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 Version 2.0

Organizational Behavior
By: Talya Bauer and Berrin Erdogan
Chapter 8 Communication 207
Communication in the Age of Social Media: The Case of Tweeters, 207
Facebookers, and Bloggers in the Workplace
Understanding Communication 209
Communication Barriers 211
Different Types of Communication 217
The Role of Ethics and National Culture 228
Employee Satisfaction Translates to Success: The Case of Edward Jones 232
Conclusion 233
Exercises 234
Endnotes 236

Chapter 9 Managing Groups and Teams 239

Putting Peer Pressure to Work: The Case of Pret a Manger 239
Group Dynamics 241
Understanding Team Design Characteristics 248
Management of Teams 258
Barriers to Effective Teams 262
The Role of Ethics and National Culture 263
Teamwork Takes to the Sky: The Case of General Electric 265
Conclusion 266
Exercises 266
Endnotes 270

Chapter 10 Conflict and Negotiations 273

Negotiation Failure: The Case of PointCast 273
Understanding Conflict 274
Causes and Outcomes of Conflict 278
Conflict Management 281
Negotiations 285
The Role of Ethics and National Culture 294
Avoiding Conflict at WorldCom: The Case of Bernard Ebbers 296
Conclusion 297
Exercises 298
Endnotes 300

Chapter 11 Making Decisions 301

Decisions, Decisions: The Case of Angry Birds 301
Understanding Decision Making 303
Faulty Decision Making 312
Decision Making in Groups 317
The Role of Ethics and National Culture 322
How Poor Decisions Can Derail an Icon: The Case of Eastman Kodak 324
Conclusion 325
 Exercises 326
Endnotes 329

Chapter 12 Leading People Within Organizations 331

Taking on the Pepsi Challenge: The Case of Indra Nooyi 331
Who Is Considered a Leader? Trait Approaches to Leadership 333
What Do Leaders Do? Behavioral Approaches to Leadership 337
What Is the Role of the Context? Contingency Approaches to Leadership 340
What’s New? Contemporary Approaches to Leadership 347
The Role of Ethics and National Culture 357
Leadership Development: The Case of Starbucks 360
Conclusion 361
Exercises 361
Endnotes 363

Chapter 13 Power and Politics 367

You've Got a Friend in Me: The Case of Dale Carnegie 367
The Basics of Power 368
The Power to Influence 372
Organizational Politics 379
Understanding Social Networks 382
The Role of Ethics and National Culture 385
Getting Connected: The Case of Social Networking 387
Conclusion 388
Exercises 388
Endnotes 392

Chapter 14 Organizational Structure and Change 395

Lean, Mean Driving Machine: The Case of Toyota 396
Organizational Structure 397
Organizational Change 404
The Role of Ethics and National Culture 415
Changing for Good: The Case of Hanna Andersson Corporation 417
Conclusion 418
Exercises 419
Endnotes 420

Chapter 15 Organizational Culture 423

Creating a Unique Culture: The Case of Google 423
Understanding Organizational Culture 425
Characteristics of Organizational Culture 428
Creating and Maintaining Organizational Culture 434
Creating Culture Change 445
The Role of Ethics and National Culture 448
 Service Culture Makes All the Difference: The Case of Four Seasons Hotels 449
Conclusion 450
Exercises 451
Endnotes 453

