chapter - Pearson

chapter
1
ORGANIZATIONAL BEHAVIOR
AND MANAGEMENT
■
■
■
■
■
■
■
■
WHAT IS ORGANIZATIONAL BEHAVIOR?
ORGANIZATIONAL BEHAVIOR AND MANAGEMENT
CHALLENGES FOR ORGANIZATIONAL BEHAVIOR
AND MANAGEMENT
CHALLENGE 1: USING NEW INFORMATION
TECHNOLOGY TO ENHANCE CREATIVITY AND
ORGANIZATIONAL LEARNING
CHALLENGE 2: MANAGING HUMAN RESOURCES
TO INCREASE COMPETITIVE ADVANTAGE
CHALLENGE 3: DEVELOPING ORGANIZATIONAL
ETHICS AND WELL-BEING
CHALLENGE 4: MANAGING A DIVERSE
WORKFORCE
CHALLENGE 5: MANAGING THE GLOBAL
ENVIRONMENT
Euan Baird, CEO of Schlumberger,
is determined to keep his company
at the forefront of using advances
in information technology to find
new ways to enhance his company’s
performance and his
employees ability and motivation
to do their jobs.

Opening Case
HOW EUAN BAIRD USES INFORMATION
TECHNOLOGY TO MANAGE ORGANIZATIONAL
BEHAVIOR AT SCHLUMBERGER
Schlumberger is a global technology company that sells products and services
to improve the productivity of its customers. For example, its Oilfield
Services Division is the leading supplier of services and technology to the
international petroleum industry. 1 In the last decade, its chief executive officer
(CEO), Euan Baird, has revolutionized the way the company and the people
inside it operate by introducing new information and communications technology at
all levels and in all areas of the company. In his view, these new technologies have
transformed the way in which the company manages the behavior of its people and
subunits.
Information technology (IT) refers to the computer systems and software that
organizations use to speed the flow of information around an organization and to
better link people and subunits within it. Information technology includes a company’s
internal communications and messaging e-mail system whereby employees
are linked through their desktop and laptop computers to each other, to the company’s
information databases, and often, to its suppliers and customers as well. At
Schlumberger, Baird has utilized IT to improve organizational behavior and performance
in many ways.
First, Baird designed Schlumberger’s IT to increase employee motivation, job
satisfaction, and performance. Information systems were designed to give employees
access to more and better information, and to put employees into closer communication
with each other. Before the new information systems, managers and supervisors
had controlled the flow of information between employees, and the organizational
hierarchy was the main means of communications and control. Now,
everything the information employees need to perform their work is available electronically,
and employees can access this information and use it creatively to better
satisfy customer needs. Moreover, to enhance the level of cooperation between
employees, employees can “sign” their work electronically so that they can be given
credit for their inputs. This builds employee motivation because it allows managers
to better reward superior employee performance. Moreover, Baird and his managers
discovered that the IT network was very effective in promoting trust between
employees and in creating a sense of belongingness in the company. Electronic communication
allows employees to maintain an active everyday working relationship
3

4
Chapter 1 Organizational Behavior and Management
Today, developing the information technology that allows employees to handle
information and knowledge more effectively and to better communicate with each
other, and with an organization’s customers and suppliers, is an important challenge
in managing organizational behavior. At Schlumberger, Euan Baird actively seeks
ways to use information technology to obtain input and advice from employees, to
communicate with employees, and to let them know he supports their activities and
is listening to their concerns. Baird strives to find new ways to improve the perforwith
each other even though people are at very different levels in the company or
even very far apart.
New IT systems have also helped Schlumberger to better train its employees
in new technical advances and increase their productivity and responsiveness to customers.
For example, each of the operating subunits, such as oilfield services, established
an online support system that provides employees with up-to-date documentation,
training material, and advice over the network. Called In Touch, employees
can access training information at their convenience and fit it into their busy work
schedules.
Another important aspect of the way in which Baird designed Schlumberger’s
IT systems was to take full advantage of the possibilities offered by virtual teams.
Virtual teams are groups of employees, electronically linked to each other through
e-mail and often video messenging systems, who may seldom or ever meet, but who
work on projects together intensively in real time. For example, consider the way
Baird used IT to overcome the problems of managing the far-flung global operations
of its oilfield services group. Baird split oilfield services into 25 separate regional
groups to service the needs of clients in each of their regional areas, for example,
China, the U.S. Gulf Coast, and Alaska. While employees inside each regional group
use electronic means to communicate with one another, they are also in continual
online communication with the other 24 groups so that they are easily able to
exchange market information, personal experiences, and best practices. The company’s
virtual team structure has greatly improved cooperation and teamwork
throughout the oil services division and the company’s other subunits, speeding customer
service and reducing the time it takes to get new products to the market—
important sources of competitive advantage. 2
Indeed, according to Baird, one of the main functions of IT is to “create companies
that learn and do not forget what they have learned.” Information technology
helps employees to assimilate and manage large amounts of complex information,
and it gives them access to new and changing information so they can be constantly
learning how to do things better; thus, it helps employees to make intelligent choices
and improve the decisions they make. Indeed, at Schlumberger, Baird has almost
eliminated the need for paper. Almost everything employees need to perform their
tasks is now handled electronically and all the reports that he and his managers read
are read onscreen. They are from online databases that employees continually
update to keep communication and feedback quick and effective—something that
pleases Schlumberger’s customers and leads to increased company performance.
Overview

Chapter 1
Organizational Behavior and Management
mance of his employees and thus the performance of Schlumberger itself. To these
ends, Baird has taken the following steps:
■
■
He strives to increase their skills and knowledge and works hard to involve
employees in the running of the business and encourages them to find new
ways to speed product development, raise quality, and increase revenues.
He rewards employees for superior performance and makes sure that each
employee’s contribution to the organization is recognized.
■ He tries to create a work setting in which employees can work hard both
alone and in virtual teams to further their organization’s goals and interests.
As Baird’s actions suggest, a solid understanding and appreciation of how people
behave in organizations, and what causes them to behave the way they do, is the first
step in managing organizational behavior effectively. Once managers appreciate the
forces that shape organizational behavior, they can use new tools and techniques, such
as information technology, to enhance individual and organizational performance.
In this chapter, we define organizational behavior and its relationship to management,
and we demonstrate how a working knowledge of organizational behavior
is essential for managers and employees alike in helping an organization to meet its
goals. We discuss the functions, roles, and skills of management and describe how
understanding organizational behavior is necessary for a manager to be effective. We
also discuss five contemporary challenges to the management of organizational
behavior, focusing on two that are perhaps the most important facing managers
today: (1) the need to utilize effectively the fast-developing information technology
that is affecting all aspects of the way a company operates, and (2) the need to create
an organizational context that allows employees to be creative and innovative as they
go about their jobs. By the end of this chapter, you will understand the central role
that organizational behavior plays in determining how effectively an organization
and all the men and women who are part of it are in achieving their goals.
5
■ ■ ■
WHAT IS ORGANIZATIONAL BEHAVIOR?
Organization
A collection of people who work
together to achieve individual and
organizational goals.
To begin our study of organizational behavior, we could just say that it is the study of
behavior in organizations and the study of the behavior of organizations, but such a
definition reveals nothing about what this study involves or examines. To reach a
more useful and meaningful definition, let’s first look at what an organization is. An
organization is a collection of people who work together to achieve a wide variety of
goals. The goals are what individuals are trying to accomplish by being members of
an organization (earning a lot of money, helping promote a worthy cause, achieving
certain levels of power and prestige, enjoying a satisfying work experience). The
goals are also what the organization as a whole is trying to accomplish (providing
innovative goods and services that customers want; getting candidates elected; raising
money for medical research; making a profit to reward stockholders, managers,
and workers). Police forces, for example, are formed to achieve the goals of providing
security for law-abiding citizens and providing police officers with a secure,
rewarding career while they perform their valuable service. Paramount Pictures was
formed to achieve the goal of providing people with entertainment while making a
profit, and in the process, actors, directors, writers, and musicians receive well-paid
and interesting work. Euan Baird works hard at Schlumberger finding new ways of
using IT to increase performance, not only to provide customers with high-quality
innovative products but also to provide himself with power, wealth, and a satisfying
work experience.

6
Chapter 1 Organizational Behavior and Management
Organizational behavior
The study of factors that affect
how individuals and groups act in
organizations and how organizations
manage their environments.
Organizations exist to provide goods and services that people want, and the
amount and quality of these goods and services are products of the behaviors and
performance of an organization’s workers—of top managers, of highly skilled workers
in sales or research and development, and of the workers who actually produce or
provide the goods and services.
Organizational behavior is the study of the many factors that have an impact
on how individuals and groups respond to and act in organizations and how organizations
manage their environments. Understanding how people behave in an organization
is important because most people, at some time in their life, work for an organization
and are directly affected by their experiences in it. People may be the paid
employees of small mom-and-pop operations or large Fortune 500 firms, the unpaid
volunteers of a charitable organization, the members of a school board, or e-entrepreneurs
who start new online businesses as thousands of people are doing today. No
matter what the organizational setting, however, people who work in organizations
are affected significantly by their experiences at work.
Most of us think we have a basic, intuitive, common sense understanding of
human behavior in organizations because we all are human and have been exposed to
different work experiences. Often, however, our intuition and common sense are
wrong, and we do not really understand why people act and react the way they do.
For example, many people assume that happy workers are productive workers—that
is, that high job satisfaction causes high job performance—or that punishing someone
who performs consistently at a low level is a good way to increase performance
or that it is best to keep pay levels secret. As we will see in later chapters, all these
beliefs are either false or are correct only under a narrow set of circumstances, and
applying these principles can have negative consequences for workers, managers,
and organizations.
The study of organizational behavior provides guidelines that both managers
and workers can use to understand and appreciate the many forces that affect behavior
in organizations and to make correct decisions about how to motivate and coordinate
people and other resources to achieve organizational goals. Organizational
behavior replaces intuition and gut feeling with a well-researched body of theories
and systematic guidelines for managing behavior in organizations.
The study of organizational behavior provides a set of tools—concepts and
theories—that help people to understand, analyze, and describe what goes on in
organizations and why. Organizational behavior helps people understand, for example,
why they and others are motivated to join an organization, why they feel good or
bad about their jobs or about being part of the organization, why some people do a
good job and others don’t, and why some people stay with the same organization for
30 years and others seem to be constantly dissatisfied and change jobs every two
years. In essence, organizational behavior concepts and theories allow people to correctly
understand, describe, and analyze how the characteristics of individuals,
groups, work situations, and the organization itself affect how members feel about
and act within their organization (see Figure 1.1).
The ability to use the tools of organizational behavior to understand behavior
in organizations is one reason for studying this topic. A second reason is to learn how
to use and apply these concepts, theories, and techniques to improve, enhance, or
change behavior so that individuals, groups, and the whole organization can better
achieve their goals. For example, a salesperson working in Neiman Marcus in
Houston has the individual goal, set by his sales manager, of selling $5,000 worth of
men’s clothing per week. In addition, he and the other members of the men’s clothing
department have the group goal of keeping the department looking neat and
attractive and of never keeping customers waiting. The store as a whole (along with

Chapter 1
Organizational Behavior and Management
7
FIGURE 1-1
What Is Organizational
Behavior?
Organizational behavior
Provides a set of tools
that allow:
People to understand,
analyze, and describe
behavior in organizations
Managers to improve, enhance,
or change work behaviors so
that individuals, groups, and
the whole organization can
achieve their goals
all the other stores in the nationwide Neiman Marcus chain) has the goals of being
profitable by selling customers unique, high-quality clothes and accessories and providing
excellent service. As you can see, these goals are interrelated. By being helpful
to customers, the salesperson’s behavior contributes to attaining (1) his personal sales
goal, (2) the department’s goal of never keeping customers waiting, and (3) the organization’s
goals of being profitable and providing excellent service.
Recall from the chapter-opening case that Schlumberger’s goal is to attract
customers by providing them with innovative, high-quality technical products. To
achieve this goal, Euan Baird has had to find ways to use new information technology
to speed the development of new products while keeping quality high.
Schlumberger has been improving its ability to achieve these goals because of the
way Baird encourages his employees to work hard and well and because of his concern
for finding the right way to motivate and reward them. A key challenge for all
managers, and one that we address throughout this book, is how to encourage organizational
members to work effectively for their own benefit, the benefit of their
work groups, and the benefit of their organization. How does Baird try to meet this
challenge? He requires workers to work hard individually and in virtual teams to
meet their goals, and he ensures that workers benefit directly from their hard work
by recognizing their individual and group achievements. Now that change is becoming
a way of life for many organizations, it is extremely important for managers to be
constantly on the alert to find new ways to motivate and coordinate employees to
ensure that their goals are aligned with organizational goals.
Levels of Analysis
Our examples of how managers can use organizational behavior tools to understand
and alter behavior signal the three levels at which organizational behavior can be
examined: the individual, the group, and the organization as a whole. A full understanding
of organizational behavior is impossible without a thorough examination of
the factors that affect behavior at each level.
Much of the research in organizational behavior has focused on the way in
which the characteristics of individuals (such as personality and motivation) affect
how well people do their jobs, whether they like what they do, whether they get
along with the people they work with, and so on. In Chapters 2 through 9 we examine
individual characteristics that are critical for understanding and managing behavior
in organizations: personality and ability, attitudes and values, perception and
attribution, learning, motivation, and stress and work-life linkages (see Figure 1.2).

