Understanding and Managing Organizational Behavior This page intentionally left blank Understanding and Managing Organizational Behavior SIXTH EDITION Jennifer M. George Jesse H. Jones Graduate School of Business Rice University Gareth R. Jones Mays Business School Texas A & M University PRENTICE HALL Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montréal Toronto Delhi Mexico City São Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Editorial Director: Sally Yagan Editor in Chief: Eric Svendsen Director of Editorial Services: Ashley Santora Editorial Project Manager: Meg O’Rourke Editorial Assistant: Carter Anderson Director of Marketing: Patrice Lumumba Jones Marketing Manager: Nikki Ayana Jones Marketing Assistant: Ian Gold Senior Managing Editor: Judy Leale Production Project Manager: Ilene Kahn Senior Operations Supervisor: Arnold Vila Operations Specialist: Cathleen Petersen Creative Director: Christy Mahon Sr. Art Director/Design Supervisor: Janet Slowik Art Director: Steve Frim Interior and Cover Designer: Judy Allen Cover Art: IMAGEZOO/SuperStock Manager, Rights and Permissions: Hessa Albader MyLab Product Manager: Joan Waxman Editorial Media Project Manager: Denise Vaughn Media Project Manager: Lisa Rinaldi Full-Service Project Management and Composition: Integra Software Services, Inc. Printer/Binder: R. R. Donnelley Cover Printer: Lehigh-Phoenix Color/Hagerstown Text Font: 10/12 Times Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on appropriate page in the text. Copyright © 2012, 2008, 2005, 2002 by Pearson Education, Inc., publishing as Prentice Hall, One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458. Many of the designations by manufacturers and seller to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps. Library of Congress Cataloging-in-Publication Data George, Jennifer M. Understanding and managing organizational behavior / Jennifer M. George, Gareth Jones. — 6th ed. p. cm. Includes bibliographical references and index. ISBN 978-0-13-612443-6 1. Organizational behavior. 2. Organizational effectiveness. I. Jones, Gareth R. II. Title. HD58.7.G454 2012 658.3—dc22 2010045891 10 9 8 7 6 5 4 3 2 1 ISBN 10: 0-13-612443-7 ISBN 13: 978-0-13-612443-6 Brief Contents Preface xxi Chapter 1 PART 1 INDIVIDUALS IN ORGANIZATION Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 PART 2 Appendix 276 The Nature of Work Groups and Teams 276 Effective Work Groups and Teams 306 Leaders and Leadership 336 Power, Politics, Conflict, and Negotiation 370 Communicating Effectively in Organizations 400 Decision Making and Organizational Learning 434 ORGANIZATIONAL PROCESSES Chapter 16 Chapter 17 Chapter 18 36 Individual Differences: Personality and Ability 36 Values, Attitudes, and Moods and Emotions 64 Perception, Attribution, and the Management of Diversity 94 Learning and Creativity 126 The Nature of Work Motivation 154 Creating a Motivating Work Setting 180 Pay, Careers, and Changing Employment Relationships 210 Managing Stress and Work-Life Balance 242 GROUP AND TEAM PROCESSES Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 PART 3 Introduction to Organizational Behavior 2 Appendix: A Short History of Organizational Behavior Research 35 468 Organizational Design and Structure 468 Organizational Culture and Ethical Behavior 500 Organizational Change and Development 530 Research Methods in Organizational Behavior Glossary 566 References 575 Name Index 624 Company Index 632 Subject Index 634 560 This page intentionally left blank Contents Preface xxi Chapter 1 Introduction to Organizational Behavior 2 Opening Case Ursula Burns Succeeds Anne Mulcahy as CEO of Xerox Overview 4 What Is Organizational Behavior? 5 The Nature of Organizational Behavior Levels of OB 3 5 6 OB and Management 8 Managerial Functions 9 ■ OB TODAY: How Joe Coulombe Used OB to Make Trader Joe’s a Success Story 11 Managerial Roles 12 Managerial Skills 12 Challenges for OB 13 Challenge 1: The Changing Social and Cultural Environment Developing Organizational Ethics and Well-Being 14 14 ■ ETHICS IN ACTION: How Unethical Behavior Shut Down a Meat-packing Plant 16 Dealing with a Diverse Workforce 17 Challenge 2: The Evolving Global Environment Understanding Global Differences 19 19 ■ GLOBAL VIEW: IKEA’s Worldwide Approach to OB Global Learning 20 21 Global Crisis Management 22 Challenge 3: Advancing Information Technology 23 IT and Organizational Effectiveness 24 IT, Creativity, and Organizational Learning 24 Challenge 4: Shifting Work and Employment Relationships 25 ■ YOU’RE THE MANAGEMENT EXPERT: Moving to Self-Managed Teams 26 SUMMARY 27 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 28 CLOSING CASE: How Jeff Bezos Manages at Amazon.com 31 Appendix: A Short History of OB 32 F. W. Taylor and Scientific Management 32 The Work of Mary Parker Follett 33 The Hawthorne Studies and Human Relations Theory X and Theory Y 34 Theory X 33 34 Theory Y 34 PART 1 INDIVIDUALS IN ORGANIZATIONS Chapter 2 36 Individual Differences: Personality and Ability Opening Case Nooyi’s Determination Overview 36 37 38 VII VIII CONTENTS The Nature of Personality 38 Determinants of Personality: Nature and Nurture Personality and the Situation 39 39 ■ FOCUS ON DIVERSITY: Liane Pelletier Transforms Alaska Communications Personality: A Determinant of the Nature of Organizations 41 42 The Big Five Model of Personality 42 Extraversion 43 Neuroticism 44 Agreeableness 45 Conscientiousness 45 Openness to Experience 45 ■ GLOBAL VIEW: Fujio Mitarai Cuts Costs, Develops New Products, and Protects the Environment at Canon 47 ■ YOU’RE THE MANAGEMENT EXPERT: Understanding a New Employee Conclusions 49 Other Organizationally Relevant Personality Traits Locus of Control 49 Self-Monitoring 49 Self-Esteem 49 50 Type A and Type B Personalities 51 Needs for Achievement, Affiliation, and Power How Personality Is Measured 52 53 The Nature of Ability 53 Cognitive Ability Physical Ability 53 54 Where Do Abilities Come from and How Are They Measured? Emotional Intelligence: A Different Kind of Ability The Management of Ability in Organizations Selection Placement Training 55 56 57 58 58 58 SUMMARY 59 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 60 CLOSING CASE: Mark Wilson Creates a Different Kind of Telemarketer Chapter 3 63 Values, Attitudes, and Moods and Emotions 64 Opening Case Satisfied, Committed, and Happy Employees at Nugget Markets Overview 66 Values, Attitudes, and Moods and Emotions The Nature of Values 65 66 67 ■ ETHICS IN ACTION: Gentle Giant Moving Company Values Honesty The Nature of Work Attitudes 71 The Nature of Moods and Emotions 71 Relationships Between Values, Attitudes, and Moods and Emotions Job Satisfaction 74 75 ■ OB TODAY: Job Satisfaction Declines in the United States Determinants of Job Satisfaction Theories of Job Satisfaction 76 79 The Facet Model of Job Satisfaction 80 Herzberg’s Motivator-Hygiene Theory of Job Satisfaction 81 76 70 48 IX CONTENTS The Discrepancy Model of Job Satisfaction 82 The Steady-State Theory of Job Satisfaction Measuring Job Satisfaction 83 83 Potential Consequences of Job Satisfaction Does Job Satisfaction Affect Job Performance? Absenteeism Turnover 83 83 85 85 Organizational Citizenship Behavior Employee Well-Being 87 87 Organizational Commitment 88 Determinants of Affective Commitment 88 ■ YOU’RE THE MANAGEMENT EXPERT: Increasing Affective Commitment Potential Consequences of Affective Commitment SUMMARY 89 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 90 CLOSING CASE: Paetec’s Values Lead to a Satisfied and Committed Workforce Chapter 4 88 89 93 Perception, Attribution, and the Management of Diversity Opening Case Effectively Managing Diversity is an Ongoing Journey Overview 96 The Nature of Perception 97 Motivation and Performance Fairness and Equity Ethical Action 95 98 98 99 Characteristics of the Perceiver 99 Schemas: The Perceiver’s Knowledge Base 100 ■ FOCUS ON DIVERSITY: Discrimination in Layoff Decisions The Perceiver’s Motivational State The Perceiver’s Mood 101 102 103 Characteristics of the Target and Situation Ambiguity of the Target 103 104 Social Status of the Target 104 Impression Management by the Target Information Provided by the Situation 105 106 Standing Out in the Crowd: The Effects of Salience in a Situation 107 ■ ETHICS IN ACTION: Disabled Employees Key to Success at Habitat International 109 Biases and Problems in Person Perception Primacy Effects 111 Contrast Effects 111 Halo Effects 110 111 Similar-to-Me Effects 112 Harshness, Leniency, and Average Tendency Biases Knowledge-of-Predictor Bias 112 112 Attribution Theory 113 Internal and External Attributions Attributional Biases 114 115 ■ YOU’RE THE MANAGEMENT EXPERT: Helping a Coworker Effectively Managing a Diverse Workforce 116 Securing Top-Management Commitment to Diversity 117 116 94 X CONTENTS Diversity Training Education 117 117 Mentoring Programs Sexual Harassment 118 119 SUMMARY 120 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 121 CLOSING CASE: Sodexo and Principle Financial Group Recognized for the Effective Management of Diversity 125 Chapter 5 Learning and Creativity 126 Opening Case UPS Is Very Serious About Learning Overview 128 The Nature of Learning 129 Learning through Consequences 127 129 Encouraging Desired Behaviors through Positive and Negative Reinforcement Shaping 130 133 Discouraging Undesired Behaviors through Extinction and Punishment Organizational Behavior Modification Ethical Issues in OB MOD Learning from Others 136 136 ■ GLOBAL VIEW: Vicarious Learning at the Ritz-Carlton Learning on Your Own 138 140 Beliefs about One’s Ability to Learn: The Role of Self-Efficacy Sources of Self-Efficacy 133 135 141 142 Learning by Doing 143 Continuous Learning through Creativity 143 The Creative Process 143 Characteristics of Employees That Contribute to Creativity 145 ■ OB TODAY: Jim Newton’s Openness to Experience Helps Others Be Creative Characteristics of the Organizational Situation That Contribute to Creativity The Interaction of Personality and Situational Factors 147 ■ YOU’RE THE MANAGEMENT EXPERT: Encouraging Independent Thinking The Learning Organization 148 SUMMARY 149 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 150 CLOSING CASE: Continuous Learning and Innovation 153 Chapter 6 The Nature of Work Motivation Opening Case High Motivation at Enterprise Rent-A-Car 154 155 Overview 156 What is Work Motivation? 157 Direction of Behavior Level of Effort 157 158 Level of Persistence 158 The Distinction Between Motivation and Performance Intrinsic and Extrinsic Motivation Theories of Work Motivation 160 159 145 146 158 148 XI CONTENTS Need Theory 160 Maslow’s Hierarchy of Needs Alderfer’s ERG Theory The Research Evidence Expectancy Theory 161 162 163 163 Valence: How Desirable Is an Outcome? 164 ■ OB TODAY: Motivating Loyal Employees at the Container Store 164 Instrumentality: What Is the Connection Between Job Performance and Outcomes? 165 Expectancy: What Is the Connection Between Effort and Job Performance? 166 The Combined Effects of Valence, Instrumentality, and Expectancy on Motivation 167 Equity Theory 168 Equity 168 Inequity 169 Ways to Restore Equity 169 The Effects of Inequity and the Research Evidence 170 Organizational Justice Theory 170 Forms of Organizational Justice 170 ■ YOU’RE THE MANAGEMENT EXPERT: When Equal Treatment Backfires 171 ■ ETHICS IN ACTION: Organizational Justice at Genentech Consequences of Organizational Justice 173 174 SUMMARY 175 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 175 CLOSING CASE: Motivating Employees at the SAS Institute 178 Chapter 7 Creating a Motivating Work Setting 180 Opening Case High Motivation Results in Exceptional Customer Service at Zappos Overview 182 Job Design: Early Approaches Scientific Management 181 183 183 Job Enlargement and Job Enrichment 185 Job Design: The Job Characteristics Model 186 Core Job Dimensions 186 ■ OB TODAY: Tough Economic Times Result in Changes in Job Design The Motivating Potential Score Critical Psychological States 188 192 Work and Personal Outcomes 193 The Role of Individual Differences in Employees’ Responses to Job Design The Research Evidence 193 195 Job Design: The Social Information Processing Model 195 ■ YOU’RE THE MANAGEMENT EXPERT: Redesigning Jobs The Role of the Social Environment The Role of Past Behaviors 197 Job Design Models Summarized 198 ■ FOCUS ON DIVERSITY: Job Sharing a Viable Option Organizational Objectives 196 196 199 200 ■ GLOBAL VIEW: Offshoring Expands Into Many Kinds of Jobs Goal Setting 202 What Kinds of Goals Lead to High Motivation and Performance? Why Do Goals Affect Motivation and Performance? 