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The Challenges of Siting a New Headquarters Amazon Courts New York City.pdf
Andrew Hoffman

The Challenges of Siting a New Headquarters: Amazon Courts New York City

Published by WDI Publishing, a division of the William Davidson Institute (WDI) at the University of Michigan.

© 2020 Sidharth Mahajan, Aloka Narayanan, Bo Shi, Charlie Warner, and Lane Wollerton. This case was written by University of Michigan graduate students Sidharth Mahajan, Aloka Narayanan, Bo Shi, Charlie Warner, and Lane Wollerton, under the supervision of Andrew Hoffman, Holcim (US) Professor of Sustainable Enterprise, a position that holds joint appointments at the University of Michigan’s Ross School of Business and School for Environment and Sustainability. The case was prepared as the basis for class discussion rather than to illustrate either effective or ineffective handling of a situation. The case should not be considered criticism or endorsement and should not be used as a source of primary data. The opening situation in the case is fictional.

In January 2019, Lane Bradfort,i Amazon’s director of economic development, sat pensively as she scrolled through yet another op-ed bemoaning Amazon’s decision to choose Queens, New York, for an additional headquarters. Since the November 2018 announcement, the backlash had been unexpectedly fierce. She shook her head, still in disbelief that after such a rigorous decision-making process and intense due diligence that she and her team had not seen this coming, or at least not to this degree.

Bradfort remained convinced that the New York City borough of Queens, and Arlington, Virginia, were the best locations for splitting Amazon’s new second headquarters, for a myriad of economic reasons. That said, choosing a location with an overwhelmingly business-friendly environment had been a top priority. Now, given the seemingly unending protests against a decision that she and her team had been so proud of only months before, she was beginning to doubt whether Amazon could be successful in New York.

Bradfort recalled the first time she walked into Amazon’s Seattle headquarters when she started with the company back in 2016. Amazon was rapidly growing and that trajectory had only continued (see Exhibit 1). In the 12 months preceding the end of Q3 2018, Amazon had become one of the largest retailing companies in the world and unequivocally the largest online retailer, with net sales of $134.5 billion in North America alone (see Exhibit 2).

When Bradfort was assigned to the project team to find the ideal location for Amazon’s second headquarters, she talked with founder and CEO Jeff Bezos about why the company had chosen Seattle as its first headquarters. He reminded her that when he launched Amazon.com in 1994, the company only sold books online. Bezos told Bradfort of three primary reasons the company had chosen the Washington state location. First, there was an ample supply of talented software engineers in the area. Second, the location was close to Roseburg, home of the largest book distribution warehouse in the country. Finally,

i Lane Bradfort is a pseudonym.

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

as Amazon did not have a physical store in Washington, state law did not mandate the collection of sales taxes. As Bradfort and her team began to build out an initial list of top priorities for the second, additional, headquarters, she kept in mind the logic and justification behind Bezos’ considerations for the first HQ.

The Need for a Second Headquarters

Amazon’s search for what it called “HQ2” was a logical next step given the company’s skyrocketing growth between 2010 and 2018. The company was by no means unique in searching for a second headquarters location. Firms such as CenturyLink, Bank of America Corp., and Samsonite (among many others) had established multiple headquarters for reasons ranging from CEO changes and mergers to tax advantages.1

In 2010, Amazon had only 5,000 local employees, but over the next eight years that number increased to 45,000 employees in the Seattle office.2 Worldwide, its job force went from 33,700 employees in 2010 to 575,000 in 2018.3 The influx of specialized and highly skilled workers resulted in a “prosperity bomb” for both Amazon and Seattle.4 Amazon outdid every other global firm in market capitalization growth between 2011 and 2018.5 By 2018 Amazon occupied 33 buildings in Seattle, and had plans to grow to 40 (see Exhibit 3). By comparison, in the District of Columbia the entire federal government operated a total of 55 buildings.6

Amazon’s search for an HQ2 location was prompted not only by the need for more real estate for its growing workforce, but other driving factors as well. While the prosperity bomb benefited Seattle businesses growth—pumping just shy of $40 million into the city’s economy between 2010 and 20177—there were also casualties. In that same seven-year span, Seattle apartment rents rose by 64% and home prices jumped month over month.8 A growing number of people were priced out of housing. By 2015, Seattle declared its homelessness problem a state of emergency.9 In a comprehensive review of US metropolitan areas, the Brookings Institution ranked Seattle third in prosperity, but 86th in inclusion, due to a rising income gap and lopsided wealth distribution.10

