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Copyright © 2015 by SAGE Publications, Inc.

All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher.

Printed in the United States of America.

Library of Congress Cataloging-in-Publication Data

Nahavandi, Afsaneh.

Organizational behavior / Afsaneh Nahavandi, University of San Diego, Robert B. Denhardt, University of Southern California, Janet V. Denhardt, University of Southern California, Maria P. Aristigueta, University of Delaware.

pages cm

ISBN 978-1-4522-7860-5 (hardcover)

1. Organizational behavior. I. Title. HD58.7.N338 2015 302.3′5—dc23 2013032049

This book is printed on acid-free paper.

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Brief Contents

PREFACE ABOUT THE AUTHORS

PART I: INTRODUCTION

Chapter 1: Introduction to Organizational Behavior: History, Trends, and Ethics

PART II: INDIVIDUAL BEHAVIOR AND CHARACTERISTICS

Chapter 2: Culture and Diversity: Developing a Cultural Mindset Chapter 3: Self-Awareness, Personality, Emotions, and Values Chapter 4: Perception and Attribution Chapter 5: Motivation and Engagement Chapter 6: Managing Stress Chapter 7: Fostering Creativity and Innovation

PART III: GROUP AND TEAM PROCESSES

Chapter 8: Decision Making Chapter 9: Communicating Effectively With Others Chapter 10: Working in Groups and Teams Chapter 11: Managing Conflict and Negotiation Chapter 12: Leadership: Classic to Contemporary

PART IV: ORGANIZATIONAL CONTEXT

Chapter 13: Organizational Power and Politics Chapter 14: Organizational Strategy and Structure Chapter 15: Organizational Culture and Change

GLOSSARY PHOTO CREDITS AUTHOR INDEX SUBJECT INDEX

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Detailed Contents

PREFACE ABOUT THE AUTHORS

PART I. INTRODUCTION

Chapter 1. Introduction to Organizational Behavior: History, Trends, and Ethics What Is Organizational Behavior?

Individual, Group, and Organizational Levels of Analysis Social, Economic, and Ethical Context

A Brief History of Organizational Behavior The Classical Period The Humanistic Period Modern Organizational Behavior

Current Trends in Organizational Behavior Positive Organizational Behavior Neuroscience and Organizational Behavior

People Skills in Management Differentiating Between Managers and Leaders What Managers Do What Leaders Do Influence of Managers

Creativity and Change in a Global Society Creativity and Change A Global Society

Global Society: Global Ambassadors Mentor Emerging Women Leaders Across the Globe The Ethical Environment

Personal Integrity A Cultural Mindset Social Responsibility

Creativity and Change: Do Well, Do Good, or Do Both? Global Sustainability

Summary and Applications for Managers Key Terms Exercises Cases

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PART II. INDIVIDUAL BEHAVIOR AND CHARACTERISTICS

Chapter 2. Culture and Diversity: Developing a Cultural Mindset What Is Culture and Why Does It Matter?

Defining Culture Characteristics of Culture Three Levels of Culture The Cultural Iceberg: What We Know and What We Don’t Know Sophisticated Stereotypes

Diversity in Today’s Workplace Primary and Secondary Dimensions of Diversity Benefits and Challenges of Workplace Diversity Legal Considerations Gender Diversity

Global Society: DeLoitte Builds Diversity Generational Diversity

National Culture Hall’s Cultural Context Framework Hofstede’s Five Cultural Dimensions Global Leadership and Organizational Behavior Effectiveness—GLOBE

Culture and Individual Behavior Developing a Cultural Mindset Creativity and Change: Responding to Cultural Differences

Cultural Mindset Components The Cultural Mindset in Organizations

Summary and Applications for Managers Key Terms Exercises Cases

Chapter 3. Self-Awareness, Personality, Emotions, and Values Understanding Individual Differences

Influence of Individual Differences: Behavioral Range Why Is Self-Awareness Important?

Skills and Abilities Skills Abilities

Creativity and Change: The Musical Instrument Museum Emotions

Emotional Intelligence Emotions in the Workplace

Personality Traits Myers-Briggs Type Inventory (MBTI)

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Big Five Personality Traits Narcissism Proactive Personality

Values The Importance of Values

Global Society: The Right Way to Apologize Developing Self-Awareness Summary and Applications for Managers Key Terms Exercises Cases

Chapter 4. Perception and Attribution What Is Perception?

