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Organizational Behavior

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We dedicate Organizational Behavior: A Critical-Thinking Approach to all of our students who have believed in us, inspired us, and encouraged us to try new ways of teaching.

Chris Neck dedicates this book to his wife, Jennifer, and his children, Bryton and GiGe, for helping him realize what is truly important in life.

Jeff Houghton dedicates this book to his wife, Loree, and sons, Pierce and Sloan, and thanks them for all their support, encouragement, and love.

Emma Murray dedicates this book to her husband, Sam, and her children, Ava and Anya, for their unending love and support.

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Organizational Behavior

A Critical-Thinking Approach

Christopher P. Neck Arizona State University Jeffery D. Houghton

West Virginia University Emma L. Murray

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FOR INFORMATION:

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Printed in the United States of America

Names: Neck, Christopher P., author. | Houghton, Jeffery D., author. | Murray, Emma L., author.

Title: Organizational behavior : a critical-thinking approach / Christopher P. Neck, Jeffery D. Houghton, Emma L. Murray.

Description: Los Angeles : SAGE, [2017] | Includes bibliographical references and index.

Identifiers: LCCN 2015039717 | ISBN 9781506314402 (hardcover : alk. paper)

Subjects: LCSH: Organizational behavior.

Classification: LCC HD58.7 .N43 2017 | DDC 658.3—dc23 LC record available at http://lccn.loc.gov/2015039717

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This book is printed on acid-free paper.

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Brief Contents

Preface Acknowledgments About the Authors Part 1. Introduction

Chapter 1. Why Organizational Behavior Matters Part 2. Individual Processes

Chapter 2. Diversity and Individual Differences Chapter 3. Emotions, Attitudes, and Stress Chapter 4. Perception and Learning Chapter 5. Motivation: Concepts and Theoretical Perspectives Chapter 6. Motivation: Practices and Applications

Part 3. Teams and Teamwork Chapter 7. Teams Chapter 8. Decision Making and Ethics Chapter 9. Creativity and Innovation Chapter 10. Conflict and Negotiation

Part 4. Leadership and Influence Processes Chapter 11. Leadership Perspectives Chapter 12. Influence, Power, Politics Chapter 13. Effective Communication

Part 5. Organizational Context Chapter 14. Organizational Culture Chapter 15. Organizational Strategy Chapter 16. Organizational Change and Development Chapter 17. Organizational Structure, Design, and Technology

Glossary Endnotes Self-Tests Name Index Subject Index

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Detailed Contents

Preface Acknowledgments About the Authors Part 1. Introduction

Chapter 1. Why Organizational Behavior Matters What Is Organizational Behavior and Why Is It Important? Managing Human Capital

Value Rareness Inimitability

Behavioral Science Disciplines That Contribute to OB OB in the Real World

Psychology Sociology Social Psychology Political Science Anthropology

A Critical-Thinking Approach to OB The Scientific Method

Examining the Evidence Open Systems Theory

OB Challenges and Opportunities Globalization Economic Factors Workforce Diversity Customer Service People Skills Innovation and Change Sustainability

Global Ethics Three Levels of Analysis in OB

Individuals Teams Organizations

Positive OB and High-Involvement Management In Review Key Terms Exercise 1.1 Exercise 1.2

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Exercise 1.3 Case Study 1.1 Self-Assessment 1.1

Part 2. Individual Processes Chapter 2. Diversity and Individual Differences

Diversity in OB Surface-Level and Deep-Level Diversity Age/Generation Diversity Race and Ethnicity Gender Diversity and Sexual Orientation Diversity of Abilities Diversity Training

The Importance of Individual Differences OB in the Real World Nature Versus Nurture Myers-Briggs Type Indicator and the Four Temperaments

Myers-Briggs Preferences The Sixteen Myers-Briggs Types

The Big Five Model Applying The Big Five

Examining the Evidence Other Personality Attributes In Review Key Terms Thinking Critically About the Case of Laura Pierce Exercise 2.1 Exercise 2.2 Exercise 2.3 Case Study 2.1 Self-Assessment 2.1

Chapter 3. Emotions, Attitudes, and Stress Emotions in Organizational Behavior Emotions in the Workplace

Emotional Contagion Emotional Labor Emotional Regulation Emotional Intelligence

Attitudes and Behavior How Attributes Are Created

OB in the Real World Cognitive Dissonance

Common Workplace Attitudes

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Stress in the Workplace Stressors

Stress-Related Outcomes and Wellness Managing Stress

Examining the Evidence Wellness

In Review Key Terms Thinking Critically About the Case of Laura Pierce Exercise 3.1 Exercise 3.2 Exercise 3.3 Case Study 3.1 Self-Assessment 3.1

Chapter 4. Perception and Learning Perception: Interpreting Our Environment Components of the Selection Process

The Perceiver The Environment The Focal Object

Why Is Perception Important? Common Perceptual Distortions Common Attribution Errors Learning Processes: Behavioral Theory

Classical Conditioning OB in the Real World

Operant Conditioning Theory Reinforcement Theory

Learning Processes: The Cognitive View Examining the Evidence

Triadic Reciprocal Model of Behavior In Review Key Terms Thinking Critically About the Case of Laura Pierce Exercise 4.1 Exercise 4.2 Exercise 4.3 Case Study 4.1 Self-Assessment 4.1

Chapter 5. Motivation: Concepts and Theoretical Perspectives The Motivation Process OB in the Real World

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Needs Theories Maslow’s Hierarchy of Needs ERG Theory Herzberg’s Two-Factor Theory McClelland’s Acquired Needs Theory Money as a Motivator

Examining the Evidence Equity Theory

Organizational Justice Goal-Setting Theory

Specific Goals Difficult Goals Goal Acceptance and Commitment Feedback

Expectancy Theory In Review Key Terms Thinking Critically About the Case of Kate O’Donnell Exercise 5.1 Exercise 5.2 Exercise 5.3 Case Study 5.1 Self-Assessment 5.1

Chapter 6. Motivation: Practices and Applications Intrinsic Motivation OB in the Real World Types of Extrinsic Rewards

Seniority-Based Pay Job Content–Based Pay Skill-Based Pay Performance-Based Pay

Motivation Through Job Design Psychological Empowerment Nontraditional Work Schedules Examining the Evidence In Review Key Terms Thinking Critically About the Case of Katie O’Donnell Exercise 6.1 Exercise 6.2 Exercise 6.3 Case Study 6.1

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Self-Assessment 6.1 Part 3. Teams and Teamwork

Chapter 7. Teams Teams and Teamwork in Contemporary Organizations

Teams Versus Groups Are Teams Effective?

Types of Teams OB in the Real World A Model of Team Effectiveness: Context and Composition

Team Contextual Influences Team Composition

A Model of Team Effectiveness: Processes and Outcomes Team Norms and Cohesion Synergy: Process Gains and Losses

Examining the Evidence Team Decision Making

Advantages and Disadvantages of Team Decision Making Team Decision Approaches

In Review Key Terms Thinking Critically About the Case of Brian Stevens Exercise 7.1 Exercise 7.2 Exercise 7.3 Case Study 7.1 Self-Assessment 7.1

Chapter 8. Decision Making and Ethics Decision Making and Problem Solving A Rational Model of Decision Making

Define the Problem Identify and Weigh Decision Criteria Generate Multiple Alternatives Rate Alternatives on the Basis of Decision Criteria Choose, Implement, and Evaluate the Best Alternative

Decision Making in the Real World Bounded Rationality Satisficing Decisions Intuition Heuristics Biases and Errors

Examining the Evidence Ethical Decision Making in Organizations

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OB in the Real World Ethical Decision-Making Approaches In Review Key Terms Thinking Critically About the Case of Brian Stevens Exercise 8.1 Exercise 8.2 Exercise 8.3 Case Study 8.1 Self-Assessment 8.1

Chapter 9. Creativity and Innovation Creativity and Innovation in Individuals, Teams, and Organizations OB in the Real World A Three-Component Model of Creativity

Domain-Relevant Skills and Expertise Creativity-Relevant Processes Intrinsic and Extrinsic Motivation

Support for Creativity in Organizations Creative Potential Versus Practiced Creativity Three Types of Support for Creativity

Examining the Evidence The Innovation Process

Idea Generation Problem Solving Implementation and Diffusion

Types of Innovation in Organizations In Review Key Terms Thinking Critically About the Case of Brian Stevens Exercise 9.1 Exercise 9.2 Exercise 9.3 Case Study 9.1 Self-Assessment 9.1

Chapter 10. Conflict and Negotiation Conflict in Teams and Organizations

Functional and Dysfunctional Conflict Types of Conflict The Conflict Process

Conflict Management Strategies Examining the Evidence Trust in Organizations

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Types of Trust Outcomes of Trust

Negotiation and Dispute Resolution Getting Ready to Negotiate

OB in the Real World Shaping Expectations Providing Supporting Evidence Negotiating the Deal Agreement and Implementation Third-Party Dispute Resolution Approaches

Bargaining Approaches Integrative Bargaining Strategies Other Negotiating Strategies

In Review Key Terms Thinking Critically About the Case of Brian Stevens Exercise 10.1 Exercise 10.2 Exercise 10.3 Case Study 10.1 Self-Assessment 10.1

Part 4. Leadership and Influence Processes Chapter 11. Leadership Perspectives

What Is Leadership? Formal and Informal Leadership OB in the Real World

Management Versus Leadership Basic Leadership Types Early Leadership Perspectives

Trait Leadership Perspective Behavioral Leadership Perspective Contingency Leadership Perspective Hersey and Blanchard’s Situational Leadership Model House’s Path–Goal Theory Substitutes for Leadership Model

Contemporary Leadership Perspectives Leader–Member Exchange (LMX) Theory Transformational Leadership Charismatic Leadership

Examining the Evidence Follower-Centered Leadership Perspective

Power-Distributing Leadership Perspectives

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Empowering Leadership Shared Leadership Self-Leadership

Values-Based Leadership Perspectives Authentic Leadership Spiritual Leadership Servant Leadership Ethical Leadership

Cross-Cultural Leadership Leadership and Gender In Review Key Terms Thinking Critically About the Case of Langston Burrows Exercise 11.1 Exercise 11.2 Exercise 11.3 Case Study 11.1 Self-Assessment 11.1

Chapter 12. Influence, Power, Politics Power: Definition and Overview Basic Sources of Power

Organizational Power Personal Power

Using Power: Tactics for Influencing Others Consequences of Influence Tactics Organizational Politics

Organizational Factors Examining the Evidence

Individual Factors Possible Outcomes of Political Behavior

OB in the Real World In Review Key Terms Thinking Critically About the Case of Langston Burrows Exercise 12.1 Exercise 12.2 Exercise 12.3 Case Study 12.1 Self-Assessment 12.1

Chapter 13. Effective Communication The Role of Effective Communication in Influencing Others Types of Communication Channels

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OB in the Real World Barriers to Communication

Active Listening Examining the Evidence Communicating in Organizations Cross-Cultural Communication

Low-Context Versus High-Context Cultures Social Context Other Complicating Factors Overcoming Difficulties in Cross-Cultural Communication

In Review Key Terms Thinking Critically About the Case of Langston Burrows Exercise 13.1 Exercise 13.2 Exercise 13.3 Case Study 13.1 Self-Assessment 13.1

Part 5. Organizational Context Chapter 14. Organizational Culture

Characteristics of Organizational Culture Components of Culture

OB in the Real World The Competing Values Framework Dominant Culture, Subculture, Counterculture Strong and Weak Cultures

Artifacts of Organizational Culture Functions of Organizational Culture

External Adaptation Internal Integration Potential Dysfunctions of Culture

Types of Organizational Cultures Positive Organizational Culture Communal Culture Fragmented Culture Mercenary Culture Networked Cultures Ethical Culture Spiritual Culture

Examining the Evidence Shaping Organizational Culture

Influence of Founders and Top Management

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Selection Practices Socialization Methods Feldman’s Model of Organizational Socialization

In Review Key Terms Thinking Critically About the Case of Yolande Turner and Pioneering Health Exercise 14.1 Exercise 14.2 Exercise 14.3 Case Study 14.1 Self-Assessment 14.1

Chapter 15. Organizational Strategy Organizational Strategy OB in the Real World

Strategic Planning Process Levels of Strategy Competitive Advantage and Strategy Types Types of Strategies

Organizational Learning as a Strategic Process Acquiring Knowledge Distributing Knowledge Retaining Knowledge

Globalization Opportunities and Challenges

Adapting Organizational Practices Across Cultures Hofstede’s Dimensions Global Integration Versus Local Responsiveness Leadership Across Different Cultures

