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<strong>chapter</strong><br />
1<br />
ORGANIZATIONAL BEHAVIOR<br />
AND MANAGEMENT<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
WHAT IS ORGANIZATIONAL BEHAVIOR?<br />
ORGANIZATIONAL BEHAVIOR AND MANAGEMENT<br />
CHALLENGES FOR ORGANIZATIONAL BEHAVIOR<br />
AND MANAGEMENT<br />
CHALLENGE 1: USING NEW INFORMATION<br />
TECHNOLOGY TO ENHANCE CREATIVITY AND<br />
ORGANIZATIONAL LEARNING<br />
CHALLENGE 2: MANAGING HUMAN RESOURCES<br />
TO INCREASE COMPETITIVE ADVANTAGE<br />
CHALLENGE 3: DEVELOPING ORGANIZATIONAL<br />
ETHICS AND WELL-BEING<br />
CHALLENGE 4: MANAGING A DIVERSE<br />
WORKFORCE<br />
CHALLENGE 5: MANAGING THE GLOBAL<br />
ENVIRONMENT<br />
Euan Baird, CEO of Schlumberger,<br />
is determined to keep his company<br />
at the forefront of using advances<br />
in information technology to find<br />
new ways to enhance his company’s<br />
performance and his<br />
employees ability and motivation<br />
to do their jobs.
Opening Case<br />
HOW EUAN BAIRD USES INFORMATION<br />
TECHNOLOGY TO MANAGE ORGANIZATIONAL<br />
BEHAVIOR AT SCHLUMBERGER<br />
Schlumberger is a global technology company that sells products and services<br />
to improve the productivity of its customers. For example, its Oilfield<br />
Services Division is the leading supplier of services and technology to the<br />
international petroleum industry. 1 In the last decade, its chief executive officer<br />
(CEO), Euan Baird, has revolutionized the way the company and the people<br />
inside it operate by introducing new information and communications technology at<br />
all levels and in all areas of the company. In his view, these new technologies have<br />
transformed the way in which the company manages the behavior of its people and<br />
subunits.<br />
Information technology (IT) refers to the computer systems and software that<br />
organizations use to speed the flow of information around an organization and to<br />
better link people and subunits within it. Information technology includes a company’s<br />
internal communications and messaging e-mail system whereby employees<br />
are linked through their desktop and laptop computers to each other, to the company’s<br />
information databases, and often, to its suppliers and customers as well. At<br />
Schlumberger, Baird has utilized IT to improve organizational behavior and performance<br />
in many ways.<br />
First, Baird designed Schlumberger’s IT to increase employee motivation, job<br />
satisfaction, and performance. Information systems were designed to give employees<br />
access to more and better information, and to put employees into closer communication<br />
with each other. Before the new information systems, managers and supervisors<br />
had controlled the flow of information between employees, and the organizational<br />
hierarchy was the main means of communications and control. Now,<br />
everything the information employees need to perform their work is available electronically,<br />
and employees can access this information and use it creatively to better<br />
satisfy customer needs. Moreover, to enhance the level of cooperation between<br />
employees, employees can “sign” their work electronically so that they can be given<br />
credit for their inputs. This builds employee motivation because it allows managers<br />
to better reward superior employee performance. Moreover, Baird and his managers<br />
discovered that the IT network was very effective in promoting trust between<br />
employees and in creating a sense of belongingness in the company. Electronic communication<br />
allows employees to maintain an active everyday working relationship<br />
3
4<br />
Chapter 1 Organizational Behavior and Management<br />
Today, developing the information technology that allows employees to handle<br />
information and knowledge more effectively and to better communicate with each<br />
other, and with an organization’s customers and suppliers, is an important challenge<br />
in managing organizational behavior. At Schlumberger, Euan Baird actively seeks<br />
ways to use information technology to obtain input and advice from employees, to<br />
communicate with employees, and to let them know he supports their activities and<br />
is listening to their concerns. Baird strives to find new ways to improve the perforwith<br />
each other even though people are at very different levels in the company or<br />
even very far apart.<br />
New IT systems have also helped Schlumberger to better train its employees<br />
in new technical advances and increase their productivity and responsiveness to customers.<br />
For example, each of the operating subunits, such as oilfield services, established<br />
an online support system that provides employees with up-to-date documentation,<br />
training material, and advice over the network. Called In Touch, employees<br />
can access training information at their convenience and fit it into their busy work<br />
schedules.<br />
Another important aspect of the way in which Baird designed Schlumberger’s<br />
IT systems was to take full advantage of the possibilities offered by virtual teams.<br />
Virtual teams are groups of employees, electronically linked to each other through<br />
e-mail and often video messenging systems, who may seldom or ever meet, but who<br />
work on projects together intensively in real time. For example, consider the way<br />
Baird used IT to overcome the problems of managing the far-flung global operations<br />
of its oilfield services group. Baird split oilfield services into 25 separate regional<br />
groups to service the needs of clients in each of their regional areas, for example,<br />
China, the U.S. Gulf Coast, and Alaska. While employees inside each regional group<br />
use electronic means to communicate with one another, they are also in continual<br />
online communication with the other 24 groups so that they are easily able to<br />
exchange market information, personal experiences, and best practices. The company’s<br />
virtual team structure has greatly improved cooperation and teamwork<br />
throughout the oil services division and the company’s other subunits, speeding customer<br />
service and reducing the time it takes to get new products to the market—<br />
important sources of competitive advantage. 2<br />
Indeed, according to Baird, one of the main functions of IT is to “create companies<br />
that learn and do not forget what they have learned.” Information technology<br />
helps employees to assimilate and manage large amounts of complex information,<br />
and it gives them access to new and changing information so they can be constantly<br />
learning how to do things better; thus, it helps employees to make intelligent choices<br />
and improve the decisions they make. Indeed, at Schlumberger, Baird has almost<br />
eliminated the need for paper. Almost everything employees need to perform their<br />
tasks is now handled electronically and all the reports that he and his managers read<br />
are read onscreen. They are from online databases that employees continually<br />
update to keep communication and feedback quick and effective—something that<br />
pleases Schlumberger’s customers and leads to increased company performance.<br />
Overview
Chapter 1<br />
Organizational Behavior and Management<br />
mance of his employees and thus the performance of Schlumberger itself. To these<br />
ends, Baird has taken the following steps:<br />
■<br />
■<br />
He strives to increase their skills and knowledge and works hard to involve<br />
employees in the running of the business and encourages them to find new<br />
ways to speed product development, raise quality, and increase revenues.<br />
He rewards employees for superior performance and makes sure that each<br />
employee’s contribution to the organization is recognized.<br />
■ He tries to create a work setting in which employees can work hard both<br />
alone and in virtual teams to further their organization’s goals and interests.<br />
As Baird’s actions suggest, a solid understanding and appreciation of how people<br />
behave in organizations, and what causes them to behave the way they do, is the first<br />
step in managing organizational behavior effectively. Once managers appreciate the<br />
forces that shape organizational behavior, they can use new tools and techniques, such<br />
as information technology, to enhance individual and organizational performance.<br />
In this <strong>chapter</strong>, we define organizational behavior and its relationship to management,<br />
and we demonstrate how a working knowledge of organizational behavior<br />
is essential for managers and employees alike in helping an organization to meet its<br />
goals. We discuss the functions, roles, and skills of management and describe how<br />
understanding organizational behavior is necessary for a manager to be effective. We<br />
also discuss five contemporary challenges to the management of organizational<br />
behavior, focusing on two that are perhaps the most important facing managers<br />
today: (1) the need to utilize effectively the fast-developing information technology<br />
that is affecting all aspects of the way a company operates, and (2) the need to create<br />
an organizational context that allows employees to be creative and innovative as they<br />
go about their jobs. By the end of this <strong>chapter</strong>, you will understand the central role<br />
that organizational behavior plays in determining how effectively an organization<br />
and all the men and women who are part of it are in achieving their goals.<br />
5<br />
■ ■ ■<br />
WHAT IS ORGANIZATIONAL BEHAVIOR?<br />
Organization<br />
A collection of people who work<br />
together to achieve individual and<br />
organizational goals.<br />
To begin our study of organizational behavior, we could just say that it is the study of<br />
behavior in organizations and the study of the behavior of organizations, but such a<br />
definition reveals nothing about what this study involves or examines. To reach a<br />
more useful and meaningful definition, let’s first look at what an organization is. An<br />
organization is a collection of people who work together to achieve a wide variety of<br />
goals. The goals are what individuals are trying to accomplish by being members of<br />
an organization (earning a lot of money, helping promote a worthy cause, achieving<br />
certain levels of power and prestige, enjoying a satisfying work experience). The<br />
goals are also what the organization as a whole is trying to accomplish (providing<br />
innovative goods and services that customers want; getting candidates elected; raising<br />
money for medical research; making a profit to reward stockholders, managers,<br />
and workers). Police forces, for example, are formed to achieve the goals of providing<br />
security for law-abiding citizens and providing police officers with a secure,<br />
rewarding career while they perform their valuable service. Paramount Pictures was<br />
formed to achieve the goal of providing people with entertainment while making a<br />
profit, and in the process, actors, directors, writers, and musicians receive well-paid<br />
and interesting work. Euan Baird works hard at Schlumberger finding new ways of<br />
using IT to increase performance, not only to provide customers with high-quality<br />
innovative products but also to provide himself with power, wealth, and a satisfying<br />
work experience.
6<br />
Chapter 1 Organizational Behavior and Management<br />
Organizational behavior<br />
The study of factors that affect<br />
how individuals and groups act in<br />
organizations and how organizations<br />
manage their environments.<br />
Organizations exist to provide goods and services that people want, and the<br />
amount and quality of these goods and services are products of the behaviors and<br />
performance of an organization’s workers—of top managers, of highly skilled workers<br />
in sales or research and development, and of the workers who actually produce or<br />
provide the goods and services.<br />
Organizational behavior is the study of the many factors that have an impact<br />
on how individuals and groups respond to and act in organizations and how organizations<br />
manage their environments. Understanding how people behave in an organization<br />
is important because most people, at some time in their life, work for an organization<br />
and are directly affected by their experiences in it. People may be the paid<br />
employees of small mom-and-pop operations or large Fortune 500 firms, the unpaid<br />
volunteers of a charitable organization, the members of a school board, or e-entrepreneurs<br />
who start new online businesses as thousands of people are doing today. No<br />
matter what the organizational setting, however, people who work in organizations<br />
are affected significantly by their experiences at work.<br />
Most of us think we have a basic, intuitive, common sense understanding of<br />
human behavior in organizations because we all are human and have been exposed to<br />
different work experiences. Often, however, our intuition and common sense are<br />
wrong, and we do not really understand why people act and react the way they do.<br />
For example, many people assume that happy workers are productive workers—that<br />
is, that high job satisfaction causes high job performance—or that punishing someone<br />
who performs consistently at a low level is a good way to increase performance<br />
or that it is best to keep pay levels secret. As we will see in later <strong>chapter</strong>s, all these<br />
beliefs are either false or are correct only under a narrow set of circumstances, and<br />
applying these principles can have negative consequences for workers, managers,<br />
and organizations.<br />
The study of organizational behavior provides guidelines that both managers<br />
and workers can use to understand and appreciate the many forces that affect behavior<br />
in organizations and to make correct decisions about how to motivate and coordinate<br />
people and other resources to achieve organizational goals. Organizational<br />
behavior replaces intuition and gut feeling with a well-researched body of theories<br />
and systematic guidelines for managing behavior in organizations.<br />
The study of organizational behavior provides a set of tools—concepts and<br />
theories—that help people to understand, analyze, and describe what goes on in<br />
organizations and why. Organizational behavior helps people understand, for example,<br />
why they and others are motivated to join an organization, why they feel good or<br />
bad about their jobs or about being part of the organization, why some people do a<br />
good job and others don’t, and why some people stay with the same organization for<br />
30 years and others seem to be constantly dissatisfied and change jobs every two<br />
years. In essence, organizational behavior concepts and theories allow people to correctly<br />
understand, describe, and analyze how the characteristics of individuals,<br />
groups, work situations, and the organization itself affect how members feel about<br />
and act within their organization (see Figure 1.1).<br />
The ability to use the tools of organizational behavior to understand behavior<br />
in organizations is one reason for studying this topic. A second reason is to learn how<br />
to use and apply these concepts, theories, and techniques to improve, enhance, or<br />
change behavior so that individuals, groups, and the whole organization can better<br />
achieve their goals. For example, a salesperson working in Neiman Marcus in<br />
Houston has the individual goal, set by his sales manager, of selling $5,000 worth of<br />
men’s clothing per week. In addition, he and the other members of the men’s clothing<br />
department have the group goal of keeping the department looking neat and<br />
attractive and of never keeping customers waiting. The store as a whole (along with
Chapter 1<br />
Organizational Behavior and Management<br />
7<br />
FIGURE 1-1<br />
What Is Organizational<br />
Behavior?<br />
Organizational behavior<br />
Provides a set of tools<br />
that allow:<br />
People to understand,<br />
analyze, and describe<br />
behavior in organizations<br />
Managers to improve, enhance,<br />
or change work behaviors so<br />
that individuals, groups, and<br />
the whole organization can<br />
achieve their goals<br />
all the other stores in the nationwide Neiman Marcus chain) has the goals of being<br />
profitable by selling customers unique, high-quality clothes and accessories and providing<br />
excellent service. As you can see, these goals are interrelated. By being helpful<br />
to customers, the salesperson’s behavior contributes to attaining (1) his personal sales<br />
goal, (2) the department’s goal of never keeping customers waiting, and (3) the organization’s<br />
goals of being profitable and providing excellent service.<br />
Recall from the <strong>chapter</strong>-opening case that Schlumberger’s goal is to attract<br />
customers by providing them with innovative, high-quality technical products. To<br />
achieve this goal, Euan Baird has had to find ways to use new information technology<br />
to speed the development of new products while keeping quality high.<br />
Schlumberger has been improving its ability to achieve these goals because of the<br />
way Baird encourages his employees to work hard and well and because of his concern<br />
for finding the right way to motivate and reward them. A key challenge for all<br />
managers, and one that we address throughout this book, is how to encourage organizational<br />
members to work effectively for their own benefit, the benefit of their<br />
work groups, and the benefit of their organization. How does Baird try to meet this<br />
challenge? He requires workers to work hard individually and in virtual teams to<br />
meet their goals, and he ensures that workers benefit directly from their hard work<br />
by recognizing their individual and group achievements. Now that change is becoming<br />
a way of life for many organizations, it is extremely important for managers to be<br />
constantly on the alert to find new ways to motivate and coordinate employees to<br />
ensure that their goals are aligned with organizational goals.<br />
Levels of Analysis<br />
Our examples of how managers can use organizational behavior tools to understand<br />
and alter behavior signal the three levels at which organizational behavior can be<br />
examined: the individual, the group, and the organization as a whole. A full understanding<br />
of organizational behavior is impossible without a thorough examination of<br />
the factors that affect behavior at each level.<br />
Much of the research in organizational behavior has focused on the way in<br />
which the characteristics of individuals (such as personality and motivation) affect<br />
how well people do their jobs, whether they like what they do, whether they get<br />
along with the people they work with, and so on. In Chapters 2 through 9 we examine<br />
individual characteristics that are critical for understanding and managing behavior<br />
in organizations: personality and ability, attitudes and values, perception and<br />
attribution, learning, motivation, and stress and work-life linkages (see Figure 1.2).