Perception Process Culture and Perception

The Three Stages of Perception Attention Stage Organization Stage

Global Society: Heineken’s PR Challenge Interpretation and Judgment Stage

The Attribution Process Information We Use to Make Attributions Making Attributions About Our Own behavior

Perceptual Biases Fundamental Attribution Error Stereotypes Halo-Horns and Similarity Effects Primacy and Recency Self-Serving Bias Difficulty in Overcoming Biases Managing Biases

Creativity and Change: Speaking of Leadership … Masculine or Feminine? Summary and Applications for Managers Key Terms Exercises Cases

Chapter 5. Motivation and Engagement Approaches to Motivation

Why Does Motivation Matter? Need Theories Expectancy Theory

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Global Society: Motivation at Semco Goal Theories Equity Theory Reinforcement, Reward, and Punishment

Current Debates and Perspectives Motivation and Life Stages “Anti-Motivation” Theories

Trust and Engagement Creativity and Change: General Stanley McChrystal Creativity and Engagement Summary and Applications for Managers Key Terms Exercises Cases

Chapter 6. Managing Stress Defining Stress

The General Adaptation Syndrome The Consequences and Costs of Stress Stress: Good, Bad, and Ugly

Sources of Stress Individual Factors Organizational Factors

Creativity and Change: A Top Management Team Under Stress Coping With and Managing Stress

Personal Strategies Global Society: Nokia’s Culture

Organizational Strategies Summary and Applications for Managers Key Terms Exercises Cases

Chapter 7. Fostering Creativity and Innovation The Importance of Creativity and Innovation What Is Creativity?

Views of Creativity Characteristics of Creative Individuals Conceptual Skills and Abilities Creativity as Behavior Creativity as a Process An Integrated Perspective on Creativity

The Creative Process

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Roles in the Creative Process Social and Structural Factors

Impediments to Creativity Defining the Problem Incorrectly Judging Ideas Too Quickly Stopping at the First Acceptable Idea Lack of Support Hostility to Sharing Knowledge

Fostering Creativity in Organizations Creativity and Change: Implementing Innovative Ideas: Sol and Robert Price

Challenging Work Supportive Supervision Organizational and Work Group Culture

Global Society: Alessi Embraces Failure Workload Pressures and Resources Positive Emotions

Fostering Creativity: Techniques and Tools The Idea Box or Matrix Analysis Synectics Mindmapping Design Thinking

Enhancing Your Personal Creativity Summary and Applications for Managers Key Terms Exercises Cases

PART III. GROUP AND TEAM PROCESSES

Chapter 8. Decision Making Defining Decision Making

Levels of Decision Making Decision Making and Problem Solving Bottlenecks in Decision Making Why Decisions Fail

Ethical Decision Making Generating Alternatives Creativity and Change: Cirque du Soleil Implementing Good Decisions Models of Decision Making

The Rational Model The Organizational Process Model

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The Collaborative Model Other Decision Making Models

Global Society: Asia’s Scottish Company Who Should Be Involved in Decision Making?

Involving the Group to Prevent Poor Decisions Levels of Participation and Styles of Decision Making Diversity: Opportunities and Challenges for Decision Making

Techniques for Making Decisions The Decision-Making Primer Focus Groups Brainstorming Cost-Benefit and Cost-Effectiveness Analysis Nominal Group Technique Evidence-Based Management

Summary and Applications for Managers Key Terms Exercises Cases

Chapter 9. Communicating Effectively With Others Defining Communication The Communication Process Improving Interpersonal Communication

Barriers to Effective Communication Oral Communication

Global Society: Avon’s Global Reach Active Listening Supportive Communication Dialogue

Creativity and Change: Three Lessons in Contemporary Communications Electronic Communication

Specialized Forms of Communication Persuasive Communication Coaching and Personal Counseling Conducting Effective Meetings Writing Memos, Reports, and Proposals

Summary and Applications for Managers Key Terms Exercises Cases

Chapter 10. Working in Groups and Teams Defining Groups and Teams

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Structural Issues in Groups and Teams Group Size and Composition Roles and Norms Cohesion, Conformity, and Deviance