8
Chapter 1 Organizational Behavior and Management
Understanding and managing
organizational behavior
requires studying
Individuals in organizations
Chapter 2 Individual differences:
Personality and ability
Chapter 3 The experience of work: Values,
attitudes, and moods
Chapter 4 Perception, attribution, and the
management of diversity
Chapter 5 Learning in organizations
Chapter 6 The nature of work motivation
Chapter 7 Motivation tools I: Job design
and goal setting
Chapter 8 Motivation tools II: Performance
appraisal, pay, and careers
Chapter 9 Stress and work-life linkages
Groups and organizational processes
Chapter 10 The nature of work groups
and teams
Chapter 11 Effective work groups
and teams
Chapter 12 Leadership
Chapter 13 Communication
Chapter 14 Decision making
Intergroup relations and the
organizational context
Chapter 15 Organizational structure
and culture
Chapter 16 Determinants of organizational
structure and culture
Chapter 17 Managing global organizations
Chapter 18 Power, politics, and conflict
Chapter 19 Organizational change
and development
FIGURE 1.2 Components of Organizational Behavior
Group
Two or more people who interact
to achieve their goals.
Team
A group in which members work
together intensively to achieve a
common group goal.
The effects of group characteristics and processes (such as communication and
decision making) on organizational behavior also need to be understood. A group is
two or more people who interact to achieve their goals. A team is a group in which
members work together intensively to achieve a common group goal. A virtual team
is a group whose members work together intensively via electronic means and who
may never actually meet. The number of members in a group, the type and diversity
of team members, the tasks they perform, and the attractiveness of a group to its
members all influence not just the behavior of the group as a whole but also the
behaviors of individuals within the group. For example, a team can influence its
members’ decisions on how diligently they should do their jobs or how often they
are absent from work. Chapters 10 through 14 examine the ways in which groups
affect their individual members and the processes involved in group interactions
such as leadership, communication, and decision making.
Many studies have found that characteristics of the organization as a whole
(such as the design of an organization’s structure and its culture) have important
effects on the behavior of individuals and groups. An organization’s structure controls
how people and groups cooperate and interact to achieve organizational
goals. The principal task of organizational structure is to encourage people to
work hard and coordinate their efforts to ensure high levels of organizational performance.
An organization’s culture controls how the individuals and groups interact
with each other and with people (such as customers or suppliers) outside the
organization. Organizational culture also shapes and controls the attitudes and
behavior of people and groups within an organization and influences their desire
to work toward achieving organizational goals. Chapters 15 through 19 examine
the way organizational structure and culture affect performance and also examine

Chapter 1
Organizational Behavior and Management
how factors such as the changing global environment, technology, and ethics affect
work attitudes and behavior.
Organizational Behavior in Action an Example
The way in which individual, group, and organizational characteristics work
together is illustrated in the way General Motors (GM) and Toyota cooperated to
reopen a car assembly plant in Fremont, California—a plant that GM had previously
closed because of its poor performance. (See Insight 1.1.)
INSIGHT 1.1
O R G A N I Z A T I O N A L B E H A V I O R
9
NUMMI FORGES AHEAD
At Nummi, supervisors and workers
cooperate on an ongoing basis
to find new and improved ways to
assemble cars. Workers also
receive training when any
changes are made to the car
model or method of assembly to
ensure the high quality the car
plant is known for.
In 1963, GM opened a car plant in Fremont, California, 35
miles southeast of San Francisco. 3 The plant was a typical
assembly-line operation where workers performed simple,
repetitive tasks on cars that moved steadily past them on
assembly lines. From the beginning, the plant experienced many problems that
reduced its performance. Worker productivity was low, and the quality of the assembled
cars was poor. Worker morale was also low, drug and alcohol abuse were widespread,
and absenteeism was so high that hundreds of extra workers had to be
employed just to make sure that enough
workers were on hand to operate the plant.
To try to improve the plant’s performance,
GM managers tried many things, such as
changing the workers’ jobs, increasing the
speed of the production line, and instituting
penalties for absenteeism. None of these
actions seemed to work, and, seeing no
chance of improving performance, GM
closed the plant in 1981.
In 1983, GM and Toyota announced
that they would cooperate to reopen the
Fremont plant. GM wanted to learn how
Toyota operated its efficient production system,
and Toyota wanted to know whether it
could achieve a high level of productivity by
using Japanese management techniques on
American workers. In 1984, the new organization, New United Motor
Manufacturing Inc. (NUMMI), reopened in Fremont under the control of Japanese
management. By 1986, productivity at NUMMI was higher than productivity at any
other GM factory, and the plant was operating at twice the level it had operated at
under GM management. Alcohol and drug abuse had virtually disappeared, and
absenteeism had dropped to near zero. A new approach to managing organizational
behavior had brought about this miracle.
At the NUMMI factory, Toyota divided the workforce into 200 self-managed
work groups consisting of three to five teams (today it has over 700 groups4) led by
a group leader, and made the group rather than the individual workers responsible
for the performance of the group’s assigned task. Each worker was trained to do the

10
Chapter 1 Organizational Behavior and Management
jobs of the other group members, and workers regularly rotated jobs, so their work
experiences were less repetitive and boring. In addition, each worker was taught procedures
for analyzing the jobs within the group and was encouraged to find ways to
improve the way tasks were done. Work group members timed each other using
stopwatches and continually attempted to find better ways to perform their jobs. In
the old plant, GM had employed 80 managers to perform this analysis. Now, in the
new plant, self-managed work groups not only perform job analysis but also take
responsibility for monitoring product quality.
With all workers divided into self-managed work groups, what role do managers
play in the new factory? At NUMMI, a manager’s job is defined explicitly in
terms of providing workers with support. In the new work system, the manager’s role
is not to directly monitor or supervise group activities but to find new ways to facilitate
these activities and give a group advice on how to improve work procedures. In
setting up NUMMI’s organization, the plant’s upper management gave each group
the authority to make its own decisions; however, group members and management
are jointly responsible for coordinating and controlling work activities to maintain
and improve organizational performance. Why did employees buy into this new
work system? A number of factors came into play: NUMMI’s no-layoff policy, extensive
worker training, and the use of flexible work groups, which give workers, not
managers, control over how things are done on the production line.5
In May 1997, the NUMMI plant produced its 3-millionth vehicle, and it
received J. D. Powers & Associates’ Bronze Plant Award for quality. In 1999,
General Motors and Toyota signed a new five-year cooperative agreement to work
on advanced technology vehicles, one result of which was the innovative new Toyota
Echo model introduced in 2000.6 At NUMMI, a new approach to managing behavior
has increased performance and well-being for workers and the organization, and
both managers and workers are committed to working together to continually
improve performance. ■
At the reopened Fremont plant, action to improve performance was possible
only when managers realized the need to rethink the way they managed organizational
behavior at all three levels of analysis. First, upper management changed organizational-level
characteristics by moving from a system in which managers analyzed
and controlled jobs and work processes to one in which self-managed teams controlled
all aspects of a given task. At the group level, each team was given the authority
and responsibility for designing group members’ tasks and for monitoring and
controlling members’ behavior. At the individual level, work-group members
became responsible for learning a wider range of tasks and for monitoring their own
performance level so that performance could be increased at all levels in the plant. As
the NUMMI story shows, the effective management of organizational behavior
requires managers and workers alike to consider the impacts and effects of individual,
group, and whole-organization characteristics as they try to achieve organizational
goals. It requires them to continuously evaluate and find new and improved
ways of managing organizational behavior to improve performance.
■ ■ ■
ORGANIZATIONAL BEHAVIOR AND MANAGEMENT
A working knowledge of organizational behavior is important to individuals at all
levels in the organization because it helps them to appreciate the work situation and
how they should behave to achieve their own goals (such as promotion or higher
income). But knowledge of organizational behavior is particularly important to managers.
A significant part of a manager’s job is to use the findings of organizational

Organizational effectiveness
The ability of an organization to
achieve its goals.
Management
The process of planning, organizing,
leading, and controlling an
organization’s human, financial,
material, and other resources to
increase its effectiveness.
Manager
Any person who supervises one or
more subordinates.
Top-management team
High-ranking executives who plan
a company’s strategy so that the
company can achieve its goals.
Chapter 1
Organizational Behavior and Management
11
behavior researchers, and the tools and techniques they have developed, to increase
organizational effectiveness, the ability of an organization to achieve its goals.
Management is the process of planning, organizing, leading, and controlling
an organization’s human, financial, material, and other resources to increase its
effectiveness. A manager is anybody who supervises one or more subordinates. Lou
Gerstner, CEO of International Business Machines Corporation (IBM), for example,
is IBM’s top manager; he has ultimate responsibility for all 150,000 of IBM’s
employees. The sales manager of IBM’s southern region, who controls 300 salespeople,
is also a manager, as is the manager (or supervisor) in charge of an IBM computer
service center who supervises five service technicians.
Managers at all levels confront the problem of understanding and managing
the behavior of their subordinates. Gerstner has to manage IBM’s top-management
team, high-ranking executives who plan the company’s strategy so that it can achieve
its goals. The sales manager has to manage the sales force so that it sells the mix of
mainframe, mini, and personal computers that best meet customers’ informationprocessing
needs. The service manager has to manage technicians so that they
respond promptly and courteously to customers’ appeals for help and quickly solve
their problems. (Traditionally, IBM has been well known for its high-quality customer
service and responsiveness.)
Each of these managers faces the common challenge of finding ways to help
the organization achieve its goals. A manager who understands how individual,
group, and organizational characteristics affect work attitudes and behavior can begin
to experiment to see whether changing one or more of these characteristics might
increase the effectiveness of the organization and the individuals and groups that
comprise it. The study of organizational behavior helps managers meet the challenge
of improving organizational effectiveness by providing them with a set of tools:
■
■
■
A manager can work to raise a worker’s self esteem or beliefs about his or
her ability to accomplish a certain task in order to increase the worker’s
productivity or job satisfaction.
A manager can change the reward system to change workers’ beliefs about
the extent to which their rewards depend on their performance.
A manager can change the design of a person’s job or the rules and procedures
for doing the job to reduce costs, make the task more enjoyable, or
make the task easier to perform.
Managerial Functions and Roles
As we mentioned earlier, the four principal functions or duties of management are
planning, organizing, leading, and controlling human, financial, material, and other
resources to allow an organization to achieve its goals. 7 And, as our examples
showed, managers knowledgeable about organizational behavior are in a good position
to improve their ability to perform these functions (see Figure 1.3).
Planning
Deciding how best to allocate and
use resources to achieve organizational
goals.
Planning. In planning, managers establish their organization’s strategy—that is,
they decide how best to allocate and use resources to achieve organizational goals. At
Southwest Airlines, for example, CEO Herb Kelleher’s strategy is based on the goal
of providing customers with low-priced air travel. 8 To accomplish this goal,
Southwest uses its resources efficiently. For example, Southwest uses only one kind
of plane, the Boeing 737, to keep down operating, training, and maintenance costs;
employees cooperate and share jobs when necessary to keep down costs; and its use
of the Internet is state of the art and one of the easiest to use in the industry.

12
Chapter 1 Organizational Behavior and Management
FIGURE 1.3
Four Functions
of Management
Planning is a complex and difficult task because a lot of uncertainty normally
surrounds the decisions managers need to make. Because of this uncertainty, managers
face risks when deciding what actions to take. A knowledge of organizational
behavior can help improve the quality of decision making, increase the chances of
success, and lessen the risks inherent in planning and decision making. First, the
study of organizational behavior reveals how decisions get made in organizations and
how politics and conflict affect the planning process. Second, the way in which
group decision making affects planning and the biases that can influence decisions
are revealed. Third, the theories and concepts of organizational behavior show how
the composition of an organization’s top-management team can affect the planning
process. The study of organizational behavior, then, can improve a manager’s planning
abilities and increase organizational performance.
Organizing
Establishing a structure of relationships
that dictate how members of
an organization work together to
achieve organizational goals.
Leading
Encouraging and coordinating
individuals and groups so that all
organizational members are working
to achieve organizational goals.
Organizing. In organizing, managers establish a structure of relationships that dictate
how members of an organization work together to achieve organizational goals.
Organizing involves grouping workers into groups, teams, or departments according
to the kinds of tasks they perform. At IBM, for example, service technicians are
grouped into a service operation department, and salespeople are grouped into the
sales department. In the NUMMI example, we saw how workers were grouped into
self-managed work groups, and in Schlumberger how virtual teams are used.
Organizational behavior offers many guidelines on how to organize employees
(the organization’s human resources) to make the best use of their skills and capabilities.
In later chapters, we discuss various methods of grouping workers to enhance
communication and coordination while avoiding conflict or politics. At Southwest
Airlines, for example, although employees are members of particular departments
(pilots, flight attendants, baggage handlers), they are expected to perform one
another’s nontechnical jobs when needed.
Leading. In leading, managers encourage workers to do a good job (work hard,
produce high-quality products) and coordinate individuals and groups so that all
organizational members are working to achieve organizational goals. The study of
different leadership methods and of how to match leadership styles to the characteristics
of the organization and all its components is a major concern of organizational
behavior. At Southwest Airlines, for example, Herb Kelleher and his managers join

