Eleventh Edition Organizational Behavior & Management Robert Konopaske John M. Ivancevich Michael T. Matteson Organizational Behavior and Management Eleventh Edition Robert Konopaske Associate Professor of Management, McCoy College of Business Administration, Texas State University John M. Ivancevich Hugh Roy and Lillie Cranz Cullen Chair and Professor of Organizational Behavior and Management, C. T. Bauer College of Business, University of Houston Michael T. Matteson Professor Emeritus Organizational Behavior and Management, C. T. Bauer College of Business, University of Houston This book is dedicated to our students and colleagues who inspire and challenge us. ORGANIZATIONAL BEHAVIOR AND MANAGEMENT, ELEVENTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2018 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2014, 2011, and 2008. 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Title: Organizational behavior and management/Robert Konopaske, Associate Professor of Management, McCoy College of Business Administration, Texas State University, John M. Ivancevich, Hugh Roy and Lillie Cranz Cullen Chair and Professor of Organizational Behavior and Management, C. T. Bauer College of Business, University of Houston, Michael T. Matteson, Professor Emeritus Organizational Behavior and Management, C. T. Bauer College of Business, University of Houston. Description: Eleventh Edition. | Dubuque, IA : McGraw-Hill Education, 2016. | Revised edition of Organizational behavior and management. Identifiers: LCCN 2016041475 | ISBN 9781259894534 (alk. paper) | ISBN 1259894533 (alk. paper) Subjects: LCSH: Organizational behavior. Classification: LCC HD58.7 .I89 2016 | DDC 658.4--dc23 LC record available at https://lccn.loc.gov/2016041475 The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites. mheducation.com/highered About the Authors Robert Konopaske is Associate Professor of Management at the McCoy College of Business Administration, Texas State University. He earned his Doctoral Degree in management from the University of Houston, a Master’s Degree in international business studies from the University of South Carolina, and an undergraduate degree at Rutgers University. His teaching and research interests focus on international management, organizational behavior, and human resource management issues. The recipient of numerous teaching awards at four different universities, Rob is also the co-author of several textbooks, including: M: Management (4th and 5th editions), Management: Leading & Collaborating in a Competitive World (12th edition), Organizations: Behavior, Structure, Processes (11th, 12th, 13th, and 14th editions), Organizational Behavior and Management (7th, 8th, 9th, 10th, and 11th editions), Human Resource Management (12th edition) and Global Management and Organizational Behavior. He has published numerous academic articles in Journal of Managerial Psychology, Journal of Applied ­Psychology, Academy of Management Executive, Journal of Management Education, ­Journal of Business Research, Work and Stress, Human Resource Management Review, Management International Review, Business Horizons, Human Resource Management, and International Journal of Human Resource Management. He has served on the editorial boards of two international management journals, and has held multiple national leadership positions for the Academy of Management’s Human Resource Division. Rob has worked in the private, nonprofit, and education sectors, and has conducted research-based consulting for such global companies as Credit Suisse, PricewaterhouseCoopers, and KPMG. John (Jack) M. Ivancevich (August 16, 1939–October 26, 2009): In Memoriam. Hugh Roy and Lillie Cranz Cullen Chair and Professor of Organizational Behavior and Management, C. T. Bauer College of Business, University of Houston; B.S. from Purdue University, and MBA and DBA from the University of Maryland. Never one to miss a deadline, Jack submitted his last revisions for this textbook during the summer of 2009. A few months later, he passed away with quiet dignity surrounded by loved ones. On that day, the management discipline lost a passionate and award-winning educator, and an influential leader with an incomparable work ethic and sense of integrity. Jack led by example, and those of us who were fortunate enough to know him were inspired to work harder and reach higher than we ever thought possible. Jack was committed to higher education and the creation and dissemination of management knowledge. He was comfortable in the classroom and would encourage students to think critically about and apply the concepts and theories of organizational behavior and management to their lives. Jack had an “open door” policy, and spent countless hours helping students and answering their questions. His reputation as a tough teacher was softened by his appreciation for the need of many students to balance a desire for education with a full-time job and family demands. Among Jack’s most valued honors was the Ester Farfel Award for Research, Teaching, and Service Excellence, the highest honor bestowed to a University of Houston faculty member. Complementing his passion for teaching, Jack loved to write books. He tried to write at least 300 days a year, averaging about 1,200 words per day. Over a 40-year period, Jack reached well over a million students by authoring or co-authoring 88 books about various aspects of management and organizational behavior. In 1987, the first edition of Organizational Behavior and iii iv About the Authors Management (with Michael T. Matteson) was published. Preceding this textbook were several others like the award-winning and popular textbook Organizations: Behavior, Structure, Processes (co-authored with James L. Gibson and James H. Donnelly); which was first published in 1973 and is currently in its 14th edition. In 2005, Organizations (11th edition) received the McGuffey Longevity Award from the Text and Academic Authors Association. This award recognizes textbooks and learning materials whose excellence has been demonstrated over time. A sample of Jack’s other textbooks include: Human Resource Management, Global Management and Organizational Behavior (co-authored with Robert Konopaske), Management and Organizational Behavior Classics (co-authored with Michael T. Matteson), Fundamentals of Management: Functions, Behavior, Models (co-authored with James L. Gibson and James H. Donnelly), and Management: Quality and Competitiveness (co-authored with Peter Lorenzi, Steven Skinner, and Philip Crosby). Jack was not only an accomplished educator and book author but also a prolific and highly respected researcher. Well known for his highly disciplined work ethic, Jack authored or co-authored some 160 research articles, which were published in such journals as Academy of Management Journal, Academy of Management Review, Administrative Science Quarterly, Journal of Applied Psychology, and Harvard Business Review. His research was highly influential and explored a range of management and organizational behavior topics, including job stress, white-collar crime, diversity management, global assignments, job loss, absenteeism, job satisfaction, goal setting, job performance, training method effectiveness, and organizational climate. The diversity of Jack’s research reflected the complex and interrelated nature of management issues in organizations. In 2000, in recognition of publishing a substantial number of refereed articles in Academy of Management journals, Jack was inducted into the Academy of Management’s Journals Hall of Fame as one of the first 33 Charter Members. This is an impressive achievement when considering that in 2000, the Academy of Management had approximately 13,500 members. In addition to teaching, writing books and conducting research, Jack applied his knowledge of organizational behavior and management to the several leadership positions he held since joining the University of Houston faculty in 1974. In 1975, he was named Chair of the Department of Organizational Behavior and Management, and in the following year, Jack became the Associate Dean of Research for the College of Business Administration at UH. In 1979, Jack was awarded the Hugh Roy and Lillie Cranz Cullen Chair of Organizational Behavior and Management, among the most prestigious positions at the University of Houston. From 1988–1995, he served as Dean of the UH College of Business Administration. In 1995, Jack was named UH Executive Vice President for Academic Affairs and Provost, a position he held for two years. Through visionary, performance-driven, and principled leadership, Jack left a lasting and meaningful imprint on the entire University of Houston community, including internal constituents like fellow administrators, Deans, program directors, faculty, staff, and students, as well as external stakeholders like legislators, donors, alumni, and area company executives. His accomplishments were even more extraordinary, given the fact that Jack continued to teach classes, write books, and publish research articles while holding these myriad leadership positions. Jack made innumerable contributions to all facets of higher education, all of which will be felt for years to come. Perhaps one of Jack’s greatest and longest lasting legacies will be from the many individuals he mentored during his 45 years in higher education. As busy as he was throughout his entire career, Jack was extremely generous with his time and made it a priority to mentor a large number of individuals, including current and former students, junior faculty, colleagues from the publishing industry, and many others. He wanted people to succeed and would do everything he could to help them accomplish their goals. About the Authors v Jack would often invite younger faculty members to collaborate with him on research projects. As a member of 80 doctoral and master’s committees, Jack relished his role as mentor and would spend hours with graduate students, helping and guiding them through the process of conducting original research for their theses or dissertations. Jack was always willing to make phone calls and write detailed letters of recommendation on behalf of his students to help them get hired or, later in their careers, get promoted or be awarded tenure. He invested heavily in these individuals and expected hard work and commitment to excellence in return. Many of these former graduate students are professors at universities and colleges throughout the United States and now find themselves mentoring and inspiring their own students. On a personal note, Jack was my mentor, colleague, and friend. Words cannot capture how grateful and honored I feel to have worked so closely with him on several organizational behavior textbooks and research projects over the past 12 years. We became acquainted in 1999, after Jack agreed to be my dissertation chair at the University of Houston. Given Jack’s stature and commanding presence, I was a little intimidated by him in the beginning but quickly realized he was a “gentle giant” who could switch rapidly between discussions of research, books, academic careers, teaching, and the importance of being a good family man and father, and achieving balance in one’s life. Jack was a great story teller and especially liked relating tales of his early years in the south side of Chicago. Like me, he was proud of the fact that he grew up in a multiethnic environment where one’s parents, extended family, and family friends were always around to keep an eye on the kids in the neighborhood, while always ready to offer them a delicious home-cooked meal. Jack taught me many things; some lessons were passed along during thoughtful conversations, but most came by observing him in action. Jack taught me to take life “head on” with a strong, positive, and can-do attitude while never losing sight of the importance of being a loving and committed husband and father. He will be sorely missed by all of us who were fortunate to have been touched by his warm friendship and guided by his generous