T 1 | Prologue 1 What Is Organizational Behavior? MyManagementLab™ © Improve Your Grade! ‘When you see this icon €3, visit www.mymanagementlab.com for activities that are applied, personalized, and offer immediate feedback. After studying this chapter, you should be able to: Demonstrate the importance of interpersonal skills in the workplace. Define organizational behavior (OB). Show the value to OB of systematic study. Identity the major behavioral science disciplines tht contribute to OB. Demonstrate why few absolutes apply to OB. Identify the challenges and opportunities managers have in applying OB concepts. Compare the three levels of analysis inthis text's OB model. © Chapter Warm-up your professor has chosen co assign this, go to www.mymanagementlab.com to see what you should particularly focus on and to take the Chapter I warm up. ‘u've probably made many observations about people's behavior in your life, Ina \way, you ae already proficient at seeing some ofthe major themes in organizational behavior (OB). At the same time, you probably have not had the tools to make these observations systematically. This is where OB comes into play. And, as we'll learn, OB is much more than common sense, intuition, and soothsaying,2 Pan 1 + Prologue listo ‘understand and predict, human behavior a organizations. The ‘completes of human teh 1 proict,bat re thy random — certain fandaenal consistencies wndelic the behavior of al individ ‘THE IMPORTANCE OF INTERPERSONAL SKILLS Until the late 1980s, business schoo! curricula emphasized the technical aspects of management, focusing on economies, accounting, finance, and quantitative techniques. Course work in human behavior and people skills received relatively less attention. Since then, however, business schools have realized the significant role understanding human behavior pliys in determining a manager's effectiveness. As the director of leadership at MIT's Sloan Sehoo! of Business stated, “M.B.A. students may get by on their techn: cal and quantitative skills the fist couple of years out of school. But son, leadership and communication skills come tothe fore in distinguishing the managers whose careers really takeoff." Incorporating OB principles into the workplace can yield many important org tional outcomes. For one, companies knovn as goox places to work—such as Starbucks, “Adobe Systems, Cisco, Whole Foods, Google, American Express, Amgen, Pfizer, and “Marriott—have been found to generate superior financial performance.” Second, develop- ing managers’ interpersonal skills helps organizations attract and Keep high-performing cmployees, which is important since outstanding employees are always in short supply and are costly to replace. Third, there are strong associations between the quality of work place relationships and employee job satisfaction, stress, and turnover. One large survey ff hundreds of workplaces and more than 200,000 respondents showed that social rel tionships among coworkers and supervisors were strongly related to overall job satsfac~ tion, Positive social retationships aso were associated with lower stress at work and ower intentions to quit: Further research indicates that employees who relate to their managers With supportive dialogue and proactivity find that thir ideas are endorsed more often ‘which improves workplace satisfaction Finally, increasing the OB element in organiza~ tions can foster social responsibility awareness. Accordingly, universities have begun to incorporate social entrepreneurship education into their curriculum inorder to train fture leaders to use interpersonal skills to address social issues within their organizations.* This cerviculum refleets a growing awareness of the need for understanding the means and outcomes of comporate social responsibility ° ‘We understand that in today's competitive and demanding workplace, managers cean’t succeed on ther technical skills alone. They also have fo exhibit good people skills ‘This text has been weitten to help both managers and potential managers develop those people skills with the knowledge that understanding human behavior provide. ENTER ORGANIZATIONAL BEHAVIOR We've made the case for the importance of people skills. But neither this text nor the discipline on which it is based is called “people skills.” The term that is widely used to deseribe the discipline is organizational behavior. Organizational behavior (often abbreviated OB) is a field of study that invest ‘gates the impact individuals, groups, and structure have on behavior within organizations, for the purpose of applying such knowledge toward improving an organization's effec tiveness, That's a mouthful, so let's break it down. Organizational behavior is a field of study, meaning that it isa distinet area of ex- pertse with a common body of knowledge. It studies three determinants of behavior ‘organizations: individuals, groups, and structure. In addition, OB applies the knowledgeChapter 1 + What Is Organizational Betavior? — 3 gained