productivity.
During a two-ye"r study of a small group of female
cmployl."l."s. the rescarchers again observed thal pro-
ductivity increased over time. but the increases could not
be solely atlributed to Ihe effects of clwnges in the
wort setting. Gradual! y. the rc,;e"rchers disl:overed thm. to
some degree. the results they werl." obtaining werc influ-
enced by the fact that the researchers themselves had
becomc pm1 of the experimenl. [n olhcr words. the prcs-
ence of the reseafl:hers was affecting the results bec"use
the employccs enjOyl."d recl."iving atll."ntion and being
the SUbject of study ,l1ld were willing to cooperate with the
researchers 10 produce the results they belie"ed the
researchers desired,
Subscqucntly. it was found thm many other factors
also inlluence employee behavior. ,lnd it was nO! clear
what was actually inlluencing Hawthorne employees'
behavior. Howevl."r. this particular effect-"'hich became
known as the HawthornI.' effect-seemcd to suggC),t thm
the al1itude of employees toward thei r managers affects the
level of employees' performanl:e.ln particular. the signifi-
cant finding was that a manager's behavior or leadership
approach can affect perfornmncl.'. This finding led many
researchers to tum their attention to managerial beh,wior
and leadership. If supervisors I:ould be trained to behave in
ways that would clicit cooperative behavior from thcir sub-
ordinales. then productivity could be increased. From
37
this view emerged the human relations movement. which
advocates thaI supervisors be behaviorally tramed to man-
age sulxmlinates in ways that elicit their cooperation and
increase their productivity.
The importance of behavioral or human relmions
training became even dearer to its supporters alter
another series of eXpl."riments-the bank wiring room
experiments. In a study of emplOYl.'es making lelephone~
switching equipment. researchers Elton Mayo and
F. J. Rocthlisberger discovered that the l."mployees. as a
group. had deliberately adoptl."d a norm of output restric-
tion to protect their jobs. Other group mcmocrs subjected
employees who violated this informal production norm
to sanctiolls. Those who violated group-performance
norm, and performed above the norm were call1.''d "ralC'-
busters": tho>e who perfonned below the norm were called
"chisellers:'
The experimenters concluded that both types of
employees threatened the group as a whole. Ralebusters
threaten group members because they reveal to managers
how fast the wort e,1I1 be done. Chi>ellers arc looked down
on because they arc not doing their share of the work.
Work-gmup members discipline botll ratebustcrs and chis-
ellers in order to create a pace of work that tile employees
(not the managers) think is fair. Thus. the work group's
innul."nce over oUtpllt can be as great as thl." supervisors'
influence. Sincl.' thc work group can innuence thc behavior
of its members. some management theorists argue that
supervisors should be tmined to behave in ways th,H gain
the g(xxlwill and CIXlper.ltion of emplo)"t"Cs so that super-
visors. not cmployees. control the level of work-group
perform<Ulce.
One of the nwin implications of the Hawthorne stud-
ies was that the behavior of managers and employees in
the work setting is as important in explaining thc level of
performance as the technical aspects of the task. Managers
must understand the workings of the informal organi-
zation. the system of behavioral rules and norms Ihat
emerge ill a group. whcn they try to manage Of changl.'
behavior in organizations. M,l11y studies have found that.
as time passes. groups often develop elaborate procedures
and norms that lxmd members together. allowing unifil."d
action either to cooperate with managemcnt in ordcr to
raise performance or to restrict outpUt and thwart the
attainment of organizational goals.7 9 The Hawthorne stud-
il."s demonstrated the importance of undemanding how the
fedings. thoughts. and behaviors of work~group members
and managers affect performance. It was becoming
increasi ngly I.' lear to researchers that understand ing behav-
ior in org:mizations is a complex process that is critical
to increasing pl."rformance.w Indeed. thl.' increasing inter-
est in the area of management known as OB. the study of
the factors that have an impad on how individuals and
groups respond to and act in org:mizations. dates from
these early studies.
38 CHAPTER 1 • INTROOUCTION TO ORGANIZATIONAL BEHAVIOR
Theory X and Theory Y
Scn:ral studies afler the Secolld World War revealed how
assumplions about employees' altitudes and behavior
affect managers' beha'<ior. Perhaps the most influential
approach \\;as de\\'lopcd by Douglas McGregor. He pr0-
posed thaI t\\;O different selS of assumptions about .....ork
attillloes and beha\ iors dominale the .....ay managers think
and affect how lhe-y beha\'e in organizations. McGregor
named these t.....o conlrasting sets of assumption~1beofy X
and 1beofy Y. I
Theory X
According to the assumptions of Theory X. the average
cmployee is lazy. dislikes wort;. and \\i1I1ry to do as little
as po~~iblc. Mort:O\"er. employees have lillie ambition and
wi~h to uvoid responsibililY. Thus. the m:ll\ager'~ lll~k i~ to
counteract employees' natural tcndencies to IIvoid work.
To keep employccs' perfonmlllcc ,u a high le\'el. Ihe mall-
ager must ~upervise them closely and controlthtir behav-
ior by mellllS of "lhe carmI and stick"-reward~ and
punishments.
Munagers who accept the assumptions of Theory X
de~ign and shape lhe work setting to m:uimiJ.e their con-
trol over emplo)'ee~' behaviors and minimi1.C' the employ-
CCS- cOf!trol over the pace of wort, These managers belie\'e
that emplo)'ccs must be made to do \\; hat b nece~sary for
the SllCCC'SS of the- organization. and they focus on denlop-
ing rules. SOPs. and a .....ell-defined system of rewards and
punishments to control behavior. They see lillie point in
ghing emplo)ees autonomy to sohe their own problems
because they think that the wortfortt neithc1' eXpl'l;ts noc
desires cooperation. Theory X managers see their role as 10
closely monitor employees to ensure thatlhey contribute to
the prodlXlion process and do oot threaten product quality.
Henry Ford. \\;ho closely supero'iscd and managed his
.....orkforw. filS McGregor's description of a llIanager who
I10kh Theory X assumptions.
Theory Y
In contrast. Theory Y assumes that emplo)C'C~ are nO(
inherenll) lazy. do not natural!) dislike wort. and. if given
the opportunity... ill do \\;ha! is good for the organi1.alion.
According to Theory Y. the chamcteristics of the wort SoCl-
ting determine whether employees consider woo to be a
source of satisfaction or punishment: and managers do not
need to closely control employees' bcha\ior in order to
make them perform 1lI a high \e\'el. because emplo)'C'Cs \\ ill
cxcn-ise self-l."Ol1trol \\; hen they :ire' commiued to organil.a-
tional goals, The implication of Theory Y. according to
McGregor. is Ihlll ··lhe limits of collabomtion in the orgoni-
l.ational selling :tre llOt limits of human nature but of man-
agement's ingenuity in discovering how 10 re~lize the
polenlial represented by its human resources:' 81 It is the
I11mwge(s ta,k 10 create :t work selling t111l1 encourages
cornrnitl1lenl to organ il.lIlional goals and prov ides opportu-
nities for el\1ployce~ to be imaginative and to exerehe ini·
tialil'C' and self-direction,
When managers design the organizational SClling to
reneet the as~umplions aboul anillldes and behavior sug-
gesled by 1beofy Y. the characteristics of the organil.:ltioo
are quite different from those of an organizational SClling
based 00 Thcot"y X, M3nageIS who beliC'\'e that employees
arc: moli\ated to help the org::mizalioo reach its goals can
decrmralize authority and gi\'e more conlrol o\·cr the job to
emplo)ces. both as indi\iduals and in groups, In this $d-
ting. iOOi\ idu3ls and groups :ire' Slill accountable for their
acth"ities. but the manager's role is IlOl to control employ-
ees but to pro\'ide ~upport and advice. to male sure they
ha\'e the- resources they need to perform their jobs. and to
e\'aluatc them on their ability to help the organization meet
its gools.
 PAR T 1
r.I-lAPTER Individuals in Organizations

1 r.
INDIVIDUAL DIFFERENCES:
PERSONALITY AND ABILITY

OVERYIEW

OTH}:I{ QR(;ANIZATIONALU' RELEVANT I'ERSONAUTY TRAITS

Tilt: NATUIU: 0.' AIUI.ITl'

Tm: MANMlEMENT OF AIIIUTY IN OR(;ANIZATIOr;s

SUMMAR\'

EXERCISES IN UNUERST,\NI)IN(; ANI) 1\II\NA(;lI"(; OR(;A."IIZATIONAL IlEIiAVIOR

Learning Objectives
After studying this chapter, you should be able to:
Understand the nature of personality and how it is determined by both
nature and nurture.
Describe the Big Five personality traits and their implications for under-
standing behavior in organizations.
Appreciate the ways in which other personality traits, in addition to the
Big Five, influence employees' behaviors in organizations.
Describe the different kinds of abilities that employees use to perform
their jobs.
Appreciate how organizations manage ability through selection, placement,
and training.
 Opening Case
FORGING INTO CHINA
What does it take to establish a new manufacturing facility in China?

ary Heiman, CEO of the privately held Standard Textile (0., is no stranger
to taking on new opportunities and challenges with a determination
and dedication to make them succeed. Around thirty years ago when the
small business founded by his grandfather was still selling bed sheets out of
an apartment in Chicago. Heiman convinced his father to increase Standard's
wholesale operations and open a new factory in Israel near the
Negev desert. 1 Fast forward to 2006 and Standard-a
manufacturer and distributor of textiles and apparel to hotels,
hospitals, and factories-has over SSOO million in annual
r revenues, operates in 49 countries, and has over 3,000
employees.' Standard manufactures and sells an array of products
1 ranging from scrubs, surgical gowns, and high-strength insulated
coveralls for heavy industry to bed linens, towels, and decorative
bedspreads and pillows. 3 Not only is Standard committed to
researching and developing new products to meet its customers'
needs but it is also keeping apace of the global economy.4
Around Syears ago, Heiman was convinced that Standard
should open a new manufacturing facility in Asia given the area's
booming economic growth and relatively low-cost labor. True to
his openness to new experiences and his conscientious
determination to find the ideal location for the facility, Heiman
spent a year traveling through Pakistan, India, the Philippines,
and neighboring countries, before deciding to open the facility in
Linyi, China, a relatively remote noncoastal city of 4 million half-
way between Beijing and Shanghai. Heiman committed S23
Many tutik manufacturers arnJ distributors million to open the Linyi facility and he has overcome numerous
like Standard Totilc haw opened challenges in this new venture with persistence, determination,
manuf:.e\uring facilities in China and othcr and dedication. When he was struggling to get the facility up and
Asiml countries to take advantage of
running, Heiman indicates that "Nothing, absolutely nothing,
relatively low labor costs and a booming
went right. uS Problems ranged from a heating system that didn't
Asian economy.
work for two weeks, custom machine parts made to order in
China that djd not fjt machines imported from the United States,
and polluted water to an over 15% increase in utility charges to run the
plant. Unshaken by these challenges, Heiman was convinced that China was
the place to be and he was determined to make this new venture a success. 6
Heiman's adventurousness and hard work seem to be paying off and bed
sheets manufactured in Linyi are now being shipped to the United States
and also will soon be sold in China. In addition to relatively low labor costs
in Linyi (about 40% less than they would be in Shanghai and more than 80%
less than they would be in the United States), Standard's Chinese employees
are proving to be quick learners, becoming highly skilled after just a few
weeks of training. For example, new employees with no prior textile-
weaving experience, have so excelled at tying nearly imperceptible weavers'
knots when threads snap during high-speed weaving that they do not need
to carry scissors with them as weavers normally do to snip off loose threads.

INDIVIDUAL DIFFERENCES
TIle way' in whICh J1C"pk differ
fmm each OIlier,
CHAPTER 2 • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 41
Heiman has found that Standard's Chinese employees are motivated to learn
and perform well, though they are not always comfortable taking the
initiative, which may be due to China's history of state-controlled factories?
Of course, expansions into China like Standard's are not without their
critics who fear that ultimately jobs will be lost in the United States. And
while Standard has not laid off U.S. employees and does not plan on doing
so, it is estimated that, over the next five years, the U.s. garment and textile
industry will lose around 30% of its 4S0,000 jobs. s While Heiman
acknowledges that textile manufacturing based in the United States is likely
to decline, he suggests that textile manufacturers need to focus their efforts
on R&D while at the same time being in step with the global economy.9
Interestingly enough, while Heiman's investment in establishing a
manufacturing facility in Linyi has been both his largest investment and also
the one that has caused him the most problems along the way as booming
China moves from a state-controlled to a market economy, he is convinced
that overcoming all the hurdles along the way was well worth the effort. As
he puts it, "I know the potential is simply awesome. "10
Overview
Each member of an organization has his Of her own style and ways of behaving.
Effectil'ely working with others require, an understanding and appreciation of how people
differ from one anothcr. Gary Heiman. for example. is pe~istc1H and detcrmined. qualities
thai h:1\'e conlributed to his success as CEO of Siandard Textile. In order to effectil'ely
wolt with Helm"n. it is imJXlrtant th"t Heiman's subordinates and colleagues understand
what he is like and what is imJXlMant to him.
In this chapler. we focus on individual differences. the ways in which people differ
from each other. M"nagers need 10 underst"nd individual differences bec,lUSC they have an
impact on the feelings. thoughts. and behaviors of each member of an organization.
Individual differences affect. for example. job satisfaction. job perfonnallcc. job stress. and
leadership_ Organiwtionalmembers internct with each other on a daily basis. and only if they
understand each other are their illlerJdions likely to result in high levels of S<llisfaction and
perforrn'Ulce,
Individual differences may be grouped into two categories: personal ity differences
and differences in ability. We focus on the nature. meaning, and detern1inants of per-
sonality and on the ways that personality and situational factors combine to influence
feelings. thoughts. and behavior in organizations. We dis<:uss speciFic personalilY traits
that arc particularly rclcvalll to organizational behavior. We then turn our allemion to
differences in ability. After describing various types of ability. we discuss the key issue
for managers: how ability e,l11 be managed to ensure that employees can effectively
perform their jobs.
The Nature of Personality
l'cople's personalities can be described in a variety of ways_ Some people seem to be perfec-
tionists: they can be critical. imjXltienl, demanding. and intense. Olher kinds of people arc
more relaxed and easygoing. You may h"ve friends or co-wolters who always sccm to have
something to smile alxlut and arc fun to he around, Or perhaps you hal'e friends or wworkers
who are shy and quiet: they are hard to get to know and Illay SOlllCtimcs scem dull, In each of
42 PART t • INDIVIDUALS IN ORGANIZATIONS

PERSONALITY
1lJe pattern of rekniwl)' cndurin/;
"a)', th,t a pcr.on fttkll"nb,
aoo behavc'
tocse examples. wc arc deseribing what people arc generally like without referring to tocir
specific fcelings. thoughts, and behaviors in any given situation. In formulating a gencral
description of someone. we try to pinpoint something that is relatively enduring about the
person. something that seems to explain the regularities or pallerns we observe in the way
toc person thinks. fccls. and behaves.
Personality is the pal(ero ofrelatil'ely enduring ways that a person feels. thinks. and
behaves, Personality IS <HI important factor in accounting for why employees act the way
they Jo in organizations anJ why they have favorable or onfavorable alliluJes toward their
jobs and organizations. II Personality has been shown to influcnec earcer choice. job satis·
faction. stress, leadership. lLnd some aspects of job performance.

Determinants of Personality: Nature and Nurture

Why arc some employees happy anJ easygoing anJ others intense anJ critical'! An answer
to this question can be founJ by examining the determil1allls of personality: nature anJ
nUrlure.
NATURE Pcrs01t;1llty is partially determineJ by ullturc. or biological heritage. The genes
Biologi,'al heritage. /;cneti,' that you inherited from your parents innucnce how your personality has unfolJcd. 1l
maLcup, Although spccific genes for pcrsonality have not yC't been iJemified. psychologists havc
swdied identical twins in an attempt 10 discover the eXlelll 10 which personality is
inherited. 13
Because idemical twins possess iJemical genes. they have the samc genetil: Jelermi-
nalllS of personality. Idl"ntical twins who grow up togC'ther in thl" same family havl" the
same permissive or strict pal'C'nts :lnd sintilar I ife experiences. 1f 1I1e twins hl\\'e simi lar per-
sona
ities. it is impossible to identify tlte source uf the similarity bel:ause they Itavl" not
only the same genetic makeup but also similar life experiences.
In contras\, identical twins who are separated at hirth anJ raiseJ ill differcnt settings
(perhaps because they arc adopted by different fatnil ies) share the same genetic material
bllt often hllve very different life experiences. Evidence from research on sepamled iJen-
til:alt,,'il1s and other s\llJies suggcsts that approximately 50 pcrcclll of the variation we
observe in pcople's personalities can be auributl"d to naturc-to gcnetic factors (sec
Exh ibit 2.1). t~ Th us. ,Ihout hal f of 1he \'l\ri ation we observe in employees' personal ities
til organizations reneCls the Jistinl:tive ways of thinking. feeling. and behavmg they
NURTURE inheriteJ from their parents. The other 50 percent renects the innuenl:e of nurture. ur
I.ifc cxpcrien,e, lift." experienccs.
Person,llity develops over time. responding to the experiences people Itave as chil-
dren anJ as adults. Factors such as the strictness ur permissiVcness of a I:hilJ's parents.
the number of uther ('hilJrcn in the family. the cxtent to whil:h p,lrents anJ teachcrs
demand a lot from a child, success or lack of success at making friends or gelling and
keeping a job. ,Ind even the culture in which a person is raised ,lnd lives as an adult arc
shapers ufpersonality.
Bel:attsc about half of the variation in pcople's pcrsnnalilics is inherited fmm thcir
parents and. thus. is basil:ally fixed at birth. it comes as no surprise thm personality is quite
slable over periods of lime ranging from 5 to 10 ye,lrs, This docs not mean lhat personality
cannot change; it means that personality is likely tu change only uver many ycars. Thus.
the impan of any spel:ifte work situation or crisis Ull an cmployec's persollillity is likely to
be felt only if the situation continues for mallY years. An important outcomc of this fact is
thaI managers should not expect to change employees' personalities. In facl. for all pmcli-
I:al purposes. managers shuulJ vicw employccs' personalities as rclauvely rixcd in the
short run.

EXHIBIT 2.1
Natu~ Nurtu~
Nature and Nurture: BiologICal heritage life expenenc..
The Determinants of
Personality
 CHAPTER 1. • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 43

Personality. nevertheless. is an imporlant individual difference lhat managcrs and

other organizational members need 10 lake into account in order 10 underSland why
peuple feel. think. :md ael as Ihey du 10 organizations. For e;o;ample. realizing Ihal ,In
employee complain, a lot and often gel, up,et because of hi, or her personalily will help
a manager deal Wilh this type of employee. especially if the employee's job performance
is aeeepl'ible.

Personality and the Situation

Because personality accounts for observable regularities in people's altitudes and
beh'IViors. it would seem reasonable 10 assen thai il would account for such regularities
at work. A substantial budy of litemlure in psycholugy and a gro.....ing sci of studies in
organizational behavior suggest that persona lily useful for explaining and predieling
how employees generally feel. Ihink. and behave on the job.l.\ Pcrsonalily has been
shown 10 infiuence several work-relalcd allilUdes and bch'lViors. including job salisfac-
tion (Chapter 3). the ability to handle \\"{)rk-related Slress (Chapler 8). Ihe chuice uf a
career (Chapter 8). and leadership (Chapter 12).16 Because of personality. some people.
like Gary Heiman in the opening case. arc very conscientious about most lhings lhey do
and. lhus. penonn al a higher level1han do those ..... ho arc nOI so conscienlious. as we
discuss later in this chapter. t?
However. in addition to personality.lhe org;mizational situation also affect, work ani-
tudes and behaviors. In SOllie organizations. there are slrong situational CQnstrailJ1s and
pressures (such as job requiremenls or strict rules and regul,llions) Ihat force people to
behave in a cerlain way. regardless of their personalities.l~ For e;o;amplc. an employt'C on
an assembly line manufanuring bicycle, must put handlebars on each bicycle that passes
by. A bike passes by e\'ery 75 seconds, and thc employec has 10 be sure lhat lhe handlebars
are properly attached 10 euch bicycle within Ihat lime frame. It doesn'l mailer whelher Ihe
employee is shy or outgoing; regardlc,s of his or her personalilY. Ihc cmployee has a spe-
cific ta,k 10 perform day in and day out in the same manner. Because the employee is nO!
free to vary his or her behavior, personality is nOl useful for understanding or prediCling
job perfomwnce in this situalion.
Consider ,mother e;o;amplc. Employt-es at McDonald's and olhcr fast-food restaurants
follow clearly specified procedures fnr preparing large quamities of burgers. fries. and
shakes and scrving lhem to large numbers of CUS10mers. Because each employee knows
exaelly what the procedltreS arc and how 10 curry them oul (Ihey arc spelled out in

When there are slrong situational

prc"urcs to perform specific
behaviors in a ccn"in manner. as
is th<.· ease on Ihis ,,,sembi)' line,
person"lit)' m;'y not be a good
prcdidor of on-thc-job behavior.
44 PART t • INDIVIDUALS IN ORGANIZATIONS

a detailed manual). the food is always prepared in the same manner. regardless of the
employees' personalities.
As these Iwu examples show. in organizations in whIch situational pressures on
employees· behaviors are sirong. personality may not be a good predidor of on-Ihe-job
behavior. Whcn situational pressures arc weak. however. and employees havc morc
choice about how to perform a job. personality plays a more important role. and what a
person can put into his or her job performance will somelimes depend on the kind of
person hc or she is. For instan,'c. a stalewide English <.:urrkulum requires English
tcaehcrs to tcach Shakespeare's M(/,.b('l!I to high-school seniors. but thc curriculum
does not specify exactly how the play is 10 be taught. A teacher who is outgoing and
has a flair fur the dramatic may bring the play ,tIld its themes 10 life by dressing up in
period <.:ostumes and acting oul scenes. A te'Kher who is less oUlgoing may simply ask
studcllls to lakc turns reading aloud from the play or ask them to write a paper on how
Shnkespeare reveals a Ceri<lilltl1eme tl1rough the pl,ly's dialogue and actioll. Both teach-
ers are fullowing the curriculum but. as yuu c.lIl see. their indIvidual persunalities affect
fUHI· they du so.
By now it should be clear to you that hoth personality and situmional factors affect
org,lnizmional behavior. 19 It is the interaction of personality ,md situational factors that
deteffilines how people think. flOCI. and behave in general 'lIld. specifkally. how they do so
withill an org.mizatioll (sec Exhibit 2.2). Robert Greelle. for example. is an exe,'utive in an
advertising agency who is responsible for coming up with advcrtising campaigns alld pre-
senting them to the agency's clients. Greene is a creative. achievement-oriented person
who has good ideas and has developed the agency's most suc<.:essful and lucralive cam-
paigns. But Greene is also shy and quiet and cannot always effedively communicate his
ideas to diems. Greene's personality alld the situation eombille or interal;t to determine his
overall performance. He performs well when working on his own or with his tearn to
de"elop advcrtismg campaigns. but in interpersonal silliations. su<.:h as when he prcscnl~
his campaigns to clients. he performs poorly. A manager who understands this inter..lction
can eapitaliw on the perSOliality strengths (creativity and achievement orientation) tltat
propel Greene to develop successful ,ldvertising campaigns. The mannger can also guard
against the possibility of clients having a negative reaction to Grceoc's shyness by teaming
him up for presentations with a gregarious cxecutive whosc strong suit is pitching cam-
paigns to elients_ IfGrcelle"s manager did not understand Itow Greene·s personality ami the
sltualion interacted to shape Greene"s performance. the advertising agency might lose
clients because of Greene·s inability to relate to them effectively and convi nee them uf the
merits of his campaiglls.
Effectivc managers recognize that the various situations and personality types interact
to determine feelings. Ihoughts. altitudes. and behaviurs at work. An undcrstanding of
employees" personalities and the situations in which they pert·orm beSt enables a manager
to help employees perform at high levels and fccl good about the work they are doillg.
Furthermore. wlten employees at alllcvels in an org,lIlizatioli understand how personality
and the situation interac!. good working rel,ltionships and urg:lnizational effectiveness arc
promoted.
As profiled in the followi ng Focus on Diversity. thc interactions of personality and sit-
uational factors oftcn infiuenee the kinds of positiollS and organizations peoplc arc
atlr.l<.:tcd tu and. ultimatcly. their effectiveness.

EXHIBIT 2.2

The Intera(tion of F..hngo

Personality and Pe,ron.hty Thoughts
Situational Fa(tors A""udeo
Beh.\Ilor
 CHAPTER 2 • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 45

Focus on Diversity
Liane Pelletier Transforms Alaska Communications

When a recruiting firm contacted Liane Pelletier to see if she was interested in becoming
CEO of Alaska Communications Systems (ACSl, Pelletier wavered, but not for long.'o At
the time, Pelletier was a senior vice president at Sprint where she had worked for the past
seventeen years 21 Why was Pelletier attracted to the position at ACS) And why would
this Connecticut-born executive who loves to travel consider moving to Alaska, which
makes travel a time-consuming endeavor since it can take over 3 hours Just to fly from
Anchorage to 5eattle?12
The combination of Pelletier's love for adventure
and new experiences, the opportunity to leverage
her industry experience, and the challenge of
remaking ACS actually made the decision to head
up ACS a relatively easy one for Pelletier. Pelletier
has always had an adventuresome side-hiking
along the Appalachian trail, venturing down the
Amazon River, and, now, snowshoeing in Alaska l3
are the kinds activities she seeks out and enjoys-
so moving to Alaska appealed to this aspect of her
personality.
As a seasoned manager in the telecommunications
industry, the position at A(S represented an exciting
opportunity to revamp Alaska's largest local exchange
carrier and the only local provider who has its own
local, long distance, wireless, and Internet infrastruc-
ture. 24 When Pelletier came to ACS, she discovered
that the company was organized around products
Lianllc Pellcticr's lovc lOr advcnture. ill
combination with her ,kills and cx!",ni", rather than customers, Different divisions woukJ pro·
gained trom ycms of c.~pcricncc in vide different kinds of services to customers without
the tckxx,mmun;"ation, indust'),. regard to hO'N these same customers might be using
h:l\'c colltributed to her eft,:cti"cly other products provided by other divisions, Pelletier
transfomling Alaska C,~nmun;"ati"n, restructured A(S to focus on the customer-hO'N to
Systcms to bener SCTVe its CUStO!llCrs and
better serve customers through the multiple products
cXp'md its range of pn><!Ul·tS.
and services that A(S provides. Now, sales and service
to customers are integrated across product lines, and employees receive training so that they
are knowledgeable about all oj A(S's products.'S Customer-focused grO'Nlh and improving
wireless service are priorities for ACS and Pelletier's efforts to transform ACS have paid off in
terms of increases in ACS's earnings and stock price. 26 Clearly, the combination of Pelletier's
love of adventure, her skills and expertise as a seasoned telecommunications ex€(utive, and
the opportunity to transform ACS to better serve its customers and expand its range of prod-
ucts and services have all contributed to her effectively transforming ACSL7

Personality: A Determinant of the Nature of Organizations

Ben Schneider. n promirlCnt UrpnilAltional rcscnrcher nt the University of Maryland. has come
up with an imeICsling view of the way in which personality detemlines the nature of whole
orgnni7.mions. He calls his schemn the lI\trnetion-sclection-lltirition (..\51\) rrl.lmework 28
Seh~idcr proposes lIwt lIlC "personality" of n whole organization is J:lrg.:ly:l product of the
46 PART t • INDIVIDUALS IN ORGANIZATIONS
ATIRACTION-SELECTION-
ATIRITION (ASAj
FRAMEWORK
The i<lea th.l an organi"u;on
allract'illW -.eke!> iodi' iuoal,
"ith ,imibr I"'l'.Ooalilie, and
10"", individual, wilh "'her
tyl"" of pcrwllalilic"
TRAIT
A 'IX:<:ific <:omponcm of
flI'l'.Onal il).
personal ities of it!, employccs. He suggests that individuals wilh similar personal itics tl.'nd to he
a1tracted to an organization (m/radiml) and hired by it (seleclioll). and individuals with other
types of personalities tend to leave the organization (m/rilion). As a result of the interplay of
a!traction. sdcction. ami attrition. there is some consistenl)' or similarity of personalities "'ilhin
an organizalion. and this "typical" personality determines the nature of the organi7-ution itsc-If. 29
ASA processes operate in numerous ways. When organizations hire new employees.
they implicitly size up the e:<tent to which prospective hires fit in with the organization-
that is, Ihe extent to which their personalities match the personalities of current members.
This sizing up is especially likely to occur in small organizations. Larl)' Pliska. who heads
up Planterra. a Michigan company that sells plants and trees. hires all new managers him-
self so that he can be sure they relate to ,md support his philosophy for the company. John
Schaeffer. founder of Ihe California company Real Goods Trading. conduns most of the
final intcrvil.'wing and docs most of the hiring for his company in an attempt to find what
he calls "even·tempered" employees..lO
Wh<lt are the IInpticahons of the ASA framework'! \Ve would expect. for eX<lmple. that
people who <IfC cremive and like 10 lake risks would be attrdl:tcd to enlrepreneurial organiza-
tions and would be likely to be hired by such organi7"lltions.lndividuals who do not have this
orienlation eilher would nOI seek jobs with these organizations or '"ould be likely to leave
lhem. Over lime, ASA pTU(;esses may result in lhese organizalions being composed of large
numbers of cremive risk t;lkers who. inlurn. give the organization its entrepreneurial nature.
The cntreprenl.'urial nature of the organization. in tum. influl.'ne{'"s l.'mployccs' fcelings.
lhoughts. and behaviors and reinforces their own propensity for risk l;lking.lt is importanl to
realize Ihal although ASA processes c<ln strenglhen an org<ll1lz'ltion. they can abo lead an
organization 10 perform JXKlrly or even fail. This negative oulcomc occurs when most melll-
bers of the organi7.mion view opportunities and problcms in the same way and. as a result of
lheir shared point of vicw. are rcsistarl1lo different points of view and m,lking needed changes,
The Big Five Model Of Personality
When people describe other people. Ihey often S<ly things like "She's gOI a 101 of personal-
ily," meaning thallhe person is fun loving. friendly. ;lnd oUlgoing. or "He's got no person-
ality:' meaning that thc person is dull and boring. In fact. thl.'re is no such thing as a lot of
personalily or no persol1,11 ity: evel)'one has a specific type of personalily.
Because personalily is ,111 unportanl determinmll of how ;l person Ihinks. feels. and
behaves. it is helpful 10 dislinguish between differenltypes of personalily. Researchers
have spent considerable time and effon trying to idl.'ntify personality types, One of the
most imponalll ways th,l\ researchers have found to describe a persolwlity is in terms
of Imils. A Irait is a specific comJXlIlenl of personal II y that describes the IXlrticular lendcn~
des a person has 10 feel. think. and act in certain ways. such as in a shy or oUlgoing. crili-
calor accepting, compulsive or e;lsygoing marmer. [n thl.' opening case. Gary Heiman of
Sland;lrd Textile was described as being conscientious and open to new experiences: as
you will learn. conscientiousness and openness 10 experience are <lclually two personality
Iraits. Thus. when we speak of a person's personalily. we arc really referring to a collenion
of traits thm descriocs how tile person gl.'nerally tends to feci. think. and OChave.
Researchers have idenlified mmty person,ility trailS. and IltOSI psychologisls agn.--e thatlhe
IrallS Ihat make up a person's personality can bc organiztxl in a Ilierarchy:ll The Big Five
model of personality places five general personality traits m Ihe top of the trait hierarchy:
cxtraversion. neuroticism. agreeablencss. conscicnt iousness. and openn('s, to experience ('>l'C
Exhibit 23).32 Ench of the Big Five lraits is composed of various specific lr:.liIS. EXlmversion
(the lemlcncy to havc a posilive outlook on life). for e.\amplc. consists of specific lraits such as
JXlSilive emolions. gregariousness. and warmth. The Big Five and lhe specific tr:.lits lower in
the Iliemrchy arc universal. They can be used to describe the personalities of people regardlcss
of Iheir age, gender. race. ethnicity. religion. socioeconomic background. or country oforigin.
BICh of Ihe general and specific tmils represents <I conlinuum <llong whi<:h a certain
aspeci or dimension of personality can be placed. A person can be high. low. average. or
anywhere in betwcen on the continuum for cach trdit. Exhibit 2.4 shows a profilc of a person
 CHAPTER 1. • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 47

EXHIBIT 2.3
The Hierarchical Organization of Personality

Th. Big F..... Oponn... '0

d,m.n,ions of
E>ptri<n«
p"""n.1i'Y

Spo"fi,tr.i" An".'Y 'NO Compoten« F.nto'y

..I.,M to rh< S< If-,on"iou," <s' Sm. ightfotw. rd n<" Ord<r Action,
Big FiY< Vuln... b,lioy T.nd<r-mind.dn<" s<lf-d,,,,ipline Ide.,

S<",,,,,: AdaplcJ f,,,,,, KX McC,,,,, and P.T. Co,ta ·'Oi.",'ri",i"an< ValiJily <>f NEo-PIK f'a<Cl S<-ab.'· Ed"'''';IHIul ""t! /""rlwlogj(-ul .llro,"''''",''''1 52:
229-2-'7. Copyright Cl 1992, Rerrime<i by Sage Publicalions. hie.

who is low 011 extraversion, high on l1C"u1Uticism. about avcragC" on agreeableness and consci-
entiousness. and relatively high on openness 10 experience, To help you understand what a Big
Fivc personalily profile mcans, we describe the eXlremcs uf each Irail next. Keep in mind that
a person's stamling onthc trait could be anywhere along the continuum (as in Exhibit 2.4).

EXTRAVERSION
The teooency lO experience
po,;ti'-e cmolional 'Iale, and k-cl
go<>d abool "ne>elf and Ike ,,<>rid
an",oo <lIIC: MI,o ,aUN! p"'itiw
all""li';I)',
Extraversion
E"lral'ersion. or posith'c 'lffco::tivity. is a personality trait that predisposC"s individuals to
C"xperience positive emotional stmes and feel good <lOOUl themselves ,111d aboulthe world
around them. EXlmverts-people high on the cxtravcrsiun scale-tcnd to be >uciable. anL'C-
tinnate. and friendly. Intrll\'ens-people low Oil the extraversion S('ale-are less likely to
experience positivC" emOlional SlaWS and havC" fewer social interactions with others. At wort,
eXtr;;lverts are more Iikely than introverts to experience positive mood" be smisfied with llteir
jobs. and genemlly fccl good about the urg,miz<ltiun and thuse arolmd them. ExtTII\'CrtS also
are more likely to enjoy ,ocializing with their coworkers. They may do particularly wcll in
jobs rC'quiring frcqucnt social interact ion. such as in s;;lles and C"ustonlC"r-rC"!ations positions.
Of C"ourse, people who are low on extr<I,'ersioll can succeed in a variety of occupalions.
For example. Ste\c Case. former chairman and CEO of Amcrica Online and AOL Timc
WarflC'r. is often described as not being high 011 extraversion. 33 All example of a personality
scak that measures a person's level of e"trm-ersion is provided in Exhibit 2.5.

NEUROTICISM
The tendency lO . . petien,e
neg"I,,-, cmo(;on,,1 ,WIC' "nd
vic" <H""clf aoo (he "<>rId
arouoo one ncgati'd)': "I""
.alled ncg"lI'c aff.(t" it),
Neuroticism
In ContraSl to extraversion. ncurolio.:isrn-or ncgali\'C nfrL't'Ii\'ily-reflects people's ten-
dcncies to expericnce negative emotional states. flOCI distressed. and generally view them-
selves and the world around thC"m nC"gatively. Individuals high 011 nC"uroticism are more
likely than individuals low on neuroticism to experience nC"gative emotions and stress over
time and across situations. [I\(Jividuals who are high on ncuroticism are murc likely to

EXHIBIT 2.4

A Big Five Personality

Profile Neuro",i,m
---==::"~"'""=1blIII

A&,e<abl.ni';';'-:::::::
Con.ciemiou.n."
H'gh
48 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 2.5
Instructions: Listed below is a series of statements a person might use to
A Measure of describe her or his attitudes. opinions. interests, and other characteristics. If a
Extraversion or Positive statement is true or largely true. put a 'T' in the space next to the item. If the
Affectivity statement is false or largely false, mark an 'T' in the space.
S<",ruo: A. ·ll:lkg~n. '"Brief Manual Please answer every statement, even if you are not completely sure of
for 1he Diffe",mial Personality the answer. Read each statement carefully, but don't spend too much time
Questionnaire:' "nl'llbli,~
deciding on the answer.
manu",-"i"" Uni"<-"Thity of Mi""",,~a.
1%2. K~priuled ""II perrni"iou. _ _ 1. It is easy for me to become 7. I often feel sort of lucky
enthusiastic about things I for no special reason.
am doing. 8. Every day interesting and
_ _ 2. I often feel happy and exciting things happen to
satisfied for no particular me.
reason, 9. In my spare time I usually
_ _ 3. I live a very interesting life. find something interesting
_ _ 4. Every day I do some things to do.
thai are fun. 10, For me, life is a great
_ _ 5. I usually find ways to liven adventure.
up my day. 11. I always seem 10 have
_ _ 6. Most days I have moments something pleasant to
of real fun or joy. look forward to.
Scoring: Level of extraversion or positive affectivity is equal to the number of
items answered "True. '"

cxpericncc ncgativc moods at work. fccl stressed. and gcncrally havc a ncgativc oricntation
toward the work situation. 34 Often. thc tcrm 1I{'lIrv/ie is used in thc mcdia and popular
press tu describe a person who h~s a psychological problem. Neuroticism. howcver. is ~
trait that all nOnllal. psychologically hcalthy individuals possess to ~ ccnain dcgree.
Individuals high on ncuroticism arc somctimes more critical of thcmselves and their
perfurmancc ttwn are peoplc low on ncuroticism. That tendency may propel them to
improve their performance. As a result. they may be pani\:ularly prulkient in \:\:rtain situa-
tions. such as ones that requirc a high dcgree of qual ity control, critical th inki ng. and cvalu-
atiol!. Individuals high on neurot icism may also cxen a nccded "sobering" influellCC duri ng
group dc\:ision making by playing devil's advocate and pointing oul the negative aspects of
~ proposl'd dedsioll. Individu~ls low on neuroticism do not tend to c.\pericllce negativc
cmotions and arc not as critical and pessimistic as thcir high-ncuroticism Cllumcrpans. An
cxample of a persona!ity scale that measures ncuroticism is provided ill Exhi bit 2.6.

Agreeableness
Agrcellbknl1;S is the Imit that captures thc distinctiun between mdividuals whu gct along
AGREEABLENESS well with othcr people ;llld those who do not. Likability in gencral and the ability to care for
11Ie tendency to set ul<l"l! '''.''11 othcrs and to be affectionatc charactcrizc individuals who arc high on agreeahlcness.
"itll,"I1e"" Individuals low on agreeablcness arc ant,lgonistic. miSil1lstful.unsympatllCtie.uneoopcra-
tive. unsympathClic. lmd mde. A luw mcasure of agrceableness might be an ad,'antagc in
jobs that require a person to be somewhat amagollistic. such as a bill collcl·tor or a drill
scrgcant. Agrecablc individuals gcnerally are easy to get along with and are tcam playcrs.
Agreeableness can be an asset in jobs that hinge on developing good relll1ionships with
other people. An cxample uf a scalc Ihat mc~surcs agrl'Cablencss is providcd in Exhibit 2.7.

CONSCIENTIOUSNESS
11lc eXlCntl" "lIi<'1I ape"'''''
is cateful. '>ClUpul,IU'. and
p""",,'cnng,
Conscientiousness
Conscienliousness is thc extcnt to which an individual is carcful. scrupulous. and
perscvering. Individuals high on conscientiousncss arc organizcd and have a lot of
self-disciplitlC.3S Individuals low on oonscicntious1lCss may lack direction and self--<Jisciplinc.

EXHIBIT 2.6
A Measure of
Neuroticism or Negative
Affettivity
Soorc"C: A. Telkgcn. "Urief Manual
for the Differemial P''I'SOnalily
Que>lion""ifc:' unpubli,he<J
manu",·,il". Uniw",ity of Min",,""'a.
1982. Rcprinl.,J ,,·;th penni."ion
-
"au.
Bcing open to new c.'pcficncc~
and willing tu lah' risks ha, l'"id
off hand,omely for bill ,,,noire
Mark Cuban. the colorful owner
of the D.llas ~bvcri<;ks. Cub:m
mUlIc his fIrst million fOOliding a
cQmp'IlC' comp,my .flcr "ollcgc-
without ever h"ving taken an
infmmminn syswms d."
CHAPTER 1. • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 49
Instructions: Listed below is a series of statements a person might use to
describe her or his attitudes, opinions, interests, and other characteristics. If a
statement is true or largely true, put a ''1'' in the space next to the item, If the
statement is false or largely false, mark an "F" in the space.
Please answer every statement, even if you are not completely sure of
the answer. Read each statement carefully, but don't spend too much time
de<:iding on the answer.
_ _ 1. I often find myself worrying 8. I am easily startled by
about something. things that happen
_ _ 2. My feelings are hurt rather unexpectedly.
easily. 9. I sometimes get myself
~_ 3. Often I get irritated at little into a state of tension and
annoyances. turmoil as I think of the
day's events.
_ _ 4. I suffer from nervousness.
_ _ 10. Minor setbacks sometimes
_ _ 5. My mood often goes up irritate me too much.
and down. _ _ 11. I often lose sleep over my
~_ 6. I sometimes feel "just wornes.
miserable" for no good 12. There are days when I'm
reason. "on edge" all of the time,
___ 7. Often I experience strong 13. I am too sensitive for my
emotions-anxiety, own good.
anger-without really _ _ 14 I sometimes change from
knowing what causes happy to sad, or vice versa,
them without good reason,
Scoring: level of neuroticism or negative affectivity is equal to the number of
items answered "True,"
Con>cicntiousncss is imponant in many organizational situations and has been found to be a
good predictor of performallce in many jobs ill a wide varicty of organizalions. J6 Rogcr
Salquist. entreprellcur and CEO of the successful Calgcnc Inc. (now pan of Munsantu
Corporation). is known for hi~ aUcntion to dctails. \Vhcn trying to win U.S. NXJd and Drug
Administration (FDA) approval for his gcnctically a!lcrcd lommo. for inswncc. Salquist made
ovcr 25 trips to Washington. DC. and was relemlcss ill his clTol1s to provide thc FDA and Ollter
agcncics with all the .scicntific data he cuuld in support uf the safety of his lomatu. Salquist's
conscicntiousness paid off b<..>t:ausc the FDA agreed thaI no special labeling or tcsting would
be nccessary fQr gcnelically engillCCrcd f(l(l(!s sueh as Calgcne \ ncw tommo:17 In the opening
cnsc. it is also clcar that Gary Heiman of Standard Tcxtile is high 011 conscientioUSlteSS,
Of course. in ordcr for conscicntiuusness to result in high perform~ml'C. cmployccs nCl:d
to havc the capabilities or skills needcd 10 be high performcrs. For cxample. a recell1 study
found thal whcn job pcrformancc depends on being cffc<:tivc ilHcrpcrsonally. consciCll1ious-
ness was only positivcly rclilled to pcrfonnancc among those employecs who had high social
~ki Il~ .JS An cxamplc of. scale that mcasurc~ conscicntiousncss is prov idl-d in Exhibit 2.7.
Openness to Experience
111C last of thc Big Fivc pcrsonality traits. 01)('IllICSS 10 CXI)('ricnec. captures the cxtCIl! to
which an individual is original. Opell to;1 wide varicty of stimuli. has brood illtcrests. and is
willing tu takc risks as opposed tu reing narrow-minded :md cautious. Recall Gary Hciman's
openncss to c.xpericnce in Ihe opcning c• .sc. For jobs that change frequently. rL'1.juirc innova-
tion. or involvc considcrable risk. individuals who arc open 10 cxpericncc may havc an
50 PART I • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 2.7
Measure of Agreeableness, Conscientiousness, and Openness to Experience

Listed belO'N are phrases describing people's behaviors. Please use the rating scale below to describe how
accurately each statement describes you. Describe yourself as you generally are now, not as you wish to be in
the future. Describe yourself as you honestly see yourself, in relation to other people you know of the same
sex as you are, and roughly your S<3me age.

1 , 3 4 5
very inaccurate Moderately inaccurate Neither inaccurate nor accurate Moderatelyaccurate Very accurate
1. Am interested in people, _ _ 17, Often forget to put things back in their
2. Have a rich vocabulary. proper place. *
3. Am always prepared, _ _ 18. Do not have a good imagination. *
4. Am not really interested in others.* _ _ 19. Take time out for others,
5. leave my belongings around.* _ _ 20. Like order.
6. Have difficulty understanding abstract _ _ 21, Am quick to understand things,
ideas.* _ _ 22 Feel little concern for others. *
7. Sympathize with others' feelings, _ _ 23. Shirk my duties,'
8. Pay attention to details. _ _ 24. Use difficult words.
9. Have a vivid imagination. _ _ 25. Feel others' emotions.
_ _ 10. Insult people.* _ _ 26. Follow a schedule.
_ _ 11. Make a mess of things. * _ _ 27 Spend time reflecting on things.
_ _ 12. Am not interested in abstract ideas.' _ _ 28, Make people feel at ease.
_ _ 13. Have a soft heart. _ _ 29. Am exacting in my work.
_ _ 14, Get chores done right away, _ _ 30. Am full of ideas,
_ _ 15. Have excellent ideas.
_ _ 16. Am not interested in other people's
problems.*
'Items reverse scored: 1=5; 2=4; 4=2, 5=1
5<oring: Sum responses to Items for an overall scale
Agreeableness = Sum of items 1, 4, 7, 10, 13, 16, 19, 22, 25, 28
Conscientiousness = Sum of items 3, 5, 8, 11, 14, 17, 20, 23, 26, 29

OPENNESS TO EXPERIENCE
11>0 utcm 10 ",hll'h ~ pe,,",on j,
oriJ,1in~l.lI:l, broalJ imere,h,
i, ,,,Iling to I~lc ml,.
advanlage, For o~mless 10 e,,~riet1l:e 10 be lrJnslall-d inlo creative and innovalive behavior in
organizalions. however. tlJc organizalion muSI remove obstacles 10 innovalion. MOTC()ver. jobs
~nd and tasks tllU';! not be too closely defined so that job holders arc able 10 use their openncss ttl
experietlCC to COtllC up with new ideas. J9 Entrepreneurs. who are often ch:tr.leterized as risk
l:tkers.-lO frequenlly Sl:trl tlleir own businesses bc£ause tile large organizalions Ihat employC<l
llJcm placed ttXI many rcStridions (m lhem and gave lhem t(XI littlc reward for innovation and
risk taking. Although openness 10 cxpericucc c1carly is an advantage for entl\?prcneurs and
those perfomling jobs Ih:!t require innovatioll. org:!ni7.ations al>o ll<.-'CU pt..'Ople 10 perfonn jobs
lhal do nOI allow mu"h Opportulllly for originalilY. In addition. organizalions are sOillClimes
afr.tid 10 takc thc risks Ihal employees high 011 openness loc"perien"c may Ihrivc on.An cxam-
pic of a personality scale that measures openncss to experience is providC<l in Exhibit 2.7.
Sometimes the combination of high openness 10 esperience and high conscientious-
ness can be beneficial when employees need 10 make diffi"tlll dL"Cisions in unceT!;lin limes.
This has proven to be Ihc case for Fujio Mitarai. CEO of Canon. Inc .. as prolilcd in Ihe
accompanying Global View.
 CHAPTER 2 • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY S1

Global View
Fujio Mitarai Cuts Costs and Develops
New Products at Canon

FUJio Mitarai, Chairman and CEO of Canon, Inc, has turned around Canon's fortunes and
more than tripled its nel profits since assuming top management positions at this global
camera, prinler, fax, and copier maker over a decade ago. Mitarai has made many changes
at Canon---changes that refled his high levels of conscientiousness and openness to experi-
ence, Mitarai realized that to revitalize Canon he needed to cut costs and boost profitability.
His conscientiousness helped him to take the steps needed to make this happen: shutting
down weak businesses and di~isions, pushing employees to always be on the lookout lor
ways to cut costs, and r(Warding employees for increasing sales and profitability.41
Whereas Mitarai's discipline has served Canon well, so has his high level of openness
to experience, which has influenced him throughout his life As a child who only knew
the Japanese language and culture, he longed 10 go overseas. After a few years at
Canon in Japan, in 1966 he translerred to the company's New York office, where he
remained for 23 years, building the camera and copier business for Canon in the United
States. In 1989. he returned to Japan as managing director prior to assuming the CEO
position 42

, • Mitarai's openness to
both the Japanese and the
American ways of manag-
ing has led him to become
somewhat of a role model
' for other executives, and
he was recently named
one of BusinessWeek's
"Best Managers. "43 For
example, consistent with
American practices, he
believes in merit pay to
reward high performers;
consistent with Japanese
practices, he values loyalty
Fujio Milami. presiocm and CEO of Canoll III,' .. has tunlC<.l and, thus, is an ad~ocate
around C~"Oll 's fortune~ and more than lripkd il~ net profn~,
The many dwnges he has mad~ al Canon rcfk,'t hi.1 high kvcls of
of lifetime employment.
con>cicmiOUllle"" and opcn,IC"~ to e~p<:riellce. Rather than appoint out-
siders to the board of
directors to keep top management on track, he prefers the value-added contributions insiders
on the board can make. HCl\o'Iever, he also recognizes the need for the oversight of manage-
ment that is accomplished by empowering auditors to playa more active role in corporate
governance,44
Mitarai's openness to experience has even changed the way that Canon manufactures
its cameras and copiers. In Japan, Mitarai replaced its traditional assembly lines used for
proouction with a "cell" system. Each cell is made up of six workers who assemble prod-
ucts in a small area rather than on a long assembly line. Cell proouction has proven to be
much more efficient than assembly lines in Japan, and Canon is now implementing the
new' method in its production lacilities outside of Japan. Looking to the future, Mitarai
52 PART 1 • INDIVIDUALS IN ORGANIZATIONS

has increased Canon's spending on research and development to take advantage of the
latest scientific developments in technology to create new and better products. 4s Canon
commits around 8% of sales to R&D, has filed over 17,000 patents since 1995, and is
developing new products ranging from SED TV panels (a new type of flat screen TV) to
OLEOs (organic light-emitting displays that are brighter and consume less power than
LCDs)46 Clearly, high levels of conscientiousness and openness to experience have helped
Mitarai get Canon back on track

Conclusions
Rescnrch suggests that the Big Five traits arc important for understanding worlHclatcd
altitudes and behaviors and. thus. our understanding of organizatlonnl behavior. As we dis-
cuss in mon.: detail in Chapter 9. for example. neuroticism or negalive aff,-"Ctivity is useful
in understanding stress in thl." workplal."l.".~7 Re.scarchl."rs hnve found thm individuals high
on ncgmive affectivity arc Illore Iikcly to indicate thm thcre arc significant strcssors in the
workplace and 10 experience Slress at work. Research has also shown Ihat individuals high
on extraversion or positive atTectivily arc more likely 10 kel good'll work and be smistied
with their jobs. These people are likely (() perform well injobs such as sales and manage-
mell1. which rcqu ire soc ial interaction.4~
As you have undoubledly recognized from our discussion of Ihe Big Five trailS. Ihere
is no sUl:h thing as a good or bad personality protile. Each person is unique and has a dif-
ferent type of personal ity thm Illay be su ited to di fferell1 ki nds of organizat iOllal situatiolls.
Good managers need to understand and learn to (Ie(ll with people of all pcrson111ity types.

You're t;he Management; Expert;

Understanding a New Employee

Marty Feldman owns a music store that caters to all kinds of musicians ranging from
beginners to professionals. The store sells many varieties of music for different instru·
ments and takes special orders for hard·la-find music and instruments. located in the
heart of New York City, Feldman prides himself not only on the store's extensive musi-
cal offerings but also on his very knowledgeable staff, many of whom are, themselves,
practicing musicians. Feldman recently added a new member to his staff, Paul
Carvacchio. Carvacchio is a pianist who plays in a local symphony, gives piano lessons
to children and adults, tunes pianos, and works part-lime in the store as its specialist
pianist. Feldman continues to be impressed with Carvacchio's knowledge and exper-
tise. Recently, Feldman observed Carvacchio helping a customer who was a first-time
piano buyer; Feldman was impressed with how Carvacchio helped the customer iden-
tify a piano that would best suit her needs and budget, and the customer recently
placed a special order to purchase the piano through the store. Moreover, she signed
up for the store's maintenance and piano.tuning service. However, Feldman continues
to be puzzled by Carvacchio's seeming dissatisfaction with the job. Carvacchio period-
ically complains about small things and tends 10 be quite critical when mishaps occur
in the store. Feldman recently asked Carvacchio how things were going and if he liked
working at the store, and Carvacchio indicated that everything was fine and he had no
complaints. Yet Feldman is afraid that Carvacchio didn't tell him the whole story. As an
expert in organizational behavior, Feldman has come to you for help Why does
Carvacchio sometimes act like he is dissatisfied with working at the store when he has
indicated he likes his job and he is performing well?
 CHAPTER 1. • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY S]

Other Organizationally Relevant Personality Traits

Several other specific personality tr.tits arc relevant to understanding and managing behav-
ior in organizations (sec Exhibit 2.8),

locus of Control
People diller in how much control they believe they have over silUations they arc in and
over what happen, to them. Some prople think they have rel:ui\'ely linle impact on their
surrouodiogs and linle control over imlX)t"{ant things that happen in their lives. Others
believe th<llthey can h,1\'e a considerable impact on the world around them and on the path
their lives take. The locus-of-control trait caplures this difl'erence among individuals. 4Q
EXTERNAL lOCUS OF "Extcrnals ," or indi vidual, with an e.'l:ternal locus of cnnlml. tend to bel ieye thai out-
CONTROL side forces are largely responsible for their fnle. and Ihey see lillie connection between
~"ri~, peopl~ Whll believe Iheir own actions mtd whal happens to them. ··Internals:' or individuals with an internal
thai fate, IUL~. or '1U1,ide- force,
IOl'US Ilf ctmlml. think that their own actions and behaviors have an impact on what hap-
arc rc,pon"bk for what happen,
to I~m, pens to them. When people with an internal locus of control perform well. they arc likcly
to aHribute their perfornwnee to qualities within themselves. such as their own abililies or
efforts. When people wllh an e;.;temal locus of conlrol perform well. they are likely to
INTERNAL lOCUS OF altribute their performance to e;.;ternal forces such as luck. the effects of powerful people,
CONTROL or simply the fact that the task wns easy. In organizntions. internal, nre more easily mOli-
ne"rihe, people who belie"e v,ued Ihan externnls. !tHernnls do nOI need as much direct supervision because lhey tend to
thaI abi l;tl, efJon, Or llk'ir OWn
believe their work behaviors influencc importanl uutcomes such as how well they perform
;\<;""n' delcmlio.: whal happen,
to them their jobs and the pay increases. praise.job Sl"Curity. and pmmOlions they receive.

SELF-MONITORING
The extent to whil'h people try to
",,"Imlille "aI' Ih,,} pre'Cnt
them-eh e, 10 Ollie""
Self-Monitoring
Self-nlOJlitorin~ is the eXlentto which prop!e try to control the way they present them-
selvcs to others. 5O High self-monilors want their behavior to be socially acceptable and arc
attuned to any social cues that signal appropriate or inappropriate behavior. They strive to
behave in a situationally nppropriatc mnnncr, For c;.;amplc, if they are in a meeting and sce
others making suggeslions. they will try to make suggestions as wcll. They arc also good at
managing the impressions that others have of them. [n comrasl.low self-monitors arc not
particularly sensitive to (·ues indicating acceptable behavior. nor arc they overly concerned
about bchnving in a situationally npproprinte manner, For exnmple, Ihcy may nct oored in
a meeting with the president of :In organization or they might I'oice their concerns in ajob

EXHIBIT 2.8
Locu. of control
Personality Traits
Specifically Relevant s"lf.monltoring
10 Organizations

Orga~,z>,iM.11y _-j_ Typo: A atld Type B p.... on.hty

... Ieva~, personality {"It.

Need for .ch,_mtnt

Need fur aff,I,."on

Need for po_r

54 PART t • INDIVIDUALS IN ORGANIZATIONS

imerview about "'orking long hours. People who arc low self-monitors are guided by their
own altitudes. beliefs. feelings. and principles and are not too concerned about what others
think of their behavIors,
High self-monitors are morc likely than low self-monitors to tailor their behavior to
fit a given situation. Thus. high self-monitors may perform especially well in jobs such as
sales or consulting. which require employces to interact with different types of people on
a regular basis. In additIOn. bec,llIse high self-monitors cml modify theIr behavIOr to
approximate "'hat individuals or groups e.\pccl of Ihem. they are particularly effective
when an organization needs someone to communicate with an outside group whose
support is being sought. such as wheJl a nonprofit organization tries to secure donations
from wealthy individuals.
Low self-monitors are more likely than high self-monimrs to say what lhey think is
true or correct and arc nO! overly concerned about how others will react to them. Thus.
low self-monitors may be especially adept at providing organi"lat;oJl,11 mentbers
wilh open. honest feedba<:k (particularly when il's negalive) and playm£ devI!"s advo-
cate in decision-making groups. A scale that measures self-monitoring is provided in
Exhibit 2.9.

EXHIBIT 2.9
Instructions: Please indicate the extent to which each of the following
A Measure of Self- statements is true or false for you personally.
Monitoring
_ _ 1. I find it hard to imitate the 10. I'm not always the person
500"",: S. a''''£'''''"d "nd ,\1. Sny....r. behavior 01 other people, I appear to be.
.. To Ca,,'. Narorc ar 11, JoinlS" On
_ _ 2. At parties and social _ _ 11. I would not change my
II'" Exi""r.,c nr Di",,,,,c Cia,,,,, ill
Personalily:' P.,~'cllologieal Rc_",w gatherings, I do not opinions (or the way I do
92 (I q~~): J t7-t9. Copyrighl Cl attempt to do or say things) in order to please
I<)S5 by ,he Amer;,:"n I"yd,ologi<'ai things that others will like. someone or win their favor.
Assoc;.. i"". Rtprioled" illl
pcrml>SlOn, _ _ 3. I can only argue for ideas 12. I have considered being an
that I already believe, entertainer.
_ _ 4. I can make impromptu 13. I have never been good at
speeches even on topics games like charades or
about which I have almost improvisational acting.
no information. 14, I have trouble changing
_ _ 5. I guess I put on a show to my behavior to suit
impress or entenain different people and
others, different situations,
_ _ 6. I would probably make a 15. At a pany I let others keep
good actor, the jokes and stories going.
_ _ 7. In a group of people, I am 16. I feel a bit awkward in
rarely the center of public and do not shO\rV up
attention. quite as well as I should.
__ 8 In different situations and 17. I can look anyone in the
with different people, I eye and tell a lie with a
often act like very different straight face (if for a right
persons. end).
_ _ 9. I am not particularly good 18. I may deceive people by
at making other people being friendly when I
like me really dislike them.
Scoring: Individuals high on self-monitoring tend to indicate that questions 4,
5, 6, 8, 10, 12, 17, and 18 are true and that questions 1, 2, 3, 7, 9, 11, 13,
14, 15, and 16 are false,

SELF-ESTEEM
The C'lcm 10 ",hid! pc<>plc ha\c
pride;n them",l"e, and the;,
"apabihlie,
TYPE A
A pc""n who b:l' an inlen,e
10 ""hie",". i, c'lrcmcly
~e,ire
"ompctll;\C. and has a 'Irong
",n"" of urge",-)"_
TYPE B
A pc"",n who lend, 10 be
ca')'g,,;n~ aod rcla,,,><l.
NEED FOR ACHIEVEMENT
lile lk,;rc to pcrt'>mI ehalk'nging
la'" "cli and to Tlleel one"
high "andard,
CHAPTER 1. • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY SS
Self-Esteem
Sdf-l'strtm is the exlenltu which people have pride in Ihemsclves amI their capabililies.sl
Individuals with high self-esleem think they are generally capable and worthy people who
cao deal with most situotions. Individuals with low self·esteem question their self-worth.
doubt Iheir capabililies. and are apprehensive aboullheir abilily to succeed III differenl
endeavors.
Self-esteem has scveral implications for understanding behavior in organizations. 52
Self-esteem influences people·s choices of activities and jobs. Individuals wilh high self-
eSlccrn arc more likcly than individuals with low self-esteem to choose challenging careers
and jobs. Once they arc on the job. individuals with high self-esteem may set higher goals
forthelllscives and be more likcly to tackle difficult tasks. High self-esteem also has a pos-
itive itnpoct Oll Illotivmion ond job smisfaetion. Clearly, Gary Heiman's high self-esteem
has contributed to his success at SI<lndard Texlile. It must be kept in mind. however. lhat
people with low self-esteem can be JUSt as capable as those with high self-est(X·m. in spite
of their self-doubts.
Type A and Type BPersonalities
In the popular press, you will often hear sOllleone referred to as a "Type A" or read that
"Type A personolitk's" are prone to high blood pressure. Individuals who are Type A have
on intense desire to ach ieve. are extremely competitive. hove a sense of urgency. are impo-
tient, and can be hoslile. 53 Such individllals have a slrong nl"t.-u 10 get a lot done in a short
time period and can be difficult to get along with because they arc so driven. They oftell
intemJpt Olher pcople and sontetimes finish their sentences for them because they arc so
impatient. More relaxed and eosygoing individuals arc loheled T)'pe U.
Because they are able to accomplish so much. Type A's would seem to be ideal
employees from the organizat ion's perspcrti ve. especially in sit uations in which a lot of
work needs to be done in a short amount oftinte_ However. becausc thcy can be difficult to
gel along wilh, Type As may not be effective in siluations thaI require a lot of interoction
with others. Consistent with this observation. one study found lhat Type A managers were
more likely to have conflicts with their .wbordinates and with coworkers than were Type B
managers. 54 Type A employees arc not particularly good team players and often work best
alone. In addition, Type As may get frustroted in long-term situations or projecls because
they like 10 sec resulls quickly.
Another important difference between Type A and Type B individuals has received a
lot of allention in the popular press. Type A individuals are lllore likely than Type B's to
h;l\'e coronary heart disease. In fact. two heart doctors identified lhis trait after they real-
ized that many of their heart-allack patients were very impalient. sometimes hostile, and
always in a hurry and watching the clock. Some research suggests that a tendcncy toward
hostility is particularly responsible for Type A's heart problems,
Needs for Achievement, Affiliation, and Power
David McClelland has done extensive research on three traits that are present in all people to
varying degrees: the need for achievemenl.lhe need for ;lffiliolion. aod the need for power. S5
Individuals with a high need for ar.:hic\'cl1lfnt have a special desire to perform chal-
lenging tasks well and \() meet their own personal standards for excellence. They like 10 be
01' n
in situations ill which thcy are personally responsible for what happens. like to sct clear
g0<11s for themselves, arc willing 10 take personal resporlsibility for outcomes. and like to
receive pcrfomJance feedback. Not surprisingly. such individuals are often found in jobs
that help thcm to satisfy their strong desire to excel. Indeed, McClelland has found thai
entrepreneurs and managers are especially likely to have a high nced for achievcment. In
one study. for example. McClelland found lhat 10 ye,lrS after gradual ion, undergraduales
who had shown a high nl"Cd lur achievemcnt were more likely to be !uund in entrepreneur-
ial occupations than were tho>!.' who had shown a low need for achie"ement. 56 In addition,
effective mallagers oftcn have a strong goal orientation and teod to lake moderate risks, a
findirlg lhot is consislcnl with 11k:: profile of an individual with a high need for achievement.
56 PART t • INDIVIDUALS IN ORGANIZATIONS
NEED FOR AFFILIATION
TIle de,ire l<> e,tabh,h and
main13;n good relation, ",jth
others,
NEED FOR POWER
TIle d<."\ire to ewn emot",na] al>l.l
beh.1>'ior..' mmmi or jnn""w.'e
o'erothcrs
It is not surprising, therefore, that a high need for achievemelll often goes hand in hand with
career success. This has been the case for Flight Operations Vice~President Captain
DclxJrah McCoy. who oversees more than 8.700 fhght attendants and 5.200 pilots at
Continental Airiines. H As a teenager. r.kCoy worked m a grocery store to earn money to
take llying les,ons. She joined Continemal as a pilot in 1978 and has since been pmmoted
many times, leading up to her CUlTent high-ranking position,58
Individuals with a high t)L't-'d for :lffilialion arc eSJX:l:ially cotll:erTK:d about eslabli,hing
and maintaining good relations with other people. They not only want to be liked by others
but they also want everyone to get along with everyone el'\C. A, you might eXJX:et. they like
working in groups. tend to be sensitive to other people's feelings. and avoid taking actions
that woold result in interpersonal conllil1.ln organizations. individuals wilh a high need for
alliliation ~re espcd~l1y likely to be found in jobs that require a lot of S(x:ial interal,tion.
Althoogh they make good team playen>, a manager might not W:llU a group to be l:ompo:l.",d
primarily of individu,lls with ,L high nC<.'d for allili.uion bee;luse the group might be more
concerned about maintaining good interpersonal relations th;ln about .ll:tually accomplishing
its tasks. 1nd ividual S I" ith ~ high need For allil iation Illay <lIS() be less ctrcetive in situations in
which they need to ev~luate othel"'i because it lIlay be hard for them to give ncgative fccdh.1ck
to a cowolter or a subordin<lte-a task thm might disrupt inter]X'rsonal relations.
Individuals with a high need For IJOwer ha"e a strong desire to exert emotional and
behavioral control or inlluence O\er othen>.59 The~ individuals an' eS]X'l'ially likely to be
found in nmnagerial jobs and leadership positiolls. which require one person to exen inllu-
ellee over others. Individuals with a high need for power may 'IClLl~llly be more effC\:tive as
leaders than tho~ with a low need for power, In a study of the effeC1i\eness of former pres-
idellls of thc United States. for example. Roben House of the University of Pcnnsylvania
and his colleagues found that a president's need for power was a good predictor of his per-
formance and effectiveness in office.1*! 'The power-level needs of a president were assessed
by analYling his inaugural spcel:hes for thoughts and ideas indicative of the need for
power. From the o]X'ning case, it i, clear that Gary Heiman has a high nccd for power,
which contributes to his effectiveness as CEO of Standard Textile_
What combination of the needs for achievement. affiliation. and power results in higher
m<lll<lgerial motivation and performance? Although it might seem that high levels of all
three arc imponalll for managerial effectiwness. research by Michael Stahl suggests that
managers should have a high nccd for achievement and power.lil A high need for affiliation
might not necessarily be a good quality in ml1llagers because they may try tOO h;lrd to be
liked by their subordinates instead of trying to le<ld them to higher performance levels.
Swhl's findings on managerial effectiveness primarily apply to lower- and midd)c-)cvl"l
managers,62 For top eXl"cutives and managers, the I)('ed for power appears to be thc need
that dominates all others in detennimng their suel'Css.63
How Personality 15 Measured
We have been discussing the various traits that make up an individual"s personalily without
much nll:ntion of how to detl"rmine an individual's standing on any of these tmits. By far the
most common and cost-effective means of assessing the personality traits of adults is through
scales developed to me<lsure persoll<llity. To l:omplete these scales. individuals answer a
series of q ueslions aboLII themscl ves.t>l Exhibits 2.5. 2.6. 2.7. <lnd 2.9 prov ide examples of
scales that measure the Big Five ]X'fSOnal it y lraits and sci f-monitoring. Personal ity scales Iikl"
these <Ire often used for resc;lrch purposes, for example. to detennine how people who vary
Oil these tr<lits respond to different work situations. Although the use of sUl:h scales alw<lys
rons the risk of respondcllls intclHiollally distoni ng their answers to ponr.ly themscl ves in a
desimble fashion, research suggests that this is not a significant prohlem. 6S
The Nature of Ability
When looking at individual differences and the way they affect the attitudes and behaviors
of employees. we must look not only 111 each employee's ]X'rsonality but also at the llbili/ir!l.
(Ip/ill/des. and !lkillI the employee possesses. Those temlS are onen used interchangeably. In
 CHAPTER 1. • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 57

ABILITY
The mental or phy""al COpa<:ily
to do ,0methillJ;.
our discussion. however. we focus on abilil}'. which has hccn defllled as "what a person is
capable of doing:«> Abilily has imlXJnalll implications for understanding and managing
orgal11l<:ltional behavior. 11 delennines the kvel of perfonnance an employee can achieve
and. because the effectiveness of an organization as a whole depends on the petfomlance
len"ls of all individual employees-from janitors and clerks (() upper managC'rs and the
CEO-abilily is an impona11l dC'tenninant of organi:Wlion~t1 petformance. Two basic lypeS
of abilily affect performance: cugnitive or mental ability and physical abilily.

Cognitive Ability
Psychologists ha\'e idenlifi<."il many lypes of l'Ognitivl.' ability and grouped them in a hierar-
chy. nlC most gcneral di mension of cognit ive abi I ity is XI'l1l'ru/ ;1//('lfix("I~>(,.67 Below general
intelligence arc specific types of cognitive abilily lhm refleel eOmpelenee in differelll ,Ireas of
menl.11 functioning (sec Exhibil 2.10). Eighl lypeS of cognitive ability idenlified and
described by psychologist Jum Nunnally. whose work was based in pan on the pioneering
work of L Land T. G. Thurstone in tile 194Os. arc described in Exhibit 2, Il.toS
Rescarch suggests thaI cognitive ability predicts perfonnance on lhe job. as long as the
ability in queslion is n::Jied on ill perfonning lhe )ob. 69 For example. numerical abilily is
unlikely 10 predin how wC'l1 a wriler ur mmedian will perform on the job. To understand
the relation octween cognitive ability and job perfonllanee. one needs to identify the abili-
lies lhat are required to effect ivel y perform the job. 70 rn Ihe previous exmnple. verbal :lbi l-
ily is especially likely 10 be Importanl for a wriler or comedian. Thus. lhis is lhe cognitivc
ability most likely to predict SUl:cess in thesejobs. 7t Cogllitive ability also i, an imponall1
contributor to group or team performance n It is imponall1 to keep ill mind. however. tllat
other things in addition tu cognilil'e ability dClennine perfonnance.

Physical Ability
People ditTer not only in cogllilive ;Ibilily bUl also in physical abilily. Two types of physical
abilities arc motor and physical skills.u A ma/(Jr skill is the ability to physically manipulate
objects in an environment. A physical skill is a person's fitness and strength. E. A.
Fleishman has devoted considerable alienI ion 10 identifying and studying physical ability
and has conduded that there arc II basic mutor skills (such as reaction limc. manual dex-
terity. and speed of arm movement) and nine physical skills (such as Slatic strengtll. which
includes the ability to lift weights and st111I1it\a).74

Where Do Abilities Come from and How Are They Measured?

LIke personality. both cogI1111\'e ability and phYSICal abilily arc dClermin,,"il by nalure and
nunure (sec Exhibit 2. [2). General imelligencc is detemlincd by the gencs we inllerit frum our
[Xlfellls (nalurc)75 and by situational factors (nunure). Standardized tests such 'lS the GMAT
(General Mallagemclll APlitude Tes!) or lhe SAT (Scholaslic Apliwdc Tes!) are designed to
IllCasure cenain lxlSic aptiludes and abilities that people arc prolxlbly born wilh. bUl we know
lhat people's scores on thcse tcsls change over lime and that silUaliona[ changes such as
repealed tmining on practice exams can ill1[1ruve pcrfommnce. Mon:over. an individual may be
genelically endowed wilh superior inlelligence. but ifthal person grows up in a scverely impov-
erished ellvirunmcnt (chamcleril-t.-d by poor nUlrilion. irregular school allendance. or parenls
who arc drug abusers). his or her s(''O!Th on standard illlelligencc lests will probably ,uffer.

EXHIBIT 2.10
Gene.. l,n,ellige""e
Types of Cognitive I
Ability , , ,
Verb~1 Real-Onlng Ab<I,ly'o ""~
ab,lily abll,ly r~la"omh,1"

Numeric.1 Abilily 10 Per<.",u.1

ab,lily ",member abil,ly
58 PART 1 • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 2.11
Cognitive Abilities

Examples of jobs in which the ability

Ability Description is especially important

Verbal ability Ability to understand and use Comedians, teachers,

Numerical ability
Reasoning ability
Deductive ability
Ability to see
relationships
Ability to remember
Spatial ability
Perceptual
written and spoken language lawyers, writers
Ability to solve arithmetic Waiters, investment bankers,
problems and deal with numbers engineers, accountants
Ability to come up with solutions Therapists, interior designers,
for problems and understand the principles car mechanics, computer
by which different problems can be solved software designers
Ability to reach appropriate conclusions Medical researchers, detectives,
from an array of observations or evaluate scientists, investigative reporters
the Implications of a series of facts
The ability to see hOlN two things are Anthropologists, travel agents,
related to each other and then apply this consultants, wedding planners
knowledge to other relationships and solutions
Ability to recall things ranging from Translators, salespeople,
simple associations to complex groups managers, researchers
of statements or sentences
Ability to determine the location or Air traHic controllers, architects,
arrangement of objects in relation to clothing designers, astronauts
one's own position and to imagine hOlN an
object would appear if its position
in space were altered
Ability to uncover visual patterns and see Professional photographers. airplane
relationships within and across patterns pilots, cruise ship captains,
landscape designers

Soorce: Based. in part. on J. C. Nunnally. Psychometric 1lIoory. 2nd od, (New York: I>1cGraw- Hi II. 1978).

Surgeon' like tho'" who "'p"rated

Ahmed and r\.'lohal1lcd Ibmhim-
Egyplian twin' l"Onjoined all~
~ad-lll.'\:d both cognitive and
ph)";"al ,kills. The deli,'ale,
imrieatc procedure required a ycar
of planning and 26 hour; of prio.-
>urgeI')' 10 complelc.The lwins
WC'''' scpardtoo in 20(H.

EXHIBIT 2.12
Nature and Nurture:
The Determinants of
Cognitive and Physkal
Abilities
EMOTIONAL
INTELLIGENCE
The abIlity 10 unoJe"tand and
manage one', OW" feeling, and
enlOlioll' and lhe feeling, and
emotion, of other people,
CHAPTER 1. • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY S9
Nur<.,re
Natu•• Cog";';... and
_ Educa'lOn, practK.,
Biologicat heritage phyolcal :obili,;"
and exercIse
Both nature and nunure also determine physical ability. Height. bone structure. limb
length. and relative proportions are genetically determined and cannot be changed.
Through practice and training such as wcight-lining and acrobic excrcise.howcvcr. people
can enhance somc of their physical and mowr skills.
Researcher!; have devcloped many accurate paper-and-pencil measures of cognitivc
ability: managcr!; can often rcly on the results of these tests as useful indicators of tllc
underlying ability tltcy are mcasuring. The tests can be used to ensure that prospectil'e
cmployees havc thc types of ability neeesS<lry to perform a job. to place c.\istmg cmploy-
ccs ill differcnt jobs in an organi7-<uioll. to idcntify individuals who might nccd additional
training. and to cvaluate how succcssful training programs are in raising ability lcvcls (we
discuss each of thcse issucs in thc neXI scclion). Bcforc using any of lhcsc tests. howc~'cr.
managcrs have 10 make sure that the teslS arc ethical and do not unfairly discriminate
against diffcrem kinds of cmployees. Some tcsts of cognitive ability have been criticized
for being cul1urally biased, Critics say that they ask questions tha!. because of differenccs
in the tcstlakcrs' clhnic backgrounds. may be rclMil'cly C:lsy for mcmbers of ccrtain
groups to answer and more diflicult for members of mher groups to answer.
Physical ability can be mcasured by having a person cngagc in thc activity he or she
would hnve to do on the job. For example. managers who need to sec whether a prospective
employce i, Strong enough 10 dcliver. unpa~k. and set up heavy appliances could ask the
individual to lift pmgrcssivcly hcavier weight, to dctcrnlinc the lcvel of his or her slatic
strength. New York City Sanitation Department evaluates the physical ability of prospectivc
employees by having them pick up trash oogs and toss them into garbage trucks.
Although organizations spend considerable tune and elTon to cnsure lhe prople they
hire have the abilitics thcy nced to be cffectivc in thl,ir jobs. sometimc, peoplc arc not
givcn the opportunity to usc their abilities on lhc job. A reccnt sltJdy of ovcr 600 manager!;
and 700 hourly employees fouud lh,1\ two thirds of lhe managers and employees surveyed
thought thattlleir companics used only about 50 percent of their erllployees cogmt1Vc abil-
itics. 76 Evcn somc IT profcssionals belic\-e that thcir abilities are not being dTcclivcly uti-
lized. A rerent study of over 200 IT professionals found that ovcr 40 pereent of them were
so bored ,It work thm they thought aboul quining their CUtTent jobs.77 Hence. in addition to
ensuring lhat cmployees havc thc abililies nct.'ded to perform at ,I high lc\-cl. organizations
should also strivc to give them the opportunity to usc thcm.
Cognitive and physical abilities can degeneratc or become impaired because of dis-
ease. drug or alcohol abuse. exeessi~'e levels of stress. or f,uigue. In many organizations. it
IS important to aceuratcly assess thc ability lcvcl of an cmploycc to know what he or she is
cap<lble of doing. but it is also nccessary to know whcn and why that ability may becoll1e
impnired. OrganizatiOlls have traditionally f\"sponded to impairment by testing cmployees
for subswnce abllse. This h~ls. indeed, been found to rc<luce illegal drug use. iS
Drug tcsting ~an deteCtlhe presence of drugs and alcohol. but it docs not tap into
impairmcnt due to other factors like exccssivc fatiguc or discnsc. Another problem with
conducting a drug test is that it usually takcs at least two to threc days to get back the results.
In respollSC 10 those problems. some firms h,I\'C dcveloped "fitness for duty" perfonn:mee
tests to deternlinc whether employees can safely perform their job,. Some of thcse lcsts
involvc thc usc of computer tcrminals and gamcs thm mcasure ac~urJcy and reactioo timc
againsl an employee's baseline score?~
Emotional Intelligence: A New Kind of Ability
Psychologisls h~l~'e identified a new kind of ability lhal is not so much concerned with cogni-
tivc or physical eap.1bilities but rather with emOlional capabilities. Emotional intcl1igclll"C is
the ability to understand and managc onc's own feelings and ell1tl1ions and the feelings and
60 PART t • INDIVIDUALS IN ORGANIZATIONS

emotions of others:'10 Emotion:ll lI11elligenee :llso helps promote clTeetive functioning and
wl'lI-being among employees. Pwple difll'r in terms of the extenllO whil:h they know how
tl}l'y.themsclves. arc feeling. why they are feeling Ihm way. and Iheir ability to manage those
feeli ngs. Simi larl y. Ihey differ in their ability to understand what other people are fee ling and
why. and Iheir ability to influence or m,uwge tl}l' feelings of olhers. Emotional intelligence
describes these indiv idual differclKes.RI An examplc of a scale that measures emOlional intel-
ligence is provided in Exhibit 2.13.
Research on emotional intdligence is in its early stages. However. it is plausible that
emotional intelligence rnay facilitate job performance in a number of ways and a low level
of emotional intelligence may actually impair perfnrmanl:e. For example. pSYl:hologist
Martin Seligman found that salcspcople at Metropolitan Life who were high Oil optimism
(an aspect of emotional intelligellce) sold considerably more insurance policies than S<lles-
people who were less abt.:: to manage Ihen feelings and think positi\'ely.R1 As anolher
example. a recent study condu(:ted by Kenneth Law and colleagues found that el1101ional
intelligence prl'dicted le"els of life satisfaction among students and Ie"els of job perfor-
manee among employccs ill Hong Kong and the People's RepUblic of China. s3

EXHIBIT 2,13

A Measure of Emotional Intelligence

Please indicate the extent to which you agree or disagree with each of the following items using the 1-7
scale below.

1 2 3 4 5 6 7
Totally Somewhat Neither Agree Somewhat Totally
Disagree Disagree Disagree nor Disagree Agree Agree Agree
1 have a good sense of why I have certain feelings most of the time.
2, always know my friends' emotions from their behavior.
3, always set goals for myself and then try my best to achieve them,
4. am able to control my temper so that I can handle difficulties rationally.
5. have good understanding of my own emotions
6. am a good observer of others' emotions,
7, always tell myself I am a competent person.
8, am quite capable of controlling my ovm emotions.
9, really understand what I feel.
_ _ lOam sensitive to the feelings and emotions of others.
_ _ 11, am a self-motivating person.
_ _ 12. can always calm down quickly when I am very angry.
_ _ '3. always know whether or not I am happy.
_ _ 14, have good understanding of the emotions of people around me.
_ _ 15, would always encourage myself to try my best.
_ _ 16, have good control of my own emotions.

Scoring: 5elf-Emotions Appraisal = sum of items 1, 5, 9, 13

Others-Emotions Appraisal = sum of items 2, 6, 10, 14
Use of Emotion = sum of items 3, 7, ", 15
Regulation of Emotion = sum of items 4, 8, 12, 16

S."'IL~·
K La,,'. C W""g . .nd L. Song, '11", C""""'d.nd Cril~rio" ValiJity of En\(~i""ul hlldtig~",-'c and It, l'(~en,iut Ulili,}' fot M""ugerr",,,,
SwJic,:' )",,,,,,,1 '1Appli~,1 P"w'Io"I"g\', 2004. 89(3). p. 496: C. S, Wong a,l<! K, S, Law, '.,.he Eff""t> "r Leader and FoHower Em"'io",,1 Inlcllig."", on
Pcrfnrmaocc and All i'uJe' An ExplorJIOI)' Sloo)':' u,uk"llip QI",,',.,I\'. 2001. tJ. PI" 243-274.
 CHAPTER 1. • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 61

EmOlion~1 illtdligcfK.'C led Sir

Rocco FOllc tocrc~tc ~ k:oding
luxury hold Ilwna£cment
cQmpany in Eun'P" by helping
him undcrswnd wh~t customers
w~I1L o.,spitc his nrcni", ~nd
success. r..:>ne S.1yS the rcal asset
of hi, botels is ils cmpl,')'<-'Cs.
•
•

•
•
...-
N-
•
• •
• •

Recent theorizing nnd resenrch suggest Ihm emotional imelligenee is an espceinlly

importa11I ability for lenders nnd managers. enabling them to understand and rcl,l1e well 10
others as well as underst~nd Ihcmselves. ll4 Emotiunal intelligence also helps leaders and
managers maill1ain their enthusiasm and confidence and communicate a vision to follow-
ers tha! will elH,"rgize them to work toward orgnnizalionnl goals. 85 Jing Zhou and Jennifcr
George. professors al Rice University" have theorized Ihnt lenders" emotional intelligence
mighllx: especially importalll fur awakening emploYl:e l:reativily.~6 For Sir Roccu Forte.
CEO of [,one HOlds. the ability to understand how customers fccl and determine what
they wam is the key (0 excellem customer serviee.~7
Emolional inlelligenee sometimes plays n subtle but important role in effcclil'e work-
place Ix:haviors. For example. l:onsider the l:ase of Jane" who was hired by George
McCown of McCown Dl."C Leeuw. a buy-out company in i\knlo Park. Clllifomia. 10 help
determine which companies nrc good purchase opponunities. Jane wns highly intelligelH
with excellelll oumerical skills and a top-notch educmional background, McCown sent
Jane to visit a company he was interested in purl:hasing. After visiting Ihe l:ompany and
pcrfonning vnrious calculations. Jane advised McCown to buy the company Ix:causc lhe
numbers looked good. McCown" however. decided 10 visit Ihe company himsclf. nnd he
was glad he did. As he puts il. "I could tell in Ihe first 11'.'0 minules of talking to the CEO
that he was experiencing serious burnout. The guy was being uverwhchned by problems.
On paper. things looked greal. But he knl'w whm was coming down the line. Jane had
missed Ihose cues eompletel y:'1llI EvidelH Iy" Jnne's low lel'el of emot ional inlell igenee pre-
vented her from understanding how the CEO of the largeted comp,lny was feeling and
why-cues her boss was able 10 pick upon. Jane is llO longer with McCown Dec LL"Cuw.~
Andrcn Jung. CEO and chnir of Avon Products. is a ftrm bclie\'er in the imponnnce of
emOlional intelligence. As she puts it. "Emotional imel!igence is in our DNA here m Al'on
becausc rel,llionships are critical ,1l every stage of our business:-'.'O
Understanding peopll' and relationships dearly has (Xlid oIl for Chri"tinc Poon. Vice
Chninnnn of Johnson & Johnson (J&J) and Worldwide Chairman fur J&J's Medicines and
Nutrit ionals.'\t Whi Ie holding nllC of the higocst-r.mking positions in J&J. PIXl1! doesn't act
like a ""celcbrily manager": sl}(" belicves lhm all employces make a company successful. not
justthosc at the I'ery top,'ll Poon's high Icvcl of emotional inlelligencc is reflccled in I}("r phi-
losophy. managemelll style. and how she inleracls .....ith people. POlIll has an easygoing
demennor and seems down III emh. yet soc is a careful ,md deliberate de,:ision maker. Equally
imponant 10 I}("r is foslerillg a work enl'ironmcnt where respect for cmployees. customers. nnd
the gcneral public is I'alucdy·l S]}(" has II}(" confidence and emotional stamina 10 take on whal
62 PART t • INDIVIDUALS IN ORGANIZATIONS

might seem to be insunnouillable challenges and conquers them III an easygoing manner.
I'oon is intelligem and c1l:'ati\"e and encourages those around her to bc equally inquisitive and
ask queslions?~ Being resul1s oriented and driven to sut'Ceed, roon realizes Ihal her employ·
t'Cs drive that suc(;es.s, so she lreats lhem as t'1]ual members of her leamYs

The Management of Ability in Organizations

Although we hal'e mentioned the many typcs of ability that people p'YisesS, only a few abili-
lies arc likely 10 be relevant for the pcrforman(;e of any panicular job. Managerial work. for
example. requires cognitive abilily. IlOt very many physical abilities, and probably some
degree of emotional illlelligence. whereas being a grocery-store shelf stocker or ,I car W(lsher
requires mainly physical ability. A brllin surgeon, for inswnee. must rely on cognili\"e and
physical abilities when pcrforming highly complicilted and ddicate opcJ<ltions.
For managers. the key issue regarding ability is to make sure that employees ha\"e the abil-
ilies they need to perfonn their jobs effecti\"e1y. 'There are three fundamental ways to manage
ability in organizations to ensure thallhis match-up h'lppcns: selection. placement. and tmining.

Selection
Managers (;an t"tJlltrol ability in orgllnizations by scltx:ting individuals who have Ihe abililies
they need. This first in\"olves identifying the tasks they want the employees to accomplish
and the ubilities they need to do theln. Once these abilities are identified. managers then ha\"e
to develop a(;(;umte measures of Ihem. The key question at Ihis point is whether a person's
s<:ore on an ability measure is actually a good predictor of the task that needs 10 be pcr-
formed. If it isn·\. there is no point in using it as a selection device. Funhermore, it would he
unethical to do so. An organization that uses an inappropriate nlC1lSUrc ,md rejects Cal\1ble
appl icarl1s leaves itsel f opcn to potent ral lawsuits for unfair hIring pmctices. BUI if the IIbil ity
measure docs predictt<lsk performance, then managers (;an use it as a selection 1001 to ensufC
that the organi;>;aTion has the mix of abilities it needs to accomplish its goals.

Placement
Once individuals are selected and become 1'.11'1 of an organization. managers mUSt aeeur.uely
match each employee to a job thai will capitalize on his or her abililies. Again. managers
need 10 identify the ubility requirerncllls of the jobs to be filled. and they need accurate mea-
sures ofthcsc abilities_ Once these measures arc available. the aim is to place employees in
positions thai match their abilities. Placement. however. involves more than JUSt assigning
new employees to appropriale positions. II also becomes an issue in hOflzonlal moves or pro-
motions within the org'Ulization. Obviously. an org<lniz:nion wants to prom(ne only its mosl
able employees to higher·level positions.

Training
Selet1ion and placement relale 10 the IIl11l1re aspects of abililY. Training relales 10 the lIl/rlIII!'
'\Specls of ability. TJ<lining can be an em..d i\"e means of enhancing employt'Cs' abilities. We
often think that lhe goal of tmining is 10 improve employccs' abilities beyond the minimum
level required. Frequently. however.organizmions use tmining to bring employees' skills up to
some minimulll required level. Extensive researdl suggesls Ihat job-<lppropriate tmining is
cfrtx:tive in increasing employees' skills and abilities and. ultimalely. their pcrfomklllCe.%
To gain a competitive advantage. organizations often need to usc new and advanced tech-
nology to lower costs and irlCreasc quality. efficiency. wid pcrfonnallCe. Companies thllt use
ad\"ant"Cd Icchnology often find Ihm lheir employees' llbilrlies and skills are defrcient in a num-
ber of ways. In the factories of the (Xls!. mosl employees could get by wilh shcer physical
strength and stami na. but those days are large Iy gone. In today"s techn ical world. higher le\"e1s
of skill arc generally needed. Companies like General Electric. Motorol11. The Cont,liner
Store. and MIll iken have found thai investments in training 1lI0re than JXlyofr in temls of high
pcrfonn<lnce?1 AI Oregon-based Umpqua Bank. employt'Cs rt'Ceivc Iraining in all Ixlllking
areas so everyone is qualified to help CUSlonlCrs in their banking needs and custonlCl"S arc not
 CHAPTER:2 • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 63

kept waiting,98 Interestingly enough. in China's boonllng economy where skillt'd employees
are in short supply amI high demand. (l}mpanies are finding that providing training and learn-
ing opportunities can be an effective means of recruiting and retaining employees.'!')
Training can also be used to increase the emotional intelligence of employees_ In order
for emotiunal intelligcnce trainmg to sUl:ceed. however. empluyees must rel:ugnize the
importanl:e of emotional intelligclKc and be motivated 10 improve thcir own cmotional
capabilities. Emotional intelligcnce tmining typically begins wilh an accurate assessmelll
of the employee's strengths and weaknesses. Someone who is very familiar with rhe
employee's un-the-jub behaviors and i, trustcd by the employee should provide this assess-
ment. EmploYL'Cs then need 10 practice handling different situation, and reneet on what
went well nnd what didn·1. Throughout the process, the support of a trusted conlidaot or
cOllch can help thcm realisticllily analY1.e their own feelings and behllviors and the feelings
and beh,lViors of uthers. As cmployees begin to develop mure cifective ways uf interal:ting
with others. their emOlional intelligence has the pOlemial to inneasc. Today. emotional
intelligence training is becoming more commonplace, Avon and Mctropoliran Life are
among the many compllnies that otTer emotion,ll ilHelligence training to their employees.

Summary
Thc two main Iypes of individual differences are personality differences and ability differ-
ences. Understanding the nature. detcrminams. and consequences of iIJ(I ividua Idilferences
is essenrial for managing organizational bebavior, Because people differ so much from
ellch other. an appreciation of the nature of individual differences is necessary to under-
stand why people act the way they do in organizations. In this chapter. we made the
following major points:
I. Personality is the pattern of rclativcl y enduring ways that a person fecls. th inks. and
behaves. Personality is determined both by nature (biological heritage) and nUl1ure
(situational factors). Organizational outcomes that have been shown to be predicted
by personality include job satisfaction. work stress. and leadership effectiveness.
Persunality is IIUl a usefu I prcdidor of organizational outcomes whcn there are strong
situational consrr.linrs. Bel'ause personality tends to be stable o\'er rime. managers
should IlOt expect to change personaliry in the shorr run. Managers should accept
employees' personalities as they arc and develop effective ways to deal with people.
2. Feelings. thoughts. anitudes. and behaviors in an organization arc dc1ermined by the
interacr ion of personal ity and situat ion.
3. The Big Fivc personality tmirs arc extra versioll (or posit ive affectivity). ncuroticiSlll
(or negative affectivity). agreeableness. conscien1iousness. and openness to cxperi-
enee, Other personality tr.lits pal1icularly relevant to organizational bebavior include
locus of control, self-moniroring. self·esteem. Type A and Type B personalities. and
the needs for achieveillem. affiliation, and power
4. In addition to possessing ditTerent persun'llities. employees also differ in their abili-
ties. Of what rhey arc capable of doing. The two major rypes of ability arc cognitive
ability and physical ability.
5. Types of cognitive ability c:tn be arranged in:t hierarchy wirh gcneral illlelligence at
the top. Specific types of l:Ognitive ability arc verbal ability. numeric:II ability. rea-
soning abi Iity. deductive abi Iity. ability to see relationships. abi lit y 10 remember. spa-
rial ability. and perceptual abiliry,
6. There ,Ire two types of physical abi Iity: motor sk ilis (the ~lbi Iity to mall ipu late
objects) and physical skills (a person's fitness and stfCngth).
7. Both nature and nUl1ure contribute to determi ning physil:al abi Iity and l:ogn it ive abi 1-
iry. A rhird. recently idenr ified. abil ity is emotional imelligence.
8. In org'll1i1-<lrions. ability can be managed by selecring individuals who h:tve the abili-
ties needed tu accumplish tasks. placi ng employees in jubs that c"pital ize on their
abilities. and training employees 10 enh"nce 1heir ability levels.
64 PART t • INDIVIDUALS IN ORGANIZATIONS
Exercises in Understanding and
Managing Organizational Behavior
Questions for Review
I. Why is it importarltto understand that both nn!ure
arld rlurtllrc shape an employee's pcrsorlality?
2. What arc some situatiorls irl which you would II(J/
expect employees' personalities to infiuenee their
behavio(!
3. What are some situations in which you would
expcrt employees' personalities to infiuence their
behavior"
4. Is it good for organizations to be eompos.ed of
individuals with similar personalities'! Why or
why not?
5. A lawyer needs to score high on which of the Big
Fi\'e personality trmts'! Why'!
OB: Increasing Self-Awareness
Characteristics of People and Jobs
Choose a job Ihal you are very familiar with-a job thai
you currently have. a job that you used to have. orthc job of
a close family member or friend. Or the job could be one
that you haw been able tu observe closely during your
inleractiun wilh an organizatiun as a customer. eliell1. or
patient. For toc job of your choosing. respond to the follow-
ing items.
I. Describe the job. including all the lasks that the
jobholder must perform.
2. Choose tWO of the Big Five personality traits thal
you Ihink wuuld have Ihe mOSt impact on the job-
holder's feelings.lhuughts. allitudes. and behav-
iors. Explain why you think these traits might be
p<lrticulariy important for underst:lJlding the job-
holder's reaclions.
6. Whal arc some jobs or situations in which employ·
ees who arc high on agn.-eableness would be espe-
ciallyeffeclive?
7. When might self-monitoring be dysfunctional in
an organization?
8. Whallevels of the nel'<1s for aehievemelil. power.
and affiliation might be desirable for an clcmen-
tary schoolteachcr?
9. What types of abilities are especially IInportant for
an upper-level manager (such as Ihe presidenl of a
~Wh"
ulVISlon
,I'" ) to possess. y.
10. whm arc the three ways in which ability can be
managed In orgmnlations'!
3. Identi I'y three of the organizmiona lIy relevam per-
sonality traits that you think would affect perfor-
mance on thisjub and explain why you Ihink Ihey
arc likely 10 be importam,
4. Which of the jobholder's hchaviors arc primar-
ily determined by the situatiorl arld not
persunality'!
5. What cognilive abililies must Ihe jobholder
posscss?
6. What physical abil ities must the jobholder
possess'!
7. How can selection and placement be used to
ensuTC that prospective jobholders have these
abilities'!
8. How can an org'lI1ilationtrain jobholders 10 raise
levels of these abililies?
 CHAPTER 2 • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 65

A Question of Ethics
Emotional illlciligem:e-ihe ability 10 undcrstand and manage one's own and other peo-
ple's moods and emotions-can be increased through Iraining. Whcn people arc high on
emotional intelligencc. thcy are better able to undcrstand and usc emotions to influcnce
others. Howel'er. people can be influenced in positive and negative ways. As an example of
Ihe bner. hisloril:al atrocities and l:ull tragedies have been anribuled to the ability of l:er-
lain individuals to have high levels of influence over Olhers.

Questions
1. Whal are the elhieal impl ieal ions of emotional inte Iligenl:c train iug?
2. What steps can organ izatinns take to ensure that employees· e mOl iona I illlell i-
gence is putiO good usc and not used for personal gain or unethical purposes?

Small Group Break-Out Exercise

Understanding Situational Influences
Form groups of thrt:e or four (X'Ople and appoinl one member as the spokespcn;oll who wi II
COllllllun icate your conelus ions to the rest of the class.
I. Tnke;l few minutes to think aboutn recent incident in which you behaved in n
manncr Ih;>t was ineonsislent with your personality ;>nd/or abilities.
2. Take turns describing thcse situalions and why you behaved the way you did.
3. As a group. de"c1op a list of the characteristics of situations in which people's
behnvior is primarily detemlined by the comext or situation ~111d in which individ-
ual diffcrences playa very minor rolc.
4. Think of rcasons why it is imponam for employees and managers to be aware of
situational influences on work behavior.

Topic for Debate

Per,onality and ability have major implications for how people feel. think. and behave in
organizations, Now that you have a good understanding of these individual differences.
debate the following issue:
Teum A. Organi~.ations should sclect or hire pros~tive employees on the basis of
their personality traits.
Team B. Organilmions should 110/ select or hirc prospectivc cmployees on the basis of
their personality traits.

Experiential Exercise
Individual Differences in Teams
OlJjedi\'C
In organizations like Merck & Co.. the phannaceuticals gian!. and Microsoft Corpor-uion.
thc Icnding produccr of computer software. rescarl:h scientists or compuler programmcrs
oftell work together in small teams nn complex. path-break ing projects to create new drugs
or computer software. Team members interact closely. often ovcr long timc pcriods_ in
order to complete their projttts. Individual differences in personality and ability provide
team, not only with valucd rcsourl:es needed \() l:omplcte their projeds but also With
66 PART 1 • INDIVIDUALS IN ORGANIZATIONS

potential Mlurct~s of conflict and problems. Your objective is to understand how individual
differences in personality and ability affect people's behavior in teams.

Procedure
The class divides into groups of three to five pL"Qplc. and ea(;h group apJXlints one member
as spokesperson to present the gmup"s findings to the whole class. Each gmup discusses
how the personalities and abilities of team members may affect team performance and may
cause conllict and problems. Using lhe knowledge of personality and abilily gained in lhis
(;hapter. ea(;h grOllp answers the following ljuestions.
1. Do certain personality traits make people good team members? If so. whm arc
they and why arc they important? If nOl. why not'!
2. Is it more effective for teams 10 be composed of members who h.\\'c different per-
sonality lypeS or similar personality types'!
3, What kinds of abilities makc people good team members?
4, Should team melnbers hal'e similar or different kinds and levels of abilities?
When .tll the groups arc finished discussing these issues. the spokespersons lake turns
presenting the groups' findings to the rest of the class, and the instructor lists the findings
on the board.

New York TiITles Cases in the Nevvs

t!;i)e ~f\lf !lork ~mr5

"The Math Whiz vs. the Media Moguls in a Battle for Millions,"
By Riduml Siklo.\', April J, 2006, p. C I. C'i,

Ilenry C. Yuen is in a protracted legal
,trug~le with Rupert Muruo<.'h. mer Mr.
Yucn's management of Gcm,u,r atld its
tmublrtl aa.wIlIlitlg.
Amid the flash of the Internet bubble.
Ilenry C. Yuen, the dtairnwn ami ehid
exeeuti\'e of GelllSlar,TV (;uidc Inler_
nal;Orl<l1, did thing, his way.
Despitc running a company wonh
mOre than $20 billion in early 2(0() and
being partners wirh RUller, Murdoch's
Ne s Corporation, he operated out of
lo ·relll offiee~ in Pasadena. Calif.
A visitor to the headlluarters recalls thai
u~ing a fax machine rc<juired utlpl ugging
the telephone because lhere was only
one line. A former Gem~rar employec
recalled Mr. Yuen driving 10 lunch four
blocks frum rhe ofliee. bur then parking
t.....o blocks a.....ay to a\'oid paying a valet
charge.
But e\'en as Mr. Yucn was pinching
pennics, he was manipulalitlg hundreds
of milhons in re"enue to m'lke the
company l<K,k morc prutilable. ""eording
to prosecutors and lI1\'estOfS.
Mr, Yuen was forced out :'s
Gemsla,s ,'hairman and chief l'xCl'uti""
more than three years ago, after the
eompany acknowledged lhat rewnue
h:,d been inlhted <llld the stock price
collapsed, Ne .....s Corporation's in,'ol\'e-
ment with Mr. Yuen-ir owns 41
p.,reenl of Gl'm.S(ar~resulted in 2002
in a S6 billion writedown. the biggesr
such hit Mr. Murdodl has taken in his
storied e<lrecr.
An 1Il"e,tigation 11110 Mr. Yuen's
""nduer by the Seeurilie< and Ex,'hange
COll1mis>ion, and a tangle of other
Iitigarion. show that M'- Yucn. a malh-
ematician and lawyer who built Gemstar
by developing and aggressi",ly defcnding
patents for tetevision viewing, still casts a
long shadow""" the News Corporation
mid Mr. Murdoch.
Ncws Corp,wdlion, rhrough Gcmstar,
has pursued Mr. Yucn with unusual \'igor.
going s(' far as 10 file a \'ictim sratcmcnr
askin,g a court to ovenurn Mr. YlICn's pie"
a~rccmcnr in a nimitlal casco In addition
to his other legal troubles, including .1
c1ass·a(;tion lawsuit. Mr. Yuen faces an
arbitration dispuIl' with Gelllstar, in
which Mr. Murdoch scck~ to force
/Tok YOCTl to rerum eamin~s 10lalin£ SOml'
SIOO million. including S2 Inillion in
annu<ll salary he still rCl'l'ivcs under til<:
sc\'eranee <lgreemeill.
N,'it!lcr Mr. Muruo,:h nor Mr, Yuen
would comment for Ihis arricle. BUI
sewnll people who .. ork dosely with
Mr. Murtloch ,""y Ocm'tars rough srance
has been <I response to Mr. Vuen's
harub<lll tactin.
'"Rup.crt doesn't look back, he doesn't
spend a l()l of timc rhinking abour Hen!)':'
La..... rwee A bcobs, group general
,x",n«:1 for rhe Ncws Corporation, ",id ;n
an interview. He added. howe'"r. "This is
0"" of rhe fcw people wc·'·c C"cr deah
with "00 etearly committed fraud:'
Ripple< from rbc Gcmsrar debaclc go
beyond fin.meial losses. Gerostar repre-
scnted Ihc beginnings of a partnership
between Ne .....s Corporation and the
media billionaire John C. Malonc thar
h.,s become hOlly contemious.

last momh, in a civil action brooght
by the S.E.C.. a fe<leral distrin judge in
Los Angeles ruled lhat Mr. Yuen had
committed al'l'ouming fraud while
running Gemstar by misreprcscming
some $200 million wonh of revenue in
scven tmnsactions from 1999!O 2002. At
a hearing Wedne'<day. the judge, Mariana
R. pt'leizer. will del ibemte on the S.E.C.·s
re'lu"'lthat Mr. Yuen pay ITK)rc than S60
million in resti!lltion. Mr. Ar~in sHid his
client intl'nded to appeal. Separ.lte1y, a
spo~esmen for the Uniled StateS "ttorocy
in los Angel'" ",id a niminal i"'luiry on
Mr. Yucn was wntinoing.
)'lr, YllCn. "h" i, 57. has mainlained
lh"t he was the ta!)!et of an orehestr.J1ed
effort by Mr. ~Iurd,,<:h's allies to
commandeer the business he h:ld bui II.
His law)'er. Stanley S. Ari<in. as>!:nlod:
"To SOnlC estent. lhis company. News
Corpo.....tion. sn out to blow up my goy
and they did i1. It's too bad ill"nlC 10lhis.
1 thi'lk we have scS'Crely dimini,hed
our opponunily to benefit fmm the genius
of Henry Yuen and his vision and
entrcprcneurshi p:'
Gemslar's early dwpters were far
more promi'ing for Mr. Yuen The ,on uf
a Hong Konf' ):Iwyer. he lIIo"ed to the
Uniled Stat", when he wa, 17 to study
mathematics at the Uni"ers;ly of
Wisl'onsin and Ihen .II Ihe California.
In,tilute of Tedmology In P:lsadena. At
Calteeh. he heeame friends wilh another
docloral student. Daniel Kwoh. with
whom he would found Gem,tar in 19~9
"He played soccer "cry well, even
Ihough he wa, kind of smallish - he was
"ery fast, very decisive:' Mr. Kwoh
rl'l'alled in an interview.
Mr. Yuen went on to gain a I:lw
degree from Loyola University. He put
his knowledge of math and law together
with Mr. Kwoh to im'ent VCR I'lu,. a
patented system for simplifying the way
['<-'<lple program their "ide<K'assl'lll'
rc<:or<krs. Allhough rd'ti"e1y few people
u,ed VCR Plu'. Gem,tar waS abll' to
persuade both h:tr<lware makers and
publishers of TV listings. induding Mr.
Murdoch's TV Guide. 10 [XI)' licensc fees
for i1.
Mr. Yoen's next innovation was 10
buy up wmp,mies that had devcloped
inter;1C1;\<: progr.\lIlming guides that would
help navigate the gmwing numhers of TV
Oplions.
Mr. Ym'n could be ruthlcss. Ootside
Gemstar. he al'(juired the nicknamc
CHAPTER 2 • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY
"p"tent terrorist"" for his WIllingness to
'oe pOlential panne" like Thomson
Eleclronies or Time Warncr. Fmmet!
(,{'pies of the ~~,mpany 's [XIten" dewr.\led
the conference room.
Wilhin the company. he wa, abrupt
and secretive as " chief executive. and
fomler colleagul's ,ay his only eonf'dant
was Elsie M. Leung. Gemslar's longtime
l'hief finanl'ia! offil'l'r. Three Gemslar
emplorees said MrYuen would soddenly
tum lO Ms. Leung in ml'dinG-' with uther
cxcruti"es :1nd begin speaking with her
in Cantone..,. "I "'oold not say of Henry
th:'1 sweelOess :'nd diplomacy werc his
'trong ,uil:' ,\ lr. Arkin .,aid.
In anolher of Mr. Yuen's nwny legal
tangles, h,' ha, Ix...·n in lengthy litigation
wilh his ex-wife. Molly Yuen. lhe mOlher
of t,,·o of his four dlildrc'n. She l'ontendcd
ina I996 lawsuit that Mr, Ytlcn forged her
signature Oil di'"<>I":" """ulllents a lkcaOc
e"rlier and that she was !lO1 awarc of lhe
faked divorce for yl'ars. She argued that
the divorce Wi'S intended to deprive her of
" dairn On Mr. Yuen's growing fortune.
,\lr. Yuen denied the al'cusations and.
al1hough the divol"I:e m"uer ,,'as >Cltkd in
2000. the l'ouple remains in liligalion
over payments Mr. Yuen stopped ma~ing
tu her two yea,.,; later
Mr. Kwoh left the company in 1997
after what he de'<:rihc<J as a dispute over
business slrmegy. which he declined to
elahorate on. Ahhough he and Mr. Yuen
both live in Pasadena. they ha"e not
'poke'n si')('e, Mr. Kwoh said.
Mr. M"lone and Mr, Murdoch had
tried separalely and togelher to buyout
Mr. Yuen. They both coveted Gemst""s
ri~'h profit margins from li~'ensing; in
19'18 the company had a prOfil of $38.7
million on revellue of $126 million.
Indeed. ",nid the hoopl:' over l'Onverge,,,:e
at th<.' lime.l'.k Yuen tl"lUght lhat his on-
scl'Ct'n guide woold be lhe ultimme toll-
k""per for the media and told l'Olleagues
that Getnstar would someday be bigger
than Miml'ofl.
Afler his ciftll1s to buy Gcmstar failed.
Mr, Malone bcl'anK' a big shareholder in
TV Guide by merging a Wt11[X1ny with his
oWn on·scree'n guide business into iI, Then
'n 1999. ~lr. Murdoch pl"OJl'O"C{l 10
Mr. Yucn that Gem,lar ac'-luire TV Guide'
for $9.2 billion in wxk This tinlC. he
agreed. with condition,: Mr. MurdOl'h
would end up the bi~",st ,harehol,ler. but
he would gel an employment contract
poning him firmly in charge for fi"e years.
67
Mr. YU<.:n nc.Xt !limed to buying compa-
nies 10 pmduce -'O-~'alled dcctronil'-h<,x,k
readers. Mr, Murdoch hailed Mr, Yucn in
Business Week magazine as a brilliant
Slmlq;ist
Ilot culture, and .'trategies da,hed.
Mr. Murdoch fell that TV Guide was
being negleded in favor of Mr. Yuen's
e1eetronic ve·nturcs. He began con"ening
weekly management medinl!' .II TV
Guide's offices in New Yor~ th:l1 Mr.
Yuen would attend by tl'l'·l·onfl'rl'nee.
Al'l'ording to one person who attended.
Mr. Yuen would often put th<.' mceting on
hold after only a few minutes. Ie:,,' ing the
sound of Muzak Willing through the
speaker as his contribot ion.
In private meetings, Mr. Murdoch and
Peler Chernin. News Corpor:,tion's
pr.'sidenl, pri.'sscd Mr. Yu,'n to "'place
Ms. Leung as chief t1n:lIlcial oflker. Mr.
Yuen refused. Mr. Yuen's lawyers
described this as "a l'ampaign to ta~e
OVer Gemstm and omt Dr. Yucn" in coun
filings. bot Ncws Corp(Jr~tion offl('ials
and lawyers deny this. They say they
became incrcasingly l'onl'crned that
GCIllSlar, under Mr. Yuen 'lilt! Ms.
Leung's direelion. was overstating the
growth prospeels for lhe ele"'lroni~
publishing guides.
The Gem'tar board began an internal
in\'l'stigalion thai led to revenoe rc.,tale-
ments that would tOlal some $330 million.
A, Ihe accounting issues OCl'ame public
in 2002. Gem"tm's stock withered and lhe
boardroom turned venomou,. M,- Yocn
and Mr, Murdoc~ met scveral timcs-
al'l'ompanied only by Mf. Arkin on
Mr. Yuen's side or Mr. Chemin with
Mr. Murd(xh-IO negotiate a graceful exit
for Mr. Yuen.
Those negotiations led t() Mr. Yuen',
alld Ms. Leung" s dCfli1l'1urcs in November
2002. Ilut to Mr. Yuen's ,urprise. a nearly
$30 IIl1l1ion scverJnce negoliated with
Mr. Murd<K'h was placed in ,'Snow by
GeOlsl"r at the behesl 01 the S.E.C.
Mr. YUl'n ha' admitted that shortly
aHer Gemst:,r receivcd a broad subpocn:l
from the S.E.C" he dell'led infonnation
from a hard dri"e in his Gemslar
omi.'e, including e-mail and eOt"JXlrale
docUIIlCIlIS. Then. the day before he was
scheduled to lcslify befon' the S.E.C..
Mr. Yucn inst:,lIed a progratn thai crascd
other files. A w,'C~ later, he had the hard
drive removed from his office. according
to the ",illli,wl pica he entered into la't
yc:tr.
68 PART 1 • INDIVIDUALS IN ORGANIZATIONS

Mr, Yue,,'s lawyers say Ihis was an
emu in judgmenl. "ot an admission Ihat
he had eommined fmud, In pleading
guihy to the obstrunion c'barge last
Oclober, I\lr, YueTl had agreed to serve
six months of home delention and spend
two ye<lrs on probatioTl, But both the
S.E.C and (kmstar in its "ietim', brief.
pelltioned a federal district judge, John
Waher, to ",jed the deal.
Richanl L. SlOlIe, il lawyer for Gemstar
with ~l()gan & Hanson in Los Angel<',.
argucd thi't as <I result of the conduct by
Mr. Yuen and others. Gem'tar had aln.'ady
p:'id morc than 570 million to scttlc
shar~holdc>r lawsuits, plus a $10 million
line 10 the SEC
In additiml to the billions of dollars in
Illarl:ct vi,luc Gcnlsli'r'S shareholders had
1(l>t. Mr, StOtK' ",id, G:mstar hal; ilK'um'd
Illore than $100 million in legal fccs
rdated to im'esligating and pursuing
Mr. Yuen,
In December 2005, Judge Walter
rejectcd thc tcrms of thc plea and Mr.
Yucn withdrew it,
LaSI ycar M,- Yucn struck a deal with
th,- SEC. under whidl hc would havc
paid somc $14 million and a,'oided trial.
But Mr. Yucn inslsled that the money
comc from the frozcn 530 million
SCVcntnee. Whcn thc Judgc reje<:'tcd that
requcst. Mr. Yuen told his Iawycr. "I havc
no oth~r fund,," This wa, uncxpeded.
givcn that, among othcr e:lmings. Mr.
Yuen had sold 559 million of Gem'tar
stock 111 the spring of 2002.
The S,E,C:s c'ase again't Mr. Yuen
proceeded to Irial. "hcre hc and Ms.
Leung testified thaI he did nol knowingly
order or commit :1t1y accouming fmud, In
her ruling againsl M,- Yuen on Marc'h 20,
Judge Plaeizcr wrotc that she "did not
find the testimony of either Yuen or
Lcullg to be persuasive or cred ible:'
All thc' othc'" implicat,'d in the
Gemswr troubles, including 1\--Is. Leung:
Gemstar's ,tuditm. KPMG, and three
olhcr former Gemst;tr exccl'ti"es ha"e
ag"",tl to settk the SEC. daims against
lIlCllI, KPMG h~d paid $10 million. alld
Ms. Leung has agrecd to p'ly $ 1.35
millioll.
Fur Mr. MurdOl.'h's company. one of
the scars fronl its involvemcnt with Mr
Yuen is a deal it ""nduded with Mr.
Malone shortly after the mcrger. ill
Scpt"mbc-r 2000. Mr. Malonc traded his
2 I per<:em intcre't in Gel1lstar-TV Gu ide
for a roughly 12 p.;rcent nonHlting
intcrcst in the News Corporation that.
combincd with 6 perccnt he 'Ilready hcld,
made him the conglomerale's large't
sharcholder oUbide thc Murdoch family
Given the conHng eollal'sc in Gemslar
,hare,. that prm·ed to be a brilliant m,wc
for Mr. Malone. Two years ago, he
,urpriscd M,- Murdoi.·h I>y convening hi,
stock into voting shares. Last year, Mr.
Murdoch pUI in pl~c'e a poi,on pill to
stave off his erslwhile friend and panllCr,
Gemstar now o<X'upie, a relatively
quicI corncr of the News Corporation.
Mr. Murd".:h"s and Mr. Yuen', "i,ion for
the e1cclrollic progr~mmill£ guidc as a
major moncy makc>r has yet to materialize.
Gcmsl<lr sl~lrcs closed on Friday at $3.06.
dO\\'llfmm$41 in2CXXJ.
Mr, Yucn has spcm much of his time
since Gemstar at a house in the Pa,sadena
hills 1IIId at another house ill L:lgulla
Bc'ach. Calif. Peopk e10se to Mr. Yu('n
wondcr why he did not mo"c 011 from
Gcmstar while he had tllC ehallc;e. Had 11<'
takcn the buyout offers for tlJc cOl1lIJ1Iny
in the late 199O's he would ha,'c w~lked
aWilY with 5300 million.
AnOlllCr fonnel memocr of G<'rnst~r's
managemem tcarn. who. li\;e others
intcrvie\\'cd for this article asked not to
be identificd because of the litigation
surrounding Mr. Yuen, r,"'allctl asking
Mr, Yuen shonly aftcr the merger with TV
Guidc why hc h:ld not cashed oul.
M,- Yuc"', response' "Sini"g at tlJc beach
wilh ,,11 thm moncy IS my idea of hell:'

Questions for Discussion

I. Based on the material in the case and the chapter content, how would you describe Henry
Yuen's per;.onality?
2. How might his pcr;.Ol13lity and the situation he was in have contributed to his actions m
Gemstar'!
3. How would you Char<lCICrize his abilitics?
4. Based on the information in the case, do you Ihink he is high or low on emotional intelli-
gence" Why? Be sp.;cific,

eh' ;XrlU york (!am,s

Served as King of England, Said the Resume
By Mll/l Vi/hmo, March 19. 2006, Se,.liotl J, fl. 9

Q. YOII ",','11 10 /ll'dllle .\"OlIr rhUIIU'. To li'·e, emen'lining. "'I)'. "",usino: Of funny:' employment .screening company 111
,../IlH deSree i.l· il urr"/lfl/ble tv t'1II/wllilil said Barry A. Lic'bling. IJr~,idc,nt of Clcveland, ,aid his organization found
-,"our skills lIIul e,lfleriellce? Liebling Associatcs, a mal11lgeIlIent th,ll 56 percent 01 "'sullies comaiocd
A. A "'sume i, your be,t shO! at e<msuhing firm in New York. "But all of fals~h,><.>tls of some kind. "When you

persu:lding prospectivc employers 10
meet you in p"rson and learn more ~bout
you, but if you vccr from the trulh. you 're
ouloflinc'.
"A "'sume c"n be illtention·gr.lbbing.
st"'1Ii"o:, interesti"g, intrigu;ng, pm\l><,·a·
lh<<t l1K'anS lIOthi!l); if the content isn't real:'
Q. How oft"I! do pm/,I" I"l.,'ify
rhlllllh?
A. E"idemly. fairly often Nick
Fishman. uecut;vc vice presidenl of
Background Infonllatioll Services. a pre-
consider these numbers:' Mr. Fishman
said. "if YUU'f(' nOt thc one who's
falsifying somelhing, your ncighbor
probably is."
Even high-Ic\'C1 employees SOOK'titI)CS
engage in false adverti,ing. Last month,
 CHAPTER 2 • INDIVIDUAL DIFFERENCES: PERSONALITY AND ABILITY 69

for example, David 1. Edmondson, the
former chief exe('utive of Radin Shack.
the electronics retail chain based in 1'011
Wonh, resigoed afler acknowledging that
he Iwd c1'limed to ha"e two colle),'e
dcgr<'Cs but "'-'tually had nooc.
Q. \1'1i\' 110 l);,ol'le lie 011 II/eir "'SUllies?
A. "MoXI applicams do it because they
are ins«ure about their experiences .md
want to seem more <jualified:' said Roben
S, Feldm,m, professor of psychology at
the Unive"ity of Masxa('huSl.,tts in
Amhel"S\. "When we w:'m 10 try to be
likable, we xhade things to put tIK'm in lhe
beSt possible light." Mr, feldm.m said,
'"Unbx people are p,,-'tly surc that ",sunK'
is ),'oin),' to be checked, ifs temptin),' to
shalk reality and mah, one's prior
experietlCCS more flowery:'
Rachel Weingarten. presiocnt ofGTK
1I--1arkeling Group. an enterlainment
marketing finn in Brooklyn, says one lie
begels anmher, "With a 10\ of people.
when they first put in something that's
untrue, it", nOI a grandiose lie. but
in,h,:ad a minor det<lil," ,he said, '"Over
time, they add to it until they've got a
eomplelel y difTerent experience. and they
beliC''C e,"ery wone
Q. lVllicllfllC!S </r" colI/mOlI/\' mim'/I'
[nell/ell?
A. You name i\. people h.,,"e made it
up. A 2003 ,u,,'ey by the Society of
Human ResouKe Management. <I trade
a,;.,(x'iati"n in Alexandria, Va .. f\>und that
44 pereent of2.6 million rcspollocnts said
they had mi,stated their work experience
on their resumes, And a 2(l(l.\ report by
the federal Bure<lu of Inve'llgalion
eSlimated. based on a sampling, thai
500.000 people in the United States had
lisled false <'ollege degreex on their
resumes and work applications,
Donna Flagg. a prin('ipal of Ihe
Krysalis Group, a human resources
<'Onsuhing fiml in New Yurko ""id grade
point averages were often liberally
rounded upward. 1uming a 3.6 into a 4.0.
Then there's lhe nebulous timeline.
,,'hieh l.,.lichelle lI.<x'('ia. ,-in' prexident of
Human Resourees al Authoria. a stamng
<'Ompany in Waltham. Mass .. des..-ribed
as stretching the dur;ltion of employmenl
to eliminate gaps,
"A candidate mighl say they worl;ed
at a eompany 'from 2004-2005: but in
fact. th:'t person only worked :ll the
company from NO\','l1lber 2004 to Jan·
u:,t'}' 2005. which is hurdl) a full year:'
,\15. Roc('ia said.
People ulso tcnd to e~aggerate their
skills. Anna h'ey, author of "Tht Ivey
Guide to Law School Admissions"
(Hareourt, 2005). says unscrupulous
applic~nts may fal>ely claim knowledge
of a langu"gr or u compulcr program.
"All it takes is one interviewer who
happens to spe<lk llie language 10 call
your blufT, and that one fudge under-
mines the credibilily of everylhing else
you say ~hout you,..;clf:· Mx I,ey. who
I"'es m Orlando, Ra" said.
Q. Is il wmlll! 10 omil ("en"ill fll('IS or
ex,,,,r;"IIU'S 10 Ji,-g,o'u axe?
A.lflhe information on your r,,-ume
is ,lCcurate. you are free to le.we in or
take out whalever yOll like, George f.
Brenila. a pan ncr al the New York law
ftnn Clifton Budd & OcM<lri'l. said it
wax perfectly acceptahle to list a degr<'C
tlwl you camed from a panicular school
without revealing when you reeeived it.
Undcr the Civil Righls Act :lnd lhc Age
Discrimination in Employmem Act. "he
said. the only age-relmed <juestion em-
ployers ~re legally allow(,d tn ask i,
whelher an <lpphc<tlll is over Ill:'
"DisGui,ing age might look suspi-
cious:' he said. "but ifs perfectly within an
employee', rights under the law."
Q. \1'!lilll'rt'CllUliolls ,-llOu!d \'011 e1/>ff1
a" elJlll/")'''' 10 lake "gil;",! fm",/?
A, The fcderi,l Fair Credit Reponing
Att .<llow, employers 10 I"erify ("'et)'thing
on <In applicant's resume, M:my 1\l'lnagers
run ,impk baekground ,'hn'h On the
Internet before the hiring process con-
dudocs, On rare oe<'a,ions, a emnpany will
retain a screening company to verify
a r!'sum\" after ,m {'111ployc{' lias l:x-cn
hirc<1.
Van('e. an investigation and s{'('urity
firm in O~kton. Va .. re<juires ils new hires
to ,i),'n do,:umcnls indi~ating lliat
evel)'lhing on their resume and job
application is Inte. Drew ~kKay, ,enior
vice president and deputy general
~ounsel, said that a I<ltcr disco"cry thul an
employ(", had violmed this ('ontran was
clem grounds for termination.
"Our syslem is all ahout the facts,"
Mr. /l-kKay said, "If you tell Ihe tnnh
from the beginning, )'OU hav'e nothing to
worry about."

Questions for Distussion

1. How is the l1lana!!el1lenl of abi Iity in or!!.mizations affected when job appl i"'l1lts Iie OIl
lheir r6ullll's"
2, In what ways C~lIl Iyin!! on resumes hUl1 job applicants?
3. How docs lying OIl resumes affttl employers'!
4. Why do 'iOmc peopll' f<:cl the need toJi<: on th<:ir re,umes'!
 PAR T 1
r.I-lAPTER Individuals in Organizations

1
VALUES, ATTITUDES, AND
MOODS AND EMOTIONS

OVERYIEW

VALUf.S, ATTITUIlES. ANn Moons ANI) EMOTIONS

.lOll SATlSMCTION

TIIEORn:s Of' .108 SATISFACTION

ORGANIZATIONAL COMMrnn:NT

SUMMAR\'

EXERCISES IN UNUERST,\NI)IN(; ANI) l\IANA(;II"(; OR(;A."IIZATIONAL IlEIiAVIOR

Learning Objectives
After studying this chapter, you should be able to:
Describe the nature of work values and ethical values and why they
are of critical importance in organizations.
Understand why it is important to understand employees' moods
and emotions on the job.
Appreciate when and why emotional labor occurs in organizations.
Describe the nature, causes, theories, and consequences of job satisfaction.
Appreciate the distinction between affective commitment and continuance
commitment and their implications for understanding organizational
behavior.
 Opening Case
A WINNING FORMULA AT VALERO ENERGY
How can an old-economy COfflpilny transform itself, prosper,
and be good to its employees?

decade ago, no one would have thought that San Antonio, Texas-based
Valero Energy-with a single oil refinery processing low-cost, sour nude
oil-would become the powerhouse it is today. In the ensuing years, Valero
CEO and now chairman, Bill Greehey, proceeded to buy up unwanted
refineries from other companies at a fraction of their replacement costs.
Today, Valero is the largest oil refiner in the United States with
18 refineries, mostly focused on sour crude oil. l Valero's revenues
and profits have soared,l And while this success is clearly driven
by a combination of good business decisions and market
conditions, it is also driven by the important values and attitudes
that pervade the company and all it does.
Greehey values his employees-so much so, that they come first,
before shareholders and customers. As he puts it, u . . . the more you
do for your employees, the more they do for shareholders and the
more they do for the community...3While devastating accidents
have plagued some other oil companies in recent years, Valero
ranks ~fety among one of its core values. The company installed
new safety equipment in the refineries it purchased and pursues
~fety relentlessly; any intentional violation of ~fety rules on the
part of managers or employees results in dismissal. 4
Greehey realizes that employees are the backbone of Valero
and is committed to doing right by them. Not only does Valero

.. ~
.. provide employees with generous benefits, it also has a no-layoff
-- policy. Managers are expected to treat employees with respect
and like they would want to be treated themselves; managers
V;llcro Encl'l!Y dcmonstr;ltc'd its commitmem who show a lack of respect for their subordinates, treat them with
to it, employc'C!> in IOC w;lke of Hurriem", condescension, or, for example, curse at them can lose their jobs. s
K;ltrina. which hil toc Louisi:m:' CO'lStl inc in The values and attitudes that pervade Valero were put to the
2005. In addition l<l ddiwring suppli..,,;.
test in the wake of Hurricane Katrina, which hit the louisiana
"Olter. and food to employees. V;llcro brooght
coastline in 2005. The remarkable ways in which employees stood
in mobile hOlTll.·s fur those employees and
tocir f;lmilies whose hol)l~ well: unlivable. by each other and the company, and the ways in which Valero
stood by its employees, literally brought long-time employee and
plant manager for Valero's St. Charles oil refinery near New
Orleans, Jonathan Stuart, to tears when he was briefing Greehey and
other key executives on how the refinery and its employees had fared a
few days after the hurricane had wrought its destruction. Stuart headed up
a 50-person crew that rode out the storm in the shut-down refinery.6
The crew stood by Valero and Valero stood by its employees. For example,
the day before the hurricane hit, a supervisor used his own personal credit
card to purchase supplies and stayed up all night cooking meals for the crew.
Crew members worked twenty-hour days, replacing motors, putting up new
power poles, and repairing power lines. Within eight days, the plant was up
and running (while a neighboring Shell refinery was still shut down); at the
same time, the crew had determined the whereabouts of all the plant's 570
employees. 7
 CHAPHR 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 73

Back in San Antonio, headquarters arranged for supplies to be delivered

to employees whose homes were devastated and trucks brought in water,
food, chain saws, generators, refrigerators, shovels, and Nextel phones (the
only cell phone system that remained operable). For employees whose
homes were unlivable, 60 mobile homes were brought in. The company
provided free fuel to employees and law enforcement personnel and the
Valero SAFE fund provided employees with up to $10,000 in aid. Valero
continued to pay its employees while other refineries stopped issuing pay
checks. Melvin Edgar, a security supervisor, who spent two days on the roof
of his house in the Gentilly section of New Orleans before being rescued and
brought to the over-crowded Superdome, lined up for a bus there to take
him to San Antonio. When he arrived, he called Valero, and office services
manager Robert Pena picked him up, took him shopping for clothes, took
him for a meal, and then took Edgar to his own home to shower and get
some sleep. The next day, Pena drove Edgar back to S1. Charles so Edgar
could find his family. Recalling the experience, Edgar says, nl wanted to get
back to find my family and get back to work. If it wasn't for Valero, lord
knows where I'd be. ~8
Clearly, Valero and Greehey came through for employees and the
community during the aftermath of Katrina with flying colors. And the
company's commitment to its employees shows through in their commitment
to the company and high levels of job satisfaction. Not surprisingly, in 2006,
Valero Energy ranked number 3 in Fortune's 100 Best Companies to Work
For. 9 ln explaining why Valero is a great company, Fortune wrote nWhen
disaster strikes, this team pulls together. After hurricanes Katrina and Rita
hit, Valero dispatched semis filled with supplies, set up temporary housing
for employees, fed volunteers-and donated $1 million to the Red Cross. to H

Overview
What p<:ople think and feel about work in general. and about their jubs and organizations in
particular. affects not only how they behave at work but abo Iheir o\"er<lll well-being-how
h<lpPY. he<lhhy. and prosperous thcy arc. r: rom the open ing case. it is c1c<lr Ihat cmployces at
Valero arc not only satisfied with their jobs and cOl1uniued to the organizmion. but tllat
V<llero stands by and is committed to its employees and their own well-hemg. In this c1wp-
ter. we focus on the thoughts <llld k'CIings that dctenlline how peuple experience work and
the ways in which these thoughts and feelings affect organizational behavior. We discu.'s
values. allitudes. and moods ,ntd emotions-the ditTercnt types of thoughts and feelings
people h:lVe about work in general and about their jobs and org<lnizations in particular.
We describe the nature and consequences of two uf the most widely studied work attitudes:
job .,atisfaClion and organizational commitmcnt. By the end of this chapter. you will have
a good apprccimion of the rallge of thoughts and feelings eentmllO tile experience of
work and the implications of these thoughts and feelings for understanding and managing
organizational behavior.

Values, Attitudes, and Moods and Emotions

The thoughts and feelings people havc about work. their jobs. and their organizations
determine how they experience work. Some thoughts and feelings are fundamell1al and
bro.1d: they are concerned not w much with as~cts of a p:,,'icular job or organization but
74 PART t • INDIVIDUALS IN ORGANIZATIONS

more with the meaning and nature of work itsclf. These thoughts and feelings, called
l'iI/He)'. are relatively long lasting. Other thoughls and feelings are more specific. Those
that are focused direl:tly on a person's current job or urgani:wlion, ""llIed .rork lI/limdeJ,
are not as long lasling as values. I\hrk /IIomfs (I/Id elllOliollJ -that is, how people feel wh iIe
they arc performing their jobs from day to day. hour to hour. and even minute to minUle-
also determine how they experience work. Next we describe each of these determinants of
how people experielll:e work.

The Nature of Values

VALUES
One', per.oMI convicti,,", ~boul
"h~1 """ ,hoold ,Iriw for in life
and ho" 01><' ,hook! beha'-e,
Values are one's personal nlllvictions aboul "'hat one should strive for in Iife and how one
should behave. I I From the opening case, it is clear that Bill Grechey's values include pro-
viding a safe working environment for V,llero's employees, pUlling them [,rst. ,Ind looking
oul for them alld their l"Ommunlties in times of need. While researl:hers have identifit'iJ
multiple values ranging fmm a world at peace and a world of beauty to a comfortable life
and social recognition, two kinds of values thm are especially relevant to organi~mional
beh:lvior are work vulues and ethical values (see Exhibit 3.1: in Chapter 17. we describe
another type uf imputt,mt values: national values).

WORK VALUES
..\n cmplo}<'C" pe"",,~1 conv,c·
I;on, about" h.l 001,'0111(:' <.me
,oooJd ""1""'1 from ,",on.. and
ho.... one ,bould beh...... al ,",on...
Work Values, Work vulues are an employee's personal convictions about what
outcomes one should expect from work and how one should behal'e at work. Outcomes
that people might expect to obtain through work indude a comfortable existence with
family security. a sense of acnlmplishment and self-respect. social recognition. and an
exciting life,12 Ways flCople think they should behal'e at work indude being ambitious,
imagirHltive. obedient. self-controlled, and resflCctful to others. 13 Work values are
general and long-lasting feelings and beliefs flCoplc have that eontributc 10 how they
experience work.
Why are work values important for understanding and Illanaging organizational behav-
ior'l They renect what people are trying to achieve through and at work. An emplo)'ee
who thinks that he or she should learn new things on the job, for example, will be unhappy
working as a cashier in a supermarket becausc. oncc he or she has Icarned how to u>c the
ca~h register. there will be little opportunity for any further learning. His or her unhappiness
m:lY, in tum, cause him or her 10 be less helpful to customers or more likely 10 look for
another job.
Thc work values that rescarcllers in org:lIli~ational behavior have identified gcnerally fall
into two broad categories: intrinsic work values and extrinsic work values (sec Exhibit 3.2).'~

EXHIBIT 3,1

Values in the Workplace

Val....
Person.1 <on,,<,ion, about whal
one .hould "ri"" for III hfe and
how one ,hould b<h...

Work waJue. En.;<aJ ...lu<5

Personal <on"Won, aboil' PeNOnal <o"vi",iol1' • bout
outeom.. and beha"o, a' wo.-l ""'at
is ..gn•• nd wrong

In.';nsic: wori< ..-aJu.. Extrinsic: won. .-..I"",

Value, .h., are ",Ia.ed
'0 ,he natute of ,he
worl<. i,self
Value. ,hat a", ",Ia,ed
• 0 ,he <on..quen«,
of worlt
~~
Utili,arian ..-aJuos
Dem",n, produce .he
g, e" good fonh •
g " numb<r of peopl.
tigh' ..-aJuos
Moral Ju,,;<_ .-..I"".
De",,,,n. pro.ect ,he Dem,o", .11<><:a.e
fund,men,.1 ngh' b<".r." .nd h.rm, ,n •
and pnvilige' of propl. f.ir, eqult.ble mannt,

EXHIBIT 3.2
A Comparison of
Intrinsic and b:trinsic
Work Values
INTRINSIC WORK VALUES
\\or\. valuc\ Ihm lln' ",lall-d to
lhe nalure of wort. ilself,
EXTRINSIC WORK VALUES
\\ork 'alue' thai arc relate'>!
10 the eom".."tjucoc", of "or\.
CHAPTER 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 75
Intrinsic Work Values Elltrinsic Work Values
Interesting work High pay
Challenging work Job security
Learning new things Job benefits
Making important contributions Status In wider community
Reaching full potential at work Social contacts
Responsibility and autonomy Time with family
Being creative Time for hobbies
lntrinsk work .'alues ure vlllues thlltllre rel1l1ed to the 11<l1Ure of the work itself.
Employees who desire to be chullenged, learn new thlllgs, make importanl eOlllributions.
and reach their full JXltential on their jobs have intrin~ic work value,. These employees
want challenging jobs thm usc all of their ski lis and abilities and provide them wit h respon-
sibility und llulOnomy (the ubility to Ilwke decisions), while m the sume tillle giving thelll
opportunities for personul growth. Employees who desire adventure. bemg ere:lti"e . or
helping (Jl.her people also are satisfying intrin~ic work values because the work they perfoml.
whether it be building new businesses. composing a new symphony. or helping a troubled
teen. is whut is importuntto them.
RUlher than valuing feallires of the work itscJL some elliployee~ have l·xtrinsic wurk
\'alul's . values that arc relmed to the conse(juences of work. Employees whose primary rea-
son for working is to cam money. for example. have extrinsic work values. They see work
primllrily as a meuns of providing economic sceurity for themselves and their families.
These employees vulue their work not for its own sake but for its consequences. Other
extrinsic work values include a job"s status in the organizmion and in the wider commu-
nity. social contacts provided by the job. and the extent to which a job enllbl"s an employee
to spend time with his or her fumily, pursue a hobby, or I'olunteer for a worthy causc.
Because working is the way muSt people make a living . there is an extrinsic clement to
mo,t people's work values. but mllllY penplc ha\'e both extrinsic and intrinsic work vallics.
Extrinsic and intrinsic work values differ ill their relali"e importance from one person to
another. An elemenlary schoolteacher who likes teaching b\n (joits her job to take a higher-
p;:Iying posilion as a sales represcntative for a computer company has stronger extrinsic
than intrinsic work values. A social worker who puts up with low pay and little thanks
because he feels that he is doing something important by h"lping disadvantaged families
and their chi Idren has stronger Ullri nsie than eXlrinsie work values.
Whcn making changes in the workplacc . managcrs need 10 take into account cmploy-
ees' valucs. Managers may try to increase employees motivation by making their work
more imeresting. giving them more freedom to make their own decisions. or expanding the
number of activities they perform (see Chapters 6. 7 . and I:l for det~lils 011 mOlivation).
A manager might try to increase thc motivation of a computer sales reprcsentative by
requiring her to call on different types of customers llnd by giving her the re,ponsibi!ity for
selling up the equipment a customer purchases.
The success of such ,lpproaehes to increasing motivalion. however. depends 011 the
extent to which the change in an employee's job relmes \0 the employee's \'alues. Making the
work of the computer ,alcs rcprcsentat ivc more interest ing and challcnging may do little to
increase her motivatioll if her strong extrinsic work values result in her being motiv1lted
primarily by Ihe money she e'lms. Indeed. Ihese efforts muy actually backfire if Ihe sales rep-
resentalive thinks she is worting hardcr on her job but not n.:eciving any additional fmandal
compensation. Employces who are extrinsically motivated Illay be much more responsi\'e to
finallCial ineemives (such as bonuscs) and job sc<:unty than to ehunges in the work itsclf.
Because work values rcnt"Ct what employees arc trying to achieve through working.
they hold the key to understanding how employees will react to different evems in the
workplace and to understanding and managing organiZalional behavior. Managcrs need to
76 PART t • INDIVIDUALS IN ORGANIZATIONS
ETHICAL VALUES
One \ perwnal con,-ietion, aboul
"hal" righl and wrong.
UTILITARIAN VALUES
Valuc, th~l dicl~lc lilal <!""i"on,
,houl<! be madc Ihal generalc tl1c
grealC'\1 good for II1c grealC'\1
number of peoplc.
MORAL RIGHTS VALUES
Valuc' Ihal ,liCWlC thai d... ,;i"oo,
'houl<! be madc '0 tllullhe
deci,ion' prodm-e the grcate"
good for ll>c grcalc'l number
of people.
JUSTICE VALUES
Valuc, thai di.'lalc thai d,,,:i,ioo,
,hould be made io "")" tllal
",id
all.-.;ate r.enefil harm among
tho"" affeClcd by the deci,ion> in
a fair.equilablc. or impartial
manner.
CODE OF ETHICS
A ....1 or formal rule> ancI
standard,. ba-.ed on clhical ,'al"",
am belief> aboul whm i, ril!hl lind
"mng. that cmpl"l......." can u...: to
noakc apprl'{lriate dcci,i(ll" w-hen
the imc",", of Olhcr illdividuab or
groups arc al 'lal.c,
WHISTLEBLOWER
,\ p",,'on who inform, people in
po,ilion, of aUlhority ar.dlor lhe
public of in>!a"""" of" rongJo--
ing. illcgal beh",'ior. or unelhical
behawx in an organi,allOl1,
be especially sensitive to the work \'alues of their subordinates whcn making changes in
jobs. working hours. or other aspects of the work situntion.
Ethical Values Ethical \'alues are one's pcrsunal<.:onvidions aboul what is righl and wrong.
Ethical values hclp employccs decide on the right COlJrsc of action and guide their decision
making and beilavior. 15 Especially in situations in whicilthe propcrcoursc of actioll is unclear.
ethical "alues help employccs nlake moml decisions. Some ethical v:llues:lre focused on an
individual's <.:onduct and whether it is righl or wrung. such as being honesl Of trustworthy.l~
Other kinds of ethical valucs comc into play when a person must decide how to makc
decisions that have the potenti,llto benefit or ilarm other individuals or groups. These eth-
i<'::l1 valnes arc espcci:llly import:lnl guides for behavior when a decision l1I:1y benefit one
individual or gruup 10 the dclrimelll of anOlher. 17 For example. when major corpor-It ions
like Ea.,tman Kodak announce plans to layoff thousands of employees duc to lower
demand for their products ,md services. the stock price of shares in these companies often
rises.l~ Fewer employees means fewer costs and grealer profitability. The workforce
reduction benefits sharehulders uf the <.:mporation beC<luse Ihe value of their stock has
increased. but it hurts those employccs whose jobs have been or will be cut.
Utilitarian. moral rights. and justice values are complemetllary guides for Decision
making and bch"vior when a dedsion or adion has the polential to benefit or h:lrm
others. t9 Utilitarian l'alues diclate that dN'isions should be made Ihm generate the great-
est good for the greatest number of people. Moral rights vlllues indicatc that decisions
should be made in ways that prolect the fundamental rights and privileges of people
afl'ttled by Ihe d<."CISioll. such as their fret'iJom. safely. and privacy. Justice values dictate
Ihm de<.:isiuns should be made in ways Ihm allocale benefil and harm among those affected
by the decision in a f<lir. equitable. or impartial manner. 2Q
Each kind of ethical value should be taken into account when evalualing whether or
nol a <.:oursc of adion is an ethical one. Even with these values as guides. employees afe
often fa<.:cd with ethi<.:al dilemm:ls be<.:ausc the illlerests of those who might be affected by
the decision are oftcn in conflict and it is IlOt always clear how to dctcrminc. for example.
how to weigh the benefits ,md com of different groups to determine the greatest good.
which rights and privileges must be safeguarded. and whm is a fair or ethical dedsion.2 1
For example. what SOft of job security do loyal and h:lrd worki ng employecs deser\'e? What
docs the corporation owe its shareholders in terms of profits'!
People de\'elop tileir own individual elhical values over tUlle based on influences from
l;lIllily. peers. s<.:h(KJlillg. religiOUS instillltiolls. and OIher groups.n As employees. these
ethical values guidc their behavior in the workplace. Sometimes different groups of
employees or people holding certain kinds of jobs or professions develop what arc called
professional ethics.13 Physicians. lawyers. :lnd university professors have professional
ethics that didale appropriale and inappropriate behaviors. Societal ethics. embodied in
laws. customs. practices. and values. apply to a society as a whole.
Individual ethics. professional etilics. and societal ethics all contribute to an orgtl!liza-
tion's code of ethics. A code of l'thies is tile set of formal rules and standards. based on eth-
kal values :lnd beliefs about what is right and wrong. thai employees <.::In lise \() make
appropriate decisions when the illlerests of mher iudiv iduals Of groups :Ire at stake .24 Recent
corporate scandals. allegations of wrongdoing. and fraud at companies such as WorldCom.
Enron. Tyco. Adelphia. and ImClone2~ h:l\'e resulted In m:lny organizations taking active
steps 10 ensure thm employees behave in an elhieal manlier ;lIld Iheir <.:odes of ethks are
followed. Howc\'er. some of the organizations in which the most egregious inst:lnces of
fmud ha\'e recently occurred actually did ha\'e codes of ethics. 26 Thc problem was that they
were nol fullowed. and outside parties such as audilorS. lxlnkers. ttnalysts. and lenders did
not inter\'ene when they should ha\'e. Rather. as in Ihe case of Enron. il took Ihe coura-
gcous action of a whistleblower (Sherron Watkins) to bring the wrongdoing to lighl. 27
A whistiehlower is a person wilo infollns people in positiolls of authority ttndlor the public
of instances of wrongdoll1g. illega) behaVIOr. or Ill\Clhicallx:havlOf in an organizalion. 2S As
Ihe a<.:colllpauyiug Managing Ethically feature illustrates. having a <.:ode of ethi<.:s only
results in ctliic:ll behavior whcn it is followed and cnforced.
 CHAPTER 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 77

Managing Ethically
When Codes of Ethics Fail

Enron had a cooe of ethics and a conflict-ol-interest policy that, if followed, should have
prevented the downfall of this oru:e high-flying company. However, its boord of directors
waived the code and policy to allow Enron managers to lorm the off-balance-sheet
partnerships that destroyed the company.29 At Tyco, one 01 the lawyers in charge 01 com-
pliance with ethics policies has been accused 01 falsifying records. Arthur Andersen llP,
Enron's auditing lirm, was convicted 01 obstruction 01 justice for destruction of documents
pertaining to Enron's audits, Ironically, prior to the conviction, Arthur Andersen routinely
performed ethics consulting selVices for clients, 30
"Ethical failures usually are not the result of peo-
ple not knowing the law or regulations. It is because
they felt a variety of other pressures," explains
Barbara L~ Tolfler, an ethics el<pert and professor at
Columbia University's business school. 31 It is
because of these pressures that the federal govern-
ment passed the Sarbanes-Oxley Act of 2002, which
has dramatically increased the reporting and
accountability obligations of public companies and
also requires independence on the part 01 a com-
pany's audit committees 32 The act also provides pro-
tections for whistleblowers and has increased the
criminal penalties for those engaging in white-collar
crime, The act has been called, "the most dramatic
change to federal securities laws since the 19305. "33
Does passage of the Sarbanes-Oxley Act over-
ride the need for an organization to have a code of
ethics? Absolutely not Rather, the act not only
The fonncr eh icf t1nanci:d offocer of
requires a code of ethics be enacted, but it also
En",n Corp .. And",,,, S. F~SlOW is
escorted in lhe custody of the Fill to the
mandates strict adherence to it. It also requires that
34 If
f,'ocml murthousc Wcd""sJ~y, Ocr. 2, organi2ations have ethics programs in place
2002 in Hou,ton. Fa>;10W surrendered (0 a company is convicted of fraud, the penalties
FBI <lgl'n\.< "-, prose'tutors WCT<' might be reduced if the firm can document it had
expected to file. implemented programs to encourage ethical
behavior and detect fraud. Many organizations such as Ford Motor Co, and Johnson &
Johnson are stepping up their ethics training for all employees through the use of Web-
based programs offered by companies such as Integrity Interactive Corp. and Legal
Knowledge Co.3S A number of nonprofit organizations, such as the National
Whistleblower Association, formed in 1988, provide assistance to would-be whistle-
blowers 36 Hopefully, heightened public awareness of the potential for corporate
wrongdoing, penalties lor those convicted of white-collar crimes, enforcement of the
Sarbanes-Oxley Act. and protection for would-be whislleblowers will reduce the
incidence of unethical behavior in organizations.
78 PART 1 • INDIVIDUALS IN ORGANIZATIONS

The Nature of Work Attitudes

WORK ATIITUDES
Colli.'<-'t;'m, of feeling,. belief>.
and thought\ about 00\0. 10
bchaw in one', job and
organ".at,ol\
JOB SATISFACTION
T1lc ~'{,lIcclion of feeling, and
belief> that people Oa\e at>oul
their current.iob-_
ORGANIZATIONAL
COMMITMENT
nlC colle-lion of feeling' and
belief, that people have "boO!
their organizalion "' a "'001",
Work :llIitudcs ;lfe (;olleclions offeclings, beliefs. and thoughts about how to behave thai
people (;urremly hold about their jobs and organizalions. Work anitudes arc more specific
lhan values and not as long lasting because the way people experience their jobs often
changes Ol'er time. For example. a person's work sltualion might be altered due 10 a job
Iransfer or being giv('n or denied a promotion. As a result, his or her work anitudes might
(;hangc. too. Values. in comrast. can and often do remain constant from job to job and orga·
niwtion 10 organization. Two work allilUdes tim! have especially impoTlanl implications
for organizalional behavior arc job s:ltisfaetion and organizational commitmenl.
Jub satisfaction is the (;ollection of feclings and beliefs Ihm people have about Iheir
current jobs. People's levels or degrees of job satisfaction can range from eXHeme satisfac·
tion to extreme dissalisfaClion. In addition to having attitudes about their jobs as a whole.
people also carl hal'e :lllitudes about various aspects of their jobs such as the kind of work
they do: their coworkers. supervisors, or subordinales; and their pay.
Organiz..ational commitment is the collection of feelings and beliefs thm people have
about their organizalion as a whole. Levels of conuniunenl Clm range from being eXlremely
high to extremely low, and pt"Qple can have altitudes about various aspects of their organiz.a-
tion such as the organizalion's promolion practin:.s. the l]uality of the organization's pruducts.
and the organi7-<lt ion "s stance on ethical issues.
Work altitudes, like job satisfaclion and organizatiOrl:lI commitment. arc made up of
Ihree (;()[nponenls: feehngs, the affective componcnt: beliefs. Ihe (;ognillve component:
and thoughls about how to behave. the behavioral component (sec Exhibit 3.3).37 For
cxample, the aJf"j>li\"t' ('uIII!)()n/,1I1 of an employee's anitude is the employec'sfet'/ings
about his or her job or organization. The n'f'nirin' ('(IIIIIJUllelll is the employec's bl'lil'f~
about the job or orgallization~thalis. whether or not he or she belie,'es Ihe job is meaning-
ful and imponalll. The hellm'iora! C(IIII{HJIICIII is Ihe employee's Ihol/ghl.1 about ho\\' to
behave in his or her job or organizmion. Each componelll of a work attitude influences and
tends to be consislent with the other components.
Because job S<lIlsfadion and organizalionall'Qmmitmenl are key delemlinants of the
experience of work and cemral to underslanding and managing organizalional behavior.
""e explore lhcse two work allitudes in depth later in the chapter.

The Nature of Moods and Emotions

WORK MOOD
How l"'Opk fed al t~ lime they
;o;luall> perform Iheir joly,
Work mood describes how people feci m the time they actually perform their jobs,
Some employees lend to !'eel exciled and enthusiastic at work. whereas olhers feel
anxious and nervous. and still OIhers feci sleepy and sluggish. Much more transitory
than vlllues and attitudes. work moods can change from hour to hour. day 10 day. and
sometimes minute to minute. Think about how your own moods hal'e I'aried since you

EXHIBIT 3.3
Components of Work Affective component
How ~n emplO)Iee ""I,~bou,
Attitudes ~ .. oc ~er Job oc org'm""i""

Worl< .<titudeo
Cognitive component
Collec,ion. of f~'ng., beli.fs,
Wha< an .... plO)iC1: beli..., to
bct"'•• bout hi. or ~u job
'nd t~ough" about bow to
be~.v. in onc', JOb ~nd
0' Qrg~"'zo'"",
org'''''''''''''

Bcha.;ocal coml'O""'"
Wh~, ~n .mplO)iC1: I~,n'"
~bQut how,,,beiJ,;,1't in ~i,
0' hoc job 0' organi""ion

1\ wide mnge of silUutiooul f'lCtors
can re,ult in employ~..,s such a,
these expcriellCitlg positjve mood~
mnging fmlll plea.'ant int<'ra<:lions
wilh w,,"'orkcrs 10 rc<:civing
po,itive feruh""k "nd suc.:e'i.,fully
completing a project.
WORKPLACE INCIVILITY
RuJc inlCrpe""",,,t hcha.';llr\
""n"'ti.,c of a I'Kk of regard
and respc':l for olhc",.
CHAPTER 3 • VALUES. ATTITUDES. AND MOODS AND EMOTtONS 79
wokc up today or about how your moods today differ from how you felt yesterday. Then
you will h,I\'e some idea about the fluelUming l1alUre of work moods,
Althuugh people C;1Il experience dilfcrem moods at wurk. moods can be categorized
generally as posilive or negatin'. When employees arc in IXlIi/il'e II!O(}{I.~. they feel excited.
eruhusiastie. a<;tive, strong, peppy. or elated. 38 When employees arc in l!fXmil'f' IIUH)(}:"
they feel distressed. fearful, scornful. hostile.jittery. or nervous. 39 Sometimes employees'
feelings arc neither strongly positive nur strungly negative: they may simply experience
less inteJH;e feclings such as being drowsy, dull. and sluggish or calm. placid, and
relaxed. olO The extem to whieh employees experience positive, negative. and less intense
moods m work is detennined by both their personalities and the specific situation.
Recall from Chapter 2 that empluyees whu are high on the personality trait of /m.liril'c
(iffeetil'ily are more likely than other employees to experience positive moods at work. and
employees who arc high on the trait of l!fl;lIln'c 1if]i;>cli,'iN arc more likely to experience
negmive moods at work. A wide range of situational factors (liso affects work mood-
major events and conditions, such as receiving a promotion (or a demotiol1) and gelling
along well with one's coworkcrs. and relm ively III inor cond it iOIlS, such as how pleasam the
physical surroundings are. 4t If you stop and think a minute aboUlthe different factors thm
influence your own moods-weather. pressures of school or family life. your love life. and
so on-you will sce that many of them. though unrelated 10 work, Ilonetheless have lhe
potelll ial to influence an employee's mood on the job. Getting engaged, for example, may
put an employee in a very good mood both on and off the job. but having a big argumellt
with one's spouse may put an employee in a I'ery bad mood.
Preliminary research suggests that workplal'c inl'jo'ilily, rude illlcrpcrsonal behaviors
reflectin" of a lack of regard lind respect for mhers, may be on the rise. which can lead to
more negative moods being experienced by organizationallllembers. 42 The increasing use
of e-mail and phoue conversations in place of face-lu- face commu nications and mounti ng
woridoads and pressures on many employees has resulted in some managers and cmploy-
ees being uncivil to each other and just pia in rudc .~3 Office incivility can range fmm ignor-
ing a coworker or subordinate, mnking rude comments. or never having the titlle for e\'en n
brief conversation to mising one's voice. being sareastic. refusing requests for help. and
verbal belinlemem. When organizationnl members are uncivil toward each other, there can
be potent ially nu Illemus ncgmi\'e consequences in addition to the recipients of such behav-
ior feel ing bad. such as reduced job smisfaction and lower organizational effectiveness. ol4
Research suggests that mood at wurk has important consequences for understanding and
managing organizational bchavior,~'~ Employees in (XlSiti\e m(Kxls at work, for example, are
more likely to be helpful to each other and those amund them. including diems and customers,
80 PART I • INDIVIDUALS IN ORGANIZATIONS

EMOTIONS
Imen", ,hon-li,·ed feeling, that
are linked to " ,p",,; fie ""u'" or
"ntc-.:cdcnt.
nnd Ilk.'y may nlso be less likely 10 be nbsent fromlheir jobs.46 One sludy foond lhnl s;despt."O-
pie who were in posilive mooJs at work provided higher-quality service 10 cuslomers in a
department store than did salespeople who were not in posith'e moods.47 AIKlther study foond
that the cxtent to which Icnders (in lhis case. managcrs of small relail stores) cxpericnced posi-
live moods wns re];l\ed 10 the perfonnnnce levels of lheir subordinales (Ihe s.llespt."Ople in lhe
st{}rcS).4~ (Leadership is the subject of Chapler 12.) Resean;h has also found that mOlx!s influ-
ence important behaviors ,uch as creativity, derision mak ing. and the accuracy ofjudgmcnts.49
Recelll studies suggest lhatlhe influence thm tnoods hnve on behaviors is likely 10 depend
on lhe silualion or conleAl.loo. 50 ForeAafltple. sOllie sludies h,1\'c foond lhal peoplc in posilive
nxxx!, are nXlt"C likely to cOllie up with unusual word associations, which has been used to
index creativity.51 The reasoning in these studics is that positive moods result in people think-
ing more bffi1dly or expansively. However. Other Studies h,lve found lhm being in a Jlegalive
mood somelimes foslers cre'lIivily. ForeAamplc. when employees arc slriving 10 be crealive
on the job. <tIm have 10 delermine for themselve, how weilihey are doing or whenlhey have to
corne up with a creative idca ulmcr pressure, people in ncgative tml(X/s telm to dcmand more
of lhcmselves ,um put forth more effort to be creativc.51 Whetlk.'r positive lnoods. negmive
ITKxXIs. or both lead 10 creativily :tppcars 10 depend on Siluallonal factors such ~IS the gools or
objcdives that are being SOIJght. the extent to which people l'l'Ceive clear feedback about how
they arc doing. and thc nature of the tasks they arc working on.53 Similarly. wc know that pos-
itive nnd negntil'e m(l(X\s influence decision mak ing. Again. howcI'er. the exact JIm ure of Ihal
influence depends on silualional faclors sud <IS lhe kind of d<:dsion being made, lhe goals of
lhe decision maker. and the kind, of informal ion available 10 lhe decision maker.
Clearly. work nl(l(X.is can have important effects on organi~atiOllallx-havior.MOll;'Owr.
because manngers ;lnd organiz<ltions can do mallY things 10 promole posilive rnoods-for
e.\~unplc. giving people allraclive oftkes 10 work in. giving praise when it is deserved. provid-
illg employees with opportunities for S1x:ial imcraction. and innllporating fun and hUITHlr imo
the workpla.::e-work moods are receiving more attcntion from researchcrs and managers
nlike. Addilionally. since all employees are likely 10 experience negative moods m some lime
or anolher on lhe job. il is import<tnllo understand the consequences of lhose bad feelings ntxl
how lhey might be channeled itl10 effective behaviors. (For more on understanding and
managing moods. see the discussion of emotional intclligcnce in Chapter 2.)
Moods lend 10 be genernl and pervasivc feelings that do not interrUpl employees'
lhoughls or behaviors. Emotions. by conlrast, arc much more inlense than mood,. Emutions
,ue illlense. ,hort-lived feeli ngs thai are I inked to a spccitk cause or antecedenl and illlemJpt
thought processes and behaviors. Emotions have adaptive. evolutionary value in that thcy sig-
nallo people thm solllClhing has hnppened or will happen lhat has nnpliealions for personal
well_being.'S4 Thus. emOlion, alert u, 10 lhings we nccd 10 pay allenlion 10 and lhings we
need to do. For example, the fear a ncwl y hired office worker experiences u[Xln hearing that
her company has had a really bad fourth quarter and is about to layoff employees intcmlpts
her ongoing work as she lhinks aboul how she should deal with lhis polenliallhrc~lI (c.g .. lry
10 ftlld out more informalion. update her re'umc. sl.m I(}()king for olher jobs). Resc,uchers
have identified basic emotions that have universal nonvcrbal expressions such as anger. dis-
gUSt. sadness. fear. <;urprisc. and happiness,5.'i Prel iminary research suggests that certain other
emolions such ns pride nlso 11<I\'e unil'efSlll nonverbal expressions.56
Over lime. emotion, can ft..'Cd inlo nl(l(X.is.57 FlIT e.\ample. if a manager engages in work-
place incivility by berating a subordinate in fmm of coworkers, toc sulxlrdinatc may initially
fcel strong emotions of angcror sharne. As tilne goes by. the intcnse cmOtion mny subsidc and
feed inlo n less intense negative Illood Ihallhe subordinale eApcriences for the remainder of the
day. coloring his or her lhoughls, feclings. ,ux! behaviors, As another example, take thc case of
Mary and Paul Putnam. a dual-can:cr couple who work in differelll statcs and have been com-
mUling on wcekends to sec each other. BOlh of Ihe PUlnams hnl'e been Irying to relocale 10
c1iminnle their 10ng-dislark.'C marriage. nix! they hnve <tgrecd Ihat whoe\'er finds an acceplable
posilion firsl will make the move. R<:n:nlly. Palll received a phone call indic<lting thai he was
offered a [XlSition in a company dosc 10 where Mary is working. It is just whm he has hccn
looking for. J""aul is ecslatic and pUtS whm he has been \I'orking on aside. He is thrilled ~l1ld calls
Mary. and lhe Iwo coont lheir blessings for their good fortulle. A short while Inler.I""Jul realizes
 CHAPTER 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 81

he must get back to work and finish a repon thm is due tn his bnss the following day; thmugh-
out the day. Paul is in a grell1 nKXld. even when he is IlOt thinking about his new job.
Fur Sir Richard Branson. the Oarnboyant founder and chief exccutive uf Virgin Group
Ltd .. positive emotiuns and moods stem from pursuing his love of advemure. starting new
businesses. and enjnying his family life. as profiled in the follnwing Global View.

Global View
Richard Branson Thrives on Excitement

Richard Branson, the maverick founder and chief executive of Virgin Group Ltd, describes
his own experience of work as follows, "I don't think of work as work and playas play. It's
all living I'm living and learning every day. "58 Living and learning for Branson means
indulging his endless curiosity. being adventuresome. having fun. and filling each day with
a seamless integration of work and family life.
British-born Branson. a high-school dropout, has grown the Virgin Group into an over
$7 billion global collection of over 200 companies, each with its own CEO and board of
directors. These companies are truly a diverse lot ranging from records (Virgin Records)
and airlines (Virgin Atlantic) to retail goods, cell phones, and consumer electronics s9
Potential new ventures
range from grape fer-
menting and oil refining
to space travel (Virgin
Galactic is taking reserva-
tions for space travel
planned to lift off in
2008)60 Some of his
companies are very suc-
cessful and others not so
successful, but Branson
clearly has had enough
success to continue to
pursue new businesses
Sir Rich:mj Branson. foulllkr :mJ chid cxccut;\'t of Virg in Group that strike his fancy; his
ttJ.. thrivcs on ucitcl11ent. aJ'·cnturc. living Iife to its fullest. and
net worth is estimated to
starting new businesses.
be over $2.5 billion 61
Branson thrives on adventure, taking risks, and enjoying life to its fullest. He can't
stand being bored and always likes to be doing something. In terms of his career, that
means building new businesses in diverse locations around the globe. 62 Of course, he wants
these businesses to be successful but not so much for financial gain as to enable him to
keep doing what he loves-learning about new businesses and diving in head-first. 63
Branson also values his family time and often works from home when he is not traveling. He
typically wakes up &lrly in the morning and does some work, then has time with his family,
then works some more-work and family life are often intertwined. He seems to thrive on
a relentless stream of activity including hot air ballooning and tennis. 64 For all his love of
adventure and lun, Branson also keeps a close eye on his businesses 6S Perhaps it is the
combination of intense involvement and commitment with a love of surprise and adventure
that explains Branson's accomplishments. One thing is certain-he has enjoyed every
minute of it.
82 PART I • INDIVIDUALS IN ORGANIZATIONS
EMOTIONAL LABOR
1lIc v.-:rl. that employcc, f",Tionn
tn Ctmlml tlleir cxp<:,;c","-'C arod
""I'R",ion of mn(l,h and
cmOU"n, un (he job,
EMOTIONAL DISSONANCE
An internal ,tate that C,i'h when
emph') cc' are e'p<:ctOO lO
c~pre" feeling, th;ll arc at odd,
"ith hov. thc cmplo}",,' arc
",:wally f''eling.
On cenain kinds of jobs. it is imponant that cmployees expre,s cenain kinds of moods
and emotions and refntin from expressing other kinds. For example. waiteN. flight a!1endants.
and eht"CrleadeN arc expcctoo to display positive moods and emotions. like enlhuswsm and
pleasure. and refrain ftntll experien<:ing negative moods ,Uld emotions. Ii ke anger and hostility.
Thu" tlO matter how di,tressed these employees might be for a variety of reasons-say. being
forced to deal with a difficult customer. experiencing /light delays. or having problems at
home-lhey lire eXlx:eted to be cheerful and pleas1ltll, Sometimes this IS I'ery hard 10 do and
<:an be quite stressful. We have all been in situations in whi<:h we tried to hide how we really
felt and expres.s an cmotion other than our true fccl ing" This can be qu itc challenging on ocra·
sion. Now imagine having to do this d~lY in and day out as pan of your job. Emotional htbor
IS the work Ihat employees perform to control their experience and expression of moods and
ctlKJlions on the job.66
Emotional labor is governed by di.,plt/v rules. 67 There are two types of display rules:
feeling rules and expression niles. "eeli,,!' rilles dictate appropriate and inappropriate feel-
ings for ,1 particular selling. 6li For example. funeral dire<:lors are not supposed to feci
delighted in the presen<:e of grieving families. and m,Ulagers arc not supposcd to fL"Cl angry
when leuing subordinatcs know that they have just received promotions. As anOlhercxamp1c.
professors are expected to be enthusiastic whcn they teach classes and not be bored.
£Ipren'ion ru/l'.f didatc what emotions should be expressed and how they should be
expressed in a pani('ular sening.69 For example. professors arc exp.." ned to be enthusiastic via
tlleir facial expressions and tone of voice. but they are not expecled to jump up and down and
hoot ;lIld holler. Employees who are high on etllOtiotwl intelligencc (see Ch;lpter 2) are likely
to be beuer able to follow feeling and expression mles.
Emotional labor takl"s place in many organizations and in a variety of kinds of jobs.
For example. many employees believe that they should not cry in the workplace in from of
coworkers. no mailer how badly they might be feeling. However.jobs do differ intenns of
the extent to which emolional labor is required on a day-to-day basis, Jobs that involve
high Ic\'Cls of interpersonal imeraction (whether with the public. students. co\\'orkers.
clients. customers. or patients) typically require more emotional labor than jobs that entail
less frequent interaclions with others,
Emotiunal dissonan(~ occurs when employees arc cxp':Ck"d to express feelings that are
at odds with how the employees are actually feeling.70 For example. a waitcr who is angry
after deali ng with a panicularly difficult customer is nonetheless expected to act pleasant and
helpful. Emotional dissonaoce can be a signifi<:ant souree of stress foremployees.1t especially
when it (J<:curs frequently or on a day-to-day basis. (We discuss stress in more delail in
Chapter9.) In a recent study. Stemmie Wilk and Lisa Moynihan found that when call-cemer
employees' supervisors place heavy emphasis on employees expressing positive emotions and
being pleasant and polite to callers no mailer how I11de the CalleN might be to the employees.
tile employt"cs were mud more likely 10 f("C1 emotionally exhausted from their work. 7l
Of course, emotional labor is often pan and pareel of high-quality customer service
and docs not necessarily need to lead to high levels of stress if it is managed appropriately.
Tak.:: the case of the restau]";1tlt at the Inn at Little Washington. famous for its exceptional
food and perhaps even more famous for its high-quality <:ustotller scrvi<:e.7-' Cofounder and
chef. Patrick O'ConneiL believes it is his obligation and the obligation of his swff to pm-
vide such a superior dining experience that people leave thc rcstaunlll( feeling much beller
than when they entered i17~ Not only is Ihe st;llf ex]X-<;ted 10 manage their own emotions.
bm they are also expe<:tcd 10 manage the emOlions of their <:USIOt11ers.
When a dining pany emers thc rcstaurant. the captain assigns the party a mood ruling
gauging their current state of mind from a low of I 10 a high of 10. Ratings of 7 and lowcr
suggest thai th.:: party seems unhappy or displeased. TIle mood r.llings are pl<tced on the
table's order and also hUllg in the kit<:hen, O'Connell insists that guest, leave his rcstau rant
with a mood rating of9 or II). and swff members arc encouraged to do whatevcr they can
to see that this happens. Tours of the kitchen. tableside visits from the chef. and compli-
menlary drinks or dessens all arc used to try 10 ensure thM everyone leaves the restaurant
feeling great.7 5 And it is up 10 the staff to figure OUi how to improve the moods of
customers who might have just gonen imo an argulllelll or had a very rough day.

TRUST
!In e~rre--,i()n of conlideoce in
anolher pcr",,, or gr<>Up of
people lh,l ~uu "il\ noI be pUI al
ri<k. harmed. or injured by Iheir
"'11""'_
EXHIBIT 3.4
Relationships Between
Values, Attitudes, and
Moods and Emotions
CHAPTER 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 83
The restaurant staff also is required to be very knowledgeable about a variety of topics
ranging from different kinds of foods and wines to tlle likes and dislikes of imponant food
and restauranl critics. St~ff members arc admomshed ne"er to ,ay "no" or"l don"1
know:' 76 O'Conncll provides them wilh tlle Ir<tining and cxperience before thcy aClually
begin serving customers. so they never need to plead ignorance. New wait staff receive
several months of training. which includes being asked every kind of question thm a cus~
tomer might pose to them. Only when they are able 10 satj~fa~torily mtswer these questions
do they rL'\:civc their portion of the tip poo!. O'Connell indi~ates that his ~Imost fanati<.:al
approach to providing high-quality customer servicc essentially renccts hi~ gratitude to his
customers. willlout whom the restaurant would ccase to exist. And emplo)'ees seem to like
the emphasis on ~ustomer servi~e: tumO\er at the Inn is much lower than at many other
rcstaurants. 77
Relationships Between Values, Attitudes, and Moods and Emotions
Values. auilUdes. alld moods and emotions capture the range of thoughts and feelings that
m;lke up the experience of work. Each one of these dClenninants of the experience of work
h~s the potential to alTe<:t the other two (sec E:l:hibit 3.4). Be<:~llsc work values are the most
stable and long lasting. they can strongly affect work auitudes. m(){)ds. and emOlion~.
A person whose work values emphasize the impon~lHce of being ambitious. for example.
m;ly h~\'e negative work attitudes toward a job that uffers no possibility of promotion.
Work ~llitudes <:an ~ITc(;( work moods and emOlions in a similar fashion. A s~lesper­
son who is very satisfied with his or her job and loves interacting with customers may often
be in a good mood at work. In this case. work attitudes (job satisfaction) affect work moods
and emotions (positl\'e feclings).
In the long nm-over the course of a few years-<t person's work value> might eh<tnge
in response to his or hcr more neeting anitudes. mo(xls. and emotions toward work. A per-
son who values work as merely a way to make a living and not as a source of personal ful-
fillnx:nt mighl find a nursing job so rew,lrdmg and exciting that he or she is usually in a
good mood while on the job and fmds it satisfying. Eventually. the person's work values
may change to include the importance of doing something to help other people. By con-
trast. an employee who frequently experiences bad moods at work ,Ind often feels angry
(perhaps because of a dishonest or unpleasant supervisor) m,ly be less satisfied ~nd decide
the job isn't meeting his or her expectations. Persistent moods and emotions. in other
words. can have an impact on long-held attitudes and values'8
When members of an org'l1li7.ation share important values. have positive anitudes. and
experience positive moods. they may be more likely to trust each othcr. 79 Trust IS an
V.lue, ' ' : : : : : " Awtude>
(mos, >labl.) '. (mod..... '.1y >lable)
--------+ W.aker Mood. and
'e1allQ~sI>ip. Emo"o~.
--------+ Stronger (mo.' ~hangong)
,ela"o~ship.
84 PART I • INDIVIDUALS IN ORGANIZATIONS

Trust is nOionly importal1l

am,mg mcmbcr'i or an
organizalion but alro betwccn an
mganizaliun and its "U~10nlC1'i 0'
clients. For e.\amplc. il is
important fur aidinc passcngcr'i
to trust pilOls and night
attcndants to look out rm tllCir
sa1cly ~ntd well-being.

expression of confidcnce in anothcr person or group of peoplc that you will not be put at
risk. harmed. or injured by Iheir aetions. 8t1 Tmsl. in turn. can enhanee cooperation and the
sharing of information necessary for creativity and innovation. A lad of trust between
employees and managers is often symptomatic of more widespread prnbleills in an organ i-
zation. 81 At a minimum. managers mu,t cnsure that employees can be confident that their
well-being will nOI be jeopardized by Iheir jobs. From the opening ea,e. it i, clear thattruSl
levels arc high at Valern Energy. Unfortunately. this is not always the case.

Job Satisfaction
Job satisfadion (the colledion of ft.·dings ami beliefs that penple ha\'e abouttht>ircurrcntjobs)
is onc of tllC most important and wdl-research..---d work attitudes in organi7;ltional behavior.
Why do managers and researchers think it's so important" Job satisfaclion has tile potential 10
alTecl a witle range of behaviors in organizations and tlllltribtite to employccs'le,'e1s of well-
being. Illierestingly enough. research suggests that levels of job smisfactioll in the Ul1itcd
States haw declined ill the paS! dcca,!c.'2 According to a Conference Board survcy.job satis-
faction lewIs. ha"e decreased across all income levels and employees lend to be least ;;;ui,fied
with thcircompanics' promotion and bonus policies. and pension and health p11l11s,83 And. alier
many l"(lmp;mies have laid off employees to cut costs. those who have been fortunate to keep
their positions often face highcr workloads. which has thc potential to decrease tlICir Icvds of
job satisfaction and aho question tlICextentto which their employe!> arc comrniued to them.84

Determinants of Job Satisfaction

What causes ditTercnt employees 10 be satisfied or dissatisfied with their jobs? Four fa<:to!>
affect the level of job satisfactioll a person experiences: personality. values. the work situ-
ation. and social influcnce (see Exhibit 3.5).

PerSO"ilIlity. Per,onality, the enduring ways a person has of feeling. thinking. ,U1d
behaving (see Chapter 2). is. the first detemlinant of how people think and fl"C1 about their
jobs or job satisfactiol1. x5 An individual's personality influences the extent 10 which
thoughts and feelings about a job are positive or negative. A person who is high on the Big
Five trait of extroversion. for im;tance. is likely to have a higher level of job s-uisfaclion
than a pe!>on who is low on this tmil.~
Given that personality helps to dewnnine job satisfaction and that per,onality is. in
pan, genetically determined. reSC'archers have wondered whether genetics influence job
 CHAPTER 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 85

EXHIBIT 3.S
Determinants of Job Satisfaction

Penonality
The enduring ways a person
ha< offeding, ,hink;ng, and
behaving

Work ~ituation Job satisfaction VaJue~

The work ;,sdf
Co-workers, supervisors,
and subordinates
Physical working conditions
Working hours, pay, and job seeu"ty
The collection offedings, beliefs, In";n.,c work valu ...
and thoughts about how '0 behave _ _ Ex";ns;c work values
wi,h respect to one's cu ....en< job Ethical values

i
So<:ial influence
Co-workers
Groups
Cul,u'.

satisfadioll, Rll:hard Arvey of the Uni"ersity of Minnesota ,lIld his I:olleagues explored the
extent to which employees' levels of job satisfactioll were inherited from their parents.S;
Thcy studicd 34 idcntical twins who werc raised apan from an carly age_ The twins shared
the same genetic makeup but were exposed to different situational influences in their
de\'cloprnent<tl years amI l<tter in life. Fur e<tch pair of twins. the rest:arl:hers me<tsurcd the
degree to which olle twin's level of job ,atisfal:tion was the s<tme as the other twin's level.
The researchers found that gcoetic factors accounted for about 30 percem of the dif-
ferences in levels of job satisfaction across the twins in their study. Another interesting
fi nding was that the twi ns tended to hold jobs that were si rn ilar in I:omplexity, motor skills
needed. and physical demands required. This suggcsts that people seck out jobs that arc
suited to their genetic makeup_In other words, people's personalities (which arc panially
inherited) pre(hspose thernto choose certain kinds of jobs.
What do these lindings mean for managers? Essemially, they sugge,t that part of job
satisfact ion is determi ned by employee,' personal it ies, which an organization or manager
cannot change in the short run. Docs this mean that managers should not worT)' about the
job salisfaet ion levels of their subord inates or that il is pointless to try to impro\'e le"e Is of
job satisfaction'! Defmitely not. Although it certainly is impressive that genetic factors
accou III for 30 percem of the differences in levels of job satisfaction. 70 percent of the vari-
ation in job satisfaction remains to be explained. It is this 70 percent that tn~lImgers can
innuence. TIlliS, managers should be concerned about job satisfaction because it is some-
thing thm is within their power lO innuence and "hange.

Values. Values have an impact on levels of job satisfaction because they renect
employees' convictions about the outcomes Ih,1I work should lead to and how one should
behave at wmk. A person with strong intrinsic work v<tlues (those related 10 the nmure of the
work it!\c1J), for example, is more likely than a person with weak intrinsic work values to be
smisfied with a job that is interesting and personally meaningful (such as social work) but
that also requires long working houTS and doesn't pay well. A person wilh strong extrinsic
work value, (those rcJmcd to the consequences of work) is more likely than a person with
weak extrinsic work values to be satisfied wilh a job that pays wcll but is mOllotonous.
86 PART t • INDIVIDUALS IN ORGANIZATIONS
WORK SITUATION
The ,",ort it",lf, ,",orting
collditi0n'. and ali uther a'pe~1'
Oflh" job and the ~mplo~ing
organ "allon
Somc job holders.likc this
pediatril·ian. dcrin' thl';r job
~'tisf;lCtion from the kind of
work that th~y do.
The Work Situation. Perhaps the most important sourcc of job satisfal'1ion is the work
situation itself-the tasks a person performs (for example. how interesting or boring they
are). Ihe ]X.'Qple a jobhulder inter,ll'1S with (cuslorners. subordin<ltes. and supervisors). the
sumlUndings in which a person works (noi~e level. cruwdNlness. and lemperature). and Ihe
way the organization treats its employees (sueh as the job security it offers them
and whelher Ihe pay and benefits arc fair). Any aspect of Ihe job and the employing
organizalion is par1 of Ihe wurk situalion and carl affeci job s<ltisfaCiion.~~ Al:cording lu
\\hrking M()/I!er magazine. which pllblishcs a list of the lop 100 wmp<lnies for working
mothers. flexibi Iity is a very imponant contributor 10 Ihe job sat isfaclion levl'ls of work ing
rnolhers,sq FlexibililY can lake many forms. ranging from cOmpre~sed workweeks and
flexible workmg hours 10 the ability tu lake an extended leave uf absence 10 allend 10 a sick
child. For Cindy Clark. an employee at the lKEA furniture ~Iore in Plymoulh Meeling.
Pcnnsylvania. [KEA's flexibility has been a blessing. When her son Ryan was born. she
was able to switch to a three-day workweek. 90 When Ryan was recenlly dingnosed with
leukemia. Clark took a six-mOlllh leave of absence to take care of him. knowing that her
job would be wailing for her when RY<ln recovered and she cou[d get bal'k to work. 9t
Most people would bl' more satisfied Willi ajob that pays wel[ and is vcry securc than
with ,I job that pays poorly and exposes the employee to the ever-present threm of ,I layoff.
SOIllC of the Iheories of job satisfaction thai we l:ol\sider [aler in Ihe chapler focus Oil the
way in which specific ~ilual iona[ factors affect job sati~faclion.
Somctimcs pl'oplc arc dissatisfiNl wilh tocir jobs bo..><:ausc of real problems in thc work-
place, Pcrhaps Ihey arc over[oadNl with res]Xlnsibilitics. Or pl'rhaps they arc required to use
IIlctlkienl processes and pTo(:edures. lack thc aulonomy 10 eXpl'diently so[ve problems or
institute more efficicnl and efTcrlive ways of doi ng th ings. or fcd fruslratNl that tocir organi-
zmion is not taking a mol"l' proactivc approach 10 seizing OPlXlnunilies. Reecnt rescafl'h
suggests th;lt di,satisfaction can aClually bl' an impl'tus for change and improl'cment in an
organization to the extent Ihat an organi lalion provides a suppur1ive environmenl. For cxam-
pIc. Jing Zhou and Jennifcr Georgc of Rice Unh'ersity found. in a silidy of 149 office
cmp[oyees of a company Illat makes petro[ellm drilling equipmcnt. that cxperienced job
dissatisfaction was positiVely re[ntNlto crcntivity on the job (i.e .. coming up with new and
useful ideas 10 improve Ihings) when employees were l:ommiUed to remain wilh IOC organi-
7-<llion and citocr rcceived llsefu[ feedback from their coworkers. had coworkers who were
helpful and supportivc. or lX'rccived tllat their organization was supponivc ofcmployees' crc-
ativity?2 Interestingly enough. when Pepsi Cola had vinually lost the "co[a wars" to rival
Coca Cola over a del:ade ago. dis~atisfaC1ion wilh that ~tate of <lfTairs led managers and
cmp[oyees to rethink locir busincss. As a result. they redcfull'd Ihcir business as focusing Oil

SOCIAL INflUENCE
The influeocc lnat ind"iduah
ur groop' havc O<l a pc....,n·,
altitude, and beha, ior.
CHAPTER 3 • VALUES. ATTITUDES. AND MOODS AND EMOTIONS 87
foods and bevemges. not just soft drinks, and today. Pepsi nas a best-sclling bottled water in
Aquafina. its Gatorade has 80% of the market for srol1s drinks. and Pepsi has 60% of the
U.S. snad-food market with products like Frito-Lay chips. Today. Pepsi is outperfonlling
Coke on scveral financial indicators such as share price and profttability. Clearly. the
proactive responsc that Pepsi managers and employees had to the dissatisfaction they experi-
enced from losing the cola wars lead to far bigger wins for l'epsi.93
Social Influence. The last determinant of job satisfaction is sudal innucnee. or the
influence tnat individuals or groups have on a person"s attitudes and behavior. Coworkers.
the groups a person belongs to. and the euhure a person grows up and lives in all have the
potent i,ll to affect employees' levels of job satisfaction.
Social influence from co\>'orker.f can be an imponant determinant of nn employee's
job satisfaction because coworkers are always around. often have similar types of jobs. and
often have certain things in common with an employee (such as educational background).
Coworkers c<ln havc n p<ll1iculnrly potent influence on the job-sntlsf<lction levels of new
hires. New hi res are Sl ill likely to be formi ng an opi nion about the organization and the job.
They might not yet know whm to make of it or whether or not thcy will ultimately like it.
If they are surrounded by coworkers who are dissmi,fied with their jobs. they are more
likely to be dissatJsfiL'd themselves than if they are surrounded by employL"Cs who enjoy
and are satisfied with their jobs.
The groups he or she belongs to <llso influence an employee's level of job satisfaction.
The family in which a child grows up. for example. can affect how sati,fied the child is
with his or her job as an <ldult. An employL"<: who grows up in a wealthy family might Ix:
dissatisfied with a job as an elementary schoolteacher occausc the salary places out of
reach the high Slandard of living he or she enjoyed while growing up. A teacher raised
under more modest circumstances might also desire a higher salary but might not be dissat-
is1ied with his or her teaching job lx-.:ause of its pay level.
A wide variety of groups can affect job satisfanion. Employees who belong to certain
religious groups are likely to be dissatisfied with jobs that require working on Saturdays or
Sundays. Unions can have powerfUl effects on the job-sati sfaction levels of their members.
Belonging 10 a union that belicves managers are not treating employees as well as they
should be, for example, might cause an employee to be diss.atisfied with a job.
The clIlllI,-r a person grows up and lives in llJay also affect an employee's level of job
satisfaction. Employees who grow up in cultures (such as the American culture) that
emphasize the importance of individual achie\elTlcnt and accomplishment arc more likely
to be satisfied with jobs that stress individual accomplishment and provide bonuses and
pay raises for individual achievement. Employees who grow up in cultures (such the
Japanese culture) that emphasize the importance of doing what is good for everyone may
be less satisfied with jobs thm stress individual competition and achievement. (We discuss
nmional culture in lllOTe depth in Chapter 17.J
In fact. cullUral influences may shape not just job satisfaction but also the attitudes
cmployees have aboutthernsclves. An American may introduce a leclure with a joke th<lt
displays both his knowledge and his wit. but a Jap;lIlese lecturer in the same position would
more likely start off apologizing for his lack of expertise. According to Dr. Hazel Markus
of the University of Michigan and Dr. Shinobu KilaYUln<l of the University of Oregon.
these lwo contra,ting styles rellect how Arneric;lI1s and Japanese view themselves. which
is. in tum, b,tscd on the values of their respective cultures.9~
Com;istelll with American culture. the American lecturer views and portrays hilll.self
as independcnt. autonomous. and striving 1O achieve: this IlJakes him feel good and makes
his American audience comfortable. In contrasl.Japancse cultufe stresses the interdepen-
dence of the self with OIhers: the goal is to fit in. meet one's obligations. and have good
interpersonal relations. The Japanese leclUrer's mOTe self-dTaeing style reflects thesc
values: it demotJstrates that he is but one part of a larger system and emphasizes the
connection between himself and Ihe audience.
Markus and her colleagues have been conduning some interesting research that further
illuminates the effects of culture on attitudes about the sclf. They have asked Japanese and
88 PART t • INDIVIDUALS IN ORGANIZATIONS

American stlldcnts 10 describe Ihcmsclves using whm the rescan:hers call the "Who Am r'
scale. Americans tend to reslXlnd to the scale by describing personal characteristics (such as
being athlelic or smart). Japanese ,tudents.l1owevcr.lend to describe themselves in temtS of
Iheir role, (,uch a, being th<, second ,on), These re,ponse, again illuslrale Ihat Americans
view themselves in tenns of personal chamcteri.stics. and Japanese view themselves in temts
of social char~cteriqics such as their position in their family.95 This is a simple yet powerful
dernonstration of how the culture and sociely we grow up in rnfllrences our allitudcs. even alli-
ludes as fundamental as our allituOL"S aboul oorscl ves!

Theories of Job Satisfaction

There arc many theories or models of job s<ltrsl:lction. Each of them t.tkes inlo accounl one
or more of the four main detemlinants of job satisfaction (personality. value,. the wort sit-
uation, and social influcnce) and <;pecifies. in more detail. exactly what causes one
employee to be satisfied with a job and another employee to be dis,atisfied, Here. we dis-
cuss four of the most influential theories: the facet mooel. Herzberg', motivator-hygiene
theory. the discrepancy model. and the steady-state theory. These differ!."nt theoretical
approaches to job satisfaction are complememary. Each Itelps us understand the various
aspects of job s.uisfaetion by highlighting the f~letors and issues managers need to consider
in order to enltance lite S<lt istitctiol1 levels of tlteir subordinates.

The Facet Model of Job Satisfaction

The facet moo!."1 of job satisfaction focuses primarily on work situation factors by breaking
JOB FACET a job imo its componcnt elements. or joh facets. and looking at how salisfied employees
One of numerOl" ,:omponenh arc with each f;lcet. Many of the job facets that researchers have investigated nre listed <md
of ai'*'. dciined in Exhibit 3.6. An employee's ovemll job satisfaction is detennined by summing
his or her s~tisfaction with each facet of the job.
A, Exhibit 3.6 indicates. employees c~n take into account numerous aspects of their
jobs when thinking about their levels of job satisfaction. The facet model is useful bee<luse
it forces managers and researchers to recognize that jobs affect employees in multiple
ways. However, man<lgcrs who use this mooel to ev~lu:ne the work situation's effect on job
satisfnction always need to be aware thaI. for any particular job. they might inadvertently
exclude an important facet th.1I strongly influences an employee's job satisfaction.
The extent to which <In employing organization is "family friendly:' for example. is an
important job facet for many employees. Given the increasing diversity of the workforce
and the increasing numbers of wornen. dual-career couples. and single parents who need to
balance their reslXlnsibililies on the job and al home. family-friendly org<lnizational poli-
cies and benefrts arc becoming imlXlrt<lnt to more and more employees.96
Amgen. a biotechnology company and drugmaker. was listed in Fortll/lt magazine's
100 Best Companies to Work for in 2004. 97 Arngen recently opened one of the biggest on-
sile child care fncilities in the UnitL'd States. The child cm-e center can accommodate up to
430 children ranging in age from 6 weeks to 5 years old. Although employees must pay for
their children to come to the center. it is less expensive than other child care facilities
and provides a safe and educational envirorllnen1. Bright Horizons. headquartered in
Massachusetts. manages the center for Amgen. Before the new center opened. Arngen had
~ much smaller on-site f<lcility with a long waiting list. 911
Anotocr issue lh<lt must be considered by managcrs using facet models of job smisfac-
tion is thm sollle job facets may be rnore irnportant than others for any given ernployee.'l9
Family-friemlly policies. for example. are generally valued by employees with de!X'ndents.
but they clearly ilfC less important for emploYl'Cs who arc single and intend to remain so.
Telecommuting (see Chapter 9) ~nd work-at-hOllle arrangements might be facets that appeal
to working parents and those with long commutes. but they might not appeal to younger
emploYl'Cs who enjoy social IIlteraction with thetr L'O\\-'orkers. CompenS<ltion amI security
rnight be k!."y job-s,atisfaction facets for a single woman who has strong extrinsic work vailles,
At the otlter end of the spectrum. ~ high-ranking militnry retiree receiving a generous pension
 CHAPTER 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 89

EXHIBIT 3.6
Job facets That Playa
Part in Determining Job
Satisfaction
Sou",,,: D. J. W"i" d al., Manual
for the ~ linn".'iOla Satt.,fanion
Que'lion""i,e. 1%7. Minnewta
Studie, in V"euli"MI Rehabilita'i"n
XXILC 1%7 Uni",,,it)' of
M inllo.""". Reproduced by
permis>ion of VO':"lional
P,}"h"lngy R"""urch.
Job Facet Description
Ability utilization The extent to which the job allows one to
use one's abilities
Achievement The extent to which an employee gets a feeling of
accomplishment from the job
Activity Being able to keep busy on the job
Advancement Having promotion opportunities
Authority Having control over others
Company policies The extent to which they are pleasing to an
and pradices employee
Compensation The pay an employee receives for the job
Co-workers HQIN well one gets along with others in the workplace
Creativity Being free to come up with new ideas
Independence Being able to work alone
Moral values Not having to do things that go against one's conscience
Rewgnition Praise for doing a good job
Responsibility Being accountable for decisions and actions
Security Having a secure or steady Job
Social service Being able to do things for other people
Social status The recognition in the wider community that goes
along with the job
Human relations The interpersonal skills of one's boss
supervISion
Technical supervision The work· related skills of one's boss
Variety Doing different things on the job
Working conditions Working hours, temperature, furnishings, office
location and layout, and so forth

For cmployees with children.

fumily fricndly I'olie'i", und
on·sitc child cure fiu:iht;cs. such
as this 01'" ut the SAS Institute',
Ci'n be important cont,ibutors to
job suli,faction,

_ _ _1
90 PART t • INDIVIDUALS IN ORGANIZATIONS

might havc strong intrinsic work valucs: he might be morc satisfied with a postretiremcnt job
offcring high Icvels of ability uti IiZ:J1 ion> achieverncnt. and creativity.
Frank Courtney. a Harvard University graduate. was the bUll of jokcs whcn he
acceplcd a position with U.S. Stccl while m"ny of his classmmes were acccpting posilions
with more prestigious and glamorous companics. 1oo Working in hcavy industry. howevcr.
provided Courtncy with a job facet he truly desired: responsibility. At U.s, Steel. he was
responsible for oversceing the production and shIpping of hundreds of tons of steel while
his buddies in the more glamorous legal and fmancial industries were spending a lot of
thcir time making photocopics. lOt

Herzberg's Motivator·Hygiene Theory of Job Satisfaction

One of the earlicsttheories of job smisfoction. Frederick He,lberg's mOl iva tor-hygiene theory.
focuscs on the effl'Cts of certain types of job faccts on job s:.ltisfaetion. Herllx:rg's thl'Ory pro-
poses that every employee has two scts of needs or requircmell1s: motivator neeJs ,mJ hygiene
nccJs. 102 Moli"ulur I/el'ds are associatcd with thc actual work itself and how challenging it is.
Job facets such as how interesting the work is. autOnomy on the job. and the responsibility it
affords satisfy motivlltor nel-ds. Hygil'llt' lleed,I' are assuciatl-d with the physical lInJ psycho-
logical context in which the work is performed. Job fa/:cts such ,lS the physical working COII-
ditions (for example. Ille tempcraturc and pleasalllness of the surroundings). the nmure of
sUlX'rvision. amount of pay. aoo job security s.1tisfy hygiene needs.
HelLberg proposcd the following theoretical relationships between motivator needs.
hygiene needs. anJ job smisfaction:
I. When motivator neeJs are me\, employees "'ill be satisfieJ: when these needs are not
mc\, cmployecs will not be satisficd.
2. Whell hygiene needs are met. cmployees will not be dissatisfied: whcn thcse needs
are not mel, employees will be Jissatisfil-d.
According to Herlberg. an employee could experience job satisfaction and job di~satis­
l:tctioll at the same time. An employee could be .Wl/iIfted because II/mi l'(Iwr I!I.w/s arc being
mCI. f'or exam pic. thc cmployec might find the work intcresting and challenging yet be di.u-
ali,llied because h is or hcr hygiene nads are not being mct. (Perhaps the position offers Iit-
tie job security.) AccorJing to the tmditional view ofjob satisfact ion. SlIt isfactlon and Jissat-
isfaction arc at opposite enJs of a single continuum. and employees are either s:.ltisfieJ or
diss:.ltisficd with thci r job~. Exhi bit 3.7(a) i1Justrmcs lhc traditional view. HCrLberg proposed
that dissat isfactiOll and sa! isfaction are IWO Sl'parale dimellshms. onc ranging from sat isfac-
tlUn to no satisfaction ,111d the other ranging from dissatisfaction to no JissatisfactlUn,
Exhibit 3.7(b) illustrates HerLberg's view. An employee's locmion un the sati~faction con-
tinuum dcpends 011 the eXlent to which motivator nceds arc mel. and lin cmployee 's locatioll
on the disSll1isfactiol1 continuum depends on the exlentto which hygiene needs arc mcl.
Many research studies hal'e tested Hcnberg's formulations. Herzberg himself con-
ducted some of the early sttlJies that suppuned the theory. He relied Oil the criliml ilt";-
t/tll!5 I,'dmiqu(' to collcct his data. Herzberg and his colleagues imcrviewcJ employecs anJ

EXHIBIT 3.7 Di••••i.fact;.,n-..ri.f.c.;.,., dimen.ion

D,...n,r.c"O"
Two Views of Job withJob

Satisfaction A. AccO<ding '0 the tr.di'K>n.1 VlOW, an .mploy•• i•• i,h.c • .:",.~.d
0.- d".. ".~.d with "os 0' hor job,

No ..,i,(a«K>" _ _. . s..",ra"io"
wi,h Job (mo,i.... ,o, woth job (mo'..... o.-
n«d. no, m<o) n••d, m<l)
Din.ti.fact;"" dimen.ion
Di..a,i,ract;on No di"""ifa"ion
wi'" Job (hygi.ne with job (hygiene
n«d. nO' m<o) n.. d. mot)
B. Acconling '0 H<rzberg, an employee can be both sa,isfied and
dissati,fied w"h hi. 0' her job at the same ,ime,
 CHAPHR 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 91

asked them to dcscribe a timc when they felt particularly good about their jobs and a lime
when they felt particularly bad about their jobs. After eollaling responses from Illany
employees. they made the following discovcry: Whcncver employecs related an inst~mec
when they fell good aoout their job. the inc idem had to do with the work itself (it was
relmed to their 1II00il'(l/or lIeeds). Whenever they described an instance when they felt bad
about their job. the incident had to do with the working cOllditions (it was relmed to their
11."I;ielle neells). These results certainly seemed to support Heo:berg's thl-ory.
When other researchers used different methods to test Herzberg's theo!)'. however. the
theory failed to receive SUppllrt. I01 Why did studies using the critical incidents technique
support the theory? As you will learn in Chapter 4. people have a tendency to W~lnt to take
credit for the good things that happen to them 'lnd blame others or outside forces for the
b'ld things. This basic tendellcy probably 'lCCOUlits for crnployees' describing good things
that happened to thelll as being rclmed to the work itself. because the work itself is somc-
thing ~111 employee can tnke direct credit for. Conl'ersely. working conditions arc mostly
outside the control of an cmploy'ee. and it is hUlll'ln nature to try to attribute bad things to
situations beyond one's control.
Evcn though research docs 1101 support Hcr/.berg"s theory. the attention HerlllCrg (Xtid to
motiv,lIor needs and to work itself as determinants of satisfaction helped to focus
researchers' and managers' allemion on the import'lnt topic of job design and its effeets on
organ izat ional behavior (d is('ussed in detail in Chapter 7). Nevertheless. managers nccd to be
aware of the lack of researeh Stlpport for thc tl'k.'Oretical relationships Herzberg proposed.

The Discrepancy Model of Job Satisfaction

The discrepancy model of job >;I\isfaction is based on a simple ide~: To determine how sat-
isfied they arc with their jobs. emploYL'CS compare their job to some id,'a/ job. IW This ideal
joh could be what one thinks the job should be likc. what Olle expeeted the job 10 be like.
whm onc wants from ajob. or what one's fOfTner job was like. According to the discrep-
ancy model of job salist"'ction. when employees' exp(:ctations about their ideal job arc
high. and when these expectations arc not Il1Ct. employees "'ill be diss~tisficd. New college
gr~duales may be particularly prone to having overly high cxpectations for thcir firsl
jobs. IOS According to discrepancy models of job s~ltisfaction.lheyare bound to experience
some job dissatisfaction when the ir new positiuns fai] 10 meet theIr hIgh hopes.
Some rese'lrchers have l:ombincd the fa('Ct and discrepancy models of job satisfaction. I06
f"'()r each of the job facets described in Exhibit 3.6. for example. we could ask employees "how
much" of the fae.;,tthey currell1ly have on the job compMcd to what they think their jobs should
have. The difference Ix:tween these two qU'lntities \\oold Ix: the employees le\d of satisfal1ion
with the faLOCI. For example. an employcc who indicates that she thinks she should have a lot of
autonomy on her job but reports that she currelllly has limited autonomy would be dis.satisfied
with the autonomy fae.;,t of her job. After dctennining satisf~lction le\ocls for each of the job
fawts in this manner. the tota] of all of the responses would yield an overall satisfaction score.
Discrepancy models arc useful be('ause they wke into account that people often take a
comparative approach to Cl'aluation. It is not so much the presence or absence of job faects
tlwt is important but r.llher how a job st;lcks ltp against an employee's "ideal job:'
Managers need to fl'Cogmze this comp'lrative approach and should ask employees what
they w;lll1their jobs to be like. This information can help them make meaningful changes
to increa", thc Ievcl of job satisfaction thcir subordinates arc expericncing.

The Steady-State Theory of Job Satisfaction

The steady·state theory suggests th,1I each employ'ee has 'ltypical. or characteristic. level
of job satisfact ion. called the steady state or eq uiIibri UIII le\'el. Different situational fadors
or events at work may move an employee temporarily from this steady state. but tile
employee will return eventually to his or her equilibrium Icvcl 107 (sec Exhibit 3.8). For
example. receiving a promotion and raise may temporarily boost an employcc's level of
job satisfaction, but it eventually will return to the cquilibriulll level. The finding that job
satisfaction tends to be somcwhat stable ovcr timc tOll supports the stcady·state vicw. The
92 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 3.8 Ev.nu; ,hat

You g<t a pcomo"on You g<! a b,gge' You win ,h. mon,hly

,
m<....$< -",,,
and ....Iaty inc,ea$< offi« wi,I> a window .al., con',,'
Job Satisfaction as a ...",fa<tKm
Steady State

I E.,wlloo"m
1....1of
job s.,osfac"on

~
E,<nu ,ha,
YO"' 1"<s1 pmpo,.1 YO"' ... ~u .., fo. a
d.u.a"" job
...,,,factton is <!lo' down n.w d.", is ... fu""d

mtluence of personality on job satisfadion ~Jso is consistent with the steady-state

~ppru~ch. Because personality. one of the determinants of job s~tisf~ction, is stable over
timc, we would cxpe<;t job satisfaction to cxhibit somc stability ovcr timc.
TIle Sle'ldy-stnte theory suggests that when man<lgers mnke changes in the work silUa-
tlon in ~n effort to enhance job-satisfaction levels, they need to determine whether the
resulting increases in s~tisf~ction are lempor~fY or long I~sting. Some rese~rchers have
found, for exmnplc. that whcn ehnnges arc made in the nature of the work it"Clf (such as
making jobs more interesting). levels of job satisfaction increase tempowrily (e .g .. for six
month,) but then retum to their former levels.IO\l To decide on the most cll"e<:tive ways to
sustain an inuc<lse in job satisfaction, il is also imponant for managers to detennine how
10H/; it takes employees to retum to their equilibrium levels. Changes in some job faccts. for
example, may lead 10 longer-lasting changes in job salisfaction than eh'lIlges in other facets.

Measuring Job Satisfaction

There ~re several measures of job satisfaction that managers can use to determine job-
satisfaction levels. A man<lger who discovcrs (hat most employees are dissatisfied with Ihe
same few job facets and that overalllel'els of job satisfaction are low as a fesult can usc this
information to determine where to In.lke changes in the work situation. Researchers can
~Iso use Ihese measures to leam more about the causes ~nd consequences of job s~tisfac­
tion. Mos( of these mcasures ask empJoyces to respond to a series of questions or statc-
rnents nboultheir jobs. Among the most POpUI,lr scales ,Ire the Minnesota Satisfaction
Questionnaire (based on .1 facet approach)} 10 Ihe Faces Scale, II I and the Job Descriptive
Iildex. l12 Sample items from the first two of these scales appear in Exhibil 3.9.

EXHIBIT 3.9
Sample Items from A. Samplo i,flTo' from m. Minn• ."," SatHfaction QIJ",'ionnai...
Empk>y.......pond '0 ..cn o[,no i«mo On m~ p..... n' job, ,h;. i, now I 1<.1 abo",
Popular Measures of
by ch«k'ng wh<tn•• 'hey ...., 1. 6<,ng able '''' '«P b".~ a(l 'he ,;m •.
Job Satisfaction o v,ty d" ~.fied 2 The chane. '0 be ·som.body" in 'no <ommlJnity
SOIJ",e: (A) D. J. Wei" el .1., o D" fiod 3. The way my JOb provid.. fo. st..dy.mploym.n'
Ma""al forlheMinne"",,,, o Can', d«id. ",n«nor ...., •• Ii.d or M'
4. My pay and til•• mOlJn' of wone ( do.
S. Th. fr«dom '0"'" my own JlJdgm.nt,
Sati,r...·'ion Quc,tionnain:. 1967. o SOli,li.d 6. Tho chane. '0 wone by m)"'lf.
Min""""" Siudie, in Vocalional
Rehabililalioo; XXII. Cop; righl
o v''l' ..,;wod 7. Tho chane. to d....lop d",,,, fn.nd,nip,v.'irn m~
<o·wone....
1%7 Uni'''''';ty of M in"">OIa. 8. Tho way (gOt full , ..d" f",. ,h.
wone I do
RcproJlJccd by peon1i"ion or \I Th. chanoo '0
n.tp poopl,
\'"callo",,1 P"y<ooloty lee",,,,,,h. 10. My JOb "'<U"ty,
(B) Ie, B. Dunham and J. B. Hennan. B. Tho Facn Sc.k
"Oc,-cJopn",nl of" Female Fa,:", Employ.o. ""k« til. f.... ,h., best "p"""'" how 'hey rul abo", ,h". Job in g,n•••1
Seale for ,\ lea",ring luI>
Salisfao:lion:' Jm''''"! of Alll,li,,}
I'sych,,!ol/l' 60 (1975): 629--3 I,
Copyrigl>1 (l 1975 by tOe American
P.,ycoology Aw",iotiou. Reprinled
",itl> permi"ioo.
 CHAPHR 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 93

Potential Consequences of Job Satisfaction

Earlier, w'e said that job satisfaction is one of the most imponant and most studied alli-
ludes in org3llizational behavior. One reason for lhe inlerest in job satisfaction is that
whether or no! an employee is salisfied with his or her job has consequences not juS! for
the employee but also for coworker);. managers. groups. learns. and the organization as a
whole. In th is senion, we consider se"cral potentia I consequences of job sat isf:lCtion: job
performance. absenteeism. turnover. organizational citizenship behavior. and employee
well-being.

Does Job Satisfaction Affect Job Performance?

Intuitively. mosl people (including managers) believe that job satisfaclion is positively
associated with job perfonnance-that is. that C'mployC'es who arC' more smisfied with their
jobs will perform at a higher level!han those who are less smisfied. Many studies have
been conductcd to see whether lhis piece of convcntiomil wisdom holds tme. Surprisingly,
the results indicatc that job satisfaction is /101 strongly relatcd to job performance: at best.
there is a very weak positive relationship. One recCnl rC"view of the many studies conducted
in this area eoneluded thm levels of job satisfactiOIl ,lecounted for only ~lbout 2 percent of
the differences in performance lewis anoss employees 111 the studies reviewed. IIJ Another
recent review found somewhat similar results: Job satisfaction accounted for. on average.
about 3 percell! of the differences in perfonnance levels across cmployces. t 14 For all prac-
tical purposes. then, we can conclude that job s,uisfaClion is /t0l meaningfully associaled
with job performance.
Although this finding goes againSl the intuition of many managers. it is nOi that sur-
prising if we consider when work anitudes such as job satisfaction do affxt work behav-
iors. Research indicmes that work attitudes (such as job smisfaction) affect work behaviors
only when employt:es are fr(:e to vary their behaviors and when an employee's attItude is
rdevam 10 the behavior in l]uestion.
Are most employces free to vary their levcls of job performance to reflect how satis-
fied they are with their jobs'! Probably IIOt. Organizatiolls spend cOllsidemble time and
effort to ensure thaI members perfoml assigned duties dependably regardless of whether
they like their jobs or nOl. As you will see in later chapters. organizations develop rules and
procedurcs that employees are expected to follow. To ensure the rules arc followed. they
reward employees who perform at acceptable levels and punish or dismiss employees who
do not. Such rules. procedures. rewards, and punishments are SItuational pressures that
compel employees to perfonn at acceptable lel'ds.
If chefs in a rcstaurant. for example, lower the l]uality of the meals they preparc
because they are dissatisfied, customers will stop coming to the restaurant. and the
restaur-tnt will either go 011\ of business or the owners will replace the chefs. Similarly.
firefighters will not keep their jobs if. because of their levcls of job satisfaction. they
vary the number of emergencies thcy respond to, And a secrctary who. because of diss.at~
isfaction, ClltS b~lCk on the l]uality or quantilY of letters he or she types is likely to be rep-
rimanded or even !ired ;HId certainly will nOI be olTered a promotion.
In order for a work allitude Uob satisfanionl to influence behal'ior. thl." altitude mUSI
be relevant to the behavior in l]uestion Uob performance). Sometimes employees levels of
job S<1tisfaction are not rele\'anlto their job performance. Suppose a securilY guard is sat is-
lied with his job because it is not very demanding and allows him 10 do a lot of outside
reading while on the job. Clearly. this employee's job satisfaction is nOi going to result ill
higher levels of performance because the reason for his satisfaction is that the job is not
very denwnding.
Becausc of strong situational pressures in organ izations to behave in cenain ways and
because an employee's level of job satisfaction may not be relevam to h is or her job perfor-
Ina lIce. job satisfaction is 1/01 strongly related to job performance. Some researeh. however.
suggests th.lIthe direction of influence between these two factors (salisfaction and perfor-
mance) may be reversed: Job performance may lead to job satisfanion if employees are
fairly rewarded for a good performance. The relationship between job performance and
94 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 3.10
Motivation to Attend Ability to Attend Work
Determinants of Work Is Affected by Is Affected by
Absence from Work
Job satisfaction Illness and accidents
Organization's absence policy Transportation problems
Other factors Family responsibilities

rewards. Ihe impur1<lnce of equily ur fairness. and the implicallons uf these issues for
understanding alld managing organiz<llional behavior are covercd in more det<lil in
Chaptefli 6, 7, and 8 on motivation.

Absenteeism
Ab>entceism <.:an be very <.:ostly for organi Za! ions. II is estim<lted that approx inl<ltely I mi I-
lion employees a day are absem fromlheir jobs. In a year. absenteeism costs companies in
lhe Uniled SlaieS approximalely $40 billion. I 15 NOI surprisingly, in an effort 10 reduce
absenteeIsm, many researchers have studied its relmiol1ship to job satlsfa<.:tiun. Research
focusing on this questiun has indi<.:ated thm job smisf:l<.:tion has a we:lk negativc relation-
ship Wilh abSCllleeism: Employees who arc satisfied with lheir jobs are somewhat less
likely to be absenl. l16
Richard Steers and Susan Rhodes have provided a model of absenteeism th:lt helps
explain the>e results. 117 They propose thai cmployee atwndance is a fun<.:tion nO! only of
lheir mOlivation to go 10 work but also of their abilily to :lnend (sec Exhibit 3.10). An
employee's abilitl, 1O go 10 work is influenced by illness and accidents. transportation
problems. and family rcsponsibihties. Because uf the variety uf situations and factors that
affect work absen<.:es, it's not surprising that the relationship belween satisfal'1ion and
abscnleeism is relatively weak. Job satisfacliun is just onc of many factors that affcCI the
IIlOri'YllivH to attend. I 18
Absenteeism is <l behavior that organiz'ltlons can never eliminate, but they c:ln cOlllrol
and manage il. Allend;lIlce poli<.:ies should not be so reMri<.:tive, howevcr.thalthey literally
force cmployccs 10 comc 10 work cven if thcy arc ill. A ccrtain Ievcl of abSClHeeism-
perhaps from a high-stress job-can be functional. Many companies. such as General
Foods Corporation. have acknowledgcd this possibility by indudin£ "mental hcalth days"
or "persoll'll days" in thcir absen<.:e policies. General F(xxls employees can take a mental
hcalth or personal day at lheir discrelion. Thcy arcn 't pcnalized for these absences, and lhe
absences don't count toward the numbers of sick and vacation days they're allowed,

TURNOVER
Th" perlTlallCnI willJ<lraw41 of an
employee frooo llle "mploy·oog
organ".•llOn
Turnover
l\lrnO\'f;'r is the pcrmancnl withdrawal of an cmploycc from lhe cmploying organization.
Job satisfaClion shows a weak-to-mooerme negmil'e relationship to turnover-th,1t is. high
job satisfaction leads to low turno"er. Why is thIS relationship observed'! Employecs who
are satisfied with thcir jobs are less likely to quit than those who are dissatislied. but somc
dissatisficd cmployces ncver Icave. and othcrs who arc satisfied with their jobs cl'enlually
move on 1O another organization. Moreover. unlike absemeeism. which is a {I'III/XJH/r.\'
form of withdrawal from the org;lIlizatioll. turnover is perl/llmem and can have a major
impa<.:l on an cmployee's life. Thus, the dL'Cisioll to quil a job is not usually madc lightly
but is instead the result of a carefully lhought-out process.
When. in thc turnover process. docs job satisfaction play:ln important role'! According
to a mood of the turnovcr pnx:css devclojX.-d by Bill Mobley, job satisfa<.:tion triggcrs the
whole tunJovcr pnx:ess (sce Exhibit 3.11 ).119 Employees who are very satistied Wilh their
jobs Illay ncver cven think about quining: for lhose who are dissatisfied. it is thc dissatis-
faction that starts thcm thinking about quilling.

EXHIBIT 3.1'
Mobley's Model of the
Turnover Process
s,..""u: I\d'pted from w, H. Mobley.
"lnler"'L'<.li,," Lin~"IW.' in the
Relation>-hip Bet"·""" Job
S,ti,faclion and Employee
Tum"'e':' jm"'",' ofA",,'ied
p,"'{'''ol()~, 6 ( 1977): 237·40.
Copyright © 1977 by ll>e American
l'lo)'d>ological A,sociation. Rep'intc<J
wilh Permi'Li(~1
ORGANIZATIONAL
CITIZENSHIP BEHAVIOR
Reh", ior th~l i, not t"Cquired but
i, n,,,:,,,"")' for organizational
,u .... ival and effecti.. ne",
CHAPTER 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 95
Job d"",,,,f.et,on Think,ng of Ev.lu.,ion of ~nef",
""p."ie""ed quitting .nd co," of qwtting
I
Ev.lua,ion of ~'ITh foc In,enlOon '0 'uITh
I-
.I'em.tive. • Itern.'i",. fo, .Itern.ti""•
Comp.rison of .Item.~"". _ Intention to
Qui./st.y
to pre",n' Job quit/.toy
A~ indicated in Exhibit 3.11. job dissatisfaction will cause an employee to begin
thi nk ing ;lbout qu ill ing. Al this poi nt. the individual ev,dll:l!eS the benefits of sC;lrchi ng for
a ncw job ,'ep.;us thc (;osts of quilling. Thcse cost, could indude ;lny corporate bencfit, that
arc linked to seniority (such as vacmion time and bonuses). the los~ of pension and medical
plans. and a reduced Ie"el of job security (which is often based on seniority in the organi-
wtion). On lhe b~sis of lh i~ cost/benefit eV:llumioll, the individu~1 may decide to sc~rch for
altcrnativc job,. Thc per,on c,,~luatcs and (;ompare, thcst· ~ltcrnativcs to thc currcnt job
3nd then develops an intention to quit or stay. The intcntion 10 quit e"entually leads to
turnover behavior. Hence. although job smisf~ction or dis~mi,faction is an imponalH f~ctor
to considcr bec~use it may trigger the Whole tUTIlover process and Slart ~n employec think-
ing abom quilling, other factop.; come into play to dctcrmine whcther or not an cmployce
3ctually quits. (Mobley's model applic.'\ ncither to employees who il11pul~i\'ely quit their
jobs nor to employees who quit their jobs beforc even looking for alteTIlmives.)
Just ~s Hlthe case of ;lbsenteeism, m~nagcrsoften think of turnover as a costly beh;lv-
ior that must be kept to a minimum, There are ccrtainly (;oSls to tumol'er. su(;h as the (;osts
of hiring and training replacelllelH employces. In addition, turnovcr oftcn causcs disrup-
tions for existing members of an organization: it may result in delays on importall1
projel:ts: and it can cause problems whell employees who quit ~re members of teams.
Although thcsc and othcr l:osts of turnovcr (;an be signifkam, turnover (;an also havc
cenain benefits for organi7,mions. First. whcther lUmover is a cost or benefit depend~ on
WhO is leaving, If JXl'Or performers arc quitting and good performers arc staying, this is an
ideal situ~tion, and m~nagers may not w:mt to redul:e lcvels of turnover. Second. turnovcr
(;an rcsult in the introduction of new ideas and approa(;hes if the organization hires
newcomers with new ideas to replacc employees who have left. Third, turnovcr can be a
relatively painless and n;llUml W1lY to reduce the size of tllc workforce through 111/'-;1;011.
the process through which people Ie;lve an organ iz~tion of their own free wi II. Anri! ion C;ln
be an importall1 benefit oftunJovcr in lean crollomi(; time~ bc<:ausc it rcdul:cS the need for
organizations to downsize their workforces. Finally. for organizations thm promote from
within, turnover in the upper rllnks of the org:mizmion frees up some positions for promo-
tions of lower-level mcmbers. Like abscnl<:eism. turnovcr is a behavior thai nl:eds to be
managcd but 1l00nccessarily reduced or eliminated.
Organizational Citizenship Behavior
Although job satisf,lction is not relmed to job performance, new research suggests Ilmt it is
relatcd to work behaviors th~t arc of a more vohmtary n~tllre ~nd not sped1ically rL-quired
of employces. Organizalional citizenship beha\'io[ (OCB) is behavior thm i~ above and
beyond the call of dUly-that is. behavior thm is not rcquircd of organizational mcmbers
but is Ilonetheless nccessary for oT£,miz,ltional surviv:ll and effcctiveness. l20 Exmnples of
OCB indude hclping coworkers; protttting the organization from lirc. theft. vandalism.
and Olher misfortunes; making construnivc .sugge~ti()ns: dcveloping one's skills and capa-
bilities; and sprcading goodwill in thc larger community. These bchaviors arc seldom
required of organiz~tional members. but they ~re important in all org~nizations. Helping
96 PART t • INDIVIDUALS IN ORGANIZATIONS

coworkcrs is an cspecially important form of OCB whcn it comcs to computing in the

workplace and leaming new information technologies.
Empluyees h,we cunsiderable discretiun over whether or not they engage III acts of
organizmional citizenship behavior. Most employees' job descriptions do not require them
to come up with innovative suggestions to improve the functioning of their depanments.
Nevertheless. employees often make valuable innovative suggestions. and it may be that
employees who are moSI salisfied with Ihelr jobs are must likely 10 do so. On"e again.
be"ausc these behavior.> are voluntary-that is. there arc no strong situational pressures to
perform them-it is likely that tltey are influenced by attitudes such as job satisfaction. As
we saw e'lrlier. work moods are also likely to have some impact on these behaviors.
Empluyees whu ,Ire in positive moods arc espt-cially likely 10 perfurm forms of OCB. such
as helpi ng cuslOmers or suggesting new ideas. III
Dennis Organ of Indiana Universily suggesls Ihat satisfied employees may be likely to
perform these behaviors because Ihey seck to gil'e something back to an orgal1i:wlion th,U
haS treated them well. lll Organ nOles that most people like tu have f,lir exchanges with the
people <lnd organizatiolls for which they work. Be"ausc of this desire. employees who arc
satisfied Illay 'iCek to reciprocate or give something back to the organi7.ation by engaging in
various fornls of OCB.
Be"ause the various furms of organizational citizenship beh,IViur arc not form<llly
required of emploYL"Cs. they may not be formally recognized by the organization's reward
and incentive systems. Often managers may not even be aware of thC''iC behaviors or may
undereSlimme their occurrence (as in the C'ase of employees helping others with their PC
problems). This lack of awarcness does not mean. however. that managers cannot recug-
nize and acknowledge OCB that does occur.
John Brady. presidC'nt of John Brady Design ConsultalllS. developed a simple yC't
innovative method to acknowledge OCU. At the start of eneh yenr he gives each of his I~
employees a jar comaining 12 marbles. Throughout the year. employees gIve marbles to
others who have helped them in some way or have accomplished some oUl-of-the-ordinary
feaL In this way. C'mployees are recognized for thC' OCB that occurs and are proud of the
marbles they accUmUl,He ol'er the year. even though the)' may reC'eive no more tangible
rewards (such as a bonus) lur perfurming these behaviors u3
Similarly. Texas A&M UnivC'rsity recognizes OCB by publishing aCCOUIIlS of OCB in
the HI/mall H/'S(}lIras Ne"'sleller distributed pC'riodieally to all C'lllployees of the univer·
sity. A special seetion of the newsleuer titled "We Caught You Doing Something Right"
chrolllc1es instances of OCB that havc taken place during the past few months. Here is a

When employees volunwrily

help each mher out on Ihe job,
they arc engaging in
organizalional citizenship
lx:havior.

EMPLOYEE WElL-BEING
H,,,, happy. Itcallhy. anJ pro-.,
pemu, employee' an;:
AFFECTIVE COMMITMENT
The "ommitmeOllhal e~,'h when
empk,}'ce, are happy 10 be
members of an organi'."lion.
,I'
beheve anJ fed gOO<! abool
lhe organi'.l;on ar.J whal il
,rand, for. are alrached 10 the
"rganil.alKm. mlJ intend 10 do
w hal i, o::ooJ for lhe organi'''lion
CONTINUANCE
COMMITMENT
The "ommilnlCnt lhal "~"h w!len
,1 " ,-,mlly for employee, 10
'C1)
le",'c an organitation,
CHAPTER 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 97
samplc cntry: "Michacl Jackson. who worb. in thc Library. was caught coming in on his
own lime to review work for a eooperalive grant-funded projecl involving 18 Texas :lea-
demic libr.uies. By \,olunt:lrily cuntributing his tIme. Mich'lel has enablcll the Tex.ls
Documents to the People Project to stay on schedltle:'I!~
Employee Well-Being
Emplo)"f;,e wl'll-beillg-how happy, healthy. and prosperous cmployecs are-is thc lasl
pote01i:l1 consequence of job smisfaclion we consider. Unlil::e absenteeism and turnover.
this cunsequence focuses on the employee rather than the orgamwtion. If you count the
number of hours of their allull lives that employecs spenll on the job, the number is truly
mind-boggling: An employee who pUIS in an eight·hour day, works five days a wed, and
has two weel::s off a year for vaealion worl::s approxim<l1ely 2.000 hours a year. Over a
40-year period (from age 25 to 65). this empluyee clocks ill some 80.000 hours on lhe job.
(The,c figurcs llon't cven touch on thc amount of time employees speod thinking about
lheir jobs during 1hcir timc off.) Bcing dissatisfied wilh one's job for a major porlion of
onc's working life almost certainly :ldversely affects well-being and generallwppiness.
Consi,tcnt with thi, observat ion, re,carch suggests Ihat Job s,atisfaction contributc, to ovcr-
ail wcll-being ill lifc.ll~ According u> Bcnjamin Amick, a pmfes,or at thc Univcrsity of
Tcxas, "More satisfaction Icads 10 improvctl physical and mCll1al hcalth and savcs mOIlCY
through reduced he:lhh-care co,ts and improved productive time al worl:::'lU,
Organizational Commitment
Wocreas job satisfaction relatcs to fcelings and belicfs lhat indivilluals havc about specific
jobs. orpmizaliona! COlllmilmell1 relmcs 10 fcelings and beliefs aboutlhe employing organi-
Z:l1ion as a whole. Re>earchers have identified twu di>lincttypcs of organlzalional commit-
ment: atlcdh'c commitmcnt and {'tllll inuance commitment .117A ffl'Cliw cum milmcnl cxist,
wocn cmployees are happy to be member> of an organization. believc in and feel good about
the org'lnization and what it stands for. are al1~lChed to the organization. ~lJJd intend 10 do what
IS good for Ihe organiza1ion. Conliml:JlK'c l'OJllmitnJ('nl exi>ls when employees arc cummit~
tcd not so much becau>c they "',JIll to be but because they have to be-when the nht, of Icav-
ing lhc organi,~tion (loss of seniorily,joh securily, pensions, mcdical benefits, and so on) arc
too grem. l28 As you might imagine. affeclive commitment gencnlily h~lS more pOsi1i"e con-
sequcnces for employee, and organizatiuns than continuance commitment.
Determinants of Affective Commitment
A willc range of personality and situat ional factors has IOC pOlell1ial 10 affecl !cvels of affeclive
commilmcnL For example. employee, may be more commiued 10 organizmiOlJs that behave
in a socially rc,ponsible manncr and contribute to socie1y at large. It is easier to believe in and
be commincd tu an organization that is doing gO(x! things for society r;lth.cr than causing harm.
such as polluting IOC atnmsphere. Ben & JelTy's Homcmade, the ice cream company. encour-
ages employee commitmem lhrough socially responsible corporale policies and programs that
suppor1lhe community and pr01ect1he environment. l29 The Bod)' Shop, which mmlUfae1ureS
anll sells organic beauty products, cngcl]{!crs commitmcnt in it, cmployees by sUPfXming the
prolection of lhe cnvironmcll1 and animal rights. Employees may also be more likcly 10 be
commined 10 an org.mizaliOll thaI shows lhm il cares aooul its cmployees and values lhem as
mdividuals. M~magers c:mnot expcc1 empluyees 10 be comrniued to an organi"l.1tion if the
organiZiltion is not commiUcd 10 cmployccs anll sociclY as a wholc.
Potential Consequences of Affective Commitment
Managers imui1ivcly believc lhm cmployees who arc cOlllmined 10 an organizmion will work
harder. mid rese:lreh h~IS found affective commitment to have a weak ]XlSitive rcl.nionship wi1 h
job pcrform:mce DO Huwever. a!Tcctive commilment (like jub ,ati,faction) may be more
highly related to organizalionall:itizcnship behavior (OCB). Because thcse behaviors arc vol-
untllf)'. lhey tcnd 10 be more dircrlly related 10 employees' attiludes toward an organization.
98 PART t • INDIVIDUALS IN ORGANIZATIONS

You're t;he Management; Expert;

Increasing Affective Commitment

Juan Quintero is a division manager in a large consumer products firm. Quintero's division
recently underwent a restructuring, which resulted in 10 percent of the division's employ-
ees being laid off. Quintero did everything he could to help those employees who were
laid off find other fXlsitions by, for example, giving them advance notice of the layoff,
enabling them to use office space at the company until they found a new job, hiring
career counselors to help them figure out their best options and prepare resumes, and so
forth. He also honestly explained to all employees why the restructuring and resulting lay-
offs were a business necessity. Prior to the layoff, Quintero felt pretty good about satisfac-
tion and commitment levels in his division. On prior annual surveys the company had con-
ducted, Quintero's division always came out on top in terms of employee satisfaction and
commitment. However. he is beginning to worry that things might have changed, and he
has data to support his fears. After informal chats with some of the division's employees,
Quintero sensed diminished levels of job satisfaction and affective commitment to the
company. On the latest annual survey conducted one month ago. Quintero's division
scored in the lowest quartile in affective commitment. Quintero is concerned, to say the
least. He cannot understand why attitudes have changed so much over the year Even
more worrisome, he does not know how to address this problem looking for an expert
in organizational behavior. Quintero has come to you for help_ Why have levels of affec-
tive commitment deteriorated in this division, and how can he bring them back up to their
prior highs7

When affective commitment is high. employees are likely to W~lnt to do what is good for the
organil..atiun and, thus, perfurm OCBsYI HO"'ever, when tuutinuance l"Ommitrncnl is high,
employees arc not expected to go above and beyond Ihe call of duty because Ihcircommitmenl
is based more on necessity than a belief in what thc organization S(ands for.
AfTective commitment also shows a weak. neg,uive relationship to absenteeism and
lardiness. 132 A stronger. negative rctalJonship exists belween affective commilment and
lurnover. Employccs who arc commilted to an organizatioll arc less likely to 4uil; Iheir
positive attitude toward the orgallizat ion itscl f makes them rcluctant to leave. 13.1

Summary
Values. altitudes. and moods and emotions have imponanl effects on organizational behav-
ior. Values (mt empluyee's personal convictions about what one should strive for in life and
how one should behave) are an importal11 determinant of un-the-job behavior. Job satisfac-
tion and organizational commitmcm arc two key work altitudes with important implications
for understanding and man,lging behaviors such as organizational citizcnship bellavior.
absenleeism, and tUnlOVCr. Work mQods nnd cmotions nlso are importallt detcrminants of
behavior in organizations. In this chaplcr. wc madc thc following major point~:
I. Two important km<b of valucs thnt inilucllCc organiz;ltional behavior are work valucs ;md
cthical \'aluCl;. Work anilUdcs, mo/'C specific and less long lasting than values. arc collec-
tions of feelings, beliefs. and thoughts dmt people have alxlut how to behave in lhcircur-
rent jobs mld organizations. Work moods and clllotions. more transilory lhan both values
 CHAPHR 3 • VALUES, ATTITUDES, AND MOODS AND EMOTIONS 99

and attilUdes, arc \Ulplc's feelings at IOC time Ihey aL1uaily pcrfonn tocir jobs. Values,
auitudcs. and IltooJs and emotions all have toc polential to influence each otOCf.
2. Work values are employees' personal oon\'lctions about what uutcomes they should
expc<:t from work and how they shouhJ behave at work. There arc tw'u broad types of
work values: intrinsic work values and extrinsic work values. lmrinsic work values are
values related to the work itself. such as doing something that is interesting and chal-
lenging or having a sense uf aecomplishrncnt. E.\trinsic work values are values relatL-u to
the con,;equcnn:s of wort. such as having family SL'Curity or StatuS in the wmmunity.
3. Ethical values are an employees' personal convictions about what is right or wmng.
Three types of ethical values are utiliwriall values. monll rights values. and justice
values. Utilitarian values dictate that decisiuns shuuld be made so thatlhe decision
produces the greatest goud fur the greatest number of \Ulple. Moral rights values
indicate that decision.s should be made in ways thai protect the fundamental rights
and privileges of people ;lffected by the decision. Justice \'alues dictate that decisiollS
shuuld be made in ways that allocate bendit and h,trm among thuse aff<.'Cted by the
decision in a fair. equitable. or impartial manner.
4. Two imponant work altitudes are job satisfaction and organizational commitment.
Job satisfaction is the collectioll of feelings and beliefs that people have about their
current jubs. Organizatiunal commitment is the culk-<:tiun uf fL-clings and beliefs that
people bave abuut their organization as a whole. Wurk attitudes have three compo-
nents: an affective component (how a person fcels about his or ocr job). a cognitivc
component (what a person believes about his or her job). and a behavioml CQmpo-
nenl (whal a person thinks aoout how tu behaw in his or her jub). Peuple can have
work aniludes about specific aspens of their jubs and urganizations and abuut their
jobs and organizations as a whole.
5. People experience many different moods at work. These moods cnn be categorized
generally 3S positive ur negative. When emploYL-es arc in positive muods.they feel
excited. enthusiastic. acti'·e. stmng, peppy, or elated. When employc<-'"S are in negative
moods. they fcel distressed. fearful. scornful. hoSlilc.jincry. or ncrvous. Employees also
experience less intense moods at work. such ns k-eling sk-epy or calm. Wolt moods are
determined by both personality and situation and have the potentialtu inllllence organi-
zational beh;tviors ranging fmm absence to being helpful to customers and coworkers
to creativity to leadership. Emotions are intense. shon-lived feelings that are linked to
a speeitie cause or antecedent. Emotional labor is the work that employees perf0I111
to control their experience and expression of muods and emotions on the job.
6. Job sati,faction is one of the most important and well-researched ;mitudes in organiza-
tional beh;tvior. Job satisfaction is determined by personality. values. the work situation,
and social lnflueoce. Facet. discrepancy. and steady-state models of job satisfaction nre
uscful fur understanding and m;maging this important altitude.
7. Job satisfaction is not strongly related to job performance because employees arc
often I)ot free to vary their levels of job Ilerformnnce nnd because sometimes job
satisf;tction is nOI relevant to job performance. Job satisfaction has a we,tk. negative
relationship to absenteeism. Job satisfaction innuences turnover: employees who
arc satisfied with their jobs are less likely to quit them. Furthermore, employees
who nrc satisfied with their jobs are more likely to perform voluntary behaviors.
known as urganizational citizenship behavior. that contribute tu org;lnizatiunal
effectiveness. Job satisfaction also has a positive effeCl on employee well-being.
8. Organizational commilment is toc collection of feelings and beliefs that people have
about their organizmion as a whole. Alfective commitment exists when employees are
happy to be rncrnbers of an urgani~lion and believe in what it stands for. Continuance
commitment exists when employees are commilled to the organization because it is tou
costly for them 10 Icave. Affective commitment has Illore posit!>'e consequences fOf
org,lnizations and their members than continuance comrnitlltcnt. Affective commltrflCnt
is more likely when o'1;anizations are socially responsible and demunstrate that they are
committed to emploYL-es. EmploYL"Cs with high lewIs of alfeet!>'e wmmilment arc less
likely to quit and may be more likely to perform organizational citizcnship behavior.
100 PART t • INDIVIDUALS IN ORGANIZATIONS
Exercises in Understanding and
Managing Organizational Behavior
Questions for Review
1. How would you descrihc- a person you know who
has strong imrinsie ;md extrinsic work values'!
2. Why might two employt'es with Ihe same job
develop differem attitudes toward it?
3. On what kinds of jobs might the moods that
employees experience be panicularly impon<lnt
for understanding why they behave as they do'?
4. Why arc allitudes Icss long lasting than values.
and why arc moods more transitory than anitudcs'!
5. What specific stand<lrds might people usc lO
determine their satisfaction with different faccts
of their jobs?
08: Increasing Self Awareness
Understanding Your Own
Experience of Work
I. Describe your work valucs. Are they predominantly
extrinsic or imrinsic?
2. How would your work values afTect your reactions
to each of these events .It work'!
a. Gelling promoted
h. Being reassigned to a position with morc
responsibility but receivillg no increase in pay
c. Having to work laiC at night and travel one
wcek a month on ajob you find quite imeresting
d. Having a stressful job that pays well
e. Having ;tn exciting job with low job security
3. Dcsl:ribe your mood over the past wt"Ck or two.
Why ha\'c you fell this way? How has your mood
afTITted your behavior"!
6. Why is job satisfaction 110t SIrongly related to job
perform<lnce'!
7. Should managers always Iry to reduce absen·
tee ism and turnover as much as possible"! Why
or why not?
8. In whm kinds of organizations might organiza-
tionall:ltizenship behaviors be espcl:lally
important'!
9. What spccific things can an organization do to
r.l;se levels of affective commitment'!
10. In whm kinds of org:mizations might affective
wmmitmelH be cspec'ially important?
4. What facets of a job are panicularly im]Xln<:ll1t
determinants of yOllr level of job S<:ltisfaction'!
What standards do you (or would you) USC!O
cvaluate your job on these dimensions')
5. Toward what kind of organization arc you most
likely to have affective l:onunitmellt'! Toward whm
kind of organization arc you mllst likely to have
COlllinu<lnce commitment?
6. How might your afTective commitment to an
organization aflect your bchavior"!
7. What forms of organi Zilt ional citizc nsh ip behavior
are you especially likely to perform. and why?
What forms of organizMional cilizen&hip behavior
are you leastlikcly to perform. and why?
 CHAPTER 3 • VALUES, ATIrrUDES. AND MOODS AND EMOTtONS 101

A Question of Ethics
On some jobs. employees arc expeCiell to perform emotional labor most of the time.
Salespeople. for example. arc often required to be cheerful and polite, even to the most
unpleasant customers. However. this can create high levels of stress for employees to the
extent that they onen h:1\'e to hide their true feelings. Additionally. 10 Ihe extent thaI a cus-
tomer is rude or abusive.llemands for emotional labor might be questionable on ethical
grounlls.

Questions
1. Are there limits to the extent to which an employer shoulll requirc cmployee-s to
perfOl1n emotional labor? Ifso. what arc Ihese limits? IfnoL why nol'?
2. Under whal conllition llo you Ihink it would be unethical to require emotional
labor from employ,-"C,? Be specific.

Small Group Break-Out Exercise

Identifying Unethical Behavior
Form groups of three or four pcnplc. anll appoim one nll"mbcr as the spokesperson who
will communicme your conclusions to the rest of the class:
1. Take a few minutes to think aboul inslances in which you observed unethical
beh'1\'ior taking place in an organization (as an employee. customer. diem. or
observe-r).
2. T:lke turns llcscribing Ihesc instances.
3. Each person Ihen should lake a few minules 10 wrile down criteria Ihat helps to
llistinguish cthical behavior from unethical behavior.
4. Using input from Stcp 3. as a group,comc up with the- key crite-ria that you think
should be used to detemline whether behavior is ethical or unethical.

Topic for Debate

Values. allitudes. anll moods anll emotions ha\'e impoTlant implications for unllerstanding
and managing organizational behavior. Now that you havc a good undcrstanlling of values.
allitullcs, and moods anll cmotions.llcbate the following issue.
Team A Because job smisfaction is nOI relatcd 10 job performance. managers do nOI
need to be concernell about it.
Team B. Managcrs do neellto be conccrned aboul job satisfaction even though il is not
relalcd 10 performance.

Experiential Exercise
Promoting Organizational Citizenship Behavior
Objective
Organiwlions work most effcclil'ely when their members voluntarily engage in organiza-
tional citizenship behavior,. It i, likely thaI you have witnessed somc kind of organiza-
tional cilizenship behavior. You may have seen this behavior performed by a coworker or
supervisor where you work. You may have seen this behavior when you were interaCling
with an organization as a cUSlomer or c1ienl. Or someone in YOllr university (a fal:t1lty or
102 PART t • INDIVIDUALS IN ORGANIZATIONS

staff memocr or a studcnt) may haw gone above and ocyond the call of duty to hdp
another person or tllc university as a whole. Your objective is to identify instances of OCB
and Ihink about how m:magers eml promote sm:h behavior.

Procedure
Each member of Ihe dass lakes a few minules 10 think about inslaneeS of organizalional
citizenship behavior Ihat he or she has observed and makes a lisl of them. The class then
dividcs into groups of three to five people, and each group appoints one mcmocr as
spokesperson to prescnl the group's conclusions to the whole class, Group members do thc
following:
1. Take turns describing inslann~s of organizational citizenship behavior they have
observed .
., Discuss the similarilies and differences betWeen each of these inst,llll'eS of organi-
zalional citizenship behavior and suggest some reasons why they may have
occurred,
3. Compile a list of steps thm managcrs can take to promote organizational citizcn-
ship behavior.
Spokespersons from each group report Ihe following back to the class: four examples
of organizmional cilizenship behavior Ihm group members have observed and three SlCPS
that managers can take to try to promote OCB,

New York Tinles Cases in the News

"Here's an Idea: Let Everyone Have Ideas,"

By Iv. C, Tay/or; New York TlllleI, Mtlrc!l 26, 2006. Seoioll 3. p. 3.

Like man)' lOp exeeutin", Jame, K.
Lavoie and Joseph M. Marino la.\.'P a close
eye nn the ,tork market. !:lut the two men.
<.u-foUlKkrs of Kill"-SoluliotlS. a software
compan), that build, advan<:..- d-and
highly classitied-command-and·control
system-, for the Navy, don 'I worry much
aboot Nasdaq or the New York Stock
Exchange.
In,tead, they focus on an inlermll
markct wh<'re any emplo)'ee can pro-
pos<: th"t the company acquirc ,I new
tC<'hn"logy, entN a ncw bus;ness or
make an efficiency ilnpro"cment, These
pmpo.\als be.'on\\.' slOd,s. c'()I11pldc with
ticker symbols. discussion liSlS and c·n'l<li1
akrts, Employees buy or sell th,' stod:s.
and prices change to rellectthe sentiments
of the eompany's enginc,'rs. computer
scientists and projcctman"gers-as well
as its marketcrs. <Ierounl,UllS and ,·\'ell lhc
n:<;eptionist,
"We·re the fOUllllors, but we're far from
the ,m"rtC.'<1 people here." Mr Lavoie,lhe
•'hief exe<:uti,'e, <aid during an ime,,"'iew
at Rite-Solutions he<ldquarters o\lIside
Newp"rt, R.t. "At moSt n,mpanics, espe-
ei"lIy technology companies. the most
brilliant insight, tend to mme from people
other than senior mWl<Igen1CIll, So we
.'rcal..-d a marktplat'C to harYcst mlle<:liw
gcmus:'
That', a refrc,hing dose of humility
from a successful C.EO, with decades of
experiell\x' in his rdd. (Mr. La,'Oic. 59, is
a VIC,n;ull War vctemn and an accomplished
engineer who has d.·'·oted his .'arcer to
milital)'-oriented 'echnologies.)
Most companies operate undN thc
assumption th"l big ideas ool1le from a few
big brain,: the inspired founder. the
ecccntric invcntor. the visionary boss, Bilt
there' a tine lillC belwcrn in<lividual genius
and know-it-all armgalll'l'. What hapJll-'ns
when r;v,tls become so nUI11Croos. whcn
tedu1<>logi,', mo,·c Ml quic'kly. Ihat no
corporate honcho <;"nthink of every,hing'?
Then it's time 10 ;nwnt a less lop-down
approach to inno\'at;on. to make it
everybody's business to come up with
great ide""
Th:,("s a key Jesson behind the risc of
open -,oure'e technology, most n01"bl)'
Linux. A ragtag ;Irmy of programmers
organized into gmups, wrote computer
eod<:. made the code aV<lilable for
<Inyone to re\'is<.· and. b), competing and
co·operating in a global community.
rcsha!'<-'d the marht for software. Th,'
brilli'lIlce of Linux as a model of
in",,,,at;,,n i, that it i, ptlw\'red by th.,
grass·roots bri lJi:mcc of the thousands of
pmgr:lIllJt1<"rs \\'ho ere'ateo it.
i\c<,:orcting to Torn O·Reilly. ,he foun<.lcr
<lnd chief ex,'Cuti"", of O'Rei lIy ~k'dia. the
computer book publisher. :md an ",-angcliSl
fur upen Sourc'e te..lmulogies. ('fcativit)'
is no longer aboUI which companies ha"e
Ihe must visionary cxC<'uti"es, but \\ho
has Ihe most compelling ··architecture of
particip<llion." That is. whieh companies
make it ca.,)'. inleresting "nd rewarding for

a wide rml)!e of contributors to otkr ideas.
sot", problems arnJ imp",ve pmduns"
At Rite-Solutions, the architecture of
participation is bmh busines"like and
pl~lyful. Fifty-live stocks are Iistcd on the
company'.s inlernal marke!' which is
called "Iutual Fun, Each stock comes
with a dctail<'d description-I'allcd an
expect-us, as opposed to a prospcrtus-
and begins Irading at a pricc of SIO,
Every employee gelS $10.000 III
"opinion monl'y" to allocate among the
offerings. and employees signal their
enthusiasm by in"esting in a stock and.
bener yet. volunteering to work on the
proj<'<'t, Volunteen; share in thc pnx:(,<,ds.
in the form of real 1H0ney. if the stock
bel'Ollll'S a product or deli"ers savings,
Mr. Mllrino, 57. presidcnt of Rite-
SolutioltS, says the market. 'dlich bq;an
in JlIlluary 2005, has already paid big
dividends, One of the e'lrliest sto<:ks
(ticker symbol: VIEW) was a pr<JPO"al to
apply three-dimensional visualization
tc<;hnotogy, akin to video pnles. to hetp
><Iilors mid dornestil' ,,-'curity personnel
practice making dc<;isions in emergency
,ituatiolls. Initially, Mr. Marino WaS
unenthusiaSlic about the idea-"'rlll not
a joystick jockey"'-but support among
employees was overwhelming, Today.
that proouct Ime. called Rite-Vicw,
accounts for 30 pcKCnt of tOlal ,"lcs,
"Would this have h"ppcned if it were
just up to the guys atthc lOP""' M,- Marino
askc<:l, "Absolutely nOl, But we could not
ignore the facl that so many people were
rallying "round the idea. This system
removes thc lerrihle bunJen of us always
havin)! to be right:'
An01her virtue of th,' _,tol'k markc!'
Mr, La"oie added. is that it finds good
ideas fmm unlikely SOUK"S, Among Rite-
Solutions" core technologies "re p"nern
"'<'ognition algorithms u"-'d in military
applicalions. as welt <IS for electronic
gambling s)'Stenl' at casinos, a big Ill<lrket
Questions for Discussion
L What "al ues docs Rite-Solutions' approach to inno"at iOI1 appeal to? Why?
2.
3.
4.
CHAPTER 3 • VALUES, ATIrrUDES. AND MOODS AND EMOTtONS
for the eomp"ny. A m<'mocr of tile admin·
i,tr~tive ,mff, wilh TlO tel'hnieal expe"ise.
thought that this technology might also be
used in educational settings, 1<) cre<l1e an
entertaining ",,,y for studel1ls to learn
history or math,
She started a stock e"lled WinlPlayl
Lc"m (symlx'l. WPLl, which "nmeted a
rush of investment from engineers e'lger
to turn hcr idea into a produI·!. Their
enthusiasm led to meetings with H:'sbro.
up the road in Pa",tucket, "nd Rite-
Solutions won a eomr""t to help it build
it.s VuGn multimedia system, introdun:d
last Christm:,s,
Mr, La"oie called this innovation an
example of lhe "IIuiet genius"' th<tl goes
untapped inside ",,,,,t organil:ttions. "WI'
would have never eonnccted tllese dots:· he
said. "But one cmploytt !lo;ued an idea,
tots of employcrs go p;lssioll:uc "bout it
and that )cd to a new lilll' of business:'
The next frontier is to t"p the IIuiet
genius that exists outside orgarlizations-
to allr,ICt inl1ov"tions fmtn people who arc
prcparcd to v.ork "ith a cornpmlY ("\'en if
the)' don't workJor il. An intriguing case
in point is InnoCenti"e. a vinual rcscardl
and development bb through which major
~'OrJlOmtions invite scienti,ts and engineers
worldwide 1<) contribute ideas "nd solve
problems they ha"en't been able to crack
themselvcs,
InnoCentive, based m Ando"er,
,\1a",. is liter~lly" mmketpbee of ide"-',
It h~ls signed up more Own 30 blue·ehip
I'",np"nies, ind uding Proeter & G"mble,
Boeing, "nd DuPont. whose research
I<tbs "re groaning under Ihe weight of
unsoh'ed problems and unfl1lished
projel'ts. It has <tlso signed up more
than 90.000 biologists, chemists "nd
other professional, from mOl(' than t 75
countries. These "solvers" compete to
meet thorny tel'hnieal I'hallenge' posted
by "sccker"' eomp"nies. Each challenge
has a detailed scientific dl'scription. a
How might work ,lItitudcs be influenced by their apprweh?
How might work moods ,,00 emotions be "ffeeted?
How Imght suggesting a new idea that gets impkrnented affe"tle"els of employee com-
mitment at Rite-Solutions'?
103
deadhne and an ~Iw"rd, which can ron as
high a, $ tOOOOO,
"We are talking about the democmti-
I.ation of seiel1'-":' said Alpheus Hingham_
",ho spent 28 yean; '" a scientist and
senior resemch executive "I Eli Lilly &
Company before hcI.'Oming the president
and chief excI'utive of InnoCentive, "'Whal
happens when you open your eomp<lllY to
thousands and thousands of minds, ca'-'h
of them ",ith 'I totally ditlcrent set at life
c-xpcrielll'esT'
InnoCemive. founded "S:1ll indepen-
dent st"rt-up by Lilly in 2001. h,,~ "n
impressive record, It can point to a long
list of "aluable sck.'ntifi" ideas that h""e
:,rrived with surprising speed. from
fm"way places. In <tddition to the Unik'd
5t"tes, the top countnes for solvers :lle
China. India and Ru'sia.
Last month InnoCentive "1\r;lCted :' 53
million infusion of ,'mture capital to
accelerate its groWlh, "'There is a ·col·
)c<;ti"" mind' out there:' Dr. Bingham s<,id.
'1hc IIl1C,tion for wmp<lnies is. wh"t f,..",,-
tion of it Can you al'\,essT'
That rem"ins "n unans",ered que'tion
at many companies, "hose leaders con·
tinue 10 rely on their own bminpower "s 1he
key souK"\.' of ideas. BUI there's evidence
th"l more "nd more top exc<;utives arc
recognizing the hmi1s of their individual
genms
Back at Rite-Solutions, for eX'lmrle.
one of the mo,l valu"ble stocks on
Mutual Fun tS the stock m<lrket itself
(symbol: STK) So many exeeuti"es from
other companies h~ve asked 10 study
the systcm that te"m ch"mpioned the
ide" or licensing ,t is a p"x1uct-<1l101her
uncxpeded opportunily,
"There's TlOthing wrong with cxperi-
ence,"' said Mr. Marino, Ihe company',
presidctH, "The problem is when e.xpe-
rie",'e gets in the way of innm'ation. As
founders, the one thin!! we know is th"t
we do" 't know all the amwcn;."'
104 PART 1 • INDIVIDUALS IN ORGANIZATIONS
"Trying Out for Life's Second Act,"
By D. Gill. New York l"imn. April II. 2006, p. Efl.
Nolorious for high finUll<"ial risk and
grueling work hours, enlrepreneurship
sound, like just Ihe ,orl of vcnlure a
retirement-minded person would shun.
But mOn.' people al tlr near retirt'nl<'nt agt·
are going into business for Ihemselves.
sonK:times living outllK:ir >cninr years far
differently Ihan they e"er would have
imagined.
Sepa.-ale slUdies ;n the past two years
from Ihe Ewing Marion Kauffman.
F()IJ ndalion and the Center on Aging and
Work at Boston College indiealc that
Americans are increasingly het'oming
entr<.'pr,'ncur, at age 50 or later, a lrend
resear("hers e~pe("1 10 intensify as bany
boomers expand lhe age £roup. Even the
o"er-65 age group is be("oming self-
employed more often now. according 10
lhe Kauffman Foundation rescar("h.
While <IU1ny of these self-employed
workers ar(" independent mnt.-a("[or:'i-
often opeMing a one· person busitlCss like
a mmuhancy-reseaKh also indi,'at"s
that older wol1;ers are opening or buying
full-fledged busitICsses mOK than in the
!XIS!. A sludy published by AARP in 2()().t,
using rcseaKh from Ib<' nonprofit RAND
Corpor.llion. shows an upward trend in the
number of peopk owr age 50 who own
incorporated businesses.
As much as Ihese unlikely ("ntrepre-
neurs are drawn by lhe challenge of
,uee,'Cdin£ in business, e.slll."rts say. many
arc pu,hed into lhe effort by difficult
eiKUlmlan<-cs.
For 57-year·old Ilow;,rd DuBrow. the
de"ision to buy a business ("ame from a
("ompany merger that Iefl him jobless in
2002. After 30 years of dirnbing eorpor~
Ule ladders. he found himself in a (juan·
dary; b<' was tOO )'oung 10 relire, too old
10 do it again,
"'I knew I ,'ouldn't just relir,'.'" said
i\k DuBrow. who as a "i"" prcsidcm of a
major eornpukr-kasing ..'ompany o"ersaw
some S25l>illioll in ""'("ounts !>cforc t!>c
layout '"I didn't have enough money for
Ihat. But [ had just had it with ("orporal("
wol1;. I WaS til\.x1 and llunlC<1 out. I didn't
Ihink I h:Jd the drive anymore ttl go b:K'k in
and light my way up again:'
l"-'tead, he Idt Chi"aj,'o and dipped
into his wllcrted bonuses and 40 I(k)'s to
buy a 'mall. ,truggling hmdware ,tor,' in
New Port Ric·hey. Fla. Today. he spends
aboul 50 hours a wc..'k stocking ,htlve"
helping CUSlOnlerS and running Davis
Hardwme along with his five employees,
It hasn't worked out e~a("tly as he had
plmmed-Mr. DuBrow had envisioned
profits and thrce-da)' work-we("ks-but
he said IK: w,,-~ happy, '"It's fun:' he 'aid.
..[ ,till like it a lot !>cuer Ihan :lIl)'lhing I
did before:'
Certainly, people g("nerally want to
....·ork bter in life tll<ln e"er !>cfore, ,aid
MaKie l)itt-Cat.'<Quphes, dircdm of Ihe
BOSIOIl College Cemcr on AgllIJ,' and
Wori<. "Almo,t e\'Cry single ,un'ey makes
lhal loud and clear," shc S<lid. "In contrast
10 the past. people don't wamlo (juil"
YCI despilc some ("ol11panies' re("ent
effort.s 10 relain senim workers, ,·mpo.-.!t("
downsizing has left many older workers
out of jobs befm(" th(")' wallled 10 k'a"e,
said Sara Rix, senior policy adviser at
AARP, AI,o, a, relircmenl Itll,ms, ,he
said. they HIke a harder look al how lIIuch
Ib<>y ha"(" a,'"rued 10ward rcliR'ment, and
if il will support the qua lily of life
they had ('~PC("tt"d. If ,om("onc want, to
begin to e"m more. entrepreneurship "'111
",em ,'a,ier or ",on.' allrani"e than
finding good·p;,)'ing salaried employment
aftN 50.
CI;'rctICe Wildes. who worked for 22
yem, in engineering jobs at Sprint. said
he applied for dOlCn~ of jobs and e"en
dm"e a school bus awhile aflcr h,' "':as
fon:ed imo early rclircn;cnt at age 52. t\t
lhe lime. he WaS surprised 10 fll\d his
bank ;>("("ount ,hort of a retiremem living.
he said. in parI tx-cauS<.' his c'omp"ny
stock had lost mu("h of its value. "I had
expcet<-d the position I WaS ill to givc me
a whole 101 more toward retirement than
....,hat I gOl." he said.
'1""0 years later. he tt.>nk a '"I""..,h ("OUfse
in starting a llusitlCss at the Kauffm:m
Foundalion, whi("h pn,moles entrcprcneor-
ship, In 2003, he opened Rolling Wheels
Training Cent("r, a m(>loR'yel(" driving
sehool in Kansas City. Long before leaving
Sprint, Mr. Wildes had drca"I<-d of ,tarting
Rolling Wheels-in retiren;cnt. "1 was
forc('d into it Ix'fore I .....as ready:' he said,
UtlCl11ployment is a po.... crfulmori"ator
for entrcpre'K:urship, s"id Ihe eeonomiSi
Rob Fairlie. an as,;.ociate professor at the
University of Cllifomia, Santa Cruz. alld
author of the ""Kauffman inde.' of Entre-
prcneural Anivity:' H,' said his research
,how, that pcuple who losl job.s are
more likely to ,tart busin..'ssc..~ than olhers.
Of those who do. he said. the average
at,'" is 50.
Kathryn Morrison ,aid she ne,'er
env,sioned herself :,s an enlrepreneur
until ,h(" found herself unemployed al
age 50. after a Career m br<Xld("asting and
a stint as a prcss go-between for a
flll"'Kial trade :Isso<:ialion. "'I ("ouldn't
find a jot':' she said. "I was I<'rrifled'-
But sbe landed" ("OI!tntCI to produce a
brod,ur(" for on(" mutual fund ("('"'pany
and then 'lIIother. She o))Cned SunSmr,
oo.sed in Alexandria Va .. as a media
rclalions ("OI\1p'IIIY for in"cstlllent advisers.
whi"h has grown 10 12 employ......s wilh
about $2.5 million in allnu,,1 fe'·cnues.
Ms, Morrison, noW 65, ,aid ,he had no
imelllion of retiring 'Hly time soon.
Of ,'ourse, some lale-in-life ("ntreprc-
neurs are simply fulfilling longtime
dR'ams that could bt" fulfIlled only anN
de(";,des of wage or sal:lry work. Early
retire'ment pa"kag'" or helly 401(k)',
sonIClin;c" make Ihose go;ds possible.
"All of my life I had ",'"med 10 go into
bu,;\1ess fOf myself."" said Wally Blume.
67, orK: or the inwntors or th,' fonnul" for
)I,'loose Tra("ks ke ("ream. In his 30\ and
40's, Mr. Blume looked into nurn,'rous
enlreprcllCurial opportunities. induding a
fran,'hisc' dleese ,tore. "Bul I ne"er had
the money to make il work:' he said, He
eventually resigned himself to :, long
("arcrr at the supermarket giant Kroger
Corpomtion in til""" produCl de'·clopuK:nl.
followed by " Slim as an ingrediems
salesman for a ,mailer company.
BUI when Moo"" 1'.-""ks. an i<:e ("ream
flavorin£ he <uld a few wlleagucs in\'Cllted
on the .side bc<:ame an uIIC~I"'"'-"ted hit.
Mr, Blume diswvered he had both Ihe
 CHAPTER 3 • VALUES, ATIrrUDES, AND MOODS AND EMOTIONS 105

oppononi(y and the PrOOllCl to finally ,(art
a bu,ine,", He was 62 wb<'n be buill a
home in Wayl:lI1d, Mich, with an emire
floor dcdica(0010 luming (he brand into a
full-11c<I"..:ct business.
His bu,ine,", Denali Flavors, now
sells ingrediel1ls for 30 copyrighted
fla\"{)[';, induding Moose "fmc"-, While
he wouldn"( disclose Denali's fmanei'11
condilion. he' ,aid it, flavors were
included in prodUC1S (hm generJIe
mUj;hly $85 million a year in ,alcs. The
company is expanding (he uSC of ilS
produ("[s in "akes and cookie" as wdl as
in icc cream in foreign countries.
As an e'nlr<'prcncur, Mr, Blume said
he has workd a 101 longer hours th,ln he
did in his )'oulh, par(i<'ularly in (he firsl
couple of years. "Bu( you jusl lo"c it:' he
said, "ThIS was my bosllless, :lIId Ihis
was my pa,"",",
Sonl<Climes. older workers look lIlto
buying a bu,ine," a, a way 10 case illlo
re(iremen!. £lUI (hcre are "el)' few sue·
eessful <~lmpanics lhal allow the owne" 10
work half·d'lys, busillCss brokers (ypically
lell dienl" '1llere arc none-they're all
broke:" ~lid Bob Hough. presidcnt of
Sunbdt Business Brokers in Clear water,
1'1<1. [n(reprell<Curship. (hey wam,rctjuircs
long hours.
Rcgardless. older entrepreneurs (end (0
be 1ll1"" ",ti,ti(,d (han (heir <x>lmterparb in
salaried jobs. a,:cording (0 rcsearch m (he
Bos(on Collej;e <'enter. In an unpublisbc..J
study this year, sonle 90 per<"Cn( of small
busin<'SS oWllers ovcr aj;c 50 (b,,( (Ill' "'Ill<'r
surveycd were mOfC Iikcly (h:u! wage and
salaried workers (0 Want (0 S('ly III the
,ame job
Like any other popula(ion in busill<CSS.
older entrepreneurs rep"n a variety of
success. Mr, DuBrow said he was s(ill
putting more money jlllo hi, bardware
store (han he gO( ou( of il. He s:lid he
boped 10 make a profit of abnlJt S2.lXO to
S3.lXO a mnn(h from i( wilhin a couple of
yea". Mr. Wilde" the motnrcyde school
owncr. s;,id he did nOt expee( (0 gel rich.
"But we'll make a Ii"inj;:' he said.
Mr, Blume ilnd Ms. Morrison bolh
said th<.'y we", financially far h:lppier and
more successful (h:lI1 (hey ever expecled.
"1 driyc eXJl!'n,iYC car, and ,'a"ation
:IIound (he world:' "18, Morrison said.
"My lif(' is bell<>r than my beS( d",,,,ns,'"

Questions for Discussion

J. Why are sume older workers becoming emrepreneurs?
2. What work valul's drivl' would·be l'mrt'prcneurs?
3. Why are some en(rl'prelll'un. more sa(i,ticd Wilh (heir work as l'll(rcprelleurs than in (hl'ir
prior jobs, despile pUlling in longer work hours'?
4. What might ('nusc moods and elllotions (0 f1uelOa(e for entrepreneurs'!
 PAR T 1
CHAPTER Individuals in Organizations

~l PERCEPTION, ATTRIBUTION,
J AND THE MANAGEMENT
OF DIVERSITY

CIIARACTIORI!>TICS lit" 1'1110 1't:RCt:IVI;R

CHARACTP-RI~'TICSOt' TIIF. T,\R(aT ANI) SITUATION

ATTRJDUTION THEORY

SUMMAR\'

EXERCISES IN UN1WRSTANnlNG ,\Nl) I\'!A,"I,\GING ORGA,"HZATIONAL BEHAVIOR

Learning Objectives
After studying this chapter, you should be able to:
Describe how perception is inherently subjective and how characteristics
of the perceiver, the target, and the situation can influence perceptions.
Understand how the use of schemas can both aid and detract from accu-
rate perceptions.
Be aware of biases that can influence person perception without per-
ceivers being aware of their influences.
Understand why attributions are so important and how they can some-
times be faulty.
Appreciate why the effective management of diversity is an imperative
for all kinds of organizations and the steps that organizations can take
to ensure that different kinds of people are treated fairly and that the
organization is able to take advantage of all they have to offer.
Describe the two major forms of sexual harassment and the steps organi-
zations can take to combat sexual harassment.
 Opening Case
EFFECTIVELY MANAGING DIVERSITY IS AN ONGOING CHALLENGE
How can organizations meet the challenge of eHectively managing diversity?

orne people believe that discrimination is a thing of the past, They

acknowledge that discrimination in the workplace was a serious
problem in earlier times but feel that today, heightened awareness of the
problem, as well as the significant legal and financial consequences that
(an result from it, has eliminated most forms of discrimination.
Unfortunately, discrimination is not a thing of the past.
Class-action discrimination lawsuits are still being settled every
day to the tune of millions of dollars. For example, over the
past 10 years, the Adam's Mark chain of luxury hotels agreed to
pay S8 million to settle a racial discrimination lawsuit; 1Texaco
settled a S176.1 million racial discrimination lawsuit involving
1,400 employees;2 Ford Motor Company agreed to pay S3 million
to settle allegations that women and minority applicants were
discriminated against in the hiring process at several Ford
plants;3 and Coca-Cola settled a racial discrimination lawsuit for
S192.5 million. 4 Currently, unsettled suits alleging workplace
discrimination are pending at organizations ranging from
Johnson & Johnson and BeliSouth to the National Football
League, General Electric, and Wal-Mart. 5
When managers become aware of evidence of potential
discrimination, they need to pay immediate attention and act
proactively both to address the potential problem and perhaps
change the organization's policies and practices. How problems
were addressed at General Motors when its minority dealership
program was in trouble is a case in point. Problems with the
Effectively managing <liw"ity is nitkal for program became apparent in a report prepared by civil rights
ali organiz:.lions. Imgc and small. attorney Weldon latham. The report addressed alleged
problems ranging from minority dealers being overcharged for
their dealerships and given undesirable locations to being inadequately
trained and having their life savings depleted as a result. GM's program
was originally designed to eliminate discrimination, but it seemed to be
hurting rather than helping minority dealers.
Eric Peterson, who had recently become head of the minority dealership
program when Latham's report came out, took quick proactive steps and
implemented 213 of Latham's 215 recommendations to solve the problems
he had documented. General Motors now responds to minority dealers'
complaints within 30 days; 80 percent of minority dealers are now earning a
profit compared to only 50 percent before the changes, and approximately
16 percent of minority dealerships are earning more than Sl million, which
compares favorably with statistics for GM dealerships overal1. 6
Unfortunately, the fact that discrimination lawsuits continue to be filed
in U.S. courts signals that at least some organizations are not meeting the
challenge of effectively managing diversity.7 Recently, the National Urban
league (a nonprofit organization) conducted a large-scale study of over
5,500 U.S. workers in a variety of jobs, organizations, and positions ranging
from entry level employees to top managers and CEOs to determine how
 Cl'APTER 4 • PERCEPTION, ATIRI8UTlON, AND Tl'E MANAGEMENT OF DIVERSITY 109

employees themselves view the diversity initiatives of their employers. s The

results of the survey (which was funded by Enterprise rent-a-car) underscore
how challenging effectively managing diversity can be. Only 32 percent of
employees felt that that their employers effectively managed diversity; only
47 percent of top managers felt that their companies effectively managed
diversity. Interestingly enough, of the top managers surveyed, 59 percent
indicated that they were partly to blame for their companies not doing a
better job of hiring, promoting, and fairly treating diverse employees
because they themselves were not as active in diversity initiatives as they
could have been. 9
The study also identified eight companies ("Effective Diversity Practices"
companies or HEDP" companies) whose employees indicated were actually
doing a good job of effectively managing diversity. How do the EDP
companies meet the challenge of effectively managing diversity? While each
company has a somewhat different approach, the study identified some
consistent themes that set these companies apart. to First, there is genuine
top-management commitment to the effective management of diversity as
an actionable goal, the attainment of which is regularly reviewed. Second,
diversity training and recognition and rewards for successful diversity
initiatives take place on an ongoing basis at all levels in the organizations.
Third, recruiting and hiring diverse employees is a top priority. And lastly,
EDP companies' diversity initiatives are not just internally focused, but rather
they reach out to the communities in which the companies operate by, for
example, seeking diversity in the suppliers of goods and services, marketing
to diverse customers, and utiliZing external adVisory boards to provide
guidance as to how the companies can effectively meet the diversity
challenge vis-a-vis their own employees, their suppliers and their customers,
and the communities in which they operate. Interestingly enough, the
growth in productivity of the EDP companies over a recent four-year period
was over 15 percent higher than the growth in the productivity of the U.S.
economy at large. ll All in all, while discrimination is definitely not a thing of
the past, at least some organizations appear to be meeting the challenge of
effectively managing diversity.

Overview
oncn two peoplc in an organization with Ihe same qualifil.:ations are vicwed differcmly.
One may be scen as much more capahle than another. evcn though there is no ohjeClive
hasis for this distinction-thc "more capable" person doesn't perform ,11 a highcr level.
The opening case shows. for example. Ih;]t African Americans <lnd olher minorilies in
husiness scltings are somctimes SClon as less cilpahlc and cornpetell1than nonminority
employces. even when they have identical qualiflcalions.
As ,mother example of the way people can view things differently. think of the last
group meeting you ,mended .md Ihe different ways in whil:h people in the group inter-
preted whal wenl on in the nlCetjng. One person might havc secn thc final decision as the
result of an imp:mial consideration of all altermuivl'"so hm anothl'"r person might havc SCl'"n
it as the resuh of a powl'"rful member imposing her or his will. Similarly. whal might have
appeared 10 be a reasonable.li\'ely discussion to one person was a noisy. incomprehensible
free-for-all 10 a second, and deeply offensive to a third. The facl is thai each of us sccs and
ill1crprcts the saml'" people. objcrts, and e\'l'"nts differently.
110 PART t • INDIVIDUALS IN ORGANIZATIONS

In this chapter. we look at how perception and attribution help people organize. make
scnse of. and interpret what they obscrve. We discuss why equally qualified members of an
organizmion or cqu:llly well intent toned eustOtners are perceIVed differently. why people
who attend the same meeting might have different interpretations of what went on. and
even why two people who watch the S:lme movie might come away with vel)' different
opinions about it. A major focus of this chapter is the role of perception :lIld anribution in
the etYecti"e tTwnagement of di\'erse employees. Throughout the ch<lpter. we give ex:ltnples
of how managers can enhance their abilities to manage diverse employees by paying allen-
tion to the ways they perceive and judge other people.
Perception :lud :lllribution are of fUlldament:l1 importallee in understallding and man-
agi tlg org<lmwtion:ll beh,WIN oc'C:utse <Ill decisions and behaviors in org:ltllwtiol1s. such as
the man:lgement of diversity. arc innueneed by how its members imerpret and make sense
of the people and events :lround them. Decisions aboul who should be hired. fired. tr:lns·
ferred. or promoted and decisions about how to encouroge organiz:ltional members to be
more productIve. to be more helpful to coworkers. or to pcrfornl otherwise desiroblc orga-
nizmional behaviors are all based on managers' interprcwtions of the situations they face.
Managcrs :It all levels of an organization who understand how perccption and amibution
sh<lpe such interpret:ltions are in a good position to try to ensure that their decisions help
rather than harm the organizatton and its members. Understanding perception :lnd :lllrtbu-
tion can aclltally help people at all levels of an organization interact with mhers and be
more etTcetive in thcir jobs.

The Nature of Perception

PERCEPTION Perl-'eption is the process by which individuals selee!. organize. and interpret the input
1lIc rrocc" b~ whICh indi,id~al, fronl their senses (vision. hearing. touch. smell. and taste) to gIVe meani ng and order to the
"" leel. flf'GiiIl;ze ,and ill1e'l"" title
world around them. Through perception. peoplc try to make sense of their environment
input from ttleir "'IL"" and the objects, events. and mher people in it. Perception has three components (see
Exhibit 4.1):
I. The f!I'r,xil'('r is the person trying to interpret some oh.'lCrvation that he or she has
just made. or the input from his or her senses.
2. The IiIrgel ofpaceplilm is whatever the perceiver is trymg to make sense 01. The tar-
get can be another person. a group ofpl-'Ople. an event. a situation. an idea. a noise. or
anything else the perceiver focuses on. In organizational behavior. we arc oftcn con-
cerned With perJO/! """repliuli. or another person <IS the target of perception.
3. The Jilum;ol! is the context m which perception takes place-a eOlllmitlL'C mt'Ctlng.
the hallway. in front of the office coffee machine. and soon.
Characteristics of all three components innuence what is actually perceived.
People tend to think thm perception is a simple phenomcnon. They belie\'C" that there
is an objective reality-a reality that exists independelll of who observes or describes it-
and that as long as their senses are not impaired (as long as they see clearly. hear well. arc
not intox icated. and so fnnh). pcrel'ption is si mply thl' understand ing of this objective real-
ity. People who believe in objective rcality tend to believe that their own perceptions arl'

EXHIBIT 4.1

Components of
Perception •

Situation or conte'" in whic~ perception toke. ploce


ACCURATE PERCEPTIONS
Pcrccplio", (hal arr a, dO'<' a,
pI,,,ible !O Ibe lrue "aWn.' of lhe
lal'l'cI of llC"cpI'01l,
CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY ",
uccurate depictions ofthm reality. They believe thm they pen:eive the true nature of the tar-
get (sec Exhibit 4.1) und beh:l\'e as if this were the case.
The perceptual process. howe,'er. docs not always yield a("("urale pcrcq)ljons-
perceptions that arc as dose as possible to the true or objective nJiure of the targe!. Even
people who arc trying to be totally "objcctive" often base their decisions and act on an
interpretation of reality that is subjective-that is. one that is based on their own thoughts.
feehngs. and experiences. As a result. interpretations of reality vary among individuals.
What is seen depends on who is doing the looking.
The fact that perception is not always accurate has significant implications for under-
standing and managing organiz.mional behavior. Virtu:t1ly every decision that a manager
makes-whether it be about hiring. firing. compensming organizational members. and so
on-Jepcnds on the perceptions of the decision maker. so accurate perception, arc the pre-
requisite for good Jecisions, When perccptious are inaccurate. managers anJ other rnem-
bers of ao orgaoization make fauhy decisions thm hurt not only the employees involved btll
also the organization. Why are accur"te perceptions of such fundamental llnportance in
organizational beh:Jvior in gcncr.t1 anJ in managing Jiverse employees in (Xlrticular? The
answer to this question touches on issucs of motivation and performance. fairness and
equity. and ethical action.
Motivation and Performance
Rec<lll from Chapter I that a major responsibility of man<lgers at aHlevels is to encouruge
organization members to perform to the best of their abilities in ways that help the organi-
zation aehie"e its goals_ In essence. managers need to ll1l1ke sure that subordinates afe
motivated to perfornt at a high I<::vel. Bec~use motivation <lnd perform~nce arc of such fun-
damental import<lnce in org;mizatiom;. in Chapters 6 and 7 we discuss them in det<lil anJ
the 013 tools that managers can usc, However. in order to usc these tools and motivate their
subordinates. rnunagers need to first have un underswnding of their diverse subordinates
anJ see them as they really arc. The more acclInllcly managers percei"e subordinates. the
bener able they arc to motivate them. For exampl<::. a manager who accurately perceives
that a subordinate is inJependelll and restlllS close supervision will be more likcly to give
the subordinate the breathing room he or she needs. Similarly. if a manager accurately
perceives th<lt a subordinate who shies "way from difficult tasks has the ability to Jo them
bill suffers frOll1 low self-csteem (one of the personality tr.lits JiSl:ussed in Chapter 2). the
manager will be more likely to assign to lhe suborJinate tasks of an appropriate level of
difficulty while at the same time provide the ellcouragement and support the subordinate
needs. Accurate perceptions also help m<lnagers relate to each other and enable members at
all levels to work together to achieve organizational goals.
Fairness and Equity
Suppose a manager supervises a diverse group of20 subordinates lind every six months the
manager has to Jecide how wcll each subordinate performed .Htd how big <l bonus each
deserves. When the manager makes these Jel:isions. it is extremely import<lnt that his or
her perceptions of each suborJinate"<; pcrfonnanee are as accurate as possibl<::. If the man-
~ger's perceptions arc inaceurute. the wroog decisions will be made. and some elltployees
arc likely to belie"e thcy are nOt being fairly trcateJ and perhaps are cven bcHlg JIscrimi-
nateJ ag<linsl. If some of the high performers receive lower bOlluses than some of the
mediocre performers. for example. the high performers might feel thcy arc not being
tre:lled fairly. As you will >cc in Chapter 6. f;lir ~nd equit;lble treatment is important when
It comes to motivating elllploy(:es. COllst:quently. inaccurate perceptions on the p~rt of the
supervisors of these high performers may breeJ rcsentmell! and cause them to minimize
their efforts: Why should they bother to try so hard when their efforts arc not being recog-
nized? Simi1~rly. as suggested by the opening case. if African Americans arc passed up for
promotions because they arc mist;lkenly perceIved to be less competcnt. this unfair treut-
melll hurts not only these employees but also the organization as a whole because it won't
fully he utilizing the talents of all of its members. Ultimately. some minority employees
112 PART 1 • INDIVIDUALS IN ORGANIZATIONS

In too:,y's globnl economy.

attr~cting and retaining a global
worHorcc is a top priority for
many organizations.

may leave the orgnnizationl0 seck fairer treatment elsewhere: this lUrnover will further
weaken the organiz'llion. It is. therefore. eX1TCmely imporlant lhat managers' perceplions
be accur-lte because their dccision making and uhirnalc effectivellcss depend on it. 12
In today's global economy. it is increasingly imponam for organizations 10 be able
to attract and retain a global workforce. Just as companies headquanercd in the U.s. arc
hiring employees from around Ihe globe. so 100 arc eomp,lllies in China and India hir-
mg-for example. hiring American and European employl'Cs.!J Anraeting and re1ainll1g
a global workforce necessitates that employees' contributions. accomplishmems. and
capabilities are ,Iecurately perceived regardless of the employees' nationality or country
of origin. Essenlially. in order to ha\'e an effective glob,1I workforce. all members of an
organizalion need 10 be trealed fairly. For example. lake Ihe case of an American man-
ager in a Japanese company who is a superior performer and seeks to ad\'ance 10 a top
management position. If this manager believes that regardless of her capabilities and
conlributions. she will never be promoted lU such a posilion because she is nOI Japanese
and all lop managers in her company bave always beenlapanese. she will likely seck 10
leave the organizatioll. foOl' some reason. managers in her company inaccurately pereeive
the capabililies and contributions of employees who are not Japanese and thus. do not
promote ll1em mto high-ranking posilions. As anolher example. a Lalino working in an
Indian oUlsourcing company recemly decided to change cmployers when he realized Ihe
likelihood of his advancing in the ranks were slim. regardlcss of his performance and
contributions.'4 Thus. reg,lrdless of what COUt11ry a company is based in. attracting and
relaining a global workforce reljulres thai employees' c<1pabililies and performance
arc accurately perceivcd and that all employees arc treated fairly. regardless of Iheir
countries of origin.

Ethical Action
We mentioned in Chapter I th;ltlhe wor~foTCe is becoming increasingly diverse and mem-
bers of an organizalion ohcn inlcr.tcl with others who may be dlfferenl from them in age.
r.lce . gender. elhnil:ity. and othcr charadcristics. Accurately perceiving diverse mc mbers of
an organ izat iOIl and their abi Iitics. sk ilis. and perfommncc levcls is not only a legal rcqui 1\"
menl btlt also ,Ill ethical neeessily. To give these individuals the opporltlnities and rewards
thcy dcserve. avoid illegal discrimination. and act in an ethical manner. a manager's per-
ceptions mUM therefore be accurate. Managcrs and others who undcrstand what percep-
tions are. how they me fonncd. and what influcnces thcm arc in a better position to cnsurc
this happens and that the organization benefits from it.

SCHEMA
An al>,\~...t ~""" bJgc ,Uuttu",
that i< 'IOred in IllCmory and
ma~c, p""ibk the organilaliun
an<! interpretation of informali(,"
about u target of perception
EXHIBIT 4.2
Characteristics of the
Perceiver That Affect
Perception
CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY "3
Characteristics of the Perceiver
Have you nOlieI'd that several people can observe the same person or event and come away
with diffefCnt interpfCtations of what thcy saw? That suggests that .>omcthing about the
perceiver may influcnce his or her perception.
Perceivers do not passively process information. Their experience or knowledge
(sdlellws). their needs and desires (III()/;m(io!l{/l SIaICI). and their feelings (moods) filter
information into thcir perccptions of reality (sec Exhibi\ 4.2). We now consider the way
each of these chnracteristies of the perceiver affects perception.
Schemas: The Perceiver's Knowledge Base
Whcn John Cunninghnm. a projcct manngcr a1 the engineering firm Tri-Syslems Inc ..
was ussigned to a new supervisor (a retired Air Forcc colonel). he did not gather a lot of
information before forming all impression of him. Instead. he took wh:ltever inform:l-
tion was at hand (howe\'er incomplete) and de\'eloped his own view or perce pi ion of Ius
new boss. Simply knowing that his new supervisor used to be in the military was
enough to convince Cunningham that he had a pretty good handle Otl what the retired
colotlel was Iikc. Cunningtwtll's supervisor in his last ]Xlsition h:ld servcd in the armcd
forces, and Cunningham had found him bossy and opinionated. To a neutml observer.
such limited information (the supervisor's military background) hardly S\.'ems suffidem
to support an asscssment. Bot for Cunningham. the equation was simple: His new
ex-military supervisor would be opinionated and bossy just :IS his other one had been.
Like Cunningham. we all interprelthe world ,1Tound uS on lite basis of limited infor~
mation. In large part. we rely on past experience and the knowledge we have gathered from
a variety of sources to interpret and make sense of any ncw person or situation (Ihe lIIrge(
of p("r("f'Jlrioll) we encounter, Our past experiences are orgallized into schenl:ls. :lbstr:lct
knowledge structures that are slored III memory and allow people to organize and interpret
infonnation abom a givcn target of perccption. IS Once an individual devclops a schemn for
a target of perecption (such as a former military person). any new target related to the
schema activates it. ,11td information aboltt the target is processed in a way consistent wit It
mformation stored in the schema. Thus. schemas determine the way a target is percei\"Cd.
Schemas help people interprctthe world around them by using their past experiences
and knowledge. Think about the last time you wcnt to a pany whcre there wcre many peo~
pic you didn't know. How did you decide whom to talk to and whom to try to avoid?
Without realizmg you were doing so. you probably relied un your schemas about what dif-
ferem types of penple arc like to form your perceptions and then decided with whom you
wantcd to spend some time.
John Cunningham·s schem:l for ex-lIIilitw)' 5upal'isor indic:ltes Ihat "ex-mi Iitary super-
vi.>ors are bossy nnd opinionatcd:' Because his new {xISS was in the military, Cunmngh:lm
perccives him as bossy and opinionated. All perccivers acth'C1y interpret reality so that it is
consist\,nt with their expectations, which arc, in tum. detemlin\'d by their schemas. 16
Sehemas al.>o innuence Ihe sen.>ory input we JN1Y altention to and the input we ignore.
Once a s.:hema is activated. wc tend to notice information that is consistent with the s.:herna
and ignore or discount information that is inconsistent. Because of his schema. Cu nningham
is especialty attuned to any infommtion that indicates that his new supervi.>or is bossy and
S<ohema,
P~rcti"", Mo,i"""o".1 M.l< P~rcrp,ion or. larg~'
114 PART t • INDIVIDUALS IN ORGANIZATIONS
STEREOTYPE
A >,Cr of O\erll ',mplilied ~od
often inaccurare tleliefs about
rhe rypical cham"rcrhtic_ of a
parlicular "mill',
opinionated (the boss has already rearranged the office layout). but Cunningham tends III
ignore infonllation to the cornra')' (the boss solicits and listens to Olhcr people's suggestions).
By selecting sensory input consistent with exi~tmg schemas .md diSl.'Ounting or ignoring
incon~istent input, schemas arc reinforn~ and strengthened. It is not slrrprising. then. that
schemas arc R?sistaru to change ,17 Resistance docs not indicate thm schemas arc immutable: if
they were. people would be unable adapt to changes in their environment. Schemas are. how~
evcr. slow to change. A l'OnsiderJble ~Hnount of l'Ontradictory infoffiwtion must be encourltert.'<1
before a person's schemas are altert.~. and he or she is able to perceive a target difJCrcmly.
Are Schemas Functional? Many times we jump to the wrong conclusions and form
maccurilte perceptions of other people oosed on ollr schcmas. especially when we have
limited infonnation about the target. Schemas. nevertheless. are functional for perl-eivcrs.
We arc continually bombarded with so much sensory input. so many potential targcts of
perception. that we cannot possibly take them all in and make sense of each one. Schem,ls
help us make sense of this confusing array of sensory input. help us choose what
information to pay allention to and what to ignore, and guide our perception of oftcn
ambiguous information, In this way. schcmas help members of an organization Ieam about
and adnptto the complex environment inside and outside the organization.
Schemas can be dysfunctional. howevcr. if they result in innccurate perceptions.
Cunningham's new supervisor milY not be at all bossy or opinionated but milY instead be
an accessible. eompctent. and talented manager. Cunninghilm's schema for 1'.\'-lIIililon·
SIIperrisvr. however. causes him to perceil'e his boss in .1 different-and negmive-light.
Thus. Cunningham's schcma is dysfunctionill because his lllnccuratc perceptions color his
interactions with his new boss.
Inaccurate perccptions can also be dysfunctional for the target of perception. Some
men in business have schemas that fil successful female professionals into a pigeonhole
mari:ed "wife. mothcr. daughter,.. rs Whcn a man with such a schema encounters a woman
in an organiz:nion. the schema is activated. and the man pereeivcs the woman as Icss com-
petent and capable in a business context than ~he actually is. This incorrect perceplion can
hurt the woman's future prospects when she is passed up for promotion or denicd access to
linancing to stan her own business.
Schcmas can guidc perceptions in a functional way. but WI.' have to guard against the
common tendency to jump to ineorrcct conclusions based on our past experiences. t9 John
Cunningh:ul1 clearly did not hal'e enough infonnation to have an accurate perception of his
supervisor, ilnd hc should have refraincd from making a judgment until he saw how his
supervisor actually behaved on the joh.
Stereotypes: An Example of a Dysfunctional Schema. A sleu'Ot~'pc is a set of overly
simplilicd ilnd often inatturate beliefs about thc typicill characteristics of a p.micular group.
We all arc fmniliar with stcreotypes bascd on highly visible characteristics. such as racc.
gender. nationality. or age. and we arc aware of the damage they can do.2\) Stereotypes
<Ire dysfunctional schemas because they are often based on inaccurate informatron
about individuals' interests. beliefs. capilbil ilies. behavior.;. and so on, Stercolypcd individuals
arc a\signed to thc scocma only because they POSSC\S a single distinguishing eharactcristic.
As SOOll as a person is encountered and stercotyped. the perceiver assumes that the
person has the characteristics associated with the stereotype.2t The perceil'Cr pays al1en-
tion to information \:onsistcnt with the stereotype and ignores innlllsistent information.
Because objcctive reality (what thc person is R?ally likc) rarcly matches subjective rcality
(whallhe perceiver Ihillks the person is like). stereotypes can be dysfunctiollal and dam'lg-
ing to the perceiver. the target. ilrtd the organization.
Stereotypes based on race, gender. and ilge have been responsible for discrimination
in society in gcneral and in lhe workplace in particular, For example. when Margarct
Jackson. chairman of tile Auslralian Qantas Airways. was going through airport security
althe Lus Angeles airport rccemly. a security guard stopped her and had her frisked after
he noticed that she had ilircraft designs in hcr C<ltTy-on bag. 22 1ackson told thc guard that
she was the Chailllwn of Qantas and in dishelieL he said. "But you're a woman,"23

In an ctTon 10 ruruit and fCtmn
older workrs, Home [lep'"
offers employees the option of
working during the wimer
months in StOfCS in Florida and
during the summer monlhs in
stores in Slales like M~inc and
I'ennsyl vania,
PERCEIVER'S
MOTIVATIONAL STATE
The n~'Cd,. 'alo"s. and dcslrCs
of a pe"'ci,cr at Ihc time of
pcrccpltOn.
CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY "5
As a result of the negative effects of sUc'h stereotypes. it is illegal to discriminate
against people because of their race. gender. or age. and organi7.atiotls that do so may
face lawsuits. as indicated in the opening case. The aging of the workforce. combined
with increases in average life eXj)<."Ctancy. has !c;(d to an increasc in the number of age
discrimination lawsuits being filed by laid-off older workers who believe that they lost
their jobs because of their age.2~ At the same time, some organi7.ations are actively
recruiting and hiring older employees. as profiled in the fOllowing Focus on Diversity.
Employees have to guard against thinking stert.."01.ypically aoollt dillcrcnt types of org.mi-
7.L1tional members. One way to do so is to encourage members of an organi7Jltion to think aooul
the characleristics that really affect job perfornm(}Ce and not irrelevant characteristics like age.
race, or gender. Discriminaling against or treating employees differently I:ll:cause of their gen-
der. age. or r.lCe is I}()\ only illegal but also unethical. MOfL'Ovcr. it is uocthil'al to discriminate
against employees based on any charxteristic unrelated to petfonnance woclher it is sexual ori-
entation. religion. disabilities, or roumry of origin, In the years since the fateful September I I
terrorist a1t;K;k that felled Ihe World Tr.lde Ccnter in New York City. some AmbAmericans and
other.; of Middle Eastern descent have bL'Cn victims of discrimination in the workpbce."~
The Perceiver's Motivational State
The IlCfCch'cr's moth'atioJJ:11 Slillc-the perceiver's needs. values. and desires m the time of
perception-influences his or her pereeption of the target, Perceivers see what they W,U11 to
see. hcar what they want to hear. and believe whal they wanllo believe becausc of their moti·
vational state. A simple yet ingenious experiment has demons1r.lted the effects of the per-
ceiver's motivational state. Panicipatl1s arc shown a '>Cries of locaninglcss abstract pictures
and are asked what objects and shapes they perceive in them.l1le images they see depend on
their I1lOtivalional slates. Those who are hungry. for example. are motivated to see food and
actually do indicate that they perceive images of food in the ab~tract pictures ."6
Like schcmas. motivational states can resuh in inaceur.l1e pen:cptions and faulty deci-
sion m;;lking. Suppose a manager does nOI get along with a hardworking. productive sub-
ordinate, The subordinate is a thorn in the manager'~ side. and the manager would wel-
come any opportunity to justify recommending thm the subordinate be transferred to
another position or even dismissed. What is likely to h;;lppell when the 1113nagcr must e\'al-
uate the subordinale's IX'rformance 011 some relatively SUbjective dimensions such as coop-
ermion and being a good team player'? Even if the subordinate actually deserves to SCOfc
high, the manager may rate the pen;on low.
OrganizatiOllaltocmbers need to be aware that thcir own needs and desires influenc,;'
their perceptions and can result in faulty decisions that have negati~'e consequences for the
116 PART t • INDIVIDUALS IN ORGANIZATIONS

Focus on Diversity
Some Older Workers Lose Jobs, Others Find Them

A growing number of companies are facing age discrimination lawsuits filed by laid-off
employ~s who believe that their age was the reason they were let go. Lynette Steuck
was a 51-year-old software project manager when she was laid off from Best Buy. Steuck
and 45 of other laid-off employees are suing Best Buy for age discrimination. Stephen
Snyder, the attorney handling the case, indicates that age was a factor in the lay-off deci-
sions and that "The people in their 30s were at greater risk of termination than those in
their 20s, the 40's more than the 30s, the 50's more than the 40s. And the people in their
60s and up were at the greatest risk of all.- n Hugh Juergens, a plaintiff in the Best Buy
case, indicated that he received exemplary performance evaluations from his boss prior to
being laid off by the company. Best Buy denies that age discrimination took place and it
will be up to the courts to decide the outcome of the case. Z8
Best Buy is not alone in being faced with charges of age discrimination. For example,
both Sprint and IBM face similar charges (which they also refute). In the Sprint case, 2,300
employees were laid off and those filing the age discrimination suit claim a forced ranking
system was used to categorize older workers as low performers. Sharon louk, a plaintiff
in the Sprint case, recalls her boss telling her that '"We need to get young people. -29
Bonnie Hoopes, another plaintiff. said that her boss told her in an email that the best
employees have a variety of characteristics including" lots of runway ahead of them. ·30
Again. the outcomes of these and other age discrimination lawsuits will be decided by the
courts, law Professor Howard Eglit at the Chicago. Kent School of law estimates that less
than one third of age discrimination lawsuits actually are settled in favor of the employees
alleging age discrimination. 31
Ironically, Just as these lawsuits are increasing. other organizations like Home Depot,
Borders Bookstores, and Wal-Mart are actively trying to recruit older workers 32 Home
Depot offers employees the option of working during the winter months in stores in
Florida and during the summer months in stores in states like Pennsylvania and Maine
Borders Bookstores recruits retired teachers and other older employees by providing them
with free books and other benefits that appeal to them Wal-Mart recruits older workers
in senior centers and has over 200,000 employees over the age of 55. 33 However. it is
generally harder for older workers to find new Jobs than younger ones and it takes them
longer to do $0.34 In any case, when companies do discriminate against older employees,
not only do they risk having to fight costly lawsuits. but they also risk losing the contribu-
tions of valuable employees.

orgnnizmiol1. Onc wny mnnngcrs elm gunrd ngninslthis outcome is to base perceptions on
adu:!1 behaviurs they h:!\'c obscrvt-d a person perfumling. In SlIm, manngcrs need tu be
aware of their own motives. eOlKentrme Oll perceiving how people anually perform, and
refmin from assuming how someone probably behaved whellthey did llot directly observe
his or her behavior.
PERCEIVER'S MOOD
How a percei'," fed, "llhe lillie The Perceiver's Mood
of perc"l>l",n
The pcrceh'er's ulCMJd-how the perceiver feels at the time of perception-call also influ-
ence perception of the target. In Chnpter 3. we discussed how work moods (people's feel-
HlgS.1I the time they perform their jobs) innucnce organizationnl behnviur. People's rnCMlds
also affect their perception of a largCl. n
 CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY "7

Maric I'lanagan. a fashion designer for a clothing manufacturer. was so excited about the
new line of women's suits she finished designing late one aftenJoon Ihal she could hardly
wail 10 show her skell:hcs 10 her super\'isor Phil KrJus the next day. BUI when Flan<lgan S<lW
Kraus in lhe hallway the nexl morning. he barely grunted "hello:' and later Ihal morning his
secretary told Flanagan that Kraus was in a terrible mood. Despite her eagerness to fmd OUI
what KrllUS thought of her oew lioe. Flanagan decided to wait uotil he was in a bener mood
before showing him her sketches, She reasoned that even If Ihe new line was a potential
winner. Kraus W<lS likely to fiml fauh with il bt.:cause of his b<ld m(KKl. She realized lhal pt-'o-
ple's mooJs influence their perceptions and judgments. When employees arc in a positive
mood. Ihey arc likely to perceive Iheir coworkers. supervisors. SllOOrdirHltes.llnd even their
jobs in a more positive lightlhan they would when they arc in a negative rnood:>6

Characteristics of the Target and Situation

We dcJined I'erceplion as the process whereby people scled. organize. and interpret the
inpul fmm their senses to gh'e me<lning <lnd order to the world around them. This input
comes from the targcts of perccptioll in the situalions in which thcy arc perceived. Thus.
just as ehanleterisl ics of the perceiver inlluence percept ions. so. too. do the chllr:lcterist ies
of the target and the situation (sec Exhibit 4.3).
How do characteristics of the target influence perception? Consider two job appli-
cants (the targelS of perception) who have similllr qU11lificmions and arc equally capable.
An inlerviewer (the perceiver). ho\\'ever. perceived one applicant much more positively
than the other because of the way eill:h al:ted dllring the interview. One applil:ant tried 10
lll1lke a good impression by \'olunteering infonnation about his past accomplishments and
achievemertls and behaviltg in a confident and businesslike fashion. The other was low
key and mentioned his acllievements only when he was specifically llsked aooutthem.
The difference in behavior caused the intervie\\'Cf 10 perceive one applicant as more capa-
ble than the other.
Here is lin example of how the situation influences perception. Suppose you (the
perceiver) see one of your friends (the target) wearing a b:lthing SUit at the beach
(the situation). You might perceive that he is relaxed and enjoying himself, Now sup-
pose you see the same fricnd wellring a bathing suit at work (another situation). You
perceive that he is psychologically disturbed.
In this section. we consider the ambigUIty and social status of the target and impres-
sion management by the target. We then discuss how characteri,;tics of the situation inl1u-
enl:e perception by pfovidi ng additional infOfmation for the perceivCf to use to interpret the

EXHIBIT 4.3

Factors That Influence Perception

Characteristics of the Perceiver Characteristics of the Target Characteristics of the Situation

Schemas' The perceiver's knowledge Ambiguity: A lack of clearness or Additional information'

b,;e
Motivational state, The perceiver's
needs, values, and desires at the
time of perception
Mood: The perceiver's feelings at the
time of perception
definiteness that makes it
difficult to determine what a
person, place, or thing is
really like
Social status: A person's real or
perceived position in society or
an organization
Use of impression management:
A person's efforts to control others'
perceptions of him or her
Situational information that
the perceiver uses to
interpret the target
Salience: The extent to which
a target stands out among a
group of people or things
118 PART t • INDIVIDUALS IN ORGANIZATIONS

target. Managers and OIher members of an organization who arc aware of the ways in
which various target- and SilUatiolHeimed factors influence pcrception are well positioned
to ensure that their perceptions of people. tlnngs. amI events are as al:curate as possible.