Global Society: Management With Traditional Roots Developing Teams

The Forming Stage The Norming Stage The Storming Stage The Performing Stage Characteristics of Effective Teams

Types of Teams Top Management Teams Project Teams Process-Improvement Teams Cross-Functional Teams Self-Directed Teams

Creativity and Change: The Chilean Mine Disaster Virtual Teams

Helping Teams Become Effective Clear Goals Building Cohesion and Managing Diversity Developing Trust Team Leadership Training Managing Team Conflict Reward Structure Organizational Structure Building an Ethical and Collaborative Culture

Summary and Applications for Managers Key Terms Exercises Cases

Chapter 11. Managing Conflict and Negotiation Defining Conflict

Views of Conflict Consequences of Conflict Types and Levels of Conflict

Culture and Conflict Sources of Conflict

Personal Sources of Conflict

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Organizational Sources of Conflict Creativity and Change: Helping Relationships Managing Conflict

Two General Approaches Individual Conflict Management Styles Preventing and Reducing Conflict Increasing or Stimulating Conflict

Negotiating The Negotiation Process Ethics and Negotiation Culture and Negotiation

Global Society: Cross-Cultural Negotiations Common Mistakes in Negotiation Negotiation Strategies

Summary and Applications for Managers Key Terms Exercises Cases

Chapter 12. Leadership: Classic to Contemporary Thinking About Leadership Traditional Approaches to Leadership

The Trait Approach The Behavior Approach The Contingency Approach

Contemporary Approaches to Leadership From Traits to Skills and Competencies The Transformational Approach Value-Based Leadership Authentic Leadership Shared Leadership Collaborative Leadership Positive Leadership Emotions and Leadership

Creativity and Change: Fully Human Leadership The Ethics of Leadership Global Society: Leading the Global Fund for Women

The Follower Leadership, Morality, and Globalization Ethical Issues

Creative Leadership Summary and Applications for Managers

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Key Terms Exercises Cases

PART IV. ORGANIZATIONAL CONTEXT

Chapter 13. Organizational Power and Politics Thinking About Power and Politics

Early Voices Changing Perspectives on Power Questioning Power and Authority

Sources of Power for Individuals Legitimate Power Reward Power Coercive Power Expert Power Referent Power Balancing Power Structural Aspects of Power

Is Power a Positive Force or a Destructive Force? Global Society: Luxottica and the Power of Controlling Resources

Positive Aspects of Power Negative Aspects of Power

Managing Organizational Politics and Being Influential Creativity and Change: Power and Ethics

Gaining Positive Political Skills Empowerment: More Than Delegation

Summary and Applications for Managers Key Terms Exercises Cases

Chapter 14. Organizational Strategy and Structure The Organizational Context The Organizational Environment

Enacting the Environment Environmental Uncertainty

The Organization and Technology Global Society: Indra Nooyi: The Indian-Born CEO of Pepsi

Types of Technology Effects of Changing Technology

Strategic Basics: Mission, Goals, and Strategy Managing Strategy

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Low-Cost Strategies Versus Differentiation Organizational Structure

Basic Components of Structure Organic and Mechanistic Organizations

Creativity and Change: Charles Merrill Traditional Structural Options

Managing in an Uncertain Environment Gathering Information Adapting Internal Culture and Structure Changing the Environment

Summary and Applications for Managers Key Terms Exercises Cases

Chapter 15. Organizational Culture and Change The Relationship Between Culture and Change

Change Processes in Organizations Organizational Culture

Elements of Organizational Culture Individual Behavior and Organizational Culture Cultural Change

Approaches to Understanding Change Classic Approaches to Managing Change Organizational Learning

Creativity and Change: A Culture of Responsibility Large Systems Change

Global Society: Scandal at Parmalat Newer Approaches to Bringing About Change

Change Through Management Action or Reorganization Change Through Organization Development Change Through Appreciative Inquiry

Steps in Organizational Transformations Creativity and Change: Hyundai Soars The Ethics of Managing Change Summary and Applications for Managers Key Terms Exercises Cases

GLOSSARY

PHOTO CREDITS

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AUTHOR INDEX

SUBJECT INDEX

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Preface

Failure is simply the opportunity to begin again, this time more intelligently. —Henry Ford

The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.

