Team Analysis Assignment Do NOT include your name on the submission. I blind-grade these assignments. FORMAT CHECKLIST. o APA Format; checkout the student sample paper on the Purdue Owl website: https://owl.purdue.edu/owl/research_and_citation/apa_style/apa_formatting_and_style_guide/apa _sample_paper.html (You do not need to worry about including a title page or abstract; just use this as a resource for correctly formatting in-text citations, quotes, and references.) o 5-7 pages double-spaced including between paragraphs (roughly 1.5-2 pages per question) o 1-inch margins (all around) o Times New Roman, 12-point font o References: Include this section at the end of your paper with the full references for your sources. o In-text citations: Please use APA format for the articles, except when you refer to the textbook. Use may use this format for the textbook: (Text, p.58-59). If you cite concepts covered only in class that are NOT in the text then cite them as (Course notes, date xxx). Please note: Please do not type up the question to fill up space or using a larger font with wider margins. If I copy-andpaste only your answer into a separate document, using the correct formatting (excluding headers and references), it should take up at least five pages. You may (and are encouraged to) visit a Writing Tutor to polish your paper. You may book an appointment by calling them at 617.573.8034 or through the Navigate portal. EXTERNAL SOURCES. You should incorporate at least 2 outsides sources that are peer-reviewed academic journal articles (e.g., Academy of Management Journal, Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, Journal of Management, etc.) You may have additional sources that are not journal articles, but at least 2 of your sources should reference academic journal articles. The librarians are available to assist you with identifying academic articles and using the library e-search tool; please contact them at 617-573-8535 or sawlib@suffolk.edu. GRADING. I will be grading you on the thoroughness and thoughtfulness of your responses, your integration of material from the textbook and lecture, and the integration of your outside sources. You should not rely heavily on quotes; the majority of the paper should be in your own words with appropriate citation of outside sources. Additionally, your writing should be professional and virtually grammar- and error-free. ANALYSIS OF CONCEPTS. Write about each topic provided below coherently and competently. For each concept you must define it in your own words and explain how the concept explains or applies to what you experienced or learned. Use specific examples. A scholarly narrative can include opinion and a less formal "voice," however, it must also be professional, with assertions, opinions, and arguments supported by cited concepts, models, and terms from this course. A narrative that is an outline or more like stream of consciousness will earn a low score. One strong suggestion: avoid simply "trashing" your team or saying it was without fault. There is always some effectiveness and some dysfunction in every organization and your goal is to provide a neutral analysis that uses course concepts. You are analyzing what happened at the team level from a process perspective, not filling out a complaint form. Grades will be determined by the quality and depth of analysis and insight, NOT based on how “good” your team is. Discuss failures as well as successes: both are part of the learning experience. WHAT AM I SUPPOSED TO WRITE ABOUT? IMPORTANT: Please label your answers (e.g., 1, 2, 3). Use bold font when you name the concept (please do not bold the definition or sentence – just the concept name). 1. Describe your team’s evolution and processes using the concepts you have learned about throughout the semester below. Some concepts you may give more emphasis to than others. • • • Informal and formal roles (Ch. 7) – how did you divide the work tasks? Cohesiveness and group norms (Ch. 7) – what type of task interdependence did you team have? Communication patterns (Ch. 10) – did your team experience process losses, gains, or both as a result of your team structure? 2. Analyze how the following affected your group’s interactions and processes as described in section 1. • • • Individual differences/ background factors / personality (Ch. 2) Emotions (Ch. 4) and/or handling of disagreement/ conflict (Ch. 11) related to key that happened to or within your group Decision-making (Ch. 8) – How did this take place during teamwork? Would you work with your team again? Why or why not? 3. Explain, illustrate with examples, analyze and critique your own behavior and performance as a project team member. What did you learn about yourself as a team member this semester? Think back to where you started. You might consider prompting questions such as, how did I grow or feel disappointed in myself as a team member, or what assumptions did I have about myself when I started that aren't quite right? Use concepts and theory learned in this class to support, illuminate and demonstrate your learning. Please use AT LEAST one concept from each of the following topics we covered in this course: (a) perception/ attribution (Ch. 3) and (b) and motivation (Chs. 5 and 6). You are not limited to only those two topics if you would like to cover others in addition to these two. Team Analysis Rubric (75 points) Points possible Points earned Content The analysis of the team’s evolution and processes is well-thought out and clearly described using concepts from the course. The student clearly discusses how individual differences, emotions/conflict, and decision-making affected the group’s interactions and processes. Examples are included. The student clearly discusses the consequences of the team project for him/herself. Examples and critiques of one’s own behavior are included as part of this. The student properly defines concepts in his or her own words. Specific examples are given for each concept. Concepts from perception/attribution and motivation are included in the analysis of personal consequences from the team project. 10 pts 10 pts 10 pts 7 pts 5 pts Writing The student uses a professional tone. Assertions, opinions, and arguments are supported by cited concepts, models, and terms from this course. 5 pts The student presents the information in a way that is clear and easy to read. 5 pts The spelling, punctuation, and grammar on the writing assignment are satisfactory. 5 pts Formatting The student has included 2 peer-reviewed journal articles as support and references for their arguments in the paper. The student has properly included references on the reference page. References are in the appropriate APA format. 5 pts (yes/no) 5 or 0 5 pts (yes/no) 5 or 0 The student uses bold font when naming a concept. 3 pts (yes/no) 3 or 0 The analysis has been formatted properly. The document is the appropriate length excluding header/title and references (follows formatting requirements per the Syllabus). 5 pts (yes/no) 5 or 0 There are some short answers which need to expend. This might give you some idea about how to answer the question. Describe your team’s evolution and processes using the concepts you have learned about throughout the semester below. Some concepts you may give more emphasis to than others. · Informal and formal roles (Ch. 7) – how did you divide the work tasks? We usually discuss who is more appropriate to do a certain part. For my wicked person, I will divide the work into many small goals. And then complete these small goals step by step. · Cohesiveness and group norms (Ch. 7) – what type of task interdependence did your team have? Pooled Interdependence, each of us will be assigned to tasks, and these tasks can be carried out at the same time, each person’s tasks are completed independently · Communication patterns (Ch. 10) – did your team experience process losses, gains, or both as a result of your team structure? For our team structure, I think we have both. Because of COVID-19, the current classes are conducted in the form of online classes. When sub-groups, if the group members are in different regions or time zones, it will be difficult to discuss together. For our group, our time zone is not much different, so we can communicate better. So this is gain. On the contrary, because they are all conducted in the form of online classes, our team structure can only be reflected on the Internet, which causes us to communicate only by sending messages in many cases. 2. Analyze how the following affected your group’s interactions and processes as described in section 1. · Individual differences/ background factors / personality (Ch. 2) Personality differences may cause some shy people to not speak. If our group is all shy, then our work may be difficult to proceed. · Emotions (Ch. 4) and/or handling of disagreement/ conflict (Ch. 11) related to key that happened to or within your group · Decision-making (Ch. 8) – How did this take place during teamwork? Would you work with your team again? Why or why not? 3. Explain, illustrate with examples, analyze and critique your own behavior and performance as a project team member. What did you learn about yourself as a team member this semester? Think back to where you started. You might consider prompting questions such as, how did I grow or feel disappointed in myself as a team member, or what assumptions did I have about myself when I started that aren't quite right? Use concepts and theory learned in this class to support, illuminate and demonstrate your learning. Please use AT LEAST one concept from each of the following topics we covered in this course: (a) perception/ attribution (Ch. 3) and (b) and motivation (Chs. 5 and 6). You are not limited to only those two topics if you would like to cover others in addition to these two. As a team member, we exist as a special group. Everyone communicates through the Internet. I find it difficult for me to feel the thoughts of my team members. At the same time, I also learned that in this situation, we should communicate more actively and let the team members feel their own ideas. 2 3 4 Organizational Behavior Second Edition 5 6 Organizational Behavior A Skill-Building Approach Second Edition Christopher P. Neck Arizona State University, Tempe Jeffery D. Houghton West Virginia University Emma L. Murray Los Angeles London New Delhi Singapore Washington DC Melbourne 7 FOR INFORMATION: SAGE Publications, Inc. 2455 Teller Road Thousand Oaks, California 91320 E-mail: order@sagepub.com SAGE Publications Ltd. 1 Oliver’s Yard 55 City Road London EC1Y 1SP United Kingdom SAGE Publications India Pvt. Ltd. B 1/I 1 Mohan Cooperative Industrial Area Mathura Road, New Delhi 110 044 India SAGE Publications Asia-Pacific Pte. Ltd 18 Cross Street #10-10/11/12 China Square Central Singapore 048423 Copyright © 2020 by SAGE Publications, Inc. All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher. 8 Printed in the United States of America ISBN 978-1-5443-1754-0 This book is printed on acid-free paper. Acquisitions Editor: Maggie Stanley Content Development Editor: Lauren Holmes Editorial Assistant: Janeane Calderon Production Editor: Andrew Olson Copy Editor: Tammy Giesmann Typesetter: C&M Digitals (P) Ltd. Proofreader: Christine Dahlin Indexer: May Hasso Cover Designer: Anthony Paular Marketing Manager: Sarah Panella 9 Brief Contents 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Preface Acknowledgments About the Authors PART I: INTRODUCTION 1. CHAPTER 1 WHY ORGANIZATIONAL BEHAVIOR MATTERS PART II: INDIVIDUAL PROCESSES 1. CHAPTER 2 DIVERSITY AND INDIVIDUAL DIFFERENCES 2. CHAPTER 3 PERCEPTION AND LEARNING 3. CHAPTER 4 EMOTIONS, ATTITUDES, AND STRESS 4. CHAPTER 5 MOTIVATION: CONCEPTS AND THEORETICAL PERSPECTIVES 5. CHAPTER 6 MOTIVATION: PRACTICES AND APPLICATIONS PART III: TEAMS AND TEAMWORK 1. CHAPTER 7 TEAMS 2. CHAPTER 8 DECISION MAKING, CREATIVITY, AND INNOVATION 3. CHAPTER 9 ETHICS AND SOCIAL RESPONSIBILITY IN ORGANIZATIONS 4. CHAPTER 10 EFFECTIVE COMMUNICATION 5. CHAPTER 11 TRUST, CONFLICT, AND NEGOTIATION PART IV: LEADERSHIP AND INFLUENCE PROCESSES 1. CHAPTER 12 LEADERSHIP PERSPECTIVES 2. CHAPTER 13 INFLUENCE, POWER, AND POLITICS PART V: ORGANIZATIONAL CONTEXT 1. CHAPTER 14 ORGANIZATIONS AND CULTURE 2. CHAPTER 15 