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Chapter

1 Organizational Behavior: The Quest for People-Centered Organizations

Learning Objectives When you finish studying the material in this chapter, you should be able to: 1

Define the term organizational behavior, and explain why OB is a horizontal discipline.

2

Contrast McGregor’s Theory X and Theory Y assumptions about employees.

3

Identify the four principles of total quality management (TQM).

4

Define the term e-business, and specify at least three OB-related issues raised by e-leadership.

5

Contrast human and social capital, and explain why we need to build both.

6

Specify the five key dimensions of Luthans’s CHOSE model of positive organizational behavior (POB).

7

Define the term management, and identify at least five of the eleven managerial skills in Wilson’s profile of effective managers.

8

Characterize 21st-century managers.

9

Describe the sources of organizational behavior research evidence.

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The plaque outside the ramshackle two-family house at 367 Addison St. in Palo Alto, Calif., identifies the dusty one-car garage out back as the “birthplace of Silicon Valley.” But the site, where Dave Packard and Bill Hewlett first set up shop, in 1938, is more than that. It’s the birthplace of a new approach to management, a West Coast alternative to the traditional, hierarchical corporation. Sixty-five years later, the methods of Hewlett and Packard remain the dominant DNA for tech companies—and a major reason for U.S. preeminence in the Information Age. The partnership began when the pair met as students at Stanford University. Packard, an opinionated star athlete from the hardscrabble town of Pueblo, Colo., had a commanding presence to match his 6-ft.-5-in frame. Hewlett, whose technical genius was obscured from teachers by undiagnosed dyslexia, favored dorm-room pranks and bad puns.While different in temperament, the two soon discovered a shared passion for camping and fishing—and for turning engineering theory into breakthrough products.

The result was one of the most influential companies of the 20th century. Hewlett-Packard Co. (they flipped a coin to decide whose name went first) cranked out a blizzard of geeky electronic tools that were crucial to the development of radar, computers, and other digital wonders. Still, the pair’s greatest innovation was managerial,not technical. From the first days in the garage, they set out to create a company that would attract like-minded techies.They shunned the rigid hierarchy of companies back East in favor of an egalitarian, decentralized system that came to be known as “the HP Way.” The essence of the idea, radical at the time, was that employees’ brainpower was the company’s most important resource. To make the idea a reality, the young entrepreneurs instituted a slew of pioneering practices. Starting in 1941, they granted big bonuses to all employees when the company improved

Bill Packard and Bill Hewitt

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its productivity. That evolved into one of the first allcompany profit-sharing plans.When HP went public in 1957, the founders gave shares to all employees. Later, they were among the first to offer tuition assistance, flex time, and job sharing. Even HP’s offices were unusual. To encourage the free flow of ideas, employees worked in open cubicles. Even supply closets were to be kept open. Once, Hewlett sawed a lock off a closet and left a note: “HP trusts its employees.” If HP’s policies were progressive, there was nothing coddling about either man. Until his death in 1996, Packard was a fearsome paragon of corporate integrity. He was famous for flying to distant branches to make a show of firing managers who skirted ethical lines. Neither man would hesitate to kill a business if it wasn’t hitting its profits goals. The result: HP grew nearly 20% a year for 50 years without a loss.

Today, the behavior of the two founders remains a benchmark for business. Hewlett, who died in 2001, and Packard expected employees to donate their time to civic causes. And they gave more than 95% of their fortunes to charity. “My father and Mr. Packard felt they’d made this money almost as a fluke,” says Hewlett’s son Walter. “If anything, the employees deserved it more than they did.” It’s an insight that changed Corporate America—and the lives of workers everywhere.1

FOR DISCUSSION Which of HP’s employee-friendly practices do you think had the greatest motivational impact?

H

ewlett-Packard’s founders did more than talk about the importance of their people; they trusted, empowered, and listened to them. They created what Stanford University’s Jeffrey Pfeffer calls a “people-centered” organization. Research evidence from companies in both the United States and Germany shows the following seven people-centered practices to be strongly associated with much higher profits and significantly lower employee turnover: 1. 2. 3. 4. 5. 6. 7.

Job security (to eliminate fear of layoffs). Careful hiring (emphasizing a good fit with the company culture). Power to the people (via decentralization and self-managed teams). Generous pay for performance. Lots of training. Less emphasis on status (to build a “we” feeling). Trust building (through the sharing of critical information).2

Importantly, these factors are a package deal, meaning they need to be installed in a coordinated and systematic manner—not in bits and pieces. According to Pfeffer, only 12% of today’s organizations have the systematic approaches and persistence to qualify as true people-centered organizations, thus giving them a competitive advantage.3 Dan Rosensweig, Yahoo’s chief operating officer, knows what it takes. He recently told Fast Company magazine: “From the outside, my guess is most people think about the incredible technology we have. But what really matters is our people.”4 To us, an 88% shortfall in the quest for people-centered organizations represents a tragic waste of human and economic potential. There are profound ethical implications as well. Each of us needs to accept the challenge to do better, whatever our role(s) in society— employer/entrepreneur, employee, manager, stockholder, student, teacher, voter, elected official, social/political activist. Toward that end, the mission of this book is to help increase the number of people-centered organizations around the world to improve the general quality of life.5 4

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Chapter One

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5

The purpose of this first chapter is to define organizational behavior (OB), examine its contemporary relevance, explore its historical and managerial contexts, and introduce a topical roadmap for the balance of this book.

Welcome to the World of OB Organizational behavior deals with how people act and react in organizations of all kinds. Think of the many organizations that touch your life on a regular basis; organizations that employ, educate, serve, inform, feed, heal, protect, and entertain you. Cradle to grave, we interface with organizations at every turn. According to Chester I Barnard’s classic definition, an organization is “a system of consciously coordinated activities or forces of two or more persons.”6 Organizations are a social invention helping us to achieve things collectively that we could not achieve alone. For better or for worse, they extend our reach. Consider the inspiring example of the World Health Organization: In 1967, 10 to 15 million people around the globe were struck annually by smallpox.That year, the World Health Organization set up its smallpox-eradication unit. In 13 years it was able to declare the world free of the disease. In 1988, 350,000 people were afflicted by polio when the WHO set up a similar eradication unit. Since then it has spent $3 billion and received the help of 20 million volunteers from around the world.The result: in 2003 there were only 784 reported cases of polio.7

Organization System of consciously coordinated activities of two or more people.

On the other hand, organizations such as Al Qaeda kill and terrorize, and others such as Enron squander our resources. Organizations are the chessboard upon which the game of life is played. To know more about organizational behavior—life within organizations—is to know more about the nature, possibilities, and rules of that game.

Organizational Behavior: An Interdisciplinary Field Organizational behavior, commonly referred to as OB, is an interdisciplinary field dedicated to better understanding and managing people at work. By definition, organizational behavior is both research and application oriented. Three basic levels of analysis in OB are individual, group, and organizational. OB draws upon a diverse array of disciplines, including psychology, management, sociology, organization theory, social psychology, statistics, anthropology, general systems theory, economics, information technology, political science, vocational counseling, human stress management, psychometrics, ergonomics, decision theory, and ethics. This rich heritage has spawned many competing perspectives and theories about human work behavior. By 2003, one researcher had identified 73 distinct theories about behavior within the field of OB.8

Organizational behavior Interdisciplinary field dedicated to better understanding and managing people at work.

Some FAQs about Studying OB Through the years we (and our colleagues) have fielded some frequently asked questions (FAQs) from our students about our field. Here are the most common ones, along with our answers.

Why Study OB?

If you thoughtfully study this book, you will learn more about yourself, how to interact effectively with others, and how to thrive (not just survive) in organizations. Lots of insights about your own personality, emotions, values, job satisfaction,

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Figure 1–1 OB-Related Skills Are the Ticket to Ride the Virtuous Career Spiral

Job

rds wa Re

Rew ar

Motivation and Satisfaction

ds Pe

r fo

Perf o

rma

nce

r man c

e

S k il l s

Job

Skills

SOURCE: Edward E Lawler III, Treat People Right! How Organizations and Individuals Can Propel Each Other into a Virtuous Spiral of Success (San Francisco: Jossey-Bass, 2003), p 21.

perceptions, needs, and goals are available in Part Two. Relative to your interpersonal effectiveness, you will learn about being a team player, building trust, managing conflict, negotiating, communicating, and influencing and leading others. We conclude virtually every major topic with practical how-to-do-it instructions. The idea is to build your skills in areas such as self-management, making decisions, avoiding groupthink, listening, coping with organizational politics, handling change, and managing stress. Respected OB scholar Edward E. Lawler III created the “virtuous career spiral” in Figure 1–1 to illustrate how OB-related skills point you toward career success. “It shows that increased skills and performance can lead to better jobs and higher rewards.”9

If I’m an Accounting (or Other Technical Major), Why Should I Study OB? Many students in technical fields such as accounting, finance, computer science, and engineering consider OB to be a “soft” discipline with little or no relevance. You may indeed start out in a narrow specialty, but eventually your hard-won success will catch up with you and you will be tapped for some sort of supervisory or leadership position. Your so-called “soft” people skills will make or break your career at that point. Also, in today’s team-oriented and globalized workplace, your teamwork, cross-cultural, communication, conflict handling, and negotiation skills and your powers of persuasion will be needed early and often. Our advice: Build a solid base of OB-related skills now to be ready for whatever comes along (see Real World/Real People).

Can I Get a Job in OB?

Organizational behavior is an academic designation. With the exception of teaching/research positions, OB is not an everyday job category such as accounting, marketing, or finance. Students of OB typically do not get jobs in organizational behavior, per se. This reality in no way demeans OB or lessens its importance in ef-

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An Entrepreneur’s Odyssey: Lawyer, Baker, Manager

Four years ago,Warren Brown walked away from a job as a federal litigator to bake cakes. It all started on New Year’s 1999 when Brown, an able cook, resolved to become an expert baker as well. After work, he began to whip up cakes. He found that baking provided release from the workaday stress. [In Washington, DC,] he moved into a 600-square-foot storefront that he christened Cake Love. He funded the business with credit cards and then a $125,000 loan backed by the Small Business Administration. . . . With about four of his 16 bakery employees present at any one time . . . and a steady stream of customers, Cake Love is easily crowded. Brown opened the Love Café across the street in 2002 to provide a little breathing room.The café. . . serves sandwiches and soups as well as cake. . . . Though he spends more time managing than frosting cakes these days, he still bakes most mornings. Warren Brown SOURCE: Excerpted from Cliff,“Because Only in America Will Someone Quit a Secure Job as a Lawyer to Start a Bakery,” Inc., April 2005, p 77.

fective organizational management. OB is a horizontal discipline cutting across virtually every job category, business function, and professional specialty. Anyone who plans to make a living in a large or small, public or private, organization needs to study organizational behavior.

A Historical Perspective of OB A historical perspective of the study of people at work helps in studying organizational behavior. According to a management history expert, this is important because Historical perspective is the study of a subject in light of its earliest phases and subsequent evolution. Historical perspective differs from history in that the object of historical perspective is to sharpen one’s vision of the present, not the past.10 In other words, we can better understand where the field of OB is today and where it appears to be headed by appreciating where it has been and how it is being redirected. Let us examine five significant landmarks in the understanding and management of people in the workplace. 1. The human relations movement. 2. The quality movement. 7

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3. The e-business revolution. 4. The age of human and social capital. 5. The emerging area of positive OB.

The Human Relations Movement A unique combination of factors during the 1930s fostered the human relations movement. First, following legalization of union–management collective bargaining in the United States in 1935, management began looking for new ways of handling employees. Second, behavioral scientists conducting on-the-job research started calling for more attention to the “human” factor. Managers who had lost the battle to keep unions out of their factories heeded the call for better human relations and improved working conditions. One such study, conducted at Western Electric’s Chicago-area Hawthorne plant, was a prime stimulus for the human relations movement. Ironically, many of the Hawthorne findings have turned out to be more myth than fact.

The Hawthorne Legacy

Interviews conducted decades later with three subjects of the Hawthorne studies and reanalysis of the original data with modern statistical techniques do not support initial conclusions about the positive effect of supportive supervision. Specifically, money, fear of unemployment during the Great Depression, managerial discipline, and high-quality raw materials—not supportive supervision—turned out to be responsible for high output in the relay assembly test room experiments.11 Nonetheless, the human relations movement gathered momentum through the 1950s, as academics and managers alike made stirring claims about the powerful effect that individual needs, supportive supervision, and group dynamics apparently had on job performance. These relay assembly test room employees in the classic Howthorne Western Electric studies turned in record performance Why? No one knows for certain, and debate continues to this day. Supportive supervision was long believed to be the key factor. Whatever the reason, Howthorne gave the budding human relations movement needed research credibility. Property of AT & T Archives; reprinted with permission of AT&T

The Writings of Mayo and Follett

Essential to the human relations movement were the writings of Elton Mayo and Mary Parker Follett. Australian-born Mayo, who headed the Harvard researchers at Hawthorne, advised managers to attend to employees’ emotional needs in his 1933 classic, The Human Problems of an Industrial Civilization. Follett was a true pioneer, not only as a woman management consultant in the male-dominated industrial world of the 1920s, but also as a writer who saw employees as complex combinations of attitudes, beliefs, and needs. Mary Parker Follett was way ahead of her time in telling managers to motivate job performance instead of merely demanding it, a “pull” rather than “push” strategy. She also built a logical bridge between political democracy and a cooperative spirit in the workplace.12

McGregor’s Theory Y In 1960, Douglas McGregor wrote a book entitled The Human Side of Enterprise, which has become an important philosophical base for the modern view of people at work.13 Drawing upon his experience as a management consultant, McGregor formulated two sharply contrasting sets of assumptions about human nature (see Table 1–1). His

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Table 1–1 McGregor’s Theory X and Theory Y Outdated (Theory X) Assumptions about People at Work

Modern (Theory Y) Assumptions about People at Work

1. Most people dislike work; they avoid it when they can. 2. Most people must be coerced and threatened with punishment before they will work. People require close direction when they are working. 3. Most people actually prefer to be directed. They tend to avoid responsibility and exhibit little ambition.They are interested only in security.

1. Work is a natural activity, like play or rest. 2. People are capable of self-direction and self-control if they are committed to objectives. 3. People generally become committed to organizational objectives if they are rewarded for doing so. 4. The typical employee can learn to accept and seek responsibility. 5. The typical member of the general population has imagination, ingenuity, and creativity.

SOURCE:Adapted from D McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960), Ch 4.

Theory X assumptions were pessimistic and negative and, according to McGregor’s interpretation, typical of how managers traditionally perceived employees. To help managers break with this negative tradition, McGregor formulated his Theory Y, a modern and positive set of assumptions about people. McGregor believed managers could accomplish more through others by viewing them as self-energized, committed, responsible, and creative beings.14 According to this recent overview from HR Magazine, McGregor’s Theory Y is still a distant vision in the American workplace: With strikingly similar statistics, several highly respected research and consulting organizations have found that there’s a huge population of workers—roughly half of all Americans in the workforce—who show up, do what’s expected of them, but don’t go that extra mile, don’t turn on the creative juices, don’t get inspired to create great products or services. Perhaps the most significant finding:These are people, for the most part, who want to go above and beyond, to be an integral part of the company’s success. Something—often a disconnect with an immediate supervisor or a feeling that the organization doesn’t care about them—is getting in the way.There is a huge, untapped potential that many executives, managers and employees do not recognize and, therefore, have not addressed. And it’s sapping organizations’ potential. “We’re running as an economy at 30% efficiency” because so many workers are not contributing as much as they could, says Curt Coffman [from the Gallup Organization].15

Theory Y McGregor’s modern and positive assumptions about employees being responsible and creative.