Index 455
About the Authors
TALYA N. BAUER
Talya N. Bauer (Ph.D., Purdue University) is the Cameron Professor of Management
and Affiliated Professor of Psychology at Portland State University. She is an award-
winning teacher and researcher and recipient of the SIOP Distinguished Teaching
Award as well as the Academy of Management Human Resource division’s Innovations
in Teaching Award. She conducts research about relationships at work, including re-
cruitment, applicant reactions to selection, onboarding, and leadership. Her work has
been supported by grants from both the SHRM and SIOP Foundations and has been
published in research outlets such as the Academy of Management Journal, Academy of
Learning and Education Journal, Journal of Applied Psychology, Journal of Management,
and Personnel Psychology. She has worked with dozens of government, Fortune 1000,
and start-up organizations and has been a Visiting Scholar in France, Spain, and at
Google Headquarters. She has served in elected positions including the HRM Executive
Committee of the Academy of Management and Member-at-Large for SIOP. She cur-
rently serves as an Associate Editor for the Journal of Applied Psychology (and is the
former Editor of Journal of Management). Her work has been discussed in the New
York Times, BusinessWeek, Wall Street Journal, Harvard Business Review, USA Today,
and NPR’s All Things Considered. She is a fellow of SIOP, the American Psychological
Association, and Association for Psychological Science.

BERRIN ERDOGAN
Berrin Erdogan (Ph.D., University of Illinois at Chicago) is Express Employment Pro-
fessionals Professor of Management and Affiliated Professor of Psychology at Portland
State University. She conducts studies exploring factors that lead to engagement, well-
being, effectiveness, and retention in the workplace, with a focus on manager-employee
relationships and underemployment. These studies took place in a variety of industries
including manufacturing, clothing and food retail, banking, health care, education, and
information technology in the United States, Turkey, India, China, France, and Viet-
nam. Her work appeared in journals including Academy of Management Journal,
Journal of Applied Psychology, Journal of Management, and Personnel Psychology and
has been discussed in media outlets including the New York Times, Harvard Business
Review, and the Oregonian. Dr. Erdogan has been a visiting scholar in Koç University
(Istanbul, Turkey), ALBA Business School at the American College of Greece, and
University of Valencia (Spain). In addition to serving on numerous editorial boards,
she currently serves as an Associate Editor for Personnel Psychology, served as an Asso-
ciate Editor for European Journal of Work and Organizational Psychology and is the co-
editor of the forthcoming title Oxford Handbook of Leader-Member Exchange. She is a
fellow of SIOP.
2 ORGANIZATIONAL BEHAVIOR VERSION 2.0

AN AWARD-WINNING TEXT
We are proud to announce that Organizational Behavior by Talya Bauer and
Berrin Erdogan was awarded the prestigious TAA (Text and Academic Authors
Association) Texty Award. This award is given based on four key criteria includ-
ing how the book is rated in terms of being interesting and informative, well or-
ganized and well prepared, up to date and appealing, and containing teachable
material.
Congratulations on this incredible honor!
Acknowledgments for OB 2.0
We would also like to thank the following colleagues whose comprehensive feedback and suggestions for improving the material in
both our first and second editions helped make this a better text:
Cheryl Adkins, Longwood University
Sid Barsuk, Governors State University
Carrie Blair, College of Charleston
Pamela Buckle Henning, Adelphi University
Claudia Cogliser, Texas Tech
Leslie Connell, University of Central Florida
Donald Dahlin, The University of South Dakota
Deborah Good, University of Pittsburgh
Jeanne Enders, Portland State University
Gideon Falk, Purdue University, Calumet
David Futrell, Butler University
Bruce Gillies, California Lutheran University
Michael Hadani, Long Island University, CW Post Campus
Jeff Haldeman, Webster University
Kathy Harris, Northwestern Oklahoma State University
Kelly Kilcrease, University of New Hampshire, Manchester
Antoinette S. Knechtges, Eastern Michigan University
Michael Komos, Benedictine University
Jennifer Loney, Portland State University
Damian Lonsdale, University of South Dakota
Don McCormick, California State University, Northridge
Janet Moen, The University of North Dakota
Lorrie Mowry, McCook Community College
Peter Nowak, Boston College, Boston University, Suffolk University
Samuel Rabinowitz, Rutgers University
Gary Renz, Webster University
Brenda Riddick, California State University, Dominguez Hills
Laura Riolli, California State University, Sacramento
Mark Schwiesow, Marquette University
Shung Jae Shin, Portland State University
Leslie Shore, Metropolitan State University
Valarie Spiser-Albert, University of Texas at San Antonio
Christy Weer, Salisbury University
Marilyn Wesner, George Washington University
Jim Woodrum, University of Wisconsin-Madison
And, please let us know if you have any feedback on Organizational Behavior 2.0 at OB2.0BauerErdogan@gmail.com. If you are
referring to a specific page or chapter, please put that in your note as well.
Dedications
TALYA BAUER
This book is dedicated to Jo Ann and Frank Bauer, who fueled my desire to learn, read, and write and to my husband, Horst, and
our children, Nicholas and Alexander, who are carrying on the tradition.