8<br />
Chapter 1 Organizational Behavior and Management<br />
Understanding and managing<br />
organizational behavior<br />
requires studying<br />
Individuals in organizations<br />
Chapter 2 Individual differences:<br />
Personality and ability<br />
Chapter 3 The experience of work: Values,<br />
attitudes, and moods<br />
Chapter 4 Perception, attribution, and the<br />
management of diversity<br />
Chapter 5 Learning in organizations<br />
Chapter 6 The nature of work motivation<br />
Chapter 7 Motivation tools I: Job design<br />
and goal setting<br />
Chapter 8 Motivation tools II: Performance<br />
appraisal, pay, and careers<br />
Chapter 9 Stress and work-life linkages<br />
Groups and organizational processes<br />
Chapter 10 The nature of work groups<br />
and teams<br />
Chapter 11 Effective work groups<br />
and teams<br />
Chapter 12 Leadership<br />
Chapter 13 Communication<br />
Chapter 14 Decision making<br />
Intergroup relations and the<br />
organizational context<br />
Chapter 15 Organizational structure<br />
and culture<br />
Chapter 16 Determinants of organizational<br />
structure and culture<br />
Chapter 17 Managing global organizations<br />
Chapter 18 Power, politics, and conflict<br />
Chapter 19 Organizational change<br />
and development<br />
FIGURE 1.2 Components of Organizational Behavior<br />
Group<br />
Two or more people who interact<br />
to achieve their goals.<br />
Team<br />
A group in which members work<br />
together intensively to achieve a<br />
common group goal.<br />
The effects of group characteristics and processes (such as communication and<br />
decision making) on organizational behavior also need to be understood. A group is<br />
two or more people who interact to achieve their goals. A team is a group in which<br />
members work together intensively to achieve a common group goal. A virtual team<br />
is a group whose members work together intensively via electronic means and who<br />
may never actually meet. The number of members in a group, the type and diversity<br />
of team members, the tasks they perform, and the attractiveness of a group to its<br />
members all influence not just the behavior of the group as a whole but also the<br />
behaviors of individuals within the group. For example, a team can influence its<br />
members’ decisions on how diligently they should do their jobs or how often they<br />
are absent from work. Chapters 10 through 14 examine the ways in which groups<br />
affect their individual members and the processes involved in group interactions<br />
such as leadership, communication, and decision making.<br />
Many studies have found that characteristics of the organization as a whole<br />
(such as the design of an organization’s structure and its culture) have important<br />
effects on the behavior of individuals and groups. An organization’s structure controls<br />
how people and groups cooperate and interact to achieve organizational<br />
goals. The principal task of organizational structure is to encourage people to<br />
work hard and coordinate their efforts to ensure high levels of organizational performance.<br />
An organization’s culture controls how the individuals and groups interact<br />
with each other and with people (such as customers or suppliers) outside the<br />
organization. Organizational culture also shapes and controls the attitudes and<br />
behavior of people and groups within an organization and influences their desire<br />
to work toward achieving organizational goals. Chapters 15 through 19 examine<br />
the way organizational structure and culture affect performance and also examine
Chapter 1<br />
Organizational Behavior and Management<br />
how factors such as the changing global environment, technology, and ethics affect<br />
work attitudes and behavior.<br />
Organizational Behavior in Action an Example<br />
The way in which individual, group, and organizational characteristics work<br />
together is illustrated in the way General Motors (GM) and Toyota cooperated to<br />
reopen a car assembly plant in Fremont, California—a plant that GM had previously<br />
closed because of its poor performance. (See Insight 1.1.)<br />
INSIGHT 1.1<br />
O R G A N I Z A T I O N A L B E H A V I O R<br />
9<br />
NUMMI FORGES AHEAD<br />
At Nummi, supervisors and workers<br />
cooperate on an ongoing basis<br />
to find new and improved ways to<br />
assemble cars. Workers also<br />
receive training when any<br />
changes are made to the car<br />
model or method of assembly to<br />
ensure the high quality the car<br />
plant is known for.<br />
In 1963, GM opened a car plant in Fremont, California, 35<br />
miles southeast of San Francisco. 3 The plant was a typical<br />
assembly-line operation where workers performed simple,<br />
repetitive tasks on cars that moved steadily past them on<br />
assembly lines. From the beginning, the plant experienced many problems that<br />
reduced its performance. Worker productivity was low, and the quality of the assembled<br />
cars was poor. Worker morale was also low, drug and alcohol abuse were widespread,<br />
and absenteeism was so high that hundreds of extra workers had to be<br />
employed just to make sure that enough<br />
workers were on hand to operate the plant.<br />
To try to improve the plant’s performance,<br />
GM managers tried many things, such as<br />
changing the workers’ jobs, increasing the<br />
speed of the production line, and instituting<br />
penalties for absenteeism. None of these<br />
actions seemed to work, and, seeing no<br />
chance of improving performance, GM<br />
closed the plant in 1981.<br />
In 1983, GM and Toyota announced<br />
that they would cooperate to reopen the<br />
Fremont plant. GM wanted to learn how<br />
Toyota operated its efficient production system,<br />
and Toyota wanted to know whether it<br />
could achieve a high level of productivity by<br />
using Japanese management techniques on<br />
American workers. In 1984, the new organization, New United Motor<br />
Manufacturing Inc. (NUMMI), reopened in Fremont under the control of Japanese<br />
management. By 1986, productivity at NUMMI was higher than productivity at any<br />
other GM factory, and the plant was operating at twice the level it had operated at<br />
under GM management. Alcohol and drug abuse had virtually disappeared, and<br />
absenteeism had dropped to near zero. A new approach to managing organizational<br />
behavior had brought about this miracle.<br />
At the NUMMI factory, Toyota divided the workforce into 200 self-managed<br />
work groups consisting of three to five teams (today it has over 700 groups4) led by<br />
a group leader, and made the group rather than the individual workers responsible<br />
for the performance of the group’s assigned task. Each worker was trained to do the
10<br />
Chapter 1 Organizational Behavior and Management<br />
jobs of the other group members, and workers regularly rotated jobs, so their work<br />
experiences were less repetitive and boring. In addition, each worker was taught procedures<br />
for analyzing the jobs within the group and was encouraged to find ways to<br />
improve the way tasks were done. Work group members timed each other using<br />
stopwatches and continually attempted to find better ways to perform their jobs. In<br />
the old plant, GM had employed 80 managers to perform this analysis. Now, in the<br />
new plant, self-managed work groups not only perform job analysis but also take<br />
responsibility for monitoring product quality.<br />
With all workers divided into self-managed work groups, what role do managers<br />
play in the new factory? At NUMMI, a manager’s job is defined explicitly in<br />
terms of providing workers with support. In the new work system, the manager’s role<br />
is not to directly monitor or supervise group activities but to find new ways to facilitate<br />
these activities and give a group advice on how to improve work procedures. In<br />
setting up NUMMI’s organization, the plant’s upper management gave each group<br />
the authority to make its own decisions; however, group members and management<br />
are jointly responsible for coordinating and controlling work activities to maintain<br />
and improve organizational performance. Why did employees buy into this new<br />
work system? A number of factors came into play: NUMMI’s no-layoff policy, extensive<br />
worker training, and the use of flexible work groups, which give workers, not<br />
managers, control over how things are done on the production line.5<br />
In May 1997, the NUMMI plant produced its 3-millionth vehicle, and it<br />
received J. D. Powers & Associates’ Bronze Plant Award for quality. In 1999,<br />
General Motors and Toyota signed a new five-year cooperative agreement to work<br />
on advanced technology vehicles, one result of which was the innovative new Toyota<br />
Echo model introduced in 2000.6 At NUMMI, a new approach to managing behavior<br />
has increased performance and well-being for workers and the organization, and<br />
both managers and workers are committed to working together to continually<br />
improve performance. ■<br />
At the reopened Fremont plant, action to improve performance was possible<br />
only when managers realized the need to rethink the way they managed organizational<br />
behavior at all three levels of analysis. First, upper management changed organizational-level<br />
characteristics by moving from a system in which managers analyzed<br />
and controlled jobs and work processes to one in which self-managed teams controlled<br />
all aspects of a given task. At the group level, each team was given the authority<br />
and responsibility for designing group members’ tasks and for monitoring and<br />
controlling members’ behavior. At the individual level, work-group members<br />
became responsible for learning a wider range of tasks and for monitoring their own<br />
performance level so that performance could be increased at all levels in the plant. As<br />
the NUMMI story shows, the effective management of organizational behavior<br />
requires managers and workers alike to consider the impacts and effects of individual,<br />
group, and whole-organization characteristics as they try to achieve organizational<br />
goals. It requires them to continuously evaluate and find new and improved<br />
ways of managing organizational behavior to improve performance.<br />
■ ■ ■<br />
ORGANIZATIONAL BEHAVIOR AND MANAGEMENT<br />
A working knowledge of organizational behavior is important to individuals at all<br />
levels in the organization because it helps them to appreciate the work situation and<br />
how they should behave to achieve their own goals (such as promotion or higher<br />
income). But knowledge of organizational behavior is particularly important to managers.<br />
A significant part of a manager’s job is to use the findings of organizational
Organizational effectiveness<br />
The ability of an organization to<br />
achieve its goals.<br />
Management<br />
The process of planning, organizing,<br />
leading, and controlling an<br />
organization’s human, financial,<br />
material, and other resources to<br />
increase its effectiveness.<br />
Manager<br />
Any person who supervises one or<br />
more subordinates.<br />
Top-management team<br />
High-ranking executives who plan<br />
a company’s strategy so that the<br />
company can achieve its goals.<br />
Chapter 1<br />
Organizational Behavior and Management<br />
11<br />
behavior researchers, and the tools and techniques they have developed, to increase<br />
organizational effectiveness, the ability of an organization to achieve its goals.<br />
Management is the process of planning, organizing, leading, and controlling<br />
an organization’s human, financial, material, and other resources to increase its<br />
effectiveness. A manager is anybody who supervises one or more subordinates. Lou<br />
Gerstner, CEO of International Business Machines Corporation (IBM), for example,<br />
is IBM’s top manager; he has ultimate responsibility for all 150,000 of IBM’s<br />
employees. The sales manager of IBM’s southern region, who controls 300 salespeople,<br />
is also a manager, as is the manager (or supervisor) in charge of an IBM computer<br />
service center who supervises five service technicians.<br />
Managers at all levels confront the problem of understanding and managing<br />
the behavior of their subordinates. Gerstner has to manage IBM’s top-management<br />
team, high-ranking executives who plan the company’s strategy so that it can achieve<br />
its goals. The sales manager has to manage the sales force so that it sells the mix of<br />
mainframe, mini, and personal computers that best meet customers’ informationprocessing<br />
needs. The service manager has to manage technicians so that they<br />
respond promptly and courteously to customers’ appeals for help and quickly solve<br />
their problems. (Traditionally, IBM has been well known for its high-quality customer<br />
service and responsiveness.)<br />
Each of these managers faces the common challenge of finding ways to help<br />
the organization achieve its goals. A manager who understands how individual,<br />
group, and organizational characteristics affect work attitudes and behavior can begin<br />
to experiment to see whether changing one or more of these characteristics might<br />
increase the effectiveness of the organization and the individuals and groups that<br />
comprise it. The study of organizational behavior helps managers meet the challenge<br />
of improving organizational effectiveness by providing them with a set of tools:<br />
■<br />
■<br />
■<br />
A manager can work to raise a worker’s self esteem or beliefs about his or<br />
her ability to accomplish a certain task in order to increase the worker’s<br />
productivity or job satisfaction.<br />
A manager can change the reward system to change workers’ beliefs about<br />
the extent to which their rewards depend on their performance.<br />
A manager can change the design of a person’s job or the rules and procedures<br />
for doing the job to reduce costs, make the task more enjoyable, or<br />
make the task easier to perform.<br />
Managerial Functions and Roles<br />
As we mentioned earlier, the four principal functions or duties of management are<br />
planning, organizing, leading, and controlling human, financial, material, and other<br />
resources to allow an organization to achieve its goals. 7 And, as our examples<br />
showed, managers knowledgeable about organizational behavior are in a good position<br />
to improve their ability to perform these functions (see Figure 1.3).<br />
Planning<br />
Deciding how best to allocate and<br />
use resources to achieve organizational<br />
goals.<br />
Planning. In planning, managers establish their organization’s strategy—that is,<br />
they decide how best to allocate and use resources to achieve organizational goals. At<br />
Southwest Airlines, for example, CEO Herb Kelleher’s strategy is based on the goal<br />
of providing customers with low-priced air travel. 8 To accomplish this goal,<br />
Southwest uses its resources efficiently. For example, Southwest uses only one kind<br />
of plane, the Boeing 737, to keep down operating, training, and maintenance costs;<br />
employees cooperate and share jobs when necessary to keep down costs; and its use<br />
of the Internet is state of the art and one of the easiest to use in the industry.
