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Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. What are the basic characteristics of managerial decision-making?
2. What are the two systems of decision-making in the brain?
3. What is the difference between programmed and nonprogrammed decisions?
4. What barriers exist that make effective decision-making difficult?
5. How can a manager improve the quality of her individual decision-making?
6. What are the advantages and disadvantages of group decision-making, and how can a manager improve the quality of group decision-making?
06: Perception and Managerial Decision Making
exploring managerial careers
Up, Up, and Away: How Stephanie Korey and Jen Rubio founded their luggage company
Jen Rubio and Stephanie Korey faced a number of important decisions in starting their luggage company, Away—beginning with the decision to start a business! That decision came about after Rubio’s luggage broke on a trip. She found it frustrating that all the luggage options were either inexpensive (\$100 or less) but low quality, or high quality but incredibly expensive (\$400 and above). There was no midrange option. So in 2015 Rubio and her friend Stephanie Korey began researching the luggage industry. They found that much of the reason for the high prices on quality luggage was because of how it was distributed and sold, through specialty retail shops and department stores. If they opted instead for a model in which they sold directly to consumers, they could provide high-quality luggage at more of a midrange (\$200-\$300) price. After considerable research, the two were convinced that they had an idea worth pursuing. Rubio and Korey settled on the company name “Away,” which is intended to invoke the pleasure that comes from traveling.
Both of the founders had prior experience working for a start-up in the e-commerce space (Warby Parker), which helped them with making sound choices. Rubio’s background was more in branding and marketing, while Korey’s was in operations and supply chain management—so each was able to bring great expertise to various aspects of the business. They raised money initially from friends and family, but within a few months, they sought venture capital funding to ensure that they had enough money to get off to a successful start.
A big decision that Rubio and Korey had to make fairly early in the process of establishing their business was to settle on an initial design for the product. This decision required extensive marketing and consumer research to understand customer needs and wants. They asked hundreds of people what they liked about their existing luggage, and what they found most irritating about their existing luggage. They also contracted with a two-person design team to help create the first prototype. This research and development ultimately led to the design of an attractive hard case that is surprisingly lightweight. It also boasts extremely high-quality wheels (four of them, not two) and high-quality zippers. As a bonus, the carry-on includes a built-in battery for charging phones and other devices.
The two founders also had to choose a partner to manufacture their product. Because their product had a hard, polycarbonate shell, Rubio and Korey discovered that manufacturing in the United States was not a viable option—the vast majority of luggage manufacturers using a polycarbonate shell were based in Asia. They researched a number of possible business partners and asked lots of questions. In addition, they eventually visited all of the factories on their list of options to see what they were actually like. This was an important piece of research because the companies that looked best on paper didn’t always turn out to be the best when they visited in person. Rubio and Korey ended up working with a manufacturing partner in China that also produces luggage for many high-end brands, and they have been extremely pleased with the partnership. They continue to devote time to building and maintaining that relationship, which helps to avoid issues and problems that might otherwise come up.
By the end of 2015, Rubio and Korey had developed their first product. Because the luggage was not going to be available in time for the holiday shopping season, they decided to allow customers to preorder the luggage. To drum up interest, the duo engaged in a unique storytelling effort. They interviewed 40 well-respected members of the creative community about their travel experiences and created a hardcover book of travel memoirs called The Places We Return To. Not only was the book interesting and engaging, but it also made lots of people in the creative community aware of Away luggage. Starting in November 2015, the travel memoir book was available for free with the purchase of a gift card that could be redeemed in February 2016 for luggage. The book project generated tremendous advance interest in the product, and the 1,200 printed copies sold out. Away generated \$12 million in first-year sales.
Stephanie Corey and Jen Rubio faced many important and novel decisions in initially developing and building their business. They have been successful in part because they made those decisions wisely—by relying on shared knowledge, expertise, and lots of research before reaching a decision. They will continue to face many decisions, big and small. They have expanded their product line from one piece of luggage to four, with more luggage—and other travel accessories—in the works for the future. Their company, which is based in New York, has grown to over 60 employees in the first two years. These employees include the two design-team members who were contracted to help create their first prototype; Rubio and Korey appreciated working with them so much, they offered them full-time positions with Away. Each new hire represents new decisions—decisions about what additional work needs to be done and who they should hire to do it. Each new product also brings additional decisions—but it seems Rubio and Korey have positioned themselves (and their business) well for future successes.
Sources: Kendall Baker, “An Interview With the Co-Founder of Away,” The Hustle, December 5, 2016, https://thehustle.co/episodes; Bond Street Blog, “Up and Away,” Bond Street, https://bondstreet.com/blog/jen-rubio-interview/; Josh Constine, “Away nears 100k stylish suitcases sold as it raises \$20M,” TechCrunch, May 19, 2017, https://techcrunch.com/; Adeline Duff, “ The T&L Carry-On: Away Travel Co-Founders Jen Rubio and Stephanie Korey,” Travel & Leisure, March 9, 2017, http://www.travelandleisure.com/; Burt Helm, “How This Company Launched With Zero Products –and Hit \$12 Million in First-Year Sales,” Inc.com, July/August 2017, https://www.inc.com/; Veronique Hyland, “The Duo Trying to Make Travel More Glamorous,” The Cut, December 22, 2015, https://www.thecut.com/.
Managers and business owners—like Jen Rubio and Stephanie Korey—make decisions on a daily basis. Some are big, like the decision to start a new business, but most are smaller decisions that go into the regular running of the company and are crucial to its long-term success. Some decisions are predictable, and some are unexpected. In this chapter, we look at important information about decision-making that can help you make better decisions and, ultimately, be a better manager.
1. What are the basic characteristics of managerial decision-making?
Decision-making is the action or process of thinking through possible options and selecting one.
It is important to recognize that managers are continually making decisions and that the quality of their decision-making has an impact—sometimes quite significant—on the effectiveness of the organization and its stakeholders. Stakeholders are all the individuals or groups that are affected by an organization (such as customers, employees, shareholders, etc.).
Members of the top management team regularly make decisions that affect the future of the organization and all its stakeholders, such as deciding whether to pursue a new technology or product line. A good decision can enable the organization to thrive and survive long-term, while a poor decision can lead a business into bankruptcy. Managers at lower levels of the organization generally have a smaller impact on the organization’s survival, but can still have a tremendous impact on their department and its workers. Consider, for example, a first-line supervisor who is charged with scheduling workers and ordering raw materials for her department. Poor decision-making by lower-level managers is unlikely to drive the entire firm out of existence, but it can lead to many adverse outcomes such as:
• reduced productivity if there are too few workers or insufficient supplies,
• increased expenses if there are too many workers or too many supplies, particularly if the supplies have a limited shelf life or are costly to store, and
• frustration among employees, reduced morale and increased turnover (which can be costly for the organization) if the decisions involve managing and training workers.
Deciding When to Decide
While some decisions are simple, a manager’s decisions are often complex ones that involve a range of options and uncertain outcomes. When deciding among various options and uncertain outcomes, managers need to gather information, which leads them to another necessary decision: how much information is needed to make a good decision? Managers frequently make decisions without complete information; indeed, one of the hallmarks of an effective leader is the ability to determine when to hold off on a decision and gather more information, and when to make a decision with the information at hand. Waiting too long to make a decision can be as harmful for the organization as reaching a decision too quickly. Failing to react quickly enough can lead to missed opportunities, yet acting too quickly can lead to organizational resources being poorly allocated to projects with no chance of success. Effective managers must decide when they have gathered enough information and must be prepared to change course if additional information becomes available that makes it clear that the original decision was a poor one. For individuals with fragile egos, changing course can be challenging because admitting to a mistake can be harder than forging ahead with a bad plan. Effective managers recognize that given the complexity of many tasks, some failures are inevitable. They also realize that it’s better to minimize a bad decision’s impact on the organization and its stakeholders by recognizing it quickly and correcting it.
What’s the Right (Correct) Answer?
It’s also worth noting that making decisions as a manager is not at all like taking a multiple-choice test: with a multiple-choice test, there is always one right answer. This is rarely the case with management decisions. Sometimes a manager is choosing between multiple good options, and it’s not clear which will be the best. Other times there are multiple bad options, and the task is to minimize harm. Often there are individuals in the organization with competing interests, and the manager must make decisions knowing that someone will be upset no matter what decision is reached.
What’s the Right (Ethical) Answer?
Sometimes managers are asked to make decisions that go beyond just upsetting someone—they may be asked to make decisions in which harm could be caused to others. These decisions have ethical or moral implications. Ethics and morals refer to our beliefs about what is right vs. wrong, good vs. evil, virtuous vs. corrupt. Implicitly, ethics and morals relate to our interactions with and impact on others—if we never had to interact with another creature, we would not have to think about how our behaviors affected other individuals or groups. All managers, however, make decisions that impact others. It is therefore important to be mindful of whether our decisions have a positive or a negative impact. “Maximizing shareholder wealth” is often used as a rationalization for placing the importance of short-term profits over the needs of others who will be affected by a decision—such as employees, customers, or local citizens (who might be affected, for example, by environmental decisions). Maximizing shareholder wealth is often a short-sighted decision, however, because it can harm the organization’s financial viability in the future.1 Bad publicity, customers boycotting the organization, and government fines are all possible long-term outcomes when managers make choices that cause harm in order to maximize shareholder wealth. More importantly, increasing the wealth of shareholders is not an acceptable reason for causing harm to others.
As you can see from these brief examples, management is not for the faint of heart! It can, however, be incredibly rewarding to be in a position to make decisions that have a positive impact on an organization and its stakeholders. We see a great example of this in the Sustainability and Responsible Management box.
SUSTAINABILITY AND RESPONSIBLE MANAGEMENT
Brewing Sustainable Success
The focus of a manager or a business owner is often primarily on doing well (making a profit). Sometimes, though, organizational leaders choose to pursue two big goals at once: doing well and simultaneously doing good (benefiting society in some way). Why? Generally, because they think it’s an important thing to do. The business provides an opportunity to pursue another goal that the founders, owners, or managers are also passionate about. In the case of New Belgium Brewing, the company’s cofounders, Jeff Lebesch and Kim Jordan were passionate about two things: making great beer and environmental stewardship. So it should come as no surprise that their brewery is dedicated to reducing its environmental footprint. The brewery has created a culture that fosters sustainability in a wide range of ways, such as by giving employees a bicycle on their one-year anniversary as a way to encourage them to ride bicycles to work. The organization is also active in advocacy efforts, such as the “Save the Colorado” (river) campaign, and it works hard to promote responsible decision-making when it comes to environmental issues. In fact, in 1999, following an employee vote, the brewery began to purchase all of its electricity from wind power, even though it was more expensive than electricity from coal-burning power plants (which meant reduced profitability and less money for employee bonuses).
While the brewery still relies primarily on wind power, it also now generates a portion of its electricity onsite—some from rooftop solar panels, and even more from biogas, the methane gas byproduct that is created by microbes in the brewery’s water treatment plant. The company cleans the wastewater generated from beer production, and in doing so it generates the biogas, which is captured and used for energy to help run the brewery.
Brewing is water-intensive, so New Belgium works hard to reduce water consumption and to recycle the water that it does use. The company also reduces other types of waste by selling used grain, hops, and yeast to local ranchers for cattle feed. The company, which has been employee-owned since 2013, also works with the local utility through a Smart Meter program to reduce its energy consumption at peak times.
All of these efforts at doing good must come at a cost, right? Actually, research shows that companies that are committed to sustainability have superior financial performance, on average, relative to those that are not. In coming up with creative ways to reduce, reuse, and recycle, employees often also find ways to save money (like using biogas). In addition, organizations that strive to do good are often considered attractive and desirable places to work (especially by people who have similar values) and are also valued by the surrounding communities. As a result, employees in those organizations tend to be extremely committed to them, with high levels of engagement, motivation, and productivity. Indeed, it seems clear that the employees at the New Belgium Brewery are passionate about where they work and what they do. This passion generates value for the organization and proves that it is, in fact, possible to do well while having also made the decision to do good. And in the case of New Belgium Brewery, that means working to protect the environment while also making delicious beer.
Discussion Questions:
1. What challenges does New Belgium Brewery face in pursuing environmental goals?
2. Can you think of any other examples of companies that try to “do good” while also doing well?
3. Would you like to work for an organization that is committed to something more than just profitability, even if it meant your salary or bonus would be smaller?
Sources: Karen Crofton, “How New Belgium Brewery leads Colorado’s craft brewers in energy,” GreenBiz, August 1, 2014, https://www.greenbiz.com/. Darren Dahl, “How New Belgium Brewing Has Found Sustainable Success,” Forbes, February 8, 2016, https://www.forbes.com/. Jenny Foust, “New Belgium Brewing Once Again Named Platinum-Level Bicycle Friendly Business by the League of American Bicyclists,” Craft Beer.com, February 18, 2016. Robert G. Eccles, Ioannis Ioannou, & George Serafeim, “The Impact of Corporate Sustainability on Organizational Processes and Performance,” Management Science, 60, 2014, https://doi.org/10.1287/mnsc.2014.1984. New Belgium Brewery Sustainability web page, http://www.newbelgium.com/sustainability, accessed September 18, 2017.
concept check
1. What are some positive outcomes of decision-making for an organization? What are some possible negative outcomes?
2. How is managerial decision-making different from a multiple-choice test?
3. In addition to the owners of a business, who are some of the other stakeholders that managers should consider when making decisions? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/06%3A_Perception_and_Managerial_Decision_Making/6.01%3A_Overview_of_Managerial_Decision-Making.txt |
1. What are the two systems of decision-making in the brain?
The human brain processes information for decision-making using one of two routes: a reflective system and a reactive (or reflexive) system.2,3 The reflective system is logical, analytical, deliberate, and methodical, while the reactive system is quick, impulsive, and intuitive, relying on emotions or habits to provide cues for what to do next. Research in neuropsychology suggests that the brain can only use one system at a time for processing information [Darlow & Sloman] and that the two systems are directed by different parts of the brain. The prefrontal cortex is more involved in the reflective system, and the basal ganglia and amygdala (more primitive parts of the brain, from an evolutionary perspective) are more involved in the reactive system.4
Reactive Decision-Making
We tend to assume that the logical, analytical route leads to superior decisions, but whether this is accurate depends on the situation. The quick, intuitive route can be lifesaving; when we suddenly feel intense fear, a fight-or-flight response kicks in that leads to immediate action without methodically weighing all possible options and their consequences. Additionally, experienced managers can often make decisions very quickly because experience or expertise has taught them what to do in a given situation. These managers might not be able to explain the logic behind their decision, and will instead say they just went with their “gut,” or did what “felt” right. Because the manager has faced a similar situation in the past and has figured out how to deal with it, the brain shifts immediately to the quick, intuitive decision-making system.5
Reflective Decision-Making
The quick route is not always the best decision-making path to take, however. When faced with novel and complex situations, it is better to process available information logically, analytically, and methodically. As a manager, you need to think about whether a situation requires not a fast, “gut” reaction, but some serious thought prior to making a decision. It is especially important to pay attention to your emotions because strong emotions can make it difficult to process information rationally. Successful managers recognize the effects of emotions and know to wait and address a volatile situation after their emotions have calmed down. Intense emotions—whether positive or negative—tend to pull us toward the quick, reactive route of decision-making. Have you ever made a large “impulse” purchase that you were excited about, only to regret it later? This speaks to the power our emotions exert on our decision-making. Big decisions should generally not be made impulsively, but reflectively.
The Role of Emotions
Being aware of the role emotions play in decision-making does not mean that we should ignore them. Emotions can serve as powerful signals about what we should do, especially in situations with ethical implications. You can read more about this particular type of decision-making in the Ethics in Practice box later in this chapter. Thinking through how we feel about the possible options, and why we feel that way, can greatly enhance our decision-making.6 Effective decision-making, then, relies on both logic and emotions. For this reason, the concept of emotional intelligence has become popular as a characteristic of effective managers. Emotional intelligence is the ability to recognize, understand, pay attention to, and manage one’s own emotions and the emotions of others. It involves self-awareness and self-regulation—essentially, this is a toggling back and forth between emotions and logic so that we analyze and understand our own emotions and then exert the necessary control to manage them as appropriate for the situation. Emotional intelligence also involves empathy—the ability to understand other peoples’ emotions (and an interest in doing so). Finally, emotional intelligence involves social skills to manage the emotional aspects of relationships with others. Managers who are aware of their own emotions can think through what their emotions mean in a given situation and use that information to guide their decision-making. Managers who are aware of the emotions of others can also utilize that information to help groups function more effectively and engage in better group decision-making. While emotional intelligence seems to come easily to some people, it is something that we can develop and improve on with practice. A model of emotional intelligence is presented in Exhibit 6.2.
concept check
1. Explain the two systems used by the brain in decision-making.
2. What is emotional intelligence, and why is it important for decision-making? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/06%3A_Perception_and_Managerial_Decision_Making/6.02%3A_How_the_Brain_Processes_Information_to_Make_Decisions-_Reflective_and_Reactive_Systems.txt |
1. What is the difference between programmed and nonprogrammed decisions?
Because managers have limited time and must use that time wisely to be effective, it is important for them to distinguish between decisions that can have structure and routine applied to them (called programmed decisions) and decisions that are novel and require thought and attention (nonprogrammed decisions).
Programmed Decisions
Programmed decisions are those that are repeated over time and for which an existing set of rules can be developed to guide the process. These decisions might simple, or they could be fairly complex, but the criteria that go into making the decision are all known or can at least be estimated with a reasonable degree of accuracy. For example, deciding how many raw materials to order should be a programmed decision based on anticipated production, existing stock, and anticipated length of time for the delivery of the final product. As another example, consider a retail store manager developing the weekly work schedule for part-time employees. The manager must consider how busy the store is likely to be, taking into account seasonal fluctuations in business. Then, she must consider the availability of the workers by taking into account requests for vacation and for other obligations that employees might have (such as school). Establishing the schedule might be complex, but it is still a programmed decision: it is made on a regular basis based on well-understood criteria, so the structure can be applied to the process. For programmed decisions, managers often develop heuristics, or mental shortcuts, to help reach a decision. For example, the retail store manager may not know how busy the store will be the week of a big sale, but it might routinely increase staff by 30% every time there is a big sale (because this has been fairly effective in the past). Heuristics are efficient—they save time for the decision-maker by generating an adequate solution quickly. Heuristics don’t necessarily yield the optimal solution—deeper cognitive processing may be required for that. However, they generally yield a good solution. Heuristics are often used for programmed decisions because experience in making the decision over and over helps the decision-maker know what to expect and how to react. Programmed decision-making can also be taught fairly easily to another person. The rules and criteria, and how they relate to outcomes, can be clearly laid out so that a good decision can be reached by the new decision-maker. Programmed decisions are also sometimes referred to as routine or low-involvement decisions because they don’t require in-depth mental processing to reach a decision. High- and low-involvement decisions are illustrated in Exhibit 6.3.
Nonprogrammed Decisions
In contrast, nonprogrammed decisions are novel, unstructured decisions that are generally based on criteria that are not well-defined. With nonprogrammed decisions, information is more likely to be ambiguous or incomplete, and the decision-maker may need to exercise some thoughtful judgment and creative thinking to reach a good solution. These are also sometimes referred to as nonroutine decisions or as high-involvement decisions because they require greater involvement and thought on the part of the decision-maker. For example, consider a manager trying to decide whether or not to adopt new technology. There will always be unknowns in situations of this nature. Will the new technology really be better than the existing technology? Will it become widely accepted over time, or will some other technology become the standard? The best the manager can do in this situation is to gather as much relevant information as possible and make an educated guess as to whether the new technology will be worthwhile. Clearly, nonprogrammed decisions present a greater challenge.
The Decision-Making Process
While decision-makers can use mental shortcuts with programmed decisions, they should use a systematic process with nonprogrammed decisions. The decision-making process is illustrated in Exhibit 6.4 and can be broken down into a series of six steps, as follows:
1. Recognize that a decision needs to be made.
2. Generate multiple alternatives.
3. Analyze the alternatives.
4. Select an alternative.
5. Implement the selected alternative.
6. Evaluate its effectiveness.
While these steps may seem straightforward, individuals often skip steps or spend too little time on some steps. In fact, sometimes people will refuse to acknowledge a problem (Step 1) because they aren’t sure how to address it. We’ll discuss the steps later in the chapter when we review ways to improve the quality of decision-making.
You may notice similarities between the two systems of decision-making in our brains and the two types of decisions (programmed and nonprogrammed). Nonprogrammed decisions will generally need to be processed via the reflective system in our brains in order for us to reach a good decision. But with programmed decisions, heuristics can allow decision-makers to switch to the quick, reactive system and then move along quickly to other issues.
concept check
1. Give an example of a programmed decision that a manager might face.
2. Give an example of a nonprogrammed decision.
3. What are heuristics, and when are they helpful?
4. How are programmed and nonprogrammed decisions connected to the reflective and reactive systems in the brain? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/06%3A_Perception_and_Managerial_Decision_Making/6.03%3A_Programmed_and_Nonprogrammed_Decisions.txt |
1. What barriers exist that make effective decision-making difficult?
There are a number of barriers to effective decision-making. Effective managers are aware of these potential barriers and try to overcome them as much as possible.
Bounded Rationality
While we might like to think that we can make completely rational decisions, this is often unrealistic given the complex issues faced by managers. Nonrational decision-making is common, especially with nonprogrammed decisions. Since we haven’t faced a particular situation previously, we don’t always know what questions to ask or what information to gather. Even when we have gathered all the possible information, we may not be able to make rational sense of all of it or to accurately forecast or predict the outcomes of our choice. Bounded rationality is the idea that for complex issues we cannot be completely rational because we cannot fully grasp all the possible alternatives, nor can we understand all the implications of every possible alternative. Our brains have limitations in terms of the amount of information they can process. Similarly, as was alluded to earlier in the chapter, even when managers have the cognitive ability to process all the relevant information, they often must make decisions without first having time to collect all the relevant data—their information is incomplete.
Escalation of Commitment
Given the lack of complete information, managers don’t always make the right decision initially, and it may not be clear that a decision was a bad one until after some time has passed. For example, consider a manager who had to choose between two competing software packages that her organization will use on a daily basis to enhance efficiency. She initially chooses the product that was developed by the larger, more well-established company, reasoning that they will have greater financial resources to invest in ensuring that the technology is good. However, after some time it becomes clear that the competing software package is going to be far superior. While the smaller company’s product could be integrated into the organization’s existing systems at little additional expense, the larger company’s product will require a much greater initial investment, as well as substantial ongoing costs for maintaining it. At this point, however, let’s assume that the manager has already paid for the larger company’s (inferior) software. Will she abandon the path that she’s on, accept the loss on the money that’s been invested so far, and switch to the better software? Or will she continue to invest time and money into trying to make the first product work? Escalation of commitment is the tendency of decision-makers to remain committed to poor decisions, even when doing so leads to increasingly negative outcomes. Once we commit to a decision, we may find it difficult to reevaluate that decision rationally. It can seem easier to “stay the course” than to admit (or to recognize) that a decision was poor. It’s important to acknowledge that not all decisions are going to be good ones, in spite of our best efforts. Effective managers recognize that progress down the wrong path isn’t really progress, and they are willing to reevaluate decisions and change direction when appropriate.
Time Constraints
Managers often face time constraints that can make effective decision-making a challenge. When there is little time available to collect information and to rationally process it, we are much less likely to make a good nonprogrammed decision. Time pressures can cause us to rely on heuristics rather than engage in deep processing. While heuristics save time, however, they don’t necessarily lead to the best possible solution. The best managers are constantly assessing the risks associated with acting too quickly against those associated with not acting quickly enough.
Uncertainty
In addition, managers frequently make decisions under conditions of uncertainty—they cannot know the outcome of each alternative until they’ve actually chosen that alternative. Consider, for example, a manager who is trying to decide between one of two possible marketing campaigns. The first is more conservative but is consistent with what the organization has done in the past. The second is more modern and edgier, and might bring much better results . . . or it might be a spectacular failure. The manager making the decision will ultimately have to choose one campaign and see what happens, without ever knowing what the results would have been with the alternate campaign. That uncertainty can make it difficult for some managers to make decisions because committing to one option means forgoing other options.
Personal Biases
Our decision-making is also limited by our own biases. We tend to be more comfortable with ideas, concepts, things, and people that are familiar to us or similar to us. We tend to be less comfortable with that which is unfamiliar, new, and different. One of the most common biases that we have, as humans, is the tendency to like other people who we think are similar to us (because we like ourselves).7 While these similarities can be observable (based on demographic characteristics such as race, gender, and age), they can also be a result of shared experiences (such as attending the same university) or shared interests (such as being in a book club together). This “similar to me” bias and preference for the familiar can lead to a variety of problems for managers: hiring less-qualified applicants because they are similar to the manager in some way, paying more attention to some employees’ opinions and ignoring or discounting others, choosing a familiar technology over a new one that is superior, sticking with a supplier that is known over one that has better quality, and so on.
It can be incredibly difficult to overcome our biases because of the way our brains work. The brain excels at organizing information into categories, and it doesn’t like to expend the effort to re-arrange once the categories are established. As a result, we tend to pay more attention to information that confirms our existing beliefs and less attention to information that is contrary to our beliefs, a shortcoming that is referred to as confirmation bias.8
In fact, we don’t like our existing beliefs to be challenged. Such challenges feel like a threat, which tends to push our brains towards the reactive system and prevent us from being able to logically process the new information via the reflective system. It is hard to change people’s minds about something if they are already confident in their convictions. So, for example, when a manager hires a new employee who she really likes and is convinced is going to be excellent, she will tend to pay attention to examples of excellent performance and ignore examples of poor performance (or attribute those events to things outside the employee’s control). The manager will also tend to trust that employees and therefore accept their explanations for poor performance without verifying the truth or accuracy of those statements. The opposite is also true; if we dislike someone, we will pay attention to their negatives and ignore or discount their positives. We are less likely to trust them or believe what they say at face value. This is why politics tend to become very polarized and antagonistic within a two-party system. It can be very difficult to have accurate perceptions of those we like and those we dislike. The effective manager will try to evaluate situations from multiple perspectives and gather multiple opinions to offset this bias when making decisions.
Conflict
Finally, effective decision-making can be difficult because of conflict. Most individuals dislike conflict and will avoid it when possible. However, the best decision might be one that is going to involve some conflict. Consider a manager who has a subordinate who is often late to work, causing others to have to step away from their responsibilities in order to cover for the late employee. The manager needs to have a conversation with that employee to correct the behavior, but the employee is not going to like the conversation and may react in a negative way. Both of them are going to be uncomfortable. The situation is likely to involve conflict, which most people find stressful. Yet, the correct decision is still to have the conversation even if (or especially if) the employee otherwise is an asset to the department.
If the bad behavior is not corrected, it will continue, which is going to cause more problems in the workplace in the long run. Other employees may recognize that this behavior is allowed, and they may also start coming to work late or engaging in other negative behaviors. Eventually, some employees may become sufficiently frustrated that they look for another place to work. It’s worth noting that in this situation, the best employees will find new jobs the most quickly. It’s important for managers to recognize that while conflict can be uncomfortable (especially in the short-term), there are times when it is necessary for the group, department, or organization to function effectively in the long run.
It is also helpful to think about conflict in terms of process conflict or relationship conflict.9 Process conflict, conflict about the best way to do something, can actually lead to improved performance, as individuals explore various options together in order to identify superior solutions. Relationship conflict is conflict between individuals that is more personal and involves attacks on a person rather than an idea. This kind of conflict is generally harmful and should be quelled when possible. The harm from relationship conflict arises at least in part because feeling personally attacked will cause an individual to revert to the reactive system of the brain.
Effective managers should be particularly aware of the possibility of relationship conflict when giving feedback and should keep feedback focused on behaviors and activities (how things are done) rather than on the individual. Being aware of and dealing with relationship conflict points to why emotional intelligence and empathy are beneficial in organizational leaders. Such leaders are more likely to be attentive to the harmful consequences of relationship conflict. The “Managerial Leadership” segment shows how one CEO encourages empathetic collaboration and how that effort is proving beneficial.
MANAGERIAL LEADERSHIP
Satya Nadella’s Transformation of Microsoft
When Satya Nadella became the CEO of Microsoft in 2014, he set in motion a major transformation of the organization’s culture. He wanted it to shift from a culture that valued “know-it-alls” to one that values “learn-it-all.” Instead of employees feeling the need to prove that they were the smartest person in the room, he wanted them to become curious and effective listeners, learners, and communicators. Only through continual learning and collaboration with one another, and with customers, would Microsoft remain able to develop and provide great technology solutions.
One of Nadella’s first mandates as CEO was to ask all the members of the top management team to read the book Nonviolent Communication by Marshall Rosenberg. The primary focus of the book is on empathetic communication—a kinder, gentler approach than Microsoft employees were accustomed to. Nadella believes that developing empathy leads to a heightened understanding of consumer needs and wants and an enhanced ability to develop better products and services through collaboration.
Nadella has also embraced diversity and inclusion initiatives, though he readily acknowledges that there is more to be done. This is, in part, an extension of his focus on empathy. However, it’s also good business, because increasing the diversity of perspectives can help to drive innovation.
This cultural shift is reflected in Microsoft’s new mission statement: “To empower every person and every organization on the planet to achieve more.” Empowering every person includes Microsoft’s own employees. Achieving diversity is particularly a challenge in an industry that is male-dominated, and Nadella admits that he has made mistakes based on his own biases. At a Women in Computing conference early in his tenure as CEO, Nadella suggested that women did not need to ask for raises when they deserved them; the system, he said, would work it out. He later admitted that he was wrong and used the mistake as a platform for making greater strides in this arena.
Senior management team meetings at Microsoft have apparently changed dramatically as a result of the culture change driven by Nadella. Previously, members felt the need to constantly prove that they knew all the right answers at team meetings. Nadella has established different norms; he seeks out honest opinions from team members and gives positive feedback on a regular basis. By moving the focus away from always being right and toward a focus of continual learning, the culture at Microsoft has become more collaborative, and employees are more willing to take risks to create something amazing. The culture shift seems to be paying off: Microsoft’s products are being described as “cool” and “exciting,” its cloud-computing platform is outperforming the competition, and its financial performance has improved dramatically. Transforming the culture of an organization is a massive undertaking, but Nadella’s leadership of Microsoft clearly shows that it’s a decision that can pay off.
Discussion Questions:
1. Do you think a culture focused on learning makes sense for Microsoft? Why or why not?
2. What are the advantages of a culture that emphasizes empathetic communication? Can you think of any disadvantages?
3. The job of CEO means making big decisions that impact the entire organization—like deciding to change the culture. How do you think you prepare for that job?
Sources: Kendall Baker, “Confirmed: Microsoft is a legit threat to Apple,” The Hustle, March 16, 2017. Bob Evans, “10 Powerful examples of Microsoft CEO Satya Nadella’s Transformative Vision,” Forbes, July 26, 2017. Harry McCraken, “Satya Nadella Rewrites Microsoft’s Code,” Fast Company, September 18, 2017, https://www.fastcompany.com/40457458...icrosofts-code. Annie Palmer, “Microsoft has been reborn under CEO Satya Nadella,” The Street, September 20, 2017.
concept check
1. Explain the concept of confirmation bias.
2. List and describe at least three barriers to effective decision-making.
3. When is conflict beneficial, and when is it harmful? Why? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/06%3A_Perception_and_Managerial_Decision_Making/6.04%3A_Barriers_to_Effective_Decision-Making.txt |
1. How can a manager improve the quality of her individual decision-making?
Managers can use a variety of techniques to improve their decision-making by making better-quality decisions or making decisions more quickly. Table 6.1 summarizes some of these tactics.
Summary of Techniques That May Improve Individual Decision-Making
Type of Decision Technique Benefit
Programmed decisions Heuristics (mental shortcuts) Saves time
Satisficing (choosing first acceptable solution) Saves time
Nonprogrammed decisions Systematically go through the six steps of the decision-making process. Improves quality
Talk to other people. Improves quality: generates more options, reduces bias
Be creative. Improves quality: generates more options
Conduct research; engage in evidence-based decision-making. Improves quality
Engage in critical thinking. Improves quality
Think about the long-term implications. Improves quality
Consider the ethical implications. Improves quality
Table6.1 (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)
The Importance of Experience
An often-overlooked factor in effective decision-making is experience. Managers with more experience have generally learned more and developed greater expertise that they can draw on when making decisions. Experience helps managers develop methods and heuristics to quickly deal with programmed decisions and helps them know what additional information to seek out before making a nonprogrammed decision.
Techniques for Making Better Programmed Decisions
In addition, experience enables managers to recognize when to minimize the time spent making decisions on issues that are not particularly important but must still be addressed. As discussed previously, heuristics are mental shortcuts that managers take when making programmed (routine, low-involvement) decisions. Another technique that managers use with these types of decisions is satisficing. When satisficing, a decision-maker selects the first acceptable solution without engaging in additional effort to identify the best solution. We all engage in satisficing every day. For example, suppose you are shopping for groceries, and you don’t want to overspend. If you have plenty of time, you might compare prices and figure out the price by weight (or volume) to ensure that every item you select is the cheapest option. But if you are in a hurry, you might just select generic products, knowing that they are cheap enough. This allows you to finish the task quickly at a reasonably low cost.
Techniques for Making Better Nonprogrammed Decisions
For situations in which the quality of the decision is more critical than the time spent on the decision, decision-makers can use several tactics. As stated previously, nonprogrammed decisions should be addressed using a systematic process. We, therefore, discuss these tactics within the context of the decision-making steps. To review, the steps include the following:
1. Recognize that a decision needs to be made.
2. Generate multiple alternatives.
3. Analyze the alternatives.
4. Select an alternative.
5. Implement the selected alternative.
6. Evaluate its effectiveness.
Step 1: Recognizing That a Decision Needs to Be Made
Ineffective managers will sometimes ignore problems because they aren’t sure how to address them. However, this tends to lead to more and bigger problems over time. Effective managers will be attentive to problems and to opportunities and will not shy away from making decisions that could make their team, department, or organization more effective and more successful.
Step 2: Generating Multiple Alternatives
Often a manager only spends enough time on Step 2 to generate two alternatives and then quickly moves to Step 3 in order to make a quick decision. A better solution may have been available, but it wasn’t even considered. It’s important to remember that for nonprogrammed decisions, you don’t want to rush the process. Generating many possible options will increase the likelihood of reaching a good decision. Some tactics to help with generating more options include talking to other people (to get their ideas) and thinking creatively about the problem.
Talk to other people
Managers can often improve the quality of their decision-making by involving others in the process, especially when generating alternatives. Other people tend to view problems from different perspectives because they have had different life experiences. This can help generate alternatives that you might not otherwise have considered. Talking through big decisions with a mentor can also be beneficial, especially for new managers who are still learning and developing their expertise; someone with more experience will often be able to suggest more options.
Be creative
We don’t always associate management with creativity, but creativity can be quite beneficial in some situations. In decision-making, creativity can be particularly helpful when generating alternatives. Creativity is the generation of new or original ideas; it requires the use of imagination and the ability to step back from traditional ways of doing things and seeing the world. While some people seem to be naturally creative, it is a skill that you can develop. Being creative requires letting your mind wander and combining existing knowledge from past experiences in novel ways. Creative inspiration may come when we least expect it (in the shower, for example) because we aren’t intensely focused on the problem—we’ve allowed our minds to wander. Managers who strive to be creative will take the time to view a problem from multiple perspectives, try to combine the information in news ways, search for overarching patterns, and use their imaginations to generate new solutions to existing problems. We’ll review creativity in more detail in Improving the Quality of Decision-Making.
Step 3: Analyzing Alternatives
When implementing Step 3, it is important to take many factors into consideration. Some alternatives might be more expensive than others, for example, and that information is often essential when analyzing options. Effective managers will ensure that they have collected sufficient information to assess the quality of the various options. They will also utilize the tactics described below: engaging in evidence-based decision-making, thinking critically, talking to other people, and considering long-term and ethical implications.
Do you have the best quality data and evidence?
Evidence-based decision-making is an approach to decision-making that states that managers should systematically collect the best evidence available to help them make effective decisions. The evidence that is collected might include the decision maker’s own expertise, but it is also likely to include external evidence, such as a consideration of other stakeholders, contextual factors relevant to the organization, potential costs and benefits, and other relevant information. With evidence-based decision-making, managers are encouraged to rely on data and information rather than their intuition. This can be particularly beneficial for new managers or for experienced managers who are starting something new. (Consider all the research that Rubio and Korey conducted while starting Away).
Talk to other people
As mentioned previously, it can be worthwhile to get help from others when generating options. Another good time to talk to other people is while analyzing those options; other individuals in the organization may help you assess the quality of your choices. Seeking out the opinions and preferences of others is also a great way to maintain perspective, so getting others involved can help you to be less biased in your decision-making (provided you talk to people whose biases are different from your own).
Are you thinking critically about the options?
Our skill at assessing alternatives can also be improved by a focus on critical thinking. Critical thinking is a disciplined process of evaluating the quality of information, especially data collected from other sources and arguments made by other people, to determine whether the source should be trusted or whether the argument is valid.
An important factor in critical thinking is the recognition that a person’s analysis of the available information may be flawed by a number of logical fallacies that they may use when they are arguing their point or defending their perspective. Learning what those fallacies are and being able to recognize them when they occur can help improve decision-making quality. See Table 6.2 for several examples of common logical fallacies.
Common Logical Fallacies
Name Description Examples Ways to Combat This Logical Fallacy
Non sequitur (does not follow)
The conclusion that is presented isn’t a logical conclusion or isn’t the only logical conclusion based on the argument(s).
Our biggest competitor is spending more on marketing than we are. They have a larger share of the market. Therefore, we should spend more on marketing.
The unspoken assumption: They have a larger share of the market BECAUSE they spend more on marketing.
• Examine all the arguments. Are they reasonable?
• Look for any assumptions that are being made in the argument sequence. Are they reasonable?
• Try to gather evidence that supports or refutes the arguments and/or assumptions.
In this example, you should ask: Are there any other reasons, besides their spending on marketing, why our competitor has a larger share of the market?
False cause
Assuming that because two things are related, one caused the other
“Our employees get sick more when we close for holidays. So we should stop closing for holidays.”
This is similar to non sequitur; it makes an assumption in the argument sequence.
• Ask yourself whether the first thing really causes the second, or if something else may be the cause.
In this case, most holidays for which businesses close are in the late fall and winter (Thanksgiving, Christmas), and there are more illnesses at this time of year because of the weather, not because of the business being closed.
Ad hominem (attack the man)
Redirects from the argument itself to attack the person making the argument
“You aren’t really going to take John seriously, are you? I heard his biggest client just dropped him for another vendor because he’s all talk and no substance.”
The goal: if you stop trusting the person, you’ll discount their argument.
• Does the second person have something to gain, a hidden agenda, in trying to make you distrust the first person?
• If the first person’s argument came from someone else, would it be persuasive?
Genetic fallacy
You can’t trust something because of its origins.
“This was made in China, so it must be of low quality.”
“He is a lawyer, so you can’t trust anything he says.”
This fallacy is based on stereotypes. Stereotypes are generalizations; some are grossly inaccurate, and even those that are accurate in SOME cases are never accurate in ALL cases. Recognize this for what it is—an attempt to prey on existing biases.
Appeal to tradition
If we have always done it one particular way, that must be the right or best way.
“We’ve always done it this way.”
“We shouldn’t change this; it works fine the way it is.”
• Consider whether the situation has changed, calling for a change in the way things are being done.
• Consider whether new information suggests that the traditional view is incorrect. Remember, we used to think that the earth was flat.
Bandwagon approach
If the majority of people are doing it, it must be good.
“Everybody does it.”
“Our customers don’t want to be served by people like that.”
• Remember that the majority is sometimes wrong, and what is popular isn’t always what is right.
• Ask yourself whether “following the pack” is going to get you where you want to be.
• Remember that organizations are usually successful by being better than their competitors at something . . . so following the crowd might not be the best approach to success.
Appeal to emotion
Redirects the argument from logic to emotion
“We should do it for [recently deceased] Steve; it’s what he would have wanted.”
• Develop your awareness of your own emotions and recognize when someone is trying to use them.
• Ask yourself whether the argument stands on its own without the appeal to your emotions.
Table6.2 (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)
Have you considered the long-term implications?
A focus on immediate, short-term outcomes—with little consideration for the future—can cause problems. For example, imagine that a manager must decide whether to issue dividends to investors or put that money into research and development to maintain a pipeline of innovative products. It’s tempting to just focus on the short-term: providing dividends to investors tends to be good for stock prices. But failing to invest in research and development might mean that in five years, the company is unable to compete effectively in the marketplace, and as a result, the business closes. Paying attention to the possible long-term outcomes is a crucial part of analyzing alternatives.
Are there ethical implications?
It’s important to think about whether the various alternatives available to you are better or worse from an ethical perspective, as well. Sometimes managers make unethical choices because they haven’t considered the ethical implications of their actions. In the 1970s, Ford manufactured the Pinto, which had an unfortunate flaw: the car would easily burst into flames when rear-ended. The company did not initially recall the vehicle because they viewed the problem from a financial perspective, without considering the ethical implications.10 People died as a result of the company’s inaction. Unfortunately, these unethical decisions continue to occur—and cause harm—on a regular basis in our society. Effective managers strive to avoid these situations by thinking through the possible ethical implications of their decisions. The decision tree in Exhibit 6.6 is a great example of a way to make managerial decisions while also taking ethical issues into account.
Thinking through the steps of ethical decision-making may also be helpful as you strive to make good decisions. James Rest’s ethical decision-making model11 identifies four components to ethical decision-making:
1. Moral sensitivity—recognizing that the issue has a moral component;
2. Moral judgment—determining which actions are right vs. wrong;
3. Moral motivation/intention—deciding to do the right thing; and
4. Moral character/action—actually doing what is right.
Note that a failure at any point in the chain can lead to unethical actions! Taking the time to identify possible ethical implications will help you develop moral sensitivity, which is a critical first step to ensuring that you are making ethical decisions.
Once you have determined that a decision has ethical implications, you must consider whether your various alternatives are right or wrong—whether or not they will cause harm, and if so, how much and to whom. This is the moral judgment component. If you aren’t sure about whether something is right or wrong, think about how you would feel if that decision ended up on the front page of a major newspaper. If you would feel guilty or ashamed, don’t do it! Pay attention to those emotional cues—they are providing important information about the option that you are contemplating.
The third step in the ethical decision-making model involves making a decision to do what is right, and the fourth step involves following through on that decision. These may sound, but consider a situation in which your boss tells you to do something that you know to be wrong. When you push back, your boss makes it clear that you will lose your job if you don’t do what you’ve been told to do. Now, consider that you have a family at home who rely on your income. Making the decision to do what you know is right could come at a substantial cost to you personally. In these situations, your best course of action is to find a way to persuade your boss that the unethical action will cause greater harm to the organization in the long-term.
Step 4: Selecting an Alternative
Once alternative options have been generated and analyzed, the decision-maker must select one of the options. Sometimes this is easy—one option is clearly superior to the others. Often, however, this is a challenge because there is not a clear “winner” in terms of the best alternative. As mentioned earlier in the chapter, there may be multiple good options, and which one will be best is unclear even after gathering all available evidence. There may not be a single option that doesn’t upset some stakeholder groups, so you will make someone unhappy no matter what you choose. A weak decision-maker may become paralyzed in this situation, unable to select among the various alternatives for lack of a clear “best” option. They may decide to keep gathering additional information in hopes of making their decision easier. As a manager, it’s important to think about whether the benefit of gathering additional information will outweigh the cost of waiting. If there are time pressures, waiting may not be possible.
Recognize that perfection is unattainable
Effective managers recognize that they will not always make optimal (best possible) decisions because they don’t have complete information and/or don’t have the time or resources to gather and process all the possible information. They accept that their decision-making will not be perfect and strive to make good decisions overall. Recognizing that perfection is impossible will also help managers to adjust and change if they realize later on that the selected alternative was not the best option.
Talk to other people
This is another point in the process at which talking to others can be helpful. Selecting one of the alternatives will ultimately be your responsibility, but when faced with a difficult decision, talking through your choice with someone else may help you clarify that you are indeed making the best possible decision from among the available options. Sharing information verbally also causes our brains to process that information differently, which can provide new insights and bring greater clarity to our decision-making.
Step 5: Implementing the Selected Alternative
After selecting an alternative, you must implement it. This may seem too obvious even to mention, but implementation can sometimes be a challenge, particularly if the decision is going to create conflict or dissatisfaction among some stakeholders. Sometimes we know what we need to do but still try to avoid actually doing it because we know others in the organization will be upset—even if it’s the best solution. Follow-through is a necessity, however, to be effective as a manager. If you are not willing to implement a decision, it’s a good idea to engage in some self-reflection to understand why. If you know that the decision is going to create conflict, try to think about how you’ll address that conflict in a productive way. It’s also possible that we feel that there is no good alternative, or we are feeling pressured to make a decision that we know deep down is not right from an ethical perspective. These can be among the most difficult of decisions. You should always strive to make decisions that you feel good about—which means doing the right thing, even in the face of pressures to do wrong.
Step 6: Evaluating the Effectiveness of Your Decision
Managers sometimes skip the last step in the decision-making process because evaluating the effectiveness of a decision takes time, and managers, who are generally busy, may have already moved on to other projects. Yet evaluating effectiveness is important. When we fail to evaluate our own performance and the outcomes of our decisions, we cannot learn from the experience in a way that enables us to improve the quality of our future decisions.
Attending fully to each step in the decision-making process improves the quality of decision-making, and, as we’ve seen, managers can engage in a number of tactics to help them make good decisions. Take a look at the Ethics in Practice box to see an example of how one particular manager puts these techniques into practice to make good decisions.
ETHICS IN PRACTICE
Rob Ault, Project Manager, Bayside Community Church
Bradenton, Florida
When it comes to decision-making, ethical dilemmas require particular care. Because managers make many decisions, it should not be surprising that some of those decisions will have ethical implications. With multiple stakeholders to consider, sometimes what is best for one group of stakeholders is not what is best for others. I talked to Rob Ault about his experiences with ethical dilemmas over the course of his career. Rob has been in managerial roles for over 25 years, since he was 19 years old. He told me that he had experienced a number of ethical dilemmas in that time.
Rob has spent most of his career working for for-profit organizations, and for about half of that time, he has worked in a union environment. What he has found most frustrating, regardless of environment, was when it was clear to him what was right, but what was right conflicted with what his boss was telling him to do. This included a situation in which he felt an employee should be fired for misbehavior (but wasn’t), as well as the situation in which he was asked to fire someone undeservedly. What we mostly talked about, though, was his process. How did he go about making decisions in these challenging situations?
Rob clearly stated that his approach to these situations has changed with experience. What he did early in his career is not necessarily what he would do now. He said that it takes experience and some maturity to recognize that, as a leader, the decisions you make affect other people’s lives. He also explained that a starting point for the decision-making process is always a recognition of the fact that you have been hired to generate a benefit for your company. So a manager’s decisions need to come from the perspective of what is going to be in the best long-term interest of the organization (in addition to what is morally right). This isn’t always easy, because short-term consequences are much easier to observe and predict.
I asked Rob, who he talked to prior to making decisions in situations with an ethical component. Rob told me that he felt one of the most important things you should do as a leader is to intentionally create and build relationships with people you trust in the organization. That way, you have people you know you can talk to when difficult situations come up. He was very clear that you should always talk to your boss, who will tend to have a broader understanding of what is going on in the context of the larger organization. He also told me that he liked to talk to his father, who happened to work in human resource management for a large Fortune 500 organization. His father was always helpful in providing the perspective of how things were likely to play out long-term if one person was allowed to bend the rules. Rob realized eventually that the long-term consequences of this were almost always negative: once one person is allowed to misbehave, others find out about it and realize that they can do the same thing without repercussions. Rob also seeks out the opinions of other individuals in the organization before reaching decisions with an ethical component; he told me that when he worked in a union environment, he tried to make sure he had a good relationship with the union steward because it was helpful to get the perspective of someone who was committed to the side of the employee.
The biggest ethical dilemma Rob faced was one that he actually couldn’t talk to me about. He disagreed with what he was being asked to do, and when it was clear that he had no other choice in the matter, he quit his job rather than do something he felt wasn’t right. He accepted a severance package in exchange for signing a nondisclosure agreement, which is why he can’t share any details . . . but it was clear from our conversation that he feels he made the right choice. That particular ethical dilemma makes it clear how challenging managerial decision-making can sometimes be.
Discussion Questions:
1. If you were faced with an ethical dilemma, from whom would you seek advice?
2. Describe some decisions that might be good for an organization’s profitability in the short-term, but bad for the organization in the long-term.
3. What factors would you take into consideration if you were thinking about leaving your job rather than do something unethical?
concept check
1. Explain what satisficing is and when it may be a good strategy.
2. What are the six steps in the decision-making process?
3. What are the four steps involved in ethical decision-making? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/06%3A_Perception_and_Managerial_Decision_Making/6.05%3A_Improving_the_Quality_of_Decision-Making.txt |
1. What are the advantages and disadvantages of group decision-making, and how can a manager improve the quality of group decision-making?
Involving more people in the decision-making process can greatly improve the quality of a manager's decisions and outcomes. However, involving more people can also increase conflict and generate other challenges. We turn now to the advantages and disadvantages of group decision-making.
Advantages of Group Decisions
An advantage of involving groups in decision-making is that you can incorporate different perspectives and ideas. For this advantage to be realized, however, you need a diverse group. In a diverse group, the different group members will each tend to have different preferences, opinions, biases, and stereotypes. Because a variety of viewpoints must be negotiated and worked through, group decision-making creates additional work for a manager, but (provided the group members reflect different perspectives) it also tends to reduce the effects of bias on the outcome. For example, a hiring committee made up of all men might end up hiring a larger proportion of male applicants (simply because they tend to prefer people who are more similar to themselves). But with a hiring committee made up of an equal number of men and women, the bias should be canceled out, resulting in more applicants being hired based on their qualifications rather than their physical attributes.
Having more people involved in decision-making is also beneficial because each individual brings unique information or knowledge to the group, as well as different perspectives on the problem. Additionally, having the participation of multiple people will often lead to more options being generated and to greater intellectual stimulation as group members discuss the available options. Brainstorming is a process of generating as many solutions or options as possible and is a popular technique associated with group decision-making.
All of these factors can lead to superior outcomes when groups are involved in decision-making. Furthermore, involving people who will be affected by a decision in the decision-making process will allow those individuals to have a greater understanding of the issues or problems and a greater commitment to the solutions.
Disadvantages of Group Decisions
Group decision-making is not without challenges. Some groups get bogged down by conflict, while others go to the opposite extreme and push for agreement at the expense of quality discussions. Groupthink occurs when group members choose not to voice their concerns or objections because they would rather keep the peace and not annoy or antagonize others. Sometimes groupthink occurs because the group has a positive team spirit and camaraderie, and individual group members don’t want that to change by introducing conflict. It can also occur because past successes have made the team complacent.
Often, one individual in the group has more power or exerts more influence than others and discourages those with differing opinions from speaking up (suppression of dissent) to ensure that only their own ideas are implemented. If members of the group are not really contributing their ideas and perspectives, however, then the group is not getting the benefits of group decision-making.
How to Form a Quality Group
Effective managers will try to ensure quality group decision-making by forming groups with diverse members so that a variety of perspectives will contribute to the process. They will also encourage everyone to speak up and voice their opinions and thoughts prior to the group reaching a decision. Sometimes groups will also assign a member to play the devil’s advocate in order to reduce groupthink. The devil’s advocate intentionally takes on the role of critic. Their job is to point out flawed logic, to challenge the group’s evaluations of various alternatives, and to identify weaknesses in proposed solutions. This pushes the other group members to think more deeply about the advantages and disadvantages of proposed solutions before reaching a decision and implementing it.
The methods we’ve just described can all help ensure that groups reach good decisions, but what can a manager do when there is too much conflict within a group? In this situation, managers need to help group members reduce conflict by finding some common ground—areas in which they can agree, such as common interests, values, beliefs, experiences, or goals. Keeping a group focused on a common goal can be a very worthwhile tactic to keep group members working with rather than against one another. Table 6.3 summarizes the techniques to improve group decision-making.
Summary of Techniques That May Improve Group Decision-Making
Type of Decision
Technique
Benefit
Group decisions
Have diverse members in the group.
Improves quality: generates more options, reduces bias
Assign a devil’s advocate.
Improves quality: reduces groupthink
Encourage everyone to speak up and contribute.
Improves quality: generates more options, prevents suppression of dissent
Help group members find common ground.
Improves quality: reduces personality conflict
Table6.3 (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)
Conclusion
Decision-making is a crucial daily activity for managers. Decisions range from small and simple, with straightforward answers, to big and complex, with little clarity about what the best choice will be. Being an effective manager requires learning how to successfully navigate all kinds of decisions. Expertise, which develops gradually through learning and experience, generally improves managerial decision-making, but managers rarely rely solely on their own expertise. They also conduct research and collect information from others; they pay attention to their own biases and to ethical implications, and they think critically about the information that they have received to make decisions that will benefit the organization and its stakeholders.
concept check
1. Explain why group decision-making can be more effective than individual decision-making.
2. What are some things that can prevent groups from making good decisions?
3. As a manager, what can you do to enhance the quality of group decision-making? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/06%3A_Perception_and_Managerial_Decision_Making/6.06%3A_Group_Decision-Making.txt |
Decision-making The action or process of thinking through possible options and selecting one.
Stakeholders Individuals or groups who are impacted by the organization. These include owners, employees, customers, suppliers, and members of the community in which the organization is located.
Emotional intelligence The ability to understand and manage emotions in oneself and in others.
Reactive system System of decision-making in the brain that is quick and intuitive.
Reflective system System of decision-making in the brain that is logical, analytical, and methodical.
Heuristics Mental shortcuts that allow a decision-maker to reach a good decision quickly. They are strategies that develop based on prior experience.
Nonprogrammed decisions Decisions that are novel and not based on well-defined or known criteria.
Programmed decisions Decisions that are repeated over time and for which an existing set of rules can be developed.
Bounded rationality The concept that when we make decisions, we cannot be fully rational because we don’t have all the possible information or the cognitive processing ability to make fully informed, completely rational decisions.
Confirmation bias The tendency to pay attention to information that confirms our existing beliefs and to ignore or discount information that conflicts with our existing beliefs.
Escalation of commitment The tendency of decision-makers to remain committed to a poor decision, even when doing so leads to increasingly negative outcomes.
Process conflict Conflict about the best way to do something; a conflict that is task-oriented and constructive, and not focused on the individuals involved.
Relationship conflict Conflict between individuals that is based on personal (or personality) differences; this type of conflict tends to be destructive rather than constructive.
Creativity The generation of new or original ideas.
Critical thinking A disciplined process of evaluating the quality of information, especially by identifying logical fallacies in arguments.
Evidence-based decision-making A process of collecting the best available evidence prior to making a decision.
Satisficing Choosing the first acceptable solution to minimize time spent on a decision.
Brainstorming A process of generating as many ideas or alternatives as possible, often in groups.
Devil’s advocate A group member who intentionally takes on the role of being critical of the group’s ideas in order to discourage groupthink and encourage deep thought and discussion about issues prior to making decisions.
Groupthink The tendency of a group to reach agreement very quickly and without substantive discussion.
Suppression of dissent When a group member exerts his or her power to prevent others from voicing their thoughts or opinions.
6.08: Summary of Learning Outcomes
6.1 Overview of Managerial Decision-Making
1. What are the basic characteristics of managerial decision-making?
Managers are constantly making decisions, and those decisions often have significant impacts and implications for both the organization and its stakeholders. Managerial decision-making is often characterized by complexity, incomplete information, and time constraints, and there is rarely one right answer. Sometimes there are multiple good options (or multiple bad options), and the manager must try to decide which will generate the most positive outcomes (or the fewest negative outcomes). Managers must weigh the possible consequences of each decision and recognize that there are often multiple stakeholders with conflicting needs and preferences so that it often will be impossible to satisfy everyone. Finally, managerial decision-making can sometimes have ethical implications, and these should be contemplated before reaching a final decision.
6.2 How the Brain Processes Information to Make Decisions: Reflective and Reactive Systems
1. What are the two systems of decision-making in the brain?
The brain processes information to make decisions using one of two systems: either the logical, rational (reflective) system, or the quick, reactive system. The reflective system is better for significant and important decisions; these generally should not be rushed. However, the reactive system can be lifesaving when time is of the essence, and it can be much more efficient when based on developed experience and expertise.
6.3 Programmed and Nonprogrammed Decisions
1. What is the difference between programmed and nonprogrammed decisions?
Programmed decisions are those that are based on criteria that are well understood, while nonprogrammed decisions are novel and lack clear guidelines for reaching a solution. Managers can establish rules and guidelines for programmed decisions based on known facts, which enables them to reach decisions quickly. Nonprogrammed decisions require more time to resolve; the decision-maker may need to conduct research, collect additional information, gather opinions and ideas from other people, and so on.
6.4 Barriers to Effective Decision-Making
1. What barriers exist that make effective decision-making difficult?
There are numerous barriers to effective decision-making. Managers are limited in their ability to collect comprehensive information, and they are limited in their ability to process all the information that is available cognitively. Managers cannot always know all the possible outcomes of all the possible options, and they often face time constraints that limit their ability to collect all the information that they would like to have. In addition, managers, like all humans, have biases that influence their decision-making, and that can make it difficult for them to make good decisions. One of the most common biases that can confound decision-making is confirmation bias, the tendency for a person to pay attention to information that confirms her existing beliefs and ignore information that conflicts with these existing beliefs. Finally, the conflict between individuals in organizations can make it challenging to reach a good decision.
6.5 Improving the Quality of Decision-Making
1. How can a manager improve the quality of her individual decision-making?
Managers tend to get better at decision-making with time and experience, which helps them build expertise. Heuristics and satisficing can also be useful techniques for making programmed decisions quickly. For nonprogrammed decisions, a manager can improve the quality of her decision-making by utilizing a variety of other techniques. Managers should also be careful not to skip steps in the decision-making process, to involve others in the process at various points, and to be creative in generating alternatives. They should also engage in evidence-based decision-making: doing research and collecting data and information on which to base the decision. Effective managers also think critically about the quality of the evidence that they collect, and they carefully consider long-term outcomes and ethical implications prior to making a decision.
6.6 Group Decision-Making
1. What are the advantages and disadvantages of group decision-making, and how can a manager improve the quality of group decision-making?
Groups can make better decisions than individuals because group members can contribute more knowledge and a diversity of perspectives. Groups will tend to generate more options as well, which can lead to better solutions. Also, having people involved in making decisions that will affect them can improve their attitudes about the decision that is made. However, groups sometimes fail to generate added value in the decision-making process as a result of groupthink, conflict, or suppression of dissent.
Managers can improve the quality of group decision-making in a number of ways. First, when forming the group, the manager should ensure that the individual group members are diverse in terms of knowledge and perspectives. The manager may also want to assign a devil’s advocate to discourage groupthink. Managers should also encourage all group members to contribute their ideas and opinions, and they should not allow a single voice to dominate. Finally, they should not allow personality conflicts to derail group processes. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/06%3A_Perception_and_Managerial_Decision_Making/6.07%3A_Glossary.txt |
1. What are some of the factors that enabled to Jen Rubio and Stephanie Korey to make good decisions when they established their luggage company, Away?
2. What are the two systems that the brain uses in decision-making? How are they related to programmed and nonprogrammed decisions?
3. What is a heuristic, and when would it be appropriate to use a heuristic for decision-making?
4. What is confirmation bias? Explain how it can be a barrier to effective decision-making.
5. What is a logical fallacy?
6. What are the two types of conflict? Which one is constructive, and which is destructive?
7. What are the steps in the decision-making process? Which ones do people tend to skip or spend insufficient time on?
8. What can individuals do to improve the quality of their decision-making?
9. What can groups or group leaders do to improve the quality of group decision-making?
10. What are the benefits of decision-making in a group, instead of individually?
6.10: Management Skills Application Exercises
1. If you wanted to buy a new car, what research would you do first to increase the likelihood of making a good decision? As a manager, do you think you would engage in more research or less research than that prior to making big decisions for the organization?
2. Think about a big decision that you have made. What impact did your emotions have on that decision? Did they help or hinder your decision-making? Would you make the same decision again?
3. If you were faced with an ethical dilemma at work, who would you want to talk to for advice prior to reaching a decision?
4. Which would be better to involve a group with, a programmed or a nonprogrammed decision? Why?
5. If you were manager of a group with a lot of personality conflict, what would you do?
6.11: Managerial Decision Exercises
1. Imagine that you are a manager and that two of your employees are blaming one another for a recent project not going well. What factors would you consider in deciding whom to believe? Who else would you talk to before making a decision? What would you do to try to reduce the likelihood of this happening again?
2. You have been asked whether your organization should expand from selling its products only in North America to selling its products in Europe as well. What information would you want to collect? Who would you want to discuss the idea with before making a decision?
3. You have a colleague who decided the organization should pursue a new technology. Nine months into the project of transitioning to the new technology, based on new information you are convinced that the new technology is not going to work out as anticipated. In fact, you expect it to be a colossal failure. However, when you try to talk to your colleague about the issue, she won’t listen to your arguments. She is adamant that this new technology is the correct direction for your organization. Why do you think she is so resistant to seeing reason? Given what you learned in this chapter, what could you do to persuade her?
4. Your manager has asked you to take the lead on a new and creative project. She has encouraged you to create your own team (from existing employees) to work with you on the project. What factors would you want to consider in deciding who should join your project team? What would you want to do as the team leader to increase the likelihood that the group will be successful?
5. Identify the logical flaw(s) in this argument:
• We want to have effective leaders in this organization.
• Taller individuals tend to be perceived as more leader-like.
• Men are usually taller than women.
• So, we should only hire men to be managers in our organization. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/06%3A_Perception_and_Managerial_Decision_Making/6.09%3A_Chapter_Review_Questions.txt |
Vinyl Records Make a Comeback
The music industry has seen a series of innovations that have improved audio quality—vinyl records sales were eventually surpassed by compact discs in the 1980s, which were then eclipsed by digital music in the early 2000s. Both of the newer technologies boast superior sound quality to vinyl records. Vinyl should be dead . . . yet it’s not. Some say this is simply a result of nostalgia—people love to harken back to older times. However, some audiophiles say that vinyl records produce a “warm” sound that can’t be reproduced in any other format. In addition, a vinyl record is a tangible product (you can feel it, touch it, and see it when you own the physical record) and is more attractive, from an aesthetic perspective, than a CD. It is also a format that encourages listening to an entire album at once, rather than just listening to individual tracks, which can change the listening experience.
Whatever the reasons, vinyl is making an impressive comeback. Sales growth has been in the double digits for the last several years (over 50% in 2015 and again in 2016) and is expected to exceed \$5 billion in 2017. Sony, which hasn’t produced a vinyl record since 1989, recently announced that it is back in the vinyl business.
One of the biggest challenges to making vinyl records is that most of the presses are 40+ years old. In the record-making process, vinyl bits are heated to 170 degrees, and then a specialized machine exerts 150 tons of pressure to press the vinyl into the shape of the record. About a dozen new vinyl record manufacturers have sprung up in the last decade in the United States. Independent Record Pressing, a company based in New Jersey, began producing vinyl records in 2015 using old, existing presses. Their goal upon starting up was to produce over a million records a year. Even at that level of production, though, demand far outstrips the company’s capacity to produce because of the limited number of presses available. They could run their machines nonstop, 24 hours a day, and not catch up with demand.
The big question is what the future holds for this industry. Will this just be a passing fad? Will the vinyl record industry remain a small niche market? Or is this the renaissance, the rebirth of a product that can withstand the test of time and alternative technologies? If it’s a rebirth, then we should see demand continue to grow at its recent rapid pace . . . and if demand remains strong, then investing in new presses may well be worthwhile. If this is just a short-lived nostalgic return to an outdated media, however, then the large capital investment required to purchase new presses will never be recouped. Even with the recent growth, vinyl records still accounted for only 7% of overall music industry sales in 2015. That may be enough to get old presses running again, but so far it hasn’t been enough to promote a lot of investment in new machines. The cost of a new press? Almost half a million dollars.
At least one manufacturer is optimistic about the future of vinyl. GZ Media, based in Czechoslovakia, is currently the world’s largest producer of vinyl records. President and owner Zdenek Pelc kept his record factory going during the lean years when vinyl sales bottomed out. He admits that the decision was not wholly logical; he continued in part because of an emotional attachment to the media. After demand for vinyl records practically disappeared, Pelc kept just a few of the presses running to meet the demand that remained. His intention was to be the last remaining manufacturer of vinyl records. Pelc’s emotional attachment to vinyl records seems to have served him well, and it’s a great example of why basing decisions on pure logic doesn’t always lead to the best results. Consumers make purchasing decisions in part based on the emotional appeal of the product, so it shouldn’t be surprising that consumers also feel an emotional attachment to vinyl records, as Pelc did.
When demand for vinyl records was low, Pelc stored the company’s presses that were no longer in use so that they could be cannibalized for parts as needed. When sales began to grow again in 2005, he started pulling old machines out of storage and even invested in a few new ones. This has made GZ Media not only the largest vinyl record producer in the world but also one of the only ones with new factory equipment. GZ Media produces over 20 million vinyl records a year, and Pelc is excited to continue that trend and to remain a major manufacturer in what is currently still considered a niche market.
Critical Thinking Questions
1. Why do you think vinyl records are appealing to customers?
2. Do you think the sales growth will continue to be strong for vinyl sales? Why or why not?
3. What research would you want to conduct prior to making a decision to invest in new presses?
Sources: Lee Barron, “Back on record – the reasons behind vinyl’s unlikely comeback,” The Conversation, April 17, 2015, https://theconversation.com/back-on-...comeback-39964. Hannah Ellis-Peterson, “Record sales: vinyl hits 25-year high,” The Guardian, January 3, 2017, https://www.theguardian.com/music/20...rips-streaming. Allan Kozinn, “Weaned on CDs, They’re Reaching for Vinyl,” The New York Times, June 9, 2013. Rick Lyman, “Czech company, pressing hits for years on vinyl, finds it has become one,” The New York Times, August 6, 2015. Alec Macfarlane and Chie Kobayashi, “Vinyl comeback: Sony to produce records again after 28-year break,” CNN Money, June 30, 2017, http://money.cnn.com/2017/06/30/news...rds/index.html. Kate Rogers, “Why millennials are buying more vinyl records,” CNBC.com, November 6, 2015. https://www.cnbc.com/2015/11/06/why-...l-records.html. Robert Tait, “In the groove: Czech firm tops list of world’s vinyl record producers,” The Guardian, August 18, 2016. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/06%3A_Perception_and_Managerial_Decision_Making/6.12%3A_Critical_Thinking_Case.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. Define motivation, and distinguish the direction and intensity of motivation.
2. Describe a content theory of motivation, and compare and contrast the main content theories of motivation: manifest needs theory, learned needs theory, Maslow’s hierarchy of needs, Alderfer’s ERG theory, Herzberg’s motivator-hygiene theory, and self-determination theory.
3. Describe the process theories of motivation, and compare and contrast the main process theories of motivation: operant conditioning theory, equity theory, goal theory, and expectancy theory.
4. Describe the modern advancements in the study of human motivation.
07: Work Motivation for Performance
exploring managerial careers
Bridget Anderson
Bridget Anderson thought life would be perfect out in the “real world.” After earning her degree in computer science, she landed a well-paying job as a programmer for a large nonprofit organization whose mission she strongly believed in. And—initially—she was happy with her job.
Lately, however, Bridget gets a sick feeling in her stomach every morning when her alarm goes off. Why this feeling of misery? After all, she’s working in her chosen field in an environment that matches her values. What else could she want? She’s more puzzled than anyone.
It’s the end of her second year with the organization, and Bridget apprehensively schedules her annual performance evaluation. She knows she’s a competent programmer, but she also knows that lately she’s been motivated to do only the minimum required to get by. Her heart is just not in her work with this organization. Not exactly how she thought things would turn out, that’s for sure.
Bridget’s manager Kyle Jacobs surprises her when he begins the evaluation by inquiring about her professional goals. She admits that she hasn’t thought much about her future. Kyle asks if she’s content in her current position and if she feels that anything is missing. Suddenly, Bridget realizes that she does want more professionally.
Question: Are Bridget’s motivational problems intrinsic or extrinsic? Which of her needs are currently not being met? What steps should she and her manager take to improve her motivation and ultimately her performance?
Outcome: Once Bridget admits that she’s unhappy with her position as a computer programmer, she’s ready to explore other possibilities. She and Kyle brainstorm for tasks that will motivate her and bring her greater job satisfaction. Bridget tells Kyle that while she enjoys programming, she feels isolated and misses interacting with other groups in the organization. She also realizes that once she had mastered the initial learning curve, she felt bored. Bridget is ready for a challenge.
Kyle recommends that Bridget move to an information systems team as their technical representative. The team can use Bridget’s knowledge of programming, and Bridget will be able to collaborate more frequently with others in the organization.
Bridget and Kyle set specific goals to satisfy her needs to achieve and to work collaboratively. One of Bridget’s goals is to take graduate classes in management and information systems. She hopes that this will lead to an MBA and, eventually, to a position as a team leader. Suddenly the prospect of going to work doesn’t seem so grim—and lately, Bridget’s been beating her alarm!
If you’ve ever worked with a group of people, and we all have, you have no doubt noticed differences in their performance. Researchers have pondered these differences for many years. Indeed, John B. Watson first studied this issue in the early 1900s. Performance is, of course, an extremely important issue to employers because organizations with high-performing employees will almost always be more effective.
To better understand why people perform at different levels, researchers consider the major determinants of performance: ability, effort (motivation), accurate role perceptions, and environmental factors (see Exhibit 7.2). Each performance determinant is important, and a deficit in one can seriously affect the others. People who don’t understand what is expected of them will be constrained by their own inaccurate role perceptions, even if they have strong abilities and motivation and the necessary resources to perform their job. None of the performance determinants can compensate for a deficiency in any of the other determinants. Thus, a manager cannot compensate for an employee’s lack of skills and ability by strengthening their motivation.
1. Define motivation and distinguish direction and intensity of motivation.
Ability refers to the knowledge, skills, and receptiveness to learning that a person brings to a task or job. Knowledge is what a person knows. Skill is their capacity to perform some particular activity (like welding or accounting), including knowing what is expected of them (called accurate role perceptions). Receptiveness to learning is a function of how quickly a person acquires new knowledge. Some people have more ability than others, and high-ability people generally perform better than low-ability people (although we will see that this is not always the case).1
Accurate role perceptions refer to how well an individual understands their organizational role. This includes the goals (outcomes) the person is expected to achieve and the process by which the goals will be achieved. An employee who has accurate role perceptions knows both their expected outcomes and how to go about making those outcomes a reality. Incomplete or inaccurate role perceptions limit employees’ capacity to meet expectations, regardless of their abilities and motivation.
The performance environment refers to those factors that impact employees’ performance but are essentially out of their control. Many environmental factors influence performance. Some factors facilitate performance, while others constrain it. A word processor who has to work with a defective personal computer is certainly not going to perform at peak levels, regardless of ability or desire. Students who are working full time and carrying a full load of classes may not do as well on an exam as they would if they could cut back on their work hours, despite the fact that they have high ability and high motivation.
Motivation is the fourth major factor that determines whether a person will perform a task well. Motivation is a force within or outside of the body that energizes, directs, and sustains human behavior. Within the body, examples might be needs, personal values, and goals, while an incentive might be seen as a force outside of the body. The word stems from its Latin root movere, which means “to move.” Generally speaking, motivation arises as a consequence of a person’s desire to (1) fulfill unmet needs or (2) resolve conflicting thoughts that produce anxiety (an unpleasant experience). There are many ways in which we describe and categorize human needs, as we will see later in this chapter. Certain needs are fundamental to our existence, like the need for food and water. When we are hungry, we are energized to satisfy that need by securing and ingesting food. Our other needs operate in a similar manner. When a need is unfulfilled, we are motivated to engage in behaviors that will satisfy it. The same is true for situations in which we experience conflicting thoughts. When we find ourselves in situations inconsistent with our beliefs, values, or expectations, we endeavor to eliminate the inconsistency. We either change the situation, or change our perception of it. In both cases, motivation arises out of our interaction with and perception of a particular situation. We perceive the situation as satisfying our needs, or not. Motivation is thus a result of our interacting with situations to satisfy unmet needs or to resolve cognitive dissonance.
Simply stated, work motivation is the amount of effort a person exerts to achieve a certain level of job performance. Some people try very hard to perform their jobs well. They work long hours, even if it interferes with their family life. Highly motivated people go the “extra mile.” High scorers on an exam make sure they know the examination material to the best of their ability, no matter how much midnight oil they have to burn. Other students who don’t do as well may just want to get by—football games and parties are a lot more fun, after all.
Motivation is of great interest to employers: All employers want their people to perform to the best of their abilities. They take great pains to screen applicants to make sure they have the necessary abilities and motivation to perform well. They endeavor to supply all the necessary resources and a good work environment. Yet motivation remains a difficult factor to manage. As a result, it receives the most attention from organizations and researchers alike, who ask the perennial question “What motivates people to perform well?”
In this chapter, we look at the current answers to this question. What work conditions foster motivation? How can theories of motivation help us understand the general principles that guide organizational behavior? Rather than analyze why a particular student studies hard for a test, we’ll look at the underlying principles of our general behavior in a variety of situations (including test-taking). We also discuss the major theories of motivation, along with their implications for management and organizational behavior. By the end of this chapter, you should have a better understanding of why some people are more motivated than others. Successful employees know what they want to achieve (direction), and they persist until they achieve their goals (intensity).
Our discussion thus far implies that motivation is a matter of effort. This is only partially true. Motivation has two major components: direction and intensity. Direction is what a person wants to achieve, what they intend to do. It implies a target that motivated people to try to “hit.” That target may be to do well on a test. Or it may be to perform better than anyone else in a workgroup. Intensity is how hard people try to achieve their targets. Intensity is what we think of as effort. It represents the energy we expend to accomplish something. If our efforts are getting nowhere, will we try different strategies to succeed? (High-intensity-motivated people are persistent!)
It is important to distinguish the direction and intensity aspects of motivation. If either is lacking, performance will suffer. A person who knows what they want to accomplish (direction) but doesn’t exert much effort (intensity) will not succeed. (Scoring 100 percent on an exam—your target—won’t happen unless you study!) Conversely, people who don’t have a direction (what they want to accomplish) probably won’t succeed either. (At some point you have to decide on a major if you want to graduate, even if you do have straight As.)
Employees’ targets don’t always match with what their employers want. Absenteeism (some employees call this “calling in well”) is a major example.2 Pursuing your favorite hobby (your target) on a workday (your employer’s target) is a conflict in direction; below, we’ll examine some theories about why this conflict occurs.
There is another reason why employees’ targets are sometimes contrary to their employers’—sometimes employers do not ensure that employees understand what the employer wants. Employees can have great intensity but poor direction. It is the management’s job to provide direction: Should we stress quality as well as quantity? Work independently or as a team? Meet deadlines at the expense of costs? Employees flounder without direction. Clarifying direction results in accurate role perceptions, the behaviors employees think they are expected to perform as members of an organization. Employees with accurate role perceptions understand their purpose in the organization and how the performance of their job duties contributes to organizational objectives. Some motivation theorists assume that employees know the correct direction for their jobs. Others do not. These differences are highlighted in the discussion of motivation theories below.
At this point, as we begin our discussion of the various motivation theories, it is reasonable to ask “Why isn’t there just one motivation theory?” The answer is that different theories are driven by different philosophies of motivation. Some theorists assume that humans are propelled more by needs and instincts than by reasoned actions. Their content motivation theories focus on the content of what motivates people. Other theorists focus on the process by which people are motivated. Process motivation theories address how people become motivated—that is, how people perceive and think about a situation. Content and process theories endeavor to predict motivation in a variety of situations. However, none of these theories can predict what will motivate an individual in a given situation 100 percent of the time. Given the complexity of human behavior, a “grand theory” of motivation will probably never be developed.
A second reasonable question at this point is “Which theory is best?” If that question could be easily answered, this chapter would be quite short. The simple answer is that there is no “one best theory.” All have been supported by organizational behavior research. All have strengths and weaknesses. However, understanding something about each theory is a major step toward effective management practices.
concept check
1. Explain the two drivers of motivation: direction and intensity.
2. What are the differences between content and process theories of motivation?
3. Will there ever be a grand theory of motivation? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/07%3A_Work_Motivation_for_Performance/7.01%3A_Motivation-_Direction_and_Intensity.txt |
1. Describe a content theory of motivation.
The theories presented in this section focus on the importance of human needs. A common thread through all of them is that people have a variety of needs. A need is a human condition that becomes “energized” when people feel deficient in some respect. When we are hungry, for example, our need for food has been energized. Two features of needs are key to understanding motivation. First, when a need has been energized, we are motivated to satisfy it. We strive to make the need disappear. Hedonism, one of the first motivation theories, assumes that people are motivated to satisfy mainly their own needs (seek pleasure, avoid pain). Long since displaced by more refined theories, hedonism clarifies the idea that needs provide direction for motivation. Second, once we have satisfied a need, it ceases to motivate us. When we’ve eaten to satiation, we are no longer motivated to eat. Other needs take over and we endeavor to satisfy them. A manifest need is whatever need is motivating us at a given time. Manifest needs dominate our other needs.
Instincts are our natural, fundamental needs, basic to our survival. Our needs for food and water are instinctive. Many needs are learned. We are not born with a high (or low) need for achievement—we learn to need success (or failure). The distinction between instinctive and learned needs sometimes blurs; for example, is our need to socialize with other people instinctive or learned?
Manifest Needs Theory
One major problem with the need approach to motivation is that we can make up a need for every human behavior. Do we “need” to talk or be silent? The possibilities are endless. In fact, around the 1920s, some 6,000 human needs had been identified by behavioral scientists!
Henry A. Murray recognized this problem and condensed the list into a few instinctive and learned needs.3 Instincts, which Murray called primary needs, include physiological needs for food, water, sex (procreation), urination, and so on. Learned needs, which Murray called secondary needs, are learned throughout one’s life and are basically psychological in nature. They include such needs as the need for achievement, for love, and for affiliation (see Table 7.1).4
Sample Items from Murray’s List of Needs
Social Motive Brief Definition
Source: Adapted from C. S. Hall and G. Lindzey, Theories of Personality. Sample items from Murray’s List of Needs. Copyright 1957 by John Wiley & Sons, New York.
Abasement To submit passively to external force. To accept injury, blame, criticism, punishment. To surrender.
Achievement To accomplish something difficult. To master, manipulate, or organize physical objects, human beings, or ideas.
Affiliation To draw near and enjoyably cooperate or reciprocate with an allied other (an other who resembles the subject or who likes the subject). To please and win affection of a coveted object. To adhere and remain loyal to a friend.
Aggression To overcome opposition forcefully. To fight. To revenge an injury. To attack, injure, or kill another. To oppose forcefully or punish another.
Autonomy To get free, shake off restraint, break out of confinement.
Counteraction To master or make up for a failure by restriving.
Defendance To defend the self against assault, criticism, and blame. To conceal or justify a misdeed, failure, or humiliation. To vindicate the ego.
Deference To admire and support a superior. To praise, honor, or eulogize.
Dominance To control one’s human environment. To influence or direct the behavior of others by suggestion, seduction, persuasion, or command.
Exhibition To make an impression. To be seen and heard. To excite, amaze, fascinate, entertain, shock, intrigue, amuse, or entice others.
Harm avoidance To avoid pain, physical injury, illness, and death. To escape from a dangerous situation. To take precautionary measures.
Infavoidance To avoid humiliation. To quit embarrassing situations or to avoid conditions that may lead to belittlement or the scorn or indifference of others.
Nurturance To give sympathy and gratify the needs of a helpless object: an infant or any object that is weak, disabled, tired, inexperienced, infirm, defeated, humiliated, lonely, dejected, sick, or mentally confused. To assist an object in danger. To feed, help, support, console, protect, comfort, nurse, heal.
Order To put things in order. To achieve cleanliness, arrangement, organization, balance, neatness, tidiness, and precision.
Play To act for “fun” without further purpose. To like to laugh and make jokes. To seek enjoyable relaxation from stress.
Rejection To separate oneself from a negatively valued object. To exclude, abandon, expel, or remain indifferent to an inferior object. To snub or jilt an object.
Sentience To seek and enjoy sensuous impressions.
Sex To form and further an erotic relationship. To have sexual intercourse.
Succorance To have one’s needs gratified by the sympathetic aid of an allied object.
Understanding To ask or answer general questions. To be interested in theory. To speculate, formulate, analyze, and generalize.
Table7.1
Murray’s main premise was that people have a variety of needs, but only a few are expressed at a given time. When a person is behaving in a way that satisfies some need, Murray called the need manifest. Manifest needs theory assumes that human behavior is driven by the desire to satisfy needs. Lucretia’s chattiness probably indicates her need for affiliation. This is a manifest need. But what if Lucretia also has a need to dominate others? Could we detect that need from her current behavior? If not, Murray calls this a latent need. A latent need cannot be inferred from a person’s behavior at a given time, yet the person may still possess that need. The person may not have had the opportunity to express the need. Or she may not be in the proper environment to solicit behaviors to satisfy the need. Lucretia’s need to dominate may not be motivating her current behavior because she is with friends instead of coworkers.
Manifest needs theory laid the groundwork for later theories, most notably McClelland’s learned needs theory, that have greatly influenced the study of organizational behavior. The major implication for management is that some employee needs are latent. Managers often assume that employees do not have certain needs because the employees never try to satisfy them at work. Such needs may exist (latent needs); the work environment is simply not conducive to their manifestation (manifest needs). A reclusive accountant may not have been given the opportunity to demonstrate his need for achievement because he never received challenging assignments.
Learned Needs Theory
David C. McClelland and his associates (especially John W. Atkinson) built on the work of Murray for over 50 years. Murray studied many different needs, but very few in any detail. McClelland’s research differs from Murray’s in that McClelland studied three needs in-depth: the need for achievement, the need for affiliation, and the need for power (often abbreviated, in turn, as nAch, nAff, and nPow).5 McClelland believes that these three needs are learned, primarily in childhood. But he also believes that each need can be taught, especially nAch. McClelland’s research is important because much of the current thinking about organizational behavior is based on it.
Need for Achievement
The need for achievement (nAch) is how much people are motivated to excel at the tasks they are performing, especially tasks that are difficult. Of the three needs studied by McClelland, nAch has the greatest impact. The need for achievement varies in intensity across individuals. This makes nAch a personality trait as well as a statement about motivation. When nAch is being expressed, making it a manifest need, people try hard to succeed at whatever task they’re doing. We say these people have a high achievement motive. A motive is a source of motivation; it is the need that a person is attempting to satisfy. Achievement needs become manifest when individuals experience certain types of situations.
To better understand the nAch motive, it’s helpful to describe high-nAch people. You probably know a few of them. They’re constantly trying to accomplish something. One of your authors has a father-in-law who would much rather spend his weekends digging holes (for various home projects) than going fishing. Why? Because when he digs a hole, he gets results. In contrast, he can exert a lot of effort and still not catch a fish. A lot of fishing, no fish, and no results equal failure!
McClelland describes three major characteristics of high-nAch people:
1. They feel personally responsible for completing whatever tasks they are assigned. They accept credit for success and blame for failure.
2. They like situations where the probability of success is moderate. High-nAch people are not motivated by tasks that are too easy or extremely difficult. Instead, they prefer situations where the outcome is uncertain, but in which they believe they can succeed if they exert enough effort. They avoid both simple and impossible situations.
3. They have very strong desires for feedback about how well they are doing. They actively seek out performance feedback. It doesn’t matter whether the information implies success or failure. They want to know whether they have achieved or not. They constantly ask how they are doing, sometimes to the point of being a nuisance.
Why is nAch important to organizational behavior? The answer is, the success of many organizations is dependent on the nAch levels of their employees.6 This is especially true for jobs that require self-motivation and managing others. Employees who continuously have to be told how to do their jobs require an overly large management team, and too many layers of management spell trouble in the current marketplace. Today’s flexible, cost-conscious organizations have no room for top-heavy structures; their high-nAch employees perform their jobs well with minimal supervision.
Many organizations manage the achievement needs of their employees poorly. A common perception about people who perform unskilled jobs is that they are unmotivated and content doing what they are doing. But, if they have achievement needs, the job itself creates little motivation to perform. It is too easy. There are not enough workers who feel personal satisfaction for having the cleanest floors in a building. Designing jobs that are neither too challenging nor too boring is key to managing motivation. Job enrichment is one effective strategy; this frequently entails training and rotating employees through different jobs, or adding new challenges.
Need for Affiliation
This need is the second of McClelland’s learned needs. The need for affiliation (nAff) reflects a desire to establish and maintain warm and friendly relationships with other people. As with nAch, nAff varies in intensity across individuals. As you would expect, high-nAff people are very sociable. They’re more likely to go bowling with friends after work than to go home and watch television. Other people have lower affiliation needs. This doesn’t mean that they avoid other people, or that they dislike others. They simply don’t exert as much effort in this area as high-nAff people do.
The nAff has important implications for organizational behavior. High-nAff people like to be around other people, including other people at work. As a result, they perform better in jobs that require teamwork. Maintaining good relationships with their coworkers is important to them, so they go to great lengths to make the workgroup succeed because they fear rejection. So, high-nAff employees will be especially motivated to perform well if others depend on them. In contrast, if high-nAff people perform jobs in isolation from other people, they will be less motivated to perform well. Performing well on this job won’t satisfy their need to be around other people.
Effective managers carefully assess the degree to which people have high or low nAff. Employees high in nAff should be placed in jobs that require or allow interactions with other employees. Jobs that are best performed alone are more appropriate for low-nAff employees, who are less likely to be frustrated.
Need for Power
The third of McClelland’s learned needs, the need for power (nPow), is the need to control things, especially other people. It reflects a motivation to influence and be responsible for other people. An employee who is often talkative, gives orders, and argues a lot is motivated by the need for power over others.
Employees with high nPow can be beneficial to organizations. High-nPow people do have effective employee behaviors, but at times they’re disruptive. A high-nPow person may try to convince others to do things that are detrimental to the organization. So, when is this need good, and when is it bad? Again, there are no easy answers. McClelland calls this the “two faces of power.”7 A personal power seeker endeavors to control others mostly for the sake of dominating them. They want others to respond to their wishes whether or not it is good for the organization. They “build empires,” and they protect them.
McClelland’s other power seeker is the social power seeker. A high social power seeker satisfies needs for power by influencing others, like the personal power seeker. They differ in that they feel best when they have influenced a workgroup to achieve the group’s goals, and not some personal agenda. High social power-seekers are concerned with goals that a workgroup has set for itself, and they are motivated to influence others to achieve the goal. This need is oriented toward fulfilling responsibilities to the employer, not to the self.
McClelland has argued that the high need for social power is the most important motivator for successful managers. Successful managers tend to be high in this type of nPow. High need for achievement can also be important, but it sometimes results in too much concern for personal success and not enough for the employer’s success. The need for affiliation contributes to managerial success only in those situations where the maintenance of warm group relations is as important as getting others to work toward group goals.
The implication of McClelland’s research is that organizations should try to place people with high needs for social power in managerial jobs. It is critical, however, that those managerial jobs allow the employee to satisfy the nPow through social power acquisition. Otherwise, a manager high in nPow may satisfy this need through the acquisition of personal power, to the detriment of the organization.
ETHICS IN PRACTICE
Corporate Social Responsibility as a Motivating Force
Whatever their perspective, most people have a cause that they are passionate about. Bitcoin or net neutrality, sea levels or factory farming—social causes bind us to a larger context or assume a higher purpose for living better.
So what motivates employees to give their all, work creatively, and be fully engaged? According to CB Bhattacharya, the Pietro Ferrero Chair in Sustainability at ESMT European School of Management and Technology in Berlin, Germany, employment engagement, or how positive employees feel about their current job, was at an all-time low globally in 2016: 13 percent. But not all companies battle such low engagement rates. Unilever employees more than 170,000 workers globally and has an employ engagement level around 80 percent. How? Bhattacharya credits the success of Unilever, and other companies with similar engagement levels, to an emphasis on a “sustainable business model.” He outlines eight steps that companies take to move sustainability and social responsibility from buzzwords to a company mission capable of motivating employees (Knowledge @ Wharton 2016).
According to Bhattacharya, a company needs to first define what it does and its long-term purpose, and then reconcile its sustainability goals with its economic goals. With its purpose and goals defined, it can then educate the workforce on sustainable methods to create knowledge and competence. Champions for the effort must be found throughout the organization, not just at the top. Competition should be encouraged among employees to find and embrace new goals. Sustainability should be visible both within and outside the company. Sustainability should be tied to a higher purpose and foster a sense of unity not simply among employees, but even with competition at a societal level (Knowledge @ Wharton 2016).
Other companies have made social responsibility an everyday part of what they do. Launched in 2013, Bombas is the brainchild of Randy Goldberg and David Heath. Goldberg and Heath discovered that socks are the most-requested clothing at homeless shelters. In response, the two entrepreneurs launched a line of socks that not only “reinvents” the sock (they claim), but also helps those in need. For each pair of socks purchased, the company donates a pair of socks to someone in need (Mulvey 2017). According to the company website, “Bombas exists to help solve this problem, to support the homeless community, and to bring awareness to an under-publicized problem in the United States” (n.p.). Although the New York-based company is still growing, as of October 2017 Bombas had donated more than four million pairs of socks (Bombas 2017).
In 2016, the Royal Bank of Scotland (RBS) launched a pilot program called Jump in which employees participated in challenges on ways to save water and electricity, as well as other sustainability issues. At the end of the pilot, 95 percent of the employees reported that they felt the program had contributed to employee engagement, team building, and environmental stability. Given the success of the program, in 2017 it was expanded to all RBS sites and a smartphone app was added to help employees participate in the challenges (Barton 2017).
Placing a company in a larger context and adding a second, higher purpose than the established company goals motivates employees to police the company itself to be a better global citizen. Companies benefit from reduced waste and increased employee engagement. Many companies are successfully motivating their staff, and working toward more sustainable practices, while improving lives directly.
Sources:
Barton, Tynan. 2017. “RBS boosts employee motivation and engagement through its CSR approach.” employee benefits. https://www.employeebenefits.co.uk/i...-csr-approach/
Bombas. 2017. “Giving Back.” https://bombas.com/pages/giving-back
Knowledge @ Wharton. 2016. “How Companies Can Tap Sustainability to Motivate Staff.” http://knowledge.wharton.upenn.edu/a...otivate-staff/
Mulvey, Kelsey. 2017. “This company spent two years perfecting gym socks, and it paid off.” Business Insider. http://www.businessinsider.com/bomba...-review-2017-1
Questions:
1. Do you think social responsibility to promote sustainable practices? Why or why not?
2. Do you think most companies’ CSR programs are essentially PR gimmicks? Why or why not? Give examples.
Maslow’s Hierarchy of Needs
Any discussion of needs that motivate performance would be incomplete without considering Abraham Maslow.8 Thousands of managers in the 1960s were exposed to Maslow’s theory through the popular writings of Douglas McGregor.9 Today, many of them still talk about employee motivation in terms of Maslow’s theory.
Maslow was a psychologist who, based on his early research with primates (monkeys), observations of patients, and discussions with employees in organizations, theorized that human needs are arranged hierarchically. That is, before one type of need can manifest itself, other needs must be satisfied. For example, our need for water takes precedence over our need for social interaction (this is also called prepotency). We will always satisfy our need for water before we satisfy our social needs; water needs have prepotency over social needs. Maslow’s theory differs from others that preceded it because of this hierarchical, prepotency concept.
Maslow went on to propose five basic types of human needs. This is in contrast to the thousands of needs that earlier researchers had identified, and also fewer than Murray identified in his theory. Maslow condensed human needs into a manageable set. Those five human needs, in the order of prepotency in which they direct human behavior, are:
1. Physiological and survival needs. These are the most basic of human needs and include the needs for water, food, sex, sleep, activity, stimulation, and oxygen.
2. Safety and security needs. These needs invoke behaviors that assure freedom from danger. This set of needs involves meeting threats to our existence, including extremes in environmental conditions (heat, dust, and so on), assault from other humans, tyranny, and murder. In other words, satisfaction of these needs prevents fear and anxiety while adding stability and predictability to life.
3. Social needs. These needs reflect human desires to be the target of affection and love from others. They are especially satisfied by the presence of spouses, children, parents, friends, relatives, and others to whom we feel close. Feelings of loneliness and rejection are symptoms that this need has not been satisfied.
4. Ego and esteem. Esteem needs to go beyond social needs. They reflect our need to be respected by others, and to have esteem for ourselves. It is one thing to be liked by others. It is another thing to be respected for our talents and abilities. Ego and esteem needs have internal (self) and external (others) focuses. An internal focus includes desires for achievement, strength, competence, confidence, and independence. An external focus includes desires to have prestige, recognition, appreciation, attention, and respect from others. Satisfaction of external esteem needs can lead to satisfaction of internal esteem needs.
5. Self-actualization. Self-actualization needs are the most difficult to describe. Unlike the other needs, the need for self-actualization is never completely satisfied. Self-actualization involves a desire for self-fulfillment, “to become more and more what one is, to become everything that one is capable of becoming.”10 Because people are so different in their strengths and weaknesses, in capacities and limitations, the meaning of self-actualization varies greatly. Satisfying self-actualization needs means developing all of our special abilities to their fullest degree.
Exhibit 7.5 A protester at an anti-war demonstration in Seattle held up this sign. Where would you place that on Maslow’s hierarchy of needs?
Exhibit 7.6 illustrates Maslow’s proposed hierarchy of needs. According to his theory, people first direct their attention to satisfying their lower-order needs. Those are the needs at the bottom of the pyramid (physiological, safety, and security). Once those needs have been satisfied, the next level, social needs, becomes energized. Once satisfied, we focus on our ego and esteem needs. Maslow believed that most people become fixated at this level. That is, most people spend much of their lives developing self-esteem and the esteem of others. But, once those esteem needs are satisfied, Maslow predicted that self-actualization needs would dominate. There are no higher levels in the pyramid, because self-actualization needs can never be fully satisfied. They represent a continuing process of self-development and self-improvement that, once satisfied on one dimension (painting), create motivation to continue on other dimensions (sculpting). One wonders if athletes like Tim Tebow are self-actualizing when they participate in multiple sporting endeavors at the professional level.
An overriding principle in this theory is that a person’s attention (direction) and energy (intensity) will focus on satisfying the lowest-level need that is not currently satisfied. Needs can also be satisfied at some point but become active (dissatisfied) again. Needs must be “maintained” (we must continue to eat occasionally). According to Maslow, when lower-level needs are reactivated, we once again concentrate on that need. That is, we lose interest in the higher-level needs when lower-order needs are energized.
The implications of Maslow’s theory for organizational behavior are as much conceptual as they are practical. The theory posits that to maximize employee motivation, employers must try to guide workers to the upper parts of the hierarchy. That means that the employer should help employees satisfy lower-order needs like safety and security and social needs. Once satisfied, employees will be motivated to build esteem and respect through their work achievements. Exhibit 7.6 shows how Maslow’s theory relates to factors that organizations can influence. For example, by providing adequate pay, safe working conditions, and cohesive work groups, employers help employees satisfy their lower-order needs. Once satisfied, challenging jobs, additional responsibilities, and prestigious job titles can help employees satisfy higher-order esteem needs.
Maslow’s theory is still popular among practicing managers. Organizational behavior researchers, however, are not as enamored with it because research results don’t support Maslow’s hierarchical notion. Apparently, people don’t go through the five levels in a fixed fashion. On the other hand, there is some evidence that people satisfy the lower-order needs before they attempt to satisfy higher-order needs. Refinements of Maslow’s theory in recent years reflect this more limited hierarchy.11 The self-assessment below will allow you to evaluate the strength of your five needs.
Alderfer’s ERG Theory
Clayton Alderfer observed that very few attempts had been made to test Maslow’s full theory. Further, the evidence accumulated provided only partial support. During the process of refining and extending Maslow’s theory, Alderfer provided another need-based theory and a somewhat more useful perspective on motivation.12 Alderfer’s ERG theory compresses Maslow’s five need categories into three: existence, relatedness, and growth.13 In addition, ERG theory details the dynamics of an individual’s movement between the need categories in a somewhat more detailed fashion than typically characterizes interpretations of Maslow’s work.
As shown in Exhibit 7.7, the ERG model addresses the same needs as those identified in Maslow’s work:
• Existence needs include physiological and material safety needs. These needs are satisfied by material conditions and not through interpersonal relations or personal involvement in the work setting.
• Relatedness needs include all of Maslow’s social needs, plus social safety and social esteem needs. These needs are satisfied through the exchange of thoughts and feelings with other people.
• Growth needs include self-esteem and self-actualization needs. These needs tend to be satisfied through one’s full involvement in work and the work setting.
Exhibit 7.8 identifies a number of ways in which organizations can help their members satisfy these three needs.
Four components—satisfaction progression, frustration, frustration regression, and aspiration—are key to understanding Alderfer’s ERG theory. The first of these, satisfaction progression, is in basic agreement with Maslow’s process of moving through the needs. As we increasingly satisfy our existence needs, we direct energy toward relatedness needs. As these needs are satisfied, our growth needs become more active. The second component, frustration, occurs when we attempt but fail to satisfy a particular need. The resulting frustration may make satisfying the unmet need even more important to us—unless we repeatedly fail to satisfy that need. In this case, Alderfer’s third component, frustration regression, can cause us to shift our attention to a previously satisfied, more concrete, and verifiable need. Lastly, the aspiration component of the ERG model notes that, by its very nature, growth is intrinsically satisfying. The more we grow, the more we want to grow. Therefore, the more we satisfy our growth need, the more important it becomes and the more strongly we are motivated to satisfy it.
Alderfer’s model is potentially more useful than Maslow’s in that it doesn’t create false motivational categories. For example, it is difficult for researchers to ascertain when interaction with others satisfies our need for acceptance and when it satisfies our need for recognition. ERG also focuses attention explicitly on movement through the set of needs in both directions. Further, evidence in support of the three need categories and their order tends to be stronger than evidence for Maslow’s five need categories and their relative order.
Herzberg’s Motivator-Hygiene Theory
Clearly one of the most influential motivation theories throughout the 1950s and 1960s was Frederick Herzberg’s motivator-hygiene theory.14 This theory is a further refinement of Maslow’s theory. Herzberg argued that there are two sets of needs, instead of the five sets theorized by Maslow. He called the first set “motivators” (or growth needs). Motivators, which relate to the jobs we perform and our ability to feel a sense of achievement as a result of performing them, are rooted in our need to experience growth and self-actualization. The second set of needs he termed “hygienes.” Hygienes relate to the work environment and are based in the basic human need to “avoid pain.” According to Herzberg, growth needs motivate us to perform well and, when these needs are met, lead to the experience of satisfaction. Hygiene needs, on the other hand, must be met to avoid dissatisfaction (but do not necessarily provide satisfaction or motivation).15
Hygiene factors are not directly related to the work itself (job content). Rather, hygienes refer to job context factors (pay, working conditions, supervision, and security). Herzberg also refers to these factors as “dissatisfiers” because they are frequently associated with dissatisfied employees. These factors are so frequently associated with dissatisfaction that Herzberg claims they never really provide satisfaction. When they’re present in sufficient quantities, we avoid dissatisfaction, but they do not contribute to satisfaction. Furthermore, since meeting these needs does not provide satisfaction, Herzberg concludes that they do not motivate workers.
Motivator factors involve our long-term need to pursue psychological growth (much like Maslow’s esteem and self-actualization needs). Motivators relate to job content. Job content is what we actually do when we perform our job duties. Herzberg considered job duties that lead to feelings of achievement and recognition to be motivators. He refers to these factors as “satisfiers” to reflect their ability to provide satisfying experiences. When these needs are met, we experience satisfaction. Because meeting these needs provides satisfaction, they motivate workers. More specifically, Herzberg believes these motivators lead to high performance (achievement), and the high performance itself leads to satisfaction.
The unique feature of Herzberg’s theory is that job conditions that prevent dissatisfaction do not cause satisfaction. Satisfaction and dissatisfaction are on different “scales” in his view. Hygienes can cause dissatisfaction if they are not present in sufficient levels. Thus, an employee can be dissatisfied with low pay. But paying him more will not cause long-term satisfaction unless motivators are present. Good pay by itself will only make the employee neutral toward work; to attain satisfaction, employees need challenging job duties that result in a sense of achievement. Employees can be dissatisfied, neutral, or satisfied with their jobs, depending on their levels of hygienes and motivators. Herzberg’s theory even allows for the possibility that an employee can be satisfied and dissatisfied at the same time—the “I love my job but I hate the pay” situation!
Herzberg’s theory has made lasting contributions to organizational research and managerial practice. Researchers have used it to identify the wide range of factors that influence worker reactions. Previously, most organizations attended primarily to hygiene factors. Because of Herzberg’s work, organizations today realize the potential of motivators. Job enrichment programs are among the many direct results of his research.
Herzberg’s work suggests a two-stage process for managing employee motivation and satisfaction. First, managers should address the hygiene factors. Intense forms of dissatisfaction distract employees from important work-related activities and tend to be demotivating.16 Thus, managers should make sure that such basic needs as adequate pay, safe and clean working conditions, and opportunities for social interaction are met. They should then address the much more powerful motivator needs, in which workers experience recognition, responsibility, achievement, and growth. If motivator needs are ignored, neither long-term satisfaction nor high motivation is likely. When motivator needs are met, however, employees feel satisfied and are motivated to perform well.
Self-Determination Theory
One major implication of Herzberg’s motivator-hygiene theory is the somewhat counterintuitive idea that managers should focus more on motivators than on hygienes. (After all, doesn’t everyone want to be paid well? Organizations have held this out as a chief motivator for decades!) Why might concentrating on motivators give better results? To answer this question, we must examine types of motivation. Organizational behavior researchers often classify motivation in terms of what stimulates it. In the case of extrinsic motivation, we endeavor to acquire something that satisfies a lower-order need. Jobs that pay well and that are performed in safe, clean working conditions with adequate supervision and resources directly or indirectly satisfy these lower-order needs. These “outside the person” factors are extrinsic rewards.
Factors “inside” the person that cause people to perform tasks, intrinsic motivation, arise out of performing a task in and of itself because it is interesting or “fun” to do. The task is enjoyable, so we continue to do it even in the absence of extrinsic rewards. That is, we are motivated by intrinsic rewards, rewards that we more or less give ourselves. Intrinsic rewards satisfy higher-order needs like relatedness and growth in ERG theory. When we sense that we are valuable contributors, are achieving something important, or are getting better at some skill, we like this feeling and strive to maintain it.
Self-determination theory (SDT) seeks to explain not only what causes motivation, but also how extrinsic rewards affect intrinsic motivation.17 In SDT, extrinsic motivation refers to the performance of an activity in order to attain some valued outcome, while intrinsic motivation refers to performing an activity for the inherent satisfaction of the activity itself. SDT specifies when an activity will be intrinsically motivating and when it will not. Considerable numbers of studies have demonstrated that tasks are intrinsically motivating when they satisfy at least one of three higher-order needs: competence, autonomy, and relatedness. These precepts from SDT are entirely consistent with earlier discussions of theories by McClelland, Maslow, Alderfer, and Herzberg.
SDT takes the concepts of extrinsic rewards and intrinsic motivation further than the other need theories. SDT researchers have consistently found that as the level of extrinsic rewards increases, the amount of intrinsic motivation decreases. That is, SDT posits that extrinsic rewards not only do not provide intrinsic motivation, they diminish it. Think of this in terms of hobbies. Some people like to knit, others like to carve wood. They do it because it is intrinsically motivating; the hobby satisfies needs for competence, autonomy, and relatedness. But what happens if these hobbyists start getting paid well for their sweaters and carvings? Over time the hobby becomes less fun and is done in order to receive extrinsic rewards (money). Extrinsic motivation increases as intrinsic motivation decreases! When extrinsic rewards are present, people do not feel like what they do builds competence, is self-determined, or enhances relationships with others.
SDT theory has interesting implications for the management of organizational behavior. Some jobs are by their very nature uninteresting and unlikely to be made interesting. Automation has eliminated many such jobs, but they are still numerous. SDT would suggest that the primary way to motivate high performance for such jobs is to make performance contingent on extrinsic rewards. Relatively high pay is necessary to sustain performance on certain low-skill jobs. On the other hand, SDT would suggest that to enhance intrinsic motivation on jobs that are interesting, don’t focus only on increasing extrinsic rewards (like large pay bonuses). Instead, create even more opportunities for employees to satisfy their needs for competence, autonomy, and relatedness. That means giving them opportunities to learn new skills, to perform their jobs without interference, and to develop meaningful relationships with other customers and employees in other departments. Such actions enhance intrinsic rewards.
You may have noticed that content theories are somewhat quiet about what determines the intensity of motivation. For example, some people steal to satisfy their lower-order needs (they have high intensity). But most of us don’t steal. Why is this? Process theories of motivation attempt to explain this aspect of motivation by focusing on the intensity of motivation as well as its direction. According to self-determination theory, skilled workers who are given a chance to hone their skills and the freedom to practice their craft will be intrinsically motivated.
concept check
1. Understand the content theories of motivation.
2. Understand the contributions that Murray, McClelland, Maslow, Alderfer, and Herzberg made toward an understanding of human motivation. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/07%3A_Work_Motivation_for_Performance/7.02%3A_Content_Theories_of_Motivation.txt |
1. Describe the process theories of motivation, and compare and contrast the main process theories of motivation: operant conditioning theory, equity theory, goal theory, and expectancy theory.
Process theories of motivation try to explain why behaviors are initiated. These theories focus on the mechanism by which we choose a target, and the effort that we exert to “hit” the target. There are four major process theories: (1) operant conditioning, (2) equity, (3) goal, and (4) expectancy.
Operant Conditioning Theory
Operant conditioning theory is the simplest of the motivation theories. It basically states that people will do those things for which they are rewarded and will avoid doing things for which they are punished. This premise is sometimes called the “law of effect.” However, if this were the sum total of conditioning theory, we would not be discussing it here. Operant conditioning theory does offer greater insights than “reward what you want and punish what you don’t,” and knowledge of its principles can lead to effective management practices.
Operant conditioning focuses on the learning of voluntary behaviors.18 The term operant conditioning indicates that learning results from our “operating on” the environment. After we “operate on the environment” (that is, behave in a certain fashion), consequences result. These consequences determine the likelihood of similar behavior in the future. Learning occurs because we do something to the environment. The environment then reacts to our action, and our subsequent behavior is influenced by this reaction.
The Basic Operant Model
According to operant conditioning theory, we learn to behave in a particular fashion because of consequences that resulted from our past behaviors.19 The learning process involves three distinct steps (see Table 7.2). The first step involves a stimulus (S). The stimulus is any situation or event we perceive that we then respond to. A homework assignment is a stimulus. The second step involves a response (R), that is, any behavior or action we take in reaction to the stimulus. Staying up late to get your homework assignment in on time is a response. (We use the words response and behavior interchangeably here.) Finally, a consequence (C) is any event that follows our response and that makes the response more or less likely to occur in the future. If Colleen Sullivan receives praise from her superior for working hard, and if getting that praise is a pleasurable event, then it is likely that Colleen will work hard again in the future. If, on the other hand, the superior ignores or criticizes Colleen’s response (working hard), this consequence is likely to make Colleen avoid working hard in the future. It is the experienced consequence (positive or negative) that influences whether a response will be repeated the next time the stimulus is presented.
Process Theories of Motivation
General Operant Model: S → R → C
Ways to Strengthen the S → R Link
1. S → R → C+ (Positive Reinforcement)
2. S → R → C– (Negative Reinforcement)
3. S → R → (no C–) (Avoidance Learning)
Ways to Weaken the S → R Link
1. S → R → (no C) (Nonreinforcement)
2. S → R → C– (Punishment)
Table7.2 (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)
Reinforcement occurs when a consequence makes it more likely the response/behavior will be repeated in the future. In the previous example, praise from Colleen’s superior is a reinforcer. Extinction occurs when a consequence makes it less likely the response/behavior will be repeated in the future. Criticism from Colleen’s supervisor could cause her to stop working hard on any assignment.