—Peter Drucker

Our Approach: Knowledge and Action We believe organizational behavior is not just a field of study. Organizational behavior is a practical discipline that enables us to act effectively and responsibly. Our text provides an action orientation that demonstrates how organizational behavior is a way of thinking and acting that is of critical importance to leaders, to managers, to their employees, and to their customers.

This book is about helping students understand, manage, and change their own behavior, as well as influence the behavior of others. We believe that the ability to lead and manage effectively requires knowledge, creativity, and practice. No matter what organizational setting students encounter, there are certain skills they will need to address the “people” challenges they will face. Questions of motivation, power and authority, communications, group dynamics, and leadership arise in organizations large and small and in all sectors. Whether managing the corner store, a large manufacturing firm, a major league baseball team, a nonprofit foundation, a city department, or a day spa, questions about managing people may be the most important ones future leaders face.

Many organizational behavior texts focus on the study of organizational behavior rather than the practical application of these lessons, that is, how you can more effectively manage human behavior in real-world circumstances. This book has a distinctive “action orientation” that is reflected in our pedagogy. The book is designed with three concepts in mind:

1. The importance of understanding the behavior, motivations, and actions of individuals in organizations

2. A focus on building the knowledge, self-awareness, and skills appropriate and necessary for leadership and organizational change

3. An emphasis on students learning not only from readings and discussions but also

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from their own experiences

We are not only concerned with students learning about organizational behavior; we also want them to be able to acquire practical skills and develop habits of mind that will support continued learning from their experiences. To develop the capacity for action, a different style of learning is necessary, something that goes beyond just reading about a topic. Learning the practical skills to support effective and responsible action requires not only discussing new material but also improving students’ capacity to act in pursuit of ideas.

In looking for people to hire, you look for three qualities: integrity, intelligence, and energy. And if they don’t have the first, the other two will kill you.

—Warren Buffet, CEO, Berkshire Hathaway

Target Audience Organizational Behavior is a core text for organizational behavior courses in schools of business as well as in public administration, nonprofit management, educational administration, and health care management. While the text is primarily oriented toward undergraduates, it is also suitable for graduate-level courses. The book covers all the topics in organizational behavior and the all-important “people skills,” but does so with a practical focus on how students, as future managers and leaders, can think and act creatively to motivate employees, address change, and overcome challenges in today’s interconnected global society.

Our Goals Our intent is to provide lessons and perspectives that will enhance students’ understanding of their own behavior and their ability to influence the behavior of others. To that end, this book examines the knowledge and skills acquired by the most successful leaders and managers, draws from the research and observations of scholars from various fields, and provides opportunities for students to develop both the skills and the habits of mind that will allow them to learn now and to continue to learn throughout their careers. Accordingly, the goals of this book are as follows:

1. To explore some of the most contemporary approaches to leading and managing people

2. To understand the importance and impact of the global context and of culture on people and organizations

3. To examine the factors that affect human behavior in organizations

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4. To understand human behavior from multiple levels: individual, group, and organizational

5. To develop critical management and leadership skills and provide students with the capacity to act effectively and responsibly given the stress, complexity, and uncertainty of the “real world”

The book is organized into four parts titled Introduction, Individual Behavior and Characteristics, Group and Team Processes, and Organizational Context. Note that in contrast to other texts that discuss the individual, the group, and the organization, we emphasize the interaction between these levels. For example, the topic of emotions is introduced in Chapter 3, then revisited in Chapters 8 and 11.

Themes To be effective, leaders and managers must understand their global and cultural contexts and their impact on people and organizations. They must use their knowledge, skills, and creativity to motivate others, function well in groups and teams, communicate clearly, manage conflict, and navigate change successfully. They must cope with their own and their employees’ stress, be self-reflective and open to learning and growth, and maintain their commitment to their work in spite of sometimes unreachable goals and limited resources.

We present organizational behavior topics by weaving four themes throughout the chapters and integrate them in cases, examples, exercises, self-assessments, and application-oriented questions.

Global and Cultural Perspective Organizations today function in a global environment where culture plays a central role. AACSB International, the business school accrediting body, considers global and cultural forces and cultural diversity among the key challenges managers will face in the future. Whether working across national boundaries or with diverse populations within a country, today’s managers and leaders must have an appreciation and understanding of the importance and impact of culture. Chapter 1 introduces students to the concept of globalization, explaining how our global society affects individual engagements, social relationships, and social institutions. Chapter 2 focuses on workplace diversity, explaining how culture, ethnicity, gender, and age influence behavior in organizations.

