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