New Assumptions about Human Nature

Unfortunately, unsophisticated behavioral research methods caused the human relationists to embrace some naive and misleading conclusions.16 For example, human relationists believed in the axiom, “A satisfied employee is a hardworking employee.” Subsequent research, as discussed later in this book, shows the satisfaction—performance linkage to be more complex than originally thought.

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Despite its shortcomings, the human relations movement opened the door to more progressive thinking about human nature. Rather than continuing to view employees as passive economic beings, managers began to see them as active social beings and took steps to create more humane work environments.

The Quality Movement In 1980, NBC aired a television documentary titled “If Japan Can . . . Why Can’t We?” It was a wake-up call for North American companies to dramatically improve product quality or continue losing market share to Japanese electronics and automobile companies. A full-fledged movement ensued during the 1980s and 1990s. Much was written, said, and done about improving the quality of both goods and services.17 Thanks to the concept of total quality management (TQM) and Six Sigma programs, the quality of the goods and services we purchase today is significantly better than in years past. The underlying principles of TQM are more important than ever given customers’ steadily rising expectations: Establish a reputation for great value, top quality, or pulling late-night miracles in time for crucial client meetings, and soon enough, the goalposts move.“Greatness” lasts only as long as someone fails to imagine something better. Inevitably, the exceptional becomes the expected. Call it the performance paradox: If you deliver, you only qualify to deliver more. Great companies and their employees have always endured this treadmill of expectations. But these days, the brewing forces of technology, productivity, and transparency have accelerated the cycle to breakneck speed.18 TQM principles have profound practical implications for managing people today.19

Total quality management An organizational culture dedicated to training, continuous improvement, and customer satisfaction.

What Is TQM?

Experts on the subject offered this definition of total quality man-

agement: TQM means that the organization’s culture is defined by and supports the constant attainment of customer satisfaction through an integrated system of tools, techniques, and training.This involves the continuous improvement of organizational processes, resulting in high-quality products and services.20 Quality consultant Richard J Schonberger sums up TQM as “continuous, customercentered, employee-driven improvement.”21 TQM is necessarily employee driven because product/service quality cannot be continuously improved without the active learning and participation of every employee. Thus, in successful quality improvement programs, TQM principles are embedded in the organization’s culture. In fact, according to the results of a field experiment, bank customers had higher satisfaction after interacting with bank employees who had been trained to provide excellent service.22

The Deming Legacy

TQM is firmly established today thanks in large part to the pioneering work of W Edwards Deming.23 Ironically, the mathematician credited with Japan’s post–World War II quality revolution rarely talked in terms of quality. He instead preferred to discuss “good management” during the hard-hitting seminars he delivered right up until his death at age 93 in 1993.24 Although Deming’s passion was the statistical measurement and reduction of variations in industrial processes, he had much to say about how employees should be treated. Regarding the human side of quality improvement, Deming called for the following:

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Toyota Wrote the Book on Continuous Improvement

The soul of the Toyota production system is a principle called kaizen. The word is often translated as “continuous improvement,” but its essence is the notion that engineers, managers, and line workers collaborate continually to systematize production tasks and identify incremental changes to make work go more smoothly. Toyota strives to keep inventories as close to zero as possible, not only to minimize costs but also to ferret out inefficiencies the moment they occur. Toyota deliberately runs production lines at full tilt.And workers are given authority to stop the process and summon assistance at the first sign of trouble. At the Tsutsumi plant in Toyota City, 6,600 employees working two shifts on two separate production lines can turn out 500,000 vehicles a year in eight model variations at a rate of one per minute. It is a ballet of astonishing precision, enhanced by a myriad of tiny improvements on the factory floor.

SOURCE: C Chandler,“Full Speed Ahead,” Fortune, February 7, 2005, p 82.

• Formal training in statistical process control techniques and teamwork. • Helpful leadership, rather than order giving and punishment. • Elimination of fear so employees will feel free to ask questions. • Emphasis on continuous process improvements rather than on numerical quotas. • Teamwork. • Elimination of barriers to good workmanship.25 One of Deming’s most enduring lessons for managers is his 85–15 rule.26 Specifically, when things go wrong, there is roughly an 85% chance the system (including management, machinery, and rules) is at fault. Only about 15% of the time is the individual employee at fault. Unfortunately, as Deming observed, the typical manager spends most of his or her time wrongly blaming and punishing individuals for system failures. Statistical analysis is required to uncover system failures.

Principles of TQM Despite variations in the language and scope of TQM programs, it is possible to identify four common TQM principles: 1. 2. 3. 4.

Do it right the first time to eliminate costly rework and product recalls. Listen to and learn from customers and employees. Make continuous improvement an everyday matter (See Real World/Real People). Build teamwork, trust, and mutual respect.27

Deming’s influence is clearly evident in this list.28 Once again, as with the human relations movement, we see people as the key factor in organizational success. 11

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In summary, TQM advocates have made a valuable contribution to the field of OB by providing a practical context for managing people. The case for TQM is strong because, as discovered in two comprehensive studies, it works!29 When people are managed according to TQM principles, more of them are likely to get the employment opportunities and highquality goods and services they demand.30 As you will see many times in later chapters, this book is anchored to Deming’s philosophy and TQM principles.

The Internet and E-Business Revolution E-business Running the entire business via the Internet.

Experts on the subject draw an important distinction between e-commerce (buying and selling goods and services over the Internet) and e-business, using the Internet to facilitate every aspect of running a business.31 Says one industry observer: “Strip away the highfalutin talk, and at bottom, the Internet is a tool that dramatically lowers the cost of communication. That means it can radically alter any industry or activity that depends heavily on the flow of information.”32 Relevant information includes everything from customer needs and product design specifications to prices, schedules, finances, employee performance data, and corporate strategy. Intel has taken this broad view of the Internet to heart. The computer-chip giant is striving to become what it calls an e-corporation, one that relies primarily on the Internet to not only buy and sell things, but to facilitate all business functions, exchange knowledge among its employees, and build partnerships with outsiders as well. Intel is on the right track according to this survey finding: “firms that embraced the Internet averaged a 13.4% jump in productivity . . . compared with 4.9% for those that did not.”33 E-business has significant implications for OB because it eventually will seep into every corner of life both on and off the job. Thanks to the Internet, we are able to make quicker and better decisions because of speedy access to vital information. The Internet also allows us to seemingly defy the laws of physics by being in more than one place at a time. For example, consider this futuristic situation at Hackensack University Medical Center in New Jersey: Doctors can tap an internal Web site to examine X-rays from a PC anywhere. Patients can use 37-inch plasma TVs in their rooms to surf the Net for information about their medical conditions.There’s even a life-size robot, Mr Rounder, that doctors can control from their laptops at home.They direct the digital doc, complete with white lab coat and stethoscope, into hospital rooms and use two-way video to discuss patients’ conditions.34 In short, organizational life will never be the same because of e-mail, e-learning,35 e-management, e-leadership (see Table 1–2), virtual teams, and virtual organizations.

The Age of Human and Social Capital Knowledge workers, those who add value by using their brains rather than the sweat off their backs, are more important than ever in today’s global economy. What you know and who you know increasingly are the keys to both personal and organizational success36 (see Figure 1–2). In the United States, the following “perfect storm” of current and emerging trends heightens the importance and urgency of building human and social capital: • Spread of advanced technology to developing countries with rapidly growing middle classes (e.g., China, India, Russia, and Brazil). • Offshoring of increasingly sophisticated jobs (e.g., product design, architecture, medical diagnosis).

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Table 1–2 The Brave New World of E-Leadership Because it involves electronically mediated interactions, in combination with the traditional face-to-face variety, experts say e-leadership raises these major issues for modern management: 1. Leaders and followers have more access to information and each other, and this is changing the nature and content of their interactions. 2. Leadership is migrating to lower and lower organizational levels and out through the boundaries of the organization to both customers and suppliers. 3. Leadership creates and exists in networks that go across traditional organizational and community boundaries. 4. Followers know more at earlier points in the decision-making process, and this is potentially affecting the credibility and influence of leaders. 5. Unethical leaders with limited resources can now impact negatively a much broader audience of potential followers. 6. The amount of time and contact that even the most senior leaders can have with their followers has increased, although the contact is not in the traditional face-to-face mode. Making wise hiring and job assignment decisions, nurturing productive relationships, and building trust are more important than ever in the age of e-leadership. SOURCE: Six implications excerpted from B J Avolio and S S Kahai,“Adding the ‘E’ to E-Leadership: How It May Impact Your Leadership,” Organizational Dynamics, no. 4, 2003, p 333.

• Comparatively poor math and science skills among America’s youth. • Post-9/11 decline in highly skilled immigrants and graduate students. • Massive brain drain caused by retiring post–World War II baby-boom generation.37

What Is Human Capital? (Hint: Think BIG) A team of human resource management authors recently offered this perspective: We’re living in a time when a new economic paradigm—characterized by speed, innovation, short cycle times, quality, and customer satisfaction—is highlighting the importance of intangible assets, such as brand recognition, knowledge, innovation, and particularly human capital.38 Human capital is the productive potential of an individual’s knowledge and actions.39 Potential is the operative word in this intentionally broad definition. When you are hungry, money in your pocket is good because it has the potential to buy a meal. Likewise, a present or future employee with the right combination of knowledge, skills, and motivation to excel represents human capital with the potential to give the organization a competitive advantage. Computer chip maker Intel, for example, is a high-tech company whose future depends on innovative engineering. It takes years of math and science studies to make world-class engineers. Not wanting to leave the future supply of engineers to chance, Intel annually spends millions of dollars funding education at all levels. The company encourages youngsters to study math and science and sponsors science competitions with generous scholarships for the winners.40 Additionally, Intel encourages its employees to volunteer at local schools by giving the schools $200 for every 20 hours contributed.41 Will all of the students end up working for Intel? No. That’s not the point. The point is much bigger—namely, to build the world’s human capital.

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Figure 1–2 The Strategic Importance and Dimensions of Human and Social Capital Strategic assumption: People, individually and collectively, are the key to organizational success

Individual human capital • Intelligence/abilities/ knowledge • Visions/dreams/aspirations • Technical and social skills • Confidence/self-esteem • Initiative/entrepreneurship • Adaptability/flexibility • Readiness to learn • Creativity • Enthusiasm • Motivation/commitment • Persistence • Ethical standards/courage • Honesty • Emotional maturity

• • • • • • Organizational learning (Shared knowledge)

• • • • • • • • • •

Social capital Shared visions/goals Shared values Trust Mutual respect/goodwill Friendship/support groups Mentoring/positive role modeling Participation/empowerment Connections/sources Networks/affiliations Cooperation/collaboration Teamwork Camaraderie Assertive (rather than aggressive) communication Functional (rather than dysfunctional) conflict Win-win negotiations Philanthropy/volunteering

SOURCES: Based on discussions in P S Adler and S Kwon,“Social Capital: Prospects for a New Concept,” Academy of Management Review, January 2002, pp 17–40; and C A Bartlett and S Ghoshal,“Building Competitive Advantage through People,” MIT Sloan Management Review, Winter 2002, pp 34–41.

What Is Social Capital? Social capital The productive potential of strong, trusting, and cooperative relationships.

Our focus now shifts from the individual to social units (e.g., friends, family, company, group or club, nation). Think relationships. Social capital is productive potential resulting from strong relationships, goodwill, trust, and cooperative effort.42 Again, the word potential is key. According to experts on the subject: “It’s true: the social capital that used to be a given in organizations is now rare and endangered. But the social capital we can build will allow us to capitalize on the volatile, virtual possibilities of today’s business environment.”43 Relationships do matter. In a recent general survey, 77% of the women and 63% of the men rated “Good relationship with boss” extremely important. Other factors—including good equipment, resources, easy commute, and flexible hours—received lower ratings.44

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e opl

Company

What Some Companies Are Doing to Build Human and Social Capital Human Capital Program or Activity

General Mills Minneapolis, MN 19,019 employees

“This food company makes it easy for employees to get smart. It reimburses tuition at 100% up to $6,000 per year, even for new employees.”

MITRE McLean,VA and Bedford, MA 5,383 employees

“This technology consultant to the Pentagon flies a Johns Hopkins professor to Bedford, Mass., every week so employees can earn a master’s degree in systems engineering.”

Aflac Columbus, GA 3,904 employees

“As long as . . . [employees’] college-age children or grand-children receive a GPA of 2.5 or higher, the company will pay 100% of their tuition, up to $20,000 per year.” Social Capital Program or Activity

Valero Energy San Antonio,TX 15,882 employees

“This 25-year-old oil refiner and gas retailer has never laid off an employee.”

Cisco Systems San Jose, CA 24,433 employees

“Cisco employees surveyed say they love the company’s efforts to make the workplace fun, from ‘nerd lunches’ in which experts lead a discussion of tech topics to movie-themed chow in Cisco’s cafés on Oscar night.”

TDIndustries Dallas,TX 1,426 employees

“If an employee [at this building supply company] falls ill or a relative dies, an assigned partner helps with household tasks and the like.”

SOURCE: Data and excerpts from R Levering and M Moskowitz,“The 100 Best Companies to Work For,” Fortune, January 24, 2005, pp 72–90.

Building Human and Social Capital Various dimensions of human and social capital are listed in Figure 1–2. They are a preview of what lies ahead in this book, including our discussion of organizational learning in Chapter 17. Formal organizational learning and knowledge management programs, as discussed in Chapter 10, need social capital to leverage individual human capital for the greater good. It is a straightforward formula for success. Growth depends on the timely sharing of valuable knowledge. After all, what good are bright employees who do not network, teach, and inspire? Moreover, the rich array of factors in Figure 1–2 can be an agenda for progressive people who want to join our quest for more people-centered organizations (See Real World/Real People).

The Emerging Area of Positive Organizational Behavior (POB) OB draws heavily on the field of psychology. So major shifts and trends in psychology eventually ripple through to OB. One such shift being felt in OB is the positive psychology movement. This exciting new direction promises to broaden the scope and practical relevance of OB.45 15

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The Positive Psychology Movement Something curious happened to the field of psychology during the last half of the 20th century. It took a distinctly negative turn. Theory and research became preoccupied with mental and behavioral pathologies; in other words, what was wrong with people! Following the traditional medical model, most researchers and practicing psychologists devoted their attention to diagnosing what was wrong with people and trying to make them better. At the turn of the 21st century, bits and pieces of an alternative perspective advocated by pioneering psychologists such as Abraham President George W. Bush hosts the 2005 Intel Science Talent Search (STS) finalMaslow and Carl Rogers were pulled ists.The global economy needs this sort of pre-college human capital if the world together under the label of positive psyis to become a better place to live, work, and raise families.The Intel Foundation chology. This approach recommended pumps millions of dollars into sponsoring the STS and funding scholarships for focusing on human strengths and pothese and other aspiring scientists.Who knows, one of them might be the Presitential as a way to possibly prevent dent some day. mental and behavioral problems and improve the general quality of life. A pair of positive psychologists described their new multi-level approach as follows: The field of positive psychology at the subjective level is about valued subjective experiences: well-being, contentment, and satisfaction (in the past); hope and optimism (for the future); and flow and happiness (in the present). At the individual level, it is about positive individual traits: the capacity for love and vocation, courage, interpersonal skill, aesthetic sensibility, perseverance, forgiveness, originality, future mindedness, spirituality, high talent, and wisdom. At the group level, it is about the civic virtues and the institutions that move individuals toward better citizenship: responsibility, nurturance, altruism, civility, moderation, tolerance, and work ethic.46 This is an extremely broad agenda for understanding and improving the human condition. However, we foresee a productive marriage between the concepts of human and social capital and the positive psychology movement, as it evolves into POB.47

Positive Organizational Behavior: Definition and Key Dimensions Positive organizational behavior (POB) The study and improvement of employees’ positive attributes and capabilities.