There are three ways to make a response more likely to recur: positive reinforcement, negative reinforcement, and avoidance learning. In addition, there are two ways to make the response less likely to recur: nonreinforcement and punishment.
Making a Response More Likely
According to reinforcement theorists, managers can encourage employees to repeat a behavior if they provide a desirable consequence, or reward, after the behavior is performed. A positive reinforcement is a desirable consequence that satisfies an active need or that removes a barrier to need satisfaction. It can be as simple as a kind word or as major as a promotion. Companies that provide “dinners for two” as awards to those employees who go the extra mile are utilizing positive reinforcement. It is important to note that there are wide variations in what people consider to be a positive reinforcer. Praise from a supervisor may be a powerful reinforcer for some workers (like high-nAch individuals) but not others.
Another technique for making a desired response more likely to be repeated is known as negative reinforcement. When a behavior causes something undesirable to be taken away, the behavior is more likely to be repeated in the future. Managers use negative reinforcement when they remove something unpleasant from an employee’s work environment in the hope that this will encourage the desired behavior. Ted doesn’t like being continually reminded by Philip to work faster (Ted thinks Philip is nagging him), so he works faster at stocking shelves to avoid being criticized. Philip’s reminders are a negative reinforcement for Ted.
Approach using negative reinforcement with extreme caution. Negative reinforcement is often confused with punishment. Punishment, unlike reinforcement (negative or positive), is intended to make a particular behavior go away (not be repeated). Negative reinforcement, like positive reinforcement, is intended to make a behavior more likely to be repeated in the future. In the previous example, Philip’s reminders simultaneously punished one behavior (slow stocking) and reinforced another (faster stocking). The difference is often a fine one, but it becomes clearer when we identify the behaviors we are trying to encourage (reinforcement) or discourage (punishment).
A third method of making a response more likely to occur involves a process known as avoidance learning. Avoidance learning occurs when we learn to behave in a certain way to avoid encountering an undesired or unpleasant consequence. We may learn to wake up a minute or so before our alarm clock rings so we can turn it off and not hear the irritating buzzer. Some workers learn to get to work on time to avoid the harsh words or punitive actions of their supervisors. Many organizational discipline systems rely heavily on avoidance learning by using the threat of negative consequences to encourage desired behavior. When managers warn an employee not to be late again, when they threaten to fire a careless worker, or when they transfer someone to an undesirable position, they are relying on the power of avoidance learning.
Making a Response Less Likely
At times it is necessary to discourage a worker from repeating an undesirable behavior. The techniques managers use to make a behavior less likely to occur involve doing something that frustrates the individual’s need satisfaction or that removes a currently satisfying circumstance. Punishment is an aversive consequence that follows a behavior and makes it less likely to reoccur.
Note that managers have another alternative, known as nonreinforcement, in which they provide no consequence at all following a worker’s response. Nonreinforcement eventually reduces the likelihood of that response reoccurring, which means that managers who fail to reinforce a worker’s desirable behavior are also likely to see that desirable behavior less often. If Philip never rewards Ted when he finishes stocking on time, for instance, Ted will probably stop trying to beat the clock. Nonreinforcement can also reduce the likelihood that employees will repeat undesirable behaviors, although it doesn’t produce results as quickly as punishment does. Furthermore, if other reinforcing consequences are present, nonreinforcement is unlikely to be effective.
While punishment clearly works more quickly than does nonreinforcement, it has some potentially undesirable side effects. Although punishment effectively tells a person what not to do and stops the undesired behavior, it does not tell them what they should do. In addition, even when punishment works as intended, the worker being punished often develops negative feelings toward the person who does the punishing. Although sometimes it is very difficult for managers to avoid using punishment, it works best when reinforcement is also used. An experiment conducted by two researchers at the University of Kansas found that using nonmonetary reinforcement in addition to punitive disciplinary measures was an effective way to decrease absenteeism in an industrial setting.20
Schedules of Reinforcement
When a person is learning a new behavior, like how to perform a new job, it is desirable to reinforce effective behaviors every time they are demonstrated (this is called shaping). But in organizations it is not usually possible to reinforce desired behaviors every time they are performed, for obvious reasons. Moreover, research indicates that constantly reinforcing desired behaviors, termed continuous reinforcement, can be detrimental in the long run. Behaviors that are learned under continuous reinforcement are quickly extinguished (cease to be demonstrated). This is because people will expect a reward (the reinforcement) every time they display the behavior. When they don’t receive it after just a few times, they quickly presume that the behavior will no longer be rewarded, and they quit doing it. Any employer can change employees’ behavior by simply not paying them!
If behaviors cannot (and should not) be reinforced every time they are exhibited, how often should they be reinforced? This is a question about schedules of reinforcement, or the frequency at which effective employee behaviors should be reinforced. Much of the early research on operant conditioning focused on the best way to maintain the performance of desired behaviors. That is, it attempted to determine how frequently behaviors need to be rewarded so that they are not extinguished. Research zeroed in on four types of reinforcement schedules:
Fixed Ratio. With this schedule, a fixed number of responses (let’s say five) must be exhibited before any of the responses are reinforced. If the desired response is coming to work on time, then giving employees a $25 bonus for being punctual every day from Monday through Friday would be a fixed ratio of reinforcement. Variable Ratio. A variable-ratio schedule reinforces behaviors, on average, a fixed number of times (again let’s say five). Sometimes the tenth behavior is reinforced, other times the first, but on average every fifth response is reinforced. People who perform under such variable-ratio schedules like this don’t know when they will be rewarded, but they do know that they will be rewarded. Fixed Interval. In a fixed-interval schedule, a certain amount of time must pass before a behavior is reinforced. With a one-hour fixed-interval schedule, for example, a supervisor visits an employee’s workstation and reinforces the first desired behavior she sees. She returns one hour later and reinforces the next desirable behavior. This schedule doesn’t imply that reinforcement will be received automatically after the passage of the time period. The time must pass and an appropriate response must be made. Variable Interval. The variable interval differs from fixed-interval schedules in that the specified time interval passes on average before another appropriate response is reinforced. Sometimes the time period is shorter than the average; sometimes it is longer. Which type of reinforcement schedule is best? In general, continuous reinforcement is best while employees are learning their jobs or new duties. After that, variable-ratio reinforcement schedules are superior. In most situations the fixed-interval schedule produces the least effective results, with fixed ratio and variable interval falling in between the two extremes. But remember that effective behaviors must be reinforced with some type of schedule, or they may become extinguished. Equity Theory Suppose you have worked for a company for several years. Your performance has been excellent, you have received regular pay increases, and you get along with your boss and coworkers. One day you come to work to find that a new person has been hired to work at the same job that you do. You are pleased to have the extra help. Then, you find out the new person is making$100 more per week than you, despite your longer service and greater experience. How do you feel? If you’re like most of us, you’re quite unhappy. Your satisfaction has just evaporated. Nothing about your job has changed—you receive the same pay, do the same job, and work for the same supervisor. Yet, the addition of one new employee has transformed you from a happy to an unhappy employee. This feeling of unfairness is the basis for equity theory.
Equity theory states that motivation is affected by the outcomes we receive for our inputs compared to the outcomes and inputs of other people.21 This theory is concerned with the reactions people have to outcomes they receive as part of a “social exchange.” According to equity theory, our reactions to the outcomes we receive from others (an employer) depend both on how we value those outcomes in an absolute sense and on the circumstances surrounding their receipt. Equity theory suggests that our reactions will be influenced by our perceptions of the “inputs” provided in order to receive these outcomes (“Did I get as much out of this as I put into it?”). Even more important is the comparison of our inputs to what we believe others received for their inputs (“Did I get as much for my inputs as my coworkers got for theirs?”).
The Basic Equity Model
The fundamental premise of equity theory is that we continuously monitor the degree to which our work environment is “fair.” In determining the degree of fairness, we consider two sets of factors, inputs and outcomes (see Exhibit 7.11). Inputs are any factors we contribute to the organization that we feel have value and are relevant to the organization. Note that the value attached to an input is based on our perception of its relevance and value. Whether or not anyone else agrees that the input is relevant or valuable is unimportant to us. Common inputs in organizations include time, effort, performance level, education level, skill levels, and bypassed opportunities. Since any factor we consider relevant is included in our evaluation of equity, it is not uncommon for factors to be included that the organization (or even the law) might argue are inappropriate (such as age, sex, ethnic background, or social status).
Outcomes are anything we perceive as getting back from the organization in exchange for our inputs. Again, the value attached to an outcome is based on our perceptions and not necessarily on objective reality. Common outcomes from organizations include pay, working conditions, job status, feelings of achievement, and friendship opportunities. Both positive and negative outcomes influence our evaluation of equity. Stress, headaches, and fatigue are also potential outcomes. Since any outcome we consider relevant to the exchange influences our equity perception, we frequently include unintended factors (peer disapproval, family reactions).
Equity theory predicts that we will compare our outcomes to our inputs in the form of a ratio. On the basis of this ratio we make an initial determination of whether or not the situation is equitable. If we perceive that the outcomes we receive are commensurate with our inputs, we are satisfied. If we believe that the outcomes are not commensurate with our inputs, we are dissatisfied. This dissatisfaction can lead to ineffective behaviors for the organization if they continue. The key feature of equity theory is that it predicts that we will compare our ratios to the ratios of other people. It is this comparison of the two ratios that has the strongest effect on our equity perceptions. These other people are called referent others because we “refer to” them when we judge equity. Usually, referent others are people we work with who perform work of a similar nature. That is, referent others perform jobs that are similar in difficulty and complexity to the employee making the equity determination (see Exhibit 7.11).
Three conditions can result from this comparison. Our outcome-to-input ratio could equal the referent other’s. This is a state of equity. A second result could be that our ratio is greater than the referent other’s. This is a state of overreward inequity. The third result could be that we perceive our ratio to be less than that of the referent other. This is a state of underreward inequity.
Equity theory has a lot to say about basic human tendencies. The motivation to compare our situation to that of others is strong. For example, what is the first thing you do when you get an exam back in class? Probably look at your score and make an initial judgment as to its fairness. For a lot of people, the very next thing they do is look at the scores received by fellow students who sit close to them. A 75 percent score doesn’t look so bad if everyone else scored lower! This is equity theory in action.
Most workers in the United States are at least partially dissatisfied with their pay.22 Equity theory helps explain this. Two human tendencies create feelings of inequity that are not based in reality. One is that we tend to overrate our performance levels. For example, one study conducted by your authors asked more than 600 employees to anonymously rate their performance on a 7-point scale (1 = poor, 7 = excellent). The average was 6.2, meaning the average employee rated his or her performance as very good to excellent. This implies that the average employee also expects excellent pay increases, a policy most employers cannot afford if they are to remain competitive. Another study found that the average employee (one whose performance is better than half of the other employees and worse than the other half) rated her performance at the 80th percentile (better than 80 percent of the other employees, worse than 20 percent).23 Again it would be impossible for most organizations to reward the average employee at the 80th percentile. In other words, most employees inaccurately overrate the inputs they provide to an organization. This leads to perceptions of inequity that are not justified.
The second human tendency that leads to unwarranted perceptions of inequity is our tendency to overrate the outcomes of others.24 Many employers keep the pay levels of employees a “secret.” Still other employers actually forbid employees to talk about their pay. This means that many employees don’t know for certain how much their colleagues are paid. And, because most of us overestimate the pay of others, we tend to think that they’re paid more than they actually are, and the unjustified perceptions of inequity are perpetuated.
The bottom line for employers is that they need to be sensitive to employees’ need for equity. Employers need to do everything they can to prevent feelings of inequity because employees engage in effective behaviors when they perceive equity and ineffective behaviors when they perceive inequity.
Perceived Overreward Inequity
When we perceive that overreward inequity exists (that is, we unfairly make more than others), it is rare that we are so dissatisfied, guilty, or sufficiently motivated that we make changes to produce a state of perceived equity (or we leave the situation). Indeed, feelings of overreward, when they occur, are quite transient. Very few of us go to our employers and complain that we’re overpaid! Most people are less sensitive to overreward inequities than they are to underreward inequities.25 However infrequently they are used for overreward, the same types of actions are available for dealing with both types of inequity.
Perceived Underreward Inequity
When we perceive that underreward inequity exists (that is, others unfairly make more than we do), we will likely be dissatisfied, angered, and motivated to change the situation (or escape the situation) in order to produce a state of perceived equity. As we discuss shortly, people can take many actions to deal with underreward inequity.
Reducing Underreward Inequity
A simple situation helps explain the consequences of inequity. Two automobile workers in Detroit, John and Mary, fasten lug nuts to wheels on cars as they come down the assembly line, John on the left side and Mary on the right. Their inputs are equal (both fasten the same number of lug nuts at the same pace), but John makes $500 per week and Mary makes$600. Their equity ratios are thus:
$500$600
John: <Mary:
10 lug nuts/car 10 lug nuts/car
As you can see, their ratios are not equal; that is, Mary receives greater outcome for equal input. Who is experiencing inequity? According to equity theory, both John and Mary—underreward inequity for John, and overreward inequity for Mary. Mary’s inequity won’t last long (in real organizations), but in our hypothetical example, what might John do to resolve this?
Adams identified a number of things people do to reduce the tension produced by a perceived state of inequity. They change their own outcomes or inputs, or they change those of the referent other. They distort their own perceptions of the outcomes or inputs of either party by using a different referent other, or they leave the situation in which the inequity is occurring.
1. Alter inputs of the person. The perceived state of equity can be altered by changing our own inputs, that is, by decreasing the quantity or quality of our performance. John can effect his own mini slowdown and install only nine lug nuts on each car as it comes down the production line. This, of course, might cause him to lose his job, so he probably won’t choose this alternative.
2. Alter outcomes of the person. We could attempt to increase outcomes to achieve a state of equity, like ask for a raise, a nicer office, a promotion, or other positively valued outcomes. So John will likely ask for a raise. Unfortunately, many people enhance their outcomes by stealing from their employers.
3. Alter inputs of the referent other. When underrewarded, we may try to achieve a state of perceived equity by encouraging the referent other to increase their inputs. We may demand, for example, that the referent other “start pulling their weight,” or perhaps help the referent other to become a better performer. It doesn’t matter that the referent other is already pulling their weight—remember, this is all about perception. In our example, John could ask Mary to put on two of his ten lug nuts as each car comes down the assembly line. This would not likely happen, however, so John would be motivated to try another alternative to reduce his inequity.
4. Alter outcomes of the referent other. We can “correct” a state of underreward by directly or indirectly reducing the value of the other’s outcomes. In our example, John could try to get Mary’s pay lowered to reduce his inequity. This too would probably not occur in the situation described.
5. Distort perceptions of inputs or outcomes. It is possible to reduce a perceived state of inequity without changing input or outcome. We simply distort our own perceptions of our inputs or outcomes, or we distort our perception of those of the referent other. Thus, John may tell himself that “Mary does better work than I thought” or “she enjoys her work much less than I do” or “she gets paid less than I realized.”
6. Choose a different referent other. We can also deal with both over- and underreward inequities by changing the referent other (“my situation is really more like Ahmed’s”). This is the simplest and most powerful way to deal with perceived inequity: it requires neither actual nor perceptual changes in anybody’s input or outcome, and it causes us to look around and assess our situation more carefully. For example, John might choose as a referent other Bill, who installs dashboards but makes less money than John.
7. Leave the situation. A final technique for dealing with a perceived state of inequity involves removing ourselves from the situation. We can choose to accomplish this through absenteeism, transfer, or termination. This approach is usually not selected unless the perceived inequity is quite high or other attempts at achieving equity are not readily available. Most automobile workers are paid quite well for their work. John is unlikely to find an equivalent job, so it is also unlikely that he will choose this option.
Implications of Equity Theory
Equity theory is widely used, and its implications are clear. In the vast majority of cases, employees experience (or perceive) underreward inequity rather than overreward. As discussed above, few of the behaviors that result from underreward inequity are good for employers. Thus, employers try to prevent unnecessary perceptions of inequity. They do this in a number of ways. They try to be as fair as possible in allocating pay. That is, they measure performance levels as accurately as possible, then give the highest performers the highest pay increases. Second, most employers are no longer secretive about their pay schedules. People are naturally curious about how much they are paid relative to others in the organization. This doesn’t mean that employers don’t practice discretion—they usually don’t reveal specific employees’ exact pay. But they do tell employees the minimum and maximum pay levels for their jobs and the pay scales for the jobs of others in the organization. Such practices give employees a factual basis for judging equity.
Supervisors play a key role in creating perceptions of equity. “Playing favorites” ensures perceptions of inequity. Employees want to be rewarded on their merits, not the whims of their supervisors. In addition, supervisors need to recognize differences in employees in their reactions to inequity. Some employees are highly sensitive to inequity, and a supervisor needs to be especially cautious around them.26 Everyone is sensitive to reward allocation.27 But “equity sensitives” are even more sensitive. A major principle for supervisors, then, is simply to implement fairness. Never base punishment or reward on whether or not you like an employee. Reward behaviors that contribute to the organization, and discipline those that do not. Make sure employees understand what is expected of them, and praise them when they do it. These practices make everyone happier and your job easier.
Goal Theory
No theory is perfect. If it was, it wouldn’t be a theory. It would be a set of facts. Theories are sets of propositions that are right more often than they are wrong, but they are not infallible. However, the basic propositions of goal theory* come close to being infallible. Indeed, it is one of the strongest theories in organizational behavior.
The Basic Goal-Setting Model
Goal theory states that people will perform better if they have difficult, specific, accepted performance goals or objectives.28,29 The first and most basic premise of goal theory is that people will attempt to achieve those goals that they intend to achieve. Thus, if we intend to do something (like get an A on an exam), we will exert effort to accomplish it. Without such goals, our effort at the task (studying) required to achieve the goal is less. Students whose goals are to get As study harder than students who don’t have this goal—we all know this. This doesn’t mean that people without goals are unmotivated. It simply means that people with goals are more motivated. The intensity of their motivation is greater, and they are more directed.
The second basic premise is that difficult goals result in better performance than easy goals. This does not mean that difficult goals are always achieved, but our performance will usually be better when we intend to achieve harder goals. Your goal of an A in Classical Mechanics at Cal Tech may not get you your A, but it may earn you a B+, which you wouldn’t have gotten otherwise. Difficult goals cause us to exert more effort, and this almost always results in better performance.
Another premise of goal theory is that specific goals are better than vague goals. We often wonder what we need to do to be successful. Have you ever asked a professor “What do I need to do to get an A in this course?” If she responded “Do well on the exams,” you weren’t much better off for having asked. This is a vague response. Goal theory says that we perform better when we have specific goals. Had your professor told you the key thrust of the course, to turn in all the problem sets, to pay close attention to the essay questions on exams, and to aim for scores in the 90s, you would have something concrete on which to build a strategy.
A key premise of goal theory is that people must accept the goal. Usually we set our own goals. But sometimes others set goals for us. Your professor telling you your goal is to “score at least a 90 percent on your exams” doesn’t mean that you’ll accept this goal. Maybe you don’t feel you can achieve scores in the 90s. Or, you’ve heard that 90 isn’t good enough for an A in this class. This happens in work organizations quite often. Supervisors give orders that something must be done by a certain time. The employees may fully understand what is wanted, yet if they feel the order is unreasonable or impossible, they may not exert much effort to accomplish it. Thus, it is important for people to accept the goal. They need to feel that it is also their goal. If they do not, goal theory predicts that they won’t try as hard to achieve it.
Goal theory also states that people need to commit to a goal in addition to accepting it. Goal commitment is the degree to which we dedicate ourselves to achieving a goal. Goal commitment is about setting priorities. We can accept many goals (go to all classes, stay awake during classes, take lecture notes), but we often end up doing only some of them. In other words, some goals are more important than others. And we exert more effort for certain goals. This also happens frequently at work. A software analyst’s major goal may be to write a new program. Her minor goal may be to maintain previously written programs. It is minor because maintaining old programs is boring, while writing new ones is fun. Goal theory predicts that her commitment, and thus her intensity, to the major goal will be greater.
Allowing people to participate in the goal-setting process often results in higher goal commitment. This has to do with ownership. And when people participate in the process, they tend to incorporate factors they think will make the goal more interesting, challenging, and attainable. Thus, it is advisable to allow people some input into the goal-setting process. Imposing goals on them from the outside usually results in less commitment (and acceptance).
The basic goal-setting model is shown in Exhibit 7.12. The process starts with our values. Values are our beliefs about how the world should be or act, and often include words like “should” or “ought.” We compare our present conditions against these values. For example, Randi holds the value that everyone should be a hard worker. After measuring her current work against this value, Randi concludes that she doesn’t measure up to her own value. Following this, her goal-setting process begins. Randi will set a goal that affirms her status as a hard worker. Exhibit 7.12 lists the four types of goals. Some goals are self-set. (Randi decides to word process at least 70 pages per day.) Participative goals are jointly set. (Randi goes to her supervisor, and together they set some appropriate goals for her.) In still other cases, goals are assigned. (Her boss tells her that she must word process at least 60 pages per day.) The fourth type of goal, which can be self-set, jointly determined, or assigned, is a “do your best” goal. But note this goal is vague, so it usually doesn’t result in the best performance.
Depending on the characteristics of Randi’s goals, she may or may not exert a lot of effort. For maximum effort to result, her goals should be difficult, specific, accepted, and committed to. Then, if she has sufficient ability and lack of constraints, maximum performance should occur. Examples of constraints could be that her old computer frequently breaks down or her supervisor constantly interferes.
The consequence of endeavoring to reach her goal will be that Randi will be satisfied with herself. Her behavior is consistent with her values. She’ll be even more satisfied if her supervisor praises her performance and gives her a pay increase!
In Randi’s case, her goal achievement resulted in several benefits. However, this doesn’t always happen. If goals are not achieved, people may be unhappy with themselves, and their employer may be dissatisfied as well. Such an experience can make a person reluctant to accept goals in the future. Thus, setting difficult yet attainable goals cannot be stressed enough.
Goal theory can be a tremendous motivational tool. In fact, many organizations practice effective management by using a technique called “management by objectives” (MBO). MBO is based on goal theory and is quite effective when implemented consistently with goal theory’s basic premises.
Despite its many strengths, several cautions about goal theory are appropriate. Locke has identified most of them.30 First, setting goals in one area can lead people to neglect other areas. (Randi may word process 70 pages per day, but neglect her proofreading responsibilities.) It is important that goals be set for most major duties. Second, goal setting sometimes has unintended consequences. For example, employees set easy goals so that they look good when they achieve them. Or it causes unhealthy competition between employees. Or an employee sabotages the work of others so that only she has goal achievement.
Some managers use goal setting in unethical ways. They may manipulate employees by setting impossible goals. This enables them to criticize employees even when the employees are doing superior work and, of course, causes much stress. Goal setting should never be abused. Perhaps the key caution about goal setting is that it often results in too much focus on quantified measures of performance. Qualitative aspects of a job or task may be neglected because they aren’t easily measured. Managers must keep employees focused on the qualitative aspects of their jobs as well as the quantitative ones. Finally, setting individual goals in a teamwork environment can be counterproductive.31 Where possible, it is preferable to have group goals in situations where employees depend on one another in the performance of their jobs.
The cautions noted here are not intended to deter you from using goal theory. We note them so that you can avoid the pitfalls. Remember, employees have a right to reasonable performance expectations and the rewards that result from performance, and organizations have a right to expect high performance levels from employees. Goal theory should be used to optimize the employment relationship. Goal theory holds that people will exert effort to accomplish goals if those goals are difficult to achieve, accepted by the individual, and specific in nature.
Expectancy Theory
Expectancy theory posits that we will exert much effort to perform at high levels so that we can obtain valued outcomes. It is the motivation theory that many organizational behavior researchers find most intriguing, in no small part because it is currently also the most comprehensive theory. Expectancy theory ties together many of the concepts and hypotheses from the theories discussed earlier in this chapter. In addition, it points to factors that other theories miss. Expectancy theory has much to offer the student of management and organizational behavior.
Expectancy theory is sufficiently general that it is useful in a wide variety of situations. Choices between job offers, between working hard or not so hard, between going to work or not—virtually any set of possibilities can be addressed by expectancy theory. Basically, the theory focuses on two related issues:
1. When faced with two or more alternatives, which will we select?
2. Once an alternative is chosen, how motivated will we be to pursue that choice?
Expectancy theory thus focuses on the two major aspects of motivation, direction (which alternative?) and intensity (how much effort to implement the alternative?). The attractiveness of an alternative is determined by our “expectations” of what is likely to happen if we choose it. The more we believe that the alternative chosen will lead to positively valued outcomes, the greater its attractiveness to us.
Expectancy theory states that, when faced with two or more alternatives, we will select the most attractive one. And, the greater the attractiveness of the chosen alternative, the more motivated we will be to pursue it. Our natural hedonism, discussed earlier in this chapter, plays a role in this process. We are motivated to maximize desirable outcomes (a pay raise) and minimize undesirable ones (discipline). Expectancy theory goes on to state that we are also logical in our decisions about alternatives. It considers people to be rational. People evaluate alternatives in terms of their “pros and cons,” and then choose the one with the most “pros” and fewest “cons.”
The Basic Expectancy Model
The three major components of expectancy theory reflect its assumptions of hedonism and rationality: effort-performance expectancy, performance-outcome expectancy, and valences.
The effort-performance expectancy, abbreviated E1, is the perceived probability that effort will lead to performance (or E ➨ P). Performance here means anything from doing well on an exam to assembling 100 toasters a day at work. Sometimes people believe that no matter how much effort they exert, they won’t perform at a high level. They have weak E1s. Other people have strong E1s and believe the opposite—that is, that they can perform at a high level if they exert high effort. You all know students with different E1s—those who believe that if they study hard they’ll do well, and those who believe that no matter how much they study they’ll do poorly. People develop these perceptions from prior experiences with the task at hand, and from self-perceptions of their abilities. The core of the E1 concept is that people don’t always perceive a direct relationship between effort level and performance level.
The performance-outcome expectancy, E2, is the perceived relationship between performance and outcomes (or P ➨ O).1 Many things in life happen as a function of how well we perform various tasks. E2 addresses the question “What will happen if I perform well?” Let’s say you get an A in your Classical Mechanics course at Cal Tech. You’ll be elated, your classmates may envy you, and you are now assured of that plum job at NASA. But let’s say you got a D. Whoops, that was the last straw for the dean. Now you’ve flunked out, and you’re reduced to going home to live with your parents (perish the thought!). Likewise, E2 perceptions develop in organizations, although hopefully not as drastically as your beleaguered career at Cal Tech. People with strong E2s believe that if they perform their jobs well, they’ll receive desirable outcomes—good pay increases, praise from their supervisor, and a feeling that they’re really contributing. In the same situation, people with weak E2s will have the opposite perceptions—that high performance levels don’t result in desirable outcomes and that it doesn’t really matter how well they perform their jobs as long as they don’t get fired.
Valences are the easiest of the expectancy theory concepts to describe. Valences are simply the degree to which we perceive an outcome as desirable, neutral, or undesirable. Highly desirable outcomes (a 25 percent pay increase) are positively valent. Undesirable outcomes (being disciplined) are negatively valent. Outcomes that we’re indifferent to (where you must park your car) have neutral valences. Positively and negatively valent outcomes abound in the workplace—pay increases and freezes, praise and criticism, recognition and rejection, promotions and demotions. And as you would expect, people differ dramatically in how they value these outcomes. Our needs, values, goals, and life situations affect what valence we give an outcome. Equity is another consideration we use in assigning valences. We may consider a 10 percent pay increase desirable until we find out that it was the lowest raise given in our work group.
Exhibit 7.13 summarizes the three core concepts of expectancy theory. The theory states that our perceptions about our surroundings are essentially predictions about “what leads to what.” We perceive that certain effort levels result in certain performance levels. We perceive that certain performance levels result in certain outcomes. Outcomes can be extrinsic, in that others (our supervisor) determine whether we receive them, or intrinsic, in that we determine if they are received (our sense of achievement). Each outcome has an associated valence (outcome A’s valence is VaVa). Expectancy theory predicts that we will exert effort that results in the maximum amount of positive-valence outcomes.2 If our E1 or E2 is weak, or if the outcomes are not sufficiently desirable, our motivation to exert effort will be low. Stated differently, an individual will be motivated to try to achieve the level of performance that results in the most rewards.
Vo is the valence of the outcome. The effort level with the greatest force associated with it will be chosen by the individual.
Implications of Expectancy Theory
Expectancy theory has major implications for the workplace. Basically, expectancy theory predicts that employees will be motivated to perform well on their jobs under two conditions. The first is when employees believe that a reasonable amount of effort will result in good performance. The second is when good performance is associated with positive outcomes and low performance is associated with negative outcomes. If neither of these conditions exists in the perceptions of employees, their motivation to perform will be low.
Why might an employee perceive that positive outcomes are not associated with high performance? Or that negative outcomes are not associated with low performance? That is, why would employees develop weak E2s? This happens for a number of reasons. The main one is that many organizations subscribe too strongly to a principle of equality (not to be confused with equity). They give all of their employees equal salaries for equal work, equal pay increases every year (these are known as across-the-board pay raises), and equal treatment wherever possible. Equality-focused organizations reason that some employees “getting more” than others leads to disruptive competition and feelings of inequity.
In time employees in equality-focused organizations develop weak E2s because no distinctions are made for differential outcomes. If the best and the worst salespeople are paid the same, in time they will both decide that it isn’t worth the extra effort to be a high performer. Needless to say, this is not the goal of competitive organizations and can cause the demise of the organization as it competes with other firms in today’s global marketplace.
Expectancy theory states that to maximize motivation, organizations must make outcomes contingent on performance. This is the main contribution of expectancy theory: it makes us think about how organizations should distribute outcomes. If an organization, or a supervisor, believes that treating everyone “the same” will result in satisfied and motivated employees, they will be wrong more times than not. From equity theory we know that some employees, usually the better-performing ones, will experience underreward inequity. From expectancy theory we know that employees will see no difference in outcomes for good and poor performance, so they will not have as much incentive to be good performers. Effective organizations need to actively encourage the perception that good performance leads to positive outcomes (bonuses, promotions) and that poor performance leads to negative ones (discipline, termination). Remember, there is a big difference between treating employees equally and treating them equitably.
What if an organization ties positive outcomes to high performance and negative outcomes to low performance? Employees will develop strong E2s. But will this result in highly motivated employees? The answer is maybe. We have yet to address employees’ E1s. If employees have weak E1s, they will perceive that high (or low) effort does not result in high performance and thus will not exert much effort. It is important for managers to understand that this can happen despite rewards for high performance.
Task-related abilities are probably the single biggest reason why some employees have weak E1s. Self-efficacy is our belief about whether we can successfully execute some future action or task, or achieve some result. High self-efficacy employees believe that they are likely to succeed at most or all of their job duties and responsibilities. And as you would expect, low self-efficacy employees believe the opposite. Specific self-efficacy reflects our belief in our capability to perform a specific task at a specific level of performance. If we believe that the probability of our selling \$30,000 of jackrabbit slippers in one month is .90, our self-efficacy for this task is high. Specific self-efficacy is our judgment about the likelihood of successful task performance measured immediately before we expend effort on the task. As a result, specific self-efficacy is much more variable than more enduring notions of personality. Still, there is little doubt that our state-based beliefs are some of the most powerful motivators of behavior. Our efficacy expectations at a given point in time determine not only our initial decision to perform (or not) a task, but also the amount of effort we will expend and whether we will persist in the face of adversity.32 Self-efficacy has a strong impact on the E1 factor. As a result, self-efficacy is one of the strongest determinants of performance in any particular task situation.33
Employees develop weak E1s for two reasons. First, they don’t have sufficient resources to perform their jobs. Resources can be internal or external. Internal resources include what employees bring to the job (such as prior training, work experience, education, ability, and aptitude) and their understanding of what they need to do to be considered good performers. The second resource is called role perceptions—how employees believe their jobs are done and how they fit into the broader organization. If employees don’t know how to become good performers, they will have weak E1s. External resources include the tools, equipment, and labor necessary to perform a job. The lack of good external resources can also cause E1s to be weak.
The second reason for weak E1s is an organization’s failure to measure performance accurately. That is, performance ratings don’t correlate well with actual performance levels. How does this happen? Have you ever gotten a grade that you felt didn’t reflect how much you learned? This also happens in organizations. Why are ratings sometimes inaccurate? Supervisors, who typically give out ratings, well, they’re human. Perhaps they’re operating under the mistaken notion that similar ratings for everyone will keep the team happy. Perhaps they’re unconsciously playing favorites. Perhaps they don’t know what good and poor performance levels are. Perhaps the measurements they’re expected to use don’t fit their product/team/people. Choose one or all of these. Rating people is rarely easy.
Whatever the cause of rating errors, some employees may come to believe that no matter what they do they will never receive a high performance rating. They may in fact believe that they are excellent performers but that the performance rating system is flawed. Expectancy theory differs from most motivation theories because it highlights the need for accurate performance measurement. Organizations cannot motivate employees to perform at a high level if they cannot identify high performers.
Organizations exert tremendous influence over employee choices in their performance levels and how much effort to exert on their jobs. That is, organizations can have a major impact on the direction and intensity of employees’ motivation levels. Practical applications of expectancy theory include:
1. Strengthening the effort ➨ performance expectancy by selecting employees who have the necessary abilities, providing proper training, providing experiences of success, clarifying job responsibilities, etc.
2. Strengthening the performance ➨ outcome expectancy with policies that specify that desirable behavior leads to desirable outcomes and undesirable behavior leads to neutral or undesirable outcomes. Consistent enforcement of these policies is key—workers must believe in the contingencies.
3. Systematically evaluating which outcomes employees value. The greater the valence of outcomes offered for a behavior, the more likely employees will commit to that alternative. By recognizing that different employees have different values and that values change over time, organizations can provide the most highly valued outcomes.
4. Ensuring that effort actually translates into performance by clarifying what actions lead to performance and by appropriate training.
5. Ensuring appropriate worker outcomes for performance through reward schedules (extrinsic outcomes) and appropriate job design (so the work experience itself provides intrinsic outcomes).
6. Examining the level of outcomes provided to workers. Are they equitable, given the worker’s inputs? Are they equitable in comparison to the way other workers are treated?
7. Measuring performance levels as accurately as possible, making sure that workers are capable of being high performers.
MANAGING CHANGE
Differences in Motivation across Cultures
The disgruntled employee is hardly a culturally isolated feature of a business, and quitting before leaving takes the same forms, regardless of country. Cross-cultural signaling, social norms, and simple language barriers can make the task of motivation for the global manager confusing and counterintuitive. Communicating a passion for a common vision, coaching employees to see themselves as accountable and as owning their work, or attempting to create a “motivational ecosystem” can all fall flat with simple missed cues, bad translations, or tone-deaf approaches to a thousand-year-old culture.
Keeping employees motivated by making them feel valued and appreciated is not just a “Western” idea. The Ghanaian blog site Starrfmonline emphasizes that employee motivation and associated work quality improve when employees feel “valued, trusted, challenged, and supported in their work.” Conversely, when employees feel like a tool rather than a person or feel unengaged with their work, then productivity suffers. A vicious cycle can then begin when the manager treats an employee as unmotivated and incapable, which then demotivates the employee and elicits the predicted response. The blogger cites an example from Eastern Europe where a manager sidelined an employee as inefficient and incompetent. After management coaching, the manager revisited his assessment and began working with the employee. As he worked to facilitate the employee’s efficiency and motivation, the employee went from being the lowest performer to a valuable team player. In the end, the blog says, “The very phrase ‘human resources’ frames employees as material to be deployed for organizational objectives. While the essential nature of employment contracts involves trading labour for remuneration, if we fail to see and appreciate our employees as whole people, efforts to motivate them will meet with limited success” (Starrfmonline 2017 n.p.)
Pavel Vosk, a business and management consultant based in Puyallup, Washington, says that too often, overachieving employees turn into unmotivated ones. In looking for the answer, he found that the most common source was a lack of recognition for the employee’s effort or exceptional performance. In fact, Vosk found that most employees go the extra mile only three times before they give up. Vosk’s advice is to show gratitude for employees’ effort, especially when it goes above and beyond. He says the recognition doesn’t have to be over the top, just anything that the employees will perceive as gratitude, from a catered lunch for a team working extra hours to fulfill a deadline to a simple face-to-face thank you (Huhman 2017).
Richard Frazao, president of Quaketek, based in Montreal, Quebec, stresses talking to the employees and making certain they are engaged in their jobs, citing boredom with one’s job as a major demotivating factor (Huhman 2017).
But motivating employees is not “one size fits all” globally. Rewarding and recognizing individuals and their achievements works fine in Western cultures but is undesirable in Asian cultures, which value teamwork and the collective over the individual. Whether to reward effort with a pay raise or with a job title or larger office is influenced by culture. Demoting an employee for poor performance is an effective motivator in Asian countries but is likely to result in losing an employee altogether in Western cultures. According to Matthew MacLachlan at Communicaid, “Making the assumption that your international workforce will be motivated by the same incentives can be dangerous and have a real impact on talent retention” (2016 n.p.).
Huhman, Heather R. 2017. “Employee Motivation Has to Be More Than 'a Pat on the Back.’” Entrepreneur. https://www.entrepreneur.com/article/287770
MacLachlan, Matthew. 2016. “Management Tips: How To Motivate Your International Workforce.” Communicaid. https://www.communicaid.com/cross-cu...nal-workforce/
Starrfmonline. 2017. “HR Today: Motivating People Starts With Right Attitude.”
starrfmonline.com/2017/03/30/...ght-attitude/#
1. As a Western manager working in the Middle East or sub-Saharan Africa, what motivational issues might you face?
2. What problems would you expect a manager from a Confucian culture to encounter managing employees in America? In Europe?
3. What regional, cultural, or ethnic issues do you think managers have to navigate within the United States?
Expectancy Theory: An Integrative Theory of Motivation
More so than any other motivation theory, expectancy theory can be tied into most concepts of what and how people become motivated. Consider the following examples.
1. Need theories state that we are motivated to satisfy our needs. We positively value outcomes that satisfy unmet needs, negatively value outcomes that thwart the satisfaction of unmet needs, and assign neutral values to outcomes that do neither. In effect, the need theories explain how valences are formed.
2. Operant conditioning theories state that we will probably repeat a response (behavior) in the future that was reinforced in the past (that is, followed by a positively valued consequence or the removal of a negatively valued consequence). This is the basic process involved in forming performance ➨ outcome expectancies. Both operant theories and expectancy theory argue that our interactions with our environment influence our future behavior. The primary difference is that expectancy theory explains this process in cognitive (rational) terms.
3. Equity theories state that our satisfaction with a set of outcomes depends not only on how we value them but also on the circumstances surrounding their receipt. Equity theory, therefore, explains part of the process shown in Exhibit 7.11. If we don’t feel that the outcomes we receive are equitable compared to a referent other, we will associate a lower or even negative valence with those outcomes.
4. Goal theory can be integrated with the expanded expectancy model in several ways. Locke has noted that expectancy theory explains how we go about choosing a particular goal.34 A reexamination of Exhibit 7.11 reveals other similarities between goal theory and expectancy theory. Locke’s use of the term “goal acceptance” to identify the personal adoption of a goal is similar to the “choice of an alternative” in the expectancy model. Locke’s “goal commitment,” the degree to which we commit to reaching our accepted (chosen) goal, is very much like the expectancy description of choice of effort level. Locke argues that the difficulty and specificity of a goal are major determinants of the level of performance attempted (goal-directed effort), and expectancy theory appears to be consistent with this argument (even though expectancy theory is not as explicit on this point). We can reasonably conclude that the major underlying processes explored by the two models are very similar and will seldom lead to inconsistent recommendations.
concept check
1. Understand the process theories of motivation: operant conditioning, equity, goal, and expectancy theories.
2. Describe the managerial factors managers must consider when applying motivational approaches.
Footnotes
• 1 Sometimes E2s are called instrumentalities because they are the perception that performance is instrumental in getting some desired outcome.
• 2 It can also be expressed as an equation:
$Force\enspace to\enspace Choose\enspace a\enspace Level\enspace of\enspace Effort \quad=\quad \mathrm{E} 1 \times \sum\left(\mathrm{E} 2_{\mathrm{o}} \times \mathrm{V}_{\mathrm{o}}\right)$
Where $V_{0}$ is the valence of a given outcome (o), and $\mathrm{E}_{2} \mathrm{o}$ is the perceived probability that a certain level of performance (e.g., Excellent, average, poor) will result in that outcome. So, for multiple outcomes, and different performance levels, the valence of the outcome and its associated performance ➔ outcome expectancy (E2) are multiplied and added to the analogous value for the other outcomes. Combined with the E1 (the amount of effort required to produce a level of performance), the effort level with the greatest force associated with it will be chosen by the individual. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/07%3A_Work_Motivation_for_Performance/7.03%3A_Process_Theories_of_Motivation.txt |
1. Describe the modern advancements in the study of human motivation.
Employee motivation continues to be a major focus in organizational behavior.35 We briefly summarize current motivation research here.
Content Theories
There is some interest in testing content theories (including Herzberg’s two-factor theory), especially in international research. Need theories are still generally supported, with most people identifying such workplace factors as recognition, advancement, and opportunities to learn as the chief motivators for them. This is consistent with need satisfaction theories. However, most of this research does not include actual measures of employee performance. Thus, questions remain about whether the factors that employees say motivate them to perform actually do.
Operant Conditioning Theory
There is considerable interest in operant conditioning theory, especially within the context of what has been called organizational behavior modification. Oddly enough, there has not been much research using operant conditioning theory in designing reward systems, even though there are obvious applications. Instead, much of the recent research on operant conditioning focuses on punishment and extinction. These studies seek to determine how to use punishment appropriately. Recent results still confirm that punishment should be used sparingly, should be used only after extinction does not work, and should not be excessive or destructive.
Equity Theory
Equity theory continues to receive strong research support. The major criticism of equity theory, that the inputs and outcomes people use to evaluate equity are ill-defined, still holds. Because each person defines inputs and outcomes, researchers are not in a position to know them all. Nevertheless, for the major inputs (performance) and outcomes (pay), the theory is a strong one. Major applications of equity theory in recent years incorporate and extend the theory into the area called organizational justice. When employees receive rewards (or punishments), they evaluate them in terms of their fairness (as discussed earlier). This is distributive justice. Employees also assess rewards in terms of how fair the processes used to distribute them are. This is procedural justice. Thus during organizational downsizing, when employees lose their jobs, people ask whether the loss of work is fair (distributive justice). But they also assess the fairness of the process used to decide who is laid off (procedural justice). For example, layoffs based on seniority may be perceived as more fair than layoffs based on supervisors’ opinions.
Goal Theory
It remains true that difficult, specific goals result in better performance than easy and vague goals, assuming they are accepted. Recent research highlights the positive effects of performance feedback and goal commitment in the goal-setting process. Monetary incentives enhance motivation when they are tied to goal achievement, by increasing the level of goal commitment. There are negative sides to goal theory as well. If goals conflict, employees may sacrifice performance on important job duties. For example, if both quantitative and qualitative goals are set for performance, employees may emphasize quantity because this goal achievement is more visible.
Expectancy Theory
The original formulation of expectancy theory specifies that the motivational force for choosing a level of effort is a function of the multiplication of expectancies and valences. Recent research demonstrates that the individual components predict performance just as well, without being multiplied. This does not diminish the value of expectancy theory. Recent research also suggests that high performance results not only when the valence is high, but also when employees set difficult goals for themselves.
One last comment on motivation: As the world of work changes, so will the methods organizations use to motivate employees. New rewards—time off instead of bonuses; stock options; on-site gyms, cleaners, and dental services; opportunities to telecommute; and others—will need to be created in order to motivate employees in the future. One useful path that modern researchers can undertake is to analyze the previous studies and aggregate the findings into more conclusive understanding of the topic through meta-analysis studies.36
CATCHING THE ENTREPRENEURIAL SPIRIT
Entrepreneurs and Motivation
Motivation can be difficult to elicit in employees. So what drives entrepreneurs, who by definition have to motivate themselves as well as others? While everyone from Greek philosophers to football coaches warns about undirected passion, a lack of passion will likely kill any start-up. An argument could be made that motivation is simply part of the discipline or the outcome of remaining fixed on a purpose to mentally remind yourself of why you get up in the morning.
Working from her home in Egypt, at age 30 Yasmine El-Mehairy launched Supermama.me, a start-up aimed at providing information to mothers throughout the Arab world. When the company began, El-Mehairy worked full time at her day job and 60 hours a week after that getting the site established. She left her full-time job to manage the site full time in January 2011, and the site went live that October. El-Mehairy is motivated to keep moving forward, saying that if she stops, she might not get going again (Knowledge @ Wharton 2012).
For El-Mehairy, the motivation didn’t come from a desire to work for a big company or travel the world and secure a master’s degree from abroad. She had already done that. Rather, she said she was motivated to “do something that is useful and I want to do something on my own” (Knowledge @ Wharton 2012 n.p.).
Lauren Lipcon, who founded a company called Injury Funds Now, attributes her ability to stay motivated to three factors: purpose, giving back, and having fun outside of work. Lipcon believes that most entrepreneurs are not motivated by money, but by a sense of purpose. Personally, she left a job with Arthur Andersen to begin her own firm out of a desire to help people. She also thinks it is important for people to give back to their communities because the change the entrepreneur sees in the community loops back, increasing motivation and making the business more successful. Lipcon believes that having a life outside of work helps keep the entrepreneur motivated. She particularly advocates for physical activity, which not only helps the body physically, but also helps keep the mind sharp and able to focus (Rashid 2017).
But do all entrepreneurs agree on what motivates them? A July 17, 2017 survey on the hearpreneur blog site asked 23 different entrepreneurs what motivated them. Seven of the 23 referred to some sense of purpose in what they were doing as a motivating factor, with one response stressing the importance of discovering one’s “personal why.” Of the remaining entrepreneurs, answers varied from keeping a positive attitude (three responses) and finding external sources (three responses) to meditation and prayer (two responses). One entrepreneur said his greatest motivator was fear: the fear of being in the same place financially one year in the future “causes me to take action and also alleviates my fear of risk” (Hear from Entrepreneurs 2017 n.p.). Only one of the 23 actually cited money and material success as a motivating factor to keep working.
However it is described, entrepreneurs seem to agree that passion and determination are key factors that carry them through the grind of the day-to-day.
Sources:
Hear from Entrepreneurs. 2017. “23 Entrepreneurs Explain Their Motivation or if ‘Motivation is Garbage.’” https://hear.ceoblognation.com/2017/...ation-garbage/
Knowledge @ Wharton. 2012. “The Super-motivated Entrepreneur Behind Egypt’s SuperMama.” http://knowledge.wharton.upenn.edu/a...pts-supermama/
Rashid, Brian. 2017. “How This Entrepreneur Sustains High Levels of Energy and Motivation.” Forbes. https://www.forbes.com/sites/brianra.../#2a8ec5591111
Questions:
1. In the article from Hear from Entrepreneurs, one respondent called motivation “garbage”? Would you agree or disagree, and why?
2. How is staying motivated as an entrepreneur similar to being motivated to pursue a college degree? Do you think the two are related? How?
3. How would you expect motivation to vary across cultures?[/BOX]
concept check
1. Understand the modern approaches to motivation theory. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/07%3A_Work_Motivation_for_Performance/7.04%3A_Recent_Research_on_Motivation_Theories.txt |
ability The knowledge, skills, and receptiveness to learning that an individual brings to a task or job.
content motivation theories Theories that focus on what motivates people.
direction What a person is motivated to achieve.
intensity (1) The degree to which people try to achieve their targets; (2) the forcefulness that enhances the likelihood that a stimulus will be selected for perceptual processing.
motivation A force within or outside of the body that energizes, directs, and sustains human behavior. Within the body, examples might be needs, personal values, and goals, while an incentive might be seen as a force outside of the body. The word stems from its Latin root movere, which means “to move.”
performance environment Refers to those factors that impact employees’ performance but are essentially out of their control.
process motivation theories Theories that focus on the how and why of motivation.
role perceptions The set of behaviors employees think they are expected to perform as members of an organization.
work motivation The amount of effort a person exerts to achieve a level of job performance.
ERG theory Compresses Maslow’s five need categories into three: existence, relatedness, and growth.
extrinsic motivation Occurs when a person performs a given behavior to acquire something that will satisfy a lower-order need.
hedonism Assumes that people are motivated to satisfy mainly their own needs (seek pleasure, avoid pain).
hygienes Factors in the work environment that are based on the basic human need to “avoid pain.”
instincts Our natural, fundamental needs, basic to our survival.
intrinsic motivation Arises out of performing a behavior in and of itself, because it is interesting or “fun” to do.
latent needs Cannot be inferred from a person’s behavior at a given time, yet the person may still possess those needs.
manifest needs Are needs motivating a person at a given time.
manifest needs theory Assumes that human behavior is driven by the desire to satisfy needs.
motivators Relate to the jobs that people perform and people’s ability to feel a sense of achievement as a result of performing them.
motive A source of motivation; the need that a person is attempting to satisfy.
need for achievement (nAch) The need to excel at tasks, especially tasks that are difficult.
need for affiliation (nAff) The need to establish and maintain warm and friendly relationships with other people.
need for power (nPow) The need to control things, especially other people; reflects a motivation to influence and be responsible for other people.
need A human condition that becomes energized when people feel deficient in some respect.
primary needs Are instinctual in nature and include physiological needs for food, water, and sex (procreation).
secondary needs Are learned throughout one’s life span and are psychological in nature.
self-determination theory (SDT) Seeks to explain not only what causes motivation, but also the effects of extrinsic rewards on intrinsic motivation.
avoidance learning Occurs when people learn to behave in a certain way to avoid encountering an undesired or unpleasant consequence.
effort-performance expectancy E1, the perceived probability that effort will lead to performance (or E ➨ P).
equity theory States that human motivation is affected by the outcomes people receive for their inputs, compared to the outcomes and inputs of other people.
expectancy theory Posits that people will exert high effort levels to perform at high levels so that they can obtain valued outcomes.
extinction Occurs when a consequence or lack of a consequence makes it less likely that a behavior will be repeated in the future.
extrinsic outcomes Are awarded or given by other people (like a supervisor).
goal commitment The degree to which people dedicate themselves to achieving a goal.
goal theory States that people will perform better if they have difficult, specific, accepted performance goals or objectives.
input Any personal qualities that a person views as having value and that are relevant to the organization.
intrinsic outcomes Are awarded or given by people to themselves (such as a sense of achievement).
negative reinforcement Occurs when a behavior causes something undesirable to be removed, increasing the likelihood of the behavior reoccurring.
nonreinforcement Occurs when no consequence follows a worker’s behavior.
operant conditioning A learning process based on the results produced by a person “operating on” the environment.
operant conditioning theory Posits that people learn to behave in a particular fashion as a result of the consequences that followed their past behaviors.
outcome Anything a person perceives as getting back from an organization in exchange for the person’s inputs.
overreward inequity Occurs when people perceive their outcome/input ratio to be greater than that of their referent other.
performance-outcome expectancy E2, the perceived relationship between performance and outcomes (or P ➨ O).
positive reinforcement Occurs when a desirable consequence that satisfies an active need or removes a barrier to need satisfaction increases the likelihood of a behavior reoccurring.
punishment An aversive consequence that follows a behavior and makes it less likely to reoccur.
referent others Workers that a person uses to compare inputs and outcomes, and who perform jobs similar in difficulty and complexity to the employee making an equity determination.
reinforcement Occurs when a consequence makes it more likely a behavior will be repeated in the future.
schedules of reinforcement The frequency at which effective employee behaviors are reinforced.
self-efficacy A belief about the probability that one can successfully execute some future action or task, or achieve some result.
state of equity Occurs when people perceive their outcome/input ratio to be equal to that of their referent other.
underreward inequity Occurs when people perceive their outcome/input ratio to be less than that of their referent other.
valences The degree to which a person perceives an outcome as being desirable, neutral, or undesirable. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/07%3A_Work_Motivation_for_Performance/7.05%3A_Glossary.txt |
7.1 Motivation: Direction and Intensity
1. Define motivation, and distinguish the direction and intensity of motivation.
This chapter has covered the major motivation theories in organizational behavior. Motivation theories endeavor to explain how people become motivated. Motivation has two major components: direction and intensity. The direction is what a person is trying to achieve. Intensity is the degree of effort a person expends to achieve the target. All motivation theories address the ways in which people develop direction and intensity.
7.2 Content Theories of Motivation
1. Describe a content theory of motivation, and compare and contrast the main content theories of motivation: manifest needs theory, learned needs theory, Maslow’s hierarchy of needs, Alderfer’s ERG theory, Herzberg’s motivator-hygiene theory, and self-determination theory.
Motivation theories are classified as either content or process theories. Content theories focus on what motivates behavior. The basic premise of content theories is that humans have needs. When these needs are not satisfied, humans are motivated to satisfy the need. The need provides direction for motivation. Murray’s manifest needs theory, McClelland’s learned needs theory, Maslow’s hierarchy of needs, and Herzberg’s motivator-hygiene theory are all content theories. Each has something to say about the needs that motivate humans in the workplace.
7.3 Process Theories of Motivation
1. Describe the process theories of motivation, and compare and contrast the main process theories of motivation: operant conditioning theory, equity theory, goal theory, and expectancy theory.
Process theories focus on how people become motivated. Operant conditioning theory states that people will be motivated to engage in behaviors for which they have been reinforced (rewarded). It also states that people will avoid behaviors that are punished. The rate at which behaviors are rewarded also affects how often they will be displayed. Equity theory’s main premise is that people compare their situations to those of other people. If a person feels that they are being treated unfairly relative to a referent other, the person may engage in behaviors that are counterproductive for the organization. Employers should try to develop feelings of fairness in employees. Goal theory is a strong theory. It states that difficult, specific goals will result in high performance if employees accept the goals and are committed to achieving them.
7.4 Recent Research on Motivation Theories
1. Describe the modern advancements in the study of human motivation.
Expectancy theory is a process theory. It also is the broadest of the motivation theories. Expectancy theory predicts that employees will be motivated to be high performers if they perceive that high performance leads to valued outcomes. Employees will be motivated to avoid being low performers if they perceive that it leads to negative outcomes. Employees must perceive that they are capable of achieving high performance, and they must have the appropriate abilities and high self-efficacy. Organizations need to provide adequate resources and to measure performance accurately. Inaccurate performance ratings discourage high performance. Overall, the expectancy theory draws attention to how organizations structure the work environment and distribute rewards.
7.07: Chapter Review Questions
1. Discuss the benefits that accrue when an organization has a good understanding of employee needs.
2. How might Maslow explain why organizational rewards that motivate workers today may not motivate the same workers in 5 or 10 years?
3. Describe the process by which needs motivate workers.
4. Discuss the importance of Herzberg’s motivators and hygienes.
5. Describe a work situation in which it would be appropriate to use a continuous reinforcement schedule.
6. Discuss the potential effectiveness and limitations of punishment in organizations.
7. How can equity theory explain why a person who receives a high salary might be dissatisfied with their pay?
8. Equity theory specifies a number of possible alternatives for reducing perceived inequity. How could an organization influence which of these alternatives a person will pursue?
9. What goals would be most likely to improve your learning and performance in an organizational behavior class?
10. Identify two reasons why a formal goal-setting program might be dysfunctional for an organization.
11. What steps can an organization take to increase the motivational force for high levels of performance?
12. Discuss how supervisors sometimes unintentionally weaken employees E ➨ P and P ➨ O expectancies.
13. How can an employee attach high valence to high levels of performance, yet not be motivated to be a high performer?
14. Is there “one best” motivation theory? Explain your answer. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/07%3A_Work_Motivation_for_Performance/7.06%3A_Summary_of_Learning_Outcomes.txt |
1. Many companies strive to design jobs that are intrinsically motivating. Visit several small and large company websites and search their career section. What job features related to motivation are highlighted? What type of employees do you think the companies will attract with these jobs?
2. You will be paired with another student in this class. Each of you will take one side of the issue and debate:
1. Student A: All members of the organization should be given the same specific, difficult-to-achieve goals.
2. Student B: Specific, difficult-to-achieve goals should only be given to certain members of the organization.
3. Assume the role of sales manager, and write a memo to two of your reports that have the following situations and job performance.
1. Employee 1: Shawn is a onetime stellar performer. They were twice the top performing salesperson in the company in the past decade. In the past year, Shawn has missed goal by 4 percent. Shawn recently became the parent to twins and says that the reason for missing goal this year was due to the territory being saturated with product from previous years.
2. Employee 2: Soo Kim is an energetic salesperson who is putting in long hours and producing detailed sales reports, but their performance on the sales side has not met expectations. When you examine the customer feedback page on your website, you notice that they have five times as many positive reviews and glowing comments about Soo Kim.
7.09: Managerial Decision Exercises
1. You are a manager and it’s performance appraisal time, which is a yearly exercise to provide feedback to your direct reports that is often stressful for both the employee and the manager. You feel that the feedback process should be more of an ongoing process than the yearly formal process. What are the benefits of this yearly process, and what, if any, are the drawbacks of providing both positive and remediation feedback to your direct reports?
2. You have been told by a worker on another team that one of your direct reports made an inappropriate comment to a coworker. What do you do to investigate the matter, and what actions would you take with your report, the person that the comment was directed to, and other people in the organization?
3. You learn that an employee who doesn’t report to you has made an inappropriate comment to one of your direct reports. What do you do to investigate the matter, and what actions would you take with your report, the person that made the comment, their manager, and other people in the organization?
4. Your company is considering implementing a 360° appraisal system where up to 10 people in the organization provide feedback on every employee as part of the annual performance appraisal process. This feedback will come from subordinates, peers, and senior managers as well as individuals in other departments. You have been asked to prepare a memo to the director of human resources about the positive and negative effects this could have on the motivation of employees. Note that not all of the employees are on a bonus plan that will be impacted by this feedback. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/07%3A_Work_Motivation_for_Performance/7.08%3A_Management_Skills_Application_Exercises.txt |
Motivating Employees at JCPenney, Walmart, and Amazon in the Age of Online Shopping
In the 1980s, Walmart had killed (or was killing) the mom-and-pop store. “Buy local” signs were seen, urging consumers to buy from their local retailers rather than from the low-cost behemoth. Markets have continued to shift and the “buy local” signs are still around, but now the battleground has shifted with the disruptive growth of e-commerce. Even mighty Walmart is feeling some growing pains.
Census Bureau data for 2017 shows that e-commerce, or online shopping, accounted for 8.9 percent of all retail sales in the United States, accounting for \$111.5 billion (U.S. Census Bureau 2017). Feeling the pinch, many malls across the country are closing their doors, and their empty retail spaces are being repurposed. Credit Suisse predicts that due to competition from online shopping, 20 to 25 percent of American malls will close within the next five years (Dying Malls Make Room for New Condos Apartment 2017). Furthermore, according to a 2017 study, 23 percent of Americans already purchase their groceries online (Embrace the Internet, Skip the Checkout 2017).
Whether face-to-face with customers or filling orders in a warehouse, motivated employees are essential to business success. And company culture helps drive that motivation. As a 2015 Harvard Business Review article put it, “Why we work determines how well we work” (McGregor & Doshi 2015). Adapting earlier research for the modern workplace, the study found six reasons that people work: play, purpose, potential, emotional pressure, economic pressure, and inertia. The first three are positive motives while that later three are negative. The researchers found that role design, more than any other factor, had the highest impact on employee motivation.
Anecdotally, using role design to motivate employees can be seen across industries. Toyota allows factory workers to innovate new processes on the factory floor. Southwest Airlines encourages a sense of "play" among crewmembers who interact directly with passengers (which has resulted in some humorous viral videos). A sense of the organization’s identity (and a desire to be part of it) and how the career ladder within the company is perceived are second and third in their impact on employee motivation. Unhealthy competition for advancement can do more harm than good to employee motivation, and as a result many large companies are restructuring their performance review and advancement systems (McGregor & Doshi 2015). Conversely, costs from unmotivated employees can be high. In August 2017, retailer JCPenney had an employee arrested who had allegedly cost the company more than \$10,000 in stolen cash and under-rung merchandise at a mall store. Another employee had stolen more than \$1,000 of clothes from the store less than a month earlier.
Brick-and-mortar retail outlets from Macy’s to Walmart have come under pressure by increased online shopping, particularly at Amazon.com. Walmart has responded by both trying to improve the shopping experience in its stores and creating an online presence of its own. A recent study funded by Walmart found that 60 percent of retails workers lack proficiency in reading and 70 percent have difficulty with math (Class is in session at Walmart Academy 2017). Increasing math and team skills for the employees would increase efficiency and certainly help improve employee self-image and motivation. With this in mind, Walmart has created one of the largest employer training programs in the country, Walmart Academy (McGregor & Doshi 2015). The company expects to graduate more than 225,000 of its supervisors and managers from a program that covers topics such as merchandising and employee motivation. In another program, Pathways, Walmart has created a course that covers topics such as merchandising, communication, and retail math (Walmart 2016 Global Responsibility Report 2016). The Pathways program was expected to see 500,000 entry-level workers take part in 2016 (Walmart 2016). All employees who complete the course receive a dollar an hour pay increase. Educating employees pays off by recognizing that the effort put in pays off with better-motivated and better-educated employees. In the case of Walmart, “upskilling” has become a priority.
Walmart has gone beyond education to motivate or empower employees. In 2016, pay raises for 1.2 million employees took effect as part of a new minimum-wage policy, and it streamlined its paid time off program that same year (Schmid 2017). In its 2016 Global Responsibility Report, Walmart points out that over the course of two years, the company has invested \$2.7 billion in wages, benefits, and training in the United States (Staley 2017).
Sources:
Ciubotariu, Nick. 2015. “An Amazonian's response to "Inside Amazon: Wrestling Big Ideas in a Bruising Workplace." LinkedIn. https://www.linkedin.com/pulse/amazo...romSplash=true
Class is in session at Walmart Academy. 2017. Bend Bulletin. www.bendbulletin.com/home/550...almart-academy
Cook, John. 2015. “Full memo: Jeff Bezos responds to brutal NYT story, says it doesn’t represent the Amazon he leads.” GeekWire. https://www.geekwire.com/2015/full-m...ds-to-be-zero/
“Dying Malls Make Room for New Condos Apartment.” 2017. Bend Bulletin. www.bendbulletin.com/business...dos-apartments
“Embrace the Internet, Skip the Checkout.” 2017. Bend Bulletin. www.bendbulletin.com/business...p-the-checkout
McGregor, Lindsay and Doshi, Neel. 2015. “How Company Culture Shapes Employee Motivation.” Boston, MA: Harvard Business Review. https://hbr.org/2015/11/how-company-...yee-motivation
Schmid, Emily. 2017. “Work That Matters: Looking Back on 2 Years of Investing in People.” Walmart Today. Bentonville, AR: Walmart Digital Communications. https://blog.walmart.com/opportunity...ting-in-people
Staley, Oliver. 2017. “ Walmart—yes, Walmart—is making changes that could help solve America’s wealth inequality problem.” Yahoo! Finance. finance.yahoo.com/news/walma...100102778.html
U.S. Census Bureau. 2017. Quarterly Retail E-Commerce Sales, 2nd Quarter 2017. Washington, DC: U.S. Department of Commerce. https://www.census.gov/retail/mrts/w...ec_current.pdf
WalMart 2016 Global Responsibility Report. 2016. Bentonville, AR: Walmart. corporate.walmart.com/2016grr
Walmart. 2016. “Pathways program infographic. Bentonville, AR: Walmart. https://corporate.walmart.com/photos...am-infographic
Critical Thinking Questions:
1. A 2015 New York Times article described Amazon as “a soulless, dystopian workplace where no fun is had and no laughter heard” (Cook 2015 n.p.). Employees themselves came to the company’s defense (Ciubotariu 2015). Does this reputation continue to haunt Amazon, or has it been addressed?
2. How do employees differ between a Walmart retail location and an Amazon order fulfillment center? How many white-collar or skilled jobs does Amazon have compared to Walmart?
3. With Amazon moving into the retail market with the purchase of Whole Foods, and with Walmart expanding its e-commerce, how are employee motivation challenges going to shift? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/07%3A_Work_Motivation_for_Performance/7.10%3A_Critical_Thinking_Case.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. How do organizations effectively use performance appraisals to improve individual job performance, and what are the limitations inherent in the use of various appraisal systems?
2. What practices are used in the performance appraisal process?
3. How do managers give effective feedback to subordinates?
4. How do organizations choose the best appraisal system for their organization?
5. How do managers and organizations use incentives and rewards effectively to secure the best possible performance from employees?
08: Performance Appraisal and Rewards
exploring managerial careers: Two Performance Appraisal Interviews
“Janet, thanks for coming in. As you know, it’s that time of year again. I’ve been going over this performance appraisal form and have written in my evaluation. I’d like you to look it over and then sign it.”
Janet looked over her ratings, which were nearly all in the “satisfactory” range. Even the category of dependability was marked “satisfactory”; yet, it was Janet who came in on three different occasions to cover for workers in her group who were absent for one reason or another. Janet mentioned this issue to her boss, Ken.
"Well, Janet, you’re right and that’s exactly what I expect of my employees. You know this is your first year here and you can’t expect to reach the top in one jump. But I like your style and if you keep it up, who knows how far you’ll go.”
Twenty-four minutes after the interview began, Janet left, bewildered and disappointed. She had worked hard during her first year; in fact, she had gone the extra mile on a few occasions, and now she was more confused than ever about what was expected of her and what constituted good performance. “Maybe it just doesn’t pay to work hard.”
Two weeks before their scheduled interview, Mary asked Ron to review his goals and accomplishments for the last six months and to note any major changes in his job that had taken place during that period. In the meantime, Mary pulled out the file in which she had periodically recorded both positive and negative specific incidents over the last six months concerning Ron’s performance. She also reviewed the goals they had jointly set at the end of the last review and thought carefully about not only the possible goals for the next six months but longer-term development needs and goals that might be appropriate for Ron.
On the day of the interview, both Mary and Ron came well prepared to review the past six months as well as to think about and plan for the next performance period and beyond. The interview took nearly two hours. After candidly discussing Ron’s past performance and the extent to which both sides felt he had or had not accomplished the goals for that period, they began to focus on what should be accomplished in the future. The discussion caused both sides to make changes in their original evaluations and ideas about targets for the future. When it was over, Ron left more motivated than before and confident that even though he had areas in which he could improve, he had a bright future ahead of him if he continued to be motivated and work hard.
1. How do organizations effectively use performance appraisals to improve individual job performance, and what are the limitations inherent in the use of various appraisal systems?
Performance appraisals are one of the most important and often one of the most mishandled aspects of management. Typically, we think of performance appraisals as involving a boss evaluating a subordinate. However, performance appraisals increasingly involve subordinates appraising bosses through a feedback process known as 360 feedback,1 customers appraising providers, and peers evaluating coworkers.
Whether appraisals are done by subordinates, peers, customers, or superiors, the process itself is vital to the lifeblood of the organization. Performance appraisal systems provide a means of systematically evaluating employees across various performance dimensions to ensure that organizations are getting what they pay for. They provide valuable feedback to employees and managers, and they assist in identifying promotable people as well as problems. However, such appraisals are meaningless unless they are accompanied by an effective feedback system that ensures that the employee gets the right messages concerning performance.
Reward systems represent a powerful motivational force in organizations, but this is true only when the system is fair and tied to performance. Because a variety of approaches to appraising performance exists, managers should be aware of the advantages and disadvantages of each. In turn, an understanding of reward systems will help managers select the system best suited to the needs and goals of the organization.
Performance appraisal systems serve a variety of functions of central importance to employees. Appraisal techniques practiced today are not without problems, though. Managers should keep abreast of recent developments in compensation and reward systems so they can modify existing systems when more appropriate alternatives become available.
A key management responsibility has always been to oversee and develop subordinates. In fact, it has been said that every manager is a human resource manager. Nowhere is this truer than with regard to evaluating and rewarding subordinates. Managers are consistently involved with employee training and development, monitoring employee performance, providing job-related feedback, and administering rewards.
In this chapter, we examine three interrelated aspects of the performance appraisal and reward process. As Exhibit 8.2 shows, this process moves from evaluating employee performance to providing adequate and constructive feedback to determining discretionary rewards. Where effort and performance are properly evaluated and rewarded, we would expect to see more stable and consistent job performance. On the other hand, where such performance is only evaluated intermittently or where the appraisal and review process is poorly done, we would generally see less consistent performance. We begin our discussion with a look at the nature of appraisals.
We begin by examining three aspects of performance appraisal systems: (1) the uses of performance appraisals, (2) problems found in performance appraisals, and (3) methods for reducing errors in the appraisal system. This overview will provide a foundation for studying specific techniques of performance appraisal. Those interested in more detailed information on performance appraisal systems may wish to consult books on personnel administration or compensation.
Uses of Performance Appraisals
In most work organizations, performance appraisals are used for a variety of reasons. These reasons range from improving employee productivity to developing the employees themselves. This diversity of uses is well documented in a study of why companies use performance appraisals.2 Traditionally, compensation and performance feedback have been the most prominent reasons organizations use performance appraisals.
Feedback to employees. Performance appraisals provide feedback to employees about quantity and quality of job performance. Without this information, employees have little knowledge of how well they are doing their jobs and how they might improve their work.
Self-development. Performance appraisals can also serve as an aid to employee self-development. Individuals learn about their strengths and weaknesses as seen by others and can initiate self-improvement programs (see discussion on behavioral self-management programs).
Reward systems. In addition, appraisals may form the bases of organizational reward systems—particularly merit-based compensation plans.
Personnel decisions. Performance appraisals serve personnel-related functions as well. In making personnel decisions, such as those relating to promotions, transfers, and terminations, they can be quite useful. Employers can make choices on the basis of information about individual talents and shortcomings. In addition, appraisal systems help management evaluate the effectiveness of its selection and placement functions. If newly hired employees generally perform poorly, managers should consider whether the right kind of people are being hired in the first place.
Training and development. Finally, appraisals can help managers identify areas in which employees lack critical skills for either immediate or future performance. In these situations, new or revised training programs can be established to further develop the company’s human resources.
It is apparent that performance appraisal systems serve a variety of functions in organizations. In light of the importance of these functions, it is imperative that the accuracy and fairness of the appraisal be paramount considerations in the evaluation of a system. Many performance appraisal systems exist. It is the manager’s job to select the technique or combination of techniques that best serves the particular needs (and constraints) of the organization. Before considering these various techniques, let us look at some of the more prominent problems and sources of error that are common to several of them.
Problems with Performance Appraisals
A number of problems can be identified that pose a threat to the value of appraisal techniques. Most of these problems deal with the related issues of the validity and reliability of the instruments or techniques themselves. Validity is the extent to which an instrument actually measures what it intends to measure, whereas reliability is the extent to which the instrument consistently yields the same results each time it is used. Ideally, a good performance appraisal system will exhibit high levels of both validity and reliability. If not, serious questions must be raised concerning the utility (and possibly the legality) of the system.
It is possible to identify several common sources of error in performance appraisal systems. These include: (1) central tendency error, (2) strictness or leniency error, (3) halo effect, (4) recency error, and (5) personal biases.
Central Tendency Error. It has often been found that supervisors rate most of their employees within a narrow range. Regardless of how people actually perform, the rater fails to distinguish significant differences among group members and lumps everyone together in an “average” category. This is called central tendency error and is shown in Exhibit 8.3. In short, the central tendency error is the failure to recognize either very good or very poor performers.
Strictness or Leniency Error. A related rating problem exists when a supervisor is overly strict or overly lenient in evaluations (see Exhibit 8.3). In college classrooms, we hear of professors who are “tough graders” or, conversely, “easy A’s.” Similar situations exist in the workplace, where some supervisors see most subordinates as not measuring up to their high standards, whereas other supervisors see most subordinates as deserving of a high rating. As with central tendency error, strictness error and leniency error fail to distinguish adequately between good and bad performers and instead relegate almost everyone to the same or related categories.
Halo Effect. The halo effect exists where a supervisor assigns the same rating to each factor being evaluated for an individual. For example, an employee rated above average on quantity of performance may also be rated above average on quality of performance, interpersonal competence, attendance, and promotion readiness. In other words, the supervisor cannot effectively differentiate between relatively discrete categories and instead gives a global rating.
These types of bias are based on our perceptions of others. The halo effect occurs when managers have an overly positive view of a particular employee. This can impact the objectivity of reviews, with managers consistently giving an employee high ratings and failing to recognize areas for improvement.
Whether positive or negative, we also have a natural tendency to confirm our preconceived beliefs about people in the way we interpret or recall performance, which is known as confirmatory bias.
For example, a manager may have a preconception that her male report is more assertive. This could cause her to recall instances more easily in which her report asserted his position during a meeting. On the other hand, she may perceive her female report to be less assertive, predisposing her to forget when the report suggested an effective strategy or was successful in a tough negotiation.
The halo effect is often a consequence of people having a similarity bias for certain types of people. We naturally tend to favor and trust people who are similar to us. Whether it’s people who also have a penchant for golf or people who remind us of a younger version of ourselves, favoritism that results from a similarity bias can give certain employees an unfair advantage over others. This can impact a team to the point that those employees may receive more coaching, better reviews and, as a result, more opportunities for advancements.3
Recency Error. Oftentimes evaluators focus on an employee’s most recent behavior in the evaluation process. This is known as the recency error. That is, in an annual evaluation, a supervisor may give undue emphasis to performance during the past months—or even weeks—and ignore performance levels prior to this. This practice, if known to employees, leads to a situation where employees may “float” for the initial months of the evaluation period and then overexert themselves in the last few months or weeks prior to evaluation. This practice leads to uneven performance and contributes to the attitude of “playing the game.”
Personal Biases. Finally, it is not uncommon to find situations in which supervisors allow their own personal biases to influence their appraisals. Such biases include like or dislike for someone, as well as racial and sexual biases. Personal biases can interfere with the fairness and accuracy of an evaluation and are illegal in many situations.
Reducing Errors in Performance Appraisals
A number of suggestions have been advanced recently to minimize the effects of various biases and errors on the performance appraisal process.4 When errors are reduced, more accurate information is available for personnel decisions and personal development. These methods for reducing error include
• ensuring that each dimension or factor on a performance appraisal form represents a single job activity instead of a group of job activities.
• avoiding terms such as average, because different evaluators define the term differently.
• ensuring that raters observe subordinates on a regular basis throughout the evaluation period. It is even helpful if the rater takes notes for future reference.
• keeping the number of persons evaluated by one rater to a reasonable number. When one person must evaluate many subordinates, it becomes difficult to discriminate. Rating fatigue increases with the number of rates.
• ensuring that the dimensions used are clearly stated, meaningful, and relevant to good job performance.
• training raters so they can recognize various sources of error and understand the rationale underlying the evaluation process.
• Using mechanisms like these, better employee ratings that can have greater meaning both for the individual employee and the organization will result.
concept check
• What are performance appraisals, and how are they used in organizations?
• How are performance appraisals used as a reward system, and what problems can they cause? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/08%3A_Performance_Appraisal_and_Rewards/8.01%3A_Performance_Appraisal_Systems.txt |
2. What practices are used in the performance appraisal process?
Organizations use numerous methods to evaluate personnel. We will summarize several popular techniques. Although countless variations on these themes can be found, the basic methods presented provide a good summary of the commonly available techniques. Following this review, we will consider the various strengths and weaknesses of each technique. Six techniques are reviewed here: (1) graphic rating scales, (2) critical incident technique, (3) behaviorally anchored rating scales, (4) behavioral observation scales, (5) management by objectives, and (6) assessment centers.
Graphic Rating Scales
Certainly, the most popular method of evaluation used in organizations today is the graphic rating scale. One study found that 57 percent of the organizations surveyed used rating scales, and another study found the figure to be 65 percent.5 Although this method appears in many formats, the supervisor or rater is typically presented with a printed or online form that contains both the employee’s name and several evaluation dimensions (quantity of work, quality of work, knowledge of job, attendance). The rater is then asked to rate the employee by assigning a number or rating on each of the dimensions. An example of a graphic rating scale is shown in Table 8.1.
By using this method, if we assume that evaluator biases can be minimized, it is possible to compare employees objectively. It is also possible to examine the relative strengths and weaknesses of a single employee by comparing scores on the various dimensions.
However, one of the most serious drawbacks of this technique is its openness to central tendency, strictness, and leniency errors. It is possible to rate almost everyone in the middle of the scale or, conversely, at one end of the scale. In order to control for this, some companies have assigned required percentage distributions to the various scale points. Supervisors may be allowed to rate only 10 percent of their people outstanding and are required to rate 10 percent unsatisfactory, perhaps assigning 20 percent, 40 percent, and 20 percent to the remaining middle categories. By doing this, a distribution is forced within each department. However, this procedure may penalize a group of truly outstanding performers or reward a group of poor ones.
Critical Incident Technique
With the critical incident technique of performance appraisal, supervisors record incidents, or examples, of each subordinate’s behavior that led to either unusual success or unusual failure on some aspect of the job. These incidents are recorded in a daily or weekly log under predesignated categories (planning, decision- making, interpersonal relations, report writing). The final performance rating consists of a series of descriptive paragraphs or notes about various aspects of an employee’s performance (see Table 8.2).
The critical incident method provides useful information for appraisal interviews, and managers and subordinates can discuss specific incidents. Good qualitative information is generated. However, because little quantitative data emerge, it is difficult to use this technique for promotion or salary decisions. The qualitative output here has led some companies to combine the critical incident technique with one of the quantitative techniques, such as the rating scale, to provide different kinds of feedback to the employees.
Behaviorally Anchored Rating Scales
An appraisal system that has received increasing attention in recent years is the behaviorally anchored rating scale (BARS). This system requires considerable work prior to evaluation but, if the work is carefully done, can lead to highly accurate ratings with high inter-rater reliability. Specifically, the BARS technique begins by selecting a job that can be described in observable behaviors. Managers and personnel specialists then identify these behaviors as they relate to superior or inferior performance.
An example of this is shown in Exhibit 8.4, where the BARS technique has been applied to the job of college professor. As shown, as one moves from extremely poor performance to extremely good performance, the performance descriptions, or behavioral anchors, increase. Oftentimes, six to ten scales are used to describe performance on the job. Exhibit 8.4 evaluates the professor’s organizational skills. Other scales could relate to the professor’s teaching effectiveness, knowledge of the material, availability to students, and fairness in grading. Once these scales are determined, the evaluator has only to check the category that describes what she observes on the job, and the employee’s rating is simultaneously determined. The BARS technique has several purported advantages. In particular, many of the sources of error discussed earlier (central tendency, leniency, halo) should be significantly reduced because raters are considering verbal descriptions of specific behaviors instead of general categories of behaviors, such as those used in graphic rating scales. In addition, the technique focuses on job-related behaviors and ignores less relevant issues such as the subordinate’s personality, race, or gender. This technique should also lead to employees being less defensive during performance appraisals, because the focus of the discussion would be actual measured behaviors, not the person. Finally, BARS can aid in employee training and development by identifying those domains needing most attention.
On the negative side, as noted above, considerable time and effort in designing the forms are required before the actual rating. Because a separate BARS is required for each distinct job, it is only cost-efficient for common jobs. Finally, because the technique relies on observable behaviors, it may have little applicability for such jobs in such areas as research science (and sometimes management), where much of the work is mental and relevant observable behaviors are difficult to obtain.
Behavioral Observation Scales
The behavioral observation scale (BOS) is similar to BARS in that both focus on identifying observable behaviors as they relate to performance. It is, however, less demanding of the evaluator. Typically, the evaluator is asked to rate each behavior on a scale from 1 to 5 to indicate the frequency with which the employee exhibits the behavior. Evaluation of an employee’s performance on a particular dimension is derived by summing the frequency ratings for the behaviors in each dimension.
For example, in Table 8.3 we can see an example of a form to evaluate a manager’s ability to overcome resistance to change. The rater simply has to circle the appropriate numbers describing observed behaviors and get a summary rating by adding the results. The BOS technique is easier to construct than the BARS and makes the evaluator’s job somewhat simpler. Even so, this is a relatively new technique that is only now receiving some support in industry.
Management by Objectives
A popular technique for evaluating employees who are involved in jobs that have clear quantitative output is management by objectives (MBO). Although the concept of MBO encompasses much more than just the appraisal process (incorporating an organization-wide motivation, performance, and control system), we will focus here on its narrower application to evaluating employee performance. MBO is closely related to the goal-setting theory of motivation.
Under MBO, individual employees work with their supervisor to establish goals and objectives for which they will be responsible during the coming year. These goals are stated in clear language and relate to tasks that are within the domain of the employee. An example of these goals for a sales representative is shown in Table 8.4. Following a specified period of time, the employee’s performance is compared to the preset goals to determine the extent to which the goals have been met or exceeded.
Several advantages of MBO have been observed. These include the ability to do better planning; improved motivation, because of knowledge of results; fairer evaluations, done on the basis of results rather than personality; improved commitment through participation; and improved supervisory skills in such areas as listening, counseling, and evaluating. On the negative side, however, MBO has been criticized because it emphasizes quantitative goals at the expense of qualitative goals and often creates too much paperwork. It is difficult to compare performance levels among employees because most are responsible for different goals. Sometimes the implementation of MBO goals are autocratic and therefore ineffective or even counterproductive. As discussed in the study of motivation, goals must be accepted to be effective. Finally, in order to be successful, MBO implementation must have constant attention and support from top management; MBO does not run itself. In the absence of this support, the technique loses legitimacy and often falls into disrepair.
Assessment Centers
A relatively new method of evaluation is the assessment center. Assessment centers are unique among appraisal techniques in that they focus more on evaluating an employee’s long-range potential to an organization than on her performance over the past year. They are also unique in that they are used almost exclusively among managerial personnel.
An assessment center consists of a series of standardized evaluations of behavior based on multiple inputs. Over a two- or three-day period (away from the job), trained observers make judgments on managers’ behavior in response to specially developed exercises. These exercises may consist of in-basket exercises, role- playing, and case analyses, as well as personal interviews and psychological tests. An example of an assessment center program is shown in Table 8.5.
On the basis of these exercises, the trained observers make judgments on employees’ potential for future managerial assignments in the organization. More specifically, information is obtained concerning employees’ interpersonal skills, communication ability, creativity, problem-solving skills, tolerance for stress and ambiguity, and planning ability. This technique has been used successfully by some of the largest corporations in the United States, including AT&T, IBM, and General Electric.
Results from a series of assessment center programs appear promising, and the technique is growing in popularity as a means of identifying future managerial potential. For example, Coca-Cola USA experimented with using assessment centers to select its managerial personnel. After a detailed study, the company found that those selected in this way were only one-third as likely to leave the company or be fired than those selected in the traditional way. Although the assessment center approach added about 6 percent to the cost of hiring, the lower turnover rate led to large overall savings.6
Some problems with the technique have been noted. In particular, because of the highly stressful environment created in assessment centers, many otherwise good managers may simply not perform to their potential. Moreover, the results of a poor evaluation in an assessment center may be far-reaching; individuals may receive a “loser” image that will follow them for a long time. And, finally, there is some question concerning exactly how valid and reliable assessment centers really are in predicting future managerial success.7 Despite these problems, assessment centers remain a popular vehicle in some companies for developing and appraising managerial potential.
ethics in practice
Tesla’s Performance Review
At Tesla, the automotive giant, the standards are set extremely high for their employees. In 2017, Tesla conducted its annual performance reviews as it does each year. Due to the review process, the company sees both voluntary and involuntary departures. During the review process, the managers discuss “results that were achieved, as well as how those results were achieved” with their employees.* Tesla also has a performance recognition and compensation program that includes equity rewards as well as promotions in some cases, along with the constructive feedback.
The departure of employees during the review period is not unique to Tesla; however, in 2017 there was a large exodus of approximately 700 employees following their employee reviews. Elon Musk, who recently has stepped down from the role of chairman and has been under scrutiny for his behavior,* saw the media coverage of this news as “ridiculous.”
“You have two boxes of equal ability, and one’s much smaller, the big guy’s going to crush the little guy, obviously,” states Musk. “So, the little guy better have a heck of a lot more skill or he’s going to get clobbered. So that is why our standards are high . . . if they’re not high, we will die.”
Overall, approximately 17 percent of their employees were promoted, almost half in manufacturing. As Tesla continues to grow and develop new vehicles, it is consistently pushing the boundaries and pushing its employees to new limits. Performance reviews are of the highest importance for Tesla’s business to succeed; the company needs the best people with the best skills. It is constantly growing and attempting to “suck the labor pool dry” to fill positions at many of its locations and factories.
Questions:
1. What factors do you feel could have changed in Tesla’s approach to its performance reviews?
2. How can a high-pressure environment affect an employee’s performance? What factors should be
considered to combat these issues?
Sources: K. Korosec. “Tesla Fires Hundreds of Workers After Their Annual Performance Review.” Fortune, October 14, 2017, http://fortune.com/2017/10/13/tesla-fires-employees/; D. Muoio. “Tesla fired 700 employees after performance reviews in the third quarter.” Business Insider, November 1, 2017, https://www.businessinsider.com/tesl...eviews-2017-11; J. Wattles. “Elon Musk agrees to pay \$20 million and quit as Tesla chairman in deal with SEC.” Money, September 30, 2018, https://money.cnn.com/2018/09/29/tec...ec-settlement/ index.html.
Comparison of Appraisal Techniques
It is important to consider which appraisal technique or set of techniques may be most appropriate for a given situation. Although there is no simple answer to this question, we can consider the various strengths and weaknesses of each technique. This is done in Table 8.6. It is important to keep in mind that the appropriateness of a particular appraisal technique is in part a function of the purpose for the appraisal. For example, if the purpose of the appraisal is to identify high potential executives, then assessment centers are more appropriate than rating scales.
As would be expected, the easiest and least expensive techniques are also the least accurate. They are also the least useful for purposes of personnel decisions and employee development. Once again, it appears that managers and organizations get what they pay for. If performance appraisals represent an important aspect of organizational life, clearly the more sophisticated—and more time-consuming—techniques are preferable. If, on the other hand, it is necessary to evaluate employees quickly and with few resources, techniques such as the graphic rating scale may be more appropriate. Managers must make cost-benefit decisions about the price (in time and money) they are willing to pay for a quality performance appraisal system.
concept check
• What are the techniques and scales used in performance appraisals?
• What are MBOs, and how do they relate to performance appraisals?
• What are assessment centers? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/08%3A_Performance_Appraisal_and_Rewards/8.02%3A_Techniques_of_Performance_Appraisal.txt |
3. How do managers give effective feedback to subordinates?
As previously noted, feedback represents a critical variable in determining the success or failure of the goal-setting process. The same applies to the performance appraisal process. Without effective knowledge of results, the motivational impact of the appraisal process is lost. To better understand how feedback in work settings affects employee behavior, consider the model shown in Exhibit 8.5.8
Feedback comes from many sources, including the task at hand, the supervisor, coworkers, and oneself. This input is then cognitively evaluated by the employee, who considers such factors as the perceived accuracy of the feedback (e.g., does the employee consider the information to be correct?); the credibility of the source of the feedback (e.g., does the employee trust the supervisor’s opinion?); the employee’s opinion concerning the fairness of the evaluation-process; the extent to which the feedback met the employee’s expectations (e.g., does the employee think she could have done better?); and the reasonableness of the performance standards.
If one or more of these evaluations prove negative (for example, the employee believes she is being unfairly evaluated), the credibility of the feedback is dismissed, and the employee may increase her resistance to task effort. On the other hand, where the feedback is accepted, it reinforces the employee’s direction, effort on the task, and persistence on the task. Thus, although feedback is essential, it is the nature and quality of the feedback that ultimately determines employee response.
concept check
• What types of feedback do performance appraisals provide to all organization members?
8.04: Reward Systems in Organizations
4. How do organizations choose the best appraisal system for their organization?
After a company has designed and implemented a systematic performance appraisal system and provided adequate feedback to employees, the next step is to consider how to tie available corporate rewards to the outcomes of the appraisal. Behavioral research consistently demonstrates that performance levels are highest when rewards are contingent upon performance. Thus, in this section, we will examine five aspects of reward systems in organizations: (1) functions served by reward systems, (2) bases for reward distribution, (3) intrinsic versus extrinsic rewards, (4) the relationship between money and motivation and, finally, (5) pay secrecy.
Functions of Reward Systems
Reward systems in organizations are used for a variety of reasons. It is generally agreed that reward systems influence the following:
• Job effort and performance. Following expectancy theory, employees’ effort and performance would be expected to increase when they felt that rewards were contingent upon good performance. Hence, reward systems serve a very basic motivational function.
• Attendance and retention. Reward systems have also been shown to influence an employee’s decision to come to work or to remain with the organization. This was discussed in the previous chapter.
• Employee commitment to the organization. It has been found that reward systems in no small way influence employee commitment to the organization, primarily through the exchange process.9 That is, employees develop ties with organizations when they perceive that the organization is interested in their welfare and willing to protect their interests. This exchange process is shown in Exhibit 8.6. To the extent that employee needs and goals are met by the company, we would expect commitment to increase.
• Job satisfaction. Job satisfaction has also been shown to be related to rewards, as discussed in the previous chapter. Edward E. Lawler, a well-known researcher on employee compensation, has identified four conclusions concerning the relationship between rewards and satisfaction: (1) satisfaction with a reward is a function of both how much is received and how much the individual feels should have been received; (2) satisfaction is influenced by comparisons with what happens to others, especially one’s coworkers; (3) people differ with respect to the rewards they value; and (4) some rewards are satisfying because they lead to other rewards.10
• Occupational and organizational choice. Finally, the selection of an occupation by an individual, as well as the decision to join a particular organization within that occupation, are influenced by the rewards that are thought to be available in the occupation or organization. To prove this, simply look at the classified section of your local newspaper and notice how many jobs highlight beginning salaries.
Reward systems in organizations have far-reaching consequences for both individual satisfaction and organizational effectiveness. Unfortunately, cases can easily be cited where reward systems have been distorted to punish good performance or inhibit creativity. Consider, for example, the Greyhound Bus Company driver who was suspended for 10 days without pay for breaking a company rule against using a CB radio on his bus. The bus driver had used the radio to alert police that his bus, with 32 passengers on board, was being hijacked by an armed man. The police arrested the hijacker, and the bus driver was suspended for breaking company rules.11 Such incidents hardly encourage employees to focus their efforts on responsible performance.
Bases for Reward Distribution
A common reality in many contemporary work organizations is the inequity that exists in the distribution of available rewards. One often sees little correlation between those who perform well and those who receive the greatest rewards. At the extreme, it is hard to understand how a company could pay its president \$10 to \$20 million per year (as many large corporations do) while it pays its secretaries and clerks less than \$15,000. Each works approximately 40 hours per week, and both are important for organizational performance. Is it really possible that the president is 1,000 times more important than the secretary, as the salary differential suggests?
How do organizations decide on the distribution of available rewards? At least four mechanisms can be identified. In more cases than we choose to admit, rewards go to those with the greatest power (either market power or personal power). In many of the corporations whose presidents earn eight-figure incomes, we find that these same people are either major shareholders in the company or have certain abilities, connections, or status that the company wants. Indeed, a threat of resignation from an important or high-performing executive often leads to increased rewards.
A second possible basis for reward distribution is equality. Here, all individuals within one job classification would receive the same, or at least similar, rewards. The most common example here can be found among unionized workers, where pay rates are established and standardized with little or no reference to actual performance level. Instead of ability or performance, these systems usually recognize seniority as the key factor in pay raises or promotions.
The basis for the social welfare reward system in this country is need. In large part, the greater the need, the greater the level of support. It is not uncommon to see situations in business firms where need is taken into account in layoff situations—where an employee is not laid off because she is the sole support of a family.
A fourth mechanism used by organizations in allocating rewards is distributive justice. Under this approach, employees receive (at least a portion of) their rewards as a function of their level of contribution to the organization. The greater the contribution (such as performance), the greater the reward. This mechanism is most prominent in merit-based incentive programs, where pay and bonuses are determined by performance levels.
Extrinsic and Intrinsic Rewards
The variety of rewards that employees can receive in exchange for their contributions of time and effort can be classified as either extrinsic or intrinsic rewards. Extrinsic rewards are external to the work itself. They are administered externally—that is, by someone else (usually management). Examples of extrinsic rewards include wages and salary, fringe benefits, promotions, and recognition and praise from others.
On the other hand, intrinsic rewards represent those rewards that are related directly to performing the job. In this sense, they are often described as “self-administered” rewards, because engaging in the task itself leads to their receipt. Examples of intrinsic rewards include feelings of task accomplishment, autonomy, and personal growth and development that come from the job.
In the literature on employee motivation, there is considerable controversy concerning the possible interrelationship of these two kinds of reward. It has been argued (with some research support) that extrinsic rewards tend to drive out the positive effects of some intrinsic rewards and can lead to unethical behavior.12 Consider, for example, the child next door who begs you to let her help you wash your car. For a young child, this task can carry considerable excitement (and intrinsic motivation). Now, consider what happens on a Saturday afternoon when you need your car washed but the child has other options. What do you do? You offer to pay her this time to help wash your car. What do you think will happen the next time you ask the neighbor to help you wash the car for free? In other words, when extrinsic rewards such as pay are tied closely to performance (called performance-reward contingency), intrinsic motivation—the desire to do a task because you enjoy it—can decrease.
Also, it is important to keep in mind that because extrinsic rewards are administered by sources external to the individual, their effectiveness rests on accurate and fair monitoring, evaluating, and administration. Implementation can be expensive, and the timing of performance and rewards may not always be close. For example, you may perform well on a task, but unless there is a way for that to be noticed, evaluated, recorded, and rewarded within a reasonable time frame, an extrinsic reward may not have a significant impact. Intrinsic rewards are a function of self-monitoring, evaluation, and administration; consequently, these rewards often are less costly and more effectively administered. For example, even if no one else notices or rewards you for superior performance on a task, you can still reward yourself with a mental pat on the back for a job well done or a sense of satisfaction for overcoming a challenge. The implications of this finding will become apparent when exploring efforts to enrich employees’ jobs.
Money and Motivation: A Closer Look
A recurring debate among managers focuses on the issue of whether money is a primary motivator. Some argue that most behavior in organizational settings is motivated by money (or at least monetary factors), whereas others argue that money is only one of many factors that motivate performance. Whichever group is correct, we must recognize that money can have important motivational consequences for many people in many situations. In fact, money serves several important functions in work settings.13 These include serving as (1) a goal or incentive, (2) a source of satisfaction, (3) an instrument for gaining other desired outcomes, (4) a standard of comparison for determining relative standing or worth, and (5) a conditional reinforcer where its receipt is contingent upon a certain level of performance. Even so, experience tells us that the effectiveness of pay as a motivator varies considerably. Sometimes there seems to be an almost direct relationship between pay and effort, whereas at other times no such relationship is found. Why? Lawler suggests that certain conditions must be present in order for pay to act as a strong motivator:14
• Trust levels between managers and subordinates must be high.
• Individual performance must be able to be accurately measured.
• Pay rewards to high performers must be substantially higher than those to poor performers.
• Few, if any, negative consequences for good performance must be perceived.
Under these conditions, a climate or culture is created in which employees have reason to believe that significant performance-reward contingencies truly exist. Given this perception (and assuming the reward is valued), we would expect performance to be increased.15
Pay Secrecy
Secrecy about pay rates seems to be a widely accepted practice in work organizations, particularly among managerial personnel. It is argued that salary is a personal matter and we should not invade another’s privacy. Available evidence, however, suggests that pay secrecy may have several negative side effects. To begin, it has been consistently found that in the absence of actual knowledge, people have a tendency to overestimate the pay of coworkers and those above them in the hierarchy. As a result, much of the motivational potential of a differential reward system is lost.16 Even if an employee receives a relatively sizable salary increase, she may still perceive an inequity compared to what others are receiving. This problem is highlighted in the results of a study by Lawler. In considering the effects of pay secrecy on motivation, Lawler noted:
Almost regardless of how well the individual manager was performing, he felt he was getting less than the average raise. This problem was particularly severe among high performers, since they believed that they were doing well yet received minimal reward. They did not believe that pay was in fact based upon merit. This was ironic, since their pay did reflect performance. . . . Thus, even though pay was tied to performance, these managers were not motivated because they could not see the connection.17
Pay secrecy also affects motivation via feedback. Several studies have shown the value of feedback in motivating performance (see previous discussion). The problem is that for managers, money represents one of the most meaningful forms of feedback. Pay secrecy eliminates the feedback.
When salary information is open (or at least when the range of percentage increases within a job classification are made known to the people in that group), employees are generally provided with more recognition for satisfactory performance and are often more motivated to perform on subsequent tasks. It is easier to establish feelings of pay equity and trust in the salary administration system. On the other hand, publicizing pay rates and pay raises can cause jealousy among employees and create pressures on managers to reduce perceived inequities in the system. There is no correct position concerning whether pay rates should be secret or open. The point is that managers should not assume a priori that pay secrecy—or pay openness—is a good thing. Instead, careful consideration should be given to the possible consequences of either approach in view of the particular situation in the organization at the time.
concept check
• What is the best appraisal system for organizations to adopt?
• How are rewards tied to performance appraisals? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/08%3A_Performance_Appraisal_and_Rewards/8.03%3A_Feedback.txt |
5. How do managers and organizations use incentives and rewards effectively to secure the best possible performance from employees?
We now turn to an examination of various employee incentive programs used by organizations. First, we consider the relative merits of individuals versus group incentive programs. Next, we focus on several relatively new approaches to motivation and compensation. Finally, we suggest several guidelines for effective incentive systems.
Individual versus Group Incentives
Companies usually have choices among various compensation plans and must make decisions about which is most effective for its situation. Incentive systems in organizations are usually divided into two categories on the basis of whether the unit of analysis—and the recipient of the reward—is the individual or a group. Among individual incentive plans, several approaches can be identified, including merit-based compensation (commonly known as merit compensation), piece-rate incentive programs (where people are paid according to the quantity of output), bonus systems of various sorts, and commissions. In each case, rewards are tied fairly directly to the performance level of the individual.
Although individual incentive systems often lead to improved performance, some reservations have been noted. In particular, these programs may at times lead to employees competing with one another, with undesirable results. For instance, department store salespeople on commission may fight over customers, thereby chasing the customers away. After all, customers don’t care who they deal with, only that the service is good. Second, these plans typically are resisted by unions, which prefer compensation to be based on seniority or job classification. Third, where quality control systems are lax, individual incentives such as piece rates may lead employees to maximize units of output while sacrificing quality. And, finally, in order for these programs to be successful, an atmosphere of trust and cooperation is necessary.
In order to overcome some of these shortcomings, many companies have turned to group or organizational incentive plans. Group incentive programs base at least some of an employee’s rewards on group or organization performance. Hence, employees are encouraged to cooperate with one another and with the corporation so that all employees can benefit. Programs such as profit-sharing or gain-sharing plans (discussed below) are designed to tie the employees’ future rewards and prosperity to that of the company and reduce the age-old antagonism between the two. The results are often dramatic.
Creative Pay Practices
Recently, we have seen several innovations in the way corporations approach reward systems. These efforts are designed to facilitate the integration of employee and company interests in a way that maximizes both productivity and quality of working life. Five such creative pay practices should be noted: (1) gain-sharing plans, (2) skills-based incentives, (3) lump-sum pay increases, (4) participative pay decisions, and (5) flexible benefits programs. These approaches, along with their major advantages and drawbacks, are summarized in Table 8.7.
Gain-Sharing Plans. Giving executives and senior managers bonuses to reflect their contributions to organizational effectiveness is commonplace. In fact, in some companies executive bonuses are often larger than salaries. Recently, companies have increasingly applied this same principle to all employees in the form of gain-sharing (profit-sharing) plans. Here, employees are given a chance to share in corporate productivity gains through increased earnings. The greater the productivity gains, the greater the earnings. Several variations on this theme can be found, including the Scanlon Plan, IMPROSHARE, the Ruker Plan, and the Lincoln Electric Plan. Regardless of the title, the basic plan is similar.
For example, under the Scanlon Plan (probably the oldest such program), three operating guidelines are used: (1) each department or division is treated as a business unit for purposes of performance measurement, (2) specific cost measures associated with the production process are identified and agreed to by all parties, and (3) bonuses are paid to all employees according to a predetermined formula tying the amount of the bonus to the actual cost savings realized during the time period. Under such a plan, it is clearly in the employees’ best interest to contribute to cost savings, thereby increasing their own incomes.
expanding around the GLobe
Providing Feedback in Different Countries
Global workplaces are increasing within the world businesses, and it has become a trend to have managers from one country, most likely the country in which the headquarters arise, manage employees abroad. An important consideration when managing globally is how cultural differences can have a profound effect on performance evaluations, negotiations, and criticisms.
For example, oftentimes in the United States, a method of critical feedback in the “hamburger method” (Step 1: Identify tasks. As a group, identify technical steps that would be involved in implementing. Step 2: Identify options for tasks. Split the team into several small groups. Step 3: Combine results.) is acceptable, while other countries give their feedback with just the meal alone. This strategy in the Netherlands and Germany can be off-putting to other cultures, and when you read into another culture’s technique with your own lens of reference, it can feel wrong.
Managing globally means that you need to do your research on which approach for feedback is best received for the employee’s cultural differences. For example, being direct is key when communicating with a Dutch person. In contrast, in England or the United States, criticism is not delivered directly, but with positive pieces wrapped around the negative. In Asian countries, feedback is often avoided or the message is blurred in order to “save face.” With all of these complications and considerations, it is ever more important to acutely understand the culture, the cultural understandings of employees who are direct reports, and also the lens through which feedback is being viewed as well.
Questions:
1. How can a new manager that is working with international employees ensure she is providing reviews in an appropriate manner?
2. What methods can a manager employ in her preparation for the review to be successful when providing feedback to employees of different cultures?
Sources: C. Solbach. “Feedback through cultural looking glass.” Krauthammer, September 16, 2015, www.krauthammer.com/en/publi...2/07/feedback- through-cultural-looking-glass; M. Abadi. “The exact same sentence from your boss can mean 'yes,' 'no,' or 'maybe' depending on the country where you work.” Business Insider, December 7, 2017, https://www.businessinsider.com/dire...ulture-2017-12; J. Windust. “An International Approach to 360-Degree Feedback.” Cognology, July 26, 2016, https://www.cognology.com.au/interna...gree-feedback/; “Giving Employee Feedback To A Culturally Diverse Workforce.” Impraise Blog, accessed January 26, 2019, blog.impraise.com/360-feedba...ences-between- branchescountries-in-feedback-behavior-performance-review.
Skills-Based Incentives. Typical compensation programs are tied to job evaluations. In these, jobs are analyzed to assess their characteristics, and then salary levels are assigned to each job on the basis of factors such as job difficulty and labor market scarcity. In other words, pay levels are set on the basis of the job, not the individual. This approach fails to encourage employees to improve their skills on the job, because there is no reward for the improvement. This thinking also keeps all employees in their places and minimizes the possibility of inter-job transfers.
Under the skills-based incentive program, employees are paid according to their skills level (that is, the number of jobs they can perform), regardless of the actual tasks they are allowed to perform. This approach has proved successful in organizations such as Procter & Gamble and General Foods. Employees are encouraged to learn additional skills and are appropriately rewarded. The organization is provided with a more highly trained and more flexible workforce. However, training and compensation costs are necessarily increased, so the program is appropriate only in some situations. The technique is most often seen as part of a larger quality-of-working-life program, where it is associated with job redesign efforts.
Lump-Sum Pay Increases. Another technique that has received some attention is to allow employees to decide how (that is, in what amounts) they wish to receive their pay raises for the coming year. Under the traditional program, pay raises are paid in equal amounts in each paycheck over the year. Under the alternate plan, employees can elect to receive equal amounts during the year, or they can choose to take the entire raise in one lump-sum pay increase. This plan allows employees greater discretion over their own financial matters. If an employee wants to use the entire pay raise for a vacation, it can be paid in a lump sum in June. Then, if the employee quits before the end of the year, the unearned part of the pay raise is subtracted from the final paycheck. This plan increases the visibility of the reward to the employee. The employee receives, for example, a \$600 pay raise (a rather sizable amount) instead of twelve \$50 monthly pay raises. As with the flexible rewards system discussed below, however, the administration costs of the lump-sum plan are greater than those of the traditional method.
Participative Pay Decisions. In addition, of concern to many managers is the extent to which employees should be involved in decisions over pay raises. This is the issue of participative pay decisions. Recently, several organizations have been experimenting with involving employees in pay raise decisions, and the results seem to be quite positive. By allowing employees to participate either in the design of the reward system or in actual pay raise decisions (perhaps through a committee), it is argued that decisions of higher quality are made on the basis of greater information. Also, employees then have greater reason to place confidence in the fairness of the decisions. On the negative side, this approach requires considerably more time for both the manager and the participating subordinates. Costs must be weighed against benefits to determine which approach is most suitable for the particular organization and its goals.
Flexible Benefits Systems. A typical fringe benefit package provides the same benefits—and the same number of benefits—to all employees. As a result, individual differences or preferences are largely ignored. Studies by Lawler indicate variations in benefit preferences.18 For instance, young unmarried men prefer more vacation time, whereas young married men prefer to give up vacation time for higher pay. Older employees want more retirement benefits, whereas younger employees prefer greater income. Through a flexible benefits program (also called a “cafeteria benefits program”), employees are allowed some discretion in the determination of their own packages and can make trade-offs, within certain limits. Organizations such as PepsiCo, TRW, and the Educational Testing Service already use such programs. Although certain problems of administration exist with the programs, efforts in this direction can lead to increased need satisfaction among employees.
We have seen a number of different creative solutions to the compensation dilemma. Which approaches are most effective in motivating employees? This is obviously a difficult question to answer. However, one way to get relevant information on this question is to see what corporations actually use. One such study asked major employers which of a variety of approaches had been used with a high success level. The results are shown in Table 8.8. As can be seen, skills-based compensation, earned time off, and gain sharing all received high marks from personnel executives, although other programs are also widely supported. It would appear from these results that many approaches can be useful; the choice of which one to use would depend upon the circumstances and goals of a particular organization.
Guidelines for Effective Incentive Programs
Whatever incentive plan is selected, care must be taken to ensure that the plan is appropriate for the particular organization and workforce. In fact, a simple test of the effectiveness of an incentive plan would be as follows:19
• Does the plan capture attention? Do employees discuss the plan and take pride in their early successes?
• Do employees understand the plan? Can employees explain how the plan works, and do they understand what they must do to earn the incentive?
• Does the plan improve communication? As a result of the plan, do employees understand more about corporate mission, goals, and objectives?
• Does the plan pay out when it should? Are incentives being paid for desired results, and are they withheld for undesirable results?
• Is the company performing better as a result of the plan? Are profits or market share up or down? Have any gains resulted in part from the incentive plan?
If a new (or existing) pay plan can meet these tests, it is probably fairly effective in motivating employee performance and should be retained by the organization. If not, perhaps some other approach should be tried. On the basis of such a test, several specific guidelines can be identified to increase the effectiveness of the programs. These include the following:20
• Any reward system or incentive plan should be as closely tied to actual job performance as possible. This point was discussed earlier in this chapter.
• If possible, incentive programs should allow for individual differences. They should recognize that different people want different outcomes from a job. Flexible benefits programs such as the ones discussed here make an effort to accomplish this.
• Incentive programs should reflect the type of work that is done and the structure of the organization. This simply means that the program should be tailored to the particular needs, goals, and structures of a given organization. Individual incentive programs, for example, would probably be less successful among unionized personnel than would group programs such as the Scanlon plan. This point has been clearly demonstrated in research by Lawler, which points out that organizations with traditional management and those with more participative management might approach reward systems quite differently in order to be effective.21 As shown in Table 8.9, both types of company can be effective as long as their reward systems are congruent with their overall approach to management.
• The incentive program should be consistent with the culture and constraints of the organization. Where trust levels are low, for example, it may take considerable effort to get any program to work. In an industry already characterized by high levels of efficiency, basing an incentive system on increasing efficiency even further may have little effect, because employees may see the task as nearly impossible.
• Finally, incentive programs should be carefully monitored over time to ensure that they are being fairly administered and that they accurately reflect current technological and organizational conditions. For instance, it may be appropriate to offer sales clerks in a department store an incentive to sell outdated merchandise because current fashion items sell themselves. Responsibility falls on managers not to select the incentive program that is in vogue or used “next door,” but rather to consider the unique situations and needs of their own organizations. Then, with this understanding, a program can be developed and implemented that will facilitate goal-oriented performance.
concept check
• What are the differences between individual and group incentives?
