ORGANIZATIONAL

BEHAVIOR

ROBBINS/JUDGE
 CHAPTER 1

What is
Organizational
Behavior?
 EFFECTIVE VERSUS SUCCESSFUL MANAGERIAL
ACTIVITIES

• Traditional management
- Decision making, planning and controlling

• Communication
- Exchanging routine information and processing paperwork

• Human resource management

- Motivating, disciplining, managing conflict, staffing and training

• Networking
– Socializing, politicking and interacting with outsiders.
 Allocation of Activities by Time

Average managers Successful Effective managers

managers
19% 32% 1
3 1
1 11% 19%
%
%
48%
29%
20% 44% 26%
28%

Traditional management
Human resource management
Communication
Networking
 Toward an OB Discipline
Behavioral science Contribution Unit of analysis Output
Learning, Motivation,
Personally, Emotions,
Perception, Training,
Leadership effectiveness, J
Psychology ob satisfaction, Individual
decision making,
Performance appraisal,
Attitude measurement,
Employee selection, Individual
Work design, Work stress

Behavioral change, Attitude

Social Psychology change, Communication,
Group processes, Group
decision making
Study of
Communication, Power, Organizational
Conflict, Intergroup behavior Group behavior
Sociology
Formal organizational theory
Organizational technology
Organizational change
Organizational culture

Comparative values Organization

Comparative attitudes system
Cross-cultural analysis

Anthropology
Organizational culture
Organizational environment
Power
 Case Incident 1
“DATA WILL SET YOU FREE”

Ford CEO Alan Mulally is known for starting meetings by saying “Data will set you free” and for trying to change
Ford’s culture to one that is based on increased accountability, more information sharing, and hard metrics.
“You can’t manage a secret, “ he is also fond of saying. Although it’s not clear whether Mulally’s approach will
work at Ford, which is known for its self-contained fiefdoms where little information is shared, some companies
have found that managing people accordingly to hard metrics has paid off. Consider Freescale Semiconductor, a
computer chip manufacturer based in Austin, Texas.

Freescale has discovered that in order to have the right people at the right time to do the right job, it needs an
extensive and elaborate set of metrics to manage its 24,000 employees in 30countries. Of particular concern to
Freescale is retention. ‘There’s no greater cost than human capital, especially in the technology industry,” says
Jignasha Patel, Freescale’s director of global talent sourcing and inclusion. “When you’ve got a tenured
employee that decides to walk out the door, it’s not just one person leaving, it’s that person’s knowledge and
network and skills”

To manage talent and prevent turnover, Freescale holds line managers accountable for recruiting, hiring, and retaining
employees. To do that, managers need to project their talent needs into the future and reconcile those with projected
availabilities. Patel provides line managers with census data that help them make their projections, but at the end of
the day, the responsibility is theirs. ‘What we have done is taken all of our inclusion data, all our metrics, and we’ve
moved the accountability over to the business unit,” Patel says.

Patel also provides Freescale managers with benchmark data so they can compare their effectiveness with that of
other units. The benchmark data include the number of people hired, turnovers and promotions – and breakdowns by
demographic categories. “There’s [a return on investment] for everything we do,” says Patel.
 Questions
1. Why do you think Freescale focuses on metrics? Why don’t more
organizations follow its approach?

2. As a manager, would you want to be accountable for the acquisition

and retention of employees you supervise? Why or why not?

3. In general, what do you think are the advantage and limitations of

such metrics?

4. Freescale focused on metrics for the acquisition and retention of

employees. Do you think metrics can be applied to other areas of
management, such as employee attitudes, employee performance,
or skill development? How might those metrics be measured and
managed?
 CHAPTER 2

Individual
Behavior
 Dimensions of Intellectual Ability
Dimension Description Job Example __
Number aptitude Ability to do speedy and accurate arithmetic. Accountant: Computing the sales tax
on a set of items.

Verbal comprehension Ability to understand what is read or heard Plant manager: Following corporate
and the relationship of words to each other. policies on hiring.

Perceptual speed Ability to identify visual similarities and Fire investigator: Identify clues to
differences quickly and accurately. support a charge of arson.

Inductive reasoning Ability to identify a logical sequence in a Market researcher: Forecasting demand
problem and then solve the problem. for a product in the next time period.

Deductive reasoning Ability to use logic and assess the
implications of an argument.
employees.
Spatial visualization Ability to imagine how an object would
look if its position in space were changed. office.
Supervisor: Choosing between two
different suggestions offered by
Interior decorator: Redecorating an

Memory Ability to retain and recall past experiences. Salesperson: Remembering the names of
customers.
 The Benefits of Cultural Intelligence
Have you ever noticed that some individuals seems to have a knack for relating well to people
from different cultures? Some researchers have labeled this skill cultural intelligence, which is an
outsider’s natural ability to interpret an individual’s unfamiliar gestures and behaviors in the same
way that others from the individual’s culture would. Cultural intelligence is important because
when conducting business with people from different cultures, misunderstandings can of the
occur, and as a result, cooperation and productivity may suffer.

Consider the following example. An American manager was meeting with his fellow design team
engineers, two of whom were German. As ideas floated around the table, his Germany
colleagues quickly rejected them. The American thought the feedback was harsh and concluded
that his Germany colleagues were rude. However, they were merely critiquing the ideas, not the
individual – a distinction that the American was unable to make, perhaps due to a lack of cultural
intelligence. As a result, the American became wary of contributing potentially good ideas. Had
the American been more culturally intelligent, he likely would have recognized the true motives
behind his colleagues’ remarks and thus may have been able to use those remarks to improve his
ideas.

It is unclear whether the notion of cultural intelligence is separated from other forms of
intelligence, such as emotional intelligence, and even whether cultural intelligence is different
from cognitive ability. However, it is clear that the ability to interact well with individuals from
different cultures is a key asset today’s global business environment
 “You Can’t Teach an Old Dog New Tricks!”
This statement is false. It reflects the widely held stereotype that older workers have difficulty
adapting the new methods and techniques. Studies consistently demonstrate that older
employees are perceived as being relatively inflexible, resistant to change and less wiling and able
to be trained than their younger counterparts. But these perceptions are mostly wrong.

Evidence does indicate that older workers (typically defined as people aged 50 and over) are less
confident of their learning abilities (perhaps due to acceptance of societal stereotypes.)
Moreover, older workers do seem to be somewhat less efficient in acquiring complex or
demanding skills, and on average, they are not as fast in terms of reaction time or in solving
problems. That is they may take longer to train. However, once trained, research indicates that
older workers actually learn more than the younger counterparts, and they are better at
transferring what they have learned to the job. And age actually improves some intellectual
abilities, such as verbal ability, and older brains are packed with more so-called expert knowledge
– meaning they tend to have better outlines for how to solve problems.

The ability to acquire the skills, knowledge, or behavior necessary to perform a job at a given
level - that is trainability – has been the subject of much research. And the evidence indicates
that there are differences between people in their trainability. A number of individual-difference
factors (such as low ability and reduces motivation) have been found to impede learning and
training outcomes. However, age has not been found to influence these outcomes. In facts, older
employees actually benefit more from training. Still, the stereotypes persist.
 ALL HUMAN BEHAVIOR IS LEARNED
Human beings are essentially blank slates that are shaped by their environment. B.F
Skinner, in facts summarized his belief in the power of the environment to shape behavior
when he said, “Give me a child at birth and I can make him into anything you want.”
Following are some of the societal mechanism that exist because of this belief in the power
of learned behavior:

1. Role of parenting
2. Importance of education
3. Job training
4. Manipulation of rewards
Although people can learn and can be influenced by their environment, far too little
attention has been paid to the role that evolution has played in shaping human behavior.
Evolutionary psychology tells us that human beings are basically hardwired at birth. We
arrive on Earth with ingrained traits, honed and adapted over millions of years, that shape
and limit our behavior.
All living creatures are “designed” by specific combinations of genes. As a result of natural
selection, genes that produce faulty design features are eliminated. Characteristics that
help a species survive tend to endure and get passed on to future generations. Many of the
characteristics that helped early Homo sapiens survive live on today and influence the way
we behave. Here are a few examples:

1. Emotions
2. Risk avoidance
3. Stereotyping
4. Male competitiveness
 CHAPTER 3

Attitudes
&
Job Satisfaction
 The Components of an Attitude
Cognition, affect, and behavior are closely related.
Cognitive = evaluation
My supervisor gave a
promotion to a coworker who
deserved it less than me. My
supervisor is unfair.