While one company cannot solely take the blame for a homelessness crisis of an entire metropolitan area, many people saw Amazon’s ballooning growth as a direct catalyst of the problem in Seattle. One of the main and most pernicious root causes of homelessness in the US was a lack of affordable housing. An analysis found that nearly half of households that rented in Seattle were “housing cost burdened,” meaning they spent over 30% of their income solely on rent.11

The spikes in rent and homelessness prompted local government officials to intervene. One of the most vocal was Seattle City Councilmember Kshama Sawant, a registered Socialist elected in November 2013. Sawant ran on a platform focused on raising the minimum wage in Seattle to $15 an hour and imposing taxes on Amazon and other large businesses in the city to raise money for addressing the increasing homelessness problem.12 In 2014, the Seattle City Council voted unanimously to raise the minimum wage to $15 an hour.13

The wage increase was not a welcome policy change for Amazon. In addition, animosity was growing between Amazon and local government and citizens. Many blamed the company for skyrocketing gentrification and homelessness. In late 2017, amid this growing conflict and rising tensions, the Seattle City Council formed a task force to uncover ways to generate funding for programs addressing homelessness. On March 1, 2018, the task force presented recommendations that the City Council raise $75 million from an employee hours tax, also known as a “head tax,” that would apply to any company with revenues exceeding $20 million.14

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

Naturally, businesses vigorously opposed the proposal. After its announcement but before the council voted on it, Amazon pointedly halted construction of a new building specifically to signal that it might move business elsewhere. Sawant called this move attempted blackmail, but Mayor Jenny Durkan felt differently. “I’m deeply concerned about the impact this could have on a whole range of issues,”15 said Durkan, referring to the economic fallout that likely would take place if tensions between Amazon and the local community continued to rise. Despite fears that Amazon might relocate in retaliation, the City Council approved the tax in May 2018.16 In response, business interests created No Tax on Jobs, a committee backed by the Seattle Metropolitan Chamber of Commerce, explicitly to put a referendum to kill the tax on the November 2018 ballot. Amazon and numerous other Seattle-based businesses including Kroger, Starbucks, and Albertson’s, donated $25,000 each to the committee, which ended up raising over $450,000.17 No Tax on Jobs mounted an aggressive lobbying campaign and momentum began to shift. Less than a month after they voted for the tax, on June 12 council members voted 7-2 to repeal it.18

It was amid this environment of political turmoil and bitter emotional clashes between local groups and government officials and the business community, even before the tax approval and repeal, that Amazon announced its intent to develop a second headquarters location. On September 17, 2017, Bradfort and her team released an eight-page request for proposal (RFP), formally opening the search.19

Amazon’s Search Criteria

Bradfort’s job was not going to be as easy as touring a few cities and picking whichever option she felt would best suit Amazon’s needs. The process would require careful consideration of several factors, including the willingness of cities to make concessions and offer incentives to entice the company.

It was made clear by the C-suite that cities must meet certain thresholds before they could even be considered. Some of these criteria were quantifiable, such as a metropolitan area with a minimum population of one million and a track record of being able to attract and retain strong technical talent. Others were more general, such as “communities that think big and creatively when considering locations and real estate options.”20 These were absolute musts that would help Bradfort’s team narrow the field.

Then came the logistical needs of the company. These consisted primarily of proximity to the population center, major transportation channels such as international airports, major highways, and public transit, and square footage for the proposed 50,000+ employees. As a point of reference, Bradfort and her team created a summary of Amazon’s Seattle headquarters features for bidding cities to benchmark against.

With the biggest requirements laid out, Bradfort was then left to consider other details that would still be critical for the success of HQ2. Amazon prided itself on having a culture defined by smart, talented, and driven employees. HQ2 would need to maintain and reflect that culture, so talent was a priority. The chosen city would not only need to have such an existing talent pool but also the ability for it to grow to ensure Amazon’s human capital needs would be met in the future.

Transportation, as mentioned, was vital for both employees as well as product logistics. The RFP emphasized a desire for proximity to airports with nonstop flights to Seattle, New York, the San Francisco Bay area, and Washington, D.C. Applicants would need to provide this information along with estimated travel times from proposed HQ office locations to the metro center, airports, and major highway corridors.

Bradfort and her team struggled somewhat to define the last set of requirements an applicant city would need to meet before Amazon could make its final decision: incentives. Bradfort believed that Amazon’s HQ2

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

proposal would be a boon to any city, based on the growth Seattle experienced. The proposed influx of jobs with an average compensation above $100,000 a year would be a huge attraction for any local government, not to mention the additional jobs created by the company’s proposed $5-billion capital investment. Her team believed the prestige alone would be a big win for any political official.21

Knowing the value that it brought, Amazon expected significant concessions from the applicant cities to entice the board’s final approval, such as tax credits, cash grants, or guarantees for infrastructure investment. Bradfort and her team decided to ask the applicant cities for detailed incentive plans, including whether the incentives were guaranteed vs. non-guaranteed, whether they would require state legislative approval, the timetable for incentives, and whether or not tax credits could be transferred, refunded, or carried forward in future time periods. In particular, likely based on Amazon’s experiences in Seattle, the RFP made it clear that “a stable and consistent business climate is important to Amazon.”22 Bradfort was aware that Amazon was creating a bidding war.