12<br />
Chapter 1 Organizational Behavior and Management<br />
FIGURE 1.3<br />
Four Functions<br />
of Management<br />
Planning is a complex and difficult task because a lot of uncertainty normally<br />
surrounds the decisions managers need to make. Because of this uncertainty, managers<br />
face risks when deciding what actions to take. A knowledge of organizational<br />
behavior can help improve the quality of decision making, increase the chances of<br />
success, and lessen the risks inherent in planning and decision making. First, the<br />
study of organizational behavior reveals how decisions get made in organizations and<br />
how politics and conflict affect the planning process. Second, the way in which<br />
group decision making affects planning and the biases that can influence decisions<br />
are revealed. Third, the theories and concepts of organizational behavior show how<br />
the composition of an organization’s top-management team can affect the planning<br />
process. The study of organizational behavior, then, can improve a manager’s planning<br />
abilities and increase organizational performance.<br />
Organizing<br />
Establishing a structure of relationships<br />
that dictate how members of<br />
an organization work together to<br />
achieve organizational goals.<br />
Leading<br />
Encouraging and coordinating<br />
individuals and groups so that all<br />
organizational members are working<br />
to achieve organizational goals.<br />
Organizing. In organizing, managers establish a structure of relationships that dictate<br />
how members of an organization work together to achieve organizational goals.<br />
Organizing involves grouping workers into groups, teams, or departments according<br />
to the kinds of tasks they perform. At IBM, for example, service technicians are<br />
grouped into a service operation department, and salespeople are grouped into the<br />
sales department. In the NUMMI example, we saw how workers were grouped into<br />
self-managed work groups, and in Schlumberger how virtual teams are used.<br />
Organizational behavior offers many guidelines on how to organize employees<br />
(the organization’s human resources) to make the best use of their skills and capabilities.<br />
In later <strong>chapter</strong>s, we discuss various methods of grouping workers to enhance<br />
communication and coordination while avoiding conflict or politics. At Southwest<br />
Airlines, for example, although employees are members of particular departments<br />
(pilots, flight attendants, baggage handlers), they are expected to perform one<br />
another’s nontechnical jobs when needed.<br />
Leading. In leading, managers encourage workers to do a good job (work hard,<br />
produce high-quality products) and coordinate individuals and groups so that all<br />
organizational members are working to achieve organizational goals. The study of<br />
different leadership methods and of how to match leadership styles to the characteristics<br />
of the organization and all its components is a major concern of organizational<br />
behavior. At Southwest Airlines, for example, Herb Kelleher and his managers join
Chapter 1<br />
Organizational Behavior and Management<br />
13<br />
with employees once a year to perform basic organizational tasks like passenger<br />
check-in and baggage handling to demonstrate Southwest’s team approach to leading<br />
employees.<br />
Controlling<br />
Monitoring and evaluating individual,<br />
group, and organizational performance<br />
to see whether organizational<br />
goals are being achieved.<br />
Controlling. In controlling, managers monitor and evaluate individual, group, and<br />
organizational performance to see whether organizational goals are being achieved.<br />
If goals are being met, managers can take action to maintain and improve performance;<br />
if goals are not being met, managers must take corrective action. The controlling<br />
function also allows managers to evaluate how well they are performing their<br />
planning, organizing, and leading functions.<br />
Once again, the theories and concepts of organizational behavior allow managers<br />
to understand and accurately diagnose work situations in order to pinpoint<br />
where corrective action may be needed. Suppose the members of a group are not<br />
working effectively together. The problem might be due to personality conflicts<br />
between individual members of the group, to the faulty leadership approach of a<br />
supervisor, or to poor job design. Organizational behavior provides tools managers<br />
can use to diagnose which of these possible explanations is the source of the problem,<br />
and it enables managers to make an informed decision about how to correct the<br />
problem. Control at all levels of the organization is impossible if managers do not<br />
possess the necessary organizational behavior tools.<br />
The way in which Marjorie Scardino transformed her company after several<br />
years of declining performance vividly demonstrates not only the importance of the<br />
management control function but also the way successful planning, organizing, and<br />
leading depend on a manager’s ability to take quick corrective action. (See Insight 1.2.)<br />
INSIGHT M A N A G E M E N T 1.2<br />
BIG CHANGES AT PEARSON<br />
In 1995, Britain’s <strong>Pearson</strong> PLC owned companies as different<br />
as the London-based Financial Times and The Economist magazine,<br />
Madame Tussaud’s Wax Museum, Royal Doulton<br />
China, Lazard Freres investment bank, and U.S. textbook<br />
publisher Addison-Wesley. Perhaps not surprisingly, <strong>Pearson</strong>’s managers were having<br />
a difficult time planning and controlling the activities of these diverse businesses,<br />
and the company’s performance was declining as a result. Searching for a way to turn<br />
the company around, <strong>Pearson</strong>’s chairman decided to appoint Marjorie Scardino, the<br />
chief executive of <strong>Pearson</strong>’s Economist Group, as the CEO of the whole <strong>Pearson</strong><br />
company.<br />
Scardino, a native Texan, who includes among her earlier activities operating a<br />
Gulf Coast shrimp boat and managing a Savannah law firm, took a radical new<br />
approach to managing <strong>Pearson</strong>. She began with a whole new approach to planning<br />
<strong>Pearson</strong>’s operations. She decided that henceforth <strong>Pearson</strong> would solely be a media<br />
and publishing group with cutting-edge Internet-based applications in all its businesses.<br />
9 She moved quickly to sell <strong>Pearson</strong>’s nonmedia assets such as Madame<br />
Tussaud’s (which was sold to Walt Disney) and Royal Doulton (which was sold to the<br />
Wedgwood-Waterford Group). She then used the proceeds of these sales to make<br />
over $5 billion in media and publishing acquisitions including Putnam books and<br />
Prentice Hall (the publisher of this book). Then, she combined these new businesses
14<br />
Chapter 1 Organizational Behavior and Management<br />
Marjorie Scardino (pictured here<br />
with Dennis Stevenson, Chairman<br />
<strong>Pearson</strong> PLC) has been responsible<br />
for turning around the performance<br />
of media giant, <strong>Pearson</strong><br />
Education. Prentice Hall, the publisher<br />
of this book, is one of<br />
<strong>Pearson</strong>’s divisions and Scardino<br />
has made the development of new<br />
multimedia products one of the<br />
division’s major goals.<br />
with <strong>Pearson</strong>’s other publishing businesses to<br />
create industry-leading media companies or<br />
divisions. To date, this new strategy has had<br />
great success and sales and revenues have<br />
soared.<br />
Scardino’s approach to organizing also<br />
changed the way <strong>Pearson</strong> operated. In order<br />
to quickly take advantage of the opportunities<br />
offered by the Internet and new information<br />
technology, Scardino created a new<br />
organizing plan for the divisions that forced<br />
them to cooperate to jointly develop new<br />
products, such as electronic books that can<br />
be downloaded from the Internet, to offer<br />
online customers. She also created clear lines<br />
of communication both within each division<br />
and between divisions to speed the pace of<br />
product development and to create new<br />
products for customers. This new approach to organizing has paid off as many new<br />
traditional and internet-based products and services have been introduced and sales<br />
have increased dramatically.<br />
Finally, Scardino adopted a very up-front and visible approach to managing the<br />
company. She takes advantage of new information technology to continually update<br />
all the company’s managers on her plans for the company and to ensure they understand<br />
how their activities mesh with those of the other divisions. Most recently,<br />
Scardino announced a new alliance with America Online to develop the Education<br />
Network, an Internet-based community that will link <strong>Pearson</strong>’s educational divisions<br />
directly with schools, teachers, parents, and school boards across the United States;<br />
and America Online announced that it would provide its online services for free to<br />
schools across the country. 10 Scardino’s flair and drive for making the most of<br />
<strong>Pearson</strong>’s resources is communicated clearly to managers and her leadership style is<br />
best summed up in her own words when she says, “Running a successful media group<br />
is all about accepting a process of continual change.” Finally, Scardino wants everyone<br />
in <strong>Pearson</strong> to be a shareholder because she believes it to be better to be an owner<br />
than an employee. She also believes that “People want to work for a company that<br />
cares for what they care about, doing something they think is important and having<br />
a good time.” 11 In today’s fast-moving electronic world, managing organizational<br />
behavior has never been more of a challenge for leaders and managers. ■<br />
Managerial Roles<br />
Role<br />
A set of behaviors or tasks a person<br />
is expected to perform because of<br />
the position he or she holds in a<br />
group or organization.<br />
Skill<br />
An ability to act in a way that<br />
allows a person to perform well in<br />
his or her role.<br />
Managers perform their four functions by assuming specific roles in organizations. A<br />
role is a set of behaviors or tasks a person is expected to perform because of the position<br />
he or she holds in a group or organization. One researcher, Henry Mintzberg,<br />
has identified 10 roles that managers play as they manage the behavior of people<br />
inside and outside the organization (such as customers or suppliers). 12 (See Table 1.1.)<br />
Managerial Skills<br />
Just as the study of organizational behavior provides tools that managers can use to<br />
increase their ability to perform their functions and roles, it can also help managers<br />
improve their skills in managing organizational behavior. A skill is an ability to act in
Chapter 1<br />
Organizational Behavior and Management<br />
15<br />
TABLE 1.1 Managerial Roles Identified by Mintzberg<br />
TYPE OF ROLE<br />
Figurehead<br />
Leader<br />
Liaison<br />
Monitor<br />
Disseminator<br />
Spokesperson<br />
Entrepreneur<br />
Disturbance handler<br />
Resource allocator<br />
Negotiator<br />
EXAMPLES OF ROLE ACTIVITIES<br />
Give speech to work force about future organizational goals<br />
and objectives; open a new corporate headquarters building;<br />
state the organization’s ethical guidelines and principles of<br />
behavior that employees are to follow in their dealings with<br />
customers and suppliers.<br />
Give direct commands and orders to subordinates; make<br />
decisions concerning the use of human and financial organizational<br />
resources; mobilize employee commitment to organizational<br />
goals.<br />
Coordinate the work of managers in different departments<br />
or even in different parts of the world; establish alliances<br />
between different organizations to share resources to produce<br />
new products.<br />
Evaluate the performance of different managers and departments<br />
and take corrective action to improve their performance;<br />
watch for changes occurring in the industry or in<br />
society that may affect the organization.<br />
Inform organizational members about changes taking place<br />
both inside and outside the organization that will affect<br />
them and the organization; communicate to employees the<br />
organization’s cultural and ethical values.<br />
Launch a new organizational advertising campaign to promote<br />
a new product; give a speech to inform the general<br />
public about the organization’s future goals.<br />
Commit organizational resources to a new project to<br />
develop new products; decide to expand the organization<br />
globally in order to obtain new customers.<br />
Move quickly to mobilize organizational resources to deal<br />
with external problems facing the organization, such as<br />
environmental crisis, or internal problems facing the organization,<br />
such as strikes.<br />
Allocate organizational resources between different departments<br />
and divisions of the organization; set budgets and<br />
salaries of managers and employees.<br />
Work with suppliers, distributors, labor unions, or employees<br />
in conflict to solve disputes or to reach a long-term contract<br />
or agreement; work with other organizations to establish<br />
an agreement to share resources.<br />
Conceptual skills<br />
The ability to analyze and diagnose<br />
a situation and to distinguish<br />
between cause and effect.<br />
a way that allows a person to perform well in his or her role. Managers need three<br />
principal kinds of skill in order to perform their organizational functions and roles<br />
effectively: conceptual, human, and technical skills. 13<br />
Conceptual skills allow a manager to analyze and diagnose a situation and to<br />
distinguish between cause and effect. Planning and organizing require a high level of
16<br />
Chapter 1 Organizational Behavior and Management<br />
Human skills<br />
The ability to understand, work<br />
with, lead, and control the behavior<br />
of other people and groups.<br />
Technical skills<br />
Job-specific knowledge and techniques.<br />
conceptual skill, as do the decisional roles discussed above. The study of organizational<br />
behavior provides managers with many of the conceptual tools they need to<br />
analyze organizational settings and to identify and diagnose the dynamics of individual<br />
and group behavior in these settings.<br />
Human skills enable a manager to understand, work with, lead, and control<br />
the behavior of other people and groups. The study of how managers can influence<br />
behavior is a principal focus of organizational behavior, and the ability to learn and<br />
acquire the skills that are needed to coordinate and motivate people is a principal difference<br />
between effective and ineffective managers.<br />
Technical skills are the job-specific knowledge and techniques that a manager<br />
requires to perform an organizational role (e.g., manufacturing, accounting, or marketing).<br />
The specific technical skills a manager needs depend on the organization the<br />
manager is in and on his or her position in the organization. The manager of a<br />
restaurant, for example, needs cooking skills to fill in for an absent cook, accounting<br />
and bookkeeping skills to keep track of receipts and costs and to administer the payroll,<br />
and artistic skills to keep the restaurant looking attractive for customers.<br />
Effective managers need all three kinds of skills—conceptual, human, and<br />
technical. The lack of one or more of these skills can lead to a manager’s downfall.<br />
One of the biggest problems that entrepreneurs who found their own businesses<br />
confront—a problem that is often responsible for their failure—is lack of appropriate<br />
conceptual and human skills. Similarly, one of the biggest problems that scientists,<br />
engineers, and others who switch careers and go from research into management<br />
confront is their lack of effective human skills. Management functions, roles, and<br />
skills are intimately related, and in the long run the ability to understand and manage<br />
behavior in organizations is indispensable to any actual or prospective manager.<br />
■ ■ ■<br />
CHALLENGES FOR ORGANIZATIONAL BEHAVIOR AND MANAGEMENT<br />
In the last 10 years, the challenges facing managers in effectively utilizing human<br />
resources and managing organizational behavior have been increasing. Among<br />
these challenges, those stemming from changing forces in the technological, global,<br />
and social or cultural environments stand out. As mentioned previously, the impact<br />
of new information technologies such as the internet and intranet has dramatically<br />
changed the way organizations manage and utilize their human resources. With<br />
information more accurate, plentiful, and freely available and as the use of computers<br />
increasingly takes over routine tasks, employees have more time to engage in<br />
constructive, innovative activities. Indeed, the use of modern information technologies<br />
has increased the degree to which employees can engage in creative, workexpanding<br />
kinds of activities such as finding ways to give customers better service or<br />
to find better way of performing a task. Indeed, managing organizational behavior<br />
to allow employees to act creatively is a major challenge facing organizations that<br />
wish to survive and prosper in today’s highly competitive world, as we discuss<br />
below. 14<br />
Challenges from technology are ones that derive from changing social conditions.<br />
For example, in the last 10 years the number of women and minorities assuming<br />
managerial positions in the workforce has increased by over 25 percent.<br />
Similarly, in the last decade, companies have come under increasing scrutiny because<br />
of ethical concerns about the safety of the products they produce and their employment<br />
policies toward the people who make those products both in the United States<br />
and abroad. Organizations have also been facing increased global competition from<br />
low-cost countries like Malaysia and China, and technological change has significantly<br />
reduced the employment opportunities for U.S. manufacturing workers.