Chapter 1
Organizational Behavior and Management
13
with employees once a year to perform basic organizational tasks like passenger
check-in and baggage handling to demonstrate Southwest’s team approach to leading
employees.
Controlling
Monitoring and evaluating individual,
group, and organizational performance
to see whether organizational
goals are being achieved.
Controlling. In controlling, managers monitor and evaluate individual, group, and
organizational performance to see whether organizational goals are being achieved.
If goals are being met, managers can take action to maintain and improve performance;
if goals are not being met, managers must take corrective action. The controlling
function also allows managers to evaluate how well they are performing their
planning, organizing, and leading functions.
Once again, the theories and concepts of organizational behavior allow managers
to understand and accurately diagnose work situations in order to pinpoint
where corrective action may be needed. Suppose the members of a group are not
working effectively together. The problem might be due to personality conflicts
between individual members of the group, to the faulty leadership approach of a
supervisor, or to poor job design. Organizational behavior provides tools managers
can use to diagnose which of these possible explanations is the source of the problem,
and it enables managers to make an informed decision about how to correct the
problem. Control at all levels of the organization is impossible if managers do not
possess the necessary organizational behavior tools.
The way in which Marjorie Scardino transformed her company after several
years of declining performance vividly demonstrates not only the importance of the
management control function but also the way successful planning, organizing, and
leading depend on a manager’s ability to take quick corrective action. (See Insight 1.2.)
INSIGHT M A N A G E M E N T 1.2
BIG CHANGES AT PEARSON
In 1995, Britain’s Pearson PLC owned companies as different
as the London-based Financial Times and The Economist magazine,
Madame Tussaud’s Wax Museum, Royal Doulton
China, Lazard Freres investment bank, and U.S. textbook
publisher Addison-Wesley. Perhaps not surprisingly, Pearson’s managers were having
a difficult time planning and controlling the activities of these diverse businesses,
and the company’s performance was declining as a result. Searching for a way to turn
the company around, Pearson’s chairman decided to appoint Marjorie Scardino, the
chief executive of Pearson’s Economist Group, as the CEO of the whole Pearson
company.
Scardino, a native Texan, who includes among her earlier activities operating a
Gulf Coast shrimp boat and managing a Savannah law firm, took a radical new
approach to managing Pearson. She began with a whole new approach to planning
Pearson’s operations. She decided that henceforth Pearson would solely be a media
and publishing group with cutting-edge Internet-based applications in all its businesses.
9 She moved quickly to sell Pearson’s nonmedia assets such as Madame
Tussaud’s (which was sold to Walt Disney) and Royal Doulton (which was sold to the
Wedgwood-Waterford Group). She then used the proceeds of these sales to make
over $5 billion in media and publishing acquisitions including Putnam books and
Prentice Hall (the publisher of this book). Then, she combined these new businesses

14
Chapter 1 Organizational Behavior and Management
Marjorie Scardino (pictured here
with Dennis Stevenson, Chairman
Pearson PLC) has been responsible
for turning around the performance
of media giant, Pearson
Education. Prentice Hall, the publisher
of this book, is one of
Pearson’s divisions and Scardino
has made the development of new
multimedia products one of the
division’s major goals.
with Pearson’s other publishing businesses to
create industry-leading media companies or
divisions. To date, this new strategy has had
great success and sales and revenues have
soared.
Scardino’s approach to organizing also
changed the way Pearson operated. In order
to quickly take advantage of the opportunities
offered by the Internet and new information
technology, Scardino created a new
organizing plan for the divisions that forced
them to cooperate to jointly develop new
products, such as electronic books that can
be downloaded from the Internet, to offer
online customers. She also created clear lines
of communication both within each division
and between divisions to speed the pace of
product development and to create new
products for customers. This new approach to organizing has paid off as many new
traditional and internet-based products and services have been introduced and sales
have increased dramatically.
Finally, Scardino adopted a very up-front and visible approach to managing the
company. She takes advantage of new information technology to continually update
all the company’s managers on her plans for the company and to ensure they understand
how their activities mesh with those of the other divisions. Most recently,
Scardino announced a new alliance with America Online to develop the Education
Network, an Internet-based community that will link Pearson’s educational divisions
directly with schools, teachers, parents, and school boards across the United States;
and America Online announced that it would provide its online services for free to
schools across the country. 10 Scardino’s flair and drive for making the most of
Pearson’s resources is communicated clearly to managers and her leadership style is
best summed up in her own words when she says, “Running a successful media group
is all about accepting a process of continual change.” Finally, Scardino wants everyone
in Pearson to be a shareholder because she believes it to be better to be an owner
than an employee. She also believes that “People want to work for a company that
cares for what they care about, doing something they think is important and having
a good time.” 11 In today’s fast-moving electronic world, managing organizational
behavior has never been more of a challenge for leaders and managers. ■
Managerial Roles
Role
A set of behaviors or tasks a person
is expected to perform because of
the position he or she holds in a
group or organization.
Skill
An ability to act in a way that
allows a person to perform well in
his or her role.
Managers perform their four functions by assuming specific roles in organizations. A
role is a set of behaviors or tasks a person is expected to perform because of the position
he or she holds in a group or organization. One researcher, Henry Mintzberg,
has identified 10 roles that managers play as they manage the behavior of people
inside and outside the organization (such as customers or suppliers). 12 (See Table 1.1.)
Managerial Skills
Just as the study of organizational behavior provides tools that managers can use to
increase their ability to perform their functions and roles, it can also help managers
improve their skills in managing organizational behavior. A skill is an ability to act in

Chapter 1
Organizational Behavior and Management
15
TABLE 1.1 Managerial Roles Identified by Mintzberg
TYPE OF ROLE
Figurehead
Leader
Liaison
Monitor
Disseminator
Spokesperson
Entrepreneur
Disturbance handler
Resource allocator
Negotiator
EXAMPLES OF ROLE ACTIVITIES
Give speech to work force about future organizational goals
and objectives; open a new corporate headquarters building;
state the organization’s ethical guidelines and principles of
behavior that employees are to follow in their dealings with
customers and suppliers.
Give direct commands and orders to subordinates; make
decisions concerning the use of human and financial organizational
resources; mobilize employee commitment to organizational
goals.
Coordinate the work of managers in different departments
or even in different parts of the world; establish alliances
between different organizations to share resources to produce
new products.
Evaluate the performance of different managers and departments
and take corrective action to improve their performance;
watch for changes occurring in the industry or in
society that may affect the organization.
Inform organizational members about changes taking place
both inside and outside the organization that will affect
them and the organization; communicate to employees the
organization’s cultural and ethical values.
Launch a new organizational advertising campaign to promote
a new product; give a speech to inform the general
public about the organization’s future goals.
Commit organizational resources to a new project to
develop new products; decide to expand the organization
globally in order to obtain new customers.
Move quickly to mobilize organizational resources to deal
with external problems facing the organization, such as
environmental crisis, or internal problems facing the organization,
such as strikes.
Allocate organizational resources between different departments
and divisions of the organization; set budgets and
salaries of managers and employees.
Work with suppliers, distributors, labor unions, or employees
in conflict to solve disputes or to reach a long-term contract
or agreement; work with other organizations to establish
an agreement to share resources.
Conceptual skills
The ability to analyze and diagnose
a situation and to distinguish
between cause and effect.
a way that allows a person to perform well in his or her role. Managers need three
principal kinds of skill in order to perform their organizational functions and roles
effectively: conceptual, human, and technical skills. 13
Conceptual skills allow a manager to analyze and diagnose a situation and to
distinguish between cause and effect. Planning and organizing require a high level of

16
Chapter 1 Organizational Behavior and Management
Human skills
The ability to understand, work
with, lead, and control the behavior
of other people and groups.
Technical skills
Job-specific knowledge and techniques.
conceptual skill, as do the decisional roles discussed above. The study of organizational
behavior provides managers with many of the conceptual tools they need to
analyze organizational settings and to identify and diagnose the dynamics of individual
and group behavior in these settings.
Human skills enable a manager to understand, work with, lead, and control
the behavior of other people and groups. The study of how managers can influence
behavior is a principal focus of organizational behavior, and the ability to learn and
acquire the skills that are needed to coordinate and motivate people is a principal difference
between effective and ineffective managers.
Technical skills are the job-specific knowledge and techniques that a manager
requires to perform an organizational role (e.g., manufacturing, accounting, or marketing).
The specific technical skills a manager needs depend on the organization the
manager is in and on his or her position in the organization. The manager of a
restaurant, for example, needs cooking skills to fill in for an absent cook, accounting
and bookkeeping skills to keep track of receipts and costs and to administer the payroll,
and artistic skills to keep the restaurant looking attractive for customers.
Effective managers need all three kinds of skills—conceptual, human, and
technical. The lack of one or more of these skills can lead to a manager’s downfall.
One of the biggest problems that entrepreneurs who found their own businesses
confront—a problem that is often responsible for their failure—is lack of appropriate
conceptual and human skills. Similarly, one of the biggest problems that scientists,
engineers, and others who switch careers and go from research into management
confront is their lack of effective human skills. Management functions, roles, and
skills are intimately related, and in the long run the ability to understand and manage
behavior in organizations is indispensable to any actual or prospective manager.
■ ■ ■
CHALLENGES FOR ORGANIZATIONAL BEHAVIOR AND MANAGEMENT
In the last 10 years, the challenges facing managers in effectively utilizing human
resources and managing organizational behavior have been increasing. Among
these challenges, those stemming from changing forces in the technological, global,
and social or cultural environments stand out. As mentioned previously, the impact
of new information technologies such as the internet and intranet has dramatically
changed the way organizations manage and utilize their human resources. With
information more accurate, plentiful, and freely available and as the use of computers
increasingly takes over routine tasks, employees have more time to engage in
constructive, innovative activities. Indeed, the use of modern information technologies
has increased the degree to which employees can engage in creative, workexpanding
kinds of activities such as finding ways to give customers better service or
to find better way of performing a task. Indeed, managing organizational behavior
to allow employees to act creatively is a major challenge facing organizations that
wish to survive and prosper in today’s highly competitive world, as we discuss
below. 14
Challenges from technology are ones that derive from changing social conditions.
For example, in the last 10 years the number of women and minorities assuming
managerial positions in the workforce has increased by over 25 percent.
Similarly, in the last decade, companies have come under increasing scrutiny because
of ethical concerns about the safety of the products they produce and their employment
policies toward the people who make those products both in the United States
and abroad. Organizations have also been facing increased global competition from
low-cost countries like Malaysia and China, and technological change has significantly
reduced the employment opportunities for U.S. manufacturing workers.

Chapter 1
Organizational Behavior and Management
17
These technological, social, and cultural changes taking place in the world today
pose many challenges for the men and women whose jobs require them to manage
organizational behavior:
■
■
■
■
How to use new information technologies to increase employee creativity
and organizational learning.
How to manage human resources to give an organization a competitive
advantage.
How to develop an ethical organizational culture
How to manage workforce diversity
■ How to manage organizational behavior when an organization expands
internationally and operates at a global level
We introduce these five challenges here in Chapter 1 and examine them
throughout the rest of the book.
■ ■ ■
CHALLENGE 1: USING NEW INFORMATION TECHNOLOGY TO ENHANCE
CREATIVITY AND ORGANIZATIONAL LEARNING
Creativity is the decision-making process that produces novel and useful ideas, ideas
that lead to new or improved goods and services or to improvements in the way that
they are produced. Today, using new information technologies to help people and
groups to be creative and enhance organizational performance is a major management
task. By 1991, U.S. companies spent more on IT than any other form of investment;
by 2000, this spending doubled again from $80 billion to $160 billion a year
and is forecast to double again in the next five years. 15 Information technology
encompasses a broad array of communication media including voice mail, e-mail,
voice conferencing, videoconferencing, the Internet, groupware and corporate
intranets, car phones, fax machines, personal digital assistants, intelligent agents, and
so on. By providing employees with easy and flexible access to stored and current
information, IT promotes learning, allows for the easy exchange of know-how, and
facilitates problem solving. 16 Insight 1.3 offers some examples of how IT can help
organizations speed communication and decision making and promote creativity and
organizational learning.
INSIGHT I N F O R M A T I O N T1.3
E C H N O L O G Y
HOW IT CAN ENHANCE INDIVIDUAL
AND GROUP LEARNING
In an effort to reduce costs, the textile fibers division of Du
Pont, the giant chemical company, adopted early retirement
incentives to reduce its workforce. Unexpectedly, about half
of the division’s middle managers decided to take the early retirement package. At
first, the division’s top managers panicked, wondering how work could get one if
everyone left at the same time. But the division had recently installed an e-mail system
and a corporate intranet that supplied employees with most of the information
they needed to perform their tasks. Employees began to use it heavily and learned to

18
Chapter 1 Organizational Behavior and Management
Here, a marketing manager in New
York is using video teleconferencing
to communicate to a research
and development team in Silicon
Valley their marketing vision for a
new product launch. Such interactive
sessions greatly speed decision
making and enhance performance.
make their own decisions, and over time the
IT came to replace the division’s traditional
reporting structure as a main means of control
and actually speeded communication
and decision making. 17
The advertising company, Chiat/Day,
provides a vivid example of the use of IT to
facilitate the development of new organizational
skills. Undoubtedly, an advertising
agency’s core competence involves heavy
reliance on employees’ creativity, and
Chiat/Day developed a sophisticated computer
network to promote collaboration
between employees and departments. No
longer is information moved physically from
person to person, but it is posted in the system
and the computer notifies the right person
that a file or advertising copy has been
delivered to them. As a result, their old giant manila sacks and huge mechanical files
have been replaced by “electronic job jackets” containing all needed information and
digitized photographs.18 Legal reviews and proofreading comments are added electronically
and relayed automatically to the central file. This procedure has completely
eliminated the traditional role of managers and greatly increased operational
efficiency.
Hewlett-Packard (HP) uses laser printer engines developed and manufactured
by Canon as a core component of its laser printers. Recently, HP introduced a revolutionary
new printer, the VidJet Pro, which has required that specialists from each
firm become more integrated with each other so that they can learn more about each
other’s activities and problems.19 To achieve this, HP and Canon routinely use
e-mail and voice mail to integrate their activities, yet as HP became more involved in
the design of laser engines, and Canon in the design of better printers, richer modes
of communication were required. Not wanting to sacrifice the time requirements of
constant face-to-face meetings, both firms now rely on groupware, the Internet, and
videoconferencing. Only with such technologies can designers and engineers meet
in real time, or close to it, in order to exchange and discuss product specifications,
prototype models, and so on. ■
As these examples suggest, there are many ways in which managers can use IT
at all levels in the organization, between departments and divisions of the organization
and between organizations to enhance learning, speed decision making, and
promote creativity and innovation. Throughout this book, you will find many more
examples of how this takes place as well as in-depth discussion of the importance of
facilitating learning and creativity in managing organizational behavior today.
■ ■ ■
CHALLENGE 2: MANAGING HUMAN RESOURCES TO INCREASE
COMPETITIVE ADVANTAGE
The ability of an organization to produce goods and services that its customers want
is a product of the behaviors of all its members—the behaviors of its top-management
team, which plans the organization’s strategy; the behaviors that middle managers
use to manage and coordinate human and other resources; and the behaviors of