The Bidding Process

Unlike what companies typically do regarding expansion plans, Amazon decided to conduct its bidding process in an open forum, welcoming public knowledge of which cities were bidding for the HQ2. Bezos indicated that making the search more open would attract public support and momentum. Contrary to this was Amazon’s intention to refrain from publicly sharing the specifics of the winning city’s bid until after the close of the deal.

RFP bidding officially closed on October 19, 2017, with 238 applications received. Bradfort and her team of about a dozen Amazon employees including economists, human resources managers, and real estate executives, began honing the list. The public nature of the bidding allowed cities to continue lobbying for Amazon’s attention with promotional campaigns.

By January 18, 2018, Bradfort’s team announced it had narrowed the applicants down to 20 metropolitan areas:23

• Arlington, Virginia (bordering Washington, D.C.)

• Atlanta, Georgia

• Austin, Texas

• Boston, Massachusetts

• Chicago, Illinois

• Columbus, Ohio

• Dallas, Texas

• Denver, Colorado

• Indianapolis, Indiana

• Los Angeles, California

• Miami, Florida

• Montgomery County, Maryland (bordering Washington, D.C.)

• Nashville, Tennessee

• Newark, New Jersey

• New York City, New York

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

• Northern Virginia (bordering Washington, D.C.)

• Philadelphia, Pennsylvania

• Pittsburgh, Pennsylvania

• Raleigh, North Carolina

• Toronto, Ontario, Canada

Bradfort’s team began to look more deeply into each city, taking extensive tours and conducting interviews. They also insisted on non-disclosure agreements from officials in candidate cities. Eventually, the team reached a consensus. On November 13, 2018, Amazon announced co-winners: the Long Island City area of the New York borough of Queens, and Arlington, Virginia.24

Both deals were very detailed. From Arlington, the incentive agreement provided $550 million in cash grants and $23 million from tax incentives. Additionally, Amazon was eligible to receive up to 15% of Arlington County’s hotel tax revenue. Furthermore, Arlington County committed up to 50% of any incremental tax revenue for the coming 10 years to be devoted to infrastructure improvements surrounding Amazon’s new headquarters. In return, Amazon committed to occupy 64,000 square feet by July 2020 and 6 million square feet by 2035.25

New York City had offered a significantly higher price. It said the state would give Amazon $1.2 billion in refundable tax credits provided that 25,000 jobs were created by 2028. The state further promised $505 million in capital grants to reimburse the company for costs associated with building its offices. From the city itself, Amazon would be eligible to receive a number of incentives through programs such as Industrial and Commercial Abatement and New York City’s Relocation and Employment Assistance. All told, through local and state incentives, Amazon could receive up to $3.4 billion over 10 to 20 years. Unlike Arlington, New York City tied the incentives to the number of jobs created, with benchmarks at 25,000 and 40,000 positions.26

With the bidding and selections completed, Bradfort’s team thought their work was over. As thorough as the team was, however, they did not anticipate the momentous New York backlash.

Stakeholder Analysis

In understanding Amazon’s decision to move forward with the Long Island City location and resulting backlash, it is essential to recognize that the public decision was not made in a silo. Several groups had a stake in the move to New York. Key stakeholder perspectives are detailed below.

Amazon

Amazon’s decision to come to New York was informed by several factors including the practical needs of the company, availability and quality of talent, transportation infrastructure, a business-friendly environment, and a huge incentive package.27 However, Amazon also considered the business environment that would result from longer relationships with the region. Debates in Seattle regarding increasing taxes on high-net-worth companies, and the resulting turmoil from gentrification, created an unfavorable business and political environment for the company there. Thus, Bradfort and her team likely considered those possible consequences in the New York decision.

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

Government

City: Mayor Bill de Blasio’s decision to submit a bid was primarily fueled by the economic development prospects Amazon would bring. After Amazon finalized the decision to move forward with a New York site, de Blasio told the State Legislature the Amazon deal would lead to positive growth in the technology industry in the city.28 De Blasio repeatedly defended the package that brought Amazon to New York, having been at the table in brokering the deal. His negotiations took place prior to City Council hearings.