BERRIN ERDOGAN
This book is dedicated to my parents, Ilhan and Fulda Erdogan, who were my role models and first introduction to life in academia.
I also dedicate this book to my husband, Emre, and our son, Devin, for their love and support every step of the way.
Preface
To love what you do and feel that it matters—how could anything be more fun?
- Katherine Graham

This quote sums up how we feel about teaching. What could be better than teaching? It is fun, at times exciting, and it really matters.
And one of the best courses in the world to teach is Organizational Behavior. Together we have been teaching for over 38 years and
have taught thousands of students at the undergraduate, master’s, and doctoral levels. Our teaching styles are different, but we share
some common values when it comes to teaching, including the beliefs that:
< Organizational Behavior matters
< Evidence-based research is the foundation of Organizational Behavior
< Different students learn in different ways
< There is no substitute for hands-on learning
< Learning the language of OB helps you be more effective in the workplace
< Technology can greatly enhance learning
< Flexibility in teaching delivery allows for student success

NOT “JUST ANOTHER” TEXTBOOK

As we approached the first edition of this book, we knew we didn’t want to write “just another” OB book. Enter Flat World Know-
ledge. Their model solves many of the common challenges faculty and students face when it comes to textbooks. Here are a few that
have always bothered us and that Flat World has solved:
< “I had to buy the whole book, but my teacher didn’t use the XYZ chapter.” This isn’t a problem with our book because faculty
can rearrange chapters as well as add and delete them.
< “Textbooks are too expensive!” Textbooks have traditionally been very expensive and the business model of traditional pub-
lishing firms has been a huge part of those costs. With our book, students get to choose how to read the material in a num-
ber of inexpensive formats ranging from online viewing, black-and-white or color books, audio chapters, or printable PDFs.
< “New editions come out too quickly and don’t really change.” The reason that new editions come out is because used books
don’t make money for the publishers, but new ones do. With our book, you can change editions when you want and when
you think enough is different to warrant the change.
Our journey in creating this book has been a long one. After we wrote the first draft of this book, each chapter went through mul-
tiple reviews and revisions, as well as beta tests with real students before this textbook made its way to you. A truly virtual team of
authors, copy editors, managing editors, graphic designers, technology gurus, and publishing experts worked together to create
something that has never been done before.

SO, WHAT'S NEW FOR ORGANIZATIONAL BEHAVIOR, V2.0?

In this edition, you’ll find a new look and feel, new content, and new as well as updated opening and end-of-the chapter cases.
6 ORGANIZATIONAL BEHAVIOR VERSION 2.0

© Shutterstock

This version of the book has a whole new look and feel. For example, the following changes have been made:
< We updated the content to ensure that our text reflects the most current developments in the field of Organizational Behavi-
or and include findings from recent cutting edge research.
< Dozens of new concept pages have been added. These concept pages visually bring important management content to life by
illustrating key points both in text and in vibrant photos. Research shows that 65% of individuals indicate their preference
as visual learners. These concept pages add another layer of learning cues for those who learn best visually. Research shows
that the addition of visual aids can improve learning by up to 400%.
< All opening and end of the chapter cases were either updated to include the latest content or are completely new. New cases
include Rovio, the company behind the wildly popular Angry Birds game, Netflix, UK-based Pret a Manger sandwich shops,
and investment firm TIAA CREF’s CEO Roger Ferguson.
< Those who loved the cases that were replaced need not fear. We have updated these cases as well and they can now be found
within the all new Instructor’s Manual.
< This edition is streamlined to make key points more quickly and powerfully than ever before. Chapters have been updated
to include the most relevant information while removing distractions.
< All facts and figures have been updated so that the most current information is included.
< New businesses and examples are featured throughout the book.
< What hasn’t changed is our commitment to writing in a concise, accessible, and engaging manner to communicate the latest
findings and best practices related to mastering Organizational Behavior. We hope you and your students enjoy this edition
as much as we enjoyed writing it!
PREFACE 7