ORGANIZATIONAL CHANGE AND STRUCTURE Glossary Notes Name Index Subject Index 10 Detailed Contents Preface Acknowledgments About the Authors PART I: INTRODUCTION CHAPTER 1 WHY ORGANIZATIONAL BEHAVIOR MATTERS • Case Study: Southwest Airlines’ Organizational Culture What Is Organizational Behavior and Why Is It Important? Managing Human Capital Value Rareness Inimitability Behavioral Science Disciplines That Contribute to OB Psychology Sociology Social Psychology Political Science Anthropology A Critical-Thinking Approach to OB Research in OB Open Systems Theory OB Challenges and Opportunities Globalization Economic Factors Workforce Diversity Customer Service People Skills Innovation and Change Sustainability Three Levels of Analysis in OB Individuals Teams Organizations Positive OB and High-Involvement Management In Review Key Terms 11 Up for Debate: Hiring Qualified Candidates Exercise 1.1 Organizational Behavior in an International Firm Exercise 1.2 Discussion about Who Can Be CEO Exercise 1.3 Your Experience with OB Exercise 1.4: Testing a Hypothesis Online Exercise 1.1: Understanding Skills Case Study 1.1 CVS Health Self-Assessment 1.1 PART II: INDIVIDUAL PROCESSES CHAPTER 2 DIVERSITY AND INDIVIDUAL DIFFERENCES • Case Study: PepsiCo’s Diversity Diversity in OB Surface-Level and Deep-Level Diversity Age/Generation Diversity Race and Ethnicity Gender Diversity and Sexual Orientation Diversity of Abilities Diversity Training Reducing Bias Hiring Tests Grievance Procedures Positive Ways to Promote Diversity Cross-Cultural Diversity Managing Cross-Cultural Diversity The Importance of Individual Differences Nature versus Nurture Myers-Briggs Type Indicator Myers-Briggs Preferences The Sixteen Myers-Briggs Types The Big Five Model Other Personality Attributes Machiavellianism Self-Monitoring Proactive Personality Type A/Type B Orientation Risk-Taking Propensity In Review Key Terms 12 Up for Debate: Diverse Business Environments Create Diverse Company Cultures Exercise 2.1: Personality: Core Self-Evaluations Exercise 2.2 Dimensions of Diversity Exercises 2.3 My Experience with Individual Differences Exercise 2.4: Your Generation Exercise 2.5: Nature versus Nurture Online Exercise 2.1: Understanding the Big Five Model Case Study 2.1: W.L. Gore and Associates Self-Assessment 2.1 Self-Assessment 2.2 CHAPTER 3 PERCEPTION AND LEARNING • Case Study: Twitter’s Adaptability Perception: Interpreting Our Environment Components of the Perception Process The Perceiver The Environment The Focal Object Why Is Perception Important? Common Perceptual Distortions Common Attribution Errors Learning Processes: Behavioral Theory Classical Conditioning Operant Conditioning Theory Reinforcement Theory Positive and Negative Reinforcement Punishment Extinction Schedules of Reinforcement Learning Processes: The Cognitive View Triadic Reciprocal Model of Behavior In Review Key Terms Up for Debate: Setting High Expectations for New Hires Exercise 3.1: The Power of Perception Exercise 3.2: How Are Stereotypes Formed? Exercise 3.3: Using OB to Improve Your Life Exercise 3.4: The Maze Rat and Positive Reinforcement and Punishment Online Exercise 3.1: Understanding Perceptions about 13 Workplace Norms Case Study 3.1: Kempinski Hotels Self-Assessment 3.1 CHAPTER 4 EMOTIONS, ATTITUDES, AND STRESS • Case Study: Kevin Plank, Founder of Under Armour Emotions in Organizational Behavior Emotions in the Workplace Emotional Contagion Emotional Labor Display Rules Emotional Dissonance Surface Acting versus Deep Acting Emotional Regulation Antecedent-Focused Strategies Response-Focused Strategies Emotional Intelligence Attitudes and Behavior How Attitudes Are Created Cognitive Dissonance Common Workplace Attitudes Organizational Citizenship Stress in the Workplace Stressors Stress-Strain-Outcomes Model Stress-Related Outcomes and Wellness Managing Stress Wellness In Review Key Terms Up for Debate: Employee Emotional Well-Being Exercise 4.1: Coping with Stress Exercise 4.2: Recognizing Emotions Role-Play Exercise 4.3: Mourning at the Deco Chocolate Company Online Exercise 4.1: Understanding Attitudes and Job Satisfaction Case Study 4.1: The Starbucks Experience Self-Assessment 4.1 CHAPTER 5 MOTIVATION: CONCEPTS AND THEORETICAL PERSPECTIVES • Case Study: AriZona Iced Tea: Organizational 14 Motivation The Motivation Process Needs Theories Maslow’s Hierarchy of Needs ERG Theory Herzberg’s Two-Factor Theory McClelland’s Acquired Needs Theory Money as a Motivator Goal-Setting Theory Specific Goals Difficult Goals Goal Acceptance and Commitment The Goldilocks Rule Feedback Equity Theory Change Inputs Attempt to Change Outcomes Carry Out Cognitive Reevaluation Attempts to Change Inputs or Outcomes Pick Another “Other” Leave the Field Organizational Justice Expectancy Theory In Review Key Terms Up for Debate: Raising Incentives to Increase Productivity Exercise 5.1 Understanding Equity Theory Exercise 5.2: Is Money a Motivator? Exercise 5.3: Your Motivation for Selecting Your Major Online Exercise 5.1: Which Theory for Your Favorite Characters? Case Study 5.1: The Whole Culture of Whole Foods Self-Assessment 5.1 CHAPTER 6 MOTIVATION: PRACTICES AND APPLICATIONS • Case Study: Walt Disney Company’s Motivation Techniques Intrinsic Motivation Types of Extrinsic Rewards Seniority-Based Pay 15 Job Content-Based Pay Skill-Based Pay Performance-Based Pay Individual-Level Performance-Based Pay Team- and Organization-Level PerformanceBased Pay Motivation over Time Motivation through Job Design Psychological Empowerment Nontraditional Work Schedules In Review Key Terms Up for Debate: Using Pay Raises and Pay Cuts for Motivation Exercise 6.1: Understanding Job Design Exercise 6.2: Extrinsic Rewards and Intrinsic Motivation Exercise 6.3: Charity Begins with Motivation Exercise 6.4: Role-Playing Job Design Online Exercise 6.1: Finding Examples of Individual Performance-Based Pay Case Study 6.1: Netflix Self-Assessment 6.1 PART III: TEAMS AND TEAMWORK CHAPTER 7 TEAMS • Case Study: The Team at Thomas Jefferson University Hospital Emergency Department The Difference between Teams and Groups Teams versus Groups Are Teams Effective? How to Build an Effective Team A Model of Team Effectiveness: Processes and Outcomes Team Norms and Cohesion Team Charters Synergy: Process Gains and Losses Types of Teams A Model of Team Effectiveness: Context and Composition Team Contextual Influences Team Composition Team Decision Making Brainstorm Alone—At First 16 Slow Down the Creative Process Start Drawing Advantages and Disadvantages of Team Decision Making In Review Key Terms Up for Debate: Hiring Teams Instead of Individuals Exercise 7.1: Practicing 6-3-5 Brainstorming Exercise 7.2: A Nominal Brainstorm about the Delphi Technique Exercise 7.3: Consulting at Bella Nota Online Exercise 7.1: Virtual Team Project Case Study 7.1: International Game Technology (IGT) Self-Assessment 7.1 CHAPTER 8 DECISION MAKING, CREATIVITY, AND INNOVATION • Case Study: Creativity and Innovation, Arizona State University Decision Making and Problem Solving Define the Problem Identify and Weigh Decision Criteria Generate Multiple Alternatives Rate Alternatives on the Basis of Decision Criteria Choose, Implement, and Evaluate the Best Alternative Decision Making in the Real World Bounded Rationality Satisficing Decisions Intuition Heuristics Biases and Errors Creativity and Innovation in Individuals, Teams, and Organizations A Three-Component Model of Creativity Domain-Relevant Skills and Expertise Creativity-Relevant Processes Intrinsic and Extrinsic Motivation Creative Potential versus Practiced Creativity Three Types of Support for Creativity Organizational Support for Creativity Supervisory Support for Creativity 17 Work Group Support for Creativity The Innovation Process and Types of Innovation Idea Generation Problem Solving Implementation and Diffusion Types of Innovation in Organizations In Review Key Terms Up for Debate: Compromising Values for Profit Exercise 8.1 Practicing Innovation Exercise 8.2: Decision-Making Process Role-Play Exercise 8.3: Watch Me Get Creative Here Online Exercise 8.1: Programmed and Nonprogrammed Decisions Discussion Case Study 8.1: McDonald’s Decision Making and Innovation Self-Assessment 8.1 Self-Assessment 8.2 CHAPTER 9 ETHICS AND SOCIAL RESPONSIBILITY IN ORGANIZATIONS • Case Study: IBM’s Ethical Supply Chains Ethics in Organizations Ethical Dilemmas Ethical Decision Making Contemporary Views of Ethical Decision Making How Individuals Make Ethical Decisions Ethical Leadership and Followership Leaders and Power Leaders and Privilege Leaders and Responsibility Leaders and Information Management Leaders and Consistency Leaders and Loyalty The Ethical Challenges of Followers Followers and Obligation Followers and Obedience Followers and Cynicism Followers and Dissent Followers and Bad News Social Responsibility 18 Social Entrepreneurs and CSR Building Ethical and Socially Responsible Organizations Ethics Training In Review Key Terms Up for Debate: Reporting Ethical Violations Exercise 9.1: Ethical Situations Exercise 9.2: Creating a Code of Ethics Exercise 9.3: What Is Fair? Online Exercise 9.1: Good and Bad Examples of Social Responsibility Case Study 9.1: Jet Blue’s Ethical Response to a Crisis Self-Assessment 9.1 CHAPTER 10 EFFECTIVE COMMUNICATION • Case Study: Uber’s Organizational Communication The Role of Effective Communication in Influencing Others Types of Communication Channels Barriers to Communication Active Listening Communicating in Organizations Cross-Cultural Communication Low-Context versus High-Context Cultures Social Context Other Complicating Factors Slang and Idioms Euphemisms Proverbs Verbal Dueling Humor Conversational Taboos Overcoming Difficulties in Cross-Cultural Communication Eliciting Ideas Surfacing Disagreement Giving Feedback In Review Key Terms Up for Debate: Lines of Communication Exercise 10.1 Overcoming Barriers to Effective 19 Communication Exercise 10.2 There’s an App for That Exercise 10.3 The Telephone Game Online Exercise 10.1 Examples of Poor Communication Case Study 10.1: Open Communication at 3M Self-Assessment 10.1 CHAPTER 11 TRUST, CONFLICT, AND NEGOTIATION • Case Study: Distrust in the National Football League (NFL) Trust in Organizations Types of Trust Outcomes of Trust Conflict in Teams and Organizations Functional and Dysfunctional Conflict Types of Conflict The Conflict Process Conflict Management Strategies Avoidance Accommodation Competition Compromise Collaboration Negotiation and Dispute Resolution Getting Ready to Negotiate Shaping Expectations Providing Supporting Evidence Negotiating the Deal Agreement and Implementation Third-Party Dispute Resolution Approaches Bargaining Approaches Integrative Bargaining Strategies Other Negotiating Strategies In Review Key Terms Up for Debate: Global Standardization of Negotiations Exercise 11.1 Which Is More Important? Handling Conflict Exercise 11.2: Tension, Conflict, Resolution Exercise 11.3: Win as Much as You Can Online Exercise 11.1: What Conflict Management Strategy Do You Use? 20 Case Study 11.1: Conflict and Negotiation at Disney Self-Assessment 11.1 PART IV: LEADERSHIP AND INFLUENCE PROCESSES CHAPTER 12 LEADERSHIP PERSPECTIVES • Case Study: Procter and Gamble’s Leadership Training Program What Is Leadership? Formal and Informal Leadership Management versus Leadership Basic Leadership Types Early Leadership Perspectives Trait Leadership Perspective Behavioral Leadership Perspective Ohio State University Studies University of Michigan Studies The Leadership Grid Contingency Leadership Perspective Hersey and Blanchard’s Situational Leadership Model House’s Path–Goal Theory Substitutes for Leadership Model Contemporary Leadership Perspectives Leader-Member Exchange (LMX) Theory Transformational Leadership Charismatic Leadership Follower-Centered Leadership Perspective Power-Distributing Leadership Perspectives Empowering Leadership Shared Leadership Self-Leadership Values-Based Leadership Perspectives Authentic Leadership Spiritual Leadership Servant Leadership Ethical Leadership Cross-Cultural Leadership Leadership and Gender LGBT Employees in the Workplace In Review Key Terms Up for Debate: Hierarchy of Leadership 21 Exercise 12.1 Identifying Types of Leadership Exercise 12.2 Leadership Jolt Exercise 12.3 The