spirit. Jack is survived by his wife of 37 years, Margaret (Pegi) Karsner Ivancevich; son Daniel and wife Susan; daughter Jill and husband David Zacha, Jr.; and grandchildren Kathryn Diane and Amanda Dana Ivancevich, and Hunter David Michael, Hailey Dana, and Hannah Marie Zacha. Jack was preceded in death by his beloved daughter Dana and by his first wife, Diane Frances Murphy Ivancevich. Robert Konopaske December 28, 2009 Michael T. Matteson is an Emeritus Professor of Management at the University of ­Houston. After receiving his Ph.D. in industrial psychology from the University of ­Houston, Mike taught graduate and undergraduate courses in the C. T. Bauer College of Business for over three decades. He also served as Associate Dean and Department ­Chairperson at the University of Houston. Mike has published numerous research and theory-based articles on occupational stress, managing stress, preventive health, work-site health promotion, intervention programs, and research methods. He has consulted with and provided training programs for organizations in numerous industries. He is the co-author or co-editor of a number of textbooks and trade books including Stress and Work: A Managerial Perspective, Management and Organizational Behavior Classics, and Controlling Work Stress. Brief Contents Preface xiii PART FOUR PART ONE The Field of Organizational Behavior 1 1 Effective Managers Understand Organizational Behavior 3 2 International and Organizational Culture 31 PART TWO Understanding and Managing Individual Behavior 55 3 Individual Differences at Work 57 4 Perceptions and Attributions 81 5 Motivation 101 6 Job Design and Performance 131 7 Evaluation and Rewards Influence Behavior 157 8 Managing Employee Behavior 191 9 Managing Individual Stress 213 PART THREE Group Behavior and Interpersonal Influence 245 10 Groups and Teams 247 11 Managing Conflict and Negotiations 12 Power and Politics 307 vi Organizational Processes 335 13 Communicating Effectively 337 14 Decision Making 371 15 Leadership 401 PART FIVE Organizational Design, Change, and Innovation 437 16 Organizational Structure and Design 439 17 Managing Organizational Change 471 APPENDIX Quantitative and Qualitative Research Techniques for Studying Organizational Behavior and Management Practice 503 GLOSSARY 513 ENDNOTES 525 INDEXES 279 575 Contents Preface xiii Organizational Culture Matters PART ONE THE FIELD OF ORGANIZATIONAL BEHAVIOR 1 Chapter 1 Effective Managers Understand Organizational Behavior 3 The Evolution of Management Scientific Management 6 Administrative Management 7 9 Systems Theory and Organizational Effectiveness 10 Quality 12 Productivity 12 Efficiency 13 Satisfaction 13 Adaptiveness 13 Development 13 41 42 43 46 Summary of Key Points 49 Review and Discussion Questions Exercises 50 Case 52 49 PART TWO UNDERSTANDING AND MANAGING INDIVIDUAL BEHAVIOR 55 Chapter 3 Individual Differences at Work Environmental Forces Reshaping Management Practice 14 Framing the Study of Organizational Behavior 18 57 Why Individual Differences Matter 57 Individual Differences Influence Work Behavior The Organization’s Environment 18 Understanding and Managing Individual Behavior 18 Group Behavior and Interpersonal Influence 21 Organizational Processes 23 Organizational Design, Change, and Innovation 24 Summary of Key Points 25 Review and Discussion Questions Exercise 26 Case 29 Anticipatory Socialization Accommodation 42 Role Management 43 Mentoring 43 Spirituality and Culture 7 Leaders and Organizational Behavior The Hawthorne Studies 9 Influencing Culture Change 40 Socialization Sustains the Culture 35 Characteristics of Effective Socialization 5 Why Study Organizational Behavior? 34 Organizational Culture Defined 35 Organizational Culture and Its Effects Creating Organizational Culture 37 26 Chapter 2 International and Organizational Culture 31 National Culture and Values Influence Workplace Behavior 32 58 Diversity 59 Abilities and Skills 62 Attitudes 64 Personality 67 Emotions 72 Summary of Key Points 76 Review and Discussion Questions Exercise 77 Case 79 76 Chapter 4 Perceptions and Attributions 81 The Perceptual Process 81 Perceptual Grouping 85 Perceptual Groupings Can Create Inaccuracies Stereotyping 87 Selective and Divided Attention 87 88 vii viii Contents The Way People Perceive Their Jobs Halo Effect 88 Similar-to-Me Errors 89 Situational Factors 89 Needs and Desires 89 Attribution Theory 90 Impression Management Increasing Range in Jobs: Job Rotation and Job Enlargement 141 92 An Interpersonal Process 92 A Model and Impression Management in Practice 93 Summary of Key Points 95 Review and Discussion Questions Exercises 96 Case 99 Chapter 5 Motivation Job Rotation 141 Job Enlargement 141 Increasing Depth in Jobs: Job Enrichment Self-Managed Teams 145 Alternative Work Arrangements 95 The Starting Point: Needs Motivate Employees Content Approaches 105 103 Chapter 7 Evaluation and Rewards Influence Behavior 157 Maslow’s Needs Hierarchy 105 Alderfer’s ERG Theory 107 Herzberg’s Two-Factor Theory 108 McClelland’s Learned Needs Theory 111 A Synopsis of the Four Content Theories 112 Evaluation of Performance Performance Evaluation Feedback 115 Motivation and the Psychological Contract 122 Effective Managers Motivate Their Employees 123 Summary of Key Points 124 Review and Discussion Questions 125 Exercise 126 Case 127 Chapter 6 Job Design and Performance 131 Range and Depth 137 Job Relationships 138 Reinforcement Theory 164 Reinforcement 165 Punishment 165 Extinction 165 Reinforcement Schedules 165 A Model of Individual Rewards 167 168 Rewards Affect Important Organizational Outcomes 174 Turnover and Absenteeism 174 Job Performance 175 Organizational Commitment 175 Innovative Reward Systems 135 Job Design: Range, Depth, and Relationships 161 Purpose of Evaluation Feedback 162 A Feedback Model 162 Multisource Feedback: A 360-Degree Approach 163 Intrinsic and Extrinsic Rewards Rewards Interact 171 Administering Rewards 172 Job Design and Quality of Work Life 132 A General Model of Job Design 133 Job Performance Outcomes 134 Objective Outcomes 134 Behavioral Outcomes 134 Intrinsic and Extrinsic Outcomes Job Satisfaction Outcomes 136 158 Purposes of Evaluation 158 Focus of Evaluation 160 Improving Evaluations 160 113 Expectancy Theory 113 Equity Theory 115 Change Procedures to Restore Equity Research on Equity 116 Goal Setting 119 Goal-Setting Research 121 137 Skill-Based Pay 176 Broadbanding 176 Concierge Services 178 Team-Based Rewards 178 142 146 Total Quality Management and Job Design Summary of Key Points 151 Review and Discussion Questions 152 Exercise 153 Case 155 101 Process Approaches 139 Job Characteristics 140 Individual Differences 140 Social Setting Differences 140 176 149 Contents ix Stress Moderators Part-Time Benefits 179 Gain-Sharing 180 Employee Stock Ownership Plans 180 Line of Sight: The Key Issue 181 Summary of Key Points 182 Review and Discussion Questions Exercises 184 Case 188 Maximizing Person–Environment Fit 232 Organizational Stress Prevention and Management Programs 233 Summary of Key Points 238 Review and Discussion Questions Exercise 240 Case 243 The Management of Employee Behavior 191 The Emerging Study of Misbehavior 193 Selected Misbehaviors GROUP BEHAVIOR AND INTERPERSONAL INFLUENCE 195 196 Chapter 10 Groups and Teams 247 The Nature of Groups 249 Types of Groups 250 Formal Groups 251 Informal Groups 251 Why People Form Groups 252 Stages of Group Development 253 207 E-Mail Privacy 208 The Organizational Threshold Testing Policy 209 Forming 253 Storming 253 Norming 254 Performing 254 Adjourning 254 208 Summary of Key Points 209 Review and Discussion Questions Case 210 210 Characteristics of Groups What Is Stress? 214 Stress Model 216 Work Stressors: Individual, Group, and Organizational 218 Individual Stressors 218 Group, Organizational, and Nonwork Stressors Cognitive Appraisal 221 Coping with Stress 222 223 Individual Outcomes 223 Organizational Consequences 227 255 Composition 255 Status Hierarchy 255 Roles 256 Norms 257 Leadership 258 Cohesiveness 259 Chapter 9 Managing Individual Stress 213 Stress Outcomes 239 PART THREE Sexual Harassment 196 Aggression and Violence 198 Bullying 199 Incivility 200 Fraud 201 Substance Abuse at Work 203 Cyberslacking 204 Sabotage 205 Theft 206 Privacy 229 Managing Stress: Individual and Organizational Approaches 230 184 Chapter 8 Managing Employee Behavior 191 Antecedents 193 Mediators 193 Outcomes 195 Costs 195 Management Interventions 228 Personality 228 Type A Behavior Pattern Social Support 230 Group Effectiveness Teams 263 220 262 Types of Teams 263 Team Effectiveness 267 Summary of Key Points 269 Review and Discussion Questions Exercises 272 Case 277 270 245 x Contents Chapter 11 Managing Conflict and Negotiations Subunit or Interdepartmental Power 279 A Contemporary Perspective on Intergroup Conflict 280 Functional Conflict 281 Dysfunctional Conflict 281 Conflict and Organizational Performance What Causes Intergroup Conflict? Research on Politics 320 Game Playing 321 Political Influence Tactics 322 Impression Management 324 281 282 Ethics, Power, and Politics 325 Using Power to Manage Effectively 327 Summary of Key Points 329 Review and Discussion Questions 329 Exercises 330 Case 333 The Consequences of Dysfunctional Intergroup Conflict 285 Changes within Groups 285 Changes between Groups 286 Managing Intergroup Conflict through Resolution 287 PART FOUR Dominating 287 Accommodating 288 Problem Solving 288 Avoiding 290 Compromising 290 ORGANIZATIONAL PROCESSES Chapter 13 Communicating Effectively Stimulating Constructive Intergroup Conflict Bringing Outside Individuals into the Group 292 Altering the Organization’s Structure Stimulating Competition 293 Using Programmed Conflict 293 293 Using Third-Party Negotiations Negotiating Globally 298 Improving Negotiations 299 301 307 Interpersonal Power 309 Structural Power 311 314 337 339 340 Communicating within Organizations 343 Information Richness 346 Technology and Communication 347 Internet, Intranets, and Extranets 347 Electronic Mail, Messaging, and Social Networking 347 Smartphones 349 Voice Mail 349 Videoconferencing, Teleconferencing, and e-Meetings/ Collaboration 349 Interpersonal Communication 350 Multicultural Communication 351 The Concept of Power 307 Where Does Power Come From? Empowerment 296 297 Summary of Key Points 300 Review and Discussion Questions Exercises 302 Case 305 The Communication Process 335 Downward Communication 343 Upward Communication 343 Horizontal Communication 344 Diagonal Communication 344 Communicating Externally 344 293 Negotiation Tactics 296 Increasing Negotiation Effectiveness 292 The Elements of Communication Nonverbal Messages 342 Win–Lose Negotiating 294 Win–Win Negotiating 295 Chapter 12 Power and Politics 316 317 Obedience and the Illusion of Power 318 Political Strategies and Tactics 320 Work Interdependence 282 Goal Differences 284 Perceptual Differences 284 Negotiations Coping with Uncertainty Centrality 317 Substitutability 318 309 Words 351 Space 352 Time 352 Barriers to Effective Communication Frame of Reference 353 Selective Listening 354 Value Judgments 354 353 Contents xi Chapter 15 Leadership 401 Source Credibility 355 Filtering 355 In-Group Language 355 Status Differences 356 Time Pressures 356 Communication Overload 356 What Is Leadership? Improving Communication in Organizations 357 Following Up 357 Regulating Information Flow 357 Face-to-Face Communication 358 Empathy 358 Repetition 359 Encouraging Mutual Trust 359 Effective Timing 359 Simplifying Language 359 Using the Grapevine 359 Ethical Communication 360 Summary of Key Points 361 Review and Discussion Questions Exercise 363 Case 365 Situational Approaches: Leaders’ Effectiveness Depends on the Situation 408 Fiedler’s Contingency Leadership Model 409 Vroom-Jago Leadership Model 410 Path–Goal Leadership Model 413 Hersey-Blanchard Situational Leadership Theory 363 Emerging Perspectives of Leadership 374 Alternatives to Rational Decision Making 425 Cross-Cultural Research 426 Summary of Key Points 427 Review and Discussion Questions Exercises 430 Case 433 379 379 Behavioral Influences on Decision Making Multicultural Leadership 380 Values 381 Risk Orientation 383 Dissonance 384 Escalation of Commitment 385 PART FIVE ORGANIZATIONAL DESIGN, CHANGE, AND INNOVATION 437 Organizational Design Models Individual versus Group Decision Making 387 Creativity in Group Decision Making 388 Techniques for Stimulating Group Creativity 389 394 420 428 Chapter 16 Organizational Structure and Design 387 415 418 Charismatic Leadership 418 Transactional and Transformational Leadership Coaching 423 Servant Leadership 424 Establish Goals and Measure Results 374 Identify and Analyze the Problem(s) 375 Develop Alternative Solutions 376 Evaluate Alternative Solutions 377 Select the Best Solution 378 Implement the Decision 378 Follow Up and Evaluate the Decision 379 Summary of Key Points 393 Review and Discussion Questions Exercises 394 Case 399 404 Intelligence 405 Personality 405 Physical Characteristics 405 Supervisory Ability 406 Job-Centered and Employee-Centered Leadership 407 Initiating Structure and Consideration 407 Critique of Trait and Behavioral Approaches 408 Types of Decisions 372 A Rational Decision-Making Process Group Decision Making 403 Trait Approaches: Leaders Are Born That Way Behavioral Approaches: Leaders’ Actions Determine Their Effectiveness 406 Chapter 14 Decision Making 371 Administrative Decision Making Intuitive Decision Making 380 401 Is Leadership Important? 