Ambiguity of the Target

The word ilIllbiguity refers to a lack of clearness or definiteness. It is difficult for a per-
cci\'er to Mtcrminc what an ambiguous target is really likc. As the ambiguity of a target
increases. it becomes increasingly difficult for perceivers to fom) accurate perceptions, It
is also more likely that different pereelvers will differ in their perceptions of the target.
Four managers are jointly responsible for choosing new locations for fasl-food restau-
rants for a nmional chain. Ccrtain locations (for cxample. those across the street frolll a
large university) are sure winners and others (for example. those difficu!lto enter and leavc
becausc of trallic congestion) are sure loscrs. Sm.-h locations arc relatively unambiguous
targets of perception. Each of the four managers percci ves them :lccurately. and they agree
with each othcr aboUt the desirability of those locations.
When tile nature of a target is clear. different perccil'ers have little difficulty fonning sim-
ilar perceptions of the target that are elose to its real nature. But when a target is ambiguous.
tile pereeiver needs to engage in a lot more interpretation and octive construction of reality to
form a perception of the target. The suitability of some of the locations that the four managers
must evaluate is ambiguous. Will a restaurant located in a OIKe prosperous but now f:liling
shopping mall that is being renovat..:d do well? Will a restaurantlol:ated on the outskirts ofa
small town in a rural area attract enough customers to cam a profit? The managers' percq>-
tions of the desirability of such locations tcnd to be less certain limn their [)CTCcptiolls of less
ambiguous loc'llions. and they often find themselves disagreeing with e,lch other.
The more ambiguous a target is. the more potcmial there is for errors in perception.
Thus. whell largels are ambiguous, members of an organization should not be overly confi-
dell! about tile accuracy of their perceptions. and they should acquire as much additional
infomration as tlley cmlto help them fOnll;tn accumte perception. When lookmg at ;tmbigu-
OIlS reSlaur.tnl locatiOlls (to continue our example), the four managers should coll..:ct a lot of
infonnmion -eSl imatcs of the performance levels of 01 her fast -fOO;:/ restaurants in the vicin-
ity. traffic patteros at mealtimes. population growth in the area. spending patterns of likely
(Xnrons. and so on~to be sure their perceptions are al:curate before they make a dc£ision.

Social Status of the Target

SOCIAL STATUS
A I"'rso!1', real or I"'rcei\ cd
po,ition in "",;ely or in;).Jl
orga"i/~llM,
Social status is a person's real or perceived position in society or in an organization. In the
millds of many prople, targets with a relatively high status are perceived to be smarter.
more credible. more knowledgeable. and more responsible for their actions Ihall lower-
status largels. Org:mizations often usc a high-status mcmber 10 make an imporlant
allilouncement 10 mher memhcrs of the organization or 10 the public at large because the
audience is likely to pcrceive the allnouncer as credible. A lower-status member of the
organization who is more knowledgeable than anyone else about Ille issue at hand is likely
to lack credibility bc<::ltlse of his or her status.
To ensure lhat womell and members of minority groups enjoy equal footing with
white rnell. rllld have the social status lhey deserve in ;H\ organization and 10 eonfonn to
legal fL'quirernents. many organizations have adopted affirmative-action programs. These
programs. however. sometimes perpewale Ihe perception problems and skrcolypes lhey
",,'ere meam to o\'ercome. Women and minority grnup memhcrs arc sometimes percei\'ed as
having relatively low stUtuS in the organizalion because they were affirrnntive-action
hires-people hired not because of their own merits but because of their gender or minor-
ilY status. Their affirmmive-action status causcs other memhcrs of the organization 10 per-
cei\'e alld treat them as second-class citizens.
U.S. courts hnve bccll increasingly restricting ,lffinnative-aetion programs in universi-
ties on the grounds that they are uncol\Slitul!onal. The Business-HIgher Education Forum.
a rN.-ently formed C(Klpetati\e mnsisting of 25 corporations. 36 universities. and 7 non-
profit orgallizations. is nonetheless seeking 10 promote diversity ill the college admissions
 CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY 119

process. CEOs of major corporations support tile ['orum because in tile years to come tlley
wanlto be ;lble to hire and maintain a diverse workforce reflecting the broader diversity of
thei r customer bases. 3J

Impression Management by the Target

IMPRESSION Itnpnossiun managemenl is an attempt to control the perceptions or impres,ions of otll-
MANAGEMENT crs. 38 Just as a percciver actively con-;1Tuets reality through Ilis or hef perceptions, a target
An al1empt to wntrol the of perception can also play an active role in managing the perceptions thal others hal'e of
pe,.:epl ion. 0' impre"ion'
him or her.
oj othe",
People in organizations use scveraJ impre,sion-management tactics to affect how otll-
crs perceive them. They are especially likely to usc thcsc tactics wilen interacting with per-
ceivers who have power over them and on whom they are dependent for ev'lluations. raises.
and prumotions. 39 Snbordinates. for example. usc impression-managemem tactics on their
supervisors to a gre<lter extent than supervisors usc them on subordinates. Neverthclcss.
impression management is a 1wo-way street engaged in by people at all organizational lev-
els as they intemct with superiors. peers. and subordinates as well as with suppliers. cus-
tomers .•1m! other people out,ide the organization. Exllibit 4.4 describes five common

EXHIBIT 4.4
Impression Management Tactics

Tactic Description Example

Behavioral The target of perception matches his or
matching her behavior to that of the perceiver,
Self-promotion The target tries to present herself or
himself in as positive a light as possible,
Conforming to The target follows agreed·upon rules
situational norms for behavior in the organization.
Appreciating or The target compliments the perceiver.
flattering others This tactic works best when flattery
is not extreme and when it involves a
dimension important to the perceiver,
Being consistent The target's beliefs and behaviors are
consistent. There is agreement
between the target's verbal and
nonverbal behaviors.
A subordinate tries to imitate her boss's
behavior by being modest and soft-spoken
because her OOSS is modest and solt-spol<en,
An employee reminds his boss about his
past accomplishments and associates with
co-workers who are evaluated highly
An employee stays late every night even if
she has completed all of her assignments,
because staying late is one of the norms of
her organization,
A co-worker compliments a manager on
his excellent handling of a troublesome
employee.
A subordinate whose views on diversity
are well known flatters her boss for
her handling of a conflict between
two co-workers of different racial
backgrounds. When speaking to her boss,
the target looks her boss straight in the
eye and has a sincere expression on her
face .

.\:",/"t': C. N, Alo>an<l<:,. Jr.. and G, W. Knighl. "Silumc~1 tdenti,;." and S<.><:;.t I','yd..,t"gic.t bpe,in><:n"I1i",,:' S<~'i,.,w,r)" 34 (197 I): 6~2: S. T. Fi,lc
and S E. T"ylor. S'H·itll CoX"iliw (Reading. MA: AJdi"""_W",,ley. 19~): K. J Gergen:tnd M. G, 1,,) lor. "Social Exp"C1aocy "lid selr ·\'resentat"'" in a
Statu' fI ierarch)':' Jm"'k,1 '1 E'l'nimf'm,,/ Sod,,! f'"ydw/o!i." 5 (1969): 79--92: D. Ne"'>!ou aoo T. Cze,lin,ly. "Adju>lment of AnilUde Communi,alion,
fo, Cou'ra>!, by Ex'reme Alldicn<c,:' Journat of Pe"",n.ti,y and Sociat P"y"hol"gy JO ( 197~): ~29-37: B. R. SchenUor. l"'rQ's,;'., Mw,agemf'm:
Rei"",.,.,
Tht' !:ie1f·C,I<I(·f'/!I, Si~·'(flld",,,i',·. "",llm"'7,.."."",,1 (M""le",}'. CA: JltuoblC<>lc. t9llU): M. Snjder. "tmp",,,i,,n Manage,,,,,nt:' in L. S.
Wrighl>man (Ed.). Social Psycholog)' ;n 1he Se,'eOlie, (Ne'" York: Wile}'. t977),
120 PART t • INDIVIDUALS IN ORGANIZATIONS
SALIENCE
Th<: CMCni 10 "hl~h a lal'J>cI of
percCplion ,t3rn!> n~l in a group
of people or thing,.
impression-manageml'llt tactics: behavioral matching. self-pmmotion. conforming to situ-
ational norms, appreciating or nattning others, and being consistcnt.
Confunning lu situational norms-the infunnal rules of behavior that most members
of an organization follow-is ~ particularly important impression-management lactic. 4o
Situational norms can pertain to working past the traditional 5 P.M. quitting timc to impress
the boss. disagreeing with others in meetings to be seen as important. or even dressing to
make a good impressiun.
People differ in the extent to which they conform to situational norms and engage in
othl'r forms of impression management, In Chapter 2. we discussed how people who are
high on tile trait of self-monitoring are especially concerned about behaving appropriately.
It is likely. therefore. that people whu arc high on self~munituring ,Ire more likely than
individuals who ~re low on self-monitoring to engage in impression-management tactics
such as confonning to situational norms.
Conforming to situ,ltional norms can oftcn be difficult for people operating in the
international arena. Common courtesies and gestures that <Ire taken for granted in une cul~
ture or country may be frowned on or downright insulting in another. Thc common hand
signal for "Okay" that is used in the United Stall's. for example. is eonsidcred ObSCl'lll' in
Brazil. Ghana. Greece. and Turkey and means "zero" or "worthless" in France and
Belgium. As another ex~mple. in the United States it is cunsidered polite to ~sk a man how
his wife is. but in Arab countries this inquiry is considered indiscrcet. 4t
Outright deccit can be used in impression managemcnt but is probably not vcry com-
mon. Ingntined moral or ethical codes prevent most people from deliberalely misrepresent-
ing themselves or lying.42 [n addition. the chances of being found out are often pretty Iligh.
Claiming on all employment application. for example. that you attended a certain st:hool or
workcd for a company though you never did is neitllCr honest nor smart. Most impression
management is an attempt 10 eonl'ey as positil'e an impression as possible without lying
about one's capabilities. achieveme11ls. and experiences. People are especially likely to
engage in impression management when they are likl"ly to benefit f[(Jm it. The reward Illay
be desirable job assignments. promotions. raises. or the good opinions of others.
Information Provided by the Situation
The situation-the context or environment surrounding the perceiver and the larget-
provides the perceiver with ~dditional information to use in imerpreting the ta",;e!. Consider
the situation Marci Slrxm was in when she started a new job as supervisor of salespeople in
a large department store. The department store had just begun a push to increase the quality
of customer service. and Sioan's boss impressed un her thaI improved service to customers
should be a major priority for her department. On her fi[1;t day on the job. Sloan decided to
spend as much tillll' as she could unobtrusively observing hcr salespeople in action so shl'
could get a good idea of thc level of serviee they were routinely providing.
The Iel'els uf service uffered by lhe four salespeople she was able to observe varied
considerably. In fonning her perceptions of these salespl:ople. howcver. she reI ied 1J(11 on Iy
on the behavior she observed but also on the situation in which the behavior occurred. One
key factor was how busy the department was when she observed each salesperson. She
observed two of them in lhe murning when business was slow. Each per,on handled only
two customers. bm one salesperson provided significantly more service th,lI1the other. She
observed the other two salespeople in tile late afternoon-the busiest time of day for thc
deparlment. BOlh had a continual ,tream of customers. One salesperson handled more
cu,tomers than the other. but the sluwer salesperson gave each cuSlomer more person~1
attemion. Clearly. Sloan could nOi rely solely on the bch~vi{)r of the salespeople in foruling
her impression of the customcr service they were providing. She also had to consider all
lhe additional inform~ltionthat tlte situation provided.
Standing Out in the Crowd:The Effects of Salience in a Situation
In considering how the situation alli-.:ts perception. w.: nl:l:d to focus un one factor that is p~r·
tieu larly important: the s:dienl't' of the target in the situation-that is. the extent 10 which the
target stands out in a group of Ill.-"Ople or lhings. We have all experienccd the effects of salicncc.
 CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY 121

The dcrisions of Justice Sandm

Day O'Connor,lhe f,,,,t woman
to serve on the U,S. Supreme
CourI, were do",ly watched
followin£ her appointment in
19~ I by President Ronald
Rea£an, Justice 0 'Connor's tirst
maj<>r <eaSe ,'an", in 1982, She
wrotc an opinion holding that a
male ,tudent ,'ould nOi Ix-
rejected from a nursing. school
oc><:ause of his gender.

Han" you ever been the only student in a room full of professors. the only Illall in a group of
women. or the only Africnn-Ameriean person in n room full of while p...'Qflle? A salient indi-
vidual is very conspicuous and otlen feels self-conscious, He or she lx:lieves that everyune is
watching his or here"cry move, That asscssmcnt is prelly accur.ltc too, The other people in tile
group or room do pay more atlention to tlte s.alicnt person. for he or she indeed docs stand out,
Salience. in and of itself. ,Iholiid /101 (Ifleel how a target is perceived, After all. a m<llt is the
s<nnc JX'rsun regardless of whether he is in a room full of men or women. But remember that
perception is a subjcdive pmcess :Iud. becausc of thaI subjcdivity, salience dOI'$ afJu'J Itow a
target is perceived. Exhibit 4.5 lists some situational factors that cause a larget to stand out.

EXHIBIT 4.5
Causes of Salience

Cause Description Examples

Being novel Anything that makes a target unique Being the only person of a particular age,
in a situation sex, or race in a situation; wearing jeans
when everyone else is dressed in business
clothes
Being figural Standing out from the background by Being in a spotlight; moving more than
virtue of being bright or illuminated, others in a group; sitting at the head of lhe
changing, moving, sitting or standing table; wearing bright clothes
in a prominent place, or seeming to
be complex
Being inconsistent Behaving or looking in a way that is A normally shy person who is the life of the
with other people's out of the ordinary party; a salesperson who insults a customer;
expectations a man or woman who is exceptionally
attractive

S(!j""~. s. T F;,~e "nJ s. E, la) I",.. s,,,,j,,1 OW,;lifHI (Reading. MA' Addison,"'bley. 19l!4): R. M K'hll"'. .II"" lind lliHI"''' of,h~ Cmll<m";,O/ (Ne\\'
York: Ib,;, Boob. 1977): L. Z, M, Anhur and E, Gin,berg. "Cau,al AurioolKm 10 S;,liem Slimuli: An In'·e'l;galfon of V"""I Fixmioo Medial""'."
1'e'S,H",'il)' 'M,d Sod,,1 Psychology Bulletill 7 (t 9~ I); 547-5.1: L. Z. McAnhu,.oo D. L. P""c ·'Figur,,1 Emplla,;,.rlJ l'er>on I'e1ceplion:' JOlm",1 of
E.,p",j"",,,,,,1 So,'i,,1 PI)",'holo/{l' I) (I Y77 L 521>-35: C Wolman an<! fl. Frank, "1l\c 50>10 W"man in a I'mrc.";",,al Pee, Gmup:' Aml'Ti<'UlI Jmm,,,1 of
Orlh{~i,\',·hi{/Iry45 (197S): 164-71.
122 PART t • INDIVIDUALS IN ORGANIZATIONS

What arc the consequences of salience for perception in organizations? Considcr thc
experienecs Mary Schwartz has had as thc only fcmlde p,lrtner in a small consulting fiml.
Her male colleagues treat her as their equal. <lnd she gels along well wilh each of Ihem. but
she sti II fL-cis the dTects of her salience. These effL'"Cts take the fon11 of extreme evaluations
and stell.'"otyping.

Extreme Evaluations, Sl:hwartz noticed that her male colle,lgues' reactions to her
various al:nJmplishments and mishaps on the job seemed to be extreme. She recently
landed a major ncw account for thc firm and rcccivcd such lavish praisc that shc
became embarrassed, Likewise. when she was unable to attend an imponant meeting
bel:ause of <I f,llnily problem. it was made clear to her that she had lost favor in
everyone's eyes.
Schwanz's cxpericnce is not uniquc.lndividuals who arc salicm are oftcn perceived in
more extreme terms (lXlsiti\'e or negative) tllUn inconspicuous members of a group. nley
are also seen as being especially inlluential or responsible for what happens to them <lnd to
the groups they belong to.43

Stereotyping, On se~'eral occasions Schwartz felt that her male colleagues were
unintentionally slereotyping her as a ··typical woman:' They trequently c;llIt'iJ on her to
enlighten them about the "woman's point of view" on various matters such as how to deal
with a female client or subordinate. On scveml occasions. Schwanz was tcmptcd to tell her
colleagues that ~lll women <Ire not alike <lnd to lXlint out that she had more in common with
them even though they wcre men than she had lIll:ommon with their female subordinatcs
or diems.
Individuals who are salient, like Schwanz. are often perceived in terms of whate\'er
is causing their salience: They are stereotyped. 44 Perceivers consider the thoughts. feel-
ings. and bt:haviors of salicm individuals to bt: more consistent with their distinguishing
feature than would be the case if they were nnt salient. Perceivers often also view
them as being representative of all people who arc like them with regard to the salient
characteristic.
Being salient and stereotyped in a situation l:an actually rcsult in a target's perfor-
mance !x-ing adversdy affected. 45 Research by Claudc Steele, a psychologist at Stanford
University. has found that whcn people who arc salient think about stereotypes that arc
relevant to task performance. their perfornHince might actually be impaired. 46
Performanl:e impairment OCl:urs !x-cause salicnt. stereotyped individuals become l:on-
cerned that others will perceive them based on thc stereotypc. which distracts them and
diverts some of their attention away from task performance ,47 This phenomenon. called
stereO/Ylll' tllrt'(I/. C<ln affe<.:lthe performance of individuals who are salient for a variely
of rcasons.4~
Salience due to mce has panicularly powerful effects on perrcption. Although there
are more African AmericallS and minorities in management IXlsitiolls today thallthere were
sc,'eml years ago. A rrican-American managers st iII ex perience the effects of their relat ive
salience and stereotyping. A recent study found that 45 percent of minority senior e.\ecu-
th'es had been the bun of cultural or mcial jokes while on the job. and 44 percent rCIXlr1ed
that they had to control their allger resulting from differcnt ial treatment at work. More thall
half of the executIVes fell that their organiwtions g:IVe less-challenging <lssignrnents to
minoritics. 49 Other research suggests that a little less than half of minority employees
believe that their organizmions arc not trying hard enough to provide 0pp0r1unities for
nonwhite employees. Thus. it m,ly not be surprising that African-American employees sec
less of a connection between their le,'cls of perfoml,lIIee and the pay they re<.:el\'e and arc
less likely 10 feci that they arc paid well than Iheir white counterparts.'iO Fortun<ltdy. Ihe
situation is improving and more and more organizations are taking concrcte steps to reduce
the negative effects of salience <HId stercotyping on minority employees. One such step that
seems to be effective is linking managers' bonuses to diversity goals and il1ltiatives.
According to Fortune magazine, 38 of the 50 bt:,t companies for minoritie, to work for
 CHAPTER 4 • PERCEPTION, ATIRIBUTION, AND THE MANAGEMENT OF DIVERSITY 123

do this, and it is hl.'lping provide more opportunitil.'s and a fairer workplace for all
employeeS. 51
Another that has employees who have felt the negative effects of s<llience and stereo-
typing are people with diS<lbilities. There arc o\'er 20 million people of working age with
disabilities in the United States and only about 37.5 perce III of them arc working. 52
Of those who are not working. many wish they had a job. 53 The percent~lge of working-age
Americans with disabil iIies is projcclL'd to increase due to a v,uiety of factors including the
agi Ilg of the population. medil.:al advanl.:es. and U.S. iIlvol\'ement in the war in Iraq .54 The
Americans with Disabilities Act (ADA). passed by Congress in 1990 and pUI imo effect in
1992. requires thm organizations m,\ke Iheir buildings and workplaces accessible 10 the
dis,lbled and provide al.:eommodations to enable dIsabled employees to do their jobs. 55

Ethics in Action
Disabled Employees Key to Success at Habitat
International

Habitat International. a manufacturer and contractor of indoor-outdoor carpet and artificial

grass and supplier to major home-improvement companies such as The Home Depot and
lowe's, was founded over 20 years ago by CEO David Morris, and his father SauLS? Habitat
has an enviable track record of success. OJer the past 10 years, profits have increased every
year. the factory's defect rate is lower than one-half percent, and there have been only
about 10 carpets that have been cut incorre<tly in the company's entire history, even though
during its peak months from January to June. some 15,000 rugs are produced daily, 58
Morris is the first to acknowledge that Habitat's employees are responsible for his
company's success, Interestingly enough, about 75 percent of Habitat's employees
(including some managers) have either a mental or physical disability or both kinds of
disabilities 59 When plant manager Connie Presnell recently filled a rush order
by assigning it to a team
of her fastest workers,
each of them had some
sort of disability (e.g.,
Down's syndrome, schizo-
phrenia, cerebral palsy),60
Throughout the years,
Habitat also has provided
employment opportuni-
ties to the homeless, alco-
holics who are recovering,
and refugees from other
countries who do not
speak English. Habitat's
l-bbitat International's commillncn\ to social responsibility and
employees are paid com-
di "crsity has provided numcrous cmployment opportunitics for
di""bled wOf~ing>agc people in Chattanooga. TN. and has enabled petitive wages for the
thc company to flourish. Approxinwtdy 75% of Habitat's cmployees kind of work they do and
have some ~ind of di""bility. absence and turnover
124 PART t • INDIVIDUALS IN ORGANIZATIONS
BIAS
A ') w~mu!lc lcndcoc) 10 ~'" or
inlCrp"'l in(ormulion in U W:l)
mat ""ull, in ina,,<'ural~
pcn;cplion"
Prim:Jey effcds are ,'Ol11mon
problems in inlerviews, An
intcrvitwcr Who (:Ill, "ielimto
lhe prim:ICy effect m:lY HIm
<.lown quailfie<.l intervi,:wees Who
fail 10 pcrfonn well in the fi"l
minulc or tw·o of "'1 inlerview
I:ocrau>c llJcy:lre nervous.
rates at Habitat are very low. The company is sensitive to its employees' needs and pro-
vides them with the accommodations that they need to perform their jobs effectively,
which results in a win-win situation 61
While Habitat has gained some accounts due to its commitment to diversity. the com-
pany's ethical values and social responsibility have also led it to forego a major account In
terms of the lal1er, Morris became very angry several years ago when representatives of a
distribution company made disparaging comments about his employees (out of their
earshot) While the head of the company called and apologized. the same thing hap-
pened again (after the apology was made) and Morris dropped the account It took
Habitat two years to regain the revenues it lost from that account and Morris has no
regrets 61 All in all, Habitat's commitment to diversity and social responsibility has enabled
the company to flourish and has provided employment opportunities for people with dis-
abilities in Chattanooga, Tennessee. 63
However. employment rates of pcople with disabilities h11\'e aCIll<llly declined in recent
yeafl;. As pruliled in the following Ethil:S in Adiull. Habit:Jtlntem:Jl1unal"s l:ommitmenttu
social responsibility and diversily has both provided employment apponunities for dis-
abled working age people in Ch:Jtlanoog:J, Tennes~. while m the samc lime enabling the
company to f1ourish.~
Biases and Problems in Person Perception
Wc have been describing whm perception is. how and why perceptions arc formed.11nd the
powerful effel:ts they have un urg:Jnizations and their members. Throughuutthis discus-
sion. we emphasized the importance of ;Kcurate perceptions. An'urate perceplions enablc
managcrs 10 cvaluate subordinates' performance correClly and makc fair and ethical dcci-
sions about whom to hire and promote. They also enable members of an organization to
understand and get along with each OIher and wIth clients, customers. and other pt.-ople
oll\side Ihe organization.
You might lhink Ihat once mcmhcrs of an org;lIlization are armed with this knowledgc
of perception (as you are now). their perceptions would be greatly improved. and they
would do a ocHer job of seeing OIher people (targels) as they really arc. Unfor1unmely.
biases and problems in person perception limil the aecur.lcy of perccplion.6-I and dr.lmatic
improvement does not always comc about.
A bias is a systematic tendency to usc or interpret information about a target in a
way that results in inaccurate perceptiuns. When bias and problems in person perceplion
cxis!. perceivers form inan'urale perceptions of a mrgcl. In turn. whcn perceptions are
inaccurate, dccisions are likely to be inapproprime: An ineompetelll subordinate gets
promoted. or :J competent job candidate receives a lIegatil'e rating from an interviewer.
Managers. coworkers. and subordinates who arc aware of biases and problems in person
perccption arc in a good positiolllO prcvelll them from affecting Iheir subsequcnt behav-
ior and decisions. We have already examined how stereotypes can bias perception,
In this section. we look at primacy. contr'lst. ,Ind halo effects and other comlllun biases
(SL"C Exhibit 4.6),
Primacy Effects
Despilc thc old saying --You can'l judge a book by ils cover," you have probably heard
or learned firsthand how important first impressions arc. Scientific el'idence. however.
 CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY 125

PRIMACY EFFECT
The bi3",d ['<'rccprion thm
r,,,oll, when tile fIN infonnat,on
{hat s I"'lLciver ha, shoot a {argel
hlI~ an inordinatel} large inflo-
clJ(;c on tile jX'lLciwr",
p""cplion of the target.
supports the folk wisdom of the adage.I'rim:u:y elfeel is the biased perception thm
results when the first pieces of information Ihat people have about some target hllve 1I11
lllordirwtcly large influence on IhelT perception of the tllrgel.
Primacy cffe<.:ts arc common problems in interviews. Research has found that many
interviewers decide in the tirst few minutes of an interview whether a job candidate is a
good prospect and thell spend the rest of the interview confirming their initial judgment by
sele<.:ti..ely paying allention 10 information Ihat is consiSlent wilh thai judgmenl amI dis~
counting or ignoring in<.:onsistcnt infonnation. An interview'er who falls vi<.:tim to the pri-
macy effeCl may turn down qualified interviewees who fail to perform well in thc tirst
minute or two of an interview because they arc nervous.
Primacy eITttts C'ln also be a problem m the perception amI evaluation of long-lirnc
members of an organization. The manager of a subordinate w'ho starts OUI on the fast trad.
but then begins to slide downhill may fail to percei..e the subordinate's pcrfommncc prob-
lems OCClluse of the primacy effecl. The manager's pcrception of the subordinate's current
level of performance is biased by the subordinate's early success. As a result of Ihis faulty
per<.:eption. the manager will fail 10 give the subortlinate the feedback and coaching neces-
sary to get the subordinate back on track. Organizational mcmbers who arc awarc of

EXHIBIT 4.6

Biases and Problems in Person Perception

Source of Bias Description Ellample

Primacy effects The initial pieces of information that a
perceiver has about a target have an
inordinately large effe<t on the perceiver's
perception and evaluation of the target.
Contrast effect The perceiver's perceptions of others
influence the perceiver's perception
of a target.
Halo effect The perceiver's general impression of a
target influences his or her perception
of the target on specific dimensions.
Similar-to-me People perceive others who are similiar
effect to themselves more positively than they
perceive those who are dissimilar.
Harshness, Some perceivers tend to be overly harsh
leniency, and in their perceptions, some overly lenient.
average tendency Others view most targets as being
about average.
Knowledge of Knowing how a target stands on a
predictor predictor of performance influences
perceptions of the target
Interviewers decide in the first few minutes
of an interview whether or not a job
candidate is a good prospect.
A manager's perception of an average
subordinate is likely to be lower
if that subordinate is in a group with
very high performers rather than in a
group with very low performers.
A subordinate who has made a good
overall impression on a supervisor is
rated as performing high-quality work
and always meeting deadlines regardless
of work that is full of mistakes and late.
Supervisors rate subordinates who are
similar to them more positively than
they deserve.
When rating subordinates' performances,
some supervisors give almost everyone
a poor rating, some give almost everyone a
good rating, and others rate almost everyone
as being about average.
A professor perceives a student more
positively than she deserves because the
professor knows the student had a high
score on the SAT.
126 PART t • INDIVIDUALS IN ORGANIZATIONS
CONTRAST EFFECT
The bia,cd pc:r~~pli,-,n lhal
","ulh "hen 1"''''Cpl;''''' of a
tar!;"l Jl'."rMl<1 "'" di,ton<'d by the
p.""ei'-er', pen:"plion of olhe",
HALO EFFECT
11>: b;a,ed Jl'."",eplion that
""ult, "hen 1"" p<'rceiver\
general impre"",n of a (;('l'~1
di,t"rh hi, (Or her 1'C":ept;on of
the tW);et on ,pcciflC dimemion•.
primacy effects can be on guard not to let their first impressions distort their perceptions,
For example, if a new hire comes to work Wilh visible tattoos or body pierdngs. this per-
sonal appeamnce choice should nut influence perceptions of how capable or cunscientiuus
the new hire might be.
Contrast Effects
A I..'ontrast effect is the biased perl;eption that results when perceptions of a targe! person
are distorted by the perceiver's perception of others in the situation. A managers percep-
tion of a subordinate whose performance is average is likely to be less favorable if that
subordinate is in a group of very high performers than it would be if that subordinate were
in a group of average ur luw perfurmers. An average job applicant will be perceived more
favorably by an imerviewer if he or she is preceded by two or three below-average appli-
caots rmher thmt by two or three alxwe·average applicants. Both the manager and the
Hlterviewer in tItose examples are victi lOS of the COntrast effe<:t. The stlbord inate's .md the
job applicant's perfurmance and capabilities arc not changcd at all by the behaviur uf
other employees and applicants.
Halo Effeds
A halo erfeel occurs when the perceiver's geneml impression of a target distons his or her
perccption of the target Oil spe<:ific dimensions,6s A subordinate who has made a good
overall impression un;l supervisor. for example, may be rated as perfonning high-quality
work and always meeting deadlines (specific dimensiuns of performance) even though the
person's work is full of mistakes and is usually late. Because of the halo effec!. the subor-
dinate will not receive the feedback necessary to improve performance on the specific
dirnensions in question. Halos can be negative too: A supervisor whu has a negative over.tll
impression uf a sltoordinate may mistakenly perceive that the subordinate is llllcooperative
and spends too much time on the telephone.
Similar-to-Me Effeds
It is a fact of life thm people tend to like others who are similar to themsell'es. In organi-
zations, this "birds of a feather"/"Iike likes like"' tendency can create problems because
people tend (often unmnsciously) to perceive those who arc similar to themselves more
positively than they perccive those who are dissimilar. During a performance appraisal.
for example. supervisors may rate subordinates who are similar to them more positively
than they desene.6O'> Likewise, interviewers may evaluate potential candidates who arc
similar to themsell'es more positively than they rate candidates who are dissimilar,
Similar-to-me effects can be particularly problematic for women and minority group
members trying to elimb the corporate ladder. For example. similar-to-me effects may
lead male CEOs to groom as their successors men who are like themselves ~md thus nut
perceh'e a woman as a viable successor. 67
The similar-to-mc bias is cspecially important to overcome tcxlay given thc increasing
diversity in organizational membership. In a work force that ineludes many women. mem-
belb of minority groups, and increasing numbers of people with disabilities, managers and
subordinates have more frequent contact with people unlike themselves. When evaluming
others who are diffcrcllt. pl'oplc must try to be as objective as possible and avoid the
similar-to-me trap.
Members of an organization also have tu be Ull the lookout fur the simrhlf.lo·me
bias when interacting with people from other (·ultures. For example, "'hen researchers
from three global organizations-Siemens AG of Gcrmany, Toshiba Corporation of
Japan, and IBM-joined forces lit IBM's East Fishkill. New York. facility to work
together to develop a revolutionary computer chip, the similar-to·me bias struck. Some
of the researchers tried to imeraci primarily wilh people from their own cultures. Some
of thc Japanese researchcrs. for instancc. tried to work mainly with othcr Japanese

KNOWLEDGE-OF-
PREDICTOR BIAS
TIle bia-.cd perceplion thaI rcsulh
when knowing a targl't's standing
on a predictor of peTf<>rmar".:c
influences tit<: I"'rcri,er',
perception of the target.
SELF-FULflLLlNG
PROPHECY
A pn'<licllon lhat .orne, true
hccau,c a I"'",c"cr C'p,:ch ,t
to come u-u"
CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY 127
reSC'archers. rather than with the German or American resC'archers. whom thC'y pcrceiVC'd
as"so different."t)8
Harshness. Leniency, and Average Tendency Biases
When rating a subordinatc's performancc. some supervisors tend to be overly harsh. whereas
somC' arC' ovcrly IC'nient. Others tend to ratc cvel)'one as being about avcrJ.ge. Any of these
tendencies is problC'matie for two reasons. Fir>L the supervisor does not correctly percC'ive
the variations in Ihe pcrfomlanee of his or her subordinmcs. As a resul1. high pcrfonTlCr> do
not n:ceive appropriate rt"<:ognilion and rcwards for their superior accnmplishrncnts. ,md low
performers do not TC('eive the constructive fC'C'dback thC'y need to impnwe performance.
The sc<:ond reason why these biases arc problematic is that thcy make it difficult to
evaluale and com~,re the performance of subordinates who have differenl supervisor>.
A suoordinale who has received relat ively poor ratings from a harsh supervisor may be just
as acmmplishC'd as a subordinate who has received avcrage or high ratings fmlll a lC'niC'nt
one. Evaluations biased in this manner can result in faulty decision making about pay
raises and promotions. These biases can also operate in classroom seltmgs. One professor.
for cxample. gives mostly A's in a course in which anOlher professor maintains a C+ class
average. Studell!s in the first professor's class Illay be content. but thoSC' in the other pm-
fessor's c1~ISS are likely 10 feelthnt Ihey are [lot being fairly treated.
Knowledge-of-Predictor Bias
To decide whom 10 hire. how to assign jobs 10 newly hired and existing members of an
organization. and wholll to prolllOle. organizations measure people's standing on different
predictors of performance. Depcnding on the job in question. the indicators used to deter-
mine how well a person will be able to accomplish worl; activities in the future can range
from educational background and prior work experiences. 10 slandardizt~ tests scores. and
perfonnance on cenain critical job-related tasks.
If coworker>, managers. or others in the organization know a person's standing on a pre-
dictor of performance. lhe infonnation may bias their pereeptions of the person. This problem
is known as knowlt~ge-of-pR~ielor bias. If a prol"cssor knows. for example. thaI a student
has scored highly on some predictor of academic performance such as the Scholastic Aptitude
Test (SAT) or the Graduate ManagerTlCnt Admission Test (GMAT), this knowledge may lead
the professor to pcl\.'Cive the sludenl more positively than he or she descrves. This bias could
also work to the disadvantage of a person who S(.'Ored poorly on the predictor.
Sometimes. knowledge-of-predictor bias results in a self-rulfilling propbecy-a
prediclion that comes true because a perceiver e~pccts it to come true 69 The c1assie
demonstration of this phenomenon took place in a classroom setting in the l%Os. At the
beginning of the school year. teachers were told that a few of their students were potential
"late bloomers" who. given the proper encouragemC'lll. should excel. In facL these students
had been randomly selected from the elass rosters and were no different from their peers.
Later on in the school year. however. the "Iale bloomer>" were indeed doing beller and had
even impl\J\'ed their scores on standardized IQ tests compared to their earlier pcrfnrmance
and the performance of thC' llIner children in the class. 7o What was responsibk for thC'
change? The teachers in the study probably g,lve the "late bloomers" more attention.
encoumgernenl. and feedback and had higherexpect,ltions ofthern. ,Ill of which resulted in
their improved performance. The teachers may have also looked more at these slUdcnts and
llladC' encouraging body gestures toward thelll. [n this way. knowledge of a predictor (in
this e~ISe. a false predictor) resulted in behavior changes that caused that prediction to
become lrue. Research has also shown Ihat when;lll inlerviewer conveys negative expec1a-
tions to a job applical1l simply through nonverbal body language. the applicant perfomls
poorly?1 This situation nurts both the applicant and the organization: tnC' applicant won't
get the job. and the organization may lose ,I potentially capable member.
Sometimes. self-fulfilling prophecies can occur in an entire work group. A group of
construction workers. for e~ample. may lx, very responsible and perform highly when their
128 PART I • INDIVIDUALS IN ORGANIZATIONS

superv ism has high l'Xpel'lat ions and treats Ihl'm wilh rl'speci. Thl' SaO'll' workers. howevl'r,
may act lazy and perform at a low level when lhey have a supervisor who has low expecta-
lions and ~l derogatory ,ltlilude loward lhem.

Attribution Theory
Thruugh IOC process of perceplion. pcuple Iry to make sense of their environmem and the
people in it. Sometimes. howevl'r. jusl making Sl'nM: of a targl'l docs nOl producl' good
undl'r;;landing.lb relum to an earlier example. if you sce your friend drinking beer before a
9 A.M. class. you perl'eive lhal he has a drinking prublem. This perceptiun may lead yuulu
wonder why he has Ihe drinking problem. To answer lhe queslion of "why:' you anribule
ATIRI8UTlON your fril'nd\ behavior 10 a certain causc. Your explanation of his behavior is an attribution,
An ...xplanalion of Ih" "au,"" of Attribution theory describes how people explain Ihe causes of their own and other
beh8"ior,
peuple's belwvior. Altribulion theory is mleresled in why pcuple behave lhe way lhey do and
whal can be done 10 change lheir behavior. Consider Ihe case uf Martin Riley. a newly hired
ATIRI8UTION THEORY produclion worker at Rice Paper Producls. Riley worked m a much slower pace than his
A group of th<:orie, thai de",rih,,, coworkers: he always scemed 10 be lagging behind lhe olher Illelnbers of his produClioll
how ~l. explain the cau....... of lemn. The big queslion in his supervisor's mind was why. Allribulion lheory focuscs on how
beha>ior, lhe supervisor and how Riley himself explain lhe causc uf Riley's kll'kluSler perfumlance.
In organizations. the decisions lhm arc made and lhe aClions thai are laken are based
on 1l1tributiollS for behavior. Only when these attribulions arc ~lccunlle (Ihat is. only when
lhe real c~use of a behavior h.1S been dClenmned):lre good decisiuns lIkely tu be made and
appropriale adiolls laken, In a job interview. for example. whdher a qualified applicant
who is quict and fails to ask question_, receives an offer oftcn depends onlhe intC'rviewer's
allribulions for Ihis behavior. Is the applic~nt a >hy person who take> ,I while 10 warm up to
new peuple'! Was lhe applic~nl suffering front a bad casc of nerves'! Is the applicanl nul
really imereslL"d in Ihc job'! If the imerviewer makes the laSI allribUlion for the applicam's
behavior. an offer will prohahly nOI be forthcoming, If Ihat altrihution is inaccurate, how-
ever. and lhe applicant was simply nervous. Ihell the organizalion may be missing an
opportunily 10 hire one ufthe besl applicanls for lhejob.
Similarly. supervisors' reactions 10 high or low performanl'e by subordinales often
dcpend on lh.c altribulions the supervisors make. A supervisor who atlrihutcs a subordinate's
high performance 10 exceplional abililY m~y give the subordinate increasingly ch:ll1enging
assignmenls .Illd evenlually recummend a prolTlUlion, If lhe suburdmale's high perfumlancc
is ;l1tri billed 10 luck. however. no changes may be malk in the subordinale's assign Illems. In
eithcr casc. if the allrihulions arc iIlCorreCI. problems are likcl y 10 resu It: lllC subordinate wi II
be overwhelmed by challenging assignmenls or will 1I0t receive the challenges he or she
lhrives 011. Whcn subordinales perform poorly. supervisors are likely 10 provide additional
on-lhe-job lr.Jining if thcy allribule plxlr performance 1O a lack of knowlc<lge rathcr Ihan 10
11lJ..incss _II' laziness is Ihc real causc. howevcr, lrain ing is not Iikcly to improve perfonnance,
SllIooth d~,y-Io-d~y interuclions among members of an organizntion often hinge on lhe
extenl to which people's anribuliuns ~re accurJte. 71 If a coworker snaps al you a cuuple uf limes
one day. mm you COITCl1ly alltibule Ihe coworkcr's behavior 10 the personal problems he is hav-
ing al home. Ih.cSC small incidents are nOl going 10 damage your relmionship, [f yoo illCOrrel1ly
atlribute this behavior to loc l'Oworker's dislike for you. however. you may sian ~l\'oiding him
and trcming him in a cold and distanlm.Ulncr. which will causc your relationship 10 deleriurJle.

Internal and External Attributions

INTERNAL ATIRI8UTION
An aUributi"n 1h8la"illn> lhe
cau", of beha>jur 10 ",me
"hamctcrislIc of lhe large!.
People genemlly aUribute SOIlk."QIlC·S behavior 10 inlem~1 and exlemal causes (sec Exhibil 4.7).
An inlcllml attributiun assigns Ihe causc of behavior 10 some Charal'lCrislic uf lhe target '11m
assigns credit or blame 10 lhe individual aClor. Martin Riley's supervisor at Rice Paper Pnxlucts
mighl altribule Riley's poor perfommllCe 10 personal limitations: (I) Riley lacks the abililY 10
perfonn al a higher level: (2) Riley is nOlmaking an elTon to wurk !;tsler. (3) RIley has ~
low need for al'hievemem. Atlrihulions HI abi! ily. elTon. and personalily are lh.c mosl l'umll1on
imenml mtribulions Ihat people make.

EXHIBIT 4.7
Types of Attributions
EXTERNAL AITR1BUTIONS
An ottribution lh~t ."ign, the
"""-e of bch., ,or to oUNd<:
fore.....
EXHIBIT 4.B
Attributional Biases
CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY 129
Attributions
I I
In~mal attribution External attribution
AsSIgnS 'he c'us< ofbeh."';or ASSIgns 'he c.u~ ofbeha"';or
to some characterist" of the person to fact"" e""emal to the person
Abitity Tas.k difficulty
Personatity ,~.
MotiYation
Howcvcr much peoplc likc to feel thut they are in control of what happens in their lives,
outside forces often playa dedsil'e role in determining behavior. Exlerl1ltlllltribUlions
a>sign the cause of behavior to factors outsille the individual. The most common external
altributions relate to task lIifticuhy anll luck or chance, A salesperson who has just lanllcd a
major contract, for cxample, may havc been successful because hcr company is the sole
provider of 11 particular product in a cenain geographic region or because the cu,tomer was
m a panicularly g<JUt.1 m<JUt.1 at lhe time uf negutiations.ln thc firsl case. the salesperson·s
SUeTess is anributed to the easiness of the task: in the second case. it is attributed to luck.
Wocthcr anributions for a behavior me intcrnal or cxtcrnal is an imponmll delenninant of
how peoplc respond to the behavior. Iflhe supetvisor of the &1lespersoll mentioned previously
correctly attributes the lanlling of the ma)Ur contruCl to extenwl causes such as an casy task or
luck. gett ing lhis contr.Kt may have little impact on the supetvisor·s decisions about the sales-
person's job assignments and suitability for promotion. But if the supervisor incorrectly attrib-
utes the behavior to an internal causc such as ability, the supervisor might promote this sales-
person lIlstead of another one who is more deserving but covers a more difficult territory.
The altributions people make for their own behavior also influC'nce their own subse-
qucnt actions. An employC'e who fails on a task and auributes this failure to a lack ofabil-
ity may be likely to ,lvoid the task in the future or exert minimal elTon on it because he or
she feels that his or her lack of ability will :II must certainly guarantt"C a negative outcome.
Conversely, attributing fai lure to:l lack of elTort may lead the employee to try harder in the
future on the same task. As another example. an employee who sueceells on a task anll
attributes the outcome to luck is unlikely to be affected by his or her Sllccess. whereas
allributing the suecess to his or her ability or effort will increase his or her confillenee,
Attributional Biases
The allrlbutions people make to their own behaviors and those of others can have a pro~
founll impact 011 their subsequent actions, Like perceptions. however. attributions may
sometimes Ix- inaccuratc Ix-cause of ecrtain biases. Here we consillcr threc of thesc
biases: the fundamental attribution error. ,lclor-obser\"er effect. ,md self-serving attribu-
tions (St"C Exhibit 4.8).
Bias Description
Fundamental attribution error The tendency to overallribute behavior to
internal rather than to external causes
Ador-observer effect The tendency to attribute the behavior of
others to internal causes and to allribute
one's own behavior to external causes
Self-serving attribution The tendency to take credit for successes
and avoid blame for failures
no PART t • INDIVIDUALS IN ORGANIZATIONS
FUNDAMENTAL
ATIRIBUTION ERROR
l1IC tendenC) to mwanribute
~ha,-ior to internal r~tl>er lh"n
to nlern,,1 ~au,e'
ACTOR-OBSERVER EFFECT
TIll: tendency to ~l1nbutc the
bena,-ior of 0Im,,, to intenlal
C"au"" and 10 anribute one', own
bcll:"'lor to e\lern,,1 ~"u'<".
SELF-SERVING
ATIRIBUTION
The tendeney to take erroit for
,ueee,,,,, "nd a"oid bl,,,,,e for
failure,.
The Fundamental Attribution Error. Behavior is often caused by a combination of
imernal and external factors, but situational faclOrs arc the sole detenninall1s of behavior in
certain circumstances. Regardless uf how capable and motivated an employee might be. for
example, if the employee docs nm have the proper rcsoun:es to accomplish a lask. she or he
will nm be able to perform at a high Icw!. No matter how hard a waiter tries to have
customers enjoy their meals. they arc bound to be dissatisfied if the reSlauram serves poorly
prepared food. Despite the fact that external factors often deten11lne beh:lVior. people haw a
very strong tendcncy to altributc othcr people's behavior 10 internal factors. Bel:ausc this
tendency to ovemttribute other people"s behavior 10 internal mther than to external causes is
so basic to homan nature, it has been called the rundamelltalliltribution crror. n
Why docs the fundamental attribution error occur'! Rescarl:hers have uffered two
explanations. According to the !irs!. whil:h l:OIKelllrates on perception of the target"s
behavior. when we observe a person behaving. we focus on the person, and the silualion is
simply the background for the behavior. Bec,luse the peNOn is the focus of our thinking
and the situation receives lil1le altention. we tend to think that something about lhe person
plllmpted Ihe behavior. AC(;(Jrding to Ihe sCl:ond reason for the lJCl:Urrencc of the funda-
mell1al attribution error. wc oftcn are simply unaware of all the situational factors that may
be responsible for the behavior we observe.
Bel:ausc of the tcndency to ovewttril:>ule other peoplc's behaviur to imemal causes,
managers arc likely 10 think thal a subordinate's behavior is due to somc characterisli\.' of
thc subordinate rather than to Ih.... situation. Similarly, suhordinalCS are likely 10 think Ihat
their supervisor's behavior is determined by internal rather than external causes. Suppose a
manager muS] layoff 30 perl:ent uf his or her staff bec<lusc 01' a major declinc in thc
organizmion's performance. Those who are laid off (and Ihose who remain) may be likely
to amibulc this action to the managcr's hardheartedness and lack of \.'Qncern for the well-
!xing of others rather (han to economic necessity.
People who manage diverse cmployees nc\.-d to be especially aware of the fundamen-
tal anribUlion .... rror and try to avoid it. JUSI as perceplions can be inacl:ur.tle as a resull of
stell'otypes, so, too. can attributions. Inaccurate stereotypes about women. oldcr workers.
or African Americans, for example, Illay causc members of an organization to inappropri-
ately anribute behavior to intcrnal causes sUl:h as gender. age. or race whenlhc behavior is
al:1ually caused by an external factor. [1' an older worker has difficulty gelling new COI1l-
puter softwall' to run. the work....r·' supervisor may fall victim to the stereotype that older
workers have difficulty learning new things and inaccurately attribute this behavior to Ihe
worker's age. even (hough thc reall:ause of Ihe plllblem is that thc computer has insuf!i-
dent memory to handle lhe new software (an extcrnal causc).
The Actor-Observer Effect. We make attributions not only for the behavior uf other
people but also for our own behavior. Researl:hers (;(lmparing these two types of attributions
uncovered an interesting phenomenon: the aetnr-nbserver effect. The actor-observer effcrt
is Ihe tendency to amibute the behavior of others to internal causes (the fundamental
allribution error) and to al1ribute one's own behaviur to extenwl causes.7~ We tend to think
that mher people's behavior is relat ively stable from si1tlation to situation bcl:ause it is due 10
their very Imtull'. bm we think that our own behavior varies fmm situation to siluation.
What causes this bias? According to one explanation. when we all' behaving. we focus
not on uur behavior but ralher on the situation we arc in, Because we are totally aware of
tile externaL situalional pressures thm wc face. we SL'C them as key. Because we arc less
awall' of external pressur....s or factors that anoth.... r person is dealing with. we arc likely to
see his or her behavior as internally driven.
Self-Serving Attribution. Suppose you get promoted at work. ChalKcs arc you
altribute this Olltcome to your superior abil ities and the exc.... Uem job you have been doi ng.
Now suppose that one of your eowoti;ers gets the promotion th:l1 you have been eX]XlCting.
You probably think that your supervisor has been unfair or that some political
maneuvering has taken place, This example illustrates self-serving attribution. thc
tcndency 10 take credit for successes and avoid blame for failures. 15 Thc considerable
 CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY 131

You're t;he Management; Expert;

Helping a Coworker

Juan Coto works closely with one of his coworkers Roger Brice. Coto and Brice work in
the customer service department of Diamond Furniture and do everything from taking
payments, approving credit, and arranging for furniture deliveries to responding to cus-
tomer complaints and handling returns. Coto and Brice both work the same hours and
often are the only full-time employees handling customer service at anyone time.
Periodically, the store manager will receive a complaint from a customer about Brice; the
manager talks to Brice about it, Brice gets annoyed, and the matter is forgotten. Coto
realizes that these incidents are probably not doing anyone any good, so he has decided
to try to figure out why customers occasionally complain about Brice but very rarely about
him, even though they both ~m to be doing an equally good job. So, Coto has started
watching Brice when he deals with customers who are having a problem and notices that
Brice typically approaches these situations by essentially "blaming" the customer. For
example, when a customer called to complain that her furniture had not been delivered
on the day it was promised, Brice looked up her record and then told her that she must
have made a mistake be<:ause the delivery had been scheduled for a different date than
she thought. A5 an expert in OB, Coto has come to you for help. Why is Brice blaming
customers for their problems, and how can he help Brice provide better customer service?

~rnollnt of rcse~rch condUl:tcd on this phcnomcnon su~ests that ~cccpting thc credit for
SU(;(;CSS is more l'tlmmon th<ln avoiding blame for failurc.76 Funhermore. people arc most
likely to accept the blamc for failurc when it is duc to something thcy can cOlHrol in the
future. such as by working harder or planning their time bener. n
Sclf-scrvlIlg <lllribution c~n also bias onc's perception of fricnds <lnd spouses <lnd cvcn
org<lnizatiol\s.7s People arc more likely 10 allribllle the good things that happen to their
spouses to illlernal causcs and thc bad things thai happen 10 their spouses 10 cxtcrnal
causes.7 9 When your org~lrlization 'tmkes a record eOlllribution to the United Way. you are
IIkcl Yto ~llributc thIS gcncrosity to the organ izatlon's bci ng socially responsiblc (an inler-
nal cause). But when your organization is l"ited for polluting the environmenl. you may
attribute its problelllS to estcrnal circumstances such as the unavailability Of high cost of
altemative ways to dispose of waste (an external cause).

Effectively Managing a Diverse Workforce

Throughout this c1wpter. we h~ve discussed how accurate perceptions and .Hlributions are
neccssary to c!Tcctivcly manage <I divcrse workforcc and the many issues involvcU with il.
Effcctive management of a diversc workforce is necessary for an organization to makc fair
and ethical decisions. perform at a high Icvel. alld gain a competitive advantage_ In this
section. we cxplore four stcps org.mizations can takc to promote accuralC perccptions and
allributiol\s and cffectively manage diverse cmploYL'Cs: sc(;uring thc commitment of top
manage ment to diversity. diversity trai ning. cducat ion. and Illentoring. We also discuss the
steps organizations can wke to eliminate ~nd prevent sexual har;lssmcnl.

Securing Top-Management Commitment to Diversity

Applicd Matcrials. a S4 billion sernicondl'dor cqulpmcnt company in Sili(;on Vallcy.
Californi;l. is a good example of <Ill organizatiol\ whosc top managemcnt is commitlcd to
diversity. Applied Materials has Illade FOr/ul//' maga7.inc·s "Amcrica's 50 Best Companies
132 PART I • INDIVIDUALS IN ORGANIZATIONS

Applied Materi'lls is well known

for its Commilmem to diver>iily
Fifty·ooc percent of ocw hircs at
Appli~-d Materials arc minorities,
as arc 28,4 percem orthc
~'ompany's officials and
managers and 26 perc<:Tl1 of ilS
highcst-paid cxc<outi"cs.

for Minorities" list for five years in <I row. SO This commitmcnt is shown in numerous
W'lyS. nll1gillg front a linanci<ll eommitrnent to promoting diversity ;lnd a eornmitntent to
hiring and giving diverse empluyees equal opporlunities. to a l:onunitment tu helping
minorities in the Silicon Valley area. Fifty-one percent of new hires at Applied Malerials
are minorities. as are 2&.4 percent of the company's officials and managers and 26 perccnt
of its highest-paid exeeutives. 81
Applied M<lterials h~s eummilled $1 milliun to help upen up upportunitics fur minori-
lies in Silicon Valley by. amung othcr Ihi ngs. funding a cenler in E;ISI !';tlo Alto. Cal iforn ia.
devutcd to teaching computcr skills to community mcmhcrs and minority studcnts.
Another one of the eompany's program's links up employees with high-school students in
a nearby school distriCll:omprised I~rgcly of minority adulescenls. 82 Applied Malerj~ls
sl~nds oul ~m{}ng olher Silicon Valley high-tech firms as one of ~ sclecl few that havc
dcmonstrated a commitmen\to diversity in multiple ways and are taking active steps both
intemally and extenl~lly to support il. 83
Glen Toney. group vice prcsidcnt for l:orporate aff~irs. is ~n African Americ<ln who
has been with Appli~-d Materials for morc Ihan 20 ycars. He is a mentor for se\'eral minor-
ity employees of various racial and ethnic backgrounds and provides career counscling.
personal insights :lbout how the company works, lind posilive feedb:lel.: for a job well done,
As Toney putS i1. "Poople who corne abollrd here hllve 10 muve fllsler th:ln they ever ha\'e
before. and the organization is l'omplex and can be frustrating:' M Toney and othcr top
managcrs at Applied /o.·!ateri:lls really care thm all employees are treated fairly and given
the opportunilies that they deserve, This benefits Applied Materials because i\ is able to
l:<lpitalize on the many t<t!enIS of Its divcrse workfurl:e.
What is the likely oulmme when top man<tgers arc commiued to divcrsity? Their
commitmcnt helps ensure they will perceivc and attribute the behavior of all of their
employees in liS accurate lIlight as possible and th:ltlhey will underst:lnd and sec them as
Ihey really arc. Top-manllgement commitmentlu diversity alsu hclps to promole al:Curale
pcrceptions and attribution.• of people throughoul the organization. Whcn supervisors
support diversity. subordinates are more likely to be commined to it. too. and less likely
to rely on stereotypes.
One way !o demonstrate and reinforcc lop-m<lnagemcnl commitment 10 diversity is
the creation of an active and influcnlial chief diversity officcr. Whcn shc was chicf
divcrsity officer for PricewaterhouseCoopcrs (Pwe). Toni Ricarrdi sat on the U.S.
Management CUll1minee. a 12-person group that ol'ersces global operations. Riceardl's
responsibi Iities inel uded manag ing Ihe diversily and work-I ifl' in itialives for over 100.000
 CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY 113

employees working in more than 140 countries. The U.$. Management Commil1ee must
approve any task forces that arc formed. and Riccardi made sure that the task forces
rell<.'Cted Ihe diversity in PwC not only tu increase their effectiveness but alsu tu give the
diverse members of Ihe firm imporlanl leadership experience and visibilily.s5 Riccardi
reeemly retired fmm PwC and Chris Simmons took her place as chief diversity officer. S6
Many other global organizations have diversity-designated director or officer posi~
tions to ensure that diversity is effectively nwnaged Ihroughoutthe counlries in which
an organizatiun operales. For example, Leslie Jones is the director of ethnicily and
diversity at Ernst & Young. Jones strives to make the work environmem at Ernst &
Young anractive to minorities becausc they arc key contributors to the success of the
organization.s7 Sharun Hall. who focuses on senior execulive placements at the
Chicago search firm. Spencer Stuart. indicates that demand fur chief diversity officers
is strong and rclatively reccssion-proof as more and morc global organi7.ations
adnowledge how important it is to have;, workforee that is as diverse and ntulticultural
as their customers and consurners. ss As Riccardi pUI il. ""The challenge is to make sure
people vicw diversity and work-life as positive piel'es of this new world rather than
add-ons that you don't have time for:"s9

Diversity Training
Divcrsity training can faeilitatc the managcment of a di\'crsc workforec. Thcre arc many
dil'ersit y tmin ing prognlms that h;l\'e a variety of object ives. inc hiding the following:

• making explicit and breaking down organizational members' stereOlypes that result
in inaccurate perceptions and attributions
• making members aware of different kinds of backgrounds. experiences. and values
• showing members how to deal effectil'ely with diversity-related conflicts and tensions
• generally improv ing members' understand ing of each other

Dil'ersity tmining progmms call last hours or days and can be run by consultants or
existing members of an organization with diversity expertise. Small organizations are
more likely to rely on consultants: largcr organizations often have diversity managers.
More than 50 percent of FOl1une 500 organizations. for examplc. have diversity managcrs
on staff. QO
Diversity tmining can include but is not limited to:

I. Role-playing. in which panicipants act out appropriatc and inappropriate ways to

deal with dil'erse employees,
2. Self-awareness activities. in which participants own prejudices and stereotypes are
revcaled.
3. Awareness activities. in which participalliS learn about others who differ from them
in lifestyle. culture. scx u.tl orientation. gender. and so on.

Cardiac Concepts Inc.. a Texas medical laboratory that performs cardiovascular

tests. helped to reduce conflict alllOllg elnployces with diversc cthnic backgrounds by
using a Iralning program in which pairs of participants frulll different ethnic back-
grounds madc Iists of the stereotypes held about each other91 Prudential. the largest U.$.
life in.,urance company. has its managers panicipatc in other organizations in which they
will be a minority so they can understand the challenges thm minorities experience. 92
Simlilons Associales. based in New Hope. Pennsylvania. provides div'ersily consultllIg
services including a "Special Sensitivities" session. This session educates panicipants
about words. phrases. situations. and sccnarios that might be disturbing to cenain groups
due to their backgrounds and histories. For example. m"le African-American teens
might take offense at being referred tu as "boys." The goal uf the sessiuns is to help
avoid blunders whereby one person says something that is highly offensive to another.
sometimes without realizing i1.9]
114 PART t • INDIVIDUALS IN ORGANIZATIONS
MENTORING
A pro"e" Ihmugh" h,,,h an
ex p¢rien"ed mcrnber nf an
organilalioo nhe memnr)
pm"ide, advi"e and guidance
10 a lc"-c'p¢r;en,,ed member
(lhe prrMgCl and help, Ihe lc,,-
ex!",rieoced person learn Ihe
mp¢' and do Ihe ,ighllhing' In
,...ha""c in the nrga"i!."lrnn,
Mmtoring-both formal and
informal-can help e,my-Icv'e1
cmployccs dcwlop tile ,kills
lhey ~ 10 excel on lhe joh.
Scvwty per~'Cnt nf minority
eXeCU1;\,C'. for c.'ample. $ay
informal mcmors lIe1ped lhem
early io their ca'ccl1'.
Many diversity programs arc successful. hUi others do not ehange the ways that
people pereei\'e and treat eaeh other in organizations. It appears that divcrsity training
IS most likely to be successful when it is ongoing or rcpe~ted (r~ther than <l single ses-
sion). whcn there arc follow-up activities to see whethcr the training ha, al.:l.:omplished
its objectives. and when it is supplemcnted by other diversity-related anivities in an
organization. such as events focused on celebrating diversity. IBM's Systems Stor~ge
DivlSlon m S~n Jose. for example. sets ~side one d~y ~l year ~s DiverSIty D~y. On th~t
day. employces dress in tradit ion'll ethn il' clot hi ng and share authent ic dishes with thci r
coworkers. 94
Education
Somctimcs dfectively managing dh'er>ity rcquires that Illcmbers of an organization
receive mlditioll~1 edue~tion to make thcm beller able to communicate ,md work with
diverse employees and customers. The Kentucky state government. for example. realized
that it was unable to pll)vide cmploymcnt opponunitics for peoplc with hcaring impair-
mems and could not pmvidc high·quality service to hcaring-impair<)d citizcns waming to
use slate-provided services llnd programs, Th<) Americans with Disabilities Act requires
org:mizations to be responsive to and accommodate people with dis,lbilities (includmg
deafness or hearing impainnents).9 s
Aftcr considerablc r<)search. the Kcruucky state government developed a Ihrce"stagc
program to intprove its responsiveness to people (both customers and potenlial employees)
who arc hearing impaired or deaf. First. state employees choscn for the program partici-
pate in a one-day workshop that educatcs them about dcaf culture and b:1Ckground.
Sccond. cmplOYCes a((end a four-day workshop in which Ihey leam somc of the basics of
Americ~n -Sign L1ngU~ge (Ille most often used form of signing ,1I1d a visu~1 langu~ge Ih.ll
deaf people use to communic:Jle). Finally. employees a\lend a week-long workshop on
advanced American Sign Language.%
Mentoring Programs
i\'lenloring is a process through which an expericnced member of an organization (the
mentor) provides advice and guidancc to a less-experienced member (lh<) protege) and
helps the less-experienced person learn the ropes ~nd do the right things to adVllnce in the
organizmion. Due to the similar-to-me effect and stercotyping. some young minority man-
agers find that white >cnior colleagul's aren't mcntoring them. Ilene Wasserman. of the
Cincinnati-based Kaleel Jamison Consulting Group. which speciali7.es in helping organi-
zmions nwnage ~ diverse workforce. says Ih~t senior m~nag<)rs typic:llly try to mentor
somconc who reminds thcm of themselves when they were youngcr-someonc who. as
she pUiS it. is a "done:'
Mix<)d-race (]lemor-protege rel:1lionships ar<) rare. Benson Roscn. a 1l1anagement
professor at the Unil'ersity of North Carolina at Chapel Hill. indlcales that white m~n­
agers sometimes fcd uncomfortable dcaling with minorities and may slight them (oftcn
unintentionally) in various ways such as failing to invitc thcmlo functions and giving
them perfOnllance feedback th~t is less constructive thal1thc feedb:lck they gil'e white
suoordin:Jles, LaVon Stennis. a young A frican-Am<)rie~n lawyer who worked for a I:lrgc
corporation in Nebraska. found it difficult 10 relate to her whitc male superiors. so it
WaS unlikely that any of thcm would serve as her mCIllOr. The'e obscrl':Ilions do not
mean thm white men cannot mentor minorities or Ihat lllinorilies do not wanl to receive
help frolll white managers. R~ther. they suggest that ~II members of ~n org~nizalion
(regardless of race. g<,ndcr. or other charactcristics) nced \() be aware that the similar-
to-me bias might predi'posc them to help membcrs who arc similar 10 lhem. In his
study. Rosen found that white women were more likely thall white men 10 m<)ntor
minorities or either genderY7
A rccent study of minority exel.:utives found thatmorc than 70 percem of the execu-
tivcs had informallllcntors. and they gencmlly hclieve thm mCIl10rs hdpcd thclll in thcir

QUID PRO QUO SEXUAL
HARASSMENT
Requesting or forcing an
employee 1<> pC'rfunn ...:"..1
fa,n" ,n urder I" "'cei,e M,me
opp<lnunit}'huc'h "'" m;". a
prom<l1inn. a bonus. or a spC'cial
juh a"ignmcnt) or amid a
negal;w enme'luenee t-ueh a,
demot ion. dismi"al. a h.1t In
career progr.:>'. or an unde,ired
a',igmllent or I,"mferl.
CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY 135
CareerS. 98 Lloyd David Ward. CEO of the May tag Corporatiun and one uf a handfnl of
African Amcricans to head a major U.S. corporation. was me11lorcd by ulder African-
American engineers when he was an employee at Procter & Gamble as well as by
Dr. Price Cobbs. a psychiatrist and consultant who helped him deal with the anger he felt
from bemg treided differently becnuse of the color uf his skin. 99 Fonner Coc:l-Cola
presidel1l Donald R. Keough mentored Carl Ware. head uf global public affairs and a
senior African-American managcr at Coca-Cola. Keough is curremly chairman of Allen
& Company (an investment bank).ltlO
Mentors arc not only important for tnanngers and exccutives. The United Parcel
Scrvke rdies on mell\ors 10 help entry-level emploYL"Cs develop bask skills and habits
such as being punctual and dressing appropriately.101 Mentors arc also key for entrepre-
neurs trying to slart Iheir own businesses. African-American Bcrnadette Williams. who
foundcd i-str.ltegy.com Inc .. believes thilt rnenlurs arc particularly important for minority
women trying to start a business. and her beliefs arc confirmed by many surveys.
Williams cofounded the Women's New ~-Icdia Alliance to help young women illlereSled
in technology connect with a woman experienced in the area they wish to pursUe. 102
Cleilrly. menturing can be beneficial for all kinds of employees but it may be especially
importillll for women and minorities trying to on~rcome the effects of the similar-IO-me
bias. stereotypes. and potential di.scrimination. I03
Mentoring programs can be formal or informal. And proteges cart benefit from men-
tors who arc different from them as well as from mentors who arc similar to them. What
must exist for successful mentoring to lake pbce is an atmosphere of mutual respen and
understanding and for the mentor to have the protege's best interests in mind. Maureen
Giovanni. a rnuhicultural consultant with 1. Howard & Associales. suggests that whcn
mentors and proteges arc diversc or differ from each other on one or more salielll dimen·
siolls. there can be enhanced 0ppoT1unities for mutu;]1 learning. The mentor can learn
about the background and experiences ofthc protege. and the protege can Icarn the ropes
in the organization and how 10 be successful from the mentor. I04 Through this process.
both the mentor and the protege become more skilled in dcveloping efTenivc IIllerper-
sonal relations with differem kinds of people. At Prudential. m.magers arc paired with
mcntors who are different from them to help them learn about differences betwccn groups
and the issues various groups face. Managers. in lum. arc evaluated on their ,lltemion to
divcrsity in multiple ways (on the ilmount of money they spend on ethnic marketing. for
example. and how well they incorporate diversity issues into their meetings and
speeehes).IIJ~
Visible top-management commitment. training. education. and mentoring arc jusl
some of the wnys in which organizations can effectively manage a diverse workforce. As
we have discussed throughout this chapter, effectively managing diversity begins by rec-
ognizing that the pcrecptions and al\riootions of the organization's members need to be
as accurate as possible. regardless of the age. race. gender. ethnic background. religion.
sexua I orientat ion. or ol her characteristic of the target of percept ion.
Sexual Harassment
After eXlensive study. the U.S. Anny h:ts indiCalcd that scxual hanlssrnent exists throughout
its ranks.lo(' A recent study commissioned by Congress and the Penlagon and conducted by
the Defense Task Force on Sexual Harassment and Violence at the Military Servicc
Academics concluded that sexual hamssment is a problem at the U.S. Military Academy and
the Naval Acadcmy.I07 UnfonulHuely, scxual harassment is not jusl an Anny problem but
also a problem that many other organizations. such as Chevron Corponllion and Ford Motor
Company. have had to faceYlli There are two distinct types of scxual harassment: quid pro
quo .sexual harassmelll and hostile work environment .sexual harassment. Quid lifO IluO
se~ullJ hllrllssrnent is the most obvious lyre. It occurs when the h,tr;lsscr requests or forces
an employee tu pcrfuml scxuill favors in urder to reL"Cive some oppurtulllty (such as a rJise.
a promotion. a bnnus. or a special job assignment) or to avoid a negative conSL-quence (such
as a demotion. dismissal. a halt to career progress. or an undesired assignment or
116 PART t • INDIVIDUALS IN ORGANIZATIONS

HOSTILE WORK lrunsfer).IO'l Hostile work en"i ron tllenl scxu<ll h:lr:lSSlllcnt is morc subtle and occurs when
ENVIRONMENT SEXUAL organil:tlional memberl; are faced wilh a work environmenlthal is offensh'e. inlimidal ing. or
HARASSMENT hoslile because ofthcir sex,110 Pornographic pictures. sexual jokes. lewd comments. sexually
Crcallng or malmaining a work oriented romll1ents aboul a lX'",on's physical aplX'amnce. and displays of sexually oriented
ellvironmcnl lhal i, offcll,i,c. objecls are all exmnples of hOSllle work enviromnellt scxual harassment. Hoslile work envi-
intimidating. or ho>tilc !>t"'"Jmc
ronmenls inlerfere with organizational members' abilities 10 perform their jobs cfleclively
of a I"'"on', "'~.
and are illegal, Chevron settled a $2.2 million lawsuit with four employees who experienced
a hostile work environment by.. for example. receiving violent JXlmogrnphy through the COIl1-
p;1l1y's mail syslem und being asked 10 deliver JXlmogmphic videos to Chevron employees in
Alaska. 111 As another example. Ford scnk-d a $175 million I<twsuil in\,(Jlving employ....c s al
two fuetories in Illinois, The employees c1ain~d tlll."y endured years of unwanted touching
and massuging. being called sexuulty explicit names. having JXlmogrnphy und sexunl grJffiti
displayed in the workplace. ilild olher forms of hosille work environment hilrussmenl. I12
Hoslile work environmcnl sexual harassment can also lake place eleetronicully when
employees send or receive !>Cxually oriented e-mails or pomogmphy over the Internet. For
exumple. Dow Chemical. Xerox. the New York Times. Edwurd Jones. and Firsl Union B,lllk
havc ull fired cmploYI:es for using company e-mail systems to scnd scxually orientl-d mes-
sugcs. I1.1 According to a l"L"Ccnt study. 70 percent of lhe employL"Cs slllVeyed indicated lh<ll
they have viewed or sem ("-mails at work that would be considered adult oriented. Mot"COver.
over 60 pereent admil1ed thm they h,lve scm e-mai Is thai were either l'ersonatl y offensive or
inapproprialc. 114
Rcscarch suggests thaI scxual harassmcnl cominucs to oenlr in a wide variely of orga-
ni7,ationsll~ and has adverse effects on victims' job smisfactiotl. SIrc,s levels.lifc sutisfac-
lion. and psychological well-being. ViClims of hnmssmem may also be more likely 10 try to
wilhdruw from lhe workplace. for example. by being laic or absenl, lrying to aWlid certain
lasks or situations. or thinking about quil1ing and looking for another job.ll~ They also
tend to havc negative altitudes aOOUI their supervisors and their coworkcrS,117
IntereStingly. a recenl study found lhm regardless of whether employtts experience sexual
hamsslllCnllhemsehcs. being in a work group in which scxual harassmenl occurs resulls
in employees being more dissatisfied wilh their work. lhcir coworkers. and lheir supervi-
sors and expericneing higher levels of stress. 11g
Organizalions have a legal and ethical oblig<l1ion 10 eliminate and prevent sexual
hamsslllCnl, which can occur al all levels in an organization. Many organizalions. such as
NBC includl." segml."nts on sexual harassment in their dh'ersity training and education pm-
gmms.ll\I At a minimum. there are sevcral key steps that organiwtions can take to combat
lhe sexual harassment problem. 110

• 01'\'/'1°1' a IHlwllumu.\'I1/I'1II 1'0liL'Y '\'UI'INJrted by /01' JlU/IIIIRI'IIU'/!/, This JXllicy should

(1) dcscribe and prohibit txJlh quid pro quo and hostile work environnll."nt scxual har.ISS-
mcnt. (2) provide examples of types of behaviors that are prohibited. (3) outline a proce-
dure employees can follow to report scxual hamssmell1. (4) describe the disciplinaf)'
aClions that will be laken in instances of sexual harassment. and (5) describe lhe org:mi-
zalion's commilmenllo cducating and lr.lining ilS members aboul sc.\ual harasslIIenl,
• Cleud\' COII!IIIU11ir/l1<' iiII' orglllli:,illirJl! ',5 H'.nwl hart/,HllwlII policy Ilmmgl!()//lllie
OIxt/llbl/iol/. All members of an organization should be familiar with its sewnl
harusSlTlenl JXllicy.
• hll'eIligaie charge,I' ofse.nwllwra.uIIU'1II ,rilh IIfllir comp/aim prrx:elfllre. A fair
complaint procedure should (I) be handled by a neutral third pany. (2) be dealt with
promptly and thoroughly. (3) proteCI victims and treatlhem fnirly. and (4) lrem
alleged harassers f<lirly.
• Tdke corfeClil'e aoiolllls ,50011 11,5 pO,HiMe ollce il htl.5!Jeell d"terlllilled Ihm Ie.mal
hamSSlllelll h(l\" lakf/I p/(/I'(", The nature of these corrertive anions will vary depend-
ing on lhe sc''Clity of lhe sc xllal harassment.
• Pml'idl' sexmll hlll"tlHlllelll Irail/illK aud edllcmiol/ to all tIIl'lIIm'rI of Ihe orgwli::'(l/iOIl ,
Many organizations have ~llch lrJining progr.llll' in place. including Du POIll. NBC.
Corning. Digital Equipment. and the U.s. Navy and Army.lll A growing number of
 CI'APTER 4 • PERCEPTION, ATIRIBUTION, AND TI'E MANAGEMENT OF DIVERSITY 117

organizations are taking StC"ps to C"nsure that new hires and imerns are aware of their
organization's sexual hllrIls,ment polky. For eXllmple. the Kmz Media Group. which
help> 10 sell ad\enisernenls for lelevision and mdio ,tations. IIlcludes a 25~minule
viJeo on sexual hamssmell1 in its orientation program for new hires. ln According to
Christine WahC"rs. scxual hamssmem preyC"ntion anJ resolution dircctnr at Johns
Hopkins University. 1111 new hires of thm org~U1ization are educated about the behaviors
that constilute sexual harassment. 12.1

Summary
Pcrception and attribulion are imponant topics be<:ause all Jecisions and behaviors in orga-
nizations are influenC"ed by how people interpret and make sense oflhe world around them
and each other. Perception is the prlx:ess by which inJividuals select. organize .•trlJ interpret
scnsory input. Attribution is an explanation of the cause of ochavim. PC"rception and attribu-
tion. thus. hC"lp to explain how and why people behlll'e in orgllniwtions llnd how and why
they reacllu the behavior of others. In this chapler. we made the following major points:
I. Perception is the process by which people interpret the input from their senses to
grve meaning and order to lht: world around them. The three components of per-
ception arc the perceiver. the targe\, and the situation. Acurrale perceptions arl."
necessary to makl." good dccisions and to motivate employces to perform at a high
level. to be fair and equitable. ,lIld to be ethical.
2. The perceiver's knowledge base is organizeJ intu schemas-abstracl knuwledge
structures MOrl."J in memory that allow people to organize anJ interpret information
about a given target of perception. Schemas tl."nd to be resistant to changc and can
be functional or dysfunctional. A stereotype is a dysfunctional schema because
stereotypes uften leaJ perceivers 10 assume erroneously that targets have a whole
range of charactl."ristics simply because they POSSl."SS one Jistinguishing character-
istic (e.g .. race. age. gender). In addition to the perceivcr's schcmas. his or hcr
motiv,l1ional stllle and mood also influence perception.
3. Characteristics of the target also intlucncc perception. Ambiguous targets arc subjttl
to a lot of ill1l."rprctmiOIl by thc percC"ivcr: the morl." ambiguous thl." targC"t. the morl."
likely perceivers arc to differ in their perceptions of it. The !1lrget\ socilll status 11150
affects how the target is perceived. Through impression management. tnrgetS can
actively try to manage thc perceptions thnl others have of them.
4. Thl." situmioll affcclS perception by providing the perccivcr with additional informa-
tion. One pllrticulllrly imponallt aspect of the situlltion is the target's salience-that
is. the extent to which the targel siands out in a group of people or things.
5. Biases and problems in person perccption include primacy effects: contrast rilects;
hlllo effects; similar-to-me l."ffects; harshness.ll."niC"ncy. and average tendC"ncies; and
knowledge-of-predictor bias. hmceurate perceptions resulting from these biases can
read to faully decision making.
6. Attributions arc imponant determinants of behavior in organizations bcc.IUSC how
ml."mocrs of an organizmion rC"act to othcr people's behavior dl."pends on what thcy
think cllused tile ochllvior. Attribution theory focuses 011 unden'!1lnJing how people
explain the causes of their own and olhers' behavior. Common intemal <lllribulions
for behavior incJuJe ability. effon. anJ personality. Common cxtcmal mtribUlions for
behavior include task difficulty and IlIck or chance.
Like perceptions. attributiolls e~1Il be inaccumle as 11 result of several billses.
includmg the fundamental altribution error. the aClor-obscfl'er effeet. and self·
serving attribution.
7. Three ways in which orgmlizatiOIlS Clll1 promote accurate perceptions and attributiolls
and effcctively manage diverse employees are securing top management's eomrnitmell1
to diversity. diversity training. edlrcation. and rnentoring programs. Organizations also
need to take steps 10 eliminate and prcvell1 both quid pro quo anJ hostile work environ-
ment sexual harassment.
118 PART t • INDIVIDUALS IN ORGANIZATIONS

Exercises in Understanding and

Managing Organizational Behavior

Questions for Review

1. How do schcma~ hclp members of an organi7-ation
make >cnse of each other Mid of whal happens in
Ihe organiz;j(iun?
2, Are stereotypes ever functional for the pen:eiver?
Why or why not'l
J, Why might a supervisor be motivaled to perceive a
subordinate's performam:e as being poor when it
really is nol'!
4. How might managers' moods affect organi7-ational
decision making'!
5. In what ways mighl impression management be
funnional in organizations? In what ways might it
be dysfunctional?
6. Can and should employees who are salicnt try to
reduce their salience'?
7. Why do perL'Cptual biases exist'!
8. Why might a supervisor make internal allributions
for a suoordinme's poor performance?
9. Why arc auributions important determin,ll1ts of
behavior in urganizations'!
10. Why might members of an organization disagree
about the nature of hosti Ie work environ!11ell1
sexual harassment'!

OB: Increasing Self-Awareness

Understanding Perceptions and
Attributions in Group Meetings
l1tink about the last meeting or gathering that you ,mended. II for one of your classes and assure Ihal person thai
could be a IllL't.1ing that touk place at the organizoltion you arc answers to your question" are eonfidemial. Whi Ie thc
cUITCntly working fUf. a meeting of a club or stuocnt organiza- person is answering you, take careful noles. and do
tion you are a memOCrof. a meeting of a group you hal'(' ocen IlO1 atternptto corret:1 anything thai is said. Jusllislen
assigned to for a project in OtIC of your dlSseS, Of any olher and take nOies. Ask lhe peThlll1to respond 10 each of
rL"(;ell1 gathering that invohL"d more than twO pt.-ople. these questions (one by one):
n. How would you describe what took place during
I. lkseribe your perceptions of whaltook place dur-
lhe mcelll1g. and why do you think it look plal'C'!
ing the meeting and explain why events unfoldt"d
h. How would you describe the thar.lcterislil:s and
as they did.
behavior of the other pcoplc who were prescll1
2. lkseribe the characteristics and ochavior of the
at Ihe meeting. and why do you think they
other people who were present mthe meeting and bchavl"d as Ihey did'!
explain why they aCled the way they did.
c. How would you describe Ihe reasons why I
J. lksnibe how you think you were perceived by
behaved as I did during the meeting'!
other people during the meeting and explain why
6. Compare your own descriptions from aClivilies I
you behaved as you did.
through 3 wilh Ihe descriplions you ubtmncd from
4. Aller you have l:Ompleled a(;1ivities I through 3. pid
activities 4 and 5.ln what ways were your percep-
anlllher pcrson who panicip;llt"d inthc meeting and
tions and attributions similar to tho>c of the other
arrange to meet with her or him for around 15 min-
person'! In what ways were they differem'!
Ules. Explain to the person th.lI you want to ask a few
7. Use Ihe knowledge you have gainl"d from this chap-
queslions aboullhe nK"Cling for one of your classes.
ter to explain why there ,,"'ere differences in your
5. When you meet with the pcrsoll. ask her or him 10
and the other pcrson 's Ix:rceptions and anributions
be as accumte and honest as possible. Remind lhe
and why Ihere were similarities. Be specific.
person that your get-together is pan of an assignment
 CHAPTER 4 • PERCEPTION. ATTRIBUTION. AND THE MANAGEMENT OF DIVERSITY 139

A Question of Ethics
Given perceplUal problems and biases. such as sterL'olyping and the similar-to-1JlC clfed. pro-
ponents of affirmati\'e action argue thaI organizations need to take proactive steps to ensure
that minorities and women are given the oppOl1unitiC5 they dcserw. Opponents. on lhe other
hand. al',;ue that Ihese policies can inadvertently result in more diseri mination mllter than less.

Questions
1. Think about the ethical implic:IIions of affinnativc ~Iction programs.
2. What obligation do organizations have to ensure that all members of the organiza-
tion arc treated fairly?

Small Group Break-Out Exercise

Dealing with Salience
Form groups ofthrcc or four people and appoint one member as thc spokesperson who will
communicate your conclusions to the rest of the class.
1. Take ,I few minutes to think aboUl silUations in which you were salient (i,e .. you
stood out in a group of people).
2. Take turns describing these situations and how you fclt.
3. Thcn take tums deo;cribing what other people inthe.'\C situations did to make the
situation bener or worse for you.
4. As a group. come up wilh ways that (a) individuals who arc salient III a situation
can effcctivcly deal with their salience. and (b) those who arc not salient in a situ-
ation can avoid paying undue allelHion to others who stand out and avoid forming
extreme evaluations of them and stel"C(ltyping.

Topic for Debate

Perception and attribution have major cfft-ets on the dt-eisions Ihat are made in organiza-
tions and on how mcmbers of an organization respond to each other's behavior. Now that
you have a good undenaanding of perception and anrihution, debate the following issue.
Team A. There is not much that managers e,Ul do 10 reduce lhe negmive effects of
problems and biases HI perception and allribution ill organizations.
Team B. Managers can take active steps to reduce the negative effects of problems and
biases in perception and attribution in org:mizations.

Experiential Exercise
Managing Diversity

Objective
Your objccti-'e is 10 gain firsthand experience in some of the issucs involved in managing
diversity.

Procedure
111C class divides into poups of three to five peoplc. and each group appoints one mcmber as
srokeslX'rson to prescm tlte group's reoommendmions 10 the whole class. Each group plays
the rule of a leam of diversily consultants who have been called in by a high-koch company in
the wmputer industry lO help effcctivcly manage di-'crse employees. Here is the scenario.
140 PART I • INDIVIDUALS IN ORGANIZATIONS

Nick Hopkins is the team leader of a gmup of 10 programmcrs who are developing
innovMive software 10 be used in architectural design. The tearn is composed of seven men
and three women. Hopkins thought thai everYlhing was going prell)' smoolhly in his leam
until Ihe following Iwo rel:ent evcnts, Firsl, one of the women, Car;l Lipkin. informL-d him
that she would be resigning to work for a competing organizmion, Hopkins asked Lipkin
why she decided to make this change. and she answered at lenglh.
"I can't e,\aclly cxplain it," she S;Jid, "bul ] never re<llly fcllihal my contribulions were
valued by Ihe team, [ know you al"'ays appR't:iated the work [did and appr;li>L-d my perfor-
manec highly, but somehow I didn't really fccl a pan of things, In the long run,] was afraid
thai my prospecls in the company mighillot be as good as other people's because I didn't seem
to be included 111 cenain activities and diSl:ussiolls, To give you whal will prob;}bly sound like
a real silly example, last momh I ovcrhc:ml scvc"ll of my learn members planning a deep-sea
fishing trip; I kept waiting to be included but never was, As anOlher example. [ sometimes feel
like the last person people will come to for help with a programming problem:'
The second evenilroubllllg Hopkins was as follows; Bob Risolo. anolher temu mem-
ber who at thl." timc was una"'are of Lipkin's resignation. complained that the women on
the team always seemed to stick together,
"It's like they've got their own little clique going," Risolo S<lid. "They go to lunch
logether. They lalk to eal:h other but not really to the rest oflhe team, When [ have a pro-
gmmming problem that I Ihink one of the women on the learn would be able to help IlIC
with, for sollie reason I often feci hesitant to seck out her advke, Maybe it's just my fault
I don't know:'
Hopkins has met with you (in your role as a team of di,'ersily consull<lnls) and asked
you to help hilll effectively llIanage diversity 'IS a tcam leader. He has indicatL-d that he
thought everything was going smoothly, but it evidently isn't and he wants to take sollie
concrete steps to improve mallers. Develop a plan of action to help Hopkins effectively
manage diversily in his team,
Onec your group has developed a plan, Ihe spokesperson for the group will present the
group's recommendations and the rationale behind them to the rest of thc class.

New York Times Cases in the News

Up the Down Staircase: Why Do So Few Women Reach the Top of Big law Firms?
II.\' 7: L O'Hriell, Till' Nrll' York TiI1WS, Mrm.'ilI9, ]()()I), Sec/ionJ. PJI. J, 4.

Hr;J\oREDS of feet abow Manhanan, lhe
reception area of Proskauer Rose's
headqumtl'~ boast, all of the mUSl·uJar.
streamlined ornamenlatiOll 111m symbol-
izes :!uthority alld I"""l'r in a big city law
jim\.
BCliina B, Plnml. a 60-year-old
specialist in labor and employn'IClll law.
has spent morc thall three decade, at
Proskauer n;,vigaling lhe professional
riptides and intellc,'tual efllS....·um·rlts of
flrtn life on her way to reeling in onc of
the legal world's mo,t ,toried and most
lunati.-e prill'S: a partnership
". decided I w"'lted lO be a p<lrtncr
shOl1ly aher I gOI here-by tlalun: I ha.-e
a lot of driw, I'm competilivc and
I havc a 101 of cncrgy:' she says, "For me.
bcinj; a partner wa, a way in whi,'h my
wlents and skills could be rceognilcd.
And I wanted th," rcn,gnition:'
M<. Plc'"an has lh;'l ll."CO£n iliOll, BcsKlcs
the hand""me sabry and br.rgging rights
accompanying the grueling hou~ and
em"tioru,1 ju~ling Ihal wnst;tuK' a parl"'-'T-
ship..<he has eamcd ample plaudilS fronl
pce~ outside Pro,katler, According 10 a
small plaque, one among many stacked
along her windcM', other lawyers around the
COOIll')' havc voted her one of the "Best
Lawy"rs tJl Allwriea" 11l each of the last
13 years,
Following ;n Ihe f'Klt'tep' of Elihu
ROO!, Charles Evans I'lughes, Whimcy
Nonh S"ymour Jr, 'lnd Cyrus R. V'IIlCC,
Ms, PI"van i, prcsid"nt of the N"w York
City Bar Associ"lion, only the SC(;ond
woman 10 hold Ihal I""ition ,inc" th<.'
Ofganiz.l1ion·s founding in 1870, She h...~ a
job Ihal makes OCr happy and rdk...1s OCr
sense of herself. Shc is an 'Ieeomplishl'd
lawy<'f, She has arrived,
St>c also is ,til anomaly,
Although the nation'~ law ><-'hmb for
years ha"e been gr.'du;lting cI;lsses thaI
aR' almo" e\TIlly split bclwc'en m"n and
"'"OlllCn, and alrhough jil'lllS arc absorbing
tIC'w a,so,:iatc, in nurnh<.'" that largely
 CHAPTER 4 • PERCEPTION, ATTRIBUTION, AND THE MANAGEMENT OF DIVERSITY
reneel that balance, somelhing unu,ual
happen' to m"'t women after they hegin
in climb inlo the upper tiers of law linns,
They dj""ppear.
A~'Conling to the Nalional Association
for Law I'lacemem, a tmde group that
proviocs career ~'O\lnsel ing to lawyers and
law 'tuocnts. only about 17 percent of the
p"nners at major law IInns nation"'ide
were Woml'n in 2005, a f'gure that has
risen only slightly since 1995, when aboot
IJpefl'Cni of P'lf1D>'" were women,
Evcn tltosc who h-we n1<loc it10lhe tOJ'
of tlK·ir pruf~ssion say th:Jt tlK' data shows
Ihat women's legal earrers involve distincl,
often in,umlOun~,bJe hurdles and that
those hurdks remain misunderslood or
u rxJc,,'xamined,
"You havc a given popul:lliou of people
who were significantly moti"ated to go
lhrough law sehool w;lh a cenain car~'Cr
goal in mind," say, Ms. Pic,'an. who noIL'S
lh:'t Pros~aucr has always provided her
wilh a wckoming professional home.
"What de-moli"ates them to W;tnt to
eonlinue working in the law,'
For years. one pal response 10 Ihal
4uc>tioll WaS !lUll once law S<.'hool
graduation rate, ,ub'tamially equalized
belween men and women, thm pipeline
would fuel f,m, diversity and cause
p",'nen.hips 10 eqllalize as well. Yet Ihe
pipeline has be~n gu.'hing for about two
dcradcs and partnership dis[Xtrily renUlll1S,
Although wom~n cenainly lea,'e
lirms 10 become more ael,,'e1y invoh'ed
in child-rearing. recent d~tailed studies
I1ldicale thaI female lawyers often feel
pushed into thatchoiL'e and would prefer
to mail11ain their cmccrs and a family if a
structure existed th~t ~lIowed them to do
so, Some analysIs l'nd many women who
pr~L'l;L'e law say that having l'hildr~n
isn't the primary reason mOSI women
leave law firms ~nyhow: mo,t. th~y s~y.
depart for olher careers or for dillerent
w~ys to prlli:lil'e law.
"Finm wanl women to stay, Men:l1 the
finns want women to ,lay, ~nd wom~n
wanl to swy, So why aren'l theyT asks
Karen M, Lockwood, a partner:lt Howrey
in Washington. "Law forms arc w~y
beyond discri111in~tion-this is about
ad"an('etncnt ~nd retention, Problems,
wilh ad"a!\('emcrlt and retenlion "re
groun<k"d in bia""s, I10t discrimination:'
With I"w finns ('ouning nlajor corp<>-
rations Ihat demand divef';ity within the
mn~s of IhoS<." ~dvi,ing them. ;md with
women irn;reasingly dominating the top
tiers of law school gmduates, veteran
Ia""ye", ""y that pmmOling ,,,,mcn', legal
ea=rs "nul just a matter of ~'OOd,will or
high-mindedncss. It', al><, ~ winning
business slmtcgy.
"Forget about ,~in color or gender or
whatever. if you wanl to run a gre:,t
busiD>ss, you need great. talent~..J people.
And 1 don 'I care if I'm hiring Manial1s if it
ma~~s good bu,i""ss sense." ""ys Michael
M, Boone. a founding [Xtn''''r of Haynes
and Boone in D~llas. "Ewn the largest
linns are at ris~ if they don'l do this:'
Ms. Plc,'~n ,aid that male partners at
Pros~auer had worked :Kti"ely as her
mentor'. "I wa, given oppol1unities to be
the lead lawyer and ocmonstr"te wh:u r
could do professiom,lIy wry early hert· ...
she recalls, "I thin~ the opporwnity to
prove )"ourself is part of wh~t putS
sotncone on 1he pal1nership 1rac~. Of
Course. yoo lu,,'e to seize the o]JllOl1un ity
as well:'
Pros~aul'r anointed Ms. P!cvan as "
p.lnner in 19l1O, shortly before I~w firms
around tl.... country Ix'gan ell\b;".~ing 011 a
broad consolidation wave that transfonned
the profession, Large firms bttame eVl'n
larger: expanded th~ir global reach and
praeliee areas: focused more tighlly on
bern:hmarks such ~s "billable hour," 10
assess Ihe performance of individual
lawyers: and competed voraeiOllsly for
co"eted SpolS in news media repons that
mn~~d them hy fmarn:ial yardstil'ks sUl·h
as profit jXr [Xtnncr, TIlOSC forces gained
momentum in th~ 1990', and continue
today.
Wom~n entering thi, environment
diseovered thm men enjoy~..J some distinct
ad,'antage,. largely deriving frum the
simple l'lCts Ih'lt there were more men in
most fimlS and that they had their h~lId, on
lhe levers of power, Although Ms, Pic\'llll
benef,ted frum strong male mentoring,
moSI women who pmctice IllW do not,
aceording 10 an"lys!> and female lawye",.
Women lawyers also enjoy less access 10
the networking and busincss development
opponunilies th"t tlourish in I"rgely
male pJ:oygruund, -thin~ golf eoorsc, or
footb,,11 g~nlCS-Or through "n invit"tion
for a ea.~u;d "fkr·"ur~ drin~ with a male
boss,
"W"'1\L'n an.'II't bei'lg a<1c'-]u"lely
tncmored, but I Ihin~ male associ"tes
aren't panieularly ",'ell rIl,.. ntored al all
finns either, and there's pretty widespread
dissatisfaction with that." said Merudith
Moore. director of the office for diwrsity
141
at the New Yor~ City Bar, "Having said
that, I d" think that ,ujXrstar m~le
associales arc iocntified 1110fC clearly for
infom,~1 mentoring than ,uperslar fem"le
associmes,"
Some ofthi, giv~-and-lakeenters gmy
areas that may have :tS much to do "'ith
caution a, il does with biases. Is a mal~
boss reluctant to invite a younger female
law}'l'f out for a drin~ beeauM' wat~r
cooicr challer might spar~ rumors of an
alTair or give riM' to a sexual harassml'nt
suit'! Is a femule associate hesilalH 10
addr~ss a male pmtner informully in a
hallwuy bcc:,usc it will be derided as
nirting?
Still. the sexes have been mingling in
thl' workplal'e for ""nl' lim~ noW. and
professionals. in "" their ad"pl~tion,,1
glory. ha,·e fom}(] w"rs to nmnage thL'SC
situations. Anyhow, female lawyers say,
"'Ily is a "'oman "'ho hunts down her male
boss fOt' u chat seen a~ overly aggressive or
[XlSsibly nirtalious. "'hile a male doing the
,"nlC Ihing is seen as ,nerely ambitiou,?
Lauren Slilier Rikle~n, a 52· year-old
pan""r in the Framingham, ~1:oss __ office
of the Won:e,t~r. M'L~S" linn of BowditCh
& Dewey, octail, the hurdles facing female
lawyers in her re<'enlly publi,hed boo~
"Ending lhe Gauntlet: Remo:l\'ing BaIT;"",
to v,'omen's Success m the Ltw"
(Thomson ugalwOlh, 525). In her h",,~
she wriles that law finn, need 10 reor-
gani7'" if they want to encourdl,'C and retain
women as [Xtnners, "nd that roadblocks-
whether they be errant mentoring, opaque
networking opportunities, low-gmoc case
a"ignml·nts or arbitral)' male control of
key managemenl commiltecs-should all
be rcviewl-<1.
"La'" finns li~e to l;ll~ aoout running
the firm li~e ~ busines' and looking al lllc
numbers. but they're running on an
institutional modd that', about 200 year>
old," she SilyS, "Most 11Iw linns do a
horrible job of managing their [X·rs<lIInd. in
tem\<; of training them "nd communicming
with them,"
Ms. Ri~lccn, lOS well ~s mlll'y of the
"'onICn she inttn·i<'wL·d for her boo~, nole
how loncly life lit a law iinn can feci for
"om,:n if they Slay 'Ill the partI\I.'r>hip tlllL'~
and lind f"",,,,, "umen at'Olmd them as they
a"''Cnd. In IK,r boo~. ,hl' write, "bot,t her
early c"rrer. "I had ""I)'little help "nd no
mento.-s, I SaW other WOmen ani,'l' "t t!IC
firm, struggle, and leave," Allhough she
eS1abli,hed a thriving ,·nviromnental law
praet;"e and now fmd' her firm n1<)",
142 PART 1 • INDIVIDUALS IN ORGANIZATIONS
"'elcoming. in lhe early days. "1 oc"er fell
like I bc~mgcd:' ,he ",rile,.
Olhers )w"e had similar experi"nc"s.
Jcnnifer L. Blue't"in .'«Iy' ,he cnjoys her
earccr as head of professional dcvelop-
ment for Baker & "'kKenzie. the Chicago
11I01l01ilh Ihm is lhe eounlry's largesl law
f"m. But M,. Bluestem, a .35-year-old
dean's hSI gmdualc of Ih" North",eSlenl
Uni\'Crsity S.:hool of Law, said that al ncr
t",o previous employers, she felt like all
ulllkryalued and un",anled outsider. She
describes her experiellees al Ihose law
r"ms a, londy. degrading. and akin 10
jounleys Ihroog./l halls of mirrors.
"W"nK'n an' hdd to higher slandards.
and if they don'l jump up and down lik" a
man "~lUld al a nIlX't;ng lhey men 'I Sl"'" a_s
partnership mat"ri;lI:' she says "Women
an: less likely 10 gd the auenli"n Ihan men.
Some of this is lefl o\'er from lhe sexual
hanlssmenl Cases from the 90's IX1I I think
that it's tnor<: Ixcause of lhe fact thaI we
oon't l"ok like IlK·n."
To Ix sure. >0111<: big finn, haw alr<:ady
rttogniz~x1 Ihe benefils of keeping women
on the pat1ne~hip track and ha\'e made
concerted elTorts to a<klrcss Ih" issue. Ms.
Lockwood. th<: Howrey panner. i, also
prc,ident of lhe Women's Bar Associ:,lion
of the Di,tri<:t of Columbia. and sh<: is
spearheading an effort wilh Ihal gl\lUP, her
firm and the 0"org<:10wn Uni,·ersily Law
Cenler 10 find pmelic,d solUlions. Some al
the muntry" bigg<:.'1 fim" a", backing OCr
milialive, mcluding Lmham R. W<llkins.
Kirkland & Elli, and Co\'ington &
Burling.
In a<klili"n 10 "gla<s eelling" issues
Ihal work againsl women '" l'lW firms.
M." L..ckw'KKl', iniliative-which she
says ht's benefited from Ihe b<lekillg of
Howrey's managing panner, Robert F.
Ruyak-is also exploring Ihe imp'lC1 of
what ,h.: de,cribe, a, th<.' "matcrial wall"
011 female lawyers. Sh" S;lyS lhm Ihis
wall is built on the umt"t"d ,,<sul11plion
"mollg male p.1rlnerS Ih'll women who
return to fim" after h"ving children will
"uloillatic;llly be l<:ss willing 10 wor1< h"rd
or will be "'SS (,,,pable Ihan thcy ""ere
prior 10 Ih"l-resulring in less-choice
""ignmCIIlS or less-senior po,tings,
Questions for Discussion
1. Why do some women fae.: struggles in large Itlw firms?
2. Why do femalc lawyers wnd 10 recei\'c less me11loring Ihan male lawyers?
3. How and why mighl lhe "lme bch"viors be perceived and inlerprcled di ffercntl y ;f they arc
performed by a male lawyer than if lhey arc perfonncd by a f<:malc lawyer. and vice ver-;a?
4. What is lhe "matcrnal wall;' and how can il lead 10 inacrumte pCI"Ccplions mtd anribolions'!
JWIC DiRenzo Pigou, a fumlCr Winston
& Strawn bwycr who now runs a Chicago
consulting fm1l, lhe R.' Group. thaI advises
law firms on diversity issues, says the
dyn"rnies surrounding fetll,,1e lawyers in
the Midwc>! milTor tr<:nds dscwhe", in the
cournl)'.
"People explain it simply "s the fact
thm women have children. bul so many
other factors pby into it:' ,he ,ays.
"Wom"n self-promole in a different W<lY
than men. and bel'''U''-' W01l1l'n don't gct
Iheir success tlCknowledged in Ihe same
way as I11l'n who mOre "£gre,siwly self-
promole. il cr<:ales a high level of
prof""i"nal dissatisfacl ion For wonk:n,
"S;oying these two words. 'I Wtlllt: is
n(~ sOl11e'thing m,my "·OTHen are used to
doing:' she adds. '"They <Ire 1101 ~,ying. 'I
Want the> tOP bonus: or '1 wanl Ih,,1
posilion: They h,,\'<: a differ<:n' styk of
,,,If-prnrnot;oll. But wmnen nl"Cd 10 learn
how to be eomfot"1able sayiog. 'I walll:
and how 10 say;t dTeelivcly"
AC<:Ofding 10 "Women in Law:' a 2001
sludy by Calalysl, a New Yor1< research
firm th:!t lraeks wom<:n"> experiences in a
wide "mge of workplaces. most nmk
bwyers don't sec a lack of mentoring and
netwurking opportunilies-or commit-
ment' 10 family and pe~onal r,,'ponsi-
bililics-as signifICanl Ixrrricrs 10 women's
oo\'anl"Clncnt Th<)se bi""". S"Y' C"mlysl.
me more pl\lnounced in Ihe legal world
than in other indu'tries and prnfes.,ions.
Ms. PIe"an agrees.
"A, long a, fion, a", male-dominated.
it's much less likdy th,ll IInns will make
change, to acl"Cpt tnc l'hallenge, of "".-k-
life balance" she says "1I's not Ihal !l1C1I
aren't K'Cepti\'e to these issues. it\ that
they're nOI aware:'
Rcscan:h mnducted by th.: project for
AnonlCY Relel1lion." progmrn spollsored
by the Uni>'ersity ofC"lifomia\ Ha'tings
College of Ihe Law. has idernitled an
innuibl", billable-hour-; regime as an
obsl;oele 10 job s,llisfaclion for bolh sexes.
a trend th"t is mon' pronounc'ed among
the mOSI ree<:nt crop of law sehool
gr"d""te" Some '-clemn I"wycrs wit"",;,s
this dissalisfaclioll fi~lh"nd alld say Ih;"
it lugs mot"\.' powerfully at Woml'n tlum
men because of social expeelalions aboot
hou,ehold rok, and c·hild-r"aring.
"We arc very :lecot11t11ooating with
le,,\'e, ;lnd flexible ,chedules, and evcn
wilh that we slililusc wo,ncn:' SOlyS Edith
R. Mauhai. who founded a Lo, Angde,
law linn. Robie & Manhai. wilh her
husb:m<J in 1987, "I think the p",,,,un,, on
W011IC11 from spouses, family. peers,
sch(Kl1s and <>thers i, huge.
"I Ihink Ihe real Solulion ;s a re·
as",,,ment of the role that womc'n play
in the family:' t>dds Ms. M"nhai, who is
presidem of the Los Angek's Coumy
B;lr Associtllioll. "One lhing we ,ICC{! is a
,t,nSe of shared le"ponsibilitic" for thc'
houschold ;Illd most importanlly. shared
re,pon,ibilili,,", fm taking <"at"\.' of lhe kids.'"
Ms. Manh;,i s;lid lh<lt condilions for
wmnen had imprm1.'<i a good deal o\'er the'
lasl 30 y"ars. bot added: "We h;!\'e a long
,,'ay to go. It's my dream th,n nKlre w"men
will Slick i\ out in ,he law untillhey get 10
the fun [XII1, and it jusl breaks my heart to
sec them gi"ing up the dre;un:'
Re,..can:h eondu,'ted by lhe New York
City Bar As<ocimion and other groop'
indicates thm women who tempomrily
give up their profes,ional dream, 10 pursu<:
child·rearing of Dlher pcn.ollal goals l~l'e
a diffteult. if t101 imp'-"',ible. l;me finding
easily a"ailable on·ramps when the'y
ehoo,,, to re-emer lhe legal ",Kid.
"I don'\ thutk we're Ihinking "ery
dearly about h<)W to help people do that."
Ms. PIc"an says. "Fimts need to keep in
touc'h with lh<= people and th<,..c people
need to keep in loueh ",ilh IInns so Ihey
don't b" ..· o,nc ma');inalizecL"
She also renwins flnnly awme of the
('hal k'nge, th"t pantll'rship' entail.
"I han: foulld my Icglll ",ork and public
se"'ic" enom",u,ly ",ti.,fying. and 1 would
IIC\'er wanl to be withoul tlwt. bot I WOO'I
kid you-attil1ll" it', \'el)'. "ery tiring ,md
vel)'. very demanding:' Ms. Plc"an ~aid.
"I truly bt:li,,\'e that Iawy"rs makc" hugc'
dilferencr in sociely, and I think it's a loss
wh<.'n "'omcn <k.x'ide to !l'a"" f,nn,.
"I think di\'ersity is a bencficiallhing in
an organizalion." ,he "dds. "Wilhout it,
YOIl ha"e a loss of difkrel11 poinlS of view:'
 CHAPTER 4 • PERCEPTION. ATTRIBUTION. AND THE MANAGEMENT OF DIVERSITY
"Looking at the Free Market, and Seeing Red"
8.1' R. SIIVSS. 7he Nt'>\' Yo,-k 7i1llt'J, A/,,-i/9. 2006. Sn'lion 3. p. 3,
Lou DOBBS is a m'bler of the Sinister tease.
Last month. he was in top form,
previc>wing a ,tory. he told vi",,'c''''' of his
nightly CNN newscast that when the Slate
[),:partmenl "'-'eks se,·ur,· network ..·olll-
lHunicalion,. it "Iurns to Communist
China:' and thus renocrs the United States
"pcrhaps more \'ulnerable Ihan en:r'"
The ,tory tumed out to Ix' anotlK:r Lou
Dobbs exercise in ooshing immigr~n1s, or.
more precisely. ba,hing a ,ingle unmi-
gram I.eno\'o, the PC maker originally
based in Chi"" Ihat hlSt year ae4uired
I.B.M.'s PC division and is now hased
on Raleigh. N.C. Lcnova ruenlly won
a c'(,mpelili\,e bid to sell the SUle [)"part-
ment $13 million worth of personal com-
putef';. Mr. Dubb' like some politician' on
Capitol Hill. suggests that Ihose PCs
could provide 'hadowy 'pooks in Ihe
Chinesc govcnUHent wilh nn idenl nlC'IJlS
of c'(mduc1ing espinnage.
Merely himing at ,uch n possibihly is
e[KlUgh to hun unoHl's repulalion. Thi, is
a potemially serious impairmem on the
highly compeliti"e. commoditized PC
business. What is h'lppcning to l.cnovo.
the mo,t int<'rnmionalizcd ....'mpany in
the industry. is n drive-by slllC:lring,
1\.k Dobbs is not the only pr~elitiOlK:r
of lhe hil-nnd·nnl illlaek, In his segment
about u'no\,o he called upon Mil'had
R. Wessel. a member of the U.S·Chin:l
E<:~'[K}mil' and Sewrity Re"i..·w Commis-
sion, an advisory body 10 Congress. Mr,
Wessd ""id that thl' State [kpm1mc'l\t
wOl,ld usc the Lcno\'O computef'; in offices
"round toc world. pott'ntially providinj;
Chin" access to "some of OI,r deepest
sc....· rcts:· " "tre",ure 1m\'(' of irlfonnation
they ~,uld use again>:i us,"
Mr, Wessel's segment WaS too brief to
explain how China's a~'Cl1IS wOll1<.1 be Jblc
to !,.filb hold of toc machines to in,talllhc
software fm elalldcSlinl.' dala lransmi"ion
b'lC~ to the party's Celllml Committee.
'l1JC Leno\'O "",",top, headed for the State
DepartnlCnt will be assembled in faeil-
ilie' in ,,""'lh Carolina, nOi a People's Lit>-
eration Army compound in China. Also
ullCxplained wa, how infl.'cll.'d machines
would ,nttt Gcneml Services Adminis-
tr"lion security standard, and gel past the
e;!J' X'UI Yo,k €imts
State Department's Iwo <,{lmputcr SI..'Curity
groups. which overs:<: the :'(lministration
of tkir oWn te,t suites "nd in'lall fin'w,dl,
and other SlXurily sollwarc,
Ulst wl.'Ck.1 spoke with Mr, W,',,,,,llo
Ieam nlOre about the oo,is for hi, alarm. h
tunK:d out tllat Ill.' WaS nUl able 10 ocSi.'ribe
how Chinese agents could gain an""ss to
the lxnu.'o maL'hines. undetected. while
they were being: :lssembled.
Wocn J ,.., ked w'hy IK: thought tllC St"te
l)eparlment's security procedures were
imKk:4uate llC "uj;gestcd llwt oc ",-",Id n01
,ay hecause the Slate Departmenl had
lx"Cn less tlwn forthcoming wilh him, "We
don't fully know" what the procedure,
are. he S<lid. BUI when [ asked him if oc
had re4uested infomlation fmm the
ocpanment about its protocols before he
publicly \'oiced his ('{,"cerm about the
Lcnovo ocal. he said he had nOl,
LaO)' M. WOnl.l.' I. the l'haimlan of lhe
security review commission on which
Me. Wl.'ssel .servl.'s. was even more ani-
maled in asscrtin£ that there were
sec'urity risks in thl.' Leno\'{) 'ale to the
SWle DepilllmelH, When I spo~e with
him. he professed to be my,tified a, to
"why lhe S1:Ile DepartmelH would t"ke
thl.' risk." What had the State Departmt'nt
told him :lbotJl its security procedurcs'?
He. too. had yet to ,pcak with anyone
there: thc commission's the commission',
"'4Ul"t for a bril.'fing had lx'Cn dmfted 001
I10l yet scnt.
Both commissioners as,unW that
Lcno\'o is tnan'lged by pUppelS whose
,trings an' pulled in Beijing:. Mr, \-'ksscl
",i<.l he was certain that "a major pol1ion"
of Lc'K"X' w"s '\:mttmlled by the Chioc""
gO'lWllll\Cnl." State enterprises:lre placed
in the hands of "pri'K'Clinl's." who are Ilk:
chil<.lren of go\'ernment leaders. he began
to esplain before I int,·rrupted.
Prin.:elings insullcd at lhe mcrilocrat;c'
unovo? When I asked Mr. Wessd to
identify a te",,,,u princeling, he .",,-id. "I
haven't done a research of Lctlovo:'
He said he had merely "mi",-d question'"
and had "never purported to have
answers" Thi, wa, similar 10 Ihe reply
from Mr, WOl1zcl when IlC was asked to
,ub,mntiate his allegations with detail,.
143
The fa,·t is that Leno\'o i, a li"inl'
repudintion of the system that lhese crilks
assumt' it represents. h WaS born in
1984 from UnCOlllll1Unist entrcprcneurii,l
impul,es among a group of Chinese
computer scielHisls who walHed 10 sIan
their own ,'ompany, llleir employer. tbe
Chinese Academy of Scien<.:es. gave them
S25.OOO in venture capilal. and off Ihey
wen!. It was among the fin;! Chinese
companies to issue employee stock
oplion~.
The A<.'ademy of Sciences rel'lins a
minority ownership po~i1ion. but so <.10
I.B.M. "nd thru American pri\':,le,c4uity
r,mlS. The largest bl(",k of sharl.'~ i,
owned by public ,hare holders, (lis ,hares
arc tmdcd on the Hong Ktmg ex('hange.)
unovo is he:'ocd not by a princeling but
hy an Am<:rkan. William J Amelo-
a former senior \'ice president for Dell. as
il hap!",n,.
Perhaps tllC SlXUtity ('Oncems could be
,'alidmed hy all authority nn China',
military.1 spoke with hmes C. r.,'lulvenotl.
dc'put), dirc'ClOl)' of lhe Cl.'nter for Intelli-
gence Re,earch and Analysis. which is
oo",-d in Wa'hinglOn and run by Defensc
Group Inc,
Dr. Mul\'cnon said he had many
concerns about China', st"le·sponsored
cspionagt' activities 001 unm'O WaS nOi
on his lisl. He ocscribed the cOlHroversy
about Lc'nm'o as "xenophobia and anti-
China fervor dressed up ns a technology
<.'on"t'rn
Rob Enderle of the Enocrle Group. a
tedmology ,'onsulting finn in San Jose.
Calif.. said he also saw lhe criticism of
U'1I0"0 as b.'king in substance. With an
executive ,taff spl it between Chinese and
Amcri(·ans. Leno"o is thc mo"t global
company in the PC industry. he s"id The
real story. he 'aid. waS that IllCse critics
were "really tor4ued that China i~ out-
eseeuting III(' U,S."
Lenovo is an im'iting "'ag:net for
all sorts of free·!loating ,\ nl('r;ean 'HlX i-
eties abou1 glubal ('ompetit;on. The
viseeml nature of these concerns Can be
seen in mher rl.'marks by Mr. Wonzcl of
the U.S·China Economic "nd Securily
Re"iew Conllni"ion, He said, "As a
144 PART 1 • INDIVIDUALS IN ORGANIZATIONS

ta-XJXlyer. [ have it serious concern abool
why my lax money is spem on a
computer mmlc by a company owned
hy Ihe government of the I'eople's
Republic of China," Why. he as~e<l.
cnul<ln't Ihe Slate Deparlment place ilS
order wilh a "100 percent American-
owne<l ('()mpany"?
The cold-war template of os versos
thl'm, eapilalis! \'e"us Commonisl, docs
nOI fli Ihe j;eoj;raphy of the glob<lliled
sUlljlly chain lhal underpins Ihe <'Ornpuler
indoSll)'. All players, even the "100
I"'ranl AlTl"ril'an-owncd" wndo..,;, haw
a major presence in China, Roger l. Kay.
Ihe presi<lenl of Endpoim Tl'chnologics
Associ,lles, a consulling finn in Nalic~.
Mass" sai<l China ha<l ,[((meted so many
companies based in the Unile<l States
lhal Ihe PC oxosyslem Ihere had re'lched
a critical mass. LOW-l'OSI prndoction is
nOllhe dmw, "Now Ihe reason yoo wanl
1<> be in China," he said, "is beeao,e
lhal's where everyone else is:'
Wishing wislfolly for a return 10 the
past-in which I.B,t\1. was slill in lhe PC
business-is nol li~ely to impro\'e
American compeliliveness here and now,
t\lr, Enderle said lhal iglKlring lhe d i",om-
filing f:lci Ihal technoloj;y companies
based in lhe lJnit<'d Stales are losing
leadership posilions 10 their coonterp;tns
in CaSt r\sia-not jost China, bul "Iso
T:,iwan 'lnd Soolh Korea-docs nOl m:l~e
Ihe problem go "way, "It's slill going 10 hil
os," he said.
Nevertheless, Mr, Dobbs and members
of lhe U-S.-ehina £I:onomie and Sceurily
Re\'iew Commission h'I\'c larred l.crnwo
wilh SUSpil'ion or espionage-and the
Stme Dcp;lrtmcm with beinj; lheir willing
dope, M,- Kay says the danmge to Leno\'o
has becn done, ,,'en if Ihe S1:Jte
Departmenl poreha,,-' prnneds,
"The ne-XI lime:' Mr, K"y prcdiclC1J,
"the gm'Cmml'n! oorcaolT<l1 will "'y' 'Do I
w;ulllO ~'O IhlUl'gh Ihis'! No,l'li go wilh lhe
eornpan)' lMI is pc,,-'Ciycd "s American:"
The smears will linger. he fears,
"Facts don 'I ,miler," hl' saill, "Pl.,-,:eption
matlers

Ques1ions for Discussion

I. Why were some people cun\:crncd abool I-t'novo winninj; a Sl"lc Departmenl compelilive
bid?
2, W..r.. Il\{'ir pe ....eplions aod auribuliolls accumte or inac'curat.. ?
3, How might lhe CNN News<:"sl by Luu Dobbs Ic"d 10 inaccurate perceplions in viewers?
4, Do you believe discrimination or Sll"rcolypiog is ao iSSlll" in Ihis case? Why or why no1'l
 PAR T 1
CHAPTER Individuals in Organizations

LEARNING AND CREATIVITY

OVI:;RVIE\V

LEARNING TIIROUGn CO,"SHQUt:NCES

LEARNING 0,... YOUK OWN

Lt:ARNIN(; Ih' DOli'll;

CONTINUOUS tEAKNING THIWUGH CHEATIVln'

'1'11I:: LEARNI1IiG OIU;ANIZ,\TION

SUMMAR\'

EXt:RCISHS IN UNDUISTANI'ING AND l\IANAGTr"C ORGANIZATIONAL IlMbWIOR

Learning Objectives
After studying this chapter, you should be able to:
Describe what learning is and why it is so important for all kinds of jobs
and organizations.
Understand how to effectively use reinforcement, extinction, and punish-
ment to promote the learning of desired behaviors and curtail ineffective
behaviors.
Describe the conditions necessary to determine jf vicarious learning has
taken place.
Appreciate the importance of self-control and self-efficacy for learning on
your own.
Describe how learning takes place continuously through creativity, the
nature of the creative process, and the determinants of creativity.
Understand what it means to be a learning organization.
 Opening Case
CONTINUOUS LEARNING AND THE GLOBAL
CREATIVITY ADVANTAGE
Why is continuous learning a necessity in today's business environment?

n today's global economy, more and more kinds of jobs are being
outsourced to countries with lower labor costs. Outsourcing has moved
beyond the manufacture of products to skilled, technical, knowledge-based
work with countries like China, India, Russia, Czech Republic. and Hungary
increasing their presence as a source of skilled, relatively low-cost labor. Thus,
jobs in engineering, accounting, software design, and customer
service are also being outsourced. In order to remain competitive,
a growing number of companies and their managers are realizing
that improving efficiency, cutting costs, and keeping abreast of the
latest technological developments are not enough. Rather, what is
essential is continuous learning through creativity that enables
organizations to create new concepts, products, and services and
reinvent old ones.!
A key ingredient in this continuous learning is learning
from consumers and customers-watching them as they go
about their daily routines, imagining how they experience
goods and services, and learning what appeals to them even
though they themselves might not be able to articulate it. 2 This
kind of continuous learning entails experimentation-trying
out new things and seeing how people react to them. And
when they react welt, an organization has the opportunity to
create a whole new market for itself. In creating new markets,
workers also continuously learn from each other, whether it be
an engineer working along side a factory worker to solve a
technical problem in the manufacture of a new product, or a
product designer and a marketing expert sharing insights. 3
Rudy Krolopp.lcad de~igner of lhe first
n'lI phone poses with MOlorola'S first There are countless examples of companies that have
cellular phone the DynaTAC8000X and successfully reinvented old products, created new concepts, or
the ir new R'lZr ,-.:11 phone" pril 5. 2005. ;n changed the nature of the consumer experience. Just as Cirque
Schaumburg. 111 Dubbed "the brick:' lhe du Solei! has transformed the circus experience through its
DynaT"C weighed in al 2 pounds. sold for breathtaking performances, original music, and outlandish
S3.995. and would giw you aboUI a half- costumes, so too has Starbuck's reinvented the coffee shop
hour of talk 1nne before r~'<:lmrging, and Apple the electronics store. 4
Interestingly enough, large corporations like Motorola,
General Electric, and Procter & Gamble are also recognizing the importance
of continuous learning through creativity and seeking to promote it in
numerous ways. 5 In order to facilitate continuous learning and creativity,
some organizations are creating separate workspaces called innovation
labs to bring people from different backgrounds together to learn from
each other and create. Motorola's smash hit Razr cell phone was developed
in Motorola's innovation lab, Moto City, in an office building in Chicago
rather than at the company's R&D center in Libertyville, Illinois. Designers,
marketers, engineers, and managers were brought to Moto City to develop
the Razr, bypassing traditional hurdles that new ideas typically have to go
through at Motorola, such as having regional managers sign-off on new
products. 6
 CHAPTER S • LEARNING AND CREATIVITY 147

At Fisher-Price, the preschool toy unit of Mattell, new products are

developed in an innovation lab called the Cave, a separate space at
company headquarters in East Aurora, New York. In developing new
products, employees continuously learn from going out and observing
how families and parents interact with their children and then coming
back and learning from each other to develop new products. This is how
the laugh and learn, learning Home line of toys was developed-by
watching families, employees learned that parents spend a lot of time
teaching very young children about ordinary household objects like
doorbells, lights, and drawers. Engineers, marketers, and product
designers then learned from each other in the Cave to develop a model
home made of plastic that infants can crawl through and experiment in
while seeing the alphabet, making noises, and playing with numbers.7
Employees at Proctor & Gamble learn from consumers by watching
how they go about cleaning their houses, and then they come back and
brainstorm ideas for new products, build prototypes, and then go test
them with consumers to learn how they react to them. This was how
the Mr. Clean MagicReach product was created-pairing an old brand
(Mr. Clean) with a new concept (cleaning hard to reach spots with a
detachable pole).8
Top managers at large corporations are increasing recognizing that
continuous learning through creativity is key to remaining competitive in
today's global economy. As Jeffrey Immelt, CEO of General Electric, recently
said, Ulmaginative leaders are the ones who have the courage to fund new
ideas, lead teams to discover better ideas, and lead people to take more
educated risks. "9 Embracing continuous learning through creativity, and
learning from others and experimentation, are enabling companies in a
variety of industries to meet the challenges of the global economy in
new ways.l0

Overview
Learning is an ongoing pnx;css in evcryonc's life. bolh on and olT Ihc job. In org;mizations.
employees need to Icarn how to perform the tasks and duties that makc up their jobs. how
to effectively interact with others. lInd how things work in the wider organization_
Allhough learning is p.trticularly important to neWl:omers (disl:ussed in more dClail in
Chapter 10). it is also important for expcrienl:cd members at all levels in an organiz--,ltion
hccause thcy are frequently callcd on to do things they haven·t done before. Moreovcr.
rapid rates of change in organizational environments require that employees continu,llly
leilm on the job. Clwnges til knowledge, technology, markets, competition. and customer
preferences arc among the forces in the cnvironment that necessitate ongoing learning.
In the opening casco we described how continuous learning through crcativity i.~ a kcy to
remaining competitive in today's global economy.
In Ihis chapter. we discuss the many ways in which learning takes plill:e in organiza-
tions. Wc desuibc how to use reinforcemcnt effcdively to promote learning and how
organizational members can "unlearn" undesired behaviors. Additionally. we explain how
organiziltional members can learn from watching others. can learn on their own, and can
learn "by doing:· Finally. we discuss how organizalions can promole contmuous learning
through creativity. By the cnd of this chapter. you will havc a good apprcriation of why
mu Itiple kinds of learn ing are esscntial for an organi zation to hc clTcctivc .
148 PART 1 • INDIVIDUALS IN ORGANIZATIONS
LEARNING
A ",Imi"ely pcnmmenl change in
~l1O'I'o k<.lge or bch.Ylof lhal ""ull-
fmlll proclice or e'pcncnce
OPERANT CONDITIONING
Learning thai lake' placl' ..... hen
lhe kamcr ,..,,'''gmle, tile
wnne<:l;on hctwcen a hcha';(>f
and iI, con"''luences.
EXHIBIT 5.1
Operant Conditioning
An'ccedcn~
Anything 'hat ,,,II,
omploy«.
about de'lred and unde.irod
bonaVlors and th"" con"''luenco.
The Nature of Learning
Learning is a relatively permanent ch;mge in knowledge or behavior Ihal results from
praClice or experienee. l I There are several key points in this definilion Firsl. Wilh learning
comes change, For example. when you learn a second language. your knowledge ,lIJout
how to l:omlllunicale evohes. and your behavior l:hanges when communkating with
native spe;lkers of the language. Second. Ihe change in knowledge or behavior has to be
r",!a/;"e!f f!('rlll(ll/('111 or long lasting, If you a\1empt to communicale Wilh someone in
another language by looking up words in a dictionary that you qllickly forgel once the
interal:t ion is l:Ornplele. learni ng did not take plal:e because Ihere was no permanent l:hange
in your knowledge of the second language. The third key aspen of the definition is Ihat
learning takes place as a result of practice or through e.I1Jeriellct'. Learning a second lan-
guage requires much practice in pronUllei,ltion. word usage. and grammar. Similarly.
through pral:lice or experience. sel:relaries learn how 10 IISC lIew software packages. finan-
cial analysts Jearn the implications of new lax laws. cngineers learn how to design llJore
fuel-efficienl aUlomobiles. and Oiglll allelldanlS learn how 10 serve meals on airplanes.
In this chapter. we discuss the multiples ways in which organizational member:; can and
do learn.
Learning Through Consequences
One of the most fundamental ways in which people learn throughout their lives is through
the consequences they receive for their behaviors and aClions. Psychologist B. F. Skinner
was fascinated by the power of consequences 10 inOuence behavior. and his 0llcrlll11 con·
ditiuning "ppro;Kh desnibes how learning takes place lhrough l:onsequenl:es. 12 Operant
conditioning is learning Ihal takes pl~ce whcn the learner recognizes the connection
betwccn a behavior and its consequences (scc Exhibil 5.1l. 13 An individual Icarns 10
engage in specific behaviors (such as being responsive to customers' needs) in order to
receive certainl:onsequences (such as a bonus). This type of learning IS called opemllt con-
ditioning because individuals learn to operate in their environment in a certain way to
achieve eenain consequences.
You have probably learned that if you study hard you will receive good grades. and
if you keep up with yuur reading throughout the semester. yuu will nOI be overburdened
Conoe'luenco. of Behayior
Positi~ "';nfon:cmcn'
Admini",.nng po.",~ cO"''''lu.nce,
'0 employe.. who perform ,he bohaVlor
Desirod oo-ganizarioflal bcha";on
Nega.ivc ",,,,fore.......,
RemOVing nega"~ co""'qucncn
whcn employe.. perform thc behaVIor
Extinction
Removing wha'''''''' i. currcn<l~
n:info«ing 'hc behavioo-
Punimmen'
Admlnl«enng negali~ con"''luence;
to employ«' who perform ,hc behavior

REINFORCEMENT
111<: rrucc" b) "hi~h the
prollabi lity th"t " de,in."<l
beha,-ior will ,,,,,,ur i, i",:rea",d
b) appl}'ing ~On'("IllC""e, 111m
depend on the l>clla' 'or.
CHAPTER 5 • LEARNtNG AND CREATIVITY 149
during finals week. Thus, you havl' learned how to OPl'ro11' in your environnll'nt to
achieve your desired goals. In organizations, operant conditioning focuses on associat-
mg work beh:wiors (sul:h as job performance. absenteeism. and lateness) with the con-
seq lIenl:es that will ensue in the employee's env ironlne nt. These indude de.!;red conse-
quenel's. such as pay and verbal praise. and 'lIIdnired consequl'nces. such as
reprimands.
In addition to making the connection between a behaVIOr ,HId its consequences.
antecedcll1s play an important role in operant conditioning. Ante<.,edell1s are instructions.
ruks. goals. advice from olher members of an organizmion, and anything el,e that helps
employees realize what behaviors they should and should not perform and what the con-
sequences are for dIfferent behaviors. Antecedcnts play ,Ul educational role by lettmg
employees know the organ izmional consclJuences (sul:h as a pay raise or a promot ion) for
different behaviors (performing m a high level or imprl'ssing the division presidl'lll during
a presentation) and. thus. what behaviors they should perform.l~ For ex;,mple. a rule
(thc antecedent) that three incidences uf tardiness resull in the loss of one vacation day
(the cOllselJuence) leis employees know what will happen if they arc l:ont inually lall' (the
behavior).
Openlnt conditioning focuses on how organizations call use consequences to
achievc two oull:omes. One IS increasing the probabihty that cmployees perfurm
desired behaviors such as satisfying customers and coming to work on time. The othcr
is decreasing the probability that employees perform undesired behaviors such as
excessive Web surfing ,lnd nWking lengthy personal telephone calls <It work. In the next
section. we focus on the use of operant conditioning 10 promote desired behaviors in
organizalions: Ihen we describe how operalll conditioning can be used to discourage
undcsired behaviors.
Encouraging Desired Behaviors Through Positive
and Negative Reinforcement
In operant conditioning. reinforcement is the process by which the probability that a
desired behavior will occur is increased by applying l:onsequences lhat depend on the
behavior in question. One of a manager's major responsibilities is to ensure that subordi-
nates learn and continuc to perform desired behaviors consistently and dependably, In
operant conditioning lenns. managers need to increase the chances that this will occur.
For example. they may want 10 encourage lheir subordinates to sell more products:
assemble computer components fa,ter: allend work more regularly: make more conSiSlell1
use of safety cquipment such as helmets. earplugs. and goggles: or provide highcr·quality
customer service.
Identifying Desired Behaviors. The first step in the usc of reinforcement is to idell1ify
desired behaviors that the organization wants to encourage or reinforce. such as using
safety equipmenl or giving customers good service (see Exhibit 5.1). Surprisingly.
conectly identifying lhesc behaviors is not as easy as it might seem.
To an outside observer. for example, paying a commission on sales seems like a logi-
cal way to encourage salespeople to leiml to satisfy customers. III this example. making
sales is Ihe behavior that is the foeus of Ihe reinforcement effurt. Howe\'er. this appro;lch
may rcsuh in shorl-run sales but not necessarily satisfied. loyal customers. It mighllcad to
salespeople adopting a hard-sell approach. pushing customers to huy items that do nOl
really meet their needs. Thus. the behaviors th~lt result in satisfied long-term custOrlleTS-
behal'iors SUdl as building long-tenn rel,ltionships and making sure cuSlomers buy what is
right for lhem-have n01 been idell1ified conectly. What has been identified is the amOUIl!
of actual sales.
Similarly. a professor who wants to encourage students to pat1icipate in class might
reason that students have 10 reguh,rly attend class in order tu panicipale. The professor
might. therefore. decide 10 reinforce attendan<.'C by making it worth 5 percent of a
student's grade. Most studcllls do come to class. but thcy do not aClivcly paTlicipate
150 PART 1 • INDIVIDUALS IN ORGANIZATIONS
Companies frequ<ontly usc uwarJ
walls anJ plaques as positiw
rcinfol'l:'::rs to mot;vll!':: their
employees. BUI reinforcer'; JilTer
from pcrson to pcrson. A
money-m(>IivateJ employ~..,.
for example. may be less than
plcaseJ if prcscntro with a
plaquc "CrsUS;I bonus chcdc
POSITIVE
REINFORCEMENT
Reinforcemenlthat increase, the
probability of it de'ired behavior
III .wmmi-.tenng I""ili'"
("(In'>C<J"""ees 10 emplo) "'" "lin
perform lroe b<·lla,inr.
because the behavior tlte professor Itas reinforced is attendance. not actual panieipa-
tion. The professor Iws not correclly identificd the desired behavior,
When desired behaviurs arc identified curredly. the second step in lite reinfurcement
process is to dcriOc how to reinforce toc behavior. In operant wnditioning. there are two types
of reinforcement: positive and negative. 15
Positive Reinforcement. J'osili,'c rcinrun:cnlfnt increascs lhe probability that a behavior
will occur by administering positive consequences 10 employees who petform the behavior,
TheS(' positivc ronscquct"ICes are known as pUlim'f r/'inj(m'frs. To u<>c positivc reinforcemcnt
to facilitate the le,lming of desired behaviors, managers nt.'Cd 10 determine what consequences
a gi\'en employee cunsiOcrs (Xlsitive. Potential positive reinfun:ers include rewards such as
higher pay. bonuscs, promotions. job titlcs. imcrcsting work. verbal praisc. timc off from
work, and awards. Managcrs can detcmline whcther these rewards are positively reinforcing
for any given employee by seeing if 1Iwt employee petfonns desired behaviors in order to
obtain them.
It is imlxlrtant to kccp in mind that individuals diffcr in what Ihcy consider to be a pos-
itive rcinforcer. An employee who is independently wealthy. for example. may not view
!inanci,ll rewards as a positive reinforcer but may consider inleresting work very reinforc-
ing. In contrast. an emploYl"e with many fin"ncial needs and few finam;ial resourccs may
have exactly opposite prcfcrcnces. Similarly. gClling 5 perccl1\ credit for attending class
regularly might be a powerful positil'e reinforcer for a Studenl who is !toping to eam an
A but not a pusitil'e reinforcer for a studcnl who is content wilh (I B or C in the course.
Thus. managcrs need to take imo account employecs individual prcferenees for different
conscqucnces.
With a liltle creative thinking. organizations "'Ill use reinforcement to promote the
learning and performance of a wide variety of desirable behaviors. Many companies. for
example. arc trying lO encouragc their cmployees to give cqual opportunitics to an
increasingly divcrse workforce. yet arc having a hard timc gctting a spccific handle on
the best ways to accomplish this objective. Positive reinforcement for diversity effons
m:1Y be one slrategy that organizations can use. At Colg;lle-Palmolive. for example. a
m:mager's pay is linked to diversity initiativcs through the firm's Executive Illcemive
Compensation Plan. According to thc plan, illcel1livc compensation (suc!t as a yearly
bonus) depends on the extent 10 which a manager achieves certain predetcrmined
objectives-one of which is supporting divenily. Colgatc's diversity effons in the
United States have focused primarily Oil giving clJual opportunities 10 women. African
Amcricans. and Hispanics by having managcrs rcnuit and hire thcsc ernployccs. and

NEGATJVE
REINFORCEMENT
Reinfon;enwnllhal ;rn;rea""
lhe prubabilily of a dc,ire<!
heha';or hy "'lllm ing a negalive
,x'm"qu~nCl" '" hen an olllplo}Cl"
perform' ltle l>oh",;or,
CHAPTER 5 • LEARNING AND CREATIVITY 1S1
once hired. giving Ihem meaningful joh assignments and opponunities for advancement
and prornotion. 16
Negative Reinforcement. As in Ihe GISe of posilh'e reinfon:emenl, subordinales
experiencing negmiv'e reinforcement learn the connection between a desil"L--d organi7-utional
behavior and a consequence: however. the consequence is not a positive one that ,Ill
employee wants to oblmn bUI a negalive one thm the empluyee wishes 10 remove ur avoid.
Negali\'e rt'infort'l'ml'nl increases the probabililY that a desired behavior will (K:cur by
removing. or rescinding. a negative consequence when an employee performs the behavior
desired. The negative consequence thai is removed is called a /If'Klllin-' reillforar. For
example. if a m:uwger compl;llns every tmlC an accountatll turns in a report laic. the
complaints are a IICgativc reinforccr if they result in the accuuntalll learning 10 turn in the
repuns on time. By turning in repons when Ihey arc due.1he aCCOUll1ant is able to "remo\"e"
the negative consequence of Ihe complaints. JUSI ,IS with positivc reinforcement. managers
IK-ed to lake inlo account Ihat individuals differ in whal Ihey consider 10 be a negalive
reinforcer.
When posilive and negativc reinforcClllelH is used to promOIC learning. it is imponalll
for the consequences to be equivalent in magnitude to the desired behavior. 17 For ex'lInple.
even if pay is a posilive reinlorcer for an employee. a small increa,e in pay (a $5 weekly
bonus) might not be significalll enough 10 cause the employee 10 perfoml a desired behav-
ior (say. make follow-up calls to all new customers). In the same way. 5 pereent of the
course gfllde might nOI be a big enough reinforcer to cause chronically ab,elll students 10
come to class. and a professor's complainls in c1as, might nOI be a big enuugh negative
reinforcer 10 get some studcllIs 10 panicipate in class disnlssions (and by doing so. stop Ihe
professor from complaining),
Using Reinfor<ement Appropriately. [n geneml. positive reinforcement is better for
employees. managers. and Ihe organizalion as a whole than negative reinforcement.
Ncgative reinforcement often has unimended side effects and make, for an unpleasant
wolt environment. For example. a supervisor who continually complains may be resented
and disliked. Even if positive reinfurcement and negalive reinforcement arc equally
successful in encouraging desired behaviors. the person or organizalion providing the
rdnforcemem is likely 10 be viewed much more positively when positive reinforccment is
consistenlly used.
When using reinforcement to promote Ihe learning of desired behaviors in organiza-
tions. managers need to exercise some caution: When certain behaviors receive extensive
reinforeemenl and others do not. employees may tend to focus on Ihe fomler and ignore
the laller. For example. if salespeople arc paid solely on a eommis,ion b;lsis. they may
flK:uS on making qllick sales. and in doing ,;0. may not perform the behaviors necessary for
building long-term customer satisfaClion (like making follow-up calls and service
reminders. for example). Similarly. managers have 10 be carcfulto identify Ihe righl behav-
ior, to reinlorce.
Reinforcement S(hedules. Managers using reinforcemenl to encourage the learning
and performance of desired behaviors must choose whether 10 usc eonlinuous or partial
reinforcemcllI. When reinforcement is COII/illl/OIH. a behavior is reinforced every time il
occurs. When reinforecment is PllflllIl. a behavior is reinforced intcrminently. Continuous
reinforcement Clln rc,ull in fasler learning Ihan e,lll parlial reinforcement. BUI if the
reinforcemenl for sume reason is curtailed. conlinuously reinForced behavior, will SlOp
occurring more lJuickly than will panially reinforc'ed behaviors.
Pmctieal considerations often dictate whcther rcinforccment should be con1inuous or
pm-tial. A man,lger who iSlrying to encourage employees 10 usc safety equipmenl. for exam-
ple. may find continuuus reinforcement infeasible: If she has to cOlltinually monitor her
subordinates' use of safety equipmell1. she will never be able to gel any work done herself,
Managers who decide 10 u,e panial reinforcement can choose from four "Chcdules of
partial reinforeemenl. 18 Wilh ajixed-imuml.l'chnlllle.lhe period of time between the
152 PART 1 • INDIVIDUALS IN ORGANIZATIONS
Slimubting le~rning in"ol"",
reinforcing good performance
bit-by-bit as employe,-'s Jc~m
lhe ~kill~ lhey need 10 do their
job,.
SHAPING
n.c rl'lIllorcerncll1 of """'e,,i,e
and do",r approx imal'O"' 10 •
,bin.'<l bcha, lor
occurrencc of each instance of rcinforcement is fixed or S<.'"l. An insurance agcnt whoS<.'"
surcrvisor lakes him OuilO lunch m a fancy restaurant on lhe last Friday of lhe month if he
has wrillen a large number of policies during thaI month is being reinforced on a fixed-
imerval S1:hedule. Once the surcrvisor has tah'n the agent out to lunch. a month will pass
before the supervisor takes him OUI again for performing well. If in any given month Ihc
agent wriles only a few policies, the supervisor does nOltreat himlO lunch,
With a l"llrillb/e-imen'i1/ sdleilllie. the amount of lime between reinforcements vm;es
around a constant average. The owner of a car "'ash l'Ompany who every so often watches
each employee work on a car and praiS<.'"s those who do a good job is following a variable-
inten'al schedule, The owner nlOY watch and reillforce a given employee ollee a week. Ollee
every IhH:e weeks. or once a month. but o\Cr a six-month period the average amounl of
timc bet"'ccn rcinforc('mcnts is lwo weeks.
With a Jixed·rmiQ J'('hn/(de, a cCl1ain number of desired behaviors must occur before
reinforcement is provided, Employees who (Ire p,tid $5 for every three circuit boards they
assemble arc being reinforced on a fixed-ratio s.:hedllie. Many piece-rate pay plans cUrTCntly
in use at mmpanies such as Lincoln Electric follow a fixed-rillio schedule. 19
With a I'(lrillble·rmi" .\'i'hl'dule, the number of desi red behav iors that must occur
Ixforc reinforccment \'aries around a constant ,Ivenlge, A manager who allows all
cmployec 10 leave early after she has stayed laIC for sevenil evenings is following a
variable-ralio schedule of reinforcemellL Sometimes the manager allows the employl."c 1O
leave early after working two Ime eveni ngs, at other ti mcs after four late l."veni ngs, but over
lime lhe avcmge is three evenings,
The choice of a schedule of partial reinforcement often depends on practical consider-
ations: the particular behavior being encouraged. the lype of reinforcer being used, or the
nature of tltl." employee's job. The specific type of schedule chosen is not as imponam as
lhe facl thaI reinforcement is based on the performanec of desired behaviors: Learning
lakes place only when the provision of a reinforcer depends on performance of a desired
behavior.
Shaping
SOllletimes ,I desired beh,wior is unlikely to occur on its own or at an)' glvcn point III lime
bee.lUsc an individual docs not have the skills and knowledge necessary to perform thc
behavior or becauS<.'" thc Ochavior can only evolve OUI of practice or expericncc. Consider,
for example. a lminec who is learni'lg 10 drive a bus in New York Cily, Al thc beginnillg of
her tmining condllch:d by the fimfs driving mSlnlClor. lhe trainee is unlikely 10 drive the
bus properly and. thus. cannot be reinfORced for this desired behavior. The ins!nl[tor can
uS<.'" reinforcemelll to s/ill1/1/(II(' learning, however, hy rcinforcing succcssively closer
approximations to lhe desired behavior (in lhis case. lhe proper handling of the bus in city
tmffic). Suppose the IraitH:e intttally jumps the curb when m,lkmg left turns bUI after her
sixth trip finally makes a tum that is slilllo() wide but docs not jump tlte curb. Even though
the behavior was not at its ideal level, because the turn was a bit widcr than it should have
been. litis improved behavior is posilively reinforced by verbal praise from the instrllCl0r to
increase the prolmbilily lhal il will occur again.
The rei nfoKemelll of sUlTessive and eloser approximat ions to a desired behav ior is
kllown as Sh;llling. 20 Shaping is particularly effeClive when cmployees need to Icanl
compliealed sequences of belwvior. When il is unlikely thaI cmployees will be able to
performlhe desired behaviors all at once. managers reinforce closer and closer approx-
imations to the desired behavior to 1."Ilcourage employees \() gradually acquire the skills
and expertise needed to perform at an adequate level.
Discouraging Undesired Behaviors Through
Extinction and Punishment
Just as managers nl'Cd 10 ensure lhal employees learn to perform desired behaviors depend-
ably. they .l1so need to ensure lhat employees learn no! to perform undesired behaviors,
Examples of undesired beltaviors in organizations include (among Itundrcds of others)

EXTINCTION
~ Ic,,,,ning of undc"red
beha' jor by ",nlO' ing the >()\Jr,,,,
of reinforcement,
PUNISHMENT
~ ad",in;,tral ion of a lICgatiw
eOl1"'qllCnee "hen unde'ired
beha";or OCcu",
CHAPTER 5 • LEARNING AND CREATIVITY 153
excessive ah'enteeism. excessiv.... Web surfing on company time. operating heavy equip-
ment such as bulldozer;; and cranes in a dangerous fashion. and sexual harassing other
employees. Two main oper,mt conditioning Itthniques n.-uuce the probabilily of undesired
behavior;;: ext in<.:tion and pu nishmem (see Exhibit 5.1).
Extinction. According to the principles of operant conditioning. all behaviors-good
and ball-arc controlled by remfor<:ing <.:onsequences. Thus. any behavior that occurs is
performed be<.:ause Ihe individual is re<.:eiving some form of rcinfor<.:emcnt for it. If
manag....r;; wish to lessen the prohability thm an und.. . sired behavior will occur. they ne....d to
first deteOlline what is currently reinforcing the behavior and then remove the source of
reinfor<.:emenl. Once the undesired behavior ceases to be reinforced. its !requen<.:y
diminishes until illio longer on;urs. This pro,:ess is <.:illiell cXlinclion.
Suppose ....v.... ry time a manager has a mccting wilh one of her subordinates. Sam, he
al ways tells jokes ,Ind fools around. At fir;;\. the m1111ager thinks Sam's joking is h;lfm less.
but soon she realIzes th:1I the meetings are takmg twice ilS long as they should. that certain
items on the agenlla are gelling shon shrift, and that Sam is having a hard time remember-
ing the importam points made during the me....ting. After an.... nlling a manag.... ment dcvelop-
ment seminar on operant conditioning. the manager renlizes that she is actually positil'ely
reinforcing Sam's behavior by laughing at his jokes. AI the next meeting. she treats Sam
cordially but rcfrilins from laughing at his jokes. Sam looks a little pcrplexed bul soon
SlOps joking and takes the meetings morc ilCriously.
This example iliustr:.lIes thm extinction can be;1 relmively painless way to reduce the
oc<.:urren<.:e of undesired behaviors. The supervisor hall consillered talking llircdly to Sam
or niticizing his behavior at their next meeting. Eliminating Sam's pmilive reinfor<.:emell!
for hor;;ing around probably did less to hun his feelings and disrupt their otherwiiIC g()(l(i
relat iOllshi p.
Punishment. Man1lgers do not have the time to wait for extinction to lessen or eliminate
some undcsired behaviors. Cenain behavior;; are so detrimcntal or dangcrous they need to
stop immediately.lu,t as a parent <.:annot rely on extinction to SlOp a chilli from touching a
hot stove. a manag....r cannot rely on eXlinetion to eliminate highly undesirable behavioN in
the workpl;lce such as scxual harassment or operating he1lvy equipment in a dangerous
fashion. Under such <.:Ircumstances. a nwnager can try to eliminate undesirell behavior by
using punishmellt-administering a negative nlllsequen<.:e when the unllesired behavior
occurs.
In operant conditioning. punishment and negatil'e reinforcement arc often confused.
Siudents. cmployees. and mamlgers alIke think thai these two techniques for managing
behavior are similar or have Ihe same result. However. they lliffer from ea<.:h Olher int\\1l
important ways. First, punishmcnt rl'(!lwn the probability of an U/!dl\\'irNI behavior: nega-
tive reinforcement i/!{'(/'(/JI'J the probability of a dl'Jircd beh,wior. Second. punishmelll
l11\'oll'es {ufmilli5lerillg a ncgative eonilCquence when an IImleIirei! behaVIOr occurs: nega-
tive reinforcement entails ({'IIWI'iIlS a negative consequence when a deJired behavior
occur;;. Exhibit 5.2 summarizes til..... effects of the dilTerent opcram conditioning lechniques
that managers e:llt use to encourage the performance of desired beh:lviors ,mll eliminate
undesirell behaviors.
Managers neell to take into aecountlhe fan that people dilTer in what they l'Onsidcr to be
punishment. If being scoldcd by a supcrvisor after coming 10 work late is a source of punish-
ment for one employee. then that employee will try as hard as JXlssible not to be late after
receiving a scolding. BUI an employee who hardly gives the scolding il iIC<.:ond thought will
<.:ome to work late again the next day. Some forms of punishment thm organ izat ions typically
usc are v.... rhal reprimands. reductions in pay.elimination of privileges (such as personal days
an employee call take olT at his or her discretion). and temJXIrary suspcnsion, Organiz<1iions
sometimes usc a system of progressive punishmenlto Iry 10 curtail undcsin::d behavior: the
more an employee engages in the behavior. Ihe stricter the punishment becomes.
Punishm .... nt can have some unexpected side effects and should be used only when
necessary. It not only has the potential to threaten the employee's self-respect but can also
154 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 5.2
Operant Conditioning Techniques

How Consequence
Technique Is Administered
Positive Positive consequence is
reinforcement given when desired behavior
is performed
Negative Negative consequence is
reinforcement removed when desired
behavior is performed
EKtinction Positive consequence is
removed when undesired
behavior is performed
Punishment Negative consequence is
given when undesired
behavior is performed
Effect on Behavior
Increases probability of
desired behavior
Increases probability of
desired behavior
Decreases probability of
undesired behavior
Decreases probability of
undesired behavior
EKample
Employee is praised for
cleaning up work station
Supervisor complains about
messy work station and stops
only when worker cleans it
Manager refrains from
laughing at a subordinate's
disruptive Jokes when the
two have important matters
to discuss
Manager criticizes
subordinate for telling
disruptive Jokes when the
two have important matters
to discuss

ORGANIZATIONAL
BEHAVIOR MODIFICATION
(08 MOD)
'The 'Y'lemahc appli"ahoo of the
principl<:' or operan! oooolll<'rHng
for tca.:hing and ",anaging
imponall1 rnganizalional
bch",iof",.
create so much re>cntmem amI negative feeling~ toward the puni~her and organization as a
whole that the employee might wam to retaliate. Thus. when puni,hnll."nt i, used. managers
need to be very earefultlmL while eliminating the undesired behavior. they do not create
excessil'e hostility or negative feelings.
The following guidelines can help to ensure thm punishment has its intellded effect
and docs not generate ncgmive sidc eITect.,:
• Try to downplay the emotional elelllem in\'olved in punishment. Remember that you
are punishing the peNon's undesirable behavior. 1I0t the person.
• Make sure the cho>cn negative consequence is indeed a punishment for the individ-
ual. and punish the undesired behavior immediately.2! Make sure employees know
wby they arc being punished.
• Try to avoid punishing an employee in from of othcrs. Although public punishment
might sccm like a good idea becau>c it serves as a warning to otllers. it is likely to
lIumiliate tile ind iv idual being punished. reduce his or lIer esteem. and make eowor},;-
ers uncol11fonable. Remember: Thl." key goal is to dim inate a person's undesi rablc
behavior, not his or her self-respect.
• When possible. provide employees with a desired bcllavior in place of the undesired
behavior.
When <t manager docs not follow those guidelines. not only is the individual who is
being punished likely to suITer, but so too arc his or her coworkers. the manager. and the
whole organization.
Organizational Behavior Modification
The systematic application of tile principles of operant conditioning for learning desired
behaviors is called org:mizlllional beha"ior modification (08 MOD). OB MOD has
been successfully used to improve productivity. attendance. punnuality. safe work prac-
tices. customcr service. and other important behaviors in :I wide variety of kinds of organi-
zations such as banks. depanment stores. factories. 1I0spitals. and construction sites. n
 CHAPTER 5 • LEARNING AND CREATIVITY 155

EXHIBIT 5.3
Must be
Steps in Organizational Identify .Observabl.
Behavior Modification ----------. Behavior for change - - - - - - . • M..,urabl.
.Ta<l:relattd
S"",,-e: Ad~p1ed fn>m F. Lll1h~", and ·C"'Kal '0 'he to,k
A. D. Slajko"ie, ·'Reinfon;e (Of
l'crf",ma""e: T1>e Need til G\'
Beyo"d l'3y and £,,,n R,,"·ard,."·
A",ule",,. '1 MIII",ge",ml E'en/lire
j UR
Measure ~ • D;r«t ob..",.. ion
13(2) ( 1999): 49__57.
F.. quency ofbeh.l'ior I • An:hl"al da'a
.Hi<forical da'a

j
Analyze
""'ttceden' and
con"quenct'

j Ant<cooden,..
Po"'i"" r";nf"",.",,,n,
f-------· In'.......,ne •
,, E>tinction
Puni,hm.n.
,,,
,, j..a.e
'+ ~._-
E~a1
No __
For pe,-form.nct _Vu_ M.in'a,n
intervention
Impr"""men'

OB MOD can be uscd to cncouragc the learning of dcsired organizational behaviors as

wcll as to discouragc undcsired beh'IViors.
Organizations that successfully usc DB MOD follow a five-step process: idcntify.
measure. analyze. intervene. and evaluate (see Exhibit 5.3).n

Identify the behavior to be learned. DB MOD should be used to encouragc

behaviurs that can be observed by uthers (and cnn. thcrefore. be reinfurced). nre important
for task performance. and can be measured. Examples include atlend<lIlCl'. punctuality. thc
use of safcty cquipmcnt, sales goals, customcr servicc levcls. productivity. and quality
C011lrol. H The work behal'iors also should be relel'ant to the job and to organizational
perfunnnnce. Fur example. at Ihe Trechuuse Day Care Center 111 Chicagu. the directur uf
thc center ha, identified punctu<llity as a nitical behavior in need of improvcmcnt. OB
MOD has becn succcs,fully used 10 promote desired behaviors ranging from safe driving
by city bus dril'ers and timely and error-free registration and admill'll1ee procedures
perfuffiled by huspital ndrninislrators to safe mining practiccs fullowed in open pit mincs.
It has also been uscd 1O cncourage bank tellers to establ ish eye COlllact with thci r cuslomers
and greet them by namc. to improve the productivity ofvincyanl prtlncrs. and to improve
the output of f:lctory workers. 25

Measure the frequency of the behavior. Before any adions arc takcn. it is impOn<l1ll
to get a baseline mcasurc of how often the identified behavior occurs. For cxample. the
director of Treehousc measured the pUllCtunlity of the center's staff over a two-week period
and discovered that each st,lff mcmber was late around lhrt:e timcs per week.

Anaolyze the antecedents and consequences of the behavior. Once the

frequency of the behavior has been determined. it is important to identify the current
156 PART 1 • INDIVIDUALS IN ORGANIZATIONS

antecedcnts and consequences of the behavior. At Treehouse. the director realized that
while it was assumed that staff would come to work on time for thcir shins. there were no
actual antecedenls in plal:e to cue punctualily. In lerms uf cunsequcnces. the directur
would occasionally rcprimand workers who were eXl:essivcly late for thcir shifts. and
other staff members would occasionally complain whcn they had to rcmain on thc job
pastlheir own quilling time because staff members onthc ncxt shift were latc. Howevcr.
the direcl0r realize111here were no posill\'e reinforcers in plilce to iletually promotc
punctuality.

Intervene to change the frequency of the behavior. Interventions can include

introducing antecel1ems anti applying opemnt conditioning lechniques including positive
reinforcement. negative reinfun:emcnt. punishment. and extillclion. Remember. whenever
feasible. posilive reinforl:emcnt is preferred to ncgative reinforcement and extinction is
prcfcrred to punishment. At TrcehOllse's next staff meeting. the director stressed how
important punctu<llity W<lS 10 the qu;dity of child C<lre. how important state-mandated
children·lu·caregivcr ratiuS werc. and the import.mee uf being cunsil1eratc lu othcr slaff
members (who have to fill in for those who an.' late). The diredor also had il plaque made
that summarized the reasons why "Punctuality Bcncfits Us All." which was hung ncxt to
the center's bullelin board. In addilion to cuing punclllality with these .lnlecedents. the
director also positivcly reinforced puncluality in two ways. First. each week. staff
members arriving on time were given verbal praise from the direl'tor. Sccond. staff with
perfect punctuality records cach month were allowed to take a half·day off thc following
monlh.

Evaluate whether the intervention was su((essful in changing behavior. At

this last step. the frequency of the behavior is again measured to determine if the
intervcntion was successful. [f thc behavior has been successfully modified. thcn all tlmt
needs to be done at ttlis step is to maintain the intervention (for example. continue to use
the antecedelJls and positive reinforcers from the prior slep to encourage the behavior). [f
the behavior has not been successfully modified. thell managers need to reconsider their
intervention 1l1cttlods and modify them accordingly and/or rc<:onsider the betlavior they
originally ident ified. At Treehouse. the dIrector measured the punct ual ity of the staff uver
a two·wl'Ck period following the imcfvemioll and was delightcd to discover that no staff
tllCmbers were late for their shifts during the emire two weeks.
Research suggests that when OB ""'10D is appropriately used. it can be highly effec-
tive when It cumes 10 prumoling dcsireable org.lltizational behavior. 26 For example. a
recell! review of research on OB MOD showed that it improved employee performance by
17 percell! on averagc. In a recent field experiment condu('\ed by Alexander Swjkovic and
Fred Luthans in a division of a large organization tll1lt processes credit card bills. it was
found Ihal OB MOD rcsulled in a 37 percent increase in performance when the rcinfurced
behavior included fillallcial incentives.n Ill!erestillgly. when performance was positively
reinforced by simple supervisory feedhack. the performance of employecs increased
by 20 percent. When social recognition and praise were used. performance increased by
24 percen1. 2S

EthicallssuE!S in 08 MOD
'Illere is some control'ersy surrounding the use of OB MOD in organizations. Proponents
rightfully claim that OB MOD is a useful way to managc import.lrlt organizational behav-
iors. Re>earch indicating that OB MOD can be successfully used to increase productivity
and cut down on accidcms. wm;tc. and absentecism is ccrtainly consistent with this vicw,
OpponCntS of OB MOD. however. complain thm it is overly controlling. These critics
believe that managers who explicilly milnipulale conscquences to eOlJlml behavior strip
employees of their dign ity. freedom of choice. and individ ual ity. They also bel ieve that
treating cmployees in such a cut-and-dried fashion llIay. ovcr timc. rob them ofthc initia-
til'e they might othcrwise h:lI'e tmd to respond appropriately to ctlanging conditiolls.

SOCIAL COGNITIVE
THEORY
A le;tming lheor) lhal la~e,
;nlO ~~"oun1lhc foci thul
lhought-. f~c],nl". und lhe
"",ial en' ironmenl inl1uence
learning,
COGNITlVE PROCESSES
Thoughl pm<'e,,,,,
EXHIBIT 5.4
Social Cognitive Theory
Inf""""tion
Comes from ,he organization. it>
membe", and the worl ,,'ua"on,
from ob"''',"g o,he". from ,he
le.rn..... p..' .ttainm.nts .nd
physiological ... ,.., and so ""
CHAPTER 5 • LEARNING AND CREATIVITY 157
Moroover. employees who arc managed in such a fashion may rcfmin from performing
imponam organizational behaviors lhat are not specifically pan of their job duties. such as
helping coworkers or coming lip wilh new :md good ideas. because these behaviurs uften
I:annot be assigned in advance and appropriately reinfol1:ed. These voluntary behaviors arc
essential for organizational survival and dTeeliveness but may Ilot be covered by an organi-
zation's formal system of rew:trds ~ause lhey are performed volunwrily. When employees
arc managed according 10 lhe principles uf oper.ml condilioning. Ihey may become so rein-
forcement oriented lhal they refr.lin from doing anylhing lhm is 1101 reinforced.
There i, no clear-cut answer to lhe elhic:tl dilemma posed by OB MOD. and there arc
countemrgu menlS 10 e:tch of the :lilt i-OB MOD POSiliolls. In response 10 the erilici Sm lhm
08 MOD strips employees of Iheir freedom uf chuice and illdividuality. for example. 08
MOD proponents might assen that whether an employee perfornls a behavior or not i, ulti-
mately his or her own choice and that operant conditioning lakes individuality into account
wheo the illdividual preferences of differelll reinforcers arc considered. Nonelhless. as a
manager. il is importanllo be aware of lhe issues mised by this debale and Ihink lhrough
lheir implicmions from one's own perspenive. Additionally. any use of OB MOD musl
conform to employmelll laws. For example. in California and many othcr states. labor laws
require lhat employers compenS<l1e employees for ovenime work. el'en if lhey arc paid on
a pitte-rate basis. 10 enl:oumge them 10 produce producls as quickly as possiblc.2~
learning From Others
Although operant conditioning .Iccurately describe, some of lhe major fal:tors lhat in/lu-
ence learning in organizations, certain <l~pects of Icaming arc not covered in this theory.
To gel a Illore complcte picture of how mcmbers of all organization learn, wc 1I0W turn to
social cogniti\'c lhl-"()ry (also referred 10 as social leaming lheory). Alben Rmdura. one of
lhe principal conlributors 10 social I:ognith'e theory. suggesls thai any aHempt 10 under-
stand how people learn must also lake into account a person's feclings and thoughts (cog-
nitions) and thci r observations of thc world around lhcm (thM is lheir soc ial cnvironment:
<
sec Exhibil 5.4). Social cognilive lheory al:kno.....ledges Ihe irnpon.mce of lhc persOIl in Ihe
learning process by taking cognitive processcs inlo al:count,·1()
Cognitive pmccsses arc the variou, thought processes that people engage in. When
people form :ttlributiolls (see Chapler 4), for e:<anlple. they arc engaging in ,I cognilive
process 10 determine why a person has pcrfonJled a specific behavior. From the perspective
Vicario le<tm;"g
Occu... wh ,h.l.arn....
00,,""', and Imlta'" a
model
s.lf-eontrol
I. e",dent when .he learner
u_~
Cognltlv<ly proces"".
lums "" hIS or hor <>Wn b)' 8ooI... ioo
"""ing. go.1 .nd engagIng
mrormatlon
In ""If,,,,,nforcemen' when
,h. go.1 IS ,..ch.d
5e1f·.fficaq'
'0
Uad. ,he learne, belt..,.
he 0' ,I,. <an perfofm
,uece"fully
158 PART t • INDIVIDUALS IN ORGANIZATIONS

of social cognitive theol)'. employees actively proce,s information fmm the social environ-
rnc11l and those around them when they Icam. JI
SllPPOSC yuu study hard yet are doing poorly in une of your classes. A friend of yuurs
doesn't seem to put in as much timc as you do yet is maintaining a B+ avcrage in the class. You
think you arc just as sman as your friend and notice how your friend studies for the class: He
or she takes detailed ootes in class, highlights ttle chapters. and then summarizes the key
points, and goc"S to sec the professor whenever he or she is eunfused. You Slart doing this your-
self. your grades impn)\"e. and you think you ('an salvage a B in the course after all. This exam-
ple dC"monstmtes how you havc learncd from observing a1Ml1her person. [n Icarning how to do
well in the class. your thoughts about your poor perfonmmce nnd nbout your friend's relatively
goOO perfonnance. your observations of how your friend studies for the class. yuur belief thai
you arc just as sman as yonr friend. and yonr decision to copy your friend's appro'leh to study-
illg werc the steps you took \{) leam how to perfoml well ill the class.
In social cognitive thCQry, learning from observing others perform a betlavior is called
VICARIOUS LEARNING "karinus learning. When viearluus learning occurs, a person (the learner) observes
Le~rning thai occu,." when OIle anOlht'r person (the model) perform a behavior. The learner obscn'es the effect of the
I"'",,-,n kan" a !lennior by mode I's behavior on the environmem (is it reinforced?), and when an appropriate situat ion
w .I,:nin~ .1I00ocr 1"'''''-10 pcrturm
the hch,;or arises. the learner imit.Hes the model's behnvior.
Se\er-II conditions must be met for vicarious learning to takc place: 32
• The learner must observe the model when he or she is perfonmng the behavior.
• The learner must accurately pcrl'eive the model's behavior.
• The learner must remember lhe behavior.
• nle learner must have the skills aud abilities necessary to perform the behavior.
• nle learner must sec that the model receil'es reinforcement for the behaviur in ques·
tion. [fthe model is not reinforced (or is punished) for the behavior, there is obvi-
ously uo incelllive for thc leamer 10 imitate the behavior.
A substamial amOUlil of the Icarning that takes place in organizations (In'urs vicari-
ously, Training new recruits, for cxample, involves considerable amounts of vicarious
lenrning. Fomlaltraining sessions often rely un demonstrations of nppropriate behaviors
by experienced employees and role playing during which employees observe others
performing appropriate and inappropriate behaviors. Retail organizations sOll\etimes uS{'"
films showing experienced salespeople giving customers goOO serviee in an eITon to 1rain
new salespwple to do the snrne. For these films to be effe<:tive. it is essential for the model
(the experienced salesperson) 10 be reinforced for the high-quality scrvi;;e behaviors,
Often the rt'inforcemelll is the customer's decision to purchase sOlllcthing. Similarly.

During medical residency

progmm' such as this one io
emergency medicine at the New
York ~kthodi,t Hospital io
Brooklyn. NY,llSpiring
physicians learn in a I\umb<:rof
ways. One important way in
whil'h they learn is vieariou,ly
throogh observing skilled
physicians trl'ating p"til'l\ls.
 CHAPTER 5 • LEARNING AND CREATIVITY 159

rcstaurants oftcn havc inexperienced waiters and waitre,ses follow and ohservc the
behavio~ of an cxpericnced cowori;er for a few days prior to serving their first custome~,
By watching oth~rs. new recruils Icarn appropriatc on-the-job behavIors. such as those
desired by Ihe Rilz-Carlton. whil:h is profiled in Ihe al.:compying Global Vicw.

Global View
Vicarious Learning at the Ritz-Carlton

The Ritz-Carlton luxury hotel chain is a global organization with 28,000 employees and
59 hotels scatlered in more than 20 countries worldwide ranging from Bahrain, Turkey,
and the United Arab Emirates to Italy, Japan, and China Currently, five nevv hotels are
planned to open in China alone,33 In order to appeal to its global customers around the
world, the Ritz-Carlton recently partnered with NevvspaperDirect, giving its guests access
to over 150 daily newspapers from 40 countries, 34
Providing high-quality customer service is the hallmark of the Ritz-Carlton, and it is
embodied in the first sentence of its credo: "The Ritz-Carlton Hotel is a place where the
genuine care and comfort of our guests is our highest mission,"35In order to ensure that
each nevv employee learns how to provide "the finest personal service" to Ritz-Carlton
guests-whether in Osaka, Japan, or Philadelphia, Pennsylvania-the Ritz-Carlton relies
on vicarious learning,36
Take the case of a

I
new employee who will
be a room-service waiter
at the Ritz-Carlton in
Boston. 37 After a two-day
• orientation program, the
new employee is teamed
up with an experienced
room-service waiter and
literally fo1lows the experi-
enced waiter around for
the next fevv days, observ-
ing what the waiter says
and does and how cus-
The f( itl-Carlton
i, ",nowned for its outstandinG ."-·,,,'ice. New hi",s
tomers react. The new-
Icmn "vicariously" how to givc guests grc~l scl"\'icc by accol11(XlIlying
<'xper;cnccd ,tafT members and emulatinG their behavior. comer picks up certain
tips along the way, such
as the importance of trying to anticipate what customers might want even if they don't ask
for it. For example, a guest ordering one dinner and a bottle of wine might need two glasses.
If he or she orders dinner along with ice cream, the dinner needs to stay hot while the ice
cream needs to stay cold. After observing the experienced waiter model appropriate behav-
ior, the newcomer starts playing a more active ro1e by talking to customers or opening a bot-
tle of wine, but the model waiter is never far from sight until the new-comer has learned all
he or she needs to pass a test administered by the manager in charge of in-room dining ser-
vkes. 38 Clearly, vicarious learning has p<!id off handsomely for the Ritz-Carlton It has won
the prestigious Malcolm Baldrige National Quality Award, ranked first in Business Travel
News' Top U.S. Holel Chain survey, and has been ranked as the most prestigious brand by
The luxury Institute's luxury Brand Status Index Survey.39
160 PART t • INDIVIDUALS IN ORGANIZATIONS
SElf-CONTROL
Sclf·di,,·iplinc thul allo", a
perwn tn learn tn perfnrm
a beha,'inr ~"cn though there j,
no e't~mal pre"ure 10 do '0.
SElF·REINFORCERS
Consequence, or re,,'ard, that indi·
\idual, ~an g"'c to lhcm...:h,<-".
When cmploj'l'Cs Care about
thcir work and doing a good job.
thcy oncn cngal!c in sclf·corltrol.
When employec, el1g"ge in self-
cOlllrol. m"n"gcrs should avoid
closely ,upcrvising their won;.
Vicarious Icarning also plays an impoflalll rolc in the day-to-day functioning of
most organizations. Organizational members continually observe others and often try 10
remember beh,lI'iors that result in reinfurcement. These behaviors l:an f<lnge from rela-
tivcly rumine matters. ,Ul:h as when to arrivc at work. huw long to t<lke for lUlK"h. the
best way to prc,cm a report to upper-levd man<lgcmclll. or how to conduct oneself in a
business meeting. Moreover. recent research suggests tll,lt employees can even learn
how to be cre:lIlVe by ubserving the behavior of creative cuworkers. 40
Vicarious learning is also an irnpmtal1l mcans of aCl]uiring behaviors that arc l:ompli-
cmcd and havc a high cost of failure. Much of tile Icarning that takes place thmugh operant
conditioning is the resuh of trial and error: The learner engages in a variety of behaviors and
learns to repeat those that <Ire reinforced and abalKlon those that are not. For some kinds of
work. howcvcr. <In organizmion simply cannot alTord tlk: costs of trial-and-cmlr leam ing. No
onc would wam (() be at thc mcrey of a medical imcrn who is learning open-hean surgc!), by
means of trial and error: the costs (:I few dead p;.uients) of learning in this m,ltlr.er are just too
high, In such situatIOns. vicarious learning is essential. A learner who has <III the tH."l:essary
knowledge. skills. and abilities can learn l]uite complicated SCiJuences of behavior by e<lre-
fully observing thc behaviors [Uld outcomcs of othcrs wilh more cxperiencc.
In organizations there are many )Xltential models available for members to imitMe.
Howe,'er. only a few of these mudels will be used to acquire new behaviors vic:lriously. To
take advantage of vicarious learning in org:lnizations. managers should ensure that good
perfonlll~r models are available for ncwcomers and existing organivuional members to learn
from. Models that ~lre most likely to be imitmed by others tend to be provided by (I) mem-
bers of the organization who are highly l:ompetent In the modeled behavior <lnd may even
have a reputation for being an expert. (2) individuals with high status in the organization, (3)
employee; who receive reinforcc!'> (hc kamcr desires. and (4) individuals who engage in
desired behaviors in a friendly manner. 4t
learning On Your Own
SOCi~ll cognitive theory acknowledges Ihat people can learn on their own by using self·
I.:ontrol-that is. by learning to perform a behavior even though there is no external pres-
sure to do so. Seveml nmditions indicate that a person is using sclf_control: 42
I. An individual must cngage in a low-probability behavior. A low-probability behav-
ior is a behavior that a person would ordinarily not wam (0 perform. This condition
distinguishes individuals exhibiting self-control from those engaging in activities
they enjoy. For example. Sylvia Crano. an admil1lstr.ltive secretary. has had a new
software pal:kage for graphics silting on her desk for thc past six months. Shc hates
learning how IU use ncw software and, fortunately. her boss hasn't PU( any pres,ure
on her to learn the new software. Taking the initiative to learn how to use the new
software is a low-prob<lbility res)Xlnse forCrano.lf she bites the bullet <lnd comes in
one Saturday to learn it. Crano will be exhibiting self-control.
2. Self-reinforccrs must be available to (he learncr. Self-reinforcers are any conse-
quences or rewards thm individuals give 10 themselves. I'otential self-reinforcers
include bllying onesc If a present. eat ing a t:tvorite food. going out to a movie. getting
some extra sleep. and going out with friends. Sometimes sclf-rcinforcemelll comcs
simply from a feeling of aecomplishmclll or achicvemem. In the past, when Sylvia
Crano has accomplished ,I particul:Jrly difficult task. she has rewnrded or reinforced
herself by buying <I new CD or having lunch with a friend.
3. The learner must set goals that dctermine whcn sclf-reinforccmclll takes place.
When self-comroltakes place. people do llOt indiscriminately reward thcmsclves but
set goals tllat determine when they will self-reinforce. How do people determine
these goals or standards'! Essentially. they rely on their own past performance. the
performance of others on similar kinds of tasks. or some socially acquired perfor-
mance standard. Crano \ goal was to complete thc software's lUtorial and use (hc
new program to reproduce some graphs she had done previously.

SELF-EFFICACY
A pel'>On', bdOcf aooUl hi, or her
ability to perform a panicul"r
beha, ior ,uccc"fully_
CHAPTER 5 • LEARNING AND CREATIVITY 161
4. The leJnlC"r must Jdminister the reinforcer when the goal is Jehieved. CrJno Jllowed
herself to have lunch out with her friend only when she was able to use the new soft-
W<lrc to reproduce her existing graphs.
All people engage in self-control and self-remforccmenttO learn behaviors Oil alld off
Ihe job. These activities C<lll range fmm the relatively mumlane (such as cUlling shon a
lunc'h hour to catch up on e-m<lils) to the more involved (!c<lming how to appmprialcly give
subordinates negative feedback)_ Managers need to be aWilrc that self-control takes place
at work. especially whell individuals are illterested in and care aboultheir work. When
opporlunities for self-conlrol arc present and employees engage in il. managers do not
need to tilke JS ilclive il role in contmlling behavior and c'onscquences bec'ausc employees
arc taking reslXlnsibility for learning and performing desired behaviors themselves. In such
cases. the managers' effons .11 control may be not only redundant but counterprOOllctive
beC<lUSC they may irrilate <lnd anger those who arc sci f-controlled. I nSlead of trying to con-
trol individuals like this. managers would be wise to focus their efforts on thosc who need
more guidance.
Employees who manage their own beh;wior through self-control are often said to be
self-managing. Somelimes. however. employees may need a bit of coaching and guidance
to become truly self-managing. Manager-; can provide the tmining and SUpp0T! employees
need to develop self-management skills and put them 10 use_ Some orgallizations such as
NMiunal Semiconduclur explicilly recognize this need and have formal progr.llllS in place
10 leach self_managemenl. 43
Beliefs About One's Ability to Learn: The Role of Self-Efficacy
Social cognitive theory also emphasizes the importance of self-efficllcy-a person"s belid
about his or her ability to perform a parliculnr behavior successfully-in the lenrning
process. 44 One ",:cretary may believe thai she can learn how to use a new software package
on hcr own. ilnd another may havc strung doubls alxlllt his ability 10 learn new snflwJre
without laking il formal training eourse_ Self·eflka<::y has IXlwerful cffects on learning
because people try to learn only those behaviors tlWI they think they will be able to per-
form sllccessfully.4~ Self-ell"icacy nllects learning in three ways:46
I. Self-effi{'{/("y il/jl/lellet's Ille (ICfil"ilieI ((!ld goa!I Ilwl il/dil"idllals cho()se [or Iflt'III.\'t'lres:
Employees with <l low levcl of sclf·etrlcacy may nes-er try 10 Ieant how to perform
challenging tasks because lhey think they will fail at them. Such cmployecs tcnd to sct
relatively low g011ls for themselves. Conversely. an individual with high self-efficacy
is likely to II)' lu learn how to perfurm demanding tasks and set high pcrsollal goals.
Consistcnl wilh this reasoning. research has found Ihm individuals nol only learn bUI
nlso perform at levels consistent with their self-efficacy beliefs. Employees learn what
they think they arc able to learn.
2. SeI[-(~{fi{'{/c.'" afJccl;" le{lr/ling by illflllclldlllf IiiI' efJol"I Ihlll illllil"idllaf.\' ('xcrl 011 IiiI' job:
Employees with high self-efficacy generilily work hard 10 !cam how to performncw
behaviors because they are confident thm their efforts will be successful. Employecs
wilh low self-efficacy mny excrt less effort when learning how to perform complicated
or di trlcull bchaviors. nol because they are lazy but because they don't Ihink the effort
will payoff. Their lad of cnnfidcnce in their ability to succeed causes them 10 think
thm excrting a 101 of effort is futile bc£au.sc they ilre likcly to fail anyway.
3. Sclf-effit'lln' ilOi'tH" Ihe l,en-isICll('1' ,..ilh whicll iI persoll IrieI 10 m(I.lfer 111'11" ((lit!
.IOI/Iel;m,''\ difJicull w.lks: Because elllployt"Cs wilh high self.efficacy arc confident
thm they can learn how 10 perform a given lask. they arc likely to persisl in their
efforts cvcn in the facc of tellllXlrary setbacks Of problems, Conversely cmployees <
wilh low self-efficacy who think they nrc unlikely 10 be able to leam a difficult task
afe likely to give up as soon as an obstacle .lppe<lrs or the going gelS a lillie tough.
Consistcnt with this reason ing. in a rcrcnt feview of the extensive literJture on xc If-
efficacy. Albert Bandura and Ed Locke concluded thm self-effieacy is a powerful
delerminnnt of job perfornlance. 41
162 PART I • INDIVIDUALS IN ORGANIZATIONS
EXPERIENTIAL LEARNING
l.<:uming Ih'lI OC<"U1"' b} the d,recl
in, "I",ment (>f the l"lImer in tile
,ubje<:t maU.... being learned (thai
;,.learning by <k'ingl.
Sources of Self-Efficacy
Because self-efficacy can h~ve such powerful efreels on learning :md performance in
orgauizations. il is import<lm ({) identify where it comes from. Ibndura has idell1ified four
principal sources. 48
Hm {Jt'lform(II/('1' is one of the most powerful sOurces of self-efficacy. Employees
who h<lve succeeded on job-related <ldivities in the past are likely to have higher self-
efficacy for such <lclivilies lhan employees who have failed. M<lnagers can bomt low lev-
els of self-efficacy by ensuring lhat employees can and do succeed on certain tasks.
"Small successes" boosl self-efficacy and enable more substantial accomplishments in
the future.
ViranOl's expaiclh'e 01" o!>.I"en·mi!m of o/hers is another source of self-efficacy. Scci ng
coworkers succeed;:ll a particulanask may heighlen the observer's sclf-efficacy. Conversely,
seeillg coworkers fail is likely to discoumge the observer.
Verbdl per.mnsioll-that is.lrying 10 convince people that they h~ve the ~bilily to learn
and succeed at a particular task-can give ri.'.C to S('"lf-efficacy. Rescan:h has shown thal
when managers are confidelll thal their subordin,lles can succeed a! a particular !:lsk. lhe
subordinates adu,llIy perform at a higher le\'el.49
All indil'ilhwl's rending vf his or !leI" ill//'nwl pilY.liologimf sw/eI is Ihe fuu rth ,0UTee
of self-efficacy lhal Bandura idelllified.'50 A person who expecls 10 fail al some Iask or to
find sonlething 100 demanding is likely 10 experience certain physiological symptoms: a
pounding or mcmg heart. ft.·ding flushed. swealY hands. headaches. and so on. The partie-
ul~r symptoms vary from iudividual to individual bm O\"er time become associated with
doing poorly. If the symploms slart to occur in any given situation. _e1f-eflieaey for dealing
wilh thaI situation may plummet.
Considcr the C~5e of Mich<lel Pulinski. who was facing an important job inlcrvicw.
Pulinski really wanted to gel this job and had spent a considerable amount of time
preparing for the intervicw. He was familiar with the company and had prepared good
questiolls 10 a,k the interviewer about the job. He also had Ihoroughly rehearsed an,wers
to typical intcrview questions (such as "Whcrc do you see yourself in fivc years'!"") :md
had bought a ne""' suit for Ihe occasion. The day of the interview, Pulinski glll up feeling
quite good and was anually looking forward to lhe interview and to demonslraling Ihat
he was Ihe right "Indidate for the job. He arrived 1O the interview a lillie early and paged
through a recenl copy of BIlSilll'.I".\·IVI'i'k in the reception area, As he was thinking about
ho,,"' much this job meant to him. he ,taned gelling nervous. He could feel his face gel-
ting flushed. his hands were swealy, and his heart started pounding in his chest,
I'ulinski's self-efficllcy plummeted. Because of IheSt'" physiclll symptoms. he decided
that he w~s much too nervous to make a good impreSSion in the inlerview. Unforlunmely.
his low self-efficacy resuhed in his not doing well in the illlerview and failing to gel a
job offcr.
learning By Doing
Some learning takes place by actujilly engaging in a new or differelll activity. Oflen
referred to as rxpnil'nlilll IC:lrning. Ihis k<lming occurs by the dircct involvcment oflhe
kamer in the subjel"t m<lller being learned-Ic<lming by doing. in mher words.~t Consider.
for example, how people learn to be air tmffic conlrollers. Thcy, of coursc, can read refer-
ence books on air Iraffie panems. study Federal Aviation Adminislnltion rules and regula-
tions.learn how to communicate with pilots who:lre !lying planes. and study the configu-
r.ltiolls of differem airpons. However. if they only rcly on these kinds of activities. Ihey
will ncver be an effcnive and safe air Iraffic comrolicr. Wha!'s missing? Learning by
doing. In order to master air traffic controlling, it is essemialth,ll prospective controllers
Ic<lm their jobs by doing Ihem. Clearly. il would be too dangerous for them 10 learn how to
be an air traffic controller while direeling realtraflie in air'pac·e. Bm Ihey can and do learn
by performing realiSlic simulations of aClual air lraffic controllers' jobs using Ihe samc
eqllipmentthey will be using on the job.
 CHAPTER 5 • LEARNING AND CREATIVITY 163

On some jobs. learning by doing

throu/;h perfomling aClual work
t<lsh on the job is too dml£erous.
Aspirin/; air tmfflc controllers.
for exmnple.leam their jobs by
performinG ",ali,tic ,imulation,
of aClUa I air traffic eonlrollers'
job, u.,ing the "lI1lC equipment
they will be using on the job.

Learning by doing is an important component of many kinds of jobs and occupations

ranging from landscape architecture and nursing to sports. acting. and surgery. Moreover.
learning by doing it not ju>l important in order to be able 10 be 1lble to execute technical.
physical. or artistic tasks well-it is also importmll for interpersonal skills. In the opening
case. "'hen engineers. product designers. and marketers work togelher in innovation labs
on new products. they are not only developing new products but learning valuahle imer-
per;onal skills for effective teamwork.

Continuous Learning Through Creativity

CREATIVITY Crcllth'it)' is the genenllion of nOl'el ,l11d useful ideas. 52 By nurd we mean ideas tlwt repre-
1lJe generauon of oovcl and u",flll sent new ways of thinking. By 1/seful we mean ideas Ihat ha\e the potential to comribUie to
'dca'. Ihe performance and well-being of individuals. gmup'. and organizations. When people are
being creative. thcy are cngaged in continuous learning, whethcr it is to discover a vaccine
for the HIV viros that causes AIDS. de"elop a new design for kilchen cabinets. or success-
fully revive a classic car model such as Ihe Volkswagon Beelle. The idea of easy-lo-usc
stick-on notes (Post-it NOles"'). thc idea of offering hcallhy f(Kxls like salads in fast-food
restaurants such as McDonald·s. and the idea of flexible work schedules-all are examples
of the resullS of cremivity. Creative ideas such as these are novel and useful responses to
problems and opportunities and result from continuous learning. Frol1ltoc opening case, it
is clear that cominuous learning through creativity is key 10 remaining competitive in
tod,ly's global economy.
INNOVATION ImlU\lltion is the successful implemenlation of creative ideas. 53 The 3M'''' Corporation
The ,u,~"rul implcmcmau<'m innov<lwd when it su(;(;cssfully manufacturcd and marketcd Post-il NOles''': Apple
of creali" idc,,-,. Computcr innovated when it designed ,md built the ftrst personal computer. and it cominues to
innovate today with its new product offerings and new ways to enhance consutncrs' shopping
experience in its Apple Stores.

The Creative Process

Each inSll1nee of crC<l1ivily seems unique beclluse an individual or group has come up
w ilh somethi ng that seems tolall y ncw or difTercnt. The (;real t\'c proccss. howcvcr. usually
cmails a number of learning stell' (see Exhibit 5.5).5--1 The first two steps arc recognizing
a problem or opportunity and gathering information. Sometimes the first step entails
learning that something people think is a problem really isn·!. Declldes ago. some
164 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 5.5
The Creative Process

Rocogmtlon of Information Produ~tton of ~Ie<rion of __ _• ImplementatKm

a probl~m Of a~
opp<>nunlry
• gathenng • creative idea. • ~'.at"'e idea(.) •
ofe«a'i"" idea(.)

well-intentioned. but misinformed. educators thooght it WilS a problem to be left-handed:

so when Icft-handL'd children were leaming how to write. they were urged to usc their
right !wnds no maner how awkward or dimcult it was. Sometimes the prohlem needs
redeli ning. in other words. Tooth decay in toddlers. for example. is not so much ;1 functioll
of what toddlers cat and drink but how and when they do it. (The real culprit IS drinklllg
from a bottle. <:.>pecially right Ix'fore bedtime.) Identifying a problem is also part of this
lirst step-for cxample, recognizing thm cxccssive exposure to the sun can lead to can-
cer-as is recognizing a potellli,II opportunity-for example. that reality shows appeal
greatly to today's TV viewers.~3
An important part of learning about a problem or opportunity is involved inthc sec-
ond step-gmhering inforrnmiOll. Hcre. too. learning takes place as the learner ligures
OUI wh;11 kind of inform,Ition to gather. In the process of g<lthering information. the
Jcilrner might decide the problem or opportunity has been deli ned too broildly or
too narrowly. He or she may then go back to step onc and redefine the problclll or
opportunity before procceding to learn about which information to gather and how to
lind it.
The third step in the creative process is the production of ideas. Once learners have
gathered information, they need tll corne up with potential respom;es III problems or oppor-
tunities_ During the production of ideas. it is important llmt learners feci free to come up
with ideas that seem far-fetched or off the wall.
Once the ideas have been produced. learners arc then ready for the fourth step of the
creative process: selecting the idea or ideas they think will be useful. Sometimes learn-
ers assess each idea according to some criterion they may have previously determined to
be important. such as the estimated IInnulil sliles of a new lype of digital camera or the
amount of computer memory necded to run a progrllm. At thIS step. the information
gathered during the second slep can be hclpful in evaluating thc usefulness of each idea
generated.
Ollee one or more ideas have been selccted. it IS lime for implementation. At tIns slage
in the creative process. innovation kicks in. Ciln the organization successfully implement
thc creative ideas it has devclopcd and chosen to pursue'! Although the steps in thc c("{'"ative
process are described previously and are shown in Exhibit 5.5 as if they always oceur in a
certain sequellcc. the order in which they occur is IlOt fixed. nor docs eaeh slep hal'c to take
place for creativity to occur.
As proftied in the Opening Case, many organi7-'ltiOlls arc relying on innovation labs
with open spaces and comfortable surrouudings to bring learns togelher to create new
products alld services. South Korean consumer e Jcctronies giant. Sarnsung EJcctroll ics. has
taken Ihis concept one step further with its VIP Center.~6 as proJilcd in the following
Global View.
Creativity ;HId the creative process. by their nature. are hard to predict. 11 is difficult to
tell in advllnce. for e!\ample. which decision makers will eome up with creative ideas.
Some people ilre n;ltur.lIly more creative than others. but. under the right circumstances. a
person who is not vcry cremive may corne up with a creative solution. Evidence al>o shows
that ereativilY is more likely to occur in sOllle groups aud orgllnizations than in others.
Researchers who have tricd to idcntify some of the dClCrminants of creatiVity havc found
that char.lcteristics of individual decision makers and of the situat ions in wh ich they make
decisions eOlllrihute to crcativity.
 CHAPTER 5 • LEARNING AND CREATIVITY 165

Global View
Creating New Products at Samsung
Samsung Electronics has grown to be the dominant and most profitable company in the
global consumer electronics industry, surpassing even SonyS7 Creating new products at
rapid-fire speed is key to Samsung's success. Many of these products are developed in
Samsung's Value Innovation Program Center (VIP Center) located in a five-story building in
Suwon, South Korea Researchers, engineers, and product designers are brought to the
Center to brainstorm new ideas for products, solve design problems, cut costs, and create
and innovate,58
The Center boasts training rooms: work rooms for teams; a kitchen: a rela~ation cen-
ter in the basement with a sauna, gym, billiards, and ping-pong (though apparently,
employees are often too busy to rela~): i1nd a dormitory with 42 rooms on the fifth floor.
The presence of the dormitory speaks to the intense, round-the-clock creating that takes
place in the VIP Center. In fact, when employees are working on iI project or trying to
_., solve a problem, they are
often expected to stay at
the Center until their
problem is solved or their
project has progressed.
As long-time team leader
Song indicates, "When
people are told they have
to come here, they know
they have to come up
with results in a very. very
short time."59
Silmsung's commit-
ment to continuous learn-
Samsung Elcctronks has grown to be thc domimll1 and mOSI ing through creativity is
profitablc company in the global con~llmcr c1tttronics industry by
a global phenomenon. 60
c",aling ncw and inll(wati\,c pro<!u<;ts at brcalnCl-'l spcrd.
For e~ample. Samsung
allocates a higher percentage of its annual revenues to R&D than Sony, Microsoft. and Intet
employs close to 27.000 researchers. and operates 17 research centers around the world 61
In the highly competitive global economy. Samsung emphasizes the importance of speed-
rapidly solving problems. detecting defects. coming to market with a new product, Hence,
there is a real sense of urgency to the work that is performed in the Center Teamwork is
emphasized and encouraged by common work areas as is rapid decision making and com-
munication There is also a sort of crisis mentality-if problems aren't detected and solved
quickly enough. or if a new product takes too long to develop-failure could be a step away.
Thus, Samsung expects total commitment from its employees, who often work round the
dock. As Vice Chairman and CEO long-Yong Yun puts it. " .. we stand at the crossroads to
[be]coming a world leader or a major failure.'·61 Clearly, this sense of urgency has paid off
handsomely for Samsung
166 PART I • INDIVIDUALS IN ORGANIZATIONS

Characteristics of Employees that Contribute to Creativity

Numerous chamcteristics of cmployees have been linked to creativily. but the ones that
sel.'"m to be most relcvam to understanding cre:nivity in organizations arc personal chamc-
teristics or individual differences. task-relevant knowledge. and inlrinsic motivation (see
Exhibit 5.6). These chameleristies contribute 10 cre,uivily whether employees work indi-
vidually or in groups.
Although Ihcse factors cOlllribute to creativity. they do HOI. of course. guarantee
that any given employee or group of employees will be creative. And Ihe lack. or low
kvel. of any of Ihese factors docs nOI mean that a person or group will not or cannol be
creativc. Creativity is determined by the interaction or joint effects of a number of
factors.

Individual Differences. In Chapter 2. we described ,I variety of ways in wInch pL'Ople

differ from e:Kh other and some of the personality traits and abilities especially rclcvam to
understanding and managing organizational behavior. At least three of the personality
trailS we discussed earlier arc likely to eomribUle 10 ereativlty.63
Recall that one of tile BIg Five general personality traits is Opl'llUesS 10 expuience.
which captures the eJ\lclll to "'hich an individual is original. is open to a wide variety of
stimuli. has broad imerests. and is willing to take risks. How docs openness to experience
eOlllribute 10 cremivily'? It helps employees come up with new ideas and ways of doing
things. and il helps to ensure that employees arc willing 10 t,lke tile risks involved in
proposing unusual ideas.
Two specific personality traits lhm are likely to contribute 10 crcmiviTy are !O/"IIS of
COli/IV! and seif-esll'l'lI! (sec Chapter 2). Locus of control captures the extent to which
people think that their own actions and behaviors are important in determining what
happens. !nternals believe They have a lot of cOlllrol over their environmenB and
whm happens 10 Them. Extema!.1 believe thaT outside forces determinc their fates, An
inter/wi locus of control contribules 10 creaTiviTy because it resulls in employees'
feeling responsible for coming lip with new ideas and being erealive.1'>4 An eXlI'r/wl
locus of control hinders creativity because employees believe That thl."ir own efforts :Ire
unimponant. 6S
Self-esteem is pride in oneself and in one's cap:lbilities.66 Self-esteem contributes to
employees' contldence Ihal they can cmne up WIth crc:lli\'e ideas. and it gives them the
confidence to take risks and ,uggest ideas that may seem outlandish.
In addiTion to pen>onality. it also is likely Ihm abiliTy contributcs 10 crcativilY. Al the
broadest level. intell igenee contributes TO erealil'ily because it helps employees conte up
with new ideas. see connections beTween thmgs that other people do not sec. view thmgs
from different perspectives. and synthesize a lot of information. Other cognitive abilities

EXHIBIT 5.6
Characuri.tk. Charaaeri.ri<s of me
Determinants of of employ"" organizatiOtlai situa""'"
Creativity
tndil'ldual le.... lof
d,ff.... nees aUlonomy

--•. r--;,;:~'"';;·.~--··--
Tuk·rdevant Form of
knowledge evaluation

Inlnnoie R.ward
motivation oystem

Importaf>C.
of a la,k
 CHAPTER 5 • LEARNtNG AND CREATIVITY 167

also contributc to creativity. especially when they arc relevalll to the kind of work an
employee is engaged in. Numerical ability (the speed and accuracy with which a person
can solve arithmetic problems). for e:l.ample. is likely to contribute to aeal1Vity In a
group of people who arc looking <ltthe overall cost implications of various changes to a
manufacturing process.

Task-Relevant Knowledge. Task-relevant knowledge is all of the information.

skilh. and expertise that all imlividual or group h<ls about the kind of work being
performed. h7 Without task·relevant knowledge. it would be difficult for an architeCI
to cOllie up with a cremive design for <I new building. for a doctor to find a new W<lY to
treat arthritis. or for a senetary 10 discover a unique and useful filing system.
To generale creative responses. the architect needs a good understanding of building
design <lnd architectuml principles, the doctor needs knowledge pertaining to medicine
in gener;ll ,lnd to ;lrthritis in pMticular, and the secretary needs to be f;lmili;lr with the
kinds of information to be filed, the ways in which it needs to be accessed. and how
frequently il\ accessed.

Intrinsic Motivation. In Chapter 6, we distinguish between intrinsic and extrinsic

motivation. For imrinsically motivated employees. the source of mOliv<ltion is the work
itself. These employees enjoy pcrformi ng their jobs. oftell love their work, and get a sense
of personal satisfaction when they do a good job or comc up with a creative idca.
Extrinsically motivated employees may perform at a !ngh level. butlhe source of their
motIVation is external; they arc motivated by. for e:l.arnple, the pay they receive and the
chances of receiving a bonus. raise, or promotion-positive reinforcers provided by others,
in othcr words.
In general. cmployees .Ire more likely to be creative when they arc intrinsically mOli-
vated. 6lJ The high level of invol vement ill the work that intrinsic moti vation bri ngs seems \()
spur creativity.

Characteristics of the Organizational Situation

that Contribute to Creativity
Although certain individU,lls may be more likely than othcrs to be creative. cfCativity is
'II so more Ii kel y to occur in certain situations than in others. Four situational ctWTaCleristics
arc likely to alTect C1"Cativity: le\el of autonomy. form of evaluation, reward system, and
the importance of a ta-',k or problem (sec Exhibit 5.6).

level of Autonomy. More than 70 percent of Ihe research and development (R&D)
scientists who participated in a study of creativity indicated that autonomy was an
important factor in instanccs of creativity that they were involved in or observed in thcir
organizations. h9 Autonomy is Ille freedom and independence to make decisions and have
personal control over one's work on a day-to-day basis. A high degree of autonomy IS good
for creativity. And whcn autonomy is low, creativity is unlikely.

Form of Evaluation. Imagine how William Shakespeare would have felt when he
was "Titing some of his masterpieces if a supervisor had been st<lnding over his
shoulder critiquing seenes or bits of dialogue that didn't sound quite right ("A hero who
belicves in ghosts, H1lks to himself a lot. and kills his girlfriend's father'! I don't think
so. Will") and criticizing him when he took toO long to complete a play. In all
likelihood. Ihese kinds of actiolls would have hampered some of Shakespeare's
creativity.
Crc,l1ive people and employees like to know how they are doing and to rcceil'e feed-
back and encouragement. But overly evaluative feedback and criticism can hamper cre-
ativity because it can make employees afraid 10 take rish. 7o If there is <l Mrong likelihood
that your boss will criticize the far·out idea you cOllie up with. you may not risk exprcssing
168 PART t • INDIVIDUALS IN ORGANIZATIONS

it. However, if your boss is interested in your ideas, provides constructive comments about
how they may be improved. and points out some of their pros and cons. you may be
encuura!;ed to cume up with an even Ix:I1<:r idea.

Reward System. People who comc up with crcative idcas like to bc rcwarded for them.
But what happens if employees think that their salaries. bonuses. and chances for
promotiun hinge un their almust always being right. rarely or ne\'er makmg mist:lkes. and
always being eflicient in their usc of time'! Thcir creativity may be hampered. and thcy
may be unlikely to take risks to come up with and choose creative responses to problems
and opporlUnilies. 71 By definition. creative responses are new. and there is always the
potential that they m:ly fail.
To help promote ncativity. an organization·s reward systcm should re("(lgnizc and
reward hard work and creativity. Creative employees and others in the organization need to
see that Iwrd work and creativity are recognized. appreciated. and rewarded- for example.
through bonuses and mises. II is important. however. thai these rewards not be seen as an
attcmpt to control behavior and thm employees do not feci they are being closcly watched
and rewarded bascd on what is obscr\'ed. 72 It also is important that employees arc 'WI
punished when some of their creative ideas do not pan out. Im1ced. if employers wnnt
(;reativity. they nl't.-d to en(;ourage organizational members to take reasonable risks and be
willing to accept failure.
By now it should be clear to you that DB Mud should 1101 be used for behaviors thm
involl'e creativity or when creativity is desired. 013 Mod assumes that desired behaviors
(;an be objectively determinell in advance; this is impossible for :lny kind of creative
activity. which. by definition. is Ilovel or new. Morcover, the relati\'ely rigid matching of
behavior and consequcnces in DB ,\1100 ensures that any out-of-the-ordirlOry behavior
(which coulll Ix: creative) is discouraged. More generally. principles of uperant condi-
tioning. which arc useful for learning desired behaviors that (;an be determined in
advancc. should not be uscll for crcati\'e kinds of work and tasks. Howevcr. even when
creativity is desired. principles from operant conditioning can be used to promote the
learning uf certain kinds of beh:lvior. such as using safet)' equipment. which can be
objecti\'ely sp.xifred in :ldvar1\:e. For eX:lmplc. suppose a welller is trying 10 (;ome up
with a way to join thin steel cylinders so thm the place where they arc joincd together is
invisible to the naked eye. In order to come up with the new procedure or process. the
welder should have <lutunomy 10 experiment. and consequences su(;h as rewards should
not be llirectly linked to his or her current behaviors or else his or her creativity will be
hampered. However, a priori. her supervisor knows that she must wcar safety goggles
and follow certain snfety procedures- for these kinds of behaviors. operant conditioning
c:ln be beneficial.

Importance of a Task. Being creative is intrinsically rewarding. but it also can be hard
work. Creativity is enhllnced when rnemlx:rs of an orgllnization feel thai whm they arc
working on is impurtant. 73

The Interaction of Personality and Situational Factors

Recall from Chapter 2 how behavior is often the result of the intemdion of personality
and the situation. Recent rcscarch suggests that this is the case for creativity. For cxam-
pie. a recent stully found that whether or not openness to experience was related to cre-
<ltivity in jobs Ihal do nut neccss<lrily entail creati\'e wurk depended on the extent lu
which the employees' tasks provided them with the opportunity to be (;reative. or
entailed some degree of flexibility and uncenaill1y. and the extell1 that the employees
received positive feedback.7~ Results from this study and others arc encouraging. as
they sUgf:estthat ;111 personality types have the potential tu be creali,'e If the siluatiun
they are in and those around them provide them with the right kinlls of encmrragement
and suppon. 75

You're t;he Management; Expert;
ORGANIZATIONAL
LEARNING
TIle Jl'"OC"" thf'QYgh which
manage'" in,till in all membe'"
of an organllalion a <k"", 10
lind new way' to ""prove
orpnizat"lIlal effC'<.'livene,,_
CHAPTER 5 • LEARNING AND CREATIVITY 169
Encouraging Independent Thinking
Susan Armstrong, the owner and operator of a chain of nail salons in the southeastern
United States, has recently hired a store manager, Marcy Cook. Cook is not only very qual-
ified for the job but also has many creative ideas that can increase the visibility of the
salons and their sales, In fact, Cook runs circles around Armstrong's other store managers,
who are good at keeping the stores running but do not seem that interested in doing
much else. Since Cook took over as store manager, revenues at her salon have increased
by 20 percent, and none of her staff members have quit. (The salons have generally been
plagued by high turnover rates in the past.) After Visiting the salons, Armstrong con-
cluded that part of Cook's success as a store manager is due to her independent
thinking-she takes the initiative to solve problems on her own, seeks and develops new
opportunities, and creates a positive atmosphere in her salon both for clients and the
staff. The other store managers are effective in terms of ensuring smooth operations, ade-
quate staffing, and salon appearance, but they just don't take the initiative to go beyond
the basics, Because your are an expert in OB, Armstrong has come to you for help. How
can she foster the kind of independent thinking and creativity among her other store
managers that Cook exhibits)
The Learning Organization
Not only is it importanl that individuals leam to perform behaviors that contribute to orga-
nizatiunal effectivcncss but ;llso Ihatlhe organizatiun as a whule adupts a leaming mental-
ily. Organizational learning involves inStilling all members of the organizalion with a
dcsire to find new ways to improvc its cffectiveness 76 Moreover. lcaming organizations
make sure their members lIc1tJlIlly hllvc the knowledge lind skills to learn continuously.
They also 11Ike steps tu cnsurc Ihat ncw ideas arc ;1l:ICd npon and knowledgc is sharCiJ
Ihronghoullhe organizalion. 77
Lcarning theorist Peter SengI' has idenlified five key lIclivitics cenlml to a learning
org;ltlizm ion. 78
• E"cVlmlMe pe/JQlwlmm'lerY or hiK" selj-eDkm)". [n order for members of an organi-
zatiun to Strive to find new ways of improving organizational effecti\'eness. they mUSt
havc confidencc in thcir abililies 10 do so.
• l)n'e!op comple.r sdlel!Jos 10 Jmders/(Illd l\'ork (tClh'i/il's. Recall from Chapter 4
that schemas llre ~lbstwel knowledge structures. In order for the members of lin
organization tU Icarn ncw ways to CUt costs or increllse rC\'cnues. Ihcy mUSt have
an appreciation uf nnt only their own jobs but also how the work Ihey do affects
the work of others and the organization as a whole.
• [1/{'Vl/raKe lewl/il/); il/ Krolll'~ olUll('((m~'. New discoveries often take place in groups
and te<lms.7 9 Mcm[x,rs of groups and leams nt"Cd 10 strive to find new ways of doing
Ihings am] manage thc learning process by. for example. inneasing the sclf-effieacy
of group members who Illay question their own capabilities.
• COl/mulI/inl/e (I shared \'iSIOII fin- Ihe o/'f';(/Ilhalioll (/S II whole. Members of ~tn orga-
nizatiun nt"ClJ guidanl:e In terms ofwh;lllhey should be Striving fur. For example.
should they be striving to cut cOSts. or should they focus more on improving "us-
tomer satisfaction even at the expense of higher costs') As indicated in the Opening
170 PART t • INDIVIDUALS IN ORGANIZATIONS

Case, more and more managers and companics arc finding that cutting costs and
improving efTicicney are not enough to remain competitive in tooay's global ccon-
omy. What arc really needed arc creativity and innovation to develop new products.
conccpts. and experiences thai cuslomers don·1 even know they wanl and then real ize
thcy can't live without.
• E"courage 5.l"SII'III I!lil/killg. Organizations arc systems of interrelated parts. What
one part of the organizalion docs or learns .lffects olher parts of Ihe organization.
Organizational members muSI be encouraged 10 think in these lerms amI .uJdress
how their individual actions and their actions in groups and teams influence other
parts of the organization.
Organizationallcarning is especially important for organizations in environments that
are rapidly changing. As John Browne. CEO of British Preto1cum, putS it, ··Learning is ilt
the heart of a company's ability 10 adaplto a rapidly changing environmell1.1t is the key to
being able both to identify opportunities that others might not sec and to exploit those
opponunities rapidly and fully."go
An important ingredient for a learning organization is kllmdl'dge IIWII(/!<I'IIII'III-
being able to c<lpitalize on the knowledge membcrs of the organiz'ltion h'lve th'lt might
not be wrinen down or codified in formal documents. As employees do thcir jobs, they
gain knowlcdge about the tasks they perform and learn thc best ways to get certail)
things done and solve specific problems. Through knowledge management. this infor-
mation can be shared and used by others. This knowledge is not necessarily contained
in job descriptions or wriuen down in rules. standard operating procedures. or manuals.
Rather. it is knowledge that has evolved from aciUally performing work taskS,SI By dis-
semmaling and sharing this knowledge in an organizalion, other members will be able
to take advantage of it.
A recent study of cus\()mcr service rcprescntativcs who rcpair Xcrox machines
confirms the importance of knowledge management. Repairing machines seems pretty
straightforward-error codes on Ihe maehll1es indicate whal the problems arc. and
wril1en documents and manuals specify ho,,"' \() fix the problems. When anthropologist
Julian Orr observed the reprcsentatives performing their jobs, however, their work didn't
seem straightforward at all. S2 In a typical workday. the representatives carne across
m<lny idiosyncratic breakdowns and problems and solutions that weren·t prediCiable or
dcrailed in the manuals. By adually performing lheir jobs. lhe representatives learned
ahotJI the idiosyncrasics of the machincs they repaired, how to solve a variety of
problems not covered in the manuals. nnd how a variety of faclors ranging from ainem-
perature to the 'lge of a certain part may <IffeCllheir operation. Moreover. Ihe represen·
tat ives got IOget her regu larly over breakfast, coffee, lunch, or at the end of the workday
and also at other times to sharc their knowledge whilc joking. playing gamcs, or chat·
ling. In these informal get-logethers. the represenlatives discussed problems they had
encountered and how they were sol\"ed and shared their inslghls gle<lned on the job.gJ
Clearly. the people performing a certain job arc likely to learn the most about it.
Knowledge management sccks to share this learning and knowledge throughout an
organi~Wlion.

Summary
Organizational members can learn from multiple sources and in multiple ways. In this
chnpter. we made lhe following major points:
I. l.caming is a relativcly pertnancm change in knowledge or behavior thaI results from
practice or experience.
2. In opcram conditioning. the le.rmer beh<l\"es in a \;ert<lin way to achieve certain conse-
quences. Amcredcnts let employees know which behaviors are desired, which should
be aluidcd. and what the consequences arc for performirlg diffcrcnt behaviors.
 CHAPTER 5 • LEARNtNG AND CREATIVITY 171

3. In operant conditioning. thcre arc two ways to pmmotc thc Icaming of desired hehav-
iON in organizations: positive reinforeement and negative reinforcement. Positive rein-
forcement increases the probability that a behavior will occur by alhninistering posi-
ti\'e conscljuelKes to employees woo pcrfomlthe behavior. Negative reinforn'ment
increases the probability that a desired behavior will occur by removing a ncgmive
consequence if an employee performs the hehavior. Positive reinforcement is gener-
ally preferred over negati\'e reinfon:ement.
4. Reinforcement can he continuous or partial. Partial reinforcemelll can he adminis-
tel1'd accord ing to one of four schedules: fixed interval. variablc intcrval. fixed ratio.
and variable rmio. The choice of reinfOTCemenl schedules in organizations is often
influenced by practical considerations sUl:h as the nature of the behavl<x. Job. and
reinforccr in ljucstion. Shaping. or rcinforci ng progl1'sshdy closer approximations to
a desired hehavior. can be used to encouragc hchaviors that arc unlikely to occur on
their own.
5. In oper<lllt conditioning. there are two ways to reduce the probability of undeslTed
hehavion; in organizations: cxlinl:1ion and punishment. Extinction. rcmoving the
source of l1'inforccment for an undcsircd behavior. can take timc. Punishmcnt.
administering ,I negm il'e consequence when an undesired behavior occurs. is
sometimes needed to eliminate detrimental behaviors quickly. PUnishment can
have some unill1cllded negath'e side effcCis (such as resentntent) and should he
usc-d with caution.
6. The syslematic application of the principles of openmt conditioning to nwnaging
urgamzational behavior is known as organizational behavior modification (08
MOD). 08 MOD works best for managing hehaviors that arc observable. important
for task and organizational performancc. and measurable.
7. In order for vicnrious learning to take pince. the learner mUSt p'ly nl1ention to
the model. nCl:urately percei\'e the moders behavior, remember the behavior.
and ha\'e the skills and abilities necessary to perform the hehavior: the model
must also receive reinforcement for the behavior. Models who are most likely
to be imitated by employees are competent or expert. hal'e high status. receive
poositive reinforcers that the learner desires. and model behaviors in a friendly
man ncr.
8, In order for self·control (taking the initimive 10 learn desired behaviors on one's
own) to tllke place. the follOWing conditions mUSt be satisfied: An individual
must engage in a low-probability behavior. self-reinforcers must be available.
the learner must sct performance standards or goals. and reinforcers must be self-
administered when the goal is al1ained. Self-efficacy (beliefs about one's ability
to perform particular behaviors successfully) illtluences the tasks cmployees
choose 10 learn and the goals they set for themsel\'es. Self-efficncy also affects
employees' levels of cffort and pers istence whell learn ing difficu It tasks. Past per-
formance obsen'ations of others. verbal persuasion. nlld physiological states are
<

dcterminmtts of self-effic'lcy.
9. Continuous learning takes place through crentivity. Creativity is the generation
of novel and usdul ideas nnd innovation is the successful implementation of
creative ide1ls. The steps in the creative process arc recognition of a problem or
oppoortunity. infornwtlUll gathering. productiuns of ideas. selection of ideas. and
implementation. Learners who arc high on openness 10 experience have an
imcrnal locus of control. have high sc1f-cstecm, have lask-rele"nm knowledge.
and are intrinsically motivated arc especially likely to be creative. Situational
charaCleristics th,ll arc likely to impact creat ivilY arc employees· 1e~'e Is of nuton-
omy. the evaluation and reward system llsed in an organization. and the pcrl:eived
importancc of a decision.
10. Organizatiollallearning is the process through which mallagers instill in ,111 members
of nn urganiznlioll a desire to find new ways to impro,'e urganizntlonal effectiveness.
Knowledge managemell! is important for organizational learning.
172 PART t • INDIVIDUALS IN ORGANIZATIONS
Exercises in Understanding and
Managing Organizational Behavior
Questions for Review
1. Why might an organizmion prefer to usc positive
reinforccmell1 rmhcr than ncgative reinforcemcnl'!
2. How can a manager use the principles of operant
conditioning to stop employees from bickering
and fighting with eaeh othcr?
J. Why do somc organizations use punishmcnt morc
often than others'!
4. [s OB MOD ethical? Why or why not?
5. In what ways are thc behaviors of taxi dril'CN con-
trolled by the principles of operant conditioning?
OB: Increasing Self·Awareness
learning Difficult Behaviors
Think aboul the last lime you finally SlIcc(.'eded at some-
Ihing thai had been giving you lJlluble. It {"(lUld be a partic-
ularly trouhlcsome class that you managcd to pulltllTough
with a decent gradc or a difficult project at won. that you
linally were able to finish satisfactorily.
I. Describe the specific behaviors that gavc you
trouble.
2. What antecedents prompted you 10 perform these
behaviors'!
J. What wcre the reinforcing consequences for per-
forming these behaviors successfully')
4. Would you have been punished if you had nm
finally succeeded? If you had becn punishcd.
how would you have felt about being punished?
6. On what kinds of jobs might vicarious learning be
cspecially prevalent'!
7. When might employees be especially likely to
engage in self-control?
8. Why do somc capahlc members of an organi7.mion
have low levels of sclf-efficacy'!
9. Why do organizations desiring crealivity need to
be "'illing to accept a certain level offailure?
10. Whm steps can organizations takc to promotc orga-
nizationalleaming and knowledge mmmgemcnt'!
5. Did you usc vicarious learning tu try 10 solve yuur
problem? If you did. ,,'ho did you imitate and
why? If you did not. why nOl')
6. Did you usc self-comrolto try to solvc your prob-
lem'! [f you did. whal gual did you sct for yourself.
and what was your self-reinforcer? If you did nO!
usc self-control. why not'!
7. Describe your ICl'el of self-cfficacy when you
first started uul, when yuu were having a particu-
larly troublesome time. and when you finally
succeedcd,
g, What do you think your level of self-efficacy will
be for simIlar tasks in the future? Why do you
think your self-efficacy will be at Ihis level?
 CHAPTER 5 • LEARNtNG AND CREATIVITY 173

A Question of Ethics
Positi\e reinforcement can be used to promote the le<lming of desired behaviors in organI-
zations. Commission pay plans, for example, reinfon:e salespeople for selling by p<lying
them a percentage of their actual sales. However. sometimes these plans can be takcn to
eXtremes and may result in unethical bch.wior.

Questions
1. Think about the ethical irnpl iC:llions of pay plans thaI Ii nk an employee 's current
pay to his or her current performance.
2. Under what conditions might linking pay to performancc be questionable on
ethical grouod>'!

Small Group Break-Out Exercise

Raising Self-Efficacy
Form groups of three or four people and appoint olle member as the spokespersoll who will
COl1ll11un icme your conclusions to thc rest of thc class:
1. Take a few minutes to lhink about something that you arc currently trying to learn and
having trollble witll-it oould be a SUbject th;)t yoo arc having trouble with in school.
learning a musical instmmell1. excelling in a spun. or learning a foreign language,
2. Takc turns describing what you are trying to learn and how you have gone about
it. After each person describes his or her "current learning challenge," as a team
develop ways for tllis person to boost Ilis or Iler self-efficacy for tile challenge in
question.
3. Each person then should takc a few minutes to write dowll specific stqlS hc or she
can tnke based on the group's suggestions io step 2.
4. Take turns describing the specific action steps genemted in step 3.

Topic for Debate

Creativity is the gcneration of new and useful ideas. Now that you have a grx.xl under-
stnnding of crealivity. debate the following issue.
Team A. Creativity is only llnpon<lnt in certain kinds of jobs and organizations.
Toom B. Crcativity is important ill most johs and organizations.

Experiential Exercise
Managing the Learning Process

Objective
Your objective is to gain experience in applying learning principles and theories :lod under-
standing the dtallenges involl'ed m managing the learning process.

Procedure
The class divides into groups ofthn:e to live JX-oplc. and e<tl:h group appoints one member as
spokesperson to prescnlthe group·s findings to the whole d<tss. Here is the scenario.
You are mcmbers of a group of supervisors lhat is rcspoosiblc for teaching production
wolters how to opemte a new. computerized production process. TIle new process requires
employees to work in small tcams. and e.ll:h team membcr·s pcrfornl<tnl:c inlluences the
174 PART 1 • INDIVIDUALS IN ORGANIZATIONS

performance of the leam as a whole. Prior to lhis major change. employees did nlll work in
leams bUI performed simple. repelilive lasks lhal required few skills.
To operate lhe new pnxluclion process. employees are required 10 learn new skills to
perform their now more complicaled jobs. and lhey arc currenlly rcceiving formal training
in a c1assroollJ selling and on-thc-job inslruction in their teams. SOIllC cmployees arc
responding well to lhe ch:mges. are doing well in lraining and instruction. and ,Ire per-
fonning up 10 expecl;JIions in lheir learns. Olher employees arc finding il difficuIll0 adapl
10 Iheir changed jobs and 10 leamwork and have been slow to acquire the nccessary new
skills. In addilion. lhere have been rqXlrIs of high levcls of eonflicl among members of
some teams. As a result. the overall performance of lhe learns is suffering ,Ind below
ex Ix:clalions.
As Ihe group of supervisors responsible for ensuring a sllJooth lransilion 10 the new
production proccss and high performancc in lhe prCKiuclion teams. do thc following:
I. Develop a plan of aClion based on lhe principles of operant conditioning to facili-
tale learning and high leam performance. Be specific aboul how operanl eondi-
tiolling lechn iques (posil ive reinforcemenl. negal ive rl'infoI'CellJl'nl. pu nishmellt.
and extinelion) could be used 10 promotc team members· learning of d('"sired
behaviors. wor\.:ing weillogelher. and performing at a high level.
2, I:kvelop a plan of aelioll based on the principles of soc ial cogni live theory (vicari·
ous learning. self-comm!. and sclf-effical:Y) to facililale learning and high team
performance. Bc specific about how social cognitiv('" theory could be used (0 pro-
mote learn members'leaming of desired bclwviors. wor\.:ing well togclher. and
performing at a high level.
3, Decide Whelhl'r lhl' two plans of action Ihm you devclopl'd should be combined
for lhe most dTC<:live learning 10 take plac('". Explain why or why not.

New York Times Cases in the News

llll' ~r\U !Jork fmml's

"Running Away from the Pack in Japan"
fly M. Fllck/fr. TIl£' N('w York Ti1l1('s. Mardi 22. 2006, f!f!. CI, C5.

OSAKA. J<lp<ln -In eorporatc J<lp;m. rom-
panics have long prdem:d 10 run wilh the
p;lCk. But some arc oow Icamill),' to oct like
kme wolve,.
Take Sharp. which for !Ii:C<ldes looked
like OIhl'r big bp:mesc c1ectmnics maken;,
producing "'ery de\"ice under lhe sun
fmm rice ('rK,kl'TI; 10 scmi-<'xlIldu(10"'. But
whcn Ihe company faced eollap>c eight
year, ago, its oewly insralled pre,idem,
Katsuhi\.:o M,lChid<l, jcuisoned unprof-
itable pruduct, arnJ bel Sharp's fUlure on a
singlc. lhen unproven I\CW product: nat-
panel lete"ision, u,ing a serex'n technol-
ogy c:dled liquid crystal displ<lY.
The gamhle paid off. Sharp now R'aps
record profits as a IcJder in the booming
glohJI market I'm L.C.O. t('k'visions.
"Sur,,;v<ll loct:>y me:>ns innovating Jnd
doing thing, that no One elsc docs:' Mr.
Mnehida said. "This is a lesson nOl only
for ShJrp hUl for all of Japan."
It is a Icsson that lhe business world
hcre ha.' apparenlly taken In hean. as a
w<I\"C of corpor:,te revamping "Jld inn(!'...-
tion brcathes new life into Japan', long-
moribund economy. AIIlI as these lone
""Ives multiply, they may help Jap:m play
" stronger role in global growth as lhe
"'Kid's S<:l..,rnJ-largcst economy.
Compmlics from supcnnJltel ch:>ins to
l'amera makers are moving away fmm
traditional eOllformity. They ha"e gotten
more aggre."iw about containing ('o,ts
"fter spending J<lP;lIl·s lost decade of
stagnant econom;c gmwlh dosing fado-
ries, shrin\.:ing pJyrolls 'lIld writing off
debt. More l"Ompanie, arc also acting like
Sharp. tl)'ing to sct themsclves all-lll from
ri,... l, with unique prod'K."ts and >ervi(,."s.
Thc eh"nges arc rc"riting the rulcs
of Japan', busiTll'ss culture. where for
dee"des after World War II companies
mare'hc<l in lod slep to advan('e lhe
mnion's ('CollOmy. That oolk<:t;vist systcm
bfoke !Ii,wn w[-;,n Japan', l'l"On<,my ,ulkxl
arnJ e"cn wlllmcte<l in the 1991)"s atkr the
(x,lIapse of twin bubbles in Ihe I('al cslal<'
:,,1lI slock m"rkcls.
..It', a new era for Japanese hu,i-
ness:· said John C. Beck, presidenl
of the bu.,iness ("(,"suiting company
North Star Leadership ilnd co-author of
"Japan', Bu,ine" Renai,san(·...... '"Japan
hilS become much morc cntrcprclleurial
and inno\"ati,'e. Companies arC taking
new risks, going ;nto new ilre"s. m"king
new producls."
At Sharp. Mr. M"chid" said he had
learned to take ri,ks o<:causc thc'
 CHAPTER 5 • LEARNING AND CREATIVITY 175

company ha<l no choicc. Sharp ha<l
thrive<l <luring Ihe IX"twar years with
prOOucts likc han<l·hel<l calculators. But
when M,- Mac'hi<la took the helm in
1998. weak <lomestic salcs an<l cheaper
Asian competition ha<l plunge<l the 9-1-
year-ol<l comp:my into its worse crisis
since an earthquake flattene<l its original
f:lclory in 1923.
As profit plummel<'<!, M,- t\hc'hi<la
decided 10 shrink or halt prOOuclion of
semin>ll<lu<"!,)[,. compuln monilors an<l
lUbe televisions. which were major pro(]uct
lines when.> Sharp ("{)ul<l 00 longer mmpcte
on plice. Mr. Machida Sllid he dxided lhe
only wa)' to Ixoat c'heaP<'r manufa<"lun.'rs
\\"as 10 Slay ahead toxhnologically. lie "lid
he dl<,sc flat-p;lI1d tclevision, to take
ad,"anlab'" of L.CD, loxhoology tlJ;'l Sha'l'
had oligim<lly d..'\'c1op<xJ in toc 1970', for
CaJcUlalOr screens.
"'The ol<l way of doing things Wa, ju,t
Sp1"<'ading us too thin:' Mr. Machida said
in an inlerview al Sharp's hew4uartcrs in
thi~ indu~tlial city in wc~tcrn Jap;"'.
Whik Sharp docs not break out
carnings by prodtICt. it said LCD. TV'~
will account for '1 hefty chunk of thc
record profit of 87 billion yen (57.17
,mlllOn) il cxpects in the cum'nl fiscal
ycar. ending March 31 11m is up from a
profit of ....6 billion yen (S39 million) Ul
1998. when .\lr. Machi<la lOok ovcr
Sharp's prof'l margin ,s also higher a155
perccn!. up from 1.5 perc'em o"er the
~:mle timc period.
Deman<l is so stmng for the TV's lhat
the company,s investing 350 billioo ycn
($2.97 billion) to expan<l annual pm<luc-
tion caracily to aboul 20 million in two
years, up fmm about 5 millioo ""ts now,
11 is also slepping I'P hiring, wilh plilns to
a<l<l 615 new employees next yc'ar.
dooble Ihe number it hired in 2003.
Economi'L' say lumamund ,torie, like
ShmV's are fueling lhc currcm revival in
Japan's 54 ,6 trillion cx',momy, the .",cooo-
I<lrgest after the Uniled 51;'leS. As comp<l-
nic's hire more employcx', a,Kl buil<l ncw
f'lCtorie~. the recovery has found '1 firm
fo<~ing in <lomeslic eon,umption, unlike
previous. ~hort-li"ed up·turns here that
relied on cxports. Many economists now
prc<lic'l that Jap;.1n will exp;.1oo as much as
),6 pcrrenllhis year. rivaling and perhaps
even surpassing gmwth ;n the Unite<l
Stmes,
To be sure. some specialist, say Japan
has nOi changed eoough. They point 001
that leveh of pnK!uC"!i"ity an<l earning
power still tend to lag behind lhose in the
United Slate,. Th,' pmblcm, they say, i,
th:lt fund<lmental .hange is limiled to a
small numb"r of companies, while mosl
rcm<lin too limid to Ie;<vc lhe p:lck.
'"I don't >iCc enough <li/ferentiating:'
~,id Will i:lm Swinton, an assislant de<ln in
tl><' business school at the Tokyo l'ampu,
of Temple Un;versily. "Some cOl11p;lnies
are using morc' fo<'o,>l-x1 stmtegies, bul
l11<lny still h<lve ;,Iong way to go:'
Still, most agree that change' h<l'
reached even Ihe cobweb-filk'<! corners
of Japan's <lome"tic e"ononly, Aeon,
J;'pan'~ largesl supcrm;<rket operator, has
shah'n up lhe country's r<'t<li lillg indu,try
by ere("t;ng sprawling. Wal-Mart-stylc
sUJlCn,"enlcrs e"en more auressivcly lhan
Wal-Mart'~ own local sub~idiary. Sciyu,
Customers are floding to its 10w-co'1
stores. helping Aeon fore("a't re("ord
profit for lhis j"C<ll.
Oris. an auto an<l aif("ran Ica~ing
company, has gOllcn even more eremive,
seeking to turn il",lf into a global in""'t-
ment bank with ac4uisilions like lIle $5«l
million purchas" in October of Houlihan
Lokey Howard & Zukin. the Los Angeles-
ba>iC<l mergers an<l a'-''luisition a<lvisory
finn.
But nowhere are thc' c'hanges in
corporale behavior more apparent thao
in Japan', ekc,tronic's in<lustry, where
comp;mies wmpcle in whal the Japanese
businc,s pre,,, has <lubb<x1 a new "era of
wilHler~ "'ld losers:' The formeT include
Cannn. lhe camera make,,; Malsushita
Llee";e. nwker of P-anasoni(": and Sharp,
all thriving. ~ Icanwhilc, olher well-known
cOlllp:lnies like Sanyo t~l«trie. l'ion«r
aoo S'1I1}' ha,'e floundcrc<l.
"Everything ("hanges much f<lsteT
now than 10 ye<lrs al;0," ,aid Kt',anobu
Yamagishi. a spokesllwn at Pioneer.
But this new em of compelition <llso
bears ."'rrlC <listinctly Japanc", fl,>ori.,hes.
One is the relati""ly ~mall numocr of
byotTs. whic'h companies ,till "hun here
fOT fear of ruining morale. Mr. Machida,
for one, is prou<l of the fad Sha'l' <li<l 1K1l
release any of ilS "'9JlOO employocs duling
ils tumamun<l, instew c'Ull;ng cmls by
dropping PrOOtlCt lilles.
He spent hi, first yc'ar a, prc,i<lem
nHlking almO:St d'lily lrips to Sharp
ollic'e, an<l fa("[Dr)' fl'K'" amun<l Jal"l11,
exhoning employees 10 wor\.: C~1ra hard
to make his plan a ,u,','ess,
"'If we don't do lhi~. Sh<lrp ha~ no
future:' Mr. Machida repcme<lly said.
according to employcrs, M<lny listened
,ullcnly. un"'illing 10 mnlr.Kliet their boss
in public.
Mr, Machida f''''ed a particularly
tough sell at 5h;lrp's eompu1Cr panel di-
visiol1, whose pmtluets he was snap-
ping. In town-hall-Slyle meetings wilh
50 to 100 employe<'s at a lin1<'. hc said
South KOT<,an and Taiwan<,se manU-
facturer, could make Ihe saUle panels
and he challenged his engineer, to raise
the 4ualily of L.C.D, scr<'cns high
enough 10 work for lelevi,ion,. He SCi
technical gO<lls. such as tripling lhe con·
trast rmio, a way of mea~ur;ng picturc
sharpness. within Ihree )·ears.
Employees ,aid they were ~\.:eptkal al
first Ihat L.C.D:s could work, particularly
for large lele"isions. flUl support 'luickly
grew as lhey reachcd lmgets ~Ihead of
schedule.
Sharp gained '111 early Ic<ld in L.C.D.
tele,'isions that it still strives to maintain.
In Oclobcr, it will open the tlt'St faelOry
in the worl<l to u.sc so-ealle<l eighth-
gellefiltion L.c.D. pnxluction IcchnolOl;Y.
which incn.'a"" pro<luetion by using glass
p,l'lels as largc as <I king-size bed but only
as thick as a p<"tt·aru. Sharp now com-
petes in the glom'I L.C.D, markel wilh
''lKnp;m;''s more than I0 limes ib size, like
50f1Y:ln(] Snmsung t~lectrot,ics,
"'We are constantly telling employc",,"
to posh ahe;od:' "lid Shige;Jki Mizushima,
hca<l of Sh"'11 's L.C.O. <livi,i'KL '"We CM'I
st:lnd still for a ,nonlCnt."

Questions for Discussion

1. What a.... m'JX>T:llions in Japan like Sharp learning'!
2. Whm forc"Cs <Ire prompting them 10 learn to <lo things <li/fcrently lhan they have in the p<lst'?
3. How can managcrs and employecs in O11l<'r Japanese orgnnizmions learn vic<lriously from
corpor-,tions like Sharp?
4. How <lid Katsuhiko M achi<la boost employees' levels of self-emcacy to implement <lra-
matic changes at Sharp"
176 PART 1 • INDIVIDUALS IN ORGANIZATIONS
"Going Off the Beaten Path for New Design Ideas"
8\' L. Chambalai1/, 7111' New York fimes, Mlllril 12, 2006, Sec/io/l 3, /', 28,
When most other design firms "'ere
still using the same old focus·group
tedlniq~s, Iln:o invenled the unfo"us
group, in ",hich side con"ers;'I;ons among
pa"i"ipants are al,o f('cordc<:l-to hear
"'hat they "'el'<: really thinking, Finding
out not ju,t "'hat peopk really think, but
also ho'" they I'<:ally li"e, is the lifeblood of
IDEO's imK,wlive design "'Ork,
The f,rol 1H;1\!<:;lS name in designing
produ<.'ls, induding the Palm V hand-held
organizer, but it has ~n turning ilS
all"ntioll to spaces, or envimnmcnl design,
10EO, frnm<kd in San F",nciSl.~' in 1991.
IS dd "ing into the psychology of spac'C and
coming up with uou,ual appmaehc, for
companies likc Marrioll lutt'rnalional
and rorcsl Cily Entc'I"iso.."i. two of the
1:lrgesl I'<:al estale businesses '" the
(,'OIlntT)'.
Although IDEO has grown 10 400
employ.." ", it has retained il" re""areh
lechniqucs and small·f,rm allilOOe,
No one has a formal title, induding
Frcd Dust. who might he described as
the team leader of Smart Spaee, the
company's real eSlate division, With a
haeheJ",'" degree in art hi,'lory from
Reed College in Oregon :",d a Ilwste(s
in arl'hite"ture from Ihe Uni,'er,ily of
California, Berkeley, Mr, Dust is much
like the firm itself: studied yet unpre-
tentious. casually hip, oplimistic by
nalu,,'-and wT)' hard-working,
Smart Space takes on 45 projects a
)'ear, Th"y "lIlge fWIIl de'igning a heller
office cubicle to a project to rede"e1op
"'olTlln,,reial Vl'ntur,'s within an African-
American neighborhood in Kansas City,
"We design for a"tivity as much for
spac'C," Mr, Dust said.
To achicve this, tlK- Icam ,tarts "ilh a
"deep dive:' during which Sm;'rt Space
de,igners, wlthm(Xllogi"ls alld resemdk:rs
~pend Jays-somClimes weeks-~ha<km'.
iug pcopk to observe how they live: "ocn
and where they cal, what time lhey /;0 to
bed. wh<lt their hobbies <II'<:, how they
~pcnd their money. The re~ult~ of this
researeh are otkn quite differenl from the
l'OIl\'entional wisdom.
An example IS a project that Sm,,"
Space ,,-x'entl)' n'mpletoo for a Manion's
l'xll'nded-Sl<l)' hotel dlain, TowncPlace
Suites, '[lie prevailing wisdom <lbout tr;,v·
dl'rs who need extcn<kd-sl"y al'COmrno-
d"tions is that they want ,111 their needs
10 be 1T,,'t by the hold itsdf, IDEO
I'<:scarchers found this aSS\Jnlption 10 be
illcorl'<:l'l after ,pending we,,\;s talkill/;
with TownPlace guests,
What they found WaS that people on
extended "tays do II()( latk abolJl "staying"
in the hold but "living" m lhc city, They
want to get to know the community around
tlK-m. alld they do no! "'anI to spend 11 101
of time hanging around the hOiei. And
ocemtse they h:I\'e fewer chol'<:s-like
mowing lhe lawn or walking the do/;-
they also want to usc lheir spare time on
~uch thinl,\s m; learning a new langual,\e or
tuking pi:Ulo lessons,
IDEO tr"n"laK-J Ihose re~ults into a
design coneept. In the IleW lobby, inslead
of lhe traditional couch, ,'off..", table and
television set thm nobody is w"tchin)!,
there are" IO-minute perl'hes" - bern:he",
stools and places to statld and Iean- wllere
a g""~t e,m flip Ihrough a magazine while
lillishill)! :1 cup of colfee,
More ~ignifil'antly, Ihe Smart Spaee
te;lIll designed <I m<lp wall: :' huge
rend,'ring of the immediale "rca, "'ilh
notalions ;'bout local shoppin)!, restau·
mnts, parks "nd rencation an'aS, But it
is more th;ln just a m:'p, It can be
annotated by )!Ue,1S who fInd thl'ir own
hidden treasures in the community. and
it Se,,'eS as a ,'ml""rsalio" start"r,
The team also foutld th;'t ~ause
guest> (,ften 1l<.'Cd the l"ljuivaknt of a homc
office, they may tom their bedrooms into
work spa.:es, So it came up with a highly
fk'ible nlOdular wall unit where there had
pl'<:viously been only a Iarb'" dining t:rIlle:
guest> ean aJapl 1he e!cments to usc them
:1.< an office as wd I a, a pIa..", to eat.
The client, of courJ<c. has to buy into a
de-ign concep!, So the Smart Spue" leam
buili a Iife-~ile lobby and suite out of
while foam eore and invi1ed Marrioll
eseemiv".', hOle I manager~ and even
guests to inlcract wilh the new design
and to make ~U)!ge,'lions.
"We've ne"cr gOlle through "nythmg
like this," "aid Laur" Bates, senior vil'e
prl'~id"n1 for extended-stay brands at
Marriotl, "We have built sample rooms,
but it's 1TIOfl' of" dl'c'()f "ppml"h, Thi.' was
fUOOalllCnt:,lIy ehan)!in)! the SP.1CC layout
and the an:hitl....tu"', N"t only did ,,'" b.... t a
str;'tegy basc<l on the anthropology of the
gue,t. but we gO!. veT)' <jui("kly to t:mgiblc
design."
Marriott hil'<:d all an:hit"'-'Iul'<: finn 10
earry out the redesign, which will be
rolled out at all 122 TownePlaee Suit"s
,ile~ ~tarting in April.
One of IDEO', biggesl clients is
Fore"t City Enlerprises, Ihe real estate
devclopmentl'OrTl]XU1Y based in Cleveland,
For mo~1 rcsidential projeet.', "the
typie<ll developcr pt'l>j;mms the number of
(>IlC-, IW(}- and th"-,,,-bednx>1ll units ba,,--J
on some kitld of rese:1l'I:h of the area, and
then hire~ an architect:' ~aid Gregory
Vilkin. president of Foresl Cily Residential
We,,!. '1"al\ nol ,·ery "ophi~til'ated," he
added, "We w:1I1tcd to really undcrs~md­
what i~ orban hOlL~ing and who hes thcre~
They conductcd extensive research and
eanl<.' up with five differem prmotype~ of
the urban dweller, and we tested th:1I
again"t om diems, and il wa~ rcmarkably
;occurJte:'
For ex:l1l1pl<-, Smart SI"ICC re~<-,al,:h ..-,,,
identilkd one group as "e,Wlol'<:rs"-
l'mious alld imntigati"" people "'ho likl'
to explore the neighborhood and ;'re
allr:ldcd to old ,'olHlllereial buildings
coll"erlc<:l into hOI,l,;ing "lid ()(her creati''''
living SI"'CC'S, Another group is "modl'm
rom;Illtics:' who tend to be highly
c<:Iocat"d, "'ant cOlllfo" alld 5\'"k to Ii, e in
tr"dilinnal apallnlent bui Idings,
Bccallse of the rcscaR'has' wurk, the
Small Spac'C team R',:omlllendcd scr..pping
th" old-f:"hion"d I<-a,ing office and
replacing it with a "weleorning center.'-
One will opcn SOOn at University Park
U,'ing, a four-building dewloprnem in
Cambridb'C, Ma",
Ralher Ihan jusl selling units, Ihe
welcoming ccn1er wl11 also showcase the
surrounding area with a "Five, Five,
Fiw" map thaI shows neighborhood
amenities within row minutc", fi\'l'
blocks :md li"e Imlcs, Potential I'<:sidems
are al"o offered a ""leetiol1 of (Xl~I<'ard~
 CHAPTER 5 • LEARNING AND CREATIVITY 177

thal mclude facts :Ibout the devclopment
and the neighborhood: one card. for
example. nllght have a pieture of a
dog with information about nearby
"eterinary clinics. People take thc cards
that interest them and essentially create
their own brochures. inste:ld of being
hand~..J general one, by sales agent'.
An interactive mea will have com-
puter; whe", people ~'an take a tongue-in-
the four Forest City buildings-all "ery
diffe"'nt in de,ign -will be,t suit them.
"11', a whole di/krent way 10 experi-
ence lea.,ing." .,aid Adam Siegal. vice
president for strategic mmketing at the
fo"',t City Enterprises ""idcntial gnMJp.
Though Forcst City Emerprises and
IDEO have worked IOg<'lher for only a
lillie more Ihan a year, the compmly
npe"ts the relationship to have a signifi-
ultimately designed, not just marketed.
Forest City Enterprises has signed an
exclusi"e contnlct with IDEO, which nO'"
has a team that works solely on Forc,t City
projects, foeusmg on its high-end urban
rental hou,ing.
"When you're budding a new space.
the dient ha, to own it:' Mr. Du,t said.
"So we are at our best when we're
tea~'hing our dienls how to lx, their own

cheek personality test to lind out which of cant impact 011 how de"elopmcll1s are design advocates:'

Questions for Discussion

1. How docs learning take place at mEO'!
2. Why is it imponam to listen to and ob,!'r"e lll'ople to learn what appeals to th!'rtl"!
3. What process docs IDEO follow to come up with cre:llive new iocas'?
4. Why do most corporations approach design in a very differcm w:ty from mEO'?
 PAR T 1
Individuals in Organizations

THE NATURE OF WORK

MOTIVATION

OVERVIEW

W"AT Is WORK MOTIVATION'!

NEELl THEORY

EXI'H..'TANCY THEOR\'

EQUITY Tllt:ORY

ORGANIZATIONAL .IU!>'TICE TIIEOR\'

SUMMAR\'

EXERCISES IN UNLlERST,\NI)IN(; ANI) l\IANA(;IN(; OR(;A>"IIZATIONAL IlEIiAVIOR

Learning Objectives
After studying this chapter, you should be able to:
Appreciate why motivation is of central importance in organizations and
the difference between intrinsic and extrinsic motivation,
Understand what we can learn about motivation from need theories,
Describe why expectancy, valence, and instrumentality are of central
importance for work motivation,
Appreciate the importance of equity and the dangers of inequity,
Understand why organizational justice is so important and how to
promote it,
 Opening Case
MOTIVATING EMPLOYEES AT THE SAS INSTITUTE:
A GLOBAL SUCCESS STORY
How can organizations continue to grow and have satisfied employees
in the hard times as well as the good times?

ith over 10,000 employees, the SAS Institute is the largest privately
owned software company in the world.! Annual revenues at the SAS
Institute have increased for 29 years in it row; in 2005, SAS's annual revenues
were over Sl.G billion and 24 percent of these revenues were reinvested in
research and development,l $AS's customers can be found in 110 different
countries and, in addition to its headquarters and offices in the
United States, SAS has offices in Europe, the Middle East,
Africa, Canada, Asia Pacific, and Latin America. 3
Moreover, the 5AS Institute continues to win accolades for
the way it treats its employees. For nine years in a row, it was
included in Fortune magazine's" 100 Best Companies to Work
for in America, and it has been cited 13 times as one of the
N

N 100 Best Companies for Working Mothers. ,,4 Moreover, SAS is

well known for its ability to attract and retain top talent in the
software industry; employee turnover rates at SAS are much
lower than in many other large organizations. S How does
the SAS Institute maintain this win-win situation of sustained
growth and satisfied employees, even in economic downturns?
Essentially, by the way it goes about motivating its workforce.
The SAS Institute, founded in 1976, has always strived to
ensure its employees enjoy their work and are motivated by
the work they perform. Managers believe that employees
should be interested and involved in the work they are doing
and feel that they are making meaningful contributions. For
example, whereas some software companies seeking to
The SAS In~lilu1e mUli'-ales i1S employees in expand into new markets, such as video games or educational
r1l1r1K:rIluS ways which has enablc<:l il10 aehic"c software, buy companies that have already developed
an enviable 1r",,,.. k record of 'Ul"<-",,"_
these products, the SAS Institute does all its new product
development internally. Although this approach might take
longer, SAS believes it is beneficial because employees find that
developing new products is interesting work. Moreover, SAS encourages
its employees to change jobs within the company (getting additional
training if needed) so they continue to be interested in their work and
don't grow bored with what they're doing. 6
Whereas the work itself is a major source of motivation for SAS employees,
managers at SAS are also concerned with fairly and equitably rewarding
employees for a job well done. Pay and bonuses are linked to performance,
and the company emphasizes fair treatment in numerous ways. For example,
all employees have private offices. As another example, Jim Goodnight, one of
SAS's cofounders and its current CEO and chairman, says that a founding and
enduring principle of the company is that managers should treat employees
the way the managers want to be treated themselves.7
The SAS Institute also cares about its employees and their families' well-
being both on and off the job. Some of the many other benefits employees
receive in addition to interesting work and equitable financial rewards
include an attractive work environment, with atriums overlooking rolling

WORK MOTIVATION
The p,)'chologic~J fon:e, thaI
determine the dire"tion of a
pc"on", ocha'wr '" ~n
org~oil.lll;on, a pcr'(}I\', level
of effon. ~nd a pcr>on',
level of pcr'i,\cnce.
CHAPTER 6 • THE NATURE OF WORK MOTIVATION 181
hills and artwork adorning the walls, access to the latest technology, 35-hour
workweeks, two low-cost on-site child care facilities, a 77,OOO-square-foot
fitness and recreation center,S on-site medical care, a putting green, and
high chairs in the company cafeteria so employees can eat lunch with their
children. The corporation's headquarters is located on 200 idyllic acres in
Cary, North Carolina. Employees and their families can walk or jog around
the campus's scenic trails or picnic on its grounds. 9 And, in 2006, Fortune
magazine ranked SAS NO.1 in childcare. lo
Goodnight has been committed to motivating employees to develop
creative and high-quality products that are responsive to customers' current
and future needs since SAS's founding days; currently, 96 percent of the top
100 companies in the Fortune 500 list use SAS products for any number of
purposes including risk management, monitoring and measuring performance,
managing relationships with customers and suppliers, and detecting fraud. l1
SAS also provides educational software for schools and teachers through SAS
in Schools. 12 At the SAS Institute, motivating employees really is a win-win
situation.
Overview
As the SAS Institute case suggests. motivaling employees to make importmll contributions
to thcir jobs can have a profound impact on organ izatiollal cffectivcncss. Mol ivatioll is cell-
tralto undcrSlanding and managing organi7,ational behavior bcrausc it explains why peo-
ple behave as thcy do in organizalions. u Just as your own lllolivation delcrmincs how
many classes you take. how hard you study for exams. and lhe amount of lime and effort
you spend 00 rescarch projects. similarly. lllotivatioll dctcrmincs how hard ITlcmbers in an
organization will work to hclp achieve its gook Motivation cxplains, for cxamplc, why
onc cmployee wants and lries to do a good job while anoliler employee with the SlIme abil-
Ities couldn't care less. Motivation also explains why some students strive for A's and study
mUc'h hardcr than OIhcrs, who are COll!Cll! with maintaining a solid B avcragc.
In this chaptcr. wc cxaminc work motivation. Wc focus on thc important distinctions
betwecn mOlivation and performance ;;Iud bel ween il1lrinsie and extrinsic mot ivai ion. Wc
discuss several spcciiic thcories of work lTlotivalion: necd thcory. expectancy theory.
cquity thcory. and organizmional justic'c thcory. E<lch theory secks to explain why people
behavc as they do in organizations and suggests ways of increasing employee motivation
and pcrfonnanec, An understanding of motivillion is of utmost imporunee for org:miz,l-
tional effcctiveness. Managers nced to cnsuI'C that employc'Cs choose to act in ways that
help the organizmion achicve ilS gO<lls and avoid behaving in ways that hinder till.' pursuit
of organi7..ational objeetives,
What is Work Motivation?
Muti\'mioJl is a frequently used but ]XlOrly ullderstood terrn. Over 140 definitions have been
provided o\'er lhe yems.t 4 and noted scholars of work molivation have said that trying to
ddinc 1I/00il"<lliol! oftcn givcs them "a scvcre stomachacoc:' 15 This remark may be a bit of
an exaggeration. but it undcrscores thc nced to get a fiml grasp on what motivation is before
we try to understand its role ill understanding aod manllging organizaliooal beh;;lvior,
Motivalion is important because it explains why employees behave as they do. Wurk
lIIoli,'alion can be dcfincd as thc psychological forccs within a peThon that dctcrminc thc
directiOll of that person's behavior in ;;In organization. effort level. and persistence ill thc
182 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 6.1
Elements of Work Motivation

Element Definition Example

Direction of behavior Which behaviors does a person choose
to perform in an organization?
Level of effort HO'N hard does a person work to
perform a chosen behavior?
Level of persistence When faced with obstacles, roadblocks,
and stone walls, hO'N hard does a
person keep trying to perform a
chosen behavior successfully?
Does an engineer take the time and effort
to convince skeptical superiors of the need
to change the design specifications for
a new proouct to lower production costs?
Does an engineer prepare a report outlining
problems with the original specifications, or
does the engineer casually mention the
issue when he or she bumps into a
supervisor in the hall and hope that the
supervisor will take the advice on faith?
When the supervisor disagrees with the
engineer and indicates that a change in
specifications is a waste of time, does the
engineer persist in trying to get the change
implemented or give up despite his or her
strong belief in the need for a change?

f~lce of obswcles. 16 Because motiv:l1ion inl'olves psychological forces within a person.

tn~ny orlhe topin lhat we cover in prior chapters ilrc relcvilntlo understanding motIVation:
personality and ability (Chapter 2): values. attitudes, ilnd ITloods (Chapter 3); and percep-
tion and attribution (Chapter 4).
The three key elements of work motivation Me direction of behavior. level of effort.
and level of persistence (u-e Exhibit 6.1).

Direction of Behavior
Which behaviors does a person choose to perform'! On any job. there are many behaviors
(some appropriate. some inilppropriilte) that the jobholder can engage tn. Dirt'Clio" of
bdwl"ior refers to the behavior employees ('!loose to perform from the many potemial
behaviors they could perform. If a stockbroker in an investment banking firm illegally
rmmipulates stock prices. if managers advance their own careers at the expense of their
subordin~tcs. or if an enginecr convim;es skeptic,tl superiors to changc the dcsign spel:irl-
cations of a new product in order to lower production l:osls-;tll of these actions rl"flect
behaviors thcse employecs chose to perform.
As the examples illustrate. employees can be motiv,lled inflll/l'liOlwl ways that help an
organizmion achieve its goals or m dysfllll('riOlwl w;lyS th~t hinder an organization from
achieving its goals. In looking m Illotivation. managers want to ensure thm the direction of
their subordinates' behavior is functional for the organization. They want employees to be
motivated to come to work on time. perform their assigned tasks depend~bly. come up with
good ideas. ~nd help others. They do not want cmployees to l:ome to work I~te. Ignorc
rules ('ollcerning health and safety. or p~y lip service to quality.

level of Effort
How hard docs a person work to perform a chosen behavior'! It is not enough for an orga-
nization to motivate employees to perform desired funnional behaviors; the organization
must also motivate them to work hard at these behaviors. If. for example, an cngineer
decides to try to convince skeptical superiors of the need for design changes. the engineer's
 CHAPTER 6 • THE NATURE OF WORK MOTIVATION 183

Starbucks is a model of
employee learning, ownership.
i,,'·olvemellt. and mot i\'<l1 iun.
Even pan-lime Starbucks
employees. or "panners:' as they
arc calk'<!. get stock options. full
healtlJcmc bellef,ts. and
extensiw training.

level of motivation determines the lengths to which he or she will gu to convince them.
Does the engineer juM mentiun the need for the change in easuall:unversatiun. ur does he
or she prepare a detailed repon oUllining the problems with the original specifications and
describi ng the new, cost-saving spccifie31ions thm arc needed?

level of Persistence
When f,tcoo with obst;lcles, ro.1dblocks. and stone walls. how hard does a person ke.::p try-
ing 10 perform a chosen behavior successfully'! Suppose the engineer's supervisor indi-
cates thm a change in speciflClltions is a wastl.' of time. Does the engineer persist in trying
to get the change implemelHed or give up even though he or she strongly believes it's nee~
essmy? Likewise. if a factory employe.::·s machine breaks down. does Ihe employt'C simply
stop working and wait for someone to come along to fix it, or docs the employt'e try 10 fix
the machinl' or at least alen mhl'rs aboUithe problem'!

The Distinction Between Motivation and Performance

Because 1110tiv31ion determines what employees do and how hard and diligently Ihey do it.
you might Ihink Ih,1I an employcc's motivation to du a job is the 5<lIl1C as Ihe empluyee's
job performance. In fact. motivation and performat1l"e. though often confused byemploy-
ees and managl'rs alike. arc two distinct aspects of behavior in all organization.
PeriormWlt't' is an evalumion of the results of a person's behavior: II invol ves detennin ing
how well or pourly a person has ae<:omplished a task or donc a job. l? MOI;ml;ol1 is unly
one fa(;\or among many that contributes to an employcc's job performance. The perfor-
mance of a srrccnwritl'r for a television series, for exam pic. is the extent to which viewers
find his scripts to be informative, entertaining. and engaging. Similarly. a research scien-
tist's perfomJarlcc is the extcnt 10 which hcr rescarch advanccs knowloogc. amJ a physi-
cian's perform.tIl!.:e is the extent 10 whieh he provides high·qualily care to patients.
Whm is the relationship between mUlivalion and pcrfonnance? All else hcing equal.
onc would expeci a highly motivatcd screcnwriter to wrile bener scripts than those wrillcn
by a poorly motivatcd srrt'Cnwriter. 18 All clse. howcvcr. is nOI always t-qual bc<:ause so
many othl'r fa(;\ors affe!.:t performanee-fadors such 'IS personality and ability (see
Chapter 2), the d iflkulty of the lask, the avai labitit y of resources. work ing condit ions. and
chance or luck. A screenwritcr who is highly creative. for example. m,ly quickly lum oul
high-quality s<:ripts. cvcn though his ur her mutivalion to do so is nol high. And a physician
in Somalia who is highly motivated to pl\Jvide high-quality medi!.:al care Illay have diffi-
cultly providing it due to inadequate facilities or a lack of supplies.
184 PART t • INDIVIDUALS IN ORGANIZATIONS
INTRINSICAllY MOTIVATED
WORK BEHAVIOR
Ikha'ionhal is Jl<'rformN for
0"" 'ale_
,t,
EXTRINSICAllY MOTIVATED
WORK BEHAVIOR
Ekha,-ior that i' JX'rfofmed lO
'""4"'fCmilleri'll or '''''ial
re"af(h or 10 avoid punj'hl1lem
In summary, bccau-;c llJ{)\ivation is only one of se"eral factors that can affect pcrfonnancc,
a high level of motivation does not always result in a high lel'el of perfonnancc. Conversely,
high pcrfomwm:e docs notlk:cessarily imply lhat motivalion is high: Employees wilh low moli-
vation may perfOffit al a high level if they h;I"e a great deal of abilily. Managers have to be \:arc-
ful not to automatically attribute the cause of low perfonnancc to a lack of motivation or the
callse of high perfonnance to high motivation (St." Chapter 4). If they incorrectly :lSSumc that
low perfonnallee sterns from low motivalion. nwnagers nt<1y overlook lhe real \:ause of a perfor-
mann: problem (such as inadequate training or a I;Kk of resources) and fail 10 take appropriate
actions to rectify the situation. Similarly, if managers assulIle that employees who perfonn at a
high level are highly motivated. lhey may inadvertently fail to take advantage of the talents of
exceplionally cap.1ble employees: If employees perl'omt at a high level when their mOlivation
levels arc low. they lIlay be l'apable of making truly exceptional \:ontributions to the organiza-
tion if managers de"otc their effons to boosting their motivation.
Intrinsic and Extrinsic Motivation
An01hcr distinction import::mt to a discussion of motiv"tion is the difference between the intrin-
sic and extrinsic Sotm:es of work mutivation.lntrinsicall)· I1mlh-all'd work beha,-ior is behav-
ior that is pcrfoffilC'd for its own sake: the source of motiv;nion actually willes from pcrfoffiling
I"
the behavior i~lf. in other words. A professional violinist who relishes playing in an oreltes-
tra regardless of relatively low pay and a millionaire CEO who repeatedly potS in twell'C-hour
days because she enjoys her work are buth intrinsically motivat<.'d. From the opening case. it is
clear that empluyccs at the SAS Institute arc intrinsically motivated: they really enjuy their
work. Employecs who are intrinsically mOlimtcd often remark that their work givcs thcm a
sense of accomplishment and achievemcnt or thattltey feel that they are doing something
worthwhile. For young professionals in China.1c'Ulling ami having the up(XJnunity to develop
new skills unthc job arc imponant soun:cs of intrinsic motivation. Aftcr surveying Chinese
managcrs, Grace Cheng. the managing director of Kont Ferry's search finn in Beijing. con-
cluded that "Inoney is a less important reason to change jobs than lhe (XJtcntial to grow.. :.~
As indi\:ated in the a\:\:ompanying Managing Ethi\:<llIy feature. prutecting the nalural
environment is <I source of intrinsic motivmiol1 thaI benefits us all.
Extrinsiclilly 1ll01il'1I1cd work behllvior is behavior that is performed to acquire
material or social rewards or to avoid punishlllenl. 21 The behavior is performed nOl for ItS
own sake but rather for its consequences. The operant conditioning thl'Qry of learning dis-
cusscd in Chapter 5 csscntially deals with how consequcnces (positivc and negmive rein-
forccrs and punishmcnt) can be used to generate extrinsically motivated behavior.
Examples of rew:trds that may be a source of extrinsic motivation include pay, praise. and
stallls (discussed in ddail in Chapter 8).
An employee can be extrinsically motivated. intrinsically motivated. or both. 22 When
employces are pri mari Iy extrinsically motivated and doi ng the work itse If is not a source of
motivation. il is espeei<llly im(XJrtant for <In org<lni:wt;on and its managers to make a cle,lT
\:unncction betwccn the behaviors the organizmiun wants employees to pcrfurm and thc
outcomcs or rewards employees walll.
You may be wondering whether lhere is any connection between i11lrinsic and extrinsic
motivation and the intrinsi\: and extrinsic wott valnes we described in Chapler 3. Employees
who have intrinsic work values wam challenging assignments. lhc opportunity \() make
important cOlHribut ions tu their jobs and organizations, and the opportunity to reach their full
polclHials III work. Employees with extrinsic work values desire some of the consequences of
working. such as earning money. having status in the community. social cuntacts. and lime
off from work fur family and leisure. It stands III reasun that employees with strung intrinsic
work valucs are likely to walll to be intrinsically motivated at work and those with stmng
extrinsic work values are likely to want to be extrinsically mOlivated at work.
Theories of Work Motivation
We have explored what motivation is. where it \:umes from. and how it is rclmed to the per-
furmanee of behaviurs in an organizatiunal sell ing. But we have nut considered what moti-
vates people. why they become motivated, and how they <;Ustainlhcir motivation.
 CHAPTER 6 • THE NATURE OF WORK MOTIVATION 185

Managing Ethically
Protecting the Environment

William McDonough is on a mission to save the planet, get rid of waste, and make large
corporations believe it is worthwhile to take part in these elforts 13 And his mission is pay-
ing off. McDonough is an environmental designer who, along with partner Michael
Braungart, are developing methods for organizations to make products in ways that do
not result in waste and harm the natural environment. For example, McDonough and
Braungart helped make a new material for the soles of Nike athletic shoes that biode-
grades without toxic chemicals being released. They also helped Herman Miller design a
factol)' that relies on solar heating and cooling, which reduced energy consumption at the
facility by around 30 percenl. 24
McDonough is so intrinsically motivilted to protect the environment that he believes
even recycling does too much hilrm. Products that are made out of recycled substances
still contilin some of the toxic substilnces in the original products. For eXilmple, plastic
bottles ilre often recycled, but the heavy metills ilnd carcinogens in the bottles still
make their way into the
recycled products. And
those products eventu-
ally make their way into
landfills 2s
McDonough and
Braungart introduced
the concept of "cradle-
to-cradle design" 10
their book entitled Cra-
dle 10 Cradle: Remak-
ing Ihe Way We Make
Things, published by
Northpoint Press and
William McDonough dcsignc<llhis bllil<ling for I'!crlllan Miller.
translated into Chinese,
Korean, German, Italian, and Spanish. 26 Cradle-to-cradle design means developing
products using biodegradable raw materials in ways so that when a product is no
longer useful, either the materials it is made of can be used over and over again in
other products or they organically decompose. McDonough recently developed a new
carpet lor the Shaw Industries unit of Berkshire Hathaway according to this design
principle n The carpet, called "A Walk in the Garden," is made of nylon pellets and
polymers that can be used over and over again to make new carpets, once an original
carpet wears oul. Typically, even material from recyclable carpets ends up being used
to make other products that find their ways to landfills once they are no longer useful
Not so with A Walk in the Garden, which has manufacturing costs that are 10 percent
lower than some of Shaw's other carpet lines l8 McDonough is currently working with
the China Housing Industry Association to help them design sustainable housing in
seven new cities with materials that contain no harmful chemicals and in ways that
require minimal energy costs for cooling and heating. 29 Clearly, social responsibility
and protecting and preserving the natural environment are ethical concern's that
should be on all of our minds.
186 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 6.2
The Motivation Equation

Inputs Outcomes

"fun Qu.nt;ty of work ,.,

Tjm~ Quality of work Job security
Ed"cOlion ltvtl of c,,",omer service Benef."
E><penence V.c>tton
Skill, Job sali,faction
Knowledge F...ling of accompli.hment
Job beh.v,o" Plea.ure of domg inte~..mg ....'olk

Theories about work motivation provide answers to such questions by explaining why
employees behave as they do in organizations. The key challenge facing managers in terms
of motivation is how to eneour:tge employees to contribute inputs to their jobs and to the
organization. Managers want employees \() be motivated to eOlllribute inputs (drort. spe-
cific job behaviors. skills. knowledge. time. and experience) because inputs influence job
performance and. ultimately. organizational performance. Employees arc concerned with
obtaining outcomes from the organization-both extrinsic outcomes (pay and job security)
and intrinsic outcomes (a feeling of accomplishment from doing a good job or the pleasure
of doing illleresting work). These kcy conccrns for managers and their employees IiI." at the
heaT\ of motivation. As indicated in Exhibit 6.2. we can graphically depict these concerns
III an equation: Inputs-.Perfornl.l1Il'C-.Outcomes.
The four theories that we describe in this chapter-need theory. expectancy theory.
equity theory. and organizational justice theory-nrc 1'OIIJI'Iell!('III<ln' perspectives. Each
theory addresses different questions about motivation in organizations and the relation-
ships between inputs. perfonl1ance. and outcomes, shown in Exhibit 6.2. Note that each of
the four theories has its own merits-there is no "best" theory. in other words. To get a
good understanding of organizational motivation. we need to cnnsider all four.

NEED THEORY
A !,:fllUp of thenrie' about won.
mOlivation that f'K'u<l" on
"mplO}'cc,' """Ih a, tnc 'oon:.....
of ml>lt'at,on
NEED
A requirement for ,ur,i"al anu
well-being.
Need Theory
Need theory focuses on the outcome side of the equation in Exhibit 6.2 and on this
quest ion: IV/WI OIIf('Ol/leI liFt' iI/iii ridlla/I mOliwl/cd 10 vbwiu from rhei r jobs (IIIlI or811-
/li::(l/i(!IIs~ The principal message of need theory is that employees ha\'e needs that they
are motivated til satisfy in the workplace. 30 In order to detcrmine which outcomes moti-
vate employees the most. 1l1a1Hlgers must first learn which needs employees are trying
to s:ltisfy.
Once an employee's needs arc determined. the manager must make sure that she or
he can Ctlmml-either admini~;\cr or withhold-the outcomes satisfying those needs. The
manager should make it clear to the employee thlll receiving the outco111es depends on
the desired behaviors being performed. Then the manager must administer the outcomes
contingent upon thm performance. In this way, the employee satisfies her or his needs
whilc also contributing imponant inputs tn the organization.
Although we just described need theory :IS if it is only one theory. 1Ict.'d theory is actu-
ally a group of theories about work motivntiotl. Collectively, these theories explain what
mOlivlltes employees to behave in ccnain ways by focusing on employees' needs as the
sources of motivation. Need theories propose that employees seck to satisfy many of their
needs <It work ,Ind that their behavior at work is. therefore. oriented toward need satisfaction.
A need is a requirement for sur\'ival and well.beitlg. To determine what will moti-
vme an employee. a manager Iirst must determine what needs au employee is trying to
satisfy on the job because needs will V:lry from person 10 person. Thc manager then
 CHAPTER 6 • THE NATURE OF WORK MOTIVATION 187

must ensure thm thC" C"mployC"e can ,misfy his or hC"r needs hy engaging in behaviors
that contribute to the organization's effectiveness. The two theories that we discuss next
by Abmhmn Maslow and Clayton Alderfer describe se\'er,11 specific needs employees
try to satisfy through their work behaviors and the order in which they try to satisfy
them. In prC"vious chapters. we discussed two othcr nC"ed-based approaches to under-
standing behavior in organizations: David McClelland's work on achievemell\. affilia-
tion. and power needs (see Ch<lpler 2) amI Frederick Herzberg's mOlivator-hygiene
theory (Chaplcr 3).

Maslow's Hierarchy of Needs

Psyc'hologist Abraham Maslow proposed that human beings have fIVe universal needs they
seck to satisfy: physiologiealneeds. safety needs, belongingness needs, esteem needs. and
self-aclUalization needs. These needs and examples of how they can be satisfied arc
desnibed in Exhibit 6.3. Maslow proposed thai these nc-eds can be arr.mged in a hierarchy
of imponance. with the most basic or comP'Clling needs-physiological and safety
needs~at thc basc. J' Thcse basic needs must be satislicd before an individual sccks to
satisfy IIccds higher up in the hierarchy. Maslow argued that ollce a need is satisfied. it is
no longer a source of motivation.
There arc Illany ways tllat organizations can hC"lp employees who <lrC" at dilTerclll Icv-
cis in Maslow's hierarchy smisfy their needs while m thc same time <ll.s.o hclpthe organiza-
tion achieve its goals and a competitive advanlage. Some organizations. for example. help
satisfy employees esteem needs by providing special recognition for their outstanding
aecolllpi ishments and ach icvcmellls.J1

EXHIBIT 6,3

Maslow's Hierarchy of Needs

Need level Description Examples of How Needs Are Met or

Satisfied in an Organization

Highest-level Needs
Self-actualization needs Needs to realize one's full potential
as a human being
Esteem needs Needs to feel good about oneself and
one's capabilities, to be respected by
others, and to receive recognition and
appreciation
Belongingness needs Needs for social interaction. friendship,
affection, and love
Safety needs Needs for security, stability, and a safe
environment
Physiological needs Basic needs for things such as food,
water, and shelter that must be met in
order for an individual to survive
lowest-level Needs (most basic or compelling)
By using one's skills and abilities to
the fullest and striving to achieve all
that one can on a job
By receiving promotions at work and
being recognized for accomplishments
on the job
By having good relations with co-
workers and supervisors, being a
member of a cohesive work group, and
participating in social functions such
as company picnics and holiday parties
By receiving job security, adequate
medical benefits, and safe working
conditions
By receiving a minimum level of pay
that enables a worker to buy food and
clothing and have adequate housing
188 PART I • INDIVIDUALS IN ORGANIZATIONS

According to Maslow's theory. unsatisfied needs arc the prime motivators of behavior.
and needs al the lowest levels of the hierarchy lake precedence over needs at higher levclsY
At any pmticular lime. however. only one sct of needs mOlivates behavior. ,lIld it is not
possible to skip levels. Once an individual satisfies one set of needs. he or she tries to
satisfy needs at the next le\'el of the hierarchy. and this level becomes the focus of
motivatioll.
By specIfying the needs that contribute to motivation. Maslow's theory helps m:m-
agcrs determine what will motivate any given employee. A simple but important lesson
from Maslow's theory is that employees differ in the needs they try to satisfy at work
and that what motivates one employee may not motivate another. What docs this con-
clusion suggest'? To have ,I motivatetl workfurce. managers must identify which needs
each employee is seeking to satisfy at work. antl once these needs have been itlentifietl.
managers must ensure that the employee's lleetls arc satisfied if he or she performs the
desired behaviors.

Alderfer's ERG Theory

Clayton Altlerfer's e.\ISlence-relatetlness-growth (ERG) tht'{)ry is ,t1so a need theory of
work motivation. Altlerfer's theory builtls on some of Maslow's thinking but retluce> the
number of universal needs from five to Ihree and is more flexible in terms of movement
between lel'els. 34 Like M;lSlow. Alderfer ;llso proposcs thm needs can be arranged in a
hieran:hy. The three types of Ileetls in Altlerfer's theory are desnil:x:d in Exhibit 6.4.
Whereas Maslow assumes that lower-level needs must be satisfied before a higher-
lcvel necd is a motivator. Alderfer lifts this restriction. According 10 ERG theory. a
hig her-level need can be ,I motivator even if a lower-level need is not fu II y sat isfied. ;lntl
neetls 'II more than one level can be motivaturs at any time. Alderfer agrees with
Maslow that as lower-level needs arc satisfietl. an employee becollles motivated to sat-
isfy higher· level needs. But Alderfer breaks with Maslow on the consequences of need
frustration. Maslow says that once a lower-level need is satisfied. it is no longer a
source of mot ivation . Alderfer proposcs that when an intl iv idual is mOl iv:lted to salisfy
a hi gher-1cvcJ need but has tl ifficu Ity doi ng so. the persoll's IllOt ivatioll 10 satisfy lower-
level needs will increase.

EXHIBIT 6.4

Alderfer's ERG Theory

Need lever Desaiption hamples of How Needs Are Met

or Satisfied in an Organization
Highest-Level Needs

Growth needs Needs for self-development and creative By continually improving skills and
and productive work abilities and engaging in meaningful
work
Relatedness needs Needs to have good interpersonal By having good relations with co-
relations, to share thoughts and workers, superiors, and subordinates
feelings, and to have open two-way and by obtaining accurate feedback
communication from others
Existence needs Basic needs for human survival such as By receiving enough pay 10 provide
the need for food, water, clothing, for the basic necessities of life and
shelter, and a se<ure and safe by having safe working conditions
environment
Lowest·level Needs

EXPECTANCY THEORY
A theory aboUl work motivation
thai f,,,,u'c' On h<m employees
makc ,hoice' wno!lg allemult,·c
beha,·i"" and Icwl, of em,"
A<:<:ording to e~pc<:t"n<:y
theory, employees like this oil
focld worker in Te~"s must
Ix:hC\'e lhut high )c"els of effort
will lead 1(, high levcls of
pcrfonnunee in order for their
moti"uti"" to be high_
CHAPTER 6 • THE NATURE OF WORK MOTIVATION 189
To sec how this process works.leCs look at the easc of a middle manager in a manu-
facturing finn whose existence and relatedness needs (lower-level needs) are prelly much
salisfied. Currenlly, the manager is motivated tu try IU salisfy her growth needs bUI finds
Ihis hard tu do Ix..:ausc she has been in the same position for the paS! live yc<us. She is vel)'
skilled and knowledgeable about all aspects of the job, and the wide variety and number of
her current responsibilities leave her no time to pursue anything new or exciting.
Essentially, Ihe nwnager's mutivaliun to sallsfy her growlh needs is being fruslraled
beC<luse uf thc nmure uf her job. According to Alderfer, this frustration will increase the
manager's motivation to satisfy a lower-lcvel need such as relmedncss. As a result of this
motivation. the manager becomes more concerned aoout interpersonal relations at work
and contitlll.llly S<.-cks hunest feedback from her colleagues.
The Research Evidence
Because Maslow's and Alderfer's theories were among some of the earliest approaches to
wort motivation, they have received a considerablc amount of attemiOll from researchers.
Although they seem logical and intuitively appealing and many managers like them, by
and large these theories have tended IWI to receive support from rese<lrch. 35 There appear
to be at least two major difficulties with the theories. First, it may be unreasunable to
expect a relatively small SCi of needs ordered in a panicular fashion to apply to all human
beings. Second. it may be unrealistic to expect tllat all people become motiv:lled by dilTer-
enllypes of needs in a set order (that is. thatlhe satisfaction of higher needs is soughl ollly
when lower-Ievclnecds have been satisfied).
Studies of American employees generally do not suppon the main tcnets of Maslow\
and Alderfer's theories, and it is likely that international studies conducted in other cultures
would yield even less support. Even though the condusions of the theories have nul been
supponed. we c<m still learn some imponant lessons abuut mmivalion from the work of
Maslow and Alderfer.
Expectancy Theory
Need theories try to explain II'hlll motivates employees_ Expectancy theory focuses on
how employees decide which specific behaviors to perfonn and 1101\' IllI/!"h effort to exert.
In olher words, expeda",:)' theor)' is concerned with how cmployees make choices
among alternative behaviors and levels of effort.-16 With its emphasis on choices,
expc<:tancy theory focuses on employees' perceptions (sec Chapter 4) and thoughts or
cognitive processes (Chapter 5).
Expectancy theory addresses two questions about motivation and the equation in
Exhibit 6.2. One question is: Does (III indi\'idlllll'xli('I'e Ihm ili.~ or h('( inpIIIS (weh 'IS ('ffim
Oil till' job) will resull in (l gi"('11 !en:! of perJunlumce? Ex~tancy theory proposes tl1at
regardless of which ouleomes arc ,wailable, employees will not be motivated to contribute
their inputs to the organization unless they believe it will result in achieving a gi'-en le"el of
performance. Employees' beliefs about the relationship between their inputs (such as effon)
and the performance level they reach are. thus. central to understanding motivation. Put sim-
ply, if employees do not think they are capable of performing at an Itdequale level even with
maximum effort. their mOlivation to perfonn at that level will be zero. n
The mher question that expectancy theory addresses is: Do(',~ (ill indil'idll(f! beli('I'"
Ihll/ p/'YformillX 11/ Ibis len,1 "'il/lead /lJ obtai'linX Ihe OII/COIIIO hI' or slU' "'W'IS (pm', job
sl'l"lIl"ily, (/ falillS of (lnvmplisllIl/ell/. (//1(/ IO frmll)? The second key part of expectancy
theory indicates that employees will be mOlivated to perform at a given level only if thm
le"clleads to Ihe desired outeOllles..1S
Only when the answer 10 both of these questions is "yes" will the individual be moti-
vated to cunlrib·\lle effort <lnd olher inputs un Ihe Jub. According tu expectancy theory, a
milllager who WillllS to motivate an employee to perform at a cerlain level must first make
sure the employee believes he or she can achievc the performance le\'el. Then Ihe manager
190 PART t • INDIVIDUALS IN ORGANIZATIONS

must make sure the employee helieves he or she will receive. and actually docs receive. the
desired outcomes once the performance level has been achieved.
To unde~talld the ovemJl focus of expcl:l.mcy theory. consider the din'cliol! of bchm'·
iol' of an expcriencL-d nurse who has just taken a job at a new hospital. Which behaviors
could she rhoose to perform? Docs she spend time casually chalting wilh patients. or docs
she limit her interactions to those directly pertaining to medical care? Does she discuss her
patients' symptoms and l:omplaints with their physicians in del.til. or must doctors rely on
her written records'! Does she readily help other nurses when they seem to have a heavy
load. or docs shc provide assistance only when asked')
Once the nurse chooses whm she will do. she also needs to decide how much /'ffol"/ to
exert on the job. Should she push herself to do as much as she can. even if doing so 1T1Cans for-
going some of her authorized breilks'! Should she do juSt enough to adequately pcrfonn her
job requirements? Should she minimize her effons by taking longer breaks. referring her most
difficult p<ltiell1s to ller supervisor. and avoiding conversm ions with pat ients and physicians'!
Also. with whallevel of pl'r!ii.lll'lICl' should she re]X}rt her fears that ajunior doctor has
made il misdiagnosis'! Should she mention it 10 some of her l110re senior ,'oworkers?
Should shc tell her supervisor? If her supervi.sor docs nothing about it. should she raise thc
issue with lhe head nurse in chllrge of her unit? If the head nurse is unconcerned. should
she discuss her fears with a more scnior doctor'!
Expectancy thL"tlry sl"eks to e.splain how employees go about making these various
decisions. Becausc these chokes dctcrmine what employees do on the job and how hard
they work. they have profound effects on org,mizational effectiveness. By describing
how employees make these choices. espectan.:y theory provides managers with valu-
able' insights on how \(} get employees to pc'rform org;mizationally functional behaviors
(1l1d how 10 encourage cmployees to exert Itigh levels of cffort whcll performing thcse
bchaviors.
Bttausc of its proltlUnd organizational impl i<.:ations. eXfX>t:tancy thoory is among the most
(Xlpular theories of work motivation. The tocory. whkh was originally developed by Victor
Vroom in the 1960s, assumes that cmployees arc cssentially pleasure scrki ng3'l-that is. tltey
are motiv<1led to receive positive outcomes (stich as a weekly (l<1ycheck. a boous. or an award)
and to avoid negative outcomes (such as gelling reprimandcd .lired. or demoted). It also assumes
that employees arc rational. careful pRlcessors of information and use information atxlUt their
jobs. abilities. and desires to l.kcide what they will do on the job and how hard tocy will do it.
Expectllncy theory identilies three major factors that detenmne an employee's motiva-
tion: valence. instrumentality. and espcctancy.40

Valence: How Desirable Is an Outcome?

VALENCE
In eX!l"ctancy tl....o')'. tlie
dc'irnbilit}, of an outCQITM.' to
all mdi"duul.
Employees can obtain a variety of outcollles from tlteir jobs-pay. job security. benefns.
feeliogs of accomplishment. the opponunity to do interesting work. good relmionships with
coemployees. and promotions. For any individual. the desirability of each outcome is likely
to vary. The term mlenee refers to the Ocsirability of an outcome to an individual employee.
Valence can be ]X}sitive or negative and can vary in size or magnitude. If an outcome has
[l'05ilil'/' m/t'1/('/,. an employee prefers haviog the outcome to nOt h,IVing i1. If an outcome
has !legarire mlt-!lce. an employee prefers not having the outcome. For most employ(:es.
getting a raise is likely to have (Xlsilive valence. and being fired is likely 10 have negmive
valence, The magnitude of valence is how desirable or undesirable an outeomc is for an
emllloyce. 41 Maslow's ~ll1d AIOcrfer's need theories suggest thm employees will find out-
comes that S<ltisfy their nt-eds to Ix: especially auradive or valent. In the opening casc. some
highly valent outcomes for lhe SAS employees include the op(Xlrtunity to do interesting and
creative work. develop new products, and access the latest technology. Otlter valent out-
comes at SAS include Ix:ing fairly rewarded financially. working in a pleas<U1l eovironment.
and having access to a company-provided day care and gym.
SOllle motivation problems occur because highly valent outcomes are un;lvailable tn
employces. To dctcmline what outCOOlCS might motivate an employee. managc1'\ must <:ktemlinc
\\'h,lI outcomes an employee desires or the valence of different outcomes for the employee.

INSTRUMENTALITY
In nl""'lan~y Ih,,,,ry. a
pc"'~l'lion aboul lhe eXlenl
1o ,.,hid) pcrfonnanc( of On~
or more behavior. "ill lead 10
Ihe anainrnent of a pMi~ular
OulcorT1C,
CHAPTER 6 • THE NATURE OF WORK MOTIVATION 191
Instrumentality: What Is the Connection Between
Job Performance and Outcomes?
In our di>cussion of learning and operant conditioning in Chapter 5. we emphasizetl how
imponant it is for outconlCS (or CO/III'l{III'IICeI. as they are called in operant conditioning)
to be give n to employees on the basis of thei r performa nee of dcsired behaviors. Like oper-
ant conditioning. expectancy theory proposes that outcomes should be directly linked to
desired organizational behaviors or 10 ovemlJ levels of job performance,
Instrumentality. the secoml key dctenninant of motivation an;ording to expectancy the-
my. is an employee's perception about tile extent 10 which performing cenain behaviors or per-
fOT11ling at a cena;n level will lead to the aliainment of a panicuJar outcome. In org'lOizations.
employ(:es are going to engage in desired behaviors and be motIvated to perfonn them at a high
level only if they perceive that high perfoT111ance and dcsirL-U behaviors will1cad to positively
valell! outcomes such. as a pay raise. a pronKll ion. m sonlCtimes even just a pat on the back.~2
JUSt like valence. instru melHa lit y can be posit ive or negat ive and varies in size or nHlg-
nitude. Instrumentality. the perceired association between a cenain level of job pcrfor-
malll'e (or the performance of certain behaviors) and the reeei pt of a speci fic outcome. can
be IllCa~urcd on a _\.Calc from -I to + I.An instrunlClllality of -1 means that an employee
perceives that perfonning a certain behavior. or perfoT11ling it:t1 ,I cerillin level. definitely
will /101 re.1'II/1 in obtaining the outcome, An instrumentality of + I means that the
employee perceives the performance defillilely will re.wll in obt;lining the outcome.
An advcni.~ing exeeutivc. I'm example. perceives thm if she obtains three new major cor-
porate accounts this yeM (and holds on to all of her existing accounts). her perfonn,lnee
definitely 'rill rt'.Ild/ in her rcceivmg a hefty year-·end bonus (an instrumentality of + I) and
definitdy will 1101 fl'.m/l in her being a..ked to relocate to one of the agency's less prestigious
locations (an instrumentality of - I). The magn itudc of instrulllCntalit iI'S between the extremes
of - I and + I indicates the extent of the perceived association or relationship between the pcr-
formarK'C and the outcome. An instrumentality of zero means that an employcc perceives I/O
relationship octwccn performalK'C and outcome. Let's continue with the example of the adver-
tising executive _She perceives that there is some possibility that if she performs at a high level
she will be given a promotion (an instrumentality of .3) and a larger possibility that she will
obtain a biggeroflice (an instnnnentality of .5), She perceives that her m(:dical and dental ben-
efits wi II be unalfeetcd by her level of performance (an in,trumentality of z.cro).
In trying to decide which behaviors to engage in and how hard to work (the level of
job performance to stril'e for). the advertising executive considers the I'IIlem;e:i of the
outcomes that she perceives will result from different levels of performance (how attrac-
tive the outcomes arc to her) and the ill.I'lrllmelll(llitl' of performing at a ccrtain level for
attaining each outcome (how certain it is that performing at that level will result in that
outcome), In Ihis way. both instrumentality and valence influence motivation.
Instrumental ities that arc. in fact. high and that employees bel ieve are high are clfcetive
motivators. Managers need to make sure that employees who perfonn at a high kId do in
fact receive the outcomes that they desire-outcomes with high positive valence. In the
opening case. the SAS Institute maint.lins high instrumentalities by linking employees' pay
and IXlIluscs to their performance. Managers also need to dearly communicate instrumen-
tal itie, to employees by Icui ng them know what outcomcs wi II resu It from various levels of
performance.
Sometimes employees arc not molivated to perform at a high level because they do not
pereeive thm high performance will lead 10 highly valent outcomes (such as pay raise,.
time off. and promotions). When employees think that good perfonJJance gocs unrecog-
nized. their motil'ation 10 perform at a high level tends to be low,
Expectancy: What Is the Connection Between
Effort and Job Performance?
Even though an employee perceives that a pay raise (a highly valent outcome) will resull
dircrtly from high performance (high instrunlCntality). he or shc still may not be Ill(llivmcd to
192 PART I • INDIVIDUALS IN ORGANIZATIONS

In order for ""or~ers h~e this

p<..'<!i~tric ""r,,, to b<: highly
mol ivaled. cXJl<.'<:lancy.
;"'trumenl~lity. ~nd valenc'c
must all be high.