• What is the variety of reward incentives available to organizations? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/08%3A_Performance_Appraisal_and_Rewards/8.05%3A_Individual_and_Group_Incentive_Plans.txt |
Assessment center Consists of a series of standardized evaluations of behavior based on multiple inputs.
Behavioral observation scale Identifies observable behaviors as they relate to performance and is less demanding of the evaluator.
Behaviorally anchored rating scale A system that requires considerable work prior to evaluation but, if the work is carefully done, can lead to highly accurate ratings with high inter-rater reliability.
Central tendency error The failure to recognize either very good or very poor performers.
Critical incident technique A technique where supervisors record incidents, or examples, of each subordinate’s behavior that led to either unusual success or unusual failure on some aspect of the job.
Distributive justice Where employees receive (at least a portion of) their rewards as a function of their level of contribution to the organization.
Extrinsic rewards Rewards that are external to the work itself.
Flexible benefits system A rewards program where employees are allowed some discretion in the determination of their own packages and can make trade-offs, within certain limits.
Gain sharing An incentive plan in which employees or customers receive benefits directly as a result of cost-saving measures that they initiate or participate in.
Graphic rating scale A performance appraisal technique where the supervisor or rater is typically presented with a printed or online form that contains both the employee’s name and several evaluation dimensions (quantity of work, quality of work, knowledge of job, attendance). The rater is then asked to rate the employee by assigning a number or rating on each of the dimensions.
Halo effect Results in a supervisor assigning the same rating to each factor being evaluated for an individual.
Intrinsic motivation The desire to do a task because you enjoy it.
Intrinsic rewards Rewards that are external to the work itself.
Leniency error Fails to distinguish adequately between good and bad performers and instead relegates almost everyone to the same or related categories.
Lump-sum pay increase A technique that allows employees to decide how (that is, in what amounts) they wish to receive their pay raises for the coming year.
Management by objectives Closely related to the goal-setting theory of motivation.
Participative pay decisions Involving employees in pay raise decisions.
Performance appraisals A system that provides a means of systematically evaluating employees across various performance dimensions to ensure that organizations are getting what they pay for.
Recency error Occurs when, in an evaluation, a supervisor may give undue emphasis to performance during the past months—or even weeks—and ignore performance levels prior to this.
Reliability The extent to which the instrument consistently yields the same results each time it is used.
Skills-based incentives Rewards employees on the basis of the skills they possess and not just the skills they are allowed to use at work.
Strictness error Fails to distinguish adequately between good and bad performers and instead relegates almost everyone to the same or related categories.
Validity The extent to which an instrument actually measures what it intends to measure.
8.07: Summary of Learning Outcomes
\(1\) Performance Appraisal Systems
How do organizations effectively use performance appraisals to improve individual job performance, and what are the limitations inherent in the use of various appraisal systems?
If performance is to be changed or improved, it must be rewarded. To be rewarded, it must be measured. However, great care must be taken to (1) measure important behaviors and outcomes (individual, group, or organizational) and not just those that are easy to measure, (2) measure them with the appropriate technique(s), and (3) tie appropriate rewards to the desired behaviors and outcomes.
Organizations use performance appraisals for several reasons: (1) to provide feedback to employees, (2) to allow for employee self-development, (3) to allocate rewards, (4) to gather information for personnel decisions, and (5) to guide them in developing training and development efforts.
\(2\) Techniques of Performance Appraisal
What practices are used in the performance appraisal process?
Performance appraisals are subject to several problems, including central tendency error, strictness or leniency error, halo effect, recency error, and personal biases.
\(3\) Feedback
How do managers give effective feedback to subordinates?
Among the most common appraisal systems are graphic rating scales, critical incident technique, behaviorally anchored rating scales, behavioral observation scales, management by objectives, and assessment centers. Assessment centers represent a special case of evaluations in that they focus on assessing an employee’s long-term potential to an organization.
\(4\) Reward Systems in Organizations
How do organizations choose the best appraisal system for their organization?
Rewards serve several functions, including (1) stimulating job effort and performance, (2) reducing absenteeism and turnover, (3) enhancing employee commitment, (4) facilitating job satisfaction, and (5) facilitating occupational and organizational choice.
Rewards may be distributed on the basis of power, equality, need, or distributive justice. Distributive justice rests on the principle of allocating rewards in proportion to employee contribution. Intrinsic rewards represent those outcomes that are administered by the employee (e.g., a sense of task accomplishment), whereas extrinsic rewards are administered by others (e.g., wages).
Gain-sharing incentive plans base some of the employees’ pay on corporate profits or productivity. As a result, employees are generally more interested in facilitating corporate performance. Skills-based incentives reward employees on the basis of the skills they possess, not the skills they are allowed to use at work. As a result, employees are encouraged to continually upgrade their skill levels.
A lump-sum salary increase simply provides employees with their pay raises at one time (possibly shortly before summer vacation or a major holiday).
Participative pay decisions allow employees some input in determining their pay raises.
\(5\) Individual and Group Incentive Plans
How do managers and organizations use incentives and rewards effectively to secure the best possible performance from employees?
Flexible benefits allow employees to choose the fringe benefits that best suit their needs.
A good reward system (1) is closely tied to performance, (2) allows for individual differences, (3) reflects the type of work that is being done, (4) is consistent with the corporate culture, and (5) is carefully monitored over time. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/08%3A_Performance_Appraisal_and_Rewards/8.06%3A_Glossary.txt |
1. Identify the various functions of performance appraisals. How are appraisals used in most work organizations?
2. What are some problems associated with performance appraisals?
3. Define validity and reliability. Why are these two concepts important from a managerial standpoint?
4. How can errors in appraisals be reduced?
5. Critically evaluate the advantages and disadvantages of the various techniques of performance appraisal.
6. Discuss the role of feedback in employee performance.
7. What is the difference between intrinsic and extrinsic rewards?
8. Identify the major bases of reward distribution.
9. How does money influence employee motivation?
10. Discuss the relative merits of individual and group incentive programs.
11. Describe the benefits and drawbacks of several of the new approaches to reward systems. Which ones do you feel would be most effective in work organizations?
8.09: Management Skills Application Exercises
How Would You Rate Your Supervisor?
Instructions: Think of your current supervisor or one for any job you have held, and evaluate her on the following dimensions. Give a “1” for very poor, a “3” for average, a “5” for outstanding, etc.
Think of a current or previous job, and evaluate the source and quality of the feedback you received from your supervisor. When you are through, refer to Appendix B for scoring procedures.
How Much Feedback Are You Getting from Your Job?
Instructions: Think of a current or previous job. With this in mind, answer the following questions as accurately as possible.
1. My boss lets me know when I make a mistake.
2. My coworkers help me improve on the job.
3. I receive formal evaluations from the company on my job.
4. My boss always tells me when I do a good job.
5. This company really appreciates good performance.
6. When I do something especially well, I receive a “thanks” from my boss.
7. My coworkers are very appreciative when I do a good job.
8. My coworkers compliment me on the quality of my work.
9. My coworkers are very supportive of my efforts.
10. I know when I have done a good job.
11. My job provides me with solid feedback on my performance.
12. I can see the results when I learn to do something better.
8.10: Managerial Decision Exercises
1. You are the general manager of a floral supplies distributor that provides independent florists with things that they need for their business, such as vases, ribbons, and balloons. You have read that many organizations use incentive pay plans that reward employees when the organization does well. You have 6 drivers, 12 warehouse workers, 3 inside salespeople, and an assistant that reports to you. What types of incentive plan would you propose for an organization like yours?
2. You are the HR manager at a midsized auto parts manufacturer. What are the pros and cons of establishing a 360-degree performance appraisal system in your organizations? Write a memo to the CEO outlining what you think should be done.
8.11: Critical Thinking Case
HubSpot Focus on Flexible Benefits
What would your manager say to you if you came up with the idea of traveling with Justin Timberlake on tour for an entire year? This would not just be a work from home agreement but an actual out of office plan for one full-year sabbatical. That is exactly what happened at HubSpot when Rosalia Cefalu had a crazy idea that actually got approved.
HubSpot, a global inbound marketing company, has approximately 19,000 customers in over 90 countries and 1,960 employees, stretching from Cambridge, MA, to Sydney, Australia.
“We don’t think that culture is about free beer and ping-pong and dogs in the office, it’s about what you believe, why you do what you do, and who you choose to work with,” states CTO and cofounder Dharmesh Shah. Although HubSpot has plenty of free snacks on hand for their employees to enjoy, other flexible benefits HubSpotters enjoy are unlimited vacation time, tuition reimbursement, flexible hours, and an overall environment that balances freedom with accountability.
At HubSpot it goes deeper than just the perks. The focus from the top down instills pride and passion within its employees, which then translates into happy customers.
Although flexible benefits are a big perk of working at the third-best tech company to work for, according to Glassdoor’s annual Employee Choice awards, the culture isn’t for everyone. The company practices a sense of understanding, knowing that employees will move on and do not need to stay to be loyal and that sometimes someone is no longer needed—either because of performance, or changes in the company’s needs. This isn’t taken personally, and HubSpot is able to grow and continue to grow because it objectively sees the performance of its employees and what is best for the company and employee.
Questions:
1. How does HubSpot’s focus on culture affect employee performance?
2. What concerns would you have regarding giving employees countless flexible benefits such as HubSpot does; for example, a yearly sabbatical?
Sources: S. Leibowitz. “What it's like to work at HubSpot, one of the best workplaces of 2018.” Business Insider, January 21, 2018, https://www.businessinsider.com/hubs...-states-2018-1; K. M. Newman. “Inside the Company Culture of Hubspot.” Tech.co, April 5, 2013, tech.co/company-culture-of- hubspot-2013-04; InHerSight. “Company Profile: Hubspot.” The Motley Fool, October 5, 2016, https://www.fool.com/investing/2016/...t-hubspot.aspx. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/08%3A_Performance_Appraisal_and_Rewards/8.08%3A_Chapter_Review_Questions.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. How do you manage group and intergroup processes effectively?
2. How do group norms, roles, and status systems affect employee behavior and performance?
3. How do managers develop group cohesiveness, which facilitates organizational goal attainment?
4. What are barriers to intergroup cooperation, and how do you take action to minimize such impediments
and understand how to get the most out of the collective actions of groups in organizations in order to enhance industrial competitiveness?
09: Group and Intergroup Relations
1. How do you manage group and intergroup processes effectively?
Available research on group dynamics demonstrates rather conclusively that individual behavior is highly influenced by coworkers in a work group. For instance, we see many examples of individuals who, when working in groups, intentionally set limits on their own incomes so they earn no more than the other group members. We see other situations where individuals choose to remain in an undesirable job because of their friends in the plant, even though preferable jobs are available elsewhere. In summarizing much research on the topic, Hackman and Morris concluded the following:
There is substantial agreement among researchers and observers of small task groups that something important happens in group interaction which can affect performance outcomes. There is little agreement about just what that “something” is—whether it is more likely to enhance or depress group effectiveness, and how it can be monitored, analyzed, and altered.1
In order to gain a clearer understanding of this “something,” we must first consider in detail what we mean by a group, how groups are formed, and how various groups differ.
What is a Group?
The literature of group dynamics is a very rich field of study and includes many definitions of work groups. For example, we might conceive of a group in terms of perceptions; that is, if individuals see themselves as a group, then a group exists. Or, we can view a group in structural terms. For instance, McDavid and Harari define a group as “an organized system of two or more individuals who are interrelated so that the system performs some function, has a standard set of role relationships among its members, and has a set of norms that regulate the function of the group and each of its members.”2 Groups can also be defined in motivational terms as “a collection of individuals whose existence as a collection is rewarding to the individuals.”3 Finally, a group can be viewed with regard to interpersonal interactions—the degree to which members communicate and interact with one another over time.4
By integrating these various approaches to defining groups, we may conclude for our purpose here that a group is a collection of individuals who share a common set of norms, generally have differentiated roles among themselves, and interact with one another toward the joint pursuit of common goals. (The definitions of roles and norms is provided later in this chapter.) This definition assumes a dynamic perspective and leads us to focus on two major aspects of groups: group structure and group processes. Group structure is the topic of this chapter, and group processes will be discussed in later chapters.
Types of Groups
There are two primary types of groups: formal and informal. Moreover, within these two types, groups can be further differentiated on the basis of their relative degree of permanence. The resulting four types are shown in Table 9.1.
Formal Groups. Formal groups are work units that are prescribed by the organization. Examples of formal groups include sections of departments (such as the accounts receivable section of the accounting department), committees, or special project task forces. These groups are set up by management on either a temporary or permanent basis to accomplish prescribed tasks. When the group is permanent, it is usually called a command group or functional group. An example would be the sales department in a company. When the group is less permanent, it is usually referred to as a task group. An example here would be a corporate- sponsored task force on improving affirmative action efforts. In both cases, the groups are formal in that they are both officially established by the company to carry out some aspect of the business.
Informal Groups. In addition to formal groups, all organizations have a myriad of informal groups. These groups evolve naturally out of individual and collective self-interest among the members of an organization and are not the result of deliberate organizational design. People join informal groups because of common interests, social needs, or simply friendship. Informal groups typically develop their own norms and roles and establish unwritten rules for their members. Studies in social psychology have clearly documented the important role of these informal groups in facilitating (or inhibiting) performance and organizational effectiveness. Again, on the basis of their relative degree of permanence, informal groups can be divided into friendship groups (people you like to be around) and interest groups (e.g., a network of working women or minority managers). Friendship groups tend to be long-lasting, whereas interest groups often dissolve as people’s interests change.
One of the more interesting aspects of group processes in organizations is the interaction between informal and formal groups. Both groups establish norms and roles and goals and objectives, and both demand loyalty from their members. When an individual is a member of many groups—both formal and informal—a wide array of potentially conflicting situations emerges that has an impact upon behavior in organizations. We will focus on this interplay throughout the next few chapters.
Reasons for Joining Groups
People join groups for many reasons. Often, joining a group serves several purposes at once. In general, at least six reasons can be identified for joining groups:
1. Security. Most people have a basic need for protection from external threats, real or imagined. These threats include the possibility of being fired or intimidated by the boss, the possibility of being embarrassed in a new situation, or simply the anxiety of being alone. Groups can be a primary source of security against such threats. We have often heard that there is “safety in numbers.”
2. Social Needs. In addition, as discussed in previous chapters, basic theories of personality and motivation emphasize that most individuals have relatively strong social needs. They need to interact with other people and develop meaningful relationships. People are clearly social creatures. Groups provide structured environments in which individuals can pursue friendships.
3. Self-Esteem. Similarly, membership in groups can assist individuals in developing self-esteem. People often take pride in being associated with prestigious groups; note such examples as professors elected to membership in the National Academy of Sciences or salespeople who qualify for a million dollar club as a reward for sales performance.
4. Economic Self-Interest. People often associate with groups to pursue their own economic self-interest. Labor unions are a prime example of this phenomenon, as are various professional and accrediting agencies, such as the American Bar Association. These organizations often attempt to limit the supply of tradespeople or professionals in order to maintain employment and salaries.
5. Mutual Interest. Some groups are formed to pursue goals that are of mutual interest to group members. Included here are bridge clubs, company-sponsored baseball teams, and literary clubs. By joining together, individuals can pursue group goals that are typically not feasible alone.
6. Physical Proximity. Finally, many groups form simply because people are located in close physical proximity to one another. In fact, office architecture and layout can have considerable influence over the development of social networks and groups. Consider, for example, two floors in the same building. On the first floor, all the managers have private offices arranged in a long row, with their assistants arranged in a similar row in front of them. This horizontal pattern of offices does not allow for frequent interaction between either the managers or the secretaries, and as a result group formation may be slowed. On the second floor, however, suppose all the managers’ offices are arranged in a cluster surrounding a similar cluster of assistants. The result would be more frequent social interaction among employees. This is not to say that one arrangement is superior to the other; rather, it is simply to point out how variations in office arrangements can have an impact on group formation.
Stages in Group Development
Before we begin a comprehensive examination of the structure of groups, consider briefly the stages of group development. How do groups grow and develop over time? Tuckman has proposed one model of group development that consists of four stages through which groups generally proceed.5 These four stages are referred to by the deceptively simple titles forming, storming, norming, and performing (see Exhibit 9.2).
1. Forming. In the first stage of development, when group members first come together, emphasis is usually placed on making acquaintances, sharing information, testing one another, and so forth. This stage is referred to as forming. Group members attempt to discover which interpersonal behaviors are acceptable or unacceptable in the group. In this process of sensing out the environment, a new member is heavily dependent upon others for providing cues to acceptable behavior.
2. Storming. In the second stage of group development, a high degree of intergroup conflict (storming) can usually be expected as group members attempt to develop a place for themselves and to influence the development of group norms and roles. Issues are discussed more openly, and efforts are made to clarify group goals.
3. Norming. Over time, the group begins to develop a sense of oneness. Here, group norms emerge (norming) to guide individual behavior. Group members come to accept fellow members and develop a unity of purpose that binds them.
4. Performing. Once group members agree on basic purposes, they set about developing separate roles for the various members. In this final stage, role differentiation emerges to take advantage of task specialization in order to facilitate goal attainment. The group focuses its attention on the task (performing). As we consider this simple model, it should be emphasized that Tuckman does not claim that all groups proceed through this sequence of stages. Rather, this model provides a generalized conceptual scheme to help us understand the processes by which groups form and develop over time.
concept check
• What are the reasons for joining a group?
• What are the development stages groups often go through?
• At the storming stage, what differences might you expect between groups formed for economic self-interest and groups formed for mutual self-interest? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/09%3A_Group_and_Intergroup_Relations/9.01%3A_Work_Groups_-_Basic_Considerations.txt |
2. How do group norms, roles, and status systems affect employee behavior and performance?
Work group structure can be characterized in many different ways. We examine several characteristics that are useful in describing and understanding what makes one group different from another. This matrix of variables will, when taken together, paint a portrait of work groups in terms of relatively enduring group properties. The aspects of group structure to be considered are (1) work roles, (2) work group size, (3) work group norms, (4) status relationships, and (5) work group cohesiveness. Each of these factors has been shown to influence group processes, as shown in Exhibit 9.3. Thus, the material presented here will be important when we focus on group processes later in the text.
Work Roles
In order to accomplish its goals and maintain its norms, a group must differentiate the work activities of its members. One or more members assume leadership positions, others carry out the major work of the group, and still others serve in support roles. This specialization of activities is commonly referred to as role differentiation. More specifically, a work role is an expected behavior pattern assigned or attributed to a particular position in the organization. It defines individual responsibilities on behalf of the group.
It has been suggested that within organizational settings, work roles can be divided into three types on the basis of the nature of the activities that encompass the role.6 These are:
1. Task-oriented roles. These roles focus on task-related activities aimed at achieving group performance goals.
2. Relations-oriented roles. These roles emphasize the further development of the group, including building group cohesiveness and consensus, preserving group harmony, looking after group member welfare, and so forth.
3. Self-oriented roles. These roles emphasize the specific needs and goals of individual members, often at the expense of the group.
As we might expect, individual group members often perform several of these roles simultaneously. A group leader, for example, must focus group attention on task performance while at the same time preserving group harmony and cohesiveness. To see how this works, consider your own experience. You may be able to recognize the roles you have played in groups you have been a member of. In your experience, have you played multiple roles or single roles?
Perhaps the best way to understand the nature of work roles is to examine a role episode. A role episode is an attempt to explain how a particular role is learned and acted upon. As can be seen in Exhibit 9.4, a role episode begins with members’ expectations about what one person should be doing in a particular position (Stage 1). These expectations are then communicated to the individual (Stage 2), causing the individual to perceive the expectations about the expected role (Stage 3). Finally, the individual decides to act upon the role in terms of actual role-related behavior (Stage 4). In other words, Stages 1 and 2 deal with the expected role, whereas Stage 3 focuses on the perceived role and Stage 4 focuses on the enacted role.
Consider the following simple example. A group may determine that its newest member is responsible for getting coffee for group members during breaks (Stage 1). This role is then explained to the incoming member (Stage 2), who becomes aware of his or her expected role (Stage 3). On the basis of these perceptions (and probably reinforced by group norms), the individual then would probably carry out the assigned behavior (Stage 4).
Several aspects of this model of a role episode should be noted. First, Stages 1 and 2 are initiated by the group and directed at the individual. Stages 3 and 4, on the other hand, represent thoughts and actions of the individual receiving the stimuli. In addition, Stages 1 and 3 represent cognitive and perceptual evaluations, whereas Stages 2 and 4 represent actual behaviors. The sum total of all the roles assigned to one individual is called the role set.
Although the role episode presented here seems straightforward, in reality we know that it is far more complicated. For instance, individuals typically receive multiple and sometimes conflicting messages from various groups, all attempting to assign them a particular role. This can easily lead to role conflict. Messages sent to an individual may sometimes be unclear, leading to role ambiguity. Finally, individuals may simply receive too many role-related messages, contributing to role overload. Discussion of these topics is reserved for later study, where examination of several important aspects of psychological adjustment to work.
Work Group Size
Obviously, work groups can be found in various sizes. Early management theorists spent considerable time and effort to no avail attempting to identify the right size for the various types of work groups. There is simply no right number of people for most group activities. They did, however, discover a great deal about what happens as group size increases.7 A number of relevant size outcome relationships are summarized in Table 9.2.
Group Interaction Patterns. First, we will consider the effects of variations in group size on group interaction patterns. A series of classic studies by Bales and Borgatta examined this issue using a technique known as interaction process analysis.8 This technique records who says what to whom; through using it, Bales and his colleagues found that smaller groups (2–4 persons) typically exhibited greater tension, agreement, and opinion seeking, whereas larger groups (13–16 persons) showed more tension release and giving of suggestions and information. This suggests that harmony is crucial in smaller groups and that people in them have more time to develop their thoughts and opinions. On the other hand, individuals in larger groups must be more direct because of the increased competition for attention.
Job Attitudes. Increases in workgroup size are fairly consistently found to be inversely related to satisfaction, although the relationship is not overly strong.9 That is, people working in smaller work units or departments report higher levels of satisfaction than those in larger units. This finding is not surprising in view of the greater attention one receives in smaller groups and the greater importance group members typically experience in such things as their role set.
Absenteeism and Turnover. Available research indicates that increases in work group size and absenteeism are moderately related among blue-collar workers, although no such relationship exists for white-collar workers.10 One explanation for these findings is that increased work group size leads to lower group cohesiveness, higher task specialization, and poorer communication. As a result, it becomes more difficult to satisfy higher-order needs on the job, and job attendance becomes less appealing. This explanation may be more relevant in the case of blue-collar workers, who typically have little job autonomy and control. White-collar workers typically have more avenues available to them for need satisfaction. Similar findings exist for employee turnover. Turnover rates are higher in larger groups.11 It again can be hypothesized that because larger groups make need satisfaction more difficult, there is less reason for individuals to remain with the organization.
Productivity. No clear relationship has been found between group size and productivity.12 There is probably a good reason for this. Unless we take into consideration the type of task that is being performed, we really cannot expect a clear or direct relationship. Mitchell explains it as follows:
Think of a task where each new member adds a new independent amount of productivity (certain piece-rate jobs might fit here). If we add more people, we will add more productivity. . . . On the other hand, there are tasks where everyone works together and pools their resources. With each new person the added increment of new skills or knowledge decreases. After a while increases in size will fail to add much to the group except coordination and motivation problems. Large groups will perform less well than small groups. The relationship between group size and productivity will therefore depend on the type of task that needs to be done.13
However, when we look at productivity and group size, it is important to recognize the existence of a unique factor called social loafing,14 a tendency for individual group members to reduce their effort on a group task. This phenomenon occurs when (1) people see their task as being unimportant or simple, (2) group members think their individual output is not identifiable, and (3) group members expect their fellow workers to loaf. Social loafing is more prevalent in larger groups than in smaller groups, presumably because the above three factors are accentuated. From a managerial standpoint, this problem can be reduced by providing workers with greater responsibility for task accomplishment and more challenging assignments. This issue is addressed in the following chapter on job design.
Work Group Norms
The concept of work group norms represents a complex topic with a history of social psychological research dating back several decades. In this section, we will highlight several of the essential aspects of norms and how they relate to people at work. We will consider the characteristics and functions of work group norms as well as conformity with and deviance from them.
Characteristics of Work Group Norms. A work group norm may be defined as a standard that is shared by group members and regulates member behavior within an organization. An example can be seen in a typical classroom situation when students develop a norm against speaking up in class too often. It is believed that students who are highly visible improve their grades at the expense of others. Hence, a norm is created that attempts to govern acceptable classroom behavior. We see similar examples in the workplace. There may be a norm against producing too much or too little, against getting too close to the supervisor, against being late for work, and so forth.
Work group norms may be characterized by at least five factors:15
1. Norms summarize and simplify group influence processes. They denote the processes by which groups regulate and regularize member behavior.
2. Norms apply only to behavior, not to private thoughts and feelings. Although norms may be based on thoughts and feelings, they cannot govern them. That is, private acceptance of group norms is unnecessary—only public compliance is needed.
3. Norms are generally developed only for behaviors that are viewed as important by most group members.
4. Norms usually develop gradually, but the process can be quickened if members wish. Norms usually are developed by group members as the need arises, such as when a situation occurs that requires new ground rules for members in order to protect group integrity.
5. All norms do not apply to all members. Some norms, for example, apply only to young initiates (such as getting the coffee), whereas others are based on seniority, sex, race, or economic class.
Functions of Work Group Norms. Most all groups have norms, although some may be more extensive than others. To see this, examine the norms that exist in the various groups to which you belong. Which groups have more fully developed norms? Why? What functions do these norms serve? Several efforts have been made to answer this question. In general, work group norms serve four functions in organizational settings:16
1. Norms facilitate group survival. When a group is under threat, norms provide a basis for ensuring goal- directed behavior and rejecting deviant behavior that is not purposeful to the group. This is essentially a “circle the wagons” phenomenon.
2. Norms simplify expected behaviors. Norms tell group members what is expected of them—what is acceptable and unacceptable—and allow members to anticipate the behaviors of their fellow group members and to anticipate the positive or negative consequences of their own behavior.
3. Norms help avoid embarrassing situations. By identifying acceptable and unacceptable behaviors, norms tell group members when a behavior or topic is damaging to another member. For example, a norm against swearing signals group members that such action would be hurtful to someone in the group and should be avoided.
4. Norms help identify the group and express its central values to others. Norms concerning clothes, language, mannerisms, and so forth help tell others who belongs to the group and, in some cases, what the group stands for. Norms often serve as rallying points for group members.
Conformity and Deviance. Managers often wonder why employees comply with the norms and dictates of their work group even when they seemingly work against their best interests. This concern is particularly strong when workers intentionally withhold productivity that could lead to higher incomes. The answer to this question lies in the concept of conformity to group norms. Situations arise when the individual is swept along by the group and acts in ways that he would prefer not to.
To see how this works, consider the results of a classic study of individual conformity to group pressures that was carried out by Solomon Asch.17 Asch conducted a laboratory experiment in which a native subject was placed in a room with several confederates. Each person in the room was asked to match the length of a given line (X) with that of one of three unequal lines (A, B, and C). This is shown in Exhibit 9.5. Confederates, who spoke first, were all instructed prior to the experiment to identify line C as the line most like X, even though A was clearly the answer. The results were startling. In over one-third of the trials in the experiment, the naive subject denied the evidence of his own senses and agreed with the answers given by the unknown confederates. In other words, when confronted by a unanimous answer from others in the group, a large percentage of individuals chose to go along with the group rather than express a conflicting opinion, even though these individuals were confident their own answers were correct.
What causes such conformity to group norms? And, under what conditions will an individual deviate from these norms? Conformity to group norms is believed to be caused by at least three factors.18 First, personality plays a major role. For instance, negative correlations have been found between conformity and intelligence, tolerance, and ego strength, whereas authoritarianism was found to be positively related. Essentially, people who have a strong self-identity are more likely to stick to their own norms and deviate from those of the group when a conflict between the two exists. Second, the initial stimulus that evokes responses can influence conformity. The more ambiguous the stimulus (e.g., a new and confusing order from top management), the greater the propensity to conform to group norms (“I’m not sure what the new order from management really means, so I’ll just go along with what others think it means”). In this sense, conformity provides a sense of protection and security in a new and perhaps threatening situation. Finally, group characteristics themselves can influence conformity to group norms. Factors such as the extent of pressure exerted on group members to conform, the extent to which a member identifies with the group, and the extent to which the group has been successful in achieving previous goals can influence conformity.
What happens when someone deviates from group norms? Research indicates that groups often respond by increasing the amount of communication directed toward the deviant member.19 This communication is aimed at bringing the deviant into the acceptable bounds set by the group. A good example of this process can be seen in Janis’s classic study of the group processes leading up to the abortive Bay of Pigs invasion in Cuba.20 At one meeting, Arthur Schlesinger, an adviser to President Kennedy, expressed opposition to the plan even though no one else expressed similar doubts. After listening to his opposition for a while, Robert Kennedy took Schlesinger aside and said, “You may be right or you may be wrong, but the President has his mind made up. Don’t push it any further. Now is the time for everyone to help him all they can.” Janis elaborated on this group decision-making process and termed it “groupthink.”
When a deviant member refuses to heed the message and persists in breaking group norms, group members often respond by rejecting or isolating the deviant. They tell the deviant, in essence, that they will no longer tolerate such behavior and prefer to reconstitute the group. If the deviant is not expelled, the group must continually confront behavior that conflicts with what it holds to be true. Rather than question or reexamine its beliefs, the group finds it simpler—and safer—to rid itself of dangerous influences.
Status Systems
A fourth characteristic, or structural property, of work groups is the status system. Status systems serve to differentiate individuals on the basis of some criterion or set of criteria. There are five general bases on which status differentiations are made: birth, personal characteristics, achievement, possessions, and formal authority. All five bases can be seen as establishing status in work groups. For example, an employee may achieve high status because he is the boss’s son (birth), the brightest or strongest member of the group (personal characteristics), the best performer (achievement), the richest or highest paid (possessions), or the foreman or supervisor (formal authority).
Reasons for Status Systems. Status systems can be seen throughout most organizations. We differentiate between blue-collar and white-collar employees (and even pink and gold collar), skilled tradespersons and unskilled workers, senior and junior managers, high achievers and low achievers, and popular and unpopular employees. Why do we do this? In essence, status differentiation in organizations (and their related status symbols) serves four purposes:21
Motivation. We ascribe status to persons as rewards or incentives for performance and achievement. If high achievement is recognized as positive behavior by an organization, individuals are more willing to exert effort.
Identification. Status and status symbols provide useful cues to acceptable behavior in new situations. In the military, for example, badges of rank quickly tell members who has authority and who is to be obeyed. Similarly, in business, titles serve the same purpose.
Dignification. People are often ascribed status as a means of signifying respect that is due them. A clergyman’s attire, for instance, identifies a representative of the church.
Stabilization. Finally, status systems and symbols facilitate stabilization in an otherwise turbulent environment by providing a force for continuity. Authority patterns, role relationships, and interpersonal interactions are all affected and, indeed, defined by the status system in effect. As a result, much ambiguity in the work situation is reduced.
Status can be conferred on an individual in many different ways. One way common in organizations is through the assignment and decoration of offices. John Dean, counsel to former President Nixon, provides the following account concerning status in the White House:
Everyone [on the White House Staff] jockeyed for a position close to the President’s ear, and even an unseasoned observer could sense minute changes in status. Success and failure could be seen in the size, decor, and location of offices. Anyone who moved into a smaller office was on the way down. If a carpenter, cabinetmaker, or wallpaper hanger was busy in someone’s office, this was the sure sign he was on the rise. Every day, workmen crawled over the White House complex like ants. Movers busied themselves with the continuous shuffling of furniture from one office to another as people moved in, up, down, or out. We learned to read office changes as an index of the internal bureaucratic power struggles. The expense was irrelevant to Haldeman. . . . He once retorted when we discussed whether we should reveal such expense, “This place is a national monument, and I can’t help it if the last three Presidents let it go to hell.” Actually, the costs had less to do with the fitness of the White House than with the need of its occupants to see tangible evidence of their prestige.22
Modern businesses looking to attract top talent do not have office spaces that have a group of workers siloed in their own walled-off offices with doors 20 years old.23
One Orlando business, for instance, spent about \$330,000 on the design and build-out of its space.
Status Incongruence. An interesting aspect of status systems in organizations is the notion of status incongruence. This situation exists when a person is high on certain valued dimensions but low on others, or when a person’s characteristics seem inappropriate for a particular job. Examples of status incongruence include the college student who takes a janitorial job during the summer (usually referred to as the “college kid” by the other janitors), the president’s son who works his way up through the organizational hierarchy (at an accelerated rate, needless to say), or the young fast-track manager who is promoted to a level typically held by older employees.
Status incongruence presents problems for everyone involved. The individual may become the target of hostility and jealousy from coworkers who feel the individual has risen above his station. The coworkers, on the other hand, may be forced to acknowledge their own lack of success or achievement. One might ask, for example, “Why has this youngster been promoted over me when I have more seniority?” At least two remedies for this conflict are available to managers. An organization can (1) select or promote only those individuals whose characteristics are congruent with the job and work group, and (2) attempt to change the values of the group. Neither of these possibilities seems realistic or fair. Hence, dynamic organizations that truly reward high achievement (instead of seniority) must accept some level of conflict resulting from status incongruence.
expanding around the globe
Status Systems in Japanese Business
In Japan, etiquette is not simply a prescription for appropriate social responses, it is a complete guide to conducting oneself in all social interactions. At the root of this system of social interaction is one’s status within the organization and society.
The effects of status in Japan can be seen in many ways. For example, when two businesspeople meet for the first time, they exchange business cards—before they even say hello to each other. After carefully reading the cards, each knows precisely the other’s rank (and status) in the organizational hierarchy and, thus, how to respond. The person with the lower status must bow lower than the person with the higher status.
Moreover, when four managers get into a car, status determines where each will sit. This is shown in Exhibit 9.6, where it can be seen that the most important (highest-status) manager will sit in the back seat, directly behind the driver. Similarly, when four managers enter an elevator, the least senior stands in front of the elevator controls, with the most senior behind. In a meeting room or in a restaurant, the most honored seat is farthest from the door, whereas the least honored is nearest the door. Even within the meeting room itself, a sofa is considered higher in rank than armchairs.
Clearly, status plays an important role in Japanese (and several other East Asian) societies. Status recognizes age (an important cultural variable in these societies) and tells everyone involved how to behave. Though such prescriptive practices may seem strange to many Westerners, it is quite natural in Japan. In fact, many Japanese feel such guidelines are helpful and convenient in defining social relationships, avoiding awkward situations, and making business transactions more comfortable and productive. Whether or not this perception is accurate, status systems are a fact of life that must be recognized by Western managers attempting to do business in Asia. Failure to understand such social patterns puts the Western manager at a distinct disadvantage.
Sources: Allison, “Useful Japanese Business Manners to Impress a Client or Guest,” Fast Japan, October 21, 2016; M. Yazinuma and R. Kennedy, “Life Is So Simple When You Know Your Place,” Intersect, May 1986, pp. 35–39.
Group Cohesiveness
A fifth characteristic of work groups is group cohesiveness. We have all come in contact with groups whose members feel a high degree of camaraderie, group spirit, and unity. In these groups, individuals seem to be concerned about the welfare of other group members as well as that of the group as a whole. There is a feeling of “us against them” that creates a closeness among them. This phenomenon is called group cohesiveness. More specifically, group cohesiveness may be defined as the extent to which individual members of a group are motivated to remain in the group. According to Shaw, “Members of highly cohesive groups are more energetic in group activities, they are less likely to be absent from group meetings, they are happy when the group succeeds and sad when it fails, etc., whereas members of less cohesive groups are less concerned about the group’s activities.”24
We shall consider two primary aspects of work group cohesiveness. First, we look at major causes of cohesiveness. Following this, we examine its consequences. Determinants of Group Cohesiveness. Why do some work groups develop a high degree of group cohesiveness while others do not? To answer this question, we have to examine both the composition of the group and several situational variables that play a role in determining the extent of cohesiveness. The major factors that influence group cohesiveness are shown in Exhibit 9.7.25 These include the following:
• Group homogeneity. The more homogeneous the group—that is, the more members share similar characteristics and backgrounds—the greater the cohesiveness.
• Group maturity. Groups tend to become more cohesive simply as a result of the passage of time. Continued interaction over long periods of time helps members develop a closeness born of shared experiences.
• Group size. Smaller groups have an easier time developing cohesiveness, possibly because of the less complex interpersonal interaction patterns.
• Frequency of interaction. Groups that have greater opportunities to interact on a regular or frequent basis tend to become more cohesive than groups that meet less frequently or whose members are more isolated.
• Clear group goals. Groups that know exactly what they are trying to accomplish develop greater cohesiveness, in part because of a shared sense of mission and the absence of conflict over mission.
• Competition or external threat. When groups sense external threat or hostility, they tend to band together more closely. There is, indeed, “safety in numbers.”
• Success. Group success on a previous task often facilitates increased cohesiveness and a sense of “we did it together.”
In other words, a wide variety of factors can influence work group cohesiveness. The precise manner in which these processes occur is not known. Even so, managers must recognize the existence of certain forces of group cohesiveness if they are to understand the nature of group dynamics in organizations. The second aspect of group cohesiveness that must be understood by managers relates to their consequences.
Consequences of Group Cohesiveness. As shown in Exhibit 9.7, several consequences of group cohesiveness can also be identified. The first and most obvious consequence is maintenance of membership. If the attractiveness of the group is sufficiently stronger than the attractiveness of alternative groups, then we would expect the individual to remain in the group. Hence, turnover rates should be low.
In addition, high group cohesiveness typically provides the group with considerable power over group members. The power of a group over members depends upon the level of outcomes members expect to receive from the group compared to what they could receive through alternate means. When the group is seen as being highly instrumental to achieving personal goals, individuals will typically submit to the will of the group.
Third, members of highly cohesive groups tend to exhibit greater participation and loyalty. Several studies have shown that as cohesiveness increases, there is more frequent communication among members, a greater degree of participation in group activities, and less absenteeism. Moreover, members of highly cohesive groups tend to be more cooperative and friendly and generally behave in ways designed to promote integration among members.
Fourth, members of highly cohesive groups generally report high levels of satisfaction. In fact, the concept of group cohesiveness almost demands all this be the case, because it is unlikely that members will feel like remaining with a group with which they are dissatisfied.
Finally, what is the effect of group cohesiveness on productivity? No clear relationship exists here. Instead, research shows that the extent to which cohesiveness and productivity are related is moderated by the extent to which group members accept organizational goals. This is shown in Exhibit 9.8. Specifically, when cohesiveness and acceptance of organizational goals are high, performance will probably be high. When acceptance is high but cohesiveness is low, group performance will typically be moderate. Finally, performance will generally be low when goal acceptance is low regardless of the extent of group cohesiveness. In other words, high performance is most likely to result when highly cohesive teams accept the goals of the organization. At this time, both forces for performance are congruent.
managing change
Group Cohesiveness
In the fast-moving innovative car industry, it is always important to be thinking about improving and staying ahead of the competition. For Ford and Chevrolet however, they have such popular vehicles—the F-150 and the hybrid Volt, respectively—that finding ways to improve them without taking away the qualities that make them popular is key.
With the F-150, Ford had one of the best-selling vehicles for more than 30 years, but improving upon their most popular vehicle came with its challenges. In 2015, the team wanted to introduce an economically six-cylinder EcoBoost engine, and an all-aluminum body. The team was worried about the marketplace and hoped that the customers would accept the change to their beloved truck.
The planning started 18 months before, working in parallel work teams on various parts of the project. Each team was responsible for a piece of the overall project, and they frequently came together to make sure that they were working cohesively to create a viable vehicle. The most successful piece of the dynamic for Ford was teams’ ability to share feedback. Pete Reyes expresses the teamwork mentality: “Everybody crosses boundaries, and they came back with all of the feedback that shaped what we are going to do.”
Having team cohesiveness was ultimately what brought Ford to the finish line. With over 1,000 members of the overall team, employees were able to accomplish a truly viable vehicle that weighed 700 pounds less, as well as countless other innovations that gave the truck 29 percent more fuel economy.
“We stuck to common goals . . . I don’t think I’ll ever work on a team that tight again,” stated Reyes about his team of developmental managers. As a result of their close teamwork, Ford announced third- quarter earnings of 1.9 billion, an increase of 1.1 billion from 2014.
Questions:
1. What challenges does a large project like Ford’s F-150 project have to take into account for success?
2. What kind of work teams did Ford employ throughout its project to get the best results?
3. Can Ford’s successes be translated into other smaller teams? How would you apply its best practices to a work environment of your own?
Sources: J. Motivalli, “ 5 Inspiring Companies That Rely on Teamwork to Be Successful,” Success, February 16, 2016, https://www.success.com/5-inspiring-...be-successful/; “All-New 2015 F-150 Most Patented Truck in Ford History – New Innovations Bolster Next-Generation Light- Duty Pickup,” Ford Media Center, May 23, 2014, media.ford.com/content/fordmedia/fna/us/en/ news/2014/05/23/all-new-2015-f-150-most-patented-truck-in-ford-history--new-inno.html; P. Friedman, “Body of Work,” Ford Corporate Website, accessed, December 13, 2018, corporate.ford.com/ innovation/f-150-body-of-work.html.
concept check
• Explain what work roles are.
• What role does group size play in the interactions of group members?
• What are group norms and what role do they play toward group cohesiveness? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/09%3A_Group_and_Intergroup_Relations/9.02%3A_Work_Group_Structure.txt |
3. How do managers develop group cohesiveness, which facilitates organizational goal attainment?
We have examined in detail the nature and structure of work groups, noting that work groups differ along such dimensions as size, norms, and roles. Some groups are more cohesive than others. In view of these differences, it is interesting to ask how managers can facilitate increased work group effectiveness. To answer this question, we will make use of Hackman’s model of group effectiveness.26 According to this model, illustrated in Exhibit 9.9, the effectiveness of a work group is influenced by environmental factors, design factors, and task-related interpersonal processes. These three factors combine to influence what are called intermediate criteria, which, in turn, combine with the nature of the work technology to determine ultimate group effectiveness.
What is Work Group Effectiveness?
The first question to raise concerning work group effectiveness is what we mean by the concept itself. According to Hackman’s model, effectiveness is defined in terms of three criteria:
1. Productive output. The productive output of the group must meet or exceed the quantitative and qualitative standards defined by the organization.
2. Personal need satisfaction. Groups are effective if membership facilitates employee need satisfaction.
3. Capacity for future cooperation. Effective groups employ social processes that maintain or enhance the capacity of their members to work together on subsequent tasks. Destructive social processes are avoided so members can develop long-term cohesiveness and effectiveness.
Determinants of Work-Group Effectiveness
Group effectiveness is largely determined by three factors that have been called intermediate criteria. These factors are as follows:
1. Group effort. The amount of effort group members exert toward task accomplishment.
2. Group knowledge and skill. The amount of knowledge and skills possessed by group members that are available for group effort and performance.
3. Task performance strategies. The extent to which the group’s strategies for task performance (that is, how it analyzes and attempts to solve problems) are appropriate.
Although the relative importance of each of these three intermediate factors may vary, all three are important. Without considerable group effort, appropriate skills and knowledge, and a clear strategy for task completion, groups are unlikely to be effective.
An important influence on the relative importance of these three variables is the nature of work technology. This includes the equipment and materials used in manufacture, the prescribed work procedures, and the physical layout of the work site. For example, if jobs are highly routinized, individual skills and knowledge may be somewhat less important than simple effort. On more complex tasks, however, such as research and development, effort alone will be of little help without concomitant skills and knowledge. Hence, although the relative importance of these three variables may vary with the job technology, all should be considered in any effort to understand determinants of work group effectiveness in a particular situation.
Finally, it must be recognized that these determinants of effectiveness are themselves influenced by three sets of factors (shown at the left-hand side of Exhibit 9.9). First, we must recognize a series of environmental context factors, such as the company’s reward system, training programs, job descriptions, and so forth. Second are several design factors, including group structure, member composition, and performance norms. Finally, the role of interpersonal processes—such as efforts among group members and management to reduce conflict, foster commitment, and share knowledge—must be recognized. These three sets of factors, then, are largely responsible for determining the so-called intermediate criteria that, in turn, combine with appropriate job technologies to determine work group effectiveness.
Implications for Group Management
On the basis of this analysis of group processes in work organizations, we can identify several actions managers can take in order to help groups to be more effective.
Increased Managerial Awareness. To begin, managers can make themselves more aware of the nature of groups and the functions groups perform for individuals. By learning why individuals join groups, for example, managers should be able to better understand the motivational implications of group dynamics. Is high group cohesiveness in a particular group a result of high commitment to the organization and its goals, or is it a result of alienation from the organization?
Sensitivity to Group Norms. Managers can be sensitive to group norms and the extent to which they facilitate or inhibit group and organizational performance. The potency of group norms has been clearly established. It has also been shown that company actions can increase or decrease the likelihood that norms will work to the benefit of the organization. Much of the thrust of current organizational development efforts is to use process consultation techniques to develop group norms that are compatible with company goals.
Understanding Pressures for Conformity. Much has been said in the research literature about the effects of groups on individual conformity and deviance. Groups often place significant pressures on individuals to conform, and they punish deviants by such means as ostracism. From a managerial standpoint, conformity can represent a mixed blessing. On one hand, there are many work situations in which managers typically want workers to conform to standard operating procedures (this is called dependable role performance). On the other hand, employees must be sufficiently free to take advantage of what they believe to be unique or important opportunities on behalf of the organization (innovative and spontaneous behavior). If pressures toward conformity are too strong, this spontaneity may be lost, along with unique opportunities for the organization.
Harnessing Group Cohesiveness. Where it is desirable to develop highly cohesive groups, managers can show employees how group members can help one another by working together. It is important to note, however, that group cohesiveness by itself does not guarantee increased group effectiveness. Instead, managers must take the lead in showing group members why they benefit from working toward organizational goals. One way to accomplish this is through the reward systems used by the organization.
In short, there are several lessons for managers here concerning the effects of group dynamics on performance and effectiveness. The lesson is clear: managers must be sensitive to and deal with group processes in the workplace. Without doing so, the manager and the company are destined at best to achieve mediocre results.
concept Check
• Why must managers be sensitive to and deal with group processes in the workplace | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/09%3A_Group_and_Intergroup_Relations/9.03%3A_Managing_Effective_Work_Groups.txt |
4. What are barriers to intergroup cooperation, and how do you take action to minimize such impediments and understand how to get the most out of the collective actions of groups in organizations in order to enhance industrial competitiveness?
We are now ready to move on to an examination of intergroup behavior. That is, what happens when one group in an organization must interact with another? Clearly, in any corporation, a high degree of intergroup interaction is vital to organizational success. Even in small companies, the production group must interact with the sales group, and both must accommodate the finance and accounting groups. Without smooth intergroup relations, organizational effectiveness and industrial competitiveness are virtually impossible.
Determinants of Intergroup Performance
To understand how groups interact with one another, it is important to identify the primary variables that characterize intergroup behavior.27 We can do this by suggesting a model of intergroup performance. This model is outlined in Exhibit 9.10. As shown, intergroup behavior occurs when two groups intersect. Each group has its own characteristics and uniqueness, but both operate within the larger confines of organizational policies, culture, reward systems, and so forth. Within this context, performance is largely influenced by three types of interaction requirements: interdependence requirements, information flow requirements, and integration requirements. The quality of intergroup performance is affected by the extent to which all parties to the interaction can meet these requirements.
Interdependence Requirements. Interdependence requirements relate to the frequency and quality of interactions among groups; high-quality interaction is required for successful task accomplishment. To successfully achieve corporate objectives, organizations must achieve enough intergroup interaction to coordinate resource allocation and utilization. The amount of interaction required is determined by the extent and nature of the groups’ interdependence. Group interdependence takes three primary forms (see Exhibit 9.11):
1. Pooled interdependence. Pooled interdependence occurs when various groups are largely independent of one another, even though each contributes to and is supported by the larger organization. For example, although the physics and music departments may not interact frequently, both contribute to the larger goals of the university, and both use university resources. In a factory setting, pooled interdependence can be seen in a company with two distinct manufacturing divisions; e.g., one for consumer products and one for industrial products. Although produced separately, both kinds of products come together in the shipping department, and both represent products of the same company.
2. Sequential interdependence. Sequential interdependence exists when the outputs of one unit or group become the inputs for another. For example, the manufacturing department in a company is clearly dependent on the purchasing department for the success of its own operation, whereas the purchasing department is much less dependent on manufacturing.
3. Reciprocal interdependence. Reciprocal interdependence occurs when two or more groups depend on one another for inputs. For example, without product engineering, the marketing department would have nothing to sell. On the other hand, without consumer information from marketing, product engineering might not know what to manufacture. The two units are highly dependent on each other, thereby requiring a high degree of interaction.
In summary, the type of interdependence determines in large part the degree of interrelationship that develops among two or more groups. High interdependence typically requires high intergroup interaction, whereas low interdependence typically requires relatively low intergroup interaction.
Information Flow Requirements. The second requirement for successful intergroup performance is optimal information flow. To be successful, groups need the appropriate amount of information. Information flow is influenced to a large degree by the extent of task uncertainty. When groups are working on highly uncertain tasks (e.g., a new product, an experiment, or an old product in a new environment), the need for communication increases. When task uncertainty is low, less information is typically needed.
Task uncertainty, in turn, is influenced by two factors. The first, task clarity, is the extent to which the requirements and responsibilities of the group are clearly understood. The use of standard operating procedures in organizations is an example of a group requirement. The other consideration is task environment, those factors inside and outside the organization that can affect the group’s performance. The task environment has two aspects: the number of groups that must be dealt with and the relative stability of the environment. Obviously, the more groups that must interact and the more dynamic the environment, the greater the task uncertainty. In a dynamic environment, groups tend to expand their information-gathering efforts to detect and cope with environmental changes. Hence, the greater the task uncertainty, the greater the need for comprehensive information flow systems.
Integration Requirements. The final requirement for successful intergroup performance is integration. Integration requirements focus on the extent of collaboration, cooperation, or structural relationships among groups needed to ensure success. Typically, various departments within an organization have different goals and time orientations. A technical research department, for example, often sees its goals in scientific terms and has a long-term perspective. A marketing department in the same company, focusing its goals on market considerations on the other hand, would typically have a short-term orientation. The production department, concerned with technical goals, would probably attempt to maintain a moderate time orientation in order to take advantage of the economies of scale associated with longer production runs.
A successful organization finds ways to integrate groups so that they coordinate their efforts on behalf of corporate objectives. The trick is to achieve some commonly acceptable coordinating mechanism—not a state in which all units have the same goals and time orientations. It would prove disastrous, for example, if the research unit looked for short-term results or the marketing department ignored short-term shifts in the marketplace. Through integration, various units can accommodate one another’s needs while maintaining their individuality. In this way, the strengths of all groups are used in addressing organizational problems.
When we put these various requirements and their antecedents together, we can see why achieving intergroup coordination and performance is no easy task. Table 9.3 shows the defining characteristics of four typical units of an organization: research, development, sales, and manufacturing. The interdependence, task uncertainty, and time and goal orientation of each unit are shown. Consider the complexities managers face in attempting to lead such an organization efficiently and effectively. Indeed, business magazines are filled with examples of corporate failures that can be traced to poor coordination of such units. These examples point to an endless array of potential sources of conflict that can reduce the capacity of a company to compete successfully in an ever-changing environment.
Managing Intergroup Behavior and Performance
When we analyze the challenge of managing intergroup behavior and performance, the key issue facing managers is the issue of coordination. In most situations, various units or departments in the organization all have talent needed to ensure task accomplishment. Yet, each unit has its own culture, goals, norms, and so forth. Hence, the challenge for managers is harnessing and coordinating this talent in such a way that group harmony is maintained while organizational objectives are achieved.
There are several techniques for managing intergroup relations and performance. These techniques include using rules and procedures, member exchange, linking roles, task forces, and decoupling. Let us briefly consider each as it relates to intergroup coordination and performance.
Rules and Procedures. A common way to manage intergroup relations is for senior management to establish rules and procedures governing the interactions of two or more departments or units. For example, if units consistently fail to communicate with one another, which leads to poor coordination, the company may institute a new policy requiring all groups to post certain types of information at regular time intervals or to inform other department heads of proposed new activities or changes. By simply increasing communication flow, group coordination should increase.
Member Exchange. In some circumstances, it is desirable for the organization to temporarily transfer a member from one group to another. Such exchanges offer the employee an opportunity to better understand the problems and procedures of the other group. Upon returning to his original group, the employee can share information about the other group. In addition, the transferred employee often develops better interpersonal contacts with the other department, thereby enhancing communication and coordination. An example of this can be seen when a company transfers a production engineer into the quality assurance department. As a result, the employee sees firsthand the problems of the quality control group and can take the knowledge back to production engineering.
Linking Roles. A linking role is a position or unit within the organization that is charged with overseeing and coordinating the activities of two or more groups. A good example is a product manager who is responsible for coordinating manufacturing, sales, quality control, and product research for a certain product line (see Exhibit 9.12). In essence, these linking role positions are designed to enhance communication among the various functional units and ensure that the right products are designed, manufactured, and marketed. We will say more about the product manager’s role in Understanding and Managing Work Teams.
Task Forces. A task force serves much the same purpose as a linking role except that the role is temporary instead of permanent. In a task force, individuals from several units are brought together to solve a specific problem, usually in a short period of time. It is felt that each unit has expertise to contribute and that by coordinating these efforts, a better solution can be achieved. A typical task force arrangement can be seen in Exhibit 9.14. For instance, a company facing a major financial cutback may create a task force consisting of members from across the company to identify ways to resolve the crisis. Or a company may create a task force to consider a joint venture offer from a foreign company. In both cases, the problem is that immediate and diverse skills are required to reach an optimal solution.
Decoupling. Finally, there are situations in which two or more closely related groups simply don’t work together effectively. In such cases, decoupling may be the answer.28 Decoupling involves separating two groups—physically or administratively—in such a way that the required tasks of the organization are fulfilled while the interaction between the two groups is minimized. For instance, hardware and software engineers ideally should work closely together on the design of a new computing system. Yet sometimes these people see problems and solutions quite differently, which may lead to overt hostility and uncooperative behavior. One solution would be to separate the two groups physically and then have one group (e.g., the hardware engineers) outline product specifications. Software engineers then could work more on their own to design software to meet these specifications. Obviously, some coordination would be required. Even so, such an approach could retain the services of two valued groups of engineers who see problems quite differently— a wise compromise strategy for the high-tech company.
In essence, several strategies are available to assist managers in coordinating the diverse talents of interdependent groups in ways that help achieve organizational goals. The choice of an appropriate technique depends upon the unique situation facing the manager. One such approach to managing intergroup coordination was practiced at General Motors Company as it approached the design and manufacture of the Saturn.
expanding around the globe
Engagement on Global Work Teams: IBM
Since 2008, IBM has increased its focus on becoming a globally integrated enterprise. Employing over 200,000 people from different countries and backgrounds, there are major challenges that IBM faces when managing its work teams on such a large global scale.
One of those main components is time zone management. Instead of being highly rigorous in work hours and causing employees to be available on teams at all hours of the night or day, IBM decided they would implement a results-oriented work environment (ROWE). This strategy allows employees to work where they live on virtual teams and base their hours on their own schedules. ROWE allows employees to work at the hours that they feel naturally most productive.
Another key component to managing a global work team is clear communication. IBM structures its leadership of the work teams with leaders that consist of four or five senior executives from multiple geographies. They must work side by side to understand one another’s cultural differences, as well as provide input on their overall team objectives that enable business growth in that country. They are able to accommodate local differences, learn from one another’s differences, and come to common objectives because of their remote location differences for a better outcome. Additionally, these leaders are better equipped to understand local nuances because of their deeper understanding of the global and cultural nuances of their team members.
IBM continues to focus on growing “global IBMers” by offering opportunities for global leadership experiences as well as offering opportunities to acquire new skills. The company focuses on three key actions:
1. Grow locally and globally via a consistent methodology. Align business strategies with national priorities and societal goals, build local expertise, and expand market relevance.
2. Develop leadership. Provide more employees with opportunities to enhance their skills, and offer more varied global experiences early in careers.
3. Enable the global integrated enterprise (GIE) vision. Accelerate enterprise-wide collaboration and an organizational culture based on shared values.
These key actions are clearly communicated by IBM and are demonstrated by leadership to help engage employees behind the methods. Utilizing the best technology to improve collaboration can garner the most productivity and empower employees. If leadership is engaged, employees will also engage with their work and workplace, which helps drive team cohesiveness overall.
Questions:
1. What challenges does IBM face due to the size and global reach of its employee base?
2. Name at least three strategies that managers and leaders can employ to help keep employees engaged, even when working in remote work teams.
Sources: K. White, “Enabling Growth through Global Enablement Teams,” IBM Thought Leadership, accessed January 3, 2019, https://ibm.com/services/us/gbs/thou...l-leaders.html; “Enabling Growth through Global Enablement teams,” IBM Thought Leadership, accessed January 3, 2019, https://ibm.com/services/us/gbs/bus/...workforce.html; T. Neely, “Global Teams that Work,” Harvard Business Review, October 2015, hbr.org/2015/10/global-teams-that- work; D. DeRosa, “3 Companies With High-Performing Teams,” Onpoint Consulting, October 3, 2017, www.onpointconsultingllc.com...-virtual-teams.
concept check
• Are well-functioning teams or groups in complex tasks more productive and leave workers more satisfied than in traditional arrangements?
• What is the importance of the ability to effectively manage both the task requirements and the process or maintenance aspects of the group for them to function well? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/09%3A_Group_and_Intergroup_Relations/9.04%3A_Intergroup_Behavior_and_Performance.txt |
Command group A group that is permanent.
Decoupling Involves separating two groups—physically or administratively—in such a way that the required tasks of the organization are fulfilled while the interaction between the two groups is minimized.
Formal group Work units that are prescribed by the organization.
Friendship group Friendship groups tend to be long lasting.
Group An organized system of two or more individuals who are interrelated so that the system performs some function, has a standard set of role relationships among its members, and has a set of norms that regulate the function of the group and each of its members.
Group cohesiveness The extent to which individual members of a group are motivated to remain in the group.
Informal group Groups that evolve naturally out of individual and collective self-interest among the members of an organization and are not the result of deliberate organizational design.
Information flow To be successful, groups need the appropriate amount of information.
Interaction process analysis A technique that records who says what to whom, and through using it illustrates that smaller groups typically exhibit greater tension, agreement, and opinion seeking, whereas larger groups show more tension release and giving of suggestions and information.
Interest group A network that forms due to mutual interests such as working women or minority managers.
Linking role A position or unit within the organization that is charged with overseeing and coordinating the activities of two or more groups.
Norms These regulate the function of the group and each of its members.
Pooled interdependence Occurs when various groups are largely independent of each other, even though each contributes to and is supported by the larger organization.
Reciprocal interdependence Occurs when two or more groups depend on one another for inputs.
Role ambiguity A condition that arises when messages sent to an individual may be unclear.
Role conflict A condition that can arise when individuals receive multiple and sometimes conflicting messages from various groups, all attempting to assign them a particular role.
Role episode An attempt to explain how a particular role is learned and acted upon.
Role overload A condition where individuals may simply receive too many role-related messages.
Role set The sum total of all the roles assigned to one individual.
Sequential interdependence Exists when the outputs of one unit or group become the inputs for another.
Social loafing A tendency for individual group members to reduce their effort on a group task
Status incongruence A situation that exists when a person is high on certain valued dimensions but low on others, or when a person’s characteristics seem inappropriate for a particular job.
Status system Serves to differentiate individuals on the basis of some criterion or set of criteria.
Task force Serves the same purpose as a linking role except that the role is temporary instead of permanent.
Task group Serves the same purpose as a command role except that the role is temporary instead of permanent.
Task uncertainty When groups are working on highly uncertain tasks, the need for communication increases. When task uncertainty is low, less information is typically needed.
Work role An expected behavior pattern assigned or attributed to a particular position in the organization.
Work technology Includes the equipment and materials used in manufacture, the prescribed work procedures, and the physical layout of the work site. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/09%3A_Group_and_Intergroup_Relations/9.05%3A_Glossary.txt |
9.1 Work Groups: Basic Considerations
1. How do you manage group and intergroup processes effectively?
A group is a collection of individuals who share a common set of norms, who generally have differentiated roles among themselves, and who interact with one another in the joint pursuit of common goals. Groups may be divided into permanent and temporary groups and formal and informal groups. Formal groups include command and task groups, whereas informal groups include friendship and interest groups.
9.2 Work Group Structure
2. How do group norms, roles, and status systems affect employee behavior and performance?
People join groups because they offer security, meet social needs, enhance self-esteem, fulfill economic interests, introduce them to people with mutual interests, and, sometimes, because they are in close physical proximity. Groups typically develop through several distinct stages, including forming, storming, norming, and performing. A role may be defined as an expected behavior pattern assigned or attributed to a particular position in the organization. Roles may be oriented toward the task, social relations, or the self.
9.3 Managing Effective Work Groups
3. How do managers develop group cohesiveness, which facilitates organizational goal attainment?
Social loafing is a tendency for individual members of a group to reduce their task effort in the belief that other members will cover for them. A norm is a standard that is shared by group members and that regulates member behavior within an organization. Norms facilitate group survival, simplify expected behaviors, help members avoid embarrassing situations, and help identify group members. Asch’s experiment in group pressure and individual judgment demonstrated that individuals will discount their own perceptions of a situation and follow the will of a group. Status systems serve to differentiate individuals on the basis of some criterion or set of criteria. Status incongruence occurs when one individual holds a position in the status hierarchy that is inconsistent with the conventional criteria for that position. Group cohesiveness is the extent to which individual members of a group are motivated to remain in the group. Work group effectiveness is defined by three criteria: group productivity, personal need satisfaction of the members, and the group’s capacity for future cooperation.
9.4 Intergroup Behavior and Performance
4. What are barriers to intergroup cooperation, and how do you take action to minimize such impediments and understand how to get the most out of the collective actions of groups in organizations in order to enhance industrial competitiveness?
Intergroup performance is influenced by three interaction requirements. These include the requirements for interdependence, information, and integration. A linking role is a position or unit within the organization that is charged with overseeing and coordinating the activities of two or more groups. A task force consists of members from several departments or units who are brought together on a temporary basis to solve a specific and immediate problem. Decoupling refers to the practice of physically or administratively separating groups that are not able to work together effectively.
9.07: Chapter Review Questions
1. What are the various types of groups often found in work situations?
2. Why do people join groups?
3. Describe the stages of group development.
4. How does work group size influence individual and group behavior?
5. Discuss the role of work group norms in the work situation.
6. Consider how groups influence conformity and deviance in work situations.
7. What is the major conclusion of Asch’s experiment on group pressure and individual judgment?
8. Define a role episode.
9. Why is knowledge of role relationships important for managers?
10. What purposes are served by status differentiations in work organizations? What problems emerge from these differentiations?
11. What determines group cohesiveness, and what impact does it have on group behavior?
12. Discuss how managers can improve intergroup relations and performance. Provide examples from your
own experience to defend your arguments.
9.08: Management Skills Application Exercises
1. To assist in your analysis, you may wish to complete this self-assessment. Simply think of a group you have belonged to, and answer each question as honestly as possible. When you are through, refer to Appendix B for interpretation.
How Do You Behave in a Group?
Instructions: Think of a typical group situation in which you often find yourself (e.g., a club, study group, small work group), and answer the following items as accurately as possible.
2. To see how group effectiveness works, try this self-assessment. Choose a work group (or groups) to which you belong (or did belong in the past). Once you have selected a group, simply answer the items on the questionnaire by checking either “mostly yes” or “mostly no.” When you have finished, refer to Appendix B for scoring.
How Effective Is Your Work Group?
Instructions: Select a group to which you belong, and use this group to answer the following questions. Check “mostly yes” or “mostly no” to answer each question. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/09%3A_Group_and_Intergroup_Relations/9.06%3A_Summary_of_Learning_Outcomes.txt |
1. Assume that you are the CEO of a major producer of potato chips. You have four plants and discover that one of the plants is more productive than the other three; specifically, the midnight to 8 a.m. shift is 22 percent more productive than every other shift. Since one of the things that makes chips more appealing to customers is freshness, increasing productivity and getting the product on the shelves is of enormous importance.
You decide to visit the plant based in San Antonio, Texas, and observe the 4 p.m. to midnight shift and then the midnight to 8 a.m. shift. During your visit, you are impressed with the effectiveness of the first shift and discuss the production process with the supervisor, which involves boiling the chips in hot oil, seasoning them in three varieties of salted seasoning, and having the chips go through a tube to fill the bags that are then placed in boxes for shipment to retailers. Everything seems to have been done efficiently, and you eagerly anticipate seeing what the midnight shift is doing to produce extraordinary results.
The new crew starts its shift by cleaning the production line and begins production. For the first hour, everything they do mirrors what the previous shift was doing. Then the shift supervisor calls out that it is time to clean the tubes, and for two minutes the team cleans the tubes that feed the bags with chips to remove the oil that has accumulated in the tubes. This process is repeated seven times throughout the night, with the final cleaning preparing the line for the morning shift. At the end of the night, the production report shows that this shift produced 23 percent more chips than the previous shifts. When you meet with the supervisor and workers, you ask them about their practice of cleaning the tubes. They report that they discovered that oil buildup in the tubes slowed the flow of chips, which caused everything before that step in the process to slow down. You thank them and consider what to do next. You obviously need to implement this practice across all shifts in the company and are considering how to roll this out. You also want to reward the shift supervisor, Manuel Santos, and the workers on the shift for their ingenuity. What are your next steps? Write the memo that you would send to all shift supervisors, or alternatively, write a memo to the general managers of the four plants to implement this. What are the benefits of each approach? Finally, decide on the rewards for Manuel Santos and the midnight shift workers, and write a letter that would be sent to them commending them. How might this incident be used to improve the performance of all work groups in the organization?
9.10: Critical Thinking Case
OECollaboration
At OECollaboration, a technology company that develops virtual collaboration software for new companies, Mike Jones is a new manager. One of the biggest challenges he has faced is that the team that he is managing is well established and because he is an outsider, the team members haven’t yet developed trust in him.
Two weeks into his new employment, Mike held a meeting and discussed all of the changes to the remote work agreements as well as implementing new meeting requirements for each employee to have a biweekly meeting scheduled with him to discuss their projects. The team was outraged, they were not excited, and the following days he wasn’t greeted in a friendly way; in addition, his team seemed less engaged when asked to participate in team functions.
Tracy James is also a new manager at OECollaboration who started at the same time as Mike, in a similar situation where she is a new manager of an existing team. Tracy was able to hold a meeting the first day on the job to listen to her team and get to know them. During this meeting she also told the team about herself and her past experiences. Additionally, she held one-on-one meetings to listen to each of her team members to discuss what they were working on and their career goals. After observation and discussion with upper management, she aligned her own team goals closely with the skills and experiences of her new team. She met with the whole team to make changes to a few policies, explaining why they were being changed, and set the strategy for the team moving forward.
Because she got her team involved and learned about them before implementing her new strategy, this was
well received. Her team still had questions and concerns, but they felt like they could trust her and that they were included in the changes that were being made.
Questions:
1. What challenges can a new manager encounter when starting to manage an existing team?
2. What strategies can a new manager implement to ensure that his new team is engaged with him and
builds relationships to succeed in his new role?
Sources: J. Morris, “How Smart Manager’s Win over New teams Without Bringing in Free Food,” The Muse, accessed January 4, 2019, www.themuse.com/advice/how-s...ver-new-teams- without-bringing-in-free-food; B. Tulgan, “The Challenge of Taking Over Leadership of an Existing Team,” Association for Talent Development, January 5, 2015, www.td.org/insights/the-chal...f-taking-over- leadership-of-an-existing-team; | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/09%3A_Group_and_Intergroup_Relations/9.09%3A_Managerial_Decision_Exercises.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. What is the benefit of working in teams, and what makes teams effective?
2. How do teams develop over time?
3. What are some key considerations in managing teams?
4. What are the benefits of conflict for a team?
5. How does team diversity enhance decision-making and problem-solving?
6. What are some challenges and best practices for managing and working with multicultural teams?
10: Understanding and Managing Work Teams
exploring managerial careers
Eva Hartmann, Trellis LLC
Eva Hartmann has nearly 20 years of experience as a strategic, results-driven, innovative leader with significant expertise in human resources strategy, talent and leadership development, and organizational effectiveness. She has worked in a variety of industries, from manufacturing to Fortune 500 consulting. Eva is a transformational change agent who has developed and led strategic human capital programs and talent initiatives in multiple challenging environments globally. Eva is passionate about enhancing both individual and organizational performance.
Eva began her career in one of the large “Big 6” management consulting firms at the time, and she happily returned several years ago to consulting. She is the founder and president of Trellis LLC, a human capital consulting and staffing firm in Richmond, Virginia.
Prior to Trellis, Eva was the global human resources leader for a large global manufacturer of plastic film products and was responsible for the HR strategy and operations of a \$600 million global division. In this role, Eva led a global team of HR managers in North and South America, Europe, and Asia to support global HR initiatives to drive business results and build human capital and performance across the division.
Eva has also held a variety of leadership and managerial roles in both human resources and quality functions at several nationally and globally recognized companies, including Wachovia Securities, Genworth Financial, Sun Microsystems, and Andersen Consulting (now Accenture).
Eva holds an MBA from the College of William and Mary in Williamsburg, Virginia, and a BA in anthropology from the University of Virginia in Charlottesville, Virginia. She is also an adjunct faculty member with the University of Richmond Robins School of Business. Eva currently serves on the board of the Society of Human Resource Management (SHRM) of Richmond, Virginia.
Much of the work that is performed today in organizations requires a focus on teamwork. The ability to work successfully as a team member, as well as the ability to lead teams, is an ultimate advantage within the workforce. Teams themselves must be managed, in addition to managing just the individuals, to be successful. We’ve all heard the quote originally coined by Aristotle that states that “the whole is greater than the sum of its parts.” This captures the nature of the team perfectly—there is such a synergy that comes from a team that the individuals alone are not able to create. This chapter details the importance of and benefits that you may derive from working as a team, as well as some of the ways we can make our teams more successful.
1. What is a team, and what makes a team effective?
Teamwork has never been more important in organizations than it is today. Whether you work in a manufacturing environment and utilize self-directed work teams, or if you work in the “knowledge economy” and derive benefits from collaboration within a team structure, you are harnessing the power of a team.
A team, according to Katzenbach and Smith in their Harvard Business Review (HBR) article “The Discipline of Teams,” is defined as “people organized to function cooperatively as a group”.1 The five elements that make teams function are:
• Common commitment and purpose
• Specific performance goals
• Complementary skills
• Commitment to how the work gets done
• Mutual accountability
A team has a specific purpose that it delivers on, has shared leadership roles, and has both individual and mutual accountabilities. Teams discuss, make decisions, and perform real work together, and they measure their performance by assessing their collective work products. Wisdom of Teams reference. This is very different from the classic working group in an organization (usually organized by functional area) in which there is a focused leader, individual accountabilities and work products, and a group purpose that is the same as the broader organizational mission. Think of the finance organization or a particular business unit in your company—these are, in effect, larger working groups that take on a piece of the broader organizational mission. They are organized under a leader, and their effectiveness is measured by its influence on others within the business (e.g., financial performance of the business.)
So, what makes a team truly effective? According to Katzenbach and Smith’s “Discipline of Teams,” there are several practices that the authors have observed in successful teams. These practices include:
Establish urgency, demanding performance standards, and direction. Teams work best when they have a compelling reason for being, and it is thus more likely that the teams will be successful and live up to performance expectations. We’ve all seen the teams that are brought together to address an “important initiative” for the company, but without clear direction and a truly compelling reason to exist, the team will lose momentum and wither.
Select members for their skill and skill potential, not for their personality. This is not always as easy as it sounds for several reasons. First, most people would prefer to have those with good personalities and positive attitudes on their team in order to promote a pleasant work environment. This is fine, but make sure that those individuals have the skill sets needed (or the potential to acquire/learn) for their piece of the project. The second caveat here is that you don’t always know what skills you need on a project until you really dig in and see what’s going on. Spend some time up front thinking about the purpose of the project and the anticipated deliverables you will be producing, and think through the specific types of skills you’ll need on the team.
Pay particular attention to first meetings and actions. This is one way of saying that first impressions mean a lot—and it is just as important for teams as for individuals. Teams will interact with everyone from functional subject-matter experts all the way to senior leadership, and the team must look competent and be perceived as competent. Keeping an eye on your team’s level of emotional intelligence is very important and will enhance your team’s reputation and ability to navigate stakeholders within the organization.
Set some clear rules of behavior. I have been through many meetings and team situations in which we have rushed through “ground rules” because it felt like they were obvious—and everyone always came up with the same list. It is so critical that the team takes the time up front to capture their own rules of the road in order to keep the team in check. Rules that address areas such as attendance, discussion, confidentiality, project approach, and conflict are key to keeping team members aligned and engaged appropriately.
Set and seize upon a few immediate performance-oriented tasks and goals. What does this mean? Have some quick wins that make the team feel that they’re really accomplishing something and working together well. This is very important to the team’s confidence, as well as just getting into the practices of working as a team. Success in the larger tasks will come soon enough, as the larger tasks are really just a group of smaller tasks that fit together to produce a larger deliverable.
Challenge the group regularly with fresh facts and information. That is, continue to research and gather information to confirm or challenge what you know about your project. Don’t assume that all the facts are static and that you received them at the beginning of the project. Often, you don’t know what you don’t know until you dig in. I think that the pace of change is so great in the world today that new information is always presenting itself and must be considered in the overall context of the project.
Spend lots of time together. Here’s an obvious one that is often overlooked. People are so busy that they forget that an important part of the team process is to spend time together, think together, and bond. Time in person, time on the phone, time in meetings—all of it counts and helps to build camaraderie and trust.
Exploit the power of positive feedback, recognition, and reward. Positive reinforcement is a motivator that will help the members of the team feel more comfortable contributing. It will also reinforce the behaviors and expectations that you’re driving within the team. Although there are many extrinsic rewards that can serve as motivators, a successful team begins to feel that its own success and performance is the most rewarding.
Collaboration is another key concept and method by which teams can work together very successfully. Bringing together a team of experts from across the business would seem to be a best practice in any situation. However, Gratton and Erickson, in their article Eight Ways to Build Collaborative Teams, found that collaboration seems to decrease sharply when a team is working on complex project initiatives. In their study, they examined 55 larger teams and identified those with strong collaboration skills, despite the level of complexity. There were eight success factors for having strong collaboration skills:
• “Signature” relationship practices
• Role models of collaboration among executives
• Establishment of “gift” culture, in which managers mentor employees
• Training in relationship skills
• A sense of community
• Ambidextrous leaders—good at task and people leadership
• Good use of heritage relationships
• Role clarity and talk ambiguity2
As teams grow in size and complexity, the standard practices that worked well with small teams don’t work anymore. Organizations need to think about how to make collaboration work, and they should leverage the above best practices to build relationships and trust.
concept check
• What is the definition of a team?
• Name some practices that can make a team more successful. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/10%3A_Understanding_and_Managing_Work_Teams/10.01%3A_Teamwork_in_the_Workplace.txt |
2. How do teams develop over time?
If you have been a part of a team—as most of us have—then you intuitively have felt that there are different “stages” of team development. Teams and team members often start from a position of friendliness and excitement about a project or endeavor, but the mood can sour and the team dynamics can go south very quickly once the real work begins. In 1965, educational psychologist Bruce Tuckman at Ohio State University developed a four-stage model to explain the complexities that he had witnessed in team development. The original model was called Tuckman’s Stages of Group Development, and he added the fifth stage of “Adjourning” in 1977 to explain the disbanding of a team at the end of a project. The four stages of the Tuckman model are:3
• Forming
• Storming
• Norming
• Performing
• Adjourning
The Forming stage begins with the introduction of team members. This is known as the “polite stage” in which the team is mainly focused on similarities and the group looks to the leader for structure and direction. The team members at this point are enthusiastic, and issues are still being discussed on a global, ambiguous level. This is when the informal pecking order begins to develop, but the team is still friendly.
The Storming stage begins as team members begin vying for leadership and testing the group processes. This is known as the “win-lose” stage, as members clash for control of the group and people begin to choose sides. The attitude about the team and the project begins to shift to negative, and there is frustration around goals, tasks, and progress.
After what can be a very long and painful Storming process for the team, slowly the Norming stage may start to take root. During Norming, the team is starting to work well together, and buy-in to group goals occurs. The team is establishing and maintaining ground rules and boundaries, and there is willingness to share responsibility and control. At this point in the team formation, members begin to value and respect each other and their contributions.
Finally, as the team builds momentum and starts to get results, it is entering the Performing stage. The team is completely self-directed and requires little management direction. The team has confidence, pride, and enthusiasm, and there is a congruence of vision, team, and self. As the team continues to perform, it may even succeed in becoming a high-performing team. High-performing teams have optimized both task and people relationships—they are maximizing performance and team effectiveness. Katzenberg and Smith, in their study of teams, have created a “team performance curve” that graphs the journey of a team from a working group to a high-performing team. The team performance curve is illustrated in Exhibit 10.5.
The process of becoming a high-performance team is not a linear process. Similarly, the four stages of team development in the Tuckman model are not linear, and there are also factors that may cause the team to regress to an earlier stage of development. When a team member is added to the group, this may change the dynamic enough and be disruptive enough to cause a backwards slide to an earlier stage. Similarly, if a new project task is introduced that causes confusion or anxiety for the group, then this may also cause a backwards slide to an earlier stage of development. Think of your own experiences with project teams and the backslide that the group may have taken when another team member was introduced. You may have personally found the same to be true when a leader or project sponsor changes the scope or adds a new project task. The team has to re-group and will likely re-Storm and re-Form before getting back to Performing as a team.
catching the entrepreneurial spirit
Starting the Startup Team
Nothing is more exciting than a startup business. The enthusiasm is high, and people are excited about the new venture and the prospects that await. Depending on the situation, there may be funding that the startup has received from investors, or the startup could be growing and powering itself organically. Either way, the startup faces many different questions in the beginning, which will have a tremendous impact on its growth potential and performance down the road. One of the most critical questions that faces a startup —or any business for that matter—is the question of who should be on the team. Human capital is the greatest asset that any company can have, and it is an especially critical decision in a startup environment when you have limited resources and those resources will be responsible for building the company from ground up.
In Noam Wasserman’s January 2012 HBSP article “Assembling the Startup Team,” Wasserman asserts:
Nothing can bedevil a high-potential startup more than its people problems. In research on startup performance, venture capitalists attributed 65% of portfolio company failures to problems within the startup’s management team. Another study asked investors to identify problems that might occur at their portfolio companies; 61% of the problems involved team issues. These problems typically result from choices that founders make as they add team members...”
These statistics are based on people problems in startups, and it isn’t quite clear what percent of larger company failures could be directly or indirectly attributed to people and team issues. I would imagine that the percentage is also significant. The impact of people problems and team issues in a startup organization that is just getting its footing and trying to make the right connections and decisions can be very significant. If you know anyone who has a company in startup mode, you may have noticed that some of the early team members who are selected to join the team are trusted family members, friends, or former colleagues. Once a startup company grows to a certain level, then it may acquire an experienced CEO to take the helm. In any case, the startup is faced early on with important questions on how to build the team in a way that will maximize the chance of success.
In “Assembling the Startup Team,” the author refers to the three Rs: relationships, roles, and rewards as being key elements that must be managed effectively in order to avoid problems in the long term. Relationships refers to the actual team members that are chosen, and there are several caveats to keep in mind. Hiring relatives or close friends because they are trusted may seem like the right idea in the beginning, but the long-term hazards (per current research) outweigh the benefits. Family and friends may think too similarly, and the team misses the benefit of other perspectives and connections. Roles are important because you have to think about the division of labor and skills, as well as who is in the right roles for decision-making. The startup team needs to think through the implications of assigning people to specific roles, as that may dictate their decision power and status. Finally, defining the rewards can be difficult for the startup team because it essentially means that they are splitting the pie—i.e., both short- term and long-term compensation. For startup founders, this can be a very difficult decision when they have to weigh the balance of giving something away versus gaining human capital that may ultimately help the business to succeed. Thinking through the tradeoffs and keeping alignment between the “three Rs” is important because it challenges the startup team to think of the long-term consequences of some of their early decisions. It is easy to bring family and friends into the startup equation due to trust factors, but a careful analysis of the “three Rs” will help a startup leadership team make decisions that will pay off in the long term.
Discussion Questions
1. Why might it be a bad decision to hire someone for a key startup role based only on the fact that the person is close family or a friend? What are the potential tradeoffs to the business?
2. What does it mean for the “three Rs” to be in alignment? What is the potential risk of these not being in alignment? What could go wrong?
concept check
• What are the four stages of team development?
• What can cause a team to regress in its development? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/10%3A_Understanding_and_Managing_Work_Teams/10.02%3A_Team_Development_Over_Time.txt |
3. What are some key considerations in managing teams?
For those of us who have had the pleasure of managing or leading a team, we know that it can feel like a dubious distinction. Leading a team is fulfilling—especially if the task or organizational mandate at hand is so critical to the organization that people are happy to be a part of the team that drives things forward. It can also be an exercise in frustration, as the charge is to lead a group composed of various individuals, which at various times will act both like a group and like a bunch of individuals. Managing teams is no small feat, and the most experience managers truly understand that success ultimately depends on their ability to build a strong and well-functioning team. In J.J. Gabarro’s The Dynamics of Taking Charge (HBS Press, 1987, pp. 85–87), he quotes a manager who had successfully worked to turn around a number of organizations:4
“People have to want to work together; they have to see how to do it. There has to be an environment for it and that takes time. It’s my highest priority right now but I don’t write it down anywhere because it’s not like other priorities. If I told corporate that building a team was my prime goal they’d tell me, so what? They’d expect that as part of making things better.”
I love this quotation because it’s so indicative of the state of most organizations today. The focus is on corporate goals and priorities—very task-driven and outcome-driven—but it is the people dynamics and how people work together in the company and in TEAMS that can make a real difference to the goals and outcome.
managerial leadership
Who Am I Managing?
Making the jump from individual contributor to manager is never easy, and it doesn’t take long for a new manager to realize that what got him there is much different than what is needed to be successful in the future. Individual contributors that have been recently promoted would probably say that they have strong technical skills in their area, and that they were very good at doing what they were doing. In a more savvy organization that recognizes leadership competencies, individual contributors would probably say that they have strong technical skills AND that they showed some behaviors and potential to lead others. When new managers enter their new roles, they expect that they will be managing people—that is, the people on their teams. Few new managers fully realize that the challenge ahead is not just in managing their people, but in managing all the other stakeholders and constituencies that want to and need to weigh in.
One of the key challenges that faces new managers is figuring out to balance all of the multiple demands from both the team and the stakeholders and constituencies external to the team. Linda A. Hill, the Wallace Brett Donham Professor of Business Administration at Harvard Business School, states that “among all the challenges facing new managers, the need to reconcile different constituencies’ expectations and interests is probably the most difficult.” She asserts that the demands that the new manager’s direct reports, his peers, his boss, and the company’s customers place on the new manager will cause conflict at times. Having teams of their own, new managers may think that managing their direct reports is the most important role to play, even at the exclusion of managing other stakeholders. This is incorrect. A new manager needs to “manage his other consistencies just as carefully.” (“Helping New Managers Succeed,” Lauren Keller Johnson, HBR 2008).
Whenever I started a new role, I always created a quick stakeholder checklist for myself. This document is essentially a list of all the stakeholders (beyond the team I am managing) with whom I need to build a relationship in order to be successful. I listed the names of my boss, my boss’s boss, my peers, and any other key influencers or internal customers from the business. This is a quick checklist of the people that I need to immediately have a “meet and greet” with and then possibly even set up a regular meeting with at a certain cadence. I have learned over the years that each of these stakeholders will have some input and impact on my success, and the quicker and more effectively I engage them in the work my team is performing, the better the chance of my team’s success. Some of the questions I will ask myself when figuring out my stakeholder list include:
• Whose support will I need?
• Who needs my support? What do they need from me or my team?
• Who can keep me and my team from being successful?
• What is my ongoing influencing strategy?
Some new managers will feel that these strategies for building stakeholder support are too “political” and they don’t feel right. Trust me when I tell you that this is a necessary part of the new manager role, because now the role and the work call for greater interdependence and relation building in order to be successful. It is no longer just about individual technical skills, but more about building and managing relationships with people who will support you and your team to get your work done. So, if you are a new manager asking “Who am I managing?” ... the answer is EVERYONE.
Discussion Questions
1. Do you agree with the statement that “what got you there isn’t what will make you successful in the future”? Why or why not?
2. Who would be on your stakeholder checklist? Which stakeholders are you already engaging and building relationships with?
I need to immediately have a “meet and greet” with and then possibly even set up a regular meeting with at a certain cadence. I have learned over the years that each of these stakeholders will have some input and impact on my success, and the quicker and more effectively I engage them in the work my team is performing, the better the chance of my team’s success. Some of the questions I will ask myself when figuring out my stakeholder list include:
• Whose support will I need?
• Who needs my support? What do they need from me or my team?
• Who can keep me and my team from being successful?
• What is my ongoing influencing strategy?
Some new managers will feel that these strategies for building stakeholder support are too “political” and they don’t feel right. Trust me when I tell you that this is a necessary part of the new manager role, because now the role and the work call for greater interdependence and relation building in order to be successful. It is no longer just about individual technical skills, but more about building and managing relationships with people who will support you and your team to get your work done. So, if you are a new manager asking “Who am I managing?” ... the answer is EVERYONE.
Discussion Questions
1. Do you agree with the statement that “what got you there isn’t what will make you successful in the future”? Why or why not?
2. Who would be on your stakeholder checklist? Which stakeholders are you already engaging and building relationships with?
Managing a team also means managing its boundaries. Managing the team’s boundaries—or space between the team and its external forces, stakeholders, and pressures—is a delicate balance of strategy, stakeholder management, and organizational behavior. The team manager must serve, in part, as a buffer to these external factors so that they don’t derail or distract the team from its goals. However, the manager must also understand enough about the external environment and have enough emotional intelligence to understand which forces, players, or situations must be synthesized within the team for its own benefit. Think about any medium or large-scale change initiative that you have been a part of in your career. Ideally, there is generally a vision for change and a level of sponsorship at the senior levels of the organization that is supposed to pave the way for that change to take root. The project team is officially “blessed” to kick off the team, create a charter, and identify the needed actions to drive the initiative to successful completion.
The dynamic that ensues after the kickoff is really what will determine the success of the team. There are numerous stakeholders in any organization, and many will be pro–change initiative, but others may be against the initiative—either due to lack of understanding or concerns about losing power, territory, etc. The external environment and business strategy may not be particularly well suited for a change initiative to take place, and so there may be the feeling of forces opposing the project team efforts. A strong team manager need manage these “boundaries” with the organization to help the team navigate through and with the organizational complexities, goals, nuances, and egos that are a part of any organization. In Linda A. Hill’s Harvard Business Review article “Exercising Influence,” she states that “managers also need to manage relationships with those who are outside their team but inside their organizations.6 To do so, they must understand the power dynamics of the larger organization and invest time and energy in building and maintaining relationship with those on who the team is dependent.” It is also, in her view, “the manager’s job, at a minimum, to educate other about organizational structures, systems, or politics that interfere with the team’s performance.” With all of the potential external influences on a team, managing a team’s boundaries can truly mean the difference between success and failure.
The final element of managing a team is to manage the team itself—both the people elements and the process elements, or task at hand. The process-focused elements include managing the work plan to reach the overall goal, as well as the incremental meetings and milestones that are a part of the team’s journey to reach the longer-term goal. Keeping the team focused on its objectives—beginning with setting agendas all the way to managing project tasks and celebrating milestones—assures that the team will stay on track. Projects and initiatives vary in size, scope, and complexity, and so the project management tools shouldn’t be prescribed in a general sense. The important takeaway here is to choose an approach and a tool that works for the culture
of the team and the organization, and that helps the team understand where they are, where they need to go, and what resources are a part of that process.
In managing the team members and interpersonal dynamics, there is the important element of selecting the right team members, shaping the team’s norms and culture (how are decisions made, what are our rules, how do we manage conflict, etc.), and coaching the team. Defining the right skill sets, functions, perspectives, and expertise of the members will ensure a solid foundation. Helping the team to identify and formalize the ground rules for team engagement will help manage in the face of adversity or team conflict in the future. Finally, playing a role as a supportive coach will help both the individual team members and the group entity think through issues and make progress towards goals. A coach doesn’t solve the individual/team problem, but helps the team think through a solution and move forward. Teams may need guidance on how to work things out within the team, and the manager must provide feedback and hold team members accountable for their behavior and contribution. Continuous improvement is the name of the game. A team may not start out as high performing, but they can certainly achieve that goal if everyone is focused on incremental improvements to communication, collaboration, and performance.
concept Check
• Discuss the paradox(es) of a team.
• How can a leader manage team boundaries? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/10%3A_Understanding_and_Managing_Work_Teams/10.03%3A_Things_to_Consider_When_Managing_Teams.txt |
4. What are the benefits of conflict for a team?
There are many sources of conflict for a team, whether it is due to a communication breakdown, competing views or goals, power struggles, or conflicts between different personalities. The perception is that conflict is generally bad for a team and that it will inevitably bring the team down and cause them to spiral out of control and off track. Conflict does have some potential costs. If handled poorly, it can create distrust within a group, it can be disruptive to group progress and moral, and it could be detrimental to building lasting relationships. It is generally seen as a negative, even though constructive conflicts and constructive responses to conflicts can be an important developmental milestone for a team. Some potential benefits of conflict are that it encourages a greater diversity of ideas and perspectives and helps people to better understand opposing points of view. It can also enhance a team’s problem-solving capability and can highlight critical points of discussion and contention that need to be given more thought.
Another key benefit or outcome of conflict is that a team that trusts each other—its members and members’ intentions—will arise from conflict being a stronger and higher-performing team. Patrick Lencioni, in his bestselling book The Five Dysfunctions of a Team (2002, p. 188), writes:7
“The first dysfunction is an absence of trust among team members. Essentially, this stems from their unwillingness to be vulnerable within the group. Team members who are not genuinely open with one another about their mistakes and weaknesses make it impossible to build a foundation for trust. This failure to build trust is damaging because it sets the tone for the second dysfunction: fear of conflict. Teams that lack trust are incapable of engaging in unfiltered and passionate debate of ideas. Instead, they resort to veiled discussions and guarded comments.”
Lencioni also asserts that if a team doesn’t work through its conflict and air its opinions through debate, team members will never really be able to buy in and commit to decisions. (This lack of commitment is Lencioni’s third dysfunction.) Teams often have a fear of conflict so as not to hurt any team members’ feelings. The downside of this avoidance is that conflicts still exist under the surface and may resurface in more insidious and back-channel ways that can derail a team. How can a team overcome its fear of conflict and move the team forward? Lencioni names a few strategies that teams can use to make conflict more common and productive. Mining is a technique that can be used in teams that tend to avoid conflict. This technique
requires that one team member “assume the role of a ‘miner of conflict’—someone who extracts buried disagreements within the team and sheds the light of day on them. They must have the courage and confidence to call out sensitive issues and force team members to work through them.” Real-time permission is another technique to “recognize when the people engaged in conflict are becoming uncomfortable with the level of discord, and then interrupt to remind them that what they are doing is necessary.” This technique can help the group to focus on the points of conflict by coaching the team not to sweep things under the rug.
The team leader plays a very important role in the team’s ability to address and navigate successfully through conflicts. Sometime a leader will have the attitude that conflict is a derailer and will try to stymie it at any cost. This ultimately leads to a team culture in which conflict is avoided and the underlying feelings are allowed to accumulate below the surface of the discussion. The leader should, by contrast, model the appropriate behavior by constructively addressing conflict and bringing issues to the surface to be addressed and resolved by the team. This is key to building a successful and effective team.
There are a variety of individual responses to conflict that you may see as a team member. Some people take the constructive and thoughtful path when conflicts arise, while others may jump immediately to destructive behaviors. In Managing Conflict Dynamics: A Practical Approach, Capobianco, Davis, and Kraus (2005) recognized that there are both constructive and destructive responses to conflict, as well as active and passive responses that we need to recognize. In the event of team conflict, the goal is to have a constructive response in order to encourage dialogue, learning, and resolution.8 Responses such as perspective-taking, creating solutions, expressing emotions, and reaching out are considered active and constructive responses to conflict. Reflective thinking, delay responding, and adapting are considered passive and constructive responses to conflict. See Exhibit 10.7 for a visual of the constructive responses, as well as the destructive responses, to conflict.
In summary, conflict is never easy for an individual or a team to navigate through, but it can and should be done. Illuminating the team about areas of conflict and differing perspectives can have a very positive impact on the growth and future performance of the team, and it should be managed constructively.
concept check
• What are some techniques to make conflict more productive?
• What are some destructive responses to conflict? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/10%3A_Understanding_and_Managing_Work_Teams/10.04%3A_Opportunities_and_Challenges_to_Team_Building.txt |
5. How does team diversity enhance decision-making and problem-solving?
Decision-making and problem-solving can be much more dynamic and successful when performed in a diverse team environment. The multiple diverse perspectives can enhance both the understanding of the problem and the quality of the solution. As I reflect on some of the leadership development work that I have done in my career, I can say from experience that the team activities and projects that intentionally brought diverse individuals together created the best environments for problem-solving. Diverse leaders from a variety of functions, from across the globe, at varying stages of their careers and experiences with and outside of the company had the most robust discussions and perspectives. Diversity is a word that is very commonly used today, but the importance of diversity and building diverse teams can sometimes get lost in the normal processes of doing business. Let’s discuss why we need to keep these principles front of mind.
In the Harvard Business Review article “Why Diverse Teams are Smarter” (Nov. 2016), David Rock and Heidi Grant support the idea that increasing workplace diversity is a good business decision.9 A 2015 McKinsey report on 366 public companies found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above their industry mean, and those in the top quartile for gender diversity were 15% more likely to have returns above the industry mean. Similarly, in a global analysis conducted by Credit Suisse, organizations with at least one female board member yielded a higher return on equity and higher net income growth than those that did not have any women on the board.
Additional research on diversity has shown that diverse teams are better at decision-making and problem-solving because they tend to focus more on facts, per the Rock and Grant article.10 Journal of Personality and Social Psychology showed that people from diverse backgrounds “might actually alter the behavior of a group’s social majority in ways that lead to improved and more accurate group thinking.” It turned out that in the study, the diverse panels raised more facts related to the case than homogenous panels and made fewer factual errors while discussing available evidence. Another study noted in the article showed that diverse teams are “more likely to constantly reexamine facts and remain objective. They may also encourage greater scrutiny of each member’s actions, keeping their joint cognitive resources sharp and vigilant. By breaking up workforce homogeneity, you can allow your employees to become more aware of their own potential biases—entrenched ways of thinking that can otherwise blind them to key information and even lead them to make errors in decision-making processes.” In other words, when people are among homogeneous and like-minded (nondiverse) teammates, the team is susceptible to groupthink and may be reticent to think about opposing viewpoints since all team members are in alignment. In a more diverse team with a variety of backgrounds and experiences, the opposing viewpoints are more likely to come out and the team members feel obligated to research and address the questions that have been raised. Again, this enables a richer discussion and a more in-depth fact-finding and exploration of opposing ideas and viewpoints in order to solve problems.
Diversity in teams also leads to greater innovation. A Boston Consulting Group article entitled “The Mix that Matters: Innovation through Diversity” explains a study in which BCG and the Technical University of Munich conducted an empirical analysis to understand the relationship between diversity in managers (all management levels) and innovation. The key findings of this study show that:11
• The positive relationship between management diversity and innovation is statistically significant—and thus companies with higher levels of diversity derive more revenue from new products and services.
• The innovation boost isn’t limited to a single type of diversity. The presence of managers who are either female or are from other countries, industries, or companies can cause an increase in innovation.
• Management diversity seems to have a particularly positive effect on innovation at complex companies—those that have multiple product lines or that operate in multiple industry segments.
• To reach its potential, gender diversity needs to go beyond tokenism. In the study, innovation performance only increased significantly when the workforce included more than 20% women in management positions. Having a high percentage of female employees doesn’t increase innovation if only a small number of women are managers.
• At companies with diverse management teams, openness to contributions from lower-level workers and an environment in which employees feel free to speak their minds are crucial for fostering innovation.
When you consider the impact that diverse teams have on decision-making and problem-solving—through the discussion and incorporation of new perspectives, ideas, and data—it is no wonder that the BCG study shows greater innovation. Team leaders need to reflect upon these findings during the early stages of team selection so that they can reap the benefits of having diverse voices and backgrounds.
concept check
• Why do diverse teams focus more on data than homogeneous teams?
• How are diversity and innovation related? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/10%3A_Understanding_and_Managing_Work_Teams/10.05%3A_Team_Diversity.txt |
What are some challenges and best practices for managing and working with multicultural teams?
As globalization has increased over the last decades, workplaces have felt the impact of working within multicultural teams. The earlier section on team diversity outlined some of the highlights and benefits of working on diverse teams, and a multicultural group certainly qualifies as diverse. However, there are some key practices that are recommended to those who are leading multicultural teams so that they can parlay the diversity into an advantage and not be derailed by it.
People may assume that communication is the key factor that can derail multicultural teams, as participants may have different languages and communication styles. In the Harvard Business Review article “Managing Multicultural Teams,” the authors point out four key cultural differences that can cause destructive conflicts in a team.12 The first difference is direct versus indirect communication. Some cultures are very direct and explicit in their communication, while others are more indirect and ask questions rather than pointing our problems. This difference can cause conflict because, at the extreme, the direct style may be considered offensive by some, while the indirect style may be perceived as unproductive and passive-aggressive in team interactions.
The second difference that multicultural teams may face is trouble with accents and fluency. When team members don’t speak the same language, there may be one language that dominates the group interaction—and those who don’t speak it may feel left out. The speakers of the primary language may feel that those members don’t contribute as much or are less competent. The next challenge is when there are differing attitudes toward hierarchy. Some cultures are very respectful of the hierarchy and will treat team
members based on that hierarchy. Other cultures are more egalitarian and don’t observe hierarchical differences to the same degree. This may lead to clashes if some people feel that they are being disrespected and not treated according to their status. The final difference that may challenge multicultural teams is conflicting decision-making norms. Different cultures make decisions differently, and some will apply a great deal of analysis and preparation beforehand. Those cultures that make decisions more quickly (and need just enough information to make a decision) may be frustrated with the slow response and relatively longer thought process.
These cultural differences are good examples of how everyday team activities (decision-making, communication, interaction among team members) may become points of contention for a multicultural team if there isn’t adequate understanding of everyone’s culture. The authors propose that there are several potential interventions to try if these conflicts arise. One simple intervention is adaptation, which is working with or around differences. This is best used when team members are willing to acknowledge the cultural differences and learn how to work with them. The next intervention technique is structural intervention, or reorganizing to reduce friction on the team. This technique is best used if there are unproductive subgroups or cliques within the team that need to be moved around. Managerial intervention is the technique of making decisions by management and without team involvement. This technique is one that should be used sparingly, as it essentially shows that the team needs guidance and can’t move forward without management getting involved. Finally, exit is an intervention of last resort, and is the voluntary or involuntary removal of a team member. If the differences and challenges have proven to be so great that an individual on the team can no longer work with the team productively, then it may be necessary to remove the team member in question.
There are some people who seem to be innately aware of and able to work with cultural differences on teams and in their organizations. These individuals might be said to have cultural intelligence. Cultural intelligence is a competency and a skill that enables individuals to function effectively in cross-cultural environments. I develops as people become more aware of the influence of culture and more capable of adapting their behavior to the norms of other cultures. In the IESE Insight article entitled “Cultural Competence: Why It Matters and How You Can Acquire It” (Lee and Liao, 2015), the authors assert that “multicultural leaders may relate better to team members from different cultures and resolve conflicts more easily.13 Their multiple talents can also be put to good use in international negotiations.” Multicultural leaders don’t have a lot of “baggage” from any one culture, and so are sometimes perceived as being culturally neutral. They are very good at handling diversity, which gives them a great advantage in their relationships with teammates.
In order to help employees become better team members in a world that is increasingly multicultural, there are a few best practices that the authors recommend for honing cross-cultural skills. The first is to “broaden your mind”—expand your own cultural channels (travel, movies, books) and surround yourself with people from other cultures. This helps to raise your own awareness of the cultural differences and norms that you may encounter. Another best practice is to “develop your cross-cultural skills through practice” and experiential learning. You may have the opportunity to work or travel abroad—but if you don’t, then getting to know some of your company’s cross-cultural colleagues or foreign visitors will help you to practice your skills. Serving on a cross-cultural project team and taking the time to get to know and bond with your global colleagues is an excellent way to develop skills. In my own “past life,” I led a global human resources organization, and my team included employees from China, India, Brazil, Hungary, the Netherlands, and the United States. We would have annual meetings as a global HR team, and it was so rewarding to share and learn about each other’s cultures. We would initiate the week with a gift exchange in a “show and tell” format from our various countries, so that everyone would learn a little bit more about the cultures in which our fellow colleagues were working. This type of interaction within a global team is a great way to facilitate cross-cultural understanding and communication, and to sharpen everyone’s cultural intelligence.
managing change
Understanding Our Global Colleagues
If you are a part of a global team, there are so many challenges that confront you even before you talk about people dynamics and cultural differences. You first may have to juggle time zone differences to find an adequate meeting time that suits all team members. (I used to have a team call with my Chinese colleagues at 8 p.m. my time, so that I could catch them at 8 a.m. in China the next day!) Language challenges can also pose a problem. In many countries, people are beginning to learn English as one of the main business languages. However, as I have experienced, people don’t always speak their language the same way that you might learn their language in a book. There are colloquialisms, terms, and abbreviations of words that you can’t learn in a classroom—you need to experience how people speak in their native countries.
You also need to be open-minded and look at situations from the perspective of your colleagues’ cultures, just as you hope they will be open-minded about yours. This is referred to as cultural intelligence. Whenever I would travel globally to visit my colleagues in other countries, I would see foods, traditions, situations, and behaviors that were very “foreign” to me. Although my first response to experiencing these might be to think “wow, that’s strange,” I would try to think about what some of my global colleagues find “foreign” when they come to visit me in the United States. For example, my travel to China would put me in contact with chicken feet, a very popular food in China and one that I dislike immensely. Whenever I was offered chicken feet, I would turn them down in the most polite way possible and would take another food that was offered instead. I started to wonder about what my Chinese colleagues thought about the food when they’d come to visit me in the United States. Every year, I would host a global HR meeting in the United States, and a bit part of that meeting was the camaraderie and the sharing of various meals together. When I asked my Chinese colleagues what foods they thought were unpleasant, they mentioned cheese and meat. I was surprised about the meat, and when I asked, they said that it wasn’t the meat itself necessarily, but it was the giant portions of meat that Americans will eat that, to them, is pretty unappetizing. Again, it is so important to check yourself and your own culture every so often, and to think about those elements that we take for granted (e.g., gigantic meat portions) and try to look at them from the eyes of another culture. It really makes us smarter and better partners to our global colleagues around the world.
In the HBR article “Getting Cross-Cultural Teamwork Right,” the author states that three key factors—mutual learning, mutual understanding, and mutual teaching—build trust with cross-cultural colleagues as you try to bridge cultural gaps. With mutual learning, global colleagues learn from each other and absorb the new culture and behaviors through listening and observation. In mutual understanding, you try to understand the logic and cultural behaviors of the new culture to understand why people are doing what they do. This, of course, requires suspending judgment and trying to understand and embrace the differences. Finally, mutual teaching involves instructing and facilitating. This means trying to bridge the gap between the two cultures and helping yourself and others see where different cultures are coming from in order to resolve misunderstandings.
Understanding and finding common ground with your global colleagues isn’t easy, and it takes patience and continuous improvement. In the end, however, I think that you will find it one of the most rewarding and enlightening things you can do. The more we work to close the multicultural “gap” and make it a multicultural advantage, the better off we will be as professionals and as people.
Discussion Questions
1. What are some multicultural experiences that you’ve had in which you feel that there was a very wide gap between you and an individual from another culture? How did you handle it?
2. Has economic globalization helped people to bridge these cultural gaps? Why or why not?
Once you have a sense of the different cultures and have started to work on developing your cross-cultural skills, another good practice is to “boost your cultural metacognition” and monitor your own behavior in multicultural situations. When you are in a situation in which you are interacting with multicultural individuals, you should test yourself and be aware of how you act and feel. Observe both your positive and negative interactions with people, and learn from them. Developing “cognitive complexity” is the final best practice for boosting multicultural skills. This is the most advanced, and it requires being able to view situations from more than one cultural framework. In order to see things from another perspective, you need to have a strong sense of emotional intelligence, empathy, and sympathy, and be willing to engage in honest communications.
In the Harvard Business Review article “Cultural Intelligence,” the authors describe three sources of cultural intelligence that teams should consider if they are serious about becoming more adept in their cross-cultural skills and understanding. These sources, very simply, are head, body, and heart. One first learns about the beliefs, customs, and taboos of foreign cultures via the head. Training programs are based on providing this type of overview information—which is helpful, but obviously isn’t experiential. This is the cognitive component of cultural intelligence. The second source, the body, involves more commitment and experimentation with the new culture. It is this physical component (demeanor, eye contact, posture, accent) that shows a deeper level of understanding of the new culture and its physical manifestations. The final source, the heart, deals with a person’s own confidence in their ability to adapt to and deal well with cultures outside of their own. Heart really speaks to one’s own level of emotional commitment and motivation to understand the new culture.
The authors have created a quick assessment to diagnose cultural intelligence, based on these cognitive, physical, and emotional/motivational measures (i.e., head, body, heart).
Please refer to Table \(1\) for a short diagnostic that allows you to assess your cultural intelligence.
Give your responses on a 1 to 5 scale where 1 means you strongly disagree and 5 that you strongly agree
Before I interact with people from a new culture, I wonder to myself what I hope to achieve
If I encounter something unexpected while working in a new culture I use that experience to build new ways
to approach other cultures in the future
I plan on how I am going to relate to people from a different culture before I meet them
When I come into a new cultural situation I can immediately sense whether things are going will or if things are going wrong
Add your total from the four questions above
Divide the total by four. This is your Cognitive Cultural Quotient
It is easy for me to change my body language (posture or facial expression) to suit people from a different culture
I can change my expressions when a cultural encounter requires it
I can easily change the way I act when a cross cultural encounter seems to require it
Add your total from the four questions above
Divide the total by four. This is your Cognitive Physical Quotient
I have confidence in my ability to deal well with people from different cultures than mine
I am certain that I can befriend people of different cultural backgrounds than mine
I can adapt to the lifestyles of a different culture with relative ease
I am confident in my ability to deal with an unfamiliar cultural situation or encounter
Add your total from the four questions above
Divide the total by four. This is your This is your Emotional Motivational Cognitive Quotient
Generally, scoring below 3 in any one of the three measures signals an area requiring improvement.
Averaging over 4 displays strength in cultural intelligence
Adapted from "Cultural Intelligence" Earley and Mosakowski, Harvard Business Review, October 2004
Table \(1\)
Cultural intelligence is an extension of emotional intelligence. An individual must have a level of awareness and understanding of the new culture so that he can adapt to the style, pace, language, nonverbal communication, etc. and work together successfully with the new culture. A multicultural team can only find success if its members take the time to understand each other and ensure that everyone feels included. Multiculturalism and cultural intelligence are traits that are taking on increasing importance in the business world today.14 By following best practices and avoiding the challenges and pitfalls that can derail a multicultural team, a team can find great success and personal fulfillment well beyond the boundaries of the project or work engagement.
concept check
• What are some of the challenges of a multicultural team?