WHAT WILL YOU SEE?

Our book emphasizes active learning, meaningful examples, and tools you can use today or put into your OB Toolbox for the years to
come. How do we do this?
< We wrote opening and closing cases that bring the topics to life.
< We included learning objectives, key takeaways, and discussion questions for every section of each chapter.
< We created OB Toolboxes with information you can use today.
< We wrote a section on cross-cultural implications for every chapter.
< We also wrote a section on ethical implications for every chapter.
< We included original ethical dilemmas, individual exercises, and group exercises for every chapter.
< For faculty, we have comprehensive PowerPoint slides, a rich test bank, and an extensive author-written Instructor’s Manual
to enrich teaching.

HOW ARE INSTRUCTORS SUPPORTED?

< A summary of relevant online TedTalks and videos to go with each chapter
< A summary of IdeaCasts listed at the beginning of the manual
< Discussion questions for the opening cases
< Answers to the discussion questions throughout the book
< End-of-chapter materials
< Ethical dilemmas
< Individual exercises
< Group exercises
< Solutions to the end-of-chapter materials
< Bonus material
< Further reading suggestions
So welcome to the textbook revolution—we are happy to have you on the Bauer and Erdogan’s Organizational Behavior 2.0 team!
Given that Organizational Behavior is an important management course, our objective in developing this material was to provide
students and instructors with a solid and comprehensive foundation on Organizational Behavior that is accessible and fun. Each of
the 15 chapters is comprehensive but succinct, and action-oriented whether you are just starting out in the world of work or if you
are an experienced manager. Moreover, the book and supplements have been written in a direct and active style that we hope stu-
dents and instructors find both readily accessible and relevant.

THANK YOU FOR JOINING THE REVOLUTION

In reading Organizational Behavior by Talya Bauer and Berrin Erdogan, you are quietly joining the revolution that is otherwise
known as Flat World Knowledge, our partner and publisher. For this we thank you. The people at Flat World Knowledge and your
author team share a common vision about the future of management education that is based on powerful but fun and simple-to-use
teaching and learning tools. Moreover, Flat World Knowledge gives you—you the student and you the instructor—the power to
choose. Our 15 chapters are written using a “modular” format with self-contained sections that can be reorganized, deleted, “added
to,” and even edited at the sentence level. Using our build-a-book platform, you can easily customize your book to suit your needs
and those of your students.
Only with Flat World Knowledge learning platforms do you have the power to choose what your Organizational Behavior book
looks like, when and how you access your Organizational Behavior material, what you use and don’t use, when it will be changed,
how much you pay for it, and what other study vehicles you leverage. These innovative study vehicles range from book podcasts,
flash cards, and peer discussion groups organized in social network formats. Nowhere on the planet can this combination of user-
friendliness, user choice, and leading edge technologies be found for business education and learning.
We hope you find Organizational Behavior 2.0 to be informative, accessible, and fun!
8 ORGANIZATIONAL BEHAVIOR VERSION 2.0
CHAP TER 1
Organizational Behavior
L E A R N I N G O B J E C T I V E S

After reading this chapter, you should be able to understand and articulate answers to the following
questions:
1. What is organizational behavior (OB)?
2. Why does organizational behavior matter?
3. How can I maximize my learning in this course?
4. What research methods are used to study organizational behavior?
5. What challenges and opportunities exist for OB?