440 The Mechanistic Model 440 The Organic Model 442 Designing an Organizational Structure Division of Labor 446 Delegation of Authority 447 Departmental Bases 448 The Matrix Model 452 Span of Control 454 444 439 xii Contents Designing an Organizational Structure: Additional Issues to Consider 456 Formalization 456 Centralization 456 Complexity 457 Multinational Structure and Design Virtual Organizations 460 Summary of Key Points 464 Review and Discussion Questions Exercise 466 Case 468 Forces for Change 480 Diagnosis of a Problem 482 Selection of Appropriate Methods 483 Impediments and Limiting Conditions 492 Implementing the Method 493 Evaluating Program Effectiveness 494 458 The Realities of Virtual Organizations Boundaryless Organizations 463 462 How Effective Are Change Interventions? Summary of Key Points 496 Review and Discussion Questions 497 Exercise 498 Case 500 466 Chapter 17 Managing Organizational Change 471 A General Model of Organizational Change 472 Change Agents: Forms of Intervention 474 External Change Agents 474 Internal Change Agents 474 External–Internal Change Agents Resistance to Change 475 476 Individual Resistance 476 Organizational Resistance 477 Strategies for Overcoming Resistance to Change A Model of Organizational Change and Development 479 Appendix Quantitative and Qualitative Research Techniques for Studying Organizational Behavior and Management Practice 503 Glossary 513 Endnotes 525 Indexes 478 495 575 Preface Revising and updating this textbook is always an exciting and challenging job. In completing this eleventh edition of Organizational Behavior and Management, we reviewed the most current theories, research, and organizational applications for possible inclusion. We retained the classic, influential, and long-standing work in organizational behavior. Chapter by chapter, we made a concerted effort to add several more company and other real-world examples to make the content more relevant and interesting for students. Our own teaching of organizational behavior and many excellent suggestions from the reviewers of the previous edition were factored into each phase of the revision. The major task of the author team was to produce a student-friendly, accurate, clear, and meaningful revision that will result in enhanced student learning. The student and the instructor were always in mind as we carefully revised the book. We have reviewed and considered numerous suggestions and notes from current instructors and students who use Organizational Behavior and Management, as well as from colleagues, managers, and previous users of the text. The themes and tone of these excellent ideas was to keep this book relevant, add more company examples than in previous editions, and help users apply the content to their own lives and job situations. The basic structure has been kept much as it was originally, but we have significantly updated, streamlined, and/or expanded the content of each chapter. We have, in each new edition, added more comprehensive treatment of the content base. The content in this revision has been related to events, activities, and decisions made in organizational life. We have updated all information that needed to be refreshed. Our intention in making these changes has been to offer an intensive treatment of organizational behavior that helps instructors teach easily and effectively. As dedicated teachers, we revise with fellow teachers and the student population in mind. This book was not written as a research message or as a new theoretical model. Like its predecessors, the eleventh edition of Organizational Behavior and Management contains knowledge that applies both inside and outside the classroom. Can the serious theory and research basis of organizational behavior be presented to students in an exciting, fun, and challenging way? We believe it can. Thus, we expanded the theory, research, and applications of the subject matter in the revision of the book. The eleventh edition of Organizational Behavior and Management differs from the previous editions in these ways: 1. We continue to include more domestic and global organizational examples to help students relate theory and research to actual organizations and current events. Here is a sample of the real-world organizations we added to this revision: Airbnb, Zappos, Nordstrom, Deloitte, Tesla Motors, Macy’s, Saleforce.com, Trader Joe’s, Google (and its parent company, Alphabet), Chicago White Sox baseball organization, Apple, Facebook, Underground Elephant, Huddle, Valve Corporation, Denver Broncos, Hyatt Hotels, Publix Super Markets, General Motors, Fiat Chrysler, Volkswagen (Germany), Tencent Holdings (China), Ericsson (Sweden), Nestlé (Switzerland), Kia Motors (South Korea), Cirque du Soleil (Canada), Virgin Group (Britain), and H&M (Sweden). xiii xiv Preface 2. Expanded coverage of topics relevant to managers in today’s business environment includes diversity statistics for the U.S. population and workforce over the next 40 years; the 2016 World’s Most Admired Companies; training areas where companies spent the most money in 2015; top global cities and their importance in the worldwide business environment; how to retain Millennials who tend to switch jobs every two years; looking out for Generation Z, which will make its way to the workforce soon; Volkswagen’s emissions scandal; the best places to work in 2016; companies like Adobe and GE doing away with annual performance reviews; Wells Fargo’s support and inclusion of LGBT employees in its workforce; 2016’s most valuable brands; current statistics on workplace violence, sexual harassment, and discrimination cases; increasing numbers of telecommuters and “super-commuters”; the WeChat app revolution in China; using cloud computing to connect virtual team members across the globe; and CEOs using social media to communicate to employees and customers. 3. Fundamental themes are woven throughout the book, including globalization, managing diversity and demographic changes, technological changes, total quality, and ethics and social responsibility. These themes are consistent with the recommendations for balanced subject matter coverage made by the American Assembly of Collegiate Schools of Business/International Association for Management Education. This internationally acclaimed accrediting body establishes the boundaries for appropriate topic coverage. 4. Most end-of-chapter cases have been refreshed. Two new cases have been added to replace previously used cases: Case 1.1, “REI Tells Employees to Go Outside,” and Case 10.1, “Zappos Eliminates Managers.” 5. Many of the book’s elements—Reality Check, Global OB, OB Matters, You Be the Judge, and Information You Can Use—have been updated or replaced with current topics and issues relevant to managers. The elements included in this edition are relevant, teachable, and comprehensive. 6. The complete set of materials—text, exercises, elements, and cases—stimulates students to think about how they would respond if they were in the situation being discussed or described. Reading this new edition of Organizational Behavior and Management, students become involved participants in learning about behavior and management within work settings. We have designed the book with instructional flexibility in mind. The book combines text, self-learning exercises, group participation exercises, and cases. These elements are directed at students interested in understanding, interpreting, and attempting to predict the behavior of people working in organizations. Organizational functioning is complex. No single theory or model of organizational behavior has emerged as the best or most practical. Thus, managers must be able to probe and diagnose organizational situations when they attempt to understand, interpret, and predict behavior. This edition of the text devotes considerable attention to encouraging the development of these probing and diagnostic skills. The first step in this development is for each reader to increase his or her own self-awareness. Before a person can diagnose why another person (a friend, subordinate, or competitor) is behaving in a particular way, he or she should conduct a self-analysis. This introspective first step is built into each chapter’s content and into the learning elements found at the end of chapters. The content and these elements encourage the students to relate their own knowledge and experience to the text, exercises, and cases in the book. Preface xv Framework of the Book Organizational Behavior and Management is organized into five parts containing a total of 17 chapters, one appendix, and a comprehensive glossary. The framework highlights behavior, structure, and processes that are part of life in profit and nonprofit organizations. The five parts are as follows: Part One: The Field of Organizational Behavior The first chapter, “Effective Managers Understand Organizational Behavior,” introduces the field of organizational behavior and explores the how, what, why, and when of organizational behavior as viewed and practiced by managers. Chapter 2, “International and Organizational Culture,” covers such issues as internal culture, cultural diversity, and cross-cultural research. Part Two: Understanding and Managing Individual Behavior These seven chapters focus on the individual, including topics such as “Individual Differences at Work” (Chapter 3), “Perceptions and Attributions” (Chapter 4), “Motivation” (Chapter 5), “Job Design and Performance” (Chapter 6), “Evaluation and Rewards Influence Behavior” (Chapter 7), “Managing Employee Behavior” (Chapter 8), and “Managing Individual Stress” (Chapter 9). Part Three: Group Behavior and Interpersonal Influence These two topics are explored in a three-chapter sequence: Chapter 10, “Groups and Teams”; Chapter 11, “Managing Conflict and Negotiations”; and Chapter 12, “Power and Politics.” Part Four: Organizational Processes Part Four includes three chapters: Chapter 13, “Communicating Effectively”; Chapter 14, “Decision Making”; and Chapter 15, “Leadership.” Part Five: Organizational Design, Change, and Innovation Two chapters make up the final part: Chapter 16, “Organizational Structure and Design,” and Chapter 17, “Managing Organizational Change.” Features of the Eleventh Edition The “Reality Check” and “You Be the Judge” elements start and end each chapter and are helpful for reflective analysis and debate individually or in small in-class groups. This edition includes many other teaching and discussion “elements.” We define a text element as a specific, content-based story, case, or example that is associated with and illustrates the