University of Nebraska OB scholar Fred Luthans defines positive organizational behavior (POB) as “the study and application of positively oriented human resource strengths and psychological capacities that can be measured, developed, and effectively managed for performance improvement in today’s workplace.”48 His emphasis on study and measurement (meaning a coherent body of theory and research evidence) clearly sets POB apart from the quick-and-easy self-improvement books commonly found on best-seller lists. Also, POB focuses positive psychology more narrowly on the workplace. Luthans created the CHOSE acronym to identify five key dimensions of POB (see Table 1–3). (See Chapter 5 for more on self-efficacy and emotional intelligence.) Progressive managers already know the value of a positive workplace atmosphere, as evidenced by the following situations: At Perkins Coie, in Seattle, “ ‘Happiness committees’ roam the law firm’s halls leav-

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Table 1–3 Luthans’ CHOSE Model of Key POB Dimensions Confidence/self-efficacy: One’s belief (confidence) in being able to successfully execute a specific task in a given context. Hope: One who sets goals, figures out how to achieve them (identify pathways), and is selfmotivated to accomplish them, that is, willpower and “waypower.” Optimism: Positive outcome expectancy and/or a positive causal attribution, but is still emotional and linked with happiness, perseverance, and success. Subjective well-being: Beyond happiness emotion, how people cognitively process and evaluate their lives, the satisfaction with their lives. Emotional intelligence: Capacity for recognizing and managing one’s own and others’ emotions—self-awareness, self-motivation, being empathetic, and having social skills. SOURCE: From F. Luthans, The Acodemy of Management Executive:The Thinking Manager’s Source. Copyright © 2002 by Academy of Management. Reproduced with permission of Academy of Management via Copyright Clearance Center.

ing baskets of candies and other thank-you treats on employees’ desks.”49 In a similar vein, Synovus, a Georgia bank, has developed a “pat-on-the-back culture.”50 Meanwhile, in Atlanta, at Barton Protective Services, “ ‘Love’ appears nine times in this security-guard agency’s outline of company values.”51 POB promises to make helpful contributions to the quest for more people-centered organizations in the years to come.

The Managerial Context: Getting Things Done with and through Others Like the organizations they run, managers touch our lives in many ways. Schools, hospitals, government agencies, and large and small businesses all require systematic management. Formally defined, management is the process of working with and through others to achieve organizational objectives in an efficient and ethical manner. From the standpoint of organizational behavior, the central feature of this definition is “working with and through others.” Managers play a constantly evolving role.52 Today’s successful managers are no longer the I’ve-got-everything-under-control order givers of yesteryear. Rather, they need to creatively envision and actively sell bold new directions in an ethical and people-friendly manner. Effective managers are team players empowered by the willing and active support of others who are driven by conflicting self-interests. Each of us has a huge stake in how well managers carry out their evolving role. Henry Mintzberg, a respected management scholar, observed: “No job is more vital to our society than that of the manager. It is the manager who determines whether our social institutions serve us well or whether they squander our talents and resources.”53 Let us take a closer look at the skills managers need to perform and the future direction of management.

Management Process of working with and through others to achieve organizational objectives efficiently and ethically.

What Do Managers Do? A Skills Profile Observational studies by Mintzberg and others have found the typical manager’s day to be a fragmented collection of brief episodes.54 Interruptions are commonplace, while large

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blocks of time for planning and reflective thinking are not. In one particular study, four toplevel managers spent 63% of their time on activities lasting less than nine minutes each. Only 5% of the managers’ time was devoted to activities lasting more than an hour.55 But what specific skills do effective managers perform during their hectic and fragmented workdays? Many attempts have been made over the years to paint a realistic picture of what managers do.56 Diverse and confusing lists of managerial functions and roles have been suggested. Fortunately, a stream of research over the past 20 years by Clark Wilson and others has given us a practical and statistically validated profile of managerial skills57 (see Table 1–4). Wilson’s managerial skills profile focuses on 11 observable categories of managerial behavior. This is very much in tune with today’s emphasis on managerial competency.58 Wilson’s unique skills-assessment technique goes beyond the usual self-report approach with its natural bias. In addition to surveying a given manager about his or her 11 skills, the Wilson approach also asks those who report directly to the manager to answer questions about their boss’s skills. According to Wilson and his colleagues, the result is an assessment of skill mastery, not simply skill awareness.59 The logic behind Wilson’s approach is both simple and compelling. Who better to assess a manager’s skills than the people who experience those behaviors on a day-today basis—those who report directly to the manager? The Wilson managerial skills research yields four useful lessons: 1. Dealing effectively with people is what management is all about. The 11 skills in Table 1–4 constitute a goal creation/commitment/feedback/reward/accomplishment cycle with human interaction at every turn. 2. Managers with high skills mastery tend to have better subunit performance and employee morale than managers with low skills mastery.60 3. Effective female and male managers do not have significantly different skill profiles,61 contrary to claims in the popular business press in recent years.62

Table 1–4 Skills Exhibited by an Effective Manager* 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Clarifies goals and objectives for everyone involved. Encourages participation, upward communication, and suggestions. Plans and organizes for an orderly work flow. Has technical and administrative expertise to answer organization-related questions. Facilitates work through team building, training, coaching, and support. Provides feedback honestly and constructively. Keeps things moving by relying on schedules, deadlines, and helpful reminders. Controls details without being overbearing. Applies reasonable pressure for goal accomplishment. Empowers and delegates key duties to others while maintaining goal clarity and commitment. Recognizes good performance with rewards and positive reinforcement.

SOURCES:Adapted from material in F Shipper,“A Study of the Psychometric Properties of the Managerial Skill Scales of the Survey of Management Practices,” Educational and Psychological Measurement, June 1995, pp 468–79; C L Wilson, How and Why Effective Managers Balance Their Skills:Technical, Teambuilding, Drive (Columbia, MD: Rockatech Multimedia Publishing, 2003).

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Managers’ Egos Take a Back Seat at JetBlue Airways

JetBlue’s officers don’t act aloof and sit at their desks all day.We roll up our sleeves to understand what’s going on, because our leaders shouldn’t treat others as inferiors. A couple of years ago, we promoted our middle managers without giving them leadership training.They became little dictators, and favoritism started to creep in. So we had to create a leadership program to reset the expectations of what leaders should do. But we didn’t hire a bunch of slick facilitators to talk about principles. Instead,

the people who were actually living them at JetBlue were the ones teaching the courses. Now 40 of our top managers spend two days a year leading the group. In addition, our 23 corporate officers each focus on a different city every year. Once a quarter, they go to the city and listen to the airport staff. SOURCE: JetBlue CEO David Neeleman, as quoted in B Finn,“How to Turn Managers into Leaders,” Business 2.0, September 2004, p 70.

4. At all career stages, derailed managers (those who failed to achieve their potential) tended to be the ones who overestimated their skill mastery (rated themselves higher than their employees did). This prompted the following conclusion from the researcher: “when selecting individuals for promotion to managerial positions, those who are arrogant, aloof, insensitive, and defensive should be avoided.”63 (See Real World/Real People.)

21st-Century Managers Today’s workplace is indeed undergoing immense and permanent changes.64 Organizations have been “reengineered” for greater speed, efficiency, and flexibility.65 Teams are pushing aside the individual as the primary building block of organizations.66 Command-and-control management is giving way to participative management and empowerment.67 Ego-centered leaders are being replaced by customer-centered leaders. Employees increasingly are being viewed as internal customers. All this creates a mandate for a new kind of manager in the 21st century. After conducting a Gallup Organization survey of 80,000 managers and doing follow-up studies of the top performers, Marcus Buckingham came to this conclusion: I’ve found that while there are as many styles of management as there are managers, there is one quality that sets truly great managers apart from the rest: They discover what is unique about each person and then capitalize on it. Average managers play checkers, while great managers play chess.The difference? In checkers, all the pieces are uniform and move in the same way; they are interchangeable.You need to plan and coordinate their movements, certainly, but they all move at the same pace, on parallel paths. In chess, each type of piece moves in a different way, and you can’t play if you don’t know how each piece moves. More important, you won’t win if you don’t think carefully about how you move the pieces. Great managers know and value the unique abilities and even the eccentricities of their employees, and they learn how best to integrate them into a coordinated plan of attack.68 Table 1–5 contrasts the characteristics of past and future managers. As the balance of this book will demonstrate, the managerial shift in Table 1–5 is not just a good idea, it is an absolute necessity in the new workplace. 19

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Table 1–5 Evolution of the 21st-Century Manager

Primary role Learning and knowledge Compensation criteria Cultural orientation Primary source of influence View of people Primary communication pattern Decision-making style Ethical considerations Nature of interpersonal relationships Handling of power and key information Approach to change

Past Managers

Future Managers

Order giver, privileged elite, manipulator, controller Periodic learning, narrow specialist Time, effort, rank Monocultural, monolingual Formal authority Potential problem Vertical

Facilitator, team member, teacher, advocate, sponsor, coach Continuous life-long learning, generalist with multiple specialties Skills, results Multicultural, multilingual Knowledge (technical and interpersonal) Primary resource; human capital Multidirectional

Limited input for individual decisions Afterthought Competitive (win–lose)

Broad-based input for joint decisions Forethought Cooperative (win–win)

Hoard and restrict access

Share and broaden access

Resist

Facilitate

The Contingency Approach: Applying Lessons from Theory, Research, and Practice Contingency approach Using management tools and techniques in a situationally appropriate manner; avoiding the onebest-way mentality.

Scholars have wrestled for many years with the problem of how best to apply the diverse and growing collection of management tools and techniques. Their answer is the contingency approach. The contingency approach calls for using management techniques in a situationally appropriate manner, instead of trying to rely on “one best way.” According to a pair of contingency theorists, [Contingency theories] developed and their acceptance grew largely because they responded to criticisms that the classical theories advocated “one best way” of organizing and managing. Contingency theories, on the other hand, proposed that the appropriate organizational structure and management style were dependent upon a set of “contingency” factors, usually the uncertainty and instability of the environment.69 The contingency approach encourages managers to view organizational behavior within a situational context. According to this modern perspective, evolving situations, not hardand-fast rules, determine when and where various management techniques are appropriate. For example, as discussed in Chapter 16, contingency researchers have determined that there is no single best style of leadership. Organizational behavior specialists embrace the contingency approach because it helps them realistically interrelate individuals, groups, and organizations. Moreover, the contingency approach sends a clear message to managers in today’s global economy: Carefully read the situation and then be flexible enough to adapt.70

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As a human being, with years of interpersonal experience to draw upon, you already know a good deal about people at work. This point is underscored by the title of Ann Crittenden’s new book: If You’ve Raised Kids, You Can Manage Anything: Leadership Begins at Home.71 But more systematic and comprehensive understanding is possible and desirable. A working knowledge of current OB theory, research, and practice can help you develop a tightly integrated understanding of why organizational contributors think and act as they do. In order for this to happen, however, prepare yourself for some intellectual surprises from theoretical models, research results, or techniques that may run counter to your current thinking. Research surprises not only make learning fun, they also can improve the quality of our lives both on and off the job. Let us examine the dynamic relationship between OB theory, research, and practice and the value of each. Figure 1–3 illustrates how theory, research, and practice are related. Throughout the balance of this book, we focus primarily on the central portion, where all three areas overlap. Knowledge of why people behave as they do and what managers can do to improve performance is greatest within this area of maximum overlap. For each major topic, we build a foundation for understanding with generally accepted theory. This theoretical foundation is then tested and expanded by reviewing the latest relevant research findings. After interpreting the research, we discuss the nature and effectiveness of related practical applications. Sometimes, depending on the subject matter, it is necessary to venture into the areas outside the central portion of Figure 1–3. For example, an insightful theory supported by convincing research evidence might suggest an untried or different way of managing. In other instances, an innovative management technique might call for an explanatory theoretical model and exploratory research. Each area—theory, research, and practice—supports and, in turn, is supported by the other two.72 Each area makes a valuable contribution to our understanding of, and ability to, manage organizational behavior.

Figure 1–3 Learning about OB through a Combination of Theory, Research, and Practice

Research

Theory Most complete information for better understanding and managing organizational behavior

Practice

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Learning from Theory Theory A story defining key terms, providing a conceptual framework, and explaining why something occurs.

A respected behavioral scientist, Kurt Lewin, once said there is nothing as practical as a good theory. According to one management researcher, a theory is a story that explains “why.”73 Another calls well-constructed theories “disciplined imagination.”74 A good OB theory, then, is a story that effectively explains why individuals and groups behave as they do. Moreover, a good theoretical model 1. Defines key terms. 2. Constructs a conceptual framework that explains how important factors are interrelated. (Graphic models are often used to achieve this end.) 3. Provides a departure point for research and practical application. Indeed, good theories are a fundamental contributor to improved understanding and management of organizational behavior.75

Learning from Research Because of unfamiliar jargon and complicated statistical procedures, many current and future managers are put off by behavioral research.76 This is unfortunate because practical lessons can be learned as OB researchers steadily advance the frontier of knowledge. Let us examine the various sources and uses of OB research evidence.

Meta-analysis Pools the results of many studies through statistical procedure.

Field study Examination of variables in real-life settings.

Laboratory study Manipulation and measurement of variables in contrived situations.

Sample survey Questionnaire responses from a sample of people.

Case study In-depth study of a single person, group, or organization.

Five Sources of OB Research Insights

To enhance the instructional value of our coverage of major topics, we systematically cite “hard” evidence from five different categories. Worthwhile evidence was obtained by drawing upon the following priority of research methodologies: • Meta-analyses. A meta-analysis is a statistical pooling technique that permits behavioral scientists to draw general conclusions about certain variables from many different studies.77 It typically encompasses a vast number of subjects, often reaching the thousands. Meta-analyses are instructive because they focus on general patterns of research evidence, not fragmented bits and pieces or isolated studies.78 • Field studies. In OB, a field study probes individual or group processes in an organizational setting. Because field studies involve real-life situations, their results often have immediate and practical relevance for managers. • Laboratory studies. In a laboratory study, variables are manipulated and measured in contrived situations. College students are commonly used as subjects. The highly controlled nature of laboratory studies enhances research precision. But generalizing the results to organizational management requires caution.79 • Sample surveys. In a sample survey, samples of people from specified populations respond to questionnaires. The researchers then draw conclusions about the relevant population. Generalizability of the results depends on the quality of the sampling and questioning techniques. • Case studies. A case study is an in-depth analysis of a single individual, group, or organization. Because of their limited scope, case studies yield realistic but not very generalizable results.80

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Three Uses of OB Research Findings Organizational scholars point out that managers can put relevant research findings to use in three different ways:81 1. Instrumental use. This involves directly applying research findings to practical problems. For example, a manager experiencing high stress tries a relaxation technique after reading a research report about its effectiveness. 2. Conceptual use. Research is put to conceptual use when managers derive general enlightenment from its findings. The effect here is less specific and more indirect than with instrumental use. For example, after reading a meta-analysis showing a negative correlation between SOURCE: L. Schwadron, Harvard Business Review, January 2005, p 72. absenteeism and age,82 a manager might develop a more positive attitude toward hiring older people. 3. Symbolic use. Symbolic use occurs when research results are relied on to verify or legitimize already held positions. Negative forms of symbolic use involve self-serving bias, prejudice, selective perception, and distortion. For example, tobacco industry spokespersons routinely deny any link between smoking and lung cancer because researchers are largely, but not 100%, in agreement about the negative effects of smoking. A positive example would be managers maintaining their confidence in setting performance goals after reading a research report about the favorable impact of goal setting on job performance. By systematically reviewing and interpreting research relevant to key topics, this book provides instructive insights about OB. (For more about OB research methods, see Learning Module C at www.mhhe.com/kreitner.)