Affective = feeling Negative

I dislike my supervisor! attitude toward
supervisor

Behavioral = action
I’m looking for other work;
I’ve complained about my
supervisor to anyone who
would listen.
 Major Job Attitudes
A person can have thousands of attitudes, but OB focuses our attention on a very
Limited number of work-related attitudes. These tap positive or negative evaluations
that employees hold about aspects of their work environment. Most of the research in
OB has looked at three attitudes:
1. Job Satisfaction
Job satisfaction describes a positive feeling about a job, resulting from an evaluation of its characteristics.

2. Job Involvement
Job involvement measures the degree to which people indentify psychologically with their job and
consider their perceived performance level important to self-worth.

3. Organizational Commitment
a state in which an employee identifies with a particular organization and its goal and wishes to maintain
membership in the organization. Three separate dimension to organizational commitment are:
 Affective commitment
• An emotional attachment to the organization and a belief in its values.
 Continuance commitment
• Perceived economic value of remaining with an organization compared to leaving it.
 Normative commitment
Obligation to remain with the organization for moral or ethical reasons.
 Average Job Satisfaction Levels by Facet
80

70

60

50
Percentage

40

30

20

10

0
Work Itself Pay Promotion Supervision Coworkers Overall
 Managers can create
Satisfied Employees
A review of the evidence has identified four factors conducive to high levels
of
employee job satisfaction:

1. Mentally challenging work

2. Equitable rewards
3. Supportive working conditions
4. Supportive colleagues
 Experiential Exercise
What factors are most important to your job
satisfaction
• Autonomy and independence
• Benefits
• Career advancement opportunities
• Career development opportunities
• Compensation/pay
• Communication between
employees and management
• Contribution of work to
organization’s business goals
• Feeling safe in the work
environment
• Flexibility to balance life and work
issues
• Job security
• Job-specific training
• Management recognition of
employee job performance
• Meaningfulness of job
• Networking
• Opportunities to use skills/abilities
• Organization’s commitment to
professional development
• Overall corporate culture
• Relationship with coworkers
• Relationship with immediate
supervisor
• The work itself
• The variety of work
 Experiential Exercise
On a sheet of paper, rank-order these job factors from top to bottom so that
number 1 is the job factor you think is the most important to your job
satisfaction, number 2 is the second most important factors to your job
satisfaction, and so on.
Now gather in teams of three or four people and try the following:

1. Appoint a spokesperson who will take notes and report the answers to
the following questions, on behalf of your group, back to the class.
2. Average across all members in your group, generate a list of the top five
job factors.
3. Did most people in your group seem to value the same job factors? Why
or why not?
4. Now examine your own list again. Does your list agree with the group
list?
 CHAPTER 4

Personality
&
Values
 The Big Five Personality Model
1. The EXTRAVERSION dimension captures one’s comfort level with
relationship. Eg: gregarious, assertive and sociable.

2. The AGREEABLENESS dimension refers to an individual’s propensity to

defer to others. Eg: cooperative, warm and trusting.

3. The CONSCIENTIOUSNESS dimension is a measure of reliability. Eg:

responsible, organized, dependable and persistent.

4. The EMOTIONAL STABILITY dimension-often labeled by its converse,

neuroticism-taps a person’s ability to withstand stress. Eg: calm, self-
confidence, nervous, depressed and insecure.

5. The OPENNESS TO EXPERIENCE dimension addresses one’s range of

interests and fascination with novelty. Eg: creative, curious and artistically
sensitive.
1. Do CMPT-PSI survey & Strength Description
of each set

2. High versus low set scores

3. Abaziaz.com case study [Test] [1 hour]

 “Entrepreneurs are a breed apart”
This statement is true . A review of 23 studies on the personality of entrepreneurs revealed significant
differences between entrepreneurs and managers on four of the Big Five: Entrepreneurs scored
significantly higher on conscientiousness, emotional stability, and openness to experience, and they
scored significantly lower on agreeableness. Though of course not every entrepreneur achieves these
scores, the results clearly suggest that entrepreneurs are different from managers in key ways.

A fascinating study of MBA students provides one explanation for how entrepreneurs are different
from others. Studying male MBA students with either some or no prior entrepreneurial
experience, the authors found that those with prior experience had significantly higher levels of
testosterone (measured by taking a saliva swab at the beginning of the study) and also scored higher
on risk propensity. The authors of this study concluded that testosterone, because it is associated with
social dominance and aggressiveness, energizes individuals to take entrepreneurial risks. Because
individual differences in testosterone are 80% inherited, this study adds more weight to the conclusion
that entrepreneurs are different from others.

What’s the upshot of all this? An individual who is considering a career as an entrepreneur or a
business owner might consider how she scores on the Big Five. To the extend that she is high in
conscientiousness, emotional stability, and openness and low in agreeableness, such a career might be
for her.
 International OB
A Global Personality
Determining which employees will succeed on overseas business assignments is often
difficult for an organization’s managers because the same qualities that predict success in
one culture may not in another. However, researchers are naming personality traits that
can
help managers zero in on which employees would be suited for foreign assignments.
You might think that of the Big Five traits, openness to experience would be most
important
to effectiveness in international assignments. Open people are more likely to be culturally
flexible – to “go with the flow” when things are different in another country. Although
research is not fully consistent on the issue, most does suggest that managers who score
high on openness perform better than others in international assignments.
James Eyring, Dell Computer’s director of learning and development for Asia, agrees that
personality is important for success in overseas assignments. “I’ve seen people fail the
openness test – they worked exactly as they would in the U.S. They just weren’t open to
understanding how things work in a different cultures,” says Eyring.
What does the research mean for organizations? When it comes to choosing employees for
global assignments, personality can make a difference,
 Linking an Individual’s Personality and
Values to the Workplace
Person-Job Fit
A theory that identifies six personality types and proposes that
the fit between personality type and occupational environment
determines satisfaction and turnover
Six personality types are:
Realistic, Investigative, Social, Conventional, Enterprising, Artistic

Person-Organization Fit
Essentially argues that people are attracted to and selected by
organizations that match their values, and they leave
organizations that are not compatible with their personalities.
 VALUES

Hofstede’s Framework for Assessing Cultures

• Power distance: describes the degree to which people in a country accept

that power in institutions and organizations is distributed unequally.
• Individualism versus collectivism: degree to which people prefer to act as
individual rather than as members of groups and believe in individual
rights above all else
• Masculinity versus femininity: degree to which the culture favors
traditional masculine roles such as achievement, power, and control, as
opposed to viewing men and women as equals.
• Uncertainty avoidance: degree which people in a country prefer
structured over unstructured situations defines their uncertainty
avoidance.
• Long-term versus short-term orientation: focuses on the degree of a
society’s long-term devotion to traditional values.
Traits are powerful predictors of behavior
The essence of traits approaches in OB is that employees possess stable personality
characteristics that significantly influence their attitude toward, and behavioral
reactions to, organizational settings. People with particular traits tend to be relatively
consistent in their attitudes and behavior over time and across situations.
Of course, trait theorists recognize that all traits are not equally powerful. They tend
to put them into one of three categories:
Cardinal traits are those so strong and generalized that they influence every act a
person performs.
Primary traits are generally consistent influences on behavior, but they may not show
up in all situations
Secondary traits are attributes that do not form a vital part of the personality but
come into play only in particular situations.

Managers seem to have a strong belief in the power of traits to predict behavior. If
managers believed that situations determined behavior, they would hire people
almost random and structure the situation properly.
Few people would dispute that some stable individual attributes affect reactions to the
workplace. But traits theorists go beyond that and argue that individual behavior
consistencies are widespread and account for much of the difference in behavior among
people.

Two problems with using traits to explain a large proportion of behavior in organizations
are that the evidence isn’t all that impressive, and individuals are highly adaptive so that
personality traits change in response to organizational situations.