International Assignments and Career Development Culture Shock and Cultural Adaptation Stages of Cultural Adaptation Expatriate Failure Benefits and Costs of International Assignments

Examining the Evidence In Review Key Terms Thinking Critically About the Case of Yolande Turner and Pioneering Health Exercise 15.1 Exercise 15.2 Exercise 15.3

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Case Study 15.1 Self-Assessment 15.1

Chapter 16. Organizational Change and Development The Change Process

The DADA Syndrome OB in the Real World

Lewin’s Basic Change Model Lewin’s Force Field Analysis

Forces for Change External Forces for Change Internal Forces for Change

Resistance to Change Individual Sources for Resistance to Change Organizational Sources of Resistance to Change

Examining the Evidence Reducing Resistance to Change

Organizational Development Types of OD Change Interventions

Structural Interventions Task-Technology Interventions Sociotechnical Systems Redesign Quality of Worklife Interventions People-Focused Interventions

In Review Key Terms Thinking Critically About the Case of Yolande Turner and Pioneering Health Exercise 16.1 Exercise 16.2 Exercise 16.3 Case Study 16.1 Self-Assessment 16.1

Chapter 17. Organizational Structure, Design, and Technology Organizational Structure OB in the Real World Basic Organizing Concepts

Specialization and Division of Labor Departmentalization Chain of Command Span of Control Centralization and Decentralization

Examining the Evidence

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Mechanistic and Organic Models Formalization and Bureaucracy

Types of Organizational Structures Organizational Design Integrating Technology

Technology and Organizational Design Designing Technology

In Review Key Terms Thinking Critically About the Case of Yolande Turner and Pioneering Health Exercise 17.1 Exercise 17.2 Exercise 17.3 Case Study 17.1 Self-Assessment 17.1

Glossary Endnotes Self-Tests Name Index Subject Index

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Preface

Nikos Kazantzakis once wrote:

Ideal teachers are those who use themselves as bridges over which they invite their students to cross; then having facilitated their crossing, joyfully collapse, encouraging them to create bridges of their own.

Our goal as an author team was to write an organizational behavior (OB) textbook that really engaged students—not one that involved memorizing its content for the sole purpose of passing exams and then quickly forgetting whatever they had learned. We wanted to write a textbook that students could use well after the semester was over to help them actively learn and think critically in order to understand how people behave as they pursue their career goals. In other words, we wanted to help students “build bridges” to their goals and dreams. We hope we have achieved our goal in Organizational Behavior: A Critical- Thinking Approach for students in organizational behavior classes across the world.

In our 21st-century business world, organizational behavior has taken on a new significance. In an environment in which competition is fiercer than ever, it is people who act as differentiators in the workplace. In every aspect of business, people are the cornerstone of success. This is why it is so important to understand human behavior.

The following quote from Curt Coffman and Gabriela Gonzalez-Molina in Follow This Path: How the World’s Greatest Organizations Drive Growth by Unleashing Human Potential reinforces the importance of understanding human behavior in organizations:

The success of your organization doesn’t depend on your understanding of economics, or organizational development, or marketing. It depends, quite simply, on your understanding of human psychology: how each individual employee connects with your company and how each individual employee connects with your customers.

One of the earliest studies of organizational behavior was carried out at AT&T’s Western Electric Hawthorne plant by Harvard’s Elton Mayo in 1927. The principle findings of this study showed that when workers are given the opportunity to contribute their thinking and learning to workplace issues, their job performance improves. This finding is still relevant today. Studies in organizational behavior add to our understanding of the individuals working within all types of businesses, from corporate to entrepreneurial. Organizational Behavior: A Critical-Thinking Approach attempts to capture the body of knowledge that

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encompasses the organizational behavioral research into a book that is fun to read, captures the reader’s attention, and imparts the organizational behavioral knowledge in a way that promotes critical thinking.

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Our Vision

Organizational Behavior: A Critical-Thinking Approach is a textbook for college-level undergraduate students seeking insight into individual behavior, group behavior, organizational structure, and organizational processes through the lens of critical thinking.

Organizational behavior courses are defined by the following trends: larger course sizes, the need for continually changing content to stay relevant, and instructors working to make vast online resources meaningful to the student experience. The cumulative effect of these trends on instructors is a much more demanding environment for teaching and learning. In a quickly changing business environment, many books need a complete rewrite to be fully up-to-date. Even better, though, this is a new book—written from today’s perspective, with an eye to the near future. Our goal in writing this book is to bring to the classroom a fresh view of human behavior in organizations.

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What Makes Our Book Unique

Critical-thinking approach. Students learn to analyze behavior patterns and assess consequences to predictive paths. Managers make decisions that have delayed consequences on situations, with extraordinary complexity, yet predictable patterns of behavior. A student’s ability to make decisions that result in expected and desirable consequences should be the sole objective of all organizational behavior textbooks. Continuing case narratives. Students are associative thinkers and continuously seek multiple data points to connect into a constellation of meaning. People retain knowledge through meaningful narratives, which means that stories that illustrate richly textured situations are better for learning than listing brands and public figures in the chapters. Practical applications, self-assessments, experiential exercises, and additional pedagogical features make OB come to life and encourage students to engage with OB concepts in meaningful ways.

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A Critical-Thinking Approach

We believe that in today’s business world, organizational behavior is more important than ever. Companies are looking for employees and managers who have strong organizational behavior skills. Critical thinking, problem solving, and creativity are valuable and essential commodities. Critical thinking is an essential skill; managers use critical thinking to understand, explain, predict, and influence behavior in the workplace.

Our text provides a comprehensive overview of OB theories and processes with a strong emphasis on critical-thinking applications in order to equip students with the information and skills they need to thrive in organizations today.

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Why Critical Thinking Matters in OB

A critical thinker uses his or her intelligence, knowledge, and skills to question and carefully explore situations and to arrive at thoughtful conclusions based on evidence and reason. Someone thinking critically is able to get past biases and view situations from different perspectives to ultimately improve his or her understanding of the world.

Business leaders use critical thinking when making decisions, solving problems, gathering information, and asking questions. Time and again, research has shown the effectiveness of critical thinking in the workplace. In an article published in the journal Current Directions in Psychological Science, the authors report that cognitive ability tests, including critical- thinking tests “are among the strongest and most consistent predictors of performance across academic and work settings.”1

In Organizational Behavior: A Critical-Thinking Approach, we use the components and core skills of critical thinking to teach the many facets of organizational behavior to students. Adding critical thinking to these behaviors further enhances students’ abilities to strategically think as well as analyze and solve problems. By seeking first to understand the dynamics of human behavior, then sharing the knowledge learned, they will be able to build more successful relationships within their personal and professional lives.

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How Our Book Incorporates Critical Thinking

A lot of OB books claim to help students to develop their critical-thinking skills. What makes our book different? Our book incorporates critical thinking on every page. Instead of passively reading through each chapter, the student is asked to pause, reflect, and engage more critically with the content.

Chapter 1 explains the central role critical thinking plays in OB and introduces a five-step critical-thinking framework that students can apply to challenging scenarios, problems, decisions, and other issues. Thinking Critically questions tied to Bloom’s Taxonomy appear throughout each chapter. Bracketed notations identify which domain(s) of Bloom’s Taxonomy the question falls into: understand, apply, analyze, evaluate, and create. These questions don’t necessarily have a right or wrong answer but rather are designed to challenge students to think critically and achieve higher levels of learning. Examining the Evidence boxes highlight a recent seminal OB study from high- quality OB journals and discusses its practical applications in the business world. Critical-thinking questions at the end of each box allow students to see how research in academe applies to real-life settings. OB in the Real World boxes feature real-world anecdotes, quotes, and examples from seasoned business professionals who share their knowledge and experience with students by describing how they used OB to positively influence outcomes and achieve organizational success. Critical-thinking questions help students see how OB concepts impact real people and organizations.

These critical-thinking elements are perfect for assignments or class discussions and lively debate.

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Continuing Case Narratives

In order to support our balanced approach to research and practice, and our pedagogical commitment to critical thinking, Organizational Behavior: A Critical-Thinking Approach takes a new approach to the style of OB textbooks. We include all the concepts and key terms that are expected, but we do so in a context that aids instructors in showing how and why they are applied in real world situations, and in a style that ignites the imagination and sparks discussion.

Rather than a series of unrelated organizational snapshots that offer only a superficial understanding of OB content, we create rich, continuing case study narratives that illustrate the exciting and challenging complexities of the real world. Each of the main OB subdivisions is presented through business case narratives that span multiple chapters. These continuing case narratives serve two key purposes:

1. Provide fully imagined characters and relationships that reflect challenges and opportunities that managers encounter

2. Provide sufficiently rich contexts to practice critical-thinking skills in ways that mimic actual workplace dynamics. How do we ensure that these case narratives are consistent with top-tier research and the challenges that businesses are addressing in today’s economy?

For Parts 2–5 of the book, we develop a case representing an industry and featuring several managers in an organization. These continuing cases are inspired by real people and real events but fictionalized for the learning process. Chapters include a Back to the Case recap that summarizes the events of the previous chapter’s case narrative, making it easy for instructors to assign chapters out of order.

Following is a summary of each continuing case narrative in the text:

Chapters 2–4. The Case of Laura Pierce: Differences at the West Texas Regional Theatre

The narrative focuses on Laura Pierce, a newly employed marketing and development director at the financially struggling West Texas Regional Theatre (WTRT), and the challenges she faces in trying to overcome individual differences in order to help save the theatre. In Chapter 2, Laura meets her new colleagues and gets to know more about their different backgrounds and personalities. In Chapter 3, Laura introduces her ideas to drive business to WTRT but needs to navigate the attitude and behavior of the staff. In Chapter 4, Laura deals with the consequences of differing perceptions as she meets with the WTRT board members to discuss the theatre’s financial decline.

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Chapters 5–6. The Case of Katie O’Donnell: Motivating Staff at the Waterfront Grill

Katie O’Donnell is an MBA student who has been a server at the restaurant for the past two years and just accepted the job of assistant manager at the Waterfront Grill in upstate New York. She sees her promotion as an opportunity to identify and solve a number of problems she has experienced at the restaurant over the past two years. In Chapter 5, Katie focuses on addressing high turnover by suggesting different strategies to resolve problems and motivate staff at the Waterfront Grill. In Chapter 6, Katie starts to put some of these motivational concepts into practice with mixed results.

Chapters 7–10. The Case of Brian Stevens: Trouble at the Tractor Assembly Plant

HR Manager Brian Stevens has been working in a tractor-engine manufacturing plant in the Midwest. He recently received a promotion to plant manager at the company’s tractor assembly plant and reports directly to the president of the company, Hans Wagner. Over the course of the narrative, Brian faces challenges across different teams and departments and is forced to make some tough decisions. In Chapter 7, Brian discovers one of the main problems in the tractor assembly plant: the team in the purchasing department is underperforming and he must work with the team to resolve the issue. In Chapter 8, Brian faces an ethical dilemma when his boss, Hans Wagner, tries to convince Brian to accept his decision to make some unethical cost-cutting initiatives. In Chapter 9, Brian faces the challenge of creating innovative new machinery that will increase productivity. In Chapter 10, Brian must deal with some conflict when new competitors threaten the plant’s new product and use some negotiation strategies in order to resolve the conflict.

Chapters 11–13. The Case of Langston Burrows: Leadership Challenges

Langston Burrows is a recent college graduate with a bachelor’s degree in business administration who has been offered a place in the leadership development program (LDP) at a mid-sized regional bank. Langston sets out to determine his own leadership style. In Chapter 11, Langston begins a three-month rotational leadership position and gets to know the bank staff and experiment with different leadership styles. In Chapter 12, Langston learns about how different people wield power and influence and endures the unfair political behavior of a more senior colleague. In Chapter 13, Langston must overcome some communication barriers in order to find a new role within the bank.

Chapters 14–17. The Case of Yolande Turner: Pioneering

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Health Goes International

Pioneering Health is a small organization based outside Chicago and consisting of 300 people. Headed by founder and CEO Yolande Turner, a former pharmaceutical-product line manager, the company sells disease management strategies to other health care providers, associations, and corporations that offer health insurance. This OB Story follows Yolande as she takes the business international in an effort to break into new markets. Chapter 14 describes Pioneering Health and its organizational culture. In Chapter 15, Yolande and her senior team work out strategies to expand the business internationally, choosing Germany as a location. In Chapter 16, Yolande must implement some organizational changes and developments to improve the working relationships among staff members and overcome resistance to change. In Chapter 17, Yolande introduces a new organizational structure to meet the needs of the rapidly expanding Frankfurt office.