1. MAINTAINING A CUSTOMER SERVICE CULTURE:

THE CASE OF LES SCHWAB TIRES

FIGURE 1.1 Les Schwab Tires

Source: © Thinkstock

Les Schwab Tire Centers, Inc. (a privately held company) was founded in 1952 and has built a reputation of
stellar customer service. This company oversees retail tire and brake shops that generate nearly $2 billion in
annual revenue. They have more than 7,000 employees across more than 400 locations in eight states in the
United States. It is well known for its service orientation and product guarantees. For example, they are known
to fix flat tires for free and it is estimated that they give away more than $10 million in repairs each year. Cus-
tomer stories of heroic Les Schwab Tire Centers service include a customer who went to one of their stores
10 ORGANIZATIONAL BEHAVIOR VERSION 2.0

and had the tire chains installed for a ski trip, an hour before the store opened. Another customer reports be-
ing rescued by Jeremiah Cook, a Les Schwab employee, who changed her tire in the pouring rain on his day
off. When asked why he did it, he replied, “That’s just the way we do things here. What if that was my mom on
the side of the road?”
So how is a tire company with thousands of employees in dispersed locations able to achieve such employee
commitment and customer excitement? As Pollie Sengstake, General Manager for Human Resources for Les
Schwab says, “We sell tires. Other stores sell tires. Our organizational culture is our secret sauce that makes us
successful.” How do they create such a strong sense that providing excellent customer service is the right
thing to do? Sengstake notes that to create and maintain their strong culture, Les Schwab starts right away
with new employee onboarding that stresses the “Les Schwab way” of doing things. Then the culture is rein-
forced through regular performance feedback that stresses the importance of not just what employees do,
but how they do it. All Les Schwab employees are expected to understand and behave consistently with the
organizational culture and bonuses are tied to performance on this dimension.
When thinking about Les Schwab Tire Centers, Inc., it makes sense to think of the organization as encom-
passing three separate eras. The founder, Les Schwab, had clear goals and values of treating employees like
family that influenced how he ran his business while at the helm. The fact that he never sold the company is
reflected in those goals. He referred to his successor as the closest thing to a son that he had, and things re-
mained stable in the years to come. However, with the departure of both of these family men, a new era has
begun.
The early years of the company may be termed The Les Schwab era (1952-1983). Les Schwab’s personal life
story is a big piece of the puzzle of how he approached his business. Les was orphaned at age 15. He suppor-
ted himself and his brother by leaving school early each day to complete his work as a newspaper delivery
boy. His is a “rags-to-riches” success story and his cowboy-hat-wearing persona is legend. He built his com-
pany from the ground up after borrowing $11,000 from a relative. He was known for driving his 1962 jeep
from shop to shop and living by modest means. He was also famous for his signature cowboy hat and giving
away free steaks to anyone who purchased four tires during March of each year, when sales were typically
slow. Schwab is best known for starting a policy of sharing 55% of the company’s profits with his employees
through bonuses, health benefits, and retirement trusts. It was not uncommon for store managers to earn six-
figure annual salaries and to retire as millionaires. Schwab seemed perplexed when other companies didn’t
follow suit. “Why be greedy?” he asked. “If I can help make twenty young people become successful, doesn’t
that make me 20 times more successful?” When he passed away in 2007, it was a huge blow to the organiza-
tion that he had founded.
The G. Phillip Wick era (1983-2008) was consistent in many ways with the Les Schwab era. Les Schwab Tire
Centers historically had a strong orientation toward promoting from within. Wick rose through the ranks of the
company. In 1965 he began his tenure with the company and within three years he was promoted to man-
ager of the store. At age 24, this made him the youngest manager in the company’s history. In 1983 he suc-
ceeded Les Schwab as the second president of the company and then became Chairman of the Board of Dir-
ectors until 2008. Wick remained with the company on the Board of Directors until his death in 2010. Wick is
quoted as saying, “Since I joined Les Schwab, it has been more than a way of life. Our employees and custom-
ers make this company a great place to work, and I am proud of our accomplishments.”
The Dick Borgman era (2008-present) represents the first Les Schwab Tire Centers, Inc., CEO to be hired from
outside of the company. Under his tenure, executives have been brought in from such diverse outside firms as
Adidas, Starbucks, and General Mills. During the Les Schwab era, it was clear that promoting from within was
the way things were done. "Les has always wanted to have employees who think of this as a partnership," said
Borgman, while he was still vice president. "As a result, I think it's almost a competition among stores to see
who gets the most compliment letters, who takes care of the customers the fastest." However, rather than be-
ing promoted from a store location, Borgman was trained as a lawyer and economist and hired as an execut-
ive. More recently, Borgman led the move out of Prineville, Oregon, where Les Schwab first began his business.
It is clear to those who knew him that Les Schwab never would have supported such a move if he were alive
today. The old headquarters was a simple, one-story building, and Les Schwab had estimated that staying in
Prineville added an extra forty cents to each tire. However, he resisted relocating and abandoning the com-
munity that had supported him from his early years. The new headquarters is three stories high, sits on a
twelve-acre site, and includes many modern amenities, such as solar panels and bike storage for employees.
The architecture of the new upscale Bend, Oregon, headquarters was designed to resonate with and celebrate
the company’s history. Each wing of the building is devoted to a different decade of the company’s history. In
addition, etched glass in each conference room depicts actual Les Schwab Tire ads from bygone eras and a
huge photo of Les Schwab greets visitors when they arrive at the front door.
CHAPTER 1 ORGANIZATIONAL BEHAVIOR 11