chapter’s objectives and themes. The end-of-chapter elements include exercises and cases that were selected because of their relevance to the chapter content and because of feedback from adopters. We have purposefully woven global events, situations, and examples throughout the book’s content, elements, and end-of-chapter material. Globalization is such a vital concern today that it must be presented and covered throughout the book. Managing diversity in the workplace is an important topic, which is presented and discussed throughout the book. Ethical behavior and social corporate responsibility are topics of major concern throughout the world, especially in the wake of recent scandals. Examples, incidents, and debates that present ethical dilemmas are integrated throughout the chapters. xvi Preface The text emphasizes realism and relevance. Hundreds of real-world examples of d­ ecisions, business situations, problem solving, successes, and failures are presented. Fortune 1000 companies do not dominate this book. Smaller and medium-size firms that students may not be familiar with are also used to illustrate organizational behavior and management activities. Finally, we have taken the time and space to explain the concepts, frameworks, and studies presented in the text. It was not our intention to be an encyclopedia of terms and references, but instead to use the ideas, work, and concepts of colleagues only when they add learning value to the chapter content. The goal of each presentation is to present something of value. A “cookbook” list of terms, names, historical points of reference, or empirical studies often becomes pedantic and boring. Comments on previous editions of this text suggest that Organizational Behavior and Management is readable and teachable. We believe this is so as we actively teach using this book. The learning and knowledge enrichment elements, the Reality Checks, OB Matters, Global OB examples, Information You Can Use, You Be the Judge features, exercises, and cases, can be used by instructors in any combination that fits the course objectives, teaching style, and classroom situation. OB Matters OB Matters features are interspersed throughout the text. They focus on ethical issues, global examples, and general organizational behavior and management activities. The encounters bring the concepts to life by presenting meaningful examples of activities that tie in with the chapter content. Global OB Global OB features focus specifically on global issues, problems, solutions, and programs. These are based on a variety of individual, group, or organizational situations. Information You Can Use Information You Can Use features appear throughout the text—with at least one in each chapter. This element explains, in straightforward terms, principles of how to manage and how to lead. These principles are easy to understand and use and are based on experience, theory, and empirical research. You Be the Judge The “You Be the Judge” scenarios in each chapter present a particular problem, dilemma, or issue and require the student to make a decision and solve the dilemma, problem, or situation. These action-oriented elements are intended to increase student involvement. Our “Comment” on the dilemmas is found at the end of each chapter. Exercises Organizational Behavior and Management also includes self-learning and group exercises. Some of the exercises allow the individual student to participate in a way that enhances self-knowledge. These self-learning exercises illustrate how to gather and use feedback properly and emphasize the uniqueness of perception, values, personality, and communication abilities. In addition, a number of exercises apply theories and principles from the text in group activities. Working in groups is a part of organizational life, so these exercises introduce a touch of reality. Group interaction can generate debates, lively discussions, testing of personal ideas, and sharing of information. Preface xvii Furthermore, the exercises are designed to involve the instructor in the learning p­ rocess. Student participation allows for trying out techniques and patterns of behavior and integrating exercise materials with the text. None of the exercises requires advance preparation for the instructor, although some require returning to a particular section or model in the chapter for information. The main objective is to get the reader involved. Cases The chapters end with full-length cases. These cases reflect a blend of old- and new-economy examples, principles, and lessons. Lessons can and are still being learned from older situations, recent examples, and current front-page news incidents. These realistic, dynamic cases link theory, research, and practice. They provide an inside view of various organizational settings and dynamics. The cases, like the real world, do not have one “right” solution. Instead, each case challenges students to analyze the complexity of the work environment as if they were general managers. The cases also are an invaluable teaching tool. They encourage the individual student to probe, diagnose, and creatively solve real problems. Group participation and learning are encouraged through in-class discussion and debate. The questions at the end of each case may be used to guide the discussion. A case analysis should follow the following format: 1. Read the case quickly. 2. Reread the case using the following model: a. Define the major problem in the case in organizational behavior and management terms. b. If information is incomplete, which it is likely to be, make realistic assumptions. c. Outline the probable causes of the problem. d. Consider the costs and benefits of each possible solution. e. Choose a solution and describe how you would implement it. f. Go over the case again. Make sure the questions at the end of the case are answered, and make sure your solution is efficient, feasible, ethical, legally defensible, and can be defended in classroom debate. Other Learning Devices Learning objectives begin each chapter to help the reader anticipate the chapter’s concepts, practices, and concerns. An important part of any course is vocabulary building. Thus, the book provides a thorough glossary of key terms at the end of the book, as well as key terms highlighted and defined in the pages of each chapter. Before a quiz or test, students can use the glossary to pick out terms that they will be expected to know and use. We were determined to help the reader prepare his or her own portrait of organizational behavior and management. We hope the text, exercises, cases, and other learning and knowledge enrichment elements help each student become an adventurous explorer of how organizational behavior and management occurs within organizations. Supplementary Materials The eleventh edition includes a variety of supplementary materials, all designed to provide additional classroom support for instructors. These materials are as follows: xviii Preface McGraw-Hill Connect®: connect.mheducation.com Continually evolving, McGraw-Hill Connect® has been redesigned to provide the only true adaptive learning experience delivered within a simple and easy-to-navigate environment, placing students at the very center. ∙ Performance Analytics—Now available for both instructors and students, easy-to-decipher data illuminate course performance. Students always know how they’re doing in class, while instructors can view student and section performance at-a-glance. ∙ Personalized Learning—Squeezing the most out of study time, the adaptive engine within Connect creates a highly personalized learning path for each student by identifying areas of weakness and providing learning resources to assist in the moment of need. This seamless integration of reading, practice, and assessment ensures that the focus is on the most important content for that individual. Instructor Library The Connect Management Instructor Library is your repository for additional resources to improve student engagement in and out of class. You can select and use any asset that enhances your lecture. Instructor materials include the Instructor’s Manual, PowerPoint slides, and Test Bank and Videos. The Instructor’s Manual is organized to follow each chapter in the text. It includes chapter objectives, chapter synopses, chapter outlines with tips and ideas, and project and class speaker ideas. Organizational encounter discussion questions and suggested answers, as well as exercise and case notes, are also provided to help you incorporate these dynamic features into your lecture presentations. The Test Bank has been updated to complement the eleventh edition of the text. This testing resource contains approximately 100 true/false, multiple choice, and essay questions per chapter. Each question is classified according to level of difficulty and contains a reference to the question’s accompanying learning objective. LearnSmart®: The eleventh edition of Organizational Behavior and Management is available with LearnSmart, the most widely used adaptive learning resource, which is proven to improve grades. To improve your understanding of this subject and improve your grades, go to McGrawHill Connect® connect.mheducation.com, and find out more about LearnSmart. By helping students focus on the most important information they need to learn, LearnSmart personalizes the learning experience so they can study as efficiently as possible. SmartBook®: An extension of LearnSmart, SmartBook is an adaptive eBook that helps students focus their study time more effectively. As students read, SmartBook assesses comprehension and dynamically highlights where they need to study more. Manager’s Hot Seat: Now instructors can put students in the hot seat with access to an interactive program. Students watch real managers apply their years of experience when confronting unscripted issues. As the scenario unfolds, questions about how the manager is handling the situation pop up, forcing the student to make decisions along with the manager. At the end of the scenario, students watch a post-interview with the manager to view how their responses Preface xix matched up to the manager’s decisions. The Manager’s Hot Seat videos are now available as assignments in Connect. Self-Assessments Students can explore inclinations and preferences regarding organizational behavior topics such as active listening, creativity, decision making, and diversity. Contributors The authors wish to acknowledge the many scholars, managers, reviewers, and researchers who contributed to every edition of Organizational Behavior and Management. In particular, we would like to thank the following reviewers of this edition, whose valuable feedback helped guide this revision of the book: James L. Hall, Santa Clara College; Debra D. Kuhl, Pensacola State College; David Robertson, Syracuse University and Le Moyne College; and William J. Waxman, Edison State Community College. We are indebted to those individuals who granted permission for the use of exercises and cases. In addition, adopters of former editions have made invaluable suggestions, offered materials to incorporate, and informed us about what worked well. These adopters are too numerous to list, but we appreciate the votes of confidence, the willingness to help us improve the book, and the obvious dedication each of you have to teaching. Michael Dutch, professor of business administration at Guilford College, updated and revised the Instructor’s Manual that accompanies this edition. We appreciate his conscientiousness and high-quality work. In addition, sections of the book were shaped significantly by two colleagues, James Donnelly, Jr., and James Gibson at the University of Kentucky. These two colleagues have shared and put into practice a common belief that teaching and learning about organizational behavior and management can be an exhilarating and worthwhile experience. Roger Blakeney, Dick DeFrank, Bob Keller, Tim McMahon, Dale Rude, and Jim Phillips, all at the University of Houston; Dave Schweiger at the University of South