• Explain the cultural intelligence techniques of head, body, and heart. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/10%3A_Understanding_and_Managing_Work_Teams/10.06%3A_Multicultural_Teams.txt |
adaptation Technique of working with or around differences
boundaries Lines that make the limits of an area; team boundaries separate the team from its external stakeholders
cognitive complexity The ability to view situations from more than one cultural framework
collaboration The action of working with someone to produce or create something
cultural intelligence A skill that enables individuals to function effectively in cross-cultural environments
emotional intelligence The capability of individuals to recognize their own emotions and others’ emotions
exit Technique of last resort—removal of a team member
Forming The first stage of team development—the positive and polite stage
ground rules Basic rules or principles of conduct that govern a situation or endeavor
head, body, and heart Techniques for becoming more adept in cross-cultural skills—learning about cultures (head), physical manifestations of culture (body), and emotional commitment to new culture (heart)
knowledge economy The information society, using knowledge to generate tangible and intangible values
managerial intervention Technique of making decisions by management and without team involvement
mining To delve in to extract something of value; a technique for generating discussion instead of burying it
Norming The third stage of team development—when team resolves its differences and begins making progress
paradox A self-contradictory statement or situation
Performing The fourth stage of team development—when hard work leads to the achievement of the team’s goal
real-time permission A technique for recognizing when conflict is uncomfortable, and giving permission to continue
Storming The second stage of team development—when people are pushing against the boundaries
structural intervention Technique of reorganizing to reduce friction on a team
working group Group of experts working together to achieve specific goals; performance is made up of the individual results of all members
10.08: Summary of Learning Outcomes
10.1 Teamwork in the Workplace
1. What is a team, and what makes teams effective?
A team is defined as “people organized to function cooperatively as a group.” Some of the characteristics of a team are that it has a common commitment and purpose, specific performance goals, complementary skills, commitment to how the work gets done, and mutual accountability.
Some of the practices that make a team effective are that they have a sense of urgency and direction; they set clear rules of behavior; they spend lots of time together; and they utilize feedback, recognition, and reward.
10.2 Team Development Over Time
2. How do teams develop over time?
Teams go through different stages of team development, which were coined in 1977 as Tuckman’s Stages of Group Development by educational psychologist Bruce Tuckman. Tuckman’s model includes these four stages: Forming, Storming, Norming, and Performing. A fifth stage, Adjourning, was added later to explain the disbanding and closure of a team at the end of a project.
Forming begins with team members being happy and polite as they get to know each other and understand the work they’ll do together. Storming starts once the work is underway and the team is getting to know each other, and conflicts and project stress begins to seep in. During Norming, the team starts to set rules of the road and define how they want to work together. Performing means that the team is underway and is having some successes and gaining traction. This is definitely not a linear process. Teams can regress to earlier stages if there are changes in team members or work orders that cause disruption and loss of momentum and clarity.
Forming begins with team members being happy and polite as they get to know each other and understand the work they’ll do together. Storming starts once the work is underway and the team is getting to know each other, and conflicts and project stress begins to seep in. During Norming, the team starts to set rules of the road and define how they want to work together. Performing means that the team is underway and is having some successes and gaining traction. This is definitely not a linear process. Teams can regress to earlier stages if there are changes in team members or work orders that cause disruption and loss of momentum and clarity.
10.3 Things to Consider When Managing Teams
3. What are some key considerations in managing teams?
Managing a team is often more complex than people would admit. Although a team and the team leader may be focused on the task or project work, it is actually the people dynamics and how the team works together that will make a real difference to the goals and outcomes. Managers need to remember that most of their time will be spent managing the people dynamics—not the tasks.
Managing teams also means a certain amount of paradox. A team has both individual and collective goals that need to be managed effectively. A manager needs to foster both team supportiveness and the ability to engage in conflict and confrontation. A team manager also needs to help the team with its boundaries and act as a buffer, a stakeholder manager, or a strategist when the situation calls for each. Exercising influence with key stakeholder groups external to the project group is one of the most critical functions in managing a team.
10.4 Opportunities and Challenges to Team Building
4. What are the benefits of conflict for a team?
Conflict during team interactions can feel like it derails progress, but it is one of the most important experiences that a team can have together. A team that can productively work through conflict will end up stronger, building more trust and being more open to sharing opinions. Team members will feel safe buying in and committing to decision-making as a team.
One of the other key benefits of conflict is that it encourages a greater diversity of ideas and perspectives, and it helps people to better understand opposing points of view. If a team doesn’t work through conflict well and doesn’t feel comfortable with the sharing and debating of ideas, it loses the opportunity to effectively vet ideas and potential solutions. The result is that the decision or solution will be limited, as team members haven’t fully shared their concerns and perspectives.
10.5 Team Diversity
5. How does team diversity enhance team decision-making and problem-solving?
Decision-making and problem-solving is so much more dynamic and successful when performed in a diverse team environment. Much like the benefits of conflict, diversity can bring forward opposing points of view and different perspectives and information that might not have been considered if the team were more homogeneous. Diverse teams are thus made “smarter” by bringing together an array of information, sources, and experiences for decision-making.
Other research on diversity indicates that diverse teams excel at decision-making and problem-solving because they tend to focus more on facts. Studies indicate that diverse team members may actually sway the team’s behavior to focus more on proven data—possibly because of the prospect of having to explain and back up one’s perspectives if a conflict should erupt on the team. In a more homogenous team, there is more risk of “groupthink” and the lack of challenging of ideas.
10.6 Multicultural Teams
6. What are some challenges and best practices for managing and working with multicultural teams?
With the increase in globalization over the years, teams have seen the addition of multicultural individuals on their teams, who bring with them their own diverse backgrounds and perspectives. There are very positive aspects that result from the added diversity, as discussed in the previous questions. There are also challenges that we need to be aware of when we are managing these teams.
Challenges can arise from communication styles and accents, but can also appear in the form of decision- making norms and attitudes toward hierarchy. There are some team manager interventions that are best practices for addressing these challenges. There are also some best practices for building the cultural intelligence that will make the team more adept at understanding and dealing with differences among cultures. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/10%3A_Understanding_and_Managing_Work_Teams/10.07%3A_Glossary.txt |
1. What are the key differences between a team and a working group?
2. At what stage of team development does the team finally start to see results?
3. What can cause a team to digress to an earlier stage of team development?
4. What can a team leader do to manage the team’s boundaries?
5. How does managing conflict help a team learn and grow?
6. What are some strategies to make conflict more productive?
7. Why are diverse teams better at decision-making and problem-solving?
8. Why do diverse teams utilize data more often than homogeneous teams?
9. What are some of the challenges that multicultural teams face?
10. What are the key sources of cultural intelligence?
10.10: Management Skills Application Exercises
1. Do you agree with Katzenbach and Smith’s key practices that make teams effective? Why or why not? Which of these practices have you personally experienced? Are there any additional practices that you would add?
2. Have you ever been part of a team that made it through all four stages of team development? In which stage did the team remain the longest? In which stage did the team remain the shortest amount of time? What did you learn?
3. Why do you think it is so important to manage a team’s boundaries? How can external stakeholders impact the function and performance of the team? Why is emotional intelligence such an important skill to have when managing a team?
4. In your experience, have you ever been in a situation in which conflict became a negative thing for a team? How was the conflict handled? How can a team manager ensure that conflict is handled constructively?
5. What is the difference between cultural intelligence and emotional intelligence? How can the cultural intelligence of a team improve performance? Have you ever been on a multicultural team that was high on cultural intelligence? How about a team that was low on cultural intelligence? What were the impacts?
10.11: Managerial Decision Exercises
1. You are a manager of a team that is taking a long time to move through the Storming stage. There are two individuals on the team that seem to be unproductive when dealing with conflict and are holding the team back. What would you do to help the team move through conflict management and begin Norming and Performing?
2. One of your direct reports on your team is very focused on his own personal development. He is a strong employee individually, but hasn’t had as much experience working in a team environment on a project. He wants to do well, but isn’t exactly sure how to work within this context. How would you instruct him?
3. You are leading a team responsible for a very important strategic initiative at your company. You have launched the project, and your team is very motivated and excited to move forward. You have the sense, however, that your sponsor and some other stakeholders are not fully engaged. What do you do to engage them?
4. You are the project manager of a cross-functional team project that was just approved. You have been given several good team members who are from different functions, but many of them think similarly and are unlikely to question each other on team decisions. You have the choice of keeping a homogeneous team that will probably have few team issues or building a diverse team that may well engage in conflict and take much longer to come to decisions. What choice would you make? What other information would you want to know to make the decision?
5. You are the director of a multicultural team with employees across the globe. Your team rarely has the opportunity to meet in person, but you have been given the budget to bring everyone together for a week-long global team meeting and team building. How would you structure the time together? What are some of the activities you would suggest to build stronger relationships among team members?
10.12: Critical Thinking Case
Diverse Teams Hold Court
Diverse teams have been proven to be better at problem-solving and decision-making for a number of reasons. First, they bring many different perspectives to the table. Second, they rely more on facts and use those facts to substantiate their positions. What is even more interesting is that, according to the Scientific American article “How Diversity Makes Us Smarter,” simply “being around people who are different from us makes more creative, diligent, and harder-working.”
One case in point is the example of jury decision-making, where fact-finding and logical decision-making are of utmost importance. A 2006 study of jury decision-making, led by social psychologist Samuel Sommers of Tufts University, showed that racially diverse groups exchanged a wider range of information during deliberation of a case than all-white groups did. The researcher also conducted mock jury trials with a group of real jurors to show the impact of diversity on jury decision-making.
Interestingly enough, it was the mere presence of diversity on the jury that made jurors consider the facts more, and they had fewer errors recalling the relevant information. The groups even became more willing to discuss the role of race case, when they hadn’t before with an all-white jury. This wasn’t the case because the diverse jury members brought new information to the group—it happened because, according to the author, the mere presence of diversity made people more open-minded and diligent. Given what we discussed on the benefits of diversity, it makes sense. People are more likely to be prepared, to be diligent, and to think logically about something if they know that they will be pushed or tested on it. And who else would push you or test you on something, if not someone who is different from you in perspective, experience, or thinking. “Diversity jolts us into cognitive action in ways that homogeneity simply does not.”
So, the next time you are called for jury duty, or to serve on a board committee, or to make an important decision as part of a team, remember that one way to generate a great discussion and come up with a strong solution is to pull together a diverse team.
Critical Thinking Questions
1. If you don’t have a diverse group of people on your team, how can you ensure that you will have robust discussions and decision-making? What techniques can you use to generate conversations from different perspectives?
2. Evaluate your own team at work. Is it a diverse team? How would you rate the quality of decisions generated from that group?
Sources: Adapted from Katherine W. Phillips, “How Diversity Makes Us Smarter,” Scientific American, October 2014, p. 7–8. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/10%3A_Understanding_and_Managing_Work_Teams/10.09%3A_Chapter_Review_Questions.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. Understand and describe the communication process.
2. Know the types of communications that occur in organizations.
3. Understand how power, status, purpose, and interpersonal skills affect communications in organizations.
4. Describe how corporate reputations are defined by how an organization communicates to all of its stakeholders.
5. Know why talking, listening, reading, and writing are vital to managing effectively.
11: Communication
exploring managerial careers
John Legere, T-Mobile
The chief executive officer is often the face of the company. He or she is often the North Star of the company, providing guidance and direction for the entire organization. With other stakeholders, such as shareholders, suppliers, regulatory agencies, and customers, CEOs often take more reserved and structured approaches. One CEO who definitely stands out is John Legere, the CEO of T-Mobile. The unconventional CEO of the self-proclaimed “un-carrier” hosts a Sunday morning podcast called “Slow Cooker Sunday” on Facebook Live, and where most CEOs appear on television interviews in standard business attire, Legere appears with shoulder-length hair dressed in a magenta T-shirt, black jacket, and pink sneakers. Whereas most CEOs use well-scripted language to address business issues and competitors, Legere refers to T-Mobile’s largest competitors, AT&T and Verizon, as “dumb and dumber.”
In the mobile phone market, T-Mobile is the number-three player competing with giants AT&T and Verizon and recently came to an agreement to merge with Sprint. Of all the consolidation sweeping through the media and telecommunications arena, T-Mobile and Sprint are the most direct of competitors. Their merger would reduce the number of national wireless carriers from four to three, a move the Federal Communications Commission has firmly opposed in the past. Then again, the wireless market looks a bit different now, as does the administration in power.
John Legere and other CEOs such as Mark Cuban, Elon Musk, and Richard Branson have a more public profile than executives at other companies that keep a lower profile and are more guarded in their public comments, often restricting their public statements to quarterly investor and analyst meetings. It is likely that the personality and communication style that the executives reveal in public is also the way that they relate to their employees. The outgoing personality of someone such as John Legere will motivate some employees, but he might be seen as too much of a cheerleader by other employees.
Sometimes the unscripted comments and colorful language that Legere uses can cause issues with employees and the public. For instance, some T-Mobile employees in their call center admonished Legere for comments at a press event where he said Verizon and AT&T were “raping” customers for every penny they have. Legere’s comments caused lengthy discussions in online forums such as Reddit about his choice of words. Legere is known for speaking his mind in public and often uses profanity, but many thought this comment crossed the line. While frank, open communication is often appreciated and leads to a clarity of message, senders of communication, be it in a public forum, an internal memo, or even a text message, should always think through the consequences of their words.
We will distinguish between communication between two individuals and communication amongst several individuals (groups) and communication outside the organization. We will show that managers spend a majority of their time in communication with others. We will examine the reasons for communication and discuss the basic model of interpersonal communication, the types of interpersonal communication, and major influences on the communication process. We will also discuss how organizational reputation is defined by communication with stakeholders.
Sources: Tara Lachapelle, “T-Mobile’s Argument for Sprint Deal is as Loud as CEO John Legere’s Style,” The Seattle Times, July 9, 2018, www.seattletimes.com/busines...nt-for-sprint- deal-is-as-loud-as-ceo-john-legeres-style/; Janko Roettgers, “T-Mobile CEO John Legere Pokes Fun at Verizon’s Go90 Closure,” Variety, June 29, 2018, https://variety.com/2018/digital/news/john-legere- go90-1202862397/; Rachel Lerman, “T-Mobile’s Loud, Outspoken John Legere is Not Your Typical CEO,” The Chicago Tribune, April 30, 2018, www.chicagotribune.com/business/sns-tns-bc-tmobile- legere-20180430-story.html; Steve Kovach, T-Mobile Employees Speak Out and Call CEO’s Recent Rape Comments “Violent” and “Traumatizing”,” Business Insider, June 27, 2014, https://www.businessinsider.com/t-mo...comment-2014-6; Brian X. Chen, One on One: John Legere, the Hip New Chief of T-Mobile USA,” New York Times, January 9, 2013, https://bits.blogs.nytimes.com/2013/...-t-mobile-usa/.
1. Understand and describe the communication process.
Interpersonal communication is an important part of being an effective manager:
• It influences the opinions, attitude, motivation, and behaviors of others.
• It expresses our feelings, emotions, and intentions to others.
• It is the vehicle for providing, receiving, and exchanging information regarding events or issues that
concern us.
• It reinforces the formal structure of the organization by such means as making use of formal channels of communication.
Interpersonal communication allows employees at all levels of an organization to interact with others, to secure desired results, to request or extend assistance, and to make use of and reinforce the formal design of the organization. These purposes serve not only the individuals involved, but the larger goal of improving the quality of organizational effectiveness.
The model that we present here is an oversimplification of what really happens in communication, but this model will be useful in creating a diagram to be used to discuss the topic. Exhibit 11.2 illustrates a simple communication episode where a communicator encodes a message and a receiver decodes the message.1
Encoding and Decoding
Two important aspects of this model are encoding and decoding. Encoding is the process by which individuals initiating the communication translate their ideas into a systematic set of symbols (language), either written or spoken. Encoding is influenced by the sender’s previous experiences with the topic or issue, her emotional state at the time of the message, the importance of the message, and the people involved. Decoding is the process by which the recipient of the message interprets it. The receiver attaches meaning to the message and tries to uncover its underlying intent. Decoding is also influenced by the receiver’s previous experiences and frame of reference at the time of receiving the message.
Feedback
Several types of feedback can occur after a message is sent from the communicator to the receiver. Feedback can be viewed as the last step in completing a communication episode and may take several forms, such as a verbal response, a nod of the head, a response asking for more information, or no response at all. As with the initial message, the response also involves encoding, medium, and decoding.
There are three basic types of feedback that occur in communication.2 These are informational, corrective, and reinforcing. In informational feedback, the receiver provides nonevaluative information to the communicator. An example is the level of inventory at the end of the month. In corrective feedback, the receiver responds by challenging the original message. The receiver might respond that it is not her responsibility to monitor inventory. In reinforcing feedback, the receiver communicated that she has clearly received the message and its intentions. For instance, the grade that you receive on a term paper (either positive or negative) is reinforcing feedback on your term paper (your original communication).
Noise
There is, however, a variety of ways that the intended message can get distorted. Factors that distort message clarity are noise. Noise can occur at any point along the model shown in Exhibit 11.2, including the decoding process. For example, a manager might be under pressure and issue a directive, “I want this job completed today, and I don’t care what it costs,” when the manager does care what it costs.
concept check
• Describe the communication process.
• Why is feedback a critical part of the communication process?
• What are some things that managers can do to reduce noise in communication? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/11%3A_Communication/11.01%3A_Section_1-.txt |
2. Know the types of communications that occur in organizations.
In the communication model described above, three types of communication can be used by either the communicator in the initial transmission phase or the receiver in the feedback phase. These three types are discussed next.
Oral Communication
This consists of all messages or exchanges of information that are spoken, and it’s the most prevalent type of communication.
Written Communication
This includes e-mail, texts, letters, reports, manuals, and annotations on sticky notes. Although managers prefer oral communication for its efficiency and immediacy, the increase in electronic communication is undeniable. As well, some managers prefer written communication for important messages, such as a change in a company policy, where precision of language and documentation of the message are important.
Managerial leadership
Dealing with Information Overload
One of the challenges in many organizations is dealing with a deluge of emails, texts, voicemails, and other communication. Organizations have become flatter, outsourced many functions, and layered technology to speed communication with an integrated communication programs such as Slack, which allows users to manage all their communication and access shared resources in one place. This can lead to information overload, and crucial messages may be drowned out by the volume in your inbox.
Add the practice of “reply to all,” which can add to the volume of communication, that many coworkers use, and that means that you may get five or six versions of an initial e-mail and need to understand all of the responses as well as the initial communication before responding or deciding that the issue is resolved and no response is needed. Here are suggestions to dealing with e-mail overload upward, horizontally, and downward within your organization and externally to stakeholders and customers.
One way to reduce the volume and the time you spend on e-mail is to turn off the spigot of incoming messages. There are obvious practices that help, such as unsubscribing to e-newsletters or turning off notifications from social media accounts such as Facebook and Twitter. Also consider whether your colleagues or direct reports are copying you on too many emails as an FYI. If yes, explain that you only need to be updated at certain times or when a final decision is made.
You will also want to set up a system that will organize your inbox into “folders” that will allow you to manage the flow of messages into groups that will allow you to address them appropriately. Your system might look something like this:
1. Inbox: Treat this as a holding pen. E-mails shouldn’t stay here any longer than it takes for you to file them into another folder. The exception is when you respond immediately and are waiting for an immediate response.
2. Today: This is for items that need a response today.
3. This week: This is for messages that require a response before the end of the week.
4. This month/quarter: This is for everything that needs a longer-term response. Depending on your
role, you may need a monthly or quarterly folder.
5. FYI: This is for any items that are for information only and that you may want to refer back to in the
future.
This system prioritizes e-mails based on timescales rather than the e-mails’ senders, enabling you to better schedule work and set deadlines.
Another thing to consider is your outgoing e-mail. If your outgoing messages are not specific, too long, unclear, or are copied too widely, your colleagues are likely to follow the same practice when communicating with you. Keep your communication clear and to the point, and managing your outbox will help make your inbound e-mails manageable.
Critical Thinking Questions
1. How are you managing your e-mails now? Are you mixing personal and school and work-related e- mails in the same account?
2. How would you communicate to a colleague that is sending too many FYI e-mails, sending too may unclear e-mails, or copying too many people on her messages?
Sources: Amy Gallo, Stop Email Overload, Harvard Business Review, February 21, 2012, https://hbr.org/ 2012/02/stop-email-overload-1; Barry Chingel, “How to beat email Overload in 2018”, CIPHER, January 16, 2018, https://www.ciphr.com/advice/email-overload/; Monica Seely, “At the Mercy of Your Inbox? How to Cope With Email Overload”, The Guardian, November 6, 2017, www.theguardian.com/small- business-network/2017/nov/06/at-the-mercy-of-your-inbox-how-to-cope-with-email-overload.
Nonverbal Communication
There is also the transformation of information without speaking or writing. Some examples of this are things such as traffic lights and sirens as well as things such as office size and placement, which connote something or someone of importance. As well, things such as body language and facial expression can convey either conscious or unconscious messages to others.
Major Influence on Interpersonal Communication
Regardless of the type of communication involved, the nature, direction, and quality of interpersonal communication processes can be influenced by several factors.3
Social Influences
Communication is a social process, as it takes at least two people to have a communication episode. There is a variety of social influences that can affect the accuracy of the intended message. For examples, status barriers between employees at different levels of the organization can influence things such as addressing a colleague as at a director level as “Ms. Jones” or a coworker at the same level as “Mike.” Prevailing norms and roles can dictate who speaks to whom and how someone responds. Exhibit 11.4 illustrates a variety of communications that illustrate social influences in the workplace.
Perception
In addition, the communication process is heavily influenced by perceptual processes. The extent to which an employee accurately receives job instructions from a manager may be influences by her perception of the manager, especially if the job instructions conflict with her interest in the job or if they are controversial. If an employee has stereotyped the manager as incompetent, chances are that little that the manager says will be taken seriously. If the boss is well regarded or seen as influential in the company, everything that she says may be interpreted as important.
Interaction Involvement
Communication effectiveness can be influenced by the extent to which one or both parties are involved in conversation. This attentiveness is called interaction attentiveness or interaction involvement.4 If the intended receiver of the message is preoccupied with other issues, the effectiveness of the message may be diminished. Interaction involvement consists of three interrelated dimensions: responsiveness, perceptiveness, and attentiveness.
Organizational Design
The communication process can also be influenced by the design of the organization. It has often been argued to decentralize an organization because that will lead to a more participative structure and lead to improved communication in the organization. When messages must travel through multiple levels of an organization, the possibility of distortion can also occur, which would be diminished with more face-to-face communication.
concept check
• What are the three major types of communication?
• How can you manage the inflow of electronic communication?
• What are the major influences on organizational communication, and how can organizational design affect communication? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/11%3A_Communication/11.02%3A_Types_of_Communication_in_Organizations.txt |
3. Understand how power, status, purpose, and interpersonal skills affect communications in organizations.
The Roles of Managers Play
In Mintzberg’s seminal study of managers and their jobs, he found the majority of them clustered around three core management roles.5
Interpersonal Roles
Managers are required to interact with a substantial number of people during a workweek. They host receptions; take clients and customers to dinner; meet with business prospects and partners; conduct hiring and performance interviews; and form alliances, friendships, and personal relationships with many others. Numerous studies have shown that such relationships are the richest source of information for managers because of their immediate and personal nature.6
Three of a manager’s roles arise directly from formal authority and involve basic interpersonal relationships.
First is the figurehead role. As the head of an organizational unit, every manager must perform some ceremonial duties. In Mintzberg’s study, chief executives spent 12% of their contact time on ceremonial duties; 17% of their incoming mail dealt with acknowledgments and requests related to their status. One example is a company president who requested free merchandise for a handicapped schoolchild.7
Managers are also responsible for the work of the people in their unit, and their actions in this regard are directly related to their role as a leader. The influence of managers is most clearly seen, according to Mintzberg, in the leader role. Formal authority vests them with great potential power. Leadership determines, in large part, how much power they will realize.
Does the leader’s role matter? Ask the employees of Chrysler Corporation (now Fiat Chrysler). When Sergio Marchionne, who passed away in 2018, took over the company in the wake of the financial crisis, the once- great auto manufacturer was in bankruptcy, teetering on the verge of extinction. He formed new relationships with the United Auto Workers, reorganized the senior management of the company, and—perhaps, most importantly—convinced the U.S. federal government to guarantee a series of bank loans that would make the company solvent again. The loan guarantees, the union response, and the reaction of the marketplace, especially for the Jeep brand, were due in large measure to Marchionne’s leadership style and personal charisma. More recent examples include the return of Starbucks founder Howard Schultz to reenergize and steer his company and Amazon CEO Jeff Bezos and his ability to innovate during a downturn in the economy.
Popular management literature has had little to say about the liaison role until recently. This role, in which managers establish and maintain contacts outside the vertical chain of command, becomes especially important in view of the finding of virtually every study of managerial work that managers spend as much time with peers and other people outside of their units as they do with their own subordinates. Surprisingly, they spend little time with their own superiors. In Rosemary Stewart’s (1967) study, 160 British middle and top managers spent 47% of their time with peers, 41% of their time with people inside their unit, and only 12% of their time with superiors. Guest’s (1956) study of U.S. manufacturing supervisors revealed similar findings.
Informational Roles
Managers are required to gather, collate, analyze, store, and disseminate many kinds of information. In doing so, they become information resource centers, often storing huge amounts of information in their own heads, moving quickly from the role of gatherer to the role of disseminator in minutes. Although many business organizations install large, expensive management information systems to perform many of those functions, nothing can match the speed and intuitive power of a well-trained manager’s brain for information processing. Not surprisingly, most managers prefer it that way.
As monitors, managers are constantly scanning the environment for information, talking with liaison contacts and subordinates, and receiving unsolicited information, much of it because of their network of personal contacts. A good portion of this information arrives in verbal form, often as gossip, hearsay, and speculation.9
In the disseminator role, managers pass privileged information directly to subordinates, who might otherwise have no access to it. Managers must decide not only who should receive such information, but how much of it, how often, and in what form. Increasingly, managers are being asked to decide whether subordinates, peers, customers, business partners, and others should have direct access to information 24 hours a day without having to contact the manager directly.10
In the spokesperson role, managers send information to people outside of their organizations: an executive makes a speech to lobby for an organizational cause, or a supervisor suggests a product modification to a supplier. Increasingly, managers are also being asked to deal with representatives of the news media, providing both factual and opinion-based responses that will be printed or broadcast to vast unseen audiences, often directly or with little editing. The risks in such circumstances are enormous, but so too are the potential rewards in terms of brand recognition, public image, and organizational visibility.11
Decisional Roles
Ultimately, managers are charged with the responsibility of making decisions on behalf of both the organization and the stakeholders with an interest in it. Such decisions are often made under circumstances of high ambiguity and with inadequate information. Often, the other two managerial roles—interpersonal and informational—will assist a manager in making difficult decisions in which outcomes are not clear and interests are often conflicting.
In the role of entrepreneur, managers seek to improve their businesses, adapt to changing market conditions, and react to opportunities as they present themselves. Managers who take a longer-term view of their responsibilities are among the first to realize that they will need to reinvent themselves, their product and service lines, their marketing strategies, and their ways of doing business as older methods become obsolete and competitors gain advantage.
While the entrepreneur role describes managers who initiate change, the disturbance or crisis handler role depicts managers who must involuntarily react to conditions. Crises can arise because bad managers let circumstances deteriorate or spin out of control, but just as often good managers find themselves in the midst of a crisis that they could not have anticipated but must react to just the same.12
The third decisional role of resource allocator involves managers making decisions about who gets what, how much, when, and why. Resources, including funding, equipment, human labor, office or production space, and even the boss’s time, are all limited, and demand inevitably outstrips supply. Managers must make sensible decisions about such matters while still retaining, motivating, and developing the best of their employees.
The final decisional role is that of negotiator. Managers spend considerable amounts of time in negotiations: over budget allocations, labor and collective bargaining agreements, and other formal dispute resolutions. During a week, managers will often make dozens of decisions that are the result of brief but important negotiations between and among employees, customers and clients, suppliers, and others with whom managers must deal.13
concept check
• What are the major roles that managers play in communicating with employees?
• Why are negotiations often brought in to communications by managers? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/11%3A_Communication/11.03%3A_Factors_Affecting_Communications_and_the_Roles_of_Managers.txt |
4. Describe how corporate reputations are defined by how an organization communicates to its stakeholders.
Management communication is a central discipline in the study of communication and corporate reputation. An understanding of language and its inherent powers, combined with the skill to speak, write, listen, and form interpersonal relationships, will determine whether companies succeed or fail and whether they are rewarded or penalized for their reputations.
At the midpoint of the twentieth century, Peter Drucker wrote, “Managers have to learn to know language, to understand what words are and what they mean. Perhaps most important, they have to acquire respect for language as [our] most precious gift and heritage. The manager must understand the meaning of the old definition of rhetoric as ‘the art which draws men’s hearts to the love of true knowledge.’”14
Later, Eccles and Nohria reframed Drucker’s view to offer a perspective of management that few others have seen: “To see management in its proper light, managers need first to take language seriously.”15 In particular, they argue, a coherent view of management must focus on three issues: the use of rhetoric to achieve a manager’s goals, the shaping of a managerial identity, and taking action to achieve the goals of the organizations that employ us. Above all, they say, “the essence of what management is all about [is] the effective use of language to get things done.”16 One of the things managers get done is the creation, management, and monitoring of corporate reputation.
The job of becoming a competent, effective manager thus becomes one of understanding language and action. It also involves finding ways to shape how others see and think of you in your role as a manager. Many noted researchers have examined the important relationship between communication and action within large and complex organizations and conclude that the two are inseparable. Without the right words, used in the right way, it is unlikely that the right reputations develop. “Words do matter,” write Eccles and Nohria. “They matter very much. Without words we have no way of expressing strategic concepts, structural forms, or designs for performance measurement systems.” Language, they conclude, “is too important to managers to be taken for granted or, even worse, abused.”17
So, if language is a manager’s key to corporate reputation management, the next question is obvious: How good are managers at using language? Managers’ ability to act—to hire a talented workforce, to change an organization’s reputation, to launch a new product line—depends entirely on how effectively they use management communication, both as a speaker and as a listener. Managers’ effectiveness as a speaker and writer will determine how well they are able to manage the firm’s reputation. And their effectiveness as listeners will determine how well they understand and respond to others and can change the organization in response to their feedback.
We will now examine the role management communication plays in corporate reputation formation, management, and change and the position occupied by rhetoric in the life of business organizations. Though, this chapter will focus on the skills, abilities, and competencies for using language, attempting to influence others, and responding to the requirements of peers, superiors, stakeholders, and the organization in which managers and employees work.
Management communication is about the movement of information and the skills that facilitate it—speaking, writing, listening, and processes of critical thinking. It’s also about understanding who your organization is (identity), who others think your organization is (reputation), and the contributions individuals can make to the success of their business considering their organization’s existing reputation. It is also about confidence—the knowledge that one can speak and write well, listen with great skill as others speak, and both seek out and provide the feedback essential to creating, managing, or changing their organization’s reputation.
At the heart of this chapter, though, is the notion that communication, in many ways, is the work of managers. We will now examine the roles of writing and speaking in the role of management, as well as other specific applications and challenges managers face as they play their role in the creation, maintenance, and change of corporate reputation.
concept check
• How are corporate reputations affected by the communication of managers and public statements?
• Why is corporate reputation important? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/11%3A_Communication/11.04%3A_Managerial_Communication_and_Corporate_Reputation.txt |
5. Know why talking, listening, reading, and writing are vital to managing effectively.
The major channels of managerial communication displayed in Exhibit 11.6 are talking, listening, reading, and writing. Among these, talking is the predominant method of communicating, but as e-mail and texting increase, reading and writing are increasing. Managers across industries, according to Deirdre Borden, spend about 75% of their time in verbal interaction. Those daily interactions include the following.
One-on-One Conversations
Increasingly, managers find that information is passed orally, often face-to-face in offices, hallways, conference rooms, cafeterias, restrooms, athletic facilities, parking lots, and literally dozens of other venues. An enormous amount of information is exchanged, validated, confirmed, and passed back and forth under highly informal circumstances.
Telephone Conversations
Managers spend an astounding amount of time on the telephone these days. Curiously, the amount of time per telephone call is decreasing, but the number of calls per day is increasing. With the nearly universal availability of cellular and satellite telephone service, very few people are out of reach of the office for very long. The decision to switch off a cellular telephone, in fact, is now considered a decision in favor of work-life balance.
Video Teleconferencing
Bridging time zones as well as cultures, videoconferencing facilities make direct conversations with employees, colleagues, customers, and business partners across the nation or around the world a simple matter. Carrier Corporation, the air-conditioning manufacturer, is now typical of firms using desktop videoconferencing to conduct everything from staff meetings to technical training. Engineers at Carrier’s Farmington, Connecticut, headquarters can hook up with service managers in branch offices thousands of miles away to explain new product developments, demonstrate repair techniques, and update field staff on matters that would, just recently, have required extensive travel or expensive, broadcast-quality television programming. Their exchanges are informal, conversational, and not much different than they would be if the people were in the same room.18
Presentations to Small Groups
Managers frequently find themselves making presentations, formal and informal, to groups of three to eight people for many different reasons: they pass along information given to them by executives, they review the status of projects in process, and they explain changes in everything from working schedules to organizational goals. Such presentations are sometimes supported by overhead transparencies or printed outlines, but they are oral in nature and retain much of the conversational character of one-to-one conversations.
Public Speaking to Larger Audiences
Most managers are unable to escape the periodic requirement to speak to larger audiences of several dozen or, perhaps, several hundred people. Such presentations are usually more formal in structure and are often supported by PowerPoint or Prezi software that can deliver data from text files, graphics, photos, and even motion clips from streaming video. Despite the more formal atmosphere and sophisticated audio-visual support systems, such presentations still involve one manager talking to others, framing, shaping, and passing information to an audience.
A series of scientific studies, beginning with Rankin, Nichols and Stevens, and Wolvin and Coakley, confirm: most managers spend the largest portion of their day talking and listening.19 Werner's thesis, in fact, found that North American adults spend more than 78% of their communication time either talking or listening to others who are talking.
According to Werner and others who study the communication habits of postmodern business organizations, managers are involved in more than just speeches and presentations from the dais or teleconference podium. They spend their days in meetings, on the telephone, conducting interviews, giving tours, supervising informal visits to their facilities, and at a wide variety of social events.20
Each of these activities may look to some managers like an obligation imposed by the job. Shrewd managers see them as opportunities to hear what others are thinking, to gather information informally from the grapevine, to listen in on office gossip, to pass along viewpoints that haven’t yet made their way to the more formal channels of communication, or to catch up with a colleague or friend in a more relaxed setting. No matter what the intention of each manager who engages in these activities, the information they produce and the insight that follows from them can be put to work the same day to achieve organizational and personal objectives. “To understand why effective managers behave as they do,” writes Kotter, “it is essential first to recognize two fundamental challenges and dilemmas found in most of their jobs.” Managers must first figure out what to do, despite an enormous amount of potentially relevant information (along with much that is not), and then they must get things done “through a large and diverse group of people despite having little direct control over most of them.”21
The Role of Writing
Writing plays an important role in the life of any organization. In some organizations, it becomes more important than in others. At Procter & Gamble, for example, brand managers cannot raise a work-related issue in a team meeting unless the ideas are first circulated in writing. For P&G managers, this approach means explaining their ideas in explicit detail in a standard one-to-three-page memo, complete with background, financial discussion, implementation details, and justification for the ideas proposed.
Other organizations are more oral in their traditions—3M Canada is a “spoken” organization—but the fact remains: the most important projects, decisions, and ideas end up in writing. Writing also provides analysis, justification, documentation, and analytic discipline, particularly as managers approach important decisions that will affect the profitability and strategic direction of the company.
Writing is a career sifter. If managers demonstrate their inability to put ideas on paper in a clear, unambiguous fashion, they’re not likely to last. Stories of bad writers who’ve been shown the door early in their careers are legion. Managers’ principal objective, at least during the first few years of their career, is to keep their name out of such stories. Remember: those who are most likely to notice the quality and skill in managers’ written documents are the very people most likely to matter to managers’ future.
Managers do most of their own writing and editing. The days when managers could lean back and thoughtfully dictate a letter or memo to a skilled secretarial assistant are mostly gone. Some senior executives know how efficient dictation can be, especially with a top-notch administrative assistant taking shorthand, but how many managers have that advantage today? Very few, mostly because buying a computer and printer is substantially cheaper than hiring another employee. Managers at all levels of most organizations draft, review, edit, and dispatch their own correspondence, reports, and proposals.
Documents take on lives of their own. Once it’s gone from the manager’s desk, it isn’t theirs anymore. When they sign a letter and put it in the mail, it’s no longer their letter—it’s the property of the person or organization it was sent to. As a result, the recipient is free to do as she sees fit with the writing, including using it against the sender. If the ideas are ill-considered or not well expressed, others in the organization who are not especially sympathetic to the manager’s views may head for the copy machine with the manager’s work in hand. The advice for managers is simple: do not mail the first draft, and do not ever sign your name to a document you are not proud of.
Communication Is Invention
Without question, communication is a process of invention. Managers literally create meaning through communication. A company, for example, is not in default until a team of auditors sits down to examine the books and review the matter. Only after extended discussion do the accountants conclude that the company is, in fact, in default. It is their discussion that creates the outcome. Until that point, default was simply one of many possibilities.
The fact is managers create meaning through communication. It is largely through discussion and verbal exchange—often heated and passionate—that managers decide who they wish to be: market leaders, takeover artists, innovators, or defenders of the economy. It is only through communication that meaning is created for shareholders, employees, customers, and others. Those long, detailed, and intense discussions determine how much the company will declare in dividends this year, whether the company is willing to risk a strike or labor action, and how soon to roll out the new product line customers are asking for. Additionally, it is important to note that managers usually figure things out by talking about them as much as they talk about the things they have already figured out. Talk serves as a wonderful palliative: justifying, analyzing, dissecting, reassuring, and analyzing the events that confront managers each day.
Information Is Socially Constructed
If we are to understand just how important human discourse is in the life of a business, several points seem especially important.
Information is created, shared, and interpreted by people. Meaning is a truly human phenomenon. An issue is only important if people think it is. Facts are facts only if we can agree upon their definition. Perceptions and assumptions are as important as truth itself in a discussion about what a manager should do next.22 Information never speaks for itself. It is not uncommon for a manager to rise to address a group of her colleagues and say, “The numbers speak for themselves.” Frankly, the numbers never speak for themselves. They almost always require some sort of interpretation, some sort of explanation or context. Do not assume that others see the facts in the same way managers do, and never assume that what is seen is the truth. Others may see the same set of facts or evidence but may not reach the same conclusions. Few things in life are self-explanatory.
Context always drives meaning. The backdrop to a message is always of paramount importance to the listener, viewer, or reader in reaching a reasonable, rational conclusion about what she sees and hears. What’s in the news these days as we take up this subject? What moment in history do we occupy? What related or relevant information is under consideration as this new message arrives? We cannot possibly derive meaning from one message without considering everything else that surrounds it.
A messenger always accompanies a message. It is difficult to separate a message from its messenger. We often want to react more to the source of the information than we do to the information itself. That’s natural and entirely normal. People speak for a reason, and we often judge their reasons for speaking before analyzing what they have to say. Keep in mind that, in every organization, message recipients will judge the value, power, purpose, intent, and outcomes of the messages they receive by the source of those messages as much as by the content and intent of the messages themselves. If the messages managers send are to have the impact hoped for, they must come from a source the receiver knows, respects, and understands.
Managers’ Greatest Challenge
Every manager knows communication is vital, but every manager also seems to “know” that she is great at it. Managers’ greatest challenge is to admit to flaws in their skill set and work tirelessly to improve them. First, managers must admit to the flaws.
Larkin and Larkin write, “Deep down, managers believe they are communicating effectively. In ten years of management consulting, we have never had a manager say to us that he or she was a poor communicator. They admit to the occasional screw-up, but overall, everyone, without exception, believes he or she is basically a good communicator.”23
Managers’ Task as Professionals
As a professional manager, the first task is to recognize and understand one’s strengths and weaknesses as a communicator. Until these communication tasks at which one is most and least skilled are identified, there will be little opportunity for improvement and advancement.
Foremost among managers’ goals should be to improve existing skills. Improve one’s ability to do what is done best. Be alert to opportunities, however, to develop new skills. Managers should add to their inventory of abilities to keep themselves employable and promotable.
Two other suggestions come to mind for improving managers’ professional standing. First, acquire a knowledge base that will work for the years ahead. That means speaking with and listening to other professionals in their company, industry, and community. They should be alert to trends that could affect their company’s products and services, as well as their own future.
It also means reading. Managers should read at least one national newspaper each day, including the Wall Street Journal, the New York Times, or the Financial Times, as well as a local newspaper. Their reading should include weekly news magazines, such as U.S. News & World Report, Bloomberg’s Business Week, and the Economist. Subscribe to monthly magazines such as Fast Company and Fortune. And they should read at least one new hardcover title a month. A dozen books each year is the bare minimum on which one should depend for new ideas, insights, and managerial guidance.
Managers’ final challenge is to develop the confidence needed to succeed as a manager, particularly under conditions of uncertainty, change, and challenge.
ethics in practice
Disney and H-1B Visas
On January 30, 2015, The Walt Disney Company laid off 250 of its IT workers. In a letter to the laid-off workers, Disney outlined the conditions for receipt of a “stay bonus,” which would entitle each worker to a lump-sum payment of 10% of her annual salary.
Of course, there was a catch. Only those workers who trained their replacements over a 90-day period would receive the bonus. One American worker in his 40s who agreed to Disney’s severance terms explained how it worked in action:
“The first 30 days was all capturing what I did. The next 30 days, they worked side by side with me, and the last 30 days, they took over my job completely. I had to make sure they were doing my job correctly.”
To outside observers, this added insult to injury. It was bad enough to replace U.S. workers with cheaper, foreign labor. But to ask, let alone strong-arm, the laid-off workers into training their replacements seemed a bit much.
However unfortunate, layoffs are commonplace. But this was different. From the timing to the apparent neglect of employee pride, the sequence of events struck a nerve. For many, the issue was simple, and Disney’s actions seemed wrong at a visceral level. As criticism mounted, it became clear that this story would develop legs. Disney had a problem.
For David Powers and Leo Perrero, each a 10-year information technology (IT) veteran at Disney, the invitation came from a vice president of the company. It had to be good news, the men thought. After all, they were not far removed from strong performance reviews—perhaps they would be awarded performance bonuses. Well, not exactly. Leo Perrero, one of the summoned workers, explains what happened next.
“I’m in the room with about two-dozen people, and very shortly thereafter an executive delivers the news that all of our jobs are ending in 90 days, and that we have 90 days to train our replacements or we won’t get a bonus that we’ve been offered.”
Powers explained the deflating effect of the news: “When a guillotine falls down on you, in that moment you're dead . . . and I was dead.”
These layoffs and the hiring of foreign workers under the H-1B program lay at the center of this issue. Initially introduced by the Immigration and Nationality Act of 1965, subsequent modifications produced the current iteration of the H-1B visa program in 1990. Importantly, at that time, the United States faced a shortage of skilled workers necessary to fill highly technical jobs. Enter the H-1B visa program as the solution. This program permits U.S. employers to temporarily employ foreign workers in highly specialized occupations. “Specialty occupations” are defined as those in the fields of architecture, engineering, mathematics, science, medicine, and others that require technical and skilled expertise.
Congress limited the number of H-1B visas issued to 85,000 per year. That total is divided into two subcategories: “65,000 new H-1B visas issued for overseas workers in professional or specialty occupation positions, and an additional 20,000 visas available for those with an advanced degree from a U.S. academic institution.” Further, foreign workers are not able to apply for an H-1B visa. Instead, a U.S. employer must petition on their behalf no earlier than six months before the starting date of employment.
In order to be eligible for an employer to apply a foreign worker for an H-1B visa, the worker needed to meet certain requirements, such as an employee-employer relationship with the petitioning U.S. employer and a position in a specialty occupation related to the employee’s field of study, where the employee must meet one of the following criteria: a bachelor’s degree or the foreign equivalent of a bachelor’s degree, a degree that is standard for the position, or previous qualified experience within the specialty occupation.
If approved, the initial term of the visa is three years, which may be extended an additional three years. While residing in the United States on an H-1B visa, a worker may apply to become a permanent resident and receive a green card, which would entitle the worker to remain indefinitely.
U.S. employers are required to file a Labor Condition Application (LCA) on behalf of each foreign worker they seek to employ. That application must be approved by the U.S. Department of Labor. The LCA requires the employer to assure that the foreign worker will be paid a wage and be provided working conditions and benefits that meet or exceed the local prevailing market and to assure that the foreign worker will not displace a U.S. worker in the employer’s workforce.
Given these representations, U.S. employers have increasingly been criticized for abuse of the H-1B program. Most significantly, there is rising sentiment that U.S. employers are displacing domestic workers in favor of cheaper foreign labor. Research indicates that a U.S. worker’s salary for these specialty occupations often exceeds \$100,000, while that of a foreign worker is roughly \$62,000 for the very same job. The latter figure is telling, since \$60,000 is the threshold below which a salary would trigger a penalty.
Disney faced huge backlash and negative press because of the layoffs and hiring of foreign workers. Because of this, Disney had communication challenges, both internally and externally.
Disney executives framed the layoffs as part of a larger plan of reorganization intended to enable its IT division to focus on driving innovation. Walt Disney World spokesperson Jacquee Wahler gave the following explanation:
“We have restructured our global technology organization to significantly increase our cast member focus on future innovation and new capabilities, and are continuing to work with leading technical firms to maintain our existing systems as needed.” (Italics added for emphasis.)
That statement is consistent with a leaked memo drafted by Disney Parks and Resort CIO Tilak Mandadi, which he sent to select employees on November 10, 2014 (not including those who would be laid off), to explain the rationale for the impending layoffs. The memo read, in part, as follows:
“To enable a majority of our team to shift focus to new capabilities, we have executed five new managed services agreements to support testing services and application maintenance. Last week, we began working with both our internal subject matter experts and the suppliers to start transition planning for these agreements. We expect knowledge transfer to start later this month and last through January. Those Cast Members who are involved will be contacted in the next several weeks.”
Responding to the critical New York Times article, Disney represented that when all was said and done, the company had in fact produced a net jobs increase. According to Disney spokesperson Kim Prunty:
“Disney has created almost 30,000 new jobs in the U.S. over the past decade, and the recent changes to our parks’ IT team resulted in a larger organization with 70 additional in-house positions in the U.S. External support firms are responsible for complying with all applicable employment laws for their employees.”
New jobs were promised due to the restructuring, Disney officials said, and employees targeted for termination were pushed to apply for those positions. According to a confidential Disney source, of the approximately 250 laid-off employees, 120 found new jobs within Disney, 40 took early retirement, and 90 were unable to secure new jobs with Disney.
On June 11, 2015, Senator Richard Durbin of Illinois and Senator Jeffrey Sessions of Alabama released a statement regarding a bipartisan letter issued to the attorney general, the Department Homeland Security, and the Department of Labor.
“A number of U.S. employers, including some large, well-known, publicly-traded corporations, have laid off thousands of American workers and replaced them with H-1B visa holders . . . . To add insult to injury, many of the replaced American employees report that they have been forced to train the foreign workers who are taking their jobs. That’s just plain wrong and we’ll continue to press the Administration to help solve this problem.”
On July 7, 2015, The Daily Caller reported that the Department of Labor had commenced investigations of Disney after having received several formal complaints from laid-off workers. According to the report, Department of Labor personnel reached out to the former Disney workers to conduct phone interviews regarding names of displaced employees as well as typical salaries for the positions. Disney declined to comment on the report.
In response to request for comment on the communications issues raised by the Disney layoffs and aftermath, New York Times columnist Julia Preston shared the following exclusive analysis:
“I would say Disney’s handling of those lay-offs is a case study in how not to do things. But in the end it’s not about the communications, it’s about the company. Those layoffs showed a company that was not living up to its core vaunted family values and no amount of shouting by their communications folks could change the facts of what happened.”
Questions for Discussion
1. Is it ethical for U.S. companies to lay off workers and hire foreign workers under the H-1B program? Should foreign countries restrict the hiring of foreign workers that meet their workforce requirements?
2. Discuss the internal and external communications that Disney employed in this situation. The examples here are of the formal written communications. What should Disney have been communicating verbally to their employees and externally?
Sources: Preston, Julia, Pink Slips at Disney. But First, Training Foreign Replacements, The New York Times June 3, 2015, www.nytimes.com/2015/06/04/us...train-foreign- replacements.html; Vargas, Rebecca, EXCLUSIVE: Former Employees Speak Out About Disney's Outsourcing of High-Tech Jobs, WWSB ABC 7 (Oct. 28, 2015), http://www.mysuncoast.com/news/local...lusive-former- employees-speak-out-about-disney-s-outsourcing-of/ article_d8867148-7d8c-11e5-ae40-fb05081380c1.html; Boyle, Mathew, Ahead of GOP Debate, Two Ex-Disney Workers Displaced by H1B Foreigners Speak Out for First Time, Breitbart.com, October 28, 2015, http://www.breitbart.com/big-governm...isney-workers- displaced-by-h1b-foreigners-speak-out-for-first-time; Sandra Pedicini, Tech Workers File Lawsuits Against Disney Over H-1B Visas, Orlando Sentinel, published January 25, 2016, accessed February 6, 2016, available at http://www.orlandosentinel.com/busin...125-story.html; U.S. Citizenship and Immigration Services, Understanding H-1B Requirements, accessed February 6, 2016, available at https://www.uscis.gov/eir/visa-guide...standing-h-1b- requirements; May, Caroline, Sessions, Durbin: Department Of Labor Has Launched Investigation Into H-1B Abuses, Breitbart.com (June 11, 2015), http://www.breitbart.com/big-government/2015/06/11/ sessions-durbin-department-of-labor-has-launched-investigation-into-h-1b-abuses/; Stoltzfoos, Rachel, Feds Investigate Disney, HCL America Over January Layoffs, The Daily Caller (July 7, 2015), dailycaller.com/2015/07/07/fe...-over-january- layoffs/#ixzz41DY4x8Dy; Email from Julia Preston, National Immigration Correspondent, The New York Times, to Bryan Shannon, co-author of this case study, dated February 10, 2016.
concept check
• What are the four components of communication discussed in this section?
• Why is it important to understand your limitations in communicating to others and in larger groups?
• Why should managers always strive to improve their skills? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/11%3A_Communication/11.05%3A_The_Major_Channels_of_Management_Communication_Are_Talking_Listening_Reading_and_Writing.txt |
communicator The individual, group, or organization that needs or wants to share information with another individual, group, or organization.
decoding Interpreting and understanding and making sense of a message.
encoding Translating a message into symbols or language that a receiver can understand.
figurehead role A necessary role for a manager who wants to inspire people within the organization to feel connected to each other and to the institution, to support the policies and decisions made on behalf of the organization, and to work harder for the good of the institution.
interaction attentiveness/ interaction involvement A measure of how the receiver of a message is paying close attention and is alert or observant.
noise Anything that interferes with the communication process.
receiver The individual, group, or organization for which information is intended.
11.07: Summary of Learning Outcomes
11.1 The Process of Managerial Communication
1. Understand and describe the communication process.
The basic model of interpersonal communication consists of an encoded message, a decoded message, feedback, and noise. Noise refers to the distortions that inhibit message clarity.
11.2 Types of Communications in Organizations
2. Know the types of communications that occur in organizations.
Interpersonal communication can be oral, written, or nonverbal. Body language refers to conveying messages to others through such techniques as facial expressions, posture, and eye movements.
11.3 Factors Affecting Communications and the Roles of Managers
3. Understand how power, status, purpose, and interpersonal skills affect communications in organizations.
Interpersonal communication is influenced by social situations, perception, interaction involvement, and organizational design. Organizational communication can travel upward, downward, or horizontally. Each direction of information flow has specific challenges.
11.4 Managerial Communication and Corporate Reputation
4. Describe how corporate reputations are defined by how an organization communicates to all of its stakeholders.
It is important for managers to understand what your organization stands for (identity), what others think your organization is (reputation), and the contributions individuals can make to the success of the business considering their organization’s existing reputation. It is also about confidence—the knowledge that one can speak and write well, listen with great skill as others speak, and both seek out and provide the feedback essential to creating, managing, or changing their organization’s reputation.
11.5 The Major Channels of Management Communication Are Talking, Listening, Reading, and Writing
5. Describe the roles that managers perform in organizations.
There are special communication roles that can be identified. Managers may serve as gatekeepers, liaisons, or opinion leaders. They can also assume some combination of these roles. It is important to recognize that communication processes involve people in different functions and that all functions need to operate effectively to achieve organizational objectives.
11.08: Chapter Review Questions
1. Describe the communication process.
2. Why is feedback a critical part of the communication process?
3. What are some things that managers can do to reduce noise in communication?
4. Compare and contrast the three primary forms of interpersonal communication.
5. Describe the various individual communication roles in organizations.
6. How can managers better manage their effectiveness by managing e-mail communication?
7. Which communication roles are most important in facilitating managerial effectiveness?
8. Identify barriers to effective communication.
9. How can barriers to effective communication be overcome by managers? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/11%3A_Communication/11.06%3A_Glossary.txt |
1
The e-mails below are not written as clearly or concisely as they could be. In addition, they may have problems in organization or tone or mechanical errors. Rewrite them so they are appropriate for the audience and their purpose. Correct grammatical and mechanical errors. Finally, add a subject line to each.
E-Mail 1
To: Employees of The Enormously Successful Corporation From: CEO of The Enormously Successful Corporation Subject:
Stop bringing bottled soft drinks, juices and plastic straws to work. Its an environment problem that increases our waste and the quality of our water is great. People don’t realize how much wasted energy goes into shipping all that stuff around, and plastic bottles, aluminum cans and straws are ruining our oceans and filling land fills. Have you seen the floating island of waste in the Pacific Ocean? Some of this stuff comes from other countries like Canada Dry I think is from canada and we are taking there water and Canadians will be thirsty. Fancy drinks isn’t as good as the water we have and tastes better anyway.
E-Mail 2
To: All Employees From: Management Subject:
Our Committee to Improve Inter-Office Communication has decided that there needs to be an update and revision of our policy on emailing messages to and from those who work with us as employees of this company. The following are the results of the committee’s decisions, and constitute recommendations for the improvement of every aspect of email communication.
1. Too much wordiness means people have to read the same thing over and over repeatedly, time after time. Eliminating unnecessary words, emails can be made to be shorter and more to the point, making them concise and taking less time to read.
2. You are only allowed to send and receive messages between 8:30AM east coat time and 4:30PM east coast time. You are also not allowed to read e-mails outside of these times. We know that for those of you on the west coast or travelling internationally it will reduce the time that you are allowed to attend to e-mail, but we need this to get it under control.
3. You are only allowed to have up to 3 recipients on each e-mail. If more people need to be informed it is up to the people to inform them.
2
Write a self-evaluation that focuses specifically on your class participation in this course. Making comments during class allows you to improve your ability to speak extemporaneously, which is exactly what you will have to do in all kinds of business situations (e.g., meetings, asking questions at presentations, one-on-one conversations). Thus, write a short memo (two or three paragraphs) in which you describe the frequency with which you make comments in class, the nature of those comments, and what is easy and difficult for you when it comes to speaking up in class.
If you have made few (or no) comments during class, this is a time for us to come up with a plan to help you overcome your shyness. Our experience is that as soon as a person talks in front of a group once or twice, it becomes much easier—so we need to come up with a way to help you break the ice.
Finally, please comment on what you see as the strengths and weaknesses of your discussions and presentations in this class.
3
Refer to the photo in Exhibit 11.3. Comment on the body language exhibited by each person at the meeting and how engaged they are in the communication.
4
In the movie The Martian, astronaut Mark Watney (played by Matt Damon) is stranded on Mars with limited ability to communicate with mission control. Watney holds up questions to a camera that can transmit photographs of his questions, and mission control could respond by pointing the camera at a “yes” or “no” card with the camera. Eventually, they are able to exchange “text” messages but no voice exchanges. Also, there is a significant time delay between the sending and receipt of the messages. Which part of the communication process would have to be addressed to ensure that the encoding of the messages, the decoding of the messages, and that noise is minimized by Watney and mission control?
11.10: Managerial Decision Exercises
1. Ginni Rometty is the CEO of IBM. Shortly after taking on the role of CEO and being frustrated by the progress and sales performance, Rometty released a five-minute video to all 400,000 plus IBM employees criticizing the lack of securing deals to competitors and lashed out at the sales organization for poor sales in the preceding quarter. Six months later, Rometty sent another critical message, this time via e-mail. How effective will the video and e-mail be in communicating with employees? How should she follow up to these messages?
2. Social media, such as Facebook, is now widespread. Place yourself as a manager that has just received a “friend” request from one of your direct reports. Do you accept, reject, or ignore the request? Why, and what additional communication would you have regarding this with the employee?
3. During a cross-functional meeting, one of the attendees who reports to a manager who is also at the meeting accuses one of your reports of not being fit for the position she is in. You disagree and feel that your report is a good fit for her role. How do you handle this? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/11%3A_Communication/11.09%3A_Management_Skills_Application_Exercises.txt |
Facebook, Inc.
Facebook has been in the news with criticism of its privacy policies, sharing customer information with Fusion GPS, and criticism regarding the attempts to influence the 2016 election. In March 2014, Facebook released a study entitled “Experimental evidence of massive-scale emotional contagion through social networks.” It was published in the Proceedings of the National Academy of Sciences (PNAS), a prestigious, peer-reviewed scientific journal. The paper explains how social media can readily transfer emotional states from person to person through Facebook’s News Feed platform. Facebook conducted an experiment on members to see how people would respond to changes in a percentage of both positive and negative posts. The results suggest that emotional contagion does occur online and that users’ positive expressions can generate positive reaction, while, in turn, negative expression can generate negative reaction.
Facebook has two separate value propositions aimed at two different markets with entirely different goals.
Originally, Facebook’s main market was its end users—people looking to connect with family and friends. At first, it was aimed only at college students at a handful of elite schools. The site is now open to anyone with an Internet connection. Users can share status updates and photographs with friends and family. And all of this comes at no cost to the users.
Facebook’s other major market is advertisers, who buy information about Facebook’s users. The company regularly gathers data about page views and browsing behavior of users in order to display targeted advertisements to users for the benefit of its advertising partners.
The value proposition of the Facebook News Feed experiment was to determine whether emotional manipulation would be possible through the use of social networks. This clearly could be of great value to one of Facebook’s target audiences—its advertisers.
The results suggest that the emotions of friends on social networks influence our own emotions, thereby demonstrating emotional contagion via social networks. Emotional contagion is the tendency to feel and express emotions similar to and influenced by those of others. Originally, it was studied by psychologists as the transference of emotions between two people.
According to Sandra Collins, a social psychologist and University of Notre Dame professor of management, it is clearly unethical to conduct psychological experiments without the informed consent of the test subjects. While tests do not always measure what the people conducting the tests claim, the subjects need to at least know that they are, indeed, part of a test. The subjects of this test on Facebook were not explicitly informed that they were participating in an emotional contagion experiment. Facebook did not obtain informed consent as it is generally defined by researchers, nor did it allow participants to opt out.
When information about the experiment was released, the media response was overwhelmingly critical. Tech blogs, newspapers, and media reports reacted quickly.
Josh Constine of TechCrunch wrote:
“ . . . there is some material danger to experiments that depress people. Some people who are at risk of depression were almost surely part of Facebook’s study group that were shown a more depressing feed, which could be considered dangerous. Facebook will endure a whole new level of backlash if any of those participants were found to have committed suicide or had other depression-related outcomes after the study.”
The New York Times quoted Brian Blau, a technology analyst with the research firm Gartner, “Facebook didn’t do anything illegal, but they didn’t do right by their customers. Doing psychological testing on people crosses the line.” Facebook should have informed its users, he said. “They keep on pushing the boundaries, and this is one of the reasons people are upset.”
While some of the researchers have since expressed some regret about the experiment, Facebook as a company was unapologetic about the experiment. The company maintained that it received consent from its users through its terms of service. A Facebook spokesperson defended the research, saying, “We do research to improve our services and make the content people see on Facebook as relevant and engaging as possible. . . . We carefully consider what research we do and have a strong internal review process.”
With the more recent events, Facebook is changing the privacy settings but still collects an enormous amount of information about its users and can use that information to manipulate what users see. Additionally, these items are not listed on Facebook’s main terms of service page. Users must click on a link inside a different set of terms to arrive at the data policy page, making these terms onerous to find. This positioning raises questions about how Facebook will employ its users’ behaviors in the future.
Critical Thinking Questions
1. How should Facebook respond to the 2014 research situation? How could an earlier response have helped the company avoid the 2018 controversies and keep the trust of its users?
2. Should the company promise to never again conduct a survey of this sort? Should it go even further and explicitly ban research intended to manipulate the responses of its users?
3. How can Facebook balance the concerns of its users with the necessity of generating revenue through advertising?
4. What processes or structures should Facebook establish to make sure it does not encounter these issues again?
5. Respond in writing to the issues presented in this case by preparing two documents: a communication strategy memo and a professional business letter to advertisers.
Sources: Kramer, Adam; Guillory, Jamie; and Hancock, Jeffrey, “Experimental evidence of massive scale emotional contagion through social networks,” PNAS (Proceedings of the National Academy of Sciences of the United States of America). March 25, 2014 http://www.pnas.org/content/111/24/8788.full; Laja, Peep. “Useful Value Proposition Examples (and How to Create a Good One), ConversionXL, 2015 http://conversionxl.com/ value-proposition-examples-how-to-create/; Yadav, Sid. “Facebook - The Complete Biography,” Mashable, Aug. 25, 2006. http://mashable.com/2006/08/25/faceb.../#orb9TmeYHiqK; Felix, Samantha, “This Is How Facebook Is Tracking Your Internet Activity,” Business Insider, Sept. 9, 2012 http://www.businessinsider.com/ this-is-how-facebook-is-tracking-your-internet-activity-2012-9; | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/11%3A_Communication/11.11%3A_Critical_Thinking_Case.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. What is the nature of leadership and the leadership process?
2. What are the processes associated with people coming to leadership positions?
3. How do leaders influence and move their followers to action?
4. What are the trait perspectives on leadership?
5. What are the behavioral perspectives on leadership?
6. What are the situational perspectives on leadership?
7. What does the concept “substitute for leadership” mean?
8. What are the characteristics of transactional, transformational, and charismatic leadership?
9. How do different approaches and styles of leadership impact what is needed now?
12: Leadership
EXPLORING MANAGERIAL CAREERS
John Arroyo: Springfield Sea Lions
John Arroyo is thrilled with his new position as general manager of the Springfield Sea Lions, a minor league baseball team in. Arroyo has been a baseball fan all of his life, and now his diligent work and his degree in sports management are paying off.
Arroyo knew he had a hard act to follow. The general manager whom John replaced, “T.J.” Grevin, was a much-loved old-timer who had been with the Sea Lions since their inception 14 years ago. John knew it would be difficult for whoever followed T.J., but he didn’t realize how ostracized and powerless he would feel. He tried a pep talk: “I’m the general manager—the CEO of this ball club! In time, the staff will respect me.” [Not a very good pep talk!]
After his first season ends, Arroyo is discouraged. Ticket and concession sales are down, and some long- time employees are rumored to be thinking about leaving. If John doesn’t turn things around, he knows his tenure with the Sea Lions will be short.
Questions: Is John correct in assuming that the staff will learn to respect him in time? What can John do to earn the loyalty of his staff and improve the ball club’s performance?
Outcomes: During the winter, John thinks long and hard about how he can earn the respect of the Sea Lions staff. Before the next season opener, John announces his plan: “So I can better understand what your day is like, I’m going to spend one day in each of your shoes. I’m trading places with each of you. I will be a ticket taker, a roving hot dog vendor, and a janitor. And I will be a marketer, and an accountant—for a day. You in turn will have the day off so you can enjoy the game from the general manager’s box.” The staff laughs and whistles appreciatively. Then the Springfield mascot, Sparky the Sea Lion, speaks up: “Hey Mr. Arroyo, are you going to spend a day in my flippers?” “You bet!” says John, laughing. The entire staff cheers.
John continues. “At the close of the season, we will honor a staff member with the T.J. Grevin Award for outstanding contributions to the Sea Lions organization. T.J. was such a great guy, it’s only right that we honor him.” The meeting ends, but John’s staff linger to tell him how excited they are about his ideas. Amidst the handshakes, he hopes that this year may be the best year yet for the Sea Lions.
Sarah Elizabeth Roisland is the manager of a district claims office for a large insurance company. Fourteen people work for her. The results of a recent attitude survey indicate that her employees have extremely high job satisfaction and motivation. Conflict is rare in Sarah’s office. Furthermore, productivity measures place her group among the most productive in the entire company. Her success has brought the company’s vice president of human resources to her office in an attempt to discover the secret to her success. Sarah’s peers, superiors, and workers all give the same answer: she is more than a good manager—she is an outstanding leader. She continually gets high performance from her employees and does so in such a way that they enjoy working for her.
There is no magic formula for becoming a good leader. There are, however, many identifiable reasons why some people are better and more effective leaders. Leaders, especially effective leaders, are not created by simply attending a one-day leadership workshop. Yet effective leadership skills are not something most people are born with. You can become an effective leader if you are willing to invest the time and energy to develop all of the “right stuff.”
According to Louise Axon, director of content strategy, and her colleagues at Harvard Business Publishing, in seeking management talent, leadership is an urgently needed quality in all managerial roles.1 Good leaders and good leadership are rare. Harvard management professor John P. Kotter notes that "there is a leadership crisis in the U.S. today, "2 and the late USC Professor Warren Bennis states that many of our organizations are overmanaged and underled.3
1. What is the nature of leadership and the leadership process?
The many definitions of leadership each have a different emphasis. Some definitions consider leadership an act or behavior, such as initiating structure so group members know how to complete a task. Others consider a leader to be the center or nucleus of group activity, an instrument of goal achievement who has a certain personality, a form of persuasion and power, and the art of inducing compliance.4 Some look at leadership in terms of the management of group processes. In this view, a good leader develops a vision for the group, communicates that vision,5 orchestrates the group’s energy and activity toward goal attainment, “[turns] a group of individuals into a team,” and “[transforms] good intentions into positive actions.”6
Leadership is frequently defined as a social (interpersonal) influence relationship between two or more persons who depend on each other to attain certain mutual goals in a group situation.7 Effective leadership helps individuals and groups achieve their goals by focusing on the group’s maintenance needs (the need for individuals to fit and work together by having, for example, shared norms) and task needs (the need for the group to make progress toward attaining the goal that brought them together).
Leader versus Manager
The two dual concepts, leader and manager, leadership and management, are not interchangeable, nor are they redundant. The differences between the two can, however, be confusing. In many instances, to be a good manager one needs to be an effective leader. Many CEOs have been hired in the hope that their leadership skills, their ability to formulate a vision and get others to “buy into” that vision, will propel the organization forward. In addition, effective leadership often necessitates the ability to manage—to set goals; plan, devise, and implement strategy; make decisions and solve problems; and organize and control. For our purposes, the two sets of concepts can be contrasted in several ways.
First, we define the two concepts differently. In Management and Organizational Behavior, we defined management as a process consisting of planning, organizing, directing, and controlling. Here we define leadership as a social (interpersonal) influence relationship between two or more people who are dependent on each another for goal attainment.
Second, managers and leaders are commonly differentiated in terms of the processes through which they initially come to their position. Managers are generally appointed to their role. Even though many organizations appoint people to positions of leadership, leadership per se is a relationship that revolves around the followers’ acceptance or rejection of the leader.8 Thus, leaders often emerge out of events that unfold among members of a group.
Third, managers and leaders often differ in terms of the types and sources of the power they exercise. Managers commonly derive their power from the larger organization. Virtually all organizations legitimize the use of certain “carrots and sticks” (rewards and punishments) as ways of securing the compliance of their employees. In other words, by virtue of the position that a manager occupies (president, vice president, department head, supervisor), certain “rights to act” (schedule production, contract to sell a product, hire and fire) accompany the position and its place within the hierarchy of authority. Leaders can also secure power and the ability to exercise influence using carrots and sticks; however, it is much more common for leaders to derive power from followers’ perception of their knowledge (expertise), their personality and attractiveness, and the working relationship that has developed between leaders and followers.
From the perspective of those who are under the leader’s and manager’s influence, the motivation to comply often has a different base. The subordinate to a manager frequently complies because of the role authority of the manager, and because of the carrots and sticks that managers have at their disposal. The followers of a leader comply because they want to. Thus, leaders motivate primarily through intrinsic processes, while managers motivate primarily through extrinsic processes.
Finally, it is important to note that while managers may be successful in directing and supervising their subordinates, they often succeed or fail because of their ability or inability to lead.9 As noted above, effective leadership often calls for the ability to manage, and effective management often requires leadership.
concept check
• What is the nature of leadership and the leadership process? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.01%3A_The_Nature_of_Leadership.txt |
2. What are the processes associated with people coming to leadership positions?
Leadership is a process, a complex and dynamic exchange relationship built over time between leader and follower and between leader and the group of followers who depend on each other to attain a mutually desired goal.10 There are several key components to this "working relationship": the leader, the followers, the context (situation), the leadership process per se, and the consequences (outcomes) (see Exhibit 12.3).11 Across time, each component interacts with and influences the other components, and whatever consequences (such as leader-follower trust) are created influence future interactions. As any one of the components changes, so too will leadership.12
The Leader
Leaders are people who take charge of or guide the activities of others. They are often seen as the focus or orchestrater of group activity, the people who set the tone of the group so that it can move forward to attain its goals. Leaders provide the group with what is required to fulfill its maintenance and task-related needs. (Later in the chapter, we will return to the “leader as a person” as part of our discussion of the trait approach to leadership.)
The Follower
The follower is not a passive player in the leadership process. Edwin Hollander, after many years of studying leadership, suggested that the follower is the most critical factor in any leadership event.13 It is, after all, the follower who perceives the situation and comes to define the needs that the leader must fulfill. In addition, it is the follower who either rejects leadership or accepts acts of leadership by surrendering his power to the leader to diminish task uncertainty, to define and manage the meaning of the situation to the follower, and to orchestrate the follower’s action in pursuit of goal attainment.
The follower’s personality and readiness to follow determine the style of leadership that will be most effective. For example, individuals with an internal locus of control are much more responsive to participative styles of leadership than individuals with an external locus of control.14 Individuals with an authoritarian personality are highly receptive to the effectiveness of directive acts of leadership.15 It is the followers' expectations, as well as their performance-based needs, that determine what a leader must do in order to be effective.
The strength of the follower’s self-concept has also been linked to the leadership process. High-self-esteem individuals tend to have a strong sense of self-efficacy, that is, a generalized belief they can be successful in difficult situations. They therefore tend to be strongly motivated to perform and persist in the face of adversity.16 The high-self-esteem follower tends to be responsive to participative styles of leadership. Low-self-esteem individuals, who doubt their competence and worthiness and their ability to succeed in difficult situations, function better with supportive forms of leadership. This helps them deal with the stress, frustration, and anxiety that often emerge with difficult tasks. Followers without a readiness to follow, limited by their inability to perform and lack of motivation and commitment, usually need more directive forms of leadership.17
Follower behavior plays a major role in determining what behaviors leaders engage in. For example, followers who perform at high levels tend to cause their leaders to be considerate in their treatment and to play a less directive role. Followers who are poor performers, on the other hand, tend to cause their leaders to be less warm toward them and to be more directive and controlling in their leadership style.18
The Context
Situations make demands on a group and its members, and not all situations are the same. Context refers to the situation that surrounds the leader and the followers. Situations are multidimensional. We discuss the context as it pertains to leadership in greater detail later in this chapter, but for now let’s look at it in terms of the task and task environment that confront the group. Is the task structured or unstructured? Are the goals of the group clear or ambiguous? Is there agreement or disagreement about goals? Is there a body of knowledge that can guide task performance? Is the task boring? Frustrating? Intrinsically satisfying? Is the environment complex or simple, stable or unstable? These factors create different contexts within which leadership unfolds, and each factor places a different set of needs and demands on the leader and on the followers.
The Process
The process of leadership is separate and distinct from the leader (the person who occupies a central role in the group). The process is a complex, interactive, and dynamic working relationship between leader and followers. This working relationship, built over time, is directed toward fulfilling the group’s maintenance and task needs. Part of the process consists of an exchange relationship between the leader and follower. The leader provides a resource directed toward fulfilling the group’s needs, and the group gives compliance, recognition, and esteem to the leader. To the extent that leadership is the exercise of influence, part of the leadership process is captured by the surrender of power by the followers and the exercise of influence over the followers by the leader.19 Thus, the leader influences the followers and the followers influence the leader, the context influences the leader and the followers, and both leader and followers influence the context.
The Consequences
A number of outcomes or consequences of the leadership process unfold between leader, follower, and situation. At the group level, two outcomes are important:
• Have the group’s maintenance needs been fulfilled? That is, do members of the group like and get along with one another, do they have a shared set of norms and values, and have they developed a good working relationship? Have individuals’ needs been fulfilled as reflected in attendance, motivation, performance, satisfaction, citizenship, trust, and maintenance of the group membership?
• Have the group’s task needs been met? That is, there are also important consequences of the leadership process for individuals: attendance, motivation, performance, satisfaction, citizenship, trust, and maintenance of their group membership.
The leader-member exchange (LMX) theory of the leadership process focuses attention on consequences associated with the leadership process. The theory views leadership as consisting of a number of dyadic relationships linking the leader with a follower. A leader-follower relationship tends to develop quickly and remains relatively stable over time. The quality of the relationship is reflected by the degree of mutual trust, loyalty, support, respect, and obligation. High- and low-quality relationships between a leader and each of his followers produce in and out groups among the followers. Members of the in group come to be key players, and high-quality exchange relationships tend to be associated with higher levels of performance, commitment, and satisfaction than are low-quality exchange relationships.20 Attitudinal similarity and extroversion appear to be associated with a high-quality leader-member relationship.21
The nature of the leadership process varies substantially depending on the leader, the followers, and the situation and context. Thus, leadership is the function of an interaction between the leader, the follower, and the context.
The leadership context for the leader of a group of assembly line production workers differs from the context for the leader of a self-managing production team and from the context confronted by the lead scientists in a research laboratory. The leadership tactics that work in the first context might fail miserably in the latter two.
catching the entrepreneurial spirit
How a Start-Up Finds the Right Leader
Start-ups, by their very nature, require innovation to bring new products and services to market. Along with establishing a new brand or product, the leader has to develop the relationships and processes that make a company succeed, or risk its early demise. While leading an established firm has its challenges, a start-up requires even more from a leader.
How critical is leadership to a start-up? Ask the four cofounders of the now-defunct PYP (Pretty Young Professionals), a website founded as a source of information for young professional women. What began as four young professional women working on a new start-up ended with hurt feelings and threats of legal action. In 2010, Kathryn Minshew, Amanda Pouchot, Caroline Ghosn, and Alex Cavoulacos decided to create the website and Minshew was named CEO (Cohan 2011a). Lines blurred about Minshew’s authority and the ultimate look, feel, and direction of the website. Ideals about shared leadership, where the company was going, and how it was going to get there ultimately got lost in the power shuffle. By June 2011, passwords were changed and legal actions began, and in August Minshew and Cavoulacos left altogether (Cohan 2011b).
When the legal haggling from PYP was over, Alex Cavoulacos and Kathryn Minshew, joined by Melissa McCreery, tried again. But this time, rather than hoping for the best, they put a leadership plan in place. Minshew was named CEO of the new start-up, The Daily Muse, with Cavoulacos as chief operating officer and McCreery as editor in chief. Rather than trusting to luck, the three cofounders based their team positions on strengths and personalities. Cavoulacos and McCreery agreed that Minshew’s outgoing personality and confidence made her the proper choice as CEO (Casserly 2013).
No single trait will guarantee that a person can lead a start-up from idea to greatness, but a survey of successful entrepreneurs does show some common traits. According to David Barbash, a partner at Boston-based law firm Posternak Blankstein & Lund LLP, personality is paramount: “You can have great technology but if you’re not a great communicator it may die in the lab” (Casserly 2013 n.p.). A start-up needs a leader who is confident and willing, if not eager, to face the future. According to Michelle Randall, a principal of Enriching Leadership International, start-up CEOs have to be willing to fundraise and not be too proud to beg (Casserly 2013). Peter Shankman, an entrepreneur and angel investor, says leaders have to be willing to make the hard decisions, even risking being the bad guy (Casserly 2013).
Gary Vaynerchuk credits his success to six factors. Angel investor, social media marketer, and early social media adopter, Vaynerchuk leveraged YouTube in its early years to market wine from the family’s liquor store, eventually increasing sales from \$3 million to \$60 million a year (Clifford 2017). Gary believes good leaders recognize that they don’t dictate to the market, but rather respond to where it is going. They have respect for and believe in other people, and have a strong work ethic, what Vaynerchuk called a “lunch pail work ethic”: they are willing to put in long hours because they love the work, not the perks. He also stresses that he loves technology and doesn’t fear it, is obsessed with the youth of today, and is optimistic about people and the future of humanity (Vaynerchuk 2017).
Leading a startup requires more than simple management. It requires the right leader for the right company at the right time, which means matching the right management skills with the proper flexibility and drive to keep it all together and moving in the right direction.
1. Why would start-up leaders need different leadership qualities than someone managing an established firm?
2. Vaynerchuk has been quoted as saying that if you live for Friday, get a different job. How does this apply to successful entrepreneurs?
Sources:
Casserly, Meghan. 2013. “Rocks, Paper, CEO: Finding The Best Leader For Your Startup.” Forbes. www.forbes.com/sites/meghanc...ding-the-best- leader-for-your-startup/#16b520cd20a5
Clifford, Catherine. 2017. “Self-made millionaire Gary Vaynerchuk: This is the real secret to success.” CNBC. www.cnbc.com/2017/03/13/self...k-shares-real- secret-to-success.html
Cohan, Peter. 2011a. “A Cautionary Tale: Friendship, Business Ethics, and Bad Breakups (Acts I and II). Forbes. August 9, 2011. www.forbes.com/sites/peterco.../#256d318b2735
Cohan, Peter. 2011b. “A Cautionary Tale: Friendship, Business Ethics, and Bad Breakups (Acts III and IV). Forbes. August 9, 2011. www.forbes.com/sites/peterco...utionary-tale- friendship-business-ethics-and-bad-breakups-acts-iii-and-iv/3/#66b22dd4a4f6
Vaynerchuk, Gary. 2017. “What Makes Me a Great CEO.” https://www.garyvaynerchuk.com/makes- great-ceo/
concept check
• What are the processes associated with people coming to leadership positions? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.02%3A_The_Leadership_Process.txt |
3. How do leaders influence and move their followers to action?
Leaders hold a unique position in their groups, exercising influence and providing direction. Leonard Bernstein was part of the symphony, but his role as the New York Philharmonic conductor differed dramatically from that of the other symphony members. Besides conducting the orchestra, he created a vision for the symphony. In this capacity, leadership can be seen as a differentiated role and the nucleus of group activity.
Organizations have two kinds of leaders: formal and informal. A formal leader is that individual who is recognized by those outside the group as the official leader of the group. Often, the formal leader is appointed by the organization to serve in a formal capacity as an agent of the organization. Jack Welch was the formal leader of General Electric, and Leonard Bernstein was the formal leader of the symphony. Practically all managers act as formal leaders as part of their assigned role. Organizations that use self-managed work teams allow members of the team to select the individual who will serve as their team leader. When this person’s role is sanctioned by the formal organization, these team leaders become formal leaders. Increasingly, leaders in organizations will be those who “best sell” their ideas on how to complete a project—persuasiveness and inspiration are important ingredients in the leadership equation, especially in high-involvement organizations.22
Informal leaders, by contrast, are not assigned by the organization. The informal leader is that individual whom members of the group acknowledge as their leader. Athletic teams often have informal leaders, individuals who exert considerable influence on team members even though they hold no official, formal leadership position. In fact, most work groups contain at least one informal leader. Just like formal leaders, informal leaders can benefit or harm an organization depending on whether their influence encourages group members to behave consistently with organizational goals.
As we have noted, the terms leader and manager are not synonymous. Grace Hopper, retired U.S. Navy admiral, draws a distinction between leading and managing: “You don’t manage people, you manage things. You lead people.”23 Informal leaders often have considerable leverage over their colleagues. Traditionally, the roles of informal leaders have not included the total set of management responsibilities because an informal leader does not always exercise the functions of planning, organizing, directing, and controlling. However, high-involvement organizations frequently encourage their formal and informal leaders to exercise the full set of management roles. Many consider such actions necessary for self-managing work teams to succeed. Informal leaders are acknowledged by the group, and the group willingly responds to their leadership.
Paths to Leadership
People come to leadership positions through two dynamics. In many instances, people are put into positions of leadership by forces outside the group. University-based ROTC programs and military academies (like West Point) formally groom people to be leaders. We refer to this person as the designated leader (in this instance the designated and formal leader are the same person). Emergent leaders, on the other hand, arise from the dynamics and processes that unfold within and among a group of individuals as they endeavor to achieve a collective goal.
A variety of processes help us understand how leaders emerge. Gerald Salancik and Jeffrey Pfeffer observe that power to influence others flows to those individuals who possess the critical and scarce resources (often knowledge and expertise) that a group needs to overcome a major problem.24 They note that the dominant coalition and leadership in American corporations during the 1950s was among engineers, because organizations were engaged in competition based on product design. The power base in many organizations shifted to marketing as competition became a game of advertising aimed at differentiating products in the consumer’s mind. About 10–15 years ago, power and leadership once again shifted, this time to people with finance and legal backgrounds, because the critical contingencies facing many organizations were mergers, acquisitions, hostile takeovers, and creative financing. Thus, Salancik and Pfeffer reason that power and thus leadership flow to those individuals who have the ability to help an organization or group [overcome its critical contingencies]. As the challenges facing a group change, so too may the flow of power and leadership.
Many leaders emerge out of the needs of the situation. Different situations call for different configurations of knowledge, skills, and abilities. A group often turns to the member who possesses the knowledge, skills, and abilities that the group requires to achieve its goals.25 People surrender their power to individuals whom they believe will make meaningful contributions to attaining group goals.26 The individual to whom power is surrendered is often a member of the group who is in good standing. As a result of this member’s contributions to the group’s goals, he has accumulated idiosyncrasy credits (a form of competency-based status). These credits give the individual a status that allows him to influence the direction that the group takes as it works to achieve its goals.27
It is important to recognize that the traits possessed by certain individuals contribute significantly to their emergence as leaders. Research indicates that people are unlikely to follow individuals who, for example, do not display drive, self-confidence, knowledge of the situation, honesty, and integrity.
Leadership as an Exercise of Influence
As we have noted, leadership is the exercise of influence over those who depend on one another for attaining a mutual goal in a group setting. But how do leaders effectively exercise this influence? Social or (interpersonal) influence is one’s ability to effect a change in the motivation, attitudes, and/or behaviors of others. Power, then, essentially answers the “how” question: How do leaders influence their followers? The answer often is that a leader’s social influence is the source of his power.
French and Raven provide us with a useful typology that identifies the sources and types of power that may be at the disposal of leaders:
• Reward power—the power a person has because people believe that he can bestow rewards or outcomes, such as money or recognition that others desire
• Coercive power—the power a person has because people believe that he can punish them by inflicting pain or by withholding or taking away something that they value
• Referent power—the power a person has because others want to associate with or be accepted by him
• Expert power—the power a person has because others believe that he has and is willing to share expert
knowledge that they need (The concept of resource power extends the idea of expert power to include the power that a person has because others believe that he possesses and is willing to share resources, such as information, time, or materials that are needed.)
• Legitimate power—the power a person has because others believe that he possesses the “right” to
influence them and that they ought to obey. This right can originate in tradition; in the charisma or appeal of the person; and in laws, institutional roles within society, moralistic appeal, and rationality (that is, logical arguments, factual evidence, reason, and internally consistent positions).28
Not all forms of power are equally effective (see Exhibit 12.5), nor is a leader’s total power base the simple sum of the powers at his disposal. Different types of power elicit different forms of compliance: Leaders who rely on coercive power often alienate followers who resist their influence attempts. Leaders who rely on reward power develop followers who are very measured in their responses to [what?]; the use of rewards often leads people to think in terms of “How much am I getting?” or “How much should I give?” or “Am I breaking even?” The use of referent power produces identification with the leader and his cause. The use of rationality, expert power, and/or moralistic appeal generally elicits commitment and the internalization of the leader's goals.29
Leaders who use referent and expert power commonly experience a favorable response in terms of follower satisfaction and performance. Research suggests that rationality is the most effective influence tactic in terms of its impact on follower commitment, motivation, performance, satisfaction, and group effectiveness.30
Reward and legitimate power (that is, relying on one’s position to influence others) produce inconsistent results. Sometimes these powers lead to follower performance and satisfaction, yet they also sometimes fail. Coercive power can result in favorable performance, yet follower and resistance dissatisfaction are not uncommon.
Good leaders, whether formal or informal, develop many sources of power. Leaders who rely solely on their legitimate power and authority seldom generate the influence necessary to help their organization and its members succeed. In the process of building their power base, effective leaders have discovered that the use of coercive power tends to dilute the effectiveness of other powers, while the development and use of referent power tends to magnify the effectiveness of other forms of power. A compliment or reward from a person we like generally has greater value than one from someone we dislike, and punishment from someone we love (such as “tough love” from a parent) is less offensive than the pain inflicted by someone we dislike.31
In sum, one key to effective leadership, especially as it pertains to the exercise of social and interpersonal influence, relates to the type of power employed by the leader. Overall leader effectiveness will be higher when people follow because they want to follow. This is much more likely to happen when the leader’s influence flows out of intrinsic such as rationality, expertise, moralistic appeal, and/or referent power.
Leadership is also about having a vision and communicating that vision to others in such a way that it provides meaning for the follower.32 Language, ritual, drama, myths, symbolic constructions, and stories are some of the tools leaders use to capture the attention of their “followers to be” to evoke emotion and to manage the meaning “of the task (challenges) facing the group.”33 These tools help the leader influence the attitudes, motivation, and behavior of their followers.
The Tannenbaum and Schmidt Continuum
In the 1950s, Tannenbaum and Schmidt created a continuum (see Exhibit 12.6) along which leadership styles range from authoritarian to extremely high levels of worker freedom.34 Subsequent to Tannenbaum and Schmidt’s work, researchers adapted the continuum by categorizing leader power styles as autocratic (boss-centered), participative (workers are consulted and involved), or free-rein (members are assigned the decide on their own how to do it; the leader relinquishes the active assumption of the role of leadership).
Theory X and Theory Y Leaders
McGregor’s Theory X and Theory Y posits two different sets of attitudes about the individual as an organizational member.36 Theory X and Y thinking gives rise to two different styles of leadership. The Theory X leader assumes that the average individual dislikes work and is incapable of exercising adequate self-direction and self-control. As a consequence, they exert a highly controlling leadership style. In contrast, Theory Y leaders believe that people have creative capacities, as well as both the ability and desire to exercise self-direction and self-control. They typically allow organizational members significant amounts of discretion in their jobs and encourage them to participate in departmental and organizational decision-making. Theory Y leaders are much more likely to adopt involvement-oriented approaches to leadership and organically designed organizations for their leadership group.
Theory X and Theory Y thinking and leadership are not strictly an American phenomenon. Evidence suggests that managers from different parts of the global community commonly hold the same view. A study of 3,600 managers from 14 countries reveals that most of them held assumptions about human nature that could best be classified as Theory X.37 Even though managers might publicly endorse the merits of participatory management, most of them doubted their workers’ capacities to exercise self-direction and self-control and to contribute creativity.38
Directive/Permissive Leadership Styles
Contemplating the central role of problem-solving in management and leadership, Jan P. Muczyk and Bernard C. Reimann of Cleveland State University offer an interesting perspective on four different leadership styles (see Exhibit 12.7) that revolve around decision-making and implementation processes.39
A directive autocrat retains power, makes unilateral decisions, and closely supervises workers’ activities. This style of leadership is seen as appropriate when circumstances require quick decisions and organizational members are new, inexperienced, or underqualified. A doctor in charge of a hastily constructed shelter for victims of a tornado may use this style to command nonmedical volunteers.
The permissive autocrat mixes his or her use of power by retaining decision-making power but permitting organizational members to exercise discretion when executing those decisions. This leader behavior is recommended when decision-making time is limited, when tasks are routine, or when organizational members have sufficient expertise to determine appropriate role behaviors.
Also sharing power is the directive democrat, who encourages participative decision-making but retains the power to direct team members in the execution of their roles. This style is appropriate when followers have valuable opinions and ideas, but one person needs to coordinate the execution of the ideas. A surgeon might allow the entire surgical team to participate in developing a plan for a surgical procedure. Once surgery begins, however, the surgeon is completely in charge.
Finally, the permissive democrat shares power with group members, soliciting involvement in both decision- making and execution. This style is appropriate when participation has both informational and motivational value, when time permits group decision-making, when group members are capable of improving decision quality, and when followers are capable of exercising self-management in their performance of work.
The permissive democratic approach to leadership is characteristic of leadership in high-involvement organizations. Here, leaders act as facilitators, process consultants, network builders, conflict managers, inspirationalists, coaches, teachers/mentors, and cheerleaders.40 Such is the role of Ralph Stayer, founder, owner, and CEO of Johnsonville Foods. He defines himself as his company’s philosopher. At Quad/Graphics, president Harry V. Quadracci is a permissive democrat because he encourages all Quad employees to play a major role in decision-making and execution as they manage their teams as independent profit centers.
concept check
• What is the role of the leader and follower in the leadership process?
• How do the theories of Tannenbaum and Schmidt’s leadership continuum and McGregor’s Theory X and Theory Y attempt to define leadership? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.03%3A_Leader_Emergence.txt |
4. What are the trait perspectives on leadership?
Ancient Greek, Roman, Egyptian, and Chinese scholars were keenly interested in leaders and leadership. Their writings portray leaders as heroes. Homer, in his poem The Odyssey, portrays Odysseus during and after the Trojan War as a great leader who had vision and self-confidence. His son Telemachus, under the tutelage of Mentor, developed his father’s courage and leadership skills.41 Out of such stories there emerged the "great man” theory of leadership, and a starting point for the contemporary study of leadership.
The great man theory of leadership states that some people are born with the necessary attributes to be great leaders. Alexander the Great, Julius Caesar, Joan of Arc, Catherine the Great, Napoleon, and Mahatma Gandhi are cited as naturally great leaders, born with a set of personal qualities that made them effective leaders. Even today, the belief that truly great leaders are born is common. For example, Kenneth Labich, writer for Fortune magazine, commented that “the best leaders seem to possess a God-given spark.”42
During the early 1900s, scholars endeavored to understand leaders and leadership. They wanted to know, from an organizational perspective, what characteristics leaders hold in common in the hope that people with these characteristics could be identified, recruited, and placed in key organizational positions. This gave rise to early research efforts and to what is referred to as the trait approach to leadership. Prompted by the great man theory of leadership and the emerging interest in understanding what leadership is, researchers focused on the leader—Who is a leader? What are the distinguishing characteristics of the great and effective leaders? The great man theory of leadership holds that some people are born with a set of personal qualities that make truly great leaders. Mahatma Gandhi is often cited as a naturally great leader.
Leader Trait Research
Ralph Stogdill, while on the faculty at The Ohio State University, pioneered our modern (late 20th century) study of leadership.43 Scholars taking the trait approach attempted to identify physiological (appearance, height, and weight), demographic (age, education, and socioeconomic background), personality (dominance, self-confidence, and aggressiveness), intellective (intelligence, decisiveness, judgment, and knowledge), task- related (achievement drive, initiative, and persistence), and social characteristics (sociability and cooperativeness) with leader emergence and leader effectiveness. After reviewing several hundred studies of leader traits, Stogdill in 1974 described the successful leader this way:
The [successful] leader is characterized by a strong drive for responsibility and task completion, vigor and persistence in pursuit of goals, venturesomeness and originality in problem solving, drive to exercise initiative in social situations, self-confidence and sense of personal identity, willingness to accept consequences of decision and action, readiness to absorb interpersonal stress, willingness to tolerate frustration and delay, ability to influence other person’s behavior, and capacity to structure social interaction systems to the purpose at hand.44
The last three decades of the 20th century witnessed continued exploration of the relationship between traits and both leader emergence and leader effectiveness. Edwin Locke from the University of Maryland and a number of his research associates, in their recent review of the trait research, observed that successful leaders possess a set of core characteristics that are different from those of other people.45 Although these core traits do not solely determine whether a person will be a leader—or a successful leader—they are seen as preconditions that endow people with leadership potential. Among the core traits identified are:
• Drive—a high level of effort, including a strong desire for achievement as well as high levels of ambition, energy, tenacity, and initiative
• Leadership motivation—an intense desire to lead others
• Honesty and integrity—a commitment to the truth (nondeceit), where word and deed correspond
• Self-confidence—an assurance in one’s self, one’s ideas, and one’s ability
• Cognitive ability—conceptually skilled, capable of exercising good judgment, having strong analytical
abilities, possessing the capacity to think strategically and multidimensionally
• Knowledge of the business—a high degree of understanding of the company, industry, and technical
matters
• Other traits—charisma, creativity/originality, and flexibility/adaptiveness46
While leaders may be “people with the right stuff,” effective leadership requires more than simply possessing the correct set of motives and traits. Knowledge, skills, ability, vision, strategy, and effective vision implementation are all necessary for the person who has the “right stuff” to realize their leadership potential.47 According to Locke, people endowed with these traits engage in behaviors that are associated with honesty and integrity, self-confidence, and the motivation to lead.
Personality psychologists remind us that behavior is a result of an interaction between the person and the situation—that is, Behavior = f [(Person) (Situation)]. To this, psychologist Walter Mischel adds the important observation that personality tends to get expressed through an individual’s behavior in “weak” situations and to be suppressed in "strong" situations.48 A strong situation is one with strong behavioral norms and rules, strong incentives, clear expectations, and rewards for a particular behavior. Our characterization of the mechanistic organization with its well-defined hierarchy of authority, jobs, and standard operating procedures exemplifies a strong situation. The organic social system exemplifies a weak situation. From a leadership perspective, a person’s traits play a stronger role in their leader behavior and ultimately leader effectiveness when the situation permits the expression of their disposition. Thus, personality traits prominently shape leader behavior in weak situations.
Finally, about the validity of the “great person approach to leadership”: Evidence accumulated to date does not provide a strong base of support for the notion that leaders are born. Yet, the study of twins at the University of Minnesota leaves open the possibility that part of the answer might be found in our genes. Many personality traits and vocational interests (which might be related to one’s interest in assuming responsibility for others and the motivation to lead) have been found to be related to our “genetic dispositions” as well as to our life experiences.49 Each core trait recently identified by Locke and his associates traces a significant part of its existence to life experiences. Thus, a person is not born with self-confidence. Self-confidence is developed, honesty and integrity are a matter of personal choice, motivation to lead comes from within the individual and is within his control, and knowledge of the business can be acquired. While cognitive ability does in part find its origin in the genes, it still needs to be developed. Finally, drive, as a dispositional trait, may also have a genetic component, but it too can be self- and other-encouraged. It goes without saying that none of these ingredients are acquired overnight.
Other Leader Traits
Sex and gender, disposition, and self-monitoring also play an important role in leader emergence and leader style.
Sex and Gender Role
Much research has gone into understanding the role of sex and gender in leadership.50 Two major avenues have been explored: sex and gender roles in relation to leader emergence, and whether style differences exist across the sexes.
Evidence supports the observation that men emerge as leaders more frequently than women.51 Throughout history, few women have been in positions where they could develop or exercise leadership behaviors. In contemporary society, being perceived as experts appears to play an important role in the emergence of women as leaders. Yet, gender role is more predictive than sex. Individuals with “masculine” (for example, assertive, aggressive, competitive, willing to take a stand) as opposed to “feminine” (cheerful, affectionate, sympathetic, gentle) characteristics are more likely to emerge in leadership roles.52 In our society males are frequently socialized to possess the masculine characteristics, while females are more frequently socialized to possess the feminine characteristics.
Recent evidence, however, suggests that individuals who are androgynous (that is, who simultaneously possess both masculine and feminine characteristics) are as likely to emerge in leadership roles as individuals with only masculine characteristics. This suggests that possessing feminine qualities does not distract from the attractiveness of the individual as a leader.53
With regard to leadership style, researchers have looked to see if male-female differences exist in task and interpersonal styles, and whether or not differences exist in how autocratic or democratic men and women are. The answer is, when it comes to interpersonal versus task orientation, differences between men and women appear to be marginal. Women are somewhat more concerned with meeting the group’s interpersonal needs, while men are somewhat more concerned with meeting the group’s task needs. Big differences emerge in terms of democratic versus autocratic leadership styles. Men tend to be more autocratic or directive, while women are more likely to adopt a more democratic/participative leadership style.54 In fact, it may be because men are more directive that they are seen as key to goal attainment and they are turned to more often as leaders.55
Dispositional Trait
Psychologists often use the terms disposition and mood to describe and differentiate people. Individuals characterized by a positive affective state exhibit a mood that is active, strong, excited, enthusiastic, peppy, and elated. A leader with this mood state exudes an air of confidence and optimism and is seen as enjoying work-related activities.
Recent work conducted at the University of California-Berkeley demonstrates that leaders (managers) with positive affectivity (a positive mood state) tend to be more competent interpersonally, to contribute more to group activities, and to be able to function more effectively in their leadership role.56 Their enthusiasm and high energy levels appear to be infectious, transferring from leader to followers. Thus, such leaders promote group cohesiveness and productivity. This mood state is also associated with low levels of group turnover and is positively associated with followers who engage in acts of good group citizenship.57
Self-Monitoring
Self-monitoring as a personality trait refers to the strength of an individual’s ability and willingness to read verbal and nonverbal cues and to alter one’s behavior so as to manage the presentation of the self and the images that others form of the individual. “High self-monitors” are particularly astute at reading social cues and regulating their self-presentation to fit a particular situation. “Low self-monitors” are less sensitive to social cues; they may either lack motivation or lack the ability to manage how they come across to others.
Some evidence supports the position that high self-monitors emerge more often as leaders. In addition, they appear to exert more influence on group decisions and initiate more structure than low self-monitors. Perhaps high self-monitors emerge as leaders because in group interaction they are the individuals who attempt to organize the group and provide it with the structure needed to move the group toward goal attainment.58
concept check
• What are the trait perspectives on leadership? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.04%3A_The_Trait_Approach_to_Leadership.txt |
5. What are the behavioral perspectives on leadership?
The nearly four decades of research that focused on identifying the personal traits associated with the emergence of leaders and leader effectiveness resulted in two observations. First, leader traits are important—people who are endowed with the “right stuff” (drive, self-confidence, honesty, and integrity) are more likely to emerge as leaders and to be effective leaders than individuals who do not possess these characteristics. Second, traits are only a part of the story. Traits only account for part of why someone becomes a leader and why they are (or are not) effective leaders.
Still under the influence of the great man theory of leadership, researchers continued to focus on the leader in an effort to understand leadership—who emerges and what constitutes effective leadership. Researchers then began to reason that maybe the rest of the story could be understood by looking at what it is that leaders do. Thus, we now turn our attention to leader behaviors and the behavioral approaches to leadership.
It is now common to think of effective leadership in terms of what leaders do. CEOs and management consultants agree that effective leaders display trust in their employees, develop a vision, keep their cool, encourage risk, bring expertise into the work setting, invite dissent, and focus everyone’s attention on that which is important.59 William Arruda, in a Fortune article, noted that "organizations with strong coaching cultures report their revenue to be above average, compared to their peer group.” Sixty-five percent of employees “from strong coaching cultures rated themselves as highly engaged,” compared to 13 percent of employees worldwide."66 Jonathan Anthony calls himself an entrapreneur and corporate disorganizer, because same-old, same-old comms practices are dying in front of our eyes.61 Apple found Steve Jobs believed that the best leaders are coaches and team cheerleaders. Similar views have been frequently echoed by management consultant Tom Peters.
During the late 1940s, two major research programs—The Ohio State University and the University of Michigan leadership studies—were launched to explore leadership from a behavioral perspective.
The Ohio State University Studies
A group of Ohio State University researchers, under the direction of Ralph Stogdill, began an extensive and systematic series of studies to identify leader behaviors associated with effective group performance. Their results identified two major sets of leader behaviors: consideration and initiating structure.
Consideration is the “relationship-oriented” behavior of a leader. It is instrumental in creating and maintaining good relationships (that is, addressing the group’s maintenance needs) with organizational members. Consideration behaviors include being supportive and friendly, representing people’s interests, communicating openly with group members, recognizing them, respecting their ideas, and sharing concern for their feelings.
Initiating structure involves “task-oriented” leader behaviors. It is instrumental in the efficient use of resources to attain organizational goals, thereby addressing the group’s task needs. Initiating structure behaviors include scheduling work, deciding what is to be done (and how and when to do it), providing direction to organizational members, planning, coordinating, problem-solving, maintaining standards of performance, and encouraging the use of uniform procedures.
After consideration and initiating structure behaviors were first identified, many leaders believed that they had to behave one way or the other. If they initiated structure, they could not be considerate, and vice versa. It did not take long, however, to recognize that leaders can simultaneously display any combination of both behaviors.
The Ohio State studies are important because they identified two critical categories of behavior that distinguish one leader from another. Both consideration and initiating structure behavior can significantly impact work attitudes and behaviors. Unfortunately, the effects of consideration and initiating structure are not consistent from situation to situation.62 In some of the organizations studied, for example high levels of initiating structure increased performance. In other organizations, the amount of initiating structure seemed to make little difference. Although most organizational members reported greater satisfaction when leaders acted considerately, consideration behavior appeared to have no clear effect on performance.
Initially, these mixed findings were disappointing to researchers and managers alike. It had been hoped that a profile of the most effective leader behaviors could be identified so that leaders could be trained in the best ways to behave. Research made clear, however, that there is no one best style of leader behavior for all situations.
The University of Michigan Studies
At about the same time that the Ohio State studies were underway, researchers at the University of Michigan also began to investigate leader behaviors. As at Ohio State, the Michigan researchers attempted to identify behavioral elements that differentiated effective from ineffective leaders.63
The two types of leader behavior that stand out in these studies are job centered and organizational member centered. Job-centered behaviors are devoted to supervisory functions, such as planning, scheduling, coordinating work activities, and providing the resources needed for task performance. Employee-member- centered behaviors include consideration and support for organizational members. These dimensions of behavior, of course, correspond closely to the dimensions of initiating structure and consideration identified at Ohio State. The similarity of the findings from two independent groups of researchers added to their credibility. As the Ohio State researchers had done, the Michigan researchers also found that any combination of the two behaviors was possible.
The studies at Michigan are significant because they reinforce the importance of leader behavior. They also provide the basis for later theories that identify specific, effective matches of work situations and leader behaviors. Subsequent research at Michigan and elsewhere has found additional behaviors associated with effective leadership: support, work facilitation, goal emphasis, and interaction facilitation.64
These four behaviors are important to the successful functioning of the group in that support and interaction facilitation contribute to the group’s maintenance needs, and goal emphasis and work facilitation contribute to the group’s task needs. The Michigan researchers also found that these four behaviors do not need to be brought to the group by the leader. In essence, the leader’s real job is to set the tone and create the climate that ensure these critical behaviors are present.65
The Leadership Grid®
Much of the credit for disseminating knowledge about important leader behaviors must go to Robert R. Blake and Jane S. Mouton, who developed a method for classifying styles of leadership compatible with many of the ideas from the Ohio State and Michigan studies.66 In their classification scheme, concern for results (production) emphasizes output, cost effectiveness, and (in for-profit organizations) a concern for profits. Concern for people involves promoting working relationships and paying attention to issues of importance to group members. As shown in Exhibit 12.9, the Leadership Grid® demonstrates that any combination of these two leader concerns is possible, and five styles of leadership are highlighted here.
Blake and Mouton contend that the sound (contribute and commit) leader (a high concern for results and people, or 9,9) style is universally the most effective.67 While the Leadership Grid® is appealing and well structured, research to date suggests that there is no universally effective style of leadership (9,9 or otherwise).68 There are, however, well-identified situations in which a 9.9 style is unlikely to be effective. Organizational members of high-involvement organizations who have mastered their job duties require little production-oriented leader behavior. Likewise, there is little time for people-oriented behavior during an emergency. Finally, evidence suggests that the “high-high” style may be effective when the situation calls for high levels of initiating structure. Under these conditions, the initiation of structure is more acceptable, favorably affecting follower satisfaction and performance, when the leader is also experienced as warm, supportive, and considerate.69
concept check
• What are the behavioral approaches to defining leadership?
• What roles do gender and the popular perceptions of gender roles have on views of leadership traits? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.05%3A_Behavioral_Approaches_to_Leadership.txt |
6. What are the situational perspectives on leadership?
As early as 1948, Ralph Stogdill stated that “the qualities, characteristics, and skills required in a leader are determined to a large extent by the demands of the situation in which he is to function as a leader.”70 In addition, it had been observed that two major leader behaviors, initiating structure and consideration, didn’t always lead to equally positive outcomes. That is, there are times when initiating structure results in performance increases and follower satisfaction, and there are times when the results are just the opposite. Contradictory findings such as this lead researchers to ask “Under what conditions are the results positive in nature?” and “When and why are they negative at other times?” Obviously, situational differences and key contingencies are at work.
Several theories have been advanced to address this issue. These are Fiedler’s contingency theory of leadership, the path-goal theory of leader effectiveness, Hersey and Blanchard’s life cycle theory, cognitive resource theory, the decision tree, and the decision process theory.71 We explore two of the better-known situational theories of leadership, Fred Fiedler’s contingency model and Robert J. House’s path-goal theory, here. Victor Vroom, Phillip Yetton, and Arthur Jago’s decision tree model also applies.
Fiedler's Contingency Model
One of the earliest, best-known, and most controversial situation-contingent leadership theories was set forth by Fred E. Fiedler from the University of Washington.72 This theory is known as the contingency theory of leadership. According to Fiedler, organizations attempting to achieve group effectiveness through leadership must assess the leader according to an underlying trait, assess the situation faced by the leader, and construct a proper match between the two.
The Leader's Trait
Leaders are asked about their least-preferred coworker (LPC), the person with whom they least like to work. The most popular interpretation of the LPC score is that it reflects a leader’s underlying disposition toward others—for example: pleasant/unpleasant, cold/warm, friendly/unfriendly, and untrustworthy/trustworthy. (You can examine your own LPC score by completing the LPC self-assessment on the following page.)
Fiedler states that leaders with high LPC scores are relationship oriented—they need to develop and maintain close interpersonal relationships. They tend to evaluate their least-preferred coworkers in fairly favorable terms. Task accomplishment is a secondary need to this type of leader and becomes important only after the need for relationships is reasonably well satisfied. In contrast, leaders with low LPC scores tend to evaluate the individuals with whom they least like to work fairly negatively. They are task-oriented people, and only after tasks have been accomplished are low-LPC leaders likely to work on establishing good social and interpersonal relations.
The Situational Factor
Some situations favor leaders more than others do. To Fiedler, situational favorableness is the degree to which leaders have control and influence and therefore feel that they can determine the outcomes of a group interaction.73 Several years later, Fiedler changed his situational factor from the situational favorability to situational control—where situational control essentially refers to the degree to which a leader can influence the group process.74 Three factors work together to determine how favorable a situation is to a leader. In order of importance, they are (1) leader-member relations—the degree of the group’s acceptance of the leader, their ability to work well together, and members’ level of loyalty to the leader; (2) task structure—the degree to which the task specifies a detailed, unambiguous goal and how to achieve it; and (3) position power—a leader’s direct ability to influence group members. The situation is most favorable for a leader when the relationship between the leader and group members is good, when the task is highly structured, and when the leader’s position power is strong (cell 1 in Exhibit 12.10). The least-favorable situation occurs under poor leader-member relations, an unstructured task, and weak position power (cell 8).
Leader-Situation Matches
Some combinations of leaders and situations work well; others do not. In search of the best combinations, Fiedler examined a large number of leadership situations. He argued that most leaders have a relatively unchangeable or dominant style, so organizations need to design job situations to fit the leader.75
While the model has not been fully tested and tests have often produced mixed or contradictory findings,76 Fiedler’s research indicates that relationship-oriented (high-LPC) leaders are much more effective under conditions of intermediate favorability than under either highly favorable or highly unfavorable situations. Fiedler attributes the success of relationship-oriented leaders in situations with intermediate favorability to the leader’s nondirective, permissive attitude; a more directive attitude could lead to anxiety in followers, conflict in the group, and a lack of cooperation.