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End-of-Chapter Features

In each chapter, we include traditional chapter review materials to help students check their comprehension and prepare for quizzes and exams.

In Review, organized by learning objective, summarizes key chapter information Thinking Critically About the Case challenges students to apply the five-step critical-thinking framework to the fictionalized chapter case. Short exercises and experiential exercises are designed to help students build valuable experience and increase their skills through decision-oriented and hands-on exercises. Notes on the instructor resources site include tips on how to best use the exercises in class as well as suggestions for adapting these experiential exercises to use in online or large classes. Self-assessments. The assessments allow students to apply chapter content to their own lives and better understand their own behaviors, skills, and strengths. Case studies profile real-world companies and people and illustrate how OB concepts function in the real world, providing students with engaging case examples and opportunities to apply OB concepts to the case studies. Self-Tests allow students to quickly check their knowledge of key chapter ideas.

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Content and Organization

Each chapter is introduced by an OB model that provides students with a big picture overview of how all the chapters and parts fit together.

Chapter 1, “Why Organizational Behavior Matters,” explains how and why OB has become significant in today’s organizations and describes the value of critical thinking in making thoughtful, effective decisions.

Chapter 2, “Diversity and Individual Differences,” explores the types of diversity and the importance of accepting and respecting individual personalities in order to create a harmonious workforce.

Chapter 3, “Emotions, Attitudes, and Stress,” examines how emotions influence our behavior and the behavior of those around us in the workplace; common workplace attitudes and the relationship between attitudes and behaviors; and the different ways in which stress can affect behavior in the workplace.

Chapter 4, “Perception and Learning,” describes the ways in which we interpret our environment; the factors that can influence and distort perception; and the different learning processes that shape our perceptions.

Chapter 5, “Motivation: Concepts and Theoretical Perspectives,” introduces the theories of motivation and how they influence behavior in the workforce.

Chapter 6, “Motivation: Practices and Applications,” outlines the practical ways and strategies used by organizations to encourage motivation and empower employees.

Chapter 7, “Teams,” emphasizes the critical role of teams and teamwork in today’s organizations; types of teams; and the components that make up an effective team.

Chapter 8, “Decision Making and Ethics,” addresses the main types of decisions made in organizations; the factors that influence how these decisions are made; and the various approaches to ethical decision-making.

Chapter 9, “Creativity and Innovation,” highlights the types of creativity and innovation processes; their importance to organizations; and how they affect organizational behavior.

Chapter 10, “Conflict and Negotiation,” describes the impact of conflict on organizational behavior and the ways in which negotiation and bargaining can help resolve conflict.

Chapter 11, “Leadership Perspectives,” explains the different types of leaders through theories and perspectives and discusses cultural and gender issues in leadership.

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Chapter 12, “Influence, Power, Politics,” discusses power and politics in the context of leadership, and describes the tactics and outcomes of different influence tactics.

Chapter 13, “Effective Communication,” provides an overview of the basic model of communication; the types of communication channels; and key barriers to effective communication.

Chapter 14, “Organizational Culture,” explores the facets of organizational culture and how culture is shaped and molded in organizations.

Chapter 15, “Organizational Strategy,” describes the importance of effective strategies in order to achieve organizational goals and explores strategies in the context of globalization and across cultures.

Chapter 16, “Organizational Change and Development,” explains the change process; the reasons behind resistance to change; and how organizational development is used to cope with internal and external changes.

Chapter 17, “Organizational Structure, Design, and Technology,” focuses on the impact of organizational structure on behavior in organizations; how organizational design is connected to organizational behavior; and how technology is integrated into organizational structure and design.

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Ancillaries

Personalized Learning Tools and Easy-to-Use Teaching Resources

Designed to enhance each student’s learning experience, SAGE edge is a robust online environment featuring carefully crafted tools and resources that encourage review, practice, and critical thinking to give students the edge they need to master course content.

SAGE edge for Instructors supports teaching with quality content, featuring:

Course management system integration that makes it easy for student test results to seamlessly flow into your gradebooks so you can track your students’ progress Test banks built on Bloom’s Taxonomy to provide a diverse range of test items, which allow you to save time and offer a pedagogically robust way to measure your students’ understanding of the material Sample course syllabi with suggested models for structuring your course Editable, chapter-specific PowerPoint slides that offer flexibility when creating multimedia lectures EXCLUSIVE access to full-text SAGE journal articles to expose students to important research and scholarship tied to chapter concepts Video and multimedia content that enhances student engagement and appeal to different learning styles Lecture notes that summarize key concepts on a chapter-by-chapter basis to help you with preparation for lectures and class discussions Sample answers to in-text questions that provide an essential reference Additional critical-thinking challenges, including suggested writing prompts and assignments Lively and stimulating experiential exercises that can be used in class to reinforce active learning Teaching notes for the cases to guide analysis Ethical dilemmas for each chapter require students to respond to real-world scenarios and decide what they would do in those situations Suggested film clips showing OB in the movies that include analysis and critical- thinking questions Web resources that provide further research and insights.

SAGE edge for Students helps students accomplish their coursework goals in an easy-to- use, rich learning environment that offers:

Mobile-friendly flashcards to strengthen understanding of key concepts Mobile-friendly practice quizzes to encourage self-guided assessment and practice

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Carefully selected video and multimedia content that enhance exploration of key topics EXCLUSIVE access to full-text SAGE journal articles and other readings, which support and expand on chapter concepts Web resources that provide further research and insights Learning objectives with summaries that reinforce the most important material Online action plans that allow you to track your progress and enhance your learning experience

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ENDNOTE

1. Kuncel, Nathan R., and Sarah A. Hezlett. “Fact and Fiction in Cognitive Ability Testing for Admissions and Hiring Decisions.” Current Directions in Psychological Science 19, no. 6 (December 2010): 339−345.

In the electronic edition of the book you have purchased, there are several icons that reference links (videos, journal articles) to additional content. Though the electronic edition links are not live, all content referenced may be accessed at edge.sagepub.com/neckob . This URL is referenced at several points throughout your electronic edition.

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Acknowledgments

The authors thank all those people who have supported our efforts in writing this book. There are a plethora of people who contributed to making this text a reality. First, we thank all of the students who over the years have encouraged us to leave our teaching comfort zone to explore new and innovative ways of teaching. It was through these experiences that we obtained the courage to attempt to write such a book as Organizational Behavior: A Critical-Thinking Approach. We also thank our respective deans Amy Hillman at Arizona State (W. P. Carey School of Business) and Nancy McIntyre at West Virginia University’s College of Business & Economics for their support for this project. We thank our department heads (Trevis Certo, Arizona State, and Abhishek Srivastava, West Virginia University) for their encouragement as well. Chris Neck thanks Duane Roen (Dean of the College of Letters and Sciences at Arizona State University) for his steadfast support and encouragement to excel in the classroom.

For their thoughtful and helpful comments and ideas on our manuscript, we sincerely thank the following reviewers. Our book is a better product because of their insightful suggestions.

Tracy H. Porter, Cleveland State University Samira B. Hussein, Johnson County Community College Lisa M. Nieman, Indiana Wesleyan University Tommy Nichols, Texas Wesleyan University Steven D. Charlier, Georgia Southern University Daniel S. Marrone, Farmingdale State College Linda Hefferin, Columbia College of Missouri Robert D. Gulbro, Florida Institute of Technology Deborah S. Butler, Georgia State University Christine R. Day, Eastern Michigan University Janice S. Gates, Western Illinois University Nathan Himelstein, Essex County College Harriet L. Rojas, Indiana Wesleyan University Andrea E. Smith-Hunter, Siena College Maria D. Vitale, Brandman University, Chaffey College, and UCLA Extension Audrey M. Parajon, Wilmington University Frederick R. Brodzinski, The City College of New York Michael J. Alleruzzo, Saint Joseph’s University Jacqueline Mayfield, Texas A&M International University Milton Mayfield, Texas A&M International University Bob Waris, University of Missouri-Kansas City

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Ann Snell, Tulane University Mike Shaner, Saint Louis University Susan Knapp, Kaplan University Jason Jackson, Kaplan University Palaniappan Thiagarajan, Jackson State University Maria Minor, Kaplan University David J. Biemer, Texas State University Marla Lowenthal, University of San Francisco Avan Jassawalla, SUNY Geneseo Warren Matthews, LeTourneau University Eric B. Dent, Fayetteville State University

It takes a team to write a textbook, and we thank those behind-the-scenes individuals who assisted in the research, development, and/or editing of various parts of this book. Specifically, we thank Elizabeth Parsons, Marisa Keegan, Amanda Rogers, Rachel Wilkerson, Nishant Mahajan, Varun Parmar, Kyle Helmle, Erich Weber, and Prakrut Desai.

In addition, we thank the fine folks at SAGE for bringing this book to fruition. Our dream of creating an innovative OB textbook and ancillary package has become a reality because of our amazing, energetic, and encouraging acquisitions editor, Maggie Stanley. She has been a champion for this book and our ideas (and there were many!) every step of the way. We can’t thank her enough for her dedication and support. Elisa Adams, our talented developmental editor, pushed us to explore new ideas and our associate editor, Abbie Rickard, kept us on track to write the best book possible. David Felts, our production editor, made sure that everything that needed to happen did indeed happen and kept all of us on track. We appreciate all of his hard work, creativity, and attention to detail. We are also grateful to Ashlee Blunk and Mark Achenbach from SAGE, who planted the seeds for this book many years ago.

We are grateful to Harriet Rojas (Indiana Wesleyan University), Milton R. Mayfield (Texas A&M International University), and Jacqueline R. Mayfield (Texas A&M International University) for contributing valuable, hands-on experiential exercises.

Designer Gail Buschman came up with an elegant and contemporary look for this book that visually brings to life our ideas more than we could have ever imagined. Nicole Mangona took care of a myriad of tasks during the development of the manuscript with an energy and enthusiasm that was inspiring. Liz Thornton, our marketing manager, did a great job coordinating the promotion of our book, from organizing focus groups to overseeing all of the professor outreach efforts. And we thank our families for “living without us” as we worked diligently on completing this textbook.

Christopher P. Neck

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Jeffery D. Houghton

Emma L. Murray

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About the Authors

Christopher P. Neck, PhD Dr. Christopher P. Neck is currently an associate professor of management at Arizona State University, where he held the title “University Master Teacher.” From 1994 to 2009, he was part of the Pamplin College of Business faculty at Virginia Tech. He received his PhD in management from Arizona State University and his MBA from Louisiana State University. Dr. Neck is author of the books Beyond Self- Leadership: Empowering Yourself and Others to Personal Excellence (forthcoming, SAGE); Fit To Lead: The Proven Eight-Week Solution for Shaping Up Your Body, Your Mind, and Your Career (St. Martin’s 2004; Carpenter’s Sons Publishing 2012); Mastering Self-Leadership: Empowering Yourself for Personal Excellence, sixth edition (Pearson 2013); The Wisdom of Solomon at Work (Berrett-Koehler 2001); For Team Members Only: Making Your Workplace Team Productive and Hassle-Free (Amacom Books 1997); and Medicine for the Mind: Healing Words to Help You Soar, fourth edition (Wiley 2012). Dr. Neck is also the coauthor of the principles of management textbook, Management: A Balanced Approach to the 21st Century (Wiley 2013); and the upcoming introduction to entrepreneurship textbook, Entrepreneurship (SAGE forthcoming). Dr. Neck’s research specialties include employee/executive fitness, self-leadership, leadership, group decision-making processes, and self-managing teams. He has more than 100 publications in the form of books, chapters, and articles in various journals. Some of the outlets in which his work has appeared include Organizational Behavior and Human Decision Processes, Journal of Organizational Behavior, Academy of Management Executive, Journal of Applied Behavioral Science, Journal of Managerial Psychology, Executive Excellence, Human Relations, Human Resource Development Quarterly, Journal of Leadership Studies, Educational Leadership, and Commercial Law Journal. Because of Dr. Neck’s expertise in management, he has been cited in numerous national publications, including the Washington Post, the Wall Street Journal, the Los Angeles Times, the Houston Chronicle, and the Chicago Tribune. Additionally, each semester Dr. Neck teaches an introductory management course to a single class of anywhere from 500 to 1,000 students. Dr. Neck was the recipient of the 2007 Business Week Favorite Professor Award. He is featured on www.businessweek.com as one of the approximately 20 professors from across the world receiving this award. Dr. Neck currently teaches a mega-section of management principles to approximately 500 students at Arizona State University. He recently received the Order of Omega Outstanding Teaching Award for 2012. This award is awarded to one professor at Arizona State by the Alpha Lambda chapter of this leadership

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fraternity. His class sizes at Virginia Tech filled rooms with up to 1,000 students. He received numerous teaching awards during his tenure at Virginia Tech, including the 2002 Wine Award for Teaching Excellence. Also, Dr. Neck was the 10-time winner (1996, 1998, 2000, 2002, 2004, 2005, 2006, 2007, 2008, and 2009) of the Students’ Choice Teacher of The Year Award (voted by the students for the best teacher of the year within the entire university). Some of the organizations that have participated in Dr. Neck’s management development training include GE/Toshiba, Busch Gardens, Clark Construction, the US Army, Crestar, American Family Insurance, Sales and Marketing Executives International, American Airlines, American Electric Power, W. L. Gore & Associates, Dillard’s Department Stores, and Prudential Life Insurance. Dr. Neck is also an avid runner. He has completed 12 marathons, including the Boston Marathon, New York City Marathon, and the San Diego Marathon. In fact, his personal record for a single long distance run is a 40-mile run.