Carolina; and Art Jago at the University of Missouri have exchanged materials, ideas, and opinions with the authors over the years, and these are reflected in these pages. Finally, the book is dedicated to our current and former organizational behavior and management students at Texas State University, the University of Maryland, the University of Kentucky, the University of North Carolina at Wilmington, Florida Atlantic University, and the University of Houston. We also dedicate this textbook to the students who are becoming the managers and leaders so vital to the improvement of the overall quality of life in society in the 21st century. Robert Konopaske John M. Ivancevich Michael T. Matteson P A R T O N E The Field of Organizational Behavior © Shutterstock/Rawpixel.com, RF 1. EFFECTIVE MANAGERS UNDERSTAND ORGANIZATIONAL BEHAVIOR 2. INTERNATIONAL AND ORGANIZATIONAL CULTURE What really binds men together is their culture, the ideas and the standards they have in common. Ruth Benedict, Patterns of Culture (1934) C H A P T E R O N E Effective Managers Understand Organizational Behavior Learning Objectives After completing Chapter 1, you should be able to: © Klaus Tiedge/Getty Images, RF • Summarize key contributions from the ­evolution of management. • Discuss why it is important to understand ­organizational behavior. • Explain how systems theory relates to ­organizational effectiveness. • Analyze the environmental forces affecting today’s management practices. • Understand how to frame the study of ­organizational behavior. Tony Hsieh, CEO of Zappos, has built a thriving and successful online shoe and retail business by changing the rules of how to organize, motivate, and lead employees. Over the past 15 years or so, Hsieh and his team have built the online retailer into a major success story while having a lot of fun along the way. In 2009, nine years after he co-founded the company, Amazon purchased Zappos for $1.2 billion.1 Still at the helm of Zappos today, Hsieh’s effectiveness as a manager and leader derive partly from his knowledge and use of organizational behavior principles. He understands how to inspire and motivate individuals, both employees as well as customers. Hsieh and his team carefully select employees who fit well with and contribute to the firm’s high performance, fun team atmosphere. In those instances when any new employees want to leave the company after they complete training, they are offered a $2,000 “bonus to quit.”2 The organizational processes at Zappos are focused on empowering employees and giving them the tools and support to succeed. The company is flexible and adapts to the evolving needs of ­customers and the online retail market. Hsieh believes in treating both employees and customers well, compared to many businesses that place most of their focus on the customer. A major goal of Zappos is to treat its employees and customers with integrity, honesty, and commitment.3 Hsieh encourages employees to develop themselves by checking out books stored at the company, post questions to the “Ask Anything” newsletter, make suggestions to improve how things get done, and contribute to Zappos’s fun and sometimes zany work environment. Employees have been known to volunteer to shave their heads (in a mullet style or in the shape of a “No. 1”), act in unconventional ways during job interviews, wear colorful wigs, and blow horns and ring cowbells to entertain tour groups who visit the company.4 3 Reality Check How much do you know about organizations? 1. True or false: Eighteen of the top 25 largest (in market value) global companies are from the United States. a. True b. False 2. The first comprehensive general theory of management applied to organizations was offered by . a. Henry Ford b. Thomas Watson c. Henri Fayol d. Thomas Edison 3. An American icon who emphasized the importance of quality production and products was . a. W. Edwards Deming b. Walt Disney c. Sam Walton d. Mark Stine 4. The most publicized study of organizations is called the . a. Los Alamos Experiment b. Tavistock Studies c. Hawthorne Studies d. Dell Analysis 5. Organizational behavior as a field is considered to be . a. outdated b. same as management c. multidisciplinary d. only applicable in developed countries Employees aren’t the only stakeholders who benefit from Hsieh’s approach. Customers are spoiled when they call Zappos’s customer service representatives who are encouraged to give customers a “Wow!” experience. Surprisingly, customer service employees at Zappos aren’t told how long they can spend on the phone with customers. In a time when many call-in customer service operations are tightly controlled or outsourced, Hsieh encourages his employees to stay on the phone with a customer for as long as it takes to connect with them and make them happy (the longest recorded phone call lasted six hours). Employees have been known to give customers free shipping both ways, send flowers and surprise coupons, write thank-you notes, or even help a customer find a pizza place that delivers all night.5 Compared to Tony Hsieh, some might see Jack Welch, former chief executive officer of General Electric, as a traditional hard-edge authoritarian manager. By all accounts, there seems to be some truth in that description. In his early days, Welch had a reputation for eliminating entire layers of employees. He was referred to as “Neutron Jack.” People were eliminated, but the firm’s buildings remained intact. Eventually, however, Welch learned that the human being is essential and the key to an organization’s success: The talents of our people are greatly underestimated and their skills are underutilized. Our biggest task is to fundamentally redesign our relationship with our employees. The objective is to build a place where people have the freedom to be creative, where they feel a sense of accomplishment—a place that brings out the best in everybody.6 4 Chapter 1 Effective Managers Understand Organizational Behavior 5 The key to managing people in effective ways that lead to profits, productivity, and innovation ultimately lies in the manager’s perspective. Pfeffer captured the importance of viewing people as assets by posing a number of questions and issues: When managers look at their people, do they see costs to be reduced? Do they see reluctant employees prone to opportunism, shirking, and free riding, who can’t be trusted and who need to be closely controlled through monitoring, rewards, and sanctions? . . . Or do they see intelligent, motivated, trustworthy individuals—the most critical and valuable strategy assets their organizations can have? . . . With the right perspective, anything is possible. With the wrong one, change efforts and new programs become gimmicks, and no amount of consultations, seminars, and slogans will help.7 Hsieh’s, Welch’s, and Pfeffer’s views about how to view and treat human talent are critical to the overall success of any organization. In addition to treating employees as assets (and not liabilities), managers and leaders will need other skills and competencies. The next generation of leaders will need to be fast, agile, continuously learn, and stay in front of their competition, whether it’s local, national, or global. Foreign language ability, an international business perspective, and a strong knowledge of technology and the law will also help. Since change is so widespread and constant, managers will have to be entrepreneurial. The core qualities needed to create the ideal work atmosphere begin with intelligence, passion, a strong work ethic, a team orientation, and a genuine concern for people.8 The OB Matters discusses further some major drivers of change that today’s managers must address to be effective. The Evolution of Management The formal and modern study of management started around 1900.9 However, the management process probably first began in the family organization, later expanded to the tribe and community, and finally pervaded the formalized political units such as those found in early Babylonia (5000 B.C.). The Egyptians, Chinese, Greeks, and Romans were all noted in history for major managerial feats such as the building of the pyramids, organizing governments, planning military maneuvers, operating trading companies that traversed the world, and controlling a geographically dispersed empire. However, management as a process was based on trial and error in order to accomplish specific goals, with little or no theory and virtually no sharing of ideas and practices. This lack of sharing slowed the influence of management practices throughout the world. This trial-and-error approach to management continued during the Industrial Revolution in England that lasted between 1700 and 1785.10 As a nation, England changed dramatically from a rural society to the workshop of the world. It was the first nation to successfully make the transition from a rural-agrarian society to an industrial-commercial society.11 Management of the workshops of England was characterized by an emphasis on efficiency, strict controls, and rigid rules and procedures. A new industrial era began in the United States around the time of the Civil War. There was a dramatic expansion of mechanical industries such as the railroad. In addition, large industrial manufacturing complexes employed hundreds of thousands of workers and grew in importance. Attempts to better plan, organize, lead, and control the work of employees in these complexes led managers to discuss and write about their ideas and managerial problems in engineering journals. In 1881, a new way to study management started with a $100,000 gift by Joseph W ­ harton to the University of Pennsylvania to establish a management department in a college. O B M A T T E R S CHANGING MARKETS REQUIRE AGILE MANAGERS In this fast-paced global business environment, managers must be agile and flexible to help companies sustain competitive advantage and stay one step ahead. To be successful, managers will need to harness the power of information technology and human capital. The competitive forces confronting managers include technological changes and increasing globalization. These driving forces are characterized by greater knowledge and the use of information, the liberalization of developing economies (e.g., India, China, and some African nations), and new economic alliances and regulations. A good way to gain perspective on how quickly environmental and competitive forces change is to examine the video rental industry. ­Until a few years ago, large brick-and-mortar firms like Blockbuster and Hollywood Video stores dominated the industry. Customers drove to a local store, rented a video to take home and watch, and then drove back to drop it off within a day or two to avoid late fees. Netflix changed the industry by offering a monthly fee-based mail exchange service, which allowed customers to watch more movies each month without having to drive to a store to rent them. Then ­Netflix went a step further, creating an online streaming service to complement its mail exchange service. Customers pay a monthly subscription fee to download movies, TV shows, games, and original programming. Competition in the video streaming industry continues to grow as Google Play, Apple TV, Amazon Prime, Hulu Plus, and others allow consumers to download content and stream it on a variety of devices, including TVs, PCs, tablets, and mobile devices. Estimates put annual revenues from video streaming at $14 billion by 2020. As seen with video rentals, markets can change quickly. Startups, strategic alliances, mergers, and acquisitions are changing how domestic and global markets operate. The key to competing globally is human capital. To attract, develop, and retain human capital, organizations must make continuous learning available to their employees. Companies must identify critical knowledge, transfer this information to employees, and update it on a continuous basis. Knowledge is critical on the job, working in teams, interacting with internal and external stakeholders, and learning