Chapter 1<br />
Organizational Behavior and Management<br />
17<br />
These technological, social, and cultural changes taking place in the world today<br />
pose many challenges for the men and women whose jobs require them to manage<br />
organizational behavior:<br />
■<br />
■<br />
■<br />
■<br />
How to use new information technologies to increase employee creativity<br />
and organizational learning.<br />
How to manage human resources to give an organization a competitive<br />
advantage.<br />
How to develop an ethical organizational culture<br />
How to manage workforce diversity<br />
■ How to manage organizational behavior when an organization expands<br />
internationally and operates at a global level<br />
We introduce these five challenges here in Chapter 1 and examine them<br />
throughout the rest of the book.<br />
■ ■ ■<br />
CHALLENGE 1: USING NEW INFORMATION TECHNOLOGY TO ENHANCE<br />
CREATIVITY AND ORGANIZATIONAL LEARNING<br />
Creativity is the decision-making process that produces novel and useful ideas, ideas<br />
that lead to new or improved goods and services or to improvements in the way that<br />
they are produced. Today, using new information technologies to help people and<br />
groups to be creative and enhance organizational performance is a major management<br />
task. By 1991, U.S. companies spent more on IT than any other form of investment;<br />
by 2000, this spending doubled again from $80 billion to $160 billion a year<br />
and is forecast to double again in the next five years. 15 Information technology<br />
encompasses a broad array of communication media including voice mail, e-mail,<br />
voice conferencing, videoconferencing, the Internet, groupware and corporate<br />
intranets, car phones, fax machines, personal digital assistants, intelligent agents, and<br />
so on. By providing employees with easy and flexible access to stored and current<br />
information, IT promotes learning, allows for the easy exchange of know-how, and<br />
facilitates problem solving. 16 Insight 1.3 offers some examples of how IT can help<br />
organizations speed communication and decision making and promote creativity and<br />
organizational learning.<br />
INSIGHT I N F O R M A T I O N T1.3<br />
E C H N O L O G Y<br />
HOW IT CAN ENHANCE INDIVIDUAL<br />
AND GROUP LEARNING<br />
In an effort to reduce costs, the textile fibers division of Du<br />
Pont, the giant chemical company, adopted early retirement<br />
incentives to reduce its workforce. Unexpectedly, about half<br />
of the division’s middle managers decided to take the early retirement package. At<br />
first, the division’s top managers panicked, wondering how work could get one if<br />
everyone left at the same time. But the division had recently installed an e-mail system<br />
and a corporate intranet that supplied employees with most of the information<br />
they needed to perform their tasks. Employees began to use it heavily and learned to
18<br />
Chapter 1 Organizational Behavior and Management<br />
Here, a marketing manager in New<br />
York is using video teleconferencing<br />
to communicate to a research<br />
and development team in Silicon<br />
Valley their marketing vision for a<br />
new product launch. Such interactive<br />
sessions greatly speed decision<br />
making and enhance performance.<br />
make their own decisions, and over time the<br />
IT came to replace the division’s traditional<br />
reporting structure as a main means of control<br />
and actually speeded communication<br />
and decision making. 17<br />
The advertising company, Chiat/Day,<br />
provides a vivid example of the use of IT to<br />
facilitate the development of new organizational<br />
skills. Undoubtedly, an advertising<br />
agency’s core competence involves heavy<br />
reliance on employees’ creativity, and<br />
Chiat/Day developed a sophisticated computer<br />
network to promote collaboration<br />
between employees and departments. No<br />
longer is information moved physically from<br />
person to person, but it is posted in the system<br />
and the computer notifies the right person<br />
that a file or advertising copy has been<br />
delivered to them. As a result, their old giant manila sacks and huge mechanical files<br />
have been replaced by “electronic job jackets” containing all needed information and<br />
digitized photographs.18 Legal reviews and proofreading comments are added electronically<br />
and relayed automatically to the central file. This procedure has completely<br />
eliminated the traditional role of managers and greatly increased operational<br />
efficiency.<br />
Hewlett-Packard (HP) uses laser printer engines developed and manufactured<br />
by Canon as a core component of its laser printers. Recently, HP introduced a revolutionary<br />
new printer, the VidJet Pro, which has required that specialists from each<br />
firm become more integrated with each other so that they can learn more about each<br />
other’s activities and problems.19 To achieve this, HP and Canon routinely use<br />
e-mail and voice mail to integrate their activities, yet as HP became more involved in<br />
the design of laser engines, and Canon in the design of better printers, richer modes<br />
of communication were required. Not wanting to sacrifice the time requirements of<br />
constant face-to-face meetings, both firms now rely on groupware, the Internet, and<br />
videoconferencing. Only with such technologies can designers and engineers meet<br />
in real time, or close to it, in order to exchange and discuss product specifications,<br />
prototype models, and so on. ■<br />
As these examples suggest, there are many ways in which managers can use IT<br />
at all levels in the organization, between departments and divisions of the organization<br />
and between organizations to enhance learning, speed decision making, and<br />
promote creativity and innovation. Throughout this book, you will find many more<br />
examples of how this takes place as well as in-depth discussion of the importance of<br />
facilitating learning and creativity in managing organizational behavior today.<br />
■ ■ ■<br />
CHALLENGE 2: MANAGING HUMAN RESOURCES TO INCREASE<br />
COMPETITIVE ADVANTAGE<br />
The ability of an organization to produce goods and services that its customers want<br />
is a product of the behaviors of all its members—the behaviors of its top-management<br />
team, which plans the organization’s strategy; the behaviors that middle managers<br />
use to manage and coordinate human and other resources; and the behaviors of
Competitive advantage<br />
The ability to outperform competitors<br />
or other organizations that<br />
provide similar goods and services.<br />
Chapter 1<br />
Organizational Behavior and Management<br />
19<br />
first-line managers or supervisors and production workers. An organization seeking<br />
to obtain a competitive advantage—that is, the ability to outperform competitors<br />
or other organizations that provide similar goods and services—can do so by pursuing<br />
any or all of the following goals: (1) increasing efficiency, (2) increasing quality,<br />
(3) increasing innovation and creativity, (4) increasing responsiveness to customers. 20<br />
The study of organizational behavior can help managers achieve these goals, each of<br />
which is a part of managing human resources to gain a competitive advantage (see<br />
Figure 1.4).<br />
Increasing Efficiency<br />
Organizations increase their efficiency when they reduce the amount of resources<br />
such as people and raw materials they need to produce a quantity of goods or services.<br />
For example, McDonald’s Corporation developed a fat fryer that not only<br />
speeds up the cooking time of french fries but also reduces by 30 percent the amount<br />
of oil used in the cooking process. In today’s increasingly competitive environment,<br />
organizations are trying to increase efficiency by finding ways to better utilize and<br />
increase the skills and abilities of their workforce. Many organizations train their<br />
workforce in new skills and techniques such as those needed to operate increasingly<br />
computerized assembly plants. Similarly, cross-training workers so that they learn<br />
the skills necessary to perform many different tasks (as they do at Southwest Airlines)<br />
and finding new ways of organizing workers so that they can use their skills more<br />
efficiently are major parts of the effort to improve efficiency. Many organizations,<br />
like NUMMI, are creating self-managed work groups that are collectively responsible<br />
for finding cost-reducing ways to perform their jobs.<br />
The global competitive challenge facing U.S. organizations is increasing the<br />
need to invest in the skills of the workforce, because better-trained workers can make<br />
better use of new technology. Organizations in Japan, Germany, and some other countries<br />
make a long-term investment in the form of a guarantee of lifetime employment.<br />
During their employment, employees develop skills specific to that organization and<br />
help provide it with a competitive advantage. By contrast, U.S. organizations have traditionally<br />
invested less money in training their workers. But now, with advances in<br />
technology requiring a more skilled workforce, many U.S. organizations are increasing<br />
their investment in their human capital by training new and existing employees.<br />
FIGURE 1.4<br />
How to Manage Human<br />
Resources to Gain a<br />
Competitive Advantage
20<br />
Chapter 1 Organizational Behavior and Management<br />
Many organizations also need to increase their efficiency to survive against<br />
low-cost competition from factories in countries like Mexico or Malaysia, where<br />
workers are paid only $5 a day. Many jobs have already been lost to low-cost nations,<br />
and if further job losses are to be prevented, new ways must be found to encourage<br />
workers to increase efficiency. In this as in many other areas, pressures from the<br />
global environment have increased the pressure on organizations in the United<br />
States to find new ways to increase efficiency.<br />
Cross-functional teams<br />
Teams consisting of workers from<br />
different functions who pool their<br />
skills and knowledge to produce<br />
high-quality goods and services.<br />
Increasing Quality<br />
The challenge from global organizations such as Japanese car manufacturers and<br />
garment factories in Malaysia and Mexico has also increased pressure on U.S. companies<br />
to improve the skills of their workforces so that they can increase the quality<br />
of the goods and services they provide. One major trend in the attempt to increase<br />
quality has been the introduction and expansion in the United States of the total<br />
quality management (TQM) techniques developed in Japan. In an organization dedicated<br />
to TQM, for example, workers are often organized into teams or quality control<br />
circles that are given the responsibility to continually find new and better ways<br />
to perform their jobs and to monitor and evaluate the quality of the goods they produce<br />
(just as in the NUMMI plant). 21 Many organizations pursuing TQM have also<br />
sought to improve product quality by forming cross-functional teams in which<br />
workers from different functions such as manufacturing, sales, and purchasing pool<br />
their skills and knowledge to find better ways to produce high-quality goods and services.<br />
22 Total quality management involves a whole new philosophy of managing<br />
behavior in organizations, and we discuss this approach in detail in Chapter 19 when<br />
we discuss organizational change and development.<br />
Increasing Innovation<br />
U.S. companies are among the most innovative companies in the world, and innovation<br />
is the direct result or outcome of the level of creativity and organizational learning,<br />
as discussed above. Innovation has been<br />
defined as “the process of bringing any new<br />
problem-solving ideas into use. Ideas for<br />
reorganizing, cutting costs, putting in new<br />
budgeting systems, improving communications,<br />
or assembling products in teams are<br />
also innovations.” 23 Typically, innovation<br />
takes place in small groups or teams—real or<br />
virtual—and to encourage it, an organization<br />
and its managers give control over work<br />
activities to team members and create an<br />
organizational setting and culture that<br />
reward risk taking. Understanding how to<br />
manage innovation and creativity is one of<br />
the most difficult challenges that managers<br />
face. It especially taxes managers’ human<br />
skills, because creative people tend to be<br />
Teamwork led to innovation at Davidson Interiors, a division of Textron. One<br />
team innovated a new product called Flexible Bright, a coating that makes plastic<br />
look exactly like chrome, but does not rust or scratch. Here, the members of<br />
the team are shown holding grills coated with the new product, which Ford uses<br />
in many of its cars.<br />
among the most difficult to manage. One<br />
reason that Euan Baird leads Schlumberger<br />
is that he has a strong track record in using<br />
IT to speed the innovation process.
Chapter 1<br />
Organizational Behavior and Management<br />
Increasing Responsiveness to Customers<br />
21<br />
Because organizations compete for customers, training workers to be responsive to<br />
customer needs is important for all organizations but particularly for service organizations.<br />
Organizations such as retail stores, banks, and hospitals depend entirely on<br />
their employees’ performing behaviors that result in high-quality service at reasonable<br />
cost. As the United States has moved to a service-based economy (in part<br />
because of the loss of manufacturing jobs abroad), managing behavior in service<br />
organizations has become an increasingly important area of study. 24<br />
Reengineering<br />
A complete rethinking and<br />
redesign of business processes to<br />
increase efficiency, quality, innovation,<br />
or responsiveness to customers.<br />
Restructuring<br />
Altering an organization’s structure<br />
by such actions as eliminating a<br />
department.<br />
Outsourcing<br />
Acquiring goods or services from<br />
sources outside the organization.<br />
Freelancers<br />
Independent individuals who contract<br />
with an organization to perform<br />
specific services.<br />
New Ways to Increase Performance<br />
Investing in employee skills and abilities to increase organizational performance is<br />
not the only way U.S corporations have responded to an increasingly competitive<br />
global environment. To reduce costs and increase efficiency, some companies have<br />
responded by reengineering and restructuring their organizations. Reengineering<br />
involves a complete rethinking and redesign of business processes to increase efficiency,<br />
quality, innovation, or responsiveness to customers. A company that engages<br />
in reengineering examines the business processes it uses to produce goods and services<br />
(such as the way it organizes its manufacturing, sales, or inventory), and the way<br />
its business processes interact and overlap, to see whether a better way of performing<br />
a task can be found. 25 Today, the use of new information technology plays a major<br />
part in most reengineering efforts. 26<br />
A company that engages in restructuring makes a major change in an organization’s<br />
structure, such as eliminating a department or reducing the number of layers<br />
of management, to streamline the organization’s operations and reduce costs.<br />
Restructuring and reengineering often result in many workers’ being laid off. The<br />
smaller workforces that remain are retrained to increase efficiency; once again using<br />
new information technology, they learn how to perform at a higher level, and they<br />
learn new skills. Organizational behavior researchers have been interested in the<br />
effects of layoffs not only on workers who lose their jobs but also on employees who<br />
remain in the organization. General Motors and IBM are among the organizations<br />
that have laid off hundreds of thousands of employees in their efforts to increase<br />
organizational performance.<br />
To reduce costs, many organizations do not rehire laid-off workers as full-time<br />
employees even when demand for their products picks up; instead, they employ parttime<br />
workers, who can be given lower wages and fewer benefits. It has been estimated<br />
that 20 percent of the U.S workforce today consists of part-time employees<br />
who work by the day, week, month, or even year for their former employers. Parttime<br />
workers pose a new challenge for managers’ human skills because part-time<br />
workers cannot be motivated by the prospect of rewards such as job security, promotion,<br />
or a career within an organization.<br />
Organizations are also engaging in an increasing amount of outsourcing.<br />
Many organizational tasks are performed not within the organization but on the outside,<br />
by freelancers. Freelancers are independent individuals who contract with an<br />
organization to perform specific services; they often work from their homes and are<br />
connected to an organization by computer, phone, fax, and express package delivery.<br />
Because freelancing is expected to increase as organizations outsource more and<br />
more of their tasks to reduce costs, managers will face new kinds of problems in their<br />
efforts to manage organizational behavior.<br />
Reengineering, restructuring, downsizing, hiring part-time workers, and outsourcing<br />
are just a few of the many new ways in which organizations are utilizing human<br />
resources to reduce costs and compete effectively against domestic and global competi-
22<br />
Chapter 1 Organizational Behavior and Management<br />
tors. Several organizational behavior researchers believe that organizations in the future<br />
will increasingly become composed of a “core” of organizational workers who are<br />
highly trained and rewarded by an organization and a “periphery” of part-time or freelance<br />
workers who are employed when needed but will never become true “organizational<br />
employees.” In the years ahead, managing an organization’s human resources to<br />
increase performance will be a continuing challenge. The way in which John Deere has<br />
been meeting this challenge over the last decade is instructive. (See Insight 1.4.)<br />
INSIGHT C O M P E T I T I V E A1.4<br />
D V A N T A G E<br />
JOHN DEERE FINDS NEW USES<br />
FOR ITS EMPLOYEES<br />
Pictured is a John Deere production<br />
worker who is taking on the<br />
role of a salesperson and talking<br />
to farmers about the innovations<br />
in a new John Deere tractor model<br />
at one of the many trade shows<br />
that Deere attends to display its<br />
products.<br />
In the early 1990s, John Deere was losing millions of dollars;<br />
by 1994, its profits exceeded $400 million and have been<br />
increasing since. 27 How has Deere’s startling turnaround<br />
been achieved? According to CEO Hans W. Becherer, Deere has taken advantage of<br />
the skills and capabilities of its workers to increase efficiency and<br />
raise quality. Many of Deere’s problems stemmed from a competitive<br />
environment. Caterpillar and Komatsu were ruthlessly cutting<br />
prices to battle with Deere for a share of the dwindling agricultural<br />
machinery market. To survive, Deere was forced to downsize.<br />
After laying off managers and employees, Deere realized it had to<br />
find a way to make better use of the skills of the employees who<br />
remained.<br />
Deere undertook to teach its manufacturing workers new<br />
skills. It installed sophisticated, computerized production-line<br />
technology and trained workers to operate it. Deere also sought to<br />
improve its manufacturing by grouping workers into teams whose<br />
goal included finding new ways to reduce costs and increase quality.<br />
28 Deere was not content merely with improving workers’ skills<br />
in manufacturing; it also began to teach them new skills that would<br />
help them to find ways to increase efficiency and improve performance.<br />
For example, Deere realized that manufacturing workers,<br />
with their detailed knowledge about how Deere products work,<br />
could become persuasive salespeople. Groups of production workers<br />
were given training in sales techniques and were sent to visit<br />
Deere customers to explain to them how to operate and service the<br />
organization’s new products. While speaking with customers,<br />
these new “salespeople” were able to collect information that will<br />
help Deere further reduce costs and develop new products that<br />
will appeal to customers. The new sales jobs are temporary.<br />
Workers go on assignment but then return to the production line, where they use<br />
their new knowledge to find ways to improve efficiency and quality.<br />
These moves to empower employees have been so successful that Deere negotiated<br />
a new agreement with its workers, which specifies that pay increases will be<br />
based on workers’ learning new skills and completing college courses in areas such as<br />
computer programming that will help the company increase efficiency and quality.