Jeffery D. Houghton, PhD Dr. Jeffery D. Houghton completed his PhD in management at Virginia Polytechnic Institute and State University (Virginia Tech) and is currently an associate professor of management at West Virginia University (WVU). Dr. Houghton has taught college-level business courses at Virginia Tech, Abilene Christian University (Texas), Lipscomb University (Tennessee), The International University (Vienna, Austria), and for the US Justice Department-Federal Bureau of Prisons. Prior to pursuing a full-time career in academics, he worked in the banking industry as a loan officer and branch manager. A member of the Honor Society of Phi Kappa Phi, Dr. Houghton’s research specialties include human behavior, motivation, personality, leadership, and self- leadership. He has published more than 40 peer-reviewed journal articles and book chapters, and his work has been cited more than 1,600 times in academic journals. He currently teaches undergraduate-, master’s-, and doctoral-level courses in management, organizational behavior, and leadership. Dr. Houghton was named the 2013 Beta Gamma Sigma Professor of the Year for the WVU College of Business and Economics, awarded annually to one faculty member within the college as selected by a vote of the student members of Beta Gamma Sigma; and he received the 2008 Outstanding Teaching Award for the WVU College of Business and Economics, awarded annually to one faculty member for outstanding teaching. In addition to his research and teaching activities, Dr. Houghton has consulted and conducted training seminars for companies including the Federal Bureau of Investigations, Pfizer Pharmaceuticals, and the Bruce Hardwood Floors Company. In his spare time, Dr. Houghton enjoys traveling, classic mystery novels, racquetball, and snow skiing. Finally, Dr. Houghton has trained for and completed two marathons, the Marine Corps Marathon in Washington, DC, and the Dallas White Rock Marathon in Dallas, Texas.

Emma L. Murray, BA, Hdip, DBS IT

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Emma Murray completed a bachelor of arts degree in English and Spanish at University College Dublin (UCD) in County Dublin, Ireland. This was followed by a Higher Diploma (Hdip) in business studies and information technology at the Michael Smurfit Graduate School of Business in County Dublin, Ireland. Following her studies, Emma spent nearly a decade in investment banking before becoming a full-time writer and author. As a writer, she has worked on numerous texts, including business and economics, self-help, and psychology. Within the field of higher education, she has assisted in creating and writing business course modules for students in the United States and the United Kingdom. She worked with Dr. Christopher P. Neck and Dr. Jeffery D. Houghton on Management: A Balanced Approach to the 21st Century (Wiley 2013); and is the coauthor of Management: A Balanced Approach to the 21st Century, second edition (Wiley 2016). She is the author of The Unauthorized Guide to Doing Business the Alan Sugar Way (Wiley-Capstone, 2010) and coauthor of How to Succeed as a Freelancer in Publishing (How To Books, 2010). She lives in London.

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Part 1 Introduction

Chapter 1 Why Organizational Behavior Matters

© iStockphoto.com/Rawpixel Ltd

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1 Why Organizational Behavior Matters

© iStockphoto.com/Rawpixel Ltd

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Learning Objectives By the end of this chapter, you will be able to:

1.1 Explain the basic concept of organizational behavior (OB) and its value in organizations 1.2 Describe the key role of managing human capital in creating a sustainable competitive advantage for organizations 1.3 Identify the major behavioral science disciplines that contribute to OB 1.4 Demonstrate the value of critical thinking in the context of OB 1.5 Identify the major challenges and opportunities in the field of OB 1.6 Describe the importance of ethical behavior in global organizations 1.7 Differentiate the three basic levels of analysis at which OB may be examined 1.8 Outline the benefits of positive OB and high-involvement management

The success of your organization doesn’t depend on your understanding of economics, or organizational development, or marketing. It depends, quite simply, on your understanding of human psychology: how each individual employee connects with your company and how each individual employee connects with your customers.

——Curt Coffman and Gabriela Gonzalez-Molina, authors of Follow This Path: How the World’s Greatest Organizations Drive Growth by Unleashing Human Potential

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What Is Organizational Behavior and Why Is It Important?

1.1 Explain the basic concept of organizational behavior (OB) and its value in organizations

Today’s continually changing economic world needs managers who can understand, anticipate, and direct people in a fast-paced competitive market. In the past, organizations focused on numbers and how to achieve those numbers without paying too much attention to motivating and understanding their staff. However, fast-paced organizations need the right people with the right skills to achieve success. This is why organizational behavior has taken on a new level of importance; people with organizational behavior skills are now regarded as a valuable and essential commodity. In an environment in which competition is fiercer than ever, people will differentiate your business from anyone else’s. No matter what area of business you work in, people are the cornerstone of success.

We define organizational behavior (OB) as a field of study focused on understanding, explaining, and improving attitudes of individuals and groups in organizations.1 An organization is a structured arrangement of people working together to accomplish specific goals. In short, OB focuses on figuring out how and why individual employees and groups of employees behave the way they do within an organizational setting. Researchers carry out studies in OB, and managers or consultants establish whether this research can be applied in a real-world organization.

How will studying organizational behavior benefit you in the workplace? Understanding the ways people act and interact within organizations provides three key advantages:

1. You can explain behavior. You can explain why your boss, coworkers, or subordinates are doing what they are doing.

2. You can predict behavior. You can anticipate what your boss, coworkers, or subordinates will do in certain circumstances and situations.

3. You can influence behavior. You can shape the actions of your subordinates, as well as your boss and coworkers in order to help them accomplish their goals and achieve organizational objectives.

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Studying organizational behavior can help you to understand how and why individuals and groups interact.

Ciaran Griffin/Photodisc/Thinkstock

Although explaining and predicting behavior are undoubtedly useful skills, influencing behavior is probably of the greatest interest to a practicing manager. Once you are equipped with knowledge about your employees’ work behaviors, you can use it to optimize performance by providing effective direction and guidance. This explains why managing organizational behavior (i.e. focusing on the behavior and actions of employees and how they apply their knowledge and skills to achieve organizational objectives) is so important in today’s organizations.

Let’s remind ourselves what a manager actually does in the workplace. Typically, managers carry out four main functions: planning, organizing, leading, and controlling.2 (See Figure 1.1.)

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In planning, a manager evaluates an organization’s current position and where it wants to be in the future, and sets goals, designs strategies, and identifies actions and resources needed to achieve success. Organizing means arranging resources such as people and functions to implement the strategy made during the planning stage. Managers ensure goals are achieved by leading teams and individuals effectively, which means motivating and communicating with people to achieve goals. The controlling function allows managers to monitor employee performance, ensure milestones are being reached, and take corrective or preventative action where necessary.

Managers need to be equipped with specific skills to carry out their roles effectively.3 First, they must have technical skills. A technical skill is an aptitude for performing and applying specialized tasks.4 Today’s managers need to be proficient in using the latest technologies, including databases, spreadsheets, email, and social networking tools.

Figure 1.1 The Four Functions of Managers

SOURCE: http://2012books.lardbucket.org/books/management-principles-v1.1/s19- the-essentials-of-control.html.

Although technical skills are important, they can be learned on the job; to be really

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effective, managers need to possess human skills or the ability to relate to other people.5

People with effective human skills take the feelings of others into account and are adept at dealing with conflict. A key facet of human skills is emotional intelligence (EI), which is an awareness of how your actions and emotions affect those around you and the ability to understand and empathize with the feelings of others.6

What Do We Teach in OB?

Managers need to be technically proficient and know how to get along with people, but what about dealing with the complexities of the organization itself? Managers also need conceptual skills in order to see the organization as a whole, visualize how it fits into its overall environment, and understand how each part relates to the others.7 Conceptual skills help managers solve problems, identify opportunities and challenges, and think creatively when making decisions.

Managers who embrace organizational behavior principles understand that the success of an organization lies with its people, and without people, there would be no companies, businesses, or industries. You may have a business that produces the highest-quality, most competitively priced product in the market or that prides itself on excellent customer service. However, if you don’t have the right people in place to manufacture, market, and sell your product and take care of your customers, the business will suffer. Similarly, if some of your coworkers lose motivation and provide lower levels of customer service, the company will lose business, and perhaps even its reputation. Either of these problems can bring about a decrease in profits, reduced employee wages and bonuses, staff layoffs, and in extreme cases, bankruptcy.

How do managers achieve the best outcomes for their organizations? A strategic OB approach is based on the idea that people are the key to productivity, competitive edge, and financial success. This means that managers must place a high value on human capital, which is the sum of people’s skills, knowledge, experience, and general attributes.8 Let’s take a closer look at where human capital fits into organizations, and how it is managed.

Master the content.

edge.sagepub.com/neckob

Technical skill: The aptitude to perform and apply specialized tasks

Organizational behavior: A field of study focused on understanding, explaining, and improving attitudes of individuals and groups in organizations

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Organization: A structured arrangement of people working together to accomplish specific goals

Human skills: The ability to relate to other people

Emotional intelligence: The ability to understand emotions in oneself and others in order to effectively manage one’s own behaviors and relationships with others

Conceptual skill: The capacity to see the organization as a whole and understand how each part relates to each other and how it fits into its overall environment

Strategic OB approach: The idea that people are the key to productivity, competitive edge, and financial success

Human capital: People’s skills, knowledge, experience, and general attributes

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Thinking Critically

1. OB helps managers explain, predict, and influence behavior in the workplace. Identify the types of behavior you are most interested in explaining, understanding, and predicting in the workplace.

2. Of the four main functions managers fulfill (planning, organizing, leading, and controlling), which do you think is most likely to be enhanced by an understanding of organizational behavior? Why?

3. Managers need technical, human, and conceptual skills in order to succeed. Which of these skills are least likely to be learned on the job? Explain your position.

4. Compare the book’s argument that the success of an organization lies with its people with the argument that every employee is replaceable and expendable. Which argument do you consider more compelling? Why?

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Managing Human Capital

1.2 Describe the key role of managing human capital in creating a sustainable competitive advantage for organizations

Organizations have two kinds of resources: tangible and intangible. Physical assets such as equipment, property, and inventory are examples of tangible resources. Intangible resources include an organization’s reputation and culture, its relationships with customers, and the trust between managers and coworkers. Although it is difficult to measure intangible resources because of their subtle nature, they remain crucial for organizations competing in a global economy.

Human Capital and Change

Human capital falls into the category of critical intangible resources. Today’s managers focus on enriching their human capital by nurturing and enhancing their employees’ knowledge and skills. The possibilities of building on human capital are endless— empowered, satisfied, knowledgeable employees can achieve so much for the organization and its customers. Human capital is essential for gaining competitive advantage, the edge that gives organizations a more beneficial position than their competitors and allows them to generate more profits and retain more customers.9 (See Figure 1.2.) Three main aspects of human capital enhance true competitive advantage: value, rareness, and inimitability.10

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Value

Employees can add value in many different ways, but there is a difference between merely fulfilling the requirements of your job and working with an eye on company strategy. Human capital value accumulates when employees work toward the strategic goals of an organization to achieve competitive advantage. Although it is essential that employees have the skills and the abilities to execute a company strategy, they must also have a genuine willingness to contribute to the performance and success of an organization. Therefore, it is critical that managers make every effort to continuously nurture their high-performing employees, because regardless of labor market conditions, outstanding employees are always in short supply.