For highly favorable and unfavorable situations, task-oriented leaders (those with a low LPC) are very effective. As tasks are accomplished, a task-oriented leader allows the group to perform its highly structured tasks without imposing more task-directed behavior. The job gets done without the need for the leader’s direction. Under unfavorable conditions, task-oriented behaviors, such as setting goals, detailing work methods, and guiding and controlling work behaviors, move the group toward task accomplishment.
As might be expected, leaders with mid-range LPC scores can be more effective in a wider range of situations than high- or low-LPC leaders.77 Under conditions of low favorability, for example, a middle-LPC leader can be task oriented to achieve performance, but show consideration for and allow organizational members to proceed on their own under conditions of high situational favorability.
Controversy over the Theory
Although Fiedler’s theory often identifies appropriate leader-situation matches and has received broad support, it is not without critics. Some note that it characterizes leaders through reference to their attitudes or personality traits (LPC) while it explains the leader’s effectiveness through their behaviors—those with a particular trait will behave in a particular fashion. The theory fails to make the connection between the least-preferred coworker attitude and subsequent behaviors. In addition, some tests of the model have produced mixed or contradictory findings.78 Finally, what is the true meaning of the LPC score-exactly what is being revealed by a person who sees their least-preferred coworker in positive or negative terms? Robert J. House and Ram N. Aditya recently noted that, in spite of the criticisms, there has been substantial support for Fiedler's theory.79
Path-Goal Theory
Robert J. House and Martin Evans, while on the faculty at the University of Toronto, developed a useful leadership theory. Like Fiedler’s, it asserts that the type of leadership needed to enhance organizational effectiveness depends on the situation in which the leader is placed. Unlike Fiedler, however, House and Evans focus on the leader’s observable behavior. Thus, managers can either match the situation to the leader or modify the leader’s behavior to fit the situation.
The model of leadership advanced by House and Evans is called the path-goal theory of leadership because it suggests that an effective leader provides organizational members with a path to a valued goal. According to House, the motivational function of the leader consists of increasing personal payoffs to organizational members for work-goal attainment, and making the path to these payoffs easier to travel by clarifying it, reducing roadblocks and pitfalls, and increasing the opportunities for personal satisfaction en route.80
Effective leaders therefore provide rewards that are valued by organizational members. These rewards may be pay, recognition, promotions, or any other item that gives members an incentive to work hard to achieve goals. Effective leaders also give clear instructions so that ambiguities about work are reduced and followers understand how to do their jobs effectively. They provide coaching, guidance, and training so that followers can perform the task expected of them. They also remove barriers to task accomplishment, correcting shortages of materials, inoperative machinery, or interfering policies.
An Appropriate Match
According to the path-goal theory, the challenge facing leaders is basically twofold. First, they must analyze situations and identify the most appropriate leadership style. For example, experienced employees who work on a highly structured assembly line don’t need a leader to spend much time telling them how to do their jobs—they already know this. The leader of an archeological expedition, though, may need to spend a great deal of time telling inexperienced laborers how to excavate and care for the relics they uncover.
Second, leaders must be flexible enough to use different leadership styles as appropriate. To be effective, leaders must engage in a wide variety of behaviors. Without an extensive repertoire of behaviors at their disposal, a leader’s effectiveness is limited.81 All team members will not, for example, have the same need for autonomy. The leadership style that motivates organizational members with strong needs for autonomy (participative leadership) is different from that which motivates and satisfies members with weaker autonomy needs (directive leadership). The degree to which leadership behavior matches situational factors will determine members’ motivation, satisfaction, and performance (see Exhibit 12.11).82
Behavior Dimensions
According to path-goal theory, there are four important dimensions of leader behavior, each of which is suited to a particular set of situational demands.83
• Supportive leadership—At times, effective leaders demonstrate concern for the well-being and personal needs of organizational members. Supportive leaders are friendly, approachable, and considerate to individuals in the workplace. Supportive leadership is especially effective when an organizational member is performing a boring, stressful, frustrating, tedious, or unpleasant task. If a task is difficult and a group member has low self-esteem, supportive leadership can reduce some of the person’s anxiety, increase his confidence, and increase satisfaction and determination as well.
• Directive leadership—At times, effective leaders set goals and performance expectations, let organizational members know what is expected, provide guidance, establish rules and procedures to guide work, and schedule and coordinate the activities of members. Directive leadership is called for when role ambiguity is high. Removing uncertainty and providing needed guidance can increase members’ effort, job satisfaction, and job performance.
Participative leadership—At times, effective leaders consult with group members about job-related activities and consider their opinions and suggestions when making decisions. Participative leadership is effective when tasks are unstructured. Participative leadership is used to great effect when leaders need help in identifying work procedures and where followers have the expertise to provide this help.
• Achievement-oriented leadership—At times, effective leaders set challenging goals, seek improvement in performance, emphasize excellence, and demonstrate confidence in organizational members’ ability to attain high standards. Achievement-oriented leaders thus capitalize on members’ needs for achievement and use goal-setting theory to great advantage.
Cross-Cultural Context
Gabriel Bristol, the CEO of Intelifluence Live, a full-service customer contact center offering affordable inbound customer service, outbound sales, lead generation and consulting services for small to mid-sized businesses, notes “diversity breeds innovation, which helps businesses achieve goals and tackle new challenges.”84 Multiculturalism is a new reality as today’s society and workforce become increasingly diverse. This naturally leads to the question “Is there a need for a new and different style of leadership?”
The vast majority of the contemporary scholarship directed toward understanding leaders and the leadership process has been conducted in North America and Western Europe. Westerners have “developed a highly romanticized, heroic view of leadership.”85 Leaders occupy center stage in organizational life. We use leaders in our attempts to make sense of the performance of our groups, clubs, organizations, and nations. We see them as key to organizational success and profitability, we credit them with organizational competitiveness, and we blame them for organizational failures. At the national level, recall that President Reagan brought down Communism and the Berlin Wall, President Bush won the Gulf War, and President Clinton brought unprecedented economic prosperity to the United States during the 1990s.
This larger-than-life role ascribed to leaders and the Western romance with successful leaders raise the question “How representative is our understanding of leaders and leadership across cultures?” That is, do the results that we have examined in this chapter generalize to other cultures?
Geert Hofstede points out that significant value differences (individualism-collectivism, power distance, uncertainty avoidance, masculinity-femininity, and time orientation) cut across societies. Thus, leaders of culturally diverse groups will encounter belief and value differences among their followers, as well as in their own leader-member exchanges.
There appears to be consensus that a universal approach to leadership and leader effectiveness does not exist. Cultural differences work to enhance and diminish the impact of leadership styles on group effectiveness. For example, when leaders empower their followers, the effect for job satisfaction in India has been found to be negative, while in the United States, Poland, and Mexico, the effect is positive.86 The existing evidence suggests similarities as well as differences in such areas as the effects of leadership styles, the acceptability of influence attempts, and the closeness and formality of relationships. The distinction between task and relationship-oriented leader behavior, however, does appear to be meaningful across cultures.87 Leaders whose behaviors reflect support, kindness, and concern for their followers are valued and effective in Western and Asian cultures. Yet it is also clear that democratic, participative, directive, and contingent-based rewards and punishment do not produce the same results across cultures. The United States is very different from Brazil, Korea, New Zealand, and Nigeria. The effective practice of leadership necessitates a careful look at, and understanding of, the individual differences brought to the leader-follower relationship by cross-cultural context.88
concept check
• Identify and describe the variables presented in Fiedler’s theory of leadership.
• What are the leadership behaviors in the path-goal theory of leadership?
• What role does culture have in how leadership is viewed?
• What are the differences between the trait, behavioral, and situational approaches to defining leadership? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.06%3A_Situational_%28Contingency%29_Approaches_to_Leadership.txt |
7. What does the concept “substitute for leadership” mean?
Several factors have been discovered that can substitute for or neutralize the effects of leader behavior (see Table 12.1).89 Substitutes for leadership behavior can clarify role expectations, motivate organizational members, or satisfy members (making it unnecessary for the leader to attempt to do so). In some cases, these substitutes supplement the behavior of a leader. Sometimes it is a group member’s characteristics that make leadership less necessary, as when a master craftsperson or highly skilled worker performs up to his or her own high standards without needing outside prompting. Sometimes the task’s characteristics take over, as when the work itself—solving an interesting problem or working on a familiar job—is intrinsically satisfying. Sometimes the characteristics of the organization make leadership less necessary, as when work rules are so clear and specific that workers know exactly what they must do without help from the leader (see An Inside Look at flat management structure and the orchestra with no leader).
Neutralizers of leadership, on the other hand, are not helpful; they prevent leaders from acting as they wish. A computer-paced assembly line, for example, prevents a leader from using initiating structure behavior to pace the line. A union contract that specifies that workers be paid according to seniority prevents a leader from dispensing merit-based pay. Sometimes, of course, neutralizers can be beneficial. Union contracts, for example, clarify disciplinary proceedings and identify the responsibilities of both management and labor. Leaders must be aware of the presence of neutralizers and their effects so that they can eliminate troublesome neutralizers or take advantage of any potential benefits that accompany them (such as the clarity of responsibilities provided by a union contract). If a leader’s effectiveness is being neutralized by a poor communication system, for example, the leader might try to remove the neutralizer by developing (or convincing the organization to develop) a more effective system.
Followers differ considerably in their focus of attention while at work, thereby affecting the effectiveness of the act of leadership. Focus of attention is an employee’s cognitive orientation while at work. It reflects what and how strongly an individual thinks about various objects, events, or phenomena while physically present at work. Focus of attention reflects an individual difference in that not all individuals have the same cognitive orientation while at work—some think a great deal about their job, their coworkers, their leader, or off-the-job factors, while others daydream.90 An employee's focus of attention has both "trait" and "state" qualities. For example, there is a significant amount of minute-by-minute variation in an employee’s focus of attention (the “state” component), and there is reasonable consistency in the categories of events that employees think about while they are at work (the “trait” component).
Research suggests that the more followers focus on off-job (nonleader) factors, the less they will react to the leader’s behaviors. Thus, a strong focus on one’s life “away from work” (for example, time with family and friends) tends to neutralize the motivational, attitudinal, and/or behavioral effects associated with any particular leader behavior. It has also been observed, however, that a strong focus on the leader, either positive or negative, enhances the impact that the leader’s behaviors have on followers.91
managerial Leadership
You Are Now the Leader
Leading and managing are two very different things. Being a manager means something more than gaining authority or charge over former colleagues. With the title does come the power to affect company outcomes, but it also comes with something more: the power to shape the careers and personal growth of subordinates.
According to Steve Keating, a senior manager at the Toro Company, it is important not to assume that being made a manager automatically makes you a leader. Rather, being a manager means having the opportunity to lead. Enterprises need managers to guide processes, but the employees—the people—need a leader. Keating believes that leaders need a mindset that emphasizes people, and the leader’s job is to help the people in the organization to be successful. According to Keating, “If you don’t care for people, you can’t lead them” (Hakim 2017 n.p.).
For someone who has been promoted over his peers, ground rules are essential. "Promotion doesn’t mean the end of friendship but it does change it," according to Keating. If a peer has been promoted, rather than grouse and give in to envy, it is important to step back and look at the new manager; take a hard look at why the peer was promoted and what skill or characteristic made you a less appealing fit for the position (Hakim 2017).
Carol Walker, president of Prepared to Lead, a management consulting firm, advises new managers to develop a job philosophy. She urges new managers to develop a core philosophy that provides a guide to the day-to-day job of leading. She urges managers to build up the people they are leading and work as a "servant leader." The manager’s perspective should be on employee growth and success. Leaders must bear in mind that employees don’t work for the manager; they work for the organization—and for themselves. Managers coordinate this relationship; they are not the center of it. Work should not be assigned haphazardly, but with the employee’s skills and growth in mind. “An employee who understands why she has been asked to do something is far more likely to assume true ownership for the assignment," Walker says (Yakowicz 2015 n.p.). A leader’s agenda should be on employee success, not personal glory. Employees are more receptive when they recognize that their leader is working not for their own success, but for the employee’s success.
A survey from HighGround revealed one important item that most new managers and even many seasoned managers overlook: asking for feedback. Everyone has room for growth, even managers. Traditional management dictates a top-down style in which managers review subordinates. But many companies have found it beneficial to turn things around and ask employees, “How can I be a better manager?” Of course, this upward review only works if employees believe that their opinion will be heard. Managers need to carefully cultivate a rapport where employees don't fear reprisals for negative feedback. Listening to criticism from those you are leading builds trust and helps ensure that as a manager, you are providing the sort of leadership that employees need to be successful (Kauflin 2017). Showing respect and caring for employees by asking this simple question is inspiring—an important aspect of leadership itself. Whether asking for feedback or focusing on an employee’s fit with a particular job description, a leader helps guide employees through the day-to-day, builds a positive culture, and helps employees improve their skills.
Questions
1. What do you think are the most important qualities in a leader? In a manager? Are your two lists mutually exclusive? Why?
2. How do you think a leader can use feedback to model the growth process for employees?
Sources
Hakim, Amy C. 2017. “When a Manager Becomes a Leader.” Psychology Today. www.psychologytoday.com/blog...nager-becomes- leader
Yakowicz, Will. 2015. “How to Help a New Manager Become a Great Leader.” Inc. https://www.inc.com/will-yakowicz/ho...t-leaders.html
Kauflin, Jeff. 2017. “Every Manager Can Become A Better Leader By Asking This One Question.” Forbes. www.forbes.com/sites/jeffkau...come-a-better- leader-by-asking-this-one-question/#3ca1eaff4ac1
concept check
• Identify and describe substitutes of leadership. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.07%3A_Substitutes_for_and_Neutralizers_of_Leadership.txt |
8. What are the characteristics of transactional, transformational, and charismatic leadership?
Many organizations struggling with the need to manage chaos, to undergo a culture change, to empower organizational members, and to restructure have looked for answers in “hiring the right leader.” Many have come to believe that the transformational, visionary, and charismatic leader represents the style of leadership needed to move organizations through chaos.
The Transformational and Visionary Leader
Leaders who subscribe to the notion that “if it ain’t broke, don’t fix it” are often described as transactional leaders. They are extremely task oriented and instrumental in their approach, frequently looking for incentives that will induce their followers into a desired course of action.92 These reciprocal exchanges take place in the context of a mutually interdependent relationship between the leader and the follower, frequently resulting in interpersonal bonding.93 The transactional leader moves a group toward task accomplishment by initiating structure and by offering an incentive in exchange for desired behaviors. The transformational leader, on the other hand, moves and changes (fixes) things “in a big way”! Unlike transactional leaders, they don’t cause change by offering inducements. Instead, they inspire others to action through their personal values, vision, passion, and belief in and commitment to the mission.94 Through charisma (idealized influence), individualized consideration (a focus on the development of the follower), intellectual stimulation (questioning assumptions and challenging the status quo), and/or inspirational motivation (articulating an appealing vision), transformational leaders move others to follow.
The transformational leader is also referred to as a visionary leader. Visionary leaders are those who influence others through an emotional and/or intellectual attraction to the leader’s dreams of what “can be.” Vision links a present and future state, energizes and generates commitment, provides meaning for action, and serves as a standard against which to assess performance.95 Evidence indicates that vision is positively related to follower attitudes and performance.96 As pointed out by Warren Bennis, a vision is effective only to the extent that the leader can communicate it in such a way that others come to internalize it as their own.97
As people, transformational leaders are engaging. They are characterized by extroversion, agreeableness, and openness to experience.98 They energize others. They increase followers' awareness of the importance of the designated outcome.99 They motivate individuals to transcend their own self-interest for the benefit of the team and inspire organizational members to self-manage (become self-leaders).100 Transformational leaders move people to focus on higher-order needs (self-esteem and self-actualization). When organizations face a turbulent environment, intense competition, products that may die early, and the need to move fast, managers cannot rely solely on organizational structure to guide organizational activity. In these situations, transformational leadership can motivate followers to be fully engaged and inspired, to internalize the goals and values of the organization, and to move forward with dogged determination!
Transformational leadership is positively related to follower satisfaction, performance, and acts of citizenship. These effects result from the fact that transformational leader behaviors elicit trust and perceptions of procedural justice, which in turn favorably impact follower satisfaction and performance.101 as R. Pillai, C. Schriesheim, and E. Williams note, “when followers perceive that they can influence the outcomes of decisions that are important to them and that they are participants in an equitable relationship with their leader, their perceptions of procedural justice [and trust] are likely to be enhanced."102 Trust and experiences of organizational justice promote leader effectiveness, follower satisfaction, motivation, performance, and citizenship behaviors.
Charismatic Leadership
Ronald Reagan, Jesse Jackson, and Queen Elizabeth I have something in common with Martin Luther King Jr., Indira Gandhi, and Winston Churchill. The effectiveness of these leaders originates in part in their charisma, a special magnetic charm and appeal that arouses loyalty and enthusiasm. Each exerted considerable personal influence to bring about major events.
It is difficult to differentiate the charismatic and the transformational leader. True transformational leaders may achieve their results through the magnetism of their personality. In this case, the two types of leaders are essentially one and the same, yet it is important to note that not all transformational leaders have a personal “aura.”
Sociologist Max Weber evidenced an interest in charismatic leadership in the 1920s, calling charismatic leaders people who possess legitimate power that arises from “exceptional sanctity, heroism, or exemplary character.”103 Charismatic leaders “single-handedly” effect changes even in very large organizations. Their personality is a powerful force, and the relationship that they forge with their followers is extremely strong.
The charismatic leadership phenomenon involves a complex interplay between the attributes of the leader and followers’ needs, values, beliefs, and perceptions.104 At its extreme, leader-follower relationships are characterized by followers’ unquestioning acceptance; trust in the leader’s beliefs; affection; willing obedience to, emulation of, and identification with the leader; emotional involvement with his mission; and feelings of self-efficacy directed toward the leader's mission.105 This can work to better the welfare of individuals, such as when Lee Iacocca saved thousands of jobs through his dramatic turnaround of a failing corporate giant, the Chrysler Corporation. It also can be disastrous, as when David Koresh led dozens and dozens of men, women, and children to their fiery death in Waco, Texas. Individuals working for charismatic leaders often have higher task performance, greater task satisfaction, and lower levels of role conflict than those working for leaders with considerate or structuring behaviors.106 What are the charactersitics of these people who can exert such a strong influence over their followers? Charismatic leaders have a strong need for power and the tendency to rely heavily on referent power as their primary power base.107 Charismatic leaders also are are extremely self-confident and convinced of the rightness of their own beliefs and ideals. This self-confidence and strength of conviction make people trust the charismatic leader’s judgment, unconditionally following the leader’s mission and directives for action.108 The result is a strong bond between leader and followers, a bond built primarily around the leader’s personality.
Although there have been many effective charismatic leaders, those who succeed the most have coupled their charismatic capabilities with behaviors consistent with the same leadership principles followed by other effective leaders. Those who do not add these other dimensions still attract followers but do not meet organizational goals as effectively as they could. They are (at least for a time) the pied pipers of the business world, with lots of followers but no constructive direction.
ethics in practice
Uber’s Need for an Ethical Leader
Almost since its initial founding in 2009 as a luxury car service for the San Francisco area, controversy has followed Uber. Many complaints are against the tactics employed by the company’s founder and former CEO, Travis Kalanick, but the effects are found throughout the business and its operations.
In 2009, UberBlack was a “black car” service, a high-end driving service that cost more than a taxi but less than hiring a private driver for the night. It wasn’t until 2012 that the company launched UberX, the taxi-esque service most people think of today when they say “Uber.” The UberX service contracted with private drivers who provided rides in their personal vehicles. A customer would use Uber's smartphone app to request the ride, and a private driver would show up. Originally launched in San Francisco, the service spread quickly, and by 2017, Uber was in 633 cities. The service was hailed by many as innovative and the free market's answer to high-priced and sometimes unreliable taxi services. But Uber has not been without its critics, both inside and outside of the company.
In 2013, as the UberX service spread, some UberBlack drivers protested at the company’s headquarters complaining about poor company benefits and pay. They also claimed that competition from the newly launched UberX service was cutting into their sales and undermining job security. Kalanick rebuffed the protests, basically calling the complaints sour grapes: most of the protestors had been laid off earlier for poor service (Lawler 2013). Controversy also arose over the use of contract drivers rather than full-time employees. Contractors complained about a lack of benefits and low wages. Competitors, especially taxi services, complained that they were being unfairly undercut because Uber didn’t have to abide by the same screening process and costs that traditional yellow taxi companies did. Some municipalities agreed, arguing further than Uber’s lack of or insufficient screening of drivers put passengers at risk.
Uber quickly generated a reputation as a bully and Kalanick as an unethical leader (Ann 2016). The company has been accused of covering up cases of sexual assault, and Kalanick himself has been quoted as calling the service “Boob-er,” a reference to using the service to pick up women (Ann 2016). Uber has been criticized for its recruiting practices; in particular, it has been accused of bribing drivers working for competitors to switch over and drive for Uber (Ann 2016).The company was also caught making false driver requests for competing companies and then canceling the order. The effect was to waste the other driver’s time and make it more difficult for customers to secure rides on the competing service (D’Orazio 2014). Susan J. Fowler, former site reliability engineer at Uber, went public with cases of outright sexual harassment within Uber (Fowler 2017). Former employees described Uber’s corporate culture as an "a**hole culture" and a “‘Hobbesian jungle’ where you can never get ahead unless someone else dies.” (Wong 2017) One employee described a leadership that encouraged a company practice of developing incomplete solutions for the purpose of beating the competitor to market. Fowler went so far as to compare the experience to Game of Thrones, and other former employees even consider "making it" at Uber a black mark on a resume (Wong 2017).
In terms of social acrimony and PR disasters, arguably caused or even encouraged by leadership, Uber’s rise to notoriety has arguably been more bad than good. In June 2017, Kalanick made one too many headlines and agreed to step down as the company’s CEO.
Questions
1. In the summer of 2017, Transport of London (TfL) began proceedings to revoke Uber’s permit to operate in London. How do think Uber’s poor corporate reputation may have been a factor in TfL's thinking?
2. What steps do you think Uber’s new CEO, Dara Khosrowshahi, needs to take to repair Uber’s reputation?
3. Despite Uber’s apparent success in launching in multiple markets, it continues to post quarterly losses in the millions and shareholders effectively subsidize 59 percent of every ride (www.reuters.com/article/us-u...n-question-as- investors-assess-firms-value-idUSKCN1B3103). How is this an outworking of Uber’s overall corporate culture?
Sources
Ann, Carrie. 2016. “Uber Is In Dire Need of Ethical Leadership.” Industry Leaders. https://www.industryleadersmagazine....al-leadership/
D’Orazio, Dante. 2014. “Uber employees spammed competing car service with fake orders.” The Verge. https://www.theverge.com/2014/1/24/5...competing-car- service-with-fake-orders
Fowler, Susan J. 2017. “Reflecting on One Very, Very Strange Year at Uber.” https://www.susanjfowler.com/blog/20...e-year-at-uber Lawler, Ryan. 2013. “See, Uber — This Is What Happens When You Cannibalize Yourself.” TechCruch.com. https://techcrunch.com/2013/03/15/se...pens-when-you- cannibalize-yourself/
Wong, Julia. 2017. “Uber's 'hustle-oriented' culture becomes a black mark on employees' résumés” The Guardian. www.theguardian.com/technolo...ulture-travis- kalanick-susan-fowler-controversy
concept check
• What are the defining characteristics of transformational and charismatic leaders? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.08%3A_Transformational_Visionary_and_Charismatic_Leadership.txt |
9. How do different approaches and styles of leadership impact what is needed now?
Frequent headlines in popular business magazines like Fortune and Business Week call our attention to a major movement going on in the world of business. Organizations are being reengineered and restructured, and network, virtual, and modular corporations are emerging. People talk about the transnational organization, the boundaryless company, the post-hierarchical organization. By the end of the decade, the organizations that we will be living in, working with, and competing against are likely to be vastly different from what we know today.
The transition will not be easy; uncertainty tends to breed resistance. We are driven by linear and rational thinking, which leads us to believe that “we can get there from here” by making some incremental changes in who we are and what we are currently doing. Existing paradigms frame our perceptions and guide our thinking. Throwing away paradigms that have served us well in the past does not come easily.
A look back tells most observers that the past decade has been characterized by rapid change, intense competition, an explosion of new technologies, chaos, turbulence, and high levels of uncertainty. A quick scan of today’s business landscape suggests that this trend is not going away anytime soon. According to Professor Jay A. Conger from Canada’s McGill University, “In times of great transition, leadership becomes critically important. Leaders, in essence, offer us a pathway of confidence and direction as we move through seeming chaos. The magnitude of today’s changes will demand not only more leadership, but newer forms of leadership.”109
According to Conger, two major forces are defining for us the genius of the next generation of leaders. The first force is the organization’s external environment. Global competitiveness is creating some unique leadership demands. The second force is the growing diversity in organizations’ internal environments. Diversity will significantly change the relationship between organizational members, work, and the organization in challenging, difficult, and also very positive ways.
What will the leaders of tomorrow be like? Professor Conger suggests that the effective leaders of the 21st century will have to be many things.110 They will have to be strategic opportunists; only organizational visionaries will find strategic opportunities before competitors. They will have to be globally aware; with 80 percent of today’s organizations facing significant foreign competition, knowledge of foreign markets, global economics, and geopolitics is crucial. They will have to be capable of managing a highly decentralized organization; movement toward the high-involvement organization will accelerate as the environmental demands for organizational speed, flexibility, learning, and leanness increase. They will have be sensitive to diversity; during the first few years of the 21st century, fewer than 10 percent of those entering the workforce in North America will be white, Anglo-Saxon males, and the incoming women, minorities, and immigrants will bring with them a very different set of needs and concerns. They will have to be interpersonally competent; a highly diverse workforce will necessitate a leader who is extremely aware of and sensitive to multicultural expectations and needs. They will have to be builders of an organizational community; work and organizations will serve as a major source of need fulfillment, and in the process leaders will be called on to help build this community in such a way that organizational members develop a sense of ownership for the organization and its mission.
Finally, it is important to note that leadership theory construction and empirical inquiry are an ongoing endeavor. While the study of traits, behavior, and contingency models of leadership provide us with a great deal of insight into leadership, the mosaic is far from complete. During the past 15 years, several new theories of leadership have emerged; among them are leader-member exchange theory, implicit leadership theory, neocharismatic theory, value-based theory of leadership, and visionary leadership,111 each of which over time will add to our bank of knowledge about leaders and the leadership process.
Leaders of the 21st-century organization have a monumental challenge awaiting them and a wealth of self- enriching and fulfilling opportunities. The challenge and rewards awaiting effective leaders are awesome!
concept check
• What is the role of leadership in the 21st century?
12.10: Glossary
charisma A special personal magnetic charm or appeal that arouses loyalty and enthusiasm in a leader- follower relationship.
charismatic leader A person who possesses legitimate power that arises from “exceptional sanctity, heroism, or exemplary character.”
consideration A “relationship-oriented” leader behavior that is supportive, friendly, and focused on personal needs and interpersonal relationships.
contingency theory of leadership A theory advanced by Dr. Fred E. Fiedler that suggests that different leadership styles are effective as a function of the favorableness of the leadership situation least preferred.
designated leader The person placed in the leadership position by forces outside the group.
emergent leader The person who becomes a group’s leader by virtue of processes and dynamics internal to the group.
formal leader That individual who is recognized by those outside the group as the official leader of the group.
great man theory of leadership The belief that some people are born to be leaders and others are not.
informal leader That individual whom members of the group acknowledge as their leader.
initiating structure A “task-oriented” leader behavior that is focused on goal attainment, organizing and scheduling work, solving problems, and maintaining work processes.
leadership A social (interpersonal) influence relationship between two or more persons who depend on each other to attain certain mutual goals in a group situation.
Least-preferred coworker (LPC) The person with whom the leader least likes to work.
path-goal theory of leadership A theory that posits that leadership is path- and goal-oriented, suggesting that different leadership styles are effective as a function of the task confronting the group.
transformational leader A leader who moves and changes things “in a big way” by inspiring others to perform the extraordinary.
visionary leader A leader who influences others through an emotional and/or intellectual attraction to the leader’s dreams of what “can be.” | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.09%3A_Leadership_Needs_in_the_21st_Century.txt |
12.1 The Nature of Leadership
1. What is the nature of leadership and the leadership process?
Leadership is a primary vehicle for fulfilling the directing function of management. Because of its importance, theorists, researchers, and practitioners have devoted a tremendous amount of attention and energy to unlocking the secrets of effective leadership. They have kept at this search for perhaps a greater period of time than for any other single issue related to management.
12.2 The Leadership Process
2. What are the processes associated with people coming to leadership positions?
Organizations typically have both formal and informal leaders. Their leadership is effective for virtually identical reasons. Leadership and management are not the same. Although effective leadership is a necessary part of effective management, the overall management role is much larger than leadership alone. Managers plan, organize, direct, and control. As leaders, they are engaged primarily in the directing function.
12.3 Leader Emergence
3. How do leaders influence and move their followers to action?
There are many diverse perspectives on leadership. Some managers treat leadership primarily as an exercise of power. Others believe that a particular belief and attitude structure makes for effective leaders. Still others believe it is possible to identify a collection of leader traits that produces a leader who should be universally effective in any leadership situation. Even today, many believe that a profile of behaviors can universally guarantee successful leadership. Unfortunately, such simple solutions fall short of the reality.
12.4 The Trait Approach to Leadership
4. What are the trait perspectives on leadership?
12.5 Behavioral Approaches to Leadership
5. What are the behavioral perspectives on leadership?
It is clear that effective leaders are endowed with the “right stuff,” yet this “stuff” is only a precondition to effective leadership. Leaders need to connect with their followers and bring the right configuration of knowledge, skills, ability, vision, and strategy to the situational demands confronting the group.
12.6 Situational (Contingency) Approaches to Leadership
6. What are the situational perspectives on leadership?
We now know that there is no one best way to be an effective leader in all circumstances. Leaders need to recognize that how they choose to lead will affect the nature of their followers’ compliance with their influence tactics, and ultimately impacts motivation, satisfaction, performance, and group effectiveness. In addition, the nature of the situation—contextual demands and characteristics of the follower—dictates the type of leadership that is likely to be effective. Fiedler focuses on leader traits and argues that the favorableness of the leadership situation dictates the type of leadership approach needed. He recommends selecting leaders to match the situation or changing the situation to match the leader. Path-goal theory focuses on leader behavior that can be adapted to the demands of a particular work environment and organizational members’ characteristics. Path-goal theorists believe both that leaders can be matched with the situation and that the situation can be changed to match leaders. Together, these theories make clear that leadership is effective when the characteristics and behavior of the leader match the demands of the situation.
12.7 Substitutes for and Neutralizers of Leadership
7. What does the concept of “substitute for leadership” mean?
Characteristics of followers, tasks, and organizations can substitute for or neutralize many leader behaviors. Leaders must remain aware of these factors, no matter which perspective on leadership they adopt. Such awareness allows managers to use substitutes for, and neutralizers of, leadership to their benefit, rather than be stymied by their presence.
12.8 Transformational, Visionary, and Charismatic Leadership
8. What are the characteristics of transactional, transformational, and charismatic leadership?
In recent years, there has been a renewed interest in key leader traits and behaviors. As organizations face increasing amounts of chaos in their external environments, searches for “the right leader” who can bring about major organizational transformations has intensified. This search once again focuses our attention on a set of “key” motives, knowledge, skills, and personality attributes. Emerging from this search has been the identification of the charismatic and transformational leader.
12.9 Leadership Needs in the 21st Century
9. How do different approaches and styles of leadership impact what is needed now?
Leadership in the high-involvement organization differs dramatically from that in the traditional and control- oriented organization. Leaders external to the team have as one of their primary roles empowering group members and the teams themselves to self-lead and self-manage. Leaders internal to the team are peers; they work alongside and simultaneously facilitate planning, organizing, directing, controlling, and the execution of the team’s work.
Although we know a great deal about the determinants of effective leadership, we have much to learn. Each theory presented in this chapter is put into practice by managers every day. None provides the complete answer to what makes leaders effective, but each has something important to offer.
Finally, our understanding of leadership has many shortcomings and limitations. The existing literature is largely based on observations from a Western industrialized context. The extent to which our theories of leadership are bound by our culture, limiting generalization to other cultures, is largely unknown. Cross- cultural leadership research will no doubt intensify as the global economy becomes an ever more dominant force in the world. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.11%3A_Summary_Learning_Outcomes.txt |
1. Define leadership and distinguish between leadership and management.
2. Discuss the processes associated with people coming to positions of leadership.
3. Discuss the different forms of power available to leaders and the effects associated with each.
4. It has been observed that effective leaders have the “right stuff.” What traits are commonly associated with leader emergence and effective leaders?
5. Both the Ohio State University and University of Michigan leadership studies identified central leader behaviors. What are these behaviors, and how are they different from one another?
6. Blake and Mouton’s work with the Leadership Grid® identified several leadership types. What are they, and how does this leadership model look from the perspective of situation theories of leadership?
7. Identify and describe the three situational variables presented in Fiedler’s contingency theory of leadership.
8. What are the four leadership behaviors in the path-goal theory of leadership?
9. Discuss the differences between the internal and external leadership roles surrounding self-managed work teams.
10. What are substitutes for leadership? What are neutralizers? Give an example of each.
11. What are the distinguishing features of the transformational and the charismatic leader?
12.13: Management Skills Application Exercises
1. Identify a charismatic leader and a leader with little charisma. What are the traits and skills that allow them to succeed in their roles? How can you incorporate the traits that allow them to be successful in their roles into the skills you will need to have in a leadership position?
2. You have just taken a leadership position where 40 percent of the workforce telecommutes. You want to encourage teamwork and want to ensure that telecommuting is not hurting teamwork. What is your plan to discover how things are working and how to communicate your desire to have effective teamwork?
3. You are at a meeting, and during the meeting someone on the team addresses their manager and points out a crucial mistake that could doom the project. The person says that their manager should have caught it and because of that should resign. As a leader of the group, how would you deal with the subordinate, the manager, and communication with the entire team?
12.14: Managerial Decision Exercises
1. You are the newly appointed commissioner of a major sports league that is currently in a very public game three of a best-of-seven-game playoff. After an emotional opening ceremony that recognizes a tragic event in the community that is widely praised, you settle in to enjoy the game. Early in the game, a player on one team is seen celebrating a scoring play by acting out a racially insensitive behavior after the play. How would you act in a leadership position? Read the ESPN article [http://www.espn.com/mlb/ story/_/id/21199462/rob-manfred-leadership-was-tested-yuli-gurriel-racially-insensitive-behavior- passed] and comment on how this commissioner acted in this instance.
2. One of the challenges for a new manager in a leadership position is managing stress. Reflect on a time in your life where you have taken a leadership role in a summer job, as a member of a team, or in a study group for this or another course. Develop a stress management plan that includes how you can recognize stress, how you will notice the stress, how you will manage changes to address stress, and how you will seek outside counsel and help, including a mentor to help you manage stress.
3. Few people would want to hire a skilled manager with no leadership skills, and you would not want to hire an inspirational leader who can't manage planning, delegating, or keeping things organized. Draw two "T accounts" with positive attributes on the left and negative attributes on the right for managerial skills and leadership skills that you would look for as a hiring manager for a crucial managerial and leadership position in your organization. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.12%3A_Chapter_Review_Questions.txt |
The Leadership Challenge at United
Anyone who has traveled even a little has at least one airline horror story: being stranded at an airport, obnoxious passengers, missed connections, flight delays, or just bad in-flight food. Even the most seasoned travelers would be hard-pressed to match Dr. David Dao’s experience of being forcibly removed, kicking and screaming, from a United Airlines flight. Most airline horror stories don’t end in a concussion, missing teeth, and a broken nose.
United Airlines CEO Oscar Munoz’s strangely detached response only made things worse. The incident was caught on video, and that video went viral almost immediately. Munoz issued a response that mischaracterized what plainly happened in the video and termed the violent assault as a passenger "re- accommodation" (Taylor 2017). Social media erupted with condemnation, which was echoed by late-night monologues. United was left with a damaged reputation, and its management was left wondering why their processes failed, what to do to mitigate the damage, and how to both restore their reputation and ensure that company values are followed in the future.
William Taylor (2017), in a commentary in Fortune, attributes United’s “re-accommodation” disaster as the product of company policy, airport security procedures, pilot protocols, and the “wisdom of crowds.” At each step, the gate agent, pilot, airport security, and the passengers themselves could have intervened but didn’t.
Brian Fielkow, business leader, author, and keynote speaker, writing at Entrepreneur.com, outlined some points that apply to Munoz’s response and the first reactions by United. Citing United’s core values, Fielkow points to Munoz’s failure to address the incident in light of the company’s values, take the blame, or even accurately describe what happened on the plane. Any one of these lapses in leadership would have caused confusion or stymied the recovery process. As a leader, Munoz was setting the tone for thousands of people. Seemingly abandoning United’s core values likely caused a rift in trust or just simple confusion company-wide. Miscasting the situation in a world of smartphones and social media reach only multiplied the effect. As a leader, Munoz was duty-bound to take responsibility for what literally the entire world saw—a breach of social ethics, let alone United’s core values. Failing to do this immediately created a problem larger than poorly planned company policy or just a perfect storm of contributing outside factors. Fielkow is keen to point out another crucial part of a company response— “You can’t walk it back” (2017 n.p.). Before responding, leadership should take time to gather the facts and thoroughly consider the possibilities of how the message will be received. Again, Munoz’s response failed at several key points, leading to the perception that Munoz’s second statement was “an attempt at damage control” (Fielkow 2017 n.p.).
Al Bolea, a leadership trainer, also attributes the incident to leadership failure. In a piece written for Applied Leadership, Bolea writes, “It’s about front line employees getting the wrong messages from the most senior levels of the company.” He contends that the mindset within United put procedures above context in the minds of the employees. What the gate agents should have considered was the company’s reputation, which should have prevented them from doing something most airline customers see as “profoundly immoral” (Bolea 2017 n.p.)
William C. Taylor, cofounder of Fast Company, also criticized the lack of leadership across United. As the presumptive leader of the flight, shouldn’t the pilot have done something? Why didn’t the gate agent think outside the box to solve the problem of getting the crew members from Chicago to Louisville, Kentucky? Why didn’t—or couldn’t—the gate agent use what Taylor refers to as a “common sense and a little bit of creativity” and prevent a highly embarrassing (and ultimately expensive) fiasco? Taylor muses that he would like to think he would have done more than shoot video, but the passengers on the flight remained quiet and submissive, expressing no group outrage. Finally, Taylor questions the weak initial response from United’s CEO, Oscar Munoz, writing, “If CEO Oscar Munoz’s goal was to make a disastrous situation even worse, well, he gets credit as a leader for succeeding at that” (2017 n.p.). And of the board, he questions their response, and says that response will be a “make or break test” of the company’s character (Taylor 2017).
So what will it take to lead United out of such a public mistake?
According to Brian Fielkow, the incident flew in the face of United’s core values, values which should never be sacrificed. United should have acknowledged this and addressed that failure. United should have held itself accountable for the incident rather than try to deflect blame. Fielkow contends that Munoz’s first response was to blame the passenger when Munoz should have accepted responsibility instead. Further, Fielkow writes that companies should anticipate what “can” go wrong, something the gate agents at United failed to do. Increasing passenger compensation to even three times the normal ticket price would have been cheaper than the PR nightmare (and stock price drop) that followed. After Munoz’s tepid response failed to quell general complaints about United’s handling of the passenger, he tried to issue a second “more appropriate” statement, but by then the damage had been done. Fielkow recommends waiting before issuing a response if need be. It’s better to prepared and issue a suitable response than to try to walk back a bad response. Above all, Fielkow recommends leaders “be human.” The first response Munoz gave had little empathy and made him, and United, appear insensitive and callous. A company’s first response should be to empathize with the customer, even if the customer is wrong. He writes, “When triaging a difficult problem, above all recognize the human factor” (Fielkow 2017 n.p.).
Writing in Forbes, Glenn Llopis emphasizes that how managers react to failure shapes their futures as leaders. Not only how leaders respond, but what is learned from a failure, will affect how future decisions are approached. Remember, you have to be doing something to fail, and if you never fail, then you aren’t stretching yourself. Venturing into the unknown and unfamiliar always risks failure (Llopis 2012)
Questions:
1. How have other airlines handled similar situations?
2. How much was in United Airlines’s control, and how much was actually outside their control? What social or company factors caused a seemingly common practice to escalate to this level?
3. How did the other airlines or the industry respond to the United Airlines incident?
Sources:
Fielkow, Brian. 2017. “5 Leadership Failures that Contributed to the United Fiasco.” Entrepreneur. https://www.entrepreneur.com/article/292820
Bolea, Al. 2017. “United Airlines: A System Failure?” Applied Leadership. http://appliedleadership.co/leadership/ united-airlines-system-failure/
Taylor, William C. 2017. “Where was the Pilot on That United Airlines Flight?” Fortune. http://fortune.com/2017/ 04/11/united-airlines-video/
Llopis, Glenn. 2012. “5 Things Failure Teaches You About Leadership.” Forbes. www.forbes.com/sites/ glennllopis/2012/08/20/5-things-failure-teaches-you-about-leadership/2/#2f44c3873e70 | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/12%3A_Leadership/12.15%3A_Critical_Thinking_Cases.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. How do power bases work in organizational life?
2. How do you recognize and account for the exercise of counterpower and make appropriate use of strategic contingencies in interunit or interorganizational relations?
3. How do managers cope effectively with organizational politics?
4. How do you recognize and limit inappropriate or unethical political behavior where it occurs?
exploring managerial careers
Power Play at General Electric
For years, General Electric has been the pillar of manufacturing standards and stood as an icon for the American economy. Despite its strong history, CEO woes and a power struggle from within during the past few years have started to unravel the company’s control.
Jeff Immelt, long-time CEO, was respected and revered for his discipline. However, this mentality took its toll and led to declines and complacency. The struggling company wanted change and desperately needed growth; it appointed John Flannery. Shortly after the appointment of Flannery, the new CEO pulled a change of his own as well—firing half of the company’s board.
This type of move was almost unheard of, and the purge as presented was planning to cut dividends and slash less profitable business lines. The pressure from investors was felt immediately by Flannery, and this move was a desperate attempt to regain some footing and remain atop the industry standard.
Fast forward to 2018: after only one year on the job, the board decided it was done waiting for the turnaround and took drastic action, ousting Flannery and absorbing \$23 billion in loss from the process.
The tumultuous and fast-paced changing tech-dominated economy of the 21st century showcases the harsh realities in this GE change of power. “The market didn’t even give the company the benefit of the doubt that things would work,” said Ivan Feinseth, chief investment officer at Tigress Financial Partners. “Flannery’s plan hasn’t worked.” The market favors tech companies such as Google and Amazon rather than traditional manufacturers. And the new CEO, Lawrence Culp, will have an uphill battle to take over all of the woes of GE. As the first outsider to take over leadership, he has a lot to prove as well. His successes at Danaher preceded him and the company’s stock has soared since the change occurred, already showing a positive impact.
Sources
O. Staley, “ GE is firing half its board as a new CEO cleans house,” Quartz at Work, November 20, 2017, https://qz.com/work/1133787/ge-is-fi...-cleans-house/;
T. Heath and J. McGregor, “General Electric, fallen icon of corporate stability, names first outsider as CEO,” Washington Post, October 2, 2018, https://www.washingtonpost.com/busin...=.0111eb2c36ea;
M. Sheetz, “GE shares soar after company suddenly dumps John Flannery as CEO,” CNBC, October 1, 2018, https://www.cnbc.com/2018/10/01/ge-r...-guidance.html;
T. Rivas, “GE’s New CEO Inherits a Troubled Kingdom. Here’s What He Has to Do Now,” Barons, October 2, 2018, www.barrons.com/articles/ges...to-do-now-1538495223.
Although the circumstances of the changes in leadership at GE may be unique, the exercise of power and political behavior in organizations is certainly not. Power and politics are the lifeblood of most organizations, and, as a result, informed managers need to understand power dynamics. In fact, organizations are composed of coalitions and alliances of different parties that continually compete for available resources. As such, a major influence on how decisions are made is the distribution of power among the decision makers. Unequal distribution of power in organizations can have a critical impact on many aspects of work life, including employee motivation, job satisfaction, absenteeism and turnover, and stress. Hence, an awareness of the nature and pervasiveness of power and politics is essential for a better understanding of these other behavioral processes.
The concept of power is closely related to the concepts of authority and leadership. It is important to understand when one method of influence ceases and another begins. For example, when does a manager stop using legitimate authority in a work situation and start using unauthorized power?
Finally, on an individual level, many people attempt to exercise influence in organizations by using power tactics. An awareness of such tactics helps managers to recognize them and to take appropriate actions. Keep in mind that attempts by others to exercise power do not have to be successful. A number of mechanisms are available to countermand or neutralize influence attempts. Knowledge of these strategies gives a manager greater latitude in his response to power plays by others.
In short, power and political processes in organizations represent a topic of central importance to students of organizational behavior. Along with other group processes, such as communication and decision-making, power and politics can considerably influence both the behavior and the attitudes of employees at various levels of the organization. In addition, they can further influence the extent to which various units within the organization secure the necessary resources for task accomplishment and ultimate organizational success. In short, General Electric is not alone. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/13%3A_Organizational_Power_and_Politics/13.01%3A_Chapter_Introduction.txt |
How do power bases work in organizational life?
In this chapter, we will examine various aspects of power and politics in organizations, beginning with the topic of power in interpersonal relations. Here, power is defined and distinguished from the related concepts of authority and leadership, and several bases of power and aspects of power dependency are discussed. Although these aspects of power also relate to group situations, they are more germane to interpersonal relations.
What Is Power?
Numerous definitions of power abound in the literature on organizations. One of the earliest was suggested by Max Weber, the noted German sociologist, who defined power as “the probability that one actor within a social relationship will be in a position to carry out his own will despite resistance.” Similarly, Emerson wrote, “The power of actor A over actor B is the amount of resistance on the part of B which can be potentially overcome by A.” Following these and other definitions, we will define power for our purposes as an interpersonal relationship in which one individual (or group) has the ability to cause another individual (or group) to take an action that would not be taken otherwise.
In other words, power involves one person changing the behavior of another. It is important to note that in most organizational situations, we are talking about implied force to comply, not necessarily actual force. That is, person A has power over person B if person B believes that person A can, in fact, force person B to comply.
Power, Authority, and Leadership
Clearly, the concept of power is closely related to the concepts of authority and leadership (see Figure \(1\)). In fact, power has been referred to by some as “informal authority,” whereas authority has been called “legitimate power.” However, these three concepts are not the same, and important differences among the three should be noted.
As stated previously, power represents the capacity of one person or group to secure compliance from another person or group. Nothing is said here about the right to secure compliance—only the ability. In contrast, authority represents the right to seek compliance by others; the exercise of authority is backed by legitimacy. If a manager instructs a secretary to type certain letters, he presumably has the authority to make such a request. However, if the same manager asked the secretary to run personal errands, this would be outside the bounds of the legitimate exercise of authority. Although the secretary may still act on this request, the secretary’s compliance would be based on power or influence considerations, not authority.
Hence, the exercise of authority is based on group acceptance of someone’s right to exercise legitimate control. As Grimes notes, “What legitimates authority is the promotion or pursuit of collective goals that are associated with group consensus. The polar opposite, power, is the pursuit of individual or particularistic goals associated with group compliance.”
Finally, leadership is the ability of one individual to elicit responses from another person that go beyond required or mechanical compliance. It is this voluntary aspect of leadership that sets it apart from power and authority. Hence, we often differentiate between headship and leadership. A department head may have the right to require certain actions, whereas a leader has the ability to inspire certain actions. Although both functions may be served by the same individual, such is clearly not always the case.
Types of Power
If power is the ability to secure compliance by others, how is such power exercised? On what is it based? At least two efforts have been made to identify the bases of power. One model has been proposed by Etzioni, identifying three types of power. In fact, it is argued that organizations can be classified according to which of the three types of power is most prevalent. Coercive power involves forcing someone to comply with one’s wishes. A prison organization is an example of a coercive organization. Utilitarian power is power based on performance-reward contingencies; for example, a person will comply with a supervisor in order to receive a pay raise or promotion. Business organizations are thought to be essentially utilitarian organizations. Finally, normative power rests on the beliefs of the members in the right of the organization to govern their behavior. An example here would be a religious organization.
Bases of Power
Although useful for comparative analysis of divergent organizations, this model may have limited applicability, because most business and public organizations rest largely on utilitarian power. Instead, a second model, developed by French and Raven, of the bases of power may be more helpful. French and Raven identified five primary ways in which power can be exerted in social situations.
Referent Power. In some cases, person B looks up to or admires person A, and, as a result, B follows A largely because of A’s personal qualities, characteristics, or reputation. In this case, A can use referent power to influence B. Referent power has also been called charismatic power, because allegiance is based on interpersonal attraction of one individual for another. Examples of referent power can be seen in advertising, where companies use celebrities to recommend their products; it is hoped that the star appeal of the person will rub off on the products. In work environments, junior managers often emulate senior managers and assume unnecessarily subservient roles more because of personal admiration than because of respect for authority.
Expert Power. Expert power is demonstrated when person A gains power because A has knowledge or expertise relevant to B. For instance, professors presumably have power in the classroom because of their mastery of a particular subject matter. Other examples of expert power can be seen in staff specialists in organizations (e.g., accountants, labor relations managers, management consultants, and corporate attorneys). In each case, the individual has credibility in a particular—and narrow—area as a result of experience and expertise, and this gives the individual power in that domain.
Legitimate Power. Legitimate power exists when person B submits to person A because B feels that A has a right to exert power in a certain domain. Legitimate power is really another name for authority, as explained earlier. A supervisor has a right, for instance, to assign work. Legitimate power differs from reward and coercive power in that it depends on the official position a person holds, and not on his or her relationship with others.
Legitimate power derives from three sources. First, prevailing cultural values can assign power to some group. In Japan and Korea, for instance, older employees derive power simply because of their age. Second, legitimate power can be attained as a result of the accepted social structure. For example, many Western European countries, as well as Japan, have royal families that serve as a cornerstone to their societies. Third, legitimate power may be designated, as in the case of a board of directors choosing a new company president or a person being promoted into a managerial position. Whatever the reason, people exercise legitimate power because subordinates assume they have a right to exercise it. A principal reason given for the downfall of the shah of Iran is that the people came to first question and then denounce his right to legitimate power.
Reward Power. Reward power exists when person A has power over person B because A controls rewards that B wants. These rewards can cover a wide array of possibilities, including pay raises, promotions, desirable job assignments, more responsibility, new equipment, and so forth. Research has indicated that reward power often leads to increased job performance as employees see a strong performance-reward contingency. However, in many organizations, supervisors and managers really do not control very many rewards. For example, salary and promotion among most blue-collar workers is based on a labor contract, not a performance appraisal.
Coercive Power. Coercive power is based primarily on fear. Here, person A has power over person B because A can administer some form of punishment to B. Thus, this kind of power is also referred to as punishment power. As Kipnis points out, coercive power does not have to rest on the threat of violence. “Individuals exercise coercive power through a reliance upon physical strength, verbal facility, or the ability to grant or withhold emotional support from others. These bases provide the individual with the means to physically harm, bully, humiliate, or deny love to others.” Examples of coercive power in organizations include the ability (actual or implied) to fire or demote people, transfer them to undesirable jobs or locations, or strip them of valued perquisites. Indeed, it has been suggested that a good deal of organizational behavior (such as prompt attendance, looking busy, avoiding whistle-blowing) can be attributed to coercive, not reward, power. As Kipnis explains, “Of all the bases of power available to man, the power to hurt others is possibly the most often used, most often condemned and most difficult to control.”
Behavioral Consequences of Power
We have seen, then, that at least five bases of power can be identified. In each case, the power of the individual rests on a particular attribute of the power holder, the follower, or their relationship. In some cases (e.g., reward power), power rests in the superior; in others (e.g., referent power), power is given to the superior by the subordinate. In all cases, the exercise of power involves subtle and sometimes threatening interpersonal consequences for the parties involved. In fact, when power is exercised, employees have several ways in which to respond. These are shown in Figure \(2\).
If the subordinate accepts and identifies with the leader, his behavioral response will probably be one of commitment. That is, the subordinate will be motivated to follow the wishes of the leader. This is most likely to happen when the person in charge uses referent or expert power. Under these circumstances, the follower believes in the leader’s cause and will exert considerable energies to help the leader succeed.
A second possible response is compliance. This occurs most frequently when the subordinate feels the leader has either legitimate power or reward power. Under such circumstances, the follower will comply, either because it is perceived as a duty or because a reward is expected; but commitment or enthusiasm for the project is lacking. Finally, under conditions of coercive power, subordinates will more than likely use resistance. Here, the subordinate sees little reason—either altruistic or material—for cooperating and will often engage in a series of tactics to defeat the leader’s efforts.
Power Dependencies
In any situation involving power, at least two persons (or groups) can be identified: the person attempting to influence others and the target or targets of that influence. Until recently, attention focused almost exclusively on how people tried to influence others. Only recently has attention been given to how people try to nullify or moderate such influence attempts. In particular, we now recognize that the extent to which influence attempts are successful is determined in large part by the power dependencies of those on the receiving end of the influence attempts. In other words, all people are not subject to (or dependent upon) the same bases of power. What causes some people to be more submissive or vulnerable to power attempts? At least three factors have been identified.
Subordinate’s Values. To begin, person B’s values can influence his susceptibility to influence. For example, if the outcomes that A can influence are important to B, then B is more likely to be open to influence than if the outcomes were unimportant. Hence, if an employee places a high value on money and believes the supervisor actually controls pay raises, we would expect the employee to be highly susceptible to the supervisor’s influence. We hear comments about how young people don’t really want to work hard anymore. Perhaps a reason for this phenomenon is that some young people don’t place a high value on those things (for example, money) that traditionally have been used to influence behavior. In other words, such complaints may really be saying that young people are more difficult to influence than they used to be.
Nature of Relationship Between A and B. In addition, the nature of the relationship between A and B can be a factor in power dependence. Are A and B peers or superior and subordinate? Is the job permanent or temporary? A person on a temporary job, for example, may feel less need to acquiesce, because he won’t be holding the position for long. Moreover, if A and B are peers or good friends, the influence process is likely to be more delicate than if they are superior and subordinate.
Counterpower. Finally, a third factor to consider in power dependencies is counterpower. The concept of counterpower focuses on the extent to which B has other sources of power to buffer the effects of A’s power. For example, if B is unionized, the union’s power may serve to negate A’s influence attempts. The use of counterpower can be clearly seen in a variety of situations where various coalitions attempt to bargain with one another and check the power of their opponents.
Figure \(3\) presents a rudimentary model that combines the concepts of bases of power with the notion of power dependencies. As can be seen, A’s bases of power interact with B’s extent of power dependency to determine B’s response to A’s influence attempt. If A has significant power and B is highly dependent, we would expect B to comply with A’s wishes.
If A has more modest power over B, but B is still largely power dependent, B may try to bargain with A. Despite the fact that B would be bargaining from a point of weakness, this strategy may serve to protect B’s interests better than outright compliance. For instance, if your boss asked you to work overtime, you might attempt to strike a deal whereby you would get compensatory time off at a later date. If successful, although you would not have decreased your working hours, at least you would not have increased them. Where power distribution is more evenly divided, B may attempt to develop a cooperative working relationship with A in which both parties gain from the exchange. An example of this position is a labor contract negotiation where labor-management relations are characterized by a balance of power and a good working relationship.
If B has more power than A, B will more than likely reject A’s influence attempt. B may even become the aggressor and attempt to influence A. Finally, when B is not certain of the power relationships, he may simply try to ignore A’s efforts. In doing so, B will discover either that A does indeed have more power or that A cannot muster the power to be successful. A good illustration of this last strategy can be seen in some companies’ responses to early governmental efforts to secure equal opportunities for minorities and women. These companies simply ignored governmental efforts until new regulations forced compliance.
managerial leadership
Administrative Assistants: The Power Behind the Throne
It is relatively easy to see the power of managers. They often have the ability to hire and fire, make important decisions, sign contracts, spend money, and so forth. They are, in fact, powerful entities within a corporation. What may be less apparent, however, is the power that managers’ executive or administrative assistants (EA) often have. In fact, if you want to discover just how powerful secretaries are, think of what would happen if they were not there. Most paperwork would not get done, many important decisions would not be made, and the organization would eventually grind to a halt.
The EA is intertwined with a very important piece of privileged information and requires the person to be highly detail oriented and have incredible soft skills and to be more than just technologically savvy. Many tech companies are paying top dollar to procure the right person for the job. Base salaries for executive assistants in the Bay area have been reportedly starting at \$80–100K base.
Highly skilled EAs have become increasingly hard to recruit and retain, causing their power to increase. Despite the salary, there is often a negative connotation with the role of “assistant.” “There's definitely a stigma” about the title, says 32-year-old Shana Larson, one of four EAs at Pinterest, the San Francisco visual discovery company. But for Shana, who holds a master’s degree from the University of Southern California, after the initial transition period, she felt that it was the best career decision to make—a long-term career with growth opportunities.
EAs represent a true example of counterpower within the organization. Yes, their bosses have power over them; but at the same time, they have considerable power over their bosses. Secretaries—the word is derived from the Latin word meaning “keeper of secrets”—are often privy to considerable confidential information. They routinely handle private calls, correspondence, and reports. They often serve as the manager’s sounding board for new ideas, and they more than likely know how the boss feels about coworkers and superiors. This knowledge, along with stereotypes, stigmas, and increased scarcity, gives high-quality EAs considerable leverage in dealing with their bosses and their organizations.
Questions:
1. As a new manager who receives an assistant, what are important considerations to consider when starting in the role?
2. What other stigmas or stereotypes can occur with support roles in the workplace? How does this affect your personal feelings about taking a support role for a company in the future?
3. Why is it important for CEOs and other organizational powers to understand the innate power of an administrative assistant as part of the holistic picture to understand the company environment as a whole?
Sources:
Linkedin website accessed November 12, 2018, https://www.linkedin.com/salary/seni...i-data-systems;
S. Sathian, “Executive assistant is the new power job,” USA Today, October 14, 2014, https://www.usatoday.com/story/money...-job/17244533/;
M. Lawn, “The Real Power of the Executive Assistant,” Executive Secretary Magazine, July 27, 2013, http://executivesecretary.com/the-re...ive-assistant/;
N. Price, “The Evolving Role of the Company Secretary in Today’s Corporate World,” Board Effect Blog, June 12, 2017, https://www.boardeffect.com/blog/evo...rporate-world/.
concept check
1. Define what Power is.
2. What are the components that constitute power in organizations? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/13%3A_Organizational_Power_and_Politics/13.02%3A_Power_in_Interpersonal_Relations.txt |
1. How do you recognize and account for the exercise of counterpower and make appropriate use of strategic contingencies in interunit or interorganizational relations?
As we look around organizations, it is easy to see the manifestations of power almost anywhere. In fact, there are a wide variety of power-based methods used to influence others. Here, we will examine three aspects of the use of power: commonly used power tactics in organizations, symbols of managerial power, and the ethical use of power.
Common Power Tactics in Organizations
As noted above, many power tactics are available for use by managers. However, as we will see, some are more ethical than others. Here, we look at some of the more commonly used power tactics found in both business and public organizations.
Controlling Access to Information. Most decisions rest on the availability of relevant information, so persons controlling access to information play a major role in decisions made. A good example of this is the common corporate practice of pay secrecy. Only the personnel department and senior managers typically have salary information—and power—for personnel decisions.
Controlling Access to Persons. Another related power tactic is the practice of controlling access to persons. A well-known factor contributing to President Nixon’s downfall was his isolation from others. His two senior advisers had complete control over who saw the president. Similar criticisms were leveled against President Reagan.
Selective Use of Objective Criteria. Very few organizational questions have one correct answer; instead, decisions must be made concerning the most appropriate criteria for evaluating results. As such, significant power can be exercised by those who can practice selective use of objective criteria that will lead to a decision favorable to themselves. According to Herbert Simon, if an individual is permitted to select decision criteria, he needn’t care who actually makes the decision. Attempts to control objective decision criteria can be seen in faculty debates in a university or college over who gets hired or promoted. One group tends to emphasize teaching and will attempt to set criteria for employment dealing with teacher competence, subject area, interpersonal relations, and so on. Another group may emphasize research and will try to set criteria related to number of publications, reputation in the field, and so on.
Controlling the Agenda. One of the simplest ways to influence a decision is to ensure that it never comes up for consideration in the first place. There are a variety of strategies used for controlling the agenda. Efforts may be made to order the topics at a meeting in such a way that the undesired topic is last on the list. Failing this, opponents may raise a number of objections or points of information concerning the topic that cannot be easily answered, thereby tabling the topic until another day.
Using Outside Experts. Still another means to gain an advantage is using outside experts. The unit wishing to exercise power may take the initiative and bring in experts from the field or experts known to be in sympathy with their cause. Hence, when a dispute arises over spending more money on research versus actual production, we would expect differing answers from outside research consultants and outside production consultants. Most consultants have experienced situations in which their clients fed them information and biases they hoped the consultant would repeat in a meeting.
Bureaucratic Gamesmanship. In some situations, the organizations own policies and procedures provide ammunition for power plays, or bureaucratic gamesmanship. For instance, a group may drag its feet on making changes in the workplace by creating red tape, work slowdowns, or “work to rule.” (Working to rule occurs when employees diligently follow every work rule and policy statement to the letter; this typically results in the organization’s grinding to a halt as a result of the many and often conflicting rules and policy statements.) In this way, the group lets it be known that the workflow will continue to slow down until they get their way.
Coalitions and Alliances. The final power tactic to be discussed here is that of coalitions and alliances. One unit can effectively increase its power by forming an alliance with other groups that share similar interests. This technique is often used when multiple labor unions in the same corporation join forces to gain contract concessions for their workers. It can also be seen in the tendency of corporations within one industry to form trade associations to lobby for their position. Although the various members of a coalition need not agree on everything—indeed, they may be competitors—sufficient agreement on the problem under consideration is necessary as a basis for action.
Although other power tactics could be discussed, these examples serve to illustrate the diversity of techniques available to those interested in acquiring and exercising power in organizational situations. In reviewing the major research carried out on the topic of power, Pfeffer states:
If there is one concluding message, it is that it is probably effective, and it is certainly normal that these managers do behave as politicians. It is even better that some of them are quite effective at it. In situations in which technologies are uncertain, preferences are conflicting, perceptions are selective and biased, and information processing capacities are constrained, the model of an effective politician may be an appropriate one for both the individual and for the organization in the long run.
Symbols of Managerial Power
How do we know when a manager has power in an organizational setting? Harvard professor Rosabeth Moss Kanter has identified several of the more common symbols of managerial power. For example, managers have power to the extent that they can intercede favorably on behalf of someone in trouble with the organization. Have you ever noticed that when several people commit the same mistake, some don’t get punished? Perhaps someone is watching over them.
Moreover, managers have power when they can get a desirable placement for a talented subordinate or get approval for expenditures beyond their budget. Other manifestations of power include the ability to secure above-average salary increases for subordinates and the ability to get items on the agenda at policy meetings.
And we can see the extent of managerial power when someone can gain quick access to top decision makers or can get early information about decisions and policy shifts. In other words, who can get through to the boss, and who cannot? Who is “connected,” and who is not?
Finally, power is evident when top decision makers seek out the opinions of a particular manager on important questions. Who gets invited to important meetings, and who does not? Who does the boss say “hello” to when he enters the room? Through such actions, the organization sends clear signals concerning who has power and who does not. In this way, the organization reinforces or at least condones the power structure in existence.
The Ethical Use of Power
People are often uncomfortable discussing the topic of power, which implies that somehow they see the exercise of power as unseemly. On the contrary, the question is not whether power tactics are or are not ethical; rather, the question is which tactics are appropriate and which are not. The use of power in groups and companies is a fact of organizational life that all employees must accept. In doing so, however, all employees have a right to know that the exercise of power within the organization will be governed by ethical standards that prevent abuse or exploitation.
Several guidelines for the ethical use of power can be identified. These can be arranged according to our previous discussion of the five bases of power, as shown in Table \(1\). As will be noted, several techniques are available that accomplish their aims without compromising ethical standards. For example, a manager using reward power can verify subordinate compliance with work directives, ensure that all requests are both feasible and reasonable, make only ethical or proper requests, offer rewards that are valued by employees, and ensure that all rewards for good performance are credible and reasonably attainable.
The Ethical Use of Power
Basis of Power Guidelines for Use
Source: Adapted from Gary A. Yukl, Leadership in Organizations, 8th edition 2013 (Englewood Cliffs, N.J.; Pearson), pp. 44–58.
Referent power
• Treat subordinates fairly
• Defend subordinates’ interests
• Be sensitive to subordinates’ needs, feelings
• Select subordinates similar to oneself
• Engage in role modeling
Expert power
• Promote image of expertise
• Maintain credibility
• Act confident and decisive
• Keep informed
• Recognize employee concerns
• Avoid threatening subordinates’ self-esteem
Legitimate power
• Be cordial and polite
• Be confident
• Be clear and follow up to verify understanding
• Make sure request is appropriate
• Explain reasons for request
• Follow proper channels
• Exercise power regularly
• Enforce compliance
• Be sensitive to subordinates’ concerns
Reward power
• Verify compliance
• Make feasible, reasonable requests
• Make only ethical, proper requests
• Offer rewards desired by subordinates
• Offer only credible rewards
Coercive power
• Inform subordinates of rules and penalties
• Warn before punishing
• Administer punishment consistently and uniformly
• Understand the situation before acting
• Maintain credibility
• Fit punishment to the infraction
• Punish in private
Table \(1\) (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Even coercive power can be used without jeopardizing personal integrity. For example, a manager can make sure that all employees know the rules and penalties for rule infractions, provide warnings before punishing, administer punishments fairly and uniformly, and so forth. The point here is that managers have at their disposal numerous tactics that they can employ without crossing over into questionable managerial behavior. In view of the increasing number of lawsuits filed by employees for harmful practices, it seems wise for a manager to consider his behaviors before acting; this will help ensure the highest ethical standards.
Ethics in practice
Investing the Challenger Disaster
The January 1986 explosion of the space shuttle Challenger, at a cost of seven lives, has been analyzed from several managerial standpoints: poor decision-making, poor management control, and poor leadership have all been blamed. We can also see in this tragedy an example of the unethical use of organizational power.
It has been determined that the explosion that doomed the space shuttle was caused by poorly designed seals on the booster rockets. The boosters were manufactured by Morton Thiokol, a major defense contractor. When the U.S. Congress initiated its investigation of the causes of the disaster, it found several disturbing facts. To begin with, several Morton Thiokol engineers had warned that the boosters were unsafe early in the design stage, but no one listened. Once the boosters were in production, engineers again warned of possible problems, but to no avail. The company kept the information quiet.
Equally disturbing was the fact that after two company engineers testified in the congressional hearing, they were abruptly transferred to undesirable assignments elsewhere in the company. When asked by Congress whether they thought their transfers were in retaliation for their whistleblowing, both engineers responded yes. One noted, “I feel I was set aside so I would not have contact with the people from NASA.” The company had, in effect, used its power to try to isolate those who talked freely with the congressional investigators. In its defense, Morton Thiokol responded that it had demoted no one as a result of the investigation. “We’ve changed a lot of duties . . . because we’re reorganizing,” a management representative said.
Sources:
A. E. Tenbrussel and M. Bazerman, Blind Spots: Why we Fail to Do What’s Right and What to Do About It,” (Princeton, N.J.: Princeton University Press), © 2012
A. J. McDonald, “Ethics Lessons Learned From the Challenger Disaster,” National Society of Professional Engineers, July 17, 2015
“Two Critics of Shuttle Perished,” Register-Guard, May 11, 1986, pp. 1 and 4.
concept Check
1. How is power used in organizations?
2. How can managers use strategy to counteract the negative use of power in organizations? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/13%3A_Organizational_Power_and_Politics/13.03%3A_Uses_of_Power.txt |
How do managers cope effectively with organizational politics?
Closely related to the concept of power is the equally important topic of politics. In any discussion of the exercise of power—particularly in intergroup situations—a knowledge of basic political processes is essential. We will begin our discussion with this in mind. Next, on the basis of this analysis, we will consider political strategies for acquiring, maintaining, and using power in intergroup relations. Finally, we look at ways to limit the impact of political behavior in organizations.
What Is Politics?
Perhaps the earliest definition of politics was offered by Lasswell, who described it as who gets what, when, and how. Even from this simple definition, one can see that politics involves the resolution of differing preferences in conflicts over the allocation of scarce and valued resources. Politics represents one mechanism to solve allocation problems when other mechanisms, such as the introduction of new information or the use of a simple majority rule, fail to apply. For our purposes here, we will adopt Pfeffer’s definition of politics as involving “those activities taken within organizations to acquire, develop, and use power and other resources to obtain one’s preferred outcomes in a situation in which there is uncertainty or dissensus about choices.”
In comparing the concept of politics with the related concept of power, Pfeffer notes:
If power is a force, a store of potential influence through which events can be affected, politics involves those activities or behaviors through which power is developed and used in organizational settings. Power is a property of the system at rest; politics is the study of power in action. An individual, subunit or department may have power within an organizational context at some period of time; politics involves the exercise of power to get something accomplished, as well as those activities which are undertaken to expand the power already possessed or the scope over which it can be exercised.
In other words, from this definition it is clear that political behavior is activity that is initiated for the purpose of overcoming opposition or resistance. In the absence of opposition, there is no need for political activity. Moreover, it should be remembered that political activity need not necessarily be dysfunctional for organization-wide effectiveness. In fact, many managers often believe that their political actions on behalf of their own departments are actually in the best interests of the organization as a whole. Finally, we should note that politics, like power, is not inherently bad. In many instances, the survival of the organization depends on the success of a department or coalition of departments challenging a traditional but outdated policy or objective. That is why an understanding of organizational politics, as well as power, is so essential for managers.
Intensity of Political Behavior
Contemporary organizations are highly political entities. Indeed, much of the goal-related effort produced by an organization is directly attributable to political processes. However, the intensity of political behavior varies, depending upon many factors. For example, in one study, managers were asked to rank several organizational decisions on the basis of the extent to which politics were involved. Results showed that the most political decisions (in rank order) were those involving interdepartmental coordination, promotions and transfers, and the delegation of authority. Such decisions are typically characterized by an absence of established rules and procedures and a reliance on ambiguous and subjective criteria.
On the other hand, the managers in the study ranked as least political such decisions as personnel policies, hiring, and disciplinary procedures. These decisions are typically characterized by clearly established policies, procedures, and objective criteria.
On the basis of findings such as these, it is possible to develop a typology of when political behavior would generally be greatest and least. This model is shown in Figure \(1\). As can be seen, we would expect the greatest amount of political activity in situations characterized by high uncertainty and complexity and high competition among employees or groups for scarce resources. The least politics would be expected under conditions of low uncertainty and complexity and little competition among employees over resources.
Reasons for Political Behavior
Following from the above model, we can identify at least five conditions conducive to political behavior in organizations. These are shown in Table \(1\), along with possible resulting behaviors. The conditions include the following:
1. Ambiguous goals. When the goals of a department or organization are ambiguous, more room is available for politics. As a result, members may pursue personal gain under the guise of pursuing organizational goals.
2. Limited resources. Politics surfaces when resources are scarce and allocation decisions must be made. If resources were ample, there would be no need to use politics to claim one’s “share.”
3. Changing technology and environment. In general, political behavior is increased when the nature of the internal technology is nonroutine and when the external environment is dynamic and complex. Under these conditions, ambiguity and uncertainty are increased, thereby triggering political behavior by groups interested in pursuing certain courses of action.
4. Nonprogrammed decisions. A distinction is made between programmed and nonprogrammed decisions. When decisions are not programmed, conditions surrounding the decision problem and the decision process are usually more ambiguous, which leaves room for political maneuvering. Programmed decisions, on the other hand, are typically specified in such detail that little room for maneuvering exists. Hence, we are likely to see more political behavior on major questions, such as long-range strategic planning decisions.
5. Organizational change. Periods of organizational change also present opportunities for political rather than rational behavior. Efforts to restructure a particular department, open a new division, introduce a new product line, and so forth, are invitations to all to join the political process as different factions and coalitions fight over territory.
Because most organizations today have scarce resources, ambiguous goals, complex technologies, and sophisticated and unstable external environments, it seems reasonable to conclude that a large proportion of contemporary organizations are highly political in nature. As a result, contemporary managers must be sensitive to political processes as they relate to the acquisition and maintenance of power in organizations. This brings up the question of why we have policies and standard operating procedures (SOPs) in organizations. Actually, such policies are frequently aimed at reducing the extent to which politics influence a particular decision. This effort to encourage more “rational” decisions in organizations was a primary reason behind Max Weber’s development of the bureaucratic model. That is, increases in the specification of policy statements often are inversely related to political efforts, as shown in Figure \(2\). This is true primarily because such actions reduce the uncertainties surrounding a decision and hence the opportunity for political efforts.
Conditions Conducive to Political Behavior
Prevailing Conditions Resulting Political Behaviors
Ambiguous goals Attempts to define goals to one’s advantage
Limited resources Fight to maximize one’s share of resources
Dynamic technology and environment Attempts to exploit uncertainty for personal gain
Nonprogrammed decisions Attempts to make suboptimal decisions that favor personal ends
Organizational change Attempts to use reorganization as a chance to pursue own interests and goals
Table \(1\) (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
managerial Leadership
Technology, Innovation, and Politics in Performance Appraisals
Developing a strategy for a performance appraisal is an important step for any company, and keeping out political bias is a main concern as well. Unfortunately, many times there is no way around bringing some bias into a performance appraisal situation. Managers often think of the impact that their review will have on the employee, how it will affect their relationship, and what it means for their career in the future. There are a lot of games played in the rating process and whether managers admit it or not, they may be guilty of playing them. Many companies, such as Adobe, are looking at ways that they can revamp the process to eliminate potential biases and make evaluations fairer.
In 2012, Adobe transformed its business, changing its product cycle; while undergoing process changes, Adobe understood that there needed to be a cultural shift as well. It announced the “Check-in” review process to allow for faster feedback, as well as an end to their outdated annual review process. With the faster-paced reality of their product cycles and subscription-based model in technology, this made complete sense.
This process established a new way of thinking, allowing for two-way communication to become the norm between managers and employees. They were able to have frequent candid conversations, approaching the tough subjects in order make improvements rather than waiting until an annual review and letting bad performance go unchecked or good performance go unnoticed. Eliminating a once-a-year cycle of review also eliminates the issue of politics creeping into the process. Managers are able to think critically about the performance, working alongside their employees to better the outcome rather than worrying about having a tough conversation and the bad result that may follow—and having to live with the fallout. Employees also are given chances to provide feedback and their own personal evaluation, which then is discussed with the manager. They review the items together, and what is formally submitted is agreed upon, rather than set in stone. The addition of the employee feedback is another great way to reduce the insertion of politics or bias in the review.
In result of this change, Adobe’s employees showed higher engagement and satisfaction with their work, consistently improving. They no longer had negative surprises in their annual review and were able to adjust priorities and behaviors to become more effective workers.
Questions:
1. What are important considerations to eliminate potential political bias in a performance review?
2. Why was Adobe successful in the changes that they implemented in their performance review process?
3. What other positive outcomes could be achieved from an ongoing feedback model versus annual performance review?
Sources:
D. Morris, “Death of the Performance Review: How Adobe Reinvented Performance Management and Transformed its Business,” World at Work Journal, Second Quarter, 2016, https://www.adobe.com/content/dam/ac...nce-review.pdf
“How Adobe retired performance reviews and inspired great performance,” Adobe website, accessed January 4, 2019, https://www.adobe.com/check-in.html;
K. Duggan, “Six Companies That Are Redefining Performance Management,” Fast Company, December 15, 2015, https://www.fastcompany.com/3054547/...nce-management.
Political Strategies in Intergroup Relations
Up to this point, we have explained the related concepts of power and politics primarily as they relate to interpersonal behavior. When we shift our focus from the individual or interpersonal to the intergroup level of analysis, the picture becomes somewhat more complicated. In developing a portrait of how political strategies are used to attain and maintain power in intergroup relations, we will highlight two major aspects of the topic. The first is the relationship between power and the control of critical resources. The second is the relationship between power and the control of critical resources where the second is the relationship between power and the control of strategic activities. Both will illustrate how subunit control leads to the acquisition of power in organizational settings.
Power and the Control of Critical Resources
On the basis of what has been called the resource dependence model, we can analyze intergroup political behavior by examining how critical resources are controlled and shared.21 That is, when one subunit of an organization (perhaps the purchasing department) controls a scarce resource that is needed by another subunit (for example, the power to decide what to buy and what not to buy), that subunit acquires power. This power may be over other subunits within the same organization or over subunits in other organizations (for example, the marketing units of other companies that are trying to sell to the first company). As such, this unit is in a better position to bargain for the critical resources it needs from its own or other organizations. Hence, although all subunits may contribute something to the organization as a whole, power allocation within the organization will be influenced by the relative importance of the resources contributed by each unit. To quote Salancik and Pfeffer,
Subunit power accrues to those departments that are most instrumental in bringing or in providing resources which are highly valued by the total organization. In turn, this power enables these subunits to obtain more of those scarce and critical resources allocated within the organization.
Stated succinctly, power derived from acquiring resources is used to obtain more resources, which in turn can be employed to produce more power—“the rich get richer.”22
To document their case, Salancik and Pfeffer carried out a major study of university budget decisions. The results were clear. The more clout a department had (measured in terms of the department’s ability to secure outside grants and first-rate graduate students, plus its national standing among comparable departments), the easier it was for the department to secure additional university resources. In other words, resources were acquired through political processes, not rational ones.23
Power and the Control of Strategic Activities
In addition to the control of critical resources, subunits can also attain power by gaining control over activities that are needed by others to complete their tasks. These critical activities have been called strategic contingencies. A contingency is defined by Miles as “a requirement of the activities of one subunit that is affected by the activities of other subunits.”24 For example, the business office of most universities represents a strategic contingency for the various colleges within the university because it has veto or approval power over financial expenditures of the schools. Its approval of a request to spend money is far from certain. Thus, a contingency represents a source of uncertainty in the decision-making process. A contingency becomes strategic when it has the potential to alter the balance of interunit or interdepartmental power in such a way that interdependencies among the various units are changed.
Perhaps the best way to illustrate this is to consider the example of power distribution in various organizations attempting to deal with a major source of uncertainty—the external environment. In a classic study by Lawrence and Lorsch, influence patterns were examined for companies in three divergent industries: container manufacturing, food processing, and plastics. It was found that in successful firms, power distribution conformed to the firm’s strategic contingencies. For example, in the container-manufacturing companies, where the critical contingencies were customer delivery and product quality, the major share of power in decision-making resided in the sales and production staffs. In contrast, in the food-processing firms, where the strategic contingencies focused on expertise in marketing and food sciences, major power rested in the sales and research units. In other words, those who held power in the successful organizations were in areas that were of central concern to the firm and its survival at a particular time. The functional areas that were most important for organizational success were under the control of the decision makers. For less-successful firms, this congruence was not found.
The changing nature of strategic contingencies can be seen in the evolution of power distribution in major public utilities. Many years ago, when electric companies were developing and growing, most of the senior officers of the companies were engineers. Technical development was the central issue. More recently, however, as utilities face greater litigation, government regulation, and controversy over nuclear power, lawyers are predominant in the leadership of most companies. This example serves to emphasize that “subunits could inherit and lose power, not necessarily by their own actions, but by the shifting contingencies in the environment confronting the organization.”25
To better understand how this process works, consider the model shown in Exhibit 13.8. This diagram suggests that three factors influence the ability of one subunit (called A) over another (called B). Basically, it is argued that subunit power is influenced by (1) A’s ability to help B cope with uncertainty, (2) the degree to which A offers the only source of the required resource for B, and (3) the extent to which A’s contributions are central to organizational success. Let us consider each of these separately.
Exhibit 13.8 A Strategic Contingencies Model of Subunit Power (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Ability to Cope with Uncertainty. According to advocates of the strategic contingencies model of power, the primary source of subunit power is the unit’s ability to help other units cope with uncertainty. In other words, if our group can help your group reduce the uncertainties associated with your job, then our group has power over your group. As Hickson and his colleagues put it:
Uncertainty itself does not give power; coping gives power. If organizations allocate to their various subunits task areas that vary in uncertainty, then those subunits that cope most effectively with the most uncertainty should have most power within the organization, since coping by a subunit reduces the impact of uncertainty on other activities in the organization, a shock absorber function.26
As shown in Exhibit 13.8 above, three primary types of coping activity relating to uncertainty reduction can be identified. To begin, some uncertainty can be reduced through steps by one subunit to prevent or forestall uncertainty for the other subunit. For example, if the purchasing group can guarantee a continued source of parts for the manufacturing group, it gains some power over manufacturing by forestalling possible uncertainty surrounding production schedules. Second, a subunit’s ability to cope with uncertainty is influenced by its capacity to provide or collect information. Such information can forewarn of probable disruptions or problems, so corrective action can be taken promptly. Many business firms use various forecasting techniques to predict sales, economic conditions, and so forth. The third mechanism for coping with uncertainty is the unit’s ability to absorb pressures that actually impact the organization. For instance, if one manufacturing facility runs low on raw materials and a second facility can supply it with needed materials, this second facility effectively reduces some of the uncertainty of the first facility—and in the process gains influence over it.
In short, subunit A gains power over B subunit if it can help B cope with the contingencies and uncertainties facing it. The more dependent B is upon A to ensure the smooth functioning of the unit, the more power A has over B.
Nonsubstitutability of Coping Activities. Substitutability is the capacity for one subunit to seek needed resources from alternate sources. Two factors influence the extent to which substitutability is available to a subunit. First, the availability of alternatives must be considered. If a subunit can get the job done using different products or processes, it is less susceptible to influence. In the IBM-compatible personal computer market, for example, there are so many vendors that no one can control the market. On the other hand, if a company is committed to a Macintosh and iPad computing environment, only one vendor (Apple Computer) is available, which increases Apple’s control over the marketplace.
Second, the replaceability of personnel is important. A major reason for the power of staff specialists (personnel managers, purchasing agents, etc.) is that they possess expertise in a specialized area of value to the organization. Consider also a reason for closed-shop union contracts: they effectively reduce the replaceability of workers.
Thus, a second influence on the extent of subunit power is the extent to which subunit A provides goods or services to B for which there are no (or only a few) substitutes. In this way, B needs A in order to accomplish subunit objectives.
Centrality of Coping Activities. Finally, one must consider the extent to which a subunit is of central importance to the operations of the enterprise. This is called the subunit’s work centrality. The more interconnected subunit A is with other subunits in the organization, the more “central” it is. This centrality, in turn, is influenced by two factors. The first is workflow pervasiveness—the degree to which the actual work of one subunit is connected with the work of the subunits. If subunit B cannot complete its own tasks without the help of the work activities of subunit A, then A has power over B. An example of this is an assembly line, where units toward the end of the line are highly dependent upon units at the beginning of the line for inputs.
The second factor, workflow immediacy, relates to the speed and severity with which the work of one subunit affects the final outputs of the organization. For instance, companies that prefer to keep low inventories of raw materials (perhaps for tax purposes) are, in effect, giving their outside suppliers greater power than those companies that keep large reserves of raw materials.
When taken as a whole, then, the strategic contingency model of intergroup power suggests that subunit power is influenced when one subunit can help another unit reduce or cope with its uncertainty, the subunit is difficult to replace, or the subunit is central to continued operations. The more these three conditions prevail, the more power will become vested in the subunit. Even so, it should be recognized that the power of one subunit or group can shift over time. As noted by Hickson and his colleagues, “As the goals, outputs, technologies, and markets of organizations change, so, for each subunit, the values of the independent variables [such as coping with uncertainty, nonsubstitutability, and centrality] change, and the patterns of power change.”27 In other words, the strategic contingency model suggested here is a dynamic one that is subject to change over time as various subunits and groups negotiate, bargain, and compromise with one another in an effort to secure a more favorable position in the organizational power structure.
Managerial Leadership
The Politics of Innovation
A good example of the strategic contingencies approach to the study of power and politics can be seen in a consideration of organizational innovation. It has long been recognized that it is easier to invent something new from outside an organization than to innovate within an existing company. As a result, a disproportionate share of new products originates from small businesses and entrepreneurs, not the major corporations with all the resources to innovate. Why? Much of the answer can be found in politics.
When a person or group has a new idea for a product or service, it is often met with a barrage of resistance from different sectors of the company. These efforts are motivated by the famous “not-invented-here syndrome,” the tendency of competing groups to fight over turf, and the inclination to criticize and destroy any new proposal that threatens to change the status quo. Other groups within the company simply see little reason to be supportive of the idea.
This lack of support—indeed, hostility—occurs largely because within every company there is competition for resources. These resources can include money, power, and opportunities for promotion. As one consultant noted, “One person’s innovation is another person’s failure.” As a result, there is often considerable fear and little incentive for one strategic group within a company to cooperate with another. Because both groups usually need each other for success, nothing happens. To the extent that politics could be removed from such issues, far more energy would be available to capitalize on an innovative idea and get it to market before the competition.
Sources: M. Z. Taylor, The Politics of Innovation, (New York: Oxford University Press), 2017; B. Godin, “The Politics of Innovation: Why Some Countries Are Better Than Others at Science and Technology by Mark Zachary Taylor (review),” Technology and Culture, April 2018; W. Kiechel, “The Politics of Innovation,” Fortune, April 11, 1988, p. 131.
Concept Check
1. What is politics and political behavior in organizations? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/13%3A_Organizational_Power_and_Politics/13.04%3A_Political_Behavior_in_Organizations.txt |
4. How do you recognize and limit inappropriate or unethical political behavior where it occurs?
The final topic we will examine concerns ways in which people and groups can attempt to lessen the impact of political behavior. Clearly, politics in organizations cannot be eliminated. Yet to some extent, the negative aspects of it can be neutralized if managers carefully monitor the work environment and take remedial action where necessary. Part of this issue was discussed above, in the section on counterpower. Beyond this, however, several strategies can be identified that can help manage organizational politics. As shown in Table 13.3, four basic strategies can be used.28
First, efforts can be made to reduce the uncertainty in the organization through clarifying job responsibilities, bases for evaluations and rewards, and so forth. The less ambiguity in the system, the less room there is for dysfunctional political behavior. Second, managers can try to reduce interpersonal or intergroup competition by using impartial standards for resource allocation and by emphasizing the superordinate goals of the entire organization—toward which all members of the organization should be working. Third, managers can attempt to break up existing political fiefdoms through personnel reassignment or transfer or by changing the reward system to encourage interunit cooperation. Finally, managers can work to prevent the development of future fiefdoms through training programs, selection and promotion, and reward distribution.
To the extent that employees see the organization as a fair place to work and to the extent that clear goals and resource allocation procedures are present, office politics should subside, though not disappear. In organizations where politics prosper, in fact, you are likely to find a reward system that encourages and promotes such behavior. The choice is up to the organization.
concept check
• How can managers limit inappropriate and unethical behavior in the organization?
13.06: Glossary
Authority Represents the right to seek compliance by others.
Bases of power The five bases of power are referent, expert, legitimate, reward, and coercive power.
Bureaucratic gamesmanship A situation where the organizations own policies and procedures provide ammunition for power plays.
Coalition A situation where one unit can effectively increase its power by forming an alliance with other groups that share similar interests.
Coercive power Involves forcing someone to comply with one’s wishes.
Counterpower Focuses on the extent to which person B has other sources of power to buffer the effects of person A’s power.
Expert power Occurs when person A gains power because A has knowledge or expertise relevant to person B.
Leadership The ability of one individual to elicit responses from another person that go beyond required or mechanical compliance.
Legitimate power Exists when person B submits to person A because B feels that A has a right to exert power in a certain domain.
Normative power Rests on the beliefs of the members in the right of the organization to govern their behavior.
Politics Involves those activities taken within an organization to acquire, develop, and use power and other resources to attain preferred outcomes in a situation in which there is uncertainty and disagreement over choices.
Power The probability that one actor within a social relationship will be in a position to carry out his own will despite resistance.
Power dependencies A state where all people are not subject to (or dependent upon) the same bases of power.
Referent power A state where allegiance is based on interpersonal attraction of one individual for another.
Resource dependence When one subunit of an organization controls a scarce resource that is needed by another subunit, that subunit acquires power.
Reward power Exists when person A has power over person B because A controls rewards that B wants. These rewards can cover a wide array of possibilities, including pay raises, promotions, desirable job assignments, more responsibility, new equipment, and so forth.
Strategic contingencies A requirement of the activities of one subunit that is affected by the activities of other subunits.
Utilitarian power Power based on performance-reward contingencies; for example, a person will comply with a supervisor in order to receive a pay raise or promotion.
Work centrality The more interconnected subunit A is with other subunits in the organization, the more central it is.
Work to rule Occurs when employees diligently follow every work rule and policy statement to the letter; this typically results in the organization’s grinding to a halt as a result of the many and often conflicting rules and policy statements.
Workflow immediacy Relates to the speed and severity with which the work of one subunit affects the final outputs of the organization.
Workflow pervasiveness The degree to which the actual work of one subunit is connected with the work of the subunits. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/13%3A_Organizational_Power_and_Politics/13.05%3A_Limiting_the_Influence_of_Political_Behavior.txt |
13.1 Power in Interpersonal Relations
1. How do power bases work in organizational life?
We might think of power like a car battery and influence as the current that actually gets the starter motor to turn over. There are many potential sources of power such as knowledge, information, and money. But just as the car battery unconnected cannot start an engine, these sources of power do not by themselves cause others to do anything. Actually, influencing others is achieved by possessing, or having others believe you possess, resources that they desire and depend upon and for which substitutes are not easily obtained and then establishing behavioral contingencies in the direction of the behaviors you desire to evoke.
Power is an interpersonal relationship in which one person or group has the ability to cause another person or group to take an action that it would not have taken otherwise.
There are five basic kinds of power: (1) referent, (2) expert, (3) legitimate, (4) reward, and (5) coercive.
Depending upon which kind of power is employed, the recipient of a power effort can respond with commitment, compliance, or resistance.
13.2 Uses of Power
2. How do you recognize and account for the exercise of counterpower and make appropriate use of strategic contingencies in interunit or interorganizational relations?
Power dependency is the extent to which a person or group is susceptible to an influence attempt. Included here is the notion of counterpower, or the ability of the subordinate to exercise some power and buffer the influence attempt of another.
Common power tactics include controlling access to information, controlling access to persons, the selective use of objective criteria, controlling the agenda, using outside experts, bureaucratic gamesmanship, and forming coalitions and alliances.
The resource dependence model suggests that one unit within an organization has power over another unit when the first unit controls scarce and valued resources needed by the second unit.
The strategic contingencies model asserts that one unit has power over another when the first group has the ability to block the second group’s goal attainment—that is, when it controls some strategic contingency needed by the second group to complete its task.
13.3 Political Behavior in Organizations
3. How do managers cope effectively with organizational politics?
Politics involves those activities taken within an organization to acquire, develop, and use power and other resources to attain preferred outcomes in a situation in which there is uncertainty and disagreement over choices.
Political behavior is more likely to occur when (1) there are ambiguous goals, (2) there is a scarcity of resources, (3) nonroutine technology and a complex external environment are involved, (4) nonprogrammed decisions are being considered, and (5) organizational change is occurring.
13.4 Limiting the Influence of Political Behavior
4. How do you recognize and limit inappropriate or unethical political behavior where it occurs? Political behavior can be reduced or minimized in organizations through four techniques: (1) reducing organization uncertainty, (2) reducing interunit competition, (3) breaking up political fiefdoms, and (4) preventing the development of future fiefdoms.
13.08: Chapter Review Questions
1. Compare and contrast power, authority, and leadership.
2. Identify five bases of power, and provide an example of each. Which base (or bases) of power do you feel would be most commonly found in organizations?
3. Discuss the concept of power dependencies. What is the relationship between power dependencies and bases of power?
4. What is counterpower? Provide an example of counterpower from your own experience.
5. Why is it important to understand political behavior in organizations?
6. Define politics. How does politics differ from power?
7. Compare and contrast the resource dependence model of power and politics with the strategic contingency model.
8. Identify several specific power tactics in organizations, and provide an example of each.
9. Why is it important that the exercise of power and politics be handled in an ethical fashion? What might happen if employees felt that managers were using power in an unethical fashion? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/13%3A_Organizational_Power_and_Politics/13.07%3A_Summary_of_Learning_Outcomes.txt |
1. You might find it interesting to look at your own bases of power in an organization you have worked with. To do this, simply think of your present or past job, and complete this self-assessment. When you have finished, refer to Appendix B for scoring procedures.
What Are Your Bases of Power?
Instructions: Using a current or former job, answer each of the following items by circling the response that most suits your answer.
2. It might be interesting for you to evaluate your own level of political behavior. To do this, complete this self-assessment. When you have finished, score your questionnaire according to the procedure outlined in Appendix B.
How Political Are You?
Instructions: To determine your political appreciation and tendencies, please answer the following questions. Select the answer that better represents your behavior or belief, even if that particular behavior or belief is not present all the time.
13.10: Managerial Decision Exercises
1. You have recently been promoted to the position of president of the division from your current role as VP of accounting and finance. Many people thought that the VP of sales and marketing would get the position, but you and he had always been friendly, and you thought that things would go smoothly. After about six months in the new position, you notice that he has been fighting you in small and subtle ways. You recognize his value, so you decide to let things play out and even mention other possibilities for promotion within the organization that he could apply for and that you would be supportive. After 11 months, things have not improved, and you are considering letting your colleague go. You are hesitant, however, because your organization needs a strong sales and marketing department. What should you do? If this power struggle continues, how do you think it will affect the larger organization?
13.11: Critical Thinking Case
The Ohio Connection
Janey worked as an executive assistant to a product manager at her company: Ohio Connection. Overall, she loved her job; she was happy to work with a company that provided great benefits, and she and found enjoyment in her day-to-day work. She had the same product manager boss for years, but last year, her manager left Ohio Connection and retired. Recently her new manager has been treating her unfairly and showcasing bullying behavior.
Yesterday, Janey came into work, and her boss decided to use their power as her manager and her “superior” to demand that she stay late to cover for him, correct reports that he had made mistakes on, and would not pay her overtime. She was going to be late to pick up her son from soccer practice if she stayed late; she told him this, and he was not happy.
Over subsequent days, her boss consistently would make comments about her performance, even though she had always had good remarks on reviews, and created a very negative work environment. The next time she was asked to stay late, she complied for fear of losing her job or having other negative impacts on her job. Janey’s situation was not ideal, but she didn’t feel she had a choice.
Questions:
1. What type of power did Janey’s boss employ to get her to do the things that he wanted her to do?
2. What negative consequences are apparent in this situation and other situations where power is not
balanced in the workplace?
3. What steps should Janey take do to counteract the power struggle that is occurring with her new
manager?
Sources: A. Morin, “How to Prevent a Workplace Bully from taking Your Power,” Inc., June 25, 2018, https://www.inc.com/amy-morin/how-to...our-power.html; V. Giang, “The 7 Types Of Power That Shape The Workplace,” Business Insider, July 31, 2013, https://www.businessinsider.com/the-...rkplace-2013-7; B. Weinstein, “10 Tips for Dealing with a Bully Boss,” CIO, accessed October 13, 2018, https://www.cio.com.au/article/198499/ 10_tips_dealing_bully_boss/. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/13%3A_Organizational_Power_and_Politics/13.09%3A_Management_Skills_Application_Exercises.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. How does conflict arise in organizations?
2. How do you recognize and respond to cultural differences in negotiation and bargaining strategies?
Exploring managerial careers
Conflict at Google
Over the past two years at Google, 48 people have been terminated for sexual harassment. There is a firm policy at Google pertaining to this type of misconduct, but when the effects of these types of events cause an uproar based on reports that a former top executive was paid millions of dollars after leaving Google despite misconduct and harassment allegations, it’s important to get to the point of conflict and face it head on.
That’s exactly why Chief Executive Officer Sundar Pichai did just that. In an attempt to get ahead of the storm, Pichai wrote an email to explaining that none of the individuals that were asked to leave were given severance packages. Despite this, employees are still feeling upset over such claims.
“The culture of stigmatization and silence *enables* the abuse by making it harder to speak up and harder to be believed,” Liz Fong-Jones, who is quoted in the Times’s story, wrote on Twitter. “It’s the abuse of power relationships in situations where there was no consent, or consent was impossible.”
After the article came out in the New York Times reporting that Google gave Andy Rubin, former Android chief, a \$90 million exit package, it was not just employees that were upset; there was external conflict between the company and Rubin. The media was heavily involved, including Bloomberg, and Rubin used social channels as well, making it even more complicated to counteract the negative comments or come to a resolution. Since the reports of Rubin’s actions as well as additional reports regarding Google’s permissive culture became public, Google has taken actions to update its policy on relationship disclosure.
This stance from the Google executive team is just one step in the right direction to address a culture that suggests a high level of conflict due to the protection of executives over the safety and well-being of the employees, who may be less likely to report incidents of abuse of power.
Sources
A. Barr, “Google CEO Tries to Calm Staff After Executive Misconduct Report,” Bloomberg, October 25, 2018, https://www.bloomberg.com/news/artic...conduct-report;
D. Wakabayashi and K. Benner, “How Google Protected Andy Rubin, the ‘Father of Android’,” New York Times, October 25, 2018, https://www.nytimes.com/2018/10/25/t...ndy-rubin.html;
A. Panchadar, “Alphabet Harassment,” New York Times, October 25, 2018, www.nytimes.com/reuters/2018...arassment.html.
In all organizations, including Google, some conflict is inevitable. Simply making a decision to do A instead of B often alienates the supporters of B, despite the soundness of the reasons behind the decision. Moreover, the consequences of conflict (and failed negotiations) can be costly to an organization, whether the conflict is between labor and management, groups, individuals, or nations. In an era of increasing business competition both from abroad and at home, reducing conflict is important. For these reasons, contemporary managers need a firm grasp of the dynamics of intergroup and interorganizational conflict and of negotiation processes.
We begin with a discussion of the conflict process, followed by a look at negotiations both within and between organizations. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/14%3A_Conflict_and_Negotiations/14.01%3A_Chapter_Introduction.txt |
1. How do you recognize and resolve short- and long-term conflicts among group members and among groups?
By any standard of comparison, conflict in organizations represents an important topic for managers. Just how important it is can be seen in the results of a study of how managers spend their time. It was found that approximately 20 percent of top and middle managers’ time was spent dealing with some form of conflict. In another study, it was found that managerial skill in handling conflict was a major predictor of managerial success and effectiveness.
A good example of the magnitude of the problems that conflict can cause in an organization is the case of General Concrete, Inc., of Coventry, Rhode Island. Operations at this concrete plant came to a halt for more than three weeks because the plant’s one truck driver and sole member of the Teamsters Union began picketing after he was laid off by the company. The company intended to use other drivers from another of their plants. In response to the picketing, not a single employee of General Concrete crossed the picket line, thereby closing the plant and costing the company a considerable amount in lost production and profit. Could this problem have been handled better? We shall see.
In the sections that follow, several aspects of conflict in organizations are considered. First, conflict is defined, and variations of conflict are considered by type and by level. Next, constructive and destructive aspects of conflict are discussed. A basic model of the conflict process is then examined, followed by a look at several of the more prominent antecedents of conflict. Finally, effective and ineffective strategies for conflict resolution are contrasted. Throughout, emphasis is placed on problem identification and problem resolution.
There are many ways to determine conflict as it relates to the workplace. For our purposes here, we will define conflict as the process by which individuals or groups react to other entities that have frustrated, or are about to frustrate, their plans, goals, beliefs, or activities. In other words, conflict involves situations in which the expectations or actual goal-directed behaviors of one person or group are blocked—or about to be blocked—by another person or group. Hence, if a sales representative cannot secure enough funds to mount what she considers to be an effective sales campaign, conflict can ensue. Similarly, if A gets promoted and B doesn’t, conflict can emerge. Finally, if a company finds it necessary to lay off valued employees because of difficult financial conditions, conflict can occur. Many such examples can be identified; in each, a situation emerges in which someone or some group cannot do what it wants to do (for whatever reason) and responds by experiencing an inner frustration.
Types of Conflict
If we are to try to understand the roots of conflict, we need to know what type of conflict is present. At least four types of conflict can be identified:
1. Goal conflict. Goal conflict can occur when one person or group desires a different outcome than others do. This is simply a clash over whose goals are going to be pursued.
2. Cognitive conflict. Cognitive conflict can result when one person or group holds ideas or opinions that are inconsistent with those of others. This type of conflict is evident in political debates.
3. Affective conflict. This type of conflict emerges when one person’s or group’s feelings or emotions (attitudes) are incompatible with those of others. Affective conflict is seen in situations where two individuals simply don’t get along with each other.
4. Behavioral conflict. Behavioral conflict exists when one person or group does something (i.e., behaves in a certain way) that is unacceptable to others. Dressing for work in a way that “offends” others and using profane language are examples of behavioral conflict.
Each of these types of conflict is usually triggered by different factors, and each can lead to very different responses by the individual or group.
Levels of Conflict
In addition to different types of conflict, there exist several different levels of conflict. Level refers to the number of individuals involved in the conflict. That is, is the conflict within just one person, between two people, between two or more groups, or between two or more organizations? Both the causes of a conflict and the most effective means to resolve it can be affected by level. Four such levels can be identified:
1. Intrapersonal conflict. Intrapersonal conflict is conflict within one person. We often hear about someone who has an approach-avoidance conflict; that is, she is both attracted to and repelled by the same object. Similarly, a person can be attracted to two equally appealing alternatives, such as two good job offers (approach-approach conflict) or repelled by two equally unpleasant alternatives, such as the threat of being fired if one fails to identify a coworker guilty of breaking plant rules (avoidance-avoidance conflict). In any case, the conflict is within the individual.
2. Interpersonal conflict. Conflict can also take form in an interpersonal conflict, where two individuals disagree on some matter. For example, you can have an argument with a coworker over an issue of mutual concern. Such conflicts often tend to get highly personal because only two parties are involved and each person embodies the opposing position in the conflict. Hence, it is sometimes difficult to distinguish between the opponent’s position and her person.
3. Intergroup conflict. Third, conflict can be found between groups. Intergroup conflict usually involves disagreements between two opposing forces over goals or the sharing of resources. For example, we often see conflict between the marketing and production units within a corporation as each vies for more resources to accomplish its subgoals. Intergroup conflict is typically the most complicated form of conflict because of the number of individuals involved. Coalitions form within and between groups, and an “us-against-them” mentality develops. Here, too, is an opportunity for groupthink to develop and thrive.
4. Interorganizational conflict. Finally, we can see interorganizational conflict in disputes between two companies in the same industry (for example, a disagreement between computer manufactures over computer standards), between two companies in different industries or economic sectors (for example, a conflict between real estate interests and environmentalists over land use planning), and even between two or more countries (for example, a trade dispute between the United States and Japan or France). In each case, both parties inevitably feel the pursuit of their goals is being frustrated by the other party.
The Positive and Negative Sides of Conflict
People often assume that all conflict is necessarily bad and should be eliminated. On the contrary, there are some circumstances in which a moderate amount of conflict can be helpful. For instance, conflict can lead to the search for new ideas and new mechanisms as solutions to organizational problems. Conflict can stimulate innovation and change. It can also facilitate employee motivation in cases where employees feel a need to excel and, as a result, push themselves in order to meet performance objectives.
Conflict can at times help individuals and group members grow and develop self-identities. As noted by Coser:
Conflict, which aims at a resolution of tension between antagonists, is likely to have stabilizing and integrative functions for the relationship. By permitting immediate and direct expression of rival claims, such social systems are able to readjust their structures by eliminating their sources of dissatisfaction. The multiple conflicts which they experience may serve to eliminate the causes for dissociation and to reestablish unity. These systems avail themselves, through the toleration and institutionalization of conflict, of an important stabilizing mechanism.
Conflict can, on the other hand, have negative consequences for both individuals and organizations when people divert energies away from performance and goal attainment and direct them toward resolving the conflict. Continued conflict can take a heavy toll in terms of psychological well-being. As we will see in the next chapter, conflict has a major influence on stress and the psychophysical consequences of stress. Finally, continued conflict can also affect the social climate of the group and inhibit group cohesiveness.
Thus, conflict can be either functional or dysfunctional in work situations depending upon the nature of the conflict, its intensity, and its duration. Indeed, both too much and too little conflict can lead to a variety of negative outcomes, as discussed above. This is shown in Figure \(1\). In such circumstances, a moderate amount of conflict may be the best course of action. The issue for management, therefore, is not how to eliminate conflict but rather how to manage and resolve it when it occurs.
managerial leadership
Executive Conflict Resolution Strategies
A good way to see how conflict can be functional or dysfunctional is to observe the behaviors of many of America’s CEOs. Classic examples include the cases of Jack Welch, former chairman of General Electric, and Fred Ackman, former chairman of Superior Oil. Welch enjoyed a good fight and took pleasure in the give-and-take of discussions and negotiations. On one occasion, he engaged a senior vice president in a prolonged and emotional shouting match over the merits of a certain proposal. Several managers who were present were embarrassed by the confrontation. Yet after the argument, Welch thanked the vice president for standing up to him and defending his views. This is what Welch calls “constructive conflict,” also termed constructive confrontation.
On the other hand, according to one account, Fred Ackman approached conflict quite differently. Ackman has been accused of being autocratic—he often refused even to discuss suggestions or modifications to proposals he presented. Disagreement was seen as disloyalty and was often met with an abusive temper. As one former subordinate said, “He couldn’t stand it when someone disagreed with him, even in private. He’d eat you up alive, calling you a dumb S.O.B. . . . It happened all the time.”
Many today will suggest that Jack Welch’s management approach and the conglomerate approach of GE has led to the company’s fiscal problems, while others fault the direction that Jack Welch’s successor Jeff Immelt. Others say that leaders at other companies, such as Apple’s Tim Cook, are making the same leadership errors as Jack Welch.
Questions:
1. How do you feel you respond to such conflict?
2. Would your friends agree with your assessment?
Sources:
R. X. Cringely, “2019 prediction #1 -- Apple under Tim Cook emulates GE under Jack Welch, BetaNews, February 27, 2019, https://betanews.com/2019/02/28/2019...er-jack-welch/;
M. A. Harris, “Can Jack Welsh Reinvent GE?” Business Week, June 30, 1986;
S. Flax, “The Ten Toughest Bosses in America,” Fortune, August 6, 1984, p. 21;
J. A. Byrne, “Jack Welch successor destroyed GE he inherited,” USA Today, July 15, 2018, https://www.usatoday.com/story/opini...ates/36895027/.
concept check
1. How can the use of power help and harm organizations? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/14%3A_Conflict_and_Negotiations/14.02%3A_Conflict_in_Organizations-_Basic_Considerations.txt |
1. How does conflict arise in organizations?
Here we will examine two aspects of the conflict process. First, several factors that have been found to contribute to conflict will be identified. After this, a model of conflict processes in organizations will be reviewed.
Why Organizations Have So Much Conflict
A number of factors are known to facilitate organizational conflict under certain circumstances. In summarizing the literature, Robert Miles points to several specific examples. These are as follows:
Task Interdependencies. The first antecedent can be found in the nature of task interdependencies. In essence, the greater the extent of task interdependence among individuals or groups (that is, the more they have to work together or collaborate to accomplish a goal), the greater the likelihood of conflict if different expectations or goals exist among entities, in part because the interdependence makes avoiding the conflict more difficult. This occurs in part because high task interdependency heightens the intensity of relationships. Hence, a small disagreement can very quickly get blown up into a major issue.
Status Inconsistencies. A second factor is status inconsistencies among the parties involved. For example, managers in many organizations have the prerogative to take personal time off during workdays to run errands, and so forth, whereas nonmanagerial personnel do not. Consider the effects this can have on the nonmanagers’ view of organizational policies and fairness.