Competitive advantage
The ability to outperform competitors
or other organizations that
provide similar goods and services.
Chapter 1
Organizational Behavior and Management
19
first-line managers or supervisors and production workers. An organization seeking
to obtain a competitive advantage—that is, the ability to outperform competitors
or other organizations that provide similar goods and services—can do so by pursuing
any or all of the following goals: (1) increasing efficiency, (2) increasing quality,
(3) increasing innovation and creativity, (4) increasing responsiveness to customers. 20
The study of organizational behavior can help managers achieve these goals, each of
which is a part of managing human resources to gain a competitive advantage (see
Figure 1.4).
Increasing Efficiency
Organizations increase their efficiency when they reduce the amount of resources
such as people and raw materials they need to produce a quantity of goods or services.
For example, McDonald’s Corporation developed a fat fryer that not only
speeds up the cooking time of french fries but also reduces by 30 percent the amount
of oil used in the cooking process. In today’s increasingly competitive environment,
organizations are trying to increase efficiency by finding ways to better utilize and
increase the skills and abilities of their workforce. Many organizations train their
workforce in new skills and techniques such as those needed to operate increasingly
computerized assembly plants. Similarly, cross-training workers so that they learn
the skills necessary to perform many different tasks (as they do at Southwest Airlines)
and finding new ways of organizing workers so that they can use their skills more
efficiently are major parts of the effort to improve efficiency. Many organizations,
like NUMMI, are creating self-managed work groups that are collectively responsible
for finding cost-reducing ways to perform their jobs.
The global competitive challenge facing U.S. organizations is increasing the
need to invest in the skills of the workforce, because better-trained workers can make
better use of new technology. Organizations in Japan, Germany, and some other countries
make a long-term investment in the form of a guarantee of lifetime employment.
During their employment, employees develop skills specific to that organization and
help provide it with a competitive advantage. By contrast, U.S. organizations have traditionally
invested less money in training their workers. But now, with advances in
technology requiring a more skilled workforce, many U.S. organizations are increasing
their investment in their human capital by training new and existing employees.
FIGURE 1.4
How to Manage Human
Resources to Gain a
Competitive Advantage

20
Chapter 1 Organizational Behavior and Management
Many organizations also need to increase their efficiency to survive against
low-cost competition from factories in countries like Mexico or Malaysia, where
workers are paid only $5 a day. Many jobs have already been lost to low-cost nations,
and if further job losses are to be prevented, new ways must be found to encourage
workers to increase efficiency. In this as in many other areas, pressures from the
global environment have increased the pressure on organizations in the United
States to find new ways to increase efficiency.
Cross-functional teams
Teams consisting of workers from
different functions who pool their
skills and knowledge to produce
high-quality goods and services.
Increasing Quality
The challenge from global organizations such as Japanese car manufacturers and
garment factories in Malaysia and Mexico has also increased pressure on U.S. companies
to improve the skills of their workforces so that they can increase the quality
of the goods and services they provide. One major trend in the attempt to increase
quality has been the introduction and expansion in the United States of the total
quality management (TQM) techniques developed in Japan. In an organization dedicated
to TQM, for example, workers are often organized into teams or quality control
circles that are given the responsibility to continually find new and better ways
to perform their jobs and to monitor and evaluate the quality of the goods they produce
(just as in the NUMMI plant). 21 Many organizations pursuing TQM have also
sought to improve product quality by forming cross-functional teams in which
workers from different functions such as manufacturing, sales, and purchasing pool
their skills and knowledge to find better ways to produce high-quality goods and services.
22 Total quality management involves a whole new philosophy of managing
behavior in organizations, and we discuss this approach in detail in Chapter 19 when
we discuss organizational change and development.
Increasing Innovation
U.S. companies are among the most innovative companies in the world, and innovation
is the direct result or outcome of the level of creativity and organizational learning,
as discussed above. Innovation has been
defined as “the process of bringing any new
problem-solving ideas into use. Ideas for
reorganizing, cutting costs, putting in new
budgeting systems, improving communications,
or assembling products in teams are
also innovations.” 23 Typically, innovation
takes place in small groups or teams—real or
virtual—and to encourage it, an organization
and its managers give control over work
activities to team members and create an
organizational setting and culture that
reward risk taking. Understanding how to
manage innovation and creativity is one of
the most difficult challenges that managers
face. It especially taxes managers’ human
skills, because creative people tend to be
Teamwork led to innovation at Davidson Interiors, a division of Textron. One
team innovated a new product called Flexible Bright, a coating that makes plastic
look exactly like chrome, but does not rust or scratch. Here, the members of
the team are shown holding grills coated with the new product, which Ford uses
in many of its cars.
among the most difficult to manage. One
reason that Euan Baird leads Schlumberger
is that he has a strong track record in using
IT to speed the innovation process.

Chapter 1
Organizational Behavior and Management
Increasing Responsiveness to Customers
21
Because organizations compete for customers, training workers to be responsive to
customer needs is important for all organizations but particularly for service organizations.
Organizations such as retail stores, banks, and hospitals depend entirely on
their employees’ performing behaviors that result in high-quality service at reasonable
cost. As the United States has moved to a service-based economy (in part
because of the loss of manufacturing jobs abroad), managing behavior in service
organizations has become an increasingly important area of study. 24
Reengineering
A complete rethinking and
redesign of business processes to
increase efficiency, quality, innovation,
or responsiveness to customers.
Restructuring
Altering an organization’s structure
by such actions as eliminating a
department.
Outsourcing
Acquiring goods or services from
sources outside the organization.
Freelancers
Independent individuals who contract
with an organization to perform
specific services.
New Ways to Increase Performance
Investing in employee skills and abilities to increase organizational performance is
not the only way U.S corporations have responded to an increasingly competitive
global environment. To reduce costs and increase efficiency, some companies have
responded by reengineering and restructuring their organizations. Reengineering
involves a complete rethinking and redesign of business processes to increase efficiency,
quality, innovation, or responsiveness to customers. A company that engages
in reengineering examines the business processes it uses to produce goods and services
(such as the way it organizes its manufacturing, sales, or inventory), and the way
its business processes interact and overlap, to see whether a better way of performing
a task can be found. 25 Today, the use of new information technology plays a major
part in most reengineering efforts. 26
A company that engages in restructuring makes a major change in an organization’s
structure, such as eliminating a department or reducing the number of layers
of management, to streamline the organization’s operations and reduce costs.
Restructuring and reengineering often result in many workers’ being laid off. The
smaller workforces that remain are retrained to increase efficiency; once again using
new information technology, they learn how to perform at a higher level, and they
learn new skills. Organizational behavior researchers have been interested in the
effects of layoffs not only on workers who lose their jobs but also on employees who
remain in the organization. General Motors and IBM are among the organizations
that have laid off hundreds of thousands of employees in their efforts to increase
organizational performance.
To reduce costs, many organizations do not rehire laid-off workers as full-time
employees even when demand for their products picks up; instead, they employ parttime
workers, who can be given lower wages and fewer benefits. It has been estimated
that 20 percent of the U.S workforce today consists of part-time employees
who work by the day, week, month, or even year for their former employers. Parttime
workers pose a new challenge for managers’ human skills because part-time
workers cannot be motivated by the prospect of rewards such as job security, promotion,
or a career within an organization.
Organizations are also engaging in an increasing amount of outsourcing.
Many organizational tasks are performed not within the organization but on the outside,
by freelancers. Freelancers are independent individuals who contract with an
organization to perform specific services; they often work from their homes and are
connected to an organization by computer, phone, fax, and express package delivery.
Because freelancing is expected to increase as organizations outsource more and
more of their tasks to reduce costs, managers will face new kinds of problems in their
efforts to manage organizational behavior.
Reengineering, restructuring, downsizing, hiring part-time workers, and outsourcing
are just a few of the many new ways in which organizations are utilizing human
resources to reduce costs and compete effectively against domestic and global competi-

22
Chapter 1 Organizational Behavior and Management
tors. Several organizational behavior researchers believe that organizations in the future
will increasingly become composed of a “core” of organizational workers who are
highly trained and rewarded by an organization and a “periphery” of part-time or freelance
workers who are employed when needed but will never become true “organizational
employees.” In the years ahead, managing an organization’s human resources to
increase performance will be a continuing challenge. The way in which John Deere has
been meeting this challenge over the last decade is instructive. (See Insight 1.4.)
INSIGHT C O M P E T I T I V E A1.4
D V A N T A G E
JOHN DEERE FINDS NEW USES
FOR ITS EMPLOYEES
Pictured is a John Deere production
worker who is taking on the
role of a salesperson and talking
to farmers about the innovations
in a new John Deere tractor model
at one of the many trade shows
that Deere attends to display its
products.
In the early 1990s, John Deere was losing millions of dollars;
by 1994, its profits exceeded $400 million and have been
increasing since. 27 How has Deere’s startling turnaround
been achieved? According to CEO Hans W. Becherer, Deere has taken advantage of
the skills and capabilities of its workers to increase efficiency and
raise quality. Many of Deere’s problems stemmed from a competitive
environment. Caterpillar and Komatsu were ruthlessly cutting
prices to battle with Deere for a share of the dwindling agricultural
machinery market. To survive, Deere was forced to downsize.
After laying off managers and employees, Deere realized it had to
find a way to make better use of the skills of the employees who
remained.
Deere undertook to teach its manufacturing workers new
skills. It installed sophisticated, computerized production-line
technology and trained workers to operate it. Deere also sought to
improve its manufacturing by grouping workers into teams whose
goal included finding new ways to reduce costs and increase quality.
28 Deere was not content merely with improving workers’ skills
in manufacturing; it also began to teach them new skills that would
help them to find ways to increase efficiency and improve performance.
For example, Deere realized that manufacturing workers,
with their detailed knowledge about how Deere products work,
could become persuasive salespeople. Groups of production workers
were given training in sales techniques and were sent to visit
Deere customers to explain to them how to operate and service the
organization’s new products. While speaking with customers,
these new “salespeople” were able to collect information that will
help Deere further reduce costs and develop new products that
will appeal to customers. The new sales jobs are temporary.
Workers go on assignment but then return to the production line, where they use
their new knowledge to find ways to improve efficiency and quality.
These moves to empower employees have been so successful that Deere negotiated
a new agreement with its workers, which specifies that pay increases will be
based on workers’ learning new skills and completing college courses in areas such as
computer programming that will help the company increase efficiency and quality.

Chapter 1
Organizational Behavior and Management
23
No longer will seniority be the main determinant of pay, as it is in some unionized
workplaces. 29 Deere’s new policy of empowering its workforce has benefits for workers
and for the organization as a whole. Workers recognize the connection between
these changes and their job security. The increases in efficiency and quality enable
Deere to regain control of its share of the agricultural machinery market. And the
satisfaction that workers feel when they have the opportunity to utilize new skills and
develop new capabilities increases their commitment to the company and to helping
it succeed. ■
■ ■ ■
CHALLENGE 3: DEVELOPING ORGANIZATIONAL ETHICS
AND WELL-BEING
Ethics
Rules, beliefs, and values that outline
the ways in which managers
and workers should behave.
Well-being
The condition of being happy,
healthy, and prosperous.
An organization’s ethics are rules, beliefs, and values that outline the ways managers
and workers should behave when confronted with a situation in which their actions
may help or harm other people inside or outside an organization. 30 Ethical behavior
enhances the well-being (the happiness, health, and prosperity) of individuals,
groups, and the organization, and sometimes the environment in which they operate.
31 Ethical behavior can enhance well-being in several ways.
Ethics establish the goals that organizations should pursue and the way in
which people inside organizations should behave to achieve them. 32 For example,
one goal of an organization is to make a profit so that it can pay the managers, workers,
suppliers, shareholders, and others who have contributed their skills and
resources to the company. Ethics specify what actions an organization should engage
in to make a profit. Should an organization be allowed to harm its competitors by
stealing away their skilled employees or by preventing them from obtaining access to
vital inputs? Should an organization be allowed to produce inferior goods that may
endanger the safety of customers? Should an organization be allowed to take away
the jobs of U.S. workers and transfer them overseas to workers in countries where
wages are $5 per day? What limits should be put on organizations’ and their managers’
attempt to make a profit? And who should determine those limits?
The devastating effects of a lack of ethics is illustrated by the way an airline
crash occurred when managers and workers acted unethically and put profit before
safety. The Ethics Insights in this and other chapters show how managers respond to
the ethical challenge. (See Insight 1.5.)
INSIGHT E T H I C S 1.5
THE VALUJET AIRLINE CRASH DISASTER
In On May 11, 1996, a cargo fire broke out on a ValuJet flight
from Miami to Atlanta and the plane crashed into the Florida
Everglades, killing all 105 passengers and five crew members.
This crash was not an accident, however; it occurred as the
direct result of unethical behavior of a company’s employees’ putting profit over
public safety.