EXPECTANCY
1".,,(><:CtilllC} lhoor). a pcteeplioo
aOOuI lhe ut<:nl to "hi<;h cffO<1
"ill "'SUII ;" a eennin level of
pcrformanec,
perfOim at a high Ievcl. To uodC"rstand why motivalion is low even wocn inslrumentalities and
valences are high. we t\CC<J to consider the third major factor in eXf!C'dancy theory: expectancy.
Expco.:tanl'J is an employee's perceplion aboul the extent 10 which his or her elTort
will result in a cenain level of job perfomlance. Expectancy varies from 0 tn I and reflects
the chances that pUlling forth a ccrtain amount of elTOrl will result in a cenain level of
perfonnance. An expectancy of 0 means th,U an employee belie"es Ihere is no chance thaI
hi, or her elTon will result in a certain k'vel of perfonnance. An expectancy of I sigmfies
that an l'mploycc is absolulely l'ertain that his or her effort will lead 10 a certain level of
perfonnance. Expectancies between 0 and I lie along lhe continuum bclween the two.
Employees are going (0 be motivntcd 10 perfonn desired behaviors at a high level only
If they think they can do so:u If they Ihink they ,letually .rilll't'rfrmll at a high level when they
'Aurk hard. theirexplocl,uKy is high, No matter how much the advertising eX<.ocutiw in om earlier
cxample wants the pay mise and pnllllOtion thai she thinks will result ftl)m high performalKe.
if she think's she cannOi possibly pcrfonn at the ncceS&1!)' le"el, she will nOi be mOlivated 10 do
so. Snni larly, no matter !IOW much a student wants to P;ISS ,1 COUThC. if she thinks she wi II flunk
no matter how hard ,;he studies. she wiUnot be motivated III study. E"pl'l1,UKy i,; similar to lhe
cOlleepl of self-efficacy_ discussed in Chapter 5. which captun;s the idea thm employees arc
not always cenainllJ;;l.t lheir effons will be successful or result in a given level of perlOnmUlee,
If mntiv;lIion Ic\'els are low because employees do not think their elforts will payoff with
improved perfonnance. m,Ulagers nccd 10 rca-;sure them that they are cap;lble of perfomling at a
high Ie"el if they try hard. In additiOl1.organizmiOl1s can boost employces' CX[J\.'Ctancies by help-
illg them impn)l'e their skills aod abilities, Organi7~ltiol1s ranging from the SAS Inslitute to the
Container Slorc and Southwcst Airlines are great belie"crs in training 10 boost cXplX:lancies..J.I

The Combined Effects of Valence, Instrumentality,

and Expectancy on Motivation
In order for an employee to be moti"ated to perform desired behaviors and to perform lhcm
at a high le"el. the following conditions arc nccessary (see Exhibit 6.5):

• Vii/nice must be high: The employee wants outcomes Ihe organization hns olTer,
(0

• fll.llruml>JI/(/{ily must be high: The etnploYl~ perceives thai she or he must perfOml
the desired behaviors m a high 1c\'elto obtain thcse outcomes.
• £rpC('IWlfl' mUSl be high: The employee thinks lhm trying hard will lead to pcrfor'
Il1nncc at a high level.
 CHAPTER 6 • THE NATURE OF WORK MOTIVATION 193

EXHIBIT 6.5 I" orde' for empl"".,.,. ro be motiva,ed to pe,form de.ired beh,,"o,, at, high level.

Expectancy Theory E~p"eta<lcy m,m be I"..",mentality mu" Va,*n•• mu>! be high.

high. Employt•• mu>!
perceIve that if they try
hard, they <a" perform
at a hIgh level.
be high. Employe",
must percelV< that If
they perform at a high
level. they WIll rete~
certain outcome•.
Employees mu>! d•• i,.
or w,ont ,h. outcome.
they WIll receive if they
perform at a hIgh level.

"fun

If just one of these three fa<::tors-vakncc. instrumentality. or expe<::taney-is 7S:ro. moti~

valion will be lero. In addition to believing that perfonning <::el1nin behaviors at a high level
will ri.'suh in obtaining outcomes (positive inStrumentality). our advertising ex<."<:utive must
percC'ive that ( I ) she is Iikcl Y to recC'ive dcsiR'1J (positiVC'ly vakilI) Oll1<::oll1es if she' performs al
a high kvcl and (2) she can perf0ll11 at a high kwl if she tries (has a high eXllI..'Clancy).
High performance depends on wh,tt an employee does ,md how hard he or she does it.
According 10 expectancy theory. in trying to decide what to do and how hard 10 do it.
<::mployees ask thC'm';C'h'C's questions such as these:

• Will [ be able to obtain outcomes I wanl'! (In expecttH1<::y theory terms: Is the valence
of oulcomes that the org~nization provides high?)
• Do lnccd to perform at ~ high levC'lto obtainthC'sc oll1comC's'? (In eXpe<:lancy thC'ory
terms: Is high performan<::e inSlrunlCnlal forobtainjng these out<::omes?)
• If [try hard. will I be able 10 perfonn ,11 a high level'! (In expect:mey theory lerms: Is
expecl~ncy high?)

Only when employees answer "yes" 10 each of lhe'se three questions are they motivated to
perfonn as bestlhey can. Expeclancy lheot)' suggcsts not only Ihal rewards should be bas<."d 011
perfonnancc and thai employees should have the abilities ne,-,<.ossary 10 perlinTIl al ~ high level
hut also that managers must make sure that employees accurat<::!y percC'ivc this to IX' the case.
ExpeCtan<::y thcory is a popular Iheory of motivmion and has received extensive auen-
lion from researchers. Some studies suppol1the IIK"Qry. and others do nOI,~5 bUI by and
I~rgc the theory has been supponed. 46

EQUITY THEORY
A theo.} about worl mmivation
that foeu'"" on employ,,,,,'
f>Cf'\;epl1oll' "r the fairoc" uf
their wurl outeomc, and Input,
OUT(OMEIINPUT RATIO
In e~uit} theOf'). the relanon'ohip
betwecn wh"t an emplu}cc j!:el'
fmm a job (OIlle",n,,,) und wh",
the employee contril>ute, to the
job(inp"t').
Equity Theory
The equity theory of work motivation was de\-doped in the l%Os by J. Stacy Adams (el/llily
m<::ans "faim<::ss"). Equity th<::ory is hased on thc premise that an employee per<::cives thC'
relationship bel ween ttlC vilicumes-what IIIC employee gelS from a job and organizalion-
~tld his or her inpllls-what Ihe employee contributes 10 the job ~nd organiz;lIion.~7
Outcomes include pay. fringe bendits. job s.atisfa<::tioJ1. StalllS. opponunities for advance-
ment, job se<::urity. nnd anything else thc employees wnnts from thc organization. Inputs
include spe<::ial skills. training. eduealion. work experien<::e. efforl on the job. time. and
~nything else Ihat cmploYl:cs belicve lhey contribute. According 10 Clluil)' Ihoor)'. however.
it is Iw/the objcrtivC' Iewl of outcollles and inputs Ihat is important in dctC'nllining work
motivation. What is imponant to motivation is the wayan employee perceives his or hcr
outcome/input ralio compared 10 Ihe OUll"QIllcliupUI mlio of anolher person ..t8
Thi s OIher person. called a t'efal'1I/ by Adams. is si mply ~nother employee or group of
C'mployees perceivC'd to be simi lar to on<::sC'If. ThC' rC'fC'rel11 cou Id aLso bC' onC's<::! f at a differ-
ent place or lime (for C'xample. in a previous job). or it could be one's expc<::taliOllS (for
exaruple. one's beliefs aboul what the oulPUIS and inpuls of tm entry-Iel'cl aCCOll1lltHlI'S job
should be). Regardless of Ihe referem an employee chooscs. il is the employcc'I
194 PART t • INDIVIDUALS IN ORGANIZATIONS
OVERPAYMENT
INEQUITY
Th<: inequIty thaI ni't' wr..n ~
pcNln pcn:eivc, that hi, or her
ootcomeimplll ,al'o j ' greate,
than the ,mio of a referent.
UNDERPAYMENT
INEQUITY
TIle inequil), lhat cxi,t, wr..n a
pcN>n percei,c' that hi, 0' her
Ollte·orne/input milO i, ic" than
lhe rat l(l of a referent.
EXHIBIT 6,6
Conditions of Equity and Inequity
Equity
Overpayment inequity
Underpayment inequity
p.'raplioll.5 of the rC"fe-rem's outcomes and inpuls that arc compared-not any ohjective
measure of acwal outcomes or inputs.
Thus. equity thl'Qry focuses prim<lrily on the relationship betwl>t:n inputs and outcomes
,U1d addrcs>cs this qucstion: Are lite OII1COl/ll'.\ percei\'ed {u beillg at 1111 applVpriatl' tt'l'el ill
I'OJII!"1(lriSQIl to Ille illpllls? The theory proposes thm from pa~t experience or the obscrvat ion of
Others. employees will have a sense of the input levels th,U should result in certain outcornes.49
T() lTlotiV<l1e employees to contribute the inputS the organ i:Wt ion needs. mmwgers nectl
to administer outCOllles ba>cd Oil tho>c inpllls. Moreover. managers nC"t--d to ensure that dif-
ferent employee-so outcOllle-input ralios are approximatcly equal so thm employees who
contribute mofC inputS fCceil'e mofC outcomes and vice vcrsa.
Equity
Equity exists when an iodividual's OUtcome/input r.uio equals the outcornclinput Mio of the
refefCllt (sec Exhibit 6,6). Because the comparison of the mtios is what de1ermines the prescllce
or abscnn: of C(juity (not the l:{llllIXtrison of absollllc Icvel~ of outWlTlCS and inpllls). equity can
exist even if the refe-rent l'CCe-ive-s more than the individual who is making the eompmison.
Consider the case of tWO fUlancbl analYStS who have been working at the same COrpor<ltion
for 1wo years. A1the end of the twu years, analyst A getS promoled. but nnalyst B docs flOl. Can
both analy,;t,; consider this situation to be equitable'!The answer is yes: Equity exists if analyst
A and analyst B perceive thm that their respective- outeome!input mtios arc equal or
proportion1,1 and that an1t1YSt A generally worked more hours thl1n an,llyst B. Perh'lpS. for
example, added input. or ovenime. ,K:counts for analys1 As additional outcome (the promo-
tion),
When an cmployee perceives thm thc cmployce-'s and the rdercm's outeomclinplll
r<ltios arc proponioll;ll1y equal. the employee is mOtivated either to maintain the st:I1US quo
or to increase his or her inputs tu receive more outcomes.
Inequity
Inequity, or lack uf fmrness, ex ists when outcollle/input ratios arc not proportumally (-qual,
Inequity creates tcnsion and unpleasant feelings for an employee and motivates the indi-
vidual to try to restore equity by bringing thc tWO ratios back into balance-_
TItcfC arc tWO basic ty~s of inequity: overpayment inequity nnd undcrp,lymcnt inequity
(S<."C Exhibit 6.6), O"crpaymcnl incqllil)' exists when an individual perceives that his or her
outcome/input ratio is greater than thm of a referent, Uuderpa)'llleut iue(l"ily ex ists when a
person ~rceives that his or her outCOlltc/input ratio is less than tlmt of a referent.
Individual Referent hample
Outcomes Outcomes A financial analyst contributes more inputs
Inputs Inputs (time and effort) to her job and receives
proportionally more outcomes (a promotion
and a pay raise) than her referent receives
Outcomes Outcomes A financial analyst contributes the same
> level of inputs to her job as her referent but
Inputs Inputs
receives more outcomes than the referent
(greater than)
receives.
Outcomes < Outcomes A financial analyst contributes more inputs
Inputs Inputs to her job than her referent but receives the
(less than) same outcomes as her referent,

Employccs who belong to labor
unions sometimes go on strike to
protcst whcn they think they are
bein/; unfairly treatcd and other
methods of trymg 10 restore
C<.Juity ha\'e pr<wed to he fulilc.
CHAPTER 6 • THE NATURE OF WORK MOTIVATION 19S
Consider lhe easc of Stc\'e and Mike. who are janitors in a large office building.
Stcvc is a conscientious employee who always gels to work on lime and keeps his areas
of the building spolless. Mike is often late. takes long lunch hours. and oflen "forgels"
to e1e<ln some of his areas. Steve and Mike re"eive Ihe saml' level of pay. benefits. and
OIher oUlcomes from thcir employer. According to equity Iheory. if bolh employees
have aeeurme perceptions and choose each other as a referellL Mike should perceive
(JI'/'fpllJIIICIIf ineqllily. This pt:rccpllOlt "reates tension wilhin Mike (perhaps it makes
him feel guilty). and so he's motivated to restore equity. Steve. in "ontrasl. per"ei\'es
III1r!crpOrlll('ll! i/lcqllilr. Because Stcve is cotllributing more than Mike yel receiving thc
same level of OUtcomes. he. too. expcriences lellsion (perhaps anger) alld is mOli\'aled
to reslOre equity.
Ways to Restore Equity
There are scveral ways by which equity can be restorcd ill situations like the one involving
Steve and Mike.5O
I , Employee.1 Gill chollge (1ldr inflllls or OI,I("OIlW~. When employees perceive under-
paymetll inequity. for example. lhey can re.slOre equity by reducing their inputs.
In the case of the two janitors. SIeve could restore equity by cutting back on his
mputs-by corning to work laiC. t<lking longer breaks. and working less conscien·
tiously. An utuJerpaid employee could also try to "hange his or her out"omes by
asking for a raise,
2. Emplow-'eI Iry to r!UlnMI' rheir refe'1'1/b' i/ll'II/I or OfI/(·O/lU!J'. Ste~'e might complain
to his supt:rvisor about Mike's "oming to work late and not doing;1 very good job in
the hope th<ltthe supervisor will alter Mike's inputs (perhaps by getting him to show
up on time or do a better job) or his out.::omes (CUlling his payor thr.::atening his job
security). Oil tbe other hand. Mike might en<::ourage Steve to relax and take it easy
on the job.
3. Employe('.i dWIIge Ihei r (lefl't'(llirmI of i/l(l!l/s (Iud OillCOllles (ei Iller Ihei r OWl! or
IIII' referenls 'J. M ik.:: .::ould restor.:: equity by changing his perceptions about his
inputs. He .::ould star! to think that his area is larger or harder to .::Iean than Steve's
or that he works faster. so his and Stcve's ratios <lre really proportional aftcr all.
As this example illustrates. employees who pe",eive overpayment inequity arc
especially likely to ch<lnge their per.::eplions (rather than their a.::tual inputs or
outcomes) to restore equity. This is why overpaid employees often do not feel
guilty for very long.
4. Employeo ,'{III c1ulltge JlU! referem.~' An employee may decide that the original ref-
erent does not allow for an <lppropriate comparison and. thus, select another one.
Ste~'e might recall hearing thai Mike is a relative of one of the tn1Hlagers in the COIl1-
p<lny and conclude that he is not the most su itable basis for comparison. Conversely.
Mike might dcride that Steve is dearly an extraordinary. almo,;t superhuman janitor
and select someone else to compare himself to.
S. EmlJloyen Inlre Ihe job 0,. orgw,i~(/Ii()1! vr force IIII' referI'm 10 leurI'. The most
"ommon example of this appro<lch is employee Iltmover and. not surprisingly.
leaving the organization is most prev<llcm in situations ofunderpaymetll inequity.
Thus. Steve mighl be motivated to look for a job elsewhere. or he might try to
get Mikc fired.
The Effects of Inequity and the Research Evidence
Both underpaymetll inequity and overpayment incquity ar.:: dysfullCiional for organiza-
tions. tn.magers. and employees. In the case of overp,lymenl. although employees are
sometimes motivatt'd to tIlcrease their inputs to reStore equity (an effon th<lt is fun<::tlonal
for the organization). they <lre more likdy to be tltotiv<lted to ch<lnge their perceptions of
inputs or outcomcs (an effort that is dysfunctional because there is no (It'II/(I! in.::reasc in the
196 PART t • INDIVIDUALS IN ORGANIZATIONS

level of inputs contributed by the overpaid employees). In tbe case of underpayment. capa-
ble and deserving employees may be motivated to reduce their inputs or even leave the
organizmion, both of which are dysfunctional for tbe organization. Mureover. sumetirnes
when employee.~ feel very unfairly treated. they engage in unethical behaviors such as
stealing from the organization.~2
All in aiL motivmion is highest when equity exists and outcomes are distributed to
employees on the basis of their mputs to the organization. Employees who contribute .1
high level of inputs and flx:cive, in tum. a high level of outcomes arc motivated 10 con-
tinue to contribute inputs. Employecs who contribute a low level of inputs and reecive a
low level of outcomes know tlwt if they want to increase their outcomes. they must
mcrease their inputs.
Like expectancy theory. equity theury is a popular theory of motivation and has r<'ech'ed
extensive research attClllion. Also, as in the e3.\.C of C"Xpeclaney theory. although there have
been some nonsupportive results. by and large the research supports the m~lin ideas of the
thcury.~3

ORGANIZATIONAL
JUSTICE
Organizational Justice Theory
An <"mploy,"", pe=ption of OrganizatiOlml justice. employecs' perceptions of overall fairness in their organizations,
o","mll fai"",,, in hi, or her
is increasingly being rccognized as an importam determinant of employee motivation.
~niMion
attitudes. and behaviors.s.! Organizational justice theory does not refer to a single theory

You're t;he Management; Expert;

When Equal Treatment Backfires

Tom U manages the order processing department 01 a large catering company in New York
City. Times have been tough, and he has been told that he will have very limited funds
available for annual salary increases, In an effort to be fair, he has decided to take his entire
pool of funds for raises and distribute a flat, 3 percent salary increase equally to each of his
subordinates. At the end of the last department meeting, he announced the 3 percent
raise and noted that, given the decrease in the company's revenues over the past year, he
was pleasantly surprised that any funds were available for raises. A few days after the
meeting, one of U's subordinates, Sebastian saltado, came by his office and complained
about his measly raise and asked why he was re<eiving the same percentage increase as
everyone else in the department. U tok:! him that he kne'Y\l that Saltado processed orders
more quickly than other members in the department and was more responsive to cus-
tomers, and he wished he could do something more to recognize his contributions. But, li
explained, because very limited funds were available for raises, he thought it only fair to
share the raise pool equally. Two weeks later Saltado gave notice that he would be leaving
the company because he found a better job working in a large department store. li is con-
cerned and confused-he thought Saltado really liked his work at the catering company
and was satisfied with his job; in fact, Saltado had mentioned that a friend of his would be
interested in a job in the same department if a position opened up. And li is really going to
miss having saltado around; he could always count on Saltado to placate a disgruntled
customer and somehow arrange for changes or replacements on an order to be processed
and delivered in record time. As an expert in DB, li has come to you for help. Why did
Saltado quit, and was there anything that li should have done differently?

DISTRIBUTIVE JUSTICE
The pcT\;el\ed famle" of lhe
di;lribution of oul,on'e' in an
nrgantzauon.
PROCEDURAL JUSTICE
roc pern-i,-ed fair""" of the
pro<;~"<Jun,;, u,ed to make
<Ie,i'iom aboutt!".e di,tribllli"n
of 001""""" in an organization,
CHAPTER 6 • THE NATURE OF WORK MOTIVATION 197
per se, but rather describes a group of theories that focus 011 the nature, determinants, and
consequences of organizational justice. Hased on this group of theories, researchers have
idenliried four forms of organizatlOlwl justice: distributil'c justice, procedural justice,
interpersonal jusl icc. and informat ional justice ,55
Organizational justice theory addresses this question about motivation: Are Iht pro·
,'('(lures uSl'd IU aISI'SS illpu/)' a/ld I'I'I/om/(/IICI' al/(! diSlribme OIl/CU1I/1'!i /)t'rCl'il'I',!IU bl'
fair, {lYe I'lIIp/oYl'es IInll"d wilh ,Iigllily am! [(,!ipaT, am! do /lwl/aKers pYOl'idt, Illlel/IUlTe
/'.IJ!/al/arioI!I of Iheir decisioI!I mu! The prm;edurt'J /Iud 10 tlrr;I'/, dI Tht'lI!? Organizational
justice theory proposcs that employees will 1101 be motivated to eontributc their inputs
unless they perceive that fllir procedures will be used to distribute OtHcomes in the orglllli-
zation and that they will be Ireated f<lirly by managers. These proc(:'dures include thuse
u,;ed to a,;sess input levels, determi lie the level of performance achieved, and thell actually
distribute thc OUt'OIllCS.
Whell these procedures arc perceived to be Unf1lir <lnd employees feel ullf<lirly tre<lted.
molivatioll suffers bcc<lllSC al/lhe rcl<llionshlps in the molivatlon t-qualion (sec Exhibil 6.2)
are weakened: a,;.cssing the inputs, determining Ihe performance, and ultimately distributing
the outcomes.
Forms of Organizational Justice
Becausc equity theory focuses on the fair distribution of out,omcs lIcross employecs to
encoumge high levels of mOlivmioll. it is often called <l theory of distributive justiee ..l-6
Disll"ibutiw justin', the pcr\:elVed fairness of the distribulion of oulcomes in organiz<l-
lions, ,uch as p<ly, promotions, and desirable working conditions and a,signments, is an
intport<lnt contributor to more gcneral perceptions of organi7.ational justice.57 An example
of <l scale 1Imt measures distnbut is'e JUSt ice is provided in Exhi bit 6.7.
)'nK.'t-'du ral j ustit~ IS \:ollcemed wllh Ihe pcrceiwd fairness of the procedu res ust"<! to
m:!ke decisiolls about the distribution of Ollicomes. It is /lor concerned about the aClual dis-
tribution of outcollles. 58 Procedural decisions pert<lin to how perfoml<lncc levels are evalu-
ated. how grievances or disputes are handled (if, for eX<lmple. an elllployee di~agrees with
a manager's evalu<llioll of his or her performan\:e), and how oulcomes (like raises) are dis-
Iributed. Like equity thcory, employees perupt;o/ls arc of fundamenl:!l importance for
procedural justice. That is. employees' reactions to proccdures depend on how fair they
/H'Y{·t'il'e the procedures to be nllher t1mn how fair they ;]ctually are.59
Procedural justice theory holds Ihat employees <lre going to be more motivated 10 per-
foml at a high level whcn they perceive that thc procedures used to make decisiolls about
the distribution of outcomes lire fair,60 [n other ""'Ords, they'll be more motivated if they
think Iheir perfonn:mce will be <lcclmucly assessed. Conversely, if employees think their
performance will not be accurately assessed oc'<:;]USC Ihe supervisor is not aware of Iheir
contributions to the organizatioll or lets his or her personal feelings affect appraisal"
employees will not be as strongly motiv11ted to IX'rforlll m high levels,
Employees arc likely tu perceive Ihal procedural justice is high when they arc <lble to
have input inlo procedures thai arc used to detenllinc the disiriblllion of oulcomes in all
organi7.ation and when they have the opportunity to express their own views and
opinions. 61 Take the case ofll subordirl<lte wbo has worked l'cry hard 10 attain the goal of
reducing inventory levels by 20 pcrcenl10 cut cOSIS. Oil the surface il sccms as if the gual
has not been mel. as the dollar value of inventory has remained unch<lnged. However.lhe
subordinate knows that she has actually redu,ed physical inventory levels by 20 percent:
the dollar v,llue of inventory on hlllld docs not reOeet 1his reductioll since prices have
lllcreased by about 20 percent. Having Ihe opportunily tu expl"in 10 her supervisor why
invenlory co,;tS appcar to be unchanged despite all her hard work to successfully reduce
invcntory qualllities by 20 perccnt will increasc the subordinmc's perccptions of proce-
dural justice.
Proceduml juslice IS also likely 10 be hIgh when empluyees perceive thai proce-
dures arc used consislently aero,;,; employees (e.g .. all entployees with Ihe ,ame job
havc thcir performance appraised through the same process): accurate information is
198 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 6.7
A Measure of Four Forms of Organizational Justice

Please respond to each item using the 1~5 scale below.

1 2 3 4 5
To. To. To.
small moderate large
extent extent extent
The following items refer to your outcomes. To what extent:
1. Do your outcomes reflect the effort you have put into your work?
2. Are your outcomes appropriate for the work you have completed?
3. Do your outcomes reflect what you have contributed to the organization?
4. Are your outcomes justified, given your performance?
The following items refer to the procedures used to arrive at your outcomes. To what extent:
S. Have you been able to express your views and feelings during those procedures)
6. Have you had influence over the outcomes arrived at by those procedures?
7. Have those procedures been applied consistently?
8. Have those procedures been free of bias?
9. Have those procedures been based on accurate information)
10. Have you been able to appeal the outcomes arrived at by those procedures?
11. Have those procedures upheld ethical and moral standards?
The following items refer to (the authority figure who enacted the procedure). To what extent:
12, Has he/she treated you In a polite manner?
13, Has he/she treated you with dignity?
14. Has he/she treated you with respectJ
1S. Has he/she refrained from improper remarks or comments?
The following items refer to the authority figure who enacted the procedure. To what extent:
16, Has he/she been candid in hi~er communications with you?
17. Has he/she explained the procedures thoroughly?
18. Were hi~er explanations regarding the procedures reasonable)
19. Has he/she communicated details in a timely manner)
20, Has he/she seemed to tailor hi~er communications to each individual's specific needs?
Scoring: Distributive justice == sum of items 1-4.
Procedural justice == sum 01 items 5-11.
Interpersonal justice == sum of items 12~15.
Informational justice == sum 01 items 16--20.

S<"m:~.-
J. ,\, Colqui1t. :!I)() I. "On the Dimeo,i",,"lit}, "f Org"ni'"lional JU.'li<.." A elln,,,,,,-, Validati"" of. Mc",,,,,,'- Jot",,,,1 of",,,,,Iled I's.w'hol"!:.l. Mo;
386-400. Rcprint<Od with pcnni~,ion

relied on (e.g .. numerical data such as sales figures are free of errors); and procedures
arc unbiased (c.g .. supervisors do not lei their personal likcs and dislikes infiucm;e their
judgmellls).62 Additionally. having Ihe nppununity 10 appeal judgmems and decisions
that have been made as well as knowing that procedures used in an organizalion adhere
to the organization's eode of ethiCS promotes procedural justice.63 An eJwmple of a
scale Ihat measures procedural justice is provided in Exhibit 6.7.

When managers arc cOUrteOUs
and polite and treat cmrloyec~
with dignity and rcspc<:l, they arc
pmmnting intcra':lional ju~ti,·c.
INTERPERSONAL JUSTICE
n..., pcrc'<:i,,-d faimc..,' of the
intcrpc""""l ~a1ment employee,
ret:eiw from tlw di'<lrit>utln of
"'!ICOnIC'> or their manage".
INFORMATIONAL JUSTICE
Employee perception, "f the
"\l,,ntIO "hich manager, "xplain
their dc<;i,io", and the p!'I""-
dure, thl'Y u,cd UI am""
at the", dC<.'i,iom
CHAPTER 6 • THE NATURE OF WORK MOTIVATION 199
Inteqlcrsorml justice is concerned with tile perccil'ed fairness of the imerJX'"rsonal
tremmem employees receive from the distributors of outeOllteS (usually their man,tgers).&l
It is import<lnt for malwgeTS to be cour1(:ou, and polite and to treat employt:es With dignity
and respect ((J promote interpersonal justice.65 Additionally. managers should refrain from
making disparaging remarks or belittling subordinates."" An example of a scale that mea-
sures interpersonal ju,tice is provided in Exhibit 6.7.
Informational jllstirr capture, employee perceptions of the extent to which man-
agers explain their decisions. and the procedures used to arrive al lhem, to employees.67
For example. managers can explain to cmployees (1) 1101'.' thcy assess inputs (including
time. effort. education. and prel'ious worl:: experience): (2) how they appraise perfor-
mance: and (3) how they decide to distribute outcomes. When managers describe the
procedures they usc to distribute outcomes in an honest, forthright. and timely manner.
whcn thcir explanations arc thorough. and when subordinatcs perceive thesc explana-
tions to be well-reasoned. perceptions of informational justice are lil::ely to be high. 68 An
example of a scale that measures informational justice is provided in Exhibit 6.7,
Organizational justice is illlponalll for all kinds of organizalions and employccs. even
tho,e intrinsically motivatcd by thcir work. as profiled in the following OB TOday.
Consequences of Organizational Justice
Perceptions of organ izational justice (i.e,. distributi ve just ice. proceduml j uSl ice. interper-
sonal ju,tice. informational justice) can have widespread ramif;"<Itiolls for employee
motivation. allitudes. and behaviors,&'! One can get a good handle on some of the possihle
consequences of organiwtional justice by considering the illlpliemions of procedural jus-
tice for the expectancy and equity theories of motiv<ltion,
Recall thai exp.xlancy theory asscns that individuals arc motivated 10 worl:: hard when
they believe that (I) their elTons will result in their achieving a satisfactory level of JX'"rfor-
Illancc (expec{(tncy is high) and (2) their perfonnanccs will lead to desired ootcomes such as
p;ly or a promotion (instrumentality and valence of ontcomes are hil;h). Suppose. however.
thai lin organization has a problem with procedural JUStice. and its employees do 1101 per-
ceive thal the procedures used to distribute OUlcomes are fair. More specifically. suppose
employees believe that the perfoTTWl1lCe appraisal system is inllecurate and biased. so thm
performing ,l( a high level does 1101 ensure a good perfoffil1lnce appmisal. and perlunninl;
poorly has been I::nown to result in an average performance rating. In this organization.
employees may hclieve lhat they are capable of JX'"rforming at a high level (their expectancy
200 PART I • INDIVIDUALS IN ORGANIZATIONS

OB Today
Organizational Justice at Genentech
Genentech, the san Francisco biotechnology company thaI researches, develops, and man-
ufactures new drugs to combat life-threatening conditions and diseases such as cancer was
named the Number 1 "Best Company to Work For" in 2005 by Fortune magazine 70
Founded in 1976, Genente<h has been called "the first biote<h company" and has devel-
oped drugs such as Avastin~ to treat colon cancer, Raptiva~ to treat psoriasis, and Activase~
to treat blood clots Genentech's operating sales in 2005 were over S5.4 billion (represent-
T".... ~., ing a 46 percent increase over 2004), and it has over
10,000 employees.?1
The researchers and scientists at Genente<h are
truly intrinsically motivated by their work, developing
new drugs to save lives and cure diseases, They also
thrive in a culture that embodies organizational
justice, All emploYlOes, regardless of position or rank,
are treated with respect and dignity. There are no
special offices. parking spots, or dining rooms for top
managers like CEO Art Levinson (who also happens
to be an exceptionally talented scientist) and all
emploYlOes are addressed by their first name {regard-
less of whether or not they have a PhD or an MD),72
An outcome that is very important to the
researchers and scientists is funding for their projects,
and Genentech ensures that organizational justice is
served when these funding decisions are made,
Around once or twice a year, the Research Review
Rcscarchers and scicmi,;1s at GClIcntcd Committee (composed of 13 expert PhD's) makes
lhri,'e in ~ ('ulturc lh~l embodies
decisions about where the company's research funds
organization~1 justicc.
will be allocated. 73 Scientists and researchers seeking
funding for their projects have the opportunity to discuss the progress and merits of their
work with the committee, and the committee considers multiple sources of information to
make sure that all R&D allocations are based on the scientific merits of the projects under
consideration and are not subject to any bias or favoritism. When a project is not funded,
scientists know why, do not lose their jobs, and move on to another project As Levinson
puts it, .. At the end of the day, we want to make drugs that really matter. That's the tran-
scendent issue."]4 And Genentech's commitment to organizational justice contributes to
ensuring its scientists and researchers are motivated to do just that.

is high), but lhey cannot be sure thatlhey will receivc a high performance rating because lhe
appr~isal system is unfair (proceduml justice is low). Employees will 1101 be mOlil'ated 10
exert a 101 uf dfort on lhe job if lhey think their pcrfomwnl:e WIll 1101 be accurately and
fairly assessed and thcy will /101 rel:cive the uutl:omes they think lhey deserve.
Froll1lhc pcrspcClive of equily lheory. mUlivation will also suffer whcn perceplions of
procedural justice are low. Employees may believe that their inputs to the organizalion Me
nut guing to be fairly assessed ur tllat uutl:umcs will not be distributed based un relative
inputs. Under these l:ircumslances. cmployees will not be lllotivated to contribute illpUlS.
forlhcrc is no guarantee lhallhcy will resuh in the outcomes lhey lhink lhcy deservc.

COUNTERPRODUCTIVE
WORK BEHAVIORS
IJchaviOl'" b} an cmplolc-': Ihal
vil,lale 0'l1ani/alj"n~1 'alac, and
110m" and lMI can polcnlj~lll
ham, jnd;"idu~l, and lhe
organinllOI1.
CHAPTER 6 • THE NATURE OF WORK MOTIVATION 201
It appears Ihat perceptions of procedural juslice a~ especially imponant when out-
comes, like pay and benefits, are ~Iatively low-that is. when there are few rewards to
dislribule 10 employees. When individuals obtam high levels of oulcornes, Ihey may view
Ihem as fair rI'gllrdleJ,1 of whelher or not the prlK'edures in place 10 distribute Ihem arc
really fair. However, lhey view low outcome Icvels-assuming they're the ones ~cciving
them-as equitable only when lhe procedu~s used to distribute them really tlH' fair?4
More generally, organizalion<ll juslice h<ls been found to be posilively associated with job
salisfadioll, org<lnizal ional commitmem. job performance. and organ izational cit izenshi p
behavior and negatively aSSlx:iatoo with absclllccism and tumover imemions.i5 Research also
suggests that when perceptions of organizational justice are low. there might be increased
potenli<ll for the occurrence of counlerproductive \\'ork behaviorsJ6 CuuntcrprodUl"Ii,'c
wurk hehm·jors arc those behaviors thaI violale org<lnizational values and Ilurms and have the
polcntialto hann individuals and the organi/.:ltion as a wholc,77 Such behaviors can range
from rc!atively minor infractions such as wasting time and resources to much more major
IIlfmL1iuns such as theft, saOOt<lge, and verbal and physical abuse. 1H
Summary
Work mOlivation explains why employees behave as they do. Four promlnenl Iheories
aboll! work mOl ivalion-nccd Iheory, expccl<ln<.:y theory, equily Iheory. and organ izalional
justice theory-provide compkmcntary approachcs to undcrslanding and managing mOli-
1',l1ion in org'lnizations. Each theory ,11ISWerS differelll questions aboUI the motivational
process. In thIS chapter, we made the following major poinls:
I. Work mOlivalion is the psychological forees wilhin a person that determine the dire<>
lion of the person's behavior in an organizalion, the person's level of effort. and Ihe
person's Icvel of lx:rsistence in the face of obslacles. Motivation is dislinet fmm per-
formance; other factors besides motivation (for example. ability and task difficulty)
influence performance.
2. Intrinsically mOliv<lted behavior is behavior performed for its own sake. E.\Irinsically
motivatcd behavior is behavior performed to acquirc material or social rcwards or to
avoid punishment.
3. Need Iheory, expccl<lncy thl"Qry, l-quil y theory, and organ il'.alional Justice theory arc
complementary approaches to understanding motivation. Each answers different
questions about the nature and management of motivation in organi lations.
4. Need theories of motivation idemify Ihe needs lhat employees are motivated to sat-
isfy on the job. Two major need theuries of molll'alion <lre Maslow's hierarchy of
needs and Alderfer's existence-~Ialedness-gmwthlheory.
S. EXIx:ctancy theory flx:uses on how cmploycc.s dccidc what Ochaviors to cngagc in on
the job and how much effort to exert. The lhree major concepts in expectancy IhCQry
are valence (how desirable an outcome is 10 an emploYl'C). inslrumenlality (an
employee's pern'pt ion about Ihc extenl 10 whil,h a certai n le\'el of performance will
lead to thc attainmcnt of a particular outcome), and expectancy (an cmployee 's per-
ception aboutlhe eXtenlto which effort will result in a certain level of perfonnancc).
Valence, instrumenlality. and eXlx:Clancy combine 10 determine motivation.
6. Equity theory proposes that employees compare their own otl1comefinput ratio (the
ratio of thc outcomes Ihey receive from their jobs and from the o'"£anilationto the
inpuls they contribute) 10 lite outcome/input nuio of a referent. Unequal r.ltios creale
lension inside lhe employee, and Ihe employee is mOtivaled 10 restore equilY. When
the ralios a~ equal. employees arc Illot ivated to mai main their l'urrent ralio of out-
comes and inputs or raise Iheir inputs if they want their outcomcs to increase.
7. Organizational justice theory is coneemed with employees' perceptions of overall
!;!irness in their org<lnizations. Four forms of organizmional justice arc distributive
justice. prOl'ed ural justice, iIllerpcrsonal justice, and inforl1lational just icc.
Pcrceptions of orglll1izational juslice c,U1 ha\'c widespread ramifications for cmployee
mOl ivaI ion. attitudes, and behaviors.
202 PART t • INDIVIDUALS IN ORGANIZATIONS
Exercises in Understanding and
Managing Organizational Behavior
Questions for Review
1. Why might a persun with a very high level of
motivation perfonn poorly?
2. Why might a person with a very luw lel'el uf moti-
vation be a top performer?
3. Why do people differ in lhe types of needs they
are trying to satisfy <ll wor\(?
4. Why might employees differ in theIr valences for
the same outcollles'!
5. Why might perceptions of instrumelllality be rcla-
til'ely low in an organization?
OB: Increasing Self-Awareness
Peak Motivation Experiences
Think aboul the last time you felt really llIotivated tu do
well at sOllie activity: in one of your classes. at work. or in
some kind of hobby or leisure activity (such as playing
golf. running. or singing).
1. Describe the activity and indicate how you felt
while engaged in il-
2. Was your motivation extrinsic. intrinsic. or both'!
3. Whm needs were you trying to satisfy by this
activity?
4. What outcomes did you hope to obtain by per-
forming this activity well?
6. Why might a very capable employee have low
expectancy for performing ,I( ,I high level?
7. How docs the chuice of a referent innuence per-
ceptiom; of equity 'lnd inequity?
8. Is inequity always dysfunctional for an organi7.a-
tion"! Why or why not?
9. Why might fair procedures be perceived as being
unfair by some employees?
10. What stcps can organi7.ations take to encourage
orgallizat ional justice?
5. Did you think it was likely Ihal you would attain
these outcollles if you were successful?
6. How would you chamctcri7.e yourexpcctancy for this
activity'! Why was yourexpcctancy at this level?
7. Did you ever compare Wh'll you were putting into
tbe activity and whm you were getting out of it to
tbe input and outcome of a referelll? If no!. why
not'! [f so. how did you feeillbout this compari-
sun. and how did it affect your beha"ior?
8. Did thoughts of procedural justice ever enter your
mind and affect your motil'ation')
 CHAPTER 6 • THE NATURE OF WORK MOTIVATION 203

A Question of Ethics
Employees often diller in Iheir needs for time on fmm work. Employt~s with small children.
single parcms. employees with heallh problems. and employees who are the primary care-
giver for an elderly or inflnn relative may need more time off. for example. than employees
who are single with no depende11ls and in good health. And one could argue that organi~-'l­
lions should be responsive 10 the>c difl"cring needs on elhical grounds. However. some might
feel that the same expectations should apply til all cmployees regardless of their needs.

Questions
1. Why should organizations take employees' personal needs imo account in provid-
ing benefits such as time off from wol"\;?
2. How can organizations take employees' pcrsunalneed inlo account while atlhe
same time ensuring that organizational members pcrceh'c that thcy are being
fairly treated?

Small Group Break-Out Exercise

Promoting Procedural Justice
Form groups of three or four people and appoint one member as the spokesperson who will
communicme your conclusions to the rest of the class:
I. Take a few minutes to think about a timc in your life when you felt that you were
really being treat"d unfairly and it was because of the procedures that were
being used.
2. Take turns describi ng each of your experiences and the nature of the pruct'Xlllres
that were unfair.
3. Then. as a group. c01l\e up with a list of the C~IUseS of a lack of procedural justice
in the examples in your group.
4. BaSl'Xl on step 3. develop specilic recommendations for prumoting prot-edural justice.

Topic for Debate

MOlivation explains why members of an organization behave as they do and either help or
hinder Ihe organization from achieving its goals. Now that you have a good understanding
of motivation. debate the followi ng issue:
n'llm A. Equity and justice canum be achieved in the workplace.
ream B. Equity and justice can be achieved in the workplace.

Experiential Exercise
Motivating in lean Economic Times

Objective
Your objective is to gain experience in confronting the challenges of (I) maintaining high
levels of motivation when resources arc shrinking and (2) developing an effective motiva-
tion program.

Procedure
The class divides illto groups of three to five fX'0ple. and eal:h group appoints one member as
spokesperson to present the grol.lp's recommendatiolls to the whole class. Here is the scenario.
204 PART t • INDIVIDUALS IN ORGANIZATIONS

Each grnup plays the TIlle of a team of top managers in a magazinc publishing company
that has recemly downsized and consolidated its businesses. Now that the layoff is com-
plete. top management IS Irying 10 devise a program to motivate the rema min£. edi lorial and
production employees. who range from rank-and-file employees who operate priming
presses to upper-level employees such as magazine editors,
As a resul1 of the downsizing, the workloods of mOS1 employees h(ive been increased
by aboul 30 pereenl. In addition, resources are light. A I'ery limited amount of rnoney is
available for things such as pay raises, bonuses. and benefrts, Nevertheless, top manage-
mem thinks the company has real potential and that its fortunes could turn around if
employees could be motivated to perform at a high level. be innovative, and work toge1her
to reg'lin tile company's competilive advantage.
Your group, acting as the top-managemc.nt team, ans""ers the following quc,;tions:
I. Whm specific steps will you takC' to develop a motivation program based on the
knowledge of mOtiV'llion you have gained from this chapter'?
2. What key features will your motivation program inchrde'!
3. What will you do if the pTllgr.lIl1 you develop and implement docs not SL'Cm to be
working- if motivation not only fails to increase oot also sinks to an all-time low?
When your group has completed tllose activities, the spokesperson will present the
group's plans and proposed adions to the whole class,

Nevv York Times Cases in the News

Q!1)c ~t\u York Q!imrs

"Career Switchers Add New Depth to Talent Pool in Real Estate"

8y S, Si,rQ{op, lhe New Yo,-k lime!!, Manh IS. 2(}()(j. p. C8.

When John McCanhy. a tn"NII)' man"ger di,·ersl'. al'Cording to many indu,try n.'.suml's fmm '>lher types of professionals
at Toys "R" Us, Slaned lookin£ for a new executives. who think commercial rcal estale offers
job in July 2005, hl' was nOi looking "t At Cushman & Wakl'fidd, for cxamplc, lx,th mOre inttn:sting challenges aOO beller
cornmerdal re;>1 C);1,ue [X'r se, rncn:ly for a Mr, McC'rthy joined seve,,]1 olher recently ~'Om[X'nsalion.

position in whieh he might be able 10
irnprO\'e a company's business <HOre
din.,<:lly -ruKJ be re""'rr<ktl for the "ffort.
Ar Toys "R-' Us. Mr. McCanhy spenr
eonsidemble time el'aluating tbe re"l
hin.'l1 bmkm; who ,t"rtt<:l in other fields:
they included two fonner lawyers. two
l'ertitied public al'eountants mId a fonner
saleswoman for Microsofr. said Gualbeno
M",()im'.lllC eXCl:llliw n~Ulaging dill'ClOr.
Ex~" _ lltiws ar olher <'Ornpanies conf,,,,,
the inrercsl. Some of il. rocy say. can be
rcgg~'<lto tl>.' J;TC"ler numocr of universi-
ties that now offer course work in real
e~l<>tt. as wdl as the earo:r rc,tles.<ness thai

e,tate poIenrial of the individu"l ,lores as
toc company was in the proce,s of being
ac;quin.'d. But he felt that his en.'{lenrials-
which included an M.BA. in fmalK'c ,md
C(lI'J>Ofatc 'Kl'ouming-werc mosr Slliled
to a job in in\·estmenllxmking.
Hl' did get "n offer in thar f,eld. bur in
lhe end opted for a Job at Cushman &
Wakefield of New Jersey,,, commell"ial
re,,1 e,t"lc fiml, wbere he is now working
on leasing both office and indu'lrial
pro[X'nies.
Comml'll"ial bmkemgc le"nl> used ro
consist Tlwinly of people who had spenr
their entire l'aIel'r, in real CSlate, but
lalcly they have grown to be surprisingly
Mr. Medina himself slaned out as a
la"'JeT anJ as a c'ertiticJ publ., ,lCCOImtant.
Before joining Cushman & Wakefield in
2002. he aiM' ~rved 'IS secretary of
l'omm<'lCe for rhe State of New Jersey.
Iwndlc<:l business J"I'clopment for "n
lntemcl tck,,,ommunH:mions "ompany aOO
"",IS prcsiOCnt of'l bioleeh st"n-llp,
In Augu't. Mr. i\'ledin" rook rhe helm
of Cushm"n & W"kcficld's New Jersey
operalion,. and _,ince then he ha.' l"okeJ
for both seasoned professionals and imJus·
u)' "'-'Wl'omers as a way of pnl\'iJing spe-
cialized experience or expenisc to his
mmp"ny's diems. Lately, Mr. Medin"
has also been rcceivin£ morc unsolicited
seemed to COOfSC Ihrough many indllSlncs
after llK' Sqll. 11 tenon,t an:.::ks.
Bur executives say thar many job
swit~h"rs also seem l'on";Tlced that com·
mercial n:,,1 esrare offers les., drudgery aOO
dcskwork tlwn OIocr careers, like law, as
wdl a~ rhe potemiai tocarn large l'ommi:;-
sions. mther th,m simply brin£ing horne a
",tal)'.
Michael Bush, the exc<:utive dirc<:lOr
of toc Reall;sralc Associate I'Togmm, an
indllstry-b'Kked progmm that recruits
and I,~ins minoril)' l'anJidatcs for earcers
in commerdal re,,1 estate, ".,id that about
a third of toc 33 studenls who staned the
inau£ural program in Ncw York ,n
 CHAPTER 6 • THE NATURE OF WORK MOTIVATION 205

J,muary had come from either law fIrms
or Wall Streel fimh.
The program. which '1Ire'ldy exists m
Washington and Atlanta. meets for Ihree
hoors" wuk In the e"cning ,,0<1 lasts for
24 weeks, Mr. Bush said Ihe typil'al
p'lrlicipanl W,IS 25 to 35 years old with
se,'eml >'ears of busine" expcrie""e.
Marisa Manley. lhe foullllcr and princi-
pal of Commercial Tenant Real ESlate
Represen!:ltiol1 in Manhattan. said lhat
when her mmpan)' n.'...·ntly had an opening
for a tmnS<ICtion mal~tger. she imer\'iewcd
four lawyers for thl' job. as well as an
aceOUl11am who held bulh :' law :lIId a
bu.sincs, sd1<1<,1 dcgn.-c,
"The wlcm pool is strunger, arid I'm
seeing stronger professional backgrounds
lhanl wo"ld h:"'e seen 10 ye"rs ago:' SOlid
Ms. Munk)', who waS fir" tmined as Ix>lh
"'I architect and <IS" bwyer.
Robert A. Kn"k"l. co-founder or
M"ssey Knahl Realty Services tn
Manh"uan, agreed that the pool or
"pplicants today had" wider range of
talenls. "The people cOIlling inlo the
field now h''''e tremendous credenti"ls:'
he said. "For about a yem after &pl. II.
we found. to our great surprise. that the
4uality of people looking to gel into the
business h"d <:hnged dramati<:ally. In
the 80's and 90's, it"s "ery unlikely that
pcopl<: would have left other <:areers to
go into commaei,,1 real eSlale:'
Still. making lhe jump IS nOl "Iways
ea,y. ,orne real eSlate <:xel'ut i"e, <:aution.
Mr. Knakal >;Iid that while his <:ompany's
<:ffon, to bring in mha profe,ssional, had
allO\>-'cd it to grow subSt"'llially over the
la,t fi"e y<:ars, hi,s tirm has also had
to m"ke a "substantilll <:ommitmem" to
training programs, whie'h are taught by
the company's current employus and
gen<:rally run two or th",e month, each.
Even with lraining, newcomers usually
take a while to <:.stablish toc'mscl\'Cs in the
neld. "Commer<:ial re,,1 cstale is not :'
quil'k and casy gaml', and we are always
stressing the long·term nature of this
busine,,:' l\h, /\-bnley said, '"This is"
busitlCSs where lease negotiations c<ln t"k
12 ",'<:<'ks or more and where 18 lTIonths
is usually the minimum amount of linlC"
to <:loS(" pmjee1S or 20.000 S<Juarc fttl
and 1\lOfC,
Still, ,ome rc<:cnt cmei.'rs swikher,;
say they relish the <:hange.
Lltl L Segal ,penl more than 30 years
pF<l<;tking re,,1 estate law before he joined
the Wa,hington om"" of Nev.'Jl1ark Knighl
FF,lI1~ in )anu"ry as a business ad,'iser.
u.st week, Mr. Segal said thm while he
was !lOt nece,,-,arily reading fewer SIlICk<
of legal docurllCnls lhese days, he had
'"movcd up the line'" to working on a
bro;.ocr nmge of ISSUes,
At Ma,sey Knakal. John Barrett.
one of the company's neweSI brokers,
said hc hoped evcntually 10 usc hIS lovc
or problem-solving to generale high
prices for propenies thal he IS asked 10
repre,enl. Hef",,, joining the co"'pany.
Mr. lJarrett. 42. spem 1110rc than 20
years running h;, own corporale and
group tr"vel services firm "nd then
'pent six months gctting his real eSlate
license.
H<: rec<:nll)' completed a two-momh
trJining progrJI11 and planned 10 spend
the nexl two month, I<:aming e,'cf),thing
he could <lbout the "rca that he would
<:wlI1ually c,,,-er-a ,izablc segment of
Westchester COl' Ilty.
"I had doUl' one thing siUl'e graduating
from college. and I thought it was 1; lllC for
a new l·haJlenge." Mr. Barrett saiJ last
week.
So did Marjorie L Torrcs. the founocr
and <:hief eXCCUl ivc of Coocrete Stories. a
Manhauilll .\)JupaIlY th", oITcrs real eSUIte
advice as well as brokerage and develop--
ment scrviecs. Ms. Torre',. 38, worked as
an industrial enginoxr and thell as a Wall
Street in'\"lnKont Ixmkn before ,he was
sent 10 Latin AnlCri<:a;n 1995 tOlum
around distfCSso.'<J properties.
There. she disc<'l\'ercd Ihat she prefem."d
some of the more hlllgible rewards of
comnlCrcial rcal eSlat". "In invc<tm<:nt
banking yoo do a lot of deals, but '-cry
rJrcly can you build somcthing thaI you
C'Ul 'ICtually looch:' she said.

Questions for Discussion

1. What are some sources of intrinsic mOlivation ror real eswte brokers?
2. What arc some sources of extrinsic motivmion for real estate brokers?
3, From an expt:<:lancy theory per:;pt.'Ctive, why do some people find real estate work more
motivaling than their prior jobs?
4. How can s~ializcd training in real e,tate enhance the moti,'mion of real eSlate brokers'!

ll!i), Xt\lI11ork ll!imts

"Airline Pilots Still Flying, but No Longer Quite So High"
By M. L. IVa/d, 77l1' Nt'H' lurk Trmcli. Morell 10, 2006, p. C3.

WA$mNGTON, March 9-Within thc
world of lwiation, ai rlllle pilots u>cd to be
one ,tepdown fmm astronauts, Now they
feel one slep up from bus drivers.
With half the seals in lhe nation',
airliners ,,,n by companies either in bank-
ruptcyor limping out of it, <:\'Cn the' pilot,
al the lop-lhe olle' who arc within a few
years of malldatory retirement at 60. flying
the big planc, and eaminglop dollar-arc
f'ICing " tIC\'.' world,
Th<:;r pay and pension, ha,'c be"n CUI,
and thcy work more hours to e,ml them.
In another l'onl'e"i"n to the airlincs,
their days arc interrupted more thall e"cr
by long hours of unpaid idlelKoss,
They say they lr)' hard lIot 10 let these
things brc"k lheir eoocentmtion Of inlerfere
with their work, flying passengers by the
scores or hundreds. n"w1cssly. around the
l'ollm')' and lhe world. The'y ha"<: piJote<J
206 PART 1 • INDIVIDUALS IN ORGANIZATIONS
their plaocs to a l'ttord 40 million s<lfe
lakeoff~ and bndings aero'-' the ('oomry in
the la,t five years. "'hetllcr the airline "'R,
SQlvent, bankrupl or just squeak ing hy.
Still. the oo.trdroorn blues are "'orking
their way ill10 the cockpit
"My phIlosophy right now is. I JUSt go
to work." said an American Airlines cap-
t"in ",ho, before his compmty's troubles.
Im'ed to fly. On one recent trip. he flew a
6 a,m. flight from Ne"'l"k 10 Mi'''l1i. thcn
piloted a plane from Miami to Lo~
Angeles the neXt evening. then a llight
ha('k to Newark. aC('umulating 15 paid
hours for three days On the road.
1'1", FLxleral Aviation Admini,tration
limits commercial pilols on don1\:,tic
flights to eight hoors a day. mea,unxl from
pu~hb'lCk umil arriql :It the pte, The
limits are 30 hours in sc\'('n day" 100
hours a month altd 11ll:Xl hours a ycar, T1lC
airlines do not cxceeJ those limits but
many now schedule nloch e10ser to them.
The F.A.A. rules do nOt address tile
amoum of time octwccn fl ighls. so a pi lot
could be in unifonn 12 hours or more to
accumulatc the day', hours. Eight hours
of rest time evcry 24 hours IS reQuired,
however. And pilot, feel acutely the
difference Octwecn geltmg ,t momh's
work in 14 days versu, I ~ day'.
"They kind of bleed uS oul,'" thc
American Airlines ('aptain ,aid, on
condition he not be identifIed for fear of
losing IIi, job. Pilots for major airlines
s:tid they expectcd to be fired if they
werc publi('ly ('andid on tile ncw
ch,tllenges of their jobs.
One veteran United Airlines ('aptain,
who lamen!s that when he retires in a few
years his pemion ",ill he about onc-
founh what he expcrted. said he lIad to
shut it out of his mind to prncnt tllc
distnlction from affecting his work.
Afta a r('n'nt tah'off fmm California
for the long night across the P<H:itlc. thllt
was all his first offin'r wanted to talk
aooue The captain said he snapped b.l<:k:
"You know whal, <"an WC' not talk about
United Airlines'! All it docs is ('11Use me
fru,tnltion mtd anga and th,'re's nothing
I ('an doaoout it, It churns my stomach:'
So the two. flying in OtIC oftllC .....orld·s
ntost automated, advan('ed ai'l'lanes.
t,dkttl aboul ,t hobby tlICY had in ""nUllon:
flying single-engine planes on their
days off.
The di,satisfa('tion at the top has not
changed wnlC basics of the field, young
people still dream of flying. and people
who fly small pl,tIIcs still aspire to fly
bigger ones. Legions of laid-off pilot,
hope to be Illred back. ""en at reduced
pay levcls.
-'They must 10"e it:' said Arnold I-
Uarnctl, a profcssor of managem('nt
Sl:ienee at the Sloan School of Manage-
mcl11 at the Massa('husdts InstilU1e
of Tednology. He "'tid airline pilolS
wcrc rea('ting with more fonitude tllan
other professionals might in the S:"l1e
('i rcumSlan('cs.
"I CIUHlOI falhom how fllCUlty .....ould
n'a<:l if M.l ,T. abolishc..J ttnure. increased
reaching loads and ('ut salaries by 35
perc"nt be('tIllS(' mt"ket ('ondition, h,td
changcJ:' he said.
But st'nior airline pilO1s. in doztlls of
imer"ie"cs. spoke aoout fceling depressed
and struggling not to kt it affect their
performall('e.
A('adcmics ha"c' noticed a ('hangt.
""The pilots are not a happy group right
no"'." said Paul S. Fischbc,'k. a pmfessor
of ('ngineering and publi(' polic-y at
C1lI1ICgie Mellon Uniwrsity in Pit1>hurgh.
I)r, Fi"chbeck. who flew in the Navy
and )~tS wlleagues ,,'ho Went on to fly for
the airlioc.', said that the cbange in f1nalldal
cireumstances alld job security were good
reasons to be unhappy.
But Dr. Fischbeck and others pointed
out that tllc indu'tl)' ('ulture is such Ihat
pllots must face the hardship on their
own. Othcr workers with hcalth plans
might seck professional counseling. With
pilots liccnscd by thc I'.A.A .. howe"cr,
":tS SOOl1 as you sign up for it, it's on your
ft.·<:ord, and you 're «>a.,t:'
A US Airways pilot cehoed thm
scntimcm; "If it gets reportcd to the
FAA.. you can forget il. you're nOt
wming ba<:'k to woo:. until yoo go thmogh
"I01.lllc sy,tel11 requires us todeill wilh it
ou"",h·es. That makes il wI)' dilli('ult to
go Ihroogll whilt we JUSt wenl throogh:'
Maxine E. Luhner.dinx'lOrofthc Avia-
tion Institute of York College. al the City
Uniwrsity of New York. said that eroding
mO'-ille. :t1ong with problems like ·'the
distmction of not kno",ing ,,'hNc your
pension is:' wuld n01 help safety.
Neither c'ould working longer hours_
whkh pilolS for lHany major airlines are
noW dI~ng because of c~~tlra<:l LXln,:essions
both in the lIumocr of hours f](l\\'n "rod the
numocr of lK... rs tllCy Call bo..' ma(le to wait
on the ground betw('Cn flights, Some are
"Iso flying 1II0re hoors to offset their P'IY
10'"''''
"I would say morale mtd altilude are
all in that mix," Or. Luhncr ,aid. Thc
mor'tle elfeclls prob:lbly small. she sotid.
oot "we kllow fatig"" in itself will ('reate
poor allilUdc and lock of motivation and
irritability:'
"And there's no queslion that ron1\:·
thing thaI's a dist'-.1('tion i, a safcty threat:-
>he said.
But ,he agnx'<I there was no ('mpiri('al
evidencc supponing Ihal theory, Statisti·
('ally, the airlines all.' in one of their saf('"
periods e\'Cr. wilh about 011\: lata) accident
for eWI)' 15 million flights.
"Wilh the C'Conomi(' turbuleoce thill'S
Ix'ing experienced by U.S. ('arriers.
b.:lI1krup<('y. the pri('e of oil on evel)' page.
i!", a testament to the a,'iatioll indu'tl)'
s1:lkeholJcrs and the U.S, gO"emrncnt th'lt
w,' a,,' reat'hing tllose saftly ltvds despil<'
cnormous ('hallengcs:' said Marion C.
Blakty. tit<' F.A.A, administrator. in a
speech to an avi:ltion safety ('onfercn('e
th<lt lK.·r age!lc'y organized h,t fall.
There arc $Ome warning signs.
howevct, NASA reeClitly wid the F.A.A.
of numerous reports of errors by ground
personnel. a cal,'gory of worker that has
had heavy turnover. It also warned of
reports of plalles loading tOO I itt le fuel.
A Northwest pilol desnibed his own
forgetfulness. "There arC eenain things
1'", supposed to do to set up my part of
the cockpil:' he sai<l. "We do the StutT
first. then go ha('k with tile ('1Ic('kli,t and
dollblc-chC'Ck it:' he said. And in double·
('1Ic('king. h(' once found a sct of ,wit('h('s
he w"s cerlain he had scI. but had no1.
"I though I had turn('<! tllose on:· he'
rec,tlled thinkiog. '" h,tdn't.1 JUSt w:tsn't
as ,harp, I'd lost my ('<1£(':-
Airlme execulives say they do not
know how to mea.'u,,· thc ('ffed of
morille. AI US Ai""ilys. Cilrlo Bertolini.
a 'pokes",an. said, "No <lIt(··' guing to
deny lhat US Airways employees have
Ixx'n through a tougll time, witll I:tyoffs.
('h"nges;11 work nIles and steps lowering
(~lSts. A lot of theSt saeriflc'es Came from
employeeS:-
But "we all ha.... a ,takt in lhe saf('ty
of the airline:' he a<klcd. "We're defmitely
(~mfld('nl that all employees al>"'a)'s ha,'e
safety at the lOp of their mind:'
Pilots say tht' s",ne but add that thc'
('hange in s<:hedulcs often means more
fatigue. "You can feel yourself gel1 ing to
a poim wllcre you're beginning to make
more lillie mist"kes."" S('nior captain ,It
US Airways said
 CHAPTER 6 • THE NATURE OF WORK MOTIVATION 207

"Most oftlJc mistakes are caught ,'cry "It's hard fOf me to feci sorry for OlCm:" "T1~y 're a \xl IIch of ~poilcd bntl~"" he
quic·kly. and most arc \'cl)' minor crmrs," said Capt. Jeffrey R. Hcfncr. thc safcty said. "Historkaliy, this ha, been a really
he ""id, But "at that kvcl offatigue. <lfter chainnan of th,:: union thm reprcS<'ll1s pilOlS cu~hy job once you gct to tlJc nwjors, You

weeh or ",omhs of this without a break. at Soulhwcst Airlines. who haye always makc a lot of money and you don 'I h",'c
It'S easy (0 make a major mist<lke:' tlown longer hours th<lll pilot~ at older to fly ,t 101, Bul tllCTC had to be a markct
Nm c,'cryonc agrecs that thc longcr airlines. bablKing at .somc poim:"
working schcdule is it problem,

Questions for Discussion

1. In what ways are pilots intrin,ically motivated and cxtrinsically motivatcd by Iheir work"
2, Why might pilots' lcveb of mOlivation be ded illi ng from a need theory pcrspc,ti"c'!
3, Why might pilOis lcvels of motivation be deel ining fmm all expcctilllCY theory pelOpccti"c?
4, Why might pilots' le\'els of mfl1ivation be ded ining from an organizational j u.stiec
perspective'?
 PAR T 1
CHAPTER Individuals in Organizations

CREATING A MOTIVATING
WORK SETTING

OVERYIEW

.Iollllt:SIGN: TIn: .Iou CIIARM.'Tt:KIi'.-.'ICS MOUI::L

.1011 Ut:SIG,'" MOUEI.S SliMMAIUl.UI

ORGANIZATIONAL OUJECTIYES

GOAL SEn"IN(; AI'\'O .lOll [)ESU;N ,\S MOTIYATION TOOLS

SUMMAR\'

EX[RCISES IN UNUERSTANI'ING AND J\I,\NAGIN(; OR(;AJ'IflATIONAL HMIA\'IOR

Learning Objectives
After studying this chapter, you should be able to:
Appreciate the advantages and disadvantages of the scientific manage-
ment approach to job design.
Describe the job characteristics model and its implications for using job
design to create a motivating work setting.
Understand the implications of the social information processing model.
Appreciate how and why organizational objectives can motivate employees.
Describe goal setting theory and the kinds of goals that contribute to a
motivating work setting.
 Opening Case
MOTIVATING EMPLOYEES AT GOOGLE
How can organizations create a motivating work setting?

Dogie is the largest search engine on the Internet today and the most
popular search engine in not only the United States but also in
Argentina, Brazil, Australia, Belgium. Denmark, France, the United Kingdom.
Germany, India, Italy, Mexico, Spain, Sweden, Switzerland, and Canada. 1 Its
popularity is due, in no small part, to Google, Inc.'s steadfast objective to
provide the best search results possible to its users and ~or9anjze
the world's information."2 Google's organizational objective
dictates that users' experiences are paramount. Consequently,
employees are continually collecting data on what users like and
don't like and what will improve that experience. 3 Over 5,600
people work at Google, many of them top-notch engineers. 4
Creating algorithms that make searches on Goggle the most
efficient in the industry while keeping costs low is a consuming
passion for Google's employees (known as Googlers).s
Google's founders, Larry Page and 5ergey Brin, who met as
graduate students in computer science at Stanford University in
1995, collaborated on a search engine called BackRub back in
1996. 6 They continued to work on the search engine from Larry's
dorm room, and in 1998, sought funding to found their own
company, Google, Inc. in Menlo Park, CA. The rest has been literal
history as Google, now located in the Googleplex in Mountain
View, CA. has grown at a phenomenal rateJ And Google
continues to grow. For example, in the first quarter of 2006,
Google's revenues were $2.25 billion (a 79 percent increase over
the first quarter of 2005) and earnings for the quarter increased
A general ,'icw of the google boolh at lhc 60 percent over the prior year's quarter to $592.3 million. 8 Google
20)6 Inlemat;on,,1 Consumer EIc<:tmnic" is now a truly global corporation with offices in Europe, Australia,
Show in Las Vegas. Googlc W;lS gi'ing prizes South America, Canada, India, and Korea. 9
to show-goe", who mITCdly answered a quiz.
A key ingredient for Google's ongoing success story is the way in
which Google creates a motivating work setting for its employees.
Fueled by the overarching objective of providing users with the ultimate
search, Googlers concentrate on giving users exactly what they want at
breakneck speed. 1(1 To achieve results like these, employees at Google are given
the flexibility and autonomy to experiment, take risks, and sometimes fail. They
are encouraged to learn from their failures, however, and apply what they've
learned to subsequent projects. 11
Google's engineers are provided with one day a week to work on their
own projects that they are highly involved with, and new products such as
Google News often emerge from these projects. 12 Managers, including
founders Page and Brin, believe that good ideas can be found from anyone
anywhere in the company and all Googlers are encouraged to come up with
the next big idea. Googlers can post proposals for new projects on a mailing
list that circulates throughout the company. Top managers have office hours
during which employees can drop in, discuss new ideas and projects, and
receive feedback. These projects often call upon a variety of employee skills.
For example, Google's international webmaster who comes up with the site's

JOB DESIGN
The pro,:"" of linking 'I"'c,f,c
la,h h) ,poxifl<; joh' al1lJ dcd<Jing
"hal t,,:OOi'l"'''_ "'lU;pmenl. and
J>fOC"dUI'C'; <JJoold be u..ed In
perfo..m 1I'KN: l;l-J,,_
CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 211
holiday logo translated the whole site into Korean and the chief operations
engineer is also a neurosurgeon. 13 Engineers collaborate with each other on
their projects and with managers.
While Google has grown exponentially since its founding. it still has an
aura of an informal, small company where highly motivated Googlers work on
projects to achieve organizational objectives of speed and cost·containment,
projects that they have the autonomy to pursue and a sense of ownership to
have succeed. 14 Marissa Mayer, Vice President of Search Projects & User Expe-
rience, is involved in many of these projects and interfaces between engineers
with PhDs and managers with MBAs to ensure that the best projects see the
light of day.1S Mayer, whose office with glass walls is purposely located next to
the snack area frequented by engineers and programmers, not only holds office
hours for Googlers but also is typically at work from 9 A.M. to midnight and
available for engineers to stop by and discuss their ideas. Just as speed is
essential to Internet searches, 50 too is it to new product development. accord-
ing to Mayer. As she puts it, HI like to launch [products] early and often. That
has become my mantra. H16 And having such a mantra is motivational for Googlers
as they know their ideas will be listened to and heard and what they are doing is
important not only for the company but also for users around the globe.
Overview
Changes in the design of jobs and worl: processcs are dramatically altering llle nature of
work. Employccs arc being requircd to dcvclop and usc more sl:ills tllan cvcr before. Tllcy
arc also cxperielKing more autonomy as is the case at Coogle in the Opening Ca,e.
In Chapter 6. we examined the nature of work motivation and four approaches 10
understanding motivation in organizalions. Building from this found~ltion. in this chapler
wc focus on how <In organiz<llion can ercalC a molivatlng worl: selling by thc way it designs
its jobs and the objectives and goal, it sets for its cmployccs. 17 Job design can havc a pro-
found effect on employec mOfivation. The specific go."lls employees strive for and the mol\'"
genera) corporate objectives lhat an organizalion pursues over lime (such as Coogle's
commitmcnt to organizlllg informatIon and providing lhe best and faslest Internet search
capabilities for users around the world) arc impon.ant SllUIl.·es of 1ll1l1ivation for employee,.
In terms of the motivation equation. introduced in Chapter 6 (sec Exhibit 6.2) and restated
in Exhibit 7. I. job design IUld goal selling arc I:ey factors tllat mOlivate employees to
comribute inpllts to the organization.
Job Design: Early Approaches
.lull design is thc proccss of linking spet:ific tasl:s to spedfic jobs and deciding whm tcch-
niqucs. equipmelll. and procedures should be used to perform those IiIsks. The tasks that
make up a secretary's job. for example. include answering the telephone, filing. typing let-
tcr.; and repon.s. ~lIld schcduling rneetlllgs and appoinlmcnts. Thc tcchniqucs. cquipmcnt.
and proccdurcs the secretary IIses to acmmplish these tasl:s may indude using a personal
compurer and onc or more word-proccssing software pacbges lO type docul1lerHS and pre-
pare graphs. using an answering machine 10 take calls. and keeping a weel:ly appointrnerH
book to schcdule 'Iud keep Irat:I: of mcetings.
III gcneral. managcrs try to design jobs to motivatc cmployee, to perform wcll. cnjoy
their worlc and rcedvc the OUlCOl1les they de>crve. Job design also innuences the motivatioll
212 PART 1 • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 7.1
Motivation Tools

Tool,

Moti"""on
I
lnputll o...t<omes
equatlOfl

,.,
"""
Time
Educ.u""
Quantity of work
QualIty of wo",
l£>.el of C"SlOm« "".-vice
Job ",<:un'~
Iknef",
op<nence Vac.tI""
Skill, Job satl,faction
Knowledge Feeling of occomph,hment
Job behaVloB Pleasure of dOIng in'ere>,ing wo",
Promo"on,
S,",,,.

of employees and their inPUl levels (sec Exhibit 7.1). When employees llre mOlivllted to
conlribule inpuls ,11 a high level (10 wurk harder. more eflicienll)'. :md mure crelltively) and
perfonn lheir jobs more dTedi,"ely. organizational dfecliveness in<.:rea.\Cs.
In the next sections, we examine scientific management. job enlargement, and job
ennchmcnl-lhree early llpprooches to job design. E;ICh has implications nOl only for how
/It'll" jubs should ~ designed bUI also fur how /'xisrillg jobs <.:an ~ redesigned lu improw
motivalion and perform:tlKe. Some of the approaches can ~ u>cd 10 design a job so the
employee doing it gets more smisfaetion from it (discussed in Chapter 3) along with Ihc
oUlcomes (plly. promOliotl. or Other rewords) he or she desires.

SCIENTIFIC MANAGEMENT
A 'CI of prir..;'plcs and prll(-1ice,
(\e,igned 10 ;ocrea.", tn.,
I"'rfomlancc of in<liyidu~J
emplo)ee- b)' 'lre"ing job
,implilkalinn and 'f""-'ialil-"Iion.
JOB SIMPlIFJCATION
n.e breaking up of the wun, that
net...J, to II<: pert',.-mcd III an
"",ani/allfm inl<\ the ,,,,alle,t
i<lentiftab'" ta,b.
JOB SPECIALIZATION
The ""ignrnent of ernplo}cc, to
perform ,mall. ,imple ta,h
Scientific Management
In 1911. Frederick W. Taylor published one of lhe earliest approaches 10 job design, Til<'
Prillciples vf Sciellliji(' MWIIIKellwJ/I. I~ Tllylor was concerned Ihat employees were slack-
ing off and nOI performing as highly onlhe job os lhey should be. Sciclltifk Illllnagemcnl,
a SCt of principles and pra<.:tices slrcssing job simpliticalion and spe<.:ializalion. was devel-
oped by Taylor 10 illcrease the performance of individual employees. Taylor slaned with
this premise: 'There is one besl way to pcrforn\ any job. and managcment's responsibilily is
10 delermine what thai way is. He ~Iieved lhal fullowing Ihe principles of job simplifica-
lion and specialization would help managers make lhis determinalion . .Iub simplification
involves breaking up the work Ihm needs to ~ done itl\o the smallest idemifiable tasks.
Jobs llre Ihel1 designed around these narrow lasks. .lob SIICciali1.11tion results whclI
employecs are assigned to perform snwll, simple tasks and focus eJ\clusi\'cly on them.
Many fast-food restauranls employ lhe prin<.:iples of job simplilkalion and special-
ization. The way food preparers at Subway (the sandwich shop chain) do their jobs
i11 ustrateS the pri nci pIes of s impl ification llnd specilll izal ion. Onc person pUiS lhe mCat
on a sandwidl. anOther person pUiS on the Irimmings (like lelluee, 10nlalUCS, and <.:ondi-
menls), and another person collecls the money from cUSlotl\ers. Be<.:ause of simplifka-
lion and speci 01 iZal ion, S ubway restauram s can make a large nu mbcr of "custom'· sand-
wichcs in a shon period. The effcctivcness of this job design is casily illuSlfllled by
watching whal happens when onc or more employees are unavailable (because. for
example, lhey are on the telephone or are replenishing supplies). When lhis occurs, lhe
other Subway employees mUSI do their own work plus the work of the temporarily
abscnt employee(s). As a resul!. it generally lakes mueh longer to serve a eUSlomer.
A cashier who fills in for the "Irimmings·' employee. for eJ\ample. muSI wash his or her
hands after handling a cuslomer's money before lrimming another sandwi"h (in keep-
ing with Suhway·s cleanliness policy).

Fr<-'ilerkk W. Taylor. a pioneer
;n job de,illn. em'i~ioned the
src.:ialization of Henry Fon!"s
fjr,;t aUlomobile a~~embly line.
Taylor"~ time and motion ~1Udies
led to dmmalil' produl"livil)"
il11p,,)\"emclll~. 001 they were
critil'ized for dehumanizing
employees.
TIME AND MOTION
STUDIES
SlUdie, lhat rewal e~octly IJoy,
long It w~c, lU perform a ta'~
and the be,t y,a)' to perfonn it
CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 213
Advocatcs of sdcmific managcment conduct time and motion studies to dctermine the
one best way to perform each narrow task. Time and motion sludies reveal exactly how
loog it takes to perfOnll a task and the best way to perform it-for example. what body
movements are most efficient for perfortl1ing the task. Employees are then instructed in
prcl:iscly how to perform their tasks.
Employees at Subway. for cxamplc. learn exactly how 10 slice the roll for a sand-
wich. how to place the meat on a sandwich. and how to add the trimmings. Becausc thesc
tasks are simple. employees quickly Jearn to perform them correctly. Bt:causc managers
know (frum time and motion studies) exactly how long it shouhJ take to perform each
task. they know how much output. on avcragc. they can cxpcct from an employee.
Subway knows. for example. how many sandwiches can be made and how many cus-
tomers can bc served in each shop pcr hour. By clearly specifying exactly wllat an
employee should do on the job. exadly how a task should be dOlle. and exactly how long
the task should takc. scicmific managcment cnsurcs that cmployec inputs rcsult in
acceplable performance levels.
In the scientific management ,lppruach to jub design, pay is the principal uulcomc
used to motivate cmployees to contribute their inputs. Pay is often linked closely to perfor-
mance by a piece-ratc pay systcm in which employecs arc paid a set amount of moncy for
performing a certain number of tasks. For example. lln employee might be paid $5 for
every eight sound mu filers thaI he or she llttaches to computer printers.
Scientific management has been instrumental in helping orgunizations improve
employee clTcctivcncss and productivity. The carly assembly lines that madc Ih;" mass pro-
duction of afford:lble automobiles possible reflected scientific m<Hlagement principles.
These principles still guide some mass-production assembly lines in usc today. Eventually.
however. somc disadvamages of designing jobs aCnlrding to the pritll"iples of scielllific
managcmCIll becamc apparent. Many problcms stcmmed from the fact that cll1ployces are
intelligent hum,ln beings who hlll'c the capacity to be illlrinsically as well as eXlrinsicillly
motil'aled and who also like 10 have cuntrol over their work.
Recall from Chapter 6 that f-I'II'insimlly motivated behavior is behavior performed to
acquire rewards (such as pay) or to avoid punishmcnt. and ;I/Iri/lsimll.l' 1l10tivalcd behavior
is behavior performed for its own silkc. Employees wlto arc intrinsically motivated enjoy
perfurming their jobs; the motivation comes from the wort itsclf. Howc\'cr. scientific man-
agemcl1\ fouises exclusively on extrinsic mOlivation and ignorcs thc imponalll rolc of
intrinsic motivation. This narrow focus resuhs in scvernl disadvantages for employees and
the organizations trying to motivate them.
214 PART t • INDIVIDUALS IN ORGANIZATIONS
JOB ENLARGEMENT
Inc",a,in~
the numhcr of I<"h
an cmpk>y"" perform, 001
~c"<:pin~all of lk Ia'~' al IIIe
\3.me 1e".,1 of djm~ull}' atld
""pon,jb,1 it} . aho callcd
hOl1/onlal job Ioadmg
JOB ENRICHMENT
Incn:"'ing an cmploycc',
rc'fI'""jbiljl} atld conln,1 (Wcr
hi' or her ,,"ur\;; al'" ~alled
"cni~al job loading.
First, employees may feel lhat lhey hal'e lo~;t contml over their work behavior.;. With its
careful. esact spedflcmion of how a simple. repetitive. specialized task should te performed.
and how long it should take. scientific management leaves no room for employees to feel that
they have control over their actions. Second. employees tend to feel as if they arc pan of a
machine and arc being treated as such. Because they view lheir work as depersonalized,
meaningless. and monotonous. their job satisfaction may de<:line. This decline. in tum. can
lead to lower work-life quality and potential increases in absentccism and turnover. Finally.
employec'\ have no opponlmity to develop and acquire new skill> wilhjob simplification and
speciflcmioll. These three drawbacks are part of lhe reason Subway and Olhcr fast-food
restaurants esperience high tumover levels: Employees leave to find more interesting and
demandll1g work.
lob Enlargement and lob Enrichment
The first widespread attempt to counteract some of lhe disadvamages rcimed to the sci-
entific managemem approach was job eniargelllem. a movement that started in the late
1940s ,1I1d continued through the 1950s.1 9 Job enlargement involves increasing the
number of tasks an employee performs but keeping all of the tasks at the same level of
difficulty and responsibility. Job enlargement is often referred to as hori~OI!/(I1 job 10(ld-
inx because the content of a job is expanded. but the difficulty remains constant, For
example. one might enlarge the job of assembly-line workers who allach the paper tray
to a computer printer by also requiring them to attach the sound mumer and the toner
canridge. The 1"Il1ployees now do more tasks of equal difficulty with no increasl" in the
level of responsibilily,
rroponents of job enlargement thought that increasing the number of ta~k~ pcrfomlCd
on a job might increase intrinsic motivatioll. The job enlargement approach to job design
was put imo effect at a number of companies including IBM. Maytag. and AT&T. 20 SOllle
cornpanies reponed increased employee productivity lind satisfaelioll from job enlarge-
ment. but at other ~'ornp,1I1ies the effeel~ were not as c1ear-eu!. This mixed succe~s i~ not
surprising because jobs that arc "enlarged" may still be simple and limilL'd with regard to
how much contml and variety employees have. Even though they no 10llgcr do Olle simple
task. employees performing several simple tasks (each of which may quickly lose its
appe,ll) may still be bored.
In respollse to the limited effects of job enlargement on work motivation. job
enrichment emerged in the 19f1Os. Joh enrichment involves de~igning jobs to provide
opporwnities for employee growth by givil1g employees more responsibility and con-
trol over their work. Job enrichment is often referred to as \'crlical job loading because
employees arc given some of the respollsibilities thm used to belong to their supervi-
sors. such as planning for how to go about cOlllpleting a project or checking the quality
of one's work. Herzberg's motivator-hygiene theory (discussed in Chapler 3) was a dri-
ving force J11 the movement to enrich jobs. Reealltlwt Herzbcrg'~ theory suggested that
employees' motivator needs are smisfied by things such as having aU\()llomy on the job
and being responsible for one's work. and that employees are satisfied with their jobs
only when these needs are mel.
Manager.; can enrich jobs m a variety of ways. The lullowing arc some or the most
cOllllllon:2 t
• Allow employee)' to IJII/II rh/'ir (ll\'11 'HI'-/': )'c!rnl"leI. For eS:lmple. when possible.
allow a secretary to detemline when he or she doc~ I'arious tasks. such as typing.
filing. and selling up meetings. and how much time to allow for each activity.
• Allow l'mpIOl'eeI /0 I/(-nill' holl' lire \\'or/.: J'IlUrdd VI' pcrformed. [f a manager wants a
secretary to prepare:1 new company brochure or filing system. the manager may let
the secretary decide how to design the brochure or tiling system.
• AI/oll' I'ml'loreeJ /0 chec/.: Iheir own 1mr/.:. Instead of insisting that the ,ecretary give
a draft of the brochure to the manager 10 check for error.;, the manager holds the sec·
retary responsible for producing a top-quality. error-free brochure.
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 215

• AI/o\>' <,lIIp/O.l"'<'S 10 I,'om 1I<'l\' skills. A secretary Illay be given the opportunity to
leanl bookkeeping and some bask accounting procedures.
Like job enlargelllem.job enrichment is aimed at increasing imrinsk motivation so thai
employees enjoy lheir jobs more. When employees ;;Ire gil'en more responsibility. they are
more likely 10 it..:1 competenl and like Ihey ha\e conlrol ol'er lheir own work behal'iors.Job
enrichment can also lead to efficiency gain,. a, indicaled in the accompanying OB Today.

DB Today
Cutting Costs and Increasing EHiciency
at General Mills
When Randy G. Darcy. Chief Technical Otlicer of General Mills. set out 10 dramatically
reduce costs and improve efficiency at plants making Cheerios cereal. Belly Crocker
cake mixes, and Hamburger Helper. he realized that much of his cost-CUlling efforts
would revolve around redesigning jobs II As part of this effort. he enriched employees'
Jobs by making them responsible for thinking of ways to do their jobs more efficiently
Darcy and other General Mills employees subsequently studied all kinds of different work
groups ranging from U.s. SWAT teams and Air Force mechanics to mountain-climbing teams.
By studying all kinds of
high-performing, efficient
groups and organizations,
they hope to find new
ways to lower costs at
General Mills. 23 Being
challenged to think about
new and better ways to
do their jobs has, in itself,
been job enriching.
For example, by study·
ing how racing car pit
crf?WS at NASCAR change
tires in split seconds,
Sl\Idies of NASCAR teJm, helped food IllJllUt:1ClUrcr Gcner~1 Mills General Mills employees
spc>{:t! up food manufadurinl;. G(·IJl.·ml Mills cmp!"y<>{:s used Ilk' figured out how to cut
NASCAR studies 10 tigure oot how to quickly ch;'nge prodUC1S On the amount 01 time it
thcirasscmhly lines. takes factories making
Belly Crocker mixes to
switch from one kind of mix to another, The employees managed to cut the process down
from 4.5 hours to just 12 minutes. resulting in real cost savings and increases in efficiency,
Essentially, they realized that by replacing traditional bolts with bolts that only need to be
turned one quarter and by equipping employees with tool boxes containing all the equip-
ment they need to change over a production line, what was once a slow and tedious
process could be accomplished in less than 15 minutes, Efficiency gains like these are essen-
tial if Darcy is to reach his goal of dramatically CUlling costs at General Mills.24 Thus far, he
has appeared to be successful and he was recently named Executive Vice President oversee-
ing Worldwide Supply Chain Operations, Engineering Technology, R&D, and Quality and
Regulatory Operatioos lS
216 PART t • INDIVIDUALS IN ORGANIZATIONS
JOB CHARACTERISTICS
MODEL
,\n apprn,... h to job oc,ign thm
a,m' to ,ocmif~- ,haroclcn,uc"
thai male job, intn,,,,cally
nlOli'-ating and the c'o",equences
of tho", ~har"':I~ri,ti<·,.
SKill VARIETY
TIle extcnt to "hi,'h a job
r'C<ju,rc, an employe": to u,e
dilk",nt ,lilh. abilil,C'. or
mlent>
Not all employees. however. want the additional responsibility thm job enrichment
brings, and it can sometimes have disadvantages for the organization as a whole.
Enriching some jobs can be expensive for an urganiz~tiun ~nd may be Impossible to duo
Enriching uthl'r jobs may result in less efficil'ncy. One of the reasons why Subway
shops arc able to make large numhers of customized sandwiches is hecause of joh
simplification and specializatiol1. Enriching the jobs of Subway employees might
mcrease the tIme It takes tu serv\,: customers. an uutcome that would reduce org,ltliza-
tional effectiveness.
Research evidence on the effects of job enrichment has been mixed. Although
employees secm to be more satisfied with enriched jobs. it is not cle1lr whether employees
with enriched jobs <tre actu1l!ly more motiv1lted 1lnd perform at higher levels.
Job Design: The Job Characteristics Model
The job enlargement atld job enrichment movemems came about in part because of some
of the ncgative effects observed whcn jobs were designed according to the principles of
scientific management. Both movements 1lltempted to increase employees' levels of
intrinsic motivation to perform their jobs. in the hope th<tt employees who found their jobs
more interesting and meaningful would be more motivated to perform at higher levels and
be more satisfied. Satisfied employees would mean less turnover 1lnd ahsenteeism. The
job ..:harndcrislil:S ulotlel proposed by Ri..:hard Hackman and Greg Oldham in the 1970s
was bltilt on these early approaches but went further. 26 Ba,;ed on the work of A. N. Turner
and P. R. Lawrence. Hackman and Oldham attempted to identify exactly which job char-
acteristic,; contribute to intrinsically motivating work and whal the consequences of these
ch:lraeteristi..:s are. 27
The job charaderisti<:s model is one of the mo,;t popular appr\Xlches 10 job de,;igtl.
Hackman and Oldham sought to provide a detailed and accurate account of the effeclS of
job design on motivation. performance. job s1l\isf~letion. and other important aspects of
org1lnizatiotl:l1 behnvior. Like the job enlargenlcnt and enriChment appro~ehes. the job
charactcri,;tics model focltscs Otl what makes jobs intrinsically motivating. When employ-
ees are intrinsically motivatcd. H1lckman and Oldham reasoned. good performance makes
them feel good. This feeling motivates thcm to continue to perform at a high level. so good
perfurmance become,; self-reinforeing.2g
Core Job Dimensions
According 10 the job char<tcteristi<:s model. allY job has ftve core dimensions that affect
intrinsic motivation: skill variely. task identity. task significance. autonomy. and
feedback. The higher 1l job scores on each dimension. the higher the level of intrinsic
motivatiun.
I. Skill mriety is lhe extetil to which a job requires an employee 10 usc a number of
different skills. abilities. or lalents. Employces are more intrinsically motivated by
jobs that are high on skill variety.
High mricly: In the opening C:lse. we described how Googlcrs use a variety of
skills to perform their jobs. Today. even factory jobs. which traditionally have had
relatively low level,; of variety. arc increasing in skill variety due to the prevalence
of sophistic~ted and computer-based technology. Factory empluyees nul'.' use ,I
variety of skills. including computer skills. mathematics. ,;tatistical control. and
quality control. in addition to ,;kills relnted to whatever they arc producing. such
as melal product,;.
LOll" l'iIriny: The jobs of empluyees in a Sub,,'ay restaurant have a low level uf skill
variety. Allthc employees nct-'"d 10 know is how to slice rolls and put meat and trim-
mings on them.

This .:arp<.·m"r ha, a high le,-el of
task identity.11c makes furniwrc
like this chair from ,tan to r",i,h,
TASK IDENTITY
The ",tcnt 10 "'hieh" job
;"",,1\'(' performmg a .... h<,k
pi""", of,,<Jd f'om iI, bcgi"ning
toil,end,
TASK SIGNIFICANCE
11lc extent 10 "hi,'h a job ha> an
imp;,ct on the Ii"", or .... ork of
olher J1'.~'l'lc;" 0' out of Ill<:
org"n>J.allO"_
AUTONOMY
The degree to whieh a job al1o....,
an employ"" the f.......><Iom and
indcpendcn<::c k' 'chcdulc .... ork
and decide how 10 carry ilOUI
FEEDBACK
11lc exlenllo whi<'h performing a
job provide, an emplu)'"" .... ilh
de", ,nform"li<m aboul h,., or bel'
dTC<'li"enc"
CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 217
2. 'I':lSk identity is the extent to which a job involl'es performing a whole piece of work
from its beginning to its end. The higher Ihe level of tusk identity. the more intrinsi-
.:ally mOliv,lled ,ltl employee is likely 10 be.
High idnllil)": At Google. engineers and programmers working on new projects
have a high level of task identity. as they arc responsible for their projects from
start to finish. Similarly. a carpenter who makes cU,lom wood cabinelS and furni-
ture has high lask identity. Tl\e carpenter designs ,md makes cabHlets and furniture
from start to finish.
Low idol/il)": 1'01' a factory worker assembling computer printers. task idemity is low
if the worker only anaches the paper tray.
3. Task signilkllm:e i, the e"tent 10 whil:h a job has nn tmpacI on the ltves or work of
other people in or out of the organization. Employees arc more likely to enjoy per-
fonning their jobs when they tl\ink their jobs arc important in the widcr scheme of
things. Rec<lll from the opening casc how Goog1crs view their work as highly signifi-
cant for uscrs around the globe.
High signiJh.wlCl': Medi<.:al researchers and doctors experience high levels of task
significance becausc their work promOles the health and wcll-being of people.
WW sigmjicance: The job of an employee who dries CMS off after the car;; go
through a car w<lsh I\a, low tnsk signiiicnnce bel:ause the cmployee docsn 'tthink it
has mu<,h impact on other people.
4. Autonomy is the degree ((J which a job allows an employee the frecdom and inde-
pendence 10 schedule work ;Ind decide how to carl)' it out. High autonomy generally
contributes to high levels of intrinsic motivation.
High aUlmWlIJ.I": I'mm the opening ('asc. it is clear that employees at Coogle have
high autonomy.
Low (lillO/Will)": An employee ,It Il\e 11l1emal Revenue Service who opens la" relurns
and wns them inlo differenl categories h<lS a low level of nulonomy lx:cnuse she or
he must work at a steady. predetermined pace and follow strict guidelines for sorting
the rctums.
5. FCt>(lback is the eXlenllO which performing <l job provides ,111 employee with clear
information aboll! his or her etlt'Ctivcness, Rt'Cei,'ing li:edback has a po,itivc impact
on intrinsic motivation.
Hrl{h feedlXlck: Computer-based technology in factories often gives factory worker;;
nnmediate feedb<lck on how well they are doing. and this information contribules 10
their imrinsic motivntion.
UJIl' flwlhHCk: An employee who rcshelves books in the New York City Public
Libmry mrely receives feedback as he or ,he performs the job lind is often unaware
of when he or shc makes <l mistake or docs a particularly go<Xl job.
According 10 the job characteristics model. when managers consider the live core
dimcnsions of a job. it is important for lhem to realize that ellll'lowes' pcrCeptiOllS of
thc core dimensions (not the actunl reality or a manager's perceptions) are the key
determinants of imrinsic motivation. As we discussed in Chapter 4. two people can
watch the same movie or take part in the same group meeting and have very differetll
perceptions of what they have experienced, One person might hate a movie Ihat anothcr
person loved. and one group member might p<::rceil'e that a group meeting wns a noisy.
incomprehensible. free-fm-,llI while another perceives that a reason,lble and lively dis-
cussion took place. In a like manner. two employees lIlay have the same job yet per-
ceive it differently. For e"ample. one employee might perceive the job to be high on
task significance while <lnother perceives It to Dc low on Ihls dimension.
The Motivating Potential Score
To mensure employees' perception, of lheir jobs on each of the core dimension.
Hackman and Oldham developed the lob Di(lgllo,~lic Surl''')'. The scales uscd to measure
the five dimensions are ,hown in Exhibit 7.2. Once an employee comp!ctes each of these
218 PART t ° INDIVIDUALS IN ORGANIZATIONS

MOTIVATING POTENTIAL
SCORE (MPS)
A mea,urC of lhe o\'er~lI
poIrnt,"1"f" job 10 fo'ler
inlrin"e nlOl""li"n
scales for his or her job. it is possible to compute thC' job's motivating potemial s,:ore,
The moti\'lltin~ Ilolentinl score (MPSj is a measure of the overall potential of a job to
fo~ter intrinsic motIVation. M PS is equal to the average of the first three eOTC charader-
istil:s (skill variely. task idemity. and task signilicam:e) multiplied by autonomy and
feedback. as indiemed in Exhibit 7.2. Each of the three eorC' dimC'llsions is assigned a
score r,l11ging from a low of I to a high of 7. The lowest MPS possible for a job is I (I X
I x I). and the highest MPS possible IS 343 (7 x 7 x 7). The lowest actual MrS score
that Hackman and Oldham observed was 7 for a typist in an overflow typing p<:xll: the
typist waited at hC'r typcwritC'f all day for thC' occa,ional jobs shC' rcceived whC'llthe reg-
ul,lr pool got overloaded. The highest score was )00 for a management consultant.
Hackm:lll and Oldham sllggestthat an a"erage motivating potential score for jobs in U.5.
corporations is around 128.19
The Job I)iag!los lic Sllrl'('.\' can be llsed to idC'mi fy the COfC di mensions that are most
io need of redesign in order to ineTCase ,1 job's motivating pote1Hial score and. thus. all
employee's intrinsic motivatioll. ExhibIt 7.3 shows a survey profile for a gardener who

EXHIBIT 7.2

Measures of the Five Core Characteristics from Hackman and Oldman's Job Diagnostic Survey

Skill variety
1. How much variety is there in your job? That is, to what extent does the job require you to do many
diHerent things at work, using a variety of your skills and talents?
1 2 3 4 5 6 7
Very little; the job Moderate variety Very much; the Job requires
reqUIres me to do the me to do many different
same routine things things, using a number of
over and over again. different skills and talents.
2. The job requires me to use a number of complex or high-level skills,
How accurate is the statement in describing your job?
1 2 3 4 5 6 7
Very Mostly Slightly Uncertain Slightly Mostly Very
Inaccurate Inaccurate inaccurate accurate accurate accurate
3. The job is quite simple and repetitive,*
How accurate is the statement in describing your job'
1 2 345 6 7
Ve'Y Mostly Slightly Uncertain Slightly Mostly Very
inaccurate inaccurate inaccurate accurate accurate accurate

Task identity
1. To what extent does your Job involve doing a Nwho/e o and identifiable piece of work? That is, is the job a
complete piffe of work that has an obvious beginning and end? Or is it only a small part of the overall
piffe of work, which is finished by other people or by automatic machines?
1 2 3 4 5 6 7
My Job is only a tiny part My job is a moderate-sized "chunk" My job involves doing the
of the overall piffe of work: of the overall piffe of work; whole piece of work, from
the results of my activities my own contribution can be seen start to finish; the results of
cannot be seen in the final in the final outcome. my activities are easily seen in
product or service. the final product or service,
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 219

2. The job provides me with the chance to completely finish the pieces of work I begin.
How accurate is the statement in describing your job)
1 2 3 4 5 6 7
Very Mostly Slightly Uncertain Slightly Mostly Very
Inaccurate Inaccurate Inaccurate accurate accurate accurate
3. The job is arranged so that I do not have the chance to do an entire piece of work from beginning to end.·
How accurate is the statement in describing your job)
1 2 345 6 7
Very Mostly Slightly Uncertain Slightly Mostly V,~
inaccurate inaccurate inaccurate accurate accurate accurate

Task significance
1 In general, how significant or important is your job? That is, are the results of your work likely to
significantly affect the lives or well-being of other people?
1 2 3 4 5 6 7
Not very significant: the outcomes Moderately significant Highly significant; the outcomes
of my work are not likely to have of my work can affect other
important effects on other people. people in very important ways,
2, This job is one where a lot of people can be affected by how well the work gets done.
How accurate is the statement in describing your job)
1 2 3 4 5 6 7
Very Mostly Slightly Uncertain Slightly Mostly V,~
inaccurate inaccurate inaccurate accurate accurate accurate
3. The job itself is not very significant or important in the broader scheme of things,'
How accurate is the statement in describing your job)
1 2 345 6 7
Very Mostly Slightly Uncertain Slightly Mostly Ve~
Inaccurate Inaccurate Inaccurate accurate accurate accurate

Autonomy
1. How much autonomy is there in your job? That is, to what extent does your job permit you to decide on
your own how to go about doing your work?
1 2 3 4 5 6 7
Very little; the Job gives me Moderate autonomy; many things Very much; the Job gives me
almost no personal "say" are standardized and not under my almost complete responsibility
about how and when the work control. but I can make some for deciding how and when
is done. decisions about the work. the work is done.
2 The job gives me considerable opportunity for independence and freedom in how I do the work.
How accurate is the statement in describing your job?
1 2 3 4 5 6 7
Very Mostly Slightly Uncertain Slightly Mostly Very
inaccurate inaccurate Inaccurate accurate accurate accurate
3, The job denies me any chance to use my personal initiative or judgment in carrying out the work."
How accurate is the statement in describing your job)
1 2 345 6 7
V,~ Mostly Slightly Uncertain Slightly Mostly V,~
inaccurate inaccurate inaccurate accurate accurate accurate
(Continued)
220 PART 1 • INDIVIDUALS IN ORGANIZATIONS

Feedback
1. To what extent does doing the job itself provide you with information about your work performance I
That is, does the actual work itself provide clues about how well you are doing-aside from any
"feedback" coworkers or supervisors may provide?
1 2 3 4 5 6 7
Very little; the job itself is set up Moderately, sometimes doing Very much; the job is set up
so I could work forever without the job provides "feedback" to
so that I get almost constant
finding out how weill am doing. me; sometimes it does not "feedback" as I work about how
weill am doing.
2. Just doing the work required by the job provides many chances for me to figure out how weill am doing,
How accurate is the statement in describing your job?
1 2 345 6 7
V,~ Mostly Slightly Uncertain Slightly Mostly ve~
inaccurate inaccurate inaccurate accurate accurate accurate
3. The job itself provides very few clues about whether or not I am performing well.·
How accurate is the statement in describing your job?
1 2 345 6 7
V,~ Mostly Slightly Uncertain Slightly Mostly V,~
inaccurate inaccurate inaccurate accurate accurate accurate

Scoring. Responses to the three items for each core characteristic are averaged to yield an overall score for
that characteristic.
Items marked with an "." should be scored as follows'. 1 = 7', 2 = 6', 3 = 5', 5 = 3', 6 = 2', 7 = 1

M ., . I (Skill variety+ Task identity+ Task SignifiCanCe) A F dba k

otlvatlng potentia score"" 3 x utonomy x ee c

SO",,": J. R, Hackma" and G. R. Oldham. m".. Red,.,ign. copyright (') 1980 Addison-We,ley l'ubh>hing Co. Itt< .. Reading. M""s, Reprimcd with
perm""""

works for ~ landsc~pe company. The g~rdener is ~ member of ~ three-person crew Ih~1
provides landscape services 10 residenti<ll ~nd commercial customers. The (;feW is
headed by a l<lndscapc supervisor who ~ssigns individual tash (such as CUlling grass.
prep~ring flower beds. or pl~nling trees) 10 crew members at each job sile. As indicated
in Figure 7.3. the g~rdene(s levels of task identilY and autonomy are especially low and
should be the main focus of any redesign effons. Currenlly. the supervisor <lssigns very
specific and unrelated tasks [0 each crew member: At a partieular site. the gardencr
might plant some flowers. cut solne borders. and plant a tree. The supervisor also tells
the erew members exactly how to do each task: Put the daisies here amI Ihe marigolds
around the border.
To increase task identity and autonomy. the supervisor could change the way hc
assigns tasks 10 crew members: The supervisor could make each crew member responsi-
ble for ,I major aspect of a particular landseaping job and. after providing some basic
guidelines. give Ihe erew member Ihe <lUlOliomy [0 decide how 10 accomplish this aSIXTI
of the job. On one job. for example. the gardener might he responsiblc for preparing and
aIT1l1lgi ng ~II of the flower beds (resulti ng in high t~sk ident ity). After 1he supervisor tells
Ihe gardener aboulthe eUSlOlller'S likes and dIslikes. the gardener would be free 10 design
Ihe beds as he sees fit and work on thelll in Ihe order he wanls (resulling in high
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 221

EXHIBIT 7.3
Sample Job Diagnostic Survey Profiles
Before job te<lesign Afte<-;ot> red.... gn
Profil~
ofa gardcn~, Prof,l~ of a gam"".,
MPS + [(3.S+ 1 +4)f3Jx 12 x6 .. 20.4 MPS"[(35+ S+ 4)/3J x4x 6 .. 100
, ,
,
;
,
, ,
, ,
Ta<k Task Autonomy Ferob.ck Ta<k Autonomy Feedback
;J~ntil)' "!>,,,focance .ignificance

aUlonorny). As a resuh of these changes, the 1'.1I'S of the gardener's job would rise from
20.4 to IOU (see Exhibil 7.3).
Jobs can be redesigned in a variely of ways to iocrease levels of the five core dimen-
sions and the MPS. Common ways to redesign job_ are described in Exhibit 7.4.

Critical Psychological States

H<l\:kman amI Oldham proposed lhm lhe live (;Ore job dimensions \:ontribme 10 three crili-
cal psychologic<ll states thm determine how employees react to the design of their johs:
experienced meaningfulness of the work. experienced responsibility for work outcomes,
and knowledge of resuhs.
First. employees who perceive lhm their jobs are high in skill variely. lask idcnlily. and
task significance attain the psychological stale of experienced meallingfulness of the work.
EXPERIENCED Experienced tlleanillgflline-ss of the work is the degree to which employees feel their
MEANINGfULNESS Of jobs arc important. worthwhile. and meaningful as do nwny employees at Google in lhe
THE WORK opening case. The second crilical psychologil:al Slate. l'xpcricllccd rt'spunsihility for
The degree to which emplole,,,
work outcomes. is the extent to which employees feel they arc personally responsible or
fed Ihei, yx" arc nnp.;>TI;t1lt.
accountable for lheir job performance. This psychological state stems froJll lhe core
"orlh" hil •. and meanm~fuL
dimension of autonomy. The lhird crilical psychological stale. knowledge of results. is the
degfL'C 10 which employccs know how well lhey perfonn their jobs on a continuous basis:
EXPERIENCED it stems from the corc dimension of feedback. Exhibit 7.5 summarizes the relationships
RESPONSIBILITY FOR among lhe five core dimensions. the three critical psychological ,t,lles. and work ,md per-
WORK OUTCOMES sonal oulcomes (dIscussed nexl).
T1le e~tem to which emplo}'"",
f•..::1 (lCN'nall) rc'pon,ible or
oceou~t;,hle r,,," tlleir joh Work and Personal Outcomes
pcrfnnnal\l-e .
H<Jekman and Oldham further proposed that lhe critical psychological states resull in
four key oulcomes for employees and their organiz<Jtions: high inlnnsic mOlil'atlon.
KNOWLEDGE Of RESULTS high job pcrfortlhl1ll·e. high job salisfaclion. and low absenleeism and lurnover (sec
The llc~"'" m "hich emplo} "'" Exhihit 7.5).
kn",,' ho" well they pcrfonn
t~lr job, on a contmoo", b",,, I. Iligll ill/rillIit' /1101h"m;O!l. One of the major outcomes of job design is intrinsic
motivation. When jobs arc high on the five core dimensions. employees experi-
ence lhe three critic;ll psychological Slales <Jnd <Jre intrinsically ll1oti"<Jted. When
222 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 7.4
Ways to Redesign Jobs to Increase MPS

Change Made
Combine tasks so that an employee
is responsible for doing a piece
of work from start to finish.
Group tasks into natural work
units so that employees are
responsible for performing an entire
set of important organizational
activities rather than Just part of them.
Allow employees to Interact with
customers or clients. and make
employees responsible for managing
these relationships and satisfying
customers.
Vertically load jobs so that employees
have more control over their work
activities and higher levels of
responsibility.
Open feedback channels so that
employees know how they are
performing their JObs.
Core Job
Dimensions Increased Example
Skill variety A production worker is responsible lor
Task identity assembling a whole bicycle, not just
Task significance attaching the handlebars.
Task identity A computer programmer handles all
Task significance programming requests from one division
instead of one type of request from
several different divisions.
Skill variety A truck driver who delivers photocopiers
Autonomy not only sets them up but also trains
Feedback customers in how to use them, handles
customer billing, and responds to
customer complaints.
Autonomy A corporate marketing analyst not only
prepares marketing plans and reports but
also decides when to update and revise
them, checks them for errors, and
presents them to upper management.
Feedback In addition to knowing how many claims
he handles per month, an insurance
adjustor receives his clients' responses to
follow-up questionnaires that his company
uses to measure client satisfaction

So,,,,,,: Ba>ed on J. R, Jhelm..n. "Work Rede>ign:' in J. R. Ibel",a" and J. L. Sun Ie. 00... Imp"i\'ilig Ufe ~. W"rHSa"la Monka. CA: Goodyear.
1976),

intrinsIc motiv~tiun is high. employees enjuy performing a jub fur its own sake.
Good performance makes employees feel good. amI thi, po,iti\,e feeling further
motivates them to eOll1inue to perform at a high level. Poor performance makes
employees feel bad. butthis feeling m;IY motivate them to try to perform at a
high level. In other words. because good perfurmance is self-reinforcing (perfor.
mance is iI, own reward). the motivation to perform well comes from inside lhe
employee rather than from an eXlernal source Iike praise from a supervisor or the
promise of pay.
2. High job petformallct'. Jobs high in the live core dimensions. which le~d tu hIgh
leve Is of the three nitical p,ycholog ic~1 stales. mOlivale employees to perform
at ~ high level.
3. High job swi.lft,clioll. Hadman and Oldlwm reasoned thaI employees arc likely 10
be more s~tisfied with their Jobs whcn the critic~l ps)'chologic~l st:ltes arc high
bec~use they will have more opportunities for personal growth and development
on the job.
4. Low abell/f'f'islI! and 111/-,/0\'('/: When employces enjoy performing their jobs.
Hackman and Oldham rcasoned. lhey will be less likely 10 be ~bscnt or quit. (Alsu.
recall from Chapler 3 thal satisfied employees arc less likely to be absent or quit.)
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 223

EXHIBIT 7.5
Co.. dimen,"'" P.)'<hoIogi""l>tate. Work an<! peroonal ",,"'om••
The Job Characteristics
Model
Skill "a,;<ly
500,.:", tldapled from J. R, H;o:;kman Ta.k id<n,,')'
",><1 G. R Oldham. \\lICk Rnlni811. Ta.k ';gnlflc.n«
rop)Irighl e 19l1O AdJison- Wesley
Publishing Co.. Inc.. Reading. "tA. bp-<ri<.-.c<d
Au<onomy --_I ... "",no'bili')' for
won. ou<com.. H'gh job .. ti.faction

Kn"",,<dg< of
F«dback • r«ul"
Low abl<nt<mm .od
'Ym"",,'

1
Ind''';''''''' diff",..,ce, ,ha'
.ffe<, ,he .. I~ti<>n,hip>
proposed in ,hi, model:
oCrow<h·n«" " ... ng,n
• Knowl<dg< and .k,ll.
o s.ati.f~c,ion w,th ,h< won. (on'<"

The Role of Individual Differences in Employees'

Responses to Job Design
The jub ehameteristie~ model acknowledges the role that indIvidual differences play in
determining how employees respond to the design of their jobs, To >ee how individual dif-
ferences interact with job de~igll. leI's look at the case of three sales nmnagers. each of
whom manages a different depm1ment in a depmtment ,tore. Mary Catalano. the manager
of women's shoes. i~ a competent manager. eager to le<lm more abollt dilkrem aspects of
retai ling. and is serious about her c<lreer. Ron Richards. the manager of nll~II's shoes. is sti II
mastering the responsibilities of his first supervisory position and is having a rough time.
Roberta Doran. who has an MBA in marketing. manages the china department, Doran is a
competent manager but always complaills about how low retailillg Sillaries are compared to
salaries she could be making in other organizations.
To increase the mot ivati IIg potential seore of each manager's job. the dep~lT\lllent store
h:ls recenlly redesigned each job, In the past. a manager's main responsibility was to super-
vi~e the ~ales team~ in hi~ or her respccti"C department>, After the redesign. manage~ also
became responsible for purchasing merchandise (an increase in skill variety and task sig-
nificance). hiring and firing salespeople (also an increase ill skill varicty and task signifi-
cance). and the profitability of thclr respeeti\'c dep<lrtments (ml increase in task identity.
autonomy. :lIld feedback).
As you might cxpect. Catalano. Richards. and Doran havc responded in diffcfCnt ways
to their redesigned jobs. The job characteristics model hclps explain why employees Inay
respond somewhal differenlly to an increase in some of the core characteristICS of their
jobs. It identifies three lypc~ of individual differences that affect thc relatioaships bct"'cen
thc core dimcnsions and the psychological states and the fC'lationships bctwcC'n the psy-
chological SlatC's and the outcomes (sec Exhibit 7.5). The nature of those relationships
depends on Ihe growth-nt'Cd strength. knowledge and skIlls .•md s3tisfactioll with the work
context of the individ ual cmployee.
I. GrOll'llHll'ed strellgth is the extent to which an individual wants his or her work
to contribute to personal growth. learning. and dC'velopment. When an individual
wants his or her job to fuel personal growth. both relationships in the model (core
224 PART t • INDtVIDUALS IN ORGANIZATIONS

dimensions-psychological states and psychological states-outcomes) arc stronger.

Such individu11ls arc expected to be especially reSfxmsive ooth to increased levels
in the core dimensIOns and to the critical psychulogical states. [n our example,
Mary Catalano is likely to ha\'e the most fa\'orable response to thc job rcdesign
because she is most eager to learn what she can about her chosen career.
2. Know/I'dxl' (illd Ikilh at an appropriate le\'el enable employees to perform their
jobs effectively. When employees do not have the necessary knowledge and
skills. thc rclationships depicted in Exhibit 7.5 may be weak. noncxistent. or even
negative. In our example, Ron Richards was barely keeping his head aoove water
before the increases in the core dimensions of his job. Once the job is redesigned.
he may become frustrated becausc his lack of knowledge and skills prevents him
from performing wdl. As a result, his intrinsic Illotivation and job satisfaction will
probably suffer. and he wi II be unable to perform the more complicated job.
3. Sat;I!uCI;OIl ,dll! Iht, work am/c.O describes how s;ltisfied employees ,Ire with
extnnsic outcomes (such as p,ly, benefits, job security, and good relationships with
co"'orkers) they receivc from their jobs. Hackman and Oldham rcasoncd that whcn
employccs are dissatisficd with their work contexts. they spend much of their
energy trying to deal with their dissatisfaction with the conteXtS and are not able to
appreciate and respond to the potential for intrinsic mutivation on their jubs.JO
When satisfaction with the work context is high, the relationships depicted in
Exhibit 7.4 arc cxpected to be strong: when contcxt sath.faction is low.thcy arc
expected to be weak. In our example. Roberta Doran's dissatisfaction with her pay
is intcnsified by the job redesign because shc must now take on additiunal respon-
sibilitics but will rec"cive no extra pay. ([nterms of the equity theory that WI." dis-
cussed in Chapter 6. Doran sces her outcome/input ratio as being more unfavorablc
than it was before the job redesign bcc,luse her inputs are going up but she is not
recclving any additional outcol11es.) Instead of increasmg JIltrinsic motivation and
job satisfact ion. the changes in Doran·s job make hcr evell more dissat isflcd with
her pay. llnd she spcnds much of her timc complaining, thinking about how to
improve matteTS, and looking for another job.
Although the job characteristics model focuses on the rebtionships betWCCn the core job
dimensions and psychological states and, in tum, psychological states and outcomes. cultural
differences llJay also have an impact on these relationships, Amcri<:an employt:es arc uscd to
a cCl1ain aIllOUll! of autonomy at work. hut cmployecs in othcr countries like China have trn-
ditionally liad very lillIe freedom and independence on the job. Chine,e employccs, for
example, may be l1lotivatt-u by core job dimensions suclt as autonumy, but it might take a
little time and elTon to convince them that they Glil really makc decisions on their OWII. This
pnwcd to be the case at Minneapolis-based H. B, Fullcr Company, which owns and runs a
joint \'enlUre factory in Ch ina thm makes adhesives used in products wnging from cardOO1rd
boxes tu packages of cigarettes. The Chinese cmpluyt-es were uriginally reluctant to make
dedsions on their own but now find autonomy to bc a sou ree of motivation.' I

The Research Evidence

Many research studies have tested diflercnt componcnts of the job characteristics model
since Richard Hac"kll1an and Grcg Oldham originally proposcd il. A rec'ent review of this
litcraturc conductcd by Fried and Fcrris idcntificd almost 200 studics. Fricd and Ferris's
ol'enlll conclusion from their TCview is th,U there is modest support for the modeL,2 Some
of their speci fie lind iugs ,Ire as follows:

I. It is not clear that exactly five dimcn'sions (tile fil'c core job dimensions outlincd by
Hackman and Oldham) beSt dcscribe the job design of all jobs.
2. Research shows that job dimensions ha\'e the most significant efli:cts on intrinsic
motivation and on job satisfaction: thc cffens on actual work behaviors (such as job
performance. abscntceism. and IUrnovcr) arc not as strong.

You're t;he Management; Expert;
SOCIAL INfORMATION
PROCESSING MODEL
lin appnXl<;h to job d~,ign l:Ia'><.'<l
00 the ide~ Ihat infnmMlion from
(~h~r peopJ~ a,1d ~mployc""
0" n p",1 boeha' ill'" intllk'''''~
employ en. pcn:cplion, "f
and ~'pon"" to Ihe de'ign of
their jolh
CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 225
Redesigning Jobs
Marcia long has recently been hired as the manager of a group of five employees who
process mortgage applications lor a bank in West Hempstead, New York. When long was
interviewing for the position, her boss told her there were certain morale problems in the
group. This was confirmed during long's first week on the job when her boss shared the
results of an employee attitude survey with her. The employees in her group were very dis-
satisfied with the work they did-they found it monotonous and boring. They were actu-
ally satisfied with extrinsic factors such as pay, benefits, and their coworkers. But the
nature 01 their actual jobs was a real problem. In long·s group there are basically three dif-
ferent kinds of jobs. Two employees focus on the beginning of the process of granting a
mortgage; they interact with home buyers, provide them with applications, and make
sure their applications are complete with all supporting documents attached. They also
run credit and background checks. Two employees focus on the next stage of the
process-getting surveys and appraisals conducted, interacting with builders in the case
of new homes, and arranging for title searches and a title policy. The remaining employee
focuses on arranging closings, making sure everything is complete and in good order
beforehand, and interacting with customers once they have been approved for a mort-
gage Much 10 long's surprise, the employees were about equally dissatisfied with their
jobs, regardless of which of the three positions they had. Because you are an expert in OB,
long has come to you for help. She wants to redesign her employees' jobs so that they
are more motivated and satisfied, bUI she has no idea where to start and what to focus
on. What should she do?
3. Simply adding the scores fur the job characteristics lmght be a beller way of calculat-
ing thc motivating potential score than using the multiplicative formula proposed by
Hackman and Oldham.
The results of this review of the Job charaderistics model as well as other reviews
and studies"" lead to these overall conclusions: Employees teml to prefer jobs that arc
high in the five core dimensions in the model. they tend to be lllore satisfied with these
types of jobs. and they Iwve Iligher levels of intrinsic motivation. Thus. job design can
contribute to the quality of work liFe and may also have some indirect effects on absen-
tel."ism and turnover rates. In addition, when the intrinsic motivation of l."mployel."s is
high, they arc internally motivated to perform well.As a resull, managers do not need to
supervise lhem asclosely as they do wilen tlleir intrinsic motivation is low. The need for
less supervisiun may free up some management time for Olher activitics. Ncvcrtheless,
it is not c1car that job performance will actually bc higher when CIlTC dimensions
are high.
Job Design: The Social Information Processing Model
Thc job chnracteristics model is co,nplemented by another approach to job design: 111l."
social information processing model developed in 1978 by Gerald Salancik and Jeffrey
PfefTer.J.I According to the sodal inFormation ]lnJcessing lIludd, factors othcr than the
226 PART t • INDIVIDUALS IN ORGANIZATIONS

eorl.'" dimensions specified hy Hackman and Oldham influence how employees respond to
the design of their jobs. Salancik and Pfeffer propose that how employees pcrceive and
respond tu the design of their jobs is influenced by .weilll illforlllarion (infurmalion from
olher people) and by employees' own past behaviors, The following example highlighls the
social information processing rnodcl.
Joseph Dollerty and Robert C\IllU have recently received their law degrees from
Columbia Umversity and <!ccepled associate positions with the same prestigious Wall
Street law firm. They work in differl.'"nl sc(·tions of Ihe corporale law departmenl and reporl
to different panners in the finn. for whom they do a lot of research and grunt work. The
design of their jobs and the extrinsic outcomes (pay and perks) that they receive are simi-
lar. Aboul half of their work is inleresting <lnd cllaJlenging. ,1IId the olher half is tedIOUS.
They aIT' expc<:ted 10 put in bet"'een 60 and 70 houl1; e<!eh week <lnd arc well paid. receiv-
ing $100.000 a year.
Dcspite these and other simil:!rities. Doheny's and Cantu's fe,lctions to their jobs Me
different. Doherty slill Cal1't believe Ilis luck allanding ajob Ihat is su inleresting al1d chal-
lenging. He enjoys his "'ork and thinks nOlhing of the long hours; his Iligh salary is Ille
icing on tile cakc. Calllu complains th:!t he didn"t spend four years in college and tllree
years in law school (never mind the year spent studying to pass tile b,lrexam) to spcnd half
of his time at work runnmg errands for Ihe partners uf a law fiml. He rescnts the fact that
he is nOi able to deal directly with corporate diems (this job is reserved for Ihe partners)
even though he is the Ol1e who docs most of the work 011 their cases. In his view, his high
sul,lfy barely makes up for the long working hours.
Doherty is both 1Ilirinsically mutivaled by and very S<llisrled with his Job, The opposite
is true for Cantu. whose mUlivatinn (both intrim;ic and extrinsic) i, low and dissali~faClion
is high. Why do they havc such diffcrem reactions to jobs th:!t are simibr on most dimen-
. "
SIOnS.

The Role of the Social Environment

Salancik and Pfeffer's social information processing model suggests sc\'eml reasons why
Doheny's and Cunw's rcaetions are so different. First, the model proposes that the social
environment prOVIdes employees with lIlformation about which aspects uf their job
dc~ign and work outnJmes they should pay allell1ioll 1U and which they should ignore.
Here. s()("itll ('11I';/VIIIIU'1II means the other individuals with whom employees come into
conl1let at work. An employcc's social environment.tllus. includes his or her coworkers,

The social environment provides

('mployees with information
about how they should e\"Jluate
their juhs and work ulItn,mes.

CONTINGENT WORKERS
Employee> whom organizalion,
hi re or comracl wilh on a
lCmp"r6f) ba,,' to fill nccd,
for labor thaI ehange ovcr timc.
Comingem w"rkef', like Iho'"
hired by lemporal)' employmcill
agencies, arc mOlivated by
ditlcrem factors than full-lillie
('nlploye" with more job
security.
CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 227
supervisors. and other work group mcmbers. Second. the model suggests that the social
environment provides employees with information about how they should evaluate their
jobs and work outcomes.
Doheny and Cantll belong to two different work groups. eac:h of which has three
other associates in it, In Doherty's work group, there is one other new associate and two
experieoced associ~l\es who h~L\'e been with Ihe firm for several years. Rumor has it that
the experienced associates are soon to be promoted to the position of marwging attor-
ney. From day one. Ihese two assoc:iates impressed ou Doherty and the other newcomer
to the group the valuahle experience Ihey would ohtain if they did their jobs well. They
acknowledged the dullness of the grunt work but made light of it and instead stressed
the considerable autonomy the new associates had in conducting their rese'lrch. These
two associates arc very satisfied with their jobs and are intrinsically motivated.
Interest ingl y enough. the long hours ex[X'cted of al I the associales nevcr bccame a topic
of conversation in this group. Doherty's socia) environment emphasizes the importance
of the valuable experienl:e he lS obtainl11g from his job. points out the considerable
autonomy he has. and su ggcsIs Ihat this job prov ides high levels of intri nsic mot iVal ion
and smisfactiOll.
Cant u's work group is also composed of one other newcomer and two experienced
associates who have been with the firm for several years. These two associates. how-
evcr. do not expect to be promotcd. and both arc on the job market. They arc bitter
about their cxperience.~ in the law firm and warn Cantu and the othcr newcomer thm
the)' can look forward to being "the personal slaves" of the partners for the next several
years. They also eumplain that most of the work they had to do when they first joined
the firm didn't rNJuire someone with a law degree and thaI the long hours wcre simply
inhumane. Givenlhe Iypc of social environment Cmnu encounlered. his dis~atisfaction
with his new job and his lack of intrinsic and extrinsic motivation are hardly surprising.
If two seasoned veterans evaluate the job su neg<ltively. why should he think any
differcll1ly?
The different social environments that Doheny and Cantu cncounter cause thcm 10
focus on different aspects and outcomes of their jobs and how the)' should evaluate these
f'll:lOrs.
The increasing relialKe of organizations ou contingent cmployees has some imcrcsI-
ing implications for social environmems at work. Contingent workers arc employees
organizations hire or contract with on a temporary basis to fill needs for labor. which
\:hange over time.3~ Contingent workers have little job sel:urity and loyalt), toward their
organizations because the)' know their employmcll1 is on a temporary. as-needed basis.J.t>
Contingent workers often face a different social environment on the job than do regular
employees.
The Role of Past Behaviors
The social information processing model proposes anotbcr reason why Doherty and
Cantu vicw their similar jobs so differell1ly: Employees' past behaviors havc implica-
tions for how Ihey view Iheir current jobs and work outcomes. Dohert)' made consider-
able sacrifices to get through law school. He worked at night as ,I waiter to supplement
the $60.000 worth of slUdent loans he took O\ll to pay his tuition and living cxpenses
over Ihe three· year pcricxl. H is hectic schedule made his social life praclically nonexis-
tent. Cantu. in contrast, did not have to take out an)' loans or work to p"y for law school.
His father. an attorney. alwa),s assumed that Clntu would follow in his footsteps. In
facl. Cantu was nm overjoyed by the prospect of going to law school but couldn't find a
decem job with his BA in anthropology. His parents were pleascd that he decided to
al1end the Columbi,. law school ,111d thought nothing of paying the high tuition and liv-
ing expenses llll'olved.
Because Doheny freely chose to becomc a lawycr. made a lot of sacrifi('c~ to attend
law school. and will be paying offhis debts from law ~chool for Ihe next several years. his
intrinsic motivation is high. ami his altitude IOward his job is extremely positive. Having
228 PART 1 • INDIVIDUALS IN ORGANIZATIONS

such a good job justifies all the sacrifices he has made. Cantu. who didn't have many
options after graduating from college, was pressured by lIis parents to become a lawyer
and dit!n '1l1ave 10 sacrifice much al ailiu attend law school. In tenns of his pasl behaviors.
Camu has much less lojuslify because he didn'l have much choke. nul' was he required to
make many sacrifices.
'nle social information processing model. thus. identifies a scrond faelor that affects
empluyees' reactiuns 10 the design oflheir jobs: Employees' past behaviors have implica-
lions for their evaluations of their current jobs. Ihei r levels of imrinsie mot ivat ion. and their
levels of job satisfaction. especially when these behaviors are frcely chosen and involve
ceruin personlll sacrifices.
To sum up. Ihe social informalion processing mooel poinls 10 the importance of the
social environment and PliSt bdwviors for an undcrstant!ing of how employees reacllo the
design of their johs.·1i It helps explain why two employees with the same job and oU!eomes
m,ly have very different levels of mOlivation and satisfaction. As you might expect. research
has fuund Ihal both the ob,it-.:tl,'e features of a JOb (ils actual design in lerms Oflhc five cure
di mensions of Ihe job charal'leristics model) and an employce's social environment ant! past
behavior all intcract to affect motivation levels and satisfaction:l~ ReSClirch has found Ihat
the social environment is an especially potenl source of infonl1ation when employees with
limiled infumlation and experience are new to a job ur to an urganization. Ooce empluyees
have gained firsth,Uld expcricnee with their jobs, the social environlllelll may pl<lY less of a
decisive role in molding reactions. and the actual dcsign of the job itself may beCOllle more
imJXlrt~l!ll.

Job Design Models Summarized

Scientil"ic management. Job enlargement, job enrichmenl. the job ehamcteristics model.
and the social information processing nllxlel-eaeh theory highlights differem aspects
of job design that are importam to eonsit!er when it comes to understanding work moti·
vation. The main features and motivational focus of each approach arc recuppet! in
Exhibit 7.6.
Sl'iemifir tII(//I(Ig('IIWIII advocates job simpl ilicat ion and job special izmion . and its key
goul is maximizing performance. Scicmifie management implicitly assumes thai extrinsic
motivation is the primary determinant of performance and provides no opportUlllty for
mlrinsic motivation. Proponents believe employees can be motivaled tu cumribule inputs
to their jobs and organizations if pay is closcly linked to performance by means of pieee-
rale pay systems. Jobs designed according 10 the principles of scientific managelllCnt tent!
to be boring, monolonous. and dissatisfying,
lob ell/argc/llem and job mrichmem focus on expant! ing the simple jobs created by
scient ilie management (enlargement thmugh horizontal loadi ng: enriehmC'lIt through verti-
cal loading) to promote intrinsic motivation.
In response 10 some of the problems rel,lted to designing jobs according to Ihe princi-
ples of scientific m<lnagcl11ent, Hackman and Oldham pmposed thejoh characteristics
model. The job characteristics model outlines the job dimellsions that lead to high leveLs of
intrinsic motivation. When employees are intrinsically m01ivuted. lltey contribute inputs to
their jobs because Ihey enjoy the wurk itself. According 10 tllis 1110t!el, how Jobs <Ire
designed along five core dimensions can affed intrinsic IlKltivmion,job performance, job
satisfaction. and abscnteeism ant! turnover rates.
nIl." soria/ injimllluio/l f!lvct'ssilli: //lode/makes tlte impOrtanl point that how employ·
ees view their jobs and their levels of intrinsic ant! extrinsic mOliv<ltion is affected not just
by the objenive nature of the job but al,o by the social environment 'It work and the
employees' own past behaviors.
As we melltioned at the beginning of this chapter. the prim,lry aim of the differellt
approaches tu job design is tu Iry 10 ensnre that empluyees are mOI1\'ated to cunlribute
their inputs (time. effort, knowledge. ant! skills) to their jobs and organizations,
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 229

EXHIBIT 7.6
Approaches to Job Design

Approach Main Features Motivational Focus

Scientific management Work simplification Extrinsic

Specialization
Time and motion studies
Piece-rate pay
Job enlargement Horizontal job loading (increase Intrinsic
number of tasks With no increase
in difficulty and responsibility)
Job enrichment Vertical job loading (increase Intrinsic
responsibility and provide employee
with opportunities for growth)
Job charaderistics model Core job dimensions Intrinsic
Skill variety
Task identity
Task significance
Autonomy
Feedback
Motivating potential score
Critical psychological states
Experienced meaningfulness
of the work
Experienced responsibility for
work outcomes
Knowledge of results
Work and personal outcomes
Intrinsic motivation
Job performance
Job satisfaction
Absenteeism and turnover
Social information processing Emphasis on social environment Extrinsic and intrinsic
model {what aspects to consider, and how
to evaluate a job}
Emphasis on implications of past
behaviors (on how jobs and outcomes
are perceived)

Approoehcs such os scientific monogemelH. which stress extrinsic motivntion. odl'ocme

designing jobs from on e1)'icienl:Y stnndpoim nnd closely linking pny ond performance to
thc Ill. Appro'll"hcs sud as the job charaeterist il: model. wh il:h stress intri nsil: mot iVa!ion.
suggcst designing jobs to nmkc thclll imcrcsting and cnjoyable. Regordlcss of whether
the l11otivmionol focus is intrinsic. extrinsic. or both. job design offects motivation levels
prill1<1rily by innuencing Ihe level and <I!nount of inputs employees contribute 10 their
jobs imd org<luizaliolls.
230 PART t • INDIVIDUALS IN ORGANIZATIONS
ORGANIZATIONAL
OBJECTIVES
11>e merarching. purpo-e of an
organi/mion. whal it ,tands for.
and what it _~, III accumpli,h.
SOCIAL IDENTITY THEORY
A tiM.~)I)' Ihat dc,,-,ribe, how
uldiv,dual, U'>C the gmup' and
orgaai/-"lion, they art memhe....
or to define thcmsel_e',
Global View
Organizational Objectives
Organizational objectives describe Ihe overarching purpose of an organizalion-whal
il slands for and what it seeks to accomplish. From Ihe opening case. it is clear Ihat a
key objective ofGoogle is providing users with the best possible Inlernet se~rch expe-
riellce. Organizational objectives contribule to I:fcaling a motivating work selling
because they can provide employees with a sense of meaning and purpose. Just as a
ho~pital\ objcctive of providing high~quality p~ttient care can be motivating. so. too.
c~n Google'~ objective of proteetmg the environment and pl~ying a positive role in the
communities in which it operates. Take the case of n janitor in a not-for-profit teaching
ho~pital known for it~ superior patiem care and the fact that needy paticll1~ arc never
turned away. A key source of motivation for the janitor might be knowing he is
contributing to nn orgnnization thnt really helps people regardless of Iheir financi~1
means.
Organi7-3.tional objectives can focus on the wider environlllelll in which an organiza-
tion opcrmes. its products and services. and \'~riou~ stakeholder groups including
employees. TIllS is true at Hydro. Norway's biggest induSlrial compnny. as profiled in the
accompanying Global Vic,",'.
Social identity theory explains how and why all organization's objectives can serve to
motivate its cmployees, Sociul identity theory postulale~ that people tend to c1~ssify
Hydro's Commitment to the Environment
and Its Employees
Hydro has operations in 40 countries and 33,000 employees globally.39 The company
operates in a variety of sectors, including oil and energy, aluminum, and agricultural
industries 40 A fundamental premise underlying Hydro's business model is social
responsibility and corporate sustainability.41 Corporate sustainability reflects a
long-term commitment to protecting the environment and solving environmental
problems and a commitment to social well-being. 41 Hydro was recently added to the
prestigious Dow Jones Sustainability Index, a select list of companies that excel in
sustainability in the indus-
tries in which they oper-
ate 43 These companies
are proactive in terms of
integrating environmental
and social concerns into
their operations around
the world,44
In NOlWay, Hydro is
known for its many ini-
tiatives to promote the
Job satisfaction and well-
being of its employees.
Hydm. Norw~y" biggest indu,tri~1 mmp~ny. is co",milled \(l so<:i~1 These initiatives revolve
rc~POlbibility. cOflXll"ate sust~inabihty. and the well·being of its around Hydro's organiza-
employees. tional objective of being
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 231

a responsible employer. 45 Key to these initiatives is providing employees with interesting,

meaningful. and intrinsically motivating work while allowing them to achieve a sense of
balance between work and their personal lives.
Employees at Hydro are given considerable amounts of autonomy and feel personally
responsible for the quality of their work, Whereas in the United States employees are
putting in ever longer hours, in Norway most people end the workday around 4:00 or
4:30 P,M" and women receive between seven and eight months of paid maternity leave
(men can receive up to four weeks of paid paternity leave). Balance between work and
personal life is a strong societal value in Norway and at Hydro. 46 Thus, not only are
employees granted autonomy when it comes to the tasks they perform but also when
and where they perform them,
Morten lingelmen owns a farm an hour and a half away from his job at Hydro in
Oslo. Although he has demanding responsibilities as a manager and an engineer, he is
still able to be back at his farm with his family by 6:00 P.M.; the commuter train he rides
has an "office car" where he can work and use his laptop computer. Atle Taerum also
lives on a farm an hour and a half away from his job; he comes to the office three days
a week and stays home with his young daughter the remaining two days, When Unni
Foss's father was dying. she worked full time from her parents' house so she could be
there for both of them and help them out Managers at Hydro gave Foss the autonomy
to decide where she worked. They knew she was a responsible person and would
ensure her work was coordinated with others AllOWing employees to have balance in
their lives, according to Hydro. helps them perform better. contributes to their fob satis-
faction and organizational commitment. and contribute's to Hydro's organizational
objective of being a responsible employer.

themselves and others imo social categories. such as being members of a certain group or
team. religion. political pany. or organizatIon. When people identify with an organiza-
tion. they deline themselves in terms of being a member and >ee their destiny as being
eonneetcd to iT ,47
IdenTilicmion helps people answer the "who am IT question.4~ People also prefer pos-
itive identifkations to negative ones. Thus. for example. most employees would prefer 10
work for and identify with an organization that makes safe. life-improving products for
consumers rather than for an organization whose products have a questionable safety
record. When mdividuals identify with an orgamZ<lTion. they ,Ire motivated to nwke posi-
tive contribll1ions to it because their organilmional membership is one way in which they
sec themsclves. 49 AI Googlc. as engineering director Peter Norvig puts it. "There arc
people who think they are creating something that's tlte best in the world, .. And that
product is changing people's li"es:·j()
Identifying with an org;mization can also help employees keep things in pcrspcc-
tive when doing tedious or unpleasant tasks or whell they're frustrated by a pcrsistenl
work-related problem. Knowing they arc adding real value to society can help them get
through tough times and prop up their motivation, AltllOugh individual employees typi-
cally focus on achieving thcir goals tied to their own jobs. thcy arc more likely 10 real-
ize that by meeting their individual or group goals, they arc helping the organization to
reach its objectives. too. Thus. in additiolllO general org,lnizationaJ objectives. the indi-
vidual goals employees work towlJrd pl;]y an important role in creating a molivatlllg
work setting. Goal-setting theory (discussed in the next section) describes whcn, how,
and why goals contribute to creating a motivating work seuing. 51
Increasing numbers of organiz,ltions are turning to outsourcing. or otr-horing. of busi-
ness functions ;]nd jobs to other countries such as Chllla ;]nd India. to mt"Ct their objectives
of cutting COSIS. However. as proftlcd in the following Glob;]1 View, offshoring can also be
viewed as a way to fuel growth and cfficiency.
232 PART 1 • INDIVIDUALS IN ORGANIZATIONS

Global View
Offshoring Is Here to Stay

Offshoring is Increasingly being relied on by organizations to reduce costs. According to

estimates by Gartner Inc.. offshoring of information technology and business process
functions alone are valued at more than $34 billion per year. 52 And while offshoring man-
ufacturing to low-cost countries like China has a relatively longer history, offshoring of
services is much less capital-intensive and thus has the potential to achieve more cost
reductions per dollar invested in offshoring than manufacturing, which typically entails
significant capital expenditures to get plants up and running overseas. 53
General Electric (GEl and McKinsey & Co, are two companies who have been at the
forefront of offshoring. S4 Managers at both companies have learned that offshoring is more
than just a way to cut costs. Rather, offshoring also can enable companies to grow while
increasing efficiency. GE Capital set up an office in Delhi, India called GE Capital Investment
Services with around 300 employees in the late 1990s because it was having a hard time fill-
ing positions in its growing business of mortgage refinancing, Less than a decade later,
Genpact (as the company, which is now owned by GE and two private equity firms, is called)
has over 20,000 employees, over $490 million in revenues. and offices in Mexico, Romania,
Hungary. India, China,
and the United States,ss
McKinsey also was
a pioneer within the ofl-
shoring movement, set-
ting up a Knowledge Cen·
ter in New Delhi in the mid
1990s to analyze data,
perform statistical work,
and help in the prepara-
tion of rejXlrts and presen-
tations,56 In fact, many
former McKinsey and GE
employees are now top
Outsourcing or ofT,horing "f bu,inc" fun,:ti"n, and j<>b, to other
managers at outsourcing
coumries like India "nd Chin;' is increasingly being relied on to cut
,'o,ts and fud cffi<';cncy and growth. companies, For example,
former GE employee
Pramod Bhasin is President and CEO of Genpact. S7 As another example, Rizwan Koita was a
29-year-old associate with McKinsey in London and New Delhi when he left the firm in 1999
to start his own outsourcing company, TransWorks Information Services LTD. whkh performs
back-oflice functions and operates call centers for high-tech companies and banks. Kaita sold
TransWorks in 2003 to AV Birla Group, a conglomerate based in India, and started another
nfN-I outsourcing business named Citius Tech Inc., which provides services for companies in
the healthcare technology industry. >8 Additionally, as some former employees of GE and
McKinsey assume top jobs in other large organizations (e.g" Robert Nardelli, CEO of Home
Depot Inc., was a former top manager at GEl, they bring with them the knowledge and expe-
rience with how offshoring can help acompany reach its growth and efficiency objectives, For
example, Home Depot relies on the India outsourcing compJny Tata Consultancy SefYiCe5 Ltd,
for back-office functions in merchandising and management and call-center operationsY
Clearly, it appears as if offshoring is here to stay,

GOAL
Wh~t no iodi, idu~l "try'ong. tll
acrompii,h thr(\lJgh hi, or her
beha\';or and aclions,
GOAL-SETIING THEORY
A theory that fo<;u\e, 00
idemifyin~ the tyl"" of ~"ah
that arC 01("1 cffc~ti,·c In
pmdu<:lIlg: hig:h lnel, of
moti,ation aod performance 30d
"hy ~o.. l, h~\'e the.., effect',
CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 233
Goal Setting
A goal is what an individual is trying to accomplish through his or her behavior and
actions. 6U Goal-setting theory. like the different approaches to job design, focuses on
how 10 motivate employees to contribute inputs to their jobs61 (see Exhibit 7.1), The
theory also stresses the importance of ensuring their inputs result in acceptable job per-
formance levels.
Edwin Locke and Gary Latham. leaders in goal-setting theory and research. suggest
that Ihe goals employees try to .main at work have a major impact on their levels of moti-
vation and perform;]nce. Just as you might have a goal to get an A in this coursc or to lind
a good job or nice apartment upon gmduation, employee, likewi,e have goal, that direct
their behaviors in organiwtions. Salespeople at Dillard's department stores. for example.
h:lI'e weekly .1I1d m01lthly sales goals they are eXpe<;:ted to reach. ami telephone operators
have goals For the number of customers they should assist each day. CEOs of organizations
such as IBM, Chrysler. and Acme Mctal strive to meet growth. profitability, and quality
goals.
Goal setting is used in organizations not just to inFluence input le,'els emplo),ees
arc motivated to contribute but also to ensure the inputs arc directed toward Furthering
organizational goals. 62 Goal-setting theory explains what types of goals arc most
effective in producing high levels of motivation and performance and why goals have
these effects.
What Kinds of Goals Lead to High Motivation and Performance?
According to goal-setting theory, there arc two maj<Jr characteristics of goals thaI,
together. lead to high levels of motivation and performance. One is specificity: the othcr
is diFliculty.
Spe<:ifk goals lead to higher performan<:e than do vague goals or no goals. Spedfic
goals arc often quamitative. such as a salesperson's goal of selling $600 wonh of mer-
chandise in a week. a telcphone operator's goal of assisting 20 callers per hour. or a
CEO's goal of increasing monthly and annual rel'enues by 10 percent. Vague goals are
much less pre<:ise than spc<:ific goals. A vague goal for a salesperson might be to "sell
as much as you can:' A vague goal for a CEO might be to "increase rcvenues and
quality:'
DiFlicult goals lead to highcr motivation and perform:mcc than do easy or moderate
goals. Diftkult goals arc hard (but nOl impossible) for most employees to reach.
Practically all employees can achieve casy goals. Moderatc goals can be achic\'cd, on aver-
age. by about half of the peoplc working toward the goal.
The theory states that specific and difficult goals lead to higher motivation and per-
forman<:c than do easy. moderate. or vaguc goals or no goals at all. Goal-scHing theory
is supported by rcsearch studies conducted in a wide variety of organizatiol1s. 63
Although most of the studies have been conducted in the United Swtes. research
conducted in Canada. the Caribbean. England. Israel. and Japan suggests that specific.
difficult goals lead to high levels of motivation and performance in differcnt cultures
as well.().l
Specific. difftcult goals lead to high motivation and performance whether the goals
arc set by man:lgcrs for their subordinates. by employees thcmselves.6.S or by managers
and employees together. When managers set goals for subordinates. it is im]Xlrtant that
the subordinatcs accept the go<tls-that is. agree to try to Illeet them. 66 It is also impor-
tant that employees Me committed 10 attaining g01lls-that is. wanl 10 attain them.
Sometimes mmwgcrs and employecs nwy set g(J;lls together (a process often referred to
as allow ing Sll bordinates to f!arlicipm,' in goal sell ing) to boost subord inates' a<:<:eptance
of and eOlllm itment to the goals. High sci f-efficacy aLso helps cnsure thai cmployecs wi II
be Iltotivaled to try to reach difftcult goals. Recall from Chapter 5 that self-efficacy is a
person's belief that she or he can successfully perform a behavIOr. Employces with htgh
self-effica<:y believe that they can attain difticult goats. and this belief contribUlcs to
their acceptance, commitmcnt, and motivation to achieve thelll. Sometimes providing
234 PART t • INDIVIDUALS IN ORGANIZATIONS

employees wilh flexibility to achieve their difficult goals can increase their self-efficacy
and performance. For example. at TeehTarget, an interactive media company in
Needham. Massachusetts. employees are gl\en specific. difficult goals un a quarterly
basis. bUI they are then given Ihe flexibilily to set Iheir own hours and schedules to meel
them. 67 rillally. goal selling seems to work besl when employees are given feedback
about how they are doing.()ll

Why Do Goals Affect Motivation and Performance?

Why do specific. difficult goals lead to consistently higher le\'els of motivation and perfor-
mance than easy or rnodemle goals or vague goals such as "do your best"? There arc SCI"
eml re:lsons. and Ihey Me illuslraled in Ihe case of I\hry Petersun and Alhson Rios. who
are the division managers of Ihe frozen dessens and frozen vegelables divisions. respec-
tively. of a food-processing company. Both divisions overran Iheir operating budgels the
previous year. One of Ihe priorities for the CUTTCm period is to cut operating expenses.
When Petersun and her supervisor. Ihe vice presidenl whu oversees Ihe desserl diVision.
met to decide Peterson's goals for Ihe year. they agreed thai she should aim 10 cui operat-
ing expenses by 10 pereelll. Rios met with the vice president of the vegetables division on
Ihe Si\1ne issue. and they decided on a goal of reducing operming expenses by 25 percen\.
AI ye<lr end. even Ihough Peterson mel her goal of reducing expenses by 10 pereenl and
Rios failed to nK"C1 her goal. Rios", performance was slill much higher than Pelerson's
occause she had reduced cxpenscs by 23 perecnt.
Why did Rios's more difficult goal motivll1e her 10 perform al a lel'el higher limn
Peterson'! First. Rius's dillicult goal prompled her lu direct more attenllon loward reducing
expenses Ihan Peterson felt she needed 10 expend. Second. il mOlivated her 10 put forth
more cffon than Petcrson felt shc had to put forth. Conscquell1ly. Rios spent a lot oftimc
and effort working OUI ways to reduce expenses: she developed more effldenl inl'entory
and product dislributiou systems and upgraded some of her division's produclion facllllie,.
Peterson. on the other hand. devoted much less attention 10 reducing expenses and focused
exclusively on cutting bad invcntories. Third. Rios's difficult goal motivated her to creatc
a plan for achieving her goal. The plan oUllined the cOSl savings from e~leh change she was
proposing. By conlrast. Pelersou.conlidenl that she could reach her goal through improved
inventory management. didn'l do much plann ing at all. rounh. Rios's difflcu II goal made
hcr more persistent lhan Peterson. Both Rios and Pet{"rson changed their iuventory-
handling procedures to Iry to cuI costs. and they originnlly decided 10 focus on reducing
Iheir invenlories of bolh "II'.' materials and finished products. The former. however. was
mUl.,h easier than the latter to cut back. Peterson. confident that she could attain her easy
goal. decided to maintain her finished-product inventorics as they were mId focus solely ou
reducing Ihe raw-materials inventories. Rios also encountered problems in reducing her
tinished-product invenlory but persisled until she was able to come up wilh a viable plan to
do so.
To sum up. specific. difficult goals affect motivation and ~rformance by
• directing employe{"s' attention and action toward goal-relevant activities
• causing employees to exert higher levels of efforl
• causing employees tu develup aClion plnns 10 nchieve Iheir gO<Jls
• causing employees to persisl in the face of obstacles or diflicuhi es 6'l
It is importanllo nole Ihat research shows thai goal sclling affects mOllvalion and per-
formalJce e\'en when employees are 1101 give.n any extra cxtrinsic rewards for achieving
their goals, NOl surprisingly. however. spedfie. difficult goals lend to have more powerful
effecls on performance when some financial reward iI given for goal ;JIlaimnenl. Goal
sclling can operate 10 enhance botb inlrinsic mOlivalion (in the absence of any eXlrinsic
reward.,) and extrinsic motivation (when employees arc given extrinsic rewards for achiev-
ing their goals).
Because goals work so well. selling Ihem may lead employees 10 nOf perform activ-
ilies 1101 relaled to Ihe specific goal, Ihey're supposed 10 altain (recall Ihe discus,ion of
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 235

organizational citizenship behavior in Chapter 3). Research has found. for example. that
employees with specific. difficult goals may be less likely to help a coworker who is
having a problem because II might inlerfere w;lh the achievement of their own gools.70
A lelephone operator who spends time explaining how to lise a new e1eclronic directory
to a coworker. for example. might fail to meet her own goal of assisting 20 callers
per hour because of the 15 minutes she spent helping her coworker. Some of these unas-
SIgned goals, however. may be paramounlto the organization's overall effectiveness,
Moreover. it's important that employees do nOI so single-mindedly purse their goals
that Ihey behave in questionable or unclhical ways. Clearly, no goal is so important that a
person's or an organization's ethics should be compromised.

Limits to Goal-Setting Theory

Although goal-seuing thCQry has received extensive research support for a variety of jobs
and organizations. some recent research su~e,ts that there may be certain limits on the
theory's applicabilily. Research suggests that therc are thrce circ-umstances undcr whic'h
sctting specific. difficult goals will nOI lead to high mOlivation and performance:
I. Wltl'll 1'lIIploy<'N Im:k lite .\·kill~ (11111 (lbi/ilil'.\' IIn:r!er! 10 flerform (11 (I higlt le\'el.
Giving an employee the goal of writing a computer program to calculate production
costs will nOI result in high levels of rnoli"alion and performance if the employee
docs nm know how to wrile computcr programs.
2. Wltell flllploYff.\' are gi ~'e/I COlllp!iCOIfd llIuldiUicl,f/ losh Ihal require (11/ of Ilteir
iII/eli/ioll (/lid H'quire (I nJl1~'ir!el"(lbleWHVlIl1I of lel/millg. Good pcrfonnance on com-
pi icated tasks depends on employees bei ng able to direet (Iff of the ir nllention to
learning the lask at hand. Whcn cmployees arc givcn difficult goals for such tasks.
somc of their attClllioll will be directcd toward trying to attain thc gool and nOI
towurd actually learning about the tusk. Under these circull1stunces. assigning a spe-
ci fic. di !lieu It goal <lctun lIy redllce.i pcrformnm;e 7 t Ollce the task has been mastered.
goal sclling wililhen have its customary effec'ts.
RUlh Kunfer and Philip Ackcrman of thc Universily of Minnesota explored Ihe
elTects of goal setting on the pcrfomtance of Air Force personnel who were lenming
the complicated. difficult tasks involved to become air traffic conlrollers.n During
lhe e;lrly stages of learning. assigning goals to the recruils resulted in lower levels of
pcrfonnance OCC<lUSC it distmctcd some of thcir attcntion away from learning how 10
direct air traffic <lnd tOW<lrd trying to achieve the gO;11. Once the recn,its h<ld devel-
oped a ccrtai n level of mastcry ovcr thc task. sell ing spcdnc. di !licult goals did
cnhance performance.
3. Wllfll (lIIplol'(( Slifer! 10 be cretlli \'e. As we discussed in Ch<lpter 5. creali vily is
the generation of new and useful ideas whether they be products. services. or
processes.H Given that crentlvity involves corning up wilh something that is novel
and has not beenlhought of before. il is often not appropriale to provide employ-
ees with specific. difficult goals as Ihe outcome of their creati"e efforts is
unknown. If they Me coming up with something th<lt is really new, a specific. dif-
fkult goal cannot be set a priori because managers do not yet know what it is that
they will create. Additionally. if creativily is desircd and employees arc given spe-
cific. difficult goals. il is likely they will focus on achieving the goals rather Ihan
being creative. However. Ihis docs not mean that more generul kinds of goals cun-
not help mOlivate creativity. Indeed. research has found that giving employees Ihc
gencral goal to be creative can hclp encourage neativity. And, clearly. creative
MANAGEMENT BY pursuits arc driven by organizational objectives and group gouls. such as provid-
OBJEGlVES (MBO) llIg new services that will meet chents needs.
t\ goal·"'ltto£ proc~" to ",hi~h
a manJger meet,,, ith hi, or hcr
'uper'< i,or 10 "'I goal, and Management by Objectives
~'Jludlc the cxlcnllO "hKh Some organizalions adopt fomlal syslems 10 ensure that goal selling <lctually takes place
prcnou,ly 'CI goal, how t.:cn
on a perioJic basis.7 4 Management b,- objet'lives (1\1110) is a goal-setting process in
a<.'hie,cd.
which a manager meelS periodically with his or hcr supervisor to SCI goals and cvalume
236 PART I • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 7.7
Basic Steps in Management by Objectives

Goal Setting Implementa,ion E~uation

The m.n.g., .nd ,he ,up'rvi.or
m«' .nd pn,iy d<tennine go.l. ,he
manog" WIll 'ry to .ch.."" dunng •
.peclfled penO<!,
The m.nag« i. given th< .utonomy
to deCIde how '0 meet the goal., but
prog.... tow.rd go.1 att.mment IS
p.r><xhcally ••..,••ed .nd d,Ku •..,d
by ,he man.g« .nd ,he .upeM"",.
The m.n.g« .nd the .up'rvi.or
meet '0 ...... the e"en, of go. I
.ttammen'. d,Ku .. why some go.l.
h."" no' been .".,ned, .nd set
go.l, for ,he n.., penO<!,

t _

how well previously set guals have been mCl. 7S The objeCli\'e of MBO is 10 m:lke sure thai
all gual selling cuntributes 10 Ihe organizmiun's effecliveness. Mosl MBO progr<lms arc
usually reserved for managers, butlhe programs can also be uS{"d as a motivmionallool for
nonrnallagers. Although lhe form and eomenl of MBO programs vary from organization 10
organization. most programs ha,'e lhree basic sleps: goal selling. implemcnlalion. and
cvaluation (sec Exhibit 7.7).76
I. Goal .\'ellillg. The manager and the supervisor mecl and juinlly delemline Ihe goals
lhl" managcr will try to achicve during a specific limc period. say. 6 or 12 months. In
our e<lrl ier example, Allison Rios. lhe division manager for frozell vcgelables. mel
wilh the vice prcsidenllo whom she reports. and togClher Ihey de<:ided lhal she
should work throughuut the coming year loward the gool of reducing uperaling
expem;es by 25 percell!.
2. Implf'Jllf'l/IatiuJ/_ The manager is given the aUlonomy 10 decide how to meelthe goals
in lhe specified lime period. Progress loward goal :l11ainmenl is periodically assessed
and discussed by the manager and her ur his supervisor. In our example, Rius camc
up wilh sever.1I ways to cUi expenses, including lhe developmem of more efflcielll
invenlory and produCI distribUlion syslems and upgrading Ihe produelion faeililies.
Rios made and implcmented Ihese de<:isions 00 her own and periodic<llly mel wilh
her supervisur to review how her plans were working.
3. E \'(lllIillirJII . AI Ihe end of Ihe specified Iime period, lhe manager and supervisor agai n
rncello assess Ihe eXlenl of goal allainrnenl. discuss why some gOllis may nOl have
been allained, and set goals for the nexl period.
The success of an MBO program depends ol1lhe approprimel1ess and diffleully of lhe
gIXlls Ihat are SCl. Clearly. Ihe gools should focus on key dimensions of a manager·s per-
formance such as CUll ing oper.Jling l":l:penS{"s. e:l:pandi nl; sales. or incrcasi ng Ihl" profilabil-
ily of a division's prodUCI line lhat arc under lhe manager's cumro!. And, as we've seen,
goals should be specific <lnd diffleull. Fioally. for MBO 10 work. a certain amounl of rap-
port and trusl mUSI exisl belween managers and their supervisors. A manager who doesn't
lruSI her supervisor, for example, mighl fear Ihat if some unforeseen, uncolllroliable evem
prohibilS hcr from anaining a difficult goal. lhe supervisor will penalize her (for example,
by nOI giving a raise), To a"oid this Silualion.lhe manager may Iry 10 SCi easy MBO go;lls.
Managers and supervisors IllUSt be comrnillt-d to MBO <lnd be willing to lake Ihe time and
effon needed III make it work. Moreover, when conditiolls change, a willingness 10 change
objeelives in midstream can be imponam: if an objeelive is no longer appropriale, there is
no poinl in eonlinuing to work loward il.

Goal Setting and Job Design as Motivation Tools

Recall frum Chapler 6 Ihal mUli"at ing employees tu cuntTlbute their inpuls (which Hlcludc
Ihei r lime, effort, and ski lis) 10 Iheir jobs is a key challenge in an organ ization. Goal-selting
lheory suggesls Ihal one way 10 meel lhis challenge is 10 SCi specific. diffieuli goals.
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTtNG 237

EmployC"C"s exC"n more dfort for suC"h goals than thC"y do for easy or vague goals, and
they are more likely to rersist in the face of obstacles. III addition to motivating employ-
ees. goals focus employee IIlputs in the right direCiloll so that the inputs result not only
in acceptable levels of job performance but also in the achievement of organizational
goals.
Together. job design and goal selling address some of the many questions managers
face in the reillm uf mOllv,lIiun: How can I make Illy suburdimltes more interested in
doing a good job? What is the best way 10 assign specific tasks to cach of my subordi-
natcs'! How can I get my suburdinatC"s to care about thdr work? How can I achiC"vc
increascs ill rerfonllance and quality necessary for the organizatioll 10 achiel'e its goals'!
In terms of the motivation equation (Inputs - t Performance ~ Outcomes). job desIgn
and goal selling focus primarily on how 10 motivate cmployees to contribute their inputs
to their jobs and organizations (sec Exhibit 7.1).

Summary
Job design and goal scUing arc the foundations of a motivating work sctting. The ways in
which jobs are designed and the tyres of goals that are set can have profound effcrts on
employee motivation and performance and the extcnt to which an organization is able to
achieve its gools.ln this chapter. we made the following m~ljor points:
I. One of the earliest syslematic approaches to job design was scientific management.
which Slresscs job simplilicatlon and job srecialization. Sciemiiic managemcnt
focuses on extrinsic mOlivation and can result in an efficient produl,tion process. It
also may rcsult in high levels of job dissatisfaction.
2. Job enlargement and job enrichmenl focus. respectively. on the horizontal and lhe
'crt ica I loading of jobs. Each attempts. by raising levels of intrinsic motivat ion. to
overcome some of the problems that arise when jobs are designed according 10 the
principles of scientifiC management.
3. The job ch<lTaCieristies model also focuses on intrinsic motiv(ltion. The model
proposes that live l:ore dimensions (skill variety. task identIty. task significance.
autonomy. and feedback) lead to three critical psychological states (experienced
meaningfulness of the work. experienced responsibility for work outcomes. and
knowledge of resul1s) lhm in turn lead 10 se\'eral outcomes (intrinsic motivalion.
job performance. Job salisl;lction. and low absenteeism and turnover). Individual
diffcrences (growth-need strength. knowlcdgC" and skills. and satisfaCiion with the
work context) affect the key relationships in the model. Researeh suggests that
intrinsic mOtivalion and job satisfaction do tend to result from the core charaCleris-
tics and pSYl:hological states as proposed by the model; however. job performance
is not nC"cessarily affccted.
4. The social informatioll processillg model suggests that the social environmcnt pro-
vides employees with inform~lIion about which aspecls of their job dcsign and
work oUlcomes they should pay allention to and how they should evaluate lhem.
This information influences motivation. In additioll, employees' past behaviors
have i1l1pliell1ions for how they view lheir current jobs and current levels of motiva-
tion. particularly when these pasl behaviurs were freely ehosen or entailed personal
silCfitices.
5. Goal-selling theory and resC"areh suggC"st that specific. difficult goals lead to
higher motivation and performance than do easy goals. modernte goals. vague
goals. ur no goals. Specific. difficult goals inflnence mUlivalion and performance
by directing employees' attention \{)ward goal-relevant activities. inflllcncing
effort expenditu re. influencing Icvels of persistence. and causi ng employees to
develop action plans. When employees are performing very eOmpliealed and
diffil:ult tasks that require ,III of their attention and a considerable amount of learn-
ing. specific. difticult goals should not be set ullliithe employees have mastered
the tasks.
218 PART t • INDtVIDUALS IN ORGANIZATIONS
Exercises in Understanding and
Managing Organizational Behavior
Questions for Review
1. Why might an organi~ation wanlto design
jobs according to the principles of scientific
management '!
2, Why might sOllie employees nO! wam their jobs
enriched?
J, How might a mll11ager redesign the job of a person
who delivers newspapers to raise levels of the core
job dimensions idcmificd by the job characteristics
model')
4, Can principles of scicnlific management and the
job characteristics model both be used 10 design a
job? Explain why or why no!.
08: Increasing Self-Awareness
Extrinsic and Intrinsic Motivation
Pick two (l'L'ople you know pretty well who are working
(such as friends or relatives). Try to pick one person who is
primarily extrinsically motivated by his or her job and
anotocr person who is primarily intrinsically motivated (or
both intrinsically and extrinsically motivated). Informally
meet with each of these people and ask tocm about thcir jobs
(especially what their jobs entail. toc social environment at
work, and their work go;lls, if any). Then do the folloWing:
1. Describe each person's job.
2. Is eIther job designed according to the principles
of scientifiC management'! If so. how'!
5. Why do individual differcnces affect the relation·
ships ill the job eh,lT'~eteristies mode!'!
6. Why dues the SOCIal environment influence
employees' responscs to toc design of their jobs?
7. Why should organi~alions clearly communicatc
organizational objcctives to their employees?
8. What kinds of gools should be set for a supermar-
ket l'<lshier?
9. Why do people try to attain difficult goals')
10. When might specific. difficult goals result in low
levels of performance'!
3. f:kscribc each job in temlS of the five core dimen-
sions of the job characteristics model.
4. Describe each person in terms of the individual
differences in the job char:tcteristics model.
5. How are the people's social environments at work
similar'! How are they different'!
6. Is either person assigned goals'! If so. whal kinds
of goals?
7. Wh31 do you think a<:<:ounts for the extrinsic moti~
valion and lhe intrinsic motivation of the people
you have <:hosen'!
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 239

A Question of Ethics
Sume empluyees arc given specifk. difficult goals and their very livelihood depends on
how well they perform. For example. salespeople who arc paid strictly on a commission
basis havc alltheireamings hinging on the cxtell1to which they are successful in selling to
customers. This elln sometnlles cause salespeople considemble stress. especially when
they arc \ery dependent on their earnings to suppon themselves and/or loved ones.

Questions
I. Th ink about the ethical impl ications of assign ing specilic. di fticult goals to
employees.
2. Is it ethical to hal'e employees' cnmings based entirely on the extem to which they
allain their guals'!

Small Group Break-Out Exercise

The Power of Sodallnfluence
Form groups of three or fouT peuple and appoint one member as the spokespersolJ who will
communicate your conclusions to the rest of the class.
I. Take a few minutes to think about a situation in wl1ich your opinion ditTered from
the general consensus of the group of people you were with.
2. Write down a brief description oftl1e silUmion. how you felt. whether or lint you
expressed your opinion. and whether or not you or anyone in tl1e group changed
theiropinions.
3. Take turns des<:ribing these situations and the information you wrote down for
step 2.
4. As a group. try to come up with explanations for why sometimes people who dis-
agree wilh a majority j;lil to express their opinions IlndJor end up changing thelll.

Topic for Debate

lob design and goal selling are t'wo major motivmional tools that managers can usc to
increase motivation and performance. Now that you have a good understanding of job
desigtl and goal selling. fonn 111'0 teams and debale the following issue.
Tellm A. r-lllnagers should try to avoid designing jobs according to the principles of
>ciell! ific manage llIent whenever possible.
Team B. Designing Jobs aCl:Ording 10 the principles of scientilic management can help
an organ i7-iltioll achicve its goals and should be used whenc"er appmpriate .

Experiential Exercise
Increasing Autonomy

Objective
Your objecti\-e is to gain experiencc in redesigning a job 10 increase employee autonomy.

Procedure
Assume thc mle of a manager in charge of a group of anists that draws pinufCs for greet-
ing cards. You CUITCll!ly as,ign the arlists their individuallasks. Each anist i" given a par-
ticular kind of card to wort on (one worlcs on birthday cards for femalc rehltives. one on
240 PART t • INDIVIDUALS IN ORGANIZATIONS

birthday cards for cbildren. and so on). You inform each artist of the market research that
has Oo..--en done on his or hcr particular catcgory of cards. You also communicate to each
artist your ideas about what you would like 10 see in the cards he or she crealcs. The artists
Ihen produce skclches based on Ihis information. You review the sketches. make changes.
SOIllC't illles Illake Ihe dec ision to abandon an idea or suggest a IIC'W one. and el'entuall y give
the artists the go-ahead to proccC'd with thc dnlwil1g.
You thought everything was workmg pretty smoolhly unlil you acC'identally overheard
one of your subordinates (;omplaining to another that you arc slifling his n"l:alivily. This
exchangC' hrought to mind another troubling incidC'nt. OnC' of your artists who had drawn
some of the company's best-selling cards quil a few months ago to work for a competitor,
You began to wonder whether you have designed the artlSls' jobs in Ihe best way possible.
You decide to adminisler the Job Diagnostic Slln'ey 10 your subordinates. They COIll-
plcte it anonymously. and you arc truly shocked by the results. Most of your subordinates
indic.ue thallheir jobs arc low on aUlonomy, Being an ~lrtist yourself. you arc disturbed by
Ihis outcome bec<luse you sec aulonomy as being a neCeSSitry ingredienl for crealivily.
I. Develop an action plan 10 increase levels of all\onomy in Ihe arlist'- jobs.
Although you want to increase autonomy. you also want to make sure that your
group creates cards that arc responsive 10 markel dcmands and customer taste.
2. The class divides inlo groups of Ihree 10 live people. and each group appoinls one
member as spokespcrxon to prescnt the group's rc(;olllmendations to the wholc
class.
3. Group members takc IUnlS describing lheir own sp"-'Cific action plans for increas-
ing aulonomy in Ihe artiSls' jobs while making sure the cards arc rcsponsive 10
market demands and customer tasle.
4. Discuss the pros and cons of the differcnt alternative action plans and create an
action plan that group members lhink will best increase autonomy while at the
Sitme lime ml'Ctlhe orgamzational goal of erealing best-scllmg cards.
When your group has completed those aClivities. the spokexpcrson will prexent Ihe
group's action plan to lhc whole class.

New York TiITles Cases in the News

<thr. ~r\lT york limrs

"DuPont Looking to Displace Fossil Fuels as Building Blocks of Chemicals"
lJy c. H. Ol'lIlseh. 711(' NI'w York Timl'S. FdJrlUlrl' 28.2006, p. CI, CJ5.

Ncslled a"'lly in a small room on DUPont's
ISO-acre research (;ell1er in Wilmington.
Del.. robotic arms fill tiny lubes with
gelatinous material Ihal wa.' utmned
from corn and soybcan plants. 01hC'r
melallic an,,, will so"n dip and measure
and deconstruct each smnplC'. sp.;:wing
forth a lisl "f il' attribute, and Ir~its.
Only a fi.\tful-maybc one of every
50-will mo\'c' on to the fermelllati"n
lab. a fC'w buildings away. There.
rC',earehers will sec how the' ,ampll's
react 10 different mixllIres of air.
glucose and minooc·s. Down thc hall.
other resC'archers will tin~er with the
microbes Ihemscl"es.
All of them me chasing thC' same holy
grail' bin-based ,uh,tlliI<"'''S Ihat can replace
oil and gas as buildi ng blocks for dlemi-
eals. "We figull.· oUl what works in Iheory.
.lIld th.::n we S(X whilt won::s in pmcticc:'
Alexander O. Kopal,i,. a rcsea,\'h associ-
ate.said.
E. I. do Po"l de Nemou.... & Com-
pany.unli~e most chemical comp;lIlies. has
mowd lhe quest for bio-bascd mw
materi:'ls oil thC' wish liSl [md onlO thC' to-
d" ag'·nda. The company ha, alloc'a!cd
nearly 10 percell! of its SI.3 billion
lI.·scart:h budge'! 10 utmcting ingredients
from eatbohydrates- things that grow [w,d
l'an bC' infinilely replaced-mlher Ihan
from hydrocarbons. which are mined or
drilled and readily depleled.
DuPont already ma~es 10 pereenl of
it, pnxJucts fmm nonpelrrlchC'mieal ,ub-
stances. and Charles O. Holliday lr"
Dul'onl's chief executive, expeel' 10
increase thaI to 25 percent by 2010. By
thC'n. he says..,ueh pnxJu('\, will yidd !h<'
c<luic'alem of 53 billion in revC'nue in
eUlll'nl tlr,lIa",. The WdY Mr. Holliday"""
it. so-called industrial biotcrhnology Cilll
",I\,c myriad problems. II can insula'"
DuPont from the relentless rise in gas and
oil prices. 11 ,'an win ~urio, from envimn-
mcnlalisls and share-holdC'", who worry
aboul Ihe hannful cITed of tJ<lracling

and burning oil. It can play well III
Wa,hington. p;mi<:ubrly since a 'luest for
alternate em,'rgy sourees was a crucial
point in Presidem Hush's State of the
Union rlICSs'lge. But during a nearly twOo-
hour conyersation in his 'pacious office
ab(}\'e the Hotel DuPont. Mr. Holiday
stressed hi, real nKltive in pu,hing for bio-
based malerials: his belief that lhey yield
heUer products. He noles. for example, that
the com-bllsed prop:lIIe diol. " product
used in l'arpel fibers that DuPont will
ocgin selling this spring. oilers belter dye
abs0'l'tion and stain resi,tance Ihan the
JlCtrochemical '"CThion DuPoll! 1I0W sells.
"\\F", u,ing biology to solve problems
that chemistry can't:- he S>lid.
It is not just bombast. DuPont is
working with the Energy Dcp.lrllllent to
turn Com plants-tllC husks, thc cars, the
stems. everything-into the vehicul:tr
fuel. Du Pont is do"" to de"doping pbnt-
based hair dyes and nail polishes lh:'t will
nOI adhere to skin, surgical bin-glues lhat
Can stanch intcrnal bleeding and a te'tile
fiber made from sug"r that will aC't and
fccllikecol1on.
This spring DuPont will oJlCn a
fa<:1Ory in London. Tenn .. that will make
propane diol-trademarked as Sorona-
from gluco'e For now the output is
earmarked for carpet fiber, but DuPont is
exploring whcther it can work in rigid
plastics for automobile mtcriors or de-
icing compounds for ai'l'bne,.
The company has alre'ldy converted
many lab., that once worked on pharma-
ceuticals or texliles-lwo businesses
DuPont has .,hed-Io now seart'h for
mgredients 10 replace oil .md gas. Next
year. il plans to dUSler Ihem all in one
building 'lI1d move a marketing st"ff in
with thl'm.
"Indu.\trial biotechnology is an area
in which we ean differentiate oursclws,
so we're spending a lot ntore than any
other ('ontpany on ;1:' said Thomas M,
Connelly, DuPont's chief ~iellCe 01ficer.
DuPont'" optimi,rn has olher ('henlical
industry executives MT"lching their heads.
Dow Chl'mical pulled out of a joint
"enwre with CargilllO make polyl'''lic
acid, a cornpol1l'nl of f'KKl p;1d.:aging,
from corn. Eastm"n Chemic,,1 .\Old ;ts
stake ;n Genenwr ITittmalion,,1. a leader
in indUSlrial biolechnology.
"We r"ally do belie\'(' that industrial
biotech i.\ CrilicallO our evolulion. b<lIthe
ledmologics of tile foreso.'(',lblc fUlure just
do nOI give the returns we expl'O from our
CHAPTER 7 • CREATING A MOTIVATING WORK SETTING
researeh <lollm:' s"id Andrew N, Liwris,
chief ex""ulive of Dow. which is looking
for w"ys to m<lke polyuretlwne from
soybean oil. but has put a higher priorily
on cxtm<:ting ingrc<lients from coal.
Friedheim Balkenhohl. senior "ice
president for bio-calalysis research at the
BASF Corporation, ('choes that view.
-'R<lw malerial change is one of our hoI
topi('s, but eYCn 10 ycars from now,
retlCwables will account for less th<ln 10
pcrcent of our ingredients," 1><. ,aid,
Some companie.\ <Ire .\hrugging off
bio-basct! ingrcdicnts "ntirdy, and
concrntr:<ting solely on using petroleuon
ingrt'dients more tffj('iently, ""I'm gbd
th.,t I<lrger companies are .\pending their
timc. taknl and moncy in such "xotil'
are"s. bc<;allse lhcy h"ve left a wide-oJlCn
tidd for uS thai ,,'" are fully uploiting:'
s;lid Jeffrey M. Lipton. chief e)(ccut;ve of
thc' Nova Ch"mic"ls Curpor"ti"n, whidl
makes building-block chemic"ls like
styren" and poly"thylen".
The skeptics do not f;QC Mr. I-Iolliday.
Hc points to th" thriving business thaI
DuPont-arK! even more 'ill. i\'IOns;lntO-
has buill from g"nCli"ally "ng;necrl'd
crops. '~rcn years ago il didn't secm
logical to go aft"r itlSl':ct-resistanl crops,
eil1ler:' he .,aid. "We're n01 hening Ihe
company on bio-based m"terials. but we
do think they hav" the p01ential to have
the ,.Im" 1I1lp'''t on us that long-chain
polymers once d;d:' he said. referring 10
the ,;eientil,c d;s,:o""rie.\ lhm led 10 nylon,
Industrial biOl('Chnology i, nOl a lIew
concept. of course. As far back <IS lhc
1970'" companie, experimented with
turning crops and agricultuml waSle into
fuels, In mosl l'ases, the processes were
costly and polluling. E.'en worse, il often
look mOfl' oil to Ira"-'port the alternate
fuel.\ from f:'rtn to faclory th;,n was saved
by elimin"ting pelrochemicals.
The econoonics work belter loo"y.
Pric"Cs for oil and gas I'-'m"in persistcntly
high .•md few induslry prognostic;llors
pr,..Jid ,t""p plullg"s, Moreowr, fem"'n-
wtion technologies h:"'e improved. "s
h"s the abilily to isolatc and manipulat"
plant genes. And lhe growing e1"IHOr
from "nv;r<>nnltnt"lists ant! "nviromn"n-
t"lIy conscious .\h"reholders has given
companics an added impetus to i'lvcsl
in ""green" technologies like renew"ble
rcsoun:"s.
Slill. of thc chemical companies.
DuPont Sl':cms to ru)Vc the most IInmedi:lte
11C('d for lhe adv"nt"ges that indu.\tri,,1
241
bioh::chnology can provide. In th" i<n"
1990's it paid more lh:m $9 billion 10 buy
the.lCC<! company Pioneer Hi-brcd. a price
thai many "nal)'sts still insist wa, 100 high.
If DuPont Can usc more of Pionecr's
biolechnology espen;."" it can perhaps
allay lhe criticism.
MOfl'o\'er, DuPon!' S onee-steller repu-
tnt ion for seientiflC inoovillion has fJaggc..J
of late, Although Dul"ont p',l1ray' ilself as
a new-product mill-Mr, Holliday .l.1YS
thm a Ihiru of IaSI )'ear's R'wnu,', came
from proouct, lh;,t were les, th"n ft"e
)'ears old-",mlysls say too m"ny of Ihe
new product, rcpresc111 increl1lCl\l<ll
impmvem('tlts, Tht,y notc, for t'sampk,
thilt DuPont's new hybrid corn scct!, do
yield more eom. but nOt tnough to gain
share back from Monsanlo.
"In till' I".,t lhrc", roor y"ars, nothing
ha.\ Sl00d OUI a, a re"lly breakout
prudu(·t:· ~id William R, Young an
:",,,Iy,t:tt Credil Suisse who has" IlCutral
rating 01\ DuPont ,h:lK";. Goldman Sachs
h", 1m OUlpcrform rJling on DuPont sloek_
yet Edh,in Rodrigocz,,, Goldman analyst.
agrees. ""DuPont has alway.\ prided itself
on being" science cOl1lp"ny, and it has
10 f,nd " way 10 reg"in Ihm leadership.""
be s;lid,
It i, under ",vere lime pressure. Like
many chemical companies, DuPon!"s
cost, so"red when high energy prices
were made "orse by Hllrric,me, Rlt"
and Kalrin". Teflon. one of DuPont's
workhorse prodll<:ls, conwill jK:rf1uoro-
octanoic "('id, or I'FOA. whieh h"s
been linked to cancer and strokes, and
wllich Ihe Envimnmental I'rot('c·tion
Agency ha, a,ked manuf"clUrers 10
eliminme,
And aboul 18 lK:rcent of DuPont"s
pret"X ('amings ,tem fmm sales of Co,.aar
and H)'zaar. lWO hypertension drugs it
dev('loped before it sold its phammceu-
tical business 10 Brislol-~'Iyers in 2002.
The palents on!he drugs npire in 2010,
and so will DuPo,,1", $751 million in
annual myallil's,
Amll)'.\t.\ arc divided On DuPont",
pm~JIC("(s, ,\<'("{mling to Thom,on Finan-
cial. of lhe 16 an"ly,ts th"l follow the
company, II rate il a buy "'hil,, flV<: mil' it
a hold. Shines of DuPont. which were
trading ;n t!lc $50 mnge in tile firsl half of
2005, fell 27 ('Cms_ to $40.05 yestenJay,
CIc"rly. DuPont hopes thal biod\"11I'
i,lry will pump the stock up. ""If we Call
make this integralc..J science game worK.
it will be ours to lose:' ",id John Picrce,
242 PART 1 • INDIVIDUALS IN ORGANIZATIONS

director of biochemie,)1 sciences and
englOecrmg.
It will stillbc a hard game to play. Oil
and gas remain ea~icr 10 transpor! than
solids like com and soylx:ans. and do not
degrade with hap;h weather. Plant, ai,,,
vary widely in shape ,md composition,
m:lking il hmdn 10 contml the 'l0ality of
dislillmes nwde from them.
''Th,' corn nop, the ,ugar crop.
eilher can be good or bad. 'lOd thilt
m:lkes the m:lrket lnherently VOI:ltlle:'
said I)""id N. Weidman ,'hief exe,'utive
of the Celanese Corporation. which h:ls
lemporarily shelved a patented p"",e"
for getting micro·organisms to excrete
:leetie :leid. "We :Ire not s:lying that
biotechnology will never result in
chemie:lls, hut it i, a Jong. arduou, :lnd
risky road:'
Then. again. ", ;, thc 1'''''1''-'''1 of
relyi ng on foreign oi I. AIlx:r!. H, Segars.
professor of technology m'lOagement at
the Kenan-Flagler Bu,iness School at the
University of North Carolina. notes thai
against the backdrop of political insta-
bilily 10 r.o many oil-producing regions.
DuPont', hiotedlOology slmtegy seem,
almost safe. '"If a war breaks out with
Iran:' he said. "your hiology-ba,,-xl f""l,
will look at lot betler than your petro·
based oneS.

Questions for Discussion

I, What organizational objet"livcs arc being pursued at E. I, du Pont de Nemars & Company?
1. Why arc these organizmional objcrti"es being pursued"!
J. How might the,e organizational obj,,,-'tive, be motivational for do Pont employee,'!
4. How do thcs<: objectives influence the goals scientists anJ resc<l!"Chers <In: slriving to
<lchieve?

ll'hr ;XrllIl.lork <r.mrs

"Finding Happiness In the Pursuit"
By M, 1'. /)1/1I{ei/I·/'Y. 71le Ne,.. Yurk 'limes. April 8. 2006. p. 66,

One of the great ptJu;les of human natu", is
why humans strive for more m,lIC"rial
thing,-money, joh'i. homes. "ars. flat-
sct\'Cn telcvisiOlls- wheo they <10 no{ seem
to make' them any happier in the long run.
Philosophers h<lve ponJered this
",munJrum for ,'enturies, anJ moJ"ro
eeononllsts h<l\"e bc1::n cx<lmining it over
several de"ade, in a multituJe or
cultures. NOI only docs grealer wealth
not guarant"e h:lppin"ss-e\""n wh"n
you get wh<lt you w<lnt-researeh
inJic:ll,"S Ihat you will not lind il as
satisfying <IS you had hoped. anJ you
will want something c1,e.
Rich~lrJ A. Easterlin. professor of
e("(momics at the Uni""rsit)' of Soulhern
Californi<l. is 'I scmin:or researcher inlhis
a"'3.ln eff"et, hi, ....·ork ,hows that if you
think buying a three-bedroom conJo ;HlJ
a Hond:l ElcmC"llt will make you happy.
you had better think twice. In a few
)'C"ars, a) )'ou'rc not likely to rq)or! Ix'ing
any h;'ppier. and bl you're likely to say
that. nOW. fmding a good private ,chool
for your chilJren and buying a vac;,tion
hom" will really make- you lIappy.
In Dr. Easterlin's view. this (")'elc of
desire and di"atisfaction tcnJs to kcr]l
f'C<lple on an endless treadmill. 'mis may
sounJ self-Jcfeating. but Ihat is Dr.
Easterlin's point, Why nOI get off the
l",adOlili and pursue a lif" witll f"wer
material mnbitions'! You would probably
be lIappier.
Or would you'! If material aehieve-
m"nt, tend to 1"<I\'e I"-'opk only momen-
tarily fuHilled. why Jo so muny keep
reaclling for tllal next goal?
ClaLJdia Seni\.:. professor of ,"",:onomies
at the Sorbunne, believes 111:11 the ,truggle
for ;' "ertain <lehievement nwy oller <I
penlliar ",warn all it> own. Although
maoy people sccm 'luite go;<l-orientcd-
'"'I"-",iall)' when it conK" to money,
homes, cars, new kitdlCns and other goods
tllat hav" Ix...·ome ,tanJ-ins for ,l<nus-
maybe it's nUl so mtleh lun'illg the SlUff
that people real I)' ,,"joy, bill the ,truggle to
obt<tin it.
In an ullpuhli,lIeJ paper calleJ "Is
M;l1l DoonlCJ 10 ProgressT which she
prescntcJ <It a ,ymposiulll, '"E,'onomics
"nd Ilappincss:' last month at U.s.c..Dr,
Senik C"samirn.xl the impacl of anticipating
future gains on <I person's currcnllevel of
well-being.
Resean:hers h"ve nOleJ that. for
csample ,given tlte OfIIlO!1unity to s/:hcJule
a fancy meal. many people tend to
f'<:"tpone the feast-to s",'or the
anticip<lliOll of it. In fact. Dr. Senik found
that when ~'I'le a'pire to a hener quality
of hfe within the ncxt 12 months. the
anempl to reach thai goal alone-til<.'
anticipation ind<:pendcnt of the outeonlC-
"'em, 10 heW)W happi"",s in the p.-esent.
'"For the basic person there is ple"sure
in progress ..' Dr. Senik saiJ. "We ",,'
proud to <lim at somelhing-to e"m a
deg""'. buy a hou,e. So when I wort 10
re<leh a higher position or emn <I higher
income, l'm alreaJy happy today.'"
Dr. Senik comp;'rcs it somewhal
humomu.<ly to being im'itcJ to a f:lbulou,
pany, '"Once yOIl gel Ihe"" maybe you
"njo)' tb<.' pany or maybe yoo Jon'l-hul
that doesn't m,ltIer bee<luse you"'e
alreaJy spent Ihe la,t fl'w days looking
fo","'ard to it:'
Of ,'wrse. that is no{ how Ill.,>! ~,ple
view the quest for a better job. nieer"aror
higger b<.lIlIC.1bc glory is in getting ..... h,n
you want. Yel we have <III e~periell<w lhe
phenomenon ~beha"iontl e,wlOmisl.< call
il adaptation- .....hereby once you attain
\\'hutc\'Cr you mo,t W\'C!, it 'luiekly loses
ils luster, Dr. Senik's rescar"h ,uggesh
that ifs fine to er~"e the wnJo anJ the car
as long as you ",ali7-" there may be n'lOre
 CHAPTER 7 • CREATING A MOTIVATING WORK SETTING 243

plcm;ure III striving fur lhose goals tlwn III
~ctu~lIy achieving them.
I lind this oddly eomfuning, be-.:~use
like m~ny people I ~m well ~e'-lu~imed
with materiali,tic trcild·mi!ls. ~Ild they me
exh~usling. You ('~n fL·.,[ like Sisyphus.
pushing a boulder uphill u"er and over
~g~in 10 gel the things you want.
It may seem lhal people me ~II hapless
("o"-,umePi. at the mercy of greed and
neros (or cursed by Zeus). But Dr. Scnik
oITers ~ more posilive vicw. Y,-"u e~n leI
go of lhe ralher itfy rewards of gelling
~nd spending, ~nd hK)k for e,'eryd~y
pleasure wh,le struggling 10 advance,
improvc, progrcss, ~("hieve ~nd attain.
As Dr. "-",lerlin said. "If you recognize
lh~t the striving ('an be of value in ilself.
lhen ins1C:ld of taking a job th,1I pays you
lhc most. you may be bener off l~king
work yott'lI enjoy,'" In OIher words, choose
y'Klr lrcoomills (·~,,-·fully. Like Sisyphus.
lhey"re ... here mOSI of us will spend our
lime.

Questions for Discussion

I, What arc lhe impli(·:tlions of thi, casc for job design')
2, How call jobs be designed to be more lIlolivating?
3. What arc the implications of this case for lhe usc of gfl.11 setting)n organizations"?
4. Why might ditlicult goals be cspet'i~lly mOlivating?
 PAR T 1
( Individuals in Organizations

PAY, CAREERS, AND

CHANGING EMPLOYMENT
RELATIONSHIPS

I'S\'CHOLOGICAL. COi\"TR,u,"TS

I'A\' ANI) 1'1": EMPLO\'MENT RELATION

EU:RCISF.S IN UNDERSTANIJIN(; ANI) MANA(;INf; OR(;ANIZATIONAL BEHA\'IOR

Learning Objectives
After studying this chapter, you should be able to:
Describe the determinants and types of psychological contacts and what
happens when they are broken.
Appreciate the two major roles of performance appraisal.
Understand the different kinds and methods of performance appraisal.
Appreciate the importance of merit pay and the choices organizations
face in using pay to motivate employees.
Understand the importance of careers, different kinds of careers, and
effective career management.
 Opening Case
VALUING EMPLOYEES AT COSTCO
Can organizations treat their employees very well and still remain competitive?

hen large corporations in the discount retailing industry like Wal-Mart

come under fire for paying low wages and being less than generous
when it comes to providing employees with benefits like health insurance,
the customary response is that such measures are necessary for these
organizations to remain competitive. Costeo Wholesale Corporation. the
fifth largest retailer and the top warehouse retailer in the United
States, challenges this conventional wisdom. Costco treats its
employees very well, and these employees, in return, are satisfied,
committed, loyal, and motivated.!
Hourly wages at Costco average S17 an hour, which are over
40 percent greater than the average hourly wage at Wal-Mart,
Costo's biggest competitor. 2 Costco covers the majority of health
insurance costs for its employees (employees pay around 8
percent compared to an industry average of about 2S percent),
part-time employees receive health insurance once they have
remained with Costco for six months, and around 85 percent of its
employees have health insurance at any point in time (in contrast,
less than 4S percent of Wal-Mart and Target employees have
health insurance). Costco employees also have a generous 401-K
pension plan for their retirement. 3
According to Costco CEO Jim Sinegal, treating employees well
makes good business sense. Costco's financial performance and
growth bears this out. For example, for the first half of fiscal
2006, Costco's net sales of $26.45 billion were 11 percent higher
than for the same period in fiscal 2005 and net earnings were
CO"lm Wholcsale Corporation. IhC tifth $512 million. 4 Costco, which started out with a single warehouse
brgest rcwilcr and tile lOp warehouse store in Seattle, Washington in 1983, now has 4S7 stores,
retailer in tile US. trealS its employec, vcI)'
including stores in South Korea, Taiwan, Japan, Canada, and
well. Costeo employees. in return. arc
Britain, Costco has over 44 million members who pay $45 a year to
salisfoc(], l'ornminc<l. loyal, an(] rnolivalc(],
shop in Costco stores. s
While treating employees well is an ethical imperative for
Costco and a principle in its Code of Ethics ('Take care of our employees'),
these employees, in turn, are highly committed to Costco and motivated to
perform at high levels.6 Costco's turnover rate is much lower than industry
averages, which yields major cost savings; employee theft rates are also very
low? Traditionally, turnover in the retail industry is high and costly since for
every employee who quits, a replacement hire needs to be recruited, tested,
interviewed, and trained. Compared to Sam's Club (Wal-Mart's warehouse
unit), Costco has lower labor costs as a percentage of sales and higher sales
per square foot of store space,s
While Costco's customers love the bargains and low prices that come
with shopping in a warehouse store, they also like the fact that Costco treats
its employees well. Costco's customers are very loyal and part of this loyalty
stems from the fact that they know that their bargains are not coming at the
expense of employees' paychecks and benefits. Customer loyalty also comes
from both the relatively high quality of the goods Costcos stock and the
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 247

company's commitment to not marking up prices by more than 14 percent or

15 percent (relatively low mark·ups for retail), even if the goods will sell with
higher mark-ups.9
CEO Jim Sinegal, who opened the first Costco store with an entrepreneur
in Seattle, has a long-term approach to management. Treating employees
well is a key part of this approach. As John Matthews, Senior Vice President
for Human Resources indicates, 'When Jim talks to us about setting wages
and benefits, he doesn't want us to be better than everyone else, he wants
us to be demonstrably better.'10 Take the case of Cesar Martinez who works
in the Redwood City, California, Costco warehouse store. Martinez earns
over $19 an hour and has been with Costco for over 10 years. Martinez
indicates that he has stayed with Costco so long because he feels fairly
treated, likes his job, and has a good salary and pension. 11
Fair treatment at Costeo also means that top managers are not paid
hundreds times more than entry-level employees. Sinegal's salary is S3S0,000
(and he has received annual bonuses of around S200,OOO), which is very low
by CEO standards, with some CEOs making hundreds of million dollars per
year. 12 For example, while Costco is among the top 30 U. S. companies in
terms of revenues, Sinegal's pay is less than 10 percent of what many other
CEOs make. Sinegal says, 'I just think that if you're going to try to run an
organization that's very cost-conscious, then you can't have th05e disparities.
Having an individual who is making 100 or 200 or 300 times more than the
average person working on the floor is wrong.'13 Clearly, the ways in which
Costco treats its employees and the company's performance and growth
demonstrate that an organization can both treat employees very well and
remain competitive.

Overview
Building off ofClmptcrs 6 and 7, inlhis chaptcr wc focus ol1thc broader eontcxt in which
employee mOlivation takes place. Although it IS important 10 undcrsland what motivatcs
peuple. how they arc motivated. and why. it is abo important to understand how key <l~pcCIS
of thc cntployment relationship can serve to encourage and mai main high levels of motiva-
tion. If lllisomnagcd. thcse factors can lowcr mot ivation. In Ihe openi ng case, it is clear that
how Costco treats its emplo)'ccs l:ulllributes to their motivation. satisfm:tion. and loyalty.
The naillre of the relationship between employees and organizations is changing.
Organizations in the United States arc increasingly outsourcing lIot only manufacturing
jobs but also white-collar jobs. such as compulcr progranllning, cngineering, and consult-
ing. to cuuntries wilh lower labor l:ostS.t4 Reccnt Wll1'eS of layolTs have changed U. S.
workers' expcdlHions about their l:areers and how they might unfold. In this l:hllpter. we
discuss these changes in depth. We describe the nature of the psychological contract an
individual has with an organization and factors that cause psychological contracts to
ch,lIlge over time. PsychologIcal contral:ts ,lIld the motivation equation. explained in
Chapter 6. all umlersl:ore the fact that the relationship between an organization amI its
employecs is an exchange relationship: Employees make c('"flain comributions 10 Ihe orga-
nization and. in cxchangc. expect to receivc c('"rtain outcomes.t~ We then discuss three
factors that playa l:entral rule m thIS exch:mge relatiunship: pcrfonnance apprJisal. pay.
and careers. In order 10 ha\'e a meaningful. reciprocal exdange. organizations lIeetl to
be able 10 accurately assess the nature of the eomributions employees make through
248 PART t • INDIVIDUALS IN ORGANIZATIONS

performance appraisals. Given that pay is one of the most impooalll outcomes for employ-
ees. regardless of lhe kinds of jobs lhey hold and organizations lhey belong to. we focus on
pay and how il c,m be used tu enhance mOlivalion. L<lslly. we l;Jke a longer-lenn perspective
on the employmenl relationship and address lhe careers uf the ol'danizalion's empluyees.

PSYCHOLOGICAL
CONTRACT
I\n employee', pcrwpli{>n of h"
or her exehatl~e relalo{>I"hip II<"h
an organi/.alion. oul,'OIn,,, lhe
"'Ean i/~II(>I\ hn, proml,e<lm
provide to the empl"ye"". and
wmribution, the emplo}"" i'
obligated 10 ma~e to the
tlf'!l~n "~I,<m
Psychological Contracts
A good W;Jy to think about the exchange relationship between an employee and an organiza-
tion is in tenns of a psychological contmCL'~ A psychological ronlrllel is an employee's
perceplion of his or her exchange relationship wilh an organiZiltiun: oulcomes lhe organiza-
liun has promised 10 provide and cuntributiuns the employee is obligated 10 make. 17 There
are a few key points wooh emphasizing in this definition. Firs!. psychological contracts arc
perceptual in nature IS (sec Chapter 4). Hence. they can be subject to elTors ,md biases and
also can be somewhat idiosyncratic. Having said this. lhough. docs lil1le 10 diminish lhe
impa<.:t pSYl'hulogi<.:al conlrac(s have on empluyee motivaliun. Secund. pSy<.:holugi<.:al<.:un-
tracts refer to the perceived exchange relationship between an cmployee and an organization
in teons of reciprocal promises or obligations,I9 Given the prevalence of reciprocity norms in
lhe United Slates and other countries. such as China. Singapore. and Belgium.3J organiza-
lions and lhe people wilhin them generally S<.ock tu abide by psydlOlogi<.:al conlr<lcts. (The
belief thm making a cOlllribution should lead 10 a commensurate outcome is an example of
one such lIonn,)

Determinants of Psychological Contracts

How do individuals form their psychological contracts? Essentially. by piecing together
IIlfonnalion from a variCly of sources 10 detennine what is eXjX:c1ed of lhem and whal lhey
<.:an expecl frum the organizmion in rClum. Three sources 01' informalion are parlicularly
inlluemial in helping individuals form their psychological contracts: dircct communication
from coworkers and supervisors: observations of what actually transpires in the organiza-
lion. including how similar employees bell<l\'e and arc lrcil1ed: :lIld wrincn documents (sec
ExhibiI8.1).21

Direct communication. Psychological contraclS can begin tu form before a

prospective employee e'"en joins an organizaliun. For el>ample. whell managers try 10

EXHIBIT 8.1

Determinants of Psychological Contracts

Di",ct .omm.. n""rion ObH"",rion Wri"en document>

• Ounng ",cru"men' of
p''''Po<tiv. employ...
·On·the·job ",format,on from
co·worke" ~nd "'1"''''''''''
• How employe« b<,h~Y< ~nd how u,ey
ar<: '",ated by the org~ni ..tj""
""'"I>,
• The ,,"Wr< of.• nd manne' i"
Important doc ..,on• .,e m~de
• Employ"" h.ndboolo:••
org."iut'onal pol;';,..,
• Comp~ny Web .It.
hum." ••"'u.... doeum.nts

Psychological contract
• Pe".. ",d .xchange .eb""",hlp b<,~en
.n .mplo)"'" .nd orgamzatlon
·Includ.. r«jp"",al promi ... ~nd ob-lig><icm.

To promote motivation, joh
satisfaction. and retention of
employee,. during interviews,
managers should provide
pro'I"-,.:tiYe employ.·c, Wilh
realistic job previews.
REALISTIC J06 PREVIEW
An hol",q a",,,,n,,,m of the
",I> antage, nnd di",d, anmge~ of
a particular Job and .... orking III a
pal1kular Of"ganilalior'
CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 249
recruit new employees, they nften foeus on the advamages of joining the organization
and accepting a particular job. Take the case of MMia Gomez who was recruited to be a
marketing assistant for a large conSumer products fim), Gomez ha, a BA in markCling
and was altra<:ted to the position because she hoped it would put her on track for
eventually assuming the position of brand manager. When she was recruited, she was
told that upward mobility at the firm was encouraged. and if she performed well and
proactively sought to advance. she wOlold have opportunities. This promise was one of
the reasons she a<:<:epted the position.
Oncl." l."mployl."l."s arc on thc job. thcy cOlllinue to rcceivl." dircct communication from
organizational rnembl."rs that form the basis of their psychological comracts n In Gomez's
case. however, two l:oworkers who held similar positions to hers complained they were
slUck in Jead.cnJ. glorified clerical positions. This upset Gomez because of her own aspira-
tions and what she was told whl."n she was rccruited. Shl." began to wonder to what cxtcnt she
might have been misled by the recruiter. Gomez's experience is. unfoTlunmely. not uncom-
mon. Orgamzations oflen seek to hire the best apphcants by maklllg lofty promises.
However, this strategy oftl."n backfires on<:e employees arc on the job and rl."alize how things
really arC'. Thus. t'l."search suggests that to promotl." motivation, satisfal."lion, anJ t'l."tl."ntion of
employees-as wl."l1 as l."rC'ate more accuratl." psychologicall."ontr~Cls-organi7-"tions should
provide prospedivc employees with realistt<: job previews. A ~alistic job pITv'icw (RIP) is
an honeS! a.ssessnll."nt of thl." aJvatllages anJ JisaJvatll<lges of a panintlar job and working in
a panicular organizalion. 23 RJPs l."lmble employces to make infonneJ decisions and fonn
realist;c expectations and more al."cur,lle psychologil."all."ontnlCts.
Observation. Although the aJage. 'ad ions speak ]ouJer than words.' is s01lll."whm of a
cliche. it certainly rings true when it comes to psychological contracts. Esscntially.
employees observe how they are treated, how their coworkl."rs ,Ire treated. whm kinds of
decisions arc maJc and in what manner, how thl."ir managers behave. and how outcomes
arc dislributl."J in an organization 10 form thl."ir psychological contracts.24 In Gomez's case.
she observed thai two of the Current brand marmgl."fS in hcr division had startl."d OUt as
marketing assistanls and <llso llwt her boss made the effon 10 explain the kinds of things
she (the boss) diJ anJ how it !it in with the plan for the br<lnJ.
Written documents. Wril1cn documents are also useJ in fonning psy<:hological contracts.
f'Or example, JO<:Utllems Jc><:ribing cotllpcnsat ion and ocnelit pol icies. performan<:e appraisal
ptl)l."CSSl."s. anJ career devc1optlll."l1t become thl." basis for fomling psychologicall."olllracts. 25
During her fiN few wl."l."ks on the job. Gomez periooil."ally would consult her company's
Web·sile anJ onlinl." human resources and caTl"Cr Jevelopmcnt programs to get a hcltl."r
unJnstanJing of whal to cxpect anJ see if the promises made to her Wl."re likely to be fulfilleJ.
f'(lnunmcly fOT Ill."r. all signs pointl."d to a g(l(X] potl."lllial for oovanCl."nll."nt to the brand managl."T
position-l."xcept for the complaints of tWO of her coworkel>.1llc IXlir had been passed OVl."r
for a promotion'l few months earlier. but because of the infornlalJon Gomez haJ g'UllereJ, she
was able 10 Jjstlliss Ihose cotllplaims as 'sour grapes:
Types of Psychological Contracts
There are two major types of psychological COntraclS: transal."tional and relational (Sl."l."
Exhibit 8.2).26
Transactional contracts. Transactional comrdCts tend to be shon tl."nn and Vl."ry spccifk. 27
They are narrow in focus anJ relatively flexible given their shon-ternl nature, If either IXIt1y
terminates the relationship. a repla<:etllem can be found. 28 In transactional contrads.
inJividuals focus primarily on l."xtrinsic outcomcs such as pay. Recall the Jiscussiotl of
contingent workers. Contingent workers have transactional kinds of psydlOlogical
contracts-they tr.msad with an organizalionto prol'iJc some good or service (for example.
250 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 8.2
Types of Psychological Contracts
Mutual comm"men,. between empl"Y"e
and organization deer"a..

Tran$artional con"'"""
• Relational «>ntrad$
• Shon teml • long teml
• Nurow and 'I"'c,f,c Two type' "f p'y<:h<llog;eal ""n".c" • G<n"ral and evolving
• L",,,,otd pr"m;ses • Ex.."',..... nd brood
and obligat'on, prom ..", .nd obl;g>t;<lnS

Mutual «>mm"men" betwe"n emplo)"'e

•
and <><gan;,.,;on ,n,,,,a,e

extra help during a busy time of year or clerical scrvicl.'s to fill in for an l.'mpJoyC"e on medical
leave) for a set economic return (say. hourly pay). The employing organizmion expects
~dcquate performancc un the p~rt uf thc contingcnt worker but nut much elsc. and thc
cOlltingl.'1lI worker expect~ pay for the hours worked but little more of the org~nization.
Of course. somctinlC"S organi1,atiolls dC"eidc that they want a longer-tenn relationship with a
valued cominget11 worker and m:ty sec"
to employ that individual on ,I more pennancm b.1si~.
Anoilk:r cxample of a tr.msaClional l'Ontract is an cmploymcnt situation in which there is an
initial prob~tion~ry period during wh ich either pany cm temlinate the rel;l\ion~hip,

Relational contracts. Relational contrans are longl.'r term. more gener~l, and evol I'e more
gradually over time. They imply a mutual commitment on the part of both parties 29
Employees arc affectivdy cornrnined to their organizations (see C1l:lpter 3). and the
organiz~tion is <:ommined to pmmottllg Ihe wcll-being of the cmployees. 30 Rcl~tionaJ
contr~cts cover Illuch more ground than trans,actional contracts and are also more subjective
because they entail more intallgib1c kinds of factors. such as. for example. opponunitics for
career developmcnt. Although extrinsic outcomes like p,ty are still 1Iliportant to relational
<:ontr~<:ts. ~o too are intrinsic fador~ such as making ~n important contribUliol1 IU thc
organization and a >ensc of achievemcnt. University professors who are tenured havl.'
relational kinds of psychological contracts,
The previous s<:enarius involving contmgent workers and tcnured professors ;Jre rda-
tiv-dy dear-cut examples of transactional and rcl~lionall"()Jltr.K:ts. For other jobs. however. the
distinction becomes a bit murkier. One way to think about the distinction is in tcnllS of the
CJ;:tent to which tllc employment relatiOl1ship is more tml1->aClional (short ternl) or Illore rela-
tiomll (long teml; sec Exhibit 8.2). Imkcd. th<.'Qries and reseal\:h suggest it is usefillto thmk of
ps)'<:hological ('"Dntra<:t~ as varying along ~ <:olllinilum. with tr.lIl~adional COIllr.lets falling at
one end of the cominuum and relational COlllraets falling at thl.' other. Of course . the nature of
the psychological contmet is cssentially detennitK'd by an employee's perceptions of it.
A nUllllx:r of rt...:em developments have caused rcsearchers to 4uestion to what extent
psychological (.·olltra<:ts are undergoing some swecping changl.'s. Massive layo!Ts by both
major CQrpomtion.s and smaller stan-ups and high-tech companies lIavl.' cnused employcrs
to question how committed their organizations are to them. Today. it is probably more the
exception th~m the rule to cxpect to spend one's entire c:lreer in a singlc organiz~tlUn.
Morenvcr, the OIltsourcing of ",,'ork to countries with lower-cos! labor ~uch a~ China and
India is becoming perva.sive in morl.' and more industril.'s..11 Thc trend also kads one to won-
der to what eXtCnt psychological eontmcts are ul1dergoing fundamental changes. Wllile OUt-
sourcing is not a new phenomcnon. what is new is a dmmatic increase in the outsour<:ing of
while-collar jobs..121obs for linanci~1 analysts. tdemarkcters. ac<:ount~ll\s. engineers. com-
putl.'r programmers. claims adjustcrs. loan proccssors. and architectural drafters are among
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 251

NO! only arc manufa~turing jobs

<)Ul",ur<:~d today. so ar~ many
white collar jobs. India. for
ex"mplc. h", ~"r\'ed out" niche
for itself hmldli ng ~ompllter
pmgr"nuning wurk for other
countries.

those Ix'ing outsourced to China. India. and othcr countrics with low labor costs, Evcn
m:linstay American organi7..ations such as IBM. Microsoft. and l'rocter & Gamble ,Ife out-
soun:ing their white-l:ollar jobs. n Although outSO'Jrcing has resulted in less job security tor
U. S. workers. many multinational organizations beliC've they must outsoun:e at least some
white-collar work to reap tlie Ix'nefits of low labor costs and T<:'main competitiw.>l

When Psychological Contracts Are Broken

When employees perceive that their psyeoological contmcts have bl.."Cn breached or broken
due to the failure of the organization to live up to its promiscs. their m01iv:uion and perfor-
mancC' can suffer. Breached contracts can also result in employees experiencing more negative
m<XXIs and emotions. being more dissatisfied with their jobs. and looking for employment
elsewhere. The larger the percel\'edviolation. the more intense the potential negative reaction.
Whet! contr.tcts are intentionally breached by an organi7~l!ion in signiticant ways. employees'
levels of trust in thC' organization pIUllllTK.'t. .IS In our prior example. had Maria GOlTK.'Z found
out that there was no chance of ever being promoted to the position of brand manager (C\'ell
though she was promised this when sht: was recruited). in all likelihood. her commttmentto
the company would plummet. and she wO\tld have startt.-d looking for another job.
Sometimes observing other employees having their psychological contract!; brC'ached
can CllUse p...'Ople to be concerned about their own futures in lin organizution.J(, For eXlimple.
If an organizlltion is outsourcing more and more jobs. a computer progrJtllmer who is slill
employt.-d might fear that his job. too. will evemually be outsourccd and might aCI on this fear
by finding another job. However. if the programmer was II I'alued memlx'r of the organiza-
tion. and his job was 1I0t lIe!Ulllly in jeoPlirdy. both parties stand to losc. 'Iloe organization has
lost a valued member and the programmer has lost .. good job. Thus. whenever organil..ations
take aclions that hal'e the potential to affect their members' psychological COlllr:tns. care
must be taken to accurately and honestly communicate what thc action was. why it was
taken. lind whllt the future is likely to hold. Moreover. how 31t organization trems workers
woosc contr:tclS have been broken is impor1llrl1. 37 For example. during a layoff. whether or
not workers arc givet! adequate advancc lIotice. gil'en help it! finding mher positions. pro·
vided with additionaltmining to make them more employable. and whether or not the orga-
nization is doing all it can to help them through a tough time and tr..\lIsitiol1 out of it can h;!ve
profound dlect, on how survi\'ors of the Iay-otf view their own psychological contracts.
Sometimes. whell psychological contracts arC' broken repeatedly. employees' whole
lil'es call be disruptcd as indklltcd in the following Ethics in Actioll.
252 PART 1 • INDIVIDUALS IN ORGANIZATIONS

Ethics in Action
GM Gypsies and Other Displaced Workers
Face On-Going Struggle

Over the past 10 years, North Carolina has lost 250,000 Jobs in manufacturing, On one
single day, 6,500 employees of Pillowtex (a textile manufacturer) lost their jobs when their
organization closed all of its manufacturing facilities. 38 Unfortunately, this is not an iso-
lated story as employees around the country and the world find their psychological con-
tracts broken when their employers engage in massive lay-ofts. For example, IBM recently
announced that it would layoff around 12500 employees (predominantly in Europe) 10
lower costs and increase earnings. 39
Workers in the auto industry have been hit espe-
cially hard, and continue to lace broken psychologi-
cal contracts as big automakers like Ford and GM
struggle to remain competitive Amid mounting
losses, GM recently announced that it would reduce
health benefits for retired GM employees. Glenn
5hock worked for GM for over 30 years in produc-
tion and driVing fork-lifts and is now retired Upon
hearing his health benefits were going to be cut, he
indicated 'That was my contract with them when I
retired Now they're reneging on it, and when you
make a contract you should be liable for it. '40
Knowing of GM's plans to cut at least 25,000
more jobs over the next several years, some GM
employees find themselves moving around the country
to hold on to a job as plants are closed in one location
and they transfer to another. Over the past 20 years,
300,000 Jobs have been cut at GM and the parts sup-
Tom Hoppe has worked al Gl>l plam, plier it spun-olf, Delphi Corporalion,41 As GM closes
lor 28 years. and mOveS aroond the plants, and opens new ones, still~employed GM
coonlry in lhe hopes of holding on
workers find themselves moving time and time again
10 his job.
to keep their jobs; so many times, in fact, that they
call themselves the 'GM Gypsies.'42 Tom Hoppe has worked at GM plants for 28 years, and
moves around the country in the hopes of holding on to his job. As he puts it, 'I'm always
getting ready to leave. Some GM workers just keep their stuff in boxes. ,43 Moving around
so much and the threat of job loss takes its toll not only on the GM gypsies but also their
families and home lives as they face the bind of trying to build a life in one location while
knowing they might be moving again next year 44 Production workers are not the only ones
hard-hit by U. S automakers' mounting troubles. Ford, for example. is planning on signifi-
cant reductions in white-collar fobs. 45 As these and other companies face difficult decisions
in their quest to remain competitive, the consequences of psychological contract breaches
for their current and former employees are ongoing ethical concerns as these employees
struggle to provide for themselves and their loved ones.

PERFORMANCE APPRAiSAL
Evaluating perfomlancc 10
"llI:oorngc empIO}'"" moIi"alien
and performa""e and to pro,;"Ie
infonllalion 10 hoe u~ in
managerial dc,'j,ion making.
CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 25]
Performance Appraisal
Psychological contracts and al most all of the theories and approaches to mot ivat ion we
have covered so far assume that managers can accurately appm;if'-that is. evaluate-
their subordinmes' performance and contributions to their jobs and to the organization.
In expectancy theory (sec Chapter 6). two of the mail! determinants of motivatiol! arc
eXI'"nwlcy (the perceived CllIlnection between effmt and performance) and iIlIlrwlI('lI/·
alit)' (the perceived connection betwecn performance and outcomes such as pay. praise.
and cmeer opportunities). Employees me likely to have high levels of expectancy.
instrumentality. and. thus. motivation only if their managers can accurately appraise
their performances.
According to equity theory, employees will be motivated to perform at a high le\"el
only if they perceive that they are I\'ceiving outcomes in proportion to their inputs or con-
tributions. Accllr<l1ely appraising performance is nccessary for determining employees'
cOlllributions. From the perspective of equity theory, then. employees will be motivated to
perfonn at a high level only if their performance can be and is accurately appr<lised.
Procedural justice theory suggests that the procedures that are used to appmisc perfor-
mance must be perceived as fair in order for motivation 10 be high. If employees think man-
agers' appraisals are biased or that irrelevant infommtion is used to evaluate performance,
their mot ivation is Iikely to suITer. 111 that sense. procedural just icc theory is sim i Iar to equity
theory. No mailer which approach nmlwgers use to motivale elllploy<:es. emplo}'ees will be
mUlivated to contribute their input~ to the organization and perform at a high le\'el only if
they think that their managers can and do appraise their perfonnances accurately.
Because motivation alld perform;lnee have so great an impact on organizational etfec-
tlVeness. many researchers have focused on how to appraise performance in organizations.
P... rfornmnce :Ippraisal has two o\'erarching goals:
• to enconrage Iligh lev... l~ of employee motivation and perfomlance
• to provide accurate infonnation to be used in managerial decision making.tt>
Encouraging High levels of Motivation and Perlormance
As we mentioned earlier. all the approaches to motivation we discussed in Chapter 6
d<::pend on the aceumte assessment of an employtt's perfonnanee. An accurate 'lppraisal
gi\'e~ employees t"'O imponant pieces of information: (I) the e.xtelll to which they arc COII-
tribllt ing the appropriate le\'el of inpllls to the ir jobs and the organizat ion and (2) tile extelll
to which they arc focusing their inputs in the right direction on the right set of tasks.
Essentially. perfonnance apprais.ll gives employt-esjeedbiKk thai contributes to Hllrinsic
motivation.
A positive performance appraisal lets employees know that their current levels of
motivation and performance arc both adequate ,lnd appreciated. In tum. this knowledge
makes employt-cs feel valued mtd competent and motivates them to sustain their current
levels of inputs and pel1(mnance. Many employees con~ider a good performance appr<lisal
an imponant Oll!come or reward in itsclf.
An inadequate performance nppraisaltells employees that their performance is unac-
ceplable and may signal that (I) they <Ire not motivated 10 contribute ~uf1kientll1puts to the
job. (2) they cannot contribute cenain inputs that arc required (perhaps because they lack
cenain key abilities). or (3) thcy are misdirecting their inpllls, which in and ofthclllsclvcs
arc at an adcquate level.
The case of Sw,an England. Ramon,l Michaels. and Marie Nouri. ~alespeople m the
women's cloth ing department of a large depanment store. illustrates the imponalll role of
performance appraisals in encouraging high levels of motivation and performancc.
England. Michaels. and Nouri h;ll'e just met individually with the department supervisor.
Ann Rickels. to discuss their late~t performancc apprmsals. The performances of all thn:e
sales clerks were assessed along four dimensions: lJuality of CUSlOmer service. dollar
amount of sales. cfficicnt handling of transactions (for example, proccssing sales and
254 PART t • INDIVIDUALS IN ORGANIZATIONS

returns quickly to avoid long lines). and housekeeping (returning clothing from dressing
rooms to display racks and shelves and keeping the shelves and racks neat).
England received a very positive evalualion on all four dimensions. This positi"e feed-
back on her performancc hl'lps sustain England's motivation because it lets her know that
her efforts arc appropriate and appreciated.
Michaels received a positive evaluation on the customer service dimension but a nega-
tive evalualiun on sak:s. efllciency. amI housek<:eping. Michaels Iried \'ery hard to be a good
performer and provided exceptionally high levels of service to the custumers she served.
Rickels nOled. however. that even though her shifts tended to oc on the slow side in terms of
customer tnlflle. there w,.s often a long line of customers waiting to be served and a ooeklog
of clothes in the dressing room to Ix: restocked. Rickels judged Mich;K:Js's sales perfomwnce
to Ix: lackluster. She thought the problem might be that Michaels' al1empls to help individual
customers arrive at purcha'C decisions were consuming most of her timc. Di!iCussiolls with
Mich,lels confirmed that this was the C;IS(. Michaels indicated that she was working as hard
as she l"Ullld. yet she knew that her performance was lacking un three of the four dimensions.
She confessed to feeling frustrated that she couldn't get everything done even though she
always secmed to oc busy. Michaels's negative perfonnance evaluation let her know thm she
was misdirecting her inputs. The time and effort she was spending to help customers were
preventing her from performing her other job duties. Even though Michacls's perfomlancc
evaluation was negative. it helped sustain her levcl of motivation (which had always ocen
high) bo.'Cause it showed llcr how she could become a good performer.
Nouri received a negative evaluation on all four dimensions. Because Nouri was an
experienced salesperson who had the necessary skills and abilities. the negative evaluation
signaled Nouri and her manager that Nouri's level of motivation was unacc'eptable and in
need of improvement.

Providing Information for Decision Making

As mentioned earlicr. the >ccond goal of rcrformance appraisal is to provide information
for managerinl decision making. Part of Rickels's job as supervisor of the women's cloth-
ing department. for example. is Inlining the salespeople in her arca and making decisions
about pay raises and promotions.
On the basis of the rcrformanee appraisals. Rickels decides that England should
receive a pay raise and is most deserving of a promotion 10 the position of senior sales
associate. The performance appraisals let Rickels know that Michaels needs some addi-
tional training in how to provide an 'appropriate' level of customcr service. Finally.
Rickels decides to give sonlC counseling to Nouri because of the negative evaluation of her
perfonnance. Rickels knows that Nouri is looking fur another job and doesn't expect to
remain with the department store for long. Rickels lets NOllri know that as long as she
remains in the department. she must rcrform at an acceptable levclto receive Ihe outcomes
she desires-p~IY. not having to work in the evenings. and good working relationships with
the other members of the departmem.
In this example. performance appraisal is used to decide how to distribute outcomes
such as pay and promotions equitably and how to improve the performance of employees
who arc not performing as well as they should be. Performance appraisal can ~llso be US(-
ful for other aspects of deCIsion making. For example. inforrnatioll from perfurmance
appraisals may allow managers to more effectively lIse the talents of employees. assign
them specific tasks. and group them into high-rcrforming work teams. Performance
appraisals also can alert m;Ulllgers to problems in job design or shortcomings in an orgalli-
:wtion's approach 10 motivating employees and distributing outconlCS.
Finally. performance appnlisals provide employees and supervisors with career plan-
ning information. By helping managers identify an employee's strengths and
weaknesses.47 the performance apprais;ll sets the scene for Illeaningful discussions about
the employcc's career aspirations ,1IId huw he or she can best progress toward those goals.
The perfonnance appraisal can also signal areas of improvl'ment for the employee and Ihe
skills he or she needs to develop.
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 255

Developing a Performance Appraisal System

Managers l:an use the information gained from performanl:e appraisals for two main
purposes:
• Del'/'lofJllle/!/ili ,mrl'0Scs such as determining how to motivate an employee to per-
form at a high leveL evaluating which of an employee's weaknes-;cs can be corl\---cted
by additional training. and helping an employee formulate appropriate career go,lls
• EmIl/mire. dcci.limHllakillM purposes such as dttidmg whom to promote. how to set
pay levels. and how to assign tasks to individual employees
Regardless of whil:h purpose is most impor1'lllt to a manager. there arc a number of
choices he or she needs to make when it comes to devcloping an effective performance
appraisal system. In this section. we discuss four of these choices: the estent to which for~
mal and informal appraisals are to be used. what factors are to be evaluated. what methods
of appraisal arc to be used. and who is to appraise pcrfollllance (Eshibit 8.3).

Choice 1: The mix of formal and informal appraisals. When a performance

apprais<ll is formaL the performance dimensions and the way employees 'Ire evaluated 011
them arc determined in advanl:e. [BM. GE. EsxonMobil. and most other large
organizations usc formal appraisals. which are usually conducted on a fised schedule (such
as every sis months or once a year).48 [n a meeting between the employee whose
perfommnl:e is being appraised and the persoll doing the evaluating. the employee is given
fL-cdback on his or her performance. FL-cdb:id comribliles to imrinsk motivation.
Sometimes employees wam feedback on a more frequent basis than that provided by
the formal system. Similarly. managers often want to usc perform;mce feedback to moti-
vate subordi nates on a dilY' to-dilY basis. If an emplo),ee is performi IIg poorl y. for example.
a manager might not want to wait untillhe next sis- or twelve-month performance review
to try to rectify the problem. [n these situations. an informal performance appraisal. in
which managers and subordinates meet informally to discuss ongoing progress. can meet
the needs of both emplo),ees and managers. Informal appraisals vary III foml and l:ontent
and range from a supervisor commending an employee for doing an outstanding job on a
project to criticizing an employee for slacking off and missing a deadline.
Informal performance ,Ippraisals are beneficial. Because they often take place righ1
after desired or undesired behaviors OCl:ur. employees immediately have a good idca of
whal they are doing right or wmng. As )'ou learned in Chapter 5. employees will learn to
perform desired behaviors and Icarn not to perform undesired behaviors only when it is
cleM to them th,lt consc<juences such as praise (for a desired behavior) or a reprimand (for
an undesired behavior) result hom performing the behavior in qucstlon. The smallcr an
(}rgani7~ltion is. the more likely it is to rely esclusivel y on infonnal performance appraisals.
Ideally. an organization should rely on both formal and infonnal perfonnance appraisals
to IllOtivate its members to perfonn at il high lel'el ,md to make good decisions. 1lle fonnal
appr.lis;ll ensures that perfonnanl:c gets assessed periodically along the dilllCnsions im!Xlr1ant

EXHIBIT B.3

Choices in Developing an Effective Performance Appraisal System

Choosing who appr"ises

ChOOSing the m,x of ChOOSing what facton; ChOOSIng methods of performance (supelVlsors,
format and informat '0 evalua<e (traios, appraisal (gr.ophic rating peers, subordinates,
appraisats behavion;, or result.) .cales, BARS, or BaS) worker. lhemsetvc•. or
cusromers/dienos)

r
256 PART t • INDtVIDUALS IN ORGANIZATIONS

to the organi7-<llion. Because many managers and e-mplo)'ees belie-ve that formal performance
appraisals sllould not yield ,my 'surprises: howe-vcr. ongoing informal appraisals should be
JXlrt of an organil.,uion·s performance appraisal system. An employee who IS perfonning
poorly should not have to wait six momhs or a year to find out about it: likewise. gool per-
formers should frequently be told thm they are on the right track. Informal performance
appraisals are important for motivation and perfornmnce on a day-t<Xlay basis because they
identify and rectify problems as they arise. Although managers 1Il small org,mizations may not
want to spend time and money on the development of a formal system. and managers of large
organizations may spend less time than they should appraising performance informally.
in most cases the motivational benefits of using form,11 ,md infonn,d appraisals outweigh
the custs.

Choice 2: What factors to evaluate. In addition to varying in degree of formality,

performance appraisals can also vary in content. Traits. behaviors. and rcsulls arc the three
basic types of infonnation that call be assessed. 49
When traits are used to assess perfonnance. personal characteristics (such as person-
ality, skills. or abilities) that arc deemed relevant to job perfonnnnce are evaluated. A divi-
sion manager of a large corporation may be evaluated on personal initiative, forecasting
skills. and the ability to identify and promote- managerial talent. A hOiel reservmiolls clerk
may be evaluated on patience. politeness. and the ability to remain cairn under pressure.
Using traits to assess performance has sever31 disadvantages. First. rec:lll from
Chapter::: that the iml'rtluioll of individual differences such as personal ity traits or abi Iit ies
and situational influences usually de-termines behavior. For this reason, traits or individual
differences /lilme are oflen poor predietors of performance ~ause the possible effects of
the situation are nottal;en into account. Traits may be good indicators of what;lll employee
is like but Il(l! very good indicators of what the employee adually docs 011 the job.
Second, occause traits do not necessarily have clear-cut relationships with ac!tlal
behaviors performed on the job. employees and law courts involved in cases of potential
employment discrimination are likely to view tr,lit-based performance apprai>;lls as unfair.
To a\'oid the negative effects of perceived unfairness on employee motivation. as well as
costly litigation. organizations should usc trait-based approaches only when they can
clearly demonstrate that the traits are (/(,Cl/Yall' indicators of job perform'lllce.
Finally, the usc of tratts to assess performance docs little to help motl\'<lte employees
because it focuses on relatively enduri ng ehar;leteristies that c;lnnot be <;hanged in the short
tenn. if m all. For example. telling a division manager thm she lacks initiative or a hotel
reservations clerk that he is impatient docs not give either employee much of a clue about
how to do the job differently.
When bt'!/{/I";of$ are used to appraise performance, the focus is on the actual behaviors
or actions an employee displays on the job: What an employee docs is appraised. not what
the employee is like. A division manager's beh,IVior might be appraised in terms of the
extcntto which she has launched successful new products and scrapped unprofItable exist-
ing products. A hotel reservations clerk might be assessed on his ability to make ac,:urate
reservations accommodating guests' requests and the extcnt to which he satisfactorily
explains unmet requests to guests.
Relying on beha\'iurs to assess perfurmance is especially useful bec,luse it lets
employees know what they should do differently on the job. For example, telling a hotd
reservations cierI; that he should explain why a certain request can't he met and should
answer guests' questions calmly and clearly regardless of how many people arc in line
w,liting to check in gives the clerk a lot more direction than simply telling hun he needs to
be more pmient. polite, and calm.
One potential problem with relying on behaviors to assess perfonnance is that sometimes
the same level of perfonnanee can be achieved through differl'1II behaviors. For example. two
managers may be equally effective at launching new products and scrapping unprofnable
ones. even though one reaches decisions through careful.long-tcffil research and deliberation
while tbc other relics more on gut instincts. To overcome this problem. perfonnance appmisals
sometimes focus on tk results of behaviors mther than on the behaviors themselves.
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 257

Whl.'n rewlls are usl.'d to appr.lisc performance, the focus is nOl on what employees do
on the job but Oil the ejfeds ofthl.'ir behaviors, or thl.'ir actual output. The performance of a
hotel clerk might be assc~sed in tenns of the numbcr of reservations handle<l per day and
on guest'- satisfaction rmings with their chel'k-in experience. When thl'rc arc many ways
to achin'e the same result. and the avenue the employee chooses is inconsequential. the
result itself can be a useful way of assessing perfommnce.
JuSt like the other two approaches. however. using results :llone to assess perfunnance has
its disadvantages. Somclirne~ results are not under all employee's contrul: A division's prof-
itability might suffl.'r because sales wl.'re lost when foreign trade regulations changed Ullex-
pecte<lly. A day's wOl1h of rescrV;ltions might be lost because of a computer malfunction.
Employees may also become so resultsoriente<lthat they engage in unethical pr.ldiccs such as
overcharging customers or failing to jX."rfonn impunant op.;anizational citizenship behaviors
such as helping their coworkers.
Sometimes organizations C,ln use both behaviors and results to appraise employee per-
fonnance.as IS the casc at USAA. an lIlSUf;mce and investment management finn. 5O It is a
good idea to appraisc bOlh behavior and results whell both dimcnsions of performilnce arc
imporlant for organil'.at ional l.'ffeet ivl.'ncss. In most sales jobs, for example. thl.' resu Its of a
salesperson's bdl<lvior (number of items sold) arc crucial. but tile kinds of behaviors
employed (treating custumers courteously and politely <lnd processing transactions efli-
cicntly) arc often equally impol1ilnl. BCCilUSC trait~ generally bear Ic~s dircctly 011 mallY
kind.s of jobs, thcy are not as useful in performance appraisals.

You're "the Managemen"t Exper"t

Promoting High-Quality Customer Service

Mark Milstein is the manager of an upscale sporting goods store. There are fifteen full-
time sales associates in the store who are paid, in part, based on commissions, The store
is more expensive than its competitors in the local market it serves, but it also stocks
higher-quality items that are difficult to find for the sports enthusiast. The store also prides
itself on outstanding customer service, When customers enter the store, they are
approached by a sales associate who helps them find what they are looking for and actu-
ally stays with them until they are ready to check out. The sales associates then escort
their customers to the checkout counter where they pay for their purchases, and the
cashier enters the ID numbers of the sales associate who helped them. Although sales
associates are paid the minimum wage per hour, the commissions on their sales can dou-
ble or triple their actual earnings. Milstein uses weekly sales per associate to appraise their
performances and works with new sales associates and those with relatively low sales to
improve their performances, Lately, however, Milstein has noticed a troubling trend. Fall
sales are up compared to fall sales a year ago, but so are returns, In fact. taking returns
into account, sales are actually down from a year ago. Milstein is concerned that perhaps
the sales associates are encouraging customers to buy items they may not need or want;
thus, the relatively high volume of returns results. Given that high-quality, individualized
customer service is the distinguishing competitive advantage of the store, Milstein is wor-
ried that his sales associate are perhaps too overzealous in their attempts to 'perform' at
a high level And he wonders if the way he appraises their performances and compen-
sates them might have something to do with it. Because you are an expert in OB, Milstein
has come to you for help. Does he need to change the way he appraises the sales associ-
ates' performances to promote high-quality customer service?
258 PART t • INDIVIDUALS IN ORGANIZATIONS

Choi(e 3: Methods of appraisal. Regardless of the "ppmach to pcrfomlance appraisal

OBJECTIVE MEASURES
Mea,ure, thal are bl"ed on Ia<:h
SUBJECTIVE MEASURES
Mea'ure, thal me ba>.c-d on
incJi"cJoal p.:n:epl,on'
GRAPHIC RATING SCALE
:\ ,ollj<:Clivc mea,urc on" h;~h
perfomlanec" eva]uatecJ along
a conllnuum
(fomlal or informal) and the types of information assessed (traits, behaviors. or results).
the measures lTlanagers use to appraise performarll:e C;ln be of two types: objective or
subjedive. Ohjl't.·tiw IIlcasures such as numeril:a!l,;ounts ;lrc bascd on fads. They are
uscd primarily when results are the focus of performance approi'a!. The number of
televisions a factory worker assembles in a d~IY. the dollar value of the sales a salesperson
m;lkes in a week. the number of patients a physiclan treats in a day. ;lnd the return on
I,;;lpit;ll. profit margin. and growth in inl,;ome of a bw;iness arc all objITtive measures of
performance.
Subjecti"e nlCllSures arc based on individuals' perceptions ,llld C;ln be used for
;lpprJis;lls b;lscd on tmits. behaviors. ;lud results. Becausc subjective measures are based
on peKeptions. they arc vulnerable to Illany of the biases and problems that I,;,lll diston per-
SOil perception (discussed in Chapter 4). Beeausc for Illany job., thcre is no alternative to
wbjective ,lppmisal me;lsures. rese;lrchers ,Iud rn,uHlgers have focused consider<lble atten-
tioll on the best way to deline these mcasures.
Typically. whell subjcl:tive measures arc used. managers identify spel:ifil,; dimensions
of performance (traits. hchaviOr>. or results) lliat arc imponant ill a job. Thcn they dcvelop
some kind of rating scale or measure to assess an illdividunt's standing on each dimension.
Various rating scates can be used. Thrt."C of tile most popular types arc gmphk rating scales.
behaviorally anl,;horN rating scales. and beh.\\'ioral observation sl,;ales (sec Exhibit 8.4).
Graphic rating scales can be u,ed to asscss traits. behaviOr>. or results. Behaviorally
anchored ruting scales and beh:lViorul observalioll scales focus exclusil'ely on behnviors.
Wilen a gnlphic nlting SClIlt' is used. the rater-the person responsible for the perfor-
mance appraisal-assesses lhe performanl,;e of an l'mploycc along one or more continua
with elearly spedfied inte-rvals. As indicated in Exhibit 8.4(a). for examplc. level of cus-
tomer service may be assessed by rating 11 snlesperson in temlS of how couneous she or he
is to customers 011 a live-point scale ranging from 'vcry discourteous' to 'very courteous:
Graphic rating scales arc popular in organizations bcl,;ause thcy are relatively easy to
construct and use. 51 Qne p01cntial disadvantage ofthesc <;eales is that differClll mlers may

EXHIBIT 8.4
Examples of Subjective Measures of Performance

~. G"phi. <u;ng """,te

H<>w coun"",u.... ho> ..1"p''X'fi .<>Wacd '''>':om.",?

• • •
N,,;,h<r
• •
d,><ou"'o<o'
nO' councou.

b. B""'ovion.ll~ onehond .u;ng ",at.

, 2 3 4 5 6 7
tgno'" K«p' Foit, '0 ,hank An."",,, Cornpl« •• c;..." A......ay< ,n..
,u.""",,, Wnom." ,us'ome" for 'u>tome" "anoOC"on. .ustome" ,ince..Iy,o help
...mon..,ci wa'''ng pu"'h ..... "I u ",,''''n. in a "moly pleasan,ly '''>tom"",t<><:af<
help unn.c..sanly promp,ly mann." and ofr." "om, to 'UO!
"",".nce .h... need,

Akno>,: Almon
"~, ~"""'y<
S;n«.-.Iy ,h.nks e"stome'" for pu.-ch~... 1 2 3 4 5
Pt..... ".1y gr.... wstom.rs 1 2 3 4 5
An.wers custom.... ' "Iu.."on. promptly 1 2 3 4 5
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 259

disagrec about the meaning of thc scale points. For examplc. whal is 'Yery discourteous'
behavior to one mter Inay be ollly 'discourteouS'lO anolher.
BEHAVIORALLY A bcha,-ior:llly alll:horcd nlting sclile (lJARS) allempts to overcome Illat problem
ANCHORED RATING by carefully defining what eacll scale point means. Examples of specitk work-related
SCALE (BARS) behaviors correspond to each scalc point.~2 Exhibit 8.4(b) is an example of a BARS r.lting
A ,ubjecti,e measure 011 which
for a salesperson on the counesy dimension. One potenlial problem with behaviorally
'I"'cir.,· wort<-relatNl b.:ha,-i<m
are c'aluated anchored rating seales is Ihat sometimes employees exhibit behaviors corresponding to
more than one point on the scale. For example. a salesperson may Ihank customers for Iheir
purchascs but otherwise Icnd to ignorc thcm. BARS can also lakc a eonsidcrable amount of
time and effort 10 develop and use.
BEHAVIORAL A bch:wioral observlItion scale (80S) overcomes the BARS problem of employees
OBSERVATION exhibiting behaviors corresponding 10 more Ihan one scale poim by nm only describing
SCALE (BOS) specific behaviors (as docs BARS) but also asking raters 10 indicate the frcquency with
,\ ,ubjective rnea'>Ure 011 which
Which an employee perfomls the behaviors. as shown in Exhibit 8.4(c).53 BOS, howe"er.
the t're<.JlI<ncy wjth whictJ an
cmr1o) c'C pcrfOl1l1' a heh",-"... " tends to be even more lime consuming than BARS for mters 10 complete.
;"dicatc"<!. These are just a fcw of Ihe Iypes of scales that arc available for subjeClive appraiS<lls of
perfonnance. As we indicated, each scalc has its advantagcs and disadvantages. and il is not
clear ,It this point th,l[ <lny one type is better 10 use th,ln <I[)Other. BARS ,!lid BOS can be a 101
more lime consuming to develop and lise than graphic rating sc~lcs. but they c~n be more
bendil.:ial for giving fct.-db.ack to employees bec'ause Ihey appraise more precise behaviors.

Choice 4: Who appraises performance"? We have bo.'Co assuming that supervisors ~re
the people who ~ppraise Ihelr subordinates· perform~nce. This IS usually a fair ~,sumption.
In most organizational settings, supervisors arc responsible for performance appraisals
because Ihey <lfC generally the mOSI familiar with their subordinates' bch<lvior and arc
responsible for motivating them 10 perform ~I ~cceptable levels. Sometimes. howevcr. self-
~ppraisals, peer apprais~ls. subordinate ~ppr~isals, cnstomerlclient ~pprais~ls. and
multi pic raters arc also used 10 appraise performanee.~4
Self-appraisal may offer some advantages because an employee is likely 10 be famil-
iar with his or hcr own lel'el of perform<lnce. But most people consider themselves to be
above ~verage, ~nd no one likes 10 think of him or herself as a poor performer. so ~ self-
appraisal is likely to be inflated.
Peer oflpraisaIJ arc appraisals given by an employee·s coworkers_ Peers are often very
f~mili<lr with perform~nce levcls. yel they m~y be reluet~nt to provide accumle appmiS<lls.
An employee may not w~nt 10 give his friend a poor rating. An employee m~y not w~nt 10
give hcr coworker a high raling if she Ihinks it will m,lke hcr look bad in Cllmpari,on.
Nevel1heless, reer evaluations can be useful. especially when employees are mcmbers of <I
team, ~nd the team·s perfonmmce depends on c~ch member being nlotiva!ed 10 perform at
a high level. Under these circumstances, team members arc motivated to provide ~ccurate
peer ratings beeauM." Ihc whole team suffers if onc member perform, poorly. By aceuralcly
appraising one anOlher's perfOrtllance, member;; can mOlil'ate each other to perform well
and ensure everyone docs their share of the work. It is for Ihis re~son th:11 Illany professors
who assign group projecls have Ihc members appraise each OIher·s performance. Pecr ral-
ings help to cnsure that no group Illcmber gel> a ·free ridc' or takes advamage Oflhe Olher
hardworking students in tile grollp.
SII!Jon!il/(l/e apprai!wls :Ire appmisals given 10 <I manager by the people he or she
supervises. Subordinates rail." the manager on, for example. his or her leadership behaviors.
In ordcr for subordinates 10 fcc! frec to give an aceuratc apprai,al (especially a negative
one), il is oflen desirable for the <lppraiS<lls 10 be anonymous so they need not fear rclali<l-
tion from their supervisors. Many universities nse anonymous student evaluatIOns to
appraise Ihe qual ity of Iheir leachers.
CUI"/olllerklielll appmisals arc another source of pcrformanec infonnation. Recall from
ClHlpter 5 Ihat some health m<lintell<lnCe organizmions, such as U.S. Healthcare ,Hid
A\'Med-Sante Fe. evaluale their physici~ns" performance. in pal1, on the b~sis of scores they
receivc on patient surveys. Thesc_ surveys measure whether Ihe doctors arc available for
emergcncies, provide clear explanations oflreatments, and show concern for patiems· needs.
260 PART 1 • INDIVIDUALS IN ORGANIZATIONS
360·DEGREE APPRAISAL
A p.:rfrnmOillce appmi...,] in which
an emplo)'",,', perform"",c i,
",,,Iualed by. numhc, of peur1..
who arc in a po,ition 10 C\alll(ltc
the cmplO)'.,.,,, pcrfonnancc ,uch
a, Jl<"C"". 'upe,i"",. ,ubordinat..,.
and cu,tom.."" or ehelil'.
The advalllage of using other sourecs of inform:llion. such as cuslmners. subordinates,
or peers. is that each of these sources is likely 10 be familiar wilh a different dimension of an
employee's perfomlance. BUI because each source has CQnsid<:r.lble dis:.dv:mtages if used
exdush'Cly. some organi zations rely Oil 360·degR'C <lpprais:.ls. III a 360-dc£ret' <lppraisal. an
employee's pcnorm<lncc is evalumed by a variely of people who arc in a position 10 evalualc
the employee's pcrfomlanee. A 360-degree appnlis:.l of a manager. for example. may indude
evaluations made by peers. subordinates. superiors. and clients or customers who are famil-
iar with the manager's pcrfornlance. The manager would Ihen receive feedback based on
evaluations from each oflhcsc sources. Wocn 360·degrcc appraisals are used, m[Ulagers have
to be carefullhal e(tch evaluator is familiar with Ihe perfonnanee of the individual he or she
is eV<llualing. Allhough 360-degree appr'lisals "all be uu'd for many differenl kinds of
employees. they are 1lI0S1 ~'(mlillOnly used for managers.
Thc growing popularity of 360-degree- appraisals allests to thc nccd for more fecdhack
in organizalions. And who is in a beller POSilion 10 give employees fee-dbaek lhan alilhe
different individuals lhey cOllie IIIto contact with on the job'! An employee's peers. for
example. may ha\'e a different perspect ive on his or her perforlllam.'e than the boss. A man-
ager who lads asseni\'encss when dcaling with supcriors may be too asscnivc and dicta-
torial when dealing with subordinates. Receiving feedb,lck based on evaluations from
these multiple sources has the pOlentialto provide employees wilh a richer picture of lheir
slrengths. weaknesses. and areas for impl\wcmenl.
The lcnding cooperalivc. Farm Credit Scrvicc Southwcst. rclies on 360-d c grec
appraisals for aboUI 50 percenl of its annual perform,mce .:lppraisa! process. Although the
company's l:h ief flllan"ial omcer. John Barkel!. found lhe proce,s a bit inti midating. he did
rel:ei\'e uscful feedback thaI he has subsequelllly acted upon. including the nccd I() com-
municate more with his subordinates. lJarkcll subsequcnlly inSlituted weckly mcetings
with his sl.:lff 10 open lines of communication and answer questions.~~
At Public Service Eleclric & Gas in Newark. New Jersey. manager Gordon
Smolllher's 360-degree appraisal indiealed he was 100 eOlllmlling and defensivc. which
resultcd in him dismissing other people's idcas withoul giving Ihem a chance. As a rcsult
of the appraisal. Smout her and h is boss PUI 10gether a pl:ln that included his taki ng a course
at a center spl:l:ializing in l:reati\e leadcrship and giving him private lessons with an exC(;-
uti\'e coach. Smouthcr's ratings impro\'cd dramatic<llly.S6
Experiences such as these poilH to the advantages of 300-degrce appraisalS-Ihey can
provide managers and otocr employees with valuable feedback lhey can use 10 improl'e their
perfomlanccs. However. there are also eenain polcmi:ll problems wilh 360-deg,.,..'C apprJis:.ls,
Some m:lnagcrs fear thai 360-dcgree appr<lisals might turn imo popu larily comeslS. with man-
agers who are well liked being rated more highly than thosc who may be less popular btn pro-
duce beuer results. Olhers fear that m<lnagers will be reluct:lnt to make llnpoplll:lr dt:cisions or
difficult choices oc-.:ause they lIIay ha\'c a negative cflCd on how lheir subordinates evaluale
thcm, On Ihc one hand. if appraisals arc anonymous. disgrumlcd subordinates lIlay seck
revenge by giving lheir bosses negmive evaluations. Qnll1e Olher hand. some bosses CQ:lch
their subordinates :md sollletinICs even threaten them to gel posilive r.uings. n
A manager at Cilibank indicated thai he re,:eivt'd a very negative appraisal fmm a sulxmli-
nate Illat was almost likc a peThonal anack: he was preuy sure it came fmm a poor perfonner.5S
At Baxter IlHenmlionul. although employees in the information lechnology unit were I'ery
familiar wilh each OlIICr's pcrfomlances. they were reillctanll0 provide any negalive evalua-
tions and gavc each other positive mtings because they kocw tlk: r.l\ings were being uscd for
pay raise decisions and the evaluations were nO! anonymous. Baxter dccided to colHinue using
the peer evaluations oot more for developmellt:ll purposes rather lhan decision making.!/!
Clearly. 360-degree appraisals have both advantages and disadv<llltages. In order to n:<tp
the bcnefils of 360-degree appmisals. research suggesls the appraisals should frx;us on
behaviors rathcr Ihan trailS or resu Its and 11][1\ much care be taken to cnsure appropriate raters
arc chosen. 'l1le research also suggesls thaI appraisals ,Ire more likcly 10 be IlOncst when tlICY
are anonymous. and mters should rt'Cei\'e training in how to usc tlk: ruting form.W
Rcgardlcss of whclllCr a fonnal 360·degree appraisal systcm is in place. org:mizmions
nccd to be careful Iha! managcrs and all employccs arc aC('uratcly appraised by individuals
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 261

who are knowledgeable aboutthcir behaviors. Subordinates can be ]XlMieularly knowledgeable

about their supervisors' bch,wiOfS but somctitl)CS lad the means to communicate this knowl-
edge in ways that can motivate their supervisors tu improve.l1lc Web-site ImpruveNow.l.'Ql11
provides a potential solution to this probJcm.l>t The site contains a 6O-item questiunnaire
subordinates can compkte to appmisc tile performance of their supervisors. After multiple
subordin;;ltes complete the foml independently online. the results arc Wbulated. and the super-
visor rCl."Cives specific fCl.-dback about how he or she IS doing in dirtcrent areas.1lluse areas
might indulk standing up for their subordinates and being supportive. rewarding them. or hav-
ing agood sense of what the organization or woO; group should strive for in the future.1>2
Lee Burnley and eight of her coworkers at Alliance Funding. 11 mortgage lending unit
of Superiur Bank FSB located in Orangeburg. New Jersey. completed the appmisals online
for their supervisor Sonia Russomanno. Russomannu rcrei\'Cd an overall score of B on the
appraisal. based on specitie dimensions in the rating form. Her reaction? At ftrst. she was
grmefulthat her «lting wasn't worse btl( lhel\ let down that it wasn't bener. More impor-
tantly. she realiz<:d the value of gelling honest lCedback from her subordinates to help her

EXHIBIT 8.5
Problems and Biases in Person Perception That May Result in Inaccurate Perlormance Appraisals

Problem or Bias Description Example of Problem or Bias leading

Stereotype A type of schema (abstrad knowledge
structure stored in memory) built
around some distinguishing, often
highly visible characteristic such
as race, gender, or age.
Primacy effect The initial pieces of information that
people have about a person have an
inordinately large effect on how that
person is perceived.
Contrast effect People's perceptions of a person are
influenced by their perception of
others in an organization.
Halo effect People's general impressions of a
person influence their perceptions
on specific dimensions.
Similar-to-me effect People perceive others who are
similar to themselves more positively
than they perceive those who are
dissimilar.
Harshness, leniency, When rating their subordinates'
and average performance, some supervisors tend
tendency biases to be overly harsh, some overly
lenient. Others tend to rate
everyone as about average.
Knowledge- Perceptions of a person are
of-predictor bias influenced by knowing the person's
standing on a predictor of
performance.
to an Inaccurate Performance Appraisal
A 35-year-old supervisor gives a 60-year-old
engineer a negative performance
appraisal that indicates that the engineer
is slow and unwilling to learn new
techniques although this is not true.
A subordinate who made a good first
impression on his supervisor receives a better
performance appraisal than he deserves.
A subordinate's average level of performance
is appraised more harshly than it should
be by her supervisor because all the
subordinate's co-workers are top performers.
A subordinate who has made a good overall
impression on a supervisor is appraised as
performing high-quality work and always
meeting deadlines although this is not true.
A supervisor gives a subordinate who is
similar to her a more positive performance
appraisal than the subordinate deserves.
An exceptionally high-performing secretary
receives a mediocre performance appraisal
because his supervisor is overly harsh in
rating everyone.
A computer programmer who scored highly
on cognitive and numerical ability tests
used to hire programmers in an organization
receives a more positive performance
appraisal than she deserves.
262 PART I • INDIVIDUALS IN ORGANIZATIONS

improve her performance. For example. as a result of the feedback she receh'ed.
Russomanno realized that she needs to work on using rewards to motivate her suoordi-
nales. She plans tu have her suoordmates evaluate her again ,11 the ImproveNuw.cum Web
site in the future tu see how she is doing. 6 .1

Potential Problems in Subjective Performance Appraisal

Recall from Chapter 4 that a number of problcms and biases can result in inaccurate
perceptions of other people in ,UI organization. These problems and biases (recapped in
Exhib)t 8.5) can be particuklrly troublesume for subjective performance appraisills.
AWilreness of these perception prublcms can help prcvell! these problems and biilses from
lcilding to an inaccurate appraisal.

Pay and the Employment Relation

The ,Iccurate assessment of performance is celltr,llto the goals of motivating employees to
perform al a\:ceptable levels and improving the clfectiveness of managerial decision mak-
ing. One area of de\:ision making thai oftell hilS prufound cffeds Oil the motivation of all
members of an organization-managers and employees alike- is the distribution of out-
comes. such as p,ly. benefits. vaC;ltions. perks. promotions and other career opportunities.
job titles. oilices. and privileges. [n this section. we focus un the uulcome that is one of the
mOSI powerful of alimOlivation tools: pay. Pay can be used not only 10 motivate people to
perform highly but also 10 motivatc them to join and rcmain with an organiZ3liOIl, Thus.
pay is a central aspect of psychological contracts and a key component of the cxch,ulgc
relationship between employt'Cs and an organiziltioll.
The principles of operillll conditioning disc·usscd in Chapter 5 and all of the
approachcs to motivation covcrcd in Chapter 6 suggcst that outcomcs should be distributed
to employees ("omingem on their performing desired organizational behaviors:
• Operant conditioning theory suggests that to encourage the learning of desired
organizational behaviors. positi\"e reinforcers or rewards should be distributed to
employees contingent on performan\:e.
• Need them)' suggests thm whcn pay is contingcnt on performancc. cmployces arc
motivated to perform because doing so will help satisfy their needs.
• Expectilncy theory t'lkl.'s into ~c\:ountttle fau that pay is an out\:OlflC with high
valcn\:e (highly desirable) for most employees and thai instrumentality (the associ~­
tion bclween performance and outcomes) must bc high for mOl iVai ion to bc high.
• Equity theory indicates th,1( outcomes (pay) should bc distributed in proportion to
inputs (performance).
• Procedural justke theory sugge,;ts thill the methods used to evaluate performance and
diiqribute pay nccd to be fair.
From a learning and mntivalional per,;pcctive. thc message is clear: Whcnevcr possi-
ble. pay should be based on performance ,(>I

Merit Pay Plans

MERIT PAY PLAN A plan th~t b~ses pay on performance is often cnlled a merit pa)' plan. 65 When pay is not
ha"".
A plan thai pa)' on ooscd on merit. it might be bilsed on the p<lrtkular job an employee has in an organization
performana.' ,
or on an cmployce's tcnurc in the organizillion. Mcrit pay. howevcf. is likcly to bc much
more motivational than pay thaI is not based on pcrfoml~nce,
Merit (XlY plans tend to be used most heavily at the upper levels in organizations.66 but
bolsing pay 011 perfonJlillKe h<ls bt:en shown to be effective for employees a1 lower levels in an
organiz.ation·s hicrarchy as well. Many organizations are increasingly using mcrit pay to
aUrac!. motivate. and retain employees. Manufacturing companies. accounting finns.law
offices. and investment bomb have all stepped lip their usc of mcrit (Xl)' 10 motivatc cmployccs
at all levcls. 67 Additionally. merit (XlY is an importam mOlivation tool not only in the Unik'd
Smtes but in many olher countrics as wcll such as Great Britain. Japan. and Gcrmany.~
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 263

Should Merit Pay Be Based on Individual, Group.

or Organizational Performance?
One uf the most nnpurtant choices managers face in designing an ellectivc merit pay plan
is whether to base merit pay on individual, group. or organizalional performance. The fol-
lowing guidelines, ba",d on the theories of learning and mOlivation di",usscd in previous
chapters. can be used to make this choice:
I. When individual performance can be accurately assessed (for example, the number
of cars a salesperson sells, the number of insurance policies an insumnce agent
writes, a lawyer's billable hours), the maximum mOlivational impact is obtaint-d from
b<lsillg pay Oil illdividual performancc.6'I
2. When employees are highly ill1erdepcndent-when what one employee docs affects
the work of others-and individual performance levels c:mnot be accurately
assessed, an individual-based pay-for-performance plan is not a viable option. In this
case, managers can implemell1 a group or organization·level pay-for-performance
pllln. Under such a system, employees' pay levels depend 011 how well their group or
the organization as 11 whole performs. It is impossible. for example. 10 accurately
as",ss the performance of individual members of a group of carpenters who joimly
design and construct large, elaborate pieces of custom furniture. Together they pro-
duce pieces of furniture that none of lhem could con>1Tuct alone.
J. Wht:n organiz,Hional effecliveness dclX'nds on individuals working together. t'OOpcralmg
with each OIher. and helping each uthcr out. group- or org'mization-ba.<;<."(/ pay-for-per-
formancc plans may be more appropriatc than individual-based plans. 7ll When a team of
rese~u"Ch scientists works 10gcther in a laboralory to try 10 come up with a cure for a dis-
ease such as AIDS. for example. it is essential for group members 10 share their insights
and tindings with each OIher and build upon each other's findings.

Sometimes it IS possible lu combine clements of an individual and group or company-

wide plan to get the ocnefits of lxllh. Linnlln Electric. for example. u,es a combination of
individual- and organi~ation·based plans. 71 Each year, Lincoln Electric establishcs a bonus
fund. the size of which depends on the whole organization's perfornmnce lhat year. Money
from the lxlllUS fund is then distributed to employees on the basis of their individual levels
of performance, Lincoln Electric employee, are motivated to cooperate and help each
othcr because when the firm as a wholc performs well. everybody benefits by receiving a
largcr bonus ,11 YCllr--cnd. Employees arc also motivated to perform at a high level individ-
ually not only lxx:ause their individual performances determine their share of the fund but
also OCGIUS<: thcy arc paid on piece-r..ltc basis, whi('h is discussed next.

When employees ~re highly

interdependent in """,t team.' and
iooividual pcrfonnanee levels
,-,mnot be ",x-mately 'l',,-'Sscd,
managers can implcnX'm a
team or mCanizaliun-k"cl
Ilily-for·pcrfonn,ulCe p1"n.
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COMPARABLE WORTH
1lJe idea mIt joI,ls of equi'alent
'-all>: lO.n url'aml"hOI1 sl_lOW
cart)' tIM.' s;j""'!Xli r.!leS "'ganlles.s
ofditf"",,,,,,,s in the "'Orl. Jnd
the pcr>onal "harnctc,;stic' of the
employc"C.
CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 265
programs thm usc some sort of defeITCd payment (such as contributing employees' shares of
profots to their retirement funds).74 If an organization has a bad year. then no money may be
a\~llable for profit sharing regardless of individual or group perforlnance levels,
The Ethics of Pay Differentials and Comparable Worth
It is "'ell established that women cam less nKltley than men. Women cam approximately 74
cents for evel)' dollar earned by men.7~ Some of the gender gap in rates of pay may be due to
overt discriminmion or to the factth~,t some mell h,lve more experience or bener qualific~l­
tluns. But there tS another reason for these discrepancies in pay.76 This subtle furm of dis-
crimination works as follows: Jobs that women have traditionally held (,\S nurses. teachers.
secretaries. librarians. and so forth) have lower pay rales lhan jobs that men have traditionally
held (as carpenters. mnnagers. doctors. and COnstruction workers. for example). even though
the jobs require similar skilllevcls. and the organization values them equally.
Pay differemials between men and women have the potcmial to adversely alkd the
motivation of high-JX'"rforming women who perccive they arc not receiving as much pay as
the job is worth. From the perspective ofequity theory. women who pereeive themselves as
\:ontributing levels of inputs equivaletll to those of their male counterparts but receiving
lower levels of outcomes (in parti\:ular. pay) may be motivated to reducl." their inputs
(perhaps by exl."ning Il."ss effort) 10 rl."store equity. More critical than their effccts on
motivation. pay differentials based on gender. age. rnce. ethnic background. or any other
nonperformancl." characteristic are unethical,
The principle of l'Omparabll' worth suggests thm jobs of equi"alent value 10 an orga-
ni7.atiOFl should carry tile same pay rates regardless of diffe!"Cnces in tile nature of the work
itself and the personal characteristics of tile people performing the work. 17 Pay rates
should be determined by factor> such as cll"ort. skill. and job responsibility-not by the
type of person who usuaJJy JX'"rforms the job. The gender. race. or l."thnic background of
jobholders is an irrelevant input Ihat managers should not consider when they establ ish pay
rates for different positions. When pay rates arc determined by compamble worth. it is
more likely that all members of an organization will be mOtivated to perform at a high le"el
because they are more likely to perceive they arc being paid on an equitable basis.
Although comparable wonh makes a lot of sense ill principle. it has bccll hard to put illto
practice. Organil[]tions have resisted basing s.11aries on compamble worth because pay levcls
for some )Obs would have to be r.tiscd (organizations rarely lower pay rates). On a more fun-
damental Ic"cI. however. dctcmlining what thc valuc or worth of a job is to an organization
and comparing this value to that of other very diffe!"Cnt types of jobs is diffIcult. Such compar-
isons are oftell value laden and the source of considcmble disagreement. Even so. compamble
worth is an ethical iss'te that manager> lK't-xl to be aware of and a goal wonh striving for.
Anothcr pay diffcrential that has been rcrciving increasing attention is the difference
between the pay received by those ~ltthe very (OP of an orgalli7Jltion and the many employees
under them. Today. the a\'emge CEO earns ol'er 430 times what the average hourly worker
earns.7~ While some employees are a\:tually seeing their pay being \:ut and r.,iscs eI imi nated.
CEOs. Oll the other hand..sccm to be earning c"cr IllOrc money.79 For cxample. the a"erag\."
annual compensation package for CEOs of large public companies is around S10 millioll
with some CEOs eammg many tltllCS this amounl.l;O From the opening case. this is clearly
not the case at Costco whcre CEO Jim Sincgal belie"es that being \:ost-l:onsdous dtx:s not go
hand·in·hand with vast pay diffcrcntials.~ I Huge pay differentials octWCCIl those at Ihc top of
the corporate hierarchy and those lower dowtl mise concerns aoou! distributive justice. espe-
ci<lll y when lay-.offs take place. salaries are cut. or mises are mini mal.
Careers
1llerc arc OtttCOtncs in addition to pay that arc P.1rt of many employees' psychological con-
tracts and central to their exchange relationships with their employers. One of these outcomes.
caft-'Cr opponunilic;;. is related not just to the spL'\:ific job a person holds ttxJay but also to the
johs a person expect.s to perfonll or advance to ovcr the course of his or her cntirc career.
266 PART t • INDIVIDUALS IN ORGANIZATIONS

Career opportunities often include things such as heing in a fast-track management

program or getting a promotion. but they can include other spedfic career-related out-
comes such as having the opportumty todo the kind of work you really want to do. rcceiv-
ing career-relevant experiences and training, and having exposure to people who can help
you advance your own career. Many of these career opportunities affect intrinsic motiva-
tion levels beC:luse they help people pursue the kind of work they enjoy.
SOrnetl1llCS It is possible to gi"e employees the chanl:e to do what they love. e"en
when they arc performing a job that is not direClly related to their career aspirations. At a
reS!:lurant called Applause in New York City. many aspiring singers and actors take what
they hope are temporary jobs waiting tables to support themselves because Appl,ulse
allows waiters and waitresses to sing and entertain customers while serving meals. The
restaurant. thus. gi"es aspiring singers and actors the chance to do what they lo"e. to gain
cxperience performing in front of a livc audience. and mect customcrs who might he talent
scouts. directors. and producers who. of course. can further their careers.
Bolh organizations and individual employees should engagc in career management.
When careen; are effcctively m;maged. organizations make the best use of their members'
skills and ahil itics. and cmployees are motivated to perform at high levels and tend to he sat-
isfied with their jobs. all of which help the org<lnization achie"e its goals. To use C:lrcer
opportunities as a molivationaltool. managers must understand what call."ers are. how pl.-ople
progress throogh them. and how they can be managed by both employees and organizations.

The Nature of Careers

CAREER A ellreer can be defincd as the sum of work-rel:llcd cxperiences throughout onc's Iifc-
The _um of "'or\.-retated timc.S2 A cmeer includes the number and types of jobs a person has had as well as the dif-
experience_ thruughom a ferent organizations a person has worked for.
p.;r",n', lifelime,
Why are individuals concemcd about lheir careers? A career Gut havc major effccts on a
I~rwn's economic and psychological well-being. At a basic economic level. work provides
roost people in modem society with the income thcy ne~"(\ to support thcmseh'es and their
lov(.'d OIlCS and PUlSUC thcir personal interests such as their hobbies and IClsure al:tivities. From
this cconomic perspective, career opportunitics are an important sourcc of ex/rinsi,. mOlil'lllir!/!
for employces.~3 As a source of psychological wcll·being, work can provide personnl fulfill-
ment ,1Ild give a sense of meaning and purpose to people's lives. From this psychological per-
Sped i":. call.ocr opportunities arc an important SOUIU: of illlrillSi/' !IIotimliOlI.
Why are organi7-lllions cnncerned with the careers of their memhers? Effectively man-
aging careers helps an organization motivate its members to :lchieve individual and organi-
wtional goals and perform at a high level. Effective career management in an organization
means that there will be well-qualified employees at al1le"els who can assume more
responsiblc positions as needcd to help the organization achieve its goals. Organizations
can help motivate their members through career management by helping them dcvelop tlte
knowledge. skills. abilities. and other inputs needed for high levels of pcrformances~ and
by rewarding high performers with career opportunities such as valuable e:l:perienl:e and
training. choice job a.ssignmell1.,. and promOlions.

Types of Careers
Although every individu~lrs career is unique. careers f,lll into four general categories:
steady-statel:areers. Ii near l:arcers. spira I careers. and transitory l:areers.s~

Steady-state careers. A stcady-state carecr renects a one·time commitment to a

certain kind of job that is maintained throughout one's working life.lI!'> Employees with
steady-state careers C:1Il become very skilled at. and intrinsically motivated by. the work
thcy do and often see themselves as e:l:pcrts, A family doClor who sets up a medic;11
practice in her hometown whcn she finishcs her medical training and keeps tlte same
practice throughout her carecr until she rClires at agc 70 has a stcady-statc career.

Linear careers. In a linear career. a person progrcsses through a sequcnce of jobs. and
cach job cntails progress ovcr thc prior one in temlS of responsihility, skills needcd, levcl

Some postal workers ha"e
slcady-statc careers.
BOUNDARYlESS CAREER
A <'al"'" that i, n<>llieJ to a
,ingle OTj!aJ1I£"tion and in ",hieh
" pcf'><ln has a 'ariel) of ,inds
of", mi c'p"ricnces in ditlcrcnt
organlzauon,.
EXHIBIT 8.6
Career Stages
CHAPTER 8 • PAY. CAREERS. AND CHANGING EMPLOYMENT RELATIONSHIPS 267
in the hierarchy uf an urganization. and so un.~7 Empluyees can stay with the same
organization ur mo'"e from company to company as they pursuc lincar careers. Edwin L.
An!.l. former chainnan of Procter & Gamble. staTled working for Procter & Gamble over
40 years ago ill a 10w-le"el job and worked his way up lhecorporale ladder through ellch of
the corporate divisions 10 assume the lop )Xlsition. 8ll
Spiral careers. In a spiral career. a person holds different types of jobs that build on each
other but t.::nd to be fundmnenlally differcnt. 8'1 An associate professor of management with
a spiral carecr leaves university tcaching and rcscarch tu head up the human resources
department at a large company. then. after working at that job for 10 yean;.lcavcs to start a
consulting company.
Transitory careers. A persun with a transitory career changes jubs frcquently. and cach
job is diffcrclH frolllthc one before il.90 Aftcr graduating from eollcge. Paul Jones workcd
as the manager of a hardware store for two years. then worked in a bank for a year. and is
currently tntinmg to become a )Xllice officer.
Career Stages
Although each person" carccr is unique. there arc certain career stages tllat at Icast some
people seem to progress tllrough. And cven if a person dues not progrcss through eacll
stage. he or she experiences some subset of the stages. Each stage is associated with
challenges tu bc met and tasks to be taCkled. R<:scarchers disagree about the eXact numbcr
of career stages: hcre. we discuss ft\·c stagcs thm arc useful to undcrstand a person's carecr.
even if cach ofthcsc stages is not experienced to thc same cxtent (sec Exhibit 8.6).9 1
More oflen than not. these career q,lges <Ire experienced in different organiz1ltions.
As we have said. given the high levels of uncertalllty in the environment. lay-oifs. out-
sourcing. and incrc<lscd global competition. many peoplc's psychological contracts do nOi
include expectations of a lifelong career with a single organization or even a relatively
long-term relationship. The boundllr)'less career captures the idea that eareers are not
tied to (or bound IU) a single urgani!.ation and that peoplc will havc a variet), uf work
Pr<p.r:"ion .... Org.n,zOfion.l ....
for work <n.')'
268 PART t • INDtVIDUALS IN ORGANIZATIONS

experiences in different organizations ovcr the course of their careers. Q2 Boundaryless

careers arc becoming increasingly prevalent in the Ullited St'l1esyJ

Preparation for work, During the first stagc, individuals must dC<.:ide wh<lt kind of
career they want and learn what qualifications and experiences they need to obtain a good
career-starting job?l Critical tasks faced in tile preparation stage involve acquiring the
ne<.:essary knowledge, skills. educatIOn. and training eitller from formal classroom
edu<.:ation or from on-the-job apprellliceships or OIher programs.
Pcrsnnality, ability, allitudes. and values are among the factors that affect initial career
choiee.95 lndividu,ds who are Iligh orllhe Big Five dimension of extraversion (sec Chapter
2), for example. lIlay tend to gravitate toward careers such as S<lles that ("(:quire a lot of social
imeranion with Olhers. Individuals with cxception<ll numerical abilities lIlay le<ln toward a
career in engineering. A person who has extrinsic work I'alues (Chapter 3) and v<llues work
for its eOrlsequerlccs may choose ,I law career earning him or her '1 higll income. By contrast
a person who has intrinsic work values and values work for its own sake may choose a nurs-
ing career leading 10 feelings of personal accomplishment and fulfillment.
A recent sludy by researchers Jacquelynne Eccles and Milia Vida sought to undcrstand
why young men and womell who desired science careers lended to concentrate on different
subjects, with women being more likely to focus on the biological sciences (indudmg
so(,ial science. environmelllal scien(·e. and medicine) rather than mathemalicall y based sci-
enccs such as physics. cnginecring. astronomy, and information tcchnologyY''' Evidently, it
seems thatlhe young women in the study were more people oriented and saw areas such as
medicine as more social and important for society. Young men who were more people ori-
ellled also were morc likely 10 go into the biological seiences,hut on Ihc whole. young men
were more interested ill the mathematical sciences than young womCrl'n Ecdcs suggests
that educators need to focus more on communicating to young people how different kinds
of careers cOll1ribute to society. For ex'lmple, engineers dcsign many things that help pL'Q-
pic, ranging from safe, functional buildings. to whec1chairs and other medical equipment
that improve the quality of life for the disablcd.98 By having more information about how
different jobs and careers contribute to society and help people. young women and men
will be able to make more informed career <.:hoices.

Organizational entry. During thc second stage, people try to find a job that will be a
good start to their choscn careers. People in the enlry stage find out as much as they can
about polential jobs and organilations from variolls soun;es, including business
newspapers and magazines, collcge placement offices and career/job fairs, company-
sponsored information and seminars. and personal contacts.
Once job seekers have gathered lhis information. they want to become jobholders.
Gelling an ill1erview with an organization you're interested in is sometimcs as simple as
signing up with a company representative visiting on campus or gctting 'Ihc friend of a
friend' to put in a good word for you with his wife. who is a manager at the company.
Once an interview is scheduled. it is crucial to make the most of it. Finding out as
much as possible about the (;ompany, doing practice illlerviews, and thinking of interc.>ting
questions to ask the interviewcr and good answers to frequell1ly asked questions (for exam-
ple. 'Where do you sec yourself in fil'e years?' or 'Why do you want 10 be an account;tnt'?')
arc things job applicants can do to increase their proSpcdS. In Chapter 4, we discussed
many of the factors that affect perception and, thus, both how intervicl'.'ers perceive job
applicants and how job applicants can actively influence the perception process through
impression m'Ulagement. We also expl~lincd how pereeption is distorted by biases such as
the primacy ciTed, which leads interviewers to make an initial decision about someone in
the first few minutes of the ill1erview and Ihen spend the rest of the interview sclectively
hearing and seeing things that confirm that inilial impression. In an interview, then. job
applicants must make a good impression from the mirlute they walk in the door.
In addition to selling themscl\'cs to an organi7~ltion. applicants also need to find out as
much information as they can about the job tlley arc seeking, tlleir can::cr proSpeCIS with Ihe
organization. and the organization as a wholc to make a good choice. Sometimes what people
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 269

Ihi nk a job or an organization will be Iike i, very differem fmm what they actually experience
on Ihe job. A new assistant to the division president might find. to her dismay. that her job is
really a secretarial position ;lnd not the start to the m:lIlagement career she enl'isions.
Organizations shoulJ proviJe applicants with accurate information aboutthc jobs they
apply for. their career prospects. and the organizmion as a whole. Sometimes. in an effort
to attract outstanding applicants who might have ,everal job offers. members of an organi~
ziltion might be tempteJ to paint a rosy picture uf what their organization has to offer. This
practice Ciln lead new hires to c.\pericnce Jisappointment anJ negative allituJes. both of
which might prompt them to quit. Rescarch ha.s found thm organizations that disseminate
realistic job information can reduce tuntOVer.9'i

Early carli!er. The early career stage starts once a person has obtained a job in a chosen
cmccr, TIlere are two Jistinet steps in this stage. TIle first step is I'J/IIbliJhl/ll'll/. Juring which
newcomers are mutivateJ to ICilm how to perfoml their jobs. what is e.\pc<:teJ of them. anJ
more gcnerally how to fit in (see Chapter 10).100 The second step is ,whit· reI/Will. 10 I Onn.'
newcomers have mastered their jobs and 'know' the org'Ulization. they arc motivated to
accomplish something worthwhile nnJ mnke a significant contribution to the organizatiun.
Achievement can mean differelll things to different people. For some. achievement is
synonymous with moving up the corporate ladJcr: for others. it can mean becoming an
expert in a certain area or devising ereatil'e solutions to difficult problems.
Organizations can Jo several things to help ensure members are motivateJ to achieve
individual. group. anJ organizational goals. In Chapter.> 6 anJ 7. we dlscusseJ how organi-
zations motivate members to perform at high levels and how jobs should ideally be
designed. In addition. managers need to convince employees they are able to achieve diffi-
cult goals (h,lVe high expectancy) anJ will receive the outcumes they desire when they do
(have high instrumentality),
According to equity theory. managers must also distrihute outcomes (pay, st3tus.
choice job assignments. promotions. and other career opportunities) to employees based
on thelr inputs to the urganization (abilily. education. experience.tinle. anJ effort). E:Jrlier
in this chapter. we saw the importalll role that performance appraisals can play by proviJ-
ing employees with feedback to motivate them, Accurate performance appraisals help
employees assess their own levels of achievement. detcnnine how to improl'e in the future.
and more generally assess their career progress.
Iu addition to identifying wocre and how they Ciln make the most valuable contributions
to an organi7ation. individuals can advance their careers Juring the achievement step by
seeking out a mentor (see Chapter 4) atld setting their own career goals. Gelling help from a
mentor has been founJ tu increase levels of pay atld pay satisfaction and the rate of promo-
tion for protcges. to ! Although it has commouly been assumed that mentor.> M:ek out protcges.
pmleg6s can and do seck out mentors. One recent study found that employees who had an
imemallocus of control. were high on self-monitoring. and were low on negmive affectivity
(Chapter 2) were must likely to sed out and obtain help from a mentor. Moreover.toc men-
toring dearly benetited the employees in tcrms of salary levels anJ the cxtent to which the
proteg6s felt good about their accomplishmcnts and llle progress they were making. lII .l
SOllie organizations l}<lve formal memoring programs that assign experienced member.>
to newcomers. Often. however. mentoring is an informal process in which mentor.> and pro-
teg6s seck e;K:h other out because of some common interest or oonJ. One researchcr who
interviewed successful working women found that 77 perecnt of them had received help
from a mentor. Jennie Coakley received extensive help from her mentor. Ronnie Andros.
when she began te~K:hing the fjlih grade at Columbia Elementary Schoul in Fairt:1x Count)'.
Virginia. AnJros helped CO;lklcy cope with many of the challenges ncw teacocrs face. Por
example. Andros clarified official rules and procedures. intnxluced Coakley to important
school <ldministrator.>. and gave Andros tips abotJl how 10 obtain textbooks.
/I.-1entor> are often in the same organizations as their protegh. bllt sometimes proteges
can obtain help from mentors outside their organizations. For example. Lee Cooke was the
office manager of the American Automobile Association in Washington. DC, when he met
his mentor at a local Rotary Club meeting. Lee's mentor was an orchid breeder. and their
270 PART t • INDIVIDUALS IN ORGANIZATIONS
CAREER GOALS
1lIe eXJl<-"fieoces, 1"";1;,,,,,, {)I" job,
thai emplo}~..,s woukllike 10 ha"c
in the worse nf their "",,:cr;.
CAREER PLATEAU
:\ po' ilion fn~n wht<:h the <:h<".... e'
I,f ,lllta'niog a po'o•• ''''' <If a j>h
with llYII'e "-"Sf'O'I'ibilil) be<:ome
wry ~maJl.
relationship eventually led Lcl.' to land a position with the Aml.'rican Orchid Society in
West Palm Beach, Florida. t().l
In 3ddltion to seeking out the help of a mentor. employees C3n also adv3lh;e their
C3reers by formulating <.:areer goals. [n Ch<lpwr 7. we s.1id that goals are useful motiva-
tional tools be<.:ause thl.'Y help to focus employees' attention and elTon in the right direc-
tion. C3fCl.'r goals are the experiences. positions. or jobs that employees would like to have
In the <.:ollrse of their careers. IOS Cart-'Cr goals ,Ire good guides for achievement because
they help employees de<:ide what adivities to eon<.:entrate on to advam;e their e3reers.
Midcareer. Employees in the midcareer S11lgc have generally been in the workforce
betWl-en 20 <lnd 35 years and face the challenge of remaining productive. Many employees
achieve the height of career ~ueeess during the mide<lreer stage. as exemplifiL"d by current
or one·time CEOs SC011 McNealy of Sun Microsystems. Steve Jobs of Apple Computl.'r.
John Chambers of Cisco Systems. Carly Fiorirta of Hewlen Packard. and I',u Russo of
Lucent Technologies. Many other midcareer employees. however. need to come to terms
with career plateaus. obsolescence. <lIUJ m<ljor career changes.
A person is said to have reached a e;m.'('r plateau when thl.' chances of being promoted
within his or her own organization or ,mother organi7~1tion are slim. tt)) There ,Ire several rea-
sons why employees reach a cafL'Cr plateau. First. because of the hiermchieal nature of most
of'Janiz-<lliol1~. tocre arc fewer and fewer positions to be promoted imo as employees advancl".
Sl'(:Oltd. competition for upper-level positions in organi7;1tions is itl1l.'nse, and the number of
these positions h;;ts been reduced because of downsizing. 107 Third. if some employees delay
retirement past the tr.lditional age of 65. their posi tions do not 0!X'n up for midear<.-er employ-
l'CS to assume. trnl Finally. changes in teehm)!ogy or the lack of imponant new skills altd abili-
ties may limit the extetl1to which employees can advance in organi7;1tions. 109
How can organizations help 'plateaued' employees remain satisfied. motivated. ,11ld
productive? Encouraging lateral moves amI job rotation is often an effective means of
keeping plateaued employees motivated when they no longer have the prospect of a major
promotion to work toward. Chevron is one of many organizations using this strategy.IIO At
the SAS Institute (see lhe opening case for Chapter 6). all employees arc encouraged and
have the opportunity to make lateral moves and learn new skills. II t
What steps can plateaul.'d employees take to remain valuable, motivated members of the
organization who are satisfied with their jobs') They might take on the role of mentor. They
might become 'good citizens' of their organizations by suggesting changes. Improvements.
amI generally engagmg in the various forms of organizational citizenship behavior diS(;ussed
in Chapter 3. Employccs in early career stage~ often concentr<tte on activities that advance
their careers and do not take the time to do things that help the organization as a whole.
Plateaued employees. who oflen have a good understanding of their organiz,ttion. are some-
timcs in an cspe<:ially good position to hclp start a major company-wide recycling program.
estahlish an outreach program to l"ncour.tge ml"mocrs of an orgatlization to voluntccr time to
community causes. or organize social activities such as company picnics. for example.
Employees face obsolescence when lheir knowledge and skills beeonle outmoded amI
prevent them from effectively performing their organizational roles. ObsolescelKe is
caused by changes ill tl'(:hnology or in an organizat ion \ competit ivl.' e nvironllll.'nt thm alter
how jobs arc performed. Organizations can help prevent obsolescence by providing their
members with additional training whenever possible amI :t1lowing employees time off
from work to take courses in their fields 10 kcep them up-to-date. Whenever pos~ible.
employees should sel.'k out additional training to kel.'p their skills current.
Late career. The late-career stage extends as long as an individual's career is 'Ictive.
ObsoleS(;ellel" and other potentialmidcarcer problems also C<lffY over into the late-cafL'Cr
stage. and it is imponatl1 for employees and organizations to takl.' some of the steps discllssed
earlier to overcome these problems and help older employees remain motil'ated. productive.
and satisfied. Unfortunately. age-related stereotypes sometimes cause members of an
organizlltion to pcfL'Cive older elllployees as slower. re~istant to change. or less produdive than
younger l.'mployel.'s. although this characterization is simply 1l0! true. Organi7-<ltions nccd to
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 271

dispel these myths by educating their members about the capahilities and contributionsofthdr
most senior membcrs. Some older employees choose to continue working at their current
occupations. others switch occup"tions. and still others choose to voluntl'Cr in nonprofit
org"ni lations. As indi""ted in the following Focus 011 Diversity. as the 'baby !xx11l1' gencr.lIioll
enters their 60s. more and more of them are choosing to continue working and making
significalll cOlllribut ions to their organ izations. oonlmUllities. and society as a whole.

Focus on Diversity
Older Workers Continue to Make Valuable
Contributions

Approximately seventy-seven million Americans are classified as baby boomers, meaning

that they were born in the post World War II period of economic posterity between the
years of 1946 and 1964. 112 As baby boomers begin to enter their 60s, more and more of
them are planning on continuing to work past traditional retirement ages. According to
studies conducted by AARP (American Association of Retired Persons), only 20 percent of
baby boomers plan to retire when they reach age 65 113
And many companies are seeking to retain the valuable contributions of their older work-
ers by providing them with training opportunities and benefits Take the case of Frederick
Simms, who at 68- works for Consolidated Edison Inc a poNer company in New York. 114
Simms is an emergency
field manager who has
been with Consolidated
Edison for 49 years and
has a vast array of experi-
ence dealing with emer-
gencies both large and
catastrophic (such as the
tragic 2001 collapse of
the World Trade Center)
and more minor (such as
broken pipes and water
o..__ J mains). Simms is willing to
Many older workn; continue 10 make \"alu:lblc contributions to their work sixteen-hour days
jobs and organizations. when an emergency war-
rants it, and his gcxxJ working relations with Fire Dept. brass and other emergency personnel
in New York City are invaluable.
United Technologies Corporation (UTC) spends over $60 million a year for its employees
(of any age) to leam nEW things through courses and training programs taken during their free
time through its Employee Scholar Program. 115 Many older workers take advantage of this
program to learn new skills such as Ed Perez, Perez, 62 years old and a lead mechanic at the
Hamilton Sundstrand unit of UTe in Miramar, Florida, is going to school in his spare time to
obtain his bachelor's degree in legal studies and plans to eventually go to law schooL 116 Based
on the experience of social worker Emma Shulman, he's got many more productive years
ahead of him. At 93, Shulman oot only pul in a full work week recruiting Alzheimer's patients
for a clinic at New York University's School of Medicine, but does it with so much energy that
her boss, Dr. Steven H. Ferris, says We'd definitely have to hire two or three people to replace
her. '117 Clearly, okler workers have much to contribute to organizaHons and society.
272 PART t • INDIVIDUALS IN ORGANIZATIONS

All in all. organizations and individual employees can do many things to manage careers.
When can.-"rs are effectively managed. employees are satisfied with their jobs and careers and
arc motivated 10 perfonn at high lel'els ;md Ihereby help organizations achie"C their goals.

Contemporary Career Challenges

In Chapter I, WI." discussed contemporary challenges for organizational bchavior and man-
agemcnt. Some of these challenges are very relevant to the motivation of organizational
members as they pursue their careers. When career management is effective. employees
arc gi \'en a series of mOl ivat ing job assign menlS Ihat Ihey va luI." and Ihat contribute 10 Iheir
own devclopmcm. [n this ease.lhe organization Ill:lkes good usc of ils hum:ln reSOUfl'es to
accomplish its goals. In Ihis section. we discuss Ihree career challenges that organizations
f:lce: ethie:ll C:lreer management. career managementlhal supports diversity. ilnd career
mallagement in an em of dual-career couples. [n Chapter 9. we discuss in more delail some
of the specific steps organizations can lake 10 meet these challenges as well as the chal-
lenges that arise when orgmlizatiOlls downsize and layoff some of their mcmbers.

Ethical career management. In Chapter 1. we defined /'lilies as rules. bcliefs. and

values that outline the ways Ihm managers and employees should bchave when confromcd
with a situation in which tlleir actions may help or harm other people inside or outside an
organiwtion. A key challenge for organiwtions and theIr managers is 10 ensure that career
practices arc ethical and that members of the organizalion pursue their own careers in an
elhieal manner.
Ethical career pmctiees are praelices built on honesly. trust. and open COllUllunication.
Honesty means Ihal managers are frank wilh employees oonceming Iheir career prospects,
Iheir strengths and weaknesses. and Iheir progress 10 dale. As we saw earlier. honesly begins
before an cmployee actually joins an org;mizatiOIl. whcn an organization infomls job appli-
cants about lhe good and nOI·so-good things in various positions and in Ihe organiwtion
itsclf. Honesly cOlltinues when managers appruise perfomwnce and gl\'e employees clear
and accurale feedb<.lck, which l'(JIllTibuleS to cmployees' being mOlivated 10 perform at high
levcls. To mOlivate subordinales. managers should also provide honesl feedback conceming
how subordinn1es' careers are progressing and infomlation about future career opportunities
ilnd proSpeCIS. Honesty Conlll1ues into Ihe later Cllreer stages when organizations follow
Ihrough on lheir commilmenls regarding provisions for retirement.
TruSl is also built on organization members following through on their commilmCll!s
10 each olher. If ,I manager or an organiZalion 'l1otivates an employee by promising a eer-
lain Iype of career progression gi\'en adequale job performance. Ihe opporlunilies should
be forlhcoming whenever possible. Likewise. if an employee promises his or her supervi-
sor to rcmain on the job and vows that the organization will bcnefit by. say. enrolling him
or her in an expensive course to leam a new leehnology. truSI results when the employee
follows Ihrough on lhis cOlllmilment.
Ethical career managcmcnt cannot take place wilhout open communicalion oclween
managers and subordinales. Open communication leads to a clear and shared understand-
ing of Ihe developmelll of careers. career prospeCts. and mUlu,l1 expectations.
When careers arc managed in an elhical fashion. promotions are based Oil perror·
mance. When employecs understand the link between performance and promolion and
othcr career opportunities (such as receiving challenging assignments and spccial truin·
ing), Ihey are more likely to be motlv,ned 10 perform ,n high le\'els. Morcover. ethical
career management means Ihat supervisors do nol abuse their power to make career deci-
sions and provide career opportunities to thcir subordinates. An extreme case of a supen'i-
sor abusing his or her power happens. for example. when sexual harussment occurs. and a
subordinate is led to believe he or she can't :ldvanee withouttoler:lting inapproprillle
behavior or language. To advance Iheir careers, emploYI:-CS should not be coerced to do
things compromising their own ethical standards or those of the organizalion. Exhibit 8.7
contains a short elhics quiz Ihat provides some examples of behaviors that su pcrvisors lllay
requesl subordinates to perform thai may be unClhical. I18
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 273

EXHIBIT 8.7
Ethics Quiz
SOlOW: Adaptcd from G. Gr~ham.
. W'Klld Y"" Lic f{)f Y'Klr 11,,,, 0,.
Would You Jo.,t Rathcr NO!: U""I1/-
ColI,,!!~ SllIliw &lgl~. Oclober 24.
1994. p. C3. R,,,,-inlc,,t ",ilh
!",nni"j<ln.
Supervisors sometimes ask subordinates to do things that may be
questionable on ethical grounds. Ethical career management means that
subordinates do not have to engage in unethical behaviors to advance their
own careers. Which of the following behaviors would you feel comfortable
performing, and which do you think are basically unethical?
1. Your supervisor asks you to sign her name on some letters.
2. Your supervisor asks you to respond to a request and send it under her
name.
3. Your supervisor asks you to tell callers that she is with a customer
when you know that this is not true.
4. Your supervisor asks you to delay recording expenses until the next
quarter.
5. Your supervisor asks you to tell others that she hasn't made a decision
yet even though you know she has.
6. Your supervisor tells you to record the purchase of office equipment as
an advertising expense.
7. Your supervisor asks you to backdate invoices to last quarter,
8. Your supervisor requests that you tell people you don't know certain
things that you do know.
9. Your supervisor tells you to tell top management that she is working
on a project that she hasn't begun yet (if top management happens to
ask you).
1O. Your supervisor tells you not to report sexist language you overheard if
anyone asks about it
According to Gerald Graham, Dean of the W. Frank Barton School of Business
at Wichita State University, most people would consider items 3, 4, S, 6, 7, 8,
9, and 10 to be deceptive or unethical and probably should not be agreed to.

Career management that supports diversity. Thc incrcasing divcrsity of thc

workforce means that managers have to makc surc thc organization's divcrse memocrs arc
givcn the eilfeer opportunities they desefl'e. Although progress has eer1<linly been made
with regard to diversily and hiring. somewhat less progress has been made when it comes
to motivating diverse employecs and making sure thcy're given equal career opportunities.
In Chapter 4. wc discussed scvcral reasons why people have a tcndcncy to perccive
others who are similar to themselves in gender. race. age. or cultural background more
favorJbly than thcy perccivc thosc who are diffcrent. and wc described wilyS to ovcrcomc
thcsc biases. Problems such as the similar-to-me bias can result in certain mcmbers of an
organization not rccciving lhc carecr opportunities they dcservc Occause they are dissimi-
lar to managers making the c:lreer-related decisions. This inequity can result in a lack of
motivation among employees who think they won't receivc thcir 'dlle" Managers who arc
aware of these biasc, and problems and ways to overcome them arc in a good position to
motivate thcir cm ployees :Ind promote career managemCIl1 diversity.
Organizations. too. Clln 1:lke sped flc steps to ensure equ:ll C<lfccr opportunities to their
diverse memben>. Pacific Bell. for example. has undertaken a number of initiatives to pro-
mOlC the l'areers of minorities-in particular. Hispanics. SUlllmer intcrnships lind scholar-
ships are offered to minorities cvcn before they join Pacific Bell. to help seck ont minority
applicants with the college degrees necessary for management positions. Minorities with-
OUI collegc degrccs arc hircd into !lonmanagement positions. bU1thesc cmployccs nonethc-
less can eventually advance into managcment. Onc of thc ways Pacific Bell does this i, by
holding cfficacy scminars, which prepare minority employees for future promotions. The
company has al>o instituted a special two-year developmen1 track for minority managers to
274 PART t • INDIVIDUALS IN ORGANIZATIONS

support their career dC\'elopmem. help them develop their knowledge and skills. and pro-
vide them with access to mentors. 119
Xerox Corporalion is another urg:mizalion that sup!Xn1s diversity via career manage-
ment. Xerox is careful tu pla<:e women and minorities in positions that will give themlhe
experiences they nccd for future promotions. Minority and female cau<:us groups at Xcrox
provide guidance to diver5C employees on how 1O manage their careers, Because managers
often l1l:lke importanl de<:isions that affect the <:an:ers ur wumen and mmorities. Xerox's
Balanced Wor~ For<:e pro<:ess lin~s the performan<:e appraisals and compensation man-
agcrs receive to their efforts to provide womcn and minorities with career opponunitics. l20
The Balanced Work Force process thereby motivates 1111In;lgers to support diversity at
Xerox and usc cafL-er opportu nil ies lu mut Ivate thei r di ver5C subord lIlales,

Career management in an era of dual-career couples. In mannging careers,

organizations have to take into accuunt the fnct thatlhc dual,at-cer cuuple is now the nunn
rather than the exception. Individual employee, <:ann01 make career decision, such as
relocating. accepting a promotion. and transferring to another state without considcring the
prcferences and careers of their spouses. When dual-career couples h(1\'e children. the
needs of the entire fnmily have 10 be taken into a<:count ns Ihe couple's <:<1rccrs unfold. To
help dual-career couples. employccs who arc single parents. and thosc caring for elderly
parents effect ively manage their careers. organizations can take scveraI StCps:
I. 0l'1\(1I1;:.IlIi01l.\' ('((II /;m;llIlIlIe('t'ssory IIUJI'/'J (lII(/ lI'm't'! os IIII(('I! ((S possib!I'. When
employees do need to relocate in the course of their careers. relocation programs
can be used to help their partners find new jobs and the families adjust to their
new surroundings.
2. 0'1\(1II;:.IlIioIl5 fOil lUI' j1e.xiblf \\'Orkill); orr(III);OlleIllS 10 0110'" IlIdr /1I1'mb"'I'5 lime off
""lellnen/ed. Sometimes tllest arrangements may entail simply changing the hours
worked (for cxample. from 6 A.M. to 2 P.M. instead ur from 9 A.M. to 5 P.M.) likc Xero.\
doc,. Sometimes that may mean that cmployees perfonn some of tlleir ,l~signcd tasks
at horne. At otller time,. that may mcanmanagers accommodate employccs who need
to take lime off to. for esample, take care of sick children or parents.
3. Orgalli:,fI/;o/lS ClI/l IWI'/' OII-s;le day care Cl'lIlers. One uf the must pressing I:onccms for
dual-career couples with small children and for single parents is fmding (juality day care
for their children. On~sitc day care ccntcrs are growing in popularity and give wming
p.lrcnlS the peace of mind that comes from knowing that their children arc in good hands.
These are just ,I few of the stcps that organizations can take to help members manage
their careers in light of the many other demands and constraints that employees race frum
One of Ihe most pressing
Concerns for parents of small
children is finding (juality day
<'are. On-silc' day CaT<' centers.
li~e this one mGeller,,1 Mills
hcad(juartcrs in Goldell Valley.
MN. give wor~ing p<lrems 1i~c
public rclalions manager K;rsti<'
Foster peace of mind.
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 275

Iheir pcrsonallives. Rather than ignoring these demands and constraints, as some organi-
zations have tried to do in the pas!. organizations should take steps to help employees
effeetl,'ely meet them,

Summary
The relation between employees and an organilation is an ellchange relationship that is
embodied in the employees' psychological contracts. ACCUrMe performance ,Ippmisals are
essential for the fulfillment of psychological contracts and a motivated workforce, Pay and
career opponu nit ies are two of the most important outcomes in the exc"hange relationship
between employees and ao organi7.ation and have important implicmions for motivation. In
this c!wpter. we 1II,Ide the following major points:
I. A psyehologicnl contrnct is <1n employee's percept ion of his or her ellchange relat ion-
ship with an organization. outcomes the organization has promised to provide to the
employee. and contributions the employee is obligated to make to the organilatioll.
The detenninants of psychological contrncts include direct communication. observa-
tion. and written documertts, The two major types of psychological contracts are
transactional contracts and relatIonal contmels.
2. The goals of performance appraisal an~ to ennlurage high levels of emploYL"C motiva-
tion and perfonnance and to provide accurate infonnation to be used in managerial
decision making, l'erfoml;ll1ce ,Ipprai sal c;m focus on the assessmertt of traits. behav-
iors. or results. be formal or informal. and rely on objective or sllbjedl\'e measures.
Supervisors most often appraise the perfonl1ances of their subordi nates.
3. Pay is an important outcome for most employees. Motivation and leaming thCQries
suggest that pay should be based on perfomlance. When individual perfonmmce can
be a\:\:ur;Udy assessed. the maximum motivational impact is obtained from basing
pay on individual performance. When employees arc highly interdependent. individ-
ual levels of perfomlanee cannot be accurately appraised. or Iligh Icvcls of coopera-
tion across employees are desired. it can be Mlvantageous to b<1sc pay on group or
organizational performance.
4. Merit pay in the form of Ixllluses generally is prefcr.lble to salary increases because
salary In'els Ilavc multiple dctcrminalllS in addition to current performancc. The
ethics of pay differentials and comparable worth are important issues that managers
f,Kc in using (X1y as a motIvational 1001 and striving for the equitable distrilxltHlIl of
pay in organizmions,
5. A career can be defined as the sum of work-rclated experiences throughout a pcrson's
1ifetill1e. E1Tect ive car~"Cr lTl<1l1agement helps to ensure thaI members of:m organization
arc motivated to perform at high levels and re\:eive the career opponunities they should
wlli Ie also ensuring tlla! tllc organiz-'lt ion is mak ing tllc best usc of its human resources.
6. Four gcneral types of careers are steady-state carccrs. linear careers. spiml careers.
and tmnsitory cnrccrs, Increasingly. careers arc ooundaryless meaning that people
have a variety of kinds of work experien\:cs in different organizations during their
careers, Careers can be Ihougllt of as progressing through swges. although e:Jeli indi-
vidual's career is somell'hatunique and these stages are 110t nccessarily experienced
by all I)(:ople. At cad slage. organiz,uiolls and individual s can take steps to ensure
high levels of employee motivation and effeetive \:areer managemcnt. The fi\'e st;lges
are ( I) preparation for work. (2) organ izat ional entry. (3) early career, (4) midcareer.
and (5) hue carecr. The e;lfly career stnge is made up of tll'O steps: establish,nent and
adievcment. Mentors and can:er goals can be espeCially Ilclpfulto employees during
the achie\'ement step.
7. Contemporary career challenges include etllical career management (built on hon-
esty. trust. ,Ind open communication). career man<1gement that supports diversity
(ensures that diverse members of an organization afe gi\'en the career opportunities
they deser\'e). and career managemelll in an era of dual-\:al'l-"C[ couples (acknowl-
edgcs tile many demands 011 employees arising from tlleir jobs and personal lives).
276 PART I • INDIVIDUALS IN ORGANIZATIONS

Exercises in Understanding and

Managing Organizational Behavior

Questions for Review

1. Under whal condition~ will an employee be likely
to perceive thm his or her psychological contracl
has been broken?
2, Why <Ire accurate performance apprai~als a key
ingredient in having a motivated workforee?
J, How can performance 'lpprais.1ls be used 10 form
hlgh~pcrfomling work teams?
4. Why might employC'es pef('eive appraisals based
on trait~ as unfair~
5. Despite Ihe positive effeCls ofmeril pay on mOli~
valion. when mighl an organization nOI wanllo
use it?
6. Do all employees want lheir pay 10 be based on
lheir performances'! Why or why not?
7. Why do bonuses lend to be more cll"eetive 1l10liva·
lion<llioois than salary inneascs?
8. Why are eoqxlnl1ions reluelant to pUI comparable
worth imo praelice in establishing le~'els of pay'!
9. Is motivation hkely 10 be higher al some can:er
stages Ih<ln at othC'f);'! Why or why nol?
10. Are career plateau~ inevitable for 1ll0Sl employc<:~?
Why or why not?