Challenge of Leadership Online Exercise 12.1 Assessing Leadership of a CEO Case Study 12.1: Leadership Perspective at Chobani Self-Assessment 12.1 CHAPTER 13 INFLUENCE, POWER, AND POLITICS • Case Study: Managerial Power at NextEra Energy Inc. Power: Definition and Overview Basic Sources of Power Organizational Power Personal Power Using Power: Tactics for Influencing Others Consequences of Influence Tactics Organizational Politics Organizational Factors Individual Factors Possible Outcomes of Political Behavior Four Different Types of Organizational Politics The Weeds The Rocks The High Ground The Woods In Review Key Terms Up for Debate: Managerial Benefits Exercise 13.1 Tactics for Influencing Others Exercise 13.2: I Have the Power Exercise 13.3: Grappling with Organizational Politics Online Exercise 13.1: Understanding the Consequences of Influence Tactics Case Study 13.1 Monsanto Company Self-Assessment 13.1 PART V: ORGANIZATIONAL CONTEXT CHAPTER 14 ORGANIZATIONS AND CULTURE • Case Study: Recreational Equipment Incorporated’s (REI) Organizational Culture What Is Organizational Culture? Components of Culture The Competing Values Framework 22 Dominant Culture, Subculture, Counterculture Strong and Weak Cultures Artifacts of Organizational Culture Functions of Organizational Culture Potential Dysfunctions of Culture Types of Organizational Cultures Positive Organizational Culture Communal Culture Fragmented Culture Mercenary Culture Networked Cultures Ethical Culture Spiritual Culture Adapting Organizational Practices across Cultures Hofstede’s Dimensions Global Integration versus Local Responsiveness International Assignments and Career Development Stages of Cultural Adaptation Expatriate Failure Benefits and Costs of International Assignments Shaping Organizational Culture Influence of Founders and Top Management Selection Practices Socialization Methods Context Content Social Dynamics Feldman’s Model of Organizational Socialization Anticipatory Socialization Encounter Phase Change and Acquisition Phase In Review Key Terms Up for Debate: The Importance of Organizational Culture Exercise 14.1: That’s the Way We Do Things around Here! Exercise 14.2: What Are the Artifacts of Your University? Exercise 14.3: You Got Lucky Online Exercise 14.1: Examples of Poor Communication Case Study 14.1: Zappos’ Organizational Culture Self-Assessment 14.1 23 CHAPTER 15 ORGANIZATIONAL CHANGE AND STRUCTURE • Case Study: Google’s Organizational Development and Change The Change Process The DADA Process Lewin’s Basic Change Model Unfreezing Transforming Refreezing Lewin’s Force Field Analysis Forces for Change External Forces for Change Demographic Characteristics Technological Advancements Customer and Market Changes Social and Political Pressures Generational Changes Internal Forces for Change Management Change Organizational Restructuring Intrapreneurship Resistance to Change Individual Sources of Resistance to Change Kotter’s 8-Step Change Model 1. Create a Sense of Urgency 2. Create a Guiding Coalition 3. Create a Vision for Change 4. Communicate the Vision 5. Remove Obstacles 6. Create Short-Term Wins 7. Consolidate Improvements 8. Anchor the Changes Organizational Sources of Resistance to Change Reducing Resistance to Change Education and Communication Participation Negotiation Manipulation Coercion 24 Organizational Structure Specialization and Division of Labor Departmentalization Chain of Command Span of Control Centralization and Decentralization Mechanistic and Organic Models Formalization and Bureaucracy Organizational Development Types of OD Change Interventions Structural Interventions Task-Technology Interventions Sociotechnical Systems Redesign Quality of Worklife Interventions People-Focused Interventions In Review Key Terms Up for Debate: Management’s Role in Organizational Change Exercise 15.1: Overcoming Resistance to Change Exercise 15.2: The Structure versus Strategy Debate Exercise 15.3: Road to Change and Development Online Exercise 15.1: Analyzing Organizational Structure Case Study 15.1: Organizational Change and Structure at General Electric (GE) Self-Assessment 15.1 Glossary Notes Name Index Subject Index 25 Preface Nikos Kazantzakis once wrote: Ideal teachers are those who use themselves as bridges over which they invite their students to cross; then having facilitated their crossing, joyfully collapse, encouraging them to create bridges of their own. Our goal as an author team was to write an organizational behavior (OB) textbook that really engaged students—not one that involved memorizing its content for the sole purpose of passing exams and then quickly forgetting whatever they had learned. We wanted to write a textbook that students could use well after the semester was over to help them actively learn and think critically in order to understand how people behave as they pursue their career goals. In other words, we wanted to help students “build bridges” to their goals and dreams. We hope we have achieved our goal in Organizational Behavior: A Skill-Building Approach for students in organizational behavior classes across the world. In our 21st-century business world, organizational behavior has taken on a new significance. In an environment in which competition is fiercer than ever, it is people who act as differentiators in the workplace. In every aspect of business, people are the cornerstone of success. This is why it is so important to understand human behavior. The following quote from Curt Coffman and Gabriela Gonzalez-Molina in Follow This Path: How the World’s Greatest Organizations Drive Growth by Unleashing Human Potential reinforces the importance of understanding human behavior in organizations: The success of your organization doesn’t depend on your understanding of economics, or organizational development, or marketing. It depends, quite simply, on your understanding of human psychology: how each individual employee connects with your company and how each individual employee connects 26 with your customers. One of the earliest studies of organizational behavior was carried out at AT&T’s Western Electric Hawthorne plant by Harvard’s Elton Mayo in 1927. The principal findings of this study showed that when workers are given the opportunity to contribute their thinking and learning to workplace issues, their job performance improves. This finding is still relevant today. Studies in organizational behavior add to our understanding of the individuals working within all types of businesses, from corporate to entrepreneurial. Organizational Behavior: A Skill-Building Approach attempts to capture the body of knowledge that encompasses the organizational behavioral research into a book that is fun to read, captures the reader’s attention, and imparts the organizational behavioral knowledge in a way that promotes critical thinking. Our Vision Organizational Behavior: A Skill-Building Approach is a textbook for college-level undergraduate students seeking insight into individual behavior, group behavior, organizational structure, and organizational processes through the lens of critical thinking. Organizational behavior courses are defined by the following trends: larger course sizes, the need for continually changing content to stay relevant, and instructors working to make vast online resources meaningful to the student experience. The cumulative effect of these trends on instructors is a much more demanding environment for teaching and learning. In a quickly changing business environment, many books need a complete rewrite to be fully up-to-date. Even better, though, this is a new book— written from today’s perspective, with an eye to the near future. Our goal in writing this book is to bring to the classroom a fresh view of human behavior in organizations. What Makes Our Book Unique Skill-building approach. Students are provided with opportunities to develop motivational, leadership, and teamwork skills that will help them to analyze behavioral patterns and take appropriate actions to 27 help shape and influence those behaviors in positive ways. Supporting students in building and developing the skills and abilities that will allow them to make decisions and take actions that result in expected and desirable behaviors and related outcomes is the primary objective of our textbook. Practical applications, self-assessments, experiential exercises, and additional pedagogical features make OB come to life and encourage students to engage with OB concepts in meaningful ways. A Skill-Building Approach We believe that in today’s business world, organizational behavior is more important than ever. Companies are looking for employees and managers who have strong organizational behavior skills. Leadership, teamwork, motivational capabilities, decision making, communication, ethics, and creativity are valuable and essential people skills needed in organizations. Our text provides a comprehensive overview of OB theories and processes with a strong emphasis on skill-building applications in order to equip students with the information and skills they need to thrive in organizations today. Why Critical Thinking Matters in OB Critical thinking is an essential skill; managers use critical thinking to understand, explain, predict, and influence behavior in the workplace. A critical thinker uses his or her intelligence, knowledge, and skills to question and carefully explore situations and to arrive at thoughtful conclusions based on evidence and reason. Someone thinking critically is able to get past biases and view situations from different perspectives to ultimately improve his or her understanding of the world. Business leaders use critical thinking when making decisions, solving problems, gathering information, and asking questions. Time and again, research has shown the effectiveness of critical thinking in the workplace. In an article published in the journal Current Directions in Psychological Science, the authors report that cognitive ability tests, including criticalthinking tests, “are among the strongest and most consistent predictors of performance across academic and work settings.”1 28 In Organizational Behavior: A Skill-Building Approach, we use the components and core skills of critical thinking to teach the many facets of organizational behavior to students. Adding critical thinking to these behaviors further enhances students’ abilities to strategically think as well as analyze and solve problems. By seeking first to understand the dynamics of human behavior, then sharing the knowledge learned, they will be able to build more successful relationships within their personal and professional lives. How Our Book Incorporates Critical Thinking A lot of OB books claim to help students to develop their critical-thinking skills. What makes our book different? Our book incorporates critical thinking on every page. Instead of passively reading through each chapter, the student is asked to pause, reflect, and engage more critically with the content. Chapter 1 explains the central role critical thinking plays in OB and introduces a five-step critical-thinking framework that students can apply to challenging scenarios, problems, decisions, and other issues. Thinking Critically questions don’t necessarily have a right or wrong answer but rather are designed to challenge students to think critically and achieve higher levels of learning. Examining the Evidence boxes highlight a recent seminal OB study from high-quality OB journals and discuss its practical applications in the business world. Critical-thinking questions at the end of each box allow students to see how research in academe applies to real-life settings. OB in the Real World boxes feature real-world anecdotes, quotes, and examples from seasoned business professionals who share their knowledge and experience with students by describing how they used OB to positively influence outcomes and achieve organizational success. Critical-thinking questions help students see how OB concepts impact real people and organizations. These critical-thinking elements are perfect for assignments or class discussions and lively debate. 