24
Chapter 1 Organizational Behavior and Management
Gregory Feith, senior air safety
investigator, looks at wreckage
from the crash of ValuJet Flight
592 being collected in a hanger at
Miami Airport.
Investigators discovered that the cause of
the crash was that oxygen canisters had not been
fitted with the required safety caps that would
have prevented the canisters from opening. The
oxygen canisters ignited, causing the fire that
brought down the plane. Why were the safety
caps not fitted? Because managers of the
Sabretech aircraft company had pressured two
mechanics to save money by not installing the
caps and then falsely labeling them as empty.
The cost of the caps? $9.16.33 The cost of this
unethical behavior? The deaths of 110 people.
In 1999, Sabretech’s managers and workers
were indicted on criminal charges for their
part in the disaster. Sabretech is no longer in
business, and ValuJet also was grounded because
investigators believed its lax safety procedures
were partly responsible for the incident. No
party gains when organizations or their managers
act unethically or illegally. Managers are directly responsible for developing
and maintaining ethical work practices that ensure the well-being and safety of people
both inside and outside the organization. ■
Social responsibility
An organization’s moral responsibility
toward individuals or groups
outside the organization that are
affected by its actions.
In addition to defining right and wrong behavior for employees, ethics also
define an organization’s social responsibility, or moral responsibility toward individuals
or groups outside the organization that are directly affected by its actions. 34
Organizations and their managers must establish an ethical code that describes
acceptable behaviors and must create a system of rewards and punishments to
enforce ethical codes.
Different organizations have different views about social responsibility. To some
organizations, being socially responsible means performing any action as long as it is
legal. Other organizations do more than the law requires and work to advance the
well-being of their employees, customers, and society in general. 35 Ben & Jerry’s
Homemade, Inc., for example, contributes a significant percentage of its profits to
support charities and community needs and expects its employees to be socially active
and responsible. Green Mountain Coffee Roasters seeks out coffee-growing farmers
and cooperatives that do not use herbicides and pesticides on their crops, that control
soil erosion, and that treat their workers fairly and with respect in terms of safety and
benefits. Green Mountain also contributes a share of its profits for health and education
in Costa Rica and other countries from which it buys coffee beans. Many Subway
sandwich shops have specified hours when they give free sandwiches to customers
who bring in canned goods to be given to food banks. Levi Strauss discovered that
two of its suppliers in Bangladesh were employing children under the age of 14 in violation
of International Labor Organization standards. Rather than requiring the contractors
to fire the children, many of whom were the sole breadwinners in their families,
Levi Strauss chose to pay for their education. They persuaded the suppliers to
continue to pay the children’s wages while they were in school and to guarantee that
their jobs would be waiting for them when they became of age.
Not all organizations are willing or able to undertake such programs, but all
organizations need codes of conduct that spell out fair and equitable behavior, if they

Chapter 1
Organizational Behavior and Management
25
want to avoid doing harm to people and other organizations. Developing a code of
ethics helps organizations protect their reputation and maintain the goodwill of their
customers and employees.
The challenge confronting managers is to create an organization in which
members resist the temptation to engage in illegal or unethical acts that promote
their own interests at the expense of the organization or promote the organization’s
interests at the expense of people and groups outside the organization. Workers and
managers have to recognize that their behavior has important effects not only on
other people and groups inside and outside the organization but also on the organization
itself. The well-being of organizations and the well-being of the society of which
they are a part are closely linked and are the responsibility of everyone. 36 (How to
create an ethical organization is an issue that we take up throughout the text.)
■ ■ ■
CHALLENGE 4: MANAGING A DIVERSE WORKFORCE
Diversity
Differences resulting from age,
gender, race, ethnicity, religion,
sexual orientation, and socioeconomic
background.
The fourth principal challenge is to understand how the diversity of a workforce
affects behavior, performance, and well-being. Diversity is differences resulting from
age, gender, race, ethnicity, religion, sexual orientation, and socioeconomic background.
If an organization or group is composed of people who are all of the same
gender, ethnicity, age, religion, and so on, the attitudes and behavior of its members
are likely to be very similar. Members are likely to share the same sets of assumptions
or values and will tend to respond to work situations (projects, conflicts, new tasks) in
similar ways. By contrast, if the members of a group differ in age, ethnicity, and other
characteristics, their attitudes, behavior, and responses are likely to differ.
In the last 20 years, the demographic makeup of employees entering the workforce
and advancing to higher-level positions in organizations has been changing
rapidly. Partly as a result of affirmative action and equal employment opportunity
legislation, the number of minority employees entering and being promoted to
higher-level positions has increased. 37 By the year 2005, African American and
Hispanic employees are expected to make up over 25 percent of the workforce, and
the percentage of white males is expected to decrease from 51 percent to 44 percent.
38 At the same time, the number of women entering the workforce has also been
increasing dramatically, and they are ascending to higher and higher positions in
management. 39 Finally, because of increased internationalization, diversity is evident
not just among Americans but also among people born in other nations who come to
the United States to live and work. They are expected to contribute significantly to
these totals by 2005. 40
The increasing diversity of the workforce presents three challenges for organizations
and their managers: a fairness and justice challenge, a decision-making and
performance challenge, and a flexibility challenge (see Figure 1.5).
Fairness and Justice Challenge
Jobs in organizations are a scarce resource, and obtaining jobs and being promoted
to a higher-level job is a competitive process. Managers are challenged to allocate
jobs, promotions, and rewards in a fair and equitable manner. As diversity increases,
achieving fairness can be difficult, at least in the short run, because many organizations
have traditionally appointed white male employees to higher organizational
positions. Also, seniority plays a role, and many minorities are recent hires. 41
Rectifying this imbalance by actively recruiting and promoting increasing numbers
of women and minorities can lead to difficult equity issues because this attempt to fix
the traditional imbalance reduces the prospects for white male employees. An

26
Chapter 1 Organizational Behavior and Management
FIGURE 1.5
The Challenge Posed
by a Diverse Workplace
Fairness
and justice challenge
Age
Gender
Capabilities/
Disabilities
Race
challenge
Flexibility challenge
Socioeconomic
background
Sexual
orientation
Religion
Ethnicity
Decision-making and
performance
increase in diversity can thus strain an organization’s ability to satisfy the aspirations
of its workforce, creating a problem that, in turn, directly affects the workforce’s
well-being and performance. Organizations must learn to manage diversity in a way
that increases the well-being of all employees, but deciding how to achieve this goal
can pose difficult ethical problems for managers. 42
Decision-Making and Performance Challenge
Another important challenge posed by a diverse workforce is how to take advantage
of differences in the attitudes and perspectives of people of different ages, genders,
or races, in order to improve decision making and organizational performance. 43
Many organizations have found that tapping into diversity reveals new ways of viewing
traditional problems and provides a means for an organization to assess its goals
and ways of doing business. Coca-Cola, for example, in an attempt to increase its top
managers’ abilities to manage a global environment, has deliberately sought to
recruit top managers of different ethnic backgrounds. Its CEO came from Cuba
originally, and other top managers are from Brazil, France, and Mexico. To increase
performance, organizations have to unleash and take advantage of the potential of
diverse employees. Union Bank of California has been a leader in exploiting the
advantages of a diverse workforce for the last decade. The Diversity Insights in this
and other chapters, particularly in Chapter 4, describe the management of diversity
in organizations. (See Insight 1.6.)

Chapter 1
INSIGHT D I V E R S I T Y 1.6
Organizational Behavior and Management
27
UNION BANK OF CALIFORNIA’S APPROACH
TO DIVERSITY
Bank of California employees
strive to provide great customer
service to meet the needs of their
diverse groups of customers.
Customer loyalty follows as customers
spread the good news
about the bank to their friends and
relatives.
With assets of $33.9 billion on June 30, 2000, Union Bank of
California, based in San Francisco, is the third largest commercial
bank in California and among the 30 largest banks in
the United States. 44 It has enjoyed huge success and growth
throughout the last 10 years, in large part because of the way it has
developed an approach to diversity that reflects the needs of its
employees, customers, and its environment.
Union Bank is based in one of the most diverse states in the
nation, California, where half the population is Asian, Black,
Hispanic, or gay. Recognizing this fact, the bank always had a policy
of seeking to hire and recruit diverse employees. However, it was
not until 1996 that the bank realized that it could use the diversity
of its employees to create a competitive advantage. In 1996, George
Ramirez, a vice president at Union Bank, suggested to the bank that
it should create a marketing group to develop a plan to attract customers
who were Hispanic like himself. So successful was this venture
that a group of African American employees decided that they
should create a marketing group to develop a marketing campaign
to attract new African American customers. After they enjoyed considerable
success in recruiting new customers, it was clear to Union
Bank’s managers that they should use the diversity of the bank’s
employees as a way of improving customer service so that, for
example, when customers walk into a bank branch in a predominantly
Latino neighborhood they will be greeted by a substantial
number of Latino empolyees. 45 Similarly, marketing campaigns
could be tailored to the needs of each different ethnic group.
The bank, like many other organizations, also discovered
that diversity can lead to competitive advantage because diverse
employees approach the same issue (e.g., how to attract customers) with very different
approaches and creating diverse teams of employees can help improve the quality
of decision making inside the organization. Furthermore, the bank found that as
its reputation as a good place for minorities to work increased, it began to attract
highly skilled and motivated minority job candidates so that it helped itself. As its
CEO Takahiro Moriguchi said in accepting a diversity award for the company, “By
searching for talent from among the disabled, both genders, veterans, all ethnic
groups and all nationalities, we gain access to a pool of ideas, energy, and creativity as
wide and varied as the human race itself. I expect diversity will become even more
important as the world gradually becomes a truly global marketplace.” 46 The bank
also shows its approach to diversity in the way it grooms women and minority
employees for promotion. More than four times as many women and minority
employees for promotion. More than four times as many women and twice as many
minorities are being targeted for promotion today than five years ago. 47
Will this approach to diversity hurt the pool of white employees? The answer
is no because Union Bank expects its approach to diversity to result in so much
growth and expansion that many new jobs will be created and in the end everyone
will benefit. ■

28
Chapter 1 Organizational Behavior and Management
Two other significant performance issues confront organizations with a diverse
workforce. First, research has found that many supervisors do not know how to manage
diverse work groups and find it difficult to lead diverse groups of employees.
Second, supervisors are often uncertain about how to handle the challenge of communicating
with employees whose cultural backgrounds result in assumptions, values, and
even language skills that differ from the supervisors’. 48 Various racial or ethnic groups
may respond differently to the demands of their job responsibilities or to the
approaches that leaders use to manage relationships in work groups. Age and gender
differences can also cause problems for managers, such as when younger employees
find themselves in a position of authority over older and perhaps more experienced
employees. Similarly, some men find it difficult to report to or be evaluated by women.
The mixing of generations, such as the baby-boom (1946–1964) and the baby-bust
generations (1965–1976), can also cause problems (as we discuss in Chapter 4).
If diversity produces conflict and distrust among organizational members,
individual, group, and organizational performance suffers and organizations must
take active steps to solve diversity-related problems. 49 For example, if the skills and
talents of women and minorities are not being fully utilized because older white
males cannot (or refuse to) recognize them, an organization will suffer a significant
loss of potential productivity. To reduce such losses, many organizations have instituted
cultural diversity programs to improve personal and group relationships, to
promote cultural sensitivity and acceptance of differences between people, and to
promote skills for working in multicultural environments. 50
Flexibility Challenge
A third diversity challenge is to be sensitive to the needs of different kinds of
employees and to try to develop flexible employment approaches that increase
employee well-being. Examples of some of these approaches include the following:
■
■
■
■
■
■
■
New benefits packages customized to the needs of different groups of
workers, such as single workers with no children and families, homosexuals
in long-term committed relationships, and workers caring for aged parents
Flexible employment conditions (such as flextime) that give workers input
into the length and scheduling of their workweek
Arrangements that allow for job sharing so that two or more employees can
share the same job (e.g., to take care of children or aged parents)
Designing jobs and the buildings that house organizations to be sensitive to
the special needs of handicapped workers (and customers)
Creating management programs designed to provide constructive feedback
to employees about their personal styles of dealing with minority employees
Establishing mentoring relationships to support minority employees
Establishing informal networks among minority employees to provide
social support
The Xerox Corporation, for example, has undertaken major initiatives to
increase diversity by increasing the proportion of women and minorities it recruits
and promotes. Xerox has also established a sophisticated support network for minor-