DB: Increasing Self·Awareness

Determining Career Aspirations and Goals
Think ,loom the kind of career you would like to have and 4. What would you lind espl:cially motivating In each
are trying to pursue. of these jobs'!
S. How do you think your performance ~hould be
I. lkscribe your desirC'd C:lreer. Why do you want to
,lppl<lised on each of these jobs to result in high
have thiscarL-er'!
levels of motivation?
2. lk~cribe three specific jobs lhat you lhink would
6. How should pay be determined on each of the.>e
be exeellet1l for your desired career. jobs to result in high le"els of motivation?
J. Which career stage is each of these jobs relevant to?
 CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS 277

A Question of Ethics
Gi ven that employL'C, depend 011 their !Xly for many Ihings. ineludlllg taking l:are of them-
selves and thcir loved oncs. somc would arguc thm basing pay on lcam or urganizalional
perfonnance mighl be queSlionablc on ethical grounds because the pcrformance of Olher
team or org:lnizatiun:ll members is nOI under ~Ul individu:ll employcc's control. Others
might argue Ihat merit pay based un te:lm or urganizatiunal performanl:e is :l powerful
motivmional tool to cncourage organizational mcmbers to work togl."thcr, cooperatc. and
perfonn at a high level.

Questions
I. Think llooutthe ethical implicntions of meril-bascd pay.
2. Under what conditions is the usc of merit-oosed pay to motivate employees qlles-
tion<lblc on ethical grounds?

Small Group Break-Out Exercise

When Performance Appraisals Seem Unfair
Form groups of three or four people and aPiXlint onc member as the spokesperson who will
communicate your conclusions to the rest of the class.
I. Take a few minutes to think aoout ,itllation, in which you believe your perfor-
mance was judged in an unfair manncr, Thcse situations could be related to work,
school. a spon. or a hobby,
2. Take lllrns describing these situations and how yuu fcll.
3. Then t<lke turns describing why you felt thai you were not being judged in a f<lir
manner.
4, As a group. comc up with a list of lhe determinants of perceived unfairness in
pcrfornwnce appraisals.
5. As a group.l:Ollle lip with a list ofrccollllllcndatiolls to help en,ure thai perfor-
mancc appraisals arc perccived to be fair.

Topic for Debate

The cxch<lnge rel<ltionship empluyees Iwve with their org.mizations is embodied in their
pSYl:hulogic:l1 contracts. Performanl:e appraisal. pay. and careers arc important aspccls of
thc cxchangc relationship between an cmplo)'cc and an organization and also havc impor-
tant implications for motivation. Now that )'ou have a good understanding of these impor-
tant clements of psychulogical cuntradS. debate the folloWing Issues.
Tellm A. Givcn that psychological cuntr.lcts are perccptual in naillre. thcy arc highly
idiosyncratic and thcre is not much that organizations can do to innucncc lhcm.
Team B. Organiz:ltions play an active and important role in shaping their members'
p,ychological contracts.

Experiential Exercise
Designing Effective Performance Appraisal and Pay Systems

Objective
Your objecli~'e is to gain experience in designing a pcrfonnance appr.lisal and pay sYStem
to motivate employee"
278 PART t • INDIVIDUALS IN ORGANIZATIONS

Procedure
The class divides into groups of three to five people. and each group :Ippoims one member
as spokesperson 10 prescnlthe group's recommemlalions to Ihe whole class. Here is the
S(:enario.
A,surnc the rolc of a gounllct cook who has just started a catering business. You arc
located in a college town with ,Ipproximately 1501XlO residems. Sixty thousand students
allend the I<lrge state universily localed in this lown. Your customers include professors
who host panics and reeeplions inlheir homes. sludent groups who hold parlies al various
locmions. and local professionals such as doctors and lawyers who hold panics both in
their hOllles and a1their offices.
Your stalT includes two l:ooks who help you prepare the food ,lIld four servers who
hclp you set up and serve Ihe food on IOl:ation. Often one or bOlh nKlks go to the lo(;ation
ofa cmering job to help the .'\Crvcrs prcpare food thm needs some cooking on site, such as
a soume with hot raspberry sauce.
Your business is gelling oil' to a good stan. and you want to make sure Ihat you have
an effective performance appraisal and pay systcm in place tu Illotivate your couks and
servcrs.1I is imponalllthat your cooks arc motivmed to prepare high-quality and inmgina-
tive dishes. are flexible ,Ind willing to help out as needed (you often getlast-Illinute jobs).
wurk well with each other and with yuu, and are polite lu cuSlomers on loc:lliun.1t is cru-
cialthat your servers follow your specific inslructions for each job. attractively SCt up the
food on location. provide cxccllem servicc, and are also polite and plcas.a1l1 to cUStOIllCrs.
J. Using the concepts and ideas in this el1<lpter. design;ln effective performance
appraisal syslem for the cooks.
2. Using the cOiKepts and ideas in this chapler. design an cffective performance
appmisal systcm for the servcrs.
3. How should you pay the cooks to ensure that they are motivated to prep:lre high-
quality and imaginalive dishes, arc tlexible and willing to help UUl as needed.
work well with each othcr and wilh you. :lIld arc polite to customcrs on location'!
4. How should you pay the servers to ensure tlmtthey are lllotivmed to do a good job
and provide high-quality service to your customers'!
When your group has complcled those aClivities, the spokesperson will presem the
group's recommendatioll.' to Ihe whole cia,s.

Ne\,V York TiITles Cases in the News

"Off to the Races Again, Leaving Many Behind"

8.1' E. J)tlsll. The Nell' York Til/leY, Apri! 9,2006. SecllOlI J, lip· 1.5.

In 1977, James P. Smith, a shaggy-
haired 21-yc'ar-old known a, Skinny.
look a job as a meat grinder at whal is
now a ConAgra Food, pepp<'rnni plant.
At 56.40 an hour, it was among the
Ix"t-paying job, in town for a high
school graduille.
Ncarly thr~...' d'x:adc" later. Mr. Smith
slill IJrrives al Ihe SIUlle f,lctory shortly
Ix'for<' h, 3:30 A.M. shift. Hi, hair has
thinned: he has pUl on weight. Today,
his union job pa~'s him S13,25 'Ill hour
10 operate the giant blenders Ihal
<"rush 3,600-poun<l blocks of pork and
!>ttL
His earning', whi"h totJl about 528JXXl
a year. have nOl kepi p.1ce even with
Omaha's low c'"st of living. The mmpany
c1imimncd bonuscs about a decade ago.
And now. aimosl 50, Mr, Smith is cOn-
cemcd thai his SllOJXXl retirement neSl
c'gg wilillotlx' enough-esp'-x:iaJly ,inc""
his plilnl ison a list of ones COIlAgrii W,UIIS
to ""II.
'[ will prob'lbly hilve to work (llIti) I
di,,: Mr. Smith 'aid in his Nehra,kan
baritone.
Nol. '0 for Bruce C. Rohde. ConAgm\
former cl\;linnall and chief executive, who
,tq>p'-xl down la,t s..'ptemlx.,- amid im",tor
pressure, Hc is SCi for life.
All told. Mr. R(lhdc, 57, ""'e;vro more
than 545 million during his eighl YCilrs ;ll
the helm, and waS gi,·c'n an c"timal<xl 520
million rctircmelll package as he w;llked
oUl tl><.' door.

Each y..:ar from 1997 to 2005, when Mr,
Rohde led COllAgm, he wa.' awarded eilher
a large cash bonus, a generous gmnt of
slOck 'x- optio"" or ,""Iuable benefits, socb
as extm years' en.'dil toward his guanmK'Cd
pelN'lIl
But the e0I11p.1ny, one of lhe nation's
Iargesl f'KJd ,,,,mpanies witb n"'r<' than
100 brands, slruggled under his w"teh,
ConAllra ",utinely mi"eJ earnings
(:Irgets and lInJerpcrformeJ its peers, Its
share pri,'e fell 18 pern'nl. The company
cut more than 9,000 jobs, Accounting
probl<'ms surfa,'eJ in ","cry one of
11-'1r. Rohde's eighl years,
E\'en when ConAgra reslateJ ils
fmaneial results, which 10wereJ earnings
in 1003 anJ 200.., Mr. RohJe's 516.4
million in bonuses for lhose two years
,tay..:J the ",me,
The disparity belween Mr. Rohde's
anJ Mr, Smitll's pay pa,'bg..:s may be
Slriking, b,a it is nOl unusual. Instead, it
is thc nOrm,
E"en here in the heartland. where
eorporale' dlieflaills do not take home
pay packages thaI arc anywhere ncar
those of Holly,,'ooJ moguls or Wall
StR"'1 bankers, the pay gap between th"
boss anJ th..: ['ank anJ file is wille,
New tcrhnolog)' and 1"w-eO't labor in
places like China anJ InJia ha"e put
Jownward pres.,ure on tile wages anJ
benefits of the a"emge Amerie,m worka,
Executi,,, pay. meanwhile, continues to
risc at an astonishing rate,
The a"emge top executi"e 's salal)' at a
big comIXmy "'as more lhan 170 timcs lhe
a,'erage workers earnings in l()().f, up
from a multiple 01'68 in 19-W. aecoNing 10
a stuJy last year by CamhI FryJman, a
doctor',,1 candiJate at Harvard, <II1J R'l\"en
E, Saks. an economist at the FeJeral
Reserve,
"We IK.'l'<.l to bring "Olll<' ",ality bock,"
saiJ John C. Bogle Sr" the foollJer anJ
former chairman of tlK.' V,mlluard Gr<KJp.
the mutu,,1 fmJ comlX,ny, :II1d an outsp<JO;en
critil: of exC{'uli,·,' wmpcnsalion pmetic""s.
"ThaI is somelhing lh"t in lhe long fUll is
nol g,..J for .society. We ha"e the h""" and
the h:",:·llOIs:'
Supe",ized ",laries, bonuses and
benefits. long contro""rsial, are now
drawing S<.,rlltiny from the S""uritics
Exchange Com",i'ision. ",><I have. oc,:ome
part of the nalional [X,liti,'al debate,
About 81 percent of Americ:",s 'iay they
thmk Ihm the l'hid exe,'uti,'es of large
companies an: ove'l"'id, a pe,,--'Cntage that
CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS
changes lillie with mcome level Of politieal
pany affiliation, a,-corJinll to a Los
Angeles TinlCslBloomberg survey in
February, Many "hareholJers, more,,,,er,
arc just plain angry.
Chief eseculi"es "aren't creating any
exccptiOllal value. so yoo woo Id think lhal
the a,'erage compensation of the CE,O.
would grow al the rm..: of the aver.1ge
workeT," M,- BOllie ",iJ. "When you I'K,k
al it in thilt way, it is a re:il problem:'
The problem was ,'erlainly real at
ConAgra, Mr. Rohde's arrival there in
1996 min,'id,'d with three or th,' moSI
powerful for<"Cs propelling e,\Ccuti"e pay
and hourly workers' wage, in opposite
directions, Stock oplion' were being
Us<'<.110 ,,--'ward m,magers ri,'hly, the f,){><1
industry's rapid eOllsolid"tion pushed
dO"'11 workeN.' pay and Ihe inlroJul'tioll
of new ",achinery ilnprove<l productivity
001 ,'ost many jobs,
Today. ConAgra, whose prodlleh
indllde Chef BOy:irdee canned goods,
Hunt's ketchup and Healthy Choke
dinners, ocllall in 1919 as a snwll fooJ
processor, grew r:'pidly under Charles M.
Harper. a fooocr Pillsbury executive" ho
went by the name Mike In the mid-
1970·s. he drew up an ambitious expan·
sion strategy 10 eSlablish ConAgra a'i a
major player from "din 10 dinner:' as '1
<,ofporale 'ilollan later put it. ConAgra
would sllap up more than 280 busincsses
in the nesl lwo d,'cades. From 1980 to
1993, in"eslors saw tOial re10ms of o"er
I .000 per<'ent, or 11 percent a year,
Wall Street fell It1 love with
ConAgra\ growlh story. And the p"y of
Mr, Harper. who consistently hit lhe
board's performance targel", refle,'led
the admiMion,ltl 1976, his P.1Y was 51,3
million in t,><I"y's doll"rs. By the end of
his tenure. in the e<lfly 1990's, it w"s
about S6 million a year.
"Under Mike I'larpcr, they were a
company thaI paiJ wry liltle l'ash and a 101
of long·term" stock. s:,id Frederic W.
O){,k. who WilS a ,~1Il1pensati'KI consultant
to ConAgm's bo.~rd Ilillil 2001. 'There
wen.' rule" you l"KJld lIeV,'r ",lIlhe ,lock.
TIley I ivcd poor alld they died rich,'
By the mid-199(l's,lhoollh, CmAgm's
gnm1h slr"tegy was running oot of ste,,'n.
Its market ,hare and ,alcs were nat. And its
<.k.-...'Cntrali7.c'd appro:"-,h-"",,,ntially Jetting
its 90 sur",idiariL." opemtc IiI;(' inocpend..'nl
companies-no longcr worked in an
indll'!ry domiml1ed by Wal·Mart ",><I other
Iargc supermarket buyers
279
Mr, Rohde-who had be",n ConAgm's
chief out,iJc lawyer, aJvi,inll Me. Harper
on more thml 100 deals-was hired in
1'l96 to help the cumpany reor);ani7.e. He
bcc<UlIe <,hid executive the next year,
ConAgra's sto,:k price wa, lIear a
record high, and Mr, Rohde was IX1id
handsomely, His first year's 101:11 eompen-
salion "'as $7,9 million. induding an
initial $4.3 million Te,trided ,tud grant.
"eSied O'."f 10 years. and a $SOO.ooo long·
term pl.'rfommnc"" payout.
Mr, Rohde tried 10 eent['ali7.e many oi
ConAgra's main operations and integrate
dOlenS of its businesses, But :malysts
said he let the ,~Hnp;my's brand, stagn"te
and struggled to eseeUle his plans,
From mid-l999 10 mid-l00I, ConAgm
strug·gled amid" sw,,,,ping ovcrhauLl1lc
,"Mnp;",y iocurrcJ S 1.1 billi'Ml in restrud-
uring charges. It terminaled more th:!n
8,450 employees :Il1d dosed 31 planls,
And analysts began eompl:,ining th"t
O,nAgra did nOI in"",t enough in its
brands to keep profits up.
Mr. Rohde eonlinucd to be well·
compcns"t"d. Dllrinll th:lt lwo-year
period he reeei"ed <,a,h ,,,,d stock oplioll
granl'i of mon: lhan 58.7 million. even a'
ConAgra's board withhdd his annual
bonus anJ all long-term el.Juity awarJ'i
for 200 I oceausc of we~k results,
But what lhe board took away Wilh
one hand, il gave IxlCk with the other, In
July 1001, it grallteJ Mr. Rohd,' 300.000
stock options, The reason. <lecording 10
proxy fIIinll'. wa, that an unnamed
lIldependent <,onsultanl's <,ompcns~tion
report indi"ated th"t his el.Ju ily-ba.'iCd p")"
W:IS nOl <'ompel,tive, 'There's nothing
wrong at all nmecptually with i:iving
someone options afler '1 bad ye"r:' s<lid
Mr. C'K,k, who was the unnamed consul-
tan1. "An option is an ill<'e1l1ive I'Of the
fu[ure, It is nol a reward fur the past."
Still. Mr, Cook said he rccognil.cd th:'1
P"-'Of'k "'y ..they ,,-'war<.k.'<.l him fur f~ilu",:'
"FitH'"";:'lIy:' he added. "it's h:'rd to
argll<.' with Ihat:'
TWo momhs kiter, ConAgra's compen·
salioll ,'"mmitk-c pikJ on 750.000 more
'itock options, Based 011" review of option
gr.mts, a proxy fIling said, Mr. Rohde"s
oplion posilion had been "oclow compeli·
ti,." levels for a number nf yeUTh," And the
board w<l"led to R'Cogni7.e "lhe results
a<,hievcd in n:po,ili(Mling tll<: wmlxIIlY for
the future,"
Then Mr. Rohde hil the jaekpoi ill 2003
and l()().f, ",ith the board awarding him
280 PART 1 • INDIVIDUALS IN ORGANIZATIONS

$16.4 mi Ilion in bonus mo""y and lhe part
of his long-lenn illeemi\'e pl:ln he h<ld
eanK-d. The payment' were ba...-d largely
on e<lrnillgs targets. But in "hrch 1005.
ConAgra aJllIOUn<.·W that it would haw to
reswte eilrnings for 1003 and 1oo-t.
redul'ing thcm b~' a IOlal of up to $200
million for lhe l"U years afler poor illtem,l
mntrol, Iw to irll'ornl' tax emm..
"ThaI worb 001 to ocarly 10 cents per
share annually. or Ix'twecn 10 jX'rc"nt
<lnd 15 p<:rcenl of e;"nings:' John M.
M,·Miliin. an allaly" al Prudential Equity
Gl'O\lp. wrote at tlJc lime. Cont\gra "is in
the pmccss of I"(',tatillg camillgs for both
years and we ask. why llOI res~lIe the bonus
fOf the C.E.o:·
Mr. Kin:her. the ConAgra spokesman.
S<lid the restalnncnt did not ha,"e a
material impaCI on the way Mr. Roh<Jc's
bonuses were eillculaK-d.
Wilh the accounting issues clouding
the company's future and more layoffs and
fmaneial challenges ahead. :\k Rohde
ilnnouneed Iilst May that he plannwlO slep
down. In 2005, lhe board ga"" him only
his S1.2 mill ion -"llary.
!lut lhlllUgh it all "Ir. Rohde managed
to take home more Ihan $45 million in
pay, including salary, tx>nuse, and R·,t-
rielw stock gmllts. He did 1101 sell any of
his ,tock while l'hicf cxCl'uliw bul stands
to benefll if he sells his sh:lrcs 1I0W.
M,- Smith.lhe ml'at grinder.l·an only
dremn ilbout such generosily. His wages
ha\'e grown al a pace of 2.7 perl'l'nt a
yeilr for the lasl 28 1'e:lrs. But. <ldjusled
for inflation, hi, SI3.25 an hour salary
tooilY is roughly two·thirds his $6.40-
an-hour 'tarting wagl',
Mr. Rohde's s<lI:,,-1' <llone rose al 8
percrnt a year. and IIl'lS,lh;ll-d m'-'fl' than
$23 million in l'ash mmpensation during
illmost nine years ill the comp:"'Y. Since
steppin); down in Septcmber, hl' started
collecling $1A million in sever.mce P.1Y.
twic"C hi, most I«'cnt -"Ilary. R' well a, full
he:lIth bene fils. which he will hil'·e lhl'O\lg.h
2009, C"nAgm sharc"holdl'cs arc fOOling
Ihe bill for a secretary ~nd an office llC<lr
his homc', And that $98-t,OOO annual
pension"! It reOects 20 ye~rs of >cr\'ice.
tVen though Ill' w"-~ a ConAgr<l eXls'uti,'e
for t10l quile niro::. In July. Mr. Rohde lold
1llc Om,dm World-Htrald th"t he hOpl-d to
spend pan of his retirement !lying his
helicopter betw'ccn his horne and his
family's M inocsola get<lway l'On",.
Mr. Smith. on the other hand. envi,io"-~
~pellding his golden ye~,-, huming mal·
lards and tasling for ':atfi,h at a nearby
r;,'erfl\ln! cabin. He will ha,"C 10 make do
on the $80.000 in his 401(k) plml, 'IS well
as his Social s......
·urily l'hed, and ~ pen'ion
of $106:1 month Omt WaS frozen 'llmost:1
dc<;adc ago. BUI to hear 1.1,. Smith tell it he
is rIOI ~ngry at M r. RoIJlk: or, lI'<)re ~ldly.
at the widenin); gap hclwccn cxCl'uti,'c and
worker pay. Instend, hlS feehngs are
somewhere hctWl"Cl1 di'~ppointmcnt ~nd
disbelief.
""If thc stocl:. kecps going up. m~ybc
lhey deserve il. If lhe slock is going down
W Ihe tx,tlom thcy should );el n<>thing:'
Mr. Smith said, ·'My opinion."'
la,t May, ConAgm dirccto" began
look ing. for a IIeW chief exceuti,"C, In il few
month" the~' identifil-d their man G"'1' M.
Rodkin, II 53-year-old PepsiCo's core
brand" But he did IKllmmc l'heap.
E"en before his fln;t day of work.
Mr. Rodkin was given a $1 millioll salary
:md a gU:lr.IIlICCd $2 million bonu~ for
this year. according to his c'mploynlent
l',mtral"l. He wa, gmnted IAll million
stock options wilh a projected \'illue of
$5,8 million loday, l'Xcrcisable owr llll'
IlCxt three ye:'rs. "We wanted to get him
aligned wilh the int"",,,, of sharchold<'rs
of the company:' Sleven F. GoldslOne,
C"nAgm', dminn:m aJKi the fonne, "hil'f
e.,ceuti,.., of RJR Nabisco. 101d Bloomberg
Nc'Ws at t~ ti"Ie,"The idea is to irll'I"('aSc'
shareholder v~lue, If he illere~ses ,hare·
hokkr ",<lut, hc' makes rn'MlCy, too."
If Mr. Rodkin docs nO! increasc s!l'lre·
holder I"('tums. his ,tock options will
deeline in \'a1<lC. as wiJllhe S 1.6 million ;n
C"nAgm stlx:k ht I«"Cntly t.:lUghl with his
ow-'n cash.
Still. ConAgm h~s "h"C<ld1' agI«-d 10
t~ke can: of Mr. Rodkin when he !caves.
B<I><..-d on hi, cmployment ilgrcerncnt.
he will walk away with al1c~,t $6 million
in ","erance, a prorated bonus and a
$129flOO pen'ion supen:hargc-d with Ihn.'<:
yean. of cn.-dit for eoch year he wOlt.w,
And m.KJgh he hXll:. the job at COIlAgra.
PepsiCo is shll honoring a $4.5 million.
tw()-ye~r cnnsullin);. l"nntr.>l"1 it g~\"C him
when he leli. "'If the new guy IS the right
guy. hc i, worth his weighl in guld:' said
Brian r'Olcy. ml independent compensmion
l~)nsultant in Whilc Plains. whn R"'iewcd
Mr, Rohde's and Mr. Rodkin'semplo1'ment
~);I\'cment' and other mmpensalion
documents. "If he is the wrong guy, you
havl' a scvcrante package that is ,ub'mn-
tiall1' more c.xpensivc."
ConAgm', board. in the mcantimc,
agreed to case Mr. Rodkin's transition by
flying him l'ach w'cck, fo' up 10 Iwo years,
from his home in White Plains to its
Omaha hcadquart_'cs,
Me. Smith COlntHutes to work in his
gK"Cl\ 1998 Chevy pickup trul·k,

Questions for Discussion

1. How might cmpluyc<:,;' p<:rC'cpliuns of their psydulogi<:al cuntracts be inOuenl"Cd by large
disparities in POlY belwecn tho,., at the tup,md thO>e at the bonoll1'!
2. Why do some top execulives receil'e very high pay even when their companies' perfor·
Illa"",e is kldluster?
3. What arc the impl ications for psychological contracts of pay raises allhe top increasi ng
over time at iI much higher rate than pay raises at the bonom'!
4. How might widening differcnces belween POlY levels for top executives and rank alKi filc
employees be chanl:'ing lhe nature of the employment relation in the United States?

"Short on Drivers, Truckers Dangle Stock and 401(K)"
By /. Urbiua. "I1w New York 'fimes, February 28.2006, flf'. A/, 11/4.
The me" gath<,,,,d in front of th<, BZ
Ballaz Club txlrbershop in a griuy, mostly
Hi,pani<, ""'lion of north Philadelphia
wer<' listening intently as Kimberly
Cromer made ocr pitch for a ear~,,'r in long
h;101 trucking.
"'Why poll $7 all hoor culling hair ,,'hen
you can make SIQ an hour driving an 18-
wlK,<,krT" Ms. Cromer said, hauding the
men a pamphlet in Sp'lllish explaining the
r"<'<joirem<:llt.s for a f~'{k .....1 ,'ontnK:reial
driv<,r\ liccns<:. "Scriously guys. don't you
warlt to get a job wi~t a future and ,,'{Ot Wt
ofthis t>eighborhood to S<-"C the l'OlHUry"?"
Faccd with what trod;:ing eXj}<'rls
dcsnibc a, the wor,t labor ,honage in
toc industry's history, reauiters Ii\..c Ms.
Cromer are canvassing citie, and holding
job t'lirs to entice ,K:W drivers.
Fueled mo,tly by r<'tir<'n>ent'. the dri",r
shonage grew dire, iooostry economists
say. 'tarting in 20CX> when average wage'
111 construction <tnd other blue<ollm jobs
su'p"-'s<--d those of long-haul dri"ers,
"'Guys tigured. why be out on the ~,d
for th",,' w,'Ch when thcy ('ould ,wing a
hammer during the day, m<tke more
money, and ,Ieep in toc'ir own bed each
night'?" said Bob Costello, chief
eeonomi,t for the Amcrican TruCking
Association.
With pr<-didion, fru", the a"o<:iati"n
th<tt the current shor\;.ge of 20,(0) drivers
will grow' nearly f"'e-fold within a
decade. trucking eomp'lllics ar<' offering
g"nerous 401(k), ,tod option and ocalth
care packages to new recruits and cash
bonuscs alld prizes to driwn. who rder
"iablc candid;.tes.
III hoj}<' of ,tealing drivers from
comj}<'titors. ,"Qmpanics ha"e begun
outlini ng more of tocir "abs with satd lite
radio and television and introducing
policies to allo,," dri"as to bring j}<'ts ,,,,d
~pouscs on the road
Allied Holdings a truekmg comp,my
based in D..."'~tur. Ga .. employ~ ch~plai ns
to ehttk on the morale of ils drivers.
Schneider Nmional. based in Gr""n Bay.
Wis. holds "'driwr recognition days"
e,'cr)' few montb~ ~t regional repair
shops. feawring Elvis ,mpcrsonators.
CHAPTER 8 • PAY, CAREERS, AND CHANGING EMPLOYMENT RELATIONSHIPS
e;!J' X'UI Yo,k €imts
frec barbe<'u(' and ranks for ""Jlo,,:yde>
and ;Pods. The trucking a~~oc;ation h<ts
also begun prcs,uring larg<' tru('k >lops to
a,kl]ntertlCt porWls.
"Hands down, this is the n""t ",rious
crisis thc industry has f;ICed:' said Duff
Swain. president of the Trincon Gmup. a
tr~nsponation consulting firm In
Columbus, Ohio, "'Close to 10 P<'I"Cent of
llI~jor Dcets have their tnlCks sitting up
ag<tin,1 the fence because they're short on
driver,;."
Sincc Illore tlwn Ilm:e'4uartcrs of all
goods in lhe United State, arc shipP<'d
by tntck. it is only a matter of tinK:,
Mr. Swain said. before the shon~ge e~uscs
dcl:lys '" products hilling tlK: shelves atKI
leads to consulller price increascs bc<;au.sc
of ri,ing transponation costs.
Ikspite the 7.4 million Ameri('ans Olll
of ,,"ork as of last D<,cember. and Ihe
recent round of layoffs in manufa<"luring
industries, !tuckin,g has strug,gled to tlnd
worker,; in part bc<;aus<: the lifestyle is so
gruelin,g.
"I mi"ed my son's hinh. fir,;t sleps
and kinderganen:' said N"sscr Admm,
who has been a trucker for eight year,;.
"And I'm beHCT offth:1Il most drivCTs who
don't gd home ewry w('Ckend like I do."
~Ir. ,'dams. 47, s:,id th"t before he
began hauling bottled beer for the Abit~
nrcwing Company last year. he drove
chemical t"nka trm·h. "'Now Ihat's
stressful stuff:' he said. ·'One wrong
moW ~nd you'rc in " tramc ~,"Cident with
a bomb "t yoor b;lCk."
Sin,'e 2000, dri>ws' w,,£es have
staned to rebound. though they have nol
caught up with con,tntction. ,,,:cording. to
thc as,ociation In 2004. the avcrage
annual pay for a tru,'k dri"er WaS
S34.920. compared with S37.890 for a
cOllStru('tion worker, according to toc
Depanment of L~hor.
Uniotl truck drivers nWk<, on avcrage
about SOO.coJ, aoo rooghly 10 j}<''':ent of
all truck dri"er,; in the l1)\Jntry ar"<' union-
il.cd. an C<WI()mi" with the Teamsters ~."id.
The drivers shortf<tll is eXj}<'cted to
wors<:n 111 ('omll1g year, ,ince ,,1x)UI
219.000 of the country's 1,3 million
281
long-haul tru('kns are oVCr 55 and ~re
likdy to retire in the IICxt 10 years.
"'It's ('~ll('d long-haul trm'king for a
reason:' Mr. Costcllo said. "Even though
a 101 of '"OInp~nies me rrocsigning roul('S
for shorter runs. it'~ hard to avoid long
,tretches ~way from home, and that's a
toogh way to live:'
Vi<'lOr Rivera desnibed another
factor that adds to drivcr,' stress: time
prr"ur<:.
··Yoo don't get a hoIter load than thi,."'
,aid Mr. Rivelll.~. n:faring to deadlines
that come with perishable cargo like the
$150,000 ,,"orth of ,hrimp in his refrig·
crated 18-wh<'Cler at the TA Trucking
SlOp JUSI on Exit 57 on Inler<'Slate 95 in
Baltimo", "You're making seven <". eight
stops for one trUCkload, and if tramc or
wh~tevcr backs yo" up at the beginning of
yoor nlll.'lil tlK: rest of the stops h<tve to be
rescheduled, and the dispatdlCr gets really
angry:'
Tru('king ("{Hnpanies also ("()Illplain
thm they tlC1:d to hire even more drivers
bc('au~e federal rule~ pa~",--d in January
2004 lirnit how long their drivers Can
remain on the mad ea('h ~hift before
resting, Under the rules, truckers c:rn
dri.-e for II hour, at a time', bot they hm'e
to l:ike 10 hours olf between shifts. !
nUlr<' hour, than previou,l)" rC'luirrd.
"Trucking is incongruous with what
w,"w eOm(' to nfK:d with th,> blue-
collar ccot>omy thes<: days:' said Donald
Broughton, the transportation an:t1pl
Wilh A.G. Edwards & Sons. a bl'<.)keragc
fmll based in S1. Louis. '"I'rodudivily
improvements mean that OIher industries
arc scaling down .....herras it still tah's
one driver j}<'r truck to n>o"e good,. aoo
thne is lillk way around thaI. What's
more. OIOCr industries C;lI1 outwuree. blJ1
trtteking can't:'
To meet thc growing need. some
e"rriers arc turning to new sources of
lahor likc women. retirees and e.specially
Hispanics.
"'The indu,try reali~e' that Hispanic,
are the fastest ,growing popul<tlion in the
(·OUnlry. and they're eager to tap into
them:' said Ms. Cromer. who works for
282 PART 1 • INDIVIDUALS IN ORGANIZATIONS

Congrcsode Latinos Unidos.,t community
gll)lJp in pt,ibdelphia thatjoincd force' in
20).1 with the Trucldoa<l Carricrs Associ-
ation to begin recruiting more Hi'panics
into long-haullnlCking.
Companie' ro"e I":gun "'herti'ing on
Sp;mish radio ,tnd in Sp;mish ncwSp;tpcrs.
and true'king ,dK",I, haw a<kk'<l incenti"e
English wurscs to help prepare their nOn-
Engli'h-speaking population to 1"'" lhe
fedcral cX<lm requircd for a commercial
license, Fcderal lransportation laws
require tll<lt 10ng·Il;lu) truckcrs sl>ould oc
<lble to 'p""\.:. "'ad <lnd write' English and
undcrgo boc\.:ground checks lmd drug
t"t, ,
Tile number of m,ck dri''CrS wl>o are
nol white ",,,It, ioc'n'<I",'<lt" 30 pen'cnt in
200-1, up from 26.6 perccnt in 2001.
<lceording to th{' Department of LIb""
Ilispanics now <lCCOlmt for 15 per<'CI>t of
a!ltme'k driVCN, up from 12 Jlerr'Cnt during
tile same period. federal rerums sl>ow.
"We d'x:ided two years <lgo to ,witch
trucking cOlnp;mics blxausc we Ilad tile
Icwmge:' said Claire R(leha, woo, with her
hu,b.1nd, Daniel, dri"es for the CeI"don
Gn>Up, <I truc\.:ing company based in
Indianapolis, Ms, Rocha, 51, said lIlat tlley
earned ahoot $100.000 octween thcm, a
10 percent increase o"er what they were
c:m'ing. '1'hcre (~>uldn't oc <I hel1er tillle h'
he" team dri"er:' she said,
Chri, I:!urru", president of the
Truckload Cllrricrs Association, SOlid tllat
many truck dri"ing ""h,,,,I, werc gelling
c<llls from trucking companies looking for
hushand-wife team, or femllk drivers.
"Women spouses lire especially
aUmcti"c ol1,:e th('y haw finished mi'ing
their kids OCC<lUSC they st<ln wanting to
,pend time with lhe'ir husbands on the
road:' Mr. Burruss s<lid "Women are <I Iso
S{'en by <I lot of ('arriers as more
dependilble <lnd less prone 10 jump from
company to ('ompany,"
Todd Jitdin. stnior vice president of
operations for S('hneider National. 'aid
th<lt in hope of bolstering retention. his
dri\'ers in Jalluary 200-1 [('('ei\'ed the
largest rilisc in tile company's 70-ye;"
history. "bout a $-1,000 allllu,,1 increase
for dri"elS who averaged "bout 100.000
mile, per yeil'-
'"But n-orc Ihan wages, ifs re"lIy
'luality"'f-lif" i",ues that matler,'" ",id M,-
J,ldin. citing the ,Iress of tralllc "nd rushed
hau!., across Cl>UlUry, C(>upled with uupr('-
diet"ble schedules "nd long: periods "way
from home a, the main foctor' deterring
people from entering the profession,
With lhat in mind. Mr. Jadin said thai
his compILny h;,d redesigned some of its
mutes '" umt se"eml hundn.'<l "fit, 15J)(1O
drivers cmold sleep at home ;,t leilSt 17
''''cb a )'ear. 1hc ("Ompany ha.' also tried
to iocreasc the 500 or so hushand-wifc
!c';,,», il cmpll,)'s her:ausc u,,-')' ha,'c low('r
tumo'"Cr Mes th'ltl single drivers. he saKi.
But the m",t popular mo"e has be('ll
tile wmp;ltly's dri"cr apl'rediltion e'·cnts.
Mr. Jadin .",id, like the one the ('mnpany
held in J<lnual)' in Memphi<. fe;llUring an
Elvis imper"onator and free barbecue,
'Thilt C\'ent was" reilily big hit:'
Mr. J"din said. '"I guess a little Elvis goes
a long WilY wilen it COmeS to boosting
mornle and ker:ping driwrs 011 the job."

Questions for Discussion

1. How are tTo,:kmg companies trying: 10 aUrad new drivers?
2, How are tnlcking comp,mies trying to ret"i" employees?
3. What ar" th" ad\'anta£"s of husband-and-wi!'" dri\'i ng teams'!
4. What kind(s) of eal1.'<:rs do mo,t truck drivers have"
 PAR T 1
( Individuals in Organizations

MANAGING STRESS AND

WORK-LIFE BALANCE

OVERYIEW

SOURCES Ot" STRESS

OWING WITH STRESS

SUMMARY

EXERCISES IN UNDERSTAl'I'J)IN(; AND l\IANAI;ING OR(;A."iIZATIOl'\',\1. BEHAVIOR

Learning Objectives
After studying this chapter, you should be able to:
Describe how the experience of stress is based on employees' perceptions
and influenced by individual differences.
Appreciate the fact that stress can have both positive and negative conse-
quences for employees and their organizations.
Be aware of stressors that (an arise from employees' personal lives, their
jobs, their work groups and organizations, the pursuit of work·life bal-
ance, and uncertainty in the wider environment.
Describe problem-focused and emotion-focused coping strategies for indi-
viduals.
Described problem-focused and emotion-focused coping strategies for
organizations.
 Opening Case
GLOBALIZATION HEIGHTENS WORK STRESS
Is work stress out of control?

ncertainty in the world today is creating heightened levels of anxiety for

more and more people. The sources of this anxiety are ....aried. They include
a challenging global economy; layoffs; international terrorism, geopolitical
conflicts, and war; natural disasters such as hurricanes and tsunamis; pollution
and destruction of the natural environment; as well as a series of high-profile
scandals at corporations such as Enron, WoridCom, and Tyeo. 1
Work stress, moreover, is at an all-time high. Employees
at all levels of organizations are being asked to accomplish
more with less. 2 Our ability (and sometimes our need) to stay
electronically connected to the job twenty-four hours a day,
seven days a week has also contributed to mounting levels of
stress. Increasingly, employees with laptops and company-
provided cell phones are taking work home at night and on
their vacations. Based on a recent poll, Travelocity concluded
that around 40 percent of workers traveling on vacation check
their work e-mails, over 30 percent have work-related cell
phone conversations while vacationing, and 25 percent of
travelers take their laptops with them. 3
The fact is employees are trying to juggle myriad
responsibilities, including responsibilities related to their jobs,
raising their children, and caring for their elderly parents,
Maintaining a balance between work and the rest of one's life is
becoming a huge challenge. Increasing globalization has the
potential to heighten levels of stress for multiple reasons. Clearly,
the outsourcing of both manufacturing and white-collar jobs to
GlolM] iZ<lti,," has in"rcu.,.;;1! workl"<l<h unl! low-cost countries like India, China, and Russia is a major source
tinlC dcrnunds for sollle employees who of stress for workers who face the constant threat of losing their
m,te<ld of rdaxing <II hornc with thcir
jobs, or who actually do lose their jobs when companies shut
families in the evenings. find thelllsclvCl;
down manufacturing facilities or outsource white-collar jobs.
cng<lgcxl in conferc~ calls and em<lils boc'k
and fonh to employee' in other countries like
And when companies do outsource work, employees who
India ,,'1\0 life ocginning thcir "or\.: days. retain their jobs often face mounting workloads and ever-
increasing demands on their time, never mind the fear of one day
having their own positions off-shored. Consider the case of
PortalPlayer, a Santa Clara, California, company that develops software and
chips for music players like the iPod and has outsourced around 90 positions
to Hyderabad, India. 4 Given the twelve-and·a-half-hour time difference
between India and California, instead of relaxing at home with their
families in the evenings, engineers and managers in California are
increasingly finding themselves engaged in conference calls and e-mails
back and forth to employees in India who are beginning their work days.s
And while this round the clock global workday contributes to PortalPlayer's
efficiency, effectiveness, and competitiveness, it has the potential to take a
heavy toll on employees. As Christopher Lochhead, a marketing executive in
a consulting firm that operates in 35 countries puts it, UYou can't even get a
rest on the weekend ... The reality is that when you do business globally,
somebody working for you is always on the clock. u6
 CHAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 285

A key challenge for organizations is to ensure that efficiency, quality, and

innovation do not suffer and their members retain their sanity and well-being.
Not meeting this challenge not only hurts employees but also organizational
effectiveness. A recent study conducted by the nonprofit Families and Work
Institute based in New York suggests that over 30 percent of workers in the
United States have chronically high workloads? Moreover, as work overload
increased, workers indicated that they were more likely to make errors, get
angry with coworkers and managers, feel more stressed, and not take care of
their health and have it suffer. s
Some organizations have been able to address this problem by examining
work processes and making creative changes to improve effectiveness.9 For
example, Debbie DeGabrielle, a top marketing manager at WRQ, a software
integration company based in Seattle, Washington, recently had her staff of
SO reduced to 22 while she was aiming to increase ~Ies. DeGabrielle took a
proactive approach to her dilemma, and with the help of her staff, came up
with creative ways to do more with less by developing things such as an
online "toolbox" to help staff members during sales calls and presentations.
However, she also recognizes the need to make sure she doesn't push her
staff too hard, so after strenuous periods of nonstop work, she encourages
them to take a day off. As she puts it, "You have to make sure that you don't
push so hard that you burn out."10
John Seiple, a top manager at ProLogis, a distribution facilities company
based in Denver, Colorado, was similarly challenged when the volume of his
operations increased 40 percent while his workforce was reduced by S percent.
Seiple met this challenge by eliminating unnecessary activities and pdperwork.
Rather than worrying about getting their paperwork done, employees are
urged to remain focused on customers and give customers their undivided
attention. 11
Clearly, mounting levels of stress and overload is an important issue that
many organizations need to proactively address. For example, a recent study
by the National Institute for Occupational Safety and Health (OSHA) found
that over SO percent of the employees surveyed considered job stress to be a
big problem for them personally, and over 40 percent of the employees
believed that their coworkers required some kind of assistance to manage
their job stress. 12 A study by Marlin Company, a research firm specializing in
the workplace, found that 29 percent of the employees surveyed categorized
their stress levels as being high. 13 According to research conducted by the
American Institute of Stress, job stress and its consequences, such as
absenteeism and mental health deterioration, carry a heavy price tag for
corporate America-estimated at over $300 billion annually, in fact. 14
Moreover, job stress appears to be a global problem. The European
Community proclaimed job stress to be amon9 the top work-related health
problems in Europe. Unfortunately, stress is not going to go away, so what is
important, stress management experts say, is helping employees change how
they respond to and cope with stress. 15

Overview
In previous chapters. you leanlCd about many ur lhe ways in whKh wurking in an urg,mization
affct:ts individuals. [n Chapter 3. you learned how people's experiem:cs in organizations shape
imponant attitudes they havc. such as their job s.atisfaction and organizational commitmcnt.
286 PART t • INDIVIDUALS IN ORGANIZATIONS
STRESS
11><: C 'p"ric""e of OP1X""lunilie,
or threat.' that I"-'Ople p""-,,,iw a,
i",ponant and aho pC"-"'",'C the}'
mighl nO\ be ahle 10 handle or
deal "ilh crfecli,'ely
In Chapters 5. 6. 7. and !t you le;rrned how and why different aspects of an organization-the
way it designs jobs. sets goals. appntiscs perfonn;mce. and administers rewards such as pay
and praise-affectl11otivation and perfonn:ll1ce. In thiS chapter. we continue to explore how
working in an organization afh.:ds individuals by focusing on stress and work-life balance
(the ",Iationships betwccn people \ work and their lives as a whole).
Stress affects how people feel and bch:lve both on and off the job. Stress is a national
and global COrll:crn and unfortunalely an all-lCMJ-familiar problem. It> Most of us at one time
or another have experielKed some of the consequelKes of too much stress: sleepless
nights. anxicty. nervousness. and headaches or stomachaches. A recelll study found that
around 40 111il1ion Americans experienced stress during a two-week period. 17 And. 1lS indi-
cated in the Opet1111£ case. stress costs org.mizations billions of dollars a year in lost pro-
ductivity. absellleeislll. turnover. and healthcare cOSts for stress-related illnesses.
Undcrstandi ng and managi ng stress is important not only for the wcll-being of thc 1111.'111-
bers of an organ i7~1t ion but also for the effecti I'eness of the organi zation itself.
In this dwpter. we describc the nature of stress and the consequences it has for indi-
viduals and organizations. We discuss the sources of stress and the steps that employees
and thcir organ iZ,at ions can take to hI.' Ip cmployccs cope effcctivel y with stress. By the cnd
of this chapter. you will have a good understanding of how stress affects people and how
employees and orgamzations can manage stress eflectively.
The Nature of Stress
When was llie last time you fell particularly stressed') Maybe you had a paper due In a cou-
ple of days. but you hadn't cven started it. Perhaps you had three big cxams on tile same
day. and you weren'1 gClling along witll your roommate. or you wcre worricd about not
being able to find a good job when you graduate. You might have had a sense of being
overwhelmed. of faelllg a problem that seemed lIlsurnlountable. or of being e.\peeted to do
too many til ings at once. Or you may have felt uncertain aboll! lIow to respond III an oppor-
tunity that had thc potcntial to bencfit you but also was vcry challcnging.
Stress is the experience of opportunities or threats that people perceive as import,1tll
and also perceive they mlghll10t be able to handle or deal with effccti\ely.l~ Several sig-
nific:mt aspects of Slress are highligllted in this definition. Firs\, stress call be experienced
because of ooth opportunities and threats. An opporluuity is something tllat has the poten-
tial to benefit a person. A Ilir/'{1/ is something that has the lXltenhalto harm a person. 19
Opportunities su\:h as learning new skills or getting a new job can be stressful if cmploYl-cs
lack self-efficacy (sec Chaptcr 5) and fcar that they will not be able to perform at an
acceptable levcl. Whel1 an organi:wtion reduces thc size of its workforee. cmployecs expe-
rience stress bec:wse their financial security. psychological well-being. and career devel-
opment arc thre<ltened. From the opening case. it is clear that having to work long hours
causes employccs to cxperiellce stress because it thrcatell.> their family lives.
A second aspect of stress is that the threat or 0PlXlrtunity experienced is important to a
person. By illll'0rw/!I we mean lhat it has the lXltentialto affect a person's well-being or
the extent to whi\:h SOll1l'Qnc is happy. healthy. or prosperous. Many of the things that pro-
pie encounter in the ir daily lh'es could be classified as opportunitics or threats. but usually
only the important ones result in stress. Driving through traffic on the way to work is a
threat. foresample. but for many people it is not signific;1l11 enough to result in stress. The
threat of heavy traffic may becoll1e important enough 10 cause stress. however. if you arc
caught in a traffic jam at 7:50 A.M. and arc scheduled to makc a crucial presclllation to
upper management at 8:00 A.M. In this situation. hcavy tmfflc has the potential to affect
your well-being negativcly- being late for your own presentation will not make you look
good in the eyes of your superiors.
Clearly. workplacc violcnce is one of the most Iife-th",aten ing sourccs of stress. How
real is the threat. and what can be done to ovcrcome it? Managing Ethically discusses this.
A third key aspect of stress is IlI!cuwimy: The person who is experienclIlg:1Il impor-
tant opportunily or threat is nOi sure that he or she can effectively deal with it. Whcn peoplc
 CHAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 287

Managing Ethically
Violence in the Workplace

A Xero~ employee in Honolulu shoots and kills seven coworkers; two employ~s of a
Seattle boat repair business are shot and killed by a man dressed in camouflage clothing,
a troubled employee of a Lockh~d Martin aircraft plant in Meridian, Mississippi, shoots
and kills five 01 his coworkers and then kills himself. 2o Unfortunately, these e~amples of
workplace violence underscore a national problem,
In the 19905, widely publicized tragedies involving violence by postal workers 21 led
people to believe that violence in the U.S, Postal Service was more prevalent than else-
where, The truth is postal employees are only about one-third as likely as employees in
general in the United States to be killed on the job,22 That said. appro~imately 2 million
employees in the United States are victims of workplace violence (ranging from threats
and verbal abuse to physical attacks and homicide). Workplace violence, believe it or not,
is one of the major causes of work-related deaths. 23
The threat of vkllence
on the Job is highest for
employees in service jobs
whose work hours or
places of employment put
them particularly at risk,
and for employees whose
interactions with the pub-
lic entail the e~change of
money,24 Overall, employ-
ees in retail settings are
more than five times more
likely to be victims of
homicides at work than
De'pite heightened publicity ~bout violcnc'e in the 19'XJ<;. U.s. PO'I~1 post-office workers. Ta~i­
Scrviee employees arc only about one-third as lIkely to be killcd On cab drivers and chauffeurs
the jot> a, other cmployee, in the Unit<-<l Stalcs. I\'onethcle,". the
postal scrvil:c has instituted a workplace violence ~w~rcness program
tend to be at most risk for
along with a hOlli"" employees c~n c~1110 "'pon ho,tile situ~li(ms. homicide while on the
job, followed by sheriffs
and police officers: gas station. convenience store, and garage workers; and security guards.
More often than not, the perpetrators of these crimes are not current or former coworkers
and do not know their victims. Sometimes domestic violence spills over into the workplace
such as when an abusive partner attacks his or her estranged spouse in the spouse's place of
employmenl. 25 Nonetheless, current or former coworkers continue to commit acts of work-
place violence as well. In 2005, a former post-office employee shot five employees at a large
mail-processing center in Goleta, California, and then shot herself. 26
It is an ethical imperative that managers and organizations take whatever steps they can
to minimize the threat of workplace violence, When a former empk:>yee of Intel Corporation
made violent threats, managers decided to take swift action to ensure that the work
environment was safe. They instituted a multipronged program that includes guidelines,
training, and awareness programs for employees. At each Intel kx:ation in the United States, a
wor1<place vic>lence team composed of members from security, human resources, and nursing
helps empk:>yees deal with threats and responds to any inddentsthat might occur. 27
288 PART t • INDIVIDUALS IN ORGANIZATIONS

According to the Occupational Health and Safety Administration (OSHA), all organiza-
tions should have a "zero-tolerance policy" toward violence in the workplace l8
Organizations should also take specific steps to ensure that employees are aware of the
policy and what it covers Additionally, pragmatic steps should be taken to make the
workplace as safe as possible so that employees are not put in risky situations. These steps
can range from installing security systems, surveillance cameras, and locked drop safes to
limiting the amount of available cash in stores and providing employees with safety equip-
ment such as handheld alarms and cell phones. It might also include security officers
escorting employees to their cars at nighl. 29

are confident thar they can effcrril'cly handle an opportunity or threar.they usually do IlOt
experience stress. An orthopedic surgeon performing a routine knee operation is notlikcly
10 experience stress if he or she has perfonned similar opermions in the P:lsl nnd feels con-
lidenl aboul doing a good job. Performing a complicaled hip repla\:ement on an elderly
pmiem who is in poor health, howcwr. might oc stressful for the surgcon if he Of she is
unccrtain about the outcome. Similarly. employees experience' stress from the uncertainty
of being nble 10 have a good family life while slill advancing lheir careers.
The last aspe<:t of slress emphasized in our dctinition is thai stress is rooled in pcrcep-
lion. Whether people experienec stress depends on how they perceil'e potential opportuni-
ties and threats and how they pen:e/l'e their capabilities to deal with them. One person
might perceive a job ch~mge or a promotion as an oppOrlunily for learning and career
advan\:emenl, and another pcrson mighl perceive the same job change or promotion as a
threat occausc of thc potcntial for failure. Simi larly. a person with high sci f-efficacy might
feel well equipped to take on addition~ll reSJXlnsibility. However. an equally capable
employee WIth low self-efficacy mighl perceive that he or she catl't handle any more
responsibi Iity.

Individual Differences and Stress

Our dcfinition cmphasizcs that an individual's expericncc of stress depends on a numocr of
factors such as how irnJXlrt<lnt ;1 person thinks a given oPJXlrtunity or threat is and the
exlent to whi\:h a person thinks he or she can deal effeclively with the opJXlrtunily or
lhrea!. Above all else. stress i, a I'cry personal experience. Although it may oc lerrifying
for sOl1\e students to make a presentation in front of elm;s, others cnjoy being in the spot-
light and having a chance to display their knowledge and wit, Similarly. some nurses who
care for AIDS patienls find this dUly highly stressful because of the lhre:n of <l(;\:idental
infection or the emotional pain caused by the death of lheir paliems. BlII other nurscs con-
sider caring for AIDS patients a profes~ional opJXlrtunity that they have the skill~ and
knowledge to deal with. Members of an org~lniza1ion must realize that individuals may
respond differently 10 the S<tme polential source of stress and lhat whal mighl seem tnvial
10 one employee might be a real source of stres~ for anolher.
In Chapter 2. we discussed the two major way~ in which people differ from each other.
in personality .md ability. and their implicillions for understanding and marwging organi-
zational behavior. Individual differences also playa significanl role in determining how
memocrs of an organization perceh'e and think abolll potential sourccs of stress. lhei r abil-
ity to deal with stress effectively. and ultimatdy the extent to whieh they experience stress.

Personality. Se\"emlof the personality traits wc discussed in Chapter 2 arc important for
understandillg why employees esposed to the S,llne potentbl ~ource of stress may differ ill
lhe eXlent to which lhey actually experience slress. Employees who are high on lhe Big
Five personalily dimension of Hl'umliciml. or lIegll1i\'t' afft'/:Iil'ily. for example. h;ll'e a
gcneral tcndency to view thcmsell'cs. thcir organizations. their johs. and the people thcy
work with in a negmive manner. These employees arc likely to vicw ,llnbiguous conditions
and danges al work as polential threats and feel ill-equipped 10 deal with both threals and
opportunities. ConsiSlclll with this reasoning. employees high on negalil'e affectivity tend
to experiencc more stress than those low on ncgative affcctivity;lO
 CHAPTER 9 • MANAGING STRESS AND WORK·L1FE BALANCE 289

As anothC"r C"xamplC", C"mployC"C"s who al'C' high on the Big l'ivC" dimension of
e.Onn·erJ'ioJl. or pOsili"e (IIfeCli";II;, tend (Q be outgoing and enjoy interacting and sodaliz-
mg WIth other people. In the c1assruom,ext]';]verts are less likely than introverls to experi-
en"e stress when making presemations. Similarly, extraverts <:Ire less likely !O experience
stress ill jobs requiring frequC"nt presentations or meeting with nC"w people on a day-to·day
basis. Sales and service jobs are examples.
OPCIlIII'SJ' 10 nperi<'ll(,(" which ",Iptures the extent to whid employees arc daring and
open to a wide range of experielKes, is a Iinal example of a per,ona!ity tr;lit from the Big
Fi\'(' mooel that is likely to affcrt the extC"nt to which employeC"s experience stl'C'SS. For
most people. taking risks and making frequent changes can be stressful. Even etlll'C'pre-
neurs are stressed by the risks of stm1mg theIr own cornp;mies and the frequent changes
needed to be innovative. Nevenheless, it is likely thm employees who arc high on openness
to C"xperiC"nce may find risk taking and frequent change IC"-"s stressful than those who arC"
low on openness to experience.
In Chapter 2, we also dis.;ussed sollie other. more spe"ilic personality traits that are rel-
evant to understanding and managing Org,Ul izational behavior, and it is Ii kcl Ythat these traits
also affect stress. EmployC"Cs who are high on self-f's/('elll, for example, are less likC"ly to
experience stress from challenging work assignments ,HId are ,1150 more likely to think they
C<lll deal eITt"<:ti\'c1 y with soorces of stress. As <lnother example. 1)pi' A l'IulJloyl'es have stress
experient'Cs di fferent from those of 7.11)C B l'mpIOyi'cI. Type A's, as you rcrall, ha\'e a strong
desire to achie"e, arc competitive. have a sense of timC" urgency. are impatiC"ll1. and can bc
hostile.1llcy h;I\'e a strong desire to get ,I lot done in a shon period of time. The more relaxed
Type B's arc not so driven. Initially. rese;m;hers thought that Type As would experience more
stress than Type B·s: ho'>"e"er. reeent rese;lf(;h suggests tliat only Type A" who are very hos-
tile experience high 1e\'Cls of stress. A Iinal example of a personality tmit that is likely to play
a role in the extent to which employ~s experience stress is Im:us ofco1/lml. Employees with
an internal locus of eOll1rol may experience less stress than those with an external locus of
control because they fecllhat thf."Y can inl1uence what happells to them. However, wlien
e\'ents are largely beyond an employee's control (for example. when his or her company goes
bankrupt). internals may experience stress because they are not in control of the siWation.

Ability. In addition to having differC"nt personalities, employees also differ in their

abilities. which can affect stress levels. Stress can be experienced when employees lad the
abilities necessary to perfomltheir jobs. Employees at the Collins & Aikman carpet factory
in Dalton, Georgia, lor example, experienced stress whell the factory was eompmerized.
SomC" of the employees were not able to read or perform the calculat ions ncressary to work
with the new computers and felt that their jobs were threatened. Collins & Aikman helped
employees deal with tins source of stress by providing extensive additional training. The
tmining itself was a source of stre,s for some employees who were afraid that they would
not bc able to impmve their skills bccause of OlhC"r time df."mands at work and at home}1
Somewhat related to ability is another factor that affects whether employees feel
,tressed or 1I0t: experien"e, People are more likely to feel slres>ed when tlley lack experi-
ence at doing something. and they arc less likely to feel stressed as they gain experience.
This explains why employees staning new jobs often feel slfC"ssed and nC"f\'ous-their lack
of oll-the-job experience breeds uneenainty. A new supervisor in a bank. for example. is
un"erl,lin about how to senle work-scheduling "ontlicts among his subordinates. how to
run a group meeting most effectively. how to get help from his boss without seeming
ineompelC"nt, and how to motivate a capable but poorly performing subordinate. ThC"se
sourees of ullcenainty create stress for the supervisor. but the stress diminishes O\'er time
as he gall1s experience.

Consequences of Stress
Because what an employee considers to be stressful is highly personal. employees differ in
the extent to which they experience the consequelKes of stress. even when they <Ire
exposed to the same sourc('s of stress (sllch as making a prcsclllation or getting laid oft).
290 PART t • INDIVIDUALS IN ORGANIZATIONS

At some point in their livcs, however, all employccs expericnee some of the consequences
of stress. These consequences arc of three main types: physiological. psychological. and
behavioral. Each consequence has the potetllial to alTect well-being. performance. and
clTcctivencss at the imJiv idual. group. and organizal ional levels.

Physiological consequences. Were you ever unable to fall asleep or stay asleep at
night when you wcre experiencing p'lrliculmly high levels of stress during the day'! Such
slecp disturbances are just one of the many polential physiological consequcnces of slress.
Other potential physiological con'equences range from sweaty palms. feeling flushed.
trembling. 11 pounding heart. elevated blood pressure. headaches. dizziness. nausea.
stonwchaches, backaches. and hives to heart :lllacks amI impaired Immune syslem
functioning. Rock singcr Stevie Nicks. for example. says that when she cxperiences Slress
before a live performance. her stomach gets upset. she breaks out in a sweat. and her
asthma bothers her. n
The relationship belwt-en stress and physiological consequences is compllcaled. and
rcscarchers arc slill struggling to understand tlte dynamics involvcd. 3J Two individuals
experiencing thc same high Icvcls of stress Illay havc different physiological rcactions.
Moreovcr. some prople seem to cxpericnce more physiological consequences than others
do. People also differ in Ihe exlenlto which Ihey compl:lin <tbout physic<t! symploms of
sires, such as hcadachcs and stomach aches ..l4 The most serious physiologkal conse-
quences of stress arc likely to occur only after con.,iderably high Icvcls ofstrcss arc expe-
ricnced for a prolonged period of timc. High blood pressure. cardiovasculllr disease. and
hean atlacks. for exatnpk. nwy resull from eXl:essivc levels of prolonged stress.

Psychologital consequences. One oftllC major psychological consequences of stress is

the experience of slres,ful feelings llnd emotions. Stres,ful feelings and emotions can range
from being in a bad mood. ft-eling anxious. worried. and upsello feding angry. S\;omful.
bil1er. or hostilc. Any or all of these fcel ings will dctract from employees' wel1-being .35
Another psychological consequence of stress is that people tend to hal'e more negativc
altitudes when they experience stress. Employees who are highly slressed tend to have a
more negative oUllook on various aspects of their jobs and organizations and arc more
likely to have low levels of job satisfaction and organizational commitment. Stressed
employees may feel underappreciated. fed a lack of control. and also fccl that their work
is interfering wilh their personal lives. Marlin Company and the American Institute of
Stress dcveloped a short quiz that measures the exlenl of stress based on Ihe sevcrity of ilS
psychological consequences (sec Exhibit 9.1).

Dillicuitics falling asleep ill

night or ,taying a,leep arc 0"" of
many potential physiological
<'<'""''1''''lle..,s of ,t"",.
 CKAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 291

EXHIBIT 9.1
This quiz was adapted from a stress scale developed by Marlin Company and
A Stress Quiz the American Institute of Stress. Employees respond to each of the items
SOlOW: C> 2002 Time Inc, All rig~b
based on the following scale'
"",,,,....-.1
1 2 3 4 5
Never Rarely Sometimes Often Very Often
1,Conditions at work are unpleasant or sometimes even unsafe.
2, I feel that my job is making me physically or emotionally sick.
3 I have too much work or too many unreasonable deadlines.
4 I can't express my opinions or feelings about my job to my boss.
S. My work interferes with my family or personal life.
6, I have no control over my life at work.
7. My good performance goes unrecognized and unrewarded.
8 My talents are underutilized at work.
TOTAL
Responses to each item are summed to yield an overall stress score. Scores at
or below 15 are indicative of low stress whereas those above 25 are indicative
of high stress. The higher the score, the higher the level of stress.

Uurnout-psychologic<ll. emOlion<l1. or physical exhaustion-is a spcci<ll kiml of

BURNOUT
P,)'cholog;cal. emotional. or psychological consequence of ,tr{"ss that amiCi, some employees who experience high
ph) 'i,al ,~~aU,I"'n. le\'els of woTt stress day in and day out for an eXlended period of lime. Burnout is espe-
cially likely 10 occur when cmp!oYl-eS arc responsible for helping. protecting. or taking
c<lre of other pcople,36 Nurses, d(Ktors. s(Kial workeD;. teachers. lawyers. and police offi-
cers. for example. can oc al risk for dcveloping burnOUI due to the naturc of their jobs.
Three key signs of burnout arc feelings of low perwnal accomplishmenl. emotional
exhausl!on. and depersonalizatiou. 37 Burned-out employees oflen feel lhal lhey arc not
hel pi ng olhers or accomplishi ng as much as lhey shOll Id be. Emot ionall y. they are worn OUi
from thc conSlam Slress of dealing Wilh people who are sometimes in desperate need of
assistance. Burned-out employees sometimes depersonalize lhe people they need to help.
lhinking aboulthem as objects or lhings rather lhan as feeling human beings. A burned-oll1
social worker. for example. may think aboUi a foster child in need of a new home as a case
numocr ralher lhan as a very scared 12-year-old. This psychological consequence may lead
10 a behavioral consequence when lhe burned-oul social worker tre,IlS Ihe child in a cold
and distant manner.

Behavioral consequences. The pOlemial consequen(-e of stress on job performance is

perhaps of mOSI imcresl 10 managcrs. Onc way 10 summari7£ thc relalionship OClwccn
Slress and performance is in lenns of an illl'erted U (see Exhibil 9.2). Up 10 a certain point
(poiOi A in lhe figure). increases in stress enhance pcrformanl'C. Beyond lhat point_ further
increases in stress impair performance. Slress up 10 poiOi A is pOsilil'e slre.u because il
propels employees 10 perform al a high level. Stress beyond poilll A is 1/('8/l1;W! SII'{'SS
because il impllirs perfomlanee. Dr. Allen Elkin_ who works atlhe Stress Management
Counseling Cenler in New York City. suggests lhal each pcThOn has to find lhe righllevel of
slress for himself or herself -enough to feel productive and fulfilled bw nOlllX) much \() be
overwhelming. Dr. EI kin Iikclls fi ndi ng the opti mal level of sire,s 10 lUni ng the Slrings on a
violin or guilar. If the strings are 100 loose. there is no sound: if lhey are 100 lighl. they
break: when they are tuned correctly. lhey can make beauliful music.
The f<lCllh:n Slress can be posilive is illuslratc(] by considering the motivalionallhco-
rics and lools wc discussed in Chapters 6. 7, and 8. These lhcories and lools can be used 10
raise lel'els of motivalion and job performance. but Ihey also hal'e the polenlial to increase
292 PART I • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 9.2
Woo is motiv,,-'ed
An Inverted U to p ft><m at a hig!> level
Relationship Between High
Stress and Performance
Siress up 10 point A is posili"c
bc<;au:;c il prom piS a workcr
10 perfoml <II a high Ievcl. Slress
beyond poim A is negative
becau"" II Impairs performance.

WOrkH"
Worker paralyzood by
i. bo.ed intense .<teft
~L:='-----,---,-J;-:----'===;-;-
Low l<wl of"",,, H.gh
II I
Neg"-,;",, ",,,,••

levels of slress. For example. giving an elnployee a difficult g0.1110 reach and Iltelllelling
Ihe cmployee Ihal he or shc will rceeil'e a hefly bonus only iflhe goal is a([ained is likely
10 result in a ecnain level of slress. [n Ihis case. however. Ihe Slress is posilive because il
energizes Ihe employee 10 Iry to re:Jeh the goal. Similarly. the ,tress Ihal most studems
experience as exams approach is positive because il propels Ihem 10 study. As a final exam-
ple. many performers and athleles find thai a certain amounl of slress (or stage fright) gets
Iheir adrenaline pumping and helps Ihem do their best. As singer Stevie Nids indicmes. "[f
I WaSll'l really nervous before walking all slage. I'd be really worricd:' 38 The expression "1
work beSt under pressure" captures the feeling that positive stress can propel people to
reach Iheir goals and perfonll at high levels.
Suess levels Ihat arc 100 high. however. Call impair performam;e am!. thus. arc nega-
tive. Students who suffer from serious lest anxiety cannot fCmember mmcriallhey may
have known quite well the day before the lest. Their Slress and anxiety interfere with lheir

On-Ihc-job Slress can be good. ,r

ii's kept m an oplimalle",,!.
Spons leams like lhe New Yorl<
Yankees and the Florida Marlins
can acwally uSC Slress 10
enhance their pcrfomlance in
high-.\1akcs games like Ihe World
Series.
 CKAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 293

ability to takl.' the te~;t, and thoughts of how poorly they arc going to do prevent them from
concentrating on the questions being asked. Sill1ilarly. l.'xcessively high levels of stress
may pn:ventl.'rnployees from effectively performmg their jobs. Entertainers who experi-
en"c exccssive Ic\'cls of negati\'c strcss may a\'oid livc performarKcs altogcther. as Barbra
Streisand did for 27 ycars. 3'1 In 1994. world-rl.'nowned speed skatn Dan Jansen was abll.' to
win the gold medal thai had eluded him for three previous Olympic Games only when he
was ,tble tu relax and control hts dysfun"tiunal Ie\'el of Stress with the help of spurts
psy"hologist Jamcs E. Loehr:l()
Individual diffl.'renccs also affC"Ct thl.' rl.'lationship bctwel.'n stress and pcrformancc.
Some employees. because of their personalities and abilities. are able to withstand high
le\'els of stress that seem to propel them un tu e\'en higher levels of performance: fur su"h
l.'mployees. high Ic\'cls of stress arc positi,'c. Thc performanl-e Icvl.'ls of other cmployccs
suffl.'r when stres.s becomes too high. For l.'ach l.'mploycc.thc point at which increases in
levels of stress result in decreases in perfonnance depends on Ihe employee's personality
traits and abilities.
Besidcs enhanccd or diminished job performance, othcr potcntial behavioral consc-
quences of stress include straincd intcrpersonal relations. absentceism.41 and turnovcr.
When employees are experiencing excessively high levels of stress (negmive stress). it is
often han.! for them to be as "aring and understanding with others (coworkers. subordi-
natcs. ,;uperiors. customers) as thcy normally would be. A normally agreeable employee
who suddenly flies off thc handle may be cxpericncing a \'cry high level of stress. Josl.'ph
Stridl<\Jtd. a vice president in charge of Amoco's D,illas plant. realized that stress le\'els
were getting out of hand when one of the managers at the plant started giving everyone a
hard time. ··I·le was yelling at the Sl'Cretaries. he was scre<tming at the human resour"es
people:' Strickland rc-callcd. ··It was \'cry unlike him ...·n Employc-cs expericncing high Icv-
cis of StreSS mny also have strained relmionships wilh their spouses and fllmilies. This was
found to be the case with some employees who were l<tid off at Phillips Petroleum
Company.4.1
Excessivcly high levels of stress may also lead to absenteeism and turnover, especially
when employees have other employmenl oplions. A recent study found thm many nurses
experience,;o much stress and bumoutthey arc planning to qUlttheir jobs or lea\'e nursing
altogcthcr.4~
In Japan. whcre work overload is a significant source of stress for many employees.
an extreme behavioral consequence of negalive stress is what the Japanese call k/lmshi.
death from 0\'erwork.45 A study conducted by the Japancse go\'ernment found th<tt in
1993 about one out of six mcn workl.'d a minimum of 3.100 hours a year (60 hours a
week. 52 wc-cks a year). a schedule that physicians suggest can lead to karoshi. Karoshi is
not limited to Japan: the British Medical Association has investigated claims that broshi
took the lifc of a young dodor who worked 86 continuous hours in England.46
Unfortunately. if anything. it appears that work ovcrload is on thc rise-in Japan and
around the globe. According to Jap,IIl's Health. Labor. alld Welfare Ministry. 317 deaths
in Japan in 2002 could directly be associated with excessiv", working hours.41 However.
experts belicve thc actual figure is many times higher than this. especially among profcs-
sional workcrs.4s A reCl.'nt study conductcd by the Japanese Trade Union Confcdcration
estimates that around 33 percellt of mllle employecs in Japlln ill their early thirties work
approximately 58 hours per wcc\;.49 England.Australia. and the United States also appear
to be trcnding toward increasingly long working hours. 50 And. as illustratcd in thc open-
ing case. cxccssivc working hours can be not only a significant cause of strcss hut can also
lead to health problems.

Sources of Stress
STRESSOR What causes stress? Five major potential slressors. or sources of stress. arc one's per-
A '<lUreC of ,Ire." sonal life. one's job responsibilities. membership in work groups and organizations.
work-life balance. mtd environmental uncertainty. Whelher potenti1l1 stressors become
294 PART t • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 9.3
Po.enti~1 .tr<t."".. E..perience of .<Te•• Potential con_nee.
Sources and of .trOD
Consequences of Stress Person.1 "'''''SOr> Worlcer pe,c~ption, PhysIological
con~qu~n<:..
)ob·,..,jated "'e»or> P....on.llty
Group- and organiza,ion- Ability P.ychologlCal
",Iated .tr~.""r> Expenence
con~'lu~nc"

5"'''0," ari.ing ou' of Beh.vioral

<on~'lu~n<:e.
work-life balance

nctual stressors ,tnd produce Slrcss nnd whether Ihe slress an employcc e;o;periences is pos-
ilive or negntive depend on individunl differcnces ami how lhe individual perceives and
interprets the Sl ressors. Bl.'"t wel.'"n the five cntegories of polential stres"ors (discussed next).
a nearly infinite combinalion of them can lead 10 lhe physiological. psychological. and
behnvioral consequences of Slress (see E.dtibit 9.3). The effecls of lhese stressors eom-
binI.'" to detl.'"rmine lhe overall Icvel of Slress a per,;on experienl:cs. Each stres,;or con-
tributes to or inl1uences how slressed a peNon generally fccls.

Personal Stressors
Why arc we bothering to discuss stressors from one's personal life in a book on orgllrliza-
llOnal behavior'! Wh<it happens 10 employees off Ihe job can affel:! Iheir alliludes. behllv-
iors. and performnnl:e on the job as well ns their OWII wdl-being. A normally polite and
helpful salesperson may lo'>C his temper with a disgl1JIHled customer hcrause he is preoc-
cupied with the fight he had with his wife lh,lt same morning. Similarly. a marketing man-
ager who normally has nn open-door policy mny nvotd inleracting with her l:olleagues
because shl." can't gel her mind off her leenage son's drug problem. Marrioll [mernational
found thm personal and family problems are a significant cause of the high lUmover rates
of employees in some of its reSlaunlll!S and hOlels. sl From lhe opening case. it is clear tlml
family responsibilities and horne life are an imporlant concern for employees both on and
ofT the job.
One way of viewing lhese and other personal sources of Slress is in ternlS of major and
minor life e\"cnts.~2 Major IIfc {'rcm.!' elm have serious impliealions for stress and well-
being and include the death of a loved one. divorce. seflOUS l11nes,; of oneself or a loved
one. and getting arresled. These are all sources of stress involving emOlional or physical
"threats" and are negativc _Olher major life (vems are positive "opportunilies" that can be
stressful. such as gelling married. buying a house. having or ndopting a baby. and moving
10 anOlher Slale. Relalively millor lif<, <'I'CII/S also I:an be sources of Slress. sud as getting a
speeding ticket. having trouble Wilh your in-laws or child care pnwider. and even going on
vaealion,
How slressed a person generally feels appears 10 depend not only on lhe CXlenl 10
which the stressors Ol:(ur and how signilicanllhey arc for the pt:r,;{lIl but also on how many
of them occur simultaneously during any gh'en period. S3 New college graduates. for exam-
ple. somelimcs cxperience high lel'cls of Slress because many polentially Slressful life
evenlS (oolh posllive and negalive) occur in a short period of time-moving. losing old
friends. making new friends. gelling marril'iJ. and bel:oming financially independem while
at the same lime starting or looking for a job. Although each event might be only mildly
stressful by ilself. the fact lhal they are all happening togelhcr resullS in a high le\"el of
stress.
Re,;enrl:her,; have developed que';lionnaires thall:onlain del:kli,;ls of slressful life
evems and their perceived impael. Ovl."rall stress le\"els arc determined by the number of
events lhat have occurred during a certain period (such as lhe past three years) and their
significance to a person. Overall Slress le,·els. in lum. have been shown to be relaled 10 the
exlenl 10 wh ich some of the negative consequences of slre,;s we di';l:usscd carl ier oCl:ur.·q
Items fmm one of lhesc questionnaires arc listed in Exhibit 9_4.
 CKAPTER 9 • MANAGING STRESS AND WORK·L1FE BALANCE 295

EXHIBIT 9.4
Sample Items from a Life Event Checklist

Happened in Last Three Years? Current Impact on You?

No V" Negative None Positive
1. Started school or a training No V" 3 2 0 +1 +2 +3
program after not going to
school for a long time
2. Started work for the first time No V" -3 -2 -1 0 +1 +2 +3
3 Changed jobs for a better one No V" -3 -2 -1 0 +1 +2 +3
4. Changed jobs for a worse one No y" -3 -2 -1 0 +1 +2 +3
5. Changed jobs for one that was No y" -3 -2 -1 0 +1 +2 +3
no better or no worse than
the last one
6. Had trouble with boss No y" -3 -2 -1 0 +1 +2 +3
7. Demoted at work No y" -3 -2 -1 0 +1 +2 +3
8. Found out was not going to be No y" -3 -2 -1 0 +1 +2 +3
promoted at work
9. Conditions at work got worse, other
than demotion or trouble with boss No y" -3 -2 -1 0 +1 +2 +3
10. Had significant success at work No y" -3 -2 -1 0 +1 +2 +3
11. Fired from previous Job No V" -3 -2 -1 0 +1 +2 +3
12 Promoted on present job No Vo; -3 -2 -1 0 +1 +2 +3
13 Started a business or profession No Vo; -3 -2 -1 0 +1 +2 +3
14. Suffered a business loss or failure No Yo; -3 -2 -1 0 +1 +2 +3
15. Sharply increased workload No Yo; -3 -2 -1 0 +1 +2 +3
16. Sharply reduced workload No Yo; -3 -2 -1 0 +1 +2 +3
17. Had trouble with a co-worker or peer No Vo; -3 -2 -1 0 +1 +2 +3
18 Had trouble with a subordinate No Vo; -3 -2 -1 0 +1 +2 +3
19 Had trouble with a customer or client No Vo; -3 -2 -1 0 +1 +2 +3
20. Spouse started work for the first time No Yo; -3 -2 -1 0 +1 +2 +3
21. Spouse changed jobs for a worse one No Vo; -3 -2 -1 0 +1 +2 +3
22 Spouse promoted No Vo; -3 -2 -1 0 +1 +2 +3
23 Spouse demoted at work No Vo; -3 -2 -1 0 +1 +2 +3
24. Spouse fired No Yo; -3 -2 -1 0 +1 +2 +3
25. Took out a mortgage No Yo; -3 -2 -1 0 +1 +2 +3
26. Started buying a car, furniture,
or other large purchase on an
installment plan No Vo; -3 -2 -1 0 +1 +2 +3
27. Foreclosure of a mortgage or loan No Yo; -3 -2 -1 0 +1 +2 +3
28. Did not get an expected wage No Yo; -3 -2 -1 0 +1 +2 +3
or salary increase
29. Took a cut in wage or salary No Yo; -3 -2 -1 0 +1 +2 +3
without a demotion
30. Spouse did not get an expected
wage Of salary increase No Yo; -3 -2 -1 0 +1 +2 +3
(Continued)
296 PART 1 • INDIVIDUALS IN ORGANIZATIONS

31. Robbed No Yes ~3 -2 -1 0 +1 +2 +3

32. Got involved in a court case No Yes -3 -2 -1 0 +1 +2 +3
33. Acquired a pet No Yes -3 -2 -1 0 +1 +2 +3
34. Pel died No y", -3 -2 -1 0 +1 +2 +3
35. Was not able to take a
planned vacation No Yes -3 -2 -1 0 +1 +2 +3
36 Remodeled a home No y", -3 -2 -1 0 +1 +2 +3
37 Became engaged No V", -3 -2 -1 0 +1 +2 +3
38. Engagement was broken No V", -3 -2 -1 0 +1 +2 +3
39. Spouse was physically ill No y", -3 -2 -1 0 +1 +2 +3
40. Expecting a baby No Yes -3 -2 -1 0 +1 +2 +3
41. Child started college No y", -3 -2 -1 0 +1 +2 +3
42. Serious family argument other No V", -3-2-1 0 +t +2 +3
than with spouse

Smllu: A<lapted from 11.. S. Bh'gal. S. J. McQuaid. H. Lindholm.,oJ J, Scgou;, -T'M"I Life Str",,, A ,'1ullinldllod Validalion of II", Con."'klCl and h'
Effects on Or£anilationally \':llueJ OUICO""', and W;IIId,"~w,1 Behavi"",:' }"unkll '1 Applied l',wIJolog,\' 70 (!985}: :!O2-1~: A. P. Brief. M, J. Burte. J.
•\ 1. Ge<Jrge. B. S. Robi"",". and J. WebS/c,. "Should Ncgoti"e Atlccli\'il}' Rem"in an Umneasure<J Variablc i" lhe Sludy of Job SI",.., T J""mal (if
Al'l'li~" P.,)·,'holoSJ 73 (19~~}: 193_9~: ll. S. O"hrenwcnll L. Kr.l>""ff. A. R A,l.en..,>,. aoo 1:1. P. 00111'''"'''1000. ""Ex"rnpliii<'a,io" "f a M"'h,,d fo,-
Scaling Life E"ent" The PERI Life E"~"l> Sc~I~." J",m",1 lif Ile,,111P IU,rJ ,';0,',,,1 Be"",'I", 19 ( 1978), 205-29: J. H. John"m ond l. G, SaN""", "Recem
Dcwlopmem, in Rc,.,,,,,,h on Life Str"",:' In V. H"milton aoJ D. M, Warburton (ed,.). H",,,,,,, SI/US <uld Cog"lli,,,,.. A" i"fi"'''lIIi'''' I'rt""es"i,,g
Ai'I'",,,ch (N<", Yorl: Wil<y. J 979J. 205-.16.

ROLE CONFUCT
TIle ,t",ggk th"t (,."ur, "hcn
thc beh"'io.... or ta,b mat a
pe"",n i' "'['<"'Icd to perform are
al ,Jd,j, "ilh c""h olhcr,
ROLE AMBIGUiTY
"The uoc~nailllY' lhat ,><:~u'" "hell
""'plo)''''', "'" oot ,ure "hat i,
npc<:ted ofth.. m an<l ho" they
'hould perfonn the" ph"
OVERLOAD
"The condition of ha' ing too
mall} I",~, to perform,
Job-Related Stressors
JUSI as a widc variety of life el'ell1S can be potentially ,tTCssful. a wide variely of potential
stressors arise from a person's job. Here we consider six job-rel,ned stressors: role conflict.
role ambiguity. overload. underload. challenging assignments. promotions. and conditions
thaI affect employees' emnomie well-being.
In Chaptcr I. we defined a mle as a set of behaviors or w,ks a pcrson i, expccted to
penorm because of the position he or she holds in a group or organization. Role connict
(X.'l:urs when expeded behaviors or lasks arc ,11 odds wilh eal:h other,55 A social worker
experience, role mnllid when he is told to (1) spend more timc and effort to determine
whether children in foster care should be returncd to their parents and (2) double the num-
ber of cases he handles each month. A middle manager experienl:es role conflict when her
supervisor expects her to innease produdion levels. and her subordinates complain they
are being overworked,
Role lllllbiguity i, the uncertainty that occur, when employee> are not sure about
what is expected of them and how they should perform their jobs.56 Role ambiguily can be
an espc<: ially potent SOUf'(;e of stress for ne"'comers to an organizat ion. work group. or job.
Nev.'comcrs arc often unclear about what they are supposed to do and how thcy should do
it. MO>1 employees. howel'er. experience some degree of role ambiguity at Olle time or
another because organi~atiol1s frequelltly ch.mge job responsibilities to ad'lpl10 changing
l:onditions in the competilive cnvironl1lCnl. Ford Motor Company. for example. realized it
needed to adapt to increased CU>lOlllcr demands for high·quality aUlomobilcs and workcrs'
demands for more autonomy. To 'lddress the need for change. Ford reorganized some of its
factories so th,l1 employees perfonncd their jobs in tcams mther lhan individually. Some
team members expericnl:ed role ambiguity because they were unsure about the.ir new
responsibilitics in the te:lllls.
Somelimes employees experience job·relatcd stress nOI bcc;lU>C of conflicting demands
(role l:onllict) or uncertain expeclatiolls (role ambiguity) bullx.-cause of o....~rIO:KI-the l:on-
dition of having 100 many tasks to perform. 57 Robert Kakiul:hi. vice presidell1 of human
resources at toc U.s. Bank of Washington. oftcn works nights. weekcnds. and holidays to
 CKAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 297

acromplish all of the lUsks he is assigned. Layoffs redured Kakiurhi\ depal1ment from 70
employees to six. bUt the Ilumbcrofhuman resource services that he is eX~ted to provide to
other dep;ll1ments mthe bank has not been reduced at aJ1.~~ Kaklllchi is expcrienclllg over-
load berausc his organ ization ex~1.S the remain ing human resource workers to perform the
tasks that used to be performed by laid-off workers.~9 Nadine Billard. a manager of expon
sales for the book publisher HarpcrCollins. experiences so much owrload thm she typically
works fifteen-hour days and takes work home on weekends. w According to a f\.'Cent study
condurted by tile Families and Work Inslilllte. dual-caf\."Cr couples workt.-d. on average. 91
hoors per week in 2003,compared to an average of81 hours per \!'wk in 1977.61 Whether the
high level of stress an overloaded employee experiences is negOlive and impairs perfonnance
depends on the employee's personality traits and ,tbi Iities.
Overload is p<lnirularly prevalent among middle and top managers. 62 A re<:em sllldy
conduC!ed by the American Management Assoriation found that 41 percent of the middle
m:ln:lgers surveyed had more work to do tlHln time in which to do it. Another study COl1-
ducted by the Se:lttle consulting firm Priority Management found that many middle rmm-
agel'S arc worki ng murh longer hours because of the extem of their overload. 63 Earl iet we
discussed how overload is a significant problem in Japan and somctimes leads to karoshi
(demh by overwork).
UNDERLOAD Undnlrnld. not having enough work to do. can also Ix: a SOUfl"e of Mress for employ-
TIle moo;l;on ofh...;ns too fell, ees. When was the last time you were really bored? Maybe it was a slow day at \!"ork. or
1~4, to perfonn.
you were doing re'iCarch for a p:lper at the libmry. Pcrhaps you were bored while studying
for <In exam or watching a bad movie. Now im:lgine that you were truly bored for eight
hours a day. five days a week. You would probably experience stress just becau'iC you were
bored. r\S we know from the job characteristirs model (sec Chapter 7). most employees
like to usc diffcrent skills on the job and feel like they're doing something wOl1hwhile_
More get"lerally. a cenain level of stress is positive and leads to high levels of motivation
and performance. as indicated in Figure 9.1.
ProlllO/hllls mill dwllellgillg aSIiglllllt'II/I ran be a source of stress for employees who
are not sure that they can perform effectively or who hm'e low self-efficacy_ An cmployee
promoted to a supervisory position who has never before had subordin:ltes reponing to him
may experience stress because he IS not sure that he will be able to be assertive enough.
Barbra Streisand was so negatively stressed by the challenge of performing in from of
125.0Cl0 peoplc in I\'cwYork's Centrall'ark in 1%7 that she forgot the lyrics to three ofhcr
songs mtd al'oided live performances for the next 27 years. Madonna found the opportunity
of si nging at the 1991 Os.:ar presentation (which IS broadcast to bi Ihons of television view-
ers) so stres,ful that her hand ,hook. b4
Stressor,; that affeCt employees' t>aJllumic ...d/·heillg and job secwilv :Ire also power-
ful sources of stress M When job-related illcome is very low or threatened by I<lyoffs <lnd
downsizing, a lark of job security. or pay cms. the well-being of employees and their
f<lmilies is put in jeopardy.
Numerous studies have shown that when orgll11izations layoff employees. uncrnploy-
ment stress can be I'ery damaging to employees and their f:lInilies and may result in phys-
ical and menIal illness. induding depression. suicide, family violenre, and evcn a family's
breakup.66 Layoffs can also be stressful for members of an organization who do not lose
their jobs or arc survivors of the layoff. 67 Layoff survivors can feel guilty, angry. unhappy.
lonely. or fearful th,ll they will be the next to lose their jobs. Sometimes they beeome phys-
ically ill from their high levels of stress. A 46-year-old gt.'()logist who has worked for a
Houston oil company for the P:lSt 11 years survh'ed a layoff and was promoted to Ix: the
le;lder of a group of 12 of her e10se colleagues. One of her first assignments in her new
SUperviSOr)' role was to layoff half of the geologists in the group. Her stress levels were so
high that she started to go to bed earlier and earlier at night so that she would not have 10
think about work.6~ As indicated in the acrompanying Managing Ethically, extensive
layoffs and resultant financial difficulties arc significam sources of stress for increasing
numbers of employees in the United States.
Given how important job income is to employees and their fa Illi lies. opportunities for
increasing pay Ievcls also C:lll be stressful to employees who are not sure that they can meet
298 PART 1 • INDIVIDUALS IN ORGANIZATIONS

Managing Ethically
Laid oH and On Your Own

Increasing numbers of employees in the United States are being laid off 69 and given little
assistance to deal with the sudden loss of income and challenges of finding another job.
According to a recent study conducted by the John J. Heidrich Center for Workforce
Development at Rutgers University, one out of five employees randomly interviewed was
laid off in the period from 2000 to 2003.7° less than half of those laid off received
unemployment insurance, less than one-third had their health insurance coverage
extended by their employer during their unemployment period, and less than one-fifth
received any help from their former employer when it came to retraining or finding
another job. Furthermore, approximately one-third of those laid off received no advance
warning that their jobs were being terminated, and another third received only one or
two weeks' notice?1
Unfortunately, for those l<Iid off, finding another job is often a real challenge. Many work-
ers are being forced to take part-time work or jobs for whkh they are overeducated and over-
skilled just to try to make
ends meet. For example,
John Wilkins was a soft-
ware specialist with many
years of work experience
who was laid off from his
Job. After his search for
another job in the com-
puter industry was unsuc-
cessful, he now works two
part-time jobs (unload-
ing packages for UPS in
Palatine, Illinois, and coun-
seling teenagers in a fam-
Job loss can be one of life', n",,1 lr:lUrllali,' e,\p,:ricnn·,. Somel; meS
ily service agency). And he
lhe effeels of a job loss on a person's emOlional outlook can be SO
severe lh"l il inlerfaes wilh his or her finJing "'lolher job.
is only making 25 percent
of what his salary used to
ben Greg Fuller is in a similar bind. He used to be the director of program management for
Motorola's cell phone division prior to being laid off, Now he sells cell phones at Best Buy.
earns 1S percent of what he used to at Motorola, and is thinking about selling his house and
finding less-expensive housing 73
Unemployment and underemployment are growing problems in the United States.
An estimated 4,8 million Americans are working at part-time jobs because they have been
unable to find full-time work. 74 While extended mass layoffs were actually lower in 200S than
in recent prior years, according to the U. S Bureau of labor Statistics (BlSl, in 2005 there were
4,780 extended mass layoffs that affected over 850.000 workers 75 The BlS defines an
extended mass layoff as one in which there are at least 50 cl<lims for unemployment insurance
benefits lrom a company during a 5-week period and at least 50 employees are laid off for
more than 30 days.76 While CEOs and top managers continue to take home record salaries,
many l<Iid-off, lower-level employees are struggling to find other jobs or make ends meet on
a fraction of the pay they used to earn. This is a troubling ethical concern for corporate
America that does not appear to be resolving itself.
 CHAPTER 9 • MANAGING STRESS AND WORK·L1FE BALANCE 299

the requirements for p~y increases. 77 A c~r s~lesman working strictly on a commission
b~sis experienccs l:onsider~ble stress every day bc<:ause his ability to support his family
and buy Ihcmlhe things Ihey nced depends on how many cars he sells. He likes his job
becausc he has a 101 of autonomy and is given the opportunity to cam high l:omlllissions by
his h~rd work. But the job is stressful bee,wsc so much is riding not only on what he docs
bUI also on things thm arc beyond his control. sUl:h as the el:onomy. <.:ompany-sponsorcd
discoullls. and advcrtising.
The previous examples constitute just a few of thc potential stressors people face. But
there arc still many others. some of which wc dIScussed in previous c1mpters. For cxample.
being a vi,'lim of discrimination or scxual harassmelll (sec Chapter 4) is typil:ilily very
stressful for employecs.78
Although we discuss how employees and organi7.,uions c,ln copc with stressors ill
gcncml later in the chapter. ilt tllis poim it is uscful to hst some of the steps managers can
take 10 make sure Ihat job-related stressors do nOl cause employees to experience stress
levels so high that their well-being and performancc are impaired:
• To makc surc thm rolc COnniCI docs nOI gel out of hand. managers should be sure nOI
to givc employees cOllnicting cxpectations. Thcy should try to ensure that what they
expect of subordinates docs not conOid with wh~lI others (customers. coworkers. and
other managcrs) expect from them.
• Role ambiguity can be kcpt to a managcable level hy tclling cmployees clearly what
is expected oflhem. how they should do their jobs. and what changes are being
made.
• Managcrs should try to avoid overloading their subordinates and redesign jobs with
t,Xl many lasks and responsibilitics.
• When underload is a problem. managcrs should consider redesigning jobs so they
score higher on the five core dimensions in the job characteristics model (sk iII vari-
ety.task idcntity.task signilicance. autonomy. and feedback).
• When employces experiencc stress from promotions or challcnging job assignmellls.
Innnagers should takc stcps to raise their self-cflicacy~thcir belief thlllthey can be
successful. We discussed scveral ways to boost self-efficacy in Chapter 5. sUl:h as
encouraging small successes.lelling subordinates know that others like thcmselves
have succeeded in similar kinds of situations. having high expectations. and cxpress·
ing confidence in subordinates' abilities.
• Organiz:ltiollS should do whatever they can to minimize the negati,'e effccts of lay-
offs and downsizing on thcir employees' economic wcll-being by giving employees
advance notice of layoffs. fair and equitable scverance pay. and providing them with
counseling services. Similar sleps can also be taken to reduce the stress of layoff
survIvors.
• When employees arc expericncing Siress duc 10. for examplc. a pay-for-performance
plan. managers should actively work on boosting employee's self-efficacy.

Group· and Organization-Related Stressors

Potential strcssors that can causc tOO high a 1c"cl of Stress also can arisc at the work group
and organizational levels. AI the work group levcl. for example. misunderstandings. con-
nicts. and interpersonal disagrccmerns can be sourccs of ncgativc stress for group mem-
beN. In C1Hlpters 10 and I I . we discuss thc benelits of using groups in organi7.at;ons. some
of the s~cific problcms they face.IUld w'lys to ~llleviilte them.
Given increasing globalization. more and morc organizations ilTC assembling cross-
cultural tcams whose members comc from different coumries. Misundcrslandings and
connicts due to cultural differences sometimes arc sourees of stress in these teams. For
example. in an impressive l:ross-cullural business venture. researchers from three com-
peting companies-Siemcns AG of Germany. Toshiba Corporation of Japan. and IBM-
worked togethcr at IBM's East Fishkill. New York. facilily to build a new computer
memory chip. The more than 100 scientists from the three different cultures working on
thc project called themsclves the Triad. The managcrs (from all three companies) who
300 PART t • INDIVIDUALS IN ORGANIZATIONS

organized the effort were initially concerned thC" scientists might C"nCOUllier problems
working together beeau,C" of their different cultural backgrounds. Their concerns were
borne out: Mi,underst.lndings and eonnicts became a signiric;lnt source of stress for
mimy of the scientists. For in,t;mce. the German sciemists from Siemens were aghast
when their Japanese counterparts from Toshiba c1o,ed their C"yes during meetings and
appeared to be sleeping, (Apparently, overworked scientists and managers frequently do
this in Japan during p.lfts of meetings that don't relate to them.) As another example. the
American sciemists fmm IBM experienced stress becau,e they thought thalthe Germans
spent too much time on planning. the Japanese ,pent too much time rC"vicwing ideas. and
neilher spent enough time actually gelling Ihe project done.
Working through potential misundersl'lIldings such as these in cross-cultural teams is
imJXlrtant be<;;lUse international joilll velllUfCS have many advantages: Participants get dif-
fC"rC"nt pcrspcrtives on a project or problC"m. a wide variety of skills and expcrtise is rC"pre-
seilled. ,1Ild participmlls ,Ire able to benefit from their exposure to new ways of doing
tllings. To take advantagc uf the Ix:nelits of diversity WIthout experiencing too much slress
from CII/llln' ,I·hock. individuals and groups need to Ix: sensitil'e 10 the role that national cul-
ture plays when it comes 10 behavior in groups and organizmions.
UllwlIlforwble working conditions arc another source of stress for groups al1d emire
orgamziltiuns. Excessive noise. temperature extremes. ;lnd pourly desigl1ed ulTIce equip-
melll and machinery can be very stressful whC"n employees are eXJXlsed to them day in and
day OUl.ln recent years, more than 2 ,<xx) lawsuits have been filed by employees who claim
that pourly designed compuler keybo,lrds-some made by well-knowl1 companies such as
Eastman Kodak. IBM. and AT&T -havc resulted in high levels of stress and painful.
sometimes crippling, injuries to the employees hands and wrists.7 9
Uncomfortable working conditions took on new meaning at Jim Beam's Clermont.
Kentucky. bourbon distillery when a new policy prevented workers from using the rest
room whenever they nt-eded to. BOHling-hne employees at the plant complained to the
United FIXx! and Commercial WorkC'rs Union when they were restricted to four breaks to
usc the rt'stroom during their 8 I/,.hour shifts, Wilh only one of the breaks being unsehed-
uled,80 Employees found enforcement of this policy highly stressful. uncomfortable. and
for some. a medical challenge, Employees who received notes from their doctors did not
h;1\'e to follow the policy and were able to usc the rest room whenever nat urI.' call(xl.~1
Potentially un,l'lIfe or dangerous jobs tllat involve. say, working in nuclear power
plal11s. with toxic chemicals or dangerous machinery, or wilh people who have communi-
c;lble diseases such as AIDS. !:an cause stress and injurics. 8! A rt-.:ent study by Circadian
Technologic, Inc. found that pilots who fly for United Parcd Service face d;mgC"rous
working conditions between 15 pcrcent and 31 percent of the time. The pilots' union anrib-
utes these dangerous working conditions to nigh1s lhat cross scI'eml time zones. and night
schedules thaI causc pilots to alternate between flying at night and !lying during the dily.8.1
Dangerous working conditions can also lead to on-tile-job injuries. A recent study con-
ducted by the University of Michigan School of Public Health found that ernployees ill
Mlchigm1 missed 8.9 milliol1 days of work in a year for injuries they received while
performing their jobs.u
Mergers and acquisitions arc often an organizational source of stress. particularly
for employees in the acquired firm, Employees in the acquired finn often feel like sec-
ond-cl'lss ci1izens and fear being laid off. Such fears are often justified because once an
acquisition is completed, the acquiring firm or parent company typically restructures the
organization it has acquired to capitalize on synergies aeros., the two eompaniC"s and
c1hnillate duplication of effort.8~ Some elllployees in the acquired firm may be Iikely to
lose their jobs. 0111ers will be required 10 do more WIth less. This is what h,lppened .11
Kentucky Fried Chkken when PepsiCo acquired the franchise. s6 Employees in the
newly merged firm might expcrienee stress from hC"ightC"ned uncertainty about the futurC"
and p01ential culture clashes between the two organi;o:mions.
We discuss whatilldividuais and organizations C;ln du to cope with stressors in general
later in the chapter. but at this JXlint it is useful to consider what managers and org;miza-
tions can do to try to make sure that group- and organizational-level stressors do not get out
 CHAPTER 9 • MANAGING STRESS AND WORK·L1FE BALANCE 301

of hand. first. members of work groups can be trained to work together as a team and com-
municate effectively with e,leh other. (In Chapter 19. we discuss some team-building
stwtegies.) Second. organizatiun> shuuld nwke sure that empluyees have l:omfortable
worting conditions whencver possible. Third. organizations should ensure that employee,
arc not exposed to any unnecessary risks on the joh and that all safcty precautions arc in
place to limit the risk of injury on the job. Fourth. when organizations are undergoing
major l:hanges such as mergers and acquisitionsP they shuuld provide employees with
al:l:urale and timely information about how the change will procL'ed and how it may affect
them. This is just a sampling of the stcps managers and organi7.ations can take to try to
limit the extent to which these potential stressor> h,LI'e negative effects on the employees
exposed 10 them.

Stressors Arising Out of Work-Life Balance

People cmploycd as factory workers, rceeptioni,ts. managers. nurses. and truck drivers are
also often parents. spouses. children of elderly parents. volunteers in community organiza-
tions. and hobbyists. A recent study conducted by the nonprofit Filillilies and Work
Institute based in New York found that 85 percent of U. S. employ,-'es are responsible for
family mcmbers living at home. ss In light of the fact that employees arc working longer
hours than they did 20 years ago. this suggests that achieving a balance between work and
life outside of work can be a real c1wllenge. S9 When work roles conllio with une's per-
sonal life. stress is often the resull. New al:l:ountants and attorneys working in major
accounting and law fimlS. for example. arc expected to put in very long hours. Although
wOlting long hours can be stressful in its own right. it can be even more stressful when it
conflicts with dcmands from onc's personal life. Many employecs have young children at
home and a ,pouse who is putting in equally long hours. Add in the responsibi Iity of taking
care of an ill parent or being presidelll ofa local charity and the stress can be overwhelm-
ing. Single parents often feel even 1I10re burdcncd because they do not have a spouse to
help them deal with family problems and responsibilities.'ll)
Even when employees do not have children. family responsibilities oftenl:ause stress
when thcy conflict with work demands. Faith Merrens. a managcr of software designers at
U. S. West Communications Inc .. indicates that "elder care is the biggest pcrwnal issue we
face III maintaining productiVIty from day to day:.<Jt Most of her subordinates have been
forced to take lime off frum work to care for elderly relatives. Even Merrens and her boss
had to take time off when thcir parents were hospitalized.
Additionally. many employees fall into what has been called the "sandwich genera~
tlon:'~2 These cmployees arc responsible for nut only taking l:are of their uwn children. but
also taking care of their aging parents,93 Responsibilities for children and infirm parents
oftcn conflict with hcavy workloads. significantly increasing stress for those caught in the
middle. Later in the chapter. we discuss some of the steps organizations can take to help
prevent these kinds of l:ontlicts from overwhelming thcir cmployees.
Another form of conlliet between work and personal life occurs when employees are
asked to do things that eonllict with their personal values or when thcy work in organi7~1.tions
with ethics different from tlteir own. It is very stressful. for example. for some emergency
roum personncl at private hospitals to tum away potential patients because thL)' lack medical
insurarK:e. Likewise. it is sometimes stressful for loan officers at banks to foreelo"" on a fam-
ily's mortgagc because thc family can't kecp up the paymcnts. Similarly. it may be difficult for
insur.mce agents to c.mccl medical insurance or deny cover.lge to patients for cen'lin kioos of
ailments. An envirunmentalist may feel stressed uut working for all organization that 1~t1ls to
recycll.'": salespeople may experient'e stress selling products they know are low quality.

Environmental Uncertainty
Just as employees call experience stress from their personal lives. so too can they experi-
ence stress frum unt'Crtainty and crises in the wider environment in which organizations
operate. The tr:tgic and devastating teITorist aHacks on the United States on September I I.
2001. shocked the nation and the world. Research suggests the attacks were a significant
302 PART t • INDIVIDUALS IN ORGANIZATIONS

source of stress for the employees directly affectcd by the attacks and those people illihe
vicinity of the attads. But tile attacks were also deeply distressful to people living and
working hundreds uf miles ,Iway who didn't know anyone persunally affected, This is a
stressor thm unfortunately nmtinues to be present as heightened security at airports and
public venues, We hear it in governnll."ntal warnings, and security lapses contribute 10 a
sense of threm and vulnerability ol'er which many people feel they have little control.
Although the threat uf terrorism eontmues to be ,I potential SOUfl:e uf stress aruund the
world. research suggests that it docs not appear to have l:hangcd empluyees' attitudes about
their jobs and organizations.~
Other examples of contemporary stressors stemming from the wider environment
indude globallllstability and wars in Afghanist;m, Iraq. and elsewhere. The outbreak of a
deadly disease in Asia (SARS). fears of a potemial bird flu pandl"mic, a growing number of
corporate scandals in which top managers engaged in dl"ceptiOIJ and fraud,95 tragic acci-
delJts suell as illJ explosion at a HI' oil refinery in Texas City thm killed 15 employees :l1ld
lIlJuri:d 100.96 and pollution of the nalllral environment and exposure tu toxins are JUSt a
few examples. Stressors like these that stem from uncert;li Illy in the wider ellvironmelll l:all
affect the well-being and stress levl"ls of employees in organizmiOlls-whethl"r Of not they
ha~'e ,I close connection to the stressor. Such StreSsors can be particularly troubling because
many individuals feci they have little personal control over the stressors.
Although people may havl" little l:ontrol owr terrorism. war. or cOlllagious diseases,
there arc steps they can take to manage how they feci about, think about. and deal with
environmenwl stressors. The accompanying Global View explains how.

Global View
Coping with Grief and Loss

Psychologists Dr. James Gordon, director of the

When machinery explo'Jl"d ~t ~ Tex~s
City fiP oil refinery, IS employCi:s
were killed and over tOO were injured.
Gricf counselors helped s"rvi,·ors cope
with their feeling, of loss and guill.
Center for Mind-Body Medicine in New York, and
Dr. Barrie Cassileth, a medical social worker and
director of Integrative Medicine at Memorial Sioan-
Kettering Cancer Center, both have helped people
manage stress resulting from traumatic events. 97
Dr. Cassileth helps patients and their families deal
with life-threatening diseases. Dr, Gordon helps
people in countries such as Bosnia, Macedonia,
and Kosovo return to a sense of normalcy in the
aftermath of war, He also helped New York City
firefighters in the wake of September 11, 2001,
New York Times reporter Jane E. Brody recently
spoke with these caregivers about the steps people
can take to deal with the stress caused by trau-
matic environmental events. Here are some of their
recommendations 98
Gordon and Cassileth say that, first of all, a
person needs to try to maintain a healthy balance
between knOWing what is going on in the world
and avoiding overexposure to it Thus, it might be
beneficial for you to be cognizant of the events
 CKAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 303

that are occurring around you and how you might deal with them-perhaps by
volunteering or expressing your feelings to others-but it is not a good idea to spend
excessive amounts of time dwelling on trauma {say, watching endless news reports and
films, reading articles, listening to reports on the radio, and so forth} Second, if you feel
overwhelmed, try to take things one day at a time and focus on your key priorities.
Gordon and Cassileth suggest you also maintain some Idnd of routine on a daily or
weekly basis last, but not least, try to take care of yourself physically and emotionally.
Exercise. relaxation te<hniques. meditation. and seeking help and support from others
are all beneficial ways to try to maintain your physical and emotional balance. 99
In 2005. when machinery exploded at a Texas City BP oil refinery killing 15 employ-
ees and injuring over 1DO, grief counselors were brought In to help survivors cope with
their feelings of loss and guilt. 1OO Some survivors feel guilty because they didn't do
anything to prevent a major tragic accident (even though they couldn't have and it was
out of their control), others feel guilty be<ause they perhaps weren't as nice as they
could have been to a coworker that died or was injured, and others Just feel guilty that
they are alive. Ian McDougall, a grief counselor who met with BP employees after this
tragic explosion indicates that "Fatalities make people feel very reflective, I encourage
them to live today and enjoy the day and not live in the past or the future, "tOl
Research done a few months after September 11, 2001, suggests that sometimes
people respond to traumatic environmental events by altering their values and priori-
ties, A significant number of employees who participated in one survey indicated they
had changed their values and priorities,I02 Some employees were struck by how very
important their families had become to them and that they should spend more time
with their families and tell them how important they are. t03 Lauren Howard, a psy-
chotherapist in New York City, had this to say following September 11, "There is , , , a
greater sense of community in New York, We care more about other people, - Howard
explained,lo4lndeed, the city mourned the deaths of the 2,792 people who died at
the World Trade Center, and 265 others who perished just two months later in a
plane crash in Queens,10S The tragic events caused the citizens to pull together like
never before,

The aecompanying Global Vicw clearly suggests lhat how people deal or eope Wilh
Slressors can have imponanl effects on 1I0w tlley reaCllO lhem. While we hal'e diseus>ed
\:oping in reaction 10 cenain specific preceding Slressors. we now lurn 10 a more general
dis\:ussion of ways of wping Wilh stres,.

Coping with Stress

Ultilllatrly. lhe eXlelll to which sIre,s is experien\:ed and whelher il is posilil'e or negative
depends on how people cupe-thal is. manage or deal wilh Slressors. There af" two basic
PROBLEM-FOCUSED lypeS of coping: problem-focused coping and emolion-focused coping.I'robkm·focuSl-'d
COPING {'oping relalcs 10 the sleps people lake to deal directly wilh and a\:t on lhe SOUKe of
n.c ,t~1" >",ople take 10 dc~J slress,l06 For example. employee, facing lhe lhreal of a layoff Illay cop!." in a problem-
dm'dly "uh aT>d J<;t On t~
focused manner by looking for other jobs ill organi7.ations lhat ,Ire !lot downsi7.illg. When
'O\ln;~ nf '>Ire"
problem-focused (;Oping is suc\:essfu1. II helps employees de<ll wilh opporlunities and
lhreats thm are \:l1l1sing suess,
EMOTION-FOCUSED Emotion-focused coping relates 10 the steps people lake to deal with and mlllrnl their
COPING slressful feelings and emOl10nS. I07 For example. some employees facing lhe lhreat of a lay~
TIle ,tcl" people talc to <leal off m<lY lry 10 ,11leviale some of theIr slressful feelings and emolions by e;.;ercising regu-
" ilh and ""mmllh<-ir stre"fu I larly or meditating, When clllotion-focused coping is xtt\:\:essful. strc"ful feelings and
fcelings and cmotion,.
emotions generated by threats and opportunities do not get out of hand.
304 PART t • INDIVIDUALS IN ORGANIZATIONS
TIME MANAGEMENT
Prioriti,ing and e\l,m"lIng
t....:hniqu." thaI allow ...ml'lo}""
til idemit} l~ nllN impurlanl
{.,,~, aro<J f,t them jnto l""'rdail}
,,-'hffiule
Research suggests that most of the time JX'ople engage in both kinds of coping when
dealing with a ,tre,sor. IOtI Individuals cope with stressors in a variety of problem- and
emotion-focused ways. and there arc steps organizations can take to help employees cope
with Ihe many slressors Ihey face.
Problem-Focused Coping Strategies for Individuals
Problem-focused coping is coping directly tailort-d 10 the stressor being experienced. A
college !;Cnior experiencing Slfes, due to an uJX'oming job interview coJx's in a problem-
focused way by finding OUI as much information as possible about Ihe company and doing
some praclice interviews wilh a friend. When Dale Morley moved his family from London
10 New York so that he could assume Ihe position of vice president of sales and marketing
for Avi, Internat ional. he and hi s family coped wilh Ihe Slress of be ing away from relat il'es
by periodically making audiocassettes and sending them back horne.IO'! In addition to
problem-focused coping stralegies del'ist.-d 10 manage a I'ery specific source of stress. such
as preparing for a job interview or relocating. more general slralegies l:an Ix: used 10 deal
with several kinds of SlressoTS. Here we consid... r three: lime manag...m... nt. g...ning help
from a mentor. and role negotiation.
Time management. One slrategy for coping wilh overload is linu· m:nmgl'menl. a
!;Cries of Icrhniques thai can help people accompl ish more with the Iimiled amOUIl! of ti me
Ihey do have. Time management u,ually entails these steps:
• Employee' make lists of alilhe tasks they ncrd 10 accomplish during the day.
• 111e !asks are then prioritized in teons oflhose thm are most import,un and muslbe
done and those thai are less impor1illll and can Ix: pUI off. if need be.
• Employ<'es e,limale how long it willl:tke 10 accomplish Ihe!;C lasks and planlheir
workdays accordingly.IIO
Time management is a coping strategy for individuals. but org;mizations can help
their members leam effective time management techniques. Valerie Nossal is employed
as a time man:1gemenl ex perl at MeadWestvaco Consumer and Office Products in
Siamford. Connectil:ut. 10 help employ<....s Ix:ller manage their time. 111 She suggesls Ihal
employees need to Ix: prooctive and also set priorities and limits. Given the high volumes
of work many employees arc faced with. they could work around the clock and not get
e"erylhing done. Thus. employees need to sel priorilies not only in temls of whal is more
and les, imponant 10 get done al work bUI also in terms of making sure Ihey hal'e a bal-
ance Ix:tween work and the rest of their lives. Nossal advi!;Cs employees to schedule tim ...
10 exercise and be with their families because these are impor1,ull nctivities that should
not be neglected due to wor\.: pressures. lll Moreol'er. not paymg attention 10 one's prior-
ilies and achieving a work-life balance may actually make employees less efficient.
Given pressures to get more done in less tim .... some employcrs engagc in multitask-
ing-doing two or more things at once-such as wriling a report during ,I meeting.
answering e-mmls while lalkmg on Ihe telephone. or opening mail while listening 10 a
l:oworker. Docs mu It ita,king save lime'! Prdi minary research suggests thm ralher than sav-
ing time. lllultitasking might actually make people Occome less. rather than more. efficielll.
especially when they lIre working On complex tasks or activities. 1t3 Multitasking that relics
on Ihe ,ame pnrls of Ihe bmin makes n person especi'llly vulnerable to efficiency losses.11 4
For example. if you arc Iryi ng to compo,e an e-mail wh iIe carryi Ilg on a convers;:nion with
your bo_~s o\'er your speaker phone. both of the!;C tasks require you to usc and process lan-
guage. One willli\.:ely interfere with lhe other. rc"Jlting ill lower effieiellCY. Howe\'er. pho-
locopying documenls while I;llking wilh a coworker lmghl Ix: more feasible. Ihough the
coworker is probably receiving a bit less of your allention than he or she would have
received if you weren't multitasking. liS
Getting help from a mentor. Rel:nll from Chapler 4 that more-experienced members
of an organization (menlors) can offer advice and gu idance In less·experienced members

ROlE NEGOTIATION
11>e proce" through "hich
employ'e,,, oclj,dy U) 10 change
their role_ on order 10 rcdu\:e
role confli(l. mlc amhiguit).
lwenoa<!, or ullllelloaoJ,
CKAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 305
(proteges). Gening hclp from a mentor ean be an effective problem-focused coping
strategy for dealing with streswrs such as role connic!. role ambiguity, overload. and
challenging :lssignments and promotions. A Illentor can advise an overloaded protege.
for e"ample. about how \() prioritize tasks so the important ones get accomplished, how
10 dctermi ne what tasks can be put aside. and when to say "no" to add it ional assign mems
or requests.
Like lime m,tn:lgemenl. gelling help from ,1 mentor is an individual-based. prob-
lem-focused coping strategy. but organizations can take steps to help ensure that men-
IOrs arc avai lablc III proleges. For e"ample, some organ izations have formal mel!loring
programs to help new employees get the guidance and ,ldvice they need to achieve their
goals.
Role negotiation. Role negotiUlion is the process through which employees aClivcly
try 10 change their roles in order to reduce role connic\. role mnbiguity. overload. or
underload. [[6 Sometimes simply s.1ying "no" to addilion"l assignments can be an effeClive
means of role negot iatiol1 for overlo;lded employees.
Role negotiatiol1 can also be an effective problem-focused coping mcchanism for
employees experiencing slress due to work-life linkages. Blake Ashdown. a consultmll
based in East Lansing. Michigan. helps resorts develop and manage exercise programs
and facilities. He has engaged in role negotiation by being more selective about the
assignll1C111S he takes and by turning down some resorts. Ashdown has found this ~;[rat­
egy to be an etTeclil'c means of coping with lhe contlict between his dcnwnding work
schedule and his responsibilities at home. By negotialing his role. Ashdown is able to
spend morc time Wilh his wife and fi"e children and avoid high levels of stress from his
work. 111
Emotion-Focused Coping Strategies for Individuals
In addition to trying to manage problems and opportunities thm are stressful. employecs
also have 10 leMn to manage the feelings and emotions they give risc to, Here we consider
four emotion-focused coping strategies for individllals: exercise. meditation. sod<tl sup-
port. and clinical coullseling.
Exercise. One of the reasons why exercise is so popular today is thaI it is an efft"Ctive means
of eIUOIion-flx:uscd coping. Jogging. aerobics. swimming. tennis. and walking are just a few
of the types of cxercisc that cmployees rJnging from entry-level employees to CEOs and
even American presidents usc to cope with stressors in an emotion-focused way. Regul;;lr
exercise can rtxluce stress. improve cardiovascular functioning. and enhance well·being.
Yoga is growing in popul<trity as;1 means to alleviate stress and can also increase peo·
plc's ability to eonecntrate, According to thc magazine Yoga jrJUmul. 15 million adults in
the United Stntes engage in yoga. ;;Ind over 3S million say they want to try it in the neXl
12 monlhs. t t8 Yogn involves practici ng certain poslures and poses. controlling breath ing.
and achieving a sensc of calm and allevialing stress. Some organizations arc actually pro·
viding optional yoga classes to help thcir employces combat stress. For example, KalZ
Media Company in New York and Lolllangino Studio. a Washinglon. D.C.. graphic design
company. both offer on·site yoga classes for their employees. t t9 And some counselors in
the New York City fire departmem who worked SO-hour weeks after September 11 found
yoga hclped them cope wilh thc stress of hclping firefightcrs and their families de;;ll with
the deaths of 343 fellow firefighters. Bill Crawford. who has over 30 year's experience
with the department and heads its counseling group. is a yoga de\'OIl'C himself. As he puts
it. yoga "makes me focus and put aside all the strJy thoughts oflhe day lhal overwhelm us
and cause us stress:'I20
Meditation, Some employee> deal with stressful emOlions through meditalion. There
are various forms of meditation. and some of them require professional training t(l learn.
306 PART 1 • INDIVIDUALS IN ORGANIZATIONS

EXHIBIT 9.5
A Measure of Satisfaction with Social Support

I",,,,,,,,,,",, Th~ following ~u.,,;on. ~.k .bo"' people ,n yO"' <n"'","""'" who p"""'d. Y<>" wi,h help '" "'Pf'<""- heh qu..'"'' h•• """
p.rt>, Fo, ,he for.. p.ft, 1,,,.11 ,h. p<opl< you know, ""dud,ng y<>u"oIf, whom you .an count on for help '>r ."ppon on the m.nne, <1,,,,,,1><<1,
C"'" tI1. PC",,",' 'n"i.I" ,h,,, ",I."on,hip to you (.......mpl.). Do> ..n Ii" ""'" rM" .... ptt><!fl lit"
I.......(IIt< """,bfn bettt~rJo IItt qu<>tic<l.

If you have h.d nO '"W"'" for. que";"n, eh«k ,h. word, "No on.: but <till ratt your 1,,,,,1 of ..,i,f.c';on. Do not Ii" mOf< ,h.n nin,
P"""'"S f'<' "1"""0".

bampl<

Who do you k""""whom you .an ",..t wI<h ,"form.t"'n ,hat could g<t l"'u in trouble?
No one 1 T.N. (bro,h«) 4 T.N. ((.,hor) ,,
2 L.M ("",,<I)
J R.S. (m.nd)
5 LM. (.mplo~,)
6 ,
• • , ,
• Iml••. "i.~.d

1. 'Wllom can you ,.. If)' count on to b. d'p<ndable when you n..d help'
Noone
,,
1
,,
4 ,,
,
, • , ,
w')' """i,foed f.irly """i,fied • littl. """i,fi,d .1,,,1. di"ori,f"d f.irf)' di.""",.f"d
3. Whom <,n you ,.. If)'«'un, on '0 help you f«1 mO'" ... I...d when you .... unde, p....u... o.t.~ ..'
No 0", 1
,, 4

.
, 7
,,
, , • , ,
w')' """f..d f.,rIy satl,fied • I,ttl. sa,i,fi,d • 1<t,I. di,,,,,i,f..d f.irly d,,,.,,,f..d
5. Who accept< you 'o,.If)', including both you, worst .nd b..., po,~'"
Noon. 1
,, 4
,, ,,
,
, , • , ,
v<')' ..,i.foed f.irly ..,i,fi.d • littl. . .,i.fi.d .li"I. di ...,i.f"d f.irly di...,i.r,.d
7. Whom <an you ... If)' cOUnt On '0 co'" .bout you. reg.rdl .., of what " h.pp"nlng to you?
Noon. 1
,, 4
,, ,,
7

• , • , ,
v.')' sa,i,f..d fairly sa,i.fi,d .Iml. sati,fi.d • 1<t,I, di ...,i,f..d f.irly d ..sat"fi.d
9. Whom c.n you .... If)' count on to help you f«1 l>etter when you ... feeling gener.lf)' down ,n ,lie dump'?
Noone 1
,, 4
,, 7
,,
10 How ••ti,fied'
, , • , , ,
V<t')' di ...ti.fied
(Con<onued)
 CKAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 307

11. 'Whom can you count on to con""l. you ",non y<JU ar< "'ry up"'"
Noono I
,, 4
,, ,,
,
12, H<>w
,
,a~,f1od'
, • , ,
5<cn~' SatISfaction "'It" <o<,al ,uWO" " m.a,u,~ by ..... gong '''pon"" to ,h. o",n-numb<r<d qu.,"on, (2, 4, 6, S, 10, .nd 12).

5<~lIt..: &.Ie obt.ined from I. G, Sar..",.,. I',}"h<>!ogy Dcl"'rtm"nl NI-25. Uni'""i'y of',',.. "'ington. Sc.n",. IVA 98 19~. Reprinted wiln port";,, ....,. &,01"
lk",ril,,:<1 in I G S.",""", H, R 5.1""-",,,. E. N Soc.rin . .oo G. R. l'icn:" '"1\ Hricf ~ le.,u", of 50,:; ..1 5uPll"rt: 1"t:l<.1it"1 and 111<.1,,,,,..,,,1 Impli"",i"n""
JO"n/al '1 5<,'i,,1 (If,,1 P"rw~",1 R~kll;'~l.,hil'-' 4 (1987): 497-510.

Generally. however. meditation entails being in a ljuiet C'llVironmenL slltlllg 11\ a

comfortable position, and tuning out everyday cares and worries by focusing mentally on
SQme visual image or verbnl phrase,l2t,
Buddhist monks arc masters of the practice of meditatiun and eJ\cel at the kind of
trained introspeetion that meditation involves, In fact. neurosciemists at MIT have me-t
with the Dalai Lama to understand how meditation works and what it can reveal about the
wottings ~Hld power of Ihe brain,l22 The French monk Matthieu Ricard met with neurosci-
entists at the University ufWiM:unsin for similar reasons. Not unly do the Sl:ientisls hope to
learn from the Buddh ists but the Buddhists hope to learn from the M:ielllists as well.123_

Social support. People naturally seek help from others-social support-when they arc
having problems or feeling stressed. The social support of friends, relatives. coworkers. or
other people who care aoout you and arc available to discuss problems, give ildvice, or just
be with you can be an effective means of emotion-focused coping,l24 Both the number of
people you can tum to and the quality of the rel.llionships you have wIth those people are
important in helping to alleviate stress. A sample measure that is uscd to determine the
exte-nt to which a person is satisfie-d with the social support availahle to him or her is
provided in Exhibit 9.5,

Clinical counseling. Sometimes employees have diffi<.:ulty coping on their own and
seck pmfc-ssional help or e1inical counseling. Trained psychologists and psychiatrists can
help employees leam how to cope with stressors that may seem overwhelming and at times
unbearable.

Nonfunctional strategies. The four emotion-focused coping stratcgies that wc have

discussed arc functional for individuills because they generally help ,t1lel'iate stressful
feelings and cmOlions without ueating floCW problems ur sources of stress. Unfortunately.
however. there arc other ell1otion-focuSl:d ways of coping that are less funetional for
employees. Somc pcople react to high levels of stress by eating too Illuch.drinking too much.
or taking drugs, SOlllC elllployees employed by Phillips Petroleum Company. for example.
started having problems with alcohol when they eJ\pcricn~"Cd high lcvels uf stress from a big
layoff. 12S These ways of coping are never effective in alleviating stressful feelings and
emotions in the long run. and they creatc more problems. such as being ovelv.-cight, being
addicted to .11001101 or dn,gs. and being unable to function to olle's fullest cap,lcity,

Problem-Focused Coping Strategies for Organizations

Managers and organizations can do several things to deal with problems and opportunities
that :Ire sources of stress for employees. SOllie- problem-focused coping str.lte-gies for orga-
nizations arc job redesign and rotation. reduction of unccrtainty.job security. company day
care, flexible work schedules. job sharing. and telecommuting,
308 PART t • INDIVIDUALS IN ORGANIZATIONS
You're t;he Management; Expert;
JOB ROTATION
A"ij:n;ng emph'l'c'e' t<, dIfferent
job<. 011 a ",gular oo.>i>.
Coping with the Stress of a Challenging New Job
Pamela Perkins recently took a new job as the managing director of a chain of day care
centers in the northeastern United States. After three weeks on the job, she already feels
burned out. She has been putting in 1S hour days, five days a week and spending her
weekends catching up on paperwork and visiting individual centers. Perkins feels pressure
from all sides: The relatively low-paid teachers and aides who staff the centers have a high
absenteeism and turnover rate that creates logistical nightmares, Each day. there is at
least one parent who calls on Perkins with a concern at one of the centers. Her own staff
members lack initiative, and she does not feel comfortable delegating tasks to them. And
as a single parent of a toddler who is enrolled in one of the centers, she feels guilty she's
not spending more time with her son in the evenings and on weekends. The owner of the
centers recently complimented Perkins on her swift adjustment to the new job and the
seamless way in which she seems to have gotten up to speed. He remarked that Perkins
has actually become much more adept at managing the centers than her predecessor,
who never seemed quite on top of things and took too long to address problems and
make changes. Perkins was pleased that her boss recognized the fruits of her labor. but it
was a bittersweet kind of feeling because she was feeling so stressed out at the time
Perkins has come to the realization that something must change if she is to keep this job
Because you are an expert in OB. Perkins has come to you for help How can she effec-
tively cope with the excessive levels of stress she is experiencing)
Job redesign and rotation. Sometimes it is possible to rclksign jobs to reduce negative
stress caused by high Icvels of mle cnnllicl. mle ambiguity. o'·crload. or undcrload, or to
improve working conditions. The job characteristics model (sec Chapter 7) outlined the
aspects of the job especially important to oonsilkT-narnely. skill variety. task identity. task
significance. autonomy. :lIld fel-dbad. Increasing autonomy can be useful to combat rule
cnnllicL and providing feedback can help cut down on mle ambiguity. Wocn ovcrload is a
problem. reducing toc number of tasks a jobllOlder must perfoml is a viable option. Underload
can be remedied by raising the skill levels. variety. task identity. and task significance related
to the job. Uncomfon.able and dangerous working conditions should be remedied whellCver
possible. Redesigning jobs to reduce unnecessary travel and job relocations can also help
reduce le"els of stress. pnnicularly for dual--carccr couples and single pnreills.
When job redesign is not;l viable option.job rotlltion. assigning employees to dirferent
jobs (which themselves do nut change) on a regular basis. can somctimes alleviate stress,
Physic ians. for example. often rotate on-call duty for hospitnl emergency rooms and thereby
reduce the level of stress that anyone physician experiences from this job assignment.
Reduction of uncertainty. Often employees experience stress because they arc um:en.ain
about how to perform their assigned tasks. how 10 denl with conflicting goals or expectations,
or how to prioritize assignments. Uncertainty also cnn cause stress when employees arc
unsure about how an organization expects or wants them to deal with competing demands at
work and home. Whatever gives rise to it. uncertainty oftell results in stress.
One way to reduce uncertainty in organizations is by allowing employees to pnrtici-
pme in making decisions thm affect them flnd their jobs. When employees particip<1te ill
decision making. they often have a lot more information about changes an organi'wtion can
make and how to adjust to them. We discuss participation in dccision making in more
dctail in Chapters 12 and 14. As we discuss in Chaptcr 14. participation can be taken one
 CHAPTER 9 • MANAGING STRESS AND WORK·L1FE BALANCE 309

step further by empowering employees-giving them the authority to make decisions and
be responsible for the outcollles of those decisions.
Another way to reduce uncertainty is tu improve communication throughuut an urga-
nization. Employees need dear. accurate infonnation on a timely basis. and steps should
be taken to ensure that employees understand what this information essentially means for
them as well as the organization as a whole. Good communication is so important in
understandmg and managing organi~ational behavior thal it is the focus of Chapter 13.

Job security. Whenever possihle. providing employees with job security \0 that they
know they will be able to support themselves and their loved ones helps to eliminate
stressurs related lu the econumic funcltOnS of wurk. Employees in Japan and Europe
typically have higher levels of job security than du employees in the United States.
In lean cconomie time\. it Illay be hard for organizations to guarantee job security.
IBM ,md other eompanies thm in the past prided themselves on high levcis of security h,1\"e
been forced to layoff employees. Nevertheless. organizations can take steps to reduce the
impact a layuff has on employees and their families. If a layuff is a real possibility. man-
agers should provide employees with clear. honest information about their prospects in the
organization. When laying off employees is necessary. it is beSt to give lhem as much
advance notice as possible so they can prepare themselves and explore their optiuns.
Whenever possible. outplacement counseling should be made available to help employees
find other positions or obtain additional training to increase their employment options.
Employees should ;llso receive f,tir severance packages.

Company day care. The problem of finding good. safe. affordable day care for young
children is wcll known to many working parents. So is the problem of klM)Wing whm to do
with their children when they get sick. Many organizations are coming up with innovative
ways to help employees cupe with stressurs arising OUI of this work·life linkage. For e.\ample.
Tallahassee Memorial Hospital in Florida spt"nds around $300JlOO a year to run a child care
ccntcr for its employees. Thc facility is open from 7 A.\L to midnighl.tU> As another example.
when four staff members. three of whom were supervi>ors. at the San Jose National Bank
became pregnant. b,Ulk presid.cm James Kenny and human resources din.:dor Laura Graves
gave the wOlllen the option of taking the standard 12 week maternily leavc allowed by the San
Jose Nmional Bank or corning back to work after cight wecks with their b-1bies in tow. Bank
employccs arc allowed to bring their babies to work UTitil they are six months old or are
cr.lwling,tD
Organizations can also help employees cope with the problem of what to do whell
children become ill. Such assistance not only helps reduce employees' stress but also can
reduce absenteeism. Schering-Plough. a pharmaceutical company in Memphis. Tennessee.
has a special sid room in its child care center (run by a pediatrician). so employees' chil-
dren receive proper carc whcn they are ill. In its first six months of operation. the sick room
reduced employee absenteeism by 133 days_ The money lite company S-:lves in six months
from lower absenteeism covers the COSt of operating the sid room for a whole year.12~
Time Warner has an emergency child care service for its employees. Babysillers take care
of employees' sick children in their homes. Thcy also step in to care for children should an
etnployee's regular babysincr miss work. l29

Flexible work schedules and job sharing. '\'lany organizatiuns usc tlexible work
schedules to help their employees copt" with conflicts between work and pt"fSOnal life. Stride
Rite. a Shocm'lker. and eight othcr organizations hal'c joilll'd together to lind ways 10 promote
tle.\ibility in the wurkplace. Companies such as Du Pont and Coming tmin thcir supervisor.; to
manage employees on flexible schcdules.t.!tl Flexiblc schedulcs allow employees to take time
off when thcy need to take care of a sick child or an elderly parent. Employees at Xerox have
this option and keep records of how they make up for their absences.t)t (roor more infonnation
on flexible work schooules. s(:e the closing case fur this chapter.)
When job sharing is used. two or more employees arc respon,ible for a single job and
agrec on how to dividc job tasks and working hours. One cmployee might performthc job
310 PART 1 • INDIVIDUALS IN ORGANIZATIONS
Telecommuling is growing ilt a
brisk (Xlce. A ,,-",--en! sludy
estimates th,11 over 45 million
people in lho;, United Stales ".."k
fromlhcir homes al Ie'lst pan of
Ihe time,
TELECOMMUTING
,\ "or~ "rr~nj;emcnt whereby
cnlplo~ce, a", cmployed
bl an organi>:<llion and ha\e an
aj;r<:emenl Ihal enable, th"m 10
"ork oal of Iheir home,
regularly bal not neccs>arily
allthc lime.
in Ihe mornings and another in the afternoons: employees mighl alternate days: one might
work on Mondays, Wednesdays. ;lIld Fridays and the other on Tuesdays and Thursdays: or
eaeh employee might be accountable for particular lasks and assignments. Job sharing
helps employees I,;opc with the I,;ompeting demands lhey face at work and home. In order
for job sharing 10 be effecli"c, howel'er, good communication and understanding between
the organiZalion and ilS employees are necessities.
The prospeCt of mcreased flexibility leads some people 10 bel:ome conlingenl work-
ers, hired on a lemporary basis by organizalions. If a comingel11 worker is finished wilh
an assignll1em al one company and wams to lake some time off before the nexljob. he or
she is free to do so. Howe"eL this increased flexibility comes ,t1the expensc of job sccu-
rily, and a lack of job sel,;urily can be a source of stress in and of ilself. Art direl:IOr David
Dcbowski works on a freelanl,;e basis out of San Fr.lI1l'iM:o. choosing lhe projL'l:lS he wanls
to work on f rol11 ad agcncies. Ahhough he enjoys the flexibi lity of f reelancc work. he in i-
tially found it slrcssfullO not know if he would ha\,e a new project 10 work on when he
finishL-u his l:urrenl project. He coped wl1h this sourl,;e of Slress by lisling himsclf with a
lemporJry employment agenl:Y thai spel: ializes ill his ki nd of work. 132
Telecommuting. When teleeolllllluting is used, employees are employed by an
organizalion and ha\'e an agreellle11lthal enables them to wort out oflheir homes regularly
but nOl necessarily all1he lime, 13J Some employees' lelecommuling arrangemenls may
email worting lhree days al home and lWO days in the onite. Olher employees may work
primarily at home but come 10 lhe office for mcrtings on an as-needed basis. Slill others
ha\'e 1111' oplion of working from home as the need arises, New advances in infonnmion
technology offer lelecommuters multiple ways to communicale and Slay in l:onstant
l:Oll1acl w ilh their coworkers. bo~ses. l:uSlomers. and clienls.
TelecOll1ll1uting Gill help C'l11ployees cope with stress by providing lhem with Il1llfe
flesibility. freeing up time thal would ordinarily be spent commuting, and giving them
more autonomy. However. some leleconll11ulers feel isolaled, and others think lh'll they
end up working longer hours lhan they would have bel:ausc lheir work is always ·'there"-
at home, thai is. Telcromilluting also has potemial advamagC's and disadvantagcs for lhc
employing organization. On the plus side, telccOnUI1Uling can help organizations a11ract
and rctam valuable employees. It can also lead to higher produdi vIly and less Ii me 10Sl due
10 absences. On lhe downside. le1crommuting can re~ult in coordination problems and ten-
sions between employees who te lceOlllmlllc and those who don't. t.H
Research suggests lhm employees tend 10 appreciale lhe opponunity 10 lelccommute. For
example, one reL-enl sludy found lhallelccol11l11uters were generally satisficd wilh lelecom-
muting.13~ Another sllldy found that telewnunuters perceived lower le\ds of ru!c umflict and
ambiguity. had higher levels of organizational commilment. and werc more satisfied Wilh their
su!X'rvisors than employees who did nOl telCOOml11Ule. Howel'er.lhe lc1ecommuters were less
S<llisfied wilh lheir l:tlc111ploy..-cs and opportunilics for promolions. 136 Researl:h also suggcsl~
lhat telL'l:omll1uling may be llJore likely 10 reduce Slress levels when leleulmll1uters pcn.:cive
thaI their organizations are supponil'e and real!y care aboul their well-hcing,1.17
Clearly. more organi7...1lions are making telecommuting an option for employees. and
more employees arc l:hoosing to le!ccommute. A recelll sludy eSlimales that over 45 mll-
]ion people in the United Stales work from lheir homes at least pari of the time. 138
Emotion-Focused Coping Strategies for Organizations
Organizations l:al1 help employees cope effeelhdy wilh slressful feelings and emotions
through such lhings as on-sile exercise facililies, organizmional support, employee assis-
tanCe programs. and persom.1 days and sabbaticals.
On·site exercise facilities, Rcaluing lhc bcnefils of excn:isc.many organizalions such
a~ General Foods Corporation and lhe SAS Inslitule ha\'e exercise fal:ililies and classes
thm cmployces can usc befon: and after work and during their lunch hours.
 CKAPTER 9 • MANAGING STRESS AND WORK·L1FE BALANCE 311

Organizational $Upport. Organizational support is the extent to which an organi7~nion

ORGANIZATIONAL
SUPPORT
TIle c'tentlO "h'rh an orgalli/.atioo
c""" abootllle "ell-being of it>
roc""""". !ric'S to I1clp them" hen
the) M-e a problem, ",111 lre:i.'
them rairl}
carcs llbout the well-being of its members. listens to their oomplaims, Hies to help them when
they have a problem. and treats them fairly.l3~ Fcchng and knowing that an organization cares
abmtt and i, commillt-d to its members arc likely to help rt.-duce cmployL'Cs' stressful feelings
and emotions.t.JO Research has found. fOf example. that nurses who pen:eive high levels of
organizational support arc less likely to eXlX'riencc neg,nive feelings :lnd emotions when they
take (:Ire of AIDS p:llients.I~1 Organizational support is also hkely 10 help mitigate some oflhe
negative fL-clings and emotions gener.tk-d by downsizing and layolTs. An e.lample of a measure
of employees perceptions of how supportive their org:lnizmions arc is provided in Exhibit 9.6.

EXHIBIT 9.6

A Measure of Perceived Organizational Support

Workers indicate the extent to which they agree or disagree with each of the following statements about
their organizations using the following scale'
1 2 3 4 5 6 7
Strongly Disagree Slightly Neither agree Slightly Agree Strongly
disagree disagree nOf disagree agree agree
1. The organization values my contribution to
its well-being. 1 2 3 4 5 6 7
2. If the organization could hire someone to replace
me at a lower salary, it would do so.· 1 2 3 4 5 6 7
3 The organization lails to appreciate any extra
effort from me.* 1 2 3 4 5 6 7
4. The organization strongly considers my
goals and values. 1 2 3 4 5 6 7
5 The organization would ignore any
complaint from me.· 1 2 3 4 5 6 7
6. The organization disregards my best interests
when it makes decisions that affect me,· 1 2 3 4 5 6 7
7. Help is available from the organization
when I have a problem. 1 2 3 4 5 6 7
8. The organization really cares about my well-being. 1 2 3 4 5 6 7
9. Even if I did the best job possible, the
organization would fail to notice.· 1 2 3 4 5 6 7
10 The organization is willing to help me
when I need a special favor. 1 2 3 4 5 6 7
11. The organization cares about my general
satisfaction at work. 1 2 3 4 5 6 7
12. II given the opportunity, the organization
would take advantage of me.* 1 2 3 4 5 6 7
13. The organization shows very little concern for me. * 1 2 3 4 5 6 7
14 The organization cares about my opinions 1 2 3 4 5 6 7
15 The organization takes pride in my
accomplishments at work. 1 2 3 4 5 6 7
16 The organization tries to make my job as
interesting as possible. 1 2 3 4 5 6 7
Scoring: Responses to items are averaged for an overall score,
Items marked with a • ~. should be scored as tallows: 1 = 7, 2 = 6, 3 = 5, S = 3, 6 = 2, 7 = ,.
312 PART t • INDIVIDUALS IN ORGANIZATIONS
EMPLOYEE ASSISTANCE
PROGRAMS (EAPS)
Comp,my-'pon'Ort'd program,
thai pro"I<Ic ~mpl[>l~c," ith
coun-ehng"OO oth~r lind, of
profe"ional help to deal with
,m",ors ,,,,,h a, akohnl aOO
drug abuse and famil)' problem,
EXHIBIT 9.7
Coping Strategies
Employee assistance programs. Many organizations realize that employees
sometimes face stressors thatthcy simply cannot handle on their own. IBM. General
Motors. Caterpillar. and many other organizations use ~nlphJrcl· m;sistanl'C progrmllS
(EArs) to provide their members with professional help to deal with strcssors. An:ording
to the Society for Human Resource Management. approximately 70 percent of
organizations have EAI~. Some EAI's simply provide employees with free professional
counseling by tramed ps)'\;hologists. Others are structured to deal with pmtil:ular types of
stressors and problems. such as alcohol or drug abuse by emploYlocs or members of their
families or problems with troubled te<.'ns. Champion International Corporation. for
example. offers workshops to its employees on how to deal with IX'tential drug abuse in
their fam il ies. 142
In order for EAPs \() be effective. however. employees must be guaranteed confiden-
tiality so they're not afraid their job.s and careers will be jeopardized by seeking help.
Employee health management programs (EHMrs) arc ,1 special kind of EAr designed
to promote the well·being of members of an organizMion amI cn\;ourage healthy lifestyles.
These programs focus on helping employees improve lheir well-being and abilities \() cope
with stressors by. for example. controlling their weight. quitting smoking. improving thdr
eating habits und nutrition. ,Ind detecting potenlial health problems such as high blood
pressure carly.143 Eighty·onc peTl:ent of I~rge organizations h~vc atlcast one kind of
EI-IMP in place. IM Du Pont. fllr example. offcrs cl~sses ranging fmm 4 to 10 weeks long
that are held during lunch and before and ufter work. How to SlOP smoking. control one's
weight and cat a healthy diet. and deal with back-rel:!ted problems ,Ire among the topics
discusscd. 14S
Personal days. time off. and sabbaticals. Providing person:!1 duys. time off from
work. :!nd sabbuticuls CMI help reduce stressful feelings and emotions by allowing
employees to put their work-related stress aside for a day or two (in the \;~se ofperson~1
days) or for a more extended period (in the case of sabbaticals). Personal d<tys arc
common at Tllany large and small organizations and urI.' available 10 ull employees.
Realizing the mounting pressures employees face. some organizations are setting aside
d~ys when all employees t<tke off. For example. in 2005. PriceWaterhollseCoopers gave
all of its employees 10 consccutive days off from work during the Dec·ember holiday
season,Ho
People uSlwlly cope with stressors in both problem-focused and emotion-focused
w~ys. When coping is suc\;essfuL it helps employees effe\;tivcly deal with stressful
opportunities and threa1s without experiencing \00 many slressful feelings and cmo-
tions. Exhibit 9.7 summarizes the vurious coping strategies uvailuble to individuuls und
organizations.
j j j j
Fot" individuals For organiza'ions FOO" individuals Fo, organizations
Tim, manag<m,n, Job ,.des.gn E>.,<'" On'"" ....-<,..
G.tting h.lp and co,.,ion Medi,at;on fa,'li" ..
from a m.n'o< R.d"""on of Soc,.l support Org.n'''''''onal
Rol. n<go"atlon un«rtainty .upport
ClOn,<al
Job .«utity <oun .. ling Employ-
Compan~ a."".n«
day <at"< pcog<>ms
FI..,bl. wo'->' P."",n.1 d.y<
",hod"l.. and a"d .abba''''.I,
Job .h.nng
T,lecommutmg
 CHAPTER 9 • MANAGING STRESS AND WORK·L1FE BALANCE 313

Summary
Stre" affect, individual weB-being and has the potential 10 affect the extent to which indi-
viduals and organi zations achicvc thci r goals and perform at high levels, Strcss is bound up
with employees personal lives: thus. the study of stress also entails exploring the nature of
wort-life linkages. [n this chapter. we made the following major points:
I. People experience stress when they face opportunities or threats that they
perceive as imponam and also pcn.:eive they might not be able to handle or deal
with effcctivcly. An opportunity is sOlllcthing that ha, thc potcntial \(l hcndit a
person. A threm is something that has the potenti,I110 harm ,I person. Slress is
a high IY personal experiencc inn ucnced by an mdi \' idua r s personal it y. abi IitICS.
and pcKeptions; what is stressful for one pcrson might not be stressful for
anothcr.
2. Stress can h~lVe physiological. psychological. imd behavioral consequences. The
relatiollship hctween stress and physiological cons<:quences is complicated. and the
most serious physiolo£ it'll conscquences (for example. cardiova,cular disease and
hean attack) re.,ult only after considcrahly high levels of .'Iress have been experi-
enced for a prolonged period of time. Psychological consequences of stress include
negative feelings. moods. and emotions: negative attitudes; and burnout. Potential
behavioral conscqucnces of Slfess include poor job performance. strained imerper-
sonal relations. abscntecism. and turnovcr.
3. Employees who ,Ire responsible for helping others wmetimes experience burnOUl.
The thn•." e key signs of burnout arc feelings of low personal accomplishment. emo-
tional exhaustion, and depersonalization.
4. A eenainlevel of stress is positive in that it can result in high levels of job perfor-
mance. When stress levels arc excessively high. negative stress is experienced. and
perfomlance suffers. Other potential behavioral conSt.'quenccs of high stress includc
strained intcrpersonal relations. absenteeism. and tunlOver.
5. Potcll1i a I stressors can ari se from employces' personal lives. job responsibi Iities.
membership in work groups and organizations. work-life balance. and environ-
mell1al um;ertainty. Stressors fmm employees" pcrsnnallives include major and
minor life evell1s. Job-related ,tressor; include role conflict, role ambiguity.
overload. underload. challenging assignments and promotions. and conditions
thaI affel:l employees economic well-being. Group- and organization-related
stressor, include mi~understandings.conflicts. and interpcrsonal disagreelllell1s:
uncomfortable working conditions: and dangerous or unsafe working condition,.
Stressors arising out of work·life balance result when work roles conflict with
people's personal lives. Stressors arising out of environmental uncertainty result
from events and conditions in the wider environmem in "'hil:h organizations
funnion. such as the threat of terrorL'm. pollution of the natural environment, and
infectious diseases.
6. Coping methods arc the steps people take to deal wilh stressors.l'roblem-focused
coping involvcs steps people take to deal directly with the source of stress. EmOlion-
focused coping involves step, peopk take to deal with their stressful feelings and
emotions. Most of the time. people engage in both types of coping when dealing with
a stressor.
7. Some problem-focused coping strategies that individual, can u,e arc time man-
agemell1. geuing help from a mCll1or, and role negotiation. SOllie emotion-focu,ed
coping slrategies for individuals are exercise. medit'l1ion. social support. and elin-
ical counseling. Some problem-focused coping strategies thnt organizations C,lII
usc arc job redesign and rotat ion. red uction of uncertainty. job secu rit y. comp;my
day care. flexible work schedule, and job sharing. and telecommuting. Somc cmo-
tion-focused coping stnl1egies for organiwtions arc on-site exercise facilities. per-
sonal days and sabbaticals. organizationnl support. and employee assistance pro-
grams.
314 PART t • INDIVIDUALS IN ORGANIZATIONS

Exercises in Understanding and

Managing Organizational Behavior

Questions for Review

1. Why are opportunities such a!, a job promotion
stressful for some people'!
2, Why might excessively high levels of stress lead to
turnover'?
3. Should managers try to eliminale all or most role
eonllict and ,Imbiguity'? Why or why not'!
4, [s underload as stressful as overload'! Why or
why nm'?
5. Do organizations have an ethical obligation to guar-
antee their members job security'! Why or why not'l
6. How can managers help their suoordm3lcs leam how
to cope with strcssors in a problcm-foo::uSl'tl way?
7. What should a manager do ifhc orshc thinks a
subordinate is using a dysfunctional form of
emotIon-focused coping (such as abusing
drugs)':
8. Is a certain level of stress necessary to motivatc
employees to perform 31 a high level? Why or
why not'!
9. Why might some employec.' be reluctant to UM: all
cmployee assistance program?
10. Why should an organization care whether its
members eat well or exercise regularly'!

08: Increasing Self-Awareness

The Nature of Stressful Experiences
Think about the last signilicant stressful experience that 5. Describe how you aetul1l1y coped with the stressor
you had on the job or at school. ror the experience you in 11 problem-focuscd ml1nner.
have ehoscn. do the following: 6. Describe how you actually coped with the stressor
in an emotion-focused manner.
I, Dcsnibe the experience and the surrounding cir-
7. Describe how your employing organizalion or uni-
cumstances.
versity helped you cope with the stressor. [f your
2. Explain whether the experience was stressful
employing organization or ulliversity did nOi help
because it entailed an opportunity or a threat.
you cope with thc strcssor. do you think it should
Whal was the opportunity or threat?
h,]\"c'! How"!
3. Describe your feelings when you first elleountercd
8. Describe the extent to which your ("Oping efl()rts were
the source of stress.
successful in helping you deal with the source of
4, Describe the (a) physiological, (b) psychological,
stress and with your stressful feci illgs and c1l\0tiolls.
and (c) behavioral consequences of the stress.
 CHAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 315

A Question of Ethics
As l11<1ny org<lnization, l:ontinue to lay olr employees. CEOs amI top managers arc taking
home renml salaries. In the United States. the differences between what employees atlhe
vel)' top of an organization make and those at the very bonom tend to be much greater than
they are in other countries. When layoffs take place. CEOs and top managers typically
indicate that they arc an economil: nel:e>sity. Yetthe>c very same people might be earning
millions of dollars a year. There arc many cases ofa major layoff taking place in the salllC
year that a CEO of the company laying off employees earned a record salary_

Ques1ions
l. Are there ethical implications of organi7..a1ions laying off hundreds of employees
in the same year that the CEOs earn rel:(ml salaries'! If so. what arc the>c ethic.tl
implications"! If nOlo why not'!
2. What ethical obligations do organi7A1tions have whcn thcy arc considering laying
off employees'!

Small Group Break-Out Exercise

Emotion-Focused Ways of Coping
Form groups of tha:e or foor pL"Oplc, and appoim one member as the spokesperson who
will commu nicate your conclusions to the rest of the class.
l. Take a few minutes to think about thc emotion-focused ways of coping that you
personally rely on to cope with stressful feelings and emotions.
2. Take turns deSl:ribing your emotion-focused ways of coping and have the
spokesperson li'a them on a piece of paper.
3. Now go through the list and dctermine as a group to what estent each way of
coping is likely to be effective/functional or ineffective/dysfunctional.
4, As a group,l:ome up ,,'ith a list of effedive emotion-focused coping strategies.
(This list may include but is not limited to the list that was generated previously
,
.,n step_. )

Topic for Debate

Stress l:an have major imp,Kts on people and their organizations. Now thm you understand
how stress affects individual employees as well as organizations. debate the following
Issue:
Team A. The primary responsibility for mmwging wott-related stress lies with the
employing organization.
Team B, The primnry responsibility for mnnaging woTt-related stress lies with the
individual employee.

Experiential Exercise
Developing Effective Coping Strategies

Objective
Your objective is to gain espcrience in dcveloping effective strmcgics for helping members
of an orgnnization cope with ~tress.
316 PART I • INDIVIDUALS IN ORGANIZATIONS

Procedure
Assullle the role of a supervisor of a group of 12 financial analysIs for a pelroleu,n com-
pany. Your subordinales tend lu be 111 Iheir laic twenties and early thirties. Allhough sume
oflhem arc single. others arc married and have young "hihJren. and one is a single parent.
Bccause of their joh demands. they often work late and take work home on weekends.
Your COmP~l1lY has fallcn on hard times and has recently dowllsized. You were forced
to lay otf Ihree subordinates. The layolf has really shaken up the survivors. who fe,lr that
they may be next 10 get a "pink slip:' Workloads have increaseJ. ,1IlJ lately your suborJi-
natcs always sccmto be on edgc.
,t
Recemly. four of the financial analysts gOt imo serious and loud argument over a
projttt they were working on. One of the participanlS in this light came 10 yuu practically
intcars. She said that things had goUen so baJ that members of the group always seemed
to be at each other"s throms. whereas in the pastthcy had hclpeJ each otl1er. This inciJem.
alollg with your recent observatiolls. suggested the need to tal.:e steps 10 help your subordi-
nilles cope effectively with the stress they seem lu be experiencing.
L Describe the steps you. as the supervisor. shoulJ take to detenninc whi"h prob-
Icm·foeused and emotion· focused coping strategies might be effective in hclping
the financial analyses deal with Ihe stress Ihey arc experiencing.
2. The class divides into groups of three to five people. and each group appoints one
member as spol.:csperson to prescm the group"s recommcndmions 10 the whole
dass.
3. Group members in the role of supervisor tal.:e lums describing Ihe sleps each
wOlilJ tal.:e to Jetermine eff<.'\:ti\'e problem-focuseJ 'lnJ emotion-focused coping
strategies to hdp subordinates deal wilh the stress they are experiencing.
4. Group members devdop an action plan that the group as a whole thinl.:s would
beSI lend to the development of effeClil'e problem-focused and emotion-focuscd
coping strategies.
When your group has completed those activities. the spokesperson will prese11l the
group's action plan to tile whole class.

New York TiITles Cases in the News

li!!), ;Xct" Uork lSim..

"Nine to Five, and Then Some"
8.1' M. ViI/IIIIO. Tile NI'lt" York Ttl/It'S, April/6. 2006. p. lJU 9.

Q. Your "0.1'.1 e.'I"":I,~ .wm 10 ...ork Itmg
IlOurs, 1//1/1.'"1'111 ''''''SO/III/life is slifJerillg.
\Viral rw, )VU do IU he" /PO/II )'0'" job
/llld \"Our slIlIiry illll/rI?
A. As ,oun '-'-, ),our pmfe"ionul Jif,'
owr·s!>,tdO'J>'s your IX'rsonal OIlC. speak up.
Cali Williams Y,,,,1. prcsiJcnlof Work +
Life Fit. Ii slratcgic con,ultin!,! company in
Madi."Ml. N J .. said thut C\'Co if cmpIO)',-cs
wc~ not upset aboot how moch they wcn:
working. dwindling P"rsonallill1l: vmulJ
bn:cd disillusionment down {he road. "If
you du,,'t put" ,top to it carlyon. you
bc<:omc so burned oue unprodoctivc and
o\'crwhclmcd that "vcnlually you 1t"I'C
w;lhO\lI ewn trying to ,ah'age the situ,,·
lion:' said Ms_ Yost. aUlhor of '"Work +
Life: Finding tlK' Fit TIwt"s Right for You"
(Ri\'erhead. 2fXl.l),
Q. IVIIGlna IWflpe.,nlto IIII' fig/II·
bour ....Or!;i/ir)'?
A. It may that tile ,werage
SC<:111
w'Ol'l.:Jay Ins IcngthcncJ wllsi<lcrJbly s;nl-c
the 1980 film '"NillC to Five."" Many indu,-
lries arc oolO.·llsizing and workplac'C tasks
ha\'e oceome mon: "ompliealc<-L placing a
greater hurJen on fclO.·er employees. Jim
1\,lurph)'. founder and chief execuli\'e al
Afterburner. a I1lanub'CnlCn! consulting lion
in Allama. calls thi, phenomenon "Ia,k
salUmtion:' and he notes that in areas like
con,ulting. financial ",,,,'i,,,,, and law. it's
not UIX.·omnKlIl for junior staff "",moc" to
wOOl2·or l4-hoord,lys.
But the' feJ"ral Bureau of Labor
Stalistics says the average American
employ,·c is still ".-orking close to an
eigllt-hour day. Lasl year. companies
employing a 101ai of 48 million ,,"orkcrs
reported Ihal more Ihan 72 percelll of
thnn worh·d about 8,25 hours a day. In
a 2002 reporl. Ihe !'amilies and Worl.:
In,titute in New Yorl.: reporttd that
67 percent of roughly 3.500 salaried
employees saiJ tlley worked 35 10 50
hours a week.
Q. 1,1 it it'gtli for COilifial/it's 10 t'Xlwct
1!"ll'lvYl!l!s IV work 100Ig days?
 CHAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 317

A.lt depends on the .....Of~pl"'e and lhe
job. Fedeml law mandate, ",'enime p;Jy
after 40 hours a wed:: for most worl;ers.
but lhere are important exemplion, for
executives. administmti"e personnel and
out,ide saies employee,. among others.
And mandatory o"ertime may be rou-
tine for ,ome workers-certain ho'pital
employees. for eXltmple. Comp;Jnies do
nOl typically ad,'eni", Ibm they eXp<.'<:t
employees to work 12-lIoor days: instead.
they nurture' a ,'orporate l'Ulturl' of OYl'r-
achieving :lIId Iea"e employees to ma~e
scoc-duling dIOil",,' on their own.
the boss and cite tho:; list as proof of your
,~l1Itrihulion, to lhe finn. Arml'd witb toc'SC
fac(s, you should be able to mal::e your
,'asc wilhuut beinl; viewed a, an
ulldemellicwf,
Nevenhek'ss, be taclful. The ho" i,
prOO.lbly o"erworkl'd as ",'ell. Chrisline "1.
Riordan, pmfessor of management and
associale dean of the M. J, Neeley School
of Busioc" at Texa, Cbri.'lian University
in Fort Worth. ,ays it is import"lI1 to
a"oid sounding like a compl:tiner. "You
need to put yuorsclf in your bosss shocs:'
Ms. Riordan ,aid. "What are the martel
Leamed About lmplcmentlllg Redueed-
Load W()r~:' professor, at Michil;an
Stale Univer~'ty ,n Easl Lansing found
lhat pnxluctiyity alld tcam effectivene."
soared at companies that re,ponded
crealively 10 the demand for flexihle
schedules.
"Ju,t oc..:au'iC all empklYcc works lonl;
hours docsn't necessmily mean lhllt he
or ,he is pnxluctivc,'" said Ellen Ernst
Kossc~. a profe~..<.or of labor mid IIIdustri:ll
re!ation, at the uni""rsity and one of the
:'uthors of the study. "Sometimes a tlc.~ible
wor~ schedule or ,lightly fewer hours ,'an

Julie Jan~n, author of "You Wall1 Me
to Work with Who?" (Penguin. 2(06).
expcrielX'ed lhis Jirsthand as a business
"'H\SUltl"'l. Her Ix",.,s "ocOl,raged her to
work h:lrder. she ,;"id. even tlloo:;11 she was
already puning in 70- and 8O-hour weds.
"'I remember pleading wilh lhem at one
poim for an assistant <>r S<H\lCone to h<:'lp:'
said Ms. Jansen. who lives in Stamford.
Conn. The situation "'a, ne"er resolvcd.
st-.:: sald. and it finally drove her to quit.
Q. How do ''0" feq",:sl a ligh/er
schedule willlOUllooMlIg like a sl/lda?
A.1lIc be,t way to get a reprie,'c is to
demonSlr,l1C that you de",rye one First,
ellan your hours over a tw,,""wed:: period.
and II)' 10 quantify the project, you have
handled o\er thal time. TIlcn, meCI with
condit;ons'! Wh:'l demands alld prc"ures
might he be fa,'ingT
Q. lV/1II1 pmcliC<lI I>WI'eI Illig/II
redlU'f Ille IJIIIIIIJ"r of IIOIm; ."01' SI){'IJd III
work?
A. Impw.-e your linte managcment.
Offer to ta~e wor~ home or to telecom·
mule. L<lo~ inlo altemale "'X>fk s,:hedulc,
-some cOlllpanie~ I;i"e employee, every
other Friday otf if they work nine IO-hour
days in belween. nlCre'~ also flextime-a
cu,torniztd s<'hcduk lh:ll leIS all employ",-'
il\C0'1'Orate pcrso1l:llnccds like chikl c:lre
inlo a workday.
Sevtral 'tudies ,how, tbat the,e
approaehe~ 10 sehtduhng call be effec-
ti,'e. In a 2005 ~tudy litled ":\lakinl;
Flexibility Wor~: What Manal;ers Have
do wonders for an employe,:'s em:"tive-
ne", and desire t<> gel ;n\'ol\',-d ,"
Q. lV/Ill! sholJ'" .YON do if lilt' IiosJ is
ulllrillillg 10 ('OIl/promise.'
,\, If you asl:: for a lighter wor~lo:,d.
be prcpared for all possibk "ultome.',
including 1"<:jcction. said Ken Siegel.
pre.,ide'llt nf the Impacl Groop. an "rgani-
zati",,;t] consulting firm in Beyerly Hills.
C,lif.
"Ultimately. everybody. includillg
your boss. has a job to do:' Mr, Sil.'gcl
,aid "If the boss promise, you that the
lighl at the end uf the tunnel is nOl a
train brilll;inl; you more work:' maybe
you ,hould I::eep going. "Olherwise:' he
added, "'It mi:;ht be time to stan loo~inl;
for a le" demanding job."

Questions for Discussion

1. What sources of stress docs Ihis case focus on?
2. Why are some workers beinl; required to work longer and IOlll;er hours'!
J, How t:ln wor~ers tope wilh these ,uorees of ,tress'l
4. Why is work-life b:ll:llKe impon:lnt for both employees :lnd employers?

liri), ~t\" llork lirimts

"An Ugly Side of Free Trade: Sweatshops in Jordan"
fJ,' S. Grl'ellhoWIt' (lml M. fJarbmv, nIl' New York nmH, Moy J, 2{J{)(), I'P. C I. C7,

Propelled by a frce-Imdc' agr<....·mell1 with
the United SMes, apPilrel manufacturing is
Ix.,ming in Jordan, it, exports 10 Anll..-i,'a
:;o.:,ring twentyfold in the last tive years.
But SlMllC for,-'ign worh'Th in Junlanian
fac.1orics thllt prodllCe :;:llIllCnts for 1,",,'<:t.
Wal-Mart and olher Arnl'!i"an rctaikrs
arc complaining of di,mal <'uodition,-uf
2O-hoIJr d:lys. of nul being p:lid for llIonths.
and of being hit by supcrvi.soTh and jaik.-d
when they Hlrnplain.
An ad\,ocal'y group for workcrs con-
tends that solne apparel makers in Jord:lll.
and S!lllle ...",lmcl<m; Ihat ,upply fortign
worters 10 lhem. haY<' engagl-d in human
trarnc~ing, Wor~crs from Bangl:wesh
,aid they paid 5 1.000 to 53.000 10 w!lr~ in
Jord:lIl. but when they arrived. their PiISS-
ports wen' conf"l'ated. re,triding their
ability to leave and tying tllcm to jobs th:lt
318 PART 1 • INDIVIDUALS IN ORGANIZATIONS
often pay far less Ihan promised ",Id far
Ie" Ihanthe <:ountr),', minimum wage.
"We uscd 10 Sla" "I 8 in the morning.
and we'd work until midnight, 1 or 2 ,'.M .•
seven d"ys" week;' said Nargis Akhter, a
25-year-old Banglade,hi who. in a phoTIC
interview from B"ngladeshi s'lid she
worked lasl year for the Paramount
G"T1llClI1 fa<:lory oulsi<lc Amman, "When
we w<:'" in Bangladesh they pmmi"-'ll uS
we would ",eeive $ Im.t month. bUI in lhe
fiw munlhs I wa, lhe", I unly gul one
1II0mhs's salmy -mid Ihal was jusl $50:'
The advo<:a,'y group. lhe National
Labor Commill<'C. which is bMed in Ncw
Yurk, found substandard l',,,,diliuns in
more lhan 25 of JOrd:lI]S roughly 100
garmenl fad",;es and is sCI 10 relea>(' a
report on its findings loday. Its finding,
w<'T<: supporled in inlerviews wilh
<:urrent and former workers.
SUl:h <:mnplainls have dogged lhe
globiJl appa...,l induslry for yean<. ewn as il
)~tS adoplt<lmeaslll':s inttn<l<.-d 10 improve
working tondilions in fa<:lories that pro-
duce dOlhing for AlTli:n<:an and European
l'{'InSllmers. 11U1lhe abusi"e <:onditions that
the guesl ,,'orkers deseribed ,how how
hard ;1 is to eomro] sweat-shops as fa<:!o-
ries spring up in new places, often withoul
elfe<:tivc moniloring;n pla<:<:.
[n rumt years, Jordan has become a
magnc1 for apparel manufa<:tu...,rs. helped
by Ihe privileged tntde posilion lhal the
United Stale, ha, gi\en it. first be<:aus<: of
ils 199.. peace accord wilh [smel and then
bl',:ausc of a free tr.ide agK'Cmenl signed
wilh Wa,hingl0l1Il12OJ1.
Jordan's appard industry. whi<:h
exported $ 1.2 billion 10 the Unilcd SI"ICS
last year. employs lens of Ihou,ands of
guest workers, mainly from Bangladesh
and China.
[n interviews lhis week, live B:Jllgla-
dcshi, who u,,--d to work in Jordanian
apparel faelories and four who slill do
had similar laic, of paying more than
$ 1.lX:Q 10 work in Jord<tn, of worldng 90 10
120 IKlur, a w,,,,k. of nol being paid lh~
overtime gU'H,tmeed by Jord"ni<tn law. of
slet'ping 10 or 20 to a sm<tll donn ",,,,n.
The Nalional Labor ConHnil1<:c helped
arrang.;, inl,;,,,'iews wilh th.' B'lIlgladcshi
","Oti\~rs.
The Iargesl rctaik'r in lhe Unik'd
Stat~s. Wal_Man. and one of Ihe larg~st
dOlhing IllHka" Jones App"rel. ,·on·
fi rmed }'eSlerday that they h,td discovered
serious probltlIls wilh lhe eondilioos "I
scveral major Jordaniao faetori.;".
In addilion. a faelory monilor for a
major American <"ompany confirmed that
Jordani"n faelories rouliocly eonliscated
their gue't worker, pas.sport,. do("[orcd
wage aod hoor records mid co"ched
employe,,, to jie 10 gov<:mm<:nt and <:orn-
paoy inSfC<"IOTS aboul ""Orking rondilions,
The monilo,- a,h-d not 1<l he idcmif,ed
because lhe company h.ld not gi"en 'llllho·
n,.al;onlo 'peak pubJidy,
Belh K~d::, a spokeswomao for Wal-
t\lart, said lhe (X}mpany did nol own or
m'Ill,,!,'e f:'Clories. bol lricd 10 impro'"C
",Ring ",ndilion, in Jordan and d,,-'where.
"11 is a rominUOlJS chalknge. ()()l jusl for
Wal-Mart bol for ,lilY <:'Knpany:' ,he said,
noIing lhat lhe mOSI <"OlHlnonly observed
pmblcms i",:lutk'tJ failure 10 pay proper
wages, "cgn.-g;OIlS hOlm:' and "usc of fal,;c
or insu flio.:icnt books or docunl<.'1\~rtKKI.'·
Charles Kernaghan. e~c<:uli,"C dircclor
of the Nalional Labor Commiucc. whi.'h
has cxpo"-'ll miSlrC:lllTlenl in factories in
Celltral America and China. said h,' WaS
shocked by wh:'l he discovered in Jordao.
"The",' are the wonl condilions rv"
ever seen:' he said. "You have p<:Qplc
working ..8 hours slmigh1. You lIave
workers who were S\l;Pped of lheir pass-
ports, "ho doo't have 10 cards lh,,1 allow
them to go OUI on the 'tr,,,,,- If they're
SlOpped. lhey <:all be imprisoocd or
deported. 'I) they·..., trapped. often held
under condilions of in,"Oluowl)' ,;crvitudc.'"
Mr. K<:maghan ",id Banglade,hi work-
ers had comacled his organizatioo 10 com·
plain aboul working "oodilion, in Jordan
He then lm"ded 10 Jordao and met qoielly
wilh dozen, of workers. He ",id Ameri<:an
companies. dcspitc Iheir monitoriog
effort,. were often slow to uoc,)\'er
workplace abuses because workers were
l'oa,'hed 10 lie 10 Ihem or were .,,-·arcd to
speak OUI. Moreover. fa<:lories oftcn scod
wort out to subslandard ,ubl'onlm<:tors
wilhootllOlifying Amerieao relailers.
Se,'eral fa<:lory ownl'rS in Jordan
in.\isted lhal lhey lrealed their workers
P"'P(:r1Y·
"Some people are always tllaking
alk'gali"'I>," said Karim Saifi, lhe oWOC'r
of Uoited G:tml~nl Manufa<;luring, a fac-
lOry nCar Amman lhat "'orkers nil;,'izcd
for long hours aod wage violations. "As
far as wc know. ,,'C folio'" all lhc I"bor
laws here. If we were nOI abiding by all of
the local Jordan laws, we would not be
able to operate.'"
Se"eral foreign apparel workcrs said
that while tbeir f""tones requin.'d lhem to
Slay until midnighl, lhe Jon.hmian wortcrs
""..., usually all,)\\"Cd 10 leave al 4 P.M.
Two large indu.\lrial zones oUlside
Amman are thriving. ha\"ing geared
lhemselves to the Ameri<:an apparel
market. They have al1ra<:led dozen, of
garmem maoufac(()r~rs. some with 200
workers. '1>11'1<: wilh 2.000. that say Ihey
produce c1o1hes for J. C. Penney, Scars,
Wal-;l.lark, Gap and Targd.
"It would be wrong to think lh"l pr0-
blem, at a few pial'" at<: "'p",,,,ntati,,,' of
lhe 102 app"rcl faelories in my <"ounlry:'
,aid Yanal Bl'a,ha, Jnrdan', l...ide "'pres-
emalive io Washioglon,
Jordan's ambassador to the Uniled
SWles. Karim Kaw'lr. "tid "If lhere :lre
any \";ol:tlions of our labor laws, W.'
certainly wkc ilscriollsly:'
Mr. Beasha s"id Jordani,m !':o\wn-
mem iospeclors monitor the working
(~lndiliom in fa<:torits. Bul several gUC.\1
woti\crs said fa<:lOT)' managers hid abuses
by coadling worktrs 10 lie. Mr, Bea,ha
said lhe Jordanian govern men I cared
aboul Ille ,,'e1farc of foreign gue,t
,,"Oti\ers. noting thai ;t enfor<:cd overtim<:
laws and recently illc'rcascd lhe minimum
wa!':c for eili7.cn, and guest workers.
BUI Mohammed Z" who has worked
for more thao a year al the ParamOOn1
Gm1lICnt Fa<:lory. ,aid lhal eVC1l though he
worked more lhao 100 hours a week-
oonnally from 7 10 midnighl sc"en days a
week-lhe <"()mpany r<:fused 10 pay h;m
o"ertimc wllCn he did nol meet prodll<:tiotl
targets. Ii<: ask<:d lhat his lasl name he
wilhllCld for fear of relribulion.
Having paid S2JXlO to work in Jordan,
he said, io aO imerview from Amm"o,
'"I'm nOi earning e"ough 10 r<:I"')" my loan
or to .\upporl my wife and son:'
Unhappy lhat hi, passport has been
eonnscmed, he said: '·My idem ill' h<ts
becn laken by th" cnmpany. I ha,c no
freedom Dccau.\<: I have no fr~edom 10
movC 10 olher pl'K".'!;.'"
Mohammed Saiful 1.\lam. 30. a
Bangl""'-',h; ,,'ho waS p",dut:1;on manag<:r
i'l Western GanllCnl. :<:,id th:'l sc"erod times
lhe work<:rs had 10 work until .. A.\l" then
slccp on lhe faclory's 1100f for a few hours.
before "-'SlIming work:lt 8 A.M.
"The workers got .so exhausled they
bl'C"lIlle sick,'" ht said. '111CY could hardly
Slay awake at lheir machines:'
Mr, Saiful. "ho is in lllC Uniled SlalCS
10 highlight poor working wndit;ons in
Jordml. poinled to a yenow and black
flccce sweatshirt thai he said his factory
 CHAPTER 9 • MANAGING STRESS AND WORK-LIFE BALANCE 319

made. 11 had an Alhletie Works label
made for Wal-Man selling for 59.4~.
"Somclimes wheo eomp;lOies senl III
mooitors,lhe worker> were iO'lrueted
whal to say:' I>lr. Saiful said.
I.-Iohamed Inan. who io a lelephooe
Interview from Jordan said. he was
Weslern' owner. ,aid. '"The workers get
the minimum wa£e. and all limes. there
i, 110 problem in out fadory."
MolMmed Kasim. Paramounl"s owner.
said his faelol)' al,o paid it, ",orkers
properly. Mr, Kasim and olher faC10l)'
managers >aid 'mekcrs ...." ...· iwd free mOIll
and board and sometimes medical care.
BuI seve-ral workns said lhal whell
they were sick they did nOl receive
medical ,·are. bul W'Cn' inslcad punished
and had Iheir pay docked.
SeVc'ral Bangla<k',his 'aid th,:re were
terrible conditions al faClories thai made
dOlhcs for Wal·Man and J"'leS Apparel.
which owns brands like Gloria Vanderbilt
and Jones New York,
I.h. Keek. the Wal·Man spokes-
wo",an. said ''{)l11p'Uly inspeclors n'<:ently
identifIed """riO\lS v;olalions" of ils labor
rules al lhrtt Jordalli:m faetoric" Al
Honorway Apparel Jordan. for e~ample.
whIch manufactures slccpwem for
Wal-Man. inspectors found employees
working off the dock. managers who
refused to pay ovenllnc and wages Ihat
"("Ould n<>l be verified:- ,\Is. Keck 'aid.
At tile lvOf)' Gamlent Factory, which Wal-
Man cea.\Cd working wilh 1"" y<'ars ago.
inSpC<:lors found "cgre£ious working
hours:'
Jocle Frank, a spokeswoman for
Jones Apparel. said th<' company had
also found "scrious problems:' at Ihe
I",>ry Garment FaclOry. whi"h produce'
Gloria V:lnderbill clolhing. :<nd said it
wHuld "monilor lhe situalion dosdy." A
spokesman for Scars Holding s:tid the
company WaS inH"ligaling pole'1llial
problems al lIonorw'ay. which produces
c101he' for Klllar!, a divi,ion of Scars
Holding,
A Kohl's spokeswoman <1cllied work-
ers' accusations that Clolhing sold by the
cmlllAlnY WaS mad<' al sc,'eral Jordania"
factories with poor condil;ons. Target
said il worked wilh only one such fac-
tory. AI Saf:1 Gartncnts. which Wal_Man
rc..enlly <'iled for labor viola lions.
I\lany retailers ~"id their policy W;C;.
aller disco\'Cnn£ \'iolmions. 10 "'ott with a
bdory to impn."'e condition" rather than
aUlomatieally wilhdraw their business.
\Val-r-lan "lYS it £i"cs faclOrK:S a year 10
fIX serious pmblem,. "'impeding them
"'"Cry l20days,
"Our bu,iness wilh the faelOry i, the
only leverage we ha'''' 10 pu"h for improve-
mcm:' Ms. Ked ",id,
After Tilt' Nt'.... York 7J1/lt's asked
about the ",-"Cu,alions nn Monday_ W"I_
Mart dispmehed two mspectors 10
Jordan.
Hazrm Ali. 25, who worked from
Seplember 2004 10 March 2005 at the
AI Shahaed faClOry, said he sometimes
worked 48 hOUr> in a mw and recei"ed
no pay for the six momhs,
"If we a,k<"" for molJ<.'y, lhey hit u'."
he s:,id,
Nasim" Akhlcr. 30, ,aid lhat lhe
Western faclory ga"e its workers ;<
half-gl"ss or lea for brc"kfast and
often rice and sOme ronen chicken for
lun ..h.
""I" the four months I was in Jordan.
lhey didn'l pay us a single penny:' she
,aid. "Whcn we asked m:magemem for
our money 'md for bencr food. lIl<.:y "'cre
\'ery angry at u~. We were pUI in some
son of jail for four days wilhoul anything
to cat And then they forced u, to go back
to Bangl"desh,"

Questions for Discussion

I, Why do foreign worken; go to Jordan 10 work in the "pp"rcl manufaC1uring indU,lry?
2. What sour..es of stress do they encounter there?
3. What are lhe ethical ohligations of flnns likc Wal"Man and Jones Apparel who haw proo-
ucl, manufa(;{urcd in faclorie, in Jordan'>
4. Whm can and should be done to rectify this Silumion?
 PAR T 2
Group and Team Processes

THE NATURE OF WORK

GROUPS AND TEAMS

OVERVIEW

INTRonUCTION TO GROUPS

CIIARACTERISTICS 0.' WOR" GROUI'S

lIow GROUPS CONTROl. T11EIR 1\h:M8ERS: Rou:s AND RUI.ES

How GROUPS CO.......'.Wl. TUUR 1\IUI/:IERS: GROUP NORMS

SOCIAUZATIOl'\': How (;ROUp 1\!f:MIIERS LEARN ROl.ES. Ruu:s. ANI) NORMS

SUMMAR\'

EXERCISES IN UNDERST.\NI)IN(; ANI) I\IANA(;II"(; OR(;A."IIZATIONAL IlEIiAVIOR

Learning Objectives
After studying this chapter, you should be able to:
Describe the different types of work groups and the difference between
a group and a team,
Appreciate the characteristics of work groups and the effects on the
behavior of group members,
Describe how groups control their members through roles, rules,
and norms,
Appreciate the need for conformity and deviance in groups and why
and how group goals need to be aligned with organizational goals,
Understand the socialization process and how socialization tactics can
result in an institutionalized or an individualized role orientation.
 Opening Case
TEAMS FUEL GLOBAL INNOVATION AT WHIRLPOOL
How can teams fuel innovation?

hese days, Whirlpool Corporation is a leading global manufacturer

and marketer of innovative home appliances. 1 Based in Benton Harbor,
Michigan, Whirlpool has more than 80,000 employees and almost 60
production and research centers around the world. 2 Typically, one would
not think of a manufacturer of refrigerators, dishwashers, and washers
and dryers as a global innovator, but Whirlpool has become
just that. While a strong commitment to innovation pervades
the company and its culture, so too does the realization that
cross-functional global teams that bring together diverse
perspectives and areas of expertise are central to innovation. 3
Bringing together different areas of expertise in cross-
functional teams was central to Charles L. Jones's approach
when he was hired by Whirlpool to build the Global Consumer
Design division, of which he is currently the vice president.
In the past, the actual design of appliances was more of an
afterthought rather than an integral part of new product
development. As a consequence, Whirlpool would churn out
appliances that were high quality yet very similar to those of
key competitors and competition was based on price; thus the
Whirlpool appliance prices were falling by around 3 percent a
year though demand kept pace with a housing boom. At that
point, top management realized that innovation was the key
to the company's future. 4
When Jones came on board, he created cross-functional teams
composed of engineers, graphic artists, usability researchers,
CfO'i.~-funl·lion,d learns fuel gloool innovation
human factors experts, marketers, and industrial designers to
at Whirlpool. Tcam n>embers gain valu«b1c
insights by observing ,'()Iuntl~r mnsun>ers
develop new products. The top-selling and award-winning
trying out and imcracting with pr<X!ucts in Whirlpool brand Duet<!l Fabric Care System (also referred to as the
'JX~ially dnigncd roo,m in Whirlpool's
Dreamspacee Fabric Care System in Europe), a high-end matching
Glob;.l Consumcr D<::sign Division. washer and dryer set with a novel, attractive design, was the
result of the efforts of a global cross-functional team. s The Duet ctl
features a front·loading washer with a porthole and can be raised off the
ground on a pedestal so consumers don't have to stoop as much as they
ordinarily would to load and unload clothes from a front-loading washer. It
also has a large cleaning and drying capacity, and is efficient in terms of
saving on water and energy usage. In designing the Duet system, the
interests and desires of consumers in both the United States and Europe
were taken into account, as were the perspectives of industrial design,
usability, human factors, visual appeal, marketing, and engineering; hence,
the need for a truly global cross-functional team. The Duet ctl dryers are
manufactured in Ohio, while the washers are produced in Germany. Thus,
much coordination was required between both locations to ensure that
materials and colors matched perfectly.6 As Ruben Castano, an employee in
the Whirlpool Global Consumer Design division in Cassinetta, Italy, indicates,
Nit was just a matter of small adjustments in terms of colors, graphics and
labeling of programs in order to make the product fit perfectly in each
 CHAPTER to • THE NATURE Of WORK GROUPSANO TEAMS 323

market ... the core processes and work methods inside Whirlpool are truly
global. This makes it very easy to create teams with members from all over
the world. H]
Cross-functional teams at Whirlpool learn a lot by actually observing
consumers interacting with products. Thus, it is not uncommon to see team
members huddled behind two-way mirrors in specially designed rooms
watching volunteer consumers trying out the products. s This is in contrast
to the traditional focus-group approach to product development where
consumers are brought together in a group and asked questions about their
needs and reactions to products. By actually watching consumers, team
members can gauge how useable their products are and how they will
actually be used (something consumers might not be able to articulate
themselves)."
Groups are used in other ways at Whirlpool to spark innovation. For
example. employees in the Global Consumer Design division can devote
about 20 percent of their time to developing new ideas, which are then
presented to a group of about 8 or 10 employees in studio critique
fashion. to The division is organized around brands rather than products
and often employees working on one brand such as Roper will critique a
new idea that employees working on another brand such as KitchenAid
come up with to get a diversity of perspectives with the overall objective
of giving those with new ideas honest and helpful feedback. ll
Using teams and groups to spark innovation has paid off handsomely for
Whirlpool.12In 2005, the company estimates that $760 million of its sales
were from new products and Chairman and CEQ Jeff Fettig predicts that in
2006, $ 1.2 billion in revenues will come from new products. With over 560
new projects in the pipeline, innovation appears to be alive and well at
Whirlpool Corporation. 13

Overview
In previous chnpters. we focused on how various traits an individual has (his or her per-
sonality. ability. values. attitudes. moods. perceptions. and attributiolls) and the trailS of
the organization (its rewards. punishments. promotion practices. goals. and so on) deler-
mine how employees fl'Cl. think. anu behave .md ultimately how well the organization
achiC\"es its goals. Of eoursc-. organizations don't consist of individuals working alone.
Employees arc usually assembled or clustered into groups or teams. Organizations usc
groups or teams becausc they can sometimes accomplish things th,lt no one individual
could accomplish workin£ alone. such as designing. manufacturin£. and marketing .1
new washer-uryer set like the Whirlpool brand Duct®. For example. in a group. individ-
uals can focus on panieular tasks and become bctll.'"r at performing thclll. Pcrformance
gains that result from the usc of groups have led to the popular saying ....A group is more
than the sum of its pans:'
Groups are the basic bu iIding bl(K'ks of an organ ilal ion. Just as the effei:livc functioll-
ing of a univcrsity depends on the performance of the various groups in thc university
(dep,lrtments such as management and psychology: student groups and :lIllletic teams: and
govemmg lxxlies such as the uni\ersity's student council and the faculty senale). so. l()().
does the effectiveness of GM. Yah(KJ!. and other organizations depend on the performalKe
of groups.
324 PART 2 • GROUP AND TEAM PROCESSES
GROUP
A ",t "f t"" or more 1"'''1'''' "ho
imer.<1 with e..:h OIlier to ""hie,e
ccnai" g-<ltlh or tn meet ,crta;n
,,,-'01,.
GROUP GOAL
A gool that all or mo,t '""",be"
"f a group can agree on.,.
Common gool.
FORMAL WORK GROUP
A gnmp e-tahli hed h)
manogemem to help the
m"£n" i~m,oo ~"hie"e it, goo!\.
U\ing gmups in organizations. howc\'cr. can somctimcs be- vcl)' challenging for orga-
nizmions. 14 People be-ha\'e differcnlly whcn they work in groups than when they work
~looe.I' And althuugh groups c~o sumetimes wurk ,,'under'S for an urgani:wtiuo. thcy can
also wreak havoc if thcy function improperly.16
Givcn Ihc important role groups play in all organi7-'1lions. in Ihis and thc ncxt chaptcr
we concenlrate on lhe nature and functioning of work groups and te~lmS. We Slart by
describing what a group is. how work groups devclup. key charnetcristics of work groups.
and how being a mcmber of a group affcc1s individual behavior. Wc dcsuibe how groups
conlrolthcir mcmbcr\' be-havior and turn ncwcomcrs illlo effcclivc group mcmbers
through Ihe socin!izalion process. Esscnlially. in this chnpler we explain Wh~lt work
groups are likc aod why thcy arc this way. [nlhc ncxt chapter. wc build utlthis fuundatlon
and cxplore what caw;cs somc groups to perforlll at a high Icvcl and help an organization
achicvc its goals.
Introduction to Groups
Is any gathering of individuals a group') If nOl. what diSlinguishcs 3 group from 3 mcre col-
lection of illdividunls'! Two basic nttribtJtes defioe a group:
I. Mcmbers of a group intcract with cach mher. whal onc person docs affccts cvcryonc
eLse and vicc VCrs3. 17
2. Members of a group believe there is the poleoti31 for mutual g0.11 accomplishment-
th<lt is. group members percci\'c th~t by be-Iongillg to the group they will be ablc to
accomplish ccrtain goals or nll,ct certain nccds. ls
A group.thell. is n scI of two or more people who irllemct with ench othcr 10 achieve
certain guals or meet cert~in nceds.
It is importalllto notc at thc out"ctlhat although group mcmbers may have onc or
more goals in common. lhis does not mean lhal 311 their goals nre idenlic31. For eX31l1ple.
when a persOIl from each of four different depmtrnents ill nil organiznlioll (research nnd
dc"e1opmcnt, sales. manufncturing. and cngincering) is assigned to a group to work on a
ncw product. all mcmbers of thl." group may share the common goal of dcveloping thl." best
prodUCl they cnn. Butlhe person from rese3rch 31ld developmelll might define the lit'sl
1'1'0<111('/ ns Ihc onc Ihat hns the most innovntive fcatures; the person from snlcs might definc
it as the onc that most <lppeals to pricc-(;onsciolls cu,lomers; thc reprcscntative from man-
ufacturing might dcfinc it as onc that can be produced thc most inexpensivcly: and lhe per-
son from engineering might define it ns one 11mt will be the most relinble. Although they
ngrec on Ihe common goal-givillg Ihc customer lhe 1x,I Pl\xluclthc)' can dcvise-decid-
ing whal /)I'SI f!tlJ<!IIC! mcans can be a difficult task. A gmup goal is onc Ihat all or most
memocrs of a group can agree 011.
Types of Work Groups
'!11cre nre mnllY types of groups in orgnni:wtiOlls. and each type pl3ys an important role in
dctennining org~lrlilalional crfeclivencss. aile wny to classify groups is by whether they <Ire
formal or informal. Managcrs eSI<lblish forlllal wurk gnmps to help thc organization
3chic\'c its g0.11s. nlC goals of a fomm! work group 3re dClcnnincd by thc needs of the orga-
nizmion. Exnmples of fonnni work groups include <I product qunlity committee ill n COIl-
sumcr products firm. the pedialrics dcpartmenl ill a heallh mnmtellallce orgnnizatlon
(HMO). and a lask forcc crcatcd to cnd se.\ discrimination in a law firm. Managers cstablish
cach ofthcse groups to 3ccomplish cC113in organi7,mional goals-increasing produCi qunlity
in the case of the product qU31ity com mince. providing health cmc to childrell who belong
to thc HMO ill the case of Ihe pediatrics dcpnl1rnent, nnd cndmg discrimination at thc law
firm in thc case of the task forcc,

EXHIBIT 10.1
Types of Work Groups
INfORMAL WORK GROUP
A group that emerge. "atuJ3J1y
"lten mdj,idua), pcr,..,i'c thai
memllcr-hip 10 a youp" ililleip
rhem ",:hi""e their Soal> or meel
their need'
COMMAND GROUP
A 10l1nal work group .oo",tiog
uf 'ubor,h"at", whu r,1'<'" tu til\:
same ,upe"-''''''
TASK fORCE
A fun"al work group ,"(>o,i,t ing
"f people ,,-1>0 ,onw: together to
""e"mpl i'h a specifIC goaL
TEAM
A f"rmal ""n. gnlUp eoo,i,ting
"I' Jl"ople who "or~ ioteo,e1y
together to ""hien> a .01",,",,'"
group gual.
CHAPTER 10 • THE NATURE Of WORK GROUPS AND TEAMS 325
Work group'
l"f.,..,.",1 w.,rI< sro"p'
Comm.nd Task
Solf- Into,."
Tum. m.n.g<d
group< force. wo,k to.m,
group,
Informlll work grOUIlS cmcrgc naturally in organizations because mcmbers
believe lhal working togClhcr in a group will help lhcl11 aehicve lheir go'lls or meel
their needs. A group of five factory workers who go bowllllg every Thursday night to
satisfy their common need for affilialioll and friendship is an example of an informal
group.
Types of formal work groups. Four imponanl kinds of fOlnwl work groups arc
command groups. task forces. teams. and self-managed work teams (see Exhibit 10.1).
A command gnlUp i, a collection of subordinates who report \() the same supervisor.
Command groups arc based on the basic reporling relationship, in organizalions
and are frequently represented on organizmional charts as dep.lnments (marketing.
sales. accounting. and so on). The pediatrics department in an HMO. the research
and devc!opmelll deparlmenl in a pharmaceutieal company. and Ihe financ·ial aid
depanmCIll in a university arc all examples of command groups_ Command groups arc
the vehicle lhrough which much of the work in all organization gelS accomplished.
Thus. Ihey have a huge impact on the extcll1lO which an organization is able to achieve
its goal,. The supervisors or leaders of command groups play such an importall1 role in
determining lhe effeeliveness of these groups Ihm wc dcvole Chapter 12 to thc IOpic of
leadership.
A task force is a collection of people who come together 10 accomplish a specific
goal. Once the goal ha.' been accomplished, Ihe task force is usually disbanded. Thc
group eSlablished to end sex diserimin:J1ion in a law firm and lhe produCI quality com-
millee in a consumer products firm are examples oflask forces. Sometimes. when task
forces address a goal or problem of long-term concern to an organization. they are
never disbanded. but their membership periodically changes to offer new insights about
the goal or problel11 as well as 10 relieve exiSling !ask force members of their duties so
they can focus on their regul.tr jobs. These kinds oflask forces are sometimes referred
to as Sial/ding nmllllillcc.i or las/.: groupJ. The COH>umer prodltcts firm. for example.
may always have a standing commillee assigned 10 product quality 10 ensure Ihat
fealUrc is a foremost eonsiderution as Ilew products Me devcloped and exisling ones
modified.
A team is a formal group of members who illleract at a high level and work
IOgethcr intensely 10 achieve a common group goal. When teams arc effective. Ihey
draw on the abilities and experiences of lheir members to aceompl ish things th;ll could
not be <lehieved by individuals workmg separalely or by other klllds of work groups.
Boeing. for example. uses em.u-flU/CliO/IlI! (emliS (described earlier) to design and build
new kind, of airplanes. Some organizations run illlo trouble effectively managing leams
because lheir members spend 100 much time trying to come 10 an .lgreemell1 on impor-
tmlt Issues. This. as we explained. is precisely what happened al DIgital Equiprnen1.
326 PART 2 • GROUP AND TEAM PROCESSES
In work lcams sIKh as lhis onc.
meml)crs ha\'e high levels of
intera<:lioll and work logclher
intcn",ly 10 achieve common
goals,
SElf·MANAGED
WORK TEAM
A fom,al "or~ group coo,i,ling
nf people who are jointly
fe'pon,,!>le for en'ori ng lhal the
leam accompll,he' it\' goal, and
"ho lead Ihem,el\'e,_
FRIENDSHIP GROUP
An ,nformal "on, group
con,i'ling of people "ho enjo)'
e'Kh Olh<-r, rompany and
"""aliic "ilh each mller On
and off the joh_
INTEREST GROUP
An informal "or!. group
ron,i'ling of people who come
logclh<.'r bceau'c lhe}' ha,'c a
COmm"n goal or ohJ,'Cli\c
related In lheir organii"1 ional
membership,
• • • •
Just becnuse peoplc work in n group docs not mcnn thcy work ns n I('(WI. which is fur-
ther CharnClerized by illlellH' imeraClion and n strong commilment to its gonls.
A learn with no manager or a te,lm member assigned to lead the lenm is called a
sdf-m:magt'd work tt'am. Members of a self-mnnagcd work tcam nrc responsible for
cnsuring the tcam aCCOlllplishes its goals and for performing leadership tasks such as
detemlining how the group should go about achieving ilS goals. assigning tasks 10 indi-
vidu<ll group members. dlsciplinmg group members who are not performing at an
adequate level. coordinating efforts aCross group members. and hiring and firing. 19
Self-managed work teams arc becoming increasingly popular because thcy can have a
dramatic impnet on organizations and lheir members. We discuss them in detail in the
next chapter.
Types of informal work groups. Two important types of informal work groups arc
fricndship groups and intcrcst gmups. A friendship gnmp is a collection of organizational
member;; who enjoy ench other's eompnny and socialize witll each otlter (often boll! on and
off the job). A group of faclOry worker;; who go boWling or a group of accountanlS at a Big
Four firm who frequently have lunch together <:an be Jes<:ribed as frienJship groups.
Friendship groups hclp meet employees" needs for social intcraction. arc an important
source of social support (sec Chapter 9). alld Call contribute to job satisfaClion and
employees' experiencing positive m()()Js,
Members of an organization form interest groups whe." they have a <:ommon goal
or objcctivc (relatcd to thcir organizational mcmbership) that thcy arc trying to achieve
by uniting lheir efforts. lntercst groups nre often formed in response to pressillg
concems that certain member;; of an organiZ;ltion have. Those concerns mighl include
lobbying the company to sponsor a day <:,lfC or elder care center. c!\lend the amount
of timc allowcd for malcrnity Ieavc. actively protcct the cnvironmen!. or improve con-
dilions in the communily al large. Interest groups help members of all organization
voice lhelr concerns and can be an important impetus for needed organizational
<:hanges.
Although many of thc concepts wc discuss in the rest of this chapter and in the ncxt
apply to both fonna1 and informal work groups. we mainly focus 011 the formal side oflhe
organiwlion because thIS is where managers can have lhe most IInpac!.
 CHAPTER to • THE NATURE Of WORK GROUPS AND TEAMS 327

EXHIBIT 10.2

Tuckman's Five-Stage Model of Group Development

1. Forming _ 2. Storming _ 3. Norming _ 4. P...forming _ 5. Adjouming

Group m<ml><... Group" in Group m.mb...... Group m<ml><... The group

'0
tty to get conn"t, memb.... develop do", worlc toward di.b.>nd.ona
know ead, other re.ist being t'e<, feeling. of ach'e,;ng ,heir ,tsgoal. have
and establish controlled by mendship and goal •. been achieved
a common the group. and c.mar.den.
unde..... ndong, d,,,,g"'om<n" abound, and
'n« eonarnong group m<mb....
I<ad ....h,? ,n the sha",. common
group. pU'l'0se

Group Development over Time: The Five-Stage Model

All groups change over time as group members come and go (because of lUmover. hiring.
and promoliuns. amung other things): group lasks amI gools l:hange: and group members
gain cxperience as they inleract wilh one anothcr. Somc researchers have trieJ to Jcterrnine
the ';tagcs groups normally go through ovcr time. UndcrstanJing how groups changc is
impoJ1,lJu because. as we discuss Imer in the chap1<::r. groups and their members face dif-
ferent challenges at different slages of Je"elupment. In urJer fur groups 10 be cffcl:ti\e anJ
perfonn at high levels. it is important for thcse ('hallcnges to be effcctivcly managcd. Think
back to the last group project you worked on for onc of your classes. Jt is likely that your
first group meeting was dramatically different from your last group meeting or from the
meclings that took place in between, At cach point. Ihc gl\JlIp faccd diffcrcntl:hallcnges.
Likewisc. as work groups evolvc from thcir initial inception. they too undcrgo imp0rlalll
changes.
Onc well-known model of group devclopmenl is Bruee W. Tuckman's five-stage
model. oUllincd in Exhibit 10.2. 20 During stage I. which Tudman calleJjo/"millg.
group mcmbers try 10 gct 10 know each othcr and cstablish a common undeL'itanding as
they struggle to clarify group goals anJ determinc appropriate bchavior within thc
group. Oncc individuals truly feel they arc mcmbers of the group. the forming stagc is
l:oll1plclcd.
Stagc 2, rallcJ STormillg. is charactcrizcJ by considcrable conflict. as its namc
implies. In the storming stage. members resist being controlled by thc group and might
dis<lgrce about who should lead the group or how much power thc leader should
have. This slage is completcd whell mcmbers no longer resiSlthe group's l:ontrol, anJ
thcre is mutual agreelllcm about who will lead thc group. Mcmbers usually complctc
this stage because they sec it is in their best interests to work together to achieve thcir
goals.
In stagc 3. IlOrllling. members really SlarllO fecI like Ihey belong 10 Ihe group. and
Ihcy devclop closc tics with onc anothcr. Fcclings of fricnJship and camaradcric abound.
anJ a well-JevelopeJ sense of common purpose elllerges in the group. By lhe end of this
stage. group members agree on stanJards [0 guide behavior in the group.
By the time stage 4. pc/forming. is rcachcJ. thc group is ready \() tackle lasks anJ
work towarJ achieving its goals. This is thc stagc at which the real work is donc. so iJcally.
it shouldn'ttake long to reach it. Sometimes. howcvcr. it cnn take as long as two or three
ycars to gct to the performing stage. especially when the groups are self-managed work
leams. Salurn Corporation. for example. expcricnceJ such a slowJown "..hell il StarleJ
using self-managcd work tcallls. 2t
In the laSI stage of group dcvelopment-UlljolimillR'-idernified by Tuckman as st,lge 5.
lhe gruupdisb.lnds after having acwll1plish<.'d ilS gools. Ongoing work gM'pS in oTg,mizalions
328 PART 2 • GROUP AND TEAM PROCESSES

do nOl go through this Mage and often remain at the p.~rfonlling ~;tage. In contrast. a task force
is likely to be adjourned aYler it has achieved its go.:ds.
The five-st'lge "forming-norming-storming-performing-adjourning" model IS intu-
itively appealing. but resear~h indicates that not all groups go through each of the
stages. Nordo they go through them 0111." at a time or in the order specified by Tuckman.
Some groups are characterized by considerable levels of conflict throughout their exis~
tence. in fal:!.l:: ;md always experienl:e clements of the stonnmg stage. Orgamlational
researl:her Connie Gerskk's studies of task forces found that groups with deadlines for
goal accomplishmcnt did not go through a serics of stages. Rather. they alternated
between periods of inertia in which liule was accomplished and periods of frenzied
activity in which the group rapidly progressell toward its goals. l3 Interestingly enough,
these studies founll that the timing of these stages depenlled on how long the group was
given to achieve its goals. All of the groups studied experienced inC'rtia for approxi-
mmely the first twlf of their duration. ForexamplC'. a group given six rllonths 10 ;1C'COrll-
pllSh ItS goal mighl expcriellce an mitial stage of inertia for ilS first three months. anll a
group given three months to 'Kl:omplish its gOills may be in an initial stage of inertia for
its first lllonth and a half.
As research inlo group development continues. it is probably safest to conclulle lilat
although all groups change over time. there lloesn't seem to be a single set of stages all
groups go through in a prcdeterminC'd sel]uence.

Characteristics of Work Groups

Work groups vary in many other respects in addition to type. Here we examine five char-
acteristics of groups lhat profoundly afTectlhe way members ocha,'e ;md lhe group's over-
all performance. Those characteristics are the group's size, composition. function. status.
anll efficacy. We also discuss a characteri,tic that groups have on their members: social
facilitation.

DIVISION Of LABOR
Di,iding up worl and ~"ignmg
pilrticular [,,,h l<l ,~",fi~
"orlc",
Group Size
The size of a group is measured by the number of full-timc members who work together
to achieve the group's goals. Groups may be compose<J of JUSt three people or more
than 20. 24 Group size is an important dclerminant of the WilY group members ochave.
When groups arc small. members are likely to know one another and interact regularly
with each other on a day-to·day basis. When groups arc small. it is relatively easy for
rnemocrs to sh.,re infoTr1wtion. recognize individual contributions to the group. anll
illentify with the group's goals. Strong idC'nlification wilh the group and its goals
may lead to increased motivation and commitrnenl to group goals and higher level, of
satisfaction.
In large groups. members are less likely to know 0111." another and may have lillie
personal contact with each other on a day-IO-day basis. The lower level of interaction
between members of large groups make., sharing information difficult. In addition.
because of the ninny members. individuals may consider their own cOll1ribUlions to the
group unimportant, and this l:all reduce their motivation and commitment to the group.
For all these reasons, people generally tenll to be less satisfied in large groups than in
smaller ones. n
nle disadvantages of large groups hal'e to be weighed againstlheir ;ldvant;lges. how-
el'er. On the allvantage side. larger groups have a greater number of resources at their dis-
posalto accomplish their goals. These resources include the skills, .,bilities. anll aCCUlllU-
lated work experience and knowledge of their members. A second advantage of larger
groups are the ocnefits thaI come from the division or lallor-dividing up work assign-
rnents to in<Jividual group members. When indlVidual members focus on particular tasks,
they generally become skilled at perfomling these tasks at a high level. In fact. one of the

One of the primary reaSOnS
gmup' arc u,,-'<.l in organil.:ltion'
is 10 achieve the benet,ts of a
division of labor.
HOMOGENEOUS GROUP
A I.ffi:>UI' 111 wh,~h nlClTIOCr, halC
many ehnr:>creri<t;C\;n eOlTlmon
CHAPTER to • THE NATURE Of WORK GROUPS AND TEAMS 329
primary reasons why groups (as well as whole organizations) exist is to nwke the division
of labor possible.
When making a decision about group size. an organization nl.'"eds to balancc thc
skill and resource advantages that large groups offer against certain disadvaillages.
Chief among these disadvantages are the communicatIOn and coordination problems
that occur as the number of members increases. For example. as a group gctS bigger. it
is much more difficult to let group mcmbers know about a change in proeedurcs.
I magine communicating complex procedural changes to each member of a 40-rnember
group \'ersus each member of a group of four. It also gets more difficult to coordinate
memoc'rs as the size of the group inneases.l!". for example. a group of20 students (ver-
sus. say. five') is doing a joint rescarch project. it is much more likely that two students
will in~ldvertently cover the same material. that the project report the group is submit-
ting will be disjointed. and that some students will not do their share of the work, In
general. the larger a group is. the greater is the potential for con!lil:1. duplication of
effor!. and low mOlivation. Some of these problems arc discussed in detail in the next
chapler. Exhibit 10.3 summarizes some of the potential advantages of small and large
group size.
Group Composition
Group composition refers to the charact<.'"ristics of ml.'"mbers of a group.2~ In thl.'" opening
case, recall how members of the teams that Charles Jones created in the Global
Consumer Design division of Whirlpool were noss-functional and global in that their
memocrs came from different funct ional areas such as engineering. marketing. industrial
design. human factors. and usability and also from different countries. Onl.'" way to think
about group composition is in terms of how similar or different the members arc from
each other.
Members of a hnmngeneous grnup have many characteristics in COllllllon, These
characteristics can be demographic characteristics (such as gender. race. socilXco~
nomic b'lckground. cultural origin. age. educational background. or tenure with an
organization). personality t"lItS. skills. abilities. beliefs. attitudes. vailies. or types of
work experience. A group of white men fmm the northea.stern United States who all
al1ended Ivy League colleges. place a great deal of importance on their careers. and
330 PART 2 • GROUP AND TEAM PROCESSES

EXHIBIT 10.3
Group Size Advantages

Potential Advantages of Smaller Groups Potential Advantages of Larger Groups

Interactions among group members are more Group has many resources at its disposal to
frequent accomplish its goals. including members' skills.
Information is more easily shared among group abilities, knowledge. and experience.
members, Group can have a greater division 01 labor,
Group members recognize their contributions to the so group members focus on particular tasks.
group. When group members focus on particular tasks,
Group members are motivated and committed to they generally become skilled at performing them,
the group's goals
Group members are satisfied.

HETEROGENEOUS GROUP
A group in which members h",'e
few characwri,tics in common,
work for the same New York law firm is a homogeneous group. In contrast. a group of
men and women of diverse races ,\lId cultural origins who possess degrees from bolh
large and small stale and private univerl;ilies. have differing beliefs aboullhe eentralily
of work in their lives. and work for lhe same New York law firm constitlllcs a heteroge-
neous group. Members of a heterogeneOIlS grOIlI' do not have many characteristics in
commun. Helerogeneous groups are characterized by diversity. homogeneol.ls groups
by similarily.
The rclmiollships between group composilioll. mcmber<;' behaviors. and the group's
performance arc complex. On the one hand, people tend to likc and gct along well with
olhers who .Ire similar 10 themselves. Thus. members of homogeneous groups may find it
e<lsier 10 share informalion. have lower levels of conniet. and fewer communication amI
coordination problems tban members of helcrogeneous groups. On thesc grounds you
might expect the performance and goal attainmelll of homogeneous groups to be higher
lhan lhal of heterogenCQus groups. Because group members are more likely 10 gel along
with each olher in homogeneous groups. you mighl also e.\peCllheir motivation amI satis-
faction to be high as well.
On the other hand. a group that is composed of people with differcnt backgrounds.
experiences. personahlies. abilities. and "views of the world" may be bener abk than a
homogeneous group to make good decisions be<:ause more poinls of view arc represenled
in the group. A heterogeneous group may also be able to perform at a high level beeause
lhe group has a variety of resources at its disposal. Because of their differences, group
members may be more likely 10 challenge each other and e.,i~ling wilyS of duing things.
amI the oulcome may be valuable amI needed ehange~. The homogeneous group of
lawyers. for example. might have few disagreemcnts and little trouble communicating with
one another but hal'e difficulty dealing willt female clients or clienls from different ethnic
or racial backgrounds. The more helerugeneous group uf lawyers mighl hal'e more dis·
agreements amI communication problems but fewer problems inler<lCling with clients from
different races and cultural backgrounds.
To reap the advanlages of heterogeneily. it is important for group members 10
understaruJ each others' differences and pomts of view and usc these diverse perspec-
lives to enable the group 10 perform 'II a high level amI achieve il~ goahP Exhibit 10.4
summarizes some of the potelltial advantages of homogeneous and heterogeneous
groups.
Toyot,1 used heterogeneous groups. called IHJbeyas. 10 facilitate lhe design. manu-
facturing. marketing. and sales of the Malrix. In Japanese, ()olJe)'l1 me'lIls "big. open
office:' However, the term penains more to what goes 011 in the big. open space rmhcr

EXHIBIT 10.4
Group Composition Advantages
Potential Advantages of Homogeneous Groups
Group members like and get along well with
each other.
Group members share information, have
low levels of conflict, and have few
coordination problems.
GROUP FUNCTION
['he work that a group po.'rforms
as it> ~<mtribotioo 10 lhe
accompli hmem "f"rganizational
gmlh.
GROUP STATUS
TIle impii<'itly agreed upon,
pcrrcived imponancr for the
organi,.tion as a whole of whal
a group docs
CHAPTER 10 • THE NATURE Of WORK GROUPS AND TEAMS 331
Potential Advantages of Heterogeneous Groups
Group makes good decisions because diverse
points of view are represented.
Group performs at a high level because the
group has a variety of resources at its disposal.
than thc at·tual physil:al environment. An oobeya is a meeting of a heterogeneous group
(that can be large) including people from all pans of an organization 10 work on a project
in new and different ways. Takeshi Yoshida. Toyota's ehiefengineeT for the Toyota
MatriJl. utilized oobeyas including emplo)'ees from design. engineering. nwnufaduring.
marketing, logistics. and sales around the globe to design and bring the Matri.' to
market. 2H
With millions of b3by-boomers in their 60s. a thin rank of middle rnall3gers due to
downsizing. and large nllmbers of young. rcl<ttively ineJlpcrienced emplo)'t'es. nwn)' large
organizations arc utilizing heterogeneous groups so that older, more experienced managers
can sh3r<: their knowl<:dge with ),ounger <:rnployees before they r<:tir<:. as prolil<:d in the
following Focus on Diversity.
Group Function
Group function is the work lh<tt a group contributes 10 the <t"eomplishment of organiza-
tional goals. A manufal:1l1ring dqxlrtmell1, for example, is a nlmmand grOliP that has the
responsihilit)' for producing the goods (automobiles, televisions, etc.) that an organization
sells. The manufaClllring depanment's function is to produce these goods in a cosl-effeetive
manner and maintain appropriate leeels of quality.
Within the manufacturing department are small groups of employees responsible for
performing a specific aspect of thc mmluf3Cluring proces,. In 3n automobile-m3nufacturing
plant. for e--,ample. one group's function might be to make the automobile bodies, another's
to atta"h the transmission to the body. and <toother's to paint the body. In fact. we "an think
of an entire organization as a series of groups linked together accord ing to the fundion, they
perform.
The function of a group affects the behavior of its members by letting them know
how lheir work contributes 10 the orgamzation ,Khieving its goals. A group's function
gives its members a sense of meaning and purpose .29 When members see how the work of
their group inl1uences the work of other groups. they ma), become motivaled 10 perform
(It a high level. Just as lask signifiemlce-the extent 10 which a job affe"ls the lives and
work of other pt'Qple (see Chapter 7)-affects the intrinsic motivation of indIviduals. so,
too. docs a group's function. To motivate members, Immagers should remind t1ll'm that
their activities, behaviors. and the group's function 311 are imponant contributions to the
organ iz,lt ion.
Group Status
The work thaI some groups in an organization do is often seen as being more important 10
the organization's success than the work of other groups. Group slalus is the implic,itly
agreed upon, perceived import3nce of what a group does in an organization. The Status of
a top managemenl team is likely to be eery high because il SetS lhe organization's goals
332 PART 1 • GROUP AND TEAM PROCESSES

Focus on Diversity
Heterogeneous Groups Combat Knowledge Drain

With many seasoned employees retiring or nearing retirement age, fewer experienced
middle managers than in the past due to downsizing, and a relatively large cadre of
young, inexperienced employees, many large organizations are realizing that it is
important that the knowledge and expertise that older employees have gained over
decades of work be passed on to younger generations. 3o While it is easy to pass along
some kinds of knowledge, called explicit knowledge, through written documents,
manuals and instructions, and websites and company intranets, other kinds of knowl-
edge, called tacit knowledge, are harder to capture, Scott SchaffM, director of
knowledge management at Northrop Grumman, describes tacit knowledge this way,
"It's what is held in our heads and includes facts, stories, biases, misconceptions,
insights, and networks of friends and acquaintances, as well as the ability to invent
creative solutions to problems ... tacit knowledge tends to accumulate over years of
experience, "31
In order to promote the sharing of this tacit knowledge throughout an organization
before it is lost when older employees retire, some organizations are creating heteroge-
neous groups composed
of employees from differ-
ent areas and generations
to share their expertise
with each other.32
Northrop Grumman. for
example, has formed
communities of practice
bringing together employ-
ees from diverse func-
tional areas and divisions
to share ideas and exper-
tise A community 01
practice with new hires
In order to promolC {he sharing of wei{ knowledge throuJ,!houl an in it might bring in retired
organization, SonIC organizalions an' e",a{ing helC'mgeneoos groups
project managers to share
composed of employees from diffe",nl mocas and J,!ener;l1ions 10 share
their expertise with cadi other, their expertise with the
group, and engineers
fresh out of college might be given the opportunity to spend time following experienced
engineers as they go about performing their jobs to absorb both eJq)licit and tacit knowledge
on-the-job. 33
General Electric has created what it refers to as action learning teams: groups of
employees from different functional areas such as sales, marketing, finance, production,
and legal affairs with varying levels of experience that are formed to address specific issues,
problems, or projects,34 While an action learning team works on a particular project, its
members gain know-how in areas they might not be familiar with, feedback on their
performance, and experience addressing relatively "big" projects. 35 As Bob Corcoran,
chief learning officer at General Electric, puts it. action learning teams "encourage peo-
ple to learn a lot about a lot of things. , . It reduces the likelihood that when boomers
do retire, you'll be left saying, 'Gee, old Alex was the only person here who knew how

GROUP EFFICACY
TIle shared belid group ,""mhc"
ha'" aboutlhe abillly of lhe
group 10 ;lI;hl~·ve It> ~<);ll, and
oIlj".:li,''''
Top llwnagerne1l1 tCWllS typically
havc wry high ,talUS becausc of
lhe perceived imponancc of
what the team docs for the
Orgll11lZat ion.
CHAPTER 10 • THE NATURE OF WORK GROUPS AND TEAMS 333
to do this" 36 And of course, older employees also have the opportunity to learn
from their younger team members, All in all. heterogeneous groups seem to be one
way to combat knowledge drain and encourage the sharing of tacit knowledge in
organizations. 3 ?
and determine, how it will achieve theill. The work performed by a group of accountants
who prepare quarterly profit-and-Ioss SlalemenlS and balance sheelS is certainly irnportanl.
However. il is often scen as !C,S cenlrallo the orj;amzalion·s performance as a whole than
the work performeJ by the lOp managclllelll lealll. Thus. the ,tatus of the group of aceoulI-
lalllS i~ lower than that of the top management team. The more impOrtanllhe task pef~
formed by a work group or a group·s function is. the higher is the group's SIMus in Ihe
organization. Members of groups wilh high SlalUS are likely to be mOlivaleJ 10 perform al
high levels because they sce their work as especially imponam for the sucecss of thc orga-
niz;l\ion as a whole.
Group Efficacy
Recall from Chapter 5 how self-ellieaey is a powerfUl delerminant of employees behall-
ior in an organizalion. Groups and learns have a sensl' of collecti'e efficacy.3s Group
dricae}' is the ~hared belief group members have about the ability of the group 10
achieve its goals and objectivcs. 39 How do members come to share a belief about the
group·s abil ily 10 coordinale anJ mobilize ilS members 10 perform effeclively? By laking
into account many of the faclOr> lhal contribute 10 the group's effectiveness. such as its
eompo~ition (including the ability. knowledge. and skills of its member.-\). mcmbers'
willingness to work together and share information. the resources the group has to work
wilh. and Ihe eXlenllO which Ihe group is able 10 Jevelop effcCllve strategies 10 achIeve
ii, goals..j{)
Thus. group efficacy devclop~ over time a~ members come 10 unJerstanJ each
other. how the group functions. the tasks it needs 10 accomplish. and the group's capa-
bililies. 41 We know from Ihe slages of group developmenl JiscusscJ earlier Ihat It lakes
lime for groups 10 perform up HI their eapabililies. Efficacy is nol ,omclhing thai exisls
when a group is initially formed but rather a ~hared belief that cmerges o,er time a,
members work togcther. Just as a newly formed soccer league comprised of members
who have neller played logelher before will not have a sense of group efficacy unlillhe
334 PART 2 • GROUP AND TEAM PROCESSES
SOCIAL FACILITATION
11Ie dfeets thal the pre,eoce of
O1hc" ha, on pcrf0I111aT\<;c.
cnllar>l:ing the pcrfomlance of
""")' ta.k' and impairing {he
perfonnancc of d,fli"uh tn,b,
league practices and competes with other kagues. so too will a newly formed group of
computer programmer;; developing a novel software package lad a sense of whal the
group will be able to :lccomplish when It is first formed. However. as the soccer league
practices and wins and loses games and as the group of programmer!; share their ideas.
develop a strategy. and start writing code. both groups' collective sense of efficacy
begins to emerge.
Once members corne 10 share a sensc of grol'P efficacy. this wIll also play <In impor-
t<ln! role inlhe future of the group.41 For eX<lmplc. group efficacy can influence the a,pira-
tions members h<lve for thc group. their cffort levels. how they approach ta,ks. and their
persistence when the going gets tough. 43 A group of computer programmers with high
group emcacy .Ire likely 10 pUI furth more effort. be more persistent when problems ansc.
and have higher aspirdtiuns for what the group c<ln achieve than a group of progrummers
with lowefflcaey.
When a group has low effleacy. there 1lre ,I number of things tlWI can be done to
Improve il. ForeAample. if certain skills or capabilities arc lacking in the group. there arc
a variety of W<lys to get them. Th<ltmight mean adding new members with the requisite
skills to the group. training existing members. or seeking outside help. If members arc
not able to effectively work logether. group training and developmenlmighl be in order
(see Chapters 11 and Ill). [f the group is having trouble devdoping appropri<lte task
strategies. members can reexamine the str<ltegies they do rely on. reevaluate what scems
to work and whm doesn·t. explicitly consider their strategies bcforc thcy begin their
tasks. :lnd evaluate how effective Ihe new str<ltegies they utilized were upon completing
then tasks, If communication problems eAist. there arc steps gruup members can lake to
becollle beller cOlllmunicators (sec Chapter 14). Just as self-efficacy is an imporwnt
determinant of individual accomplishments. group efficacy is an important dcterminalH
of group aceomplishments. 44
Social Facilitation
Does a secretary type more or fewer letters when placed in a room with three other secre-
taries or in a private office'! Does a computer programmer take more or less time to tind an
erTor in a complex program when working on the program in thl." presclKe of other com-
puter programmers or when working alone'! Rescarch on social facilitalion provides
answers 10 questions such as these,
Social facilitation is the effect the physic<ll presence uf others has on an individ-
ual', performance. The prescnce of other group members tends to arouse or stimulatc
individuals, oflen because the individuals feel thaI others will evaluate their perfor-
mance and give Ihem posilive or negalive outcomes dependent on how well or poorly
they do.
Two types of social faeiliwtion effects havl." been studied. A"dieIKl." l'jJ'>"/J afe the
effects of passive spectators on individual performance. [n this case. other group
members :Ire not eng:lged in the l<lsk ilself bUI arc prescnl <lS an audience. CO-lIC/ioll
eJJl'c/J arc the effects of the presence of other group members on the IX'rformance of
an individual when the other group members arc pl."rfOfming the same task as thl."
individual.
Rese.lreh un both Iypes of social facilitation h<ls produel'<1 sullle contradiclury results.
summarized in Exhibit 10.5. A typist mighl type more letters in the prescnce of other gmup
members than when typing alonc. But a computer programmer might take more time to
find 1m erTor in a complex program when working in a group. Why?
When individuals are slimulated by the prescnee of other group members. lhe" per-
formance of well-learned t<lsks and behaviors they have performed repeatedly in the past is
enhanced.~~ Typing letters is a well-learned behavior for a secretary. She or he knows
exactly how to do ii-it doesn't require much thoughl. The prescnce of olher group mem-
bers enhances Ihe secretary's performance. and she or he types mure lellers. More gener-
ally. when individuals arc stimulaled or aroused. thcir performance of well-learned tasks
tends to be enhanced.
 CHAPTER 10 • THE NATURE Of WORK GROUPS AND TEAMS 335

EXHIBIT 10.5
Social fa,;ili'ation
Social Facilitation

I I
The pre..nce of o'her group The pre,enee of other group
memben; enh.nce< 'he membe'" imp.['" the perfonnance
perfonn.nce of well·lumed of d[fflwl" comple>:, or novel
beh.,,;o« 'hal h.ve been performed bdla,,;o« [h>t involve ton'iderable
repe'ledly in 'he p",'. expenditure of effon,

However. when indivitluals arc stimulatetl by the prcscnn.' of other group members.
their performance of difficult. complex. or novel tasks and behaviors is impaired.-t6
Finding an error in a cumplex cumputer program is a dilTicullt<lsk. The progmmmer will
need to spentl a consider<lble amount of anent ion. time. and elTon tu tletect the error. It wi II
probably take longer to locate it working in the presence of others. who might create dis-
tractions. More gellerall y. when individu.lls arc stimulated or aroused. their pcrfoml'Utee of
difficult tasks tentls 10 be impairt::d.
When people realize the presence of others is tlistraeting them or ill1erfering with their
performance. they often try to isolate themselves by closing office doors. letting the
answering machines take their calls, or finding quiet places to wOlt :tlone.
Organizations c<ln actually buy special furniture to Ill<lxlmize the benefits of social
fat'ilitation and minimize the drawbat,ks. Furniture antlthe arrangement of it can provitle
members with the space they need to work alone yet still provide the opportunity they
need to meCllogether as:t group. For example. Aetna Life & Casualty's employees in its
home office <Ire organuetlmto self-m<lnaged work teams. Team members need to be able
to meet with one another and coordinate their effons. At the same time. they 11eetl to be
alone to concentrate on eomplieatetltasks. such as calculating the projected risks and
returns for different types of insurance policies. Aetna's solution to the problem w:ts to
purchase some new "learn" furniture manufaclured by Steelcase. 47 The furniture tlivitles
the tOlal work space into areas calletl ··lJei ghborhootls:' In each neighborhootl, a central
work space is created with a table where members can meet. Individual work areas thaI
arc clustered around the central work space give employees the privacy they need to per-
form their tasks. 4S

How Groups Control Their Members: Roles and Rules

In order for any group (formal or informal. command group or self-managed work
team. large or small. homugeneous or heterogeneous) to accomplish its goals. the group
must C(IIl/ra/-that is. infiuence and regulate-its members' behavior. Controlling
members' behavior is crucial whether a group is charged with writing superior e01l1-
puter programs. providing excellent customer service. raising quality levels. or
CUlling costs. Effective groups arc groups Ihal control their members' behavior antl
channel it in the right direClion. A group of waiters and waitresses in a reSl<1ura11l. for
example, needs to ensure customers arc promptly and courteously waited on, that staff
members do 1101 wait 011 e"eh other's tables or gr:tb each others' food orders. and Ihat
customers arc given their checks in a timely fashion. Three mechanisms through which
group, control their members' beh<lvior arc roles. rules. antl norms. We tliscuss
each next.

Roles
The division of labor that occurs ill groups antl organ izations nc<:essitates Ihe tleve IO]Jmclll
of roles. Recall from Chapter 9 lhat a ru/f' is a set of behaviors or tasks ~l person is expecled
to perfonn by vinue of holding a position in a group ororganizatioll, When a group divides
336 PART 2 • GROUP AND TEAM PROCESSES
ROLE RELATIONSHIPS
Tile "ai,;n which gnlUp ",Id
organ'lJt;,,"al member. imeracI
"ilh olle allOlher to perform their
'p"",fic role,.
ROLE MAKING
Ta~ing tile lIIil,at,,,, to creale a
role b) a"uming r~"'p<)n,;hililic'
Ihat are 1101 pan of an ""igllCd
role,
ROLE TAKING
Perfom,illS the re'pon,ibilitic,
th:n are required a, pan of all
..,"grlCd rule.
up its work alld a"igns panicular tasks to individual members. differelll roles arc estab-
lished within the group. For example. there are four roles in a group of employees respoll-
sible for the evening news program at a smallielevisiun statiun. TIle local news reporter's
role is 10 compile local stories of illiercst and provide on-tile-scene reports as Ilt-eded. The
8\:l1e and national news reporter's role is to cover statewide lIews stories alld help the news
anchor cover important no.tional Mories. The anchor's role is to seleet the stories to bc cov-
ered each night (based un the input uf Ihe local reporter and the statc and national reporter)
and prepare and deliver the news. The editor's role is to oversee this entire process and
make sure thm the time allotted forthe news is effieiemly and effectively used. thm impor-
tant stories o.re covered in a meaningful order. and that there is the right tunount of on-the-
seene reporting,
As we memioned earlier. sometimes organizmiollS form cross-functional teams. In a
cross-functional team. a memlx-r's role is likely to Ix- representing his or hcr function's
perspo..'Ctive on the group's project.
Associated with each role in a group arc certtHn responsibilities and rights. All of the
behaviors expected of a role occupant (the individual assigned to a role) are the role occu-
pan(s rrSjlOl/,libilitia. On a news team, for example. the am;hor's rcsponsibility is to pre-
pare <lnd deliver the news. Eueh role occupant also IHls riKhts or pl"il'ilegn'. suell <IS the
righttu usc resources <lssigned to the role. Resources can include people. money. special-
ized equipmem, or machinery. The local news reporler on a news team has the right to use
thc local C<llllera crew and its equipmcnt and has a momhly budget at his or hcr disposal for
twcking down stories.
Roles !;Icilitate the control of group mcrnlx-rs' behaviors fur several reasons. First.
roles tell members what they should Ix- doing. Second. roles not only enable a group to
hold its mernlx-rs accountable for their Ix-havior but also provide thc group with a standard
by which to evaluate the behavior. Finally. roles help managers detennine how to reward
members who perform the behaviors that make up their various roles.
Members or managers also define the mil' relationships within the group. Role
relationships dictate the way members should interact with one another to performthcir
specific roles. Role relationships may Ix- formally specified in a wrillen job description
or emerge informally o\'er time (for example. at the storming Of norming stage of group
developmem) as members work out methods for getting the job done.
On a news team. the anchor's role relationships with the local reporter and state
and national reporter arc form<llly specified in all three group membcrs' job descrip-
tIons: The two reporters and the anchor arc to work together to decide what stories will
be covercd l."aeh night. but the final decision i, ultimately up to the anchor. The anchor
has also developed an informal role relationship witlt the local relXlr(er, who is given
eonsider<lble autonomy to delermine what local news gets covered. This infurmal role
relatiouship developed when the anchor realized how skilled and motivated the local
news reponer was.
A large part of a perSOll'S role in a group may not be specified but may emerge over
time as members interact with one another. For example. one member of a group nwy
assume ,I significant number of reslXlusibilitics for the group and emerge as an informal
leader when she haudles those reslXlnsibilities well. Sometimes a manager notices that
an informal leader performs certain tasks effectively and thell promotes the informal
leader to become the new formal leader, shuuld the formal leader of Ihe group leave. be
promoted. or replaced. The process of taking the initiative to create a role by assuming
certain responsibilities thm are not part of one's assigned role is called role lIIaking. In
contrast. role taking is the process of performing one's respollsibilities associated with
an assigned role. Role taking is the COltllllOn process of assummg a formal organiza-
tional role.
On the uews team, for exampll.". the local news reporter did such a good job co\'er-
ing the local scene for the evening news that the anchor always followed her suggestions
fur stories. St<llion managers recognized her initiative tHtd high pcrform:mce. and when
the anchor left for a better positioll in a larger city. the local reporter was promoted to
become the new anchor. Role making can be an importam proce.'s in self-managed work
 CHAPTER to • THE NATURE OF WORK GROUPS AND TEAMS 337

teallls where members arc joimly trying to find innovative ways to accomplish the
group's goals.

Written Rules
Efftttil'e groups sometimes usc written rules to control their members' behaviors. Written
rules SIX:cify behaviurs that:lre rL-quired ,md thuse that:lre furbidden. The news team. for
cxample. de\doped a rule th:lt requires members to determine at the beginning of each
year when they will wke their allotted three weeks of vacatiOIl. Other rules require them to
arrallge their schedules so that only one person is on vacation on any given day. and no one
can take more than one wcek utf at a tllne. The rules help the group cuver and prescnt each
d;ly's news thoroughly and maintain the continuity uf the news from the viewer's perspct:-
tive. Over time, groups shuuld experiment with their rules and try to find better ones to
replace those that currently exis!.
Sume rules groups develup. uften called J((lIIdlmf "paming proU'dll"'J. specify in
writing the best way to perform a panicular task. Standard operating pnKedures help
cnsure thm the group's tasks wi II be performed correctly and cflic ic III Iy. For cxam pic. a
rule specifics exactly when and in whm form the news anchor should communicate his
or her plans fur the evening news each night tu the editor su that the editor has enough
time 10 rCl'iew the format and makc any nceded changes before the program airs.
Zingcrman's Community of Businesses (ZCoB) has dcwloped its own unique standard
operating procedures. ZCoB's procedures have been so efftttive that other COmPilnies
send their employees to ils trainmg cenler tu learn them. as prufiled in the accumpanying
OB Today.

OB Today
Zingerman's "Steps" to Success
Zingerman's Delicatessen was founded in 1982 by Ari Weinzweig and Paul Saginaw in
Ann Arbor, Michigan,49 Weinzweig and Saginaw are food aficionados. From the start,
they have prided themselves on making wonderful sandwiches and tracking down unique,
traditional foods, Finding tasty treasures from around the world and endless selections
of the best condiments,
including exotic oils, vine-
gars, and olives, has been
a labor of love for the
two. 5O In order to expand
their business yet main-
tain high-quality service
and an intimate atmos-
phere, Weinzweig and
Saginaw expanded their
deli concept to encom-
pass a community of
related businesses that
Zingennan's Delicatessen, founded in 1982 by Ari Weinz",eig and they call ZCoS, ZCoS
Paul Sagimw in Ann Arbor. MI. tmin, employ....,s and manag<" ib now includes the original
businesses through its unique brJlw of standard operating procedures. deli, a mail~order unit, a
338 PART 2 • GROUP AND TEAM PROCESSES
GROUP NORMS
Informal rules of conduct lor
belul,-iOf'o ron,idered ;mponant
b) O1O,t group member'>_
bakery, a caterer, and a creamery.S1 The founders' persistent emphasis on great food, high-
quality service, and commitment to people and community are part and parcel to their
sc.wy business expertise,sl
A primary tool that ZCoB uses to manage its businesses and train employees is its
unique brand of standard operating procedures, These procedures encapsulate the key
steps necessary to accomplish important objectives at ZCoB, During training, new
employees learn the "Four Steps to Selling Great Food." Step 1 is "know the food"-
whether irs how a certain artisan bread rises or how olives are cured. s3 There are also
distinct steps for particular food groups. For example, "Six Steps to Selecting Superior
Cheese" include a primary emphasis on taste, choosing handmade cheeses, and get-
ting your cheese cut to order,s4 Having trouble with a coworker? "Four Steps to
Productive Resolution of Your Differences" suggests you speak directly to the coworker
about your concerns. ss And not forgetting the need to make a profit. ZCoB's "Three
Steps to Great Finance" suggests you should understand how finance works, measure
your financial performance on a weekly basis, and make sure all employees benefit
from good financial performance,56
As word of zeoB's success spread, other organizations sought to emulate it.
Enter Zing Train, ZCoB's training, development, and consulting business. Hospitals,
restaurants, banks, and grocery store chains have all senl employees to Zing Train in Ann
Arbor to learn zeoB's sleps to success in different business areas,s7 The steps not only
seem to work, but they also seem to lead 10 satisfied employees who love what they do
Rules have scveral advantages that help groups control and manage behavior and per-
fonnnnee:
• Rules help group~ en~ure member~ will engage in behavior~ that contribute to the
effectiveness of the group and the organizatioo and amid behaviors that hinder per-
formance and goal attainment.
• Rules facilitale the (;ontrol of behavior beeause members and managers know how
and when role occupants arc expected to perform their assigned ta~ks.
• Rules facilitme the evalumion of individual group members' performance levels
because their behavior can be compared to the behavior specified by the I\Iles.
• When the membership in a group changes. rules help newcomers learn the right way
to perform their roles.
A group can develop rules at any slnge of its development. Rules developed m early
stages are onen changed or abandoned as the nature of the group's work. group go;lls. or
organizalional goals change. A healthy group re("()gni zes the need for change and is wi II ing
to alter its rules (and roles) when warramed.
How Groups Control Their Members: Group Norms
Roles and rules help group members and managers control the behavior in groups
because they specify the beh;lviors members should engage in. Norms serve the snme
purposc. 3H Nurms signal members about the bch.!\'iors expecled of Ihem. Unlike written
rules. however. whic'h are fOfll1(11 descriplions of actions and behaviors required by a
group or organizmion. grOlll' norms are il/forlllol rules of conduct. Often they ;Ire not
put in wriling.
When members share a common idea of acceptable behavior. lhey can monilor each
other's behavior to make sure everyone is following the group's nonns. This is key to con-
trolling the group_ Groups enforee their norms by rewarding members who conform to the
nomlS by behaving in the spoxilied m<ull1er and punishing members who deviale fromlhe

COMPLIANCE
A"cTltinj; to a norm in ()fd~r
to anain rc"ard, or a.oid
puni,hmem
IDENTIFICATION
A»ociatinll <mc,elf "ilh
\Upl'O"el' of a OOrm and
conforming 1n the noon r.cc~u'C
thn,e ,ndividual, do.
INTERNALIZATION
Relie' il'~ thai the beh~"nr
dic131ed bl "norm i, trulllhe
right <In<! proper ".ll to beha'e.
CHAPTER 10 • THE NATURE Of WORK GROUPS AND TEAMS 339
norms. 59 Rcwards for wnforming 10 group norms c:m includc being lrcatcd in a fricndly
m~nncr by othcr group members, \'crbal praisc, rttci"ing help from othcrs whcn nccdcd,
and 1angible rewards, such as bonuses or perks. Punishments for dcvimions can include
being ignored by Olher members. crilicizcd or reprimanded, stripped of certain privilcges,
orcxpellcd frum the group.
A group of w~iters and w~itresses in ~ busy rcst~ur.lIlt may dCH'lop informal nornlS 10
thc cffcct that members should not stcal each other's tables or orders in the kitchen and
should ulways infoon others when they observe that customers at another member's lable are
ready fur their check, These norms help lhe group ctfcclivcly ilcconlplish ilS goals of provid-
ing glxld servicc to customers and carning the best tips (Xlssiblc, A group mcmber who docs
not follow the noon (a waitcr. for cxamplc. who steals an order in thc kitchcn on a panicu-
larly busy day) might be rcprimanded. If deviation from the IlOrm oontinues, the individual
might cvcn be e;o;jX:lled from lhe group, A waitrcss who continually steals lablcs 10 carn more
tips, for cxamplc, might be brought to the attcntion of thc restaurant managcr and c\'eutually
fired. Waiters and waitresses who conform to the group's norms are rewardcd with continued
membership inllle group and other perks,11lose perks might include verlxll pmise from the
reSlilur;UI1 managcr and othcr members and biggcr lips from cuslumcrs,
Like formal roles and rules, nornls dcvclop 10 channd thc behavior of mcmbers in a
direclion thm Icads to thc achievemCIll of group and organiz.mional goals.<>O Whcn norllls
exist, members do not hal'e to waS1C time thinking about what to do in a pal1icular situa-
tion; norms guidc their aClions and spe<:ify how they should beh~,'c, Furthcrmore, when
peoplc sharc common norms, they can predict how othcrs will behavc in ccrtain situations
and thus anticipate onc another's aClions. This improv('s the intemctiOll alllong m('mbers
and resulls in fewer misunderstandings between them.
Why Do Group Members Conform to Norms?
Individuals conform to group nonns for threc m~in reasons, The first and most widcsprcad
basis for conformity to group norms is com pliancl;" - asscll1i ng to a norm in ordcr to allain
rewards or avoid punishlllent.6t When individuals cOlllply with nonllS. they do not ncees-
sarily believe lhe behavior sjX:eifled by Ihc norm is important for ilS own sake, Howel'er,
they know that ~biding by thc norm will result ill certain bencfits and ignoring il will result
in cenain costs, Consider how norms operaI(' in the following cxamplc. Thc ill1crnal audil-
ing depanmcllt of a chcmical company annually solicits eontributiOlls for the Uniled Way.
a charitable organizmion, Mary Kelly is a group member who doesn't really like the
Unitcd Way becausc shc h~s read somc anklcs questioning thc way thc <:haritablc organi-
zation US('S its funds. Nc"cnhclcss. Kclly always cOll1ributes to thc United Way because
she is afraid her coworkcrs wililhink less of her and perhaps avoid hcr if she does not.
The second reason for conformily IS idenlifielltion-assuci,lIing oncsclf with sup-
portcrs of ~ norm and conforming \() thc norm bc<:ausc lhose individuals do, John
Bickcrs. one of thc ncwest membcrs of the auditing dcpartmcllt. rcally looks up to Ralph
Dial and Steve Cashion. who haw been in the department for sevcral years and arc ripe
for proillulion, Around thc limc of the Unitcd Way campaign. Bi<:kcrs c,lsually asks Diaz
and Cashion over lunl.:h how thcy fccl ~boU1 thc Unitcd \V~y, Bolh Di~z ~nd Cashion
indicatc thcy think it's a worthy cause, and both tell Bickers thcy cOll1ributed to it during
the annual fund drive. This information Causcs Bickers to dceide 10 cOnlribute as well.
The third and polcntially most powerful basis for conformity 10 gruup norms is
inlenmlizalion-belicving thm thc behavior dictated by Ihc norm is truly thc right way to
behavc. Diaz, and Cashion's basis for conformity is illiernalization: They wholchcancdly
belicve in the United Way's e,IUSe, Norms have the most influence on group members
whcn the basis for conformity is inlcrnalization,
Idiosyncrasy Credit
Ahhollgh moSl group mcmbers arc cxpcclcd 10 conform to group norms. onc or a few
group mcmbers somctimes arc allowcd to deviale frolll the norms without being pun-
ished. These privileged individuals are generally group members who ha\'e contributed
340 PART 2 • GROUP AND TEAM PROCESSES
IDIOSYNCRASY CREDIT
nit' frec'dom 10 ,'iolme ~p
""I'm, "ilhool being pon;,hc<llhat
j,occOl\leJ 10 groop memher>,
"00 ru,,'e ronlribulOO" 101 10 !he
~'FOUp in tOe pN,
DEVIANCE
[)CYi.I"," from a norm.
a IQlIO the group in the past. Their above-average contributions to the group give thcm
what has been tenned idiosyllcrns)' crcdit-the freedom to violate group norms without
beillg punisht:d. 62
In the re,taurant described earlier. John Pelers. the waiter who has been ,,'ith the
restaurant for the longest period of time, generally takcs on the responsibility of training
new waiters and waitresses and senling conflicts that arise in the group. On very busy days,
Peters somehmes "mistakes" other group members' orders in the kitchen for his own,
However. he is never reprimanded for stealing orders. His beyond-the-call-uf-duty cOlllri-
but ions 10 the group givc him idiosyncrasy credit. which allows him to deviatc from Ihc
group's norms. Similarly. a highly skilled developer in a group of computer programmers
might frequenlly fight with other group members and with the supervisor yet never be rep-
rimanded. Although her behavior violates the group's norm of members' being polite and
considerate 10 one anQlher. the behavior is lolcrated because this progmmmer is the onc
who always finds Ihe bug in n program.
The Pros and Cons of Conformity and Deviance
From our discussion of groop nonns. you probably get the impression that confonnity is
good 111 all situations, Conformily;.1 good when nonns help a group control and inlluem:c
its members behaviors so Ihatthc group can aCHlInplish its goals. But what if a group's
norms are inappropriatc or unethical? Or what if a nonn Ihat was once appropriatc is no
longer approprime beC.IUse the situation has changed'! M.l1IY nonns. ,uch as always beh;lv-
II1g courteollsly to customers or always leaving il work area clean. promote organizational
effectiveness, but some gmup norms do not.
Studies have shown that groups of employees can develop norms that actually hurt
the group's performance. A group of employees 011 an assembly line might develop norms
to control the speed at which the work is performed. An employee who works vcry
quickly (and. thus, prod uces "too much") may be called a ..ratc buster." An employee who
works vcry slowly (or below the group norm) may be called a ""goldbricker,"" a "slader;'
or a "chiseler:'~J Other members of the group may reprimand slackers and mte busters
alike. In the ca>c of a rate buster. the reprimand may hinder group performance. because
rate busters generally tend to lower their level., of performance to fall more in line with
the group norm.
This same kind of process emt occur at all levels in an organization. A grO\IP of middle
managers may adopt a don'l-mck-the-bootnoml that signals managers to agree wilh what-
e\'er lOp management proposes. regardless of whether Ihey think the ideas are right or wrong.
A new middle manager soon learns that it doesn'l pay to rock the boot because this behnvior
will ineur the wrath of nOI only the top nwnagcr but his or her comanagers, too. When such a
noml exists. all middle managers might be reluCiant to speak lip e\'en when they all realize
that a change is sorely nccded for the organization's success. In cases like this, conformity
maintains dysfunctional group behaviors, and deviance from Ihe nonn is appropriate.
Dc,'imll'e-deviation from a norm-occurs when a member of a group violates a
norm. Groups usually respond 10 deviance in one of three ways.64 First. the group
mightlry to getlhe deviam to change by, for example. explaining to the deviant why the
norm is so important. pointing out that he or she is the only member of the group violat-
ing the norm. or repri mandi ng and puni shing the dcvi ant for viol;(t ing the norm. Second.
the group might reject 65 or try to expel the deviall1. as the group of restauram employees
did when a waitress violated the norm of not stealing tables. Third, the group might
actually dwnge the norm in question to be more in line wilh the deviant's bclwvior.
When group norms arc inappropriate, deViance can spark a needed change within
the group.
Balancing Conformity and Deviance
As illogical as it might sound. groups need both conformity and deviance to accomplish
their goals and perform at a high level. In our res!auml1l esample, conformity 10 the group
 CHAPTER to • THE NATURE OF WORK GROUPS AND TEAMS 341

norms of nOl -;tealing table, or food orders and of informing members when eu,tomers arc
ready for their checks helps the group meet its goals. A group nonn for handling customer
complaints. however. has recently changed.
In the pa'!. whenever eu,lomers I.:omplained abom a meal. the norm wa, 10 refer the
eomplai III to the restaurant manager. The manager would lalk to the customer and invariably
offer him or her an alternative selection. Then. on a particularly busy day. one of Sally
Sdwnl<:lker's customers had a complaint. Rather than seek out the manager. Schum<lker
del.:ided to h<lndle the problem herself. She offered the I.:ustomer another meal bel.:auM: that
was how the manager always solved such a problem. After that. Schumaker continued to
take mailers into her own hands whenever one of her customers had a complaint. Over time.
other members of the group noticed Sl:hurnaker"s behavior <:Ind asked her why she was cir·
cum"cnting thc rcst<lU rant manager. She explained her reasons for violati ng the gruup lIoml.
and they made sense to the other members: Handling problems themselves would enable
them to please dissatisfied customers more quickly aDd ,Ivoid bothering the lllnn,lger with
every problem.
John Petcrs. the senior waiter. decided to l:hcl:k with the man<lger to make sure it was
nil right with him if the wnit staff offered a new meal for a customer who had a complaint
about the food. The manager thought this was a great idea and was surprised he hadn't
thought of it himself. He informed the wait staff that from then on they should h;lIldle I.:OIll-
plaims themselves (as Schumaker was already doing). bm that they sholiid be sure to let
the cook know about the nature of the eomplaillls_
The norm of referring a11 complaints to the restnur:mt m,\{l:lger was dysfunet iona1 for
the group of waiters and waitresses for two reasons: (I) [t meant kt"Cping dissatisfied ClIS-
tomers waiting (whil,h prevented the group from achieving its glxxl-service goal): and
(2) it meant seeking out tlte manager. which took time that could have been used to serve
other customers (pre"ellling members from earning the maximum amount of tips they
l.:ouJd). Dcvianl.:e from this norm was functional for the group because it stimulated the
group 10 reexamine the norm and change it.
As this story shows. eVllforlll;l\' ellsures that a group can control lllembers' behav·
iors to get tasks accomplished. and dtT;allce forces group members to reexamine the
appropriateness of norms. E.\hibit 10.6 depicts the relationship between levels of I.:on-
formity and devianl.:e in a group and the group's goal 'lI.:wmplishmcnl. The group at
poim A has a low le\"el of conformity and a high level of deviance_ This group has
difficulty controlling members' behaviors and fails to attain its goals. The group at
point B has al.:hieved just the right balanl.:e: Conformity helps the group dired mem-
bers' behaviors IOward its goals. and deviance forces it to periodically reexamine the
appropriateness of it norms. In the group at point C, conformity is so high that it is
stressed at the expense of the group achieving its gO:lls. Because group members ,lfe
extremely rcludant In deviate from it, norms. this group retains dysfundional norms
and resists any sor! of change.
Because deviance can be an impetus for change and improvement. how groups
respoml to deviance e;1I1 be an import<:lnt determinant of group effectiveness. For exam-
ple. rescarl.:h ha, found that groups can benefit by allowing memhcrs who deviate from
the norms or hold a position at odds with the majority to air their views.66 Sometimes tlte
deviant or dissenter is justified. and the norm or majority position is ineffective or
unwarrml1ed. In this case. by listening to the deviant and thinking through his or her
arguments. the group might improve how it function,. Even if the deviant's position is
not justified. listening to him or her and diseussing his or her perspective is likely to lead
the group to ,I bener underswnding of the issues at hand. including the deviant:,1
Additionally. when the group's tasks require creativityt>ll (sec Chapter 5). it is especially
iIIlportam that all views arc ex prcs>ed and heard, regard less of how ou tl andish or deviam
they might seem.
Some national cultures promote high levels of conformity. In cultures such
as these. group members arc likely to abIde by the norms at a1ll.:os1s and fear change.
This phenolllenon is prevalent in Japan. [n Japan. young children arc wughtthe impor-
tance of conforming to group norms at an early age because the Japanese tcnd to sec
342 PART 2 • GROUP AND TEAM PROCESSES

EXHIBIT 10.6 High ,

The Relationship
Between levels of
Conformity and
Deviance in a Group
and Group Goal
Accomplishment

A
ww ~------;;-;--;---,,.-----,:-o---,----,--------­
a..1~nce <>f conlQ",,;<y f ~OII ;1'1 .. g"""p
Low conformity! Mod«at< conformity! H'gh conlQrmltyl
High d.vian« Mod...." d.vian« Low d.vian«

I I I
Low p<rforman« Good balance kad. to Low p<rfurm.nco
b.... uS< group high p<rformanco; l><eous< group
<an', control It> Conform"l' h<lp< th< str«s<s conformIty
m<ml><,.' l><havlo.-. group dir<e' m.ml><,..' at,h. <>p<n« of
l><havi"" ,<>Ward goa! nud<d chong...
a«omplishm.n" and
d<vianc< fo"'<1 ,h.
group '0 .".min. ,h<
appropna'.n<S5 of
1t> norm"

conformity as desirable and change as threatening. For example. JAL Coordin<llion

Servil:e Company. ~ Japanese company. teades Its female office employees the proper
ways to bow amI smile, per the norm. Propcr bowing amI smiling arc deemeJ to be so
important. in fact. othcr companies senJ hunJreJs of their members to JAL each year
for a two-Jay. bowing-anJ-smiling training seminar. The COSt is about $240 per
employee. The J~panese stress l:onform1ty to group norms to such ;\ great extentth~t
h~rmony is sometimes v~lueJ over neeJeJ l:hange. Sociologist Akira Fuji13ke suggests
thal change in Japan may be slow becausc of "a barrier c311eJ 'the group."'69 The u,e
of oobeyas. profiled earlier in Glob~ll View. e~m be an effective way of ;;llleviating
the pressures rel~teJ to conformity. In ~n oobey;!. everyone is on equ~l footing. l13s
~ voic·e. anJ is listcncJ 10. anJ all issucs are open for Jiscussion anJ potential
Jisagrcemem,

Ensuring that Group Norms Are Functional for the Organization

In our restaurant example. becausc the group's goals arc aligneJ with the rest3UTant"s
goals. the norms that arc functional for the group are also functional for the organiza-
tion. Simil~rly. the norms th~t are Jysfunc1Jon~1 for the grollp (such as referring all
customer complaints 10 the n13nager) arc Jysfunctional for the organization. When
group anJ organizational goals arc closely aligneJ, groups arc inclineJ to develop
norms th;ll help the groups achieve its goals anJ arc also functional for the organization.
Likewise. thcy are indineJ to discarJ norms that are Jysfunction;IJ for the group ~IlJ
the organization.
Group goals, however. are not alw3Ys congruent with organiwtional goals. The goal
of a group of employees that assembles radios. for example. might be to mil!imi~{' the
amount of effon each member e.\ens on the job, To ac:hieve this goal. the employees
 CHAPTER to • THE NATURE Of WORK GROUPS AND TEAMS 343

de'dop the norm of assembling no more than 50 radios per day. The group could easily
assemble 75 radios each day, but this perfomlanee level would entail additional effort on
th... pmt of members. In this case. the group nom1 is clearly dysfunctiunal for the organiza-
tion because group goals are incon,islCnt with organizational goals. The norm. however. is
functional for the group because it helps members achieve their goal of not having to work
too hard,
How can managers ensure that group nonns are functional and aligned with those of
the organization'! One way i, by making sure memhcrs arc rewarded when the organization
achieves its goals. In our restaurant example, members benefitted from the restaurant
achieving its goal of providing good service because good service lends to bigger tips.
Another way is by rewarding group members on the b.1Sis of individual or group
pcrfonnance.
The group of employees assembling radios. on the other hand, receives no tangible
benefits when the organizntion reaches its perfonnance go.d. Members are paid on 'In
hourly lmsis and receive the same amount of muncy regardless of how Ill<llly radios they
assemble. Their group goal (minimizing effort expenditure) is nO! aligned with their

You're t;he Management; Expert;

Aligning Goals
Marcy long heads a diagnostic laboratory that performs a wide variety of blood tests
in a large city_ When physicians give their patients medical orders to have certain blood
tests performed, long's lab is one of many in the city patients have the option to use,
The laboratory accepts most major insurance plans in the area and has a close rela-
tionship with many of the nearby medical practices, Some of these practices direct
their patients exclusively to long's lab. Patients, of course, can choose to go elsewhere,
but allen they do not Although long is generally satisfied with the performance of
her employees, several physicians recently complained to her that the staff are inflexi-
ble in terms of making exceptions and being responsive to special requests, For
example, if a certain blood test typically takes three days but can be performed in one
or two days if needed, staff members are unwilling to do the test sooner, even when
the reasons for doing 50 are compelling, As another example, when a patient has
multiple tests performed and some take longer than others, the lab typically waits until
all or most of the test results are in before faxing them over to the physicians. In some
cases, physicians and/or patients are anxious to get the results as they become avail-
able, and the lab's policy is to accommodate these requests. However, some physicians
have told long they've repeatedly had to request partial results before receiving them.
long has always told her staff members that they the need to be sensitive to the needs
of patients and their doctors and be as responsive as possible while maintaining the
highest standards in the field, While her staff excels at the latter, she has come to real·
ize they are not as responsive as they could be, Although she has emphasized this
point repeatedly in staff meetings, the complaints from physicians and their patients
have not stopped. In one instance, long herself had to intervene to satisfy a special
request.
Because you are an expert in OB, long has come to you for help, How can she get her
staff to be flexible and responsive to the special requests and needs of physicians and their
patients?
344 PART 2 • GROUP AND TEAM PROCESSES
SOCIALIZATION
1lIe proce" by whil:h newoome"
kolIn the role'. rule'.,n<! nom"
"f a group_
ROLE ORIENTATION
1lIe Cha"'~Cleri'lic w,) in "hi,'h
""'mbe.... of a group ,..,<pond to
nri''''' "tuation,.
INSTITUTIONALIZED ROLE
ORIENTATION
A role orienlalion in which
newcom"", are laughllo ""'ron<!
«J "IU"(lOn' in Ihc ,"nle way 1l,,1
"i'litig grOlip "",mbe" ""'pond
ID ,imil;;r ,iluation,.
organization's goal (performance) because they do nOI benefil iflhe organizational goal
is mel. The 1I0rms the group has developed (reSlricting production) are functional for its
members but dysfunclion<ll for the orgaruzation.
The need 10 align group and organizalional goals has a very dear implication for
how outcoml.'s (such as pay) should be distribuled to members of thl.' group when their
individual conlributions or performance levels canllOI be readily idelllified or evaluated.
Essentially. Ihe outcomes members receive should be based un Ihe group's lc\els of
performance. In other words, members should be rewarded when Ihe group is effeelive
and comribUles 10 the auai II mem of Ihc organ izatioll 's ovcrall goals. Whcn members arl.'
rewMded for their high performance. Ihis then becomes a group goal. alld norms
develop loward thai end. If uur radio employees were able 10 increase their earnings by
assembling more radios. it is likely the group's goal would be to increase produclion
rather Ihan 10 limil il. and new norms would probably dl.'velop toward this I.'lId.
Socialization: How Group Members Learn Roles,
Rules, and Norms
The ability of a group \() cOlUrol its members' behaviors depends on the eSlelll to which
newcomers learn Ihe group's roles, rules. and norms. Newcomers do not initially know
what is expeeled of them and wh:lt they can and cannot do. m A newcomer tu a group of
secretaries. for example. does nOI know whether it is all right to t<lke a long lunch one
d<ly <lnd make up the time Ihe nexi day or whether it is acceptable to work from 8:30 to
4:30 instead of from 9:00 to 5:00. Newcomers ,lre outsiders. and only when they have
learned the group's roles. rules, and norms do existing group members accept them as
insiders. The proces, by which newmmers Ie<lrn the roles, rules, and norms of a group i~
sociuliz.ation _
A newcomer can learn how the group controls members' behavior by simply observ-
ing how existing members behave and infefTing from this behavior whal is appropriate and
what is inappropriall.'. This mighl be perfC'C1ly accC'ptable to Ihe newcomer, bUl from IhC'
group's poinl of view, il could be risky blxausc Ihe newcomer might observe and learn bad
habits that are unacceptable to 1he group. In one of our earlier examples, a computer pro-
grammer gelS away wilh argumentative behavior that violates the group norm of helllg
cooperative because of her idiosyncrasy credit. A newcomer to the group observing her
combative behavior. however. might mistakenly assume that1his behavior is acceptable-
that it is in conformity with a group nom1.
Socialization and Role Orientation
10hn Van Mannen and Edgar Schein developC'd a mudd of socializalion dC'scribing Ihe
differenl ways in which groups socialize Iheir members, How groups socialize new-
comers. in turn. innuenccs Ihe role oricnl,l\ion that newcomers adope?1 Rule orienta-
tiun is the charactcris!ic way in which members of a group respond to various situa-
tions. For example, do members rcaCI passivdy <lnd obediently to commands
and orders? Arc they creative and innovative when it comes 10 finding solutions to
prublcms'!
Van Mannen and Schein idemifioo six pairs of contrasling socializ;lIion taclics that
influl.'nce a newmmer's learning and roll." orientation. The usc of differem combinmions of
these tactics leads 10 IWO differclll role orientations: institulionaliwd and individualized. In
an instilutionalizt-'d rok orienlation. newcomers are taught 10 respond tu situatIons in the
same w'ay that existing group members respond to similar situalions. An institutional ori-
entation encourages obediencc and conformity 10 existing roles. rules, and norms,
Newcomers who h,lVe ,111 institutionalized orient,ltion arc more likely to engage in role tak-
ing rather than in role making because thIS oricnt<ltion emphasizes lhe importance of fol-
lowing exisling ways of doing things.

When an mdividualizcd role
oricntation is desired.
newcomers still nccd to learn
and follow cx isting rolcs. rulcs.
and nornts but also mc tauf'll1
that it is a<Tcptable and desirahle
to be creati,·c and to experimcnt
with <changing how the group
docs things.
INDIVIDUALIZED ROLE
ORIENTATION
A role <lnentation in whi<'h
new<·"l1\c.... arc laught thai it "
acceplable and dc,irablc m be
,reati" and 10 experiment with
changing how Ihc £TOUp doc,
thing,_
EXHIBIT 10.7
Socialization Tactics
That Shape Group
Members' Role
Orientations
CHAPTER to • THE NATURE Of WORK GROUPS AND TEAMS 345
In ,In indi,-iduali'zcd rulc ol"icnl'ltion. individuals are taught tlwt it is aCl:eptable and
desirable to be creative and to experiment with changing how the group docs things?"
Although group members with an individualized orientation still need to learn and follow
existing roles. rules. and nomlS. they realize that these ways of c011lrolling behavior are not
cast in stone :lnd that the group will l:onsider danging them if a more effective way of
behaving is identified. Members with an individualized orientation tend to engage moll.' in
role ntaking rather than in role wking.
Socialization Tactics
The socialization tadics identilicd by V,lIl Mannen and Sl:hein arc discussed next and sum-
m<trized in Exhibit 10.7. Groups or organizations can usc all six tactics or a subset of the
six tactics. depending on their nccds and goals_ Each of thc six tactics actually represents a
pair of contrasting tactics from which a choice can be made,
Collecti....e ....ersus individual tactics. When col/alire tactics arc used. neWl:OnlCTS go
through a common learning experience designed to produce standardized or highly similar
responses to different situations. For example. all of the new sales associ31C_' hired by a
department store receive collective socializmion by particip<lling in the same two-week
Tactics That Lead to an Tactics That Lead to an
Institutionalized Orientation Indi.... idualized Orientation
Collective tactics Individual tadies
Formal tactics Informal tadics
Sequential tactics Random tactics
Fixed tactics Variable tactics
Serial tactics Disjunctive tactics
Divestiture tactics Investiture tactics
346 PART 2 • GROUP AND TEAM PROCESSES

training program. They w:llch videotapes showing the proper way to greet customers,
process a sale or returned item. and deal with customer complaints_
When illdil'idlw/i:nj tactics aTe used. newcomers are taught mdividually how to
behave. Because learning takes place on an indiviJual basis. each newcomer's Icarning
experiences are somewhat different. and newcomers arc encouraged to behave Jifferently
in the various situations they may encounter on the job. For example. newcomers to a
group of cosmetics salespeople. each of whom is responsIble for a Jifferent line (Estee
Lauder. Lanc6me. and so on), arc socializeJ inJividually by company rcprc>Clllativcs to
ensure that they develop the appropriate knowledge about the line and the type of cus-
tomers it nppe,lls 10.
Colleclire tactics tend to lead to an imtililliollll/i:ed orientation; illdiridulI{ tactics
tcnJ to lead to an imlil·idulIli:ed oricll1ation.

Formal versus informal tactics. When taetics areforlllal. newcomers are segreg,ltL-d
from existing group members during the learning process. For example. new sales
associates receive their two-week training in the depanment store's training room. During
this period. they never inlenlct with members of the groups they are to join onee their
tr.lining is complete.
When tactics arc illforllllll, newcomers leam on thl" job. For example. many restalirall1S
socialize new waiters and waitresses by having them work nlongside experienced waiters
and waitresses.
Frmuo/ taetics tend 10 lead 10 an illSti/lui()lIali~t'(f oriell1ation; illfomlll/tactics tcnJ to
lead to an indil'idlw/i:eJ oril"llIat ion.

Sequential versus random tactics. When SN/IIt'lIIitll tactics arc useJ. newcomers arc
provided with explicit information almut the sl"quence in which they will perform new
behaviors. For example. a new assistant in a veterinarians' office is told that during her first
two weeks she will assist the vets with rout1l\e checkup,. After thaI. she will also weigh the
animals and adminisler injections. After one month 011 the job she will also assist the vets
1Il surgcry.
When ram/om tactics arc used. the order in which socializmion proceeds is based on
the interest, and netxls of the individual neWC01l\er. and no set sequence i, followed. For
example. an apprentice w(Kxlworker who hilS JUSt joined a group of custom fumiture mak-
ers might be told that the ordcr in which he learns to make the diffcrem types of furniture
is up to him.
Snllwlllia! tactics tend 10 lead to an illslililriol!(/Ii:<,d orientation: mlU/olI! tactics lenJ
to lead to an il!dil'idll(/Ii~ed oriell1ation.

Fixed versus variable tactics. Fixed tactics give newcomers precise knowledge
about the timetable for completing l"ach stage in the !caming process. The sOL'ialization
of the assistam in thc veterinarians office relics on fixed tactics. The assistnnt knew
that tWO weeks would have to elapse before ,he moved on 10 the next stage in her
training.
\/arilrble tanics proviJe no informatioll about when newcomers will reach a ('cnain
stage in the leaming process: the speed of socializmioll depends on the individual new-
eOllll"r. TIle woodworker WilS socialized with variable tactics; he WllS never told how long it
shoulJ take him to learn how to make differelll types of furniture.
Fix"'/ tactics tenJ to Il"ad to an iIlSlilltliollil/i:ed oril"llIation: nmdom tactics (enJ to
lead to an illdm·dludi ~<,d oriell1at ion.

Serial ve~us disjunctive tactics. When Jeri,,/ tactics arc uscrl. existing group membl."rs
socialize I\Cwcolllers. (Waiters and waitresses training newcomers is one example.)
When di.ljllllL'fil"<' tactics are uscrl. newculllers must ligure out and de.'elop their own
ways of behaving. They arc not wid what to do by expcril"nceJ grollp membl"rs. For
 CHAPTER to • THE NATURE OF WORK GROUPS AND TEAMS 347

example. many new professors learn how to H."ach and do rescarch through disjunctivc
socialiwtion. Experienced professors in the groups or department they join often do not
give them traming or guidance III how to teach ,md do research.
Serial tactics tend to lead to an ill.llilwimwli:.ed orientation: diIjwtClil'" tactics tend to
lead til an illdil'idua!i:ed oricntmion.

Divestiture versus investiture tactics. With dh·".Hirure tal:tics. newcomers TCl:eive

negative interpersonal treatment from other members of the group. For example. they arc
ignored or taunted. Existing group mcmber<; refrain from treating neweomcrs kindly and
with respect until they lellro existing roles. rules. and norms. The classic example of
divestiture is in lmlitary boot camp. where new recruits arc msulted and subjected to a
wide varicty of abuse until they learn the rope,.
With il/l'es/;IHfe tllctics. ncwcomcrs immedimcly rcccive positive social support
from other group members. For example. a group of nurses might go OUt of its way
to teach a new member how things arc done in the group and milke the member feel
welcome.
/)i\'(',I";lure Tactics tcnd to Icad to an illl'/;w/ioulllb'd oricntmion: illl'es/i/llff tactics
tend to 1c'1d to an im!i"idtwlh'd orientation.
To sum ntarize. collect ive. formal. sequent ia 1. fixed. seria I. and di\esti ture tactics tend
to lead newcomers to develop an institutionalized orientation. Individuill. informal. riln-
dont. variable. disjunctive. and investiture tactics tend to lead newcomers to develop an
individualized orientation.i ) Wh.l( is the significance of tltis model for socializmion in
orgiln izat ions'!
Consider thc usc of sociillization tactics by the military. New recruits arc placed in
platoons with other new recruits (collfe/i1·d. arc segregated from existing group mem-
bers (/01"1/101). go Through preestablished drills and learning experiences ()'('(ltll'll/illl).
know exactly how long basic training will take and what they have to do (jiwd). have
superior officers such as platoon sergeants who socialize them (.~critll). and arc Ifeated
with little respect and tolerance until they have karned their duties and "gotten with
the program" (dil·f')'limrl'). As a result of Their socialization experiences. new recruits
develop an institutionalized role orientation in which obedience and conformity
to group roles. rules. and norms arc signs of succe,s. New ntC'mbers who l'alHlO!. or
will nol. perform according to these standards either leave lhe military or arc asked to
leal'e.
Few gmups exert thl' samc amount of control o\"er its members as the militilry. but
mher grnups do usc ,imilar tactics to socialize thcir members. For C'xamplC'. Disneyland
prides itself on visitors having a fun·filled experience in a wholesome. clean. checrful. and
friendly theme park. How docs an organization that employs over 30.000 people ensure its
employees will behave in accordance with these st;mdilrds'! A careful socialization process
geared toward developing an institutionalized rolC' orientmion is one important means for
Disney.
Disney wmlts <Ill its employ<:es to carefully follow its roles (such as their individual
job duties). rules (sllch as refraining from growing mustaches or weilring dangling ear-
rings). and nomlS (such as always going the cxtra mill" to help guests have a good time).
The insti1Ulionalized orientaTion helps employees do their jobs the Disney way and helps
the comp<lny succeed in its quest to maintain Its competitil'e .td\'antage.
New recruits. or ··cast members" as they are eillled at Disney. re<:eil'e formal training
at Disney University in groups of around 45. Their collective socialization follows a set
sequence of :letivities. During the Traditions I program. which l.lstS fOr;1 d;ly and a tHlif.
newcomers learn the Disney languilge and the four Disney guiding principles: s;lfety, cour-
tesy. show or entertainment. and efficiency. They also receive training in how to ans,,"'er
guests' questions no matter how difficult the questions may be.
Once cast members complete Tr:lditions I. they move on to further socializ.nion in
the .tl1raetion areas (Adventure land. Fantasyland. and so on; th'lt they will be joining.
This session. which can last as long as a day and a half. covers the rules for each spcrific
348 PART 2 • GROUP AND TEAM PROCESSES

Disn..::y socJahzes its thousands

of employ"",. or ··(·~,t nu mbe,.,;:·
by sending tltem to Disney
Uniw,.,;ity_ C~rcful " ..;ialization
and tmining ensures new east
members le~rn h"w to ~d the
Disney way.

arca. Las!. but not least. is on-the-job training the newcomers will be given by Ihe exjX'"-
rienced cast IllCmbers in the groups they're joining (a serial tactic). This part of the
socializalion process can take up to two and a h:M weeks to complete and includes new
I:ast members' leaming thl:ir roles and their aCl:ompanying responsibilities. privileges.
and role relatiOll';hips. All in all. careful socialization ensures oew cast members learn
how to do things the Disney way.N
Should a group enl:ourage an inSlilutional role oril:nlation in whIch newcomers
accept the status quo'! Or should it encourage an individual role orientation whereby
newcomers are allowed to develop creative and innovative responses to the tasks
required of them? The answer to this question depends on the goals of the group and
org.mization.
The main benefit of an institutionalized orientation is also its main danger: the
homogeneity it produces among group melllhcrs. If all members of a group have been
socialized to share the sallie way of looking ,1\ the world lInd 11:11'e the smne strong alle-
giance to existing roles, rules. and norms. the group may bel:ome resistant to change
and lack the wherewithal \(J cOllle up with creative solutions to problems. As we discuss
in Chapler 19. however. the very survival of groups and organizations depends on their
willingness and ability to change as needed in response to eh:lIlges in the environments
III whil:h they exist. Such chang.::s include I:hanges in customer demands, in th.:: nature
and diversity of the workfor("e. and ehange~ in economi<' conditiolJS or technology.
Groups such as marketing departments. self-managed work tcams. and research and
development teams. and org,lnizations such ;lS consumer products firms. auto
companies. and computer manufaclurers are likely to have to respond to frequent
changes in the business climate. These groups and organizations can benefit from
an individualized oriemalion and should try to usc individual. informal. random. vari~
able. disjunctil'e. and investiture tactics whenever feasible. Microsoft. for example.
tends 10 rely on many of lhese tactics to promulC individualized role orientations.
Microsoft takes this approa(,h because the effcnivencss of thc various groups in the
organization dcpends nOI 011 standardized individual behavior (likc at Disneyland) but
on encouraging members to come up with n.::w and improved solutions to software
problems.
S(Kialization helps groups achicvc whatever goals thcy havc established-II) provide
consistcntly high quality audits. to assemble 75 mdios a day. and to develop ncw softwarc-
by helping lhem control lheir members' ochaviors. Whcther a groop wants its mcmocrs to
 CHAPTER 10 • THE NATURE OF WORK GROUPS AND TEAMS 349

closely follow established ways of doing things or offer suggestions for ways to do things
differently. it needs to exert control over its members' behaviors and aclions in order to make
this happen.

Summary
Work groups are the basic building blocks of an organization. Work groups usc roles. rules.
and nonns to cOIHroltheir members' behaviors. and they usc several socialization tactics to
turn newcomers into effective group members. Groups conlribule 10 organizational effec-
tIVeness when group goals arc aligned with orgamzatiunal goals. In lhis chapter. we madc
the following major poims:

I. Two attributes separate work groups from nllldom colleclions of individuals in an

orgarllz:lliun. Members uf a wurk group (a) interact With each other and (b) perceive
the potemial for mutual goal accomplishment. Work groups vary in whcther thcy are
fonnal or infonnal. Formal work groups includc command groups. task forccs.
teams. and self-nwnaged work teams. Infomml work groups include friendship
groups and interest groups. Teams are characterized by intense inter.lcliolls between
team members to achieve te·am goals.
2. Groups develop and changc over time. The fivc"stage model of group devclopmem
proposes thm groups develop in five sequenti,ll stages: forming. storming. nonning.
perfomlllig. and adjourning. Research. however. has not indicated that there is a uni-
n'rsal sct of stages that all groups experience in the samc order.
3. Five important characteristics of groups are size. composition. function. status. and
group efficlley. Each has lhe potentillito affect the extent to which a group achieves
its goals. performs at a high level. :md ultimately is efb:live in helping an organiza-
tion attain its goals. Social fac'ilitation is a charJ.cteristic effect that the presence of
other group members has on individual performance such thai having othcrs preSClll
enhances performance of well-leamcd tasks and imp.1irs perfonnance of difficult
tasks.
4. All groups. l\?gard less of their type or characteristics. need to mmrol their members·
behaviors to be effective and attain thcir goals. Rolcs mid rules can be used to comrol
behavior in groups.
5. A role is a sel of behaViors or tasks that a person is expccll'd to perform by ,'irtue of
holdi ng a posit ion ina group or organization. Roles have rights and responsibi Iities
llnaehed to thcm. Role relationships are the ways in which group and organizational
members interacl wilh each olher 10 penorm their specific roles. Group members
acquire roles through role making and through role taking.
6. Wrinen rules spcrify behaviors thm are required of group members or are forbiddcn.
They also specify how pllrticular tasks should be performed.
7. Groups also control their members' behaviors by de"eloping and enforcing group
norms. Group norms arc shared expectations for behavior within ,\ group. There arc
three bases for conformity 10 group norms: compliance. idemification. and imer-
nalization.
8. To accomplish goals and perform at a high level. groups need both conformity to
and deviance from norms. Whether group norms result in high le\'els of group per-
formance depends on the extem 10 which group goals arc consistent with organiza-
tional goals. To facililate goal alignmcnt. group membcrs should benefit or be
rewarded whcn the group performs al a high level and contribules to the achieve-
mem of organizational goals.
9. Group Il1cmbe", learn roles. roles. and norms through the proccss of socialization.
Collective. fonnal. sequential. fixed. serial. and diveSliture soeializ<l1iont,lctics tend
to lead to an inst itutional ized role oricnlation. Individual. in rorrnal. random. variable.
disjunctive. and investiture socialization Iactics tend to lead to an individualized role
oriel1\alion.
350 PART 2 • GROUP AND TEAM PROCESSES
Exercises in Understanding and
Managing Organizational Behavior
Questions for Review
1. At what st:lge in the five-stage model of group
development might groups exert the ,nost control
over their members· behaviurs?
2, Do must mcmbcrs of an organization ,,"'ant to work
in teams'! Why or why not?
J, [n whm situations might the advamages of large
group size olllweigh the disadvantages'!
4. [n what kinds of situations might it bc especially
important to have heterogeneous groups?
5, Why are roles an importa'lt means of controlling
group members'lx:haviurs in self.managed wurk
teams?
OB: Increasing Self-Awareness
Analyzing a "Real" Group
Choose a work group featured in a lelevision series (e,g ..
Gmy's AI/(I(omy, 80.1"1011 &g(ll, CSf Miami, CSI Ne'" York.
Nllmber.\', Critlliu(lf MiHlI.~,lIo/lsl').For Ihe group you have
chosen. answer these questions:
I, [s this a formal or an informal group? What kind
of formal or informal group is it'1
2, What stage of del'elopment is this group at accord-
ing to the f,ve-stage mooel uf gruup development?
J, What can you say about the size, composition.
function, and status of this group?
4, Whal are the roles and role relalionships in this
group?
6, Why do groups need rules?
7, How are ndes lh~,t specify how to perfonn a pM-
licular task developed'!
8, Why might a group keep following a dysfunc-
tional norm or a norm that prevents the group from
achieving its goals?
9, Do all groups socialize their members'! Do ~lll
groups need to socialize their membcrs'? Why or
why not?
10, Is socializalion ever completely finished, or is it an
ungoing process'!
5, What rights and responsibilities are anaehed to
each rule in the group?
6, What rules docs this group usc to coll1rol its mem-
bcrs' bchaviors?
7, What norms docs this group use to conlrol its
members' behaviors?
8. How docs the group react 10 deviance from its
norms?
9, Do any memlx:rs of this group have idiosyncrasy
credit?
 CHAPTER to • THE NATURE Of WORK GROUPS AND TEAMS 3S1

A Question of Ethics
In many organizations, some groups of employees typically have higher status than others.
And sometimes the groups with the lower status feci that they arc not appreciated and are
"sceond-class citizens." For cxamplc, in hospitals. physicians gcncrally havc higher sta\l,lS
than nurses; in univcrsities, faculty typically havc highcr status than staff: and in hiw finns,
partners have higher status than attorneys who arc not partners and paralegals.

Questions
I. Think about the ethical implications of these kinds of status differences in
organ izat iOILs.
2. To what cxtent should groups with diffcrent Sl,I\I,lS ill an organization be treatcd
lhffen::ntly, ,md to what extcnt should they n:ccil'c equal trcatment'! Why'!

Small Group Break-Out Exercise

Encouraging Dissenting Views
Form groups of thR'C or four people, and appoim one nlC"mber as the spokesperson who
will communicatc your conclusions to the rest of The class,
I. Takc a fcw minutcs to think aboUT groups That you werc a member of in which
there was a high level of conformity to group norms.
2. Think about how someone who openly disagreed with the majority would fed and
be treated in thcsc groups.
3. Take turns describing these groups and thc bascs for confonnity in Them. And then
discuss how deviants would likely be treated in these groups.
4. As a group. come up with ways Ihat groups in which conformity is emphasized at
thc expensc of dcviance can cneouragc group mcmbers to express dissenting
VICWS.

Topic for Debate

Groups arc the basic building blocks of organization.s. Now that you have a good under-
standing of thc na\l,lre and types of groups and how groups control and socializc thcir
mcmbers, dcbate the folloWing issuc.
Team A. In most organizations. an institutionalized role oriemation is more desirable
than an individualized role orientation.
Team B. In most organizations, an individuahzcd role oricntation is more desirable
than an institlllionalized role orientation.

Experiential Exercise
Developing Roles. Rules. and Norms

Objective
Your objcct;I'e is to ga in expericnee in del'cloping roles, rules. and norms 1hat contribute 10
group eni:t:til"cncss.

Procedure
The <.:lass divides into groups of three to livc people. and eaeh group appoints one member
as spokcsperson, to present the gmup's findings to the whole class. Here is The scenario.
352 PART 2 • GROUP AND TEAM PROCESSES

Assume the role of a group of jazz musicians who rel'emly started pl.'rforming
togelher. Each member of the group has had >ome individual success as a musician 111ld
hopes that the group will become a top-perforrningjaa ensemble. The irnnK~late goals of
the group are to devclop a repertoire of pieces that showcase each member's individual
strengths and display the energy. vitalitY.:lIld ereativily of the group as a whole; to playas
many gigs as possible 111 bars aod clubs within a SOO-mile radius of home: and to start mak-
ing conlaets with recording companies. The group's long-range goal is to be a nationally
visible and succes~ful jazz group with a major-label recording COll1r.lct.
The group has goncn togethcr and played several timcs both with and withoO! an audi-
ence present and thinks it has what it takes to "make it big:' The group realizes. however.
thaI it needs to get its act together to meC! both its short- and long-range goals.
I. What roles should the musicians dcvelop to help al,hieve group goals?
2. What rules should the musicians develop to help achieve group goals?
3, What norms should the musicians develop to help achieve group goals?
4, What steps should the musicians take to help ensure that the group has the right
balallce of cOllformity and dcvianee"!
When your group has allswered those questions, the spokespc'"'ion will deS\:ribe to the
rest of the class the roles. rules. and norms that your group thinks will help the jazz group
achieve its goals. The spokesperson also will discuss the steps group members think should
be takell 10 help ensure that the jazz group has the right balallcc of nlllformity and
deviallee.

New York Times Cases in the News

~!II' ~rlu York i!!imrs

"Firefighters Gone Vegan? Even Austin Is Impressed,"
IIr f). 1IIIIIIIell/hal. nil' Nt,,,, Yurk Time!>', March 26. 2006. Sediull I. p. /4,

AUSTIN. Tex-llK' image of bij! bm\O:uy
firefighters devouring planers of four-
alann chill, siZ7.lin~ st("aks and doubk
cheeseburgers is as much a pan of
firdlOtlsc 101\: 'L< bmss fire poles and hemic
D:Jhn'l\ians.
"They're dinos<lUrs, they're big rllC"nl
ealers:' said Jo,;cph T. IkmanllO Jr" u for-
mer New York City firefighler and tile
author of "111c Firehouse Grilling Cook-
1Joot:" (Broadw<ly Books. 1998).
Hut nolllen:.
In this health·eonscious state capital
sometime~ ('alled the People's RepubliC"
of Austin. maverick behavior is nothing
oul of Ihe ordinary. Hut when Jimmy
John's. the local s,mdwieh joint. names
a ,andwi('h after you, "Ihe Engin(' 2
Veggie Sandwich": when People for
tile Ethieal Treatment of Animals
gives you an <lw<Ud for "Animal-Friendly
Firehouse of the Year"; and when
people call out 10 passing life trucks,
"Are y'all tile v('gansr even Au,tin is
taking notice.
The fi,'e fireflglller, of Team C at
Firehouse 2-Rip Esselsl}'n. James Rae.
Mall Moore. [X'rid Zwcmenwn and
SC-O{{ Walters-now cat '·egan. laking
lurns Whipping up p]ant-baS<.'d far,- like
meatless and c-heese-less pilla. pa,ta pri-
mavem and spinach enl'hiladas.
It did not happen bec-ause tlley shared
a lo"e of ,prouts.
t\ R)ulinc ehoblerol test left Sp<Xial-
ist Rae, 37, shaken. The Arnerie:m He<lrt
Assoeialion rJnks anyone with a level
of 2.tO or more high risk: Spe'Cialist R'le's
hil J4.I
"1 was floored, scared:' he said... [
Ilad no due."
All Wt one of his m<lle relatives h<ld
sun'umlled 10 lIean diseasc- by age 59,
Specialist Rae's f<llher, the sole survi"or,
Ilad a llean auac-k and tllen Iriple bypass
surgery in his mid·50·s.
Th(' team's nutntlOn guru ('amC
to his aid. Firefighter Esselslyn. 43 ;1
professional triilthlet(" for a de('adc
before joining the depanll1em 111
1997, was living proof that meat WaS
not necessary for hard work and
endurance. He be('mlle a vegetarian in
t986 and a "egan in 2002. He
persuaded the group to rally around
Specialist Rae and stan cooking "egan
dishes.
Firefighter Essclstyn knew IhrouGh
his father's work that it strict veg'1I1 diet
would help. His father. Dr. Caldwell II.
Essclstyn Jr" had been a general surgeon
at lhe (Ie,·dand Clinie and still mlK!ucts
resc:m;h there.
I)r. E"er'lyn', t2-year Iriill with
patients with what looked like terminal
lIeart disease showed that a very-Iow-
fat, plant-based diet wilh eholcslCrol·
lowering medic-inc muld bring .,triking
Improvement.
 CHAPTER 10 • THE NATURE Of WORK GROUPS AND TEAMS 353

Helin disease "nev{'f net:d exist:'
Dr. Es><:l,tyn >:lid. but if it docs. ··It 11C"er
need progr..::ss:·
His son l';led another reason for
Improving Specialist Rae's ocallh.
"J. R. oc..:aolC more of a liability than an
asset 10 us:' firefighter Esselstyn said.
gbl1l'ing at hi, p,mner with a half-smile,
"00 I want a guy wilh a bad ticker dmg-
ging nlC outT"
Illll while Speci"lisl Rae adhen:d to lhe
diet at the firehou'iC·. hc Was not a, 'triet
oUlside. He occame wh"t hc calls "
lkxitarian. 'OI1ll"~1C who olx'a,ionaJly cats
meal or fish. Wocn that did tlOl lower his
cholesk'rol enouJ;h. hc swikhcd to the
vegan diel bascd on fruils. vegetables.
whok grain, and kgumc.s. Now. hc said.
hi, cholesterol is under 200. and oc calls
thc "'ay IJC e"ts "a "ay of lif,'."'
While Te;un C cats "cgan at work-
ea,'h Illan SIIl~lS alld "..,oks dinner t",ice a
montll-Ille othcr two nlCmocrs. Lieute-
nant Walters and Fireflghler Zwememan.
are nOl always such purists nt home.
AI a recent pany l'alerN! by a Imrhccuc
reslllumnt. Firefighter Zwememan did 1101
,til'k 10 just the beam, a mistake he later
realized.
"The next nighl I was paying f", il." be
s<lid, "I fclt son of the way ( did after my
first couple of tofu dinners. which didn'l
go", well eitocr.But now I'm 011C oflhe
"'eimos like ,·'.-er)'lxldy ('[><:."
For the olocr 10 men in Firehousc 2.
the "eJ;an diet has nol gonl' down so
easily. (nside Ihe f=zer are a bag of
ehccs.:burJ;ers. FrcrK'h fril'S alld a package
of hcef next to "eJ;an offerings. One
firefiJ;hk'r ewn pUI up pmvocati"e posters
on the ,,';t1ls including on..:: Ih"t re"ds.
'"B<,... f. h's What's fm DimlCr."
Firefighler Esselslyn and the olilers
shrug it off.
"Seventy percent of our calls arc
medical." he ,aid. "'Every day we ,ee
the ravages of people e,lting to their
hean', "omenl." If nOl for Spec'iali,t
Rae's cholesterol. he said ··there would
have heen someone el,e. ,omeone
prediabelie or obese who would have
prompted us."
To reach the public. Team C has a Web
,ite - "''' w....ngull· ~ ,()f~ - Wilh glKlfy pic'-
wres of the men posing wilh fruits and
""J;etahlcs. campy hiographic", health
links. and recipes like Paul McCanney's
cnl·hilada,. lOnilla pic and Station 2's
awanl-winning wraps.
Ewn lhe flrchllU'C carnivorc's ocnefit
from the "egan cookery, routinely
,can'''J;ing leflowrs. A~ £d"'am Rod. a
dri"er on the B ~hifl. admitted. "They
ta'te gOlld."

Questions for Discussion

I. What prompted members of Team C to change their die Is?
2. What norms did Te<lm C develop and why do some members follow Ihem?
3. How mIght followmg these norms affetttheir job performance'!
4. Do you Ihink the members of Team C would have been able to adopt a hean-healthy diet
wilhout the suppon of their temn? Why or why l1ot'!

<EliI'· ~rt1J !1ork €lUttS

"Coke's Board to Get Bonus or Nothing"
By F. Nom'I. lhe New YOI'k limn, Apri/6. 2(}()(j./'/J, 1.2.