First, though personality does influence workplace attitudes and behaviors, the effects
aren’t all that strong; traits explain a minority of the variance in attitudes and behavior.

Organizational settings tend to be strong situations because they have rules and other
formal regulations that define acceptable behavior and punish deviant behavior, and they
have informal norms that dictate appropriate behaviors.

These formal and informal constrains minimize the effects of personality traits.
Moreover, people typically belong to multiple organizations that often include very
different kinds of members. And they adapt to those different situations, too. Instead of
being prisoners of a rigid and stable personality framework, as traits theorists
propose, people regularly adjust their behavior to reflect the requirements of various
situations.
 CHAPTER 5

Perception
&
Individual
Decision Making
• Creativity
The ability to produce novel and useful ideas.

• Three-component model of creativity

The proposition that individual creativity
requires expertise, creative thinking skills,
and intrinsic task motivation
 Three-component model of creativity

• Expertise
Is the foundation for all creative work. Eg: writer, producer
and director.

• Creative-thinking skills
This encompasses personality characteristics associated with
creativity, the ability to use analogies, and the talent to see
the familiar in a different light.

• Intrinsic task motivation

desire to work on something because it’s interesting,
involving, exciting, satisfying, or personally challenging
Three-component model of creativity

Expertise

Creativity

Creativity
skills
 CHAPTER 6

Motivation
Concepts
 Defining Motivation
We define motivation as the processes that account for
an individual’s intensity, direction, and persistence of
effort toward attaining a goal.

The three key elements in our definition are:

1. Intensity
2. Direction
3. Persistence
 Early Theories of Motivation
The 1950s were a fruitful period in the period in the
development of motivation concepts. Four specific theories were
formulated during this period, which although heavily attacked
and now questionable in terms of validity, are probably still the
best-known explanations for employee motivation. As you’ll see
later in this chapter, we have since developed more valid
explanations of motivation, but you should know these early
theories for at least two reasons:

1. They represent a foundation from which contemporary

theories have grown, and
2. Practicing managers still regularly use these theories and
their terminology in explaining employee motivation.
 Hierarchy of Needs Theory
1. Physiological: includes hunger, thirst and shelter.

2. Safety: security and protection from physical and emotional

harm.

3. Social: affection, belongingness, acceptance and friendship.

4. Esteem: internal factors such as self-respect, autonomy and

achievement & external factors such as status, recognition and
attention.

5. Self-actualization: drive to become what one is capable of

becoming includes growth, achieving one’s potential and self-
fulfillment.
 Theory X and Theory Y
• Theory X
The assumption that employees dislike work,
are lazy, dislike responsibility, and must be
concerned to perform.

• Theory Y
The assumption that employees like work, are
creative, seek responsibility, and can exercise
self-direction.
 International OB
How Managers Evaluate Their Employees Depends
on Culture
A recent study found interesting differences in managers’ perception of employee
motivation. The study examined managers from three distinct cultural region: Asia,
Latin America and North America. The result of the study revealed that North
American managers perceived their employees as being motivated more by extrinsic
factors than intrinsic factor. Asian managers perceive their employees as being
motivated by both extrinsic and intrinsic factors, while Latin American managers
perceive their employees as being motivated by intrinsic factors.
Even more interesting, these differences affected evaluations of employee
performance. As expected, Asian managers focused on both types of motivation when
evaluating their employees’ performance, and Latin American managers focused on
intrinsic motivation. Oddyly, North American managers, though believing that
employees are motivated primarily by extrinsic factors, actually focused more on
intrinsic factors when evaluating employee performance. Why the paradox?
One explanation is that North American value uniqueness, so any deviation from the
norm – such as being perceived as being unusually high in intrinsic motivation – is
rewarded.
Summary and Implication for Managers

1. Need Theories
2. Goal-Setting Theory
3. Reinforcement Theory
4. Equity Theory/Organizational Justice
5. Expectancy Theory
Summary and Implication for Managers

1. Recognize Individual Differences

2. Use Goals and Feedback
3. Allow Employees to Participate in
Decision That Affect Them
4. Link Rewards to Performance
5. Check the System for Equity
 CASE INCIDENT 2
Thanks for Nothing.
Questions.

1. If praising employees for doing a good job seems to be a

fairly easy and obvious motivational tool, why do you think
companies and managers don’t often do it?
2. As a manager, what steps would you take to motivate your
employees after observing them perform well?
3. Are there any downsides to giving employees too much
verbal praise? What might these downsides be and how
could you alleviate them as a manager?
4. As a manager, how would you ensure that recognition given
to employee is distributed fairly and justly?
CHAPTER 7

Group
Behavior
 Why do people join groups?
• Security. By joining a group, individuals can reduce the insecurity of ‘standing alone.” People feel
stronger, have fewer self-doubts, and are more resistant to threats when they are part of a group.

• Status. Inclusion in a group that is viewed as important by others provides recognition and
status for its members.

• Self-esteem. Groups can provide people with feelings of self-worth. That is, in addition to
conveying status to those outside the group, membership can also give increased feelings of
worth to the group members themselves.

• Affiliation. Groups can fulfill social needs. People enjoy the regular interaction that comes with
group membership. For many people, these on-the-job interactions are their primary source for
fulfilling their needs for affiliation.

• Power. What cannot be achieved individually often becomes possible through group action.
There is power in numbers.

• Goal achievement. There are times when it takes more than one person to accomplish a
particular task – there is a need to pool talents, knowledge, or power in order to complete a job.
In such instances, management will rely on the use of a formal group.
 Stages of Group Development
• Forming, is characterized by a great deal of uncertainty about the group’s purpose, structure,
and leadership. Members “test the waters” to determine what types of behavior are acceptable.
This stage is complete when members have begun to think of themselves as part of a group.

• Storming stage is one of intragroup conflict. Members accept the existence of the group, but
there is resistance to the constrains that the group imposes on individuality. Furthermore, there
is conflict over who will control the group. When this stage is complete, there will be a relatively
clear hierarchy of leadership within the group.

• Norming stage is complete when the group structure solidifies and the group has assimilated
a common set of expectations of what defines correct member behavior.

• Performing. The structure at this point is fully functional and acceptable. Group energy ha
moved from getting to know and understand each other to performing the task at hand.

• Adjourning stage. In this stage, the group prepares for its disbandment. High task
performance is no longer the group’s top priority. Instead, attention is directed toward wrapping
up activities. Responses of group members vary in this stage. Some are upbeat, basking in the
group’s accomplishment. Others may be depressed over the loss of camaraderie and friendship
gained during the work group’s life.
 “Are two heads better than one?”
Two heads are not necessarily always better than one. In facts, the evidence generally
confirms the superiority of individual over groups when brainstorming. The best
individual in a group also makes better decisions than groups as a whole, though
groups do tend to do better than the average group member.
Research also indicates that groups are superior only when they meet certain criteria.
These criteria include:

1. The group must have diversity among members. To get benefits from “two
heads,” the heads must differ in relevant skills and abilities.

2. The group members must be able to communicate their ideas freely and openly.
This requires an absence of hostility and intimidation.

3. The task being undertaken must be complex. Relative to individuals, groups do

better on complex rather than simple tasks.
CHAPTER 8

Work
Teams
 Comparing work groups and work teams
Work Groups Work Teams

Share information Goal Collective performance

Neutral (sometimes negative) Synergy Positive

Individual Accountability Individual and mutual

Random and varied Skills Complementary

 Four Types of Teams

Technology
?

Problem-solving Self-managed Cross-functional

Virtual
 Global Virtual Teams
Years ago, before the vast working public ever dreamed of e-mail, instant
messaging, or live video conferencing, work teams used to be in the same
locations, with possibility one or two members a train or plane ride away.
Today, however, the reach of corporation spans many countries, so the need
for teams to work together across international lines has increased. To deal
with this challenge, multinationals use global virtual teams to gain a
competitive advantage.
Global virtual teams have advantages and disadvantages. On the positive
side, because team members come from different countries with different
knowledge and points of view, they may develop creative ideas and solutions
to problems that work for multiple cultures. On the negative side, global
virtual teams face more challenges than traditional teams that meet face-to
face. For one thing, miscommunication can lead to misunderstandings, which
can create stress and conflict among team members. Also, members who do
not accept individuals from different cultures may hesitate to share
information openly, which can create problems of trust.
• To create and implement effective global virtual teams managers must
carefully select employees whom they believe will thrive in such an
environment. Employees must be comfortable with communicating
electronically with others, and they must be open to different ideas. When
dealing with team members in other countries, speaking multiple
languages may also be necessary. Team members also must realize that
the values they hold may be vastly different from their teammates’ values.
For instances, an individual from a country that values relationship and
sensitivity, such as Sweden, might face a challenge when interacting with
someone from Spain, which values assertiveness and competitiveness.