Chapter 1
Organizational Behavior and Management
29
ity employees. Managing diversity is an ongoing activity that has important implications
for organizations, particularly as diversity is forecast to increase as more and
more women and minority employees enter the workforce.
■ ■ ■
CHALLENGE 5: MANAGING THE GLOBAL ENVIRONMENT
The challenge of managing a diverse workforce increases as organizations continue
to expand their operations internationally. Thus, managing in the global environment
is the fifth challenge that we focus on. Global companies like GM, Toyota,
PepsiCo, and Sony all face similar problems of effectively managing diversity across
countries and national boundaries. 51 In Chapter 17, we discuss the global organization
and take an in-depth look at problems of managing behavior in global organizations.
Here, we summarize some of the main issues involved in this increasingly
important task—issues that we also discuss in most other chapters.
First, there are the considerable problems of understanding organizational
behavior in global settings. 52 Evidence shows that people in different countries may
have different values and views not only of their work settings but also of the world
in general. It has been argued, for example, that Americans have an individualistic
orientation toward work and the Japanese people have a collectivist orientation.
These individual orientations reflect cultural differences that affect people’s behavior
in groups, their commitment and loyalty to the organization, and their motivation to
perform. 53 Understanding the differences between national cultures is important in
any attempt to manage behavior in global organizations to increase performance.
Second, the management functions of planning, organizing, leading, and controlling
become much more complex as an organization’s activities expand across the
globe. On the planning dimension, decision making must be coordinated between
managers at home and managers in foreign countries who are likely to have different
views about what goals an organization should pursue. The way managers organize
the company and decide how to allocate decision-making authority and responsibility
between managers at home and abroad is one of the most significant functions of
global managers. 54
On the leadership dimension, managers must develop their management skills
so that they can learn to understand the forces at work in foreign work settings.
They must also tailor their leadership styles to suit differences in the attitudes and
values of workforces in different countries. There is considerable evidence that the
problems managers have in managing diversity inside their home countries are compounded
when they attempt to manage in different national cultures. 55 Finally, controlling
involves establishing the evaluation, reward, and promotion policies of the
organization and training and developing a globally diverse workforce.
All management activities are especially complex at a global level because the
attitudes, aspirations, and values of the workforce differ by country. For example,
most U.S. workers are astonished to learn that in Europe the average shop-floor
worker receives four to six weeks of paid vacation a year. In the United States, a comparable
worker receives only one or two weeks. Similarly, in some countries promotion
by seniority is the norm, but in others level of performance is the main determinant
of promotion and reward. The way in which global organizations attempt to
understand and manage these and other problems can be seen in the way managers
use different methods, including information technology, to manage organizational
behavior. The Global View Insights in this and other chapters, particularly in
Chapter 17, examine the topic of managing global organizations. (See Insight 1.7.)

30
Chapter 1 Organizational Behavior and Management
INSIGHT A G L O B A L V I E W1.7
IMPROVING GLOBAL COMMUNICATION
NEC a Japanese electronics giant,
like Hitachi, makes global teleconferencing
an everyday part of its
managers’ activities. Global managers
in all parts of the world join
together routinely to plan strategies
in the quickly changing
telecommunications industry.
Integrating and connecting a company’s employees and subunits
through electronic means such as video teleconferencing,
e-mail, and global
intranets is becoming
increasingly important in global organizations.
Because the success of a global company
depends on communication between
employees and business units that are likely
to be in separate countries, the value of teleconferencing
is obvious. It reduces communication
problems and allows decisions to be
made quickly. Teleconfer-encing allows managers
in different countries to meet face-toface
through television hookups to coordinate
decision making. It facilitates learning
when managers in foreign and domestic divisions
meet to confront important issues and
to solve mutual problems. For example,
Hitachi uses an online teleconferencing system
to coordinate its 28 research and development
(R&D) laboratories worldwide. 56
E-mail and high-speed data-transfer systems are also becoming extremely important
ways of quickly sharing information across the globe. U.S. companies, such as
Hewlett-Packard and IBM, make extensive use of e-mail and their corporate intranet
so that foreign and domestic divisions share information and knowledge. ■
Beyond electronic means to help managers develop a global orientation, more
and more organizations are rotating their managers to foreign divisions so that they
begin to understand the problems and opportunities present in foreign countries. 57
These “foreign” managers constitute a management network—a set of managers
who have developed an array of personal contacts with other managers throughout
the world—that helps individual managers to learn from one another and helps to
overcome a major obstacle to effective integration: subunit orientations that stymie
communication and coordination. Donald Fites, CEO of Caterpillar, rose to his present
position because of the knowledge of lean manufacturing techniques that he
gained from his experiences as a Caterpillar manager in Japan. 58 Jack Smith, CEO of
General Motors, rose to his position because of his successful introduction of lean
manufacturing to GM’s European division. Motorola established a new Asian presence
by building a factory in Tianjin, a port city near Beijing. Tam Chung Ding, who
directs Motorola’s Asian operations, commented that personal connections between
managers in the same organization and between organizations are more important in
Asia than anywhere else in the world. In Asia, integration inside an organization and
the formation of strategic alliances between organizations often depend on the personal
connections established through a management network. 59

S U M M A R Y
Chapter 1
Organizational Behavior and Management
31
Organizational behavior is a developing field of study, and researchers and managers
face new challenges to their understanding of and ability to manage work behavior.
In this chapter, we made the following major points:
1. Organizational behavior is the study of factors that affect how individuals
and groups respond to and act in organizations and how organizations
manage their environments. Organizational behavior provides a set of
tools—theories and concepts—to understand, analyze, describe, and manage
attitudes and behavior in organizations.
2. The study of organizational behavior can improve and change individual,
group, and organizational behavior to attain individual, group, and organizational
goals.
3. Organizational behavior can be analyzed at three levels: the individual,
the group, and the organization as a whole. A full understanding is
impossible without an examination of the factors that affect behavior at
each level.
4. A significant part of a manager’s job is to use the tools of organizational
behavior to increase organizational effectiveness—that is, an organization’s
ability to achieve its goals. Management is the process of planning,
organizing, leading, and controlling an organization’s human, financial,
material, and other resources to increase its effectiveness. Managers perform
their functions by assuming 10 types of roles. Managers need conceptual,
human, and technical skills to perform their organizational functions
and roles effectively.
5. Five challenges face those seeking to manage organizational behavior:
how to use information technology to enhance creativity and organizational
learning, how to use human resources to gain a competitive advantage,
how to develop an ethical organization, how to manage a diverse
workforce, and how to manage organizational behavior as an organization
expands internationally.
■ TAKE IT TO THE NET
For further information on other relevant topics, visit the George/Jones Web site: www.prenhall.
com/george

ORGANIZATIONAL
BEHAVIOR IN ACTION
■ QUESTIONS FOR DISCUSSION AND ACTION
1. Why is a working knowledge of organizational
behavior important to managers? How can such
information increase a manager’s effectiveness?
2. Why is it important to analyze the behavior of
individuals, groups, and the organization as a
whole to understand organizational behavior in
work settings?
3. Recall a manager you have known, and evaluate
how well that person performed the four functions
of management: planning, organizing, leading,
and controlling.
4. Think of a manager you have known or read
about, and describe instances in which that manager
seemed to play some of the 10 managerial
roles identified by Mintzberg.
5. Select a restaurant, supermarket, church, or some
other familiar organization, and think about how
the organization tries to increase efficiency, quality,
innovation, and responsiveness to customers.
6. How can information about organizational behavior
help organizations manage their human
resources to obtain a competitive advantage?
7. What are organizational ethics, and why is ethics
such an important issue facing organizations
today?
8. Why is diversity an important challenge facing
organizations today?
9. What special challenges does managing behavior
on a global scale pose for managers?
10. What new challenges may confront managers in
the future?
■ BUILDING DIAGNOSTIC SKILLS
Behavior in Organizations
Think of an organization—a place of employment, a
club, a sports team, a musical group, an academic society—that
provided you with a significant work experience,
and answer the following questions:
1. What are your attitudes and feelings toward the
organization? Why do you think you have these
attitudes and feelings?
2. Indicate, on a scale of 1 to 10, how hard you
worked for this organization or how intensively
you participated in the organization’s activities.
Explain the reasons for your level of participation.
3. How did the organization communicate its performance
expectations to you, and how did the
organization monitor your performance to evaluate
whether you met those expectations? Did you
receive more rewards when you performed at a
higher level? What happened when your performance
was not as high as it should have been?
4. How concerned was your organization with your
well-being? How was this concern reflected? Do
you think this level of concern was appropriate?
Why or why not?
5. Think of your direct supervisor or leader. How
would you characterize this person’s approach to
32

management? How did this management style
affect your attitudes and behaviors?
6. Think of your co-workers or fellow members.
How did their attitudes and behavior affect yours,
particularly your level of performance?
7. Given your answers to these questions, how
would you improve this organization’s approach
to managing its members?
■ RESEARCH ON THE INTERNET: A MANAGER’S TOOL
Specific Task
General Task
Enter Wal-Mart’s Web site, click on “About Wal-
Mart” and then click on “Culture Stories”(www.
walmart.com).
1. What do the stories about Wal-Mart’s culture
suggest about the company’s approach to management
and organizational behavior?
2. What do the stories say about Wal-Mart’s
approach to managing its human resources to gain
a competitive advantage?
Search for the Web site of a company that describes its
managers’ approach to utilizing human resources or
the way they address one of the four management challenges
identified in the chapter. What is their
approach, or what is the main challenge they are facing?
■ TOPICS FOR DEBATE
Now that you understand the nature of organizational
behavior and management and the kinds of issues they
address, debate the following topics:
Debate One
Team A. Organizations should do all they can to promote
the well-being of people and groups inside and
outside the organization.
Team B. The best way to increase organizational performance
is to give workers the flexibility to define and
negotiate their own positions.
Debate Two
Team A. The best way to increase organizational performance
is to clearly specify each worker’s position
and the relationships among positions.
Team B. Organizations exist to make a profit. As they
earn money for their shareholders, all they should do
to promote social well-being is to follow government
laws and regulations.
■ EXPERIENTIAL EXERCISE
A Question of Ethics
Objective
Your objective is to uncover and understand the factors
that allow you to determine whether behavior in organizations
is ethical.
Procedure
1. The class divides into groups of three to five people,
and each group appoints one member as
spokesperson to present the group’s findings to
the whole class.
2. Each member of the group is to think of some
unethical behaviors or incidents that he or she has
observed in organizations. The incidents could be
something you experienced as an employee, a customer,
or a client, or something you observed
informally.
3. The group identifies three important criteria to
use to determine whether a particular action or
behavior is ethical. These criteria need to differentiate
between ethical and unethical organizational
behavior. The spokesperson writes them
down.
33

4. When asked by the instructor, the spokespersons
for each group should be ready to describe the
incidents of unethical behavior witnessed by group
members and the criteria developed in step 3.
■ MAKING THE CONNECTION
At the end of most chapters is a “Making the Connection”
exercise that requires you to search newspapers or magazines
in the library for an example of a real company
that is dealing with some of the issues, concepts, challenges,
questions, and problems dealt with in the chapter.
The purpose of the exercise for this chapter is to
familiarize you with the way in which managers make
use of organizational behavior to increase organizational
effectiveness.
Find an example of an organization in which managers
made use of organizational behavior concepts or
theories to deal with one of the four challenges discussed
in Chapter 1: gaining a competitive advantage,
organizational ethics, diversity in the workforce, or
globalization.
Closing Case
How Jeff Bezos Manages at Amazon.com
In 1994, Jeffrey Bezos, a computer science and electrical engineering graduate from
Princeton University, was growing weary of working for a Wall Street investment
bank. With his computer science background prompting him, he saw an entrepreneurial
opportunity in the fact that Internet usage was growing at over 2,300 percent
a year. Searching for an opportunity to take advantage of his technical skills in the
new electronic, virtual marketplace he decided that the book-selling market offered
an opportunity. Deciding to make a break, he packed up his belongings and drove to
the West Coast, deciding en route that Seattle, Washington—a new mecca for hightech
software developers and the hometown of Starbucks coffee shops—would be an
ideal place to begin his venture.
Bezos’s plan was to develop an online bookstore that would be customerfriendly
and easy to navigate, and would offer the broadest possible selection of
books. He had decided to create an e-commerce business that, operating through
the Internet, never saw its customers but whose mission was to provide customers
great selection and great service at low prices. 60 Bezos realized that compared to a
real “bricks and mortar” bookstore, an online bookstore would be able to offer a
much larger and diverse selection of books. His goal was that online customers
would find it easy to search for any book in print on a computerized, online catalog,
browse different subject areas, read reviews of books, and even ask other shoppers
for online recommendations—something most people would hesitate to do in a regular
bookstore.
With a handful of employees and operating from his garage in Seattle, Bezos
launched his venture online in July 1995 with $7 million in borrowed captial. Within
34

Chapter 1 Organizational Behavior and Management
weeks, Bezos was forced to relocate to new larger premises and to hire new employees
as book sales soared. The problem facing him now was how to organize his people
and resources to best meet his new company’s goals. His solution was to organize
his workers into groups based on the tasks they needed to perform to satisfy his customers.
First, Bezos created a research and development department to continue to
develop and improve the in-house software that he had initially developed for
Internet-based retailing. Then, he established an information systems department to
handle the day-to-day implementation of these systems and to manage the interface
between the customer and the organization. Third, he created a materials management/logistics
department to devise the most cost-efficient ways to obtain books
from book publishers and book distributors and then to ship them quickly to customers.
Currently, the department is implementing new information systems to
ensure one-day shipping to customers. As Amazon.com grew, these departments
helped Amazon to expand into providing many other kinds of products for its customers
such as music CDs, electronics, and gifts as a visit to the company’s Web sit
(www.amazon.com) will show.
To ensure that Amazon.com strived to meet its goals of providing books
quickly with excellent customer service, Bezos paid attention to the way he controlled
his employees. Realizing that customer support was the most vital link
between customer and organization, to ensure good customer service he decentralized
control and empowered his employees to find a way of meeting customers’
needs quickly. Second because Amazon.com employs a relatively small number of
people, about 2,100 people worldwide, Bezos was able to make great use of socialization
to motivate his employees. All Amazon.com employees are carefully selected
and socialized by the other memebers of their work group so that they quickly learn
their organizational roles and, most importantly, of Amazon’s important norm of
providing excellent customer service. Finally, to ensure that Amazon.com’s employees
are motivated to provide the best possible customer service, Bezos gives all
employees stock in the company, and employees currently own 10 percent of their
company.
Finally, on the leadership dimensions, Bezos is a hands-on manager who works
closely with employees to find cost-saving solutions to problems. Moreover, as
CEO, Bezos acts as a figurehead to his employees, personifying Amazon’s dedication
to the well-being of its employees and customers. Indeed, he spends a great deal of
his time flying around the world to publicize his company and its activities, and he
has succeeded because Amazon.com has the most well-recognized name of any dotcom
company. At Amazon.com, all of Jeff Bezos’s actions are designed to improve
employees’ work attitudes and behaviors and to increase the performance and wellbeing
of employees and customers alike.
DISCUSSION QUESTIONS
1. What management functions and roles is Jeff Bezos performing that make
him such a successful manager?
2. How easy would it be for other CEOs to manage like Bezos?
35