29 Digital Resources SAGE edge for Instructors A password-protected instructor resource site at edge.sagepub.com/neckob2e supports teaching with high-quality content to help in creating a rich learning environment for students. The SAGE edge site for this book includes the following instructor resources: Test banks built on Bloom’s Taxonomy and AACSB Standards to provide a diverse range of test items, which allow you to save time and offer a pedagogically robust way to measure your students’ understanding of the material Sample course syllabi with suggested models for structuring your course Editable, chapter-specific PowerPoint® slides that offer flexibility when creating multimedia lectures EXCLUSIVE access to full-text SAGE journal articles to expose students to important research and scholarship tied to chapter concepts Video and multimedia content that enhances student engagement and appeal to different learning styles Lecture notes that summarize key concepts on a chapter-by-chapter basis to help you with preparation for lectures and class discussions Sample answers to in-text questions that provide an essential reference Lively and stimulating experiential exercises and activities that can be used in class to reinforce active learning and the skill-building approach Teaching notes for the cases to guide analysis Running case studies from the first edition provide instructors with additional case study content to use for further analysis of chapter concepts Suggested film clips showing OB in the movies that include analysis and critical-thinking questions Self-Assessments pulled from the end of each chapter allow students to print and fill out assessments in or outside of the classroom 30 SAGE edge for students The open-access companion website helps students accomplish their coursework goals in an easy-to-use learning environment, featuring: Learning objectives with summaries reinforce the most important material Mobile-friendly practice quizzes encourage self-guided assessment and practice Mobile-friendly flashcards strengthen understanding of key concepts Carefully selected video and multimedia content enhances exploration of key topics to reinforce concepts and provide further insights Self-Assessments pulled from the end of each chapter allow students to print and fill out assessments in or outside of the classroom EXCLUSIVE access to full-text SAGE journal articles to expose students to important research and scholarship tied to chapter concepts SAGE coursepacks SAGE coursepacks makes it easy to import our quality instructor and student resource content into your school’s learning management system (LMS) with minimal effort. Intuitive and simple to use, SAGE coursepacks gives you the control to focus on what really matters: customizing course content to meet your students’ needs. The SAGE coursepacks, created specifically for this book, are customized and curated for use in Blackboard, Canvase, Desire2Learn (D2L), and Moodle. In addition to the content available on the SAGE edge site, the coursepacks include: Pedagogically robust assessment tools that foster review, practice, and critical thinking, and offer a better, more complete way to measure student engagement, including: Diagnostic chapter pretests and posttests that identify opportunities for student improvement, track student progress, and ensure mastery of key learning objectives Instructions on how to use and integrate the comprehensive assessments and resources provided 31 Assignable video tied to learning objectives, with corresponding multimedia assessment tools bring concepts to life that increase student engagement and appeal to different learning styles. The video assessment questions feed to your gradebook. Integrated links to the eBook version that make it easy to access the mobile-friendly version of the text, which can be read anywhere, anytime Interactive eBook Organizational Behavior 2e is also available as an Interactive eBook which can be packaged with the text for just $5 or purchased separately. The Interactive eBook offers hyperlinks to original SAGE videos, including You Make the Call videos, which place students in the role of a decision maker within an organization who is faced with a real-world challenge, and Did You Know videos that provide students with unassuming research findings from sources such as Gallup and the Harvard Business Review to challenge the assumption that OB is a common-sense course. The Interactive eBook also includes additional case studies, as well as carefully chosen journal articles that students can access with just one click. Users will also have immediate access to study tools such as highlighting, bookmarking, note-taking/sharing, and more! 32 New to This Edition In addition to updating 80 percent of the chapter references, we have added two new end-of-chapter exercises and one online exercise for use in online classes to each chapter. We have also moved the continuing case studies from the text to the instructor resource site and replaced them with chapter-opening cases on real-world companies, including Under Armour, Twitter, and Uber. We have updated all end-of-chapter cases and added new profiles for the OB in the Real World feature. Additionally, we have added a new chapter on ethics and social responsibility and added the topic of trust to Chapter 11 on conflict and negotiation. Please read the section below to see the chapter-specific changes that have been made. Chapter-by-Chapter Changes Chapter 1 (Why Organizational Behavior Matters) New opening case: Southwest Airlines New section explaining why OB is not just common sense New OB in the Real World (OBRW) featuring Tom Hatten, founder of Mountainside Fitness New OBRW featuring Dr. Karen Hardy, Director of Risk, US Department of Commerce More detailed explanation of the four functions of management and how they apply to OB Additional discussion on how human skills and communication skills 33 directly relate to organizational behavior New case: CVS Health Chapter 2 (Diversity and Individual Differences) New opening case: PepsiCo New OBRW featuring Kaia West, HR recruitment, KPMG Explores three diversity initiatives commonly used in the workplace (reducing bias, hiring tests, grievance procedures) and explains the reasons why they may not work Outlines positive ways for managers to promote diversity Describes cross-cultural diversity and how it can be managed within the organization Expands discussion of the Big Five model Chapter 3 (Perception and Learning) New opening case: Twitter New OBRW, featuring Matt Nuyen, Head of Sales, Currency Capital Discusses perception in relation to fake news using current research and media examples Expands the discussion of common perceptual distortions (halo effect, stereotypes, selective attention, and so on) with new research Chapter 4 (Emotions, Attitudes, and Stress) New opening case: Under Armour New OBRW featuring Clare Collins, founder of Silver Linings Bikinis Enhanced discussion of emotional contagion using real-world examples Updated information and real-world examples on employee engagement Greater coverage of stress in the workplace including the causes of stress, different ways to manage stress, and the impact of stress on job satisfaction More discussion on wellness illustrated by new research and realworld examples 34 Chapter 5 (Motivation: Concepts and Theoretical Perspectives) New opening case: AriZona Iced Tea Greater depth added to the definition of motivation and the process of motivation New OBRW featuring Mark Shoen, U-Haul New figure illustrating S.M.A.R.T goals Enhanced discussion, research, and examples on equity theory and expectancy theory Chapter 6 (Motivation: Practices and Applications) New opening case: Disney Revised introduction to intrinsic motivation New “Examining the Evidence” feature discussing the possibility of family motivation as a replacement for intrinsic motivation New OBRW featuring Rob Kanjura, Savant Naturals New OBRW featuring Karen Sanders, manager, Virginia Tech Expanded discussion of performance-based pay New section, “Motivation over Time,” examining research on the effects of rewards on employee motivation over time, illustrated by new figure New Examining the Evidence feature: “Family Motivation as a Substitute for Intrinsic Motivation?” New material focusing on differences in work values between the baby boomer, Generation X, and millennial generations Enhanced discussion of motivation through job design Explores the argument for and against flexible work options through research and real-world examples Chapter 7 (Teams) New opening case: Pearson Enhanced explanation of the differences between groups and teams Updated research-based information on highly effective teams, highlighting the concept of psychological safety (illustrated with new figure) New OBRW featuring Derrick Hall, CEO, Arizona Diamondbacks 35 Detailed discussion on virtual teams using current research, realworld examples, and a new figure Expanded focus on team formation using Tuckman’s model Introduces Gersick’s Time and Transition Model as a different perspective to the Tuckman model Provides new examples of team norms Updated Examining the Evidence feature: “Team Cohesion: Is Too Much More Than Enough?” New section on cyberloafing as a form of social loafing Enhanced discussion of groupthink with the inclusion of political groupthink New section on how to brainstorm Chapter 8 (Decision Making, Creativity, and Innovation) New opening case: ASU Explains the difference between decision making and problem solving Clarifies the difference between creativity and innovation using realworld examples New OBRW featuring John Beck, CIO, ASU Enriched discussion on availability heuristics based on current research. New research and examples to illustrate the factors that inspire creativity. New case: McDonald’s Chapter 9 (Ethics and Social Responsibility in Organizations) New opening case: IBM New chapter on ethics Explains the importance of ethics in organizations Discusses ethical dilemmas and how to resolve them. New OBRW featuring Sam Heiler, plant manager, JMW Truss. New Examining the Evidence feature: “Ethical Leadership and Moral Judgments” Explains the different approaches to ethical decision making. 36 Clarifies the differences between ethical leadership and ethical followership. Explores the approaches to social responsibility in organizations. Identifies the components of an ethical culture. New case: JetBlue Chapter 10 (Effective Communication) New opening case: Uber Enhanced discussion of communication channels illustrated by realworld research New table describing some tips for email etiquette New OBRW featuring Destin Cook, Director of Finance, NextEra Energy Includes new research on the effect of modern technology on listening skills New Examining the Evidence feature: “Electronic Communication during Nonworking Hours” Chapter 11 (Trust, Conflict, and Negotiation) New opening case: NFL New discussion on the concept of psychological contract New content on the topic of social networks New table outlining tips for building trust in organizations New OBRW featuring Ken Hill, CEO, Dorco New OBRW featuring Radha Abboy, 8020 Consulting New case: Disney Chapter 12 (Leadership Perspectives) New opening case: Procter and Gamble Updated media examples and research New table highlighting the differences between charismatic, transformational, and transactional leaders New OBRW featuring Scott Whitfield, IBM New OBRW featuring Heather Clark, founder of Pomchies Real-world examples added to Empowering Leadership section New Examining the Evidence feature: “When Is Empowering 37 Leadership Most Effective?” Expanded discussion on leadership and gender New section on LGBT employees in the workplace New case: Chobani Yogurt Chapter 13 (Influence, Power, and Politics) New opening case: NextEra Energy Enhanced discussion of influencing tactics illustrated by real-world examples New figure illustrating inspirational leadership New Examining the Evidence feature: “Political Behavior: A Viable Coping Strategy for Organizational Politics?” New OBRW featuring Maurice S. Hebert, SVP, Tufts Health Plan New section added discussing four types of organizational politics Chapter 14 (Organizations and Culture) New opening case: REI New OBRW, featuring senior account executive, Datavard New figure to illustrate the competing values framework New media examples to highlight