• Although global virtual teams face many challenge, companies that

implement them effectively can realize tremendous rewards through the
diverse knowledge they gain
What Factors determine whether teams are
successful

1. Adequate resources
2. Leadership and structure
3. Climate of trust
4. Performance evaluation and
reward systems
 Key Roles of Teams
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 Case Incident
Team-Building Retreats
Team-building retreat are big business. Companies believe such retreats, where team members
participate in activities ranging from mountain climbing, to trust-building exercises (where team
members let themselves fall backwards into their colleagues’ arms), to Iron Chef-inspired cooking
contest (used by UBS, Hewlett-Packard, and Verizon) can foster effective teamwork. But why do
organization have teammates participate in activities that seem irrelevant to the organization’s
primary activities? Howard Atkins, chief financial officer at Wells Fargo, believes that corporate
retreats aid team building, which in turn improves company performance. At a luxury hotel in
Sonoma, California, Atkins – along with several other corporate executives – participate in an
exercise in which he and his team had to build a bridge out of boxes and unstable wooden planks.
To the delights of his colleagues, Atkins was able to make it across the bridge. The team succeeded.
According to Atkins, :What I have been trying to do is get them to see the power of acting more like a
team. It’s really a terrific success.”
Part of the success that Atkins is referring to is the double-digit gains earning by Wells Fargo – gains that
he says are one of the effects of the corporate retreats. “Success more often than not is function of
execution, and execution is really about people, so we invest pretty heavily into our people.” How heavy
is the investment? Well Fargo paid $50,000 for the retreat in Sonoma.
Given the level of expenses, some companies are now discontinuing their team-building activities
outside the organization. According to Susan Harper, a business psychologist, “team building has
definitely gone down. People are reluctant to spend money on what they think is not an absolute
necessity.” Atkins believes otherwise.” I know intuitively the payback here is huge. It’s a very small
investment to make for the payback we are going to get.
Hard drive maker Seagate takes it even further. Every year, Seagate flies roughly 200 managers to
New Zealand to participate in “Eco Seagate,” its annual team-building exercise. The tab? $9,000
per manager. Chief Financial Officer Charles Pope says it’s one of the last things he’s cut from
Seagate’s budget.
It’s clear that companies that invest in team-building retreats think they’re worth the investment.
Sometimes, though, they have unintended consequences, in 2001, a dozen Burger King
employees burned themselves while participating in a “fire walk” – a team building exercise that
requires teammates to walk barefoot across an 8-foot pit of burning-hot coals. The results were
injured employees and some very negative publicity for Burger King. In 2006, an employee of
security systems company Alarm One was award $1.7 million in damages in a lawsuit in which she
claimed she had been spanked on the job as part of a camaraderie-building exercise. One
observer of these retreats said, “Most of the time, people asking for these activities aren’t
interested in real teamwork building. What they really want is entertainment.
Some companies are taking team-building exercises in a different direction, having their
employees engage in hands-on volunteer work. When the breweries Coors and Molson
merged, they wanted to use a team-building exercise to acquaint the executive teams, but they
didn’t want to go the route to the typical golf outings or ropes course. So they helped Habitat for
Humanity build a home. UPS has new managers participate in various community projects, such
as distributing secondhand medical equipment in developing countries.
It is questionable whether team-building exercises such as mountain climbing, cooking
contest, and fire walks result in improved company financial performance, and it may be better to
think of such activities as morale boosters. According to Merianne Liteman, a professional corporate
retreat organizer, “Where good retreats have quantifiable effect is on retention, on morale, on
productivity.”
 Questions
1. Do you believe that team-building activities increase productivity?
Why or why not? What other factors might be responsible for increases
in profitability following a corporate retreat?

2. What are some other ways besides those described here to build
effective teams and increased teamwork among company employees?
How might these alternatives be better or worse than corporate
retreats?

3. How might you increase teamwork when team members are not often
in direct contact with one another? Can you think of any “electronic”
team-building exercises?
 CHAPTER 9

Communication
 Information Richness of Communication
Channels
Formal Online discussion
Prerecorded Live Video
reports, groups,
speeches groupware speeches conference
bulletins

Low High
channel channel
richness richness

Memos, Electronic Voice Telephone Face-to-face

letters mail mail conversations conversations
 CHAPTER 10

Leadership
 Trait Theories
• Trait theories of leadership differentiate
leaders from nonleaders by focusing on
personal qualities and characteristics.

 Charismatic
 Enthusiastic
 Courageous
 Behavioral Theories
• Theories proposing that specific behavior differentiate
leaders from nonleaders.

Initiating structure
• The extend to which a leader is likely to define and
structure his or her role and those of subordinates in
the search for goal attainment.

Consideration
• The extend to which a leader is likely to have a job
relationship characterized by mutual trust, respect for
subordinates’ ideas, and regard for their feelings.
Employee-oriented leader
• A leader who emphasizes interpersonal
relations, takes a personal interest in the
needs of employees, and accepts individual
differences among members.

Production-oriented leader
• A leader who emphasizes technical or task
aspects of the job.
 Leaders are born, not made
In the United States, people are socialized to believe they can be whoever they want to be – and
that includes being a leader. Being an effective leader has more to do with what you’re born with
than what you do with what you have.
That leaders are born, not made, isn’t a new idea. The Victorian-era historian Thomas Carlyle
wrote, “History is nothing but the biography of a few great men.” although today we should
biography of a few great men.” although today we should modify this to include women, his point
still rings true: Great leaders are what make teams, companies, and even countries great. As one
reviewer of the literature put it, “Leaders are not like other people.” These leaders are great
leaders because they have the right stuff – stuff the rest of us don’t have, or have in lesser
quantities.
A recent study of several hundred identical twins separated at birth found an amazing correlation
in their ascendance into leadership roles. These twins were raised in totally different
environments – some rich, some poor, some by educated parents, others by relatively
uneducated parents, some in cities, other in small towns. But the researchers found that, despite
their different environment, each pair of twins has striking similarities in terms of whether they
became leaders.
Other research has found that shared environment – being raised in the same household, for
example – has little influence on leadership emergence. Despite what we might like to believe, the
evidence is clear: A substantial part of leadership is a product of our genes. If we have the right
stuff, we’re destined to be effective leaders. If we have the wrong stuff, we’re unlikely to excel in that
role. Leadership cannot be for everyone, and we make a mistake in thinking that everyone is equally
capable of being a good leader.
Of course, personal qualities and characteristics matter to leadership, as they do to most
behaviors. But the real key is what you do with what you have.

First, if great leadership were merely the possession of a few key traits – say intelligence and
personality - -we could simply give people a test and select the most intelligent, extraverted, and
conscientious people to be leaders. But that would be disaster. It helps to have these traits, but
leadership is much too complex to be reduced to a simple formula of traits.
Second, great leaders tell us that the key to their leadership success is not the characteristics they
has at birth but what they learned along the way.

Finally, this focus on “great men and great women” is not very productive. Even if it were true
that great leaders were born, it’s a very impractical approach to leadership. People need to
believe in something, and one of those things is that they can improve themselves. If we walked
around thinking we were just some accumulation of genetic markers and our entire life was just a
stage in which our genes played themselves out who would want to live that way?
 Experiential Exercise
What is a Leader?
1. Working on your own, write down 12 adjectives that describe an
effective business leader.