Chapter 1<br />
Organizational Behavior and Management<br />
23<br />
No longer will seniority be the main determinant of pay, as it is in some unionized<br />
workplaces. 29 Deere’s new policy of empowering its workforce has benefits for workers<br />
and for the organization as a whole. Workers recognize the connection between<br />
these changes and their job security. The increases in efficiency and quality enable<br />
Deere to regain control of its share of the agricultural machinery market. And the<br />
satisfaction that workers feel when they have the opportunity to utilize new skills and<br />
develop new capabilities increases their commitment to the company and to helping<br />
it succeed. ■<br />
■ ■ ■<br />
CHALLENGE 3: DEVELOPING ORGANIZATIONAL ETHICS<br />
AND WELL-BEING<br />
Ethics<br />
Rules, beliefs, and values that outline<br />
the ways in which managers<br />
and workers should behave.<br />
Well-being<br />
The condition of being happy,<br />
healthy, and prosperous.<br />
An organization’s ethics are rules, beliefs, and values that outline the ways managers<br />
and workers should behave when confronted with a situation in which their actions<br />
may help or harm other people inside or outside an organization. 30 Ethical behavior<br />
enhances the well-being (the happiness, health, and prosperity) of individuals,<br />
groups, and the organization, and sometimes the environment in which they operate.<br />
31 Ethical behavior can enhance well-being in several ways.<br />
Ethics establish the goals that organizations should pursue and the way in<br />
which people inside organizations should behave to achieve them. 32 For example,<br />
one goal of an organization is to make a profit so that it can pay the managers, workers,<br />
suppliers, shareholders, and others who have contributed their skills and<br />
resources to the company. Ethics specify what actions an organization should engage<br />
in to make a profit. Should an organization be allowed to harm its competitors by<br />
stealing away their skilled employees or by preventing them from obtaining access to<br />
vital inputs? Should an organization be allowed to produce inferior goods that may<br />
endanger the safety of customers? Should an organization be allowed to take away<br />
the jobs of U.S. workers and transfer them overseas to workers in countries where<br />
wages are $5 per day? What limits should be put on organizations’ and their managers’<br />
attempt to make a profit? And who should determine those limits?<br />
The devastating effects of a lack of ethics is illustrated by the way an airline<br />
crash occurred when managers and workers acted unethically and put profit before<br />
safety. The Ethics Insights in this and other <strong>chapter</strong>s show how managers respond to<br />
the ethical challenge. (See Insight 1.5.)<br />
INSIGHT E T H I C S 1.5<br />
THE VALUJET AIRLINE CRASH DISASTER<br />
In On May 11, 1996, a cargo fire broke out on a ValuJet flight<br />
from Miami to Atlanta and the plane crashed into the Florida<br />
Everglades, killing all 105 passengers and five crew members.<br />
This crash was not an accident, however; it occurred as the<br />
direct result of unethical behavior of a company’s employees’ putting profit over<br />
public safety.
24<br />
Chapter 1 Organizational Behavior and Management<br />
Gregory Feith, senior air safety<br />
investigator, looks at wreckage<br />
from the crash of ValuJet Flight<br />
592 being collected in a hanger at<br />
Miami Airport.<br />
Investigators discovered that the cause of<br />
the crash was that oxygen canisters had not been<br />
fitted with the required safety caps that would<br />
have prevented the canisters from opening. The<br />
oxygen canisters ignited, causing the fire that<br />
brought down the plane. Why were the safety<br />
caps not fitted? Because managers of the<br />
Sabretech aircraft company had pressured two<br />
mechanics to save money by not installing the<br />
caps and then falsely labeling them as empty.<br />
The cost of the caps? $9.16.33 The cost of this<br />
unethical behavior? The deaths of 110 people.<br />
In 1999, Sabretech’s managers and workers<br />
were indicted on criminal charges for their<br />
part in the disaster. Sabretech is no longer in<br />
business, and ValuJet also was grounded because<br />
investigators believed its lax safety procedures<br />
were partly responsible for the incident. No<br />
party gains when organizations or their managers<br />
act unethically or illegally. Managers are directly responsible for developing<br />
and maintaining ethical work practices that ensure the well-being and safety of people<br />
both inside and outside the organization. ■<br />
Social responsibility<br />
An organization’s moral responsibility<br />
toward individuals or groups<br />
outside the organization that are<br />
affected by its actions.<br />
In addition to defining right and wrong behavior for employees, ethics also<br />
define an organization’s social responsibility, or moral responsibility toward individuals<br />
or groups outside the organization that are directly affected by its actions. 34<br />
Organizations and their managers must establish an ethical code that describes<br />
acceptable behaviors and must create a system of rewards and punishments to<br />
enforce ethical codes.<br />
Different organizations have different views about social responsibility. To some<br />
organizations, being socially responsible means performing any action as long as it is<br />
legal. Other organizations do more than the law requires and work to advance the<br />
well-being of their employees, customers, and society in general. 35 Ben & Jerry’s<br />
Homemade, Inc., for example, contributes a significant percentage of its profits to<br />
support charities and community needs and expects its employees to be socially active<br />
and responsible. Green Mountain Coffee Roasters seeks out coffee-growing farmers<br />
and cooperatives that do not use herbicides and pesticides on their crops, that control<br />
soil erosion, and that treat their workers fairly and with respect in terms of safety and<br />
benefits. Green Mountain also contributes a share of its profits for health and education<br />
in Costa Rica and other countries from which it buys coffee beans. Many Subway<br />
sandwich shops have specified hours when they give free sandwiches to customers<br />
who bring in canned goods to be given to food banks. Levi Strauss discovered that<br />
two of its suppliers in Bangladesh were employing children under the age of 14 in violation<br />
of International Labor Organization standards. Rather than requiring the contractors<br />
to fire the children, many of whom were the sole breadwinners in their families,<br />
Levi Strauss chose to pay for their education. They persuaded the suppliers to<br />
continue to pay the children’s wages while they were in school and to guarantee that<br />
their jobs would be waiting for them when they became of age.<br />
Not all organizations are willing or able to undertake such programs, but all<br />
organizations need codes of conduct that spell out fair and equitable behavior, if they
Chapter 1<br />
Organizational Behavior and Management<br />
25<br />
want to avoid doing harm to people and other organizations. Developing a code of<br />
ethics helps organizations protect their reputation and maintain the goodwill of their<br />
customers and employees.<br />
The challenge confronting managers is to create an organization in which<br />
members resist the temptation to engage in illegal or unethical acts that promote<br />
their own interests at the expense of the organization or promote the organization’s<br />
interests at the expense of people and groups outside the organization. Workers and<br />
managers have to recognize that their behavior has important effects not only on<br />
other people and groups inside and outside the organization but also on the organization<br />
itself. The well-being of organizations and the well-being of the society of which<br />
they are a part are closely linked and are the responsibility of everyone. 36 (How to<br />
create an ethical organization is an issue that we take up throughout the text.)<br />
■ ■ ■<br />
CHALLENGE 4: MANAGING A DIVERSE WORKFORCE<br />
Diversity<br />
Differences resulting from age,<br />
gender, race, ethnicity, religion,<br />
sexual orientation, and socioeconomic<br />
background.<br />
The fourth principal challenge is to understand how the diversity of a workforce<br />
affects behavior, performance, and well-being. Diversity is differences resulting from<br />
age, gender, race, ethnicity, religion, sexual orientation, and socioeconomic background.<br />
If an organization or group is composed of people who are all of the same<br />
gender, ethnicity, age, religion, and so on, the attitudes and behavior of its members<br />
are likely to be very similar. Members are likely to share the same sets of assumptions<br />
or values and will tend to respond to work situations (projects, conflicts, new tasks) in<br />
similar ways. By contrast, if the members of a group differ in age, ethnicity, and other<br />
characteristics, their attitudes, behavior, and responses are likely to differ.<br />
In the last 20 years, the demographic makeup of employees entering the workforce<br />
and advancing to higher-level positions in organizations has been changing<br />
rapidly. Partly as a result of affirmative action and equal employment opportunity<br />
legislation, the number of minority employees entering and being promoted to<br />
higher-level positions has increased. 37 By the year 2005, African American and<br />
Hispanic employees are expected to make up over 25 percent of the workforce, and<br />
the percentage of white males is expected to decrease from 51 percent to 44 percent.<br />
38 At the same time, the number of women entering the workforce has also been<br />
increasing dramatically, and they are ascending to higher and higher positions in<br />
management. 39 Finally, because of increased internationalization, diversity is evident<br />
not just among Americans but also among people born in other nations who come to<br />
the United States to live and work. They are expected to contribute significantly to<br />
these totals by 2005. 40<br />
The increasing diversity of the workforce presents three challenges for organizations<br />
and their managers: a fairness and justice challenge, a decision-making and<br />
performance challenge, and a flexibility challenge (see Figure 1.5).<br />
Fairness and Justice Challenge<br />
Jobs in organizations are a scarce resource, and obtaining jobs and being promoted<br />
to a higher-level job is a competitive process. Managers are challenged to allocate<br />
jobs, promotions, and rewards in a fair and equitable manner. As diversity increases,<br />
achieving fairness can be difficult, at least in the short run, because many organizations<br />
have traditionally appointed white male employees to higher organizational<br />
positions. Also, seniority plays a role, and many minorities are recent hires. 41<br />
Rectifying this imbalance by actively recruiting and promoting increasing numbers<br />
of women and minorities can lead to difficult equity issues because this attempt to fix<br />
the traditional imbalance reduces the prospects for white male employees. An
26<br />
Chapter 1 Organizational Behavior and Management<br />
FIGURE 1.5<br />
The Challenge Posed<br />
by a Diverse Workplace<br />
Fairness<br />
and justice challenge<br />
Age<br />
Gender<br />
Capabilities/<br />
Disabilities<br />
Race<br />
challenge<br />
Flexibility challenge<br />
Socioeconomic<br />
background<br />
Sexual<br />
orientation<br />
Religion<br />
Ethnicity<br />
Decision-making and<br />
performance<br />
increase in diversity can thus strain an organization’s ability to satisfy the aspirations<br />
of its workforce, creating a problem that, in turn, directly affects the workforce’s<br />
well-being and performance. Organizations must learn to manage diversity in a way<br />
that increases the well-being of all employees, but deciding how to achieve this goal<br />
can pose difficult ethical problems for managers. 42<br />
Decision-Making and Performance Challenge<br />
Another important challenge posed by a diverse workforce is how to take advantage<br />
of differences in the attitudes and perspectives of people of different ages, genders,<br />
or races, in order to improve decision making and organizational performance. 43<br />
Many organizations have found that tapping into diversity reveals new ways of viewing<br />
traditional problems and provides a means for an organization to assess its goals<br />
and ways of doing business. Coca-Cola, for example, in an attempt to increase its top<br />
managers’ abilities to manage a global environment, has deliberately sought to<br />
recruit top managers of different ethnic backgrounds. Its CEO came from Cuba<br />
originally, and other top managers are from Brazil, France, and Mexico. To increase<br />
performance, organizations have to unleash and take advantage of the potential of<br />
diverse employees. Union Bank of California has been a leader in exploiting the<br />
advantages of a diverse workforce for the last decade. The Diversity Insights in this<br />
and other <strong>chapter</strong>s, particularly in Chapter 4, describe the management of diversity<br />
in organizations. (See Insight 1.6.)