Figure 1.2 How Human Capital Enhances Competitive Advantage

Managing Human Capital

Competitive advantage: The edge that gives organizations a more beneficial position than their competitors and allows them to generate more profits and retain more customers

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Rareness

Not everyone has the right skillset to further the progress of an organization. Human capital rareness is the level of exceptional skills and talents employees possess in an industry. For example, you may be an excellent computer programmer with an outstanding eye for detail, or you could have a gift for dealing with customer complaints and creating resolutions to resolve dilemmas. These are rare skills that employees may bring with them into an organization, but they can also be learned given the right training and encouragement.

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Inimitability

Employees may be able to add real value and possess rare and important skills, but these attributes must be inimitable (i.e., unique and difficult to copy or replicate) for an organization to achieve success. Human capital inimitability is the degree to which the skills and talents of employees can be emulated by other organizations. The higher the level of inimitability, the more competitive an organization will be. For example, what’s to prevent an excellent computer programmer from going to a competitor that offers the same services and opportunities? Successful organizations ensure that their talented employees possess skills and talents that are difficult to imitate. This means employees have a degree of tacit knowledge: they have a feel or an instinct for a method or a process but can’t easily articulate it; they just know it is right. An organization’s culture or values are also difficult to imitate and often determine why employees choose to work for one company over another that offers similar produces and services. Usually, this comes down to the organization’s shared values, attitudes, and type of culture.

Take a look at how former Human Resources (HR) Director Meredith Soleau managed human capital at Ed Schmidt Auto, a car dealership in Ohio, to address high turnover within the company, in the OB in the Real World feature.

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Thinking Critically

1. Compare the relative importance of tangible and intangible resources. Can an organization succeed without adequate resourcing in both areas? Why or why not? [Apply]

2. Explain in your own words how value, rareness, and inimitability in human capital contribute to an organization’s competitive advantage. [Understand]

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Behavioral Science Disciplines that Contribute to OB

1.3 Identify the major behavioral science disciplines that contribute to OB

In the early days of management theory, studies focused on how workers could perform manual labor more efficiently (on a factory assembly line, for example), and how physical working conditions could be improved for better employee performance. There was little focus on the human element (i.e. how individual characteristics, communication, and interpersonal relationships effect organizations.). Over the past one hundred years, however, researchers have carried out a host of studies on the practice and application of OB, taking full advantage of its strong links to five main behavioral science disciplines: psychology, sociology, social psychology, political science, and anthropology (see Figure 1.3).

FIGURE 1.3 Disciplines Contributing to the Field of Organizational Behavior

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Psychology

Differences Among Social Science Disciplines

Psychology is the scientific study of the human mind that seeks to measure and explain behavioral characteristics. Early organizational psychological research and theory focused on the factors affecting work performance and efficiency, such as lethargy and boredom. More recently, psychologists have focused on the mental health and well-being of employees in relationship to their work performance and created methods to help employees deal with challenges such as job stress. Psychologists have also helped design performance appraisals, decision-making processes, recruitment techniques, and training programs.

Human capital value: The way employees work toward the strategic goals of an organization to achieve competitive advantage

Human capital rareness: The skills and talents of an organization’s people that are unique in the industry

Human capital inimitability: The degree to which the skills and talents of employees can be emulated by other organizations

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OB in the Real World

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Meredith Soleau, Former human resources director, Ed Schmidt Auto

© Meredith Soleau/Eric Schmidt

In volume and growth, Ed Schmidt Auto is one of the leading car dealerships in northwest Ohio. It has been in business since 1937 and currently has nearly 200 employees. When Meredith started working in the human resources (HR) department in 2006, her biggest concern was the high employee turnover, which had reached a rate of 66 percent annually.

Not only was high turnover costing the company a lot of money in recruiting and training, but it was affecting the experience their customers were having. “In order to keep customers happy we needed to have the best employees working for us and we needed to treat them well. We weren’t hiring the best people. That was our first mistake.”

Meredith quickly changed the company’s recruiting practices. Many car dealerships hire a high percentage of employees who don’t have a college education, but CEO Ed Schmidt started recruiting from community colleges and local universities. This change increased the caliber of employees coming in the door and resulted in a high number of employees who viewed their time at the company as a career rather than just another job. This change in employee attitude allowed managers to focus more of their time on helping outstanding employees move up the ladder and contributed to the development of a strong company culture. Leadership has taken full advantage of this opportunity by continuously soliciting feedback from employees, managers, and customers about ways they can make their organization even stronger.

“It’s important for leaders to know when someone is struggling and, more importantly, why they are struggling. It’s equally important to know when someone is happy and why they are happy. This information helps drive positive changes within an organization.”

At Ed Schmidt Auto, management works hard to engage employees from all over the company in projects that employees are passionate about. “We realized that we have a lot of employees who love to write, so we started a blog and let any interested employee contribute to it. There is an employee who loves Pinterest so

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we’ve made her our Pinterest employee.”

A few years ago the company discovered that one of its service technicians “souped-up” Volkswagens in his spare time. Leadership, including HR, called him into the office for a meeting.

He thought he was going to get in trouble for doing side-work and was shocked when we asked him if he wanted to help us create a completely new performance division within Ed Schmidt Auto. We knew that if we offered our customers the ability to have their cars “souped up” we’d be able to increase sales of our specialty car parts. Since Joe loved doing this kind of work, the new division just made sense. Today, sales of our specialty car parts and accessories are booming, Joe is happy, and our customers can’t stop talking about their fast and furious cars.

When you know what makes your employees tick, you can find all kinds of projects for them to work on within your business. People love working here because they know that when they have an idea they can tell their manager, and their manager will say, “Cool, we can do this together.”

Today, the turnover rate at Ed Schmidt Auto has dropped from 66 percent to 8 percent. Meredith has attributed the decline to the company’s strong new focus on the type of people hired, the way managers interact with their employees, and the CEO’s dedication to understanding the needs of everyone on the team.

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Critical-Thinking Questions 1. What aspect(s) of human capital did Ed Schmidt Auto capitalize on to reduce turnover? 2. What else could Ed Schmidt have done to influence employee turnover behavior?

SOURCE: Interview with Meredith Soleau, May 15, 2013.

Meredith is currently founder and CEO of online digital marketing and recruitment agency, 424 Degrees.

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Sociology

While psychology focuses on the individual, sociology looks at the way groups behave and they communicate and exchange information in a social setting. Sociologists have made valuable contributions to OB within areas such as group dynamics, communication, power, organizational culture, and conflict.

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Social Psychology

Social psychology mixes concepts from sociology and psychology and focuses on the way people influence each other in a social setting. Social psychologists look at behaviors, feelings, actions, beliefs, and intentions and how they are constructed and influenced by others. They have made significant contributions to reducing the level of prejudice, discrimination, and stereotyping by designing processes to change attitudes, build communication, and improve the way groups work together.

Psychology: The scientific study of the human mind that seeks to measure and explain behavioral characteristics

Sociology: The study of the behavior of groups and how they relate to each other in a social setting

Social psychology: The social science that blends concepts from sociology and psychology and focuses on how people influence each other in a social setting

Political science: The study of the behavior of individuals and groups within a political environment

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Political Science

Political science studies the behavior of individuals and groups within a political environment. Political scientists focus particularly on how conflict is managed and structured, how power is distributed, and how power is abused or manipulated for the purposes of self-interest. Their studies have helped improve our understanding of how different interests, motivations, and preferences can lead to conflict and power struggles between individuals and groups.

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Anthropology

Anthropology is the study of people and their activities in relation to societal, environmental, and cultural influences. In a global organizational environment, anthropological research has become even more significant because it increases our understanding of other cultures and the types of values and attitudes held by others from other countries and organizations.

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Thinking Critically

1. What factors are likely to have played a role in early management theory’s emphasis on physical tasks and working conditions? [Understand]

2. Of the five behavioral science disciplines listed, which one do you consider to be the most relevant to the field of management today? Explain your answer. [Analyze]

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A Critical-Thinking Approach to OB

1.4 Demonstrate the value of critical thinking in the context of OB

In the section “What Is Organizational Behavior and Why Is It Important?” we outlined the four main functions of management (planning, organizing, leading, and controlling) and the skills (technical, human, and conceptual) managers need to be effective in an organization. However, another skill is becoming increasingly important for managers in the workplace: critical thinking. Critical thinking is the use of your intelligence, knowledge, and skills to question and carefully explore situations and arrive at thoughtful conclusions based on evidence and reason.11 Increasingly used in business as a problem- solving tool, the critical-thinking approach is a powerful analytical method that helps managers consider intended and unintended consequences of individual behaviors on their teams and within their organizations and communities. Organizations need managers who think independently without judgment and bias, predict patterns of behaviors and processes, and ask the right questions—“How?” and “Why?” and not just “What?”—in order to make effective and thoughtful decisions.

Critical Thinking

At the moment, there is a skilled labor shortage in the United States, yet unemployment is still on the rise.12 How can this be? Surely, if there are enough people available for work, then companies should be able to fill their vacancies. However, as the business environment changes, so do the types of skills expected from employees. New and recent graduates may find that their educational backgrounds do not fulfill the requirements of organizations and may be forced to change, adapt, or learn new skillsets to secure a job. Furthermore, many organizations are becoming more selective; for some positions a degree is not enough.

Your ability to think critically will differentiate you from other job applicants. In an interview situation, critical thinkers take the time to think carefully about the questions they are asked, base their responses on facts or experience rather than emotion or bias, consider different viewpoints or perspectives equally, and compare their responses with similar examples that have occurred in the past. Once hired, critical thinkers are more likely to succeed. After all, most companies do not employ graduates to simply go through the motions or to be a mere cog in the wheel. They expect their employees to play a pivotal role in helping the company achieve its organizational goals. And when a company does well, everyone benefits. You don’t need to be an expert in critical thinking to get a job. Many of these skills can be learned in the workplace. However, employers look for candidates who have a questioning mind, a willingness to embrace change, and a keen desire to learn.

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SOURCE: Are They Really Ready to Work? Employers’ Perspectives on the Basic Knowledge and Applied Skills of New Entrants to the 21st-Century U.S. Workforce. Study conducted by the Conference Board, Partnership for 21st- Century Skills, Corporate Voices for Working Families, and the Society for Human Resource Management, 2006. NOTE: Number of respondents varied for each question, ranging from 398 to 424. Percentages calculated out of total number of respondents electing “increase” in importance over the next five years.

Indeed, as research shows, businesses are desperate to attract employees with critical- thinking skills.13 Why? Because organizations are undergoing such rapid change that they need their employees to consistently introduce new, fresh ideas to stay ahead of the competition. Consider the following:

1. When more than 400 senior HR professionals were asked in a survey to name the most important skill their employees will need in the next five years, critical thinking ranked the highest—beating out innovation and information technology (see Table 1.1).14

2. Senior executive development professionals report that future leaders are lacking chiefly in strategic thinking skills—which are closely related to critical-thinking skills.15

3. A 2009 study by Ones and Dilchert found that the most successful senior executives scored higher on critical-thinking skills than did the less successful ones.16

4. Forbes recently analyzed data from online databases of occupations and necessary skills in order to identify the skills most in-demand in 2013. Then the magazine went further and analyzed the key skills necessary for success in those roles. The number one skill should be no surprise at all: it was critical thinking.17

Business leaders use critical thinking when making decisions, solving problems, gathering information, and asking questions. Time and again, research has shown the effectiveness of critical thinking in the workplace. A recent article published in the journal Current Directions in Psychological Science reports that “cognitive ability tests, including critical- thinking tests . . . are among the strongest and most consistent predictors of performance

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across academic and work settings.”18

Daniel Ek, founder of Spotify, shows critical thinking by asking “How?” and “Why?” and seeking out the answers.

Andrew Burton/Getty Images

Entrepreneur Daniel Ek, founder of Spotify, is a good example of a critical thinker.19

Launched in 2008, Spotify is a digital music service that allows people legal paid access to millions of songs streamed directly from major and independent record labels. As a child, Daniel was fascinated by computers and computer games: “When he asked his mother what to do when one of his computer games broke, she told him, ‘I don’t know, why don’t you figure it out?’ So he did. ‘And that was basically my life story,’ says Mr. Ek.” By using critical thinking and asking “How?” and “Why?” Ek has managed to build a cutting-edge company worth $3 billion with more than 24 million active users.

The process of critical thinking provides you with the tools to make better decisions as a manager and help you to predict the effects and consequences of those decisions. Most important, you will be better able to manage the complexities of human behavior and initiate behavioral changes by following the critical-thinking process. There are five steps to applying critical thinking in order to manage and change behavior (Figure 1.4): observe (recognize the behavior), interpret (understand the cause and effects of behavior), analyze (investigate the causes and effects of behavior), evaluate (assess the consequences of changing behavior), and explain (justify a change to behavior).