City Council members weighed the number of jobs that would be created by Amazon, the expected dollars in investment into city infrastructure and jobs, as well as the company’s stance toward unions in evaluating the deal.29 Council members held several hearings on the subject and no members were in favor of the deal. City Council Speaker Corey Johnson called it “insulting” that Amazon’s representatives did not submit to open hearings immediately following council member requests.30 Johnson criticized the company and its CEO for taking billions of tax incentives in exchange for operating in New York while accumulating trillions of dollars in revenue.

State: Governor Andrew Cuomo was in support of the final deal, having brokered several conversations between union leaders and Amazon to make sure they came to a consensus about building the HQ2. He was dubbed “Amazon Cuomo,” given his ardent support for the move. HQ2 was in line with his vision to reform New York City into a tech giant rivaling Silicon Valley.

Federal: The member of the US House who represented Long Island City, Democrat Carolyn Maloney, expressed support for the deal for its promise to situate New York City as the “high-tech capital of the East Coast.”31 House members representing some other New York districts, particularly Democrat Alexandria Ocasio-Cortez, felt differently. Ocasio-Cortez expressed intense opposition to the agreement, saying Amazon had a poor record with labor rights and citing high tax-money incentives in lieu of city/state investment in infrastructure.32

Organized labor

New York had a long history of labor activism and had been characterized as “the cradle of the American labor movement.”33 Some of the largest skirmishes between workers and corporate entities in the United States had taken place in New York. For example, in the wake of the 1911 Triangle Shirtwaist Factory Fire, which took the lives of 145 garment workers, organized labor and sympathetic city officials went to bat against owners and management. One protest was attended by nearly 80,000 people.34 Since these battles, organized labor had remained an important stakeholder for new projects in New York City.

In 2018, a leaked internal training video revealed Amazon anti-union sentiment, pitting organized labor against the best interests of customers and shareholders.35 Amazon’s labor practices had come under fire for years before the deal, with exposés showing the rate of serious injury at warehouses for full-time workers (9.6 per 100) to be more than twice the average in the warehousing industry.36 The rapid pace of work and emphasis on efficiency encouraged Amazon managers to continue working employees even in unhealthy and unsafe conditions, such as during a gas leak in a warehouse in Eastvale, California.37

Though Amazon’s labor practices were heavily criticized by several union leaders, labor was willing to make compromises with the company to ensure HQ2 could find a place in Queens. Amazon was resistant to unionizing attempts at a warehouse facility in Staten Island, which made regional union leaders question the company’s intent in Queens. Governor Cuomo brokered meetings between union organizers and the company in discussions around HQ2, however, which resulted in tentative agreements around unionizing in Staten Island and employing unionized labor in the Queens facility.38

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

Public

Public sentiment about the Amazon HQ2 agreement was mixed, with specific considerations garnering more discontent than others. Protests at City Council meetings and charged opinions from across the nation characterized the debate.

Just a day after the New York HQ2 decision was announced, about 100 protesters assembled in Long Island City Park to protest.39 Dissent picked up soon afterward, with protesters swarming Amazon stores later in the month, demanding the company not open a second headquarters in New York. The Amazon Books store in Manhattan was overrun with protesters on November 26, 2018, several of them chanting and carrying signs with vitriolic messaging against the New York governor, the mayor, and the CEO of Amazon.40 Protests continued at City Council meetings. At one session in January 2019, council members grilled Amazon executives and New York City development officials, while members of the public held banners calling out Amazon’s work with the US Immigration and Customs Enforcement Agency and stance against unions.41

Before and after Amazon announced the HQ2 decision, social media conversations about HQ2 buzzed. Though Amazon was public about its search, transparency was limited, with the 20 shortlisted cities signing non-disclosure agreements.42 Of course, this had the impact of fueling public speculation and debate. After HQ2 was announced, New Yorkers took to Twitter to highlight how the influx of tech workers could exacerbate existing supplies and services.43 Users around the world jumped into the conversation about potential adverse and positive impacts of the decision on the city.44

One particularly contentious issue surrounded the $3 billion in state and local tax incentives that were offered to Amazon. This money, some argued, could have gone toward public services instead of to a well- situated company. Public sentiment regarding the tax incentives centered on the question of when gains from the HQ2 creation could be realized, and whether the initial subsidy estimate was accurate. The City Council Finance Committee reported that tax breaks could be much greater than $3 billion, considering officials accounted for only minimum investments in the initial report on incentives.45