Chapter 1<br />
INSIGHT D I V E R S I T Y 1.6<br />
Organizational Behavior and Management<br />
27<br />
UNION BANK OF CALIFORNIA’S APPROACH<br />
TO DIVERSITY<br />
Bank of California employees<br />
strive to provide great customer<br />
service to meet the needs of their<br />
diverse groups of customers.<br />
Customer loyalty follows as customers<br />
spread the good news<br />
about the bank to their friends and<br />
relatives.<br />
With assets of $33.9 billion on June 30, 2000, Union Bank of<br />
California, based in San Francisco, is the third largest commercial<br />
bank in California and among the 30 largest banks in<br />
the United States. 44 It has enjoyed huge success and growth<br />
throughout the last 10 years, in large part because of the way it has<br />
developed an approach to diversity that reflects the needs of its<br />
employees, customers, and its environment.<br />
Union Bank is based in one of the most diverse states in the<br />
nation, California, where half the population is Asian, Black,<br />
Hispanic, or gay. Recognizing this fact, the bank always had a policy<br />
of seeking to hire and recruit diverse employees. However, it was<br />
not until 1996 that the bank realized that it could use the diversity<br />
of its employees to create a competitive advantage. In 1996, George<br />
Ramirez, a vice president at Union Bank, suggested to the bank that<br />
it should create a marketing group to develop a plan to attract customers<br />
who were Hispanic like himself. So successful was this venture<br />
that a group of African American employees decided that they<br />
should create a marketing group to develop a marketing campaign<br />
to attract new African American customers. After they enjoyed considerable<br />
success in recruiting new customers, it was clear to Union<br />
Bank’s managers that they should use the diversity of the bank’s<br />
employees as a way of improving customer service so that, for<br />
example, when customers walk into a bank branch in a predominantly<br />
Latino neighborhood they will be greeted by a substantial<br />
number of Latino empolyees. 45 Similarly, marketing campaigns<br />
could be tailored to the needs of each different ethnic group.<br />
The bank, like many other organizations, also discovered<br />
that diversity can lead to competitive advantage because diverse<br />
employees approach the same issue (e.g., how to attract customers) with very different<br />
approaches and creating diverse teams of employees can help improve the quality<br />
of decision making inside the organization. Furthermore, the bank found that as<br />
its reputation as a good place for minorities to work increased, it began to attract<br />
highly skilled and motivated minority job candidates so that it helped itself. As its<br />
CEO Takahiro Moriguchi said in accepting a diversity award for the company, “By<br />
searching for talent from among the disabled, both genders, veterans, all ethnic<br />
groups and all nationalities, we gain access to a pool of ideas, energy, and creativity as<br />
wide and varied as the human race itself. I expect diversity will become even more<br />
important as the world gradually becomes a truly global marketplace.” 46 The bank<br />
also shows its approach to diversity in the way it grooms women and minority<br />
employees for promotion. More than four times as many women and minority<br />
employees for promotion. More than four times as many women and twice as many<br />
minorities are being targeted for promotion today than five years ago. 47<br />
Will this approach to diversity hurt the pool of white employees? The answer<br />
is no because Union Bank expects its approach to diversity to result in so much<br />
growth and expansion that many new jobs will be created and in the end everyone<br />
will benefit. ■
28<br />
Chapter 1 Organizational Behavior and Management<br />
Two other significant performance issues confront organizations with a diverse<br />
workforce. First, research has found that many supervisors do not know how to manage<br />
diverse work groups and find it difficult to lead diverse groups of employees.<br />
Second, supervisors are often uncertain about how to handle the challenge of communicating<br />
with employees whose cultural backgrounds result in assumptions, values, and<br />
even language skills that differ from the supervisors’. 48 Various racial or ethnic groups<br />
may respond differently to the demands of their job responsibilities or to the<br />
approaches that leaders use to manage relationships in work groups. Age and gender<br />
differences can also cause problems for managers, such as when younger employees<br />
find themselves in a position of authority over older and perhaps more experienced<br />
employees. Similarly, some men find it difficult to report to or be evaluated by women.<br />
The mixing of generations, such as the baby-boom (1946–1964) and the baby-bust<br />
generations (1965–1976), can also cause problems (as we discuss in Chapter 4).<br />
If diversity produces conflict and distrust among organizational members,<br />
individual, group, and organizational performance suffers and organizations must<br />
take active steps to solve diversity-related problems. 49 For example, if the skills and<br />
talents of women and minorities are not being fully utilized because older white<br />
males cannot (or refuse to) recognize them, an organization will suffer a significant<br />
loss of potential productivity. To reduce such losses, many organizations have instituted<br />
cultural diversity programs to improve personal and group relationships, to<br />
promote cultural sensitivity and acceptance of differences between people, and to<br />
promote skills for working in multicultural environments. 50<br />
Flexibility Challenge<br />
A third diversity challenge is to be sensitive to the needs of different kinds of<br />
employees and to try to develop flexible employment approaches that increase<br />
employee well-being. Examples of some of these approaches include the following:<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
New benefits packages customized to the needs of different groups of<br />
workers, such as single workers with no children and families, homosexuals<br />
in long-term committed relationships, and workers caring for aged parents<br />
Flexible employment conditions (such as flextime) that give workers input<br />
into the length and scheduling of their workweek<br />
Arrangements that allow for job sharing so that two or more employees can<br />
share the same job (e.g., to take care of children or aged parents)<br />
Designing jobs and the buildings that house organizations to be sensitive to<br />
the special needs of handicapped workers (and customers)<br />
Creating management programs designed to provide constructive feedback<br />
to employees about their personal styles of dealing with minority employees<br />
Establishing mentoring relationships to support minority employees<br />
Establishing informal networks among minority employees to provide<br />
social support<br />
The Xerox Corporation, for example, has undertaken major initiatives to<br />
increase diversity by increasing the proportion of women and minorities it recruits<br />
and promotes. Xerox has also established a sophisticated support network for minor-
Chapter 1<br />
Organizational Behavior and Management<br />
29<br />
ity employees. Managing diversity is an ongoing activity that has important implications<br />
for organizations, particularly as diversity is forecast to increase as more and<br />
more women and minority employees enter the workforce.<br />
■ ■ ■<br />
CHALLENGE 5: MANAGING THE GLOBAL ENVIRONMENT<br />
The challenge of managing a diverse workforce increases as organizations continue<br />
to expand their operations internationally. Thus, managing in the global environment<br />
is the fifth challenge that we focus on. Global companies like GM, Toyota,<br />
PepsiCo, and Sony all face similar problems of effectively managing diversity across<br />
countries and national boundaries. 51 In Chapter 17, we discuss the global organization<br />
and take an in-depth look at problems of managing behavior in global organizations.<br />
Here, we summarize some of the main issues involved in this increasingly<br />
important task—issues that we also discuss in most other <strong>chapter</strong>s.<br />
First, there are the considerable problems of understanding organizational<br />
behavior in global settings. 52 Evidence shows that people in different countries may<br />
have different values and views not only of their work settings but also of the world<br />
in general. It has been argued, for example, that Americans have an individualistic<br />
orientation toward work and the Japanese people have a collectivist orientation.<br />
These individual orientations reflect cultural differences that affect people’s behavior<br />
in groups, their commitment and loyalty to the organization, and their motivation to<br />
perform. 53 Understanding the differences between national cultures is important in<br />
any attempt to manage behavior in global organizations to increase performance.<br />
Second, the management functions of planning, organizing, leading, and controlling<br />
become much more complex as an organization’s activities expand across the<br />
globe. On the planning dimension, decision making must be coordinated between<br />
managers at home and managers in foreign countries who are likely to have different<br />
views about what goals an organization should pursue. The way managers organize<br />
the company and decide how to allocate decision-making authority and responsibility<br />
between managers at home and abroad is one of the most significant functions of<br />
global managers. 54<br />
On the leadership dimension, managers must develop their management skills<br />
so that they can learn to understand the forces at work in foreign work settings.<br />
They must also tailor their leadership styles to suit differences in the attitudes and<br />
values of workforces in different countries. There is considerable evidence that the<br />
problems managers have in managing diversity inside their home countries are compounded<br />
when they attempt to manage in different national cultures. 55 Finally, controlling<br />
involves establishing the evaluation, reward, and promotion policies of the<br />
organization and training and developing a globally diverse workforce.<br />
All management activities are especially complex at a global level because the<br />
attitudes, aspirations, and values of the workforce differ by country. For example,<br />
most U.S. workers are astonished to learn that in Europe the average shop-floor<br />
worker receives four to six weeks of paid vacation a year. In the United States, a comparable<br />
worker receives only one or two weeks. Similarly, in some countries promotion<br />
by seniority is the norm, but in others level of performance is the main determinant<br />
of promotion and reward. The way in which global organizations attempt to<br />
understand and manage these and other problems can be seen in the way managers<br />
use different methods, including information technology, to manage organizational<br />
behavior. The Global View Insights in this and other <strong>chapter</strong>s, particularly in<br />
Chapter 17, examine the topic of managing global organizations. (See Insight 1.7.)
30<br />
Chapter 1 Organizational Behavior and Management<br />
INSIGHT A G L O B A L V I E W1.7<br />
IMPROVING GLOBAL COMMUNICATION<br />
NEC a Japanese electronics giant,<br />
like Hitachi, makes global teleconferencing<br />
an everyday part of its<br />
managers’ activities. Global managers<br />
in all parts of the world join<br />
together routinely to plan strategies<br />
in the quickly changing<br />
telecommunications industry.<br />
Integrating and connecting a company’s employees and subunits<br />
through electronic means such as video teleconferencing,<br />
e-mail, and global<br />
intranets is becoming<br />
increasingly important in global organizations.<br />
Because the success of a global company<br />
depends on communication between<br />
employees and business units that are likely<br />
to be in separate countries, the value of teleconferencing<br />
is obvious. It reduces communication<br />
problems and allows decisions to be<br />
made quickly. Teleconfer-encing allows managers<br />
in different countries to meet face-toface<br />
through television hookups to coordinate<br />
decision making. It facilitates learning<br />
when managers in foreign and domestic divisions<br />
meet to confront important issues and<br />
to solve mutual problems. For example,<br />
Hitachi uses an online teleconferencing system<br />
to coordinate its 28 research and development<br />
(R&D) laboratories worldwide. 56<br />
E-mail and high-speed data-transfer systems are also becoming extremely important<br />
ways of quickly sharing information across the globe. U.S. companies, such as<br />
Hewlett-Packard and IBM, make extensive use of e-mail and their corporate intranet<br />
so that foreign and domestic divisions share information and knowledge. ■<br />
Beyond electronic means to help managers develop a global orientation, more<br />
and more organizations are rotating their managers to foreign divisions so that they<br />
begin to understand the problems and opportunities present in foreign countries. 57<br />
These “foreign” managers constitute a management network—a set of managers<br />
who have developed an array of personal contacts with other managers throughout<br />
the world—that helps individual managers to learn from one another and helps to<br />
overcome a major obstacle to effective integration: subunit orientations that stymie<br />
communication and coordination. Donald Fites, CEO of Caterpillar, rose to his present<br />
position because of the knowledge of lean manufacturing techniques that he<br />
gained from his experiences as a Caterpillar manager in Japan. 58 Jack Smith, CEO of<br />
General Motors, rose to his position because of his successful introduction of lean<br />
manufacturing to GM’s European division. Motorola established a new Asian presence<br />
by building a factory in Tianjin, a port city near Beijing. Tam Chung Ding, who<br />
directs Motorola’s Asian operations, commented that personal connections between<br />
managers in the same organization and between organizations are more important in<br />
Asia than anywhere else in the world. In Asia, integration inside an organization and<br />
the formation of strategic alliances between organizations often depend on the personal<br />
connections established through a management network. 59
S U M M A R Y<br />
Chapter 1<br />
Organizational Behavior and Management<br />
31<br />
Organizational behavior is a developing field of study, and researchers and managers<br />
face new challenges to their understanding of and ability to manage work behavior.<br />
In this <strong>chapter</strong>, we made the following major points:<br />
1. Organizational behavior is the study of factors that affect how individuals<br />
and groups respond to and act in organizations and how organizations<br />
manage their environments. Organizational behavior provides a set of<br />
tools—theories and concepts—to understand, analyze, describe, and manage<br />
attitudes and behavior in organizations.<br />
2. The study of organizational behavior can improve and change individual,<br />
group, and organizational behavior to attain individual, group, and organizational<br />
goals.<br />
3. Organizational behavior can be analyzed at three levels: the individual,<br />
the group, and the organization as a whole. A full understanding is<br />
impossible without an examination of the factors that affect behavior at<br />
each level.<br />
4. A significant part of a manager’s job is to use the tools of organizational<br />
behavior to increase organizational effectiveness—that is, an organization’s<br />
ability to achieve its goals. Management is the process of planning,<br />
organizing, leading, and controlling an organization’s human, financial,<br />
material, and other resources to increase its effectiveness. Managers perform<br />
their functions by assuming 10 types of roles. Managers need conceptual,<br />
human, and technical skills to perform their organizational functions<br />
and roles effectively.<br />
5. Five challenges face those seeking to manage organizational behavior:<br />
how to use information technology to enhance creativity and organizational<br />
learning, how to use human resources to gain a competitive advantage,<br />
how to develop an ethical organization, how to manage a diverse<br />
workforce, and how to manage organizational behavior as an organization<br />
expands internationally.<br />
■ TAKE IT TO THE NET<br />
For further information on other relevant topics, visit the George/Jones Web site: www.prenhall.<br />
com/george
ORGANIZATIONAL<br />
BEHAVIOR IN ACTION<br />
■ QUESTIONS FOR DISCUSSION AND ACTION<br />
1. Why is a working knowledge of organizational<br />
behavior important to managers? How can such<br />
information increase a manager’s effectiveness?<br />
2. Why is it important to analyze the behavior of<br />
individuals, groups, and the organization as a<br />
whole to understand organizational behavior in<br />
work settings?<br />
3. Recall a manager you have known, and evaluate<br />
how well that person performed the four functions<br />
of management: planning, organizing, leading,<br />
and controlling.<br />
4. Think of a manager you have known or read<br />
about, and describe instances in which that manager<br />
seemed to play some of the 10 managerial<br />
roles identified by Mintzberg.<br />
5. Select a restaurant, supermarket, church, or some<br />
other familiar organization, and think about how<br />
the organization tries to increase efficiency, quality,<br />
innovation, and responsiveness to customers.<br />
6. How can information about organizational behavior<br />
help organizations manage their human<br />
resources to obtain a competitive advantage?<br />
7. What are organizational ethics, and why is ethics<br />
such an important issue facing organizations<br />
today?<br />
8. Why is diversity an important challenge facing<br />
organizations today?<br />
9. What special challenges does managing behavior<br />
on a global scale pose for managers?<br />
10. What new challenges may confront managers in<br />
the future?<br />
■ BUILDING DIAGNOSTIC SKILLS<br />
Behavior in Organizations<br />
Think of an organization—a place of employment, a<br />
club, a sports team, a musical group, an academic society—that<br />
provided you with a significant work experience,<br />
and answer the following questions:<br />
1. What are your attitudes and feelings toward the<br />
organization? Why do you think you have these<br />
attitudes and feelings?<br />
2. Indicate, on a scale of 1 to 10, how hard you<br />
worked for this organization or how intensively<br />
you participated in the organization’s activities.<br />
Explain the reasons for your level of participation.<br />
3. How did the organization communicate its performance<br />
expectations to you, and how did the<br />
organization monitor your performance to evaluate<br />
whether you met those expectations? Did you<br />
receive more rewards when you performed at a<br />
higher level? What happened when your performance<br />
was not as high as it should have been?<br />