Let’s use an example to illustrate the five steps of critical-thinking methodology. Suppose you are the manager of a restaurant owned by a local businesswoman. Samir, one of your wait staff, has failed to show up for several shifts without giving any meaningful reason. Since Samir is usually reliable, you are puzzled by his absenteeism. Because you don’t have all the facts, you decide to use critical-thinking skills to investigate the real source of the problem.

The next time Samir comes to work, you observe the situation objectively, suspending all

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bias and judgment. You notice that he is abrupt with customers, doesn’t attempt to communicate with his fellow colleagues, and walks across the restaurant with a heavy gait. This helps you to interpret the situation better, giving you enough evidence to deduce that your employee is not happy. You might analyze these effects and think of a way to deal with the behavior. What should you do? You decide to evaluate the situation and assess the consequences of trying to change his behavior. Based on his performance, your boss, Jessica, the restaurant owner, tells you to fire Samir but you explain to your boss why you believe an attempt to change his behavior might be justified and she agrees to give Samir another chance.

FIGURE 1.4 Five-Step Critical-Thinking Framework for Managing and Changing Behavior

Source: Neck, C., et al., Management (Hoboken, NJ: Wiley, 2014): 5.

You set up a meeting with Samir to discover the reasons behind his unexplained absences and unmotivated behavior at work. Samir apologizes and tells you he has become dissatisfied with his job and would much rather work on the front desk of the restaurant, greeting customers and taking reservations. He says he has been afraid to tell you because he has been worried he would be letting you down by switching roles. You explain that his absences have already disappointed you but that you are willing to give him a second chance. Following a trial period at the front desk, Samir immediately becomes more motivated, and his attendance is impeccable.

Critical Thinking and Decision Making

Of course, there could be many ways to handle this dilemma, but it is clear that critical thinking can help to find the best solution for each situation when dealing with the complexities of real-life challenges.

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In the next section, we explore how managers use OB research findings to enhance their critical-thinking skills.

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The Scientific Method

Researchers use the scientific method to conduct research that managers can use to understand their employees and enhance critical thinking in OB. Researchers often begin with a theory, a set of principles intended to explain behavioral phenomena in organizations.20 OB researchers may also use models, simplified snapshots of reality, to summarize and illustrate the reasons behind certain behaviors such as absenteeism or employee turnover. Connecting the elements of these models are independent variables, which are factors that remain unchanged, and dependent variables, factors affected by independent variables. Researchers then write a prediction called a hypothesis, a statement that specifies the relationships between the two variables. For example, much OB research has been carried out on the correlation, or the reciprocal relationship between two or more factors, between job satisfaction (independent variable) and absenteeism (dependent variable).

Researchers discovered that employees who were more satisfied in their jobs had higher attendance at work than those who had lower levels of job satisfaction. At first glance, this seems pretty reasonable—you may feel more inclined to call in sick when you dislike your job. But it doesn’t end there. OB researchers used critical thinking to examine the theory further in order to provide a solution to this work dilemma. What are the factors affecting job satisfaction? What makes employees happy or miserable in their jobs? How can organizations improve conditions to increase job satisfaction and decrease levels of absenteeism? By drilling down deeply into proposed theories, researchers have created practical resolutions to address these problems. OB researchers apply critical thinking to facets of an organization by questioning and exploring the reasons behind issues such as work stress, unethical behavior, lack of team cohesion, poor relationships between individuals and groups, and many more.

Similarly, we could apply the same critical-thinking method to the issue of work/life balance (independent variable) and its relationship to stress (dependent variable), which is one of the main issues facing today’s organizations. Employees who sacrifice their personal lives for too many hours in the office may be subject to higher levels of stress. Conversely, workers who achieve a balance between their personal and working lives may have lower levels of stress. We may conclude from this that an acceptable work/life balance leads to higher levels of job satisfaction. Using critical thinking, managers explore how they can help their employees achieve a balance between work and play.

Yet, for all the research that exists on OB and the debates it continues to inspire, it is still universally agreed that there is no one best way of managing people. In fact, there is a theory for that too. It’s called contingency thinking, and it states that our actions must be dependent on the nature of the situation. In other words, one size does not fit all. Every

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single circumstance brings about a whole new set of questions and solutions—this is where critical thinking comes into play. By asking the right questions to fit each scenario, managers have a better chance of resolving problems. Related to contingency thinking is evidence-based management, which relies on research-based facts to make decisions.21

Successful OB managers use this wealth of research findings as a basis for understanding different situations.

Anthropology: The study of people and their activities in relation to societal, environmental, and cultural influences

Critical thinking: The ability to use intelligence, knowledge, and skills to question and carefully explore situations and arrive at thoughtful conclusions based on evidence and reason

Theory: A set of principles intended to explain behavioral phenomena in organizations

Model: A simplified snapshot of reality

Independent variables: Factors that remain unchanged

Dependent variable: Factor affected by independent variables

Hypothesis: A statement that specifies the relationships between the two variables

Correlation: A reciprocal relationship between two or more factors

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Examining the Evidence

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Evidence-Based Management One of the strongest proponents of applying research evidence to management practice, Denise M. Rousseau, H. J. Heinz II University Professor of Organizational Behavior at Carnegie Mellon University, defines evidence-based management (EBMgt) as “the systematic, evidence-informed practice of management, incorporating scientific knowledge in the content and processes of making decisions.”* EBMgt employs valid scientific findings in the context of critical thinking, decision making, and judgment to help managers obtain and use the best and most reliable information available to increase managerial and organizational effectiveness.*

But why is it important for managers to think critically about and incorporate current research findings into their management practices and decision making? A good parallel comes from the field of medicine. You may naturally assume that medical doctors and health care practitioners use the latest and best research evidence available in the field of medicine to make their decisions. Yet despite the thousands of studies conducted and published in the field of medicine each year, studies suggest that only about 15 percent of doctors make evidence-based decisions.^ Instead, they rely on obsolete information they learned in school, unproven traditions, personal experiences, and information provided by vendors selling medical products and services.^ During the past two decades, however, evidence-based medicine has begun to revolutionize the way medical practitioners make decisions and prescribe treatments.

Stanford Professors Jeffrey Pfeffer and Robert I. Sutton argue that managers should take a similar evidence- based approach in making decisions, taking actions, and prescribing cures for organizational ills: “Managers are actually much more ignorant than doctors about which prescriptions are reliable—and they’re less eager to find out. If doctors practiced medicine like many companies practice management, there would be more unnecessarily sick or dead patients and many more doctors in jail or suffering other penalties for malpractice.”^

Professor Rousseau suggests that EBMgt consists of four basic activities:* (1) obtaining the best scientific information available, (2) systematically assessing organizational facts, (3) using critical thinking and reflective judgment to apply the research evidence, and (4) considering key ethical issues. Throughout the remainder of the text, you will be presented with current research evidence from the field of OB and asked to think critically about how you might apply these findings in your current or future career as a management practitioner.

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Critical-Thinking Questions 1. What are some of the primary advantages of evidence-based management practices? 2. What makes it difficult for managers to be evidence-based in their actions and decision making?

* Rousseau, Denise M. “Envisioning Evidence-Based Management.” In The Oxford Handbook Of Evidence- Based Management, 3–24 (New York: Oxford University Press, 2012).

^ Pfeffer, Jeffrey, and Robert I. Sutton “Evidence-Based Management.” Harvard Business Review 84, no. 1 (January 2006): 62–74.

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Open Systems Theory

A key OB research finding that has had a significant impact on the use of critical thinking by managers is called open systems theory. According to this theory, organizations are systems that interact with (are open to) their environments and use their environments to obtain resources, or inputs, and transform those inputs into outputs that are returned to the environment for consumption.22 Open systems theory maintains that all organizations are unique and subject to internal and external environmental influences that can affect their efficiency. To ensure the smooth running of an organization, a defined structure should be in place that can accommodate problems and opportunities as they arise. Let’s take a look at how a car manufacturing company might operate, according to this theory (see Figure 1.5).

In this example, a car manufacturing company takes inputs from suppliers of certain goods or materials and then uses these resources to manufacture cars within the organization itself (“throughput” in the figure), before exporting them back into the environment as outputs. Put into a general context, this means organizations use input from their resources, such as technology, people, money, raw materials, information, and processes, and transform them into the finished product or output, which they sell.

When open systems work well, they create a value chain, the sequence of activities carried out by organizations to create valued goods and services to consumers.23 In the car example, if every link in the chain is working efficiently, suppliers are satisfied with the way they have been treated by the car company and continue to meet its specifications, employees are productive and manufacture the car in good time and within budget, and consumers are gratified with their new purchase. However, a poorly managed value chain can have disastrous consequences. Suppliers that go out of business, high employee turnover, and a dissatisfied consumer base can all lead to the decline of an organization.

Open systems strive to find a balance between themselves and their environment and to remain harmonious, especially in the face of environmental changes. A strong open system can be crucial to organizational survival, especially in today’s organizations that are continually adjusting to meet the demands of global challenges and opportunities.

FIGURE 1.5 Open Systems Theory: Inputs and Outputs

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SOURCE: Basic Open System Model. CSAP Institute for Partnership Development. US Department of Health and Human Services. n.d. Public domain. https://commons.wikimedia.org/wiki/File:Basic_Open_System_Model.gif.

Contingency thinking: The approach that describes actions as dependent on the nature of the situation; one size does not fit all

Evidence-based management: The practice of using research-based facts to make decisions

Open systems theory: The assumption that organizations are systems that interact with their environments to obtain resources or inputs and transform them into outputs returned to the environment for consumption

Value chain: The sequence of activities carried out by organizations to create valued goods and services to consumers

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Thinking Critically

1. Explain in your own words how critical thinking can be used as a problem-solving tool in the workplace. [Understand]

2. Create a list of behaviors and skills that contribute to a manager’s ability to think critically. [Apply/Create]

3. Imagine that you manage two employees who dislike each other and have engaged in heated arguments in front of customers. What specific steps could you take, following the 5-step critical- thinking model (observe, interpret, analyze, evaluate, and explain), to resolve the situation? [Apply/Analyze]

4. Identify the inputs, throughput, and outputs of a fast food chain according to Open Systems Theory. [Apply]

5. Explain the meaning of “value chain” and provide an example of one way that a value chain may be enhanced and one way a value chain may be harmed. [Apply]

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OB Challenges and Opportunities

1.5 Identify the major challenges and opportunities in the field of OB

Organizations are in a continual state of flux and transformation. In addition, within the past decade, the financial world has been in turmoil because of a lingering recession and high unemployment. The resulting uncertainty has immeasurably influenced the behavior of people and organizations. So what can you expect when you enter the workforce? Next we discuss some of the main challenges and opportunities facing organizations today (see Figure 1.6).

In an increasingly global economy with more companies expanding internationally, having a strong grasp of organizational behavior can help individuals to relate to and respect their colleagues.

© iStockphoto.com/Dean Mitchell

Figure 1.6 Challenges and Opportunities Facing Today’s Organizations

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Globalization

Globalization is a process by which the world has become increasingly interconnected through trade, culture, technology, and politics. It has had a huge influence on OB. Many organizations now have offices all over the world, and it’s not uncommon for employees to move between them. For example, you may be placed on a foreign assignment where you are expected to learn a different language and work with people from different cultures and backgrounds. Even at home, you are very likely to be working with people from abroad or from backgrounds different from yours. It is essential to be able to work well with others regardless of their location or cultural background. Communicating effectively across time zones and via the latest technological methods is equally important.

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Economic Factors

Economic events have had a significant effect on the workplace. Recessions and financial crises have led to layoffs, reduced wages, unemployment, bankruptcy, and labor shortages. Organizations are continuously strategizing to overcome economic stumbling blocks by seeking out talent and focusing on the skill set of their workforce to find innovative ways to differentiate themselves from the competition. To flourish in a work environment that is continually in flux, you will need to be agile, adaptable, and open to learning new skills when required.

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Workforce Diversity

The demographic profile of the United States is changing, and the resulting diversity in the workforce is encouraging organizations to foster inclusive working environments that do not discriminate against employees regardless of gender, race, ethnicity, age, sexual orientation, or disability.24 In most large organizations, employees are educated about diversity and taught the importance of respecting individual differences. Forming and building good working relationships is central to achieving professional success. You will need to respect others and accept people without prejudice if you want to get ahead in the workplace.