203 202 201 188 XII CONTENTS Limits to Goal-Setting Theory Management by Objectives 204 204 Goal Setting and Job Design as Motivation Tools 205 SUMMARY 205 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 206 CLOSING CASE: Motivating Employees at Google 209 Chapter 8 Pay, Careers, and Changing Employment Relationships Opening Case Changing Employment Relations in Tough Economic Times Overview 212 Psychological Contracts 210 211 213 Determinants of Psychological Contracts Types of Psychological Contracts 213 214 ■ GLOBAL VIEW: Changing Employment Relations in Japan When Psychological Contracts Are Broken 216 216 Performance Appraisal 217 Encouraging High Levels of Motivation and Performance Providing Information for Decision Making 217 219 Developing a Performance Appraisal System 219 ■ YOU’RE THE MANAGEMENT EXPERT: Promoting High-Quality Customer Service 222 Potential Problems in Subjective Performance Appraisal Pay and the Employment Relation Merit Pay Plans 225 226 226 ■ OB TODAY: Acknowledging High Performers During a Recession 226 Should Merit Pay Be Based on Individual, Group, or Organizational Performance? Should Merit Pay Be in the Form of a Salary Increase or a Bonus? Examples of Merit Pay Plans 228 The Ethics of Pay Differentials and Comparable Worth Careers 228 229 230 The Nature of Careers Types of Careers Career Stages 230 231 231 Contemporary Career Challenges 235 SUMMARY 237 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 238 CLOSING CASE: Valuing Employees at Costco 241 Chapter 9 Managing Stress and Work-Life Balance 242 Opening Case Job Loss and Its Consequences Overview 244 The Nature of Stress 243 245 ■ ETHICS IN ACTION: Violence in the Workplace Individual Differences and Stress Consequences of Stress Sources of Stress 251 Personal Stressors 252 248 247 246 227 CONTENTS Job-Related Stressors 254 Group- and Organization-Related Stressors Stressors Arising Out of Work-Life Balance Environmental Uncertainty 256 258 258 ■ GLOBAL VIEW: Coping with Grief and Loss Coping with Stress 259 260 Problem-Focused Coping Strategies for Individuals 260 Emotion-Focused Coping Strategies for Individuals 261 Problem-Focused Coping Strategies for Organizations 262 ■ YOU’RE THE MANAGEMENT EXPERT: Coping with the Stress of a Challenging New Job 264 ■ FOCUS ON DIVERSITY: On-Site Child Care and Family Friendly Benefits at Guerra DeBerry Coody 266 Emotion-Focused Coping Strategies for Organizations 267 ■ OB TODAY: Alleviating Stress Through Organizational Support 268 SUMMARY 270 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 271 CLOSING CASE: Stress and Burnout Among Entrepreneurs and the Self-Employed PART 2 GROUP AND TEAM PROCESSES Chapter 10 276 The Nature of Work Groups and Teams Opening Case Teams and Innovation at Cisco Systems Overview 278 Introduction to Groups Types of Work Groups 276 277 279 279 Group Development Over Time: The Five-Stage Model Characteristics of Work Groups Group Size 281 282 282 Group Composition Group Function Group Status 283 285 285 Group Efficacy 286 Social Facilitation 287 How Groups Control Their Members: Roles and Rules Roles 275 288 288 Written Rules 289 ■ OB TODAY: Zingerman’s “Steps” to Success 289 How Groups Control Their Members: Group Norms Why Do Group Members Conform to Norms? Idiosyncrasy Credit 290 291 291 The Pros and Cons of Conformity and Deviance Balancing Conformity and Deviance 292 292 ■ OB TODAY: Deviance and Conformity in Design Teams at IDEO 294 Ensuring that Group Norms are Functional for the Organization ■ YOU’RE THE MANAGEMENT EXPERT: Aligning Goals 295 296 Socialization: How Group Members Learn Roles, Rules, and Norms Socialization and Role Orientation Socialization Tactics 297 296 296 XIII XIV CONTENTS SUMMARY 300 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 301 CLOSING CASE: Teams Fuel Global Innovation at Whirlpool 304 Chapter 11 Effective Work Groups and Teams 306 Opening Case How Nokia Uses Teams to Increase Global Effectiveness Overview 308 Process Losses, Process Gains, and Group Effectiveness Potential Performance? 307 308 308 Process Losses and Performance 309 ■ OB TODAY: Process Losses Can Have Deadly Consequences in Hospitals 310 Process Gains and Performance 311 ■ OB TODAY: The Rolling Stones Learn to Play Together 312 Social Loafing: A Problem in Group Motivation and Performance Group Size and Social Loafing 314 Ways to Reduce Social Loafing 314 313 ■ OB TODAY: How GlaxoSmithKline Used Groups to Boost Productivity 316 How Task Characteristics Affect Group Performance Pooled Interdependence 316 317 Sequential Interdependence 317 Reciprocal Interdependence 319 ■ YOU’RE THE MANAGEMENT EXPERT: What Kinds of Groups and Tasks? 321 Group Cohesiveness and Performance 321 Factors that Contribute to Group Cohesiveness Consequences of Group Cohesiveness 322 Important Organizational Groups 325 The Top Management Team Self-Managed Work Teams 325 325 ■ OB TODAY: Dick’s Drive-In Restaurants Research and Development Teams Virtual Teams 321 327 328 330 SUMMARY 331 EXERCISE IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 322 CLOSING CASE: Why Microsoft’s Measurement System Led to Problems with Group Performance 335 Chapter 12 Leaders and Leadership 336 Opening Case How Sony’s “Gaijin” CEO Changed Its Leadership Approach 337 Overview 338 Introduction to Leadership 339 Early Approaches to Leadership 340 The Leader Trait Approach 340 The Leader Behavior Approach 340 ■ OB TODAY: John Chambers of Cisco Systems Develops a Collaborative Leadership Approach 342 CONTENTS The Behavior Approach: Leader Reward and Punishing Behavior Measuring Leader Behaviors 343 343 What Is Missing in the Trait and Behavior Approaches? Fiedler’s Contingency Theory of Leadership Leader Style XV 344 345 345 Situational Characteristics The Contingency Model 346 347 Contemporary Perspectives on Leadership 349 Path-Goal Theory: How Leaders Motivate Followers 349 ■ OB TODAY: A Sister Act Helped Claire’s Stores to Sparkle 351 The Vroom and Yetton Model: Determining the Level of Subordinate Participation in Decision Making 352 Leader–Member Exchange Theory: Relationships Between Leaders and Followers Does Leadership Always Matter in Organizations? Leadership Substitutes 354 Leadership Neutralizers 355 The Romance of Leadership 355 ■ YOU’RE THE MANAGEMENT EXPERT: How to Lead Me New Topics in Leadership Research 356 356 Transformational and Charismatic Leadership 356 ■ GLOBAL VIEW: Avon is Calling Everywhere Leader Mood 353 354 357 359 Gender and Leadership 359 ■ OB TODAY: Female Manufacturing Plant Managers Help Increase Product Quality 360 Ethical Leadership 361 ■ OB TODAY: Whole Foods Markets Leads Through Ethics and Social Responsibility 362 Recap of Leadership Approaches 363 SUMMARY 363 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 365 CLOSING CASE: Tammy Savage and the NETGENeration 368 Chapter 13 Power, Politics, Conflict, and Negotiation 370 Opening Case Pfizer’s John MacKay Uses Power and Politics to Increase Performance 371 Overview 372 The Nature of Power and Politics 372 Sources of Individual Power 373 Sources of Formal Individual Power 374 ■ ETHICS IN ACTION: New York City Taxi Drivers Make a Fast Buck Sources of Informal Individual Power ■ YOU’RE THE MANAGEMENT EXPERT: Identifying Who Has Power Sources of Functional and Divisional Power Ability to Control Uncertain Contingencies Irreplacability Centrality 375 376 377 377 377 378 378 ■ ETHICS IN ACTION: Two Judges Use Their Power and Control Over Their Courts to Corrupt Them 378 Ability to Control and Generate Resources 379 XVI CONTENTS Organizational Politics: The Use of Power Tactics for Increasing Individual Power 380 380 ■ OB TODAY: Bob Iger Uses His Political Skills to Change Walt Disney 382 Managing Organizational Politics 383 ■ GLOBAL VIEW: Mining Companies Act Tough in Australia 384 What Is Organizational Conflict? 384 Sources of Organizational Conflict Differentiation 385 385 Task Relationships 386 Scarcity of Resources 386 Pondy’s Model of Organizational Conflict Latent Conflict Perceived Conflict Felt Conflict 386 386 387 387 ■ OB TODAY: Manifest Conflict Erupts Between eBay and Its Sellers 387 Manifest Conflict 388 Conflict Aftermath 389 ■ OB TODAY: When Partners Battle for Control of Their Company Negotiation: Resolving Conflict 391 Individual-Level Conflict Management Group-Level Conflict Management Promoting Compromise 390 392 392 394 SUMMARY 395 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 396 CLOSING CASE: Mixing Business and Family Causes Conflict 399 Chapter 14 Communicating Effectively in Organizations Opening Case Toyota Is Accused of Being a Poor Communicator 400 401 Overview 402 What Is Communication? 402 The Functions of Communication 403 ■ ETHICS IN ACTION: A Peanut Company’s Use of Communication Causes Many Problems 406 Communication Networks in Organizations The Communication Process The Sender and the Message Encoding 407 409 409 410 The Medium 411 The Receiver: Decoding and the Feedback Loop Barriers to Effective Communication Filtering and Information Distortion 413 413 414 ■ OB TODAY: Why Communication Is Vital on an Airliner Poor Listening 414 416 ■ OB TODAY: The Consequences of Poor Listening Skills Lack of or Inappropriate Feedback Rumors and the Grapevine Workforce Diversity 417 417 417 Differences in Cross-cultural Linguistic Styles 418 416 CONTENTS XVII ■ GLOBAL VIEW: Honda and Foxconn Have a Communication Problem in China 418 Selecting an Appropriate Communication Medium 419 Information Richness 419 ■ OB TODAY: Telemarketing Turns-Off Customers Trade-Offs in the Choice of Media Using Advanced IT 421 422 422 Persuasive Communication 423 ■ YOU’RE THE MANAGEMENT EXPERT: How to Speed Product Development A Model of Persuasive Communication 424 ■ OB TODAY: A Failure in Communication Communication in Crisis Situations 426 427 SUMMARY 428 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 429 CLOSING CASE: How Chrysler’s Tom Lasorda Learned How to Talk to Employees Chapter 15 433 Decision Making and Organizational Learning 434 Opening Case Mattel Wins the War in Toyland Overview 436 Types of Decisions 435 436 Nonprogrammed Decisions 437 ■ OB TODAY: Steve Jobs’s and Apple’s Engineers Excel at Nonprogrammed Decision Making 438 Programmed Decisions 439 Ethical Decision Making 440 ■ ETHICS IN ACTION: Guidant’s Major Ethical Lapse The Decision-Making Process The Classical Model of Decision Making 442 March and Simon’s Administrative Model of Decision Making Sources of Error in Decision Making Heuristics and Their Effects 445 Escalation of Commitment 446 The Role of Information Technology 443 444 447 ■ GLOBAL VIEW: SAP’s ERP System Group Decision Making 441 442 448 449 Advantages of Group Decision Making 449 Disadvantages of Group Decision Making 450 Other Consequences of Group Decision Making Decision Making in Crisis Situations 452 453 ■ YOU’RE THE MANAGEMENT EXPERT: Solving Competition Between Teams 453 Group Decision-Making Techniques Brainstorming 454 454 The Nominal Group Technique The Delphi Technique 455 455 Group Decision-Making Techniques Used in Total Quality Management 455 ■ OB TODAY: How Plexus Decided It Could Make Flexible Manufacturing Pay Off 456 Organizational Learning 457 Types of Organizational Learning 458 424 XVIII CONTENTS ■ OB TODAY: IDEO Helps Organizations “Learn How to Learn” Principles of Organizational Learning ■ OB TODAY: How to Create a Learning Organization Leadership and Learning 458 459 461 462 SUMMARY 462 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 463 CLOSING CASE: Turnaround Decision Making at Liz Claiborne 466 PART 3 ORGANIZATIONAL PROCESSES Chapter 16 468 Organizational Design and Structure 468 Opening Case Avon Reorganizes Its Global Structure Overview 470 Designing Organizational Structure The Organizational Environment Technology 469 470 471 471 Human Resources and the Employment Relationship Organic and Mechanistic Structures 473 473 Grouping Jobs into Functions and Divisions 474 ■ YOU’RE THE MANAGEMENT EXPERT: Which Work System Is the Best? 474 Functional Structure 475 Divisional Structures: Product, Market, and Geographic 476 ■ OB TODAY: Why the Houston ISD Changed to a Market Structure Advantages of a Divisional Structure Disadvantages of a Divisional Structure Matrix Structure Summary 477 478 479 480 481 Coordinating Functions and Divisions Allocating Authority 481 481 ■ OB TODAY: Caterpillar Gets Leaner and More Focused 484 ■ OB TODAY: To Centralize or Decentralize—That Is the Question Mutual Adjustment and Integrating Mechanisms 485 486 ■ GLOBAL VIEW: A Product Team Structure Can “Insure” High Performance 488 Standardization 489 New IT-Enabled Forms of Organizational Design and Structure The Effects of IT Inside Organizations 491 491 ■ GLOBAL VIEW: IBM and Accenture Create “Virtual” Organizations The Effects of IT Between Organizations 493 SUMMARY 494 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 494 CLOSING CASE: Home Depot’s Military-Style Structure 498 Chapter 17 Organizational Culture and Ethical Behavior Opening Case How a New CEO Transformed Ford’s Culture Overview 502 What Is Organizational Culture? 