'l1JC The Cocu-Coia Company annourll"l'll
"n iml0v<llive pl"l1 yeslerday for Pilying
outside directors, If eamin!>, per share do
nOI rise fast enough over it thrc...,-year
pcri<ld. dire.:tors will rcc,,-,iyc nOlhing. But
they will get a signilic'lI1l ro,ise if e,lmings
p"rform <ls expe.:ted.
While m"ny eot1lpanies give din:<:too<
all '" p,ut of their pay in ,tod or slod
options. Coca·Cola app"ars to be toc liN
to hm'e <ldopted a plan th<ll "'ould pmvidl'
nOlhing if the company did not perfonn
well.
The idea was enthusiastically sup.
poned by Warren E, Buffett. III<.' dUlinruUl
of Berhhire l-lathawa)' and a Coca·Cola
direelor who is ,It'pping down from the
hoard and will nOI oc eligible for the
payments. Bllt it ,,111 into critici,m fmm
corpomle go\,e"1:01ee experts who e.\-
pressed fear thai direl"lors <"<lUld fac'e
crm11iets oj imeresl.
"We've "-'en all ,,,,ts of pmhkm, with
m,m'lgetncnls m:'nipul,lting e<lrnings to
receive im'enlil'c' payml·nl'." said Paul
Hodgson of Ihe COrporale Library. a
R,s.:an-h firm ,pceializinJ; in g,,,"em:lI1ce
issues. "'If the audit eomminee is also
f(K'II,ed on achieving earnings tmgets in
order 10 rec:ei"" its l'OmpcnsiIlion. lhen you
have the pOIential for them to Ix: less lhan
assiduolls "I delccling polential problems
in linaneial rcpll"ling."
Mr, Buffel. in a telephone interview.
discounled such fears. "I e'II1't think of
anYlhing else Ihat more direclly aligns
diredor interests with ,harclloldl't inter-
esl.<·lIe ",id, "'As a sh-1reholdcr.llovc il:'
&'rk,hire is Coke 's laI~e'l shareholder.
Mr. Buffett said lhe lhrcc')'C<1r period
would l'ncOUTaJ;e Ix,ard ml'moc'r, 1o
think of long·term interests. ,Illd he
dismi~,ed lhe idea of pa)'ing dirN'lors
pim of their compensation in stock, "If
,omebody J;et~ SI50.000 in ,tod For a
fee "nd thc stock goes down 20 peR:ent.
thcy ,till J;Cl S120.coo." he sai<l. "'I <10 not
think the shareholders inlerests arc
aligned theR'." He declined to say if he
had proposed the ide" 10 the Coke board.
Brian Foky. whose firm advises
cotHpanies on compen.<ation. respon<lc<J
c'r1tllusia,li,,"111 y 10 the Coke pi"n. ,ayinJ;.
'This i, a board that will have its feel in
354 PART 2 • GROUP AND TEAM PROCESSES

th" fire, differ.::nt from ju,t aboul any
other Ix>ard that I can Ihink oe
But 'tfter further though!. Mr, Foley
amcnded lhat opinion. "AI f",t blu.,h,
one ",anlS to applaud:' he said. ··At
second blush. one he,itates. It do,,, hm'e
some pote1l1ial dynamics that could be
a",k"'ard. Maybe th<.'y g,·t a B+:·
··It is unlikely to catch on in a big
way:· said ....k Hodg'on. adding thai he
thoughl Ihat most directors would walll
10 Ix, Sure of being paid at least some f'>e
10 compens;l1e them for Ihcir time.
Co':a-Cola in th,' past has paid its
outside directors a fcc of 5125.000;,
yi'ar. part in stoc·k and p,ut in cash. with
;Idditional paymentS for those ",ho
S<'rvcd uri board cm"mill,·es. Th,· n"W
plan would j;ive Ihem S175.ooo in stock
ea,·h year. with no nt", p"yrnenlS. Owr
a three,year period. e;lCh director would
tee"ive additional shm...·s as if he· or she
had rci""ested diviUends.
In the Ihird year. if i'amings per ,hare
arc 25.97 perccrll hij;her Ih;lnthcy were
in the basc year-a eompouml rat" of
8 percenl a year-then the direClor will
receive the' value oflhe stoc'k in ca,h at
the market prke thell. But if earnings per
share are lower than thaI. directors will
forfeit the 'hares and have worked that
year for nothing.
Thi, means thai direoors in 2C06 will
keep their shares only If 2008 C<lrnlngs
exc·eed S2.73 a ,hare. compared wilh
$2,17 in 2005. Those figures arc after
adjusting f", ,,·rtaill ullo.,ual iterm. the
company said.
t\t any gi"en lime. a direclor would
have three such plans at slakc. 11 is
C<lIlCei"able that directors m year--cnd
"'ould have an incenti'·e to bolsler eamings
to cnsure that the lalj;et waS mel. But if that
)"C"r"s \;'lj;C1 ,,,,, ;llre;K!y j;oing 10 be !nel-
or was unreachablc-they could ha'-e an
incelltive to ddly addilional profil to the
following year. in hop<.' thai thi, would help
mecllhe following )"Car's wlj;et.
Mr. Buffett, "ho has ser'·ed On Ihe
Coke board since 1989 hut ("hose Il<ll 10
seck re-election ,,1 the ,mnual mecling on
April 19. said that did not con,·("rn him.
"I don'l know about other companies,"
he said, ·'hut I ,·an assure )'ou that at
Coke nobody is going 10 be linkerinj;
",ith earnings. H isn't going 10 happen."
Yet Lynn Turner,,, man'lginj; di =tor
of Glas,. L("wis. a ,·orpomte ad,·isory
linn. and a former chief accoullt;,1It Ilt the
Sc"uritie' 'Illd Eu·hang" Commission,
noted that lasl year the S.E.c. issued a
,·,·a"'-and-desisl order barring Co("a-
Cola from viola1inj; ;lCcounling ruics.
TIlC commission said lhe company had
manipulated ""rninj;s from 1997101999
through "channel >Iuffing" by offering
generous credit terms at th.:: ends of
<juarters to per,uade Japane>c di,tributors
10 buy lIIore Coca·Cola concentrate than
lhey n<."Cdcd. thus raising ",rrnings.
The l"Ommission said thai without the
("hanncl stuffing the ,'",npany "'ould
haw 'nissc<1 earnings fore("asts in 8 of the
12 <juarters in thai period. The S.E.C.
said that while that a("l"Ountinj; Ireauncnt
"'as legal. Co.x:a-Col" violated "-'curilies
laws by nOl disclosing the channel
,tuffmg and ilS eff,'Ct on profits,
'·1 think you havoc to be careful aboul the
incentives you gi\"C peopic:' Mr. Turner
said. '·I"d be less ncrw)US if they said. ·You
cannot cash out until the end of 10 years. or
when you I("a,", the board'" That. he said.
would reduce the possible gain from
manipulating eamings in anyone year
In the late 1991J"s, Coca-Cola w"s
promising inveslors that its carnings per
share would rise ,It an annual rate of
15 PC"'("IJt 10 20 percent. In 1998, while
the S.Le. S<lid the eamings were uKreascd
by ,·ha,mel stuffing, Coke's ,h,u"" ",ac·h<.-d
a record hij;h of 588.94. and Coca-Cola
wa, Seen by many in\'<',to" as a gro",th
compan)'.
Bul the s!<,.,..k pri"e fC'11 'harply as
earnings pro'·ed dis'lppointinj; in laler
yems. and ItS current target is earnings
growth of about 7 percent 10 9 perc·ent a
year, Yesterd'ly.thc slock f.::1i 13 ("entS.IO
54195.
James D. Robinson 11I.lhe chainnan
of lh(" Coke board's ("ommiUee on ,·or-
pontiC govemance. s"id in an lnterview
that the board had ampk' prot,..:tion, in
place to prevent earnings manipulmion.
adding'
'·1 am nOl worried about the board all
of a sudd"n be,·orning corrupt to gCI a
$ 175.000 payOUl. 11·S ridil"ulous:'
He 'aid lhat lhe board might gi\'<' a
$175.000 "signinj; bonus'· 10 " new
direl'!or whos<o finan("ial condition
would nOl ;llIow him or her to work for
lIothing. Bul payout> after thai would
be based on the same fonnul" as for
oth,'r d iredo".
Mr. Hodgson of the Corpor~lC Libr~l)·
said he ""as also eOt",cmcd lhal direclors
mighl fae<: a ("onnkl if confmnled with a
[X",ible mager Ih"l would di'press
earnings for a few years but that held
the [X)tenti"llo be of j;reat '·alue in ~IC long
run.
Mr, Robinson S<lid th"t III such a",,,,...
··if it makes the most sen"" for the com-
pany 10 do Ihe acquisition. we will do the
aequisilion,'·
Mr. Hodgson. whIle erilical of the
Ct"'a-Cola plan. "ddcd. ··1 am not phil,>-
>ophlcally agamst incenli'·e plans for
direl"lors, but I think they need 10 Ix'
designed with more of an e)'e 10 long,
lerm 'tmtegy th"n this,"
Mr. Robinson s"id the board h"d
,·on,idcred mh("r gaug("s. like s!<",k prin'
perform,uKe, for dclennin 1Ill! the paYOUt.
but "'jccl("d th("m bC'cause ,hare pri,·e,
("ou ld rise or f,,11 as " piece of Ihe o\"Crall
markcI as well as be,·ause of a eompany's
performance.
"Thc onc thing the ,·ompany ,'an
deliver is earnings "nd earnings per
share:· h(" said. and th"t made il thc·
appropriate mea<ure.

Questions for Discussion

1. What norms is Coca-Cola lrying 10 j;e!s ii, Boord of Dire("tors 10 adOpl by its new in("en-
Ii".. . compensalion plan?
2. How might these normS be fOn<:tional for Coca-Cola?
3. Is lhcre allY pOlential for lhis ilICenlive plan 10 lead 10 the d......clopment of dysfunclional
norms."
4. Is lhere any polential for lhis in("emivc pktn 10 lead the BO'lrd 10 develop norms and
behavc in ways Ihat are queslionable on elhieal grounds? Why or why nol?
 PAR T 2
CHAPTER Group and Team Processes

EFFECTIVE WORK GROUPS

AND TEAMS

OVERVIEW

SOCIAL LOAt"ING: A "ROIlLUl IN GROUP MOTIVATION ANI) l't;Ht"ORMANCt:

How GROUP TASKS AFHll-"T GHOUl' PERHlRMANCE

GIWUI' COItf-SIVl:rlESS ANLl GROUP 1't:IU'OltMANn:

bIl'ORTA!'>T OR(;ANIZATlONAL GROUI'S

SUMMAR\'

OR(;ANIZATION,\L Ih:IIA\'IOR IN ACTION

Learning Objectives
After studying this chapter, you should be able to:
Describe the sources of process losses and gains and understand how they
affect group or team potential performance.
Understand how social loafing (an occur in groups and the steps that can
be taken to prevent it.
Differentiate between three forms of task interdependence and discuss
the team performance implications associated with them.
Understand the ways in which a group's cohesiveness affects its
performance and explain which level of cohesiveness results in the
highest team performance.
Describe the nature of four important kinds of groups in organizations
and how and why they help an organization achieve its goals.
 Opening Case
WHY MICROSOFf'S MEASUREMENT SYSTEM LED TO
PROBLEMS WITH GROUP PERFORMANCE
What's hurting group performance?

rom the beginning, Microsoft organized its software engineers into small
work groups and teams so that team members could cooperate, and learn
from and help each other, and so speed the development of innovative
software. Each team works on a subset of the thousands of programs that
together make up its Windows operating system and applications software
that is loaded on over 90 percent of pes today.l
In the past, much of Microsoft's reward system was based on
team performance; employees of successful teams that quickly
developed innovative software received valuable stock options and
other benefits. Microsoft's team-based reward system encouraged
team members to work together intensively and cooperate to meet
team goals. At the same time, the contributions of exceptional team
members were recognized; these individuals received rewards such
as promotion to become the managers or leaders of new teams as
the company grew. This reward system resulted in a continuous
series of improved Windows operating and applications software
such as Windows 95,98,2000, XP, and its Office, Money, and
Internet Explorer suites.
In 2006, however, Microsoft ran into serious problems with the
development of Vista, its newest operating system. Vista had been
scheduled to come out in the summer of 2006, but unforeseen
delays had put the project six months behind schedule and a
Spring 2007 launch was now planned. Some anal~ts believed it
might even be later than that, and they blamed the delays on
Microsoft's current reward system that, because it was primarily
When people wor~ in tcanJs. care nJust be based on individual performance contributions, was hurting team
taken to recognize both their pcrfonna",."e as performance.
ill(\ividuab and as a tcam: othctw;:;c many As Microsoft has grown over time (it now employs over
problems can ari:;c, as happened lit Mi<'r<Jsoft. 60,000 people) it has developed a rigid performance-evaluation
system that is increasingly based on evaluating individual
performance. The manager of each team is expected to rate the
performance of each team member on a scale of 2.5, 3.0, and so on to 5,
the highest individual performance rating. Microsoft adopted this system
to try to increase the perceived fairness of its evaluation system; however,
employees still work principally in teams and the emphasis on individual
performance hurts the way members of each team treat each other. For
example, team members are aware that they are in competition for the
highest ratings and so when confronted with a situation when they could
help other team members-but this might hurt their own personal
performance evaluations-they behave self-interestedly, and this hurts
overall team performance, Moreover, Microsoft is highly secretive about
employees sharing information about their performance evaluations,
current salaries, and the raises they receive. Indeed, employees are told
not to share such information and can get fired if they share information,l
To make matters worse, the way these evaluations get made by team
managers is also regarded as highly secretive. And, employees believe that
 CHAPTER 1t • EFFEGIVE WORK GROUPS AND TEAMS 357

when the managers of different teams meet together to discuss which teams
(as a unit) have achieved the highest level of performance, team evaluations
are distorted by favoritism. The managers of the team leaders are felt to be
influenced by how much a particular team leader supports him or her, so
that personal assessments of the performance of each team leader and thus
each team are biased by personal likes and dislikes. In other words, the
periormance-evaluation system has come to be seen as highly political,
meaning that increasingly each employee and each team perceives it is not
being fairly evaluated-objectively by the results achieved-but by the
ability of an employee or team leader to Nmake the right pitch Nto their
respective bosses. So, team members are increasingly pursuing their own
interests at the expense of others. 1
One team member, for example, commented that although she had
received awards for good work, low performance evaluations from her
current team leader had prevented her from moving to a new, more
cohesive, and less political team. As you can imagine, when team members
do not feel their personal performance contributions are being recognized,
and that team leaders are manipulating performance ratings for their own
personal ends, teamwork does little to increase company periormance.
The performance gains that can be obtained from intensive cooperative
interactions between employees are lost and team performance may
decline if employees start to compete or pursue their own interests. 4
Indeed, many of Microsoft's best software engineers have left to join rivals
like Google and Yahoo! as a result of their failure to achieve the recognition
they think they deserve at Microsoft. s Clearly, when people work in teams,
each team member's individual contribution to the team and each team's
contribution to achieving the goals of the organization must be fairly
evaluated. And this is no easy thing to do.

Overview
In Ch~pter 10. we discuss the twturc of work groups. how they control their members'
behavior. and how they socialize newcomers to eOHlriblile 10 the alt~inment of group and
organi7.ational goals. In this chapter. we cominuc our ~tudy of work groups and focus on
what makes groups like the teum~ used m Hickory Springs intd Levi's work effectively or
1101. Recall from the last chapter that ell'e<:tive work groups perform at a high level and help
an organization achieve its goals.
Numerou~ factors dctermine how effective a work group is :Ind how wcll its mcmbers
walt together. In fact. the group char~cteri~tics we discussed in Chapter 10. the wuy~ that
gmups cOlllroltheir members, and the sociali7.ation process all have the potential to influ-
ence how effective a work gmup is. In this chapter. we build on this foundation and exam-
ine why and under whm conditions groups can be Illorc than the sum of their parts and
thereby help un organiz'llion perfonn at a high level. We also examine the factors that can
lead to problems in groups and can contribute to poor group <lnd organizational penor-
mlmce, like the problems Levi Strauss experienced. Finally. we examine four important
types of work groups in detail: top mmmgemem teams. self~Illanaged work teams. research
and developmentteums. and viTiualtearns. By the end of this chapter, you will have a good
understanding of what makes work groups eHecti\'e in organizations.
358 PART 2 • GROUP AND TEAM PROCESSES
POTENTIAL
PERFORMANCE
11lc hi~IIC'l bel of perfonnut1<:e
thai a sroup i, c3f"lblc of
,..:hicving ul 3 gi,-cn point in
h'llC,
PROCESS LOSSES
Perfomlancc diflkultic, that a
group c,periencc' l>r<;au'>C 01
..,lOf'di"JllOn ~nd nlOl"a1l(l"
probICll"_
Process Losses, Process Gains, and Group
Effectiveness
EITe<:tivc work groll[)S COlllriOOte 10 the anainment of organizational goals by providing the
organizallOn wilh important outputs. The oUtpulS nught be finishcd produCIS. such as
corrcdly typed rcports and high-lJuality automobiles. or less tangible but no Ies, important
outputs. such as satisfied customer; and patients. Desired outputs also include behaviors not
related to a group's specific tasks. These behaviors inclu(~ protllptly reponing broken-down
machinery, suggcsting ways of improving work processes. going oul of one's w"y 10 help
customers. helping group members when they are under pressure. and other forms of org'U1i-
71uional citizenship behavior (see Chapler 3). As you will learn in this chapter. elTective work
groups perform at the highest level possible by minimizing performance difficulties or
process losses. Mo!t.-over. eITective work groups itlcre"se their polenlial pcrfonnanee over
time by achieving process gains. or linding bellcr ways 10 work.
Potential Performance
Managers strive to have groups perform at the highest level possible, which is called a
group's potential perlnrmant"('.6 Although potential performanee is important because it
reflects a work group's capabilities. it is often ditlicult to know in advance and can change
as eondilions change, When Japanese e;lr companies such as Tuyola were experimenting
with ways to improve the productivity of groups of assembly-line employees. one innova-
tive approach they took was to continually increase groups" eXpC<:ted or potential perfor-
milnCC levels. Re~t1izing that the Cilpabilities of groups are often untlerestimated. Jilpanese
m:magers strove 10 push gruups to produce up to their true potenlials.
In order for an ol'<lanization to achieve its goals. managers and work groups need to
strive to ensure thm a group's (jell/ol performancc comes ilS close ilS possible to its
pOlem;a/ perfOrJnilnce. 111 milny situations. however. a group's aClUal performance falls
shon of ils potential perfuml:mce, even though the group is capable of achieving its poten-
tial. To see what this can mean for an organization. nmsider the following situ<t1ion.
A group of six salesmen stalT the men's clothing department in a small. cxclusive depan-
ment store. This group is fully capable of providing excellent customer scrvice. keeping
the tlepanment clean and tle'll. and stocking and restocking merchantllsc in a limely f<lsh-
ion. Recently. however. the group's actual perfomlance has fallen below its potential per-
fornmnce. Customers wishing to return merchandise arc oftcn kept waiting unnecessarily.
and counters and dressing rooms arc oftell cluttered with clothes. Why is the actual perfor-
mance of this group below its potential perfoffiwnce. and what can the store's management
do to remedy it'!
Process Losses and Performance
Research has shown that process losses-perfomwnce ditlieulties that a group e,peri-
enees because of coordimlitOn and motivation problems-are an imponant faclor when a
group's actual performance falls shon of its potential performance. 7 Courdination prob-
lems occur when the organization's activities arc divided among the group'" members and
their inputs arc subselJucntly combined into a product or OUtput. At Levi Strauss. for e,am-
pic. the move 10 make groups of workers jointly responsible for assembling compJcle pairs
of jeans resulted in major problems of couperation between group members. Exhibit 11.1
depicts the relationship between actual and potential performance and process losses (the
exhibit also includes process gains. which we discuss in the next section).
The group of six S:lleSlllen described earlier experienced a coordination problem when
they tried 10 keep the coutllers and dressing rooms clean and tidy. Often. when a salesman
knew that one of his customers was coming to the store. he selected some clothes he
thought the customer would like and displayed them on a counter or hung them in a dress-
ing room. At the same time. clothing remained on the cuunters and in the dressing rooms
from CUSWtllers who had already been served and left the store. Even though keeping
counters neat and restocking shelves were among their job rcsponsibilities. the salesmen
 CHAPTER 11 • EFFECTIVE WORK GROUPS AND TEAMS 359

EXHIBIT 11.1
Pro<... g~;".
The Relationship In< ... ~ ... on p"t.",,~1 pt,forrn~n<.
Between Actual and ,h~, '<oul, IT"", on. "'~Y' or m"t;"~riog
~nd ,,,,,.-dln."ng gr"up membe",
Potential Performance
Process Losses and
Process Gains
I
C~u,e p"te"".1 perf"rma"ce
,,, ''''''''S< <We.- "me
I
1\..... 1g"'up perf"""a..... Po....tial petfonn."ce P"""en_
The pe,forma"ce ~I The highest ~el of P"f",mance diff,wl"e,
attained I>y a gmup perf",mance a gr01JP tha' ..,ul, rrom ,,,o,dina",,,,
i, ,apable "f ach..vi"g and m",;".,i"" p",blem,
a' a g,,,,,n P"'''' In time

tended 10 avoid ltlese lash boxau,e they did not want to make the mi,lake of re,tocking
dottle, thai one of their co-employees had jusl picked oul for a cuSlomer. As a result of this
coordination problclll. cou Illers and dressing rooms wcre usual! y cJullcred.
The group's motivation problem revolved around processing relUmed clothing. All of
the group's members were equally responsible for processing returned clothing, yet cus-
lomers wishing 10 return an item were often kept waiting cven though several of the sales-
men appeared to be available to wait on lhcm. Because thc salesmen rcceivcd no commis-
sion for proccssing returns and disliked all the paperwork involved, each one of thcm
would walt a II1l1lute or lWO before \'olunlt'Cring to help a cuslomer WIth a return m the
hope that onc of his colleagues would handle the transaction.
To meet the chalkngc of cnsuring thai a group's actual performancc equals its
potential performance. managers must try to eliminate as rnany process losses as possi-
ble. The manager of the men's clothing department elimin.l1ed the coordination problem
by designating one counter and one dressing room to be used for displaying clothes fnr
particular customers and by instructing :111 salesmen to restock the c101hes they had
selecled once they were finished helping their customers. In addition. all salesmen were
explicitly inslrucled 10 reslock c1othl.'s 011 the rernaming counterS nnd in the other dress-
ing rooms whenever they saw them. The manager solved the motivation problem by
keeping tmck of the returns thm each salesman processed. Once the salesmen knew thm
their returns were being tracked. CUStOmCrs were never again kept waiting. Sometimes
process losses can also arise from inlerpcrsonnl difficulties among group members. like
those that ensued in the Levi's factory when employees started to blame one another for
their pay falling.

Process Gains and Performance

In addition to eliminating process losscs that prevent a group fmm performing up to its
potential. managers also need to increase a group's potential performance. To increase
the effectiveness of a work group. managers need to identify ways to improve the
PROCESS GAINS grollp'S mmivation and coordinatinll to achieve pn)Ccss gaill.~-increases in pOlelllial
locre~"." in poI~ntiaJ JI"rl<>rm= performance thm resu It from new ways of motival ing and coordi nati ng group members.~
Ihm ",'ull from "'...-"'3}:; of (Sec Exhibil 11.1.) The Japanese managers experirl1ell1illg with ways to cOlltinuously
!lK~"~I;!lg ouK! nM)fd;!l~lmg group
member".
improve group performance 111 aUlomoblle <lssernbly-line senings were searchmg for
process gains: new and better ways to coordinate alld motivate employees to raise levels
of potemial performance. Process gains can lead to groups being more creative and
coming up with innovative solutions to problems.'"
The manager of the men's clothing department successfully elimillated process losses.
for example. so that the department IlO longer was sloppy and returns were handled em-
cielllly. But the managcr believed the saksmen's potential performance could still he'
360 PART 2 • GROUP AND TEAM PROCESSES

higher. He thought thm if group members pooled their skill, and abilities, they could cre:He
new kinds of attractive merchandise displays that would boost sales. To achieve this
process gain (and raise the group's potentialle\'el of penunnance). the manager needt-d tU
raise the group's motivation.
Togethcr. the ,turc manager and all of the dcpanmelll ll1anagcrs devised a strategy to
achieve process gains by increasing the motivation of the groups throughout the store: The
store manager <lrmuunl'ed a quarterly cumpetition among the groups uf salespeople frum
the differellt departments for the most innovative and allraclive merchandise display.
Winning groups would have thcir picture displayed in the cmploycc lunchroom. and cach
member of the winning group would receive a $75 gift certificate for store merchandise,
This strategy wurked. the quality of merchandise displays increased dramatically in mallY
of the dep,artments. am] the salespeople enjoyed their new challenge.
Sometimes. process gains can bc achieved by encouraging group members to be
more creat i\'e and will ing to take risks. 10 Corporate fi nanee depart melllS. for esample.
arc not usually known for then willingness to take risks. but many companies arc trYUlg
to change that. One company. Norte! Networks. spent over $15.000 On improvisational
comedy training for its finance staff mcmhers 10 cncouragc thcm to be creative and
think and act Iike a tC;lm. t t Nonel hired comedian Rob Nickerson. an independent con-
tractor with the renowned Second City comedy group.t2 whose roster of alumni
includes Bill Murray and John Bclushi. During the training. staff members were
cncouraged to work as a team to dcvelop creative stories or monologues. perform in
front of each other. t<lke risks. and think quickly onlheir feel. As f"lancial an:llyst lAIri
Ozaki plltS it. "You can't help but be nervous ... But yuu get through it: you have to.
because your team is dcpending on you. You realize that if you ,Kt a fool and I act a
fool. we arc all foolish together and you arc Ilot alone. If we can support cach other
onMage like that. doing it in the office should be easy... t3 Second City provides over 500
training workshops a year to companies such as AT&T. Motorola. Kraft Fuods. and
Accenture to hc.lp them promote teamwork throughout their organizations. 14 Another
example of the importance of securing group cooperation. this lime in a rock hand. is
profiled in the following OB Today.
Rock bands are big business and many famous groups ircquemly fall out <lnd their per-
formance drops as their creative powcrs wane-other examples include Thc Beatles. Pink
Floyd. and Slecly Dan. On the other hand some rock bands arc famous for the long-term
cooperation tlwt has led to continual process gains such as Aerosmith and The Eagles.
whose cohesh'eness over time has pmd big performance dividends.

Depending on the mOlivation of

team members. either p"x:e"
lwins or losses e~1I1 rc~olt when
people intcr:ll'l together to gd
the job done. :IS ina game of
tug-of-war.
 CHAPTER 11· EFFECTIVE WORK GROUPS AND TEAMS 361

OB Today
The Rolling Stones Learn to Play Together

The Rolling Stones have been one of the world's leading rock bands since the early 1960s
when they burst into the music scene as the· bad boys" of rock and roll. IS As with most
rock groups in those early days, they were an unproven product with no track record.
Desperate to sign recording contracts, the members of the original group worked inten-
sively together to raise their visibility; they performed scores of live concerts and spent
long hours in recording studios where Mid Jagger and Keith Richards, the band's two
major songwriters, composed the songs that have made them so famous. Their effort and
motivation paid off' The group became enormously successful and its members became
wealthy.
By the 1970s, however. the members of the group had fallen apart. One original
member, Brian Jones-who had been a leading member of the group-fell out with Jagger
and Richards as they all started to compete to be the" most famous" band member. After
Jones tragically died in a
swimming pool accident.
Jagger and Richards then
fell out and became dis-
tant from each other, in
part because of fights
about money, The Stones
had received a relatively
small percentage of the
profits their best-selling
records were generating;
nM they began to argue
about how the money
should be divided among
Sometimcs pn"xss g"ins c"n be achicwd b)' cncouraging group
group members, and how
mcmbers to coopenltc and be mon: willing 10 takc risks, This was the
npcTicnec of thc Rolhng Slones when f"ccd wilh til(' necd to m"kc much extra the writer of
their concen tours successful each hit song should
receive, This lack of coop-
eration resulted in the band's output of songs declining precipitously; also, no major tours
were organized, and new rock bands began to rep~ce the Stones in the public eye,
By the 1980s, the Stones realized the lack of cooperation and teamwork was costing
them millions of dollars in potential ne'W revenues from concert tours and record sales.
With the help of agents and concert promoters who worked to bring band members
together the situation began to change. The change began with the Steel Wheels Tour in
1989 when for the first time the Stones, working with a Canadian promoter named
Michael Cohl, took total control over all aspects of their tour. In the past, the Stones, like
most rock bands, put together a schedule of cities to tour They would then contact well-
known promoters in those cities to take responsibility for staging the concerts and sales of
tickets. The Stones would then receive a percentage of total concert revenues as their
payment; however, the promoters received over 60 percent of total revenUeS. I6
Cohl proposed that he would assume full responsibility for all 40-concert venues on
the Steel Wheels Tour and guaranteed the Stones S1 million per concert-a much higher
amount than they had ever received before. All the band members had to do was
362 PART 2 • GROUP AND TEAM PROCESSES

perform, and this would avoid the squabbling that took place when they had to make
group decisions, After they had played the first several venues it became clear to Cohl
that he was losing money on each one. To make the tour a success they would all have to
work together to lind new ways to cut costs and increase revenues
From this point on, each of the Stones became directly involved in every decision con-
cerning staging, music, advertising and promotion, and even the price of concert tickets-
which have shot up in eNery tour since Steel Wheels. The Stones faced a huge challenge to
learn how to make their concert tours profitable, but they persevered and step-by-step
have continued to refine and develop their approach in every subsequent tour
In the end, the Steel Wheels tour made over S260 million and the Stones made far
more than the $40 million they were promised. Since 1989, the Stones, have earned more
than $1.5 billion in revenues: about $500 million of these have come from royalties
earned on the sales of their records and songs. However, the incredible success of their
world tours generated the remaining $1 billion from the ticket sales, merchandising, and
company sponsorship money associated with their tours, such as their most recent tour,
the Bigger Bang tour that began in 2005. Their successful cooperation totally changed
their attitudes and behavior toward each other and when Mick Jagger and Keith Richards,
who are both now in their early 60s, were asked how long they planned to go on touring,
their answer was· until we drop." 17

In the next seclions. we e.\amine various aspects of groups that can influenCl': group
performance by increasing or deneasing process gains and losses. A manager's key obJec-
tives in creating and su·;taining highly effeclive work groups are to (I) eliminale process
losses by ensuring thalthe acwal performance of a group is as close as possible to potell-
lial performance <llId (2) cre,lte process gains by conlinually raising Ihe level of polential
performance. IS

Social Loafing: A Problem in Group

SOCIAL LOAFING
The lend"n,,)' of ;nJj,',dual,
10 nen Ie ,effon when they
....ork in a tll\1Up lhan .... hen
lhc~ ....ork alol'lC.
Motivation and Performance
In SOllie groups. any given individual's contribution to group pcrforrnnnCl': cannot be easily
recognized or Identified by other group members or by outsiders such as supervisors.
Consider a group of cuslOdiam; ....,ho arc jointly responsible for keeping the food court in
a busy shopping mall clean. The custodians arc not assigned to particular areas but instead
work together to pmrolthe whole food court. picking up trash and cleaning dirty l'lbles.
Because the custodians work logether. il is difficullto idemify Ihe performance of any
individual custodian. When individuals work in group> in whi('h individual performances
are IlOI readily obsen'able. there exists the potemial for sochll loaring-that is. the ten-
dency for people to exert less effon when they work in ,I group than when they work
alone. 19
Social loafmg ('an seriously impacl work-group effeniveness and lead 10 pnKess
losses: it occurs for two main reasons. First. rcrall from our discussions of learning and
mOlivation in e<lrlier chaptcrs that mOlivation. effort. and performancc tend 10 be highest
when oulcomes such as praise and pay are administered 10 employees conlingent Oil their
levels of individual performance. Because lhe custodians arc working in a group. and their
individual levels of performance cannot easily be idemified and evaluated by a supcrvisor.
the cuslodians realize that they will not receive positive outcomes (such as praise) for per-
forming at a high level or negalive oulcomes (such as a reprimand) for perk,mling at a low
1cvel.!O As a result of this lack of a connection between inpUls and outcomes. the custodi-
ans· motivation is lower than it would be if they wcre waiting separately. so they do not
exen as much effort.

SUCKER EFFECT
A COndiliQll in which >ot""
group mcmbe .... till! w;,hing to
be c"m;tlcw,J 'IK~C"', reduce
(bei. 0" n efJor1' wben the)' "'"
"lCialloofLng b} OIhe. gnKJp
mcmb< ... ,
CHAPTER 1 t • EFFECTIVE WORK GROUPS AND TEAMS 363
A second reason why social loafing oceurs is that cmployees who arc performing in
a group sometimes think tllal their own efforts arc Ullimportant or not really needed. This
belief lowers their ]evels of motiv:dioll. 21 For exmnplc. a ellstodiml might not clean olT
many tables wilen he works in a group because he thinks that his input is not really nec-
essary and thm some other mcmber of the group will clean the tables he misses. This
problem also arose in the earlier discussion about Levi's factory. as less·skilled workers
c.lme to rely on the efforts of the highest performers. Have you observed social loafing
when you were working on a group project for one of your classes'? Sometimes. one or
two studcms in a group do nO! do their share of the work, They think tllcy will receive
the same grade as everyone else in the group regllrdlcss of how much or little effort they
exert. or they may think their contributions aren't re<llly needed for the group to do <l
good job,
Social loafing is a serious problcm for groups and tcams because it rcsults in process
losses tll;11 lower group perfomHll1ce. When social loafing occurs. actual group perfor-
m<lnce is lower th<l11 potenti<ll perfomlance becausc some members of the group arc not
motivated to work as Ilard as they would if they "'erc working on tlleir own. Furthcrmore.
social 10al"II1g by one or a fcw members of a group somctimes induces other mcmbers of
the group to cut b.1ck on their efforts as well-as happened at Lel'i's f;letory. This type of
process loss is a result of the slicker effect. The sucker efred occurs when group members
who "'ere not originally inclined to engagc in socialloafll1g lower their efforts when they
observe other group members 10al"lI1g.22 Because they do not wam to be taken advamuge
of. or considered slId,e'·)'. their motiv;uion suffers when they see others in the group sl;lek
oft. 23 The sucker effect is consistent with the equity theory of motivation. which suggests
th<tt cmployees who perceivc inlXJuity arc motivatcd to try to rcstore cquity by bringing
their outcomc/input ratios back into balance with the ratios of their referents-other group
members (sec Chapter 6).
Group Size and Sodal Loafing
Scveral studics Ilave found that the tcndclley for group members to put forth less cHon
increases as the size of the group increases. 24 This increase in social loafing occurs
bec~mse larger numbers of people in ;1 group increase the problems associated with identi·
fying and evaluating each person"s individual performancc. The more custodians a super-
visor h<ts to monitor. for example, thc less time the supervisor can dcvote to evaluating
each custodian. As group size increases. members may also be more likely to think that
their own dTorts :Ire not an important part oflhe group's performance. which is also some-
thing that occurred in thc Levi factory.
Other kinds of process losses also occur as group size increases. 25 As you learned in
Chapter 10. in a large group. there is much potential for eontlict and coordin;ltiol1 prob-
lems. Both widen the gap between potential and actual performance due to process
losscs. 26
Ways to Reduce Sodal Loafing
Managers can try to reduce or eliminate social loafing by making each employee's indi-
vidual contribution 10 group performance identifiable. by making each employee !"toel Ile
or she is making a valuable contribution to thc group. and by keeping the gmup as small
as possible.
Making individual (ontributions identifiable. One way to eliminate social
loafing is to make individual contributions to group performlll1ce identifiable. 27 For
example. the cOl11ribUlions of individual custodians could be made identifiable by
dividing thc food court into separate zones and giving cach custodian a sep<trme area to
keep clean. The cotltributiol1s of each employee could then be evaluated on the basis of
how clean each lOne is. Sometimes. when it is difficult for supervisors to identify
individual contributions. other group members can do so by using a peer evaluation or
performancc-<tppraisal system (sec Chapter Il). SOl11e professors. for example. try to
364 PART 2 • GROUP AND TEAM PROCESSES

eliminate social loafing on group projects by baving students evaluate eacb other's
contributions to a group project and assigning grades to individual students based. in
part. on these evaluations.

Making individuals feel that they are making valuable contributions to a

group. In some kinds of groups. it is impossible for supervisors or group members to
munitor individual behaviur or make individual contributions identifiable. In a
profcssional singing group that providcs background music for <.:ommcr<.:ials and movics.
for cxample. it is vcry difficult to assess thc cffort of any individual singer. Indeed. each
singer's contribution (the quality of a person's singing) cannot be distinguished from the
performance of the group as a whole.
In situations in which each cmployee's contriblllion cannot be separated from the per-
form:lIlce of the group as a whole. managers can reduce social loafmg by making each
individual feel th:u he or she mnkes an important and worthwhile contribution to the
group.~g Making individuals ft-el valued is the second way to reduce soclnl loafing nnd
increase work-group effectiveness. This goal could be accomplished in Ihe group of
singcrs by periodically reminding each of them of their spcciallalents and the contribu-
tions they make to the group. A singer with ,I very deep and resonant voice. for example.
could be rcminded that his singing adds unique richness to the group's overall sound.
Another "'ay 10 stress the importance of each member's value and contriblllions is to let
individual members know that the success or failure of the group sometimes hinges on his
or her efforts.
Bill Walsh. celebratcd former coach of the San Francis<.:\) 4gers and the Stanford
University footballieam. tried 10 lIlake each f(}{}tball player feel that he mad!." an impor-
tant contribution 10 team performance in order to motivate him to do his best and elim·
inate any potential for social loafing. As Coach Walsh put it. "You develop wilhin the
organization and the players an appreciation for the role each athlete plays on the team.
You talk to each player and let each one know that. at some poim. he will be in a posi-
tion to win or lose a gamc. It lIlay bc OIlC play in an cntire career for a certain player or
m:lny plays each game for a Joe Mont:lna. But the poill1 is that everyone's job is essen-
tial. Everyone has a specific role and specific responsibilities ... You talk 10 each
player and indicate thC' imporl<IIKe of everyone's p;mici pat ion in Ihe process - that it is
important for eVC'I)'one to express hirnsC'lf. to offer ideas. explan3lions. solutions. for-
mulas:' 2'J Walsh's ability to make each member feel like his or her unique contributions
arc important to the team's success comes from his years of experience:ls a f(}{}tball
coach. Still. they arc important for managers of teams in small and large companies
alike to have.
Another way to reduce SOCi'11lo.1fing is by reminding each employee why their indi-
vidual t:llcnts led Ihem to be chosen as a member of the group. In forming t:lsk forces.
for example. managers typically sC'leCl individuals with different kinds of expertise and
expcriellee to get the full range of pcrspcelives :I heterogencous group provides (sec
Chapter 10), By reminding members Ihat they were selected for the task force becausc of
the unique contributions Ihey can make. managers can drive home the message that
members can (and arC' expected to) make an imporlam and worthwhile contribution to
the group.

Keeping the group as small as possible. The third way 10 reduce soci:llloaflllg is to
keep the group as small as pussiblC':1O Social loafing is morC' likely as groups gC't biggC'r
because individuals perceive that thcir own efforts and performance lewis lire
unidentifiable. unnecessary. or likely to be duplicated by others III the group. In Levi
Sirauss's factories. work groups were originally as large as 35 m!."llIbers. This resulted in
the motivation and coordin3lion problems discllssC'd in thC' opcning case. To prevent
problems like these. m;ln,lgerS should try 10 identify the optimal size of a group. given the
tasks members are performing. If managers sense that prot-ess losses are Hl\:reasing as a
group gelS larger. Ihey should take steps to reduce the gmup's size.
 CHAPTER' t • EFFECTIVE WORK GROUPS AND TEAMS 365

One way to do this is to divide the work so that two smaller groups perform it. In the
meJlswear department. for example. r:Ither than have six different salespeople interacting
10 manage the whole deparlment. lWO Ix:ople could be given the responsibility to man:lge
men's designer dothes like Polo and Tommy Hilfiger. and lhe other four could manage the
lower-priced clothing scrtion. Indeed. one reason why organizations consist of so m:my
differenl groups is to eliminate the process losses that occur because of socialloafing
mherenl in larger-sized groups. The following 08 Today iJlustraleS an example of lhis.

OB Today
How GlaxoSmithKline Used Groups to Boost Productivity

The need to develop new kinds of prescription drugs is a continual battle for pharmaceu-
tical companies. In the last few years. many of these companies have been merging to try
to increase their research productivity. In 2001. GlaxoSmithKline was created when Glaxo
Wellcome and SmithKline Beechum merged 31 Prior to the merger. both companies had
seen steep declines in the number of new prescription drugs their sdentists had been able
to deliver How could the newly formed company combine the talents of its scientists and
researchers to quickly create exciting new drugs?
GlaxoS m i th KI in e 's
top managers realized
that after the merger
there would be enor·
mous problems associ-
ated with coordinating
the activities of the thou-
sands of research sden-
tists who were working
on hundreds of different
kinds of drug programs.
Understanding the prob-
lems associated with
large size, top managers
High·tcch research anJ Jc"dopmcnt tcams whose l1l('mlJcrs work decided to group resear-
closely togcther anJ JcpcnJ on each olher for Jccision-mak;ng input
chers into eight smaller
nl'Cd to be kept ,mall so th('ir mcmlx:rs Can communicat,' ca,ily.
groups so they could
focus on particular clusters of diseases such as heart disease or viral infections. Each of
the groups was instructed to behave like a company in its own right, and they were told
that they would be rewarded based upon the number of new prescription drugs they
were able to invent, and the speed with which they could bring them to market.
To date, GlaxoSmithKlein's new group approach to research seems to have worked.
The company claims that research productivity has more than doubled since it reorga-
nized its scientists into teams: The number of new drugs moving into clinical trials dou-
bled from 10 to 20, and the company has over 130 new drugs currently being tested.
Moreover, the company claims that the morale of its researchers has increased, and
turnover is down because the disease-focused groups enjoy working and collaborating
together. The company expects to have the best new-drug "pipeline" in its industry in the
next three to four years.32
366 PART 2 • GROUP AND TEAM PROCESSES
TASK INTERDEPENDENCE
The e\lcnllu wOlch lhc work
pcrform,'d hy 01'" mcml>er "f
a ~roup affeel_ "hm "ther
mcmbcl"'> do.
POOLED TASK
INTERDEPENDENCE
TIle la k imcnlcper;Jence that
I"Cwlh "hen ca<:h mcmhcrof a
group make\ a ",parmc and
indqJcndenl contribution 10
g.roup perform'toce,
eXHIBIT 11.2
Three Types of Task
Interdependence
How the Nature of Tasks Affects Group Performance
Process losses, panicularly lhose that result from soo:.'ial loafing. are most prevalelll when
group members feci their individual COlllribUlions arc not idelllifiable or imporlant. In
some groups. however, process losses oceur because of lhe lypeS of tasks lhat members
perform. Process losses are especially likely to occur when the n<lture of the task itself
makes it difficult to idemify individu;ll pl."rform;uKe len"ls and reward employees on thai
basis_
To delemtine how to assign outcomes to the individual members in lhe group, the
kinds of wsks it performs must be t<lken into aceoullI.lames D. Thompson's mooel of
group lasks helps managers idemify (I) wsk characteristics that can lead 10 pnx:ess
losses and (2) lhe most effectivc ways to distribute oUlcomes or rewards to group mem-
bers to generate high motivation. Thompson's model is based on the concepl of 1:lsk
inlerdqwndenee-lhe extent to which the work performed by one member aITects what
othcr group members do. 33 As lask intcrdependenee wilhin a group increases. the degree
and intensity of the interaclions among group members who arc required to perform the
tasks also increase .3~ Thompson identifies three types of task interdepeudenee: pooled.
sequential. and reciprocal. 35
Pooled Interdependence
If a group task inl'olves pooled task inlerdependelwe, each member of the group makes
a separate and independent coniriblliion to group performance. BL"<:"use caeh member's
contribution is separate. it can be readily identified and evaluated. On group tasks that
involvc pooled interdcpendcnce. gmup performance is determined by summing up lhe
contributions or perfonnances of the individual members.-16 Pooled interdependence is
depicted in Exhibit 11.2A. Members A. B. and C make independentl:ontriblltlOns to
group performance, and their contributions are added together 10 measure the group's
performance,
Examples of tasks with pooled interdependence include the work performed by the
members of a typing pool. by the wailcrs and waItresses in a restaurant. by a grollp of
physicians in a health mailllen:lnCe organization. and by a glOlIp of sales representatives
for a book publisher. In each of the',c examples" group performance is lhc result of
adding up the performances of individu,ll group members: the amount of correspon-
dence typed. the number of customers served. the number of patients treated. or the
number of books sold,
One common sourcc of proccss losses on tasks with pooled imcrdcpendencc is dupli-
cmion of effon. such as when two waiters inadvertently take orders fmm the same table or
two typists mistakenly type the same report, This coordination problem can usually be
solved by carefully and clearly assigning t;u;ks to group members.
,\llotivalion problems can easily be avoided on tasks with pooled interdependence by
evaluating the perform,tnee levels of the individu;lls in the group and rewarding them on
that basis. Distributing rewards based on indlVidual pcrformanl:e is likely 10 result in
high levels of motivation, as theories of learning and motivation suggest. In fact.
A. Pool<d .asl< B. Scqu<nn.1 t.,k C. R."proc.1 task
int<rd'p<nd<n« ,nterd'p<nd.n« ,n«rd'p<nd,nco
A-..""'---""'---- Gro",
..,--------..~v-'" p.rl"ofman«
Group pe,fonn'n«
1\

SEQUENTIAL TASK
INTERDEPENDENCE
The ta,~imenJependcocc that
""ull> when group member;
mu,! pcrf"nn 'I"""if", b.:h..\ io'"
"I a prtoclennincd order.
CHAPTER 1t • EFFECTIVE WORK GROUPS AND TEAMS 367
because pooled imerdepcndence allows each member's comribution to be gauged and
rewarded, the potemial for process losses due to a lack of motivation is relatively low.
When Le\'i's used a piece-rate system to reward employees, it was using pooled task
interdependence.
Sequential Interdependence
A group task based on scqucntiHI task intcrdt'pendcncc requires specilic behaviors
to bc performed by the group's membcrs in a predetermined order. The levc-l of each
member's performMlee therefore affects tile performance of other members down the
line. The output of one employee depends upon another employee. in other wurds. [n
Exhibit I [ .2B, for example. the performance of member A affeCis the ability of member
B to perform her task: in turn, the activitics ofmemocr B afleCi the ability of member C
to perform his t'lsk. Examples of sequell1ial interdependence include all types of
assembly-line work~from the produc1iun of cars, to televisions, or Subway sand-
wkltes-where the finished product is the result of the sequemial inpUls of group mem-
bers. Onc company that failed to anticipate the problems thc mo\'c from using pooled to
sequential task interdependence would cause is Levi-Strauss. [n the [990s. Levi-
Strauss's cumpetiturs outsuurccd their manufactllring activities tu [uw-cost Asian cum-
panics: Levi Strauss, being more commilled to its employees, decided it would instead
try to incrcase the produetivilY of its U, S. factory employees by moving to use work
groups. The comp,lny abandoned its piece-wte plan whereby e,lch employee worked
separately on a speciric task and was paid according to how nwny tasks, or pieces, he or
she completed. Instead, emp[oyees were assigned to work gmups of up 10 35 people
who were now joill!ly responsible for all the jealHnaking tasks such as sewing on pock·
ets, zippers, and belt loops. They were paid according to the number of pairs of jeans
the whole team made.
But after the new team system was imp[ememed, productivity plunged. [n pan, this
was because emp[oyees weren't used to the new issues and problems the groups cfCated.
Levi's most skilled employees. for example, found that they could only work as f:lst as the
slowest members uf their teams and that their paycheck> were falling. On the other hand,
the paychecks of less-skilled employees were increasing because Ihey were benefining by
being teamed up with the faster, more highly skilled workers. Soon, the fastest employees
began to feelth,ll some team members were not pulling their weight. in-fighting between
team members increased, and emp[oYL'C morale fe[l. 37
To improve the situation Levi's began to group employees according to their skill
levels, and they reduced lhe si7.e of the teams so employees had more control over each
other. SuperVisors also gave more training to slower employees and he[ped group mem-
bers deve[op new team skills to improve Iheir group performance. Even after it made
these changes, however, Levi's found that team production had not increased productiv-
ity: in fact. productivity was just 93 percell! of wbat it was when employees worked
separately. With its attempts to increase productiVity f<liling, Levi's was forced to close
down more of its U. S. manufacturing plants. 3g Its final plant was closed in 2004. 39 When
Lcvi's decided to group its employees into teams, it switched from using pooled to
sequential task interdependence.
As Levi's fourld out. sequential interdependence makes identifying the individual
performances of group members difficult beC;lUse each member contributes to the same
final product. (In contrast, when task interdependence is pOOll'd, each member con-
tributes his or her own final product. ,lI1d group performance depends on the sum of
these contributions.) Identification of individual performance is also difficult because an
error made by a group member at the beginning of;l work sequence can affect how well
members later in the .sequence perform their tasks. [f an employee on a car assembly linc
fails to align the axle correctly, for example. employees farther down the line will have a
hard time ahgning the wheels and making the brakes wurk properly. Slmi[arly, if one
employee ,;ews the waist of the jeans improperly, a second wi[[ have difficulty attaching
belt loops.
368 PART 2 • GROUP AND TEAM PROCESSES

When the activities of group mC"mbC"rs arC" scljuell1ially interdq)C"ndC"nL the perfor-
mance levd of the least capable or poore~t·perfonning member of the group determines
group perfomwnce. In a pkmt that produces televisions on an asscmbly line. for example,
televisions move along the line at a set speed, and employees stationed along the line I.:om-
pkte their required task~ on each telC"vision thm pa~se~ by, The a~sembly line can move
only at the speed of the slowest employe<:' along the line: thus, the number of televisions
produced by the group of assembly-line employees is limilt.-d by the performance capabil-
ities of the group's poorest performer.
For thC"se reasons, the potential for proce~s los~es is highC"r with sequC"ntial intC"rde-
pendence than with pooled interdependence. MotivMion and social-loafing problems
arc also encountered more often because all of the group's members work on the same
producL and so it's hard to discern what individual performance levels arc. This was
the problem Levi's C"ncoull1C"red: its most ~killed workC"rs could only work as fast as it~
less-skilled workers.
How ean organizations try to o\'ercorne the Illotiv,llion and social-Io,lflllg problems
assol.:iated with sequential interdependcnce? One way is by closcly monitoring the on-the-
job behaviors of group members. Assembly linC"s, for example, usually employ a relatively
];lrge number of supervisors to do this. A sccond way to counteract the negative effects of
sequential task interdepemJcnce is to form worl groups consiMing of imlividuals with sim-
ilar levels of ability-as Levi Strauss subsequcntly did. When that is done. the talents and
motivat ion of high performC"rs wi II not be hampered by the prC"scncc of a low performer in
the group.
In some situations, a third way to o\'en:ome motivation problems in sequentially
interdependent gmups is to reward group member~ on the basis of the group level of per-
formance. Since social loaling by onC" mcmber impairs group performance and reduces
the rewards received by all members of the group, this lend~ members to monitor nnd
I:ontrol each others' behaviors. The most skilled employees arc also more likely to help
the less skilled learn how to perform at a high level. too, so that over time the group's
performance as a whole increascs. Since rewards based on group performance can lead
to hostility among temn members, however. supervisors must be willing to help train the
team's members, and the most skilled workers should be guar.lIlteed their old rates of
pay until the poup's pcrfOrntalKe is brought up to speed. Japanese companics havc long
recogni7.ed how 10 take advantage of sequential interdependence to continuously
improve group performance over time-a process c<lllcd Ka;:m that we discuss in
Chapter 18.
Pr()(;ess losses nrising from coordination problems also occur when tasks are sequen-
tially interdependent. If an employee at the stan of an nsscmbly line comes to work late or
needs to stup working during the day, for example, the whole line must be Shul down until
a replal:elllent I:an be found. How can managers try to overcome I:oordination difliculties?
They Gill reward employees for good allendance and punctuality, and they can ha\'(' a pool
of multiski11cd employees on hand who can step in m differelll points in production for
those who arc abscnt.
1lJousand of l'(lmpanies now organize their emploYL'Cs into groups and teams lo make
and sell their g{}(x1s ;md services because teamwork can significantly improve employee pro-
ductivity and efficiency. Whether or not a company succeeds in ('re'lling high-performing
teams depends cfiJl:ially on the way man<lgers ,Illd supervisors structure and control team
members' behaviors.
The C"xperienee of Hickory Springs Manufacturing Co., based in Hickory, North
Carotinn, illustrates many of the issues associated with creating effective groups and
teams. Hll:kory Springs is n leading supplicr of mattress components, such ns bed-
spri ngs, foam pads. wire. and fabrics, to maltress m<lkcrs. 4o Competi tion between sup-
pliers for mamess makers' business is fierce, and suppliers have been unable to raisc
their prices for se\'cral years for fear of losing business. As a eonsequcnce. Hickory
Springs wns forced to take a dose look at the way it mnkes its products. Edward
Weintraub, its owner, has searl:hed for ways to reduce \:Osts and increase productivity in

RECIPROCAL TASK
INTERDEPENDENCE
lnc ta,\; "'tcnJcpcndcJ\ce that
"",Ulh when the act;";t;e, of all
work·group membe'" are fully
llepcndent vn one anOlhcr
CHAPTER 11 • EFFECTIVE WORK GROUPS AND TEAMS 369
its factories and one of his major innovations was (() change how its employees worked
togelher.
Making ,I bed frame involvcs taking angle iron, cutting it to ,ize. punl:hiug holes.
inserting rivets. painting the bed frame. and then puning the frame and l:asters into a
card hoard hnx for shipping. Hickory Springs employees used to work separately and in
sequence to perform lhe different aClivilies necessary to make and pack each bed frame.
Often. bottlenecks arose during production because employees at one stage of the
process could perform thcir jobs faster than those at othcr stages. To ennmrage employ-
ees (() help each other out when this occurred. Weintraub decided (() organize them into
work groups.
Employees were grouped into lentnS lhat are responsible for all the aC1ivlties neces~
sary to make and pack bed frames. [n the new gmup·work system. in addition 10 Ihe $12 an
hour each employee receives for performing his or her own spoxific task. he or she also
receives ,I $3 or 25 percent hnnus if the group as a whole hilS its assigned production lar-
gel, To obtain the bonus cmployt"Cs must not only achieve the perfornwnce taf£et assuci~
ated "'ith thcir own jobs. they must also cooperalc and help Olher emp[oyees who arc
falling behind for whatever reason. So. for example. if riveters or packers arc falling
behind. those employees responsible for punching holes quickly mOI'e to help their team
members out 10 adievc the group bonus.
Teamlllembers have learned 10 think for themselves in the new group system and self-
manage their learns to COlllrolllieir own activities. This change has freed up supervisors to
think about new W,LyS to increase productivity. like improving the design of the machines
used to make the frames and finding be1ter ways to physll:ally organize lhe prodllclion
proccss to san" lime and C'ffon. 41 Hickory Springss usc of self-managed teams has
resultcd in substantial and eOlHinuing gains in productivity,lhereby enabling the company
to prosper despile ilS illability to increa>e prices.
Reciprocal Interdependence
Group tasks arc chanlcterized by n:ciprocallask inlCrtlcllClldclIl..'{.' when lhe activities of
all work-group mcmber.; are fully dependent on one another so that each member', perfor-
mance innucnces the pcrformalKe of every other member of thc group. Figure J 1.2C
shows that not only do member A's actions affcct B's. and member B's actions affect Cs
(as would be lhe case wilh sequenlial interdependence). but member Cs actions also affect
A's and B's. member A's action, affect Cs. and member B's al:liolls affect A·s. E.\amples
of work groups whose tasks arc recipmcally ilHerdepcndem include higll-lech research and
de\'elopmem teams. top management teams. emergency room [X'rsonnel. and an operati ng
room leam in a hospilal. In all these cases. team members work vcry closely together. eom-
munil:ate frequently. and each member of the team depends on the others fur decision-
making input.
The potemial for process losses is highest when tasks are reciprocally interdependcm
because motivation and coordination problems call be p:lrticularly troublesome.
Motivation problems likc social luafing ensue becausc it is difficLIIt. if nUl impussible. 10
identify an individual's level of [X'rformance when the final product is the result of lhe
cotllplex interplay of the contributions made by everyolle.
How can matHlgcrs try to minimize process losses whell a group's adivities are rel:ip-
rocally interdependent'! They should kecp groups re[atively small, emphasize that each
member can make an important and diMinet contribution to the group. and {"ncourag{"
members 10 feel personally responsible for meeting the group's goals.42 To reduce the ten-
dency for social loafing. mmtagers should rew;lrd the members for the group's perfor-
mance and encourage them 10 cOlllinuou,ly improve their own performanl:es over time by
offering them increased pay and inc{"ntives for doing so.
An example of a group characterized by reciprocal illterdependence is the top m,ln-
agement leam of a small company lhal mntlUfactures toys. On the team arc the vice pres-
idents in charge of marketing and sales. production. research and development. and
370 PART 2 • GROUP AND TEAM PROCESSES

TIle members of a surgkaltcam

nccd to be redpmeally
interdependent to make it
possible for lhem to engage in
the illlensc ilHcractions
necessary to kccp patient
opemtions as short as IX'Ssiblc
and em,,- free.

finance. Leading the leam is the president of the company. How well the company as a
whole docs depends on the eomple;\; interplay between those "arious functions, but at any
point in time it is difficult to evaluate the performance of anyone of the top m.magers,
Under these eircumst:lIlces. there is a high potemial for social loafing. but it docs not
often occur because (I) the group is relMil'ely small, (2) each vice president thinks that
his or her contributions <Ire indispensable 10 lhe success of the \:omp:my !x.'cause each is
an expert in a panic'ular function, and (3) group members' salaries depend on how well
thc firm docs.
Work groups performing tasks characterized by reciprocal inlerdepcndencc experi-
ence considemble \:oordinat ion problems 1x."I::luse of the inherem unpredictability of group
relations and imeractions. There is no sct ordering of the group's aClivities when il.<; tasks
are organized reciprocally. unlike when its tasks are organized in a seque11lial fashion. The
top management team previously described e;\;periences eoordinalion problems on a day-
to·day basis. When sales of a new dinosaur bo:lrd game greatly e;\;ceeded e;\;pectations. for
e;\;amplc. the managers in charge of marketing, production. and fmancc had to work out a
plan to increase production TUns for lhe game while keeping coslS down and not il1lerfering
wilh Ihe production of other produCIS, BUlthe produ\:lion manager was on a monlh-long
trip to Taiwan. China. and Singapore to cvaluate the feasibility of moving some of the
firm's manufacturing facilities overseas, so the group had difficulties coming up with a
viable plan. and sales were 10s1.
How can managers alleviate coordination problems When it conics 10 complex
tasks? Again, one way is to keep group sizes relatively small 10 limit the number of
individuals who mUSI coordinUle their effons. Another WilY is to locate group members
close 10 Olle another so lhut whenever one member needs input fTOm another. the input
is readIly <lvailable. With Ihe electronic fonns of eOllll11unication <lv:lilable tod:ty, team
members in different locations can now keep in \:onstant comntunication with
one another. If the prodUCliol1manager scouting 0111 factory sites in Easl Asia had beel1
e leelTOn icall y in touch wilh olher me Illbers of the group. for e;\; ample. the manufaetur-
IIlg problem at the plant might lwve beel1 averted. Fi na Ily. eoordinat iOI1 di rfieu It ics can
be reduced if groups develop norms encouraging membcrs to help one other when
I1ccdcd.
As task intcrdepcndcnce mol'es from pooled 10 sequential to reciprocal interdependence.
the potential for plVce.u losses increases because identifylllg individu.il perfomwl1ccs
becomes increasingly harder and bcc;ausc coordination becomes more diffkuh, 11lc pOlel1lial
for /lltJcesJ guins also increases as task ilHerdependenec becomes more comple;\;. As the IeI'd

You're t;he Management; Expert;
SYNERGY
A pnx;e" gain Ihal <",cur- when
mcmbc.... of a gr()(lp ..;Iing
logNher are able 10 produ<'e
more or bener oUipullhan
would have becn produced b}
Ihe comhined efto", of each
p"rson "'ling alo"".
GROUP COHESIVENESS
11le al\ra<ti,ene" of a group 10
it' membe"
CHAPTeR It • efFeCTiVe WORK GROUPS AND TeAMS 371
What Kinds of Groups and Tasks?
You have just completed your degree in computer science You have decided to refurbish
and upgrade used pes and then rent them to college students for a low monthly fee. As
a part of this service you will also repair them as the need arises.
To get your business off the ground, you'll need to hire about 20 college students on
a part-time basis to buy used pes, bring them to the workshop for servicing, deliver them
to customers, and make on-site repairs as necessary. You know that your ability to provide
good customer service is vital in the rental business and your problem is how to group
employees to get the best out of them~to get them to increase and realize their perfor-
mance potential
Using the previous material in the chapter, and given the tasks that your business
requires, what kind of task interdependence do you think is most appropriate for your
business? Also, do you think you should organize employees into just one large group, or
would you divide them into several smaller groups) If so, how many? What kinds of moti-
vation and coordination problems are you trying to prevent with your decisions)
~nd inlensily of group members' lIl1emction, increw;e and lhe expenise and ,kills of gronp
members ~rc brought 10 bearon the gronp's tasks,lhe potential for synergy in<.:rc~se;;, S~'ncrg)'
(a type of process gain) occurs whcn memocrs of a group aCling logether arc able 10 produce
more or beller outpullhan would have been produced by the combined effons of each l~rson
~cling ~Ione,
For ex~mple, lhe lop managemenl leam of lhe loy comp.my recently developed a
ncw line of compacl travel 10YS lhal were an instant success with children and very
profitable for tile eomp~ny, The m~nagers in cllarge of m~rkCling, prodUClion, rese~rch
~nd development. ~nd fjn~nce worked closely throughoul lhe developmenl ~nd !~unch
of lhe new line, As ~ resulL their re<.:ipro<.:ally illlerdependent inleracliol\s enabled
lhem 10 come up Wilh a winner in record lime. If ea<::h of the managers had worked
independently, lhe new line would never h~ve been developed successfully or laun<::hed
so quickly, Employees at Hickory Springs in lhe pre"ious 08 Today were able 10
achie"e much more by working as a leam than lhey did when each employee worked
alone.
In sum, lhe POlenlial for process gains often in<::re~ses ~s the level of task interde-
pendence increases. bUI so too dnes lhe polenti~1 for process losses, ThllS, lhe adual
performanl'c gains an organization achie"es depend on its managers" abilities 10 choose
lhe form of lask interdependence lhal besl matches the products being produced and
lhen <::re~le a work setting minimizing mot ivaI ion ~nd coordination problems rel<lled
10lhem,
Group Cohesiveness and Performance
Regardless of lhe kinds of lasks perfonned. work groups also differ in ;1Il01her imponanl
respect-how (II/Wel;l'£, lhey arc 10 lheir memocrs, When group, are "cry allr<lcli,'e 10 lheir
members. the individuals within lhem "alu<:: their memocrship and strongly wanlto remain
in lhem, The anraelivencss of a group 10 its members is c~lIed grOIlI' cohesil'cncss. 43
Groups high in <::ohesiveness ~re very ~ppealing to lheir members: those low in <::ohesivcness
372 PART 2 • GROUP AND TEAM PROCESSES

are not appealing to their members and may even repulse them to the point where thcy try
to leave lhc tearn. An important property of work groups. group cohcsivcness ll!Tects group
performanl:e and effectiveness.

Factors that Contribute to Group Cohesiveness

A variety of factors influcncc a group's level of cohesivcncss ..J.t Hcrc. we cxamine livc:
group sizc. similarity of group rncmbers. competition between groups. succcss. and the
exclusiveness of the group (see Exhibit 11.3).

Group size. As you learned in Chapter 10. as groups get bigger. their members tend to be
less satisficd. ('or this reason. largc groups do not tcnd to be cohcsivc. In largc groups. a
few mcmocN of the group tend to dominatc group discussions. and the opportunities for
participation by other group members arc hrnited. Large groups hav.: the greatcst potential
for conllict. and members find it diffil:ull to form close lies "~lith om: other. A small or
medium group size (betwecn 3 and 15 people). on the other hand. tends to promotc
cohcsivcness.

Similarity/diversity of group members. People generally like. get along wilh. and
most easily communicate with others who are similar to themselves. Moreover. people
tend 10 perceive others who arc similar to thcmselvcs more positively than they perceive
those who are differenl (duc 10 lhe similar-to-me bias disl:usscd in Chapler 4). Groups
tend to be most cohesive when group members art' homogeneous or share certain
attitudes. values. experiences. and .so on. ('or example. a task force composed of
individuals (such as cngincers) with thc samc educational background and work
e.\periences will tcnd to be more cohesivc Ihan a lask force whosc members (an
engineer. an accountant. a finanl:ial analyst. and a bi(x:hemisl) have dissimilar
backgrounds. One caveat. however. needs to be made about the similarity or
homogeneity of group members. As you saw in Chapter 10. diversity (or hcterogeneity)
can be benefil:ial because it offers the group varied resources and perspectives (a wider
range of skil Is. abi Iities. experiences. and so forth) upon ,,'hit-h to draw. 45 If the diversity
of the- group's members hclps it achieve its goals. then (/iw·nin·. rather than similarity. is
likely to f,lcilitnte group cohesivencss.4!'>

Competition between groups. Competition between groups in an organization increases

group cohesivcness when it motivates members of each group 10 band toge11ICT to achieve its
goals. 47 For this reason. organizations often promote group cohesiveness by having work
groups l:ompete against eal:h oIher.48 Groups of salespersons compete to see which can sell
the most each month. gmups of production employees compete to sec which can maintain the
highest quality standards. and groups of maintenanee employees compete to achieve tbe best
allendance record. Healthy competition is also encoumgcd by naming groups and recognizing

EXHIBIT 11.3
$, m,l antyI dN<-r<'ty Comp<'titlon WI(h
Determinants of Group of group m~mbe" other group'
Cohesiveness j j j
Group cohui.. ne..
How attrutrve a group" to ," m~mb...,

t t
Succ~. E>:du.iven~ ..
 CHAPTER 1I • EFFECTIVE WORK GROUPS AND TEAMS 373

Glolxllization has IIlcreased the

necd for and usc of vinual tcams
linkcd together by fax. phone.
...-mai I. and \'idc'OConfcrend ng.
Technologics allO"'ing instant
('()mmuni"atinn and the Growing
complexity of mullinmiOlwl
organizations ar" likely to lead (()
more vinuallcams in thc future,

tll... ones doing espcrially well. Som...timex. groups compete 11111 so much with groups inside
their organization. but with groups from othcr organi7~1tions.
Although a certain level of competition across groups can help ench group be cohe-
sive. 100 much competition can be dysfunclional alld impair effeclivcness. When compe-
tition is too intem;e. groups sometimes try to sabotage each mher. They become more
conccrned wilh "winlling thc battlc" than achieving Ihe organization's goals. in other
words. If .In organization is 10 achiel'e its g0.11s. Ihe different groups within il muSI be
willing and able to work logether and cooperate. even when they arc competing with onc
another.49

Success. "Nothing breeds success like success:' according to an old adage. When groups
arc successful. Ihey become especially Mtractive to their members and others. and the
cohesiveness of Ihe groups increases.

Exclusiveness. A group's exdusil'eness is indicaled by how difficull il is 10 become a

member of the group. the cxtent to which outsiders luok up to the group's members. the
group's status within the org3llizatiol1 (sec Chapter 10). and the special rights and
privileges accorded ils members. When group members must undergo a very tough
mitialion process or arc required tu undertake extcnsive training to joinlhe group. bemg
a member ben)mes morc highly prized. 5O For example. individuals who want to becomc
firefighters l11ust l11ect stringent physical criteria and cngage in extensive training
exercises. Grollps of firefighters lend to be highly cohesive, in p.lrt because of how
difficult il is to become a member uf the group. Fraternities. sororities, football teams.
and ('hccrlcading squads at universities also tcnd to be high on ('ohesil'cness. It is oftell
d iflicult to become a I11CI11 ber of tltese groups. These grou ps tend 10 have hi gh status as a
result. and outsiders look up to the members. who oflen hal'e special rights ,Ind
privileges.

Consequences of Group Cohesiveness

Is cohcsivencss a group property that managcrs should cl1couragc? Is thcre such a thing as
too much cohesiveness? As we S1\W when discussing group norms in Chapter 10, lhe COII-
sequences of group cohesiveness for an organization depend onlhe e.\lelltlo which group
goals arc aligncd with organizational goals. Recall fwm the restaurant example ill
Chaptcr 10 how thc goals of thc group of waiters and waitrcsscs (providing good scrvice
374 PART 2 • GROUP AND TEAM PROCESSES

and gelling good tips) were aligned with the restaur:lI1t's goal of having satisfied cus-
tomers. In examining the consequences of group cohesiveness. we first focus on the case
in which group and urganizatiunal goals are aligned. and then we louk at the case in
which they arc no!.

Consequences when group goals are aligned with organizational goals. The
first major conseqllence of group cohesiveness when gruup and urganization,11 guals arc
aligned is Ille IeI'd of fJllrlicipmirm {Iud cO/!I!l/Unicmiou Wilhill Ihe grr!llI'.~1 As
eohesivcness increases. memhC'rs become more aClive participants in thl." group. and tltl."
level of communication within it increases. This outcome can be beneficial for the
urganization. Members will be more likely tu perfurm behaviurs necessary for the group
and organization tu achieve its goals. and information will he readily shared among
members. (As we discuss in Chapter 15. an exception to this conscquence occurs in
cohesive decision-making groups that fall victim to groupthink.)
The group uf waiters and waitresses. for example. was moderately cohesive. As a
result. ils members performed a variety of behaviors 10 ensure that c'USlomers received
good service. Thcy kcpt Ihe salt and pepper sh3kers and sugar bowls on the tables filled.
helped each other with es!X'cially large tables. and kept the rcstaunillt clean and tidy.
Moreover. infomlation nowed through the group very qukkly. When the group changed
its norm uf always referring nJmplaints to the manager. for instance. Ihe change was
communicated to all group members on the vcry samc day that il was discussed with the
manager.
Although goud eummunication within groups is important. tou much communil:a-
tion Gill he dysfunctiunal if members waste a lot of time talking to each other. espe-
cially about non work matters such 3S the Monday night footh3l! game or lasl night's
episode of "CSI:' Thus. a moderate amount of group cohesil'eness is functional for Ihe
group and the organizatIon when it encourages members to participate til the group and
share information, Too much cohesiveness. howel'c.r. can be dysfunctional if members
waste timc chitchatting.
The second major consequence of cohesiveness when group and organizational
goals arc aligned is Ihe lel'e! of cOliformil." 10 groliP lIorms. 51 As group l:ohesiveness
increases. conformi ty to the group's norms lend, to increase as well. Increascd confor-
mity can be functional for grouJlS and the organization because it enables the groups to
control and direct their members behaviors toward achieving those goals. Too much
cunformity. however. can he dysfunctional if a group eliminates all deviance. As we
discussed in Chapter 10. dl."viance can benefit a group by helping it recognize and dis-
card dysfunctional norms. but excessive conformity can make a group resistant to
change.
A moderate amount of I:ohesiveness gives groups the level of l:(lIlformity they need
to achievc their goals but still allows for some deviancc. Too much cohesiveness can sti-
ne opportunities for change and growth. There was cnough conformity within the restau'
rant group th,tl it was able to control its members' beh;wior. bUI there w,lsn't so much
that members were afraid to deviate from a dysfunctional norm (like referring all food
compla ims to thl." manager. whc n they wcre able 10 h3l1dle soml." of the complai nts them-
selves).
The third major eonscquence of l:ohcsi\'eness when group ,tnd organizational glXtls are
aligned is grol'f! gool {/ccomf!lisl!!nel!{.~JCohesive groups tend \() be very effective at
achieving their goals. Group members who valul." their memberships are motivated to help
the group achieve its goals. Such members generally work well together. help e;lch other
when IlI.'(:ded. and perfoml the behaviors necessary for the group to be elTel:tive. This COli·
scljllence ccnainly SL'eIll> to be effective for the organization. and for Ihe most pan il is. If
groups become too cohesive. however. the members m3Y be so driven toward group goal
accomplishment that they lose sight of the fact that the group is pan of a larger organization.
When this happens one group may fail to cooperate with another because the members arc
solely loyal 10 their own groups. Onl,;e again. a moder-Ile amount of group cohesiveness is
functional for groups and org3l1izations becausc il facilitates goal accomplishment. Too
 CHAPTER 1 t • EFFECTIVE WORK GROUPS AND TEAMS 375

much cohcsiveness is dysfunction<ll beC<lUSC it can lead members to f<lil to coopcr.lte with
people outside the group.
By now it should be clear that ,I certain level of cohesiveness contributes to group
cffectivene,s. When tha/level is insuflicient (I) group members arc not mOlivated to par-
ticipate in the group. (2) do nOI effectively communicate with each other. (3) the group has
diflieuhy influencing its members' behaviors. and (4) the group often fails to achieve its
gool>. When th,H level is excessive-when groups are 100 cohesive-( I) time is wastell by
members sOI:ializing on the job. (2) conformity is stressed at the expcn,e of needcd
change. and (3) group goal <lccomplishment becomes more important limn coopcralion
with other groups to achieve the organi7.a1ion·s g0.11s.
A IIItHlCmle amount of group cohesiveness results in tile lItost favorable group anll
of',;anizational outcome. A moderately cohesive group has (I) the appropriate Icvel of com-
munication and participation OClween memOCrs. (2) the ability to influence mcmocrs'
behaviors to ensure conformity whi Ie still 1I110wing for some deviation. lind (3) the citpacity
to stress the importance of the group's accomplishments but not itt the expense of other
groups <lnd the organization, Indicators or signs of the lcvel of cohcsivcne!>..s in a work group
arc as follows:

• Si!iHS l!Im II group Iliu (/ modame It-l"eI of co!lI'Ji\·c/U'ss. Member, work well
together. there is a good level of cOlllllluni,:ation and participation in the group. the
group is able to influcnce its memocrs' OChaviors. and it tends to achievc its goals.
• Si!im Iful/ II ,;roup 11m (I lull' len'l of ("olll'.lil'ell~.IS. IIt formation nows slowly withi n
the group. the group has little in!lucnce ovcr its members behaviors. anll it tcnds not
to achicvc its goals.
• Sig",' l!Ial a group hm (I l'I'n' hi,;h 1('\'('1 of cohl'l'il'f'I/f'SIi. Group members sociali7.c
excessively on the job. there is n very high le\'el of conformity in the group anll intol-
er>lnce of dcviance. and the group achieves its goals at the expense of other groups or
the organi7-<ltion as a whole,

Exhibit 11.4 summarizes some of the allvalttnges nnll potentia) disadvantnges of

a Iligh lel'el of cohcsiveness when group goals arc allgncd with organizational goals.
The way in which Nokia has achie\'ell this b;IJancing act is profiled in the following
Globnl Vicw.

EXHIBIT 11.4

Consequences of High Cohesiveness When Group Goals Are Aligned with Organizational Goals

Consequences of High Cohesiveness Advantages Potential Disadvantages

A high level of participation and
communication within the group
A high level of conformity to
group norms
Group goal accomplishment
Group members are more likely to
perform behaviors necessary for
the group and organization to
achieve their goals, information
flows quickly in the group, and
turnover may be relatively low_
The group is able to control its
members' behavior to achieve
group goals.
The group achieves its goals
and is effective.
Group members may waste
time socializing on the job
and chatting about nonwork
matters.
Excessive conformity within the
group may result in resistance
to change and failure to
discard dysfunctional norms,
Group members may not
cooperate with other groups
as much as they should
376 PART 1 • GROUP AND TEAM PROCESSES

A Global View
Teams, Teams, and More Teams at Nokia

Nokia Corporation, headquartered in Espoo, Finland, employs 60,000 people around the
world and is the market leader in the global wireless communications industry. 54 Nokia
has research and development (R&D) units in 14 countries, to which it dedicates one-third
of its workforce 55 The company's success and competitive advantage is the result of its
use of teams throughout the organization, In fact, it has been said that any task or project
that is of any significance in the company is assigned to a team. This commitment to
teams starts at the top of the organization, where managers work together as a team to
make all of Nokia's important business decisions. 56 The number of teams cascades on
down through the organization, with almost all its employees mirroring the model set by
the company's top managers.
Why does Nokia get good results from its teams? Teams are given high levels of
autonomy and encouraged to be creative. High emphasis is placed on letting those peo-
ple who are most knowledgeable about a problem or opportunity make decisions con-
cerning it regardless of their position in the hierarchy (which by nature is very flat at
Nokia},57 Teams and their members take personal responsibility for decisions and believe
that their efforts and contributions are important for Nokia's continued success. Good
communication, mutual respect, and a high regard for the members of one's team are its
central values and norms, Annual meetings, referred to as the Nokia Way, also help keep
teams on track as well provide a vehicle for teams throughout the organizations to help
actualize Nokia's vision for the future,58 Through these me<lns, Nokia ensures that team
goals are aligned with organizational goals and that its cohesive groups work to benefit
the organization as a whole.

Cons~quences when group goals are not aligned with organizational goals.
Our conclusions about the consequences of cohesiveness apply only when the group's g01L1S
are aligned with the organization's goals. What are the consequeoccs when group gools are
/101 aligned with the organizational goals?
When group gonls are not aligncd with org311izational goals (rccall from Chaptcr 10
the radio assemblers whose goal was to minimize effon expenditure). the consequences for
the orgarllzation are almost always negative. In this case. group euhesiveness is dysfunc-
tional for the organization because it helps the group achieve its goals at the expense of
organizational goals.
Like the group of restaurant employees. the group of radio assemblers was moder-
ately cohesive. However. the mdiu assemblers' group gool to minimize the expenditure of
effon was inconsistent with the organization's perfornlanee goal. Consequently. the mod-
erate level of eohesivcness within the group was dysfunctional for the organization. Thcre
was a high lel'el of commullication within the group. but it usually rcvolved <!round non-
work concerns like football and baseball scores, There alsu was a sufficient amount of
conformity to group norms. which resulted in members restricting their output so that the
group ncvcr produced Illorc than 50 radios a day. even though it could have produccd 75.
Finally. the group was I'ery effcctive at achieving its goal of producing no more tlwn 50
radios.
Exhibit II.S summarizes the consequences of a high lad of cohesiveness when group
goals are nOl aligncd with organizational goals_

EXHIBIT 11.5
Disadvantages of High
Cohesiveness When
Group Goals Are Not
Aligned With
Organizational Goals
TOP MANAGEMENT TEAM
The tcam of mnrlagers who
report 10 the t'hief exceuli "e
onlcer (CEO) alld dClenn;lIc
whJt an orgallilatlOn" IrllOg
to ""'Compl,,h and devclop
plnn, for g031 allainmeoL
CHAPTER 11 • EFFECTIVE WORK GROUPS AND TEAMS 377
Consequences of High Cohesiveness Disadvantages
A high level of participation and Group members waste time socializing
communication within the group on the job and chatting about nonwork
matters,
A high level of conformity to group Group members behave In ways that
norms are dysfunctional for the organization,
Group goal accomplishment The group achieves its goals at the
expense of organizational goals,
Important Organizational Groups
Nuw thm you understand some of the problems amI challeoges thm groups face in organi-
zations 3nd the f3ctors that influcncc work-group cffcctivcncss, wc turn to 3 di>cussion of
four types of work groups: top man,lgemcnl te3ms. sclf-1l13113gcd work te3ms. resc3rch and
dc\'eJupmentteams, and virtu~lleams, Although we coullJ discuss other inlpurt~nllypes of
groups in organi:t<uions (such as wholc dcpartmcllIs. assembly-line groups, or lask fOITcs),
wc conccntrat<: on thcse four occause thcy h~ve thc IXlt<:ntial to dramatically 3ffcCl an orga-
n;zalion's perfOmlanCe,
The Top Management Team
An organ i7-:ltion's lop managelllent leam is thc tcam of managcrs who rcport to thc chief
cxecutivc officcr (CEO), TopmanagcmClll tcams (choscn by an organization's CEO and its
board of dircC1ors) profoundly affcct organizmional performancc becausc thcy dccidc
which overall goals should oc pursued, lind they eSlablish the plan of lIclion or means 10
achicve thcsc goals. Bccausc thc complex naturc of lOp managcmcnt activities rcquires
intcnsivc interaction among tcam IllcmOCrs. toplllanagClllcnt tcams arc charaClcrizcd by
reciprocallask interdcpendencc.
Whal steps can a CEO lakc 10 reduce pu)(;ess losses associated with rl't:iprocal task
intcrdcpcndcncc"! first. team sizc should oc kcpt rdmivdy small (mosllOp managcmclll
teams avcrage octwccn fivc and SCVCll lIlemocrs). Sccond. mcmocrs of lllc tcam nced to
oc assured Ihallhcir individual inpulto Ihe group is important for the team's :md thc orga-
nization's success. Third. group members nel-d to oc persuaded to oc hune,1 and open in
thc ir commu nicat iOll with one anothcr, fi nail y, a CEO shou Id make su rc that mcm ocrs arc
rcadily availablc and acccs,ibic whcncver othcr group mcmhcrs nccd thcir input and
expertise,
The qU:llily of dedsion making in Ihe top managemcnt team is a funC1ion of the
personal chaTllcteristics and backgrounds of team Illemhcrs. w [I has hccn found, for
cxamplc. lhat thc oc,t dccisiolls arc madc by top managClllcuttcams llnl1 arc divcrsc or
helerogeneous, consisting of managcrs from different functions (such ,IS markcting,
finance. and produclion). Di\'ersity in tcam memocrship ensures thm the team will have
thc adequatc complemcm of skills. knowledge. cxpertise, and expericnce to guidc the
activilics ofthc organization as a whole. Also. whcn managers bring diffcrent poiulS-of-
view and information to thc lablc, an organizatioll can avoid the dangerous problem of
grollp/llink. a pallcfll of faulty decision making that occurs when likc-minded people rein-
forcc one anothcr's tcndcncics to illlcrprct CVCIllS and information in similar ways (sC"C
Chaptcr 15).<iO Finally. litc lOp managclllcnt tcam affccts its company's performancc by
the way Ihc team uses human rcsourcc practiccs such as pcrform;lnce appraisal :Iud
rewarus to cncouragc perfonnancc.. 61
378 PART 2 • GROUP AND TEAM PROCESSES

Self-Managed Work Teams

In a self-managed work team. team members have die autonomy to le<ld and manage them-
selves und determinc how the leul11 will perform its wsks (sec Chapter 10). Sclf-munaged
teums eun be found at all levels in an organization.
Some orguuizntions use self-managed work teams. nUher Ihan more tmditionnl types
of groups or individuals working separately. The idea is to enhance job satisfal:tion and
motivate l11emocrs to perform at higher levcls 62 In a self-managed work team. ,-;cparate-
tasks normally performed by individual employees and managed by a supervisor fall under
the responsibility of a group of employees empowered to ensure they get done and get
done wel1. 63
As an csample of how a sclf-managcd work team opcrates. consider the following
situation. Requests for credit from AT&T Credit Corporation used to be processed by
mdividuals. Extending or denying credit to customers involved a number of steps: review-
ing Ihe application. verifying the customer's credit rating. notifying the custumer of
whcthcr his or her requcq for credit had occn acccpted or rejccted. preparing a written
contract. and collecting payments from the customer. Individuals were assigned to one of
these steps, Some employees focused exclusively on reviewing applil:<ltions. others on
checking credit rmings. others on wilL-cling payments. and so on. As a re-sult. with this
grouping of tasks. cmployees had lillic sensc of how thcir individual jobs contributcd to
AT&T's organizational goal of first-class customer service. To remedy this situatiol).
AT&T decidl-d to combine these mdividual tasks and give le:lIns of employees the respon-
sibility for all activities. ranging from the initial review of an applil'ation 10 collecting
paymcnt, from approvcd customcrs, The switch to the use of self-managed work teams
resulted in customers' being notified of the acceptance or rejection of their applications
sever<ll d<lYs sooner than under the old system and the daily processing of twice as many
applicatiolls. 64
The job characteristics model of joh design (sec Chapter 7) providcs a good franH.'-
work for understanding why the usc of self-managed work tearns can lead to higher levels
of motivat ion. performance. and Silt isfactlon. Recall that th is model suggests that jobs will
be motivating and result in high levels of perfonnalKe and satisfaction when they arc high
in ski II varict y. task identity. task ,ign ificance, autonomy, and fccdback.~5 Oftcn. il is d ifTr-
cult 10 design individual jobs that are high Oil each of these dimensions. The job of review-
mg applicalions at AT&T Crl-dlt Corpor.ltion. for example. required a hmited Illllllbcr of
skills. was low on task idcntity because Ihe employee often did not know whethcr the

Self-managed work team

member; have the autonomy to
lead "lid manage themsclves 'lIId
<k·termine how Ih<'y will jointly
perform the tasks necessary for
the team 10 a"hie"" its goals.
Ilere a te"m ofToyOl" workers
work 10 ",scmbk a "ar !xxly,

RESEARCH AND
DEVElOPMENT (R&D)
TEAM
A le.m th.l j, fonncd to
dc,etop fie'" prodUCh. may l>e
,'ro"-fun"li,,nal. and is "hen
u.,.;d In hlgh'lcd indu'lrie"
CHAPTER 1 t • EFFECTtVE WORK GROUPS AND TEAMS 379
application was eventually accepted or rejened. low on task significance because the
employee did not have a seose of how the job affttted the customer, ,md low 011 autonomy.
Combinmg the tasks of this job with the tasks of other jobs involved in the process. and
thell giving iI group of employt:cs respons ibilily for performi ng all of these lasks. heightens
the job characteristic levels for I'(ldl group Illflllher. Skill variety increases becausc mem-
beN usc a full array of skills to perform all of the various activities. Task identity and task
SIgnificance are heIghtened because the groups perform all the activities necessary to pro-
vide credit to customers and have a real sense of how their activities impact customer sat-
isfaction.
A number of conditions must be present for self-rnalwged work teruns to be
effect1\'e. 66
. The group must be truly self-managing. The group il.~df must havc the autonomy
and authority to do many of the things traditionally reserved for managers. like
setting the group's goals. determinmg how the group should go about reaching
them. and i1ssigning individual tasks to members. Some managers arc rcluctalll to
give up these responsibilities. Onc of the advantages of using self-managed teams
is that the number of middle m,magers needed in an organizmion may decrease.
1. Selt~man'lged work temns appear to be most cfft"t:t]\'e when the work periormed by
group members is sufficiemly complex and results in some sort of finished end pnxl-
UCI. By "complex:' we mean that a numocr of differelll ~teps and procedures must be
perfonned 1O accomplish the group's goals. By "fmished end product:' we mean
some identifi'lblc group OlltPUt sllch as extending or rejecting credit to customers and
collening payments.
3, Managers in the organization must support and be commilled to utilizing self-
managed work teams. Sometimes self-managed teams fail because managers arc
reluctant to relinquish their 'luthority to the teams. or they don't support the teams
by giving thl."m the guidance and coaching they need. Managers need to be avail-
able 10 the groups in an advisory capacity and provide coaching when needed
as well as help groups that veer off course to get back on track. When members
of a self-managed work team ha\'e serious disagreements. for e.\ample. managers
shollid be available 10 help team ml."mbers settle their differences fairly.67
4. MembeN of successful self-managed work teams must be carefully selected to
ensure that the team has the right complement of skills and expertise to get the
job done. 6s
5. Team members need \() be able In work with one another and want to be part of
the team. Not all employees waot to work closely with others on a team or want
the responsibil ity that goes <llong with being <l member of ,1 self-m<lnaged team,<>9
Self-managed work teams have been lIscd successfully by a number of organizmions.
such as General Mills. Federal Express. Chaparral Steel. 3:\1. Aellla Life & Casualty. and
Johnsonville Foods 70 However. more research is needed to understand why they h<l\'e
been successful as well as why they are sometimes not so successful. One study suggests
that members of self-managed work teams may be somewhat relUClalllto discipline each
other (for example. withhold rewards or punish a member who is not pcrfonniog aceept-
ably).71 This C,lII result in some members performing at a lower level in self-managed
teams. Other studies suggest that the success of a sclf-managed team depends on the extent
to which its members value being pan of the team and the stmlls the group has within
the organization.n In ,lny case. additional researeh is needed to explain why some self-
managed teams succeed and others fail.
Research and Development Teams
Organizations often use IX-'Scarrh and dc....~lupmcnt (R&D) lemus to de"elop new prod-
ucts. especially in high-tech industries stich as electronics. phamlaceuticals. and t'ompuI-
ersJ.1 Some R&D teams arc cross-fllnctional: team members represent each of the different
380 PART 2 • GROUP AND TEAM PROCESSES

EXHIBIT 11.6
A Cross-functional and
R~",.,ch

Research and Dw,"opm"n,

D~.rtm.m
Development Team

Engm.enng
Oep.rtmen,

Marh"ng M.nufaetunng
Dep.rtmen, D"partmen,

Fin.n«
D~.nm.m

SKUNK WORKS
An R&D team that i, creatcd to
.,!X'ditc n,,,'; product dc,jgn and
p,..,m<l1c mno'auol1 m Un
01'£3",'-"11011
functions ordepanmcnts necessary to del'elop and I~lunch a new product. An R&D team try-
ing to develop a sophisticated elcctrunic notepad. for example. might indudc members from
research and devc!opment. engineering. manufacturing. finance. marketing. and sales (sec
Exhibit 11.6). A team on which each ofthcse capabilities is represented is in a good position
to develop a successful new product.
An R&D team that is cTCaied 10 expedite new prodUCt designs and promote innova-
tion in an organization is known as a skunk works. The group consists of members of
the engineering and research depanmelllS and other suppon functions like finance and
mnrketing. Skunk works often med and work in facil ities thm nrc separated from the rest
of the organization. Having their own facilities gives group members the opportunity for
the intensive interactions necessary for innovation (or other process gains) and ensures
the group will not be interrupted or distructed by the day-to-day problems of thc organi-
zation. Members of skunk works often become very possessive of the prodUCtS they arc
developing and flocl completely responsible for the success or failure of them.
Ford Motor Company establi,hed a skunk worh to develop a new MuS!;mg coupe
and convertible. Interestingly cnough. when Ford managers projected that dc\'eloping
the new Must~lng would cost approximately $1 billion. tOp executives almost aban-
doncd the project. However. the project was ultimately spared and tllrned OVl'r to a
skunk works. When all was said and done. developing the new Mustang co>! Ford only
about S7QO million and was accomplished in 25 pereent less time than Ford usually
takes to develop ,t new model. This helpcd Ford in itS quest to regain itS competitive
advantage.
John Coleni. one of the champions of the Mustang and fou nders of the sku nk works.
along with othcr teammcmbers. realized thmto develop the new Mustang in a timely f,ISh-
ion while at the same time lowering costs. the team wOllld need the freedom to make its
own decisions and not follow Ford·, usual dc'·clopmellt process. Will Boddie. the engineer
who led the team. recognized the need to hal'e cveryone working on the project in close
proximity to one another but distanced from Ford itself so that they would not be encum-
bered by the company's prevaihng procedures and norms. A furniture warehouse in
Allen Park. Michigan. wa, converted to become the home of the skunk works. and team
members-everyone from dmfters to enginCC"fS and stylist, to ··bean eoulltefs"-moved
into cramped offices to work on the MUStang.
A tuming pomt in the team's development occurred whell an unexpected problem
arose during the te>!ing of the prototype for the 1'>lu,tang convertible. When chief cngi-
neer Michael Zevalkink test-drove the prototype. the car shimmied and shook.

For<l crcatc<l an ""xtrcm::"t"am
to <lcvdop a ocw ""rxion of its
d:lssic Mustang coupe an<l
''<;Invenible _Membc", of Ihe
group-also know as thc "skunk
works'- -I iterally barri"a<lc<l
tIICI11SCI\'CS in an empty rumiturc
warchouse ulltiltbey l:'11 tbe job
<lone.
VIRTUAL TEAM
A tearn;n "hie'h a significant
affiOUnl or ,'<;ImmUn;CaIKm and
lntcr:l<:lion ,""u'" dcclr"nicallj
rather than face 10 face_
CHAPTER 1t • EFFECTIVE WORK GROUPS AND TEAMS 381
Engineers worked for II yellr to resolve the problem. but wilen Zevalkink test-drove the
"corrected·' model. Ille car still shook. Senior execulives at Ford were aware of Ille
problem but did not renege on their promise 10 preserve the independence <lnd <lutOlt-
omy of the skunk works.
During'111 eight-week period. the convertible was furiously reengineered (lhe engi-
neen; working on it e"en slepl on the !loor of Ihe warehouse at night). and the problem
was solved by ins1:llling braces in the car and redesigning its mirrors. Will Boddie.
however. waSIl't satisfied with these changes. When he saw a new Mercedes convcrtible
In a parking IOl.lle thought. "Why shouldn'llhe Mustang cOll\'ertible have as smOOth
a ride as a Mercedes con"ertible'!"" He wId the skunk works engineers 10 purchase a
Mercedes convertible and take it apart to learn the key to its Slllooth ride. The
consequence of this research was the attachment of a 25·pound cylinder behind the
fronl fender of Ihe Mustang (a similar attachment on Ihe Mercedes conlributes to its
smooth ride).74
The skunk works was succcssful in developing the new Mustang in record time and at
a 10w'Cr-than-usual COSt because the team members closest to the issues involved nOt only
had Ihe autonomy to make decisions and ch:1I1ges as circumstances warranted but also a
high level of cOlllmilmenllo Ihe leam's goal of keeping the Mustang ali\'e. The skunk
works's autonomy and relmive isolation enabled it1() respond to problems and make
needed changes quickly ;lod efficiently.
A skunk works .tpprooch 10 R&D can be very successfUlly used to develop new and
innovative products. Even when new-product development requires the in\"olvemc111 of
many diffcrent peoplc in an organi7.ation, skunk works can still be cffcetivc. The skunk
wolts tll,1( developed the MUStang. for example. included about 400 people grouped into
whal were called "chunk leams:· each of which worked on developing a particular as)X.'Ct.
or "chunk:' of the car. 7S
Virtual Teams
Virtualtcmns arc teams in which a significanl amount of communicalion and il1leraction
among mcmbers occurs clcctronically, using computcr hardware and s o ftwarc.7 b
Organizations usc vil1ualteams to help people in different places and/or time zones work
logethcr. 77
Mcmben; of virtual teams use a varicty of new information technologies Ul share infor-
mation, interact with one anothcr, and achieve their goals. More specifically, there ;lrc two
382 PART 1 • GROUP AND TEAM PROCESSES

types of information tcchnologies that vinual teams rcly on. Synchronous technologies
enllble tellm members to communicate with each other in real time and simulwneously.
These technologies mcillde videoconferencing. t.::leconferencmg. instant messaging. and
c1cl·tronic meetings.7 8 When asyndronolls technologics are uscd. communication among
team members is delayed rmhcr than instmllancous. f'Or cXlImple. using c-maiL electronic
bulletin bo.1rdS. and websites often results in somc communication delays."''' i\-lany vinual
teams rely on both kinds of technologies. depending on the tasks they are performing. The
kind of technologies teams usc al50 hinges on levels of task illlerdependence in a virtual
tellm. For example. teams whose membcrs lire reciprocllily illlerdepcndelll have grcatcr
nced for synchrollous technologies than teams characterized by pooled interdependence,
For this reason the development of relationship-D1nlding. web-based software that <llIows
for mllc"h more team illleractioo and COIll.lCt is becoming increasingly importalll today. ami
many organiz3Iions lire tllking lIdvantllgc of its powcr to fllcilitmc group intcmction (see the
Nell" York "lillleI case at the end of the chapter).8fI
According to researcher Lt.-e Sproull. who studies virtual teams. orgam:wtions will
increasc their reliance on virtual teams because of increasing levels of globalization. When
tClllll memOcrs livc lind work in differelll coulllries. vinulli tcams are often a ncccssity.81
Vinualte.lms allow organizations to keep their members .,pprised of the knowledge. exper-
tise. and experience they nt"i.xlto accomplish the task al hand. regardless of where they arc
located.
Vinualtemns face allthc challenges thm members of ordinary teams face. such as
curbing social 101lfing and maintllining a good balmtce between conformity ,Htd
deviance. They also face the additional challenge of bllilding trust and cohesiveness
among people who rarely interact with one another in pcrson. 81 To meet this additional

OB Today
The Challenges of Being a Virtual Team Member

Hewlett-Packard, the electronics and computer technology giant, prides itself on taking
advantage of the latest development in information technology to support flexibility and
diversity.s3 Thus, telecommuting, using new information technology to facilitate working
from the home, and virtual teams are all realities at Hewlett-Packard, Take the case of
Barbara Recchia, who is a member of a team in the company's human resources depart-
ment. The other members of Recchia's team work at corporate headquarters in Palo Alto,
California, while Recchia works from her home in $anta Rosa, California (which is north of
San Francisco), and communicates with the team by phone and e-mail. 84
Although Recchia likes her virtual arrangement, she also sometimes gets lonely and
feels isolated from the other members of her team. She recalls when she first started
working from her home, she used to come to the office in Palo Alto around once a
month. She soon realized, however, that she was feeling very disconnected from her team
and the organization as a whole. Now, she comes to headquarters about once a week,
and she tries to attend important meetings on site. She also finds that it is important to
sometimes meet face to face with her supervisor to get some sense of how her supervisor
really feels about key issues and decisions,as
Equally important is making time to socialize with membets of her team when she
comes to Palo Alto. Getting together for lunch after a morning meeting helps to build a
sense of camaraderie and enables Recchia to feel connected with her team and the com-
pany These occasions also help satisfy her need for social interaction 86
 CHAPTER 1t • EFFEGIVE WORK GROUPS AND TEAMS 383

challcngc, somc virtualtcams makc it a point to schcdulc group rccreational activities

like skiing trips so that their mcrnbcrs can gel to know. understand. and trUSI e,Jch
otherP Many virtual teams .Ibo schedule periodic face-to-face meetings to supplement
clcc!Tonic forms of comrlllrrJication. which can be especially important for newly formed
virtualteams.~~
Research on virtual teams is at an e1lrly stage. but preliminary studies suggest that
while some vIrtual teams can perform as well as teams whose members meCl face to face.
team members may be less satislied with the experiellce, alld cohesiveness may be lower in
virtual teams. S9 Pcriodic face-to-facc mcctings and .schedulcd rccremional and social activ-
ities can improve the cohesiveness of virtual learns.
In some virtual teams. some members are located in the same physical location and
often interact in person. whereas OIher members of the same· team work in a different loca-
tion and interact with thc rest of thc team primarily through electronic fonns of communi-
cmion.90 While this kind of arrangement has the benefits of increased flexibility. it also
presents some special challenges as indicated in the following OB Today.

Summary
Group and organizmional effectiveness hinges on minimizing process losses. achieving
process gains. aligning group goals with orgmliwtional g<Xlls. and having the appropriate
level of group cohesiveness. Four types of gmups that are espedally important in many
organizations includc the top managemcnt tcam. self-managed work teams. research and
development teams. and virtual teams. [n this chapter. we made the following major
points:
I . Actual group performance often !~1I1s short of potential performance because of
process losses due to coordination and motivatIon problems in groups. Process
gains cause the potential performance of a group to rise. and they enhance group
effectiveness,
2. Soci'llioafing. a motivation problem that leads to process losses. is the tem[ency of
individuals to exert less elTort whcn they work in a group than whell they work alone.
Social loafing occurs fortwo reasons: (a) Individu:Ils in a gmup think that they will
not receive positive outcomes for perfomling at a high leyel or negative outcomes for
substandard perfonnance because individual levels of performance cannot easily be
identified and evaluated: also. (b) Individuals think that their own etl'orts are unim-
portant or not really needed. Social loafing can be eliminated or reduced by making
individual pcrfonnance leyels identifiable, making each individual feel that he or she
can m;lke an important and worthwhile contribution to the group. and by keeping
group size down.
3. Group tasks can be characterized in tenns of the nature of irncrdependencc between
group members. 'Thompson describes three types of task interdependence: pooled.
sequential. :Hld rttiprocal. The nature and causes of process losses ,HId process gains
depend Oil the type of task involved and the degree of interdcpendence among group
members.
4. Group cohesiveness is the allractiveness of a group to its members. Group size. the
similarily/diversity of group mcmbers. competition with other groups. success. and
the exclusivcness of the gmup help to detcmline the level of gmup cohesiveness.
Consequences of gmup cohcsh'erlCss are the Icyel of participation lInd communication
within a group. the level of confonnily to group norms. and group go;ll ;lccomplish-
men!. When group goals are alil;ned with organizational gools. there is'lIl optimal
level of gmup cohesivcnes, that results in high levels of perfornlarx:e. When group
goals are not aligned with organizational gn..1Is. group cohesiveness is dysfunctional
for an org:miwtion.
5. Four kinds of work groups that have the potential to aff(:Cl organizatronal perfor-
mance dramati<.:ally are top m,magemern teams. self-managed work teams. research
and development learns, and vinual tcams.
384 PART 2 • GROUP AND TEAM PROCESSES
Questions for Review
1. Give an example of (a) a process gain in a research
and developmenl team ,lnd (b) a process loss in a
research and dcvclopmentlcam.
2. Gh'e an cxample of (a) a process gain in a sclf-
managed work team and (h) a process loss in a
self-managed work team.
3. Why do some individuals engage in social loafing
whilc OIhers do nUl?
4. Can managers change the type of task interdepen-
dence in a work group, or is task interdependence
a relali vel y fixed charactcJi;;t ic'! If managers can
changc it. how might they do so'!
5. Why is it somctimes hard to managc groups that
are reciprocally interdependent?
OB: Increasing Self-Awareness
Group Effectiveness
Think of a group tha! you arc currcmly a member of-
a work group. a club. or any othcr group that you belong to
and ,lctively participale in. Brieny describe the group.
Then answer each of these queslions:
I. What process losses are experienced in this group?
Why?
2. What process gains arc expericnced in this group?
Why?
3. Does the aelUal perfonn<lnee of this group equal
ilS potenlial performance'! Why or why nOI?
4. How might lhis group raise its polential
performance'!
6. Is social loafing a problem in top managemelll
learns? Why or why no!'!
7. Whal kinds of elllploy~s wuuld probably prefer 10
"'ork in a vinualwam ralher than in a tcam thaI
meets face to facc?
8. How can excessivc group cohesiveness result in
low levels of perfomlance'!
9, How can t(Kl lillie gtuUp cohesivcness result in
low levels of perfonnancc'!
10. In what kinds of organizll1ions might it be
especially importanl for work groups to be
cohesivc?
5. Is soeialloafing a problcm in this gmup? Why or
why not?
6. How would you chanlclenze the major tasks per-
formed by lhis grollp in terms ofThornpsoll's
modd of task interdependence?
7. Is lhis a cohesivc group? Why or why not'l
8. Does cohesiveness help or lIinder the group's
performance?
9, Arc group goaLs alignNl with any largcr organiza-
tional goals?
 CHAPTER' t • EFFEGIVE WORK GROUPS AND TEAMS 38S

A Question of Ethics
Group Processes and Ethics
As the chapter nOles. somC1imes when groups ur teams becume too large the problem of social
loafing arises a, ,ome employl'C' wilhhold their own effort, amI let olher members of the team
bear lhe work burden. If this happens, the members of a group are likely to corne into conflict
because they do not thinl: this is fair. and thm some people ,Ire pulting their own self-interesls
above those of other group members. With this in mind think aboutlhe followmg issues:
• To whal extent should the members of a group auempt \() corrcrt and change the
behavior of a group member they feel is shirking?
• At whm point is it appropriate to inform their supervisor aboll( this behavior?
• At what point docs conflict between group members become unethical?

Small Group Break-Out Exercise

When and How to Use Groups
After rcading the following sccnario, break up into gmups of thrce or four pcoplc and
discuss the issues involved. Be prepared 10 share your thinking with the reSI oflhe class.
YO\' are the managers who are in darge of the opcr,Hiolls of a large building-products
supply company. In the past you eal'h were responsible for a differem department and each
of you well.' responsible for managing Icn employees who worked separately to stock Ihe
shelves. answer customer questions. and check OUI cuslomers. You have decided that you
can opcmte more efficiently if you organile these employees into work teams. You believe
thai the old system did not encourage }'IKlr employee, to behave proactively. Indeed. ylKl
think Ihm Ihe way Ihc work situation was dcsigncd prevcntcd them fmm fmding ways 10
improve o(X'rming procedures and Ihis is why you have chosen to usc work teams.
Teams will change how employees perform their tasks in many ways. You are meeting
to decide ho,,"' to change the way you mot ivate employees to encourage other employees ill
the new work groups to perfonn at a higher lcveL Using the chapter material:
I. Identify Ihe kinds of PI"OC<:SS gains ,Uld losses associ,ued with this change to worl:
groups and discuss ways to solve potentialmot1Vation and coorumation problems.
2. Discuss how In change the ilKemive ,y,lem 10 clKourage emplo)'cc~ to nlopcratc
and work togelhcr inlheir ncw teams 10 improve perfonnance.
3. Discuss some steps you can take to smooth the transilion to teams and help
emplo)'l"Cs become used to working in Iheir new teams.

Topic for Debate

Organi7.ational effectiveness hingcs on the effeclivencss of thc groups that make up an
organizalion. Now that )'OU have a good understanding of what makes for effectil'e work
groups. dcbatc the followi ng issue.
Team A. Process losses in work groups arc more common Ihan process gains.
Team B. Process gains in work groups are more common than process losses.

Experiential Exercise
Curtailing Social Loafing

Objective
Ynurobjeetivc is 10 gain experience in developing a strategy 10 reduce socialloufmg in an
ongOlllg group.
386 PART 2 • GROUP AND TEAM PROCESSES

Procedure
Assurnc the role of a manager of ,I home improvemeJ\lslbuilding supply store that sells a
wide range of products-induding lumber, plumbing fixtures. windows. and pamt-to
both commercial accoullls and individual customers. The store is staffed by three types of
employees who work in three differelH gmups: (I) a group of six cashiers who check OUl
purchases made by individuals on site: (2) a group of five floor employees who help cus·
tOnlers locate items they need. stock merchandise. and reshelve returns: and (3) a group of
four employees who handle commercial accounts. All the employees arc paid on an hourly
basis. The cashiers and floor employees cam the minimum wage: the commercial aeCOUlll
emplo}'ees cam one and a Imlf times the minimum wage.
You arc pleased with the performance of the cashiers and the commercial acconnt
employees. The floor employees. however. seem to be pUlling fonh less effort than they
should. On several occasions. customers have complained about not being able to fllld
items. ond you personally hove located the items for them even though there were
omple noor employees on duty. The floor employees do not seem busy, and their work,
loads have nm increased recemly. yet they have a backlog of work to be done. including
Slocking of new merchandise and reshelving. Despite their backlog. you often sec
members of this group ehalling with each other, lOking eigorelle breaks outside the b.1ck
of Ihe Slore. and making personal telephone calls-all outside their regularly scheduled
breaks.
I. Individually develop a plan of action to reduce social loafing in the group of floor
employees.
2. The class divides into groups of three to live people, and each group appoints olle
member as spokesperson 10 preselll the group" action plans to the whole class.
3. Group members take tums describing their action plans for reducing socialloaflllg
omong the floor employees.
4. Afier discussing the pros and cons of each d ilTerent approach. the group develops
a plan of action to reduce social loafing among the floor employees.
When your group has completed thesc activities. lhe spokesperson will presell1 the
group's <lclion pIon to the whole class.

New York TiITles Cases in the News

mh'· ;X"u lJork i!!im,.

"Surgical Teams Found Lacking"
Eric NaS(!IImey. NIT May 9. 2006. p. F6.

TllCy call il a surgical team. but there may
be a lot of t('mn"'orkldt lu be li'siT\'d. a
rocw study r,nds. The rescan:hers surveyed
morl' tlHln 2.100 ,urgeons. "nl',thl'siolo-
gists and nursc~ about operaling room
communications. Their vicws-and tile
divergence among them-may shed light
on 1lO'" some surgical mist"kl's happen.
When the participanls were a,kd to
"describe the quality of eommunicalion
and collahOfation you lIa\'e experienced"
with other TllCmberS of opemtinl,' temlls.
surgoons were gi"enthe lowest ratinl,' for
lealll"·ork. Their worst ,tSSCSSrrlent WaS
fl\Jm nurses, lhe l,'I\JUP that l,'OIthe highest
Ming.
"lbc study is somewhat humoling to
l1\e:' said the lead ,mthor of the sludy.
Dr. Ma"in A. Mabry. a surgCQll at Johns
Hopkins who has been adwlCatmg " new
appro;.leh tn operating room ('ommuni-
cation. '1llcrc's a 101 of pri<Jc in the surgical
community. We n" ..xl In oal:"";e out the
eaplUin·of-the-ship <Jo<:lri nc:'
For the study. described in lhe current
issucs AIIII<I/" of S"'l!en' and Tilt' }o"m<ll
oftile Alllaialll ColIl'gI! of Sllrg~Olts. the
rcseardlCrs 'lIf""ycd medical wurk"rs "t
60 hospilul., in 16 stutes. The surwy was
lx,sed on th" Safety Attitudes Quc,lion·
naire thai airlines usc to impnJ"e coc~pit
management. The goal is to make sure ,,11
memhers or a team feel free to 'lICuk out
iflhey feel a mistak is being made.
Many "perming mom miSlu~e'. like
sponges left III patients or the wrong

body pari bemg operated on. could be
~mided lhrough bener communic~tion.
lhe t<:scat<:hers s'lid. BUI lh,s can mean
gening over b~rriers of da". "'<ce.
Questions for Discussion
I. Why do process losses occor in hospilal teams?
2. Using OB, how would you design a tmining program 10 build lhe ;lHensh'e learn roulines
neec.,""ry 10 avoid oper,lling room errors'l
"Working Together, Wherever They Are"
5len' Lohr, NY7: VCI. 5, 2005. I', C.I,
To glimpse lhe re'll elkcl of loday's
computer networks, it belps to tTavel f~r
beyond lhe high'leeh holhouse of Silicon
Valley, aw~y f"'m the vemurc c~pilalisl',
IIwentors and billionaire-wannabe entre-
preneurs. To go where Google i, jU'1
~ semch engine, 1101 an obscs>ion, lry
Elkhart, Inl!.. home 10 Nibeo Inc', a
eentury·old maker and dislributor of
plumbing ,upplies. A priva1<' eomp:my,
Nibco employs 310) worters alK! gener-
~te, SSOO million a )'ear in sales. It face'
stiff competition from Chinese producers.
Sirn.:c lh<' laic 1990's, Nilx.x, ha' posIK'll
h;"d 10 incre;lse productivity ~Ild improve
cU.'tomer sn\'ice by using computer
networks. Tltc cxmlp~ny nISI focused on its
own oper-,tion" then c,l~blislK'll llClwork
links to its cuslomers ,md suppliers. Now.
Nioc'o's inH."ntory, blx,.. ~nd oomini,trative
costs lIre down sh~ll'ly. and 70 percent of
all orders 'ITC digilally ,mloll~1ted, twic'c!he
level of ~ few )'e~rs ~go.
The second round of Ink'mel inno"11·
tion appears 10 be here. Companies large
and ,mall cxperi...need soaring pnK!uc-
tivity in the 90's as the Web m~de "",..IdS
of informalion available al the click of 11
mouse. and the Internet dmstieally redu<-e<!
th... COSI of communicaling and ooing
bu,ine," with someone on the ne.xt floor
or lhe next ...onlinen!. That cOSl-eUl1mg
payoff <:ominucs 10 'preoo. Out in the nexl
wavc. companies arc embmcing the p01<'n-
CHAPTER' 1 • EFFEGIVE WORK GROUPS AND TEAMS
)!ender and even l,'eneraJ ollliook.
Aflerw~rd. the re'earchers spoke wilh
partieipanlS 'l1ld found lhal "nurses
onen desnibe good eoll~bormion as
Q!IJt ,KrtlJ york €lmtS
lial ofnelworked compuling to Jet workers
share their knowledg... more df'demly as
ll"o;:y nurture new ide'iS. new prodUClS aoo
new w~y' 1o digitally aU1om~te all ,ons of
lasks. Compllllies arC drawing on collallo-
mli"" models thai first blossomed in rn.m-
business sellings. from online g<lmes to
op<'n-source softw~re projeelS 10 the
so-called wiki ellCyelopcdi'ls and blngs 10
,peed up inno,"alion. This nelwork~'ll ml-
laboration is cre;'ling new opportunilies
and di,rupling industri.,s,
Open·souree ,oftw~re is a piollCering
c'xampk' of the kind of eollaboratin' work
m~de possible by the ImenlCl. Nelworks
of far-flung progranun.:rs ,h:lTc> c,K!e
;'nd ideas to conslantly improve and
debug their solh>lltC. So the 0p'-'n-sou[('t
Linux operating system is challenging
Mi.-rusoffs windows, 11 pnxlu':l backed by
one of the world's richest corporations.
Thl' OjX'n·>oun.~ formula is being applied
in one f'eld ~fter ~n01hcr. Projects r~nge
from Wikipedia, an open-soun:e cn.'Y-
c1opedi~. to Uiolog.ic~l Innov~tion for Open
Sol'iely, or BIOS. an open soun:e iniliati""
in bkllechl1Olog)". CO'l'Of'nions ~rc rapidly
adopling son"'an.' lools imended 10 nurture
collaborative work. inc'luding wikis. bing,.
inslallt nlCSS:lging, web-base'll <cooferellcing
and peer-to-peer programs.
For "lark DickinSOfl, a leehnical man-
ager al thc XRT Group. a software com-
1"111)", the payoff from using Web col-
387
ha\'inl,' lheu inpltl respeded. and physi-
cians oflen desnibe good collah"'~tion
as h<lving nurses who antielp<lte Iheir
needs and follow in,lruetioll.S."
labomlion software is self·evident. Wilh
Mi<"m'oft\ Li"e MC..,ling progr-'m.
Mr, Dickinson can provide l<xhnical
,upport 1o lhe large empor~lions thai use
XRTs ea,h marMgemcm software wiOlOOI
l.-a'ding fmm hi'ollil'C in King of l'rus.,i~,
Pa. He c~n sce wh~t is on lllC computer
",,,-'tn in cu,lomers' d~t~ l'Cnlers. tell ml~
cemer teams what scning nl.1Y be wrong.
w~lk lhem thmugh 'oftware upgradc,-
e''Cn. with pcnnission. t"kc comrol of their
.x,mpuler>; aoo m~ke ~'hang~" himself. In
his job. Mr. Dickinson uses lhe web
~x>lIaboratioo t,.Jl lhree or ftMJr limes a day.
"I can spend a few hours on ;1 web
~xmfc,,-·Il<.x> insleoo of ,pending three mys,
including lhe travel time. for an OIl·sile visil
10 11 dic'nl;' he said. "Thl' pnK!udivily
benefit is just obvious. Bcsidcs. I h~le
flying."
Drcsdncr Klcinwort Wasscrslcin. an
inve,tmcnt bank. has lx.'Cn using "'iki
software. which leIS users coll;,boratc on
wcb pagcs. 10 CIl<X'tJnlb'C lemn"urk <UTlO'lg
its tr.\<krs ~nd bankers arou,K! the world.
Tltc wiki sonw,lTC. from sO,:i,~IC.\I. a ,~,rt­
up. h:Jl; replaced e-mail and conference
calls for ta,ks lik('" prieinl,' internalional
bond nf!"crings ... It·, a virtual work space
for tawing lllC expc"i~ aoo knowledg.e of
m,,..,, people." 'aid P. J. Rang~,wami.chief
il\fonnaliOll olticer of Drcsd'lCr Klcinwort.
"Conference ("alls and e-mail just aren't
suiled foc coliabomli.'C work:'
388 PART 2 • GROUP AND TEAM PROCESSES

Questions for Discussion

J. What is cullaborati\"e web· based software?
2. In what ways dues this kind of IT facilitate the interactions between group members and
incrca'iC team pcrfonllan<:c"

ll;hr ;XrllIl1ork lrtmrs

"Carmakers' Big Idea: Think Small"
Michdilll' Maynard. NIT, Feb. 5, 2006. P. J. I.

No longer do the industry's two biggest
companies. G.'net""JI Motors and Ford
Motor. dominate the industry-not in
profits. sales or buzz. The honc.,t action
i., now taking place among thc next
four companies: Chrysler. a unit of
DaimlerChrysler of Germany. and the
Japanese aUlOmakers Toyota. Hond<l and
Nis<lln. As G,M. and Ford c'ut jcms, dose
plams mtd pledge yet <lgainto lntrodoce
ear'i and trucks that Amerir:ans want to buy.
their smaller rivals <Ire 111 their stTOn£est
shape eR·r. Thc Next four an.. addingjclbs.
opcnin£ pl<lms tilling showrooms with new
models-and. most imponantly, earning
billions of doll,trs in Ilro!lts that can
mntributc' to e"en n~ growth. Althou£h
all the Next Four <Ire part of big £lob«1
l·{Mnpani<.·s, tOC'y h«,·t· kept their sizc', costs
and dc;llers in the United Swtes rel;,ti\'dy
small and limited their brands and lirK'ups.
even as they e.\pIon: new niches wherc they
"an pic'k up ,ales. For them, being small
1\;" ;,ddcd up to being almost as big as the
two Dc'troit players.
"It's good 10 be small. bec«use you
can mo'"e quit'}':ly:' said Ron Pindli.
president of the Autodata Corpor«tion. an
indu,try .,tatistics finn in Woodcliff Lake.
N J. He said that "'the whole large-
eompa,,}' culture is a burden:' one lhm
both G."-1. and Ford have ,""wed 10 shed.
For inspimtion. they Can look to Chl)'sler,
which once slood with lhem as 0",-" of the
Big "I1m.'<' but is fast breaking away from
the Detroit pack. Chrysler is already
getting rid of its large-company mind-
set-along with 46.000 jobs o\t'r the last
fiw yea"" Thc latest example of its dri"e
to do Ic.~s with more is ,11 a factory here in
Dundee. Mic·h .. 60 Illi les somh of D<:lroit.
where il is uSll1g a small number of
worke", to bui Id four-cylinder engines for
its small ems. The plam is run by the
Global Engine Manufa<"luring Alliance. a
partnership of Chrysler. Mitsubishi of
Japan and Hyundai of South Kor"a. The
companies will be <lble 10 share the half
million c'ngines the plant "an build each
yem. allowing them <Ill to in\'est smaller
amounts. me"t their need.• for engin"s
and enjoy economics of scale th<lt they
couldn't ha,'e a{'hi","ed individually,
To get there. the three have negotiated
a relati\·t1y s",all labor burden from the
United Automobile Workers union:
a eontract as lhin as " "",:}.:et "akndar
th;'t docs not c;,11 for dolenS of narrowly
dc'tined job,. as is CommOn in m"ny
unionized auto plants. but has only one
c"t"gory. called t"am member. for hourly
workers. Everyone learns e\'ery job-and
a result is " work foree that is self-
starling and flexible
Chryskr"s efforts. as well 'IS those of
the others in the Ncxt Four. show a new
way of thinking in ,m lI1dustry that
sce"'cxl paml)'1.cd by its gargamuan ro<lI,'.
The contrast bet"'C'Cn old and new is
e\'en clearer in the way jobs are assigncd
to workers at the Dundee plaot During
their shifts-IO hours <I day. four d<tys a
week-workers might he responsible for
18 to 20 spots on the assembly lone.
rather than be rigidly limiled to on"
narrowly defmed task. Indeed. each
work"r learns every joh on the line.
reflectmg the plant's philosophy of
"anyonc, anywhcr". anylh ing. "nytim".'"
The workers. who are U.A.W. members.
had 10 go through a rigorou, applic'atiun
and tmining process. <lnd had to be
an'epted b~' planl managers rathc'r than
just being assigned by lhe union.
BN'ause the)' are u.,ing an elllirely neW
;'pproach. the man;lgers ;'ccepted only
two workers fwm other Chrysler
factories. Others came from parts
makers or other "ompani"s with UA.W.
workers. Despite the intensity. Jimmie
Pie",e, 36, says the job is a godsend to
hinl. lie recently lost his pre\'iousjob
when the Lear Corporation. a parts
supplier. closed its plant in Romulus.
Mich.l" his 12 years there. h" said. he
~tuck to his assigned tasks. e"en if a
probkm popped up. "At Lear. someone
else fixe~ it."" said Mr. PieKe. a sccond-
generation autoworker. At his new job.
where he superviscs a team of workers.
he >:tid that "you think of yourself more
a~ part of" bu~iness'"

Questions for Discussion

1. What kinds of process losses do teams avoid in a faetory [,Cuing'!
2. What arc the _speeilie sources of proeess gains that lead to lower costs aOO higher quality
in a factory senin£?
3. What other team concepts discussed in the chapter help expla in higher factory cfticiency?
 PAR T 2
CHAPTER Group and Team Processes

LEADERS AND LEADERSHIP

OVI:;RVIE\V

INTROIlUCTION TO Lt:AIlERSIIII'

EMU." AI'I'ROACltt;S TO LE,u)£RSIt II'

D<n:s L£ADt:RSIIIP AI-WAYS MAlTER IN OR(;AJ'iIZATIONS?

RECAP Ot" Lt:AOERSIIII' AI'PRO,u':IIU

SUMMAR"

ORGANIZATIONAL Ih:IIAVIOR IN ACTIO,'i

Learning Objectives
After studying this chapter, you should be able to:
Describe what leadership is, when leaders are effective and ineffective,
and the difference between formal and informal leaders.
Identify the traits that show the strongest relationship to leadership, the
behaviors leaders engage in, and the limitations of the trait and behavior
models of leadership.
Explain how contingency models of leadership and differentiate between
four different contingency approaches.
Describe why leadership is not always a vital process in some work situations
because substitutes for leadership exist.
Discuss transformational leadership and how it is achieved, explain how a
leader's moods affects followers, and appreciate how gender may affect
leadership style,
 Opening Case
A SISTER ACT HELPS CLAIRE'S STORES TO SPARKLE
What's the sisters' approach to leadership?

laire's stores, which sells cosmetics, jewelry, hair and body accessories,
and gift items, was thriving in 2006 as it became the place of choice for
teenage girls to hang out, socialize, and buy presents for their friends.!
Claire's current success is largely due to the work of its two co-CEOs, Bonnie
and Marla Schaefer, who took control of the store chain in 2002 after their
then 86-year-old father and store founder, Rowland Schaefer, had
a stroke. Their new leadership role had not been planned, indeed
their father had refused to name a successor because he enjoyed
being CEO, and as the family controls approximately 30 percent
of the company's stock no one could make him! Even when the
board asked them to assume leadership of the company, however,
this was meant to be only temporary and would last only as long
as it took them to recruit a new CEO, The two sisters, however,
had other ideas.
Even though her father had fired her from her first job
at Claire's because he thought she wasn't meeting job
expectations, Bonnie, like her sister Marla, had spent most of
her working life at Claire's. As the new leaders of the company,
the sisters' first task was to decide how they would run the
company together. When two people are at the helm, this
Bonnie and Marla Schaefer ~rc both sisteTS frequently leads to conflict between them as they battle for
and (x..CEOs ofCbi","'. B<~h """"k''' bdiew control over decision making and power. The sisters were
in dclc£~ti,,£ authorit}' (0 the 1l1«"'1gCTS below determined to avoid this leadership error and provide a united
t""lll and h,,,"c a p'lrticipali\"(" applX~,,:h 10 front to their subordinates-one based on a clear emphasis of
leadership. the need to set goals and then work toward achieving them.
They decided to take control over different areas of decision
making. Bonnie would be in charge of real estate, store operations, and
the company's international expansion. Marla would oversee product
merchandising, investor relations, and human relations. 1 They were
careful from the start to break down barriers between these different
functions or departments, however, and to get all their subordinates to
work together to stock and sell the products that Claire's customers
would most want to buy.
Both women believe in delegating authority to the managers below
them and have a participative approach to leadership. In the retail business
this is vital because it allows merchandisers to work closely with store
managers to decide on the right selection of products to offer customers. 3
It is also necessary in Claire's because Bonnie spends much of her time flying
around the globe to spearhead international growth and to oversee the
selection and opening of new stores.
Their goal-oriented approach works and they excel at creating a work
situation that provides managers with the authority to get important
things done so that nothing slips through the cracks. At the same time,
they are highly supportive of their subordinates and have helped many of
them develop the skills needed to manage in the fast-changing world of
teenage fashion.

LEADERSHIP
l k e.=i", of innucnc"", by nne
member Qf a groop or ~""iLltion
owr Ulb,:r member> to belp tbe
Iln..,p or org""i'.... i,lIl lll.'hi«.e it_
goah,
LEADER
An ,ooi,idual ",hoI' able to
inlluencc gronp or org""il.;J.lional
member> to help lb<' group or
organiwtion "Chle"f iI' goak
CHAPTER 12 • LEADERS AND LEADERSHtP 391
In any event, within one year of taking control, Claire's board of directors
made their acting co-CEQ titles permanent and, in the four years since they
assumed leadership, Claire's profits have soared-as has its share price. 4 So,
everyone is happy: Claire's managers, customers, employees, and investors-
including their father.
Overview
When things go wrong in all organizatioo. hlame is most oflell laid at the leader's feet.
Similarly. when organizalions arc doing particularly well. people tend to think that their
leaders are doing an especially good job. The common txlief that le,lders "nwkc a dif-
ference" and can have a major impan on people. groops. and whole organizations has
prompted OB researchcrs to exert considerable effort 10 Iry 10 explain the nature of
leadership. Researchers have focused prinHirily on tWO leadership issues: (I) Why do
some members of an organization become leaders while others do not'! and (2) Why are
some leaders more successful or effective than others? As the opening case suggests.
answering these questions is nOI easy because there are many differem kinds of leaders
and leadership approaches. While some approaches work in a panieular situatioll.
others do nol.
This chapler addresses these two importam issues and explores the nature of leader-
ship in organizatiolls. First, we define leadership and discuss the different types of leaders
found in organizations. Second. we explore sel'eral different approaches to le;;ldership Ihat
provide answers to the questions of why some people lx:come leaders. and what makes
some pL"ople able to perform at a higher level than others. We then consider the issue of
substitutes and neutralizers for leadership-thm is. factors that also help to motivate and
coordionte employee behal'ior. ;;Iod factors thnt can reduce le,lder effeeliveness. Finally.
we examine sOllle new topics in leadership theory and research: transformational and
charismatic leadership. the effel'! of a leadefs mood Oll his or her subordinate,. and gen-
der and leadership. By the end of this chapter. you will understand how and why leaders
so profoundly ;;Iffect organizational behavior at all levels,
Introduction to Leadership
Although you e,trl often recognize:1 leader when you see one in action. corning up with a
precise definition of leadership is difficult. Even researchers often disagn.-e about which
char<tCleristics best describe leadership but. in general. two arc regarded as being the moSI
impoT1;;1nt. S Firsl.lcadership iovoll'es exer/illK mf/llma over other members of;;l group or
organization. Second. leadership inl'oll'es lie/pins (I grollp or orj:wlbllion a('/,i/,)'/, iiI
goalJ. Combining these two key characteristics. we can define Il'lldl'rship as the e.\ercisc
of influence by one member of a group or organizmion over Oiller members to help the
group or organization achieve its goals. 6 The leaders of a group or organization are the
llldividullis who exert such mlluence. Lemler /'jJecti)'/'IICIS is the extent to which a leader
actually docs help a group or organizatioll to achieve its goals. 7 An effecti,,/' leader helps
achieve goals: an illlffej·ti\'e leader docs nol.~ Bonnie and Maria Schaefer have proved to
be effective leaders at Claire's bee;;luse they hal'e worked hard to find w;;Iys to improve
their company's performance.
Leaders intluence and shape Illany aspects of organizational behavior thm we have
discussed in previous chapters: attiludes (Chapter 3). learning (Chapler 5). motivation
392 PART 2 • GROUP AND TEAM PROCESSES
Tommye Jo Daves (right). a
60-year-old grandmmher. wa,
promOlcd and became Ihe pl'lm
manager of l<:"i's fa<:tory in
Murphy. North Carolina. She
began a, a scam,tre" at lhe
plant in 1959 and rose 10 the lOp
bec'ausc her job knowledge and
person'll qualilies eamed her Ihe
tnm and ",,'ped oftoc
workfor<:e.
FORMAL LEADER
A nwmberof an o'l',mi/Jt;on
"ho i' It''Cn authority b~ the
organ ,;wtion 10 ,nflue""e other
organ,uot;onal meml>ers 10
;lI.·hi<:,'e o'll.aniLalionalj!.oal<
INFORMAL LEADER
An orpminltional mcmbcr"i!h
no formal aulh<lfitl to influence
OIhe" "he> ,,,,,enhelc,, i' able
10 cwn considerable ;nfl"""""
"'",au".; of ,peeial ,~ill, dr laknl"
(Chapters 6. 7. and 8). stress (Chapter 9). and work-group effeeliveness (Chapters 10 and
I 1). Rese'lrch h'IS shown. for elwmple, th'll leaders inn uence their subord inates' or follow.
ers' levels of mot ivation. perform'lnee. absenteeism. and turnover. and the qual ity of Iheir
decision making. (We u'ejiJIIOl,'er,y and SIl!Jordilla!,'s interchangeably 10 refer to the mem·
bers of a group or organization who are influenced by a le'lder)?
All leaders exefl inlluenl:e over members of a group or organization. Some leaders.
however. have formal authority to do so while OIhers do no!. furmal lellders arc thosc
managers who are given Ihe authority to influence other members in the organization to
aehie\'e its goals. IO Wilh this authority comes Ihe responsibility 10 make the best use of all
organ izal ion's resou I"l:es, indud ing its money and capit'll and the abIlities and ski lis of its
employees. Note that not all managers arc leaders~ some managers do not h'lve subordi·
nates who report to them,ll For example. the accounting manager of a restauram who is
responsible for keeping the books is a manager bUt not a formalleader-Ihis person could
be an informal1cader. however. Claire's IS unusual in having t,,'o top form'll leaders.
Informal leaders have no formal job authority to influence Olhl'rs but sometimes
exert just as much influence in an organization as formal 1caders~and sometimes even
more. The :,bility of infor1l1alleaders to influence others often stems from special skills
or talents they possess-skills the organization's members realize will help it achieve
its goals. Eight waiters employed in a restaurant all h:I\'e the same job of serving cus·
tomeI's. for example. blll the waiter who was the most experienced and had the beSt
interpersonal skills became the informal leader of lhe group. He made sure lhat the
other waiters provided good service. and he 'llways stepped in to help settle arguments
before they got OUl of hand. The other waiters listened to him becausc his advice abOUl
customer service helped them earn large tips and because his social skills made the
restaurant a nice place 10 work.
In general. both formal1caders and informal leaders in!luence others in groups 'l11d
organ izatioJ1s. The various approaches to leadersh ip thm "'e desnibe ill th is chapler seck to
explain why some people become leaders and others do lIot and why some leaders are
more effective th~m others.
Early Approaches to Leadership
E<ll:h of Ihe V'lTious approades to leadership we diSl:uSS in the next sedions of this ch'lp-
tel' nJlnplements the other-no one theory describes the right or 011/.1' way to become a
leader or be a good leader. Each of the theories focuses on a differem set of issues, blll
 CHAPTER t2 • LEADERS AND LEADERSHtP 393

taken together they provide a beller understanding of how 10 become an effcctive leader.
Two of the earliest perspectives on leadership were offered by the trait approach and lhe
behavior appro;lch.

The Leader Trait Approach

Early studies of leadership sought to identify clldllrill).: permuill (railS that distinguish
kaders from follo,",'ers and effedive from ineffcl'1ive leaders. Recall from Chapter 2
that traits arc a person's particular tendencies to feel. think, and act in certain ways.
The search for leadership tnlits began in the I930s. ,Ind after nearty 300 studies. the list
was narrowell to several traits that showell the StTongest relationship to effective
lemlersh ip 11:
• fl/lI'l/igCIIC/' helps a leader solve compleJ\ problems.
• ul.d:-relewl/II I:lIml'ledg.' ensures that a leader knows whm has 10 be done. how il
should be done, and what resources are requircd for a group and organiwtionto
achieve its goals.
• Domil/wlt:<'. an individual"s need to eJ\ert inn uence and control over others. helps a
leader ehanncl followers' C'fforts and abilities toward achie\'ing group and organiza-
tional goals.
• Sdj-cullji(/clI("t' lx>th helps a leader influence followers .Inll motivates them to perse-
vere in the fal'e of obstacles or llifficullies.
• El/ergr/lI<lil"ill' 11'I'e/s. when high. help a leader deal with the many demands he or
she faces on a dl1y-to-day basis.
• Tolall/we for Slrcss IIClps a leader deal with the uncertainty inherent in any leader-
ship role.
• fll/('grit)' and hOllewy C'nsuTC that a leadn behaves C'thically and is worthy of his Of
her followers'trust and confidence.
• EmOliollallll(/lllrit)' ensuTCS that a lealler is not o\'erly self-centered. can control his
or hcr feelings. and can an;ept criticism. t.J
Thcre is an important poim \() understand when viewing leadership using the trait
approach. For some tr.lits. it is nOl clear what comes first: /,eillg ill illeadersllip posiliou or
/lOJ,leni'IX 1/11' lrail ill qUl'Slion. [n other words. is it possess ion of the appropriate tmit that
leads a person to become a leader'! Or. given what we learned in Chapter 2that personality
traits ell/I change o\'er the long term (several years). does be ing put in a leadersh ip [XlSition
result in a person developing leadership traits'! The ans,",'er to this question is not clear or
unambiguous. Individuals who possess the traits associated with effective leadership may
be more likely to become effective leaders than those who do nol. But ITlany 1I1dividuais
who possess the appropriate traits may never become leaders. and many leallers who
possess them arc not effective. The difficulty of this question prompted researchers to
look for other ways to understand effective leadership and search for other factors that
contribute to it.

The Leader Behavior Approach

Rather than looking at the personal traits of leaders. in later years. researchers focused on
what leallers ;lctually do-that is. on the spedjie hehm'iors performed by effective leaders.
Researchers at Ohio State University in the 1940s and 1950s weTC at the forefront oflhe
leader behavior approach. t~ The Ohio State researchers realized one of the key ways ill
which leallers mnuence followers is through their concrete behaviors. The behavior
approach seeks to identify leader behaviors that help individuals, groups. anll organiza-
tions achieve their multiple goals.
The Ohio State researchers developed ,I list of over 1.800 spedfic. concrete behaviors
they thought leaders might engage in such as sClling goals for followers. telling followers
what to llo. being friendly. anllmaking sure that followers are happy.t5 The researchers
thell developed scales to mcasure these behaviors and administered the scales to thousands
394 PART 2 • GROUP AND TEAM PROCESSES
CONSIDERATION
Beha\ ior inth,:ating mal a leader
1n.'I,. cc'JX><:t,. and \~Iuc, goOll
relation,hip, .... ,Ih h;, or her
follov.e"
INITIATING STRUCTURE
Rcha\;or, lMI ~ leader eng~gc,
in 10 make ,ure lhal "'or!:. o:et,
done and \uoordinalc, I"'rform
lhe,r jol1-. " •• cptahly.
of employees. Employees were asked 10 indicate lhe eXlelll 1Il which their leaders per-
formed the various leader behaviors. After analyzing their responses. the researchers found
that must leader behaviors involved either comid('falioll or inifialillg IlrII('WI"C. The Ohio
State results have been replkated in many studies and in other countries such as
Germany.16
Consideriltion. Behaviors indicating lhat a leader trusts. respects. and values good
relationship, with his or her followers is known as considerlliiou. Swnley Gault. a former
CEO of Goodyear Tire and Rubber. demonstrated consideration on his very first day as
CEO. He showed his foJ[owen; that he trusted them. While moving illlo his luxurious
office. he was offered a set of keys for the locked cabinets lining 1110;' office walls_ Gault
indicated tlwt he didn't want the keys becausc he liked to keep things unlocked. The
employee who offered Gault lhe keys urged him to a:consider because many people would
be going in and out of his office cvery day and the cleaning staff would come in at nigh1.
Gault's responsc was dIal he didn't nced the keys because. as he pUI it. "This company
should be run on the b,lSis of tnlst:' 11 Other examples of consideration include a leader's
being friendly. treating group members as his or her equals. and explaining 10 them why he
or she has done cenain things.
A leader who engages in consideration also shows followers lhat he or she cares aboUI
their well-being and is concerned about how they feel and what they think. David !'oltmck.
co-CEO of Ihe brokerage firm Charles Schwab & Company. learned the importance of
consideration by observing how subordinates react when their boss docs 110/ engage in
consideration. t8 Early in his career. PO!lTuck adopted a very directed. COmpetilive
approach to leadmg and rarely engaged in consideration behaviors. Charle, Schwab him-
self delivered a wake-up call to Pollruck when he let Ponruck know that people didn'tlike
working with him and didn'ttrust him becausc he was forcing his initiatives on others and
not soliciting their involvemen1. 19
With the help of an executive coach. POllruck began to alter hIS leadership style to
incorporate consideration behaviors. Now. rather than forcing initiatives on others.
POllruck shows hc respects his subordinatcs by explaining problems to them and solicit-
ing thcir input. Forexnmplc. when he came 10 the realilation that Schwab might need to
kecp Its bmnch uffices opcn on Saturdays. he explained the necd for this unpopular move
to branch managers and also acknowledged the big imposition this might have 011 their
lives and the lives of their subordinates. Rather than cneountering resistance. the consid-
eration behaviors POllTuck engaged in garnered enthusiasm nnd support for the
miti'llive. 20 !'ouruck now believc, that cunsideration is a key contributor to a compctitivc
advantage in Ihe new Intemet el'onomy because it breeds collaboration and encour;lges
tcamwork.
Initiating structure. Behaviors that a leader engages in to Iltake sure the work gets donc
and subordinates perform their jobs acceptably arc known as inili,.ling structure,
Assigning individual t<lsh to followers. planning ahead. selling goals. deciding how the
work should be performed. and pushing followen; to get their tasks accomplished arc all
initiating-structure behal'iors. 2t In the opening case. CEOs. Bonnie and M1lrla Schaefer
delegate authority to their subordinates. But. at the saille time. from regular. structured
mectings Ihey can as,ess these managers' progress toward meeting current goals. and they
can imerl'ene and provide guidance and advice as needed.
Lc,lders at lower Icvels also engage in initiating stlllctUrc. The infonnalleader of the
group of waiters in the restaurant described earlicr. for example. engaged in initiating
structure by developing" system in which ,",'aiten; serving very large tables would rlX:eive
help from other waiters whOSC' stations were not full. This leader also engaged in consider-
ation by t,lking an imcrest in the per;.onal lives of the other w,liters and by having a cake
madc and throwing a small parly to celebrate each of their birthdays.
Note that considermion and initiating structure arc complememary but independent
leader behaviors. They arc CUlllp/;'/IItlllafr becausc leaders can engage in both types of
 CHAPTER t2 • LEADERS AND LEADERSHtP 39S

behaviors. They are illdepelldelll because knowing tlJc extent to which a leader engages in
consideration says notlting about the extent 10 which he or she engages in initiating structure
and vice versa.

The 8ehavior Approach: leader Reward and Punishing 8ehavior

In addition to engaging in consideralion and initi:lting structure, le:lders behave in other
ways lhat have important effecls un their fulluwers. Recall frum Chapter 5 that
reill!orcelllelll ,'an incre<tse the probability of desirable behaviors and pllllishmelll can
decrease the protmbiJily of undesirable lx-haviors occurring. [n org:mi:mtions. managers
who arc leaders administer reinforcements and punishments.
LEADER REWARD Leader n'ward behavior occurs when a leader pusillve[y reinfurces subordinates'
BEHAVIOR desirable bch<tviors n Leaders who notic!." when their followers do <t good job and
A Ie~rs I"'siti\e reinforremem acknowledge il Wilh compliments. praise. or more langibll." benefits [ike a pay raise or
..,t ,"brn-d'""t~' do",..ablc promotion are engaging in reward lx:havior. Le.tder reward behavior helps to ensure tllal
bd,"\ior,
emp[uyees perfOrm'll high levels. Gurcharan Das. while CEO of Vicks V<tpurub's Indian
subsidiary. re,'alls engaging in leader reward behavior when he gave annual raises ltl all
employees who Illel at leasl 20 customers and 20 relUi lers or wholesalers during thc year.
Why did Das reward this behavior'.' II helped the emp[o)'ees keep in touch with the mar-
ketplace and cume up with ways tu improve the cOlllp:my's products and services. H
LEADER PUNISHtNG Leader punishing behav'ior occnrs when a leader reprimands or otherwise responds
BEHAVIOR negatively 10 snbordinates who perform undesired behavior2~ A faclOry foreman who
A kaders l",~ati\e ",spon-.c k' docks the pay of any subordinale who fails to wear saf~ty glasses on the job is engaging in
subordinate, un<ksire.J beha\ ior.
Ic<td~r punishing beh<tvior.
AlttlOugh punishing behavior can be an effective means of cunai[ing undesirable or
potentially dangerous behavior in organil-lltions (see Chapler 5). it is gener-Illy more effec-
live to use reinforcement 10 encoumge desired behavior tlwn to use pumshmenl to SlOp
undesired behavior. Punishment can have unintcnded side clTects such as resentlllent. Thc
foreman Illeillioned previously would obtain more desirable organizaliona[ results by
engaging in leader reward behavior. such as givil1g a bonus of some son 10 subordinmes
who wear their Sltfety glasses every day for a three-month period. Despite the research
evidence. howcver. leaders often engage in punishing behavior.

Measuring leader Behaviors

Considerable rescarch has been done 10 develop scales to measure the leader behaviors
described previously. The Ll'(ulership Behal'ior Dcsuiptioll QlU's/iolll/llirc asks a [eadefs
subordinates to indicate the extent 10 which lhdr leader or supervisor engages in a number of
differenl consideration and initialing-struCIUre behaviors. The Lnulerslu"p O/Jilliol1
Quesriollllaire. cumplek'd by lhe leaders lhemselves. asks [eadel':S 10 indicate which of a vari-
ety of mnsidcration and initialing-structure behaviol':S they think result in gQ(x! [eadersbip.25
Researchers have also developed measnres of leader reward behavior and leader pnnishing
bdwvior. Exhibit [2.1 is an exampte of on~ of these measures. which is completed by a
leaders subordin<tlcs.
Some of the leadership modc[s management consultallls usc 10 be[p managers [cam
how 10 be effective atso employ scales 10 measur,;- considermion and initiate Slructure, As
we discuss in Chapter [8. an approach to organization:lt change designed 10 make man-
agers more effective as leaders (Roberl B[ake and Jane Moulon's Manageria[ Grid) focuses
on idemifying the ,;-xtelll 10 which a ,'ompany's leaders arc concerned aboul peop[e (con-
sideration) and production (initiating slruetnrc).2(; Paul Hersey and Kenneth Blanchard's
model. whieh is quite popular with consullnnts, also focuses 011 consideraliun and initiat-
ing-Slrttcture bchaviurs. 27

What Is Missing in the Trait and Behavior Approaches?

A[lhough the lrait and behavior approaches to leadership arc different from each
olher-one focuses on what effective [e<tdcrs arc like, and the other on what they ,!o-
lhey do have somelhing in com ilion: Each approach essell1ialty ignores the sitnation ill
396 PART 2 • GROUP AND TEAM PROCESSES

EXHIBIT 12.1
A Measure of Leader Reward and Punishing Behavior

Th. ,ubon;jin ..., ofa I•• d...... .,k.d to ;nd,c... m ...<On' '0 which th.y .gr•• 0' di..g.... ",'h ..ch ofth. following ....."'.n.. on ,I><
following 'al.:
1 - S""ngly di..g,..< S - Slightly .g....
2 - O'.. g.... 6 - Agree
J - Sligh,ly d, ..g,.. 7 - S'rongly .g...
4 - Ne"h...g'" M,diug...

1 My ",pervi"" .Iw.)" grv<> m. pes""" feedba<k when I perfo,m well.

2 My "'pervi"" gM" me 'p<ci.1 ..cogni'ion when my woO< p<,fotm.n« ;s <sp«i.lly good.
3. My "'pervi"" would quickly .cknowledge .n improw",en, in ,he qu.lil)l or "'y work
4. Mysupervi.o, commend, "" wh.n I do. be"",h.n ''''''g< JOb
S. My sup.rvi,o, p<.-wn.lly p')'> me • co",plo",.n' wh.n I do ou....nd,ng wool<.
6. My .... pe'Vi.o, mfotm. hI> '" h.. bo" .ndj", om.", in the org.n,,,,,"on wIl.n I do ou.... ndmg work
7 If I do well, I know my supe'Vi",r w,1I rew.rd me.
8. My "'pervi.o,would do.1I th., "'e/h, could (Q help me go .. ror .. 1would IiI« '0 go in 'his o"S.n,,.,ion irmy
woO< we,.. con,i'l<ndy'bove .......g<.
9. My good perfo"".nn oft.n goe' un.. knowl.dg.d by ",y ,up<rvi"".·
10. I oft.n perro.", well '" "'y JOb .nd >till r«."", no 1""'" from ",y .uI"""sor.·
11. If I perrotmed ., • 1.....1 below th., which I wOS "p.bl. of. my "'pe"''''''' would ind"' ... h" "" h.... di •• rpro".I.
12. My "'pervi"", .how< hi. "" h.. di.pl...u... w.... n my wool< i. b<1ow ..«probl. ".nd.rd•.
13. My supervi.o,le" "'. know.bout it when I perto"" poo,jy.
\4. My sup<",,,,,,, would ...pnm.nd m. if my work were b~""," ... nd.m.
15 III'hen my woO< "not up to par, "'ysuI"fVlso, f'O"''''' out '0 me,
• f", ,h... ~.,",.",,,,i"g ~ ........... <1 ""h ,hot 1·7,2' 6, 3·5. S· 3.6·2.7·'.
leo<!« """,cd b.h>""" - 'h< ""'" ohern. 1_10
leo<! .. p.m""mom boo,,,,,, • 'he ",m of ,no ~.m. 11_15

Sourc.,: p, /1-1, F'<xbakoff. W, D, Todor. R. A, Gro"er. and V, L. Huber. '·SilUation.1 Moderator, of Leader Rev'anl .t>J l'uni;hmcn' Beh""i""', Fac' or
Fi~,i()n"-- Org,,,,i:./I;o,,,,1 B.,hm';o, ,,,,II 11"",,111 Ikr";,,j/"j 1'")(,•.,,.,,". I \1M, 34. pp. 21-6.1 Rq>,inted with IXtmi,,;,," Ilf Aca<J.;",ie P""",. I",:.

which leadcrship lakes place. Recall from Chapler 2 thaI lhe ill/emdio" of personal
charaderistil:s (such as lrails and behaviors) wilh lhe org.lI11Zational Silu<llion (includ-
ing Ihe amounl of formal aUlhority lhat leaders have and the nalure of their subordi-
nates) delerm ines a person's behavior (for example. leadersh ip and performance) in an
organizMion.
The lrail approal:h takes inl0 al:cottnt leaders· personal characlerislin bttl ignofCs lhe
sitU'll ions ill which they lry 10 lead. However, certaillieadership trailS mighl result in clfce-
live leadership in .~ome situations bUl ineffective leadership in others. Dominance. for
example. may make a football coach (1 good leader for a foolbalileam. BIJ11he smnc trail
inlhe head research scienlist (tl a mcdicallaburalory mIght nol be dkl:t1\'e be<:<lUSC his or
her subordinales arc likely to be highly educale-d people who think indepclldemly and
work beSl when left alone.
In a similar way. lhe behavior approae-h seeks 10 idenlify lhe behaviors responsible
for effedive leadership withoul eonsiderl11g how lhe situation affecls behavior. The
behavior approach iI1lpl icitly assu l1le-s lhat regardless of the si luat ion (such as a group's
charaCle-ristlcS and composilion or lhe lype of task being done). certain leadership
behaviors will resttlt in high subordinale levels of salisfaClion and perf0ft1111I1ce.
However. JUSt as lhe Siltt<llion l:an change how .1 lcader"s personal IrailS affect sulxmli-
nales' responscs, so, 100, can il influence- how subordinates respond \() a leade-r's specific
behaviors. Consider the performance of a group of carpemers who are building a C0111-
plic.ned cuslom-buill house. Their performance may increase if lheir leader engages in
inilialing SlnlCltlre by scheduling lhe work so the house is l:ol1lplclely framcd before the
 CHAPTER t2 • LEADERS AND LEADERSHIP 397

EXHIBIT 12.2
The Nature of Leadership: The Role of Traits and Behaviors

Approach Premise Drawbacks

Trait approach Effective leaders possess certain
Qualities or traits that help a
group or an organization achieve
its goals.
Behavior approach Effective leaders perform certain
behaviors, which may include
consideration, initiating structure,
reward behavior, and punishing
behavior.
Some effective leaders do not possess all
of these traits, and some leaders who
possess these traits are not effective.
The approach ignores the situation
in which leadership takes place.
The relationship between these behaviors
and subordinate performance and
satisfaction is not necessarily clear-cut.
The behavior approach ignores the situation
in which leadership takes place.

CONTINGENCY THEORY
OF LEADERSHIP
11lc tlleor) Ihal ieader
offe'liwn.", i, de1emlined b}
both lhe p"'",mal ~ham~lcri,li,"
of leader. and 1'1) lhe ,iwali"n,
in which leader. find thelll"'],".
roof is put on and by pushing employees to perform their tasks as (jui<.:kly as possible. By
eontras!, the performance of a group of furnilure assembly-line workers who have been
performing the same tasks day in and day OUI for several years know ellactly how 10 do
their jobs. Not only is their Ie.tders initwting-struetore behavior onnecessary. It might
actually lower their job satisfaction if they become annoyed by their leader nmstantly
telling them what to do.
In sum. the trait and behavior approaches contribute to our underslanding of effective
leadershIp by indicating what effective leaders lend 10 be like and what they do (see
Exhibit 12.2). A fuller understanding of le<tdership. however, can be gained only by <tlso
considering how the situation a/Tects leadership.
Fiedler'S Contingency Theory of Leadership
The trait <tnd behavior appro<tches ignofC how the situation at h<tlld influences a Ieader's
effect ivene·". Remgnizi IIg that effectiveness is determined by both ( I) the eharaCleristie of
individuals and (2) the situations in which they fUld themselves. Fred Fiedler developed the
oonlingem'"J Iheur,· or le:ldtn;hip.28 One of the most popular approaches 10 understand-
ing leadership. Fiedler's theory sheds light on two imporlant leadership issues: (1) why. in
a panicular situatioll, some le<tders will be more effective than other leaders even lhough
they have equally good credentials, and (2) why a particular leader may be effective in one
sItuation bot not in another.

Leaders who nOlicc ,,'hen lhcir
follower. do a good job und
acknowledgc il wilh
l;omplimems and praise a",
engaging in l'C"'aru bchlwior.
Leader ",ward beha"ior
encouragcs employees to
perform at a high lewl.
Leader Style
Like the trait approach. Fiedler's tlleory acknowledges thaI personal characlerislics
influence the effectiveness of leaders. Fiedler was particularly inleresled in styles of
leadership-how a persOIl approaches being a leader. He identified two distinct leader
styles-relationship·oriented and task-oriented styles-and proposed that all leaders are
characterized by one style or the other.
Leaders who arc re/mioll.ll!ip-orielllflf want to be liked by and get along well with their
subordi nates. Although lhey want their subordi nates to pcrfornl at a high level, relationshi p-
oriented leaders' fin.t priority is developing good relationships with their followers. Their
second priorily is making sure Ihatthe job gets done (task accolllplishment). Ken Fr<tnkhn.
who manages American-owned factories (lIwqlliltuforllJ) in Mexico's Bennudez Industrial
Park in Ciudad Juarez. has Ieanted Ihat a rclat iOllsh ip-oriented style is particularly importal11
398 PART 2 • GROUP AND TEAM PROCESSES
LEAST PREFERRED
CO-EMPLOYEE SCALE
,\ 4UC,Uol1naire that mca",re,
ka<k:r 'I) Ie by' '>C<.>rlnj!.lcadcr,·
re,~n"" to 4u"'ti"", "bum the
"'>-employ"" " ith "hom tr.cl'
hu\ c the mIN <liffi"ull) "",1. inj!..
LEADER-MEMBER
RELATIONS
l1Ie relation,hip' bet" ""n a
leader an<l hi, or hcr followe,."
when leading Mexican subordinate" En'ry lllorning at 6 o'clock he greet, factory employ-
ees personally wilen tlley begin work. 29
Lc.lders who are /lIsk-or'imln} want their subordinales tu perform at a high le\'el and
accomplish all of their assigned tasks. Their fim priority is lask a<":l:omplishmell!, and they
push subordinates 10 mak!.'" sure that tile job gets done. Having good relationships with th!.'"ir
subordinates is their second priority.
Ac<..:ording tu Fiedler. a leader's style. whether rel.lIionship-orienled or task-oriented. is an
enduring personal <..:hara<..:terislic. Leader style l:annot easily be <..:hanged: A relationship-
oriented leader cannot be trained to be task-oriented and vice versa. A leader's style also can-
oot easily eh.mge with the SilUatioll, III other words. a leado.--r will oot be rebtionshiJHlriented
HI one situation and task-oriented III another: he or she wIll use Ihe same style in all leadership
situations.
Which style of leadership is most!.'"ffective depends on the kind of situation th!.'" l!.'"adcr
is dealing with. Because leaders cunnot change their style. ,HI organization must do one of
two things to ensure that its leaders are uble to help their subordinutes und the orgalliza-
tion as a "'hole anai n imponam gOdls: All orgalli ~(l/ioll IIWII eiIher (I.\.5igH lemlaI In si/ll-
(I/;OIIS III \l'hi('1t Ihey will be "jfl'('III't' or dl(/1ll;l' Ih., SllllllliOlI lo/il JlI(' Il'ader.
Fiedler devised :lIld used a unique scale to measure leader style: the IClIst preferred
I.'O-clllplo)'cc SI.·'IIC'. He usked leaders to think about their leust preferred w-employee
(LPC). or the co-cmployec with whom they have the most difficulty ,,'orking. The leader
was then asked to nUe the LPC on a number of dimensions such as the ext!.'"nt to which the
LPC was friendly. enthusiastic. and plellSlmt. Rehllionship-oriented leaders (also called
high LPC !/'{/{}as) described their least preferred co-employee in relutively posilive
terms. They were able to say some good things about the co-employee with whom they
had the most difficulty working. They were able to set aside the work-related problems
they had with the LPC and see that this person had merit as another hunHHl being. In con-
trast. task-oriented leaders (also called IoU' LPC !eallas) described their least preferred
co·employee negatively. They believed th!.'"ir LPC had few redeeming qualities. Becau.'iC
they had difficulty working with the LPC. their overall impression of this person was very
neg,uive.
Fiedler theorized thut the way in which leaders described Ihelr least preferred (;0-
employee provided insight imo their approach to leading. Specifically. relation,hill·oriented
leaders would try to think positively about others-even the LPC-bccause a positive
outlook fosters good relationships. Task-oriented leaders. on the other hand. would think
negutivc1y aoom others who were diflicult to work with lxx:uuse their undesired behavior
might hindcr ta,k accomplishment.
Situational Characteristics
Fiedler proposed that situations vary in their flll'vrubllilY for leading -that is. Ihe extent to
which the situation .Illows the leader to easily guide and channel subordinate behavior in
the direction of high performance and goal unainment. When u si\llation is favorable for
leading. it is ea,ier for a leader to e.lcrt influence than it i, when a situation is unfavorable.
According to Fiedler. three characteristics determine how favorable situations are for lead-
ing: leader-member re1atiolls.task Stnlelure. and position power.
Leader-member relations. When Il'adcr-mcmlll'r relations-the relutionships
between the leader and his or her followers-are good, followers appreciatc. trust. and feel
a certain degree of loyalty toward their leader. and the situ;l1ion is favorable for leading.
When le;lder-member relations are poor. followers dislike or dlstrusltheir leader. and the
silllation is unfavorable for leading. Con,ider the following silllations: Robert Holkan. as
head mechanic. leads a group of mechanics in a garage. He gets along w!.'"ll with the
mechanics. and they often go OUt to lunch together. In Holkan's leadership situation.
ledder-member relallons ure good. Mary Lester is he'ld of the English depanment uf'l
small liberal ans ,'ollege . The other professors in the department think Lester is a snob and
a bit pretentious. Leader-member relations are poor in Lester's leadership situation.
 CHAPTER t2 • LEADERS AND LEADERSHIP 399

Task structure. Task structure is lhe extem to which the work to be performed hy a
TASK STRUCTURE
The e'lenl to .... hi,'h the .... 01"< group is clearly defined. When a group has specific goals that need (Q be accomplished and
10 be performed hy a groop I' evcry group mcmber knows how to go about achieving Ihe gools. lask SlruClure is high.
dearly defined When group goals are vague or unl'enain and members arc not sure how 10 go aboul
performing their jobs, task structure is low. Situations are more favorable for leading when
task structure is high.
Task Strudure IS high for head mechanic Robert Holkan because Ihe garage has Ihe
clear gOill of repairing <.:uSlo!1lers· cilrs in illimely fashion and be<.:ausc the highly skilled
mechanics generally know exactly whm needs to he done on each car. Task structure is
low for Mary Lester. Within the English department there is considerable 1llrmoil aboul
Ihe relative emphasis on teachmg and resear<.:h. The English professors are split about
which is more imp0rlalll. and there is <.:onsiderable disilgreemelll about how to evaluatc
professor<>' rcsearch and tcaching performances. A result of lhe ulleerlaimy about what
the "work'" of the department should be (teaching or research) is low task Structure.

POSlTION POWER Position power. Position power is the amount of formal authority that a leader has. If a
The amoonl of fomal aUlhorill a leader has Ihe power to rewilrd and punish subordinates by. for example. graming them pay
kader ha', raises and bonuses or docking their pay. then position power is high. If a leader can do little
to reward or punish suoordinaleS. then roSiliOn power is low. A situation is more filvorable
for leadillg when position power is high.
At the garage. Roben Holkan has low jXlsition jXlwer bc<.:ausc he has lillIe <.:ontrol over
rewards and punishnlCllts for the mechanics. The owner of the gar.lge determines pay rat{"s.
benefits. ilud olher rewards. aoo Holkan has little input into lhe process. Conversely. Lester
has high position power as he<ld of Ihe English department. E;,ch year. the depmtment has'l
SCt amount of money for faculty raises .•utd Lesler dctermines how to distribute the money
among the faculty. She also determines who leaches which courses aoo the tinlC' at which all
courses are 1~IUghl. Members of the dcpMtmenl nre reluetall110 disagree with her I:>oxausc
they are afraid that she mny assign them undesirable tea<.:hing times (a class. say. from 3 to
5 P.M. on Fridays).

The Contingency Model

All possible combinations of good and poor leader-member relations. high and low task
structure .•tnd high and low position power yield eighl leadership Silu.llions. Fiedler
applied the word OC{llIll to each type of situation (SL"C Exhibit 12.3), Ae<.:ording to Fiedler·s

EXHIBIT 12.3
..... ,-
""',
,,
ftavorabilityof ,~ -""- oo~

Situations for Leading ~Iations """" ""00

"""" Goo" 000. 000'

.j:",m:f'; Adapl,-d fT\>m F. E. Fi<.~ltcr.

A Tlieory III ul/d",,,Ii,p ,~
0
T'"
S<ructu,,",
High HIgh ,- ,- H.gh H.gh ~w ,-
"I,
Eff....lil'f'tle,,. (Ne..... Vorl<: McGra.....-
liil!. 1%7). Reprimc<J .....ith
pcnni,,~.n. , Position

• ".....
High ~w HIgh '-ow

ov
High

V
~w

V,
High '-ow

" '" Ortant

'" Vllt

Very favotabl~ situation Very unfa_able situation

Very falo'Orable ,i,ua"ons foe leadmg

Moderately falo'O,abl< ,;wa"O<ls for leading
Very unfavorable s"uatlOfls for leading
400 PART 2 • GROUP AND TEAM PROCESSES

th<:ory. octant I. II. and III situations arc v<:ry famrable for leading: octant IV. V. VI. and
VII situations are 1ll0(kralely favorable for leading: and an octant VIJl situation is very
unfavorable for leading.
Head Illedanic Robert Holkan has gO(xJ leader-Illemlx'r relations. high task structure.
and low position power (octant II in Exhibit 12.3). a very favorable situation for I<:ading.
Professor Mary Lester. in conlrast. has ]XlOr leader-member relations. low task structure.
and high position power (octant Vll in ExhIbit 12.3). a moclerately favorable situation for
leading.
To detenninc wh<:lh<:r Robert Holkan or Mary Lester will be thc more eff<:etive leader,
we need to look at Holkan's and ~ster's leadership styles and the favorability of their sit-
uations. TIle impact of e.lch of these factors on leader eifediveness depends. or is contin-
gem upon. the other. To idemify their leadership stylc. we ask both of thC'm to describe
their least pref<:rrcd co-cmployee. Holkan describes his least prekrrcd co-employee very
negatively: he lhinks this mechanic is basically stupid and difficult to get along with. This
description indicates that Holkan is a task-oriented or low LPC leader. Lester describes her
least preferred co·employee in positive terms. Even though she has trouble working with
tllis profcssor. slle thinks tllat lie is intelligent and pleasant. Tllis dcscription indieatcs llmt
Lester is a rclmionship-oriellted or high LPC leader.
According to Fiedler's tlleory. task·oriented leaders arc most effective in situations
tllat arc very favorable or very unfavorable. and relationsllip·oriemed leaders arc most
cffective in mod<:ratcly favorable situations (sec Exllibit 12.4). Thus. even tllougll
Holkan's and Lester's leadership situations are different as are their styles. they are
actually equally effedive leaders. Holkall IS a t.lsk·oriented leader in a very favorable
situation. and Lester is a relationship·orienlcd leader in a moderately favorable
situation.
Why are task-oriented leaders moM effective in very favorable and in unf'II'orable
situations? And why arc relationshlp·oriented leaders most effedive in moderately
favorable situations? Recall that the first priority of task·oricnted leaders is task acwm·
plishm<:nt and thC"ir second priority is good interpersonal relations. Fiedler suggests that
when leaders .md people in general are under stress. they COileentrme on their first prior-
ities. A very unfavorable situation for leading is stressful for most leaders. and task·
oriented leaders wi II foc'u s on getting the job don<: because th:!t is thei r first priority. Th is
focus is likely to be eff('ctive in such situations occaus(' it incrcases th(' chanc('s that a
group will Mlcast accomplish its tasks. In very filvonrblc situations. task-oriented lead-
ers. realizing that the group will achieve its goals bel:ausl: the situation is so g(j(}{j. can

EXHIBIT 12.4

fiedler's Contingency Theory of leadership

Situations in Which Style Is

Leader Style Nature of Leader More Effective
Relationship oriented Wants to be liked by and to get Moderately favorable
along well with subordinates for leading (octants IV,
First priority: Developing good V, VI, and VII in
relationships with subordinates Figure 12.2)
Second priority: Getting the job done
Task oriented Wants subordinates to perform at a high Very favorable or very
level and accomplish all assigned tasks unfavorable for leading
First priority: Getting the job done (octants I, II, III, and
Second priority: Developing good VIII in Figure 12.2}
relationships with subordinates

PATH-GOAL THEORY
A theor)' that dc_crib<:, ho....
leade.... can mot,vatc Ihcir
follower, 10 ",'hie,e group and
ors,mi~at;onal soal, and the
~j,>d, of b<:na'.",.... leade.... loan
engage in 10 moli,ale followe"
EXHIBIT 12.5
Path-Goal Theory
CHAPTER 12 • LEADERS AND LEADERSHIP 401
focus on their second priority- good interpersonal rel:nions-because they know the job
will get done, In moderately favorable situalions. relationship-oriented leaders can focus
on both interpersonal relallUns and task aCl:omplishmenl. 3U Some leadership expertS
have questioned these explanations and Fiedler's model. Researl'h sludies provide some
support for the model but also suggest thm it (like most theories) needs modifying:11
In summary. Fiedler considers leadership styles to be relatively fixed or enduring.
Leaders cannot be "taugh!"' to bc relalionship-oriented or lask-orienled. nor can .1 leader
aller his or her style accordi ng to the silOat ion. Instead. l:ontingency theory holds Ihat lead-
crs musl be assigned (() situations in which they will be cffcctive. If that won't work. the
silUalion must be chnnged to fil the lender. In 11le first case. task-oriented lenders should be
assigned to vel)' unfavorable or to very favorable Silu<ltiolls. while rc1alionship-orienled
le<lders should be assigned to moderately favorable ,illlations. In the ,econd ca,c. to
improve the favor<1bility ofa situation for leading. it may be possible to increase the levels
of task slruCtiHe by giving a le:lder specific gO'lls to be accomplished and guidelines
for how to channel sllbordinales' behavior to reach those goals. Anolher allernalivc
would be for the organizmion 10 improve the favorability of the situation by giving the
leader the formal authority to makc dccisions about pay raises. bonuses, and promotions
for subordinate,-increase his or her power position. in olher word,.
Contemporary Perspectives On Leadership
Several newer tllrories or approoches to leadership-each of which deals with a different
a,pect of leadcrship-have lx:en propoM...J in recent years. Like Fiedler's model. they arc
bm;ed on a cOlliingency approach that takes into accoun! both the characteristics of leader-;
and the situmions in which they're tl)'ing to lead.
Path.goxlllhCQry desl:ribes how leader, can 1Ii(J{;mte their followers to perfonn al high
level, and can keep them ,ati,fied. The Vroom and Yelton model deals with <t specific
aspecI of leadership: Ihe exlell! to which leaders should ill\'olt'e their subord;nates in de";·
s;ul/llwkm!:, Leader-member exchange theory takes into account Ihe fact thatle:lders
oflen do nOllre:tt each of Iheir ,ubordinates equally but inslead develop dijJerem k;m!I of
relmiollships with different subordinate,. Each of these perspectives add, 10 an under-
standing of whalmakes Icadership effective in organizmions.
Path-Goal Theory: How Leaders Motivate Followers
Robert House. a widely respected leadership researcher. realized that milch of what
leaders Iry to do in organizations IIlvolve, mollVating their followers. Hou,e', palh-
goal IheOQ' dc,nibes how leaders can motivate their followers to <tchie\'c group and
organizational goals and thc kinds of behaviors they can cngage in 10 accomplish that
(see Exhibit 12.5).
Effective leaders motivate their followers to achieve group and organizational
goals.
Effective leaders make sure that they have control over outcomes their
subordinates desire.
Effective leaders reward subordinates for performing at a high level or
achieving their work goals by giving them desired outcomes.
Effective leaders raise their subordinates' beliefs about their ability to achieve
their work goals and perform at a high level
In determining how to treat their subordinates and what behaviors to engage
in. effective leaders take into account their subordinates· characteristics and
the type of work they do.
402 PART 2 • GROUP AND TEAM PROCESSES

Path-goal theory suggests that effective leaders follow three guidelines to motivate
their followers. The guidelines arc based on tile expectancy theory of motivation (sec
Cilapter 6). Effective le;lders who follow these guidelines have highly motivated subonJi-
nates who are likely to med their work goals and perform at high levels:

I. /)1'/erlll;",' u'/W/IJII!<'UllIf'S 5I1bordiI/01l'$ (/rl' /n-tIIK 10 ob/o/ll For

/II /lIe It"urkp/uce.
ellmnple, what needs are they trying to s'lIisfy. or whM goals are they trying 10 l1Iect'!
After gaining this information. the leader must have ,",ontrol over those outcome.> or
over the ability to give or withhold the oull:omes to subordin:nes. J2 The new manager
of a group of five attorneys in a large law firm determined that salary raises and the
opportunity to work on Hltercsting cases with big corporate clients were the out-
,",omes lhat her subordinmes most desired. She already ,",omrollcd the assignment of
cases and c1iems. but her own boss determined salary raises. After realizing the
importance of salary raises for tile motivation of her subordinates. the manager
discussed wtth her boss the importance of being able to detennine her own subordi-
nates' raises. The boss gave her sole authority to determine their raises as long as
she kept within the budget. In this way. the manager made sure she had eontrol over
outcomes that her subordiuates desired.
2. R,,"wr} mOOn/illl/leI for performillK (1/ 'I;F'I Inels or (/elliel-;III! 1I1,,;r I\'ork Foal.l·
hy gil'il/g Ihell/ t!esin-d OllleOIll,'S. The manager in the law firm had two imponam
goals for her subordinates: eompletiug all assigumems withiu the budgeted hours
aud winuiug cases. When subordinates met these goals. tltey were performing 1ll a
high level. To mOlivate her sllbordiuates 10 attain these goals, the manager nwde
sure thm her disuibution of interesting mOll1hly case assignmellls and semiannual
raises re!lected the elltem to which her subordinates met these two goals. The sub-
ordinate who always stayed within the budgeted hours and won all of his or her
cases in the l,lSt sill months received not only the biggest raise but also the choicest
assignments.
3. Mokl" S/ll~' /111" $lIbori/ill(l/f'S bdif'l'f' /11(1/ 1111".1' ('(III ob/(l;1I 11Idr work goa/,)' (//II} per-
form (1/ hiI'll It'rels. Leaders can do this by showing subordinates the paths to goal
attainment (hence the name plll/i-goal lheory). by removing any obstacles that
might nlme up along the way, and by ellpressing confidence in their subordinates'
capabilities, Thc managcr in thc law firm realized that onc of her subordinates had
low expectations. He had little confidence in his ability to stay within budget and
to win cases no maller how hard he workl-d. The manager was able to raise this
subordinate's ellpectations by showing him how to allu,:ate his billable hours
among the various cases he was working on and explaining to him the key ingredi-
ents 10 winning a case. She also told hillll0 ask her for help whenever he Clnne
aaoss a problem he thought might jeopardize his chances of winning a case. The
subordinatc followed her advice. and together they worked OUi ways to get around
problems that came up on the subordinate's various cases. By clarifying the paths
to goal ,tttllinment and helping to remove obstacles. the supervisor helped raise this
subordinate's ellpectations and motIvation. and he actually slaned 10 win more
cases and complete thl"lll within the budgeted hours.

House idelilified four types of behavior that lenders can engage in to motivate sub-
ordinates:

• Dirl"('lil'l" bl"lIm';or (similar to initiating structure) lets subordinates know what tasks
need to be performed and how they should be perfomled.
• SflP/XJrI;l'l" 1H'1Il/\'ior (sinular to eonsider,IlIOn) lets subordinates know that 1he lr
leader cares about their well-being and is looking out for them,
• Parlil'i/Nlli!'1' bl"l1(11';or enables subordi nates to be involved in mnk ing decisions that
affect them.
• Aelii"I'I"IIU'III-orit'lI/t'd 'H'II(11'ior pushes subordinates to do their best. Such behavior
includes selling difficult goals for followers. expecting high performance. and
ellpressing confidence in their capabilities.
 CHAPTER 12 • LEADERS AND LEADERSHIP 403

In determining how to motivate subordinates or which of these behaviors to engage in.

a leader lias to take into account the nature of his or lIer subordin,Hes and tile work they do.
If a subordinate is under a lot uf stress. a leader whu engages in supportive bellaviur might
be espe<.:ially eftcdh'e. Directive behaviors arc likely tu be benclkial when subordinates
wort on complex and difficult projects. such as the lawyer who wa." having trouble win-
ning cases. As discussed e1lrlier. when subordinates arc performing easy tasks they arc
already pruficient at. initJaling structure ur direclive behaviurs arc nut necessary and are
likely to be resented: peuple don'tlike to be told how to do something they already do
quite well. When it is important for subordinates to accepl a decision that a leader needs to
make. participativc leadcl>hip behavior is likcly to be cffeetive. as the flowing OB Today
suggests.

DB Today
Tammy Savage and the NETGENeration

Tammy Savage joined Microsoft's New York City sales office straight out of Cal State,
Fresno, in 1993 when she was 22. A marketing whiz, Savage soon gained a reputation as
an expert in understanding the needs of under-3D Internet users-the "Net Generation"
or "NetGen." She became a central figure in the New York sales office's dealings with
programmers back at Microsoft's Redmond, Washington, headquarters, and her knowl-
edge of the NetGen led to her promotion. She became a manager in Microsoft's business
development group, and she moved to Redmond.
Business development keeps a company's prooucts alive and up to date with changing
customer needs. Savage used her new more senior position to reevaluate the whole

- of Microsoft's business
development efforts for
the NelGen. Her conclu-
sion was that Microsoft
was missing the boat and
risked losing the NetGens
, to rival companies like
AOl and Yahoo! whose
instant messenger ser-
vices were already very
popular, Savage's goal
was to earn back the loy-
alty 01 the NetGen and
. . . thereby increase the pop-
Microsoft manager Tammy S'l"age relied on a p"nieipalive leadership ularityof Microsoft's own
modellQ mOI;vale her leam memocrs because she knew lhey were Internet service and in-
highly com!X"tel11 ,md drivcn. Sa"agc convinced lhcmlh<ll by working stant messaging system.
as a leam, lhey euuld '1uick1y ocvelop soflwllre 10 l'aplUre the NelGen The goal was to come up
m"i'Xclscgmel11. with a product that the
NetGen would just "have to have" Savage used her new power and position to begin a
major research program to find out what needs NetGens were trying to satisfy and develop
software to meet those needs.
Savage presented her new ideas to Microsoft's top managers. including Bill Gates.
She explained that the kinds of products NetGen customers wanted were not being
404 PART 2 • GROUP AND TEAM PROCESSES
VROOM AND
YETTON MODEL
A on,odellhal 'k",rilx:' lhe
dlfl"",", wal' in" hich leade....
can make deci'ion_ and guide'
leader, in d~(cn",n;ng lhe
e,(~nt to "hich ,ubordinate'
'hould pani,-ipate in deci,;nn
makmg.
made by Microsoft and that it risked losing an entire generation of Internet users if
it could not provide a product that inspired them and met the principal needs they
were satisfying-the need for online companionship and socialization Microsoft's top
brass heard her out; they knew she had a track record of success. yet they were not
persuaded by her arguments. They could not understand why it was so important to
NetGen that they have a product they could use to share their experiences and foster
friendships on the web. lucidly for her. though, Microsoft Group VP Jim Allchin did
understand what Savage was driving at. He was persuaded by her vision to develop a
new generation of Microsoft Internet software that would attract young people
Savage was made the manager and leader of a prOject team put together to
develop the ideal NetGen web software. In early 2001, she began recruiting new
college software graduates and "NetGeners" to join her team From the begmning,
she adopted the approach to leadership that Microsoft is well known for-a participa-
tive and achievement-oriented approach. Since she was recruiting people who were
highly competent showed a drive for achievement. and would have 10 work in leams
where cooperation is vital, Savage knew she had to adopt its participative and achieve-
ment-oriented approach, Savage made it clear to team members that if they worked
together to push the development of the product quickly along, they would see the
results of their efforts right away. In other words, it was up to them to work together
to find new ways to develop superior software quickly and take back the NetGen.
The result of savage's team's efforts was the 3-degrees Windows peer-ta-peer network-
ing application that allOl'led users to listen to a shared play list, send digital photos, and initi-
ate group chats with MSN messenger. The gO<lI of this ne'W kind of • relationship" software
was to further the development of online relationships. Its users were able to build a "club,"
50 to speak, of up to ten friends. The software allowed them to create a unique identity for
the "club" through shared images, sounds, and animations called ··winks." Whenever club
members had something interesting to say, he or she could share it with the others and
instant message everyone simultaneously, Members thus built online "togetherness" by
sharing their music, feelings, and experiences with one another using the software,
When the 3-degrees team debuted the n€\lll software on Microsoft's internal website in
2002, its popularity soared. Even thousands of Microsoft employees got into the game,
forming online clubs to get to know each other better. The question now is will it succeed
with the NetGen ?33 When it debuted on the World Wide Web, it faced the challenge of
getting users to switch from their current messaging systems such as AOL messenger and
Windows messenger. Eventually, it became clear it was not going to build up a user base
big enough for the new software to connect and the features of the program were folded
into Windows messenger 7 in 200S Nevertheless, the stunning growth of relationship-
bUilding sites like myspace.com shows that Savage's team's ideas were on the right track.
and Microsoft is rushing to build the relationship aspect into its n€\lll Vista software suite.
In sum. path-goal theory en)wnces our understanding of effeclive leadership in
nrganizmions by specifying how le;uJers should molivate Iheir followers. As we dis-
cussed in prcvious chaptcrs, motivation is onc. of thc kcy dctcrminants of performancc
in organiwtiOl1s, and the ability to motivate followers is a crucial aspect of a leadcr's
effect iveness .3~
The Vroom and Yetton Model: Determining the Level of Subordinate
participation in Decision Making
One of Ihe moSI importanl things Ih.. t leaders do in org,ll1izations is make decisions.
Good decisions help lhe org.. nizaliol1 ..chieve ils goals: bad decisions hinder goal
attainmcnt. Thc Vroom and Yelton model. dcveloped in thc 1970s by Vic1(}r Vroom
 CHAPTER t2 • LEADERS AND LEADERSHIP 405

and Philip Yelton. describes the different ways in which leaders can make decisions.
and it offers guidelines regarding the extent to which subordinates should participate in
decision making. 3'
As many leaders have learned, allowing subordinales to panicipale in decision making
and problem .solving Cllil enhance leadersltip..J.6 Participation helps to ensure tltat subordi-
nates will accept a decision that affects them or requires their support, P~lnicipation may
result 11\ beller decisions if. for e-'lample. subordmates hilve mformalion pen:lining to the
decision Ihat tlte leader docs not have. Addilionally. panicipatioo C:ln help fosler subordi-
nates' growth aod dcvelopmclll and Illay result in highcr performance levels and job satis-
faetion,37
There arc. howe\'er. certain disadvantages to employee panicip:llion. The biggest
disadvantage is time. NOI only docs decision making take longer when subordinates
participate. but both the subordinates and the leader now spend time making the deci-
siorl. Another disadvUll1age of p,H1icip1dion is thm suborditllltes may disagree ,lmOng
themselves about the :lppropriatc course of actlOn or even begin to question the way
others arc doing tlteir jobs. In wam silUations. lhis can lead 10 connict and lower
performancc.
Givcl) the advantages and disadvantages of subordilllltes' panicipmion in decision
m:lking. the Vroom and Yetlon model seeks to specify when and to what extent leaders
should allow their sulxlrdinates to participate. To identify the optimal amount of panici-
pation. the Vroom and Yellon model first requires Icaders to determine whether an indi-
vidual or a group decision needs to be Illade, Individual decisions pertain to a single
sulxJrdinate. An e-'lample IS the decision the law firm manager had to make about how to
motivate a sulxlrdinatc with low confidence in his ability. Group dccisions perlain to a
group of subordinates. An example is the decision the law firm manager had to make
about how to distribute raises.
Leaders m:lking eIther individual or group dt-cisions C:1I1 ch()()sc from four different
decision-making styles. which vary in the extent to which sulxlfdinates participate in mak-
ing the decision. They arc as follows:

• Autocratic: The leader makes the decision without input from sulxJrdinates.
• Consultative: Sulxlrdinates have sOllle input, but tlte Icadcr makes the decision.
• Group: The group makes the decision: the leader is just another group member.
• Delegated: The leader gives exclusive responsibility to subordinates.

In Ie:lder-member exchange
lheory, the personal relationship
bctwcrn a leader and follower
lhat dc"dops ,wer lime may be
w,mn I'nd friendly or it ml'y be
,'old and distant and the follower
bci:ornes [Xl" of the "in·group,.
or "'lUt-group:' ""pen;""ly.
406 PART 2 • GROUP AND TEAM PROCESSES
LEADER-MEMBER
EXCHANGE THEORY
A the<>ry that de"'ribe, the
JlfT~rent kind, of relallon'hip'
thallllay Je'd<>p between"
Ieador and a foneMer and whal
the leader and the foUeM·cr giw
to and l'l:cci\" I:".... k from Ihe
relation,hip.
EXHIBIT 12.6
leader-Member
Exchange Theory
The ,.d",i(~'-'hip hctwcen in_group
followers and the lea<kr i'
char.ICICril.e<l by trust. commitment
and in,o"·cmC"TIt. 1l>c relation'hip
hctween ""'_group f"lIowers anti the
le,><Ier i, based 011 the formal
authority of the leader an<l obcJi""""
lu rule,
The VroOIli and Yenon model then inslructs leaders \() choose among these alterna-
tive decision-m,lking styles on the basis of their anSWeTS to a series of questions about
the nature of the situ<ltion and the subordinates invoh'ed. The followHlg criteria must be
considered: The nature of the tasks ocing performed by employees. the level of ta~k
interdependence. thC" output being produced, and the characteristics of the C"llIployees
involved. sueh as their skill levels. As such_ the model adopts the S<lme kind of cont;n-
gency approach as Fiedler and House-~_ but It focuses un choosing the right leader
d"dIioll-IIWkillg style. Today. allowing ~ubordinates 10 panicipate in decision making
is a very important issuc because so many companies have organized their employees
into self-managed work teams (discussed in Chapter 10) with decision-making
authority.3S
leader-Member Exchange Theory: Relationships
Between leaders and Followers
Leaders do not treat all of their subordinates in exactly the same way and may develop
different types of relationships with different subordinates. Leader-memher esehllnge
thcor,· describes the different kinds of relationships that may develop octween a leader
and a follower and describes what the leader and the follower bring to and get out of the
relationship. The theory focuses on the lellder-fol/o[('er dyad-that is. the rC"lationship
between the leader and the follower (a dmtl is two individuals regarded as a paiO:19
Leader-member exchange theory proposes that each leader-follower dyad develops ,1
unique relationship that SIems from the unfolding imeraetions oct"een the leader and
the follower.
Although each relationship is uniquc. the theory suggests that two gencral kinds of
relationships develop in leader-follower dyads (sec Exhibit 12.6). In soHie dyads. the leader
develops a special relationship wilh the subordinate. characterized by mutual trust. eommit-
IllCnt. and involvement. In these dyads. the subordinate helps the leader. the leader helps thC"
~ubordinate. and each has ~ubslantial influence Ol'er the other. The leadcr spends a lot of
tin,e with the subordinate. who is given latitude or freedom to lISC hiS or her uwn judgment
on the job. In turn. the subordinate tends 10 be satisfied and 10 perform at a high level.
Subordinates who develop this spct:ial kind of relationship with their leaders are said to be
in the m-f;lVup.¥J
Other subordinates develop a llIore traditional relationship with their leadeTS. In
these dyads. the leader relics on his or her formal authority and position in the organi-
zation to influence the subordinate. and the subordinate is expected to perform his or
her job in an acceptable manner and to follow rules and the directives of the leader.41
The subordinate has considerably less mllllence uI'er the lc'lder. and the leader gil'es the
subordinale less freedolll \() use his or her own judgment. These dyads are characterized
by an impersonal. distall1. or cold relatiol1~hip between the leader and the subordinate.
Subordinates who develop this kind of relalionship with their leaders arc said to be in
the out-group. They tend to be less satisfied and ]><:rfortn at luwer levels than l11~gruup
subordinales.
follow<r followe. follow" follow<r follow<'
Out-groap
I".gro~p

LEADERSHIP SUBSTITUTE
Somtlhin~ lh"t "'h '" pl.,e
of a f"rmalleader and male,
leade",hip unnece"al).
CHAPTER 12 • LEADERS AND LEADERSHIP 407
The relationship betwccn a leader and his or her own supervisor is also a dyad that
can be classified as an in-group or out-group relationship. Leaders who have high-quality
relationships wilh their own supervisors are more likely 10 develop high-quality relaliun-
ships with their subordinates. Furthermore. resean.:h conducted in Japan suggests that
leaders who havc high-quality relationships with their supervisnrs are more likcly to
adv,mec quickly in an organization.~2
Rese<lJ'Ch suggests lhat it is desirable fur leaders to develop special relatiunshlps with
as many of their subordinales as they can becauM: thoM: who arc in the in-group arc more
likely to perform at a highcr Icvcl and cxhibit loyalty than thosc in thc OUl_group.~3
Research further suggests thal a sharp distinction between the in-group ,md the out-group
may not be desirable because subordmales in the uut-group Tmght resentlheir relatively
inferior status and difrerential treatlllent.~4
In sununary. path-goalthcory suggests that Icaders need to focus on what outcomcs
motivate their followers and then 1O distribute those oulcomes to subordin,ues when they
altain their work goals and perform m high levels. 11 also suggests Ihe m:ed to tailor leader-
ship stylcs to the characteristics of subordinates and the situatioll. The Vroom and Yellon
model focuses on how much to allow subordinatcs to participatc in decision making. which
depends on the decision-making situ,llion and the subordinates involved. Finally.
leader-member exchange theory suggeS1S that leaders should develop high-quality relation-
ships with as many subordinates as JX}Ssiblc. They should have as big an in-group and as
small and out-group as possible.
Does Leadership Always Matter in Organizations?
By and large. research suggesls that leaders WII make a difference. Some researchers. how-
ever. have questioned whether leadershIp allmYI makes a difrerence. Docs it always help
individuals. groups. and organiz:uions perform at high levcls. achiel'c their goals. and
increase the organization's markel share and profits? These researchers argue that although it
might make JX'ople within llie organization fccl secure to lhink there is "someone" in charge.
leadership may be more a figmem of the imagination than a !;lct of organizational life.45
These researchers suggest that leaders sometimes hal'e little effect on thc attitudes and
bel13l'iors of their followers. Sometirncs, no n13t1er whnt a leader docs. employees are dissa!-
isfied with lhei r jobs or fai I 10 perform highly. At otllcr times. subordinates are satisfied with
their jobs, attain or exceed their work go:\ls. and perfornl at a high level withoul a leader's
exerting much influence at all.
As an example of an employee of lhe lalter type. consider Jason Jackson, a
scriptwriter for a hil situation comedy on a major television network. Jackson prefers 10
wort at home. where he has few intelTuptions. He StopS by his ollieI.' only a couple of times
a week to pick up his mail. Jackson rarely sees his supervisor outsidc thc quarterly plan-
ning and scheduling mcctings lhat lhey both attend. Nevertheless. Jackson is very salisfied
with his job and by all counts is a top performer. The show is in the top 10 and Jackson has
received numerous industry awards for his scripts.
Jackson's case lIlay be a bit extremc. but it docs suggest in some situmions leaderlihip
might nOl be very import,ult. Two organizmiOllal behal'ior researchers. Stel'en Kerr and
John Jerrnier. realized thaI le,ldership "substitules" and "neutra!i~.crs" sometimes acl to
limit thl' influence that leaders hal'e in organizaliolls.46
Leadership Substitutes
A leadership subslitule is something that acts in place of a fortnal leader and makes lead-
ership unnecessary. Characteristics of the subordinate. the wort. thc group, and thc organi-
zation all have lhe potell1ial to aCt as Subslitules for leadership. In Jackson's case. for
example, bolh his personal characterislics and the nature of hiS work serve as leadership
substillltes. Jackson is illielligent and skilled. and has a high lel'el of imrinsic motivation.
408 PART 2 • GROUP AND TEAM PROCESSES
LEADERSHIP NEUTRALIZER
Something thut pre'ent, a kuder
from having an~ innucnco and
negate' a leader's effort"
(Recall ffllm Chapter 6 that an employee who is itllrinsically motivated enjoys his or her
job and perfonns it well for its own sake.) Jackson loves writing and happens to be very
cre<ltive. Bec<luse he is Ihe way he is. J<lckson docs not need <l supervisor to push him to
write good snipts: his inlrinsi<.: mot ivai ion and capabilities ensure Ihat he performs at a
high level,
TIlat Jacksoll's work tends to be interesting is all additional substitute for leadership: It
contributes tu his high perfomwnce and job satisfadion. II IS nol necessary for Jackson's
supervisor to push him to perform. try to keep him happy. or even see him on a regular
basis because of these powerful leadership substitutes. Fortunately. Jackson's supervisor
re,llizes this and basically leaves Jackson alone. thereby freeing up some time to concen-
trate on his many other subordinates whu (10 rt.-quire leadership.
Leadership Neutralizers
Sidney Harman. CEO of Harman Inleftlational Industries. reillized Ihat not seeing his sub-
ordinates on a day-to-day basis was kilding them and his whole organization 10 immincnt
ruin. Hannan ItlIemational. located in California, manufactures audio equipment such as
spe,lkers for stereo systems. Allhough the company is located on the West Coast. Sidney
Harman tried to lead the company from his o!llce in Washinglon. D,C. How suc<.:essful was
he as a long-distJtKe CEO'! Not very. Harm;1tl International began to lose million of dol-
lars. Fortunately, Harman acted quickly to turn around his company's performanee_ He
moved to California. ,Ind by the next year. the company was making millions of dollars
more Ihan before. 47
Why did Harman's nuwc to California <.:oincide with the dramatic change in his l'om-
p:my's fortunes? Harman suggests that when he was 3.000 miles away he was unable to
hal'e as much inDuence on his subordinates ,IS he needed. Not h.-wing their leader around
on il day-to-day basis caust.xl managers 10 IOlerale and accept mediocre performance. 48
Esscntially, the physical distance scpar.l1ing Harman from his subordinates neutralized his
leadership cfforts.
A lelldershil) neutralizer is something that prevents a leader from having :my influ-
ence and negates the leader's efforts. When neutralizers arc present,lhere is a leadership
void. The leader has linle or no effect. and there is nothing to take the leader', place
(there arc no substitutes), CharaCleristics of the subordinate, the work. the group, and the
organization can all serve as potential neutralizers of leadership. When subordinates lack
illlrillsic motivation and are performing b'llring tasks. for example, it is often ne<.:essary
to tlse extrinIi,. rewards such as pay to motivate them to perform at a high level.
Sometimes, however. the leaders of these subordinates do not have control over rewards
like pay.
Elizabeth Williams. the leader of a group of ticket takers on a commuter railroad, had
lillie at her disposal to motivate her subordinates' performances. The ticket takers" pay
and benefits were based on seniority, atld their employment contract specified they could
be disciplined lJlld dismissed only for a major infraction. such lIS coming 10 work intoxi-
cated. Like Sidney Harman when he lived on the East Coast. Williams often did not see
her subordinates. The ticket takers worked on the trains, but she did not. Because of those
powerful neutralizers. Willilllns had little influence over her ticket takers, who often
failed to collecltickels during rush hour be<.:anse they didn't want 10 force Iheir way
through crowded passenger <.:ars. Leadership neutralizers contributed to the railroad's los-
ing money from lost ticket sales just a, the transcontinental distance between Harman and
his llllUlagers contributed to H,trman InteroatiOtlal's losses in the early 1990s.
As these examples indieille. slIIJ.lIi1lltl'J for leadership are aClually functio/lal for
organ izat ions because they free up some of a leilder's ti me for Ol her ani vit ies. But 11<'111-
rali:l'n' are rll'Ijill1('/iollol because a leader's influence is lacking. The fact that suh,·;ti-
lUteS and tleutnllizers exist probably COtltributes 10 the perceptiotl that leadership is
untmportant. Despite their existenL'C. however. research suggests thatlcaders do in filet
make a differl'nce and can have positive effens on the attitudes and behaviors of their
follower" as the following OB Today suggests. 49
 CHAPTER 12 • LEADERS AND LEADERSHIP 409

OB Today
No IIO ne Size Fits All" Approach to Leadership

Many companies whose performance is falling significantly often search for a new leader
or CEO who they believe will be able to solve its problems and turn around its pertor-
mance. What is interesting about these CEOs is that they often have very different
approaches to leadership-and not all of them are successful There is no "one size fits
all" approach when it comes to understanding what leaders do and what leadership is;
neither is there just one way of solving a company's problems
Take the example of Jacques Nasser, for example, an experienced global executive
who was appointed as CEO of Ford Motors to turnaround its pertormance, Nasser was
a brilliant, creative thinker who involved Ford in many different global projects to com-
pete against efficient Japanese car companies. Nasser was a micromanager who
sought to manage all major operating decisions and was reluctant to delegate author~
ity to his top executives. so He had an achieve-
ment-oriented leadership approach based on set-
ting his subordinates challenging difficult goals
and then driving them to succeed, He created a
tough performance-appraisal system to evaluate
Ford's middle managers, one that sought to iden-
tify and weed out those he felt were poor
pertormers
By contrast, when struggling General Motors
(GM) searched for a new leader, its selection was
Rick Waggoner, a top executive known for being a
team player and a "Type B" leader compared to
hard-driving Nasser who was seen as a typical "Type
A' leader As a Type B leader, Waggoner's leadership
style is participative-he recognizes the competence
of his top executives and he delegates to them the
authority they need to make the decisions In
the areas and functions that they are in charge of.
When Richard Parsons boxame CEO of He lets people get on with their Jobs and believes
T,me W""",r his p:micipmi\'c approach that ·you've got to work well with people.
to leadership eneoumgcd Time Wamer's
you've got to be a good judge of talen\."Sl
compcling mana,gcl'i to c,x>pcralc with
eilCh OIhcr ocross the or,g:<niz~tion. As it turned out, while Rick Waggoner is still the
CEO of GM and his company's performance is
improving, Jacques Nasser's approach didn't work for Ford, Its performance continued to
slip and William Clay Ford, who has a consensus-building leadership style similar to
Waggoner's, replaced him as CEO. He has delegated authority to his top managers to try
to jumpstart Ford's turnaround; he has also abandoned Nasser's tough performance-
appraisal system that discouraged managers from taking risks for fear of being fired for
making mistakes. 52
An example of a CEO who has adopted a leadership style that includes elements of
both Nasser's and Waggoner's approach is Ellen Hancock, CEO of Exodus Communications,
Inc, a prominent website·hosting company Like Waggoner, Hancock is a strong believer
in participation in decision making and gives the managers who report to her the authority
to make important decisions in their areas of expertise. At the same, however, like
410 PART 2 • GROUP AND TEAM PROCESSES

Nasser, Hancock is very goal oriented and excels at creating a work situation that
provides managers with guidance so Important things get done and nothing slips
through the cracks, In addition, Hancock also is supportive of her subordinates and
has mentored many women who want to succeed in the male-dominated world of
high te<h,S3
A final example of the effect of different leadership approaches comes from Time
Warner, the giant entertainment company, >4 In 2003, its visionary, achievement-oriented
CEO, Gerald Levine retired and another Time Warner executive, Richard Parsons took
over,ss While both these CEOs believe in delegating authority to their managers,
Parsons, unlike Levin, has a participative approach to leadership, When he be<ame CEO,
the diplomatic Parsons worked in a methodical way to encourage Time Warner's man-
agers to cooperate with each other across the organization, 56 Levin's hard-driving
approach had led these managers to compete with one another and turf battles
between different business units were common, As a result, Time Warner's performance
had fallen, Currently, Parson's approach is working for Time Warner and its performance
has improvedY

The Romance of leadership

Finally, il is worth noting lhal some researchers beliel'e thaI Ihe kinds of allribution
errors and slereolypes discussed in Chapler 4 may somclimes lead people to perceive
leaders in 100 positive or "romalllic" a way, For example. perceptual biases can lead
followers 10 allribule 100 much importance 10 a lender's personal sly Ie and 100 little
imp<..>rtnncc to silu:llional characleristics, like subslitutes and neutwlizers, In olher
words, followers may somclimes walll \() believe leaders have the ability 10 make a dif-
ferencc, and _~o lhey allfibute qualilies or power~ 10 them they really don 'I p-ossess. This
is referred to as the rummIer vI il'lIdrrshw. 58 Even if these beliefs aren'l "real." lhey
mnuence the way followers perceive a lender.~9 So lenders may be wise to conform 10
popular beliefs aboul what a successful leader should be "like" -for example. whal
lhey should wear. how lhey should behave toward subordin:lles. and how they should
appear to the public.

You're t;he Management; Expert;

How to Lead Me

Each person has his or her own personality, values, beliefs, attitudes, and way of vie-.ving
the world, To help you gain insight into how different kinds of leadership approaches are
likely to affect your own future work behaviors and attitudes, use the chapter material to
think about the following issues:

1. What kind of personal characteristics should a leader possess to influence you to

perform at the highest level you are capable of?
2 Which of the approaches to leadership described in the chapter would be (1) most
likely, or {2l least likely, to influence and persuade you the most to perform at a high
level? Why?
3 Which approach would you be most likely to adopt as a leader?
 CHAPTER t2 • LEADERS AND LEADERSHIP 411

New Topics in Leadership Research

Givcn the promincnce of thc subjcct of Ic<ldcrship in scholarly literature and thc popular
press, it is not surprising there are always new developments, theories, and research on
leadership. In this section, we explore some new topics of research: transfomwtional au(]
\:harismati\: leadership. the effeds of a leader's moods on his or her followers, an(] gen(]er
and leadership.

Transformational and Charismatic Leadership

TRANSfORMATIONAL
LEADERSHIP
Lcudc"'h'p (hut on,pires fullo"~"
(0 tn"t the Ieutkr, perform
behu\ """ thut ,wnrioole to lhe
""hH.'Wmenl of oqwnll,Uli<mul
goal,. unoJ perf"r,." '" high Ie\~"-
Leadership researcher Bernard Bass has proposed a theory (hat looks at how leaders
can SOlltetHlles dramatically affect their followers and orgamzations and literally trans-
form (he m . Although sc"eral ot her thenries focus on transformat iona I ,md \:harismati\:
leadership, Bass's theory is highly thought of by other researchers, i., relatively com-
prehensive. and incorporates ideas from some other well-known leadership
approaches. 60
A\:\:ording to Bass.transformationallcadership o\:\:urs when a leader transforms, or
changes, his or her followers in three important ways that together result in followers
trusting the leader. performing behaviors th,lt contribute to the achievemelll of organiza-
tional goals. and being tootivated to perfoml at high levels (see Exhibil 12.7):
I. Transformational leaders increase subordmates' awareness of the impar1anee of their
tasks and the imJXlr1ance of performi ng them we11.
2. Transformat ional leaders make subord inates aware of their needs for personal
growth. development, and accomplishment.
J. Transformational leaders motivate their subordinates 10 work for Ihe good of the
organization r.nher than e.\e1usively for their own personal gain or benefit. 61

CHARISMATIC LEADER
A 'df-confid~nt, enthu,ia,tic
leader uble to won tollu",~r,'
re'lle<;l and support for h" or
her ,·j,ioo of how good thing,
could be.
How do transform~lional leaders intluence thcir foJ1o"ws and bring thcse ch~nges
about'! Transformational leaders arc charismatic leaders-leaders wlJo have a vision of
how gOCKlthings cmlld be in an organization in contrast to how things currently (11"/,.62
Charismatic leaders e1early communicate this I'ision to their followers. and theire,\cite-
ment and cnthllsiasm induccs their followers to enthusiasli\:ally support this vision. 6J To
convey the excitement of their vision, charismatic leaders tend to have high levels of

EXHIBIT 12.7
Transformational Leadership

~ ....
)----j----,)
tn,dt.«ualty stim"I.,•• Engag•• in devttopmtn,.1
H.. chansma
followers con"de,a"on

----j----
Followers

)----j----)
Ha"" ;""..sed a""a",ness of ,h.
,mpona"ce of 'heir ..<l:s and of
p."form'ng 'hem """II
Are a""a,.., of ,h." """d. for Are mO'N.ted '0 wo,.for 'he
good ofthe "'S.mzal'on ralher
personal gm""h, dtvdopmen',
'han for 'hei' own p""onol ga.n
and accompll.hmen'
0' benefIt
412 PART 1 • GROUP AND TEAM PROCESSES

DEVELOPMENTAL
CONSIDERATION
B~ha\ ior bl a leader that i' ,up-
poni,'c and "n<'oo",g;n" towmd
r"lIower; arK! g;'", them oppor,
tun;ties to de,elop and grow on
the job. ,,,,'h a,
bl aequmnJ; new ,kill, ~nd
capahilitie'
sclf-COllftd!.'llce and s!.'lf-esteem. which further cncourages their followel'> to respect and
admire thern,M
Transformational leaders inlluenee their followers by intellectually stimulating them
to bc>;Ol1lC aware of problems in their groups and organization and view these problems
from a new perspective-one consistem with the leader', vision. M Before the leader
makes his or her inlluenee felt. followers may not TCalize a problem exists. and if they do.
they probably do not see the problem as something that direl:lly l:ot1l:erns them. A trans-
formational leader l:auses followers to view problem, differently and fccl some degree of
responsibility for helping to ,olve them.66
Tran,fomlatioll a l leaders also influence their followers through developmental con-
sideratiun.67 Den~lupl11cntal cunsidcmtiul! indudes not only the consideratiun beha"ior
diSl:usscd earlier in the chapter (whil:h indicates a leader's l:onl:ern for the well-being of
his or her followcl'» bUI also behavior thai supports and encourages follow!.'fs and gives
them opportunities to develop and grow on the job by acquiring new skills and eapabili-
ties.6li Butlding trust is 'llsu an impul1atll aspect uf tr.msforrnatiunal leadership."" Andrea
lung. CEO of Avon. is a trallsforma1ional leader who has moved Ihe nltllpany itllu the
Imcmet age as illustrated io the following global vicw.

A Global View
Avon is Calling Everywhere

If any company was in need of transformation it was

PiclUred is Avon CEO Andrea lung who
has rcmlutionizcd the company's
app1ThlCh 10 selling its cosmetics and
'll'cc"m;cs by rnOli\'ating it, An", sales and sought to help reps do more business
reps to usc the Intelllet and by recruiting online 71 This was important because Avon's reps
new s<,lcs reps who mat"h ''arious ag.·
groups of its custOlllCrs, Jung has also
eX]landed A,x",', global rc""h by
rc<:ruiting an army of IlCW S<lles reps
mound tile wurld to sell iI' products.
Avon, the well-known, door-to-door selling cosmet-
ics giant founded in 1886. Avon had over 3 million
sales reps around the globe in 2000, but does door-
to-door selling make sense in the Internet era when
75 percent of women in America work 9-5? After
several years of declining sales, Avon recogniZed the
need for change and appointed Andrea lung as its
CEO in 2000-its first woman CEO ever. Trans-
forming the tradition-laden company would be a
tough task for lung.'o She began by searching for a
new vision for Avon.
In the early 2000s, Jung began to enthusiasti-
cally communicate her vision to Avon's 13,000
sales representatives who were anxious to learn
about the company's new products and their new
CEO, lung let the sales representatives know that
Avon's future success depended on their efforts
and that they were at the heart of Avon. Jung
preached about the importance of Internet sales
initially saw the Internet as a way of bypassing
them and costing them their commissions
However, Jung worked hard to prove to them the
company cared about them and that customers

TRANSACTIONAL
LEADERSHIP
Leade"hip thaI mOli,-ale,
follower> by c\changIMg
reward, for hlgh performance
and nOlicing and reprimanding
,ubordinme, for mi'lake' and
'Ub,landard pcrfonTI"'>cc.
CHAPTER t2 • LEADERS AND LEADERSHIP 413
who purchased products online would likely end up being good prospects for personal
selling in the future, once they had uied Avon's products. lung's predictions proved to
be correct. Internet sales actually increased-not decreased-the reps' commissions,
and they now actively embrace the opportunities it has opened up for personal selling.
Moreover, Jung realized that a serious problem facing Avon was reaching beyond the
typical 30-to-55-year-old woman who had always been its main customer She decided
to target the important 16-to-24-year-old segment and allract and build brand loyalty
among young customers who will one day comprise its customer base. The potential of
this market segment is enormous. The 17 million women in this segment have a total
purchasing power of almost $100 billion a year and spend 20 percent of their income on
beauty products_ n
In 2003, a new Avon division called Mark began to disuibute a new line of hip cos-
metics designed specifically to meet the needs of this younger market segment. To meet
the sales challenge of direct distribution to customers through a personal selling
approach, lung also decided to recruit a new generation of sales reps from the same
demographic groups as younger customers. She hoped that being served by peers would
enable Avon to gear up to the needs of this younger age group, and the company's sales
reps would be trained to respond to them.
By 2004 Avon had 3.9 million reps located around the world and it reported record
glowl profits on booming worlctw-ide sales of its growing range of makeup, soaps, hair
care, jewelry, and other products.7 3 In 2005, however, Avon reported lower sales be<:ause
its competitors had imitated its successful strategies and were growing their own new
lines of products and advertising widely to increase their market share. In response lung
also increased advertising but emphaSized to sales reps that they were still the key to
achieving her vision of making Avon the number one "bricks and clicks" cosmetics shop-
ping place for women around the globe,
Tr.lI1sformational leadership is often distinguished from tram;aetional leadership.
Tl'unSlIctiOlllll Icadcrshill occurs when a leader motivates followers purely by
exchanging rewards for good performance and noticing and reprimanding subordinates
for mistakes and substandard pcrformance.74 Transformational leaders. however. also
may engage in transactional leadership. But they go one stcp further by actually
inducillg followers to support their vision and put aside their personal interests for the
sake of the org,mization and take responsibil ity for solving its problems. Subordin:ltes
thereby grow and develop more than they woulJ unJer exclusively incentive-based
tran sact iOllal-lcadersh ip sty Ics.
Research 011 transformational leadership suggests that it is positively related to sub-
ord inate mOllvat ion. job s~lIis fact ion. ,I nd job perfornw nce.7 5 One reason for th is is tlwt
the charal·teristics of a transformational leader including a desire to be creath'e anJ take
risks. to set ambitious goals for themselves. aud to articulate a clear vision of what they
want to achie"e are appealing to their followers. In a sense. followers then ,nodel their
behaviors on the transformation leader. buy into the vision. and de"elop ,I wi llingness to
unJenakc the hard. stressful work that is necessary for creativc. risk-laking work
behavior. 76
Sel'eral acaJemic studies support the utility of this lheory as do many popular books.
such as 8I1i// 10 UI.I'I. that provide lucid accounts of transformation leaders establishing
"big. hairy. audacious goals (BHAGsj"' that serve as rallying points for their followers. 71
Challenging followers to achieve goaLs that they have not imagined could be achieved in
order to nttain the tr.1llsformation leader's vision seems to be a common thread through
many accounts of this fonn of leadership behavior. And the thl-ory has gained support in
research onl1lanagers anos, countrie,.levels in the hicr.uchy. and occupations, Moreover.
evidenced suggests that it can be leamed.1S
414 PART 2 • GROUP AND TEAM PROCESSES

Nothing succeeds like success. and research suggests that as a result transforma-
tional leadeN may also be more likely 10 instill trust in their subordinMes.7'I These lead-
ers encourage .md support their followers to be innovative amI creatne, they do not
assign blame when things fail. and they just encourage employees to try again. AmI.
when suhordinates trust their leaders this can increase members' perceptiolls of
procedural justice (sec Chapter 6). which in tUnl. can lead employees to engage in orga-
nizational citizenship behaviors that l:an also raise performanl:e (sec Chapter J).~O In
addition. by observing their leader. subordinates also learn how to lead in a transforma-
tional way. so the positive henefits of transformational leadership can cascade down an
orgnniZMion, All members of an organization comc to buy inlO thc vision the transfor~
rnation leader creates. and thiS creates a strong organizational culture based on values
and norllls that help pl"Tpetuate sUl:h behaviors (this is disl:ussed at length in
Chapter 17).

Leader Mood
Megan Kelly and Rachel Feinstein arc two bank tellers working for a medium-sized
bank in New York City. They work different hours and have different supervisors but
arc close friends and frequently compare notes about their jobs and supervisors. Kelly
recently nlmplaineJ to Feinstein that her boss. Bob Griffith. always see illS so down.
Even when everything is going smoothly on his shift. he rarely smiles and often looks
as though the world is coming to an end. Although Griffith treats all the tellers on his
shift fairly and is a capable supervisor. Kelly decides to try to switch to Feinstein's
shift.
Pan of the reason why Kelly requesleJ n transfer to Feinstein's shift was sOllle of the
things that Feinstein told her about her boss. S;l1ltiago Ramirez. He almost always is in a
good mood. and it is nke to be arollnd him, He frequently jokes with the tellers. and smiles
and laughs arc as common on his shift as they arc rare on Griffith·s.
Kclly's experiencc (and probably your own) suggcsts that subordinates prefer to
work for upbeat leaders than for those who are downbe,u. Likewise. you might expect
subordinates 10 work even harder when their leaders arc happy and enthusiastil:.
Surprisingly. little research has been conJucted on the effects that leader mooJ has Oil
subordinates, SOllle prel iminary research. however. suggests that leader mood may be an
nnportant factor when it comes to understanding why some leadeN are more erTectivc
than others.
One recent study explored the effects of positive leaJer mood in a retail setting. The
leadcN were branch manageN in a nmional chain. The researchers founJ thm the managers
who were in positlVe moods at work had ~torcs that provided better customer service and
had lower turno\'er r.ltes than storcs "'hose managers werc nO! in positivc moods. AlthOllgh
more research is needed. this initial stuJy suggests thm leader mood may be an important
determinant of leader effectiveness.sl
In addition to the IlI00ds a leader experiences. a leader's ICI'el of eIliOliOl/(// illl~lIi­
gellCi' (SL'C Chapler 2) may also contribute to leader effectivene~s. EIllOlional intelligcnce
may help leaders develop a vision thai is collective and shared throughout thc organizmion
and cncrgize subordinates to enthusiastically work toward achieving it. It can ,llso help
leaders develop a mcaningful identity for their organizations and mstiJi an <l1mosphere of
trust and cooperation. Fin<llly. emotional intelligencc can help leaders remain rlexible in
rapiJ Iy changing environ men!.s .~2

Gender and Leadership

One common stereotype in organizntions is thm women arc 'supportive, nUf1uring. anJ
generally good at managing interpeNonal relations. The male counterpart to the stereo-
type of the relationship-oriented woman is the notion that men are directive and focus
on getting the job Jone-in other words. that men tend tn be task-orienteJ, Judging
 CHAPTER t2 • LEADERS AND LEADERSHtP 415

from these stereotypes. you might expect that gcndcr would have an effect on leader-
ship_ For example. you might expect female leaders to engage in more consideration
behaviors than men. and male leaders eng:lge in more Illitiating~structure behaviors
than women.
Indeed. rescarchers have investigated this question. One recrll1 review of the literature
conducted by well-respected researcher Alice Bagly and a rolle11gue found quite the opposite.
It suggesll'd that when men and women have leadership positions in org:mizatiolls. they tend
to behave in a similar manner. Men do not engage in more initiating StruCiurejust as women
do n()\ engage in more consideration.S)
One difference did emerge. however. Women tended to lead in a more democratic
style. and men tended to lead 1Il a more autocratic style.~4 When leaders arc democratl\;.
they tend to involve their subordinates in decision making and seck their subordinates'
input on a varicty of matters. Autocratic leaders tend to discouragc subordinate participa-
tion in decision making 1md like to do things their own way.
Why are women more democratic than men when they occupy leadership positions in
organizmions? Researchers have offered two pOlell1ial explanations. 8s One is thm women's
interpersonal skills (they way they intcract with othcr people) tcnd to be better than men ·s.
To be democratic or participative. a leader needs to have good interpersonal skills. To
encoumge subordinates to express their opinions. for example. it is important for a leader
to understand how subordinates feel. To reject subordinates' ideas or proposed solutions to
problems and still maintain a good rclationshi p with them req uircs a eertai n amOUIl1 of scn-
sitivity. Women may be more democratic as leaders than men simply because they arc
more skilled interpersonally.
The mher potential explanation for the finding that women leaders tend to be morc
democratic than men is that women in leadership positions eneOUll1er more resistance
from subordinates than do men in leadership positions. (Consistelll with this reasoning is
the tendency that people have to evaluate female leaders a bit more harshly than they eval-
uate male Jcaders. 86 Gender stereotypes (sec Chaptcr 4) may lead members of an organi-
zation to readily accept men in leadelOhip positions but to resist women taking on these
same roles. For example. a 55-year-old male ,;:xecutive in an engineering firm who has
always had a male supervisor througholll his professional I:areer may resist having to
report to a woman. His female supervisor. renlgnizing his resistance and re!,cntlllent.
might try to overcome it by involv ing th,;: subordi nate in dec ision mak ing and seeking his
input on a variety of mallelO. Given that women arc assuming more leadelOhip positions
in organizations. it is important to understand whether and why they might be dlfl"ercll1
from men when it comes to leading.
Interestingly enough, some recent research suggests that women may actually have bet-
ter kadt:lOhip skills in some respects. Some recent Sludies suggest that women leaders. when
evaluated by co-employees. supervisors. and sulxmlinatcs. receive somewhat higher r.nings
on skills like good cOllllllunic;ltion and listening. W(}lt quality. and being able to 1Il00ivate
others.S? Thus. to the extent that women are better listeners. less autocratic and morc Pllrtici-
patil'e. mor,;: flexible. and more willing to ildmitthey are wrong. watching and le<lming from
women leaders may actually help men la"king one or more of these skills. 88 By the same
token. watching how men network and seize opportunities to bceollle leaders may help
women advance further up the organizational hierarchy, where they are still significantly
underrepresented.

Ethicalleadership
In the 2000s numerous CEOs and top managers who lead some of the largest U. S. eom-
p<lnies have been accused of al:t ing unethil:all y. and many have also been I:onvietcd of aet-
ing illegally. In company after company leaders-such as Bernie Ebhcrs. the es·CEO of
WorldCom. and Ken Lay, Andrew Fastow. and Jeff Skilling. fonner leaders of billlkrupt
Enron-pursued their own interests at the interests of their employees and investors.
And these people lost their jobs and their savings when these companies collapSL'd as a
416 PART 1 • GROUP AND TEAM PROCESSES

result of the ir eri min:ll behaviors. To avoid th is outcome compan ies :Ire increas ingl y
checking on the credentials of their leaders to ensure they are being managed by ethical.
honest people. M,my companies have been shocked to find that lheir CEOs "innmeu··
their resumes to obtain their jobs, often claiming college degrees or work experience they
ne"er received. As a result the elhics of the people who lead companies has collle under
increasing scrutiny.
Today the requiremenlthat .:ompany leaders behave ethically and in a socially responsi-
ble way to prole.:t the illlere,;ts of their customers. investors. employees, and all those aff<."Cted
by their actions is more imponalll than c"er Ixforc. And one major rea'flll for this is that Icad-
eTS who are perceil'cd as teing cthical and fair in their dealings wilh others prol'ide the role
model for their suoordirl<ltes 10 follow. As subordinates adopt high ethicill slandards so lhe per·
ception of the need 10 behave in a fair and honest way cascades down the organization and a
just. socially responsible culture emerges (we discuss this in more d;:t:lil in Chapter 17). The
way in which the CEO of one comp<1lty. Whole Foods. crented an ethical eomlXlity illustrates
many of the Issues surrounding ethical leadership. ilnd IS profiled in the following 08
in Anioll.

OB inAction
Whole Foods Markets Leads Through
Ethics and Social Responsibility

The Whole Foods Markets supermarket chain, which specializes in the sale of organic and
chemical- and drug-free meat, poultry, and produce, has enjoyed enormous success in
the last decade, Despite the fact that it charges high prices for its premium produce, its
store sales are growing
fast. Indeed Whole Foods
plans to double both the
number of its present 170
stores by 2010 and its $4
billion revenue, All this
from a company that was
started by two hippies in
Austin, Texas, in 1978 as
a natural counter-culture
food store. How and why
has Whole Foods grown
~";;;;'=="::::=::~ so rapidly? Because, says
- its founder and CEO John
TIle founder and CEO of Whole Foods. John Mackey. says his Mackey, 01 the way he
~'Ompany has gmwn so mpidly be.:ausc he manages his storc <:hain in
chose to lead and man-
an ethi<:al way and all hi, employ~'Cs beh'lve;n a socially responsible
way toward evcrybody invoked in it, oosillcss.
age his store chain from
its beginning-in a man·
ner based on the need to act ethically and in a social resp.:msible way toward everybody
involved in its business.
Mackay started his business for three reasons-to have fun. to make money. and 10
contribute to the well.being of other people. customers. The company's mission is
based on its members· collective responsibility to the well.being of all the various

TRUST
TIle willing,""", of DOC pc"",n 01"
group llJ h~,~ f~lth ,•• on!ilk.......,
in tile ~'UOd"ili of 3no1hcr lJCf'<"',
e,~n ,hough this pu,s them 31 n,~
CHAPTER t2 • LEADERS AND LEADERSHIP 417
stakeholders who are involved with it. And, in order of priority at Whole Foods these
are customers, team members, investors, suppliers, community, and natural environ·
ment. Mackay measures his company's success on how well it satisfies the needs of
these stakeholders.
The ethical stance at the base of his business model is thaI Whole Food's customers
are guaranteed that products are 100 percent organic, hormone free, or as represented.
Similarly, Whole Foods insists that its suppliers behave in an ethical way so, for example,
the beef it sells comes from cows pastured on grass not corn-fed in teed lots or the chicken
it sells does not come from hens that have been confined in tiny cages that prevent them
tram even moving His management approach to his employees, or team members as
they are called, is also based on a unique ethical leadership position.
To pursue the company mission Mackey says that, "We put great emphasis at Whole
Foods on the 'Whole People' part of this mission, We believe in helping support our
team members to grow as individuals-to become 'Whole People.' We consciously use
Maslow's hierarchy of needs model to help our team members to move up Maslow's
hierarchy. As much as we are able, we attempt to manage through love instead of fear
or greed, We allow tremendous individual initiative at Whole Foods and that's why our
company is so innovative and creative, "89 Mackay claims all the stores in the chain are
unique because in each one team members are constantly experimenting with new and
better ways to serve customers and improve their well-being, As team members learn,
they become self-actualized and this increase in their well-being translates into a desire
to increase the well-being of other stakeholders. Mackay contrasts this supportive
approach to leadership with the classical command and control, hierarchical rewards-
based directive approach that he claims encourages the pursuit of personal rather than
team- or organizational-based objectives.
Finally, Mackay's strong views on ethics and social responsibility also serve share-
holders. Mackay does not believe the object of being in business is to primarily maxi-
mize profits for shareholders; he puts customers first. He believes, however, that when
managers engage in ethical leadership, which satisfies the needs of customers and
employees, investors' needs are simultaneously being satisfied because satisfied stake-
holders behave in ways that lead to high profits-customers are loyal, and employees
are committed. Indeed, since Whole Foods went public in 1992 and issued shares, the
value of those shares has increased 25 times-something that has certainly increased
the well-being of the company's owners,90 Clearly, ethical leadership has worked so far
at Whole Foods,
Mackay's approach to leadership can be found in other successful companies such as
GoogJc and Southwest Airlines. At Southwest. for example, Colccn Barratt pursues an
"employees first. customers second" approach because her belief is that. "If senior leaders
regu larJy commun icme with employees. if we 're Irmhful and fa"tual. if "e show them Ihat
we care, and we do our besl to respond 10 Iheir nccds, Ihey'll feel good abom Iheir work
environment and they'll be beuer at serving the passengers:">'
The issue of establishing Irust between leaders and subordinates is a central con-
cepl in elhical leadership. Trust is Ihe willingness of one person or group 10 have faith
or conf,dcnce in Ihe goodwill of anoth.er pef';on, even though this pUiS them at risk
(because the other might act in a deceitful way). For example. for employees to trust in
their leaders they mllst believe thal they will be rewarded for being cooper-lti,'e and for
work ing loward long-Ierm organ izationa I goals, even whe n Ih is may hun Ihe ir short-run
personal goals. Trusl is also l'il3ll0 establish good working relmionships in groups and
teams so that process gains can be achieved. Dilly if team members believe that other
learn members WIll ,llso behave in an elhlcal way for example, Ihey will nOI free
ride or shirk. or Ihat Iheir leaders will "play favoriles" so rewards are nOI linked 10
418 PART 2 • GROUP AND TEAM PROCESSES

EXHIBIT 12.8
Approaches to Understanding Effective leadership

Approach
Trait approach
Behavior approach
Fiedler's contingency model
Path-goal theory
Vroom and Yelton model
Leader~member exchange
theory
Substitutes and neutralizers
Transformational and
charismatic leadership
Leader mood
Gender and leadership
Focus
Specific traits that contribute to effective leadership
Spe<:ific behaviors that effective leaders engage in
Characteristics of situations in which different kinds of leaders (relationship
oriented and task oriented) are most effective
Hovv effective leaders motivate their followers
When leaders should Involve their subordinates in decision making
The kinds of personal relationships that leaders develop with follovvers
When leadership is unnecessary and when a leader is prevented from
having influence
Hovv leaders make profound changes in their followers and organizations
Hovv leaders' feelings influence their effectiveness
Similarities and differences in men and women as leaders

pcrfomwnce. will members be mollva!ed to coupernte. When ethi\:al leadership helps

establish trust and all parties work toward a ('ommon goal. the performance gains can
be substantial.

Recap of Leadership Approaches

In this chapter. we have described several approaches to understanding effective leadership
in organiz.ttions. These leadership npproaches ;Ire cornplementnry: each sheds light on a
different aspect of. or sci of issues pertaining to. efle(·ti\'c leadership. The appm<lches arc
recapped in Exhibit 12.8.

Summary
Leaders at all1evels in an organi7-ation help individuals. groups. and the organization as a
whole achieve lheir goals and can thus hnve profound effects in organizations. The
nppmnches to leadership covered in this \:hapler help explain how leaders inlluenee lheir
followers and why leaders are sOlllctimes l."ffe\:tive and sometimes ineffenivc.ln this ('hap-
ter. we made thl." following major points:
I. Leadership is the exl."rcise of intluencl." by one ml."mbcr of a group or organi7-ation
over other members to help the group or organizalion achie\'e its goals. Formal lead-
ers bave formal ;lllthority to inlluence olhers by virtue of their job responsibilities.
lnform<llieadcrs lack fonnal authority but inlluence others by virtue of their special
skills or tall."lHS.
2. nIl' trait approach 10 leadership has found that good leaders tend to be intelligent.
dominnnt, sci f-confident. energet ic. are able to WIthstand stress. hone~t. mall1re. and
knowledgeable. Possessing thcsc !faits. howcvcr. docs not guarantee that a leader will
be effective. nor docs the failure to have Olle or more ofthl."se traits mean that a
leader will be ineffeClive.
3. A lot of the behaviors lhal lenders engage in fall into two main ealegories: consideration
and initiating stnKlllrc. ConsiJeration incluoes allleaJership behaviors that inJicme that
 CHAPTER 12 • LEADERS AND LEADERSHIP 419

leaders trust, respect. and value a good relationship with tocir followers. Initiating SlnK-
wre includes all the bchllviors that leaders engage in to help subordinates achieve their
goals and perform al a high level. Leaders also engage in rewarding and pUlllshing
behaviors.
4. Fiedler's contingency theory proposes that leader effectiveness depends on ooth leader
style and ,ituatiollal characteristics. Leaders have either a relationship--oriented ,tyle
or a task-orienled ,tyle. Situational characteristics. including leader-n~mber relations.
lask structure. and posil ion power. dclermi ne how favorable a situation is for leading.
Rclationship-orientcd leaders are most effective in moderatcly favorable siluations.
Task-oriellted leaders are most effcctil'e in extremely favorable or unfllvorable situa-
lions. Leaders cannot easily change lheir slyles. so Fiedler rccomn~nds changing situ-
ations 10 filthe leader or assigning leaders to situalions in which they will be most
effcctive.
5. P:lth-goal theol)' suggests thnt effective leader, motivme their followers by givillg
them oulcomes they desire when they perform at n 11lgh level or achieve their work
goals, Effective leaders also make sure Iheir subordinates believe thallhey can oblain
their work goals and perform at a high level. show subordinatcs thc paths 10 goal
allainmelll. remove obstacles that might corne up along the way" alld express confi-
dence ill Ihei r subord inales"capabilities. Leaders net-u to adjusl the type of behavior
Ihey engage in (d irccti \'C • su pportive. part icipative , or ach ic\'cmell!-oriclI!ed) to corre-
spond to the nature ofthc subordinates thcy lIfC dealing Wilh and the lype of work
they <lTe doing.
6. The Vroom and Yellon model specifics Ihe extent to which lellders should h,\\'e their
subordinates participale in decision making. How much subordinates should partici-
pate depends on aspects of the decision that needs to be made. Ihe subordinates
involl'ed. and the illfonnmion needed to make a good decision,
7. Leader-member exchange theory focuses on Ihe leader-follower dyad and suggests
thm leaders do not trem each of their followers the same but rather develop different
kinds of relationships with different subordinates. Some leader-follower dyads hal'e
high-quality relationships. Subordinates in these dyads ,Ire members of the m-group.
Other leader-followcr dyads havc low-quality relationships. Subordinalcs in these
dyads form the out-grnup.
8. Sometimes, Icadership does IIOt secm to have much of an effect in organizations
because of the existence of substitutes and neutmlizers. A leadership substitute is
something Ihat aclS in placc of a formalleadcr. Substitutcs lIlake leadership lIllIlCl:-
essary becnuse they take the place oflhe influcnce of a leader. A leadership neu-
tralizer is something that prevents a leader from having influcnce and negates a
leader's efforts. When neulrallzers are present. there is a klldership void-the
leader is having linle or no effect. and nothing else is taking thc leadcr"s place.
9. Transformntional leaders increase their followers' awareness of the imponance of
their jobs and the followers' own needs for JX'TSOtlOl growth lind accomplishment and
motiv,lIe followers to work for the good of the orgnnization. Leaders transform tlleir
followers by being l:harismalil:. intcllel:1tIally stimulating their follow'ers. and engag-
ing in developmentnl consideralion. Transactional leadership occurs when leaders
motivme lheir subordinates by exchanging rewards for high pcrfomlancc and rcpri-
lIl,jlJding instances of low performance.
IO. Leader mood at work and le\'e Is of emolional inlcll igenl:c have the pOlenlial 10 influ-
ence leader cffectiveness. Preliminary rescarch suggests that when leaders tend to be
in a good mood at work. their subordinates lIlay perfonn at a higher level ,\lId be less
likely to resign.
I I. WOlllen and men do nol appear 10 differ in the leadership behav iors (l:ollsidl'ralion
and initiating structure) that they perform ill organi7A1tiol1s. Womcn, however, appear
to be more democnltk or panidpative than men as leaders.
12. Ethil:al leadcrshi p helps develop trust among organ izalional members thai translates
into high performance and prnllx:ts the well-being of all stakeholders.
420 PART 2 • GROUP AND TEAM PROCESSES
Questions for Review
1. In whm ways are the trait and behavior approachcs
to leadership similar'!
2, Under what l:in:umst;ntl:es might leader-punishing
bch;lVior be appropriate'!
3. Are Fiedlcr's contingency model and thc trait
approach consistent with one ;mother or inconsis-
tent'! E~plain.
4. How might a rclationship-oriell1ed lealler who
manages a restaurant and is in a very unfavorable
situation for leading improve the fal'orability
of the situation so that it bttomes nllxJerately
fa\'orable'!
5. In whm kinds of situations might it be especially
important for a leader to focus on motivating sub-
ordinates (as outlined in path-goaltht"Qryl'!
08: Increasing Self·Awareness
Contemporary leaders
Choose a public figure you are fam lliar w ilh (you know the
individual. you ha\'e rcad aboU! the person in magazines
and newspapers, or you have seen him or her on TV) who
is in a leadership position. Pick someone olher people in
yourdass arc likely 10 know. The person could be a leader
in politics or governmcnt (at the national. stalc. or local
le\'el). a leader in your community, or a leader at the col-
lege or university you .menu, For the leader you have
selected. answer the follOWing queslions:
I. What traits docs this leader ,lppear to possess?
2, What behaviors does this leader engage in'!
6. What might be somc of thc consequences of a
leader having;1 relatively small in-group and a
large out-group of subordinates'!
7. Can organizations create substitutes for leadership
to cut down on the number of managers thcy nced
to employ'! Why or why not'!
8. When might having a charismalic le;[(ler be dys·
functional for an organization'!
9. Do organizations always nced transformational
leaders. or arc they needed only some of lhe lime?
E.\plain.
10. !-low can managers practice ethical leadership.
and encourage their subordinates to act elhically
as weiI"
3. Is this Ieadcr relmiollshi p-oriented or task-oriented'!
How favorable is the leadership situation according
to Fiedler's l:ontingeney llHxlel'!
4. !-low docs Ihis leader try 10 molivale his or her
followers?
5. To what e~tent does this kader allow his or her
followers \0 p,trticipate in decision making?
6. Do any substitutes or neutralizers eJ\i~1 ,,'ilh regard
10 this leader? What arc they?
7. Is tit is a trallsforrnmionalleader? Why or why not?
8. Does this leader engage in If.lnSaClional leadership?
 CHAPTER t2 • LEADERS AND LEADERSHIP 421

A Question of Ethics
Influence at Work
Influence and persuasion IS a ccntr,1I pari of a leader's job: leaders routinely allernplto
inl1uencc employees to work hard and perform al a high level. Leadership can have a dark
side if managers inl1ul.'nce employees to behave in unethical ways, however. Think aboul
the ethical issues involved in leadership and address the following questions:
I. Whal kmds ofaetions of a leader would you regard as being clearly unethical in
their anempts to influl.'nce and persuade employees?
2. Do you think some kinds of Icadl.'rship approoches arl.' more l.'thicalthan others?
3. At what point does transforrnationalleadership become unClhical in an organiza-
tional SCitillg'?

Small Group Break-Out Exercise:

A Leadership Problem at HighandTall
Form groups of three to five peopll.'. discuss thc following scenario, and discuss the ques-
tions: be prepared to sh,lre your discussions with your class:
You are Ihe founding entrepreneurs of HighandTalJ Company. a fa&l-growing digit,,1
software company that specializes in home conSlllller clectronics. CUSlomcr demand to
license your software has boomed so much that injust two years you have added over 50
new software programmers to help develop a new range of software products. These
pt:ople arc young and lIlexperienced bUI are highly skilled and used to pUlling in long
hours to see their ideas succeed. The growth of YOllr compaoy has been so swift that you
still operatc informally. As top managers you have been so ab,orbed ill your own work
that you have paid little attention to the issue of leading your growing company. You
have allowed your programmers to find solulmns 10 problems as they go along. they
have also been allowed to form their ow'n work groups. bill there are signs that problems
are arlslllg.
There have been increasing complaints from employees that as managers you do not
recognize or reward good performance and that they do nOI feel equitably treated.
MOI"Cover. there havc becn growing concerns that you arc either too bu,y or not willing to
listcn to their ncw idea, and act on them. A bad atlllosphere seems to be developing in lite
company and recently scveral talented employees have left.
You realize in hindsighlthat you have done a poor job of leading your employees and
that you IK'Cd to develop a common leadership appmach to encourage employees \() per-
fom] well and stay with your company.
I. Anlllyze this leadership situ;l\ion to uncover the contingency factors that will be
important in \:hoosing a leadership approa\:h. EJlamme the four approaches to
leadership against thcse faclors.
2. Which is the most effective Il.'adership approach to adopt?
3. In what other WHyS could you innuenee and persuHdc your employees to perform
well and stay With your company'!

Topic for Debate

Leaders can have powerful effects on their 'iubordinates and their organi7.atiOlls as a whole_
Now that you have a good understanding of leadership. debme the following issue:
Team A. Managers can be:: trained to be c!Tedive leaders.
Team B, Managers either have what it takes to be an effective leader or they don·t. If
they don·t. they cannot be train<.'d to be effe<:tive leaders.
422 PART 2 • GROUP AND TEAM PROCESSES

Experiential Exercise

Effectively Leading a Work Group

Objective
Your objcctivl.' is to gain experience in effectively leading a group of employee, who have
va1)'ing lewis of ability and !\lotivat ion.

Procedure
Assume the role of Marin Cuellnf. who has jusl been promoted to the position of supervi-
sor of a group of four employe.::s who crcale designs for wallpaper. The group's goul is to
create imaginatiw am] best-selling wallpaper designs. Cuellar is excited but apprehensive
about assuming her first real leadership position. As a forml.'r memocr of this group. she
has had ampll.' opportunity to obsen'e some of her new subordinates' (and fonner group
members') on-the-job behaviors.
Each person brings differl.'nt strl.'ngth. and weaknesses to his or hl.'r job. Ralph Katten
can turn out highly creativc (and occasionally) bcst~selling dcsigns if hc tries. But oflcn. hc
does nOltry: he secms 10 daydream a lot ,Ind not lake his work seriously. Elisa M,lrtinez is
a hard employee who docs an ucceptable job: her designs are nut particularly noteworthy
bll1 arc not bad eithcr, Karen Parker is ncw to the group and is still learning thc ins and outS
of wallpaper design. Tmcy McGuire is an above·averoge pcrformcr: hcr dcsigns are g()(X\.
and she turns oulll fair number of them.
I. Using the knowledge you have gained from this chapter (e.g.. about the bchuvior
approach. pmh-goal theory. and Icader-ml.'mber exchange theory). describe the
steps Maria Cuellar should take to effe<::tively lead this group of wallpaper design~
ers. Should she usc the same approach with each of her subordinates. or should
her leadership approuch diner depending on the subordinate involved?
2. Thl.' clas, divides into gnlUps of three to five people. and each group appoints one
member as s["lOkespcrson. to present thc group's rc<::ommcndations to thc whole class.
3. Group mcmbcrs take turns describing thc steps Cucllar should take to bc an effcc-
tivc leader.
4. Group members cnmpar<:: and contrast the different leadership approaches that
Cuellar might take and assess their advant,lges and disadvantages.
5. Group membcrs decide what advice to give Maria Cuellar to help her be an effec-
ti"c leader of the four designers.
When the group has cornplctl.'d lhose activities. the spokespcr,on will present thl.'
group's TC<::ornrnel1dations to the whole dass.

Nevv York TilTlcs Cases in the News

lhr ~r\u iJork (!intes

"At LucasArts, No Playing Around in Quest to Be No.1"
By uwm !If. IJnIWII!, NIT. April 172006,1'. Cl,

In Septcmber 2OW. J im Vimd IllCt with tho::
director George Lucas at his offil'e at
S~ywalkr Ranch nl.'m herc. At the lime.
Lu"asAns. thl' video game "ompany
crciltcd by Mr. Lucas in 1982 and n.ll1 by
Mr. Wilrd. was itl dis:lrr~y. The division
waS ma~ing 100 many medio<:re "Slar
Wars" games. il was rife wilh internal
ri.'alri", and ;\ was in SUl'h jal'~luSler
finnncial shape that oonllscs for employCCl'
were s<:mpped th:lt ycar. Mr. Ward. a
\'Cteran Lu"asfilm mar~eling executivc
who had OCcn nanlCd presidclll of Lucas·
Arts only f,xlr months earlier. was there to
prc,;cnt Mr, Luca~ wilh:t busincss plan.but

he had a few que,tion, of his own. Mo,t
importilnt. did Mr, LlICas I'.lve the desire 10
tum Lll<"a,Arts inlo onl' of lhe lOp five
vid.--o giinlC publishers? Indeed. Mr, LucilS
said, IK· did. "Wc' c'an do thi, ourselveS:'
Mr, Ward recalled Mr. Lucas tdling him,
"Wc' will put our reSlllirn" behind this.'"
LucasArts is IlOI No.5 yet. But lasl yeilr
il nUlked No. S in silles. up from No, 13 a
year earlier. il<"cording to the NPD Group.
And. Mr. WanJ.46. is bring err'<.lite'<.l with a
tumilround. While No, 8 may !oCCrll low in
an indu,try obsessed with No, I. Luc'as-
Am gOl there selling a f,"elion of the
games its comp..'titors did. Analysts "'ld
othe['!; in lhe industry agn:<: it is a pmmising
tum for Luc"s Arts and. in particular.
Mr, Ward Bur his most challenging days
may Ix: ahe"d, TlIC video gmnc industry
has bc."n in the <k~drums for months: video
garnc "lies are lagging as con,unlC[,!; wait
to buy rhe neXl gene,,,riOl1 of consoles_
mduding the F'layStation 3. Sitting lr1 his
offil'e overl"oking rhe San F,,,nl"isco Bay
one recent morrung. Mr. Ward reflected
on whar I>e and his team had done ", far
11 was at <I town h<lll nlttling III August
200..\. thl' rnrmrh before he met with Mr.
Locas. thm he outlmed his stnttegy in "'1
auditorium filled with staff members. It
seemed simple: LucasArts would make
high-quality games, and deliver rhem on
time and on budget. "I learned this from
GC'orge:' said Mr. Ward, "There are rhese
countless meetings where he is mtiolH'J,
laid back, Bad then he sets the bar >!,
high you begin to think. like. this guy is
our of his mind:' To illustrare rhe point.
11-'1r. Ward raised his right arm in lhe air.
higher than the Idt."1 said. 'Gang, this i.,
what we ilre doing:" said Mr, Ward.
slowly raising his left arm to meet the
righl. "Now they've learned thilt if rhey
COil"" rc'motdy close to this. they can do
ilmating things."
Before joining LUl'asfilm in 1997.
Mr. W<lrd had distinguished himself for 13
years as an aggre"iw <ldvenising exel'U-
ti,"" ""rkinl; with the likes of Apple Com-
put,"r, Nike and M i"TOsoft. While workinl;
at the ad\"eni~ing firm of Wiedcn &
Kennedy. he "'as in"oh'ell in the intro-
duction of Windows 95 for Micrn,,-,ft, He
and his colleagues reeonl1nend,'d that
Questions for Discussion
L Wh"t kind of a leader is Jim W"rd. :ux! wll"t theo!)' be>! describes his approach to le:uJcrship?
2. If you Wl."l1' his subordinate. how woul<J Jim Ward cXpl."Ct you to heha\'c?
J. Why does P,;tcr Hirschmmlll complement Jim Ward at LucasArts"
CHAPTER 12 • LEADERS AND LEADERSHIP
,\lin",oft usc the Rolling Stone', hit
"Slart Me Up" in its 110W linnous cam·
I"'ign, Later. he wa, \Vieden's global
<\Ccount direel0r for Nike ,md p;ln of
the team thar int",du('c'<.l Tiger Wood, a,
a brand. Mr. W;"d W<lS rcrruited to
LUl'a,film in 1997 to ",'crsee t!JC world-
wide marketing of the la~1 three movies
in the "Star Wars" serics_ as well a, all
of Lucasfilm's DVD library. But by
NOn'rIlber 2003. Mr. Ward wamed ",ore
re~ponsibility, Mr. Lucas ;lnd Ms. Chau
agreed to ler Mr. Ward "tryout" at
LuciisArt~ even rhough he had no e'pe·
rience making video gmncs. "When he
ralked to us we were rhinking maybe.
maybe not:' said Ms, Cllau. "Bul if he
surrounded himself wilh people who kTlCW
the busincs~. and he li,terK:d. tllis could Ix
great." Mr. Ward wa, named president at
LocilsArts in May 200..\.
Rohoic n,"."h. pre~idcnt of the entenain-
ment <lnd devices division at Microsoft.
who has known Mr. Ward silll"C the ~ran of
Windows 95. said Mr. Ward sought a(h'i,"C
from <>thers on h<,w be,t ro revive
LtrcRsArts. "He did lislen to <I lot of fCOPlc.
hut once he mad<.' a deci~i{)n. he didn't
waSle lime ~'Ctting it done:' "lid Mr. B<lch.
Alonl; rhe way, he '11.'0 de,e1oped a
reputalion for directncss lhat could be a
lillk· mugho Mr. RiecilielJo .,aid th"t Mr.
Ward "can run certain people o"e(' with
his hig voic"C and strong point of view, "/To'ly
sense is if you took the average e.xecutiw
with a 50- to SO-hour "'oIiw",·k. they
spend abollt 50 pereent of their time jusl
being nicc· ... said Mr, Rieeiriello, "Jim
doesn't deal with th;lt. He picks up half a
wc"Ck right there.'"
In 2004. ;Ibout one·quilrter of neilrly
..\00 cmploye('s at LutasArts lost their
jobs. said severill former employees.
(Mr, Ward dedined to di",'uss the l"yoITs.
Currenrly rhere are 252 employees in (he
division,) He qui"kly S<llight to shakc up
the culturc."1 needed 10 frc.... rhem up and
gct rid of tllC polities so I "oul<J inslitute a
ream:' ~aid Mr. Ward. "I told rhern they
eithi.'r get on bO<lrd or they 1I0n·t." He
Ix:gan weckly mectings to enl"ourage
d("p<lnrT~nt hea<Js to talk. He said he
separllll"d the qU<llity-control <lcpanmcm
from product development ro creare
423
"lIC'llthy tension:' giving staff members
morc freedom roexpress their vicw,.
Mr. Ward saill he had successfully
worked with ncati"" people his emire
Career. <lnd former LueasAns employ,,,,s
,aid he ,ought to in'pirc. nut c,'en
Mr. W<lrd cOIICeded that LlICasArts devel-
opers were su'pil'iou, at first. "You've
never run a video gallIC comp.1ny before:'
hl" said many of t!JCrn told him. As a resuh
he kTICW 1IC tlttdc<J SOme01IC to lIClp who
knew how to make games. So he
promoted Peter Hirschm"rm. 3..\. 10 be
vi,'e pn'sident of pnx!ul"l <JC\'cJopment.
"The linchpin was to fmd a creiltive
p"rtner." Mr. Ward said. A former pro-
due' ion ilssistam who worked with Sle"en
Spielberg. Mr. Hir.SI.·hmann "'as inH,lved
in de"eloping th;lt director's widely
aedaimcd Me<J,,1 of Honor video gaml's
before joining LuciisAns in 2002 ;'S "
produl'n, Mr, Ward got to know
Mr. Hirsl"hmann in early 200..\. when he
would p"d do"'n the h,dlto his offi,'c late
ar night to check on rhe progress of St;rr
Wars: Battlefront. which Mr. Hirschmann
wa~ owr""....rng:.
Whik Mr. W<lrd Can be forceful. Mr.
Hirschrnann is more rebxed. He once hil'l-d
an icc Cream truc\.: to deli'-cr gelato to tllC
,mff. "Peter is a pcrf",·t counter to me:' said
Mr. Ward, At frrst Mr. Hirschmann was nol.
interesTed in rhe joh. "I ~aw a Irll of baggab'C
with it:' SOlid Mr. Hirschmann, "But Jim
said. 'We arc going to hir the rescr bullon.
We are going to reOOol: Then I thought.
ma)'bc rhis was ffi",blc." Their exeirement
was I"'lpable on a l"C\."Cnt afternoon. when
Mr. W"rd, Mr, Hirschmann and Haden
Blackman. the projeet leader of a
fonlK'oming "Star Wars" game, reviewed
all of lhe cornpmly's recent projects .
Mr. BI,"."kman outlinc'<.l a '""'w S101)'liTIC thar
deh'ed deeper into Darth Vader's history.
'1'hel\..', a kit of prc'ssurc' ," said Mr. Ward,
"I mean we're t:lking 520 million out of
George's pOi:k"t." he said. ("pping Mr.
lIirschm.mn on the shoulder while refer·
ring to tlK' potential cost of a ,'i<J<~) ganlC
for the next gerICMion of consoles.
Mr, Hir,dllnann ,rnd Mr, Blackman shor
each OIhcr a knowing gl;lI>ce. "We feci the
pressure. all right." Mr. Hirsl.'hrnann said.
laughing.
424 PART 2 • GROUP AND TEAM PROCESSES
"He Naps, He Sings, and He Isn't Michael Dell"
Can' Ril"/ill, NY-': Sel'lnllbt',- 11.2005, p. 3.1.
Thcre', an e'lablished drill. '" Sl' il
SOlllClimes seems. whell a publicly Il1'ded
mmpuny disappoinlS Wall SlreN.1ht·ehid
eweutive blall'ICS high oil prices, Or ifs the
fault of unfore'cen Impp,,"ings in A,ia. or
of a soflware upgralle that lIidn'l go as
planl\(;<I. Bul maybe Kevin B. Rollins. the
chief e~c<:utive of Dell. is so new to the job
thai he <locsn't knew.. allY belter. Mr.
Rollins. 52. had been C.E.O. for barely a
year when Ddl. the ,'omputcr maker.
announced laSI momh that it had fallen
ShOr1 of expeelmions-I~)th its own and
those of analysts. The compuny', profns
did risc 28 percenl in lhe second quarter.
tn'l.'<Ilargelyon strong ",,,,,,,,as sales. hut
tOlal re"enue came in scveml hundred
million doll"", shon of projecTions.
Mr, Rollins. who became an e.xccll1ivc
afTer a "areer switch in his 40's. could
have offered ,IllY Ilumber of e.xcllscs. nol
the le<l.\1 of whi"h is DcW, own previous
success. He mighl ha"c also mCnlioned
thai Dell i, w,,;,lling wilh Ihe ,ame
question facing other m"llIre tcchnolO),'y
mmpani," Ihat ..anked among lhe higl>c·'1
fliers of Ihe I99(J"s: How 10 increase
[""enue, when il is alrcady s(' big?
Despile all of Ihis. Mr. Rollins blamcd
himself for Dc'lI's disappoinling e'lffiings.
"Fl1ltlkly:' he "'id during a conference call
wilh allalysts. "w'e exe('uled poorly on
Ill"naging ovcrall selling pl"iccs'" - in par-
li,'ular lhose ma"hilK'S wid 10 eon,unll;rs.
If nothing else. Mr. Rollins. who suc-
'....'I.'<Ie<l Ih(' (.xxnpany·s founder. Michael S.
Dell. as chief execulive in Jllly~. is a
difk,,'nl cui of CEO. Con,id.;r his reaC-
tion in 20)1 when IIC canlC to belie'"C thai
the ,'orporalc culture of Dell Imd becn
soured by gfC\XI. Mr. Rollins. then the
company's S(X'orld in command. blamed
himself and fellow top executi\'Cs for
failing 10 sct Ihc righl lone:. To hdp SCi
thing, right. he dccr~...,d that every Dell
mat~,ger would submil 10 p-'riodie cvalua-
lion, by hi, or her undcrlying_.-a polky
still in plat."C. dlOUgh he cndured Ihe sting of
people cs.'iCntially Tclling him lhal he ,x)IJld
be SO supereilious and icy cold Ihal his
per'ionalily "",uld be .slored in a mcat
locker.
During that pmeess. for in,lan,"'. Paul
D. McKinnon. a senior vice prc.,idcm who
",wscc's hum,," resoun;cs al Dell. remem-
bers proclaiming Mr, Rollins aloof. a roor
IiSlc'ner and a leader "..Ill, "I limes c""ld
seem u'IJppl"Oa<'h;'blc. AnOlher senior vk"C
pre,ident. Paul D.Be·II. ,,'110 is responsible
for the eompany's European. Middle
E..., lern and Afri",m operalions. ,aid Ihal
Mr. Rollins coold be argunlCntati\'C. maybe
e""n OOllhc"""d, Mr. Rollins chuckled a,
hc recalled lhe Ii"" limc he endured Ihi,
Iwisl on lhe siandard employee review,
"You mean when people said I wa, a lillie
arnlg'UlI and maybe a 101 opinionaledT he
",id. a ,lightly pinched ,mile on hi, fa,;c.
Hc didn'l seem lIefe",i"e about "'hal he
had learned about hin~'iClf &' mu<:h ...~
fascimltcd by lhe results of a social cxperi-
menl in which he wa, the leSl ,ubje.:t.
"You Iell your family "boUI Ihe Ihings
you learn and they go. ·Well. wc knew
th"I:" he said, And with Ihal. Mr, Rollins
ICI loo'iC anolher laugh. To 1hc extcnl thai
1IC has any repnt,nion al all. il i. Ihat of a
OO1l0n-do",n 10gi,li," expert. one of the
operaliom') geniuses 1Il0ST responsible for
..."embling a <:Ol1lpany Sl' w<:11 run Ihal
,""demi<:s study il. I,nd e"cn <:ompclilOfS
admire lhe emden<:y wilh whi"h il spils
001 PC's and. increasingly_ olher prOOucls
like· prinl<:[s. ldc"i,ion, and a "heapcr
alternalive to Ihe ;rod, BUI when people
I1IC'Ct him. they discowr Ihat he is morl'
soft·spo~eo anll reserved Ihan a Iypical
chief "Xl"'ulin'_ Fric'n<ls say he is also
warmer and more easygoing than ftrst
impn;ssions-if nOI also sc<:ond and third
impressions-mighl suggest, --A l'..a<:1ic~'<I
cxtro\'Crt" is Ihe way Tlll,mas J. l\-kr~'<Iilh_
a good friend and lhe <:ompuny\ former
chief lim,"cial off,,·cr. dcs.:ribed him.
In 1hc buck·slapping w"rlll of big bu~i­
IICSS. wh,:re deals arc "ftcn eonSUnlnlJk'<l
''''er gl...."", of bourtKm or bOltks of line
wine. Mr. Rollins "Iso 'lands OUI. As a
MOmlOn. he has IIC"er <:on,umcd an
"koholic beverage. He plays Ihc violin
,,,,"c..a l timc' a wcc~, and oc<:a'ionally
performs publicly. He's II skier and a
mountain hiker. and he ra.;c, tnOlorcyde,
,md faSI cars. a pastnlle he occasionally
,hares wilh Joseph M. Tucc·i. ,-hd ne<:u-
Ii'''' of EMC. the (''0111PUler slorage devi<:c
maker Ihal has be...·n a D..'II partner sinc"
2((11 . "Ile is very differenl O'I<:c you gel 10
know him:- Mr. Tu,oci 'aid. "He Carl <:onle
off as ;,Ioof. bul he's f;tr lrOln iT:' Thinccn
munths ago. Dell I"c" Ihe world's top
<:ompuler ma~er. endured whal is sup-
p..,s..'d 10 be <XIC of tile hardcr IransiliiXlS
for any <:orporation Mr. Dell was <:hief
cxccuti"e for 20 years af1Cr he: founded IllC
l'omp;my in his dolln room at Ihc
Uni\"ersity ofTcxas in Auslin. TIlOU£h lie
gave up Ihat lille laSl ycar. he '~lYcd un a"
l.-hrunnan -a Ilpe of IIrrangcmctll thaI Can
make the Iran,fer of Ihe day-tn-day
rcspon,ibililics 10 lhe new chief Ihal mIlCh
more difficult, said Samuel A, Culhcn. a
professor m lhe Anderson School of Man·
agement al IllC Univcr'iily of California.
Los Angeles. "Uslulily this ends III' being
OtIC big me" unlcss lhe fOIHKlcr gets til<:
heek OUI of Ihere.'" he said. Aside from
Dell. there h..., be...,n nne nolablc cxc'eption
10 Ihis in the technology world. added
Professor Culben. who has sludi,-..l
execlilive kadership for 35 years, It is
Mi""'»oft. w'herc Bill Gale, ,tepp,;d aside'
as <:hief execulive in 2()((l. afler a lju;,ner-
n'ntury of running Ihe enmp;lny. but
remained chairm"n (and added Ihe new
lilk of "<:hid software arehitc<:l") aft.....
Sleven A. B"lIlllCr 1000.: o"er as CEO. In
picking hi, ,u<:,·e"or. Mr. Dell "wa,
tOnlln;'le 10 find lhe righl guy:' Professor
Culben said_ ",lIId lhen "'hen h,' did. hc'
was advanced enough ..., a human being 10
!ruslllim and Ieaw him alone and giw him
rnoncy and prestige and the freedom to do
Ihis job:'
While Mr. Rollins and Mr. Dell arc nol
pm1i"ularly dosc on a personal Ic\"d-
Ihey rarely sodalize with e;l<;h Olher.
Mr, Dell said-Ihey do work do,e1y
logelhcr. flgU""l;V<:ly and literally. Their
large wo(xkn dcs~s face Ollc 'lI1olher in
adjoining offi<:cs ",paralro by a glass wall
and a glass door, Mr. Tucci "'ys he has
vi,itcd tho'iC offi<:es about 5-0 limes lind
111" nc"cr seen lhe door dosed,"1llc way
tho'c twu guy, gct along i, nOT an a<:t:-
Mr. Tucci said. "I can Stllrt a <:O'1\"ersalion
 CHAPTER 12 • LEADERS AND LEADERSHIP 425

with Mil·had.:md Iwo weeks bl<'r finish it
with Kevin, 1llcy know what each Olher is
thinking." Ea,'h OIls" complemenlS the
other's mlems, Mr. Dell is a skillful ".les-
m,m aOO the ,,-',Kk·ntt.xhnologi,t mapping
new trends, Mr. Rollins takes responsi-
bility for ",ost e,",,,)'thing clse. from the
spcc<l at which the company's factories
o[X":lk' 10 employee ITIomk.
"People always wonder how well a
tramilion lit<' this will work when the
founder is Slaying very im'olve<l:' Mr.
Ballmer wrole in an c-mail mc"age. But
when people work IOgether as well as
Mr. Rollins aOO Mr. Dell do. he a<kk-.J. "it
actually helps thatlhe founder is staying
inw,lwd. becmlsc you can <"ol\t11\ue
to drmv on each other's Sirenglhs:'
Mr. Ballmer has worke<l dosely wilh boIh
men. gi"en the pre--cmine"'" of both <'Om-
panics in tile personal-comput<.'r uniwcsc.
Mr. Rollins was living in Bo,tnn. a I"'nncr
at B'lin & company. the management
cO'Huhing firm. when he wa, a,ked to fly
to Austin in 1993 to m,:et witll e.\ccutiws
at Dell. H.: readily acknowledg"s that hc
was h'lrdly thrilled about the assignment.
"Texa, i, a I'HH)-ng way from Bo,ton. in
'lHmy ways:' he said. He had worked
primarily witll """"1"','" "oml"'nics
before his panners asked him to hdp what
wa., Ihcn a mo,kst-,iz" mmputcr "oml"'ny
on pa,,<.' 10 lose $100 million th,1t year,
Ju,t bel'"", Me. Rollins '''ri''"d. Ddl
announce<llh"t it woold ",II ils <'Omputers
at Wal-Man ,to[('s. as well as mlltinuing
to sell di",ctly to consumers o"er the
Int<"01<.'I. Breaking into big-box ",tail out-
lets. Dell S:lid. <"Quid bring in an addilion"l
5125 million in annual ",wllue-and
rapidly build its brand n,ullC. Mr. Rollins
promplly sugg('Sli:tl tllat Ddl ',:utlll· the
de"l. telling a mccling of top Dell
"x""utivc" tMtthc ammg<.'l11Cm. o""rtimc.
would prove to be 'I money loser. H"
aPr''''-'mly made a persua,iv" ,·a",. Within
d"ys Mr. Dell S<.lid he aske<l1l-lr. Rollins to
c·oo th<.· "ompany', agn.""ments with retail
chains, After Ih"l. Mr. Dell ;'dde<l. "very
rapidly Kevin occame a nilieal pml of thc
senior m"nage01<.'nt team"'-ahhough h"
wa~ 'lillte,:lIni"'ally a l"nn!iultanl.
K"vin Rollins naps, lie ~ldmi1ted as
mud\ not long befor.: kffr.:)' R. l"'mdt.
the ... hief exccuti\"(' of Geroc~al EICClric. on<:
of DeWs top ...u,tolT\ers. WaS sdl<"duk-.J 10
speak 10 a group of Ddl "xe... uli"es. Mr.
Rollins re... koIK·d tllal his famous visitor
mighl ha"" fun with lhe I"k. SO II<.' broke
tOC n<:""S thai Mr. hnm,:1t l~l<l ...alle<l him Oil
a 1'C<"<.'I11 v""ation in MexiL,' and "aughl him
in "n aflc'moon snooz.... Many p;:opk: insioc
lhe "ompany had thc ,ame reael;mr "1-1('
napsT TIle wry i<k:a seemed incongruous
Ultho;;(' who work for lIim and sec him pol
in 70- to 8O-hour work"ccks. (H" still
find' Ihe lime to run four or f,v" mile'
sewraltimcs a ....cck "nd 10 pursue a long
list of hobbie~. And ....hcn he', in town. he
alleOOs "hurch every sunday.) So. too. did
tOC idea of M,- Rollins pulling 00 a ('()wtx»'
hat. moull1ing 'I Shlgc at a oosl::ctball arcn:1
and a"''''''''l'''nying lIim,..-If on the violin
while belting out a song spoofmg a
,wllpoler indust'), 1<,..,. But he did !hal. 100.
al a Dell evenl. Among Mr. Rollins's gins
a, "11;"1' cx,x·utive. tho,,' arouOO him 'ay. i,
what Mr. Bell. head of DeWs European
operations....alls hi, ··tigllt messaging:' So
crisply docs Mr. Rollins convey toc D<:II
lin,'. said Roger L Kay the fountler of
Endpoint Tcrhnologies Associates. a
resem\"11 fiml that monitors tile pe"","al
"omputer indust')·. Ihal il i~ "'I lillie bit
,,'cary how nel)'ollC from the lIighc,;t to till'
lowesl "Illployee is on 'ness'lge:' Today
Mr. Rollins's I1lCSS.1h~ is i1mt evel)·th;ng is
fmc al 0<.'11. despite a depre~.,ed ~to...k
prk"-lIOwat $34.65.down 17 percent for
the )'"a,- Dell may bc lhe leading wmputer
nwker m th" world. but it is No.2 in
Europe and No.2 in Asia. leaving pknty
of room for growth tlt<.'re. "As wr big
'tral"gie iniliatiws "aplme ,hare and
protlts. the proflls we deli\'er will go up
and our ,u",k price will nalurally ri,,':'
Mr. Rollins said. "W" hav" a 101 of room
for growth for a long time oc·fore we hOI""
10 "sk what's the neXI vision Ihing. It·s
really a maUer of "x,""ution:'
THEREIN lies whal Mr. Rollins
lIope, is lIis "x'rel w"ap<lI1. In early 2002.
shorlly ;t1ler he Ic;'med whal his c1oS<.'sl
und.:r1ings n'all)' tlloughl of hi, ,tyk. lie
stood before 50 or so olher 101' Dell
c'xC<'uti"es 'md acknowl ...dged that lie
nccded to grow as a m"nager "I could
giw tit<.' cold. "ak-ulat...d answer:' he s"i<1
in an interview rec"lIing that meeting.
"BUl I r...ally "'anted to Ix- a lIIore
inspiralionallcaokr:" Th" 0<.'11 way is 10
...onstamly N'<.'ak th" 'yslem 10 make il
mor(' cff<ciem J"';t a~ Dell manag"rs
sludy the mowmellts of workers on its
a~'embly line.' to maximize cffkien"y.
th<.'y eolle"llvc!y decid<.'d 10 ,tudy
Ih"m~elv"s. For hi, pan. M,- Rollin'
",ad-p:uti... ularly booh "bout the
"oumry', founding fathers. He d"... idcd
thai he W,IS too mueh like Alexander
Ha"'ilton-eoolly effi"i"n! in lIis ana-
lysis but shu" on people skills-and 100
lillie likc G"nrge Washington. whom
Mr, Rollins cast as tIl<.' kind oflc'ld"r able
to motivat" peopl" by 1I"lping Illem 10
better understand thel11selv"s. "Maybe I
"an'l be a George WashinglOll ill lermS of
ln~piration:' h" said. "but certainly I
know I Can always do better.""

Questions for Discussion

I. What are tllc Illain ekmellts of Kevin Rollins's kaokrship ,lyle?
1. How would you d"scribe his p<.'rsol1alily or key p<.'rsol1111 strengths and weakncs5<.'s?
J. Given thcS(' factors. what approadl 10 kadership do you think he has adopt cd? How suc-
...essful h", Ihis approa... h been?
 PAR T 2
Group and Team Processes

POWER, POLITICS, CONFLICT,

AND NEGOTIATION

OVERVIEW

SOURCES Ot· INDlVlI)UAL I'OWER

SoURCt:S OF I:UNCTIONAL ANI) DI\'ISIONAI. POWER

ORGAJ\jIZATlONAL POLITICS: TilE Us.: Of POWER

WIIAT Is OR(;ANIZATIONAL Cor.·.·I.ICT·!

NU;OTI,\TION: KESOU'IN(; CON .... ILT

SUMMAR\'

EXERCISES IN UNUERSTANI'ING AND J\I,\NAGIN(; OR(;AJ'IflATIONAL HMIA\'IOR

Learning Objectives
After studying this chapter, you should be able to:
Understand the nature of power and explain why organizational politics
exists and how it can help or harm an organization and its members.
Differentiate between the main sources of formal and informal power
people can use to engage in organizational politics as well as the sources
of functional and divisional power.
Discuss the nature of organizational conflict and the main sources of con-
flict in an organizational setting.
Describe a model of the conflict process that illustrates how the conflict
process works.
Explain how negotiations can be used to manage the conflict process and
resolve disputes between people and groups.
 Opening Case
MIXING BUSINESS AND FAMILY CAUSES CONFLICT
Why are power struggles taking place in the two media empires?

wo of the most powerful global media empires in the World are

controlled by family patriarchs. Sumner Redstone. who is over 80,
controls Viacom, which owns Paramount and MTV, and CBS Inc. And
Rupert Murdoch, who is in his mid-70s, controls News Corp., which owns
the Fox Network and studios amongst an array of other global media
assets. 1 Both these men brought their many children into their
businesses and over time groomed them to take up senior
management positions and eventually succeed them. However,
in both these companies the fight between siblings to succeed
their fathers has caused escalating conflict and bad feeling
both between siblings, and siblings and fathers, which has
pulled their families apart.
In the Redstone family the conflict came to a head when
Brent Redstone was kicked off the board of directors of
National Amusements, the family-owned company that owns
about three-quarters of both Viacom and CBS. He claimed he
had not been consulted in key decisions concerning the
company-despite the fact that he owns one-sixth of the
company worth over $1 billion. 1 Apparently Sumner Redstone,
who intends to remain chairman until "the last breath in my
body" asked both son Brent and sister Shari, who he had been
grooming to take control when he dies, to give him the voting
rights to their stock. Brent refused, while Sari agreed. So,
Sumner Redstone appointed her vice-chairman of the company
and his heir apparent. Claiming wrong doing by his father,
Two I;>illionairc patriarchs. Ru[X'n Murdo<:h Brent began a lawsuit to force the break up of his father's
ami Sumner Reds1one. have found thaI all empire and gain access to his $1 billion stake, If he sold his
lhc moncy and powcr in lhc world dOC'!101
stake, this might put the Redstone's control of their company
m:,};c for an org'lOiza1;on lhat Can increase
at risk. Sumner Redstone's plan to shift control of his media
thc wei I-being of its mcmbers -c"c" when
thcy h~ppcn lO be their o .... n ch ildrcn.
empire to Shari Redstone after he dies would thus be in
jeopardy.
In the Murdoch family a conflict between siblings is also
hurting family relations. Apparently, Rupert Murdoch had been grooming
his eldest son, Lachlan Murdoch, to take over the family empire. Lachlan rose
through the ranks to become the deputy chief operating officer of News
Corp. and publisher of the New York Post. However, in a move that was a
great surprise to many, Lachlan, Murdoch's heir apparent, suddenly resigned
his executive posts at the media company in July 2005.] This left lachlan's
brother, James Murdoch, who had been acting as the CEO of the British
satellite television service Sky Broadcasting in line to succeed his father.
Once again money and power seems to be at the heart of the conflict.
Apparently Murdoch wants the young children of his new wife to eventually
share in the control of his media empire. However, Lachlan was reluctant to
give them voting rights that would reduce his own rights and thus power in
the company. This may have precipitated his father's anger and led to his
removal from his management positions. 4 Since Murdoch's youngest children

POWER
111e ahihly of one J'C'NlO or
group (0) cau,"" anmhe, J'C'n.on or
group 10 do "'mc!hing lhal the)'
mhe"" ,'" mil'h\ OUI Il,"e tJo,><:.
ORGANIZATIONAL
POLlTICS
,kli'-liit', in "'hi"h manab"''''
engage to ;I1<TC"..c Ir.:;r p'-"'cr and
to JlII"lI<.' goal' thai faw' their
indi\'idu.al 'In<l gO'HJp inlen"4.,
CHAPTER 13 • POWER, POlincs, CONFLICT, AND NEGOTIATION 429
are infants, if James cannot fill his father's shoes when he assumes control, it
is likely that nonfamily top executives at News Corp. will also battle to gain
control of the company. So, once again politics is the order of the day as
ambitious people-both family and nonfamily members-fight for the
power to control the media resources of the company.
Overview
Al thcsc mcdia companics. family mcmbers and manngcrs fought over who ,vould lake
control of thcsc eompnnics in thc [(nurc. Both Redstone llnd Murdoch uscd thc power
derivcd from lheir position nS CEO of their re,pectivc eompnnies 10 promote Iheir sup-
porter, amI fire lhose who disagreed with them-even when they were fnmily members.
ESSClHially. a power slruggle is taking placc at the top of cach of thesc companies and
the result hns been high le.'cls of conllict and politics, In this chapter we explore powcr.
politics. eonflic\. and negotiation and their effects on organizations.
We dixcu,s the naturc of power and politic,. how they can help and harm an organiza-
tion. and whcrc thc powcr of individuals. funelions, and divisions comes from. We survcy
thc politicaltnetics thntmllnagerS cnn usc to gnin control of org'lHiz:ltional resourccs. Wc
thell turn our attention 10 org;lnizational connict, examining its sources. the way a typical
conflict plays out. and the strategies that can be used to manage it so that it helps rather
than harms the org311iwtion. Finally. wc discuss the rolc of negotiation as a means to
resolve political struggles nnd conllict. By thc cnd of tins chaplcr you will undcrstnnd why
power. politics, and conflict play central roles in organizational life and how the ability of
managers to learn 10 negotiate and manage the,-;c processes can improve the organization's
effect iveness.
The Nature of Power and Politics
Whencver people come together in an organization. their anivities must be directed and
c011lrollcd so that they can work togcther to achieve their common purpose and goals.
Power. the ability of one person or group to cause another person or group to do something
thcy otherwise might not hi,"e done, is the principal means of direl:ting and l:oll1rolling
organizational goals and aetivities. 5
Managers often disagree about what an organi7.ation's goals should be ;l11d the beSt
ways of achicving Ihem, One way in which managers can anempltO control the dcclsion-
making pnx;ess \I) support their intcrests is to use thcir power to engage in politics.6
Organizatiomtl politics arc activities in which managers cngage to increase their power
and pursue goals that favor thcir individual and group intercsts? Managcrs ,1\ all levels
may engllge in politic:!1 belwvior 10 gain promotion or 10 inilucnce orgal11l;ltional decision
making in their favor.
Is the usc of power and politics to promote personal or group interests ovcr organiza-
tional interests ncccssari Iy a bad thi ng1 There are various answers to thi s qucstion.
On Ihe one hand. Ihe lerms /w.rer and pu/irio often havc negative connolations
be,·ause people ass,xiate them with attcmpts 10 IISC organilational resource, for onc 's per-
sonal advantage and goals at the expense of the goals of others. When Jacques Attali took
over as head of the European B:mk for Reconstruction and Development. for example. he
took advantage of his power as head of the bank to make personal usc of its resources.
Allali spent (wer $1.5 million 10 change the marble in the bank's new London offices 10
suit his taste, and he spent almost the samc amount to hire privatc planes for his personal
430 PART 2 • GROUP AND TEAM PROCESSES
POLITICAL DECISION
MAKING
Deci'inn making charncterill'<l
b) ,",:li.c di",gA:cmcm ".'cr
"hich organi/alional goal' IU
P~"uc and how lu p~"ue lhem.
COALITION
A gmup nf mClO:!ger. "ho ha"c
"mllar IOle..:,I, and join [urw,
lU achic'e their guab
FORMAL INDIVIDUAL
POWER
I'o\>cr lhat originale, from a
p,,,,,,-'n', pOSlltOn to an
orgaOtiallUn,
use. During his rl'"ign at the bank, the organization spent $3[0 million on itself-twice the
amount it invested or lent to countries in Eastern Europe and the fonner Soviet Ullion. 8
Similarly, in 2(X}4. Dennis Kozlowski. ex-CEO of Tyro, was al:cused of behaving Illegally
by diverting millions of dollars of Tyco·, money for his personal usc. His expenses
included millions spem on a birthday pany for his wife where Jimmy Buffet serenaded
partygoers. Additional millions were spent 10 refurbish his New York apanment-
reportedly, Kozlowski spent a whopping $6,000 on a new shower cunain alone! [n 2005.
Kozlowski was seltlenced to up to 25 years in jail, with a minimum of eightY
Managers who usc (or, 1lI0re eorrcctly, abuse) power and politics to promote- thcir own
interests arc likely to harm the interests of Olhers-in these c:lses. countries thm were to
receive aid from the bank Anali was overseelllg. and Tyco's stockholders.
Onlhe other hand, there are way, in which power and politics can help org.mizations.
Firs\, when diffe-rent managers or group.~ champion differe-nt solutions to a problem and
usc the-ir power to promote these solutions. the ensuing debates over the appropri,lle
course of action can help improve the quality of orgamzational decision making. IO
In mher words, politic:.l decision nmking-del:ision making l:haral:lerized by active
disagrcement over which organizational goals to pursuc and how to pursue them-can
lead to a more efficiem usc of organi7.ational resources. Second. different managerial per-
spectives l:an promote the change lhat <llIows an organization to adapt to its clJanglllg
environment. When enalilions, groups of managers who have similar inll."rl'"sts.lobby for
all organization to pursue new strategies or changc its structure, lite usc of power call
move the organization in new directions. t I
We will have more to Sily about organization,,1 politil:s later in the chapter. For now,
the main poill1 is that power and politics can help an organizalion in two main ways:
(I) Managers call usc power to eontrol people and other resources so that thcy cooperate to
achieve an organiz,llion's current goals. and (2) Managers can also use power to engage in
politics and influence the decision-making pnJ<:ess to help promote new, more appropriate
organizational goa[s. An organization has to guard l:lmtinually and vigi lantl y against man-
agcrs who might use power to harm the organization. Powcr·hungry managcrs are people
to be feared and avoided. Nevertheless. power is necessary for the efficient functioning of
organizations, and in any group of people, the question of how to distribute power and
establish a power structure is an importHIlI one. ll
An organization's power structure-partially revealed by its organizational chan-is
the manifestation of the formal and informal sources of the power managers. functions.
and divisions possess. The l:hart shows how the organization makes dl-.:islons and whose
.IllIercsts th
osc d · · avor.
CClSIQlIS r"
To see how power can be acquired formally and informally. it is necessary to examine
where organizational power comes from. When managers at the top of an org:lni7.ation
understand the sourl:es of power. it is easy for them to manage power and politil:s to gain
the bC"nefits while minimizing the negative effccts, Indeed, a prerct:]uisite of managerial
success is the ability to analyze and chart an organization's power structure :Iccurately.
Such 111l analysis enables managers to develop coalitions and build a power base front
which they can influelKe organizational dedsion making.
Sources of Individual Power
Most individu~l1s in an organization h.tve some ability to control the behavior of other indi-
viduals or groups. bll1 some have more power than others. Where do individu<lls in an orga-
nization get their power from, and how do they get it'! Researchers distinguish bctweenthe
fomlal and informal powcr that individuals possess (sec Exhibit 13.1 ).14
Sources of Formal Individual Power
Formal indi"idu:ll power is the power thai Siems rrom a person's position in an organiza-
tion's hierarchy. When individuals accept a position in an organization. they :ll:l:cptthc
formal responsibility to carry 0111 agreed·upon tasks and duties, [n return. the organization
 CHAPTER 13 • POWER, POLITICS, CONFLICT, AND NEGOTIATION 431

EXHIBIT 13.1
Individual POW"-
Sour(es of Individual
Power r
fonn~power
r
Informal po_
leglt,mate power E>:pert power
Reward power Referef\t power
Coerei", power Ch.",m."c power
Information power

gives them fonnal authority to usc its people and other resources to accomplish job-related
tasks and duties. Rupert Murdoch and Sumner Redstone in the opening case possess the
most formal power as the top executi\'es of their respective media empires, whi<:h gives
them authority ovcr the managers below them. including their c'hildren who own billions of
dollars in stock in these companies. Formal power is a reflection of an individual's
I~gilimme. reward, wneire, and ill!or/lwlivu power,

LEGITIMATE POWER legitimate power. Legitimate power confcrs on an individual the legitimate authority
The p,,-,wcr 10 conlrol and u>c to control and use organizational resources to accomplish organi:r.ational goals.'5 The
organ" aliona! re,oun.~, to legitimale power of a CEO. for example. is granled by an organization's board of directors,
aL'mmpli'h nrgani/aliooal goal>.
which. representing its owncrs' inlereSts. gi\'es the CEO authority o\'er all organiz<ltional
resourc'es. The CEO, in \Urn. has the right 10 confer legitimate power upon managers
funher down in the organization's hierarchy. Continuing down through the hierarchy.
upper-level managers give lower-level managers Ihe authority to hire, fire. monitor. and
o\'crsee the behavior of subordinmes. Thc CEO and lower-Ievcl managers also possess the
power to withdraw authority from their subordinates, by firing. demoting. or otherwiSl.'
stripping away a subordinate's authority to control organizational resources.
Legitimate power is the ul1inwte souree of an individual's power in an orgmliz'llion.
Onc day. a CEO like Jeff Immelt of GE or Carly Fiorino of HP may havc a personal staff
offl\'e hundred pcople, a private jet, a chauffeur-driven limousine, and the righlto usc the
company's New York penthouse. But if a CEO is removed from office by the board of
direclors, the neXI day. all of his or her aulhority and privileges are gone. The greater a
managn's legitimate power is, the greater i, the manager's authority and the more
accountable and responsible is the person for his or her performance and usc of organiza-
tional resources. This is why CEOs who perform poorly are often quickly replaced, as the
fomler CEOs of Ford, Motorola. LUl:ent. McDonald's, and m.my olher poorly pcrfonning
companies have recently discovered.

REWARD POWER Reward power. RewlIrd power is the power to give pay raises. promotion. praise.
The ",mer 10 gi\'c pa}' rai,c" mleresting projects. and olher rewards to subordinates. As long as subordinates vallie the
prOlll(~'On, pr:ti"', inlcre'ting rewards. a Ill<lnager l:an usc rcward power to influenc'c and comrol their behavior. In
proje,1.', and Olhl.-r o:wJrd, to
,ubo!dinalc, Chapter 5 (on learning), we discussed how imponam positi\'e reinforecment could be in
influencing behavior. In Ch~lpters 6 and 7. we discussed how rewards can influeoce
motivation.
The amount of rewards that an org;mizatioll can give is limited. When extrinsic'
reward.s such as raises and promotions arc scarce, intrinsic rewards like praise and interest-
ing job assignments can become more imponMIt. One challenge that managers face is
mOlivating their subordin.lles when their abilities to l:onfer langible rew.lrds is limited.

COERCIVE POWER Coercive power. Coerch'e IlO\\'er is the power to give or withhold punishment.
The I"-",cr 10 ~i,·c or w ilhh,,1d I'uoishments range from suspension to dentotion . termination. unpleasant job assignments.
puni,hment,
or e\'en the withholding of praise and goodwill.
The ;lbilit)' \() reward or punish subordinates gi\'e, supervisors great power, which is
sometimes abused. As we discussed in Chapter 5. punishment has negative side effects and
432 PART 2 • GROUP AND TEAM PROCESSES
INFORMATION POWER
1lJe J'o.,,,er thai ,I""" from '0:<'1.'''
10 and control O"cr mfomWlKIO.
INFORMAL INDIVIDUAL
POWER
Power llIal 'tcn" fmm 1',"'on"l
chara'teri'lic\ 'och "-' peNlll"lit)'.
,~iI1,. and capabilille'
EXPERT POWER
Informal JlO"er thaI 'len" from
,opcnor abllll)' or e~~i\C
should be used with caution. It is for this reason that lllOSt organizations have clearly
defined rules concerning when and how employees arc to be rewarded or punished. Clearly
s[X'cified rules ami procedures that govern how coercive power and reward po",'er are used
pren,m superiors from arbitrarily using tht'ir lcgititnJle (X)",'cr to benefit their sup(XJners
and hurt opponents. or people they simply dislike or disagree with. 16 The funClion of
review bo~lrdS and prom01ion eomminees in organizations. for example. is to ensure l1m(
[X'ople are promoted on the basis of merit and ",har they know. not '1'11011I (hcy know.
In Chap(cr 6 we disI.'ussed the importance of perceptions of equity in determining
mOlivation in organizations. No maner what rewards or punishmCllls people anually
receive. they compare their rewards or punishmeills to those received by others. If (hey feel
mequilably treated. lhey may perform poorly. be dlssatisticd wilh lheir jobs. or quit. The
abi I ity to confer rewards and punishmenls fairly and cqu ilabl y is a crucial man;lgerial skill.
and organiz-<I(iOlls usually provide managcrs with wrineH guidelines to hclp them perform
this funClion.
Information pow~r. Inrorlll;ltion Ilower is power stemming from acccss to and control
over informmion. t7 The grealer a manager's access (0 and COl1(ro! ol'er infomm(iol1. (he
greater IS his or her infomlation power. The more information a man'lger possesses. lhe
bener able he or she is to solve problems facing subordinmes. As a result. the greater is
subordinates' dependence on thc managcr. Some managcrs arc rcluctall1 to share
information with subordin'lles. The)' fear that if their subordinates know as much as they
do. the power to comrol and sha[X' their behavior will be los\.
Although individual managers somdimcs benefit from keeping information to thcm-
selves. lhc mOSl effective organi<:mions are those in which organi<:ational members share,
not hoard. infonn:ltion. IndC<.'d. in organi<:alions llml recogni7.c the value of empowering
employees. managers deliberalely decemrali<:e authority and make informal ion easily
accessible 10 everyone. This allows subordinates to assume more responsibility for lhe
organ iwtion 's performance and feel more motivated. t8
Sources of Informal Individual Power
Several managers in a group or department may be mthe same level in lhe organiz-<ltional
hierarchy or hold the same (XlSil ion. but some will have more power than olhers, Simi larly.
some lower-levclmanagers may SL"Cmlo have as much (XJwer amI aUlhority as higher-level
managcrs-or even more. What accoums for thi., paradox? Power comes not only from an
individu,t1's formal posit ion in an organization but aIso from a person's personality, skill s.
and capabililies. Power stemming from personal charaderistics is inrurnml indi\'idual
powl'r,19 Researchers have idemified several sources of it: expcrJ, nferelll, and
churiSJlliI/w powcr.
Exp~rt pow~r. In any group. some individuals have skills or talents thai allow them
to [X'rform at a higher level than others. In a group of engineers. (here may be one or
lwo individuals who al""ays seem \() find a simple or inexpensive design solmion 10 a
problem. In a group of salespeople. there may be a few individuals who always seem to
land large new accounts. Group members often look to these individuals for advice. and
in doing so. come 10 de[X'nd on them. This dependence gives lhese individuals expert
(X)wer.
E."llert power is informal powcr that stems from superior ability or expertise in per-
forming a task. Generally. people who possess expert power are promoled up the hierarchy
of authorily ,0 that their infomlal power eventually becomes formal, Sometimes. however.
individuals with expert power arc mavericks: They have little abilily Of desire to assume
fOfmal authority ovcr others. When that is Ihe case. managcrs with fonnal power must take
p.1ins to develop good working relaliollships wilh subordinates who havc expel1 power:
otherwise. conflicl may arise as formal leaders and informal leaders with eX[X'11 power baI-
lie for cOlllrol o\'er people and resources.

REFERENT POWER
Int'onnal po..... er lhal 'len" from
being 11~ct:l. admired. and
""'pI-'<:lcd.
CHARISMATIC POWER
An inten-.c t'onn of ref"",,,, 1X'..... er
lhal 'lern' f,om an indiyiduar,
pc""n"1 ily 0< ph},i<;al or OIher
.bi Iitic,. whidl mduec Ollie,.., 10
bel ic,e in and foll"", lhat pc""n.
You're t;he Management; Expert;
CHAPTER 13 • POWER, POLITICS, CONFLlG, AND NEGOTIATION 433
Referent power. People who gain power and influence in a grouJl hecause thcy arc
liked. admired. and respected ;lTe said to JXlssess referent power. Individuals who are high
on the personality lraits uf agreeableness. extraversioll. or even conscientiousness are often
liked or admired (sec Chapler 2). Willingness to help olhers may also lead 10 someone's
being liked or admirctl. Fame is onc sign that a person has acquired referent power. Why
are famous film stars and athletes paid 10 endorse goods and services'! Advertisers expecl
lheir referenl power 10 auraet their admirers 10 ooy the cump>lnies' producls. Pt:uple with
rderem pov..er arc liked benuse of who they arc. not just bc<:ausc of lheir expenise or lheir
abilities to influcncc people. ohtain resources. or achieve their own ends. Tennis star
Serena Williams is one of these people. In 2004. William negotiated a comraet with Nike
paying her over $60 million for eight years of lennis produd endorsements.
Charismatic power. Charismatic puwer is an imense form of referenl JXlwer
stemming from an individual's personality. physical strengths. or other abilities that
induces others to belicve in and follow that person. 20 In Chapter [2 we discussed how
lransformalionalleaders-leaders who possess eharismalic power-often inspire awe and
loyally in their folluwers. These follo"'ers ooy inlo lhe le:tder's vision and work with
excitement and ell1husi:tsm toward goals sct by the leader. n When charismatic power
exists. legitimate JXlwer. reward power. and coercive JXlwer lose their significance because
followers give the charism~llc leader Ihe right to huld lhe reins of power ~nd make the
dedsions th~l define the vision :tnd goals of an organization and its members.
Many charismatic lcadl."rs can l."xcite a whole- organization alld propel il 10 new
heights. ~s have Bill Gates at Microsoft and Steve Jobs at Apple. But charismatic JXlwer
e;"ln h>lve ~ dark side. evidenl when fullowers of lhe ch~rismalic leader blindly follow the
leader and fail 10 lake personal responsibilily for lheir actions becausc lhey lhink the leader
knows what is best for thc organization. Whcn charismatic JXlwl."r is abusl."d by a ll."adcr
who has a mistaken or evil vision. no checks or balances exist to resist thl." leader's direc-
lwes. no matter how uUlrageous Ihey m~y be. This appears 10 hal'e hapJX-'lled ~t EnrOll.
which be(;ame one of the SL-cmingly most su(;(;essful U. S. wmpanies in t"C(;ord lime. The
cOIllJlany's success was attributcd largely tn thc brilliance of its CEO Kenncth Lay and its
CFO Andrew Fastow. Fastow and L~y's followers blindly followed the OrdeN of their
charismalic leaders. When fraud. ralher Ihan experlise and charisma. was shuwn to be the
soun:e of Enron's profits. the (;ompany implodctl. Most of lhese elllployees losl their jobs.
Fastow was jailed in 2()()4 for 10 ycars. and in 2(X)(j Lay dicd of a hean allack before his
longjai! term began.
Some researchers hal'e argued that (;harismallc leadership is an ~dvanlage only when
a forlllal hieran,hy of aUlhorily phKes some l'he(;ks on the power of this person. n Thus.
Identifying Who Has Power
Think about one of the organizations that you have worked for in the past or that you are
currently employed by. Create a chart of the managers you come in contact with most
often and the employees who seem to have the most influence in your department or
organization. list the formal and informal sources of power of these people Show on
your chart how these people form a nelwork thaI influences decision making. Which
employees have the most influence? Which employees do you expect to be promoted the
soonest? Why?
434 PART 1 • GROUP AND TEAM PROCESSES

OB Today
Power Corrupts at WorldCom

In 2002, WorldCom, the giant telecommunications company, entered Chapter 11 bank-

ruptcy after its was revealed that its top executives had deliberately overinflated revenues
by $11 billion dollars. Not only its top executives (such as former CEO Bernie Ebbers) were
implicated-so were eight of WorldCom's 11-member board of directors who were at the
helm when the company booked these billions of dollars and provided $408 million in
per$Onalloans and lucrative pensions benefits to Ebbers. How could WorldCom's board of
directors have failed in their oversight role?
Four of these eight board members had long-term personal and business ties to Ebbers
and had been appointed to the board at his urging Two of these four directors sat on
WorldCom's compensation and stock option committee, which granted Ebbers these huge
personal loans. At least one of these two directors reportedly also stm:k a deal with Ebbers
whereby Ebbel> gave him a(cess to company aircraft for $1 a month plus a $400-an-hour
usage fee, when the real

••
cost of using such aircraft
is hundreds of thousands
of dollal> a year In return,
this director agreed to
Ebbers's huge severance
package, which also ran
into the hundreds of mil-
lions after he resigned n
Small wonder then
that in the fall of 2002,
with these directors still
collecting large fees and
receiving huge perks
Former WorldCom CEO Bemie Ebbers "'as sentenced 10 25 years in from WorldCom, critics
pri'on in July 2005 for u'ing his power 10 ovcr"", the SII billion
were calling for their
WorldCol11 fmud. the lat]est corporate fmlld 111 U, S, hi.\lory.
removal from the board,
They had not resigned voluntarily and legally the company cannot unilaterally replace
them until WoridCom's next general meeting, However, WorldCom was able to fill three
other vacancies with new directors, such as former U, S, Attorney General Nicholas
Katlenbach and Dennis Beresford, a former chairman of the Financial Accounting
Standards Board, who can ensure that these unethical directors can do no more harm to
a company that has cost its shareholders billions of dollars and whose future is still in
doubt.
Facing legal action, most of these directors have paid millions of dollars back to the
company to avoid criminal prosecutKm. Former WorldCom boss Ebbers was sentenced to
25 years in prison in July 2005 for using his power as CEO to oversee the $11 billion
WorldCom fraud-the largest corporate fraud in U, S. history, This is one of the toughest
sentences ever imposed on an executive, and has become commonplace today. Even with
possible time off for good behavior, Ebbers, currently in his 60s, will remain locked up
until 2027, when he would be 85.
 CHAPTER 13 • POWER, POLITICS, CONFLlG, AND NEGOTIATION 435

only wlll."n the power of a charismatic CEQ is balanced by the power of lhe bo.ard of dircr-
tors or a strong top management team is the CEO a force for g<XJd and someone who can
stir peuple to work together to pursue cummun guals.ln the 2000s. Michael Eisner. the for-
mer CEO uf Walt Disney. "ame under scrutiny Ix-.:ause eriti"s argued he "ould "onlrol
Disney's board of directors and so was making decisions that were often not in the COIll-
pany's best interests. Under pressure he eventually resigned. but what happened to
WorldCum. whose charismatic but corrupl CEO louk advantage uf his control of Ihe board
of directors to behave lInethil'<llly and illegally, is di,;cusSL-d in the following OB Today.