CHAPTER APPENDIX
A Short History of Organizational
Behavior Research
The systematic study of organizational behavior began in the
closing decades of the nineteenth century, after the Industrial
Revolution had swept through Europe and America. In the
new economic climate, managers of all types of organizations—political,
educational, and economic—were increasingly
turning their focus toward finding better ways to satisfy
customers’ needs. Many major economic, technical, and cultural
changes were taking place at this time. With the introduction
of steam power and the development of sophisticated
machinery and equipment, the industrial revolution changed
the way goods were produced, particularly in the weaving and
clothing industries. Small workshops run by skilled workers
who produced hand-manufactured products (a system called
crafts production) were being replaced by large factories in
which sophisticated machines controlled by hundreds or even
thousands of unskilled or semiskilled workers made products.
For example, raw cotton and wool, which in the past families
or whole villages working together had spun into yarn, were
now shipped to factories where workers operated machines
that spun and wove large quantities of yarn into cloth.
Owners and managers of the new factories found themselves
unprepared for the challenges accompanying the
change from small-scale crafts production to large-scale
mechanized manufacturing. Moreover, many of the managers
and supervisors in these workshops and factories were engineers
who had only a technical orientation. They were unprepared
for the social problems that occur when people work
together in large groups (as in a factory or shop system).
Managers began to search for new techniques to manage their
organizations’ resources, and soon they began to focus on
ways to increase the efficiency of the worker–task mix. They
found help from Frederick W. Taylor.
F. W. TAYLOR AND SCIENTIFIC
MANAGEMENT
Frederick W. Taylor (1856–1915) is best known for defining
the techniques of scientific management, the systematic study
of relationships between people and tasks for the purpose of
redesigning the work process to increase efficiency. Taylor
was a manufacturing manager who eventually became a consultant
and taught other managers how to apply his scientific
management techniques. Taylor believed that if the amount of
time and effort that each worker expends to produce a unit of
output (a finished good or service) can be reduced by increasing
specialization and the division of labor, the production
process will become more efficient. Taylor believed the way to
create the most efficient division of labor could be best determined
using scientific management techniques, rather than
intuitive or informal rule-of-thumb knowledge. Based on his
experiments and observations as a manufacturing manager in
a variety of settings, he developed four principles to increase
efficiency in the workplace: 1
■
■
■
Principle 1: Study the way workers perform their tasks, gather
all the informal job knowledge that workers possess, and experiment
with ways of improving the way tasks are performed.
To discover the most efficient method of performing
specific tasks, Taylor studied in great detail and measured
the ways different workers went about performing their
tasks. One of the main tools he used was a time and
motion study, which involves the careful timing and
recording of the actions taken to perform a particular task.
Once Taylor understood the existing method of performing
a task, he then experimented to increase specialization;
he tried different methods of dividing up and coordinating
the various tasks necessary to produce a finished product.
Usually, this meant simplifying jobs and having each
worker perform fewer, more routine tasks, as at the pin
factory or on Ford’s car assembly line. Taylor also sought
to find ways to improve each worker’s ability to perform a
particular task—for example, by reducing the number of
motions workers made to complete the task, by changing
the layout of the work area or the type of tool workers
used, or by experimenting with tools of different sizes.
Principle 2: Codify the new methods of performing tasks into
written rules and standard operating procedures.
Once the best method of performing a particular task
was determined, Taylor specified that it should be
recorded so that the procedures could be taught to all
workers performing the same task. These rules could be
used to further standardize and simplify jobs—essentially,
to make jobs even more routine. In this way, efficiency
could be increased throughout an organization.
Principle 3: Carefully select workers so that they possess skills
and abilities that match the needs of the task, and train them to
perform the task according to the established rules and procedures.
To increase specialization, Taylor believed workers had
to understand the tasks that were required and be thoroughly
trained in order to perform the task at the required
36

Chapter 1
Organizational Behavior and Management
37
■
level. Workers who could not be trained to this level were
to be transferred to a job in which they were able to reach
the minimum required level of proficiency. 2
Principle 4: Establish a fair or acceptable level of performance
for a task, and then develop a pay system that provides a reward
for performance above the acceptable level.
To encourage workers to perform at a high level of efficiency,
and to provide them with an incentive to reveal the
most efficient techniques for performing a task, Taylor
advocated that workers benefit from any gains in performance.
They should be paid a bonus and receive some
percentage of the performance gains achieved through the
more efficient work process.
By 1910, Taylor’s system of scientific management had
become nationally known and in many instances faithfully and
fully practiced. 3 However, managers in many organizations
chose to implement the new principles of scientific management
selectively. This decision ultimately resulted in problems.
For example, some managers using scientific management
obtained increases in performance, but rather than
sharing performance gains with workers through bonuses as
Taylor had advocated, they simply increased the amount of
work that each worker was expected to do. Many workers
experiencing the reorganized work system found that as their
performance increased, managers required them to do more
work for the same pay. Workers also learned that increases in
performance often meant fewer jobs and a greater threat of
layoffs, because fewer workers were needed. In addition, the
specialized, simplified jobs were often very monotonous and
repetitive, and many workers became dissatisfied with their
jobs.
From a performance perspective, the combination of
the two management practices—achieving the right mix of
worker–task specializations and linking people and tasks by
the speed of the production line—resulted in the huge savings
in cost and huge increases in output that occur in large, organized
work settings. For example, in 1908, managers at the
Franklin Motor Company using scientific management principles
redesigned the work process, and the output of cars
increased from 100 cars a month to 45 cars a day; workers’
wages, however, increased by only 90 percent. 4
Taylor’s work has had an enduring effect on the management
of production systems. Managers in every organization,
whether it produces goods or services, now carefully
analyze the basic tasks that workers must perform and try to
create a work environment that will allow their organizations
to operate most efficiently. We discuss this important issue in
Chapters 6 and 7.
THE WORK OF MARY PARKER FOLLETT
If F. W. Taylor is considered the father of management
thought, Mary Parker Follett (1868–1933) serves as its
mother. 5 Much of her writing about management and the way
managers should behave toward workers was a response to her
concern that Taylor was ignoring the human side of the organiztion.
She pointed out that management often overlooks the
multitude of ways in which employees can contribute to the
organization when managers allow them to participate and
exercise initiative in their everyday work lives. 6 Taylor, for
example, never proposed that managers should involve workers
in analyzing their jobs to identify better ways to perform
tasks, or even ask workers how they felt about their jobs.
Instead, he used time and motion experts to analyze workers’
jobs for them. Follett, in contrast, argued that because workers
know the most about their jobs, they should be involved in
job analysis and managers should allow them to participate in
the work development process.
Follett proposed that “Authority should go with knowledge
. . . whether it is up the line or down.” In other words, if
workers have the relevant knowledge, then workers, rather
than managers, should be in control of the work process itself,
and managers should behave as coaches and facilitators—not
as monitors and supervisors. In making this statement, Follett
anticipated the current interest in self-managed teams and
empowerment. She also recognized the importance of having
managers in different departments communicate directly with
each other to speed decision making. She advocated what she
called “cross-functioning”: members of different departments
working together in cross-departmental teams to accomplish
projects—an approach that is increasingly utilized today. 7 She
proposed that knowledge and expertise, and not managers’
formal authority deriving from their position in the hierarchy,
should decide who would lead at any particular moment. She
believed, as do many management theorists today, that power
is fluid and should flow to the person who can best help the
organization achieve its goals. Follett took a horizontal view
of power and authority, rather than viewing the vertical chain
of command as being most essential to effective management.
Thus, Follett’s approach was very radical for its time.
THE HAWTHORNE STUDIES
AND HUMAN RELATIONS
Probably because of its radical nature, Follett’s work went
unappreciated by managers and researchers until quite
recently. Most continued to follow in the footsteps of Taylor,
and to increase efficiency, they studied ways to improve various
characteristics of the work setting, such as job specialization
or the kinds of tools workers used. One series of studies
was conducted from 1924 to 1932 at the Hawthorne Works of
the Western Electric Company. 8 This research, now known as
the Hawthorne studies, was initiated as an attempt to investigate
how characteristics of the work setting—specifically the
level of lighting or illumination—affect worker fatigue and
performance. The researchers conducted an experiment in
which they systematically measured worker productivity at
various levels of illumination.
The experiment produced some unexpected results.
The researchers found that regardless of whether they raised
or lowered the level of illumination, productivity increased. In

38
Chapter 1 Organizational Behavior and Management
fact, productivity began to fall only when the level of illumination
dropped to the level of moonlight, a level at which presumably
workers could no longer see well enough to do their
work efficiently.
As you can imagine, the researchers found these results
very puzzling. They invited a noted Harvard psychologist,
Elton Mayo, to help them. Mayo proposed another series of
experiments to solve the mystery. These experiments, known
as the relay assembly test experiments, were designed to investigate
the effects of other aspects of the work context on job
performance, such as the effect of the number and length of
rest periods and hours of work on fatigue and monotony. 9
The goal was to raise productivity.
During a two-year study of a small group of female
workers, the researchers again observed that productivity
increased over time, but the increases could not be solely
attributed to the effects of changes in the work setting.
Gradually, the researchers discovered that, to some degree,
the results they were obtaining were influenced by the fact
that the researchers themselves had become part of the experiment.
In other words, the presence of the researchers was
affecting the results because the workers enjoyed receiving
attention and being the subject of study and were willing to
cooperate with the researchers to produce the results they
believed the researchers desired.
Subsequently, it was found that many other factors also
influence worker behavior, and it was not clear what was actually
influencing Hawthorne workers’ behavior. However, this
particular effect—which became known as the Hawthorne
effect—seemed to suggest that the attitudes of workers toward
their managers affects the level of workers’ performance. In
particular, the significant finding was that a manager’s behavior
or leadership approach can affect performance. This finding
led many researchers to turn their attention to managerial
behavior and leadership. If supervisors could be trained to
behave in ways that would elicit cooperative behavior from
their subordinates, then productivity could be increased.
From this view emerged the human relations movement,
which advocates that supervisors be behaviorally trained to
manage subordinates in ways that elicit their cooperation and
increase their productivity.
The importance of behavioral or human relations training
became even clearer to its supporters after another series
of experiments—the bank wiring room experiments. In a
study of workers making telephone switching equipment,
researchers Elton Mayo and F. J. Roethlisberger discovered
that the workers, as a group, had deliberately adopted a norm
of output restriction to protect their jobs. Workers who violated
this informal production norm were subjected to sanctions
by other group members. Those who violated group
performance norms and performed above the norm were
called “ratebusters”; those who performed below the norm
were called “chisellers.”
The experimenters concluded that both types of workers
threatened the group as a whole. Ratebusters threaten
group members because they reveal to managers how fast the
work can be done. Chisellers are looked down on because they
are not doing their share of the work. Work-group members
discipline both ratebusters and chisellers in order to create a
pace of work that the workers (not the managers) think is fair.
Thus, the work group’s influence over output can be as great
as the supervisors’ influence. Because the work group can
influence the behavior of its members, some management
theorists argue that supervisors should be trained to behave in
ways that gain the goodwill and cooperation of workers so
that supervisors, not workers, control the level of work-group
performance.
One of the main implications of the Hawthorne studies
was that the behavior of managers and workers in the work
setting is as important in explaining the level of performance
as the technical aspects of the task. Managers must understand
the workings of the informal organization, the system of
behavioral rules and norms that emerge in a group, when they
try to manage or change behavior in organizations. Many
studies have found that, as time passes, groups often develop
elaborate procedures and norms that bond members together,
allowing unified action either to cooperate with management
in order to raise performance or to restrict output and thwart
the attainment of organizational goals. 10 The Hawthorne
studies demonstrated the importance of understanding how
the feelings, thoughts, and behavior of work-group members
and managers affect performance. It was becoming increasingly
clear to researchers that understanding behavior in
organizations is a complex process that is critical to increasing
performance. 11 Indeed, the increasing interest in the area of
management known as organizational behavior, the study of
the factors that have an impact on how individuals and groups
respond to and act in organizations, dates from these early
studies.
THEORY X AND THEORY Y
Several studies after World War II revealed how assumptions
about workers’ attitudes and behavior affect managers’ behavior.
Perhaps the most influential approach was developed by
Douglas McGregor. He proposed that two different sets of
assumptions about work attitudes and behaviors dominate the
way managers think and affect how they behave in organizations.
McGregor named these two contrasting sets of assumptions
Theory X and Theory Y. 12
Theory X
According to the assumptions of Theory X, the average
worker is lazy, dislikes work, and will try to do as little as possible.
Moreover, workers have little ambition and wish to
avoid responsibility. Thus, the manager’s task is to counteract
workers’ natural tendencies to avoid work. To keep workers’
performance at a high level, the manager must supervise them
closely and control their behavior by means of “the carrot and
stick”—rewards and punishments.
Managers who accept the assumptions of Theory X
design and shape the work setting to maximize their control