502 501 500 492 CONTENTS How Is an Organization’s Culture Transmitted to Its Members? Socialization and Socialization Tactics XIX 504 504 Stories, Ceremonies, and Organizational Language 505 ■ OB TODAY: UPS and Walmart Know How to Build Persuasive Cultures 507 ■ YOU’RE THE MANAGEMENT EXPERT: A Culture of Cleanliness Factors Shaping Organizational Culture Characteristics of People Within the Organization Organizational Ethics 508 509 509 510 ■ ETHICS IN ACTION: Apple: Do You Protect Your Products or the Workers Who Assemble Them? 511 The Employment Relationship 513 ■ OB TODAY: How Making Employees Owners Can Change Organizational Culture Organizational Structure 514 515 Adaptive Cultures versus Inert Cultures 515 ■ OB TODAY: How Google’s Founders Created a Groovy Culture 516 Traits of Strong, Adaptive Corporate Cultures Values from the National Culture 518 Hofstede’s Model of National Culture 519 Creating an Ethical Culture 517 522 Why Does Unethical Behavior Occur? 523 ■ ETHICS IN ACTION: Jim McCormick’s ADE-51 “Bomb Detector” Ways to Create an Ethical Culture 524 ■ GLOBAL VIEW: Everything Is Not Coming Up Roses 525 SUMMARY 526 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 527 CLOSING CASE: Why 3M Has an Innovative Culture 529 Chapter 18 Organizational Change and Development Opening Case Dell Struggles to Regain Its Leadership 531 Overview 532 Forces for and Resistance to Organization Change Forces for Change 530 533 533 ■ ETHICS IN ACTION: Outsourcing and Sweatshops: Do They Go Hand in Hand? 535 Impediments to Change 536 Organization-Level Resistance to Change Group-Level Resistance to Change 537 538 Individual-Level Resistance to Change Lewin’s Force-Field Theory of Change 538 538 Evolutionary and Revolutionary Change in Organizations Evolutionary Change I: Sociotechnical Systems Theory Evolutionary Change II: Total Quality Management 540 ■ OB TODAY: Starwood’s Work to Satisfy Its Customers Revolutionary Change I: Reengineering 542 ■ OB TODAY: Hallmark Card Wakes Up Revolutionary Change II: Restructuring Revolutionary Change III: Innovation 544 545 543 539 539 541 524 XX CONTENTS Managing Change: Action Research Diagnosis of the Organization Determining the Desired Future State Implementing Action 547 Evaluating the Action 548 546 547 547 ■ YOU’RE THE MANAGEMENT EXPERT: Bringing Change to a Restaurant 549 Institutionalizing Action Research Organization Development 549 550 OD Techniques to Deal with Resistance to Change 550 ■ OB TODAY: Crisis After Crisis Seem to Plague BP OD Techniques to Promote Change 551 552 SUMMARY 555 EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL BEHAVIOR 556 CLOSING CASE: How United Technologies Manages the Change Process Appendix 559 Research Methods in Organizational Behavior Glossary 566 References 575 Name Index 624 Company Index 632 Subject Index 634 560 Preface In the sixth edition of Understanding and Managing Organizational Behavior, we keep to our theme of providing students with the most contemporary and up-to-date account of the changing issues involved in managing people in organizations. In revising this book, we have continued our focus on making our text relevent and interesting to students—something we have learned from feedback received from instructors who tell us the text engages students and encourages them to make the effort necessary to assimilate the text material. We continue to mirror the changes taking place in the real world of work by incorporating recent developments in organizational behavior and research and by providing vivid, current examples of the way managers and employees of companies large and small have responded to the changing workplace. Indeed, we have increased our focus on small businesses and startups and the organizational behavior challenges their employees face. The number and complexity of the organizational and human resource challenges facing managers and employees at all levels has continued to increase over time, especially because of today’s hard economic times. In most companies, managers and employees are playing “catch-up” as organizations work to meet these challenges by employing fewer employees and implementing new and improved organizational behavior techniques and practices to increase performance. Today, relatively small differences in performance between companies, for example, in the speed at which they can bring new products to market, or in the ways they motivate their employees to find ways to reduce costs or improve customer service, can combine to give one company a competitive edge over another. Managers and companies that utilize proven organizational behavior (OB) techniques and practices in their decision making increase their effectiveness over time. Companies and managers that are slower to implement new OB techniques and practices find themselves at a growing competitive disadvantage, especially because their best employees often depart to join faster-growing companies. Our challenge in revising Understanding and Managing Organizational Behavior has been to incorporate and integrate the latest advances in theorizing and research and provide a thorough and contemporary account of the factors that influence organizational behavior. Importantly, we strived to convey this knowledge to students in a very readable, applied, hands-on format to increase their understanding and enjoyment of the learning process. What’s New in This Edition In response to the positive comments and support of our users and reviewers, we have continued to refine and build on the major revisions we made to the last edition. The revised edition of Understanding and Managing Organizational Behavior mirrors the changes taking place in the world today, both on a global dimension and in terms of the ways the changing nature of work is affecting organizational behavior. First, we have extended our coverage of ethics, ethical behavior, and social responsibility because of the continuing controversies and scandals that have involved a growing number of well-known companies in the 2000s. We have more in-depth coverage of ethics both in terms of new content areas within chapters and in the many kinds of company examples we use to illustrate what organizations can do to curb individual self-interest and promote ethical organizational behavior. Many specific issues such as ethical dilemmas, ethical leadership, building a socially responsible culture, and the role of ethics officers are now included in the new edition. Second, the increasing globalization of business and diversity of the workforce has led us to extend our coverage of the many opportunities and challenges globalization and diversity pose for understanding and managing organizational behavior today. Some of the major specific changes or updates we have made to our book include: ■ New opening chapter cases that deal with important contemporary issues. For example, the Opening Case for Chapter 7 profiles how the innovative on-line retailer Zappos motivates its employees to provide exceptional service to customers; the Opening Case for Chapter 9 provides a close look at the devastating effects that job loss has had for employees and XXI XXII PREFACE ■ ■ ■ ■ ■ their families around the United States; and the Opening Case for Chapter 10 describes how Cisco Systems relies on teams to innovate around the globe. In addition, new and updated chapter boxes and new closing cases to encourage in-class discussion. For example, the closing case for Chapter 2 describes how Mark Wilson, founder of Ryla Inc., created a different kind of customer contact business by providing a supportive, caring, and developmental environment for employees; the closing case for Chapter 7 describes how Google motivates employees; and the Global View box in Chapter 8 profiles the changing nature of psychological contracts and employment relations in Japan. We have carefully chosen a wide range of large and small companies to examine the issues facing companies as they attempt to increase their effectiveness in an increasingly competitive global environment. New material on how tough economic times can spur employees to take proactive steps to modify the design of their jobs via job crafting, which also leads managers to change the design of jobs; what managers can do to motivate and reward employees when resources are scarce, especially when their employees are also required to perform additional tasks or work harder to maintain organizational performance; and new material about job loss and its consequences, including rising stress, that arise because of economic concerns (for example, new material on job satisfaction levels at record lows in the United States and why layoffs can be so devastating for employees and hence the need for organizations to managing layoffs in a humane fashion). Expanded coverage of ethics and the steps organizations can take to improve the way managers and employees make ethical choices, especially in uncertain situations; and many new boxes on the way employees respond to ethical problems and on how organizations are emphasizing the importance of enforcing codes of ethics. Increased coverage of issues that arise from increasing workforce diversity at a time when millions of baby boomers are retiring and fewer middle managers exist because of downsizings and layoffs; and how organizations such as Northrop Grumman and GE are creating heterogeneous groups composed of younger and older, more experienced employees, to help transfer job-specific knowledge and experience to younger, inexperienced employees. Expanded discussion of the role of personality, emotion, and mood in organizations and of recent research on emotional intelligence (for example, new coverage about how people reported to be somewhat introverted have been successful in their careers, including Bill Gates, Warren Buffett, Charles Schwab, and Andrea Jung). Increased coverage of the importance of organizational learning at all levels from CEO to first-level employees and how increased training and education of employees is resulting in many changes in the way organizations operate—at the task, job, group, and organizational levels. Our intention has been to provide students with the most up-to-date, readable, succinct account of organizational behavior on the market. To accomplish this, we have only drawn on the theories and concepts that have received the most empirical research support and acceptance by the academic community. We