about individuals, groups, and the effect of structure on behavior in order to make ‘organizations work more effectively peels of To sum up our definition, OB is the study of what people do in an organization shniques. and how their behavior affects the organization’s performance. And because OB is con- on, Since ‘cerned specifically with employment-related situations, it emphasizes behavior as related human to concerns such as jobs, work, absenteeism, employment turnover, productivity, human sadership performance, and management, Although debate exists about the relative importance of ir techni- each, OB includes these core topic 2adership + Motivation a + Leader behavior and power Haat + Interpersonal communication ea * Group structure and processes — * Alte development an pereepion ee + Change processes A + Conliet and negotiation a + Work design or supply iG of work: survey € WATCH IT oeial rela- » satisfac: and lower If your professor assigned this, sign into mymanagementlab.com to watch a video titled Herman Miler: Organizational Behavior to learn more about this topic and respond to questions. ore often, COMPLEMENTING INTUITION WITH SYSTEMATIC STUDY organiza = begun to Each of us isa student of behavior. Whether you've explicitly thought about it before, ain future you've been “reading” people almost all your life, watching their actions and trying ons? This to interpret what you see oF predict what people might do under different conditions. nieans and Unfortunately, the casual or commonsense approach to reading others can often lead 10 erroneous predictions. However, you can improve your predictive ability by supplement- managers ing intuition with a more systematic approach. ope skills ‘The systematic approach in this text will uncover important facts and provide a elop those base from which to make more accurate predictions of behavior. Underlying this system- atic approach isthe belief that behavior is not random, Rather, we ean identify fundamen- tal consistencies underlying the behavior of all individuals and modify them to reflect individual differences. ‘These fundamental consistencies are very important. Why’ Because they allow pemctie predictability. Behavior is generally predictable, and the systematic study of behavior ‘a means to makin eat reasonably accurate predictions. When we use the term systematic oes study, we mean looking at relationships, attempting to atribute causes and effects, a ig: basing our conclusions on scientific evidence—that is, on data gathered under controlled conditions, and measured and interpreted in a rigorous manner. Evidence-based management (EBM) complements systematic study by basing rial decisions on the best available scientific evidence. For example, we want ste doctors to make decisions about patient care hased on the latest available evidence, and EBM argues that managers should do the same, becoming more scientific in how they think about management problems. A manager might pose a managerial question, anizations, on's effec- dehavior in knowledge arch,4 Past 1+ Prolo for the best available evidence, and apply the relevant information to the qué athand. You might think it difficult to argue against this (what manager would say deci sions shouldn’t be based on evidence?), but the vast majority of ma fare made “on the fly.” with little systematic study of available evider Systematic study and EBM add to intuition, or those “gut feelings” about what makes others (and ourselves) “tick.” Of course, the things you have come to believe in an unsystematic way are not necessarily incorrect, Jack Welch (former CEO of GE) noted, “The trick, of course, is to know when to go with your gut.” But if we make all decisions With intuition or gut instinct, we're working with incomplete information—Iike maki sement decisions ‘an investment decision with only half the data about the potential for risk and ren . Big Data It is good news forthe future of business that rs ers have identified the potential of data-driven management and decision making. While “big data”—sthe extensive use of statistical compilation and analysis—has been applied to many areas of business, increasingly itis applied to making effective decisions and man: aging human resources, Let's discuss the roots ofthis new trend in management, which began over inthe marketing department of some of the first online retailers. It's difficult o believe it now, but it was not long ago that companies treated online shopping as a virtual point-of-sale experience: shoppers could browse websites anony- rmously. and sales data were tracked only on what shoppers bought. Gradually, though, online retailers began to track and act upon information on customer preferences that ‘uniquely available through the Intemet shopping experience, information far superior to data gathered in simple store transactions. This enabled them to create more targeted marketing strategies than ever before. The bookselling industry is a case in point: Before ‘online