Learning from Practice Learning to deal effectively with people and eventually manage them is like learning to ride a bicycle. You watch others do it. Sooner or later, you get up the courage to try it yourself. You fall off and skin your knee. You climb back on the bike a bit smarter, and so on, until wobbly first attempts turn into a smooth ride. Your chances of becoming a successful organizational participant and manager can be enhanced by studying the theory, research, and practical examples in this textbook. Figuratively speaking, however, you eventually must climb aboard the “organizational bicycle” and learn by doing.83 The theory➝research➝practice sequence discussed in this section will help you better understand each major topic addressed later in this book. Attention now turns to a topical model that provides a road map for what lies ahead.

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A Topical Model for Understanding and Managing OB Figure 1–4 is a topical road map for our journey through this book. Our destination is organizational effectiveness through continuous improvement. Four different criteria for determining whether or not an organization is effective are discussed in Chapter 17. The study of OB can be a wandering and pointless trip if we overlook the need to translate OB lessons into effective and efficient organized endeavor. At the far left side of our topical road map are managers and team leaders, those who are responsible for accomplishing organizational results with and through others. The three circles at the center of our road map correspond to Parts Two, Three, and Four of this text. Logically, the flow of topical coverage in this book (following introductory Part One) goes from individuals, to group processes, to organizational processes. Around the core of our topical road map in Figure 1–4 is the organization. Accordingly, we end our journey with organization-related material in Part Four. Organizational structure and design are covered there in Chapter 17 to establish and develop the organizational context of organizational behavior. Rounding out our organizational context is a discussion of organizational change in Chapter 18. Chapters 3 and 4 provide a cultural context for OB.

Figure 1–4 A Topical Model for What Lies Ahead External Environment (Cultural Context) Organization (Structure, Culture, Change) Understanding and managing individual behavior

Managers and team leaders responsible for achieving organizational results with and through others

Understanding and managing group and social processes

Organizational effectiveness through continuous improvement

Understanding and managing organizational processes and problems

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The dotted line represents a permeable boundary between the organization and its environment. Energy and influence flow both ways across this permeable boundary. Truly, no organization is an island in today’s highly interactive and interdependent world. Relative to the external environment, international cultures are explored in Chapter 4. Organization–environment contingencies are examined in Chapter 17. Chapter 2 examines the OB implications of significant demographic and social trends, and Module A explores important ethical considerations. These discussions provide a realistic context for studying and managing people at work. Bon voyage! Enjoy your trip through the challenging, interesting, and often surprising world of OB.

Summary of Key Concepts 1. Define the term organizational behavior and explain why OB is a horizontal discipline. Organizational behavior (OB) is an interdisciplinary field dedicated to better understanding and managing people at work. It is both research and application oriented. Except for teaching/ research positions, one does not normally get a job in OB. Rather, because OB is a horizontal discipline, OB concepts and lessons are applicable to virtually every job category, business function, and professional specialty. 2. Contrast McGregor’s Theory X and Theory Y assumptions about employees. Theory X employees, according to traditional thinking, dislike work, require close supervision, and are primarily interested in security. According to the modern Theory Y view, employees are capable of self-direction, of seeking responsibility, and of being creative. 3. Identify the four principles of total quality management (TQM). (a) Do it right the first time to eliminate costly rework. (b) Listen to and learn from customers and employees. (c) Make continuous improvement an everyday matter. (d) Build teamwork, trust, and mutual respect. 4. Define the term e-business, and specify at least three OB-related issues raised by e-leadership. E-business involves using the Internet to more effectively and efficiently manage every aspect of a business. Six OBrelated issues raised by the advent of e-leadership are (a) greater access to information for everyone, (b) leadership is migrating to lower levels and outside the organization, (c) development of nontraditional leadership networks, (d) followers have more information earlier in the decision making process,

(e) greater influence for unethical leaders with limited resources, and (f) more contact between senior leaders and their followers. 5. Contrast human and social capital, and explain why we need to build both. The first involves individual characteristics, the second involves social relationships. Human capital is the productive potential of an individual’s knowledge and actions. Dimensions include such things as intelligence, visions, skills, self-esteem, creativity, motivation, ethics, and emotional maturity. Social capital is productive potential resulting from strong relationships, goodwill, trust, and cooperative effort. Dimensions include such things as shared visions and goals, trust, mutual respect, friendships, empowerment, teamwork, win–win negotiations, and volunteering. Social capital is necessary to tap individual human capital for the good of the organization through knowledge sharing and networking. 6. Specify the five key dimensions of Luthans’s CHOSE model of positive organizational behavior (POB). The CHOSE acronym stands for confidence/self-efficacy, hope, optimism, subjective well-being, and emotional intelligence. 7. Define the term management, and identify at least five of the eleven managerial skills in Wilson’s profile of effective managers. Management is the process of working with and through others to achieve organizational objectives in an efficient and ethical manner. According to the Wilson skills profile, an effective manager (a) clarifies goals and objectives, (b) encourages participation, (c) plans and organizes, (d) has technical and administrative expertise, (e) facilitates work through team building and coaching, (f) provides feedback, (g) keeps things moving, (h) controls details, (i) applies reasonable pressure for goals accomplishment,

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(j) empowers and delegates, and (k) recognizes and rewards good performance. 8. Characterize 21st-century managers. They will be team players who will get things done cooperatively by relying on joint decision making, their knowledge instead of formal authority, and their multicultural skills. They will engage in life-long learning and be compensated on the basis of their skills and results. They will facilitate rather than resist change, share rather than hoard power and key information, and be multidirectional communicators. Ethics will be a

Discussion Questions 1. Why do we need people-centered organizations? 2. What reasons do you have for wanting (or not wanting) to study OB? 3. What is your personal experience with Theory X and Theory Y managers (see Table 1–1)? Which did you prefer? Why? 4. How would you respond to someone who said TQM was just a Fad, it’s not relevant today? 5. What are your personal experiences with e-leadership? What practical lessons have you learned?

forethought instead of an afterthought.They will be generalists with multiple specialties. 9. Describe the sources of organizational behavior research evidence. Five sources of OB research evidence are meta-analyses (statistically pooled evidence from several studies), field studies (evidence from real-life situations), laboratory studies (evidence from contrived situations), sample surveys (questionnaire data), and case studies (observation of a single person, group, or organization).

7. What appeals to you most (or least, or both) about the concept of positive organizational behavior (POB)? 8. Based on either personal experience as a manager or on your observation of managers at work, are the 11 skills in Table 1–4 a realistic portrayal of what managers do? 9. What is your personal experience with 21st-century managers or managers who were stuck in the past? Describe their impact on you and the organization. 10. What “practical” theories have you formulated to achieve the things you want in life (e.g., graduating, keeping fit, getting a good job, meeting that special someone)?

6. What are you doing to build human and social capital?

OB in Action Case Study

IBM’s Donna Riley Strives for “Collaborative Influence”84 It was at a client meeting in San Francisco in October 2002 that Sam Palmisano, IBM’s new CEO, first unveiled the initiative he hoped would transform his company. His idea: The Internet really did change everything (the crash of the New Economy notwithstanding). In a hyperconnected world, IBM’s clients needed to become “on-demand” companies, their every business process exquisitely calibrated to respond instantly to whatever got thrown at them. And to help them, IBM would have to do exactly the same thing.

When she heard about the new strategy, Donna Riley, IBM’s vice president of global talent, remembers wondering whether the company had the right managers for its new direction. “If leadership is stuck in the past, and the business has changed, we have a problem,” she says. By the spring of 2003, Palmisano and his leadership development team realized the strategy would indeed demand a new breed of boss—leaders who were as sensitive to changes in their environment as Indian scouts.

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For help, Riley turned to the Hay Group, a consultancy that specializes in executive development. Hay had done work for IBM before, most notably in 1994 when, at former CEO Lou Gerstner’s behest, the firm had interviewed a group of the company’s top managers. As part of his turnaround strategy for the troubled company, Gerstner wanted to develop a new style of leader who could help transform its failed culture. Ultimately, Hay distilled 11 competencies from the interviews that would guide IBMers’ performance as they pulled off one of the most remarkable corporate rebounds in history. In the summer of 2003, Hay Group returned to conduct another set of interviews with 33 executives who had been identified as outstanding leaders in the new on-demand era—the folks who really got the new strategy and who were on the cutting edge in a high-performance culture. They were drawn from every division of the business, every part of the world, united by their extraordinary ability to get the job done. The plan was to put these top players under a microscope, to divine how they thought about their jobs and the company; how they interacted with clients, peers, and subordinates; how they set goals and went about meeting them—in short, to extract the best practices from the best leaders to see if they could be duplicated. In a series of three-and-a-half-hour interviews, the managers discussed circumstances in which they had been successful—or not. The interviews were supplemented by surveys of the people they worked with. Researchers then combed through the stories and accompanying data, looking for characteristics and qualities that distinguished these high performers. The results were stunning. “The experts predicted maybe a third of the competencies would be the same, a third would be slightly different, and a third would be brand new,” says Riley. “Much to their surprise—and ours—we found it truly is a new book,” requiring all new skills. To begin with, the best executives no longer thought of the folks to whom they sold stuff as customers; they saw them as clients. The difference? “A customer is transactional,” says Harris Ginsberg, IBM’s director of global executive and organization capability. “A client is somebody with whom you have a longstanding relationship and a personal investment.” It’s no longer enough to sell a customer a server. An IBMer should be so focused on becoming a long-term trusted partner that she might even discourage a client from buying some new piece of hardware if it’s in the client’s best interest to hold off. The 33 leaders were also adept at a skill IBM calls “collaborative influence.” In a highly complex world, where multiple groups might need to unite to solve a client’s problems,

old-style siloed thinking just won���t cut it, and command-andcontrol leadership doesn’t work. “It’s really about winning hearts and minds—and getting people whose pay you don’t control to do stuff,” says Mary Fontaine, vice president and general manager of Hay’s McClelland Center for Research and Innovation. For example, Frank Squillante, an IBM vice president, has only four direct reports. To do his job—devising the strategy for the company’s intranet, and then developing and deploying applications for 325,000 people and 100,000 business partners—he must be a master at cajoling people over whom he has no real power. “I use ‘collaborative influence’ every minute of every day,” he says. “If I tried to pull one of these, ‘I’m in charge so you have to do this’ maneuvers, the whole thing would break down.” Riley’s team is now training IBM’s executives in the new competencies. This year, only top management will be assessed against them. The next group—some 4,000 executives—will have a year to study the goals before being held accountable. But the new approach has already spurred some more flexible, collaborative efforts. Cross-functional teams from IBM’s global services, software, and systems groups have helped Mobil Travel Guides transform itself from a travel content provider to a real-time, customized travel-planning service; a team of staffers from Big Blue’s research, software, and consulting services helped Nextel dramatically improve its customer-care services. In an interconnected world, such horizontal, collaborative networks of people clearly make more sense than rigid hierarchies. And leading in such a challenging environment is an acquired skill. “Leadership is a personal journey for each person,” says Riley, “but I think having a culture that says this stuff matters—particularly when it’s linked to your business strategy—is a very powerful combination.”

Questions for Discussion 1. What role, if any, does McGregor’s Theory Y play in IBM’s drive to create a new breed of manager/leader? 2. What evidence of the e-leadership issues presented in Table 1–2 can you detect in this case? Explain. 3. How does the building of human and social capital (Figure 1–2) factor into this case? 4. Which three or four of Wilson’s 11 managerial skills (Table 1–4) will be most important for IBM’s managers in the years ahead? Explain your choices. 5. What is the linkage between the 21st-century manager, profiled in Table 1–5, and IBM’s notion of collaborative influence?

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Personal Awareness and Growth Exercise

How Strong Is Your Motivation to Manage? Objectives

Instructions

1. To introduce a psychological determinant of managerial success. 2. To assess your readiness to manage. 3. To discuss the implications of motivation to manage, from the standpoint of global competitiveness.

Introduction By identifying personal traits positively correlated with both rapid movement up the career ladder and managerial effectiveness, John B Miner developed a psychometric test for measuring what he calls motivation to manage. The questionnaire assesses the strength of seven factors relating to the temperament (or psychological makeup) needed to manage others. One word of caution. The following instrument is a shortened and modified version of Miner’s original. Our version is for instructional and discussion purposes only. Although we believe it can indicate the general strength of your motivation to manage, it is not a precise measuring tool.

Assess the strength of each of the seven dimensions of your own motivation to manage by circling the appropriate numbers on the 1 to 7 scales. Then add the seven circled numbers to get your total motivation to manage score.

Scoring and Interpretation Arbitrary norms for comparison purposes are as follows: Total score of 7–21  Relatively low motivation to manage; 22–34  Moderate; 35–49  Relatively high. How do you measure up? Remember, though, high motivation to manage is only part of the formula for managerial success. The right combination of ability and opportunity is also necessary. Years of motivation-to-manage research by Miner and others has serious implications for America’s future global competitiveness. Generally, in recent years, college students in the United States have not scored highly on motivation to manage.85 Indeed, compared with samples of US college students, samples of students from Japan, China, Mexico,

Factor

Description

Scale

1. Authority figures

A desire to meet managerial role requirements in terms of positive relationships with superiors. A desire to engage in competition with peers involving games or sports and thus meet managerial role requirements in this regard. A desire to engage in competition with peers involving occupational or work-related activities and thus meet managerial role requirements in this regard. A desire to behave in an active and assertive manner involving activities that in this society are often viewed as predominantly masculine and thus to meet managerial role requirements. A desire to tell others what to do and to utilize sanctions in influencing others, thus indicating a capacity to fulfill managerial role requirements in relationships with subordinates. A desire to assume a distinctive position of a unique and highly visible nature in a manner that is rolecongruent for managerial jobs. A desire to meet managerial role requirements regarding activities often associated with managerial work that are of a day-to-day administrative nature.

Weak 1–2–3–4–5–6–7 Strong

2. Competitive games

3. Competitive situations

4. Assertive role

5. Imposing wishes

6. Standing out from group

7. Routine administrative functions

Weak 1–2–3–4–5–6–7 Strong

Weak 1–2–3–4–5–6–7 Strong

Weak 1–2–3–4–5–6–7 Strong

Weak 1–2–3–4–5–6–7 Strong

Weak 1–2–3–4–5–6–7 Strong

Weak 1–2–3–4–5–6–7 Strong Total  _________________

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Korea, and Taiwan consistently scored higher on motivation to manage.86 Miner believes the United States may consequently lag in developing sufficient managerial talent for a tough global marketplace.87 In a study by other researchers, MBA students with higher motivation-to-manage scores tended to earn more money after graduation. But students with a higher motivation to manage did not earn better grades or complete their degree program any sooner than those with a lower motivation to manage.88

Questions for Discussion 1. Do you believe our adaptation of Miner’s motivation to manage instrument accurately assessed your potential as a manager? Explain.