have also worked hard to streamline the discussion in the text and make the material even more appealing to students. Organization of the Book Once again, in terms of the way our book is organized, Chapter 1 discusses contemporary organizational behavior issues and challenges; it also provides an approach to understanding and managing organizational behavior that sets the scene for the rest of the book. In Part One, “Individuals in Organizations,” we underscore the many ways in which people can contribute to organizations and how an understanding of factors such as personality, emotional intelligence, creativity, and motivation can help organizations and their members channel effort and behavior in ways that promote the achievement of organizational objectives and the well-being of all organizational stakeholders including employees. Chapters 2, 3, and 4 provide extensive PREFACE XXIII coverage of personality, emotional intelligence, mood and emotion, values and ethics, and the proactive management of diversity; importantly, we link these factors to important behaviors and determinants of organizational effectiveness. Chapter 5 conveys the variety of ways in which organizational members can and do learn, with a new emphasis on continuous learning through creativity. Our treatment of the important issue of work motivation is divided into two chapters. In Chapter 6, we provide an integrated account of work motivation and the latest development in motivation theory and research. Chapter 7 then focuses on how to create a motivating work environment through job design, organizational objectives, and goal setting. Chapter 8 addresses the changing nature of the employment relationship and the implications of factors such as outsourcing, performance appraisal, pay differentials, and boundaryless careers for motivation and performance. Lastly, in Chapter 9, we focus on the stressors people face, how they can be effectively managed, and how to find a balance between work and other aspects of life. Overall, Part One reflects both contemporary theorizing and research and the challenges and opportunities facing organizations and their members. In Part Two, “Group and Team Processes,” we bring together the many ways in which organizational members work together to achieve organizational objectives, the challenges they face, and how to achieve real synergies. Chapters 10 and 11 focus on the key factors that lead to effective work groups and teams. Chapter 12 provides an updated treatment of leadership, particularly transformational leadership in organizations. Chapter 13 contains our discussion of power, politics, conflict, and negotiation. In Chapter 14, we discuss how the latest developments in information technology have changed the nature of communication in and between organizations. The final chapter in this part, Chapter 15, provides updated coverage of decision making, knowledge management, and innovation. Part Three, “Organizational Processes,” separates our treatment of organizational structure and organizational culture to allow for an integrated treatment of organizational culture and to underscore the importance of ethics. Chapter 16 focuses on organizational design, structure, and control and the factors that affect important organizational design choices. Chapter 17 presents an integrated treatment of organizational culture and ethical behavior. It focuses on the informal and formal social processes in organizations that affect the ways people behave, the sources of organizational culture, including organizational ethics, and the nature, causes, and consequences of ethical behavior. We also discuss the factors that can lead to unethical behavior. Finally, Chapter 18 provides updated coverage of organizational change and development to reflect current realities in the very dynamic environment in which organizations operate. In summary, the organization and content of our book keeps to its goal of providing instructors and students with a cutting-edge coverage of organizational behavior topics and issues that our users have appreciated in prior editions. For students, we provide a treatment of organizational behavior that allows for self-assessment because it (1) is comprehensive, integrated, and makes important theories and research findings accessible and interesting to them; (2) is current, up-to-date, and contains expanded coverage of significant contemporary issues including ethics, diversity, globalization, and information technology; (3) uses rich, real-life examples of people and organizations to bring key concepts to life and provide clear managerial implications; and, (4) is experiential and applied. Our extensive and engaging end-of-chapter experiential exercises contained in “Exercises in Understanding and Managing Organizational Behavior” give students the opportunity to catch the excitement of organizational behavior as a fluid, many-faceted discipline, and they allow students to develop and practice their own skills. Pedagogical Structure and Teaching Support We believe no other organizational behavior textbook has the sheer range of learning features for students that our book has. These features—some integrated into the text and some at the end of each chapter or part—engage students’ interest and facilitate their learning of organizational behavior. The overall objective of these features is to help instructors actively involve their students in the chapter content. The teaching support includes the following: XXIV PREFACE Instructor’s Resource Center At www.pearsonhighered.com/educator, instructors can access a variety of print, media, and presentation resources available with this text in downloadable, digital format. Registration is simple and gives you immediate access to new titles and new editions. As a registered faculty member, you download resource files and receive immediate access and instructions for installing Course Management content on your campus server. If you ever need assistance, our dedicated technical support team is ready to help with the media supplements that accompany this text. Visit http://247pearsoned.custhelp.com/ for answers to frequently asked questions and toll-free user support phone numbers. The following supplements are available to adopting instructors: ■ ■ ■ ■ ■ Instructor’s Manual Test Item File TestGen Test Generating Software PowerPoints DVD Videos on DVD Video segments illustrate the most pertinent topics in organizational behavior today and highlight relevant issues that demonstrate how people lead, manage, and work effectively. Contact your Pearson representative for the DVD. mymanagementlab mymanagementlab (www.mymanagementlab.com) is an easy-to-use online tool that personalizes course content and provides robust assessment and reporting to measure individual and class performance. All of the resources you need for course success are in one place and are flexible and easily adapted for your course experience. Some of the resources include an a Pearson eText version of the textbook quizzes, video clips, simulations, assessments, and PowerPoint presentations that engage you while helping you study independently. CourseSmart eTextbooks Developed for students looking to save on required or recommended textbooks, CourseSmart eTextbooks save students money off the suggested list price of the print text. Students simply select their eText by title or author and purchase immediate access to the content for the duration of the course using any major credit card. With a CourseSmart eText, students can search for specific keywords or page numbers, take notes online, print out reading assignments that incorporate lecture notes, and bookmark important passages for later review. For more information, or to purchase a CourseSmart eTextbook, visit www.coursesmart.com. Acknowledgments Finding a way to coordinate and integrate the rich and diverse organizational behavior literature is no easy task. Neither is it easy to present the material in a way that students can easily understand and enjoy, given the plethora of concepts, theories, and research findings. In writing Understanding and Managing Organizational Behavior, we have been fortunate to have the assistance of several people who have contributed greatly to the book’s final form. We are very grateful to Eric Svendsen, our editor-in-chief, and Meg O’Rourke, editorial project manager, for providing us with timely feedback and information from professors and reviewers that have allowed us to shape the book to meet the needs of its intended market; and to Kerri Tomasso, production editor, for ably coordinating the book’s progress. We also appreciate the wordprocessing and administrative support of Patsy Hartmangruber, Texas A&M University, and Margaret R. De Sosa of Rice University. PREFACE XXV We are very grateful to the many reviewers and colleagues who provided us with detailed feedback on the chapters and for their perceptive comments and suggestions for improving the manuscript. A special thank you goes to the following professors who gave us feedback on this text and its previous editions: Cheryl Adkins, Longwood University Deborah Arvanites, Villanova University Robert Augelli, University of Kansas Regina Bento, University of Baltimore Alicia Boisnier, University of Buffalo Robert Bontempo, Columbia University W. Randy Boxx, University of Mississippi Dan Brass, Pennsylvania State University Peggy Brewer, Eastern Kentucky University Diane Caggiano, Fitchburg State University Elena Capella, University of San Francisco Russell Coff, Washington University Jeanette Davy, Wright State University Dave Day, Columbia College Lucinda Doran Stewart Edwards, Marymount University and NVCC Megan Endres, Eastern Michigan University Mark Fearing, University of Houston Dave Fearon, Central Connecticut State University Dean Frear, Wilkes University Steve Grover, University of Otago Lee Grubb, East Carolina University Bob Gulbro, Jacksonville State University Jennifer Halpern, Cornell University Phyllis Harris, University of Central Florida Sandra Hartman, University of New Orleans Dave Hennessy, Mount Mercy College Mary Hogue, Kent State University–Stark Campus Ronald Humphrey, Virginia Commonwealth University Courtney Hunt, Northern Illinois University Bruce Johnson, Gustavus Adolphus College Eli Kass, Saint Joseph’s University Mary Kernan, University of Delaware John Klocinski, Lourdes College Deborah Litvin, Merrimack College Rosemary Maellero, University of Dallas Karen Maher, University of Missouri– St. Louis Stephen Markham, North Carolina State University Gary McMahan, University of Texas–Arlington Jeanne McNett, Assumption College Angela Miles, Old Dominion University LaVelle Mills, West Texas A&M University Janet Near, Indiana University Margaret Padgett, Butler University Tim Peterson, University of Tulsa Allayne Pizzolatto, Nicholls State University Nathan Podsakoff, University of Florida Peter Poole, Lehigh University Nancy Powell, Florida International University Asha Rao, California State University Hayward Elizabeth Ravlin, University of South Carolina Diana Reed, Drake University Sandra Robinson, University of British Columbia Tracey Rockett, University of Texas at Dallas Hannah Rothstein, Baruch College Joseph Santora, New Jersey Institute of Technology Chris Scheck, Northern Illinois University James Schmidtke, California State University Fresno William Sharbrough, The Citadel Shane Spiller, Morehead State University Christina Stamper, Western Michigan University Eric Stephan, Brigham Young University Charlotte Sutton, Auburn University Brian Usilaner, University of Maryland University College XXVI PREFACE Sean Valentine, University of Wyoming Betty Velthouse, University of Michigan Flint Susan Washburn, Stephen F. Austin State University Robert Whitcomb, University of Wisconsin Eau Claire Frank Wiebe, University of Mississippi Thanks are also due to Ken Bettenhausen, University of Colorado at Denver; David Bowen, Thunderbird; and Art Brief, University of Utah. Finally, we are grateful to two incredibly wonderful children, Nicholas and Julia, for being all that they are and the joy they bring to all who know them. J.M.G.