Creativity and Change

The complexity, interconnectedness, and dynamic nature of today’s organizations requires managers and leaders who can think and act creatively to navigate the ever-changing organizational landscape. The 2010 IBM Global CEO Study, based on face-to-face

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interviews with 1,541 CEOs, general managers, and senior public sector leaders around the world, concluded that the single most important attribute of future leaders will be creativity. “Creative leaders invite disruptive innovation, encourage others to drop outdated approaches and take balanced risks. They are open-minded and inventive in expanding their management and communication styles, particularly to engage with a new generation of employees, partners, and customers.” Chapter 7 helps students understand the creative process and common impediments to creativity as well as how to overcome those challenges, and introduces techniques for enhancing their own and their employees’ creativity. Creativity and Change boxes illustrate how organizations around the globe react to change creatively.

Thinking and Acting Ethically

Integrity and acting in an ethical manner are essential to effective leadership and the survival of our organizations. Chapter 1 frames organizational behavior using an ethical context. Ethics is then incorporated in subsequent chapters, showing students how ethics relates to topics such as decision making, teams, negotiation, leadership, and managing change.

Positive Psychology and Strength-Based Approach We wrote this text with a strong emphasis on positive psychology. We believe that effective managers must be aware of their values and their strengths. We focus on teaching students to build self-awareness and the importance of investing in followers’ and employees’ strengths rather than weaknesses as a way to enhance individual and organizational success and create even more positive conditions. The importance of positive psychology and self- awareness are introduced in Chapters 1 and 2, then echoed in the following chapters.

Action-Orientation In each chapter, we present a review of the relevant material related to each of the topics, and we provide some specific and immediate ideas and tools that will help students aspire to be managers and leaders. The presentation of various topics in this ordered and pedagogically sound manner engages students immediately in the material as a personal concern, acquaints them with the relevant and important thinking on the topic, gives them immediate and practical guidelines for action, and then leads them through case analysis, critical thinking questions, and exercises to test and improve their skills and abilities.

To achieve our goals, we present a solid foundation of ideas as well as real-world illustrations and applications that will help students develop their own personal, interpersonal, and institutional skills in areas such as motivation, creativity, decision making, communication, and group dynamics—what we have called the people or process skills.

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Real-World Illustrations

• Chapter-Opening Cases begin each chapter to set the stage for the material covered in the chapter. They provide students with an example of an organization that faces the challenges discussed in the chapter and allow them to see how the material they will read can be applied.

• Chapter-Concluding Cases put students in the driver’s seat and allow them to respond to an organizational behavior challenge.

• Global Society vignettes illustrate organizational behavior concepts in an international context. Discussion questions urge students to deepen their understanding of globalization and culture.

• Creativity and Change vignettes spotlight organizations that are responding creatively to change. Discussion questions help students take their understanding to the next level.

Applications

• Self-Assessments are interspersed throughout the chapters to allow students to gain awareness of their values, personal characteristics, and strengths.

• What Would You Do? boxes present hypothetical scenarios that require students to immediately interact with a chapter concept and connect it to their own behavior.

• What Do You Think? boxes challenge students to exercise critical thinking in making judgments about significant issues. These questions help students think like future managers by presenting them with issues commonly facing those in business, in public, and in nonprofit organizations, especially judgments concerning ethical issues.

• Applications for Managers end each chapter with a list of specific action recommendations that help students tie the information provided in the chapter to managerial action.

• Exercises help students apply chapter concepts and develop their skills.

We believe the above tools provide information as well as opportunities for students to enhance their management and leadership skills and broaden their perspectives.

Our goal is to provide substantive insights that will prepare students to be effective managers, feel more competent and confident in their interactions with people, lead others in their work to achieve a better world, and gain greater satisfaction and joy from the career they have chosen.

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Acknowledgments We thank our many friends and colleagues at the University of Southern California, Arizona State University, and the University of Delaware who contributed to this book and provided special knowledge and insight. We also thank a group of dedicated practitioners who helped substantially enhance our understanding of how to most effectively manage and positively influence behavior in organizations. We dedicate this book to both groups!