2. Which of the seven dimensions do you think is probably the best predictor of managerial success? Which is the least predictive? Why? 3. Miner puts heavy emphasis on competitiveness by anchoring two of the seven dimensions of motivation to manage to the desire to compete. Some observers believe the traditional (win–lose) competitive attitude is being pushed aside in favor of a less competitive (win–win) attitude today, thus making Miner’s instrument out of date. What is your position on this competitiveness debate? Explain. 4. Do you believe Miner is correct in saying that low motivation to manage hurts the United States’s global competitiveness? Explain.

Group Exercise

Timeless Advice Objectives 1. To get to know some of your fellow students. 2. To put the management of people into a lively and interesting historical context. 3. To begin to develop your teamwork skills.

Introduction Your creative energy, willingness to see familiar things in unfamiliar ways, and ability to have fun while learning are keys to the success of this warm-up exercise. A 20-minute, smallgroup session will be followed by brief oral presentations and a general class discussion. Total time required is approximately 40 to 45 minutes.

Instructions Your instructor will divide your class randomly into groups of four to six people each. Acting as a team, with everyone offering ideas and one person serving as official recorder, each group will be responsible for writing a one-page memo to your current class. Subject matter of your group’s memo will be “My advice for managing people today is. . . .” The fun part of this exercise (and its creative element) involves writing the memo from the viewpoint of the person assigned to your group by your instructor. Among the memo viewpoints your instructor may assign are the following: • Bill Hewlett (chapter-opening vignette).

• Mary Parker Follett. • Douglas McGregor. • A Theory X supervisor of a construction crew (see McGregor’s Theories X and Y in Table 1–1). • W Edwards Deming. • A TQM coordinator at 3M Company. • A contingency management theorist. • A Japanese auto company executive. • The chief executive officer of IBM in the year 2030. • Commander of the Starship Enterprise II in the year 3001. • Others, as assigned by your instructor. Use your imagination, make sure everyone participates, and try to be true to any historical facts you’ve encountered. Attempt to be as specific and realistic as possible. Remember, the idea is to provide advice about managing people from another point in time (or from a particular point of view at the present time). Make sure you manage your 20-minute time limit carefully. A recommended approach is to spend 2 to 3 minutes putting the exercise into proper perspective. Next, take about 10 to 12 minutes brainstorming ideas for your memo, with your recorder jotting down key ideas and phrases. Have your recorder use the remaining time to write your group’s onepage memo, with constructive comments and help from the others. Pick a spokesperson to read your group’s memo to the class.

• An ancient Egyptian slave master (building the great pyramids).

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Questions for Discussion

4. Where does the management of people appear to be headed?

1. What valuable lessons about managing people have you heard?

5. All things considered, what mistakes are today’s managers typically making when managing people?

2. What have you learned about how not to manage people?

6. How well did your group function as a “team”?

3. From the distant past to today, what significant shifts in the management of people seem to have taken place?

Ethical Dilemma

Liar! Liar!89 Calling in with a manufactured cough and a fake, throaty “I’m not feeling well” can seem rather dull compared to some excuses employers hear. . . . Career-Builder.com, . . . commissioned a nationwide survey of 1,600 people and found that more than one-third of U.S. workers called in sick at least once last year when they felt well. . . . Among the most unusual excuses that have been heard: • My bus broke down and was held up by robbers. • I was arrested as a result of mistaken identity. • I hurt myself bowling. • My curlers burned my hair and I had to go to the hairdresser.

If you were a manager, how would you respond to questionable excuses such as these? (what are the ethical implications of your answer?) 1. “I call in sick sometimes when I’m not, so it would be unfair to pick on others who do the same.” (So you’ll do nothing?) 2. “When someone lies to me it not only insults my intelligence, it destroys any trust I might have in that person. Employees with lame excuses for not being here need to be held accountable.” (Explain how.) 3. “It just shows you can’t trust people. You give them an inch, they’ll take a mile. Flagrant rule-breakers need to be punished as a warning to others.” (Explain how.)

• My cat unplugged my alarm clock.

4. “Look, people are people. If I cut them a little slack they will return the favor by doing something extra on the job.” (What about repeat offenders?)

• I forgot to come back to work after lunch.

5. Invent other responses. Discuss.

• I eloped.

• I totaled my wife’s Jeep in a collision with a cow. • I had to be there for my husband’s grand jury trial. • A hit man was looking for me.

For the Chapter 1 Internet Exercise featuring The building of human capital at Intel Corp. (www.intel.com), visit our Web site at www.mhhe.com/kreitner.

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Learning Module A Ethics and Organizational Behavior

T

he loud message comes from one company after another: Surging health care costs for retired workers are creating a giant burden. So companies have been cutting health benefits for their retirees or requiring them to contribute more of the cost. Time for a reality check: In fact, no matter how high health care costs go, well over half of large American corporations face only limited impact from the increases when it comes to their retirees. They have established ceilings on how much they will ever spend per retiree for health care. If health costs go above the caps, it’s the retiree, not the company, who’s responsible. Yet numerous companies are cutting retirees’ health benefits anyway. One possible factor: When companies cut these benefits, they create instant income. This isn’t just the savings that come from not spending as much. Rather, thanks to complex accounting rules, the very act of cutting retirees’ future health care benefits lets companies reduce a liability and generate an immediate accounting gain. In some cases it flows straight to the bottom line. More often it sits on the books like a cookie jar, from which a company takes a piece each year that helps it meet earnings estimates. . . . The fate of retirees can be very different. When Robert Eggleston retired from International Business Machines Corp. 12 years ago, he was paying $40 a month toward health care premiums for himself and his wife, LaRue, with IBM paying the rest. In 1993, IBM set ceilings on its own health care spending for retirees. For those on Medicare, which provides basic hospital and doctor-visit coverage, the cap was $3,000 or $3,500, depending on when they retired. For those younger than 65, the cap was $7,000 or $7,500. Spending hit the caps for the older retirees in 2001, the company says, pushing future health cost increases onto retirees’ shoulders. Mr Eggleston, 66 years old, has seen his premiums jump to $365 a month for the couple. Deductibles and copayments for drugs and doctor visits added $663 a month last year. “It just eats up all the pension,” which is $850 a month, Mrs Eggleston says. Her husband has brain cancer. Though he gets free supplies of a tumor-fighting drug through a program for low-income families, he has cashed in his 401(k) account, and he and LaRue have taken out a second mortgage on their Lake Dallas, Texas, home. IBM retirees as a group saw their health care premiums rise nearly 29% in 2003, on the heels of a 67%-plus increase in 2002. For IBM, with its caps in place, spending on retiree health care declined nearly 5%, after a drop of 18% the year before. IBM confirms that retirees’ spending has risen as its own has fallen.1

FOR DISCUSSION Do you think it is ethical for a company like IBM to raise retirees’ contributions to health benefits while its own decrease? Explain.

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R

l World ea Re al People

Merck Attacks Critics of Big-Selling Painkiller Vioxx

As academic researchers increasingly raised questions about Vioxx’s heart safety, the company struck back hard. It even sued one Spanish pharmacologist, trying unsuccessfully to force a correction of an article he wrote. In another case, it warned that a Stanford University researcher would “flame out” unless he stopped giving “anti-Merck” lectures, according to a letter of complaint written to Merck by a Stanford professor. A company training document listed potential tough questions about Vioxx and said in capital letters,“DODGE!” The revelations shed new light on the interplay between marketing and science at Merck as bad news piled up about a blockbuster drug used by some 20 million Americans. Amid growing danger signs, Merck fought a rearguard action for four and a half years, clinging to a hope that somehow Vioxx’s safety could be confirmed—even though its research chief had already privately acknowledged its risks. SOURCE: Excerpted from A W Mathews and B Martinez,“Painful Drug: E-Mails Suggest Merck Knew Vioxx’s Dangers at Early Stage,” The Wall Street Journal, November 1, 2004, p A1.

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What are the frequency and consequences of unethical behavior? Although it is difficult to obtain precise statistics on the frequency of unethical behavior, a 2005 nationwide survey of 581 human resource professionals revealed that 62% of the respondents occasionally observed unethical behavior at their companies.2 Unethical behavior occurs from the bottom to the top of organizations. For example, a survey of job applicants for executive positions indicated that 64% had been misinformed about the financial condition of potential employers, and 58% of these individuals were negatively affected by this misinformation.3 It is very likely that some of these affected individuals moved their families and left their friends only to find out the promise of a great job in a financially stable organization was a lie. Experts estimated that US companies lose about $600 billion a year from unethical and criminal behavior.4 Studies in the United States and the United Kingdom further demonstrated that corporate commitment to ethics can be profitable. Evidence suggested that profitability is enhanced by a reputation for honesty and corporate citizenship.5 Ethics can also impact the quality of people who apply to work in an organization. A recent online survey of 1,020 individuals indicated that 83% rated a company’s record of business ethics as “very important” when deciding to accept a job offer. Only 2% rated it as “unimportant.”6 As you will learn in this learning module, there are a variety of individual and organizational characteristics that contribute to unethical behavior. OB is an excellent vantage point for better understanding and improving workplace ethics. If OB can provide insights about managing human work behavior, then it can teach us something about avoiding misbehavior.

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Ethics and Organizational Behavior

Learning Module A

Ethics involves the study of moral issues and choices. It is concerned with right versus wrong, good versus bad, and the many shades of gray in supposedly black-and-white issues. Moral implications spring from virtually every decision, both on and off the job. Managers are challenged to have more imagination and the courage to do the right thing. For example, do you think Merck acted ethically when researchers began raising questions about the heart risks associated with its big-selling painkiller Vioxx (see Real World/ Real People)? Merck responded this way even after its research chief, Edward Scolnick, had e-mailed colleagues in March 2000 that “the cardiovacuslar events ‘are clearly there’ and called it a ‘shame.’ ”7 To enhance your understanding about ethics and organizational behavior, we discuss (1) a conceptual framework of ethical behavior, (2) a decision tree for diagnosing ethical decisions, (3) whether moral orientations vary by gender, (4) general moral principles for managers, and (5) how to improve an organization’s ethical climate.

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Ethics Study of moral issues and choices.

A Model of Ethical Behavior Ethical and unethical conduct is the product of a complex combination of influences (see Figure A–1). At the center of the model in Figure A–1 is the individual decision maker. He or she has a unique combination of personality characteristics, values, and moral principles, leaning toward or away from ethical behavior. Personal experience with being rewarded or reinforced for certain behaviors and punished for others also shapes the individual’s tendency to act ethically or unethically. Finally, gender plays an important role in explaining ethical behavior. Men and women have different moral orientations toward organizational behavior.8 This issue is discussed later in this section.

Figure A–1 A Model of Ethical Behavior in the Workplace Neutralizing/enhancing factors

• • • • • •

• • • •

Internal organizational influences Ethical codes Organizational culture Organizational size Structure Perceived pressure for results Corporate strategy

External organizational influences Political/legal Industry culture National culture Environment

Role expectations Individual Personality Values Moral principles History of reinforcement • Gender

• • • •

Top management team characteristics Age Length of service Military service Homogeneity/heterogeneity

• • • •

Ethical behavior

SOURCE: Based in part on A J Daboub,A M A Rasheed, R L Priem, and D A Gray,“Top Management Team Characteristics and Corporate Illegal Activity,” Academy of Management Review, January 1995, pp 138–70.

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Part One

The World of Organizational Behavior

Next, Figure A–1 illustrates two major sources of influence on one’s role expectations. People assume many roles in life, including those of employee or manager. One’s expectations for how those roles should be played are shaped by a combination of internal and external organizational factors. Let us now examine how various internal and external organizational influences impact ethical behavior and how these effects are neutralized or enhanced by characteristics possessed by an organization’s top management team.

Internal Organizational Influences Figure A–1 shows six key internal organizational influences on ethical behavior.9 Corporate ethical codes of conduct and organizational culture, discussed in Chapter 2, clearly contribute to reducing the frequency of unethical behavior. Consider the example of Rudder Finn, the world’s largest privately owned public relations agency. Rudder Finn established an ethics committee early on in its history because the founders maintain that public relations professionals have a special obligation to believe in what they are doing. David Finn, co-founder and CEO, chairs every ethics committee meeting to demonstrate how seriously he takes this issue. In part, these meetings perform the function of a training program in that all members of staff are invited to participate in an open forum, during which actual ethical problems are freely discussed and an outside adviser provides objectivity. “Employees have to trust that if they go to a line manager to discuss a delicate situation or seek advice, they can do so without fear of repercussions,” says Finn.10 This example also illustrates the importance of top management support in creating an ethical work environment. A number of studies have uncovered a positive relationship between organizational size and unethical behavior: Larger firms are more likely to behave illegally. Interestingly, research also reveals that managers are more likely to behave unethically in decentralized organizations. Unethical behavior is suspected to occur in this context because lower-level managers want to “look good” for the corporate office. In support of this conclusion, many studies have found a tendency among middle- and lower-level managers to act unethically in the face of perceived pressure for results. Further, this tendency is particularly pronounced when individuals are rewarded to accomplish their goals.11 By fostering a pressure-cooker atmosphere for results, managers can unwittingly set the stage for unethical shortcuts by employees who seek to please and be loyal to the company.

External Organizational Influences Figure A–1 identifies four key external influences on role expectations and ethical behavior. The political/legal system clearly impacts ethical behavior. As previously mentioned, the United States is currently experiencing an increase in the extent to which its political/ legal system is demanding and monitoring corporate ethical behavior. In contrast, other countries such as China do not put as much emphasis on monitoring unethical and potentially illegal actions. Consider the case of counterfeit business. The World Customs Organization estimates counterfeiting cost companies $512 billion in lost revenue in 2004. China is the largest contributor to counterfeiting in the world, accounting for nearly twothirds of all the fake goods worldwide.12 Past research also uncovered a tendency for firms in certain industries to commit more illegal acts. Researchers partially explained this finding by speculating that an industry’s culture, defined as shared norms, values, and beliefs among firms, predisposes managers to act unethically.

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Although China is the largest contributor to counterfeit business around the world, officials like these in Zhejiang Providence have been increasing their attempts to confiscate fake products. These officials found 460,000 fake Sony brand batteries and 30,000 fake Sony brand earphones.Would you buy a designer “knock-off” if the price was right?

Moreover, Figure A–1 shows that national culture affects ethical behavior (national cultures are discussed in Chapter 4).13 This conclusion was supported in a multi-nation study (including the United States, Great Britain, France, Germany, Spain, Switzerland, India, China, and Australia) of management ethics. Managers from each country were asked to judge the ethicality of the 12 behaviors used in the OB Exercise. Results revealed significant differences across the 10 nations.14 That is, managers did not agree about the ethicality of the 12 behaviors. What is your attitude toward these behaviors? (You can find out by completing the OB Exercise.) Finally, the external environment influences ethical behavior. For example, unethical behavior is more likely to occur in environments that are characterized by less generosity and when industry profitability is declining.

