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Organizational BehaviorOrganizational Behavior

Organizational BehaviorOrganizational Behavior

[AUTHOR REMOVED AT REQUEST OF ORIGINAL PUBLISHER]

U N I V E R S I T Y O F M I N N E S O T A L I B R A R I E S P U B L I S H I N G E D I T I O N , 2 0 1 7 . T H I S E D I T I O N A D A P T E D F R O M A W O R K O R I G I N A L L Y P R O D U C E D I N 2 0 1 0 B Y A P U B L I S H E R W H O H A S R E Q U E S T E D T H A T I T N O T R E C E I V E

A T T R I B U T I O N . M I N N E A P O L I S , M N

Organizational Behavior by [Author removed at request of original publisher] is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

Contents

Publisher Information x

Chapter 1: Organizational Behavior

1.1 College Textbook Revolution 2 1.2 Understanding Organizational Behavior 4 1.3 Understanding Your Learning Style 14 1.4 Understanding How OB Research Is Done 17 1.5 Trends and Changes 22 1.6 Maintaining Core Values: The Case of Nau 31 1.7 Conclusion 33 1.8 Exercises 34

Chapter 2: Managing Demographic and Cultural Diversity

2.1 Doing Good as a Core Business Strategy: The Case of Goodwill Industries 37 2.2 Demographic Diversity 40 2.3 Cultural Diversity 64 2.4 The Role of Ethics and National Culture 75 2.5 Managing Diversity for Success: The Case of IBM 79 2.6 Conclusion 82 2.7 Exercises 83

Chapter 3: Understanding People at Work: Individual Differences and Perception

3.1 Advice for Hiring Successful Employees: The Case of Guy Kawasaki 86 3.2 The Interactionist Perspective: The Role of Fit 89 3.3 Individual Differences: Values and Personality 92 3.4 Perception 112 3.5 The Role of Ethics and National Culture 122 3.6 Using Science to Match Candidates to Jobs: The Case of Kronos 127 3.7 Conclusion 130 3.8 Exercises 131

Chapter 4: Individual Attitudes and Behaviors

4.1 People Come First: The Case of SAS 134 4.2 Work Attitudes 136 4.3 Work Behaviors 147 4.4 The Role of Ethics and National Culture 160 4.5 Rebounding from Defeat: The Case of Jeffrey Katzenberg 163 4.6 Conclusion 165 4.7 Exercises 166

Chapter 5: Theories of Motivation

5.1 A Motivating Place to Work: The Case of Zappos 170 5.2 Need-Based Theories of Motivation 172 5.3 Process-Based Theories 183 5.4 The Role of Ethics and National Culture 199 5.5 Motivation in Action: The Case of Trader Joe’s 202 5.6 Conclusion 204 5.7 Exercises 205

Chapter 6: Designing a Motivating Work Environment

6.1 Motivating Steel Workers Works: The Case of Nucor 208 6.2 Motivating Employees Through Job Design 210 6.3 Motivating Employees Through Goal Setting 223 6.4 Motivating Employees Through Performance Appraisals 232 6.5 Motivating Employees Through Performance Incentives 241 6.6 The Role of Ethics and National Culture 248 6.7 Motivation Key for Success: The Case of Xerox 251 6.8 Conclusion 253 6.9 Exercises 254

Chapter 7: Managing Stress and Emotions

7.1 Facing Foreclosure: The Case of Camden Property Trust 256 7.2 What Is Stress? 258 7.3 Avoiding and Managing Stress 272 7.4 What Are Emotions? 284 7.5 Emotions at Work 289 7.6 The Role of Ethics and National Culture 297 7.7 Getting Emotional: The Case of American Express 300 7.8 Conclusion 302

7.9 Exercises 303

Chapter 8: Communication

8.1 You’ve Got Mail…and You’re Fired! The Case of RadioShack 307 8.2 Understanding Communication 310 8.3 Communication Barriers 315 8.4 Different Types of Communication and Channels 328 8.5 The Role of Ethics and National Culture 345 8.6 Employee Satisfaction Translates to Success: The Case of Edward Jones 350 8.7 Conclusion 352 8.8 Exercises 353

Chapter 9: Managing Groups and Teams

9.1 Teamwork Takes to the Sky: The Case of General Electric 356 9.2 Group Dynamics 358 9.3 Understanding Team Design Characteristics 368 9.4 Management of Teams 384 9.5 Barriers to Effective Teams 390 9.6 The Role of Ethics and National Culture 392 9.7 Green Teams at Work: The Case of New Seasons Market 395 9.8 Conclusion 397 9.9 Exercises 398