strong and weak cultures Chapter 15 (Organizational Change and Structure) New opening case: Google New introduction profiling sexual harassment using a real-world example New media examples illustrating the topic of external forces for change New OBRW featuring Cris Weekes, SVP, Central Garden and Pet New section on generational changes New section explaining the ten main reasons for resisting change New figure illustrating psychological reactions to change New section on Kotter’s 8-Step change model featuring updated figure New case: General Electric 38 End-of-Chapter Features In each chapter, we include traditional chapter review materials to help students check their comprehension and prepare for quizzes and exams. In Review, organized by learning objective, summarizes key chapter information. Up for Debate challenges students to think critically and develop and discuss their own viewpoints across a wide range of issues, including diversity, emotional well-being, and ethics. Short exercises, experiential exercises, and online exercises are designed to help students build valuable experience and increase their skills through decision-oriented and hands-on exercises. Self-assessments allow students to apply chapter content to their own lives and better understand their own behaviors, skills, and strengths. Case studies profile real-world companies and people and illustrate how OB concepts function in the real world, providing students with engaging case examples and opportunities to apply OB concepts to the case studies. Content and Organization Each chapter is introduced by an OB model that provides students with a big-picture overview of how all the chapters and parts fit together. Chapter 1, “Why Organizational Behavior Matters,” explains how and why OB has become significant in today’s organizations and describes how human skills and communication skills directly relate to organizational behavior. Chapter 2, “Diversity and Individual Differences,” explores different types of diversity, describes positive ways for managers to promote diversity, discusses how cross-cultural diversity can be managed within the organization, and explores personality theory in greater depth. Chapter 3, “Perception and Learning,” describes the ways in which we interpret our environment and discusses the effects of common perceptual distortions such as halo effect, stereotypes, and selective attention. 39 Chapter 4, “Emotion, Attitudes, and Stress,” explores how emotions influence our behavior; common workplace attitudes; and the impact of stress in the workplace and how to manage it. Chapter 5, “Motivation: Concepts and Theoretical Perspectives,” discusses the process of motivation, and explores the theories of motivation and how they influence behavior in the workforce. Chapter 6, “Motivation: Practices and Applications,” outlines the practical ways and strategies used by organizations such as job design and flexible work options to encourage motivation and empower employees. Chapter 7, “Teams,” emphasizes the critical role of teams and teamwork, explores team norms, and explains the components that make up an effective team. Chapter 8, “Decision Making, Creativity, and Innovation,” addresses the main types of decision making in organizations, and highlights creativity and innovation processes and how they affect organizational behavior. Chapter 9, “Ethics and Social Responsibility in Organizations,” explains the importance of ethics in organizations, discusses ethical dilemmas, and explores different approaches to social responsibility. Chapter 10, “Effective Communication,” describes the different types of communication channels, explores the effect of modern technology on communication, and describes the key barriers to effective communication. Chapter 11, “Trust, Conflict, and Negotiation,” explains how managers can build trust in organizations, manage conflict, and learn to negotiate using a variety of different skills. Chapter 12, “Leadership Perspectives,” discusses different types of leaders and leadership theories, and explores gender issues in the workplace, such as those related to LGBT employees. Chapter 13, “Influence, Power, and Politics,” describes different types of influence tactics for influencing others, discusses the concept of power and its relationship to leadership, and explores different forms of organizational politics. 40 Chapter 14, “Organizations and Culture,” explores the facets of organizational culture, how organizations can adapt their practices across cultures, and different ways in which culture is shaped in organizations. Chapter 15, “Organizational Change and Structure,” describes the forces for change in organizations, outlines resistance to change and how to reduce it, and discusses how organizational structure helps shape behavior in organizations. Note 1. Kuncel, Nathan R., and Sarah A. Hezlett. “Fact and Fiction in Cognitive Ability Testing for Admissions and Hiring Decisions.” Current Directions in Psychological Science 19, no. 6 (December 2010): 339−345. 41 Acknowledgments The authors thank all those people who have supported our efforts in writing this book. There are a plethora of people who contributed to making this text a reality. First, we thank all of the students who over the years have encouraged us to leave our teaching comfort zone to explore new and innovative ways of teaching. It was through these experiences that we obtained the courage to attempt to write such a book as the 2nd edition of Organizational Behavior: A Critical-Thinking Approach. We also thank our respective deans Amy Hillman at Arizona State (W. P. Carey School of Business) and Javier Reyes at West Virginia University’s College of Business & Economics for their support for this project. We thank our department heads (Kevin Corley, Arizona State, and Abhishek Srivastava, West Virginia University) for their encouragement as well. Chris Neck thanks Duane Roen (Dean of the College of Integrative Sciences and Arts at Arizona State University) for his steadfast support and encouragement to excel in the classroom. For their thoughtful and helpful comments and ideas on our manuscript, we sincerely thank the following reviewers. Our book is a better product because of their insightful suggestions. Reviewer Acknowledgments Tracy H. Porter, Cleveland State University Samira B. Hussein, Johnson County Community College Lisa M. Nieman, Indiana Wesleyan University Tommy Nichols, Texas Wesleyan University Steven D. Charlier, Georgia Southern University Daniel S. Marrone, Farmingdale State College Linda Hefferin, Columbia College of Missouri Robert D. Gulbro, Florida Institute of Technology Deborah S. Butler, Georgia State University Christine R. Day, Eastern Michigan University Janice S. Gates, Western Illinois University Nathan Himelstein, Essex County College Harriet L. Rojas, Indiana Wesleyan University 42 Andrea E. Smith-Hunter, Siena College Maria D. Vitale, Brandman University, Chaffey College, and UCLA Extension Audrey M. Parajon, Wilmington University Frederick R. Brodzinski, The City College of New York Michael J. Alleruzzo, Saint Joseph’s University Jacqueline Mayfield, Texas A&M International University Milton Mayfield, Texas A&M International University Bob Waris, University of Missouri-Kansas City Ann Snell, Tulane University Mike Shaner, Saint Louis University Susan Knapp, Kaplan University Jason Jackson, Kaplan University Palaniappan Thiagarajan, Jackson State University Maria Minor, Kaplan University David J. Biemer, Texas State University Marla Lowenthal, University of San Francisco Avan Jassawalla, SUNY Geneseo Warren Matthews, LeTourneau University Eric B. Dent, Fayetteville State University Dr. Patrick Coyle, Lycoming College Dave Beaudry, Ph.D., Keene State College Angela Balog, Saint Francis University Vallari Chandna, University of Wisconsin, Green Bay Jennifer Griffith, University of New Hampshire Marjolijn van der Velde, Devenport University Desiree Keever, State University of New York, Delhi Kathleen Novak, University of Denver Curt Beck, Concordia University Chad Stevens, Keystone College Kevin G. Love, Ph.D., Central Michigan University Alex Chen, University of Central Arkansas Jeffrey B. Paul, The University of Tulsa Joseph Simon, Casper College Kristin Holmberg-Wright, University of Wisconsin, Parkside Annette B. Roter, Viterbo University Laura Yu Hickerson, James Madison University Stephanie A. Kodatt, Ph.D., Texas A&M University Katrina Graham, Suffolk University Keanon Alderson, California Baptists University 43 Min Carter, Southern Illinois University Huaizhong Chen, West Virginia University Yi-Yu Chen, New Jersey City University Guorong Zhu, Salem State University Todd A. Conkright, Creighton University Michael L. Woodward, Shorter University Adriana Machado Casali, Conestoga College Alicia J. Revely, Miami University Amanda L. Christensen, University of Cincinnati Colleen A. McLaughlin, Liberty University David Hofstetter, Clark University Monica Law, Ph.D., Marywood University Dr. Richard J. Vaughan, University of St. Francis It takes a team to write a textbook, and we thank those behind-the-scenes individuals who assisted in the research, development, and/or editing of various parts of this second edition. Specifically, Chris Neck would like to thank George Heiler, Kevin Murphy, and Tristan Gaynor for their above and beyond help. This textbook was made better by their talents and contributions. In addition, we thank the fine folks at SAGE for bringing this book to fruition. Our dream of creating an innovative OB textbook and ancillary package has become a reality because of our amazing, energetic, and encouraging acquisitions editor, Maggie Stanley. She has been a champion for this book and our ideas (and there were many!) every step of the way. We can’t thank her enough for her dedication and support. Lauren Holmes, our talented developmental editor, pushed us to explore new ideas and kept us on track to write the best book possible. Andrew Olson, our production editor, made sure that everything that needed to happen did indeed happen and kept all of us on track. We appreciate all of their hard work, creativity, and attention to detail. We are also grateful to Ashlee Blunk and Mark Achenbach from SAGE, who planted the seeds for this book many years ago. We are grateful to Harriet Rojas (Indiana Wesleyan University), Milton R. Mayfield (Texas A&M International University), Jacqueline R. Mayfield (Texas A&M International University), and Steven Stovall (Southeast Missouri State University) for contributing valuable, hands-on experiential exercises. Designer Anthony Paular came up with an elegant and contemporary look for this book that visually brings to life our ideas more than we could have ever imagined. Alissa Nance took care of a 44 myriad of tasks during the development of the manuscript with an energy and enthusiasm that was inspiring. Amy Lammers, our marketing manager, did a great job coordinating the promotion of our book, from organizing focus groups to overseeing all of the professor outreach efforts. And we thank our families for “living without us” as we worked diligently on completing this textbook. 