We’d also like to thank the following reviewers who provided valuable insights and critiques during the development of this text:

Derek D. Bardell, Delgado Community College

Carl Blencke, University of Central Florida

Ralph R. Braithwaite, University of Hartford

Serena C. Brenneman, University of Arkansas

Bill Carnes, Metropolitan State College of Denver

Maryalice Citera, State University of New York at New Paltz

Nicole L. Cundiff, University of Alaska Fairbanks

Diane Denslow, University of North Florida

Aimee Dars Ellis, Ithaca College

Gerald G. GeRue, Rock Valley College

Bruce Gillies, California Lutheran University

Karen N. Gleason, Viterbo University

Lynn Godkin, Lamar University

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Marvin Gordon, University of Illinois at Chicago

Paul Govekar, Ohio Northern University

Melissa Gruys, Wright State University

Michael A. Guerra, Lincoln University

Nell Tabor Hartley, Robert Morris University

James Jeremiah, Ashford University

James Katzenstein, California State University, Dominguez Hills

Aleksey Kolpakav, Indiana University

Cayce Lawrence, Christian Brothers University

Edward F. Lisoski, Angelo State University

Gypsi Luck, California State University, San Bernardino

Kenyetta McCurty, Amridge University

Rakesh Mittal, New Mexico State University

Dan Morrell, Middle Tennessee State University

Cynthia Busin Nicola, Carlow University

Patricia K. O’Connell, Lourdes University

Deborah Olson, University of LaVerne

Floyd Ormsbee, Clarkson University

John Overby, The University of Tennessee at Martin

Michael Palanski, Rochester Institute of Technology

Kannan Ramanathan, University of Texas at Dallas

Hindy Lauer Schachter, New Jersey Institute of Technology

Andrea Smith-Hunter, Siena College

Rudy Soliz, Houston Community College

Martha C. Spears, Winthrop University

Lisa Stamatelos, Pace University

Joe Stauffer, The University of Texas of the Permian Basin

David L. Sturges, University of Texas-Pan American

Marjolijn van der Velde, Davenport University

J. Lee Whittington, University of Dallas

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Shirley A. Wilson, Bryant University

Marilyn Young, The University of Texas at Tyler

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About the Authors

Afsaneh Nahavandi is Professor and Chair of the Leadership Studies department at the University of San Diego and Professor Emeritus at Arizona State University. Previously, she was Associate Dean of the College of Public Programs and Professor of Public Administration at Arizona State University, as well as the Director of the MBA Program and Professor of Management at Arizona State University West campus. Her teaching and research interests include organizational behavior, leadership, culture and diversity, and ethics. She is author of a top leadership text, The Art and Science of Leadership (6th edition) (2012). She is also the author of numerous journal articles and other works, including Ancient

Leadership Wisdom (2012), Organizational Behavior: The Person-Organization Fit (1999), and Organizational Culture in the Management of Mergers (1993).

Robert B. Denhardt is Professor and Director of Leadership Programs in the Sol Price School of Public Policy at the University of Southern California, Regents Professor Emeritus in the School of Public Affairs at Arizona State University, and Distinguished Visiting Scholar at the University of Delaware. Dr. Denhardt is a past president of the American Society for Public Administration and a member of the National Academy of Public Administration. Dr. Denhardt has published 22 books, including Managing Human Behavior in Public and Nonprofit Organizations, The Dance of Leadership, Theories of Public Organization, Public Administration:

An Action Orientation, In the Shadow of Organization, and The Pursuit of Significance.

Janet V. Denhardt is the Chester A. Newland Professor of Public Administration and Director of the Price School Sacramento in the Sol Price School of Public Policy at the University of Southern California. She is a member of the National Academy of Public Administration and her teaching and research interests focus on organization theory, organizational behavior, and leadership. She has authored numerous books including Managing Human Behavior in Public and Nonprofit Organizations, The Dance of Leadership, The New Public Service, and Street-Level Leadership:

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Discretion and Legitimacy in Front-Line Public Service. Prior to joining the faculty at the University of Southern California, Dr. Denhardt taught at Arizona State University and at Eastern Washington University, and she has served in a variety of administrative and consulting positions.