-G.R.J. About the Authors Jennifer M. George is the Mary Gibbs Jones Professor of Management and Professor of Psychology in the Jesse H. Jones Graduate School of Business at Rice University. She received her B.A. in psychology/sociology from Wesleyan University, her M.B.A. in finance from New York University, and her Ph.D. in management and organizational behavior from New York University. Prior to joining the faculty at Rice University, she was a professor in the Department of Management at Texas A&M University. Professor George specializes in organizational behavior and is well known for her research on mood and emotion in the workplace, their determinants, and their effects on various individual and group-level work outcomes. She is the author of many articles in leading peer-reviewed journals such as Academy of Management Journal, Academy of Management Review, Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, Journal of Personality and Social Psychology, and Psychological Bulletin. One of her papers won the Academy of Management’s Organizational Behavior Division Outstanding Competitive Paper Award and another paper won the Human Relations Best Paper Award. She is, or has been, on the editorial review boards of Journal of Applied Psychology, Academy of Management Journal, Academy of Management Review, Journal of Management, Organizational Behavior and Human Decision Processes, Administrative Science Quarterly, International Journal of Selection and Assessment, and Journal of Managerial Issues. She was an Associate Editor for the Journal of Applied Psychology, a consulting editor for the Journal of Organizational Behavior, and a member of the SIOP Organizational Frontier Series editorial board. She is a Fellow in the American Psychological Association, the American Psychological Society, and the Society for Industrial and Organizational Psychology, and she is a member of the Society for Organizational Behavior. She also has co-authored a leading textbook on Contemporary Management. Gareth R. Jones received both his B.A. and Ph.D. degrees from the University of Lancaster, U.K. He previously held teaching and research appointments at the University of Warwick, Michigan State University, and the University of Illinois at Urbana–Champaign. Professor Jones specializes in both organizational behavior and organizational theory and is well known for his research on socialization, culture, and applying transaction cost analysis to explain many forms of intraorganizational and interorganizational behavior. He also has published many articles in leading journals of the field and is one of the most prolific authors in the Academy of Management Review. One of his articles won the Academy of Management Journal Best Paper Award. He is, or has been, on the editorial review boards of Academy of Management Review, Journal of Management, and Management Inquiry. Jones is a professor of management in the Mays Business School at Texas A&M University, where he is actively involved in teaching and research in organizational behavior and related fields. CHAPTER 1 Introduction to Organizational Behavior Outline Overview What Is Organizational Behavior? Challenges for Organizational Behavior Challenge 1: The Changing Social and Cultural Environment Challenge 2: The Evolving Global Environment Challenge 3: Advancing Information Technology Challenge 4: Shifting Work and Employment Relationships Summary Exercises in Understanding and Managing Organizational Behavior Appendix: A Short History of Organizational Behavior Learning Objectives After reading this chapter, you should be able to: ● Define organizational behavior and explain how and why it determines the effectiveness of an organization. ● Appreciate why the study of organizational behavior improves a person’s ability to understand and respond to events that take place in a work setting. ● Differentiate between the three levels at which organizational behavior is examined. ● Appreciate the way changes in an organization’s external environment continually create challenges for organizational behavior. ● Describe the four main kinds of forces in the environment that pose the most opportunities and problems for organizations today. URSULA BURNS SUCCEEDS ANNE MULCAHY AS CEO OF XEROX How did Xerox’s CEOs turn the company around? Getty Images, Inc - Liaison Opening Case Anee Mulcahy (left) and Ursula Burns devised a successful turnaround plan to save Xerox. Mulcahy and Burns worked closely with customers to develop new strategies for Xerox based on improved products and services. In 2009, Mulcahy became the chairperson of Xerox and hand-picked Burns to succeed her as CEO, which Burns did in 2010. In the early 2000s, Xerox, the wellknown copier company, was near bankruptcy because aggressive Japanese competitors were selling low-priced digital copiers that made Xerox’s pioneering light-lens copying process obsolete. The result was plummeting sales as U.S. customers bought Japanese copies and Xerox was losing billions of dollars. Xerox searched for a new CEO who had the management skills to revitalize the company’s product line; 26-year Xerox veteran Anne Mulcahy was chosen to lead the company’s transformation. Mulcahy had begun her career as a Xerox copier salesperson, transferred into human resource management, and then used her considerable leadership and communication skills to work her way up the company’s hierarchy to become its president. As the new CEO, the biggest organizational challenge Mulcahy faced was to find ways to reduce Xerox’s high operating costs but, at the same time, find ways to develop innovative new lines of copiers. Specifically, she had to decide how to invest the company’s research dollars to develop desperately needed new kinds of digital copiers that would attract customers back to the company and generate new revenues and profits. Simultaneously achieving both of these objectives is one of the biggest challenges a manager can face, and how well she performed these tasks would determine Xerox’s fate— indeed its very survival.1 To find a solution to this problem, Mulcahy, known as an unassuming person who as CEO prefers to stay in the background, focused her efforts on involving and listening to Xerox’s managers, employees, and customers describe its problems. Mulcahy began a series of “town hall” meetings with Xerox employees, asked them for all kinds of creative input and their best efforts, but told them that tough times were ahead and that layoffs would be necessary. At the same time, she emphasized that only their motivation to work hard and find ways to reduce costs and develop new products could save the company. To discover how the company should best invest its R&D budget, Mulcahy made reaching out to customers her other main priority. She insisted that managers and engineers at all levels visit, meet, and talk to customers to uncover what they most wanted from new digital copiers—and from Xerox. During one of her initiatives, called “Focus 500,” which required Xerox’s top 200 managers to visit its top 500 customers, Mulcahy came to increasingly appreciate the skills of Ursula Burns, who had joined Xerox 4 years after her and was quickly establishing her own reputation as a manager who knew how to motivate and lead employees. Burns had started her career as a mechanical engineer and was now the top manager in charge of its manufacturing and supply chain activities—the main source of its high operating costs. By listening closely to both employees and customers, Mulcahy, Burns, and Xerox’s engineers gained insights that allowed them to transform the company’s product line. Their goal was to spend Xerox’s shrinking R&D funds to develop two new lines of digital copiers: 3 4 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR a line of state-of-the-art digital color copying machines for use by large businesses and a line of low-end copiers offering print quality, speed, and prices that even Japanese competitors could not match. To shrink costs, Mulcahy was forced to flatten Xerox’s management hierarchy and streamline its operating units that reduced the number of employees from 95,000 to 55,000 and cut 26 percent from corporate overhead. By 2007, it was clear that Mulcahy and her managers—in particular Ursula Burns, who was now Mulcahy’s second in command—had devised a successful turnaround plan to save Xerox, and all of its employees were committed to work together to continually improve its products and performance. Continuing to work closely with customers, Mulcahy and Burns developed new strategies for Xerox based on improved products and services. In talking to Xerox customers, for example, it became clear they wanted a combination of copying software and hardware that would allow them to create highly customized documents for their own customers. Banks, retail stores, and small businesses needed personalized software to create individual client statements, for example. Mulcahy decided to grow the customized services side of Xerox’s business to meet these specialized needs. She also decided to replicate Xerox’s sales and customer service operations around the globe and customize them to the needs of customers in each country. The result was soaring profits. In 2009, Mulcahy decided she would leave the position of CEO to become Xerox’s chairperson, and her hand-picked successor Ursula Burns became its next CEO.2 The move to transfer power from one woman CEO to another at the same company is exceptional, and Burns is also the first African American woman to head a public company as large as Xerox. Within months of becoming CEO, Burns announced a new major initiative to acquire Affiliated Computer Services for $6.4 billion so Xerox could increase its push to provide highly customized customer service. Burns said the acquisition would be a major game changer because it would triple Xerox’s service revenue to over $10 billion and increase total company revenues to $22 billion. Also, $400 million in cost savings were expected. Xerox’s shares have climbed 40 percent since Burns took over as CEO, and in March 2010 Mulcahy announced her intention to retire. With Ursula Burns at the helm, however, Xerox’s future looks bright indeed. Overview At Xerox, Mulcahy and Burns found a way to create a set of new organizational behaviors that have led to a cooperative, win-win situation for the company and its employees. Xerox’s employees work hard, are committed to their company, and today they are less inclined to leave their jobs than employees who work for many other high-tech companies. This favorable work situation has been created because Xerox: ● ● ● Strives to increase employees’ skills and knowledge and encourages them to take responsibility and to work closely with customers in ways that lead to a stream of new and improved products and better customer service. Provides employees at all levels with rewards to encourage high performance and makes sure that employees’ contributions are recognized. Creates a work setting in which employees develop a longer-term commitment to their organization and are willing to cooperate and work hard to further their company’s goals. As the example of Xerox suggests, creating a favorable work situation in which people at all levels want to behave in ways that result in customers’ receiving a high-quality product does not happen by chance. It is the result of careful planning and a solid understanding and appreciation of how people behave in organizations and what kinds of things cause them to behave the way they do. The best way to gain such an understanding of people at work, and the forces that shape their work behavior, is to study organizational behavior—the subject of this book. CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR 5 In this chapter, we first define organizational behavior and discuss how a working knowledge of organizational behavior is essential