4. How concerned was your organization with your<br />
well-being? How was this concern reflected? Do<br />
you think this level of concern was appropriate?<br />
Why or why not?<br />
5. Think of your direct supervisor or leader. How<br />
would you characterize this person’s approach to<br />
32
management? How did this management style<br />
affect your attitudes and behaviors?<br />
6. Think of your co-workers or fellow members.<br />
How did their attitudes and behavior affect yours,<br />
particularly your level of performance?<br />
7. Given your answers to these questions, how<br />
would you improve this organization’s approach<br />
to managing its members?<br />
■ RESEARCH ON THE INTERNET: A MANAGER’S TOOL<br />
Specific Task<br />
General Task<br />
Enter Wal-Mart’s Web site, click on “About Wal-<br />
Mart” and then click on “Culture Stories”(www.<br />
walmart.com).<br />
1. What do the stories about Wal-Mart’s culture<br />
suggest about the company’s approach to management<br />
and organizational behavior?<br />
2. What do the stories say about Wal-Mart’s<br />
approach to managing its human resources to gain<br />
a competitive advantage?<br />
Search for the Web site of a company that describes its<br />
managers’ approach to utilizing human resources or<br />
the way they address one of the four management challenges<br />
identified in the <strong>chapter</strong>. What is their<br />
approach, or what is the main challenge they are facing?<br />
■ TOPICS FOR DEBATE<br />
Now that you understand the nature of organizational<br />
behavior and management and the kinds of issues they<br />
address, debate the following topics:<br />
Debate One<br />
Team A. Organizations should do all they can to promote<br />
the well-being of people and groups inside and<br />
outside the organization.<br />
Team B. The best way to increase organizational performance<br />
is to give workers the flexibility to define and<br />
negotiate their own positions.<br />
Debate Two<br />
Team A. The best way to increase organizational performance<br />
is to clearly specify each worker’s position<br />
and the relationships among positions.<br />
Team B. Organizations exist to make a profit. As they<br />
earn money for their shareholders, all they should do<br />
to promote social well-being is to follow government<br />
laws and regulations.<br />
■ EXPERIENTIAL EXERCISE<br />
A Question of Ethics<br />
Objective<br />
Your objective is to uncover and understand the factors<br />
that allow you to determine whether behavior in organizations<br />
is ethical.<br />
Procedure<br />
1. The class divides into groups of three to five people,<br />
and each group appoints one member as<br />
spokesperson to present the group’s findings to<br />
the whole class.<br />
2. Each member of the group is to think of some<br />
unethical behaviors or incidents that he or she has<br />
observed in organizations. The incidents could be<br />
something you experienced as an employee, a customer,<br />
or a client, or something you observed<br />
informally.<br />
3. The group identifies three important criteria to<br />
use to determine whether a particular action or<br />
behavior is ethical. These criteria need to differentiate<br />
between ethical and unethical organizational<br />
behavior. The spokesperson writes them<br />
down.<br />
33
4. When asked by the instructor, the spokespersons<br />
for each group should be ready to describe the<br />
incidents of unethical behavior witnessed by group<br />
members and the criteria developed in step 3.<br />
■ MAKING THE CONNECTION<br />
At the end of most <strong>chapter</strong>s is a “Making the Connection”<br />
exercise that requires you to search newspapers or magazines<br />
in the library for an example of a real company<br />
that is dealing with some of the issues, concepts, challenges,<br />
questions, and problems dealt with in the <strong>chapter</strong>.<br />
The purpose of the exercise for this <strong>chapter</strong> is to<br />
familiarize you with the way in which managers make<br />
use of organizational behavior to increase organizational<br />
effectiveness.<br />
Find an example of an organization in which managers<br />
made use of organizational behavior concepts or<br />
theories to deal with one of the four challenges discussed<br />
in Chapter 1: gaining a competitive advantage,<br />
organizational ethics, diversity in the workforce, or<br />
globalization.<br />
Closing Case<br />
How Jeff Bezos Manages at Amazon.com<br />
In 1994, Jeffrey Bezos, a computer science and electrical engineering graduate from<br />
Princeton University, was growing weary of working for a Wall Street investment<br />
bank. With his computer science background prompting him, he saw an entrepreneurial<br />
opportunity in the fact that Internet usage was growing at over 2,300 percent<br />
a year. Searching for an opportunity to take advantage of his technical skills in the<br />
new electronic, virtual marketplace he decided that the book-selling market offered<br />
an opportunity. Deciding to make a break, he packed up his belongings and drove to<br />
the West Coast, deciding en route that Seattle, Washington—a new mecca for hightech<br />
software developers and the hometown of Starbucks coffee shops—would be an<br />
ideal place to begin his venture.<br />
Bezos’s plan was to develop an online bookstore that would be customerfriendly<br />
and easy to navigate, and would offer the broadest possible selection of<br />
books. He had decided to create an e-commerce business that, operating through<br />
the Internet, never saw its customers but whose mission was to provide customers<br />
great selection and great service at low prices. 60 Bezos realized that compared to a<br />
real “bricks and mortar” bookstore, an online bookstore would be able to offer a<br />
much larger and diverse selection of books. His goal was that online customers<br />
would find it easy to search for any book in print on a computerized, online catalog,<br />
browse different subject areas, read reviews of books, and even ask other shoppers<br />
for online recommendations—something most people would hesitate to do in a regular<br />
bookstore.<br />
With a handful of employees and operating from his garage in Seattle, Bezos<br />
launched his venture online in July 1995 with $7 million in borrowed captial. Within<br />
34
Chapter 1 Organizational Behavior and Management<br />
weeks, Bezos was forced to relocate to new larger premises and to hire new employees<br />
as book sales soared. The problem facing him now was how to organize his people<br />
and resources to best meet his new company’s goals. His solution was to organize<br />
his workers into groups based on the tasks they needed to perform to satisfy his customers.<br />
First, Bezos created a research and development department to continue to<br />
develop and improve the in-house software that he had initially developed for<br />
Internet-based retailing. Then, he established an information systems department to<br />
handle the day-to-day implementation of these systems and to manage the interface<br />
between the customer and the organization. Third, he created a materials management/logistics<br />
department to devise the most cost-efficient ways to obtain books<br />
from book publishers and book distributors and then to ship them quickly to customers.<br />
Currently, the department is implementing new information systems to<br />
ensure one-day shipping to customers. As Amazon.com grew, these departments<br />
helped Amazon to expand into providing many other kinds of products for its customers<br />
such as music CDs, electronics, and gifts as a visit to the company’s Web sit<br />
(www.amazon.com) will show.<br />
To ensure that Amazon.com strived to meet its goals of providing books<br />
quickly with excellent customer service, Bezos paid attention to the way he controlled<br />
his employees. Realizing that customer support was the most vital link<br />
between customer and organization, to ensure good customer service he decentralized<br />
control and empowered his employees to find a way of meeting customers’<br />
needs quickly. Second because Amazon.com employs a relatively small number of<br />
people, about 2,100 people worldwide, Bezos was able to make great use of socialization<br />
to motivate his employees. All Amazon.com employees are carefully selected<br />
and socialized by the other memebers of their work group so that they quickly learn<br />
their organizational roles and, most importantly, of Amazon’s important norm of<br />
providing excellent customer service. Finally, to ensure that Amazon.com’s employees<br />
are motivated to provide the best possible customer service, Bezos gives all<br />
employees stock in the company, and employees currently own 10 percent of their<br />
company.<br />
Finally, on the leadership dimensions, Bezos is a hands-on manager who works<br />
closely with employees to find cost-saving solutions to problems. Moreover, as<br />
CEO, Bezos acts as a figurehead to his employees, personifying Amazon’s dedication<br />
to the well-being of its employees and customers. Indeed, he spends a great deal of<br />
his time flying around the world to publicize his company and its activities, and he<br />
has succeeded because Amazon.com has the most well-recognized name of any dotcom<br />
company. At Amazon.com, all of Jeff Bezos’s actions are designed to improve<br />
employees’ work attitudes and behaviors and to increase the performance and wellbeing<br />
of employees and customers alike.<br />
DISCUSSION QUESTIONS<br />
1. What management functions and roles is Jeff Bezos performing that make<br />
him such a successful manager?<br />
2. How easy would it be for other CEOs to manage like Bezos?<br />
35
CHAPTER APPENDIX<br />
A Short History of Organizational<br />
Behavior Research<br />
The systematic study of organizational behavior began in the<br />
closing decades of the nineteenth century, after the Industrial<br />
Revolution had swept through Europe and America. In the<br />
new economic climate, managers of all types of organizations—political,<br />
educational, and economic—were increasingly<br />
turning their focus toward finding better ways to satisfy<br />
customers’ needs. Many major economic, technical, and cultural<br />
changes were taking place at this time. With the introduction<br />
of steam power and the development of sophisticated<br />
machinery and equipment, the industrial revolution changed<br />
the way goods were produced, particularly in the weaving and<br />
clothing industries. Small workshops run by skilled workers<br />
who produced hand-manufactured products (a system called<br />
crafts production) were being replaced by large factories in<br />
which sophisticated machines controlled by hundreds or even<br />
thousands of unskilled or semiskilled workers made products.<br />
For example, raw cotton and wool, which in the past families<br />
or whole villages working together had spun into yarn, were<br />
now shipped to factories where workers operated machines<br />
that spun and wove large quantities of yarn into cloth.<br />
Owners and managers of the new factories found themselves<br />
unprepared for the challenges accompanying the<br />
change from small-scale crafts production to large-scale<br />
mechanized manufacturing. Moreover, many of the managers<br />
and supervisors in these workshops and factories were engineers<br />
who had only a technical orientation. They were unprepared<br />
for the social problems that occur when people work<br />
together in large groups (as in a factory or shop system).<br />
Managers began to search for new techniques to manage their<br />
organizations’ resources, and soon they began to focus on<br />
ways to increase the efficiency of the worker–task mix. They<br />
found help from Frederick W. Taylor.<br />
F. W. TAYLOR AND SCIENTIFIC<br />
MANAGEMENT<br />
Frederick W. Taylor (1856–1915) is best known for defining<br />
the techniques of scientific management, the systematic study<br />
of relationships between people and tasks for the purpose of<br />
redesigning the work process to increase efficiency. Taylor<br />
was a manufacturing manager who eventually became a consultant<br />
and taught other managers how to apply his scientific<br />
management techniques. Taylor believed that if the amount of<br />
time and effort that each worker expends to produce a unit of<br />
output (a finished good or service) can be reduced by increasing<br />
specialization and the division of labor, the production<br />
process will become more efficient. Taylor believed the way to<br />
create the most efficient division of labor could be best determined<br />
using scientific management techniques, rather than<br />
intuitive or informal rule-of-thumb knowledge. Based on his<br />
experiments and observations as a manufacturing manager in<br />
a variety of settings, he developed four principles to increase<br />
efficiency in the workplace: 1<br />
■<br />
■<br />
■<br />
Principle 1: Study the way workers perform their tasks, gather<br />
all the informal job knowledge that workers possess, and experiment<br />
with ways of improving the way tasks are performed.<br />
To discover the most efficient method of performing<br />
specific tasks, Taylor studied in great detail and measured<br />
the ways different workers went about performing their<br />
tasks. One of the main tools he used was a time and<br />
motion study, which involves the careful timing and<br />
recording of the actions taken to perform a particular task.<br />
Once Taylor understood the existing method of performing<br />
a task, he then experimented to increase specialization;<br />
he tried different methods of dividing up and coordinating<br />
the various tasks necessary to produce a finished product.<br />
Usually, this meant simplifying jobs and having each<br />
worker perform fewer, more routine tasks, as at the pin<br />
factory or on Ford’s car assembly line. Taylor also sought<br />
to find ways to improve each worker’s ability to perform a<br />
particular task—for example, by reducing the number of<br />
motions workers made to complete the task, by changing<br />
the layout of the work area or the type of tool workers<br />
used, or by experimenting with tools of different sizes.<br />
Principle 2: Codify the new methods of performing tasks into<br />
written rules and standard operating procedures.<br />
Once the best method of performing a particular task<br />
was determined, Taylor specified that it should be<br />
recorded so that the procedures could be taught to all<br />
workers performing the same task. These rules could be<br />
used to further standardize and simplify jobs—essentially,<br />
to make jobs even more routine. In this way, efficiency<br />
could be increased throughout an organization.<br />
Principle 3: Carefully select workers so that they possess skills<br />
and abilities that match the needs of the task, and train them to<br />
perform the task according to the established rules and procedures.<br />
To increase specialization, Taylor believed workers had<br />
to understand the tasks that were required and be thoroughly<br />
trained in order to perform the task at the required<br />
36
Chapter 1<br />
Organizational Behavior and Management<br />
37<br />
■<br />
level. Workers who could not be trained to this level were<br />
to be transferred to a job in which they were able to reach<br />
the minimum required level of proficiency. 2<br />
Principle 4: Establish a fair or acceptable level of performance<br />
for a task, and then develop a pay system that provides a reward<br />
for performance above the acceptable level.<br />
To encourage workers to perform at a high level of efficiency,<br />
and to provide them with an incentive to reveal the<br />
most efficient techniques for performing a task, Taylor<br />
advocated that workers benefit from any gains in performance.<br />
They should be paid a bonus and receive some<br />
percentage of the performance gains achieved through the<br />
more efficient work process.<br />
By 1910, Taylor’s system of scientific management had<br />
become nationally known and in many instances faithfully and<br />
fully practiced. 3 However, managers in many organizations<br />
chose to implement the new principles of scientific management<br />
selectively. This decision ultimately resulted in problems.<br />
For example, some managers using scientific management<br />
obtained increases in performance, but rather than<br />
sharing performance gains with workers through bonuses as<br />
Taylor had advocated, they simply increased the amount of<br />
work that each worker was expected to do. Many workers<br />
experiencing the reorganized work system found that as their<br />
performance increased, managers required them to do more<br />
work for the same pay. Workers also learned that increases in<br />
performance often meant fewer jobs and a greater threat of<br />
layoffs, because fewer workers were needed. In addition, the<br />
specialized, simplified jobs were often very monotonous and<br />
repetitive, and many workers became dissatisfied with their<br />
jobs.<br />
From a performance perspective, the combination of<br />
the two management practices—achieving the right mix of<br />
worker–task specializations and linking people and tasks by<br />
the speed of the production line—resulted in the huge savings<br />
in cost and huge increases in output that occur in large, organized<br />
work settings. For example, in 1908, managers at the<br />
Franklin Motor Company using scientific management principles<br />
redesigned the work process, and the output of cars<br />
increased from 100 cars a month to 45 cars a day; workers’<br />
wages, however, increased by only 90 percent. 4<br />
Taylor’s work has had an enduring effect on the management<br />
of production systems. Managers in every organization,<br />
whether it produces goods or services, now carefully<br />
analyze the basic tasks that workers must perform and try to<br />
create a work environment that will allow their organizations<br />
to operate most efficiently. We discuss this important issue in<br />
Chapters 6 and 7.<br />
THE WORK OF MARY PARKER FOLLETT<br />
If F. W. Taylor is considered the father of management<br />
thought, Mary Parker Follett (1868–1933) serves as its<br />
mother. 5 Much of her writing about management and the way<br />
managers should behave toward workers was a response to her<br />
concern that Taylor was ignoring the human side of the organiztion.<br />
She pointed out that management often overlooks the<br />
multitude of ways in which employees can contribute to the<br />
organization when managers allow them to participate and<br />
exercise initiative in their everyday work lives. 6 Taylor, for<br />
example, never proposed that managers should involve workers<br />
in analyzing their jobs to identify better ways to perform<br />
tasks, or even ask workers how they felt about their jobs.<br />
Instead, he used time and motion experts to analyze workers’<br />
jobs for them. Follett, in contrast, argued that because workers<br />
know the most about their jobs, they should be involved in<br />
job analysis and managers should allow them to participate in<br />
the work development process.<br />
Follett proposed that “Authority should go with knowledge<br />
. . . whether it is up the line or down.” In other words, if<br />
workers have the relevant knowledge, then workers, rather<br />
than managers, should be in control of the work process itself,<br />