Sources of Functional and Divisional Power

Although formal individu:11 power, panicularly legitimate power. is the primary source of
power in organizations. managers in panicular functions or divisions can take advantage uf
other sources of power to enh;lllce their individual power. A <tjvision ur function becomes
powerful when the tasks that il perfurms give itlhe ability tu control the behaviur of other
divisions or funnions, to make them depcndelll on it. and thereby inerease its share of
organi~;l\ional resources (sec Exhibit 13,2).H

Ability to Control Uncertain Contingencie5

A wntingcncy is an event or problem thai could occur :lUd must be planned for. by having
peuple and resources in place to deal wilh it. A fun"tion or division has power over uthers
if it can reduce the uncenainty they experience or manage the contingency or problem that
is troubling them. 25 The marketing function. for example, often has power o\"er the manu-
faduring function lx.-cause il can furecasl potenlial dem:lnd for a product (a contingency
facing manufaclUring). This ability 10 forecast demand I"L-duces the uncenainty manufac-
turing faces by enabling it to plan production runs so as to minimize COSIS. Similarly. the
public relations department and legal function are able to mannge problems for olher func-
tions after those problems h:l\'e ocl:urred, and 1Il doing so they reduce uncertainly fur Ihose
fun"tions and gain power over thelll. In gcneral. fllndions or divisions that Gill soh·e thc
organization's problems and reduce the uncertaimy it experiences are the ones that have
the most power in the organization. 26 Today. the ability to control IT is one wny to gain
su"h power because it provides access 10 important relevam informatiun. n Huwever. IT
must be used carefully \() avoid provoking conl1k·t between groups-and betwecn cus-
tomers and ,':llespeoplc. as the folluwing OB Today suggests.

Irreplacability
A funetiun or division g;lins power when it is irreplaceable-thm is. when no other func-
tIon or diviSIon CMI perform its activlties. 28 In one study of a Fren"h lobaccu plant. for
example, Michncl Crozier found that the relatively low-status repair engineers had great
power in the plant. The plam m:ln:lgers were very respectflilloward tllem,2'l The source of
the engineers' power. Crozier discol'ered. was their irreplac;lbility. Although the engineer-
ing funclion was luw in the formal hierar"hy. Ihe engineers as a group were the unly
cmployees who knew how to fix the plam's machi nes when they broke down. If thcy chose

EXHIBIT 13.2
Ab<lityto control Ab.lity to control
Sources of Functional unC~rtaln trrepl.cubll,ty C~nt",llty and gen ......
and Divisional Power conting.n" .. re><Jurr..

l
FunctIonal or
dM<ional pow..-
436 PART 1 • GROUP AND TEAM PROCESSES

OB Today
Telemarketing Turns-OK Customers

In the 1990s, the use of telemarketing by companies such as phone service and credit
card providers increased dramatically. Improvements in IT made it possible for specialist
telemarketers to target customers and then to automatically dial their phone numbers
repeatedly until they picked up the phone. At this point, a sales rep would come on the
phone line to sell to the customer. To prevent such unwelcome intrusions, customers
began to use services such as Caller ID and gadgets like TeleZapper, which blocks these
automatic calls. Finally, in 2003 national legislation was passed that allows customers to
register with the Federal Trade CommissKm to be put on a list that will make it illegal for
telemarketers to make calls to their listed phone numbers.
Since telemarketing
no longer reaches cus-
tomers, companies have
,I been forced to rethink
their approach to sales
and selling. Surprisingly,
despite the fact we are liv-
ing in a "wired world,"
some organizations have

-
r- gone back to the old fash-
ioned method of door-
to-door selling. Hundreds
of companies, like tele-
phone providers AT&T
Just as phone selling ('aused innea,ing ('onf1iel with customers in
and sec, cable TV pro-
the 1990s. SO has risen thc frcquc",'y of facc-to-facc connict with
viders like Com cast and
d'Klr-lo-door ,alcspeople.
countless regional utility
companies, are sending out thousands of door-to-door sa~ reps to "connect" with people
in the evenings at their hOffi6.
Many people think it is their friends and neighbors knocking at their doors, but no, irs
sales reps determined to get customers to switch their phone, cable, or utility service
providers. People who have problems slamming the door in a sales rep's face, versus slam-
ming down the phone, have been switching service only to regret it later. Just as phone
selling caused increasing conflict with customers in the 1990s, so is face-to-face conflict
with door-to-door salespeople on the rise. Provoking conflict with customers needs to be
avoided since customer loyalty is vital for organizational effectiveness.

to. the cngineers could cause problems for the tlwnufacturing function. To maintain their
staltJs as inl."placeable l."mployees, thl." l."nginccrs jealously hoarded thl."ir knowledge and
refusl."d to write it down.
All functions and divisions are irrepl.1ceable to a certain degree. How irreplaceable they
are depends on how easy it is to lind a replacemetl1 for them. JO For example. many organi-
zmions can asscmble 1heir products in low-cost foreign locations and thereby reduce the
power of their domestic manufacturing functions rclmivcly casily. Because it is difficult for
an orgm1izatiot1 to gain access to high-qu.1hty research and devclopment infomlation. the
R&D function in m<1tly companies is mort' irreplaceable than is the manufacturing.
 CHAPTER 13 • POWER, POLITICS, CONFLlG, AND NEGOTIATION 437

Centrality
The power of a function or division also Siems from its impor1am;c. or centrality. to the
organization-that is. how central it is to the organization's operations and the degree to
which it lies at the center of information l1ows.)1 Central functions. who>c activities are
necded by nwny other functions. have access to a lot of information. which gives them
power III their dealings with others. 32 The produd-developmem depar1menl. for example.
has a high degree of centrality benuse R&D. engineering. marketing. and manufacturing
all need product specifications in order to plan their aetivities_ In the COUIW of its dealings
with other functions. product development acquires a lot of valuable information about
many aspecls of organizat ional adiv it ies - information that it can usc to make OIher I'unc-
tions dependent on it.

Ability to Control and Generate Resources

The ability to control and generate resources for an organization is another source
of functional and divisional power. The ability to control resources is. for example. a
principal souree of power for top managers such as Serge Weinberg 3 ) These managers
control the purse strings of the orgmtiwtion and have the ability to give or Withhold
rewards-money and funding-to functions and divisions. This ability is important
because the more money a division is given. the more pcnple it can hire and the more
advanced facilities it can build so that it increases its chances of success. In contrast.
when divisions ,Ire starved for funds. they cannot hire new skilled employees or buy
new technology 10 increase their efficiency and this lack reduces their efficiency in the
long run.
Although controlling resources is important. the ability to gel/I'mif' them is also
unportanl. The division whose goods and services provide the organization with the most
profits will be the most importam division in the organization. Very often. new CEOs and
corporatc headquarters staff arc promoted from the divisions thm have been most suc-
cessful in generating resources. Irlthe past. IBM's top managers came from its mainframe
division. which generatL-d most of the company's revenues and profits. Today. most of
IBM's profits arc being generatcd from computer scrvil·cs. so morc top m<lnagers from
this division arc being promoted, Similarly, most of GM's top managers comc from its
most profitable car divisions.
To fully understand the power structure of an organization. a manager n(:eds to analyze
all sources of poweL The sources of individual power. such as position in the hierarchy. arc
the most imponam dctcmlinams of powcr. But a managcr must also take imo considcration
the sources of functional and divisional power when detennining the relative power of func-
tional and divisiol1<l1 managers in the organiz;ltion. J4

Organizational Politics: The Use of Power

Organizational politics are activities that managcrs cngagc in to increase their power. Oncc
they acquire it. they can use power to influence decision m,lking so thm the organization
purslles goa Is that favor their indi vidual. funct ional. and d Ivisiona I interests JS
One reason why many people engage in organizational politics is that jobs arc a scarce
resouree ..3-6 The highcr a manager rises in a hierarchy. the more difficult it is to cominue (0
rise because fewer and fewer jobs are ,lv,lilable at the upper levels. To compete for these
scarce jobs and to increase their chances of prurnotion and share of org;lIlizational
resources. employees try tll increase their power and influence. 3r Without constant vigi-
lance. organizational politics can gct out of hand and preventthc organization from achiev-
ing its g0.11s. 38 For this reason. it rnusttry to lIlan;lge the politics to promote positive effects
and prevent negative ones. 39
To understand how organiz;ltions can manage politics. we need to look at the tactics
that managers use to increase thcir individual p0\\-'cr and thc powcr of their functions and
divisions.40
438 PART 2 • GROUP AND TEAM PROCESSES

Tactics for Increasing Individual Power

Managers l:an use many kinds of political t<ldil:s to inl:fease their power. bel:ome cxperts at
political dccision making. and increase thcir chances of obtaining their goals 41 In the fol-
lowing pagcs we dcscribe somc commonly used tactics (sec Exhibit 13.3).

Tapping the sources of functional and divisional power. The way in which
functions and divisions gain informal power suggests >cvcr..lltactics that managcrs can use
to incrcase their individual powcr. First. managers can try 10 make themselves
Irreplaceablc.~2 For example. they TTlay develop speciahzed skills such <IS knowledge of
l:olllputers or spel:ial relationships with key customers tha! allow them to soh'e problems
or limit unccrtainty for OIhcr rnanagcrs in the organization. Second. managers may
speci,llize in an area of increasing concern to the organization so thm they el'entually
conlrol :l cnlcial contingency faclllg the urg~lI1izatiun.4J Third. managers can try tu make
thelllsclves mure central in an organization by deliberately :llTepting responsibilities that
bring thcm into contact with many functions or managers. Politically astute managers
cultivate bolh people alld infomlation. and they are able to build up a personal nelwork of
conlacts in lhe organiz,Uion-contads that they can use 10 pursue personal goals such <IS
prumut ion .4~

Recognizing who has power. Another way to increase individual power is to develop
the ability to recognize who has power in the org,miwlion. With this knowledge a person
knows whom to try tu inlluenl:e and impress. By supporting a powerful ntanager and being
indispensable to him or hcr. it is possible 10 rise with thm person up the organizational
ladder. There Me five faClOrs to assess in order lO determine the relative power of differelll
managers in an organizatiun.4~
I. SOU/L'eI of Power: Power has many sources in an organization. The power of a man-
ager or ,ublmit may come from legitimate authority. from the possession of scarl:e
rcsources. or from cxpenisc. A manager who as>csscs the source of various man-
agers' power will learn whom to inlluence to obtain his or her objectives.
2. COme(III<'II('e~' of Power: The people who have the most power C<lll be identified by
an assessment of who benefits the most from the decisions made in an organiz<ltion.
For example, managcrs compete for resources through the budgeting process. and
oblaining access to scarce resources is a measure of how much power a manager has.
3. Symbols of Pmrer: 1\1,my symbols of preslige and Sl,ltus arc gener..llly <lssociated with
power in an urganization. Job titles. fur eX<lmple. arc a prized possession; and titles such
ax "ch ief excculive officer" and "presiocnt" confcr grcat prestige on thc officcholdcr.

EXHIBIT 13.3
Political Tactics for Increasing Individual Power

Pohtlc~1 'aWes such u'

j I I I I
T.pp<ng,h. R«ognlZ,ng who Bnng,ng In.n
C"ntrolling ,h. Building c".li,ion,
source, of fimetlon~1 h~, power .g.nd~ ou,,,de ""pen .nd .II,~,...••
and d",,,ion.1 pcwet'

I
Allow "'.n.g.... to devetop
• p""",r ba.. and engage In

pcli"« successfully
 CHAPTER 13 • POWER, POLITICS, CONFLlG, AND NEGOTIATION 439

The usc of a cOlllOratc jct or a chauffcured car. occupying a comer officI." with a wonder-
ful vicw, and h,lving a reserved parking place are other signs of power.
4. Personal Repllwliom: A per>on's reputation within an organizaliun is likely tu indi-
l:ate the pcrsun's puwer to intluence Jedsion making.
5. R"prf.lcll/(l/i(J!lu/ !m!ic(l/or,5: The organizational roles a person or subunit plays and
the responsibilities they possess are indications of puwer. A manager's membership
on an intluential cormllll1ee. such ,IS a company's operatIons cOmmilh:e. is a sign of
the person's inlluence in organizational Jecision making. Managers who occupy cen-
tml administrative roles have access to impoMant information and dcrivc power from
this access, It strengthens their ability to make sound decisions and to aiter the bar-
gaining process in their favor.
By focusing on those iive factors. a person new to an organization can assess wllich
pL'op1c or groupS have the most power. ArmeJ wilh this knowledge. thc newcomer can
make certain predictions about which groups will be favorC'd by thC' Jecision-making
procC'ss to recC'ivC' a large sllarc of organizational resources or be proleeleJ fronl cutbacks
if resources are se"rce.
Once managers havc accur.rte1y assessed thl." power structure of an organization anJ
have obtained some indiviJual powcr. they can usc se\'eral other IaClics to enhance their
power,

Controlling the agenda. An impoMant tactic for influencing decision makiog is to

l:ontrol Ihe agenJa-thal is. to Jelennine what issues and problems decision makers will
consiJer. The ability \() control the agenda is one reason why managers like \() be members
of or in chargc of committccs. By controlling the agenda. managers can limit tile
considermion of ~lltel11atives in the course of decision mnking. Powerful m~lnagers. for
e~ample. can prevent f0l111al JiSCUSS10n of any issue they Jo not suppuM by not puning the
issue on the agcnJa.

Bringing in an outside expert. When a major disagreement over go,lls cmerges, as it

oflen Joes wilen an organil.ation is undergoing change or restructuring. rn.-magers know
that escry subunit is lighting to safeguard its own interests. Managers in charge of Jifferent
functions want the a~ to fall on functions other than theirs and want to benefit from
whatever change takes plnce. Knowing that one function or one person's preferreJ
al1ernal1\'e will be perceiveJ by others as politil:ally mOIl\'ateJ anJ selt·ll1terestcJ. a
manager may bring in an outsiJc c~pert who is considered to be a neutml observer. The
manager thcn uses the "objective" views of this e~peM to suppun his or her position.

Building toalitions and alliantes. Managers may form a coalition with other
mallagers to obtain the puwer they need to influence the decision-making process in their
favor. Mnny coalilions result from agreements to trade srrppun: Function A agrees to
support function B on an issue of interest to function B. anJ in return function B supports
function A on an issue of intcrest to function A. Skills in coalition building are impurtant in
org,ltlizlltional pulitics because functional interests frequently change llS 111e orgllllizmionlll
environment changes. Becausc or such changes. coalitions must be activcly manageJ by
their members.
The ability to forgc coalitions anJ alliances with thc managcrs of the most impuMam
divisions provides llspiring top m,umgers wilh a power base from whicll they c,ln promote
their personal agenJa. Having many suppoMers cnhanccs a manager's claims to puwer in
the organization. bUl there is a downside 10 alliances: the possibility that inJiviJual melll-
bel'> will rcquest alliance suppoM for their losing propositions. it is particularly impoManl
for top-level mar1<lgers to builJ persomrl reJntionships with members of the board of direc-
tors. CEOs need the srrppurt of the boarJ in any contest between top managers; withoUl it
CEOs might lose their jobs to another top-level manager. The way in which politics anJ
powcr struggles havc intluenccd Kodak is discussed in the following OB Today.
440 PART 1 • GROUP AND TEAM PROCESSES

OB Today
Politics at Kodak
Eastman Kodak, whose little yellow film boxes have long been a part of the global photo
scene, has experienced declining performance for years 46 Kodak was slow to react to the
threat of global competition in its central film-making business, and a successive series of
political contests between its managers has stifled its attempts to restructure its activities
The problems have been going on for at least a decade
In the early 1990s, Kay Whitmore, a Kodak veteran, was appointed as CEO, He gained
the top job as the leader 01 a coalition of Kodak's most senior managers. Since any
attempt of his to raise Kodak's performance would require massive cuts in some of
Kodak's businesses, Whitmore was reluctant to make the drastic changes that Kodak
needed to regain its competitiveness, So. in 1993, investors were delighted to hear about
the appointment of Christopher Steffen as Kodak's new chief operating olficer
Steffen has a reputation as
a "turnaround artist" who per-
formed miracles at Chrysler and
Honeywell. Investors thought that
an outsider would finally bring
a breath of fresh air and fresh
ideas to Kodak's inbred top man-
agement team, Investors were
therefore shocked when Steffen
announced his resignation from
the company less than a week
after his appointment. citing "dif-
ferences with the company's
approach to problem solving."
Kodak <lppoimed Amonio Perez <IS ilS new CEO 10 Apparently he and the coalition of
rco'Sanize Ihe compan), and l'nd tl><.' power balik, bcl"'ccn Kcx:lak's top managers headed by
ilS lap managers so il could aggressively pursue a digil'll
CEO Whitmore had very different
imaging ,lralq;y. Inten,e cnmpclilion in Ihl' digilal imaging
markel is slill hUM ing Kod,lk howewr. and lhe comp"n)' is ideas about how to restructure the
c"nlinuing 10 shrink. company and the speed at which
restructuring should be done,
Stelfen wanted to massively reduce operating costs by closing several business units and
laying of/large numbers of employees, Whitmore's coalition resisted this and, as in the
past, Kcx:lak's entrenched management had the power to carry the day by firing Steffen,
After this event Kodak's stock plunged, and within months Whitmore was ousted by a
concerned board of directors. He was replaced by George Fisher in 1994, the first outsider
ever to lead Kodak, The hope was that Fisher would be able to change the way organiza-
tional politics worked at Kcx:lak and that this would enhance the company's performance,
Fisher made many changes, but he, too, had to fight against the no-change tactics used
by Kodak's top brass to protect their interests, He never gained their support. 47
Behind the scenes. another Kodak veteran, Dan Karp, was waiting to become its CEO
In 2000, supported by a coalition of Kcx:lak's top managers, Karp became Kodak's new
CEO and Fisher was out, Karp got the Job because he had great support from other
Kodak executives to expand its push into electronic imaging 48 They backed his candidacy
to protect their own jobs. By 2003 it became dear that Karp was still trying avoid the

ORGANIZATIONAL
CONFLICT
The lnJg.gk thot an"" "hen
the goal-di"'cled beha,-ior of
0"" perwn or group bloch lhe
g""I·dllutc"d llo:ha,-ior "r
another peNln or group
CHAPTER 13 • POWER, POLITICS, CONFLlG, AND NEGOTIATION 441
radical restructuring necessary to save the troubled company Karp was not the right per·
son to take on this role, especially as he was obligated to many of Kodak's top managers
who had lobbied for his appointment to the top job.
So, in 2003 Kodak's board of directors hired Antonio Perez, a former HP executive as
its new president and COO, to reorganize the company. Perez did make the hard choices
closing divisions and laying of many more thousands of managers and employees In
2005, his success led to his appointment as Kodak's new CEO and he is responsible for
implementing the new downsized streamlined company's new digital imaging strat egy49
However, intense competition in the digital photography market, and declining film sales,
has not allowed Perez to bring Kodak back to profitability-the best he has been able to
do is to stem its losses, and its future is still uncertain.
Managing Organizational Politics
The exercise of power is an essential ingredient of organizational life. so it is imponam for
an orgaoization to manage organizational politics and harness it to support organizational
interests. TIle m:ln:lgement of organizational politics falls primarily to the CEO because
only the CEO possesses legitimate power over all other managerl;. This power allows Ihe
CEO to cOll1ml pol itical COl1!ests so that they hel p r.lther than harm the organizal ion. If the
CEO is perceived as being weak. however, other top managerl; (who may possess their OWIl
stod of ex~rt. referellt. or charismatic !Xlwer) will lobby for Iheir own interests and com-
pete among themselves for control of resources.
Powcr slfugglcs, as in the opelling case. sap the strellgth of an orgallization. waste
resources, and distraelthe organ ization from achievi ng its gool s. 10 avoid power struggles,
an organization must have a strong CEO who can balance .md manipulate the power Mruc-
ture so Ihatno m:lIlager or l:oalition of managers bel:omes strong enough to threaten orga·
nizational interests. At Ihe same time. a strong CEO should not fcar 10 dclcgate significam
responsibilities to managers below when they have demonstnlted their personal success.
When there is a balance of !Xlwer. the decisions that result from the political process are
more likely to favor tile long-term interests of the organization. 5O
In summary. occause power and politics influcnce many kinds of decision making ill
organizations. memocrs need to be able to tell what's going on around tllem. They can do
this by analyzing the sources of power at the functional. diVisional. and orgml1zational lev-
els. and by idcntifying powerful people and observing their appro'Kh 10 leaderl;hip. To
increase their chances of promotion most managers try to develop a personal poWCf basc to
increase their visibility and individual power.
What is Organizational Conflict?
Organiz:ltional politics gives risc to connict as one person or group attempts to influence
the goals and d,:cision making of an organization to adval1l:e its own interests-usually at
the expensc of some other person or group. Organi:wlional conflict is the sdf·interested
struggle tl1at arises whcn the goal·directed behavior of one person or group blocks thc
g0<11-directed beh:wior of another perl;On or group.51
The C/l":d of conllict on 0lbanizational pel10mwncc has fL'CCived considerable al1emion.
Intllc past. researchers viewed connict as always bad or dysfunclional for an organization
i:xxausc it leads to lower organizational performancc,~2 According to this view, eonlliet occurs
because managers have not designed an organizational structure that allows people. functions.
or divisions to coopermc to 'K:hieve corporatc objcdives. The currcnt view of connil:l, how-
eyer. is Ihat. although it is unayoidable. it can often increase organizational perfomlalKe if it is
carefully managed al\d negotiatoo. 5J
Exhibit 13.4 illustrates the effect of coull ict on organiz'l1 ional pcrfomwllCe. At first. con-
Ilid can inl:rease organizational perlormance bel:ausc it exposcs wcakncsses in organizational
442 PART 2 • GROUP AND TEAM PROCESSES

EXHIBIT 13.4
The Effect of Conflict on
Organizational
Performance

dedsioll making and design and prompts the org,mization to make changes. Managers realigu
the organizatiun's power structure ,lr1d shift the balmlCC of power in f;l\'orufthe group lhal can
best meet the organization's current needs. At some point-point A in Figure 13.4-an
increase in conflict Icads to a deeli ne in pcrfonnance because conflict betwccn managers gets
out of control. and the organization fragments into competing interest groups.54
The job of top managers is tu prel'entl:onniet from going beyond point A and tu chan-
nel connil:t in directions that increase organizational pcrfomlanl:e. Thus. managing con-
flict. like managing politics. is a way tI) improvc organizational decision making and
resOl.lree allocation. making the organization more effective. 55

Sources of Organizational Conflict

Connld. both between individuals and betwlocn groups. has many sources. and managers
need to be aware of them so thm when it Ol:Curs they can either control or resolve it. Three
major sOl.lrces of interpersonal and intergroup conflict arc diffcrcntiation. task relation-
ships. and scarcity of resourees.~

Differentiation
Differentimion in an organization occurs when people and tasks are grouped or split up
ill10 functions and divisions to produce goods and scrvices. The splining of lhe organiza·
tion into functions or divisions produces conflict because it makes the differences in func-
tional orientations and stalus incunsistencies apparent.

Differences in functional orientations. Differcnt functions commonly dcvelop

different orientations loward the organization·s major priorities. 57 Their views of what
needs to be done to increase organizational perfomlanl:e differ bel:ause their tasks. jobs.
and goals differ. Manufacll.lring generally has a short-term. t·ost-directcd efficiency
orientation. Research and dcvelopment is oricntcd toward long-term. technical goals, and
sales is oriented toward satisfying CllSlOmer needs. Thus. manufneturing may see the
solution to a problem as one uf redul:ing costs. resenrch and developmcnt as one of
promoting product innovation. and sales as one of increasing dcmand.
Because of di !Terences in thei r functional orientations. funct ional groups can havc dif-
fering views of the orgmlization·s priorities. These differences can le;\(I 10 conflict that can
do considerable hnrm. undermining the organizatlon's cohesivencss and fundional inte-
gr•.Ition and reducing its performance.

Status inconsistencies. O\'er timc. some funl:tiuns or divisions cume to see themselves
as more viwlthan others to an organi7-<Jtion's operations and believe thal they have higher
st:uI.lS or greatcr prcstigc in the organization. 58 In this situation. high-status functions make
lillie ,mcrnpl to adapt their behaviors to the needs of othcr functions. thus blocking the
goals of other functions. 59 Similarly. functions lilat arc most centf,11 and essentl,,1 tu a
company's operations may comc to sec themsclves as more importam than other fundions
and atlcmpt to achievc thcir goals at Iltc cxpense of the less central functions.
 CHAPTER 13 • POWER, POLITICS, CONFLICT, AND NEGOTIATION 443

Task Relationships
Task relationships generale conflict belween people and groups because organil:alional
lasks arc interrelated and affect one another, Overlapping authority. task interdepen-
dence. and incompatible el'aluation systems may stimulate conflict 31110ng functions and
divisions. 60

Overlapping authority. If two different functions or divisions claim authority for the
same task. conflict may develop. Such confusion oftcn arises whcn ,I growing organizatiOl1
h,iS not yCI fully worked out relationships between different grollps.61 As a result.
functions or divisions light for nmtrol of a resource and thus spawn conflict. At the
individual level. too, managers can come into conflict over the boundaries of their
authority. especially when one manager Mtempts to seize another's authority and
resources. If a young rrl<lnager stmts to upstage his or her boss. for eX<lmple. the boss may
react by assigning the subordinate to relatively unimportant projects or by deliberately
withholding the resources the person needs to do a good joh. Something similar to this
occurred:1t Cucci and is discuss.::d in lite following OB Today.

OB Today
Battle for Control Changes Gucci

Gucci, the Italian luxury fashion house, is One 01 the best-known companies in the world,
its clothes, shoes, and accessories are bought and worn by the rich and famous every-
... :;;;;;=- ., where 62 The success of a luxury lash ion house rests
on its claim to oller customers products that are
unique and diflerent, and people who pay the
incredibly high prices Gucci charges must leel they
are part 01 the select crowd who can afford to wear
its stylish creations.
Gucci's fortunes were saved in 1990, when its
CEO Domenico De Sole invited the brilliant, Texas-
born, gay clothes designer Tom Ford to be<:ome its
principal clothes designer, With De Sole's backing,
Ford designed new clothes collections that led to
record sales, and Gucci once again became the fash-
ion leader of the world, Together, the two men,
known as "Tom and Dom" within Gucci and the
fashion world, were admired and respected for their
creative endeavors and design expertise 63
In 2004, however, the peace at Gucci was shat-
tered when a huge conflict broke out at the top of
Managers typic<llly come into connicl Gucci about who should lead the company into the
when the area, of their author;!y are not future. Gucci is a part of the huge French luxury
dclincd <lnd lhcy compelc to increase goods company Pinault-Printemps-Redoute (PPR)
their power and ,tmu, in an
org<lnizmion. This huppened m Gucci. The biggest shareholder of PPR is Francois-Henri
and led 10 the dep;mure of its top Pinault. who appointed a top executive named
desi£ncr. tlJc brill i<lot guy Tum Furd. Serge Weinberg to head the PPR Empire. In 2004.
444 PART 2 • GROUP AND TEAM PROCESSES

Tom and Dam's contracts were due \0 expire, and Weinberg assumed responsibility for
negotiating the conditions under which Ford and De Sale would run Gucci over the next
decade.
Before Weinberg took over, De Sale and Ford had been given total control over Gucci
and made all the important design and business decisions. Weinberg had no experience in
high fashion and freely ad milled that his main contact with high fashion had been
through his wife who was a fashion model. Nevertheless, Weinberg was determined to
exert his authority as the top executive of the whole PPR Empire over Gucci's top exew-
tives. He wanted the right to sign off on Tom and Dam's major business decisions: essen-
tially, he wanted them to recognize his greater power, authority, and status They on the
other hand, wanted to protect their autonomy and feared Weinberg's interference would
harm Gucci's performance,
Thus, the stage was set for a major power struggle between Tom and Dom, who felt
Gucci's current success owed everything to their design talents, and Weinberg, who felt
he had the right to decide under what conditions they should lead Gucci because he rep-
resented the interests of its owner.
For several months, Weinberg negotiated with Tom and Dam over who should have
control of Gucci. Over time, the struggle escalated, and conflict arose because neither
Weinberg nor Ford and De Sale would give in on the ultimate question of who should
have the power to determine Gucci's future. Ultimately, Ford and De Sole announced they
would leave Gucci when their contracts expired in 2004. 64 The fashion world was
stunned and Weinberg was faced with the major problem of who to replace them with,
Very often, when power struggles between managers escalate into conflict, it does no
one any good. If these executives could only have found a way to negotiate and resolve
their differences, perhaps by bringing in a neutral third party or mediator, the breakup
might not have occurred.

Task interdependencies. The development or production of goods ,lIld services

depends on the flow of work from one function to another: each function build" on the
contributions of other functions.6:'i If one functiOll does not do its job well. the ability of the
function next in line to perform is compromised. ,md the outcome is likely to be conflic1. 66
For example. the ability of manufacturing 10 rc<!u('e costs on the produdioll lille depends
on how well research and developmem has designed the product for cheap manufaCiure
and how well sllles has al1meted large. stable customer accounts. When one function fails
to perform well. all functions suffer.
The potemial for conflict increases as the inter(!l-pendellce of fund ions or divisions
incrcascs. Thus, as task illlerdependence increasc.s from pooled, to sequential. to reeipmcal
interdependence (see Chapter I I). the potential for conflict among functions or divisions is
gre<lter. 67

Intompatible evaluation systems. Inequitable performancc-evaluation systems

that reward some functions but not others sometimes cre,ue conflicr. 68 Typical
problems include finding ways to jointly reward sales and proouction to avoid
schcdul ing conflicts that lead to higher cOSts or diss<ltisfieJ (CUSlOmers. Also. the more
(Complex the task relationships betwecn functions arc. the hardcr it is to cvaluate caeh
function's individual contribution to performance and reward it appropriately. which
also mrrC<lSCS the likelihood of conflict.

Scarcity of Resources
Competilion for st.·aree resources produ(Ces l.'Onflict.69 Conflict over the allocation of
capital occurs among divisions and betwecn divisions and corporate headquaners.
Budget fights can be fierce when resources <Ire scarce. Other organizational groups also
 CHAPTER 13 • POWER, POLITICS, CONFLlG, AND NEGOTIATION 445

have an il11erest in the way a company allocates scarce resources. Shareholders care
about the size of the dividends. Employees want to max imize their salaries and benefits.
Managers in competition for scarce resources may fight over whom should get the
biggest pay raise.

Pondy's Model of Organizational Conflict

Bec:lUSC conflict of one kind or another is inevitable in organizations. it is an impon;1I1t
influence on behavior, Louis Pondy developed one of the moSI widely accepted models of
organizational conflict. 70 Pondy views confliet as a dynamic process that consists of five
sequential stages (see Exhibit 13.5). No matter how or why connict arises in an organiza-
lion. managers can use Pondy's model to analyze a conflict and guide Ihelr allempts to
manage it.

Latent Conflict
In the firsl stage of Pondy's model there is no actu,,1 conflict. The potential for con-
flict to arise is present. though latenL because of the sources of connict thai we JUSt
examined.

Perceived Conflict
The stage of perceived confliet begins whcn one party-individual or group-bccomes
aware that its gools arc being thwarted by the actions of ~lllother party. £1ch party searches
for the origins of the con1lict, defines why the conflict is emergmg. analyzes Ihe events that
led to ils occurrence. and conStrucis a scenario that accounts for the problems it is experi-
encing with othcr parties. For example. the Illanufacturing function of a company Illay
trace its production problems to defective inputs used in the assembly process.
ManufaCiuring managers wonder why the inputs are substandard and after an irwestigalioll
discover that lhc materials managemenl funclion .·,hose to buy inpuls from the lowest-cost
supplier instead of paying for high-quality inputs. This decision reduces input costs and
EXHIBIT 13.5 improves mmerials management's performance but raises production costs and worsens
Pondy's Model of manufacluring's performance. Manufacturing comes to see m.lterials managemenl as
Organizational Conflict Ihwarting its goals and inlerests.
What usually happens at the stage of perecived eonnict is thm thc conflict escalmes as
functions stMttO battle over the e~luse of the problem. In an attempt to get 'llaterials man-
agemenlto change its purchasing practices. manufacluring complains aboul materials
Stage 1
latent conlltn management 10 the CEO or to anyone clse who will listen. Materials managemern argues
(.ourc.. of conA"'l) thm low-cost inputs do not reducc quality and elaims that manufacturing docs not properly
train its emplo)'ees. Each pany perceives the connict ,Ind its C1lllseS differently?1 Thus.
I allhough both funclions share the same gool of superior produCI quality. they attribule Ihe
Stage 2: cause of poor quality very differently.
Perceiw:d eonA,e!

I Felt Conflict
Stage 3: During the stage of felt connict the parties in conniet develop negative feelings about each
Felt conflict other, Typically, each group closcs r.rnks. develops an us-versus-them allitude. and blames

I Ihe olher group for Ihe problem. As .·onflici escalates. cooperation bclwccn groups
declines. as docs organi7-11tional effectiveness. 72 r"Or cxample, it is almost impossible to
Stage 4; speed new product development if rnmerials management and manufacturing arc frghting
Mamr.., conAoc,
over lhe qu'llity of inputs and final pnxluct,.
I As the partics in conlliCi bailie and argue for their points of view. the significance of
the disputed issue is likely 10 be blown out of proportion. Consider. for examplc. a rela-
Stage S'
tively simple kind of conflict: conflict between roommates. Roonllnate A consistently
Confl,e' .ftennath
neglects 10 pUI his dirty dishes in the di,hwasher and clean the kilchen counters. To getlhe
sloppy roommate to clean up. roommate B firsl makes a joke about Ihe messy kitchen. If
446 PART 2 • GROUP AND TEAM PROCESSES

no change occurs in roommate A\ behavior. room male 13 starts 10 complain. If lhere is slill
no improvement. lhe roommates begin flghling and become so antagonistic loward one
anulher thai they not only cease 10 be friends but also begin looking fur uther living
arrangements. The original problem was relalively minor. bUI when nXlmmate A did nolh-
ing 10 solve it. the problem escalated into somelhing that became increasingly difficult to
rnan<lge. This l11<1y well h<lve been Ille SilO<llion that developed at Gucci <IS both sides grew
more and more antagonistic to the other as time wenl on.

Manifest Conflict
Inlhe Slagc of manifesl conflict, one parly decides how to reael to or deal with the party
thal it sees as the source of tile conflict. and both p;JJ1ies try 10 hurt e;Jch Olher and thwart
each other's goals.
Manifest conflict can take many forms. Open aggression or even vjolence belween
people and groups may occur. There arc many stories and myths in organi7,alions about
boardroom fighls in which malwgers actually came to blows as Illey sougllt to promote
their interests. Infighting 111 the top-managementtC<llll is a more indired form of aggres-
sion that occurs as managers seck to promote their own careers a1the expellse of others
in lhe orgalli7ation. When Lec laeocca was at Ford. for example. Henry Ford II decided
to bring in the he,ld of General MOlors as the new Ford CEO. Wilhin one year. l;JcQCca
engineered the new CEO's downfalltu clear his own path to the top. Eventually. he lust
the banle when Henry Ford forcN! him OUI because he feared lhat lanKca would lake his
power.
Manifest contlict between groups like teachers and parents. prisoners and guards.
and unions alld managers is also cOmmon. In the past ill industrial disputes. for exam-
ple. managers often obtained their goals by using !<lcti" such as sabotage. strikC"break-
ing. hiring new workers as permanenl rcplacC"ments for slriking workers. and physical
HltimidMion.
Manifesl conflict also takes the fOfm of a lack of cooperation between people or
functions. a resu It that can serious Iy hurt an organ i7at ion, I f an organ i7at iOIl .s mC"mbers
do nOl cooperate. inlegralion declines. and the organization is less likely to come
together to achieve its goals. One partIcularly dysfunctional kind of manifest conflict
Ol;CUfS whell parties accommodate or avoid managing a conflict. In this situation. one
party might try to frustrme lhC" goals of its opponent by passivity-that is. by doing

Arguing managers is one ofthc

many forms lhal manifest
conflict lakes. On some
"ccasions managers have been
known to rcson to loud shouting
mall'h," as llR'y sc"k 10 esen
conlrol and win lhe decision·
making lxInlc.
 CHAPTER 13 • POWER, POLITICS, CONFLICT, AND NEGOTIATION 447

nothing. Suppose there is a history of conflict octween salcs and production. but sales
desperately needs to rush out an order for an important cI ien\. What might manufaetur-
mg do? One strategy is 10 agree informally 10 S'IIeS' requests and Ihen do nothing. When
sales come-s banging on the door looking for its prodllcls. manufacturing says: "Oh. you
me-ant /rut Friday. [ thoughl you meant this Friday," In general. the- stronger manifest
conflict is, the more Of£aniZ3Iional effectiveness suffers because coordination and inte-
gration between nWllagers :md subunits decline. A parlicuhlTly strong form of manifest
contlicl is illustrated in the following OB Today.

OB Today
When Partners Battle For Control of Their Company

CIC Inc. was founded by two partners. David Hickson and Glenn S Collins III. III
College Station, Texas. Each founder took a 50--50 stake in the small business. (lC's
strategy was to maintain and service high-tech equipment like CT scanners, X-rays.
and lasers. in hospitals and universities across the United States 73 Hickson's and
Collins's new venture proved very successful, business increased very rapidly, and by
2000 the company had over 200 employees In the 1990s, CIC upgraded its service
program so that all maintenance transactions could be handled electronically over the
internet using the company's in-house software programs. Since CIC's new Internet
service could save hospitals up to 20 percent of their maintenance costs, the savings
would amount to millions of dollars a year. Hospitals flocked to join the program. and
Cle's future looked bright indeed.
Imagine then the impact of the bombshell that occurred when Hickson, on vacation
with his family. returned to College Station to find that in his absence, Collins had staged
a coup. He found that he had been replaced as president by a CIC manager who was one
of Collin's dosest friends, that CIC managers and workers who had been loyal to Hickson
had been fired, and that all the keys and security codes to cle buildings had been
changed, Hicbon immediately sought and obtained a legal restraining order from a judge
that allowed him wck into the company and reinstated fired employees. The judge also
issued an order preventing the two men from taking any actions that were not part of
their normal job duties,
Apparently this extraordinary situation had occurred because the two owners had
not been able to agree on the company's future dire<:tion-a problem that had resulted
in a deteriorating personal relationship between them. Since they were equal partners,
neither had power over the other to resolve the conflict. As a result, the conflict had
become worse over time. Different camps had formed in the organization with differ-
ent (IC managers being a member of one camp or the other, loyal either to Collins or
Hickson,
In the months following this episode, it be<:ame dear that the two men would be
unable to resolve the conflicts and problems between them, The only solution to the con-
flict seemed to be for one person to buyout the other, and they each searched for bank
financing to do so. Finally, it was announced Ihat Hickson had purchased Collin's share of
the business. However. the problems between the two men were apparently not to be
resolved there. 74 Collins immediately announced that he would use the money from his
share of ClC to start another company that would essentially provide the same kind of
service as CIC I
448 PART 2 • GROUP AND TEAM PROCESSES

When eontliets arise. mwmgcrs

can help employee' hy framing a
scnlcment both IXlrties perceive
to be a "win-win" ,ituali'm.

Man~lger;; need to do aUtltey can to prevent m,lnifest conflict from becoming dys·
functional and to intervene as early as possible in this stagc. If thcy can nut prevent the
breakJown in communication and coorJination thm u,ually occur, inilli, 'Iage. lite COII-
flict advances 10 the lasl stage: Ille conflict aftcrmmll.

Conflict Aftermath
Sooner or later. conflict in an organization is rcsoll'ed in one way or another-someone
gelS fired. a CEO tells a division 10 shape up. the organization gels reorganized. or Ille con-
flict becomes so bad that the org;mizmioll fails. RC'gardlC'ss of the outcome. il is aimosl cC'r-
tain thmthe causes of the conlliCi will occur again in anothcr context. Suprosc that sales,
still angry over the earlier "mix-up" with manufllcturing. appro.1ches manufacturing with a
new request. How will these funelions behave'! Probably. their wariness anJ lack of trust
will make it harJ for them to agree on anything. Now suppose thai after Ihe earlier
eocourtler sales and manufacturing were able to solve their dispute amicably through com-
promise ,md collaboration. In thllt elise. when sales next has a special request for manufac-
turing. the two departments will be able to sit down together and work (JUI ajoint plan Ihat
suils Ihe neeJs of bulh functions.
Every conflict episode leaves a conflict "aftermath" thm affects the way both parties
perceive anJ respond to future episodes. If conflict can be rcsoll'ed by compromise or col-
labor-Ition before it progresses to the manifesl stage. the conlliel aftemlath will promote
good future working rclationships. But if conflict is Illlt resolved umil late in Ihe process.
the competition thmt,lkes place will result in a conflict aftennath that sours future working
relationships anJ leads to an organizational culture poisoned by the presence of perma-
neml)' uncooper"li"e relatiollships like Ihal al CIC.

Negotiation: Resolving Conflict

One uf management's major responsibilities is to help panics in contliet-subordinates.
funclions. or divisions-cooperate in resolving Iheir disputes. Indeed. much of a mall-
agers timc can be spent in managing conflic\. If a company is to achie\'e its goals.
managers must be able to resolve conflicts between employees and groups. ,rnJ it is
always best thm conlliet is settled by compromise betweell the parties in eonllicl,75
Compromise is po"sible when each pany is willing to engage in a give-anJ-lake
exchange and to make concessions until a reasonable resolution of thc conflict is
reached. When the panics to a conflict arc Willing to cooperate with each other to find a

NEGOTIATION
A p"""'" in which gro~P' with
confli~1ing inte""t' IT1l'ellOj;etOC,-
10 makc offcl';. c(>u",crnfTcl';. ",Id
t"OllCe, io"" lO cat"h other in an
effort to ",,,,h·c their djllerence'_
CHAPTER 13 • POWER, POLITICS, CONFLlG, AND NEGOTIATION 449
SOIUl ion 10 the confl ict lhm each Ii nds acceptable, a company is more like Iy 10 achieve it s
goals.
Ncguti:ltiun is a process in which groups with l:onllictHlg IIltere~ts meet tugether
tu make offers,counteroffcrs, and conces,ions tu each other in an elTon 10 resolve their
differences,?6 Negotialion is an important technique thal managers can usc 10 increase
the chances of reaching compromise between individuals and groups in confliCI. 71
Through negotiating and b:lrgllining, the parties to a conflict try to come up with an
acceptable SolUlion by considering various ways 10 allocate resources. Sornctirne~, the
panics hclieve thal the more one party gains. the more the other loses. This makes them
compel;tive and adversarial in Ihe bargaining and negOliation process. 78 They "take a
hard Iinc," make unrealistic demands, and use all of their power tu get what they want.
Manager~ need to help the (Xtrlie~ avoid viewing the conflict compelitively-as a win-
or-lose situation. Instead, they need to frame the siluation so it can be viewed by both
parties as a win-win silUation. Negotiation is an importanl tool lIUl1 managers can usc to
handle conflict in ways that lead to couperative, functional outcumes rather than cum~
petilive, dysfunctional outcomes.
Individual-Level Conflict Management
The management of conflict belween individuals i~ directed at changing the allilude~ or
behavior of those involved in lhe confl ict. N If thc confl ict is due 10 a clash of personal ilies
and Ihe panics in conflicl simply do nOI understand one another's point of view. Ihe orga-
nization can help the people involved by bringing in outside help to gIVe advice and l:oun~
scI. Education and ~ensi[ivity and awarcness lraining hl"lp people learn to understand and
to deal Wilh those who are not like thcmselves. If the conflict is due 10 work·foree divcr-
sity-such as when a young per,on supervises older. more experienced worker> or a
female manager supervises an all-male work gmup-the urganization can u,e t-ducation
and lr.lining to help employees appTCciale the differences in their allilUdes and avoid or
succcssfully resolve conllk1.
If the conflict is due to a ba,ic disagreement aboul how the work should be per-
formed, or about the performance of the other party, manager, can lise a ,tep-by-step
ncgOliation approach to help resolve a dispute betwecn employecs. This is especially
useful whcn the confliCl ha, reached the rell and manifest conflict >lage and the dispute
is poisoning not jU>l per,onal but also work-group relation,hips. The steps inlhe process
arc a, foliows llO :
I. A manager meet, with both the employees in cunflict and forcefully outline, the wa)"
their behavior is affecting the way thcy perform thl"ir jobs and other members of lhc
depanmen1. Each employee lhen is asked to exprcss lhcir thoughts and feelings about
the conflict to open up the connict ,0 thll1the manager. and the employees.under-
stand the fact, ofthe conflict and each uther's pu,itions.
2. The managl"r summarizes lhl" dispute belween lhe employees in a wrincn form,
creating a report lhat carefully matches both sides of the case to idcntify lhc main
factors that arc in dispute. For example, iflhe dispule is about one employee not
pull ing his or her weighl or perform ing substandard work, each e mplo)"l"C" inter-
pretalion of the facls is balanced against the other.
3, Thc manager discusses thc facts in thc repon Wilh cach cmployee separatcly aCling
as a neutral third pany: Ihe manager uses the filct-finding report to work out a solu-
tion each employee can accepl. going oock and forth bclweenlhe employt"C, until
they ,:an accl"pt a common Solulion.
4. The manager meets with both employees to discuss the agrecment and get thcir
COmmilment to resol ving the dispute. Each employee also agrees to meel with the
manager should sub,equent problems arise.
If the conflict cannot be negotiall-d ,ucce"fully, another sulution is to move people
around. Managers can lransfer employees to new positions whcTC they will n01 mcct each
other, or where they can corne to hl"ttcr appreciate lhe Olhers' poill1 of view. Job rotation
450 PART 2 • GROUP AND TEAM PROCESSES

and assignmcnts to ncw teams or depanmcnts or eVen to ncw countrics help ()Cop Ie to
develop fresh perspectives on issues in dispute. Promotion can also be used to change alti-
tudes. Man.lger> might deal WIth troublesome union shop stewards by makmg them >uper-
visors. They might deal with troublesome manufacturing managers by promoting them
sideways into a position in training. plant security. orelsewhcre. lnthis way panics to thc
conflict are pennaneruly removed from the conflict situation.s , As a last reson.lln org,uli-
lalion can fire the people involved and replace them with others who h.we no history of
dysfunctional nmflict. Replacing managers from the CEO down 10 first-level supervisors
is also a common method of eliminating conflict.

Group-level Conflict Management

Group-level conflict management is aimed at changing the attitudes and behaviors of
groups llnd departments in eontlict. S2 Managers call physically sepllrate work groups.
deny them the opponunity to interact face 10 filee. and thus eliminate the potenlial for
direct conflict. Coordination between separate groups is then made possible by using
integrat ing roles (sec Chapter 16) llnd gil' ing some people the fu Il-t ime responsi bi Iity to
coordinate the groups' ilctil'ities while keeping them physically separilte. Sometimes.
managers can develop rules .md standard operating prol:edures to l:oordinilte the
groups" activities or give thelll common goals. allowing them to achieve their goals
simu Itaneousl y.
Often. however. these solutions provide only a temporllry solution to the problem. If
the lllltJerlyinl; causes arc nut addressed. the cuntlie! is never truly resulved. and Ihe
organization's performance may continue to ,urfer, Bccause few organization, can
afford this outcomc. Illost usually try to resolve the con!1iet at its source by negotiating
at the group leveL
THIRD-PARTY Direct negotiations between groups are held eIther with or withuut a third-part)'
NEGOTIATOR negotiator-an outsider who is skilled in handling bargaining~-' and negotiation. The third
An i>l.lhilkr '~lllcd i" hml<lling pllny facilitates the bargllining process and helps the pllnies in dispute find a solution to
harg~jni"g .,l<! negOlialion. their problem. 8J Sometimes the common superior of the pllnies in conflictllcts llS the third
pany. If the thIrd pm1y plays the role uf mediator. he or she takes ,I neutfJI stance and
hel ps the panics to IT'Conci Ie thei r dilTcfCnces. If the panics cannot find an equitable solu-
MEDIATOR
A neutral thin.! pan} "hotri~, 10
tion. the third pany nmy act as arbiter. or judge. and impose a solution.
help panie, in Coof!ict r<'("oocil. There are five basic forms that negotiation may til!;e ilS groups c~nl handle contlict
thelf djfle",n~~" with others: compromise. collaboration. aCl:ommudmion. avoidance. and competition (St'C
Exhibit 13.6).85 The horizontal axis of Exhibit 13.6 measures the degfL'C to which a person
or group is concerned with obtllining its own goals. The vertical llxis mCllSurcs the extent to
ARBITER which the person or group is concerned with helping some other person or group to
A third pan)- "ho ha' the authority achieve its goals. Using this model. it is possible to compare the different ways of handling
to impo<e a -.<>Iminn to a di'pYle.
conflict during the felt stage.

EXHIBIT 13.6

Ways of Handling A<rommodation Collabontion

Conflict

Compromise

Cow !-----c_-~-c_----c_--__c;_c
L.,." I""r,,,, in a<~i.";ng.,."n goal. Hig~
 CHAPTER 13 • POWER, POLITICS, CONFLlG, AND NEGOTIATION 451

At the middle of the figure is (·olllprolllise. Compromise usually involves bargain-

ing and negotiation to reach a solution that is acceptable to both panics. Sometimes. the
parties in tlispute use colhdmrwiOlllO find a solultun: Each side Iries to salisfy nut only
its own goals but also the goals of the other side. Collaboration can benefit an
organization because the panics work together to find a solution that leavcs them both
beller off. Compromise and collaboration enable the parties in tlispute to solve their
differences. 56
Acco/ll/llo({mioll is a style of hantlling confli<.:t in which one party simply allows Ihe
mher to achieve its goals. With (/\'oidmu'e. both partics rcfw;e to rccognize thc real
source of the problem anti act as if there were no problem. Both of thcsc conflict solu-
tiuns are un>:llisfactury frornthe organiz.l1ion·s perspc£tive and from the perspective uf
one or both of the parties in conllic!. Accommodation means thai une group uses its
powcr to force the other to wbmit-1O accommodate its tlemands. in other words. This
solution is unlikely to lead to coopenltion: furthemlore. the we.tker party is likely to
be,:ome resenlful <Inti be on Ihe luukolll for any upportunily tu get back ;n the slronger
pany. Similarly. avuitlance means Ihat the conflict will smultler, and Ihe parties will
rcmain uncooperativc or uncommunicative.
Com{Jnilioll leads to the greatest antlll10st visible conflic!. Each party is looking out
for its own 1Illerests anti has liltle inlerest in untlerstantling Ihe other's posilion or laking
Ihe other's necils inlo acmunt. When a conflkt is handletl competitively. or when accom-
modation or avoidance are typical styles of handling conflict. thc conflict escalates 10 the
next stage inl'ondy's model.

Promoting Compromise
There arc five specitic lactics that managers can usc to structure the negOtialion anti bar-
gaining process to make compromise anti collaboration more likely: emphasize common
goals: focus on the problem. not the people: focus 011 interests, not denHlIlds: create opror-
tunities for joint gain: and focus on what is fair.

Emphasize common goals. COlllmon goals arc goals that all parties agree on
regardless of the source of their conflict. Increasing organizational effectiveness.
lIlcreasing respuns iveness to customers. anti gai ni ng a competitive atlvantage are JUSt a few
of the many common goals thalmembcrs of a company can emphasize during bargaining.
Emphasizing common goals hclp panics in conflici to kccp in mind the big picture and the

One'c people in connie't focus on

their joilll intcrest8.they ar" on
the roaJ towaru achieving
creative 'Olut;oo, lhat will
bcocfit anJ satisfy cadi of them.
452 PART 2 • GROUP AND TEAM PROCESSES

fact that thcy arc working together 10 help the company succecd dc,pite thcir
disagreements.

Focus on the problem, not the people. Pcople who arc in connict may nO! be ablc to
resist the tcmptation to focus on thc shoncomings and weaknesses of thc OIhcr person or
group. Now instead of anading the problem itself. people sIan to mtad one another. For
example. they talk <loont the mist,lkes the olher group has made in the pas\. and they
criticize the pen;onality of the other person or their pers011<l1 habits. This approach is
inconsistcnt with reaching a compromise through bargaining. All panics to a conflict need
to remnin focused on the problem or the soorce of the conflict ,11ld :I\'oid the templation to
discrt-u It each other personally.

Focus on interests, not demands. I:kmauds are what a person wants: intcrests arc
why thc pcrsol1 wnuts them. When two pcople are ill connic\. il is unlikely that the
demands of ooth can be me\. Their underlying interesls. however. can be met. and meeting
them is whm b;[rgaining ;[1\(.1 ncgotiation is <Ill abou\.

Create opportunities for joint gain. Once the panics to a connicl focus on their
Interests. they are on the rood IOwanJ <lchieving cre,ltive solutions that will benefit them
both. This win-win scenario means that rather than having a fixed set of alternativcs fmm
which to choose. the panics can come up with new altemativcs that might even expand the
resource "pie:'

Focus on what is fair. Focusing on what is fair is consistent with the principles of
equity theory. Equity theory emphasizes the fair distribution of outcomes hased on the
inpuls or contribulions that people make to comp,mies. II is likely thm pm1ies in connict
will prefer different alternatives: each party wants the oue that best serves his or her
interests. Emphasizing fairness and equity will help the parties come to a mUlual
agreemcnt about what the best solution is to the problelll.
When managers pursue Ihose five strategies and encoumge other members of the com-
pany to do so. they arc more likely to reso! vc their (;ontllcts effectivcly through negotiation
and bargai ning. Then. managers can use ('onflict to he Ip innea,e a company's performance
and avoid destructive lights that harm the people involvcd in confliel as well as Ihe ofgani-
l.1lion.

Union-management negotiations. One of the most common types of ncgOliation and

bargaining lakes place between unions and management during contraCI talks. Suppose
this year managemenl is III a strong POSiliol1 because the economy is in recession. When
management and the union sit down 10 negOliate. m"nagemelll cru,hes the union. which
goes back to its members empty-handed. Next year. the emnomy has recovered. and Ihe
negotiations begin again. Whal will be the attitude of the union this time? Manageillent
probably will confront a no-holds-barred allempt to beat mmtagement and get e,'erylhing
the union thought it should have gotten last year.
When two parties are in continual negotiation with one another. they realize that. for
the survival of the organizmion. they need to adopt a long-term perspective that empha-
sizes their joint objectives and minimizes differences. In a negotiation situation. such ,IS
managemelll-union bargaining. it is import<llll to note that lWO differcnt processes go on
simultaneously. First is dis/rilm/h'" I)(,rgaillillg. in which the panics bargain over how to
divide resources. deciding who gets whal and how llluch.~7 Second is (mimdillal s/mC/IIr-
ing.1I1 which the parties lry to influence their opponent's attitudes. For example. either
m<lnagemelll or union negotiators might del' ide to al:t in an <Iggressivc manner to increase
their share of the resources. or perhaps act in a conciliatory manlier to preserve long-term
working relationships. save face. or demonstmle how much power they h:lve should Ihey
choose 10 lise it 88
Union and management negOlialOTX often develop long-term relationships with oue
another and try to eoopemle because thcy know that stalcmatc and attempts to destroy onc
 CHAPTER 13 • POWER, POLITICS, CONFLlG, AND NEGOTIATION 45)

another result in an antagoni,tic. destruetive conflict aftermath in which evel)'one loscs.

Negotiation and bargaining is a difficult and delicate process in which the art of give-and~
take and posturing for position is finely developed. Negotiations typically take place o,'er
a period of months as the panics discover what they can and cannot get. This is true of
negotiations not only between management and unions but also between corporate head-
quarter managers and divisional managers. and between managers and subordinates as
they discuss pay amI promotions.
In summary. negotiation ;md bilrgaining is an impon:mt means to resolve and man-
age conflict in work and organi7.ational settings. Conflict can never be eliminated
because differeoces in ioterests and in ;lttitudes. ;IS well as competition Ol'er resources.
are integral 10 the way orgaOlzatioos operate. For the oulcome of confliClto be beoefi·
cial. an organiziltion's members have to learn how to deal with contlil·t when it occurs
and 10 adopt the appropriate way of resolving it. Managing contlict through negotiation
is an important part of a mao,lger's job and an important aspect of organizational
behavior at all levels.

Summary
Understanding and managing power. politics. conflict. and negotialiOll is an integral
part of a man:lger's job. Organizations tue composed of people who come together to
achieve their common goals. When resources are scarce. people and groups have to
compete for them. and some achieve their goals while others do not. In an organization.
managers have the primilry responsibility to ensure lila! eompetition for resourees is
free and fair and that people who obtain power over resources do so bec;\Usc they pos-
sess skills :lnd abilities that will. in the long run. benefit all members of the organiza-
tion. Managers also have the responsibility to manage conflicts as they arise to ensure
the long-term success of the organiz;Liion and to maintain a balance of power to etlsure
that politics and contlict benefit rather than harm the organization. In this chapter. we
made the following major points:
I. Power IS the ability of one person or group to cause another person or group to do
something they otherwise might not have done. Politics is activities in which man-
agers engage to increase their power and to pursue goals that favor their individual
and group interests. Power and polilies C:ln bcoefit or h:lrm:l11 organization.
2. Soun:es of lonnal individual power include legitimate power. reward power. coercive
power. and information power. Sources of informal individual power include expen
power. referent power. :lnd charismatic power.
3. Sources of funetioll:ll and divisional power include the ability to control uncel1aio
contingencies. irreplacabi Iity. centrality. and the abi IitY to control and generate
resources.
4. ,"lanagers can use many kinds of political tactics to increase their individual power.
These tactics ioclude making oneself irreplaceable and central. controlling contin-
gencies and resources. rN:ognizing who has power. controlling the agenda. bringing
in an outside expen. and building coalitions and alliances. Managing politics to
obtain its positive effects requires a balance of power in an organization and a
strong CEO who has the ability to keep powerfUl people and groups in check.
5. Connict is the struggle that arises when the goal-dirL'Cted behavior of one person or
group blocks the goal-direrted behavior of another person or group. Whether conniet
benefits or harms an organization depends 0'1 how it is tllanaged.
6. The Ihree main sources of contliet arc differentiatlOl1, task relatIonships. and Ihe
scardty of resources. When connie! occurs. it typically moves through a series of
stages. III Pondy's model of eonflict, these stages arc latent conniet. perceived
conflict. felt conflict. manifest connie\. and the eoofliet aftermath.
7. Negot iation and Ixlrgaini ng are important means of managing and fesol ving con tlld
at both the individual and group level. The ability to negotiate an agrccment is an
important skill a manager needs to cultivate.
454 PART 2 • GROUP AND TEAM PROCESSES
Exercises in Understanding and
Managing Organizational Behavior
Questions for Review
1. In whm ways can thc use of powcr and politics
help or harm an org,mizmion?
2. What arc the principal sources of a manager's
formal [X),,'er and informal [X)wer'! How does the
way a managl.'"r excrciscs powcr affcct
su bordi nates'!
3. Think of a manager you have worked under or a
leader you have been in close contact with. What
werc the main sources of this person's individual
power? What was your reaction to the way this
person exer.:ised power'!
4. Whm arc thc main sources of funnional and divi-
sional power~
Increasing Self-Awareness
Understanding Conflict and Politics
Think of the last time you came illlo conflid with another
person or group. such as a managcr you worked foror cvcn
a friend or family member. Then answer theS(' questions:
1. Was this the lirst time you came into conflict with
this pany. or was the conflict one in a series of
contlicts'!
2. What was the sour.:c of the wntlicl'! Did you and
the other pany see the source of the connict differ-
ently'! If so. why?
3. How would you describe the way you both reacted
to the conflict'!
5. Why is it important to have a powl.'"r tmlance in an
organization'?
6. In what ways can the manager of a function
deliberately set out to gain pO"'l.'"r inside an
organi zation ')
7. Why may connict be good or bad for an
organization'!
8. What arc the main soun:es of conflict between
functions"
9. Why is it important for mamlgerS to try to reduce
manifest conflict and neate a good .:ontlict
aftermath'!
10. Whm are the main conflict resolution strmcgies~
4. Did the conflict reach the stage of manifest con-
tlid! If it did no!. how did yOll manage to a,'oid
coming into manifest conOid'! If it did. what form
did the manifest conflict take'!
5. How was the conflict resolved?
6. What kind of conl1iet afternwth resulted from the
way you or the other party managed the cunfli.:!'!
7. How well do you think you managed the wnOict
with the other pany?
8. Given wh;ll you know now. how could you ha"e
handled the cunl1ict more effeetively?
 CHAPTER 1J • POWER, POLITICS, CONFLICT, AND NEGOTIATION 4SS

A Question of Ethics
Power. Politics, and Negotiation
Managers roulinely use orgamzaliunal politics .lml negotiatiun to try tu convince other
managers to agree with their goal, ami follow the course of action they are championing.
They may also seck ways to increase their personal power in an organizalion to further
their own imerests. Think about the ethical issues involved in politics. power. and negotia-
tion and address the folluwing issues:
I. At what poim docs it become unelhicalto usc organizational politics to promOle
either personal inlercsts or the irucrests of a function or division')
2. Whm is the role played by ethical values in the negotiation .md barg'lining process
to ensure that ouh:omes arc !;lir and equitable'!

Small Group Break-Out Exercise

What Are the Sources of Conflict?
Form groups of three or fOUf people and appoim one member as thl." spokesperson who will
communicate your conclusions to the rest of the class.
Think of an organization you are alll:1milwr with such as a local restauranl or super-
market store and discuss the way it operates. Using the material in the "hapter:
1. IdeIHi fy how diffcr'T'lIIimioll might potent ially gin" rise 10 conn ict between different
employees or groups in this organization (e.g.. because of stalus inconsistencies).
2. Identify how ((Is/.: re/mi(!I!ship.l might potentially result in conllict between different
employees or gruup, in Ihis organization (e.g.. because of task interdepcndendes).
3. How docs the way the organization operates. such as its hieral"(:hy of authority and
the way it groups activities intodeparlll1ents. help to prevent such conllict from
arising'!

Topic for Debate

OrganizatiOllal pol itics and confl ict are pan of the fabric of behaviOf in organizatiOlls. Now
that you understand how these processes ,,"'ork in organiz.uions. debme the following issue.
Team A. The use of power by self-interested managers and groups has the potential to
do an organization more g(xxlthan harm.
Team B. The use of power by self-interested managers and groups lias the polentialto
du an organizatiun more harm than good.

Experiential Exercise
Managing Conflict Successfully

Objective
Your ubjective is to gain an appreciation of the COnniCl process and to understand the dif-
ficulties involved in mmwging conniet successfully.

Procedure
The class divides intu groups of from tllrce to five people. and each group appoints one
member as spukespcn;on to repon on the group's findings to the whole dass. Hl're is Ihe
scenariO.
456 PART 2 • GROUP AND TEAM PROCESSES

You are a group of top managers that has been charged with rcsolving all escalating
conflict belween manufacturing and sales manllgers in a Inrge company 111111 mllnUfaclUrcs
office furniture. The company"s fumiture can Ix cuslomi,..ed to lhe needs of individual cus-
tomers, and it is cruo::ial that sales prov ides manufacturi ng with accurate informatioll alxlUt
each customer\ specific rcquiremems. Ovcr the last fcw momhs, howevcr, manufacturing
has been complaining that sales provides this information 100 late for it to make the most
efficienl usc of ilS resources, that sales is increasingly making errors in describing each
custolller's special needs, and that silles demands unreasonably quick turnaround for its
customers, For its part, sales is complaining ahout sloppy workmanship in the final prod-
uet, which has led 10 an increased level of customer complaints, aboUl increasing delays in
delivery of the furniture, and about manufacturing's unwillingness to respond flexibly to
unexpected last-minutc customer requcsts, Problems arc increasing, and in thc last meeting
betwcc.n senior manufacturing and salcs mallagers haNh words were spokcn during a biller
exchange of ehllrges and counter charges.
L As a group, nse the concepts discussed in this chapter (particularly Pondy's
model) to analyze the naturc of the conflict between manufilcturing and sales, Try
to identify the sources of the conflict and ascertain how far the conflict has gone.
2, Devisc a detailed action plan for resolving the eunfliet. Pay particular atlemion to
the nccd to create a good connicl aftermath, In devising your plan, be sure to
analyze (a) the obstacles to rcsolving the conflict. (b) the appropriate conflict
managcment techniques to usc. and (c) ways to design a new control and reward
system to help eliminate such conflicl in the future.
When asked by your instructor, the spokesperson will describe your group's analysis
of this confl in bet ween functions and the anion plan for resolving it,

Ne'W' York TiITles Cases in the News

llJr. ~('\U ilork €i11lrs

"New DaimJerChrysJer CEO Targets Infighting and Intrigues"
By N('(,I E. IJOlld('lI(' and SI('I'I'II POll '('r, Nm '('mba 28. 2005. p. /J.I.

DIETER ZETSOIE doesn't oo.'OlllC chief
exe<'utiw of D~imlerChrysler AG until
Jan, I, but already he hasstancd worlo; on a
"it~1 task, sotkning tlK' <·~u.'1ie corporate
eulturc th<lt m~rlo;cd lhe tenUTe of outgoing
CEO JUfl;en S,:hrempp.
In July, Mr. &hrempp, 61 years old,
unexpe<:tedly annouoc<..J I>t, would rdire
aftcr II tumulluous years running the
~utomak<·r. As hi, ,ucc"s,or he namc'd
Mr. ZelSChe, ~n occ~sion~1 OOardJOOn' riv~l
who mgillttrro tl1<: dml1\~lie turnaround of
the eOlnp;lny'S U.s. arm, Chryster Group.
In S"pt"mtx'r. Mr, Zctsehc. 52 y"ars old.
1ll0V,,,t from Chrysler 10 lhe coillpany's
Stuttgart ocadqu~rl"rs ~nd took mnt",1 of
the Mercedes division. After only a few
days as MCK'C<kS chi"f oc sigmdcd ~ big
ch~nge, letting lhe unit's entire managc-
Illent ,t<ln' in '1 memo that he "won't
loler~te any infiChting, inuiC"'-" or f'}lili<:~l
gallles:' TIle missive, Mr, Zetschc said in
an intervi<'W during ~ c~tocring of Chl)"""
dealers in Las Vegas, was "<I great chance
10 ",t the tone right from the beginning"
.lnd 10 l11<1kc cle<lr thaI under his leadership
"what count, is performam:e," not int""",1
<lHianccs,
SU<'h wasn't ~Iw~ys Ihe case unde'r
Mr. &hrempp. The prime mover behind
the 1998 merb",r lh~t crcat<..J the G<'mtan-
American car Illilker, Mr, SchrempI'
epitomized the jcHetting, deal-making
celebrity CEO of the 1990s, But when hi,
slmtegy floun<krcd and DaimicrChl)'slcr's
markel vatue ptunge<!. he came under
sharr <critiei,m from lIwe,tors, At the
company's April ~nnu~t meeting, he faced
hours of wilhering allaeks on his ,trategy
and k'u<krship, Th~t 'pe<:tade, peopi<'
famili:'r with the matter &1id, contributed
to his dcTisi<1lI10 rdire with more than two
years remaining on his contr.u;t. Trading
big-shot CEO, like· Mr. SchrempI' for
more down-to,cunh le:lIn players is
tx'coming """" cOmmon in "ofpomt<'
boardrooms. E<lrlier {his yeur, lIewlett-
r:K'bnl Co, ou,t<..J the high-profile Carly
Fiorin<l in f:JVor of Marlo; Hurd, a low,key
CEO from NCR C",p, Wall Disncy Co,
downshifted from {he dOlllineering
Michael Eisner 10 Roocn Iger, who is
IllOrc of a conscnsus·b\Jildcr,
During the go·go 199(1,;. high-o<'tane,
ego·dri""n CEOs were in vogue. says
Judith Glaser, a marmgenk'nt cXp"rt ":ho
ex~miocs ex<Xutive person~l;lies in a
 CHAPTER 1J • POWER, POLITICS, CONFLICT, AND NEGOTIATION 457

coming boo~ called "The Leadership
DNA." Bul over lime. she says, lhe "me-
centric" approoeh e,m morph lIllO a
bullying slyle and creale a vindiclive,
polilicized almosphere in which subonh-
nalcs hallie each O1her to win the boss's
favOf.As a resull. ~trd memocrs, employ-
l"-'" and im'CslrlPi now find CEO hubris k",s
appcaling-espeei<llly if Ihe company's
perfomumc'" fah""" Ms. Glaser says.
"There's defll1ilcly <I Ireoo from the '1-
l-CmrK" pe",ona!ili"s to the 'w,,-<.-cnlri,,""
So far, lhe CEO· ciCCI h<ls declincJ to
gi\'e mUc'h detai! about how h" plans
to procccJ in the new job, IIi, live years <II
Chrysler. howewr, iooicale he is a haoos-
on, ,Iraighl-lalking man,lger willing to
suffc"T a short-Icnn selback for long·lenn
benefil In conlr.istlo 1\1r. Schrcmpp, who
di'lancl."d himsclf from opcnllional
maUcrs and rarcly mixed wilh oruinary
employees. Mr, Zetschl." has ,pem lime
in thc lasl Iwo momhs with Merc'cdes
OCsigners, ollcring suggeSlioos 10 impro\C
Ihe slyling: of ",wml modcls in de,-cl-
opml."nl. Emlier Ihis monlh he spoke :II 'I
galherin!! of Ch')'sler dealep;-an audi-
encl." Mr, Schrempp neVl."r <lddrl."sscd-
alld ''(",,'cd 10 relum to 'peak 10 the group
as CEO,
Unl ike a lot of new Ix".sc'. Me. Zcl""he
says hl." isn't pl<lnning 10 repl,lcc the
oUlgoing CEO', confidantes who l'Onlillue
10 hold powl."rful posts al helldquartl."rs.
Thl."sc include Mr, Sehrc'mpp's wifc,
Lydia, who has a highly paid joh in Ihe
office of the CEO, Mr, Zelsche said she
will stay wilh the l'Ompany, ahhough she
won'l oc part of his managemenl le<lln,
And shortly aflcr he was named CEO-
elcct, Mr, Zelsehe approached Hartmlll
Sc'hic'k, head of corporale ('(,mmunic'a-
lions, ,md asked him 10 rem;lin in the posl.
Mr, Sc'hic'k agreed, Though "'It. Z<.'lsche
,lCknowkxlgcd Ihat "iI'S 1Il0re ust"II" for ,I
new IxISS 10 SCk'Cl his own key Spokl'sman,
he said he enjoyed a "tolally open"
rdalionship wilh Me. Schick, Kl-cpinl; him
would "Iso scnd a signallh"t he isn't intent
on ouslinl; Me. S.:hn.'mpp 's tcam ac",s, lhe
bo.1rd,

Questions for Discussion

I, What kinds of power struggles and polilical banles ""isl inside DaimlerChrysler?
2, What is Dieter lelschc's approach 10 managing power and polilics?
3, Whal will be the bigge,t ob~lacies he faces in solving Ihe COtnpany's problems?

l!ii)< ~<IIIllO<k l!ii11lfS

"Fewer Corporate Chiefs Are also Serving as Chairmen."

R.I' C/(i/ldia H. De"lsch. NIT. Mon'l! 17, 2006. fl. C2,

Disney did it, So did Fannie Mac,lkwlcll-
Packaru and Dell. ,\10,;1 companies in
Britain do il. And now. more American
l'{)mpanics arc doing iI, 1<~" w""qing board
ehaim~lnships away from chief e,xcculives,
An'oruing 10 executive rccruiliul; finn
Russell Rey1lolds Associales. 29 percel1\ of
the companies in the S & I', have sq>am1<'d
the jobs, up from 21 percel1\ five years ago,
Somc, Iikc Disney. we fOJ\.'cd by share-
holders to dccO<Jplc the roles, Orhers, like
Do:II, did so 10 giw a hard-"orking presi-
dent "pr\)n1Olioo to ehd excculi\'C, Many
olhers wanl 10 lei a new chief t'Xeculi\'e
grow i"lo the job under the w"~tchflll eye of
the Former one. serving <IS l'haimlan, 11K'
insur~nee ioouslry Ill;'y soon give co'n-
panic's a tinancial ilK'enlivc to splil the lOp
jobs, too, "We always ask. Are you cOn-
sid<'ring dividing Ihe titles, and if not,
why don'l youT said Lou Ann Layton,
nUlIlagilll; direelor incharge of nalional
din."<1OIS' atld offICers' liabil ily inSUr.i11CC at
Marsh Inc, Companies Ihat do dcCOt1ple II-.:
mles arc slarling to a,k for diS(~lUnK "Our
clients ask us aboul Ihis ",'cry day." s"id
Pctcr Tulupman. a spokc>man for lhe
Atneric'11llntemnional Groop,
Many shareholders say sUc'h splits are
overdue, "When the s;lIne person fills
Ix}!h role,. lhc odd., arc much Ie'" thaI the
bo;<rd will challenge inappropriate
d"cision,," said Ihc Ncw York Siaic
complroller,Alan G, Uncs;, who o\'er-
S('e, New YOlk's p.,nsion funds. Thc
COIJncll of lnstillltional investors, which
eoulllS lIu"t large pen,ion funds as
11Ie,nbers, has a policy lhat all boards
should ha,'c an indcpendent dirc"lOf a,
chairman, Dirl'Ctors themselves are jump-
ing on Ihe bandwagon, In a poll laM yem
by Russell Reynol!ls Ihat asked the
queslion for lhe firsl lilli", 59 p..'J\.'elll ""id
they liked the idea of splitting the job of
<'hairrnall lmd dlief t'Xeculi\'c, .. 1t is JUS!
harder to achieve independell1 oversighl
of a C.ED. who's also Ihe eh"irrn'11l,"
,aid Palricia C. Dunn. who became
chairwom'ln of Hewlcll-Pack"ru whell
Carlelon S, Fiorina, then chairwoman aoo
chief exeeulive, was ousled l'lSt ye"r,
Ms. Dunn rctained Ihc litle aficr Mark V,
Hurd was nall-.cd chief excculi"",
And a few <'hid exe<'uliws, wcaricd
by Ihe amounl of time top jobs consume
in Ihis Sarbancs-Oxley em. WCkrHl](' Ihe
splil, Stevcn A, Raymund. lhe ehainn,m
and c'hief exec'ulive of Tec'h D"la, plans
to give up the chief execlllive ~Iot as
sOOn as th,' compa"y finds" suc,...'SSOf.
"I want to stay ilI\'oh'ed in the company:'
Mr, Raymund, 50. said. "Bul I'm gClling
f"tigued, and I "'ant to do other lhings
with Ell)' lik" Charles A, Tribbett III. a
Russell Rcynolds Illanaging d ircctor, said
Ihal more people aspiring 10 be <'hief
exccuti"es were willing 10 an'cpt the
splil. Ihough most sli II found il unselll mg,
"Cllldidates still want both titles. but it's
458 PART 2 • GROUP AND TEAM PROCESSES

jusl nOI the deal breaker it was five years
ago," he said.
Managemeol specialists argue that
!Oo maoy eorpomte disasters <can be
traced to concentrating power ~t Ihe lOp.
Jame, E, S(·hrager. a management
professor at the Gradu:lte School of
Busines> of the Uniwrsity of Chieago.
is certain that Ms. Fiorin,,·s role "S
ehairwoman and <chid exe(·utive of
Ikwlett-Paekard enabled her to push
lhmugh the eompany·' ill-starred a(·qui-
Silion of COlllp'lq CompUter. Mr. He'·esi
and other Disney ,hareholders say Ih"t
Michael D. Eisner. Disney'., former
ehairman and (·hid ,'xeeutive. u",d his
du,t1 role to get a huge severance
pa(·kage for Michael S. Ovitz. ,,'hom hc
hired and then fired as his No, 2. Disney
has sin<:e amended its guidelines h'
l11ake s<"p,,,atinf! the POStS the norm.
Many shareholders prder to kecp the
roles <:ombined. Dcspile publi<: oUlruge
over the rid retircnlClll pu<:kagc the board
of GellCml Elcletri<: granled 10 John F.
Wekh Jr.. G.E.", former <:hairman and
chief eXiX"live. G,E. shareholders '·oted
10 Id Jeffrey K. Immd!, who su,'<ceeded
Mr, Welch. keep both litles. PcterOToole.
a G.E. 'pok<:sm;m. <aid that the '·pre,iding
di=tor'· role of R<llph S. Luscn. "·00 had
never worked for G,E., (~,nf<:m_.,j elKlUgh
indepcnden<:e. Indeed. many <:omp;mies
IKlW ha,'e "lead'· or ··presiding·' din:<:tors
overseeing committees Ihat deal with
(~"tlpcnsalion and ot!ll.'r ".,,,sitive ar<:,K "I f
there· s a lead din-'C1or who has the jinal say
on meeting <lgendas or information flow.
we·re h"ppy:' s:oid P"triek S. MeGu""
exe(·utive vi,.., presid<:11t of Institutional
Shareholder Ser"ices. which udviscs
lnstimliom on pmxy matters. But that
setup docs nOl uddress perhaps the mOSI
",mpelling push to demuplc the top Iwo
roles: the need, 'IS corporJlions are under
in<:n'asing ",rutiny. to prow that th<.'
comp;lny t<lkes go\'errnll1<:e seriously.
Splilling the rol<', ··",nd.' a signal 10
the oUlside world that Ihe bo~rd re;llly
("ares ahml1 l;0'"Cmal1<:{"." Ms. Dunn. tl>t·
Itcwlett-Pa<:kard <:hairwom~n. said. ·'and
to the ,enior-k"d staff that th<:y a,,'
responsible for providing information 10
th{" board,lKltjusl to th<.' C.E.o:·

Questions for Discussion

1. What ar\) (a) the advantages and (b) the dis.ldvantages of scpanning the roles of chairper-
son and CEO?
2. Do yotl think polilics and <:onflkt will be higher or lower if these roles arc split?
3. Which approach besl ser\'es shart"holdcr imercsts?
 PAR T 2
CHAPTER Group and Team Processes

COMMUNICATING
EFFECTIVELY IN
ORGANIZATIONS

WHAT Is CO,\l,\1UII>ICATlON?

Till:: COMMUNICATION PROCESS

IIARRIERS TO E .....:CTIVI( COMMUNICATION

SU.U::TI,<;C AN AI'I'ROI'RIATE COMMUNrCATlO"'~]\'1EIlIUM

PERSUASIVE COMMUNICATION

SUMMAR\'

EU;RCISES IN UNDERSTAl'I'I)IN(; AND i\IANAI;ING OR(;ANIZATIONAI. BEIIAVIOR

Learning objectives
After studying this chapter, you should be able to:
Describe the four main functions of communication and differentiate
between different kinds of communications networks.
Discuss the steps in the communications process and the requirements for
successful communication to take place.
Differentiate between the main kinds of barriers to communication and
explain how they can reduce the effectiveness of communication.
Identify the main kinds of communication media and explain how they
vary along the dimension of information richness.
Appreciate the importance of persuasive communication and describe
how to create persuasive messages to influence others.
 Opening Case
CHRYSLER'S TOM LASORDA KNOWS HOW TO TALK TO EMPLOYEES
Why is communication so important?

n the past, Chrysler (part of DaimlerChrysler's global empire) was often

criticized for its failure to adequately communicate current problems
and future plans to employees and the trade unions that represent many
of them. Its Uivory tower approach u led top decision makers to remain
isolated from what was going on in its car plants; and employees often
felt they were kept in the dark as announcements about their
company came from trained spokespeople reading carefully

• prepared script. This communication approach led to a wide

gulf between Chrysler managers and employees-it contributed
to the company's deteriorating performance during the 19905.
Chrysler has taken many steps to remedy this communication
problem in the 2000s in order to bring managers and employees,
at all levels of the company, closer together to deal with the
major problems it faces. Chrysler's top executives recognized that
only intense cooperation between employees and managers could
produce the efforts needed to turnaround its performance and
manage global competition. One step Chrysler took to encourage
cooperation was to promote managers who understand the
concerns and problems facing its workforce-and how to talk
to employees. And who better could speak to workers than
managers whose parents worked in Chrysler plants and who were
raised in homes where events at the company were a major topic
of conversation?
One of these managers is Tom laSorda, whose father was
the United Auto Workers (UAW) president of one of Chrysler's
Torn u.SortJa. CEO of Chryskr has fin,{-hand Canadian auto plants, and whose grandfather was also a union
knowledge of the concerns of auto workers leader at that company. With his union roots, LaSorda has first-
today: his father and grandfather WtTe bolh
hand knowledge of what concerns auto workers at a time when
members of lhe Un;ted Auto Workers Unioll_
thousands of them are losing their jobs because of intense
global competition. 1 laSorda remembers from his childhood
when his father was laid off for six months when the economy collapsed;
he also knows what it is to live from paycheck to paycheck, which most
American families do.
Oieter Zetsche, the German-born former CEO of Chrysler, who engineered
its recent turnaround, recognized LaSorda's unique skills-the background and
experience that enables him to effectively communicate with employees, as well
as his proven management skills. Zetsche is an extravert and showman, but he
appreciated that down-to-earth laSorda is at his best when interacting with
ordinary people-like the employees in Chrysler's plants. Zetsche mentored
laSorda, and when his own success resulted in his being promoted to CEO of
the whole of DaimlerChrysler, he decided laSorda was the best choice as
Chrysler's next CEO.2
How have LaSorda's skills in talking and relating to union employees and
officials paid off? Analysts say that Chrysler has enjoyed more conciliatory
dealings with employees and the UAW than GM or Ford. laSorda has helped
the UAW recognize the reality of global competition and that it is necessary
 CHAPTER 14 • COMMUNICATING EFFEGIVElY IN ORGANIZATIONS 461

to take a long-term view to help Chrysler and its employees prosper-

despite the pain this will cause employees in the short run. 50 far, not only
has the UAW agreed to a painful 24,000 layoffs in the last five years; it also
has agreed to change work practices that resulted in high operating costs;
and, it is working with the company to find ways to lower healthcare costs.
These are all major factors hurting the competitiveness of Chrysler and the
Big Three U. 5. carmakers.
In return, laSorda worked to improve the future prospects of those laid-
off workers. Chrysler has provided major funding to allow new companies to
open up car-parts operations near Chrysler's plants to provide new jobs; it
provided new training, education, and severance benefits to laid-off
employees; and it has behaved fairly to current employees. laSorda has
spent considerable time walking around Chrysler's plants talking with
workers, meeting with UAW executives, and addressing union members at
their annual meeting-the first Chrysler CEO ever to do so. As he says,
uWhen you're running a business, you do what's best for all," and he hopes
that in the long run this will translate into thou~nds of new well-paying
auto jobs.) This will happen if Chrysler's innovative new cars (it will introduce
ten new models in 2006) are popular, and U. 5. car buyers once again
become loyal Chrysler customers. 4

Overview
As the work of Tom LaSorda at Chrysler suggests, communication is one of the most
important processes that takes place in organiwtions; it has a major impact on individ-
ual. group. and organizational performance:~ High-performing organizations have
mastered the communication process: their members havc the inform;uion they nced
when they need it to achievc the organization's goals_ In cOlHrast. the poor perform311ce
of many organizations is often the result of communication problcms within the
organization,
Gh'en the- sheer impact that communication has on individual. group. and org;miza-
tiooal effectiveness. this chapter appropriately focuses on its nature." Finil. we define com-
munication. outline its implic:llions for organizational behavior. :lnd describe the functions
that communication serves in organiziltions. Second. we e.lamine comlllon patterns of
communication in organizations. Third. we describe a model of the communication
process and discuss common cornmunicalion problems and ways to avoid them. We thell
explore one of the key components of thc comlllurtic,uion process-the connnunic<ltion
medium or method-in depth. [,inally. we discuss the steps involved in pcniuasive COIll-
Illunicat ion. By thc end of th is chapter. you wi II understand why effective commu nieation
is so i!nport;lnt in organizations.

What Is Communication?
Onc of the dcfining features of communication is thc .I'haritlg of ;lIforlll(lI;OIl wilh mlwr
I'H!pl/'.7 An accountant for Ernst & Youog communicates with his boss by informing him
~bout how qUIckly a l~r"£e ~uditing project is going. when he a~ks to take hrs v~cation ~t the
beginning of June. and when he reque,ts that hi, boss purchase a new softw<lre package to
help in thc preparation of complicated income tax forms.
462 PART 2 • GROUP AND TEAM PROCESSES
COMMUNICATION
1ht: ,harin~ of IOf",m:mon
bet.""",o t,,{> or ,»Ore ;,!Ji,',daal,
or group' to reach a commoo
uo<le"'tandin~.
The simple sharing of information is not enough for communication to take place,
however. The second defining feature of communication is the rwdu'IIK of II WlllmU/I
IIl1dl'l"II{//uli/lg.~ The sharing of infol111ation does not accumplish much in organizatiuns
unless pcuple concur on what this infonnation mcans. For example. suppose the accoun-
tant at Ems! & Young informs his supervisor that he has run into some problems on Ihe
auditing project and it will take 10ngel10 complete than was originally thought. The super-
visor might assume that the <ludit is simply more complicatetl anti lime consuming than
most others. The accountant. however. might suspect that the top-management team at the
company it is auditing is trying to hide questionable. and perhaps illegaL accounting prac-
tices. In this situation. effe<:t ive eommun iemion has not taken pl:tee. The supervisor does
not t1ntlerst<lntl the source and magnitude of the problems the auditor has encountered. [n
other woms, a common understanding has /10/ been reached. This reduces the effediveness
of both the nuditor and the supervisor. The audilor doesn't get the supervisor's advice and
help in handling the tricky situation. and the supervisor isn't lil'ing up to an importalH
responsibility~rJamely. working elusely with his employees on an unusual or especially
difficult auditing project.
In this case. communication-the sharing of information between two or more
indivitluals or groups to reach a common understanding-hasn't occurred. Re:,ching a
common understanding docs /101 me.1O that people ha.'c to agree with each other, What
it doeI mcan is that people must have a relatively aCl'urate idea of what a person or
group is trying to tell them,9 Communication is g(l(l(! or effective when members of an
organiwtion share information with ench other ill1d all parties invoh'ed are rel:Hively
clear about what this information means. Communication is inctTectivc when people
either do not receive lhe informatioll they need or are not quite sure what the informa-
tion they do receive means. tO
The Functions Of Communication
Effective communication is important in org:tnizations because it affects practically
eve!)' aspect of organizational behavior. t 1 For example. members of an organization are
likely to cOllle to understand each other's personalities. attitudes. and values only when
they communicate effectively with one nnother. Likewise. employccs are motivated to
perform m a high level when someone communicates e1e:lrly what is expected of them
and expresses confidence in their ability to perform. Fin<lUy. leaders can influence and
persuade their followcrs only when effective communil'ation takes place.
When organizations experience problems such as unmotiv:lted employees or exces-
sively high turnover. poor communication is often parti:llly to blame. A secretary may
have low motivation to develop new bookkeeping skills or to t<lke on the additional
responsibility of planning conferences because he thinks he is in a dead-cnd job. [n real-
ity, no one has bothered to communiC:lte to him that secretaries do have opportunities to
advance in the company. Similarly. a softw'lre cornp.1OY that announces th.H a larger rival
has purchased it may sec its turnover rate triple. even though no layolTs and few internal
changes will re,ult from the ch:lnge in owncrship. Thc rcason for the exodus is thm its top
munagers have not clcarly communicated 10 employees that their jobs are not m risk.
Expecting the worst. the beSt performers (who have the most opportunities available to
thelll elsewhere) will find other jobs.
G(l(l(! communication prevents many problcms like these from occurring and serves
several other important functions in organi7..llIiOlls: providing knowledge. motivating the
orgilllization's members. controlling and coordinat111g group activities. and cxprcssmg
fl.-dings and emotions (see Exhibit 14.1).
Providing knowledge. A basic function of communication is to gil'e members of Ihe
organization the information they need to do their jobs cffecti\'ely.l~ By providing
knowledge about. for example. ways to perform ta,ks, and the decisions that have been
made, an organizllIion makes surc iv. members have the infonnation thcy need to perform
at high levels.
 CHAPTER t4 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 463

EXHIBIT 14.1
functions of Communication

Pro';ding knowledge
abo.., ~ornpany goal<, how
'0 p.. fon11 a Job, "and"d'
fo' acceptable beha",o',
n""ded change., and. o on

1 Motivating OI'"ganharional
memben-for <xam~"
Expu..ing f-ling and
Fun"on by de,,,,,,,ining •• Ieoc,""
emo,;on, ,u~h a, PD'"''''''
• •
and nega''''' mood"
e,,;,iement, and .nge'
"'
Commumcatoon
"'SIng <Xpe"anc'e. and
,n "rum en' al "'''. as"gnong
specofic and d,fficuh goal"
and gi",ng feedback

J
Controlling and coordinating
group ac,;.;tie._for e... mpl,
by 'eduong SO<',allo.fing,
communoc.tong roles. rul...
• nd no"",: and a""'dong
duplica""" of dl'o...

The imponance of communication is most apparenl when an employee has Just slarted
a new job. As you learned in Chapter 10. individuals staning new jobs face consider.lblC'
uncC'rtainty about what they are supposed to do, how they should go aoout doing it. and
what the acceptable standards arc. Communielllion from coworkers. supervisors, eus-
lomers. clienls. and olhers helps reduce Ihis uncertainly and provides newcomers wllh the
knowledgc they need to perform their jobs efTcrtivcly.
Communication is eSSCIl1 ial for the social i7..atioll of newcomers at all levels in an orga-
niz.uion, When Mickey Drexler. the man who made Gap Inc. famous. became CEO of
slmggling clothes rclailer J, Crew. he spenl his first weeks on Ihe job communicaling with
as many employees as he could to !carn about the troubled company he was hired to hclp
turn arou nd. Orex kr instituted a series of "town hall" Illcctings and talked to employees at
all levels about J. Crew's problems.
The knowledge funclion also is important for even the most experienced members of
an organization because things change. JuS! as the prooucts or services an organization
provides change in response to customers' desires, so does thc nature of an entployee's job
responsibililies. Clearly communicaling Ihe new tasks. responsibililies. and policies
required helps ensure that the members of the organization will continue to understand
whm necds to be done so it will achieve its goals.
The vast amount of information and knowledge available on the World Wide Web
(WWW)looayallowsemployeestoaccess;lll kinds of dala to help them perfonn their jobs
and solvc problems. On the other hand, cmployee~ Gill al~o plan vacation~, shop for
clothes. sc II antiqucs, and make stock trades through thC' Illlernet on company ti me. which
ha~ raised ethical dilemmas for many organi'lation~. as the followillg M'lllaging Ethically
suggests.

Motivating organizational members. As you Icamcd in Chapters 6 and 7. motivation

is a key dctenllinant of perfonnance in org:lni'lation~. and connnunicmion plays a central role
464 PART 1 • GROUP AND TEAM PROCESSES

Managing Ethically
What1s the Right Way to Use the WWW?

A growing problem for more and more organizations is employee web surting at work. 13
According to Dr David Greenfield, who runs the Center for Internet Addiction based in
West Hartford, Connecticut, pornographic websites are among the most common, non-
work-related sites employees visit while they are supposed to be working. 14 The majority
of the visits to pornographic websites occur during the normal workday. Similarly, the
majority of stock trades made using online broker Charles Schwab are made from the
workplace. It has been estimated that web surfing results in significant losses in produc-
tivity, with total costs tallying in the billions of dollars. 15
This trend creates a number of ethical dilemmas for organizations. On the one hand,
employees value their privacy, and access to the Internet is considered a perk on some jobs.
On the other hand, when employees surf the WWW
on company time, their job performances might suf-
fer. Moreover, companies expose themselves to
potential legal conundrums ranging from copyright
infringement to hostile work environment charges,
and sexual harassment allegations. 16
The combined productivity losses and legal risks
have led more organizations to actively monitor
their employees' Internet activities and email mes-
sages. 17 According to an American Management
Association survey of medium-to-large organiza-
tions in the United States, almost 7S percent of the
companies surveyed indicated that they engage in
some monitoring of employees' activities and com-
munications. IS Some organizations also install fire-
walls that prevent employees from accessing partic-
u
ar websites on the job. And when employees
violate their organizations' Internet use policies,
It ha, becn c'limmcd thal wch ,urflllg negative consequences often ensue. Thousands of
at work. at rcwil. stockbroking. 'lIld
companies have fired employees for visiting porno-
pornographic wel"itcs ""ult, in
graphic websites on the job. Hence, employees may
significant los"'s in employee
pmduclivity thm (',,,I ('ompanic's want to think twice before they surf the W'NW on
billions of dollars. company time.

in motivating members of an organiz.ltion to a<:hicve their guals. Expectancy tht"Ury (sec

Chapter 6) propOSCl;. for example, Ihm managers do tnc following:

• Dclermtne what Olucumes subordinates arc trying to obtain from their jobs-that is.
the vaknces of various outcomes.
• Make sure thm employees perceive thm obtaining these outcomes is contingent on
performing m a high le\"el-th:1l is, make sure that instrumentalities nre high.
• Make sure that employees believe that they <:an perform at il high le"el-that is.
make sure that expectancies arc high.

The only way that a manager can determine the valences of different llut<:Ollles for any
given employee is by talking (/lJd listening to the employec to fmd out what the employee
 CHAPTER 14 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 465

walliS. Likewise. managers nccd to comlllunicme with employees 10 assure thelll they arc
capable of performing at high levels and will be rewarded for doing so.
As ;mother example of the role of conurTunication in motivating employees. consider
goal-setting thcory (examined in Chapler 7). It suggests that employees will pcrfoml at a
high level when they have specific and diflkult goals and arc given feedback concerning
how they arc doing. Man;lgerS use eommunication 10 let employees know what goals they
should be Mriving for and how they are progressing in their efforts to achieve those goals.

Controlling and coordinating group activities. As you learned in Chapters 10

and II. It is essential for groups to control theIr members behaviors so that they perform
their jobs in all acceptable fashion. Recall. for example. that a key challenge for scJf-
managed work teams is to reduee social loafing-the tendency of people to exert less
effort when working in groups titan when working on their own. When ;l member of a
group engages in social loafing. one of the primary ways that other members of the
group (·an reduce il is by communicating to the loafer that his or her behavior has been
observed and is not going to be tolerated. Groups and organizations exert control over
their members by regul;lrly communicating infonml1ion about roles. rules. and norms to
thelll. Similarly. as the interdependence between group members increases. the need for
comlllunication to coordinate their efforts in order 10 achieve group goals also
incrcases. lq For example, conullunication can help to eliminate duplication of effort in a
team ;lIld to prevent one poorly performing member from keeping the other members
from achieving the group·s goals,

Expressing feelings and emotions. One of the 1lI0St important functions of

comnlunication is to allow people to express their feelings and emotions.]O These feelings
and emotions can be general \IT specific and can originate from inside or outside the
workplace.
Recall from Chapter 3 that "·or( II/()()(/s arc the feelings people experience on a day-to-
day basis as lhey perfoTTlI their Jobs. Often. individuals ;lnd groups can better achieve their
goals if they can communi<.:ate their moods to others. The nJ(xx!s employees expcrienc:e on
the job infl uence their percept ions and eval uations of people and situat ions as well as their
beh~lvior.]1
For example. when the IIwnager of an electronics store snapped at a subordinate who
was proposing;1Il innovath'e way to inc:rease customer traflic through the store and thus
increase sales, the hurt look on thc subordinate·s f;lce made the manager realize that such
impatience was OUt of line. The manager decided to communiCllte his feelings to the sub-
ordinate. and he frankly told him that he W,lS in II lousy mood lind that they should wait
until the next day to discus, what sounded likc a promising proposal. This simple commu-
nieatiOll of feelings helped to prevent a minor incident from tllming into a major problem.
Emotions such as excitement or anger;lrc oftcn stirred by specific events at work or at
home. so it is ortcn useful for indtviduals 10 communicatc lheir emotions to others in the
organization. An employee who has just learned she has receivcd a promotion may be so
elated she can·t think straight enough to have an in-dcpth discussion with her supervisor
about fiuding and training her successor. Simply commtlnie~lting this f~lettO the supervisor
and postJXming the con\'ersallon for a wllile is the sensible lhmg to do. Similarly, as you
leamed in Chapter 9. an employce who is upset and angry aboll1 his SJXlUse'S terminal ill-
ness may feci a little bit better when he communicates his emotions to others and receives
their social support 21 ;\'Ioreol'er. supervisors. co-employees. and subordinates will be
more lmderstanding of the employee·s 1,1Ck of enthusiasm or rt-<;enttendency to be overly
critic-al when they real ize the tremendous str.lin he is ullder. Communic-alion of mlxx!s and
cmotiOIlS helps organizational members understand each othcr. and when people under-
sland each other. they are better able to work together to perform well and achieve their
go.1Is.
In summary, cOllllllunication is vital to ensure subordinates have all the information
thcy nced to perform their jobs and achieve their goals. Effective communication also lets
subordinates know a leader is confident they can perfonn at high lel'els lind that they will
466 PART 2 • GROUP AND TEAM PROCESSES

benefit from performing well. Communication is also vital to help subordinatcs under-
stand the goals they should strive for and give them clear feedback about how they arc
pcrfOmling.
Employees can also be encouraged to "ommunicate effedively with each other to
coordinate their activities, amid duplication of effon. and limit social loafing. f'inaJly. to
avoid misundcrstandings. manager> usc communication to express their own feelings and
emotions to others. and should encourage their subordinates to do the same.

Communication Networks in Organizations

COMMUNICATION
NETWORK
Th.. "'I ofpalhway, lhrou~h
",hi~h mf"nnal,on 00"" ",ithm
a ~roup or "'1!'Jlllal",n
Communication in an organilation-both between employees at different levels in the
hierarchy. and between employees in different functions and departments-tends to ()(:cur
in certain recurring patterns. The sct of pathways through which information flows within
a group or organization is called a COtnnlllnkalion ndwork. Communication networks
arc found at both group and organizational levels.
Group communication networks. As we discussed in Chapters 10 and 11. self-
m;maged work teams. top-management teams. and other work groups play impor1;mt
role, in most organizations. Among the communication networks that can de"l."lop in
such groups arc the wheel. the chain. the circle. and the all-chlll1ncl network (see
Exhibit 14.2).
In a wheel network. most infurmatioll travels through one central member of thl."
group. This central memocr receives information from all other group memocrs and is
the sole selldcr of information to thcm: the other 1IIe1llbers of the group do not COlll1llU-
nic;}te dirttlly with each other. Wheel networks are most common when there is puo/I'(!
(wk imerdcpclU!cllCl'-thm is. when group members work independently and group per-
formance is determined by summing up the performance, of thc members of the group.
Examples of such groups arc typing pools and groups of sales reps covering different

EXHIBIT 14.2 Chain

Group Communication
Networks

r l
Group m<rnbe< A.><mbly·I'ne ""o,hr
Gtoup tuder

Circle All Chat",.1

x
• Task force member Top managemen,
team member
 CHAPTER 14 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 467

geographic regions-their members have lillie need to communicate directly with cach
other. Most communication !lows to ,lnd from either the formal or the informal leader of
the group. For these kinds of group tasks. the wheel is an effective communication path-
way because it is fast and efficient.
In a chain network. communication !lows in a predetermined sequence from one
group member to the next. eh,lin networks arc common when there is uqlll''llillllllSk
illlnrJelH.'lldl'lla. and members are required to perfoml specific behaViors in a predeter-
minetl ortler. Examples of groups like this include all types of assembly-line "'ork. where
thc finished prcxluct is the result of the scquell1ial inputs of the group's members. Whilc
working on an assembly line. individuals arc able to communicate only with others who
arc adjacent to them on the line. Cham networks also characterize communication up antl
down the hierarchy.
Thc circle network occurs in groups whosc members eommunicatc with OIhcrs who
arc similar to them on some dimension ranging from experience. interes!>. or area of
expertise to the location of their offices or even who they sit next to when the group meets.
Employees tend to communicate with group members whose offices are locatetl next 10
theirs. for example. Similarly. whcn groups sit at a rountl table. members tend to talk to
those on either side of them.
In all all-charlileinetwork. every gTo<'lp memocr communicates with e"ery other group
member. All-channel networks arc prevalent wocn there is I"e<."il'/l)m/ /(1,\'k imen!ef!l'tufeuce-
that is. when the activities of work-group mcmbers depend 011 one another. Each group
member's behavior influences the behavior of every other member of the group. Examples of
groups that use an all-channel communication network because of the complex nature of the
work they perform include high-tcI:h reSl"arch and tlevelopment teams. top-managemell!
teams. emergcncy room perwnncl, and surgical teams.

Organizational communication networks. Organil~tion charts th~t summ~rize the

formal reporting relationships in an organization renect olle type of organizational
communication network. Formal rcporting relationships emerge from the chain of
COllllll,lnd established by ~n organization's hierarchy. The hierarchy detennines which
subordinates report 10 a given supervisor. to whom that supervisor reports. antl so on. up
and down the chain of command. A simple organization chan is provided in Exhibit 14.3.
When an organizational communication network is accurately de~;:ribcd by an
organization chart. eomrnunie,Hion !lows up and down the hierarchy of the organization
from subordinates to supcriors and vice versa,
Newcomers 10 an organization may not sec an organization chan until the)' ha\'e been
on the job for scveral months_ But when they sec the chan. they arc often surprised oceausc
the communication pallerns that they have been observing bear liule resemblance to the
communication patterns specifietl by the chart. Lack of congruence between actual

EXHIBIT 14,)

A Simple Organization Chart

ew

,------1-----
Manag..-

Sul>o,d'n.""
468 PART 2 • GROUP AND TEAM PROCESSES

EXHIBIT 14.4

An Example of Actual em Subo«!,o~<e..----SvbonJ.n~I' ~------,

Communication
Patterns in an
Organization
M'Mgtr -- M'Mg"

M~o~g..- - - Subo'dlMtt - - SubordiMtt - Subord'Mtt - Subordio~t<

S"bo"';ina,~
LI S"bo"';'M'~ Subo«!ina«
,-----J I
Subordina.. - Subordina«

I:ollllllunicalion p~11l:rnS and lhosc spcdfied in an organiz~lion I:hart is common.

COllllllunicmion in organizmions oftcn flows around issucs. go~ls. projccts. and problems
rmhcr than upward and dowuward from onc formal reporting relationship to anothcr. The
roundabout flow ensures thai members of the organizalion have access 10 lhe information
lhey need to perform their jobs.
Actu~1 communic~tion patterns in an organization m~y look morc likc the informal
network shown in Exhibit 14.4 than like the formal organization chart in Exhibit 14.3.
Allhough the rel~tionshlps shown on an organization chart are solllewhat stable. actual
I:ommunicmion p~l1erns like in thc ncl"'ork shown in Exhibit 14.4 ~re likely to ch~nge as
conditions in thc organiz-<ltion changc. Mcmbcrs of an organizmion dcvclop ncw pattcms
of communication as the type of information they need changes 23
Communication cxperts David Krackhanlt and Jeffrey Hanson suggest that there
~re at least three informal I:ommunil:ation nctworks in org~nizations: the advil:e net-
work. thc trust nctwork. and the communication nctwork. Thc (uit'in' t!,'!>('ork providcs
paths of communication for obtaining technical information. EXamples might include
detemtining the countries abroad that offer the lowest rnanuf"cturing costs and solvmg
problems like ho"' 10 fix ~ complicated machine whcn it breaks down. The trlW 1Ie!-
work providcs paths of communication for delicatc information. such as information
pertaining to contlicts. disagreements. and power struggles. as well as the handl ing of
potential ~nd >lClual crisis situations such as a produd recall. The COI/IJII1/llicmioll !/e!-
work provides paths of comlllunication th~t ~re used on a day-to-day ba,is for ordinary
work-related mattcrs such as a changc in accounting proccdurcs or the upcoming COlll-
pany picnic.H

The Communication Process

SENDER
Th~ indi"idual. group. or
organization th;u need, or .....anb
tu ,hare inf"ml"tion ",lh '"nk:
Olher in,!ividual. group. or
organw'tlon,
Regardless of the nature of the communication network. effective communication involves
~ series of distinct steps shown in the model of the communication process presented in
Exhibit 14.5 and de,cribed in thc following paragraphs 25 The model is cyclical since
effective communication is a continually repeatcd process. Howeycr. the sendcr initiatcs
the communication process. so we stllrt by discussing the sender and the message.

RECEIVER The Sender and the Message

The iodi"ldual. group, Or The ~nd~r is the llldividllal. group. or org>lnization lhat wants or n<:eds to share informa-
org"nir"l;on for wh;~h tion with some other individual. group. or organization to accomplish one or more of the
mIMmatIon;, ;ntendeJ
four functions of communication dcscribcd previously. The receil'er is thc individual.
 CHAPTER t4 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 469

EXHIBIT 14.5
The Communication Process

Me.ooze

1 I
1 I
O""odinZ by ••nder Mcd,om Message
(now re",,;..or)

_ Fttdb.d loop

group, or orgnnilation for which the informntion is intended. For e~ample. a supervisor
may wish to send information to a subordinate about his or her performance, a task force
on diversity may oecd to eommuoicate to top management its assessmell1 of the prol110~
tion barriers facing minorities. or the organization may neetl to communicate to the
Environmental Protection Agency aboul whnt it's doing 10 comply with new waste dis-
MESSAGE posal regulations.
lile mf'>rmalion Ihat a ",nder Thc message is the information that the sender needs or wants to share with other pco-
l1<.,<:d_ or wanl' tl> ,h= ",th other pie. Effective communication tlepends on messages th,H nre as clear and complete as pos-
people.
sible. Clarity is important regardless of the content of the message, whether it relates 10
perfonnance fl.'edback. task-force findings and conclus ions, or an organ ization's response
to ncw government regulations. A message is deaf when it contains information that is
e;lsily ill1crpretetl or understo<Xl. A message is cOlllpfCle when it contmns allthc informa-
tion necessary to adie\'e a "ommon understanding betwccn the sender and the rL-.:eh'er.
Soml.'times, problems in the communi"ation process crop up because the sl.'nder is vague
or unsure about what the message should be. A supervisor. for e~ample, might give vague
fectlback to a subordinme about performance on a fC«:nt <lssignment because the supervi-
sor gave too little thought to how thc subordinate actually performed or how his or her per-
formance could improve in the future.

ENCODING
Tr~",lal;ng n me"age into
_}'nlooh or I:mJ,1uage Ihal a
receiver Can ander-land.
Encoding
Once the sender has decided what the message is. the next step in the process is encodillg,
or tr.tns!atillg the message into symbols or language the receiver cnn undcrstand. A super-
visor who puts ideas about how a subordinate is performing and ways that performance
can be imprO\"l.'d into words, a task force that summarizcs the rl.'suhs of its investigations
and weekly meetings into words and statiStics such as the number of African Americans
nnd wOIllen III top,managcment positions. and n member of all organization who shows a
government inspector the organization's waste disposal oper.nions-all of these arc exam-
ples of the encoding of messages.
Although encoding ideas by putting them into words seems simple enough, some
orgamzations arc finding that their employees In"k the basic writing and oral "ommunic<l-
tion skills needed to do this and are taking action to improve encoding. First Bank Systems
Inc .. in Minnl.'allOlis, Minnesota, for example. helps emploYl.'es ranging from clerks to
managers improve their grammar through skills-upgratling classes. Smith Corona
Corporation, located in New Canaan. Connecticul, teaches employces how to answer tele-
phone calls 26
For comlllunication to be effective, the sender must translate thl.' message into a form
thm the receiver can llntlerstand. When itleas are tnmslated into words, for example, the
470 PART 2 • GROUP AND TEAM PROCESSES

sender mUSI take care 10 usc words the receiver undersl:lnds. Have you ever lislened to a
compuler ex perl explain lhe workings of a new software package using terminology that
meant nOlhing 10 you'! His or her failure to cOlOmunicllle prolXJbly added 10 your confusion
instead of providing you wilh the knowledge you needed. A visit to a doclor can also be an
exercise in fruSlnllion if thC" doctor describes your problC"m and ilS treatment in words you
can'l ullderstarld.

Jargon. In bolh of thO$c" C"xamp1c-s. a breakdown in communication occurs because of

JARGON Ihe use of jurgoll. spccializC"d terminology or languagC" thai members of a profession.
Spe.:ializ<."d temlinology or occupalion. or olher group develop 10 llnprove communication among themselves,
l~ngu"ge lhal ",e",bozr> uf a group CompUler experts ha\'e their own jargon. as do physicians. lawyers. and people pursuing
lk,erol' 10 ai<J communication
among lhem",I",.,. most occupations or profcssions, Jargon facilitates communication wilhin an occupation
beelluse it simplifies encoding. Ralher than having to describe :1 complex array of
symploms and their likely causes. a nurse can use a single medical lerm such as
gll,Wroelller;t;s. and OIher health care providers will know the ailmelll lhe nurse is
refcrring to.
Messages encoded wilh jargon can lead 10 eUI'L'I;,.e communiealion when senders
and receivers arc members of the same occupalion or profession. Jargon becomes
a problem only whC"n lhC" reeeh'er of a jargon-laden message is oUlside the sender'~
profession or occupational group. [n lhis easc. thc usc of jargon Icads 10 ;1I/1/('('/i,..'
communication.
Somclimes even individllal companies have Iheir own jargon. For example. al Ihe
brewery Coors. newly developed beers are cillied "the liquid:' At Microsoft. an employee's
knowledge and ability arc referred 10 as his or her "bmulwidlh:' Al Wal~MarL tmining new
employees 10 smile and offer a high level of cuslOmer service is known as being "Wal-
MartizL'"d:' And Inlel e~eculives "lnlellize" new businesses they arc lrying 10 enler and
compete in. such as lelecommunications. 27

MEDIUM
The palhway lhrough which an
enc<Xk:d me,-,agc i, tran,min<."d
loarcec"er.
VERBAL COMMUNICATION
The sharing of informatiun by
m,,,,,,, of wor<h. either ,polen or
wriuen,
The Medium
Once a message is encoded. it is Inlllsmitted to Ihe receiver lhrough some medium. The
medium is Ihe p31hway through which an encoded message is Iransmiued 10 a receiver.
(Medin is the plund fonn.)
Verbal communication. Verb:11 comnlUninllion is Ihe sharing of informauon by
means of words. either spoken or writtcn. For messages lhm are eneodNl imo words. lhe
media can include face~to-face oral communication. oral communication over the
lelephone. and wriucn C"oml1lunication Ihrough Ihe usc of memos. leiters. and reports Ihal
may also be electronically Ir.lllsmiued via email or fa~ machines.
Each medium of verbal communication has advaruages and disadvamages. Although
Ihere are no clear-CUI rules about when to usc one rathC"f than anOlher. there arc lWO guide-
lines for seleCling a medium.
One guideline is 10 selccl a medium Ihal the receiver monitors-a medium thaI Ihe
receiver pays anelllion to. in llIher words. People diffC"r in their preferences for commu-
nication media. Mickey Drexler. CEO of J. Crew. prefC"N to usc oral face-to-face com-
munication. Ron Shaich. presidenl of Ihe Boston-b<lsed. fasl-f(H)(] chain All Bon Pain.
likes to see lhings in writing, The most effeclive forms of communicalion for people
like Shaich arC" wrinen memos, repons. and lenC"rs.2~ A sendcr who ignoTCs receivers'
individual preferences for media is asking for trouble. A fC"ceivC"r may nOI rcalize thc
HnpOrlance of a message delivered in casual conversation over lunch if he or she
e~pecls the message IU be delivCTed via a formal report. A receiver who is inundated
Wilh memos and IcnC"rs and mOfC" accustomed 10 having imponam messages dclivC"red
orally mighl lOSS a leuer eonlaining an imponalll messagC" imo the Irash withoul ever
reading il.
The second guideline to follow in selecling a medium is 10 Iry 10 select one Ihat i~
appropriate 10 the messagc you arc lrying to cOllvcy and 10 usC" multiple media when

NONVERBAL
COMMUNICATION
I'he 'haring of infnrmatiOll by
1l1oCao, uf f"<Cial e<prc"",ns. br>d}
language. anJ mode of Jre",
DECODING
Imerprl"ling or tf)' iog to make
'>Co", of a ,cnd.::r', mc,,,,gc,
CHAPTER t4 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 471
necessary. Common sense suggests that if you arc communicating a personal and
important message to all individual (such as information about being fired. being
promoted. receiving a raise. or being transferred to another unit). oral communication is
called for. preferably face 10 face. Alternatively. if the message you are trying to
communicate is involved and complcx. such as a proposal to open a ncw faclOry in
Singapore. written communication is appropriate. If the message is important. you
might want to back up the wrillen communication with oml communication as well.
Nonverbal communication. Words arc not the only way people communicate. It is
also important to realize that communication not only has a verbal component. it has a
nonverbal component as well. NOllnrball'olllllluniclllioll is the sharing of IIlformation
by means of facial expressions (smiles and grimaces). body language (posture and
gestures). and even mode of dress (elegant business attire versus jeans and a T_shirt).!9
Research has shown that the receiver I'llyS grem al1emion to the way a message is delivered
by the sender. to his or her tone of voice. stance. facial e.\pressions. apparent moods and
emotiolls. and so on. All these factors arc used to help interpret the meaning in the
message-and the meaning behind it. Thus a superior might simply say to a subordinate
"please complete the llssignment by fil'e o'clock:' but the nonverbal cues tell the
subordinate the assignment should have already have been completed. the boss is mad. and
unless the report is done by five o'c1ock there is going to be big tllluble. Similarly. your
coworker slamming his door in your face after a recent argument and the uniform wom by
a police officer standing next to your illegally parkc<J car all transmit encoded messages
to you.
Indced. an important nonverbal cue that affects Ihe way a messagc is rcceived
includes the style of dress adopted by people in all organization or the way a particular
person dresses. Some organizations. for exanlplc. insist on white button-down shirts
and blouses. blue suits. and black shoes- somelhing that often signifies a formal. hier-
archical work setting. Increasingly. today many organization, encourage "husiness
casual" dress or have informal dress days to communicate thai employees and man-
agers are partners who should trust one M10ther. The way a p,lfticulllr person dresses
can also signal much about the type of person he or she is. as the following OB in
Action suggcsts.
In general. because people tend to have less control over their nonverbal than over
their verb,ll communication. their facial expressions or body language often g1Ve them
away when they wish 10 withhold some information. A sendl'f who compliments some-
onc he di,likcs but fails 10 look the receil'er in the eye. for example, is not concealing
his insincerity. Nonverbal communication also can be useful for communicating sup-
port. acceptance. and a sense of camaraderie. Researchers have long noted the value of
hugs as a form of communication. Hugs help reduce stres,. r.tise self-confidence. and
make pcoplc fccl connected with those around thclll. Studies of newborns. thc elderly.
and childrell in orplwnages have shown tlwt toucll is neeeSSllry for psychological well-
being. Sometimes. a good hug at the right time can express powerful feehngs and emo-
tion,. This wa, the case when retiring Supreme Court Justice William Brennan greeted
his succcssor David Souter after Souter's confirmation hearings. According to
Souter. ··He hugged Inc and he hugged me. and he went on hugging me for a very. very
long time:·J()
We have covered JUSt some of the is,ues involved in selecting a communication
medium. Given the importance of choosing the right mcdium and the difficulty of making
the right choice. we focus on additional aspects of this step in the communicmion process
later in this chapter. in the sections on information richness and the impact oftechnologi-
cal advances llnllrganizational communicatioll.
The Receiver: Decoding and the Feedback Loop
Just as sendcrs have to translate their idcas or messages into a fonn lhat can be scm to th('
receil'er. receivers hlll'e to make sense of the messages they receive, I)(~'oding is interpreting
472 PART 1 • GROUP AND TEAM PROCESSES

OB inAction
Dressing for Leadership Success
If you Joined a new organization and on your first day entered a room full 01 employees,
how would you tell which person was the leader? Increasingly, people who specialize
in reouiting and selecting new CEOs and other top executives for major companies
are coming to the conclusion that the old adage "the clothes maketh the man," and in
business today, "the women as well," is a particularly good nonverbal clue as to who
is in charge. Somehow,
the leader is the person
who always seems to
wear the smartest. best-
tailored suit that flatters
his or her physique, or
the nicest shirt or blouse,
or the shiniest shoes, and
•
best-looking briefcase. 3t
leaders have style, or
at least they have learnt
the importance of paying
personal assistants (PAs)
whose job it is to seek
An imponal1ll1onverbal cue that affe<:ts the way a message is l'C<;eivcd out and buy the clothes
is the "lyle of dress mJoptcd by" lX,nieular pcrson or group of pcorle whose style makes the
;n an organi;:ation. CEO, often ,Ire,s for succe". but member; of
boss look best. Top exec-
roy,,1 famili<:s h","e for centuries unocNO<XJ the ad"antages of being
the most wcll-drcs,ocd of all. utives such as Oracle
CEO Larry Ellison, eBay's
Meg Whitman, and of course Donald Trump who admits that he learnt the hard
way the importance of wearing the right clothes, all employ PAS.32 Of course good
clothes cost more money. sometimes a lot more money; however, they keep their
good looks for a longer time, they crease less. they clean better, and they can often
last for years. And, the ultimate payoff is that when you look like a leader many peo-
ple often will treat you like you are one and so over time this increases your chances
of promotion.

or trying to make sense of a sender's mesS<tge. For messages thaI arc relatively dear-cut. such
,l\ infonnalion aboUl a raise or about a spcrific goal. decoding can be straightforward. Some
messages. howel'er, are ambiguous. For example. what causcd your boss's look of disgust
when yotltold him your sales promotion was a flop"! Was the look due to his displeasure with
your pcrfomlatl<:e or his com:em o\'er the dwindling sales of the prod\ll:t in\'01\'<.'<11 Or was it
ju,;t the rc.sult of one more piece of bad news lhm Jay'? During decoJing. the receiver tries to
detenninc which interpretation of the message, of all the possible interpretations, is accurate.
When messages arc ambiguous. the reeeil'er may have diffiCUlty with decoding or
may think that the message means something other than what the senJer imcnJed. Whcn
messages are ambiguous, the likelihooJ increases that the receivers' own beliefs. attitudes,
values. m()()(!s. pereeptual biases, and so on will influence deccx!ing.

NOISE
Anylhing lhal inlerfere, with lhe
cvrnmUni"Jli"" p,oce",
FILTERING
A ",roder', ....'Ilhhol<ling pan Of.1
TTlC""~C bc",u'oC the ,clMlcr
thinh lhe n:cei,e, <Joe" nOl nee<!
or will not warn 10 ,,,,:eiw lhe
infom'"li"n.
CHAPTER t4 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 473
You may be templed to think that communication is largely complete once decod-
ing has taken plaee. As indicated in Exhibit 14.5. however. only <lbOUl h<llf of the COIl1-
municalion process has occurred up to this point-lhe inlti<ll-transmission half. Recall
lhat I.:ommunicalion is lhe sharing of information 10 real.:h a common understanding. Up
umil and including the point at which the receiver decodes the message. the communi-
cation process has l<lrgely been one of sharing information. Members of <In organization
know they have reached a common understandmg and have I.:ornmunicated effec-
tively by I.:ompleting the feedb'Kk loop. the second half of the prol.:ess illustrated in
Exhibil 14.5.
After decoding lhe IlleSS<lge. the recei\'er has to respond to it and start the feedback
loop. The receiver muSI first decide whal mess;tge to pass on to the origmal sender.
Sometimes. the rel.:eiver·s message is as simple as '"[ got yonr memo and agrcc lhat we
need 10 meel to &scuss this is.,,ue:· At Olher limes, tlte receiver may provide, in a long and
detailed me,sage, the information that the sender requested. Or. the receiver's response
might bc lhat he or she did not undersland lhe message.
Once lhe rece.iver decides on a respon~e. he or she cneod,'s the message and trans-
milS it. using a IIIfdium lhat the original scnder monitors. The original sender d('('odt'S
the response. I f the original ,ender is con fident t(wt the receiver properl y interpreted the
mitial message and a common understanding has been reached. the communication
process is complete. However. if durillg decoding lhe original sender realizes that the
receiver did not properly inlerprct or decodc lhe mcssagc. lltC whole COlllmunication
process needs to continue until both parties llre confident thaI they have re<lched 11 com-
mon underslllndillg.
The feedback loop in lhe I.:ommunil:al ion process I.:an be just as importalll as the initial
transmission of the message because it confirm, lhat the message has been received and
properly underslood. Thus. effective communicators do wh<ltever they can to make sure
thcy rCl.:etVe feedbal.:k. For example, an advertising ext-.::utive hoping to convinl.:e a Cllr
company to use her finn to promote a new model may send a detailed proposal to lhe mall-
ager <l1 the car company who will mllke the decision. In lhc Iencr <lccompanying lhe pro-
posal. the lIdvertising executive m<lkes sure she will m:eive feedb<lck by telling the m<lll-
ager that she "'ill be calling him in two or thft:e weeks 10 answer any questions he might
have. During the phone nlllversation. the advertising executive makes sure that thl." man-
ager has underslood the key component, of lhe proposal.
Barriers to Effective Communication
Noise is <lnything tllM interferes Wilh the communiC<llion process. Noise can include the
use of jllrgon. poor handwriting. a broken answering machine. a heavy workload lhat
prevellls a rece-iver frum reading a written report. a rel.:eiver·s bad mood resulting in the
misinterpretation of a messagc. or lhe operation of perceptual biases (sec Ch<lpler 4).
One of the key challenges for man;tgers is to eliminate as much noise <l, possible.
Noise is a general lenn. but there lIre specific cOllllllunication problems thai result in
inelTedive l:ormnunil.:ation. Here. we examine six important potelllial cOlllmunil.:ation
problems in organil,<l1ions <lnd ways 10 overcome lhcm so that individuaLs. groups. and
organiz<l1 ions C<ln commllnic<lte elTectil'ely and thus bener ach iel'e their gO<l1 s: fi Itering and
informal ion dislortion. poor listening. lal.:k of or mappropriale ftocdbal.:k. rumors. work·
foree diversity, and dilTereIKe.\ ill cross-cullurallinguistic styles.
Filtering and Information Distortion
Filtering oCl.:ur~ when senders withhold p<lrt of a message because they think the rel.:l."iver
docs not nl."ed thl." information or will not walllto receive il. Nobody walllS lO be lhe be<lrer
of bad news, <lnd subordin<l1es <lre pal1icul<lrly loath to p<lSS negative informMiol1 on to
thei r bosses. However. tf subordinales withhold Ilegalive informalion or fi Iler it oul of lheir
messages. a supervisor may nO! even be aware of a problem until it's almost too laIC to
resolvc il. What was once a minor problemthM could h<lvC been easily fixed now becomes
474 PART 2 • GROUP AND TEAM PROCESSES

INFORMATION
DISTORTION
l1le d'ange in "",aning trn.t {)Xu",
"hen a """"'~'" trn,-e1, tluoogh a
'.:Tle' of dIfferent \CIllk" to a
!\:«"e,.
a potential disaster. Su pcrvisors also someti mes filter informmion in thcir commun ications
with subordinates. As a result. subordinates may have more negative attitudes. be less
effective. ur expcrictl\:c mure stress, Sometimes when an urganiwtiun is making majur
changes. such as downsizing. supervisors fail to give their sulxlfdinates information about
tllc changes. and tile result is Iligh levels of stress as subordin3les become uncertain about
their futures with the organization.
The magnitude of the filtering problem is underscored by the fact thm subordinates
arc sometimes reluctant to convey negative information to their superiors even in crisis
Siluations. A tragic example of til is problem was thc Air F1lorida plane 111m crashed ill10 a
bridge over the Potomac River after taking off from Nalional Airpon in Washington. D.C.
Federal Aviatiun Administratlun (FAA) itwestig.lturs detennined that the crash resulted in
(Xlrt from the copilOl"s failure to tell the pilot about problems willl engine pl>,,"'er readings
that were causcd by icc on the enginc sensors. Becausc of this and othcr instances of plH)r
communication and filtering. the r"AA now h.ls mandatory ,lssenil'eness and sensitivity
traimng fur airltne crew members to make sure th:llllley cummunicate effectively and do
nOi engage in filtering."
Related to Ille problem of liltering is informlltion distorlion. Ihc change in meaning
that ocCurs when a message travels through a series of different seoders to a receiver.
Expcrimems (and the childrell"s game ""Telcphone'") have shown. for example. that ames"
sage that stal1S at one end ofa chain of [lNlplc is likely to become something quite differ-
em by Ille time it reaches the lasl reeeivcr at the otllerend of the c1Jain.ln addition. senders
may deliberately alter or distort a mess'lge to serve their own interests-to make them-
selves look good or to adv(]ncc their own individual or group goals at tile expense of orga-
nizational goals.
F1iltering and infonnation distortion can be avoided by establishing (nISI in an organi·
zation. as discussed earlier. One aspect of trust is the policy of 1101 blaming the sender for
bad ncws. Whcn subordinatcs trust their supervisors. supervi>ors trust their sulxmlinatcs.
and coworkers truSt each other. and when all members of an organization arc confldell1lhat
they will not be blamed for problems out of their control. filtering and distOl1ion arc much
less likely to occur.

Poor listening
Many people cnjoy talking more than thcy enjoy lislCning to othcrs. So. 1101 surpris-
ingly. poor listening is responsible for many communication problems in organizations.
Consistent WIth this observation arc findings from a recent study that suggests that

EXHIBIT 14.6
Filtenn& and
Barriers to Effective inform."on
di"ort,on
Communication
Dlf(.... nc~' in
cro...... ~lt~,.1 1 ,-,
hngwstic,tyle' "- Ba...-i......0
/' 10".1''''&

Efl'ecti""
Communication
Lad <Jf or

'"
Wo,Ho.-c~ ,/ In.ppmpn.,~
dlvers,ty
feedback
J
Rumors
.nd ,h~
grapev'ne
 CHAPTER 14 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 475

SonK'onc with notoriously poor

listcning skills is Donald
Trump, picturcd hcre with
Larry King who sccms to be
listening earefully as Trump
relales his ambition to become
Pre'side'nt of the Un itl'd Statl'S
in;' show televised in 1999,

manogers think the voice mail they send is 1110re importam than the voice mail they
reeeil'e and that senders generally think their messages arc more imporuml, urgent. and
helpful than do the reeeil'ers.J~ In addition. (lCople sometimes listen only to the part of
a message they wanllO hear.
Members of 'lIl organization can do several things 10 become better listeners or
receivers of messages. Being a good listener entails giving a sender your undivided
allention.looking him or her in the eye. and not interrupting. Rather than thinking aboul
what they are going to S;lY nex!. good liSlellers focus on trymg 10 understand what they
arc hearing and how the sender fccls about il. Being a good listener a],;o means asking
questions and rephrasing key points to make sure you understand their meaning, avoid-
ing distracting tile sender (by glancing at Ihe clock or tapping a pencil. for example). and
accepting what the sender is telling you. even tf it is not what you want to he.lr. It isespe-
cially import'lIlt for supervisors 10 be good listeners when their subordinates arc trying to
communicating with them and avoid the natural tendency to pay more attention to lhe
information corning from their superiors. The FAA's mandatory sensitivity training for
airl inc crews. for example. may hel p pi lOiS become bellcr Iistcners. Ani nterest ing exam-
ple of a manager who learned the importance of being a good listener is profiled in the
following OB Today.

DB Today
The Consequences of Poor Listening Skills

In 1997, Marc Brownstein decided to return to his native city. Philadelphia, and assume
the position of president of the small ad agency his father Bernie had founded-the
Brownstein Group.3S Months later, Marc Brownstein was confident that he had made the
right decision and was leading the agency effectively because the Brownstein Group's
476 PART 2 • GROUP AND TEAM PROCESSES
RUMOR
Unoffldal infonnalion on lopic,
lh:n are imporlam or imerc'ting
to an organitalion', memocr;.
revenues were up, it was gaining clients, and garnering more industry recognition. 36
Seeking to further enhance his leadership skills, Brownstein decided to enroll in a short
executive-development course. One of his assignments for the course was to have his
managers complete an anonymous questionnaire rating his job performance as president
of the agency.37
Brownstein was shocked to learn that his managers did not think that he was an
effective leader, While they thought that he meant well, managers complained about a
breakdown in communication at the agency. They claimed that Brownstein failed to
keep them informed about important matters like how the agency was doing and
who its new clients were, and that he also often failed to give them feedback about
how they were perlorming. Moreover, they claimed that Brownstein didn't seem to
consider his subordinates' preferences when handing out assignments and that
he was generally a poor listener, For example. when a manager would meet with him
in his office, Brownstein would often interrupt him or her several times to take
phone calls,38
Brownstein realized that he had to make some major changes quickly or he would
lose talented employees, Turnover at the agency was already surprisingly high, and now
he knew why. So he decided to change his communication style and schedule regular
meetings with everyone on staff to open up the lines of communication. Any topic was
fair game at these meetings, and Brownstein made a point of really listening to his man·
agers He focused his attention solely on what the person he was talking to was saying
and put his phone calls on hold His employees immediately sensed the change in his
leadership style. Believing their contributions were now being appreciated, they more
actively suggested ways to improve the agency's operations, including how it managed
its c1ients 39 With the lines of communication opening up, Brownstein also began to
understand what was really going on in his employees' minds. Above all, he learned
that leaders need to pay attention to and listen to whaltheir subordinates have 10 say-
that the feedback they provide is just as important as the feedback their superiors give
to them l40
lack of or Inappropriate Feedback
Sometimes communication breaks down becnuse receivers eilher fnil 10 provide feed-
Imck or provide k"Cdbnck in nn inappropriate manner. This barrier to effective commu"
nicalion is especially likely to occur whcn feedback is ncgative bec.lusc negative
feedback mnkes people feel uncomforlnble. A Inanngcr at a bank. for example. may be
reluclanl 10 leI one of her subordinales know lhal a loan application lhe subordinille
worked closely on wilh a cuSlorner is going 10 be lllflled down. He or she mny nvoid
broaching the issuc, pUlling lhe subordinnle in an cmbarrassing posilion if the bad ncws
is divulged by the customer whose loan hns been rejccted. By developing good feed-
bnck skills. managers and employees :ll nil levels in an organizalion will be more likely
10 respond in an appropriale manner 10 messages they reecive. whclhcr they're posilive
or ncgativc.
Good feedlmck concelllrmes on lhe message being responded to, not on lhe sender's
pcrsonnlily, nlliludes, capabilities. or more general pcrformnnee lel'els. Good feedback is
spedtie llnd focuses on lhings Ihe sender comrols. When giving feedback,lhe receil'er
should try 10 put himsclf or herself in lhc original sendcr's shoes. undcrstand how the
sender feels. and relay the feedback in n manner that conveys the right message without
unneeesSilrily hurting the sender"s feelings.
Rumors and the Grapevine
A rumur is unofficial information on lopics that arc importanl or inleresting 10 an
organi~mion·s mcmbers, Rumors usunlly -"prcad quickly and uncontrollably around

GRAPEVINE
A "'I of intonna] mmmuni<calioo
palh.... ,,), lhroug.h .... hi<ch unom~ial
informalion flov, s.
CHAPTER t4 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 477
cOlllmunicmion networks and, once starred, arc often hard 10 SlOp. They arc especially
likely to spread when members of the organizmion arc not informed aboul malters that
Iwve the potential tu affect them personally. like perhaps a takeover attempt by anuther
company. impending layoffs. or a scandal involving a top m;mager. Sensational rumors
sometimes hC'lp relieve lhe everyday horedOIll of organizational life. These rumors
often ell1ail gossip about tile personal lives and Ilabits of the organization's various
members.
How can companies hall the spread of inaccurate and somelimes damaging rumors
and also provide employees Wilh up-to·dme, accurate information on issues lhm arc impor-
lam to them? One way is with an IT network consisting of computer rnollitors and/or tele-
vision screens linked tu the Internet. ur via a company-owned satellite system that can
beam information to employees working in many places. Wal-1\-'lan. for example. has a
srme-of·the·an IT system rhm allows for the rapid communicmion of inforrnmion to ils
thousands of slores.41
According to lhe Atlanta consulting firm KJH Conllnunical!ons. companies can use
thesc systems to control the spread of rumors. communicme accurare information to
large numbers of employees. and coordinate emergency efforts. 42 For example, when
Jeff lmeHt took over as CEO of GE. he appeared on GE's company-wide Imranet sev-
eral times during his lirst months on the job to communicate to employees lhat they had
no need to worry aboUilhe future of their jobs and organization. And when heavy fog in
Memphis. Tennessee, hailed delivery of rhousands of Federal Express's overnight pack-
ages and lellers.the company used its lntranelto keep employees informed and instruct
them on whal to do. Federal Express also uses its Intranel to communicate al:curate
information and hall the spread of unfounded rumors. such as rhose rhar sprang up
when the company stopped making deliveries berween European countries and laid off
4.000 European employees. Americ;lIl employees learned of these changes on Federal
Express's compuler monitors and were reassured thaI their own jobs were secure. The
European employees who were actually let go were informed of rhe layoff face to face.
Rumors arc ofrcn spread rhrough tlte grUllcvine, a ,er of informal communication
pathways tllrough which unofficial information flows in an organization. 43 In any
group. department. or division of an organization. some individuals seem to know
everyrhing about everyone and everyrhing and pass along large quanrities of unofficial
information ro orhers. Rumors rhat spread through rhe grapevine can be about rhe pri-
vate or work li~'es of key members in Ihe organization. the organization itself, or the
fUUlre of the organization and its members. Although rumors that arc spread through
the grapevine are often inaccurare. sometimes informarion transmined lhrough the
grapevine;I accurate. For example, Mike O'Connell. a marketing manager in an airline
company. told one of his co-employees over lunch that he was quin111g his job. had
given his supervisor two weeks advance notice. and would be joining British Airways
in London. By the end of the same work day. everyone in O'Connell's deparunenr
knew of his plans evellthough he hadn't mentioned (hen! to anyone else (nor had his
supervisor).
Workforce Diversity
Increasing diversity might alsu become a barricr to effective communication when the
members of a group or organization don't sec eye to eye or fail to respect and appreci-
ate each orher's poinrs of view. To counter this effect, many organizations are institUl-
ing dil'Crsity training prograrns so their ernployees can learn to conununicMe and work
weillogether. For example. Federal Express has a voluntary four-and-a-half-day diver-
sity training program available to its 5,500 managers to help them learn to understand
and appreciare each Olhcrs points of view. Similarly. Pacific Gas & Electric has a
rm1l1datory four-hour di~'ersily trainillg for its 12,000 employees. Employees must find
the training valuable becallse the classes often run long. sometimes up to six or eight
hours. 44
478 PART 2 • GROUP AND TEAM PROCESSES

What goc, on in a diver,ity training program'! The training can he approached

seventl different ways. One approach involves having a panel of minority members in
the organization describe and sh'lre with their coworkers their own experiences and
difficulties.
Another appro'lch involve, having memocrs of an organi7-'1tion work for a period of
time with people who arc different fromthemscll'es. New recruits to the San Diego Police
Department. for example. 'lre assigned a one·wttk tour of duty working with citizens who
arc very different from them. A white woman might be sent to work with an all-male
Hi,panic teenage gang to gain some understanding of how these youths view society and
learn how to communicate with them and other people who arc very different from her.
Regardless of how it is done. helping diverse groups and members in an orgamzation get
along so that they communicate effce·tively and work together 10 achieve their goals is
imperative-especially as diversity within the workforce (and the world) cominues to
Hlcreasc.

Differences in Crosscultural Linguistic Styles

When people from different ellllllres inter'let. communication difficulties sometime
LINGUISTIC STYLE arise because of dilTerences in lingUistic styles. Linguistic style is a person's charac-
A I"'N>II'" ~h""""leri'li~ wa) of teristic way of speaking including tone of voice. volume. speed. usc of pauses. direct-
'I"'dling. ness or indirectness, choice of words. usc of qucstions and jokes, and willingncss to
take credit for ideas.~5 Within a culture. linguistic styles can vary betWeen. for exam-
ple. different regions of a country or between men and women. Across cultures. how-
ever.linguistic style diffefl."nces are typically much greater. and this can lead 10 many
misu nderstandi ngs.
In Japan. for example. employees tend to communicate more fomlally and be more
dcferentialtoward their bosses than employees are in the United States. On the one hand,
Japanese employccs don't mind lengthy pauses in a conversation while they arc thinking
about something undcr discussion. On the other hand, Amcrican enlployecs often find
lengthy pauses in conversations uncomfortable and fttl the need to fill the \'oid by talking.
Ameri':,lns arc also more likely to take individual credit for ideas and accomplishments in
conversations. whereas Japan's morc group-oriell1ed culture makes individual credit-
taking less likely.46
These cross-cultural differences can result in many connnunication difficulties. For
instance, U.S. employees' tenden.:ies 10 take credit for their ideas and accomplishments
may causc Japancse employees to think they arc hcing boastful when thi, is nOI the casco
Lengthy pauses on the part of Jnpanese communicators may cause U.S. employees to feel
that the J<lpanese aren't interested in the discussion. On the other hm1d, U.S. employees'
tendelKie, to fill these p'luses may cause the Japanese to think they 'lfC being pushy and
not giving them a chance to think. Neither of the,e scenario, may he correct. but arc
merely products of differcllt linguistic styles.
Cultures also differ in terms of the physical distance between speakers and listeners
deemed appropriate for conversations at work. 47 For example, people in Brazil and
Saudi Arabia favor closer physical distances than do people in the United Stales.
Americans lllay feel uncoillfort~lble when Brazilians stand '"too'" close to them during a
conversation, while Brazili;lns may be wondering why Americans keep backing up and
SL"Cm so standoffish.
Cross-cullural communication difficulties such as these can he overcome by under-
standing cross-cultural dilTerellccs in linguistic styles. Before interacting with people from
a different culture, members of an organization should try to le,lm as much as possible
about the linguisti.: style of that cuhure. Expatriate man'lgers who have lived in the coun-
try in qucstion can often he a good source of information about its linguistic style occause
they IHlve first-hand experience interacting with the cUItUfC'S members. Learning about
more genera I. eross-c ultur'll differences IS also often helpfu I because thesc di ffefCnces arc
often linked to differcn.:es in linguistic slyles.

INFORMATION RICHNESS
The amounl of informuuon a
mc-d,um (>f commun;cat,on ~an
,'arr) and lh~ ~"~nllO "hich;l
.. nabl~s «'nd~" and re,'ciwr; to
reach a common un<lcr'landin!!.
EXHIBIT 14.7
The Information
Richness of
Communication Media
CHAPTER t4 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 479
Selecting an Appropriate Communication Medium
The communication difficulties that many companies experience demonstrate that shar-
ing information to reach a common understanding is often more difficult than it appears
to be. Choosing the right communication medium for any given message can help
ensure that a mess<lge is received and properly understood. but selecting a medium
involves trade-offs for both the sender and the receiver. One way to examine these
trade-offs is by exploring the information richness of various media. their demands on
the reeeiver's and the sender's time, and the paper trail they leave. In this section. we
explore these issues and the implications of aJv.lIlces in information technology for
communication in organizations.
Information Richness
Communication media diITer in their inforll1<1tion ril:hm.'ss-that is. the amount of infor-
mation they can carry allJ the extent to which thcy enable senders <lnd receivers to reach a
common undcrstanding.4~ Media that arc high in informat ion richncss are capable of tmns-
mining more information anJ nre more likely to generate a common understanding thnn
are media that are low in richness. The \'arious media avaIlable to orgamzational members
I:all be catl:gorizl:d into four gen\:ral groups bas\:J on their information richn\:ss (s\:e
Exhibit 14.7),49
Face·to·face communication. Face-to-face communication is the medium highest
in inform<ltion richness for at least two re<lsons, Th\: first is that it provid\:s the r\:ceive.r
not only with a verbal messagc but also with a nonverbal messagc conveyed by
the sender's body language and facinl expressions.5<J The nonverbal part of the
communic<ltion gives receivers adJitional lIlfOrmatlon they can usc to decode the
messag\:s. When Joan Schmitt. an engin\:er for a construction firm. met with h\:r
supervisor Fred Johnston to discuss the plans for a Brazilian projcct thc company was
bidding on. Johnston gOt up from behind his desk to sit in a chair next to Schmitt's as
she described her proposal, His action provided Schmill with information: He respected
h\:r anJ wanted her 10 feel that they w\:re on equal footing in their discussioll of the
bidding. Similarly. when Johnston mentioncd that the ncwly hired and incxperienccd
son of the owner of the firm was to be ;l member of the team preparing the bid. his
failure to look her in the eye and his purseJ lips convC)'\:d that he was not pleased With
this situation.
Thc second reason why face-to-facc COlllmunication is highest in information rich-
ness is that it allows receivers to give senders instant feedback. Senders can clarify
amblguou, information immediat\:ly. and the communication proce>s can be l:yekd
through a, many times as n\:eJed until a common understanding is reached. 5t At the
engineering firm. Fred Johnston was quite familiar with thc Brazilian clients for whom
the bid was being prepared and thought it best they be more involved in the bidding
prol:ess than was normally the cas\:. He suggested. for \:xample. that th\: clients have
Information ri<;hne..
Verbal Personally
Impersonal
Face-fo-foce Commun",atlon add"'.... d
wnnen
commUnication dectronically writlen
CommunKaUon
fran""o:'ed communlcatl""
480 PART 2 • GROUP AND TEAM PROCESSES

morc input into materials spcciflcations and quality parameters than was usual. Joan
Schmitt was taken aback by Johnston's suggestion. She wasn't sure why it was impor·
tant and how to carry it out. After :l 20-m ill ute discussion. however. Sch III ill re:ll ized that
what Johnston was suggesting was not unreasonable or difficult and that it made sense
givcn thc cI ients' desirc to have morc input i1110 the deta ils of the bui ldi ng .s construct ion
than was customary.

Verbal communication electronically transmitted. Verbal communication that

is electronically transmitted over telephone lines is the communication medium next
highest in information richness. Telephone conversations do not provide the receiver
with nonverbal information from body language and fa\:ial expressions. but they still
arc a rich xource of in format ion. The rece iver can hear the message. interpret the lOne of
voice in which it is delivered. hear clearly which parts of the message the sender
emphasizes. and get a sense of the sender's general demeanor while communicMing.
Because this Iype of verbal \:ommunicalion is personally addressed to the receiver.
the receiver is likely to pay anent ion to it. When Johnston was talking on the telephone
with the Brazilian clients about the building they wanted. for example. he could
sense their enthusiasm and was pleased that they sounded comfortable talking
with him.
Telephonc conversations also allow for instant feedback so misunderstandings can be
cleared up quickly_ Although not commonly used. video telephones allow callers to sec the
person they me talking to. As the usc of broodbafld iflcreases. computers are likely to serve
as vidl.-'<J telephones ill the fultlre. 52 Visual images add 10 the information richness of this
medium.
Also in this category of electronic verbal media is communication using voice mail
and answering machines. both of which allow receil'ers to gather information frum the
sender's tone of voice and inflections in the sender's verbal \:ommunication. btl! they do
not permit immediate feedback. When using this medium to communicate with a receiver.
the >ender needs to m:lke sure that the receiver monitors this medium by C:llling in fre-
quently 10 r(x:eive mess:lge"

Personally addressed written communication. Wrinen communications (like

letters and memos) addressed personally to the receiver are next in infomlation richness.
Personally addressing the communlc:ltion helps to ensure the receiver will pay attention to
it. and writing for one person allows the sender to tailor the message in such a way that the
reccivcr is most likely to understand it. Feedback is not instantancous. but this may not
always be:l disadvantage. In some ,illwtions. it is important for receil'ers to hal'e time to
rdle<:t on a message and then formulate a response. E-mail is :lbo Ill\: luded in this category
of media. However. for CIlmmu nication to be effective receivers have to che('k periodically
to sec whether they have any electronic messages.

Impersonal written communication. Lowest in information richness is written

communication that is nO! addressed to a particular receiver. This form of
communication is used when a sender needs to communicate with a large number of
receivers simultaneously. like when a \:ompany president wants to dIspel rumors of an
impending layoff. Becauxc this type of medium is impersonal. receiving feedb'lck is
unlikely. For this reason. it is ("specially imponalll for the sender to usc languagc that
all receivers will be able to illlerpret correctly. so th;lt a common understanding will be
reached.
This kind of medium is also useful when a large amount of information needs to be
communicated. such as the monthly salcs of a company's products by state, enrollment in
a large state uni versity by college and major. or the instruct ion, for running a complicaled
printing press. When information is complicated (like the printing press instructions).
some form of written communication is a necessity so that receivers can go ba<:k and
review the information as nceded.
 CHAPTER 14 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 481

Trade-Ofts in the Choice of Media

In choosing a mellium. one of the most signitkalll tralle-offs is between ill{orll!(/Iioll r!l.-h·
II('IS anllthe WIIOUIl/ of lilll(' it takes to communicate the message by using the mcl.lium.
Oral. face-to-face COlllmunication. for example. has high information richness but cao be
vel)' time consuming. When messages are important. and the sender is not certain that a
wrillen message will be understood. then taking the time to communicate orally is usually
worthwhile. However. when a message is clear-cut and easy to unllerstand. such as an
annOUllcementthat a company will close at noon 01) the Frillay before Memorial Day
weekend. a written memo or letter may be most expedient.
Another trade-off that neells 10 be taken into account is the trade-off between
illformll/ioll ricill/(',H and the lI(e(! for II flOfler or ,,!eorollh' Imil- written documentation
of a message. in olher words. When messages are complicalell and need to be referred to
later. like those cuntaining operating instrudions or elaborate procedures.:1 paper or elec-
tronic trail is a clear allvall1age. Similarly. wrinen (;ommuni(;<l\ion is advantageous when a
sender requires proof that a messagc was sent. A patient who is llenied medical insurance
coverage for a particular procedure and appelt!s the insurance company's decision wants to
be able to prove that the insurance cumpany was notified about the procedure and
approved it.

Using New Information Technology

Rcccnt advances in informationtcchnology (IT) have givcn members of organizations not
only new ways to communicate with each other but also timely access to more information
than ever before. 5 .J An organization must be (;ilrcful not to overwhelm its empluyees with
so mach informmion thm they spend more time realling e-mail and bulletin boards than
doing thcir jobs.5-t Most employees in corporate America who use e·mail receive around
30 messages per day and spend about two hours a day responding and completing tasks
related to the lllesS<lges, a(;corlling 10 Ferris Resear(;h based in S,ln FranciSl:o, and Ihese
figures are expected to increase significilll1ly over the next few ye;lrs. 55 Joseph Galli. who
used to receive around 150 e-mails a day when he was presidcnt of Anlazon_com suggests
that e-mail should be used only for those tasks it is most suited for. such as sending data.
memos. summaries. or relevant inform<ltion. Other kinds of messages <Ire more eftkiently
and effectively handled on the phone or in person. Also, Galli suggests that when it is
important 10 express feelings such as congrawlations for a job well done or motivate
employees to excel. voice mail is superior to e-mail since feelings as well as words can be
commun iCilted, '>6
Despite thesc problems. IT has the potential to significall1ly reduce Ihe costs of com-
municating information. 57 For example. at Aetna Life & Casuahy Company. most training
manuals. mte books. and other Hlsur.mce documents (whi(;h used to be on paper) are now
on computer. Aetna estimates that this change from paper 10 elc(;tronic communication
saves about $6 million annually due to. for example. the elimination of COSIly storage fees
for cxtra nlanU,lls and binders (around 52.000 a month) and the 45-cents-per-page cost of
updaling and changing employees manuals when proccl.lures are ahered (oflen irl\'olving
millions of pages).

Intranets. Communication infonnation technology advanccs like the Internet have also
dramatically altered the nature of communication in almost all organizmions.~ The United
States has the most Inlemet users. but other countries in Europe anll Asia also ha,-e high
numbers of Internet users. 59 Many organizations. using the same technology that the
Intcrnet is based on. have created their own company-wide computcr nctworks. called
INTRANET inlrmlcts. which use softw;lfe to facilit<lle real-time online communication within an
A comp;l0l'''' ilk c"{)mputcr organization. [ntranets conlain a wille variety of information ranging from directories.
oCI"or, manuals. and product spe{·ificatinns to delivery schedules. minutes of meetings. ;mll
current financial performanee_ Thcy can be accessed by all members of the organization_
Organizations usc ill1ranelS to efficiently communicate information to their members as
482 PART 1 • GROUP AND TEAM PROCESSES

OB inAction
Intra nets Are Good for Business
Founded in 1996, Alteon Websystems quickly became a leading maker of the advanced
hardware and software necessary to manage websites and e-businesses It achieved its
dominant position because of the way its managers developed one of the most effe<tive
systems of communication to speed up new product innovation in the Internet industry60
From the beginning, demand for Alteon's products was so great that its managers
were confronted with problems that required solutions that changed from week to week.
Sales projections for its products were doubling on a monthly basis. How could the com-
pany find a way to allow its employees-both at different levels in the hierarchy and in its
different departments-to communicate quickly and effectively to respond to such rapid
and unpredictable changes? How could the communication process be changed so that
Alteon's software engineers could communicate with manufacturing managers to
develop and produce new products qUickly and reliably)
Alteon's answer was to develop an in-house, web-based software platform, or
Intranet, making it possible for its work groups. teams. and subunits like production. engi-
neering, and sales to communicate quickly and effectively. For companies that rely mainly
on written communication, it can take considerable time and many phone calls and
e-mails before managers can agree on what to do Using its state-of-the-art Intranet,
however, all Alteon's salespeople could communicate with each other electronically and
work together in real time on an ongoing basis to discuss the changing nature of cus-
tomer needs.
When salespeople have decided what those needs are, they then use the Intranet to
communicate them to the company's engineers, who then work together online to de<ide
how to change the design of the company's hardware to meet those needs. Not only does
this speed new product design, but also, because manufacturing managers are connected
to the web-based Intranet, they knew about all the information and knowledge being
developed in other parts of the organization. Using the company's Intranet they also
offered their own inputs into the product-development process. The combined result of
its improved communication was rapid, high-quality de<ision making that made Alteon a
market leader. 51
Interestingly enough, however, Alteon still recognized the need to encourage face-to~
face, oral communication. Every Friday afternoon, its 240 employees gathered together
for informal give-and.take sessions in which employees asked managers tough questions
and then broke into groups to confront specific problems 62 Any decisions and plans
made in these groups were then inputted into the company's intranet and this informa-
tion was communicated to all the company's employees everyvvhere. Today, an Intranet
like the one Alteen developed is used by most companies seeking to keep abreast of fast-
changing technology

wcll as givc thcm casy acccss to thc information thcy nccd todo lhcir job.~. whcnthcy nccd
it. as discussed ill the OB in Action. 63
As the Alteun example suggests. IntranCls enable empluyees 10 work togelher elec-
tronically to facilitatc joint problem sol"ing. M In real time. all of the members of
one group. and eVCIl those of Olhers. can sce lhe mcssagcs being relaycd had and forth
 CHAPTER t4 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 483

via the Intranct and tcchnology likc instant Illcssaging. The usc of tcleconfcrencing.
which is relatively high in information richness because group members can sec. as
well as hllk to. each other face-to-f;lee in real tnne. has also grown in popularit)':ls the
usc of brolldband Internet connections has exploded. M The Japanese company
Hitachi Limited. for example. uscs teleconferencing to facilitatc communication
between its 29 research laboWlOries in Japan. Scientists and engineers in the different
laboratories usc teleconferencing to share knowledge ;lOd coopcrllte on joint research
projects. Teleconferencing is also a good choice of medium when members of a
group or orgllnization llre locatcd in different eoull1rics. 66 HP llnd IBM arc among thc
rnllny compllnies that usc teleconferencing to f,lciliWte communication between man-
agers in its foreign <tnd domestic drvisions. Nevertheless. when it comes to solving
thorny problems. fllce-to·f<tce communication is still often necessary beCltuSC it is infor-
matioo rich.
In summary. research suggests tlt;lt fllce-to-f,lce communication works beSI when a
message is important and there is a good "hance that the receiver will have difficulty
undcr,;tanding it. Moreover. when me,;sage,; arc important and complex it is best to usc
multiple communication media such as facc-to-face communication and writtcn
reports. On the other hand. wrinen communication is (,ppropriate when it is neeess,lry
to document th<tt a message has been tr<tnsmilled and when the mess<tge needs 10 be
refeITed to more than OlKe. Finally. in some situations. electronically tr<tnsmitted oral
or written communication is just as effective as face·to-face communication and can
save rime.

You're "the Managemen"t Exper"t

How to Speed Product Development?

You have been called in by the top managers of a small, high-tech startup company to
advise them how to solve a major communication problem. The company makes flat
panel LCD displays that function both as computer monitors and as TV screens. The mar-
ket is growing rapidly. and there is increasing demand for a wider variety of sizes of
screens, and for screens with brighter displays that also offer a clearer picture when
viewed at an angle. You have different teams of engineers working on the design of the
different-sized screens, and even more teams working to design brighter displays that can
be viewed from wider angles.
Recently, members of many of these teams have been complaining that they are
not learning quickly enough about the technical advances being made by other teams.
This is slowing down their progress, and many teams are falling behind the schedule
you have set for launching your new displays in the marketplace. Currently, top
managers are responsible for monitoring the progress of the various teams and dis-
seminating new information to them. The managers hold regular meetings with the
team leaders, and together they summarize any new information into technical e-mails
that are sent to all team members. However, these methods of communication are
obviously not sufficient.
Using the material in the chapter, design a new communications system for this com-
pany that will allow the teams to better share information and coordinate their actions to
speed the product-development process.
484 PART 2 • GROUP AND TEAM PROCESSES
PERSUASIVE
COMMUNICATION
TIle auem[ll by (me IX'NOn or
group 10 tr~n>mil and 'hare
informal"'" "ilh anolber 1X'",,,n
or group 10 gellhem 10 l>Cee[ll.
agree" ith. t,lllo", and ",e~ to
achie,'c lhe f<.>nne"" goo"''''d
obj.;di'c,.
Persuasive Communication
In organizations, one person's ability to understand another is not the only objective of
communkmion. Often a person wants to persuade and influence other people. Persuasil'e
COIllIllUllklllioll is ,10 a11empt by one person or group to transmit and share information
with anolher person or group in order to get them to accept. agree with, follow. or other-
wi>e achieve the objITtives the communicator desires. When il c'ome, to persuasive COlll-
munieation, not only is thc accurate transfer of information necessary but also how it's
"framed" or "packaged" so as to influence other people.
Persuasive communication is important in many di!ferent kmds of situations. We dis-
cussed in Chapler 12 how leaders :l1Iempt to influence and persuade their employees. but
employees also attempt to influence their leaders. Some of the most importanl sitomions in
which there is a need to communicate persuasively occur when one party lacks the power
to direct the other party as he or she wishes. [n this case, persuasion must be us<-'d. For
example, managers in one fuoctional department or group arc often in a situmion where
they need to influence managers fronl other functional departmellts or groups. Since these
managers ha"e no power over one another. they have to influence and persuade their coun-
terparts 10 follow or adopt their goals or objectives. Also, employees who work in a group
often wish to influence the ir coworkers to follow the ir ideas, Since they have no legiti mate
power over their coworkers, they'll need to persuade them. Even employees who du have
expert ur referent power need tu know how to persuade their coworkers to successfully
influence them.
In each instance, communication occomes the vehicle through which attempts to
influence and persuade others are made. Some studies have foundthm m~l1l~lgers spend
most of their time III meetings and commll1ees where their primary goal is to provide
accurate information about their plans and goals and elicit support for thcm. Small
wonder then that people in organizations need to develop a competence in persuasive
COtlllll un ication.
A Model of Persuasive Communication
To e.\amille how persuasive commuOlcation cumpetem:e is dcveloped, we follow the steps
inlhe communications model outlined previously but focus on how persuasive communi-
cation works. RC(;allthat the two main parties involved in communication arc known as Ille
sender and the receiver. TIte sender's task is to influence the receiver's response to the mes-
sage-that is, to persuade the receiver to agree with and act on the message. Five faClors
dctermine how persuasive a messagc will be: the characteristic, of Ihe sender. active lis-
tening, the content of the message, the medium or channel through which it is scnt, and
finally the characterist ics of the receil'er.
Characteristics of the sender, As you might expect. messages arc always morc
persu(lsive when they arc sellt from those people who arc ('(",dible, meaning that the
receiver believes that the sender is in a position to know what is the appropri'lle objectil'e.
Leaders, of course, are credible becausc they ha\e legitimate power they can use to gain
the compliance of their employees. In addition, leaders who have expert and referent
[Xlwer arc also credible and can use these qualities to secure the commitment of
employees. Other factors that promote credibility are moral integrity and emotional
intelligence. If the receiver believes the sender is an honest, trustworthy person, he or she
is more likely to believe that the information he or she is receiving is true and should
therefore be acted upon. People who have empathy-those who can underswnd aod appeal
to the feelings and emotions of others-can usc empathy to gain credibility and influence
others. Emotional intelligem;e can be used to good effecl. b,ut it can also be harmful. say,
when a con artist takes advantage of his or her personal appeal to deliberately trick or
deceive others.
People who are able to persuatlc others also often possess good speaking and listening
skills. As speakers, they know how to use every w'ord to en-ecl. They don't speak too
quickly, they marshal their arguments logically, and subtly CIlme back to the same [Xlint
 CHAPTER 14 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 485

again and again to make sure the key facts arc being not only communicated but empha-
sized. Good speakers invite listeners to ask questions to clarify issues and genenlle feed-
Ixld. interesl. and support for their ideas. They usc personal qualilies such as their referent
power or emotional intelligence to ··emOlionally charge" their words to convince othen; they
knoll' what they are doing. that their approach is the riK'1I one. and that it will s,w(('et!.

Active listening. The content of the message. lhat is. the infonnation and argumenls it
contains. is also a crucial ingredient in the communication process. The receiver of the
message. especially if he or she is an anive li';!ener. is always evaluati ng the meaning and
implications of the information being given. looking for the tlteme behind it. and
ambiguities or inconsislencies mlhe arguments.
A competent scnder knows this and is careful not to offer the R'Ceiver a one-sided or
incomplete account of why somc i,sue is important, To gain credibility. the sender knows
he or she needs to presctll all sides of an argurnent-el'en tbose COntrary to his or her posi-
tton. The sender can always later shift back to the m<tjor theme being communic<tted. using
a few strong <trgllmellls to persuade and win over the rcceiver.
As you might expect. the content of a messagc can be grcatly augmented by framing
the argume111 with ,In emotional appeal th,U "it's in the best interests of everyone in our
department :md vilalto the future of our comfXlny."' [n other words. the coment of a mes-
sage can be made much more persuasil'e wben it appeals 10 the receiver's feelings and
emotions as well as to his or her intellect.

Method of communication. In general. face-to·f.lce cornrnunic<ttion and telephone

cOlwersations offer the greatest facility for persuasive communication. while formal
written letters and memos and email arc mOSI suited for conveying factual. detailed
information. which requires time and effort to digest and acturon, In practice. these
electronic methods of communication might be used at the beginning of an "influence
attempt" when managers and employees are collecting information to work out how to
respond to some new dcvelopmcnt, such as a change in the work sctting. The sendcr and
receil'Cr share such information and tr), to persuade the olher as to the beSt course of
action to pursue. In the hours or days before the final dectsion is made. the sender :l11d
receiver arc likely to resOr! to a more persuasivc approach. Thl" exchange of emails
declines and th('y stan to usc the telephone. Depending on the le\"el of disagrecment or
complexity of the issue they arc dealing with. face-to-face meetings then become the
communication method of choice. These face-to-face meetings allow them 10 process
the most information. both logically and l"lllotionally. to arrive at the best decision.

Face·to-face commlln ie:lt ion is

highest in information richn,;".
PiclUred is a shili meeting m a
"lexic'an ma'luiladora plant that
m:muf:lCturc< radios for Delco
and GM. The slll"'n'isor and
team members :Ire exchanging
nlC''''ge> to R'ach a common
undCI"l'Hlooing of the d:ly'S wor~
pcrformanCl' ,
486 PART 1 • GROUP AND TEAM PROCESSES
• People who arc competent, persuasive communicators have a good undcnaanding of
Prcsi,knt Lyndon Johnson
was a rna,ln at I""suasive
comrnonicmion. He knew when
to call Senato", to ~a;n their
supl'or1. when to knod on their
J'KJrS. or ('wn when to cajole
orthrca[cn them.
DB Today
how these diffcrCIl1 methods of cOmmunication should be used. They know when and
when not to send an email. when it is lime to make a phone call. anti when It is vital (0
knod on the other person's door. Former President Lyndon Johnson was a rna,ler at this
approach. To persuade scnmofS to VOle for his bills he would first send his aids to talk to
them and give [hem wriuen information. Later. he would call1hclll on the telephone to dis-
Cuss (he issues ,1Ild further hIS case. Then. in the tI~ys <Inti hours before the fin~lvole on ~
bill he would chargc tlown to congress. locatc lhe "swing-votc" senators, ;lIlti Iilerall y push
them against the wall imo a corner. There he would put his hantls on their shoulders,
squeeze their arms, put his face close to theirs. and either c~jole or tllreaten them ullliithey
~grcetlto do wh~t he wantetl. This physical approach IS very common ,Imong powerful
(!Cople, or (!Cople who know how \() gcltheir way. Failing 10 communicale persuasively
can somctimes prove catastrophic. as the following OB Today on the space shunk
Columbia illustrates.
Characteristics of the receiver. What about the receiver? Beciluse in any infiuence
allcmpL a rcceiver upon rcplying becomes a sendcr. much of the previous inform31ion
applies to receivers. too. Rcceivcrs, for cS~lll1plc. can learn to enhancc thcir credibility, use
lheir emotion,ll inlelligence. ~nd sclcct the best melhod 10 tr~nsmit a message back 10 the
scntlcr. However, lhere arc cena in l.'haracterist ies of the receiver lhat come into play when
persuasive communication takes place.
A Failure in Communication
One day before the breakup and crash of the space shuttle Columbia in the Spring of
2003, senior NASA engineers worried that the shuttle's left wing might burn off and
cause the deaths of its crew, But they never sent their warnings to NASA's top managers.
After intense debate via phone and e-mail, the engineers, supervisors, and the head of
the space agency's Langley research facility in Hampton, Virginia, decided against taking
the matter to top NASA
managers,67
The engineers sug-
gested they should ask the
U.S. Strategic Command
to use its sophisticated
ground-based imaging
equipment to inspect the
shuttle for damage that
might have been caused
by debris striking the
left wing during launch,
However, after asking for
such help, a senior space
agency official later withdrE."N the request before the NASA engineers had completed their
analysis of how serious the tile damage problems might be. OrK:e again, all this communica-
tion was handled by phone calls and e-mail.

DEVIL'S ADVOCATE
A pef¥ln willing 10 """d ~I' and
q~e'tion ,he belief- of more
powerful people, ""i'l influence
wcmpl', ""d COn' jncc OIhe....
thul aplannoo CO""",, of aGion i,
fluwed.
CHAPTER t4 • COMMUNICATING EFFECTIVELY IN ORGANIZATIONS 487
Later, NASA top administrator Sean O'Keefe commented that he probably should
have taken part in the decision to cancel the survey, but he had not been asked
directly, face-to-face to participate, so he had Just followed the debate through e-mail.
Moreover, he said he had not known for most of the mission about the shuttle's
problems. 68
All these events point to the choice of the wrong method of persuasive communi-
cation All the people involved in the investigation were communicating bye-mail
and phone calls. NASA engineers knew all about the problems and risks involved and
had reported them through e-mails However, at no point had they asked for a face-to-
face meeting with top managers where all the issues could be laid out on the table.
Thus, even though a few NASA engineers knew there was the possibility of a potential
disaster and had communicated this to middle managers electronically, this method did
not persuade others, and the survey of the craft was not conducted. 69 Managers at all
levels failed to request face-to-face meetings in which the engineers with first-hand
knowledge could have been present to communicate their fears. The tragic event
demonstrates the importance of managers knowing how to engage in and choose the
right methods to communicate persuasively.
First, receivers whu nrc themselves highly compctcnl and hn,'e high sel!~eslt-'::tn arc
Jess likely to be .. taken in," or swayed. by logical or emotional argumcnts they believe arc
flawed. They arc morc likely to be able 10 "cut through the chaff" to determine if the
sender is acting out ofpersonnl illlcreSi or in a way tllat will benefit others. Then. they enn
decide how 10 react 10 whM the sender hns said.
People with high self-esteem arc very uscfultu ha\'e around because they arc frequently
the ones who will challcnge the idcas or suggestions of a leadcr. or more senior manager.
when they sense they nrc flawed. They ;lCI ns what is known ns Ihe de,'il's mh'OI.·llle-n
person willing to stnnd up and question the beliefs of more powerful people. resist influence
attempts. and convince olhers that the planned anions arc flawed. At this level. the issue
of self-imcrest and the intelll to persuade to personally bencfit docs comc into play. Now,
persu;lsi\'e communicmion eXlends inlo the renlm of orgnnizmion<ll polilics, n 10pic we
discussed in the previous chapter.
In summary, thc goal of persuasive comillunication is to sway and inlluenl"e others by
the kind of lllcssages that arc sent. Effcct ive leaders. eil hcr managers. supervisors. or infor-
m;ll group leaders. undcrst;md Ihe issues inl'olved in persuasi\'e cOlllmuniC<llion nnd use
them to promote individual. group. and organiz.ation goals.
Communication in Crisis Situations
E,lrlier we mentioned that communicalion in crisis or disnster siwations poses panicu-
lar problems for the organizalional hierarchy. When a crisis arises, the uncxpccled
nature of the emergency requires that managers havc the ability \() respond rapidly 10 it.
And this typically involvc.' working intensively with othcr managers in teams to find
solutions to the problems lhat have arisen. In crisis silUmions then, the l1eed to quickly
set up leams uflen becomes lhe foundntion of Ihe communicaliun nelwork. and indeed.
advanl'e l:omingency planning for uisis situations often typically involves the prior
sc leet ion of team mcmbers and dccisions about wherc to locatc thcm. Top-managemel1l
tearn ,nembers must work logether to mnke policy decisions and then commul1icate
these decisions quidly 10 Iheir subordinnleS. and so un down Ihe org"nizalionnl
hierarchy so that information cascades out and all employees can develop the appropri-
atC responS{'.
488 PART 2 • GROUP AND TEAM PROCESSES

Obviously. face-to-face communication provides the most effective communication

\:hannel in this situatiun because It provides for the transmissiun uf rich informatIon.
However. this must be supplemented by getting experts into the crisis situation so they \:an
rapidly evaluate the situation and transmit back accurate and relevant information to lhe
top managemelltteam. Obviously. the quality of the team's decisions can only be as good
as the quality of the informatiun it rt.occivcs.
Gathering alTurate and timely information is espccially important whcn t"'o or
more diffcrcnt organizations must cooperate to del iver a rapid resJXlnse. The communi~
cation problem here. as we will discuss in depth in Chapler 16. is that a tOp manager
from one organizatIon has Ito authority over managers in a second organiz<lllon-e"en
lower-level man<lgers, Thus. a rapid response is only possible if m<lnagers in different
organizations call quickly agree on or arrive at a common definition of thc situation.
All too often. however, when confronted with major disasters such as the one that faced
NASA and the resJXlnse uf U.S. government agellcies to the dcvastation \:aused
by HUTri\:ane Katrina. there is a failure of communication. There arc several reasons
for this.
First. as we discussed in the last chapter managers often wrne into conflict when
there arc complex task interdependencies or when there arc unclear reJXlrting relation-
ships. both of which arc likely to emerge in crisis situations. Second. when confronted
with the need to make crucial decisions many mllOagers arc inclined lu "pass the buck"
and leave the final de..:ision to ,omeone above them in the hierarchy. In this way they
..:an avuid blame if something goes awry. Third. collecting good information simply
takes time, and unless there has been effcctive advan..:e planning. often in,'olving dry
rUllS and emergency simulations. it takes much longer for managers to diagnose and
respond to the crisis ordisa,ter. Some of these factors also seem to have played a rule at
NASA. and in the delayed resJXlns..: of the Federal Em..:rgen..:), Management Agency
(FEMA) to Hurricane Katrina. In the FEMA case, the hcad of FEMA waited 48 hours
to mobilize the huge relief effort. in large part because he wanted the green light
from the White House. In addition to both the Guvernor uf LouisIana and the Mayor of
New Orleans. howe"er. people in the lidd also failed to signalth..: levd of emergen..:y,
Indeed. later reports sugg<-"sted that one reason for Governor Kathleen Blanco's
slow reSJXlnse was th11t she was inundated with e·mails from around the world from
country leaders and others offering help. ,md from peuple whose relati"es were tntpped

TIle former head of the federal

Emergency Management
As>ocia!ion (FEMA) waited 48
hour, to mobilizc thc huge relicf
effort for New Orkans, in large
part because he wanted the grccn
lIl!ht from his bosses atlhe
Whitc Housc_
 CHAPTER 14 • COMMUNICATING EFFECTIVElY IN ORGANIZATIONS 489

in New Orleans. She WllS also engaged in political ballies with other govcrnment
~gencies.7o

Summary
Communkalion is one of the moSI impon.ant processes Ihiltlilkes place in organizations.
Effective communication allows individuals, groups, and organization_, to achieve their
goals and perform at high levels. and it affects virtually every aspect of organizational
~havior.ln tllis chapter. we made the following major points:

I. Communication is the sharing of infonnation ~tween t\\'o or more individuals or

groups in an organiziltion 10 re~ch a common umJcrstamling. Communil:ation serves
four miljor functions in organizations: providing knowledge, motivating organiza-
tional memOCrs. CQlHrolling and coordinating individual effons. and expressing feel-
ings and emotions.
2. Four lypeS of work-group commlillication nClworks arc the wheel. the chain. the
cirde. and the all-channel. As the level of task interdependence increases in a
group. so too docs the need for com1JluniC31ion between group mcmbers. Whcn a
group's task is chawcterized by pooled interdependence, the wheel network is
likely to be used. When ~ group's t~sk is l:haraeterized by sequentiill inlerdepen-
denee. a chain network is likely 10 be used. When a group's lask is ch~r~nerized
by reciprocal interdependence, an all-channel nctwork is likely to be used. An
organizll1ion's actual communication network is seldom accurately depicted in its
formal organiz~tion ch~rt. Networks change ~s communication Ill-eds l:hiluge
within the organization or group.
3. The communicll\ion process entails a number of steps including the sender's CIICOO-
ing of the mesS<1ge. selection of a medium. decoding of the message by tile ~eiver.
~nd compleling Ihe fl..:dbal:k loop.largon (spcdalized language used by members of
a group) facilitates communication within the group and hindcrs communication OUl-
side tile group.
4. Filtering and information diston.ion. poor Iistening. kick of or inappropriate
feNlba<.:k, rumors. ilnd <.:ross-<.:ultural differences in linguisti<.: styles can ill!
lead to ineffective communication in organizations. Communication can be
improved by establishing trust and encouraging open communication. improving
1istening skills. developmg good feedback skills. using <.:ompany TVs 10 spread
a<.:curale informiltion. ~nd underst~nding cross-<.:tiltural differences in linguisti<.:
style,.
5. COll11nunicat ion med ia vary in information richness (the amount of information
Ihey <.:an carry and Ihe polentinllhey have for enabling senders and receivers 10
rench a l:ommon understanding). F~ce-t(J-face communi<':a!ion is the medium high-
est in information richness. It is followed by verbal communication electronically
transmitted. personally nddrcssed written communicll\ion. and impersonal wriuen
l:ommunJcat ion. Other fa<.:tors thai affect Ihe select ion of a medi tlllJ include Ilow
much of the sender's and receiver's time it takes ~nd whether it leaves a paper or
electronic trail.
6. Advan<.:es in infonnmion tccllnology such as global computer networks like tile
Inlernet generally tend 10 conlribule most to the knowledge fun<.:tiolJ of <.:ommunica-
tion. Given the v~st array of information currently avai lable to organizational mem-
bers. organizations hnve to be careful thallhcir members are not ovcrloaded with
infonnmion. Using electronic communic,uionto replace face-to-face communication
in work groups has l:ertain disndvantages that lend to inl:rease liS the level of task
interdC'pcndencC' between group members increases.
7. Persuasive communication is tile usc of information and messagcs to influcnce others
to act in the way desired by the sender.
490 PART 2 • GROUP AND TEAM PROCESSES
Exercises in Understanding and
Managing Organizational Behavior
Questions for Review
1. Why is rcaching a common undcrstanding a ncc-
cssary cond it ion for commun ication to hal'e t,lken
plal:e'?
2. Why are membl'-rs of an organization sometimes
reluctant to express their feelings and emotions?
J. Why is feedback a necessary component of the
comlllunication process'!
4. What jargon have you encoumen."d'l How did it
hamper or help your tJllderstandi ng of messages
being communic.:lted to you'?
5. [s 1iI tering always dysfunctional" Why or why not'!
6. Why do alnU)!;1 all organizations have grapevines?
OB: Increasing Self-Awareness
Effective and Ineffective Communication
Think of two communication experiences you had in the
last six months-one in which you felt thm you commu-
nicated cspecially efkdivcly With another individual or
gmup (call il Communication Expericnce I. or CEI) and
one in which you fch thm you had particularly JXlOr com-
munication with another individual or group (call it
Communication Experiencc 2. or CE2). If you arc cur-
rcntly cmploycd. try to pic'k experiences thm occurred at
work. Describe both experiences. and thCll answer these
(IUestions:
1. Which of thc functions of communication wcre
scrved in CEI and CE2? Which of the functions of
communication should have been served in CE2
but werc not'?
7. Why arc somc people annoyed by thc incrcasing
usc of voice mail inmanyorganiz.ltions (instead
of having senetaries and assistants take messages
for people who arc away fmmtheir desks)?
8. Is using a mcdium high in inform3lion richncss
always desirable? Why or why not?
9. How have advances in tC\;hllology l:hanged the
ways that you communicate with other people on a
day-to-day basis?
10. Should organizations have organization charts'?
If nol. why not'? If so. what should they be
used for?
2. Which parts of the communication process worked
especially well in CE I? Which pans of the com-
municmion process failed in CE2?
3. W1lS any jargon used in either CE I or CE2'! If not.
why not? [I' so. did the usc of jargon lead to clfec-
tive or ineffective cOlllmunicatioll?
4. Did any filtering lake place in CE I or CE2? Why
or why not?
5. Were rumors or the gr~pcvine involved in CEI or
CE2'!
6. Dcserihe thc information richness of the communi-
cation medill that were involved in CEI and eE2.
7. Did either CE I or CE2 in\'ol\'e the usc of any
allvances in information technology'! II' so. how dill
these advanccs aid or hinder good COll1munic3Iion?
 CHAPTER t4 • COMMUNICATING EFFEGIVELY IN ORGANIZATIONS 491

A Question of Ethics
Communil:ation is often uscd to intlucnl:c mher people and to persuade them tu behave in
ways that oclp an organizmion achieve its goals. Sometimes. hlm'ever. influence and persua-
sion can be used for unethical purposes. Managers, forexampk. might persuade employees to
overcharge customers for prOOucts such as legal or accounting services. or encoumge employ-
ees to sell expensive produds to l:ustolllers woo obviously cannot afford to buy thclll. On the
other hand. employees might try to persuade their managers they arc doing a good job by only
communicating infonnation that makes them look good and "hiding"" the rest.
I. How l:an managers decide If their allempts to influence employees are ethical or
unethical'!
2. How can employees decide if their allempts to intlucnce their managers or
coworkers are ethical or unethical?
3. What kind of rules could be created in an org.mization to ensure allempts to inllu-
enl:e and persuade others never become unethil:al?

Small Group Break-Out Exercise

Implementing IT in a Medical Clinic
After reading the followi ng scenario. break up imo groups of three or four people and di s-
cuss the issues invol I'ed. Be prepared to discuss your think ing with the rest of the class.
You have been called in by the doctors in a large ml-dil:al dink to advise them how to
take adv;mtage of their new information tcrhnology to improve organizational communi-
cation. Although the clinic docs have an e~mail system. and doctors arc connected into a
local area network (LAN) that al!ows thel1l to post information on bulletin lJoards and
al:l:ess shart-d patient records, in praClice they rarely use them. Most comlllunieation takes
place face-to-faCl~ when they meet each other in the coffee rooms or by playing telephone
tag as they meet their busy schedules. As a communications expen your job is to get the
doctors to appreciate the potential of their new IT.
I. What kinds of advantages can you tell the dodors thcy will obtalll when they usc
the new IT'!
2. How could you usc persuasive communication to convince the doctors to usc the
new IT! Create an action plan to help the docturs learn how to use and apprecmte
the new IT.

Topic for Debate

Good commUl1kation is central to the functioning and effectiveness of all organizalions.
Now that you have a good understandmg of communication in org;mizations, debate the
following issue.
Toom A. Advances in IT can makc it easier for members of an organization to C{)mmu-
nieate wilh each other.
Tellm B. Advanl:es in IT can make it more diffkult for members of an organization to
communicate with each other.

Experiential Exercise
Troubling Communication

Objettive
Your objed i\'e is to gain experience in commun il:ating elfel:t),'ely in a troublesome situation.
492 PART 2 • GROUP AND TEAM PROCESSES

Procedure
The class dividcs into groups of three to five people aod each group appoims oue mem-
ber as spokesperson to present the group's conclusions to the whole dass. Here IS the
scenario.
One group member aSSUIlH.'"S the role of David Jimenez, Ihe supervisor of a group of
chemical engioeers. Aoother group member assumes the role of Swan Kippling. one
of the chemical engineers. The remaining members uf the group are observers. Once
Jimenez and Kippling assume their rnles, the observers take notes on the verbal and
nonverbal communication they observe as well as instances of effective and ineffective
commullication between the two.
Fur the p;tSt sc"eral months. Kippling has been designing a prototype of a new waste-
coutrol processing devil·e. He has just disco\'ercd thal his device Joes nOi conform 10 a new
Eovironmental Protcction Agcncy (EPA) regulation that will go into effect in one year. nlis
is a major sctback. Although some of the design work can be salvaged. at least several
weeks of work will be lost. Jimenez and Kippling are meeting in Jimenez's omce to discuss
the problem. why it occurred, and how it can be avoided in the future. Jimenez's positiou is
that cxtrapolming from recell! EPA regulmions. requirements. and dclibcrmions. Kippling
should have been able to anticipme EPA's most recent ruling and take it into account in his
design work, or at least he should have drawn up a contingency plan In casc such a ruling
was put into effec!. Kippling's position is thm there is no way he coold ha\'e known what
EPA was going to do.
I. Jimenez and Kippling assume their roles. They are meet ing to discuss the
problem. why it occurred, and how it can be avoided in the futllre. Jimenez is
10 meet with his [xlSS in fifteen minutes to discuss the problem, so he and
Kippling have only fifteen minutes to come to some kind of resolution of
this llWl1er.
2. When Jimenez and Kippling's meeting is t1nished.the observers should discuss
the verbal and nonverbal communication they observed as well as what was par-
ticularly effective :md ineffective.
3. The entire group determines which instances of communication betwccn Jimenez
and Kippling were especially effective and why and which instances of commlllli-
cation were especially incffective ::Jnd why.
When (he group has finished (hose activities. the spokesperson will prescnt the
group's conclusions to the whole class.

Nevv York TiTTles Cases in the News

eh' ;)1ctll lJork (!am,s

"Guess Who's Got His Back"
Michael /larixm.J. NYT. MI/\" I. 2{J()(j.p, F/.

RIGHT or "rong, i( Il,,-~ somehow become lo-fmd wa(ch balleries ~",d record-player up to SI.ooo for I' simp\c sile. far more
conventional wisdom: Wal_Man is b;,d for necdks. WaJ-r.-brt is mOl\: ally (han (hall (he owner. Cheryl Cook, WaS willing
small businesses. olll>JX'"nding. OlI(mwl<Cu, enemy. more lifeline lhan threat, (0 pa.y.

"cring and outgrowing Ic~ser ri,-als
un(il (hey change (heir stn,tegy or close
tocir doors.
But for Sparky EIC<:lronics. a family-
OW'k-'{) stol\: in California (ha( sells hard-
Tile 4J-)'ear-old StOR'. whi,'h has a
loyat cus(omer base of handymen and
eon(ractors. wanted a Web sit~ to reacll
consumers beyond ils home in Fresno
Bu( the big (echnology c-omp,mies "'ank'{)
Theil there Wa.1 Wal-Mart. For S100,
(he relai\cr helped creale sparkyeleetron-
ics,eom. mmpk(e ,,-ith (he i,'on (hat sits
above its Slorc. an o\'ersilC clcc(rifi""
cartoon dmrader. "The nicr (hing WaS

that il did nol ,',,,t U., an arm and a 1<,/;:'
Ms, Cool:. said,
For th<>u~unds of imkp'-'ndently uw",'<1
conwnience stores, reswural!ts "nd h"ir
salon" th~ nation's Iarg~.'t-and mmt
fcarcd-ret"iler "Iso h"ppells to be a
busi"",s part""r, Through its Sa",'s Club
division, a chain of 570 club stores, Wal-
Mart helps tlll'm pn>c"ss credit-,'ard
tr;'nsactions, build Wco silCS, pay employ-
~c's "nd tak.' out loans, all ," barg;)in
prices,
In that S'.-n"", Sam's Club is an o",is
within tile harsh dimate of Wal-M'lM ;\t
Sarn·s.tlle wry qualities llmt male Wal·
Man such a formidable competitor-its
~ize 'Illd hard·nosed n...goti"ting t:leti...s
with suppliers-have been unkashed on
b..'h"lf of ,m"ll busi,>c'scs.
At Wal-Mart's request. for example.
the h...alth inSUraTlc", comll'lIIy Extend
Benefits Group waived a $500 fcc for
Sam's Club members who signed up for
ils plan,. And the financial ",rvi,'cs cum-
p"ny First Data. which proc...sscs credit-
card payment', set aside 50 exc<'utiw, to
worl; with Sarn's members.
At a time when Wal-:"1an is ulHJer
aSS:lult by critics for. "nlOng Other things,
driving mum-and-pop sto"" out of bu,i-
ness, S"m's looms as " relatively UIll'lppcd
puhli,' ",lations su~~e,~ ,tol)'.
But thm may be about to change. Wal-
Man's unusual plan 10 offer training to
small busin~sses in urban "reas wocre it
wants to build SlOres, announ,'~d la't
month. will rely on the expenise of
Sum's Club, which has provided ,u,'h
suppon 10 ilS members for two dec;,dcs,
ex,,,,'uti\'l" ,aid.
An,1 Wal-M"rt says m"rketin!, for
Sam's Club, whi"h has traditionally
focused on its low prices and the good
works of its bJu... -smockcd employ,'es,
will soon focus 011 its relationship with
sm,,11 busine'''-'s.
It is a relationship th;'t lhe company
has invcst...d h...avily in. Sam's Club has
udusive hours for small businesses
(7 a.m. to 10 a,lll .. f,,'''' days a w...ckj, a
Questions for Discussion
1. What kind of message is Sam's sending to small-ousiness customers?
2, Wha1 are the main ways in whi<:h Sam's is COlllll1unicating 10 busincss cll,tulners?
3. Wha1 has been their re,;punse and why has S:Ull', been successful?
CHAPTER 14 • COMMUNICATING EFFEGIVELY IN ORGANIZATIONS
d~,i£naled onlin~ ordcrin£ sy't~m for
small businesses (order by 5 p.m .. pick
up anytim,' th... n~xt day) and a t,'am of
sales representatives who even m<ike
house ,'ails to small busin,'s",s.
An"lysts estim;'te that small-busincss
owocrs g... nnat~ haIr of thl' $40 billion in
annual sales at Sam's Cillb. though the
wmp;II1Y will not disclose' such figu"'"
Most businesses that usc S;lm's Club
dC'pend on it for routine pun.-hases-
deaning supplies, hamburger patties. file
foldas, ink cartridges. ItR'l1.'asingly,
however. they rely on Sam's Cillb for
Ix,~il' ",rvil:es tb,,1 the retailer gets through
a gl11wing net"urk of outside companic..;,
Smn's Club's irl\'oll·... ment in thes...
services i, lim ited, It negOliatcs the prices,
bllt companics lik... Ext... nd S...n"fits
administer them, with Sam"s Club doscl)'
monitoring CIlSIOIl1<.'r Sl'rvice. Sam's Club
generally derives little or no direct profn
from iiS rok. R"ther, servic..., like credit·
.-ard pr".-e"ing and health insurance
g""1<.'mle good will for Sam's, and create
an ineentiv~ to r.-n~w an annual
mcmbership.
Internal research show, that s~rvic~,
increase loyalty to the retatler be.-allSC
members ,'annot secure the .,ame di,-
counts on their own, Customer Synergy
Solution" a consulti ng firm in Houston,
WaS staggering under the weigh1 of
S2,600 in monthly health illsurance
premiums. p:lrlly Occause of back-to-
ba,'k surgeri,', for onc of its twu
employees, By switching to an EXlend
Benefits plan through Sam's Club, one
with a Health Savin!,s Account and a
high d,'ductible. rathcr than a small
group plan, the company cut its premi·
umS by $2,200 a month. The ownerS of
K,C:s County Siofe. in Nacogdoches.
Tcx" ne...ded to process credit-c'urd
and debit-card payments in their two·
month-old store. Atkr res... ar<'hing fi>'e
competing services. they chose Firsl
D"ta, anoth... r Smn', partn...r. be,'"us... i1
charged the lowest rates, Some people
join Sam's only for these servi...",. Sren
493
HUllon, the own... r of Windoworks Etc"
a residcmial window-washing company
1n Washington St"te,joincd Sam's Cillb
lint for its cheap "leaning solution but
to develop a chcap Web Site, e"stside
willdow.-!cal1ing.col!1, which would
give his ousmess more legitimacy,
"'My office i, my pi,'lup and c~lIph<mc
and I;'ptop,'" he s"id. "The", is nothing
(,(lIl<Tet~, no storefmnt. Th,' W,'b ,jt~
b\.-.;omes your storefront." The discounts
th"t Sam's Sc<'ures are, in many ,'ases,
considerable. First D;iIJ docs not ch;'rge
Sam's Club n",mbers its regular monthly
service fcc. which amounts to S60 a year.
and gi>'cs th"1\1 a frc'" debit PIN p"d-
linked to a cash rcgistcr-I'alucd at 5150,
Ext... nd Ben,'fll' not only eliminated a
5500 i,dministr"til'e fcc for Sam's Club
members, it redul'ed a scpar"lC monthly
fcc for processing medical reimburse-
ments fmlll S5 to S2.50, or $30 a year.
Brian Tenner. senior vice presidenl for
saks at Extend BelK"fi1S, said lbat Sam's
Club was a tough llCgOliator, 'Thai is whal
th... y ar... good at," he ,aiJ, "Tky push
t>:lCl.'"
Every month. Wal-Mart's technology
o!Tice produces a new lisl of busincsses
that have IllOI'e<I into 11K" commcreial area
n...ar a Sam's Club swre. a Ii." glcane<l
from publtc rceords like ch'1I1gc-of-
add",,, form.' ,\>"" sales rep"'sentatil"Cs.
asstgned to each club store, fan out 10
"'C1uit tho.,., new rosine.",,, CI'C')' w~ck,
knocking on doors rmhcr than leaving
telephonc messages. Sto"" hold br~ak­
fasts for small·ousiness members scveml
tintes a ycar, often ill\'iting on~ local
comp'lIly to make a present:,tion. And
~V<'ry managcr at the company, from
store managers to lhe chief exccutil·e. is
"'4ui,,'d to work at a small bu,i",'" 0""
dlly " ye;'r to better underw,nd its needs.
"The", ,,'ally i, a small-town feci 10 it."
s(lid Judi llrenSlein ofCustomcr Synergy.
Sh~ said .,h~ was on a f,,,t-namc basis
with Ihe mana!'er of her local S,"n's
Club, who has tuld h,'r to .-all him,
pcrwnally. if she l1l.-.;ds anything.
494 PART 2 • GROUP AND TEAM PROCESSES
"Guidant Consultant Advised Company to Release Data on Defects."
Burr." Meier. Nn: March 9. 2006. I'. CJ.
A "onsultant In the Guidanl Corp",mlion
lold the company last year thaI hc
belil·,·ed il had a d"ar ethical obligalion
to tell phy~ieians aboUl heart device
dekelS. and urged the' company to
O"erhaul il~ praclices. newly relea~cd
,court re,·ords show. In Iwo lenglhy
memos wrine" jusl before Guidam wa~
swamped t:.y ,·onlrov"r,y. Ihe c'onsul-
lant. Dr. Rkhard N.l'ogoro~. al"" lold
company exeeulives Ihal Iheir decision
to withhold ,uch data. while 'tati~lically
dcfcnsit:.k, WaS queslionuble. Guidmll
exeCUlive~ have said they did nm
publicize defibrillalor flaws becmtse
lhey believed that patients facc'<l grealer
rish from replacement surgery Ihan
from the unit,. !lut Dr. Fognros wrote in
one memo lhal Guidan!. while believing
il was aCling in lhe palienl' besl
interes!. had viola1Cd a "saered obli-
galion" il had 1<> dO<:lors by imccposing
lIS medical Judgmenl for lheirs. He also
n(}\ed lhat Guidam had a dear <"<mflid
of intereSl lhal would omurally lead it to
discl"se produel failures only wheo
"absolulely nece~sary:'
"This mnfli<:t is IK>I lai:il: il is obvio..s
for all 10 sec:' Dr. r'Ogoros wrole in a memo
da1<'d May 18.2005. adding: "This me,UlS
Ihal when a 1r.lgedy occurs. QlIr d<xi~ions
will be viewed in the harshesl lighl
po~~ible. wilboul any objcrlive
,·,Illsilk·.....lion of tlK: slalislieal nic·cties
~uppor1ing our octionS:' The menm~
wriuen by Dr. Fogorus an." Ihe lalesl
inlernal Guld.ml n....."iYds 10 erner~", from a
produel liabililY lawsuil filed in a Texas
"ale coun by patients who n.",eived
Guidant rkflbrillalors. BUlthc re~llrds II~IY
prove e~pecially damaging 10 Guiibnl
oceause they show a paid company
consultalll challenging the rkvke maker's
al)!.umenlS. TIK: diK:umenls me coming 10
light as the Sen~te Judiciary Commiucc
plans <I hearin~ 100norrow on possible
new Iegi"lation Ihat would m~ke it ~
ferkral <.-Time fur a corp0r.lle exc<:ulivc lU
knowingly ship a defei:tiw prodllC!. A
M inocapolis physician. Dr. Barry J. Maron.
who'" palienl died after ~ defecliw
Guidanl defIbrillator failed. i, <lmon~ lho,e
scheduled 10 leSlify.
Sl",'en Tragash. a spokesman for
Guid;mt. which is based in Indian~polis.
said thallhe <k":lInIC'nls ,how "how sni-
ously Guidanl t;lke~ the very compkx
i,slle of how and w'hen 10 "'omJl1Unie"le
potential device risks to physici~ns­
an i.sue lilal is bcin~ di>e'us~ed
and debated nm only within Gllidalll
bul also lhroll~hout lhe induslry:'
Dr. Fogoros. reached at his home
yeslerday. said thaI he had ocen a,ked
nm to ,ommelll on th, dOC"lIments
because of aelive lilig'1Iion. His memos.
which make referelKe to Dr. Maron.
were wrinell I<lSl May. jusl <lfter Gu idant
told the Minneapolis physician lhat his
patienl had had ~I type of Guidanl
defihrillator lhat had repealedly shon-
cirC"ulled beC~lUse of an cleelrie~11 flaw.
At thaI lime. Dr. Maron and a colleague.
Dr. Roben G. Hauser. urged Goidallt to
alen physician., about lhe devic'e defel'l:
the company had known aboul lhe
defec'l for three years. When the
eompmlY f~liled 10 do so. Dr. Maron <lnd
Dr. Hausl'r comac'led olhc'r physic'ians
~lIld Till' New York TilII~5, which pub·
li,hed an anic-le in laIc May aboul the
device,
Sinl"" lhen. Guidanl ha' recalled
more Ihan 100.000 impl<lntable he~rl
dc"viees. induding lhre,· models of
defibrill'l1ors with similar ekelriC"al
l1~ws that are lied to al Ie'lsl ~""Cn
patienl deaths. The company. whkh is
ba~ed in Indi'lIlapoEs. is al~o under
inWSligalion by the Justice ])ep~rtmenl
,md lhe Food and Drug Adminislration,
A deflbrillalor is a device thal uses
c1edricily to disrupt a polenlially falal
hean rhythm. Last ;\1;Iy. soun after The
Time,! anick appeared. Dr. Fogoros. a
eardiologisl in PinSburgh. vigorously
ddended GlI1danCs actions in an
illler"iew published on an Imernet Web
sileo Medscapc. ''ThlS dala's been oUl
there in public lhe whole time:' he Will;
quoled as saYlllg aboul lhe device. BUI
in inlernal memos wrinen jusl lwo
wel'ks earlier Dr, Fogums liK,k a nilical
view of Guidan" s pohe ies when il Came
10 dala disclo,ure. courl rt'l"imls show.
Those IHemOS also pn:dic1. wilh an eerie
ac·c·ur'Ky. Ihe ai.,is Guidant ~oon f,,,"ed
for failing 10 inform doctors abolH
pOlenlially lif"-lhn:all'ning produl"I
failures.
In eSSell<"e. Dr. Fogoros wrote lhal
Guidam was caught OClween two C"on-
flieling ;mpulses. doing whal il Ihoughl
was righl for p:ltielll~ or allowing doctors
10 make lh"l dC{'ision. He concluded lhm
the company. by withholding data fmm
doclOrs. was viol"ling ilS bilsie elhieal
dUly 10 IJc forthright wilh phys;c·ians.
"Neilher lhe doctor nor Ihe pallelll
consider themselves to have signed up 10
have Guidalll diel,He ,IllY In:alrnelll
plans:' he wnlte in his May 18 memo.
Dr. Fogoros. who IS slill a company
comuhalll. selll hi, memo, {() the chief
medical oftker of GUldan'-s hean
de";c'e uni!. Dr. Joseph M. Smilh.
n:cords show. Guidanl exeeullves like
Dr. Smilh have defended lheir d"d,ion
nOl 10 "len doclors earher aboUI hean
dev;C"e pmblems by saying thal doing >e'
would h"ve led to unnecessary removal.
"'p",ing palienls 10 "urgieal l'ompli-
c;l1ions like infcclions. Impl;Jtlled hean
de"ic'es like defibrillalors are nommlly
repl"ced aboul every five years when
lheir balleril" wear ou\. A diK:lor'S de('i-
sion aboul whelher 10 n:place a problel11
devin' carlin is lypie,llly determined by
how depcndel11 an individu;1I palienl is
on Ih<ll unit. Dr. Fogoros wrole lhat hc'
believed the device used by Dr. Maron's
palienl was highly reliable and Ihal
Guidal11 e~ecutives could defend their
adi"ns Wilh slali,lics, Bul he added lilal
;1 was in Guidal11"s best interest to
overhaul ils disC'losure praelic'es by
"e~posing our dirty laundry a, well a~
our clean:' He also predieled lhal Ihe
company's usc of stalislie~ to justify its
aClions ,,"ould be l11el "with biller
derision lowards our prolesls lhat we
were only actlng wilh lhe p'lIienls' besl
imeresls at hean."
 CHAPTER 14 • COMMUNICATING EFFEGIVELY IN ORGANIZATIONS 495

e;!J' X'UI Yo,k (1!imts

"Anatomy of a Flawed Company"
Editorial, NY"!: April I. 2006. P. A f4.

A manufacturn alh""ed its product
engiocers to keep faulty c;,rdiac devices
on th(' market wilhout {'onsidNing the
medical itnp;tct ;lnd failed to alert
do{'[ors and patients .....hen the d<'vic{'s
staned to malfunction That is the damn.
ing con<'iu,ion of cxperts who cvalu"ted
how the company. the Guidam Corpora·
tion, real'ted to ""idenc<' Ih"t sOme of
its implanted def'brillators had short-
circuited wlwn Ihey ....."re supposed to
stabili7.e the chaotic heartbeats of pati-
ents. At least sc"en patients died when
their defibrillatOr> fai led to .....ork,
The Guidant devices came under :t
cloud Ia" May .....hen l1w '!imf's revealed
thm a eolkge student had died when his
defibrillator "hort-drcuited and that the
company had known about the f1<1w for
three years oot had ne,'", told doctor, or
p;'tiell1s. The company SUbSel!llemly
disdo".,d ddel'ls in other d""il'es a"
.....ell. recalled tens of thousa'lds of fI"wed
unit, and w"s hit with a barra!!" of
lawsuits and im'estigations,
Now a pmtd of e.~perts mnunissioned
by the {""1pany has iss\ll.-..J an independent
,erdiet on the fiaS<.~l.11 fillds tl~tt Guidan(s
devices "fC geocrally reliable and among
the be,t in Ihe industry, bul it f"ults tile
comp"ny\ f;,ilure to protect patients from
rare bUI lif,,·!hrea!ening malfundiol1s.
Indeed. it is "Sh,ni"hing bow ""valier tile
compmty w"s. It left key decisions in lhe
hand" of low-le,'c1 pro<1uct pcrform:lIIce
<:nginccrs who were content iffailure rates
remaiocd within predicted limit", r"l;ard-
kss of tile conscquellC<:s for h:lplcss patio
ents. Its {'hief medie,,1 "ffilw paid little
;'1!cntion to pmient safety and lcantcd about
till' f"ilure pmblcm Iale and imtd,'Crtently.
Even after :111 improved version of til<:
flaw"d d<:fibrilbtor w"s de,'Cloped, the
wmpany :t1lowed some 4JXlO of the older
dC"il'es to be impl"'lled in p"lients "'h"
wen:n't infonned of the ri,ks,
Guidant is now s,:rmnblin~ to pili
p:,rient s;lfery high in the dccision.m"k ing
proc<:ss. Nobody knows IIOW tile company
{'omp.lre' with others in the industry when
it co,,,,,s to handling lkfcets. BUI it SC{'ms
likely that ,,11 de"ice manufacrurers could
bend,t from the paocrs ad"ice that wm·
panics be rar mon: forthcoming about
publicizing ddee!s and that a high priority
be plac...-.J on pr",'em,ng dearh, fn>m e\'Cn
mn: m"lfullctions,

Questions for Discussion

J. Why should Guidan! h:''''' communicat"d knowleUl!" "boUl its dcfe",i"" he,llt devices to
doctors and pati"nts?
2. What reasons did Guidant gi"e to defend its d""i,ion, [0 wi[hhold lIIformalion'l
3. What criteri" Can be usctl to dedde when withholding information that is important to
other people or groups is unethical?
 PAR T 2
CHAPTEI<' Group and Team Processes

'"
DECISION MAKING AND
ORGANIZATIONAL LEARNING

OVERYIEW

'1'11I'; J)ECISloi'H\,lAKING I'ROU:SS

SoURn:s OF ERROR IN DECISION 1\'1,\1'1"'(;

GIWUI' I)ECISIO;'~ l\IAKING

GROUP DECISION-MAKIN(; l):cHNIQUES

OKGANIZATIONAI. LEARNING

SUMMAR'"

EU:RCISF.S IN UNIJERSTANnlNG ,\1'11) MANAGING ORGANIZATIONAl. BEHAVIOR

Learning Objectives
By the end of this chapter, you should be able to:
Differentiate between nonprogrammed and programmed decisions and
explain why nonprogrammed decision making is a complex, uncertain
process.
Explain the difference between the two main models of decision making
and describe which is the most realistic.
Discuss the main sources of error in decision making.
Describe the advantages and disadvantages of group decision making and
explain the techniques that can be used to improve it.
Understand how organizational learning can improve decision making
and explain the steps involved in creating a learning organization.
 Opening Case
DOLLS IN COMBAT: BARBIE VERSUS THE BRATZ
What were the mistakes made by MatteI's decision makers?

he rapid pace at which the world is changing is forcing all kinds of

companies to speed up their decision making. Otherwise they will get left
behind by competitors who do respond faster to changing customer fads and
fashions. Nowhere is this truer than in the global toy industry, where in the
doll business, worth over 510 billion a year in sales, vicious combat is raging.
The largest global toy company. Mattei, has earned tens of
billions of dollars from the world's best-selling doll, Barbie, since it
introduced her almost fifty years ago. 1 Mothers who played with
the original dolls bought them for their daughters. and then
granddaughters, and Barbie became an American icon. However,
Barbie's advantage as best-selling global dollied Mattei's
managers to make major errors in decision making in the 2000s.
Barbie and all Barbie accessories accounted for almost 50
percent of Mattei's toy sales in the 1990s, so protecting its star
product was crucial. The Barbie doll was created in the 1960s
when most women were homemakers, and her voluptuous
shape was a response to a dated view of what the "ideal"
woman should look like. Barbie's continuing success, however,
led Bob Eckert-Mattel's CEO-and his top decision makers to
underestimate how much the world had altered. Changing
cultural views about the role of girls, women, sex, marriage,
and women working in the last decades shifted the tastes of
doll buyers. This led MatteI's managers to collectively buy into
an "If it's not broken don't fix it" approach, so they continued
to bet on Barbie's continuing success. In fact, given that Barbie
Sale's (,r BmlL doll, arc ilK:rem,ing while was still the bestseller they thought it might be very dangerous
sales of Barbie dolls arc fall ing because the to make major changes to her appearance because customers
m,,,,agers re,ponsible for designing tile dulls
might not like it and stop buying her. Mattei's top managers
"'ade dift'crent dcrisions abOlll what young
decided not to rock the boat, they decided everything was fine
girls wanlcd from a doll in the 2000s.
with the brand, and no major changes in Barbie were planned.
So, Mattei was unprepared when a challenge came along in
the form of a new kind of doll, the Bratz doll introduced by MGA
Entertainment. Over the years many competitors to Barbie had emerged-
selling dolls is very profitable-but no other doll had matched Barbie's
appeal to young girls (or their mothers). The marketers and designers behind
the Bratz line of dolls had spent a lot of time and money to discover what
the new generation of girls, especially those aged 7-11, wanted from a doll.
And it turned out that the Bratz dolls they designed met the desires of these
girls. Bratz dolls have larger heads, have oversized eyes, wear lots of
makeup, wear short dresses, and are multicultural to give each doll
"personality and attitude." 2 The dolls were designed to appeal to a new
generation of girls brought up in the fast-changing fashion, music, and
television market/age that is relationship oriented. The Bratz dolls met the
untapped needs of "tween" girls, and the new line took off. MGA quickly
licensed the rights to make and sell the doll to toy companies overseas, and
Bratz quickly became a serious competitor to Barbie.
 CHAPTER IS • DECISION MAKING AND ORGANIZATIONAL LEARNING 499

Now Mattei's decision makers were in trouble; they had no choice but
to change the assumptions behind their decision making and bring Barbie
up to date. Furthermore, they had to learn to do what was necessary under
intense pressure from a competitor that had everything to gain and nothing
to lose-while Mattei faced the prospect of losing billions in Barbie sales.
Mattei's designers must have been wishing they had been adventurous and
made more radical changes earlier when they did not need to change.
However, they decided to change Barbie's Uextreme U vital statistics, they
killed off her old-time boyfriend Ken and replaced him with Blaine, an
Aussie surfer, and so on. 3
They also recognized they had waited much too long to introduce their
own new lines of dolls to meet the changed needs of tween and other girls
in the 2000s. So they rushed out the "My Scene u line of dolls in 2002, which
were obvious imitations of Bratz dolls. This new line has not matched the
popularity of Bratz dolls. Mattei also introduced a new line called Flava in
2003 to appeal to even younger girls, but this line flopped completely. At the
same time, the decisions that they made to change Barbie and her figure,
looks, clothing, and boyfriends came too late-sales of Barbie dolls have
continued to fall. This is serious stuff because Mattei's profits and stock price
both hinge on Barbie's success.
Analysts argue that Mattei had not paid enough attention to
organizational learning-that is, the need to stay up to date with changing
customer needs and to introduce new and improved products that are
necessary to keep a company on top of its market. Only time will tell if
Mattei's decision makers can find ways to reverse the decline in doll sales.
But, decision making at Mattei has changed forever: Managers recognize
they must learn new ways of responding to a changing environment.

Overview
Making decisions is ,Ill essential parl of behavior in organizations. Good decisions lIelp
individuals. groups. and organizatiuns acllieve tlleir goals and perfurm well. B"d decI-
sions lIindcr goal anainmem and lower performance. Mailers experielKe illustrates tile
way in which the quality ofdcdsion making can change quickly over timc in a company.
It suggests 1I0w complex tile process of making good decisions can be and how factors at
Ihe individual and gruup le\'el. like people's changing needs and desires, and a wmlxmy's
imernal decision-making pnKedures lhal affeci the way il views ils cnvirooment can
affCCI it. Decision making is one more important organizational behavior that nceds to be
understood.
In this chapler. we discuss how members uf urganizations make decisiuns. We exam-
ine the types of decisions that need to be made in org;mizations and lhe decision-making
process. We explore some biases and problems in decision making. We look at the pros
and cons of using groups inste,ld of individu<lls to m<lke decisions and some of the issues
invol\'ed in group decision making. Finally, we discuss huw a company can encourage
organizational leaming to both maintain and improve the quality of its decision making
o\'er time_ By the end oftllc chaplcr, you will undersland how decision making is a crucial
detemlinant of whdher or not individuals. groups, and orgarllzations perform al higillev-
cIs and achie\'e their gools.
500 PART 2 • GROUP AND TEAM PROCESSES
DECISION MAKING
TIle proc.'c" by whi,h nwmbcl1i
,)f an o'l'ani,alion chCl<hc a
,pecific cou",,", 0'- a<:lion to
re,pooo to boIh opponunitie,
and problem"
NDNPROGRAMMED
DECISION MAKING
Dc<;"ion ma~ing in rc'plm'<: 10
"",clOflIl'O'Iunil ...... "lid prohl,'ll'l'
Types of Decisions
III previous chapters, we di,cussed some of thc choices thm organizational members make
cvcryday-decisions ranging from how ll13nagcrs should motivate and rcward subordi-
nates. to what is the best way for subordinates to communic"te important information to
their supervisors. to how group mcmbeno should rcspoml to a devialll coworker. Making
such choices is the essence of decision making. In fact. decision making can be defined as
thc proccss by which members of an organization choose a specific course of action to
respond to the opportunities and problems that confront them, Good decisions help an
individual, group. or organization to be effective. Bad decisions hinder effectiveness and
result in poor performance and negative anitudes at all organizational levels.
O"'..d sion making in response to OP/XJr!UII;I;fS occuno when membeno of an organization
make choices or ilct in ways that result in benefits or gains. Such dt.><:isions r.mge from those
made by an upper-Ie\'elmanager in a sUl'Cessful electronics company trying to decide whelher
to market the firm's products in Europe. to a telephone operator at the s.ame oomp,my deciding
whethcr to take an online business counoe to expand his or her skills and opportunities.
Individuals. groups. ilnd entire organizations re,lch their full potentials only when they t,lke
advamage of 0pIX,rtunilies to increase their elril:ienl)' and effectiveness. Many famous man-
ageno such as Andrew Grove, former CEO of Imel, :md Stc\,e Jobs, who was previously fired
as CEO of Apple but is now its current CEO. suggest that successful companies often fail
oc><:ausc they get compl'll:cnl. fail to take advantage of opportunities. or misread the way the
future of their industry is changing. Thus, managers at Intel and Apple:tfC const:mtly on the
lookoU\ for new opportunities and spend a lot of lime figuring out how to respond to them.4
Decision mnking in response to prohlem)' occuno when individunl. group, or organiza-
tional goal ilttainrTlellt and perrormanl:e ilre threatened. A doctor's goal to provide good
medical care in a rur:ll community is threatened when the doctor lacks the financial
rcsources to purchasc mcdical cquipmcnL A production group's goal of winning the
monthly quality contest is threatened when tWO of its members engage in social lonfillg.
And an orgiltllzation's goal of being profitable IS threatened when the top·management
team experiences communication pmblcms. Through the decision-making process. organ i-
zationalmemt1eno choose how to respond to thesc :llld Olhcr kinds of problems.
Whether they arc responding to a potential opportunity. or deciding how to solve a
problem. two basil: types of decisions are milde in organizations: nonprogrammed deci-
siolts :lltd programmed decisions.
Nonprogrammed Decisions
Whcn members of an organiZalion choosc how to resixlild to new or novcl opportunities
and problems. they engage in nonprogrllnllued decision Illllkillg. 5 Nonprogrammed deci-
sion making in\'olves searching for Ihe extra information Ihat is needed 10 make the right
choice. 6 Becau.'" the problem or oPlxmunity ha, 1l0! been experienl:ed before, members of
the organization are uncertain about how they should respond. and thus they search for any
information they can find to help them make their decision.
1'>,1 ike Castigl ion;' the manager of a successful Ital ian rcstauram cal k-d Ciao! in a small
Tesas town, for example. was confronted with a novel problem when a nationwide Italian
restaurant chain. The Olive Garden, opened a new restauranl a few blocks away. The
arrival of a strong competitor posed ,I nOI'el problelll for Mike: previously. Ciao! had been
the only halian restaurant in town. Similarly, staff members at Ciao! faced new potential
employment opportunities when The Olive Garden advertised for waiters and waitresses.
As soon as he learned '1lC Olive Garden was planning to open a restaurant. Mike tried
to find oUt as much as he could about his new competitor-its lunch and dinner menus and
prices. the kinds of customers it appeals to. the ljuality of ils food, and so Oil, Mike also
tra\'eled to the nearby l:ities of Houston and Dallas and ale in scveral Olive Gardcn re,tau-
nUl1S to sample the food and ambience and record customer traffic_
As a result of these search activities. Mike decided that the qUlllity of the food he
served at Ciao! was better and thalthe prices the two restaurams charged were similar. The
Olive Gardcn. however, had a widcr selection of menu item.s and offcred a soup or salad
 CHAPTER IS • DECISION MAKING AND ORGANIZATIONAL LEARNING 501

with every C"ntrce. Mike decided to expand his menu by adding three new itC"ms to thC"
lunch mcnu and four to the dinner menu. He also decided to serve a housc salad with all
entrees. which would appeal to his he,llth-conscious customers. As a result of his search
for information. Mike Castiglioni was able to dL'£ide how to respond to the problem of
competition in a successful way, and Ciao! continues to thrive despite its new competition.

PROGRAMMED DECISION
MAKING
De,'i,ion ma~ing in re,,,,,n,,, 10
"",urrin~ opporlunilie' and
prnbkm,
PERFORMANCE PROGRAM
A """<Jard ",quence of beh",-iOl'
lhal Ol].""ilalional rnembo.-p,
f"'llo..... routinely .... hcoc"cr Ihcy
COCoon'cr" pal1icular t) 11" of
problem oropportumty,
Programmed Decisions
Although members of an organiz,uion frequently make unprogrammed doxisions. they also
need to engage in prognllllnn.'d dL'Cision making-Ihat is. makmg decisions in response
to recurring opponunilies and problems? To make a programmed decision. the decision
maker uses a I)('rfornmllee !lfogram. a standard sequcncC" of behaviors that organi7.ational
members follow routinely whenever they encounter a particular type of problem or oppor-
tunity.S o.::partment Slores dcvelop performance programs th;ll spl.'Cify how salespl.'Qplc
should respond to cu,tomers who return items that have been worn and arc dl'fedive.
Grocery stores develop performance programs thm indicme how clC"rks should respond
when sale items are out of stock. Universities develop performance programs dictating
how to deal with students who cannot eomplcte theIr courses.
Organizations develop performance programs whenever the same kinds of opponuni-
ties or problems keep cropping up, Once a performance progmm is developed. mC"mbers of
the organization initi<l1e Ihe performance progrnm almost nutommically as soon as the
opportunity or problem is encountered. They do not have to search for informmion or think
about what they should do in response. Organizational rules (sec Chapter 10) arc types of
perfonnance programs dcveloped to help nlembers makc programmed doxisiolls.
Because of improvements in the local economy. Mike Casliglioni W,IS faced with the
recurring problem of Ciao!'s experienced w;liters and waitresses being offered jobs at
Thc Olive Gardcn alld other new re,tauralllS opening in town. Although the waitcrs and
waitT\'SSC'S at Ciao l were gencrall y sat isfied with their jobs, they illlervicwed at some of Ihe
new restaurants to see whelher they could earn more money. gel better benefits. or working
hours. Periodic;llly. waiters or waitresses C;lme to Mike and told him thaI they had been
offered beller benefits or working hours by one of his competitors. The first couplC" of
times this happened. Mike needed to make a IIoll/lr(wramm"d doxision becausc the prob-
lem was rel,llively novel. Accordingly. he searched for information to help him with his
decision: How costly would it be to hire and train a new waiter or waitress? How imponant
was it to ha\'C" experienced waiters and waitresses who knC"w many of Ciao!'s regular cus-
tomers? As a result of his search for information. Mike concluded that. whenever possible.
he should try to ret,lin as nwny of Ciao!'s waiters and waitresses as he could by matching
the hourly r.Hes. benefits. and working hours they were otTered at mher restaur.mts,
OncC" Mike had madC" this decisioll. whenC"V<."r waitC"rs Of waitressC"s came to him and
told him of better job offers they had received, he matched lhe offers whenever he could.
Mike Castiglioni esscntially Iwd dL'C'ideo on a stnndard response to a recurring problem-
the essence of programmed decision m;lking and the usc of performance programs.
As this examplC" iliustnltc"s. pcrformancC" programs often evo!vC" from nonprogrammC"d
decisions. ESSelll ially. if wh,lt was once a novel problem or opponunity keeps recurring. it
becomes something that requires;l progntmllled decision. and the org:mization comes up
with a stand;lrd response or performance pmgr;llll (sec Exhibit 15.1).

EXHIBIT 15,1
N"""I probtem or
N""program..-:!
Nonprogrammed and opportumt~ am.e, ,n _
dec;';"" malcing
Programmed Decision need of a re>p<>me

Making
Problem or Program..-:! Perf<>nn.n<e
opportun"~ r<:<:ur> d.<i..ion mal<ing progr>m .. u.o:d
502 PART 2 • GROUP AND TEAM PROCESSES

Performance programs S31'e time because they make il unnecessary for organizational
membc'" to search for infonnation 10 make a decision: instead. all they need to do is fol-
low the performance program. Managers. however. must be able to realize when perfor-
mance programs need HI be changed and take the steps neces,ary 10 alter Ihem.
Organizmions tend to be slow to change performanre programs because doing things Ihe
way they have ~llways been done in the past is often easier lhan devising and implemenling
new procedures.

The Decision-Making Process

When people think of decision making in organiwtions, the kinds of decisions they usu,tlly
have in mind arc nonprugrammed decisions involving a search for new and necessary
information. 11m,. in the remainder of thi, ch'lpter. we ftKUS On nonprugrammed deci-
sions. Whenever we usc the term ded.~i()lI. we arc referring specifically to a
I/mlfJlT}ivamIllNI decision. Two widely studied models of lhe decision-making process ;trc
the classical decisiotHl1aking model and James March and Herbert Sunon's adminislrati"e
decision-making model.

The Classical Model of Decision Making

CLASSICAL
DECISION-MAKING MODEL
A prc"'"plive npprnn<:h ba,ed on
the n'iillmption_ th::!tthe de~;,ioo
ma~cr h~, ulllhc occ'<:"ury
inform.';"" aOll will ct,,,,,,",,
the be,t pm,jble solution or
rc'pon",.
Sarah HUn1er.~, marketing
manager at a food products
company had 10 lind ways 10
",vive the sak, of a line of
frozen desserts. TIlis is usual in
ions who'" oulcome, were
uncertain.
Thc ChtSSiclll dt,<:ision-m ... king model is a {Jrescri/llil'r mvdel~it describes how people
s!lvuh! nwke decisions. Q TIlis model rests 011 two assumptions: (I) People have access to
all the infomlation thl'y nt'Cd 10 make a dt'Cision. and (2) people make dt'Cisions by chuos-
ing the be,t possible snlmiollto a problem or response to an opponunity.1O According to
the classical model. a decision maker should choose how to respond to opportunities and
problems by engaging in these four sleps:ll
I. Listing all aheflla1ives from which a choice will be selected: These altcrna1ives repre-
sent dilTerenl responses to the problem or the opportunity.
2. Listing the consequences of each ahemmive: The consequences arc what would
occur if a given ahemative were seleCled.
3. Considering his or her own preferences for each alternative or set of consequences
and then rllnking the sets from most prefeTTCIJ tu least preferred.
4. Sdecting the ahemmive that will re~uh in the mo,t preferred sct of conscquences.
According to the c1... »ical model. if members of an organizalion follow these four
stcps, they will make optimal decisions. given the decision makcr's preferences. 11 Do
membc'" of an organization actually make decisions according to the classical model? [f
they do not. could they make better decisions if they did? The answer lu both questiolls is
"no" because of scveral basic problemS with the classical model.
The classical model is ullrealistic.n Its assumption that decision makers have alilhe
informatiOll needed to make optimal decisions beaTS lillIe resemblance to thc conditions
facing 1110St organizations. Even if the decision make'" did ha"e :111 necessary infurt1wtion.
they probably would not be able to u,e il all. This is because the cognitive abilities of deci-
sion makers arc limited: often, they canllot take into account thc largc quamities of infor-
mation available to them.
One way to consider the difficuhtes of the classical model is to compare the four steps
previously described to actual dt'Ci~ion making in organizations. With regard to the first
step, derision makers often rio IWI knoll' IIlIlilr OIINII(ilil'l'$ they can choose fmm. 14 One
of Ihe defining features of nonprogrammed decisions is thm they involl'e a con,idenlble
amount of search for infurmation. Even after this sellrch is complete. however. tt is likely
that decision makers are llWare of only some of the possible llhematives.
For example, the challenge facing Sarah Hunter, a marketing manager at a FOrlunc
500 food products company, was to solve the problem of lackluster sales of a line of frozen
desserts. Hunter's search for alternatives yielded three potential solutiuns to the problem:
(I) The company could launch a series of ncwspaper and magazine advenisements with
coupons: (2) the company could negotiate with major grocery Slore chains to give the

ADMINISTRATIVE
DECISIDN·MAKING MODEL
A de",ripl;'e approach 'lre,,;ng
that Incomplete information.
psychological and "",iologi"al
proce'...:s. and tile deci"on
ma~er', cognitive abilitie, afr,,'t
decision ma~jng and Ihat d""i-
,"on ma~c" urtcn "huose sat"
factory. "01 opumal.
solutions,
CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL lEARNING 503
desserts a more visible location (at eye level) in thc frozcJl foods scctions: or (3) the com-
pany could dcvclop a scrics of cxpensive television ads airing during prime time. Hunter's
infornwtion scan:h fai led to uncover uther altematl,'eS: (I) ren:lllle tile products. (2) change
the products' padaging. (3) reorient the pa<.:kaging and marketing of sume of the products
to appeal to ccrtain scgmems of the markct (for cxample. pitch angcl food cake to health-
conscious adults and frozen yogurt bars 10 young children), and (4) dropping the line
altogether.
In the sccond ,tep of the dassi<.:al Illodel. decision makers list the consequences of
each altcrnative. As in the first stcp. however. dccision makcrs oftcn do 110/ klloll' u/l of Ih('
t"OIIH'i/lle11('(';} thm will ensue if they choose a gil'en altenwtil'e. 15 One rea>on it's hard to
make decisions is that the decision maker often docs not know what Will happen if a gIven
course' of a<.:tion is choscn, Sarah Hunter did not know whether coupons in newspapers and
magazincs would signilicantly boost salcs beeausc her company had expcrienccd mixed
success with this ,Ippr0<1ch in the past. She knew that television ads were likely to increase
sales. bUI it was not clear whether the increase in sales would be lemporary or long lasting
or be large cnough to offset the high cOSts of pun:hasing air Ii mc in pri me vicwing hours.
A.s the 1hird stcp in thc classical modcl. deci sion makcrs must consider their own pref-
crellces for sets of conscquelll:eS. Once again. the classical model assumes lhat decision
makers arc able 10 rank SCIS of consequences and know their uwn prderences. 16 However.
decision makers dOl! '1 (4hra.l'I kllow for ,wre what Iltey waw. Stop and think about ,omc of
thc important and difficult dccisions you have had to make. Sometimes. lhese decisions
wcre difficult 10 make precisely because .rOil "'<'1<.'11'1 IUll' wlwlyrm ""IIlllcd. A graduating
senior with an aCl'Ounting degree from the University of Wiscunsin, for example. linds it
hard to choose between a job offcr from a Wisconsin bank and onc from a major aCCOUIl1-
ing firm in Ncw York City because he docsn 't know whClher hc prefers the securily of Slay-
ing in Wisconsin. where mOSl of his f:mlily and friends are. to the excilement of living in a
big city and the opportunity to work for a major firm. Similarly. Sarah Hunter did not know
whelher she preferred to dramatically improvc frozen dessert ,ales or improve lhem just
enough to maintain profitability and then 1lI0VC on to anOlher product line.
Becausc ofthes.c problems with the first three steps in the classical model (I) il iI
oflel! i/ll/1O.Hible for all orgwli:(I/iOlI '05 m('mbaJ to mllke Iile bl'si po.uible decisiom, and
(2) ('\'('11 if they IImke (I good ({ecisiOI!, all(! om th(l/ 11"<lI .Ipelll /IIaking il
lite lillie. eJJor/.
miKlr1 Ilot bc ll"orlh,,·ilile. 17 Real izing this problem with the classical mode I. James Marc It
and Herbert Simon developed a more realistic accounl of decision making: the administra-
tive dl'Cision- makmg model, 18
March and Simon's Administrative Model of Decision Making
The classical model is prescriptive: it indicates how decisions .IhOidd be made. In comrast.
March and Simon's administratin> decision-making model is Ih~,w'riplil'e-it explains
how pcople 11('11/(/11.1' /llilke decisions in organizatiolls. IQ March and Simon Slress that
incomplele information and the decision maker's cognilive abilities and psychologic<ll
makeup affect decision making. Consequently, decision makers often choose .I{/Ii.glletar.\',
not optimal. solutions. 20
According to the administrative dccision-making model. decision makcrs choose how
tu respond to opportunities and problems on Ihe basis of a simplified and approximate
account of the situation-the decision maker's dclinition of it. in other words. Decision
makcfs do not takc into account all information relevant to a problem or opportunity. nor
do they consider all possible allenlatives and lheir consequences.
Sarah Hunter did not consider renaming or changing the packaging of Ihe frozen
desserts. or reorienting them to appcallo certain segments of the market. or even recolll-
mending thm lhc company drop Ihe products altog('"ther. Shc did not dcfinc the situation in
those tern)s. Shc defined the Sitllat ion in terms of incrcasi I1g sales of cxist ing products. not
changing the products tu 111<1ke them more aural:! ive to customers. In addi tion , the thought
of dropping the line never entered her mind. although that is what the company ended up
doing two years latcf.
S04 PART 2 • GROUP AND TEAM PROCESSES
SATISFICING
Seardling fur arnl d,,>O'-,nl'"n
"'''''p'ublt r."pon'4'" or ",I"lio".
nOi nec",">ari1lllJe be'llJO',iblc
~.
Decision makers may follow some of the Sll.'PS in the class ical mool.'l. such as gelll.'rat-
ing alternatives and considering the eOllsequellees of the alternatives and their OWII prefer-
elll.'es. But the IIlfomwtion they consider is based on their ddinition of the situalion, wllich
is the resull of psychological and sociological factors. Psychological factors include the
decision makl.'r's personality. ability. pC"rceptions. l.'xllCriencl.'s. and knowledgl.'.
Sociological factors include the groups. organization. and organizational and national cul-
lure of which the decision nwker is a member.
The alternatives Sarah Hunter consiJerL-d allJ. more generally. ber defin ition of Ihe sit-
uation were based in part on two factors. One was hl.'r pasl marketing eXpC"ril.'nces: Shl.' had
always worked 011 improving and maintaining sales of "successful" products. The other
was the marketing department in which she worked. II was quill.' conscrvative. For exam-
ple. il rarely made changes to produl't names and packaging. il haJ introduced few new
products in thl.' paM 10 ycars. and it had not droppeJ an cxisting product in 12 yC"ars' tinlC".
Satisficing. Rather than making optirnal Jecisiolls. organizational me,nbers oftell
engage in Slilisficilig-that is, Ihey search for and choose (/C('I'IJlilbll' responses to
opportunities anJ problems. nolne<:esS<lrily the be.1I possible responscs ..l l One way that
decision makers can satisfice is by listing criteria that woulJ Ic:IJ 10 an aecl.'ptablC" choice
and piding an altC"TtHltive that mC"C"ts the criteria. When deciJing among many job
applicants to hire. for example. organizations often satisfice by listing criteria that (111
acceptable candiJme shoulJ meet (such as having an appropriate degree from a college or
un iversity. job-rC"latC"d expe riencC", anJ good interpersonal skills) anJ thl.'n choosing a
candidate who meets the criteria. If organiZluions were 1O make the optimal hiring decision
r.lthcr than a sati~faclOry one, they woulJ have to pid the best eanJiJatc-the person with
the best educational background. prior experience. and interpersonal skills. Often. it woulJ
be very difficult and time-consuming (if not impossible) to do thLs.
Ethical decision making. One criterion of a satisfactory decision in any organi7.ation is
that it be nhim/. Ethical deci~ions promote well-being and do not ClIUse lwrm to members
of an organization or to other people affected by an organizatlon's activities. Although it is
easy to describe what an ethical JC"cision is. sometimes it is Jifficult to determine thC"
boundary between ethical and unethical decisions in an organization. Is it ethical. for
example. for a pharmaceutical company to decide to charge a high price for a lifesaving
dmg thlls making it unafforJablc to some people'! On the one hanJ. it can be argued that
the drug is Cllstly to produce anJ the company neeJs the re\'C"nues to continue producing
the drug as well as to research ways to improve its etTcctivcness. On tile other hand. it can
be argued that the comp:my has a montl oretllieal obligation to make the drug al'ailable 10
as many people as possible. In 2004. for example. Sheering Plough raiSL-d the price of its
best-selling AIDS prC"\'ention drug by 500 percl.'nt. causing an upmar among doctors anJ
patients who claimed that this would lead to grcm harJsllip for patielllS. many of wholll
would no 10llgerbe able to afforJ it. Sheering Plough simply saiJ that it had been charging
too 10'" a price for its valuable dmg and that it haJ the right to increase its price.
Some people Jelibcratcly makc unethical Jl.'cisions to bencfit themselvcs or their
organizations. but el'cn decision makers who strive to be ethical arc sometimes faced with
difficult choices or ethical dilemmas. Under these circumstances. satisficing. or making
acceptable decisions that arc ethical. can be Jifflcult. One example of blatantly unethical
decision making by pharmacl.'utical companies occurreJ when six of thC"m admiul.'d thcy
a
had conspired to artificially raise the price of vitamins. such as vitamins A. 2, C. E. ,wd
beta carotene. Swi~s giant Hoffman·La Roche agreed to pay $500 million HI crimin;tl fines.
and German Company BASF paid a $225 million fine: the others were also fined large
amounts. 22 How could this happen'!
Senior managers from each of these company's vitamin divisions jointly made the
decision to innate their Jivisiol1's profits and to aet unethically at the expense of con-
sumers, In scver.lI meetings around the world. they workeJ out the Jetails of the 1'101,
which wcnt undiscovered for scvl.'ral years. Many of thC" top managers involved have bcl.'n

SOUNDED RATIONALITY
An al>ilil) !<> rca,on lh~I"
,'on,lrajn~d b~ tile Iimil31ion'
of 11K- human mind il",lf,
CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL LEARNING 50S
prosecuted in their home countries, and all have been fired. BASI', for example, com-
pletely replaced its worldwide management team. v
What h,ls Ix.-cn the end result of this fiasco for these companies'! All have agr.:.-cd to
create a sped'll "ethics officer" position within their organizations. The ethics officer is
responsible for developing new ethical standards with regard to how decisions arc made.
The ethics officer is also responsible for listening to employees' compl~lints about unethi-
cal behavior, training employees to make ethical decisions. and counseling top managers
to prevent funher wrongdoing. N
Bounded rationality. Unlike the classical model. which disregards the cognitive
limitation, of the decision maker, March and Simon acknowkdge that decision makers arc
constrained by bOllnded rutionality-an ability to reason that is limited by the limitations of
the hunwn mind itself, March and Simon's lIloJel assumes that bound<.><J rationality is a fact of
oTganizationallife, Members of an urganization try to act T<ltionally amI make good (k:cisions
that beneftt the organization. but their rationality is Ii mited by their own cognitive abi lities. 25 It
is often impossible for decision makers to simultaneously consider all the information relevall1
to a decision (el'en if it were al'ailable) and use ,III this infonnation to lmlke an optimal choice.
Even though the infomlation providel.! by al.lvances in IT can help members of an organization
make better decisions. rationality is always limited. or bounded. by the capabilities of the
human mind. Thus. decision makers approach decisions on the basis of their own subjective
definit ions of the situat ion. and they usually slltisftce r.llhcr than optimize.26
When members of <:In organization realize thatl.!L-cision making procec<ls more often
as l.!escribcd by March and Simon than as outlined in the classical model. they arc better
able to understand why both good and bad dedsions are made in organizations and how
decision making can be improved. Good decisions arc often mal.!e when decision makers
arc able to identify and focus on the key aspects of the situation. Bal.! decisions may result
from defining a situation improperly.
How did Sarah Hunter. in our e:!r1ier example. define lhe situmion she was in'! She
believed that her challenge was to improve sales uf an existmg product rather than to
change the pnxluct or evaluate whether it should be dropped. Her definition of the situation
limited the potential solutions she considcred. Only after trying two of those solutions and
f1liling did she and her company realize the need to redefIne the siwmion and recognize
that the prodnclline needc<l tu be either dramatIcally changed or dropped.
In summary. it is imponant to realize that different members of an organization arc
going to define the same problem or opponunity in different ways, depending on their per-
sonalities. abilities. knowledge. expertisc, and the groups they belong to. As a result, deci-
sIon makers nt'ed to carefully examine how they define opponunlties aud problems and lhe
implications these definitions have. To help improve decision making. it is important to
focus on the inforntation most rclevant to the decision at hand and he cognizant of lhe
sources of decision-m:!king errors. We discuss these sources of error nexl.
Sources of Error in Decision Making
Given that de<:isiun makers often do not have aJithe infomwtion they IK-cd to make a good
decision and arc boundedly rational. it is not surprising that a variety of sources of error in
decision making exist.27 Some of these sources of error arc pen'asive anl.! rccurring.2~ Many
decisioll makers succumb to these errors and make less than satisfactory dedsions becausc
ofthem. 29 Two major sources uf error arise from (I) the shuncnts. or rules ot thumb. people
use to make decisions. which can Ie'ld 10 both good .md bad dedsions: anl.! (2) the human
tendency to Ihrow good money after had and cOlllinue involvemcnt in unfruitful activities.
Heuristics and the Biases They May lead To
Given the number and complexity of the many decisions that people have to make at
work and in their personal lives. it is not surprising that they often try 10 simplify things
or usc certain rules of thumb to help them nwke decisions. The rules of thumb t)1<1t help
506 PART 2 • GROUP AND TEAM PROCESSES
HEURISTICS
~ul~, of tnumb Inat \"'lplif~
dec,,;oo rn.'jog
AVAILABILITY HEURISTIC
Th~ rule oflnurnb Inut 'U~, an
CICot Inat j, CO.) to remember i,
Ii,cl) to hal'c (X','urrcd more
rn."lucml~ than an clem Inal i,
diffieuh to remember
REPRESE NTATIVEN ESS
HEURISTIC
1llc rule or thumb that ,a), ,imilar
kinds of "'''01' th"t h"pp"ncd in
the pa,t an:: " g<~>d prt.'<.I"1U" or the
liklihood uf an ul"-,<,mitlj: ..,..eot
EXHIBIT 15.2
Heuristics and the Biases
They May Lead To
people simplify decision making are called hellristics. 30 Heuristics are invol I'ed in much
of the decision making that takes place in organizations: people tend to usc them without
even knowing they arc doing so. Ikcau,e they simplify matters, heuri,tics can aid in the
decision-making process, but they can also lead to bi/lses-sySlematic errors in decision
making. JI Three common rules of thumb arc availability and representatiwness heuris-
tics. and anchoring and adjustment heuristics (see Exhibit 15.2). We discuss each of
these next.
Availability heuristic. When making dedsions, organizational members onen have to
judge the frequency with which different events will occur and their likely causes. The
:Inlilabilit" hCllristit· reflects the tendency to delemline tne frequency of an event and its
causes by how easy these evems and causes are to remember (that is. how (l\'(lihdJ/e tney
are from memory).J2 PCQple tend to judge an event that is easy to remember as occurring
more frequently tl1an an event that i, difficult to remember. Likewise, if a potential cause of
an event comes to mind quickly, people are likely to think that It is an important causal
factor.
The availability heuristic can aid dceision making because evcnts and causes that
actually do occur frequently conic easily to mind. However. factors other than frequency
of occurrence also determine the availability of information that can be recalled. As a
result. the availability heuristic can cause certain biases to emer into decision making.
One such bias is the overestimation of the frequency of ,'i,'il! or eXIr/'me events and their
causes because they are easy to remember. 3J Another is the ol'erestimation of thc
frequency of reccm events and tncir causcs because they also tend to be easy to
rcmembcr.3 J
When Sarah Hunter was trying to decide how 10 increase sales of frozen desserts,
for example. she renlembered that one of her co~employees recently experienced dra-
m.Hic success boosting fruit drink sales with a serics of advcrtisemctlts and coupons
placed in magazines and Sunday newspaper supplements. Thc fact thattne success was
real/l and {'xtreme led Hunter to f!\'/'rHI'II!We the extent to whicl1 this approach would
Il1crease the sales of her product line. This same bias led her to ignore instances in
which the saml' kinds of advertisemcnts and coupons failed to improve the sales of
other products. As a result of the biascs emanating from tnc availability hcuristic.
Hunter decided to place advertisements and coupons in magnines and Sunday supple-
ments in the hope of increasing frozen dessert sales-a strategy that ultimately pro,'ed
to be unsuccessful.
Representativeneu heuristic. The reprl'sentath'l'tll'ss heuristic reflects the
tendcncy to prediclthe likelihood of an el'em occurring from the extcnt to which the event
is typical (or repreIelllmi,'e) of similar kinds of events that l1ave happened in the past. 35 A
manager in the United States trying to determine whether a domcstically popular hand
O" "im~,ing 'he fr«J""n<~
A""il~bility
heun<li<
m.y l••d to of Id , ... me. o....«n,
..." "de.u=
F.ilu ... to uk< ;n,o ><:<oun,
R.p... ",n'~tlV<n ...
neun".,
m.y k~d '0 b..e r~l<5 ~nd o,,,,,,,",m."ng
,h. hk<hho<><! of .~ ... <Wnl>
Anchonng .nd In.ppropn.t. d..""o", when
.djustm<nt ma~ k.d '0 ,"i,,~1 .mounts ~r< too high
h.u,i.nc ortoolow

BASE RATE
The lI<:lu<l1 fn,'lucncy w>lh which
an e'enl oceu'"'.
ANCHORING AND
ADJUSTMENT HEURISTIC
The rule of lhumb thai say' Ihal
d"ci'lOl1' "boUI htm- big or ,mall
nn amc""nt r-uch n, a ",Ial).
bU<lgel. or le,·,,1 of ,'0'1» 'hould
be can be made by making
adJu"nlenl' fl\>l11 'ome i"itial
amount.
Many gamblers suffer from
"r.c:llalion of COmmilm"n!
be,'ausc lhe)' chose 10 "mll1c<IU,ly
beli","" lhal bening UlOn:: mOlleY
will allow Ihem I" recoup lhe
mOIl"y lhey l\:Iv" jusl los!. This
belief fre'luellily leads 10
personal financial disilSl"r.
CHAPTER IS • DECISION MAKING AND ORGANIZATIONAL LEARNING 507
cremn will scll in Sp~in. for example, comp~res the CXlent 10 which Sp~in is simil~r 10
foreign countries in which the eream h~s sold especially well or (Q countries in which lhe
cream has nOl suhJ well. The manager decIdes not tu export the hand cream 10 Spain
because Spain is typical of the countrics in which the product had bombed (the I:ream had
bombed in Olhcr Sp~nish-spc~king eoull1ries, for example).
The represemaliveness heuriSlie can somelimes be a good shOTlcut used to eSlim:lte
thc likelihood of an up;:ummg cl'cnt because thc fad th:!t similar kmds of e,'cnts happened
in the past may be a gtXld predinor of the up;:oming evell1. 36 Sometimcs, howe"er. lhis
heuriSlic can cause dccision makers 10 disregard import~ll1 informa1ion ab0U11he frc-
qucncy of c"ents. In such eases. the representatil'eness heuristic leads 10 biased decision
making.
One sourl:e of bias emanming fmmlhc representmiveness hcuristic is the failure to
lakc imo accoull! lhc hllse rate. or the aClual frequency Wilh which cvcnts occur. 31 Thc
managcr in lhc hand cream cxamplc should havc considcred thc number of timcs thc hand
crcam did nut sell wcll in foreign countrics.lfhc had, he would have fuund thatlhe prod~
Ul:t sold well in IIIOSI l:oull1ries to which it was exported and lhat its failure ill foreign mar-
kcts w~s rare. USillg this informal ion ill the decision-makillg proccss would have lold the
mallager that chances thatlhe cream would sell well ill Spain were pretty high. However.
thc managcr did not takc this basc-ratc information into al"COlllll. Hc decidcd not to cxport
the h<lnd cream to Spain. and missed 0111 on a good opportunilY. To <lvoid the pitfalls of lhe
rcpresentmivcness heurislic. il is important to lakc basc rates imo accounl because it is
likely that common events (the hand cream's high sales in foreign counlries) will oceur
again and that raTe cvents (thc product's failure in a fcw I:Olllllries. somc of which werc
Spanish-sp;:aking) will not occur agilill,
Anchoring and adjustment heuristic, The :ull:horing and Iidjustmcnl hcuristic
rel1ct:ts the tcndcncy to makc del:isions bascd on adjustments from somc initi:!1 amount (or
ollcilor).-'8 Dccisions about sal~ry increascs arc often m~de by rhoosing a p;:rcentage
increase from an employee's current salary. Budget decisions are onen made by deciding
whether thc current budget should be inercased ordeneased. Decisions abootthc degrec to
whkh I:O,ts mu,t be I:ut arc oneil based on the current Ic\'d of t:osts, In situations like
lhese. if the in il i~1 amounts ~re rcasonablc. then thc anchori ng and adjustmcnt heuri Sl ic
might be a good shol1cut for decision making.
By using thIS heuristic. dccisiun makers nced to t:ollsidcr unly thc degree 10 which
the currcnt level needs 10 be changed. They do nol. for example, need to determinc a
p;:rson's salary from scrmrh or build ~ budgct from ground zero. BOI if thc original
amount from which n decision or ndjllstment is made is 'WI reasonable. the anrhoring
and adjustment hcurislic WIll le'ld 10 biased decislUn makmg. If employecs' currcnl
salary levels arc low in romparison to what they could be carning in similar killds of
johs and companies, even a relatively largc pcrcent~ge increase (such as 15 p;:rccnl)
may sli!lleave themllnderpaid. Likewise. if a department's budget is much too high.;l
10 percelll dccrcase will lead to the departmenl's stili being allocatcd mure money than
it really nceds.
Escalation of Commitment
A second source of error in decision nWking (in add ilion to biascs) is L'Sl:Illalion of
L'lll1l1nitmcnt-thc tenden\:)' of decision makers to invest additioll:!l time, moncy, or
effort into whm ~re es,enti~lly bad dcci,ions or unproductivc courses of aClion thai are
already draining lhe organizatiOll'S resources. 39 Here is a typical escalation-of-commil-
ment s<.:enario: (I) A decision makcr initially makes a dcclsion that rcsults in some kind
of loss or negative outl:omc. (2) Rather than I:hange the I:ourse of adion containcd in
lhe initi~1 decision, lhc dcrision makcr commils morc time. mOllcy. or cffort 10 lhe
course of nction. (3) Punher losses arc experienced bccause of this escalation of
<.:ommitmcnt to a falling cuursc of "ction. Escalation of cOlllmitmcllt is graphically
illustrated in Exhibit 15.3.
508 PART 2 • GROUP AND TEAM PROCESSES

EXHIBIT 15.3 5225,000

Escalation of 5200.000
•
Commitment
,~ 5175,000

,
"• 5150,000

"~ 5125.000
,, 5100,000
8
,••• 515,000

•• 550,000
0

" 525,000
0
In"..1dec"'on 550,000" 10<1 An .dd,t'onal 575,000
"made and u a ,"""It "f "I"" os comm"",.n'
5100,000" 'he dee,<o"n '" ,10< (ailong Coork "f
c"m",,"<d '" action <<c.I ..""
e.'rymg ,t "u'

Sarah Hunter experienced escalation of commitment in her quest to imprOl'e s,llcs of

ESCALATION OF
COMMITMENT
Tn.: tendency to in"c,1 ~lkhlH:>!Ial
ti me, ffiOlIC), or elIo" into" hal
"'" e"emially bad <IC\'i,ions or
unprodllCliw COO,..,C_ of action,
SUNK COSTS
C,"'t> lhat <'annol "" ",,'el'>C<l and
w,1I 001 be alfe<:tetJ bJ.' sub-.c'l",'nl
dc<.;i''''n ",4.in!!
frozen dessens, First. she embarked on a series of magazine and newspaper ads, When this
appmach failed to boost sales and the money was spem, she decided to negotiate with gfll-
cery store chains 10 makc thc products more visible in thcir frozen foods sections, This was
difficult to do. bot she nonelheless persevered and was successful at gening it done, This
Slr<llegy, however, also fai led 10 boost sales, InSle<ld of reassessing her original dt-c ision to
Iry 10 boost frozcn dessen sales, Humer gave her boss a proposal for a >cries of expensive
tclevision adverlisemems. Luckily for the organization, the boss denied her request and
hailed her esc,llation of commitment.
ESI:"lallOn of commitmem is common in organiZ<llions (even at lop-m<:\Ilagemenl
levels) <lnd in people's pcrsonallives, Investors ill stocks and real eslale, for examplc.
oftcn cominuc to invest in losing vcntures. pouring good money aftcr bad. Why docs
escalation of commitment occur, even among presumably knowledgeable decision
m<lkers'! There appe<lr 10 be <llleaSlthree I:auses of this type of faulty decision making:
I, Decision IIwkers oftell '/0 1101 'mill 10 admil 10 Ihemsl'/I'es or 10 0/1",1' people 111111 Illey
hm'e 1II11ll.' U mi,"/(Ike ,.\0 Rmher than reasse,;s Ibe wi,;dom of their original decisiolJ in
light of the negative consequences they have cxpericnced. decision makers commit
more resources to the course of action in order to reconfirm the "correctness" of the
original dt-cision,
2, GiI'ell Ihe U/IIOWt! of lIIom'.\' or l'eIOl' ,,-'es 1/UII 11m'" beell 10,\'1, deci.lio/l lIIakcrI crm-
I/eously Iklirl'e Ihal (11/ mldilional l'Ollllllillllell/ of YeMJIII'('f sis jll.l'1ifted 10 re,'oll{l
SUllie of 111Oj'(' IOSSl'S,41 When lhe newspaper and Illagazine ads and the location
I:hange in the grocery stores failt'd 10 boost sales, what did Sarah Hunler do'! She
decided lbat after invesling so much lime. elTort, and money inlo boosting sales,
she had no alternmive but to push ahead with the TV ads, The costs that she has
already incurred. however, were sunk cools-costs lhm could nOl be recovered or
alTeded by subscquenl decision making. The sunk Costs should not have enlered
into l-tunter's decision making,
3, 1),'ci.I'ioli Il/llke/)' lemllu l(lke more ri sits \l'hell 11",-\' fn/l1/1' or "i,,", ,!f','iJiol/.I' in I/('Kuli"e
II'I'I/IS (for e,wmple, (/.\' (/ way 10 1'{'('()I'er /IIOIlf'y Ilwl hm' be"11 Ion) mil,er Ihan ill Il'(ls'i-
lil'e I/'I'IIIS (for e.wlllple, as a \l'ay /() g,'lIenlle /lion' mo/ltT),42 When Samh Hunler
originally thought about TV ads, she decided against them because they were too
risky: thcy would cost too much money givcn the ullccnainty about whethcr or not
they would boost sales, At that point. Hunter had spent no re,ources on boosling 5<1Ies:
 CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL LEARNING 509

the TV ads were framed (in her mind) in positive tenns: as a way to boost sales. But
after her first two strategies failed. the TV ads were fr~rned in negative renns: as a
way to fl\:OVer some of the time. effort. mtd money she had already spentunsuccess-
fully trying to boost sales. Once the decision was framed negatively. Hunter was will-
ing ro risk rhe high cost of the ads. 43
Biases resulring from esc'alarion of commitment and the usc of heuristics can result in
poor decision making ar alileyeis in an organizarion. This problem is compounded by tile
factth,ll decision makers often usc heuristics without being aware that they are doing so.
Escalation of commitment also occurs without decision makers realizing that they are
rhrowing good money after bad. No maner how knowledgeable a decision maker is. the
potential for poor decision making as a result of biases and the escalation of conllnitrncll1
is always present.

Buyer's Remorse
One of thc outcomes of poor decision making. and onc many individuals as wcll as
BUYER'S REMORSE groups and organizations often experience. is buyer's remorse. nUfer's remorse is mt
An ~moI'OI1~J mooi'i,," in whi,'h emotional condition in which a person or group feels doubt and regret about a decision
a I',"'on or group fccl, Juubl and that involves th!." purchas!." or ".. inning of some high-priced product. [t is frequently
regre' 'OOU' " lk....'i,iOl'lha'
in'olw the pureh~", or" inning
associated with the purchase of high-value products such as propeny. ncw machincry.
of ",nle h,gh-prinoJ product. or computers. or it may even be about the high-price paid to hire a new employee or
manager or outside contractor.
The sense of doubt that the correct decision has been made is often brought about by
the fear that a decision has been made too quickly. or without enough infonnmion being
collected, for example. about the cnpacity of a computer. or the skills and experience of a
new manager. Interestingly. the condition often arises after winning an auction because by
definition the person mUSl have been the one willing to pay the most so the doubt arises-
have I paid too much'? A top managcmemteam may wonder ifthcy have paid too much for
the oil rights to a section of ocean. or for the right to operate cell phones in a certain fre-
quency range. A manager might wonder if they havc really choscn the best person for the
job or paid too much to obtain the lease of a ncw store. One of the cases at the end of the
chapter explores this kind of reaction to decision making.

The Role of Information Technology

The use of [T can oftcn help to reduce the effect of these biascs and heuristics on decision
making.+! IT systems can genemtc much more information on which managcrs can base
their de<:isions. Likewise. new software progrmns can generate improved tables and charts.
making the data more meaningful to managers. This. in tum. can reduce the effects of the
availability and rcpresen!ativeness bi'Lses. 45
AdditiolHllly. because IT can be used to link managers at different levels and in differ-
ent pans of the org:mization. there is less likelihood of their making errors. For exarnple.
the escalation-of-commitment bias is likely to become far less of a problem when more
objectivc information is available that a serious problem docs exist in the organizmion.
J\lanagers with different perspectives can simultaneously examine that information before
deciding what to do.
IT can also turn many nonprogr.'lllmed decisions into programmed ones. For example.
whcn salespeople can turn to onlin!." databases and software programs to access instant
solutiolls for their customers. this frees up their time to make more sales calls or provide
beller-quality customer service. At all levels in the org,mization. the applicatron of IT
allows managers to spend more time making nonprograrmned decisions that can enhance
organizational performance. The following A Global View profiles how the enterprise
resource planning system designed and sold by the Gertllan [1' company SAP can improve
the quality of organizational decision making. An I>/!/erpri.lt' re.lOflrL'l' plallning (ERf» IyI-
(em is a company-wide Irnranet based on mullimodllie software that allows an organization
to link and coordinate its functional aoivitics and operations.
510 PART 1 • GROUP AND TEAM PROCESSES

Global View
SAP's ERP System

- ._.--
1- _._..,--
- -- -- _._-
1...--

-- ..
, ...
.••••••••
••••••••
••

---
-_-
•••••••••
•
... .
..
- .
------ .-
--
 CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL LEARNING 511

Group Decision Making

Frequcntly groups. r.llher than individuals. makc dccisions in organizations. Thcse groups
might have a formal leader or functional manager who oversees the decision· making
proccss. Self-managed work teams also necd to make decisions. howevcr. In this section.
we consider some of the potential advantages. dis.1dvantages. and consequcnces of group
decision mak ing. (See Exhibit 15.4.)

Advantages of Group Decision Making

Advantages of using groups to make decisions include the availability and diversity of
members' skills. knowledge. and expertise: enhanced memory for frll:ts: greater ability to
correct errors: and greater decision acceptance.

Availability and diversity of members' skills, knowledge, and expertise.

When groups makc decisions. each group member's skills. knowledge. and expcnise eml
be brought into play. For certain kinds of decisions. an individual decision maker is very
unlikely to have all the different capahilities needed to make a good decision. For example.
when Jack Weleh. General Eleetric's (GE) fonner CEO. needed to decide whether to invest
$70 million to modernize GE's washmg machine-manufacturing facilities ncar Louisville.
Kentucky. or buy washing machines from another company and sell them under the GE
brand namc. he clearly did not have all the skills. knowledge. and expertise needed 10 make
the decision by himself. He lIeeded input from v,lrious managers about m:l11ufacturing
costs. product development COSts. and quality considerations. He also needed input from
union representatives about whether GE's unionized emploYL'Cs would agree to needed
changes in their jobs to cut costs if the company decidcd to go ahead with the
modernization program. Relying on group decision making. Welch undertook the
modernization program. which proved to be a wise choice. so Whenever a decision requires
skills. knowledge. and expertise in scveral areas (such as marketing. finance. engineering.
production. and researeh and developmCIl1). group decision making has clear advantages
over individual decision making.
This advantage of group deCIsion making suggests that there should be dil't'I'Iily
among group members (sec Chapter 10), In addition to diversity in knowledge and exper-
ti~e. it is oftcn desirable to have diversity in agc. gcnder. racc. and cthnic backgrounds.
Diversity gives a group thc oppot1unity to consider differcnt poims of view. Traditionally.
for example. groups that designt-d new automobiles for major car companies like GM and
Ford wcre a11 male. Now. to develop popular world cars these companies realize it is vital
to have women and designers from abroad on the team. They bring ncw. differcnt. impor-
tant cultural insights to the design process that result in a new car model that appeals to
women and car buyers mother countries.-II NutraSwt-et Corpor.ltioll is another company

EXHIBIT 15.4
G...,,,p Deci.... n Making
Advantages and
Disadvantages of Group
Decision Making

Advantage.

//\~
Av~,I~bltity Enh~nced Cruter Time
/ \ P",enti~1
Cr.~t.r
." memory de<"'Of1 to make a Co,
~b;hty
d,~"ity for fact. acceptance de<,,;on G<-oupthlfik
S12 PART 1 • GROUP AND TEAM PROCESSES

that values diversity. Nutr.l$weet is attempting to improve its product's foreign sail'S and
sail's to African Americans and Hispanics. who havc relatively high incidences of diabetes.
Given this aim. Nutm$wcct views a diverse wurkforcc as a pra~tical busine>s necessity.
Another example of diversity "'orking to help a ~ompany is profiled in the following DB
Today.
Although diverse work groups can improve decision making. they can give rise to a
problem: Group members who have diffcrent points uf view bec,wse of their varied ba~k·
gruunds sometimes find it hard to get along with each other. Many organizations arc trying
to respond to this challenge through divcrsity training programs. which aim to hclp mcm-
bers of an organization understand each other so they cnn work together effectively and
make good decisions.

Enhanl::ed memory for fach. When a decision requires the consideratioll of a

substantial amount of infomlMion. groups have an advantage over individuals beeause of
their mcmory for faets. H Must pt.'Ople cngaged in the process of making a dt~ision havc
expcrient'cd the frustrating problcm of forgctting an important piccc uf information.
Because a group can rely on the mcmory of cach of its mcmbcrs. the problem of
forgetfulness is minimized. Information that one member of tile group forgets is likely to

OB Today
Gap Understands Diverse Customers Needs

Gap, the well-known clothing company, has always been responsive to the changing
needs of its diverse customers, and it is careful to employ clothes designers and salespeo-
ple who reflect the demographics of its customers. It ran into major problems in the
19905, however, when suddenly its designers lost contact with its customers and they
chose to make lines of unusual or garish clothing that appealed to no one, Its profits
plunged as sales fell in its Gap, Banana Republic, and Old Navy stores and investors felt it
had lost sight of customers' needs,
Gap hired a new CEO, Mickey Pressler. an ex-Disney executive, to change Gap's
decision.making process. 53 Pressler had learned at Disney how imlX'rtant it was to study
customers' quickly changing needs, He restructured the design department by forming
teams of diverse employees to investigate the changing needs and demographics of Gap's
customers-to see which customer needs were being met and which were nol. These
teams discovered many things, and they qUickly figured OUt how to meet the needs of
Gap's traditional customers and its sales rose again However, they also discovered that
Gap was not adequately serving the needs of a major market segment-older women. 54
The 46 million baby-boom generation women born between 1946 and 1964 have vast
spending power. indeed they are the people who give their children and grandchildren
the money to shop at Gap's stores t
Pressler realized his diverse employee teams had discovered a profitable new sales
opportunity and he formed a team charged with the task of making all the thousands of
decisions involved in opening a new chain of Gap stores that would stock clothing tar-
geted at the needs of older, female professional or casual customers who wanted to look
good in clothes that fit their lifestyle, So Forth & TOWne is Gap's new chain for female
boomers. age 35 and upss Five stores opened in 2005, and five additional stores are
scheduled to open in 2006, with another 20 in 2007 if Gap finds that its decision making
has worked, and its new chain proves popular,

GROUPTHINK
A pattem of taully ded'lon
ma~ing that !"C,'U" in "nh~,i,·~
group, who,e member> ,ai,,"
for aJ!rccmcnt at tile cxpcn", of
a<.'curalc1y a, c""'8 information
rclc>ant to the dcei'ion.
CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL LEARNING 513
be remcmbered by anmher. For example, even if Jack Welch had all the information he
needed to decide whether General Electric should make or buy washing machines. it is
highly unlikely he would be able to remember:lll of it when the time c:lme to m:lke the
final decision. Having a group of GE m:magers and employees available to participate in
the decision making helped to ellsure that important information was 1101 forgOllen or
overlooked.
Capability of error detection. No mauer how experienced decision makers are. they
all n1<:1ke mistakes. Some errors occur in the mformation.gathering stage or in the
evaluation of alternatives. Other errors occur when the final decision is made. When a
group makes a decision, error!; madc by some group members might be detected and
corrected by others.5<> If. for ex:nnple, a mamlger m GE nHlde a miswke in calculating
production costs at the new manufacturing facility that was being contemplated. there was
always the l'hance that another manager would detect the error.
Greater dec:ision acceptance. For a decision 10 be implementcd. it is often necessary
for several members of an organization to accept the decision. Suppose, for example, a
grocery store manager decides to exlend the store's operating hours from 18 10 24 hours a
day by sl"hc-duling employees ttl work for longer periods of time (and not hiring any new
employees). The employees must accept this decision for it to work. If none of the
employees is willing to work the new 10 P.M. to 6 11..\1. shifl. the decision cannot be
implemented.
The likelihood employees will accept a decision increases when they takc pan in the
dedsiOlHl1aking process. l11c successful implementation of GE's decision to invest $70
million to modernize its washing machine-manufacturing facilities. for example. depended
on union leaders agreeing to changes in the employees' jobs. 57 By involving lhe union in
the decision making, Jack Welch helped ensure that these employees would alTept and
suppon the decision to go ahead with the modcmi7.a1jOl1 plan.
Disadvantages of Group Decision Making
Group decision making has cer\;lin advantages over individlHl1 decision making (panicu-
larly when the decisions arc complex, require the gathering and processing of a variety or
large amount of informmion, and require aeceplance by others for successful implementa-
tion). But there arc also disadvalllagcs to group dec is ion mak ing. Two of thcm arc timc and
the potential for groupthink.
Time to make a decision, Ha"e you been in the annoying situ<ltion of being in a group
that seemed to take forever to make a decision that you could ha\'e made yourself in half
the time? One of tlte disadval11ages of group dedsion making is the amount of time i1
consumes. Groups seldom make decisions as quickly as individuals can. Moreover. if you
multiply the amounl of time a group takes to make a group decision by the lIumber of
people in the group, you can sec the extelll to which group decision making eonsumcs lite
time and elTon of organizational members.
For decisions that meet cenain criteria, individual deCIsion making takes less time
than group decision making and is likely to result in a decision that's just as good.
Organization's should usc ind ividual and not group decision making when (I) an ind ivid-
ual is likely to have all the capabilities needed to make a gooddecision.(2) an individual is
likely to be able 10 gather and accurately take into accounl alilhe necessary infofl11ation.
and (3) lhe acceptance of the decision by the organization's other members is either unnec-
essary or is Iikcl Y to occu r, regardless of their involvement in decision maki ng.
The potential for groupthink. Grouilihink is a pattern offaulty decision making that
occurs in cohesive groups whose members strive for agreement at the expense of
accurately assessing information relevant to the decision.58 Irving Janis coined the ternl
groujJlilink in 1972 to describe a paradox that he observed in group decision making:
514 PART 2 • GROUP AND TEAM PROCESSES

Groupthin~ often occurs in crisis

siluation, when dee'i,ion ma~ers
lack "eeumte infonnation about
e"ent.' and pnK'c" information
accordin)! 10 thc group's
preferrcd assumptions and
values. Some <lrgue this occurred
at NASA lind ""ulted in the
laullCh and subsequent
destruction of the Challenger
space shuttle.

Sometimes groups of highly qualificd and experienced individuals make very poor
decisions. 59 The decisions made by President Lyndon B. Johnson and his advisers betweel1
1964 <lnd 1967 to eS<:<llate the war ill Vietnam. the dL'Cision made by President Richard M.
Nixon and his advisers to cover up the Watergate break-in in 1972. the de('isioll made by
NASA mId Morton Thiokol in 1986 to launch the Chal/eJl!,er space shuttle (which
exploded after ta~eoff. killing all crew members)-all these decisions were innuenced by
grollpth1l1k. After the j;1C\' the decision makers invol\ed in these and other fiascoes arc
often shocked that they and their colleagues were involved in slle'h plx}r dedsion making.
Janis's investigations of groupthink primarily focused on government dccisions. but the
polential for groupthink in business orgwtizations is just as likely. For example. the
decision by MatteI's managers (sec the Opening Case for this chapter) not to change
Barbie or bring 0ll111ew. cOll1cmpl}rary lines of dolls to protect CUrfew Barbie sales can
also be seen as an example of this decision-making error.
Recall from Chapter II that eohesil'e groups are very allr:tctive to their members. The
individuals in the group value their membership and strongly want to remain part of il.
WhCll groupthink OCe'lITS. members of a cohesive group unanimously sUppllrt a decision
favored by the group leader without carefully asse<;sing its pros and cons.
This unanimous support is often based on members' exaggerated beliefs about the
group's capabilities and moral standing. They think the group is more pllwerful than it is
and could never make a decision that might be momlly or ethically questioned. As a result.
the group becomes c1osed·minded and fails to pay attention to infonnation that suggests
that the decision might not be a good one. Moreover. when members of the group do have
doubts abom the decision being m"de. they are likely to discount thm;e doubts and not
rnell1iOIl them to othcr group memocrs. As a result. the group as a whole perccivcs that
there is unan i1l10US su pport for the decision. and group nX' mbers act ive1y try to prCI'CIl1 any
negativc information pertaining to the dccision from being brought up for discussion. 60
Exhibit 15.5 summarizes Janis's basic model of the grouplhink phenomenon. 11 is impor-
tant to note that although groupthink occur.<; only in coh",ive groups. many cohesive
groups never succumb to this faulty mode of decision making.
A group Icadcrcan take the following steps specifically dcsign,:d to prevent the occurrence
of groupthink: these steps also contribute to good decision m<lking in groups in generJl:~1
• The group leader encoumges all group members to be critical 01 proposed alterna-
tivcs. to raise any doubts they may have. and to accept criticism of their own ideas,
It is especially important for a group leader to subject his or her own viewpoint to
criticism by other group members.
 CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL LEARNING 515

EXHIBIT 15.5
Groupthink
SOt""" Adapled from Irvin L. Janis.
Gn"'1J1hj"k I',ychologiml Sr,,,li,es IIf
PrAM)' !Jt>,.;.,';w.' ,,,ul FPil,"''''s. 2nd ttl.
Copyrighl C 1982 by Hooghloo
Mifflin COnlr:my, Reprinled with
permi,,;oo.
1. III... ion.,f "'yuln~bili'Y
G<,<>up ",.",b.... a.....ry op"m,..'" and
la~••""..."'" n.k"
2. Belief in inheren, morality of ""' 8""'P
Group m.mb." fa,1 '0 con"d" th.
«hi,al con"Gu<nc", of d«i"on•.
3. Coli"",;" ,abonaliu,;"",
Group m<mb." iSno" info,ma~on
,hat >«gg"" 'h<y might n«d '0
"think ,he wiodom of ,he de,i,ion
4. St<r<Otype. o>f oth... g>'Oup'
Other gm<Jp' w"h opp<>,mg
view, a«.......,d a, he,ns ,"comp<<<n'.
5. Solf-c""..,...hip
Gro<Jp me",l><... fail '" m<n"On
.ny doub" ,hey ha.. '0 ,h. g""up.
li. Illusion. o>f unanimity
C""up me",ber, ",iSt.kenly I><li"'e
they ar<.11 ,n 'olal .g«.m.n'.
7. 0;,..., p....u.-e on di..""'....
M.mb<"who di ... gr.. with the
8""uP', d«i<ion .r< urg.d to
ch.ng. ,heir view,
8. Emerge""• .,f ..If...,p<>in'od
mind guard.
Som. g")UP m.mb< ... ''Y '0 .h..ld ,he
gcoup from.ny ,nform.toon lh ..
sugg.... tha' lh<y n.od to «con"der
the wisdom ofth. d«i"c,".

I
I

• The group leader refrains from expressing his or her own opinion and views until the
group has had a chance to consider all alternative,. A leader', opinion gil'cn too carly
is likely to stille thc gcncration of alternatives ami produelive debale.
• The group leader encourages gmup members to gather informmion pertaining 10 a
decision from people oUlside the group and to seek outsiders perspeclives on the
group's ideas.
• Whenever a gmup mccts.the group leader assign, one or two members 10 play the
DEVll'S ADVOCATE role of de"jJ's admcale-thm is. to crilicize, raise objectiolls. and identify pOlemial
Someone who argue, again'l a problems with any decisions the group reaches. The devil'> advocate should raise
"a,,~ or JlO,,1 ion in orocr 10 lhesc problcms cven if hc or she docs not belic\'e thc points are valid.
delennine it> ,,,Iidil}'.
• Ifan importanl de<:ision is being made and time allows. aflcr a group has made a deci-
sion. the group leader holds a second meeting. During the sccond mccting. members
can raise any doubts or misgivings thcy might have aboUllhe course of action lhe
group has chosen,

Other Consequences of Group Decision Making

Three olher eonsequcnccs of group deeisioll making are not easily classified ,1> advan-
tages or disadvantage,: dilfusion of rcsJX1l1sibilily. group polarizatioll. and the polemial
for conflict.

Diffusion of responsibility. Group decisions are characlerized by a diffusion of

respo"sibilily62- that is. lhe group as a whole ralher IIlan any olle individual is accountable
for the dl"Ciston, If the (kd,ion wa, a good one. lhe group gcts the crt."dil: if the dc<:i,ion was
a (X)or one. a single individual is 1101 blamed.
Somelimcs. whcn importanl decisions are made Ihat entai I considerahle uncertainty.
it C,UI be very ,lressful for one individual 10 assumc sole responsibililY for the decision.
Morcover. undcr these <:ondllions. somc people are indincd 10 make a dc<:ision they
know willllO! come back 10 haul1l them ralher than the decision they Ihink is best for the
organization. When thi, is Ihe case. diffusion of responsibilily can be au advamage of
group dccision mllking.
516 PART 2 • GROUP AND TEAM PROCESSES

Diffusion of re,ponsibility can also be a disadvamagc if group mcmbers do not takc

the time and effort needed to make a good decision bc<:ause they are not held individu,llIy
accountable. This consequence IS related to the concept of social loafing (sec eh,tpter 11 j.
the tendency for individuals to exert less effort when they work in a group.

Group polarization, Another consequcnce of group decision making is that group., tcnd
to make more extreme decisions than do individuals. This lendency is called group
polarization. 63 By e,Hrelll(, deciIiollI we mean making more risky or conservative
del:isions rather than taking a middle-of-the-road approadl. For example, on the one hand,
the group might commit a va,t amount of resources to de"c1op a new product Ihat mayor
may not be successful. On the other hand. it nlight decide not 10 introduce lIny new
products bel:ausc of the uncertainty involved.
Why arc decisions made by groups more extreme than decisiolls made by individu-
als? The diffusion of responsibility is one reason. 64 But there arc at least IWO morc
explan,l\ions for group polarizatioll. FiNt. kllowing that other group members have the
same views or support the s,trne decision can cause group members to becOnle more
confident of their positions. M Group members who initially supported commilling a
moderate amount of rcsources to the deYelopmcnt of a new product may occome morc
confident in the product's potenti111 success after learning thai other members of the
grol'P also feel good about the product, As a result of thts increased l:onfidellce. the
group makes the more extreme decision to commit a large amount of resources.
Second. as a group discusses altcrnatil'es. mcmocrs of the group oftcn come up with
pcrSIHlSive 1lrguments to support their favored ,llternative (say. for example. why the
new product is "bound to be"' a successl. 66 As a result of these persuasive arguments.
the group's confidence in the chosen alternative increases. and the decision becomes
more extrcmc.

Potential for conflict. There is always the potential for conflict in decision-making
groups. Group members differ in their knOWledge. skills. and expertise as well as in their
past experie'Kcs, These differences cause them to view opportunities and problems and
responS(.'"s to them in diffcrelll ways. '''loreovcr. certain group members may stand to
benefit from one alternMive being choscn over another- and self-interest may causc them to
push for th"taltemattve. Other group members may resent this pressure and disagree or
push for "n alternative that benefits thelll. Such eonnict can be funcliona! for glUUpS and
organizations whcn it forces them to cvaluate the altenmtivcs carefully. However. it can be
dysfunctional when individual members become more concerned aboul winning the bllltle
than making a good dt'£tsion.
In summary. groups are used to mah' decisions when the det'ision requires a wide
range of "kills. knowlcdge. and cxpenise. or morc information than a singlc individual
could be expected to possess. Group decision making is time consuming. however.
"lthough IT can help reduce this problem. [n "ddition. it is import.mtto encourage group
members to be critical of each other's ideas. to eVillume the differcll1 alternatives. and to
follow the fivc stcps that help prevent grou]lthink.

Decision Making in Crisis Situations

EMlier. we discussed how the psychologist Irvin Janis argued thm rD;lny group ill1eraclions
arc characterized by a process known as groupthink that results in poor dt'£ision-making
outcomes. Recall that gmuplhink lKcurs when a team of decision makers embarks on a
course of action without questioning undcrlying assumptions. Typically. the team coa-
lesces around a person or fXllicy: it ignores or fillers out infonnation that can be uscd to
qucstion the policy and develops after-the-fact rationalizations for its decision.
Commilmell1lO mission or goals bet'omes based on an emotional. subjective rather than a
cognitive. objective assessment of the "corre<:t" course of action. The consequences are
poor decisions.
 CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL LEARNING 517

You're t;he Management; Expert;

Solving Competition Between Teams

You're a management consultant who has been called in to help improve decision mak-
ing at a large pharmaceutical company. The survival of the company depends on the
number of successful new drugs developed by its research scientists. These scientists
work in teams developing different kinds of drugs. Each team is committed to the suc-
cess of its own drug project, and over time, they have become very competitive with
one another. It has gotten to the point where each team has started to hoard informa-
tion and knowledge that might actually be of use to other teams, The competition is
reducing the quality of decision making and slowing down the drug development
process.
Using the information in the chapter. suggest a program to improve the decision mak-
ing process that both eliminates competition between teams and builds cooperation
between them,

The phenomenon of groupthink may be especially likely to occur in crisis situations

when decision makers lack first-Iwnd. accuf;lte information about events and so can
pro,;ess information according to their own preferred assumptions and values. R<.-':<llIthat
Jani s traced n1<lny past dccision-maki ng fiascocs to dcfenivl." policym<lking by govcrnment
leaders who receivcd social suppon frOlllthcir in-group of advisers. For cxample. he sug-
gested that President John F. Kennedy's inner circle suffered from groupthink when they
collecllvcly supported the decision to launch the Bay of Pigs invasion of Cuba. even
though available information showed that it would be <In unsuccessful vcnture and would
damage U. S. relations with other countries. Some critics have pointed to the same process
opemting in the decision by the Bush govemmentto invade Iraq despite the fact that avail-
able intelligence had not been <lble to uncover any evidence of weapons of mass destruc-
tion in lmq at that time.
Janis has observed that groupthink-dominated groups arc ch,lmcterized by strong
pressures toward uniformity. which make their Illembers avoid nlising controversial issues.
questioning weak arguments. or calling a halt to soft-headed thinking. All these conditions
are e,pecially likely to be prco;cl1! in crisis ,ituation, whcre,a, we noted in thc last chapter,
top dedsion makers may prefer to pass the buck so as to avoid assuming individual respon-
sibility for dtx:isions Tlwde. Instead. tile group as a whole shares responsibilrty and this pro-
tects their collective interests, for no one person can be made the ··scapegoat."
Thus, in cri,is situations, it is cspecially imponant to usc techniques like dcvWs adm-
eaey. which requires the generation of a response plan to a crisis and then a critical analy-
SIS of the plan. When one member of lhe l!(:eision-nwking team 'Is~umes the role of devil's
advocate and lists all the re<lsuns why the response plan might fail. decision makers c<ln
become aware of the perils hidden in the recommended courses of action. Thus the people
in Ch,lrge of forming the top-lcl'el teams that respond to suddcn crises might be well
advised to build devil's advocacy into the dtx:ision-rnaking process mId employ one or
more of the decision-milking techniques discussed nc.,,1.

Group Decision·Making Techniques

Several other techniques have been developcd to help groups make good decisions that
promote high levels of performance and positive attitudes and avoid some of the poten-
tial disadvantages of group decision making. In this section. we describe three of those
518 PART 2 • GROUP AND TEAM PROCESSES
BRAINSTORMING
A 'pontaneous, pani,'ip.ltiw
"".i,ion-making t..",hni<.j"" that
group' u,e 10 generate a ,,-ide
range or allernati'e' from whICh
to male a de. i'ion,
PRODUCTION BLOCKING
1,.0" or pro<loctj\ ity in
brain,tmming group, due to
"ariou~ di,tmdio", and
limitatio." inherentlu
brain,torming
NOMINAL GROUP
TECHNIQUE (NGn
A l!e<.'i'ion-m:llmg te<;hni<.jue that
ioch... k, the f<>llo" "'g 'Ie!,,'
I!""-'p meml'cr. J;l'nernte j~a, 0"
their (""" an<J wrile th<m dO'J> n,
group memt.:" '·Ommum.ate
their idea, to the ""t (If the group.
and each idea i, then di"u,,,,,.j
an<J criti<ally e,J!uated by the
group.
techniques: brainstorming, the nominal group technique. and the Delphi technique. We
also discuss some of the group decision-making techniques used in tOial quality man-
agement programs.
Brainstorming
Sometimes. groups do not consider as wide a range of alternative responses to 0P[X1J1U nities
and problems as they should_ At other times. group members prematurely make a decision
without adequalely considering other alternatives. Urainstorrning is a sponwncous. p.1J1iei-
p;ttivc, del:ision-making tCl:hnique that groups use to generate a wide r.mge of alternatives
from which to make a dc!:ision.67 A typical bminstorming session proeeeds like this:
I. Group members sit around a table, and one member of the group desnibes lhe prob-
!em or opportunity io need of a response.
2. Group members are encouraged to share their own ideas with the rest of the group in
a free and open manner without any critical evaluallon of the ideas.
3. Group members are urged to share their ideas no mailer ho'" far-fetched they may
seem, to come up with as many ideas as they can. and to build on each others'
suggestions.
4. One member of the group rel:ords the ideas on a chalkboard or tlip chart as they are
presented.
Although it seems that brainstorming groups would come up with a wide range of
alternatives, research suggests that individuals working separately tend to generate more
ideas than do brainstorming groups.M A group of marketing managers who brainstoml to
come up WIth a eatchy name for a new l:onvertible spoJ1s car. for example. will in all like-
lihood come up with fewer ideas than will individual managers who dream up ideas on
their own and then pool them. Why docs this outcome occur? There are at least two rea-
sons. First. even though members of brainstorming groups are encouraged to share even
the wi ldest or str.lI1gest idea. and even though critic ism is suppressed, groltp members te nd
to be inhibited from sharing all their ideas with others. Sel:ond. production blocking takes
plan'". This loss of productivity has sevcral catlses. 69 Group members eannot give their full
allent ion to generating alternatives because they are listening to other people's ideas. They
forget some of their ideas while they are waiting for their turn to share them with the rest
of the gnlllp. And only one per!i(lll can speak at a time. so the number of ideas thai can be
presented is limited.
Electronic brainstorming can overcome some of these problemsJO Group members
can use personal computers to record their ideas wlllle at the sollne time having aecess to
allernatives generated by other group members on their l:omputer screens. Elec'tronk
brainstorming is an effective means of preventing somc of the production blocking that
OCCllrs when brainstorming groups meet face to faee. 71
The Nominal Group Technique
The nominal grullp tl't:hniqm' (NGT) also can be used to OVerl:ome produl:tion blocking
and is a way for groups that need 10 make a decision quickly to select an alternatil'e.7 2
Group members sit around a table. and one member of the group describes the problem or
oppoJ1unity. Members are then given a certain amount of time (perhaps 20 or 30 minutes)
to come up with ideas or alternative w~ys \() res[Xmd to the problem or op[XlJ1unity and
write them down on a pieee of parx~r. Because eaeh member eomes up with alternatives
While brainstorming privately. the I\'GT avoids prodllction blocking. Moreover. when the
NGT is used, group members are encouraged to write down all their ideas no mailer how
bizarre they Ill<ly seem. Doing this individually m:lY help to overcome the inhibition that
limits some hrainstorming groups.
After writing down ;lll oftlteir ideas. members present them in a round-robin fashion:
Ead person seated <Itlhe table presents one idea at a time. One member records the ideas
on a chalkboard or flip chart, and no discussion oflhe ideas lakes plal:c at this [Xlint.After
all thc ideas arc listed. the group discusses thcm one by one. Members are allowed to raise

DELPHI TECHNIQUE
A tkc;""n·m;\~ing ,....,hm'lU<: in
'" hkh a -erie, Of'lue'li,,,,nail"C'o
a'" .....Ill 10 ex!",", "" "'" j"ue m
hand. lhough lhey newr lIClually
nlCCl face to f",-"C_
BENCHMARKING
Sele-."tin~
a high-perfnmling group
aoo u,ing lhi, group "-' a moueL
CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL LEARNING 519
questions and objections and critically evaluate- each idea. After e-ach alternative- has been
discussed. each member privately ntnks all of the alternatives from most preferred to leaS(
preferred. The alternative Ihat recelVes Ihe highest ranking lllthe group is chosen. and the
decision-making proces, is complete.
The NGT he-Ips a group reach a decision quickly (sometimes in just a couple of
hours). and it allows all of the ideas generated by the Tllembers to be CQnsidered. NGT is
nol feasible for complex d,:cisions requiring the processing of large amounlS of mfonna-
lion and repeated group meeting>. It is abo not appropriate when il is imponant thaI all. or
most. group me-mbers agrx on thc alte-rnmive chosen (a decision by a jury would be such
ao example).
The Delphi Technique
When the Delphi In'hniquc is used. group members never meet face 10 face. n When a
leader is faced with a problem or opponunity thm needs to be responded to. the advice of
expcrts in the area is sought through wrinen communication. The leader describes the
problem or opportunity and solicits Iheir help by asking them 10 complete and relurn
a lJuestionnaire. After all the questionnaires have been returned. the leader <.:ompilcs
the responses and scnds a summary of them 10 all group members. along with additional
questions that need to be answered for a decision to be made. This process is repcated as
m~my times as nxded 10 reach a consensus or a decision thaI most of the experts think is a
good one.
The Delphi technique has the advantage of not requiring group members who may be
>callered around the country or the globe to meet f;lce to fllce. Its princip;ll diS;ldvanlages
are that it can be lime consuming. and il docs nul <llluw for group interaction. 11 also
depends on Ihe cooper'll ion of the e.\pens 10 respond promptly to the questionnaires and
tllke the time- needed to complete them c<lrefully. These disadvamages Clln be overeome. to
some extent. by using some of the new cornpUler software being del'elopcd for work
groups by cumpanies like Microsoft.
Group Decision-Making Techniques Used in Total Quality Management
Total lJuality managemenl (TQM)74 is 11 philm;ophy and sct of practices that have been
developed to improve the quality of an organization's goods and services and the efficiency
with which they are produced. Total quality managemenl (which we discuss in detail in
Chapter 18) include, Iwo group decision-making technilJlles-benehmarking and empow-
ermelll -which can be used to improvc- group decision making in general. The objective of
these techniques is to encourage group members to make suggestions and U'\C their knowl-
edge to come up with ways 10 reduce costs and waste and increase quahly with the ultimate
goal of pleasing the fmal customer. Ben<.:hmarking and empowermenl <.:;m be used. for
eXllmple. in nl1lnufacturing seltings to reduce defel'ts and recalls of ne-w cars. in customer
service depanrnelllS to shorten the time it t,lkes to respond to a customer complailll. and in
a<.:counting depanments to make bills e"sier for customers to read.
Benchmarking. When groups make decisions, it is often difficull for group mcmbers to
grasp exactly what they should be striving for or trying 10 achieve when they el'aluate
ahem"tives. A group's overall goal. for example. may be 10 increase performance and
quality. but the 1e\'CI of performan<.:e or quality thaI the group should aim for may n01 be
dcar to group members. Benchmarking hdps groups figure out what they should be trying
to accomplish when making a dedsioll. A benchmark is ,I standard against which
something can be measured or judged.
8l'nchmarking involves selecting a high-performing group or organization Ihat is
currently providing high-quality goods or ",rviccs to its customers and using this group or
organizmion as 'Ilnodel. When ,Ilow-perfomling group lIeeds to make a decision. members
<.:omp<lre where Iheir group is wilh where the ben<.:hmark group or organil..ation is un some
crilerion of lJuality. They then try to detenllinc how to reach the standard sel by the group or
organi7~1tion being hcnchmarked. Forcxample. when groups in express delivery organizations
520 PART 1 • GROUP AND TEAM PROCESSES
EMPOWERMENT
The pro<.-e" or giving employee,
throughout an organi""l",n lhe
aUlhoril} 10 make de.:i,ion, and
be ""fK'l"i\lk f0f lheir OOICOmc,
OB Today
like DHL and UPS need to decide how to imprnve the quality of their service" 10 eu"tOlOCl'i,
lhey sometimes usc Federal Express's guaralllee of IICX1-day del ivery and com inuous tracking
of ]cuers and packages as benchmarks of Wh:lt they should be slriving for.
Empowerment. A guiding principle of total quality management i" that pcrfonnanee
and quality improvements are the responsibility of all organizational members. Employees
are oflell in the best position to come up with ways to improve perform<lnce and qu'llity.
Empowerment is the proce,s of giving these employee" the authority 10 make de<:i,ions
and be re"ponsible for their outcomes. Empowerment often requires managcrs and Olher
employees to change lhe ways they lhink about decision nlaking. Rather than managers
making the decisions and lhe rest of ;In organization's employees carrying them oul.
empowennent requirc~ that the respon~ibility for (Je("i,ion making be sh<lred throughout an
organization.
Gening employees nnd manngers to chnnge the way lhey lhink about decision mnking in
an organization can be diffIcult but also worth lhe effort. McDonald·s. Fedeml E.\press.
Citibank. and Xerox are alllong the growing li"t of companies using empowerment 1O
improvc group decision making.7·~ Xcrox hns gone so far as 10 push its supplicrs 10 usc
empowennenl (and other TQM practices) to improve lhe qunlity of lhe pnrts Xerox buys
from them. 76 For example. Trident Tuuls. located in Rochester. New Yort. supplies Xerox
with c1enromagncti(, COlJ1(Xll\Cn1S. Xerox helpt-'"d train Trident employees to u\c TQM lech-
niqucs like empowe11llent 10 improve lhe qualily ofTridcm's parts. As a resuh of lhe lmining.
groups of employees m Trident cut the number of steps in (he company's materials-ordering
process from 26 (012. reducing lhe le<ld (ime llCeded (0 fill customer orders from 16to 7
weeks. The emploYL"Cs also reduced !he amuunt of limc l\Ceded to design new compuncnts
from 5 years (0 16 momhs. The story of how managcrs at Plcsus empowered the company's
employees and crealed a learning organizmion is discussed in the following DB Today.
How Plexus Decided It Could Make Flexible
Manufacturing Pay Off
In the United States, over 2.3 million manufacturing jobs were lost to factories in low-eost
countries abroad in 2003. While many large U. S. manufacturing companies have given
up the battle, some companies like Plexus Corp., based in Neenah, Wisconsin, have been
able to craft the decisions that have allowed them to survive and prosper in a low-eost
manufacturing world.
Plexus started out making electronic circuit boards in the 19805 for IBM. In the 1990s,
however, it saw the writing on the wall as more and more of its customers began to turn
to manufacturers abroad to produce the components that go into their products, or even
the whole product itself. The problem facing managers at Plexus was how to design a
production system that could compete in a low-cost manufacturing world. U.S, compa-
nies cannot match the efficiency of foreign manufacturers in producing high volumes of a
single product, such as millions of a particular circuit board used in a laptop computer, So
Plexus's managers' decided to focus their efforts on developing a manufacturing technol-
ogy, called "low-high.' thaI could efficiently produce low volumes of many different
kinds of products
Plexus's engineers worked as a team to design a manufacturing facility in which prod.
ucts would be manufactured in four separate "focused factories." The produclion line in
each factory is designed to allow the operations involved in making each product 10 be

ORGANIZATIONAL
LEARNING
The proc,", lhrough which
manager> ,,,,,lw increa""
organi7a1ion member>' dc,ire
and abililY I" malc UC.'WlO'
Ihal conlinuou,l) raise
organizational dfi.icnc)' "nd
effcdi'cne'"
CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL LEARNING 521
performed separately, although operations still take place in sequence. Workers are
crosstrained so they can perform any of the operations in each factory So, when work slows
down at any point in the production of a particular product, a worker further along the
line can step back to help solve the problem that occurred at the earlier stage on the line.
These workers are organized into self-managed teams empowered to make all of the
decisions necessary to make a particular product in one of the lour factories Since each
product is different, these teams have to quickly make the de<isions necessary to assem-
ble them if they are to do so cost effectively. The
ability of these teams to make rapid decisions is vital
on a production line because time is money. Every
minute a production line is idle adds hundreds or
thousands of dollars 10 the cost of production. To
keep costs down, employees have to be able to
react to unexpected contingencies and make non-
programmed decisions, unlike workers on a conven-
tional production line who simply fOllOW a set per-
formance program.
Team decision making also comes into play
when the line is changed over to make a different
product. Since nothing is being produced while this
occurs, it is vital the changeover time be kept to a
minimum. At Plexus, engineers and teams working
together have reduced this time to as little as
30 minutes. Eighty percent of the time, the line is
running and making products; only 20 percent of
Other companics O\lhOurcc-d jobs 10
the time is it idle n This incredible flexibility, devel-
low·COSI countrics. oot plcxus. a
WiS\."()n~in-bascU circuitl:>oard makcr.
oped by the members of the company working for
foo.'uscd on tcamwork. w,laptmion. and years to improve the decisions involved in the
fk~ibilily in'lcad. Today. lhc '''"'pony changeover process, is the reason why Plexus is so
pllX!uces 2.5 !imcs thc nurnlx'-r of efficient and can compete against low-cost manu-
<;ir<;ui! I:>oards it did tcn yC"" ago when
facturers abroad. In fact, today, Plexus has about
it had lwice as many cmployccs.
400 workers, who can produce 2.5 times the prod-
uct value that 800 workers could just a decade ago.
Quality is also one of the goals of the self-managed work teams. Employees know
nothing is more important in the production of complex. low-volume products than a rep-
utation for products that are reliable and have very low defect rates, By all accounts, both
managers and workers are very proud of the way they have developed such an efficient
operation, The emphasis at Plexus is on continuous learning to improve the decisions that
go into the design of the production process.7 8
Organizational Learning
Because decision l\mking takes place under uncertainty. mtd because of the errors th,l! can
affect decision making. it is not surprising that many of the decisions that managers and
organizmions make aIT' mislakes and end in failure. Olhers. of eoursc, allow an organiza-
lion to succeed ocyond managers' wildesl dreams. Organizations survive and prosper when
their memocrs make the right de<:isions-sometimes through skill and sound judgment.
sometimes through chance and good luck. For dL'Cision making to be successful over time.
howevcr. organizations must improve their abilities ({) make ocner decisions and reduc·e
decision-mak ing errors.
One of the most important processes that en11 help managers make belter ue<:isions is
organizational lcarning. 79 Organizational learning is a process managers seck (Jut to
522 PART 2 • GROUP AND TEAM PROCESSES
EXPLORATION
Learning that ir"'oI,'c'
organ,,,nional members ..::arching
f'lI" arK! experimenting" rth IIC'\<
lim!> or foml> of organiZOllionai
beha\ i"'" and IlIlX;edu"" 10
i",""-'l'>C cfTcC1i\'ene".
EXPLOITATION
Learnin!! that in\'ol"'"
organizational rnembel'i j,nding
way' 10 rcfine and rmpro\"
CX "lin!,- org.ani'''l;onal
beha'io,," and procNlure, to
im-rea'C "ffecti'en"",
LEARNING ORGANIZATION
An <:>q!anizarion Ihal rut"))O'efully
talc, ,tel" to enhance and
"""imrze ttl<' poIential for
c\plorati'e;rrtd c,ploilali,'"
organil;J1innailearning 10 tale
place.
EXHIBIT 15.6
Principles of
Organizational learning
improve llle decision-making ability of employees and enllanee organizational efficiency and
effIXti\"eness. 80 Because of the rapid pacc of change in looay's business environment. orga-
niz<lliunallearning is a vilal activily that muSI be managed. TIlis requires an underslanding of
how organizationalleaming tx:"urs and the [,,"Iors that "an promote or impede it.
Types of Organizational Learning
James Marcil, whose work on decision making was discussed l'arlicr. proposl'd that IWO
principal types of organizational 1l'arning str-Ilegies can be pursul'd to improve dl'cision
milking: e.\ploriltion iInd exploitalion. sl Expluflliion involves orgamlaliunal members
searching for and l'xpcrimenting with new kinds or forms of behaviors and procedures to
increase effeClivelll'ss. Learning Illat involvcs exploration migllt involve finding new ways
to make and sell goods and services or invenling nl'W ways to orgfHlize l'mployecs. such as
developing crossfunct iOllal or virtual teams.
Expluilation involves organizational members leaming ways to refine and improve
existing organizational behaviors and procedures to increase effIXtiwlless. This mighl
involve implementing a TQM program to promote the continuous refinemenl of existing
operating pro<:edurcs or developing an improved set uf rules to enable a work group to
morl' cffeClively perform its specific tasks.~2 Exploration is therefore a more radicalleam-
ing process than l'xploitation although bolh are importam for improved decision making
tllat enhances the organ iZ.<llion's effectiveness. s3
A karning OI'ganizalion is an organization lilat purposefully lakes steps to enllance
and maximize lhe potemial forexplorath'e and l'xploilative organizational learning 10 take
plaee. 84 How do manager; create a learning organizatiOll. one capable of allowing its
members to appreciate and respond quickly to chaugcs taking place around it'! By increas-
ing the ability of employees at every level in the orgamzation to queslion <llld analyze the
way tile organization performs ils activities and to experiment with new ways to change it
to increase effectivenl'SS.
Principles of Organizational Learning
In order to create a learning organization. managers need to prumote learning at the individual
and group levels.1l5 Some pri m:iples for creati ng a learning organization have been dcvdopcd
by Peter Scnge mid are diSl'ussed in the following panlgraphs. 86 (Sec Exhibit 15,6.)
Personal mastery. At tile individuallcveL managl'fS need to do all they can to facilitate
the learning of new skills. norms. and valul'S so that individuals can inereasl' their own
personal <lbility to help build the organiz.<ltion·s core l'ompeleneies. Senge has argued lhat
P.,.""nal
ma"ery
j
Principles "f Compl"
• Ocgani....io"",1
Leami"&
• men.al
models
/
Bu,ld'ng Team
a sh.,.d
ium,ng
" ..on
 CHAPTER IS • DECISION MAKING AND ORGANIZATIONAL lEARNING 523

for organizational learning to occur, each person needs to dcvclop a sense of l'",sO/wl
"W~·lf'rJ. Essentially. that means the organiz3Iion should empower individuals to
experiment and creale and explure what Ihey want. The goal is to give employees the
opportunity to develop an intense appredation for their work that translates into a
disti nCI ive competence for the organ ization .87

Complex mental models. As pmt uf attaining personal mastery. mid to give employees
a deeper understanding of what is involved in a particular adivity. organilations need to
encourage employees to develop and usc romplex 111('11/(/1 models that challengc them to
find new or bener wllyS to perform a task. As an1lnalogy. a person might mow the lawl1
once a week and treat this as a chore that has to be done. However. suppose the persun
decides to study how the grass gmws and to experiment with ctllting the grass to different
heights and using different fcnilizers and watering patterns. Thmugh this study. he or .shc
notices that cutting Ihe grass to ,I eenain height and using specific combinations of
fertilizer and water promote thicker growlh and fewer weeds. resulting in a better-looking
lawn that needs less mowing. What had once been a chore may become a hobby. and
personal mastcry is achieved. Looking 31 the task in a new way has become a souree of
deep person,11 s'llisfaction. This is the message behind Senge's principles for developing a
learning urganization. Namely. organilatiuns must el1\;oumge each of their llldi"idual
members to develop a taste for experimell1ing.ss
A learning organi7,ation can encourage employees to form complex mcntal models
and develop a sense of personal mastery by providing them with the opponunilY 1O assume
more responsibility for their dttisions. ThiS can be dune in a variety of ways. Empluyt-es
might be cross-trained so that they can perform many differem tasks. and the knowledge
they gain may give them new insights into how to improve work pl'l)Cedures. On the other
hand, perhaps a specific task that was performed by scveral different employees Ciln be
redesigned or reengineered so that one employ<."C. aided by an atlvam;ed infoTIllation sys-
tem, can perform the complete task. Again, the result m:lY be :In increase in the level of
organizational learning as the employee fmds ncw ways to get the job donl;'_

Team learning. At the group level. managers need to encourage learning by promoting
thc usc of various kinds of groups-such as self-managed gmups or erossfunctional
teams-so that individuals can share or pool their skills and abilities to solve problems_
Groups allow for the ereiltion of IWlergl,-the idea that the whole is much more thlm the
sum of its parts-which can enhance performance. In teTIllS of Thompson's model of task
ill1erde(lCndence discussed in Chapter 11. for example. the move from a pooled. to
sequential. to reciprocal task interde(lCndence will increase the potential for group-level
leilming because the group's members have more opportunities to mteraet and learn from
one another over time. "Group routines" that enhance group efth:livene,s may develop
from such interactions. 89 Senge refC"rs to this kind of learning as /I'm/! Itaming, and he
argues that team learning is as. or even more. important than individual-level learning ill
promo! ing orgmliwt iOlWl learning. This is tIue to the fact that most iIlIportant dec isions lire
made in groups, like dqxmmcntal and fum;tional groups.
The ability of tcams to bring about organizational learning was unmistakable when
Toyota revolutionized Ihe work process in a former GM factory in California. Large
performilnce gains were achieved in the factory when Toyota's managers created work
teams and empowered leam members to take over the responsibility for measuring,
monitoring. and eontrolling their own behavior to find ways to continuously increasc
performance.