Chapter 1
over workers’ behaviors and minimize the workers’ control
over the pace of work. These managers believe that workers
must be made to do what is necessary for the success of the
organization, and they focus on developing rules, standard
operating procedures, and a well-defined system of rewards
and punishments to control behavior. They see little point in
giving workers autonomy to solve their own problems
because they think that the workforce neither expects nor
desires cooperation. Theory X managers see their role as to
closely monitor workers to ensure that they contribute to
the production process and do not threaten product quality.
Henry Ford, who closely supervised and managed his workforce,
fits McGregor’s description of a manager who holds
Theory X assumptions.
Theory Y
In contrast, Theory Y assumes that workers are not inherently
lazy, do not naturally dislike work, and, if given the opportunity,
will do what is good for the organization. According to
Theory Y, the characteristics of the work setting determine
whether workers consider work to be a source of satisfaction
or punishment; and managers do not need to closely control
workers’ behavior in order to make them perform at a high
level, because workers will exercise self-control when they are
committed to organiztional goals. The implication of Theory
Y, according to McGregor, is that “the limits of collaboration
in the organizational setting are not limits of human nature
but of management’s ingenuity in discovering how to realize
the potential represented by its human resources.” 13 It is the
manager’s task to create a work setting that encourages commitment
to organizational goals and provides opportunities
for workers to be imaginative and to exercise inititative and
self-direction.
When managers design the organizational setting to
reflect the assumptions about attitudes and behavior suggested
by Theory Y, the characteristics of the organization are
quite different from those of an organizational setting based
on Theory X. Managers who believe that workers are motivated
to help the organization reach its goals can decentralize
authority and give more control over the job to workers, both
as individuals and in groups. In this setting, individuals and
groups are still accountable for their activities, but the manager’s
role is not to control employees but to provide support
and advice, to make sure they have the resources they need to
perform their jobs, and to evaluate them on their ability to
help the organization meet its goals.
THEORY Z
In the 1980s, William Ouchi, a professor interested in differences
between work settings in Japan and the United States,
took the management approach inherent in Theory Y one
Organizational Behavior and Management
39
step further. 14 In the United States, national culture emphasizes
the importance of the individual, and workers view their
jobs from an individualist perspective and thus behave in ways
that will benefit them personally. Perhaps because of this,
Ouchi noted, many U.S. managers adopt Theory X rather
than Theory Y assumptions. They expect workers to behave
purely in their own self-interest and believe workers will leave
an organization at a moment’s notice if they see a better
opportunity elsewhere. To counter this expectation, Ouchi
speculated, managers simplify jobs and increase supervision to
make it easy to replace workers and to minimize any problems
that might result from high rates of turnover. In U.S. companies,
control is frequently explicit and formalized: Job
requirements are clearly specified, and most workers are evaluated
on and rewarded for their individual level of performance.
In contrast, Japanese managers expect workers to be
committed to their organizations and therefore treat them
differently. Some large Japanese companies guarantee workers
lifetime employment and view the training and development
of workers as a lifelong investment. Moreover, Japanese workers
tend to have a collective or group orientation to their
work, a result of the characteristics of Japan’s national culture,
which emphasizes the importance of groups and organizations
rather than individuals. Consistent with the Japanese culture,
Japanese managers create work settings that encourage a
group-oriented approach to decision making, they give work
groups responsibility for job performance, and they allow
work groups to control their own behavior.
Ouchi suggested that U.S. companies could capture
many of the advantages that Japanese companies enjoy by
combining various characteristics of the Japanese and U.S.
management systems and following the approach to management
that he called Theory Z. In what Ouchi calls a “Type Z
organization,” workers are guaranteed long-term (but not
lifetime) employment, so that their fears of layoffs or unemployment
are reduced. Type Z managers attempt to combine
the Japanese emphasis on the work group with a recognition
of individual contributions by setting objectives for individual
workers so that individual performance achievements can be
recognized within a group context. Thus, individuals are recognized
and rewarded not only for individual performance
but also for interpersonal skills that improve decision making
or communication. As we discuss in later chapters, the implementation
of Theory Z requires an organizational structure
that allows the organization to be flexible and responsive to
changes inside the organization and in the external environment.

40
ENDNOTES
Chapter 1
Chapter 1 Organizational Behavior and Management
1. www.schlumberger.com, 2000.
2. E. Baird, Innovation, Vital Speeches of the Day (July 15, 1999), 600–602.
3. “Management Style,” www.nummi.com, 2000.
4. “NUMMI Milestones,” www.nummi.com, 2000.
5. “Return of the Stopwatch,” The Economist (January 23, 1993): 69.
6. “GM, Toyota Create Historic Partnership,” About.com (April 20, 1999).
7. H. Fayol, Industrial and General Administration (London: Pitman, 1949); P. F. Drucker, Management
Tasks, Responsibilities, Practices (New York: Harper & Row, 1974).
8. www.flysouthwest.com, 2000.
9. www.pearson.com, 2000.
10. R. Evans, “Lone Star: Texan Marjorie Scardino Is Shaking Up Britain’s Pearson,” Barron’s (May 8,
2000): 20–22.
11. www.pearson.com, 2000.
12. H. Mintzberg, The Nature of Managerial Work (New York: Harper & Row, 1963).
13. R. L. Katz, “Skills of an Effective Administrator,” Harvard Business Review (September–October 1974):
90–102.
14. R. Forrester and A. B. Drexler, “A Model for Team Based Organizational Performance,” Academy of
Management Executive (August 1999): 36–49.
15. G. H. Taylor, Knowledge Companies. In W. E. Halal (ed.), The Infinite Resource (New York: The Free
Press, 1988): 97–101.
16. T. W. Malone & J. F. Rockart, “Computers, Networks, and the Corporation,” Scientific American 263
(1991): 128–137.
17. T. H. Davenport, and L. Prusak, Information Ecology (New York: Oxford University Press, 1997).
18. S. Kathleen, “Working Smart,” OIC 13(4) (1999): 104.
19. A. Affua, Innovation Management (New York: Oxford University Press, 1998).
20. C.W.L. Hill and G. R. Jones, Strategic Management: An Integrated Approach, 4th ed. (Boston: Houghton
Mifflin, 1998).
21. S. M. Puffer, “Continental Airlines CEO Gordon Bethune on Teams and New Product Development,”
Academy of Management Executive (August 1999): 28–35.
22. A. R. Jassawalla and H. C. Sashittal, “Building Collaborative Cross-Functional New Product Teams,”
Academy of Management Executive (August 1999): 50–63.
23. R. M. Kanter, The Change Masters (New York: Simon and Schuster, 1983).
24. C. K. Prahalad and V. Ramaswamy, “Coopting Customer Competence,” Harvard Business Review,
(January–February 2000): 79–90.
25. L. S. Richman, “Reengineering Under Fire,” Fortune (April 18, 1994): 186.
26. P. Evans and T. S. Wurstler, “Getting Real About Virtual Commerce,” Harvard Business Review
(November–December 1999): 84–98.
27. www.deere.com, 2000.
28. P. Roberts, “John Deere Runs on Chaos,” Fast Company (November 1998): 164–66.
29. K. Kelly, “The New Soul of John Deere,” Business Week (January 31, 1994): 64–66.
30. R. Edward Freeman, Business Ethics: The State of the Art (New York: Oxford University Press, 1991).
31. R. C. Soloman, Ethics and Excellence (New York: Oxford University Press, 1992).
32. L. K. Trevino, “Ethical Decision Making in Organizations: A Person–Situation Interactionist Model,”
Academy of Management Review 11 (1986): 601–17.
33. “ValuJet Crash Charges,” Miami Herald, July 13, 1999, p. 1A.
34. H. Mintzberg, “The Case for Corporate Social Responsibility,” Journal of Business Strategy (December
1983): 3–15; J. J. Chrisman and A. B. Carroll, “Corporate Responsibility—Reconciling Economic and
Social Goals,” Sloan Management Review 25 (1984): 59–65.

Chapter 1
Organizational Behavior and Management
35. H. Mintzberg, “The Case for Corporate Social Responsibility,” Journal of Business Strategy (winter
1973): 3–15.
36. T. M. Jones, “Ethical Decision Making by Individuals in Organizations: An Issue Contingent Model,”
Academy of Management Review 16 (1991): 366–95; G. R. Shea, Practical Ethics (New York: American
Management Association, 1988).
37. L. I. Kessler, Managing Diversity in an Equal Employment Opportunity Workplace (Washington, DC:
National Foundation for the Study of Employment Policy, 1990).
38. W. B. Johnson and A. H. Packer, Workforce 2000: Work and Workers in the 21st Century (Indianapolis:
Hudson Institute, 1987); M. Galen and A. T. Palmer, “White, Male and Worried,” Newsweek (January
31, 1994): 50–55.
39. Ibid.
40. H. W. Fullerton Jr., “New Labor Force Projections Spanning 1988–2000,” Monthly Labor Review
(November 1989): 3–12.
41. M. Fine, F. Johnson, and M. S. Ryan, “Cultural Diversity in the Workforce,” Public Personnel
Management 19 (1990): 305–319.
42. T. Cox Jr., Cultural Diversity in Organizations (San Francisco: Berrett Koehler, 1994).
43. D. Jamieson and J. O’Mara, Managing Workforce 2000: Gaining the Diversity Advantage (San Francisco:
Jossey-Bass, 1991).
44. ww.uboc.com, 2000.
45. G. Colvin, “The 50 Best Companies for Asians, Blacks, and Hispanics,” Fortune (July 19, 1999): 53–57.
46. “Union Bank of California Honored By U.S. Labor Department For Employment Practices.” Press
release, September 11, 2000.
47. Ibid.
48. S. Jackson and Associates, Diversity in the Workplace: Human Resource Initiatives (New York: Guildford
Press, 1992).
49. Lennie Copeland, “Learning to Manage a Multicultural Workforce,” Training 25 (1988): 48–56; B.
Geber, “Managing Diversity,” Training 27 (1990): 23–30.
50. J. R. Fulkerson and R. S. Schuler, Managing Worldwide Diversity at Pepsi-Cola International. In
Jackson and Associates, Diversity in the Workplace, pp. 248–78.
51. C. K. Prahalad and Y. L. Doz, The Multinational Mission: Balancing Local Demands and Global Vision
(New York: Free Press, 1987); C. A. Bartlett and S. Ghoshal, Transnational Management (Homewood,
IL: Irwin, 1992).
52. P. J. Dowling and R. S. Schuler, International Dimensions of Human Resource Management (Boston: PWS-
Kent, 1990).
53. N. Adler, International Dimensions of Organizational Behavior (Boston: Kent, 1991).
54. G. Hofstede, “The Cultural Relativity of Organizational Practices and Theories,” Journal of
International Business Studies (fall 1983): 75–89.
55. R. L. Tung, “Selection and Training in U.S., European, and Japanese Multinationals,” California
Management Review 25 (1982): 57–71.
56. www.Hitachi.com, 2000.
57. A. Edstrom and J. R. Galbraith, “Transfer of Managers as a Coordination and Control Strategy in
Multinational Organizations,” Administrative Science Quarterly 22 (1977): 248–63.
58. www. caterpillar.com, 2000.
59. www.motorola.com, 2000.
60. “About Amazon.com,” www.amazon.com, 1999.
41
Chapter 1 Appendix
1. F. W. Taylor, Shop Management (New York: Harper, 1903); F. W. Taylor, The Principles of Scientific
Management (New York: Harper, 1911).

42
Chapter 1 Organizational Behavior and Management
2. L. W. Fry, “The Maligned F. W. Taylor: A Reply to His Many Critics,” Academy of Management Review
(1976): 124–29.
3. J. A. Litterer, The Emergence of Systematic Management as Shown by the Literature from 1870–1900 (New
York: Garland, 1986).
4. D. Wren, The Evolution of Management Thought (New York: Wiley, 1994), 134.
5. L. D. Parker, “Control in Organizational Life: The Contribution of Mary Parker Follett,” Academy of
Management Review 9 (1984): 736–45.
6. P. Graham, M. P. Follett—Prophet of Management: A Celebration of Writings from the 1920s (Boston:
Harvard Business School Press, 1995).
7. M. P. Follett, Creative Experience (London: Longmans, 1924).
8. E. Mayo, The Human Problems of Industrial Civilization (New York: Macmillan, 1933); F. J.
Roethlisberger and W. J. Dickson, Management and the Worker (Cambridge, MA: Harvard University
Press, 1947).
9. D. W. Organ, “Review of Management and the Worker,” by F. J. Roethlisberger and W. J. Dickson,
Academy of Management Review 13 (1986): 460–64.
10. D. Roy, “Banana Time: Job Satisfaction and Informal Interaction,” Human Organization 18 (1960):
158–61.
11. For an analysis of the problems in determining cause from effect in Hathorne studies and in social settings
in general, see A. Carey, “The Hawthorne Studies: A Radical Criticism,” American Sociological
Review 33 (1967): 403–16.
12. D. McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960).
13. Ibid., 48.
14. W. G. Ouchi, Theory Z: How American Business Can Meet the Japanese Challenge (Reading, MA: Addison-
Wesley, 1981).