Neutralizing/Enhancing Factors In their search for understanding the causes of ethical behavior, OB researchers uncovered several factors that may weaken or strengthen the relationship between the internal and external influencers shown in Figure A–1 and ethical behavior. These factors all revolve around characteristics possessed by an organization’s top management team (TMT): A TMT consists of the CEO and his or her direct reports.15 The relationship between ethical influencers and ethical behavior is weaker with increasing average age and increasing tenure among the TMT. This result suggests that an older and more experienced group of leaders is less likely to allow unethical behavior to occur. Further, the ethical influencers are less likely to lead to unethical behavior as the number of TMT members with military experience increases and when the TMT possesses heterogenous characteristics (e.g., diverse in terms of gender, age, race, religion, etc.). This conclusion has two important implications. First, it appears that prior military experience favorably influences the ethical behavior of executives. While OB researchers are uncertain about the cause of this relationship, it may be due to the military’s practice of indoctrinating recruits to endorse the values of duty, discipline, and honor. Regardless of the cause, military experience within a TMT is positively related to ethical behavior. Organizations thus should consider the merits of including military experience as one of its selection criteria when hiring or promoting

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OB in Action Case Study

How Ethical Are These Behaviors? Instructions Evaluate the extent to which you believe the following behaviors are ethical. Circle your responses on the rating scales provided. Compute your average score and compare it to the norms.

Very Unethical

Unethical

Neither Ethical nor Unethical

Ethical

Very Ethical

Accepting gifts/favors in exchange for preferential treatment

1

2

3

4

5

Giving gifts/favors in exchange for preferential treatment

1

2

3

4

5

Divulging confidential information

1

2

3

4

5

Calling in sick to take a day off

1

2

3

4

5

Using the organization’s materials and supplies for personal use

1

2

3

4

5

Doing personal business on work time

1

2

3

4

5

Taking extra personal time (breaks, etc.)

1

2

3

4

5

Using organizational services for personal use

1

2

3

4

5

Passing blame for errors to an innocent co-worker

1

2

3

4

5

Claiming credit for someone else’s work

1

2

3

4

5

Not reporting others’ violations of organizational policies

1

2

3

4

5

3

4

5

Concealing one’s errors

1 2 Average score  _________________

Norms (average scores by country) United States  1.49 Great Britian  1.70 Australia  1.44 France  1.66 China  1.46 Average of all 10 countries  1.67 SOURCE:The survey behaviors were taken from T Jackson,“Cultural Values and Management Ethics: A 10-Nation Study,” Human Relations, October 2001, pp. 1287–88.

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Learning Module A

managers. Second, organizations are encouraged to increase the diversity of its TMT if they want to reduce the chances of unethical decision making. Chapter 4 thoroughly discusses how employee diversity can increase creativity, innovation, group problem solving, and productivity.

A Decision Tree for Ethical Decisions Ethical decision making frequently involves trade-offs. The opening vignette to this learning module is a good example. IBM’s decision to raise their retirees’ health benefit contributions saved the company money and thereby created a positive impact on shareholder value. On the other hand, individuals like Robert Eggleston were hurt by this decision. He ultimately had to take out a second mortgage on his home to pay for health-related expenses. This section presents a decision tree that managers can use to help navigate through ethical questions such as the one faced by IBM in the opening vignette. The decision tree is shown in Figure A–2 and it can be applied to any type of decision or action that an individual manager or corporation is contemplating.16 Looking at the tree, the first question to ask is whether or not the proposed action is legal. If the action is

Figure A–2 An Ethical Decision Tree Yes

Yes

Yes

Is it ethical? (To answer, weigh the effect on customers, employees, the community, the environment, and suppliers against the benefit to the shareholders.)

Does it maximize shareholder value?

Is the proposed action legal? No

No

Don't do it.

Do it.

No

Don't do it.

Yes

Don't do it.

Would it be ethical not to take the action? (To answer, weigh the harm or cost that would be imposed on shareholders against the costs or benefits to other stakeholders.)

No

Do it, but disclose the effect of the action to shareholders.

SOURCE: Reprinted by permission of Harvard Business Review. From Constance E Bagley,“The Ethical Leader’s Decision Tree,” Harvard Business Review, February 2003, p 19. Copyright © 2003 by Harvard Business School Publishing Corporation; all rights reserved.

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illegal, do not do it. If the action is legal, then consider the impact of the action on shareholder value. A decision maximizes shareholder value when it results in a more favorable financial position (e.g., increased profits) for an organization. Whether or not an action maximizes shareholder value, the decision tree shows that managers still need to consider the ethical implications of the decision or action. For example, if an action maximizes shareholder value, the next question to consider is whether or not the action is ethical. The answer to this question is based on considering the positive effect of the action on an organization’s other key constituents (i.e., customers, employees, the community, the environment, and suppliers) against the benefit to the shareholders. According to the decision tree framework, managers should make the decision to engage in an action if the benefits to the shareholders exceed the benefits to the other key constituents. Managers should not engage in the action if the other key constituents benefit more from the action than shareholders. Figure A–2 illustrates that managers use a slightly different perspective when their initial conclusion is that an action does not maximize shareholder value. In this case, the question becomes “Would it be ethical not to take action?” This question necessitates that a manager consider the harm or cost of an action to shareholders against the costs or benefits to other key constituents. If the costs to shareholders from a managerial decision exceed the costs or benefits to other constituents, the manager or company should not engage in the action. Conversely, the manager or company should take action when the perceived costs or benefits to the other constituents are greater than the costs to shareholders. Let us apply this decision tree to the example in the opening vignette on IBM. Is it legal for a company to decrease its contribution to retiree health care benefits while simultaneously raising retirees’ contributions? The answer is yes.17 Does an organization maximize shareholder value by decreasing its retiree health care expenses? Again, the answer is yes. We now have to consider the overall benefits to shareholders against the overall benefits to other key constituents. The answer to this question is more complex than it appears and is contingent on an organization’s corporate values. Consider the following two examples. In company one, the organization is losing money and it needs cash in order to invest in new product development. Management believes that new products will fuel the company’s economic growth and ultimate survival. This company’s statement of corporate values also reveals that the organization values profits and shareholder return more than employee loyalty. In this case, the company should make the decision to increase retirees’ health care contributions. Company two, in contrast, is profitable and has been experiencing increased market share with its products. This company’s statement of corporate values also indicates that employees are the most important constituent it has, even more than shareholders: Southwest Airlines is a good example of a company with these corporate values. In this case, the company should not make the decision to decrease its contribution to retirees’ benefits. It is important to keep in mind that the decision tree cannot provide a quick formula that managers and organizations can use to assess every ethical question. It does, however, provide a framework for considering the trade-offs between managerial and corporate actions and managerial and corporate ethics. Try using this decision tree the next time you are faced with an ethical question or problem.

Do Moral Orientations Vary by Gender? It is interesting to note that two women, Sherron Watkins and Maureen Castaneda, played key roles as whistle-blowers (i.e., when an employee informs others about corporate

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wrongdoing) in the Enron fiasco. “Watkins, Enron’s vice president of corporate development, wrote the prescient memo to Enron’s chief executive that warned him the company was in deep financial trouble. Castaneda, Enron’s director of foreign exchange, is the one who told authorities that Enron was still shredding documents after its officials were ordered to preserve every piece of paper.”18 Does this suggest that women are more likely to be whistle-blowers because they have different moral principles than men? A study of 300 self-described whistle-blowers revealed that gender was not related to employees’ reporting wrongdoing.19 Still, other re- Sherron Watkins, former Vice President for Corporate Development at Enron search suggests that men and women was one of the whistleblowers who brought the company’s unethical practices to view moral problems and situations light. Former Enron Chief Executive Officer, Jeffrey Skilling, looks on as she testifies differently. Carol Gilligan, a well- before the Senate Commerce Committee on Enron. Do you think it took a lot of known psychologist, proposed one courage for Sherron to testify? What are the consequences of being a whistleblower? underlying cause of these gender differences. Her research revealed that men and women differed in terms of how they perceived moral problems. Males perceived moral problems in terms of a justice perspective, whereas Justice women relied on a care perspective. The two perspectives are described as follows: perspective Based on the ideal A justice perspective draws attention to problems of inequality and oppression and holds of reciprocal rights up an ideal of reciprocal rights and equal respect for individuals. A care perspective draws and driven by rules attention to problems of detachment or abandonment and holds up an ideal of attention and regulations. and response to need.Two moral injunctions, not to treat others unfairly and not to turn away from someone in need, capture these different concerns.20 Care perspective Involves compassion This description underscores the point that men are expected to view moral problems in and an ideal of terms of rights, whereas women are predicted to conceptualize moral problems as an issue attention and of care involving empathy and compassion. response to need. A meta-analysis of 113 studies tested these ideas by examining whether or not the justice and care orientations varied by gender. Results did not support the expectation that the care perspective was used predominantly by females and the justice orientation predominantly by males.21 The authors concluded that “although distinct moral orientations may exist, these orientations are not strongly associated with gender.”22 This conclusion suggests that future research is needed to identify the source of moral reasoning differences between men and women. Which moral perspective do you prefer: justice or care?

General Moral Principles Management consultant and writer Kent Hodgson has helpfully taken managers a step closer to ethical decisions by identifying seven general moral principles (see Table A–1).

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Hodgson calls them “the magnificent seven” to emphasize their timeless and worldwide relevance. Both the justice and care perspectives are clearly evident in the magnificent seven, which are more detailed and, hence, more practical. Importantly, according to Hodgson, there are no absolute ethical answers for decision makers. The goal for managers should be to rely on moral principles so their decisions are principled, appropriate, and defensible.23 ExxonMobil is a good example of a company trying to follow this recommendation. According to the company’s corporate citizenship statement, We pledge to be a good corporate citizen in all the places we operate worldwide.We will maintain the highest ethical standards, comply with all applicable laws and regulations, and respect local and national cultures.We are dedicated to running safe and environmentally responsible operations.24

Table A–1

The Magnificent Seven: General Moral Principles for Managers

1. Dignity of human life: The lives of people are to be respected. Human beings, by the fact of their existence, have value and dignity.We may not act in ways that directly intend to harm or kill an innocent person. Human beings have a right to live; we have an obligation to respect that right to life. Human life is to be preserved and treated as sacred. 2. Autonomy: All persons are intrinsically valuable and have the right to self-determination.We should act in ways that demonstrate each person’s worth, dignity, and right to free choice. We have a right to act in ways that assert our own worth and legitimate needs.We should not use others as mere “things” or only as means to an end. Each person has an equal right to basic human liberty, compatible with a similar liberty for others. 3. Honesty: The truth should be told to those who have a right to know it. Honesty is also known as integrity, truth telling, and honor. One should speak and act so as to reflect the reality of the situation. Speaking and acting should mirror the way things really are.There are times when others have the right to hear the truth from us; there are times when they do not. 4. Loyalty: Promises, contracts, and commitments should be honored. Loyalty includes fidelity, promise keeping, keeping the public trust, good citizenship, excellence in quality of work, reliability, commitment, and honoring just laws, rules, and policies. 5. Fairness: People should be treated justly. One has the right to be treated fairly, impartially, and equitably. One has the obligation to treat others fairly and justly.All have the right to the necessities of life—especially those in deep need and the helpless. Justice includes equal, impartial, unbiased treatment. Fairness tolerates diversity and accepts differences in people and their ideas. 6. Humaneness. There are two parts: (1) Our actions ought to accomplish good, and (2) we should avoid doing evil.We should do good to others and to ourselves.We should have concern for the well-being of others; usually,we show this concern in the form of compassion, giving, kindness, serving, and caring. 7. The common good:Actions should accomplish the “greatest good for the greatest number” of people. One should act and speak in ways that benefit the welfare of the largest number of people, while trying to protect the rights of individuals. SOURCE: From A Rock and a Hard Place: How to Make Ethical Business Decisions When the Choices Are Tough, (New York,American Management Association, 1992). Reprinted with permission of the author.

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How to Improve the Organization’s Ethical Climate A team of management researchers recommended the following actions for improving onthe-job ethics.25 • Behave ethically yourself. Managers are potent role models whose habits and actual behavior send clear signals about the importance of ethical conduct. Ethical behavior is a top-to-bottom proposition. • Screen potential employees. Surprisingly, employers are generally lax when it comes to checking references, credentials, transcripts, and other information on applicant résumés. More diligent action in this area can screen out those given to fraud and misrepresentation. Integrity testing is fairly valid but is no panacea.26 • Develop a meaningful code of ethics. Codes of ethics can have a positive impact if they satisfy these four criteria: 1. They are distributed to every employee. 2. They are firmly supported by top management. 3. They refer to specific practices and ethical dilemmas likely to be encountered by

target employees (e.g., salespersons paying kickbacks, purchasing agents receiving payoffs, laboratory scientists doctoring data, or accountants “cooking the books”). 4. They are evenly enforced with rewards for compliance and strict penalties for noncompliance. • Provide ethics training. Employees can be trained to identify and deal with ethical issues during orientation and through seminar and video internet training sessions.27 • Reinforce ethical behavior. Behavior that is reinforced tends to be repeated, whereas behavior that is not reinforced tends to disappear. Ethical conduct too often is punished while unethical behavior is rewarded. • Create positions, units, and other structural mechanisms to deal with ethics. Ethics needs to be an everyday affair, not a one-time announcement of a new ethical code that gets filed away and forgotten. Boeing, for example, has hired an outside ethics watchdog in response to several breaches of ethics. Ethics transgressions have cost the company billions of dollars in government contracts and resulted in the firing of several top-level executives. The new external ethics compliance officer will oversee Boeing’s new ethics-compliance programs and will report directly to the US Air Force.28

Discussion Questions 1. Use Figure A–1 to identify the most important influences on IBM’s decision to increase retirees’ contributions to health benefits while decreasing its contributions. 2. Why do you think there is an increase in the number of indictments against executives in the United States? 3. If you were a professor at a university, what would you do to discourage students from cheating on assignments and exams? Explain your recommendations.

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Group Exercise

Investigating the Difference in Moral Reasoning between Men and Women Objectives 1. To determine if men and women resolve moral/ethical problems differently. 2. To determine if males and females use justice and care perspectives, respectively, to solve moral/ethical problems. 3. To improve your understanding about the moral reasoning used by men and women.

Introduction Men and women view moral problems and situations dissimilarly. This is one reason men and women solve identical moral or ethical problems differently. Some researchers believe that men rely on a justice perspective to solve moral problems whereas women are expected to use a care perspective. This exercise presents two scenarios that possess a moral/ethical issue. You will be asked to solve each problem and to discuss the logic behind your decision. The exercise provides you with the opportunity to hear the thought processes used by men and women to solve moral/ethical problems.

Instructions Your instructor will divide the class into groups of four to six. (An interesting option is to use gender-based groups.) Each group member should first read the scenario alone and then make a decision about what to do. Once this is done, use the space provided to outline the rationale for your decision to this scenario. Next, read the second scenario and follow the same procedure: Make a decision and explain your rationale. Once all group members have completed their analyses for both scenarios, meet as a group to discuss the results. One at a time, each group member should present his or her final decision and the associated reasoning for the first scenario. Someone should keep a running tally of the decisions so that a summary can be turned in to the professor at the end of your discussion. Follow the same procedure for the second scenario.29

shipment of 12, and they are all promised to people who previously stopped in to place a deposit and reserve one. A woman comes by the store and pleads with you, saying that her six-year-old daughter is in the hospital very ill, and that “Peter Panda” is the one toy she has her heart set on. Would you sell her one, knowing that you will have to break your promise and refund the deposit to one of the other customers? (There is no way you will be able to get an extra toy in time.) Your Decision: _____ Would Sell

SCENARIO 2 You sell corporate financial products, such as pension plans and group health insurance.You are currently negotiating with Paul Scott, treasurer of a Fortune 500 firm, for a sale that could be in the millions of dollars. You feel you are in a strong position to make the sale, but two competitors are also negotiating with Scott, and it could go either way. You have become friendly with Scott, and over lunch one day he confided in you that he has recently been under treatment for manic depression. It so happens that in your office there is a staff psychologist who does employee counseling.The thought has occurred to you that such a trained professional might be able to coach you on how to act with and relate to a personality such as Scott’s, so as to persuade and influence him most effectively. Would you consult the psychologist? Your Decision: _____ Would Consult

Would Not Consult

Men Women Rationale for your decision:

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Unsure

Rationale for your decision:

SCENARIO 1 You are the manager of a local toy store.The hottest Christmas toy of the year is the new “Peter Panda” stuffed animal.The toy is in great demand and almost impossible to find.You have received your one and only

Would Not Sell

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Questions for Discussion 1. Did males and females make different decisions in response to both scenarios? (Comparative norms can be found in Note30.)