While the billions in tax incentives could theoretically have been apportioned to city services, Governor Cuomo argued that, under the offer, every $1 in tax incentives would result in $9 in realized gains over 25 years, for a grand total of $27.5 billion in revenue.46 The number touted by Cuomo was not adjusted for inflation, and a report commissioned by the state concluded the benefit-cost ratio would be 6.3:1 rather than 9:1.47 A potential public gain also included the 25,000 jobs that would be added at the HQ2 facility at an average salary of $150,000 over a 15-year period.48 As a part of the deal, Amazon promised to provide public resources in the form of a tech startup incubator, artist studios, public open space, and workforce development for lower income residents and high school students.49 By Amazon’s estimates, which were debated, it would have added 15,000 jobs to the city by 2034.50

While residents would have benefited from many of the perks in the agreement, Amazon’s search for a new HQ2 had brought up contentious Seattle issues that could easily have repercussions for New York residents as well. Long Island City’s 2018 median household income was $67,000 and less than 50% of residents had a bachelor’s degree or higher.51 Jobs created by Amazon’s HQ2 were slated to go mainly to people with high educational attainment, and create an influx of highly skilled workers to the neighborhood, leaving less specialized workers with fewer opportunities. Many feared HQ2 would raise the cost of renting and buying homes, due to high demand, creating a challenging political and social environment similar to Seattle.52 These conversations, and a desire to avoid the pattern of expedited gentrification that took place in Seattle, were fodder for grassroots action against the HQ2 plan.

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

Backlash

“When Amazon made the original HQ2 announcement in September 2017, Senator Bernie Sanders (D-VT) hadn’t yet targeted the company’s wages and labor practices and Alexandria Ocasio-Cortez was still a New York bartender and a complete unknown on the national political stage.”53 – Jason Del Rey, Vox

“Amazon is a billion-dollar company. The idea that it will receive hundreds of millions of dollars in tax breaks at a time when our subway is crumbling and our communities need MORE investment, not less, is extremely concerning to residents here.” – Alexandria Ocasio-Cortez, Twitter, 12 Nov. 2018

Despite the public nature of the bidding war between cities, many of the provisions that Mayor de Blasio and Governor Cuomo negotiated with Amazon were largely decided behind the scenes. Indeed, the New York HQ2 deal did have many proponents, but they were ultimately unable to prevent an outpouring of negative sentiment about the move. In October 2017, during the bidding for HQ2, community groups implored that de Blasio not concede tax benefits to Amazon.54

Some critics viewed the Amazon HQ2 bidding process as a ploy to gain the most tax benefits as possible from the competing cities.55 Amazon’s search criteria contained opaque language, which simultaneously obscured the selection process and incited a furious race to win out against other cities with whatever incentives possible.

The New York City Council, feeling left out of the process until the deal was already solidified by de Blasio and Cuomo in November 2018, decried that the agreement was made in back rooms without transparency to the public. Anti-HQ2 demonstrators gathered outside the three City Council hearings that ensued after the deal was made. While Amazon hired lobbyists to help with public relations, grassroots organizers were unsatisfied.56 Many of the organizations that supported Ocasio-Cortez on her path to victory for a House of Representatives seat were on the front lines of the HQ2 protests.57 A December 2018 poll found that while 60% of Queens residents supported the HQ2, 78% demanded more government involvement in order to make the deal more favorable for local residents.58

Regardless of local sentiment, critics across the nation and around the world weighed in via social media on the pre- and post-deal. Some local residents welcomed the move as a plan to bring in new jobs, while others worried about facing the same negative externalities as Seattle did, particularly increased housing costs. Ocasio-Cortez’s large national following gave her an outsized influence in the social media storm, with many of her followers retweeting her scathing critiques of the deal. Amazon was being painted as a greedy consumer of tax benefits because its executive team continued to earn unprecedented compensation (see Exhibit 4).

The Final Decision: Should Amazon Pull Out of NYC?

Bradfort and her team had a decision to make. Trust had broken down between Amazon and New York City. The headlines continued to state that Bezos, de Blasio, and Cuomo had made a shady backroom deal, with a $3-billion handout to the corporation. Despite a promise to invest heavily in education initiatives at over 130 New York schools, Amazon’s reputation was suffering.59

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

One thing perplexed Bradfort the most: how could the project not succeed when the New York City mayor, the New York governor, and a majority of the public were in support? Were the media, a small group of protesters, and a few politicians distorting the will of the city for their own political gain? If so, should Amazon push back? On the other hand, after a very charged 2018 election, maybe the city wouldn’t back down. In the age of social media, even local politics were no longer local; the world was watching Amazon’s moves. If the company caved into the protesters, how would that impact other Amazon decisions and negotiations? If New York did not provide tax breaks that were traditionally awarded to attract companies, would that embolden other cities to follow suit? Losing this battle would cost Amazon a few hundred million dollars in the short run, but backing down could cost the company billions in the future.