The question now is whether Les Schwab Tire Centers, Inc., can maintain its distinctive and focused customer-
service culture. When organizations transition from a customer focus to a more administrative focus, chal-
lenges may surface. Time will tell whether Les Schwab’s legacy will be strengthened by making tough busi-
ness decisions in tough economic times, or whether evolving away from the roots of Prineville and Schwab’s
focus on internal employees as the key to success will lead Les Schwab Tire Centers, Inc., to becoming “just an-
other tire company.”[1]

C A S E D I S C U S S I O N Q U E S T I O N S

1. Think about the three eras described above. How would you describe each of the eras? Please be
prepared to support your answer with examples of each.
2. Think of examples in your own life of when a firm has delivered excellent customer service. Are there
examples in which you’d be moved to write a positive customer service letter? What do you think are the
main reasons why Les Schwab Tire Centers, Inc., are so successful at garnering such positive customer
feedback?
3. Do you think Les Schwab Tire Centers, Inc., has a competitive advantage because of their corporate
history? Why or why not?
4. Do you think Les Schwab Tire Centers, Inc., will continue to be as successful as it has been if it falls on hard
economic times? Why or why not?
5. Which costs to do you think are associated with maintaining a strong organizational culture, such as that
of Les Schwab Tire Centers, Inc.? What are the potential benefits?

2. UNDERSTANDING ORGANIZATIONAL BEHAVIOR

L E A R N I N G O B J E C T I V E S

1. Learn about the layout of this book.

2. Understand what organizational behavior is.
3. Understand why organizational behavior matters.
4. Learn about OB Toolboxes in this book.