Jurisdictional Ambiguities. Conflict can also emerge from jurisdictional ambiguities—situations where it is unclear exactly where responsibility for something lies. For example, many organizations use an employee selection procedure in which applicants are evaluated both by the personnel department and by the department in which the applicant would actually work. Because both departments are involved in the hiring process, what happens when one department wants to hire an individual, but the other department does not?
Communication Problems. Suffice it to say that the various communication problems or ambiguities in the communication process can facilitate conflict. When one person misunderstands a message or when information is withheld, the person often responds with frustration and anger.
Dependence on Common Resource Pool. Another previously discussed factor that contributes to conflict is dependence on common resource pools. Whenever several departments must compete for scarce resources, conflict is almost inevitable. When resources are limited, a zero-sum game exists in which someone wins and, invariably, someone loses.
Lack of Common Performance Standards. Differences in performance criteria and reward systems provide more potential for organizational conflict. This often occurs because of a lack of common performance standards among differing groups within the same organization. For example, production personnel are often rewarded for their efficiency, and this efficiency is facilitated by the long-term production of a few products. Sales departments, on the other hand, are rewarded for their short-term response to market changes—often at the expense of long-term production efficiency. In such situations, conflict arises as each unit attempts to meet its own performance criteria.
Individual Differences. Finally, a variety of individual differences, such as personal abilities, traits, and skills, can influence in no small way the nature of interpersonal relations. Individual dominance, aggressiveness, authoritarianism, and tolerance for ambiguity all seem to influence how an individual deals with potential conflict. Indeed, such characteristics may determine whether or not conflict is created at all.
A Model of the Conflict Process
Having examined specific factors that are known to facilitate conflict, we can ask how conflict comes about in organizations. The most commonly accepted model of the conflict process was developed by Kenneth Thomas. This model, shown in Figure \(1\), consists of four stages: (1) frustration, (2) conceptualization, (3) behavior, and (4) outcome.
Stage 1: Frustration. As we have seen, conflict situations originate when an individual or group feels frustration in the pursuit of important goals. This frustration may be caused by a wide variety of factors, including disagreement over performance goals, failure to get a promotion or pay raise, a fight over scarce economic resources, new rules or policies, and so forth. In fact, conflict can be traced to frustration over almost anything a group or individual cares about.
Stage 2: Conceptualization. In stage 2, the conceptualization stage of the model, parties to the conflict attempt to understand the nature of the problem, what they themselves want as a resolution, what they think their opponents want as a resolution, and various strategies they feel each side may employ in resolving the conflict. This stage is really the problem-solving and strategy phase. For instance, when management and union negotiate a labor contract, both sides attempt to decide what is most important and what can be bargained away in exchange for these priority needs.
Stage 3: Behavior. The third stage in Thomas’s model is actual behavior. As a result of the conceptualization process, parties to a conflict attempt to implement their resolution mode by competing or accommodating in the hope of resolving problems. A major task here is determining how best to proceed strategically. That is, what tactics will the party use to attempt to resolve the conflict? Thomas has identified five modes for conflict resolution, as shown in Figure \(1\). These are (1) competing, (2) collaborating, (3) compromising, (4) avoiding, and (5) accommodating. Also shown in the exhibit are situations that seem most appropriate for each strategy.
The choice of an appropriate conflict resolution mode depends to a great extent on the situation and the goals of the party. This is shown graphically in Figure \(2\). According to this model, each party must decide the extent to which it is interested in satisfying its own concerns—called assertiveness—and the extent to which it is interested in helping satisfy the opponent’s concerns—called cooperativeness. Assertiveness can range from assertive to unassertive on one continuum, and cooperativeness can range from uncooperative to cooperative on the other continuum.
Once the parties have determined their desired balance between the two competing concerns—either consciously or unconsciously—the resolution strategy emerges. For example, if a union negotiator feels confident she can win on an issue that is of primary concern to union members (e.g., wages), a direct competition mode may be chosen (see upper left-hand corner of Figure \(2\)). On the other hand, when the union is indifferent to an issue or when it actually supports management’s concerns (e.g., plant safety), we would expect an accommodating or collaborating mode (on the right-hand side of the exhibit).
Five Modes of Resolving Conflict
Conflict-Handling Modes Appropriate Situations
Source: Adapted from K. W. Thomas, “Toward Multidimensional Values in Teaching: The Example of Conflict Behaviors,” Academy of Management Review 2 (1977), Table 1, p. 487.
Competing
1. When quick, decisive action is vital—e.g., emergencies
2. On important issues where unpopular actions need implementing—e.g., cost cutting, enforcing unpopular rules, discipline
3. On issues vital to company welfare when you know you’re right
4. Against people who take advantage of noncompetitive behavior
Collaborating
1. When trying to find an integrative solution when both sets of concerns are too important to be compromised
2. When your objective is to learn
3. When merging insights from people with different perspectives
4. When gaining commitment by incorporating concerns into a consensus
5. When working through feelings that have interfered with a relationship
Compromising
1. When goals are important but not worth the effort or potential disruption of more assertive modes
2. When opponents with equal power are committed to mutually exclusive goals
3. When attempting to achieve temporary settlements to complex issues
4. When arriving at expedient solutions under time pressure
5. As a backup when collaboration or competition is unsuccessful
Avoiding
1. When an issue is trivial, or when more important issues are pressing
2. When you perceive no chance of satisfying your concerns
3. When potential disruption outweighs the benefits of resolution
4. When letting people cool down and regain perspective
5. When gathering information supersedes immediate decision
6. When others can resolve the conflict more effectively
7. When issues seem tangential or symptomatic of other issues
Accommodating
1. When you find you are wrong—to allow a better position to be heard, to learn, and to show your reasonableness
2. When issues are more important to others than yourself—to satisfy others and maintain cooperation
3. When building social credits for later issues
4. When minimizing loss when you are outmatched and losing
5. When harmony and stability are especially important.
6. When allowing subordinates to develop by learning from mistakes.
Table \(1\) (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
What is interesting in this process is the assumptions people make about their own modes compared to their opponents’. For example, in one study of executives, it was found that the executives typically described themselves as using collaboration or compromise to resolve conflict, whereas these same executives typically described their opponents as using a competitive mode almost exclusively. In other words, the executives underestimated their opponents’ concern as uncompromising. Simultaneously, the executives had flattering portraits of their own willingness to satisfy both sides in a dispute.
Stage 4: Outcome. Finally, as a result of efforts to resolve the conflict, both sides determine the extent to which a satisfactory resolution or outcome has been achieved. Where one party to the conflict does not feel satisfied or feels only partially satisfied, the seeds of discontent are sown for a later conflict, as shown in the preceding Figure 14.1.1. One unresolved conflict episode can easily set the stage for a second episode. Managerial action aimed at achieving quick and satisfactory resolution is vital; failure to initiate such action leaves the possibility (more accurately, the probability) that new conflicts will soon emerge.
concept check
1. Describe the process of the conflict model. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/14%3A_Conflict_and_Negotiations/14.03%3A_Causes_of_Conflict_in_Organizations.txt |
1. When and how do you negotiate, and how do you achieve a mutually advantageous agreement?
We have discovered that conflict is pervasive throughout organizations and that some conflict can be good for organizations. People often grow and learn from conflict, as long as the conflict is not dysfunctional. The challenge for managers is to select a resolution strategy appropriate to the situation and individuals involved. A review of past management practice in this regard reveals that managers often make poor strategy choices. As often as not, managers select repressive or ineffective conflict resolution strategies.
Common Strategies that Seldom Work
At leave five conflict resolution techniques commonly found in organizations prove to be ineffective fairly consistently. In fact, not only do such techniques seldom work—in many cases, they actually serve to increase the problem. Nonetheless, they are found with alarming frequency in a wide array of business and public organizations. These five ineffective strategies are often associated with an avoidance approach and are described below.
Nonaction. Perhaps the most common managerial response when conflict emerges is nonaction—doing nothing and ignoring the problem. It may be felt that if the problem is ignored, it will go away. Unfortunately, that is not often the case. In fact, ignoring the problem may serve only to increase the frustration and anger of the parties involved.
Administrative Orbiting. In some cases, managers will acknowledge that a problem exists but then take little serious action. Instead, they continually report that a problem is “under study” or that “more information is needed.” Telling a person who is experiencing a serious conflict that “these things take time” hardly relieves anyone’s anxiety or solves any problems. This ineffective strategy for resolving conflict is aptly named administrative orbiting.
Due Process Nonaction. A third ineffective approach to resolving conflict is to set up a recognized procedure for redressing grievances but at the same time to ensure that the procedure is long, complicated, costly, and perhaps even risky. The due process nonaction strategy is to wear down the dissatisfied employee while at the same time claiming that resolution procedures are open and available. This technique has been used repeatedly in conflicts involving race and sex discrimination.
Secrecy. Oftentimes, managers will attempt to reduce conflict through secrecy. Some feel that by taking secretive actions, controversial decisions can be carried out with a minimum of resistance. One argument for pay secrecy (keeping employee salaries secret) is that such a policy makes it more difficult for employees to feel inequitably treated. Essentially, this is a “what they don’t know won’t hurt them” strategy. A major problem of this approach is that it leads to distrust of management. When managerial credibility is needed for other issues, it may be found lacking.
Character Assassination. The final ineffective resolution technique to be discussed here is character assassination. The person with a conflict, perhaps a woman claiming sex discrimination, is labeled a “troublemaker.” Attempts are made to discredit her and distance her from the others in the group. The implicit strategy here is that if the person can be isolated and stigmatized, she will either be silenced by negative group pressures or she will leave. In either case, the problem is “solved.”
Strategies for Preventing Conflict
On the more positive side, there are many things managers can do to reduce or actually solve dysfunctional conflict when it occurs. These fall into two categories: actions directed at conflict prevention and actions directed at conflict reduction. We shall start by examining conflict prevention techniques, because preventing conflict is often easier than reducing it once it begins. These include:
1. Emphasizing organization-wide goals and effectiveness. Focusing on organization-wide goals and objectives should prevent goal conflict. If larger goals are emphasized, employees are more likely to see the big picture and work together to achieve corporate goals.
2. Providing stable, well-structured tasks. When work activities are clearly defined, understood, and accepted by employees, conflict should be less likely to occur. Conflict is most likely to occur when task uncertainty is high; specifying or structuring jobs minimizes ambiguity.
3. Facilitating intergroup communication. Misperception of the abilities, goals, and motivations of others often leads to conflict, so efforts to increase the dialogue among groups and to share information should help eliminate conflict. As groups come to know more about one another, suspicions often diminish, and greater intergroup teamwork becomes possible.
4. Avoiding win-lose situations. If win-lose situations are avoided, less potential for conflict exists. When resources are scarce, management can seek some form of resource sharing to achieve organizational effectiveness. Moreover, rewards can be given for contributions to overall corporate objectives; this will foster a climate in which groups seek solutions acceptable to all.
These points bear a close resemblance to descriptions of the so-called Japanese management style. In Japanese firms, considerable effort is invested in preventing conflict. In this way, more energy is available for constructive efforts toward task accomplishment and competition in the marketplace. Another place where considerable destructive conflict is prevented is Intel.
Managerial leadership
Sustainability and Responsible Management: Constructive Conflict that Leads to Championships
Dealing with conflict lies at the heart of managing any business. Confrontation—facing issues about which there is disagreement—is avoided only at a manager’s peril. Many issues can be postponed, allowed to fester, or smoothed over; eventually, they must be solved. They are not going to disappear. This philosophy not only applies to business but to sports dynamics as well.
Take two NBA all-stars, Kobe Bryant and Shaquille O’Neal. Although they are world-renowned athletes now, when they first started in the NBA, there was plenty of conflict that could have caused their careers to take a much different path.
In 1992, O’Neal was the first play taken in by the NBA draft, he dominated the court with his size and leadership from day one. Four years later, Kobe Bryant, the youngest player to start in the NBA was brought onto the same team: the Los Angeles Lakers. The two were not fast friends, and the trash talk started as Bryant publicly criticized his teammate—and continued for years.
Ultimately in 1999, Phil Jackson was brought in to coach the LA Lakers, and his creative approach to their conflict changed everything. Instead of seeing this tension and ignoring it, or chastising the players for their feud, he used their skills to develop a new way of playing the game. O’Neal brought power and strength to the court, while Bryant was fast and a great shooter. Jackson developed a way of playing that highlighted both of these talents, and he built a supporting cast around them that brought out the best in everyone. The outcome: three NBA championships in a row.
While many may have just ignored or tried to separate the two superstars, Jackson was innovative in his approach, saw the opportunity in using the conflict to create a new energy, and was able to build a very successful program.
Questions:
1. What was the key to the success for Phil Jackson and his team?
2. How would you have approached the two players (or employees) that were in conflict and causing tension on your team?
3. What strategies would have been important to employ with these two individuals to resolve the conflict?
Sources:
J. DeGraff, “3 Legendary Creative Conflicts That Sparked Revolutionary Innovation,” Huffington Post, September 26, 2017, https://www.huffingtonpost.com/entry...b08d66155043d6;
K. Soong, “‘I owe you an apology’: Shaquille O’Neal explains why he loves Kobe Bryant years after feud,” Washington Post, February, 17, 2017, https://www.washingtonpost.com/news/...=.b9cca63b5761;
M. Chiari, “Kobe Bryant Discusses Getting into Fist Fight with Shaquille O'Neal,” Bleacher Report, March 9, 2018, https://bleacherreport.com/articles/...haquille-oneal.
Strategies for Reducing Conflict
Where dysfunctional conflict already exists, something must be done, and managers may pursue one of at least two general approaches: they can try to change employee attitudes, or they can try to change employee behaviors. If they change behavior, open conflict is often reduced, but groups may still dislike one another; the conflict simply becomes less visible as the groups are separated from one another. Changing attitudes, on the other hand, often leads to fundamental changes in the ways that groups get along. However, it also takes considerably longer to accomplish than behavior change because it requires a fundamental change in social perceptions.
Nine conflict reduction strategies are shown in Figure \(\PageIndex{Exhibit 14.5. The techniques should be viewed as a continuum, ranging from strategies that focus on changing behaviors near the top of the scale to strategies that focus on changing attitudes near the bottom of the scale.
1. Physical separation. The quickest and easiest solution to conflict is physical separation. Separation is useful when conflicting groups are not working on a joint task or do not need a high degree of interaction. Though this approach does not encourage members to change their attitudes, it does provide time to seek a better accommodation.
2. Use of rules and regulations. Conflict can also be reduced through the increasing specification of rules, regulations, and procedures. This approach, also known as the bureaucratic method, imposes solutions on groups from above. Again, however, basic attitudes are not modified.
3. Limiting intergroup interaction. Another approach to reducing conflict is to limit intergroup interaction to issues involving common goals. Where groups agree on a goal, cooperation becomes easier. An example of this can be seen in recent efforts by firms in the United States and Canada to work together to “meet the Japanese challenge.”
4. Use of integrators. Integrators are individuals who are assigned a boundary-spanning role between two groups or departments. To be trusted, integrators must be perceived by both groups as legitimate and knowledgeable. The integrator often takes the “shuttle diplomacy” approach, moving from one group to another, identifying areas of agreement, and attempting to find areas of future cooperation.
5. Confrontation and negotiation. In this approach, competing parties are brought together face-to-face to discuss their basic areas of disagreement. The hope is that through open discussion and negotiation, means can be found to work out problems. Contract negotiations between union and management represent one such example. If a “win-win” solution can be identified through these negotiations, the chances of an acceptable resolution of the conflict increase. (More will be said about this in the next section of this chapter.)
6. Third-party consultation. In some cases, it is helpful to bring in outside consultants for third-party consultation who understand human behavior and can facilitate a resolution. A third-party consultant not only serves as a go-between but can speak more directly to the issues, because she is not a member of either group.
7. Rotation of members. By rotating from one group to another, individuals come to understand the frames of reference, values, and attitudes of other members; communication is thus increased. When those rotated are accepted by the receiving groups, change in attitudes as well as behavior becomes possible. This is clearly a long-term technique, as it takes time to develop good interpersonal relations and understanding among group members.
8. Identification of interdependent tasks and superordinate goals. A further strategy for management is to establish goals that require groups to work together to achieve overall success—for example, when company survival is threatened. The threat of a shutdown often causes long-standing opponents to come together to achieve the common objective of keeping the company going.
9. Use of intergroup training. The final technique on the continuum is intergroup training. Outside training experts are retained on a long-term basis to help groups develop relatively permanent mechanisms for working together. Structured workshops and training programs can help forge more favorable intergroup attitudes and, as a result, more constructive intergroup behavior.
concept check
1. What are the strategies that managers can use that can reduce conflict? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/14%3A_Conflict_and_Negotiations/14.04%3A_Resolving_Conflict_in_Organizations.txt |
1. How do you recognize and respond to cultural differences in negotiation and bargaining strategies?
We have seen the central role conflict plays in organizational processes. Clearly, there are some areas where managers would prefer to solve a problem between two parties before it results in high levels of conflict. This is usually accomplished through negotiation. Negotiation is the process by which individuals or groups attempt to realize their goals by bargaining with another party who has at least some control over goal attainment. Throughout the negotiation process, considerable skill in communication, decision-making, and the use of power and politics is required in order to succeed.
We will consider several aspects of negotiation, including stages of negotiation, types of negotiation behavior, and the negotiation process itself. We begin with the reasons why people engage in negotiation and bargaining in the first place.
Stages of Negotiation
In general, negotiation and bargaining are likely to have four stages. Although the length or importance of each stage can vary from situation to situation or from one culture to another, the presence and sequence of these stages are quite common across situations and cultures.
1. Non-task time. During the first stage, the participants focus on getting to know and become comfortable with each other and do not focus directly on the task or issue of the negotiation. In cultures such as ours, this stage is often filled with small talk. However, it is usually not very long and is not seen as important as other stages. North Americans use phrases such as “Let’s get down to business,” “I know you’re busy, so let’s get right to it,” and “Let’s not beat around the bush.” However, in other cultures such as Mexico or South Korea, the non-task stage is often longer and of more importance because it is during this stage the relationship is established. In these cultures, it is the relationship more than the contract that determines the extent to which each party can trust the other to fulfill its obligations.
2. Information exchange. The second stage of negotiations involves the exchange of background and general information. During this stage, participants may, for example, provide overviews of their company and its history. In Japan, this is an important stage because specific proposals or agreements must be considered and decided in the larger context. The information exchanged during the second stage provides this larger context.
3. Influence and persuasion. The third stage involves efforts to influence and persuade the other side. Generally, these efforts are designed to get the other party to reduce its demands or desires and to increase its acceptance of your demands or desires. There are a wide variety of influence tactics, including promises, threats, questions, and so on. The use of these tactics as well as their effectiveness is a function of several factors. First, the perceived or real power of one party relative to another is an important factor. For example, if one party is the only available supplier of a critical component, then threatening to go to a new supplier of that component unless the price is reduced is unlikely to be an effective influence tactic. Second, the effectiveness of a particular influence tactic is also a function of accepted industry and cultural norms. For example, if threats are an unacceptable form of influence, then their use could lead to consequences opposite from what is desired by the initiator of such tactics.
4. Closing. The final stage of any negotiation is the closing. The closing may result in an acceptable agreement between the parties involved or it may result in failure to reach an agreement. The symbols that represent the close of a negotiation vary across cultures. For example, in the United States, a signed contract is the symbol of a closed negotiation. At that point, “a deal is a deal” and failure to abide by the contents of the document is considered a breach of contract. In China, however, there is not the strong legal history or perspective that exists in the United States, and a signed document is not necessarily a symbol of the close of the negotiations. In fact, to some extent it symbolizes the beginning of the final points of negotiation. The signed document identifies the key issues that still need to be negotiated despite the fact that it may contain specific obligations for the involved parties concerning these issues. Quite simply, even though the document may obligate one party to deliver a product on a certain day and obligate the other party to pay a certain price for delivery, the document itself does not symbolize that the negotiation concerning these specifics is closed.
Each of these four stages and the sequence described above are common across most situations and cultures. However, the length of time devoted to each stage, the importance of each stage, and the specific behaviors associated with each stage can vary by situation and certainly do vary by culture.
Bargaining Strategies
Within the context of these four stages, both parties must select an appropriate strategy that they believe will assist them in the attainment of their objectives. In general, two rather distinct approaches to negotiation can be identified. These are distributive bargaining and integrative bargaining. A comparison of these two approaches is shown in Table \(1\).
Distributive Bargaining. In essence, distributive bargaining is “win-lose” bargaining. That is, the goals of one party are in fundamental and direct conflict with those of the other party. Resources are fixed and limited, and each party wants to maximize her share of these resources. Finally, in most cases, this situation represents a short-term relationship between the two parties. In fact, such parties may not see each other ever again.
A good example of this can be seen in the relationship between the buyer and seller of a house. If the buyer gets the house for less money (that is, she “wins”), the seller also gets less (that is, she “loses”). This win-lose situation can also be seen in classes where the professor insists on grading on a specified curve. If your friends get an A, there are fewer As to go around, and your chances are diminished.
Two Approaches to Bargaining
Bargaining Characteristic Distributive Bargaining Integrative Bargaining
Payoff structure Fixed amount of resources to be divided Variable amount of resources to be divided
Primary motivation I win, you lose Mutual benefit
Primary interests Opposed to each other Convergent with each other
Focus of relationships Short term Long term
Table \(1\). (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Under such circumstances, each side will probably adopt a course of action as follows. First, each side to a dispute will attempt to discover just how far the other side is willing to go to reach an accord. This can be done by offering outrageously low (or high) proposals simply to feel out the opponent. For example, in selling a house, the seller will typically ask a higher price than she actually hopes to get (see Figure \(1\)) The buyer, in turn, typically offers far less than she is willing to pay. These two prices are put forth to discover the opponent’s resistance price. The resistance price is the point beyond which the opponent will not go to reach a settlement. Once the resistance point has been estimated, each party tries to convince the opponent that the offer on the table is the best one the opponent is likely to receive and that the opponent should accept it. As both sides engage in similar tactics, the winner is often determined by who has the best strategic and political skills to convince the other party that this is the best she can get.
Integrative Bargaining. Integrative bargaining is often described as the “win-win” approach. That is, with this technique, both parties try to reach a settlement that benefits both parties. Such an approach is often predicated on the belief that if people mutually try to solve the problem, they can identify some creative solutions that help everyone. A good example can be seen in bilateral trade negotiations between two nations. In such negotiations, participants usually agree that a trade war would hurt both sides; therefore, both sides attempt to achieve a balance of outcomes that are preferable to a trade war for both sides. In doing so, however, the trick is to give away as little as possible to achieve the balance.
As shown previously in Table \(1\), this approach is characterized by the existence of variable resources to be divided, efforts to maximize joint outcomes, and the desire to establish or maintain a long-term relationship. The interests of the two parties may be convergent (noncompetitive, such as preventing a trade war between two countries) or congruent (mutually supportive, as when two countries reach a mutual defense pact).
In both cases, bargaining tactics are quite different from those typically found in distributive bargaining. Here, both sides must be able and willing to understand the viewpoints of the other party. Otherwise, they will not know where possible consensus lies. Moreover, the free flow of information is required. Obviously, some degree of trust is required here too. In discussions, emphasis is placed on identifying commonalities between the two parties; the differences are played down. And, finally, the search for a solution focuses on selecting those courses of action that meet the goals and objectives of both sides. This approach requires considerably more time and energy than distributive bargaining, yet, under certain circumstances, it has the potential to lead to far more creative and long-lasting solutions.
The Negotiation Process
The negotiation process consists of identifying one’s desired goals—that is, what you are trying to get out of the exchange—and then developing suitable strategies aimed at reaching those goals. A key feature of one’s strategy is knowing one’s relative position in the bargaining process. That is, depending upon your relative position or strength, you may want to negotiate seriously or you may want to tell your opponent to “take it or leave it.” The dynamics of bargaining power can be extrapolated directly from the discussion of power Table \(2\) and indicate several conditions affecting this choice. For example, you may wish to negotiate when you value the exchange, when you value the relationship, and when commitment to the issue is high. In the opposite situation, you may be indifferent to serious bargaining.
When to Negotiate
Bargaining Strategies
Characteristics of the Situation Negotiate “Take It or Leave It”
* Indicates relative power distribution between the two parties; “low” indicates that one has little power in the situation, whereas “high” indicates that one has considerable power.
Value of exchange High Low
Commitment to a decision High Low
Trust Level High Low
Time Ample Pressing
Power distribution* Low or balanced High
Relationship between two parties Important Unimportant
Table \(2\). (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Once goals and objectives have been clearly established and the bargaining strategy is set, time is required to develop a suitable plan of action. Planning for negotiation requires a clear assessment of your own strengths and weaknesses as well as those of your opponents. Roy Lewicki and Joseph Litterer have suggested a format for preparation for negotiation. According to this format, planning for negotiation should proceed through the following phases:
1. Understand the basic nature of the conflict. What are the primary areas of agreement and disagreement?
2. What exactly do you want out of this negotiation? What are your goals?
3. How will you manage the negotiation process? Here, several issues should be recognized:
1. Identify the primary issues to negotiate.
2. Prioritize these issues.
3. Develop a desirable package including these important issues.
4. Establish an agenda.
4. Do you understand your opponent?
1. What are your opponent’s current resources and needs?
2. What is the history of your opponent’s bargaining behavior? What patterns can you see that can help you predict her moves?
Research indicates that following such procedures does, in fact, lead to more successful bargaining. In Table \(3\), for example, we can see differences in both the planning approaches and the actual behaviors of successful and average negotiators. Preparation clearly makes a difference, as does interpersonal style during the actual negotiation.
Differences Between Successful and Average Negotiations
Negotiation Behavior Skilled Negotiators Average Negotiators
Source: Based on data reported in N. J. Adler and A. Gunderson, International Dimensions of Organizational Behavior 5th edition (Mason, OH: Cengage Learning, 2008), pp. 165–181.
Before the Negotiation
Number of options considered per issue 5.1 2.6
Portion of time spent focusing on anticipated areas of agreement instead of conflict 39% 11%
During Negotiation
Portion of time spent asking questions of opponent 21% 10%
Portion of time spent in active listening 10% 4%
Portion of time spent attacking opponent 1% 6%
Table \(3\) (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Cultural Differences in International Negotiations
In view of the increased emphasis on international industrial competitiveness, it is important to understand what happens when the two parties to a negotiation come from different cultures or countries. A knowledge of cultural differences can assist the manager both in understanding the other party’s position and in striking the best possible deal given the circumstances.
A good way to start this analysis is by recognizing how different cultures approach the art of persuasion; that is, how do people in different countries try to win you over to their side in a dispute? Although we cannot possibly examine all cultures, consider the results of a study of differences in persuasion techniques for North America, the Middle East, and the former Soviet Union. As can be seen in Table \(4\), Americans, Arabs, and Russians have significantly different approaches to persuasion. Americans tend to enter into a discussion emphasizing facts and figures, whereas Arabs may focus on emotions. The Russians may talk about ideals.
Moreover, in a negotiation situation, the American is ever-conscious of deadlines, whereas the Arab takes a more casual approach, and the Russian is often unconcerned about time. Americans make small concessions early in the bargaining process to establish a relationship. Arabs, on the other hand, make concessions throughout the bargaining process, and the Russians try not to make any concessions at all. Clearly, this study has only highlighted trends, and exceptions can be easily found. Even so, a knowledge of such differences, however general, can greatly facilitate improved interpersonal relations and bargaining success for both parties.
National Styles of Persuasion
North Americans Arabs Russians
Source: Adapted from J. S. Martin, Intercultural Business Communication, (Englewood Cliffs, N.J.: Pearson, 2005).
Primary negotiating style and process Factual: appeals made to logic Affective: appeals made to emotions Axiomatic: appeals made to Ideals
Conflict: opponent’s arguments countered with Objective facts Subjective feelings Asserted ideals
Making concessions Small concessions made early to establish a relationship Concessions made throughout as a part of the bargaining process Few, if any, small concessions made
Response to opponent’s concessions Usually reciprocate opponent’s concessions Almost always reciprocate opponent’s concessions Opponent’s concessions viewed as weakness and almost never reciprocated
Relationship Short-term Long-term No continuing relationship
Authority Broad Broad Limited
Initial position Moderate Extreme Extreme
Deadline Very important Casual Ignored
Table \(4\). (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
We can also examine the personal characteristics of negotiators from different countries. A study by John Graham focused on the key characteristics of negotiators from different countries, in this case the United States, Japan, Taiwan, and Brazil. Results of the study are shown in Table \(5\), which shows the rank order of the defining characteristics. Again, we can see major differences in negotiators from around the world. Each has certain strengths, yet these strengths vary considerably from country to country. Americans are seen as prepared and organized, thinking well under pressure, whereas Japanese are seen as more dedicated and shrewd. Taiwanese negotiators were found in the study to be highly persistent and determined, working hard to win the opponent’s respect, and the Brazilians were amazingly similar to the Americans.
Key Individual Characteristics of Negotiators (Rank Order)
American Managers Japanese Managers Chinese Managers (Taiwan) Brazilian Managers
Source: “Key Individual Characteristics of Negotiators” by John Graham, Graduate School of Management, University of California, Irvine.
Preparation and planning skill Dedication to job Persistence and determination Preparation and planning skill
Thinking under pressure Perceive and exploit power Win respect and confidence Thinking under pressure
Judgment and intelligence Win respect and confidence Preparation and planning skill Judgment and intelligence
Verbal expressiveness Integrity Product knowledge Verbal expressiveness
Product knowledge Listening skill Interesting Product knowledge
Perceive and exploit power Broad perspective Judgment and intelligence Perceive and exploit power
Integrity Verbal expressiveness Competition
Table \(5\). (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Finally, we should note that negotiators from different countries differ markedly in their verbal and nonverbal communication patterns. In one study (again among Americans, representing North America; Japanese, representing East Asia; and Brazilians, representing South America), observers counted the number of times each negotiator did certain things within a given time limit. The results are shown in Table \(6\). As can be seen, these negotiators use both verbal and nonverbal communication in very different ways. Note, for example, that Brazilians on average said “no” 83 times within a 30-minute segment, compared to 5 times for Japanese and 9 times for Americans. On the other hand, Japanese appealed to ideals and societal norms and simply sat in silence more than the others. Such differences affect not only the negotiation process but also, in many cases, the outcomes. That is, if a negotiator from one culture has annoyed or insulted the opponent (intentionally or unintentionally), the opponent may resist doing business with that person or may fail to offer attractive terms. Hence, again we see the value of better understanding cultural variations in negotiations, as in other matters.
Communication Patterns during Negotiations for Three Cultures
Tactic Japan United States Brazil
Source: Based on data reported in J. Graham, “The Influence of Culture on Business Negotiations,” Journal of International Business Studies, Spring 1985, pp. 81–96.
Verbal Communication
Making promises 7 8 3
Making threats 4 4 2
Making recommendations 7 4 5
Appealing to ideals and norms 4 2 1
Giving a command 8 6 14
Saying “no” 5 9 83
Making initial concessions 6 7 9
Nonverbal Communication
Periods of silence 6 3 0
Interrupting opponent 12 10 29
Looking directly into opponent’s eyes 1 3 5
Touching opponent 0 0 5
Table \(6\) (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Concluding Thoughts about Conflict and Negotiations
One of the classic negotiations approaches that you might encounter is the book, Getting to Yes. This book expound the authors favored method of conflict resolution, which they term principled negotiation. This method attempts to find an objective standard, typically based on existing precedents, for reaching an agreement that will be acceptable to both interested parties. Principled negotiation emphasizes the parties’ enduring interests, objectively existing resources, and available alternatives, rather than transient positions that the parties may choose to take during the negotiation. The outcome of a principled negotiation ultimately depends on the relative attractiveness of each party’s so-called BATNA: the “Best Alternative To a Negotiated Agreement”, which can be taken as a measure of the objective strength of a party’s bargaining stance. In general, the party with the more attractive BATNA gets the better of the deal. If both parties have attractive BATNAs, the best course of action may be not to reach an agreement at all.
Conflict is most likely to occur when the goals, expectations, and/or behaviors of at least two parties differ and when those differences are difficult to avoid (such as when interdependence among the parties involved is high). Conflict itself is neither good nor bad, productive nor destructive. The key to the outcome of conflict is the manner in which it is managed. Negotiation, as a key means of managing conflict, has four distinct stages. However, the length, importance, and norms for each stage can vary by situation and especially by culture.
Expanding around the globe
Negotiating Styles in Malaysia and America
One of the emerging countries in Southeast Asia is Malaysia, whose natural resources and stable economic growth are allowing it to develop as an important manufacturing center in the region along with Singapore, Indonesia, and Thailand. What happens when American businesspeople visit Malaysia to do business? In the following example, cross-cultural researcher George Renwick describes major differences between the two cultures as they approach a negotiation.
Americans’ patterns of negotiation, like all of their patterns, differ somewhat depending upon their context. The negotiating patterns of government officials working out a treaty, for example, are somewhat different from those of a business executive “hammering out” a contract. The pattern portrayed here will be that of the business executive.
The American businessperson usually begins a series of negotiating sessions in a cordial manner, but he is intent on getting things under way. He is very clear as to what he and his company want, when it is wanted, and how he will go about getting it; he has planned his strategy carefully. And he has done what he could to “psyche out” his counterpart, with whom he will be negotiating. From the outset, the American negotiator urges everyone to “dispense with the formalities” and get on with the business at hand. As soon as possible, he expresses his determination, saying something like, “Okay, let’s get down to brass tacks.”
The American usually states his position (at least his first position) early and definitely. He plans before long to “really get down to the nitty gritty.” He wants to “zero in” on the knotty problems and get to the point where “the rubber meets the road” (the point, that is, where “the action” begins). Once the negotiations are “really rolling,” the American usually deals directly with obstacles as they come up, tries to clear them away in quick order, and becomes impatient and frustrated if he cannot.
Most of what the American wants to convey, of course, he puts into words—often many of them. His approach is highly verbal and quite visible—and thoroughly planned. He has outlined his alternative ahead of time and prepared his counterproposals, contingencies, backup positions, bluffs, guarantees, and tests of compliance, all carefully calculated, and including, of course, lots of numbers. Toward the end, he sees that some bailout provisions are included, but he usually doesn’t worry too much about them; making and meeting business commitments “on schedule” is what his life is all about—he is not too concerned about getting out. If he has to get out, then he has to, and he will find a way when the time comes.
The American experiences real satisfaction when all the problems have been “worked out,” especially if he has been able to get provisions very favorable to his company—and to his own reputation as a “tough negotiator.” He rests securely when everything is “down in black and white” and the contract is initialed or signed.
Afterward, the American enjoys himself; he relaxes “over some drinks” and carries on some “small talk” and “jokes around” with his team and their counterparts.
Malay patterns of negotiation, as might be expected, differ considerably. When they are buying something, Malays bargain with the merchant, and when they are working, they socialize with their boss and coworkers. Their purpose is to develop some sense of relationship with the other person. The relationship then provides the basis, or context, for the exchange. Malays take the same patterns and preferences into their negotiating sessions. When all is said and done, it is not the piece of paper they trust, it is the person—and their relationship with the person.
A Malay negotiator begins to develop the context for negotiations through the interaction routines appropriate to this and similar occasions. These routines are as complicated and subtle as customary American routines; they are cordial but quite formal. Like Americans and their own routines, Malays understand the Malay routines but are seldom consciously aware of them. Neither Malays nor Americans understand very clearly the routines of the other.
As the preliminary context is formed, it is important to the Malay that the proper forms of address be known beforehand and used and that a variety of topics be talked about that are unrelated to the business to be transacted. This may continue for quite a while. A Malay negotiator wants his counterpart to participate comfortably, patiently, and with interest. As in other interaction, it is not the particular words spoken which are of most importance to the Malay; rather he listens primarily to the attitudes which the words convey—attitudes toward the Malay himself and toward the matter being negotiated. Attitudes are important to the relationship. At this point and throughout the negotiations, the Malay is as much concerned about the quality of the relationship as the quantity of the work accomplished. Motivation is more important to the Malay than momentum.
The Malay negotiator, as in other situations, is also aware of feelings—his own and those of his counterpart, and the effects of the exchanges upon both. He is also aware of, and concerned about, how he looks in the eyes of his team, how his counterpart looks in the eyes of the other team, and how both he and his counterpart will look after the negotiations in the eyes of their respective superiors.
The Malay is alert to style, both his own and that of his counterpart. Displaying manners is more important than scoring points. The way one negotiates is as important as what one negotiates. Grace and finesse show respect for the other and for the matter under consideration. Negotiating, like other interaction, is something of an art form. Balance and restraint are therefore essential.
The agenda that the Malay works through in the course of the negotiation is usually quite flexible. His strategy is usually rather simple. His positions are expressed in more general terms than the American’s, but no less strongly held. His proposals are more offered than argued: they are offered to the other party rather than argued with him. Malays do not enjoy sparring. They deeply dislike combat.
In response to a strong assertion, the Malay negotiator usually expresses his respect directly by replying indirectly. The stronger the assertion and the more direct the demands, the more indirect the reply—at least the verbal reply.
The Malay and his team usually formulate their positions gradually and carefully. By the time they present their position, they usually have quite a lot of themselves invested in it. Direct rejection of the position, therefore, is sometimes felt to be a rejection of the person. Negotiating for the Malay is not quite the game that it is for some Americans.
If the Malay and his team have arrived at a position from which they and those whom they represent cannot move, they will not move. If this requires a concession from the counterpart, the Malays will not try to force the concession. If the counterpart sees that a concession from him is necessary, and makes it, the Malays, as gentlemen, recognize the move and respect the man who made it. A concession, therefore, is not usually considered by the Malay team to be a sign that they can press harder and extract further concessions. Instead, a concession by either side is considered as evidence of strength and a basis for subsequent reconciliation and cooperation.
What about getting out a contract? Making and meeting business commitments is not what a Malay’s life is all about. He has other, often prior, commitments. He therefore enters into contracts cautiously and prefers to have an exit provided.
In addition, Malays are certain of their control over the future (even their control of their own country) than are Americans. Therefore, promising specific kinds of performance in the future by specific dates in a contract, especially in a long-term contract where the stakes are high, is often difficult for Malays. It is even more difficult, of course, if they are not certain whether they can trust the persons to whom they are making the commitment and from whom they are accepting commitments. Malays therefore give a great deal of thought to a contract and to the contracting party before signing it. And they are uneasy if provisions have not been made for a respectable withdrawal should future circumstances make their compliance impossible.
Questions:
1. How are the different approaches important to understanding negotiations and cultural differences?
Sources:
G. Renwick, Malays and Americans: Definite Differences, Unique Opportunities (Yarmouth, Maine: Intercultural Press, 1985), pp. 51–54.
Concept check
1. Understand the strategies in bargaining.
2. Understand the role that cultural differences have in the negotiation process. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/14%3A_Conflict_and_Negotiations/14.05%3A_Negotiation_Behavior.txt |
Key Terms:
Affective conflict
Seen in situations where two individuals simply don’t get along with each other.
Behavioral conflict
Exists when one person or group does something that is unacceptable to others.
Cognitive conflict
Can result when one person or group holds ideas or opinions that are inconsistent with those of others.
Conflict
The four types of conflict are goal conflict, cognitive conflict, affective conflict, and behavioral conflict.
Constructive confrontation
A conflict that leads to a positive result.
Goal conflict
Can occur when one person or group desires a different outcome than others do. This is simply a clash over whose goals are going to be pursued.
Intergroup conflict
Usually involves disagreements between two opposing forces over goals or the sharing of resources.
Interorganizational conflict
Disputes between two companies in the same industry, two companies in different industries or economic sectors, or two or more countries.
Interpersonal conflict
Where two individuals disagree on some matter.
Intrapersonal conflict
A conflict within one person.
Assertiveness
Can range from assertive to unassertive on one continuum.
Cooperativeness
The extent to which someone is interested in helping satisfy the opponent’s concerns.
Frustration
May be caused by a wide variety of factors, including disagreement over performance goals, failure to get a promotion or pay raise, a fight over scarce economic resources, new rules or policies, and so forth.
Jurisdictional ambiguities
Situations where it is unclear exactly where responsibility for something lies.
Status inconsistencies
Situations where some individuals have the opportunity to benefit whereas other employees do not. Consider the effects this can have on the nonmanagers’ view of organizational policies and fairness.
Task interdependencies
The greater the extent of task interdependence among individuals or groups, the greater the likelihood of conflict if different expectations or goals exist among entities, in part because the interdependence makes avoiding the conflict more difficult.
Administrative orbiting
An ineffective strategy for resolving conflict.
Character assassination
An ineffective resolution technique where the person with a conflict attempts to discredit and distance an individual from the others in the group.
Due process nonaction
The strategy of wearing down a dissatisfied employee while at the same time claiming that resolution procedures are open and available. This technique has been used repeatedly in conflicts involving race and sex discrimination.
Negotiation
The process by which individuals or groups attempt to realize their goals by bargaining with another party who has at least some control over goal attainment.
Third-party consultation
An outside consultant that serves as a go-between and can speak more directly to the issues because she is not a member of either group.
BATNA
An acronym popularised by Roger Fisher and William Ury which stands for ‘Best Alternative to a Negotiated Agreement’. BATNA answers the question: ‘What would you do if you weren’t able to agree a deal with your negotiation counterparty?’ Your BATNA is the alternative action you’ll take should your proposed agreement fail to materialize.
Distributive bargaining
Where the goals of one party are in fundamental and direct conflict with those of the other party. Resources are fixed and limited, and each party wants to maximize its share of these resources.
Integrative bargaining
Essentially “win-lose” bargaining where the goals of one party are in fundamental and direct conflict with those of the other party. Resources are fixed and limited, and each party wants to maximize its share of these resources.
Resistance price
The point beyond which the opponent will not go to reach a settlement.
Summary of Learning Outcomes
14.1 Conflict in Organizations: Basic Considerations
1. How do you recognize and resolve short- and long-term conflicts among group members and among groups?
Conflict is the process by which a person or group feels frustrated in the pursuit of certain goals, plans, or objectives. Conflict may take one of four forms: (1) goal, (2) cognitive, (3) affective, or (4) behavioral. Conflict may occur on several levels, including intrapersonal, interpersonal, intergroup, and interorganizational.
14.2 Causes of Conflict in Organizations
1. How does conflict arise in organizations?
Conflict in organizations can be caused by task interdependencies, status inconsistencies, jurisdictional ambiguities, communication problems, dependence on common resource pools, lack of common performance standards, and individual differences. A model of the conflict process follows four stages. Conflict originates (stage 1) when an individual or group experiences frustration in the pursuit of important goals. In stage 2, the individual or group attempts to understand the nature of the problem and its causes. In stage 3, efforts are made to change behavioral patterns in such a way that the desired outcome, or stage 4, is achieved.
14.3 Resolving Conflict in Organizations
1. When and how do you negotiate, and how do you achieve a mutually advantageous agreement?
Ineffective conflict resolution strategies include nonaction, administrative orbiting, due process nonaction, secrecy, and character assassination. Strategies for preventing conflict include (1) emphasizing organization-wide goals; (2) providing stable, well-structured tasks; (3) facilitating intergroup communication; and (4) avoiding win-lose situations. Strategies for reducing conflict include (1) physical separation, (2) use of rules and regulations, (3) limiting intergroup interaction, (4) use of integrators, (5) confrontation and negotiation, (6) third-party consultation, (7) rotation of members, (8) identification of interdependent tasks and superordinate goals, and (9) use of intergroup training. Negotiation is the process by which individuals and groups attempt to reach their goals by bargaining with others who can help or hinder goal attainment. Negotiation is helpful in three primary instances: (1) a conflict of interest, (2) the absence of clear rules or procedures, and (3) when there is a desire to avoid a fight. Distributive bargaining attempts to resolve a win-lose conflict in which resources are limited and each party wishes to maximize its share of these resources. Integrative bargaining occurs when both parties attempt to reach a settlement that benefits both sides in a dispute.
14.4 Negotiation Behavior
1. How do you recognize and respond to cultural differences in negotiation and bargaining strategies?
A resistance point is the point beyond which an opponent will not go to reach a settlement. Planning for a negotiation session involves (1) understanding the basic nature of the conflict, (2) knowing what the group wants to achieve in the session, (3) selecting a chief negotiator, and (4) understanding one’s opponent. Cultural differences play a major role in the negotiation process and influence such factors as persuasion techniques, the key characteristics of the negotiators, and communication patterns.
Chapter Review Questions
1. Identify the types of conflict commonly found in organizations, and provide examples of each.
2. How can conflict be good for an organization?
3. Identify some reasons for the prevalence of intergroup conflict in organizations.
4. How does intergroup conflict affect behavior within a work group? behavior between two or more groups?
5. Review the basic conflict model discussed in this chapter. What lessons for management follow from this model?
6. Of the various strategies for resolving and preventing conflicts that are presented in this chapter, which ones do you feel will generally be most effective? least effective? Why?
7. What is the difference between distributive and integrative bargaining? When would each be most appropriate?
8. How can cultural differences affect bargaining behavior? If you were negotiating with a Japanese firm, what might you do differently than if you were facing an American firm? Explain.
Management Skills Application Exercises
1. You might find it interesting to see how you approach conflict resolution. To do this, simply complete this self-assessment. When you are done, refer to Appendix B for scoring details.
What Is Your Approach to Conflict Resolution?
Instructions: Think of a typical situation in which you have a disagreement with someone. Then answer the following items concerning how you would respond to the conflict. Circle the number that you feel is most appropriate.
Highly Unlikely Highly Likely
1. I firmly push for my goals.
1 2 3 4 5
1. I always try to win an argument.
1 2 3 4 5
1. I try to show my opponent the logic of my position.
1 2 3 4 5
1. I like to discuss disagreements openly.
1 2 3 4 5
1. I try to work through our differences.
1 2 3 4 5
1. I try to get all concerns on the table for discussion.
1 2 3 4 5
1. I try to work for a mutually beneficial solution.
1 2 3 4 5
1. I try to compromise with the other person.
1 2 3 4 5
1. I seek a balance of gains and losses on each side.
1 2 3 4 5
1. I don’t like talking about disagreements.
1 2 3 4 5
1. I try to avoid unpleasantness for myself.
1 2 3 4 5
1. I avoid taking positions that may incite disagreement.
1 2 3 4 5
1. I try to think of the other person in any disagreement.
1 2 3 4 5
1. I try to preserve relationships in any conflict.
1 2 3 4 5
1. I try not to hurt the other person’s feelings.
1 2 3 4 5
Managerial Decision Exercises
1. The president of your company has just told you that an Indian multinational company is interested in purchasing a large amount of the products that you and your group are responsible for. You have been charged with meeting with the team from India, hosting their visit, and negotiating the agreement, including pricing. How do you communicate during the meeting with your colleagues? What are some aspects of the social and business interactions that you will want you and your staff to avoid? What will you report back to the president regarding the meeting, and will you encourage her to take part in the meeting?
Critical Thinking Case:
College Corp.
Janice just graduated college, she’s ready to head out on her own and get that first job, and she’s through her first interviews. She receives an offer of a \$28,000 salary, including benefits from COLLEGE CORP, from an entry-level marketing position that seems like a perfect fit. She is thrown off by the salary they are offering and knows that it is lower than what she was hoping for. Instead of panicking, she takes the advice of her mentor and does a little research to know what the market range for the salary is for her area. She feels better after doing this, knowing that she was correct and the offer is low compared to the market rate. After understanding more about the offer and the rates, she goes back to the HR representative and asks for her preferred rate of \$32,500, knowing the minimum that she would accept is \$30,000. Instead of going in for her lowest amount, she started higher to be open to negotiations with the company. She also sent a note regarding her expertise that warranted why she asked for that salary. To her happy surprise, the company counter offered at \$31,000—and she accepted.
Questions:
1. What key points of Janice’s negotiation led to her success?
2. What could have Janice done better to get a better outcome for her salary?
Sources:
“Good & Bad Salary Negotiations,” Salary.com, April 19, 2018, https://www.salary.com/articles/good...-negotiations/;
M. Herner, “5 Things HR Wishes You Knew About Salary Negotiation,” Payscale.com, accessed October 21, 2018, https://www.payscale.com/salary-nego...n-tips-from-hr. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/14%3A_Conflict_and_Negotiations/14.06%3A_Glossary.txt |
Learning Outcomes
After reading this chapter, you should be able to understand these statements:
1. Identify contemporary external forces pressuring organizations.
2. Explain how organizations organize to meet external market threats and opportunities.
3. Identify environmental trends, demands, and opportunities facing organizations.
Exploring managerial careers
Jeff Bezos of Amazon
Amazon’s market value was estimated at \$1 trillion USD dollars in 2018. The company was recognized as the most innovative company in Fast Company’s 2017 list, accounting for 44 percent of all U.S. e-commerce that year—approximately 4 percent of the U.S.’s total retail sales. Amazon market value is greater than the sum of the market capitalizations of Walmart, Target, Best Buy, Nordstrom, Kohl’s, JCPenney, Sears, and Macy’s. Jeff Bezos, founder and leader, has creatively accomplished what most large companies fail at: meshing size, scale, and external opportunities with agility. Sales figures reached \$100 billion in 2015 while the stock price climbed over 300% in the past five years. The company plans on creating over 50,000 new jobs starting in 2018. Bezos has blended his strategy of virtually reaching unlimited numbers of online customers while maintaining land-based distribution centers using Prime’s \$99-per-year—\$119 in 2018—membership. Stephenie Landry, an Amazon’s vice president, stated that Prime has reached 49 cities in seven countries. Over 100 million people in 2018 subscribe to the Prime service. She noted that the business has only to answer two questions from customers: “Do you have what I want, and can you get it to me when I need it?” The answer seems to be yes, especially with Bezos’s strategy of having high-tech robots already working side by side with human employees—resembling a “factory of the future.”
Bezos’s digital commerce strategy has led the firm to become the leader of retail commerce. Amazon’s digital strategy uses Prime memberships that are supplied and supported by land-based distribution centers; Prime takes in reaching about 60% of the total dollar value of all merchandise sold on the site. That accounts for 60 million customers in the United States who use Prime and who spend \$2,500 on Amazon annually. A study of 3,000 independent businesses, half of whom were retailers, listed competition from Amazon as their primary concern. Industry after industry is being disrupted, some replaced, by Bezos’s strategy. He has said, “Everybody wants fast delivery. Low prices. I’m serious about this. Our job is to provide a great customer experience, and that is something that is universally desired all over the world”.
Still, Amazon faces such challenges as high shipping cost (over \$11 billion annually), pressures on employees (especially those working in warehouses that have been criticized for poor working conditions), shipping contractors who go on strike demanding higher wages and reduced workloads, and the possibilities of more governmental regulation (especially with regard to adding drones as a delivery method), as well as pressures to pay more taxes. Bezos has countered these arguments by adding more full-time jobs in different cities, promising to improve working conditions, supporting public spaces for the public, and most importantly, contributing to the U.S. economy.
Sources
Noah Robischon, (2017). Why Amazon Is The World’s Most Innovative Company Of 2017, https://www.fastcompany.com/3067455/...ompany-of-2017;
L. Thomas, (2018). Amazon grabbed 4 percent of all US retail sales in 2017, new study says, https://www.cnbc.com/2018/01/03/amaz...new-study.html
Organizations and industries are again at a crossroads when confronting new and challenging external environmental demands. Exceptional companies such as Amazon, in the opening case, Apple, Netflix, and Google/Alphabet Inc. exemplify evolving business models that combine strategic innovation, technological prowess, and organizational cultural agility that not only meet external environmental demands, but also shape them.
Many businesses with traditional business models, however, have failed or are not succeeding strategically, operationally, and organizationally by not realizing and/or adapting to changing external environments. Such firms that were once successful but did not anticipate and then adapt to such changes include Blockbuster, Toys R Us, Borders, Sun Microsystems, Motorola, Digital Equipment Corporation, Polaroid, and Kodak, to name only a few. A sample of contemporary external environmental trends and forces that currently challenge organizations’ survival and effectiveness includes:
• Digital technologies and artificial intelligence (AI): Extensions of AI help automate a firm’s value chain, thus speeding up and increasing efficient operations and service to customers—as Amazon exemplifies. A current survey showed that 59% of organizations are collecting information to develop AI strategies, while others are moving forward in piloting and/or adopting AI solutions to compete faster and at less cost.1 However, there are also risks that accompany firms that incorporate new digital and online technologies without adequate security measures. For example, some newer online technologies can expose operational systems to cyberattacks and large-scale manipulation. Hacking is now both an illegal and ongoing “profession” for those who are able to paralyze organizations from accessing their data unless they pay a ransom. While hacking is not new, it is more widespread and lethal, to the point of even threatening national security. Emerging evidence from the U.S. presidential election between Donald Trump and Hillary Clinton suggests that international hackers affected online U.S. election processes. Still, the future of most businesses is using some type of digital and AI technologies.
• The advent of blockchain technologies that are interrupting new industry practices. Blockchain is not a single technology; it is “an architecture that allows disparate users to make transactions and then creates an unchangeable record of those transactions.” It is “a public electronic ledger—similar to a relational database—that can be openly shared among disparate users and that creates an unchangeable record of their transactions, each one time-stamped and linked to the previous one.” These technological inventions will continue to affect almost every business process from procurement to legal management. The banking industry is already using it. It increases speed, security, and accuracy of transactions.
• Sharing-economy cultural and economic value-added business models that use information technologies to gain competitive advantage. Companies such as Airbnb and Uber have ushered in new business models that have already disrupted real estate, hotel, taxi, and other industries. Taking out the middle layer of management in transactions to increase efficiencies and customer satisfaction while cutting costs through the use of information and social media technologies will continue. This trend has already had both positive and disruptive effects on companies. Many customers are likely benefitted; businesses with outdated and ineffective business models have either failed or struggle to adapt.
• Shifts in learning and learning credentials. Identifying, recruiting, and retaining talent is crucial to organizations. An evolving crisis for the current generation—future talent—is the continued rise in higher educational institutions’ tuitions, student debt, and the changing nature of jobs. With the advent of online resources, prospective students’ inability to pay creates both a crisis and opportunity for traditional higher educational institutions. While bachelor’s degrees remain a requirement for many companies hiring needed higher-level talent, online resources such as Khan Academy, Udacity, and Coursera are gaining recognition and legitimacy toward providing financially challenged students opportunities for entry-level jobs. While many higher-skilled students and professionals may not presently be included in this trend, companies seeking to pay lower wages while offering flexible working conditions are attracting students. Again, how higher educational private, not-for-profit, and even for-profit educational institutions adapt, innovate, and manage their external environments is yet to be seen.
• Ethics, corporate social responsibility (CSR), and sustainability. Corruption, lying, and fraud have been and continue to be part of the landscape of governments and public- and private-sector corporations. However, public awareness through social and online media has awakened consumers and corporations to the impending dangers and drawbacks of illegal and unethical activities of certain large corporations. And external environmental problems, created in part by humans, such as pollution and climate change pressure companies to be responsible for their share of the costs associated with these problems.
This small sample of powerful external forces illustrates the continuing pressure companies encounter to innovate in their industries. Basic theories, concepts, and principles are presented in this chapter to help explain elements of external environments and how organizations and corporations can organize and are organizing to survive and thrive in the 21st century. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/15%3A_External_and_Internal_Organizational_Environments_and_Corporate_Culture/15.01%3A_Chapter_Introduction.txt |
1. Define the external environment of organizations.
To succeed and thrive, organizations must adapt, exploit, and fit with the forces in their external environments. Organizations are groups of people deliberately formed together to serve a purpose through structured and coordinated goals and plans. As such, organizations operate in different external environments and are organized and structured internally to meet both external and internal demands and opportunities. Different types of organizations include not-for-profit, for-profit, public, private, government, voluntary, family owned and operated, and publicly traded on stock exchanges. Organizations are commonly referred to as companies, firms, corporations, institutions, agencies, associations, groups, consortiums, and conglomerates.
While the type, size, scope, location, purpose, and mission of an organization all help determine the external environment in which it operates, it still must meet the requirements and contingencies of that environment to survive and prosper. This chapter is primarily concerned with how organizations fit with their external environments and how organizations are structured to meet challenges and opportunities of these environments. Major takeaways for readers of this chapter include the following: 1) Be able to identify elements in any organization’s external—and internal—environment that may interest or affect you as an employee, shareholder, family member, or observer. 2) Gain insights into how to develop strategies and tactics that would help you (and your organization) navigate ways to cope with or try to dominate or appeal to elements (e.g., market segments, stakeholders, political/social/economic/technological issues) in the environment.
The big picture of an organization’s external environment, also referred to as the general environment, is an inclusive concept that involves all outside factors and influences that impact the operation of a business that an organization must respond or react to in order to maintain its flow of operations. Figure \(1\) illustrates types of general macro environments and forces that are interrelated and affect organizations: sociocultural, technological, economic, government and political, natural disasters, and human-induced problems that affect industries and organizations. For example, economic environmental forces generally include such elements in the economy as exchange rates and wages, employment statistics, and related factors such as inflation, recessions, and other shocks—negative and positive. Hiring and unemployment, employee benefits, factors affecting organizational operating costs, revenues, and profits are affected by global, national, regional, and local economies. Other factors discussed here that interact with economic forces include politics and governmental policies, international wars, natural disasters, technological inventions, and sociocultural forces. It is important to keep these dimensions in mind when studying organizations since many if not most or all changes that affect organizations originate from one or more of these sources—many of which are interrelated.
Globalization is a combination of external forces shaping environments of organizations. Defined as the development of an integrated global economy and characterized by free trade, capital flows, communications, and cheaper foreign labor markets, the processes of globalization underlie the forces in the general international economic environment. This dimension continues to present opportunities and pressures to companies operating locally as well as globally. Globalization continues to affect industries and companies in ways that benefit some and not others. Amazon, for example, is thriving. The firm sells low-end products through its brand AmazonBasics. The company has individual retail websites for the United States, the United Kingdom and Ireland, France, Canada, Germany, Italy, Spain, the Netherlands, Australia, Brazil, Japan, China, India, and Mexico. Uber and Airbnb represent some of the larger sharing-economy companies that operate internationally and have to date prospered in the so-called new but fragmenting global economy.
In general, countries that have gained from globalization include Japan, South Korea, Taiwan, Malaysia, Singapore, Hong Kong, Thailand, and China. China’s markets and growing economic prowess have particularly been noticed. China’s GDP (gross domestic product) is estimated at \$13.2 trillion in 2018, outpacing the \$12.8 trillion combined total of the 19 countries that use the euro. Corporations worldwide, large and small, online and land-based, strive to gain access to sell in China’s vast markets. Moreover, China at the beginning of 2018 owns \$1.168 trillion of the United States’ debt. Japan, in second place, owes \$1.07 trillion of this debt. Any instability politically and economically with China could result in increasing inflation and interest rates in the U.S. economy that could, in turn, negatively affect U.S. businesses.
Economic forces
Economically, “The strategic challenge of the next decade is navigating a world that is simultaneously integrating and fragmenting. Stock markets have set new records and economic volatility has fallen to historic lows, while political shocks on a scale unseen for generations have taken place. Seemingly contradictory realities do co-exist.” Overall, while economic data indicates that globalization has had a positive effect on the world economy, a dark side also shows that two-thirds of all households in 25 advanced-economy countries had incomes stagnate and/or decline between 2005 and 2014. Moreover, the U.K. and U.S. witnessed falling wages. Wealth distribution in these countries continues to decline. Income inequality globally is also rising. Other trends that also affect the global, regional, and local economies are discussed in this chapter as well as below.
Technological forces are another ubiquitous environmental influence on organizations. Speed, price, service, and quality of products and services are dimensions of organizations’ competitive advantage in this era. Information technologies and social media powered by the Internet and used by sharing-economy companies such as Airbnb and Uber have democratized and increased, if not leveled, competition across several industries, such as taxis, real estate rentals, and hospitality services. Companies across industry sectors cannot survive without using the Internet, social media, and sophisticated software in R&D (research and development), operations, marketing, finance, and sales. To manage and use big data in all these functional areas, organizations rely on technology.
Government and political forces also affect industries and organizations. Recent events that have jarred the global economy—and are too early to predict the long-term outcomes of—are the United Kingdom’s exit from the European Union, President Trump’s nationalistic policies echoed by other presidents in Chile and Argentina, wars in the Middle East, policies that question and disrupt free trade, health-care reform, and immigration—all of which increase uncertainty for businesses while creating opportunities for some industries and instability in others.
Sociocultural forces
Sociocultural environmental forces include different generations’ values, beliefs, attitudes, customs and traditions, habits, and lifestyles. More specifically, other aspects of societal cultures are education, language, religion, law, politics, and social organizations. The millennial (ages 20 to 35) workforce, for example, generally seeks work that engages and interests them. Members of this generation are also health conscious and eager to learn. Since this and the newer generation (Generation Z) are adept and accustomed to using technology—social media in particular—organizations must be ready and equipped to provide wellness, interesting, and a variety of learning and work experiences to attract and retain new talent. Millennials are also estimated to be the United States’ largest living adult generation in 2019. This generation numbered about 71 million compared with 74 million baby boomers (ages 52 to 70) in 2016. By 2019, an estimated 73 million millennials and 72 million boomers are projected. Because of immigration, millennials are estimated to increase until 2036.
Other general sociocultural trends occurring in the United States and internationally that affect organizations include the following: (1) Sexual harassment at work in the era of #MeToo has pressured organizations to be more transparent about relationships between owners, bosses, and employees. Related to this trend, some surveys show new difficulties for men in workplace interactions and little effect on women’s career opportunities taking place in the short term. (2) While fewer immigrants have been entering the United States in recent years, diversity in the U.S. workplace continues. For example, 20 million Asian Americans trace their roots to over 20 countries in East and Southeast Asia and the Indian subcontinent—“each with unique histories, cultures, languages and other characteristics. The 19 largest origin groups together account for 94% of the total Asian population in the U.S.” (3) Young adults in the United States are living at home longer. “In 2016, 15% of 25- to 35-year-old Millennials were living in their parents’ home. This is 5 percentage points higher than the share of Generation Xers who lived in their parents’ home in 2000 when they were the same age (10%), and nearly double the share of the Silent Generation who lived at home in 1964 (8%).” (4) While women have made gains in the workplace, they still comprise a small share of top leadership jobs—across politics and government, academia, the nonprofit sector, and business. Women comprised only about 10% of CEOs (chief executive officers), CFOs (chief financial officers), and the next three highest-paid executives in U.S. companies in 2016–17. A 2018 study by McKinsey & Company “reaffirms the global relevance of the link between diversity—defined as a greater proportion of women and a more mixed ethnic and cultural composition in the leadership of large companies—and company financial outperformance.” These and other related sociocultural trends impact organizational cultures and other dimensions involving human talent and diverse workforces.
Natural disasters and human-related problems
Natural disaster and human induced environmental problems are events such as high-impact hurricanes, extreme temperatures and the rise in CO2 emissions as well as ‘man-made’ environmental disasters such as water and food crises; biodiversity loss and ecosystem collapse; large-scale involuntary migration are a force that affects organizations. The 2018 Global Risks Report identified risks in the environmental category that also affect industries and companies—as well as continents and countries. These risks were ranked higher than average for both likelihood and impact over a 10-year horizon. The report showed that 2017 was characterized by high-impact hurricanes, extreme temperatures, and the first rise in carbon dioxide emissions in four years; “man-made” environmental disasters; water and food crises; biodiversity loss and ecosystem collapse; and large-scale involuntary migration to name a few. Authors of this study noted that “Biodiversity is being lost at mass-extinction rates, agricultural systems are under strain and pollution of the air and sea has become an increasingly pressing threat to human health.” Most vulnerable to rising seas are low-lying islands in the Indian and Pacific Oceans. The Republic of the Marshall Islands has more over 1,100 low-lying islands on 29 atolls that include island nations with hundreds of thousands of people. Predictions indicate that rising sea levels could reach 3 feet worldwide by 2300 or sooner. One report stated that in your child’s lifetime, Miami, Florida, could be underwater. Large sections of Louisiana’s marshes separating the ocean from the coastline are submerging. Oil producers and other related corporations are being sued by that state, claiming that fossil fuel emissions have contributed to natural disasters such as climate change. Many new companies in the United States are already constructing buildings to withstand increasing flooding and predicted rising water levels.
concept Check
1. What factors within the economic environment affect businesses?
2. Why do demographic shifts and technological developments create both challenges and new opportunities for business? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/15%3A_External_and_Internal_Organizational_Environments_and_Corporate_Culture/15.02%3A_The_Organization%27s_External_Environment.txt |
1. Identify contemporary external forces pressuring organizations.
Industry and organizational leaders monitor environments to identify, predict, and manage trends, issues, and opportunities that their organizations and industries face. Some corporations, such as Amazon, anticipate and even create trends in their environments. Most, however, must adapt. External environments, as identified in the previous section, can be understood by identifying the uncertainty of the environmental forces. Figure \(1\) illustrates a classic and relevant depiction of how scholars portray environment-industry-organization “fit,” that is, how well industries and organizations align with and perform in different types of environments.
The two dimensions of this figure represent “environmental complexity” (i.e., the number of elements in the environment, such a competitors, suppliers, and customers), which is characterized as either simple or complex, and “environmental change,” described as stable or unstable. How available monetary and financial resources are to support an organization’s growth is also an important element in this framework. Certain industries—soft drink bottlers, beer distributors, food processors, and container manufacturers—would, hypothetically, fit and align more effectively in a stable (i.e., relative unchanging), simple, and low-uncertainty (i.e., has mostly similar elements) external environment—cell 1 in Figure \(1\). This is referred to when organizations are in a simple-stable environment. Of course unpredicted conditions, such as global and international turmoil, economic downturns, and so on, could affect these industries, but generally, these alignments have served as an ideal type and starting point for understanding the “fit” between environment and industries. In a stable but complex, low- to moderate-uncertainty environment, cell 2 in Figure \(1\), universities, appliance manufacturers, chemical companies, and insurances companies would generally prosper. This is referred to when organizations are in a complex-stable environment. When the external environment has simple but high to moderate uncertainty, cell 3 of Figure \(1\), e-commerce, music, and fashion clothing industries would operate effectively. This is referred to when organizations are in a simple-unstable environment. Whereas in cell 4 of Figure \(1\), an environment characterized by a high degree of uncertainty with complex and unstable elements, industries and firms such as computer, aerospace, airlines, and telecommunications firms would operate more effectively. This is referred to when organizations are in a complex-unstable environment.
Figure \(1\) is a starting point for diagnosing the “fit” between types of external environments and industries. As conditions change, industries and organizations must adapt or face consequences. For example, educational institutions that traditionally have been seen to operate best in low- to moderate-uncertainty environments, cell 4 of Figure \(1\), have during this past decade experienced more high to moderate uncertainty (cell 2)—and even high uncertainty (cell 1). For example, for-profit educational institutions such the University of Phoenix and others—as compared to not-for-profit universities and colleges, such as public state institutions, community colleges, and private nonprofit ones—have undergone more unstable and complex forces in the external environment over the past decade. Under the Obama administration, for-profit universities faced greater scrutiny regarding questionable advertising, graduation rates, and accreditation issues; lawsuits and claims against several of these institutions went forward, and a few of the colleges had to close. The Trump administration has shown signs of alleviating aggressive governmental control and monitoring in this sector. Still, higher educational institutions in general currently face increasingly complex and unstable environments given higher tuition rates, increased competition from less-expensive and online programs, fewer student enrollments, and an overabundance of such institutions. Several private, not-for-profit higher educational institutions have merged and also ceased to exist. Adapting to increasingly rapid external change has become a rallying call for most industries and organizations as the 21st century evolves.
Organizational Complexity
It is important to point out here that external (and internal) organizational complexity is not often as simple as it may seem. It has been defined as “…the amount of complexity derived from the environment where the organization operates, such as the country, the markets, suppliers, customers and stakeholders; while internal complexity is the amount of complexity that is internal to the organization itself, i.e. products, technologies, human resources, processes and organizational structure. Therefore, different aspects compose internal and external complexities.”
The dilemma that organizational leaders and managers sometimes face is how to deal with external, and internal, complexity? Do you grow and nurture it or reduce it? Some strategies call for reducing and managing it at the local level while nurturing it at the global level—depending on the organization’s size, business model, and the nature of the environments. Without going into complicated detail, it is fair to say at the beginning of the chapter that you may want to read through the chapter first, then return here afterward.
In the meantime, here are some simple rules from organizational practitioners De Toni and De Zan to keep in mind for managing high levels of complexity from the external environment, internally, after you have diagnosed the nature of the external complexity—as we discuss throughout in this chapter: first, assemble “…a set of self-managing teams or autonomous business units,[known as modularized units] with an entrepreneurial responsibility to the larger organization.” These focused self-organizing teams use creative methods to deal with the diversity to the advantage of the organization. A second method when facing high external environmental complexity when you want to gain value from it is to find and develop “…simple rules to drive out creativity and innovation … to keep the infrastructure and processes simple, while permitting complex outputs and behaviours.” An example offered is found in the rules of the Legos company: “(1) does the proposed product have the Lego look? (2) Will children learn while having fun? (3) Will parents approve? (4) Does the product maintain high quality standards? (5) Does it stimulate creativity?”
A third strategy for dealing with external complexity involves companies’ building on their own capabilities manage too much complexity, which otherwise lead to chaos. Some of those strategies include creating open networks internal and outside the organization to promote cooperation and integration and to develop brand and reputation. Also, sharing “…values, vision, strategy, organizational processes and knowledge, through the development of trust and incorporation and promotion of leaders at all levels” can help internal teams exploit external complexity to the organization’s advantage. Keep these ideas in mind as you read through the chapter and think about how leaders, managers, employees, and you can learn to read external environmental clues that organizations can use to creatively and proactively use organizational resources to be more competitive, effective, and successful.
concept check
1. Why do change and shifts and technological developments create both challenges and new opportunities for business? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/15%3A_External_and_Internal_Organizational_Environments_and_Corporate_Culture/15.03%3A_External_Environments_and_Industries.txt |
1. Identify different types of organizational structures and their strengths and weaknesses.
A 2017 Deloitte source asked, before answering, “Why has organizational design zoomed to the top of the list as the most important trend in the Global Human Capital Trends survey for two years in a row?” The source continued, “The answer is simple: The way high-performing organizations operate today is radically different from how they operated 10 years ago. Yet many other organizations continue to operate according to industrial-age models that are 100 years old or more.”
Early organizational theorists broadly categorized organizational structures and systems as either mechanistic or organic. This broad, generalized characterization of organizations remains relevant. Mechanistic organizational structures (Figure \(1\)) are best suited for environments that range from stable and simple to low-moderate uncertainty (Figure 15.2.1) and are characterized by top-down hierarchies of control that are rule-based. The chain of command is highly centralized and uses formal authority; tasks are clearly defined and differentiated to be executed by specific specialized experts. Bosses and supervisors have fewer people working directly under them (i.e., a narrow span of control), and the organization is governed by rigid departmentalization (i.e., an organization is divided into different departments that perform specialized tasks according to the departments’ expertise). This form of organization represents a traditional type of structure that evolved in environments that were, as noted above, stable with low complexity. Historically, the U.S. Postal Service and other manufacturing types of industries (Exhibit 15.2.1) were mechanistic. Again, this type of organizational design may still be relevant, as Exhibit 15.2.1 suggests, in simple, stable, low-uncertainty environments.
Organic organizational structures and systems, however, have opposite characteristics from mechanistic ones. As Figure 15.2.1 shows, these organizational forms work best in unstable, complex, changing environments. Their structures are flatter, with participatory communication and decision-making flowing in different directions. There is more fluidity and less-rigid ways of performing tasks; there may also be fewer rules. Tasks are more generalized and shared; there is a wider span of control (i.e., more people reporting to managers). Figure \(1\) offers examples of organically structured industries, such as high tech, computer, aerospace, and telecommunications industries, that must deal with change and uncertainty. Contemporary corporations and firms engaged in fast-paced, highly competitive, rapidly changing, and turbulent environments are becoming more organic in different ways, as we will discuss in this chapter. However, not every organization or every part of most organizations may require an organic type of structure. Understanding different organizational designs and structures is important to discern when, where, and under what circumstances a type of mechanistic system or part of an organization would be needed. The following section discusses five types of structures with variations.
Types of Organizational Structures
Within the context of mechanistic versus organic structures, specific types of organizational structures in the United States historically evolved over at least three eras, as we discuss here before explaining types of organizational designs. During the first era, the mid-1800s to the late 1970s, organizations were mechanistic self-contained, top-down pyramids. Emphasis was placed on internal organizational processes of taking in raw materials, transforming those into products, and turning them out to customers.
Early organizational structures were focused on internal hierarchical control and separate functional specializations in order to adapt to external environments. Structures during this era grouped people into functions or departments, specified reporting relationships among those people and departments, and developed systems to coordinate and integrate work horizontally and vertically. As will be explained, the functional structure evolved first, followed by the divisional structure and then the matrix structured.
The second era started in the 1980s and extended through the mid-1990s. More-complex environments, markets, and technologies strained mechanistic organizational structures. Competition from Japan in the auto industry and complex transactions in the banking, insurance, and other industries that emphasized customer value, demand and faster interactions, quality, and results issued the need for more organic organizational designs and structures.
Communication and coordination between and among internal organizational units and external customers, suppliers, and other stakeholders required higher levels of integration and speed of informational processing. Personal computers and networks had also entered the scene. In effect, the so-called “horizontal organization” was born, which emphasized “reengineering along workflow processes that link organizational capabilities to customers and suppliers.” Ford, Xerox Corp., Lexmark, and Eastman Kodak Company are examples of early adopters of the horizontal organizational design, which, unlike the top-down pyramid structures in the first era, brought flattened hierarchical, hybrid structures and cross-functional teams.
The third era started in the mid-1990s and extends to the present. Several factors contributed to the rise of this era: the Internet; global competition—particularly from China and India with low-cost labor; automation of supply chains; and outsourcing of expertise to speed up production and delivery of products and services. The so-called silos and walls of organizations opened up; everything could not be or did not have to be produced within the confines of an organization, especially if corporations were cutting costs and outsourcing different functions of products to save costs. During this period, further extensions of the horizontal and organic types of structures evolved: the divisional, matrix, global geographic, modular, team-based, and virtual structures were created.
In the following discussion, we identify major types of structures mentioned above and discuss the advantages and disadvantages of each, referenced in Figure \(2\). Note that in many larger national and international corporations, there is a mix and match among different structures used. There are also advantages and disadvantages of each structure. Again, organizational structures are designed to fit with external environments. Depending on the type of environments from our earlier discussion in which a company operates, the structure should facilitate that organization’s capability to achieve its vision, mission, and goals.
Figure \(2\) offers a profile of different structures that evolved in our discussion above.
Note the continuum in Figure \(2\), showing the earliest form of organizational structure, functional, evolving with more complex environments to divisional, matrix, team-based, and then virtual. This evolution, as discussed above, is presented as a continuum from mechanistic to organic structures—moving from more simple, stable environments to complex, changing ones, as illustrated in Figure \(2\). The six types of organizational structures discussed here include functional, divisional, geographic, matrix, networked/team, and virtual.
The functional structure, shown in Figure \(3\), is among the earliest and most used organizational designs. This structure is organized by departments and expertise areas, such as R&D (research & development), production, accounting, and human resources. Functional organizations are referred to as pyramid structures since they are governed as a hierarchical, top-down control system.
Small companies, start-ups, and organizations working in simple, stable environments use this structure, as do many large government organizations and divisions of large companies for certain tasks.
The functional structure excels in providing for a high degree of specialization and a simple and straightforward reporting system within departments, offers economies of scale, and is not difficult to scale if and when the organization grows. Disadvantages of this structure include isolation of departments from each other since they tend to form “silos,” which are characterized by closed mindsets that are not open to communicating across departments, lack of quick decision-making and coordination of tasks across departments, and competition for power and resources.
Divisional structures, see Figure \(4\), are, in effect, many functional departments grouped under a division head. Each functional group in a division has its own marketing, sales, accounting, manufacturing, and production team. This structure resembles a product structure that also has profit centers. These smaller functional areas or departments can also be grouped by different markets, geographies, products, services, or other whatever is required by the company’s business. The market-based structure is ideal for an organization that has products or services that are unique to specific market segments and is particularly effective if that organization has advanced knowledge of those segments.
The advantages of a divisional structure include the following: each specialty area can be more focused on the business segment and budget that it manages; everyone can more easily know their responsibilities and accountability expectations; customer contact and service can be quicker; and coordination within a divisional grouping is easier, since all the functions are accessible. The divisional structure is also helpful for large companies since decentralized decision-making means that headquarters does not have to micromanage all the divisions. The disadvantages of this structure from a headquarters perspective are that divisions can easily become isolated and insular from one another and that different systems, such as accounting, finance, sales, and so on, may suffer from poor and infrequent communication and coordination of enterprise mission, direction, and values. Moreover, incompatibility of systems (technology, accounting, advertising, budgets) can occur, which creates a strain on company strategic goals and objectives.
A geographic structure, Figure \(5\), is another option aimed at moving from a mechanistic to more organic design to serve customers faster and with relevant products and services; as such, this structure is organized by locations of customers that a company serves. This structure evolved as companies became more national, international, and global. Geographic structures resemble and are extensions of the divisional structure.
Organizing geographically enables each geographic organizational unit (like a division) the ability to understand, research, and design products and/or services with the knowledge of customer needs, tastes, and cultural differences. The advantages and disadvantages of the geographic structure are similar to those of the divisional structure. Headquarters must ensure effective coordination and control over each somewhat autonomous geographically self-contained structure.
The main downside of a geographical organizational structure is that it can be easy for decision-making to become decentralized, as geographic divisions (which can be hundreds if not thousands of miles away from corporate headquarters) often have a great deal of autonomy.
Matrix structures, illustrated in Figure \(2\) and depicted in Figure \(7\), move closer to organic systems in an attempt to respond to environmental uncertainty, complexity, and instability. The matrix structure actually originated at a time in the 1960s when U.S. aerospace firms contracted with the government. Aerospace firms were required to “develop charts showing the structure of the project management team that would be executing the contract and how this team was related to the overall management structure of the organization.” As such, employees would be required to have dual reporting relationships—with the government and the aerospace company. Since that time, this structure has been imitated and used by other industries and companies since it provides flexibility and helps integrate decision-making in functionally organized companies.
Matrix designs use teams to combine vertical with horizontal structures. The traditional functional or vertical structure and chain of command maintains control over employees who work on teams that cut across functional areas, creating horizontal coordination that focuses projects that have deadlines and goals to meet within and often times in addition to those of departments. In effect, matrix structures initiated horizontal team-based structures that provided faster information sharing, coordination, and integration between the formal organization and profit-oriented projects and programs.
As Figure \(7\) illustrates, this structure has lines of formal authority along two dimensions: employees report to a functional, departmental boss and simultaneously to a product or project team boss. One of the weaknesses of matrix structures is the confusion and conflicts employees experience in reporting to two bosses. To work effectively, employees (including their bosses and project leaders) who work in dual-authority matrix structures require good interpersonal communication, conflict management, and political skills to manage up and down the organization.
Different types of matrix structures, some resembling virtual team designs, are used in more complex environments. For example, there are cross-functional matrix teams in which team members from other organizational departments report to an “activity leader” who is not their formal supervisor or boss. There are also functional matrix teams where employees from the same department coordinate across another internal matrix team consisting of, for example, HR or other functional area specialists, who come together to develop a limited but focused common short-term goal. There are also global matrix teams consisting of employees from different regions, countries, time zones, and cultures who are assembled to achieve a short-term project goal of a particular customer. Matrix team members have been and are a growing part of horizontal organizations that cut across geographies, time zones, skills, and traditional authority structures to solve customer and even enterprise organizational needs and demands.
As part of the next discussed organizational type of structure, networked teams, organizational members in matrix structures must “learn how to collaborate with colleagues across distance, cultures and other barriers. Matrix team members often suffer from the problem of divided loyalties where they have both team and functional goals that compete for their time and attention, they have multiple bosses and often work on multiple teams at the same time. For some matrix team members this may be the first time they have been given accountability for results that are broader than delivery of their functional goals. Some individuals relish the breath and development that the matrix team offers and others feel exposed and out of control.” To succeed in these types of horizontal organizational structures, organizational members “should focus less on the structure and more on behaviors.”
Networked team structures are another form of the horizontal organization. Moving beyond the matrix structure, networked teams are more informal and flexible. “[N]etworks have two salient characteristics: clustering and path length. Clustering refers to the degree to which a network is made up of tightly knit groups while path lengths is a measure of distance—the average number of links separating any two nodes in the network.” A more technical explanation can be found in this footnote source. For our purposes here, a networked organizational structure is one that naturally forms after being initially assigned. Based on the vision, mission, and needs of a problem or opportunity, team members will find others who can help—if the larger organization and leaders do not prevent or obstruct that process.
There is not one classical depiction of this structure, since different companies initially design teams to solve problems, find opportunities, and discover resources to do so. Stated another way, “The networked organization is one that is connected together by informal networks and the demands of the task, rather than a formal organizational structure. The network organization prioritizes its ‘soft structure’ of relationships, networks, teams, groups and communities rather than reporting lines.” Figure \(8\) is a suggested illustration of this structure.
A Deloitte source based on the 2017 Global Human Capital Trend study stated that as organizations continue to transition from vertical structures to more organic ones, networked global designs are being adapted to larger companies that require more reach and scope and quicker response time with customers: “Research shows that we spend two orders of magnitude more time with people near our desk than with those more than 50 meters away. Whatever a hierarchical organization chart says, real, day-to-day work gets done in networks. This is why the organization of the future is a ‘network of teams.’”
Advantages of networked organizations are similar to those stated earlier with regard to organic, horizontal, and matrix structures. Weaknesses of the networked structure include the following: (1) Establishing clear lines of communication to produce project assignments and due dates to employees is needed. (2) Dependence on technology—Internet connections and phone lines in particular—is necessary. Delays in communication result from computer crashes, network traffic errors and problems; electronic information sharing across country borders can also be difficult. (3) Not having a central physical location where all employees work, or can assemble occasionally to have face-to-face meetings and check results, can result in errors, strained relationships, and lack of on-time project deliverables.
Virtual structures and organizations emerged in the 1990s as a response to requiring more flexibility, solution-based tasks on demand, fewer geographical constraints, and accessibility to dispersed expertise. Virtual structures are depicted in Figure \(9\). Related to so-called modular and digital organizations, virtual structures are dependent on information communication technologies (ICTs).
These organizations move beyond network team structures in that the headquarters or home base may be the only or part of part of a stable organizational base. Otherwise, this is a “boundaryless organization.” Examples of organizations that use virtual teams are Uber, Airbnb, Amazon, Reebok, Nike, Puma, and Dell. Increasingly, organizations are using different variations of virtual structures with call centers and other outsourced tasks, positions, and even projects.
Advantages of virtual teams and organizations include cost savings, decreased response time to customers, greater access to a diverse labor force not encumbered by 8-hour workdays, and less harmful effects on the environment. “The telecommuting policies of Dell, Aetna, and Xerox cumulatively saved 95,294 metric tons of greenhouse gas emissions last year, which is the equivalent of taking 20,000 passenger vehicles off of the road.” Disadvantages are social isolation of employees who work virtually, potential for lack of trust among employees and between the company and employees when communication is limited, and reduced collaboration among separated employees and the organization’s officers due to lack of social interaction.
In the following section, we turn to internal organizational dimensions that complement structure and are affected by and affect external environments.
concept check
1. How does a matrix structure increase power struggles or reduce accountability?
2. What are advantages of a formal committee structure? Disadvantages? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/15%3A_External_and_Internal_Organizational_Environments_and_Corporate_Culture/15.04%3A_Organizational_Designs_and_Structures.txt |
1. Explain how organizations organize to meet external market threats and opportunities.
At a basic level of understanding how internal organizations respond to environments, consider the theory of Open Systems, which the organizational theorists Katz and Kahn and Bertalanffy introduced.
Figure \(1\) illustrates this theory’s view of organizations as open systems that take in resources and raw materials at the “input” phase from the environment in a number of forms, depending on the nature of the organization, industry, and its business. Whatever the input resources are—information, raw materials, students entering a university—to be transformed by the internal processes of the organization. The internal organizational systems then process and transform the input material, which is called “through-put” phase, and move the changed material (resources) to the “outputs” and back into the environment as products, services, graduates, etc.
The open systems model serves as a feedback loop continually taking in resources from the environment, processing and transforming them into outputs that are returned to the environment. This model explains organizational survival that emphasizes long-term goals.
Organizations according to this theory are considered as either Open or Closed systems, (or relatively opened or closed) depending on the organization’s sensitivity to the environment. Closed systems are less sensitive to environmental resources and possibilities, and open systems are more responsive and adaptive to environmental changes. For example, during the 1980’s the then Big 3 U.S. auto manufacturers (Ford, General Motors and Chrysler) were pressured by Japanese auto manufacturers’ successful 4-cylinder car sales that hit the U.S. like a shock wave. The Detroit producers experienced slumping sales, plant closures, and employee lay-offs in response to the Japanese wave of competition. It seemed that the U.S. auto makers had become closed or at least insensitive to changing trends in cars during that time and were unwilling to change manufacturing processes. Similarly, Amazon’s business model, discussed earlier, has and continues to pressure retailers to innovate and change processes and practices to compete in this digital era.
Organizations respond to external environments not only through their structures, but also by the domains they choose and the internal dimensions and capabilities they select. An organization defines itself and its niche in an environment by the choice of its domain, i.e., what sector or field of the environment it will use its technology, products, and services to compete in and serve. Some of the major sectors of a task environment include marketing, technology, government, financial resources, and human resources.
Presently, several environmental domains that once were considered stable have become more complex and unstable—e.g., toys, public utilities, the U.S. Postal Service, and higher education. And even domains are changing. For example, as referred to earlier, the traditionally stable and somewhat unchanging domain of higher education has become more complex with the entry of for-profit educational institutions, MOOCs (massive open online courses), internal company “universities,” and other certification and degree programs outside traditional private institutions. Sharing-economy companies such as Uber and Airbnb have redefined the transportation domain in which taxis operate and the hospitality domain in which hotels and bed and breakfasts serve. New business models that use mobile phones, ICTs (information communication technologies), and apps remove middle management layers in traditional organizations and structures.
With a chosen domain in which to operate, owners and leaders must organize internal dimensions to compete in and serve their markets. For example, hierarchies of authority and chain of command are used by owners and top-level leaders to develop and implement strategic and enterprise decisions; managers are required to provide technologies, training, accounting, legal, and other infrastructure resources; and cultures still count to establish and maintain norms, relationships, legal and ethical practices, and the reputation of organizations.
Figure \(2\) shows internal organizational dimensions. These dimensions and systems include leadership, strategy, culture, management, goals, marketing, operations, and structure. Relationships, norms, and politics are also included in the informal organization. There are other internal functions not listed here, such as research and development, accounting and finance, production, and human resources. Another popular depiction of internal organizational dimensions is the McKinsey 7-S model, shown in Figure \(3\). Similarly, strategy, structure, systems, skills, staff, and style all revolve around and are interconnected with shared values (or culture) in an organization.
A unifying framework shown in Figure \(4\), developed by Arie Lewin and Carroll Stephens, illustrates the integration of internal organizational dimensions and how these work in practice to align with the external environment. Note that it is the CEO and other top-level leaders who scan the external environment to identify uncertainties and resources before using a SWOT analysis (identifying strengths, weaknesses, opportunities, and threats) to confirm and update the domain of an organization and then to define the vision, mission, goals, and strategies. Once the enterprise goals and strategies are developed, the organizational culture, structure, and other systems and policies can be established (human resources, technologies, accounting and finance, and so on).
As Figure \(4\) shows, after a CEO and the top-level team identify opportunities and threats in the environment, they then determine the domain and purpose of the organization from which strategies, organizational capabilities, resources, and management systems must be mobilized to support the enterprise’s purpose. The company McDonald’s has, for example, successfully aligned its enterprise with the global environments it serves, which is “1% of the world’s population—more than 70 million customers—every day and in virtually every country across the world.” The major operating goal of the firm driving its internal alignment is a “fanatical attention to the design and management of scalable processes, routines, and a working culture by which simple, stand-alone, and standardized products are sold globally at a predictable, and therefore manageable, volume, quality, and cost.” A more detailed SWOT analysis of McDonald’s operations can be found in endnote.
In practice, no internal organizational alignment with its external environment is perfect or permanent. Quite the opposite. Companies and organizations change leadership and strategies and make structural and systems changes to meet changing competition, market forces, and customers and end users’ needs and demands. Even Amazon continues to develop, expand, and change. With a mission statement as bold and broad as Amazon’s, change is a constant: “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online” (Amazon.com, Apr 15, 2018).
Amazon has a functional organizational structure that focuses on business functions for determining the interactions among the different parts of the company. Amazon’s corporate structure is best characterized as global function-based groups (most significant feature), a global hierarchy, and geographic divisions, as Figure \(6\) shows. This structure seems to fit with the size of Amazon’s business—43% of 2016 retail sales were in the United States. Seven segments, including information technology, human resources and legal operations, and heads of segments, report to Amazon’s CEO. “Senior management team include two CEOs, three Senior Vice Presidents and one Worldwide Controller, who are responsible for various vital aspects of the business reporting directly to Amazon CEO Jeff Bezos.” The strategic goal underlying this structure is to facilitate Amazon.com to successfully implement e-commerce operations management throughout the entire organization.
Despite the company’s exponential growth and success to date, as noted earlier in the section on organizational structures, a disadvantage of structures such as Amazon’s, and in this case Amazon’s, is that it has limited flexibility and responsiveness even with its current growth. “The dominance of the global function-based groups and global hierarchy characteristics reduces the capacity of Amazon to rapidly respond to new issues and problems encountered in the e-commerce business.” Still, Amazon’s most outstanding success factor remains its CEO, Jeff Bezos—his ingenuity, vision and foresight, and ability to sustain and even extend the company’s competitive advantages. Amazon customers value these factors—customer purchase criteria (CPC) that include price, fast delivery, and reliable service. “Consumers choose Amazon because it does better than its competition on these CPC.”
concept check
1. Explain the McKinsey 7-S model. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/15%3A_External_and_Internal_Organizational_Environments_and_Corporate_Culture/15.05%3A_The_Internal_Organization_and_External_Environments.txt |
1. Identify the fit between organizational cultures and the external environment
Organizational culture is considered one of the most important internal dimensions of an organization’s effectiveness criteria. Peter Drucker, an influential management guru, once stated, “Culture eats strategy for breakfast.” He meant that corporate culture is more influential than strategy in terms of motivating employees’ beliefs, behaviors, relationships, and ways they work since culture is based on values. Strategy and other internal dimensions of organization are also very important, but organizational culture serves two crucial purposes: first, culture helps an organization adapt to and integrate with its external environment by adopting the right values to respond to external threats and opportunities; and secondly, culture creates internal unity by bringing members together so they work more cohesively to achieve common goals. Culture is both the personality and glue that binds an organization. It is also important to note that organizational cultures are generally framed and influenced by the top-level leader or founder. This individual’s vision, values, and mission set the “tone at the top,” which influences both the ethics and legal foundations, modeling how other officers and employees work and behave. A framework used to study how an organization and its culture fit with the environment is offered in the Competing Values Framework.
The Competing Values Framework (CVF) is one of the most cited and tested models for diagnosing an organization’s cultural effectiveness and examining its fit with its environment. The CVF, shown in Figure \(1\), has been tested for over 30 years; the effectiveness criteria offered in the framework were discovered to have made a difference in identifying organizational cultures that fit with particular characteristics of external environments.
The two axes in the framework, external focus versus internal focus, indicate whether or not the organization’s culture is externally or internally oriented. The other two axes, flexibility versus stability and control, determine whether a culture functions better in a stable, controlled environment or a flexible, fast-paced environment. Combining the axes offers four cultural types: (1) the dynamic, entrepreneurial Adhocracy Culture—an external focus with a flexibility orientation; (2) the people-oriented, friendly Clan Culture—an internal focus with a flexibility orientation; (3) the process-oriented, structured Hierarchy Culture—an internal focus with a stability/control orientation; and (4) the results-oriented, competitive Market Culture—an external focus with a stability/control orientation.
The orientation of each of these cultural types is summarized as follows. The Adhocracy Culture profile of an organization emphasizes creating, innovating, visioning the future, managing change, risk-taking, rule-breaking, experimentation, entrepreneurship, and uncertainty. This profile culture is often found in such fast-paced industries as filming, consulting, space flight, and software development. Facebook and Google’s cultures also match these characteristics. It should be noted, however, that larger organizations may have different cultures for different groupings of professionals, even though the larger culture is still dominant. For example, a different subculture may evolve for hourly workers as compared to PhD research scientists in an organization.
The Clan Culture type focuses on relationships, team building, commitment, empowering human development, engagement, mentoring, and coaching. Organizations that focus on human development, human resources, team building, and mentoring would fit this profile. This type of culture fits Tom’s of Maine, which has strived to form respectful relationships with employees, customers, suppliers, and the physical environment.
The Hierarchy Culture emphasizes efficiency, process and cost control, organizational improvement, technical expertise, precision, problem solving, elimination of errors, logical, cautious and conservative, management and operational analysis, and careful decision-making. This profile would suit a company that is bureaucratic and structured, such as the U.S. Postal Service, the military, and other similar types of government agencies.
The Market Culture focuses on delivering value, competing, delivering shareholder value, goal achievement, driving and delivering results, speedy decisions, hard driving through barriers, directive, commanding, and getting things done. This profile suits a marketing-and-sales-oriented company that works on planning and forecasting but also getting products and services to market and sold. Oracle under the dominating, hard-charging executive chairman Larry Ellison characterized this cultural fit.
Amazon illustrates a company that can have a mix of cultures and be effective. For example, Amazon blends a high-performance Adhocracy Culture with regard to its external expansion and Bezos’s leadership style; at the same time, Amazon resembles a Hierarchy Culture internally with regard to its tight control over employees at lower levels. The company propelled its domain from an “online bookstore” “to selling everything online to being the pioneering in adopting cloud computing with AWS . . . to adopting the latest robotics in its warehouses to improve productivity . . . to thinking and testing disruptive technologies like drones and so on.” It has been criticized, at the same time, for its “toxic cut-throat work environment,” asserting that Jeff Bezos is overly demanding and sets very high standards for Amazon employees, as well as for himself. This type of culture extends down to the warehouse employees. Amazon employees have complained that “Work came first, life came second, and trying to find the balance came last.” This criticism peaked with an alleged suicide attempt in 2017 of a disgruntled employee who requested a transfer to a different department within in the company but was placed on an employee improvement plan—“a step that could result in his termination from Amazon if his performance didn’t improve.” Amazon has since changed many of its working rules and regulations for warehouse employees.
concept Check
1. Explain the concept of hiring for fit as it relates to corporate culture.
2. What are some organizational issues that must be addressed when two large firms merge or grow rapidly like Amazon?
15.07: Organizing for Change in the 21st Century
1. Identify environmental trends, demands, and opportunities facing organizations.
The 2018 annual Global Risks Perception Survey (GRPS) predicts the following trends in the external environment: (1) persistent inequality and unfairness, (2) domestic and international political tensions, (3) environmental dangers, and (4) cyber vulnerabilities. With this context, authors in this report suggest that complex organizations approach their futures with the “nine resilience lens”—i.e., the capacity of a company or other organization to adapt and prosper in the face of high-impact, low-probability risks. The nine lenses are grouped into three categories. First, structural resilience considers the systemic dynamics within the organization itself. The author calls for “system modularity,” i.e., structures and designs that are “loosely coupled,” which is another way of saying that rigid, mechanistic hierarchies will not function as well in these high-impact environments. Secondly, integrative resilience underlines complex interconnections with the external context. Here the author suggests that organizations must be part of and aware of their contexts: geographically and the health of “individuals, families, neighborhoods, cities, provinces, and countries” that are affected. Relatedly, the author notes that organizations must rely on their social cohesion—such as the social capital an organization has to fall back on in times of crisis—which is a strong source of resilience. Third, transformative resilience requires that mitigating some risks requires transformation. Important to organizations here is the need “to proactively change or it will end up being changed by external circumstances.” This process requires organizational foresight, not forecasting. Organizations need to apply different search, environmental scanning, and new discovery techniques “to engage with the uncertainty of multiple futures.” They do this through innovation and experimentation. In practice, Google, Amazon, Facebook, SpaceX, Tesla, Airbnb, Uber, and the resilience of other industry and organizational pioneering will be required.
Another trend on the horizon is that “[o]rganizations are no longer judged only for their financial performance, or even the quality of their products or services. Rather, they are being evaluated on the basis of their impact on society at large—transforming them from business enterprises into social enterprises.” A recent survey showed that 65 percent of CEOs rated “inclusive growth” as a “top-three strategic concern, more than three times greater than the proportion citing ‘shareholder value.’” Deloitte researchers noted that “[a] social enterprise is an organization whose mission combines revenue growth and profit-making with the need to respect and support its environment and stakeholder network. This includes listening to, investing in, and actively managing the trends that are shaping today’s world. It is an organization that shoulders its responsibility to be a good citizen (both inside and outside the organization), serving as a role model for its peers and promoting a high degree of collaboration at every level of the organization.” | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/15%3A_External_and_Internal_Organizational_Environments_and_Corporate_Culture/15.06%3A_Corporate_Cultures.txt |
Key Terms
Socio-cultural environment forces
Include different generations’ values, beliefs, attitudes and habits, customs and traditions, habits and lifestyles.
Technological forces
Environmental influence on organizations where speed, price, service, and quality of products and services are dimensions of organizations’ competitive advantage in this era.
Government and political environment forces
The global economy and changing political actions increase uncertainty for businesses, while creating opportunities for some industries and instability in others.
Natural disaster and human induced environmental problems
Events such as high-impact hurricanes, extreme temperatures and the rise in CO2 emissions as well as ‘man-made’ environmental disasters such as water and food crises; biodiversity loss and ecosystem collapse; large-scale involuntary migration are a force that affects organizations.
Simple-Stable environments
Environments that have a small number of external elements, and elements are similar, and the elements remain the same or change slowly.
Simple-Unstable environments
Environments that have a small number of external elements, and elements are similar and where elements change frequently and unpredictably.
Complex-Stable environments
Environments that have a large number of external elements, and elements are dissimilar and where elements remain the same or change slowly.
Complex-Unstable environments
Environments that have a large number of external elements, and elements are dissimilar and where elements change frequently and unpredictably
Organizational structures
A broad term that covers both mechanistic and organic organizational structures.
Mechanistic organizational structures
Best suited for environments that range from stable and simple to low-moderate uncertainty and have a formal “pyramid’ structure.
Horizontal organizational structures
A “flatter” organizational structure often found in matrix organizations where individuals relish the breath and development that their team offers.
Organic organizational structures
The opposite of a functional organizational form that works best in unstable, complex changing environments.
Functional structure
The earliest and most used organizational designs.
Divisional structure
An organizational structure characterized by functional departments grouped under a division head.
Matrix structure
An organizational structure close in approach to organic systems that attempt to respond to environmental uncertainty, complexity, and instability.
Geographic structure
An Organizational option aimed at moving from a mechanistic to more organic design to serve customers faster and with relevant products and services; as such, this structure is organized by locations of customers that a company serves.
Networked-team structure
A form of the horizontal organization.
Virtual structure
A recent organizational structure that has emerged in the 1990’s and early 2000’s as a response to requiring more flexibility, solution based tasks on demand, less geographical constraints, and accessibility to dispersed expertise.
Domain
The purpose of the organization from which its strategies, organizational capabilities, resources, and management systems are mobilized to support the enterprise’s purpose.
McKinsey 7-S model
A popular depiction of internal organizational dimensions.
Corporate culture
Defines how motivating employees’ beliefs, behaviors, relationships, and ways they work creates a culture that is based on the values the organization believes in.
Adhocracy culture
Creates an environment of innovating, visioning the future, accepting of managing change, and risk taking, rule-breaking, experimentation, entrepreneurship, and uncertainty.
Market culture
Focuses on delivering value, competing, delivering shareholder value, goal achievement, driving and delivering results, speedy decisions, hard driving through barriers, directive, commanding, competing and getting things done.
Hierarchy culture
Emphasizes efficiency, process and cost control, organizational improvement, technical expertise, precision, problem solving, elimination of errors, logical, cautious and conservative, management and operational analysis, careful decision making.
Clan culture
Focuses on relationships, team building, commitment, empowering human development, engagement, mentoring, and coaching.
Internal dimensions of organizations
How an organization’s culture affects and influences its strategy.
Competing Values Framework
Developed by Kim Cameron and Robert Quinn this model is used for diagnosing an organization’s cultural effectiveness and examining its fit with its environment.
Summary of Learning Outcomes
15.1 The Organization's External Environment
1. Define the external environment of organizations
Organizations must react and adapt to many forces in their internal and external environments. The context of the firms such as size and geographic location impact how environmental forces affect each organization differently. An understanding of the forces and they currently affecting organizations and pressuring structural change is crucial.
15.2 External Environments and Industries
1. Identify contemporary external forces pressuring organizations
An understanding of the various industries and organizations ‘fit’ with different types of environment in crucial. There are small and large organizations that face environments that are either stable of unstable and managing the organization by recognizing their environment is a crucial skill.
15.3 Organizational Designs and Structures
1. Identify different types of organizational structures, and their strengths and weaknesses
An understanding of Mechanistic vs Organic Structures and Systems and how they differ and how these major concepts help classify different organizational structures is crucial to recognizing organizational structures. Finally, the issue of organizational complexity and its impact on organizational structure needs to be understood.
You should be able to discuss the evolution of different types of Organizational Structures. You should understand and identify the six types of organizational structures, and the advantages and disadvantages of each: Functional, Divisional, Matrix, Geographic, Networked Team, and Virtual.
15.4 The Internal Organization and External Environments
1. Explain how organizations organize to meet external market threats and opportunities
You should understand and identify the six types of organizational structures, and the advantages and disadvantages of each structure:
• Functional
• Divisional
• Matrix
• Geographic
• Networked Team
• Virtual
You should also understand why the internal dimensions of an organization matter with regard to how it fits with its external environment.
15.5 Corporate Cultures
1. Identify the fit between organizational cultures and the external environment
You should be able to identify and differentiate between the four types of organizational cultures and the fit of each with the external environment and describe the CVF framework. Finally, you can identify the internal dimensions of organizations, the interconnection among the dimensions, and how these affect the ‘fit’ with external environments.
15.6 Organizing for Change in the 21st Century
1. Identify environmental trends, demands, and opportunities facing organizations.
Among the trends in the external environment: (1) persistent inequality and unfairness, (2) domestic and international political tensions, (3) environmental dangers, and (4) cyber vulnerabilities. Another trend is that organizations will no longer solely be judged only for their financial performance, or even the quality of their products or services. Rather, they will be evaluated on the basis of their impact on society at large—transforming them from business enterprises into social enterprises.
Chapter Review Questions
1. Explain how several current environmental forces are affecting and will affect organizations and organizational structures’ effectiveness and efficiency in the near future?
2. What are ways to classify and describe how industries and organizations fit and do not fit with their external environments?
3. What are a few industries and/or organizations that are fitting well with their current environments? What are a few that are not? Why?
4. What are some major differences between organic and mechanistic organizational structures and systems?
5. Which organization would you work best in, an organically or mechanistically structured one, and why?
6. What are some advantages and disadvantages of functional structures?
7. Do you think it’s true that every organization has a hidden functional structure in it? Explain your answer.
8. Why have functional structures been criticized for not accommodating new changes in the environment?
9. What are some advantages and disadvantages of divisional structures?
10. How is a product structure one type of a divisional structure? Explain.
11. What are some disadvantages in working in a matrix structure and why?
12. What advantages do matrix structures have compared to functional structures?
13. What advantages do geographic structures have compared to a functional structure?
14. What are issues that working in a networked team structure present?
15. In what ways is a virtual organization and structure different from the other ones discussed in the chapter?
16. What major trends discussed at the end of this chapter are different from previous external environments and the ways organizations were organized?
17. What purposes does an organization’s culture serve when considering the external environment?
18. How does Figure 15.4.2 facilitate an understanding of how the internal organization functions with external environments?
Management Skills Application Exercises
1. You have just been assigned to lead a functionally structured organization. Explain what types of skills you would need to best perform this function.
2. What types of problems would you expect to have managing a divisionally structured organization? What skills would you need to excel in this undertaking?
3. If you were assigned to work in a matrix team structure, explain the issues and benefits you might expect to experience and why. What skills would help you in this function?
4. .You have just been assigned to work with a strategy team in an organization to predict issues and opportunities that might be expected for the next 2 years. Using this chapter, explain what information you would provide to this team?
5. Use Figure 15.5.1, “The Competing Values Framework,” to identify the type of organizational culture at IKEA, Home Depot, and Best Buy.
Managerial Decision Exercises
1. You are a manager working in a functionally structured organization. A disgruntled employee is complaining about problems she is having in that structure. Outline a way you would find out more about her complaints with regard to her being in this type of structure and some ways to assist her.
2. You are a manager working in a networked team structured organization. A disgruntled employee is complaining about problems he is having in that structure. Outline a way you would find out more about his complaints with regard to his being in this type of structure and some ways to assist him.
3. You have been selected to lead a team to decide on a different type of structure in your organization to better serve customers who are complaining about poor service that is slow, impersonal, and not meeting their needs to be heard. Presently, the functional structure isn’t working well. Outline some information from your knowledge using this chapter that would help the team in its assignment.
4. You witness a senior executive at your firm engaging in overly aggressive methods of pressuring employees to increase their sales quotas beyond reasonable means. You are in a networked team structure that is partly a matrix. You are uncertain about whom to discuss this issue with. What would you do?
5. As a new graduate, you have been hired to help a medium-sized company come into the 21st century. Products need revamping, people aren’t sharing information, and customers are gradually leaving. The firm has a traditional top-down managed, vertical hierarchy. It is believed that the firm has very good potential to sell its products, but new markets may be needed. Outline an agenda you would work on to research and make suggestions with regard to this chapter’s focus and content.
Critical Thinking Case
Wells Fargo, Crisis and Scandal
The recent widespread scandal at Wells Fargo jolted and shocked the corporate world. How could such internal corrupt and outrageously illegal and unethical activities by professionals have occurred? Wells Fargo is “an American multinational financial services company headquartered in San Francisco, California” with offices nationwide and “the world’s second-largest bank by market capitalization and the third largest bank in the U.S. by total assets.” In September 2016 it was discovered that the company was continuing to create fake customer accounts to show positive financial activity and gains. 5,000 salespeople had created 2 million fake customer accounts to meet high-pressure internal sales goals, including a monthly report called the “Motivator.”
The out-of-control sales leadership pressured sales employees to meet unrealistic, outrageous sales targets. Dramatically unrealistic sales goals propelled by continuous pressure from management coerced employees to open accounts for customers who didn't want or need them. “Some Wells Fargo bankers impersonated their customers and used false email addresses like [email protected], according to a 2015 lawsuit filed by the city of Los Angeles.”
The “abusive sales practices claimed in a lawsuit that Wells Fargo employees probably created 3.5 million bogus accounts” starting in May 2002. Wells Fargo is awaiting final approval to settle that case for \$142 million. However, regulators and investigations found that the misconduct was far more “pervasive and persistent” than had been realized. “The bank’s culture of misconduct extended well beyond the original revelations.” For example, regulators found that the company was (1) “overcharging small businesses for credit card transactions by using a ‘deceptive’ 63-page contract to confuse them.” (2) The company also charged at least 570,000 customers for auto insurance they did not need. (3)The firm admitted that it found 20,000 customers who could have defaulted on their car loans from these bogus actions; (4) The company also had created over 3.5 million fake accounts attributed to customers who had no knowledge of such accounts.
Wells Fargo has had to testify before Congress over these charges, which have amounted to \$185 million dollars, and more recently the company has been ordered by regulators to return \$3.4 million to brokerage customers who were defrauded. The CEO and management team have been fired and had millions of dollars withheld from their pay.