2. Break into groups of four or five people each. Appoint a note-taker and
spokesperson. Compare your lists, making a new list of adjectives
common across two or more persons’ list. (Count synonyms – decisive
and forceful, for example – as the same)

3. Each spokesperson should present the group’s list to the class.

4. Across the lists, are there many similarities? What does this tell you
about the nature of leadership?
 Case Incident
The kinder, gentler leader?
The stereotypical view of a CEO – tough minded, dominant, and hyper-aggressive – may be
giving way to a more sensitive image. Nowhere is this shifting standard more apparent than at
General Electric. There may be no CEO more revered for his leadership style than former CEO
Jack Welch, a “tough guy” in his own words. Yet his handpicked successor, Jeff Immelt, is
remarkable for his very different leadership style. Whereas Welch was intense, brash, and
directive, Immelt was described by Financial Times as “unshakably polite, self-deprecating and
relaxed.”

Of course, Immelt is only one leader, and his success at GE is hardly assured. But he’s far from
alone in the set of seemingly sensitive CEOs. Colgate-Palmolive CEO Reuben Mark says of his
leadership credo: “I have made it my business to be sure that nothing important or creative at
Colgate-Palmolive is perceived as my idea.” In an interesting contrast to Chrysler CEO Bob
Nardelli, Chrysler President Jim Press (formerly president of Toyota of America) embraces
‘servant leadership” and says one of his main functions is to “get out of the way” and support
those who work with him.

A recent study of CEO s seems to suggest that this trend is spreading. The CEOs in its simple
scored, on average, 12points below average on tough-mindedness. Yes, that’s below average. As one
observer of the corporate world concludes “The Jack Welch approach appears to be on the wane.”
• You might think a kinder, gentler approach works only for Fortune 500 CEOs, whose very job
security might rely on glowing press coverage. In the United States, though, you don’t get
much further from Wall Street than the Hanford, Washington, nuclear site, and there’s
evidence that the “nice” approach to leadership is taking hold there, too. Jerry Long, VP of
operations for CH2MHILL’s cleanup of the Hanford site, argues that a central part of his job is
“showing them you care.”

• Consider the meteoric rise of Barack Obama – all the way from state senator to serious
presidential contender in just 3 years. While a student at Harvard Law School, Obama was
famous attorney Laurence Tribe’s research assistant. Tribe said of Obama, “I’ve known
senators, presidents. It’s never known anyone with what seems to me more raw political
talent. He just seems to have the surest way of calmly reaching across what are impenetrable
barriers to many people.” although some have argued that Obama’s campaign represents an
emphasis of style over substances, it may be that after years of acrimonious political wars,
people consider the how as important as the what. Regardless of whether Obama makes it to
the White House, it seems clear that part of his incredible rise reflects people’s desire for a
kinder, gentler leader
 Questions
1. Do you think the kinder, gentler leader image is just a fad?

2. Do you think the kinder, gentler leadership approach

works better in some situations than others? It is possible
that Welch and Immelt are both effective leaders?

3. Do you think the leadership style of people like Immelt

and Obama is a result of nature, nurture, or both? What
factors can you think of to support your answer?
 CHAPTER 11

Contemporary
Issues in
Leadership
 Finding and Creating
Effective Leaders
Selecting Leaders
• The entire process that organizations go through to fill management positions is
essentially an exercise in trying to identify individuals who will be effective leaders. Your
search might begin by reviewing the specific requirements for the position to be filled.
What knowledge, skills, and abilities are needed to do the job effectively? You should
try to analyze the situation to find candidates who will make a proper match.
• Testing is useful for identifying and selecting leaders. Personality test can be used to
look for traits associated with leadership – extraversion, conscientiousness, and
openness to experience. Testing to find a leadership candidate’s score on self-
monitoring also makes sense. High self-monitors are likely to out perform their low-
scoring counterparts because the former are better at reading situations and adjusting
their behavior accordingly. You can also access candidates for emotional intelligence.
Given the importance of social skills to managerial effectiveness, candidates with a high
EI should have an advantage, especially in situations requiring transformational
leadership.
• Interviews also provide an opportunity to evaluate leadership candidates. For instance,
we know that experience is a poor predictor of leader effectiveness, but situation-
specific experience is relevant. You can use an interview to determine whether a
candidate’s prior experience fits with the situation you’re trying to fill.
• Similarly, the interview is a reasonably good vehicle for identifying the degree to
which a candidate has leadership traits such as extraversion, self-confidence, a
vision, the verbal skills to frame issues, or a charismatic physical presence.
• The most important event organizations need to plan for is leadership changes.
Nothing lasts forever, so it’s always simply a matter of when a leader exits, not
whether.

Training Leaders
• Organizations, in aggregate, spend billions of dollars, yen and euros on leadership
training and development. Although much of the money spent on training may
provide dubious benefits, our review suggests that there are some things
managers can do to get the maximum effect from their leadership-training
budgets.
• First, lets recognize the obvious. People are not equally trainable. Leadership
training of any kind is likely to be more successful with individuals who are high
self-monitors than with low self-monitors. Such individuals have the flexibility to
change their behavior.
• What kinds of things can individuals learn that might be related to higher leader
effectiveness? It may be a bit optimistic to believe that we can teach “vision
creation,” but we can teach implement skills. We can train people to develop “an
understanding about content themes critical to effective visions.”
• We can also teach skills such as trust building and mentoring. And leaders can be
taught situational-analysis skills. They can learn how to evaluate situation, how to
modify situations to make them fit better with their style, and how to assess which
leader behaviors might be most effective in given situations. A number of
companies have recently turned to executive coaches to help senior managers
improve their leadership skills.

• On a optimistic note, there is evidence suggesting that behavioral training through

modeling exercise can increase an individual’s ability to exhibit charismatic
leadership qualities.

• Finally, there is accumulating research showing that leaders can be trained in

transformational leadership skills. Once learned, these skills have bottom-line
results, whether in the financial performance of Canadian banks or the training
effectiveness of soldier in the Israeli Defense Forces.
 Keep Leaders on a Short Leash
A company’s leaders need to be managed just like everyone else. Often they cause
more harm than good. There is a long list of CEOs who practically drove their
companies into the ground: Carly Fiorina (HP), Harry Stonecipher (Boeing), Raymond
Gilmartin (Merck). Although the names always change, the sad fact never does: CEOs
are often given the “run of the house” and are reined in only after the damage is
done. So what happens? A new CEO is hired, and all too often, the same pattern
repeats itself.

The key is not who the leader is but how he or she is managed. CEOs are given far too
much influence and treated with kid gloves by their board of directors (who generally
end up selecting and rewarding one another). They make nice while they're being
interviewed, but once hired, most turn into autocrats, running their empires with little
room for participation, dissent and heaven forbid, any limits on their power.

Yes, CEOs need to be hired carefully, but there are limits to how well we can see the
“real” CEO. Much more important is having an autonomous board that will limit the
CEO’s powers and make him strongly accountable based on performance metrics.
Yes, some CEOs fail, but that’s business. If everyone succeeded, why would you need a
CEO in the first place? The key to leading companies is to choose wisely.

Select poorly, and you need to put systems in place to manage the leader. But this is a
losing game. It you’re stuck with a dog as CEO, you’ll never be able to manage all
aspects of her job. Blessed with a good one, and you won’t need to worry about
managing her performance – the CEO will do that job quite well on her own.

Some companies have limited the leader’s authority by clicing up the leader’s job and
micromanaged him or her at every turn. For example, when Citigroup’s Chairman and
CEO Charles Prince was forced out in late 2001, many argued in favor of separating the
role of Chairman and CEO because the CEO couldn’t and shouldn’t be trusted to do
the job. What company, and what leader, can excel under such a handicap?

There is nothing better than hiring the right CEO. There is nothing worse than hiring
the wrong one.
 CASE INCIDENT
GENERATION GAP: MENTOR AND PROTEGES
As the baby boom generation nears retirement, many Boomers are mentoring their
future work replacements – Generation Xers. Some Boomers have found the process
difficult. William Slater, a 47 years old computer engineer who participates in his
company's formal mentoring program, has had negative experiences with three
protégés. He recalls that one tried, unsuccessfully, to take his job, while another
repeatedly spoke badly about him to his boss. “I have an ax to grind with Generation
X. They’re stabbing aging Baby Boomers in the back,” says Slater.