Chapter 10: Conflict and Negotiations

10.1 Negotiation Failure: The Case of the PointCast 400 10.2 Understanding Conflict 402 10.3 Causes and Outcomes of Conflict 408 10.4 Conflict Management 413 10.5 Negotiations 420 10.6 The Role of Ethics and National Culture 435 10.7 Avoiding Conflict at WorldCom: The Case of Bernard Ebbers 438 10.8 Conclusion 441 10.9 Exercises 442

Chapter 11: Making Decisions

11.1 Decision-Making Culture: The Case of Google 446 11.2 Understanding Decision Making 449 11.3 Faulty Decision Making 461

11.4 Decision Making in Groups 466 11.5 The Role of Ethics and National Culture 475 11.6 Empowered Decision Making: The Case of Ingar Skaug 478 11.7 Conclusion 480 11.8 Exercises 481

Chapter 12: Leading People Within Organizations

12.1 Taking on the Pepsi Challenge: The Case of Indra Nooyi 486 12.2 Who Is a Leader? Trait Approaches to Leadership 489 12.3 What Do Leaders Do? Behavioral Approaches to Leadership 497 12.4 What Is the Role of the Context? Contingency Approaches to Leadership 503 12.5 What’s New? Contemporary Approaches to Leadership 513 12.6 The Role of Ethics and National Culture 529 12.7 Leadership Development: The Case of Starbucks 534 12.8 Conclusion 536 12.9 Exercises 537

Chapter 13: Power and Politics

13.1 Focus on Power: The Case of Steve Jobs 541 13.2 The Basics of Power 544 13.3 The Power to Influence 552 13.4 Organizational Politics 566 13.5 Understanding Social Networks 572 13.6 The Role of Ethics and National Culture 577 13.7 Getting Connected: The Case of Social Networking 581 13.8 Conclusion 583 13.9 Exercises 584

Chapter 14: Organizational Structure and Change

14.1 Organizational Structure: The Case of Toyota 590 14.2 Organizational Structure 592 14.3 Organizational Change 605 14.4 The Role of Ethics and National Culture 624 14.5 Changing for Good: The Case of Hanna Andersson Corporation 627 14.6 Conclusion 630 14.7 Exercises 631

Chapter 15: Organizational Culture

15.1 Building a Customer Service Culture: The Case of Nordstrom 634 15.2 Understanding Organizational Culture 636 15.3 Characteristics of Organizational Culture 641 15.4 Creating and Maintaining Organizational Culture 653 15.5 Creating Culture Change 671 15.6 The Role of Ethics and National Culture 676 15.7 Clash of the Cultures: The Case of Newell Rubbermaid 679 15.8 Conclusion 681 15.9 Exercises 682

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Publisher Information

Organizational Behavior is adapted from a work produced and distributed under a Creative

Commons license (CC BY-NC-SA) in 2010 by a publisher who has requested that they and

the original author not receive attribution. This adapted edition is produced by the University

of Minnesota Libraries Publishing through the eLearning Support Initiative.

This adaptation has reformatted the original text, and replaced some images and figures to make the resulting

whole more shareable. This adaptation has not significantly altered or updated the original 2010 text. This work

is made available under the terms of a Creative Commons Attribution-NonCommercial-ShareAlike license.

Chapter 1: Organizational Behavior

Learning ObjectivesLearning Objectives

After reading this chapter, you should be able to understand and articulate answers to the following questions:

1. What is organizational behavior (OB)?

2. Why does organizational behavior matter?

3. How can I maximize my learning in this course?

4. What research methods are used to study organizational behavior?

5. What challenges and opportunities exist for OB?

1.1 College Textbook Revolution

The traditional textbook publishing model no longer serves the interests of students,

educators, and authors. Textbooks are too expensive for students and too inflexible

for instructors. And authors, the major, initial source of value in the industry, are

increasingly confused by faster revision demands and their compensation for those

revisions. Flat World addresses all these industry pain points.

Jeff Shelstad

In 2007, two textbook publishing industry veterans, Jeff Shelstad and Eric Frank, started a privately held company, to be a new and disruptive model for the college textbook market. Traditional business textbook publishers carry a portfolio of 5 to 10 titles per subject and charge premium prices for new textbooks, an average of $1,000 in textbooks for a college student’s first year, according to a recent General Accounting Office (GAO) report. FWK’s strategy aims to turn the traditional model on its head by providing online textbook access free to students. FWK earns revenues by selling students the digital textbooks in alternate formats, print and audio initially, and also by selling highly efficient and mobile study aids. Despite the fact that professors have rated the academic quality of FWK textbooks as equal to or higher than that of textbooks from traditional publishers, the cost to students is a fraction of current market prices due to the efficiencies of the FWK business model. Moreover, with FWK’s platform, instructors who adopt FWK books for their classes are able to pick and choose the material provided to their students, even if it is from earlier versions of textbooks that have since been revised.