more about competitors. Knowledge sharing is another important component of staying competitive. Ericsson, a Swedish electronics firm with offices around the globe, encourages knowledge sharing through information technology. Many of the company’s training programs provide creative learning tools and equip employees with the skills they will need to provide effective service to customers. The company has a technical certification program that ensures its people achieve or exceed industry standards; a sales excellence program that allows customerfacing professionals to acquire a deep understanding of customers and their environment in three distinct training phases; and the Ericsson Academy, which provides online learning opportunities that complement the company’s formal programs and everyday continuous learning. Sources: Elena Holodny, “The 13 Fastest-Growing Economies in the World,” Business Insider, http://www.businessinsider.com, accessed February 12, 2016; Elyse Betters, “Which Is the Best Movie Streaming Service in the US?” PocketLint, http://www.pocket-lint.com, accessed February 12, 2016; Felix Richter, “Online Video—A Billion Dollar Opportunity,” Statista, http://statista.com, accessed February 12, 2016; company website, “Training Programs,” http:// www.ericsson.com, accessed February 12, 2016; Thomas H. Davenport and Laurence Prusak, What’s the Big Idea? Creating and Capitalizing on the Best Management Thinking (Boston: Harvard Business School Press, 2003). The management curriculum at that time covered such topics as strikes, business law, the nature of stocks and bonds, and principles of work cooperation. Scientific Management scientific management A body of literature that emerged during the period 1890–1930 that reports the ideas and theories of engineers concerned with such problems as job definition, incentive systems, and selection and ­training. 6 In 1886, an engineer named Frederick W. Taylor presented a paper titled “The Engineer as an Economist” at a national meeting of engineers. This paper and others prepared by Taylor expressed his philosophy of scientific management.12 Taylor’s major thesis was that maximum good for society can come only through the cooperation of management and labor in the application of scientific methods. He stated that the principles of management were to: ∙ Develop a science for each element of an employee’s work, which replaces the old ruleof-thumb method. ∙ Scientifically select and then train, teach, and develop the worker, whereas in the past a worker chose the work to do and was self-trained. ∙ Heartily cooperate with each other to ensure that all work was done in accordance with the principles of science. ∙ Strive for an almost equal division of work and responsibility between management and nonmanagers. Chapter 1 Effective Managers Understand Organizational Behavior 7 These four principles constitute Taylor’s concept of scientific management. Some regard him as the father of modern management. Regardless of the amount of credit he deserves, Taylor was a key figure in elevating the role of management in organizations. He has had a lasting impact on a unified, coherent way to improve the way managers perform their jobs. Administrative Management Henri Fayol, a French industrialist, presented what is considered the first comprehensive statement of a general theory of management. First published in France in 1916,13 Fayol’s Administration Industrielle et Générale was largely ignored in the United States until it was translated into English in 1949. Fayol attributed his success in turning around and managing a large mining firm to his system of management, which he believed could be taught and learned. He emphasized the importance of carefully practicing efficient planning, organizing, commanding, coordinating, and controlling. These five pillars of management (the modern term “leading” has replaced the term “commanding”) are frequently used as the foundation for most introductory management and organizational behavior textbooks. Fayol’s approach was a significant contribution in that it presented three important developments that have had a lasting impact on the field. 1. Management is a separate body of knowledge that can be applied in any type of ­organization. 2. A theory of management can be learned and taught. 3. There is a need for teaching management in colleges. Why Study Organizational Behavior? organizational behavior Drawing on psychology, sociology, political science, and cultural anthropology, OB is the study of the impact that individuals, groups, and organizational structure and processes have on behavior within organizations. Why do employees behave as they do in organizations? Why is one individual or group more productive than another? Why do managers continually seek more effective ways to design jobs and delegate authority? Why are some organizations (e.g., Netflix) more innovative than others (e.g., Blockbuster)? These and similar questions are important to the relatively new field of study known as organizational behavior. Understanding the behavior of people in organizations—­ productivity, teamwork, work-life balance, job stress, and career progression—are top concerns of all managers and leaders. People make the difference. Based on the fact that organizational behavior (OB) has evolved from multiple disciplines, we will use the following definition of OB throughout this book: Drawing on psychology, sociology, political science, and cultural anthropology, OB is the study of the impact that individuals, groups, and organizational structure and processes have on behavior within organizations. This multidisciplinary view of organizational behavior illustrates a number of points. First, OB is a way of thinking. Behavior is viewed as operating at individual, group, and organizational levels. This approach suggests that when studying OB, we must identify clearly the level of analysis being used—individual, group, and/or organizational. Second, OB is multidisciplinary. This means that it utilizes principles, models, theories, and methods from other disciplines. The study of OB is not a discipline or a generally accepted science with an established theoretical foundation. It is a field that only now is beginning to grow and develop in stature and impact. Third, there is a distinctly humanistic orientation within organizational behavior. People and their attitudes, perceptions, learning capacities, 8 Part One The Field of Organizational Behavior feelings, and goals are of major importance to the organization. Fourth, the field of OB is performance-oriented. Why is performance low or high? How can efficiency and effectiveness be enhanced? Can training increase on-the-job performance? Practicing managers face these important issues. Fifth, the scientific method is used to study OB variables and relationships. As the scientific method has been used in conducting research on organizational behavior, a set of principles and guidelines on what constitutes good research has emerged.14 Finally, the field is application oriented. It is concerned with providing useful answers to questions that arise in the context of managing organizations.15 Exhibit 1.1 offers a framework and overview of the multiple disciplines that have contributed to the study of OB and the application of OB principles in organizational settings. EXHIBIT 1.1 Contributions to the Study of Organizational Behavior Behavioral Psychology Sociology Concept Contribution Values Self-concept Attributions Learning Motivation Personality Emotions Perception Training Leadership effectiveness Job satisfaction Individual decision making Performance appraisal Attitude measurement Employee selection Work design Work stress Unit of Analysis Individual Group dynamics Work teams Communication Power Conflict Negotiations Intergroup behavior Group Formal organization theory Organizational technology Organizational change Organizational culture Social Psychology Behavioral change Attitude change Communication Group processes Group decision making Comparative values Comparative attitudes Cross-cultural analysis Anthropology Organizational culture Organizational environment Political Science Conflict Impressions Coalitions Alliances Joint ventures Intraorganizational politics Power Output Organization Organizational Behavior Chapter 1 Effective Managers Understand Organizational Behavior 9 Leaders and Organizational Behavior Changes occurring within and outside of institutions present major challenges to leaders, managers, and administrators in organizations. Terms such as social responsibility, cultural diversity, ethics, global competitiveness, social networking, and reengineering are used freely by experts and nonexperts. Each of these concepts reinforces the fact that leaders are being asked to perform effectively in a changing world. Another challenge that leaders face is the increased emphasis that consumers are placing on value.16 The trend among consumers is to consider the total value of a product or service. Today, more than ever, customers expect organizations to be responsive to their needs, to provide prompt service and delivery, and to produce top quality goods or services at the best price possible. Along with an increasingly diverse workforce and demanding customers, leaders must contend with changes in both domestic and global markets and competition. The global market expects easy access to high quality products and services at a competitive price. Leaders are being asked to establish and manage effective employee teams, departments, or organizations that can respond and compete globally. Everything facing a leader in organizations today is constantly changing. Properly aligning the human resources of the organization with the changing conditions requires an understanding of such phenomena as the organization’s environment, individual characteristics, group behavior, organizational structure and design, and organizational change processes. The modern-day goal of aligning human resources with organizational factors was initiated with the Hawthorne studies. The Hawthorne Studies From 1900 to 1930, Taylor’s concept of scientific management dominated thought about management. His approach focused on maximizing worker output. However, Taylor’s emphasis on output and efficiency didn’t address employees’ needs, leading some trade unions to resist implementation of scientific management principles. Mary Parker Follett was opposed to Taylor’s lack of specific attention on human needs and relationships in the workplace. She was one of the first management theorists to promote participatory decision making and decentralization. Her view emphasized individual and group needs. The human element was the focus of Follett’s view about how to manage. However, she failed to produce empirical evidence to support her views. Industry leaders wanted concrete evidence that focusing on human resources would result in higher productivity. The ­Hawthorne studies, though flawed, provoked many managers and academics to focus on employees’ needs, attitudes, and behaviors. A team of Harvard University researchers was asked to study the activities of work groups at Western Electric’s Hawthorne plant outside of Chicago (Cicero, Illinois).17 Before the team arrived, an initial study at the plant examined the effects of illumination on worker output. It was proposed that “illumination” would affect the work group’s output. One group of female workers completed its job tasks in a test room where the illumination level remained constant. The other study group was placed in a test room where the amount of illumination was changed (increased and decreased). In the test room where illumination was varied, worker output increased when illumination increased. This, of course, was an expected result. However, output also increased when illumination was decreased. In addition, productivity increased in the control-group test room, even though illumination remained constant throughout the study. The Harvard team was called in to solve the