It is not only Baby Boomers who have had bad experiences. Joel Bershok, a 24 years
old, was optimistic about the prospects of having a mentor. However, his mentor
dissolved the relationship after only 3 weeks. Says Bershok, “He just wanted it for his
resume.” To Bershok, one of the major problems with a mentoring relationship is a
lack of trust. With an uncertainty economy and companies making frequent layoff
announcement, Boomers are wary of teaching their younger counterparts too much
for fear that those counterparts, who usually make less – and so cost the company less
than Boomers – may replace them.
The fear may be justified. For example, Janet Wheeler, a 49 years old broker, saw her
job replaced by two younger workers after her company let her go. Wheeler thinks
that other Boomers are beginning to notice the risks of mentoring and are responding
by not teaching their protégés as much as they could. “You see young people being
brought along just enough to get the job done, but not so much that they’ll take your
job,” she states.

Given that some studies have demonstrated the beneficial effects of mentoring on
employee outcomes such as performance, job satisfaction, and employee
retention, many analysts are concerned that Baby Boomers are failing to see
mentoring as a responsibility. According to a study by Menttium Corporation, a firm that
aids companies in installing mentoring programs, almost 90 percent of formal mentoring
relationships end prematurely. The primary reasons include poor matching of mentors to
protégés and a lack of effort to keep the relationship going.

But some workers have strongly benefited from mentoring programs and are trying to
maintain mentoring programs in their companies. Three years after joining Dell, Lynn
Tyson, 41 helped start a formal mentoring program open to all of Dell’s 42,000 employees.
“I never had a formal mentor in my entire career. Most of the time I was shaking in my
shoes,’ says Tyson. Her program has been successful so far-and she mentors 40 protégés.
“I’m not trying to make this sound sappy, but I have the ability to make a different in
somebody’s career, and that excites me every day.”
The benefits are especially apparent for women and minorities who, historically, have
had greater difficulty than white males in climbing to top management positions.
According to a study by Harvard University professor David A. Thomas, the most
successful racial minorities at three different corporations had a strong network of
mentors. In addition, research has shown that women also benefit from having
positive mentoring experiences in that they have greater career success and career
satisfaction.

With the right amount of effort, protégés, mentors and the companies that sponsor
such relationship can realize tremendous benefits. However, individuals in mentoring
relationship may need to look past generational and other individual differences to
achieve such benefits. Though Slater has had share of bad mentoring experiences, he
is still optimistic. “Mentoring is a time-honored concept. Those of us who’ve been
mentored should mentor others. Otherwise, we’ve short-circuited the process and the
future, “ he says.
 QUESTIONS
1. What factors do you believe lead to successful mentoring programs? If
you were designing a mentoring program, what might it look like?

2. In what ways might a protégé benefit from having a mentor? In what

ways a mentor benefits from having a protégé?

3. Of the three types of trust discussed in the chapter, which one may be
the primary type in mentoring relationships and why?

4. What types of leaders, in terms of personality traits and behavioral

tendencies, would most likely be god mentors? What types of leaders
might be poor mentors?
CHAPTER 12

Power
&
Politics
Politics is in the Eye of the Beholder

A behavior that one person labels as “organizational politics” is very likely

to
be characterized as an instance of “effective management” by another. The f
act is not that effective management is necessarily political, although in
some cases it might be. Rather, a person’s reference point determines
what he or she classifies as organizational politics. Take a look at the
following labels used to describe the same phenomenon. These suggest
that politics, like beauty, is in the eye of the beholder.
“Political” Label “Effective Management” Label
1. Blaming others vs. Fixing responsibility
2. “Kissing up” vs. Developing working relationships
3. Apple polishing vs. Demonstrating loyalty
4. Passing the buck vs. Delegating authority
5. Covering your rear vs. Documenting decisions
6. Creating conflict vs. Encouraging change and innovation
7. Forming coalitions vs. Facilitating teamwork
8. Whistle-blowing vs. Improving efficiency
9. Scheming vs. Planning ahead
10. Overachieving vs. Competent and capable
11. Ambitious vs. Career minded
12. Opportunistic vs. Astute
13. Cunning vs. Practical minded
14. Arrogant vs. Confident
15. Perfectionist vs. Attentive to detail
 Employee Responses to
Organizational Politics
Decreased job
satisfaction

Increased anxiety
Organizational and stress
politics may
threaten
employees Increased
turnover

Reduced
performance
 CHAPTER 13

Conflict
and
Negotiation
Personal variables such as personality differences can be
the source of conflict among coworkers. To reduce
conflict resulting from personality differences, Vertex
Pharmaceuticals teaches employees how to identify
other people’s personal types and then how to
communicate effectively with them. At Vertex, innovation
is critical to the company’s mission of developing drugs
that treat life-threatening diseases. By training employees
to work harmoniously in spite of personality
differences, Vertex hopes to eliminate unproductive
conflict that impedes innovation
 The Conflict Process

Stage 1: Potential Opposition or Incompatibility

 Communication
 Structure

Stage 2: Cognition and Personalization

 Perceived conflict
 Felt conflict

Stage 3: Intentions
 Competing
 Collaborating
 Avoiding
 Accommodating
 Compromising

Stage 4: Behavior
Stage 5: Outcomes
 
Dimensions of Conflict-Handling Intentions

Assertive

Competing Collaborating
Assertiveness

Compromising
Unassertive

Avoiding
Accommodating

Uncooperative Cooperative

Cooperativeness
 Conflict-Intensity Continuum
Annihilatory
conflict Overt efforts to destroy the other party

Aggressive physical attacks

Threats and ultimatums

Assertive verbal attacks

Overt questioning or challenging of others

Minor disagreements or misunderstandings

No conflict
 Conflict-Resolution Technique
• Problem solving Face-to-face meeting of the conflicting parties for the
purpose of identifying the problem and resolving it through open discussion.
• Superordinate goals Creating a shared goal that cannot be attained without
the cooperation of each of the conflicting parties.
• Expansion of resources When a conflict is caused by the scarcity of a resource-
say money, promotion, opportunities, office space- expansion of the
resource can create a win/win solution.
• Avoidance Withdrawal from or suppression of the conflict.
• Smoothing Playing down difference while emphasizing common
interest between the conflicting parties.
• Compromise Each party to the conflict gives up something of value.
• Authoritative command Management uses its formal authority to resolve
the conflict and then communicates its desires to the part involved.
• Altering the human variable Using behavioral change technique such as human
relations training to alter attitudes and behavior that cause conflict.
• Altering the structural variables Changing the formal organization structure and
the interaction patterns of conflicting parties through job
redesign, transfer, creation of coordinating positions, and the like.
 Conflict-Stimulation Technique
• Communication Using ambiguous or threatening messages to
increase conflict levels.

• Bringing in outsiders Adding employees to a group whose

background, values, attitudes, or managerial styles
differ from those of present members.

• Restructuring the organization Realigning work groups , altering rules and

regulations, increasing interdependence, and
making similar structural changes to disrupt the status quo.

• Appointing a devil’s advocate Designating a critic to purposely argue against

the majority positions held by the groups.
Distributive Versus Integrative Bargaining
Bargaining Distribute Integrative
Characteristics Bargaining Bargaining

Goal Get as much of the pie Expand the pie so that both
as possible parties are satisfied

Motivation Win/Lose Win/Win

Focus Positions (“I can’t go beyond this Interest (“can you explain
point on this issue”) why this issue is so important
to you?”)
Interest Opposed Congruent

Information Low (sharing information High (sharing information will

sharing will only allow other party allow each party to find ways to
to take advantage) satisfy interests of each party)
Duration of Short term Long term
relationship
 Staking Out the Bargaining Zone

Party A’s aspiration range

Party B’s aspiration range
Settlement
range

Party A’s Party B’s Party A’s Party B’s

target point resistance point resistance point target point
 Negotiating Across Cultures
Obtaining a favourable outcome in a negotiation may in part depend on the
cultural characteristics of your opponent. A study of negotiators in China,
Japan, and the United States found that culture plays an important role in
successful negotiation. The study found that, overall, negotiators who had
both a self-serving “egoistic” orientation and a high goal level fared the best
overall compared with negotiator with an other-serving “prosocial”
orientation and low goal level. In other words, the strategy combining a self-
serving negotiation position, where one is focused only on maximizing one’s
own outcomes, coupled with a strong desire t obtain the best outcomes, led
to the most favourable negotiations results.