Building a shared vision. Another one of Senge', principles for designing a Icilming
organization emphasizes the imponanee of bllildillg slu/lwl l'isioll. Building a shared
vision involves creating iln ongoing frame of reference or mental model that all of the
urganiziltion"s members usc 10 frame problems or opportunities ,tnd that binds them to an
organization. At the hean of this vision is likely to be the set of work values and Ilorms that
guide behavior in a panicular sctting.
S24 PART 1 • GROUP AND TEAM PROCESSES

Systems th inki ng, Scnge's laS! pri nciple of organi zational learni ng, sy.l/flll.5 1lIillking,
emphasizes thm in order 10 create a learning organi7..ll1ion. managers mUSl reeogni7.c how
learning allhe individual and group level> affect each other. For e!\ample, there is little
poim in neat ing leams to fa.:i Iitme team learning if an organizat ion does not a!so take steps
10 give its employees the freedom 10 develop a sense of personal maslery. By encouraging
and promoting organizational learning at each of these levels-that is. by looking at
organiz<ltional learning as a .I'.'".I'It'III-managers can bUIld and \:reate a learning
organization that facilitates an organization's ability to make high-quality de.:isions
rapidly. The way in which Nike buill a leaming organization to respond 10 the chang{'"s
conslantly taking place Mound il is discussed in the following 013 Today.

Leadership and Learning

While Phil Knight might encourage le'!TIling from employees below him in the hiemrchy.

OB Today
Nike Creates a Learning Organization
Nike, headquartered in Beaverton, Oregon, is the biggest sports shoemaker in the world, In
the 19905, it seemed that its founder and CEO Phil Knight and his team of shoe designers
could put no wrong foot fOlWard, and all their design decisions led to the global acceptance
of Nike's shoes and record sales and profits for the company At the heart of Nike's business
plan was its decision to design very expensive high-performance shoes that often sold for
more than S100. Frequently, the shoes were touted by celebrities like Michael Jordan and
Tiger Woods 90
As time went on,
however, and Nike's for-
tunes soared, some
strange dynamics took
place. The company's
managers and designers
became convinced they
"knew best" what cus-
tomers needed and that
their choices and deci-
sions about future shoe
lines would unquestion-
ably be well received by
customers who would
Ni~e', designers ,md mar~elcrs arc cOlllinu:111 y wor~i ng to diseo'w
continue to flock to buy
beller waY' 10 sali,f~' peoplcs diffcrcnl n~...xJs for alhklic and "·al~ing
their new creations,
shoc,. Their gool is 10 ·'lhrill" customers and make buying a new p;Jir
of Ni~c ,hoc, a major cWlll-sunK'lhing worth lhc S120 + prj.:c Nj ~c But things were chang-
charges for its new shoes. ing in the sport-shoe
environment. Many new
competitors had entered the market, and they began to offer alternative kinds of sports
shoes-shoes targeted at specific market segments like skateboarders, soccer ~ayer.;, or power
walkers, Nike had no shoes in these market segments. Moreover, Nike afso fai~ to notice that
sports shoes vvere evoMng into perfonnance shoes for more everyday uses such as walking or
backpacking, It afso fai~ to take note of consumer.;' increasing preferences for dark blue and
black shoes that wore well in cities and that could double as work am walking shoes,
 CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL LEARNING 525

By the end of the 19905, Nike's sales and profits started to fall sharply. Many of its nevi
lines of sports shoes were not well received by customers, and CEO Phil Knight knew he
had to find a way to turnaround his company's performance. Realizing that his designers
were starting to make poor decisions, he decided to bring in people from outside the
company to try to change the way decisions were made. One of these was an executive
named Gordon 0 McFadden, who was brought in to lead the outdoor products division.
He advised Knight to take over and purchase some of these small companies, such as
North Face, to qUickly widen Nike's product line. But Nike's managers and designers
resisted this idea believing that they could still make the best decisions and that Nike
should continue to grow its product lines from within So, McFadden quit 91
By 2000, with sales still slumping, it became obvious lhat Nike would have to take
over some competing shoe companies in order to grow successfully. One of the first of its
acquisitions was ColeHann, the luxury shoemaker, and Nike's designers proceeded to revi-
talize its line of shoes by using their skills to make them more comfortable. Then, realizing
it had to get into small markets, in 2002, Nike bought other small companies such as
Hurley, lhe skate and surfboard apparel maker.
To lry 10 overcome its past errors in its decision making, however, Knight decided on a
nevi way to design shoes for specialized niche markets, like the skateboarding, golf, and
soccer markets. Henceforth, rather than having Nike's designers all grouped together in
one large design department, they would be split up into different teams, Each team
would focus on developing unique products to match the needs of customers in its
assigned market segment. The skate team, for example, was set up as a separate and
independent unit, and its eleven designers and marketing experts were charged with
coming up with a unique line of shoes for the sporl. Similarly, because of poor sales, Nike
separated golf products from the rest of the company and created an independent unit to
develop new golf shoes, clubs, and other golfing products. 92
What Nike was trying to accomplish with the change was to obliterate the com-
pany-wide, decision-making mindset that had resulted in its past decision-making
errors, With many different teams, each working on different lines of shoes and other
products, Nike was hoping to build diversity into its decision making and create teams
of experts who were attuned to changing customer needs in their segments of the
sports product market.
So far, it seems that Nike's new approach to decision making is working better. Many
of its new products lines have been well-received, and its sales and profits have started to
rebound. Nike has apparently learned from its mistakes. Indeed, Knight is trying to pro-
mote organizationallearning----the process of helping the members of an organization to
"think outside the box" and be willing to experiment, take risks, and be different.
Knight's current willingness to delegate authority and empower the different units to take
responsibility for their own product lines is one example of this.

npparelltly he does nOl encourage Ihis from his top executives. [n 2004. hc appointed
William Perez as CEO uf Nike to take responsibility for its future strategic decision nl<lk-
ing.'H However, just 13 months Imer in January 2006, the new CEO resigned l'laiming Ihm
Knighl would not give him the autonomy 10 nmke those decisions and lhat he wns con-
sl:lnlly "micro-managing" his CEO nnd Ihut he could not Imlke any impol1~lIlt decisions!
Enl'tJUraging orgunilulionalleummg is a complex, dillicull process precis.cly Ixcaus.c il
take, an organization and its decision makers Olllln uncharted rollle fraughl wilh dangers and
uneCl1ainty. Yct uncertainty is at the heart of unprogrammed decision making and. as in the
opening case, if decision m:lkers nre nOI prcpnred to make h,ird choices and mCl:'I customer
needs, companies lik.e Manel can quickly lose out and see their profItability deteriorale,
By all acwunls the best companies <Ire those that encourage learning and nowhere is this
clearer than al General Electric (GE), whose previous and currCIl! CEOs are on top of the
lenrning gnme. GE's charismatic CEO Jeff ImmcH has an appronch to leadership lhat is
Jack Wdch mmJc org~lliz:otiollal
learning the ba.,is of his
approach to managing
organizalional behavior at GE.
Welch cominu:l1ly employed
new tlThni<jues soch as total
quality m~n~geIJ)CIlt :md Six
Sigma to challenge arid moti"ate
people to be innovative :ltl<.l
aeatiw.

defined by his commitmelllio make GE a teaming organization.lmmelt has seen the impor-
tance of teaming his entire career at GE. for his predccessor Jack Welch made organi7;Jtional
learning Ihe foundation of his approach too. Welch was consl:mtJy employing new techniques
such as total quality management. Six SIgma. and creating "hailenging ev:lluation and com-
IJCnsmion systems tn reward people for their innovative and creative ideas.
Immelt believes that in today's rapidly changi ng global environmClll the basis for suc-
cessful decision making is not how much managers and employees know but how quickly
they "an learn new ways to respond. Consequently. Immell makes organizationallcaming
a comerstone of his approach to leaJership be"ause he has seel1the results of successful
learning-continuous improvement in the way his company performs and fiexibility that is
the envy of companies many times smailer than GE.
At the center of learning in GE is its Crotonvil1e "GE Umversity:' where every year
thousanJs of GE's up and coming managers go through intensive learning programs
designed to make them "learning managers:' Furthermore. at GE promOlion is based on a
manager's perceil'eJ ability to learn (juiekJy: this is a sign that a manager has leadership
potential. IlllkeJ.lmmch feels that continuous 1carnmg is a hall mart of all great CEOs who
sec encouraging and rewarding it as a main way ofensuring a company's continuing success.
One important way in which learning takes place is through benchmarking other com-
panies. As discussed curlier. bcnchrnarl.:ing is the process of choosing a company that pos-
sesses ex"cptionaJ skills in performing :l fum;tional activity. such as marketing. malerials
management. or manufacturing. and then learning the sJlC"cific routines and processes that
ennble it to perform at such a high level. Benchmarking gives a company's etnployees a
goal or st:muard to aehieve-GE bcncltrmtrks Toyota. Dell. ~lIld Procter & G'lmble. FroHl
Toyota and Dell. the leauers. GE learns how to improve its manufaduring anJ materials
management processes. and from P&G how to market new and existing prooucts to cus-
tonlers in innovative ways. LeaJership and learning go hanJ in hanJ today.

Summary
The decisions made by employees at ail levels in organizations can have a major impact on
levels of pcrform:rrKc anJ weil-being anJ on the e.\tent to which individu'lls. groups. anJ
whole organizations achicve their goals. In this chapter. wc made the following major
points:
I. Decision making is the proccss by which mcmbers of an organization ch()(}sc how
to respond to oppot1unities anu problems. Nonprogramrned decision making occurs
when members of an organizalion choose how to respond 10 novel oppot1unities
anJ problems. Nonprogrammed dedsion making in\'()I,'es a se:m:h for information.
 CHAPTER tS • DECISION MAKING AND ORGANIZATIONAL lEARNING 527

Programmed decision making occurs when members of an organization respond to

recurring opportunities and problems by u,ing ,tandard re,ponscs (pcrfomlatlce pro-
gr:Ull,). Thi, chapter focuse, on nonprogwll1mcd decIsion making.
2. The classical modcl of decision making is a presaipth'e modellhm assumes Ihat
decision makers have access 10 all the information they necd and will make the
best decision possible. A decision maker using the classical model takes these four
steps: (a) list ing all allen];]t ives. (b) list ing the consequcnces of each allernat ive.
(c) considering his or her preferences for each alternalive or set of consequelKes.
and (d) selecting the alternative that will result in the most preferred set of conse-
quences. Decisions nHlde according to thc classical model arc optinHiI decisions,
3. There arc problems with the classical model because it is nOI re:llislic. Decision
makers often do not know all the alternatives they can choose fmm. often do not
know the conscquences of cach alternative. may not be clear about their own pref-
erences. and in many cases lack the mental ability to take into account alilhe infor-
malion required by the classical model. Moreover. the elassic:ll model call be very
lime consuming.
4. March and Si mon .s admi nistrative decision-maki ng model is descriptive: il explains
how decisions are actually made in organiz,uions. March and Simon proposc that
decision makers choose how 10 respond 10 opportunilies and problems on the basis of
a simpl ilied and approxi mate aCCOUIll of the situatioll called the dec ision maker's
delin it ion of the situation. This detin ition is the result of ooth psychological and soci-
ological processes. Rather th:ln m:lk ing opt imill ded sions. decision m,lkers often >:\t-
isfice. or make an acceptable dt"Cision. nol necessarily an oplimal decision. Salisficing
on'urs bct:ause of bounded r.l1ionality.
5. Heuristics arc rules of thumb that simplify decision making but can Icad to crrors or
biases. The aVllilability heuris1ie renects the tendency 10 determine the frequency of
an evenlllnd ils Clluses by how easy they arc 10 remember (how available IheY:lfC
from melllory). The availability heurislic can lead to biased dccisionmaking when
the frequency of events and causes is overestimated because they are vivid. extreme.
or recent. The represcntativeness heuristic reneets the tendency to predict the likeli-
hood of an evenl from the extent 10 which Ihe e,"elll is typi<:al (or representalive) of
similar kinds of e\'CIllS that have happened in the past. ReprcsentJlivene.ss call lead
to biased decision making when decision makers fail to take into account base ratcs.
The llnchoring and adjustment heuristic re!leels the tendency to make decisions
based on adJustmenls from some initilll amounl (or am;hor). The anchoring and
adjustment heuristic can lead to biased decision Illaking when the initial amounts
""'ere too high or too low.
6. Escalation of commitment is the lendency of decision makers to inl'est addilional
lime. money. or eflor! i1lI0 losing courses of a.·1 ion. Escalation of (;Ommitmclll ()(;curs
because decision makers do not walllto admit that Ihey have madc a mistake. view
further commitment of resources as a way to recoup sunk costs. and are more likely
10 t,lke risks when decisions arc framed in negativc rather 1han in positive terms.
7. The advantages of using groups instead of individuals to make decisions include
the avai Iabi Iit Yand d iversi ty of members' ski II s. knowledgc. and expert ise:
enhanced memory for facts: capability of error detection: and greater decisiol\
aceeptan(;e. The disadvantages of group decision making IIlciude the lime it takes
10 make 'I decision and the potcmial for grouplhink. Olher conscquen(;es include
diffusion of responsibility. group polarization. and the potential for connict.
8. Group decision-making techniques used in organiwtions illclude bnlinstortning. the
nomillal group I~hniqlle. and lhe Delphi Icchn iqlle. Two group dl::cision-making tech-
niques uscd ill 100al quality m:lnllgement are benchmarking and empo""'CrnlCllI.
9. Two main types of organizationalleaming lhat can kad to improved decision making
are exploratil'e and exploitatil'e learning, Organizations can improve their members
ability 10 m~lke high-qu:llity decisions by encouraging them to develop personal mas-
lery ;md complex melli'll models. Ihrough team learning. by building a shared vision.
and through systems thinking.
528 PART 2 • GROUP AND TEAM PROCESSES
Exercises in Understanding and
Managing Organizational Behavior
Questions for Review
1. [)(;l programmed decisions 3nd the usc of perfor-
m3nee progrmns nlw,lys evoll'e from whm were
origirl<llly llunprogmmmed decisions'! Why or
why not'?
2. f'or what kinds of dccisions might the cla,sic31
mooel be more approprime than March and
Simun·s mode!'!
3. How might the anchoring and adjustmcnt heuristic
affC\:t goal SClling'!
.:I. Clllthe 31',lilability nlld the represcn1miveocss
heuristics operone simultaneously'? Why or why nut'!
08: Increasing Self-Awareness
Analyzing Individual and Group Decisions
Think of two importalll decisions that you have recently
made-onc that you made individually and onc thm you
m,lde as a member of a group. Describe each decision. For
each decision. answer these questions:
I. Was the pnxess by which you made the decision
more accurately described by the classical model
or by March and Simon·s mode!'! Why?
2. In what ways were heuristics involved in making
the decision')
5. How might dccision-making groups fall into thc
eSCal31ioll-of-eonlmitment tmp"!
6. Why do members of diverse groups sometimes
find it hard to make a dC\:ision'?
7. In whm ways can conflict in a dC\:ision-making
group be ooth an ,ldv(intage and a disndvantnge"?
8. Do all employt'Cs wnntto be empuwen."iJ ,1Ild make
the decisions thm their bosscs used to make? Why
or why not?
9. What is the relationship between the anchoring
and adjustment heuristic and benchmarking?
3. Was escalation of commitmelll involved in making
the decision?
4. Why did you make the individu<11 decision on yOUT
own rathcr than in <1 group? Do you think <1 bencr
dC\:ision would have been made if the decision had
been mnde III a group'! Why or why not'!
5. Why did you make the other decision as a member
of a group rather than on your own? Do you think
that you could have mooe a better decision on your
own? Why or why not"!
 CHAPTER 15 • DECISION MAKING AND ORGANIZATIONAL lEARNING 529

A Question of Ethics
As the chapter discusses. the question of whether a decision IS ethical or not is an impor-
tant aspect of thC' dcci,ion-maki ng pnx:ess. In gmup dC'cision mal. ing. someti mes the dif-
fusion of rC'sponsibility can lead a group to make an extreme and unethical decision
because the responsibility for it is spread over all group members. With this in mind. think
alxHlt the following issues:
• To what extent to you believe each member of the group is awarC' that mlle.·tiw?!y.
they might be making an unethical decision?
• What steps could be taken to make individual group members be more outspoken
in suggesting a possible course of action is unethical'!

Small Group Break-Out Exercise

Brainstorming
After reading the following scenario. hreak up into groups of three or four peopk and dis-
cuss the issues invol I'ed. Be prepared to discuss your tllinking with the reSt of the class.
You and your partners arc trying to dl"<:ide which kmd 01 restaurant to open in a new
shopping cemer in your cilY. The problem confronting you is Ihat the city already h<ls many
restaurants thm provide different kinds of food in all price ranges. Your challenge is to
decide whiell type of restaurant is most likely 10 succeed. Using the brainstonlling tech-
nique. follow thesc steps to make your decision:
I. As a gmup. spend 5 or 10 minutes generating ide<ls alxHlI the alternative kinds of
restaurants you think will be most likely to succeed. Write down the altenmtives.
2. Spend 5 to 10 minutes debating the pros and COilS of the altematives and try to
reach a group consensus.

Topic for Debate

Decision making is one of the most important processes in all organi7mions. Now that you
hal'e a good understanding of decision making. debate the following issue.
Team A. Individuals gener-illy make bener decisions than groups,
Team B. Groups generally make bener decisions than individuals.

Experiential Exercise
Using the Nominal Group Technique

Objective
Your objeet ive is to gain C'xperience in us ing the nominal group lcehn iquc ,

Procedure
The c1a~s divides into groups of three to fivc pcople. and each group appoints one mcmber
as spokesperson to report the group's experiences 10 Ihe whole class. Here is the scenario.
As,ullle the role of a self-managed work team. The team is une of the besl-performing
teams in the comp<lny. and the members like and get along well with cach other. CUrTemly.
team members are paid an hourly wage based on seniority. The company has decided 10
change the way in which members of all self-managed teams arc paid and has askcd each
te<lm to propose a new pay plan. One plan will be I:hoscn hom thuse proposed and msti·
tuted for:lll tcams.
530 PART 2 • GROUP AND TEAM PROCESSES

U<;c the nominal group technique to decide on a pay plan by following these -;!Cps:
I. E.ach team member comes up with ideas for alternative pay plans on his or her
own amJ writes them llown on a piece of paper,
2. Team members present their illeas one by olle ,,'hile one member rel:orlls them on
a piece of paper. There is no lliscussioll of the merits of the different altenmtives
at this point.
3. Team me mbers discuss Ihe ideas one by one anll mise any questions or objel:l ions.
Critil:al evaluation Utkes place at this slep.
4. Each team memocr privately ranks all the alternatives fmm mosl preferrcllto least
preferred.
S. The team chooses the alternative that receives the highest ranking.
After the llcrision has been malle. team members diSl.·uss the pros anlll:ons of using
the nominal group techniquc to make a dccision like this onc.
When your group has completed the exercise.lhe spokesperson will report back to the
whole elass on the del:isioll the group TC<lched as well as the group's assessment of the pros
and cons of the nominal group technique.

New York Times Cases in the News

(l;hr NrllIl10rk (!;intr.

"Buyer's Remorse Is Causing Some Palpitations at Johnson & Johnson."
By STep/wl/ie Palll, NIT. Nort'mlJer 5, 2005. P. Ct.

Johnson & John,on', stumble in the
purchase of the Guidant Corporation. the
medical device maker. illustr~te-' the !",rils
of designmg a corporate stmtegy around
acquisitions. Until recently. John,on &
Johnson s.:r\"Cd :tS the rare examplc of a
company that could csc<:ute ,u<:h a
stratcgy saeecssfully. From 1995 to thc
end of la.'t year. John,on & John,on
bought 51 companics. Mo.;t of thc aC<jui-
sitions ha,'e beC'n regarded a, sman and
succcssful. in pm because thc <:ompany
pride" it",lf on a ,low. deliberative vetting
proccss before m;,king purehases. But like
a new homeown<:r who has di",.uwrcd a
leak in the bascment. Johnson & Johnson
is esperi<:r....ing buyer', renKl,,"-' this time.
p;lnicularly because Gliidant is John"Oll &
Johnson', lal);c,t a,:quisition C'·"r.
Aftcr the Federal Tr<lde Commi~~ion
apprtlwd the Gliidant deal yc,tnday.
Johnson & Johnson said it woutd not
completc' th" $25.4 billion m'quisitiun
11nless Guidant agreed to renegOli;,te the
tC'mlS, In a ,t<ltcmcnt. Johnson & Johnson
cited produ<:t re<:alts of some Guidant
hean oc"iee~ 'lIld fcd..'ml invcstigations of
the ("Omp:"'y, The deal had been ,'iewed as
unponant to Johnson & Jollnsc>rl's long-
term .'trategy. It ga"e the <:ompany ~
<:hall<:<: to build a c~r<Jia<' rhythm businc<s.
:, fast-growing 'lICa, If Johnson & JoIlIlson
<:annm per,uad<: Guidant to agree on <I
lower price. somc analysts expect JoIlIlson
& Johnson to look c1scwhe", to wmplete
its strategy. The problem is other hean
de,'ice m~kers may nm W<lnt to do
business with a company that just walked
away from a d<:al. John,on & Johnson's
problems with the GlIid"m deal arc not
unique. E\'en before thc' deal lx'gan to
Unnl'"el. questions h<ld been raised about
the wi,dom of se\'<:ral mher Johnson &
Johnson pur<:h;I'Cs. ~s well as the way
som<: c~llllpanic" ha",-, be<:n integmtcxJ into
the corporate family.
The de:ll~ illustrate the risk of aggres-
sive bllying. A 1....-di<:<l1 product th:!t looks
pmrni,ing on th<' surf<K:c c'an fac'" r'"l;ula-
tory problems or quid;ly Will into ;' lemon,
And tJH, sdk'r always knows nK'''' than th('
buyer. While Johllson & Johnson h~s gen·
emll~' <lon" :I good job of taming the
octopus-a faH1ung collc<:tioll of more
than 200 opcmting wmpanies with mon'
lh;", 115J)(Xl emptoyees-it has nOl
always capitalized on thc innovativc
abilities of the <:ompa"ies it a<:quircs.
,tCcording to Sydncy Finkdstein. <I man-
agement professor ~t the Tue-k School of
Bu,inc" at Danmouth. A,an exampte. M,-
Finkelstein points to Johnson & JoIlEIsoo's
t l)<)6 'akemw of Cordis for S t .~ billion.
Whllc the acquisition was a chance- for
John,on & John"m to <:emcnt it~ early 1e<Kl
lit Ole ste-tll busiocss. e-Iltcial Cordis t<llent.
accustomed to an entrepreneurial ap-
proach. clashed with Johnson & John·
son', more top-down ,trunure. he s<lid.
SorTie d..-.:idcd to Iea"e!lle comlJimy.
'1llcy tend not to be able to retain til<:
imlO'·ati,·c calJilbil ity:' Mr, Finkelslein SOlid.
'"That resides in!",ople:' Bec'aus(' ofth<'
resulting delays in stellt innovation.
John,on & Jol"'"lIllcft tJH, dmr wid<., open
for competitors. ineluding Guidant. allow-
ing other c'(lIl\IJi"'"'~ to c'apture the bulk of
the Slent market by 1998. ocrording to Mr.
Finkelstein. II took Johnson & John"",
se\'<:ral yeaN to l\.'\."()ver.
Rc·taining takrn will be " major issuc
as Johnson & Johnson tries to renegOl;'
atc with Guidanl. With many Guida!lt
employees holding large amounts of
,to,:k. Johnson & John,on runs th..- risk
of angering vitat Guidam employees if it
push..-s too hard. aC'c'ording to Jan D"vid
Wald. a fmancial <lnatyst for A. G.
Edward.s & Son, who formerly wor~ed
for Guidan\
 CHAPTER 15 • DECISION MAKING AND ORGANIZATIONAL lEARNING 531

Questions for Discussion

J. Wh~t i> buyer's remorse? Why is i, a decision-m~kingerror?
2, Why did J&J's decisioilio buy Cordis run imo problems'! Wh~t can J&J learn from lhe
Cordis ~l'qui~ili()n th~' will help II devi-e a plan 10 1110Ii,'at", and fClain Guid~nl el11ployee~"

"A Gamble on LCD TV's Meant Survival for Sharp"

By Martill Fork/a. NYT. Mard, 22. 2006, fl. C/.

In corpO"'Il' lapan, n,mp~nies h~ve long for lk...·,ldcs "fter World War II "ompanic, M,- ~heh;da spen! his first year as
prefcm:d 10 run wi'h the I",ck. But some m~r<:hed in lock slep 10 ~d"~n<:e the president making almOSI daily trips 10
an' now karning to a,:t like I'Hle wolws, n"tion 'I' c<:onomy. That <:olleetivi,t ,ystcm Sh~rp off'i,','s and f~etory floors around

Take Sharp. "hich fordccadcs looked like
olocr bij! Japancs<: clce1l'lmics makers.
producing every device under the sun
from ri,1.' ,'ook= 10 stmi{'ondudors. But
when lhe compa"y faced collap,..; eighl
ye'lfs ~go. ilS newly in~lalled pr"sidcnt,
Katsuhiko M:oehida. jellisone<! unprof-
ilablc producb mid bel Sh~rp's future un a
single. lhen-unproven new prodUCI: fla,-
p,mcl telev;sions us,ng ~ s(:reen
ted:mology <:alled li<.juid-crystal display.
The gamble p"id off. Sh~rp nO'>" re~~
re(:ord prOliiS as a leader in lhe booming
global m....kct for L.CO. tckvisions,
"Survi",,1 loday mean.< inmwating and
doing things tllllt nu OnC elsc docs:' Mr,
Machida said. '~I'his i, a le,,,,n nol only
fur Sharp but for all of Jap;lll."
It i, a le"on Ihat lhe bu,inc" world
here has apparently taken 10 hcan. as
a wave of corporatc reva"'ping and
nlllOvmion breathes new life into J~pan's
long-moribund c<:onomy. And as these
10lle wolves multiply. they may help Jap;1l1
playa ,tn1l1gcr mle in global growth as lhe
world's scromJ-largest o:x:onomy.
Compani,', from supermarh'l "ha;n, to
camera makers ~re moving aw:,y from
tmdili"nal <:onrormity. Th<:y havc goll~n
more aggressi"e about containing cos's
~ftcr ,pending Jap~n's lost decade
uf swgn:!llt economic growlh closing
ra,·tor;cs, shrink.ing payrolls and wril;ng
off debt. More col11p:'nies :,re ~I'l) acling
lilc Sharp, trying to s..-t IIK'nlsch',·s apan
from rival> with unique products ~nd
servi,'es. The l'hangcs "re ,,-'wriling Ihc
rules of Japan's business cuhure. where
broke down when J:<p~n's economy
stalled and e-'<:n ,'ontraetcd in Ih<: 1990's
after Ihe coll"JlSC of Iw;n bubbles in the
real est"tc alld sloc'l marklS. "It's ~ new
er~ for Japanese businesS:' Solid John C.
Ikd, president of lhe busin<:ss <:onsu lting
<:o"'pany North Slar Lc~dership ~nd co-
author of "!up"'I'S Busilless RenaisSHlltC:'
"Japan h~, become much more emreprc--
ncurial ~nd innuv~live. Companies ~rc
laking new rii'ks. going imo new ~re~i'.
making ,leW products."
AI Sharp. Mr. M,oehida said he h"d
Ie~med to take risks Mausc lhe eomp;,ny
h"d no "hoi<:e Sharp h~d thr;wd during
tile poslw"r years with products hle hand·
held c~kulat'-"". But when M,- Machid~
took the hclm in 1998, we~k dOlllCstic
sale, and <:heaper A,ian <:ompetit;on had
plunged thc 94-year-old company mlO ils
worse <:ri.,i, ,i!>l'C an eanhquak,' flattened
i1S original faclory in 1923, As prolil
plummctcd, Mr, Ma<:hid~ de"id~d to
shrink or halt production of scmicondue-
tors. <:omputcr mon;wrs and tub<.' tcle-
visions, which were m~jor prodU<:1 lines
wocre Sharp <,<mid no longer <:ompctc on
price. Mr. Machid~ s<lid he duided Ihe
only way to beat "h,'aper manufa<:lurers
WaS 10 sl~'y Ilhe;od lechnologic:,lly. He "'lid
h..- chosc nal-pand lekvi,ions to tak.e
adv:ullage of L.CD. technology Ih~1
Sharp h~d originall)' dncloped in loc
1970'1' for caleul~tor screens, "The old
"'~y of doing Ihing> waS jusl spreading
us 100 Ihin:' ~lr. M;ochid:l said in an
in!('fv;ew at Sh~rp's he;odquartcrs in this
indUSlrial cily in weSlem Japan.
Japan. edKming employees '0 work e.\tr~
hard 10 m"k<: his plan a .'U{TCSS. "If
we don't do this. Sh~rp has 110 future:'
Mr. M"l'hid" repealedly s~id, ~<:l-ording
10 employees. M:'ny Iislened sullenly.
unwilling 10 contradi!'! their b/>Ss in
public. Mr, Mao::hida faced a p;,nkularly
tuugb scll at Sharp's eompull'r pancl
di,·ision. whose products he w~, scmp-
pinj!, In town-h~ll-stylc mtttings wilh 50
10 100 employees ;01 ~ timc. he said South
Korean ~nd Taiwanese manuf~leturers
<:uuld make Ihe same panel,. and he
ch<lllenged IllS cng;ncers to raisc the
qu~lily of L.CD. se,,-'Cn, high el1(mgh to
wurk for televisions. He SCI tuhnical
goals. i'och a, tripling the ..-on1r~" mlio. a
way of me~suring picture sharpllCss.
within three yca",. Employ"'" ,aid Ihey
were skeplical m lirsl that L.CO:s could
work. pa";"ularly for large Ide,';,;ons.
But suptJOI1 <.juiclly grew as lhey reachc<l
t~rgets ahead of ".-hcdu Ie. Sharp gained ~n
early lead in L.CD. lelevisions that it still
i'trivc, to maintail1. In O,·wber. it will
open the first factory in the world 10
usc ">-l'ancd eighth-gclJ<-'rdtion L.CD.
production le<:hllOlogy, which increases
produl'1ion by using gl,,-~, p~nds as large
:IS ~ king-size bed bul only as Ihick ;os II
post<:a,,!. Sharp now {'ompell's in th~
global L.CD, m:"kel ",ith companies
IlHlre lhilll 10 limes its s;ze.like SOllY ,uld
S:'l11sung Elcrlronics.
"We ~re l'"n'lallll~' t{'lIing {'mploy,,<,s
10 push ~hc:,(J:' ""id Shige~li MilU,hima.
he"d of Sharp's L.CO. di"is;'Kl. "We can'l
>I~nd slill for;o monlCnl:'

Questions for Discussion

1. In whm ways is Sharp's decision to go illlo 'he LCD-sercel1marlcl 'Ill example ofnol1pro-
grammed (k:<:isiol1making'!
2. Whal kind of decisions did /I-'lr, Machida m~ke to plUmole Ofg~nilmional le~rning Ihrough-
oul Sharp'l Why has Sharp sut<:eedcd '0 far"
 PAR T 3
CHA Organizational Processes

ORGANIZATIONAL DESIGN
AND STRUCTURE

OVERYIEW

DESIGNI,'1iG ORGANIZATIONAl. STRUCTURt:

GKOUPIN(; .lOllS INTO FUNCTIONS AND DI\'ISIO,~S

COORDINATIN(; "UNCTIONS ANIl DIVISIONS

NIOW IT·[NAIIU:U FORMS m' O'WANllA1'IONAL l)t:S1GN ANI) STltUCTlJll.t:

SUMMAR\'

OKGANIZATIONAL IInlA.vloR 1,'1 ACTIO,'1

Learning Objectives
By the end of this chapter, you should be able to:
Understand the relationship between organizational design and an orga-
nization's structure.
Explain the main contingencies affecting the process of organizational
design and differentiate between a mechanistic and an organic structure.
Cite the advantages of grouping people into functions and divisions and
distinguish between the main forms of organizational structure from
which an organization can choose.
Explain why coordination becomes a problem with the growth of an orga-
nization and differentiate between the three main methods it can use to
overcome this problem and link its functions and divisions.
Gain an understanding of the enormous impact modern information tech-
nology has had on the process of organizational design and structure
both inside organizations and between them.
 Opening Case
HOME DEPOT'S NEW MILITARY-STYLE STRUCTURE
How has Bob Nardelli changed his organization's structure?

he way in which Home Depot, the home improvement supply chain,

has recently changed its organizational structure to better motivate and
coordinate employees provides some good lessons in organizational behavior.
The company's founders, Bernie Marcus and Arthur Blank, saw an opportunity
to open a home improvement ~superstoreU and to offer a range and variety
of products at low prices that no other home improvement store
then in existence could match. They opened their first store in
Atlanta, Georgia in 1979, and its huge success encouraged them to
rapidly expand the number of their stores.! Because their young
company was growing so quickly, they decided to give individual
store managers considerable freedom to order and stock the kinds
of products local and regional customers wanted to buy.
This decentralized approach to operating the store chain
worked well until the huge profits Home Depot was earning
attracted new competitors into the home improvement market,
such as lowe's. lowe's managers had watched Home Depot's
rapid growth and were convinced they could do better. In
particular, they believed Home Depot's weakness was its poor-
quality customer service and poor store layout, which was very
similar to a warehouse. lowe's managers designed stores so
they easy for ordinary "unskilled" homeowners to shop in, they
made sure lots of help was available, and they decided to stock
a standardized range of products in all their stores to reduce
costs. The result was that lowe's quickly caught up with Home
Depot in the 1990s; Home Depot's stock collapsed when
Home improwment SlOres Lowes and ~lome investors feared it was downhill from here on.
Dcpo! ha'·e been ligh(ing (0 expand (heir Home Depot's founders decided it was time for a change;
share "f (he markcl in the 2O(()s_ Dcspile
they searched for a new CEO to turnaround their company's
increasing pcrfonnaoce. Boo Nardelli.
performance. Bob Nardelli, a former GE top manager, was their
Home Dep"l", CEO. resigned in January
2007 and left wi(h a ,;c'·enlllee (XlCbge
choice. Nardelli had a reputation for finding ways to lower costs
valued at $210 milli"n. and overhead while giving customers what they wanted. 2
Nardelli also has a military background, and he understood the
advantages of a centralized chain of command and uniform,
standardized operating procedures to get the job done quickly and
efficiently. Since 2002, Nardelli has worked to develop a military-style
organization for Home Depot. 3 He has steadily recentralized authority
over time and removed store managers' abilities to choose what products
to stock for their individual stores. His goal was to streamline and
centralize Home Depot's purchasing activities at its Atlanta headquarters
to reduce costs. At the same time, he realized the need to attract
customers by increasing the number of new, innovative products Home
Depot stocks for them. Nardelli also created a sophisticated organization-
wide IT system that provides store-by-store performance comparisons and
each store manager knows how well their store is doing and where it
ranks on this hierarchy. Now, top management has realtime, military-like
information on how its "forces" are succeeding in the field.

ORGANIZATIONAL
STRUCTURE
The formal system of ta,1.. and
reporting rciatiUlhllip, thaI
Cilntrols. coord inatc,. and
moti,ate, employee, sO that
they cooperate and work
together to ach Ie'C an
organi/at;"n', gnak
ORGANIZATIONAL DESIGN
The proce" by which manage"
....Iec! and m3nagc ,'a,;ou,
d, nlen,i"n, and l'OmpOnents of
organi/.atintlal 'l",cture and
<'ulttlrc "I!hat an organi..ation
can achicle ,t> g"als
CONTINGENCY THEORY
Orj!anirOllional s1l'''1urc .,]lOUld
be lk,;gllCd to malch the ~t
of eOlltingcocic,- factor<. or
""ndl1l"'" thai cause"n
organi/.at;oo the """1 uoccrta;nt)'
CHAPTER 16 • ORGANIZATIONAL OESIGN AND STRUCTURE 535
Within eighteen months his new organizational structure worked-Home
Depot's costs fell and its sales increased as customers responded to his new
way of operating. This promising beginning convinced Nardelli that his new
"mechanistic style" of organizing is the right one for increasing efficiency in
the future. In fact, he has been busily recruiting ex-military officers, who
understand his organizing approach, to help him. By 2005, Home Depot had
recruited more than 17,000 ex-military personnel to manage its 1,600 stores
and Nardelli's own personal assistant is an ex-marine staff Colonel.
Nardelli believes the home improvement business is not "rocket science,"
and that a company that focuses on keeping its costs low and giving its
customers the most value will be the one that performs best in the long run.
In 2006, however, Lowe's was continuing to perform well, and despite Home
Depot's rapid recovery, it has its work cut out to remain the market leader-
for, while its profits are up, Lowe's is still catching up.4ln January 2007,
despite 5 years of improved performance, declining stock price led Home
Depot's board of directors to ask for Nardelli's resignation.
Overview
The Home Depofs experience suggests that the wayan organization is designed has a
major affecl un the way employees behave and how well il openltes. Morcol'Cf. with com-
pelilion increasing in evcry markel. like Ihe hume impruvemenl markei. il is imperalive
Ihat companics continuc 10 fmd ncw ways to operate efficicntly and flcxibly.ln this chap-
ter we first exam inc lhe naliJre of organ iZal iona I design and strUCIIJre. and we then discuss
lhe main CQntingeneies or changing conditions lhal affecllhe way a pmlicular org:lniz<l-
lion is designed. Sl"i:ond. we louk at Ihe differcnl ways in whil:h peoplc and groups can be
arranged to create an organizational structure that allows them to best achievc an org:mi-
zation 's goals_ Th ird. we e)lami nc the melhods organizations usc to coordinatc and ime·
grale ~ople and groups 10 ensure lhat lhey work 10gelher well. Finnlly, we focus un the
way ncw forms uf informatiun technology arc changing lhc way organizations manage
their aC1i\'ilies.
Designing Organizational Structure
Organi;o;ing is the process of establishing the structure of working relationships among
employees to allow lhem 10 achieve organizalional goals effectively. Or~;llli't.lItio"lIl
slructure is the fumlal syslem of task and job reporting relalionships Ihal delemlincs how
cmployees usc resources 10 achicve thc organizalion's goals. S Organizational dt'Sign is the
process of making thc specific choices about how to arrangc the tasks and job relationships
lhm comprise the organiz.uional slruclure. 6
According 10 l'Onlingl'nl:)' lhl~Jr)', an organizalion's slruclure needs 10 be designed 10 iiI
or match the sct of contingencics-fano" or conditions-Ihat affed it the most and cause it
the most ulleertainty? Since each organi;o;atiotl faccs a diffcrent sct of contingencies, thcre is
no "one best way" 10 design an organizmion: The best design is one lhat fits lhe organiza-
lion's spl.-<:i!i\; silualion. Thrl"C importanl cOntingcm;ies thaI !;\elor into the design of oT'.,o;ani-
;o;alional slructurc arc: (I) the naturc of the organizilliou's etwironmcnl. (2) advances in
536 PART 3 • ORGANIZATIONAL PROCESSES
TECHNOLOGY
The C'Omhina""n of '~III,.
kno..... IcJgc. 1001>. ma~hinc,.
compu'e" .• nd "",Uipmenl u",d
in 'he de,ign. produc'ion. anJ
di"ribu,;"n of £oo'h and
>en-ice'
EXHIBIT 16.1
Three Contingencies
Affe<ting Organizational
Design
technology (increasingly. information techoology). and (3) the characteristics of an organ iza-
tion's human resources. S Each of these is discussed in detail ne~t. followed by the way they
affect an organization's stmClure.
The Organizational Environment
We examined ~everal forces in the environment that affect organizational behavior ~uch as
changes in the social. eultuml. and global environment in Chapter I. In gelleral, the more
quickly forces in the environment are changing. the greater the uncert~,inty within it. and
the gre:ller are the problems of quickly :lecessing resources the org:lnization needs to per-
form well. I ike additional capit:ll, pl:lllls. and equipment. In order to speed up the decision-
nmking and communication proccsses rclatcd to obtaining rcsourcc.s. the most likely
choice of design will be one that brings fle~ibility to lhe organization." In this case. an
organiziltion is more likely to decentralize ,wthorilY and empower its employees to make
important operating decisions. to Since change is occurring everywhere in today's global
cnvironmcnt. fillding ways to structure organizmions to empower self-managcd teams and
employees is on the rise.' I
In contrast. if lhe environment is stable. reSOltr<:es arc readily availilble. and uncer·
tainty is low. then less coordination and cmnmunicatioll among people and funnions is
needed to obtain r"sources. Organizational design choices can be madc that bring more
stabililY or fomlality to llle struclurc. A more clearly defined hier,lrchy of authorilY and
extensive body ofru1cs and regulations is likely to be appropriale in this case,
Technology
Tl'ehnolog}' is the combinmion of skills, knowledge, tools. machines. complller.;, and
equipment llmt is used in the design. production. and distribution of goods and scrvices.
As a rule. the more complicated the technology thai all organizalion uses. the more diffi-
cult it is to regulate and control it. Thus. in contingency theory. the more complicated the
technology. thC" greatn is the need for a flexible structurC" to allow an organizmion to
respond to unexpected situations and providC" its C"mployees with the frecdom to \\'ork out
new solulions to the problems they enwunler using 1t. 12 1n contrast, the more rouline the
technology. the more appropriate is a formal stTlltlure lxx:ause tilsks arc simple and the
steps needC"d to produce goods and services havc becn worked out in advance.
What Illakes a lechnology routine or complicated'! One rescarcher who invcstigated
this issue. Ch,lf1cs !'errow. argued thallwo factors determine how complicated or nonrou-
tine technology is: task variety and task analyzilbi Iity. 1.1 uisk \'{/riny is the 1111 mber of new
or unexpected problems or situations that a pc.... on or fuuctional group encounters while
performing tasks or jobs. '/(Isk (lIliIh'llbiliry is the degree 10 which programmed solutions
are avaIlable to people or funclional groups to sol\'e Ihe problems lhey encounter.
Th. Org.nouu"n', Em'lronm.n' Tho Org.n,uuon', T«hnology
1
Hum." Rowu",., and ,h.
Employm.,,' R.I.lIon,h,p

SMALL-BATCH
TECHNOLOGY
A method u,e<1to produce
_mall 'lu'nlllic, of <:u_tomllc<1.
"ne·of-a·~lnd produ<:h b._cd
on the ,.ilh of people who
,,,,,. tOJ;elhcr in 'mall group"
MASS-PRODUCTION
TECHNOLOGY
A method ofpro<Juction u,ing
automatcd machine, th.1 are
prog.rammed to perform the ",me
operation, time and time ag:.in,
S.illcd wor.crs ilt Steillway and
Son, wrap a 22-fool-long maplc'
rim :<round tile press that will
,hape it inlo the c'a,,-' for a Moocl
D grand piallO.:m cxatnple of
,mail-balCh production in aelinu.
Roughly 200 people are ;n\'ol\,cd
;n ma.iug and assembling the
piano. which has 12.000 pans
.n<1 <'o,t, a!xlllt $ 60.000 to buy.
CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 537
Nonroutine or complicated tcrhnologics arc characterized by high tas. variely and low
task analyzabilily: this means lhm many varied problems occur and thm solving these
problems requires significant nonprogramnK'd decision ma.ing. In contrast. routine tech-
nologies arc characterized by low task variely and high lask analyzabilily; this means thm
the problems encoumercd do not vary much and arc easily resolved through programmed
decision makiog.
Examples of nonroutine lechnology are found in the w,ly scienlisls in a research and
de\'elopmenllaboralol)' develop new products or discover new drugs. or in the way emer-
gcncy or operating room personnel eooperale 10 quickly respond 10 each pmiem"s panicu-
lar medical needs. Examples of roUtine lechnology include typical m,tss-production or
assembly oper:llions. where employees perform Ihe same t,lsk repeatedly ,md lhe pro-
grammed solutions necessary 10 perform a task efficiently have already Ix:en idemilied and
reli ned. Similarly. in service organizations such as fast-f()(X/ restaurants. thc tasks thm crew
members perform in making and serving lilc f()(X/ are very rouline.
The extent to which the process of actually producing or crealing goods and services
depends on people or machines is another faclor that delennines how nonroutine a tech-
nology is. The more the tcrhnology used 10 produce goods and scrvices is based on the
s.ills. knowledge. and abililies of people wor.ing togelher on ;In ongoing basis and not on
automated machines Ihat can be programmt'd in advance. the more complex the technol-
ogy is. Joan W(xxlward. a professor who investigated the relationship belween technology
and organizational structure. diffefCntiated among thn.-'"C kinds of technology on the basis
of lhe relmive contributions made by people or m'lchines.l~
Small-b,.teh kehnulog)' is used to produce small quantities 01 customized. one-of-a-
kind pnxlucts and is based on the skills of pt"ople who work logether in small groups.
Examples of g()(X/s and services produced by small-batch technology include CUSlom-buih
cars. such as Ferr.tris ,HId Rolls Ro)'ces. highly specialized melals and chemicals lhal arc
product'd by tbe pound ralher than by the ton. and the evaluation services performed by a
small team of auditors hired HI evaluate the accuracy of a firm's financial statemems.
Bccause small-hatch goods or services arc- cuslomized and unique. employees nced to
respond to each silualion in a more unique fashion: a dcrenlralized structure of authorilY
allows them 10 respond tle.\lbly. Such:l structure is therefore appropriate wilh small-batch
technology.
Woodward's second kind of technology. mass-production tc'ChnoIOg)'. is based primar-
Ily on the use of automated machines that arc programmed to perfonn the s:nne opemtions
lime and lime again. Mass pHxluction works moSI eflieienlly wben each person perfoDlls a
538 PART 3 • ORGANIZATIONAL PROCESSES
CONTINUOUS·PROCESS
TECHNOLOGY
A melln.t of pn>duelion In,,~vinl;
the u'" of aUlommL>d machi"",
".unin/; in 'l"lucnee and
controlled lhrough compute,."
f"'ln a "entral monitorin\: 'lalion.
ORGANIC STRUCTURE
All organiz8lirnlal ,lruclure
de,igned l\} promote ne,ibilil~'
'0 Ihal cmplo~cc, l',m inili"l~
,'hange and aoJ"p1 4u,,~ly 10
"hanging nmdil ion'
repetitive ta~k. There- is less need for flex ibi Iity: in this case. a fonnul orgun izat ional structure-
is preferred because it gives manager,; the rnost control over the prodUClion process. Mass
pnxlul1iun results in an oU1put of large quantit ies of staJ1(~mlized producls such as ti n cans,
f'Ord Tauruses, washillg ma(;hines. and light bulbs. and servi(;es su(;h a~ a (;ar wash or dry
cleaning.
TIle 1hird kind ofteclHlology that Woodward idelllified. eontinuouS-I)r'OC'CSS tcchnolol:)'.
IS ,llmost lOtally mtthanized. Products are produced by autornatl-d rna(;hines working in
scquen(;e and controlled through computers from a (;elllral Illonitoring stmion. Examples
of continuous-process technology include large steclmills. oil refineries. nuclear power
Wllions. und large-scale brewing operations. The role of employees in continuous-process
technology is nOllO produce individual products but inslead 10 walch fur problellls that
may occur uIICXpc<:K-dly imd adversely affl'l:t the- overall pnx:ess. 1bc possibi lity of a ma(;hin-
cry or computer breakdown. for example. is a major hazard associaled witll COlllinuous-
process lechnology. If an unexpected situation does occur (like an explo~ion in a chemical
complex). employees must be able 10 respond quickly and appropriately lu prevent a disas-
ter. In this case, the llexible respon,e required will ne(;e~sitate a flexible organizational
structure .
As we discussed in previous cll<lpters. new information lechnology is profoondly
affecting how urg,lIllzations operale. An IT-enabled organizational structure allows for new
kinds of tasks and job-reporting relationships among e1eo:tmnically connected people Ihat
promotes superior COlllmuniCalion and coordination. For examplc. onc type of IT-enabled
organizal ional rel~ltionsh ip discussed in Chapter 15 is kllowledge IIwna!'emem. the sharing
and integraling of expertise within and between functional groups and dlvisiuns in real
time.l~ Unlike more rigid or bureaucratic organizing methods. new IT-enabled orgalliza-
tions can resflOnd more quickly to changing conditions in the competitivc environment.
Human Resources and the Employment Relationship
A third important conti ngency affecting ,Ill org,111 ization 's choice of structure is the chamc-
teristics of its human rcsour(;es and the nature of the employment relationship. [n general.
the morc highly ,killed an organization's workforce. Ihe more people arc requircd to work
togelller in groups or teams to perform their tasks. In this case. an org:miz,uion is more
likely tu usc a flexible. decentml ized strll(;lure. Also. the longer and better the employment
relationship a company has with its employees. the more likely it is to choose a design
structure giving, thellJ thc freedollJ to make important decisions.l~ Highly skilled cmploy-
ees usually desire freedom and autonomy ,md dislike close supervision. 11 For example, no
one nel-US to tell a Sl:ientist to reporl his or her re~ults accurately and impart i<llly or dOClors
and nurses to give patiellls the beSl care possible.
Moreovcr. whcn people work in tcams like doctors and nurses and groops of research
scientists do. they must be able to interact freely. A more flexible organizational structure
make~ this possible. When it o:ullJes to desigmng an organizational structure, both the WOn
and the people who do it are- important.
Organic and Mechanistic Structures
As the previous discussion suggests. an organization's environment. technology. and
human resources arc three main faO:lors tltat influence the design of its structure. The
greater the level of un(;ertainty in the environment of the organization. complexity of its
technology. and skill of its workforce. the more likely managcrs arc to design a flcxible
structure. In contingency lhcory, the term or~anic Slructure is used to describe an orgalli-
zatiunal Slructure th,1I is designed 10 promole flexibility so that employees can initiate
change and adapt qu il'kly to changing cond it ions. In an organic stnt(;!U re. employees work-
ing, in emflOwered teams assume the responsibility to make decisions as org,anizational
needs dict,ue. Employees also arc expected 10 conlinually develop skills in new kinds of
ta~ks and 10 work together to fmd the best ways to perform a lask. Shared work norms and
values become the main means through which employees coordinate their activities to
achieve organizational grmls.

MECHANISTIC STRUCTURE
An "'¥anllational ,1/ll<;lUrc
dc,ig'lC<lto in<l~'(: cmpk,yee, to
beha,c in p"-,,hctahle, occountable
"aI".
FUNCTION
II gro"p of p,:"plc who [JCrfonn
,llC ,ame ty[JC' of ,a,h or
hol<l ,imilar po,ition, in nn o,£a·
ni,um".,.
FUNCTIONAL STRUCTURE
An org<ll1i,,aliooal "roct,,~ Ihal
grool" h)gr..~her people "ho r.okl
,imilar po,itioll'. perf<>ml a ,imilar
",t of "",h. or "'" the ",me kin,h
of skill,
You're t;he Management; Expert;
CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 539
In COlllrast. the more st'lble the organization's environment, the less complex and more
well understood its technology. and Ihe less skilled liS workfol'\:e.lhe more likely are m,U\·
agel'S 10 design an organizalion<ll Siructure thai is formal and controlling. In cOll1ingency
theory, the term mecililIlistie structu re is used to descrihe an organiZal ional structure llmt
is designed to induce employees to bell.we in predictable. accoulliable ways. In a mecha-
nistic structure. dl-cislOn-making aUlhority is retamed at the top of the orgamz<ltion. each
employee performs a clearly defined Jask. and, each knows exactly whm his or her area of
responsibility is. The work process is coordinated by an extensive system of rules and rcg~
ukltions that link employee activities and make them ordered and predictable. How do you
design <Ill organization Structure to be either flexible or form<ll'! The way in which Bob
Nardelli designed Horne Depot's mechanistic structure is described in the opening case. In
genemL the wayan organization's structure works depends on the organizing choices man-
agers nwke about two principal issues:
• How to group jobs into functiollS and divisions
• How to coordinate or integrate jobs. fllllchonal groups. and dJl'isions
Grouping Jobs into Functions and Divisions
As we note in Chapter I. organization, arc groups of people working together to achieve
a widc variety of goals. One of tile main reasons f".-'Ople work togcthcr is so thm thc orga-
nization can experience gllins in productivity that resull from the division of labor and
specializatioll. IS
Thc fmH i,sue in organizational dcsign is to choose a division of labor or way to group
different jobs together to best mect thc needs of the organ izat ion's environlllent. tcrhnol-
ogy. and human rCSOUTCes. Most organizalions group jobs together according to their func-
tion. and Ihereby develop a functional Struclure. A funl'tion is a group of people working
togcthcr who possess si mi lar ski lis Of use thc same ki nd of knowlcdgc, tools, or techniqucs
to pcrfonlt their jobs. A funClionul structure is an organizational structure composed of
all Ihe job specializations that an organization requires 10 produce its goods or serviccs.
For example. the salespeople in a car dealership belong to the sales function. Together. c:lr
sales, car repai r. car pariS, and accounting afe the sct of functions that allow an automotivc
dealership to sell and maintain cars. Consider how Michael Dell developed a functional
Which Work System Is the Best?
You're an expert on organizational design who has been called in to advise a new web-
development company about how to organize its work activities. The company's goal is to
design websites to suit the needs of specific clients, usually small- to medium·sized com·
panies. This will require that the website developers work closely with each client. Once
the site is built to the satisfaction of the client, it will have to be constantly updated to
incorporate new software technology and to reflect changes in the client's business
needs. The managers of the new company want to know if they should (1) design the
work processes so that. using a sophisticated IT system, each employee working alone can
make all the necessary decisions to satisfy a particular customer's request; or (2) use small-
batch production and group employees into leams to develop several different websites
at once. Which system do you think is likely to be most effective? Why?
540 PART 3 • ORGANIZATIONAL PROCESS

EXHIBIT 16.2
ew
Dell's Functional M,chul D.II
Structure

Man~fO<tu~ng
Custom.. Product Mat.nal,
"-'n«;on m",ce d<Velopment m.nagem.nt
"-'nction function "-'netion

DIVISION
A group of fUJ><:lio'" creo'cd 10
all"", an O'E,milUllon 10 prooJucc
and Ji,p"'C of a pallic-ular kmJ of
1;:00J or -er\ ice 10 cu"ome.....
strul:lure. To effe<:tivdy control the ~ctivities of his employees as his eOl1lp~ny grew. Dell
neated the functional ,tructurc illustrmed in Exhibit 16.2,
Dell groups all employees who performlasks relmed to assembling personal comput-
ers into the m,lI1ufae\l1ring function and all employees who handle DelJ"s telephone
s~les II1to the s~les function. Engineers responsible for designing DeWs computers ~re
grouped into the product dewlopment function. ~nd employees re,ponsible for obtaining
supplies ofh~rd discs. chips. and other inputs arc grouped illlo the materials managemelH
funet iOIl. The functiollal Stfllctu re su ited the needs of Dell's growing COmp<lny. espeei<llly
~s it battled with Compaq~now a p~rt of HP~and Gateway for control of the person~l
computer market-a balllc whic'h it i, currell1ly winning hands down. 19
If an organization suhsequell1ly grows and prospers, it often employs a second group-
ing by division and adopts a more complex fonn of divisional struClUre. A dh'isioll is ~
group of functions created 10 speci<lhze in making and selling a p~rticular kind of good or
service .20
Choosing a strUl"lure and then designing it so that it works as intended is a signifieal1l
challenge. The ability to make the right kinds of organizing choices is often what differen-
tiates effective from ineffective organil~tions, Org~nilation~1 de,ign is such an important
decision because it affel"ls the behavior of people in so many differell1 ways. First, il affens
employees' 1110tivationto work hard and to develop supportive work anitudes. Second, it
affects the likelihood that different groups. functions. or divisions will Want to cooperate
with one another. share resources. and work together effel:ti\ely.21 To be effC\:tive. an orga·
nization must decide how it wants its Illembers 10 behave. what atlilUdes it W<lnts to
encourage. and what it wall1S ils members to accomplish. Then, it can make design choices
b.1scd ol1thesc goals.

Functional Structure
Advantages of a functional structure. A functional structure offers sever~l
advantages when it l:omes to managing an organ izatioll's ~ctiv it ie,. All org~nizat ion, (even
relatively slllall nnes) group their activities by function. at !cast to some extent. to C<lpturc
the benefits that result from the dil'ision of labor and specialization.

Coordination advantages. People grouped IOgcther al:l:ording to similarities in their

positions can easily communicate and share information with each other. As we saw in
Chapter 13 on comlllunication and Chapter 14 on decision making, people who approach
problems from the same perspective C~l1 often make decisions 1110re quickly amI
effectively than can pt:nplc whose perspectives dilTer. A func1ional grouping alw make> it
easier for people to learn from one an01her's experiences. In this way. a functional
structure helps employees improve their skills and thereby enhances individual ,l(ld
org~nilational perfonnance.

Motivational advantages. Grouping by function improves an organization's ability to

motiv,ue employees. When employees are grouped together by function. supervisors are in a
good position to monitor individual pcrfonT1~nc-e. reward high pcrfontl'\Ilce. and discollmge
 CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 541

soci3110afing. functional supervisors fiml moniloring e3.\Y because lhey usually [Xls'.Css high
levels of skill in {he panicular function. Grouping by function also 3110ws group melnber> to
monilor 3nd eonlrol one aooll1e(s beha\'ior and p.::rfonnance levels. Funl:lional grouping C3n
also lead 10 the development of norms. values. and group cohesiveness lhal promme high
performance (see Chapter II). Finally. grouping hy function creates 3 C3reer ladder to
motivate employees: Function31 man3ger> and supervisors are typically employees who have
been promoted beC3Use of Iheir superior perfomlances.

Disadvantages of a Functional Structure. To man.tge the division of labor. mOSl

organizalions develop a function~1 slnlclure because of the coordin~tion and motivalion
3dvantages associated with it. However. as an organization continues to grow and its
aClivities become more diverse and CQtnplex. a functional structure may no longer allow it
10 coordinale its activities effectivcly. II may even hinder lhe orgam~A1lion for anyone of
Ihe following lhree rea-;ons:
I. When the range of produclS or scrvices lh~t ~ company proouccs increases. its vari-
ous functions can begin to experience difficulties. Imagine the problems lh;ll would
occur. for cxample. if a company stancd to make cars. thcn went into computer>.
followed by clothing, bUI used the same sales force 10 sell alllhree producls.
Most s<tlespeople wOllld ml1 be ~ble to learn enough aboul alllhrcc prooucts
quickly enough for the company to provide its customers good service.
2. Coordillatioll problems n13Y arise. As organizations attract customers with different
needs, II llmy find ill13rd 10 service lhese different needs by using a single set of
fUll("\ions. The nt'CdS of individual cuSlomer>. for example, arc often very differenl
from the needs of large rorporate CUSlOmen;, although each still reqllires a high level
ofper>onalized service.
3. As companies grow, lhey often expand lheir operations nationally. Servicing lhe
needs of different region~1 customers with a single sel of manuf~cturing.sales. or
purchasing functions becomes very difficult.
To cope wilh coordination problems such as these, organizations typically overlay
their funCliOI131 stn.lCllJres with divisional Slruetures,

Divisional Structures: Product. Market. and Geographic

When a divisional structure overlays ilS functional groups. an organizMion can eoordm~te
its activilies more effedh'Cly. Organizations can choose from three kinds of divisional
structure: product. market. 3nd geographic structures (see Exhibit 16.3). Each is suited to a
p3rticular kind of coordination problem f;lcing an organization.!!

Product structure. When an organiz.ttion chooses 10 group JX'Ople and funclions so lhal
PRODUCT STRUCTURE it can produce a wide variety of differenl products, il moves 10 a product slruclurt'. Each
A <Ii,· i,io,,"1 O'l'~niLalion,1 product division contains thc functions necessary to '.Cr.'ice the specifie goods or products,
"ru~llIrC th~t groop' lum:t,on, Exhibil 16.3(a) shows the product structure used by a company like General Eleclric.
by {~PC' of pmdocl so thm ea<h
<li .. i,ion comai", the fun,:lio", which has many separate prodllct-orienled divisions-for example. dIVisions responsible
it ne...I, to "'....·i~c lhe pro<lU~I' it for produdng light bulbs. aerospace procluds, and appliances. Each of Ihese divisions has
produce, its own set of functions (such as accounling. marketing. and research and dcvelopment).
Wh:tt arc the :tdvmll:tges of a product structure'! It allows 3 comp3ny 10 increase its
division of labor so thaI il can make and sell a wider r.tnge ofprooucts. Dell. for example,
created product divisions when it began to sell new electronic goods like work stations,
mini compulers. printers. and PDAs in the 2ooos. Each product division is responsible for
lhe success of its new products, so the members of e;teh division focus lheir energies on
m~king those proouels ~ success. In 2006, Kod~k announced it was splil1ing its consumer
photographic products division into two pans. 111 the futllre. the digital imaging products
group will m3113ge growing sales of its digital C31nems. printer>. and 3ccessories: the film
542 PART 3 • ORGANIZATIONAL PROCESSES

EXHIBIT 16.3 A. Produ<t ..",<tuee

Three Types of
Divisional Structure
Corpo","
m,o,geme",

Pm.ou"
divi<;on.
Compu,er A.,0'P'« AW 'i • nco
.o;";';on .oM,ion d;";<;",,

Fuo<tio"<

em

Corpor.te
mao'geme"t

Corpora« 5m.1I bU>l"'" IrI<!""du.1 G<>v<rnm,""

oustom.... oustom.... <ustom .... age"o",<

C. Ge<>g",phi< .truOW'.
em

Co'por.t.
maoag.m."t

G.oS'aph;<
di,,;<;om
W• .,.rn E.st.rn South"", C.otral
reg'o" reg'o" regoon "g"'o

r-f-, d-J. P
Fun<t1o"<

fh
inwging products gruup will be responsible for Kodak's declinmg Imdilional chemiC<11-
based films and accessories?-' Companies change their producl divisions as the demand for
their products ris;.- and falls-the goal is to organize a company's rcsources to ocst meet
customer nceds.

MARKET STRUCTURE
A tli, i~,ona 1organi,",ional
,lruelure ,hal jJmup' function,
b} lyf'C' of eU_lUmen. '0 thm
e"ch d,,,,"on eOnla,", the
function, ,1 need, to ",,,,ce a
'f'Ccitie ,egmem of the markol
Market structure. Sometimes the most pressing problem facing an organil:1tion is to deliver
products to customcrs in a way thm ocst meelS eUSlomcr needs_ To accomplish this goal. an
organization is likely to choose a 1Il1irket structure and group functions into divisions to
respond to the 11l:eds of parllctllar Iypes of customers, (See Es hibit 16.3B.j For example.
companies like Staples and Office Max serves imljviduall"ustomers. but they also ha\'e large
accounts wilh small·busincss customers and acCOUIllS with large companies and go\'cmmCI1(
agencies. Cuslomcrs who buy brge qu,1l11ilies of office supplies require special services and
oflell demand sp!."Cial paymcnl or dehvery tenns. To suit the sp!."Cilie net-ds of each group of

GEOGRAPHIC STRUCTURE
A dl""ioo o'Eanil.alional 'tru.:ture
th"1 J;roup, fUl'ICtion, by f'Cj!.lOn
,;0 that e"ch di .. i,joo cool,io,
the fUl'ICtiuo, It Ileed, to ,.,., Ke
cu,t'>Irer, 10 U 'p<:~iti~ £'''Il-
graphic U"'".
When u large mmp"ny like GM
has m,my different divisions.
they arc often housed in different
buildings or locations. It
Ix'<:ome, difli~ull for d;v; ,ions to
exchunge information 'lI1d
,'oordinate their ''''I ivil ie,.
Divisions m"y al"" swn to
cm"pele and pursue 1111,ir own
J!o.~ls <II the e~p<:nse of
"~aniz,,tional goal", ,\11 these
problems occurred lIt GM,
CHAPTER 16 • ORGANtZATIONAL DEStGN AND STRuaURE 543
customcrs, finns gRlUp thcir functions according to the type of customcrs' neoos. Th:u way.
each lIlari;et division can spedalize in. and be<:orne more effxlive at. ,neeting them.
Geographic 5trU(ture. When organizations expand rapidly both at home and abmad.
functional struclUres can become problematic becalJsc managers in one central location
may fttld it ttlneasingly difficult 10 deal with lhe ditferent issues facing dIfferent regions.
In these cases. a geugraphic structure. in which divisions are brokl'n down by location. is
often chosen (sec Exhibit 16.JC), To achie"e I'ederal Express's corporate mission of
prOl'iding next-day mail service. CEO Fred Smilh chose a geographic structure wilh
regional divisions. Large rClailers like Macy·s. Neiman Marctl~. and Brooks Brothers also
use a geographil' structure. Since retail customers' purchascs can vary dramatically by
region (morc down parkas arc likely to be sold in lhe Midwest than in California, for
example) ;l geographic structure gives regi01wl managers lhe flexibilily they need to
choose the range of products best suited to theIr CUSlotJ1ers.
If it adopts a global geograpilic IIrI,clI,re. then an organization locates different
divisions in each of the world regions in which il operates. Oflen, for example. products
lhat appeal to U.S. CUSlomers do not appeal 10 CUSlomers in Europe. lhe P1,cific Rim. or
Sottth America. Thc goal is to customne products 10 meet the needs of customer; in
those' diffcrent world regions. and a global geographic strueture allows an organization
to do ll1is.
Advantages of a Divisional Structure
A divisional structure~whelher irs based on products. markets. or geogmphy~hasCOOf-
dinalion and motivational advantages lhal overcome m;lny of the problems associated with
a funclional structure as the size and complexity of an organization increases,
Coordination advantage5. Bc-calJSC each division contains its own sel of functions.
fUnClional groups are able 10 focus their aClivilies on a specific kind of good. service. or
cuSlomer. Thts narrow focus helps a division crealI' high·quality pr<.:.ducts and provide
high-quality customer service. Each product division. for example, has its own ~ales force
lhm specializes in selling ils panicular product. This specialization enables salespeople to
perfonn more effeclively.
A divisional structure also faciltlateS communic..tion between functions ,md can
improve decision making. thereby increasing penormance. Burlington Nonhern Sant.. Fe
Railway began dividing up its shipping opemlions into product divisions by the commodi-
lies cuS101ners ship~ears. chemic,lls. food produClS. and so on. The ch,ulge from a func-
tional to a producl structure 'lllowl'iJ lhe company to rr'iJuce cos1s and make better use of
their resources.2~
Simi lar kinds of advanlages can re,u h from usi ng a market struclUre. Groupi ng diffcr-
enl functions together ina markel di vision to serve one lype of CUS10ll1er en;lbles 1he func-
tions to coordinate their 'lclivilies and better serve their customers. For e....ample. KPMG.
the third largest Kcounting company in the United Stales, reorganized fmm a functional
stlllcturc (in which people were organized into lradilional functions like accounting. audit-
ing. taxes. and consulling) to ;l market Slructure. Employees in each of these funclional
are;lS were grouped together to serve customers in different industries. like manufacturing.
financial. and relail sectors. for example. 2S KPMG moved to a mari;et structure to make
bellcr use of its human and olher resources.
A geographic Struclure pUiS Hwnagers closer 10 lhe .scene of oper:Jlions lhan managers
at cemml headqu;lners. Regional managers are well positioned 10 respond to the region;ll
needs of customers and fluctlJations in resources inlhose areas. Often they arc able to flOd
S44 PART 3 • ORGANIZATIONAL PROCESSES
CORPORATE
MANAGEMENT
TIl<: >1:1 of !Ilunag~r. wh(><,C
""pon,jl>ilit} " 10 ,upe...';'" and
ow""," ttl< di\ i,ion.11 manager.,
OPERATION COSTS
The eo>l\ a ,,,,:iated wilh
managing an organ"allon.
solutions to specific problems in those areas and usc availablc resources more effectively
than managers at headqu<Jrters can.
Finally. on an individual level. people who are grouped together into divisions are
sometimes able to pool their skills and knowledgc and brainstorm ncw' ideas for prod-
ucts or improved customer service. As divisions develop a common identity and
approach to solving problems. their cohesiveness increases. and the result is improved
decision makmg.
Motivational advantages. Grouping into divisions offers organizations a wide range
of motivational advant,lges as well. First. a divisional structure gives rise to ,I new level
of management: corponlh' OIallllgl·mcnl (see ExhibIt 16.3). The responsibility of
corporatc managers is to supervise and oversee the managers of the various divisions.
Corporate managers e{J()rdinate and motivate divisional managers and reward them on tbe
b.1sis of the perfonn,lnee of their individual di visions. A divisional Structure makes it easier
for organ izations to evaluate and reward the performam:e of individllal di visions ,1Ild their
managers and reward them in a way that is closely linked to their performance.2<> Rcrall
frOIll Chapter R that a clear connection between performance and reward increases
motivation. Corporale mlln:lgers elln also evalume one regional operation against another
and share idcas dcveloped by one region with thc otbers to improve perfomlance.
A second motivational advantage is that divisional managers enjoy a large measure of
autonomy because they-not corporate managers-are responsible for operations, Their
atllOnomy tends 10 promote positive Ivork attitudes iHld boost perfonllilllce, Another moti-
vational advantage of a divisional structure is that regional nl1lnagers and emploYI:es are
close to their customers and more likcly to develop personal relationships with them as a
result. These relationships give the managers and employees an extra incentive to perform
well. Finally. on an individual lel'e!. employees close ident ification with thei r division can
increase their commitment. loyalty. and job satisfactioll.
Disadvantages of a Divisional Structure
Although divisional structnres offer large. complcx organizations a number of coordina-
tion and motivational advantages over functional structures. they have cenain disadvan-
tages as well. The disadl'amages can be overcome with good managemcnt. but some of
them are simply the result of the way a divisional strUCture works.
First. because each division has its own sct of fu net ions. the lIJWrali ng {XlSls of man-
agi ng an organization increase. The number of managers in an organizat ion. for example.
increascs. ~ausc each division has its own set of sales managers. manufacturing man-
agers. accountants. and so on. It also creates a completely new level of management that
mUSl be paid for-the corporate levcl ofmanagcment.
Second. as we discuss in the following. communication may suffer when a divisional
structure is implemented. Because divisional structures normally have Illore managers and
more levels of mallagement Ihan functional slructures. cOll1tTlunic.ltion eml become more
comple.\ as various managers at various levels in various divisions anempt to exchange
information with one another and coordinatc their activities.
·Illird. divisions HillY start 10 compete for organizational resources and pursue their
own gools al Ihe expense of organiz,ltional goals. These con!1icts reduce cooper.ltion and
call sometimcs result in friction between divisions.
If these conditions exist. a company may decide to disband its division structure and
split apan into separate companies that ,Ire easier to manage. For cXllmple. in 2006 Tyro. a
large d iv isional company. dl...:ided thllt II would break inlo three independent comp;mies Ihat
would operate in the ele"uonics. healthcare. and security and lire protcrtion indnstries.17
Tyeo's corporate managers believe that after the split the executives of eacb company will
Ix: able to develop a !\lOfC competitive oosiness model and choose a StroctUfC- for example.
functional or product-that allows them to implement it more eff(:ctively. Additionally.

MATRIX STRUCTURE
An organ"'lt;OIlal ,tl1.l\;lUre that
"muILill"ou,l) groul" P""I'k h)
function and h) prod""t leam,
CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 545
Tyco\ COlpOrale office will be c1o<;cd down. which will ll.'sult in saving, in operating cmts
as corporate executives either leave the company or join one of the three new companies.
Managers must continually compare and evaluale the benefits and costs of using a
futKtional or a divisional slructure. When Ihe beneftlS exceed the I.:osts. they should move
to a divisional structure. Even with a divisional structure. however. managers must find
ways 10 operate thm ovell.'01l1e s01l1e of the disadvantages inherent to it. and keep divisions
and functions coordinated and motivaled,
Matrix Structure
Moving to a product. market. or geographic divisional Slructure allows managers 10
respond more quickly and nexibly to Ihe parlicular set of contingencies they confront.
However. when the environment is dynamic and changing rapidly and ullcenainty is high.
even a divisional structure may not provide managers with enough nexibility to respond to
quickly enough. 2g This can occur. for example. when infomwtion tL-chnology or Ihe needs
of I.:ustomers are e"ol ving rapidly. In Ihis case managers must design Ihe most nex ibk kind
of structure avai lable to their organizat ion. Th is is called the IIwlnx J'lrU('fllH'.
In a 'lilltrix structure. managers group people and ll.'SOureeS in two ways simultane-
ousl)': by functIon and by pruduct.2'! Emplo),ees arc gl\lllped b), [ill/aiolls to allow them to
kam fmm one anolher and become more skilled and produclive. In add ilion. employees
all.' grouped into pmducllt'IIIII.\ in which members of differcnt functions work togcther to
develop a specific produe!. The result is a complex network of reporting relationships
among product teams and functions Ihal makes the malrix stfllcture very flexible. Each
person in ~ product team reports to two bosses: (I) ~ funclional boss. who assigns individ-
uals to a team and evaluates their perfonnance from a functional per!i;pc<:tivc. and (2) the
boss of their product team. who evaluates his or her performance On the lea1l1. Thus. team
members are known ~s ll1"o·b(),u clllployl'es.
Exhibit 16.4 illustrates a malrix ,trueture. The vcrticallines show the functions of an
organiwtion. and the horiwmal lincs show the product teams rcsponsiblc for devcloping
or manufacturing thc organization's products. At the interscct ion of the lines are employ-
ees who report to both a functional boss and" product boss. The membeTh of the learns are
each developing a specific product. One' team in Figure' 16.4 is working on the Alph:l COIll-
puter workstation for small businesses: another team is working on the Acta workstation
designed for large corporate customers.
Coordination advantages. Typically. a company uses a matrix structure (rather than
an ordinary divisional structure) for three reasons:
I. It needs todcvclop new products very rapidly.
2. It needs to maximize communication and cooperation between tel101 members.
3. 1nnovation and creativity are ke)' to the organ iZ<i1 ion's eontinu IIlg success. JO
Producttemns permit face-to-hlee problem solving and create a work sctting in wllich
managers with differe'nl functional expertise can cooperate to solve nonprogrammed
decision-making problems. Product team membership in a mmrix structure is not fixcd.
Two-boss employees arc transferll.'d from team to team when their functional expertise is
needed. For example. Ihree electrical engim:ers work Hl the Alpha te:Ull 10 design Ihe most
efficient s)'stcm to link the electronic L·omponcnts. When they solvc the Alph<i design pl\lb-
!clll. they may then move to the Beta team if it require.s theirexpcrtise. The nexibility ofa
mmrix structure ,llIows an organization 10 make best usc of its human resources.
Motivational advantages. To understand how the matrix structure innue"Kes
motivation. it is imponant to understand that the' memhers of the product teallls arc
generally highly qualified and skilled employees with advanced degrees ,Ind expertise
111 Iheir fields. The malri.\ structllre provides a work selling giving employees fn:-cdom
546 PART 3 • ORGANIZATIONAL PROCESSES

EXHIBIT 16.4
R.... "'h "nd Produ",
Engin«ring M.nur'Guring
A Matrix Structure d""k>pm'"' function
d~lopm.",
fi'Oc~on
1\'O",,,,n lima'on

"am
, .1
~
"
.Ipha
1-
-
Product
"am
.l.
~"
-- I
, l
, J
• Indi.idual.mploy.., who "port to two bose"~,
Product "am compo",d of<mploy..,woth two bo,,,,,

and autonomy over th~ir work activities. As we SIlW in Chapter 7 .job design is important
in dctermining work altitudes and bchavior~. and many people enjoy jobs with a high
motivating-potential score. Mmrix structures allow for such motivmion and encourage
work behaviors that enhance quality and innovation.

Disadvantages of a matrix structure. As you might expeel. matrix Strudurcs have

some disadvantages as well. Inherent to thent arc several properties thm can cause job
di~satisfaction. Matrix structures can increa~e role conflict and ambiguity (see Chapler 9).
and high levcl~ stress within them can sometime~ ensue. Two bo~ses making eontlil:ting
demand~ on an employee can l:ause him or her to feel some rule conflid; the very ItKlse
system of reponing relmionships can make employees vulnerable to role ambiguity. The
result is stress. Another souree of discomfort for employees is thm they might have trouble
demonstwting their personal contributions to team perforrnanl:e bel:au~e they move so
often from team to team. For reasons such as these. some penplc dislike "'orking within a
matrix structure.-]I
A~ this di~cussion suggests. the matrix structure i~ associated with the most complex
coordination and motivational Issue~. On the one hand. it has enormous coordination
advantages; but on the mher hand. it ean cause complex mOlivmional problems. The extent
of these problems explains why only companies that depend for their survival on rapid
product development designed to meet very specific customer needs use matrix ,tructure~.
They are especially common in high-tech and biotcchnology l:olJ1p,mies.

Summary

L;lTge organi7..Mions ~lre more complex than small organizations. They have a greater num-
ber and \'llricl)' of fundions and divisions bel:ausc they produl:e a greater number ,md vari-
cty of goods and scfvil:es. As organiz1l1ions grow. they can implcmcnt one or more diffcr-
ent organizational structures. Each SlnlC1ure offers coordination and motivational
advantages and disadvantages. and eaeh is suited to addressing a panicular contingency or
problem fal:ing the organization. Most companies use a fundional design to group organ i-
z1l1ional anivitie> and thcn overlay it with a product. market. geographic. or llJatrix struc-
ture to manage the specific eOlllingcncies they face.

AUTHORITY
TlJe p""'cr lh~t enable'< OIIC peNlfl
to llold :U1<~ller PC"''''' iIIXOUnt.tlle
for hi, or her llC'til'lfl'.
HIERARCHY OF
AUTHORITY
An olll'mi,at"m·, chain of
comma.nd that denne' the
rclali,-c authorit}' of ... ach k"d
"I' TlwTlagcmcnt,
SPAN OF CONTROL
TIle nurnb<"r of employ"", ,,00
",pon to a 'Jl<...·ific manager.
CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 547
Coordinating Functions and Divisions
The ftrsl organi7-<ltional design task is to group function, and divi,ions and crcale the orga-
nizational struCllJre best suited to the contingencies an organiZ31ion faces. The second
organizational design task is to ensure Ihat there is sufficient coordination or integration
among functions and divisions su thai the organizatiun·s resources <lfC used effectively.
l!<lving discussed the ways in which organizational activities arc divided up into functions
and divisions. we now look at how the pans are put back logether, We look ftrst althe way
in which the hierurehy of authorilY is used to coordinate functions and divisions so Ih,1I
they wurk together well. Then we focus Oil integration and examine the Illany dIfferent
illlegrating mechanisms that can be used to coordinate functions and divisions.
Allocating Authority
As orgaoizations grow and produce a wider runge of goods and services. the size and num-
ber of their functiuns and divisions increase. To coordinate the activilies of people. func-
tions, and divisions. person must develop a clear hierarchy of aothority.32 Authority is the
JXlwer vested in a person 10 make decisions and use resources to achieve organiZalional
g0<11s by virtue of his or her position in nn org'111ization. The hienlrch~' or lIuthority is ,Ill
organi zalion·s chain of command - the relative authurity that each manager has -extendi ng
fmm the CEO at the top. down through the midd Ie m<lnagers and ft rsl-I inc managers. to the
nonmanagerial employees who actually make the goods or provide the services. In a hier-
archy. each lower JXlsition is under the supervision of a higher one: as a result. authorit)'
links and mlegr.ttes the aCli"ilies of managers and employees across hierarchical levels.
The term spall uf l'olltnll refers to the number of subordinmes who report directly to a
managcr.
Recall from the last section. for example. how the position of divisional manager
emerges when an organization splits npart into divisions and how a corpurule-Ievel man-
ager emerges to integrate the activities of divisional managers. Similarly. a hierarchy
emcrges inside each funCI ion to imegratc the activities of employees withi n each fu nnion.
As nn organiZalion grows and the problem of integrating activities wilhin and between
functions and di visions inneases. the organizmiun typicall y increases the number of levels
in its hierarchy. As it docs so. thc sp;lIlof colllrolnarmws. JJ
Compare the hierarehies shown in Exhibit 165(:1) and 16.5(b). Thc CEO in Exhibit
16.5(a) supervises six different functions. so the CEO·s span of control is six subordinates.
There arc three levels in the hierarchy-the CEO. the managers in charge of each funnion.
and the employees who rcport to each functional manager. Suppose the CEO decides that
he can no longer effectively monitor the activities of the six functions because they are
growing so rapidly. One way of solving tlus problem IS to create a new level in Ihe hierar-
chy. To do this. the CEO adds a level to the hierarchy by creating the positions of opera-
tion, manager and product development manager. as shown in Ex hibit 16.5(b). Each of the
new managers supervises three functions. These two managers and the CEO then work
togelltcr as a lemn 10 inlegrute the activilies of all six funclions. The organil:lliol1 now has
four levels in the hierarchy. the CEO·s span of contrul namlWS from six to two. and the
span of comrol of the tl-"O new managers is three. Increasing the number of levels in an
organization's hierarchy increases 1he coord ination between the aCI ivities of different func-
tions. Also, as Ihe 1l111l1bcr of levels in the organiznlional hierarchy increases. Ihe span uf
contrul narrows. so managers arc better <lble to coordinate and Illotivme their subordinates.
Tall and flat hierarchies. The number of Icvels inll hierarchy varies from organization
to organization. In generul. the larger and mure cumplex <In organizatiun is. the laller is ils
hierarchy. Tall organiz<ltions have many hierarchical levels relative to their size: nat
organizations have few (sec Exhibit 16.6).
JUSI as it becomes more diffteuh to coordinate the activities of diffcrent functions as
their number incTC<lses. il becomes more dlffteult tu achieve coordinaliun belween hierar-
chical levels when an organization's hierarl·hy becomes too tall. Communication and
decision-making problems stan to occur. As the number of managcriallevcls increases, the
548 PART 3 • ORGANIZATIONAL PROCESSES

EXHIBIT 16.5
Using the Hierarchy to Manage Intergroup Relations

A. A"';de span of-.troI

cco

Moter'al> Re....ch and Infom...tlon

S.le. Manufacturing Eng,neering
m,n'gement d"""lopment ..",ce,
function function functIOn
func"on funct,on funct,on

B. A n:ilTOW 'pan of control

Prod""t
Ope<>tio".
d....dopm.'"
man.ger
man.g..-

Mot.,'.I, R...arch and Inf<>m>a,;on

s.le, Manuf.cturing
management d.""loprnent
Engone<ring
..",ceo
function function func';on
function function funwon

time it takes to send messages up and down the chain increases, The result is slower deci-
sion making. In addition. information passed from perSOll to person is more likely to get
distorted or fillered as messages become garbled and managers interpret them according 10
thei r own imerests. These problems detr.tct from the quality of Jedsion making. In facl. all
the communications problems discussed in Chapter 14 increase as;m organization's hier-
arehy becomes 1311er and taller.

The minimum chain of command. An imponam organizational Jesign principle is

Colleen C. Barrell. the number
two excruti,'c of Soulhwc"
Airlines.;s well known fur hcr
clTons to cmpower cmployees
amJ con"ince tlK:111 they should
feel frce to go alxwe and beyond
their prescribed roles 10 provide
cu""men; bener "'.....'i<:e
the prilldplr of 111(' lIIitlimum r!lain of mmtl/(tlld. A mini mu tl1 chain or command principle
can help mitigate problems that ensue when the hierarchical structure becomes too tall.
The principle states th"t an or£uniZ,llion should oper,lIe with the fewest levels possible.
EITedive organizations should scrutinize their hicrarchies to see whether the number of
levels can be reduced-for example. whether one level can be eliminateJ and its
responsibilities assigned to managers or eillployees above or below it.
This practice has become increasingly common in the United States as companies b,ll-
tling low-cost global competitors search for ways to CUI costs. One manager who is con-
stantly trying to empower employces and keep the hierarchy flat is Collccn C. BarretL the
number-two executive of Southwest Airlilles.J.l At SouthwesL she is well known for con-
tinually reaffinning the comp,my's message that employ<:es should feci free to go above
and beyonJ their pre,cribeJ role, to provide customcr, bener service. Southwest employ-
ecs are cncouraged not to look \0 their superiors for guidance but rather to themselves lind
 CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 549

EXHIBIT 16.6 A Fla' organi,a,ional "f1Jc'ur~ B_ Tall organlZa"onal "f1JC'uro

A 3-In'ej h,erarrhy A 7-1"",1 ho<rarchy
Examples of Flat and
Tall Hierarchies

ways to do their job, benef. As a re'ult. Southwest keep, the number of its middle m:ln-
agers to a minimum.

Centralization versus decentralization. Another way to keep the organizational

hierarchy flat is to decentralize authority to lower-level managers amI nonmanagerial
employees. J5 When lower-level managers and non managerial employees have the
responsibility to make important decisions. Ihe problems of slow and distorted
comrnunieillion nOled previously are kept 10 a minimum. This can increase rnotiv,ltion by
making lower-level jobs more interesting and rewarding. Moreover. fewer managers are
needed bc<:ause their role is not to make decisions but to act as coach and facilitator and to
help other employees make the best decisions.
Decentralizing authorily allows [1!l organrzation and its employees to behave 111 a flex-
ible way even :IS the organization grows :lnd oc'"Comes taller. This is why managers arc so
intcrested in cmpowering employecs. creating self-managed work teams. establishing
crossfunctionalteams. and even moving to a product-team structure.
Although more and more organizalions are taking steps 10 decentr:llize authorily. 100
much decentr:ll ization has cerlai n disadv~ntages. If divisions. functions. or teams arc given
too much decision-making authority. they Illay begin to pursue thcir own goals at the
expense of the organization·s goals. Managers in engineering design or R&D. for example.
may become so focused on making Ihe best possible product thatlhey fail 10 re:llize Ihat
the best produl,t may be so expensi\'e. few people will be willing or able to buy it! Also.
with too much decentralization. a lack of communication among functions or divisions
may prevent synergies among them from mmerializing and org,lnizational perfonn,lnce
may sutTer.
An organization must se~k the balance betwcrn authority centralization and dcrentral-
ization that Ocst mects the major cOlllingencies it faces. [f an organization opemtes in a sta-
ble environment using well-understood technology. for example. then there is no pressing
need to decentr;rlize authority. and top-level managers can milke most of the dL'"Cisions.->6
However. in uncenain. changing environments like those in surrounding high-tech indus-
tries. companies are specding new products to market. Employees and te~ms must
be empowered to m~lke important decisions so Ihat lhe organization can keep pace with
the ch:lnges taking place. These companies arc more likely to prefer a hrgher degree of
decentrJ.lization.
In summary. (he design of the organizational hierarchy is one of the most imponant
decisions an organization makes as it attempts to coordinate its functions and divisions and
550 PART 1 • ORGANIZATIONAL PROCESSES

OB Today
Microsoft Centralizes to Meet Google's Challenge

Microsoft has been racing to compete against companies like Yahoo! and especially
Google, both of which are developing innovative web-based software products to attract
broadband users, In the 2000s, the company has been hindered by its slow decision mak-
ing, however, and its top managers decided that the source of the problem was that too
much authority had been decentralized in the organization,
In 2005 Microsoft was composed of seven major business units, each of which was
headed by a top executive who was in charge of the managers who led the hundreds
of product teams working on related software applications in each business unit. This
structure allowed each of the seven business units to make quick decisions internally;
however, the problem was that many potential synergies between the business
units-particularly in the area of developing integrated web-based applications-were

• ! "'':::~:::''''1 going unnoticed. So,

new products were not
being developed and the
result was that Google's
lead was increasing.
Bill Gates, Steve
Ballmer, and a team of
iiiijiii other top Microsoft exec-
utives decided that a
radical overhaul of the
company's structure was
necessary to change the
way company-wide deci-
sions were made and to
As lh(' 'oft ware program""'r on lh(' eoo('h in the G'Klgkplex speed organizatiooallearn-
soggcslS. Googlc slrivcs 10 kcrp ilS SlnlClOrc ;lS rclaxc<J and lle.\iblc ing. The top-management
a, possible 10 cn<"<"'rage pcopl<' I" {O'K,perate and lhink "001 of lhe
team decided to consoli-
oox," Microsoft ;,Iso slrafed out lhis way bOl ilS "cry success led 10 so
l1lo('h gmwlh it h,,, 10 find "''''/ kinds of SlnKlu", I" a('h ieyc ,lid,
date and merge the activ-
coopcrJliol1 ;,,,d spcc<J i"novalion-+-J 174 ities of the seven different
groups into three princi-
pal divisions, each of which would be headed by a top manager with a proven record of
fast product innovation. The three divisions were the Microsoft Platform Products and
Services Division responsible for the Windows platform, servers, and tools; the Microsoft
Business Division responsible for its Office products and software for small and mid-sized
businesses; and Microsoft Entertainment and Devices Division responsible for Its Xbox
console and games. mobile phones, and other hand-held productsY
The idea is that this reorganization will reduce the infighting and miscommunication
that has been slowing product development between the seven different groups, To solve
such problems, often Gates or Ballmer had to intervene and this slowed decision making,
Now the head of each division could react faster, intervene, and solve problems as they
arose because each division was more centralized. The result would be a faster flow of
web-based products inside each group,
In the new structure, however, the three exe<utives in charge of the divisions wield
enormous power in the company. Although this reorganization has centralized control
over product decision making it has also added another layer in Microsoft's hierarchy.

MUTUAL ADJUSTMENT
The onj,1oinj,1 infom"ll
cOUlmuni,al;on arnonj,1 different
peoplc and function, that is
nc~-e"ary for an organization to
a,h,eve ils goals.
INTEGRATING
MECHANISMS
O'1lanlling lools u",d to ,",,,,asc
c't'mmunkal,on and ,ooruination
among fUn':li,,", and Ji' i,jom.
CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 551
Thus. the danger exists that this new structure might make the company even more
bureaucratized so that the potential gains will not be realized.Jaln 2006 it is still unclear
whether or not Microsoft's new structure is working. Has the reorganization just created
three new fiefdoms and more bureaucracy? Or will the change allow Microsoft to come
out with its own Windows web-based offerings that will make Google's web-based prod-
ucts such as e-mail storing. desktop searching. and rumored web-based word processing
less attractive to customers) Only time will tell. however Delays in releasing its new Vista
operating system does not bode well lor its new structure-.-a more nimble Microsoft may
still be a long way away39
achieve its goals. Managcrs nced 10 continually scrutinize the hierarchy to make surc il
meets the organiz"lion's needs, and they must be prepared to change it if it does not. We
diSl:USS isslles and problems in changing organizational structure in detail in Chaplcr 18.
Mutual Adjustment and Integrating Mechanisms
Thc organizmional hicr•.Hehy is an imponant metliod of coordination because it links :md
allow~ tlie aetivitie~ perfonned by employees at all levels of tlie organization to be con-
trolled. If necessary, for example. the operations manager in Exhibit 16.5(b) can t<:llthe
sales, manufal:1Uring. and mmerials management managers whal to do and how to l:oordi-
nme Iheir activities. However, thc opcmlions manager cannOltcllthc product de\"elopmclJ!
manager wliat to do because the two managers arc 3t the s(ml(' fen-' ill Ihe Mcrt!r('hy.
Funhennore. the oper.nions nwnager cannollell anyone in R&D. engineering. or infonna-
lion syslems what 10 do even Ihough Ihey arc at a lower hieJ<lrl:hlCal level bc<:ause Ihey do
not report to him or her. These functions report to the product development managcr. who
is responsibJc only to the CEO. Ultimately, only tile CEO. the person al the top of the hier-
archy, has the aUlhorily 10 teU everyoue in the organization whalto do" and thai IS why:ln
organizmion"s top manager is so powerful.
Bccausc manager; at tlie same level or in diffcrent functions liave no power ovcr each
other. org:lnizmions need to use tools other than the organizational hierarehy to coordinate
their activities. One iOlJXIrtmll fonn of coordination takes place Ihrough mutual adjustment
and Ihe usc of integrating mtxhanisms. 1\1 utual adjustmcnt is the ongoing l:ommunicalion
among different people and functions that is nccessary for an organi711tion to achicvc its
g0<11s. Mutual adjustment makes an organization "s structure work smoothly beC11Use it fad 1-
ltales communication and the free flow of infonnalion between funclions. MUhml adjUSIOlent.
for example. prevents the emergence of differenl orienlmions that can causc ,ignificant
comlllunication and decision-making problems between functions and divisions.
To facilitme mutual adjustment. organizations use various kinds of illtegnlting meCha-
nisms. Integrating lIJl:chanisllls are organizing tools used 10 IIlcrease commuOll:alion and
nKJrdination among functions and divisiolJs.Here. we discuss several kind, of integrating
mechan isms that fad Iitate mutual adjust me III in Ihe order of their illlJXlrtance..j()
Direct (ontact. Wilh dirt."Ct conlact. managers from different funClions establish face-to-
face working relalion,hips that allow them 10 soll'e WlllmOlJ problems informally wilhoul
having to go through thc formal channels of authority in the hierarcliy. In a functional
Structure, for eX:llllple. m,ltwgers in sales try 10 develop good. inforlll1l1 working
relalionships wilh managers in manufal:turing so Ihal bolh can simultaneously make
decisions to achieve their goals. Re'll"hing agrecmelJlmay not be ea~y because the gO:lL, of
the two groups are not always idcntical. Manufacturing's goal is to keep costs m a
minimum: to do this it is often necessary maintain production ,Iccording to a particular
schedllie to smoothly manufacture g{)()(]s in large batches. Sales's goal is 10 respond to Ihe
need, of customers: it often needs to ask manuf:lcturing to c"hange product ion schedule, on
short notice to accommodate unexpectcd customer requcsts. I3ccause such s:lles-dictatcd
Changes raise manufacturing's COStS, the JXltential for conflict arises. A high level of direct
552 PART 3 • ORGANIZATIONAL PROCESSES

COlllaet between sales and manufacturing managers. however. can lead to a give-and-take
relationship thm fosters coopcration between functions.

LIAISON ROLES
A pcnnancm ma1\~g.:n"1 p''''lion
in which lhe m.nager', only role
i, 10 roordinale the oclivilie, of
difk~nI di,'i,ion,.
Liaison roles. Bel:ausc organizations re{'ognize that direet l:onta<.:t is important. they
often establ ish Ihlison roles givi ng spcei fic functional managers the fort/wi res])Onsibi Iity
of communicating with managers in another function to solve common problems. To
facihtate commumcatlOn. managers in haisoll roles meet regularly to exch:lI1ge
information. and members of one fun<.:tion Iransmit requests to other functions through
these liaison personncL Over time. the personal working relationships thm develop between
tile managers perfOnlling these roles enllilllCe coordination throughout the organizmion.

Teams and task forces. Organizations often create teams and task forces composed of
cmployees from difTerelll functions to facilitatc communication and cooperation. While a
tearn is a pennanent group made up of representatives from two or more functions that
meets regularly. a task force IS a temporary. or ad hoc. group set up to solve a specific
problem. An organization might set up a task force to study problems il expects 10
cncounter as it expands its operations into anothcr country. for example. After the task
force comes up with ,I solution to the problem to which it is assigned. it disbands.
In contrast, an urganizatiun may usc a team to increasc coordination between func-
tions like the produl't development team shown in Exhibit 16.7. Bel:ause product develop·
ment is an ongoing activity. an organization is likely to creatc a permanCIll tcam composed
of members from sevcral functions whose job it is to constanlly scrutinize new product
ideas and make recommendatiuns alxJllt the unes that should be funded.
The important roll" teams and task forcl"s play to promote mutual adjustment cannot be
overemphasized. Jt has becn estimmctl thm managcrs spend over 70 perccnt of their time in
face-to-face meetings with olher managers making decisions and solving problems that
cannot be dealt with through the formal hier.lrchy or in any other way.4t

Cross-functional teams. Rcccntly. many organizatiolls have implcmcmcd cross-

funct iunal teams to faci Iitate mutual adjustment. Cross -fimtliollaf leI/mol cunsist of prople
from diflcrent functiuns who arc permanently assigned to wurk full-time on a team to
bring a new good or service to the market. 42 Cross-functional teams are diffcrelll from
ordinary teams in scvcral ways. Members of an ordinary team arc full-time mcmbers of thc
same function or division: members of cross-functiunal temns are full-time members of
dilkrclll functions or divisions and report to the leader of the team. Exhibit 16,8 shows an
example of a cmss-functiollal team structure formcd to faci Iitatc mUlual adjustmeill.
Hallmark Cards moved to a cross-functional team struc\Ure whcn it decided to organize
its tasks according to specific types of cardS-birthday cards. Christmas cards. Mother's
Day cards. and so on. Rather lhan having card designers. anisls. rhyme writers. and other
EXHIBIT 16.7
Using a Team to Increase Coordination Between Functions

,w

PtodtKt
Opcra"on,
d .....top"'.n,
",.n'g.'
",.nager

Finane< .nd Matenal. R.«a",h and Info.ma,ion

Mart.tong Manuractunng Eng,n••nng
.«ountlng fun«,on ",anag."",n' d..... lop"'.n' «tv"..
functoon function
fiJn<~on fun<f;OO> fUI><,;on fun«;oo>

Product o"",lop",ent Team

 CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 553

EXHIBIT 16.8
A Cross-Functional Team Structure
Cro'S-functional teams arc composed of fu ""tional pc~nncl who arc assigned full-time to wor\; in the team.

em

C<>'PO"'~
""nag''''''''

Tum Tum Toam

I.ad.. Iud" I••d ..

Manuf.erunng Engm«nng Manufaerunng Engm«nng Manufactunng Eng,n..nng

p<rsonn.1 p<rsonn.1 p..""nn.1 p<rsonn.1 p<,,,,,nn.1 p<rsonn.1

>-, >-, >-,

Product d... gn Mat.n.l. Produ" d..ign Mat..,;.I, Produ" d,-'gn Ma,.".I,

p<o'$(In".1 p...onnd p'o'$(Inn<1 p<o'$(Inn.1 p<o'$(Inn.1 p<o'$(Inn.1

specialists work in separale funclions. Hallmark assigned them to cross-funclional teams to

reduce the need to coordinate among functions. The new structure greatly speeded up
product dc\'clopment. A new card used to take a year 10 get to the market: now it takes
only a few months. Sun Life also provides a good example of a company that has 1ISl.-d
cross-functional teams with great succe,s. as the following Global View disl·usses.

Standardization
The third principal lool that organizations can usc to coordinate their activities and illle-
STANDARDIZATION grate functions and divisions is stlindardi:tlllion~the developrnenl of programmed
TIle development of rout,,,,, responses, performance standards. written rules, and S1and:trd operaling procedures
""pon"" to recumng problem, (SOPs) that spel:ify how employees and functions should responJ to recurring problems or
llr opportunil;c',
opportunities. An organization can standardize activities at the input. conversion, and OUl-
put stages. 4J

Standardizing inputs. Organizational inputs inciuJe Ihe skills anJ l:apabililie, of

manageN and employees. the quality of the raw materials anJ component pans used to
make products. and the machinery and computers used in the prodUCtion process.
Organiwlions develop performance sland'lrds. such :tS ljuality or TI::It<1bility specifications.
used to evaluate and aSsess inputs before they arc put into production, Japanese car
companies, for example. arc renowned for the stringem quality specifications that they
require suppliers of car componenlS such as engine blocks to meet. Increasingly. more
global companies arc reeogmling lhal hIgher inpul standards resull in IlIgher-qualily
productS.
Organizations can standardize the skills of their manageN and employees by requiring
lhem to have cennin ljunlifications and experiences. An asscmbly-Iine employee mighl be
required 10 have a high school dIploma, an R&D scientisl mighl be requirt-d to have a
PhD. from a prestigious research university. anJ a CEO might be requireJ to have shown
that he \If she has successfully managed similar kinds of businesses in the pas\.
SS4 PART 1 • ORGANIZATIONAL PROCESSES

Global View
Sun Life's New Product Team Structure

Canada Sun life Financial, based in Toronto, Canada, is one of the largest insurance com-
panies in North America, and in the 19905, like most other insurance companies, it oper-
ated with an organizational a structure that was very rigid and bureaucratic 44 Over the
years it had developed a tall, centralized structure and upper-level managers made the
final decisions about whether or not to offer prospective customers insurance and how
much their policies should cos\. Sun also operated with a functional structure. When a
potential customer requested information about insurance coverage, a member of its cus-
tomer service department took the application and handed it over to the company's order
fulfillment department for processing, In turn, the order fulfillment department sent the
application to the actuarial department that calculated the insurance premium Only after
several more steps were completed could Sun's salespeople inform a would-be customer
about the outcome of his or her insurance request.
The process of channeling a request through many different levels in the hierarchy and
across so many different functions took considerable time. Frequently, because most
potential customers obtain multiple quotes from several insurance companies, the long
time lag resulted in lost business. Customers simply "satisfice" and choose an insurance
policy from one of the first two or three companies that give them an insurance quote
quickly.
Sun Life realized it had to find a way to respond more quickly to its customers, espe-
cially because its competitors were acquiring other insurance companies and a number of
dot.com companies had begun selling policies on the Internet. This new aggressive com-
petition made Sun's managers realize that they had to change the way their company
operated and do it fast. Sun needed a structure that would allow it to respond quickly and
flexibly to the needs of customers: it knew it must empower front-line employees to
quote and issue policies. Toward this end Sun decided on the following course of action:
First, it discarded its functional structure and reorganized its 13 different functional
groups into a series of crossfunctional product teams. Employees from sales, customer
service, order fulfillment, and other functions became members of "service teams," Each
team was also equipped with a sophisticated IT system that gave the team access to all
the information needed to resfXlnd to a customer's requesl. 4S This empowered each team
to perform all the steps necessary to process an insurance request; no longer was it nec-
essary for subordinates to go to their managers for approval on policies-the team could
make its own decisions.
When all the exchanges between departments were eliminated, Sun's managers were
astonished by the way its new structure operated. Its new teams could work so quickly
and flexibility that the time needed to process an insurance request fell by 7S percent!
With such rapid service the company found it much easier to attract new customers and
its business grew rapidly as a result. Sun Life soon realized that it could use IT in other
ways to improve the way it coordinated its activities. As the company grew, for example,
it began to offer a wider range of financial services such as pension management and
investment and estate planning. Sun won a national award for the way it had trans-
formed its organizational design to improve customer service-something that also
resulted in record revenues and profits. 46

FORMALIZATION
TIle ~-..: ()f rob ~nd 'l~nd~rd
oper:mng prorrJun" 10 <:omrol
"n urg"ni,"lIun', arU'llle'
CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 555
Organizations that rcrruil and scleCl employcrs who meel stringent crileria can be rela-
lively confidelll that their employees will respond in approprime ways to uncertain events.
This is why organizalions spend so mu~h lime recrulling and selecting employees.
Standardizing conversion procenes. To slandardizc lhc conversion processes an
organizalion uses to make the final product. organi:wtions specify the kinds of beh,lvior
Ihey expel:! from their employees. When these beh<lviors arc specified. bOlh individuals
and groups arc more likely to act nmsistently in ways Ihat allow an organization 10
achieve its goals, Thc principal way in which organizatiollS standardize behaviors is
through the usc of rules and SOl's, (Sec Chapter 10.)47 Because rules and SOPs specify
Ihe series of ,IClions or del:lsions thai employees arc expecled to perform in a given
situation. Ihey st;mdardize employee responses 1U the situation.
Formali1.atiOJl is thc uSC' of rules and SOPs 10 control un organization's m;:tivitics. The
more an organizution can rely on formlilizatioll to specify required behaviors. the less it
IH:eds to use eilher direl:! supervision from Ihe hierarchy or mutual adjuslment.
Formalization results in lower operming costs. oncc rulcs havc been developed. They arc
also inexpcnsive 10 implement and cost thc organization liulc to maimain. All that is
required is th;lt new employees be taught the appropriate rules to follow in certain situa-
lions. (Recall from Chapler 10 thai socializalion is the process by which employees learn
orgunizational rules and SOPs.)
Although some rulcs are necessary 10 the smOOlh running of an organization. too
many rules can give rise to u number of problems:
• Excessive formulization e,lll "straitjocket" employees and prel'elllihem from
responding creatively and flexIbly to new siluations.
• Employees' inc! inalion 10 obey nIles withoul thinki ng about their conscquelll'cs can
reduce the quality of orgunizmional decision making.
• Too much cmphasis on the use of cxistillg rules and proccdures can make it espe-
cially ditlicull for an orgamzationto makc changes and develop new rules.
Despite these drawbacks. fornwlizalion is a powerful tool as the experience of
sileROCK based in Emeryville. California suggcslS. siteROCK is in the business of host-
ing and manuging other companies' websiles and keeping them up and running and clTor
free, A site that goes down or IlHlS haywire is encmy number I. The company is run by
Davc Lilly. an ex-nuclear submarine commander. To maximize Ihc performance of his
employees and to incrcase their ability to respond 10 unexpected online e"ents. Lilly
decided thc company needed u comprehensh'e SC'1 of rules und SOPs to cover allihe major
known problems lhm could emsh a site.~8 He insisted thai every problem-solving proce-
dure Ix' wrillen down. siteROCK now has over 30 thick binders listing all Ihe processes
and Checklists that employees need 10 follow when anllnexpccted event happens. Their job
is 10 try to solve the problem using lhese procedures.
At siteROCK. these wriucn rules and SOl's are also used to eonlrol employee
behal'ior to achiel'e high levels of customer service. Because Ihe goal is 100 percent
reliabilily. detailed blucprints guide planning :md decision making-nol seal-of-the-
pams solutions lhat might work 80 percen! of the timc bUI result in disastcr the othcr
20 percent of the time. Before site ROCK employees are allowed in the control room
each day. Ihey must read over Ihe mosl important rules and SOPs. Atthe end of a shift
Ihey spend 90 minutes doing paperwork thai logs whm they have done and detail any
new or improved rules that thcy hal'e come up with. siteRock's goal is simple: Usc rules
to aehiel'e a quick resolution of cornpie x issues. If the existing niles don't work. then
employees must experiment. When Ihey find a solution. it goes irllo the rule book to aid
Ihe fUlllre decision making of all employees in the organization. Clearly. sileROCK is
muk ing c xce lien! usc of ru lcs to standurdi ze its high-tech opermions and is un cxcepl ion
to the rule tlull a company needs a decentralized approach to adjust to rapid technolog-
Ical change.
556 PART 3 • ORGANIZATIONAL PROCESSES
VIRTUAL ORGANIZATION
A C\lffipanl thm oper-ue, largely
u-,mg 11t."" "Ifonnal'"'' l<Xhnol,~}'
"here proplc ~,Id fOllelKll'I' ore
linked throug.h company inln"'''!>
arold:uaba1>C',
Standardizing Outputs. f'inally. OWplll standards are ai'll an effective way to
standardize behavior. Illstead of specifying the behaviors the orgallization expects from its
employees with rules and SOPs. the organizatIon specifics what the final output of its
employees must be for the organization to achie"e its goo1S.49
Imagine. for example. how difficult it is for a manager to monitor the behavior of
employees like salespeople or R&D sciell1ists. It is impossible to watch a scientist to see
how well he or she "docs research:' Likewise. the cost invohed to have managers shadow
salespeople and give them instructions would be exorbitall1, So. organiz;llions spel:ify the
level of performance they rcqui re from their employees and set staudards-or pe rformancc
goals-by which 10 measure actual employee outputs. In the case of salespeople. for
example. an organization mIght set a sales target for how much each salesperson should
sell each month or how many custolllers thcy should visit e'll'h day. SpL"Cifying the goals
for researchers is Illore difficult because their wort is so long tcrm and complex. but au
R&D function can be measured by the number of new products it del'elops or the [lumber
of new patents thilt it files. As we saw in Cllilpter 7. selling specific challenging gools can
be an effcrtive way to motivate employccs.
By using specific goals aud targets to measure the pcrformancc of individuals and
groups. an organization increases the control it has over their 'lctivities. The more ways an
organizmion can devise to measure its perfonnance.the more clTecllve it becomes.
New IT-Enabled Forms of Organizational
Design and Structure
TIle inl:reasing use of new infonnation technology is changing the nature of organiz;llional
desigll and strul'lure.';O The pri ncipal reason is because IT changes companies and allows
tl1em to behave in more flcxible. organic way. The effects of IT on organiz,ational design
can be seen both inside and between organizations.SI
The Effects of IT Inside Organizations
In the last d,:cade. information technology has had a dmmatic c!Tcct on the way in which
organizations group and coordinate thC'ir aetivitiC's,~2 f'irs!. IT increases communication
and coordination and promOles mUlOal adjustmcnt among teams. functions. and
dil'isions. S3 Second. IT penn its the greater decentralization of decision making because
employees have instant access to the infonnation they need to make a dccision.5~ A previ-
ous Global View showed how Sun Life used IT to reorganize from a functional structure to
one based on erossfunetional product teams. Sun's new IT system gave tcams the informa-
tion they needed to handle each custom.:r's specific request. As a r.:sult of using IT. orga-
nizations no longer nccd tall milnagement hierarchies. They eiln operate with Baller StI1IC-
tures that speed dcrision making and enable the organization to act in a more flexible and
organiC way.
Some organizations . .:spccial1y those th~ll provid.: complex services and employ
highly trained workers. have gone one step funher and created what has been called a vir-
lIIal organizat ion. A \'irlual organization is onC' in which C'mployees are linked to an orga-
ni7.ation·s ccntralized dat~lbascs by computers. faxes. and vidcoconferencing and rarely see
one another face-to-face. If ever. ss These employees might only infrequently visit the
physical premises of tl1eir companies; they receive their assignlllents electronically. reJXlrl
back to their superiors C'lectronically. and operate aU1ooolllously.~6 Almost all their
employees are out in the field. working anywhere .lluund the globe working with c1icnts to
solve th.:ir problems. Large consultancy companies like EDS and AccentufC operate in thIS
fashion as the following OB Today illustrates. It provides iln interesting example of how
IT. by deccmralizing autl10rity to employccs. can promote flexihility and allow a company
to behave orgMlically.
 CHAPTER 16' ORGANIZATIONAL DESIGN AND STRUCTURE 557

OB Today
Accenture#s UVirtual U Organization

Accenture, a global management consulting company, has been one of the pioneers in
using IT to revolutionize its organizational structure. Its managing partners realized that
since only its consultants in the field could diagnose and solve clients' problems, the com-
pany should design a structure that facilitated creative, on-the-spot decision making To
accomplish this, Accenture decided to replace its tall hierarchy of authority with a sophis-
ticated IT system to create a virtual organization, 57
Firs!. it flattened the organizational hierarchy, eliminating many managerial levels,
Then, it went about setting up a shared organization-wide IT system that provides each of
Accenture's consultants with the information and knowledge they need to make their
own decisions. If the consultant still lacks specific knowledge to solve a client's problem,
the system is designed to provide them with data from Accenture's thousands 01 consul-
tants located around the globe who can provide them with expert backup help.~
To implement the
change, Accenture first
equipped every one of its
consultants with a awire-
less laptop computer, and
each consultant was
linked to the others via a
sophisticated corporate
intranel. depending on
the particular ktnd of
client he or she served.
For example, consultants
who work with consumer
product firms are linked
Aeeemure equips each of i(s eonsulwn(s with a wireless l<lptop together in one group,
computer. then expert nx",Jinators at i(s head<juarters assemble all
and those that work with
(he ehent knowledge eonsult<ll11s feed into i(s corporate llilranel. They
then send Ibis knowledge wirclessly back (0 all consultants so (bey brokerage companies are
eiln work togClher (0 develop ocuer client SOIUI ions, linked together in another.
Often, the members of
these groups e-mail their counterparts working at different client sites to see if any of
them, say, have encountered a client problem similar to one they are presently facing and
what they did to solve it. If members of the consultant's core group can't solve the prob-
lem, he or she can then communicate with members of other groups by tapping into
Accenture's large information databases containing volumes of potentially relevant infor-
mation. The consultant can also communicate directly with other company employees
through a combination of phone, voice mail, e-mail, and teleconferencing in an attempt to
gain access to more current information presently being gathered and applied at other
client sites, 59
Oftentimes, employees uncover useful information that can pertain to employees in
very dilferent areas of the firm For example, if the project involves installing an enterprise-
wide computer system, the consultant has quick access to the information of hundreds of
others consultants who have dealt with the software in question but applied it in different
558 PART 3 • ORGANIZATIONAL PROCESSES
NElWORK STRUCTURE
A ,lru"tural a1T.;nS""",nl whereby
companies oul",urec 0""' or m<;>rC
of lbeir functional a.:t"'lIies 10
(~ber sflC'.'iali,1 eompOiIlic'
contexts. By utilizing these resources consultants stay abreast of the innovative practices
being implemented within their own firm and within client firms
Accenture found that the effects its virtual organization had on flattening the struc-
ture, decentralizing authority, and enlarging and enriching roles increased the creativity of
its consultants and enhanced their performance, By providing employees with more infor-
mation and enabling them to easily confer with other people, Accenture gave its consul-
tants much more freedom to make decisions. Moreover, because they often work far
away from Accenlure's headquarters, the electronic connections have made consultants
much more independent. They are able to make their own decisions, which has been a
source of motivation. The end result for Accenture is that it now one of the best-known
of all global consulting companies 60
The Effects of IT Between Organizations
Another innovation in org~niz~tional design-the usc of outsourcing and networking
~truClUrcs between org~nization~-ha~ largely been the result of information technology.
Recall from Chapler I thm olll,l'oun'i!!/! involl'es moving a functional ;lctivity th;l1 WaS done
imide an organization to the OIl1.1ide. where another company performs it. Many compa-
nies h~\'e found that thc usc of thc Internet and software platform, linking nrganizations
together in real"time makes it easier and cheil[lCr for them to send a s[lCcific kind of
functional aClivity. ~uch as making component P.1rtS. nwnufacluring the final product.
or el'en managing the IT function itself. to other companics to perform For example. the
U.S. military signed a 10 year Sl5 hillion contract to let EDS. the computcr services com-
pany. manage its vast array of computer networks and infonllation systems. 'The move to
outsource manufacturing to low-cost countries like China and M:llaysi,t has been acceler-
ating. Companies like Black and Decker. Sony. and Levi Strauss now contract with m;mu-
facturers abroad to produce most. if not all. of their products. which are then shipped to the
markets in which they will be sold.
Some cOlTlpmties radically alter tlleir organizatiorwi structures by focusing only on
that one specific functional activity such as product design or research and development at
which thcy excel and then outsource the rest of their other functional activities to other
companies In doing so. they opernte within what is called a network slructurc. 61 Nike.
for exmnple. the largest and most profitable sports shoe manufacturer in the world. uses a
network structure to make. distribute. and sell its ShocS.61 At the center of the network is
Nike'~ product design and research function located in Bcavenon. Oregon. where Nike'~
designers are cOllstantly developing new. innovative spons shoe designs. However. that is
almost all that Nike does in Beal'enon. besides the corporation's admmistrative activities.
All the other functional work that Nike needs to make and sell its shoes has been out-
sourced to companies around the world! Nike manages its relationships with the compa-
nies in its network through advanced IT. Its designers usc sophisticated computer software
syslems 10 design its shoes. and all of the new product infonnalion. including its t(:chnical
and manufacturing instructions and spcl·ifications. arc stored electronically. Whcn the
de,igners have completed their work. they then relay the blucprints for thc new products
electronicl1l1y to Nike's network of suppliers and m;lnufaClUrcrS in Southeast Asi:I. 63 For
example. instructions fOf the design of a new sole ml1Y be sent 10 a supplier in Taiwan. and
instructions for the leather uppers to a supplier in Malaysia. These suppliers then pruduce
the shoc parts. which arc subsequently sent for final assembly to a manufl1cturer in China
with whom Nike has established an alliance. From China. the shoes arc shipped to distrib-
utors throughoul the world and afe marketed in each country by org:milations that Nike
COll1rads "'ith,
 CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRuaURE 559

The advantage of thi, network structure is that Nike can respond quickly and flexibly to
changes in customer needs and !a,tes. If demand for a panicular kind of shoe drops and demand
for another soors. Nike can mpidly transmit new inslructions to its network of manufacturers
abroad to l'hange their prudul1ion pl<:lns. Moreover. OCG'use il docs nOi have toclxmlinme many
differcm functional activities. Nike C1Ul pr=vc its flm hicrafChy and stay small and nimble. In
essence. a network structure allows Nike and many other romp,1nies to act in an organic way.
Companies arc inl:rcasingly n:cognizing the m:my opponunities outsourcing mId nCl-
worting afford when it l:omes 10 rL-ducing (;(lSts and increasing flexibilily. Clearly. m<:ln-
agers have to carefully assess the relative benefits of having their own organization per-
form a functional activity or make a particular product versus forming an alliance with
another organization to do It. As you l:an see, desIgning an orgamzalional structure is
occoming increasingly comple., in today's rapidly l:hanging global "'odd.

Summary
Organizational slrul:ture affects how people and groups beh:lve in ml organization. it pro-
vides a framework that shapes employee alliludes and behavior. Organizalions need 10 ne-
ate a structure that allow them to coordinate and Illotivatc peoplc. functions and divisions
effectively. 'This chapter makes the following major points:
I. Organizational structure is till" fonnal system of task and job-reponing relmionships that
deteffi1ines how employees use resources to achieve organizational gools. Organizational
design is the process of making the s)l<.'t:ilic organizing choices about t;lsh ;md JOb rela·
tionships that result in the construction of a particular of',;anizational structure.
2. Contingency theory argues that an organization's structure needs to be designed to fit
or match the set of cOlllingencies-factors or conditions-that affect it the most and
l:ause illhe most uncertainly. Three importanl conlingenl:)' fal:lOr~ are: tile organiza·
tional cnvironment. advances in technology (especially information technology). and
an organization's human resources.
3. 1lIe greater the lel'el of uncertainty in tile environment. the nrOTe complex its technol-
ogy; and the more highly skilled its wortforl:c. the IllOrc likely managers arc to design
an organic structure-one that is fle.\ible and Ihat l:an cllangc quickly. The more stable
the environmcnt. the less complex its technology; and the less skilled its workforce. the
more likely an organizmion is to have a mechanistic structure---<lnc thai is fOlllla!. ron-
lrolling and deSigned 10 induce employees 10 behave in predictablc. al:counlable ways.
4. The main structures Ihat nrganizluions use to differentiate their activities and to
group people into fonctions or divisions are functional, product. rnMket, geographic.
and matrix structures, Each of these is suited to a particular purpose and has specific
l:()()rdinalion and mOlivation advantages and disadvanlages associated witll it.
5. As organizmions grow, pmblcms of c()()rdinating activities between functions and
di visions arise. 'Three methods organizations can use to sol ve coord ination problems
are to use the hicrarchy of aUlhority. mutual.ldjusltncn1. and standardizalion.
6. To coordinale their activities. organizalions develop a hieran:hy of authority and del:ide
how to allocate decision-making responsibility. Two important choices that they must
tnnke are how mallY levels to have in the hierarchy and how much authority to decen-
tmlize to managers lhroughoul the hienm:hy and how much to relain at the lOp.
7. To c()()rdinate their adivilies. organizations develop mct:hanisms for pmmot ing
mutual adjustmcnt (the ongoing informal eommunicmiOll and interaction among peo-
ple and functions). Mechanisms that f:lcilitate Tllutual adjustment include direct con-
tad. liaIson roles, tcam, and ta,k forl:es, and crossfunctionalleams.
8. Organizations thai use standardization to Clxlrdinatc their ;Ktivities develop pro-
grammed respon>cs and written rules thm specify how people and functions arc to
coordinate their actions to accomplish organizational objectives. Organiz.uiotls can
standardize Iheir inpul, throughput. and oUlput adivilies.
560 PART 3 • ORGANIZATIONAL PROCESSES
Questions for Review
1. Whm is the rc lationsh ip between organi zmiona I
de,ign and structurc'!
2. Wh>ltl:unlingencies would c~use ~n organil~lion
to chom;e an organic ralher than a mcchanistic
structure?
J. Why do organizations group ~ctivities by function?
4. Why du organil~liulls movc 10 somc kind uf dl,'i·
sional structure"!
5. What kind of organiZ3lionai structure would you
expect to find in (a) a fast-food feSWuran!. (b) ~
company like General EIt-clri\; or General Muturs.
(l:) a biolechnology mmpany?
08: Increasing Self-Awareness
Understanding Organizational Structure
Think of an organizalion Ihal you are familiar with-a
university, restaurant. church. department slorl.". or an
organiwtioll th~t you havc workcd for-and ~nswer thesc
questions:
I. Whm form of slrul:ture docs the organizalion usc
to group peopll." and resources? Draw a diagmm
showing the ll1~jor functions. Why do you think
the organ iZ.;ltion uses this fum! of structure'!
Wou Id anothl."r form of slrul:ture (e .g., divisional)
he more appmpriatl."'!
2. How many Il."vcls ~rc there in the organizmion's
hiemrchy'! Dr~w ~ dlagmm showing the Icvels in
6. What kind of structure docs your colll."ge or busi-
ness use."
7. Why IS coordinating funCilons ~nd divisions a
problem for an organizmion'l
8. What are the main issucs in deciding on thl." dcsign
of an org~nizat ion's hierarchy of <luthority"!
9. Why IS mutual adjustmenl <In impor1am means of
inlegration in most organization,'!
10. What kinds of organizational activities are easiest
to st~nd~rdize? Most difficult'!
the hierarchy and the job titles of the people at
e~ch level. [)o you think this org~niz;;ltion has
the righl number of levels in its hierarchy'? How
l:enlralized ordel:enlralized is authorily in the
organi;o;at ion'l
3, To whm degree docs the organiz~tion usc mutual
adjustment and stand~rdization to coordinalc ils
activities? What mcchanisms docs it u,e to
increase mutual adjustment? Docs it usc teams or
eross-function~1 teams'? What kinds of rules and
standard oper.lIing procedures docs it use"?
 CHAPTER 16' ORGANIZATIONAL DESIGN AND STRUCTURE 561

A Question of Ethics
How to Layoff Employees
You are Ihe manager(s) charged wilh reducing high operating costs. You h;lVe been
inslructcd by Ihe CEO to 1."Iiminme 25 percent of Ihe company's workforce. both managers
and employees_ You also must manage thl." layoff process and then filld a nl."W way to allo-
catl." authority in thl." company to increase efficiency.
Some managers charged wilh decilling which employees should be laill off mighl
dedde to keep Ihe l."mployccs they like '!nd who arc obediell! 10 them. rmher than the onc.s
who arc difficult or the ocst pl."rfomlers. They might deeide to lay off the most highly paid
employees. When rellesigning the hiefllrchy they mightlry to keep most power ;l11d author-
Ity in Ihe ir hanlls. Think of the elhil:al issues involved in layoffs and organ izational design
and answer the following questions:
L What ethical rules should managers USl." when dl."eiding which employees to
terminate"?
2. What ethical rules l:an help managers 10 best allocate authorily and design their
h ier.m:h ies"!
3. How can tlte usc of ethical principles help managers make the layoff process less
painful for employees'!
4. Whal effeds do you think the way the layoff is carriell uut will hav-e on Ihe
employees who remain"?

Small Group Break-out Exercise

Speeding Up Website Design
You have been called in as consultants by the top functional managers of a website design.
production. and hosting company whose new anullalell websile deSIgns are allracting a lot
of allelllion and a 101 of customers. Currenlly. employees arc organizetl imo tliffercnl func-
tions such as hartlware. software dl."sign. graphic an. and wehsite hosting. as well as func-
tions such as marketing and human resources. Each function takes its tum to work on a
new project from imtial customer request to final online websile hosting.
The problem this company is experiendng is Ihal it typically takes one year from the ini-
tial idea stage to the time thm the wl."hsite is up and running anti the company wants to sltonen
this time by half to protect and expand its market niche. The managers believe their current
functional SlnKture is the soun:e of the problem; il is nol allowing employees to de\'elop weo.
sites fast elK}LIgh to Siltisfy cuslOnlCfS' Ocmands. TItey wam you to suggest a beller one.
1. Discuss ways in which you can improve the way the currelll functional structure
opl."rales to spl."ed up website development.
2. Disl:uSS the pms and l:ons of l:hanging to a matrix structure to reduce websile
de\'clopmem time. Thcn. di,cuss thc pros anti cons of following Sony's approach
and using crossfunctional teams to coortlinme octween functions.
3. Which of these stn,ctures do you think is most appropriate and why?

Topic for Debate

Different kinds of organizational structures lead pl."oplc to beh;]ve in differell! ways. Now
that you understand the kinds of choices that organizations face when they create their
organizmional structures. deb<lle the following issues.
Toom A. Today. Ihe hiel<lrdy of aUlhority is more imponam than mulual adjustl1lCnl in
nxmJinming and mOlivating people and funclions to achic\'c an organization's goals.
Team B. Today. mutual adjustment is more impol1antthan tlk: hierarchy of aUlhority in
l:()(lrdinating anti mOlivaling individuals and functions to achie\'e an ol'<!anization"s goals.
562 PART 3 • ORGANIZATtONAL PROCESSES

Experiential Exercise
Analyzing Organizational Structure
fur this chapter you will ;nwlyze the struClllTe of a Teal organiz<ltion such as a dCJXl"mcl1t
store, restaurant, hospital. fire station, or pol ice department, In the next chapter you wi II iden-
tify the contingencies that have influenced the development of the organizmion's culture,

Objective
Your obje<:tive is to gain experiellce in 3Imlyzing and diagnosing an organization,

Procedure
The class divides into groups of from three to five people, Group members discuss the kind
of organization the group will analyze and then explure the possibility of g:lining access to
the organizatiun by using a personal contact or by calling and going 10 see the manager in
charge of the organization. After the group gains access to the organization. each member
of the group interviews one or more members of the organizatiOll, Usc the following ques-
tions listed tu develup an interview scht'dule to guide your intefl'iew of the organization's
employees, but be sure to ask additional questions to probe more deeply into issues that
you thi nk are imerest ing and reveal how the organizat ion's structure works,
After all of the groups complete the assignment. the i11StrUCtor either will allocate
c1<lss time for each group to make a presentation uf its findings to the whole class or will
re(juest a wrinen repo",
I, Dmw an organizational chan showing the major roles and functions in your
organization,
2. What kind of structure docs your organization us.c') Why docs it us.c this structure')
What are the advantages and disadvantages of this structu re?
3. How docs your organization integrate and coordinate its activities?
:I. Describe the organiZ,l1ion's hierarchy of authority. Is it tall or flat? Is it central-
ized or de<:entr<llized'! How wide a span of control docs the top manager have?
h. Whal integrating mechanisms docs the organization usc to coordinate its
activities?
c. To whm degree docs the organization standardize its activities, and how does it
do this'!
4, Summarizing this infonnation, would you say the organization ()pcrme~ with a
mechanistic or organic structure') Are there clements of hoth?

New York Times Cases in the News

l!!1,r ~"'U l10rk l!!imrs

"At Time Inc. the Big Heads Roll."
-Dm'itl Carr. NY'!: Vect'll/bl'!' /9, 200S. p, C. f,

TIME INC. was always the G,'neral
Motors of the magazine industry, ,\
huge company wilh a maSs toud,. the
publisher of such OlympialHounding
brands as Time, Life and Money. it was
both a chronicler and a symbol of
Amtriean b,awn th"t found a way )'tar
aftn ye", 10 ,'orne op with produ"I'
Ih:,t cOnsumers w:,med, With more th:m
t50 pubJi,'alions. Time Inc. is stilllhc
Gener-.I Motors of the magazine indus-
Iry. but. of ,'our,,', tll"t ha.' com,' 10
mean something diffcre nl, The comp;my
Ih"l Henry Luee founded i, confmnled
by profound 'e,'ula' changes in the
mar~er ,md a llat-lO·rotten "d"crtising
,'yck that has kft Ih,' onec'-patri"ian
publishing house s.:fambling to make its
numb<.'rs. reorganizing in fits and slart,
and, last week, cuning loose some of its
more' precioos human aSSCIS,
 CHAPTER 16 • ORGANIZATIONAL DESIGN AND STRUCTURE 563

Ann S. Moore. ehmrv.-oman 'Uld chief
exc<:uti\,e of Time Inc _, moyed with sho,:k-
ing swiftness. aiming at chiefs more than
Indian~, beeause IhaCs where the money
'5, Jack Haire. chief of corpomtc >:lIes and
a 2l\-year employee of the company. was
OUI. as was Richard Alkinson. a fonner
chief linatK"ial officer who was in "hatge
of the 11C"-'S and infol1lmtion group. Eileen
Naughton, president of Tim" M"g,,~ill"
and one of lhe rising young "<Irs in the
business, wa~ told to pa,'k up. as were a
numlx:r of OIher rising exc<:uli'·es. On the
editorial side. Tillie M"g"~i,,,",~ bureau
chiefs in I\l0seow. Beijing. Seoul and
Tok~'o were "ul: 10 book th,' price of
se'-cring them in 2OOS. the comp:lI1y
n,"Cd.'d to nKW" on manag"'" who had II(}
union proteclion. In all. more lhan 105
people out of lJ.(lOO wne lei go-nOl a
big numlx:r. but more cuts are coming.
It is a diflicult time for print in gcneral.
hut at Time Inc .. magazines that depend
on male readers arc ctmllenged in
pmticular: Time is down 14.2 peR'cnt in
'llh"ertising pages from 2QO.t. whi Ie SiX'rts
illustrated is off a whopping 185 peR..,m
and Fortune is down 105 perce1l1. La,l
August, Don Logan, the chairman of lhe
mcdi'l ,md communic<llions group of
lime Inc'" parem company, Time Warner,
Noticed that '1 division he u>Cd to n'n-
and achien'<.l pmfl1 gmwth;11 for 14 mn-
scculive years-scctncd to Ix: l:ulking, l-Ie
",nl Ms, l\1<xne a bluntly worded
reminder thai she needed to make her
numlx:,,;,
Ms, Ivloore responded to the grim
neWS and the pR'ssure by n<lm;ng Non,
McAniff and John Squires. two executive
vice pre!iidents with ,wy diff,-'renl but
well-established publishing skills, as co-
chief operating ollicers and then moving
swifty to wipe out the layers of man-
a~'Cl11ent underneath lhem. "The company
was lOll top-heavy," Ms. MOIlre said on
the phone last Friday. "You think thm
only weak people gel caught up in a
reorganization, but thm was not the case
here, These were good people, people I
had ,,"orked with for years, but this is
aboul taking "hai,,; away from the table
th,lt don't make ,my sensc ,my more:'
Reporter>-my",lf inl'luded-ha,'e writ-
ten for years about Time lnc:s mulliple
laycrs of nmnagcn",n!: why ~hould a
single m,'gazine h:lve a president. a pub-
lisher and an eXl"Cut;ve in dmrge of salcs?
"I :lIn tired of all these li1t1e bels we
h,,,,"' been l'oming up with:' Ms. MOI,re
"lid "We are big. :111<1 we !Iced big 1x:1S.
I think thill ",,; w,' hi",e ocxxlm,' mOil' la)t"rN.
the cul1ure here has bccon'x: risk-averse:'

Questions for Discussion

I, What kind, uf problems did Ann Moore ident; fy with Ihe w:'y Time's urganiZ<Jtional Sln.tl'-
was working?
llIrc
2. Whal change~ did she make 10 the structure? Why will the>e changes impllwe Time' ~
performance"

l!:i), ~""11ork liilll's

"Dow Jones Plans to Merge Online and Print Divisions,"
Kai/wrille Q. Seelye. NIT. Febrllary 23,2006, p. C6.

Dow Jones & C"mp:my. the puhlisher uf
Tile \~(III SUet'l J",mwl, annoolll..,d )"C'ter-
day that il ""ukJ nx:rge its print and online
oper.ltions. puning them under lhe control
of L Gordon CrO\'in, who had been
pre,idem of the company's online unit.
"The Internet will not mean the cnd
of the print medium:' Mr Crovitz wrote
in a memo yesterday. "But as people
have tmmy more choices 'lbout how,
when and whcre they gct lheir nl'WS,
eSli1blishcd media such as newspapers
must adapt, we will be the lir>t to ad:'pt
by developing a newsp'lpcr for this
digital age'." Like most newsp:lpers, TIll'
JOllrtltl/ h<ls struggled :lS readers and
ad,'ertisl'rs have' moved to the Internet.
Mr. Crovitz sign,<led his commillnenl to
onlin,' operations yeSlnday. lelling
analySIS in iI conference call lh:lt "we
don't ('ompare ourselves to newspapers
per sc because thal's only pan of whal
we are."
The company is reorganizing around
;lS lhree markels-COnSumer media,
enterprise media and n)lnmunity media.
11 had been organized <lround ilS thrce
melhods of distributing informal ion-
pri nl, online and community ne,,-·sl'''pers.
"We have peuple in prinl who think ahmll
circulation. ad sales. producing :md
delivering newspape,,; and they're wry
print-focused becausc they grew up
there," Mr. Zannino ""id in an imcrvil'w,
"They don'11hink 'lboul online. And we
ha,'e a separate online organization thal
umil loday reported up to :'n entirely
dilTerc'nt man:'g,-'ment team,"
Ilis goal is 10 merge them so they sel I
print and digilal ads at the same liml' and
,;.0 they appe:ll 10 readers who. for
nampll', read llll' paper and I,x,k ilt their
UlackBcrries al the same time. as he ""id
he docs.
"We'll run them like fmnchises. heing
somewhal aJ,'no'lic about where people
eh"o"" 10 get information from uS:' he
said. "Well. not emirely agnostic. W1Wl
we really want is for them to usc us in all
chm1l1els of distribution. When they do.
we serye them bener. thl'y're happier and
we gel to generate more protlt:'
On the ed;torial side, he said the", "'as
"lre'ldy cooper'll ion belwl'Cnlhe prinl and
online stalTs but he hopt'<.lto "take that up
:t nOlch.'" The lWO other markets around
whi"h the mmp:my is being ",Slructun.'<.l
:tre enterprise medi". eonsi.\ting of lhe
Dow J"nes New,",ires and ;1~ Iin'!!sing
services, lInd cOlUmunity medi:" oversee-
ing tlK' mmpany's 15 daily and 19 we.,kly
Onaway comlUunity newsp:'pers in nine
st"te~.
564 PART 3 • ORGANIZATIONAL PROCESSES

<thr Nr\lT iJork limrs

"Mellon Combines 2 Units Into a New Group"
NIT. JIII/uary 4. 2006, p. CA.

The Mellon Finalll'ial Corporation said
yeslerday Ihal il had combined its
Drc'yfus ~lutual Fund unit with its
Institut;onal Asset Man:tgelllent group
to C'Tc'ate a n"W organil.:ttion "alkd
Mellon Assel "'hnagelllen!.
Mellon said Ihal Ronald O'Hanky
would lead the (ombin"d group. and
that Stepll(n E. Canta would remain
chief exe(ut i,'" of Dreyfus Corporal ion,
Mr. O'Hanley will report to Martin G.
~kGuinn. Mellon', (hairman and (hief
executive. Mr. Cant"r. who previously
reported to Mr. McGuinn, now report'
10 Mr, O'Hanky,
Mr, O'Hanky sai<J the reorganization
r"necled a shift in Ihe retail marke!.
wl~re im'"'t''''' increasingly buy through
bJ'QkeHkalcrs and ad,·is<:l"S.
Mdlon. basW in Pit1>burgh, ha, bt'l,n
eritidz,,<l by son", shareholocrs. in ra"i·
cular III" hedge fun<J Highficl<Js Capilal,
for a lagging S1<:x:k p.-il'e, 1'lighf,c1ds. basW
in Bo,lOn. has urged tlWI Ihe company
,cparate i" asS<:t managen",m fJ'Qnl it,
Imsl and pTlx.'CS,ing busitICss<:s.
Mr O'Hanley >aid the arguments
advanc<:d by lIighftelds w"re illogical.
"Then:' are real bendits 10 both our diems
;md 10 our shareholders in kcrping thes<:
busin",>cs logether,'" Mr. O'Hanley S<Jid.
He said the major CUStOnJ<:r S<'gn",m in
both the in""'t"'''''t m:magement busilIC»
and til{' procc%ing t>\1sit"'ss is til{' Unit"d
Stales defillCd·bcn"fit !X'n,ion ",,,rke!.
"T""re are IlOI only the S<Jtn<: in"ituti"ns
bul also Ihe S,",tIC people III the in'li·
tutions.'" Me. 0 '.lanl"y said,

"ABN Amro Plans Reorganization to Shift Focus"

NYT, Ocwba IS. 2ooS. I'. c.s,
Tht Dutc'h bank ABN Amro said ycsler·
day that it planned to reorgani:/:" its
ornalions 10 f,)(us On midmarket cor·
porate clients and ,aid i" "hief 0!X'ra-
ting offi,'er would take o"er as finance
(hief next }'"ar.
The three main busmess unilS-
(On'Umn and (ommer"ial dient'i.
wholesale elienls, and private clients
and a"e! management-will he hmken
into 10 Unib slarling next year. givm£
dien!> a("ess to more pro<Juel.'i, the
company said.
ABN Amro said in February tlwt it
planned su(h a mov" and that il would
focus on fewer eorporale relationships,
'Thi, is the next step in aligning our
organizalion further with our strategy,
enabling u, to 'erve our dieniS even
octter by drawing on the untapped
potential or the grnur."' AIlN Anno',
ehain"an, Rijkman W, J. GrocmnL said
in a S1atement.
ABN's eUffi'Tlt "hief ojl{'r.lting olf"xr,
Hugh y, Sn>t1-Barrett. will take ,wer a.,
chic,r linmK:i,,1 officer 011 Jan. I .1llC current
fimul<.\: ,'hid, To'" tk S"'",m, ,,'ill relire on
May 1
SCjx,rately, Ihc French bank Societe
Generalc said it planned to spin off its
in"cstment banking arm in the Umted
States. SG Cowen & Company.lleM year
through a stock offering.
'Thi, flocuion will allow SG Cn""n to
porsuc its tk"c1opment as an independent
bu,iness and to fma""e its grt""tll with
dirr'{'\ :1<.'<.'\...'<8 to capital markels;' Jean·Pierre
Muster, bead of S<K:iete Gcner~1c 's invest-
tn<:nl banking ,ml1,said in a,t"lemem.

Questions for Discussion

J. Why did ,,;'ch uf lhe Ihr,..., <"U!\1p;mics discussW abuve Ch;U1gC their urganiwtio";lj st"-Kture?
2. Using the types of organizational 'ilnKtUre discussed in the chaptcr, (a) id"mify Ihe struc·
lure Ihat bt'sl descrihoc, the tr original ,Iruelure, and (h) identify the structure that bt'St
describes the on" they changed to.
 PAR T 3
CHAPTER Organizational Processes

ORGANIZATIONAL CULTURE
AND ETHICAL BEHAVIOR

OVERYIEW

WHAT Is ORGANIZATIO.'1.U. CUI.TUltE'!

How Is AN OK(;ANllATION'S CULTUKt: TRANSMITrUI TO ITs !\1UIIH:HS?

FACTORS SIIAI'IN(; ORGANIZATIONAl. CUI.TUKt:

VALUES FROM TilE NATIONAl. CUI.TURt:

CREATI]';(; AN ETHICAL CULTURE

SUMMAR\'

OR(;ANIZATION,\L Ih:IIA\'IOR IN ACTION

Learning Objectives
After reading this chapter, you should be able to:
Distinguish between values and norms and discuss how they are the build-
ing blocks of organizational culture.
Appreciate how a company's culture is transmitted to employees through its
formal socialization practices and through informal Hon·the-job" learning.
Discuss five main factors that shape organizational culture and explain
why different organizations have different cultures.
Appreciate how differences in national culture affect the culture of orga-
nizations within a particular society.
Understand the importance of building and maintaining an ethical orga-
nizational culture.
 Opening Case
OPENING CASE HOW TO BUILD A CREATIVE CULTURE
How does 3M's culture affect innovation?

M is a company known worldwide for its organizational skills that

promote creativity and the innovation of new products. 3M aims to
achieve at least 25 percent of its growth each year from new products
developed by its employees in the previous five years. To promote the
creativity of its employees, 3M has developed cultural values and norms
that strongly emphasize the need for employees to feel
empowered, to experiment, and to take risks to come up with
new product ideas. The company has many famous stories
about employees who charged ahead and pursued their own
product ideas-even when their managers doubted the success
of their efforts. Take the case of Scotch tape.!
The story of Scotch tape began when Dick Drew, a 3M
scientist, visited an auto body shop in St. Paul, Minnesota. 1 Two-
tone cars were popular then, and Drew watched as paint-shop
employees improvised a method to keep one color of paint from
being over sprayed onto the other using a paint shield made up
of a combination of heavy adhesive tape and butcher paper. As
they pulled their shield off when the paint was dry, however, it
often took the other color paint with it. Employees joked with
Drew that it would be a good idea if 3M could develop a product
to make their task easier.
Dick went back to his boss and explained his idea for a new
product-a tape with a weaker glue or adhesive, one that would
3M "im~ to achieve al leaSI 25 percenl of ils not pull the paint off. His boss was not convinced this was a viable
gro"th each year from new products project, he told him to go back to work on developing an improved
ocveloped by ii, employees in thc previous
heavy-duty glue as he had been. Drew went back to his lab but
five years. To accomplish this I( has
decided that while he pursued his assigned project, he would also
ocveloped an oq;ani1ational cuhun: based ,m
value, and 1l0nllS (lUll stress the need for pursue his new idea. Over time, he began to divert more and more
employees to be inn,,,"ati,,e and nealive resources to his project and made repeated attempts to invent a
weaker glue. Word of his efforts spread throughout 3M's labs, but
his boss decided to turn a blind eye to his efforts; other people at
3M had done the same thing and they had had success. Within two years,
Drew perfected his glue and developed "masking" tape. It was an instant
success with paint-shop employees.
His boss realized they had a potential winner. Once it hit the market it
soon became clear that masking tape had potentially thousands of other
applications. Drew was now an organizational hero. He was given control of
a major lab and the resources he needed to develop new kinds of tape for
these varied uses. In 1930, for example, he invented clear cellophane tape;
"Scotch" tape became one of 3M's most successful products. 3
The fact that employees spend their time on projects of their own
choosing is the source of many of 3M's cultural values and its success. 3M, for
example, developed an informal norm that its researchers should spend 15 per-
cent of their time to develop projects of their own choosing. It was this norm
that brought about the development of other new products such as Post-It
notes. To encourage more innovation and risk taking, 3M was careful to

ORGANIZATIONAL
CULTURE
The ,<'I of ../"...'<1 "a I"".. , belief"
and I'I()m" lhal innu"n"", lhe
wa)' emplo),.....' lhin;', fe<'l. and
behave IOw'am eolCh olher and
l"wam people ou",dc lhe
orgal1tzallOn.
VALUES
General nileria. ,Iandam,. Or
gui<ling 1'';'''';1'1,'' Ihal people
UM: 10 delenninc wh,,,h 1) PC' of
behavior>. event... ,itual;on,.
an<l oulcome, are dc,irablc or
umk,imblc,
CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 567
recognize its heroes-the people who invented its new products. 3M
established its "Golden Step Program" which rewards successful product
innovators with substantial monetary bonuses, Also, they become members
of its "Carlton Hall of Fame," which gives them recognition throughout the
company and access to a career ladder that can take them to the top. All
these practices gained the loyalty and support of 3M's scientists and helped
create a culture of innovation.
To speed innovation, 3M also realized the importance of creating
organization-wide values to encourage employees to cooperate and share
their ideas with one another. To avoid the problem of people in different
functions focusing solely on their own tasks, 3M established a system of
cross-functional teams made up of members from product development,
process development, marketing, manufacturing, packaging, and other
functions. So all the groups have a common focus, the teams work closely
with customers, Customer needs, in other words, are the common
denominator linking all of the teams. For example, one of 3M's
cross-functional teams worked closely with disposable diaper manufacturers
to develop the right kind of sticky tape for their needs. Clearly, all this
attention to creating a culture of innovation that conveys to its employees
the values of excellence and innovation has paid off for 3M.
Overview
3M attributes a large part of its success to a culture that encourages employees like Dick
Drew 10 work hard, cooperale. be adventurous. and take risks in order 10 pursue their own
ideas, In this ehaptcr. we first define organizational culture and discuss the way it influ-
cnees employces, work aniludes and behaviors. Then we discuss how employees learn
about an organization's culture from the company's formal soci11lization pnlctices and
mformal processes, like wat"hing how things ""gel done:' Five major building blocks of
organ izarional culture ;rre then discussed (I) the eharacterist ics of people with in the orga-
nization, (2) organizational ethics, (3) the employment relationship, (4) organizational
struclure, and (5) n1l1ional cuhure. Finally. an issue thai is especiallY importllrll in the
2000s-how and why il is ne"essary for organizations to bUIld and maintain all ethl"al "111-
ture is eX;llllincd.
What Is Organizational Culture'?
Organi:r.Ulionall'ullurc is the set of shared values, beliefs, and nOffilS that inlluences the
way employees think, feel. and behave toward each other and toward people outside the
organilation. In Schein's (1900) view. culture is "a pattcrn of shared basic assumptions a
group learns as il soh'es ilS problems of eXlemal adaptatiun and inlernal inlegration. that
is "ollsidered valid, is taught 10 new members as Ihe corre<:l way )"ou perceive. Ihink and
feel in rdation to those problems:' 4 Just as an organization's structure can increase
employee cooperalion and motivation. so the values and assumptions in an organization's
culture also can promote work attitudes and behaviors lltal increase org«nizational effec-
tivcness. 5 This is be"aosc the org'lll izat ion's cullu re "olJtrol s the way employees perceive
and respond to their environment. what they do with information, and how they make-
dedsions,6
What arc organiz:nional "alues. and how do they affect work anilUdes and behavior?
Values arc general criteria. standards. or guiding principles tltat peopk use to determine
568 PART 3 • ORGANIZATIONAL PROCESSES
EXHIBIT 17.1
Terminal and
Instrumental Values in
an Organization's
Culture
TERMINAL VALUES
A <k-,;red eoo 'Me or",,{mme
{h,1 people ~~ to ",:hie'e.
INSTRUMENTAL VALUE
A dc,ired mode or t~pe of
beh""ior {hat people '''''~ {o
folio"
Organiz.;orional Val"".
)------'1'--------1
T... minal Valu•• Instru"",,,,aI Values
D..ired and stat.. or
o",com.. D.,ir.d mod., of beha,,;or
(._g_. ~ig~ quality••"".llenc.) (•.g., bemg hdpfiJl, working h.,dj
J
Spec,fic "orm., ",Ie•. and SOPS
(._g_, being cou,twu. '0 co.worke..,
"dymg up the work area)
which types of behaviors. events, situations, and outcomes are deslmble or undesirable. 7
There are two kinds of values: ternlinal and instrumentill (sec Exhibit 17.1 ).s A terminal
mlue is a desired cnd stale or OUlCOll1C lhat people seck to achieve. Organizations mighl
adopt any of the following as tern] inal wlues. or gu idi ng pri Ill,' iples: qual ily. responsibi lily.
innovativeness. excellence, economy. morality, and protit~lbility. Large insurance compa-
nies. for example, may value prolitability. but their temlinal values are often stability and
predictability because the company caunO! afford to take risks. It must be there to payoff
policyholders' claims.
An inslrUlllenlal "lillie is a desired mode or type or behavior. Modes or behavior that
organizations advocate include working hard. respec1ing traditions and authority. being
conscrvative and cautious. being frugal. being creative and courageous. being honest. tak-
ing risks. and mainwining high standards.
An organ izalion 's culture thus consists of the end st:ttes that the organizat ion seeks to
achieve (its terlllina! ra/llc.f) imd the modes of behavior the organization encourages (its
ills/rllllll"ll/O! \'allles). Ideally. instrumcntal I'alues help Ihe organization achieve its termi-
nal values. For example. computer companies like HP and Microsoft whose cultures
emphasize the terminal ":tlue of innovatl\'eneSS might aU:tin this outcome by encour<tging
instrulllCntal values like working hiln1. being creative. and taking risks. That combination
of terminal and inslrumemal values leads to an entrepreneurial culture-one in which
employees are challenged to t,lke risks or go out on a limb to test their ideas.9 On the other
h:tnd. insurance companics or accountmg firms genemlly emphasize Ihe terminal v:tlue of
stability and predictability and try to :l11ain this oU!come by encouraging instrumcntal val-
ues that emphasi;o;{'" behaving cautiously. following the appropriate rules. and oheying
instructions. The result will be a conservative culture.
To encouruge members to adopt certain tennillill and instrumental values and beh:tve
in certain ways as they pursue their goals. the organil.ation develops speeifil' norms. [n
Chaptcr 10 w{'" delined a 1I0rll1 as a shared expc\:tation ror Ix'havior. Norms are standards or
styles or behavior that are considered ae{'"cpl:tble or typical for :1 group of people. In
essence. norms :tre informal rules of conduct that emerge ovcr time to encoumge employ-
ees to cultivate work altitudes illld behaviors that arc considcred importalll to an organiza-
tion. So. for example. the specific norms of being courteous. k{'"eping olle's work ar{'"a
ele,ln, or being a "team player"' will del'clop in an organization whose more generaltenni-
nal or instrumental values inelude being hclpfu I and hard working or coopel<ltil'e. 10
Norms are largely informal. so many of th{'" Illost crucial values an organization has
arc also not wrilten down_ They {'"xiS! only in the shared norms. beliefs. assumptions. and
ways of lhinking and belwving that people within :tn organiz:tlion use to rel.lle to each

Former Southwest Airlille~ CEO
Herb Kdkhcr (~l Icm ~nd his
second in command. Coli",,"
Barretl. set "ut to dC'vel,,!,
terminal and instrumental \'alues
that would provide low-",)s!.
high-(juality airline service to
<'u,tonters. Tllo::)' <'rc~tcd an
organ izat ional culture that
a<'mmplishcd this go,,1.
CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 569
other and analyze and deal with problems, t t For example. from one another. members
learn how to perceive and re,pond to various siwalions in ways that are consistent with
the organization's accepted values. Eventually. members choose and fulluw appropriate
values without e\'en realizing they are doing so.t2 Over time. they iW<'rllali:e the urgani-
zation .s values and the speci lic ru Ics. norms. :lIld SOPs that govern behavior: Ihm is. orga-
ni7..ational values become part of members' mindsct alld afftttthe way they perceive and
respond to a situatlon. t3
Values and norms work in a subtle. indireCl fashion. yet ha\'e a powerful effect on
behavior. 14 To get a feel for Ihe effect of organizational values, consider how differences in
behuvior ,11 Southwest Airlines and Value Line refieet differences in values. When
Suuthwest Airlines was fonned to compete against giant airlines like American and
United. its CEQ Hcrben Kelleher and hi, sccond in command. Collccn Barrett. knew they
had their work cut out for them. To compcte they had to provide 10w·cos1. high-quality air-
line service to customers. Kelleher :lnd Barren set out to del'elop termin111 and instrumen-
tal values that would create a culture accomplishing thiS gool-and they succeeded. Today.
Southw'est"s organizational culture is the ellvy of its compctitor~.
South west managers und employees arc commined to the success of the organizat ion.
They do everything they can 10 help one another nnd provide customers with excellent ser-
vice (a terminal value), Four times a year. SOll1hwestmanagers work as baggage handlers.
ticket agent~. and night attendants so they get a feel for the problcms facing OIhcr employ-
ees. An informal norm mukes il possible for employees to mcct with Barrell (and Kelleher
sometimes. :11111ough he has retired as CEO) every Fridny :It noon in the company's Dallas
parking lot for a company cookou!. Both managers have encouragt-d employees to be cre-
ative and 10 dcvclop rules and norms 10 sol ve their own problems. To please. customers. for
example. employees dress up on spedal days like Halloween nnd Valentine'S Day and wear
"fun uniforms" el'ery Friday. In addition. they try to develop innovatil'e ways to improve
cu,tomer service and satis!;lction.
All employees participatc in a btmus system based on thc company's petformances.
and employees own over 20 percetl1 of the airlinc 's stock. which. not surprisingly, has con-
sistently perfonllO~d well. The entrnnee h1\11 at Southwest Airline's headquarters ,It Love
Ficld in Dallas is full of plaques earned by employees for their outstanding perfomlance.
Everybtxly in thc organiz:ttion cooperates to achievc Southwe~t\ goal of providing 101'.'-
cost. high-quality service. and Southwesl's euhure seems to be worldng to its advantagc_
Contrast Southwest's culture with that of Value Line. Inc . Jean Bunner. publisher of the
Value Line lnvcstment Survey. fashioned an organizational culture that emplo)'ees hate and
no one envies. In her anempt to reduce costs and improve efficiency, Bunner creatcd instnl-
mental values of frugality and ttonomy that soured employees' 1l1titudcs toward the organi-
zation. Among the other strict rules she created. employees were told to sign in by 9:00 A,M.
every day and sign out when lea\' ing, If they fake<lthcir arrival or departure time. they faced
dismissal. Because :tt Valuc Line mcssy desks arc considered signs of unproductivity.
Bunner re(juired depMunentlnanngers to file a "e1ean surfnees report" every day. certifying
that empluyt'Cs have tidied their desks. IS Buttner keeps salary increases as small as possible.
and she has kcptthe company's bonus plan and health plan under tight rcin.
Did promoting thcse tenninal and instrumell1al values payoff! Many highly tmined.
professional woti;ers left Value Line because of tlte hostile atmosphere produced by these
"economical"' values and work rules that debase employees. This turnover generated dis-
contCIl1 among the company's customcrs. The relationship betwecn employees and Buttner
became so poor that employees reportedly put up a notice on their bulletin board criticiz-
ing Buttner's rnunugell1ent style nnd suggesting thM the company could usc SOll1e new
leadership. Bunner's response to this mess-Ige was to remol'e the bulletin board. Clearly.
Bultner did not create a culture of cooperation at Value Line.
The terminal and instrunlCntnl values thal Kelleher and Blluner developed to mannge
their organizntions elicited very different responses from their employees. The cuhural vnl-
ues at Southwest led empluyees to perceive that they were apprttiated by the organization
and that the organi7_atioll wanted to reward behavior that supportt-d its goals. The cuhur.!1 val-
ues at Vnlue Line. on the other hand, nlien:lted employees. reduced commitment and loynlty.
570 PART 3 • ORGANIZATIONAL PROCESSES

and increased employee tumover. t6 Clearly, an organization's culluml values are important
shapers of members' behaviors,17 Shared eulluml values pruvioc a common refereoce point
and smooth intemCiions among organizational members, People who share an organization's
values may come to idcntify strongly with the organiz-1lTion, and feelings of self,wol1h may
flow from their membership in it. 18 Employees of Southwest Airlines, for ell<llnple, seem to
value greatly Their membership in the organization and are mmmined to it.

How Is an Organization's Culture Transmitted

to Its Members?
The ability of an organization's culture to motivate employees and increase its effective-
ness is directly related to the way in which members learn the org;mization's values, They
learn the piVoTal values and llOnllS from an organization's formal sOI:ializalion pr.lctil'es
and from The signs, symbols, stories, rites, l'ercmonics, and organizational language That
del'elop informal! y as an organ iZ<ltion's culture matures. (Sec Exhibit 17,2),

Socialization and Socialization Tactics

As we discussed in Chapter IU. newcomers to an organiz-1ltiol1 must leHrn the values and
nomTS thm guide existing members' behavior and dedsion making,t9 Newcomers arc out-
siders, and only when They have learned an organization's values and act in accordance
WiTh its norms wi II lon£-t ime members accept thcm as insidcrs, To learn all org,11l iVltion 's
cult ure, newcomers must obtain illformation about cui tural values. and they do so fonnally
by parTidpaTillg in all organization's socialization program, They do so infomlally by
observing and working wilh other employees,
We discussed socialization in detail in Chapter 10. Recall Van Mannen and Schein's
model for structuring the organiz,uion's socialization experience so newcomers learn its
values, In III Ill. these values influence the way in which newcomers respond TO a situation:
Do they reacT passively and obcdiemly to commands and ordcrs? Are thcy creative and
innovmive ill searching for solutions to problems~ When organizations combine these tac-
tics as suggested in Exhibit 10.1, there is some el'idence that they can influence an indi-
vidual's role orient<ltion, Military-style socialization discussed in Chapter 10 is one such
example (sec p, 347), Dell has built a culTure using socializaTiOll practices That arc very
illstl1Jctive in this respect. The Texas-based computer maker has developed a lean organi-
zational culture focused on cullmg costs <lnd providing excellent customer service to help

EXHIBIT 17.2 Form.1

wci.loutlon
Ways of Transmitting pru".s
Organizational Culture

I
Org.mZ>t1on.t Employees Ie"", Th.
nt.s .nd ___• organ.... 'ional •• _
org.n'lauon.t
COremonieS val.... and no.m. t.ngu.g.
throlJgh:

1
S'gns, symbot"
and stori.,
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 571

sell its products. How docs Dell socialize its new cmployees so they Icam thc vales :lIlds
norms of its culture? In a very specific way: Just like the :mny. Dell has a "boot camp" to
which it sends ils employees for tmining. 20 For four weeks employees go to a Dell truining
(;enler outside Austin. Texas, where they are educaled about the basil: software Ihat oper-
atcs Dell's products: MS oflkc. WindowsNT, and Visual basic. the main programming lan-
guage installed on the machines, are among the programs they study. At the end of the boot
C:lOlp there is a Irnni projed in which 6 to 9 people arc given a real business problem facing
Dell. They must arrive at a solution to the problem and thcn present their findings to a
pancl of instructor-;. Duri ng this tmining process ncw cmployees al so learn thc basic val ues
and nOnllS that guide Dcll cmployees: they are also taught how to provide excellent cus-
tomer service. Employees form many common bonds because tltey are all sociahzed
together and trained in such a focused. concentrated way.2I
After "boot camp." a wed of shadowing is rcquired: Thc new hirc observes an expc-
rieneed Dell employee performing the tasks that comprise his or her organil.a1ional role.
The new hire is able to ask questions :md absorb infommtion quickly <lnd dfeetivcly. In
this way DeWs Ie<ln. cost-cutting organizmional values <lre tr<lnsmitted quickly to employ-
ees. The carcful socialiZalion proccss has become incrcasingly important at Dell occauS('"
its mpid growth has required tlte company to recruit many new employees who must be
brought quickly up to spl.'ed.12

Stories, Ceremonies, and Organizational Language

The cultural values of an of<,;anization are often evident in the stories. (;eremomes. and Inn-
guage found in the organization.n At Southwest Airlines. for example. employees wearing
costumes on Hallowecn, the Friday cookouts with top managcrs. and employees pitching
in to help to speed aircmft turnaround as needed all reinforce and communicate the conl-
pany·s culture.
Organizations usc several types of cercmonial rites to communicate cultural norms
and values. 24 Rill'S of !Jmmge mark an individual's entry to, promotion in. and depar-
ture from the organization. The socialization programs used by the army and by Dell
arc rites of passage: so. too, arc the ways in ",hi(;h an organization grooms people for
promotion or ret ireme III . R ile$ of illl,'gml;oll. such as sharcd announcemcnts of organ i-
zational success. office parties. and company cookouts. build and r('inforcc common
bonds between members. R;le~' of tmlwm;eJ/lell/. like awards dinners. newspaper
releases. und employee promotions, give an organization the opportunIty to publidy
acknowledge and reward employees' contributions and thereby enhance their commit-
ment to its values.
The stories and I.mguage of an organiz.1tion are also important media for comrnuni-
(;ating culture, Stories (be they fact or fiction) about organizational heroes provide impor-
tant clues abom cultural values and norms. Such stories can reveal thc kinds of behaviors
that the organization \'alues and the kinds of practices it frowlls upon. Studying the stories
and language can reveal the values thM guide behavi()r.2~ At 3M. for example, to build
cooperative team values and norms each team is headed by a "product champion," who
takes the responsibility for huilding cohesive team rclatiollships. Each team is also given a
"management sponsor:' one of 3M's top managers whose job it is to help the team get
resources and provide support when the going gets tough.After all, product development is
a vcry risky undertaking, and many projeds do not succeed. Clearly, a team with a (;hnm-
pion and a sponsor is more likcly to experience successl
Because language is the principal medium of cornmunicmion in org:mizations. the
characteristIC names or phrases a company uses 10 frame and describe evenlS provide
important dues about norms and values. Many organizations use te(;hnical languages
to facilitate cooperation betwccn their employccs. 26 For cxample, becausc many 3\1 prod-
ucts are flat. such as Scotch tape. Post-It notes, floppy disks. sandpaper. and transp:lren-
cies, the quality of ··flatness·· has corne to be dosely asSO\:iated with 3M's lerminal values.
Flatness is oftell a winning theme in 3M's corporme language, At Micl\lsoft, employees
have developed a shorthand languag.... of softwarc-type phrases to describe ""Ollllnunication
S72 PART 1 • ORGANIZATIONAL PROCESSES

prohlems. Technical languages arc used hy the military. spons teams. in hospitals. and in
many other specialized work contexts.
The concept of organizational language encompasses not only spoken language but
also how people dress. the offices Ihey occupy. the company cars they drive. and how they
fonnally addrcss one another. In Microsoft and some othcr organizations casual dress is thc
norm. Indeed. in the last decade many I;lrge companies that used to emphasize conservative
business-Iype clothing like Ford and IBM now ellcountge -'business casual"- c10lhing and
"dress-down" days where employees can wear whatever Ihey fl"ClmoSI comfortable in.
Like socialization pntcticcs. organi7.ational language. ccrcmonies. and stories help
people "Icam thc ropes" aud the organization's cultural values. As the following OB Today
shows. \Val-Marl uses many of these means to socialize its employees and enhance Its
orgauizmional culture,

OB Today
Sam Walton and Wal-Mart's Culture

Wal-Mart, headquartered in Bentonville, Arkansas, is the largest retailer in the world

In 2003, it sold over $250 billion worth of products n A large part of Wal-Marl's success
is due to the nature of the culture that its founder, the late Sam Walton. established for
the company, Walton wanted all his managers and workers to take a hands-on approach
to their jobs and be totally committed to Wal-Marl's main goal. which he defined as total
customer satisfaction, To motivate his employees, Walton created a culture that gave
employees at all levels, who are called associates, continuous feedback about their per-
formance and the company's performance.
To involve his associates in the business and encourage them to develop work behaviors
focused on providing quality customer service, Walton established strong cultural values and
norms for his company,
Some of the norms asso-
ciates are expected to fol-
low indude the "ten-foot
attitude." The ten-foot
attitude encourages asso-
ciates, in Walton's word,
to "promise that when~
ever you come within
10 feet of a customer,
you will look him in the
eye, greet him, and ask
._~ ...._~ him if you can help him,·
- - The "sundown rule"
To cnCOUnll!c \Val-Marl'S cmployccs or "associ"t"," to develop work
states that employees
behaviors focused on providing 'lual ily cu,tomcr ,crvicc. Walton
established ,trong cultural valucs and norms fur his company, should strive to answer
customer requests by
sundown of the day they are made. The Wal-Mart cheer ("Give me a W. give me an A," and
so on), is used in all its stores 28
The strong customer-oriented values that Walton created are exemplified in the stories
its members tell one another about Wal-Mart's concern for its customers. They indude
stories like the one about Sheila, who risked her own safety when she fumped in front of
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR S73

a car to preyent a little boy from being struck, about Phyllis, who administered CPR to a
customer who had suffered a heart aHack in her store; and about Annette, who gaye up
the Power Ranger she had on layaway for her own son to fuifililhe birthday wish of a cus-
tomer's son. t9 The strong Wal-Mart culture helps to control and motiyate employees to
achieYe the stringent output and financial targets the company has set for itselPO
A notable way Wal-Mart builds its culture is at its annual stockholders' meeting, an
extr<wagant ceremony celebrating the company's success. 31 Eyery year Wal-Mart flies
thousands of its highest performers to its annual meeting at corporate headquarters in
Arkansas for a show featuring performers like exercise guru Richard Simmons and singers
Reba Mcintyre and Andy Williams. Will-Mart feels that expensiye entertainment is a
reward its employees deserve and that it reinforces the company's high-performance val-
ues and culture. The proceedings are even broadcast live to all of Wal-Mart's stores so
employees can celebrate the company's achieyements together. 3t This is just one way
Wal~Mart uses information technology to bolster its culture. 33 Online training programs
and company announcements are electronically sent 10 all its stores on a regular basis so
managers and employees know exactly what is happening at the company's many stores
around the world.

Finally. organizational symbols often convey an organization's cull ural values to its
members and to others uutside the organiz<ltion:l~ In some organizatiuns. fur exmnple, the
size ufpeoples' offices. their location Oil the third floor or the thiny-third floor. the luxul)'
of the furniture ill them. and so on symbolize the cuhur.ll values all organization holds. Is
the organization hierarchical1lnd stalUs-conscious. for eX:lmple. or arc informal. participa-
tive work relationships enl:uuraged? At General Motors. the exel:lltive suite on the top floor
of the Deuuit headquarters is isolateJ from the reSI of the building and open only to lOp
GM executives. A private corridor anJ stairway link lOP managers' offices. and a private
elevator connects them to ,I he,lted parking gamge.
Sumetimes, tile very Jcsign uf tile bllllJ ing Itself is a symbol of an org,mizatiun's v<lllles.
For example. the Walt Disney Comp'lIly hired fameJ Japanese arl:hitct·t Arata !sozaki to
design toc Team Disney Building. which houscs Disney's "inmginC'C'ring unit" in Orlando,
Florida. This building's contempor,lry and unusual design. featuring unusual shapes anJ
bright colors. conveys the importance of imagination and creativity to the Walt Disney
Company amI to the people who work in it. When Louis Gerstner took wlllrol of IBM in the
early 1990s when its sales wc.... rollapsing, olle of his first actions was to build a brand-ncw,
c;lmpus-style headquarters building similar to Disney·s. He moved all IBM's managers to
open-plan offil:es and suites in the new bllilJing. IBM's old high-rise skyscr.lper building,
whic'h Gerstncr belic\"eJ reducL"tltcamwork and innovation and encourageJ conscrvative
thinking. was sold.

You're t;he Management; Expert;

A Culture of Cleanliness

You're the trainil1Q e~pert for a fast-food restaurant chain that is opening up a location in
a new city. One of your company's major priorities is food :;afety and cleanliness. The
chain has never in its history had a case of food poisoning, and preserving this record is
central to its culture. In fact, the chain insists its employees exhibit high personal hygiene
and that they thoroughly clean and disinfect the restaurants each night upon closing.
Your job is to instill these core values in the new hires quickly. How will you design your
socialization program?
574 PART 3 • ORGANIZATIONAL PROCESSES

Factors Shaping Organizational Culture

Now thaI you have seen ,,'hal organizmional l:ulture is and how ml.'mocn; learn and become
pan of an organi7,mion's culture. some difficult queSlions can be addressed: Where docs
organizalional culture come from'! Why do differenl companies have differenl eul1ures?
Why might a cullure that for many years helps an organization achieve its goals suddenly
harmthc organization?
Organizalional culture is shaped by the illleraction of four main factors: lhc personal
and professional eharacterislics of people within lhe organizalion. organiwlional ethics.
the lwture of the employmenl relationship. and the design of its organizmional stna:1Ufe
(scc Exhibit 17.3). Thcse factors work logether to produce differem cultures in differl.'lll
organizations and cause changes in culture over lime_

Characteristics of people Within the Organization

The ultinwte source of organiwliollal culture is the people who nwke up the organization. [f
you wam 10 know why cullllres differ. look at their memocrs. Organizatiolls A. B. and C
develop dislinctly different cultures because they mtmc\, select, and retain people who have
differem vnlues. personalities. and elhics. 35 Recall the allraction-selection-atlrilion model
from Chapter 2. Pt"Qple mny be nllmcled to an organization whose values mntch theirs: sim-
ilarly. an organization seleCls p<-'ople who share its values. Over time. peoplc who do nOilit
in leave, The result is that people inside the organi zation become more and more similar. lhe
values of the organization become more and more pronounced and ciearcut. <lnd the cuhure
becomes more nnd more disl inC! from that of sim ilar oTj;aniwtions. 36
The founder of an organizmion has a substalllial influencc on the organization's in i-
linl culture because of his or her per-.;onal values and beliefs.J7 r'Qunders sctlhc scene for
the laler development of culture because they nOl only establish the new OT£:lnizmion's
values but ~lso hire its first members. Presumably. the people selected by the founder
have values and imerests similar to his or hcrs.3~ Ovcr timc. members buy ill10 thc
founder's vision and perpetuate the founder's values iUlhe organizatiou.3~ This has cer·
tainly been lhe case at Microsoft and Dell. whose founders championed innovative nnd
frug'll values. respt-.:tively.
An impOn<llll impl ication of this is that an organizmion .s members become simi lar over
lime aud come to share the S<lllle values_ This. in fac\, may actually hinder their abililies 10
fId,lpt and respond to Ch<l11ges in lhe enviromTlCnl.40 This happens when lhe orgnnizmion"s
values and norms be(;ome .\0 strong nnd promote so mud group cohesiveness. members

EXHIBIT 17.3
Ch.,.cr<nst'cs of
Where an Peopl. Withon
Organization's Culture ,h.O,g.no.auon
Comes From
I
Th. N.w,. ofth<
Orgo,"""onol Organiuhon;d
Ethic< • Culture
• Employm.nt
Rdau"nsh,p

1
D·"sn ,,(
Orgamu"on.1
Stru~tu",
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 575

Complilcrs arc nOl just toys as

thi, picturc of a powerful
Alienwarc dcslaop gaming
CQmpuler ,uggeslS. AI ienwme,
which was 'Iequircd by Dell in
2C06, cQntinue, to push Ihc
limits of high-pcrfonnance
cQmpming for gamel'<, neati"e
professionals and the
gQwrnment SI"K"e.

mispcn,:eive the environl1len\.~1 AIsQ. gruupthink might appear as members reinforce one
another's misperceptiQns and respond inappropriately to them. Groupthink has been a prob-
lem at many eomp<lnies. Even though Microsoft hilS strong. cohesive values that bond its
members. Bill Gales haS worked hard to make il clear that employees should express their
Q"'n perSQnal views. e"CnthQugh they might ditTer frQm his and everyone else'> in the orga-
nization. One cxample of how Gates's policy has worked to Microsoft's advantage occurred
when the company started its Internet sen'ice. MSN. The comp111lY believed the popularilY
of its Windows platform WQuid allow il to cQnlrol the future development of the Intentet.
even though Netscape had introduced a popular bmwser. Two cOiKerned Microsoft pm-
granum'l'< working in its Imernet division wrote a memo to top managers arguing that
Microsoft would end up wilh I/O control over the 11lIemet. givell the pace at which il was
developmg. They also argut'i.l that Netscape's browser would Ix:come the dominant way
people would access the Interne\. The programlllers argued that to nlfllpete with Netscape.
Microsoft should rush to develop its own web browser.
After reading Iheir memo, Gates convened a major organization-wide meetillg. Top
managers listened while all of the Issues were aired and adnllUed they were wrong. The
company then diverted most of its human talent to devclop its oWn bmw>cr as quit'kly as
possihle. Within one year. the first version of Internet Explorer was ready. and Microsoft
el'en went so far 1lS 10 gil'e il away free to users. This posed a major challenge for Nelseape.
which had been l:harging u.>t:rs for Nelscape Navigator.
Successful companie, like Microsoft certainly need a strong set of terminal I'alues
cmphasizing innOl'ation and hard work. Howcl'cr. they need to Ix: careful their very suc-
cess doesn't lead members to Ix:lieve their company will always Ix: Ihe "best" inlhe busi-
ness, or "invincible:' Some companies have made this mistake. The old IBM Qflhe 1980s
Ix:lieved its control of the mainframe market made it invilKihlc: JB~'l employees laughed
o!Tthe potential threat personal computers posed, The CEO of another dominant computer
m1lker at Ihat time. Digital Equipmenl. reportedly commenled that "personal computers are
just toys." Within a few yean;. Digital Equipment was experiencing huge losses.
The "pcople make the place" I'iew of organizational culture explains how an organiza-
tion del'elops the shared cultuml values that can have such as powerful effect on Ihe ".-ork
attitudes and Ix:haviors. The "people make lite place" view also implies the culture of an
organization muSI be managed by the people who contml il \() ensure that it docs not lead
to problems.~2 ror thi, reason. some experts advocate that a company should have. a board
of independent-minded dire<:tors who aren'l afraid to challenge lOP management and thai
CEOs and lOp managers should Ix: changed regularly. We look al this issue later in the
chapter whl:n we discuss ethics.
576 PART 3 • ORGANIZATIONAL PROCESSES
ORGANIZATIONAL ETHICS
1lIe moral ,alue" bel ",f" and
rulc' thul e'tabli,h th<- apprupriatc
"a}' for;m OIpTiltation and ih
memtJ,:r\ to deal" ith each OIher
and "ith JICOPlc oul1-idc th<-
OIl'unitallon.
EXHIBIT 17.4
Sources of
Organizational Ethics
Organizational Ethics
An organizaliun can purposefully develop some kinds of culluml ,,~lues tu control the w~y
its mcmbers behave, Onc imporlalll class of values that falls ill\o this category stems from
organi7~.tion:ll ethics. the monll values, beliefs. and rules that establish the appropriate
w~y for ~n orgamwtion ~nd its members to de~1 with e~ch other ~nd pt:ople outside the
organizalion. Ethic~1 valuc~ rest on prindples stressing the importance of treating every-
one fairly and equally.
Organiwtions are constantly making choice~ aoout the right. or ethical. thing to do.
A comp.ltly like IBM. Target, ur Sears might wonder whether it should have procedures in
pl~ce giving advance nOlice to it~ employees about impending layoffs or plant c1o~ing"
Traditionally. companies have becn Il."lurtant to do so becau>c thcy fcar employces will
become hostile or apathetic and perform poorly. Similarly. a company has to decide
whether to allow its rnmwgers to pay bribes to government officials in foreign countries
where such payoffs are an alxepted way of doing busine>s, evcn though they may a(;lllally
be illcgal. 43
To make these decisions. an organization purposefully implants ethical instrumcntal
values in its cultllre. 44 Such ethics outline the right and wrong ways to behave when the
a(;tion takcn m~y help one person or group but hurt anuthcr.4~ Ethical "alucs, and thc rulcs
and norms that reflcctthem, are an integral part of all organization's culture because they
help to detcrmine how its mcmbers willmaoagc situations and makc dccisiolls.
The question is how are urg;Hliz~tional ethics formed'! Ethical values ~re a product
of soo:ictal, professional, :md individual ethks.46 (Sec Exhibit 17.4.) We diso:uss eao:h of the
aspects next.
Societal ethics, The ethics of the country or society in which the organiz~tion eJ\ists are
important dcterminants of its ethical values. Societal cthics are the moral values
formali~.cd in a society's legal systcm. in its Cl.l>toms and practices. and in the unwri\1en
norms and values that its people follow in their daily lives. Most peoplc automatically
follow the ethical norms and ,,~Illes of the society in which they live beo:ausc they have
intemalized them and made them thcir oWIl. 47 Whcn societal cthics are codified imo law
(rules), an organization is legally required to follow these laws in its dealings with people
mside and outside of the organiz.ltion.
One of top management's m~in re~ponsibilities is to ensure thaI the organization's
members obey thc law. Indeed, in ccrtain situations lOp managers can be held accountable
for thc conduct of their subordinatcs. One of the main ways top managers ensure ethical
beh;lvior on the part of their organiz.ltions is b}' instilling good values in their members,
Organintio.....J Ethics
Tho moral .. I , b<1,.f, .• nd rut.. ,h., o"abh,h
,h. owropri _~ for on OrgOnilOtion and I,.
memb<rs ro ,1.01 WIth eoch o,h.r and WI,h
poopl. ou",d. tho "'Sam"",,,"
S""i..;>1 Ethics Ptot"euio.....J Ethics tnm"';d..;>1 Ethic.
Tho.,hoc, of tho Th. mo...t values ,ho, The person.t moral
country or SO<"'Y • group of "mitatty valu.. ,ha' pe<>fll. use
in wh,ch on tra,nod pooplo to "ructuro ,ho,r
d",.lop to control
o'gonl",,,ol)OX"" ,h." b<hav1Or
,"'orac"ons WIth
o,hor poopt.
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 577

However, while some companies (Iih" Johnson & Johnson and Mcrck) are well known for
their ethical cultures. many organizations nonetheless ,lct illegally. immorally. and unethi-
c:llly. These organizalions frequenlly do little tu del'elop ethic,ll values fur Iheir employees
to follow.

Professional ethics. Profession,ll ethics are the moral values that a group of similarly
trained people develup to control their performance of a task or use their resources. 4S
Peoplc intcrnalize thc values and norms of their professions just as they do thc values and
norms of Iheir societies. Generally. Ihey follow these norms when deciding how to
behave. 49 Some organizations have many types of professionals wurkmg for them~
nurses. lawyers. researchers. doctors. and accountants-whose behavior is governed by
professional ethics. These ethics Ilclp shape the organization·s culture and dcterminc how
members denl with other people and groups. Medical ethics. for example. control how
doctors and nurses do Iheir jobs and help establish the l:ultun: of the organizations they
work for. Profes,ional ethic,. for example. encourage d(Ktors to act in best intcrests of
their patients: perfonning unnecessary medical pr~Kedurcs for one's own financial benefit.
for example. is considered unethical. Similarly, ~lt companies like Merck and Johnson &
Johnson. prufessional ethics induce SCIl:ntlsts and tel:hnil:ians to beha\e ethically when
preparing and presenting the results of thcir research.
Most professional groups have the authority to enforce the ethical standards of thc-ir
profession. Doctors and lawyers. for example. can be barred from pnlcticing Iheir profes-
sion if they violate professional rules.

Individual ethics, Individual cthics are the personal moral values that people usc to
structure their interactions with Illher people. In Illany instances, personal ethics mirror
societal ethics and originate in the law. But personal ethics are also the result of an
IIldividual"s upbringing. They Illay stem from his or her family. friends. or membership in
a churl:h or other sodal organization. Bel:ausc personal ethics influeol:e how a pen;on will
act in an organization, an organization's culture is strongly affected by the people who arc
in a position to establish its ethical values. As we S~IW earlier, the founder of all
organization plays a particularly important role when il comes 10 eSlablishmg the ethical
norms and value, of the organization.

The Employment Relationship

A thi rd factor shaping organizat ional culture is the natu re of the employment relationship a
comp,my establishes with its employees via its human resource policies and practices,
Rccall frum Chapter 8 our diseussiun of the changing empluyment relationships betwccn
organizations and their employees: Human reSUllfl:e policies. like a l:ompany's hiring. pro-
motion, and layoff policies along with pay and benefits, can influence how hard employees
will work to achieve the orgnniwtiOll's goals, how allached they will be 10 it. and whether
or not they wiJl buy into its valucs and norms. 50
Whelle\'er p<:ople must work togethn to al:complish a l:ommon goal the potential for
miscommunication, compctition, and conflict is always present. Well-designed human
resouree policies function as the "oil" preventing "people problems" from occurring and
c:m align <Ill employee's goals wilh his or her eumpany"s. They ,Ire also a good indieatur of
how the organization values its cmployees, Consider the effeels of a company·s promotion
policy, for example. If a company pursues a policy of promoting ··from within," employees
who nlready work for the organization are recruited to fill higher-level positions. On the
other hand. a company with a policy uf promolion ""from without"· will fill its upen posi-
tion, with qualified outsiders. What impact will this have'!
Promnting frOIll within will bolster strong values and norms, build loyalty.. and
encourage employees to work hard to advnnee within the organization. Upward Illobility is
a major Illutivatlllg factur for many lx:ople, Promoting from withm also helps a cumpany
retain its highest-performing employees. If employees sec no prospect of being promoted
from within, they are likely to begin looking for opportunities elsewhere. As a result,
578 PART 1 • ORGANIZATIONAL PROCESSES

values and norm, emerge that lend themsC"lves \() employC"e turnover and a temporary
relationship betl'.'een companies and employees. 'llJis is what has happened at many e01l1-
panies m the high-le<.:h seC"tor. whiC"h has gone through greal turmoil in recent years. An
estimated one million U.S. lech employees IOSitheir jobs following Ihe bursl of the
dOl.com bubble a1 thC" turn of the century. CompaniC"s like Apple ComputC"r, HewlC"u
1';;Ickard. ;;Ind IBM -well known for their strong corporate values. long-term employrnent.
risk-t;;lking initiatl\'es. ;;l[ld employee eommitmenl-were some of Ihe corporations forel-d
10 layoff the most employees,
AnothC"r important human resource policy relates to thC" company', pay level and
incentive systems. A company can choose to pay its employees above. below. or at the
mduslry-al'erage pay IC"vel. Some companies. Microsoft- Merck. and IBM .11110ng them.
choose 10 pay their employees above the average-industry pay Ind. On one hand. above-
averagC" pay aumets the best-qualified employees. On the othC"r hand. 'OmC" companiC"s pay
below-'I\'erage wages and accept a high level of employee h1rnover as normal. Similarly.
there are many different kinds of incenlive pay linked to individual. group. ;md comll<lny
performance that alTect employee work attitudes and beh:lviors, To retain their emploYl'Cs.
many companies give them bonu'iCs and company stock linked to thC"ir contributions or
years of service. This lends 1O nlake employees feel like "owners" of the company.
Companies like IBM. Microsoft. and Acccnture believe incemives such as lhis encourage
the development of values and nonns that improve organizational elTcctiwness. 51 We saw
how Jean ButlnC"r's aHempt to limit Valuc Line employees' benefits resultcd in hostility and
high turnover. We also saw how Herbert Kelleher. by establishing a company-wide slock-
oplion system and encour:lging emploYl'Cs to find bettcr ways to make customers happy.
fostcred commitment and loyalty at Southwest Airlines. Indeed. evidence suggests that
linking pay to performance creates a culture of commined and motivated employees who
perform at high le\"els. The following OB Today ,hows how one company did justlhis.

DB Today
Bimba Changes Its Approach
The Bimba Manufacturing Company, based in Monee. Illinois. manufactures aluminum
cylinders Its owner Charles Bimba decided to sell the company to its employees by estab-
lishing an employee slock-
ownership plan (ESOP),
He kept 10 percent of the
shares; the other 90 per-
cent was sold to employ-
ees. Some of the employ-
ees' money came from
an already existing profit-
sharing plan; the rest was
borrowed from a bank. 52
Changes in the com-
pany since the ESOP was
introduced have been dra-
matic, and the orientation
Before Bimlxl.lrn:. employees porcha.scd ,hares in their eompnny,
rhey merely followed manage~' orders. Nnw these ,amc cmployees of the work force to the
thin~ h~e owners. Tenmwork and innovalion have dramatically organization has totally
impro,·cd the aluminum <:ylin<ler maker', opemlion<. changed, Previously, the
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 579

company had !\No groups of employees: managers who made the rules and workers who car-
ried them oul. Workers rarely made suggestions and generally just obeyed orders. Now. cross-
functional teams composed of managers and workers meet regularly to discuss problems and
find nlW ways to improve quality These teams also meet regularly with customers to better
meet their needs
Because of the incentives provided by the new ESOP. management and workers have
developed new working relationships based on teamwork to achieve excellence and high
quality. Each team hires its own members and spends considerable time socializing nM
employees in the nM culture of the organization. The new cooperative spirit In the plant
has forced managers to relearn their roles They now listen to workers and act as advisers
rather than superiors.
So far, changing the company's property rights system has paid off, Both its sales and
employment have doubled, Bimba has expanded to a new, larger facility, and it has
opened facilities in both Europe and Asia, Furthermore, workers have repaid the entire
loan they took out to finance the employee stock purchase. s3 In the words of one worker,
the ESOP has led to "an intense change in the way we look at our jobs. "54 It has totally
chilnged Bimba's corporate culture and the commitment of its work force,

Organizational Structure
As the Bimba story illustr<l1es. redesigning human resourcc policies and introducing ncw
traini ng, promotion. and incClllivc systcms can alter an organ ization 's cu Iture by changing
its instrumenlal values and norms, Bimba's cullure changcd because it altered its organiza-
tIonal structure and empowered sel f-managed teams. At Bimba. th is change el iIII inated the
necd for close supervision. Coordination is achievcd by Icams of employecs who value
cooperation and arc motivated by thc prospect of sharing in the wealth the organization
geiler-lies.
We have seen how the values and norms that shape employee work anitudes and
behavion; arc derived from the organization's people. ethics. and HRM policies. A fourth
source of cu Itural val ues eomes from the organizat ion's strUClllre _RlXall from Chapter 16
that of!!(l1/i:lII;Olla/SIr!U;wf/, is the formal system of task and reporting relationships th,lI
an organization establishes to coordinate and motivate Its employees. Because dlffewnt
struClures give rise to different cultures. managers need to design a certain kind of organi-
zational structure in order to ewate a eenain kind of culture. Mechanistic structures. for
example. give rise to tOlally different sets of norms. rules. and cultural v;llues thml do
organic structures.
Rccall fmm Chapter 16 that lIu·('h(II!i.~li(' Slr/WI/,f/,S are lall. highly ccmralized, and
standardiled. and "''!i(/Il;C Slmdllr/,s arc nat and decentralized and rely on mutual adjust-
ment. In a tall. centralized organization. peuple have wlatil'cly lillie personal aUlononly.
and desirable behaviors include being cautiuus. obeying amhority. and respecting tradi-
tions. Thus, a mechanislic structure is likely to give rise to a culture in which predictability
and stability are desired end states. In ~l nat. decentralized structure. people have more
freedom tu choose mId control Iheir own aclivities. and desirable instrumental values
includc being creative or courageous and taking risks. Thus an organic slructure is likcly 10
give rise 10 a CUItUfC in which innovation and nexibility aw desired terminalvalucs.
An org.lIlization's structure can promote cultural values that foster integration and
coordination. Out of stable task and role relatiunships. for example. emerge shawd noons
and rules that help reduce communications prublems. prevent the distortion of informa-
tion. and speed the now of information. Mowover. norms. valucs, and a common organi-
zationallanguage can improve the performance of teams and task forces. It is easier for
different functiuns tu share infornlalion and trust one anolher when they share similar cul-
tural values. One reason why product-development time is short and the organization is
nexible in product tC'3m structures and matrix structures is that the reliance on face-to-face
580 PART 3 • ORGANIZATIONAL PROCESSES

contact betwcen functional specialists in tcams forces those teams (() quickly develop
shared values and e0l111110n responses to problems.
Whether a company is centralized or deeeniralized also leads to the de\'l~lopll1enl of
different kinds of cullural valucs. By dcccntralizing amhority and cmpowering employecs
an organization can cstablish valucs that encoumgc and reward creativity or innovation. In
doing thi s. an organ iZ..llt ion signa Is them that it"s "okay" to be innovative 111ld do things their
own way-as long as their actions are cOnsi,lent with the good of the o'1;ann:ltion.
Conversely. in some organizations. it is imponant that employees do nm makc dcd-
siolls on their own and that their actions be open to the scrutiny of superiors. In cases like
this. centralization can be used to create cultural values that reinforcc obedicnee and
accounlability. For cxample. in nuclear power pl:mls. values that promote stability. pre-
dictability. and obedience to lIuthority are deliberately fostered to prevent disastcrs. 55
'11roUgh norms and rules. employees are taught the imponance of bchaving consistently
and honestly. and they Icarn that sharing infomlation witll supervisors. especially informa-
tion about mistakes or errors. is the only acceptable foml of bchavlor. 56

Adaptive Cultures versus Inert Cultures

Adaptive cultures arc Ihose whose v,llue, and flOrms help an organization build momen-
tum. grow. and chauge as IK'Cded to ac,hieve its goals and be effceti\"e. Inert cultures arc
those thm lead 10 values and norms that fail to motivate or inspire employees: thcy lead to
stagnation and often f:,ilure over timc. What leads to an adaptive or inert culture',>
Researchers have found thai organizations with strong adaplivc cultures like Whirlpool.
GE. Toyota. Googlc. and IBM invest in their employees. They adopt human rcsourcc prac-
tices that demonstratc thcir commitmClll to their members by. for example. emphasizing
the long-term nature of the employment relationship and trying 10 avoid layoffs. These
companies devclop long-term career paths for Iheir employces and invcst hcavily in tmin-
iug and dcvclopmcm tomilkc them more v..luable to thc organization. In Ihese ways. tcr-
minal and in,truillental v..lues penaining to the worth of the people working wilhin thc
organization encourage the del'elopment of supportive work attitudes ,tod behaviors.
In adaptivc cultures. employces oftcn reecive rewards linkcd diredly to thcir perfor-
mance and to the performance of the cnmp..ny as a whole. Sometimcs. employee stock-
owncrship plans arc developed. In an ESOP. workers as a group are allowed to buy a
signific:H\l percentage of lheir company's stock. Workers who are owners of the company
havc an inccntivc to dcvelop skills improving thcir performancc levcls. These cmployccs
arc also morc likcly to search anively for way' to improvc quality. cfficicncy. and perfor-
mance. At Dell. for example_ employees arc able to buy Dell stock at a steep (15 percent)
discount and build a sizable st<\ke in the company over time.
Howcvcr. somc organizations dcvclop cultures with valucs Ihm do not includc protcct-
ing and increasing the worth of their people as a major goal. Thcir cmploymcnt practiccs
arc based on short-term employment needs and minimal i'lVestmcnt in employees. who
perform simple. routine tasks. MorCQver. employees are not often rewarded based on their
performance and thercfore havc lillie incentivc to improvc thcir skills to help the org:miza-
tion meet it, goals. In a company with an inert culture and poor relatinnships with its
employees. the instrumcntal values of noncooperation. laziness. and output restriction
nonns ,Ire common. Employees are content 10 be told what to do because they have little
motivation to perform beyond the minimum requircments. Unfonunately. such a hierarchi-
cal structure and emphasi., on close supervision produce a culture that docsn'l readily
adapt to a change. By contrast- an ad,lptive culture emphasizes entrepreneurship and
respt'<:l for employees. rnnovati \'e organ izational st ructures like crossfunct ional teams that
empnwcr and mmivatc cmployees arc likely \() devclop in such a culturc. This pUIS thc
organiz3lion in a bener position to adapt 10 the changing business climate.
An org,l\Iization that seeks to manage and change its culture must lake a h,lrd look at
all four factors that shape culture: the ch,traeteristics of its members (particul,lrly Ihc
founder). its ethic..1 valucs. human rcsourcc policics. ilnd organiziltional structurc.
However. changing a culture can be difficult hccause ofthc ways these factors interact and
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 581

affect one ;molher.~7 Often. a majur reorganizalion is necessary for a cultural change 10
occur. as we discuss in Chapler 18. The way Googlc creales a culture Ihal makes il easy 10
adapl and change. and which encourages ongoing leaming and crealivily. is discussed in
lhe following OB Today.

DB Today
How Goggle's Founders Created a Groovy Culture

Google, the web-based services company, whose fast-growing product line includes
state-of-the-art seilrch engines, e-mail, and chat, was started in 1995 when two Stanford
graduates in computer science, Sergey Brin and larry Page, collaborated to develop a nevv
kind of search engine technology. They understood the shortcomings of existing search
engines i1nd by 1998 they had developed a superior engine that they felt was reildy to go
online. They raised $1 million from family, friends, and risk-taking "angel" investors to
buy the hardware necessary to connect Google's software to the Inlernet
AI first, Google answered only 10J)(JO inquires a day--its plain home page is hardly
very welcoming-but in a few months it was answering 500,000 inquires; by the end of
1999,3 million; end of 2000, 60 million; and in the spring of 2001 it reached 100 million
, per day! sa Today, Google
has become the most-
widely used search
engine and the comp<lny
has one 01 the top five
most-used Internet web-
sites. So quickly has
Google's rise been that
rivals like Yilhoo! and
Microsoft are struggling
to catch up i1nd prevent
Google from providing
i111 the services they offer,
and doing it better i1nd
Pietu ....-d are Sergey Brin and Larry P<lge. lhe founder,; of Google.
for free! (Google milkes
who slane<llhcircompany in 199510 provi<le cuslomers Wilh a Slale-
Of-lhe-<lrI sc<ltch enginc. Google has gone on 10 creatc a whole hOSI billions by selling adver-
of <;uslolller-frien<lly software pro<lll<;IS. Illany un<ler development ill tising space on its widely
"Googlc ulbs" lhm have madc it a Slar "'Ihc inforllWliol\ lcchnology used web-applications.)
worl<l. Google's explosive
growth is largely due to the culture or entrepreneurship i1nd innoviltion its lounders
cultivated from the start. Although in 2006 Google has grown to over 2,000 employ-
ees worldwide, its founders claim that it still maintains a small company leel because
its culture empowers employees, who it calls staffers or " Googlers, - to create the
best software possible, Brin and Page creilted Google's entrepreneurial culture in sev-
eral ways.
From the beginning, lacking space and seeking to keep operating costs low, Google
staffers worked in "high.density clusters' that encourage intensive team interactions.
Three or four employees, each eqUipped with a high.powered linux workstation, sharing
a desk, couch, and chairs shaped like large rubber balls, work together to improve its
582 PART 3 • ORGANIZATIONAL PROCESSES

technology Even when Google moved into more spacious surroundings at its modernistic
"Googleplex" headquarters building, staffers continued to work in shared spaces and so
its team atmosphere was perpetuated
Google also designed its building so that staffers are constantly meeting each other in
Google's funky lobby, in the Google Cafe where everyone eats together, in its state-
of-the-art recreational facilities. and in its "snack rooms" equipped with bins packed with
cereals, gummi bears, yogurt, and, carrots, and, of course make-your-own cappuccino.
They also created many opportunities for employees to gather together at informal events
such as a TGIF open meeting and a twice-weekly outdoor roller-hockey game where
staffers are encouraged to bring down the founders. s9
All this attention to creating what Just might be the "grooviest" company headquar-
ters in the world did not come about by chance. Brin and Page knew that Google's most
important strength would be its ability to attract the best software engineers in the world
and motivate them to perform well. Common offices, lobbies, cafes and so on bring all
staffers into close contact with each other, develop collegiality, encourage them to share
their new ideas with their colleagues, and encourage them to constantly improve its web-
based applications and find new products to grow the company. Google also continually
searches for new ideas emerging in the INWW, and in 2005 it bought a company that
spedalizes in developing web-based personal word processing and storage. It will use the
skills of these newcomers to develop products that will compete directly with Microsoft's
PC-based software.
The freedom Google gives its staffers to pursue new ideas is a clear signal of its
founders' desire to empower them to be innovative and to work to make Google the soft-
ware powerhouse in the next decade. Also, to motivate staffers to innovate important
new software applications, Google's founders reward their achievements by giving them
stock in the company, which effectively makes staffers its owners as well. So successful
have they been in designing Google's culture that in the mid-2000s, alienated by the
growing bureaucracy at Microsoft, and the lack of opportunity to make real wealth
(Microsoft no longer offers stock options but gives employees stock based on perfor-
mance), Google has been attracting away many of its top software engineers who wel-
come the challenge of working for the visionary company.
Google's founders understand that building and maintaining a strong organizational
culture is a prerequisite for successful, ongoing innovation. 60 In August 2004, Goggle
went public and its shares, which were sold at $85 a share, were worth over $100 by the
end of the first day of trading and rose to as high of $475 by January 2006. This made
Brin and Page's stake in the company worth billions, and many of its employees are now
multimillionaires. When Google went public. its founders also created two classes of
stock, an ordinary class, and a special class that gives them the voting rights and power to
control the future of their company No outside company can take over Google. Its future
is in their hands and those of its staffers, and what the company will become is something
Widely debated inside the company and beyond.

Traits of Strong, Adaptive Corporate Cultures

Sc\'cml s->holars havc allCmplCd to uncover thc common tmits that strong alld adaptive eor-
por-HC cultures share and to filld out whether there is a particular set of valucs tlwI dOllll-
natcs ad"plivc culturcs that is missing from weak Of incn OIlCS. An c"r1y. but still influen-
tial. allcmpt is T. J. PcteTS and R. H. Waterman's account of thc valucs and norms
chanleteristic of succcssful organiZ,Hions lind their cultures. 61 They argue Ihm organiza-
tions with ~Irong cultures are chamctcril.ed by three common \'alue sels.
First. successful compan ies have v"lues promot ing a bidS for (le/io/!. The empha,is is
on autonomy and entrepreneurship. and employees are encouraged to take risks-for
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 583

example. to create new products-even though there is no assurance that these products
will be winners. Managers are closely involved in the day-to-day operations of the com-
pany .md do nOI simply make slralegie decisions isol.Hed in some Ivory tower. and employ-
ees have a "hands-on. value-driven approach:·
The second set of values stems from the lUuure of /111" OYK(IIliza/;ol1 \' missiOIl. The
company must stick with what it docs best and maintain control over its core ~lctivitics.
A company can e;lsily gel sidetracked into pursuing activities outside ils area of expertise
just because they seem to promise a quick rctum, Management should cultivate values so
that a company sticks to its knitting. which means staying with the businesses it knows
best. A company must also establish close relationships with customers as a way of
Hnprovmg its competitive position. After all. who knows more about a company's pcrfor-
m;lllce than those who usc its produns or services'! By emphasizing customer-oriented val-
ues. organizations arc able to leam customers' needs and improve their ability to develop
prooucts and seTvices customers desire. All these managemem values are strongly repre-
sented in companies profiled in this chapter. such as 3M. Wal-Mmt. ;llld Google: they are
also found in companies like IBM. Dell. and Toyota. which arc sure of their mission and
take constant Sleps to maintain it.
The third set of values bears on Iwlt' to vperlll(' /11t, orXUllbllivlI. A comp,llly should
try to establish an organizational design that will moti"ate employees to do their best.
Inherem in this set of values is the belief that productivity is obtained through people and
that respc>:t for thc individual is the primary mcans by which a company can aeate th{"
right atmosphere for productive behtwior. A simihtr philosophy perv,ldes the culture of
Japanese companies. as we diseuss in the following paragraph.62 Many U.S. companies.
such as 3M and Google pay this kind of attention to their employees. An emphasis on
{"ntreprcncurship and respc>:t for tltc cmployc{" leads to thc establishmcnt of a strueture that
gives employees the latitude to make decisions and motivates thcm to su>:>:eed. Because a
simple struc1ure and a lean staff beSt fit this situatton. the organization should be designcd
with only the number of managers and hier..trchicallevds that arc neccssary to get the job
donc. The organi7ation should also be sufficicntly deeentrali7cd to permit employccs' par·
ticipation but centralizcd enough for management to make sure that the >:ompany pursues
its mission and that cul1uralv;llues are closely followed.
The,se three main scts of values arc at the hean of;t strong organi7ational culture. and
manag{"mcnt transmits and maintains them through transformational and ethical leadcr-
ship. Managers need to establish the values and nonns that will help them bring their orga-
nizations into the future, Whcn this is accomplished, only those people who lit the values
are recruited into the organization. and, through training, they bc>:ome a pan of the organi-
zation .s culture.

Values From The National Culture

The \';llues ;lnd nOTIllS of a nalion ha\'e (I pTofound imp'lct on Ihe eul1ure of ea>:h and
every organization operating or hcadquartercd within it. Culture. whethcr organiza-
tionalor national. is a product of the values and norms that people usc to guide and con-
trol their behavior. On a national Ic"el. a eOUll1ry's values and norms detcrminc whal
kinds of altitudes and behaviors are acceplable or 'lppropTiale. Members of a parti>:ular
nation,tl culture arc instilled with these values as they gro'" lip. Norms and sodal guide-
lines dictate the way they .should behave toward one another and. often. toward people
of different cult UTeS.
Recall from Chapter I Ih;lt nat ional cu Iture IS the parti>:ul;lr set of eeonomi>: . pol It ieal.
and Slx:ial valucs that exist in a panicular country, U.S. national cuhure, for example. is
based on capitalistic economic values. democratic political valu{"s. and individualistic.
wlllpetitive social values-all characterize the way people in the Unitcd StaleS livc and
work, The culture of a U.S. company is distinct from the cultures of Japanese. French. or
German companies. for example. because thc valucs of these countries differ in signili-
cant ways.
584 PART 3 • ORGANIZATIONAL PROCESSES

Hofstede's Model of National Culture

Resear\:hers have spent considerable time and effort idenlifying similarities and differ-
ences between the cultural values and norms of different coulllries. A model of national
culturc den'loped by Gcert Hofstede argues that diffcrences in the values and norms of dif-
ferent countries arc c:tplurcd by five dimensions of cullurc. 63

Individualism versus collectivism. The dimension that Hoi&tede called individualism

versus \:olIedivism focuse, Oil the values that govern the relatiollship betwL"C1J individual,
and groups. [n coulHries whcre individualism prevails. values of individual achievemelll.
freedom. and competition are stressed, In eOUll1ries where eollcctivism prevails. values of
group harmony. coheSiveness. and consensus arc very strong. and the imporl.lI1\:e of
cooperation and agrcement between individuals is ,tressed. In colle<:tivisll:ulture,. the
group is more important than thC" individual. and group mC"mbers follow nonns that stress
group rather thlln personal interests. Japall epitomizes a country where collectivist values
dOIl1 in"te. and the United States epilomizes a country where mdividual ist valucs prcvml.64

Power distance. Hofstede used power distance to refer 10 the degree to which" country
accepls the fact Ihat differelKes in its citizens' physical and intelieCluall:apabilities give
rise to inequalities in their wcll-being. This eonccpt also measures the dcgree to which
countries ~'ccept economic :md social differences in wealth. status. and well-being as
na1ll1<11. Countries that "l1ow inequalities to persist or increase arc s"id 10 have high power
distance. Professional! y succes,fu I workers in high-power-distance l:OU mries amass wealth
and pass it on to their children. In these coumries. inequalities increase over time: the gap
bclwcen rich lind poor. with 1111 the ;l11endant political and WCiill consequences. grows veT)'
large. [n contrast. \:Olllltries thilt dislike the de"e1opmenl of large inequality gaps between
their citizens arc said to have low power distance. These countries usc taxation or social
welfare programs to reduce inequality and improve lite lot of the le:lsl fortunme mcmbers
of society. ww-power-dislance countries nre more interested in prel'enting a wide gap
between rich and poor and discord between classes.
Advanced Western eoulllries like the United State,. Germany. the NethC"r1ands. and IhC"
United Kingdom score relativcly low on power distance and are high on individualism.
Poor Latin Americ:tn counlries like Gu.llemala.l\mama. <lnd Asiiln countries like Malaysia
and the Philippines score high on (X)"'er distance and low on individllalism.65 These find-
ings suggest that the cultural values of richer countries emphasize prolecting the rights of
individuals and. at the same time. provide a fair chance of success to e"ery member of
society. But even among Western countries there are ditTerences. Both the Dutch and lhe
British sec their countries as more protective of the poor and disadvantaged than
Americans. who believe Ihat people have Ihe right to be rich as well as the righlto be poor.

Achievement versus nurturing orientation. Countries thm arc achie"ement

oriented value assertiveness. performance. success. and competition and are results
oriented. Counlries that arc nurturing oriented value the qualily of life. warm personal
relationships. and servil·e and care for the weak. Japan "nd the United Stmes tend 10 be
achievemcnt oricmed. The Netherlands. Swcdcn. and Denmark lend to be nurturing
oriented.

Uncertainty avoidance. Jusl llS people differ ill their tolerance for uncertainty and
willingness to take risks. so do countries. Countries low on uncertainty avoidance (such as
the United States and Hong Kong) arc easygoing. value diversity. and are IOlcram of
diffcrences in what ])rople believe and do. Countries high on uncertainty avoidance (such as
J~lpan and France) tend 10 be rigid and intolerant. In high-uncertainly-avoidance cul1l1res.
conformily to Ihe values or the sodal and work groups to whil:h a person belongs is lhe
norm. and strul"lured situations arc preferred because they provide a sense of security.
Differences in nal;onlll culture help explain why the cultures of companies in
one country tend 10 be different from those of oomp:lnies in another. French and German
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 585

organizations. for cxmnplc. admire the cntreprcneurial drh'e of U.S. managers and thc
Arnl."fiean work ethic but treat their managers and workers in different ways than do U.s.
organizalions. French and Germ.m organiwtions are far less concerned with issues of
equity and oppofllmity in their hum:m resource policies. In Pmnce. for example. social
class still determinl."s the gendl."r, ethnicity. and background of l."mployees who wi II suc-
cessfully climb the organizational ladd('r. 1I.10f('over. German and French COlllpanies
employ far fewer foreign nalionals m theIr managemenl mnks Ilwn do U.s. companies. In
the Unites States, the mosttalentl."d employees are likely to be prumOled regardless of their
nationalorigin. 66

long-term versus short-term orientation. The last dimension that Hofstedc

identified concerns whether citizens of a country have a long- or a shorHl."nn orientation
toward life .lJld \\'ork. 61 A long-term orientation is likely to be Ihe result of values that
mdude thrift and peThistence, A short-term orientation is likely 10 be the result of values
that express a mncern for maintaining personal stahility or happiness and for living in the
present. Countries with long-term orientations include Japan and Hong Kong. well known
for their high rate of per c;lpita savings. TIle United States and France, which tend to spend
more ;md save less. have a short-term orientation.
Exhibit 17,5 lists the ways people in ten countrlcs score on Hofstedl."·s five dimensions
of national culture.
National CUItUfCS v;lry widely, as do the values and nonns that guide the ways people
think and acl. When an organization expands into Foreign countries. it employs citizens
whose values reflect those of the national cu Iture, The fact that national cultu rc is a deter-
minant of organizational culture poses some interesting problems for an organization seek-
ing to manage its global opcmtions.611

EXHIBIT 17.5
Culture Dimension Scores for 10 Countries

Achievement Uncertainty long-Term

Power Distance Individualism Orientation Avoidance Orientation

United States L H H L L
Germany L H H M M
Japan M M H H H

France H H M H L
Netherlands L H L M M

Hong Kong H L H L H
Indonesia H L M L L
West Africa H L M M L
Russia H M L H L
China H L M M H

H .. top lhim )
Nore: M" me<!;um thin! among 53 rounlne, and ,egi<.n, for lhe f,n.! foo' dimen,ion>: among 23 ,oonr,"" for rhe fifth
L" bonom lhi'd

Sou,,,,, Adapled from G, Hof,lc>de. '"Culw,a' COIl>lraim, in Manage"lCnl 'Theorie':' Aeillkm)' 'if M",,,,gemmr E.n'Curi,.e. 7 (1993):91 ,
586 PART 3 • ORGANIZATIONAL PROCESS

If di!Terences in vJlues between coull1ries C<1ll>C differences in Jllitudes Jnd behaviors

between workel'j in different subsidiaries, In organi:wtiotl will find it difficult to obtain the
benefils of glob~ll leJming. Different parts uf Ihe cump:my located III different countries
m<lY de\'elop diffcrelll oril."nlations toward Ihe probll."ms facing Ihe compJny Jnd Iheir own
subcultures. They will bc<:ome concl."ml."d more with their own local problems than with
the global problems facing the company as a whole, and this will hinder organizational
effeclil'eness.
Another major problem can (K:cur when a company in une cuunlry seeks to cooperate
with a company in a diffcrent country, perhaps via ajoill1 \,ell1ure. Differences in national
values and norms can make such cooperation difficult for many reasons, as the problems
that emerged when Pillsburgh-based Corning Glass. and Me;o;lcan glass-maker Vilro,
formed a joinl venture illuSlr<lte. Corning amI Vilm formed their vell1ure to share lednoJ-
ogy and market one another's glass products throughout Nonh Amcrica and so take advan-
tage of the North American Free Tr.lde Agrecmem (NAFfAl. At the signing of the joint
venture, both companies were enlhusiaslic about the proSpecLs for Iheir alliance. Managers
in bOlh companies claimed they h<ld similar org;mizalional ('ultures. Both companies had
top-manageml."nt tcams dominJtl."d by the family ml."mbcrs of the foundl."rs: both Wl."r("
globid companies with broad product Jines: and both had Ixen successful managing
alliances with olher companies in the P<lst.6'I Nevertheless, within Iwo years, Corning
GI<lsS terminated Ihe joill1 \'l."lllure. returning the S 150 million Vitro had given it for access
to its tcchnology. Why had the velllure failed? The cultures and values of the two compa-
nies were so different that Coming managers and Vitro managers could not work together.
Vitro. the Me.\i<;<ln company, did busmess the Mexican way. in accordance with values
prevailing in Ml."xican culture. In Me;o;ico, business is conducted Jt a slower pace than in
the United States. Used to a protected market. Mexican companies are inclined to sit back
and make their decisions in a "I'ery genleel;' consensual kind of way.70 Managers lypically
come 10 work al 9 A~I., spend two or more hours at lunch, often al home with lheir families,
and then work late. often umil 9 PM. Mexican managers and their subordinates arc
intcnsely loyal and res]:liXtful to their superiors. The corporate culture is based on pater-
nalistic. hiemrcltic1l1 v1llues. and mOSI important decisions are made by small leams of top
m<lnagers. ThiS cenlr.tlizatioll slows down decision making because middle man<lgers may
comc up with a solulion to J problem but will nOltakc action withoul top-management's
approval. In Mcxico. building relationships with new companies tnkcs time and effort
Ixcause lruSI de\'elops slowly. Personal conlacts thai develop only slOWly between man-
agers in dill"crent companies arc imponant for doing business in Mexico,
Corning, the American company. did bu,iness the American way, in accordance with
values prevailing in American culture. Managel'j in the United Stutes take short lunch
bre'lli.s or work lhrough lunch so Ihey can leave carly in Ihe even mg. In nmny American
companies, decision-making aUlhority is decenlralized 10 lower-level managers. who make
important decisions and commit thcir organization to certain courses of action. U.s. man-
agers like to make decisions quickly and worry aboutlhe consequences later.
Aw.ue of the differences in their appro1lches 10 doing business. managers from
Corning and Vilro tried 10 compromise and find a mUlually acceptable working style,
Managers from both companics 1lgreed to takc long worki ng lunches togethcr. Vitro's man-
agers agreed 10 forgo going home at lunchlime, and Coming's managcrs agrecd to work 1l
bil I.lter m night so Ihey could talk 10 each olher and speed up Ihe decision-tn.lk ing process.
Over lime, however. the differences in m<lllagement Styles ;md approaches 10 "'ork became
a source of frustration for both sets of m1lnagers. The slow p1lce of dcrision m1lking WJS
frustrating for Coming's m.lIwgel'j. The pressure from Corning's managers to get cvery·
lliing done quickly was frustrating for Vitro's managers. In the end. lhe Americans wilh-
drew from what had originally seemed to be a promising \'emurl.".71 Corning's m;lIlagers
working in Mexico di'\Covcred that the org1lnizational cultures of Vitro 1lnd Corning wcre
not so similar after all. and they decided to go home. Vitro's managers also realized lhat il
was poinlless 10 prolong Ihe \'enlure when lhe differences were so greal.
Corning and many other U.S. companies Ihal have enlered into global Jgreemenls
hJ\'e found that doing husincss in Mexico or in1lny other country is different from doing
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 587

business m home. American managers living abroad should not expect to do business tbe
American way. lleeause values, nonns, customs, and etiquelle differ from one country to
anuther. expatriale nwnagers muSI learn to understand the differences belween their
national culture and the l'ullurc of the host coumry. if they arc to manage global organiza-
tional behavior successfully.
To prevelH the emergence of different nmional subcultures within a global organiza-
tlon.;m organiz.llion must take steps tu creale a global culture and organizatiun-wide val-
ues and Ilorms that foster cohesiveness among divisions. But what does that entail'! Global
infonnation technology. networks. and tcams can be used to transmit valucs to the organi-
zation's worldwide divisions. Via global networks. expatriate managers can move from
one country to another. spreading the company's values :md norms thronghuut its
divisions. Indeed. the transfer of employees from one division to another helps them
understand they are members of a global organizmion. Global teams-both real and vir-
lUal-formcd of m,lIwgers from differenl countries can also facilitMe the developmclH of
shared values.
Many large companies atlelllpt to dcvelop a cohcsivc set of values and norms through-
out their organizmions by transferring thc-ir top managers to their global divisions. When
Niss,ln. Hond'l. nnd Sony. for example. ex pand abro.1d. the entire top-Illnnagement team of
the new global division consists of Japanese managers whose job il is to disseminate the
companics' values. The Japanese have been vcry successful ;n maimaining cOlJ1rol of the
orgaoizationnl culture of their plants in the United States and England. Quality levels at
Japanese auto plants in the United States are close to levels in J.lP:Ill. in facl. Nevenheless.
the eultumllearning process works both ways. as the following Global View suggests.

Global View
A Gai;in Works to Turnaround Sony

Sony, the Japanese electronics maker, used to be renowned for using it> innovation and engi-
neering prowess to turn out blockbuster Il€!'N products such as the Walkrnan and Trinitron TV.
In the 19905 product engineers at Sony turned out an average of four new product
ideas every day. Why? A large pan of the answer was because of Sony's culture, called the
"Sony Way,"' which emphasized communication and cooperation between groups of
engineers across the com-
pany to foster innovation
and change. Engineers
were given considerable
freedom to pursue their
own ideas, and the man-
agers of different prod-
uct groups championed
their own innovations:
but problems arose with
Sony's approach in the
2000s.
Companies in Korea,
Taiwan, and China began
Many Japaocsc spend their entire ...."Of~ing lives at the s;lmc comlXlny.
and historic'ally many Japaocsc companics ha,'C pu,",ucd a poli('Y of to innovate new tech-
Iifctimc cmploymcnt. gnar<lllk'Cing cmployees they will ncver be laid nologies like digital LCD
ofT in unler to SC('urc their loyally and ("(lmmitmcllt. screens and flash memory
588 PART 3 • ORGANIZATIONAL PROCESSES

that made Sony's technologies obsolete. Companies like Apple and Nokia came out with the
iPod, smart phones, and tablet computers that better-fitted customer needs than Sony's
"old-generation" prooucts such as the Walkman. One reason that Sony experienced major
problems responding to these changes was that its culture had changed with its success. The
top managers of its many divisions had become used 10 acting as if they had control of a fief-
dom and, protected by the Japanese tradition of lifetime employment, they worked to pro-
tect their own division's interests, not their company's. This competition had increased Sony's
bureaucracy and slowed its decision making, something that made it much harder for Sony
to take ad~antage of its pipeline of new- product innovations' At the same time, its research
was becoming enormously expensive as divisions demanded more and more funds to create
innovati~e rt€W products.
Sony's Japanese top managers were at a loss about what to do, sensing this was a
crucial turning point in their company's histolY they turned to a gaijin-or a non-Japanese-
executive to lead their company. Their choice was Sir Howard Stringer. a Welshman, who
headed Sony's North American operations and had been instrumental in cutting costs and
finding ways to increase the profits of Sony's US, division,
Stringer cannot speak Japanese, but luckily for him many of Sony's top executives do.
And, now that he is in command he faces the problem of reducing costs in Japan where,
like many Japanese companies. Sony has a policy of lifetime employment. He has made it
clear that layoffs will be forthcoming as Sony must reduce its high operating costs, He has
also made it clear that the politicking going on between Sony's different products groups
must stop and managers must prioritize new products and only invest in those that have
the highest chances of success, for it must reduce its huge R&D budget. Indeed, he wants
to make engineering, not management, the focus once again at Sony and eliminate the
tall, bloated hierarchy that has developed over time-by, for example, downsizing corpo-
rate headquarters, In Stringer's own words, the culture or "business of Sony has been
management, not making products. -72 However, he has to accomplish this in Japan,
which has a national culture known for its collectivist, long-term orientation, and for its
distrust of gaijen or foreign values. And these same values operate inside Sony, so Stringer
will have to be hard-headed and push Sony to make the best use of its resources,

Creating an Ethical Culture

Wc mention earlier that ethics-the moral values, beliefs. and rules that govern the way
organization~ and their members should ~lct toward one ;mother and people outside the
organizmion-form an irnponant pan of an organization'~ cultural vaJues. In an era when
most companies' actions arc being more illlensivcly scrutinized by customers. investors. and
governmcnt agencies. organizMiOllS and their empJoy~'Cs cannot affonJ to engage in actions
that will hann the cotnp;my"s reput,nion. Creating an ethic:ll organizationall:ulture has now
become a major priority for many comp;mies bel:ause failing to do so can be catastrophic.
One of the most imponall1 effects of ethicaJ rules is to rC"gulate and control the pursuit
of uobridled self-interest. To understand why self-interest needs to be regulated. consider
the "tragedy of the commons:' The tragedy of the l:om 1110ns holds that it is r,ltioo;ll for peo-
ple \() maximize their usc of"l:omnx)IJ"land or resources (parks and open range are exam-
ple);;) because it's free. For example. cattle owncrs will all want to graze their hcnJs on IhC"
open rJnge to promote their individual intere>ts. As a result. the land will ahno>t cenainly
be overgrazed. and erosion will render it unusable. The ration<ll pursuit of individual self-
ill1erests. in other words. will result in a collective disaster.
The same thing can happen in organizations: Left to their own devices. people will
pursue their own goals at the expense of collective goals. Top managers. for example. may
IlIn the organ izat ion to their own advantage mtd to the detrimcllI of sh<lreholders. employ-
ees. and customers. Similarly. powerful unions m<lY negOliate wages so high that in the
Jong run. a company lJceomes uncompetitive.
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 589

Ethical values and rules control self-intcrested hehavior1hat might lhremen the collec-
tive interests of an organization and socicty in geneml. Ethical valucs establish dcsired cnd
stales-for ex:ul1ple. equitable or ""good" business practil:es-.md the modes of hehaviur
necded 10 achicvc Ihose end statcs. slll;h as being honest or being fair. Ethical valucs in an
organi7-'1tion's culture also reduce the need for people to always evaluate what is right or
wrong. By automatically following an ethical rule. people are also more productive
bel:;mse they spend less Ilme and effurt trymg to d(:cide wh<ll course of al:tiun 10 lake. 73
Another impuffilnt reason to act cthically is that when an org<lnization follows acn:plcd
ethical rules. it gains a good repUlation?4 This is a valuable a~set that entices people to do
business with it. including customers, suppliers. and the best job applicants. On the other hand.
organizations wilh unethical reputations breed hostIlity and rmstmsl. Althuugh unelhical orga-
nizations mighl reap shorl-tenn benefits. they arc penalized in the long run because evenlually
people will refu'>C to deal with them. This liaS happened in the 2()()()s. Pcople dumped compa-
nies like WorldCom/1\KI ,Ind Qwest in droves bcc,lUse they "cooked their books" to inflate
their profits. Unfortonalely. even unethical bo::havior on Ihe part of just a fcw individuals c<ln
harm lhe organizalion as a ,'.:holc. Ethical rules. bws. and social cuSloms were designed pre-
cisely bo::cause of thi.~. Without them. organization~ and societies would suffer.

Why Does Unethical Behavior Occur?

If there are good reasons for individuals and organizations to behave ethically. why do we
SL'C so many inStarKcs of unclhical bo::havior'!

lapses in individual ethics. [n thL"Ory. individuals le<lm how to behaw ethically as they
mmure. People learn right from wrong from family member,;. friends. religious im;litutions.
schools. professional associmions. and other organizations. However. imagine thm your
falher is a mobsler. that your mother IS a political terrorist. or your family belongs 10 a
warring ethnic or religious group. Broughl up in such <In cnvironment. you mighl be led to
bclien~ that aoy act-induding murder-is acccptable if il benefits you. your family. or your
fricnds. In a similar way. individuals within an orgnnizmion may come to believe that any
al:tionthal promotes or protcds the organiz;ltion is a~"t.'Cplable" even if II dues harm to othcrs.
This apparemly happened at now-dcfunct accounling company Arthur Andersen.
whcn its unscrupulous partncrs ordered middlc manager<; to shred records of its dealings
with Enron to hide evidence of its illegal :Iccounting practices. Although middle managers
knew Ihis was wrong. they followed orders \x:cause of the power Ihc firm·s p<lrlners had
over them. They were afraid they would lose Iheir jobs if Ihey did not behave uncthically
and shred the documems~and they wcre used to obeying ordcrs. None1heless. in the end.
thcir actions still COSI tllem tlleir jobs.

Ruthless pursuit of self· interest. We normally confronl cthical issues when we

weigh our personal intcrests against thc effects our actions will have on othcrs. Suppose
you will be promoted to vice president of your compaoy if you can secure a $100 mi Ilion
contract. but thai to getlhe cunlract. you must bribe the contractor wilh $1 million. Your
career and fmurc will probably be assured if you JX'rform Ihis act. "Whal harm will il
doT you ask yoursclf. Bribery is common: if you don't pay thc million dollars. you arc
certain that someone else will. So what do you do'! Research suggests that people who
believe they have the most at Slake arc the ones most likely to ael unethically. Similarly.
it h<ls been shown Ihat organiz<ltions that arc doing badly economically and arc
struggling to survivc are the ones most likdy to commit unethical and illegal acts such as
bribery. although many other orgaoizations will do so if they are given the 0PPOrlunity.75

Outside pressure" Many studies have found tlWI the likelihood of uncthical or criminal
beh<lvior increases when peoplc kd outside pressure 10 perfonn. It" company performance is
deteriorating. for examplc. top managers may be pressured by shareholdcrs to boost the
corporation's perfortnanee. Fcarful of losing their jobs. they may engage io unethical behavior
to increase the value of the company's stock. If all outside pressures work in the same
590 PART 3 • ORGANIZATIONAL PROCESSES
WHISTLE-BLOWING
When an employ<'C <kx:i<le' 10
inform an oohide person or
agency aboul ilkgal or unethic'al
managerial hehavior.
Piclured is Sherron Watkins. a
fonner ..enior ex<'<:ulic'e of Ihe
defuncl Enron Corp.. who
revealed evidence 'Ibout {he
fraud perpc{raled by it is lOp
rnanagenl {O the FTC anJ other
goc'ernmcl1l agern:ies.
direction, it is easy {o unden;tand why une{hical organizational cultures develop. Managers at
all levels buy into unethical acts. and {he view thai the endjuSlifies the means filten; lhrough
the ol"j;:m iwtion, II' the ul"j;aniz,uion 's members pu J\ togelher tu disguise their ullCthical actiuns
,U1d pmll'<:t une another flUm pros<:cution. the org:lllization !xx:omes incre'lsingly defensive.
The social COSIS of une{hical behavior are hard 10 measure bOl can be casily seen inlhe
long run. They lOke {he fonn of mismanaged organizalions lhal become less innovative.
Ol"j;all1zatiuns like this spend less :md less money developing new and improved products
and more and more money on advertising or managerial salaries. When new competitors
anive who refuse {O play the same gamc, {he mismanaged organization begins {O crumble,
Ways to Create an Ethical Culture
There are severnl ways to create an e{hieal organiz.mional culture {o help members resist the
le,nptationto engage in illegal ,}C1S for person;ll gain. First. an organization can ellcourage
pt"Qple to act ethically by pUlling in place mcentives for ethical behavior and disinl-entl~'es to
po nish thosc ,'..ho behave unethically. A company's lOp m:magers- Ihe (X."Qple who have the
ultimalC responsibility for ensuring an organization behaves ethically-must be proactive in
eSlablishing the comp:my's ethical position. M;;ll1agers create an ethical culture by making a
personal commitment to uphold ethical values ,md tr.lll,mit them to subordinates.
As a leader. a manager can promote the moral values th:ll determine how employees
will make decisions by eSlablishing appropriate rules and norms of behavior that OUlline
the organization's ethical position. II is also important for managers to demonslr<lte their
commitment to folloWing the rules via their own behavior. That includes bemg honest and
acknowledging errors or omissions quickly :lnd disdosing the facts accurately.
Second. organizalions can design an organiZalional structure that reduces the ineen-
til'es for people to behave unel h ieall y. The creation of aut hority rel;l\ionships and rules 1h,ll
promote ethical behavior and punish unethical acts. for e!lample. will encourage members
to behave in a socially responsible way. The federal government. for e!lample, has a SCI of
uniform Slandards of conduct for excculive branch employees 10 follow. These standards
cOI'er ethical issues like giving and receiving gins. impartially 'lssigning work to go\'e111-
melll contractors. and ,Ivoiding contlicts of interest when it ClImes to one's financial mat-
ters and outside work aClivilies. These regulalions eovcr fi\'e million federal workers.
Third. an organiZAtion can develop fair and equitable human resourec procedures towards
the management of its diverse employees, This signals workers th,ll they ClHI eXpe£tto be
trcaK-u in an ethical way. that they arc working for an ethical organization. and that they should
behave in a like manner, (,ounh.organizations can put procedures into pbce giving sU(xlfdi-
nates access 10 upper-level managen; 10 voice their COI}Cerns about unelhical organizalional
behaviors they might observe. Ten percent of Fonune 5(X) companies now have elhies officers
in their employment. An ethics offtcer is a man:lger responsible for twining emploYL"cs about
elhical conducl and investigating claims of ul1Clhical behavior. Elhics committees within lhe
Ol"j;anization C:ln then make formal judgmel1ls depending upon {he offtcer's ftndings. Elhic:ll
values. of eoorse. now down from the top of the org:lniz,uion but arc slrengthened ur weak-
ened by the design of the organizational structllre and progwms like these.
Organizmions Ihat lack avenues for employees 10 air {heir elhical COllcerns or fail 10
follow up on those concerns risk being exposed by whist1e·blowers. Whistle_blowing
occurs when an employee infornls an outside persun or urganization. like a government
agency. or newspaper or television reporter. about an organization's illegal or unelhical
behaviors (frcquemly on lhe pan of ilS lOP managers). Employees typically become
whistle-blowers when lhey feel powerless to prevent .m organization from committing an
unelh ieal act or when they fear retribulion rrom the eomp,my if they voice thei r coneems. 76
Fifth. an ol'eanization can create a stmng (xwrd of directors from olllside the company
with no lies 10 top management. The directors should oversee {he aClions of lOP managers.
and. if they sec ,IllY sign of wrongdoing or mismanagement. "nip it in lhe bud," Inlhe 200k
there have been many calls to strengthen the power of boards to scrutinize the decisions
made by managers. One company forced to respond to this call is the Walt Disney Co.. pro-
filed in lhe following Elhics in AClion.
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 591

Ethics in Action
Corporate Governance at Walt Disney

In the early 2000s, the performance of the Walt Disney Co. fell precipitously. By 2003,
many analysts were wondering if Michael Eisner, who had been its CEO for the last 18
years, was still the right person to run the company Eisner had a hands-on approach to
running the business: he wanted to be involved in every major business decision, and he
kept a tight reign on his managers. He was also criticized because, although 60 and due to
retire in 2006, he had not laid out a succession plan that indicated which managers would
assume the top roles at Disney after he stepped down. Such a plan is important because
many companies flounder if a nevv CEO has not been groomed to take over the top Job.
In addition, Eisner was criticized for creating a weak, captive board of directors that
was unwilling to scrutinize and question his business decisions, some of which were major
errors Over the years, Eisner created a 16-member board of directors in the company, at
least 8 of whom had personal ties to him. This did not serve Disney's stockholders well
because Eisner's decisions often reduced the company's performance. For example, Eisner
pushed through the merger of Disney with Capital/ABC and since the acquisition the
poorly performing ABC network has dragged down Disney's stock price. In the meantime,
over the 19 years he was CEO, Eisner received more than $800 million in stock options
from the company and enjoyed all the lavish perks-corporate jets, penthouse suites, all-
expenses paid trips that most CEOs of large companies receive today.
With its performance falling, Eisner came under increasing criticism for his autocratic
management style, his lack of a succession plan for the company, and his creation of a
weak board of directors, as well as the fact that that he is still paid vast sums of money
despite his company's declining performance. Indeed, many analysts began to wonder if
Eisner was behaving ethically as CEO, so in 2003 the company reorganized its board of
directors. Two new special outside directors were appointed, one of whom chairs two
board meetings a year that Eisner-who normally chairs these meetings-was not be per-
mitted to attend. The board now had more freedom to assess Eisner's performance.
Many analysts claimed these changes were not enough because the majority of the
board was still beholden to him. In 2004, Roy Disney, Walt Disney's nephew and a major
stockholder, began a campaign to remove Eisner from his position as CEO and he lobbied
board members for a change in leadership. Although unsuccessful in removing Eisner, in
the fall of 2004 Eisner announced that he would not seek another term as CEO when his
contract expires in 2006. The board then began an immediate search for Disney's next CEO
and in 2005 named Robert Iger, Eisner's second in command and hand-picked successor,
to be its next CEO when Eisner stepped down in September 2005, one year early.
For a while it appeared likely that Eisner might become Disney's new chairman and so
retain substantial control of the company. Once again analysts wondered, is this the ethical
thing to do? Wouldn't its shareholders be better served if Disney had an all-new team at the
top? In any event, in December 2005 Disney announced it was negotiating to buy Pixar, the
movie animation studio started by Steve Jobs, CEO of Apple. Eisner and Jobs had had many
personal run-ins, and Steve Job's election to Disney's board effectively meant that Eisner was
out of Disney for good. Indeed, some analysts started talking about Jobs being named CEO
of Disney, and even a possible merger between Disney and Apple, Disney's performance
under Iger has improved. however, and now that Jobs is on the board it is likely that the
board will actively oversee the performance of top managers and ensure issues such as suc-
cession are resolved in ways that support the interests of Disney's shareholders.
592 PART 3 • ORGANIZATIONAL PROCESSES

EXHIBIT 17.6

Creating an Ethical Culture at MCl/WoridCom

In order to create an ethical culture at the old WorldCom, MCI's new managers took the following steps:
• Recruited a new CEO who was not at the company during the events at issue, and who brought a
reputation for integrity and forthrightness in his leadership skills
• Recruited a new president and chief operating officer from outside the company who has more than
25 years of telecom experience
• Recruited a new chief financial officer, general counsel, and director of internal controls, all of whom
came from outside the company
• Replaced its entire board of directors who were present at the time the fraud was discovered, thereby
removing 100 percent of the directors who were participants in governance under the regime of the
prior CEO Bernard J. Ebbers
• Recruited new and highly qualified independent directors
• Consented to the establishment (and continuation) of the Corporate Monitor program, which
represents an unprecedented level of independent oversight 01 management activity
• Closed the finance and accounting department located in the company's former Clinton, Mississippi,
headquarters where most of the fraudulent activities were conducted
• Hired more than 400 new finance and accounting personnel
• Retained a new outside auditor and commissioned a complete reaudit of the years 1999-2002 to
document the company's actual performance as best as it can be reconstructed from available records
and personnel
• Evaluated all corporate assets for value impairment wrote off all goodwill, and wrote down asset-
carrying values for property, plant, and equipment to achieve a realistic balance sheet
• Initiated a widespread and intensive review led by three new directors to identify wrongdoing
that occurred and those who participated. Also funded a separate thorough investigation by the
bankruptcy examiner and responded to his findings concerning wrongful actiVities of different
types
• Terminated dozens of employees, including a number of senior officers, who either participated
in inappropriate activities, who appeared to look the other way in the face 01 indications of
suspicious activity, or who otherwise acted in a manner inconsistent with necessary standards of
conduct
• Agreed to abolish use of stock options in favor of restricted stock with full expensing of the value of
equity grants on the company's profit and loss statement
• Initiated a thorough review of internal controls to strengthen the company's systems and
procedures for capturing and reporting financial data and a widespread program to create a much
stronger system
• Put in place a new Ethics Pledge program pursuant to which senior officers Including the CEO pledge
to pursue ethics and integrity, compliance programs, and transparency and candor in financial
reporting well beyond SEC requirements
• Established a new Ethics Office
• Commenced a training program for employees on their responsibilities under the federal securities
laws, accounting issues that may signal inappropriate behavior or fraud. and ethical issues
• Consented to the Permanent Injunction
• Consented to a financial settlement with the SEC under which $500 million in cash and $250 million
in stock will be paid into a trust for victims
SOIl"",: Academy of Managemem E,erulive: The Thinking Manager', Source. Cop)o',lghl 1993 by Acad. of Mgml. Reproducetl ,,'1m permission
of Acad. of Mgnlc in the formal Telbooio: ,-Ill Cop)'riEht Clc.r.nc<: Cenler,
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 593

Finally. just as pressures from tho-;c at the top of Ihe organizmion can help prevent
unethical behavior. so can pressures from people and groups outside the company.77
Government agencIes. l1Idustry councils, regulalory t.odies. and l:OnSUmer watchdog
groups all playa role when il comes 10 making sure corporations follow the rules. In the
last few years in panicular. government rcgulators have very actively prosecuted managers
al companies like WorldCom and Enron. WorldColl1 (now renamed MCI) later brought in
new top managers who look many of the steps JUSt discussed to rebuild thai organizalion's
c1hicall:ulture. The steps arc summarized in Exhibil 17.6.78
In sum. there are many sleps that can bc taken to help strengthen managers' and
employees' commitment to behave ethically. When ethienl values are instilled, a strong
adaptive l:ulture develops. which. inlum. helps organizations achieve their goals.

Summary
Organizational culture is an im]Xlrtantmeans through which organizations coordinate and
mOlivale the behavior of their members. An organization can shape work altitudes and
behaviors by the way it invests ill and rewards its employees OVCf time and by ils allempts
to encoumge values of excellencc. The chaptcr has made the following main points:
I. Organizational culture is the set of shared values. beliefs. and norms Ihat influence
the way employees think. feel. and behave toward each other and toward people out-
side the organizalion.
2. There are Iwo kinds of organizational values: temlinal (a desirctl outcomc) and
instrumental (a desired mOl.Il." of behavior). Itle:lIly. instrumental values hclp thc ol',;a-
nization to nchic\'e its terminal values.
3. Culture is transmilled to nn organizalion's members by means of (a) SOCIalization anti
Iraining programs and (b) stories. ceremonies. anti I:mguage used by members of the
organization.
4. Organizational culture develops from the inWT3Clion of four factors: tlte personal and
professional chantcterislics of people within the organizalion. organizationnl ethics,
Ihe nalure of Ihe employmenl relationship belween a company and ils employees.
and Ihe design of its organizational structure. These factors work together to produce
different cultures in different organizations and cause changes in culture o\'er time.
5. Different orgamz:ltions have different kinds of cultures oc-cause they anrJCI. selcct.
anti rclain dilferent kintls of people. Because an organization's founder is instrumen-
tal in initially determining what kind of people get selected. a founder can have a
10ng~lasting effcct on an organizatioll's cu hure.
6. Ethics are Ihe moral values. reliefs. and rules that establish the right or appropriate ways
in whil'h one person or group shoold inleral:t ,utd deal with another person or group.
Organizational ethics are a protluct of socictal. professional. and indi"itlual ethics.
7. nlC nature oftllC employment relationship between a company ,md its employees C,IUSCS
lhe dcvelopnl<::nt of [Xu'1il:ular norms. values. and allitooc-s toward the org:mizmion.
8. Different org:miz:ttional structures give ri,., 10 different patlerns of inter.ll1ion anKlIlg
peoplc.11tcse different [Xlttems kat! to the formation of diffen;1ll organizational cultures.
9. Adaptive cultures ,Ire those whose values and norms help an organization to build
momentum. grow, and change as needed to al:hie\e its gools anti be e!fective.lnert
cultures are thosc that lead 10 values and norms Ihat fail to motivale or inspire
employees. They lead to stagnation and often failure over time.
IV. Another important detenninant of organizmional culture is the values of the nation in
which ~I company is founded and has its home opemtions.
II. A company can Itelp to build and sustain anl1hical culture by establishing tltc righl
kinds of incentives and rules for rewarding ethical behavior. by establishing a strong
b<xlrd of directors. anti by making sure employees follow the legal rules and goide-
lines established by governmcnt agencies and wmch.xl by consumer groups.
594 PART 3 • ORGANIZATIONAL PROCESSES
Questions for Review
1. What arc tile building blocks of organizational
cullUre?
2. How do newcumers learn the cuhurt: uf an
organization?
3. rind a manager or person in charge of helping new
employees "learn the ropes" and queStiOnlhis
persun about huw their organizaliun socializes its
new Illl'mbers.
4. Whal four factors affect the kind of cuhure thai
develops in an organization'?
5. In whal ways can urg.mizationa! cuhurt: lIlneasc
organ izational effel:tiveness?
08: Increasing Self-Awareness
Understanding Culture
Pid an organizatiun you are very familiar wilh such as a
local school. church. or one in which you have worked for
a long period of time. Use the chapter material to think
about its culture and answer the folluwing questions:
I. What are lhe temlinal and instnJlllental values of
the organi~.ation'? How do they alfcct ilS members'
altiludes alld behaviurs?
2. Idemify the main beliefs and norms or organiza-
lion'll members. How do lhese norms relate 10 lhe
organizations values'? Is lhere a fit bclwl"Cn them'!
Idcmify areas for improvcment.
6. $uPIXlse you were ,tarting a new re'laurant. WhaT
kind of cuhure would help promote organizational
elfecliveness'? Huw would yuu lry 10 build such a
cuhure'?
7. How docs national cuhure affeCI organimtional
culture'?
8. Why IS it impurlanllhat.m organizaliun's memo
bers behave l'lhically'? Why docs unethical behav-
ior occur?
9. How can you build and maintaill an elhieal
culture'?
3. How does lhe organization socialize new mem-
bers'! Could the ways it helps ncwcumers learn the
organization's cuhurc be improvcd?
4. What kinds of organizalional cefCmonies does lhe
organizalion ha\'e to help reinforce its values and
norms'!
5. Try to idemify lhe .'\Ource of lhe values and norm,
of your organizmion·s culture: for example. do
yuu think the people or the orgmnzalion's rules
and procedures havc the moSI affect on urganiza-
tional culture?
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 595

Small Group Break-Out Exercise

Developing a Service Culture
Form groups uf three to five IX"Qple nnd disl:uSS the following s<:ennrio:
¥ou arc the owners/managers of a new live-slar resort hotel opening up on Ihe white
sand beaches of the west coast of Florida. For your venture to succeed you need to make
sure thm hotel employees focus on providing customers with the highest-quality customer
service possible. ¥ou are meeting to discuss how to create a l:tdture that will promote sUl:h
high-qual ity scrvke. tl1m wi II encourage employees to be comm iued to the hotel. amI thm
will reduce the level of employee turnover and absenteeism. which arc typically high in the
hotel business.
1. What kinds of organiziltional values and nom]s encourage employees to behave 111
ways thmleild to high-quality customer sl'rvice?
2. Using the concepts discussed in this chapter (for example. people. employment
relationship. socialization). discuss how you will create a culture that promotes
the le-trning of these l:ustol1ler service values and norms.
3. Which fanor is the most imJXlrlalll detcrminant of the kind of CUltUfC you expect
to lind in a live-star hotel?

A Question of Ethics

When Is Culture too Strong

An organizalion's managers may attempt to influence cmploycc attitudcs and behaviors by
building a p;lfticular kind of culture. The process of building 1l strong culture can ll;lve a
dark side if managers creme values and norms that ultimately l:ause employt-es to behave
in uneth ical \·.:ays. In other words. sometimes a cu hure can become too strong and its mem-
bers may all begin to act Ullethically and withoul regard to their cffeets of their actions on
others. Think about the ethical issues involved in building organizalional culture and
address the following issucs:
1. When and under what conditions can valucs and norms become so strong Ihat
they cause employees to act in unethical ways?
2. Think nbout the four m<lin factors influencing org:miz<ltiun<ll cui lure. How could
thcy be used to create a culture that causes employees to nd in unethical ways'.'
3. Why might differences in n:nional culture lead to unethical behavior in a global
org~L1l i7-:1tiol\?

Experiential Exercise
A Culture Problem at HighandTall
Form groups of three to live people. discuss Ihe following scenario. and dis<:uss the ques-
tions. Be prepared to share your discussions with you class:
You are the founding entrepreneurs of HighandTall Company. a fa,t·growing digital
software company that spcci<lliz.es in horne consumer eleclronics. Customer demand to
license your softwilre has boomed so much that in JUSt two years you have added uver 50
new software programmers to l1elp dcvelop a new range of software PIlJUuctS. Thcse peo-
ple are young and inexpericnced but are highly skilled and used 10 pUlling in long hours to
sce their ideas succeed. The growth of your comp:my has been so swift thal you slill oper-
atc informally. You have been so absorbed in youruwn work that you have paid little allen-
tion 10 the issue of developing a culture for your growing company. Your progr.lllll1lers
havc been learning how your company works by observing you and by seeing whal goes
on in their own work groups. There are increasing signs thai all is not well. however.
596 PART 3 • ORGANIZATIONAL PROCESSES

There have been increasing complaints from employees that as managers you do not
recognize or reward good performance and that they do not feel equitably tre1lted.
MOfCQver. Ihere have been growing concerns that you arc either tOO busy or not wIlling 1O
listen 10 their new ideas and al:t on them. A bad atmosphere seems to be developing in Ihe
company. and recently several talcnted employees havc Icft.
You realize in hindsight that you have done a poor job of crcating a culture lhat
encourages employees to perfoml well and Slay wilh your company.
I. What kinds of values and norms do you want to make Ihe heart of your organiza-
tion's culturc?
2. Think about this work situatioll, How could you try 10 blJild an adaptive culture.
basel! on Ihese values and norms. for ),ourorganization'? (Hint: Focus on the four
sourl:es of culture.)
3, In what othcr ways could you influence and persuade your employees to perfaml
well and stay with your comp.my'!

New York Times Cases in the News

mh' ~"U l.Iork (!!int'.

"For Trader Joe's, a New York Taste Test."
)llli(/ MOIl.:ill, NYT. March 8. 2006. V Fl.

In an indu,trial ["Irk ,omewhere in Los
An,gels. the pieces of the puule cOlne
togdher. One crew. u,ing rakes. tum, 525
pounds of IICwly roasted )X'anuts trucked
in from Texas. Another adds a heavy
shower of dried whole chilies. lelHon
gn"s fiber,. ('uIT)' lea\'es and <,<lIlc' sUFr
imponed from a producer in Thailand
whosc identity is a doscly kept seerN.
"No OrIC escCl)\ us knows :1111he ["lns of
the operation." ,,,id r.htl Siowi. vi('e
president for men:hall(!ising for the Trader
Joe's food ,torcs.....·hoM: populmily took
ofT in California in the 1970\ and whose
fiN ,tore in New York City is opening On
March 17. "In that way it's like a
conspimcy:' Long before Tnlder Joc's
wcnt nalional. i1.' inexpensive but unu"ual
products-things like wild blueberry
juice. Sicilian extra-virgin olivc oil and
frozen ehickcn-lemon grass spti ng rolls-
inspired an intense following amoog
American food lo'·cn>. rarely sccn in thc
aisl" of a ,upermarkel.
The stores me sn\;lll. the sclution is
uneven and the eorporale cuhure .'an be
described as dorky. But because its
produel' are often not a,-aiiahle anywocrc
else: because lhey mystcriously appear.
disappear. then reappear on lh., sock.·,; or
)X'rhaps simply bcC;llISC they often ws(e
\'\'1)'. \'Cry good. Tradc" Joc', has be.'ome
tremendously popular aTl\On,g Americans
who lik" 10 Ix' entc'rtained and educated
by what they cat. as well as nourished by
il. To prote.:t it, house-brand produ('],. lhe
company is nOloriously surelive, But it
opened ,lightly to this rep"'1er recently.
for the first tinle al[(""ing an outsider into
the daily critique c'onduded by the
company's besHra;ned palates, a group
kno.....n as "the t"'ting p;lIle1."·1llc t"sling
panel is whal takcs us from having good
products 10 h.wing addil'ti"e producls:'
said ])oug Rauch. the prc,ident. Like
Tmdcr Joc's Thai Lime & Chili Pe;ulUts.
for esample: ri.'h. spicy, fragrant. ,weet
and not quite like anything else on the
ma" lI1arkel.1lJcy n::prcscnt lhe end of a
long process of travel. researeh. argument
all(! experimentation "You can drivc
yourself crazy in th,s job. like <I cat
eha"ing its tail. and sometimes you IlCwr
get there:' "'lid Lori Latta. who buys dried
fruit and nuts for the .'ompany and has
been on tIle tastin,g panel for 20 years.
More than a buyer. Ms. Lana add, in
the skills of chef. advocate. food scielllist
and nutrilionis!. Her job. and Iho", of the
14 other "cate,gory leaders:' is to
perpelually trawl th.· world visiting all
kinds of food businessess-reSI"UraIllS.
fanller, markets. arti"mal pa,ta makers.
street stalls and su)X'rmarkels-and Ihen
tnulSlat" their finds to the ,tores. When a
calegory leader was served 'In ideal
tiramisu at a small rc'smurant on the
Amalfi coaSI of haly. he spent months
.....orking with the d,ef on <I version Ihal
('Quid be n\:lss-produccd, frozen.esponed
to the Unit"d St~,tcs all(! ,old for S6.99 ill
freezcr cases from San Diego to Boston.
But tirst it had to pass the tasling pand.
Once appro\'<'~. new pnldueb I;ne lip
IICXI to the popular peanlll-buttcr·stuffed
pretzels, chocolate-covered espresso
beans and green chili I:nnales. all of them
addit;\,<,- frec. all-natural.
There I' nothlllg quile like the chain
anywhere else on the American food
landsc"pe. "Trader Joc's IS radic;llly
different in many ways frorn othcr food
relailers:' said Stcphen Dowddl..'ditor-in·
chid of Progressive Grocer maga,.ine.
"The stores are sl1wli. tlleY don't rely On
national brands. you ean't do pnee
comparisons and they definilely don 'I
 CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR 597

offer one stop shopping, But every
product has a ,tory," The Polyne,ian-
thellIed ehain WaS established by joc
Coulomoc in Pasadena, Calif.. in Ihe
1960's, in an aHempt 10 rescue his
com'eniell<:e ,tores after 7-Eleven came to
lown, "We decided to go in Ihe other
direciion-IO appeal w people whu are
well-edllealed, wcll-tnwcled and under-
paid:' Mr. Coulombe said, (Hl' sold his
fimll imere"l in Ihe company in 1989,
but many of his inn",'ations arc slill in
place.) In the 1970'". he s:';d. :Ifter
th(' slores slopped selling Ihing, like
Twinkie" magazines and balteries and
ro,:used on f'KId and winc', the business
took off, "For years, we were the eOun-
try's Img<'sl imJK,rtN of Dijon mu,tard,
Of capers, Of arborio rice, Of every-
thing likc Ihat you Can Ihink of:'
Fans of the eh'lin f,nd such qUlrh
e,ldcaring All employccs wear Hawaiian
shirts al work, whethcr tlley arc shelvers
or lhe <'hief excculic'e, "It help, us k<'Cp a
sense of humor about whal we do," said
Mf. Sloan. who, like many senior ,taff
members. began working for Ihe "om-
pany as a college studc,nt-that was in
I99J-mJd ne'er left,
One February aftcrnoon at Ihe head-
qU<lrters in Monro"i<l, ne:'r Pasadena (yes,
<"'en the rc<'eptionisls wcar Hawaiian
shirt,,). the tasting panclmembers. most
"'cll inlo their .\0', or older. nowdcd
cheerfully into thc test kitchen, (This
n.'JK,rter w,,-, allowed in on condition thai
individual members-many of whom
nc'goliale with "l'ndoTS for l'h:mges in
product oot be qooted by nan;c on the
opinions lhey c'xpTl.'ssexl,) Thc pa,t<l buyer
had boillxl up six different Ilalian brmJds
of whole-grain pa"la and tossed Ihem in
plain olive oil.
The group fell ,ilem and began
chc\>-'ing intently, Irnmedi'l1c1y. comments
flew, "Jntere,'ling nutty flavors on No, I."
"This one ha" a eanlbomdy texture at the
end." "What aboul til<' omega-J', on thi,
Otic?" Eventu:llly, a jiworite W<lS deter-
mined hy a ,how of hand, and a plan
sketehc-xJ for tile slep :lhead: persu.lding the
suppliN to mah' refinements and "oh'e
problems, TIM kilJd OfP;Miol~'te, focu",,-xJ
allemion 10 f'KId i, dearly sen-'Cd by
TnJdcr j,x', customers. "This ,soumIs
CTJZy. 001 ~'ou fc'd lih' the mmp;my likes
food even more lhan tocy like nto,,,,y;' s,lld
Maf('y Benfiglio, wbo Iiees nCar the
b"'lIIch in L;m:hlHolll, N. Y. "You don't feel
Ihal al the ,upern"utd,"

Questions for Discussion

1. Based on this description on'ruder jocs, what do yoo think are the comp.lny's (I) terminal
values? and (2) ioslnlmcolal values~
2, In what ways do ),OU think its "dorky culture" is tran"mined to its new employees? To its
customer!"! Why ha, its ('ulloTe hdp(·<J it be successful"

lilt ~r\U !lork (timts

"Sears Chairman Works to Emphasize Selling."
Mldwel Uar/)ClfU. NYT. April I J, 2006. p, C3.

Tllc billionaire investor who pulled ofl the
unlikely merger of Scars Roebuck and
Km:lrt i" orJdertakinl! :lnotber challenge:
nealing a business euhure focused on
sclling, For 90 minutes on Wedne:sday, tile
investor, Edward S. Lampen, the II<lTmally
redu"ive ehairnwn of Scars Holding.
spoke expansiwly about Ihe need to
change altitudes ,md work habits al the
merged company, One <'ffort is already
under way: assembling the company's lOp
500 managers here f'lT mamlhon Imining
sessions, wllerc a film clip from "Miracle
00 Icc." about the Unitcxl State, hod<'y
te,un th:,t won toc gold med:ll ilt toc 19&1
Wintl'r Olympic'''' is USl'ti to pronK,te team
work and impro"e customer service,
"In tlK.' pas!. wc had a situation where
people worked here but could not get
results:' Mr. Lampert said during Ihc firsl
shmeho)der meeting for tl", newly formed
relailer. "We need to invc," in lhose
people,"
BUI one cultural change lhat analysts
and inve"tors wanted 10 see-the
di-'Clo,ure of a detailed plan for Scaf';-
rem",,,ed c1u"ivc,lrwe>tOl'S and employees,
he said. "mU,'1 he <'omfonable with
ambil!uity and with failure," But he did
give ,o,ne hints alKKJt his plans. saying Ihal
Scars would upgrade it" La'Jd'" End
dothing line,: Ihal lhe JK)pular I\'lartha
Siewart Everyday line of houscw<lre",
whil'h analyst, <'xp<'dcd Scars to carry,
woo.Jld ren'l(lin exclu"ive to Km"n: and thaI
Ihc mmpany wouk1l1<~ pay a divi<lcnd. bul
Mher reinveslthat !noney in operations.
During an unusually candid qUl',tion-
and·an"wer """"ion on Wednesday, Mr.
Lampert, "'bo i",nen criticized for sharing
link infonnation wilh stockhol<lcrs. di,,·
cussed a range of lopic,', lalking at greal
length and, m m"ny <'<lses, ,101 aboot Sems,
He al"" ""knowledged missteps since the
me11,'<::r, like the ,Il-f:tted Scars Esscllli'lis
format. which failed be,:ause of whal Mr.
Lmnpcn ealled:t dozen mi>take>, including
how workers were <lcployed in the slore
:uJd Ihc mi,x ofproduelS,
But al a time when Ihe ""mpuny',
rc"enue has slipped. tile biggest emphasis
W<.x1nesday wa, on Ihe employee c([hure
at SC<lrs and Kmart, One result of th:tt
c'mph"sis i, a progmm Ihat alk",,', workers
at Scars "tores wlto eOlleel eomrni""ions
to sell pr<lduets anosS the store, nUl jusl
in :' niche ~Ire<l like refrigerators or
di"hwashers, Mr, L<mpert al'knowlcdgl'ti
thut critics might frown on hi" fOC11" on
.'uhuT<', "How .'ould a finanl'c guy think
598 PART 3 • ORGANIZATIONAL PROCESSES

thal slUff mallers:' he asked. ·'It seems
sofl." But. ('iting examples of compan;es
that have created strong cul1ures. he said
""it's not soft at General Ele(·tric or
Microsoft:' He eiK'd the exmnple of Scars
employees who used up to three coupon,
to buy a product <It the stOfe but were
willing to pay full price at a rival. lar£et.
'111:11"s so,ncthing to Iei'm from:' he said.
In a sign of how seriously Scars
executives are taking mrl'"rate cuhure, lhe
chief excclt1i"e, Aylwin B, Lewis, said th<lt
he and M,- Lampen had spent 90
days developing a relati"ely shon vision·
and-mission .,tatemcnt and defining its
every word.1lJc shili, /'>Ir. Lewis said m an
interview after the shareholdcr meeling,
was rnore than ju.\t symbolic. In the last
ycar, the comp;UlY h"" rcpla,'Cd 35 percent
of store mana£e", al Sea", and 25 pe"-"Cnt
of store managers at Km1m, SaYlllg they
did not meel tough new slandards.
Typically, the lUmover rate among store
managers i, 10 pe"-"Cnt a year. ··It 's IKll the
he11l1less whacking of pcopk::' Mr. Lewis
said. "hul tellinG them wc ar(' serious alKlUl
oor new .\Iandards:·

Questions for Discussion

1. Wlt<lt do youtltink Edw<lrd L,ltnpen means by a culture "focused on selling?'"
2. Givcn his It:'adt:'n,hip approadl. what kinds of tenninal and ;n,trumt:'otal values do you
think he will usc 10 crC<ltc Scar's >elling culture?
3. How successful do you think his approach will be with customers'!

Excerpts From Report of the Columbia Accident Board

NIT. AI/gUM 27, 2003, p- A 18.

Following are e.\Cerpts from the repon of
the Columbia r\l"Cirlt:'nt Investigation
Board, which WaS released yeSterd11Y.
Thc fulllcxt i, onlinc at nytimc,.l"tnn!
Columbi:,.
The Hoarrl Statemcn.
For all tho~e who a'c mspirerl by
night. anrl for the nation where' IX,wc",rl
flight WaS j'rst achieved, the ye11r 2003
harl long becn anticipate'rl as on(' of
celebration-Dec, 17 would mark the
"entcnni<ll of the rlay the Wright Flycr
fir~r too~ ro rhe air, But 2003 began
in,tearl on a note of sudden and profounrl
10». On Fcb. I. Space Shuttle Columbia
waS dc,troyerl in " rlis",ter th"t daimerl
the lives of all se"cn of ils crew.
It is our vicw that complex ,y,te'ms
almost always fail in complex way,.
and we belie"c it woulrl be wrong to
rerluce thc complexilies and weak-
ne,ses a,socimcrl with thcsc ,ystems to
somc ,implc explanation.
Too often. <lccirlent invcstigations
hlame a failurc only on Ihc la,r step
m a compln proce~,. when a more
comprehen'iw undcrstanrling of lhat
process could re"eal that earlier steps
might he e4uall)" or cwn morc l·ulpahlc.
In this board's opinion, unless the
tcchnical. organizational and ('ultural
recommend<ltions Imide in thi, re!XlII are
implememerl. little will have Ix...,n
accomplish('rl to Icssen the cha'K"C that
<lnother accident will follow.
Organizational Caust'S
, .. The org11niz11tional causes of this
act'irlcnt are roo!<'rl in Ihe 'pa('c ,huttk'
progr11rn'S history <lnd culliJre, including
the original "ompromise, that Were
rcqui"xlto g<lin appro"al for the shunle
p"'grmn, subse4uent ye"r, of fesourcC
const,,'ints. fluctu<lting priorities. schro·
ule prc's>uf(',. misch<lractcrizations of
lhe ,hurtle as operalional rather than
rlevdopmental mId lack of an agreed
nalional vision,
Cultural tmits and organil<ltional
pr<ll."1ice' detrimental to safety and
relmbility "'''ere allowed to dc"c1op,
ineluding reliance on paSI 'UCl'e,", a, a
substihlte for Wllnrl cnginl"Cring pmetiecs
(su('h as teSling to understanrl why
systems were not perfonll;ng in ,[('cor·
d,mcc with re'luircments/specification'j:
organizational b<lrricrs which prc\'ented
effcoivc communication of critical safety
inform<ltion and 'tilkrl professional
rlifTeren,"C, of opinion: lac~ of intcgrated
management aero", prognll11 clement':
and the evolution of an informal ('hain of
command and decision making process",s
that opcratcrl oUisidc the organinltion's
rules.
In the bo"rd', view, NASA's OfgHni·
1.alional culture and ,tru,'lure harl ",
much to do with this accident as thc
CXll'mal tank fwm, Organi1.ational ('uhurc
refers to thc valucs, norms. belief, <lnd
practices that govern how an institution
funerions. Ar the most rosie levcl, Ofllani·
zational ,'uhure rlefincs the assumptions
that employces tll<lkc as thcy carry 0\11
their wor~.h is a powl'rful foree that {'arl
pcr'istthrough rcorg<lnizations and rhc
re<lssignment of key pcrs",lnel. Giv'en
that today'S risks in human space flight
are as high anrl the safety margins as
razor thin as rhey ha"e ewr been. there
i' little morn for ovcrcollfirlcncc. Yet
the aniludes and dccision making of
,huttle pmgmrn managers 1mrl engineers
rluring the e"ems leading up to this
<I"c;rlem wcrc ele",ly o"ereonf,dcnt and
often burcaucratk III nature. They
rleferrcrl to layererl mlrl cllmbersomc
regulation., r"ther than thc fuooamcntal,
of safety.
The shuttle pmgr"m's safely culturc
is .\tmining to hold together thc ,"estigc,
of a once-robu.,t Sy"lcm, safcly pmgram.
As the boarrl in"estigated the Columbia
acc'irlcnt, it expecterllO finrl a "igomu,
safety organizmion, proccss and culture
at NASA bcaring little f('.semhlan(·e to
what the Rogers Cornmi~sion identified

as the mcffCl.'live "sikm s<lfety" syslem
in whi('h budgel CUI,' rcsuhed in a lack of
resources. personnel. mdependenee and
aUlhority.
NASAs initial brielings 10 the board on
ih safety progr~ms esr-lUscd a risk-avcI>;C
philosophy that em(lO"-'ercd any employee
to SlOp an operation at the merc glimmer of
a problem. UnfortUtWlc1y. NASA's views
of its saf<>Jy ('uhure in those bridings did
001 rctlcct reality. Shunle progrmn safety
personnel failed to ade'-jualcly asSi.·ss
allOm"lies and frcquemly 'lCeepled critical
risks without qualitative ur '-juantitative
suppon. even when the lools 10 provide
more <:omprehensi\'c asscssnR'nts w<'Ie
aV;lilable.
Simibrly. the' buard np<.>{:t(·d to find
NASA's Safety and Mission Assur;ulCe
o~;lnizatior1 tk'X'ply eng;l£('<.J at e,"('Iy k\'el
of shuttle tll~nagemenl' Ihe Flight
R<:adiness Review, the Mission Managc-
men! Team. lhe Debris Assessment Team.
the Mission Evaluation Room and su
fOrlh. This was nor the case, In briefing
after briefing, interview after interview.
NASA remained in denial In lhe ageney's
eyes. "there were no safety·of·tlight
issues." and no safely wmpromises inlhe
long history of debris slrikes on the
them'al prolcrJion sySlem.
The s,lenee of progntm·Ie,·eI safety
pro<:es",s undermined oversight: when
lhey did not speak up. safety pnsonnel
could not fulf,t11heir stated mission to
provide "checks and lx,latlces," A pallem
of a("("eptan('e prevailed throughoul the
organization that 10lerated foam pro-
blems wilhout sufficient cngmeermg
justification for doing so.
Cmmeding lbe parts of NASA's
organizational syslem and dmwing the
parallels witb Cballenger demonstr~le
three things, First. despite all Ihe pOS1-
Challenger changes al NASA ami the
agency's notable 'lChievements since.
the ('auSes of the institutional failure
responsible for Challenger ha"e not been
fixed. S('(·ond. the bo;trd strongly lx·-
Iieves Ihat if lhese pcrsiSletll. systemic
tlaws are not resolved. tlK· S(·(·t1<· is sct for
another accident.
Th<'lcfore. the recomlJll'ndatiu!ls for
change are not only 001 iix ing lhe shultle's
te<'lUli('al system. but also 001 fixing <"l<"h
pan of Ihe organizalion~1 system Ihat
produced Columbia's failure. Third. the
board's focus on the context in whieh
dttision making ,x:eurrcd docs not ITlCilll
lhal individuals are nOl responsible and
CHAPTER 17 • ORGANIZATIONAL CULTURE AND ETHICAL BEHAVIOR
accoumablc. To lhe eountrary. individuals
always must assume responsibilily for
their actions, What il docs mean is thai
NASA's pmhlems cannot be solved sim-
ply by rcliremel11s. resignations or tnms-
ferring personnel.
The constraints under which lhe
agen('y has operated throughout the
shunle program have ...onlributed to
both shullie an'idems. Ahhough NASA
leaders hl\\"e played "n importam role.
th,'se con,uaim w('re not C'ntirely of
NASA's own making. The White I'lousc
and Congress must r,'''''gniz,' the role
of lheir decisions in this accident and
t,tke responsibilily for sakty in the
future .
Thmugh its recommendations m
P;,n 2, the OOOlrd has urged that NASA's
human spae(·tlight prog"'~m adopt the
char~eleriSlics obscl\'ed in high-reliabilily
organizations. Onc is sepamting te<:hnical
authorily from the funclions of managing
schedules ,rnd (·os:. Another is an inde·
pendent safely and mi,sion as,urance or·
ganization. The lhird is the e<lpability
effeclive systems integr~tion.
Perhaps even more dlalknging than
these organil.ational changes arc the
cultural changes rc'-juircd. Wilhin NASA.
the cultural impedimenls to safe and
effective shul1lc operalions arc real and
substamial. as documented extensively in
thlS report. The board's view,s thaI
('uhural prohlems arc unlikely tu he
corre...ted without 10p-Ie"el leadership.
Such leadership will have to rid lhe
system of pnlClices and pallern thaI
have heen ,'alidated simply b('eause
lhey h<l\"e been around so long. Examples
incluJc the tende",:y 10 keep knowledge
of problems contained within a center or
program. makin!: le('hnical de('isions
wilhout in·deplh p<.'Cr-rcvie"'ed technical
analysis. and an unoffi('ial hi('ran:h~' or
caste system crealed by placing
('X<:essi"e power in one offKe, SU('h
flletors inlerfere wilh open com·
muni(·ation. impede the sharin!: of
lessons lc,,,ned, cause duplie"tion and
unnN'e>sary expenditure of resoun:es.
prol1lpl resistance 10 extern,,1 advice and
create a burd('n for manag('rs, among
Olher undesir~blc outcomes. Collectively.
these unJcsirable ,'haraeleristi...s threaten
",fety.
So did "Is. Hansen begin to yearn for
the old days as a reponer') Not a bit.
Instead, she learned an imponant lesson
about the workplace: surface manifes-
599
t"lions of a eompany's eul1urc don'l
matter: ",hat <"unt, are its (""" vailles.
Ms. H"nscn came to view lhe fonnality
and strict rules al Bank One as lillie more
a mild annoyance-and to appreciate whal
she saw as its principles of sharc-..l purpose.
open <'Ommunication and mutual respect
anKlIIg employ<'Cs.
The money helped. too."The ne'" job
requircd l11e to adapt my personalily 10
tho: new cireumst,mces:' she said, "l3ut I
knew thaI in makin!:thcsc changes th"re
would be a payoif. r"e been l,ble 10
a,'hic,'" my personal gouls, There's lx'u",
money. excellent beneflls. 1"111 suving to
make a down paymcnl on a monlP£e and
for lhe first 1il1le l' III debr free:'
In Mar(·h. Ms. H,rns<:n lJ<,£an working
al Ihne One C,pita) Mllrkels. a sub-
sidiary of Bank One. as a rc",arch editor.
ajob that she called"a perfc<:t fll."
There is a lesson in her txperiertC<: for
people looking for a job. or lhinking of
Swildling tarITrs. It has always been
llccepted wisdom among WOr\.:pj'Ke
expcrts that enrployees thriR best in a
company whose eullure malthes lheir
pasonalrty, l3ul as Ms. Hansen's ,haky
bul uhimately sun·c.ssful U-~t~,ilion shows.
il is importanl for job candidates 10 peer
below lhe surface to ftgure out what really
matters 10 lhem.
Similarly. if you love what you arc
doing. maybe you should stay pUI, e""n
if more luaative offers beckon. Christine
I3l:lCeo. J I. ,rn executlve assistant for
the AIl.,ehutl Emertainmem Group. a
sports and entertammenl tOmpany io
Los Angeles. say' she never fell more
professionally fulfillcd th:," when she
worked from 1997 to 2000 as un
e.xeeuli'·e assistant at Scholasli.... the
Manhattan publisher lhat spe('ializes in
children's books.
Ms, Bra('eo. a e('rlilied teacher.
SIrongly identified with ilS mission to
edu('als' ,'hildren and impro,·e litera(·y.
And she said she fell Ih;,t n11"lagemel11
(' ared about employ·ees. tn'ati ng them 10
lcClUfCS l"ld workshops by authors and
edu('atms. givin£ them perks like a
rooftop restaurant and an on-sill'
library. Tht managcment kept employ-
ees informed lhrough lhe company's
rtewslctl('r and IntranCl S;lt,
Though she left S<:holaslic 10 move to
Califomia in 2(0(). she is hopi'lg a return
is not OUI of lhe question. especially if
the WmpiltlY opens an offite tiK're. as she
ha~ heard it plans to do.
600 PART 3 • ORGANIZATIONAL PROCESSES

Of course. '" Ihis sagging economy.
pc<lplc d'''per~te for ""It can he fOf)!:;,,,n
for igooring polenti:11 employers' culture
altogether. "You don't think aboul it if
you're just eonecmcd about survi"al:' said
Randall $. Hansen, the puhli.<her of
Quintcsscll1ial Careers, an online job site.
"Any offer is a good one if it allows
yOtl to P<lY Ihe bills or en,ure you won't
oc homek'ss." said Dr. Han,,'n, who is no
relation to Joyce Hansen.
But the e'",)flo",y is starting 10 show
signs of life. Last wed.sun"ys from May
,howed that faclOry adi"ity exceeded
expeclations and job cuts by employers
oc'dirl<-d sharply. If tilt: e",momy n'boonds
this sununcr. as some cxpeet, people
looking for wurk mighl find th,'y haw
1lI0re f1c.,ibilily lO take II close look Jlllhc
mmpanies that "'<lnt to hi,,' tlK'm,
Sometilncs. of course. ir is obvious
where you belong ,rnd whero you don·t.
An environr"ental Jlctivisl would not
h"w to s.:mtch much I>clow the surface
10 realize she would not enjoy working
for an oil company with" ,potty r,",'ord
on poliUlion
Job seekers shuuld think hard aoout
wh"t, enclly. in a ,'ompJlny's culture is
important to them '1I1d what rS oot, experts
say. For ,ome, a roUfl0P reSlauram or
large ornce with a north-south e.'posure
might m"lter a 101 Others might prefer a
laid-bad:. environment, and wme value
opportunities for advancement and to
make more money.
Dr. Hansen offered a hasi"les!: "You
want to be happy going to wurk, You
don'l want 10 be one oflhose pc"'plc who
spend SundJlys Ihinking, 'Oh my God. I
l'an 't face my job IOmom,w,'"
There are many ways to le:lrn about a
,'o"'pany', "ulture, from doing online
research to chatting with employees off
11K' premi,e,.
Uenjilinin DILttner. presidcllt of DJltt-
ncr Con,ulting and an adjunct as,i,tant
professor of organizationJlI psychology
at New Yllrk Uni"c'r,ity, ,ays you Can
pick up clues by making i' c;'su,,1 visit.
"Are people sitting in the reception area
responded to" As" p;:oplc to flat·ou'
dcs,.. ril>c what it's like tu work Ihc'Tl' and
whal typ;:s of people ;'re happiesl."
Job hunte'rs ,hould be' aware thal
employers. too, arc il1lcnt on fmding 'he
right match. In fact. bel'Jluse they are
hiring fewer peoplc than tlK')" were a few
years 'lg0. thcy arc paying c10scr mtention
to the personalities of "pplieants to make
sure lhcy slwre tile compmly's "alues wid
goals. ae,",,,ding to Herbert Greenocrg,
chief executi"e of C"liper Human Stmte·
gies. a job-aptitude assessment ,'omp,my
in Princelon. N, J.
Caliper darge, 5265 for it, per-
sol1lllity wldjob·aptilmk: lest, a two-hour
exam uscd by companies like Fed Ex
and Avis. and it "'Jys that business lI'lS
;""rea,,-d 20 pen;ent O\'cr tlK' last y"ar.
An01hcr method th:lt h"s been gaining
fa\'Of ",,"<'ntly for ",rUlinizing job cUlldi-
dJlles. Dr. lI"nsen says. is something
,'ailed the situational interview, whi,'h
uses role·pl<lying techniques to gauge
applic"nt, re,ponses to ,ituations th,'y
mighl encounter on the job,
For all the (Ompha.,is on finding th,'
righl fit. employers should n01 lose sight
of tho:: \'alue- of a diwrsily of viewpoints,
workpbce e.'perts say. Sometimes. new
hires with "untmrian ide"s Can shake
thing.s up in a positi"e way,
'1l1ey're coming front a fresh [X'rspe.>
tiC'e." Dr. Dattner said "They can ask,
'Why do '''C' do it this way? let's (1)' it Ih"t
way.

Questions Discussion
1. In v.. hm ways docs the accident board attribute the Co/wllbia disaster to Nasa's cu Itltre?
2, How could Na,a's culture (II/(/ Slrrrcture be changl'<J 10 ensure such a tr"gedy ncver h"p-
pen, "g"in?
 PAR T 3
CHAPTER Organizational Processes

ORGANIZATIONAL CHANGE
AND DEVELOPMENT

OVERYIEW

FORCES FOR ANO RESISTANO; TO ORGANIZATION CHANG~:

EVOL.UTIONARY AND Rn'OL.UTIONAKY CII,\!'i('.: IN OIU;ANIZATIONS

SUMMAR\'

OKGANIZATIONAL IInlA,vloR 1,'1 ACTIO,'1

Learning Objectives
After reading this chapter, you should be able to:
Appreciate the forces that lead to organization change and the various
impediments to change that arise during the change process.
Distinguish between evolutionary and revolutionary change and identify
the main types of each of these kinds of change process.
Discuss the main steps involved in action research and identify the main
issues that must be addressed to manage the change process effectively.
Understand the process of organization development and how to use vari·
ous change techniques to facilitate the change process.
 Opening Case
ANNE MULCAHY TRANSFORMS XEROX
What is Mulcahy's approach to change?

n 2001, Xerox, the well-known copier company, was near bankruptcy. A

combination of aggressive Japanese competitors selling low-price copiers,
and it shift toward digital copying that made the old light-lens copying
process that Xerox had pioneered obsolete, was leading to plummeting
sales. Xerox was losing billions of dollars and its board desperately
searched for a new CEO who could change the way the company
operated and revitalize its product line.! The person they chose
to transform the company was Anne Mulcahy, a 26-year Xerox
veteran who had begun her career as it salesperson, transferred
into human resource management, and then used her leadership
abilities to work her way up to become its president.
The biggest challenge Mulcahy faced was how to save
billions of dollars by reducing Xerox's huge operating costs
while at the same time investing billions of dollars in R&D to
innovate new kinds of copiers. Only by simultaneously achieving
both of these objectives could she save the company. To find
solutions to the problem, she focused her efforts on involving
and listening to Xerox's employees and customers. Mulcahy
began a series of Ntown hall" meetings with Xerox employees
and told them that tough times were ahead and that layoffs
would be necessary in the short run. 2 At the same time she
emphasi2ed that only their suggestions, creative responses, and
hard work to find ways to reduce costs could help save the
company.
To help discover how the company should best invest its R&D
As a pari of her e1Torts to change Xerox budget, she made reaching out to customers her other main
and lurn lhe compu"y around. Ann priority. From the top down she insisted that managers, engineers,
Muleahy implcment<:<l a" approach called and salespeople must work with customers to find out what they
'"F{)(,us 500."' This requires Xerox's lOp wanted most from copiers. She implemented an approach called
200 cxcruti __cs 10 go out into the field und
"Focus 500" that requires Xerox's top 200 executives to go out
visil its lOp 500 ~'USlumcrs and de-'c1op uri
into the field and visit its top 500 customers and to develop an
ongoing relationship with them
ongoing relationship with them. She reinforced this as a major
priority by such means as issuing standing orders that even if
Xerox executives were in important meetings, they should immediately go to
the phone and meet the needs of their assigned customers.
By listening closely to both employees and customers, Mulcahy, and
Xerox's managers, researchers, and engineers gained new insights that
have transformed its product line. Mulcahy decided to focus the R&D
budget on producing two new major kinds of product, a new line of
digital color copying machines for use by medium and large businesses,
and low-end copiers that offer a print quality, speed, and price that even
Japanese competitors cannot match. 3 Xerox also invested in developing an
efficient sales and service network to support its new copiers and manage
customer relationships. At the same time, Xerox has cut 26 percent from
corporate overhead, and 29 percent from R&D since 2000, and has reduced
its workforce from 95,000 to 55,000.

ORGANIZATION CHANGE
The mowlTI<'nl of an tlq;aI1'IO,tiun
~Wa} from i" pn:-.:nt ".lIe_oJ
toward ,ome de,ired future ,tat~
to increa", it> ef!ecti"er",,'.
CHAPTER t8 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 603
Bt 2005 it seemed that Mulcahy and her managers did choose the right
turnaround plan to save the company. Their risky gamble on two new main
tines of copiers, and a painful downsizing and reorganization have paid off.
Xerox is now the leader in the high-end and low-end of the digital copying
market and over two-thirds of Xerox revenues now come from products and
services developed since 20001. Xerox's profits are still not high, however,
because of intense price competition in copiers from companies like
lexmark, Canon, and HP. However, it now can build from a position of
strength, and its employees who have worked so hard to turn around the
company see that their efforts have paid off, and that their jobs and futures
seem secure. Indeed, by 2006 the company was hiring 1,000 new workers
each quarter as demand for its products increased. 4
One other outcome of Mulcahy's change strategy has been to build a
new company culture based on the use of total quality management that
emphasizes the continuous improvement or work processes. Xerox's lower
costs have been achieved by its employees' never-ending efforts to find
better, more reliable, and more efficient ways of performing the thousands
of specific tasks involved in making and selling copiers. The result has also
been an increase in the quality of its copiers, which is vital to its customers.
Xerox's new adaptive culture emphasizes the values of customer service and
commitment to employees. Mulcahy's hope is that Xerox will once again
take its place as one of the most admired companies in the world.
Overview
Xerox. like other companies facing the digital revolution. needed to transform itself and
change in order to survive and prosper. In an era when technology is advancing rapidly.
most organil:nions are confronting the need tu learn new w,lyS tu reduce COStS :md offer
better g<KKls and services to customers. The need to change is a fact of life that most orga-
nizmions have to dcal with. Indeed. in tcxlay's environment. organi7.alions cannot afford to
change only when their perfornlallce is deteriorming: they need to continuously predict
and anticipate the nelod fur change.
There arc many reasons why organizatiulls change and many Iypes of change they can
pursuc.like rcstrueturing. rccngineering. "e-engineering:' innovation. and totnl qunlity
mmwgement. In this clwpter. we completc our lll1alysis of organizmiollal behavior by
examining the rlature arld process of urganization change, We look at forces for amI resis-
tance 10 change. and we examine difl'erent types of changes that occu I' in organ izations. We
also look m "action rcscareh," a method organizations can use to plan. implement. and case
the change process, We examine various techniques thm managers can use to overcome
resistance tu change and facilitate Ihe process. s By the em,] of this chapter you will under-
stand why managing change successfully is a vital part of organi7.ational behavior,
Forces for and Resistance to Organization Change
Organil,.tion change is the movement of;m organi~~1tion aw~y from its present St,He and
toward some desired future state tu increase its effec1heness. Why does an organization
need tu change the way it performs its activities? The business environnll,"m is constamly
changing. and the orgnnization must adnptto these forces in order to survive. 6 Exhibit 18.1
lists the mOSl important forces for and impc<lnnClltS to change that confront an organiza-
tion and its managers.
604 PART 3 • ORGANIZATIONAL PROCESSES

EXHIBIT 18.1
Forces for Change Impediments To Change
forces for and
Impediments to Change Competitive forces Organizational impediments
Power and conflict
Economic and political forces Differences in functional orientation
Mechanistic structure
Global forces Organizational culture
Demographic and social forces Group impediments
Group norms
Group cohesiveness
Ethical forces Groupthink and escalation of commitment
Individual impediments
Uncertainty and insewrity
Selective perception and retention
Habit

Forces for Change

Recall from Chapter 16 that many environmental forces have an impact on the organiza-
tion and that rel:ognizing the nature of the$C forl:es is one of a manager's moSt important
tasks.7 If managers arc slow 10 respond to competitive. economic. political. global. and
other forces. the organization will lag behind its competitors and its cffectivencss will be
compromised.