Shelstad and Frank previously served as the editorial director and the marketing director, respectively, at Prentice Hall, a major U.S. publisher of educational materials and a division of Pearson PLC. They resigned from Prentice Hall in January 2007 with plans to start a higher education publishing business together. During the first several months, they met with many students, professors, authors, advisors, and potential angel investors. Shelstad became the CEO; Frank was the chief marketing officer. They also added David Wiley as the chief openness officer.

Asked why he started FWK, Shelstad said, “I was convinced the college textbook publishing industry model was broken.” He added, “When more and more students are running from your core product, you have a problem. For example, many leading business school textbooks sell in the college bookstore or on various Internet sites for $150 or more. Students by and large don’t see that value. So they search franti- cally for substitutes, and the Internet has made the availability and pricing of substitutes very obvious.” In its first term (fall of 2009), FWK had 40,000 students using its textbooks. This steadily continued to rise as faculty discovered the low-priced alternative that combined quality and affordability for their students. As of January 2013, FWK has published more than 100 books, with faculty customers at more than 2000 institutions in 44 countries. As a result, more than 600,000 students have benefited from affordable text- book choices that lower costs, increase access, and personalize learning.

Media attention regarding the fledgling FWK was generally very favorable. Social media experts also gave the company accolades. For example, Chris Anderson devoted a page to the FWK business model in his

bestselling book ”Free: The Future of a Radical Price.” Moreover, early user reviews of the product were also very positive. For instance, an instructor who adopted an early FWK text, Principles of Management, noted, “I highly recommend this book as a primary textbook for…business majors. The overall context is quite appropriate and the search capability within the context is useful. I have been quite impressed [with] how they have highlighted the key areas.” At the same time, opportunities to improve the Web interface still existed, with the same reviewer noting, “The navigation could be a bit more user friendly, however.” FWK uses user input like this to better adjust the strategy and delivery of its model. This type of feedback led the FWK design squad to improve its custom Web interface, so that instructors can more easily change the book.

Further changes occurred in late 2012, when the company announced it would no longer offer free online access to its textbooks. Moving from “free to fair” (the entry point for students is now $19.95) was a diffi- cult but necessary decision. On its website, the company explained:

“As the transition to digital has changed student buying trends, the free format has become a barrier to our long-term growth and ability to offer a fair and affordable model that works for all our customers, from individual students and instructors to our institutional partners.”

In December 2012, the company announced the appointment of Christopher Etesse as CEO. Etesse is a former senior executive and Chief Technology Officer with Blackboard Inc. Shelstad will remain with the company in a strategic role as Founder.

Only time will tell if the $30 million invested in FWK by 2012 will result in the establishment of a new titan in textbook publishing or will be an entrepreneurial miss.

Based on information from United States Government Accountability Office. (2005, July). College text- books: Enhanced offering appear to drive recent price increases (GAO-05-806). Retrieved April 22, 2010, from http://www.gao.gov/cgi-bin/getrpt?GAO-05-806; Community College Open Textbook Collaborative. (2009). Business reviews. Retrieved April 22, 2010, from http://www.collegeopentextbooks.org/reviews/ business.html; Personal interviews with Jeff Shelstad and Eric Frank.

Discussion Questions

1. Which competitive advantages do open textbooks seem to possess?

2. Which learning styles might be most effective for individuals in entrepreneurial firms? Explain your answer.

3. How might the extensive textbook industry experience that open textbook founders possess help or hinder the company’s ultimate success or failure?

4. If you were one of the founders, how would you prioritize how you spent your time in the first weeks on the job after getting the venture capital funding?

1.2 Understanding Organizational Behavior

Learning Objectives

1. Learn about the layout of this book.

2. Understand what organizational behavior is.

3. Understand why organizational behavior matters.

4. Learn about OB Toolboxes in this book.

About This BookAbout This Book

The people make the place.

Benjamin Schneider, Fellow of the Academy of Management

This book is all about people, especially people at work. As evidenced in the opening case, we will share many

examples of people making their workplaces work. People can make work an exciting, fun, and productive place

to be, or they can make it a routine, boring, and ineffective place where everyone dreads to go. Steve Jobs,

cofounder, chairman, and CEO of Apple Inc. attributes the innovations at Apple, which include the iPod, Mac-

Book, and iPhone, to people, noting, “Innovation has nothing to do with how many R&D dollars you have.…It’s

not about money. It’s about the people you have, how you’re led, and how much you get it” (Kirkpatrick, 1998).