selling, brick-and-mortar bookstores could collet data about book sales only to create projections about consumer interests and trends Wit the advent of Amazon, su denly avast array of information about consumer preferences became available for track ing: what customers bought, what they looked at, how they navigated the site, and what they were influenced by (such as promotions, reviews, and page presentation). The chal- lenge for Amazon then was to identify which statities were persistent, giving relatively constant outcomes over time, and predictive, showing steady causality between certain inputs and outcomes. The company used these statistics to develop algorthins that let it forecast which books customers would like to read next. Amazon then could base its ‘wholesale purchase decisions on the feedback customers provided, both through passive methods and through Solicited recommendations for upcoming tits. ‘The use of big data for managerial practices is a relatively new area but one that holds convincing promise. A manager who uses data to define objectives, develop theo- ries of causality and (est those theories can determine which employee activities are relevant tothe abjectives.? However, we're not advising that you throw your intuition, forall the business press, out the window. In dealing with people, leaders often rely on hunches, and sometimes the outcomes are excellent Other times, human tendencies get in the way. Research findings indicate we are likely to be biased toward information that we've heard most recently, that has been frequently repeated, or that is of personal arch findings should be viewed with the same discemment as data ‘output the prudent use of big data, along with an understanding of human behavioral archers, the media, and company lead: relevance. While reay deci- ut what ) noted, ny lead- While ‘plied to rd man- + Which Jonline though, hat was superior eted Before only 10 ud ortrack- ad what he chal- latively certain that let base its passive one that >p theo ities are tuition, rely on cies got ‘mation dersonal as data aavioral ‘Chapter | + What Is Organizstional Behavior? — 5 tendencies, can contribute to sound decision making and ease natural biases. What we are advising is to use evidence as much as possible to inform your intuition and experience. ‘That isthe promise of OB. DISCIPLINES THAT CONTRIBUTE TO THE OB FIELD Organizational behavior is an applied Behavioral science built on contributions from & number of behavioral disciplines, mainly psychology and social psychology, sociology, and anthropology. Psychology’s contributions have been principally atthe individual or micro level of analysis, while the other disciplines have contributed to our understanding cf macro concepts such as group processes and organization. Exhibit I-1 is an overview ‘of the major contributions to the study of organizational behavior. Behavioral Contribution Unit of Output ‘science enalysis ie Behovioral char - aH 4 ce Sse oe " Sudy ot | Peal ser fernl gonston fs Eexeashant) oa Seeaciar or naan | Corparave ves Comperatve Sn Grossclal enayls - sears disipl 1008, but one are ‘more important than payehoogy EXHIBIT 1-1 ‘Toward an OB Discipline8 Pant + Prologue Categories of Types a Paces of Conditions of Companraon Employment Enploymen Eploymen Employment for Employment oe (ie i vidoes | rouge || aula Unempleyed/jobles || | Job share ae cong feted Stier” being Terps oe cane ti i Enployed~workg for afoot or rere company, epaneaten, or for an via her ler mane andor Banta, wth eetabehed u reloyeddeatized—worig ina poston cr wh responses tha re blow ne’ ecatenl er axpasence ane rk, oF o-arployed refers other englojas who wore cise by a company ane eied byte eam comp, or 1 mpyess who et tho \esoce (nae unemloyed nd own new emgloynest Unemployodbes—curenty ot working: may ba x sang, ether wih or witout goverment beetsassstnce, he tho without ‘Svea pay tam pes po eher new to Be wero trrnated om revo empoert other shor erm unerployed on) rong miter uramptye oa Entorrenou--ene whoruns hs orher un busines, te ea sla waka ra tha founder company wah mpess redone vo tas endo is a carer ina pfeson er vlna by choice of runt by an eeloj's mance Job, the ito who government batts tom praxis x or rn isi! ‘her new he vores or termina rom provus arpoynent 4s v9 to mn sah ay ote ing —cure unemployed act ooking or ced hg ‘company in ution th emeoye ie recognaadto bo nota t . nm EXHIBIT 1-2 Employment Options Sources: J. R. Anderson Jt, etal, “Action lems: 42 Trends Affecting Benefits, Compensation, Training, Staffing and Technology.” HR Magazine Uaruacy 2013) p. 33; M. Devihurst, 8. Hancock, and D. Ellsworth, "Redesigning Knowledge Work." Harvard Business Review Uanuary-February 2013), pp. 58-64 E.Frauenhelm, “Creating a New Contingent Culture,” Workforce Management (August 2012), pp. 34-38; N. Koeppen, “State Job Aid Takes Pressure ‘off Germany,” The Wall treet Journal (February 1, 2013), p. AB; and M. A, Shaffer, M. . Kraimer, YP. Chen, and 1M. €. Bolino, “Choices, Challenges, and Career Consequences of Global Work Experiences: A Review and Future Agenda," Journal of Management July 2012), pp. 1282-1327 (continuedlet the reins) sabi! dung nd stinved) Chapter 1+ What Is Organizational Behavior? 