2. What was the moral reasoning used by women and men to solve the two scenarios?31 3. To what extent did males and females use a justice and care perspectives, respectively? 4. What useful lessons did you learn from this exercise?

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Endnotes CHAPTER 1 1P Burrows, “Architects of the Info Age,” Business Week, March 29, 2004, p 22. 2Based on Jeffery Pfeffer, The Human Equation: Building Profits by Putting People First (Boston: Harvard Business School Press, 1998); and Jeffrey Pfeffer and John F. Veiga, “Putting People First for Organizational Success,” Academy of Management Executive, May 1999, pp 37–48. 3Data from Pfeffer and Veiga, “Putting People First for Organizational Success,” p 47. Also see C A O’Reilly and Pfeffer, Hidden Value: How Great Companies Achieve Extraordinary Results with Ordinary People (Boston: Harvard Business School Press, 2000); and J P Guthrie, “HighInvolvement Work Practices, Turnover, and Productivity: Evidence from New Zealand,” Academy of Management Journal, February 2001, pp 180–90. 4As

quoted in P B Brown, “What I Know Now,” Fast Company, February 2005, p 96.

11Evidence

indicating that the original conclusions of the famous Hawthorne studies were unjustified may be found in R G Greenwood, A A Bolton, and R A Greenwood, “Hawthorne a Half Century Later: Relay Assembly Participants Remember,” Journal of Management, Fall–Winter 1983, pp 217–31; and R H Franke and J D Kaul, “The Hawthorne Experiments: First Statistical Interpretation,” American Sociological Review, October 1978, pp 623–43. For a positive interpretation of the Hawthorne studies, see J A Sonnenfeld, “Shedding Light on the Hawthorne Studies,” Journal of Occupational Behaviour, April 1985, pp 111–30.

12See

M Parker Follett, Freedom and Coordination (London: Management Publications Trust, 1949).

13See

D McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960).

14For

a story of a manager’s switch from Theory X to Theory Y, see D Dorsey, “Andy Pearson Finds Love,” Fast Company, August 2001, pp 78–86. Also see J S Nielsen, The Myth of Leadership: Creating Leaderless Organizations (Palo Alto, CA: Davies-Black, 2004).

5See T Butler and J Waldroop, “Understanding ‘People’ People,” Harvard Business Review, June 2004, pp 78–86; R Levering and M Moskowitz, “The 100 Best Companies to Work For,” Fortune, January 24, 2005, pp 72–90; A Harrington, “Hall of Fame,” Fortune, January 24, 2005, p 994; A Pomeroy, “How HR Can Affect the Bottom Line,” HR Magazine, February 2005, pp 14, 16; D K Datta, J P Guthrie, and P M Wright, “Human Resource Management and Labor Productivity: Does Industry Matter?” Academy of Management Journal, February 2005, pp 135–45; and P Babcock, “Find What Workers Want,” HR Magazine, April 2005, pp 50–56.

18J McGregor, “The Performance Paradox,” Fast Company, April 2005, pp 29–30. Also see A Levin, “Fewer Crashes Caused by Pilots,” USA Today, March 2, 2004, p 1A.

6C

19Instructive

I Barnard, The Functions of the Executive (Cambridge, MA: Harvard University Press, 1938), p 73.

15S Bates, “Getting Engaged,” HR Magazine, February 2004, pp 44, 46. 16See

D W Organ, “Elusive Phenomena,” Business Horizons, March–April 2002, pp 1–2.

17See,

for example, R Zemke, “TQM: Fatally Flawed or Simply Unfocused?” Training, October 1992, p 8.

8See J B Miner, “The Rated Importance, Scientific Validity, and Practical Usefulness of Organizational Behavior Theories: A Quantitative Review,” Academy of Management Learning and Education, September 2003, pp 250–68.

background articles on TQM are R Zemke, “A Bluffer’s Guide to TQM,” Training, April 1993, pp 48–55; R R Gehani, “Quality Value-Chain: A Meta-Synthesis of Frontiers of Quality Movement,” Academy of Management Executive, May 1993, pp 29–42; P Mears, “How to Stop Talking about, and Begin Progress toward, Total Quality Management,” Business Horizons, May–June 1993, pp 11–14; and the Total Quality Special Issue of Academy of Management Review, July 1994.

9Edward

20M

7F Zakaria, “The Education of Paul Wolfowitz,” Newsweek, March 28, 2005, p 37.

E Lawler III, Treat People Right! How Organizations and Individuals Can Propel Each Other into a Virtuous Spiral of Success (San Francisco: Jossey-Bass, 2003), p 19. Also see D Rosato, “21 Ways to Jump Start Your Career,” Money, April 2005, pp 162–66. 10B

S Lawrence, “Historical Perspective: Using the Past to Study the Present,” Academy of Management Review, April 1984, p 307.

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Sashkin and K J Kiser, Putting Total Quality Management to Work (San Francisco: Berrett-Koehler, 1993), p 39.

21R J Schonberger, “Total Quality Management Cuts a Broad Swath—Through Manufacturing and Beyond,” Organizational Dynamics, Spring 1992, p 18. Also see R Gulati and J B Oldroyd, “The Quest for Customer Focus,” Harvard Business Review, April 2005, pp 92–101; and A Tilin, “Vespa Goes Back to School,” Business 2.0, April 2005, p 24.

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22Based on C Hui, S S K Lam, and J Schaubroeck, “Can Good Citizens Lead the Way in Providing Quality Service? A Field Quasi Experiment,” Academy of Management Journal, October 2001, pp 988–95. Also See J Pfeffer, “How Companies Get Smart,” Business 2.0, January–February 2005, p 74. 23Deming’s landmark work is W E Deming. Out of the Crisis (Cambridge, MA: MIT, 1986). 24See

M Trumbull, “What Is Total Quality Management?” The Christian Science Monitor, May 3, 1993, p 12; J Hillkirk, “World-Famous Quality Expert Dead at 93,” USA Today, December 21, 1993, pp 1B–2B; and O Port, “The Kings of Quality,” BusinessWeek, August 30, 2004, p 20.

25Based on discussion in M Walton, Deming Management at Work (New York: Putnam/Perigee, 1990). 26Ibid.,

p 20.

27Adapted

from D E Bowen and E E Lawler III “Total QualityOriented Human Resources Management,” Organizational Dynamics, Spring 1992, pp 29–41. 28See T F Rienzo, “Planning Deming Management for Service Organizations,” Business Horizons, May–June 1993, pp 19–29. Also see M R Yilmaz and S Chatterjee, “Deming and the Quality of Software Development,” Business Horizons, November–December 1997, pp 51–58. 29For

details, see T J Douglas and W Q Judge, Jr, “Total Quality Management Implementation and Competitive Advantage: The Role of Structural Control and Exploration,” Academy of Management Journal, February 2001, pp 158–69; and K B Hendricks and V R Singhal, “The Long-Run Stock Price Performance of Firms with Effective TQM Programs,” Management Science, March 2001, pp 359–68. 30For example, see J R Dew, “Learning from Baldrige Winners at the University of Alabama,” Journal of Organizational Excellence, Spring 2001, pp 49–56; R B Chase and S Dasu, “Want to Perfect Your Company’s Service? Use Behavioral Science,” Harvard Business Review, June 2001, pp 79–84; A W Ulwick, “Turn Customer Input into Innovation,” Harvard Business Review, January 2002, pp 91–97; and S Thomke and E von Hippel, “Customers as Innovators: A New Way to Create Value,” Harvard Business Review, April 2002, pp 74–81. 31See G Hamel, “Is This All You Can Build with the Net? Think Bigger,” Fortune, April 30, 2001, 134–38; and B Rosenbloom, “The Ten Deadly Myths of E-Commerce,” Business Horizons, March–April 2002, pp 61–66. Internet and Web pioneers are profiled in O Port, “He Made the Net Work,” BusinessWeek, September 27, 2004, p 20; and O Port, “Spinning the World’s Web,” BusinessWeek, November 8, 2004, p 16. 32M

J Mandel and R D Hof, “Rethinking the Internet,” BusinessWeek, March 26, 2001, p 118. Also see G T Lumpkin and G G Dess, “E-Business Strategies and Internet Business Models: How the Internet Adds Value,” Organizational Dynamics, no. 2, 2004, pp 161–73; and T J Mullaney, “E-Biz Strikes Again!” BusinessWeek, May 10, 2004, pp 80–82. 33A Bernasek,

“Buried in Tech,” Fortune, April 16, 2001, p 52.

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34T J Mullaney and A Weintraub, “The Digital Hospital,” BusinessWeek, March 28, 2005, p 77. 35See

S Boehle, “Simulations: The Next Generation of ELearning,” Training, January 2005, pp 22–31; and A Fisher, “Find Online Training That Pays Off,” Fortune, February 7, 2005, p 34. 36See R J Grossman, “Blind Investment,” HR Magazine, January 2005, pp 40–47; and A Pomeroy, “People Are Our Greatest Asset,” HR Magazine, April 2005, p 20. 37For

details on these trends, see S Hamm, “Tech’s Future,” BusinessWeek, September 27, 2004, pp 82–89; J Puliyenthurunthel and M Kripalani, “Good Help Is Hard to Find,” BusinessWeek, February 14, 2005, p 52; J Pfeffer, “A Blueprint for Success,” Business 2.0, April 2005, p 66; S Clifford, “Employers Tackle a Tricky Math Problem,” Inc., March 2005, p 28; S Ladika, “Unwelcome Changes,” HR Magazine, February 2005, pp 83–90; E E Gordon, “The 2010 Crossroad,” Training, January 2005, pp 33–35; R J Grossman, “The Truth about the Coming Labor Shortage,” HR Magazine, March 2005, pp 46–53; A Fisher, “How to Battle the Coming Brain Drain,” Fortune, March 21, 2005, pp 121–28; and J Puliyenthuruthel, “The Soft Underbelly of Offshoring,” BusinessWeek, April 25, 2005, p 52. 38B E Becker, M A Huselid, and D Ulrich, The HR Scorecard: Linking People, Strategy, and Performance (Boston: Harvard Business School Press, 2001), p 4. 39See

D Stamps, “Measuring Minds,” Training, May 2000, pp 76–85; C A Bartlett and S Ghoshal, “Building Competitive Advantage through People,” MIT Sloan Management Review, Winter 2002, pp 34–41; and R Rodriguez, “Meet the New Learning Executive,” HR Magazine, April 2005, pp 64–69. 40See

“Top High School Scientists Selected,” USA Today, March 16, 2005, p 5D; and O Port, “Meet the Best and Brightest,” BusinessWeek, March 28, 2005, pp 88–91.

41Data from “The 100 Best Companies to Work For,” Fortune, February 4, 2002, p 84. 42Inspired by P S Adler and S Kwon, “Social Capital: Prospects for a New Concept,” Academy of Management Review, January 2002, pp 17–40. Also see D Lidsky, “Winning the Relationship Game,” Fast Company, October 2004, pp 113–15; J Steinberg, “One Heart at a Time,” Fast Company, November 2004, p 49; K H Hammonds, “A Lever Long Enough to Move the World,” Fast Company, January 2005, pp 60–63; and A C Inkpen and E W K Tsang, “Social Capital, Networks, and Knowledge Transfer,” Academy of Management Review, January 2005, pp 146–65. 43L

Prusak and D Cohen, “How to Invest in Social Capital,” Harvard Business Review, June 2001, p 93.

44Data

from “What Makes a Job OK,” USA Today, May 15, 2000, p 1B.

45See W L Garner and J R Schermerhorn Jr, “Unleashing Individual Potential: Performance Gains through Positive Organizational Behavior and Authentic Leadership,”

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Organizational Dynamics, no. 3, 2004, pp 270–81; T A Wright and R Cropanzano, “The Role of Psychological Well-Being in Job Performance: A Fresh Look at an Age-Old Quest,” Organizational Dynamics, no. 4, 2004, pp 338–51; and J H Gavin and R O Mason, “The Virtuous Organization: The Value of Happiness in the Workplace,” Organizational Dynamics, no. 4, 2004, pp 379–92. 46M

E P Seligman and M Csikszentmihalyi, “Positive Psychology: An Introduction,” American Psychologist, January 2000, p 5. Also see the other 15 articles in the January 2000 issue of American Psychologist; and M Elias, “What Makes People Happy: Psychologists Now Know,” USA Today, December 9, 2002, pp 1A–2A. 47See F Luthans, K W Luthans, and B C Luthans, “Positive Psychological Capital: Beyond Human and Social Capital,” Business Horizons, January–February 2004, pp 45–50; and F Luthans and C M Youssef, “Human, Social, and Now Positive Psychological Capital Management: Investing in People for Competitive Advantage,” Organizational Dynamics, no. 2, 2004, pp 143–60. 48F

Luthans, “The Need for and Meaning of Positive Organizational Behavior,” Journal of Organizational Behavior, September 2002, p 698. Also see T A Wright, “Positive Organizational Behavior: An Idea Whose Time Has Truly Come,” Journal of Organizational Behavior, June 2003, pp 437–42. 49R

Levering and M Moskowitz, “2004 Special Report: The 100 Best Companies to Work For,” Fortune, January 12, 2004, p 78.

50A Harrington,

“Hall of Fame,” Fortune, January 24, 2005, p 94. Also see S Zuboff, “The Case for Optimism,” Fast Company, April 2005, p 101.

51Levering and Moskowitz, “2004 Special Report: The 100 Best Companies to Work For,” p 76. 52See

P F Drucker, “What Makes an Effective Executive,” Harvard Business Review, June 2004, pp 58–63; M E Porter, J W Lorsch, and N Nohria, “Seven Surprises for New CEOs,” Harvard Business Review, October 2004, pp 62–72; D McGinn, “Building a Better CEO,” Newsweek, March 28, 2005, pp 38–39; and J Welch and S Welch, “How to Be a Good Leader,” Newsweek, April 4, 2005, pp 45–48. 53H Mintzberg, “The Manager’s Job: Folklore and Fact,” Harvard Business Review, July–August 1975, p 61. Also see J Gosling and H Mintzberg, “The Five Minds of a Manager,” Harvard Business Review, November 2003, pp 54–63; and H Mintzberg, “Third-Generation Management Development, Training and Development, March 2004, pp 28–38. 54See,

for example, H Mintzberg, “Managerial Work: Analysis from Observation,” Management Science, October 1971, pp B97–B110; and F Luthans, “Successful vs. Effective Real Managers,” Academy of Management Executive, May 1988, pp 127–32. For an instructive critique of the structured observation method, see M J Martinko and W L Gardner, “Beyond Structured Observation: Methodological Issues and New Directions,” Academy of Management Review, October

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1985, pp 676–95. Also see N Fondas, “A Behavioral Job Description for Managers,” Organizational Dynamics, Summer 1992, pp 47–58. 55See

L B Kurke and H E Aldrich, “Mintzberg Was Right!: A Replication and Extension of The Nature of Managerial Work,” Management Science, August 1983, pp 975–84.