45 About the Authors Dr. Christopher P. Neck is currently an Associate Professor of Management at Arizona State University, where he held the title “University Master Teacher.” From 1994 to 2009, he was part of the Pamplin College of Business faculty at Virginia Tech. He received his Ph.D. in Management from Arizona State University and his MBA from Louisiana State University. Neck is author of over 100 scholarly articles in seminal academic journals as well as a number of books. Some of his books include: Self-Leadership: The Definitive Guide to Personal Excellence (2017, Sage); Fit to Lead: The Proven 8-Week Solution for Shaping Up Your Body, Your Mind, and Your Career (2004, St. Martin’s Press; 2012, Carpenter’s Sons Publishing); Mastering SelfLeadership: Empowering Yourself for Personal Excellence, 6th edition (2013, Pearson); The Wisdom of Solomon at Work (2001, Berrett-Koehler); For Team Members Only: Making Your Workplace Team Productive and Hassle-Free (1997, Amacom Books); and Medicine for the Mind: Healing Words to Help You Soar, 4th Edition (Wiley, 2012). Neck is also the coauthor of the principles of management textbook Management: A Balanced Approach to the 21st Century (Wiley 2013; 2017, 2nd Edition); the upcoming introductory to entrepreneurship textbook Entrepreneurship (Sage, 2017); and the introductory to organizational behavior textbook Organizational Behavior (Sage, 2017). Dr. Neck’s research specialties include employee/executive fitness, self-leadership, leadership, group decision-making processes, and self-managing teams. He has over 100 publications in the form of books, chapters, and articles in various journals. Some of the outlets in which Neck’s work has appeared include Organizational Behavior and Human Decision Processes, Journal of Organizational Behavior, Academy of Management Executive, Journal of Applied Behavioral Science, Journal of Managerial Psychology, Executive Excellence, Human Relations, Human Resource Development Quarterly, Journal of Leadership Studies, Educational Leadership, and Commercial Law Journal. Due to Neck’s expertise in management, he has been cited in numerous national publications, including The Washington Post, The 46 Wall Street Journal, The Los Angeles Times, The Houston Chronicle, and the Chicago Tribune. Additionally, each semester Neck teaches an introductory management course to a single class of anywhere from 500 to 1,000 students. Dr. Neck was the recipient of the 2007 Business Week Favorite Professor Award. He is featured on www.businessweek.com as one of the approximately twenty professors from across the world receiving this award. Neck currently teaches a mega section of Management Principles to approximately 500 students at Arizona State University. Neck received the Order of Omega Outstanding Teaching Award for 2012. This award is awarded to one professor at Arizona State by the Alpha Lambda Chapter of this leadership fraternity. His class sizes at Virginia Tech filled rooms up to 2,500 students. He received numerous teaching awards during his tenure at Virginia Tech, including the 2002 Wine Award for Teaching Excellence. Also, Neck was the ten-time winner (1996, 1998, 2000, 2002, 2004, 2005, 2006, 2007, 2008, and 2009) of the “Students’ Choice Teacher of The Year Award” (voted by the students for the best teacher of the year within the entire university). Also, some of the organizations that have participated in Neck’s management development training include GE/Toshiba, Busch Gardens, Clark Construction, the United States Army, Crestar, American Family Insurance, Sales and Marketing Executives International, American Airlines, American Electric Power, W. L. Gore & Associates, Dillard’s Department Stores, and Prudential Life Insurance. Neck is also an avid runner. He has completed 12 marathons, including the Boston Marathon, the New York City Marathon, and the San Diego Marathon. In fact, his personal record for a single long-distance run is a 40-mile run. Dr. Jeffery D. Houghton completed his Ph.D. in management at Virginia Polytechnic Institute and State University (Virginia Tech) and is currently an associate professor of management at West Virginia University (WVU). Dr. Houghton has taught college-level business courses at Virginia Tech, Abilene Christian University (Texas), Lipscomb University (Tennessee), the International University (Vienna, Austria), and for the US Justice Department-Federal Bureau of Prisons. Prior to pursuing a full-time career in academics, he worked in the banking industry as a loan officer and branch manager. 47 A member of the Honor Society of Phi Kappa Phi, Dr. Houghton’s research specialties include human behavior, motivation, personality, leadership, and self-leadership. He has published more than 50 peerreviewed journal articles, book chapters, and books, and his work has been cited more than 3,500 times in academic journals. He has coauthored three textbooks: Self-Leadership: The Definitive Guide to Personal Excellence (2017, Sage), Organizational Behavior (2017, Sage), and Management: A Balanced Approach to the 21st Century (Wiley 2013; 2017, 2nd Edition). He currently teaches undergraduate, master’s-, and doctoral-level courses in management, organizational behavior, and leadership. Dr. Houghton was named the 2013 Beta Gamma Sigma Professor of the Year for the WVU College of Business and Economics, awarded annually to one faculty member within the college as selected by a vote of the student members of Beta Gamma Sigma; and he received the 2008 Outstanding Teaching Award for the WVU College of Business and Economics, awarded annually to one faculty member for outstanding teaching. In addition to his research and teaching activities, Dr. Houghton has consulted and conducted training seminars for companies including the Federal Bureau of Investigations, Pfizer Pharmaceuticals, and the Bruce Hardwood Floors Company. In his spare time, Dr. Houghton enjoys traveling, classic mystery novels, racquetball, and snow skiing. Finally, Dr. Houghton has trained for and completed two marathons, the Marine Corps Marathon in Washington, DC, and the Dallas White Rock Marathon in Dallas, Texas. Emma L. Murray completed a Bachelor of Arts degree in English and Spanish at University College Dublin (UCD) in County Dublin, Ireland. This was followed by a Higher Diploma (Hdip) in business studies and information technology at the Michael Smurfit Graduate School of Business in County Dublin, Ireland. Following her studies, Emma spent nearly a decade in investment banking before becoming a fulltime writer and author. As a writer, Emma has worked on numerous texts, including business and economics, self-help, and psychology. Within the field of higher education, Emma worked with Dr. Christopher P. Neck and Dr. Jeffery D. Houghton on Management (Wiley 2013); and is the coauthor of the principles of management textbook Management: A Balanced Approach to the 21st Century (Wiley 2013, 2017–2nd 48 Edition), the coauthor of Organizational Behavior (Sage 2017), and the co-author of Entrepreneurship: The Practice and Mindset (Sage 2018). She is the author of The Unauthorized Guide to Doing Business the Alan Sugar Way (2010, Wiley-Capstone); and the lead author of How to Succeed as a Freelancer in Publishing (2010, How To Books). She lives in London. 49 Part I Introduction 50 ©iStockphoto.com/g-stockstudio Chapter 1 Why Organizational Behavior Matters 51 1 Why Organizational Behavior Matters Carolyn Van Houten/The Washington Post via Getty Images The single biggest decision you make in your job—bigger than all the rest—is who you name manager. When you name the wrong person manager, nothing fixes that bad decision. Not compensation, not benefits—nothing. —Gallup CEO Jim Clifton in the summary accompanying his organization’s 2013 “State of the American Workplace” employee engagement study Learning Objectives By the end of this chapter, you will be able to: 52 1.1 Explain the basic concept of organizational behavior (OB) and its value in organizations 1.2 Describe the key role of managing human capital in creating a sustainable competitive advantage for organizations 1.3 Identify the major behavioral science disciplines that contribute to OB 1.4 Demonstrate the value of critical thinking in the context of OB 1.5 Identify the major challenges and opportunities in the field of OB 1.6 Differentiate the three basic levels of analysis at which OB may be examined 1.7 Outline the benefits of positive OB and high-involvement management Case Study: Southwest Airlines’ Organizational Culture The airline industry has been one of the most saturated and unprofitable businesses for at least the past three decades. It is a business where profit margins of 3 percent aren’t uncommon and where customer satisfaction hovers around 60 percent. Seats are getting smaller, delays longer, and prices higher despite fuel prices being 30 percent lower. The list of would-be competitors to Southwest Airlines and imitators is lengthy, all with plenty of money and plenty of brand recognition. What they all lacked was Southwest’s intense focus on organizational culture. In an industry where profits are shrinking, Southwest Airlines stands as an example of a company that is finding opportunities where others are not with profit margins consistently around 10 percent. Southwest stands out in a well-saturated industry thanks to its organizational culture of putting employees before profits and before customers. Southwest Airlines was founded in 1967 by Herb Kelleher and Rollin King, serving just three cities in Texas. By 1998 they had built Southwest Airlines to be the fifth largest US air carrier, serving over 50 million passengers a year. It only took until 1980 to be recognized as number one in customer service, a list that they consistently top to this day. Today Southwest has the mission of “dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.” What makes Southwest Airlines consistently stand out begins with the way that they look for employees and the manner in which they treat them. 53 Southwest Airlines founder Herb Kelleher has long kept the recruitment motto at Southwest, “Hire for attitude and train for skill.” When searching for employees, Southwest is not looking for the perfect résumé or the perfect work experience. Instead, Southwest is looking for someone whose devotion to the company and to its customers brings them to “a sense of mission, a sense that ‘the cause comes before their own needs.’” Southwest instills three main things into the hearts of its employees: a warrior spirit, a servant’s heart, and a “fun-luving” (sic) attitude. These are far different directives than the typical “take the initiative” or “care about your customers” and that is why Southwest can bring in the kind of people that fits their mold for a trainable employee. In the past year, the company had openings for roughly 4,500 new employees and received more than 150,000 applications. What motivates the employees at Southwest is something much greater than a paycheck; instead, they share a common purpose. The paycheck can get people to work on time consistently, but it takes something more inspirational to get employees to go the extra mile. Southwest CEO Gary Kelly says, “Southwest is a great place to work and brings the greatest joy because we have such meaningful purpose.” The Southwest vision that guides its employees is “to connect people to what’s important in their lives through friendly, reliable, and low-cost air travel.” This vision guides Southwest’s growth as well as the motivation of its employees to go the extra mile and serve the customers for a broader purpose than a paycheck. To enforce this purpose to which all Southwest employees aspire to, Gary Kelly gives “shout outs” to employees who have gone above and beyond each month to show great customer service. The culture at Southwest Airlines is one that nurtures employees that go above and beyond and incentivizes them to show great customer service. Despite Southwest’s excellent reputation for customer service, like any large organization, it’s experienced a few bumps in the road, largely related to technology problems. In July 2016, Southwest was forced to cancel thousands of flights following a technical failure, and in early 2017, a series of computer outages left hundreds of thousands of customers stranded. President of Southwest Airlines, Tom Nealon, realizes the necessity of efficient technology for improving the customer experience, and for Southwest employees to adopt the technical skills needed to provide a higher level of service, but not at the sacrifice of the personal touch for which the airline is so well known. “We need to be digital,” he says. “We need to strengthen our customer 54 experience. But our customer experience is always going to be centered with our people.” Indeed it is Southwest’s “people” who went the extra mile and provided sleeping bags and pizzas to a girls’ lacrosse team which had been stranded because of an outage. By going above and beyond the call of duty, Southwest’s employees had saved the airline from a potential customer services disaster. Another part of its technology program involves connecting with international customers. Since its 2010 purchase of AirTran Airways, trade on the international routes (gained by Southwest because of the acquisition) was not as good as it should