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Customer Service

Organizations are creating customer-responsive cultures to meet the increasing needs and changing demands of their customer bases. Companies are striving to understand the customers’ needs first and then tailor the product to customer requirements. In most businesses, you will carry out some level of customer service, whether you are dealing with external clients (customers) or internal ones (coworkers). In doing so, you will need to develop a customer-focused attitude and think creatively about how to satisfy customers’ needs.

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People Skills

Managers and employees must have excellent people skills, such as the ability to communicate and interact with others, in order to work harmoniously with their colleagues. Being able to relate to other people has just as much impact on success as your technical skills, especially when you are leading and managing teams.

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Innovation and Change

Organizations need to simulate innovation and change by becoming faster and more agile than the competition. Tangible resources such as physical equipment are no longer the mainstay of an organization. The organization’s most important assets are its people and their ability to continuously create, strategize, innovate, and convert their ideas into quality products and processes. Critical thinking is imperative in innovation; you will need to question, analyze, and create to come up with new, original ideas that will appeal to your customers to secure a competitive advantage.

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Sustainability

Many organizations are striving to build a more sustainable and responsible global marketplace by taking environmental factors into consideration during decision making and goal setting. Whatever role you play, you will need to take into account the effects your decisions and the decisions of others may have on the environment, your community, and the organization itself.

Sustainability

Throughout this book, we explore these and other factors that influence OB, including leadership, and the effects of a new generation of workers on the workplace. In the next section, we analyze one of the most important elements of global OB: ethical behavior in organizations.

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Thinking Critically

1. Of the seven challenges discussed in this section, which do you consider the most difficult to address? Which do you consider the easiest to address? Why? [Understand]

2. Based on your own work or volunteer experience, have you ever experienced any of these seven challenges? Describe your experience and brainstorm ways for overcoming these challenges. [Apply]

3. Select a company and research online to learn more about their sustainable business practices. Do they have a sustainability plan? What are some recommendations you might make that would benefit the organization as well as the environment and society? [Apply/Analyze]

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Global Ethics

1.6 Describe the importance of ethical behavior in global organizations

Ethics are moral principles that guide our behavior. Although ethics are useful in helping us make decisions and come to certain conclusions, they don’t always give a clear answer to every moral question. For example, complex issues such as abortion and euthanasia have been the subject of strong debate over many years, yet people do not agree on a “right” or “wrong” moral answer to these issues. By following a code of ethics, however, we can make many decisions based on sound guiding principles.

More than a decade ago, the unethical behavior of some major US-based organizations hit the headlines worldwide. One of the most infamous cases brought about the fall of energy giant Enron. In 2001, it was discovered that Enron’s CEO Kenneth Lay had used unethical accounting practices and led his team to commit one of the largest corporate frauds in US history. One of the biggest corporate casualties of the Enron scandal was the company’s auditors, the accounting and consultancy firm Arthur Anderson, which until then had enjoyed a sterling reputation. Because of the unethical choices made by a few members of the Enron team, such as the decision to destroy evidence of wrongdoing, the company was eventually dissolved.

More recently in 2015 Volkswagen came under fire for developing software designed to ensure some cars meet emissions standards during emissions testing but not during normal operation. Consumers were led to believe they were making an environmentally responsible choice by choosing Volkswagen vehicles. As a result of this scandal, stock prices have fallen and consumer trust in the Volkswagen brand has weakened. This scandal illustrates the economic, reputational, and financial damages that unethical behavior can cause.

Former Enron CEO Kenneth Lay was convicted of conspiracy and fraud after the company went bankrupt in 2001.

AP Photo/Pat Sullivan

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Company scandals have also made many people more aware and less tolerant of perceived unethical behavior. For example, Naked Juice, owned by PepsiCo, was sued in 2011 for deceptively labelling its products “all natural” despite their including some synthetic ingredients.25 PepsiCo refuted the claim but dropped the word natural; the firm has pledged to pay a total of $9 million in compensation to consumers who purchased the juice in the past.

Global Ethics

As the Enron, Volkswagen, and other scandals prove, making unethical decisions can have huge consequences. Yet it is not only enormous organizations that deal with ethical problems. Breaches of ethics happen all over the world; in many countries corruption is prevalent, and instances of bribery to win business are commonplace. Similarly, some organizations exploit labor by hiring children, paying very low wages, and forcing employees to work in poor conditions. An organization is unethical if it violates the basic rights of its employees and ignores health, safety, and environmental standards.

One of the more recent ethical debates springs from the rapid development of artificial intelligence (AI) technology. With enhanced speech recognition available, robot dogs in development, and solar-powered drones and self-driving cars on the horizon, the risks associated with AI have quickly come to the fore. Tesla Motors founder Elon Musk and the noted physicist Stephen Hawking are among those who have expressed concern about the ethical consequences of advanced technology. Still to be answered are questions about the danger of building robots for military use, the safety of self-driving cars, the possibility that jobs will be lost to drones and robots, and the general risk of creating software designed to help computers think like humans. Google, owner of several robotics companies, has set up an ethics board to ensure that AI technology is not exploited.

However, Google is not the only company conscious of ethical risks. In many organizations, employees attend training programs, workshops, and seminars that present ethical dilemmas and how to overcome them. In most workplaces there is a growing intolerance for unethical behavior, and there is an expectation that employees will align their work practices with the organization’s code of ethics. Indeed, such is the demand for a better understanding of ethical organizational behavior that many business schools, including the Catholic University of America, have integrated ethics into their business and economics courses on a daily basis to teach students the importance of behaving ethically in the workplace.26

One of the ways to ensure the practice of good ethical behavior in organizations is to understand the actions and behavior of people and how they work together. In the next section of the chapter, we explore the three underlying levels of analysis in the

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organizational behavior model.

Ethics: Moral principles that guide our behavior

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Thinking Critically

1. Analyze the relationship between ethics and technology. How might technology lead to unethical behavior? How might technology help businesses develop more ethical and transparent business practices? [Apply/Analyze]

2. Recall a recent news story related to unethical behavior by a company. What were the effects of the ethical breach in terms of their reputation and profitability? [Analyze]

3. Research a company that is making a positive ethical impact in the business world. How is that company making a difference? How do you think this affects their reputation and profitability? [Analyze]

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Three Levels of Analysis in OB

1.7 Differentiate the three basic levels of analysis at which OB may be examined

There are three main levels of analysis within the OB model: individuals, teams, and organizations.27 (See Figure 1.7.) Each level builds on the previous one. For example, individuals working well together lay the foundation for effective teams, which in turn work together to achieve organizational goals.

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Individuals

Individuals are the foundation of organizations, and the way they work and behave makes or breaks a business. The role of managers is to integrate individuals into the organization, nurture their skills and attributes, and balance their needs and expectations accordingly. When managers do this successfully, individuals will achieve high levels of job satisfaction, motivating them to work toward attaining organizational goals. For instance, the management at Ed Schmidt Auto, featured in OB in the Real World, strives to engage employees from all over the company in projects they are passionate about.

FIGURE 1.7 The Three Main Levels of Analysis

Organizational Levels

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Teams

Teams or groups exist in all organizations, large or small, and their effective functioning is essential to the success of any organization. Teams are complex because they consist of many different personalities and attitudes. Managers who understand the dynamics of a team and the way it is structured also better understand the underlying behaviors of individuals within the group. A good example is the British football team Manchester United, whose players continually cooperate with each other in pursuit of a common goal, in spite of well-documented personality differences and the occasional feud.28

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Organizations

Organizations provide individuals and groups with the tools and systems to achieve objectives and goals. The attitudes and behavior of employees are influenced by the way organizations are structured. For instance, Google’s organizational structure is centered around employees from all disciplines working together to meet goals and generate innovative ideas. Google employees derive job satisfaction from a flexible working structure that provides them the freedom to set their own goals and standards.29

With organizations continually juggling market changes and customer demands, the success of a business depends on its workforce as never before. But how do managers get the best from individuals, teams, and the organization itself?

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Thinking Critically

1. Discuss the relationship among the three levels of analysis in OB. How might individuals influence organizations? How might organizations influence individuals? [Understand/Apply]

2. Teams play a critical role in OB. What are some of the benefits of working in teams? What are some of the challenges? [Understand/Apply]

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Positive OB and High-Involvement Management

1.8 Outline the benefits of positive OB and high-involvement management

Drawing from a range of organizational research and theories, scholarship on positive organizational behavior focuses on the strengths, virtues, vitality, and resilience of individuals and organizations.30 The idea is that nurturing the strengths of individuals rather than attempting to “fix” their weaknesses is far more beneficial to achieving organizational goals. Employees will gain more self-confidence and feel more positive about their skills and abilities, leading to better performance. Managers who practice positive OB value human capital as their most important resource.

Positive OB

Say you are the manager of a sales and marketing department. You need your sales team to reach a specific sales target by the end of each month. However, one of your new hires, a recent business graduate, is regularly failing to meet objectives, bringing down the department’s sales total. When you arrange a one-to-one meeting with him, he admits he is finding the role tougher than he thought it would be. He knows the products and services inside out but finds it difficult to persuade people to meet with him to discuss a potential sale. As his manager, you arrange additional training to improve his sales technique and build his confidence in selling. Following extensive training, he succeeds in securing a couple of meetings with prospects but fails to sell anything. When you hired him, you felt he had potential. Do you fire him for not bringing in the business, or do you consider another position for him in the organization?

Managers who practice positive OB will communicate with their employees and learn their strengths to discover the position that is best suited to their skills.

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© iStockphoto.com/JackF

Managers who practice positive OB will choose the second option. This employee may not be a good fit for sales, but what else can he do that would benefit the organization? Perhaps he loves to write and feels more comfortable communicating through media rather than over the phone. As a Web content assistant, writing articles for the company website and working with project teams, designers, and developers to ensure information is presented in the best way, he can thrive.

This is just one example of how managers get the best from (and for) their employees using positive behavior. Most people are hired for a reason, but it is entirely possible that some may not be the best fit in the role for which they were hired. In such a case, managers who value their human capital should make every effort to match employees’ skill sets with a more appropriate position. Otherwise, organizations could face the dilemmas of low job satisfaction and reduced productivity, leading to an increase in absenteeism and high turnover.

Positive OB places the highest priority on the well-being of employees. This style of management is closely linked with high-involvement management, a strategy in which managers empower employees to make decisions, provide them with extensive training and opportunities to increase their knowledge base, share important information, and provide incentive compensation.31 Increasing employee involvement in this way is a very democratic approach to management, giving all employees, including those who carry out basic duties, a say in how the work is conducted. They are then more likely to work hard, and more willing to adapt to new processes and learn new tasks. Empowered, satisfied employees strive to achieve organizational goals.

High-Involvement Management

Again, this type of approach works only when the right employees are selected to work in an organization. They must be the right cultural fit and believe in the values and mission of the company. Equally, managers must treat employees with respect, listen carefully to their ideas, and be willing to admit to themselves and their employees that they don’t have all the answers. When high-involvement management is effective, it helps to build strong relationships between employees and managers, fosters trust, and increases job satisfaction and productivity.

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Brandon Steiner of Steiner Sports is a high-involvement manager.

AP Photo/Kathy Willens

High-involvement managers have different ways of empowering their employees. Take Brandon Steiner, for instance. Steiner is the founder and CEO of Steiner Sports and a professional sports marketer, speaker, and author. He believes the well-being of his employees begins with the food they eat, and that there is a strong correlation between a healthy diet and work performance.32 When new hires join Steiner Sports, he tells them, “I don’t care about a lot of the things other managers do, but one thing you cannot do here is eat unhealthily.”33 How does Steiner encourage his employees to be healthy? The company pays for gym membership, ensures a continuous supply of fresh fruit is available in the break room, and makes personal side bets with heavily overweight employees to see who can lose the most weight in the healthiest way within a specified period of time. One of Steiner’s mottos is, “If you don’t feel your best, you can’t do your best work.”34 Would you like to work for a company like Steiner Sports that strongly promotes employee health and well-being? Do you think you would fit in and buy into the ethos of this type of organization? If you are not the type of person who places as high a value on healthy living as Steiner, then perhaps this might not be the right work culture for you. Remember, high- involvement management works best when employees are a good fit for the organization.

Throughout this text, we present a number of case studies and scenarios to demonstrate a critical-thinking perspective in relation to OB. Some of the characters you will meet in our OB stories include Laura Pierce, who is beginning her new role as marketing and development manager for the West Texas Regional Theatre (WTRT); Katie O’Donnell, a college MBA student working as a server at the Waterfront Grill restaurant in upstate New York; Brian Stevens, plant manager of a tractor assembly plant in the Midwest; and Langston Burrows, a recent college graduate working in the leadership development program (LDP) in a mid-sized regional bank. Based on real-life scenarios, the stories illustrate the types of situations and people you may come across within organizations and

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to provide you with clear insights and strategies to deal with complexities as and when they arise.