for any person in today’s complex, global world. We then examine how changes taking place outside an organization in the global, social, technological, and work or employment environments are changing the way people work together and cooperate inside an organization. The way rapid changes in an organization’s environment have posed challenges for the behavior of all the people who work inside organizations is our focus. By the end of this chapter, you will understand the central role that organizational behavior plays in determining how effective an organization and all the men and women who are part of it are in achieving their goals. What Is Organizational Behavior? ORGANIZATION A collection of people who work together and coordinate their actions to achieve individual and organizational goals. To begin our study of organizational behavior, we could just say that it is the study of behavior in organizations and the study of the behavior of organizations, but such a definition reveals nothing about what this study involves or examines. To reach a more useful and meaningful definition, let’s first look at what an organization is. An organization is a collection of people who work together and coordinate their actions to achieve a wide variety of goals. The goals are what individuals are trying to accomplish as members of an organization (earning a lot of money, helping promote a worthy cause, achieving certain levels of personal power and prestige, enjoying a satisfying work experience, and so forth). The goals are also what the organization as a whole is trying to accomplish (providing innovative goods and services that customers want; getting candidates elected; raising money for medical research; making a profit to reward stockholders, managers, and employees; and being socially responsible and protecting the natural environment). An effective organization is one that achieves its goals. Police forces, for example, are formed to achieve the goals of providing security for lawabiding citizens and providing police officers with a secure, rewarding career while they perform their valuable services. Paramount Pictures was formed to achieve the goal of providing people with entertainment while making a profit in the process. Actors, directors, writers, and musicians receive well-paid and interesting work. Organizations exist to provide goods and services that people want, and the amount and quality of these goods and services are products of the behaviors and performance of an organization’s employees—of its managers, of highly skilled employees in sales or research and development, and of the employees who actually produce or provide the goods and services. Today, most people make their living by working in or for some kind of company or organization. People such as a company’s owners or managers—or company employees who desire to become future owners or managers—all benefit from studying organizational behavior. Indeed, people who seek to help or volunteer their time to work in nonprofit or charitable organizations also must learn the principles of organizational behavior. Like most employees today, volunteers attend training courses that help them understand the many kinds of issues and challenges that arise when people work together and cooperate in a company or organization to benefit others, such as when they seek to aid ill, distressed, or homeless people. The Nature of Organizational Behavior ORGANIZATIONAL BEHAVIOR The study of factors that affect how individuals and groups act in organizations and how organizations respond to their environments. Organizational behavior (OB) is the study of the many factors that have an impact on how people and groups act, think, feel, and respond to work and organizations, and how organizations respond to their environments. Understanding how people behave in an organization is important because most people work for an organization at some point in their lives and are affected—both positively and negatively—by their experiences in it. An understanding of OB can help people to enhance the positive, while reducing the negative, effects of working in organizations. Most of us think we have a basic, intuitive, commonsense understanding of human behavior in organizations because we all are human and have been exposed to different work experiences. Often, however, our intuition and common sense are wrong, and we do not really understand why people act and react the way they do. For example, many people assume that happy employees are productive employees—that is, that high job satisfaction causes high job 6 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR EXHIBIT 1.1 What is Organizational Behavior? Organizational behavior Provides a set of tools that allow: People to understand, analyze, and describe behavior in organizations Managers to improve, enhance, or change work behaviors so that individuals, groups, and the whole organization can achieve their goals performance—or that punishing someone who performs consistently at a low level is a good way to increase performance or that it is best to keep pay levels secret. As we will see in later chapters, all of these beliefs are either false or are true only under very specific conditions, and applying these principles can have negative consequences for employees and organizations. The study of OB provides guidelines that help people at work to understand and appreciate the many forces that affect behavior in organizations. It allows employees at all levels in an organization to make the right decisions about how to behave and work with other people in order to achieve organizational goals. OB replaces intuition and gut-feeling with a well-researched body of theories and systematic guidelines for managing behavior in organizations. The study of OB provides a set of tools—concepts and theories—that help people to understand, analyze, and describe what goes on in organizations and why. OB helps people understand, for example, why they and others are motivated to join an organization; why they feel good or bad about their jobs or about being part of the organization; why some people do a good job and others don’t; why some people stay with the same organization for 30 years and others seem to be constantly dissatisfied and change jobs every 2 years. In essence, OB concepts and theories allow people to correctly understand, describe, and analyze how the characteristics of individuals, groups, work situations, and the organization itself affect how members feel about and act within their organization (see Exhibit 1.1). Levels of OB In practice, OB is examined at three main levels: the individual, the group, and the organization as a whole. A full understanding of OB is impossible without a thorough examination of the factors that affect behavior at each level (see Exhibit 1.2). EXHIBIT 1.2 Levels of Analysis in Organizational Behavior Organizational Level Group Level Individual Level CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR GROUP Two or more people who interact to achieve their goals. TEAM A group in which members work together intensively and develop team specific routines to achieve a common group goal. VIRTUAL TEAM A group whose members work together intensively via electronic means, and who may never actually meet. Much of the research in OB has focused on the way in which the characteristics of individuals (such as personality, feeling, and motivation) affect how well people do their jobs, whether they like what they do, whether they get along with the people they work with, and so on. In Chapters 2 through 9, we examine individual characteristics critical in understanding and managing behavior in organizations: personality and ability; attitudes, values, and moods; perception and attribution; learning; motivation; and stress and work-life linkages (see Exhibit 1.3). The effects of group or team characteristics and processes (such as communication and decision making) on OB also need to be understood. A group is two or more people who interact to achieve their goals. A team is a group in which members work together intensively and develop team-specific routines to achieve a common group goal. A virtual team is a group whose members work together intensively via electronic means using a common IT platform, and who may never actually meet. The number of members in a group, the type and diversity of team members, the tasks they perform, and the attractiveness of a group to its members all influence not just the behavior of the group as a whole but also the behaviors of individuals within the group. For example, a team can influence its members’ decisions on how diligently they should do their jobs or how often they are absent from work, as happens at Xerox. Chapters 10 through 15 examine the ways in which groups affect their individual members and the processes involved in group interactions such as leadership, communication, and decision making. Many studies have found that characteristics of the organization as a whole (such as its culture and the design of an organization’s structure) have important effects on the behavior of individuals and groups. The values and beliefs in an organization’s culture influence how people, groups, and managers interact with each other and with people (such as customers or suppliers) outside the organization. Organizational culture also shapes and controls the attitudes and behavior of people and groups within an organization and thus influences their desire to work toward achieving organizational goals. An organization’s structure controls how people and groups cooperate and interact to achieve organizational goals. The principal task of organizational structure is to encourage people to work hard and coordinate their efforts to ensure high levels of organizational performance. Chapters 16 through 18 examine EXHIBIT 1.3 Components of Organizational Behavior Understanding and managing organizational behavior requires studying Part One Individuals in Organizations Part Two Chapter 2 Individual Differences:Personality and Ability Work Values, Attitudes, Moods, and Emotions Perception, Attribution, and the Management of Diversity Learning and Creativity The Nature of Work Motivation Creating a Motivating Work Setting Pay, Careers, and Changing Employment Relationships Managing Stress and Work–Life Balance Chapter 10 The Nature of Work Groups and Teams Chapter 11 Effective Work Groups and Teams Chapter 12 Leaders and Leadership Chapter 13 Power, Politics, Conflict, and Negotiation Chapter 14 Communication in Organizations Chapter 15 Decision Making and Organizational Learning Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 7 Groups and Team Processes Part Three Chapter 16 Organizational Processes Organizational Design and Structure Chapter 17 Organizational Culture and Ethical Behavior Chapter 18 Organizational Change and Development 8 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR the ways organizational structure and culture affect performance, and they also examine how factors such as the changing global environment, technology, and ethics impact work attitudes and behavior. K.M. Cannon\Getty Images, Inc - Liaison OB and Management Sam Palmisano introduces the companies’ new products to reporters and analysts at trade meetings. MANAGERS Persons who supervise the activities of one or more employees. TOP-MANAGEMENT TEAMS High-ranking executives who plan a company’s strategy so that the company can achieve its goals. ORGANIZATIONAL EFFECTIVENESS The ability of an organization to achieve its goals. The ability to use the tools of OB to understand behavior in organizations is one reason for studying this topic. A second reason is to learn how to use and apply these concepts, theories, and techniques to improve, enhance, or change behavior so that employees, groups, and the whole organization can all better achieve their goals. For example, a salesperson working in Neiman Marcus in Houston has the individual goal, set by his supervisor, of selling $5,000 