On the flip side, if Bradfort and her team recommended moving forward with construction, it would not be impossible to strike a new deal, with the mayor and governor cooperating. If the deal were renegotiated, would the protesters go away? Or, as seen in power struggles between corporations and activists in San Francisco, would civil unrest ensue?60

In five minutes, Bezos would be calling Bradfort and her team for their opinion on whether to stay in the deal. On paper, New York was still the best site for the new HQ. Should Bradfort’s team recommend that Amazon invest more in lobbying and public relations to fight bad press? Was it even possible for the company to rebuild trust with the city’s constituents? If the company did pull out, years of negotiations and resources would have been wasted. Moreover, Amazon would create precedent for the public to gain power in corporate negotiations. Amazon’s decision would experience intense scrutiny no matter which way it went, especially as a contentious 2020 election loomed.

As conflicted as she felt, Bradfort was sure of one thing: whatever decision made now would have repercussions for decades to come.

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

Exhibit 1 Business Wire Article Excerpts: Amazon Q3 2018 Financial Results

Amazon.com Announces Third Quarter Sales Up 29% to $56.6 Billion SEATTLE--(BUSINESS WIRE)--Oct. 25, 2018-- Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its third quarter ended September 30, 2018.

Operating cash flow increased 57% to $26.6 billion for the trailing twelve months, compared with $17.0 billion for the trailing twelve months ended September 30, 2017. Free cash flow increased to $15.4 billion for the trailing twelve months, compared with $8.0 billion for the trailing twelve months ended September 30, 2017. Free cash flow less lease principal repayments increased to $8.1 billion for the trailing twelve months, compared with $3.5 billion for the trailing twelve months ended September 30, 2017. Free cash flow less finance lease principal repayments and assets acquired under capital leases increased to an inflow of $5.4 billion for the trailing twelve months, compared with an outflow of $1.1 billion for the trailing twelve months ended September 30, 2017.

“Amazon Business has now reached a $10 billion annual sales run rate and is serving millions of private and public-sector organizations in eight countries,” said Jeff Bezos, Amazon founder and CEO. “And we’re not slowing down – Amazon Business is adding customers rapidly, including large educational institutions, local governments, and more than half of the Fortune 100. These organizations are choosing Amazon Business because it increases transparency into business spending and streamlines purchasing, with increased control. The team is doing a fantastic job building and innovating for customers.”

Source: “Amazon.com Announces Third Quarter Sales up 29% to $56.6 Billion.” Business Wire, 25 Oct. 2019. https://www.businesswire.com/news/home/20181025005964/en/ Amazon.com-Announces-Quarter-Sales-29-56.6-Billion

Exhibits

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

Exhibit 2 Q3 2018 Results and Trailing Twelve Months

Source: “Amazon Q3 Financial Results Conference Call Slides.” Amazon Investor Relations, Slide 12. https://ir.aboutamazon.com/files/doc_presentations/Webslides_Q318-_Final.pdf.

Exhibits (cont.)

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

Exhibit 3 Amazon.com, Inc. 2017 10-K, Selected Items

Exhibits (cont.)

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

Exhibit 3 (cont.) Amazon.com, Inc. 2017 10-K, Selected Items

Source: Amazon.com, Inc. Form 10-K 2017, United States Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1018724/000101872418000005/amzn- 20171231x10k.htm. Accessed 15 May 2020.

Exhibits (cont.)

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

Exhibit 4 Amazon.com, Inc. Executive Compensation

Source: Amazon.com, Inc. Schedule 14A. United States Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1018724/000119312518121077/ d514607ddef14a.htm. Accessed 15 May 2020.

Exhibits (cont.)

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The Challenges of Siting a New Headquarters: Amazon Courts New York City

1 Chen, Te-Ping. “Lessons for Amazon in running multiple headquarters: Recruiting talent and reaching customers can be easier, but avoiding the ‘second tier’ impression takes work.” Wall Street Journal, 5 Nov. 2018. https://www.wsj.com/articles/lessons- for-amazon-in-running-dual-headquarters-1541426635. Accessed 19 Feb. 2020.

2 Luckerson, Victor. “Seattle and the Socialist: The Battle Raging Between Amazon and the Far Left.” The Ringer, 17 July 2018. https://www.theringer.com/tech/2018/7/17/17578524/seattle-amazon-kshama-sawant-socialist-local-politics. Accessed 19 Feb. 2020.

3 Parilla, Joseph. “Amazon HQ2: How did we get here? What comes next?” The Brookings Institution, 28 Aug. 2018. https://www. brookings.edu/research/amazon-hq2-how-did-we-get-here-what-comes-next/. Accessed 19 Feb. 2020.