In the aftermath of the scandal, even though Wells Fargo executives were not imprisoned for the extensive consumer abuses committed by the company, the CFPB (Consumer Financial Protection Bureau) and Office of the Comptroller of the Currency (OCC) imposed a \$1 billion fine on Wells Fargo for consumer-related abuses regarding auto loan and mortgage products. The OCC also forced the company to allow regulators the authority to enforce several actions to prevent future abuses, such as and including “imposing business restrictions and making changes to executive officers or members of the bank’s board of directors.” The new president of the company, Tim Sloan, stated, “What we’re trying to do, as we make change in the company and make improvements, is not just fix a problem, but build a better bank, transform the bank for the future.”
Critical Thinking Questions
1. What happened at Wells Fargo with regard to past activities that led to this major scandal?
2. What internal dimensions of the company were part of the problems that occurred?
3. How might the organizational structure of the company have been part of the problems that occurred?
4. . Identify and use relevant concepts from this chapter as well as your own thoughts and analysis to diagnose the scandal at Wells Fargo. How could such a scandal have occurred in the first place? Who and what was at fault?
5. Suggest some solution paths the company might consider, using knowledge from this chapter and your own thoughts/research, to avoid such a scandal from reoccurring.
Sources:
Pasick, Adam, “Warren Buffett Explains the Wells Fargo Scandal,” Quartz, May 6, 2017. qz.com/977778/warren-buffett...fargo-scandal/;
Bloomberg, “The Wells Fargo Fake Accounts Scandal Just Got a Lot Worse,” Fortune, August 21, 2017. http://fortune.com/2017/08/31/wells-...ount-estimate/;
Horowitz, Julia, “‘huge, huge, huge error’ in Wells Fargo Handling of Ethics Line Calls, CNN, May, 6, 2017. https://money.cnn.com/2017/05/06/inv...ing/index.html; http://money.cnn.com/2018/02/05/news...ine/index.html;
Wattles, Jackie, Grier, Ben, and Egan, Matt, “Wells Fargo’s 17 Month Nightmare,” CNN Business, February 5, 2018. https://money.cnn.com/2018/02/05/new...ine/index.html.
Hudson, Caroline, “Wells Fargo Stocks Still Struggling in Wake of Scandal,” Charlotte Business Journal, April 2, 2018. https://www.bizjournals.com/charlott...n-wake-of.html | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/15%3A_External_and_Internal_Organizational_Environments_and_Corporate_Culture/15.08%3A_Glossary.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. What are the fundamental dimensions of change?
2. How do managers deal with change?
Exploring managerial careers
Jackie Smith, CareSource University
Jackie Smith is a human resources, training and organizational development professional with more than 20 years of experience. She has worked in a variety of organizations and industries in both the for-profit and not-for-profit sectors.
Jackie is vice president of CareSource University at CareSource, a Medicaid managed care organization. She oversees CareSource University as well as the company’s performance management, succession, and goal-setting processes. In 2017 CSU delivered more than 240,000 learning hours, coached 300 leaders, and onboarded 1,100 new hires. CareSource University has been nationally recognized for seven years as one of Training magazine’s Top 125 training organizations, ranking in the top 19 for six years. In 2017, CSU was named to the global Learning Elite, ranking 18th among worldwide organizations. Prior to CareSource, Jackie was president of Reflections on Learning, a performance-consulting firm, and worked as a senior organizational development consultant, regional human resources manager, training specialist, and manager in the financial services, retail, and transportation industries.
Jackie’s instructional focus has been in the area of leadership development, designing programs including:
• Developing Your Leadership Vision
• Leading through Extraordinary Change
• Transforming Team Performance through Dialogue
• Building Sustainable Strategy with Appreciative Inquiry
Her educational background includes a BS in education from Miami University, Ohio and Luxembourg and an MS in organizational development and leadership from St. Joseph’s University in Philadelphia. In addition, she has served as an adjunct faculty member at Antioch McGregor University and is a certified facilitator in a variety of training and development programs, organizational assessments, and Myers-Briggs profiling. She also serves as a team leader facilitating business strategy sessions in countries around the world including Ecuador, Jordan, Guinea, and Senegal.
This chapter will cover several concepts that deal with how leaders develop and shape organizations. An understanding of the concepts in this chapter is essential for leaders who need to pull people together to accomplish the essential work of a business in a consistent process over time. We will address the essential ideas.
16.02: Organizational Structures and Design
1. What are mechanistic versus organic organizational structures?
First, an organizational structure is a system for accomplishing and connecting the activities that occur within a work organization. People rely on structures to know what work they should do, how their work supports or relies on other employees, and how these work activities fulfill the purpose of the organization itself.
Second, organizational design is the process of setting up organizational structures to address the needs of an organization and account for the complexity involved in accomplishing business objectives.
Next, organizational change refers to the constant shifts that occur within an organizational system—for example, as people enter or leave the organization, market conditions shift, supply sources change, or adaptations are introduced in the processes for accomplishing work. Through managed change, leaders in an organization can intentionally shape how these shifts occur over time.
Finally, organizational development (OD) is the label for a field that specializes in change management. OD specialists draw on social science to guide change processes that simultaneously help a business achieve its objectives while generating well-being for employees and sustainable benefits for society. An understanding of OD practices is essential for leaders who want to maximize the potential of their organizations over a long period of time.
Together, an understanding of these concepts can help managers know how to create and direct organizations that are positioned to successfully accomplish strategic goals and objectives.
To understand the role of organizational structure, consider the experience of Justin, a young manager who worked for a logistics and transportation company. His success at leading change in the United States gave his leaders the confidence that he could handle a challenging assignment: organize a new supply chain and distribution system for a company in Northern Europe. Almost overnight, Justin was responsible for hiring competent people, forming them into a coherent organization, training them, and establishing the needed infrastructure for sustained success in this new market.
If you were given this assignment, what would you do? How would you organize your employees? How would you help them understand the challenge of setting up a new organization and system? These are the kinds of questions that require an understanding of organizational structure, organizational design, organizational change, and organizational development.
One of the first issues Justin will need to address deals with how he will organize the system he will manage. “The decisions about the structure of an organization are all related to the concept of organizational design. There are two fundamental forms of structure to remember when designing an organization.
To address these questions, we need to be familiar with two fundamental ways of building an organization.
The formal organization is an officially defined set of relationships, responsibilities, and connections that exist across an organization. The traditional organizational chart, as illustrated in Figure \(1\), is perhaps the most common way of depicting the formal organization. The typical organization has a hierarchical form with clearly defined roles and responsibilities.
When Justin sets up his formal organization, he will need to design the administrative responsibilities and communication structures that should function within an organizational system. The formal systems describe how flow of information and resources should occur within an organization. To establish the formal organization, he will identify the essential functions that need to be part of the system, and he will hire people to fill these functions. He will then need to help employees learn their functions and how these functions should relate to one another.
The informal organization is sometimes referred to as the invisible network of interpersonal relationships that shape how people actually connect with one another to carry out their activities. The informal organization is emergent, meaning that it is formed through the common conversations and relationships that often naturally occur as people interact with one another in their day-to-day relationships. It is usually complex, impossible to control, and has the potential to significantly influence an organization’s success.
As depicted in Figure \(2\), the informal organization can also be mapped, but it is usually very different than the formal organization. The chart you see in this example is called a network map, because it depicts the relationships that exist between different members of a system. Some members are more central than others, and the strength of relationships may vary between any two pairs or groups of individuals. These relationships are constantly in flux, as people interact with new individuals, current relationships evolve, and the organization itself changes over time.
The informal organization in Justin’s design will form as people begin interacting with one another to accomplish their work. As this occurs, people will begin connecting with one another as they make sense of their new roles and relationships. Usually, the informal organization closely mirrors the formal organization, but often it is different. People quickly learn who the key influencers are within the system, and they will begin to rely on these individuals to accomplish the work of the organization. The informal organization can either help or hinder an organization’s overall success.
In sum, the formal organization explains how an organization should function, while the informal organization is how the organizational actually functions. Formal organization will come as Justin hires and assigns people to different roles. He can influence the shape of the informal organization by giving people opportunities to build relationships as they work together. Both types of structures shape the patterns of influence, administration, and leadership that may occur through an organizational system.
As we continue our discussion of structure and design, we will next examine different ways of understanding formal structure.
Types of Formal Organizational Structures
Now, Justin will need to choose and implement an administrative system for delegating duties, establishing oversight, and reporting on performance. He will do this by designing a formal structure that defines the responsibilities and accountability that correspond to specific duties throughout an organizational system. In this section, we’ll discuss the factors that any manager should consider when designing an organizational structure.
Bureaucracy
One of the most common frameworks for thinking about these issues is called the bureaucratic model. It was developed by Max Weber, a 19th-century sociologist. Weber’s central assumption was that organizations will find efficiencies when they divide the duties of labor, allow people to specialize, and create structure for coordinating their differentiated efforts, usually within a hierarchy of responsibility. He proposed five elements of bureaucracy that serve as a foundation for determining an appropriate structure: specialization, command-and-control, span of control, centralization, and formalization.
Specialization
The degree to which people are organized into subunits according to their expertise is referred to as specialization—for example, human resources, finance, marketing, or manufacturing. It may also include specialization within those functions. For instance, people who work in a manufacturing facility may be well-versed in every part of a manufacturing process, or they may be organized into specialty units that focus on different parts of the manufacturing process, such as procurement, material preparation, assembly, quality control, and the like.
Command-and-Control
The next element to consider is the reporting and oversight structure of the organization. Command-and-control refers to the way in which people report to one another or connect to coordinate their efforts in accomplishing the work of the organization.
Span of Control
Another question addresses the scope of the work that any one person in the organization will be accountable for, referred to as span of control. For instance, top-level leaders are usually responsible for all of the work of their subordinates, mid-level leaders are responsible for a narrower set of responsibilities, and ground-level employees usually perform very specific tasks. Each manager in a hierarchy works within the span of control of another manager at a level of the organization.
Centralization
The next element to consider is how to manage the flows of resources and information in an organization, or its centralization. A highly centralized organization concentrates resources in only one or very few locations, or only a few individuals are authorized to make decisions about the use of resources. In contrast, a diffuse organization distributes resources more broadly throughout an organizational system along with the authority to make decisions about how to use those resources.
Formalization
The last element of bureaucracy, formalization, refers to the degree of definition in the roles that exist throughout an organization. A highly formalized system (e.g., the military) has a very defined organization, a tightly structured system, in which all of the jobs, responsibilities, and accountability structures are very clearly understood. In contrast, a loosely structured system (e.g., a small, volunteer nonprofit) relies heavily on the emergent relationships of informal organization.
Mechanistic and Organic Structures
Using the principles of bureaucracy outlined above, managers like Justin have experimented with many different structures as way to shape the formal organization and potentially to capture some of the advantages of the informal organization. Generally, the application of these principles leads to some combination of the two kinds of structures that can be seen as anchors on a continuum (see Table \(1\)).
Elements of Organizational Structure and Their Relationship to Mechanistic and Organic Forms
Mechanistic Organic
Highly formalized Standardization Low
High/Narrow Specialization Low/Broad
Centralized Centralization Decentralized
Functional Departmentalization Divisional
Table \(1\). (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)
On one end of the continuum is mechanistic bureaucratic structure. This is a strongly hierarchical form of organizing that is designed to generate a high degree of standardization and control. Mechanistic organizations are often characterized by a highly vertical organizational structure, or a “tall” structure, due to the presence of many levels of management. A mechanistic structure tends to dictate roles and procedure through strong routines and standard operating practices.
In contrast, an organic bureaucratic structure relies on the ability of people to self-organize and make decisions without much direction such that they can adapt quickly to changing circumstances. In an organic organization, it is common to see a horizontal organizational structure, in which many individuals across the whole system are empowered to make organizational decision. An organization with a horizontal structure is also known as a flat organization because it often features only a few levels of organizational hierarchy.
The principles of bureaucracy outlined earlier can be applied in different ways, depending on the context of the organization and the managers’ objectives, to create structures that have features of either mechanistic or organic structures.
For example, the degree of specialization required in an organization depends both on the complexity of the activities the organization needs to account for and on the scale of the organization. A more organic organization may encourage employees to be both specialists and generalists so that they are more aware of opportunities for innovation within a system. A mechanistic organization may emphasize a strong degree of specialization so that essential procedures or practices are carried out with consistency and predictable precision. Thus, an organization’s overall objectives drive how specialization should be viewed. For example, an organization that produces innovation needs to be more organic, while an organization that seeks reliability needs to be more mechanistic.
Similarly, the need for a strong environment of command-and-control varies by the circumstances of each organization. An organization that has a strong command-and-control system usually requires a vertical, tall organizational administrative structure. Organizations that exist in loosely defined or ambiguous environments need to distribute decision-making authority to employees, and thus will often feature a flat organizational structure.
The span of control assigned to any specific manager is commonly used to encourage either mechanistic or organic bureaucracy. Any manager’s ability to attend to responsibilities has limits; indeed, the amount of work anyone can accomplish is finite. A manager in an organic structure usually has a broad span of control, forcing her to rely more on subordinates to make decisions. A manager in a mechanistic structure usually has a narrow span of control so that she can provide more oversight. Thus, increasing span of control for a manager tends to flatten the hierarchy while narrowing span of control tends to reinforce the hierarchy.
Centralization addresses assumptions about how an organization can best achieve efficiencies in its operations. In a mechanistic structure, it is assumed that efficiencies will occur in the system if the resources and decisions flow through in a centralized way. In an organic system, it is assumed that greater efficiencies will be seen by distributing those resources and having the resources sorted by the users of the resources. Either perspective may work, depending on the circumstances.
Finally, managers also have discretion in how tightly they choose to define the formal roles and responsibilities of individuals within an organization. Managers who want to encourage organic bureaucracy will resist the idea of writing out and tightly defining roles and responsibilities. They will encourage and empower employees to self-organize and define for themselves the roles they wish to fill. In contrast, managers who wish to encourage more mechanistic bureaucracy will use tools such as standard operating procedures (SOPs) or written policies to set expectations and exercise clear controls around those expectations for employees.
When a bureaucratic structure works well, an organization achieves an appropriate balance across all of these considerations. Employees specialize in and become highly advanced in their ability to perform specific functions while also attending to broader organizational needs. They receive sufficient guidance from managers to stay aligned with overall organizational goals. The span of control given to any one manager encourages them to provide appropriate oversight while also relying on employees to do their part. The resources and decision-making necessary to accomplish the goals of the organization are efficiently managed. There is an appropriate balance between compliance with formal policy and innovative action.
Functional Structures
Aside from the considerations outlined above, organizations will often set structures according to the functional needs of the organization. A functional need refers to a feature of the organization or its environment that is necessary for organizational success. A functional structure is designed to address these organizational needs. There are two common examples of functional structures illustrated here.
Product structures exist where the business organizes its employees according to product lines or lines of business. For example, employees in a car company might be organized according to the model of the vehicle that they help to support or produce. Employees in a consulting firm might be organized around a particular kind of practice that they work in or support. Where a functional structure exists, employees become highly attuned to their own line of business or their own product.
Geographic structures exist where organizations are set up to deliver a range of products within a geographic area or region. Here, the business is set up based on a territory or region. Managers of a particular unit oversee all of the operations of the business for that geographical area.
In either functional structure, the manager will oversee all the activities that correspond to that function: marketing, manufacturing, delivery, client support systems, and so forth. In some ways, a functional structure is like a smaller version of the larger organization—a smaller version of the bureaucracy that exists within the larger organization.
One common weakness of a bureaucratic structure is that people can become so focused on their own part of the organization that they fail to understand or connect with broader organizational activities. In the extreme, bureaucracy separates and alienates workers from one another. These problems can occur when different parts of an organization fail to communicate effectively with one another.
Some organizations set up a matrix structure to minimize the potential for these problems. A matrix structure describes an organization that has multiple reporting lines of authority. For example, an employee who specializes in a particular product might have both the functional reporting line and a geographic reporting line. This employee has accountability in both directions. The functional responsibility has to do with her specialty as it correlates with the strategy of the company as a whole. However, her geographic accountability is to the manager who is responsible for the region or part of the organization in which she is currently working. The challenge is that an employee may be accountable to two or more managers, and this can create conflict if those managers are not aligned. The potential benefit, however, is that employees may be more inclined to pay attention to the needs of multiple parts of the business simultaneously.
concept check
1. What are different types of organizational structures?
2. What concepts should guide decisions about how to design structures? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/16%3A_Organizational_Structure_and_Change/16.01%3A_Chapter_Introduction.txt |
1. What are the fundamental dimensions of change?
Our discussion about organizational structure to this point has focused on the forms that an organization might take and the options that are available to managers as they design structures for their organizations. However, organizations are constantly evolving. One common refrain is that "there is nothing so constant as change." Because of this, there is no one best way to organize in all circumstances. Effective managers need to be aware of the various factors that drive the need for change. There advantages and disadvantages of each the various forms of organizing we have discussed. Managers need to adapt the organization so that it is ideally situated to accomplish current organizational goals. Thus, effective managers need to know how to plan and implement change to achieve organizational success.
We will begin this section by reviewing the types of changes that may occur in an organization. Then we will explore the organizational life cycle model, which explains how the structural needs of an organization evolve over time.
Types of Change
There are many different types of changes in organizations. The first, consistent with what we talked about so far in this chapter, is structural change. This has to do with the changes in the overall formal relationships within an organization. Examples of structural change include reorganizing departments or business units, adding employee positions, or revising job roles and assignments. These changes should be made to support broader objectives such as to centralize or decentralize operations, empower employees, or find greater efficiencies.
Another common type of change is technological change. Implementation of new technologies is often forced upon an organization as the environment shifts. For example, an industry upgrade in a commonly used software platform may require that employees learn new ways of working. Upgraded machinery or hardware may require employees to learn new procedures or restructure the way that they interact with one another. The advent of web-based cloud technologies is an example from the last decade and an example of ways which new forms of collaboration are becoming more available. Technological change often induces structural change because it requires different ways of connecting across an organizational system.
A third type of organizational change is culture change. Organizational culture refers to the common patterns of thinking and behaving within an organization. Culture is rooted in the underlying beliefs and assumptions that people hold of themselves and of the organization. These beliefs and assumptions create mindsets that shape the culture. Culture change is among the most difficult kinds of changes to create within an organizational system. It often involves reshaping and reimagining the core identity of the organization. A typical culture change process, if it is successful, requires many years to achieve.
The Organizational Life Cycle
Most organizations begin as very small systems that feature very loose structures. In a new venture, nearly every employee might contribute to many aspects of an organization’s work. As the business grows, the workload increases, and more workers are needed. Naturally, as the organization hires more and more people, employees being to specialize. Over time, these areas of specialization mature through differentiation, the process of organizing employees into groups that focus on specific functions in the organization. Usually, differentiated tasks should be organized in a way that makes them complementary, where each employee contributes an essential activity that supports the work and outputs of others in the organization.
The patterns and structures that appear in an organization need to evolve over time as an organization grows or declines, through four predictable phases (see Figure \(1\)). In the entrepreneurship phase, the organization is usually very small and agile, focusing on new products and markets. The founders typically focus on a variety of responsibilities, and they often share frequent and informal communication with all employees in the new company. Employees enjoy a very informal relationship, and the work assignments are very flexible. Usually, there is a loose, organic organizational structure in this phase.
The second phase, survival and early success, occurs as an organization begins to scale up and find continuing success. The organization develops more formal structures around more specialized job assignments. Incentives and work standards are adopted. The communication shifts to a more formal tone with the introduction of hierarchy with upper- and lower-level managers. It becomes impossible for every employee to have personal relationships with every other employee in the organization. At this stage, it becomes appropriate for introduce mechanistic structures that support the standardization and formalization required to create effective coordination across the organization.
In a third phase, sustained success or maturity, the organization expands and the hierarchy deepens, now with multiple levels of employees. Lower-level managers are given greater responsibility, and managers for significant areas of responsibility may be identified. Top executives begin to rely almost exclusively on lower-level leaders to handle administrative issues so that they can focus on strategic decisions that affect the overall organization. At this stage, the mechanistic structures of the organization are strengthened, and functional structures may be introduced. Often, tension emerges over how to find balance in the structure. Most organizations at this stage of development need to have elements of a mechanistic bureaucracy while maintaining an environment that allows for the innovation and flexibility that is a feature of an organic structure.
A transition to the fourth phase, renewal or decline, occurs when an organization expands to the point that its operations are far-flung and need to operate somewhat autonomously. Functional structures become almost essential, and subunits may begin to operate as independent businesses. Often, the tensions in the company between mechanistic and organic inclinations may be out of balance. To address these issues, the organization has to be reorganized or restructured to achieve higher levels of coordination between and among different groups or subunits. Managers may need to address fundamental questions about the overall direction and administration of the organization.
To summarize, the key insight about the organizational life cycle is that the needs of an organization will evolve over time. Different structures are needed at different stages as an organization develops. The needs of employees will also change. An understanding of the organizational life cycle provides a framework for thinking about changes that may be needed over time.
Dimensions of Change
When considering how to assess the need for change in an organization, it can be helpful to think of three dimensions: the scope of change, the level of change, and the intentionality of change.
The first, the scope of change refers to the degree to which the required change will disrupt current patterns and routines. Incremental change refers to small refinements in current organizational practices or routines that do not challenge, but rather build on or improve, existing aspects and practices within the organization. Common incremental change practices are LEAN and Six Sigma, which are used to find relatively small changes that can generate greater efficiencies in a process. An organization can improve its product-line efficiencies by identifying small discrepancies in process, then fixing them in a systematic way. Incremental change does not typically challenge people to be at the edge of their comfort zone.
In contrast, transformational change refers to significant shifts in an organizational system that may cause significant disruption to some underlying aspect of the organization, its processes, or structures. Transformational change can be invigorating for some employees, but also highly disruptive and stressful for others. Examples of transformational change include large systems changes and organizational restructuring. Culture change often requires transformational change to be successful.7
Finally, a strategic change is a change, either incremental or transformational, that helps align an organization’s operations with its strategic mission and objectives. This kind of change is necessary for an organization to achieve the focus it needs to make needed transfer missions and work it does feel to stay competitive in the current or larger organization, larger market environment, or societal environment.
The level of change refers to the breadth of the systems that need to be changed within an organization. Individual-level change focuses on how to help employees to improve some active aspect of their performance or the knowledge they need to continue to contribute to the organization in an effective manner. Individual-level change programs include leadership development, training, and performance management. Group-level change centers on the relationships between people and usually focuses on helping people to work more effectively together. Team development, or teambuilding, is one of the most common forms of a team change process. Organization-level change is a change that affects an entire organizational system or several of its units. Strategic planning and implementation is perhaps the most common type of organization-level change. Higher-level change programs usually require changes at lower levels—an organization-level change may require change at both team and individual levels as well.
Intentionality is the final dimension of change and refers to the degree to which the change is intentionally designed or purposefully implemented. Planned change is an intentional activity or set of intentional activities that are designed to create movement toward a specific goal or end. Planned change processes often involve large groups of people and step-by-step or phase-by-phase activities that unfold over a period of time. Usually, effective leaders identify clear objectives for the change, the specific activities that will achieve those objectives, and the indicators of success.
In contrast, unplanned change is unintentional and is usually the result of informal organizing. It may or may not serve the aims of the organization as a whole. Unplanned change may be completely spontaneous, occurring simply because employees in some part of an organization want to initiate change. But sometimes it occurs as a byproduct of a planned change process. This is because it is difficult for leaders to anticipate all the consequences of a planned change effort. Employees react in unpredictable ways, technologies don't work as expected, changes in the marketplace don't happen as expected, or other actors may react in unanticipated ways.
As we will discuss below, some change models are designed to take advantage of the potential for spontaneous organizing among employees. Unplanned change can be harnessed as a positive force when employees are invited to be proactive about working toward common organizational goals.
concept check
1. What are the fundamental dimensions of change? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/16%3A_Organizational_Structure_and_Change/16.03%3A_Organizational_Change.txt |
1. How do managers deal with change?
To this point in the chapter, we have focused on factors that influence the need for change. We have also discussed how to think about the dimensions of change that may be needed. In this section, we will describe different approaches to designing and implementing change.
Change management is the process of designing and implementing change. Most leaders are responsible for some degree of change management. In addition, as indicated in the introduction, organizational development (OD) is a specialized field that focuses on how to design and manage change.
An OD consultant is someone who has expertise in change management processes. An internal consultant is someone who works as an employee of an organization and focuses on how to create change from within that organization. An external consultant is an OD specialist hired to provide outside expertise for a short period of time, usually for a major change effort. Leaders are more effective in managing change if they understand the common practices for managing change as well as the perspectives and practices used by OD specialists.
Basic Assumptions about Change
There are numerous models of change available to managers, and it can be difficult to discern the differences between them when creating a planned change process. Many approaches and methodologies for developing organizations and managing change have been developed and practiced during the last century. Indeed, it can be daunting and confusing to sort through and understand which models are most appropriate and relevant for a particular situation. Every model of change has its strengths and its limitations, and it is important to understand what these may be. The type of change methodology used in a particular situation should be matched to the needs of that situation.
It may be helpful to use several questions when deciding on the appropriate approach to use in a planned change process.
A first question has to do with the starting place for the change: Is the organization in a state of deficiency that needs significant fixing, or is it in a state of high performance, where there exists a need for refining and tweaking?
One common motivation for change is the perception that an organization may be in some state of dysfunction with significant and serious problems, somewhat like a patient in a hospital in need of serious medical attention. A dysfunctional organization may require transformational change, in which the fundamental assumptions, beliefs, and organizing ideas of the organization are thoroughly challenged and altered. This set of perceptions often leads to deficit-based change, in which leaders assume that employees will change if they know they will otherwise face negative consequences.
In contrast, leaders may perceive that an organization is highly functional, much like an Olympic athlete or highly accomplished team. A high-performing organization may require incremental change as the organization continues to build on solid fundamentals to refine and add to its capacity for high performance. This set of perceptions often leads to abundance-based change, in which leaders assume that employees will change if they can be inspired to aim for greater degrees of excellence in their work.
A second important question addresses the mechanisms of change: What are our assumptions about how to create change? This question is crucial, because the answers determine the preferred designs for planned change and the perceptions of the effectiveness of the change.
Top-down change approaches rely on mechanistic assumptions about the nature of an organization. In this approach, a relatively small group of individuals in the organization will design a process and instruct others throughout the organization as to how the process of change should unfold. Most employees in the top-down approach play a passive role during the design process and are generally expected to follow the directions given to them by leaders in the organization. In other words, this approach to change relies on the formal organization to drive the legitimacy of the change.
The opposite of the top-down change approach is the emergent or bottom-up approach. This approach relies on the belief that employees will be more invested in change if they play some role in the process of designing the change. Participatory management, the inclusion of employees in the deliberations about key business decisions, is a common practice that aligns with the emergent approach to change.
The differences between top-down and bottom-up approaches can be dramatic. For example, following the top-down approach, leaders might determine that the organizational structure needs to be reconfigured to better accommodate a significant shift in its business. They might assume that they can implement the new structure and that employee routines and patterns of behavior will then change in a natural progression.
The bottom-up approach may reverse this logic. Employees might first work together to explore the tasks that are essential to a specific business problem, they might experiment with potential changes, and then managers might rearrange structures to match the new, emergent way of doing work. In contrast to the top-down approach, in a bottom-up process a shift in structure may be a last step.
A challenge for many managers in the bottom-up approach is a perception that they cannot directly control planned changes. Rather, they must rely on processes that draw employees together and expect that employees will respond. This requires a leap of faith, trusting that the process of involving people will lead to desirable emergent changes.
In practice, top-down and bottom-up practices often work together. For example, leaders might exercise top-down authority to define and declare what change is necessary. Then, they might design processes that engage and empower employees throughout an organization to design how the change will be brought about. Working toward a generally defined goal, employees at all levels are highly engaged in the change process from beginning to end. This approach has the effect of encourage self-organizing through the informal organization as employees make and implement decisions with minimal direction.
As a general rule of thumb, the more complex the potential change, the greater the need to involve employees in the process of planning and implementing change.
A final question addresses the mindset for change: What are our fundamental beliefs about people and change?
Again, a simplistic dichotomy is helpful for defining the approach that may be employed to create change. In the conventional mindset, leaders assume that most people are inclined to resist change and therefore they need to be managed in a way that encourages them to accept change. In this view, people in an organization may be seen as objects, sometimes even as obstacles, that need to be managed or controlled. When leaders use conventional methods, they demonstrate a tendency to assume that their perspectives are more informed sound and logical than the perspectives of employees. They will work hard to convince employees about the correctness of their decisions, relying on logic to prove the point. They may be inclined to use methods that may be seen by employees as manipulative or coercive. Some authors claim that the conventional mindset is the default, or dominant mode of change in most organizations.
In contrast, in the positive or appreciative mindset, leaders assume that people are inclined to embrace change when they are respected as individuals with intrinsic worth, agency, and capability. In this view, employees in an organization may be seen as partners, sometimes even as champions of change, who can do significant things. When leaders use appreciative methods, they involve employees through meaningful dialogue and seek to lead with a sense of purpose. They may start the change process by highlighting the values that people may hold in common to establish an environment in which employees develop a strong sense of connection with one another. With a strong social infrastructure, they involve employees through participatory processes that allow them to develop common goals and processes for achieving significant changes.
The three questions we have raised here can lead to many variations in the way that leaders design and implement change. For example, it is possible for a change process to be deficit-based, top-down, and conventional, while another change process may be abundance-based, bottom-up, and positive. Other change processes may be mixed in their design and delivery—for example, starting with a deficit-based perspective yet choosing to use an abundance-based design to create transformational change through a bottom-up, participatory, appreciative process. In today’s business environment, it is rare to find an approach that purely fits any of these categories.
We will next turn to a discussion of common change models that may be analyzed through the three questions just raised.
sustainability and responsible management
Why Is the National Hockey League Interested in Climate Change, and Why Did They Hire Kim Davis?
Because of demographics, with most of their employees coming from northern U.S. states, Canada, and northern European countries, there was probably no organization more racially uniform than the National Hockey League. In these days of increased attention on social issues and changing demographics, the NHL needed a drastic shift in its approach to inclusivity and the social issues it addresses. Two of the best people to usher in change, they decided, were an accomplished executive untouched by old-guard hockey culture and a former player.
Kim Davis knew that she was different from many executives, managers, coaches, and players in the National Hockey League. She welcomed the challenge, and it was a major attraction that led her to accept the position. She looks like no one else holding the position of executive vice president at the NHL, which has primarily been run by (a) men and (b) white men in its over-100-year history. The league signaled a long-overdue shift in thinking when it named Davis, a black woman, as executive vice president of social impact, growth initiatives, and legislative affairs.
In a time when the NHL is trying to adapt and become more welcoming to those who feel they don’t belong or haven’t been allowed to belong in the sport, the perfect person to initiate change was someone from the outside, someone free of a hockey culture that has become stale by current social standards.
Especially compared to the other major North American pro sports, hockey sometimes unfairly gets accused of being tone-deaf or at least resistant to change. The league is working hard to improve its commitment to inclusivity, with initiatives like the Declaration of Principles and Hockey Is For Everyone, but change doesn’t come easy for players, coaches, administrators, and fans of the sport. Davis represents the NHL’s attempt to shepherd the game through social change—internally and externally. That’s been her area of expertise throughout her professional life. At JPMorgan Chase she endured nine different mergers, and her job was to help her employees prepare for change.
“Most people aren’t comfortable with change, and often when they say that, what they really mean is that they are comfortable with change, but they aren’t comfortable with change happening to them,” she said. “It’s all about what happens to us, so how as a leader do you help people get through that?
“We may not be able to control that fan and that microcosm of society that is over-indexed in our sport,” she said. “Over time it will change as we introduce new fans, and guess what? Even that classic model of our fans, that white male, generationally, their kids, they’re not buying into that even if their parents are.”
"Find another hockey executive who will touch a topic like that without tapdancing.” And that’s why Kim Davis is here. She’s the outsider turned insider, the voice of those formerly neglected. And she’s just getting started.
Regarding climate change, why did the NHL attend the historic climate change conference in Paris? As NHL President Gary Bettman states: “Our game, which is probably unique to most other professional sports, is so tied to the environment. We need cold weather; we need fresh water to play. Therefore, our game is directly impacted by climate change and fresh water scarcity. So, we developed NHL Green, a mandate to promote this type of awareness across all our organizations. Over the course of the last five years, we've done everything from a food recovery initiative, which was taking all the unused food that we prepare in our arenas and donating it to local food banks ... to a water restoration program. All of that culminated in the release of a sustainability report in 2014, which was the first of its kind from any U.S. pro sports league. It's important to us.”
The NHL players are also interested. One individual is recently retired player Andrew Ference, who introduced green initiatives like the NHL Players Association Carbon Neutral Challenge. While he was a player with the Stanley Cup champion Boston Bruins, he knew that he wanted a career after retirement from the NHL and decided to attend the Harvard Business School, where he earned a certificate in Corporate Sustainability and Innovation. Since he really prioritized sustainability in his life, it was a natural progression to a second career after his retirement. Ference says, “I’ve had a lifelong passion for the environment and sustainability issues. But, before leaving the NHL, I wanted to back that up with some formal education. When I signed up for that first class, I knew in my gut it was a big moment.”
Commissioner Gary Bettman says that the next stage regarding sustainability is to “…engage more players around this issue because when we put out stuff on our social media platforms, 12 million followers on social media, that definitely gets messaging out to fans. But when you get an Andrew Ference, that's when you get a lot more engagement. We need to educate our athletes on this issue because they grew up on frozen ponds, they get the connection between learning to play outside and environmental issues. They get it.”
Discussion Questions:
1. How are the roles of Kim Davis, Gary Bettman, and the players regarding change defined in the concepts of this chapter?
Sources:
Matt Larkin, “Kim Davis is the kind of Leader the NHL Needs in 2018: A Hockey Outsider,” The Hockey News, April 6, 2018, http://www.thehockeynews.com/news/ar...ockey-outsider
Kevin Blackistone, “Why the NHL is getting involved in climate-change efforts, ‘The Chicago Tribune, January 3, 2016, http://www.chicagotribune.com/sports...103-story.html
Miranda Green, “NHL Report Finds that Climate Change Hurts the Sport,” The Hill, March 28, 2018, http://thehill.com/policy/energy-env...urts-the-sport
“Andrew Ference; Student Spotlight,” Harvard University Extension- Inside Insight, Accessed March 15, 2018, www.extension.harvard.edu/in...andrew-ference
Amalie Benjamin, “Andrew Ference Excited About New Sustainability Role,” NHL.com, March 13, 2017, https://www.nhl.com/news/andrew-fere...en/c-287680614.
Common Change Models
In this section, we will share four common approaches to OD and organizational change. Lewin’s model and Kotter’s model are common planned change processes that usually rely on the mechanisms of formal organization. The other two models, Cooperrider’s Appreciative Inquiry model and the Olson and Eoyang Complex Adaptive Systems model, are designed to promote informal organizing and emergent change.
Lewin's Change Model
Psychologist Kurt Lewin proposed one of the first models of change. Lewin’s change model shows organizational change occurring in three phases (see Figure \(2\)).
First, an organization must be "unfrozen" in that existing norms, routines, and practices need to be disrupted. This can be done in several ways. For example, structural changes that cause a disruption in the system can be introduced to the organization. Similarly, the introduction of a new technology or policy can cause an organization to "unfreeze." Whatever the cause, unfreezing sets the stage for change.
Next, changes are introduced in the organization to shift the system to a new state or reality. Typically, people react to moments of disorder by creating a new form of order. As changes are introduced, managers might provide a number of interventions that help people adjust to the new norms of reality they are facing. For example, they might require employees to go through a training program, or they might hold discussion sessions or town-hall meetings with people talk about the changes and troubleshoot. The intent of this phase is to help people adjust to the expected change.
The final phase is to "refreeze" the organization. That is, leaders of the organization reinforce the new norms or practices that should accompany the change. They might adjust the resources, policies, and routines to fit the new expected norms.
Lewin’s model explains a very basic process that accompanies most organizational changes. That is, many people prefer a stable, predictable organization, and they become accustomed to the routines that exist in their organizational environment. For this reason, common routines and behaviors need to be disrupted. When past routines and behaviors are no longer available, people naturally adjust. As they react to a new reality, they establish new routines and patterns of behavior.
However, Lewin’s model is most understandable when we assume that an organization is generally stable unless otherwise acted upon. That is, this model seems to fit in organizations in which any change is likely to last for a long period of time. Such a stable organizational context is increasingly rare in contemporary society.
Still, Lewin’s model really describes a basic pattern of change that plays out in all organizational systems: stability gives way to instability, something shifts in the system, then stability emerges once again. An understanding of this pattern can be viewed through either deficit-based or abundance-based lenses, and it applies in either top-down or bottom-up approaches.
Kotter’s Change Model
Kotter’s change model is one of the most widely used in organizations today. Generally, it aligns with mechanistic view of structure and thus it may be especially useful in organizations where there is a strong, hierarchical structure. This is an eight-step model, shown in Figure \(3\), that relies on a centralized, top-down process for creating planned change.
In the first step, managers establish a sense of urgency. They do this by creating a narrative about why the change is necessary. Top managers often use diagnostic tools to gather data that supports the case for change. They strive to convince key organizational leaders and employees that the change is absolutely necessary. A common metaphor is to “create a burning platform,” or to make it clear that the organization cannot survive if it continues doing what it has done.
In the second step, form a powerful guiding coalition, managers assemble a group of influential people to help shape the planned change. Ideally, the guiding coalition should represent the areas of an organization that will be affected by the change. The guiding coalition should become ambassadors for the change as it unfolds.
In the third phase, create a vision of change, the manager and guiding coalition together create a vision of the expected change. They outline the scope of the change, the reason for the change, and what will be better or different as a result of the change.
The fourth step is to communicate the vision—reach out to all members of the organization and communicate the vision for change. Ideally, they connect with all the key areas of the organization that will be affected. They clearly explain why the change is needed and how the change should unfold. If needed, they answer questions and clarify problems.
The fifth step is to remove any obstacles. This step is intended to reduce the resistance to change and/or to provide the necessary resources to make the change successful. The success of this step helps to smooth the way for successful implementation.
The sixth step is to create small wins. A very powerful way to encourage people to support changes to help them to see the path to success. Short wins signal to the organization that a change is possible and that tangible benefits will come once the change is fully implemented.
The seventh step is to consolidate improvements. Small changes build up over time and become big changes. As the organization successfully moves toward implementation, it is important to consolidate and solidify successes. Managers should reinforce and celebrate small wins and milestones. The unfolding success of the change helps to convince all members of the organization that the change is real and will produce its intended benefits.
The last step is to anchor the changes. In this step, the new norms and practices that accompany the change are standardized and refined. The mode of change moves from transformational to incremental. Refinements are implemented to fine-tune the change and to capture all the intended benefits.
Kotter’s model is especially useful in situations where the desired change is reasonably predictable and where leaders are empowered to drive the change down through an organization. One challenge is that many employees may resist change if they have had no hand in shaping the plans. This is especially true if they do not fully comprehend the urgency of the change or the vision for the change. In this regard, it tends to be used when leaders hold a deficit-based view and are generally inclined to take a top-down approach from a conventional perspective. Still, where leaders need to clearly define and implement a large-scale change, Kotter’s model may work very effectively.
A comparison and contrast of Lewin’s and Kotter’s models is illustrated in Figure \(4\)
Appreciative Inquiry
The Appreciative Inquiry (AI) model is a model specifically designed as an abundance-based, bottom-up, positive approach. An Appreciative Inquiry, broadly defined, can be any question-focused, participatory approach to change that creates an appreciative effective on people and organizations. That is, the process of asking and discussing questions (inquiry) causes people to appreciate the people around them, the strengths of their organization, and the opportunities before them. Simultaneously, the process of having conversations expands the social capital of the organization, or the ability of people to work effectively together.
Developed in the 1980s by David Cooperrider at Case Western Reserve University, AI relies on the assumption that people continuously create their organizations through an emergent process that occurs in the common conversations of organizational life. These conversations are shaped by “narratives” about the reality of the organization in which people find themselves. For example, a dominant narrative might be that an organization’s leaders are corrupt and intent on exploiting employees, or in contrast, that an organization’s leaders are compassionate, forward-thinking, and innovative. Whatever the narrative, employees tend to justify actions that align with their views. Over time, a narrative can become a self-reinforcing reality. Based in this understanding of organizations as a socially constructed system, the key to creating change is to change the dominant narratives of an organization.
In AI, group dialogue is the primary mechanism for helping people to create new narratives. Specifically, appreciative conversations are intense, positively framed discussions that help people to develop common ground as they work together to co-create a positive vision of an ideal future for their organization. When leaders use appreciative inquiry, they intentionally invite dialogue that generates a narrative for a positive organizational reality. This shift in narrative will inspire a shift in the actions that employees initiate in their daily work. While this approach may sound somewhat ambitious and abstract, in reality it is simply an opportunity for employees to envision the future changes they would like to see, then work together to design how they will make these changes a reality.
OD consultants have developed many different variations of AI practices that address different organizational contexts. However, most of them rely on some version of a 5-D cycle: define, discover, dream, design, destiny.
The first phase is define, in which the objective for change and inquiry is established. In this phase, the leaders will create a guiding group, often called a steering committee. This group should include a cross-section of perspectives that represent the different parts of the organization where change is desired. Together, they will decide on a compelling way of describing an objective that invites people to think about ideal possibilities for the organization. In this process, they might turn a problem upside down to inspire a new narrative. For example, British Airlines turned a baggage-claim problem into an exploration of excellent customer service, and Avon turned a problem with sexual harassment into an opportunity to explore what it would take to create exceptional employee engagement. By adjusting the perspective for the inquiry, each company was able to design an OD process that not only solved the original problem but also established a clear vision of what they most wanted as the positive alternative.
The second phase, discover, focuses on questions that explore ideal, existing examples of the desired future. The question “who are we when we are at our best?” is commonly used to encourage this exploration through dialogue among employees. For example, British Airways asked its employees to describe examples of exceptional customer service anywhere in its organization. By sharing stories of exceptional customer service, they found examples of exemplary service, even though the dominant narrative was that they had challenges in this area. Finding existing examples of the desired future—no matter how small—causes people to see that a positive alternative is possible. Such examples also provide the data for documenting the strengths of an organization and the factors that make success possible.
The third phase, dream, is an exploration of ideal future possibilities for the organization. The strengths and factors revealed in the discovery phase provide a foundation this discussion. Employees are invited to think creatively about what the organization might do if it were to build on its strengths. “What could be?” is a commonly used question to encourage this exploration. Many organizations have used creative techniques to encourage employees to innovate about the future. They might have employees work in groups to design prototypes of a process or write a mock newspaper article about a future successful project. The idea of the dream phase is to encourage employees to think as expansively as possible about the possibilities for change, usually in a fun and inviting way.
The fourth phase, design, starts with a process of prioritizing the ideas that have been developed in the dream phase. Employees might work together to brainstorm a list of all the possible areas for action that might help them to accomplish the objective. Then they use a collective process to identify the ideas that have the most promise. Usually senior leaders will add their voice to endorse the ideas that they want to encourage as actual action initiatives. Employees might be invited to join project teams that will carry out specific actions to develop and implement key actions.
The final phase, destiny, occurs as employees implement the plans they have developed. Project groups will continue to work on the agreed-upon action steps for a period of time. Typically, they will meet with other employee-based groups to check in, report on progress, and adjust their plans. Some organizations will also create celebrative events to commemorate key successes.
The appreciative inquiry cycle can become an intrinsic part of an organization’s culture. Some companies will go through the AI process on an annual basis as an integral part of strategic planning. Other organizations use it only as needed when major transformational changes are desired. Though the examples in this section illustrate appreciative inquiry as used to change organizations as a whole, the model can also be applied at any level of organization—for example, in work with individuals and teams.
Complex Adaptive Systems
The final model we will review builds on the assumption that all organizations are complex adaptive systems (CAS). That is, an organization is constantly developing and adapting to its environment, much like a living organism. A CAS approach emphasizes the bottom-up, emergent approach to the design of change, relying on the ability of people to self-manage and adapt to their local circumstances. Before reviewing the CAS model in more depth, perhaps it would be helpful to examine a change process that is grounded in the CAS model.
One common CAS-based approach is Open Space Technology, a technique in which dozens of people may be involved. To set the stage, let’s suppose that we want to create a series of innovations to improve the culture of innovation in an organization. The first task would be to invite as many interested stakeholders as possible to participate in a discussion on various topics related to the culture of innovation, perhaps over a two-day period. At the beginning of the first session, a leader in the organization might greet the participants and invite them to be part of an open-ended exploration of ideas and solutions. A facilitator would then distribute a single sheet of paper and a marker to each participant. She would ask each person to propose a topic or question for discussion, explaining that the purpose of this exercise is to attract other people to join a discussion.
Then she will go around the room, giving each person in turn up to 30 seconds to propose a topic or question and describe the significance and urgency of the idea. The go-around continues until a variety of topics are identified. Next, the facilitator works with participants to define a list of topics for discussion. The facilitator then designates times and locations for discussions on those topics. Finally, participants “vote with their feet” to choose groups that they want to join for discussion. Typically, each discussion in an Open Space meeting will include an exploration of key questions, actions related to those questions, and proposals for resolving key questions.
As shown by this example, this approach is similar to AI in that it focuses on creating the conditions for people to self-organize in ways that align with the overall objectives of an organizational system. However, one big difference is that it relies less on step-by-step processes for creating change and more on principles that can be applied in many variations to shape the conditions for change in an organization.
The CAS approach provides a useful perspective on how organic organizational structures emerge and develop through the informal organization. An understanding of CAS, therefore, provides leaders with the key knowledge they need to influence the direction of the informal organization, even if they cannot directly control it.
To use the CAS approach, it is essential to understand a few key features about how self-organizing occurs among employees. To begin, the direction of any organization is emergent and requires involvement from many people. Yet, when people react to change, their exact behaviors may be unknowable, unpredictable, and uncontrollable. Most often, people react to change based on the perceptions of the people in their immediate circle of relationships within the organization. Every person in an organization is both influencing others and being influenced by others. This means that a key locus of change must involve the relationships that people have with one another. From the perspective of CAS, a change in the nature or patterns of interpersonal relationships in an organization will lead to changes in the outcomes of that organization. Leaders, in this regard, should think of themselves as facilitators of relationships and as supporters of employees who are constantly engaged in self-organizing to create needed changes.
So, how can a leader (as a facilitator) influence the way in which self-organizing occurs? For starters, a leader needs to pay attention to the key conditions that allow for informal self-organizing to occur. There are three basic questions to consider.
First, to what degree do people feel empowered to act as change agents in the system? Self-organizing originates in the people who comprise the organization. If they view themselves as agents who have discretion to act, they are more likely to take initiative, engaging in nondirected activities that may benefit the organization. Do people feel empowered as agents of the organization? If not, interventions may be designed to help people understand their own capacities and competencies.
Second, how connected are people to one another in the organization? Relationships are the building blocks of all informal organizational activities. The more connected people feel to one another, the more likely they are to work with others in self-directed activity. Do people feel like they have high-quality relationships with coworkers? Are people regularly connecting with other individuals that they do not know very well? If the answers to these questions are negative, then interventions can be designed to strengthen the quality and configurations of connections within and across an organization.
Third, to what extent are flows of information and energy passing through the connections that exist between people? Both informal and formal feedback loops provide a mechanism whereby people receive information about what is working and or not in their activities. Do people quickly receive information about breakdowns or successes in the system? Is the emotional energy in the system generating a positive dynamic that encourages people to be engaged? Again, if the answers to these questions are negative, then processes or initiatives should be designed that will help people to communicate more effectively across their relationships.
Aside from examining these basic conditions for self-organizing, the CAS approach assumes that every organizational outcome is the product of an indeterminable number of variables. No one cause produces a single outcome. For instance, the accurate delivery of a product to a customer is caused by a whole system of interrelated factors, each influencing the other. Therefore, where broad changes in outcomes are desired, the whole system of interrelated factors needs to be engaged at once. The preferred method of doing this is to engage broad groups of stakeholders simultaneously, using dialogue and conversation to help people develop their sense of agency, their connections with others, and the processes that need to be adjusted to create desired changes in outcomes. Appreciative inquiry is one method that works especially well to accomplish all these impacts.
In addition, leaders may also influence the structures that shape patterns of self-organizing. From a CAS perspective, a structure is anything that causes people to engage in a particular pattern of activity. Structures can be physical, such as the work environment, or they can be assumptions or beliefs that are broadly held, such as the ideas about bureaucracy we discussed earlier in this chapter. To create change, leaders can change the structures that are producing current patterns of organization.
There are three ways in which self-organizing structures can be altered. First, a leader can influence the boundary conditions that establish the limits for emergent activity. Boundary conditions define the degree of discretion that is available to employees for self-directed action. Giving employees more responsibility, empowering them to make decisions at the local level, and providing them with more discretion in the work they do are some of the ways that the boundary conditions may be expanded. The more undefined the boundaries, the more self-organizing can be expected.
Second, self-organizing is altered through the introduction of disturbances to the system. Sometimes this can be as simple as helping employees learn about the tensions that exist within an organization around existing patterns of self-organizing activity. For example, there are nearly always significant differences in perspective among different subgroups in an organization. Helping employees to have conversations with others who have significantly different perspectives can introduce a positive disturbance that causes people to reorganize their activities to overcome hidden structures. In manufacturing organizations, for instance, it is common for engineering and production departments to be isolated from one another. Dialogue that includes and connects the employees from such groups can help them overcome and change the structural assumptions that may cause them to self-organize in ways that antagonize the other. The conversation itself can be a catalyst for change.
One final suggestion is a reminder to pay particular attention to the flows and connections that exist among employees across an organizational system. It is essential to healthy organizing to regularly create opportunities for transformational connections, in which employees are able to learn about the perspectives of other areas of an organization. As they develop and maintain healthy connections, they will empathize with and consider those perspectives as they engage in their own self-organizing activities.
The CAS approach, as indicated earlier, provides both a perspective and a set of principles that can be used in many ways. Many methodologies build on the assumptions of the CAS approach. These include appreciative inquiry and others such as Open Space Technology, Whole Systems Change, Future Search, and more. In this section, we have barely scratched the surface of the variety of practices that can be used to catalyze change.
Planning a Change Management Process
The perspectives we have reviewed in this section provide a very brief menu of the options that are available to leaders as they consider how to manage change. In reality, many of these can be used together, and they should not be considered as mutually exclusive. For example, Kotter’s model can be seen as an overall framework for designing a long-term change process. The Open Space or appreciative inquiry models can be used in certain parts of the Kotter process—for example, in the creation of a guiding coalition or creating a vision for the change.
Moreover, there are many, many practices and methodologies that may align in different ways to the framework of questions provided in this section. These can be used in different combinations to design change processes that meet the needs of a particular context.
concept check
1. What questions may be used to guide OD and change management?
2. What are the common models of OD and change management? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/16%3A_Organizational_Structure_and_Change/16.04%3A_Managing_Change.txt |
Key Terms
organizational structure
The system of task and reporting relationships that control and motivate colleagues to achieve organizational goals.
organizational design
The process by which managers define organizational structure and culture so that the organization can achieve its goals.
Organizational change
The movement that organizations take as they move from one state to a future state.
managed change
How leaders in an organization intentionally shape shifts that occur in the organization when market conditions shift, supply sources change, or adaptations are introduced in the processes for accomplishing work over time.
organization development (OD)
Techniques and methods that managers can use to increase the adaptability of their organization.
formal organization
A fixed set of rules of organizational procedures and structures.
informal organization
The connecting social structure in organizations that denotes the evolving network of interactions among its employees, unrelated to the firm's formal authority structure.
bureaucratic model
Max Weber’s model that states that organizations will find efficiencies when they divide the duties of labor, allow people to specialize, and create structure for coordinating their differentiated efforts within a hierarchy of responsibility.
specialization
The degree to which people are organized into subunits according to their expertise—for example, human resources, finance, marketing, or manufacturing.
command-and-control
The way in which people report to one another or connect to coordinate their efforts in accomplishing the work of the organization.
span of control
The scope of the work that any one person in the organization will be accountable for.
centralization
The concentration of control of an activity or organization under a single authority.
formalization
The process of making a status formal for the practice of formal acceptance.
mechanistic bureaucratic structure
Describes organizations characterized by (1) centralized authority, (2) formalized procedures and practices, and (3) specialized functions. They are usually resistant to change.
vertical organizational structure
Organizational structures found in large mechanistic organizations; also called “tall” structures due to the presence of many levels of management.
organic bureaucratic structure
Used in organizations that face unstable and dynamic environments and need to quickly adapt to change.
horizontal organizational structure
Flat organizational structure in which many individuals across the whole system are empowered to make organizational decisions.
flat organization
A horizontal organizational structure in which many individuals across the whole system are empowered to make organizational decisions.
product structures
Occurs when businesses organize their employees according to product lines or lines of business.
geographic structures
Occur when organizations are set up to deliver a range of products within a geographic area or region.
matrix structure
An organizational structure that groups people by function and by product team simultaneously.
structural change
Changes in the overall formal relationships, or the architecture of relationships, within an organization.
technological change
Implementation of new technologies often forces organizations to change.
culture change
Involves reshaping and reimagining the core identity of the organization.
differentiation
The process of organizing employees into groups that focus on specific functions in the organization.
entrepreneurship
The process of designing, launching, and running a new business.
scope of change
The degree to which the required change will disrupt current patterns and routines.
incremental change
Small refinements in current organizational practices or routines that do not challenge, but rather build on or improve, existing aspects and practices within the organization.
transformational change
Significant shifts in an organizational system that may cause significant disruption to some underlying aspect of the organization, its processes, or its structures.
strategic change
A change, either incremental or transformational, that helps align an organization’s operations with its strategic mission and objectives.
level of organization
The breadth of the systems that need to be changed within an organization.
individual-level change
Focuses on how to help employees to improve some active aspect of their performance or the knowledge they need to continue to contribute to the organization in an effective manner.
group-level change
Centers on the relationships between people and focuses on helping people to work more effectively together.
organization-level change
A change that affects an entire organizational system or several of its units.
intentionality
The degree to which the change is intentionally designed or purposefully implemented.
planned change
An intentional activity or set of intentional activities that are designed to create movement toward a specific goal or end.
unplanned change
An unintentional activity that is usually the result of informal organizing.
change management
The process of designing and implementing change.
organizational development (OD)
Specialized field that focuses on how to design and manage change.
OD consultant
Someone who has expertise in change management processes.
deficit-based change
Leaders assume that employees will change if they know they will otherwise face negative consequences.
abundance-based change
Leaders assume that employees will change if they can be inspired to aim for greater degrees of excellence in their work.
top-down change
Relies on mechanistic assumptions about the nature of an organization.
emergent or bottom-up approach
Organizations exist as socially constructed systems in which people are constantly making sense of and enacting an organizational reality as they interact with others in a system.
participatory management
Includes employees in deliberations about key business decisions.
conventional mindset
Leaders assume that most people are inclined to resist change and therefore need to be managed in a way that encourages them to accept change.
positive or appreciative mindset
Leaders assume that people are inclined to embrace change when they are respected as individuals with intrinsic worth, agency, and capability.
Lewin’s change model
Explains a very basic process that accompanies most organizational changes.
Kotter’s change model
An overall framework for designing a long-term change process.
Appreciative Inquiry model
A model specifically designed as an abundance-based, bottom-up, positive approach.
appreciative conversations
Intense, positively framed discussions that help people to develop common ground as they work together to cocreate a positive vision of an ideal future for their organization.
Complex Adaptive Systems (CAS)
A model that views organizations as constantly developing and adapting to their environment, much like a living organism.
change agents
People in the organization who view themselves as agents who have discretion to act.
boundary conditions
Define the degree of discretion that is available to employees for self-directed action.
disturbances
Can cause tension amongst employees, but can also be positive and a catalyst for change.
Summary of Learning Outcomes
16.1 Organizational Structures and Design
1. What are mechanistic versus organic organizational structures?
The organizational structure is designed from both the mechanistic and the organic points of view, and the structure depends upon the extent to which it is rigid or flexible. Flexible structures are also viewed as more humanistic than mechanistic structures. The mechanistic organizational structure is similar to Max Weber’s bureaucratic organization. Organic structures are more flexible in order to cope with rapidly changing environments. These structures are more effective if the environment is dynamic, requiring frequent changes within the organization in order to adjust to change. It is also considered to be a better form of organization when employees seek autonomy, openness, change, support for creativity and innovation, and opportunities to try new approaches.
All organizations need structures to accomplish their work, and they need an ability to change in order to sustain and renew themselves over time
16.2 Organizational Change
1. What are the fundamental dimensions of change?
It is often said that the only constant is change. Managers need to have the ability to understand the dimensions of change, know what drives change, and know how to implement changes to meet and exceed organizational goals. The three types of change are structural, technological, and culture changes. Managers need to understand change as organizations evolve and grow over time.
One of the key responsibilities of management is to design organizational structures that will allow an organization to accomplish its primary objectives. The structure should always match the need for coordination. Often, managers cannot tell what form the organization should take until they experience the informal organization that determines how work is actually accomplished. Only then can they understand how to draw on the concepts of bureaucracy to appropriately design a structure that will maximize the likelihood of organizational success.
16.3 Managing Change
1. How do managers deal with change?
As an organization grows and matures, change becomes necessary to its sustained viability. Thus, another key responsibility for most leaders is the task of designing and managing change. We have reviewed several questions that should be considered when designing a change process, and we have explored several approaches that may be used to guide the development of organizational change.
The field of knowledge about how to change and develop organizations is vast and can be somewhat confusing to the novice learner. The material presented in this chapter provides an overview of key ideas, but there is so much more to learn. Should you wish to become an influential leader of change, it is important to learn more about this very important field of research and practice.
Chapter Review Questions
1. What is an organizational structure?
2. What are different types of organizational structures?
3. What is organizational design?
4. What concepts should guide decisions about how to design structures?
5. What is organizational change?
6. What are the fundamental dimensions of change?
7. What are organizational development (OD) and change management?
8. What questions may be used to guide OD and change management?
9. What are the common models of OD and change management?
Management Skills Application Exercises
1. Refer to Exhibit 16.1.1, Exhibit 16.1.2, and Exhibit 16.2.1 for this exercise. Pick a business that you are familiar with, and draw their existing organizational chart. You may be able to infer much of the information from their website or through a short interview with someone in their organization. After completing this task, construct an alternative organizational chart and comment on why it may be more effective than the current organizational structure and what risks that new structure may have.
2. You have been assigned the task of working with a company that had a traditional, functional organizational structure with sales, marketing, product development, finance and accounting, and operations teams each reporting to a VP, who then reported to the CEO. The company wants to move to a matrix organization that will retain the efficiencies of the functional organization but also groups employees by product teams. You have been asked to comment on how to manage this change and how to communicate and respond to employee concerns. Specifically, you need to address: What are the desired impacts or benefits of this project on the organization? What are the emotions that your employees may have about this organizational change? How could the employee emotions impact the organization or its operations? How can the organization manage these emotions, or in what ways do you think they should manage these emotions to get desired outcome?
Managerial Decision Exercises
1. Place yourself in the position of a CEO who is contemplating a reorganization of your company and has received conflicting opinions from two of your trusted reports. Presently you are a wholesaler with 45 regional warehouses who acquires products from manufacturers and distributes them to retailers and service establishments. You have over 100,000 SKUs (stock keeping unit) ranging from ACE bandages to Ziploc bags. You have 825 field-based sales representatives who represent all the products within a geographic area.
One of the ideas that has been brought up by the vice president of marketing is to specialize the salesforce into three groups, fashion retail, general retail, and services. Basically, individual sales representatives would be able to specialize with greater expertise and product knowledge to better serve customers. The vice president of sales fears that many of her salespeople will leave due to the expanded geography that this change would require.
What process would you take to address the concerns of your managers? How would you implement the plan? What customer considerations would you need to address?
2. You have recently accepted the position of director for a full-service retirement home that has three components. The first component is for retired individuals and married couples who can still manage on their own but appreciate the amenities such as medical care and having other residents that they interact with through planned activities. The second is for residents who are still relatively healthy but do need assistance for specific tasks such as mobility and the like. The third section is for individuals with chronic health issues and palliative care patients.
You have learned during the interview process that the facility has performance and morale issues and that the previous director had a rigid structure, did not allow workers from different roles to interact, and wanted all decisions to be directed to her. This has led to dramatic staff turnover and a larger number of empty units compared to other facilities.
As the incoming new director, you will need to address the staff, and your new assistant asks whether you would like to address the staff in one large room or in smaller meeting rooms with employees from the different functional units. She also asks how to handle the workers who are from different shifts. Make your communication decisions, and write up an opening statement to make to the employees before you open the meeting to questions.
Critical Thinking Case
Danny Meyer Leads His Company through the Challenges of Eliminating Tips
What happens when your CEO wants to remove the tip structure from your restaurant? Do you complain about the new prices as a customer? Do you worry about your paychecks as a server?
Danny Meyer, CEO of Union Square Hospitality (home to some of the most successful New York restaurants), discovered these answers when he began eliminating the tip structure in most of his restaurants. He had seen firsthand the largest negative impact of a tipping culture: employees stuck in front-line positions with no chance to advance to management without taking significant pay cuts.
Meyer began by first involving the affected employees in town-hall talks. These town halls happened months before any publicity was released. Meyer then hosted town halls with customers to explain the importance of fair wages for all his employees at the restaurant, not just the few who served the food. The transition period for each restaurant to eliminate tips was usually three to six months.
As a result of eliminating the tip structure in most of his restaurants, Meyer has been able to increase the pay structure for cooks at those locations, which enables him to fill more cook positions and address a common industry shortage. Meyer has also been able to hire employees with a purpose to deliver exceptional hospitality. Meyer encourages his employees to take care of each other first, and to then take care of the customer, which creates a virtuous cycle of hospitality.
Meyer constantly uses feedback from his employees even after the tip structure was eliminated. He wants to ensure that each employee feels their voice is heard and understood. Employees continue to have access to town-hall meetings and internal feedback channels to offer honest feedback.
Critical Thinking Questions
1. What type of change is this: transformational or incremental? Why?
2. What level(s) of change is Meyer aiming for in this case?
3. What models are consistent with Meyer’s process for designing and implementing change?
Sources:
Mark Matousek, Dannu Meyer Banned Tipping at his Restaurants- But Employees Say it has Led to Lower Pay and High Turnover,” Business Insider, October 20, 2017, http://www.businessinsider.com/danny...uggles-2017-10
Loren Feldman, “Danny Meyer On Eliminating Tipping: “It Takes a Year to Get The Math Right,” Forbes, January 14, 2018, https://www.forbes.com/sites/lorenfe.../#189bd5c8431f;
Elizabeth Dunn, “The Limitations of American Restaurants’ No-Tipping Experience,” The New Yorker, February 24, 2018, https://www.newyorker.com/culture/an...ing-experiment. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/16%3A_Organizational_Structure_and_Change/16.05%3A_Glossary.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. What has been the evolution of human resource management over the years, and what is the current value it provides to an organization?
2. How does the human resources compliance role of HR provide value to a company?
3. How do performance management practices impact company performance?
4. How do companies use rewards strategies to influence employee performance and motivation?
5. What is talent acquisition, and how can it create a competitive advantage for a company?
6. What are the benefits of talent development and succession planning?
Exploring managerial careers
Eva Hartmann, Trellis LLC
Eva Hartmann has nearly 20 years of experience as a strategic, results-driven, innovative leader with significant expertise in human resources strategy, talent and leadership development, and organizational effectiveness. She has worked in a variety of industries, from manufacturing to Fortune 500 consulting. Eva is a transformational change agent who has developed and led strategic human capital programs and talent initiatives in multiple challenging environments globally. Eva is passionate about enhancing both individual and organizational performance.
Eva began her career in one of the large “Big 6” management consulting firms at the time, and she happily returned several years ago to consulting. She is the founder and president of Trellis LLC, a human capital consulting and staffing firm in Richmond, Virginia.
Prior to Trellis, Eva was the global human resources leader for a large global manufacturer of plastic film products and was responsible for the HR strategy and operations of a \$600 million global division. In this role, Eva led a global team of HR managers in North and South America, Europe, and Asia to support global HR initiatives to drive business results and build human capital and performance across the division.
Eva has also held a variety of leadership and managerial roles in both human resources and quality functions at several nationally and globally recognized companies, including Wachovia Securities, Genworth Financial, Sun Microsystems, and Andersen Consulting (now Accenture).
Eva holds an MBA from the College of William and Mary in Williamsburg, Virginia, and a BA in anthropology from the University of Virginia in Charlottesville, Virginia. She is also an adjunct faculty member with the University of Richmond Robins School of Business. Eva currently serves on the board of the Society of Human Resource Management (SHRM) of Richmond, Virginia.
Human resource management is an area that has evolved a great deal over the last few decades. From the days of the very tactical “personnel” management to the current and more strategic state of human resources, businesses and HR professionals alike have changed the way they see the function. In the current economy, human capital assets (i.e., people) are the greatest value creators. Companies compete for talent, and they distinguish themselves in their business performance by the talent they have in their ranks. Human resource management, therefore, becomes a key lever companies can utilize to find, recruit, develop, and grow talent for competitive advantage. This chapter discusses the value and benefits that human resource management brings to an organization, as well as the challenges that the function still faces as a strategic partner to the business. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/17%3A_Human_Resource_Management/17.01%3A_Chapter_Introduction.txt |
What has been the evolution of human resource management (HRM) over the years, and what is the current value it provides to an organization?
Human resource management over the years has served many purposes within an organization. From its earliest inception as a primarily compliance-type function, it has further expanded and evolved into its current state as a key driver of human capital development. In the book HR From the Outside In (Ulrich, Younger, Brockbank, Younger, 2012), the authors describe the evolution of HR work in “waves”. Wave 1 focused on the administrative work of HR personnel, such as the terms and conditions of work, delivery of HR services, and regulatory compliance. This administrative side still exists in HR today, but it is often accomplished differently via technology and outsourcing solutions. The quality of HR services and HR’s credibility came from the ability to run administrative processes and solve administrative issues effectively. Wave 2 focused on the design of innovative HR practice areas such as compensation, learning, communication, and sourcing. The HR professionals in these practice areas began to interact and share with each other to build a consistent approach to human resource management. The HR credibility in Wave 2 came from the delivery of best-practice HR solutions.
Wave 3 HR, over the last 15–20 years or so, has focused on the integration of HR strategy with the overall business strategy. Human resources appropriately began to look at the business strategy to determine what HR priorities to work on and how to best use resources. HR began to be a true partner to the business, and the credibility of HR was dependent upon HR having a seat at the table when the business was having strategic discussions. In Wave 4, HR continues to be a partner to the business, but has also become a competitive practice for responding to external business conditions. HR looks outside their organizations to customers, investors, and communities to define success—in the form of customer share, investor confidence, and community reputation. HR’s credibility is thus defined in terms of its ability to support and drive these external metrics. Although each “wave” of HR’s evolution is important and must be managed effectively, it is the “outside in” perspective that allows the human resource management function to shine via the external reputation and successes of the organization.
catching the entrepreneurial spirit
Human Resources Outsourcing—Entrepreneurial Ventures
Human resources is a key function within any company, but not all companies are able to afford or justify full-time HR staff. Over the last decade, HR outsourcing has become a good business decision for many small companies whose current staff doesn’t have the bandwidth or expertise to take on the risks of employee relations issues, benefits and payroll, or HR compliance responsibilities. This has led many HR practitioners to try out their entrepreneurial skills in the areas of HR outsourcing and “fractional HR.”
Human resources outsourcing is very commonly used by smaller companies (and often large companies too) to cover such tasks as benefits and payroll management. This is an area that has been outsourced to third parties for many years. More recent is the trend to have “fractional HR” resources to help with the daily/weekly/monthly HR compliance, employee relations, and talent management issues that companies need to address. Fractional HR is a growing industry, and it has become the service offering of many entrepreneurial HR ventures. Fractional HR is essentially as it sounds—it is the offering of HR services to a company on a part-time or intermittent basis when the company may not be able to justify the cost of a full-time HR resource. An HR professional can be available onsite for a specified number of hours or days weekly or monthly, depending on the company’s needs and budget. The HR professional handles everything from HR compliance issues and training to employee issues support. Also, for companies that are keen on development of employees, the HR resource can drive the talent management processes—such as performance management, succession planning, training, and development—for companies who require more than just basic HR compliance services.
How does a business leader decide whether HR outsourcing is needed? There are generally two factors that drive a leader to consider fractional HR or HR outsourcing—time and risk. If a leader is spending too much time on HR issues and employee relations, he may decide that it is a smart tradeoff to outsource these tasks to a professional. In addition, the risk inherent in some HR issues can be very great, so the threat of having a lawsuit or feeling that the company is exposed can lead the company to seek help from a fractional HR professional.
HR entrepreneurs have taken full advantage of this important trend, which many say will likely continue as small companies grow and large companies decide to off-load HR work to third parties. Some HR companies offer fractional HR as part of their stated HR services, in addition to payroll and benefits support, compensation, and other HR programmatic support. Having a fractional HR resource in place will often illuminate the need for other HR services and program builds, which are generally supported by those same companies. Whether you are an individual HR practitioner or have a small company of HR practitioners and consultants, fractional HR and HR outsourcing can be a very viable and financially rewarding business model. It can also be very personally rewarding, as the HR professional enables smaller companies to grow and thrive, knowing that its HR compliance and processes are covered.
Discussion Questions
1. At what point should a company consider bringing on a full-time HR resource instead of using a fractional HR resource? What questions should the company ask itself?
Human resource management provides value to an organization, to a large extent, via its management of the overall employee life cycle that employees follow—from hiring and onboarding, to performance management and talent development, all the way through to transitions such as job change and promotion, to retirement and exit. Human capital is a key competitive advantage to companies, and those who utilize their human resource partners effectively to drive their human capital strategy will reap the benefits.
Human resource management includes the leadership and facilitation of the following key life cycle process areas:
• Human resources compliance
• Employee selection, hiring, and onboarding
• Performance management
• Compensation rewards and benefits
• Talent development and succession planning
Human resources is responsible for driving the strategy and policies in these areas to be in accordance with and in support of the overall business strategy. Each of these areas provides a key benefit to the organization and impacts the organization’s value proposition to its employees.
concept check
1. In what way do you usually interact with human resources? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/17%3A_Human_Resource_Management/17.02%3A_An_Introduction_to_Human_Resource_Management.txt |
How does the human resources compliance role of HR add value to an organization?
Human resources compliance is an area that traces back to the very origin of the human resources function—to administrative and regulatory functions. Compliance continues to be a very important area that HR manages, and there are numerous regulations and laws that govern the employment relationship. HR professionals must be able to understand and navigate these laws to help their organizations remain compliant and avoid having to pay fines or penalties. The additional threat of reputational harm to the organization is another reason that HR needs to be aware and alert to any potential gaps in compliance.
Some of the most common examples of laws and regulations that govern the employer-employee relationship include the following (SHRM.org):
• Age Discrimination in Employment Act (ADEA)
• Americans with Disabilities Act (ADA)
• Fair Labor Standards Act (FLSA)
• Family and Medical Leave Act (FMLA)
• National Labor Relations Act (NLRA)
• Worker Adjustment and Retraining Notification Act (WARN)
The Age Discrimination in Employment Act (ADEA) of 1967 protects individuals who are 40 years of age or older from employment discrimination based on age. These protections apply to both employees and job applicants. It also makes it unlawful to discriminate based on age with respect to any terms of employment, such as hiring, firing, promotion, layoff, compensation, benefits, job assignments, and training.
The Americans with Disabilities Act (ADA) of 1990 prohibits private employers, state and local governments, employment agencies, and labor unions from discriminating against qualified individuals with disabilities. The ADA defines an individual with a disability as a person who: 1) has a mental or physical impairment that substantially limits one or more major life activities, 2) has a record of such impairment, or 3) is regarded as having such impairment. An employer is required to make a reasonable accommodation to the known disability of a qualified applicant or employee if it would not impose an “undue hardship” on the operation of the employer’s business.
The Fair Labor Standards Act (FLSA) of 1938 establishes the minimum wage, overtime pay, recordkeeping, and youth employment standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments. Special rules apply to state and local government employment involving fire protection and law enforcement activities, volunteer services, and compensatory time off instead of cash overtime pay.
The Family and Medical Leave Act (FMLA) of 1993 entitles eligible employees to take up to 12 weeks of unpaid, job-protected leave in a 12-month period for specified family and medical reasons. FMLA applies to all public agencies, including state, local, and federal employers, local education agencies (schools), and private-sector employers who employed 50 or more employees in 20 or more workweeks in the current or preceding calendar year, including joint employers and successors of covered employers.
The National Labor Relations Act (NLRA) of 1947 extends rights to many private-sector employees, including the right to organize and bargain with their employer collectively. Employees covered by the act are protected from certain types of employer and union misconduct and have the right to attempt to form a union where none exists.
The Worker Adjustment and Retraining Notification Act (WARN) of 1988 generally covers employers with 100 or more employees, not counting those who have worked less than six months in the last 12 months and those who work an average of less than 20 hours a week. Regular federal, state, and local government entities that provide public services are not covered. WARN protects workers, their families, and communities by requiring employers to provide notification 60 calendar days in advance of plant closings and mass layoffs.
These are just a few of the key regulatory federal statutes, regulations, and guidance that human resources professionals need to understand to confirm organizational compliance. For additional information on HR compliance resources, the Society of Human Resource Management (SHRM) at SHRM.org maintains a plethora of resources for the HR professional and the businesses that they support.
To ensure the successful management and oversight of the many compliance rules and regulations, the human resources team must utilize best practices to inform and hold employees accountable to HR compliance practices. Some of these best practices include education and training, documentation, and audit. Each of these is described in greater detail, and will help HR achieve its important goal of maintaining HR compliance for the organization.
Education and training in the areas of compliance and labor law is critical to ensure that all applicable laws and regulations are being followed. These laws can change from year to year, so the HR professionals in the organization need to ensure that they are engaged in ongoing education and training. It is not just imperative for the HR professional to receive training. In many organizations, managers receive training on key rules and regulations (such as FMLA or ADA, to name a few) so that they have a foundation of knowledge when dealing with employee situations and potential risk areas. Human resources and management need to partner to ensure alignment on compliance issues—especially when there is a risk that an employee situation treads into compliance regulation territory. See Table \(1\) for a partial list of federal labor laws by number of employees, as displayed on the Society for Human Resource Management website.
Table \(1\): Federal Labor Laws by Number of Employees.
Federal Labor Laws by Number of Employees
American Taxpayer Relief Act of 2012
Consumer Credit Protection Act of 1968
Employee Polygraph Protection Act of 1988
Employee Retirement Income Security Act of 1974 (ERISA)
Equal Pay Act of 1963
Fair and Accurate Credit Transaction Act of 2003 (FACT)
Fair Credit Reporting Act of 1969
Fair Labor Standards Act of 1938
Federal Insurance Contributions Act of 1935 (Social Security) (FICA)
Health Insurance Portability and Accountability Act of 1996 (if a company offers benefits) (HIPPA)
Immigration Reform and Control Act of 1986
These federal laws cover all employees of all organizations. Several other factors may apply in determining employer coverage, such as whether the employer is public or private, whether the employer offers health insurance, and whether the employer uses a third party to conduct background checks. Source: SHRM website, https://www.shrm.org/, accessed October 20, 2018.
Table \(1\). (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)
Documentation of the rules and regulations—in the form of an employee handbook—can be one of the most important resources that HR can provide to the organization to mitigate compliance risk. The handbook should be updated regularly and should detail the organization’s policies and procedures and how business is to be conducted. Legal counsel should review any such documentation before it is distributed to ensure that it is up-to-date and appropriate for the audience.
Scheduling HR compliance audits should be part of the company’s overall strategy to avoid legal risk. Noncompliance can cause enormous financial and reputational risk to a company, so it is important to have audits that test the organization’s controls and preparedness. When the human resources function takes the lead in implementing audits and other best practices, they create real value for the organization.
concept check
1. What does an employee handbook provide to an organization? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/17%3A_Human_Resource_Management/17.03%3A_Human_Resource_Management_and_Compliance.txt |
How do performance management practices impact company performance?
Performance management practices and processes are among the most important that human resources manages, yet they are also among the most contentious processes in an organization. Many people view performance management as a human resources role and believe that it is in some parallel path with the business. On the contrary, for the process to be successful, it should not only be human resources that is responsible for driving performance. For the (typically) annual performance management process, human resources and line management should partner on the implementation and ongoing communication of the process. Although HR is responsible for creating and facilitating the performance management processes, it is the organizational managers that need to strongly support the process and communicate the linkage of performance management to overall organizational goals and performance. In my experience, it was helpful when business leadership emphasized that performance management isn’t a human resources process—it is a mission-critical business process. If a business manager can’t track and drive performance at the individual level, then the overall organization won’t know how it’s tracking on overall organizational goals. Performance Management Before discussing the state of performance management in the workplace today, it is important to understand the origin of performance management. Performance management began as a simple tool to drive accountability (as it still does) but has evolved more recently into a tool used for employee development.
Performance management can be tracked back to the U.S. military’s “merit rating” system, which was created during World War I to identify poor performers for discharge or transfer (“The Performance Management Revolution,” Harvard Business Review, October 2016). After World War II, about 60% of all U.S. companies were using a performance appraisal process. (By the 1960s nearly 90% of all U.S. companies were using them.) Although the rules around job seniority determined pay increases and promotions for the unionized worker population, strong performance management scores meant good advancement prospects for managers. In the beginning, the notion of using this type of system to improve performance was more of an afterthought, and not the main purpose. By the 1960s or so, when we started to see a shortage of managerial talent, companies began to use performance systems to develop employees into supervisors, and managers into executives.
In 1981, when Jack Welch became CEO of General Electric, he championed the forced-ranking system—another military creation. He did this to deal with the long-standing concern that supervisors failed to label real differences in performance (HBR, The Performance Management Revolution). GE utilized this performance management system to shed the people at the bottom. They equated performance with people’s inherent capabilities and ignored their potential to grow. People were categorized as “A” players (to be rewarded), “B” players (to be accommodated), and “C” players (to be dismissed). In the GE system, development was reserved for the “A” players—and those with high potential were chosen to advance to senior positions. Since the days of GE’s forced ranking, many companies have implemented a similar forced-ranking system, but many have backed away from the practice. After Jack Welch retired, GE backed away from the practice as well. Companies, GE included, saw that it negatively fostered internal competition and undermined collaboration and teamwork and thus decided to drop forced ranking from their performance management processes.
Most people agree, in theory, that performance management is important. What people may not agree on is how performance management should be implemented. As the dissatisfaction with performance management processes began to increase, some companies began to change the way they thought about performance. In 2001, an “Agile Manifesto” was developed by software developers and “emphasized principles of collaboration, self-organization, self-direction, and regular reflection on how to work more effectively, with the aim of prototyping more quickly and responding in real-time to customer feedback and changes in requirements.” (Performance Management Revolution, HBR). The impact on performance management was clear, and companies started to think about performance management processes that were less cumbersome, incorporated frequent feedback, and delivered performance impacts.
In a recent public survey by Deloitte Services, 58% of executives surveyed believed that their current performance management approach drives neither employee engagement nor high performance. They need something more nimble, real-time, and individualized—and focused on fueling performance in the future rather than assessing it in the past. (“Reinventing Performance Management,” Harvard Business Review, Buckingham and Goodall, 2015). In light of this study, Deloitte became one of the companies that has recently sought to redesign their performance processes. As part of their “radical redesign,” they seek to see performance at the individual level, and thus they ask team leaders about their own future actions and decisions with respect to each individual. They ask leaders what they’d do with their team members, not what they think of them (“Reinventing Performance Management,” HBR). The four questions that Deloitte asks of its managers are as follows:
• Given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus.
• Given what I know of this person’s performance, I would always want him or her on my team.
• This person is at risk for low performance.
• This person is ready for promotion today.
Although there has been some discussion over the last several years about some companies wanting to drop performance appraisals completely, most of the research seems to support that the total absence of performance management doesn’t help either. A recent global survey by CEB Global reports that more than 9,000 managers and employees think that not having performance evaluations is worse than having them. (“Let’s Not Kill Performance Evaluations Yet,” HBR, Nov 2016, Goler, Gale, Grant). Their findings indicate that even though every organization has people who are unhappy with their bonuses or disappointed that they weren’t promoted, research shows that employees are more willing to accept an undesirable outcome when the process is fair. The key question really becomes: how can HR help the business create a process to fairly evaluate performance and enhance employee development while not burdening the business with undue bureaucracy and non-value-added activities?
managing change
Global versus Local HR
Multinational companies are always challenged to determine the balance between global and local needs when creating a human resource management strategy. Some large companies weigh heavily on the side of centralization, with very few local deviations from the global strategy. Others may allow more localization of processes and decision-making if there are very specific local cultural needs that must be addressed. In either case, companies are well-served by maintaining global standards while also allowing for local market adaptation in the human resources areas where it makes the most sense.
According to the MIT Sloan Management Review article “Six Principles of Effective Global Talent Management” (Winter 2012), most multinational companies introduce global performance standards, competency profiles, and performance management tools and processes. These are the human resources areas that are most closely linked to the overall strategies and goals, and thus remain at the global level. Those HR processes that are not perceived as being as closely linked to the strategy and that may need to have local market inputs include processes such as training and compensation. Hiring practices may also need to be locally adapted, due to country-specific labor laws and challenges. One caveat, however, is that a company may limit itself in terms of its global talent management if it has too many country-specific adaptations to hiring, assessment, and development processes for top talent. It is important that the company takes a global approach to talent management so that cross-learning opportunities and cross-cultural development opportunities can take place.
One of the most important aspects of global talent management is that a company can break down silos and pollinate the business with talented employees from around the globe. Some companies even have global leadership programs that bring together high-potential leaders from across the organization to build camaraderie, share knowledge, and engage in learning. Others have created rotational programs for leaders to be able to experience new roles in other cultures in order to build their personal resumes and cultural intelligence. Human resources can have an enormous impact on the company’s ability to harness the power of a global talent pool when they create a global network for talent while also balancing this with the requirements of the local market.
Discussion Questions:
1. Why might compensation programs and hiring practices need to have local adaptation? What would be the risks if these were not adapted to local markets?
As organizations evaluate their options for a performance management system, human resources and business leadership need to consider several challenges that will need to be addressed—no matter what the system. (“The Performance Management Revolution,” Capelli and Tavis, HBR, pp. 9-11).
The first is the challenge of aligning individual and company goals. Traditionally, the model has been to “cascade” goals down through the organization, and employees are supposed to create goals that reflect and support the direction set at the top. The notion of SMART goals (Specific, Measurable, Achievable, Relevant, Timebound) has made the rounds over the years, but goal setting can still be challenging if business goals are complex or if employee goals seem more relatable to specific project work than to the overall top-line goals. The business and the individual need to be able to respond to goal shifts, which occur very often in response to the rapid rate of change and changing customer needs. This is an ongoing issue that human resources and business leadership will need to reconcile.
The next key challenge to think about when designing a performance management process is rewarding performance. Reward structures are discussed later in this chapter, but reward systems must be rooted in performance management systems. Currently, the companies that are redesigning their performance processes are trying to figure out how their new practices will impact their pay-for-performance models. Companies don’t appear to be abandoning the concept of rewarding employees based on and driven by their performance, so the linkage between the two will need to be redefined as the systems are changed.
The identification of poor performers is a challenge that has existed since the earliest days of performance management, and even the most formal performance management process doesn’t seem to be particularly good at weeding out poor performers. A lot of this is due to the managers who evaluate employees and are reluctant to address the poor performers that they’re seeing. Also, the annual performance management process tends to make some managers feel that the poor performance should be overlooked during the year and only addressed (often ineffectively) during a one-per-year review. Whatever new performance management models an organization adopts, they will have to ensure that poor performance is dealt with in real time and is communicated, documented, and managed closely.
Avoiding legal troubles is another ongoing challenge for organizations and is another reason for real-time communication and documentation of performance issues. Human resources supports managers as they deal with employee relations issues, and the thought of not having a formal, numerical ratings system is unfathomable for some people who worry about defending themselves against litigation. However, because even formal performance processes can be subjective and may reveal ratings bias, neither the traditional formal process nor some of the radical new approaches can guarantee that legal troubles will never develop. From my experience, the best strategy for effective and fair performance management is real-time communication and documentation of issues. The employee is told about his or her performance issues (in as close to real time as possible), and the manager has documented the performance issues and conversations objectively and has engaged human resources with any larger or more complex issues.
“Managing the feedback firehose” and keeping conversations, documentation, and feedback in a place where it can be tracked and utilized is an ongoing challenge. The typical annual performance process is not conducive to capturing ongoing feedback and conversations. There have been some new technologies introduced (such as apps) that can be used to capture ongoing conversations between managers and employees. General Electric uses an app called PD@GE (PD = performance development) that allows managers to pull up notes and materials from prior conversations with employees. IBM has a similar app that allows peer-to-peer feedback. Although there are clearly some technology solutions that can be used to help communicate and collect feedback, human resources will need to continue to communicate and reinforce rules around objectivity and appropriate use of the tools.
Performance management processes—traditional and inventive new approaches alike—will face the same challenges over time. Human resource management professionals need to be aware of these challenges and design a performance management system that addresses them in the format and within the context of their culture.
concept check
1. What are some of the key challenges of any performance management process? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/17%3A_Human_Resource_Management/17.04%3A_Performance_Management.txt |
How do companies use rewards strategies to influence employee performance and motivation?
Both performance management and rewards systems are key levers that can be used to motivate and drive individual and group performance ... which leads to overall organizational performance, productivity, and growth. Performance and rewards systems are also “cultural” in that they provide a glimpse into the way a company manages the performance (or nonperformance) of its employees, and to what extent they are willing to differentiate and reward for that performance. There has been a great deal of discussion over the years to identify best practices in the ways we differentiate and reward employees, which will also drive employee performance and motivation.
Before we can talk about best practices and findings in rewards and motivation systems, we must first define the terms. Rewards systems are the framework that an organization (generally via human resources) creates and manages to ensure that employee performance is reciprocated with some sort of reward (e.g., monetary or other extrinsic) that will drive and motivate the employee to continue to perform for the organization. Rewards programs consist primarily of compensation programs and policies, but can also include employee benefits and other extrinsic rewards that fulfill employee needs.
Within human resource management, the primary focus of a rewards program in an organization is to successfully implement a compensation system. Most organizations strive to implement a pay-for-performance compensation program that offers competitive pay in the marketplace and allows differentiation of compensation based on employee performance. Pay for performance begins with a philosophy that an organization adopts that states that they seek to reward the best-performing employees to enhance business performance and take care of those who can have the greatest impact.
In the 2011 SHRM article by Stephen Miller, entitled “Study: Pay for Performance Pays Off,” Miller says that companies’ top four drivers for moving to a pay-for-performance strategy are to:
• Recognize and reward high performers (46.9%)
• Increase the likelihood of achieving corporate goals (32.5%)
• Improve productivity (7.8%)
• Move away from an entitlement culture (7.8%)
The study also showed that the drivers differed depending on whether the company was high performing or lower performing. Almost half of high-performing organizations indicated that recognizing and rewarding top performers was the main driver of their pay-for-performance strategy, making it number one on the list of primary drivers. Lower-performing organizations did not appear to be as sure about the drivers behind their strategy. The number one driver among this group was achieving corporate goals. It appears that those top-performing organizations that implement a pay-for-performance strategy truly believe in the idea of differentiating among different levels of performance.
According to the 2015 World at Work “Compensation Programs and Practices Report,” pay for performance continues to thrive with better than 7 in 10 (72%) companies saying that they directly tie pay increases to job performance, and two-thirds (67%) indicating increases for top performers are at least 1.5 times the increase for average performers. In addition, the results of the survey seem to indicate that employees’ understanding of the organization’s compensation philosophy improves when there is higher differentiation in increases between average and top performers. The greater differentiation of increases is more visible and drives home the point that the company is serious about pay for performance.
A pay-for-performance program may have many components, and the human resources organization has the challenge of designing, analyzing, communicating, and managing the different components to ensure that the philosophy and the practices themselves are being carried out appropriately and legally. Human resource management’s role in establishing pay for performance is that HR must engage business leadership to establish the following elements of the framework:
1. Define the organization’s pay philosophy. Leadership needs to agree that they will promote a culture that rewards employees for strong performance.
2. Review the financial impacts of creating pay-for-performance changes. How much differentiation of performance will we have? What is the cost of doing this?
3. Identify any gaps that exist in the current processes. If any of the current human resources and compensation policies conflict with pay for performance, they should be reviewed and changed. Examples may lie in the performance management process, the merit increase process, and the short-term and long-term bonus processes. If the performance management process has gaps, these should be corrected before pay for performance is implemented; otherwise this will generate more distrust in the system. The salary structure should also be benchmarked with market data to ensure that the organization is compensating according to where it wishes to be in the marketplace.
4. Update compensation processes with new pay for-performance elements. This includes the design of a merit matrix that ties employee annual pay increases to performance. Other areas of focus should be the design of a short-term bonus matrix and a long-term bonus pay-for-performance strategy. In other words, how does performance drive the bonus payouts? What is the differential (or multiplier) for each level?
5. Communicate and train managers and employees on the pay for-performance philosophy and process changes. Explain the changes in the context of the overall culture of the organization. This is a long-term investment in talent and performance.
Human resource management professionals play a key role in the rewards processes, and employee compensation is only one piece (although a key piece!) of the “total rewards” pie. World at Work defines total rewards as a “dynamic relationship between employers and employees.” World at Work also defines a total rewards strategy as the six elements of total rewards that “collectively define an organization’s strategy to attract, motivate, retain and engage employees.” These six elements include:
• Compensation—Pay provided by an employer to its employees for services rendered (i.e., time, effort, and skill). This includes both fixed and variable pay tied to performance levels.
• Benefits—Programs an employer uses to supplement the cash compensation employees receive. These health, income protection, savings, and retirement programs provide security for employees and their families.
• Work-life effectiveness—A specific set of organizational practices, policies, and programs, plus a philosophy that actively supports efforts to help employees achieve success at both work and home.
• Recognition—Formal or informal programs that acknowledge or give special attention to employee actions, efforts, behavior, or performance and support business strategy by reinforcing behaviors (e.g., extraordinary accomplishments) that contribute to organizational success.
• Performance management—The alignment of organizational, team, and individual efforts toward the achievement of business goals and organizational success. Performance management includes establishing expectations, skill demonstration, assessment, feedback, and continuous improvement.
• Talent development—Provides the opportunity and tools for employees to advance their skills and competencies in both their short- and long-term careers.
Human resource management is responsible for defining and driving the various elements of an organization’s total rewards strategy and ensuring that it is engaging enough to attract and retain good employees. It is easy to see that there are many different types of rewards that can motivate individuals for many different reasons. In the HBR article “Employee Motivation: A Powerful New Model” (Nohria, Groysberg, Lee), August 2008, the authors describe four different drives that underlie motivation. They assert that these are hardwired into our brains and directly affect our emotions and behaviors. These include the drives to acquire, bond, comprehend, and defend. Table \(1\) illustrates each of these drives, the primary levers found in an organization to address those drives, and the actions that should be taken to support the primary levers.
Table \(1\) (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license)
Hiring Top-Level Executives
Steps in the Process Poor Practices Best Practices Challenges
Adapted from “The Definitive Guide to Recruiting in Good Times and Bad,” from article “Hiring Top Executives: A Comprehensive End-to-End Process,” Harvard Business Review, May 2009.
Anticipate.
Hiring only when you have an opening
Poor succession plan
Not anticipating future needs
Conduct ongoing analysis of future needs.
Always evaluate the pool of potential talent.
Linking the talent plan to the strategic plan
Incorporating HR into the strategic planning process
Specify the job.
Relying on generic job specifications
Continually defining the specific demands of the job
Specifying specific skills and experience requirements
Dialogue between HR and top management
Develop a pool.
Limiting the pool
Only looking for external or internal candidates
Develop a large pool.
Include all inside and outside potential candidates.
Breaking organizational silos
Assess the candidates.
Don’t pick the first OK choice.
Don’t only use your “gut.”
Use a small pool of your best interviewers.
Conduct robust background checks.
Training senior managers on interviewing techniques
Hire the choice.
Don’t assume money is the only issue.
Don’t only discuss the positives of the job.
Show active support of the candidates’ interests.
Realistically describe the job.
Ensure that offered compensation is fair to other employees.
Getting commitment of top managers
Ensuring compensation equity
Integrate the new hire.
Don’t assume that the hew hire is a “plug and play.”
Use a “top performer” as a mentor.
Check in often early in the process even if no problems seem imminent.
Rewarding mentors
Review the process.
Don’t hang on to bad hires.
Remove bad hires early on.
Review the recruiting practices.
Reward your best interviewers.
Institutionalizing audit and review practices
Admitting mistakes and moving on
The drive to acquire describes the notion that we are all driven to acquire scarce goods that bolster our sense of well-being. This drive also seems to be relative (we compare ourselves to others in what we have) and insatiable (we always want more). Within an organization, the primary lever to address this drive is the reward system, and the actions are to differentiate levels of performance, link performance to rewards, and pay competitively.
The drive to bond describes the idea that humans extend connections beyond just individuals, to organizations, associations, and nations. In organizations, this drive is fulfilled when employees feel proud to be a part of the company and enjoy being a member of their team. Within an organization, the primary lever to address this drive is culture, and the actions are to foster mutual reliance and friendships, to value collaboration and teamwork, and to encourage best practice sharing.
The drive to comprehend is the concept of all of us wanting to make sense of the world around us and producing different theories and accounts to explain things. People are motivated by the idea of figuring out challenges and making a contribution. In organizations, the primary lever to address this drive is job design, and the actions are to design jobs that have distinct and important roles in the organization, as well as jobs that are meaningful and foster a sense of contribution.
The drive to defend is our instinct to defend ourselves, our families, and our friends, and it describes our defensiveness against external threats. This drive also tells us a lot about our level of resistance to change, and why some employees have especially guarded or emotional reactions. In organizations, the primary levers that address this drive are performance management and resource-allocation processes, and the actions are to increase process transparency and fairness, and to build trust by being just in granting rewards, assignments, and other recognition.
Within human resource management, the area of compensation and reward systems is exceedingly complicated. In organizations, we think primarily of compensation rewards, which are very important drivers and motivators for most people. We need to also remember the other aspects of the total rewards strategy, as well as the drives and levers we can utilize to motivate employees.
concept check
1. What is the first step in defining an organization’s pay-for-performance strategy? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/17%3A_Human_Resource_Management/17.05%3A_Influencing_Employee_Performance_and_Motivation.txt |
What is talent acquisition, and how can it create a competitive advantage for a company?
We’ve discussed some of the key focus areas that human resource management professionals need to address to ensure that employees are performing their roles well and are being fairly rewarded for their contributions. We haven’t yet addressed how we think about where these employees come from—Whom do we hire? What skills do we need now and in the future? Where will we even look for these employees? What are some best practices? Talent acquisition is the area within human resource management that defines the strategy for selection, recruiting, and hiring processes, and helps the organization fight the “war for talent” during good times and bad.
Hiring strong talent is a key source of competitive advantage for a company, yet so many companies do it poorly. Often, the recruiting and hiring processes happen reactively—someone leaves the organization and then people scramble to fill the gap. Very few companies take a longer-term, proactive approach and work to create a strategic plan for talent acquisition. In the article “The Definitive Guide to Recruiting in Good Times and Bad” (Fernandez-Araoz, Groysberg, Nohria, HBR, 2009), the authors advocate for a rigorous and strategic recruiting process that includes the following critical actions:
• Anticipate your future leadership needs based on your strategic business plan.
• Identify the specific competencies required in each position you need to fill.
• Develop a sufficiently large candidate pool.
In organizations today, there are often pieces of the talent acquisition process that are outsourced to external recruiters, as opposed to being managed internally by human resources employees. While outsourcing specific searches is not an issue, there must be internal HR/talent acquisition employees responsible for creating the overall strategic plan for the recruiting function. Contract recruiters may then take responsibility for a piece of the overall process by leveraging the strategy and competencies that the HR team puts forth.
Recruiting and hiring of high-level leadership candidates has special risks and rewards associated with it. The risk that a key leadership position is vacant or becoming vacant poses a risk to the organization if it is left open for too long. These high-level positions are often harder to fill, with fewer candidates being available and the selection of the right talent being so critical to the organization’s future. The reward, however, is that with due diligence and clear goals and competencies/skills defined for the position, the HR/talent acquisition professional can create a competitive advantage through the recruitment of key high-level talent.
The following best practices illustrate the key steps for effective recruiting of key leadership hires. Both human resources and business leadership should partner to discuss and define each of the elements to ensure alignment and support of the recruiting plan and process (Definitive Guide to Recruiting, HBR, 2009).
Anticipate your needs. Every two to three years there should be a review of high-level leadership requirements based on the strategic plan. Some of the questions to answer here are:
• How many people will we need, and in what positions, in the next few years?
• What will the organizational structure look like?
• What must our leadership pipeline contain today to ensure that we find and develop tomorrow’s leaders?
Specify the job. For each leadership position identified, specify competencies needed in each role. For example:
• Job-based: What capabilities will the job require?
• Team-based: Will the applicant need to manage political dynamics?
• Firm-based: What resources (supporting, talent, technology) will the organization need to provide the person who fills this role?
Develop the pool. Cast a wide net for candidates by asking suppliers, customers, board members, professional service provides, and trusted insiders for suggestions. It helps to start this process even before you have a role that you’re hiring for. During succession planning and talent discussions internally, it helps to start making of list of internal and external contacts and potential candidates before the need arises.
Assess the candidates. Have the hiring manager, the second-level manager, and the top HR manager conduct a “behavioral event interview” with each candidate. Candidates will describe experiences they’ve had that are like situations they’ll face in the organization. Gain an understanding of how the candidate acted and the reasoning behind their actions. Make sure to evaluate a broad range of references to ask about results the candidate achieved.
Close the deal. Once you have chosen the final candidate, you can increase the chance that the job offer will be accepted by:
• Sharing passion about the company and role, and showing genuine interest in the candidate
• Acknowledging the opportunities and challenges of the role, differentiating the opportunities at your organization from those of your competitor
• Striking a creative balance between salary, bonuses, and other long-term incentives
Integrate the newcomer. It is important to integrate new hires into the company’s culture:
• During the first few months, have the managers and the HR team check in with each new hire.
• Assign a mentor (star employee) to provide ongoing support to each new hire.
• Check in with the new hire to ensure that they are getting enough support, and inquire about what other support might be needed. Ensure that new hires are adequately building new relationships throughout the organization.
Refer to Table \(1\): Hiring Top-Level Executives, adapted from “The Definitive Guide to Recruiting in Good Times and Bad,” from the article “Hiring Top Executives: A Comprehensive End-to-End Process,” Harvard Business Review, May 2009.
By following these best practices, human resources and business leadership can ensure that the new hire is integrating well and has the best possible start in the new role. Talent acquisition is a key element of any human resource management program, and the right process can mean the difference between a poor hire and a distinct competitive advantage gained through top talent.
concept check
1. How can we ensure a more successful integration of the new hire? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/17%3A_Human_Resource_Management/17.06%3A_Building_an_Organization_for_the_Future.txt |
What are the benefits of talent development and succession planning?
Talent development and succession planning are, in my opinion, two of the most critical human resource management processes within an organization. You can work tirelessly to recruit and hire the right people, and you can spend a lot of time defining and redesigning your performance and rewards programs, but if you can’t make decisions that effectively assess and develop the key talent that you have, then everything else feels like a wasted effort. Talent development describes all process and programs that an organization utilizes to assess and develop talent. Succession planning is the process for reviewing key roles and determining the readiness levels of potential internal (and external!) candidates to fill these roles. It is an important process that is a key link between talent development and talent acquisition/recruiting.
The human resources function facilitates talent development activities and processes, but they are also heavily reliant on business inputs and support. Each of the talent development processes that will be discussed require heavy involvement and feedback from the business. Like performance management, talent development is a process that HR owns and facilitates, but it is a true business process that has a fundamental impact on an organization’s performance. Talent is a competitive advantage, and in the age of the “war for talent,” an organization needs to have a plan for developing its key talent.
One of the key tools that is used in talent development is the talent review. This process generally follows an organization’s performance management process (which is primarily focused on current employee performance) and is more focused on employee development and potential for the future. Talent reviews often employ the use of a 9-box template, which plots employee performance versus employee potential and provides the reviewer with nine distinct options, or boxes, to categorize where the employee is.
Table \(1\): Performance and Potential Grid.
Performance and Potential Grid
Potential
Performance over time
Lowest potential rating
Middle potential rating
Highest potential rating
Highest
John Smith
Melanie Roper
Keegan Flanagan
Chieh Zhang
Edgar Orrelana
Rory Collins
Aimee Terranova
Medium
Joseph Campbell
Alina Dramon
Alex Joiner
Lauren Gress
Christina Martin
Thomas Weimeister
Richard Collins
Lowest
Marty Hilton
The performance axis ratings are low/medium/high and based on the employee’s recent performance management rating. Low = below target, medium = at target, and high = above target. Like the performance rating, this reflects performance against objectives and the skills and competencies required in the employee’s current role and function. Performance can change over time (for example, with a promotion or job change). Performance is overall a more objective rating than potential, which leaves the rater to make some assumptions about the future.
Potential is defined as an employee’s ability to demonstrate the behaviors necessary to be successful at the next highest level within the company. Competencies and behaviors are a good indicator of an employee’s potential. Higher-potential employees, no matter what the level, often display the following competencies: business acumen, strategic thinking, leadership skills, people skills, learning agility, and technology skills. Other indicators of potential may include:
• Top performance in current job
• Success in other positions held (within or outside of the company)
• Education/certifications
• Significant accomplishments/events
• Willingness and desire to advance
Managing Change
Tech in Human Resources
There has been a boom in HR technology and innovation over the last several years—and it is making some of the traditional HR systems from last decade seem enormously outdated. Some of the trends that are driving this HR tech innovation include mobile technology, social media, data analytics, and learning management. Human resources professionals need to be aware of some of the key technology innovations that have emerged as a result of these trends because there’s no sign that they will be going away any time soon.
Josh Bersin of Bersin by Deloitte, Deloitte Consulting LLP, wrote about some of these HR technology innovations in his SHRM.org article “9 HR Tech Trends for 2017” (Jan. 2017). One of these technology innovations is the “performance management revolution” and the new focus on managing performance by team and not just by hierarchy. Performance management technologies have become more agile and real time, with built-in pulse surveys and easy goal tracking. Now, instead of the formal, once-a-year process that brings everything to a halt, these performance management technologies allow ongoing, real-time, and dynamic input and tracking of performance data.
Another HR tech trend named is the “rise of people analytics.” Data analytics has become such a huge field, and HR’s adoption of it is no exception. Some disruptive technologies in this area are predictive—they allow analysis of job change data and the prediction of successful versus unsuccessful outcomes. Predictive analytics technologies can also analyze patterns of e-mails and communications for good time-management practices, or to predict where a security leak is likely to occur. One other incredible analytics application consists of a badge that monitors employees’ voices and predicts when an employee is experiencing stress. That is either really cool or really eerie, if you ask me.
The “maturation of the learning market” is a fascinating trend to me, as an HR professional who grew up in the days of multiple in-class trainings and week-long leadership programs. Learning processes have changed greatly with the advent of some of these innovative HR technologies. Although many larger companies have legacy learning management systems (like Cornerstone, Saba, and SuccessFactors), there are many new and competitive options that focus on scaling video learning to the entire organization. The shift has gone from learning management to learning—with the ability to not only register and track courses online, but to take courses online. Many companies are realizing that these YouTube-like learning applications are a great complement to their existing learning systems, and it is predicted that the demand will continue to grow.
Other trends of note include technologies that manage the contingent workforce, manage wellness, and automate HR processes via artificial intelligence. It is amazing to think about so many interesting and innovative technologies that are being designed for Human Resources. The investment in human capital is one of the most critical investments that a company makes, and it is refreshing to see that this level of innovation is being created to manage, engage, and develop this investment.
Discussion Questions:
1. Why do you think learning systems evolved in this way? Is there still a place for group classroom training? What types of learning might require classroom training, and what is better suited for online and YouTube-style learning?
In the talent review, the potential axis equates to potential for advancement within the organization: low = not ready to advance, medium = close to ready, and high = ready to advance. Potential does not equate to the value of an individual within the organization, nor does it state the quality of individual. There are likely many strong performers (top contributors) in every company who prefer to stay in their current role for years and be specialists of their own processes. A specialist or expert may not want to manage people, and thus would be rated as low on potential due to the lack of interest in advancement. Advancement may also mean relocation or lifestyle change that an employee is not willing to make at that time, so the employee would be rated low on potential for that reason. Potential can certainly change over time, given people’s individual situations and life circumstances. Potential tends to be the more subjective ratings axis, as it involves some assumptions into what a team member could be capable of based on limited information that is available now.
A human resources team member should absolutely facilitate the talent review process and provide leaders with clear session objectives and specific instructions in order maintain the integrity and confidentiality of this important talent process. The book One Page Talent Management (Effron and Ort, HBS Press, 2010) describes the talent review meeting as a talent review calibration process that “ensures objective performance and potential evaluations, clear development plans, and an understanding of what high potential means in your company. A calibration meeting brings together a manager and her team members to discuss their talent. Each team member presents the performance and potential (PxP) grid that he prepared on direct reports and briefly describes how each person is rated. Other team members contribute their opinions based on their firsthand interactions with that person. The discussion concludes after they have discussed each person, agreed on their final placement, and identified key development steps for them.”
After everyone being discussed has been placed in one of the boxes on the 9-box template, the leadership team should discuss key development actions for each employee. (If there isn’t time to discuss development activities for each employee, the group should start with the high-potential employees.) After the talent review calibration process is complete, human resources should keep a master list of the documented outcomes, as well as the development activities that were suggested for everyone. HR should follow up with each of the leaders to help with the planning and execution of the development activities as needed. The key outputs of the talent review process include:
• Identification of the “high-potential” employees in the organization
• Definition of development actions/action plans for each employee
• Insight into talent gaps and issues
• Input into the succession planning process
Succession planning generally follows shortly after (if not right after) a talent review because human resources and organizational leadership now have fresh information on the performance and potential of employees in the organization. Succession planning is a key process used to identify the depth of talent on the “bench” and the readiness of that talent to move into new roles. The process can be used to identify gaps or a lack of bench strength at any levels of the organization, but it is usually reserved for leadership roles and other key roles in the organization. In succession planning, human resources will generally sit down with the group leader to discuss succession planning for his group and create a defined list of leadership and other critical roles that will be reviewed for potential successors.
Once the roles for succession planning analysis have been defined, both HR and the business leader will define the following elements for each role:
• Name of incumbent
• Attrition risk of incumbent
• Names of short-term successor candidates (ready in <1 year)
• Names of mid-term successor candidates (ready in 1–3 years)
• Names of long-term successor candidates (ready in 3+ years)
• Optional—9-box rating next to each successor candidate’s name
The names of longer-term successor candidates are not as critical, but it is always helpful to understand the depth of the bench. With the information recently collected during the talent review process, HR and management will have a lot of quality information on the internal successor candidates. It is important to include external successor candidates in the succession planning analysis as well. If there are no candidates that are identified as short-, mid-, or long-term successor candidates for a role, then the word “EXTERNAL” should automatically be placed next to that role. Even if there are internal candidates named, any external successor candidates should still be captured in the analysis as appropriate.
Talent reviews and succession planning processes both generate excellent discussions and very insightful information on the state of talent in the organization. Human resources facilitates both processes, in very close partnership with the business, and ultimately keeps the output information from the sessions—i.e., the final succession plan, the final 9-box, and the follow-up development actions and activities as defined in the talent review session. With this information, human resources possesses a level of knowledge that will allow it to drive talent development and coach managers on the follow-up actions that they need to set in motion. Some examples of follow-up development activities that may be appropriate based on the outputs of the succession and 9-box events include training, stretch assignments, individual assessments, and individual development plans. Training and training plans identify the learning events that an individual would benefit from, either in a classroom or online format. Stretch assignments may be an appropriate development action for an employee who is being tested for or who wants to take on additional responsibility. Individual assessments, such as a 360 assessment for managers, is a good developmental tool to provide feedback from manager, peers, direct reports, customers, or others who interact with the employee regularly. Finally, an individual development plan is an important document that employees should use to map out their personal development goals and actions, and to track their own status and progress toward those goals.