Maria P. Aristigueta is the Charles P. Messick Professor, Director of the School of Public Policy and Administration, and Policy Fellow in the Institute of Public Administration at the University of Delaware. Her teaching and research interests are primarily in the areas of public sector management and include performance measurement, strategic planning, civil society, and organizational behavior. She is a coauthor of Managing Human Behavior in Public and Nonprofit Organizations (3rd edition), author of Managing for Results in State Government and Managing Behavior in Public and Non-Profit Organizations, and coeditor of the International

Handbook of Practice-Based Performance Management.

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INTRODUCTION

PART 1

• 1. Introduction to Organizational Behavior: History, Trends, and Ethics

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1 Introduction to Organizational Behavior History, Trends, and Ethics

LEARNING OUTCOMES

After studying this chapter, you should be able to:

1. Explain what organizational behavior is and why it is relevant to your career

2. Compare the differences between leaders and managers and the roles each play

3. Summarize the contributions leaders and managers make to their organizations

4. Trace the development of the field of organizational behavior in study and practice

5. Explain why understanding creativity and change in a global society is so important to future organizations

6. Describe how personal integrity, a cultural mindset, social responsibility, and global sustainability affect the way leaders and managers act

Turning Around a Bank Consider the following case. In your 21 years with a well-established European banking institution, you have earned a reputation as a turnaround specialist, someone who can come into a difficult situation and move the organization in a positive direction. Because of this reputation, you have just been appointed as the head of the company’s corporate and investment banking unit. The previous manager left in a storm of controversy following an in-house investigation showing an abysmal track record, one that significantly contributed to the larger bank’s fourth quarter losses. The investigation leading to your appointment was initiated after a popular television “newsmagazine” highlighted how much more effective other companies were in maintaining client trading, even in the face of Europe’s deepening debt crisis.

Understandably, the workers in your division are disheartened. Turnover and absenteeism are high. Workers report feeling unfairly criticized and point to the lack of necessary resources to effectively do their jobs. Yet, as you talk with these individuals, you find that they are bright, committed, and hardworking. The truth is, forces outside their control have contributed to the crisis, and some of the criticism does seem unwarranted. You

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believe that you can work with these people to build a stronger, more service-oriented division. But it’s going to take special skills—and more than a little luck!

Others were interested in the behavior of commodities, while I was interested in the behavior of people.

—Peter Drucker, Management Theorist

This case raises many important questions that help us define organizational behavior. Think about them from a practical standpoint: What are the most important issues here? Are they technical issues or are they people issues? Well, the truth is that there are probably some of both, but there is no question that in most situations, including this one, the human issues are central. Knowing that, you must then decide whether you will respond by

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dealing with one person at a time, by trying to work with groups, or by seeking some system-wide intervention. Obviously, there is some overlap among these three levels, but each becomes a lens through which we see, interpret, and respond to the specific circumstances that we confront.

I believe the real difference between success and failure in a corporation can be very often traced to the question of how well the organization brings out the great energies and talents of its people.

—Thomas J. Watson, CEO of IBM

People don’t quit their jobs, they quit their bosses.

—Anonymous

As we change the lenses through which we see a given situation, our definition of the problems that the situation entails and the possible solutions to those problems also change. For example, if you focus on individual behavior, then you might think of the problem as one of employee motivation, the failure of employees to communicate effectively with customers, or employees’ lack of understanding the broader purposes and goals of the division and the larger organization. As a result, you might meet and talk with employees; try to understand their needs, desires, and motivations; work with them to set individual and group goals; and seek their input on policy and operational changes that would improve outcomes.

Looking through the group lens, you might ask whether existing work groups are functioning effectively. Do employees feel like they are part of a team or do they feel alienated from their coworkers and supervisors? Is the culture of existing groups or teams conducive to achieving division goals? You might form task forces of employees to address particular problems, or you might reconfigure work teams to address certain types of cases.

If you focus on the organizational level, you might ask whether the department is structured appropriately to accomplish its tasks. Are management systems, such as goal setting and performance measurement, in place? Is management information available to guide decision making? Are organizational communications clear, and are policies documented and disseminated? Are the reporting and coordination methods appropriate? Here you might create new structures or mechanisms for communications throughout the organization. All of these questions fall in the domain of organizational behavior—and are absolutely essential to successfully dealing with the issues that arise in today’s organizations.