4 Parilla, Joseph. “Amazon HQ2: How did we get here? What comes next?” The Brookings Institution, 28 Aug. 2018. https://www. brookings.edu/research/amazon-hq2-how-did-we-get-here-what-comes-next/. Accessed 19 Feb. 2020.

5 Parilla, Joseph. “Amazon HQ2: How did we get here? What comes next?” The Brookings Institution, 28 Aug. 2018. https://www. brookings.edu/research/amazon-hq2-how-did-we-get-here-what-comes-next/. Accessed 19 Feb. 2020.

6 Parilla, Joseph. “Amazon HQ2: How did we get here? What comes next?” The Brookings Institution, 28 Aug. 2018. https://www. brookings.edu/research/amazon-hq2-how-did-we-get-here-what-comes-next/. Accessed 19 Feb. 2020.

7 Westneat, Danny. “Take it from us: With Amazon, you can get too much of a good thing.” Seattle Times, 8 Sept. 2017. https:// www.seattletimes.com/business/amazon/take-it-from-us-with-amazon-you-can-get-too-much-of-a-good-thing/. Accessed 1 Apr. 2020.

8 Luckerson, Victor. “Seattle and the Socialist: The Battle Raging Between Amazon and the Far Left.” The Ringer, 17 July 2018. https://www.theringer.com/tech/2018/7/17/17578524/seattle-amazon-kshama-sawant-socialist-local-politics. Accessed 19 Feb. 2020.

9 Luckerson, Victor. “Seattle and the Socialist: The Battle Raging Between Amazon and the Far Left.” The Ringer, 17 July 2018. https://www.theringer.com/tech/2018/7/17/17578524/seattle-amazon-kshama-sawant-socialist-local-politics. Accessed 19 Feb. 2020.

10 Luckerson, Victor. “Seattle and the Socialist: The Battle Raging Between Amazon and the Far Left.” The Ringer, 17 July 2018. https://www.theringer.com/tech/2018/7/17/17578524/seattle-amazon-kshama-sawant-socialist-local-politics. Accessed 19 Feb. 2020.

11 “Homelessness Response.” City of Seattle. https://www.seattle.gov/homelessness/the-roots-of-the-crisis. Accessed 23 Mar. 2020.

12 Luckerson, Victor. “Seattle and the Socialist: The Battle Raging Between Amazon and the Far Left.” The Ringer, 17 July 2018. https://www.theringer.com/tech/2018/7/17/17578524/seattle-amazon-kshama-sawant-socialist-local-politics. Accessed 19 Feb. 2020.

13 Thompson, Lynn, and Amy Martinez. “Seattle City Council approves historic $15 minimum wage.” Seattle Times, 2 June 2014. https://www.seattletimes.com/seattle-news/seattle-city-council-approves-historic-15-minimum-wage/. Accessed 19 Feb. 2020.

14 Schofield, Kevin. “Seattle Task Force Recommends Council Raise $75M from ‘Head Tax’ on Some Businesses to Fund Homelessness Services.” Seattle Business, 1 Mar. 2018. http://www.seattlebusinessmag.com/policy/seattle-task-force-recommends-council- raise-75m-head-tax-some-businesses-fund-homelessness. Accessed 19 Feb. 2020.

15 Day, Matt, and Daniel Beekman. “Amazon issues threat over Seattle head-tax plan, halts tower construction planning.” Seattle Times. 2 May 2018. https://www.seattletimes.com/business/amazon/amazon-pauses-plans-for-seattle-office-towers-while-city- council-considers-business-tax/. Accessed 19 Feb. 2020.

16 Luckerson, Victor. “Seattle and the Socialist: The Battle Raging Between Amazon and the Far Left.” The Ringer, 17 July 2018. https://www.theringer.com/tech/2018/7/17/17578524/seattle-amazon-kshama-sawant-socialist-local-politics. Accessed 19 Feb. 2020.

17 “NO TAX ON JOBS, 2018.” Public Disclosure Commission, State of Washington. https://www.pdc.wa.gov/browse/campaign- explorer/committee?filer_id=NO%20TJ%20%20111&election_year=2018. Accessed 19 Feb. 2020.

18 Luckerson, Victor. “Seattle and the Socialist: The Battle Raging Between Amazon and the Far Left.” The Ringer, 17 July 2018. https://www.theringer.com/tech/2018/7/17/17578524/seattle-amazon-kshama-sawant-socialist-local-politics. Accessed 19 Feb. 2020.