mystery. The team concluded that ­something more than pay incentives was improving worker output within the work groups. After ­conducting 10 Part One The Field of Organizational Behavior additional studies, the researchers uncovered what is referred to as the “Hawthorne effect” ­operating within the study groups.18 That is, the workers felt important (and increased their productivity) because someone was observing and studying them at work. For another eight years, Elton Mayo, Fritz Roethlisberger, and William Dickson, leaders of the Harvard study team, continued their research of over 20,000 Western Electric employees at the Hawthorne plant. They found that individual behaviors were modified within and by work groups. In a study referred to as the “bank wiring room,” the Harvard researchers again faced perplexing results. The study group completed only two terminals per worker daily. This was considered to be a low level of output. The bank wiring room workers appeared to be restricting output. The work group members were friendly, got along well on and off the job, and helped each other. There appeared to be a practice of protecting the slower workers. The fast producers did not want to outperform the slowest producers. The slow producers were part of the team, and fast workers were instructed to “slow it down.” The group formed an informal production norm of only two completed boards per day. The Harvard researchers learned that economic rewards did not totally explain worker behavior. Workers were observant, complied with norms, and respected the informal social structure of their group. The researchers also learned that social pressures could restrict output. Interviews conducted years after the Hawthorne studies with a small number of actual study participants and a reanalysis of data raised doubts about a number of the original conclusions.19 The conclusion that supportive managers helped boost productivity is considered incorrect by critics. Instead, the fear of job loss during the Great Depression and managerial discipline, not the practices of supportive managers, are considered responsible for the higher rate of productivity in the relay assembly test room experiments. Despite the criticism, the Hawthorne studies are still considered the major impetus behind the emphasis on understanding and dealing with human resources. Since the 1930s, the Hawthorne studies are perhaps the most-cited research in the applied behavioral science area, though they are not referred to as the most rigorous series of studies. Nonetheless, the Hawthorne studies did point out that workers are more complex than the economic theories of the time proposed. Workers respond to group norms, social pressures, and observation. These were important revelations that changed the way management viewed employees and paved the way for more modern ways of viewing the impact of individuals, groups, and organization structures and processes on organizational behavior. One of those modern views is systems theory, which is discussed next. Systems Theory and Organizational Effectiveness systems theory A theory stating that an organization is a managed system that changes inputs into outputs. inputs Goods and services (raw materials, human resources, energy, etc.) organizations take in and use to create products or services. Systems theory suggests that an organization is a managed system that changes inputs into outputs. It enables managers to describe the behavior of organizations both internally and externally. Internally, you can see how and why people within organizations perform their individual and group tasks. Externally, you can relate the transactions of organizations with other organizations and institutions. All organizations acquire resources from the outside environment of which they are a part and, in turn, provide goods and services demanded by the larger environment. Managers must deal simultaneously with the internal and external aspects of organizational behavior. This essentially complex process can be simplified, for analytical purposes, by employing the basic concepts of systems theory. In systems theory, the organizations are seen as one element of a number of elements that act interdependently. The flow of inputs and outputs is the basic starting point in describing the organization. In the simplest terms, the organization takes resources (inputs) Chapter 1 Effective Managers Understand Organizational Behavior 11 EXHIBIT 1.2 The Basic Elements of a System Inputs Process Outputs Environment outputs The products and services (smartphones, food, social networking sites, etc.) that organizations create. from the larger system (environment), processes these resources, and returns them in changed form (output). Exhibit 1.2 displays the fundamental elements of the organization as a system. The concept of organizational effectiveness presented in this book relies on systems theory. Two main conclusions suggested by systems theory are: (1) effectiveness criteria must reflect the entire input-process-output cycle, not simply output, and (2) effectiveness criteria must reflect the interrelationships between the organization and its outside environment. Thus: Organizational effectiveness is an all-encompassing concept about how products or services are produced or provided. Much additional research is needed to develop knowledge about the components of effectiveness. There is little consensus about these relevant components, about the interrelationships among them, and about the effects of managerial action on them.20 In this textbook we attempt to provide the basis for asking questions about what constitutes effectiveness and how the qualities that characterize effectiveness interact. According to systems theory, an organization is an element of a larger system, the environment. With the passage of time, every organization takes, processes, and returns resources to the environment. The ultimate criterion of organizational effectiveness is whether the organization survives in the environment. Survival requires adaptation, and adaptation often involves predictable sequences. As the organization ages, it probably will pass through different phases. It forms, develops, matures, and declines in relation to environmental circumstances. OrganizaInformation You Can Use tions and entire industries rise and fall. Today, the mobile comWAYS TO IM PR OV E EF F EC T I V ENESS puting industry is on the rise, and the steel industry is declining. Marketing experts acknowledge the existence of product–­ Many high-performance, effective organizations market life cycles. Organizations also seem to have life cycles. ­engage in the following managerial practices: Consequently, the criteria of effectiveness must reflect the 1. Provide opportunities for training, development, stage of the organization’s life cycle.21 For example, a grocery and continuous learning. store that has been in business for 30 years (maturity stage) 2. Share information often with employees. needs to focus on being efficient in order to remain competitive 3. Encourage cooperation across teams, and survive. departments, and the organization. Managers and others with interests in the organization must 4. Link compensation to performance. have indicators that assess the probability of the organization’s 5. Avoid layoffs. survival. In actual practice, managers use a number of indicators of long-run survival. Among these indicators are measurements 6. Role model positive behaviors and attitudes. of productivity, efficiency, accidents, turnover, absenteeism, 7. Respect differences across employees. quality, rate of return, morale, engagement, and employee satis8. Listen to employees’ and other stakeholders’ faction.22 The overarching criterion that cuts across each effecconcerns and ideas. tiveness dimension is quality. Unless c­ ustomers perceive quality 12 Part One The Field of Organizational Behavior in ­products or services, there will be no survival. Any of these criteria can be relevant for particular purposes. For simplicity, we will discuss six popular criteria of effectiveness. They are quality, productivity, efficiency, satisfaction, adaptiveness, and development. Quality J. M. Juran and W. Edwards Deming, in 1950, were prophets without recognition in their own country, the United States. These two Americans were pioneers in quality and emphasized the importance of quality long before it was popular to do so.23 Deming is the most recognized guru of statistical quality control (SQC). He is the namesake of Japan’s most prestigious quality award, the Deming Prize, created in 1951. Juran is best known for his concept of total quality control (TQC). This is the application of quality principles to all company programs, including satisfying internal customers. In 1954 Juran first described his method in Japan. He became an important inspiration to the Japanese because he applied quality to everyone from the top of the firm to the clerical staff. Today is different. Inspired by the teachings of these two pioneers, many U.S. leaders and managers believe that to survive, organizations must provide high quality and reliable products and services, as well as treat customers in a close-to-perfect manner.24 More than any other single event, the 1980 NBC-TV White Paper, “If Japan Can . . . Why Can’t We?” introduced the importance of quality to the American public. The television program showed how, from 1950 to 1980, the Japanese had risen from the ashes of World War II to become an economic giant with companies like Toyota, Honda, and Sony turning out products of superior quality. Japanese organizational effectiveness centered on the notion of quality. The Japanese interpret quality as it relates to the customer’s perception. Customers compare the actual performance of the product or evaluate the service being provided to their own set of expectations. The product or service either passes or fails. Thus, quality has nothing to do with how shiny or good looking something is or with how much it costs. Quality is defined as meeting customers’ needs and expectations. In today’s competitive global world, the effective company is typically the one that provides customers with consistently high quality products or services. According to Fortune magazine’s 2016 list of the World’s Most Admired Companies in terms of quality, Apple, Alphabet (Google’s corporate parent), Amazon.com, Berkshire Hathaway, and Walt ­Disney earned the top five spots.25 These companies know that to stay in business (survival in effectiveness terms), the customer must be kept happy and satisfied. In many organizations, quality is now the top priority.26 For example, Kia Motors’ fun and hip vehicle, Soul, won first place in the J.D. Power and Associates 2015 Initial Quality Study for the compact multipurpose vehicle segment.27 Kia Motors is designing and selling cars that are not only fuel-efficient and fun to drive, but also perceived as having higher levels of quality and reliability than in the past.28 Kia and its sister company, Hyundai, recently surpassed their Japanese counterparts in terms of vehicle quality.29 The companies are targeting an increase in global sales growth of about 2 percent in 2016.30 Productivity As used here, productivity reflects the relationship between inputs (e.g., hours of work, effort, use of equipment) and output (e.g., smartphones produced, customer complaints handled, trucks loaded). The concept excludes any consideration of efficiency, which is defined below. The measures of productivity, such as profit, sales, market share, students graduated, patients released, documents processed, clients serviced, and the like, depend upon the type of industry or institution that is being discussed. Every institution has Chapter 1 Effective Managers Understand Organizational Behavior 13 o­ utputs and inputs that need to be in alignment with the organization’s mission and goals. These measures relate directly to the output consumed by the organization’s customers and clients. Efficiency Efficiency is defined as