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Burger King is owned by British firm, and MeDonald’s sells hamburgers in more than 100 companies in six continents. ExxonMobil, a so-called U.S. company, reported that less than 6 percent of its 2011 earnings were from gas and natural products sales in the United States. New employees at Finland-based phone maker Nokia are increasingly being recruited from India, China, and other developing countries—non-Finns now outnumber Finns at their renowned research center in Helsinki. And all major automobile makers now manuf: ture cars outside their borders; Honda builds cars in Ohio, Ford in Brazil, Volksw Mexico, and both Mercedes and BMW in South Africa, The world las indeed become a global village. In the process, the manager’s job has changed, Effective managers will anticipate and adapt their approaches to the global wwe discuss next. INCREASED FOREIGN ASSIGNMENTS If you're a manager, you are increasi Tikely to find yourself in a foreign assignment—transferred to your employer’ operating division or subsidiary in another country. Once there, you'll have to manage a workforce very different in needs, aspirations, and attitudes from those you are accustomed to back home. To be effective, you will need to understand everything you can about your new Jocation’s culture and workforce—and demonstrate your cultural sensitiv introducing alternate practices. before WORKING WITH PEOPLE FROM DIFFERENT CULTURES Even in your own cou you'll find yourself working with bosses, peers, and other employ different cultures. What motivates you may not motivate them. Or your communication style may be straightforward and open, which others may find uncomfortable and threatening work effectively with people from different cultures, you need to understand how their culture, geography, and religion have shaped them and how to adapt your management style to their differences. Hy, ses born and raised in OVERSEEING MOVEMENT OF JOBS TO COUNTRIES WITH LOW-COST LABOR It is difficult for managers in advanced nations, where minimum way ‘ypically $6 or more an hour, to compete against firms that rely on workers from China and other developing nations where labor is available for 30 cents an hour. In a global economy, jobs tend to flow where lower costs give businesses a comparative advantage, ‘though labor groups, politicians, and local community leaders see the exporting of jobs as undermining the job market at home. Managers face the difficult task of balancing the interests of their organizations with their responsibilities to the communities in which they operate ADAPTING TO DIFFERING CULTURAL AND REGULATORY NORMS “Goi ‘a business is not as simple as typing in an overseas e-mail address, shipping g ‘foreign port, or building facilities in other countries. To be successful, managers need to know the cultural norms of the workforce in each country where they do business. For instance, in some countries a larg of the workforce enjoys long holidays ‘There will be country and local regulations to consider, too. Managers of subsidiariesCChapter + What Is Organizational Behavior? 14 abroad need to be aware of the unique financial and legal regul ns applying to on “guest companies” or els risk violating them. Violations can have implications for theit me operations in that country and also for political relations between countries. Managers ee also need to be cognizant of differences in regulations for competitors in that country; Leet many times, the laws will give national companies significant financial advantages over ied fom foreign subsidiaries. ' cores Managing Workforce Diversity sagen in One of the most important challenges for organizations is workforce diversity, the con- cept that organizations are becoming more heterogeneous in terms of gender, age, race, agers job ethnicity, sexual orientation, and inclusion of other diverse groups. Whereas globalization the global focuses on differences among people from different countries, workforce diversity ad- | dresses differences among people within given counties. ‘Workforce diversity acknowledges a workforce of women and men, many racial creasingly and ethnic groups, individuals with a variety of physical or psychological sbilities, and ‘operating people who differ in age and sexual orientation. Managing diversity is a global concern. workforce ‘Though we have more to say about workforce diversity later, suffice it to say here that sd to back diversity presents great opportunities and poses challenging questions for managers and ‘your new ‘employees in ll counties. How can we leverage differences within groups for competi- y—before tive advantage? Should we treat all employees alike? Should we recognize