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A Facebook employee walks past a sign at Facebook headquarters in Menlo Park, California. In 2013, Facebook was ranked as the best place to work by Glassdoor’s Employees’ Choice Awards. Studies indicate that companies where employees are happy also tend to perform well financially, demonstrating the link between individual factors (employees’ happiness) and organizational factors (financial success).

What Is Organizational Behavior? Organizational behavior is the study and practice of how to manage individual and group behavior in business, government, and nonprofit settings. Accordingly, the field provides critically important and highly useful perspectives on motivation, leadership, communications, groups, power and politics, culture, and other matters that directly concern individual and group behavior. It also speaks to organizational issues and even community issues, but it does so through the lens of individual and group behavior.

Organizational behavior: the study and practice of how to manage individual and group behavior in business, government, and nonprofit settings

Fundamentals of Organizational Behavior

Individual, Group, and Organizational Levels of Analysis To give you a complete picture of the field of organizational behavior, let’s look at the four perspectives or levels as shown in Figure 1.1. The first level studies the individual. It is the smallest possible level of analysis in organizations and includes topics such as individual

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differences, perception, motivation, and learning. The second level is the small group. Groups can be as small as two people or can be much larger, depending on the group’s goal and tasks. The study of groups and teams in organizational behavior includes issues of group size and composition, cohesion, trust, team building, and decision making.

The third level of analysis in organizational behavior is concerned with the larger groups, such as departments, and with organizational processes. It includes issues such as the design and structure of organizations, organizational culture, power and politics, and change. Managers must understand their organizations at all three levels of analysis to meet the daily challenges they face. Organizational behavior then can be seen as resulting from the exchanges among these levels. (Note that the three major sections of the book emphasize the interaction among these layers.)

FIGURE 1.1 LEVELS OF ANALYSIS IN ORGANIZATIONAL BEHAVIOR

Social, Economic, and Ethical Context In our view, leaders and managers today must consider a fourth level of analysis—that which concerns the social, economic, and ethical context in which they act. As we will see later in this chapter, today’s society is becoming increasingly a global society, marked by networks and lines of communication unheard of only a few years ago. Consider the case of Kentucky Fried Chicken moving into China in a dramatic way, aiming at opening a new outlet every day for a total of 15,000 restaurants. Think of the issues involved. Should they adapt their offerings to the local market or should they completely revamp their business model—and their menu? And what about the people questions that are raised in working in a country with different traditions of leadership, communications, and a variety of other areas?

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SELF-ASSESSMENT 1.1

THE TELLER DILEMMA

Tanya R. Li has been promoted to director of the Bank at the Urban Center. The customers serviced by the bank are racially and ethnically diverse. The white tellers are in the minority and feel isolated. The tellers of color feel that the white tellers do not understand the customers. In addition, James, a veteran teller, has been discovered to have a criminal record prior to employment at the bank. Headquarters has a policy that does not allow anyone with a criminal record to work in direct contact with money, but the supervisor who hired James was not aware of the policy.

Tanya has identified three problems: (1) how can she make the tellers gain better understanding of each other’s cultures? (2) How can she help the tellers gain better understanding of the customers’ culture? (3) How does she deal with James, whose performance has been stellar since he joined the bank 15 years ago?

Before trying to advise Tanya on how to proceed, consider these questions:

1. What knowledge, skills, and abilities in organizational behavior would Tanya need to possess in order to deal with this situation?

2. Which of these capacities do you already have?

3. Which of these capacities do you need to acquire or improve upon?

Please come back to this case after studying this chapter to see how your answers differ.

A Brief History of Organizational Behavior Let’s look briefly at how the study of human behavior in organizations has addressed these questions. Although for hundreds of years, historians and philosophers have discussed leadership, what has been called “the management century”1 began about a hundred years ago. From that point, the development of organizational behavior can be divided into categories: the classical period, the humanistic period, and modern organizational behavior. In the following sections, we will examine representative works in each area. Our intent is not to provide a complete overview of work in each period but just to suggest the main themes that were discussed in each.

Leadership: occurs where one or more members of a group or organization stimulate others to more clearly recognize their previously latent needs, desires, and potentialities