56For

example, see H Bruch and S Ghoshal, “Beware the Busy Manager,” Harvard Business Review, February 2002, pp 62–69.

57Validation

studies can be found in E Van Velsor and J B Leslie, Feedback to Managers, Volume II: A Review and Comparison of Sixteen Multi-Rater Feedback Instruments (Greensboro, NC: Center for Creative Leadership, 1991); F Shipper, “A Study of the Psychometric Properties of the Managerial Skill Scales of the Survey of Management Practices,” Educational and Psychological Measurement, June 1995, pp 468–79; and C L Wilson, How and Why Effective Managers Balance Their Skills: Technical, Teambuilding, Drive (Columbia, MD: Rockatech Multimedia Publishing, 2003).

58For

example, see S B Parry, “Just What Is a Competency? (And Why Should You Care?)” Training, June 1998, pp 58–64.

59See

F Shipper, “Mastery and Frequency of Managerial Behaviors Relative to Sub-Unit Effectiveness,” Human Relations, April 1991, pp 371–88.

60Ibid. 61Data

from F Shipper, “A Study of Managerial Skills of Women and Men and Their Impact on Employees’ Attitudes and Career Success in a Nontraditional Organization,” paper presented at the Academy of Management Meeting, August 1994, Dallas, Texas. The same outcome for on-the-job studies is reported in A H Eagly and B T Johnson, “Gender and Leadership Style: A Meta-Analysis,” Psychological Bulletin, September 1990, pp 233–56.

62For

instance, see J B Rosener, “Ways Women Lead,” Harvard Business Review, November–December 1990, pp 119–25; and C Lee, “The Feminization of Management,” Training, November 1994, pp 25–31.

63Based

on F Shipper and J E Dillard Jr, “A Study of Impending Derailment and Recovery of Middle Managers across Career Stages,” Human Resource Management, Winter 2000, pp 331–45. Also see S Finkelstein, Why Smart Executives Fail: and What You Can Learn from Their Mistakes (New York: Portfolio, 2003); and B Stone, “The Music Stops for a Rock Star,” Newsweek, February 21, 2005, pp 38–40.

64See

S Cummings and D Angwin, “The Future Shape of Strategy: Lemmings or Chimeras?” Academy of Management Executive, May 2004, pp 21–36; and M C Mankins, “Stop Wasting Valuable Time,” Harvard Business Review, September 2004, pp 58–65.

65Essential

sources on reengineering are M Hammer and J Champy, Reengineering the Corporation: A Manifesto for Business Revolution (New York: HarperCollins, 1993); and J Champy, Reengineering Management: The Mandate for New Leadership (New York: HarperCollins, 1995). Also see

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“Anything Worth Doing Is Worth Doing from Scratch,” Inc., May 18, 1999 (20th Anniversary Issue), pp 51–52.

pp 31–38. Also see D Cohen, “Research: Food for Future Thought,” HR Magazine, May 2001, p 184.

66See

77Complete

C A Beatty and B A Barker Scott, Building Smart Teams: A Roadmap to High Performance (Thousand Oaks, CA: Sage, 2004). 67See, for example, W A Randolph and M Sashkin, “Can Organizational Empowerment Work in Multinational Settings?” Academy of Management Executive, February 2002, pp 102–15; S E Seibert, S R Silver, and W A Randolph, “Taking Empowerment to the Next Level: A Multiple-Level Model of Empowerment, Performance, and Satisfaction,” Academy of Management Journal, June 2004, pp 332–49; J L Kerr, “The Limits of Organizational Democracy,” Academy of Management Executive, August 2004, pp 81–97; and J Janove, “A 3,500-YearOld Lesson in Delegating,” HR Magazine, March 2005, pp 109–22. 68M Buckingham, “What Great Managers Do,” Harvard Business Review, March 2005, pp 70–79. Also see M Buckingham, One Thing You Need to Know: . . . About Great Managing, Great Leading, and Sustained Individual Success (New York: Free Press, 2005). 69H

L Tosi, Jr, and J W Slocum, Jr, “Contingency Theory: Some Suggested Directions,” Journal of Management, Spring 1984, p 9.

70For

empirical evidence in a cross-cultural study, see D I Jung and B J Avolio, “Effects of Leadership Style and Followers’ Cultural Orientation on Performance in Groups and Individual Task Conditions,” Academy of Management Journal, April 1999, pp 208–18. 71See Ann Crittenden, If You’ve Raised Kids, You Can Manage Anything: Leadership Begins at Home (New York: Gotham Books, 2004). 72See S L Rynes, J M Bartunek, and R L Daft, “Across the Great Divide: Knowledge Creation and Transfer between Practitioners and Academics,” Academy of Management Journal, April 2001, pp 340–55. 73See R L Daft, “Learning the Craft of Organizational Research,” Academy of Management Review, October 1983, pp 539–46. 74See K E Weick, “Theory Construction as Disciplined Imagination,” Academy of Management Review, October 1989, pp 516–31. Also see C C Lundberg, “Is There Really Nothing So Practical as a Good Theory?” Business Horizons, September–October 2004, pp 7–14. 75Theory-focused versus problem-focused research is discussed in K E Weick, “Agenda Setting in Organizational Behavior: A Theory-Focused Approach,” Journal of Management Inquiry, September 1992, pp 171–82. Also see the collection of articles about theory in the March 2005 issue of Academy of Management Learning and Education, pp 74–113. 76For

instance, see M R Buckley, G R Ferris, H J Bernardin, and M G Harvey, “The Disconnect between the Science and Practice of Management,” Business Horizons, March–April 1998,

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discussion of this technique can be found in J E Hunter, F L Schmidt, and G B Jackson, Meta-Analysis. Cumulating Research Findings across Studies (Beverly Hills, CA: Sage Publications, 1982); and J E Hunter and F L Schmidt, Methods of Meta-Analysis: Correcting Error and Bias in Research Findings (Newbury Park, CA: Sage Publications, 1990). Also see J Merritt and L Lavelle, “A Different Kind of Governance Guru,” BusinessWeek, August 9, 2004, pp 46–47.

78Limitations of meta-analysis technique are discussed in P Bobko and E F Stone-Romero, “Meta-Analysis May Be Another Useful Tool, but It Is Not a Panacea,” in Research in Personnel and Human Resources Management, vol. 16, ed G R Ferris (Stamford, CT: JAI Press, 1998), pp 359–97. Also see R A Peterson and S P Brown, “On the Use of Beta Coefficients in Meta-Analysis,” Journal of Applied Psychology, January 2005, pp 175–181. 79For

an interesting debate about the use of students as subjects, see J Greenberg, “The College Sophomore as Guinea Pig: Setting the Record Straight,” Academy of Management Review, January 1987, pp 157–59; and M E Gordon, L A Slade, and N Schmitt, “Student Guinea Pigs: Porcine Predictors and Particularistic Phenomena,” Academy of Management Review, January 1987, pp 160–63. 80Good discussions of case studies can be found in A S Lee, “Case Studies as Natural Experiments,” Human Relations, February 1989, pp 117–37; and K M Eisenhardt, “Building Theories from Case Study Research,” Academy of Management Review, October 1989, pp 532–50. The case survey technique is discussed in R Larsson, “Case Survey Methodology: Analysis of Patterns across Case Studies,” Academy of Management Journal, December 1993, pp 1515–46. 81Based

on discussion found in J M Beyer and H M Trice, “The Utilization Process: A Conceptual Framework and Synthesis of Empirical Findings,” Administrative Science Quarterly, December 1982, pp 591–622. Also see S Albers Mohrman, C B Gibson, and A M Mohrman, Jr, “Doing Research That Is Useful to Practice: A Model and Empirical Exploration,” Academy of Management Journal, April 2001, pp 357–75. 82See J J Martocchio, “Age-Related Differences in Employee Absenteeism: A Meta-Analysis,” Psychology & Aging, December 1989, pp 409–14. 83See J Beeson, “Building Bench Strength: A Tool Kit for Executive Development,” Business Horizons, November–December 2004, pp 3–9. 84L Tischler,

“IBM’s Management Makeover,” Fast Company, November 2004, pp 112–13. For more on IBM, see S Hamm, “Beyond Blue,” BusinessWeek, April 18, 2005, pp 68–76.

85These

research results are discussed in detail in J B Miner and N R Smith, “Decline and Stabilization of Managerial Motivation over a 20-Year Period,” Journal of Applied Psychology, June 1982, pp 297–305.

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86See J B Miner, J M Wachtel, and B Ebrahimi, “The Managerial Motivation of Potential Managers in the United States and Other Countries of the World: Implications for National Competitiveness and the Productivity Problem,” in Advances in International Comparative Management, vol. 4, ed B Prasad (Greenwich, CT: JAI Press, 1989), pp 147–70; and J B Miner, C C Chen, and K C Yu, “Theory Testing under Adverse Conditions: Motivation to Manage in the People’s Republic of China,” Journal of Applied Psychology, June 1991, pp 343–49. 87See J B Miner, B Ebrahimi, and J M Wachtel, “How Deficiencies in Motivation to Manage Contribute to the United States’ Competitiveness Problem (and What Can Be Done about It),” Human Resource Management, Fall 1995, pp 363–87. 88Based on K M Bartol and D C Martin, “Managerial Motivation among MBA Students: A Longitudinal Assessment,” Journal of Occupational Psychology, March 1987, pp 1–12. 89Excerpted from K Gurchiek, “I Can’t Make It to Work Today, Boss . . . Gotta Round Up My Ostriches,” HR Magazine, March 2005, p 30.

LEARNING MODULE A 1Excerpted

from Ellen E Schultz and Theo Francis, “Financial Surgery: How Cuts in Retiree Benefits Fatten Companies’ Bottom Lines,” The Wall Street Journal, Eastern Edition, March 16, 2004, p A1. Copyright 2004 by Dow Jones & Co. Inc. Reproduced with permission of Dow Jones & Co. Inc. via Copyright Clearance Center. 2Results

can be found in “HR Poll Results,” http://hr2.blr.com/index.cfm/Nav/11.0.0.0/Action/Poll_Question/ qid/170, accessed April 8, 2005. 3Results can be found in Matthew Boyle, “By the Numbers: Liarliar!” Fortune, May 26, 2003, p 44. 4See

www.josephsoninstitute.org/pdf/workplace-flier_0604.pdf, accessed April 8, 2005. 5A discussion of ethics and financial performance is provided by R M Fulmer, “The Challenge of Ethical Leadership,” Organizational Dynamics, August 2004, pp 307–17. 6Results

can be found in “Tarnished Employment Brands Affect Recruiting,” HR Magazine, November 2004, pp 16, 20. 7A W Mathews and B Martinez, “Painful Drug: E-Mails Suggest Merck Knew Vioxx’s Dangers at Early Stage,” The Wall Street Journal, November 1, 2004, p A1. 8See

C Gilligan, “In a Different Voice: Women’s Conceptions of Self and Morality,” Harvard Educational Review, November 1977, pp 481–517. 9The following discussion is based on A J Daboub, A M A Rasheed, R L Priem, and D A Gray, “Top Management Team Characteristics and Corporate Illegal Activity,” Academy of Management Review, January 1995, pp 138–70. 10L

Simpson, “Taking the High Road,” Training, January 2002, p 38.

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11Supporting

results can be found in M E Schweitzer, L Ordónez, and B Douma, “Goal Setting as a Motivator of Unethical Behavior,” Academy of Management Journal, June 2004, pp 422–32.

12These

statistics, and counterfeiting in general, are discussed in F Balfour, “The Global Counterfeit Business Is Out of Control, Targeting Everything from Computer Chips to Life-Saving Medicines. It’s So Bad That Even China May Need to Crack Down,” Business Week, February 7, 2005, pp 54–64.

13Supporting

research can be found in J B Cullen, K P Parboteeah, and M Hoegl, “Cross-National Differences in Managers’ Willingness to Justify Ethically Suspect Behaviors: A Test of Institutional Anomie Theory,” Academy of Management Journal, June 2004, pp 411–21.

14Results

can be found in T Jackson, “Cultural Values and Management Ethics: A 10-Nation Study,” Human Relations, October 2001, pp 1267–302.

15The

following discussion is based on Daboub et al., “Top Management Team Characteristics and Corporate Illegal Activity.”

16This

discussion is based on Constance E Bagley, “The Ethical Leader’s Decision Tree,” Harvard Business Review, February 2003, pp 18–19.

17For

a thorough discussion of this issue, see Schultz and Francis, “Financial Surgery: How Cuts in Retiree Benefits Fatten Companies’ Bottom Lines.”

18T

Gutner, “Blowing Whistles—and Being Ignored,” Business Week, March 18, 2002, p 107.

19Results

are discussed in ibid.

20C

Gilligan and J Attanucci, “Two Moral Orientations: Gender Differences and Similarities,” Merril-Palmer Quarterly, July 1988, pp 224–25.

21Results

can be found in S Jaffee and J Hyde, “Gender Differences in Moral Orientation: A Meta-Analysis,” Psychological Bulletin, September 2000, pp 703–26.

22Ibid,

p 719.

23See

Ch 6 in K Hodgson, A Rock and a Hard Place: How to Make Ethical Business Decisions When the Choices Are Tough (New York: AMACOM, 1992), pp 66–77.

24D Matten and A Crane, “Corporate Citizenship: Toward an Extended Theoretical Conceptualization,” Academy of Management Review, January 2005, p 167. 25Adapted

from W E Stead, D L Worrell, and J Garner Stead, “An Integrative Model for Understanding and Managing Ethical Behavior in Business Organizations,” Journal of Business Ethics, March 1990, pp 233–42.

26For

an excellent review of integrity testing, see D S Ones and C Viswesvaran, “Integrity Testing in Organizations,” in Dysfunctional Behavior in Organizations: Violent and Deviant Behavior, eds R W Griffin et al. (Stamford, CT: JAI Press, 1998), pp 243–76.

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27Guidelines for conducting ethics training are discussed by K Tyler, “Do the Right Thing,” HR Magazine, February 2005, pp 99–101. 28For

details regarding Boeing, see “Boeing Hires Outsider to Monitor Its Ethics,” Arizona Republic, May 5, 2004, p D5. 29These scenarios were excerpted from L M Dawson, “Women and Men, Morality, and Ethics,” Business Horizons, July–August 1995, pp 62, 65. 30Comparative norms were obtained from Dawson, “Women and Men, Morality and Ethics.” Scenario 1: would sell (28% males, 57% females); would not sell (66% males, 28% females); unsure (6% males, 15% females). Scenario 2: would consult (84%

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males, 32% females); would not consult (12% males, 62% females); unsure (4% males, 6% females). 31The

following trends were taken from Dawson, “Women and Men, Morality and Ethics.” Women were likely to primarily respect feelings, ask “who will be hurt?”, avoid being judgmental, search for compromise, seek solutions that minimize hurt, rely on communication, believe in contextual relativism, be guided by emotion, and challenge authority. Men were likely to primarily respect rights, ask “who is right?”, value decisiveness, make unambiguous decisions, seek solutions that are objectively fair, rely on rules, believe in blind impartiality, be guided by logic, and accept authority.

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