However, the degree to which this particular strategy resulted in better

outcomes depended on the negotiating partner. The results showed that
being self-serving and having a high negotiation goal level resulted in higher
outcomes (in this case, profits) only when the negotiating opponent was
other-serving. Negotiators from the United States are more likely to be self-
serving and have high goal levels. In China and Japan, however there is a
greater likelihood that negotiators are other-serving and thus are more
concerned with others’ outcomes.
Consequently, negotiators from the United States are likely to obtain better
outcomes for themselves when negotiating with individuals from China
and Japan because American negotiator tend to be more concerned with
their own outcomes, sometimes at the expense of the other party.

Though this study suggests that being self-serving can be beneficial in some
situation, negotiators should be wary of being too self-serving. U.S
negotiator may benefit from a self-serving negotiation position and a
high goal level when negotiating with individuals from China or Japan,
but being too self-serving may result in damaged relationships, leading
to less favourable outcomes in the long run.
 CHAPTER 14

Organization
Structure
 Key Design Questions and Answers for
Designing the Proper Organizational Structure
The Key Question The Answer is Provided By

1. To what degree are activities subdivided into Work specialization

separate jobs?

2. On what basis will jobs be grouped Departmentalization

together?
3. To whom do individuals and groups report? Chain of command

4. How many individuals can a manager

Span of control
efficiently and effectively direct?

5. Where does decision-making authority lie? Centralization and decentralization

6. To what degree will there be rules and

Formalization
regulations to direct employees and
managers?
 Structural Considerations in Multinationals
When bringing out a business innovation in any country, trudging through corporate
bureaucracy can cause delays that result in a competitive disadvantage. This is
especially true in China, one of the world’s fastest-growing economies. Successful
multinational corporations operating in China are realizing that the optimal
structure is decentralized with a relatively high degree of managerial autonomy.
Given that more than 1.3 billion people live in China, the opportunity for
businesses is tremendous, and as a result, competition is increasing. To take
advantage of this opportunity, companies must be able to respond to changes
before their competitors.

Other companies that have implemented more formalized, bureaucratic structures

have fared less well. One manager of a consumer electronics company who
wanted to reduce the package size of a product to lower its cost and attract
lower-income Chinese customers had to send the idea to his boss. His boss, the
vice president of Asian operations, then send the ideas to upper management in
the United States. Although the idea was approved, the process took 5 months,
during which competitors introduced similar packaged products.
So when it comes to innovating in a dynamic , fast –paced economy such as China,
decentralization and autonomy can be major competitive advantages for
multinational companies. To gain this competitive advantage, companies are
empowering their overseas managers to make their own decisions.
 Downsizing Improves Organizational
Performance
There aren’t many leaders who like to downsize. Doing so always means inflicting pain
an employees and enduring attacks by politicians, labor groups, and the media. But
If there is one thing we have learned in the past 20 years, it's that downsizing has
been an indispensable factor in making companies more competitive.

In 1970s and 1980s, most companies in established countries as the United States were
overstaffed. That made them vulnerable to foreign competition from companies
with lower labor costs and a better ability to quickly adapt to new economies
conditions and technologies. It’s perhaps inevitable that companies do this: Success
breeds complacency; and, when business is good, companies tend to overstaff and
become bloated. Like the patient with a heart condition, they find the remedy is
often painful, but fail to address it, and the eventual harm may be much worse.

Nearly all major U.S companies that were around in the 1970s have shrunk their
workforces and streamlined their operations. Look at IBM. Once one of the largest
employers in the world, it often touted its no-layoff policy. But in the 1980s and
1990s, it became quite clear that IBM was too big, too complex, and spread too thin.
Today, IBM is profitable again, but only after it shed nearly 100,000 jobs. Here is
what former IBM CEO Lou Gerstner said about the need to restructure the company:
It got stuck because it fell victim to what I call the success syndrome. The more successful enterprises
are the more they try to replicate, duplicate, codify what makes us great. And suddenly they’re
inward thinking. They’re thinking how can we continue to do what we’re done in the past without
understanding that what made them successful is to take risks, to change and to adapt and to be
responsive. And so in a sense success breeds its own failure. And I think it’s true of a lot of
successful businesses.

Layoffs and restructuring are rarely the popular things to do. But without them, most organizations
would not survive, much less remain competitive.

Downsizing has become a sort of rite of passage for business leaders; you’re not a real leader unless
you’ve downsized a company. However, to separate fact from myth, let’s look at the evidence. Do
companies that have downsized perform batter as a result?

The authors of this study don’t argue that downsizing is always a bad strategy. Rather, the upshot is
that managers shouldn’t assume layoffs are a quick fix to what ails a company. In general,
downsizing does not improve performance, so the key is to do it only when needed and to do it in
the right way.

What are some ways organizations can do this? First, they should use downsizing only as a last resort.
Second, and related, they should inform employees about the problem, and give them a chance to
contribute alternative restructuring solutions. Third, organizations need to bend over backward to
ensure that employees see the layoff process as fair, including making sure the layoff criteria are fair
(and ideally result from employee involvement), advance notice is given, and job relocation
assistance is provided. Finally, make sure downsizing is done to good effect - not just to cut cost,
but to reallocate resource to where they can be most effective.
 Case Incident
Can a Structure be Too Flat?
Steelmaker Nucor likes to think it has management figured out. And with good reason. It is
the darling of the business press. Its management practices are often favorably reviewed
in management texts. And it’s been effective by nearly any business metric.

There’s one fundamental management practice that Nucor doesn’t appear to have mastered
– how to structure itself.

Nucor has always pride itself on having just three levels of management separating the CEO
from factory workers. With Nucor’s structure, plant managers report directly to CEO Dan
DiMicco. As Nucor continues to grow, though, DiMicco is finding it increasingly hard to
maintain this simple structure. So, in 2006, DiMicco added another layer of management,
creating a new layer of five executive vice presidents. “I needed to be free to make
decisions on trade battles,” he said.

Still, even with the new layer in its structure, Nucor is remarkably lean and simple. U.S. Steel
Corp. employs 1,200 people at its corporate headquarters, compared to a scant 66 at
Nucor’s. At Nucor, managers still answer their own phone calls and emails, and the firm
has no corporate jet. Even comparatively lean companies like Toyota appear fat and
complicated compared to Nucor. “You’re going to get at least ten layers at Toyota before
you get to the president,’ says a former Toyota engineer.
 Questions
1. How does the Nucor case illustrate the limitations of the
simple organizational structure?

2. Do you think other organizations should attempt to replicate

Nucor’s structure? Why or why not?

3. Why do you think other organizations have developed much

more complex structures than Nucor?

4. Generally, organizational structures tend to reflect the views

of the CEO. As more and more “new blood” comes into
Nucor, do you think the structure will begin to look like that
of other organizations?
 CHAPTER 15

Organizational
Culture
A Definition of Organization Culture
1. Innovation and risk taking. The degree to which employees are encouraged to be
innovative and take risks.

2. Attention to detail. The degree to which employees are expected to exhibit precision,
analysis, and attention to detail.

3. Outcome orientation. The degree to which management focuses on results or outcomes

rather than on the technique and processes used to achieve those outcomes.

4. People orientation. The degree to which management decisions take into consideration
the effect of outcomes on people within the organization.

5. Team orientation. The degree to which work activities are organized around teams rather
than individuals.

6. Aggressiveness. The degree to which people are aggressive and competitive rather than
easygoing.

7. Stability. The degree to which organizational activities emphasize maintaining the status
quo in contrast to growth.
Contrasting Organizational Cultures
• Organization A
This organization is a manufacturing firm. Managers are expected to fully document
all decisions, and “good managers” are those who can provide detailed data to
support their recommendations. Creative decisions that incur significant change
or risk are not encouraged. Because managers of failed projects are openly
criticized and penalized, managers try not to implement ideas that deviate much
from the status quo. One lower-level manager quoted an often-used phrase in
the company: “ if it ain’t broke, don’t fix it.”