the ratio of outputs to inputs. The short-run criterion focuses attention on the entire input-process-output cycle, yet it emphasizes the input and process elements. Among the measures of efficiency are rate of return on capital or assets, unit cost, scrap and waste, downtime, occupancy rates, and cost per patient, per student, or per client. Measures of efficiency inevitably must be in ratio terms; the ratios of benefit to cost or to time are the general forms of these measures. Satisfaction The idea of the organization as a social system requires that some consideration be given to the benefits received by its participants as well as by its customers and clients. Satisfaction and morale are similar terms referring to the extent to which the organization meets the needs of employees. We use the term satisfaction to refer to this criterion. Measures of satisfaction include employee attitudes, turnover, absenteeism, tardiness, and grievances. Adaptiveness Adaptiveness is the extent to which the organization can and does respond to internal and external changes. Adaptiveness in this context refers to management’s ability to sense changes in the environment as well as changes within the organization itself. Ineffectiveness in achieving production, efficiency, and satisfaction can signal the need to adapt managerial practices and policies. Or the environment may demand different outputs or provide different inputs, thus necessitating change. To the extent that the organization cannot or does not adapt, its survival is jeopardized. Development This criterion measures the ability of the organization to increase its capacity to deal with environmental demands. An organization must invest in itself to increase its chances of survival in the long run. The usual development efforts are training programs for managerial and nonmanagerial personnel. In 2015, U.S. companies increased spending on the ­following training areas (starting with the area with the greatest increase):31 ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ Management/supervisory training Onboarding (process of socializing new employees into organization) Customer service training Interpersonal skills (e.g., communication and teamwork) IT/systems training Sales training Mandatory/compliance training Professional/industry-specific training Executive development Desktop application training There are several environmental forces that can influence a manager’s ability to achieve organizational effectiveness. 14 Part One The Field of Organizational Behavior Environmental Forces Reshaping Management Practice power The ability to get things done in the way the organization wants them to be done. globalism The interdependency of transportation, distribution, communication, and economic networks across international borders. diversity Refers to those attributes that make people different from one another. A number of forces are reshaping the nature of managing within organizations. Organizations that have recognized these forces are working to channel their managerial talents to accomplish goals by using their knowledge about each of six major forces.32 The first force at work is the power of human resources, or the organization’s ability to get things done in the way it wants them to be done. The way managers and employees work, think, and behave exerts a major influence on the overall effectiveness and success of an organization. Over the next several years as baby boomers (those born between 1946 and 1964) retire, organizations of all types will be facing a shrinking pool of skilled job candidates and a shortage of technically skilled workers. Some of the key human resource challenges will be in the areas of recruiting skilled talent, training and developing employees, transferring knowledge from senior to junior employees through mentoring, and retaining high performing employees as job opportunities become more available. To compete effectively in the 21st century, globalism must be understood and leveraged. Globalism is characterized by networks that interconnect countries, institutions, and people. Of the largest 25 global corporations in terms of market value in 2015, 12 are from the United States; 7 from China; 2 from Germany; and 1 each from Japan, the Netherlands, the UK, and South Korea.33 As a result of global integration, the growth rate of world trade has increased faster than that of world gross domestic product. That is, the trading of goods and services among nations has been increasing faster than the actual world production of goods. To survive the fast-paced changes in the global world, firms must make not only capital investments but also investments in people. How well a firm recruits, selects, retains, and motivates a skilled workforce will have a major impact on its ability to compete in the more globally interdependent world. The Global OB feature describes the top worldwide cities as ranked by global consulting firm A.T. Kearney. The company looked at various metrics across several dimensions to determine not only the top-ranked cities across the globe in 2015, but also the cities that have the potential to exert their global influence in the near future. As will be discussed in greater detail in Chapter 3, a diverse workforce is fast becoming a reality in the United States. As America’s workforce changes, managers and co-workers need to continuously learn more about each other so that a productive and respectful work culture can be created and nurtured. While Japan and China are basically homogeneous societies in terms of race, the United States is diverse and has been rapidly increasing its workforce diversity since the 1970s. Not only is racial and ethnic diversity growing, but also more women, older workers, and people with disabilities (including wounded veterans) are entering the workforce in increasing numbers. The workforce in 2014 was quite diverse with 47 percent being female, 16 percent Hispanic, 12 percent African American, and 6 percent Asian.34 From 2014 to 2024, older workers (aged 55 and over), Hispanics, and Asians are expected to be the fastest-growing groups in the U.S. labor force. About 40 percent of the U.S. workforce is likely to be nonwhite by the year 2024.35 The percentage of women in the workforce will remain relatively steady at close to 47 percent. This increase of diversity (older, minority, and female employees) in the labor force presents several opportunities for U.S. organizations. However, unless they properly train, prepare, and compensate minorities and women for the highest-level jobs, organizations are not going to be competitive. Also, organizations need to think of creative and flexible staffing approaches to retain experienced older workers who want to continue working while potentially dealing with health concerns or enjoying partial retirement. G L O B A L O B TOP GLOBAL CITIES TRANSCEND BORDERS Several events over the past few years demonstrate how global the world has become. For example, the refugee migration from Syria to European countries, the glut of oil, and the strength of the U.S. dollar against other world currencies affect people, financial markets, and institutions on a worldwide basis. Tracking this “borderless” world, A.T. Kearney, a global management consulting firm, has developed an in-depth analysis of the ­top-performing cities today and those with the greatest potential for the future. For the Global Cities Index, the study analyzed 125 cities around the world, measuring 27 metrics across five dimensions: business ­activity (flow of capital, market dynamics, and major companies present), ­human capital (education levels), information exchange (access to ­information via Internet and other media sources), cultural experience (access to major sporting events, museums, and other expos), and ­political engagement (political events, embassies, and think tanks). New York topped the list, followed by London, Paris, Tokyo, Hong Kong, Los Angeles, Chicago, Singapore, Beijing, and ­Washington, DC, rounding out the top 10 cities based on current ­performance. The Global Cities Outlook portion of the study measured 13 leading indicators across four dimensions to determine the likelihood of these cities becoming global hubs: personal well-being (safety, health care, inequality, and environmental performance), economics (long-term investments and gross domestic product [GDP]), innovation (level of ­entrepreneurship through patents, private investments, and business incubators), and governance (proxy for long-term stability through speed of change Rapid change is found in many areas of business, including technology, demographics, globalism, and new products and services. psychological contract An unwritten agreement between an employee and the organization that specifies what each expects to give to and receive from the other. transparency, quality of bureaucracy, and ease of doing business). San Francisco ranked first, followed by London, Boston, New York, Zurich, Houston, Munich, Stockholm, Amsterdam, and Seoul. Interestingly, 16 global cities placed in the top 25 rankings of both indexes and are considered “Global Elite”—well-known centers for commerce, culture, and politics. In the Americas, New York, Los ­Angeles, Chicago, Toronto, San Francisco, and Boston are considered elite. In Europe, five cities—London, Paris, Brussels, Berlin, and ­Amsterdam—made elite status. And in the Asia-Pacific region, Tokyo, ­Singapore, Seoul, Sydney, and Melbourne top the elite ranking for that area. More cities around the world are making great strides to become global. Cities are becoming stronger and increasingly exerting influence that transcends country borders. Much like countries that formed “power groups” like the G20 and NATO, cities are organizing into consortiums that will greatly influence business, politics, people, education, and the environment in the near future. Sources: Mike Hales, Andrés Mendoza Pena, Erik Peterson, and Johan Gott, “Global Cities 2015: The Race Accelerates,” A.T. Kearney, http://www.atkearney. com, accessed February 15, 2016; “A.T. Kearney Global Cities 2015 Identifies 16 Elite Cities Based on Their Current Performance and Future Potential,” ­PRNewswire, http://www.prnewswire.com, accessed February 15, 2016; Scott Leff and Brittany Petersen, “Beyond the Scorecard: Understanding Global City Rankings,” The Chicago Council on Global Affairs, http://www.thechicagocouncil. org, accessed February 15, 2016; Laura Smith-Spark, “European Migrant C ­ risis: A Country-by-Country Glance,” CNN, http:www.cnn.com, accessed ­February 15, 2016; Parag Khanna, “When Cities Rule the World,” McKinsey & Company, http://www.mckinsey.com, accessed February 15, 2016. The speed of change is another crucial force to recognize. Smartphones, PC tablets, social networking sites, the Internet, genetic engineering, space travel, and more demanding consumers who want better-quality products and services at lower prices and on time are some of the changes sweeping the world. Identifying, understanding, and responding quickly to changes in the environment are now a part of a manager’s job requirement. The elements of change include almost instantaneous communication and computation.36 Technology is facilitating online connectivity through such social networking sites as Facebook, Twitter, and LinkedIn that has resulted in the shrinking of space and distance. Intangible value of all kinds, such as services or products that “go viral” and reach millions of potential users, is growing at a rapid speed. The modern manager is going to have to be adaptable to such rapid change. The worker–employer psychological contract is another force. Very few organizations still offer employees lifetime jobs, guaranteed advancement or pay raises, or assurance that their work roles will be predictable and stable. However, the most admired employers believe that openness, integrity, providing opportunities, and supporting the growth and development of their employees...
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