This became a sore point with investors in early 2009 when Jobs took a medical leave of absence. Many wonder

if Apple will be as successful without him at the helm, and Apple stock plunged upon worries about his health

(Parloff, 2008).

Figure 1.2

Steve Jobs is known for developing innovative products by hiring the right people for the job and fostering a culture of hard work and creativ-

ity.

Wikimedia Commons – CC BY 3.0.

Mary Kay Ash, founder of Mary Kay Inc., a billion-dollar cosmetics company, makes a similar point, saying,

“People are definitely a company’s greatest asset. It doesn’t make any difference whether the product is cars or

cosmetics. A company is only as good as the people it keeps” 1

Just like people, organizations come in many shapes and sizes. We understand that the career path you will take

may include a variety of different organizations. In addition, we know that each student reading this book has a

unique set of personal and work-related experiences, capabilities, and career goals. On average, a person working

in the United States will change jobs 10 times in 20 years (U.S. Bureau of Labor Statistics, 2005). In order to suc-

ceed in this type of career situation, individuals need to be armed with the tools necessary to be lifelong learners.

So, this book will not be about giving you all the answers to every situation you may encounter when you start

your first job or as you continue up the career ladder. Instead, this book will give you the vocabulary, framework,

and critical thinking skills necessary for you to diagnose situations, ask tough questions, evaluate the answers you

receive, and act in an effective and ethical manner regardless of situational characteristics.

Throughout this book, when we refer to organizations, we will include examples that may apply to diverse orga-

nizations such as publicly held, for-profit organizations like Google and American Airlines, privately owned busi-

nesses such as S. C. Johnson & Son Inc. (makers of Windex glass cleaner) and Mars Inc. (makers of Snickers

and M&Ms), and not-for-profit organizations such as the Sierra Club or Mercy Corps, and nongovernmental orga-

nizations (NGOs) such as Doctors Without Borders and the International Red Cross. We will also refer to both

small and large corporations. You will see examples from Fortune 500 organizations such as Intel Corporation or

Home Depot Inc., as well as small start-up organizations. Keep in mind that some of the small organizations of

today may become large organizations in the future. For example, in 1998, eBay Inc. had only 29 employees and

$47.4 million in income, but by 2008 they had grown to 11,000 employees and over $7 billion in revenue (Gibson,

2008). Regardless of the size or type of organization you may work for, people are the common denominator of

how work is accomplished within organizations.

Together, we will examine people at work both as individuals and within work groups and how they impact and

are impacted by the organizations where they work. Before we can understand these three levels of organizational

behavior, we need to agree on a definition of organizational behavior.

What Is Organizational Behavior?What Is Organizational Behavior?

Organizational behavior (OB) is defined as the systematic study and application of knowledge about how individ-

uals and groups act within the organizations where they work. As you will see throughout this book, definitions

are important. They are important because they tell us what something is as well as what it is not. For example, we

will not be addressing childhood development in this course—that concept is often covered in psychology—but

we might draw on research about twins raised apart to understand whether job attitudes are affected by genetics.

OB draws from other disciplines to create a unique field. As you read this book, you will most likely recognize

OB’s roots in other disciplines. For example, when we review topics such as personality and motivation, we will

again review studies from the field of psychology. The topic of team processes relies heavily on the field of soci-

ology. In the chapter relating to decision making, you will come across the influence of economics. When we

1. Retrieved June 4, 2008, from http://www.litera.co.uk/t/NDk1MDA/.

study power and influence in organizations, we borrow heavily from political sciences. Even medical science con-

tributes to the field of organizational behavior, particularly to the study of stress and its effects on individuals.

Figure 1.3

OB spans topics related from the individual to the organization.

Those who study organizational behavior—which now includes you—are interested in several outcomes such as

work attitudes (e.g., job satisfaction and organizational commitment) as well as job performance (e.g., customer

service and counterproductive work behaviors). A distinction is made in OB regarding which level of the organi-

zation is being studied at any given time. There are three key levels of analysis in OB. They are examining the

individual, the group, and the organization. For example, if I want to understand my boss’s personality, I would

be examining the individual level of analysis. If we want to know about how my manager’s personality affects my

team, I am examining things at the team level. But, if I want to understand how my organization’s culture affects

my boss’s behavior, I would be interested in the organizational level of analysis.

Why Organizational Behavior MattersWhy Organizational Behavior Matters

OB matters at three critical levels. It matters because it is all about things you care about. OB can help you

become a more engaged organizational member. Getting along with others, getting a great job, lowering your

stress level, making more effective decisions, and working effectively within a team…these are all great things,

and OB addresses them!