Talent development is a collection of organization-wide processes that help to evaluate talent strengths and gaps within the organization. Although many of the processes are carried out in a group setting, the output of talent development needs to be very individualized via a collection of development tools and strategies to enhance performance. Human resources is a key resource and partner for these tools and strategies, and thus plays a critical role in the future of talent for the organization.
Conclusion
Human resource management is a complex and often difficult field because of the nature of the key area of focus—people. In working with people, we begin to understand both the expressed and the hidden drives—intentions and emotions that add complexity and additional context to the processes and tasks that we set forth. We also begin to understand that an organization is a group of individuals, and that human resources plays a critical role in ensuring that there are philosophies, structures, and processes in place to guide, teach, and motivate individual employees to perform at their best possible levels.
concept check
1. What roles should an organization discuss as part of the succession planning process? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/17%3A_Human_Resource_Management/17.07%3A_Talent_Development_and_Succession_Planning.txt |
Key Terms:
Human resource management
The management of people within organizations, focusing on the touchpoints of the employee life cycle.
Employee life cycle
The various stages of engagement of an employee—attraction, recruitment, onboarding, development, retention, separation.
Human capital
The skills, knowledge, and experience of an individual or group, and that value to an organization.
Human resources compliance
The HR role to ensure adherence to laws and regulations that govern the employment relationship.
Employer-employee relationship
The employment relationship; the legal link between employers and employees that exists when a person performs work or services under specific conditions in return for payment.
Society for Human Resource Management
The world’s largest HR professional society, with more than 285,000 members in more than 165 countries. It is a leading provider of resources serving the needs of HR professionals.
Performance management
The process by which an organization ensures that its overall goals are being met by evaluating the performance of individuals within that organization.
Pay-for-performance model
The process and structure for tying individual performance levels to rewards levels
Merit matrix
A calculation table that provides a framework for merit increases based on performance levels.
Total rewards strategy
As coined by World at Work, includes compensation, benefits, work-life effectiveness, recognition, performance management, and talent development.
Talent acquisition
The process of finding and acquiring skilled candidates for employment within a company; it generally refers to a long-term view of building talent pipelines, rather than short-term recruitment.
War for talent
Coined by McKinsey & Company in 1997, it refers to the increasing competition for recruiting and retaining talented employees.
Talent development
Integrated HR processes that are created to attract, develop, motivate, and retain employees.
Succession planning
The process of identifying and developing new leaders and high-potential employees to replace current employees at a future time.
9-box
A matrix tool used to evaluate an organization’s talent pool based on performance and potential factors.
Competencies
A set of defined behaviors that an organization might utilize to define standards for success.
Talent review calibration process
The meeting in which an organization’s 9-box matrix is reviewed and discussed, with input and sharing from organizational leadership.
Training, stretch assignments, individual assessments, individual development plans
These are tools that may be used in talent development:
Training—a forum for learning in person or online
Stretch assignments—challenge roles for high-potential employees
Individual assessments—personality and work style inventories of employees
Individual development plans—documents that highlight an individual employee’s opportunities for growth and path of action
360 assessment
An evaluation tool that collects feedback from manager, peers, direct reports, and customers.
Summary of Learning Outcomes:
An Introduction to Human Resource Management
1. What has been the evolution of human resource management over the years, and what is the current value it provides to an organization?
Human resource management began in its first “wave” as a primarily compliance-type function, with the HR staff charged with enforcing compliance of employees and running the ongoing administrative processes. In the second wave, HR became focused on the design of HR practice areas, which could be built upon best-practice models. Wave 3 of HR brought with it the concept that HR should be a true partner to the business and should support the business strategy through its programs and services. Finally, in the fourth wave, HR is still a partner to the business, but it looks outside of the business to customers, investors, and communities to see how it can be competitive in terms of customer share, investor confidence, and community reputation.
Some key areas that HR supports within the employee life cycle process include: human resources compliance, employee selection and hiring, performance management, compensation rewards, and talent development and succession planning.
Human Resource Management and Compliance
1. How does the human resources compliance role of HR provide value to a company?
Human resources helps protect the company and its employees to ensure that they are adhering to the numerous regulations and laws that govern the employment relationship. The impact of noncompliance can be very costly and can be in the form of financial, legal, or reputational cost. Some of the key legislation that HR manages compliance around includes the Fair Labor Standards Act (FLSA), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and the Family and Medical Leave Act (FMLA), among others.
Some of the best practices for informing and holding employees accountable are to provide education and training to explain the regulations, to provide reference documentation for guidance with the regulations, and to schedule regular compliance audits to ensure that processes are being followed. Scheduling regular internal HR audits help the organization plan and feel comfortable with its level of preparedness and illustrates the value that a strong HR group can bring to the organization.
Performance Management
1. How do performance management practices impact company performance?
Performance management is a critical business process that the human resources group manages for the business. Performance management aligns the work of individual groups with the overall business objectives and enables the business to work toward its goals. Performance management should also help the company differentiate between different levels of employee performance through the management of feedback and a rewards structure.
Performance management also allows a company to identify its poor performers and provides a consistent process for tracking and managing poor performance in a manner that is fair and consistent with the law. There has been much discussion of best practices for a performance management process beyond a formal, annual process that often feels cumbersome to the business. However formal or informal, human resource management needs to ensure that the process helps to differentiate different levels of performance, manages the flow of feedback, and is consistent and fair for all employees.
Influencing Employee Performance and Motivation
1. How do companies use rewards strategies to influence employee performance and motivation?
Companies use rewards strategies to influence employee performance and motivation by differentiating between the various levels of performance. This strategy is called pay for performance, and it ties the employee’s performance level to a consistent framework of rewards at each level. Research indicates that the primary reason that companies implement pay for performance is to be able to recognize and reward their high performers.
To implement a pay-for-performance structure, HR and the organization first need to define a compensation philosophy, then perform a review of the financial implications of such a system. Gaps in the current system must be identified, and compensation practices should be updated in accordance with the determined pay-for-performance design. Finally, communication and training are key to help employees understand the context and philosophy, as well as the specific methodology.
Building an Organization for the Future
1. What is talent acquisition, and how can it create a competitive advantage for a company?
Human resource management plays the important role of managing the talent processes for an organization, and it is critical in the process of acquiring talent from the outside. Talent acquisition is the process of determining what roles are still needed in the organization, where to find people, and whom to hire. Hiring top talent is a key source of competitive advantage for a company, and not all organizations are good at doing it.
The impact of hiring is especially magnified when you talk about top leadership talent. The right leadership candidate can make all the difference in an organization’s growth, performance, and trajectory over the years. HR should work with the business to assess need and specifics of the job, develop a pool of candidates, and then assess candidates for the right person to bring into the organization.
Talent Development and Succession Planning
1. What are the benefits of talent development and succession planning?
Talent development and succession planning processes provide organizations with the systems needed to assess and develop employees and to make the appropriate decisions on their internal movement and development. One important talent development process involves a talent review, in which leadership discusses the employees in its groups in terms of their performance and potential. Performance is based on current performance management evaluations on the current role. Potential is based on behavioral indications that would predict future high performance and promotability in an organization. There is then a discussion on the follow-up actions and development plans for the employees, based on where they fall in the performance/potential matrix. The benefit of this process is that the organization gains a better understanding of where the top talent is within the organization and can make plans to manage the development of that talent.
Another key process for managing talent is succession planning. In this process, leadership and HR meet to identify leadership roles and other critical roles in the organization, and then they discuss a potential pipeline of internal and external successor candidates at different levels of readiness for the role. The output of succession planning is that an organization gets to understand the depth of its talent bench and knows the gap areas where it may need to focus on developing or acquiring additional candidates.
Chapter Review Questions
1. What are the four “waves” of the human resource management evolution?
2. What are some of the key regulations that human resources must manage compliance with?
3. What are some of the unintended consequences of a forced ranking system?
4. What are some of the performance management challenges that must be addressed, no matter what the system?
5. Why are many companies interested in moving to a pay-for-performance strategy?
6. What are the main process steps for implementing pay for performance?
7. What are some best practices for recruiting new leadership candidates?
8. Describe the steps of a talent review session.
9. What is the difference between performance and potential?
10. How can you tell if a candidate has potential?
Management Skills Application Exercises
1. How has human resource management’s evolution over the years helped to make it a better partner to the business? In what way would you expect HRM to continue to evolve over the years?
2. Do you believe that a formal, annual performance management process is necessary to help an organization reach its goals? Why or why not? What are the minimum process requirements that must be met to successfully evaluate performance?
3. .Is it possible for an organization to reward people fairly without implementing a pay-for-performance process? Why or why not? Do you see any pitfalls to a pay-for-performance process?
4. How does the “war for talent” impact talent acquisition processes? How can HR be more successful working with the business to navigate the competitive talent landscape?
5. What are the benefits of having talent review calibration processes? What is the downside of the process? Should an organization let employees know what their talent review “rating” is? Why or why not?
Managerial Decision Exercises
1. You have been hired as a new Finance VP, and you oversee a team of almost 30 people. Your HR manager has recently informed you that there have been several employee relations in your group in the recent past, and you are concerned about the level of knowledge that your management team has around dealing with these issues. What could you do to close the gap in knowledge and mitigate the risk of issues in your group?
2. Your company has decided to drop their formal, annual performance management process and move to a system based on ongoing feedback and communication with employees. You are concerned because you have always been careful to differentiate your employees by performance level, and you’re worried that this will hurt your stronger employees. How can use ensure that your feedback and communication with employees provides performance management, despite the lack of a formal system?
3. Your company has recently implemented a pay-for-performance model for compensation. This worries you because you know that your employees will be even more upset with their performance ratings if they know that they are tied to compensation. What actions can you take to start to prepare for this change?
4. You are the director of an engineering organization and have been fighting the “war for talent” for a while. It seems that whenever you have a role vacancy, you let HR know but it takes forever to find someone—and the candidate often turns down the job. What are some ways to better partner with HR to get ahead of the curve for the next time?
5. You are the VP of a line of business at an international manufacturing company. You and several of your long-time colleagues will be retiring over the next few years, and you need to start thinking about talent and succession planning. You are going into a talent review discussion next week, and you’re realizing that you have a dearth of potential within your organization. What are some actions you (and HR) can take now to ensure that your business unit isn’t floundering when you leave for retirement?
Critical Thinking Case
Zappos, Holacracy, and Human Resource Management
In 2013, Zappos was performing well under the leadership of Tony Hsieh and was getting ready to take on a new challenge that would, among other things, push the boundaries of traditional human resource management. Although business was booming, Tony Hsieh was not a man who wanted to be in status quo mode for too long, so he set out to implement an organizational and cultural change called Holacracy. Zappos was the largest and best known of the 300 companies worldwide that had adopted Holacracy—a new form of hierarchy that is a “flexible, self-governing structure, where there are no fixed jobs but simply temporary functional roles.”
In a Holacracy, the main unit is called the “circle,” which is a distinct yet fluid team. Leadership became similarly fluid with the changing circles. Circles are designed to meet certain goals and are created and disbanded as project needs change. The intent is that people self-select to work on projects that they want to work on and that they have the skills for. Tony also removed all previous titles. The role of manager went away and was replaced with three roles: “lead links” would focus on guiding the work in the circles; “mentors” would work on employee growth and development; and “compensation appraisers” would work on determining employees’ salaries. In 2015, he decided to further break down the divisions between many of the functions, changing them all to business-centric circles. There were changes to almost every human resource management structure that you can think of, and there were quite a few growing pains within the organization. Zappos began to look at employee pay, and Holacracy seemed to have a steep learning curve for many people, even though a “constitution” was created to provide guidance. Zappos was also facing 14% attrition, as some of the rapid and excessive changes were wearing on employees. Tony was a visionary, but for a lot of people it was hard to catch up and see the same vision.
From a human resource management perspective, there could be some positive attributes of a Holacracy if it were to succeed—such as building engagement and helping to build talent and skill sets. There were also a few risks that needed to be dealt with carefully. When you create an organization in which people don’t have set teams or projects but instead determine what they want to work on, one of the big challenges is going to be determining the level and nature of their role, as well as the compensation for that role. If Holacracy is compared to a consulting organization, in which consultants are brought into different projects with different requirements, it is critical to first determine the level of their consultant role (based on their education, skills, experience, etc.) so that they can properly move from project to project yet maintain a role of a certain level. That level is then tied to a specific pay scale, so the same consultant will receive the same salary no matter which project he is on. If that consultant is “on the bench,” or not placed on a project (or self-placed, in the case of Holacracy), then after a certain defined period that consultant may be at risk of termination.
Holacracy is in some ways a challenging concept to think about, and self-management may not be able to work in all environments. A company that is implementing a Holacracy may find that they are able to master the process of self-selection of work in the “circles.” The “task” part of the equation may not be much of an issue once people figure out how to navigate the circles. However, the “people” part of the equation may need some work. The greatest challenge may lie in the structures and processes of human resource management that ultimately define the employer-employee relationship.
Critical Thinking Questions
1. What are some of the human resource management processes that might be enhanced by a Holacracy? What processes will be challenged?
2. Do you think that a Holacracy can be compared to a consulting company? How are they similar,s and how are they different? Can you think of work areas or industries in which Holacracy would be very difficult to implement?
Sources:
Askin and Petriglieri, “Tony Hsieh at Zappos: Structure, Culture, and Change”, INSEAD Business School Press, 2016. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/17%3A_Human_Resource_Management/17.08%3A_Glossary.txt |
Figure \(1\). (Credit: Steven Lilley/ flickr/ Attribution 2.0 Generic (CC BY 2.0))
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. How do you recognize the symptoms of stress in yourself and in others?
2. What are the underlying causes of stress in a particular situation?
3. How do managers and organizations minimize the dysfunctional consequences of stressful behavior?
4. What are the remedies for job-related stress, and how can managers motivate employees to participate actively in health promotion efforts for the benefit of all concerned?
Exploring managerial careers
Workplace Perks: Are They Worth It?
Often tech companies top the charts as the best places to work, touting fancy benefits and big-time perks. However, recent studies have shown that big tech companies can also be extremely stressful places to work. According to research conducted by PayScale.com, more turnover can be expected at companies like Facebook and Amazon due to employees reporting low levels of job satisfaction and job meaning. Also topping the charts for Amazon are reported levels of stress, higher than the tech average—64 percent compared to 58 percent.
“Amazon will work you to death, either you are gone after two years, or you stay forever because you love working that hard,” stated a former employee of Amazon’s cloud business.
Adding to the workplace environment is the company culture. Long hours, often times on weekends, and the expectation of staying connected to e-mail 24/7 add to the stressful workplace.
“Amazon is a culture of self-driven workaholics,” stated Lydia Leong, research analyst for Gartner covering the company. “There is a culture of frugality, and unlike many recent companies in Silicon Valley, you are not compensated for it with an array of free services.”
These conditions may be considered acceptable by many individuals that choose to continue at Amazon and are motivated by the fast-paced environment, but according to the American Institute of Stress, this can cause health risks. Sixty-two percent of individuals studied routinely found that they end the day with work-related neck pain, 44 percent reported stressed-out eyes, 38 percent complained of hurting hands, and 34 percent reported difficulty in sleeping because they were too stressed out.
Work-related stress is one of the most prominent—and costly—issues of today. The World Health Organization reports that physical and mental stress costs businesses \$300 billion each year, not to mention the tolls on productivity. However we look at it, stress and stress-related problems have a direct impact on the effective management of organizations, and contemporary managers must be willing to commit the necessary energy and resources to minimize the dysfunctional consequences of such problems if they are to achieve an effective level of operations.
Sources:
L. Rao, “Amazon: Working There Will Kills You. But You’ll Love It,” New York Times, August 17, 2015, http://fortune.com/2015/08/17/amazon...times-workers/
“Tech Industry Salaries,” Payscale, accessed January 12, 2019, https://www.payscale.com/data/tech-industry-salaries
I. Ivanova, “ The Most Stressed-Out Tech Companies,” CBS News, July 25, 2017, https://www.cbsnews.com/news/tech-mo...ful-companies/
“Workplace Stress,” Stress.org, accessed January 12, 2019, https://www.stress.org/workplace-stress/
B. Covert, “Longer Hours, More Stress, No Extra Pay: It’s Not Just Amazon, It’s the Modern Workplace,” The Motley Fool, August 26, 2015, https://www.thenation.com/article/lo...ern-workplace/.
In this chapter, we will examine several aspects of job-related stress and consider several ways in which corporations can facilitate employee health and well-being. We begin by looking at problems of work adjustment as a general framework for the study of stress. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/18%3A_Stress_and_Well_Being/18.01%3A_Chapter_Introduction.txt |
1. How do you recognize the symptoms of stress in yourself and in others?
Failure to adjust to work represents a major problem in industry today. It has been estimated that between 80 and 90 percent of industrial accidents are caused by personal factors.1 Turnover, absenteeism, drug abuse, alcoholism, and sabotage remain relatively permanent fixtures of most contemporary work organizations. To the extent that individuals are unable to adjust to work, we would expect them to persist in counterproductive behavior.
W. S. Neff has identified five types of people who have problems adjusting to work. He suggests that each of the five types represents a “clinical picture of different varieties of work psychopathology”:
• Type I: People who lack motivation to work. These individuals have a negative conception of the work role and choose to avoid it.
• Type II: People whose predominating response to the demand to be productive is fear or anxiety.
• Type III: People who are characterized predominantly by open hostility and aggression.
• Type IV: People who are characterized by marked dependency. These people often exhibit the characteristic of helplessness. They are constantly seeking advice from others and are unable to initiate any action on their own.
• Type V: People who display a marked degree of social naïveté. These individuals lack perception when it comes to the needs and feelings of others and may not realize that their behavior elicits reactions from and has an effect on others. Typically, these individuals are socially inept and unaware of appropriate behavior in ordinary social situations.
Several important points follow from this analysis. First, note that failure to adjust to a normal job or work schedule does not automatically imply that an individual is lazy or stupid. Several deeply ingrained psychological problems keep people from making normal adjustments in many cases. Second, note that only one of the five types (Type I) exhibits a motivational problem. Managers must look beyond motivation for answers to the psychopathology of work. One type (Type V) exhibits a form of personality disorder, or at least social immaturity. But the remaining three types—those exhibiting anxiety, aggression, or dependency—all have problems relating not only to personality, but more importantly, to how the nature of the job affects that personality. In fact, anxiety, aggression, and dependency are major factors inherent in stressful jobs in organizations. Hence, it seems that at least three of the five reasons for failure to adjust to work relate to the extent to which the job is experienced as stressful and causes the individual to want to withdraw.
It has been wisely observed that “if, under stress, a man goes all to pieces, he will probably be told to pull himself together. It would be more effective to help him identify the pieces and to understand why they have come apart.” This is the role of the contemporary manager in dealing with stress. Managers cannot simply ignore the existence of stress on the job. Instead, they have a responsibility to understand stress and its causes.
We will explore the topic of work-related stress in several stages, first examining major organizational and personal influences on stress, then considering several outcomes of stress, and finally exploring methods for coping with stress on the job. Throughout, emphasis will be placed on how stress and its consequences affect people at work and what role managers can play in attempting to minimize the effects of stress on both the individual and the organization. We will make liberal use of practical examples, and, as usual, you will be given an opportunity to evaluate yourself on several aspects of stress and wellness in organizations.
Work-Related Stress
For our purposes here, stress will be defined as a physical and emotional reaction to potentially threatening aspects of the environment. This definition points to a poor fit between individuals and their environments. Either excessive demands are being made, or reasonable demands are being made that individuals are ill-equipped to handle. Under stress, individuals are unable to respond to environmental stimuli without undue psychological and/or physiological damage, such as chronic fatigue, tension, or high blood pressure. This damage resulting from experienced stress is usually referred to as strain.
Before we examine the concept of work-related stress in detail, several important points need to be made. First, stress is pervasive in the work environment.4 Most of us experience stress at some time. For instance, a job may require too much or too little from us. In fact, almost any aspect of the work environment is capable of producing stress. Stress can result from excessive noise, light, or heat; too much or too little responsibility; too much or too little work to accomplish; or too much or too little supervision.
Second, it is important to note that all people do not react in the same way to stressful situations, even in the same occupation. One individual (a high-need achiever) may thrive on a certain amount of job-related tension; this tension may serve to activate the achievement motive. A second individual may respond to this tension by worrying about her inability to cope with the situation. Managers must recognize the central role of individual differences in the determination of experienced stress.
Often the key reason for the different reactions is a function of the different interpretations of a given event that different people make, especially concerning possible or probable consequences associated with the event. For example, the same report is required of student A and student B on the same day. Student A interprets the report in a very stressful way and imagines all the negative consequences of submitting a poor report. Student B interprets the report differently and sees it as an opportunity to demonstrate the things she has learned and imagines the positive consequences of turning in a high-quality report. Although both students face essentially the same event, they interpret and react to it differently.
Third, all stress is not necessarily bad. Although highly stressful situations invariably have dysfunctional consequences, moderate levels of stress often serve useful purposes. A moderate amount of job-related tension not only keeps us alert to environmental stimuli (possible dangers and opportunities), but in addition often provides a useful motivational function. Some experts argue that the best and most satisfying work that employees do is work performed under moderate stress. Some stress may be necessary for psychological growth, creative activities, and the acquisition of new skills. Learning to drive a car or play a piano or run a particular machine typically creates tension that is instrumental in skill development. It is only when the level of stress increases or when stress is prolonged that physical or psychological problems emerge.
General Adaptation Syndrome
The general physiological response to stressful events is believed to follow a fairly consistent pattern known as the general adaptation syndrome. General adaptation syndrome consists of three stages (see Figure \(1\)). The first stage, alarm, occurs at the first sign of stress. Here the body prepares to fight stress by releasing hormones from the endocrine glands. During this initial stage, heartbeat and respiration increase, blood sugar level rises, muscles tense up, pupils dilate, and digestion slows. At this stage the body prepares basically for a “fight or flight” response. That is, the body prepares to either get away from the threat or to combat it. Following this initial shock, the body moves into the second stage, resistance. The body attempts to repair any damage and return to a condition of stability and equilibrium. If successful, physical signs of stress will disappear. If the stress continues long enough, however, the body’s capacity for adaptation becomes exhausted. In this third stage, exhaustion, defenses wear away, and the individual experiences a variety of stress-related illnesses, including headaches, ulcers, and high blood pressure. This third stage is the most severe and presents the greatest threat both to individuals and to organizations.
Types of Stress: Frustration and Anxiety
There are several different ways to categorize stress. However, from a managerial perspective, it is useful to focus on only two forms: frustration and anxiety. Frustration refers to a psychological reaction to an obstruction or impediment to goal-oriented behavior. Frustration occurs when an individual wishes to pursue a certain course of action but is prevented from doing so. This obstruction may be externally or internally caused. Examples of people experiencing obstacles that lead to frustration include a salesperson who continually fails to make a sale, a machine operator who cannot keep pace with the machine, or even a person ordering coffee from a machine that fails to return the correct change. The prevalence of frustration in work organizations should be obvious from this and other examples.
Whereas frustration is a reaction to an obstruction in instrumental activities or behavior, anxiety is a feeling of inability to deal with anticipated harm. Anxiety occurs when people do not have appropriate responses or plans for coping with anticipated problems. It is characterized by a sense of dread, a foreboding, and a persistent apprehension of the future for reasons that are sometimes unknown to the individual.
What causes anxiety in work organizations? Hamner and Organ suggest several factors:
“Differences in power in organizations which leave people with a feeling of vulnerability to administrative decisions adversely affecting them; frequent changes in organizations, which make existing behavior plans obsolete; competition, which creates the inevitability that some persons lose ‘face,’ esteem, and status; and job ambiguity (especially when it is coupled with pressure). To these may be added some related factors, such as lack of job feedback, volatility in the organization’s economic environment, job insecurity, and high visibility of one’s performance (successes as well as failures). Obviously, personal, non-organizational factors come into play as well, such as physical illness, problems at home, unrealistically high personal goals, and estrangement from one’s colleagues or one’s peer group.”
Concept Check
1. What is work related stress? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/18%3A_Stress_and_Well_Being/18.02%3A_Problems_of_Work_Adjustment.txt |
1. What are the underlying causes of stress in a particular situation?
We will now consider several factors that have been found to influence both frustration and anxiety; we will present a general model of stress, including its major causes and its outcomes. Following this, we will explore several mechanisms by which employees and their managers cope with or reduce experienced stress in organizations. The model presented here draws heavily on the work of several social psychologists at the Institute for Social Research of the University of Michigan, including John French, Robert Caplan, Robert Kahn, and Daniel Katz. In essence, the proposed model identifies two major sources of stress: organizational sources and individual sources. In addition, the moderating effects of social support and hardiness are considered. These influences are shown in \(1\).
We begin with organizational influences on stress. Although many factors in the work environment have been found to influence the extent to which people experience stress on the job, four factors have been shown to be particularly strong. These are (1) occupational differences, (2) role ambiguity, (3) role conflict, and (4) role overload and underutilization. We will consider each of these factors in turn.
Occupational Differences
Tension and job stress are prevalent in our contemporary society and can be found in a wide variety of jobs. Consider, for example, the following quotes from interviews with working people. The first is from a bus driver:
“You have your tension. Sometimes you come close to having an accident, that upsets you. You just escape maybe by a hair or so. Sometimes maybe you get a disgruntled passenger on there who starts a big argument. Traffic. You have someone who cuts you off or stops in front of the bus. There’s a lot of tension behind that. . . . Most of the time you have to drive for the other drivers, to avoid hitting them. So, you take the tension home with you. Most of the drivers, they’ll suffer from hemorrhoids, kidney trouble, and such as that. I had a case of ulcers behind it.”
Or consider the plight of a bank teller:
“Some days, when you’re aggravated about something, you carry it after you leave the job. Certain people are bad days. (Laughs.) The type of person who will walk in and say, ‘My car’s double-parked outside. Would you hurry up, lady?’ . . . you want to say, ‘Hey, why did you double-park your car? So now you’re going to blame me if you get a ticket, ’cause you were dumb enough to leave it there?’ But you can’t. That’s the one hassle. You can’t say anything back. The customer’s always right.”
Stress is experienced by workers in many jobs: administrative assistants, assembly-line workers, foremen, waitresses, and managers. In fact, it is difficult to find jobs that are without some degree of stress. We seldom talk about jobs without stress; instead, we talk about the degree or magnitude of the stress.
The work roles that people fill have a substantial influence on the degree to which they experience stress. These differences do not follow the traditional blue-collar/white-collar dichotomy, however. In general, available evidence suggests that high-stress occupations are those in which incumbents have little control over their jobs, work under relentless time pressures or threatening physical conditions, or have major responsibilities for either human or financial resources.
A recent study attempted to identify those occupations that were most (and least) stressful. The study results are presented in Table \(1\). As shown, high-stress occupations (firefighter, race car driver, and astronaut) are typified by the stress-producing characteristics noted above, whereas low-stress occupations (musical instrument repair person, medical records technician, and librarian) are not. It can therefore be concluded that a major source of general stress emerges from the occupation at which one is working.
The Most and Least Stressful Jobs
High-Stress Jobs Low-Stress Jobs
Source: Adapted from The Jobs Rated Almanac by Les Krantz. 1988 Les Krantz.
1. Firefighter
2. Race car driver
3. Astronaut
4. Surgeon
5. NFL football player
6. City police officer
7. Osteopath
8. State police officer
9. Air traffic controller
10. Mayor
1. Musical instrument repairperson
2. Industrial machine repairperson
3. Medical records technician
4. Pharmacist
5. Medical assistant
6. Typist/word processor
7. Librarian
8. Janitor
9. Bookkeeper
10. Forklift operator
Table \(1\). (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
A second survey, by the American Psychological Association, examined the specific causes of stress. The results of the study showed that the most frequently cited reasons for stress among administrative professionals are unspecified job requirements (38 percent), work interfering with personal time (36 percent), job insecurity (33 percent), and lack of participation in decision-making (33 percent).
Finally, a study among managers found that they, too, are subject to considerable stress arising out of the nature of managerial work. The more common work stressors for managers are shown in Table \(2\).
Typical Stressors Faced by Managers
Stressor Example
Source : Adapted from D. Zauderer and J. Fox, “Resiliency in the Face of Stress,” Management Solutions, November 1987, pp. 32–33.
Role ambiguity Unclear job duties
Role conflict Manager is both a boss and a subordinate.
Role overload Too much work, too little time
Unrealistic expectations Managers are often asked to do the impossible.
Difficult decisions Managers have to make decisions that adversely affect subordinates.
Managerial failure Manager fails to achieve expected results.
Subordinate failure Subordinates let the boss down.
Table \(2\). (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
These stressors range from task ambiguity and role conflict to overwork and the possibility of failure. Indeed, responsibility for others may be the greatest stressor of all for managers. Studies in the United States and abroad indicate that managers and supervisors consistently have more ulcers and experience more hypertension than the people they supervise. Responsibility for people was found to be a greater influence on stress than responsibility for non-personal factors such as budgets, projects, equipment, and other property. As noted by French and Caplan:
“If there is any truth to the adage that ‘man’s greatest enemy is himself,’ it can be found in these data—it is the responsibility which organizational members have for other organizational members, rather than the responsibility for impersonal aspects of the organization, which constitutes the more significant organizational stress.”
Thus, a person’s occupation or profession represents a major cause of stress-related problems at work. In addition to occupation, however, and indeed closely related to it, is the problem of one’s role expectations in the organization. Three interrelated role processes will be examined as they relate to experienced stress: role ambiguity, role conflict, and role overload or underutilization.
Role Ambiguity
The first role process variable to be discussed here is role ambiguity. When individuals have inadequate information concerning their roles, they experience role ambiguity. Uncertainty over job definition takes many forms, including not knowing expectations for performance, not knowing how to meet those expectations, and not knowing the consequences of job behavior. Role ambiguity is particularly strong among managerial jobs, where role definitions and task specification lack clarity (refer to Table \(2\)). For example, the manager of accounts payable may not be sure of the quantity and quality standards for her department. The uncertainty of the absolute level of these two performance standards or their relative importance to each other makes predicting outcomes such as performance evaluation, salary increases, or promotion opportunities equally difficult. All of this contributes to increased stress for the manager. Role ambiguity can also occur among non-managerial employees—for example, those whose supervisors fail to make sufficient time to clarify role expectations, thus leaving them unsure of how best to contribute to departmental and organizational goals.
How prevalent is role ambiguity at work? In two independent surveys of employees, it was found that 35 percent of one sample (a national random sample of male employees) and 60 percent of the other sample (primarily scientists and engineers) reported some form of role ambiguity. Hence, ambiguity of job role is not an isolated event.
Role ambiguity has been found to lead to several negative stress-related outcomes. French and Caplan summarized their study findings as follows:
“In summary, role ambiguity, which appears to be widespread, (1) produces psychological strain and dissatisfaction; (2) leads to underutilization of human resources; and (3) leads to feelings of futility on how to cope with the organizational environment.”
In other words, role ambiguity has far-reaching consequences beyond experienced stress, including employee turnover and absenteeism, poor coordination and utilization of human resources, and increased operating costs because of inefficiency.
It should be noted, however, that not everyone responds in the same way to role ambiguity. Studies have shown that some people have a higher tolerance for ambiguity and are less affected by role ambiguity (in terms of stress, reduced performance, or propensity to leave) than those with a low tolerance for ambiguity. Thus, again we can see the role of individual differences in moderating the effects of environmental stimuli on individual behavior and performance.
Role Conflict
The second role-related factor in stress is role conflict. This may be defined as the simultaneous occurrence of two (or more) sets of pressures or expectations; compliance with one would make it difficult to comply with the other. In other words, role conflict occurs when an employee is placed in a situation where contradictory demands are placed upon her. For instance, a factory worker may find himself in a situation where the supervisor is demanding greater output, yet the work group is demanding a restriction of output. Similarly, a secretary who reports to several supervisors may face a conflict over whose work to do first.
One of the best-known studies of role conflict and stress was carried out by Robert Kahn and his colleagues at the University of Michigan. Kahn studied 53 managers and their subordinates (a total of 381 people), examining the nature of each person’s role and how it affected subsequent behavior. As a result of the investigation, the following conclusions emerged:
Contradictory role expectations give rise to opposing role pressures (role conflict), which generally have the following effects on the emotional experience of the focal person: intensified internal conflicts, increased tension associated with various aspects of the job, reduced satisfaction with the job and its various components, and decreased confidence in superiors and in the organization as a whole. The strain experienced by those in conflict situations leads to various coping responses, social and psychological withdrawal (reduction in communication and attributed influence) among them.
Finally, the presence of conflict in one’s role tends to undermine her reactions with her role senders and to produce weaker bonds of trust, respect, and attraction. It is quite clear that role conflicts are costly for the person in emotional and interpersonal terms. They may be costly to the organization, which depends on effective coordination and collaboration within and among its parts.
Other studies have found similar results concerning the serious side effects of role conflict both for individuals and organizations. It should again be recognized, however, that personality differences may serve to moderate the impact of role conflict on stress. In particular, it has been found that introverts and people who lack flexibility respond more negatively to role conflict than do others. In any event, managers must be aware of the problem of role conflict and look for ways to avert negative consequences. One way this can be accomplished is by ensuring that their subordinates are not placed in contradictory positions within the organization; that is, subordinates should have a clear idea of what the manager’s job expectations are and should not be placed in “win-lose” situations.
Role Overload and Underutilization
Finally, in addition to role ambiguity and conflict, a third aspect of role processes has also been found to represent an important influence on experienced stress—namely, the extent to which employees feel either overloaded or underutilized in their job responsibilities. Role overload is a condition in which individuals feel they are being asked to do more than time or ability permits. Individuals often experience role overload as a conflict between quantity and quality of performance. Quantitative overload consists of having more work than can be done in a given time period, such as a clerk expected to process 1,000 applications per day when only 850 are possible. Overload can be visualized as a continuum ranging from too little to do to too much to do. Qualitative role overload, on the other hand, consists of being taxed beyond one’s skills, abilities, and knowledge. It can be seen as a continuum ranging from too-easy work to too-difficult work. For example, a manager who is expected to increase sales but has little idea of why sales are down or what to do to get sales up can experience qualitative role overload. It is important to note that either extreme represents a bad fit between the abilities of the employee and the demands of the work environment. A good fit occurs at that point on both scales of workload where the abilities of the individual are relatively consistent with the demands of the job.
There is evidence that both quantitative and qualitative role overload are prevalent in our society. A review of findings suggests that between 44 and 73 percent of white-collar workers experience a form of role overload. What induces this overload? As a result of a series of studies, French and Caplan concluded that a major factor influencing overload is the high achievement needs of many managers. Need for achievement correlated very highly both with the number of hours worked per week and with a questionnaire measure of role overload. In other words, much role overload is apparently self-induced.
Similarly, the concept of role underutilization should also be acknowledged as a source of experienced stress. Role underutilization occurs when employees are allowed to use only a few of their skills and abilities, even though they are required to make heavy use of them. The most prevalent characteristic of role underutilization is monotony, where the worker performs the same routine task (or set of tasks) over and over. Other situations that make for underutilization include total dependence on machines for determining work pace and sustained positional or postural constraint. Several studies have found that underutilization often leads to low self-esteem, low life satisfaction, and increased frequency of nervous complaints and symptoms.
Both role overload and role underutilization have been shown to influence psychological and physiological reactions to the job. The inverted U-shaped relationship between the extent of role utilization and stress is shown in Figure \(3\). As shown, the least stress is experienced at that point where an employee’s abilities and skills are in balance with the requirements of the job. This is where performance should be highest. Employees should be highly motivated and should have high energy levels, sharp perception, and calmness. (Recall that many of the current efforts to redesign jobs and improve the quality of work are aimed at minimizing overload or underutilization in the workplace and achieving a more suitable balance between abilities possessed and skills used on the job.) When employees experience underutilization, boredom, decreased motivation, apathy, and absenteeism will be more likely. Role overload can lead to such symptoms as insomnia, irritability, increased errors, and indecisiveness.
Taken together, occupation and role processes represent a sizable influence on whether or not an employee experiences high stress levels. One job where the profession and its required roles almost guarantee significant stress is air traffic control. Consider for a moment whether you would want to have this job.
Expanding around the globe
Are the Japanese Working Themselves to Death?
Karoshi literally means death from overwork, and unofficial estimates are that as many people die each year from karoshi as from traffic accidents in Japan—approximately 10,000. In 2016, the legal claims of karoshi rose to a record high of 1,456 according to government figures. Additionally, just under 2,000 suicides linked to work-related causes were reported. In October 2017, the latest employee death that shook the media was 31-year-old journalist Miwa Sado, and before that 24-year-old Matsui Takahashi, an employee working at Dentsu advertising agency, leapt from the roof on Christmas Day 2015.
These incidents are just two of many that occur more frequently in Japan due to the culture of overtime and stress within the work environment. Each of these women logged over 100 hours of overtime over the course of one month. Often the causes of death include heart failure, stroke, and suicide due to the stress, lack of sleep, and sleep deprivation that is caused by being overworked. Takahashi posted on Twitter, “It’s 4 a.m. My body’s trembling, I’m going to die. I’m so tired.” Soon after her death, the president of Dentsu resigned from his post.
Many reports suggest that performance reviews are marked negatively for those that don’t work lots of overtime, while others suggest employees must strive to make good impressions on their bosses, and staying late or working extra is perceived as loyalty to their jobs and companies.
The Japanese government has taken strides since the two incidents to implement policies to help to combat karoshi for good. One attempt implemented in 2016 is A Premium Friday plan, where Japanese workers are allowed the chance to leave at 3 p.m. on the last Friday of each month. This has only made some employees busier because some companies have organized their monthly finances to hit sales goals before the end of the month. Little success has been seen from this initiative. One Tokyo-best IT Service company forced employees to wear purple capes on the third Wednesday of the month if they worked late, which was a very bold and visual tactic to showcase the “working late is not cool” vibe. This shaming tactic worked, decreasing the overtime worked by 50 percent. Some companies have implemented individual changes such as breakfast offerings and allowing time off as needed.
Changing the Japanese work culture will take time. Although these small changes have not made a large impact yet, the discussion is widening, and workplaces are becoming more aware of the need for drastic changes in policy to counteract the growing issue of stress in the workplace.
Questions:
1. What considerations should a manager take before implementing changes to a work environment and policies when managing a global team?
2. What environmental and cultural factors can affect an employee’s work ethic and their level of stress in their workday?
Sources:
C. Weller, “Japan is facing a 'death by overwork' problem — here's what it's all about,” Business Insider, October 8, 2017, https://www.businessinsider.com/what...7-10?r=UK&IR=T
E. Warnock, “Japan by the Numbers: ‘Karoshi’,” Tokyo Review, October 12, 2017, http://www.tokyoreview.net/2017/10/j...oshi-overwork/
(Why Japanese Workers Keep Working Themselves to Death,” CBS News, October 20, 2017, https://www.cbsnews.com/news/karoshi...nese-overwork/
D. Demetriou, “Death for Overworking Claims Hit Record High in Japan,” The Telegraph, April 4, 2016, https://www.telegraph.co.uk/news/201...high-in-japan/
D. Hurst, “First step in changing Japan's workaholic culture: less overtime,” NBC News, January 8, 2018, https://www.nbcnews.com/news/world/f...ertime-n833051.
Personal Influences on Stress
The second major influence on job-related stress can be found in the employees themselves. As such, we will examine three individual-difference factors as they influence stress at work: (1) personal control, (2) Type A personality, and (3) rate of life change.
Personal Control
To begin with, we should acknowledge the importance of personal control as a factor in stress. Personal control represents the extent to which an employee actually has control over factors affecting effective job performance. If an employee is assigned a responsibility for something (landing an airplane, completing a report, meeting a deadline) but is not given an adequate opportunity to perform (because of too many planes, insufficient information, insufficient time), the employee loses personal control over the job and can experience increased stress. Personal control seems to work through the process of employee participation. That is, the more employees are allowed to participate in job-related matters, the more control they feel for project completion. On the other hand, if employees’ opinions, knowledge, and wishes are excluded from organizational operations, the resulting lack of participation can lead not only to increased stress and strain, but also to reduced productivity.
The importance of employee participation in enhancing personal control and reducing stress is reflected in the French and Caplan study discussed earlier. After a major effort to uncover the antecedents of job-related stress, these investigators concluded:
“Since participation is also significantly correlated with low role ambiguity, good relations with others, and low overload, it is conceivable that its effects are widespread, and that all the relationships between these other stresses and psychological strain can be accounted for in terms of how much the person participates. This, in fact, appears to be the case. When we control or hold constant, through statistical analysis techniques, the amount of participation a person reports, then the correlations between all the above stresses and job satisfaction and job-related threat drop quite noticeably. This suggests that low participation generates these related stresses, and that increasing participation is an efficient way of reducing many other stresses which also lead to psychological strain.”
On the bases of this and related studies, we can conclude that increased participation and personal control over one’s job is often associated with several positive outcomes, including lower psychological strain, increased skill utilization, improved working relations, and more-positive attitudes. These factors, in turn, contribute toward higher productivity. These results are shown in Figure \(3\).
Related to the issue of personal control—indeed, moderating its impact—is the concept of locus of control. It will be remembered that some people have an internal locus of control, feeling that much of what happens in their life is under their own control. Others have an external locus of control, feeling that many of life’s events are beyond their control. This concept has implications for how people respond to the amount of personal control in the work environment. That is, internals are more likely to be upset by threats to the personal control of surrounding events than are externals. Recent evidence indicates that internals react to situations over which they have little or no control with aggression—presumably in an attempt to reassert control over ongoing events. On the other hand, externals tend to be more resigned to external control, are much less involved in or upset by a constrained work environment, and do not react as emotionally to organizational stress factors. Hence, locus of control must be recognized as a potential moderator of the effects of personal control as it relates to experienced stress.
Type A Personality
Research has focused on what is perhaps the single most dangerous personal influence on experienced stress and subsequent physical harm. This characteristic was first introduced by Friedman and Rosenman and is called Type A personality. Type A and Type B personalities are felt to be relatively stable personal characteristics exhibited by individuals. Type A personality is characterized by impatience, restlessness, aggressiveness, competitiveness, polyphasic activities (having many “irons in the fire” at one time), and being under considerable time pressure. Work activities are particularly important to Type A individuals, and they tend to freely invest long hours on the job to meet pressing (and recurring) deadlines. Type B people, on the other hand, experience fewer pressing deadlines or conflicts, are relatively free of any sense of time urgency or hostility, and are generally less competitive on the job. These differences are summarized in Table \(3\).
Profiles of Type A and Type B Personalities
Type A Type B
Highly competitive Lacks intense competitiveness
“Workaholic” Work only one of many interests
Intense sense of urgency More deliberate time orientation
Polyphasic behavior Does one activity at a time
Strong goal-directedness More moderate goal-directedness
Table \(3\). (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Type A personality is frequently found in managers. Indeed, one study found that 60 percent of managers were clearly identified as Type A, whereas only 12 percent were clearly identified as Type B. It has been suggested that Type A personality is most useful in helping someone rise through the ranks of an organization.
The role of Type A personality in producing stress is exemplified by the relationship between this behavior and heart disease. Rosenman and Friedman studied 3,500 men over an 8 1/2-year period and found Type A individuals to be twice as prone to heart disease, five times as prone to a second heart attack, and twice as prone to fatal heart attacks when compared to Type B individuals. Similarly, Jenkins studied over 3,000 men and found that of 133 coronary heart disease sufferers, 94 were clearly identified as Type A in early test scores. The rapid rise of women in managerial positions suggests that they, too, may be subject to this same problem. Hence, Type A behavior very clearly leads to one of the most severe outcomes of experienced stress.
One irony of Type A is that although this behavior is helpful in securing rapid promotion to the top of an organization, it may be detrimental once the individual has arrived. That is, although Type A employees make successful managers (and salespeople), the most successful top executives tend to be Type B. They exhibit patience and a broad concern for the ramifications of decisions. As Dr. Elmer Green, a Menninger Foundation psychologist who works with executives, notes, “This fellow—the driving A—can’t relax enough to do a really first-rate job, at the office or at home. He gets to a level that dogged work can achieve, but not often to the pinnacle of his business or profession, which requires sober, quiet, balanced reasoning.” The key is to know how to shift from Type A behavior to Type B.
How does a manager accomplish this? The obvious answer is to slow down and relax. However, many Type A managers refuse to acknowledge either the problem or the need for change, because they feel it may be viewed as a sign of weakness. In these cases, several small steps can be taken, including scheduling specified times every day to exercise, delegating more significant work to subordinates, and eliminating optional activities from the daily calendar. Some companies have begun experimenting with retreats, where managers are removed from the work environment and engage in group psychotherapy over the problems associated with Type A personality. Initial results from these programs appear promising. Even so, more needs to be done if we are to reduce job-related stress and its serious health implications.
Rate of Life Change
A third personal influence on experienced stress is the degree to which lives are stable or turbulent. A long-term research project by Holmes and Rahe has attempted to document the extent to which rate of life change generates stress in individuals and leads to the onset of disease or illness. As a result of their research, a variety of life events were identified and assigned points based upon the extent to which each event is related to stress and illness.
The death of a spouse was seen as the most stressful change and was assigned 100 points. Other events were scaled proportionately in terms of their impact on stress and illness. It was found that the higher the point total of recent events, the more likely it is that the individual will become ill. Apparently, the influence of life changes on stress and illness is brought about by the endocrine system. This system provides the energy needed to cope with new or unusual situations. When the rate of change surpasses a given level, the system experiences overload and malfunctions. The result is a lowered defense against viruses and disease.
Concept check
1. What impact do different occupations have of the stress levels of workers in those jobs?
2. What are Type A and Type B personalities and how does stress affect each personality type? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/18%3A_Stress_and_Well_Being/18.03%3A_Organizational_Influences_on_Stress.txt |
1. How do managers and organizations minimize the dysfunctional consequences of stressful behavior?
We have seen in the previous discussion how a variety of organizational and personal factors influence the extent to which individuals experience stress on the job. Although many factors, or stressors, have been identified, their effect on psychological and behavioral outcomes is not always as strong as we might expect. This lack of a direct stressor-outcome relationship suggests the existence of potential moderator variables that buffer the effects of potential stressors on individuals. Recent research has identified two such buffers: the degree of social support the individual receives and the individual’s general degree of what is called hardiness. Both are noted in Figure 18.1.2
Social Support
First, let us consider social support. Social support is simply the extent to which organization members feel their peers can be trusted, are interested in one another’s welfare, respect one another, and have a genuine positive regard for one another. When social support is present, individuals feel that they are not alone as they face the more prevalent stressors. The feeling that those around you really care about what happens to you and are willing to help blunts the severity of potential stressors and leads to less-painful side effects. For example, family support can serve as a buffer for executives on assignment in a foreign country and can reduce the stress associated with cross-cultural adjustment.
Much of the more rigorous research on the buffering effects of social support on stress comes from the field of medicine, but it has relevance for organizational behavior. In a series of medical studies, it was consistently found that high peer support reduced negative outcomes of potentially stressful events (surgery, job loss, hospitalization) and increased positive outcomes. These results clearly point to the importance of social support to individual well-being. These results also indicate that managers should be aware of the importance of building cohesive, supportive work groups—particularly among individuals who are most subject to stress.
managerial leadership
Disconnecting from the “Always On” Work Culture
It is very rare that you are farther than an arm’s length away from your smartphone. You get anxious when there is no Wi-Fi in a hotel room, and if your battery is running low, the stress skyrockets through the roof just imagining what you could miss out on. All of these stresses, combined with an increasing demand for being reachable for your work, can relate to high stress and other negative health effects.
Many workplaces, such as medical professionals, have a high importance to the response rate they employ. Others, such sales teams, may require certain response times to e-mails, calls, or texts, with explanation of why they were not achieved. According to the recent study by the Academy of Management, “employees tally an average of 8 hours a week answering work-related emails after leaving the office.” This also could include regularly taking work home or working while on scheduled time off and vacation, and all can cause stress and lack of sleep and greatly reduce focus and engagement during office hours.
In the UK, surveys have uncovered the impact of technology, with 72.4 percent of respondents admitting that they were performing work tasks outside of regular work hours (https://businessadvice.co.uk/hr/empl...ing-employees/). Increasing the stress and potential negative affects is when the smartphones are being accessed: mainly before bed and right when they wake up. Feeling groggy in the morning and not getting a good night’s sleep could be due to the exposure to cell phones, computers, and TVs during the two hours before bed. Further studies have also shown that the blue light from devices can disrupt circadian rhythms and the internal clock the helps determine when to sleep and when to wake. (https://www.sciencenewsforstudents.o...sabotage-sleep)
Other countries outside of the U.S. have changed their ways and implemented policies to counteract the “always on” cultural norm that pervades the modern workplace. As of January 1, 2017, French employees now have a new law with the “right to disconnect.” This law allows employees to walk away from their smartphone technology and does not allow employers to fire individuals that do not respond to work-related inquiries while out of office.
Questions:
1. What are some ways as a new manager that you can help positively impact your new team to counteract the “always on” mentality?
2. What are some negative workplace behaviors that could arise from promoting an “always on” work culture?
Sources:
S. Caldwell, “Revealed: How Britain’s always-on culture is really affecting employees,” Business Advice, May 15, 2018, https://businessadvice.co.uk/hr/empl...ing-employees/
J. M. O’Connor, “The Always on Smartphone Culture, Turn it Off,” Forbes, September 8, 2017, https://www.forbes.com/sites/forbesc.../#236c2e7521c0
M. Kitchen, “How to Disconnect From ‘Always On’ Work Culture,” The Wall Street Journal, October 5, 2018, https://www.wsj.com/articles/how-to-...s&page=1&pos=2
M. Wall, “Smartphone stress: Are you a victim of 'always on' culture?,” BBC, August 14, 2014, https://www.bbc.com/news/business-28686235.
Hardiness
The second moderator of stress is hardiness. Hardiness represents a collection of personality characteristics that involve one’s ability to perceptually or behaviorally transform negative stressors into positive challenges. These characteristics include a sense of commitment to the importance of what one is doing, an internal locus of control (as noted above), and a sense of life challenge. In other words, people characterized by hardiness have a clear sense of where they are going and are not easily deterred by hurdles. The pressure of goal frustration does not deter them, because they invest themselves in the situation and push ahead. Simply put, these are people who refuse to give up.
Several studies of hardiness support the importance of this variable as a stress moderator. One study among managers found that those characterized by hardiness were far less susceptible to illness following prolonged stress. And a study among undergraduates found hardiness to be positively related to perceptions that potential stressors were actually challenges to be met. Thus, factors such as individual hardiness and the degree of social support must be considered in any model of the stress process.
Consequences of Work Related Stress
In exploring major influences on stress, it was pointed out that the intensity with which a person experiences stress is a function of organizational factors and personal factors, moderated by the degree of social support in the work environment and by hardiness. We come now to an examination of major consequences of work-related stress. Here we will attempt to answer the “so what?” question. Why should managers be interested in stress and resulting strain?
As a guide for examining the topic, we recognize three intensity levels of stress—no stress, low stress, and high stress—and will study the outcomes of each level. These outcomes are shown schematically in Figure \(1\). Four major categories of outcome will be considered: (1) stress and health, (2) stress and counterproductive behavior, (3) stress and job performance, and (4) stress and burnout.
Stress and Health
High degrees of stress are typically accompanied by severe anxiety and/or frustration, high blood pressure, and high cholesterol levels. These psychological and physiological changes contribute to the impairment of health in several different ways. Most important, high stress contributes to heart disease. The relationship between high job stress and heart disease is well established. In view of the fact that well over a half-million people die of heart disease every year, the impact of stress is important.
High job stress also contributes to a variety of other ailments, including peptic ulcers, arthritis, and several forms of mental illness. In a study by Cobb and Kasl, for example, it was found that individuals with high educational achievement but low job status exhibited abnormally high levels of anger, irritation, anxiety, tiredness, depression, and low self-esteem. In another study, Slote examined the effects of a plant closing in Detroit on stress and stress outcomes. Although factory closings are fairly common, the effects of these closings on individuals have seldom been examined. Slote found that the plant closing led to “an alarming rise in anxiety and illness,” with at least half the employees suffering from ulcers, arthritis, serious hypertension, alcoholism, clinical depression, and even hair loss. Clearly, this life change event took its toll on the mental and physical well-being of the workforce.
Finally, in a classic study of mental health of industrial workers, Kornhauser studied a sample of automobile assembly-line workers. Of the employees studied, he found that 40 percent had symptoms of mental health problems. His main findings may be summarized as follows:
• Job satisfaction varied consistently with employee skill levels. Blue-collar workers holding high-level jobs exhibited better mental health than those holding low-level jobs.
• Job dissatisfaction, stress, and absenteeism were all related directly to the characteristics of the job. Dull, repetitious, unchallenging jobs were associated with the poorest mental health.
• Feelings of helplessness, withdrawal, alienation, and pessimism were widespread throughout the plant. As an example, Kornhauser noted that 50 percent of the assembly-line workers felt they had little influence over the future course of their lives; this compares to only 17 percent for nonfactory workers.
• Employees with the lowest mental health also tended to be more passive in their nonwork activities; typically, they did not vote or take part in community activities.
In conclusion, Kornhauser noted:
“Poor mental health occurs whenever conditions of work and life lead to continuing frustration by failing to offer means for perceived progress toward attainment of strongly desired goals which have become indispensable elements of the individual’s self-esteem and dissatisfaction with life, often accompanied by anxieties, social alienation and withdrawal, a narrowing of goals and curtailing of aspirations—in short . . . poor mental health.”
Managers need to be concerned about the problems of physical and mental health because of their severe consequences both for the individual and for the organization. Health is often related to performance, and to the extent that health suffers, so too do a variety of performance-related factors. Given the importance of performance for organizational effectiveness, we will now examine how it is affected by stress.
Stress and Counterproductive Behavior
It is useful from a managerial standpoint to consider several forms of counterproductive behavior that are known to result from prolonged stress. These counterproductive behaviors include turnover and absenteeism, alcoholism and drug abuse, and aggression and sabotage.
Turnover and Absenteeism. Turnover and absenteeism represent convenient forms of withdrawal from a highly stressful job. Results of several studies have indicated a fairly consistent, if modest, relationship between stress and subsequent turnover and absenteeism. In many ways, withdrawal represents one of the easiest ways employees have of handling a stressful work environment, at least in the short run. Indeed, turnover and absenteeism may represent two of the less undesirable consequences of stress, particularly when compared to alternative choices such as alcoholism, drug abuse, or aggression. Although high turnover and absenteeism may inhibit productivity, at least they do little physical harm to the individual or coworkers. Even so, there are many occasions when employees are not able to leave because of family or financial obligations, a lack of alternative employment, and so forth. In these situations, it is not unusual to see more dysfunctional behavior.
Alcoholism and Drug Abuse. It has long been known that stress is linked to alcoholism and drug abuse among employees at all levels in the organizational hierarchy. These two forms of withdrawal offer a temporary respite from severe anxiety and severe frustration. One study by the Department of Health, Education, and Welfare reported, “Our interviews with blue-collar workers in heavy industry revealed a number who found it necessary to drink large quantities of alcohol during lunch to enable them to withstand the pressure or overwhelming boredom of their tasks.” A study in New York revealed a surprising amount of drug abuse by young employees on blue-collar jobs—especially among assembly-line employees and long-haul truck drivers. A third study of a UAW local involving 3,400 workers found 15 percent of the workforce addicted to heroin. And, finally, there is an alarming increase of drug and substance abuse among managers.
Both alcohol and drugs are used by a significant proportion of employees to escape from the rigors of a routine or stressful job. Although many companies have begun in-house programs aimed at rehabilitating chronic cases, these forms of withdrawal seem to continue to be on the increase, presenting another serious problem for modern managers. One answer to this dilemma involves reducing stress on the job that is creating the need for withdrawal from organizational activities.
Aggression and Sabotage. Severe frustration can also lead to overt hostility in the form of aggression toward other people and toward inanimate objects. Aggression occurs when individuals feel frustrated and can find no acceptable, legitimate remedies for the frustration. For instance, a busy secretary may be asked to type a stack of letters, only to be told later that the boss changed his mind and no longer needs the letters typed. The frustrated secretary may react by covert verbal abuse or an intentional slowdown on subsequent work. A more extreme example of aggression can be seen in the periodic reports in newspapers about a worker who “goes berserk” (usually after a reprimand or punishment) and attacks fellow employees.
One common form of aggressive behavior on the job is sabotage. As one study found:
“The roots of sabotage, a frequent aspect of industrial violence, are illustrated by this comment of a steelworker. ‘Sometimes, out of pure meanness, when I make something, I put a little dent in it. I like to do something to make it really unique. Hit it with a hammer deliberately to see if it’ll get by, just so I can say I did it.’ In a product world where everything is alike, sabotage may be a distortion of the guild craftsman’s signature, a way of asserting individuality in a homogeneous world—the only way for a worker to say, ‘That’s mine.’ It may also be a way of striking back against the hostile, inanimate objects that control the worker’s time, muscles, and brain. Breaking a machine in order to get some rest may be a sane thing to do.”
The extent to which frustration leads to aggressive behavior is influenced by several factors, often under the control of managers. Aggression tends to be subdued when employees anticipate that it will be punished, the peer group disapproves, or it has not been reinforced in the past (that is, when aggressive behavior failed to lead to positive outcomes). Thus, it is incumbent upon managers to avoid reinforcing undesired behavior and, at the same time, to provide constructive outlets for frustration. In this regard, some companies have provided official channels for the discharge of aggressive tendencies. For example, many companies have experimented with ombudsmen, whose task it is to be impartial mediators of employee disputes. Results have proved positive. These procedures or outlets are particularly important for nonunion personnel, who do not have contractual grievance procedures.
Stress and Job Performance
A major concern of management is the effects of stress on job performance. The relationship is not as simple as might be supposed. The stress-performance relationship resembles an inverted J-curve, as shown in Figure \(2\). At very low or no-stress levels, individuals maintain their current levels of performance. Under these conditions, individuals are not activated, do not experience any stress-related physical strain, and probably see no reason to change their performance levels. Note that this performance level may be high or low. In any event, an absence of stress probably would not cause any change.
On the other hand, studies indicate that under conditions of low stress, people are activated sufficiently to motivate them to increase performance. For instance, salespeople and many managers perform best when they are experiencing mild anxiety or frustration. Stress in modest amounts, as when a manager has a tough problem to solve, acts as a stimulus for the individual. The toughness of a problem often pushes managers to their performance limits. Similarly, mild stress can also be responsible for creative activities in individuals as they try to solve difficult (stressful) problems.
Finally, under conditions of high stress, individual performance drops markedly. Here, the severity of the stress consumes attention and energies, and individuals focus considerable effort on attempting to reduce the stress (often employing a variety of counterproductive behaviors as noted below). Little energy is left to devote to job performance, with obvious results.
Stress and Burnout
When job-related stress is prolonged, poor job performance such as that described above often moves into a more critical phase, known as burnout. Burnout is a general feeling of exhaustion that can develop when a person simultaneously experiences too much pressure to perform and too few sources of satisfaction.
Candidates for job burnout seem to exhibit similar characteristics. That is, many such individuals are idealistic and self-motivated achievers, often seek unattainable goals, and have few buffers against stress. As a result, these people demand a great deal from themselves, and, because their goals are so high, they often fail to reach them. Because they do not have adequate buffers, stressors affect them rather directly. This is shown in Figure \(3\). As a result of experienced stress, burnout victims develop a variety of negative and often hostile attitudes toward the organization and themselves, including fatalism, boredom, discontent, cynicism, and feelings of personal inadequacy. As a result, the person decreases his or her aspiration levels, loses confidence, and attempts to withdraw from the situation.
Research indicates that burnout is widespread among employees, including managers, researchers, and engineers, that are often hardest to replace by organizations. As a result, it is estimated that 70 percent of the largest U. S. companies have some form of anti-burnout/stress reduction training.
concept check
1. What can managers do ro reduce stress levels in employees that can harm productivity and can lead to counterproductive behavior in the workplace, absenteeism, as well as alcoholism and drug abuse. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/18%3A_Stress_and_Well_Being/18.04%3A_Buffering_Effects_of_Work_related_Stress.txt |
1. What are the remedies for job-related stress, and how can managers motivate employees to participate actively in health promotion efforts for the benefit of all concerned?
We come now to the most important question from a managerial standpoint: What can be done to reduce job-related stress? Many suggestions for coping with stress are implicit in the previous discussions. However, it is possible to summarize several important actions employees and managers can take in order to provide a more desirable work environment and improve employee adjustment to work.
Individual Strategies
There are many things people can do to help eliminate the level of experienced stress or, at the very least, to help cope with continuing high stress. Consider the following:
Developing Self-Awareness. Individuals can increase awareness of how they behave on the job. They can learn to know their own limits and recognize signs of potential trouble. Employees should know when to withdraw from a situation (known to some as a “mental health day” instead of absenteeism) and when to seek help from others on the job in an attempt to relieve the situation.
Developing Outside Interests. In addition, individuals can develop outside interests to take their minds off work. This solution is particularly important for Type A people, whose physical health depends on toning down their drive for success. Employees can ensure that they get regular physical exercise to relieve pent-up stress. Many companies sponsor athletic activities, and some have built athletic facilities on company premises to encourage employee activity.
Leaving the Organization. Sometimes an employee may be unable to improve her situation and, as a result, may find it necessary (i.e., healthful) simply to leave the organization and find alternative employment. Although this is clearly a difficult decision to make, there are times when turnover is the only answer.
Finding a Personal or Unique Solution. Another means individuals can use to cope with stress is through a variety of personal or unique solutions. For instance, here is how one manager described his reaction to a stressful situation: “If someone finally bugs me, I politely hang up the phone and then pound the hell out of my typewriter, saying all the things on paper I wanted to say to that person on the phone. It works every time. Then, I rip up the paper and throw it into the trash can.” If an employee cannot leave a stressful situation, this may be a good temporary way out of it.
Physical Exercise. Because part of the cause of the fatigue resulting from stress is the body’s physical reaction, exercise can be an effective means of enabling the body to more effective deal with the physical components of stress. Regular exercise can be an important and effective individual strategy.
Cognitive Perspective. Finally, because stress is in part a function of how events are perceived and interpreted, controlling one’s cognitive perspective of events can also be an effective strategy. Although one would not want to go so far as framing a truck speeding toward you as an opportunity rather than a threat, positively framing situations as well as distinguishing factors that are within as well as outside your control and influence can be effective means of reducing stress.
Organizational Strategies
Because managers usually have more control over the working environment than do subordinates, it seems only natural that they have more opportunity to contribute to a reduction of work-related stress. Among their activities, managers may include the following eight strategies.
Personnel Selection and Placement. First, managers can pay more attention in the selection and placement process to the fit between job applicants, the job, and the work environment. Current selection and placement procedures are devoted almost exclusively to preventing qualitative role overload by ensuring that people have the required education, ability, experience, and training for the job. Managers could extend these selection criteria to include a consideration of the extent to which job applicants have a tolerance for ambiguity and can handle role conflict. In other words, managers could be alert in the job interview and subsequent placement process to potential stress-related problems and the ability of the applicant to deal successfully with them.
Skills Training. Second, stress can be reduced in some cases through better job-related skills training procedures, where employees are taught how to do their jobs more effectively with less stress and strain. For instance, an employee might be taught how to reduce overload by taking shortcuts or by using new or expanded skills. These techniques would only be successful, however, if management did not follow this increased effectiveness by raising work quotas. Along with this could go greater effort by managers to specify and clarify job duties to reduce ambiguity and conflict. Employees could also be trained in human relations skills in order to improve their interpersonal abilities so that they might encounter less interpersonal and intergroup conflict.
Job Redesign. Third, managers can change certain aspects of jobs or the ways people perform these jobs. Much has been written about the benefits of job redesign. Enriching a job may lead to improved task significance, autonomy, responsibility, and feedback. For many people, these jobs will present a welcome challenge, which will improve the job-person fit and reduce experienced stress. It should be noted, however, that all people do not necessarily want an enriched job. Enriching the job of a person with a very low need for achievement or external locus of control may only increase anxiety and fear of failure. Care must be taken in job enrichment to match these efforts to employee needs and desires.
In addition to job enrichment, a related technique aimed at reducing stress is job rotation. Job rotation is basically a way of spreading stress among employees and providing a respite—albeit temporary—from particularly stressful jobs. Job rotation is particularly popular in Japan as a means of allocating the more tedious or boring tasks among a large set of employees so prolonged stress is reduced. Japan is also finally working toward a reduced workweek as a means of reducing job-related stress.
Company-Sponsored Counseling Programs. Several companies have begun experimenting with counseling programs, the fourth strategy suggested here. For instance, Stanford University’s executive program includes a module on coping with stress, and the Menninger Foundation conducts a one-week anti-stress seminar in Topeka. In one experiment among police officers, the value of a stress management program was examined. In the program, which consisted of six two-hour sessions, officers were told about the nature and causes of stress, were shown useful relaxation exercises, and were put through several simulated stressful situations—such as role playing the handling of an arrest. Throughout, emphasis was placed on reinforcing the officers’ confidence that they could, in fact, successfully cope with on-the-job stress. The results of the program showed that those officers who went through the program performed better, exhibited greater self-control, and experienced less stress than officers in comparable positions who did not go through the program. Similar findings have emerged in a variety of business organizations. Once again, much work-related stress can be reduced simply by encouraging managers to be more supportive and to provide the necessary tools for people to cope with stress.
Increased Participation and Personal Control. Fifth, managers can allow employees greater participation and personal control in decisions affecting their work. As noted above, participation increases job involvement and simultaneously reduces stress by relieving ambiguity and conflict. However, although the benefits of increased participation are many, it should be noted that being more participative is no easy task for some supervisors. One study, for example, found significant differences in the extent to which different supervisors would allow their subordinates to participation in decision-making. Females were found to allow more participation than males. Supervisors with high achievement needs, high levels of confidence in the abilities of their subordinates, and low feelings of being threatened by others allowed more subordinate participation. The issue of participation does not appear to be whether subordinates desire it; instead, it appears to be whether superiors will allow it.
Work Group Cohesiveness. Sixth, managers can attempt to build work group cohesiveness. Team-building efforts are common in industry today. These efforts focus on developing groups that will be both more productive and mutually supportive. A critical ingredient in the extent to which stress is experienced is the amount of social support employees receive. Team building represents one way to achieve this support.
Improved Communication. Managers can open communication channels so employees are more informed about what is happening in the organization. With greater knowledge, role ambiguity and conflict are reduced. Managers must be aware, however, that communication is a two-way street; they should allow and be receptive to communication from subordinates. To the extent that subordinates feel their problems and complaints are being heard, they experience less stress and are less inclined to engage in counterproductive behavior.
Health Promotion Programs. Finally, many companies have recently embarked on a more systematic and comprehensive approach to stress reduction and wellness in the workplace. These programs are usually referred to as health promotion programs, and they represent a combination of diagnostic, educational, and behavior modification activities that are aimed at attaining and preserving good health. A typical program includes risk assessment, educational and instructional classes, and counseling and referrals. Health promotion programs tackle a wide array of health-related concerns, including physical fitness, weight control, dietary and nutritional counseling, smoking cessation, blood pressure monitoring, alcohol and substance abuse problems, and general lifestyle modification.
Companies involved in such programs usually feel that the costs invested to run them are more than returned through higher levels of productivity and reduced absenteeism and stress-related illness. Moreover, many companies have found that providing such services serves as an attractive incentive when recruiting employees in a tight job market.
Stress is a function of the objective environment but also of individuals’ subjective interpretation of events and their consequences. Both body and mind are involved the process. It is important for both firms and individuals to take preventive measures before the cumulative effects of stress manifest themselves in ways that cost both the individual and the company.
Eustress is a term that signifies beneficial stress, either psychological, physical. The term was coined by using the Greek prefix “eu”, meaning "good", and stress, literally meaning "good stress". Eustress was originally explored in a stress model by Richard Lazarus. It is the positive cognitive response to stress that is healthy, or gives one a feeling of fulfilment or other positive feelings.
concept check
What are some things that managers can do to reduce stress in the organization? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/18%3A_Stress_and_Well_Being/18.05%3A_Coping_with_Work_related_Stress.txt |
Key Terms
anxiety
A feeling of inability to deal with anticipated harm.
frustration
Refers to a psychological reaction to an obstruction or impediment to goal-oriented behavior.
general adaptation syndrome
Consists of three stages: the first stage, alarm; the second stage of resistance; and the third stage, exhaustion.
strain
The damage resulting from experiencing stress.
stress
A physical and emotional reaction to potentially threatening aspects of the environment.
locus of control
The concept that much of what happens in one’s life is either under or outside of their own control.
personal control
Represents the extent to which an employee actually has control over factors affecting effective job performance.
Type A personality
Type A personality is characterized by impatience, restlessness, aggressiveness, competitiveness, polyphasic activities, and being under considerable time pressure.
rate of life change
The variety of life events were identified and assigned points based upon the extent to which each event is related to stress and illness.
role ambiguity
Occurs when individuals have inadequate information concerning their roles.
role conflict
The simultaneous occurrence of two (or more) sets of pressures or expectations; compliance with one would make it difficult to comply with the other.
role overload
A condition in which individuals feel they are being asked to do more than time or ability permits.
role underutilization
Occurs when employees are allowed to use only a few of their skills and abilities, even though they are required to make heavy use of them.
tolerance for ambiguity
Individuals measure and affect by role ambiguity (in terms of stress, reduced performance, or propensity to leave) than others with a low tolerance for ambiguity.
burnout
A general feeling of exhaustion that can develop when a person simultaneously experiences too much pressure to perform and too few sources of satisfaction.
hardiness
Represents a collection of personality characteristics that involve one’s ability to perceptually or behaviorally transform negative stressors into positive challenges.
social support
The extent to which organization members feel their peers can be trusted, are interested in one another’s welfare, respect one another, and have a genuine positive regard for one another.
Eustress
Beneficial stress.
health promotion programs
Represent a combination of diagnostic, educational, and behavior modification activities that are aimed at attaining and preserving good health.
Summary of Learning Outcomes
18.1 Problems of Work Adjustment
1. How do you recognize the symptoms of stress in yourself and in others?
Stress is a physical and emotional reaction to potentially threatening aspects of the environment. The damage resulting from stress is called strain. The general adaptation syndrome is the common pattern of events that characterizes someone who experiences stress. The three stages of the syndrome are alarm, resistance, and exhaustion. Two primary types of stress can be identified: frustration and anxiety.
18.2 Organizational Influences on Stress
1. What are the underlying causes of stress in a particular situation?
Four organization influences on stress can be identified: (1) occupational differences, (2) role ambiguity, (3) role conflict, and (4) role overload or underutilization. Three personal influences on stress are (1) personal control, or the desire to have some degree of control over one’s environment; (2) rate of life change; and (3) Type A personality. Type A personality refers to individuals characterized by impatience, restlessness, aggressiveness, competitiveness, and polyphasic activities (that is, attempting to do several activities at the same time).
18.3 Buffering Effects of Work related Stress
1. How do managers and organizations minimize the dysfunctional consequences of stressful behavior?
The effects of potential stress can be buffered by two factors: (1) social support from one’s coworkers or friends and (2) hardiness, or the ability to perceptually and behaviorally transform negative stressors into positive challenges. Sustained stress can lead to (1) health problems; (2) counterproductive behavior, such as turnover, absenteeism, drug abuse, and sabotage; (3) poor job performance; and (4) burnout.
18.4 Coping with Work related Stress
1. What are the remedies for job-related stress, and how can managers motivate employees to participate actively in health promotion efforts for the benefit of all concerned?
Burnout is defined as a general feeling of exhaustion that can develop when a person simultaneously experiences too much pressure to perform and too few sources of satisfaction. Individual strategies to reduce stress include (1) developing one’s self-awareness about how to behave on the job, (2) developing outside interests, (3) leaving the organization, and (4) finding a unique solution. Organizational strategies to reduce stress include (1) improved personnel selection and job placement, (2) skills training, (3) job redesign, (4) company-sponsored counseling programs, (5) increased employee participation and personal control, (6) enhanced work group cohesiveness, (7) improved communication, and (8) health promotion programs.
Chapter Review Questions
1. Discuss the five types of problems related to employee work adjustment.
2. Define stress. How does it differ from strain?
3. Describe the general adaptation syndrome.
4. Contrast frustration with anxiety.
5. Identify the major categories of variables that have been found to influence stress. What role does social support play in the process? What role does hardiness play?
6. In the chapter, the plight of assembly-line workers was discussed. What realistic suggestions would you make to relieve the tension and stress of this job?
7. Compare and contrast role conflict and role ambiguity.
8. How does a manager achieve a useful balance in a person-job fit so neither role overload nor role underutilization occurs?
9. How should a manager deal with a subordinate who is clearly a Type A personality? How should a manager who is a Type A personality handle her own stress?
10. Of what utility is the rate-of-life-change concept?
11. In organizations with which you are familiar, which of the many suggestions for coping with stress would be most applicable? Are the strategies you selected individual or organizational strategies?
Management Skills Application Exercises
1. You may wish to see if you have experienced stress in your present (or previous) part- or full-time job. To do so, simply complete this self-assessment. When you have finished, refer to the scoring procedures in Appendix B.
How Stressful Is Your Job?
Instructions: This instrument focuses on the stress level of your current (or previous) job. Think of your job, and answer the following items as frankly and honestly as possible.
Strongly Disagree Strongly Agree
1. I am often irritable with my coworkers.
1 2 3 4 5
1. At work, I constantly feel rushed or behind schedule.
1 2 3 4 5
1. I often dread going to work.
1 2 3 4 5
1. I often experience headaches, stomachaches, or backaches at work.
1 2 3 4 5
1. I often lose my temper over minor problems.
1 2 3 4 5
1. Everything I do seems to drain my energy level.
1 2 3 4 5
1. I often interpret questions or comments from others as a criticism of my work.
1 2 3 4 5
1. Time is my enemy.
1 2 3 4 5
1. I often have time for only a quick lunch (or no lunch) at work.
1 2 3 4 5
1. I spend considerable time at home worrying about problems at work.
1 2 3 4 5
1. Are you interested in determining whether you are a Type A or Type B? If so, simply complete this self-assessment. When you have finished, score your results as shown in Appendix B.
Are You a Type A?
Instructions: Choose from the following responses to answer the questions below:
1. Almost always true
2. Usually trued.
3. Seldom true
4. Never true
Answer each question according to what is generally true for you:
Source: Adapted from “Are You a Type A?” The Stress Mess Solution: The Causes and Cures of Stress on the Job, by G. S. Everly and D. A. Girdano. Reprinted by permission of the authors.
———
1. I do not like to wait for other people to complete their work before I can proceed with my own.
———
1. I hate to wait in most lines.
———
1. People tell me that I tend to get irritated too easily.
———
1. Whenever possible I try to make activities competitive.
———
1. I have a tendency to rush into work that needs to be done before knowing the procedure I will use to complete the job.
———
1. Even when I go on vacation, I usually take some work along.
———
1. When I make a mistake, it is usually due to the fact that I have rushed into the job before completely planning it through.
———
1. I feel guilty for taking time off from work.
———
1. People tell me I have a bad temper when it comes to competitive situations.
———
1. I tend to lose my temper when I am under a lot of pressure at work.
———
1. Whenever possible, I will attempt to complete two or more tasks at once.
———
1. I tend to race against the clock.
———
1. I have no patience for lateness.
———
1. I catch myself rushing when there is no need.
1. The Holmes and Rahe “Schedule of Recent Experiences” is shown here in this self-assessment. You are encouraged to complete this scale by checking all those events that have occurred to you within the past year. Next, follow the scoring procedures described in Appendix B.
How Stable Is Your Life?
Instructions: Place a check mark next to each event you experienced within the past year. Then add the scores associated with the various events to derive your total life stress score.
Source: Adapted from “Scaling of Life Change: Comparison of Direct and Indirect Methods” by L. O. Ruch and T. H. Holmes, Journal of Psychosomatic Research 15 (1971): 224, 1971.
Life Event Scale Value
——— Death of spouse 100
——— Divorce 73
——— Marital separation 65
——— Jail term 63
——— Death of a close family member 63
——— Major personal injury or illness 53
——— Marriage 50
——— Fired from work 47
——— Marital reconciliation 45
——— Retirement 45
——— Major change in health of family member 44
——— Pregnancy 40
——— Sex difficulties 39
——— Gain of a new family member 39
——— Business readjustment 39
——— Change in financial state 38
——— Death of a close friend 37
——— Change to a different line of work 36
——— Change in number of arguments with spouse 35
——— Mortgage or loan for big purchase (home, etc.) 31
——— Foreclosure of mortgage or loan 30
——— Change in responsibilities at work 29
——— Son or daughter leaving home 29
——— Trouble with in-laws 29
——— Outstanding personal achievement 28
——— Spouse begins or stops work 26
——— Begin or end school 26
——— Change in living conditions 25
——— Revision of personal habits 24
——— Trouble with boss 23
——— Change in work hours or conditions 20
——— Change in residence 20
——— Change in schools 20
——— Change in recreation 19
——— Change in church activities 19
——— Change in social activities 18
——— Mortgage or loan for lesser purchase (car, etc.) 17
——— Change in sleeping habits 16
——— Change in number of family get-togethers 15
——— Change in eating habits 15
——— Vacation 13
——— Christmas 12
——— Minor violations of the law 11
Total Score = ———
1. If you are interested in your own potential for burnout, you may wish to complete this self-assessment. Simply answer the ten questions as honestly as you can. When you have finished, follow the scoring instructions shown in Appendix B.
Are You Suffering from Burnout?
Instructions: Check whether each item is “mostly true” or “mostly untrue” for you. Answer as honestly as you can. When you have finished, add up the number of checks for “mostly true.”
Mostly True Mostly Untrue
1. I usually go around feeling tired.
——— ———
1. I think I am working harder but accomplishing less.
——— ———
1. My job depresses me.
——— ———
1. My temper is shorter than it used to be.
——— ———
1. I have little enthusiasm for life.
——— ———
1. I snap at people fairly often.
——— ———
1. My job is a dead end for me.
——— ———
1. Helping others seems like a losing battle.
——— ———
1. I don’t like what I have become.
——— ———
1. I am very unhappy with my job.
——— ———
Critical Thinking Case
Managerial Leadership, Sustainability, and Responsible Management: Mindfulness at Google Inc.
Even though the outside appearance of Google headquarters may be filled with stereotypical visions of nap pods and scenes from “The Internship,” there is still a lot of work that is accomplished by those working there. With work, there can come stress, and job-related stress is a huge issue, with studies by the Behavioral Science and Policy Association stating that working long hours has been shown to increase mortality by 20 percent. No matter how many cushy perks you can get, they won’t make everyone happy, and Google is combating this with creativity. They attempt to counteract the stress-related issues by offering specific classes—for example Meditation 101 and Mindfulness-Based Stress Reduction. They also encourage their employees to join their online and in-person community called gPause. This specific group helps support and encourage meditation practice. The key to this stress-reducing revolution at Google is that they have a company culture that supports the behavior. The company also promotes day meditation retreats at a handful of their locations. This type of creativity is sure to take hold at other companies across the globe.
Questions:
1. Google is one of the leading tech companies in the world. What do you think of their approach to handling stress within the workplace? Do you think that this approach will be effective? Why or why not?
2. A company culture that supports stress reduction is key to the success of any program within the company. What are some obstacles that can arise when handling stress within a workplace? What are some methods that you would employ as manager to counteract these obstacles and implement stress-reduction programs within your workplace?
Sources:
J. Goh, J. Pfeffer, S. A. Zenios, “Workplace stressors & health outcomes: Health policy for the workplace,” Behavioral Science and Policy Association, February 15, 2017, https://behavioralpolicy.org/article...the-workplace/;
J. Porter, “How Google And Others Help Employees Burn Off Stress In Unique Ways,” Fast Company, November 16, 2015, https://www.fastcompany.com/3053048/...in-unique-ways. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/18%3A_Stress_and_Well_Being/18.06%3A_Glossary.txt |
Learning Outcomes
After reading this chapter, you should be able to answer these questions:
1. What are some different types of entrepreneurship?
2. What characteristics lead individuals to become entrepreneurs?
3. How can the business model canvas help us to describe and assess a business model?
4. How do entrepreneurs finance their new business ideas?
5. How can entrepreneurs leverage design thinking to solve complex problems and navigate uncertain environments?
6. How can government support entrepreneurship?
Exploring Managerial Careers
Maria Rose Belding, MEANS Database
One day while volunteering at her local food shelter in Iowa, middle school student Maria Rose Belding was forced to throw out hundreds of boxes of expired macaroni and cheese. While Maria carried the boxes to the trash, she walked past hungry families waiting for food, and she considered the sheer size of the world’s hunger problem. In the United States alone, over 133 billion pounds of food is thrown out annually, and there are over 45 million Americans who do not have enough to eat. Belding’s experience led her to create MEANS (Matching Excess and Need for Stability) Database, a nonprofit organization that creates an online network for food pantries and shelters to communicate with anyone that may have extra food, such as restaurants, grocery stores, and caterers. Through MEANS’s app and website, excess food that would be discarded is instead sent to a shelter or food pantry.
Belding knew that she needed to create a platform to connect food pantries to food surpluses, but she did not know how. Grant Nelson, a law student at George Washington University, cofounded MEANS with Belding. Nelson led the data science and technology components and built the cloud infrastructure that MEANS needed to be successful in Belding’s goal of connecting people or organizations with extra food to those who need it. MEANS Database uses cloud-based software and e-mail-based communications to match food pantries with surplus food.
Many people donate food to shelters with good intentions, but it often is not the right type of food for a certain shelter. For example, some shelters predominantly serve senior citizens with health issues such as hypertension, mandating a low-sodium diet. When a food pantry receives a ramen noodle donation, the staff should not give it to the elderly, and might instead throw the ramen away. MEANS allows pantry staff to post the unwanted food so that another pantry can claim the donation. For both food recipients and donors, the process is straightforward, and it is free to create an account with MEANS. The shelter provides its location, needs, and distance willing to travel for a food dimension. On the donation end, a shelter, restaurant, or any other potential donor of extra food can report the type and amount of food they are trying to give away, and MEANS e-mails the local pantries looking for that type of food. The MEANS technology enables the transactions in which both parties must agree for the food to be transferred.
Belding continued to build MEANS Database during her high school studies and later as a premedical undergraduate student at American University. She received several honors for her efforts, including L’Oréal Women of Worth and one of CNN’s top ten recipients of “Hero of the Week” of 2018. Belding plans to pass daily management of MEANS to her staff and remain on the board during her medical school studies. MEANS Database has moved over two million pounds of food across 48 states and is exploring international possibilities.
Sources:
Maria Belding, “Math matters (but actually): We Can Solve Hunger With Numbers,” December 02, 2015, https://www.huffingtonpost.com/maria...b_8698146.html;
Ykaie Du, “Feeding the Hungry with Data Science - The Possibility Report,” 2017, https://www.theatlantic.com/sponsore...-science/1796/;
Nancy Dunham, “How a Once-Bullied Student Created a Network to Feed Thousands: 'We Want to Get Wasted Food to People Who Need It,'” March 17, 2016, http://people.com/human-interest/mar...eed-thousands/
Ron Fournier, “Fighting Hunger the Millennial Way,” December 22, 2015, Retrieved from https://www.theatlantic.com/politics...al-way/461856/
Terrence McCoy, “The revolutionary technology helping to fight food waste,” December 6, 2015, https://www.washingtonpost.com/local...=.d4f9663f5cfc
MEANS Database - a nonprofit food rescue platform, 2019, https://www.meansdatabase.com/
Maria Rose Belding is one of millions of the world’s entrepreneurs—that is, individuals who recognize and pursue opportunities, take on risk, and convert these opportunities into value-added ventures that can survive in a competitive marketplace. Entrepreneurs hail from many backgrounds and age groups—with Belding representing young middle school, high school, and college entrepreneurs. Entrepreneurs have in common a drive to achieve and grow and a willingness to take initiative and personal responsibility. Entrepreneurs frequently require other resources such as cofounders and teams, and then must build a large network of customers, suppliers, and other stakeholders. While MEANS Database is a registered nonprofit, MEANS has many for-profit competitors and partners. | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/19%3A_Entrepreneurship/19.01%3A_Chapter_Introduction.txt |
1. What are some different types of entrepreneurship?
Entrepreneurship is a global phenomenon, with individuals all over the world at various stages of the process. While there are many definitions of entrepreneurs and entrepreneurship, we consider the scholarly field as defined by Shane and Venkataraman that seeks to understand how opportunities are discovered, created, and exploited; by whom; and with what consequences. When most people think of entrepreneurship, they may think of individuals such as Maria Rose Belding, as well as Jeff Bezos (Amazon) and Elon Musk (Tesla and SpaceX). However, there are many other types of entrepreneurship that we will explore in this chapter. MEANS Database is an example of social entrepreneurship—that is, creating innovative solutions to immediate social and/or environment problems and mobilizing resources to achieve social transformation. MEANS Database illustrates how social entrepreneurs often solve problems more effectively than the government. Entrepreneurs can also operate inside existing organizations: corporate entrepreneurship involves the creation of new products, processes, and ventures within large organizations. Another prevalent type is family entrepreneurship—that is, when a business is owned and managed by multiple family members, usually for more than one generation. Serial or habitual entrepreneurship refers to individuals who start several businesses, simultaneously or one after another. Entrepreneurship can also be classified according to the desired goals—for example, individuals who pursue lifestyle entrepreneurship typically create a venture to suit a personal lifestyle and not for the sole purpose of making profits. High-technology entrepreneurship involves ventures in the information, communication, and technology space, which typically have high expectations for revenue growth. Entrepreneurs can also be classified according to the stage of their venture development, as outlined in the Global Entrepreneurship Monitor (GEM) research program in the next section.
Global Entrepreneurship Prevalence
Each year, the Global Entrepreneurship Monitor (GEM)2 study gathers data from 60+ countries to determine how many individuals are engaged in various phases of entrepreneurship. The first phase captures potential entrepreneurs who believe that they have the capacity and knowledge to start a venture and don’t fear failure. If you are reading this book and believe that you are developing the skills necessary to someday start your own company, and you believe that the risk-reward payoff is promising, then you fit this definition of a potential entrepreneur. The next GEM category is nascent entrepreneurs who have set up or are in the process of setting up a venture that they will own/co-own that is less than three months old and has not yet generated wages/salaries. New business owners operate a business for over three months but less than three years. And finally, established business owners actively run a business that is over three and a half years old. GEM researchers calculate a Total Entrepreneurial Activity (TEA) rate, which is the percentage of the adult population (ages 18–64) who are either nascent entrepreneurs or owner-managers of a new business. Figure \(1\) provides an overview of the GEM model to measure entrepreneurial activity in a given economy. As shown, GEM data captures attributes of the individual entrepreneur, industry sector, and expected impact in terms of potential business growth, use of innovation, and share of international customers. Figure \(2\) shows the most recently available rates of entrepreneurial activities across geographic regions. These regions are classified by their development status, with factor-driven countries the least developed; these countries subsist primarily on agriculture and extraction businesses, and rely heavily on unskilled labor and natural resources. Efficiency-driven economies are more competitive and utilize more advanced and efficient production processes to provide better-quality products and services. Innovation-driven economies are the most developed, typically relying on knowledge-intensive industries and an expanded service sector. As shown, entrepreneurial activity rates range from nearly 20 percent of the adult population in Ecuador to lows of less than 5 percent in several countries such as Bulgaria, Bosnia & Herzegovina, Italy, and Japan. Entrepreneurship rates can be extremely high in factor-driven countries as there are fewer traditional businesses and entrepreneurship may be the only good opportunity in the labor market. Among innovation-driven economies, the U.S. has one of the highest TEA levels, perhaps due to the American culture of individualism and the many organizations that support entrepreneurship. Another key factor is societal value, which we review in the next section.
Societal Value for Global Entrepreneurship
The GEM research project also examines societal values for entrepreneurship, which can help drive an abundance or lack of entrepreneurs. In the 2017/2018 report, across 52 economies, there was strong support for entrepreneurship as a good career choice. The lowest levels were reported in innovation-driven economies, perhaps because there are many good corporate career options. GEM researchers identified that almost 70 percent of the adult population believes that entrepreneurs enjoy high status within their societies. There are slight differences, with factor-driven countries reporting higher status levels as compared to innovation- and efficiency-driven countries. Moreover, across 52 economies, about 61 percent of adults believe that entrepreneurs garner substantial media attention, with the higher levels in increasingly developed economies. This data suggests that when entrepreneurs are portrayed favorably in the media, individuals will be more likely to consider entrepreneurship as a career.
Concept check
1. What are some different types of entrepreneurs?
2. How does entrepreneurship differ across countries? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/19%3A_Entrepreneurship/19.02%3A_Overview_of_Entrepreneurship.txt |
1. What characteristics lead individuals to become entrepreneurs?
Will you join the millions of entrepreneurs operating around the world? Wanting to be an entrepreneur is not enough—an individual must be able to develop and refine a new business opportunity, and it also requires a special personality as well as key skills.
Entrepreneurial Personality
Studies of the entrepreneurial personality find that entrepreneurs share certain key traits. Most entrepreneurs are:
• Ambitious—competitive, with a high need for achievement
• Independent—individualists and self-starters who prefer to lead rather than follow
• Self-confident—understand the challenges of starting and operating a business and are decisive and confident in their ability to solve problems
• Risk takers—willing to accept a moderate (and sometimes large) degree of risk relative to potential returns
• Visionary—spot trends and act on them
• Creative—offer innovative solutions and approach functions such as creative product designs and bold marketing strategies
• Energetic—offer high energy levels and perseverance, often working a full-time job while starting a venture
• Passionate—love their ideas and are delighted to bring them to the market, sometimes turning a hobby into a venture
• Committed—willing to make personal sacrifices to achieve their goals
Ethics in practice
Ethical Choices Transform Family Business into International Brand
Even as a young girl growing up in Paris, Apollonia always knew what she wanted to do when she grew up: take over the family business. But she didn’t anticipate how quickly this would happen. When her father, Lionel Poilâne, and mother died in a helicopter crash in 2002, France lost its most celebrated baker, and Apollonia stepped into the role. She was just 18 years old at the time with plans to matriculate to Harvard in the fall, but the moment her parents had prepared her for had come. As her Harvard admissions essay said, “The work of several generations is at stake.”
With organization and determination, Apollonia managed one of the best French bakeries in the world, based in Paris—from her apartment in Cambridge, Massachusetts. She would usually wake up an extra two hours before classes to make sure she could make all the phone calls for work. “After classes I check on any business regarding the company and then do my homework,” she says. “Before I go to bed I call my production manager in Paris to check the quality of the bread.” Because the name Poilâne has earned a place with a very small group of prestige bakers, the 18-year-old was determined to continue the tradition of customer satisfaction and quality her grandfather established in 1932. When her grandfather suffered a stroke in 1973, his 28-year-old son, Lionel, poured his heart into the business and made the family bread into the global brand it is today. Lionel opened two more bakeries in Paris and another in London. He developed and nurtured a worldwide network of retailers and celebrities where bread is shipped daily via FedEx to upscale restaurants and wealthy clients around the world.
Experimenting with sourdough is what distinguished Poilâne’s products from bread produced by Paris’s other bakers, and it has remained the company’s signature product. It is baked with a “P” carved into the crust, a throwback to the days when the use of communal ovens forced bakers to identify their loaves, and it also ensures that the loaf doesn’t burst while it’s baking. Today, Poilâne also sells croissants, pastries, and a few specialty breads, but the company’s signature item is still the four-pound miche, a wheel of sourdough, a country bread, pain Poilâne.
“Apollonia is definitely passionate about her job,” says Juliette Sarrazin, manager of the successful Poilâne Bakery in London. “She really believes in the work of her father and the company, and she is looking at the future, which is very good.”
Apollonia’s work ethic and passion fueled her drive even when she was a student. Each day presented a juggling act of new problems to solve in Paris while other Harvard students slept. As Apollonia told a student reporter from The Harvard Crimson, “The one or two hours you spend procrastinating I spend working. It’s nothing demanding at all. It was always my dream to run the company.”
Her dedication paid off, and Apollonia retained control of important decisions, strategy, and business goals, describing herself as the “commander of the ship,” determining the company’s overall direction. Today, Poilâne is an \$18 million business that employs 160 people. Poilâne runs three restaurants called Cuisine de Bar in Paris and in London, serving casual meals such as soups, salads, and open-faced tartines. The company ships more than 200,000 loaves a year to clients in 20 countries, including the United States, Japan, and Saudi Arabia. “More people understand what makes the quality of the bread, what my father spent years studying, so I am thrilled about that,” says Apollonia.
Critical Thinking Questions
1. What type of entrepreneur is Apollonia Poilâne?
2. What personal ethics drove Apollonia’s decision to take over the family business?
Sources
“About Us,” https://www.poilane.com, accessed February 1, 2018;
Meg Bortin, “Apollonia Poilâne Builds on Her Family’s Legacy,” The New York Times, https://www.nytimes.com, accessed February 1, 2018;
Lauren Collins, “Bread Winner: A Daughter Upholds the Traditions of France’s Premier Baking Dynasty,” The New Yorker, https://www.newyorker.com, December 3, 2012;
Gregory Katz, “Her Daily Bread,” American Way magazine, July 15, 2005, p. 34;
Clarel Antoine, “No Time to Loaf Around,” Harvard Crimson, http://www.thecrimson.com, October 16, 2003.
Most entrepreneurs combine many of the above characteristics. Sarah Levy, 23, loved her job as a restaurant pastry chef but not the low pay, high stress, and long hours of a commercial kitchen. So, she found a new one—in her parents’ home—and launched Sarah’s Pastries and Candies. Part-time staffers help her fill pastry and candy orders to the soothing sounds of music videos playing in the background. Cornell University graduate Conor McDonough started his own web design firm, OffThePathMedia.com, after becoming disillusioned with the rigid structure of his job. “There wasn’t enough room for my own expression,” he says. “Freelancing keeps me on my toes,” says busy graphic artist Ana Sanchez. “It forces me to do my best work because I know my next job depends on my performance.”
Managerial Ability and Technical Knowledge
A person with all the characteristics of an entrepreneur might still lack the necessary business skills to run a successful company. Entrepreneurs need the technical knowledge to carry out their ideas and the managerial ability to organize a company, develop operating strategies, obtain financing, and supervise day-to-day activities. Jim Crane, who built Eagle Global Logistics from a start-up into a \$250 million company, addressed a group at a meeting, saying, “I have never run a \$250 million company before, so you guys are going to have to start running this business.”
Good interpersonal and communication skills are important in dealing with employees, customers, and other business associates such as bankers, accountants, and attorneys. As we will discuss later in the chapter, entrepreneurs believe they can learn these much-needed skills. When Jim Steiner started his toner cartridge remanufacturing business, Quality Imaging Products, his initial investment was \$400. He spent \$200 on a consultant to teach him the business and \$200 on materials to rebuild his first printer cartridges. He made sales calls from 8.00 a.m. to noon and made deliveries to customers from noon until 5:00 p.m. After a quick dinner, he moved to the garage, where he filled copier cartridges until midnight, when he collapsed into bed, sometimes covered with carbon soot. And this was not something he did for a couple of months until he got the business off the ground—this was his life for 18 months. But entrepreneurs usually soon learn that they can’t do it all themselves. Often they choose to focus on what they do best and hire others to do the rest.
Concept Check
1. Describe the personality traits and skills characteristic of successful entrepreneurs.
2. What does it mean when we say that an entrepreneur should work on the business, not in it? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/19%3A_Entrepreneurship/19.03%3A_Characteristics_of_Successful_Entrepreneurs.txt |
1. How can the business model canvas help us to describe and assess a business model?
A business model describes the rationale of how an organization creates, delivers, and captures value. Entrepreneurs need to develop and refine a business model for themselves as they seek clarity about what they are doing, and also for discussing with colleagues, partners, and other stakeholders. Moreover, this business model will help them to identify opportunities in their internal and external environment. Originally developed by Alex Osterwalder and colleagues, the business model canvas covers the four main areas of any venture: customers, offering, infrastructure, and financial viability. There are nine building blocks that describe and assess a business model: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure. Table \(1\). depicts the business model canvas.
Business Model Canvas
Key Partnerships
• Who are our key partners and suppliers?
• Which key resources are from which partner?
• What key activities are done by partners?
Key Activities
• What key activities do our value proposition, channels, customer relationships, and revenue streams require?
Value Proposition
• What do we provide our customers?
• What problem are we solving?
• What are we offering to each customer segment?
Customer Relationships
• What type of relationship does each customer segment want?
• How costly are the relationships?
• How do we integrate them with the rest of our business model?
Customer Segments
• Who are our customers?
• From whom are we creating value?
Key Resources
• What key resources do our value proposition, channels, customer relationships, and revenue streams require?
Channels
• How will we reach our customer segments?
• How are our channels integrated?
• Which channels are the most efficient?
Cost Structure
• What are the most important costs in our business model?
• Which key activities and key resources are the most expensive?
Revenue Streams
• What are customers willing to pay?
• What and how do they currently pay?
• How much does each revenue stream contribute to overall revenue?
Table \(1\). (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
Nine Building Blocks of the Business Model Canvas
Customer segments: Without customers, businesses cannot survive. Businesses must identify and understand their customers, and they can group these customers into segments with common characteristics.
Value propositions: A company creates value, or benefits, for customers by solving a problem or satisfying a need. The value proposition is the reason that customers choose one option over another when deciding what to buy. Although certainly not an exhaustive list, customers may value: newness, performance, customization, design, brand, price, cost reduction, risk reduction, accessibility, and convenience.
Channels: Channels bring the value proposition to the customers through communication, distribution, and sales. Companies can reach their customer segments through a mix of channels, both direct (e.g., through sales force and web sales) and indirect (e.g., through own stores, partner stores, and wholesalers), to raise awareness, allow for purchase and delivery, provide customer support, and support other important functions of the business.
Customer relationships: Companies need to maintain relationships with their customers to acquire and retain customers and boost sales. Strong customer relationships can significantly impact overall customer experience. There are many categories of customer relationships including personal assistance, self-service, automated service, user communities, and co-creation.
Revenue streams: There are two types of revenue stream: revenues from one-time customers and revenues from ongoing payments. Revenue pricing mechanisms vary from fixed (e.g., predefined prices based on static variables) to dynamic (e.g., price changes based on market conditions). Revenue streams can be generated through asset sales (e.g., selling a physical product), usage fees, subscription fees, licensing, brokerage fees, advertising, and temporarily selling the use of a particular asset (e.g., lending, renting, or leasing).
Key resources: Any business needs resources—physical, financial, intellectual, and/or human—to function. These resources enable the company to provide their products or services to their customers.
Key activities: Key activities are the critical tasks that a company does to succeed and operate successfully. Different companies focus on different activities in categories such as production, problem-solving, and platform/network.
Key partnerships: Companies build partnerships to optimize their business, reduce risk, or gain resources. There are four main types of partnerships: strategic alliances between noncompetitors, coopetition—strategic alliances between competitors, joint ventures, and buyer-supplier relationships.
Cost structure: All businesses incur costs through operation, whether fixed or variable. They may also face economies of scale and scope. Companies consider their cost structures in two strategies—cost-driven, where all costs are reduced wherever possible, and value-driven, where the focus is on greater value creation. Cost structures will often consider fixed costs, variable costs, economies of scale, and economies of scope.
Business Model Canvas Application: Apple
To best illustrate the business model canvas, we can take a look at Apple illustrated in Table \(2\).
Customer segments: Apple’s main consumer segment is the mass market, and Apple sells globally to customers all over the world. These customers tend to have similar needs and problems that can be addressed through globally standardized offerings such as the iPhone and iPad (hardware) as well as iTunes (software).
Value proposition: In a competitive marketplace, Apple must offer a bundle of products and services that cater to the customer segment. As one illustration, Apple iTunes offers a seamless music experience where customers can easily find, purchase, and download music all in one place.
Channels: Customers are able to interact with Apple in person through retail stores and Apple stores as well as online through the iTunes store and Apple’s company website.
Customer relationships: Apple’s customers are dedicated to the brand and often have many Apple products, such as iPhones, iPads, and MacBooks. The Apple lovemark has become a status symbol.
Revenue streams: Apple earns most of its revenues from selling products such as iPods, and the iTunes store protects them from competition with similar features.
Key resources: Apple’s key resources include its name brand, hardware and software, and content.
Key activities: Apple products have outstanding marketing and hardware design.
Key partnerships: Through negotiations and contracts, Apple’s iTunes store is one of the world’s largest online music libraries.
Cost structure: Most of Apple’s costs come through manufacturing and marketing, including employee salaries.
Business Model Canvas for Apple
Key Partnerships
• Record companies
• OEMs
• People
• Content & agreements
Key Activities
• Marketing
• Hardware design
Value Proposition
• Seamless music experience
Customer Relationships
• Lovemark
• Switching costs
Customer Segments
• Mass market
Key Resources
• Apple brand
• iPad hardware
• iTunes software
• Content & agreements
Channels
• Retail stores
• Apple stores
• Apple.com
• iTunes store
Cost Structure
• People
• Manufacturing
• Marketing/sales
Revenue Streams
• iTunes store
• Large hardware revenues
• Some music revenues
Table \(2\). (Attribution: Copyright Rice University, OpenStax, under CC BY-NC-SA 4.0 license)
The business model canvas can be used to determine how to compete, as either an initial entrant or a fast follower. An entrepreneurial organization is often a first mover by introducing a new product or service category that can potentially define an innovation’s characteristics in the minds of buyers, gaining valuable name recognition and brand loyalty. First movers can also lock in key resources (such as certain distribution channels) and set a technology standard. Second movers have the potential advantage of learning from and improving on the first mover’s efforts. For example, second movers can take advantage of existing customers and optimize the first mover’s product to add new features, especially when customers are willing to switch. Research on the battle between first and second movers indicates that they are equally likely to win the market. One illustration of first and second movers is in China’s competitive mobile payment industry.
Expanding around the globe
The War of Two “Horses”: First and Second Movers in China’s Mobile Payment Industry
Over the last decade, Chinese people have been rapidly and systematically utilizing mobile payment—that is, payment services performed through a mobile device. This trend kicked off with China’s first e-commerce wholesale platform Alibaba, founded by Jack Ma from his humble apartment in Hangzhou, China, in 1999. Responding to eBay’s growing presence in China a few years later, Jack Ma launched taobao.com, a consumer-to-consumer (C2C) and business-to-consumer (B2C) online marketplace. To support taobao.com’s transactions, Jack Ma released Alipay later that year as a “third-party online payment platform.” Mobile payment became a reality in China when Alipay released its mobile app in 2008, which can be used to pay water, electricity, and gas bills as well as mobile phone fees. After 2011, when the first third-party payment license was issued to Alipay, more Chinese consumers replaced their credit cards and debit cards with Alipay. By 2013, Alipay overtook PayPal as the world's largest mobile payment platform. Alipay dominated 69.6 percent of China’s mobile payment market. Jack Ma was the “only horse” (the surname Ma means “horse” in Chinese) in the field and a clear first mover, but faced a solid rival in second mover IT giant Tencent.
Ma Huateng founded Tencent Inc. in 1998, and its early years focused on the iconic product of QQ, China’s first instant messaging software product. Tencent expanded into other Internet fields such as games, music, microblogging, and online shopping. By 2011, Tencent’s QQ was China’s most successful instant messaging software with over 700 million active users, and the company released WeChat, another instant messaging software product. Tencent’s two software products competed in the same space, with QQ primarily PC-based with “online” and “offline” status, and WeChat smartphone-based without “offline” status. WeChat soon acquired over 300 million users. Tencent is often described as a successful “second mover,” imitating a promising business model introduced by innovative first-mover firms and then surpassing these firms.
The two IT giants faced off in 2013 when each invested in a taxi booking app: Didi (by Tencent) and Kuaidi (by Alibaba). In an August 2013 5.0 version update of WeChat, users were surprised to find a “wallet” function added to the app, but most did not know how to use it. However, for Jack Ma and Ma Huateng, all had become clear: the two “horses” were going to war.
Tencent offered and then linked three seemingly unrelated apps: smartphone-based WeChat, taxi-booking app Didi, and a new wallet function. In January 2014, WeChat wallet was linked to Didi as the payment method. Passengers using WeChat to pay the taxi fare received a generous subsidy from Tencent, making taxi fare lower than bus fare. Alipay and the Kuaidi app responded in a similar way. While widely welcomed by white-collar workers, the money-burning campaign cost each side approximately 1.5 billion RMB (US\$244 million). For Ma Huateng, the campaign is not just about occupying the newly born taxi-booking app market in China, but also about penetrating Jack Ma’s precious share of the mobile payment market by “teaching” WeChat users how to use make mobile payments. Weeks later, Ma Huateng continued his “teaching” in the virtual red envelope campaign during Chinese Spring Festival. The virtual red envelope is modeled after the Chinese tradition of exchanging packets of money among friends and family members during holidays. WeChat introduced the “red envelope shake” to the Chinese Spring Festival Gala, during which users were invited to shake their smartphones for a chance to win red envelopes, and eight million WeChat users participated in this promotion campaign. WeChat users can save the money won to their WeChat “wallet” and then send it to others with their own red envelope. WeChat sent 1.2 billion red envelopes worth over half a billion RMB (US\$82 million) during the promotion. However, to use the money from the red envelope, WeChat users needed to add their bank card to their WeChat account and thus fully activate the WeChat payment function. Retrospectively, Jack Ma regarded the WeChat red envelope promotion as a “Pearl Harbor attack” on his territory.
After the Chinese Spring Festival, the money-burning war game between first mover Alipay and second mover WeChat continued. Both sides heavily subsidized taxi passengers on their taxi-booking apps through 2014. In the third quarter of 2014, Alipay’s market share reached a peak of 82.6 percent, but WeChat’s increasing presence the in mobile payment market was unstoppable. Both sides engaged in a new red envelope campaign during the next Spring Festival holiday. While Alipay fought hard to defend its market share, WeChat’s social nature smoothly transformed users into payers.
By the end of 2016, both sides saw continuous growth in user population; however, Alipay’s market share dropped to 54.10 percent, and Tencent and WeChat’s market share rose to 37.02 percent. In that year, consumers spent 157.55 trillion RMB (US\$23.72 trillion) on mobile devices in China, and QR codes and POS machines supporting both Alipay and WeChat could be found at street food vendors, supermarkets, department stores, and online markets.
Discussion Questions:
1. What tactics did Tencent use to encroach on Alibaba’s share of the mobile payment market?
2. What key resources did WeChat use to compete with Alipay?
3. Does WeChat’s presence in the mobile payment market always negatively affect Alipay?
4. Would you rather be a first mover or a second mover in a new technology market?
Sources:
Sophia Yan, “6 things you never knew about Alibaba”, CNN, May 12, 2015, http://money.cnn.com/2015/05/12/tech...cts/index.html;
Paul Mozur, “In Urban China, Cash Is Rapidly Becoming Obsolete”, New York Times, July 16, 2017, https://www.nytimes.com/2017/07/16/b...-payments.html;
Eva Xiao, “How WeChat Pay became Alipay’s largest rival”, Tech in Asia, April 20, 2017, https://www.techinasia.com/wechat-pay-vs-alipay;
Anonymous Author, “WeChat”, Wikipedia, October 2 2017, https://en.Wikipedia.org/wiki/WeChat...yment_services;
Anonymous Author, “WeChat red envelope”, Wikipedia, September 19, 2017, https://en.Wikipedia.org/wiki/WeChat_red_envelope;
Anonymous Author, “Alipay”, Wikipedia; September 8, 2017, https://en.Wikipedia.org/wiki/Alipay;
Nie Chenjing, “Mobile Payment Report: Alipay Shares Occupy Half of the Country”, Xinhuanet, March 31, 2017; http://news.xinhuanet.com/fortune/20...1120732899.htm;
Li Yanxia, “Central Bank Report: China Mobile’s payment amount increased by nearly 50% year-on-year in 2016, March 16, 2017, http://it.people.com.cn/n1/2017/0316...-29150183.html.
concept check
1. What are the key components of the business model canvas?
2. What are the advantages and disadvantages of being a first mover? | textbooks/biz/Management/Organizational_Behavior_(OpenStax)/19%3A_Entrepreneurship/19.04%3A_Business_Model_Canvas.txt |
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