There are extensive rules and regulations in this firm that employees are required to
follow. Managers supervise employees closely to ensure there are no deviations.
Management is concerned with high productivity, regardless of the impact on
employee morale or turnover.

Work activities are designed around individuals. There are distinct departments and
lines of authority, and employees are expected to minimize formal contact with
other employees outside their functional area or line of command. Performance
evaluations and rewards emphasize individual effort, although seniority tends to
be the primary factor in the determination of pay raises and promotions.
• Organization B
This organization is also a manufacturing firm. Here, however, management
encourages and reward risk taking and change. Decisions based on intuition are
valued as much as those that are well rationalized. Management prides itself on
its history of experimenting with new technologies and its success in regularly
introducing innovative products. Managers or employees who have a good idea
are encouraged to “run with it.” and failures are treated as “ learning
experiences.” The company prides itself on being market-driven and rapidly
responsive to the changing needs of its customers.

There are few rules and regulations for employees to follow, and supervision is loose
because management believes that its employees are hardworking and
trustworthy. Management is concerned with high productivity, but believes that
this comes through treating its people right. The company is proud of its
reputation as being a good place to work.

Job activities are designed around work teams, and teams members are encouraged
to interact with people across functions and authority levels. Employees talk
positively about the competition between teams. Individuals and teams have
goals, and bonuses are based on achievement of these outcomes. Employees are
given considerable autonomy in choosing the means by which the goals are
attained.
 CHAPTER 16

Human Resource
Policies
and
Practices
“It’s First Impressions That Count”
This statement is true. When we meet someone for the first time, we notice
a number of things about that person: physical characteristics, clothes,
firmness of hand-shake, gestures, tone of voice, and the like. We then
use these impressions to fit the person into ready-made categories. And
these first impressions tend to hold greater weight than information
received later.

The best evidence about first impressions comes from research on

employment interviews. Findings clearly demonstrate that first
impressions count. A recent study suggested that interviews often know
whether they will hire someone soon after the opening handshake and
small talk.

Research on applicant appearance confirms the power of first impressions.

Attractive applicants fare better in interviews and overweight applicants
are penalized.
Another study revealed just how superficial interviewer judgment often are.
These researchers responded to employment ads in Chicago and Boston.
In their responses, they submitted fake resumes of high and low quality,
and used names that were traditionally African American (Kenya and
Hakim) and Caucasian (Allison and (Brad). The researchers found that
the resumes with Caucasian names received 50 % more callbacks than
those with African American names. Moreover, while 27 % of the high
quality resumes with Caucasian names received callbacks, only 8% of the
high-quality resumes with African American names did.

A final body of confirming research finds that interviewers’ post-interview

evaluations of applicant conform, to a substantial degree, to their pre-
interview impressions. That is, those first impressions carry considerable
weight in shaping the interviewers’ final evaluations assuming that the
interview elicits no highly negative information.
 CHAPTER 17

Organizational Change
and
Stress Management
 Sources of Resistance to Change
• Individual Sources
Habit – To copy with life’s complexities, we rely on habits or programmed responses.
But when confronted with change, this tendency to respond in our accustomed
ways becomes a source of resistance.

Security – People with a high need for security are likely to resist change because it
threatens their feelings of safety.

Economic factors – Changes in job tasks or established work routines can arouse
economic fears if people are concerned that they won’t be able to perform the
new tasks or routines to their previous standards, especially when pay is closely
tied to productivity.

Fear of the unknown – change substitutes ambiguity and uncertainty for the
unknown.

Selective information processing – individuals are guilty of selectively processing

information in order to keep their perceptions intact. They hear what they want to
hear and they ignore information that challenges the world they've created.
• Organizational Sources
Structural inertia – Organizations have built-in mechanisms – like their selection processes
and formalized regulations – to produce stability. When an organization is confronted
with change, this structural inertia acts as a counterbalance to sustain stability.

Limited focus of change – organizations are made up of a number of interdependent

subsystems. One can’t be changed without affecting the others. So limited changes in
subsystems tend to be nullified by the larger system.

Group inertia – Even if individuals want to change their behavior, group norms may act as a
constraints.

Threat to expertise – Changes in organizational patterns may threaten the expertise of

specialized group.

Threat to established power relationship – any redistribution of decision-making authority

can threaten long-established power relationships within the organization.

Threat to established resource allocations – groups in the organization that control sizable
resources often see change as a threat. They tend to be content with the way things
are.
 Approached to Managing
organizational Change

1. Lewin’s Three-Step Model

2. Unfreezing the Status Quo

 Lewin’s Three-Step Model

Unfreezing Movement Refreezing

 Unfreezing the Status Quo

Desired
state
Restraining
forces

Status
quo

Driving
forces

Time
 Kotter’s Eight-Step Plan for Implementing
Change
1. Establish a sense of urgency by creating a compelling reason for why
change is needed.
2. Form a coalition with enough power to lead the change.
3. Create a new vision to direct the change and strategies for achieving
the vision.
4. Communicate the vision throughout the organization.
5. Empower others to act on the vision by removing barriers to change
and encouraging risk taking and creative problem solving.
6. Plan for, create, and reward short-term “win” that move the
organization toward the new vision.
7. Consolidate improvements, reassess changes, and make necessary
adjustment in the new programs.
8. Reinforce the changes by demonstrating the relationship between
new behaviors and organizational success
 A Good Organizational Culture Knows No
Boundaries
In a study of 230 organizations from different industries around the world,
and from regions including Asia, Europe, the Middle East, North
America, and Africa, having a strong and positive organizational culture
was associated with increased organizational effectiveness.

The study, published in the journal Organizational Dynamics, found that the
strong and positive aspects of organizational culture most critical to
success across regions generally included:
 Empowering employees
 Having a team orientation
 Having a clear strategic direction and intent
 Possessing a strong and recognizable vision.
Though there were similarities when comparing regions in terms of
organizational culture and effectiveness, there were some differences
when researchers compared individual countries. An organizational
culture that stresses empowerment, for example. Appears to be more
important for performance in countries such as the United Kingdom and
Brazil and less important in countries such as Japan because of the
former two countries’ focus on the individual. Also, a focus on creating
change within the organization appears to be a strong predictor in
Jamaica, but it currently is unclear as to why this is the case.

Overall, the study confirms that having a strong, productive organizational

culture is associated with increased sales growth, profitability, employee
satisfaction, and overall organizational performance regardless of where
the organization is physically located.
 “People Socialize Themselves”
This statement is true to a significant degree. Although we
generally think of socialization as the process in which a
person is shaped by his environment – and indeed that is the
major focus of socialization research – more evidence is
accumulating that many people socialize themselves, or at
least substantially mold their socialization experiences.

Research has show that people with a proactive personality are

much better at learning the ropes than are newcomers.
That’s because they are more likely to ask questions, seek
out help, and solicit feedback – in short, they learn more
because they seek out more information and feedback.
Research indicates that individuals with a proactive personality,
are also better at networking when they join an
organizations, and achieve a closer fit with the culture of
their organizations – in short, they build their own “social
capital.” as a result of being more effectively socialized into
the organization, proactive people tend to like their jobs
more, perform them better, and show less propensity to
quit. Proactive people, it seems, do a lot to socialize
themselves into the culture of an organization.

None of this is meant to deny that socialization matters. The

point is that people are not passive actors in being
socialized. It may well be that how well someone is
socialized into a new culture depends more on her
personality than anything else.
 Spirituality and Organizational Culture
• Workplace spirituality recognizes that people have
an inner life that nourishes and is nourished by
meaningful work that takes place in the context of
community.

• Organizations that promote a spiritual culture

recognize that people have both a mind and a spirit,
seek to find meaning and purpose in their work,
and desire to connect with other human beings and
be part of a community
 Characteristics of a Spiritual
Organization

• Strong sense of purpose

• Trust and respect
• Humanistic work practices
• Toleration of employee expression
 How Organizational Cultures Have an Impact
on Employee Performance and Satisfaction

Objective factors High

•Innovation and risk taking Performance
Perceived as
•Attention to detail
•Outcome orientation Organizational culture
•People orientation
•Team orientation Satisfaction
•Aggressiveness
•Stability Low