2.1 About This Book

The people make the place.
- Benjamin Schneider, Fellow of the Academy of Management
This book is all about people, especially people at work. As evidenced in the opening case, we will share
many examples of people developing, growing, and making their workplaces work. People can make
work an exciting, fun, and productive place to be, or they can make it a routine, boring, and ineffective
place everyone dreads. The late Steve Jobs, cofounder and former chairman and CEO of Apple Inc., at-
tributed the innovations at Apple, which include the iPod, MacBook, iPhone, and iPad, to people, not-
ing, “Innovation has nothing to do with how many R&D dollars you have. It’s not about money. It’s
about the people you have, how you’re led, and how much you get it.”[2]
12
FIGURE 1.2
Steve Jobs (1955-2011) was known for
developing innovative products by hiring the
right people for the job and fostering a culture
of hard work and creativity.
Source: http://en.wikipedia.org/wiki/
Image:SteveJobsMacbookAir.JPG.
organizational behavior
(OB)
The systematic study and
application of knowledge
about how individuals and
groups act within the
organizations where they
work.
ORGANIZATIONAL BEHAVIOR VERSION 2.0
Mary Kay Ash, founder of Mary Kay Inc., a billion-dollar cosmetics company,
makes a similar point, saying, “People are definitely a company’s greatest asset. It
doesn’t make any difference whether the product is cars or cosmetics. A company is
only as good as the people it keeps.”[3]
Just like people, organizations come in many shapes and sizes. We understand that
the career path you take may include a variety of different organizations. In addition,
we know that each student reading this book has a unique set of personal and work-re-
lated experiences, capabilities, and career goals. On average, a person working in the
United States will change jobs more than eleven times in their career.[4] In order to suc-
ceed in this type of career situation, individuals need to be armed with the tools neces-
sary to be lifelong learners. So, this book is not about giving you all the answers to every
situation you may encounter when you start your first job or as you continue up the ca-
reer ladder. Instead, this book gives you the vocabulary, framework, and critical-think-
ing skills necessary for you to diagnose situations, ask tough questions, evaluate the an-
swers you receive, and act in an effective and ethical manner in a variety of different
contexts.
Throughout this book, when we refer to organizations, we will include examples
that may apply to diverse organizations, such as publicly held, for-profit organizations
like Google and American Airlines; privately owned businesses such as Les Schwab Tire
Centers and SAS institute; and not-for-profit organizations, such as the Sierra Club. We
will also refer to both small and large corporations. You will see examples from Fortune
500 organizations, such as Intel Corporation or PepsiCo, as well as small start-up or-
ganizations. Keep in mind that some of the small organizations of today may become
large organizations in the future. For example, in 1998, eBay Inc. had only 29 employ-
ees and $47.4 million in income, but by 2014 they had grown to 33,500 employees and
over $16.05 billion in revenue.[5] Regardless of the size or type of organization you may
work for, people are the common denominator of how work is accomplished within
organizations.
Together, we will examine people at work both as individuals and within work
groups and how they impact and are impacted by the organizations where they work.
Before we can understand these three levels of organizational behavior, we need to
agree on a definition of organizational behavior.
2.2 What Is Organizational Behavior?
Organizational behavior (OB) is defined as the systematic study and application of knowledge
about how individuals and groups act within the organizations where they work. As you will see
throughout this book, definitions are important. They are important because they tell us what
something is as well as what it is not. For example, we will not be addressing childhood development in
this course—that concept is often covered in psychology—but we might draw on research about twins
raised apart to understand whether job attitudes are affected by genetics.
OB draws from other disciplines to create a unique field. As you read this book, you will most
likely recognize OB’s roots in other disciplines. For example, when we review topics such as personality
and motivation, we will again review studies from the field of psychology. The topic of team processes
relies heavily on the field of sociology. In the chapter relating to decision making, you will come across
the influence of economics. When we study power and influence in organizations, we borrow heavily
from political sciences. Even medical science contributes to the field of organizational behavior, partic-
ularly to the study of stress and its effects on individuals.
CHAPTER 1 ORGANIZATIONAL BEHAVIOR 13

Those who study organizational behavior—which now includes you—are inter-

ested in several outcomes, such as work attitudes (e.g., job satisfaction and organiza- FIGURE 1.3
tional commitment) and workplace behaviors (e.g., customer service and counterpro-
ductive work behaviors). A distinction is made in OB regarding which level of the or- OB spans topics ranging from the individual to
ganization is being studied at any given time. There are three key levels of analysis in the organization.
OB: the individual, the group, and the organization. For example, if we want to under-
stand our boss’s personality, we would be using the individual level of analysis. If we
want to know about how our manager’s personality affects our team, we are examining
things at the team level. But, if we want to understand how our organization’s culture
affects our boss’s behavior, we would be interested in the organizational level of
analysis.