Competitive forces. Organizations are constantly striving to achieve a competitive

advantage.~ Competition is a force for change because. unless an organization matches or
surpasses its competitors in at least one competitive area (either in terms of cffidcncy.
quality. innovation. or responsiveness). it will nOI surviveY
To eXl:el in the area of effici/'Ilcy or ({11lI/it.\'. an organizatton must constantly adopt
the latest technology as it becomes available. The adoption of new technology usually
brings a change to task relationships as employees learn new skills or techniques to
operate the new technology.tu Later in this c1wpter we discuss total quality manage-
ment and reengmcering. two l:hange strategies that organizations can usc to achieve
superior efliciency or quality.
To excel in the area of ;1/1/0"0/;01/ and obtain a technological advantage. a company
must skillfully manage the process of innov<ltion. another source of chllnge. (We discuss
innovation later in the chapter.) Central to the ability to capture and sustain a competitive
advantage is tlie ability to excd in the most intportant area of all: re,lfJ0I1I;relle.u (0
(,III/Ollifn.

Economic. political. and global forces. As we snw ill Chaptcr I. economic .tnd
political forces cont111ually affect organi:wtions and compel them to change how and
where they pmdul:e goods and servil:es. Economil: and politil.'al unions between countries
are becoming lln inercasingly important force for change. t I The North American Free
Tr.tde Agreement (NAFTA) paved the way for coopenHion alllOng Canllda. the United
States. and Mexico. Many organizations III these countries have taken advantage of
NAFfA to find new markets for their products and new snun:e, of inexpensive labor and
inputs.
 CHAPTER t8 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 605

The European Union (EU)-an alliance of European countries that tmccs its origin to
the end of World War 11- includes over twenty members eager to exploit the advantages of
a large protected market. Polantl and many other furmerl y com111unist countries of E:tstem
Europe. and Georgia and OIher former republics of the Soviet Union. have now joined the
European Union to foster their own eeonomie and politieal development. Many more
countries such as Turkey arc seeking entry as well.
Jap,tn and other fast.growing Asian countries like Malaysia. Thailantl. ,1I1d Chma-
recognizing that economic union, protect member nations and neate barriers against
foreign competitors-have moved to increase their prcsence in countries abroad.
Numerous Japanese companies. for example. have opened m;mufacturing plants in the
United States. Mexico. and in Eurupean countries such as Spain. Poland. and the
Uniled Kingdom to capitalize on the advamages the European Union and trade agree-
ments likc NAFrA offer. Toyota. Honda. and Nis,an have all opcncd largc car plants in
England 10 supply cars to EU member countries. for example. These finns arc also
t<lking adv,mlage of the low labor costs m England (compared to those in Fr<ll1ce.
Gcrm<tny. or Japan). and the products m<tde in Engl<tnd arc not subjen 10 EU import
tariffs. Similarly. in the Far East. Pacific Rim countries like Japan. Thailand. Taiwan.
Malaysia. and Singapore all face the problem of how to develop all economic union of
thetT uwn as lhe world tlivides into three distinct economic spheres: North America.
Europe. anti Asi<t.
No organi7.ation can afford to ignore thc cffects of global economic and political
forces on its "etivities. The rise of 10w-cOSI foreign competitors. the development of
new technology that can erode a company's competitive advantage. <lnd the failure tu
exploit low-co,t inpllls abroatl all spell tloom for an org<tnization competing in the global
marketplace. 12
Othcr global challcngcs organizations facc include the nccd 10 help thcir rn,lnagers
who work abroad adjust to a variety o!" national cultures anti untlerstand the economic.
political. anti cultural values of the coulliries in wh ich they arc hlCated .13 ToyOla. for exam-
pic. has reali7.ed thc importance of scnding its Japanesc car designcrs and cngineers to
work wilh their counterparts in olhcr countries. This helps Ihe company mect the needs of
customers in overseas m<lrkelS as well as spread its Kaizen manul;,cturing methods to its
other divisions.

Demographic and sodal forces. Managing a diverse work force is one of the biggest
challenges to confrollt organizations in the 2000S.I~ We discussed in previous chapters
how changes 111 the compositiun of the work force and the increasing diversity of

Here. a class of adults is shown

attending a cia" on English as
a second langu;'ge. While such
,'Iasses arc' on the increase. so
;Ire classes for adul1s to study
Spanish as a second bnguaJ!e
as iml1ligr~tion from "lexico
and central America {·,,,,tinues
to rise.
606 PART 3 • ORGANIZATIONAL PROCESSES
ORGANIZATIONAL INERTIA
The lcndency of un ol);anilal ion
10 maimain lhe slalU, quo.
employees have presented organizations with many chalicnges and opportunities,
Increasingly. ehangcs in the delllographie characteristics of the wor~ force have led
managers tu alter their styles uf managing employees in an effurt to learn how to best
umlerstand. supervis<,. and motivate minority and fcmale members. This indudes
abandoning thc stcreotypcs they unwillingly hcld in the past whcn ma~ing promotion
decisions. It also means understanding the importance of equity in the recruitment process
and ac~nowledging that employees tuday :lre loo~ing for a better balallce between work
and leisure. As more and more women have entered the work for<,e. companies ha\'e had to
accommodate the needs of dual-carecr and single-parem familics. This might includc
providing employees with child and eldercare and allowing them 10 ~cep Oexible work
s.:ht-uu!es to beller manage their busy lives. 15
Many companies have helped their employees keep up with ch;lIIging technology by
supporting advanced education and training for them. lncrea~ingly. organizations arc COI11-
ing to realize tbat the ultim,lle source of competitive advantage Wid organiz,nional effcc-
tweness lies in fully utilizing the skills uf their members. by. for example. empowering
their employees to make important dccisions. 16 As we discuss later in this chapter. reengi-
nccring and tOial quality managcment are change strategies that aim to alter how an orga-
niz,ltion views its activities :md the employees who pcrfOmlttlem.
Ethical forces. While it's important for an organization 10 change in response to
demographic and social force.~. it also is important for them to do so in an ethical way-
especially in the face of increasing govenJment. political. and social SCrtltiny.17 Many
comp,mies have cre<lted the role of ethics officer. a person to whum employees cmt report
ethical l>lpses on the (Xlrt of the organization's managers or tum to for :Idvice when faced
with ethical bw;iness dilemmas. Organizmions are also trying to promote ethical behavior
by giving cmployees direct access to important decision makers and by protccting whistle-
bluwers who expose ethical problems.
Many organizations need to make changes to allow managers and employees at >Ill
levels to report unethical behavior so that the organizmion can move quickly to eliminate
this beh<lvjor and thereby protect the organization. its lJ)Cmbers. and customers from repu-
tatlunal harm,18 Similarly. if organizations operate in countries that pay little allentlUn
to human rights or the well-being of employt"Cs. they have to le>lrn how to change these
standards-at least within their own org:mizations-IO protect their foreign employees.
The story given in the following Ethics in Action of how U. S. sporting good nHikers have
ballied al:cusations about their prodlictS being prodllct-u in third-world sweatshups illus-
tralCS this isslle.
Impediments to Change
From customer design preferences to thc issue of where clothes should be produced and
whether economic or political unrest will affect the availability of raw materials. the forees
of change bombard org:miz>ltions from all sidcs. Effel:tive organizmions are agile enough
to adjust 10 these forces. But many internal forces make the organization resistant to
change. 19
In the last decade. many of America's best-known (and formerly strongest ,l11d most
successful) compmties-Chrysler. Ford. Xerox (profiled in the opening case). Kodak.
Delta. HP. and Maey's >lmong them-have SL"Cn their fortunes decline. SOllle.like Macy·s.
",,'ell! bankrupt: others likc Ford. Delta. and Kodak arc still in deep financial trouble. But
some cOlllp~lnies. like Chrysler ~md Xerox. seem to h~I\'e reversed the decline and
embarked upon a recuvery. How did such former powerhouses lose their effectiveness'!
The main explanation for such decline is >II most always an org:mization's inability to
change in response to changing environlllcntal conditions like increased eompetitioll.
Rese,lrch suggests that one of the main reasons for some organiz;Jlions' inability to change
is org,lI1izalional inl,rti,•. or the tendency tu m>lint>lin the st>ltus qllo.:!O Impediments to
change that callsc inertia arc found at the organ izmion . grou p. and ilid ividual levels .21 (Sec
Exhibit 18.1.)
 CHAPTER 18 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 607

Ethics in Action
Nike, Reebok, Adidas, and the Sweatshops
More products are increasingly being manufactured in poor, third-world countries
today, but the behavior of the companies who outsource their production to subcon-
tractors In these countries has increasingly been called into question. Nlke, a giant in
the sportswear Industry, was one of the first companies to experience this when it
came to light how employees working abroad for Nike's subcontractors were being
treated, Indonesian employees were stitching together shoes in hot, noisy factories
for only 80 cents a day, or about S18 a month n Employees in Vietnam and China
fared better; they could earn about 51,50 a day. Critics charged that at least a B-a-

.
day wage was needed for these workers to make a living,
___. . . .
-" ,~-- ,These facts surround-
"-,_ ing Nike's subcontracting
practices abroad gener-
ate<! an outcry in the
United States. Nike was
roundly attacked for its
practices, which resulted
in a sales backlash for
the company. Phil Knight,
Nike's billionaire owner,
was asked how, when
his own net worth was
over S3 billion, he could
defend paying a worker
Female employees work in a huge foctory to sew clOlhing, for SOlie
80 cents a day. As criti-
in the Uniled Slale,. More and more n,mpanie, are pnlicinllihe
conditions under which such employ~'Cs labor 'IS stories <lbout cism mounted, Knight was
IOO-hour work weeks wilh few breaks arc rep<>ned in lhe media. forced to reevaluate Nike's
labor practices. The com-
pany subsequently announced that henceforth all of the factories producing its shoes and
clothes would be independently monitored and inspected. Then, after Reebok, a competitor
criticized for similar labor practices, announce<! it was raising wages in Indonesia by 20 per-
cent, Nike raised its wages by 2S percent, to about S23 a month. 23 Small though this may
seem, it was a boon to employees in these countries.
In Europe, Adidas, another sportswear company, had largely escaped such criticism.
But soon reports arose that a Taiwan-based Adidas subcontractor in EI Salvador was
employing girls as young as 14 in its factories and making them work for over 70 hours a
week. They were only allowed to go to the restroom twice a day, and if they stayed in the
restroom longer than three minutes, they were penalized a day's wages.24 Adidas moved
SWiftly to avoid the public relations nightmare that Nike had experienced, It announced
that henceforth, its subcontractors would also be required to abide by more strict labor
standards. Thus, throughout the industry companies were forced to reevaluate the ethics
of their labor practices and promise to keep a vigilant watch on their subcontractors in the
future,
In the 2000s, companies like Nike have worked hard to correct such abuses 2S In 2005
Nike employed over 100 inspectors who visit several hundred factories a year and evalu-
ate their working conditions, and, if problems are found, work to correct them,26 These
608 PART 3 • ORGANIZATIONAL PROCESSES

new procedures have had a major impact: many reports of abuses now come directly 10
Nike, which then takes action so complaints about working conditions have fallen n
Moreover, Ihe movement to protect the rights of employees manufacturing clothing
abroad has spread to include all types of other products and other retailers and whole-
salers A particularly good example of a company's description of its ethical position on
the treatment of overseas employees can be found at Gap's websile 28

Organization-level Resistance to Change

Mnny forces inside nn organizal1on mnke it difticull for the orgnnizntion to ctmlge In
response to changing conditions in its cnvironment.19 The most pll"'l.''fful organiz<ltion-
level impediments to change include power and conflict. differences in functiOlml orientn-
tion. mechanist ic structure, and organ iz.ational cuhure,

Power and conflict. Changc usually bencfits some people, functions. or div isions at the
cxpense of othcrs, When change causes power Struggles and organizational conflict. an
organizmion is likely 10 resist it.J() Suppose thm a change in purchasing pnlclilXs will help
the materials managemcnt group in nn orgnnization achievc its gool of TL'duci ng input costs
but that it will harm manufacturing's ability to reduce manufacturing costs, Materials
management will push for thc change. but manufacturing will resist it. Thc conflict
bel ween the lWO functions will slow down the process of ch,lllge and perhaps prevent it
from occllrring at all.
Many large companies have experienced resistance til change onlhe pan of their func-
tional groups. In the 1990s. for exmnplc, managcrs in IBM's mainframe computer division
were the most powerful in the corporation. To preserve lheir eSlilblished position. prestige,
nnd power in the organizatIOn, lhese mnnagers fought off attempts to redirect IBM's
resources to produce workstations and network computers that CUSlOmers desperately
wanted. This failure to change in response to customer demands severely hampered IBM's
spec(] of response to its competilOrs. As a result. the company lost billions of doll:lrs. It was
not until a new CEO look over operations and ruthlessly laid otT IhouS<llH.ls of mainfmme
managers and divened resource, toward making and servicing network computers that the
company's fortunes began to change.

Differenl::es in functional orientation. Diffcrcnces in functional orientation arc

anolher major impediment 10 change and source of orgnnizational inertia. Different
functions and divisions otten St'C the source of a problem or issue differently as <l result of
their own viewpoints. This ""tunnel vision" inneases organizational inertia because the
organization must spend time and cffort to secure agrecment aboutlhe souree of a problem
before il C:lll el'en consider how the organization needs 10 respond 10 lhe problem.

Mechanistic structure. Recall from Chaptcr 16 that tall hinarchies. ('elllralized

decision making. and the standardizalion of behavior through rules and procedures
charncterize mechanistic structures. In contras\. organic structures arc nat and
decentralized and rely on mutual adjustment between people to get the job done. 31 Whil:h
structure is likely to be more resistant to change?
MlXhaniSlic stl\lctures arc more resistanlto change. People who work within a me<:h-
anislic SlruClure are expected 10 act in certain ways and do not develop lhe initimi\"e to
ndjust their behavior to changing conditions. The extensive usc of mutunl adjustment and
dccentralized authority in an organ ic structure, on the. other hand. fosters the development
of skills lha! ennble employees to be creative. responsive. and lind SOIUlions to new prob-
lems. A meChanistic slructure lypicnlly llel'elops as an organiz<ltion grows and is a princi-
pal source of inert ia. especially in large organizations.
 CHAPTER t8 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 609

Organizational culture. The valucs and norllls in an organization's culture can Ix-
another souree of resistance to change. JuSt as role relmionships result in a series of Slable
e~pectatioJ1s belwl-cn people. su v<llnes and nonns cause people to behave in prediclable
ways. If organizatiunal ch;mge disrupts laken-fur-granted values and norms and for\:es
people to changc whm they do and huw they do it. resistance is likely to ensue. Many
org<lnizations del'elop conservative values thm support the StalUS quo and make managers
reluctant to search for new ways to compete. As a result. if the environment changes and
a company's products becollle obsolete. the cOlllpany has nothing to fall ba\:k on; failure
is thcreforc likcly.32 Sometimes. valucs and norllls arc so strong thm evcn when thc
environment is chnnging ;Hld it is clear that a new strategy needs to be adopted. managers
cannot du so because they ilre wed tu the ways they presently do business.

Group-level Resistance to Change

As we discussed in Chapters to and I I. groups perfomt much of an organizmion's work.
and se\'eral group char.t\:teristics can produ\:e resistance to \:hange. Here we consider fOUT;
group norms. group cohesil'cncss. groupthink. and cscalation of cummitmcm.

Group norms. Many groups dcvelop strong informal norms thm spc\:ify appropriatc
and inappropriatc Ix-haviors and govern thc interactions octwcen group memlx-rs (sec
Chaptcr 10). Often. changc alters wsk and role relationships in a group; and when it docs.
it disrupts group nurms and the infurmal expedations that members l1<tve of one anuther.
As a rcsult. mcmbers of a group may resist change because a whole ncw set of norms may
ha"e to be dcvclopcd \() mcctthC' nccds of the ncw situ31ion.

Group cohesiveness. Group cohesiveness. or the allractiveness of a group to its

mcmbers. affeds group performancc (sec Chapter I I). Although some lcvcl of cohesi\'encss
promotcs group pC'rforrnancc. too much cohcsiveness can actually rcducc pcrforrnancc
because it stifles opportunities for the group to change and lldapt. A highly cohesive group
milY resist attempts by management to change what it dues or even who its members are.
Group mcmbers may unile to preservc the status quo and to protcct their intcrcsts at lhe
eXfJ'C'nsc of other groups.

Groupthink and escalation of commitment. Groupthink is II pallern of faulty

decision making that occurs in cohesive groups when memlx-rs discount negative
informatIon in order to agree wilh each other. Escal<ltion of commitment worsens this
situation. This occurs when membcrs realize that their "ourse of action is wrong. but
cominue to pursuc it regardless. Groupthink and esclilation can make changing a group's
Ix-h~lvior very difficult.

Individual-Level Resistance to Change

Individuals within an org:mizmion may be inclined to resist ehangc hc<:llUSC of uncertainty.
selective perception. and force of habit:']

Uncertainty and in5t:!(urity. People tend to resist change because they feel uncertain
and insecure about what its outcome will be. J4 Employees might be given new tasks; role
relationships may "hange: somc cmploYl:CS mighl lose their jobs while others might be
promOlcd. Employees' resisHmce to the unccrtainty lind insecurity surrounding change can
cause organizational inertia. Absenteeism and turnover Illay increase as change takes
place. and employees may become uncooperative. attempt 10 delay or ,low down the
"hange pn)(;ess. or passively resist it.

Selective perception and retention. Perception and mtribution playa major role in
determining work attitudes and behaviurs (sec Ch,tpter 4). There is a general tendency fur
people to selccti\'cly pen:eivc information that is consistcm with their existing views (or
610 PART 3 • ORGANIZATIONAL PROCESSES
FORCE-FIELD THEORY
TIle tl>eor)' lh~t org~niLatiOl1~J
"hange o,:cuN" hen lOree' for
ehan!,e ,tren!'t!>.:n. R:,i,tan<"t:
t" change le",en,. or holh
occur ,j multa"""",ly.
One ofGM's many plams Ihat
ha"e either dosed or arc due for
dosure o\'er the ne.xt several
)'ea", as the company shrinks its
manuf~eturing e;Ip.1bilities dllC
to the succeSS of Japan<'se
compclilOrs. At the same tillle.
Japanese <'armakers ha,-e oJX'ned
do~ens of new pl;lnlS in the
United Stale·s.
schemas) of their organizations. Thus, when change takes place. employees tend to focus
only on how it will personally affe<:tthem or theirfunction or division. If they perceive few
benefits, they may reject the change. Nut surprisingly, it C'1l1 be difficult for an orgalllzation
to develop a common platfurm to promote dange anuss an organiz:tlion and get people to
sec the need for it.
Habit. Habit. people's preference for fam iIiar actions and cl'elllS, is another impedi melH
to change. The difficulty of breaking bad Iwbits llnd adopting new styles of behavior
mdicatcs how hard it is for people to change their habits, Why are habits hard tu break?
Some researchers have suggested that people have a built-in tendency to return to their
original behaviors-a tendency thm stymies change.
Lewin's Force-Field Theory of Change
As you have seen, a wide variety of forces make organizations resistant to change. and a
wide variety of forces push organizations toward change. Researcher Kurt Lewin de,'el-
oped a theory ahout organi7-<ltional change. According to his force-field thl'{)ry, these two
scts of forces arc always in opposition in an organization. 35 When the forces <Ire evenly
b1ll:lI1ced. the orgunizalion is in:1 st.lle of inertia .md does not elwnge. To get an organiza-
tion 10 change, managers must find a way 10 increase the forces for change. redllce resis-
tance to changc, or do hoth simultaneously. Any of these slrntcgies will overcome inen.ia
and causc an orgunization to change.
Exhibit 18.2 iJlust rlltes Lew in' ~ theory. An organizat ion at perforttmnce level P I is
in balance: Forces for change and resislanee to change are equal. Management.
howcvcr, dccides that the organization should strive to achievc performance level P2.
To get to level 1'2, managers must illat:me the forces for change (lhe increase is repre-
senled by the lengthening of the up-arrows), redlli"e resist1lnee lu change (the reduction
is represcnted by the shortening of the down-arrows), or bOlh. If managers pursue any
of the three strategies successfully, the organization will change and reach performance
level 1'2.
Before we look in more delail 'It the techniques thaI manllgers can use to <wercome
resislanl.:c <lnd fadlitate ch<lnge. we need 10 look at the types of change tht'y I.:an implement
to increase organizational cffe<:tiveness,
IS

EXHIBIT 18.2
lewin's Force-Field
Theory of Change
EVOLUTIONARY CHANGE
Change lhat "I!radual.
ioc",,,,,,maL and n3mw.ly
f""u<ed,
REVOLUTIONARY CHANGE
Changc lhal i, mpid. dmmali~.
and broadl) focu'c'<l.
SOClO·TECHNICAL
SYSTEMS THEORY
Idc,,-' aboul how DrJ;3niLaI'On,
,hoold d,oo:"" 'pt.... if,c kind, of
~onltlll 'y'lcn" lh.t mulch lhe
l""hlll~al nature ilf lhoc worl..
prot...,,,,
CHAPTER 18 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 611
Ro.;.~«o '0 Ro"'.ance to
change ~,.
,
••<
• •
;7 "
•,i
,
•
~
"
Forc.. fw Foru. fur
chonge change
Tim.
Evolutionary and Revolutionary Change
in Organizations
Managcrs continu;ll1y face choices nbout how best to rcspond to the forces for change.
There arc sever.1I types of chnnge that managers can adopt to help their organiz<ltiolls
achieve desired fUllJre state,.-J6 [n general. types of chnnge fall into two broad cmegories:
evolutionary change and revolutionary ehnnge. 37
E,·olutiona...y changc is grnduaL increment;l!. nnd nnrrowly focused. Evolutionary
ch;lnge is nO! dr.IStic or sudden but a mnstant attempt to improve. adapt. and adjust stral-
egy and structure incremell\ally to accommodate change, taking place in the environ-
menl. 38 Socio-technical systems theory aud total quality managemelH. or kaL~en. are two
lIlstrlllllents of evolutionary chnnge. Such improvcmcnts might el1lnil utilizing tel:hnology
in a better way or renrgnnizing the work pnx:ess.
Some organizations. however. need to make major changes quickly. Faced with
drastic. unexpecled changes in the environment (for example. a new technological
breakthruugh) or wilh an Impending disaslcr rcsulting from misrnanngement. an orga-
niz<llion might need to aet quil:kly and decisively. [n this l:<lse. revolution<lry change is
called for.
RC"olutionllr)' ehllnge is rapid. dramatic. and bro,ldly focused. Revolutionary change
lIlvolves <I bold atlempt to quickly find new ways to be effective. It is likely to rcsult in a
r<ldkal shift in "..ays of doing things, new goals. ano:J a new strul:1ure for the organization.
The process has repercussions at all levels in the organization -corporatc, divisional, funl:-
tiona!. group. and individual. Reengineering. restructuring. and innovation are Ihree
IInpor1ant instruments of revolutionary change.
Evolutionary Change I: Socia-Technical Systems Theory
&)(:iu-ll'chnical S)-SICnlS thet,...y was one uf thc fi rsl llteuries that proposed the impor1<1nce
of l:hanging role <lnd task or tcchnic<ll relationships tll increase organi7.ational cffective-
ness JQ The theol)' emerged from a study of changing work practices in the British coal-
mining industry..w
After World War II. ncw lechnology that changed work relationships betwt-cn miners
was imroduced ill10 the British mining industry. Beforc the w<lr. ClJ<l1 mining W<lS a sm<lll-
bmch. or craft, proccss. Teams of skilled miners dug coal from thc coalfacc undergrouno:J
and perfonned all the other activities necessary to transport the coal 10 Ihe surface. Work
t()(Jk place in <I wnllm:d space where productiVIty depended on elose C()()peratlon between
tcam mcmbers. Employees dcveloped thcir own routines <lnd norms to getlhe job done ano:J
provided one another with social support to help combat the stress of their dangerous and
confining working conditions.
612 PART 3 • ORGANIZATIONAL PROCESSES
TOTAL QUALITY
MANAGEMENT (TQM)
OR KAIZEN
An ongoing and eon,lam ./foll by
a1luf an urpm""u",n" function'
to find new "ay, 1(> ;mpro'e tl\(:
qualitl of the oq!anization',
goo<), and ",.vi,:."
QUALITY CIRCLES
Gronp' uf empluyee, "liu mcet
regllIMI}' to di"clI" the "U)'
"ork i, performed in order to
find new "ay, to incrca",
P<'rformaocc,
This method of coal mining. called the "hand got method:' approximated small-batch
technology (see Chapler 16). To increase efficiency, managers decided to replace it with
the "long wall methud:' This melhod utilized a nK..:hanized. mass-pruduction technology.
Miners used powered drills 10 CUI the coal. and it was Ihen transported to the surfacc on
conveyer belts. Tasks becamc morc routine as the work proccss occamc programmcd and
standardized. On paper. the new technology promised impressive incrc,lses in efficiency.
But after ilS introduction. mine efiiciency rose unly sluwly and absenteeIsm among min-
ers. whi<'h had always been high. increased dramalically. Consultants were called to the
mines III figure out why the expcClcd gains in efficiency had not occurred.
nte researchers pointed Oulthm to operale the new technology efficiently, nmnagement
had changed the lask and role relattonshtps amung the mmers. The new task and role rela-
tionships had destroyed informal norms and social support. disrupted long-established
informal working relationships. and reduccd group cohesivencss. To solve the problem. the
researchers rewmmended linking the new lechnology with the old social system by re<:re;ll-
IIIg the uld system uf lasks and roles and decentralizing authority to work groups. When
managers redesigned the production process. productivity improved and absenteeism fell.
This slUdy ill ustratcs the need to fit. or "jointly optimiz.e." the workings of an organ iza-
tion's technical ,Ind social systems. The lesson leanted from socio-technical sYStemS theory
is that when managers change task and role relationships. they muSI gradually adjust the
te<'hnical and stx,ial systems so that group norms and cohesiveness arc not disrupted. By tak-
ing a gmdual approach like this. an organi7.mion can avoid group-level resistance to change,
Evolutionary Change II: Total Quality Management
'Iolal IjUlllil)' mllnll~emenl (TQi\I) or kuizen is an ongoing and constant elTon by all of
an organizmion's functions to find new ways to improve the quality of the organization's
goods and services. 4t In many companies, the imtial decision to adopt a TQNl approach
signals a radical change in the way they organizc their activities. Once TQM is adopted by
an organi7.ation, it gcnerally leads to continuous. incrcmental change. and all functions arc
expected to coopen:<le with each other to improve quality.
First developed by a number of American business l:onsultanls. such as W. Edwards
Deming and Joseph Juran. 100al quality management was eagerly embraced by Japanese
companies after World War 11. For Japanese companies, with tlteir lradition of long-tcrm
working relationships and coopemtion betWeen functions. the implementation of the new
TQM system was an im;rcll1ental step. Shop-noor employ<'Cs in Japan. for example. had
long been org;lIlized into llualit}, circles-groups of employees who met regularly to dis-
cuss the way work was performed in order to find new ways to improvc performance_~2
Ch,lnges frequently Hlspired by TQM include altering the design or type of machines
used to assemble products and reorgani zing the scquenl'e of an organ ization's activities to
provide better scrviee to customcrs. As in socio-techn inti systcms throry. thc emphasis in
TQM is ontl1e fil betwecn technical and social systems. Changing crossfunctional rela-
tionships to help improve quality is I'ery imponant in TQM. Poor quality OfteH originates
al crossover points or after handolTs-that is. when people turn over the work they arc
doing to people in diffcrent functions. Thc job of intcrmcdiate manufacturing, for example.
is to assemble inputs to make the final product. Coordinating the design of the various
inputs so thatlhey fittugether smoothly and oper.lIe etlcctively together is ol1e area Ih,lt
TQM fOl:USCS on. Members of the difl'l'fent functions work together 10 find new ways to
reduce thc number of inputs needed or to suggest dcsign improvemcnts to heip the inputs
to be assembled more easily and reliably.
TQM and kaizen elln help increase product quality and lower custs, as we saw earlier
with Xerox. The results of TQM aelivilies can alst) dr.lmatically alll..:1 an organization's
responsivcness to its customers. as Cilibank found out. Citibank is one of thc leading
global futancial institutions and has established the goal to become /hl' premier institution
m the tweilly-first century. To achieve this lofty goallhe cump:my started to use TQM to
increase its responsiveness to customers, [I recognized that, ultimately, its cu,lomer base
and loyalty determine a bank's future success. As the first step in its TQM <."ffoM. Citibank
 CHAPTER 18' ORGANIZATIONAL CHANGE AND DEVELOPMENT 613

focused upon idcmifying the factors tha! dissmisfy its customers. When it analyzed the
complaints. it found Ihat most of them centered around the time it took to complete a cus-
tomer's request-like responding to an .Iccount problem or gelling a loan. So. Citllxmk's
managers began 10 examine how they handled cad kind of I.:USlOlJler request.
For each distinct kind of requcst. they formed a cmssfunctionalteam of people wh()S{"
job was to break down a specific request into the steps between people and depal1ments
needl-u to fulfill the request. These temns found that oftentimes Ill:lny sleps in the process
were unnC\:essary and I.:ould be done away with if the right information systems tools were
used. They also found thm vcry oftcn delays occurred because cmployees simply did not
know how to handle the requesi. They were nOI being gil'en the right kind of training 10 de111
with them. As a result. Cltibank deeided to Implement an organil1ltiolHvide TQM program.
M;magers and supervisors <II the nJlllpany were ch;lfgl"d with reducing the nJllIp!exity
of the work proccss and finding the most cffective way to proccss requcsts. They wcre also
chllrged with tellching employees how 10 answer each spo.>dfic request. 'The results were
remarkable. For example. III the loan deparllllentthe TQM program reduced the number of
handoffs ne,:essary to PI\X;CSS a request by 75 perl.:em: average time taken to respond to a
customer dropped from scvcral hours to Ihirty minutes. By 20<Xl. over 100.000 employees
had been trained worldwide in the new TQM processes. And Cilibank could easily
measure TQM's ctfeCliveness by Ihe inl.:reascd slx:ed wilh whkh il was handling a higher
volume of I.:UstOIll requests fmm its gmwi ng number of global cus!OllIers in over 100 1.:0U 11-
trics.43 Another company regarded by many as the global leader ill TQM is Toyota. pro-
filed in the following Global View.

Global View
Toyota's Commitment to Continuous Improvement

Toyota has long been known as a company that has constantly strived to change
its production systems to enhance efficiency, quality, and customer responsiveness. It
pioneered the system of "lean production," a form of reengineering the work process
that resulted in dramatic
improvements in the qual-
ity of its vehicles And
Toyota has always pur-
sued total quality man-
agement or Kaizen, a
change strategy that
involves a continuous
incremental improvement
of work procedures
Using kaizen, production-
line employees are made
responsible for finding
Allhis ToyotJ pl:lIl1 TQ,\1 was uscd 10 redesign the IIIJchines uscd ways to improve work
to asscrnbk pnxJlICt; and [1.·orJ>anil.L· till· sc'luo.'IICC of ta>k., u>cd to procedures to drive down
Jssemblc a product. Tllc result was 1111 increase in cffkicncy :lIld (ju;llity. costs and drive up quality.
Individually, and in quality
groups or circles, employees SUggesl ways to improve how a pal1icular Toyota car model is
made. (Ner time, from their thousands of suggestions, incremental innovations made to the
car assembly process result in major improvements to the final product. Employees receive
614 PART 3 • ORGANIZATIONAL PROCESSES

cash bonuses and rev..rards for finding ways to improve work procedures, and the result has
been a continuous increase in car quality and reduced manufacturing costs
In the 2000s, however, under the leadership of Toyota's new president, JUJio Cho, the
company sought to increase the speed of change to further improve its efficiency and
quality to gain an edge over its major competitors like GM, Ford, and DaimlerChrysler. It
has begun a series of new kinds of change programs, each directed at improving some
aspect of its operations, which Toyota hopes will bring both incremental and radical
changes to the way it operates.
Some incremental change programs involve strengthening its kaizen program such as
pokayoke, or mistake-proofing. This initiative concentrates on the stages of the assembly
process that have led to most previous quality problems: employees are required to double-
and triple-check a particular stage to discover defective parts or to fi~ improper assembly
operations that lead to subsequent customer complaints. Another program is ·CCe21,"
which involves working with the company's suppliers to find ways to reduce the costs of
Toyota's car components by 30 percent-something that will result in billions of dollars in
savings. Toyota has also introduced a new manufacturing process called GBL which uses
a sophisticated nev..r assembly process to hold a car body firmly in place during produc-
tion, This allows welding and assembly operations to be performed more accurately,
resulting in better quality cars, GBl has also enabled Toyota to build factories that can
assemble several different kinds of models on the same production line with no loss in
efficiency or quality, This is a major competitive advantage, The company's global network
of plants can now quickly change over the kinds of cars they are making depending upon
buyers' demands for various models at different points in time.
Other radical change efforts have focused on revamping Toyota's development and
design process to keep up with changing customer needs and demographics-for exam-
ple, the age of the average Toyota car buyer has been steadily increasing, Despite Toyota's
climbing global sales (which exceeded $160 billion in 2006), the company was criticized
for failing to understand how the market was changing, Analysts blamed the problem on
centralized decision making at the company and a culture that had long been dominated
by Toyota's cautious and frugal Japanese designers. Rather than designing innovative,
flexible vehicles customers were increasingly demanding, Toyota continued to focus on
cutting costs and increasing the quality of its vehicles, When the company's U, S, design-
ers, for example, argued with designers in Tokyo that an eight--cylinder pickup truck was
what Toyota needed to keep pace with GM and Ford, they were ignored. Headquarters
also turned a deaf ear to the call to manufacture other new kinds of vehicles appealing to
younger customers, Slow sales of small pickups and compact cars soon showed that both
these design changes were necessary, however.
To quickly get an improved design process into gear, President Cho championed two
new change techniques to radically alter the design process: PDCA and Obeya. Obeya is
based on frequent brainstorming sessions between engineers, designers, production
managers, and marketers designed to speed new model cars to the market. PDCA-or
"plan." "do," "check," "action, "-is a program designed to empower the company's
designers outside of Japan to intervene in the car development process and champion
designs that meet the needs of local customers The result of promoting a flexible. decen-
tralized car design process was the speedy introduction of the rugged eight-cylinder
Tundra pickup truck and the angular, Scion xB compact in the United Slates, as well as the
Yaris, Toyota's best-selling European car. The Yaris was designed in Europe, and its success
there led to its subsequent introduction in Japan, where it also sold well.
Toyota's mastery of the need to manage change has made it by far the most profitable
of the major carmakers, With all its new change processes operating at full speed, Toyota
replaced Ford as the world's second largest carmaker in 2004 and seems likely to replace
GM as the world's biggest carmaker before 201 O.

BUSINESS PROCESS
Any activit) that i, \;tal to th~
quic'~ del;\'eD of good, and
"'.... i~~, to ~u't"m~f> or that
prom,J1C' high qualit) or 10,",
m,K
CHAPTER t8 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 615
More and more companies arC" C"mbracing the continuous, incremental type of change
that results from the implementation of TQM programs. Many companies have found.
huwever. that implementing a TQM program is not always easy Decause it requires
employees and managers to adopt new ways of looking at their roles in the organization.
Managers must De willing to decelllralize decision making. empower employees, and
Deeome f~leilitatON rather than supervisors. The "command and control" model gives way
to an ""adVIse and support" model. [( is also impot1,lt1t that empluyees. as well as mmwgeN.
share in the increased profits that successful TQM programs can provide. [n lapan. for
cxample. performancC" bonusC"s frequently account for 30 perccnt or more of C"lllployces'
and managers' salaries. and salaries can fluctu1l1e widely from year to year Decause organi-
zational performance changes.
Despite the success that organizations [ike Toyota. Citibank. Harley-Davidson, and
Xerox have had with TQM, many other organizations do not achievc thC" incrC"ascs in qua[-
ity and cost reductions associated with TQM and abandoll their progr'lms. One reason
TQM can fail IS Decause top managers underestunate the degree of commitment from peo-
ple at all levels in an organization necessary to imp[emelllihe program. A second reason is
the long timdrame nC"Ccssary forTQM efforts to yield results. Unfortunatc[y, TQ~1 is not
a quick ftx th,lt c;nt turn an organization around ovcrttigh1.44 [t is an evolutionary process
that Dears frutt only when it Deeomes a way of [ife 111 an organiz<ltion as it has become at
Toyola. which is pcrh<lps the wor[d's leader in championing the bizen process.
Revolutionary Change I: Reengineering
Reengineering involves the "fundamenta[ rethinking and radical redesign of business
processes to ach icvc dramatic improvements in eritica[, contcmporary measures of perfor ~
m~nce such as cos!. quality. service. and spced:· 45 Change resulting from reengineering
requires managers to go back to the basics and dissect each step in the work process.
Instead of focusing on an organ ization's jllile/ions. the managers of a rccngi nccfL'"d organi-
zation focus on business proccsses~just as Toyota did when recngineering its car dC"vc[-
opment ilnd design process.
A business proct-'Ss is any activity (such as order processing. inventory control. or
product design) vila[ to the quick de[ivC"ry of goods and services to customers. or a pr()("ess
that promotcs high quality or [ow costs. Business processes are not the responsibility of
anyone function: they involve activities across functions. Because reengineering focuses
on business processes and not functions. a lL'Cngineered organization always adopts a new
approach to organizing its activities.
Organizations that take up reengincering ignore thc existing arrangemcnt of tasks,
roles. and work activities. Mallagernent starts the reengineering process with the customer
(not with the product or service) and asks the question: "How can we reorganize the way
wc do our work. our busincss processe.', to provide the Dest-qua[ity. lowest-cost goods and
services to the customer?" Frequently. when companies ponder this question. they discover
Detter ways to organize their 'H:tivities. For e.\arnp[e. a business process that currently
invoh'es members of ten different functions ""orking sequemia[ly to provide good. and
services might be performed by onc person or a few peop[e at a fraction ofthc cost :tfter
reengineering. Because rcengincering often results in such chllnges.job en[argemcnt and
enrichment (discussed in Chapter 7) arc common results of reengineering. Individual jobs
become increasingly compleJ(o and people are grouped into nussfunctionalteams as busi-
ness processes are reengineered to reduce costs and incrC"asc quality. [ike what happencd at
Chryslcr. which is discussed in thc following 08 Today.
Reengineering and TQM arc hlgh[y interrelated and complementary. After revo[ution-
ary reengineering has taken place and the question "What is the best way 10 provide cus-
tomers with thC" goods or scrvice thC"y require'!" has beC"tl answered. evolutionary TQM
takes over. The focus for the organization then Decontes: "How can we now continue 10
lInpro\'e 11lld refine the new process and find Deller ways of rnanaglllg task and ro[e re[a-
tionshipsT Successful organizations eJ(amine both questions simultaneously. and they
cOlllinuous[y ancmpt 10 identify nC"w and better processes for llleC"ting thC" goals of
616 PART 1 • ORGANIZATIONAL PROCESSES

OB Today
Chrysler Adopts a Crossfunctional Team Structure

Alter almost going bankrupt in the early 199Os, Chrysler's managers realized they needed
to radically reengineer their organizational structure to reduce costs and speed the devel-
opment of new cars that customers would want to buy. Chrysler became the first U. S. car
company to pioneer the use of crossfunctional teams and new information technology to
lower manufacturing costs and speed 46 the introduction of new products. 46 Chrysler's
decision to use crossfunctional teams linked to a sophisticated computer ne\INork came
about in the following way,
In 1988, Chrysler acquired American Motors (AMC) and its seven hundred design
engineers, Rather than distributing these engineers among Chry.;ler's different engineering
functions-transmissions, brakes, engines. and so on-ehrysler made a radical decision.
It chose to keep the engi-
neers together and have
all seven hundred of them
work together in a cross-
functional team devoted
to redesigning the Jeep
Grand Cherokee, infa-
mous among consumers
for its poor reliability,
The seven hundred
engineers from all areas
of design engineering
worked together on a
single huge work floor,
TIle Daimkr Chrysler PT Cruiser inlrodllCed in 1999 was the tiN of They were joined by mar-
se,"eral new mooc Is that help the company tr~nsfom, itself and ('atch keting, finance, purchas-
up wilh Japanese car ma\.:ers. Ne'Hlheless. in 2006 Chrysler. li\.:..: ing, and other functional
GI>'l and Fon.!. had 10 C"Ul baC"k on produ(·t;on by some 70.0Xl ,'chicles
e~perts who gave them
as C"USlO'OCrs lumed to fu..::l·dtieienl ears whiC"h an: .11,11 mainly
information about cus-
proouccd by the Japanese.
tomers' needs, input
costs, and so on. All of the information communicated be\INeen functional specialists was
recorded and e~changed electronically through sophisticated computer systems so that
each member of the team knew what the others were doing. Top management then gave
the team a target price for the car and told them to design it to fit within that price range.
The result was astounding, The new design was finished just in \lNo years, and the Jeep
Cherokee was an instant success when it was introduced in 1992. Chrysler was so pleased
with the results the cfOssfunctional team achieved that it decided to change the entire
structure of the company from one that revolved around functions to one that utilized
these crossfunctional teams.
In the new structure. functional personnel are assigned to one of four major teams-
the small car, large car, minivan, or Jeepltruck team-and each team has its own vice pres-
ident. Chrysler also built a $1 billion technology center with separate floors to house each
team. Its crossfunctional team structure allows Chrysler's functional e~perts to meet and
share ideas to speed the development process It also allows for the intense interaction
among people necessary for successful innovation and product development.
 CHAPTER t8 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 617

Chrysler's turnaround and new skills in lean production attracted the attention of
Daimler, the maker of the Daimler Benz car. Daimler wanted to combine Chrysler's low·
cost skills with its engineering excellence and the companies merged to form Daimler
Chrysler in 1998.47 The merger resulted in many nev..r problems, but by 2004 the merger
seemed to be working. There has been an outpouring of new, innovative vehicles like the
Chrysler Crossfire. Pacifica. PT Cruiser Convertible. its best-selling 300Cl. and the
redesigned Sebring and nev..r Aspen SUV planned for 2007 48

increased efficiency. qU1llity. and responsiveness to custorners.49 Hnllmark Cards, based in

K;lnsas City. Mlssuuri. provides many lessuns for managers seeking tu put such a plan for
ch;lnge imo action.
Hallmark sells 55 percent of the 8 billion birthday. Christmas. and othcr kinds of cards
sold each year in tile United Stmes. XI However. in tile last d.xade HallmMk experienced
great competition frum snl;llier and mure agile card cump;lnies that piuneered new kinds of
specialty greeting cards and sold thcm-often at disnlUlll prices-in supermarkets and dis-
count stores. To keep Hallmark on top of its markct its managers deddcd to cxaminc how
they were currently performing work activities and what improvcmentS could be made,
Top managemelll beg<ln this evaluation by urg;lnizing a hundred nl<lnagers into teams
to <lnalyze H<llImark's compet itors. the ('hanging nallirc of customer needs. the of'J;lniza-
tional struclllrc thc company was using to coordinatc its activities. and thc way it was
developing. distributing. and marketing its cards-its basic business processes, in other
wurds. What the teams fuund startled managers frum the top duwn <Iud showed there was a
dcsperatc nced for change.
Manag;;-rs discov;;-red that although Hallmark had the world's largest creative staff-
over 700 artists and writcrs who design ol'er 24,000 new cards each year-it was tnking
over three years to get a new card w market. Once an artist designed a new card and a
writer came up with an appropriate rhyme or message, it took an avcrage of three years for
the card to be produccd. packaged, and shipped to retllilcrs. Infomlation on changing cus~
tomer needs,:1 vital input into decisions about what curds should be designed, took many
months to reach artists. That delay made it difticult fur Hallmark to respond qui<:kly to its
competitors.
Armed with this infonllatiOIl. the hundred team managers presented top management
with a hundred recommendations for changes that would altow the company to do its work
more quil.:kly and effectively. The recommendations called for a complete change in Ihe
way thc company organized its basic business processcs, Hallmark began by complctely
restnJcturing its activities. Previously the company had relied on a functional structure.
Artists worked sepamtc1y from .....riters. and both artists and writers worked separately
from mmerials management. printing, and manufacturing personnel. Twenty-five handolfs
between cmployees wcre needcd to produce the final product, and 90 pcrcclH of the time
work was simply siuillg in somcbody's in- or out-basket. Taking the adviee of thc teams,
Hallm,lrk changed to a crossfullctionalteam stnlcture. People from different functions-
artists, writers. editors, and so on-were grouped into teams responsible for pnxlucing a
specific kind of card, such as Christmas cards, get-well cards, or ncw lincs of specialty
cnrds.
To eliminate the need for handoffs betw(''I':n depaT1ll1ents, each team is now responsi-
ble for all aspects of the design process. To reduce the need for handoffs within a te;lm, all
team membcrs work togelhcr from a card's inception to plan the sleps in the design
process, and all ,Ire responsible for reviewing the success of theireffons. To help each team
evaluate its efforts and gIVe it the information it needs about what customers wanl.
Hallmark introduccd a computerized point-of-sales merchandising systcm in each of its
Hallmark Card storcs. This gives each tcam instam feedback on whal and how many kinds
of cards arc selling at any given point in time. Each team eun 1I0W continuously experiment
with new card designs to aur;lCt mure customers.
The clTects of thcse changes have been dr,unatic. Not only arc cards illlf(xluced in less
than one ycar, but somc reach Ihe market in a matter of mOlllhs. Quality has increased as
618 PART 3 • ORGANIZATIONAL PROCESSES

each tcam focu>cs on improving its cards, and costs have fallen because the IICW work sys-
tcm is so cffkicnl. Thc mcssage is c1car Managcrs must continually analyze their business
processes to ensure they are aligned with changing customer needs :md business practices.
Every company must adopt the state-of-Ihe-arl kaizen "nd IT applicalions thm arc the key
to success today.

E-Engineering. In fad. the term E-engincrring has becn ("oined to refcr to companies'
atlcmpts 10 use all kinds of information systcms to improve thcir performanccs. In
previous chaplers. lherc havc been many examples of how thc usc of Intcrncl-bascd
software systems l:all ch;lIlge the way a l:ompany's slralegy and struclure operilles. New
informalion systcms call be employed in all aspects of an organization\; business and for
all kinds of reasons. 51 For examplc, Cyprcss Semiconductor's CEO, T. J _Rodgcrs. uscs the
comp.my's onlinc managemcnt-inform'llion system to continually monitor his managers'
adivities and hclp hIm kl"{:p the organizmional hier.lIl;hy l1al. Rodgers daims that he can
review the goals of all his 1500 managers in about four houTS. and he docs so each wed. S2
Wc have already discussed how companics like Citibank and Toyota use [ntcrnet-baseD
systc illS to stream [inc thcir Oper.ll ions and to better link 1hemse[ ves to their customers. The
importance of E-engineering is only [ikely 10 im;reasc in the future as it changes the ways
a company org;lIlizes people and tasks and [inks them together to impmve its performance.

Revolutionary Change II: Restructuring

Organizmions experiencing a rapid deteriomtion in performance may try to turn things
around by restructuring. All organization that resorts to restructuring usually alternpt to
simplify its organization,,1 structure by e[imin"ting divisions. departmenls, or [eve[s in
the hierarchy. and downsizing emp[oyees to [ower operaling l:oSIS. It also l:ontracts wilh
othcr companies to perform i1.S manufacturing. customer service. and other funetiona[
activities.
When William F. Ma[ec, for example. took over as Ihe heaD of Ihe ft...Jemlly adminis·
lered Tennessee Valley Authorily (TVA). Ihe organizalion h"d o\"er fount"en levels in its
hiemrchy of 37 J)(X) employees. and its customers had experienced an average increase in
their utility rmes of over 10 percent per ye~lr. Describing TVA as a lOp-heavy bureaucracy.
Makc quickly moved to slash costs and restructure the orgalllzalion; he redllced Ihe levels
in the hiemrchy 10 nine and Ihe emp[oyees 10 18.500, and he froze utility rates for len
years. Another example of restructuring that illustrates the imponant role played by out-
sourcing is discussed in the following Globa[ Vicw insight.
Why does restrul:turing become necessary. and why mayan organizallon need 10
downsize or oulsoun.'e ils operations? Sometimes. an unforeseen "h"nge in the environ-
rnclll occurs: Perhaps a shifl in tcchno[ogy makes the company's products obsolete. or a
worldwide recession reduces demand for its products. Sometimes an organization has
excess capacily because customers no longer want the goods and services il provides
because they are, outdaled. [ow quality. offer lilllc value. or Ihe customcr service re[aled 10
them is poor. as at eMaehines. Somelimes organizations downsize because they have
grown too lall and bureaucratic and their opewling costs have become much 100 high.
Organiwlions even reslruclure. allimcs. when they are III a slrong posilion simply 10 stay
on lop in the face of competilion. Micmsoft. for example. is constantly changing its slruc-
ture to realign its resources with the changing computing environmcm.ln 2003. for exam-
ple. the company broke its MSN division into two distinct unils, one to handle ilS imcrnet
customers. and one 10 handle its growing Inlerncl adivities [ike X-Box gaming.~jJ Theil.
recall from Chapler I I that in 2006 the company reorganized to three major operaling
groups focusing on funhcring its web·bascd Windows operating. applications. and gaming
aClivitics.
All tOO often. companies arc for(;ed 10 downsize and lay off cmployl"{:s because they
do II()/ COlli inuall y monitor lhc way they operatc -und do not make the increme Illal adjust-
rnell1s to their strategies and strUC\llres allowing thcm to CQll1ain COSIs and adapl.5~
Paradoxically. because they have nOl paid attention 10 the need to reengineer themsc[ves.
 CHAPTER 18 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 619

Global View
eMachines Merges with Gateway
In 2001. eMachines. a low-price computer maker whose machines sold for less than
$800. was going bankrupt. The main problem? low product quality because of
eMachines' inefficient manufacturing operations and poor service from its customer ser-
vice reps, who seemed unable to help customers fix problems with their new computers.
Wayne Inouye, a Japanese American who has been in charge of Best Buy's computer-
retailing division. was put in charge of turning around the company or shutting it down if
he could not.
To turnaround the company. Inouye adopted a radical approach to change. He
decided to outsource the company's manufacturing. sales. and customers service opera-
tions, Henceforth. eMachines' computers would be assembled at low-cost global loca-
tions in countries like China or Malaysia. and software specialists in Bangalore. India.
would handle its customer service operations. Furthermore, while eMachines used to sell
most of its computers online or by advertising. in the future Inouye decided to sell his
computers through retail partners such as Best Buy.
After outsourcing all these activities, Inouye focused his company's efforts on market-
ing, constantly monitoring what kinds of new features customers want from their com-
puters and how much they are willing to pay for them. eMachines is electronically linked
to its retailers and its managers have real-time information on which kinds of computers
are selling and why. Using this information they can then redesign computers and then
electronically ship new computer specifications to their overseas manufacturers. In this
way, the computers coming off the assembly line match customers' current needs thereby
increasing eMachine's sales. The results of all these changes were astounding. In 2003 the
company's sales exceeded $1 billion, and it replaced Gateway to become the number
three leading PC maker, only to be bought out by this company in 2004 so Gateway could
now adopt eMachine's successful business practices.

they are for<:ed into a position where restll.lcturing be<:omes the only way they can survive
to compete ill an increasingly cutthmat environment.
Rcstructuring.like rccngincerillg. TQM. and othcr changc strategies. gcncratcs resis-
tance 10 change. Often. the decision to downsize will require the establishment of new lask
and role relationships. Because this change may threaten the jobs of some employee,. they
resist the changes taking place. Many plans to introduce change. including restructuring.
take a long time to implement and fail because of the high level of r<C'si,tance encountered
nt all levels of the organization.

Revolutionary Change III: Innovation

Rcstructuring is often necessary because advancing technology makes the technology all
organization is currently using to producc goods aod servic<C's (or thc goods and services
them,elves) obsolete. For example. advancing te<:hnology has made computers much
more powerful am] cheaper to manufa(;\ure. This in itself has changed the type of complll-
ers customers want. L1PlOpS are rapidly Occoming more popular than home PCs. for exam-
pie. [f organizations ,Ire to avoid falling behind ill the competitive race to produce new
goods and services, they must lake steps to introduce new proou<:ts or develop new tech·
nologics to produce thcm reliably and at a low co,;t.lnnovation. as we discu,;,cd in Chaptcr
15. is the successful use of skills and resources to create new lc<:hnologics or new goods
620 PART 3 • ORGANIZATIONAL PROCESSES
PRODUCT CHAMPION
An ,"pen manager appoimL"<lto
head a ne'" proolll:lleam and
kad a new prod""t fNm ;1'
beginning 10 comm"rdali~aljon
EXHIBIT 18.3
Lewin's Three-Step
Change Process
and services so that an organization can change and bener rcspond to the nccds of cus-
tomers. 55 Innovation can result in spectacular success. Apple Computer changed the face
of the cumputer industry when it intruduced tts persunal computer. Honda changed the
face uf the small motorbike market when it introduced small 50cc motorcycles. M:try Kay
changed the way cosmetics are sold to customers whcn it introduced at-home cosmetics
parties and person11lized selling.
AltllUugh innovatiun d<Xs bring about change. it is also associated with a high level of
risk beGlllSe the outcomes of research and development activities are uften uncel1ain.'i61t
has been estimated that only from 12 to 20 percent of R&D projccts resuh in products that
make it to the market. 57 Thus innovation can lead not only to the ch1111ges organiz11tions
want~the introductioll of profitable new technologies and produClS~but also to the kinds
of changes they want to avoid - technologies that arc incfficient or pruducts that customers
dOIl'( wam. 1n the 2(x)()s" for example. cell phonc uscrs have increasingly demanded new
features such as calendars. color screens. word processing. g<llnes. :md even digital C,\]n-
er;ls butlt into their phones. Cornpa nies like Mutorola :md Nokta that were sluw to bui Id-in
these new features have seen their sales fall. and companies like S:myo and Sony that
moved quickly to illlroduce these features have prospered.
Innovat ion is one of the most difficult instruments of change to manage .58 Recall from
Chapter 16 that when organizations rely on innovation as the source of their competitive
advantage. they need to adopt organ ic. flexi ble Structu res such as matrix or crossfunctional
tcam structures giving employees the frecdom to experimcnt and be crcmive:w Like with
reerlgineering. the need for functions to coordinate their ,lctivities and to work together is
ImiXlrtant for successful innovation. andl:ompanies that rely on innovation have to i;lcili-
tate the change effort and suppon the effons of their members to be creative. For example.
the tcMn ,.kullk ,,"orh was coined at Lockhced Corporation when thm company sct up a
specialized unit. sc~rate from its regular functional organiwtion. to pioneer the develop-
ment of the U-2 spy plane. Ford Lupied the skunk works model to develop a new version of
the Mustang and other cars. To try to increase the success rate of innovatiou and new prod-
uct development. many higlHcch organizations have dcvcloped thc role of product cham-
pion. an expert manager apiXlintcd to head lInew product team and sec a new product from
its inception to sale.60 Many of the techniques fur managirlg I:hange that we discuss in the
next >cction were developed to help facilitate innovation. Of all the instruments of revolu-
tionary change. innovation offer; the best prospect for long·tenn success but also iXlses thc
most risk.
Managing Change: Action Research
No mailer what type of evoillt ionary or revol UJ ionary change an organ ization adupts" man-
agers face the problem of getting the organization to change. Kun Lewin. whose force-
field theory argues that organizations are balanced between forccs for change and resis-
tance to change. has a relnted perspective on how managers can bring change to their
organ izations (st."C Exhibi t 18.3).
In Lewin"s view. implementing .·hange is a three-step process: (1) unfreezing the orga-
nization from its prescnt statc. (2) making the change. and (3) ""refreczing""thc organi7.a-
tion in the new desired state so that its members do not rel'en to their previous work alti-
tudes and role bchaviors.61 Lewin warns that resistance to change will quickly cause an
organization and its members to reven to their old ways of doing things unless the organi-
zation actively takes stC!lS to refrccze the organi7.ation with the changes in place_ It is not
enough to make SOllie changes in lask Wtd role relationships lind expcctthe ch;lnges to be
1. Unf"",,,, th. 2, Mak. 'he 3, Ref",u<ll'le
o.,.anllorion from _ d.si",d 'l'P" of _ O.,.anllalio-n In.
'ts p,,,,en' "or. change new desi'ed .,,"
 CHAPTER t8 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 621

EXHIBIT 18.4 successful and cndure. To gel an organization 10 remain in ils new S1ale. managers must
aelively manage the change process. 6'
The Steps in Action Ao:liun l"t-'SClIrx:h is a strategy fur generating and acquiring knuwledge that marl;lgers
Research can usc 10 define an organization's desired future state and to plan a change program
enabling it to reach that state.63 The techniques and pmctices of action research help man-
I agers unfreeze an organiz.uion. move it to its new desired position. and refreeze it again so
1 Diagno.ing the that the benefits of the change arc retained. Exhibit 18.4 identifies the main steps in Itetioll
organIzatIon
research.
I
2. DeteffTHmng the Diagnosis of the Organization
desired future "ate The firsl slep in action rescareh requires m<lnagers to recognize the existence of a problem

I lhat needs to be solved and acknowledge thai some type of change is needed. In general.
recognition of the need for change arises because someone ill the organization thinks theTC
3, Implemen"ng 'he
is a gllp between desired pcrfomwnee and actual performance. Perhaps customer COI!1-
ac"on
plaill1s aboutthc, quality of goods or servi<.:es have inneased. Perhaps pro/its have rel:ently
I fallen or operating costs have escalnted. Or perhaps turnover among managers or employ-
ees has been excessive. btthe first stage. managers need to analyze what is going on and
4. Evalua.ing .he
aetoon why problems arc OCCUlTing. Rec"ll that slow S'lleS of its small pil:kup trol:ks and the aging
of its typical car buyer caused managers at Toyota to rccvaluate the organization"s prcsclJ!
I state.
Di~lgnosing the organization can be a complex process. Like a doctor. managers have
S.ln'li'ullonoli;:ing
action ",..arch to distingu ish bet ween symptoms and causes, For example. there is Ii tlle point in introdul:-
ing ncw technology to reduce proUul:tion l:osts if the problem is that demand is falling
because customers do not Iikc the design ofthc product. Toyota needed to introduce new
change programs to "ddress jUS1this problem. Managers have to carefully collect infonna-
ACTION RESEARCH
tion abouttlte organization to diagnose the problem cOlTCctly and get employees commit-
A Mraleg, for genernling aJ1J
aC''luiring knowledge Ihal ted to the changc prol:ess. At this early st"ge il is important for managers to l:olled infor-
manage!"' ':;1"
use 10 define an mntion from people at all levels in the organization and from outsiders such as customers
nrganizat;on'\ de'ired fUlure and suppliers. Questionnaire surveys given to employees. customers. and suppliers.•tnd
Slale and 10 plan a change 1I1terviews with employees and managers can provide IIlformation essential to a l'OlTCct
progmm lhal allu","s lhe
diagnosis.
otgani/al;on 10 re""h lhal slatc.

Determining the Desired Future State

Aftcr idemificatioll of the presell1 statc. the next stcp is 10 identify whcre the organization
need\ to be - its des ired futu re state. This step also involves a difficult planlli ng proccss as
managers work out various .tlternative courses of action that could move the organization
to wtlere ttley would like It to be. Identifymg the desired future state irlVohes deciding
whal the organization's strategy and strudure should be. For example. should the organi-
zation focus on rcducing costs and increasing efficiency? Or are improving quality and
responsiveness to customers the key to futuTC success? What is the best kind of stnlelUre
for tlte org.mization to adopt to realize organizational go"ls-a product structure or per~
haps a crossfunnionaltcam structure?

Implementing Action
Implementing action is the third step of action researl:h.;,.t It is a three-step pnx:css. First.
managers need to idel11ify possible impediments to change thntthcy will encounter as they
go about making changes. These include impediments at the organization. group. and indi-
vidual lel'els.M Suppose managers choose to rcengineer the company from a functional to
a nossfullctional team struelure 10 speed produd development and reduce costs. They
must anticipate the obstacles they will enCOUll1er when they "unfreeze"' the organization
and make the changes. Function:ll managers. for example. might strongly reSiSI efforts to
change the comp.tl1y bel:ause their power and prestige in the organization might suffer.
Similarly. members of each fUJ1nion who have grown al:cuslOmed 10 working with the
samc people and to stable task and role relationships will resist being assigned to a ncw
622 PART 3 • ORGANIZATIONAL PROCESSES
EXTERNAL CHANGE
AGENT
An ouhilk l'OI1'uhanl "ho "lIl1
e~pen 10 maol~l!;ng dMngl:
INTERNAL CHANGE AGENT
A man~ger from" ithin an
"'1'an ilati"n "hu i,
~"'''' kdge~hk abool lhc
,im"tiOll 10 be ,·hang-'<l.
TOP-DOWN CHANGE
Change Ihal i, ImplcTl\Cl11exl by
m"nagc" ~l a high level in lhe
or:gani"'tion
BonOM-UP CHANGE
Change lhal i, implementNl by
cmploycc, al low le,eh in the
organi'"ti"n .00 grauually ri-.:,
until il i, felt th"",gr.out the
organilallon,
team where tasks and roles have to be ",:orked out again and new imerpersonal relation-
ships h<lve to be forged.
The more re\'olutionary Ihe dl<lnge lhat is adopted. the grealer will be the problem of
imple menling il. Managers need 10 fi nd ways 10 mini mize. 1.:01llroI. and coopl res i,lanee to
change. They also need to dcvise strategies to bring thc organization's members on board
and foster their commitment to the change process. Moreover. they Tllust look to the future
and seek ways to refrccze lhe changes Ihey have made.
The scnmd slep in implemellling adion is dcriding who will be responsible for ;lctu-
ally making Ihe changes and colllrolling the change proccss. The choic('"s are to ('"mploy
external chllllge ligents-ouiside consultants who are experts in managing change-or
intnl1alo.:hllnge llg~llts-managers from WIthin the organization who ~re knowledgeable
about the situation-or sOllle combination of both. 66
The principal problem with using illiernal change agellls is that other Ill('"mbers of thc
org,ulization may perceive them as being polilie,dly involved in the clwnges and bi,tsed
loward certain groups. EXlernal change agenls. in contmsl. are likely 10 be perceived as
being less influenced by imcrnal politics (although rcrall from Chaptn 13 lhat one polili-
cal tactic is to bring in an outside cxpen to providc support for one's own vicw of what
needs 10 be changed). Another reason for employing extenl,ll chnnge agents is thm as out-
siders. they have a detached view of the organization's problems and can dislinguish
betwcrn the "forest and Ihe trees:' Insiders can be so involved in whm is going on within
the organization thm they cannot see the lrue souree of the problems. Managemelll consul·
tants. such ;lS those from McKinsey & Co. ,lnd Aceenture. are frequently broughl in by
large org~nizalions 10 help the top-management team diagnose the organization's problems
~1J(1 suggcst solutions. M~ny consullllnts specialize in l"ertain types of organization~l
change. like restrueturi ng. reengi nccring. or implemellii ng IOlal qual ity managelllent.
The third step in implementing action is deciding which specific ctwnge strmegy will
most effeclively unfreezc. change. ~nd refreeze the organizalion. Specllic techniques for
implementing change arc discussed later in this chapler. The types of change that thcSl.'"
techniqucs give rise to fall into two categories: top-down and bonolll_up_~7
'IOII-down change is change thaI is implemented by manageN m ,I high level in the
organizalion. The result of radical op,;anizal ional restrueluring and reengincering is top-down
change. Managers high up in the organization decide to make a change. realizing full well
that it will reverberate at all organizmionallevcls. The managers choose to manage and solve
problems as they arise III the divisional. functional. or individual levels during Ihe process.
Bottom-up dmnge is I:hange that is implemcnt\."<.l by employees ~t low lcvels in the orga-
ni7~llion and gradually rises until it is felt thnmghout the organi7~ttion. When an organization
wants to engage in OOitom-upehange. the fiNt step in the ilCtion research process-diagnosing
the organization-becomes pivotal in dctermming the sucl:ess of the change. Managers
in\"()lve cmployees at ~11 Icvels in the chllnge process to gel their inpul and lessen thl,ir resis-
tance. By reducing the uncenainty employec's experielKe. bouolll-up change facilitates
unfreezing and increases the likelihood that employees will retain the new behaviors they
learn during the change process. In eonlrast. top-down change proceeds rapidly. forces
elllploycrs to h'Cp up ",ith lhe p;tce of change, ~nd troublesrnxll.s problcms as they ari>e.
In gcneral. bonoill-up change is easicr to implemelll than top-down change because it
provokes less resistance. Organizalions thm have the time to engage in bonom-up change
are gener~lIy well-nln org,lI1izations that pay altention to change. are used to change. and
I:hange often. Poorly run organizations. those thai rarely change or postpone I:hange lInlil
it is too late. are frequently forced to engage in top-down restructuring simply to survive.
For example. Lucent did not have the luxury of bcillg able to use boltOIll-Up change when
liS performance declmed precipitously in the early 2000s. Lucen!"s new CEO Patriei'l
Russo had to take imllledi~te action to rcduce costs and develop new products th~t would
turn around the company when she took over in 2003.1>8 Russo slashed the number of
Lucent's product development teams from 14 to 5. closillg 9 of Lucent's opcnlting divi-
sions in Ihe process. She ~lso focused its resources on developing fewer. but more
advanced. products. In contrast. even though Microsoft dominates ils competilors. Bill
Gmes constantly secks changc to improve his organization's performancc. Even Ihough
 CHAPTER t8 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 623

CIHlinnan of the Frcoch

telecommuniC~I;()nS e'luipmell1-
m~ker Alcatel. Serge Tehuruk
and L"':ell1 CEO Patricia Russo
allend a press conference in
Paris in 2(X)6 where they
announced their ~grccmelll to
merge. The merger will Creme
the wurld's second I~rgest
telc<~,mmunicmi()ns c<"nf"ln~',
and Russo will become Its CEO.

Microsoft was earning record prufits. in 2006. Gates annollnecll ncw initiatives lu dC"clop
ncw web-based Winllows software for all kinds of digital devices including smanphones.
tablet PCs. and MP3 players. He also established three new operating divisions to develop
the,e products to stay on lOp of thc industry.6')
Organizatiuns that change the mo,t are able to exploit thc advantages of evulutiona')'
bonom-up change occause their managers arc always open to the need for change and con-
stantly use action rcscarch to find new and bener ways to operate and increasc effective-
ness. Organizations in which change happens rarely are likely candidates for revolutionary
top-down change, Because their managers do nol usc action research on a continuing
basis. they allempt <'hange so late that their only option is some massive restructuring or
downsizing to turn their organization around.

Evaluating the Action

Thc fourth ,tep in action rcscarch is evaluating the action that has been taken and asses,ing
the degree to which the changes have accomplished Ihe desired objectives. Armed with this
cvaluation. management decides whether more change is needed 10 reach the organiza-
tion's desired future state or wht'ther more effort is needed to refreeze the organization in
its new state.?o
The besl way to evaluate the change process is to develop measures or eriteri,l to help
managers asscss whether the organization has reached its desired objcctives. When criteria
de"eloped at the ocginning of action research arc usell consistemly o"cr timc to evaluate
the effccts of the change process. manager<; have ample informmion to assess the impact of
the changes they have made. They can compare costs before <tIld after the change to sec
whether efficiency has incre:Is<:·d. Fur example. they can survey employees to see whether
they are more satisfied wilh their jobs. They can ,urvey custoll\ers to ,ee whether they are
more smisfied with the 'luality of the organization's products. As part of its kaizen effon.
m;magers at Toyol,l carefully survcy their customer, to make sure that the quality and fea-
tures of the company's new car models meet their cxpectations. That infurmation help<.-ll
them to evaluate the success of their change effon.
Assessing the impact of changc is especially difficult beeausc thc effe<:ts may cmcrge
slowly. The action re,earch process that we have been describing may take scveral years to
complete. Typically. rcengineering and restructuring take months or years. and lutal qual-
ity m<lnagemelll. once under way. never stop,. Conscqueml y. managers need val id and rei i-
able measures that thcy can use to evaluate performance. All too often poorly performing
organizations fail to develop and consi,tently apply criteria to evaluate their performance.
624 PART 3 • ORGANIZATIONAL PROCESSES
You're t;he Management; Expert;
ORGANIZATIONAL
DEVELOPMENT (00)
A ",ric, of te,'hni4ue, and
method, that manage" eill! U,,"
,n their ,1\:I;on research pro~ram
ti) ,n,11:3,e lhe adaptability of
thei r organization.
Bringing Change to a Restaurant
You are the change agent called in to help a local restaurant find out why its sales are not
increasing. The restaurant's major problem is a low level of repeat business--<ustomers
just don't seem to return often. After visiting the restaurant several times posing as a cus-
tomer, you discover that there seems to be a high level of conflict between the chefs in
the kitchen and the waiters, and a high level of conflict between the waiters themselves.
The chefs are also playing favorites with the waiters to get a share of their tips; waiters
who give the chefs a cut of their tips get better lood for their customers than those who
do not. and their customers are served quicker. Unfortunately, customers notice the strife
between employees and react to it negatively. That means smaller tips for both waiters
and chefs and fev.ler repeat customers for the restaurant. Draw up a plan for changing
this situation and develop some before-and-after measures to evaluate how well your
plan is succeeding.
For those organizations. the pressure for change often comes from the outsidc when share-
holders complain alxlUt poor prolits, customers complain aboll! their prooucts, or regula-
tory bodies investigatc their practices.
Institutionalizing Action Research
TIle nel'd to rn<llHlge change is so vital in today's quickly changing environmell1 thal organi711-
tions must institutionalize action researeh~that is, make it a TCquin:d habit or a noml adoptt-d
by every member of the org:lIlization. The institutionalization of al1ion research is ,lS nen:s-
sary at the top of the organization (wherc the top management leam plans the organization's
future strategy) as it is on the shop /loor (wllere employees meet in quality circles to lind new
ways to increase ell"icienl)' and quality). Bl>£allsc change is so diflicult and t\.-quires so much
ttHmght ,Uld effort to implement, members at all levels of the organization must be rewarded
for being part of sucC('ssful change effons. Top managers l:an be rewarded with stock options
and bonus plans linked to organizmional perfomlance. Lower-Ie\"elmembers can be rewarded
through an emploYl"C stock-ownership plan and by perfmmance bonuses amI pay linkl-d to
individual or group perfOnllance. Indeed, t:mgible re\'lards arc one way of helping to reft\.>£ze
till: organi711tion in its new statel:>oxausc. as we disl:Usscd in ChaplCr 8, pay is an imponam
motivation tool for helping people Jearn and sustain desired organization<ll behaviors.
Organization Development
Orguni7':llion dCH'lopment (OD) is a series of techniques and methods that managers can
use in their action researl:h progr.tm to increase tile <ldaptabi lity of their organization. 71 In the
words of organi7~1tional theorist W~UTCn Bennis. 00 refers to a "l:omplex edul:ational strategy
imended to change beliefs, altitudes, values, 111ld structure of organiwlions so that they can
betler ad;!pt to new technologies, markets, and ch;!lIenges and tile dizzying rate of change
itself:' 72 l1le goal of OD is to improve organizational effectiveness and help people reach their
potential~ and rcali7.c their goals. As action rcsearch pl1)C('cd~, managers nC('d to l:olllinually
unfreeze. change, and refreeze m;llJagers' and employees attitudes and behaviors. M,my 00
techniques have been developed to Ilelp managers do this. We tirst look at OD ((.>£hniques to
help managers unfreeze an organization and o'·ercome rcsistan(;cs to change. We then look at
00 tel:hnique~ to Ilelp managcrs l:hange and refreeze an organization in its new desired statc.
 CHAPTER t8 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 625

OD Techniques to Deal with Resistance to Change

Resistam;e to change occurs at all levcls of an organization. Il manifests itself as organiza-
tional politics and power struggles betwccn individuals and groups. differing perceptions
of the lleed for change. and so on. Tactics that managers can use to reduce resist:Jnce to
change indude education and communication. participation and empowennent. facilita-
tion. bargaining and negotiation. manipul<ltion. and L"tlCn:ion. n

Education and communication. One of the mo,t imponant impedimell1s to <.:hange is

un<.:ertainty about what is going to happe-no Through educmion and communication.
internal ;;l11d esternal agems of ch;;l11ge can infonn members of the organization about the
change and how it will affL-.:tthem. 74 Change lIgents can communicate this information in
formal group meetings. by memo. in one-on-one meetings. and. increasingly. through
electronic means such a, e-mail and videoconfcrencing. \Val-Man. for esample. has a
state-of-the-an videoconfereneing system. 1\1,ln,lgers at corporate headquarters put 011
prescntations that are beamed to all \Val-Mart storcs so that both managers and employees
arc aware of the <.:hanges taking pl<l<.:e.
Even whcn plam closure., or massive layoffs arc planned. it is sti II best- from bOlh an
ethical and a <.:h;lnge standpoint-to inform employccs about what will happe-n to them as
downsizing occurs. Many organizations fear that disgruntled employccs Illay try to hurt the
organizmion as it doses or sabotage the closing process. More often. however. <'mployees
are coope-nltive umil thc end. As organizations become more and more aware of the bene-
fits offered by incrememal cll<lnge. they are increasing communication with the work force
to gain employt-es' cooperation and to overcome their resistance to change.

Participation and empowerment. Inviting employees to partiCipate in the change

proo::ess is becoming a popular method of redudng resistance to change. Participation
complements empowcrment by increasing employees' involvcment in decision making
and giving them greater autonomy to change their work procedures. [n addition. to
encourage employt"Cs to share their skills lind talents. organizations arc opening lip their
books to inform employecs about the organization·s finalKial condition. Some
organizations usc ESOPs to motivatc and reward cmployees and to harness their
commitment to change. \Val-Mart. for esample. has an ESOP for all of its store employees
and encourages their continual inpllt regarding decision making. Participlltion and
cmpowcrment are two key clements of most TQM progr,lIns.

Facilitation. Both managers and employees lind change stressful hccausc established task
and role relationships aiter as it lakes place. As we discussed in Chapter 9.lhcre are scveral
things organizations (an do to help their members lllanage strcss: Provide them with training
to help them learn how to pe-rform new tasks. and allow them time off from work to
recupe-rate from thc stressful effcrts of changc. (ompanie, like Microsoft and Apple
Computer. for example. gil'e their most talented programmers time off from ordinary job
assignments to think about ways to create new kinds of products. Other companies offer
senior managers sabbaticals 10 "r<"Charge their ootteries" following stressfu I e,"ents.
Many companics cmploy psychologists and consultants to help cmployees handle the
stress associated with change. During organizational restructuring. especially when large
layoffs arc common. many orgmlizations employ consultants to help employees deal wilh
thc stress and uncertainty of being laid off and having to lind new jobs. Some companies
pay consultants to help thcir (EOs managc the SITess associated with being forced to
downsize their employees.

Bargaining and negotiation. Bargaining and negotiation arc imporunttools th;;!t help
Ill<lnagers m;lIlage conn ict (sec Chapter 13). Because ch<ln£e causes conll ict. bargaini ng C<ln
countcr resistance to <.:hange. By using a<.:tion re>earch. managers Gill anticipate the effects
of change on interpersonal and intergroup relationships. Managers can usc this knowledge
to help different people and groups negotiate their future tasks and roles and reach
626 PART 3 • ORGANIZATIONAL PROCESSES

compromises that will lead thcm to acccpt changc. Ncgotiation also helps individuals and
groups under,wnd how change will affect others ,0 that the organization as a whole can
develop <l common perspective on why change is laking place and why it is important.

Manipulation. When II is clear that change wIll help some individuals and groups at the
expense of olhers. scnior managers need to inlervene in the bargaining process and
manipulatc thc situation to securc thc agreemcnt. or:n least the acceptance. of various
JX'oplc or groups to thc rcsults of the change proccss.7~ As we discusscd in Chaptcr 13.
powerful managers have considerablc ability 10 rcsisl ch.mge.•1111.1 in large org.mizalions
infighling among divisions l:an slow or hall the l:h<lnge prol:ess unless it is carefully
m<lltaged. Politics and political tactics like c(}(}ptation and building allianccs becomc
irllJXlrtnnt as ways of overcoming the opposition of powerful functions and divisions that
feellhreatened by the l:hanges taking place.

Coercion. ·The ultimate way to eliminate resistance to chnnge is to coerce the kcy players
mto acccpling change and threatcn dire cOl1scquell\;es ifthcy choose to resist. Employees and
rnan<lgers at all levels can be IhreatenL'ti wilh reassignmcnt. demotion. or eventcrminmion if
tocy resist or threntel1 thc change process. Top managcrs aHempt to use the Icgitimate power
at their disposal to quash resist:lnce to change and to eli m in~lte it. Thc advnl1tage of coereion
can Ix: the slx:cd at whtch change t.tkes place. The disadvantage is Ihat it can leave jX:ople
.mgT)' and discnchanled and can make lhe rcfrcczing process diflicull.
Managers should not undcrestimatc the level of resistancc to change. Organizations
worl.; blxausc they reduce uncertail1ly by me<lllS of predictable olles and routines thm JX'0-
pic can use to accomplish Iheir l<lsks. Change wipes olltthc predictability of rules <lnd rou-
tines and JX'rhaps spells the end of the status and prestige that accompany some positions.
It is not surprising Ihat JX'ople resist changc and that organizations themselves. hceause
they are made up of JX'0ple. are so diflieuh to ehnnge.

00 Techniques to Promote Change

Many 00 techniques are designed to mal.;e changcs and to refreeze them. l1lcse tlochniques
can be used at the individual. group. and organization Icvcls.l1lc l:hoice oftechniljues is deter-
mined by the type of change. In general. the more rcmlution:Jry a change is. toc more likely is
an organization to use 01) techoiques at all th!\."'(' levels. Counscling. sensitivity tr;:lining. and
proccss consultation are 00 tC'l:hniques directed at changing the altitudes and Ix:havior of
individuals. OilTerel1ttC'l:hniljues arc effLoctive at the group and organization levels.

Counseling. sensitivity training. and process consultation. Rl'Cali from Chaptcr 2

thatlhc personal ities of individu'lls differ <lnd that the differell\;es lead ind ividuals to interpret
mtd react to otocr people and events in a variety of ways. Even though personality cannot be
changed sigllifiea11lly in the short run. people can Ix: helJX'd to understand that their own
perceptions of a situ.llion an:: not nC'l:cssarily thc corr~"Ct or the only JXlssible ones. People cmt
also be helped to understand thatthcy should learn to tolemte differences in perception and to
embr..lce and accept human diversity. Counseling and sensitivity Imining arc techniques that
organizations can use to help individuals to understand the nature of their oll'n nnrl OIher
p(:<Jplc·s personalities and to usc that I.;nowledge to improve their interactions with others. 76
roc highly motivated. driven boss. for cxample. mustleam that his or her subordinates <lfC
not disloyal. lazy. or afflicted with personality problems Ix:cau!.e they are contcnt 10 go home
at five o'clock and want unehallenging job assignments. Instead. they have their own set of
work values. and they v<llue their leisure ttme. Traditionally. one of OO·s main efforts has
Ix:en to imprtwe thc lju'llity of the ".:ork life of organizational members and innease their
well-being and satisfaetiol1 with the organization.
Twined profession~t1s such as psychologists counsel organizational memlx:rs who arc
pcrl:eived by their superiors or peers 10 have certain problems in apprcl:iating thc vicw-
points of others or in dealing with l:ertain tylX" of organizational members. Through
counseling they learn how to more effectively managc their interactions with other people

SENSITIVITY TRAINING
An OD technique thaI C'OI""t, of
imen.... mun",ling in which group
member>. a"kd b)- a f'l<;ilit"tOf.
leam how <JIhe" pereei,.e lhem
and rna}' learn how to deal more
"'"Muwly "'th OIlJers,
PROCESS CONSULTATION
An OD le<'hnique In whlCh a
foc il itatm worh do",ly "ith a
manager 0" the job to help th,'
manager 'mpro<e hI' (lr her
,ntern<:tion with Nher group
memlle"
TEAM BUILDING
An OD technique in ",-hich a
fae; litalOr fi "t ob,er~c, the
i"temelion, of group membcrs
and then help, lhem Ix:come
a", arc of '" ay' to improve lheir
work imera<:l ion"
CHAPTER 18 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 627
in the organi7:ation. Recall from Chapter I , for example. that one challenge facing grow-
ing numbers of while male managers is learning how 10 manage female aud minority
employees effeclively. Similarly. a female mmwger might rel:ei<'e counseling oc,eause her
peers find her too aggressive or ambilious and her drive 10 sucl:eed is poisoning work
relationships in a group.
Sensith'it), training is an intense lype of eounscling. 77 Members who have problems
dellling with others meel in a group wilh a Irilinoo facililalor 10 learn more about how lhey
and olher group members view Ihe world. Group members arc encouraged \() be fonhrighl
about how they view themselves ilnd others, and through diseussion they learn the degree
10 which olhers perceive them as simil;u or differenl from lhemselves. By examining the
source of differences in pert'Cplion. members l:an rellch a beller understandmg of the way
OIhers perl:eive tllem and bN;ome morc sensilive wilen dealing with otllers.
Panicipation in sensitivity training is a very intense experience because a person's
innermost thoughts and feelings are broughl 10 lighl and disS<Xted in public. This process
milkes milny people vcry uncomfonable. so cenain ethical issues may be raised by an orga~
ni7:ation's decision to send "difficult" members for scnsitivity training in the hope that they
willleant more aboUlthemselves.
Is a manager too directive. 100 demanding. or too suspicious of subordinales'! Does a
milnager deliberately deprive subordinates of information in order to keep them dcpen-
dem'! )'nlCt'ss t'onsullalioll provides answers to such questions. Process consultation
bears a rescmblanee 10 both counscling and sensitivity training7~ A trained process eon-
sultan1. or facilitator. works e10sely with a m,lnager on the job. to help the manager
tmprove his or her interaclion wilh other group memoc,rs. The outside consultant aclS as a
sounding Ixlard so that the manager can gain a better idea aboUl what is going on in the
group setting and can discover the imerpcrsonal dynamics that arc affecting the quality of
the relationships within the group.
Process consultation. sensitivily trainmg. and counselmg are just three of the many
OD techniques that have been developed to help individuals learn to cllange their attitudes
and behavior in order to function more effectively, 1I is common for many large organi7:a-
tions to provide lheir higher-level managers wilh a yearly budget 10 be spent on individual
developtl1Cnt efforts s\tch as these or on more l:onventional execulive education progr.lllts.
Team building and intergroup training. To manage change wilhin a group or
between groups. change agems can employ three different kinds of OD tcrhniques. Team
huilding, a common method of improving relationships willlin a group, is similar to
process eOllsultation excepllhat all the members of a group participate 10gether to lry 10
lmprov'e ll1eir work inleTal:tions. 79 For example. group members discuss with a change
agent (who is a trained group f<ldlitator) the quality of the imerpcrsonal relationships
between team members and between the members and their supervisor. The goal of team
building is 10 improve lhe way group members work 10gether-lo improve the interaction
ttl ll1c group to al:hieve proccss gains and redut'C process losses. Team building docs IWI
focus on what the group is trying to aellievc. bu\, rather. on the members' relationships,
Team building is importam when reengineering reorganizes the way people from dif-
ferent funclions work together. When new groups arc formed. leam building can help
group members quickly establish lask and role relationships so that they can work effec-
tively together. Team building facilitates the development of functional group norms and
values and helps members develop a eommOll approach to solving problems.
The change agent begins the te~lm-boilding process by watching group members inter-
ad and identifying the way the group currently works. Then the change agcnl tillks wilh
some or all of the group members one on one to get a scnse of the problems that the group
is experiencing or just to identify where the group process could be improved. In a subse·
quent le:lm-builtling session Ihat normally takes place ,U a local ion aW<lY from the lIormal
workplace. the change agent diM:uSSCS with members the observations he or she has made
and asks for their views on till.· issues brought to their anention. Ideally. through this discus-
sion team members develop a new appreciation aboll! the group dynamies that affect their
behavior. Group mernoc,rs may form small task forces 10 suggest ways of improving lhe
628 PART 3 • ORGANIZATIONAL PROCESSES
Team buildin),' is used!O nnprove
the inter.K1ions and ",lationships
lx:lwttn group memlx:rs to
,.::hie,·e pmeess gains and reduce
process losses. Frequently. a team
;s assigned 10 work on a spe<:iflc
projccl where members ha'"" to
1I,,!;otia!e lhe mle alld lask
relationshIps ncccss.1lY to get the
job done dfll·iell1ly,
INTERGROUP TRAINING
An 00 lechllique thaI u'le' tc3m
bulldlllg to illlprme the work
intera,-"t;OIl, of different fU""lions
or di,-i,;oll'.
ORGANIZATIONAL
MIRRORING
An aD te,-"hlllque to whIch a
fac'ilitator help, two
interdeporlldem groups ex plore
thei r PCl\;CptIOIl' and rel;lI ions
in order to improve lheir "ork
Jntcr""llon,.
ORGANIZATIONAL
CONFRONTATION
MEETING
An aD tc,·hllique thai bri~,
t""ctller all of Ihe Illanagc.... "I
llll organi/at;oll to ,-""nfront tbe
issue of whether 11K- organization
is effC<:I"e1y mc..'tillg it' goal,
judgo it· JJui/J lln dw ...
group process or to discuss specific ways of handling problems thm have heen arising. The
goal is 10 est.:lblish a plntfonn from which group members themselves. willI no input from
the change ;lgenl. can make I:ominuous improvemenls in 111<: way the group functions.
Intergroup training takes leam building one slep fUl1her and uses it to improve Ihe
ways different functions or divisions work together. Its gool is to improve organi1;1tional
petfonnance by focusing on a function or division 's joint acti vities and oUlput. Gi I'en 1h.1I
I:rossfundiunal I:oonlination is especially impurtant in reengineering and tolal quality
m<lnagement. imergroup Ir<lining is an important OD lel'hnique Ihm org<lniz31ions c<ln
cxploit to implcmCIl1 changc.
A popular form of intergroup training is called orglltliZlltional mirroring. all OD
tel:hnique designed 10 improve the etfel:tiveness of inlerdependent groups.so Suppose that
two groups arc in conflict or simply nced to learn more about e<lch mher. and one of the
groups calls in a consultmll to improve coopermion between thc two. The consull.:llll begins
by intervicwing members of both groups to understand how each group views the olher
and uncover possible problems the group, arc having with eal:h OIher. The groups arc then
brought together in a trdin ing session. and the consu Itant tell s them that the goal of the ses-
sion is to explore perceptions and relations in order to improvc their work relationship,.
Then. wilh the consultant le.:lding the discussion. one group describes ilS perceptions of
whm is happening and its problems with Ihe other group. while the other group sits and lis-
tens. Then thl' consulwnt reverses the situation-hellce the term orgall;:rllimw/
IIUnVri'I}:-and the group that was listcning takes its turn discussing its perceptiOlls of
what is h:lppening and its problems. while the other group lislens.
As a result of this initial discussion. eal:h group appreciates the other·s pcrspel:tive,
The next step is for members of both groups to form l.:lsk fot"l:es to discuss w<lys to deal
with the issues or problems raised, The goal is to dcvclop action plallS that C.:ln be uscd to
guide future intergroup rel:llions and provide a basis for follOW-Up. The change agent guid-
ing this training session needs to be skilled in illiergroup relations because both groups are
discussing sel1siti ve issues, If the proccss is not m<lllagcd weI I. illiergroup re btions cau be
further weakened by this OD technique.
Total organizational interventions. A varicty of OD techniques can be used m thc
organization 11'1'1'1 to promote organizMion-wide change. One is the urganizationul
I..'tmfrontation meeting. SI At this mtocting. all of the managers of an organization tlltoct to
confront the issue of whether the org<ll1ization is effectivdy meeting its goals. At the first
stage of 1he process . .:Igain with faeil it.:ltion by a change agent. top management invites free
and open discussion of the organizm ion 's sitoalion. Then lhe eotlsultan1 divides the managers
 CHAPTER 18 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 629

into groups of seven or eight. ensuring that the groups are as heterogeneous as possible and
that no bosses and subordinates are members of the same group (so as to encourage free and
fmnk discussion). The snwll groups rcpontheir findings 10 the tOI.ll group, and the sons of
problems confronting the organization arc c:ltegorized. Top management uscs this statement
of the issues to set organizational priorities and plan group action. Task forces are formed
fromlhe small groups to take responsibility for working on the problems idemified, and each
group reports back to top management on the progress thai has been made. The result of this
process is likely to be changes in the org:mization's structure and operating procedures.
Restructuring, rccngincering. and total quality management often originme in organization-
wide OD interventions that reveal the kinds of problems that an organization needs to solve.

Summary
Organi13tional change is an ongoing process th1lt has important implic:ltions for organiza-
tIonal perfomwTlce and for the welJ.tl<::ing of an orgamzalion's members. An organization
and its members must be constantly on the 'lIen for changes from within the organization
and from the outside environment, and they must learn how to adjust to change quickly nnd
effectively. Often. the revolution1.ry types of change that result from restructuring and
reengineering arc nccessary only because an organlz.ltion and ils managers ignored or
were unaware of l:hanges in the cnvironmell! and did not make incremcntall.,h'lI1ges as
needed. The more an organization changes. the easicr and more cffcctive the changc
process becomes. Developing and managing a plan for change are vital to an organiza-
tion's success. In this chapler. we made the following major points:
I. Organizational change is the movement of an organization away from its prescnt
state and toward some fUllln." state to increase its effectiveness. Forces for organiza-
tional change include competitive forces. economic. political. and global forees,
demographic and social forces. and ethical forces. Organizations arc often reluctant
to change because resistance to change at the orgal11Z:1tion. group. and indi\'idualle\'-
cis has given rise to org.mizational inertia.
2. Sources of organization-level resistance to change include power and connict. differ-
ences in functional orientntion. mechanistic structure. and organizat ional culture.
SOUrl.'CS of group-le\'c1 resistance to change include group nonns. group cohesiveness.
and groupthink and escalation of (:ommitmell1. Sources of individual-Ie"el rcsi"taoce to
changc include unccnnimy and insecurity. selective perception and retentioo. and hnbit.
3. According to Lewin's force· field theory of change. organizations arc balanced
belween forces pushing for change and forces resistanlto change. To gCl an organiza·
tionto ch'lIlge. managers must fmd a way to increase the forces for change. reduce
resistancc to changc. or do both simultaneously.
4. Types of changes fall into two broad categories: evolutionary and revolutionary.l1le
main instTllments of evolutionary change arc socio-technical systems theory and total
qual ity management. The mai n inStrumCIllS of revolutionary change arc rcengi ncer-
ing. restructuring. and innovation.
S. Action research is 11 strategy that managers can usc 10 plan the change process. The
1ll.lin steps iII action rese<lrch arc (I) diagnosis and analysis of the organizat ion.
(2) determ in ing the desired future state. (3) implementing actioll. (4) evaluating the
action. and (S) institutionalizing action resear<:h.
6. Organizational development (OD) is a series of techniques and methods to increase
the adaplability of organizations. 00 lechniques can be used to overcome resistance
to l.·hange and to help the organiz.t1ion to change itself.
7. 01) techniques for dealing with resistance to ehangc include education and commu-
nic;l\ion. panicipation and empowerment. f'lcilit:llion. bargaining and negotiation.
manipulation. and coercion.
8. 00 techniqucs for promoting change include. at the individual1cvcl. counseling. sen-
sitivity training. and process consuhmion: at the group level. team building and inter-
group training: and m the organization level. organizational confrontation m(.~tings.
630 PART 3 • ORGANIZATIONAL PROCESSES

Questions for Review

1. Whm are the main forces for and impedimellls to
change?
2. How do e\olution;try ch;tnge ;tnd revolutionary
change differ'!
3. Whm is the main purpose of total quality manage-
ment'!
4. What is a business process. 3nd why is reengineer·
ing a popular instrument of change today'!
5. Why is restructuring sometimes necessary for
l\'engincering to take place?
6. Which type of change is likely to encounter the
greatest resisl;lnce'!
7. Whal arc the main steps in aClion research?
8. What is org;tnization;tl dc\'e1opmcnt. and what is
.liS goa.
I'
9. In what ways can team building and intergroup
training promote organizational effecliveness')

OB: Increasing Self-Awareness

Coping with Change
Imaginc lhal you are the manager of a design group that is b. How will you delermine the crossfullctiunal
soon to be rL'Cnginecred imo a crossfunction;tltcam com· team's desired fUlllre st31e?
posed of people from several different functions that have c. What will be- Ihc most impol1:lIlt implementa·
had little contact with each other. tion choices you will face? For example. how
will you manage resistance to change'!
1. Discuss the resistance to change m the organiz;t·
d. What criteria will you usc 10 evaluate the
tional and individualle\'els that you will likely
change process?
encounter. 3. How might you usc team building and other orga-
2. Using action research. chart the steps thai you will
nizalional developmenllechniqucs 10 implemenl
use to manage the ch;tnge process.
the change?
a. How will you diagnose the work group's prc-
scm state'!
 CHAPTER 18 • ORGANIZATIONAL CHANGE AND DEVELOPMENT 631

A Question of Ethics
Managing the Change Process
Some people find ch<lnge a vcry diffil:ull lhing for rca sons dcscribed in thc chapler.
Managers often find it difficult also 10 l:hange an org,mizmion's culture bel:ausc lhey call-
1I0t get pcoplc to develop new kinds of work attitudes or to adopt new kinds of values and
norms-such as those i!lI'oll'ed in implemell1ing kaizen.
SomClimcs. kaizen requires bolh people and groups to change their work allillldcs
and behaviors in imporlanl ways. often ways lhey do not wish. and they resist the changes
being made. Also. there have OCcn cases where organizations actively involve employees
in the change process by. for example. suggesting ways 10 chnnge their jobs :lnd perform
them morc clTcctively. Then. aflerthc change process hns t.lken place lhey proceed to lay-
oft' emploYL"Cs. Think about the ethiull issues involved in this situation and address the
following issues:
I. What kinds of techniques should managers be allowed to use 10 change employee
alliludes and behavior before their ,ll:tiOIlS would be considered unclhical'!
2. Under whm conditions it is l"thicalto tl"nninatl" employccs as a result of implc-
n1l"nting an organizational change program?
3. Whal kind of guarantees should m:ln:lgers offer employees to enlist their support
if they suspeCt layoft·s ma), be necessary'!

Small Group Break~Out Exercise

Practicing Kaizen
Form groups of threc to fil'c people and discuss the following scenario:
Yoo are a groop of software engineers meeting to discuss how to implement a kaizen
program 10 reduce lhe number of mislakes made in the developing and writing of compuler
code. Prescmly. your employees are each rc;;ponsi blc for a differenl section of the l:odc and
thcy typically just hand off their work to the person next in line-which is tl1l" poim where
errors often creep in. You are contemplating imrodueing a computer-aided design process
that will make each employee's cooe- wri ling activit ies visible to everyone else (Un/thai wi II
alert employees when ('hanges they make impact other employccs nlde-writing activities.
This will likely cause considerable conflict among employccs because it will complicate
their work activities.
J. How l:an you manage the change procl:SS 10 reduce employt-es' likely reSiSlanl:e 10
the changes that will take place in the work process'!
2. What kind of reward system could you devisc to motivate employees to contribute
and make suggestions for improving the new system'!

Topic For Debate

Organizational change alters role and 1:ISk relationships at all levels of:m organization.
Now that you understand the Ilature and process of organi~.ational change. debate the fol-
lowing issue:
Team A. Changing IX:op1c's atliludes and behavior is e<lsicr than changing organiza-
tional strunure and nl1ture.
Tea/II B. Changing organizational Structure and culture is easier than changing peo-
plc's anillldes and behavior.
632 PART 3 • ORGANIZATIONAL PROCESSES

Experiential Exercise
Analyzing Forces for and Impediments to Change

Objectives
Your objoxtive is to understand the complex problems surrounding organizational change.

Procedure
The dass divides into groups of from three to five people. Each member of the group
assumes the role of supervisor of a group of manufacturing employees who assemble
mainframe computcrs. Hcrc is thc sccnario.
The employees' jobs are changing because of the imroduction of a new. COmPl1tcr-
controlled manufacturing technology. USll1g Ihe old technology. employees stationed
along a moving l:onvcyor belt perfornled a de<lrly defined set of operations tn assemble the
l:ompulers. The ncw. computcrized lechnology makcs it possible 10 producc many differem
models of compulers sirnul1aneously.
To operale the technology effectively. employees have to learn new. more complex
skills. <lnd Ihey also have to learn how 10 work in learns bel:ause Ihe new lechnology is
based on the usc of flexible work teams. In the new work teams. the employees them-
selves. not a supervisor. will be responsible for product qu,llily and for organizing work
al:tivilics, The new role of the supervisor will be to facilitale. not direl:l.the work process.
Indeed. <I major pan of Ihe l:hange to flex ible work leams involves inlrodul:ing a lolal qual-
ity management progmmto improvc quality and reduce costs.
1. Chart the main impediments to change at the organization. group. ,llld il1dividual
le,'Cls thai you. as inlernal change agenls. arc likely 10 encounter as you assign
cmployees 10 flexible work teams.
2. Discuss somc ways to overcome resistance to change in order l(l help Ihe urgani-
7..1ltiol1 move to ilS fulure desired slate.
3. Dis<:uss the pros <lnd cons of lop..{]own l:hange and bottom-up change. <lnd decide
which of them slulUld be used to implemcnt Ihe change in the work system.
4. Which specific organizational developmelll tcchniques mightlJc mOSl useful in
helping to implemelllthe change smoolhly?

New York Times Cases in the News

ll'h' ;,\'rllIl1ork &!imrs

"Ford Eliminating up to 30,000 Jobs and 14 factories."
Micheline Maynard. NIT. Jalluary 24. 2006. AI,

The Ford MOior Company ,aid Monday
that it would close as many as I.. faclOrics
and cuI up In 30 J)(X) jobs ",·er lhe nexl ,ix
years. II was the I:,tesl move in a
fundamenlal re'lructuring of Delroi!"s
tr~ditional :1\1\0 comp,ulies. hit h,ud by
f",eign compct;lOrs. who have laken
more th:m 40 percent of lhe American
marke\. The mowS by Ford. Ih<' ""<"lmd-
largesl aUlOmaker in the Uniled States.
"·Olne lWo months aner Gene·ml Molors.
the· indu'l')· leader. S1lid il would dose all
or pan of a dozen faclories mid eliminale
a ,imilar number of joh,. In<·luding <·ulS
that took place ,11 lhe Ch')'sler Corpora-
lion. the Big Three autolllakcl1i have
c1imim'led or ,lllnounced plans to e1imi-
nale nearly 140.000 job, ,ince 2000.
includi ng salaried posit ions. ThaI is abour
on<·-lhird of rheir North Ameri{·an
p;lyroll. a rollb;lek to a work force size
not seen ,in{"C lhe cnd of World War lJ.
While 1"" Big Thll.'C are visibly shrink-
ing. lheir combined nlO'·"s do nO! spell lhe
end of auuHnOli\"e manuf"'."luring in lh<·
Unitexl S~1tcs. BUI lhe gcogmphic footprint
has largely ,hift<'ll ,oulh. where a new aulo
irldustl)' is tlourishing. J:lp;mese. Gcrnwn
and South Korean lXlmp;mie, now employ
60.000 people. or aboul the -"une number
by ",hieh Ford and G,'\!. havc ,aid lh<'y
will shrink, But foreign milkers ;Ire
crearing a young'"'. {·heaper work force.

sideslepping D.:lroit"s unemployed mK!lhe
higher pay and benefits package' thaI
[)elroil workers were gelling. The Uniled
AUlomobile W,x-kcrs un~)n_ wh~:h repres-
ents .....orkers 111 lhe Unitcd Slalcs. s"id lhe
ann'liJI>l"Cment by Fnrd wa, "deeply dis.a.p--
pointing and OC\"JSlaling"' for ilS members.
The cutbacks 'ignal a new realily for aolo
workers-one in which $3(l-an·hour
wage' and g':ncroo, oc'l1<:fil, an.' IX) lonb",r
a gum;lIl1cc.
The l'uls al Ford arc lak ing pbee under
a iUrn:'round plan il is c;lIhng lhe W"y
Forward. marking ils second allempl 10
rcv,unp lhe company in lhe 1:1.\1 four ycars.
Ford's goal is to oc'eome as nimble as
Toyota ,md llonda. clming lhrough layers
of bureallcrdey that h,,,'e slymied lhe
development of innovative vehicles like
hybrid del'lril' ('ar'. It al,o highlighls
Ford's American I'OOIS and :,ims to create
clearer idmlilies for ilS Ford. Lil>l~}ln and
Mercury brands. Ri,ing gas and sleel
prices and "lrong compelilion from
abroad ha,'c imen"iflcd lhe challenge 10
Ford and G.M .. al",,,dy bordened by
rising health care eo,ts and a legal'y of
promising ril'h pension package. and
OIher relirement bcncfn,. More important.
both companies have f"iled 10 find lhe
right fonnula, 10 ,ali,fy lhe AnlCril'an car
Questions for Discussion
I. What arc lhe main
2. What kino of change slr.llegies is Foro 'Ioopling 10 llIrnaroolld its performance?
3. How wiJltheSl' changes help 10 improve perfonnance?
"When Terry Met Jerry, Yahoo!"
Ri('lwrd 5ikl<M', NIT. }Ollll(lr\" 29. 2006. 3.1.
WHEN Yahoo Inc. annOlincoo nearly five
y,'ars ago thaI Terry S. SelllCl. lhen a fomlCr
Ie'lder of lhe WaTl1Cr Brolhers mOlion
picture 'Iudio, would OC'<.X>fllC iI' ch:limliifl
a,ld chief execulive. lhe re:lClion boIh
outside and wilhin Yahoo was 11<)1 c'xaelly
one of wild eocouragelllenl. Despite a
bugely 'ul...·c"ful c'a",er running compa-
Il~S thm n~lJ;c 1lI0vies. lelevision shows and
mu,ic Mr. $cnlel "'''-S imm..-diatcly lat.:k-d
an "old medi'l"' guy, Worse. he wa, a
Hollyw,xld gu)". and h,Kl barely lou,:hed a
computer during lhe nearly two decade> he
o\'cr:saw Wamer Bmlhers.Al Yahoo, where
CHAPTER 18 • ORGANtZATtONAL CHANGE AND DEVELOPMENT
buyer. The "-,,,ull has been a swift slide in
market ,hare. Ford. whieh held ahoUi 25
percent of lhe Car market in 2000. hcld
only 17.4 perr"nl in 2005.
"londay's culS al Ford affect aboul 'I
Ihird of iI' hourly payroll in North
America. where it has 87.000 workers.
The "ompany is al,o eUlling anolher
4.000 salaried employccs, or 'IOOUl 10
per"ent of ils while--l:ollar force. and ha'
pledged 10 reduce its exeeuth'e r.mks by
12 lX'rn'nl, Forc'ign manufadure". who
nOW scll more th'm 4 of every 10 cars ~md
lrul'l;" in lhe Uniled Slatcs. have "real<-d
lell~ Oflhousands of jobs al new faceories
from Ontari" 10 Ohio, aen", Ihe South
and in Mexico.IJcC<luse of lheir growlh.
lhere has be"n no nel loss in AmNi"an
aulomolivc jobs over the lasl 10 years. In
fal·!. those foreign companies. Which
colleclively employed about 60.000
workers al the North Amcril'an pbnts la'l
year. arc e~panding lheir factories, Laler
lhis ycar. Toyota will open a !lew lruck
plam in San AnlOnio. and it is building
anolher fill' lOry in Ontario.
While foreign automakcrs haw hired
some former D.:lroit workers. most of
lheir work" haw no automOli"e experi-
ence and "'ere chosen lhrougll rigorous
'<Crc....ning pnlee,Se' Ihal 'Ire" phy,ical
prOblcm~ c"nfronling Ford')
lhr ~r\u york ~ntr1i
the collapse of the dol·eOllI bubbk: and the
eV"I"Jralion of onli"" ad,·,·rtising had ju.'1
helped sink lhe col1lp<1ny's market "'Iluc
from a peak of SIn billion mju'l S12.6
billion when he joined. the "-'<.'Cplion "'asn'l
"·arm. Mr. Sen»l. lhen 58, hudl>Cith<'r gcck
credit like lh;lt of Y"huo's co-foondcrs. kfl)'
Yang and David Filo. I1<Jr Silicon Valley
vClllllre·capitalist swagger. Mr. Semel
I..,kc-d like a sclf-"-,,,,rr'ti bul unassuming
guy who origini'lly hailed from Quccns.
which he' wa"
The slory linc al Y"hoo is Illllch
differenl hlday. H"ving lose $98 million
633
endurance ,md a ocnt for working in
leams. With a smallcr martet ,lIarc. Ford
has ilS plants m North America operaling
al only lhree-<]uanel'i capa"il)', 'parking
lhe eomp,my's decision Monday to close
a'>embly planl' in Wixom, ....·Iich.• oul,ide
D.:troil: Hapeville. Ga .. oUlside Allam'l:
and Hazelw,xxL Mo" a suburb "f SI.
Louis.
Ford', chief execulive, Wi Iliam Clay
Ford Jr.. c'llied the CUIS "a painful last
re'or!.'" But lie 'aid lhe company', plan
comained "lhe vision :lnd slrmegic
f'leuS 10 rebuild Ihe bu,ine,,:' "Wilh
il:' Mr, Ford "aid. '"we will re!ilke the
American roadway:' Mr. Ford, who
unveiled lhe earlier transform:l\ion
program in 2002. shortly aflN he
installed himself as chief execuli"e,
said lh"l plan had "l'lIil'''eJ ilS goal, bUI
WaS not enough in the face of seiff
forr'ign cOmpetilion. "Wc will not sland
for business as usual.'" Mr, Ford said.
Bul Ford held oul hope for some
workers. sa),ing Ihat it planned tocrea1C
a new fa"lOry somewhere in Norlh
America 10 build small cars al a low
cos!. Ford executives deelllled 10 $<IY
when the plant would be buill-or
whelher il planned 10 employ unionizcd
workers in Ihe Uniled Slates or Canada.
on revenue of$717 mIllion in the ye:lr
when Mr. $"mel joincd il. Yah"o earned
$1.1 billion laSl year on "lies of $5.3
billion. Dollar' a,ide, Yahoo has Ihe
widesl glob:11 rc:'ch of ,my Inlernel site.
h eoums more lhan 420 million
regislercd uscrs around lhe world. and il
owns lhe m"sl-u,ed e-mail. inslanl-
messaging and music Web sile, on lhe
pia,»!. In lhe Uniled Slate's alone. Yaho"
amacled 103 million unique visitors in
December, making il lhe e"unlr~",
most-visiled Web destinat ion. :lCcording
10 Nielsen NClRating'.
634 PART 3 • ORGANIZATIONAL PROCESSES
"It', a 21 'H:emury roc>dia c"OIllp'my." Mr,
Semcl ,al<l in a """em inter\'ic"" "TIle
dlfferenc-e bel"'ccn lhe more t'a<litlonal
me<lla roml=ie, an<l romf'-lnie.' II~c Yahoo
is all abool tcehoolo£y, an<! tl>c IWo-
lechoology and me<lla-tOlally mar,y each
(~hcr." A.' he look, ba<;~ ow, hi, fi", )'C'I";
running Yahoo, Mr, Semel makc' 00 "",lense
of b.'lng a lc·<:hTlO-guru. aoo he i, often a>ke<l
wealher he really un<lerstan<l' lechoology.
''I'm neW, going 10 be" 1."'(;hool0I'I,1. Ixll I
ha\'e to hoe con,'ersant:' he <al<l. a<lding: "1
Wa, ncwn,n octOI' or a dl"""IOf or a ,Il\j;er-
I had 10 ulJ<le,,;tan<!lhe pmce." ",,,II enough
III help ma~e ,1c>.:I,ion,:·
By Ihc lime he was hire<!. Yahoo alrca<ly
ha<l Ihe fQl'n<lallon for ,,,c<'''s>-mo,1
tJOIably its number of "'orkl"'i<Ie usen;, more
lha" 2(X) million. who <lid c"crylhing from
d,ec~lng bY,ine." Ill'WS an<! 'pon, \Core, to
sen<ling c-mail an<l IlI,wnt Incssages,
li'lenlng to mu,ic an<! shopping, BUll>cyond
lhc IlOwerful brand an<! a ,omf'-l"y full or
whlzze,. lhere wa, no dear bu,llK"ss
Slralegy, The fiN Ihing Mr, Semel <ll<l Wa, 10
'Ieamline 44 bu,lne" unil' Inlo 4. Thai
hellX'<llo sel corporale priorllies. "Terry'"
"'lent Ie" focu, on fo,:us i, pmb"bly tl>c
most Imporlant Ihing we a, a leam or a, a
c'Omp"ny:ore doing:' Mr. Yang ",id.
Mr. Semel's fiN big deci'ion_an<l
pmb"bly hi, ,hrew<le'I-wa, 10 m"kl'
a<l,'enl,ing It' main,,,,y bY,ine-ss. AI 'ome of
hi, ea,I""1 m<'Cling, at Yahoo. Mr. Serocl
recalled, \Ome "xecutl,'c, were advocaling
Ihal the bY,i".,s, in'le,1<! POU' iI' effo{\, imo
If)ing 1o eXlrael mOlllhly fcc.' fr<Mn it,
rq;i'le,e<l u""rs, "He wa, \'C'y ea,I)' on in
Ihlnking. 'If we can ~cep the use" growing
an<l we can kccp l'm",ing usagc, we will be
able 10 monelize Ihi' an<! we will be able 10
"re"l~ "II",,:" ",i<l Mar)" ~ led,cr, the Imerocl
analyst as Morgan Sianley. "It \Oun<!, like
,,,om an<l "pplc pic, Ix" lhal ",a, somcthing a
Iol "I' pcopIe <lKl 001 get in lOll :'
Mr, Scmel was al>o h-.:a to <Ie"clop
other re"cn"" stream" including mu,ic
>er\'ic~" g''''II:> an<l premiu,n c-mail
""munl'. It, absen..-e in lhe <lial-up Imen"'l
acc.,>' bY,inc", where AOL a,><I Microsoft
ha<J JI<lIe Jl"'ilinn" scemc<l, in lhose day,. a
glaring di,a<l"anlal;~, Mr. S~mcl addre,,,,<l
Ihis wilh hi' ,",con<! ,man mo"e;
C>lublislling a IXlrtnc"hip wilh SUe. now
AT&T, 10 sell Yahoo br:md high-'IX',>d
Questions for Discussion
I, What problems did Terry Semel identify as obstacles 10 improving YaOOo!'s performance'!
2, What kin<ls of chang" ,t ....II"gy has Mr. Semel lx....-:n u'ing 10 tumull)unll Yuhoo'\ p.:rfor-
manec? How successful has he been?
conne..-lion, mw souped-up phone Iincs,
Y"hoo later ad<.Jc<l VcrilOn, Briti'h Telecom
an<l Rogers Communi..-alion, in Canada,
an<l now h"s 9,6 million ,ubscribe",
ac,-",r<llng to Morgan Slanley e'llmates,
Euch s"b>criplio" gCocrale, all avcruge of S3
u nMlnlh for Yahoo. Vllal 10 lIS focu, on
,>\kcl1i,lnl' WaS Yahoo', decision, in 2003, 10
de"elop ilS own sca,..-h bu,lness-bullt
on lhe ...upi<l-fire ",:qui,illon, of Inklomi an<!
O"en",e, whi..-h ilsclf ha<l jU'1 bought
AllaVi,ta_lO comlX'le with Googk. That
f,.'C<! Yahoo fmm ha,'ing 10 licen"" GoIl£Ic',
:-careh technology. "We hanll)' wenl 10 sleep
ufter we Slanc<l 10 un<len;land thcir
b"'ine-s<' ~Ir, Semel sal<l of O"erlure'.s
""'''k", of pl:,,:ing ,pon\Orc>d link' alonpide
rele"alll search re,ults. (O"erture ha< been
,.",hristcl,,>d as Y,ohoo Sean'h ~ laTh"ing,)
T"" ye"'" af"'r Inln><ludng ils own ",arch
cng;"." Yuhoo mul, 'Jflly ulO£1e in lhat f",I<l.
BUI il has also ha<l 1o a..-~"""ledge lhal II Is
Icss eff,'<.1ive Ih"n iI' ri,',oJ al in,mml)'
matching relevanl ad, 10 seareh re,ult>. An<l
Yahoo's "'are of lhe ",aTt:h ,,~u1<CI ,Iippc<llo
-'0 percenl in I:)e(..,mber fnJflI :12 perrelli In !he
San", momh a yea, ca,lier, while Gongle',
'han' rose 1o 40 rercenl fmm 35 IX'rcem,
,,':<:o,<lin£ 10 ComScorc Me<lia "letrK:.
Impnl\'ing lhe fillaocial relum on 'earch
a<l"crti,ing. Mr, Semel says. is iT' the works,
Allhough search repn...><;elll' ooly 5 pen:elll of
acti"it)' On Ihe Web. this i, no sn~~11 !I,,~tcr: lhe
higher profil margins !,,,,,,.,r:"e<l by GoIlgle's
AdWor<ls bu,inc" are " big re">o,, Ihat
GOO£Ie', S12H billion marlel capitalizatl<\I1
II(»O.' <lwarfs Yahoo's, (HI,lor)' will <b.'ide
whelhe' GoIJgle or, for Ihal matler. Y,lh<1O
,,':'rrallt, Iheir ,IMf)' "alualion, in a market
where lhe ,lOCks of mc<lia comp"nie, wllh
mneh higher rewnne, are ocing ,hunnc<l by
in""lors,) SI;IL Mr, Semel millen<!, that
Yuh,x'\ abllily 10 bien<! brJoo an<l ",arch
a<I",nising will set it ap'''' as lhe Web
coollnucs it' -swifl e,,~ulion. Su",an L. Deder,
Y,ohoo', fl""""'" "hief. nole, 1h:'1 mo,1 "'areh
",1"e11i",rs are already online one way or
anolher an<l leoo 10 be ,,,,,oil or mid,izcd ''Om-
p"nies. BUI. she said. n~l1ly n~ljorrorpor-ulions
arc Slill 'p"n<!ing 001)'" 'mall pcrc"magc of
their Illarlelin;; hOOb'els online.
wilhoul ,'onlclll Ihal lX'ople wam, of
course, a<l,'eni,lng i., moot. Yahoo has
l'ai"'>d allemio" in lhe p"'l )"ar for <.Jcwlop-
ing original programming, ""sed oUl of a
new Yahoo Mc<lla complex in Sallla Mooi..-a.
Calif, Colullllli'h ha"e been hired for it,
news ,Ite,. reponers are hutching mullimc<lia
presenlalions and Ihe ille,;tablc o"linc
realily 'how i' in the works, Yahoo want.s 10
hoe Ih~ largcsl online "Ideo h"b, ,Ireaming
everylhing from new" dip, an<l nMl\'ic
I"'JIlc", 10 Howar<.l Slern 'Iunt, un<l NASA
mi."lol1\, Laq ye"" il "reanK.>d foo' billion
mu,ic \'i<loo.s, enough 10 nil lhe \Che<lIJ Ics of
a 101 of MTV channel',
Mr. Semel 00><1 hi, Yuhoo collcal'UC-' are
most cal'e, to en,'ou..." gc their ,e£i'lered
u",rs. who rcpre.",m roughly .j() percenl of
Ih<- one billion lX'oplc now onli"., glol>;,lIy,
10 ..-",ale lheir I'M n c""lettL Yahoo e,,,,,uli"e'
,ay th:1I 'OI:iul nelworks. blo£s. me"age
board, a,><I Sile' where u.'er< from around
lhe wo,ld ,h"re m:m'rials-likc Ihe recelll
Yahoo acquisilion, Flickr, a photo ,haring
bY,incss. un<l DeI,i..-io.u" where people
swap infonnalinl1 on favorile Web ,ile, an<!
OIher thinl"-are the key, 10 a fa'i em"'l'inl'
n>e<lia m,u1<el'
Ac,oss Y"hoo', o"erf1owing campus of
purple cubides in Sunny,ale, C"llf.. leam,
are wo,king on a mnge of pro<.Juets-w;th
name, II~e Yahoo-,60, Y'Q, Y,ohoo Min<!Sel.
MyWeb 2.0 aOO Yahoo An,wers-th", uSC
Web-scarching as a ribbon for tying logether
"in"al communjti~s, M)'Web 2,0, for
example. bill' IISelf J' a """,Ial .search
e'lgioc" th"l leiS users ta£ ""arch result> lhey
may wulll1<l rorne bod 10 an<! to 'hare lhose
re,ulh with cyberf,icn<l,.
JelfWcincr, Yahoo', .senlor ,'1"" prc,i<l<:m
fOf ",arch un<! Ularkclplao.'C, camc up wilh lhe
""mnym FUSE 10 ,um up Yahoo', social
nclworli"g ambil;ons; 10 "find, Use, ,hare an<!
eXp"n<! all human knowlc<lge:' Thi' ,ouoo,
awfully high·mi"ded f(ll' a ronlp"ny WllOSC
logo coo, in an exdum",;on JI<lim. bYl II
UlMJcrscorcS anolher difference belwecn old
and 1"'1" In a ..-yn;'-ul a£,'; "Pcople come 10
work lryinl' 10 change t!lilll"'" Mr, Wei,,,,r
>ai<!. 11><')' al.\O rome 10 work knowing that
'he l"lemel i, a fiel<l of dreams Wilhoul
b",rien; 10 emry. If you don't bYild II.
Sllmco"" else will_mO'1 Iilcl)' Google.
Tcchoolol'Y i, ,,'hal allow, Yahoo IU ,Ian
lhese ,sen'icc, a,><I 10 lie them logelher on u
glol>;,1 "calc, ",\Imo'l from lhe fin;1 ili,y I
can", to Yahoo:' Mr. Semel sui<!, "I rcali7.c<l
Ihal ,'wry st...ow£), we wc,e ,~""i<lcring had
10 he rclule<llo lhe qual it)' of our I""hnnlog)'."
 Appendix
Rc~('arch \Iethods in Organizational Beha,ior
Overview
RtMtlrrh mnhoth is a broad lenn th:Jt rcfcrs to the SCI of
tcchniques used 10 acquire 1.::110\\ ledge or learn about some-
thing of inu:rcsl. In organizational boeha,ior. Il,'scarch
melhOOs are the Il'Chniques used 10 learn about how indi-
vidu:lls and groups respoOOlo and act in oq;anizOllions and
how Ol};anii'3tions respond to theiT environments.
An understanding of research methods i~ irnponalll
for scvcral rca~ons:
I. II allows rcsc1lrchcrs. managers. :lnd olher members
of organi7.<llions \0 learn <toout why )X-'Qplc fcd ,md
behave a~ they do in organj7-3tions.
2. Jl helps people 10 solve problems in ors.rni~alions
3nd. 1I10re gcner.ll1y. come up with ways 10 increase
pcrfonn:mcc and well-being.
3. It can help managers and OIller mcmbc", of an orga-
ni7;llion usc findings from research dooe by Others to
impro\'C' conditions in their organiZ'lIions.
4. II can help members of an organivilioo properly I::\"al-
uate alhi~ and rcrummerxlalions pro\ ided by Olhers
such as consult3nlS.
5. II allows people to e\"aluate the various theories of
organizational behavior.!
Our discussion of R'search methods proceeds as fol-
lo\I,<s. We present a general model of the scientifIC process
U'ied 10 learn about organiVlIional beha\'ior. We discuss
how researchers develop theories to explain some a~pect of
organivuional behavior and how theories can be evaluated.
We mo\'e on 10 the actual lcsting of lheories. We discuss
lhe different lypeS of research designs lhat arc used
lhroughool lhe scientifIC process. We conclu<k' wilh a dis-
cu"ion of elhical considerations.
The Scientific Process
A basic modcl of lhc scientific process is providcd in
Exhibit A.I.~ Because the model is cyclical. \\e ~'Ould ~l:m
describing lhe process at any point. For convenience. we
stan al poinl A. the obscn·ation of organi1.31ional behavior.
At point A. a researcher nOlites something about organiza-
t)ooal behavior tflal she or he wi.shes to lcam more about.
The I"('searcher may OOsen'c'. for example. lhat le\e1s of
absenteeism ate: higher in some groups lflan in others. that
employees pcrfoolling some jobs experience mU('h higher
!e>'els of Slress lhan do tOOse performing other jobs. or thaI
some emplo)t'eS put forth much IJ)()I"(' effon than Olhers.
After making OOsen,:lIions like these. the I"('Joearcher
lries through irxluction to come up widt a general e.~plana­
tion for what she or he has obsen'ed (point B in Exhibit
A.I)./lIlIIiC/ilH/ is lhe JlfOCC'>S thai researcht:Ts use 10 come
up with general ways 10 account for or explain specific
obscrvations or inslanees of organi:l:alional behavior.
Researchers who observed thaI individuals varied in the
amounts of effOl't lhey excr1~'d on lhe job. for example. trit'd
to come up with some generdl explanalions for Wh:ll lhey
observed. The oulcome wa); theories of work mOliv:lIion.
Once a researchcr has a gencml e.\pl1l11111ion 10
accoulll for:l phclloillenoll. then. through deduClion. ,he or
he mukcs specific predictions thm sccmlikely to be lrue if
lhc gellcrdl cXplanalion was a good one. /)nh/I'/ioll is lhc
process of making specific predictions (poinl C in E.\hibit
A.1) from gcncml explanatiuns. A general e.\planmion for
absellleeiSlll (arri\'ed at through induction). for example.
might be thaI employees are nlOSl likcly to be absent from
their jobs Ilohell they are dissalisfied and ha\e a lot of per-
sonal rrspoosibilities in addition 10 lheir "orf,; n:spollsibil·
ities. Ha\ ing made this general explanation from indue-
lion. lhe researcher mighl usc deduction to predict lhat
nurses Iloho are dissalisfled wilh their jobs and fla\e chil-
dren "ill ha\'e higher levels of absence from won. during :t
year than \\i11 nurses "00 are satisfied and do not h:t\e
children.
The Scientific Process
A
Ob.....auoo' of
org.non"on.1
b<:ha".,..
c •
• ""'""
<>:plo ,f~
.....-
"'1t"""" 1
636 APPENDIX· RESEARCH METHODS IN ORGANIZATIONAL BEHAVIOR
Once a researcher has made a prediction. the next step
io the scientific process is 1O test this prediction and deter-
mine the extenl to which it is Irue. VuificaTiol! is the
process by which researchers determine whelher their pre-
dictions arc accurate by making specific ohservations
about organi7.ational behavior, The researcher might ask
150 nurses employed by a large hospital to complete a
questionnaire that includes measures of job s<tlisfaction
and also asks them how many children they have. The
researcher might also ask tlie hospital to supply the num-
ber of days each nurse is absent for one year. These obser-
vations allow the researcher to verify whelher his or her
predictions arc accuratc. Verification completes the cycle
of the scientific process and the researcher is back <ll
pointA in Exhibit A.I.
Because human behavior in organiz.atiolls is complex
and determined by many factors. it is often tlie case that 31
least part of the predictions researchers make are not veri-
fk'd or found to be aL'Cur<ttc by observalions of actual orga·
niz<tlional bebavior. When this occurs. a new cycle of
induction and deduction begins. Researchers cycle through
the process again and try to come up with another general
explarl<ltion for what they observed. make predIctions from
Ihis explanation. <tnd then test these predictions through
verification.
Research in organizational behavior. as in all fields of
stlldy. is a cooperative lIndertaking. Several differenl
researchers might all be studying the saille phenomenon
and learning from each other's research. One researcher
who studies absenteeism. for example. might come up
with a new explanation for absenteeism. Based on Ihis
explanmion. another re>earcher might make cert'lin predic-
tions and test them in several organi7.ations. Some of these
predictions might be verified. and uthers mighl not be.
A third researcher Ihen might sed 10 modify the original
explanation to account for these new observations.
Researchers cooperate with each other or learn and
build from each other's research in several ways.
Rese<trchers who already know each other often share
ideas and research findings informally as well as ask for
each other's advice. At professional meetings and confer·
ences researchers present theIr work tu olher researchers
who are inlerested in the s<tme topic. And researchers wrile
up their ideas and findings and publish them in journals
and books for others to read,
Coming Up With General
Explanations: The Role
of Theory Building
A Theory ;s :I gener:ll explan:ltion of some pheoomenon,
Theories :Ire arrivcd al Ihrough inductIOn. When
researchers build theories. they arc moving from ]Xlint A 10
point B in the scicntific process shown in Exhibit A.1.
Theories summarize and organize what researchers have
already learned about some pheoomcnon as well as
provide direclion for future research. Thoories (:In never
be proved to '"be eonn:I" because there is always the ]XlS-
sibilily that a future study will nOi suppon the theory.
When research findings :Ire consistent with or support a
theory. confidence in the theory increases. Above all else.
theories should be useful. Theories should help us under-
stand organizational behavior as well as provide direction
for fUlllre rese;lrch in organizMional behavior.
Four basic criteria Ih,ll researchers e:ln use to deter·
mine how useful a theory is are correspondence, t'oher-
ence. parsimony. and pragmatism:' Com'.I'lwmlt?l/{"( is the
extenlto which a theory is congruent with wh:lt is aetu:llly
observed in organizations. One way to dClermine corre-
spondence is to sec whelher predil'lions derived from the
lhoory are verified or found 10 be accurate. COIU'fl:'IJ(,(, is
the extenlto which the logic in the lheory is straightfor-
ward and the Iht"Ory IS free of any logical contrudlctions,
PlIrIim{my is the exlem to whit'h a theory is free of con-
cepts or relationships that arc not necessary to provide a
good expl:ln'lIion. Suppose tliere are lWO theories of absen-
tt"Cism. one includes five concepts and Ihe other len. and
each docs an equally g(xJ<! job of explaining absenteeism.
The simpler theory is prefcrred because of its greater parsi-
mony, f'ragmarism is lhe extenlto which a lheory stimu-
lates further research. A minim;!1 condilion for pragmatism
is that Ihe theory is able to be tesled. No mailer how elo-
quent a theory is. if no onc is able to test it, the theory is
nOt I'ery useful at all.
Developing Specific Predictions:
Formulating Hypotheses
Once a theory is in place. researchers need to makc spe-
cific predictions based on the Iheory; in other words.
through deduction. move from point B to point C in
Exhibit A.l. Specific predictions in organizational
behavior are often stated in the form of hypotheses.
A liypOlhesis is a statemenl aboul the relationship
belween two or more variables.4 A l'lIr;ah!c is a dimension
along which some aspeCI of individuals. groups. or orga-
nizations differs or varies. Variables pcnaining to individu-
als include ;lge. gender, job s;ltisfaction.organizalional
t'ommitment. motivation. and job performance. Variables
pertaining to groups include group size. group norms,
and group cohesiveness. Variables penaining to organi-
zations include organizalional structure.technulogy. ,md
culture.
Some hypotheses simply state thai two or more vari-
ables arc related to each olher. 01her hypotheses swte how
variables affeci each uther-that is. they describe a causal
rel<ttionship between variables. Ultimately. researchers
always prefer to he able 10 state their hypothe>eS in causal
 APPENDIX· RESEARCH METHODS IN ORGANIZATIONAL BEHAVIOR
A Causal Relationship
tenns; cllu...al relatKmshil'S provide explanations for "'hl'
things happen. When h)"J)(xheses are 001 stated in causal
teons. the reason often is that the reM'areher is "cry Ull("l,"f-
tain about what causal relationship to exp«1 or knows that
she or he will not IK: able to conduct re!>Carch to test a
cau!!oal relationship.
When hypotheses do describe a cuus:ll relationship
between variables. the variables can IK: categorized into
four types; imlependelll variables. dependenl variables.
mcdi:.tor \'nriables. and moderalor wriables. An il/de-
!,I'mlnll I'Mil/blt' is a variable that causes another vari·
able 10 change when it varies or changes. The variable
that ctwnges in responsc to the independent v:.riable is
called the IfejJellr/elll I'l,r;able (sec Exhibit A.2).
A hypothesis might state. for example. that whell the
paymellt of production workers ChallgeS from lln hourly
basis to a piece-rate basis. levels of performance or
production im:rease. In this example. the mcthod of pay
is the independent \·ariable. and performance is the
dependellt variable.
Sometimes independent \'ariablcs do not directly
affect dependent variables but I"3ther operate through a
third ,·ariable. A lIlt'dillwr mril/blt' is a mechanism
through ""hkh an independent ,.mabie has an effect on a
dcpendent \'ariable (see Exhibit A.3). In oTEanizational
behavior. mediator "uiablcs often refer to something that
is hard to obserw directly. such as moti,·ation. In our pre-
vious example. a mediator of the relationship bet""cen
method of pay and performance mllY be motivation.
Method of pay impacts motivation such that cmplo)'CC$ arc
nK)re mOli\'aled to perfoon at a high level .... hen their pay is
E HIBIT A
Mediator and Moderator Variables
- - ~d..n.
vanabk
0<"".....".
~~""
631
ba.'iCd on their performance rather than on an hourly rolte.
When moti\'ation increases. performance illCrea~ (assum-
ing all else is equal).
A IIlQdtn/for IT/ril/blt is a \'ariable that. \\ hen it
changes. it also changes lhe nature of the relationship
between the independent and the dependent \"lIriables (see
Exhibit AJ). When the moderator \'ariable changes. for
example. il can tum strong posith'e relationships into
weaker positi\"t' relationships. into negati\"t' reblionshil'S, Of
into 00 relationship 31 all. Positi\·e. negati\e. aod no relation-
ship is depicted graphically in ExhiDit A.4. An exalllple of a
moderator of the relationship between method of IXlY and
performance i~ financial need. A hypothesis might Slate that
there is a strong, positiw relationship bct""een method of
pay and pcrfom131lCC foremployee:s who have high financial
needs llHd a weak positive relalion,hip for employees who
have low financial needs.
Testing Hypotheses:
Operationalizing Variables
On~ researehers have specific prediclions or hypotheses.
they thel1 ha\e 10 test them thl1)lJgh the process of verilica-
tion-th:lt is. they must move from point C to point A in
the scientific process illustrated in Exhibil A.I. In order to
test hypotheses. l"t'SCarchers need to find .....aylo to me:lSllre
the \.mable~ in the h)'l)Qthcses. Many of the \'ariables of
interest in organizational beha\'ior are abstT3C'l. Job SIItis-
f:lClion, molh'atioo. stress. culture. and organiZ:ltional
strnclure. for example, are abstracl terms that are some-
times hard to define. let alone measure. Ne\'cl1heless,
finding measures for these \'ariables is necessary in order
to leSt h)'pothe~s,
As a first step, n:searcl1ocni need to han' dear t'OflCCP-
lUll! definitions of the variables or be cenain about"" hat
exactly they are trying to measure.1llen they need to find
ways of fJl)('f/lt;OJlllli:illg, or measuring, these variables.
A specific measure of a variable is sometimes called an
operatiOIll/lllejill;/iOIl of the variable.
There arc two imponmtl criteria by which to judge
whether a good opcmt iUlwl deliniliun or measure of " I'llri·
able is being us<.x! in a rc.'iCarch sludy; reliability :l!\d validily.
Rl'lhl!Ji/i/y is the extent to which a measure of a I'ariable is
free of error. Sup!,usc yOIl llre weighing people bUI the
scale you are using is not reliable. E:K:h time you weigh
them their weight varies by three or four pollilds even
though their actU:l1 weight has oot changed. Your measure
of ""'eight lacks reliability because it COIIt:lins a significant
amount of error,
Measures of job satisfaclion, performance. and other
organizational beha\ior \'ariables need to be reliable in
order for researchers to be able to ha\e gootltestS of their
h)·pothc:scs. For some OT};anizaliooal bcha\ ior variables.
such as job sati~foction, reliable lIlCasures ha\e already
638 APPENDIX· RESEARCH METHODS IN ORGANIZATIONAL BEHAVIOR
EXHIBIT A.4
Relationships Between
Independent Variables
(IV) and Oependent
Variables (OV)
A ,,,oog
f'O'"i""
",I.t'on,hip
A..roog o<S."""
",I.tlon,h,p
been created in the past and used in many re'.Carch sludies.
These measures typically ask employees to answer a num-
ber of questions about Iheir current jobs. Sample ilems
from two of these measures are provided in Exhibit 3.9 in
Chapter 3. When using an existing meastJre of a variable,
researchers shotJld always determine how reliable or free
of error Ihe measure is in Iheir own particular study.
There are several ways 10 assess the reliability of a
meastJre. For example, if a questionnaire measure of job
smisfaction ,Ish employees to answer ten questions ,IOOtJt
their currenl job. each of the questions should be assessing
job satisfaction. One way 10 determine whelher the mea-
sure is reliable is to assess the extent to which each per-
son's answers to the questions are consistent with each
olher. If each question taps job salis!;tctiofl. but on some
qtJestions people indicale that they arc very smislied and
on others thm they are very dissmisfied, thellthere is a lot
of error in the meastJre and it is not reliable. This technique
assesses ill/emal consislellcy relillbilily.
Another way of delermi fling rei iabi Iily is assessi ng the
extent to which repeated meastJres of a variable agree with
each othcr (assuming that the v<lriable itself has not
changed). This lechnique assesses leH-rele'w relhlhility.
For cxample, the height of adults should 1J(1l change fmm
day to day. and a way to assess Ihe reliability ofa mcastJre
of height is to use the measure to determine people's height
on seveml dillerent days and assess the exlent to which the
measures of height are the same fmm day 10 day.
'11e second criterion by which to jtJdge an operational
definilion or measure is validity. I/(/Iillily is the extenl to
which all operational deflllition of a variable is actually
A wu' po''''''''
",13"00"';1' No ..I."on",ip
Awuk
o<S""'"
'~.'K>n,hlp
measuring the variable in question. Given thai many of the
variables in organiz<ltional behavior rcsearch are abstract.
it is essential that meastJres of variables are valid or thm the
measures are actually measuring whalthc researcher wants
to measure. A measure of job satisfaction. for example. is
not valid if it is simply measuring the extent to which peo-
ple tend to have a positive otJtlook on life in general and
not how they feel aoouttheir currenl jobs. ReliabililY is a
lK"Cessary but not suflicielll condition for validity. In order
for a measure to be valid. at a minimum the measure has to
be free of error. However. the measure also has to be tap-
ping inlo the righl variable.
Determining the validity of measures in organiza-
tional hchavior is an ongoing and complicated process.
Researchers cannot be sure from one research sltJdy lhat
their measures are valid. Only through repe,lled use
of measures can researchers be confidenl inlhe validity of
their measures. Moreover, there arc multiple indicators
of validity. One indicator is the extcllIto which experts in
,Ill area think thai the measure is adequately gauging the
variable ill question. Anmher indicator is the extent 10
which the measure is related to measurl"S of other variables
in expected ways and is different from other measures of
differenl vari.tbles. Only Ihrough using a measure many
times and relying on mulliplc indicators of validity can
researchers he confide lit in the val idity of thei r measures.
Research Designs
The design of a specific research sltJdy is geared toward
whalthe researcher wishes to accomplish from the study.
 APPENDIX' RESEARCH METHODS IN ORGANIZATIONAL BEHAVIOR
Different research designs or ways of conducting research
are well suited to differem siages in the research process,
Here. we discuss Ihree types uf research designs: qualitative
researl:h. I:russ-sectional research. and experimental
rescarch. 3 Qualitative research can help researchcrs move
from point A to B ,l11d from poim B to C in the scientific
process (see Exhibit A.I). Cruss-sedional and experimental
researl:h can help researchers mUlle fmm point B to C and
from poim C to A. Each research design can be helpful in
other ways as well. Cross-sectional research. for exantple.
sometimes helps researchers move from point A 10 poinl B.
Qualitative Research
One hallmark of qualitative research i, the cnreful
ob)'/,nwiOI/ of actuallxhavior in organizations. Researchers
watch what members of an organization do and listen to
what they say in the hopes of getting an accurate picture uf
whHlnaturally ()(.'Curs in an organization. Researchers keep
careful records of what they have observed. Qualitative
research can provide researchers with a rich description of
organizational life and the many factors that affect it.
There arc two basic ways of doing qualitHlive
research: panicipant ObServHlion and direct observation. In
I'{/rlicipl/III ubsamrioll. the researcher aclually becomes a
member of the organization that he or she is observing. and
often other members of the organizat ion do not realize that
the newest member of the depanillem or team is conduct-
IIlg researeh. Participant observation gives the researcher
the opportunity to experience first hand what it is like to be
a member of thc orgrmization. and it hclps thc researcher
gain the confidence and trust of other members of the orga-
nization. In dirar obsermrirm. the researcher enters an
organization as an observer and records what he or she
secs (often as it occurs). Direct observation can be less
time-collsuming than participant observation.
Because qualitative rescarch enlails detailed observa-
tions. it is often conduded in one or a feworganiz.ations.
A key question that arises from this kind of research design
perwins to the gCIl/'rtI{blbilily of the findings-the eXtent
to which what researchers discuver in one organizalion is
true of other organ izatiolls.
Cross-Sectional Research
When using a cross-se<:tional design. researchers develop
and test spectfic hypotheses aboul relationships belween
variables. To do so. they must dewlop or use existing mea-
sures of variables that arc both reliablc and valid,
Questionnaires and interviews are often used to gather
measures of variables. Although qualitative designs are well
suited for making observations and coming up with gencr,.lI
explanations for them. cross-sectional designs arc wcll
suited for testing specific hypotheses because the researcher
tS actually collecting measures of variables. However,
researchers GUinot test hypotheses that state causal relation-
ships between variables by using cross-sectional designs
639
because they have no control over the mallY other factors
that might impact a dependent variable in addition to the
independent variable. Hence. with cruss-se<:tional designs.
researchers can teM only hypotheses that state that cenain
variable.s arc related to each other.
Experimental Research
The hallmark of experimental resean:h designs is the
controlled IIIlmipU{llIiol1. or changing. of an independent
variable to determine what effect it has on a dependent
variable. There are two types of experimental research
designs: true experimellls and quasi-experiments.
True /.'X/l('rillleIllS arc the only kind of research design
that allows researchers to test causal hypotheses and draw
conclusions aboul causal rd,ltionships. True experiments
allow researchers to do this by controlling foreverything else
thm might affect a dependent variable besides changes in the
independent variable. Two fe,l1ures of true experiments
provide this control; a control group and r.mdum assignment
of panieip.mts to the experimental and the contml groups.
Suppose a rcscarcher is interested in thc relationship
betWeen Illethod of p,ly and perfonnance and decides to do
an experiment. The researcher hypothesizes that Swilching
from an hourly pay plan to a piece-rate pay plan results in
an increase in performance. He or she takes a group of
employees who are currently being paid on an hourly rate
and switches them to a piece-r.tte plan and measures their
performance before and after the change. Performance
does increase after the change. Can the researcher con-
clude that the change tn plly plan caused the change in per-
fonnance'! No. and the reason is that the researl:her did not
control for other things-in addition to the change in pay
plan~that might have been resJXlnsible for a change in
performance. such as the fact that the employees have
gained more job experience and thus their performance
would have increased regardless of the change in pay plan.
By having a tUlllrol group-a group of participants
for whom the researcher does not change Ihe independent
variable (in this case. the pay plall)-the researcher is able
to control for, or take into account. other things besides the
pay plan th~ltmight affect performance because the control
group also will be eXJXlsed to these things. By randomly
assigning participants to the experimemal and comrol
groups. the researcher guarantees that these groups start
out at an equivalent JXlsition. Because the experimental
and cunlrol groups start out in equivalent JXlsitions
(because of random assignment). the O/l/Y diffcrence
between the groups is the change in pay plan. Thus. if the
performance level of the control group stays the same bUI
rises for Ihe experimental group. the researcher can confi-
dently conelude that the change in pay plan caused the
change in performance. Conversely. if the performance
levels of both groups stay the same or increase. then the
change in pay plan is not having the hypothesized effec!.
For pr.lctical reasons it is very difficult to conduct In.le
experiments in rcal organizations. Manipulating variables
640 APPENDIX' RESEARCH METHODS IN ORGANIZATIONAL BEHAVIOR
like !Xly and randomly 3-'>Signing empkl)"ccs to e.\perimental
and control groups are orten V('T}' disrupli"e to the ongoing
acth ities of an organization. and few managers are willing
to tolerate tbeSt: disnJplions. Partially for thb rt'ason. true
experiments are often C1)OdUCIed in laboratory 'iCllings aI
unl\crsities using college students as participants rather
th:Jn employccs. 11le logic behind this prac1ke is that if a
researcher is studying some fundamental a~pcct of human
fuoctioning lile motl\-ation. she or he should be able to
obsc"'e its oper.ltion in a laboratory .... ith student~ or in an
oq;anization .... ilh employees. Although this assumplion
males loCnse. it might also be the case that conditions in
organilalion~ are so different from conditions in the lab (or
that some differences between employees and college stu-
dentS are 1IO fundlmental) that results from the lab do rtOI.
generalize to Ihe field or 10 real organil.atiollS. III Olhl."r
words. what mighl occur in the laboralory mighl nOI occur
in an org:mizalion and vice versa. To be on Ihe Slife side.
rc,cllrchcrs llccll to supplemcnt laboratory rescarch with
field resc11rch whcncver possible.
Similar to 11 true cxpcrimcill. qllll.li·t.lptrilllf'll/s 11lso
il1l'0lvc lhc manipulmion of an inllcpelldcnt .'ariable. The
lll:ljor llifferencc is thaI in a qUllsi~xpcrirncnl II re...carcher
docs not ha\'c a control group or does nul randomly a~sign
participants to experimental and control groups. Quasi-
exp..'1iments are often a practical nocessity \\ hen researchers
want to conduct experiments in real organilations. Forexam-
ple. a researcher might find an Oll;anization that currently
opel"lltcs si1 facln'S that employ a hundred employees each.
11le organization wants to experiment \\ ith changing from an
houri) P3) plan 10 a piece-rate pay plan. Management
decides to make the change in three of the factories and leave
!he od'Icr three (to be used as a control group) on the existin£.
hourly plan. In thisquasi-experiment.1hcre is a oorurol group
oot no r.l/ldoln assigllffiC'ru Ix:cause of the practical probIcm
thaI all cmployees in a single factory need to be worting
under the same !Xl)' s)·stem.
Because of the lack of a control group or l"llndoJll
assignment. re.'learchers cannot test caus:,1 hypolheses or
:Irrh'c lit c:lusal conclusions from quasi.cxpcrimcnls.
Ncvertheless. quasi-experiments can proville vahlable
insights imo org11niz:llional behavior.
Tradeoffs in the Choice of Research Designs
By lhis timc. it shuuld be clear to you Ihm multiple trade-
offs affcct lhe choice of a rcsc:lrch dc~ign. Qualilalive
designs have the ad\'amage of providing researchers with a
rich acCQOnt of the many factors thaI innucnce organizational
behavior. True experiments ha\e the 3(h"al1lage of allo\\ ing
researchers to tCSt causal rt'latiOflships. Rc.'>Carcbers ,anrtOl.
come 10 causal ,onclusions fmm qualil:lll\'C designs. anll
they mighl be neglecting important or,gani7.alional behav-
ior \-ariabk'S in true experiments. No one design is prt'fer-
able: O\'er al1Olher. and each one is ..... ell suited tu differt'nl
Slages in the scientific proct'ss. M(lIT(l\"cr. research on any
topic in organizational beha\ior benefits from research
using all three t)·pes of designs.
Ethical Considerations
in Organizational
Behavior Research
Rcsc:lrchers h11Ve ethical oblig31ions to rellCarch partici-
pams. There is disagreement about lhc exact nature of
lhese obligmions. but here are some guidelincs lhat many
researchers woulll agree with: 6
I. Thc rcse11rchcr should obtain the infonned consent of
rc.'>Carch p:ll1iciparus. When consent is ;/I[OI'JlII'<I. p.1.r-
ti<:ip;mts know thatlhey are Illking part in a rc.'>Carch
stully and do so voluntarily. Obtaining informed con-
sent bccumes troublesome in a !Xlrticipam observatiun
design because an irucgrnl feature of this design is that
members uf an Ofllanizalion do 1101 re:llizc thut
research is actually being conducted.
2. Panici!Xlnts should 1101 be h:Jnned in an) way b) lhe
research being conducted.
3. Participants' rights to privac)· should be respected.
.t. Participants in a control groop should not be denied
treatmentth:Jl the researcher kno.....s would benefit
!hem. This guideline is IIIOSI cle:arly rclc:\-ant to med-
icalltSCatCh. HO\\·e\·er. there ~ in~ \\hen it
might be rcle\'3nt to organizational behavior research.
wdl as the case \\ hen a researcher knoW's that a cer-
tain type oftl"llining bencfits employccs yet gi\'cs only
r.ome of the employees the training (that is. those in
the cxperimental group).
5. P:lnicip.1nts should be debriefed. Once rcsearelJcrs
h11VC <.'Ol1lpletoo a stully. they should let participallls
know whllt the study wa~ aboul. and they shoulll be
available 10 answer questions.
6. D~lUI should be lreated confillentially.
Summary
Only through conducting research on organil11tional
behavior can progress be made in understanlling 00\\ indi-
\ iduals anll groups respond to and act in org:anizatiolls and
how org:ani1.3tions rt'spond to their environments.
References
CHAPTER 1
1. ",ww.Amazon.com, "Abou! Arnal.Oo.com'"1006.
2. Ibid.
3. H. F,,)"ol. 11/(111.1I";(11 wl/I Gmend Admi"iSlmliUIl (ulll<!<m:
Pillnan, 1949): P. F. Druckr. Mi/1wgt>melll Ttub,
R"v)(mJ'ibilirieJ', Pr(l{'liCf',~ (New York: Harpe, and Row.
1974).
4. www.fly",-,ulhwcst.colll.2006.
5. www.ddir.colH.2006.
6. hIt p: II ""at lIe limes.nw sou It·c .COrru11 t mJI"bi1uaric 'iJ
2001211576_dicks23m,hlml
7. H. M inlzbiorg. Till' Nil/lire of Mm'"l:<'rial \\in* (N('w 'I'm',;.:
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8. R. L. K"ll. "Skills of an Eff~'<,ti,·c Administra1or," Han'anl
HII~'illess Nt'..;e"'. ScptCll1ocr-O<;tobcr (1974): 90--102,
9. T. Donaldson. "Taking Ethics Scriously-A Mission Now
More Possible." Academy of MWIIIgelllClIl R('\';<'I'- 28
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(Septemlx:r 2002): 40-42.
45. Ibid.
46. I. Rowley, "Cm Cmon Keep Priming Money'!" BllSilWH
\\hk Ollli,,~ (Scpt<:mhcr 5, 20)5), www.bu-,ine"w('e~,<:om,
47. M. A. llurke,A.I'. Brief. and J. M. George, "The Role of
Ncgativc AfTc<:tivity in Undcp;tanding Relationships
!letween Sclf-Repons of Stressors and Strains: A Comment
on th<: Appl i<:d P,'ydlology Lit"m!ure:' JOlln",1 ofA,'plied
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48. Barri<:~ and Mount, ''The Big Fi,'e PCn;(mality Di111,'nsi"m
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J. M. Gcorj:!e. "Time StnlClUre and Purpose as a Mediator
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50. ,\1. Snyder. "Sclf-Monitoring of Expressive llchavior:'
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53. D. c.Ganstcr,J. Schauhme<:k. W. E. Simc,and B. T
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54. R. A. Bamn. "Pcrsonality "nd Organizational Contlid:
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l'syriw/ogiJI40 (1985): 812-25: D. C. /\kCleliand.
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Amuia/!! I's.,-dllliogisl 3J (1978): 20 I-I O.
56. D. C. M,Clelland. "A<:hil'\,cnt<:nt and Entrcpre't<:un,hip;
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57. L Goldlx:rg. "Contiocntal Exccuti.,-e Is Still" Pilot:' HlIJlS'loll
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58. L. Goldbcr£, "Continent,tl Executi.,-e Is Still a PiIOl."
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1973).
60. R. J. House, W. D. Spanglcr. and J. Woy<:kc. "Personality
and Charisma in the U.S. Prcsidelt<:y: A PsydlOlo£ical
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6 I. M. J. Stahl. "A<:hincmcl1l. Power, and Managcrial
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62. Ibid,
63. D. C. McClelland and D. H. Burnham, "I'owcr Is the Great
Moti\';'tor:' Homml Hl/sitl<'JJ Review 54 (1976): 100-10,
64. D. S. Onl.'S and C. Visw"S\-aran, "Job·Spc<:ifi<: Appli"a"t
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65. L. M.IIOI'gh. N. K. Eaton. M. D. Dunnette. J. D. Kamp.
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!'syl'l",lo!!:Y 75 (1990): 581 ~95.
66. D. Lubi",~i and R, V. Dawis, "Aptitudes, S~ills, and
Proti<;ien"';c,:· In M. D. Dunnelle and L. 1\1. Hough (F..ds,).
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61. Ibid,
68. J. C. NIlnnally. P~·.W!lOIll"lriC Tlu'or\'. 2nd cd. (New Yorl<.:
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69. K. R. Murphy. B. E. Cronin, and A, 1', Tam. "Contro\,ersy
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88(4 2003): 660---7 I
70. Ibid,
71. J. F Salgado, N. Andcrson, S. MoS(·o",. C. Bcnua. F. d,'
Fruyt. and J, 1'. RoliarKl. "A Meta-Analytic Study of
Gcncral Mcntal Ahilily Validity for Diffcrent On'upations
in tlte European COllllllunity:' JOIml111 ofAI'I'I!,.d
p.,)chology 88(5 20m): 1068-81: J. F. Salgado.
N. Anderson, S, Mos<:oso. C. !lertu;!. and F. de Fruyt.
"Intemational Validity G,'neralizalion of GMA and
Cogniti''C Abilities: A Europe:ln Community Mew-
Analy,is:' Pa\Ulllld /'.I),,.hology 56 (20m): 573----605.
12. J. A. LePine, "Te'tm Ad,1ptation ;'nd Postch;'nge
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APllli",1 p,'lyclwl"SY 88( I 2003); 27-.W.
73. M. D. D,Jl1nclle. "Aplitudes. Abil ities. and S~i lis:' In M. D.
Dunneue (Ed.), Ha",IIJ(Jot of lmli/Jui,,1 ami Ory;{lIIi~,,'iOl"11
!'J.n'bolo!!:y (Ch ieago: Rand M<:Nally. 1976). 473-520.
74. E. A. Fleishm,m, ''The Dcs.-riptioll and Predi,'tion of
Pereep!ual·Motor S~ ill Learning:' In R. Glaser (Ed ,).
TmillillK R,'setln11 01111 Edllea/ion (Pitl>burgh,I'A:
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Fleishman. "On the Rd.ttion Between Abilities.leaming,
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75. H, M. Chipuer. M. RO"ine. and R. Plomin. "USREL
Modeling: Genetic and Environmental Influenccs on IQ
Re"isilcd:'/lildligence 14 (1990): 11-29: N. L. Pclkrscn,
R. Plomin, J. R. Ne"dmade. and G. E. ~kClcam.
"A QumlliWli"e Genelic Analysis of Cogniti"e Abilities
During the Second Hal f of lhe Lifc Span:' /';~"('h{JluSiflll
SciellCl' 3 (I992): 346-53.
76. "Think About h: Your Br.linpower i\.1ay Be Va'lly Undcru><.xl
on lhe Job:' 11,111 Siren JOimlol, May II. 1997, p. A1.
77. R. Merle, '"Technolog)' Worke'" Sec No Sizzle in Whal
They Do:' l\i,1I Street JOImml,April26, 2000. p, n.
78. "Drug T<'sl, K<>cp Paying Off, But Continued Gain' Arc
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79. L. i\.kGinley,·' Timess' Exam' Help 10 Measure Wmkn
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80. D. Goleman, EIIIOliO/u,lllIIellig('ll<'e (New York
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17 (1993): 433-42: J. D. Mal'er and P. Salo\'ey. "What Is
Enlolionallntdligern."eT' In P. Salowy 'md D. Sluyler
(Eds.). EmOliOlwl fJi.'\'dol'lIIellllllld Elllo/;mwi
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Ba,ic Books. 1997) pp. 3-34: P. Salo\'e)" and
J. D, M'ljW, "Emolionalintelligcnel-:'llllllgllllllioll,
C0811;1;01l. o/l(ll'ersollulil)' 9 ( 1989---1990):
185-211,
81. D. Goleman. EIIlOliOil/fl/llle/ligelwe (New York: Bantam
Books, 199..): J. D. Mayer and P, Salow)", "l1lc Inlelli),'e!ll'C
of EmOlional Intell i),'eTl("c:' IlIIell;gelll:e 17 (1993): 433-42:
J. D. May.-r and P. Salow)", "Whalls EmotionallnlclligenceT
In 1'. Salo\'ey and D. Sluy'er (F..d\.). /;.1"uti(JI1(11 /),,\'<'Io/,illelll
wul EnrOliollal fllidlixence: IlIIplica!iollJ for EdllWlioli
(New York: Ba,ic Books. 1997)1'1" 3-34: P. Salovcy
and J. D. Mayer, "Emoliomtl Intelligcll<'C:' l"II(~;mll;()n.
C0811;1;01l. omll'enUIl(llil)' 9 ( 19~9-1 <)')0): 1"'5-2 I I.
82. A, Farnham. "Are You Smart Enough to Keep Yom Job?:'
l'onunc. January 15,1996, PI' 34--4...: M. E. 1'. Seligman.
{Pam",1 Oll/illlism (New Yorl;: A, A. Knopf. 1990).
83. K. Law, C. Wong. and L Song, "The Con,tnK't and
Criterion Validity of Emot ional Intelligence and Its
Potential Ulility for .\lanagement Studie"" JOllmal of
Applied PncllOlog\' 89 (2004): ..83-496.
84. '"L<'ading by F<>cl:' Hamml BII~ilwn R,'\';''''' ~2(l)
(j,mumy 2004): 27-37.
85. J, i\.1. G<'ol),'<.>. "E",,,tion, and Lea<k'rship: The R"le of
Emolion,,1 Imelligencc;' fill/111m Re/(I/io/ls, 2COO. 5~.
1027-1055; R, S, Rubin, D. C. Munz, and W, H. 13"",,,,,-,,.
"Leading From \\11hin: l1lc Elfccl' of EnlOlion Rccognilion
and Personal ily on Tmn,fonnaliunaJ uadc.m;p &·!lavio..."
AWl/em" of Mmulgt'l/l<1l1/ JOIlnllll"ll(5 2lXl5): 845-858.
86. J. Zhou and J, "·1 Gcors<', "A"'akcning Empluyee
Crealivity: The Role of Leader EnlQlion:d Ime)l;gcnce:'
Tire u'tuler"I,ip Qllarterll' 14 (2003): 545---68.
87. A. Farnham. "Are You Smart EJI{)ugh to Keep Y(){'r Job?'"
88. Ibid,
89. Ibid
90. A. Jun),'. "Leading by Fccl: Seek Fmuk Fccdba<.'k:· iliside
rile Mimi of the {Pmler (January 20(4): 31
91. "Christine A. Poon Appoinlcd A Vicc Chairman of Johnson
& John'on." JOhllSOIl & Jolmsoll (March 20. 20(6).
w,,"w.jnj.eom,
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92. M. Auslri:1 Fanner. "The Powcr Who Leads a Billion·Doliar
Bus;"""." /);wn;ly 1111"- Magl/~;l1e Cmw Siore. Jllly 2003.
www.di\'ersityine.eom.
93 Ibid.
94. Ibid
95 Ibid.
96, W. Arthur, Jr.. W. BeUTlCII, Jr,. P, S. Edens, and S. T. 13e11.
"Effecti\'encss of Train ing in Organizations; A Meta-
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97, J. Pfelfcr, "A Blueprint for Success:' 1I""il1e"" 2,0 (April
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98, L. Conley, "CollUral Phenol1>cnon:' I'Ilsl COJllI>lm,' (April
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99, "China's Ix:ople problem:' 7111' EcollolII;sl (April 16.2005):
53-54.
CHAPTER 3
I. J. Guyon. '11lc Soul of a Mon~)'making Mal'hi,>c:' Fortulle
(Cklober 3. 20(5): 113-20: "Valero's Bill Greehey To !'<xus
On Role A, Chairman:' l'el..,.o EII<''/:.'' COf{IOf</r'Oll
(Cklober 31.2(05). http://www.\.alero.comlNR/cxcre>J
AD 148F57-B714-4C0 ]-A20S-8812D-1A75D9.hlm,
2 R Barker. "Valero', Swect S[Xll:- 1I11}'i"e,,}' \\led Onlille
(O<.'lober 24, 2(05), www.business,,"eek.<:orn:··Valero
E""rsy Cooperation Rep<ms Fourth Quaner and Full Year
2005 £amin),'s:' If""'" En,.,X." Coporwioll (January 31.
2(()6). http://wwlV.valero.com/Ne ws Ro<)m/N ews +Releases!
NR_20060] ~ l.hlm: "Valero Receives s..'\'eral Top Honors:'
\ illem Ellerg) CV1l'0f</r;lII! (De':ember 30. 20(5).
hnp:/lwww,"alero.eom/NewsRoom/News+ReleaSi::sI
NR_200512:"10.htm.
3, J. Guyon, "The Soul of" Moneymaking Machine:' FOrlfme
(October 3, 2005): 113-20.
4. Ibid.
5 Ibid.
6. Ibid.
7, Ibid.
S, Ibid.
9, "Fortune 100 Best Companie., to Work fnr: Full Li,t:'
CNN Monc)".eom (Milrch 23. 20(6), hllp:/1 money.enn,eoml
magaz;nes!fortune!be.stmmpani<"/fuIU i."); ""Abow lhe
2005 Speakers:' GreOl Pillce 10 Work,Cul/ferellce (March
22, 2006). hllp:/lww"",grea1pl:K:<.'Iowmk-",,mferen~e .eoml
cOllfcrenecf,peakers.php'!id=86: "Valero Jumps to No.3 on
FortUl>C's List of 'Am~ri{'a" 100 BeS! Companies 10 Work
For' in America:' Valera El/erg.l· COIporlllion (J:'nuary 9.
2006), hl1p:llwww.\.al~....e..m IN~wsRo"m/Ncws+Relea>c.sI
NR_20060 IOll.hun: "Bill Gn:chey, ChaimHln of the
Board:' liJll'/l'J EIIl'rgy Corl}<Jf<lli/JI1 (March 22, 2(()6),
http://www, \'Jlero.eomINcwsRooml E.~ec\lti\"e+Team/.
10, "Fortune 100 Be'l Companie, 10 Work for: Valero Energy:'
CNN MOI/<'\",colII (March 23. 20(6). hnp:l/money.cnn
.<:mn/nlag,aineslfof1unelbc'lcompanies!snapshOl",l
1521.ht"'1.
11. W. R. Nom,A, P. Brief.J. M. Alieh. aud E. M. Doherty,
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O,/:wli;JI1;OIlUI !kill/viol. vol. 10 (Gn.."Cnwich. (T: JAI !'n:.Sl;.
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13. Ibid.
14. Nord. Brief. Atieh. aod Doheny, "Work Valocs and Ihe
Conduct of Oq:;anizational Behavior"; A. MaIka and J, A.
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27. S. N. Mehla. "'EN RON 'Employees Are th(' Best Line of
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29. W:Hennann. "On the Uscs of Psychological Theory and
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30. Ibid,
31. Ibid.
32. "SarbaJles-Oxle)' Aet of 2002:' CPE Olllill" (February 7,
20(4). www.cpconline,comJcpcnew/S:lroX.aSp.
33. Ibid,
34. Ibid,
35. Waterma:IO, "On the USi.·s of P,ydlOlo)!ical Theory ,U1<)
Research in the Process of Ethical Inljuiry": Schmitt.
"Companies Adu Ethics Tmining:'
36. "N"lional Whi"lleblower Cenler: About the Center"'
(February 9, 2()l).\), w,,",w.whi,t \cblowers ,org/html!
aoouUhe_whistleblow.htm: S 1\,1, Kohn.··National
Whi,tlcblower Center; Corpomte Whi,llcblowers"
(February 9. 2()l).\). www.whi~1 leblowers .org/html!
COrponol e_whist Ieblo,,"e rs .ht rn.
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38. I). Watson ano A. Td Iegen. '~rowanl a Consensual Strueture
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39. D. Watson. Mood (IIld Tl.'t1Il'emmem (New York: Guilford
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40. Ibid
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JOIml/l1 ofApplicd Ps,'cllO/OK" 67 (1982): 806-17.
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126. A. Cortese. "Bored to Dc"th m Work-Literally," Sus;'less
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127. N. J. Allen and J, P, Meyer. "Alleeti"e. Comim",nce, and
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Hdul\'ior 4<) (19%), 252-76.
128. Ibid.
129. S. Alexander, "Life's Just a Bowl of Cherry Garcia for
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130. Allen and Meyer, "Aff~"'ti"e, COlllinuan~'C, and Normati"e
Commitment to lhe Organiz"tiOll": J. E. Mathieu and
D. M. Zajae."A Re"iew and "-kta-Analysis of the
Amccede1l1s. Correlates. and Conscquences of
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131. R, Cropanlano, D. E. Rupp, and Z. S. Byrne'. "The
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Job P~rfom1an",', and OrganiGalional Citizenship
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I60----69.
132. Allen "nd Meyer. "Affective. Continuance. and Normati",
Cornmitmcllt to the Organization": Mathieu ",ld Zajae."A
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I'syclwlogiCilI R"I/I'li" 108 (1990): 171-94.
LB. Allen "nd Meyer. "Affe<:tive. Continmmce, "nd Normative
Commitment to the Organilalion: An E~amin:"ion of
Con,truet Validity": J, E. Mathieu and D. M. Zajac.
"A Review and Meta-Analysis oflhe Antecedent'.
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CHAPTER 4
"Ho!CIIO Pay 58 Million in Settlement." March n, 2()()}.
1/011,'/011 Chrollicl<,. !'>larch 22. 2()()}. p. 3A.
2 M. France and T. Small. '1lJc Ugly Talk on the Texaco
T:,pe:' Busillcss I\Tek, (No"ember 18. 1996): 58: J. S.
Luhlin, "Te~aeo Case Causes a Stir in BoardnKlms," 1I~,1I
SlfUI JOImw/, November 22. 1996. pp, B I . B6: T. Smart.
'"Tesaco, Lessons from a Crisi.s-In-l'rogre"," RU.';II<'lI
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3. ··Ford. Sculing Bias Ca.",. Will Hir" More Women,
M inotilies:' flOUSIOlI CIi",,,icll1. r-.::bn'ary 19. 2000, p. 8C.
4. C. Salter."A Reformer Who Meam Busin"ss:' FlI.Il
COJllpo".\' (AprillOOJ): 102-11,
5. Ibid.: A. ZirlUn,'m1:IIl, "Wal-Mart Appeal> Bia,-Suit
Ruling:' llil/l S,tUI JOImwl.Augusl 8, 2(()5: 135:
C. H. Deuts,·h. "Chil'f of Unit Fib L!wsuit An'using G, E.
of Raci:ll Bias:' '1l1e Ne... l'(n'k '/1IlIl'S, May 18.2005: C3.
6, C. Daniels. "GM Tric..J: How to L{)\'~ a Bad Report Card,"
FOr/wle(July 10.2000): 189.
7. A. Zimmerman, "Wal-Man Appeals Bias-Suit Ruling:'
WII/I Slreel JOIln/"I. August 8. 2005: B5: C. H. DcUISCh.
''ChiC[ of Unit Fill's Lawsuit A"ellsing G.E. of Ra,'ial
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8. J. C. Peoplcs, "Diversity Pn,,'lic'es That Work: The
American Worker Speaks." The N:ttional Urban League
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9 Ibid.: A. Fisher. '"How You Can Do Beller On Diversity:'
FO"'l1Ic (No"~mbcr 15,20(4): 60.
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I I. J. C. Peoples. "Diversity PraClices Th'll Work: The
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w,,"w.nul ,org: A. Fisher, "How You Call Do Beller On
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14. Ibid.
15. 5, T. Fiske and S. E. Taylor, So,..ial Cognilion (Reading,
MA: Addison-Wesley, 1984),
16. J. S. Bruner. "Going Bcyond the Information Given:'ln
H. Grober. G. Terrell. ami ~l. WenheinlCr (Eds.).
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18. A. H. fisher. "When Will Women Get to the Top?"
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19. D. J. Schl1ei<1er. "Social Cogn it ion." Antrlml RI'\';,'lI' of
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20. Fi,ke and T"ylor. Social Cognilion.
21. K. D, Eisbaeh. "How 10 Pitch a Briliianlldca:·II<ln·tml
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22. "Securily Ordeal for Qmltas Boss." CNN.com (January 10,
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2J. Ibid.
14. N. AI,t<,<, "When Gmy ~lead, Roll. Is Age Bias "t Work'>"'
nil' N,',," York 11111eJ (J,muary 30, 2005): BUJ.
15. K. King. "If Looks Could Kill:' Uusine" 2.0 (Decemocr
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Or Ibrassing Workers'!"" /Jusiness l~('ek J (December
2(01): 84: A. Salkewr, '"The INS Hurt, lJncle S"m Most of
t\ II: lJy Det"ining Hundreds of the Foreign ~ luslim< It
Lured illio \\'c-st Coast Officc", the Agency SU{'ceedcrJ Only
H:lnning U.S. Security:' tJus;Iless Week Onli,l<' (J:'nuary 23.
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26. D. C.l.kClell"nd and J. W. Atkinson. "The Projective
EXpt"C"ion of Needs: The EfJen of DifJl'(enl Intensilies of
lhe Ilunger Drive on PeKeplion:' Jounlol of I's:,c1lOlogy 25
(l9~8): 205~22.
27. Ibid.
28. Ibid.
29. Ib;<1.
30. Ibid.
31. Ib;<1.
32. M. Freu<1c'nlll.'im, "Help Wanted: Older Workers Pleasr
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33. Ibid.
34. L. Corghan. "Don 'I Lei 'Ram~ml' Age Bias Bring You
Do"'n in Job Hung:' The HmmrJl! Clrrrmic/1' (Augu'l 29.
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35. C. J. Thoresen, S, A. Kapl"n. A. I'. Bar,ky, and K. de
Chermont, "The AlTeetive lJndcrpinni ngs of Job Percepl;on
and Allitudes: A Mct,,-Al1alylic' Review "nd Il1legmtion:'
PJI'cllOloglrol Bulle/III 129 (6): 914-45.
36. J. 1.1, George and A, 1'.Urid, "Fl'Cling G'KJd-Doing G'KJd: A
Conceptual Analysis of lhe ~ lood at Wo;\(·Organizalional
Sponla""ilY Rdali'lI1,hip:' Ps.,chologimIHlIl/nill 112
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a, a Fac1<lr in Organizational Beh"vi",:'ln 13, M. Sl"w and
L. L. Cummings (Eds ,). Reseor<:/i iJi OrgIlJli~II;O"ol
lJe/un'ior 13 (G"-x'n,,,ich, CT: JAI PTe,,_ 1991). 1~54.
37. J. Merritl. "Wal1led: A Campus That Looks Like America:'
lJ".lill1'.H lied 11 (M"f<"h 2002): 56---58.
38. R, Leery and R. M. Kow"lski. "Impression Managetnent A
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I'SI"clrologicolliulinill 107 (1990): ~7.
39. Ibid,
40. C, N. Alexamler Jr. and G, W. Knight. "Situaled ldentit;cs
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(1'171): 65--82: Fiske an<1 T"y10r. Social Cognition: K. J.
Gergen and M. G. Taylor, "Social Expcetanc'y and
S<:1f~Presel1lation in a SWtus Hierarchy:' JOllrll1l1 of
Elf/erimnlIlII Soc;ol P,<;\'r-!IO!<)f,'" 5 (1969): 79-92.
4 I. C. Stephen,on. "Bu,i ness !:ti'l\IClle" ~ lore Than Min<1ing
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42. Leery and Kowalski. "Impression Management"
43. Fi~kc "ml T"ylor. Social Cogn ilion.
44. Ibid,: R, M. K"nter, Men 'lIld Women of lhe Corpomtion
(New York: Ba,ic Hooks. 1977).
45. P. R, Saekell, C. M. Hardison. and M. J. Cullen. "On
Interpreling SIN<-Xlty!'" Th",at a, Ac,-~,untj ng for Afric'an
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Sackeu, C. M, Hardison, and M. J. Cullen, "On the Value of
Correcting M i'characterizalion' of Slereolype Th"'"t
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46. C. M. SK'Clc and J, A. t\mns"n, "St<-",olype Th"'"t D"e,
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P.,),'hologiu 59 (1 l. (January 2004): 47-48; J. Amnson.
~I. Luslina, C, Good, K. Keough. C. M. Sleele, and
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;lnd Sullkiel1l Faclors in Stereolype Thre"t:' JOllrJIal of
Erperimnl/ol St)('ial P.,)·l'!lOlogy 35 (1999): 29-46; Sac'kdl,
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as Accounling for African AlTl<'ric'an- While Diffen.·occs on
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47. S;LCkell.ll"tdison. and Cullen. "On Interpreting Sterolype
Threat "s Accounting for African AnK"ril'''n-Whi Ie
Differences on Cogniti"e Te,;IS": Sackett.I'brdison. and
Cullen. "On lhe V"lue of Correct ing M isd'"rac'lerilatious
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48. Sleele and Aronson, "Slereoly[X' Threat Docs NOI
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Luslina, Good. Keough. Slecle, and Brown. "When

While Men Cm't Do Math": Sa.ckelt. Hardison. and
Cullen. "On Interpreting StereOlypc Threm as
Aeeounling for African American·While Difkrences on
Cognitive TeSI": Sk-ele and Aron",". "SterCQtypc Threat
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49. S, H. Mehla. "America's 50 Best Compmlics for MlIlorilies:
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50. Ibid,
51. Ibid,
52. "Chanbook on Work and Di><ability:' AcTe" to Disability
Oat:, (April 6. 2006). hnp:/lwww.infousc.oomldi,abililydaHV
"'orkdisabililyll_l ,phI': L. MyeTh. '"Gap Wilk'ns Bctw<Tn
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Workftlf<'e. Rl'pOr!S Shows:' ClmmidcOlllil/e (October 5,
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5J. M. Conlin. "The New W",Hon:e."· BlIsilll'J'J tl..d (Mareh
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54. "Chartl>oot: on Work mid Disability:' Ael""ss to Disability
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55. J. Williams. "A K,00 Act hxlc'{:d:' B"sill"ss lI'ed.: (March
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56. A. Stein Wellner. "The Disability Advanta£e:·ll/c.
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511. A. Stein Wellner. "The Disability Advant'lge:·IIIc.
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59. "Ilabit<lt Internation,ll: Our People:' (April 6. 20(6).
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60. A. Stein Wellner. "The Disability Ad,·"ntJ£e:· /lIe.
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61. Ibid.
62. Ibid.
63. Ibid,
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107."2 Academics Fauhed on TrealrllenlS ofW"rT,,'n:' Tile Nl'W
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108, "Cocvron Sell Ie·s Ckrims of 4 Wom<'n al lInit as Part of Sex
lIias Suit:' 111:11/ S,r..n JOIIfJIIII. January 22. 1995. p. B12:
J. Muller, "Ford: Toc High Cosl of Hams,nlCnl:' BoHitWH
Ilel'k(NO"embcr 15.1999): 94-%.
109, R. L. Paelzold and A. M. O·Leary-Kelly. "Org"'lizalional
Communi<"alion and the t..,gal Dimensions of Hoslile Worl::
Environmenl Scxual Hamssment:'ln G. L. K,,'ps (Ed.),
Scxu'll Harassmcnt: Communic"lion Implie:ltions
(Cre"kill. NJ: Hampton Pre'S. 1993).
110. A. M. O·Leary-Kclly. R. L. Paclzold. and R. W, Grimn.
"Scxual Hara"menl ""' Aggre"i"e AC1ion: A Framework
for Undcrs1and mg Scxual Hamssment:' paper presented at
lhe annual meeting OflOC A<'ademy of Managemem,
Vancouver, Canada. AU£USI 1995.
Ill. "Chemlll Sell Ie' Claims of 4 Women at lIni1 as I'art of Sex
Bias SUi1:'
11 2. J. Muller, "Ford: The High C"'l of Harassm<'nl:' BU.li""Ii.1
\\i'ek (No"emocr 15. 1999): 94--%,
113. S. Olaf,on, "Dow Fires W"rkers for E-Mail Abuse:'
HOI/stoll ClllVllicll'. August 22. 2{()(). p. 13A: A, Carrns.
"Ba"dy E-Mails We'" Funny Till Times" Pan'nl Fire<J 22:'
HOI/stOll Cllflmicle. February 6. 2{()(). p. 3D.: M. Coni in.
"Worke·rs. Surf al YuurOwn Ri,k:' Boni"esJ II"d (Jun,> 12.
2lXX.l): 105-6,
114. "What Pnxluelivily Re"olution?"" BUJ;ll"J.lllhk (June 12.
200:): 106,
115. R, II ic·,. N, Hauscnnan. S. S<·h"",,·hau. and J. Slibal.
"Reported Incidence Rales of Work-Related Sexu;ll
Harassmem in lhe Uniled Slales: Using Mela-Analysis 10
Explain RepoflCd Rale Disparilies:' l'erJOII'lei /'HcIPO/08.1'
56 (2003): 607~31.
116. T M Glomb. L. J. Munson. C. 1..,. Hulin. M. E, Bergman.
arid F. Dm,gow. "Slrucluml E4Ualim! M(xlcls of Scxual
Harassmen1: l..ongill!dinal E~plor~lion~ and Croo,·
SCdional Gencmlizations:' JoolfIllll ofApplied Ps.\·c/mlog."
8-1 (1999): 14-28
117. K. T. Schneider, S. Swan. and L. F. Filzgeml<J. "Job· Related
and P'ychological Effec'b of Se~ual Har~."men1 in thc
Workplace: Empirical Evidcnc.: from Two Organizalions:'
Jourtlal ofAl'l,lil'd P;~'("hology 112 (1997): 40 1-15.
118. T. M, Glomb. W. 1..,. Richman. C. L. Hulin. el al .. "Ambient
Sexual Hara"ment: An Imegral<..J M,xl<:l of AmC<,."{:dcnts
and Consequences:' Orgmli;:.llIiOlw/Hellm'ior GtI<llI"'"WI
1:Jn:'isitm /'fV('('J'e,~ 7 I (Seplemhcr 1997): 309-21l,
119. E, Jensen wxl J. Lippm~n. "NBCs Problem: Gifted
Exec'U1i"" Who Dr~"k:' Willi StrI'I" Joolflml, Dccemhcr U.
1996. Pl'. B I. B19.
120. S. J. Bresler and R, Thacker, "F"ur-I'oinl Plan Help, Sol""
Har~s~nJ(.'m Problems:' fiR Mllgll;:';II.. (May 1993): I 17-24.
l2 I , "Du Pont', Solulion:' Training (MarT:h 1992); 29; Jensen and
LipPI1l.1l1. "NBCs Problem:' 11\:111 Streel JOl/mal. December
13, 1996. PI" B I, B19: J. S. Lublin. "Sc~ual Har~s,menl
'"10vcs lip Agenda in Many E~CCUli,·c Educ:<tion Progr"ms:'
11I111 Sm"'1 ]mmwl, Dcl"Cmoc>r 2. 1991, pp. B 1. B4; "Nav~' I,
Teaching Sailors Wh~l Proper Conduel Is:' nil' {lrWII/-
CIlII"lSe SUIl;"" £asll'. ,\pril 19, 1993, p. A2.
122. 'Tr~ining New Workers 10 Avoid Sc.walllar"ssl1lent Is a
Slimmer Pri",ily:' I~llll Sin:'" Jmmwl. June 29. 1999. p. A I.
t23.lbid,
CHAPTER 5
I. 1\, Nussbaum. "l1ow 10 Build Innovali"" Companies:'
B,,;'j'illl'J,'I\~d (August I. 2005): 61-6ll,
2. Ibid
3. Ibid,
4. Ibi<J: L. Tischler. "Join lhc CircuS:' FilS' Com/1II11.' (July
20(5): 52-58.

5. B. Nussbaum. "How 10 BUIld Inno"ativc Companics:'
BII,nillt'S.l'll',,/,J.: (August 1. 2(05): 61--{i~.
6. J. Wclx:r.... Mosh Pits' Of Crcmivity:' l"<.l"illt"ss\\'eek
(No"emhcr 7. 2(05): 9ll-1 00.
7. Ibid,
~. B. Nussbaum. "How 10 Build Innm'ative Companics."
fllissillt"ss\\"<'eJ.: (August I. 20(5): 61-68,
9. Ibid,
10. Ibid: L, Tischler. "Join thc Circus:' r/ISI CompallY (July
2005): 52-58, J. WClx:f.... Mosh Pits' Of Crcati,'i,y:'
I1llsilll'ss\\'1'eJ.: (No"cmber 7. 20(5): 98-100.
11. W, C. Hamncr. "Rcinfore<'mcnt Theory and Contingency
Managemcnt in Organizational Scnings:'ln H. Tooi and
W. C. Hamner (Eds.). OrSllIli~(l(iolla/ Be/un'ior will
MwwgelJl<'lll: A Com;"S/'lin Ap/'f()(11"1! (Chicago: SI. Clair
Prcss.1974).
12, Il. F. Ski nncr. Cotllil/gel/des of R<'I'IIfofCl'mt'tlI (Ncw York:
AppletlKl-Century-CmfB.1969).
13, F. LUlh;ms and R, Kreitner. OrSIlIli:!lIiollall1dll/l';Or
MOilifrl'<IIion 1111I1 BeY"lId (Glen>'iew. IL: SCO[(. Foresman.
1985).
1--1. J. L. KOllmki. "Applied Behavior Amdpis aoo Organizational
lkha,'ior: Reeipn:.;al Inllllcn<.:e of the Two Fields," In B, M.
Sww aoo L. L. Cummillgs (Ed~.). ReJt:ilrl'!I ill Orgl",i~lI/i01I11/
BdU(I·ivr. vol. 8 (Grccnwieh. Cf: JAI Prc.~~. 1(86).297-334.
15. H, M, Wciss, "Leaming Theory and Indu.,trial and
Organization"1 I'l<ychology:' In M. D, DunnellC"nd L. M.
Hough (Eds.),lfwulllooJ.; of Iml'ISIr;,,1 will Orglmi:aliolllli
I'sw:/wlo);y. 2nd cd .. "01.1 (PaloAlto.CA: Consulting
Psychologists Press.I990).171-22J.
16. S O"emlan. "When It Comcs to Managing Oi'·ers'ly.
a Fcw CompanicsAre Lio~ing Pay to Pcrformancc:'
HRMIII;(I;illl' (Dc<:cmber 1992): 3l\----4O.
17. J. 0, Sh:,w, M. K. Duffy, A. Mitra. D. E. Loc~hart. ;lOd
M. Bowler. "Rcactions Ul Merit l~~y locrea,e"
A Long itudinal Tesl of Signal Scnsit ivity
PClS""el ive:' JOl/n",1 vfAl'plic," 1',\)"I'!lv/ogy SS(3 200-'):
538-44,
18. Wciss. "Learning Them)' and [ndu",ial and Organizational
Psychology,"
19. "Wor~ ing at Lineoln." (Dc"ember I5. 20(3).
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"Abou, Linl"Oln." (Ocn'mber 15,2003).
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"Our His,or)' - A Centul)' of EH'c Jlell<:c. A Future of
InllOv~ljon:' (Dc<:embcr 15.2(03). www,lineoltlclcctric
.•·omkorporatelab<>Ullhistot)'.asp; .. Lilll"Oln Ele,·tfi,· Vision
and M issioos." (December 15. 2(04). www.lincoloeleetric
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20. J. P. I-lou~ton. Flmill/lII/'l1l11ls of l.R/lmilll; all" Mt'lIwn'. 3rd
ed. (New Yor~: Hareourt Bme,' Jovanovieh. 1986); Weiss,
"Learning Th\'Ot)' and Indl1~lrial and Org~o;zational
P,y,·hology."
21. R. D. Arvcy alld J. M. Inn<:cvi<:h. "Punishmcnt in
Organizatioos: r\ Revi...,.., Propo<:"itions. aoo Rescan:h
Suggcstions:' Aault'lII.l' of '\/(/IIII!!/'I1It:1II R/,\'i/,.,.' 5 ( 1980):
123~32,
22. A. D. Staj"o"ic and f. Luthaos. "Bcha,'ioral M:",agemcot
"nd Task Pcrfomlan<:c in Orgaoizations: COll,:eplual
ija<:"gfl'und. MCla-Analysis. alld TCSI of Altcmati""
Modds:' Persolllll'l PJ\"c1w/o);\' 56 (200.1): 155-94.
REFERENCES 65]
23, Luthans and Kreitncr. Orgalli::JlliOlIll/lk/u(I';or
MQ/Jiji('wioll w/ll HI')'fmd: F Luthans and AD. Staj"o"k .
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24, Luthans and Slaj"o"ie. "Reinforce for Pcrformance."
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P<:rformanee in Organizations", LUlhans and Staj~",'ie.
"Rci nfon;e for Pcrformaocc": G. Bi II ikopf Encina aod
",I. V. Norton, "Pay Melhod AlTens Vineyard Pruner
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26, A. D. Staj~ovi<: "oJ F, Luthmls. "A MCla-Analysis of thc
ElTeets of Drsanilalional Beha"i", Modili<"ation on Task
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27, A. D. Staj~ovi<: aod F, Luthans. "Diffcrcmi;11 Effc<:t~ of
I'Kenti"" Motivators Oil Wor~ Perfonnanec," Armll'm." lif
MWIIII;<.''"'''U JVlirllllf4(3 200 I): 5W-90.
28, Ibid.
29, "In Califomi;1 Garment: Wor~crs H""c Rights:' (O<:tobcf
2(02) ....."'w,dirx'a .g'w• "ww.wnr~itout .ea.gov.
30. A. ijandllr;•. Sodai U'I/nlillg '11,,'On' (Upper S:wJdlc Ri"cr.
NJ: Prentil'C Hall. 1977): A. Bandum, SI'If-Effic/ln: 1711'
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19(7).
3 I Bandura. Socillll.R/lmillg Tllnlr)' (Upper Saddle Ri"cr. NJ:
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ofCOIJ/lvl. (New Yor~: W. 1-1. Freeman and Co.. 1997)
32, Baodura. Sod/II Ll'ilmillg Tlll'or,,: T. R, V. Davis and
F. Luthan,. Orl;/lI1i;;miV/IIII H"II/ll'ior MiX/ifrnlliol/ (/11(1
8<.'\'011I1. G1covicw.lL: Seott Foresman. 1985,
33. "Fa,-" SheCI." The Ritl,-Carhon (July 28. 20(3). www
ri tzc~rhon ,eom/corporate!abouCuslface,httt .asp: "TIIC
Ritz Carlton: Fa,·t Sh.,.,t:· t\ pril 12. 2(06). hup://www.
ri tzcml10n ,eomlcorporate!abo lit_u slfacl ~ shc<:t .asp:
"Punin' On The Glitz In Miami:' BII.I"illt's~·\\'1'1'kOIl/iIW
(April 12, 20(6). hnp:l/www.busiocsswc<:k.com/priml
",agaz;ne/col1lentJ 04_081e387 1141 .hlm?"han=mz
34, In T. Gumcr. "Dividcnds:' 8I1S;,leJS \\t'e/': VI/lilll' (July 28,
2(03). No
35, "Gold Standmds:' The Rilz-Carlton (July 28, 20(3),
www.f;tz<.·adUln.com/corpn rateIa b<>U t_us/fad--,he,'t.a-,p ,
36, Ibid.
37, P. Hemp, "My Wce~ as a R,x,m-Servi<:c Waiter atlh,' Ritz:'
Hllrl'lml Hus;,ll'ss R<."o·il'K' (J IIIlC 2002): .50-62.
38, Ibid .
39, "F;lCt ShccI": "Press Rdcase: Thc Ritz-Carlton Comp"ny
Repeats as Most Prestigious Luxury Hotd Brand in 2006
SurvC)' of the Luxul)' Instit IItC:' '1l1e Ril;·Car/WII I'r/'ss
Room (April 12. 2006). htlp:/lwww.ritlearlton,<'01ll1
corpo r"tcIpress_roomlrc1cascslluxu ry_in <I il utc_06. hIm I,
40, J. Zhou ... Wt....n th,' Pres/:n<.·c nrCreat;\'<" Coworkers Is
Rc btcd 10 Creal;"ily: Rolc of Supervioor Close
Monitoring. Dew loplllenial FeeJba,·k. and Crcativc
Personalily:' JVIIrIIllI vf Afl/llied I'syclwlogy 88(3 20(3):
4JJ~22,
41, A. P. Goldstein alld M. Sorchcr. Clwl/giliS SI!pen'isor
lJt:full'ior (New York: Pergamon Press. 1974): Luthaos "00
Kreimer. OrSlllli;ariollill 8eluI1'ivr Mo"ijiml;vl/ lind
B<.'wmd.
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43. M. Morav<-"". K. Wh<-",Icr. "nd Il. H"II. "Getting College
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44. T J. M"urer, E. M. Wei", anJ 1'. G Ibrlx'ik, "A Model of
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48. Il;mdllra. "Self-Efficacy Mcch:'nism in Hum:ln Agency:'
49. D. &len anJ A, B. Shani. "Pygmalion Goes I<> Boo! Camp:
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50. Bandllra. "Self·Effie:'ey .\keh:'nism in 1'luman Agenc)':'
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53. Ibid.
5-1. Ib;d.
55. J. L. Adams, COIIl"'/"ual BlodbuSlil/,~: A Gllide 10 Beller
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56. P. Lewis. '"A Perpetual Crisis Machine:' FOr/une
(September 19.2(05): 58-71
57. Ibid.: "Samsung's Di£ital World:' (April 12,2006).
hllp:llwww.samsung.eom/.
58. P, Lc»-'is, "A P~rpetual Crisis Machine:' fOn/me
(September 19, 20(5): 58---71: tl. NusslxJum, "How to
Bui Id Inoo"alive Companies,'" IJI,siJlesslVet'l.: (August I ,
2(05); 61---68.
59. P. Lc»-'is. '"A Perpetual Crbis Machinc:"'Onllll" (Scplember
19. 20(5): 58---7 I.
60. B. Nussbaum. "How to Iluild Inno"ali"e Comp:tnies:'
BlISi/l(',I,\'llhk (Ausus! 1,2005); 61--{J8.
61. P. Lewis. "A Perpelual Crisis M:lchine:' FUr/llIle
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62. Ibid.
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65. Ibid,
66. Bamm and Harringllm "Crt:ali"ity,lntellige'K"e. and
Person"hty:'
67. Amabile. "A Model of Crt:"tivity and [nn,wation in
Org:lnizations:'
6R. Amabile. "A Model of Crt:ativity and Inn"vation in
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69. Amabile,"A Mo<lcl of Crt:ativity ;md Inno"ation in
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70. IbiJ,
71. IbiJ,
72. Ibid,
73. IbiJ,
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75. J. Zhou and J. M. George. "t\w;'~ening Employee
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78. Senge. TIl<' F1/11 /)lsl'i"line: 111e Art 1I11i/I'rlU:lice (1 rile
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79. M. J. Grawitch. O. C. MunT-. E. K. 1;lliott. anJ
A. Mathis, "PrmnOling Creativity in Temporary
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80. S. E, I'm~est:h, '"Unleashing lilt.' Power of Learning:
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Hmwml HllJi"eH R""i",,' (Septembcr-Cktobcr 1997): 148.
81. J. S. Brown and P. Duguid, "Balancing Act How 10
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82. IbiJ,
83. Ibid,
CHAPTER 6
I. J. Goodnigh'. "'Welcome to SAS" (August 26.2003):
www.sas.{~)mIC...po...lc/index ,hlml, '"SAS Press Center:
SAS Corporale Stat;slics.'"(April 18.2006). hllp:/Iwww.
Sas ,l"om/binlpfp.pl?=ofi.
2. "SAS Conlinues Annual Revenoe Growth StrCiJ~" (Augu,t
28, 2003): ""'w.sus ,com/new,", preleascl 031 oo3/no.::ws 1
.hunl: ··SA.'; Press Ceme" SAS Corporate Slalistics:'
(April 18, 20(6), hnp}/ww,," .sas.(;omibinl pfp.pl ?=fi.
3. ··SA.'; Press Cell1cr: SM; Corpor~te Sla1i"ics:'
(April 18, 20(6), hup:/lww,," .sas.<'Ontibinlpfp.pl?=fi.
4. "Worklifc" (Augus' 26. 2003): www.sas.comJcO'lX""ate/
wor~lifeJindcx.html: "SAS Ma~cs FORTUNE'S '100 Best

Comp.1nies to Wor~ f'Or':' (April 18.2(06).
hilI': /I www.sa.-\.om/ne wsffcal urd 12ja n06/fo nu TIC .hl 01 L
5. "Saluting theGIob.11 Awarns RocipicntsofAnllUr Andersen's
lk'II'r",cli~"""iAwanls 2000" (Scplemhcr6. 2(0):
www.fonllllC.com:J.N.Gangemi ...Teachingl)lClkllCfits01
Balanee:' HUJ;III'J'S !It'd O"lil'" (Scplemllcr 20. 2fXlj).
hllp".1"'''WW.OOS;rlCSSWOC~.collvprintibschoolsl
mmcntl,,-·p2oo5ibs...'lOO50920_2fXlj-WXlI .h,
6. J. Pfclkr. "SAS Instilllle: A Differenl Appro.1ch to In ..'Cntives
and I''''opk' i\.lanagement l'mdil"Cs in lhe Software Indus1I),'
(J;lI111ary 1998): Harvard BllSiTlCSS School Ca."C HR·6.
7. Ibid,
8. "Wor~1ifc"' (August 26.20(3): wwwsas.com/
eor,x,r" td wurk Iifeli nJex.ht mI.
9. Pfeffer. "SAS Instiwte": N. Slein. "Winning the W"r to Kocp
Top Talcnt" (Sl'ptl'mhcr 6. 2OlXJ): www.fortune.mm.
10. "SAS r.-1"kes FORTUNE'S '100 Besl Comp;'nies 10 Work
For':' (April 18,2(06), hnp:/Iwww.sas.mntlocwsl
featurclI2jan06/fonllllC .hlinl.
11. Goodnight. "Wdcome to SAS": "By Solution" (August 26.
2(03): www.sas.com/success/soilltion .hln' L
12. S. H. Wild,tr",". "Do Your Homework, Mi"rosoft:'
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13. G, p. Lath"m. aOO M. H. Budworth. "The Study 01W"rk
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14. F J. ,-"oJy "nd W S. Becker. "'MOlivali"n Theory
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15. J. P. Cam"'-"'II and R D. Pritch"rd. "Moti"ation Theory in
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16. R. Kanf,.r... MOliv,,!ion Theol)' aOO IOOIJ'1Iial and
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17. Ibid.
18, A. K. Kirk aOO D. F. Brown. "Laten! Constructs of
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19. A. p. Bril'fand R.J.Aldag. "Th,.lnuinsi,'-Extrinsi,·
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,\Iwwgfwelll ReI';el<' 2 (1977): 496--99.
20. C. Hymowitz. "Recruiting Top T:.lent in Chin,l T;,ke, a
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26.2(05):BI.
21. Bril'f'lI1d Ald"g, "The Intrin,ie-Extrinsil' Dil'howmy:'
22. N. Nichobol1. "How to MOlivale Your Problem P~'Ople:'
Hon'l",J H'l.Iilll'sS Nf\,)'<'U' (January 2003 l: 57-65.
23 L. Ibles. "An Enviml1mcnlal Problem Slippi ng Through
the QU"l'ks," .....""hiIl8101I/IOSI.COI/i (Au),'u>l 27,2005).
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25, Ibid.
26 "Ma,ters of D"';gn: Wi IIi"m McDonough:' FilSIC011lIHIII)
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28, Ibid.
29, "Designing the FUlllre:' MSNBC.colII (April 18, 20(6).
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31, I>bslow, MOIiml;OII "lid l'l'r.wmal;ly: J. P. Camp!x'lI aad
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32 V, AoJerson. "K udos for Crealj"ity:' PasO/lllt'1 JQI1T11i11
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33 i\.-1<I,low. MOIi1'(lIio/l o/ll/l'erS0I1Iiliry: C,,'upocll and
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35. K"nfer, "MotivationTheory aoJ Industrial aTld
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'>6. v, H. Vroom, \l-'ork allli Mu/imlion (New York: Wiley. 19(4).
37 thid.
38, Ibid.
39, tbid.
40, Ibid.
4 I, Cam"'-"'II aoJ l'ritchmd, .. Moti"ati"n Themy in Indu.'lrial
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SO. Ibid.
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60. JI, I. L. Ambrose and M. Schmirlke, "Organizal;on Slru,'lure
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6 I. J. A. Col'luin. "On the Dimensionality of Organi,"'tional
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63. Ibid.
64. J. A. Col'luin. "On the Dimensionality of Organizational
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of P",ad"",i J",wice (New York; Plenum, 1988),
66. J. A. Col'luin. "On lhe Dimensionality of Organizational
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67. R, J. Bies, "The Predicamenl of Injusli,'e; The Managc'menl
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(Eds.), Rneordl in Orgal/bllioJlaIBl'IllIl'ior, "01. 9
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D. L. Shapiro. "lmcraClional Fairness Judgmcnls: TIle

Jnflueoce of Causal Accounts:' Socio/ Juslier
N"!>'I'llIl'h 1 (1<)1l7): 199-218: J. Greenlx'rg. '"Looking
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68. J. A, Colquin. "On lhe Dimcnsiomllily of Organizmional
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69. J. A. CoJquin. D. E. Conlorl. M. J, We-son. C. O. L H.
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?..apata-Phelan. "What is OrGanizational Justice? A
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70. B. Morri" "Thc' Bc" "lac'e to Work Now:· Fommt'
(J,mumy 23. 2(06): 78-86: "Gcnentech: A Biolech
Rc,,-,arch and Informal ion Company: Aboul Us:'
(Apri I 18. 2(06). hnp:/Iv.","w.gene .contlgenclaboutlillde~.
jsp?hl=n&q-Gcn<·le..-h&blnG=Coogle+Se"reh: """lICnlech:
About Us - Awards & RecoGnilion:' (April 18.2(06).
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71. "Gcnenladl: Newsr<>om- C""pomte Information-
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.<:omlgcnc/ncwslki1Slcorpomtc/f:l'IFadS j.p: A. Weinlmob.
"No Apologies for Gcncntech's PriceS:' lJll,I;IIt'ssWuk'
Ollli",- (MardI 21. 2<X>6). htlp:/lwww.busincsswed:.eoml
pri nl/technology!contenllmar2OO61tc2lXl60321_073434 ,hlnl,
72. B. Morri,. "The Best Plac'e to Work Now:' Ftmmlt'
(January 23. 2006)' 78-86.
73. Jbid,
74. Ibid,
75. J. Gn.'Cnberg. "Read ions to Procedllml [nju'liec ill
Paymenl Distributions: Do the Means JuSlify the Ends?"'
JO!mllllofApplird PSI'r:!lOloKV 72 (1987): 55-61 ,
REFERENCES 657
76. J. A. Colqllitl. D, E. Conlon. M, 1. Wesson. C. O. L. H,
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78 Ibid: D. E. Warren. "ConstnlCti"c and Destructi"e Deviance
in Org"'liz"lions:' Al'wlemv of Mmlll~rlll<:11/ Rai,..... 28(4
20(3): 622-32: 6, E. Litzky. K. A, EddlcslOn. and D. L.
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AUldnllV ofMWl<Ige>J!e>!l PaSfll',Iil'es (February 2006):
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79. Ibid: D. S. Oocs. "Employee Silence: Qlliesceoce ~I!I
Acquiesc"Cuce a, R",'pons,,, 10 "'",dved lnjmti<·e."·
flll<'nllliiollal JOllm1l1 ofSeI/'C!i/1l1 mill AlsnSlIIt'1I1 10.
(2002): 1-4.
CHAPTER 7
I, R D. HoC "Why Tech Will Bloom Again:' B,<;int'ss \\'e/'k
Onlille (All gllst 25. 2003): IVwlV.businesswc<::K.com:
"Google Corromte Information: Quick rrofile:' (April 24.
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2 B. Elgin. "ManaGing Google', Idea Fad'K)':' BIl,linl'.nlVed
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3, K. H. Hammonds. "Growlh Search:' FUJI C<Jml'0Il~' (April
2003): 74-81,
4, J. Kcrslcllcr. "'Slill the Cellier of Thi, World:' B".\'illl'.I"'-
\\'''t'k On/im' (A ugusl 25. 200.1): www,busillCsswed.eom:
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5, K. H. Hammonds. "GrolVlh &areh:' FUJI COIIIPllllY (April
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6, "G,~>gk Corporate Jnfonn"tiou: G<:lOgJC M iksloncS:'
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7, Ibid.
8, B, Helm. "G''''GIe's Giani Slridc:'/J'lSi>JenlV"d OIlUm'
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I I. K. H, Hammonds. "Gruwlh Search:' Fll.\1 C01llP'lI1.l (April
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15. B. Elgin, "Mana!,';ing GtKlglc's Idca Fadory:' B"silla.'·
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16. Ibid.
\ 7. G. P. L~th'1I11 and M.Il, Uudwonh. "The Study ofWor~
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2-1. Ibid.
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htlp:l/w·ww.ge"l·ral",ills.<:ornleorl'orule/ITll:tli"3,'nlerl
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28. Hae~man and Oldham. "M01ivmion Through lhe Design of
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29. Hac~man and Oldham. Ilork Hnlesix,1.
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3 I. M. W. BrallChli. "WlK:n in Huangpu ... :. \\i,1I S,re,.,
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3~. B, T, Loher. R.A Noe, N. L. Moeller, and M. P. Fit'-ger~ld.
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34. G. R. Salanei~ and J. Pfeffer,"A S"('iallnf"mmlion
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Greer. und S. ,\. Youll!,';blood (Ed,.), Th,' Blnl'k",cll
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36. Ibid,
37. Ibid,
38. R. W. Griffm. "Objc<:ti'''' and Sociill SOlIr,-""" of Infonnalion
;n Task Rl-dc,ign: A Fiekl Experinll'nl," ArI",i"iSlrrtli\y'
S<i('ll('t' Qrmrterl\' 28 (1983): 18-1-200: J. lllomas and
R. Griflin, 'The S""i"llnf"nmlion PrlK.'CSsing Model of Ta,k
Dcsign: A Heview of lhc Literature." Arwlemy of
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39. "About Hydro" (September 5. 200~): www,hydro.,-y)m:
"Hydro Fact Sheel," hl1p:llwww.hydm ..'OmlenlprcssJooml
facts/index .html: ··So...ially Respon'ihle Rusinco;, Operations:'
(April 2-1. 2(06), hupJ/ ":WWllydro.collllcnlglolxtl_commilmenl!
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40. C. Fi,hnwn. "The W"y 10 EtIOltj,'h: Nor.;~ Hydro's Wor~­
Life Experimenls Test a Hadi,'al Idea: A Company Cun
Compele on lhe Bnsis of BalatlCe:' Fasl Com!'wl."
(Jul)'!Augu,1 1999): 160-74: A. Sai"s."" Norway's Oil
Pmch at Lasl Open 10 OUlsiders?" BIIJi1!CJJ lIt'ek (Online).
June 14. 1999: A. Sains. "What Happened to Norway',
Gusher." lJ/rJi1!cJJ 1l,'ek (011[;/11'). November 16, 1998:
www.hydro.<"Omlenlaboullindex.hlml: .. Living Industrial
Hislory Through 100 Years." IJusi"ess IVeek (April 24 .
20(6), hllp:/!www,hydru.<"Omleniaboul/hi.,loryl index.hlm L
41. "Soci,,1 Responsibility" ($cplember 5, 20(3): www.hydro
.l1o/enlalxlUllglobal_<"Ornmitmenll'iocail_rc"plindex.hlml:
E, Reilen. "Deur Sh:ll",holdcr"' (September 5. 20(3):
www.hydm.nolc nlim'" ,lor_ rc' Jal ions/fi na ne;a1_", pi
2oo23nnu"l_reporllshnre_leller.hlml: "Our Villoes:' (April
2-1. 2O:l6). hltp:1I www.hydro.eomlcnlulxlllll'llIr_,'ulues/
iodcx.html,
42. "Su,lainabk' o..','c1opn](·nl G'KKl for Env;runrnenl -and
BOllom Line" (September 5. 2003): www.,ltncricas.hydm
.(~lm: "Talking En"irm\ml'nt wilh Suppliers" (Scptember 5,
2(03): www.hydro."o/en/aboullglobal_...ommitn;cnll
cn"ironmenl,
43. E, Hull·Hansen und T. Aaslaml, "Hydro on Dow Jones
Suslainabilily Index for Fifth Year" (Scptemocr 5, 2003):
www'.hydro....om!enlpress_roomlllCwsfmehivc/2003_091
dowjones_Sit 'lain in<lex _<>n .hl nil.
44. "Welcon;c to the Dow Jone' SU"lainability Intlcxes."
Dow Jonn SUJIltI,u,bilil" Imli'xcs (Septcmocr 5, 2(03):

www_<;uslmnabililY-11IOCxes.com: "Fl'CljUCnlly A,~cd
Que,tions," 1>0>.' JOIWS S"SWiMbi!ity Imll's,'s (Septem!>::r 5.
2003): www.<;uslamabilily-iodcxes.com: "COrpOrale
Suslainabili1y:' f),y". JVlPI'.' S"Sto;'uJl:>iliry' lIule.rI'J' ($cptemllcr
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45. '"Hydro Fael Sheet:' (April 24. 2OCl6), hU1':!/wwwhydro.e(Jml
en!press_roonVfaelsiindcx 1nml: '"Socially Responsibk
Bu,incss 0p"r~lionS:' (April 24. 2(X)6). htlp:l!wwwhydfll.mml
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46. Fishman, '111e Way 10 Eoough:'
47. H, Tajfel and J. C. Turner. "The Social locmil)' Theory of
Intergroup Behavior:' In S. Wors<:hel and W. G. Auslin
(Eds.).PncllOlogy of IlIIergrollp l?dmiolls (2nd cd.:
Chi"ago; NC'lson-Hall. 1985). pp.7-24.
48. B. E. A,hfOOh "nd F. M"e1. "Social Idemi1y Theory and lhe
Organizalion:' Ami/em." of M"''''8I'm'''l1 Ret'i,,",,' 14 (1989):
20-39: Tajlel and Turner. "The Soci:,lldemity lhcory of
Intergroup Beh""ior."
49. M. E. Ilrown. "f</t'III!Jicmiol! </11<1 Some COllllili'J1\S of
Orgal1i~mifJ1\"llm'(JI\Y'"u'1!I:'A dmi"ismJlil'l' Sciellce
QUllrlal" 14 (I %9): 346-55: Tajfel and Turner.
"The S(K.'ial IMnlily Th,,<,r)' ()f Inlergroup B"ha>'io(':
Ashfonh ;md M;'el. "Social Idem'1y Theory and lhe
Organization:'
50. K.I-l. Hammonds. "Growth Search." p. 76.
51. Uilham and Budwonh. "The Sludy ofWor~ Jl,lolivalion in
lhe 20th Century:'
52. "Learning 10 Live Wilh Otfshoring:' lJ"SilU:',iS I\~ek
(january 30. 2006), 122.
53. Ibid,
54. '"Offshoring: S1'",ading the Gospel:' (i\larch 6. 20(6).
hup:llwww.busincsswec~.comlprinlimagazi.lCleonlcnll
06_1 01b3974074.hlm~<:han;gl.
55. "Othhoring: Spreading lhc Gospel." (Mareh 6, 20(6).
http://www.husi"""week-,-,om/prim/magal;""I<:onlent!
06_101b3974074.hlm?chan;gl: "GcnpHC1: MHnagcmcnt
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aboul"s."Sp?~cy;I&page;tcmn hlm&submcnu=O:
'"Gen1'ad:' (April 25. 2(06). hllp:llwww.gcnpad.<:nnV
genp:ll;llabotllUS'!~CY; I: "Genpact: Growlh H"lOry:' (April
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56. "Offshonng: Sprc"ding th<: Gospel:' B,>sillnJWed O"lill('
(JI, l"reh 6. 20(6), hnp:llwww.bo.lSincsswec~.comlprim!
rnaga1.i ne/cont <:n 1/06_ IOlb 3974074.h1m"c' han;gI.
57. '"Genpact: Management Team:' (April 25. 2006.)
hUp:l/www.genpac·l.<:nmlaboullls,asp?key",l&page=leam.hl
m&submenu=O: "GenpaCl:' (April 25. 20Cl6).
hup:l/www.gcnpan.<:omlg<:npa<:t!aboulus?kcy"'l:
'"Genpact: Growth llislory:' (April 25. 2(06).
hUp: I/www.genl",el.<:omlgcnpa{'llabolllu.,.asp?key= I & pag{>
;growth,hlm.
58. "Offshonng: Spreading the Gospel." lJ".\itlf'.~,'\\~d Olllille
(M"rch 6. 2(06). http://www.busi.lCssweck.comlprint!
lilag aZ in"leo nk'lI1/06_1 Olb 397407 ~.h lm?c ha" =gI.
59. Ibid,
60. E, A. Lo,cke and G, P. Uitham, A Tlu'orv of Gool S,'lIil/l!
1I1111'!iuk I'erfonmmce (Upper Saddle River. NJ: Prentice
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61. J.J. Donovan "",I K. J, Willi"ms. "i\lissing 1he Mark:
Effecls of Time ..nd CausHI Anribulions 0" Goal Revis;on
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66. F. K. Lee. K. M. Sheldon. "nd D.Il. Turb"n. "Personali,y
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CHAPTER 8
I. S, Greenhouse, "How Coste" B~-eame the Anti-Wal-Mart:'
Nt"l\' Yark Times (July 17,2(05): BU I. BU8.
2. Ibid.
J. Ibid.
4. "C"-'[('O Wholcsak C"'por~tion Repon., & ...·0'1<1 Quane.,- anJ
Ye;lr-!o·Date Ope,,",ing RCI'ults Fiscal 2006 .md February
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5. S, Greenhouse, "How Co,teo Became llle Anti· Wal· M,u1:'
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6. "'Corpo,,",e Governance:' Cos/co lV/lOlc,lll!e 1m'<'Sior
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7. S Greenhouse. "How Costc'o Beeame the Anti-Wal-Man.'"
Nt..... York Times (July 17,2(05): BU I. BU8: S. C.
"Bce'au", Who Kncw a Big-Box Chain Could Have a
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8. S Holn",s and W. Zellner, "Comn1Cmmy: Thc Cost<:o
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78084_mz021.ht111?chan .. , : M, Ilcrbs!. '111e Costeo
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9. S, Greenhouse. "How Costco Became tlK: Ami-Wal· "lart:'
Nev.. y,Jr. Tilller (J Illy 17, 2005): BU I. BUll.
10. Ibid.
1 I. M. Herb,!. "The Costco Challcnge; An Altcmatiw to Wal-
M:,nizationT LRA Oll/ille (Jilly 5. 20(5), hnp:/I,,"ww.
Iaborresca~'h.orYprint .php?id"391 .
12. S. Greenhouse. "How Costco Bcrame the Ami-W:<l·~lart:·
N".. y,Jr. ]ilIOn (J uly 17, 2005): BU I. BU8.
13. Ibid.
14. B. Einhorn, "Mo,'e Over, India:' B,ninE's'." \\""k (Augu,t
11.2003): 42-43.
15. L M, Shore 'lOd J. A·M. Coyle-Shapiro, ··Editorial: New
Dcvelop",enlS in the Employcc·Organization Relationship.'"
JOllfl!a! ofOrgon;:u/imull B,-I,m'iar 24 (john Wiley &
Sons. Ltd. 2003): 443-50.
16. Ibid.
17. D. M. Rousseau and J. McLean Park,. "The Contr~cts of
InJ iviJuals and Organizations:' Rnemdl ill OrXm1i;;lIiono/
Bellurior 15 (JAI Press. hie, 1993): 1-4.>: S. L Robinson.
·~rru.'l and Ilrea<:h Oflhc Psychological COl1lracl:'
AdJllI,,;stmlil"e Sci"llce Q,wrlern' 41 (Cornell University,
1996): 547-99: S, L I(obinson el al.. "'Changing
Obligations '1I1d the Psychological COl1lmct A Longillldi nal
Study:' A,.(l(/emy of Mrmugenlflll J",mlO/ 37 (1994): 137-52:
I. R. "laeNeil, ·'Relational Comract: Wha( We Do'1I1d Do
N01 Know,"' Wi.ICOllSilll-'lll' RPl';ew (1985); 483---525.
I~. L. Sehurer Lambert. J. R. Edwards. and D. M. Cable.
"Brcach and Fulfilln1Cnt of the Psychological COll1r~l"1:
A Comparison of Traditional and Expanded Views:'
"'-'r,WIll"d PJ),:I"'{08) 56 (2003): 895-934.
19. I(ousseau anJ P"rks. "The Comrae!s of 1I1<1ividuals and
Organizations"'; Robinson, ''Trust and Br<:ach or th,'
Psychologic;<l Comr:",t"·: Robin>on ct "I., '·Changing
Obligations and the Psychological Contr~n"; MaeNcil.
"'Rcl:Ltion;ll Contract:'
20. Shore and Coyle-Shapiro, "Editorial:'
21. J. Asc1"ge :lOd R. Eisenberger. "PercciveJ Organization;'1
Support and Psychologi"al ContraelS: A TIleor/.'lil"a1
Integr~tion:' llmmal of Orgull;:lII;Olllr!lIdlm';or 24 (2003):
491-509: D. M. Rou,scau, PS\"('lw/oKiCll/ C01llracis ;11
OrK(//lhl/iollS" (ThOllsand Oaks. CA: Sage. 1995).
22. Ibid.
23. S. L. Prcmac!; and J. P. Wanous. '"A Meta-Anal)"sis of
Real iSlic Job Pl\":vicw Experil1lCnts:' JmmlG/ of Ai1ph<,rI
PSYl'hology 70 (I (85): 706---19: J. P. WallOus. "Real istic
Job Prcviews; Can a Procedure to Reduce Tumo"er
Also Influence the Relationsh ip Betw~...,n Abi litics
and Performance'!'" Pasalllw! PS"\'cll%.~,' 31 «(978):
249--5~: J. P. Wanous. Or!5,/IIi;;lIirJllll! flllry: /(l'l'm!llIIelll.
Selnlloll, <lllri Sacioli;;1I101l of Newcamers (ReaJ mg. MA:
Addison-Wesley. 1980)
24. Asclage a,l<1 Eisenberger. "Pcr<:eivcJ Org'1I1izational
SUPP''" and Psychologic'al COll1r~c1S"': Rousseau.
Psychological Commcts in Organizations.
25. Ibid
26. Rousseau and Parks. "The COnln1cts of Individuals ,md
Organizations" Robinson, '"Trust and Brcach of the
Psychological Comn",t"·: Robinson ct '11.. '·Changing
Obligations and th<'l'syc'hological Contrae1"; "bcNeil.
'·Relational Comract:'
27. R. Cropan1.ano, D. E, Rupp. and Z. S, Byrne. "11Jc
RcI"tionship of Emotional Exhaustion to Work Anitudcs.
Job Performance. and OlJ;anizational Citizcmhip Beha\'io",:'
Jo,mlll/ of Applied /'nclw/aIiY 88 (I 2003): I (()..69.
28. Rousseau and Parks. "Tilt., Com",,·ts of Individuals and
Org"niz;ltions": Robinson. '"TruSl and Breach of the
Psy<:hologi<'al Conlrad"'; Robinson Cl aI., "Changing
Obligations and the Psychologic,,1 Comr~cf': M:",Neil.
"Relational COlltra('(:'
29. D. N. Sull. "'MJngaging By COmmilnlemS:' Homml
Ih,.';lle,H ReI';"", (June 20(3): 82-9 I.
30. Rousseau ;lIlJ P"r~s. "'The COn1r~clS of Individuals and
Organizations"'; Robinson, ''Trusl ,md Brca"h of the
Psychological Contract": Robin>Ol1 ct al.. "Changing
Obligations anJ the PS)'l'hologieal Contmel"': Ma,·Neil.
"Relational Comr;'ct:'
31. M. Kripalani. "Calling Bangalorc: Mullinalions Are
Making It a Hub for l-ligh.Tc<:h Research:' HlIS;lIesS \\~d
(No\'ember 25, 2(02): 52-53.

32. B. Slone. "Men at O'"Crwor~: 1lJc Good News Is We're
More Produelive. The Bad News~ They Don't Need as
Many of Us:' N('\\'s.....ee/( (Au£ust 11.2003): 38-39.
33. S Armuur and M. Kessler. ""USAs New ".loney-Saving
Export: White-Collar Jobs:' USA Toda," (August 5. 2003):
11l-2B.
34. "Oulsourein£ Jobs: Is il B;ldT' Busil/t'ss WI"'/( (August 25.
2003): 36--38: K. Madigan, ··Yes ... "" B"lille~'J Week
(August 25, 2003): 36-38: ~1. J. Mm1<JcI, ..... No"
B",~il1eH aloe/.: (August 25. 2003): 36--38.
35. Rousseau :md Pm~s, ""The COt11raelS of Individuals and
Organizations"": Robi nson, "Trust and Breach uf lh,'
Psychological Contmcf': Robinson et al.. "Chml£ing
Obligaliuns and Ih,'I"yl'holugical Cuntra,·t""; Mal·Neil.
"Relaliotwl Contritet:'
36. Ibid,
37. Ibid,
38. '"The HIIman Cusl uf Chcap"r Tuwels:' TIle El'IJ/lomi.,'/
(April 23. 2005): 30.
39. S, l"hr, "I. B. M. tulay Off O,er 10.000 In Stru£gk' tu
Keep Up Prollts:' NI'I'o' Yor(' Times (I\l:ty 5. 2005): A I . C7 .
40. l, Ha,,'~ins, Jr" N. E. BOOlklle. and K. Maher, "G'\1.Amid
Industry Overhaul. Cuts He:lith Iknellts for Retirees:' 1111'
\\hll Sm.'I'/ Jmmllli (Cktuocr 18,2(05): AI, A8.
41. A Geller. "Wor~ers Play Role of 'G,\I Gypsies':' "111"
Haus/oll C1mmir/e (M;ly 6. 20(6): DI. D4.
42. Ibid,
43. Ibid,
44. Ibid
45. N. Shirouzu. "Ford May Go o..'qlCr With Job Cuts:' Till'
\\~,II S/fT"'/ JlJlm'lIl (July 22. 2005): A6.
46. C. D. Fisher. L. F. Sehocnfeldl,and J. B. Shaw, "WIIWI
NI'J'v"n'1' Munug/'IIIt'IlI (HuslOn' Houghton Mim in. 1'l'Xl).
47. J. M. Jae~matl and M. H. Slrober. "Fear of Feedb.1e~:·
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48. Fisher. Sehocnfeldt. a,K! Shaw.lI,mulI) RnoufCl'
M (111(1g<,'II<' Ill.
49, Ibid: G, P. latham "nd K, N. Wexley./llcft'osillg
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50. R. Hen~{)ff. "Ma~e Your OtTIee More I'mdul"Iive:' FOriwl/'
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51. R. S. &huler. Mml/lsing Hllmall Nt:sOlm'I'S (New York:
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52. T. A. DeCotii" "An Analysi.s or the Ex1<'mal Validity und
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Or8alli~{l/imUlI Bl'llIn',or (/lui H,,"um Pnfim"''''N 19
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53. Schuler. Mallagillg HmlUm R"SOllfCes.
54. N. Nicholson. ""How 11' Motivate' Your Problem Pcople-:'
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55. H. la'....a-';I(·r. "pnfonrurn,:e Reviews Arl.· M"rl.· Valuable-
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56. Ibid.
57. Ibid: J. S. Lubl in. "Turning the Table." Undcrlings Evaluate
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S Shellenbar£er. "Reviews from Peers InSlruCI-and
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69 Lawler. I'ay /Ill/I Orglll,i;/lIir!1/ {)("o·l'loI'IIII'1U.
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72. Lawler. Puy ",,,I Orga"i;mio" f)/,I"t'I0l'ml'IJ/.
73, Fisher. &hocnfeldt. :md Sha"'. "umo/! Nl'sOl,rre
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87. Ib;d.
88. C. Hymowilz and G. St"m. "At Pro,:ter & Gamble, Brands
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IN. Driver. "Car,-ers: A Review of Pe"onal and Organilational
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90. Ibid.
9 I. Greenlwus, Cilrea Mwwgel/li:llI.
92. M Il Arthur. '~rbe Boundarylcss Career: A New
Pcrspc.;ti"e for Org,mizational Inquiry:' JOUr/wi of
Org01ll;/Iliolllll Heill/.-ior. I5 (1'>94): 295--306:
M. B. Anhur and 0, M, Rousseau, Tlie BOWI/Iaryiess
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D. M. Rou,seau (Ed.,.) Til" HOllllr!i".,.lel.,· Care,",: AN"",
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l.. T. Eby e! al.. "f>r<,dietnrs of Success in the Em of the
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93. S. C. de Janasz. S. E. Sulli\-an. and V. Whiting, "Mentor
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94. Greenhaus. Career Man<lgemelll.
95. J. L. Holland, Ma~i"g \'IXWi01I«1 Clloi<:e,~' A TlI"or.... '1
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M. B. Barri,,>:. M. K. Mount. and R. Gupta, "Mda-AnalY'is
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96. J. Chamberlin, "Study Offas Clues on Why Women
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97. Ibid.
98. Ibid.
99. J. P. Wanous, "Realistic Job Previews: Can a Procedure to
Redu"e Tum",'er AI,o lnfluen"e the Relationship Hetween
Abilities and Pcrfonnam:eT' Persolllld !'s\"cllOlo!{\" (1978):
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100. Greenhalls, COf/'a MlIJilIgelllelll.
101. Ibid,
102, G. Dreher and R. Asb, "A Comjlilrdti"e Study of Memoring
Among Men and Women in /\-hnagerial, l'",fe"ilHlal, and
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103. D. B. Turb~n and T. W. Dollgheny. "T1JC Role of Protege
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104. L. Clyde Jr.• '"Would You ,'lal<.- a Good Protege?"", National
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105. Grcel1hau,. Cmur /I1l/1l«8"III~1/I
106. T. P. ference. J. A. F. St,mer. and E. K, Warren. "Mamlging
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107. B T Abdclnor and 0 T. Hall. CI/w{'r /),'.-e!oI'JJlemof
ESlabiished Emplown (New York: Cetller for R"se'lrch in
Ca"",r [)cvelopment. Columbia Un iversity. 1981):
J. M. Bardwiek. "Pl~tcauing and Productivity:' Sioall
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108. Abdclnor and Hall. Cilrea Dl'\'el0PI/I1'1It of ESlablish"'!
Eml'loyeeJ', J. S'mnenfcld. '"Dealing with the Aging
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)()') f"Crcn,."e. Stoner. and Warren ...,\lanaging the C""",r Plateau:'
I 10. J. Ficrm~n, '"Beating the Midi ife Career Crisis:' FOrllme
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III.J. Pldler. "SAS InslilUle: A Different Approae to
locell1ives and People Management f'ra{"\i",', in lhe
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111. S, Clilford. "Saying No to RetirenlCnt:' file, MIIglI;ill~
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D<lby Boomers:' (M~y 5, 2006), hnp://www.nIC1Iife.coml
AppliealionsICorpor«teIWPS/CDAIl'ageGel1er.l.torlO1'8895-
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113. P. Coy, '"Old. Sm~rt, f'rodu,·tiw:· HU.I"lIe,'.. -lIi'd (June 27,
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Ihl.l'illes.,\\\·d (July 25, 2005): 102-3: S. Clifford. "Saying
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27-19,
) 14. 1'. Coy. ··Old. Sman, Productive:' Hu.\il/t'S)"I\t-~k (Ju ne 27.
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) 15. Ibid.
116.lbid.

117.lbid,
I I ~. G. Gr.Jh~m. "Would You Lie for Yom Ilo~~ or Would Yoo
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120. Ibid,
CHAPTER 9
I. C. Daniels. "The List Talxlo:' Forrwlt'. O<:toocr 28, 2002,
135---44: B. 1,1 indo. "Turn ing lhe Tide." 8I<Jill/'J·.I"11'eek.
September 26. 2005. 64-66,
2. In E. L~Fren;ere (Ed.). ""1titude~ in the Al1lcric~n
Workpl~ee VII. The Scventh Anmwl Labor D~y Survey."'
The 1o.hrJin Company by H~rri" lmeracti'·e. I-II.
... K. Duran. "Vac~tion? Whm E.xaetly Is That'!' Till' /lOllSlOII
Cllmnide.l)ccembcr 5. 2005. DS
4. R. Konrad. "Skepkss ,n America:' 711t' 1101<.1"1011 Clmlll;d,'.
.\lay IS. 2005. O~.
5. Ibid,
6. Ibid
7. J. S<'Ott. "Burnoul Bites Workers ~nd Employers:' Tile
HOl/wol! Clmmid", February 17,2006,01,04.
8. C. Krischcr Goodm~ll. "S~ying No to Extra Work:' Till'
IIOII.WUII Clrnmid". Apri I I 8, 2005, 05.
9. C. Hymov.-'itz. "Doing More wilh Less.Avoiding Shoddy
Work ,,"d Burned-Out St~ff."·llIllre /"nul. Febru~ry 25,
200... B I.
10. Ibid,
II. Ibid,
12. In E, LaFrenicrc (Ed,), "Allitudes in thcArnerinlll
Workpl~ee VII, The Scventh Annu~1 Lubor D"y Survey."'
13. Ibid,
14. Ibid,
15. "B"d Job, Arc' " Pmblem Eur,,[X'-wide:' Iro~"rd\ 1I!1l.~,,~il!<:,
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16. J. A, Fuller. J. M. 5t"nlon, G. O. Fi~her. C. Spitzmiller. ~nd
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J",mllli 0/Aflpl;nl Pnc!lOlogI' 88 (6 2003): 1019-33,
17. "Neg~tive Fecling~ Affiicl40 Million Adults in U.5 .."· \\~t//
Slr",,1 JOllnllll, Nowmlx'r 26. 1993, p. B I ,
Ill. R. S. L:I7,~ru,.I'.I3·c!wI08i("ll1 SIfl'SS Will COI'illg l'I'lJ('t'J'st'J
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19. L'll.arus ~nd Folk man. SIren. A/'I"";$ol. mId C"l'illg
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25. CI~y, "Sccuring the Workpl"ce: Arc Our Fears
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29, Ibid,
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34 Ibid.
..5. D. Watson and A. Tellcgen. "To",,,rd,, Conscnsu:11 Structure
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37. R, T. Lee "nd B. E. Ashfonh, ··Onthe Mc~ning of
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40, D, J;lI'.scn, "Winning, Ho", the' Olympi"n Qu il TIl'illg T<K'
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56. Ibid.
57. Kahn and 8yosicre. "Stress in OrganiZ:llions:'
5~. Fi,her, "Weleome to the Age ofOvcrwork:'
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63. Fi,her. "Welcome to the Age of O'"Crwork:'
64. Seligmann. NamUlh, and Mi Iler. "Drowning on Dry Land ..
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66. Ibid: R. L. Kalin. II\)rk«",1 H('o/lh (New York: Wiley,
1981): S. V. Kasl and S. Cobb, "Blood Pressure ctwnges in
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67. J. Bro"kner, '1'IIe EfTe("\~ of Work Layuffs ,m Survimr.;:
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L. L. Cumming~ (Ed~,), R",'Mn'h ill Org«II;;<II;oll,,1
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68. J. Fiem,an. "Bc'ating the Midi ife Career Crisis:' Fom",,,.
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69. M. Davis, "Anadarko to Jettison 400 Job<;: Senior
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70. L. A. Joonson. "Stud)': I in 5 Laid Off in Reeent
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71. Ibid,
72. B. Rosc. "Part-Tim" Work, Full·TImc' Worries:' 'limI/OII
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73. Ibid.
74. Ibid,
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Annual Averdges for 2005:' Nnt's Vllited SUIlt',}
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76. Ibid,
77. Brief ,md A tich. "Studying Job Stress": L. U:-vi.
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Supplement 110. 528, (1972): 119: M. Timio :md S. Gentili,
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78. R, [I ies. N, Hausennan. S. Sehwochau. and J. Stibal.
"Reporled In<'idenee Rates of Work -Related Sexual
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79. K. I'ope. "KeytKYdrd U,ers Say Makers Kncw of Pmblelll-',"
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~O. B. Sehrc'iner, "HOI Watero"Cr B"thnKHn Breaks:' Hm<sIOIl
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81. Ibid.
112. J. M. George. T. F. Reed. K. A, B:l1l:'rJ. J. Colin. :,nd
J. Fieldi ng. "Cont"<'j with A IDS Patient, a, a Souree of
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I'"<'(Son, "H igll-Quality Work, Job Sati,faction. and
Oceup;,tional InjurieS:' Joun/al of Applied 1'~.... cI!Olvgy 88
(22m3): 27{"'-83,
83. "Cargo PilO1s Say They Are Flying Tired. aoo Seek Tougher
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84. "Workplaee Injurie~ May Be Far Worse Than GO"emment
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85. J. A. Krug, "Why [)(, They Keep Leaving"" Hlln-urd
1J",,;IIl"SS RM'i,,", (February 20(3): 14-15.

86. Ibid,
117. Ibid
88. Y. Cole. ·'Work·Life in ~I Down Economy: Momlc Boost or
Revenue Flu,hT f)il"e~i,.'"ln(' (March/April 20(3): <)6-101,
89. Ibid,
90. S, Shdlenoorger. "'Single I'arcnting Homt' Carcer Stre"."'
\\i/II SI...·'·I JOllnlUUUne I. 199..1. B I.
91. S, Shellenbarger. "'The Aging of America h Mak ing .Eldcr
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92. "Saoowich Generation Caught in DcnlO£rnphie Tmp:'
/l!a""Selllem 1.1.1"'.. , May 10,20)6. hnp:llwww.management-
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93. S, Shcllcnoorgcr. "The Aging of America I, Making 'Elder
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Februa')' 16. 1994, A I, All: "Sandwil:h Genl'ration Caught
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94. A. M. Ryan. B, J. We,I, and J. Z, Carr. "Effeets of the
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JOIlnwl ofAIIf!lil'd PS-ycilOlogl' 88 (4): 647-59.
95. "Credibility of Witness Is Altacked at Tyco Tri"I:' New Yor~
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%. l. M, Si.xd, "Counsdors Hdp Survin,rs Dcal .... ilh Grief:'
nil' HOIlSIOII Chronicle. March 29. 2005. A I .
97. J. E. BrtXly, "Expcns Offer Ways toAllcviate Stress:'
HOIl)'wn Chronidl'. April 20, 2003, 4E.
98. Ibid,
99. Ibid
100.1. M, Sixe!. "Counsclors Help Survivors Dcal .... ith Grief:'
TlPe HUIISloll Clmmidl'. March 29.2005. A I.
101. Ibid,
102. L. A. Mainiert> and D. E. Gib,on, "Managing Employ<..,
Trauma: Dcaling with the Emotional Fallout from 9111.'"
Aradem)· of lIIanagl'llIl'nt £\WlI/;"" 17(3 2003), 130---43.
103. Ibid,
IQ.l. C. Haberman, "As Opposed to Numbness, I'aill Is G,~>d:'
N/"tI' York nll/t'J. OClOlJer 21. 200J: C2Q.
105. M. A. Schuster, B. D. Stein, L. H. Jaycox. R. L. Collin.,.
G. N. Marsh<ll!. M. N. EHion. A, J. Zhoo. D. E. Kanousc.
J. L. Morrison. and S. H. Berry, "A National Surwy of
Stress Reactions after the September 11.2001. Terroris!
AHal'ks:' Tile N,,,,' Englw'd lounwl of Medicilll' 345(20),
November 15.2001. 1507-12. '"Feds Eye En£ines in
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106. S, Folkman a"d R, S, Lazarus, "An Analy,is orCoping in a
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R. S. Lal."ros. "Iflt Changes It Must Be" Pro,:ess: Study
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R. S. L",aru,. "Coping a, a Mediator of Emotion:' lOltrtwl
of P,'~mlalil-," 011<1 Sociol PJI'('/lOloKI' 54 (1988): 466-75.
REFERENCES 665
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!O8. Ibid.
109. D. Dunn, "For Globctrotting Execs en Fmni lie.'" /JI/sinl'ss
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III. E, All Powell. "Time Management Can Produce Rewards;'
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I 12. Ibid.
1 n. S. Shdlcnoorger, "Multita,king Make' You Stupid: Studies
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JOIln/al. February 27,2003, B1.
I 14. Ibid.
115. Ibid.
116. W. L, French and C.11, Bell Jr.. Orgillli:!lliollal
Dt"'l'lopwem: /Jelwl'ioml 5C;1'1"'1' "1/l'n·l'mi()II.~ for
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117. S. Shellenbarger. '"Work and Family: Men Find More Ways
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1 18. S. For,ter. "Companies Say Yo~a Isn't a Streteh: Physiea!.
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119. Ibid.
120. Ibid.
I 21 . Quick and Quick. Orglmi~mi(!1wl Siren WId I'r/'l'emil"/'
At111111gl' IIII'llI,
122. S. Be£ley. "J)"lai Lama and MIT Together In\'Cstigate Value
of Meditation:' ail/I SIred JOIml<ll, September 19, 200.., B1.
123. Ibid.
124. S. Cohen and T. A, Wills, "Stress. Soci,t1 Support.:lnd Ihe
Buffering Hyptllhe,is:' 1'.\yl'ilOlvgiclll Hullel;Il 98 ( 1985):
.. 10-57: I, G. Samson, H. M. Levine. R, B, Basham. and
B R. Sara'on. "Assessing Social Suppon: The So,:ial
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I'J.\1'lwlog)' 44 (198-'): 127-39.
125. "Stress Busters:'
126. B A"h, '"Companies Sa>, Ye, to Child-Cal" Servi"eS:'
lJmm-College ~'lr1liol/ I:./Igle. May 29. 1994. C5.
127. M. D. Fder, '"Babes in Work Lind,'" Fontme.April 18,
1994, .. 1-32.
128. S. Shdk'noorg"r, "Fiml' Help Employees Work with Si<'k
Kids:' lIilll S/lrel lOllrllal. May I I , 1994. 131.
129. "Work-Fami Iy Problem, Get Their Own I\ lanag""';:· \\illl
51reel lUllmlll. April 14.1992.131.
130. "Training Work<'rs to Be F1nibk' on Schedules:' Ilhll
Slreei lOllmlll. Febru;ll-y 10. 1993. I: "Workpl"ee
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JVI/TllIII. NOl'ember 23. 19'13. A I ,
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132. J. Aky. "The Temp Biz Boom: Why It's Good:' Pontllle.
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133. N. B. Kurland and D. E. Bailey. 'Telework: The
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136 M. 19baria and T. Guimaraes_ "'Exploring Differenccs in
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147---N,
137, 1'. L. Dixon and J. Websler, "Fmnily SlruelUre and lhe
Telemmmulcr', Qual ily of Lifl' ," JOllrtPol of Em/ Ulil:'r
CO/llflwitrg (Fall 1998): 42-49.
138, "Annual Survey Sh,,,,, Amcricans Arc Working From
Many Different LOCal ions OUlside Their Employers
Officc:' Inlemalional 1'ekv.-ork A,socialion & Coulll'i 1-
News-Press Release. May 10.2006. http://www.
workingfmnmnywh,'rc.orglocws; "ITAC, The Telework
Advisory Group For WorldatWork:' May 10.2006.
hnp;www.workingfrornanywhct<'.otg:; "Virtual Busilll'ss
Owners COlllmunily.-FAQ Center: Teleconllnuting!
Telcwork,'" May 10,2006, hl1p:/Iwww,vss,:ybcroffice
.cOlufvfa<j/25,hllnl.
139, R. Eisenocrger. 1', Fasulo, and V. Du"i,·Lw\1a'lm,
"Perceived Organi7.ational SlllJPO" an<l Employee
Diligence, COl11milment, and JmlO\'alion:' i<mnwl of
Applied l'S)d",/ogy 75 (1990): 5 1-59: R. Eisenberger.
R. Huntinglon, S. Hutchin,on. an<l D. Sowa, "Pern'i"ed
OrganiUlional Suppo":' Jounw/ of A/'l'lit'i/ Psych%S.'
71 (1986): 500-7: M. L. Ambrose and M. Schminke,
"Organi"ation Siruelure as a Moderator of the
Relationship Between Proce<luml Juslice, [ntcmctional
JU'lil·e. Perceive<l Organi7.at;onal Suppo". an<l
Supervisory Trust:' JOllrna/ of A;'fJIi~d Psn'/IO/ogv
88 (2 2(03): 295-305.
14{I. D. N. Sull, "Managing By Commitments:' If<ll1'<mllJusillt'ss
N,...'i,,",,' (June 2003), 82--91.
141, J. M. George, T. F. Ree<l. K, A. Ballar<.J.J. Colin. an<l
J. Fielding. "Contael wilh Al DS Palient.' "', a Soul<'e of
Worl;-Relate<l Distress: Eflecls ofOrganiz:llional and
SOl'ial Suppo":' Ai'at/elJl)· (if Mmwg<'1l1nll Jounll1l 35
(19%): 157-71.
142, B. 01 i"er, ""How 10 I'revem Drug Abuse in Your
Worl;plaee:' fI"M(j811~ille (~ember [993): 78-81.
143, R.A. Wolfl' and D. F.l'arl;,·r, ""Emp]o)'ee Health
,\hm'gemel11: Ch:<llcnges ,ll1d Opponunities:' Ami/I'ml' of
Mallagf'IIIl'1II Em,'wiw' 8 (2 1994); 22-31.
144, U.S, Depanl11el11 of Heallh and HUln:m Services. 1992
Nwiww/ Sun·e;.· (iflVorhit~ H"aitb Promotioll Actil';li~,\__
A SIIIIIIt/i1n' "Won (Washington, OC: U.S. Dcp;.lnment of
Heallh and Human Sen'ices, 1992).
145, Wolfe and p."ker. "Employee Ilcallh Management:'
146, J. M. Aug'lurns, ., Besl COnlp,my Pak? Employl"'s'
nrne Off." 711t! flOI/!l101I CltlVuide. January 9.
2006, D4.
CHAPTER 10
I. "Whirlpool Corporalion To<lay:' May 10.2006.
hItp:!lwww,"hiripoolcorp.conValxlUtidefaul1.lsp,
2. "Future Growth through Global Presence,"" May 10,2006,
h t1 p: /lwww.whiripookorp.com/abouVvi, ion_an<l_s lr~1Cgy/
glob"lplalfonll.<lSp: "Whirlpool to shed factories an<l jobs:'
TI,,-, HO/lm,m CbIVII;C/(, I>by II. 2(1}6. Dl: D. Camerl'n.
"Whirlpool 10 CUI 4jOO jo~ in plm1l e1osures:'
MSNBC"olll. May 10. 2(()6, hllp:!lwww.m,nbe.m.,n.l·onl!
i<l/12722%9,
3. C. Saller. '"Whirl pool Find, II' Cool." Fast COlJlpOIl);, June
2005, B-75.
4. Ibid: ""I~ow Whirlp<Kll Defioc" Innovation" ll/llil1t'Jsl~\-'d
Olliillt', March 6. 2006, http://www.busincssweek.coml
inrnwalc/l"<K1lenVnmr2lXl6lid2O:l60306_287425.hlm; "Global
CoopcMion and 1'e:<lnwol1; Procedure '111 AW:lN Winning
PnKlul'l:' May 10, 2t06. htlpJlwww.wh;r!p<••k.Orp.
oonvocwslfcal urcslholl1C ,asp'inews.i d=9&acl ion=pri1l1: "!ow
Worl<l 1'e<:hIKllogy A"'ard, Winne~ & Finali,b." 77,,-, IliJrld
Tec/lIwlQgY Nt'Mork, May 10. 2lXl6. http://ww,,",wln,tIeV
2OO4lbio 141 .html, C. Salter, "A J<lIll'S for Dc'sign:·
F<lSICmllf1Wn·. May 10. 2006, hup:/lwwwJaSICOIllpany.OOml
dc~igll/2(Xl5/jollCs-{Ja,htJl1t M, Arndt. "Creati"il)'
Ch:erflowillg:' HII!I!IIt'S!llIi't'k Ollliue, May 8. 2lXl6. http://
www, bu~ iill'S> wl'\:k .mITVnwgazinclmnlenl106_I 'lib 3983061 .
hlln'icalllp;.lign.jd:scan:h: ""Onlioc EXlr~: Whirlpool '-' Future
Won'l Fade ," BIU'ille.\·,'II!>,-J; O"li1l". May 8, 2(X)6.
htl 1': I/www. bu si Ilesswee k-comitnaga>: incJ COI11C nl!
06_l9ib.l983067, htm?eatnp:,igJl_id=at<'h.
5. "Global Coopcralion an<l Teamwork Prcll:edure an Awar<l
Winning Produel," May 10,2006, http://ww,,".
whirlp<lOll"orp .comlnew slfcal ures/home .asp?new,. id '"
9&action=print.
6. C. Saher. "'Whirlpool Find, Il' Cool." filM C(lI'II"my. JUlie
2005, 7.1-75: C. Salter, "A Jones for Design:' f'mCOfJl/!<I11\'.
~hy 10. 2lX16. hllp:/lwwwJil'"'ompany .l~,"vdesign!20051
jonc.,-qa.lllmi.
7. '"Global Coopcrali<,n an<l Teamwork PnX·l'<.lurc an
Awar<l Winning Product:' May 10. 2(X)6. http://Www.
wh; rlp<Klkorp .<:0 m!ne wslfeat u'" s!home .as p ~ n<:w, .;<l '"
9&action=prinl,
8. C. Saller, "'Whirlp<llli Find, lIS OIl'I."' Fil;"! COlJlpimy. June
1005,73-75,
9. Ibid: C. Saller, "A JOI"" for De,ign:' FalitCmll/"'"),
1\lay 10. 2006, hnp:/Iwww.fastcol11plmy.comldesign/2OO51
jonc'-<p.hlrnl.
10. C. Salter."A JOIICS for Design:' r,mCOllllm!l\', May 10.
2006, hilI'; /I www.fa.1 C(}Ill piln y.l"onVde" ignl2005/ jon <"S-<j a
.hlml.
I I. Ibi<l; C. Saller, "'Whirlp<Kll Finds hs C,Il,I:' Fa.ll CVIlII!0Il).
June 2005. 73-75,
12. Ibi<l,
13. "Online blr;': Whirlpool's Future Won't Fade:'
B".\'ill~,ull\-'t'k Ollhllt', May 8. 2006. hllp;!!www.
bus iIICSSweek.eOm/nl:'ga"iocIconIC11I!06_I 9ib3 98 3067.h1In?
,'amI'" i gn_id=sc,"':' h.
14. 10.....ard I'hellomt'llo!ogy of GIVII!'S ()Jul Groll/' Mt'llIbersltip.
H. Son<lak. M. N<:a1c. ,uKl E. Mannix (Eds.). (Oxfor<l:
Elscvier Scieoce. 20(3): W. A, Kahn, Book Review of
Towar<l Phenomenology ofGruups and Group
Membership. Adlllilli!l/mliw Srit"lCt' QI/arlerly (J une
2003): 330-.H.
IS. 11. Moon. D. E Conlon. S. E Humphrey. N Quigley. C. E.
DcVl'fS. and J. M. Nowakow,ki, "Group Decision Process

and Incremcnl<lhsm III 0l'£anizmi01l<1l Decision Making."
Orgm,i:.(l/iolw/ HI'!w,-ior a",1 HIIIIIIlII l)eci.I'ioli l'r<Xf'nf'~'
92 (2003): 67-79.
16. Ii. Dumaine. ''The Tmuille willl Team"" Fomme.
September 5.1994.86-92.
17. ,\I. E, Shaw, Gm"I' f)Ylla",i,'~·. 3rd cd. (New York:
McGraw-H,ll. 1981),
18. T M, i\!ills. Tlw ,<;o";ology ofS"'dll Gmll/'_~ (Upper Saddle
Ri\'cr.NJ: Prentice Hall. 1967).
19. J. A, l'ea",e II and E, C. Ravlin. '"The Design and
Aeliv<lliOll of Self-Regu l<lll11g Work Groups:' Hll/llw,
Relmiollll1 (1987): 751-S2,
20. n. W, TlICkman. "Dc\'elopmcnl<ll Sequences in Small
Grou!":' l'_~'dlO/OSi"II/Il"II('/il163 (1965): 384-99; B. W.
Tuekm:1Il and M, C. Jenscn. "Swges of Sl1l',ll Group
Ocvclopml·m:' Gmul' amI Orglllli:lI/i",,,,/ Sluliie~ 2 (1977):
419-27-
21. R. G, LcFauw andA, C. Hax. "Managcrial and
Tcchnologie<llinnov:nions at Saturn CorpoMion:' MIT
MI",ugemelll(Spring 1992} 8-19.
22. R. S. PelerSOn and K, Jackson Behfar. '"The Dynamic
Re btionship Bel ween Perfomlance Fccdt:",d,. Trusl. and
Conf1ie, in Groups:,' Longi1Udinal S'udy:' OrSUlli:llliQJIIi/
Ill'llln'ior amI lIumml Ikcil"iol/ Proce.fJH 92 (2003 j:
102-12.
23. C. J, G. Gersil'k, "Time and Transition in Work Teams:
Toward a New Model ofGmup De,·c1opmem." Al'Udemy of
M<I1I11I<I'IIIl'1II }ollrtlill J I (1988): 9-41 : C. J. G. Ge,."ick.
"Marking Time: Prediclable Transilion, in Task Groups:'
AcadI'WI' of MIIIIIIS"'lIelll }ollnw/ 32 (1989): 274-309.
24. t, L. Thompson. Mllh"S Ihe Telllll; A Gllidl' for Mmwger~'
(Upper Saddk River, NJ: Prentice Han. 2000),
25. G. R. Jones. "Task Vi,illility. Free Ridi ng. and Shirking:
Explaining the Effee! of Structure '1I1d T~'<:hoology on
Emplo)'~", l:Iehavior:' A("(l{/I'",.I' of M(l1lagl'1l11mt Ne..i,,",,' 9
(1984): 684-95,
26. C. Gibson and F. Vermeulen."A Healthy Divide'
Subgroups as <I Slimulus for Team Le<ITning Behavior:'
A(/",i"iJlrlJ/il"(' Stif'It('f' Q,,,,ner/Y 48 (2003): 202-39.
27. W, B. Swann. Jr" J. T. Poller. D. C. Seyle, and S, J. Ko.
'"Finding Value in Diyersily' Verifl<"alion of I'er:sonal and
Social Self-Views in Diverse Groups:' Acmlem\' of
/II"''''!j('mellt N("l'i",,· 29 (I 20(4): 9-27.
28. F, Warner. ""In a Word, Toyotil Drives for Innovation:' FilII
CO/III"'''.I', (AugusI2oo2): 36-38,
29. J. S!U;m Bunderson and K. M. SUlc1iftc. "When 10 Put the
Brakes on Learning:' HIU\'(m{ lJIlIi,,('.\.\ H"l'ie... (February
2003): 20-21.
30. A. Fisher, "How 10 Ballle the Coming Brai" Drain:'
FOrltlllf (~breh 21. 20(5): 121-28.
31. Ibid,
32. Ibid.
JJ. Ibid: '"Northrop Grumma" Corpomliorl-Ddining the
Future:' May 11.2006. hupl/www,nonhropgrumm;'n,co'n.
34. "Gcneml Elcdnc: Ollr Company:' May II, 21:06,
hup:/lwww.ge.c<.. ..ven/wmpa ..y/: A. Fisher. "How to Battle
lhe Coming Brain Dmin:' FOrIUlt(' (MaR'h 21, 2005): 121~28.
35. A. Fi,her. "How to Banlc the Coming Ilrain Drain."
Fortlltll' (Man:h 21. 2005): 121-28.
36. Ibid
37. Ibid,
REFERENCES 667
38, 1'. C. Brown. "The Effeel of Verbal Scif-GuidmICe Tmining
on Collc<;li"e Efficacy and Team Performance:' l'erwlUw/
PJI'dlO{OIlV 56 (200J): 935-64.
39 A Ilandura, SI'If-Effi,w'): Tile £xer";w vf COII/mi (New
York: W. ~l. Freeman and Company, 19(7).
40 Ibid.
41, Ibid.
42 Ibid.
43, Ibid.
44, Ibid,
45, C. F. Bond Jr. '1I1d L. J, TilliS. "Social Facilitation: A
Meta-Analysis of 24 1 Sludies:' l'J'.l'd'vlogil'Ul Hllllni"
94 (1983): 265-92: Shaw. Gmul' f)nllJrJI;"s.
46, Ibid,
47, B. DUl1lain. "Who Needs a BossT FOr/tf/l". MilY 7, 1990.
PI"52---60,
48, Ibid.
49, B, Burlinglon, '"The Coolcst Small Company in An",riea:'
Ille. MlIgIIVItf' (January 20(3): 64-74.
50, "Zingemla!\'s Mail Or<k'r:' "-ww.:tingerma""r0111,
September Q. 2003. www.zingeflnan.com/A bout Us ,pilsp.
51, E.l.c'vinc, "Mo"abk Feast.> for tlK' Holidays:'
RIfJ'illI'SI\\td Online. December 7. 1998.
www.bl/inc..week.co.n/@ @JAsb.\YQQBa@rJQctV
arch i\'e,\1 19981b3607 1553.arc h (Ill.
52, Burlington, "The Coolest Small Comp<lny in Amerira.":
www.7.ingermanS.<'~lm.May II. 2006. http://www.
zinge nna ns.emnli nda .pas p.
53. Burlington. 'The Coolest Small Company in America:'
54. "Six Steps 10 Sdccting Suprnor Chccsr:' ,,"ww.zingennans,
<'"O1ll (2003).
55, "A Guide 10 Gelling Along: ZCoB Procedures for Dealing
with Conflie! or l)i"alisfanion Wilh a Co-Worker:'
ZingunuU/'s Sluff Guide (2002). ,,"ww,images. me.eoml
frc<.,toolslzin£.-train/zing..guidc.pdf,
56, .... Steps to Grcat Finance:' Zingennan's S/l/ffGlIide
(200 2), WWW.i1ll age s. illC",om/freelool sf zing..l rai nJ
zing~finanee.pdf.
57, Burlington. "The Cooiesl Small Company in America:'
58, J. R. H<lekman. "Group Innuenees on Individuals in
Organizalions:'ln /0,-1. D. DunllClle and L M Hough (Eds,).
HI/III/book of Indus/rill/lltill OrgWli::J/liolllll PSI·cllO/OXI·.
2nd cd .. ""I. 3 (l'alo ,\ 110, CA Consulting P,'ydl<llogi"s
Press,I992),I99-267.
59, Ibid,
00. D. C. Feldn1<ln. ''l1\C De"clopmenl imd Enforeement of Group
Norms:' Amlin"y of Mmulsemem R",·i"". 9 (1984): .j 7-53.
61, II aekman. "Group InfluellCcs on Individual, in
Organizations:'
62, E. P. lIoliander. "Confornlity. Status. and Idiosyncrasy
Credi\." l'syc!ro{oXi",,/ Re.:iew 65 (1958): 117-27.
63, M. !Jallo". "The Indu,trial R'l1ebustcr: A Char;'eterization:'
AWlied Amllml';)/ogy 7 (1948): 5-18.
64, Ilaeklll;,". "Group Influences on Individual, in
Organ izat ions:'
65, C. L Jackson and J. A. LePine. "Pccr Response 10 a Team's
Weakest Link: A Te,t and Extension or lePine and Van
Dyne's Mooel:' }vunrll{ ofAI'I'/if'll l'sn'!rQ{ogy 88
02003): 459-75.
66 C. J. Nemeth and Il. M. Staw. ·'The Trade-Offs of Social
Control and Innovation in Groups and 0l'£anizations:'
668 REFERENCES
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67. Ibid.
68 . .\1. J. Gmwitch. D C. Munz, and 1".1. Kramer. '"Effect, of
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Temp"''''y W",kgmul":' Groll!' [.A-1P(lm/eJ': Thl'ory.
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D. C. Munz. E, K. Elliol1. and A, il.bthi,. "PmmOling
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The Effects of Positi"e M'KId and Autonomy in Pmbk'm
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f)yllo",in: T"t:Ory~ ReJt'on-l,. w,,1 Pwc,/rl' 7 (3 2003):
200-13,
69.•\1. William, und Y. Ono. "Jupune'" Cite Need for Bold
Ch;J1lge. but NOI at the Expen>e of 'Stubilily:" \\1111 S/I."el
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70. G. R. Jones. "Psj-'chologicul Orientution und the P!"Ix:e" of
O,);unizationul SociuJizatioll; An Interactioni,t PnsJX'<.·liw:'
AClllleiJI.l' ofMllIwgt'mt'1II Re,'it'l'· 8 (1983): 46..\-74.
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00:0ni::.t/liOlUlI Sodali;tllirm:'
74. www.intere<>!weSLoom/disneyland: M, N. Ma"inez.
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CHAPTER 11
I. www.mi<:m...fu;om.2C06
2. O. Thomas. "Miermoft Employees Feel Mahgned:'
www.money.clln.com .•\1urch 10 2006.
3, J. Nightingale, "Rising Frustmlion wilh Mierosoft·s
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4. Ibid,
5. "Microsoft·s Dcp;lrring Employees:' www.)·ahoo.llCws.com.
May 6 2006,
6. J. D, Steiner, Group Process and Produeliv;ly (New York:
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7. R. A. GUlZO ;lnd G. P. Shea. "'Group Performance and
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and L M, Hough (eds.), H(/I/(Ibook of IrulU:>"/rilil 111/(1
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8. GUlZO und Shea. "Group Performance and Intergroup
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9. P. B. P;(ulus and H.C. Yang. "'Idea Generation in Groups'
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II. C. Daniels. "This Man Wants to HelpYoo, Seriously:'
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12. www.sccondcily.com.
13. Daniel" "Tbi, Man Wams to Help You. Serio....,ly...
14. Ibid,.328.
15, www.rolling'tone,-,·om,2006.
16. A. Serwer, "'Inside the Rolling Stones hlC:' FOnlme,
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17. www.roliingstollCs.colll.2C06.
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A,."demy of MmUlgl'1111:11t JOl/m"l, April 200 I. mi. 4..\,
376-393,
19, P. C. Emley, ··So,..ial Loafing and Colleelivi,,,,:
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£l]N'rimelll<ll So6al P.';)"e!IOI()h~' 16 (1980): ..\57---ti5:
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K. Williams,S, Harkins, and B. Lm:me, "ldell1ifiability as a
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21. M. A. Bric\;:ocr, S. 0, Har~ins. atxl T. M. Ostrom,
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68. Ibid.
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71. Ibid,
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79. T. Dvir. D, EWIl, ,Old B. J, A,~)li(). "lmp'K.1 or Tnillsfom~,tiona1
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S,'i"'I,'e Quarterly. 1972. 13. pp. 359----370; Miles. Marro--
Orgwli:,(JliolliJ/lle/wl"ior.
52. Miles. Mu,:ro·Organizational Behavior.
53. S, P. Robbins. Managing Organizalional Conflkt'
A Nontraditional Approach (Englewood Cliffs. NJ.:
I'remke-Hall. 1974): L. Coser. The Function' of Social
Confliel (Ncw Yorl::: Free Press. 1956).
54. A. C. Amason. "'Dislinguish Illg the Etlects of Flineti01wl
and Dysfun<:lional Conflict on Strategi,' Dc,'ision
Making ... :. Ami/elll." oj Mwwg"/Il"'lI l"'mUJ/. February
19%, ""I. 39, pp. 123-149,
55. B, Kabanotl. "'Equily. Equ'liity. Power. and Contliel:'
AN"!e,,,} oj MlJIlligemrnl N''>'if'\<'. April I 991 . ",I. 16,
pp.416-442.
56. lltis di"-'ussion owes llIu,'h to the scminal work of lhe
following "ulhors: Lou R. Poooy. "'Org,mizalional Coniliet:
Concepts und Models." Al/mini,llmlire Scil;lwe OIUJrter(Y.
1967.2. pp, 296-320: aoo R, L Walton :1I1d J, M. Dutton.
'The 1\1armgement of Imerdepmtmental Connie!: A Model
iiOO Review:' AI/mirris/ril/i"" Scil'lICe QUI/f/ertl·. 1969. 14.
pp.62-73.
57. S. W. Floyd. "'Stralegizing Throughool the Organizalion:
Managing Role C"nllil'l in Stmtegie Rl·nl· .....al:· AmI/em.'" oj
Mwwgl'Jltnl/ RI'l·il,\<'. January 2((X). wI. 25. pp, 154-178,
58. M. K, Duffy. J. D. Shaw amI E. M. Slark, "Performance
and Satisfaction in Con!licled Interdependent Groups:
Wh"ll and How Docs Self-E,k...·rn ~bke a Diffl'rcnce'r'
Acm!t'JIt.'" oj MlJIlIIgt'meni JourII"l. August 2((X). wi. 43.
pp.772-783.
59. M. Dahon. Men Who Manage (New York: Wiley. 1959):
\',-'"lton mid DlIllO!l. "'The Management of ImeJ"tkp,,,tmeutal
Conflict."
60. W"lton alld DullOll. "'The Mana~emcnt of InleJ"tkp;lrtmentul
Conltict": J. McCann aoo J. R. Galbrailh.
"'lnteJ"tkpartmcntal Relalionships." m P, C. Ny,trom and
W H. Starhucl::. cds. Handbook of Organizational Design
(New York: Oxford Universily Press. 1981),
61. R E. Nelson. "The Strength of Sirong Tics: Social
NClworks anJ Intergroup Confl,ct in Organizations."
;lem!t'm)' oj Mallllgemeltl Jouflwl. JUllC I 989. mi. 32.
pp.377-402.
62. www.£ucci.com.2006.
63. A. Galloni. J, Carrcyrou. and C. Rohwedder. "'Slripped of
Slars at Top, Will Gucci Stilll:le Gun';"" ~\'IJII SIren
JouOIol. 2003. NO"ember 5. pp, A.I. A.14.
64. C. Hm)'n. "Struggling to Design the Future al Gueei:' N,'\<'
Jork Tlmn. 2004. Jan IOIh. p. C, I.
65. J. D, Thompson. Organizatiom in AClion (New York,
l\kGraw-Hill.I%7).
66. K. S. Jehn alld E. A. Munl1ix. "The Dynami,' Nature of
Conllic!: A Longi1Udinal SllIdy of Intragroup Conflicl and
Group Performan"e:' Armlem)" oj/I!(1II(1gemeltl Jourllal.
April 2000. "01, 44. pp. B8-252.
67. Walton und Dulton, '11K. Managenll'nt of InleJ"tkpannll'ntaJ
Coulliel:' p. 65.
68. Ibid .. p. 68,
69. Pondy. "Organizational Connict:' p. 300.
70. Ibid" p, 310.
71. S. W. Floyd. "'Str.negizing Throughool the Organiz:n;on:
Maniiging Role ConniCl in Stmt,!;i,' Renewal." A,·.,,}(omy of
Management Review. January 2000. "01, 25. pp. 154-178.
72. G. Liibi'''K'''. D. J. Bnlss and B. Gray. "'Social Networks
"00 Pereeptions of Intergroup Confl iel' The Role of
Negati\'(; ReI"tiu",hips and ... :. Awl/em.\' ojMlllwgemelll
JuuH!al. February 1998. "01. 4 I. pp. 55--68.
73. CIC Corp. wc'bsilC www.eiciige.lI::y.<.XJ1l1.
74. B. Fannin. "C1C Workel'!' A,k Judge to Void Noncompliance
Pael:' T7,e Ellg/e, October 2.~rd. 1997.p.l.

75. P. S. Nugenl. "Managing Conniet Third-Party
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EWClilire. Febnoary 2001. vol. 16. pp. 139-141 .
76. J. Z. Rubin and B R. Brown. The Sr",ial Psychology of
Barg'lining and Negotimion (New York: Academic Press.
1975).
77. J. F. Bren. "Slairways to Heaven: An lmerlocking Self-
Regulalion Model of Neg<>liation." An/(/plliY of
Millwgemelll Nerie\<'. July 1999, vol. 24, pp. 435-451,
78. J. T.Polzer. E.A. Mannix and t\l, A. Neale. ""lntereM
Alignment and Coalilions in Multiparty Negotiation:'
Acadl'1J1y of Management Joum"/. February 1998. "01. 4 1.
pp.42-55,
79. E, E. Nc·ilsen. "Unde"I'lIlding and Managing Inlergroup
Conflict:' In J. F. Veiga and J. N. Y"nouzas. oos .. The
Dynamic, of Organizalional Theory (Sl, Paul. Minn.' Wc',l.
1979). pp. 290-2%: Miles. Maero-Org;'nilaliollal
Beha"ior.
80. T. L. Sranley. "When Push Cumes ro Shove: A t\1allager's
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p.6.
81. P. S. Nugenl, "Mar~,ging Confli,'!: Third-Party Inlerventions
for Mallagen;.'" ACIIllt'lIn' of/IImwgelllelll ElI'curiw. Febru;lry
2oo2,,\~.16.pp, 139-141.
82. Neilsen. ""Undersranding an<J Managing Inlergroop
Conflic\.""
83. C. lJ,cn<Jcrsl<y. ·"Organi7.ariunal Dispute Resolution Systems:
A Complcrnenlarilies MO<lc1."" Acm/elll\" <If Mwwgel/lCIII
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84. R. E. Wallon. "Third Party Roles in Inter<Jcpartmental
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85. K.1lJornas. "Confliel arid Negotiation Processes in
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H:tndlxJok of Industrial ,md Organizmional Psychology.
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,'16. R. L Pinkley and G.B. Nonhcmfl. "Conflict Frames "f
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1994, \'01, 37, pp, 193-206.
,'17. R. E. Wallon an<J R. B, McKe"ie. A Behavioral Theo')' of
Llbor Relations (New York: McGmw-Hill, 19(5).
,'18. Ibid,
CHAPTER 14
I. K. Naughlon. "Tho;, Bloc-Collar CEO."" N('\i·"week.
December 5. 2005. 4-6.
2. "'ww.daimler('h')',ler,eorn.2005.
3. K, Naughroo. 01'. eil.
4. www.ch.)·slef.{xlln.2006.
5. L, W. Porter and K. II. Roberts. "Cotnmunication in
Organizalion,:'ln M. D. Dunnen,· (cd,), Hwu//!<Jot of
IlIdIlSlr;,,/ UIU/ Orgwli;allollall's'ic!wlogy (Chicago: Rand
,\kNaUy.1976),1553-89,
6. J. K, Barge an<J C. Oli,'Cr. "Working With t\pprceimion in
Managerial Pnrl'tiee:' A""dnll.l' of MI11ll1/:,'I/I«/11 R''l'i('",.
January 2003. vol 28.124--43.
7. C. A. O'Reilly and L. R. Pondy, "Org,mizaliona)
Communication ,"" In S, Kerr (cd .). Orglllli:;miVlwllldllr..;or
(Columbus. OH: Grid. 1979) pp.71-106.
REFERENCES 675
8, Ibid.
9. K. L A,ho;,raft. ""''''''pc<:li"" on Organizaliooal Communi-
emions: Findiog Common Ground:' Ami/emv of MIUI<I.~('ml'1I1
R('l'i",,'. Oclober 200 I. '01. 26. 666---69.
10. D. ,\. I~ofmmm ,md A. Slelzer, "The Role of Saldy Climatc
and Communicalion in Accidenl Interpreralion:
Irnpliealions for Lc:uning From Negali"e Evems:' Awd<'lliV
of Ma,,«galll'lII Jounllli. Decemlx't 1998. vol. 41 . 644----58.
II. N. Phillips and J. L. Brown. "Analyzing Cornrnunic:tlion '"
and Around Organizations; A Critil'al Hermeneutic
Approach:' Awdl'm,' of M<lII,(~eJ!l"1IIJOl/mal. December
1993. ""I. 36, 1547-77.
12. P. P. Lc Breton. AdlllilliJ'lrtilil'l' Illll'l!igl'lIce'/llfomulI;oll
'<;y,w""'$ (Bo'loo: Houghlon Milllin. 1963): W. G. Scoll aoo
T. R. Mitchell. Orgllui:lI/illll 'l7lmrl' (llomewood. lL: Irwin,
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13. R. lIrccdcn. "Small Talk. Surting the Nel-,\t Work:'
lVaii '<;lral JOImwl. Oct 2 I. 2003, AN.
14. t\ 1. Conlin. ""Employees. Surf at Your Own Risk:' RUJ'iuess
lVed (June 12.20(0): I05--{J.
15. Ibid.
16. L. Am\>tmng. "Someone 10 Walch Over You:' 8U,I'III'.I.I
Wed (July 10.2(00): BusillessWccl; Online,
17. "Inlemel Fi hers Curb Web Surfing:' IIIl/USlri,,1
O;mibmion. 2003. n. 36,
18, Ibid.
19. O. W. Raskin an<J C. E. Aronoff. hlll'I]/t'TJ'OIlHl
("mlltlmllieulion ill Orglll/i:;aliom (Santa Monica. CA
Goodyear. 1989).
20. F.l'cming, "Toward a P,)'cholol!;cal Theory of Hunum
Communicalion." Joumol of /h-",ulI/l/)' 22 ( 1953-1954):
B-76: Ston and M ilehcl1. Orgalli::alioll TiWo......
2 I J. M. G<:orge. ""Mooo an<J Absence:' JOIlrlml of AI'I'!ipd
PJ1'dlOlogy 74 (1989): .• 17-24: J, M, George, "Stale or
Trail: Effect, of Po,itive M,IO<! on Pm"",ial Behavio" at
Work:' JOImlili of Applied PsydlOlog-'" 76 (1991): 299-.307:
J. M. George and A. P. BrieL ""I''-'''ling Good-Doing O"od:
A Concepltwl Analysis of the MoOO at Work Organizalional
Sponlaneily Rebtion,hip.'"I'sydlOlogirlll Hullnin 112
(1992): 310-29.
22, S. Cohen and T. A Will,. "Slress, S",:ial Support, and the
Buffering Hypothesis:' Ps\"dlO/ogical Bullelhr 98 (l985):
3 10-57; J. M. George. T, F. R,'CJ. K. A. Bal1",d, J. Col in.
:'nd J. Fiel<Jing. "Contael with AIDS !"aticnls as a Source of
Work-Relaled Dislress: Effed' of Organizational and
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(1993): 157-71.
23. V, An;jnd :l1ld C. C. Manl. "An Organi7.ation;<1 Memory
App""K'h 10 Infonnalion Managc'tnem:' A<"iIdell/,I' of
Mwwg"lIIem RI'I·''''''. October 1998, vol. 23. 796-810,
24. D. K,.....l·kh,"'Jl and J. R. H,mson, "Informal Ntlworks: TIlL'
Company:' Harl'aTd 1I11J'iul'J's RI'I';I"" (July-August 1993):
104-11.
25, E. M. Rogers and R. Agarwala. Rogers. Coumrllll;Cil/irlll ill
OrgwlblliO/!.I' (New Yon:: Free Pn.'ss, 1976).
26. "Employers Struggle to Teach Their Employees Basic
Cmnmuniealion Skills:' lVaii Sireel JOlin/III, November 30.
1993.AI
27. "Corporale Jargon: If You Don'l Know lhe Imide Skinny.
It Can He a Jumblc."II'i111 SIII'I!/ Jounwl.l'ebruary 15.
1994, A I.
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29. J. T. Malloy. Drt'ssfor SI«OCt'SS (New Yorl;: Warner Books.
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30. J. Sandberg. "People Arc Hugging a Lot More Now and
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A I.A5.
31. Ibid.
31. C. Gallo, "Leaders Must Look the Pan:' ,,"w,,",busincss,,"cck
mm, Mun:h 11.2006.
33. J. Cmey. "Getting Business to Think About lhe
Unthinkable:' Husinen ll,'d (June 24. 1991): 104---6,
34. firieflngs from the Editors, "The New Conul1unicmions:
Don't Fax Me, I'll Fax You:' Hon'o,,1 H'MillnJ' N"l'i",,'
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35. ,,"ww.brnwnsteingroup.cmn.2004.
36. "Ultimate Vision:' Af)IVEEK Easlern Edilion (November 10.
1997): 54,
37. www.brownsleingroup.wm:··Pcnn~yh·ania:·AOII·EEK
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II!III Slrl't'/ Joum"l. January 6. 1998, B2,
38. H. Stout. "Self·Evaluation firings Ch"nge to " Fa,nily's Ad
Agen,:y."
39. Ibid.
40. M. Anderson. "Renaiss,"",:e Won",n." Adwt'<,k. M"y 14.
2001. 5
41. www."""lmm'.eom,2006.
42. N. Templin. "Compan;e, Use TV to Re"('h Their
Employees." lI'all Sired Joun/III, December 7, 1993.
HI. 616.
43. Baskin and Aronolr, fll/N/wrsollill COI/I"lIlIIicalioll ill
Orglmi;<JIiolls.
44. A. Rossett and T. Bickhmn, "Diversily Training: Hope,
Failh. and Cyniei,m:' Tmi"illg (Janu"ry 1994): 4 1--45.
45. D. Tannen. "The Power of Talk:' Hare'ard Business Review
($cptember----Q<.·t<>bcr 1995): I 3~--4~; D. Tannen. Ti'/killl:
frolll 910 5 (New York: Avon Books, 1995).
46. Ibid.
47. Ibid.
4~. R. L Daft. R. H, Lengel. "od L K. Trcvi"". "'Mes'<:lge
Equivocality. Media Selcction. and Manager Performance:
Implie,,!;ons for lnformatio" S)"'tems." MIS QlIonn!?-' 11
(1987): 355-66: R. L Daft ~md R.II, Lenj;e1. "'Informalioo
Ri(·hn<.'ss: A Ncw Approa,:h to M~,"agcri,,1 Behavior and
Organization Design:' In Il, M. SWw and L L Cummings
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49. R. L D,tft. Orgalli::/II;,,1II Tl1nJry ""d lR.liS" (New Yon.::
Wesl.I992).
SO. J. D. Ford and L W. Ford, "The Rok of Coowrs"t;o"s in
Producing Intentional Chanj;e in Organizalions:' "C<ld,'",y
of MW1<IKen1l'm Rel'i'1l', July 1995, \'01. 20, 54 1-71 .
51. Ibid.
52. S, P. Weisb"nd "nd S. K. Sdllleider. "Cornputcr-Mctli"ted
Comn1Uni("alion "nd Sociallofom,ation: Status Salience
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53. R. W. Collins, "Communicalions Pulicy "lid Inform"lion
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22.2(0)' llusio(''SW""k Ooline.
55. Ibid,
56. Ibid
57. R, W. Coll,ns, "Communicmions Policy ,md Infonnmion
Te,:hoology: I'mmis("s, Pmblems and I'm.'peds' Armlem....
of MWlOgemelll R''1'i",,', Oclober 2003, vol. 28, 673-76.
5~. Ibid,
59. Ibid,
60. www... It~oowcbsystems.eom , 2000.
61. Il. Riggs, "Smaner Nctworks:' fllfomwtioll'n','I.:. (April 12.
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62. M. Borden. "When Big Growth HilppettS to Small
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63. A. L Sprout. "Tbc Internel Inside Your Company:' FOrJiJ//e
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65. S.O. Straus. S. P. Weisband. J. M Wilson, "Human
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68. ,\1. L Wald, "Management I"u("s lonming io Shullie
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3. w,,"w.manel.com.2(X)6,
4. A. Gmw, '"How Intel Makes Spending Pay orr:' Fort/llle
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5. J. 0, March lind H. A. Simon, Orgalli;{)/ioll.~(Ntw York:
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6. Mar<:h "nd Simoo. Org<l"icmio!ls.
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9. M. K, Stcc·enson.J, R. Buscrne}'er, "ad J. C. N"ylor,
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JOl/moluf &'Ollomi("j 69 ( I (55): 99---118.
II. Ibid,
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U. Simon,"1\ Behavioral Model of Rational Choice:'
14. March and Simoo. Org("';::.ilI;O"'~.
15. Ibid,
16. Ibid,
17. Edwards. "The Theory of Decision Ma~ing": March and
Simon, Orglllli;miOll.I; Simon "A Behavioral Model of
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18. March "nd Simon. Orgun;;:.al;ons; Simon, "A BC'h""ioml
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19. Stnel1>nn, BlI'<"·ITll·j'a. and N"y[or, "Judgmem and rx"isioIT-
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20. March and Simon. Orgwl;~ati"1!s; Simon,"A BC'havioral
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21. Man:h "nd Simon. Orgal/;~al;"'J''.
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25. Simon, Til<' Nt'If,' ScinlU of M"",,g"III""1 l>n;siol/.
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28. C. M, Fiol and E. J. O'Connor. "Waking Up! Mindfulness
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31. Bazerman, 1mlglJtelll ill Managerial DecisiOlI Mabng:
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33. Ibid,
).t. Bazerm;lII. 1m/gJJt,'1II il/ Mwwgailll Decisioll Making,
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f)/,... dof!"'<'ru (New Yor~: ~kGraw-HiJl. 1978).
64. W. L. French mid C. II. Bell. Orgwli:,lllitJ/lIlI/)(~'dofillPt>!I/
(Englew'KJd CI iffs. N J: Prenl icc-Hall. 1990).
65. L. Coch and J, R. P. French. "Overcoming Resist:'nce to
Change:' Hllmoll ReI,,'iOlH, 1948, 1,512-32.
66. Fre'l(:h ,md Bell. Orglllli~l1iolllll f)t'l'dO/mll'lII,
67. Ibid.
68. ",ww.lucent.com.2006,
69. "'ww.minosofl,eo111,2006.
70. W. L. French. "A CIJCcllist for Ol);anizing at)(!
Implementing an 00 Effort:'ln W, L. French.C. H. Bell.
and R, A. Zawack i. Orgl11li~lIliQIIUI 1x-.·..I0I'IIl..1P1 lIIul
Tra1P.lformulitm (HmllCwIKld.lL: Irwin. 1994).484-95.
11. Kotter. Schlesinger. and Sathe. Or/:l11li;(l/ioll. p. 487.

72, W. G. Benni,. O'1lllllbrlifltwl 1k\·...lopml't'I: Its Naillfl',
Or;8111,( ""d f'rr$I!f'<"lil'I'J (Keooing, ~lA: AlJlJi'On-We._1cy.
19(9).
73. KQtt"r ano.l S<:hlc,i"l'"r, "Choosinl' Slmlcl'ic, fur Change'"
7~. S. Fo.\ anlJ Y. Amichai-llambuf\.'Cr, '"TIle Powcr of Emotional
APl"'als in Promoting Oq::anilillionoll Clangc I'rogr~n\_,"
AC/l(~' u/Mmulgl'mnll £'1'{'l'Il/II't, 2001, lui. 15,4, ~5.
75. S, Mycong-GII, ''()o,'~"'A:oming Emolional BarriCfl'. Polili....1
CJb-;1aCIc_. aoo Controllmpcr,ll i"\$ in lhe I\elion-Science
App""":h 10 lno.lil'Klual ano.l Organi/.alional Learning:'
Acadt'IIr,' of MmKlgt'fllfflf l..n,nriflg (II,d f;Jucatil"" 2«}3,
,"01.2. L 7-22.
76. E.II. Schein. OfJUlli~fll»ll!1PJ\'chi)/og)' (Englc.."OOd
Cliffs. NJ: Prrnlicc-t1all. 1980).
77. R. T. Golcmbic..-sld, I'hc Labo:nlory Appro:ach 10
Organization Change: Schema of a MClhod:' In Margulies
and Raia. cds.. COOCt'pluuI FfllIfIdluions of0rglMli:ational
Dt-I·t'loflmt'1l/. 198-212: J. Kelley -QrganlGlllonal
De''CIopmcnt Through SnllC1ured Scn~ili'il) Tr:lining,-
IbKl .. 213--28.
78. E. H. Schein. PfDCt'1S C~s"'IIJI!lHl (Rcading, MA:
AdoJison-Wok'}'.I969).
79. M. Sa-<hLin and W. W;mrr BlIl'\;c. '"OIpnization
De\"clopmcnt in the 198(}...M Jmlnwll of MI'~' 1981.
13, J9~ 17; D. Eden, -ream De''CIopm.:nt:~·
Expcrimcntll Conlirmillion Among Coml:w Comp;mies,-
Grollp lMld 0'8U,ri:DIWn SI"di('s. 1986. 5. 133-16:
K. P. DeMeu>o: and S. J. Licboolill., ~An Empirical AnaI)sis
ofTcarD BUIlding Re><:an:h,- GroupallJ OfJuni:atiolt
SJ"dit"S. 1981.6. 357-78.
80_ F""",h and Hell, Org01U:/I/!lHl fJt"I·t'lopmt'lII.
81. R. BcclhanJ.1'hc Confrontllion Mreting:' HanYinJ
B"si"t'ss Ht'I,it"M-. Mareh-April 1967. 159-()5.
REfERENCES 683
APPENDIX
I. E. F, Slon." H...uun'h M""I,Otls il! O'1llml:miO/IIII H~fllll"ior
(Santa '\lonica. CA.: Good),.,ar, 1978),
2, C. G. Hempel, As/'t'<"1$ III S<'il'mijic E_lp/{mmi/ll, (New
Yeri:: Free Pres._. 1965): SMIC. Hnt'I",'h MI'llt<.!ds 1,1
Orgnni::JJli/H'1l1 Eklr(FI'ior.
3. A. Kaplan. TIlt' Co/Wllel of IlIqll;')' (New Yeri:: T. Y.
C"",'cll. I~),
4. M. Cohen 000 E. Nagel. All fll/I'IJI/",i~ 10 /..ogle ami
Scit'ntiftc Ml'lhod (1'1,,'" YoI'\;: HaR.'Otln. Br.K."C. 19J.l):
F. K.,rlingcr. f"rNm/Il/W>IS of1h'hUI'wm/ Ht'Sl'tJrch
(1'1..,. Yeri:; Holl. Rinchan aoo Win"oo.I913): Slone.
Rt'St'arch Mt'lhods in OfJUJliUJIW>u,I8t'/wI'icr.
S. Some of the matcrial i" lhi' >-Celioll dr:l"~ from lhe
rollo..- in!! SOIIrcC~: T_ D, Cook and D. T. Campbell, 1"hc:
Design and Cooduclor Qua..'i-EAperimcnb and True
Experiments in Field Sctt,"g~.M In M. D. Dunrtcuc, cd .•
Hlutdbofll:. of Indllslnal and 0'llIlItl:P/!/lllU1 PS'l-cholQf)'
(Chicago: R:llxl McNall), 1976),223-326: P. J. RunLel
and J. E. McGr.llh. Rt'St'orch Qf/ H"llllln Ikhunor (N..,.
YoR: Iioll. Rinchan and Win"lon, 1912): SIOnC'.
Rt'St'orr/l Mnhoos III 0'llllnj:atil/fHlllk/wl';o~,
6. S. w. Cool:, -Ethica1I,"'""S in lhe Conduct or RC"GIKh in
Social Rclaliom.- In C. ScHUL. L S, WnglllSrnan. S, W.
Cool:. cd~-. Ht'MlHl"h Mt'thods III $oc1(J1 Rtli,IWIIS (Nc..-
Y<Jrt: HoIl. Rinchan anti Win"on. 1976): U. C, Kdman,A
T""" 10 Sf't'iJk: On Hw_ ii//ut's IUlII $ocilll RI'St'olrl!
(San Francisco: kJs..-e) Ba",. 1%8). Runlcl and McGrath,
H('Jt'U,1rl! on H!HIJ/ln /khUl'jor, Slone, Ht'Jt'U,II'h Mn/rads in
0'JUni:Dli~olBa1Jal1or.
Photo Credits
Chapter 1 p. 2: Mark Richards; p. 7: JdfGcisslcrf
BloombcrgfLandov: p. 10: Dick's Drive-In Restaurants:
p.15: Jade-Snow MoylBloomberg Ncwslu.ndov: p. 17:
Charles KrupaiAP Wide World Photos: p. 21: Ingl'ar
Andersson/AI' Wide World Photos: p. 25: LUCAS JACK-
SONlReulersiLandov LLC: p. 28: A. Ramcyll'ho!oEdillnc.
Chapter 2 p. 40: © cpa/Corbis: p. 43: locrg SartJachiAP
Wide World Photos: p. 45: Courtesy of Alaska
Communi<:ations Systems: p. 49: AFPlPaul BlldJAgcIK"t:
France PrcssdGcny Images; p. 51: Koji Sa';''lharalAP Wide
World Photos: p. 58: Lando\' LLC; p. 61: Rocco Fone HOlds
Chapter 3 p. 72: J. Pm CarterlAP Wide World Photos:
p.77; AI' Wide World PhOlOS: p. 79: © Michael
Goldrnan/r.'1asterfilc: p. 81: AI' Wide World Photos: p. 114:
JefT GrccnbcrglPhotoEdit Inc.: p. :>;6: (orbi, Royally Free:
p. 89: © 2006 SAS Institute Inc. All rights reserved: p. %:
HARRISON MCCLARY/B[oombcrg NewslLandov LLC
Chapter 4 p. [08: Waller Hodge,IGetly [mages [ncJStone
Allstock: p. 112: "lmk Ril:hards; p. 115: Marcio Jose
Sanl:hel1AP Wide World Photos: p. [2 [: Dennis
Brack/Black Star; p. 123: Habitat [ruernntiolla[ Inc.: p.
[24: © Michae[ Mahov[ichlMasterfi[e: p. [32: Mark
Richards: p. 134: Mark Douet/Gel1y Images [nc.lStone
Allstock
Chapter 5 p. [46: AP Wide World Photos: p. [50: Gerhard
WestrichILaif/Aurora/Aurora & Quanta Productions. [nc.:
p. 152: The Image Works; p. 158: David Grossmanrrhe
[mage Works: p. 159: A[an K[ehr/Churchill & K[chr
Photography: p. [60: Jim Pickcre[[rrhe Stock Connection:
p. 163: TaxilGetty Images: p. [65: Ki Ho ParklKistone
Photography
Chapter 6 p. 180: Courtesy of SAS Institute. [ne.: p. [83:
David Walega: p. [85: Courtesy of l\·lBDC: p. 189: David
R. Frazierll'hotoEdit [nc.: p. 192: Michne[ Newman/
PhotoEdit [nc.: p. 195: Michael NewmanfPhotoEdit Inc.:
p. [99: Michael Newman/PhotoEdit Inc.: p. 200: Paul
Sakuma/AP Wide World Photos
Chapter 7 p. 210: Rick WilkingiCorbisJRcuters America
LLC: p. 213: Getty [mages Inc.: p. 2 [5: AP Wide World
Photos: p. 217: © Ariel Ske[leyICORB[S: p. 226:
(;J Masterli[cIMasterli[e: p. 227: Mark Richard>: p. 230:
Norsk Hydro: p. 232: Gautam SinghlAP Wide World Photos
Chapter 8 p. 246: Tim BoylelGellY Images. [nc.: p. 249:
ClPierrc TremblaylMasterfilc: p. 25 [: AP Wide World
Photos: p. 252: AP Wide World Photos: p. 263: © Michael
Go[dmanlMasterl![e: p. 267: Diane Bondarclr. P()()[lAP
Wide World Photos: p. 27 [: MTPA Stock/Masteti!!e Stock
[mage Libntry: p. 274: Ann Heiscnfe[t/AP Wide World
Photos
Chapter 9 p. 284: DigitalvisionlAGE Fotostock America.
[nc.: p. 287: William Thomas/GellY Images. [nc.; p. 290:
PhotoAltolAGE Fotostock Amcrica. Inc.: p. 292: Corbisl
Hcltmann; p. 298: AI' Wide World Photos: p. 302: The
Gil[veston COllnty Daily Ne,",'s. Chad Greene/AP Wide
World Photo,: p. 310: CorbislBettm;mn:
.84
Chapter 10 p. 322: Whirl(XlO[ Corporation: p. 326: Masterli[e
Stod Image Libntry: p. 329: AGE Fotostock Amcrica. Inc.:
p. 332: Digital Vision/AGE Fotostock Amenca. [nc.: p. 333:
Gelt)' Images Entert:linment: p. 337: Pcter SmithlZingerrnan's
Dclicatesswl: p. 345: PhotoAhoiAGE r"Qtostock Amcrica.lnc.:
p. 348: A. Ramey/PhotoEdit Inc.
Chapter 11 p. 356: Rex Rystedt Photography: p. 360:
DigitalvisionlAGE Fotostock America. [nc.: p. 361:
DavidJ. Phillip/APWide World Photos: p. 365: PixtaJl
AGE Fotostock America. Inc.: p. 370: Digitalvisi()n/AGE
FOlostock America. Inc.; p. 373: MaSlerfile Corporationl
Zcfa: p. 378: ADEK BERRYIAFP/Getly [mages:
p. 381: CorbislBeltmann
Chapter 12 p. 390: Debi Fox Photography. Washington
D.CJClaire·s Stores: p. 392: Michael A. Schwan
Photography. [nc.: p. 397: Javicr Larrea/AGE Fotostock
America. Inc.: p. 403: John W. Clark: p. 405:
image 100/AGE Fotostock America. Inc.: p. 409: © CI·IR[S
PIZZELLOfReutersiCorbis: p. 412: Gelly Images. IncJ
Liaison: p. 4 16: Bob Daemmrichrrhc Image Works
Chapter 13 p. 428: PArrophal'nlThc Image Works: p. 434:
Mary Altaffer/AP Wide World Photos: p. 436: Dion
Ogustffhc Image Works: p. 440: AndIT'w HarrcrlBloombcrg
NewslLandov LLC: p. 443; UPPAfTophanliThe Image
Works: p. 446: Brucc AyrcslGetty [mages Im;JStone
AIl,tock; p. 448: [mage StatclAlamy [magcs: p. 45 [:
J. Stocksh()()ter/AGE Fotostock America. Inc.
Chapter 14 p. 460: Dario Lopez-Mills/AP Wide World
Photos: p. 464: ANDREAS I'OLLOKlGetty Images.lnclf~lXi:
p. 472: © RcutersICORBIS: p. 475: W[RE[MAGESTOCKI
WirelmagcStockIMastcrflle Stock Image Lihmry: p. 485: Bob
Dacmmrich/nle Image Works: p. 486: © BetlmannlCORBIS.
AU Rights Reserved: p. 486: NASA/John F. Kennedy Space
Center: p. 488: Eric GaylAP Wide World Photos
Chapter 15 p. 498: Imagination Photo Design: p. 502:
Vstock/AGE f,,(ltosttx:k America. Inc.: p. 507: Ric Fr.ux.-islAP
Wide World PllOlOS; p. 514: NASAIAI' Wide World Photos;
p. 521: Plexus Corporation: p. 524: Rid BowmerlAP Wide
World Photos: p. 526: AP Widc World I'\}(ltos
Chapter 16 p. 534: Virginia Hart/AI' Wide World Photos:
p. 537: Lisa QuinoncsfBlack Star: p. 543: Paul SancyaiAP
Wide World Photos; p. 548: Courtesy of Southwest
Airlines: p. 550: © Cttherine Karnow/CORB[S: p. 557:
Jeff Christensen/Rclilers Limited
Chapter 17 p. 566: 3M: p. 569: LM Otero'APWide World
Photos: p. 572: Gilles Mingas);onIGelly Images: p. 575:
Alicnware: p. 578: Jean-M:Jrc GioouxfGclly Images. Inc.:
p. 581: Kim KulishlCorbis/Beltmm1l1: p. 587: Mark Richards:
p. 590: Manin H. SimOIl/CorbisiSABA Press Photos. Inc.
Chapter 18 p. 602: Getty [mages News: p. 605: Jell
GreenbcrglOmni-Photo Commllniciltions. [nc.: p. 607: AP
Widc World Photos: p. 610: Bob KristICorbislBettm:1I1n:
p. 613: AI BehrmanlAP Wide World Photos: p. 616: Getty
Images News: p. 623: © OLIVER WEIKEN/epaiCorbis:
p. 628: Mark Richards