We have structured this book to explore the challenges and opportunities facing OB on an individual, group, and organizational level. Throughout the text, we explore the complexities of human behavior, including individual behaviors, emotions, and attitudes. We also examine OB in the context of leadership, motivation, teamwork, and culture.

At the heart of every job, regardless of the industry, lies the need to get along with people and to fit in with the values and culture of the organization. However, in today’s organizations, fitting in does not mean agreeing with everything to maintain the status quo, nor does it mean laughing at your boss’s jokes (especially when you don’t think they are very funny!). Instead, applying critical thinking by asking questions, suspending bias, and providing creative solutions, all of which you’ll experience in this book, form the new norm. Understanding and gaining knowledge about OB is a lifelong learning process. Your career success depends on your ability to learn from your everyday experiences and on the way you conduct your relationships with others, behave, and communicate.

In a world where the only constant is change, it is more important than ever to manage our own behavior and understand the feelings, attitudes, and behaviors of others around us in order to work harmoniously and productively and succeed in a complex working environment.

Positive organizational behavior: The strengths, virtues, vitality, and resilience of individuals and organizations

High-involvement management: The way managers empower employees to make decisions, provide them with extensive training and the opportunities to increase their knowledge base, share important information, and provide incentive compensation

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Thinking Critically

1. Identify your top five strengths. Describe how each of these strengths might benefit an organization. [Understand/Apply]

2. Could there be a downside or unintended consequences for managers who focus primarily on the findings of positive organizational behavior research? Explain your answer. [Analyze]

3. List three concrete ways a high-involvement manager could empower employees. [Apply]

Visit edge.sagepub.com/neckob to help you accomplish your coursework goals in an easy-to-use learning environment.

Mobile-friendly eFlashcards and practice quizzes Video and multimedia content A complete online action plan Chapter summaries with learning objectives EXCLUSIVE! Access to full-text SAGE journal articles

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In Review

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Learning Objectives

1.1 Explain the basic concept of organizational behavior and its value in organizations

Organizational behavior studies how and why individual employees and groups of employees behave the way they do within an organizational setting. The three main reasons for studying organizational behavior in your organization are to be able to explain it, predict it, and influence it. 1.2 Describe the key role of managing human capital in creating a sustainable competitive advantage for organizations

Human capital is essential for gaining competitive advantage, the edge that gives organizations a more beneficial position than their competitors and allows them to generate more profits and retain more customers. Three main aspects of human capital enhance true competitive advantage: value, rareness, and inimitability. 1.3 Identify the major behavioral science disciplines that contribute to OB

Psychology is the scientific study of the human mind that seeks to measure and explain behavioral characteristics. Sociology is the study of the behavior of groups and how they relate to each other in a social setting. Social psychology blends concepts from sociology and psychology and focuses on how people influence each other in a social setting. Political science studies the behavior of individuals and groups within a political environment. Anthropology is the study of people and their activities in relation to societal, environmental, and cultural influences. 1.4 Demonstrate the value of critical thinking in the context of OB

Critical thinking is the ability to use intelligence, knowledge, and skills to question and carefully explore situations and arrive at thoughtful conclusions based on evidence and reason. The critical-thinking approach is a powerful analytical method that helps managers consider intended and unintended consequences of behaviors on their teams, organizations, and communities. 1.5 Identify the major challenges and opportunities in the field of OB

The process of globalization has had a huge influence on OB. The economy has had a significant effect on OB. Organizations are continually strategizing to overcome economic stumbling blocks by hiring talent and focusing on the skill sets of their workforce to find new, innovative ways to differentiate themselves from the competition. Workforce diversity develops when organizations foster working environments that do not discriminate against others regardless of gender, race, ethnicity, age, sexual orientation, and disability. Organizations are creating customer- responsive cultures to meet the increasing needs and changing demands of their

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customer base. Managers and employees must have excellent people skills to use on the job to work harmoniously with their fellow colleagues. Organizations need to simulate innovation and change by becoming faster and more agile than the competition. There is a growing commitment to fostering an ethical culture and improving ethical behavior in the workplace. Many organizations are striving to build a more sustainable and responsible global marketplace by taking environmental factors into consideration during decision-making and goal-setting practices. 1.6 Describe the importance of ethical behavior in global organizations

Ethics are moral principles that guide our behavior. Ethical scandals in recent years have made many people more aware and less tolerant of perceived unethical behavior. An organization is unethical if it violates the basic rights of its employees and ignores health, safety, and environmental standards. In many organizations, employees attend training programs, workshops, and seminars that present ethical dilemmas and how to overcome them. In most workplaces there is a growing intolerance for unethical behavior and an expectation that employees will align their work practices with the organization’s code of ethics. 1.7 Differentiate the three basic levels of analysis at which OB may be examined

There are three main levels of analysis within the OB model: individuals, teams, and organizations. Individuals are the foundation of organizations: the way they work and behave either makes or breaks a business. The role of managers is to integrate individuals into the organization, nurture their skills and attributes, and balance their needs and expectations accordingly. Teams or groups exist in all organizations, large or small, and have a significant influence on the behavior of individual team members. Managers who understand the dynamics of a team and how it is structured gain more knowledge about the underlying behaviors of individuals within the group. Individuals and groups work within the formal structure of organizations. Organizations provide employees with the tools and systems to achieve objectives and goals. The attitudes and behavior of employees are influenced by the way organizations are structured. 1.8 Outline the benefits of positive OB and high-involvement management

Positive organizational behavior focuses on the strengths, virtues, vitality, and resilience of individuals and organizations. High-involvement management occurs when managers empower employees to make decisions, provide them with extensive training and the opportunities to increase their knowledge base, share important information, and provide incentive compensation. This type of approach works only when the right employees are selected to work in an organization. When high- involvement management is effective it helps to build strong relationships between individuals and teams, fosters trust, and increases job satisfaction and productivity.

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Key Terms

Anthropology 10 Competitive advantage 6 Conceptual skill 5 Contingency thinking 15 Correlation 13 Critical thinking 10 Dependent variable 13 Emotional intelligence 5 Ethics 19 Evidence-based management 15 High-involvement management 23 Human capital 5 Human capital inimitability 7 Human capital rareness 7 Human capital value 7 Human skills 5 Hypothesis 13 Independent variables 13 Model 13 Open systems theory 15 Organization 3 Organizational behavior 3 Political science 9 Positive organizational behavior 22 Psychology 9 Social psychology 9 Sociology 9 Strategic OB approach 5 Technical skill 4 Theory 13 Value chain 15

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EXERCISE 1.1: OB on Screen Think of at least two movies or television shows about the president or CEO of a large business. How does the leader treat his or her employees? What changes could be made to foster better employee relations?

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EXERCISE 1.2: What You Were Then Morris Massey, a marketing professor at the University of Colorado, developed a video series expounding the concept “You Are What You Were When.” The idea behind this was that the culture, the significant world events, and your own personal life experiences during your youth contribute significantly to your identity. To better understand the differences in individuals with whom you work, it may be helpful to understand what was happening in the world when they were young.

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Objective: To better understand OB and practice understanding the individual differences that exist in people.

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Instructions: Interview two people who are from different generations than yourself. You can interview family, friends, or acquaintances. Ask them the following questions about life when they were 8–14 years old:

1. Where did you grow up? (State or country) 2. How did your closest friendships develop? 3. What was happening in the world? How did these world events affect you? 4. What was the economic situation of your family? 5. What was the most important thing to you during that time of your life?

Now, ask yourself those same questions and write down your responses.

As a class or in groups, aggregate the responses and address the following questions.

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Reflection Questions: 1. What patterns do you see in the aggregated responses? 2. What differences do you see based on where individuals grew up? 3. What types of world events had the most impact? 4. How might someone’s economic situation growing up influence the way she or he thinks about work and

approach her or his job? 5. How can you use the knowledge of what people were experiencing in their youth to better work with

them now?

Exercise contributed by Harriet Rojas, Professor of Business, Indiana Wesleyan University.

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EXERCISE 1.3: Your Experience with OB

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Objective: This exercise will help you to better understand organizational behavior, its concepts, and its uses by helping you to explain and discuss your organizational experiences in terms of Chapter 1 concepts.

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Instructions: Step 1 (10 minutes): Think about an organization that you are or have been a member of. This organization can be any type of organization as discussed in the first chapter of this text (i.e. a social, religious, charitable, or other type of organization). After selecting your organization, think about some problem that the organization has had. Write down a brief (no more than one half of a page) narrative describing this problem. Be sure to explain the problem using the concept terms from Chapter 1. Also, try to identify the level at which this problem existed: individual, group, organizational, or across multiple levels.

Step 2 (10 minutes): Find a partner and read each other the problem you each wrote about. Select the most interesting of the two write-ups. Together re-write the description so that it clarifies any points that are unclear and is more concrete in its use and application of chapter concepts.

Step 3 (10 minutes): Each pair should find another pair to form a quad. Each pair should read the situation write-up selected in step 2 to the other pair. Again, select the situation that is the most interesting, and work together as a group to improve the situation description. Clarify any misuse of terms, and be sure that as much of the situation as possible is described using chapter concepts.

Step 4 (10 to 30 minutes): Select one person from the quad to read the write-up chosen by the entire quad as the most interesting to the entire class. The person who reads the situation should be someone other than the person who initially wrote about the situation, but everyone should be prepared to help clarify any points about the write-up using chapter concepts.

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Reflection Questions: Think about the process of identifying organizational problems in terms of the organizational behavior concepts you are learning.

1. How did identifying the problem in this way change the way you thought about the problem? 2. How did linking the problem to the concepts help you think about methods for dealing with the

problem? 3. How did thinking about the level of the problem shape the way you thought about the problem? 4. When listening to other groups, note how their descriptions used chapter concepts. Were there any

usages that surprised you or you were uncertain about?

Exercise contributed by Milton R. Mayfield, Professor of Business, Texas A&M International University and Jaqueline R. Mayfield, Professor of Business, Texas A&M International University.

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Case Study 1.1: Pfizer Pharmaceuticals Researchers at the Gallup-Healthways Well-Being Index estimate that employee unhappiness costs US businesses a mind-boggling $300 billion per year in lost productivity. And although worker productivity—what drives it, what quashes it—is a topic of some debate, certain correlations show up again and again: unhappy workers have high levels of absenteeism and produce less in both quality and quantity. According to a 2011 Harvard Business Review article, workers’ creativity, productivity, commitment, and collegiality are all affected by their level of happiness, and the corporate bottom line either suffers or flourishes as a result.

Discussions about the world’s “happiest places to work” might bring to mind some now-famous companies like Zappos, with its focus on hiring only the right employees, or any number of technology-based start-ups creating unusual workspaces to foster creativity. The seemingly cold and faceless world of pharmaceuticals is perhaps an unlikely candidate for a happy place to work. Yet for the second year in a row, 165-year-old New York City- based Pfizer Pharmaceuticals grabbed the number one spot on the 50 Happiest Companies in America list published on career website CareerBliss. With annual revenue exceeding $67 billion, driven by more than 110,000 employees, Pfizer—the maker of Advil, ChapStick, Zoloft, Viagra, Dimetapp, and hundreds of other drugstore products found both behind and over the counter—not only ranks as the world’s largest pharmaceutical company, it also employs the happiest workers.

Job satisfaction at Pfizer is the result of forward-thinking, innovative policies that seek to create a meaningful, engaging environment for colleagues (as Pfizer employees are called)—and one in which those colleagues enjoy working with each other. The most prominent strategy used in creating such an environment is ownership. Pfizer CEO Ian Read promoted the ownership culture in 2012 with the goal of engaging each employee in improving the company for all its stakeholders, from consumers to shareholders. The ultimate goal was the creation of a work environment that was a birthplace not only of new products, but of new pathways leading to those products. In turn, this environment would support the employees within it and foster in them a deep sense of responsibility to fellow colleagues and every company stakeholder.

The idea of the ownership model was born of candid research within the company among employees at every level. That led to the creation of a corporate culture that fosters independent and innovative thinking, provides opportunity for growth and movement within the company, gives meaningful feedback to employees, and encourages responsible risk taking while placing a high emphasis on personal responsibility. Failure is treated as an inevitability that provides an opportunity for learning or problem solving—and pharmaceutical research is no stranger to failure. By accepting failure and providing meaningful, constructive feedback, the company encourages employees to innovate, and innovation is something Pfizer considers an imperative for continued success in a crowded industry.