2.3 Why Organizational Behavior Matters

OB matters at three critical levels. It matters because it is all about things you care
about. OB can help you become a more engaged organizational member. Getting along
with others, getting a great job, lowering your stress level, making more effective de-
cisions, and working effectively within a team; these are all great things, and OB ad-
dresses them!
It matters because employers care about topics that are covered in OB. A recent
survey by the National Association of Colleges and Employers (NACE) asked employ-
ers which skills are the most important for them when evaluating job candidates, and
OB topics topped the list.[6] levels of analysis
The top five personal qualities/skills: In OB, includes examining the
1. Ability to make decisions and solve problems individual, the group, and the
organization.
2. Ability to verbally communicate with those within and outside the organization
3. Ability to work in a team structure
4. Ability to plan, organize, and prioritize work
5. Ability to analyze data
Finally, it matters because organizations care about understanding people. The best companies in the
world understand that the people make the place. How do we know this? Well, we know that organiza-
tions that value their employees are more profitable than those that do not.[7] Research shows that suc-
cessful organizations have a number of things in common, such as providing employment security, en-
gaging in selective hiring, utilizing self-managed teams, being decentralized, paying well, training em-
ployees, reducing status differences, and sharing information.[8] Glassdoor.com, a popular review web-
site of corporations, highlights the best companies, such as Facebook, McKinsey & Company, and Ri-
verbed Technology, where employees give kudos to management for providing learning opportunities,
giving employees challenging and interesting work and not micromanaging the process, and treating
employees with respect. Research shows that organizations that are considered healthier and more
effective focus on how they relate to their employees by being deliberate and mindful about providing
role clarity, information sharing, and performance feedback. Unfortunately, research shows that most
organizations are unhealthy, with 50% of respondents saying that their organizations do not engage in
effective people management practices covered in OB.[9]
In the rest of this chapter, we will build on how you can use this book by adding tools to your OB
Toolbox in each section of the book as well as assessing your own learning style. In addition, it is im-
portant to understand the research methods used to define OB, so we will also review those. Finally,
you will see what challenges and opportunities businesses are facing and how OB can help overcome
these challenges.
14 ORGANIZATIONAL BEHAVIOR VERSION 2.0

2.4 Adding to Your OB Toolbox

Your OB Toolbox

© Thinkstock

OB Toolboxes appear throughout this book. They indicate a tool that you can try out today to help you devel-
op and apply your OB skills.

Throughout the book, you will see many OB Toolbox features. Our goal in writing this book is to cre-
ate something useful for you to use now and as you progress through your career. Sometimes we will
focus on tools you can use today. Other times we will focus on things you may want to think about that
may help you later. As you progress, you may discover some OB tools that are particularly relevant to
you while others are not as appropriate at the moment. That’s great—keep those that have value to you.
You can always go back and pick up tools later on if they don’t seem applicable right now.
The important thing to keep in mind is that the more tools and skills you have, the higher the
quality of your interactions with others will be and the more valuable you will become to organizations
that compete for top talent.[10] It is not surprising that, on average, the greater the level of education
you have, the more money you will make. Those with a college degree make 65% more money than
those who had a high school degree and the differences in pay continue to grow with those earning a
master's degree making more than double the income of a high school graduate.[11] Organizations
value and pay for skills as the next figure shows.

FIGURE 1.4
Education and training have financial payoffs as illustrated by these unemployment rates and earnings for workers
age 25 and older.

Source: U.S. Bureau of Labor Statistics, http://www.bls.gov/emp/ep_chart_001.htm.

Tom Peters is a management expert who talks about the concept of individuals thinking of themselves
as a brand to be managed. Further, he recommends that individuals manage themselves like free
agents.[12] The following OB Toolbox includes several ideas for being effective in keeping up your skill
set.
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