individual and cultural differences? How can we foster cultural awareness in employees without lapsing i into stereotyped political correctness? What are the legal requirements in each country? » country, Does diversity even matter? I raised in Improving Customer Service style may Service employees include technical support representatives, fast-food counter workers, ~ening. To sales clerks, nurses, automobile repair technicians, consultants financial planners, and bone flight attendants. The shared characteristic oftheir jobs is substantial interaction with an snagement ‘organization's customers. OB can help managers increase the success of these interac- tions by showing how employee attitudes and behavior influence customer satisfaction. “Many an organization has filed because its employees failed to please customers. ioe lie OB can provide considerable guidance in helping managers create customerfrendly cul- ec tures in which employees are friendly and courteous, accessible, knowledgeable, prompt in _ responding to customer needs, and willing to do what's necessary to please the customer.’ sranage, Improving People Skills ag of jobs cet Ree a in which theories that can help you explain and predict the behavior of people at work. You'll also sain insights into specific people skill you can use on the job. For instance, you'll earn ‘ways to design motivating jobs, techniques for improving your management skills, and Jobat” for skills to create more effective teams. rods off to gers need siness. For [Networked organizations allow people to communicate and work together even though they may be thousands of miles apart. Independent contractors can telecommute via com- puter to workplaces around the globe and change employers as the demand for their12° Patt + Prologue services changes, Software programmers, graphic desfiners, systems analysts, technical ‘writers, photo researchers, book and media editors, and medical transcribers are just few «examples of people who can work from home of other nonoffice locations. “The manager's job is different in « networked organization. Motivating and lea ing people and making collaborative decisions onfine require different techniques than When individuals are physically present in a single location. As more employees do their jobs by linking to others through networks, managers must develop new skills. OB can Provide valuable insights to help hone those skills Enhancing Employee Well-Being at Work The typical employee inthe 1960s or 1970s showed up ata specified workplace Monday through Friday and worked for clearly defined &- or 9-hour chunks of time. That's no lon- ser true fora large segment of today’s workforce as even the defiition of the workplace has been expanded to include anywhere a laptop or smartphone can go. Even ifemployees Work at home or from half a continent away, managers need to consider their well-being at work, One ofthe biggest challenges to maintaining employee well-being is that organiza tions are asking employees to putin longer hous, either inthe office or online. Employees are increasingly complaining thatthe ine between work and nonwork time has become blurred, creating personal conflicts and stress. Second, employee well-being is challenged by heavy outside commitments. Millions of single-parent households and employees with ‘dependent parents are significantly challenged in balancing work and family tesponsibili- ties, for instance ‘As a result oftheir increased responsibilities in and out of the workplace, recent studies suggest employees want jobs that give them flexibility in their work schedules so they ean better manage work-life conflics."” Organizations that don’t help their people achieve work-life balance will find it increasingly difficult to attract and retain the most apable and motivated employees. As you'll seein later chapters, the field of OB offers a number of suggestions to guide managers in designing workplaces andl jobs that can help employees reduce work-life conflicts. Creating a Positive Work Environment A teal growth area in OB research is postive organizational scholarship (also called Positive organizational behavior), which studies how organizations develop buman strengths, foster vitality and resilience, and unlock potential. Researchers in this area say too much of OB research and management practice has been targeted toward identify ing what’s wrong with organizations and their employees. In response, they try stuly ‘What's good about them. Some Key independent variables in positive OB research are engagement, hope, optimism, and resilience in the fae of stain, Positive organizational scholars have studied a concept called “reflected best self” asking employees to think about when they were at their “personal bes” in order to understand how to exploit their strengths. The idea is that we all have things at which ‘we are unusually good, yet we too often focus on addressing our limitations and too ra {hin about how to exploit our strengths."