be. Southwest is investing in technology to attract its international customers by building a new reservations system which includes foreign currency exchanges and point-of-sale programs. Not only will the new system give Southwest better control over its flight fares, but it also provides the airline with the option to add ancillary charges, which is something that most of its competitors do. But despite the changes ahead, Nealon says that Southwest will still keep its policy to allow passengers to check in their first two bags for free. “It’s part of our brand,” Nealon says. “It’s part of our promise to our customers, and we’re not going to change it.” However, a recent tragic event has forced Southwest to look beyond its technology inefficiencies to address a much more serious situation. In April 2018, a Southwest Airlines plane was forced to make an emergency landing due to an engine explosion which killed one passenger and injured seven more. The CEO of Southwest Airlines, Grace C. Kelly, has called for “enhanced inspection procedures” on its entire fleet of aircraft to ensure a terrible tragedy like this never happens again. Resources: Ahles, A. (2017). New Southwest Airlines president combines tech and people skills. Star-Telegram. Retrieved from http://www.startelegram.com/news/business/aviation/sky-talk-blog/article146047379.html Carbonara, P. (1996). Hire for attitude, train for skill. Fast Company. Retrieved from https://www.fastcompany.com/26996/hire-attitude-train-skill Gallo, C. (2014). Southwest Airlines motivates its employees with a purpose bigger than a paycheck. Forbes. Retrieved from https://www.forbes.com/sites/carminegallo/2014/01/21/southwest-airlines- 55 motivates-its-employees-with-a-purpose-bigger-than-apaycheck/#de8246753769 Makovsky, K. (2013). Behind the Southwest Airlines culture. Forbes. Retrieved from https://www.forbes.com/sites/kenmakovsky/2013/11/21/behind-thesouthwest-airlines-culture/#15e375a03798 Martin, E. (2015). A major airline says there’s something it values more than its customers, and there’s a good reason why. Business Insider. Retrieved from http://www.businessinsider.com/southwest-airlines-puts-employeesfirst-2015-7 Solomon, M. (2012, April 4). What you can learn from Southwest Airlines’ culture. The Washington Post. Retrieved from https://www.washingtonpost.com/business/on-small-business/what-you-canlearn-from-southwest-airlines-culture/2012/04/03/gIQAzLVVtS_story.html? utm_term=.174c12262071 Case Questions: 1. Describe how Southwest Airlines builds their human capital. 2. What differentiates Southwest from any other airline? 3. What kinds of human skills is Southwest Airlines looking for in potential employees? Master the content edge.sagepub.com/neckob2e What Is Organizational Behavior and Why Is It Important? >> LO 1.1 Explain the basic concept of organizational behavior (OB) and its value in organizations Today’s continually changing economic world needs managers who can understand, anticipate, and direct people in a fast-paced competitive market. In the past, organizations focused on numbers and how to achieve those numbers without paying too much attention to motivating and 56 understanding their staff. However, fast-paced organizations like Southwest Airlines need the right people with the right skills to achieve success. This is why organizational behavior has taken on a new level of importance; people with organizational behavior skills are now regarded as a valuable and essential commodity. In an environment in which competition is fiercer than ever, people will differentiate your business from anyone else’s. No matter what area of business you work in, people are the cornerstone of success. We define organizational behavior (OB) as a field of study focused on understanding, explaining, and improving attitudes of individuals and groups in organizations.1 An organization is a structured arrangement of people working together to accomplish specific goals. In short, OB focuses on figuring out how and why individual employees and groups of employees behave the way they do within an organizational setting. Researchers carry out studies in OB, and managers or consultants establish whether this research can be applied in a real-world organization. Over the years this research has uncovered some surprising results. One study found that American employees would rather have a better boss than a pay raise.2 This is certainly the case in Southwest Airlines where employees are more motivated by a good management with a clear vision, than they are by salary. Being treated well, respected, and rewarded for excellent service is more important to the Southwest Airlines employees than money. In another survey, people said they would rather have a better boss than a private office or free snacks!3 Management expert Victor Lipman believes that when people quit their jobs, they are quitting their managers, rather than the companies themselves.4 The point is that managers who lack OB skills lose good employees. This is why it is important for you to learn OB skills in order to eventually become a manager who people will listen to and respect. Organizational behavior: A field of study focused on understanding, explaining, and improving attitudes of individuals and groups in organizations Organization: A structured arrangement of people working together to accomplish specific goals 57 How will studying organizational behavior benefit you in the workplace? Understanding the ways people act and interact within organizations provides three key advantages: 1. You can explain behavior. You can explain why your boss, coworkers, or subordinates are doing what they are doing. 2. You can predict behavior. You can anticipate what your boss, coworkers, or subordinates will do in certain circumstances and situations. 3. You can influence behavior. You can shape the actions of your subordinates, as well as your boss and coworkers in order to help them accomplish their goals and achieve organizational objectives. Although explaining and predicting behavior are undoubtedly useful skills, influencing behavior is probably of the greatest interest to a practicing manager. Once you are equipped with knowledge about your employees’ work behaviors, you can use it to optimize performance by providing effective direction and guidance. This explains why managing organizational behavior (i.e., focusing on the behavior and actions of employees and how they apply their knowledge and skills to achieve organizational objectives) is so important in today’s organizations. There is a common belief among some people that OB is just common sense, but this is not the case. We cannot rely on just common sense to truly understand the behaviors of others. If that were the case we would be in danger of using inaccurate generalizations, incorrect suppositions, and common misconceptions to justify or define other people’s behaviors. OB provides a systematic approach, based on scientific evidence, to further our understanding of behavior that goes far beyond common sense alone. Put simply, OB is for everyone. It applies to everyday situations where you find yourself interacting with people, from the workplace, to home life, to the basketball court. Explaining and predicting behavior are of great interest to both formal managers in organizations and all employees given we all have the ability to influence coworkers. Throughout this book, we will show how OB concepts can relate to all employees at all levels of a company with a primary focus on formal managers. While the understanding of OB can benefit all employees and all levels in an organization, let’s now focus on formal managers and what a manager actually does in the workplace. 58 Let’s remind ourselves what a manager actually does in the workplace. Typically, managers carry out four main functions: planning, organizing, leading, and controlling.5 (See Figure 1.1.) In planning, a manager evaluates an organization’s current position and where it wants to be in the future, and sets goals, designs strategies, and identifies actions and resources needed to achieve success. Organizing means arranging resources such as people and functions to implement the strategy made during the planning stage. Managers ensure goals are achieved by leading teams and individuals effectively, which means motivating and communicating with people to achieve goals. The controlling function allows managers to monitor employee performance, ensure milestones are being reached, and take corrective or preventative action where necessary. Figure 1.1 The Four Functions of Managers Source: Carpenter, M., Bauer, T., Erdogan, B. (2012). “Chapter 15: The Essentials of Control.” Management Principles. https://2012books.lardbucket.org/books/management-principlesv1.1/s19-the-essentials-of-control.html OB is an integral part of these four functions as each function involves people “behaving” in certain ways to achieve specific tasks and duties. Successful planning, organizing, leading, and controlling would not be 59 possible without managers following some fundamental OB principles. Organizational members need to be equipped with specific skills to carry out their roles effectively.6 First, they must have technical skills. A technical skill is an aptitude for performing and applying specialized tasks.7 Today’s members need to be proficient in using the latest technologies, including databases, spreadsheets, email, and social networking tools. Tom Nealon, president of Southwest Airlines, believes in combining people skills with technical skills in order to provide the best customer service to the airline’s passengers. Technical skill: The aptitude to perform and apply specialized tasks Although technical skills are important, they can be learned on the job; to be really effective, managers need to possess human skills or the ability to relate to other people.8 People with effective human skills take the feelings of others into account and are adept at dealing with conflict. These skills are essential for managing relationships not only with peers and employees but also with competitors, partners, suppliers, and stakeholders. Managers with human skills also realize the importance of communicating and sharing information across the organization in order to achieve goals. Southwest Airlines CEO Gary Kelly is a good example of someone who uses human skills to give “shout-outs” to the employees who have excelled in customer service. Kelly understands being acknowledged for hard work makes people feel good. Human skills: The ability to relate to other people A key facet of human skills is emotional intelligence (EI), which is an awareness of how your actions and emotions affect those around you and the ability to understand and empathize with the feelings of others.9 Emotional intelligence: The ability to understand emotions in oneself and others in order to effectively manage one’s own behaviors and relationships with others Managers need to be technically proficient and know how to get along with people, but what about dealing with the complexities of the 60 organization itself? Managers also need conceptual skills in order to see the organization as a whole, visualize how it fits into its overall environment, and understand how each part relates to the others.10 Conceptual skills help managers solve problems, identify opportunities and challenges, and think creatively when making decisions. Conceptual skill: The capacity to see the organization as a whole and understand how each part relates to each other and how it fits into its overall environment Managers who embrace organizational behavior principles understand that the success of an organization lies with its people, and without people, there would be no companies, businesses, or industries. You may have a business that produces the highest-quality, most competitively priced product in the market or that prides itself on excellent customer service. However, if you don’t have the right people in place to manufacture, market, and sell your product and take care of your customers, the business will suffer. Similarly, if some of your coworkers lose motivation and provide lower levels of customer service, the company will lose business, and perhaps even its reputation. Either of these problems can bring about a decrease in profits, reduced employee wages and bonuses, staff layoffs, and in extreme cases, bankruptcy. How do managers achieve the best outcomes for their organizations? A strategic OB approach is based on the idea that people are the key to productivity, competitive edge, and financial success. This means that managers must place a high value on human capital, which is the sum of people’s skills, knowledge, experience, and general attributes.11 Let’s take a closer look at where human capital fits into organizations, and how it is managed. Strategic OB approach: The idea that people are the key to productivity, competitive edge, and financial success Human capital: People’s skills, knowledge, experience, and general attributes 61 Studying organizational behavior can help you to understand how and why individuals and groups interact. © iStockphoto.com/Rawpixel Thinking Critically 1. OB helps managers explain, predict, and influence behavior in the workplace. Identify the types of behavior you are most interested in explaining, understanding, and predicting in the workplace. 