worth of men’s clothing per week. In addition, he and the other members of the men’s clothing department have the group goals of keeping the department looking neat and attractive and of never keeping customers waiting. The store as a whole (along with all the other stores in the nationwide Neiman Marcus chain) has goals of being profitable by selling customers unique, high-quality clothes and accessories and providing excellent service. If all these different goals are met, employees receive a large yearly pay bonus and Neiman Marcus makes a profit. Knowledge of OB can help Neiman Marcus employees earn their bonuses. For example, OB research has found that organizations whose employees have been taught how to work as a team, and to take pains to be helpful, courteous, and agreeable to each other and to customers will be more effective than those organizations whose employees do not behave in this way. At Neiman Marcus, employees know what kinds of behaviors result in satisfied customers. They know that if they work hard to be courteous and agreeable to each other and to customers, they will sell more clothes and so they will achieve (a) their personal sales goal, (b) their department’s goal of never keeping customers waiting, and (c) the organization’s goals of being profitable and providing excellent service. A working knowledge of OB is important to employees at all levels in the organization because it helps them to appreciate the work situation and how they should behave to achieve their own goals (such as promotion or higher income). But knowledge of OB is particularly important to managers, people who direct and supervise the activities of one or more employees. For example, Sam Palmisano, CEO of IBM, and Ursula Burns, CEO of Xerox, have ultimate responsibility for the behavior of the hundreds of thousands of employees who work for these companies. The sales managers of IBM’s or Xerox’s southern region, who control hundreds of salespeople, are also managers, as are the managers (or supervisors) in charge of these companies’ technical service centers who supervise small teams of service technicians. Managers at all levels confront the problem of understanding the behavior of their subordinates and responding appropriately. Palmisano and Burns have to manage their companies’ top-management teams, the group of high-ranking executives who jointly work to develop the strategies that allow an organization to achieve its goals. Similarly, sales managers have to train their salespeople so that they can offer each customer the mix of IT hardware and software that best satisfies their company’s specific needs. And, service managers have to manage IT technicians so that they respond promptly and courteously to customers’ appeals for help and quickly solve their IT problems—providing customers with high-quality customized or personalized service is currently a major strategy of both IBM and Xerox. Each of these managers faces the common challenge of finding ways to help the organization achieve its goals. A manager who understands how individual, group, and organizational characteristics affect and shape work attitudes and behavior can begin to experiment to see whether changing one or more of these characteristics might increase the effectiveness of the organization—and the individuals and groups it consists of. Organizational effectiveness is the ability of an organization to achieve its goals. The study of OB helps managers meet the challenge of improving organizational effectiveness by providing them with a set of tools. CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR ● ● ● 9 A manager can work to raise an employee’s self-esteem or beliefs about his or her ability to accomplish a certain task in order to increase the employee’s productivity or job satisfaction. A manager can change the reward system to change employees’ beliefs about the extent to which their rewards depend on their performance. A manager can change the design of a person’s job or the rules and procedures for doing the job to reduce costs, make the task more enjoyable, or make the task easier to perform. Recall from the chapter-opening case that Xerox’s goal is to attract customers by providing them with high-quality, affordable copiers and customized service. To achieve this goal, Xerox’s CEOs created a work setting in which employees were taught what kinds of organizational behaviors are necessary to create superior color copiers customized to the needs of different organizations. Xerox succeeded because it chose a way to motivate and reward employees that encourages them to work hard and well and behave in a way that benefits everyone. A key challenge for all organizations, and one that we address throughout this book, is how to encourage organizational members to work effectively for their own benefit, the benefit of their work groups, and the benefit of their organization. Managerial Functions MANAGEMENT The process of planning, organizing, leading, and controlling an organization’s human, financial, material, and other resources to increase its effectiveness. The four principal functions or duties of management are planning, organizing, leading, and controlling an organization’s human, financial, material, and other resources to increase its effectiveness.3 And, as our previous examples show, managers who are knowledgeable about OB are in a good position to improve their ability to perform these functions (see Exhibit 1.4). PLANNING PLANNING In planning, managers establish their organization’s strategy—that is, they decide Deciding how best to allocate and use resources to achieve organizational goals. how best to allocate and use resources to achieve organizational goals. At Southwest Airlines, for example, CEO Gary Kelly’s goal is to provide customers with low-priced air travel, and to achieve this Southwest has created many strategies to use its resources as efficiently as possible.4 For example, Southwest uses only one kind of plane, the Boeing 737, to keep down operating, training, and maintenance costs; employees cooperate and share jobs when necessary to keep down costs; and the company sells its tickets on its own website—one of the easiest to use in the industry. Planning is a complex and difficult task because managers must make decisions under uncertain conditions and so considerable risks are involved when they choose which strategies to pursue. A knowledge of OB can help improve the quality of decision making, increase the chances of success, and lessen the risks inherent in planning and decision EXHIBIT 1.4 Four Functions of Management Planning Decide on organizational goals and allocate and use resources to achieve those goals Controlling Evaluate how well the organization is achieving its goals and take action to maintain and improve performance or take corrective action Organizing Establish the rules and reporting relationships that allow people to achieve organizational goals Leading Encourage and coordinate individuals and groups so that they work toward organizational goals 10 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR making. First, the study of OB reveals how decisions get made in organizations and how politics and conflict affect the planning process. Second, the way in which group decision making affects planning, and the biases that can influence decisions, are revealed. Third, the theories and concepts of OB show how the composition of an organization’s top-management team can affect the planning process. As a result, the study of OB can improve a CEO’s and top management team’s planning abilities and allow them to increase organizational performance. ORGANIZING ORGANIZING In organizing, managers establish a structure of work relationships that Establishing a structure of relationships that dictates how members of an organization work together to achieve organizational goals. determines how members of an organization will cooperate and act jointly to achieve organizational goals. Organizing involves grouping employees into groups, teams, or departments according to the kinds of tasks or jobs they perform. At Southwest and Xerox, for example, the technicians who service and maintain their products (planes and copiers) are grouped into the service-operation department; and their salespeople are grouped into the sales department. OB offers many guidelines on how best to organize employees (an organization’s human resources) to make the most effective use of their personal skills and capabilities. In later chapters, we discuss various methods of grouping workers to enhance communication and coordination while avoiding conflict or politics. At Southwest Airlines, for example, although employees are members of particular departments (pilots, flight attendants, baggage handlers), they are expected to perform one another’s nontechnical jobs when needed. LEADING LEADING In leading, managers encourage workers to do a good job (work hard, produce Encouraging and coordinating individuals and groups so that all organizational members are working to achieve organizational goals. high-quality products) and coordinate individuals and groups so that all organizational members are working to achieve organizational goals. The study of different leadership methods and of how to match leadership styles to the characteristics of the organization and all its components is a major concern of OB. Today, the way managers lead employees is changing because millions of employees work in self-managed teams—groups of employees who are given both the authority and responsibility to manage important aspects of their own work behaviors. These groups, for example, are often responsible for interviewing job applicants and for selecting their new team members who they often train as well. Also, these groups work together to improve work methods and procedures that can increase their effectiveness and help each other raise their own personal job skills and knowledge. The managers who used to actively supervise the team now play a different role—that of coaches or mentors. Their new role is to provide advice or support as needed and to champion the team and help it to obtain additional resources that will allow it to perform at a higher level and earn greater rewards as well. SELF-MANAGED TEAMS Groups of employees who are given the authority and responsibility to manage many different aspects of their own organizational behavior. CONTROLLING CONTROLLING Finally, in controlling, managers monitor and evaluate individual, group, Monitoring and evaluating individual, group, and organizational performance to see whether organizational goals are being achieved. and organizational performance to see whether organizational goals are being achieved. If goals are met, managers can take action to maintain and improve performance; if goals are not being met, managers must take corrective action. The controlling function also allows managers to evaluate how well they are performing their planning, organizing, and leading functions. Once again, the theories and concepts of OB allow managers to understand and accurately diagnose work situations in order to pinpoint where corrective action may be needed. Suppose the members of a group are not working effectively together. The problem might be due to personality conflicts between individual members of the group, to the faulty leadership approach of a supervisor, or to poor job design. OB provides valuable tools managers can use to diagnose which of these possible explanations is the source of the problem, and it enables managers to make an informed decision about how to correct the problem. Control at all levels of the organization is impossible if managers do not possess the necessary organizational-behavior knowledge. The way in which Joe Coulombe founded a retail company called Trader Joe’s, which follows this approach to managing OB, illustrates many of these issues as the following OB Today suggests. CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR OB TODAY Michael Nagle\Getty Images, Inc - Liaison How Joe Coulombe Used OB to Make Trader Joe’s a Success Story Trader Joe’s, an upscale specialty supermarket chain, was founded in 1967 by Joe Coulombe, who then owned a few convenience stores that were fighting an uphill battle against the growing 7–11 chain. 