and managers should behave as coaches and facilitators—not<br />
as monitors and supervisors. In making this statement, Follett<br />
anticipated the current interest in self-managed teams and<br />
empowerment. She also recognized the importance of having<br />
managers in different departments communicate directly with<br />
each other to speed decision making. She advocated what she<br />
called “cross-functioning”: members of different departments<br />
working together in cross-departmental teams to accomplish<br />
projects—an approach that is increasingly utilized today. 7 She<br />
proposed that knowledge and expertise, and not managers’<br />
formal authority deriving from their position in the hierarchy,<br />
should decide who would lead at any particular moment. She<br />
believed, as do many management theorists today, that power<br />
is fluid and should flow to the person who can best help the<br />
organization achieve its goals. Follett took a horizontal view<br />
of power and authority, rather than viewing the vertical chain<br />
of command as being most essential to effective management.<br />
Thus, Follett’s approach was very radical for its time.<br />
THE HAWTHORNE STUDIES<br />
AND HUMAN RELATIONS<br />
Probably because of its radical nature, Follett’s work went<br />
unappreciated by managers and researchers until quite<br />
recently. Most continued to follow in the footsteps of Taylor,<br />
and to increase efficiency, they studied ways to improve various<br />
characteristics of the work setting, such as job specialization<br />
or the kinds of tools workers used. One series of studies<br />
was conducted from 1924 to 1932 at the Hawthorne Works of<br />
the Western Electric Company. 8 This research, now known as<br />
the Hawthorne studies, was initiated as an attempt to investigate<br />
how characteristics of the work setting—specifically the<br />
level of lighting or illumination—affect worker fatigue and<br />
performance. The researchers conducted an experiment in<br />
which they systematically measured worker productivity at<br />
various levels of illumination.<br />
The experiment produced some unexpected results.<br />
The researchers found that regardless of whether they raised<br />
or lowered the level of illumination, productivity increased. In
38<br />
Chapter 1 Organizational Behavior and Management<br />
fact, productivity began to fall only when the level of illumination<br />
dropped to the level of moonlight, a level at which presumably<br />
workers could no longer see well enough to do their<br />
work efficiently.<br />
As you can imagine, the researchers found these results<br />
very puzzling. They invited a noted Harvard psychologist,<br />
Elton Mayo, to help them. Mayo proposed another series of<br />
experiments to solve the mystery. These experiments, known<br />
as the relay assembly test experiments, were designed to investigate<br />
the effects of other aspects of the work context on job<br />
performance, such as the effect of the number and length of<br />
rest periods and hours of work on fatigue and monotony. 9<br />
The goal was to raise productivity.<br />
During a two-year study of a small group of female<br />
workers, the researchers again observed that productivity<br />
increased over time, but the increases could not be solely<br />
attributed to the effects of changes in the work setting.<br />
Gradually, the researchers discovered that, to some degree,<br />
the results they were obtaining were influenced by the fact<br />
that the researchers themselves had become part of the experiment.<br />
In other words, the presence of the researchers was<br />
affecting the results because the workers enjoyed receiving<br />
attention and being the subject of study and were willing to<br />
cooperate with the researchers to produce the results they<br />
believed the researchers desired.<br />
Subsequently, it was found that many other factors also<br />
influence worker behavior, and it was not clear what was actually<br />
influencing Hawthorne workers’ behavior. However, this<br />
particular effect—which became known as the Hawthorne<br />
effect—seemed to suggest that the attitudes of workers toward<br />
their managers affects the level of workers’ performance. In<br />
particular, the significant finding was that a manager’s behavior<br />
or leadership approach can affect performance. This finding<br />
led many researchers to turn their attention to managerial<br />
behavior and leadership. If supervisors could be trained to<br />
behave in ways that would elicit cooperative behavior from<br />
their subordinates, then productivity could be increased.<br />
From this view emerged the human relations movement,<br />
which advocates that supervisors be behaviorally trained to<br />
manage subordinates in ways that elicit their cooperation and<br />
increase their productivity.<br />
The importance of behavioral or human relations training<br />
became even clearer to its supporters after another series<br />
of experiments—the bank wiring room experiments. In a<br />
study of workers making telephone switching equipment,<br />
researchers Elton Mayo and F. J. Roethlisberger discovered<br />
that the workers, as a group, had deliberately adopted a norm<br />
of output restriction to protect their jobs. Workers who violated<br />
this informal production norm were subjected to sanctions<br />
by other group members. Those who violated group<br />
performance norms and performed above the norm were<br />
called “ratebusters”; those who performed below the norm<br />
were called “chisellers.”<br />
The experimenters concluded that both types of workers<br />
threatened the group as a whole. Ratebusters threaten<br />
group members because they reveal to managers how fast the<br />
work can be done. Chisellers are looked down on because they<br />
are not doing their share of the work. Work-group members<br />
discipline both ratebusters and chisellers in order to create a<br />
pace of work that the workers (not the managers) think is fair.<br />
Thus, the work group’s influence over output can be as great<br />
as the supervisors’ influence. Because the work group can<br />
influence the behavior of its members, some management<br />
theorists argue that supervisors should be trained to behave in<br />
ways that gain the goodwill and cooperation of workers so<br />
that supervisors, not workers, control the level of work-group<br />
performance.<br />
One of the main implications of the Hawthorne studies<br />
was that the behavior of managers and workers in the work<br />
setting is as important in explaining the level of performance<br />
as the technical aspects of the task. Managers must understand<br />
the workings of the informal organization, the system of<br />
behavioral rules and norms that emerge in a group, when they<br />
try to manage or change behavior in organizations. Many<br />
studies have found that, as time passes, groups often develop<br />
elaborate procedures and norms that bond members together,<br />
allowing unified action either to cooperate with management<br />
in order to raise performance or to restrict output and thwart<br />
the attainment of organizational goals. 10 The Hawthorne<br />
studies demonstrated the importance of understanding how<br />
the feelings, thoughts, and behavior of work-group members<br />
and managers affect performance. It was becoming increasingly<br />
clear to researchers that understanding behavior in<br />
organizations is a complex process that is critical to increasing<br />
performance. 11 Indeed, the increasing interest in the area of<br />
management known as organizational behavior, the study of<br />
the factors that have an impact on how individuals and groups<br />
respond to and act in organizations, dates from these early<br />
studies.<br />
THEORY X AND THEORY Y<br />
Several studies after World War II revealed how assumptions<br />
about workers’ attitudes and behavior affect managers’ behavior.<br />
Perhaps the most influential approach was developed by<br />
Douglas McGregor. He proposed that two different sets of<br />
assumptions about work attitudes and behaviors dominate the<br />
way managers think and affect how they behave in organizations.<br />
McGregor named these two contrasting sets of assumptions<br />
Theory X and Theory Y. 12<br />
Theory X<br />
According to the assumptions of Theory X, the average<br />
worker is lazy, dislikes work, and will try to do as little as possible.<br />
Moreover, workers have little ambition and wish to<br />
avoid responsibility. Thus, the manager’s task is to counteract<br />
workers’ natural tendencies to avoid work. To keep workers’<br />
performance at a high level, the manager must supervise them<br />
closely and control their behavior by means of “the carrot and<br />
stick”—rewards and punishments.<br />
Managers who accept the assumptions of Theory X<br />
design and shape the work setting to maximize their control
Chapter 1<br />
over workers’ behaviors and minimize the workers’ control<br />
over the pace of work. These managers believe that workers<br />
must be made to do what is necessary for the success of the<br />
organization, and they focus on developing rules, standard<br />
operating procedures, and a well-defined system of rewards<br />
and punishments to control behavior. They see little point in<br />
giving workers autonomy to solve their own problems<br />
because they think that the workforce neither expects nor<br />
desires cooperation. Theory X managers see their role as to<br />
closely monitor workers to ensure that they contribute to<br />
the production process and do not threaten product quality.<br />
Henry Ford, who closely supervised and managed his workforce,<br />
fits McGregor’s description of a manager who holds<br />
Theory X assumptions.<br />
Theory Y<br />
In contrast, Theory Y assumes that workers are not inherently<br />
lazy, do not naturally dislike work, and, if given the opportunity,<br />
will do what is good for the organization. According to<br />
Theory Y, the characteristics of the work setting determine<br />
whether workers consider work to be a source of satisfaction<br />
or punishment; and managers do not need to closely control<br />
workers’ behavior in order to make them perform at a high<br />
level, because workers will exercise self-control when they are<br />
committed to organiztional goals. The implication of Theory<br />
Y, according to McGregor, is that “the limits of collaboration<br />
in the organizational setting are not limits of human nature<br />
but of management’s ingenuity in discovering how to realize<br />
the potential represented by its human resources.” 13 It is the<br />
manager’s task to create a work setting that encourages commitment<br />
to organizational goals and provides opportunities<br />
for workers to be imaginative and to exercise inititative and<br />
self-direction.<br />
When managers design the organizational setting to<br />
reflect the assumptions about attitudes and behavior suggested<br />
by Theory Y, the characteristics of the organization are<br />
quite different from those of an organizational setting based<br />
on Theory X. Managers who believe that workers are motivated<br />
to help the organization reach its goals can decentralize<br />
authority and give more control over the job to workers, both<br />
as individuals and in groups. In this setting, individuals and<br />
groups are still accountable for their activities, but the manager’s<br />
role is not to control employees but to provide support<br />
and advice, to make sure they have the resources they need to<br />
perform their jobs, and to evaluate them on their ability to<br />
help the organization meet its goals.<br />
THEORY Z<br />
In the 1980s, William Ouchi, a professor interested in differences<br />
between work settings in Japan and the United States,<br />
took the management approach inherent in Theory Y one<br />
Organizational Behavior and Management<br />
39<br />
step further. 14 In the United States, national culture emphasizes<br />
the importance of the individual, and workers view their<br />
jobs from an individualist perspective and thus behave in ways<br />
that will benefit them personally. Perhaps because of this,<br />
Ouchi noted, many U.S. managers adopt Theory X rather<br />
than Theory Y assumptions. They expect workers to behave<br />
purely in their own self-interest and believe workers will leave<br />
an organization at a moment’s notice if they see a better<br />
opportunity elsewhere. To counter this expectation, Ouchi<br />
speculated, managers simplify jobs and increase supervision to<br />
make it easy to replace workers and to minimize any problems<br />
that might result from high rates of turnover. In U.S. companies,<br />
control is frequently explicit and formalized: Job<br />
requirements are clearly specified, and most workers are evaluated<br />
on and rewarded for their individual level of performance.<br />
In contrast, Japanese managers expect workers to be<br />
committed to their organizations and therefore treat them<br />
differently. Some large Japanese companies guarantee workers<br />
lifetime employment and view the training and development<br />
of workers as a lifelong investment. Moreover, Japanese workers<br />
tend to have a collective or group orientation to their<br />
work, a result of the characteristics of Japan’s national culture,<br />
which emphasizes the importance of groups and organizations<br />
rather than individuals. Consistent with the Japanese culture,<br />
Japanese managers create work settings that encourage a<br />
group-oriented approach to decision making, they give work<br />
groups responsibility for job performance, and they allow<br />
work groups to control their own behavior.<br />
Ouchi suggested that U.S. companies could capture<br />
many of the advantages that Japanese companies enjoy by<br />
combining various characteristics of the Japanese and U.S.<br />
management systems and following the approach to management<br />
that he called Theory Z. In what Ouchi calls a “Type Z<br />
organization,” workers are guaranteed long-term (but not<br />
lifetime) employment, so that their fears of layoffs or unemployment<br />
are reduced. Type Z managers attempt to combine<br />
the Japanese emphasis on the work group with a recognition<br />
of individual contributions by setting objectives for individual<br />
workers so that individual performance achievements can be<br />
recognized within a group context. Thus, individuals are recognized<br />
and rewarded not only for individual performance<br />
but also for interpersonal skills that improve decision making<br />
or communication. As we discuss in later <strong>chapter</strong>s, the implementation<br />
of Theory Z requires an organizational structure<br />
that allows the organization to be flexible and responsive to<br />
changes inside the organization and in the external environment.
40<br />
ENDNOTES<br />
Chapter 1<br />
Chapter 1 Organizational Behavior and Management<br />
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31. R. C. Soloman, Ethics and Excellence (New York: Oxford University Press, 1992).<br />
32. L. K. Trevino, “Ethical Decision Making in Organizations: A Person–Situation Interactionist Model,”<br />
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33. “ValuJet Crash Charges,” Miami Herald, July 13, 1999, p. 1A.<br />
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1983): 3–15; J. J. Chrisman and A. B. Carroll, “Corporate Responsibility—Reconciling Economic and<br />
Social Goals,” Sloan Management Review 25 (1984): 59–65.
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Organizational Behavior and Management<br />
35. H. Mintzberg, “The Case for Corporate Social Responsibility,” Journal of Business Strategy (winter<br />
1973): 3–15.<br />
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Management Association, 1988).<br />
37. L. I. Kessler, Managing Diversity in an Equal Employment Opportunity Workplace (Washington, DC:<br />
National Foundation for the Study of Employment Policy, 1990).<br />
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Hudson Institute, 1987); M. Galen and A. T. Palmer, “White, Male and Worried,” Newsweek (January<br />
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39. Ibid.<br />
40. H. W. Fullerton Jr., “New Labor Force Projections Spanning 1988–2000,” Monthly Labor Review<br />
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47. Ibid.<br />
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Geber, “Managing Diversity,” Training 27 (1990): 23–30.<br />
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Jackson and Associates, Diversity in the Workplace, pp. 248–78.<br />
51. C. K. Prahalad and Y. L. Doz, The Multinational Mission: Balancing Local Demands and Global Vision<br />
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IL: Irwin, 1992).<br />
52. P. J. Dowling and R. S. Schuler, International Dimensions of Human Resource Management (Boston: PWS-<br />
Kent, 1990).<br />
53. N. Adler, International Dimensions of Organizational Behavior (Boston: Kent, 1991).<br />
54. G. Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of<br />
International Business Studies (fall 1983): 75–89.<br />
55. R. L. Tung, “Selection and Training in U.S., European, and Japanese Multinationals,” California<br />
Management Review 25 (1982): 57–71.<br />
56. www.Hitachi.com, 2000.<br />
57. A. Edstrom and J. R. Galbraith, “Transfer of Managers as a Coordination and Control Strategy in<br />
Multinational Organizations,” Administrative Science Quarterly 22 (1977): 248–63.<br />
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41<br />
Chapter 1 Appendix<br />
1. F. W. Taylor, Shop Management (New York: Harper, 1903); F. W. Taylor, The Principles of Scientific<br />
Management (New York: Harper, 1911).
42<br />
Chapter 1 Organizational Behavior and Management<br />
2. L. W. Fry, “The Maligned F. W. Taylor: A Reply to His Many Critics,” Academy of Management Review<br />
(1976): 124–29.<br />
3. J. A. Litterer, The Emergence of Systematic Management as Shown by the Literature from 1870–1900 (New<br />
York: Garland, 1986).<br />
4. D. Wren, The Evolution of Management Thought (New York: Wiley, 1994), 134.<br />
5. L. D. Parker, “Control in Organizational Life: The Contribution of Mary Parker Follett,” Academy of<br />
Management Review 9 (1984): 736–45.<br />
6. P. Graham, M. P. Follett—Prophet of Management: A Celebration of Writings from the 1920s (Boston:<br />
Harvard Business School Press, 1995).<br />
7. M. P. Follett, Creative Experience (London: Longmans, 1924).<br />
8. E. Mayo, The Human Problems of Industrial Civilization (New York: Macmillan, 1933); F. J.<br />
Roethlisberger and W. J. Dickson, Management and the Worker (Cambridge, MA: Harvard University<br />
Press, 1947).<br />
9. D. W. Organ, “Review of Management and the Worker,” by F. J. Roethlisberger and W. J. Dickson,<br />
Academy of Management Review 13 (1986): 460–64.<br />
10. D. Roy, “Banana Time: Job Satisfaction and Informal Interaction,” Human Organization 18 (1960):<br />
158–61.<br />
11. For an analysis of the problems in determining cause from effect in Hathorne studies and in social settings<br />
in general, see A. Carey, “The Hawthorne Studies: A Radical Criticism,” American Sociological<br />
Review 33 (1967): 403–16.<br />
12. D. McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960).<br />
13. Ibid., 48.<br />
14. W. G. Ouchi, Theory Z: How American Business Can Meet the Japanese Challenge (Reading, MA: Addison-<br />
Wesley, 1981).