2. Of the four main functions managers fulfill (planning, organizing, leading, and controlling), which do you think is most likely to be enhanced by an understanding of organizational behavior? Why? 3. Managers need technical, human, and conceptual skills in order to succeed. Which of these skills are least likely to be learned on the job? Explain your position. 4. Compare the book’s argument that the success of an organization lies with its people with the argument that every employee is replaceable and expendable. Which argument do you consider more compelling? Why? THE BIG PICTURE: How OB Topics Fit Together 62 Managing Human Capital >> LO 1.2 Describe the key role of managing human capital in creating a sustainable competitive advantage for organizations Organizations have two kinds of resources: tangible and intangible. Physical assets such as equipment, property, and inventory are examples of tangible resources. Intangible resources include an organization’s reputation and culture, its relationships with customers, and the trust between managers and coworkers. Although it is difficult to measure intangible resources because of their subtle nature, they remain crucial for organizations competing in a global economy. Human capital falls into the category of critical intangible resources. Today’s managers focus on enriching their human capital by nurturing and enhancing their employees’ knowledge and skills. The possibilities of building on human capital are endless—empowered, satisfied, knowledgeable employees can achieve so much for the organization and its customers. Human capital is essential for gaining competitive advantage, the edge that gives organizations a more beneficial position than their competitors and allows them to generate more profits and retain more customers.12 (See Figure 1.2.) Southwest Airlines stands out among its competitors because of its commitment to nurturing its human capital. Three main aspects of human capital enhance true competitive advantage: value, rareness, and inimitability.13 63 Competitive advantage: The edge that gives organizations a more beneficial position than their competitors and allows them to generate more profits and retain more customers Figure 1.2 How Human Capital Enhances Competitive Advantage Value Employees can add value in many different ways, but there is a difference between merely fulfilling the requirements of your job and working with an eye on company strategy. Human capital value accumulates when employees work toward the strategic goals of an organization to achieve competitive advantage. Although it is essential that employees have the skills and the abilities to execute a company strategy, they must also have a genuine willingness to contribute to the performance and success of an organization. Therefore, it is critical that managers make every effort to continuously nurture their high-performing employees, because regardless of labor market conditions, outstanding employees are always in short supply. Human capital value: The way employees work toward the strategic goals of an organization to achieve competitive advantage Rareness Not everyone has the right skillset to further the progress of an 64 organization. Human capital rareness is the level of exceptional skills and talents employees possess in an industry. For example, you may be an excellent computer programmer with an outstanding eye for detail, or you could have a gift for dealing with customer complaints and creating resolutions to resolve dilemmas. These are rare skills that employees may bring with them into an organization, but they can also be learned given the right training and encouragement. In our OB in the Real World feature, Dr. Karen Hardy, Director of the Risk Management Division and Deputy Chief Risk Officer at the US Department of Commerce, describes how managers can select the best talent. Human capital rareness: The skills and talents of an organization’s people that are unique in the industry OB in the Real World Dr. Karen Hardy, Director of the Risk Management Division and Deputy Chief Risk Officer at the US Department of Commerce Dr. Karen Hardy is currently the Director of the Risk Management Division and Deputy Chief Risk Officer at the US Department of Commerce. Her specialty is in Enterprise Risk Management where she is a recognized industry pioneer and influencer, and with three decades of experience on her hands, is nationally recognized for excellence in many facets of her work. Dr. Hardy has worked for both the private and public sectors. She served as senior advisor on risk management to the Controller of the United States while on assignment to the White House Office of Management and Budget, where she was credited with influencing federal policy for instituting risk management in 65 government. Dr. Hardy is an accomplished national and international speaker, and award-winning and best-selling author, achieving high accolades in anything she sets her mind to. Due to her time in both the public and private sectors, and with a long tenure at the Department of Commerce, Dr. Hardy has a keen sense of the difference between both sectors, as well as what their future holds. Dr. Hardy vowed to never go into the public sector early on in her career, but after spending time in consumer banking, she found that she was missing a mission in her day-to-day life and decided to try something new. One recurring theme in her description of public versus private sector management work is that goals in the private sector are driven by the bottom line while public sector work is mission driven. While a business worries about what investments are immediately paying off quarter to quarter, Dr. Hardy can think about the long-term impacts of programs and services designed to improve the quality of life for constituents. It takes longer to see the impact of her work because it is done on such a large scale. The public sector is a very complex environment, with systems inside of systems, and from time to time it is easy to feel like a cog in a machine, but Dr. Hardy says that this isn’t unique to federal work. She states that the difference between the two industries is that in the public sector, at the end of the day, while you may be a small piece in a large machine, there is a purpose in the work you do to accomplish a mission. While this isn’t necessarily in contrast to all private companies today, bottom lines can often get in the way of accomplishing missions for good. The stereotype of public sector work has always been a comparison to bureaucratic red tape and this may have discouraged many prospective candidates from seeking federal work. Dr. Hardy says that while this is something they are always trying to improve, this isn’t unique to government work. She states, “Bureaucracy is the result for any massive organization, both private and public, but it is becoming less and less tolerated.” While in banking, she saw firsthand the amount of bureaucracy involved within a large for-profit institution and she stressed that this is how many large institutions order themselves. So how can you, as a manager, ensure that you are attracting the best talent when the private sector will, in some cases, be able to pay more and offer benefit and bonus packages beyond what the public sector can provide? Dr. Hardy says that it may be getting easier as the next generation of leaders will seek out companies that have well-defined 66 missions and purpose. Dr. Hardy says that while the public sector may be limited by salary thresholds, they can offer millennials what they are searching for—and that is purpose. Due to the profit-driven versus mission-driven dynamic, the next batch of employable students is more interested than ever. Increasingly millennials are caring more about what they are doing and how they are serving. They want a mission to accomplish and they may be willing to take a little less to do it, given the other trade-offs, such as telecommuting and a balanced work life. For this reason, Dr. Hardy says that they have always attracted a certain type of high-achieving applicant, but the outlook is even better now more than ever. Dr. Hardy believes that the new generation of public sector leaders are accustomed to functioning in sharing and transparent communities and that this adaptability is perfect for the management of key programs and services that benefit the American public. Dr. Hardy says “they will bring that behavior with them,” and that “if we can make sure we continue to promote the service-oriented work found in government, I can’t think of a better way to find a purpose-driven job than to serve in the federal sector.” As a manager, it is her duty to direct her workforce toward the identified mission of the Department of Commerce, and she sees it as her role to lead on principled strategy above all else. Dr. Karen Hardy looks fondly toward the next generation of federal workers and believes it will be a more capable workforce than ever. She finishes by saying that when she took her job she took an oath, one of the same oaths taken by Congress to serve the people of the United States and to serve with that oath in mind. She is forever loyal to that oath and sees it taken very seriously throughout her branch of government. Critical-Thinking Questions 1. What differences are there between the public and the private sector regarding objectives? 2. What does the future hold for government employee recruitment according to Dr. Karen Hardy?• Source: Interview with Dr. Karen Hardy conducted on February 23, 2018. Inimitability Employees may be able to add real value and possess rare and important 67 skills, but these attributes must be inimitable (i.e., unique and difficult to copy or replicate) for an organization to achieve success. Human capital inimitability is the degree to which the skills and talents of employees can be emulated by other organizations. The higher the level of inimitability, the more competitive an organization will be. For example, what’s to prevent an excellent computer programmer from going to a competitor that offers the same services and opportunities? Successful organizations ensure that their talented employees possess skills and talents that are difficult to imitate. This means employees have a degree of tacit knowledge: they have a feel or an instinct for a method or a process but can’t easily articulate it; they just know it is right. An organization’s culture or values are also difficult to imitate and often determine why employees choose to work for one company over another that offers similar products and services. Usually, this comes down to the organization’s shared values, attitudes, and type of culture. Human capital inimitability: The degree to which the skills and talents of employees can be emulated by other organizations Take a look at how Mountainside Fitness founder Tom Hatten managed human capital at his 13 fitness centers across the Phoenix Valley in the OB in the Real World feature. Thinking Critically 1. Compare the relative importance of tangible and intangible resources. Can an organ...
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