7–11 offered customers a wider selection of lower-priced products, and Coulombe could not compete. If his small business was to survive, Coulombe needed to change his strategy. He decided to supply his customers with upscale specialty products such as wine, drinks, and gourmet foods. Coulombe changed the name of his stores to Trader Joe’s and stocked them with every variety and brand of California wine that was produced. He also began to offer fine foods like bread, crackers, cheese, fruits, and vegetables to complement and encourage wine sales. His planning paid off, customers loved his new upscale supermarket concept, and the premium products he chose to stock sold quickly—and they were more profitable to sell. From the beginning, Coulombe realized that finding a new niche in the supermarket business was only the first step to help his small, growing company succeed. He knew that to encourage customers to visit his stores and buy more expensive gourmet products, he needed to provide them with excellent customer service. So, he The Trader Joe's approach to organizing entails decentralizing had to find ways to motivate his salespeople to perform authority and empowering salespeople to take responsibility for at a high level. His approach to organizing was to demeeting customer needs. Employees are given autonomy to centralize authority and empower salespeople to take make decisions and provide personalized customer service. responsibility for meeting customer needs. Rather than instructing employees to follow strict operating rules and to get the approval of their supervisor before making customer-specific decisions, employees were given autonomy to make their own decisions and provide personalized customer service. This approach led employees to feel they “owned” their supermarkets, and Coulombe worked to develop a culture based on values and norms about providing excellent customer service and developing personalized relationships with customers, who are often on first-name terms. Coulombe led by example and created a store environment in which employees were treated as individuals and felt valued as people. For example, the theme behind the design of his stores was to create the feeling of a Hawaiian resort: employees wear loud Hawaiian shirts, store managers are called captains, and the store décor features lots of wood and Tiki huts where employees provide customers with food and drink samples and interact with them. Once again, this helped to create strong values and norms that emphasize personalized customer service. Finally, Joe Coulombe’s approach was strongly influenced by the way he went about controlling salespeople. From the outset, he created a policy of promotion from within the company so that the highest performing salespeople could rise to become store captains and beyond in the organization. And, from the beginning, he recognized the need to treat employees in a fair and equitable way to encourage them to develop the customeroriented values and norms needed to provide personalized customer service. He decided that full-time employees should earn at least the median household income for their communities, which averaged $7,000 a year in the 1960s and is $48,000 today—an 11 12 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR astonishingly high amount compared to the pay of employees of regular supermarkets such as Kroger’s and Safeway. Moreover, store captains, who are vital in helping create and reinforce Trader Joe’s store culture, are rewarded with salaries and bonuses that can exceed $100,000 a year. And, all salespeople know that as the store chain expands, they may also be promoted to this level. In sum, Coulombe’s approach to developing the right set of organizational behaviors for his small business created a solid foundation on which this upscale specialty supermarket has grown and prospered. Managerial Roles ROLE A set of behaviors or tasks a person is expected to perform because of the position he or she holds in a group or organization. Managers perform their four functions by assuming specific roles in organizations. A role is a set of work behaviors or tasks a person is expected to perform because of the position he or she holds in a group or organization. One researcher, Henry Mintzberg, has identified ten roles that manager’s play as they manage the behavior of people inside and outside the organization (such as customers or suppliers).5 (See Exhibit 1.5.) Managerial Skills SKILL Just as the study of OB provides tools that managers can use to increase their abilities to perform their functions and roles, it can also help managers improve their skills in managing OB. A skill is an ability to act in a way that allows a person to perform well in his or her role. An ability to act in a way that allows a person to perform well in his or her role. EXHIBIT 1.5 Types of Managerial Roles Type of Role Examples of Role Activities Figurehead Gives speech to workforce about future organizational goals and objectives; opens a new corporate headquarters building; states the organization’s ethical guidelines and principles of behavior that employees are to follow in their dealings with customers and suppliers. Gives direct commands and orders to subordinates; makes decisions concerning the use of human and financial organizational resources; mobilizes employee commitment to organizational goals. Coordinates the work of managers in different departments or even in different parts of the world; establishes alliances between different organizations to share resources to produce new products. Evaluates the performance of different managers and departments and takes corrective action to improve their performance; watches for changes occurring in the industry or in society that may affect the organization. Informs organizational members about changes taking place both inside and outside the organization that will affect them and the organization; communicates to employees the organization’s cultural and ethical values. Launches a new organizational advertising campaign to promote a new product; gives a speech to inform the general public about the organization’s future goals. Commits organizational resources to a new project to develop new products; decides to expand the organization globally in order to obtain new customers. Moves quickly to mobilize organizational resources to deal with external problems facing the organization, such as environmental crisis, or internal problems facing the organization, such as strikes. Allocates organizational resources between different departments and divisions of the organization; sets budgets and salaries of managers and employees. Works with suppliers, distributors, labor unions, or employees in conflict to solve disputes or to reach a long-term contract or agreement; works with other organizations to establish an agreement to share resources. Leader Liaison Monitor Disseminator Spokesperson Entrepreneur Disturbance handler Resource allocator Negotiator CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR CONCEPTUAL SKILLS The ability to analyze and diagnose a situation and to distinguish between cause and effect. HUMAN SKILLS The ability to understand, work with, lead, and control the behavior of other people and groups. TECHNICAL SKILLS Job-specific knowledge and techniques. 13 Managers need three principal kinds of skill in order to perform their organizational functions and roles effectively: conceptual, human, and technical skills.6 Conceptual skills allow a manager to analyze and diagnose a situation and to distinguish between cause and effect. Planning and organizing require a high level of conceptual skill, as do the decisional roles previously discussed. The study of OB provides managers with many of the conceptual tools they need to analyze organizational settings and to identify and diagnose the dynamics of individual and group behavior in these settings. Human skills enable a manager to understand, work with, lead, and control the behaviors of other people and groups. The study of how managers can influence behavior is a principal focus of OB, and the ability to learn and acquire the skills needed to coordinate and motivate people is a principal difference between effective and ineffective managers. Technical skills are the job-specific knowledge and techniques that a manager requires to perform an organizational role—for example, in manufacturing, accounting, or marketing. The specific technical skills a manager needs depend on the organization the manager is in and on his or her position in the organization. The manager of a restaurant, for example, needs cooking skills to fill in for an absent cook, accounting and bookkeeping skills to keep track of receipts and costs and to administer the payroll, and artistic skills to keep the restaurant looking attractive for customers. Effective managers need all three kinds of skills—conceptual, human, and technical. The lack of one or more of these skills can lead to a manager’s downfall. One of the biggest problems that entrepreneurs confront—a problem often responsible for their failure—is lack of appropriate conceptual and human skills. Similarly, one of the biggest problems faced by scientists, engineers, and others who switch careers and go from research into management is their lack of effective human skills. Management functions, roles, and skills are intimately related, and the ability to understand and manage behavior in organizations is indispensable to any actual or prospective manager over the long run. Challenges for OB OPEN SYSTEM Organizations that take in resources from their external environments and convert or transform them into goods and services that are sent back to their environments where customers buy them. In the last few decades, the challenges facing organizations to effectively utilize and develop the skills, knowledge, and “human capital” of their employees have been increasing. As we noted earlier, among these challenges, those stemming from changing pressures or forces in the social and cultural, global, technological, and work environments stand out. To appreciate the way changes in the environment affect behavior in organizations, it is useful to model an organization from an open-systems perspective. In an open system, an organization takes in resources from its external environment and converts or transforms them into goods and services that are sent back to that environment, where customers buy them (see Exhibit 1.6). EXHIBIT 1.6 ENVIRONMENT An Open System View of Organizational Behavior Input Stage •• • Raw materials Money and capital Human resources Organization obtains inputs from its environment Conversion stage •• • Machinery Computers Human skills Organization transforms inputs and adds value to them Sales of outputs allow organization to obtain new supplies of inputs Output stage •• Goods Services Organization releases outputs to its environment 14 CHAPTER 1 • INTRODUCTION TO ORGANIZATIONAL BEHAVIOR ORGANIZATIONAL PROCEDURE A rule or routine an employee follows to perform some task in the most effective way. The activities of most organizations can be modeled using the open-systems view. At the input stage, companies such as Ford, General Electric, Ralph Lauren, Xerox, and Trader Joe’s acquire resources such as raw materials, component parts, skilled employees, robots, and computer-controlled manufacturing equipment. The challenge is to create a set of organizational behaviors or procedures that allow employees to identify and purchase high-quality resources at a favorable price. An organizational procedure is a behavioral rule or routine an employee follows to perform some task in the most effecti...
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