It matters because employers care about OB. A recent survey by the National Association of Colleges and

Employers (NACE) asked employers which skills are the most important for them when evaluating job candi-

dates, and OB topics topped the list (NACE 2007 Job Outlook Survey, 2008).

The following were the top five personal qualities/skills:

1. Communication skills (verbal and written)

2. Honesty/integrity

3. Interpersonal skills (relates well to others)

4. Motivation/initiative

5. Strong work ethic

These are all things we will cover in OB.

Finally, it matters because organizations care about OB. The best companies in the world understand that the

people make the place. How do we know this? Well, we know that organizations that value their employees

are more profitable than those that do not (Huselid, 1995; Pfeffer, 1998; Pfeffer & Veiga, 1999; Welbourne &

Andrews, 1996). Research shows that successful organizations have a number of things in common, such as pro-

viding employment security, engaging in selective hiring, utilizing self-managed teams, being decentralized, pay-

ing well, training employees, reducing status differences, and sharing information (Pfeffer & Veiga, 1999). For

example, every Whole Foods store has an open compensation policy in which salaries (including bonuses) are

listed for all employees. There is also a salary cap that limits the maximum cash compensation paid to anyone

in the organization, such as a CEO, in a given year to 19 times the companywide annual average salary of all

full-time employees. What this means is that if the average employee makes $30,000 per year, the highest poten-

tial pay for their CEO would be $570,000, which is a lot of money but pales in comparison to salaries such as

Steve Jobs of Apple at $14.6 million or the highest paid CEO in 2007, Larry Ellison of Oracle, at $192.9 million

(Elmer-DeWitt, 2008). Research shows that organizations that are considered healthier and more effective have

strong OB characteristics throughout them such as role clarity, information sharing, and performance feedback.

Unfortunately, research shows that most organizations are unhealthy, with 50% of respondents saying that their

organizations do not engage in effective OB practices (Aguirre et al., 2005).

In the rest of this chapter, we will build on how you can use this book by adding tools to your OB Toolbox in

each section of the book as well as assessing your own learning style. In addition, it is important to understand

the research methods used to define OB, so we will also review those. Finally, you will see what challenges and

opportunities businesses are facing and how OB can help overcome these challenges.

Adding to Your OB ToolboxAdding to Your OB Toolbox

Your OB ToolboxYour OB Toolbox

OB Toolboxes appear throughout this book. They indicate a tool that you can try out today to help you develop your OB skills.

Throughout the book, you will see many OB Toolbox features. Our goal in writing this book is to create something

useful for you to use now and as you progress through your career. Sometimes we will focus on tools you can use

today. Other times we will focus on things you may want to think about that may help you later. As you progress,

you may discover some OB tools that are particularly relevant to you while others are not as appropriate at the

moment. That’s great—keep those that have value to you. You can always go back and pick up tools later on if

they don’t seem applicable right now.

The important thing to keep in mind is that the more tools and skills you have, the higher the quality of your inter-

actions with others will be and the more valuable you will become to organizations that compete for top talent

(Michaels, Handfield-Jones, & Axelrod, 2001). It is not surprising that, on average, the greater the level of educa-

tion you have, the more money you will make. In 2006, those who had a college degree made 62% more money

than those who had a high school degree (U.S. Bureau of Labor Statistics). Organizations value and pay for skills

as the next figure shows.

Figure 1.4

Education and training have financial payoffs as illustrated by these unemployment and earnings for work-

ers 25 and older.

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

Tom Peters is a management expert who talks about the concept of individuals thinking of themselves as a brand

to be managed. Further, he recommends that individuals manage themselves like free agents (Peters, 1997; Peters,

2004). The following OB Toolbox includes several ideas for being effective in keeping up your skill set.

Your OB Toolbox: Skill Survival KitYour OB Toolbox: Skill Survival Kit

• Keep your skills fresh. Consider revolutionizing your portfolio of skills at least every 6 years.

• Master something. Competence in many skills is important, but excelling at something will set you apart.

• Embrace ambiguity. Many people fear the unknown. They like things to be predictable. Unfortu- nately, the only certainty in life is that things will change. Instead of running from this truth, embrace the situation as a great opportunity.

• Network. The term has been overused to the point of sounding like a cliché, but networking works. This doesn’t mean that having 200 connections on MySpace, LinkedIn, or Facebook makes you more effective than someone who has 50, but it does mean that getting to know people is a good thing in ways you can’t even imagine now.

• Appreciate new technology. This doesn’t mean you shoul

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