19 Weise, Elizabeth. “Amazon HQ2 timeline: The winners are New York City and Arlington, Virginia.” USA Today, 12 Sept. 2018. https://www.usatoday.com/story/tech/science/2018/09/12/timeline-amazons-search-hq-2-its-second- headquarters/1273275002/. Accessed 7 May 2020.

20 “Amazon HQ2 RFP.” DocumentCloud.org. https://www.documentcloud.org/documents/4112684-Amazon-Requirements.html. Accessed 18 Feb. 2020.

Endnotes

W05C26 For the exclusive use of Z. mi, 2021.

This document is authorized for use only by Zengyang mi in 2021 Spring MHBO ERMCPS5010_H01_2021_1 taught by Patti Ippoliti, Columbia University from Dec 2020 to Apr 2021.

16

The Challenges of Siting a New Headquarters: Amazon Courts New York City

21 “Amazon HQ2 RFP.” DocumentCloud.org. https://www.documentcloud.org/documents/4112684-Amazon-Requirements.html. Accessed 18 Feb. 2020.

22 “Amazon HQ2 RFP.” DocumentCloud.org. https://www.documentcloud.org/documents/4112684-Amazon-Requirements.html. Accessed 18 Feb. 2020.

23 “Amazon HQ2 Shortlist: Details on the 20 Finalists in $5B Sweepstakes.” Forbes, 18 Jan. 2018. https://www.forbes.com/sites/ bisnow/2018/01/19/amazon-hq2-shortlist-details-on-the-20-finalists-in-5b-sweepstakes/. Accessed 19 Feb. 2020.

24 Stevens, Laura, Keiko Morris and Katie Honan. “Amazon Picks New York City, Northern Virginia for its H2Q Locations.” Wall Street Journal, 13 Nov. 2018. https://www.wsj.com/articles/amazon-chooses-new-york-city-and-northern-virginia-for-additional- headquarters-1542075336. Accessed 7 May 2020.

25 Nickelsburg, Monica. “Full details of Amazon’s HQ2 deal with Arlington County, Va., revealed for the first time.” GeekWire. 5 Mar. 2019. https://www.geekwire.com/2019/amazons-hq2-deal-with-arlington-county-gives-big-concessions-asks-little-of-the- company/. Accessed 19 Feb. 2020.

26 Edwards, Riley. “Breaking Down the Amazon HQ2 Deal: Facts and Takeaways.” Citizens Budget Commission, 21 Nov. 2018. https:// cbcny.org/research/breaking-down-amazon-hq2-deal. Accessed 19 Feb. 2020.

27 Hicks, Nolan, and Max Jaeger. “Cuomo: New York’s $3B giveaway to Amazon costs us nothing.” New York Post, 13 Nov. 2018. https://nypost.com/2018/11/13/cuomo-3-billion-giveaway-to-amazon-costs-us-nothing/. Accessed 19 Feb. 2020.

28 Carola, Chris. “NYC mayor defends Amazon deal at state hearing.” Associated Press, 11 Feb. 2019. https://apnews. com/0063d5d4787d4af494de3bc9405b5369. Accessed 19 Feb. 2020.

29 Spivack, Caroline. “City Council spars with Amazon, EDC over HQ2 cost concerns.” NY Curbed, 30 Jan. 2019. https://ny.curbed. com/2019/1/30/18204085/city-council-spars-with-amazon-edc-over-hq2-cost-concerns. Accessed 1 Apr. 2020.

30 Spivack, Caroline. “City Council spars with Amazon, EDC over HQ2 cost concerns.” NY Curbed, 30 Jan. 2019. https://ny.curbed. com/2019/1/30/18204085/city-council-spars-with-amazon-edc-over-hq2-cost-concerns. Accessed 1 Apr. 2020.

31 “Here’s what the US Congresswoman for Long Island City thinks about Amazon HQ2.” CNBC, 15 Feb. 2019. https://www.cnbc. com/video/2019/02/15/heres-what-the-us-congresswoman-for-long-island-city-thinks-about-amazon-hq2.html. Accessed 19 Feb. 2020.

32 Foussianes, Chloe. “A Timeline of Amazon’s ‘HQ2,’ From the First Announcement to a Failed Campus in New York City.” Town and Country. 14 Feb. 2019. https://www.townandcountrymag.com/society/money-and-power/a26345749/amazon-hq2-new-york-city- timeline/. Accessed 19 Feb. 2020.

33 Greenhouse, Steven. “New York, Cradle of Labor History.” New York Times. 30 Aug. 1996. https://www.nytimes.com/1996/08/30/ arts/new-york-cradle-of-labor-history.html. Accessed 19 Feb. 2020.

34 “Triangle Shirtwaist Factory Fire.” History, Original 2 Dec. 2009; updated 13 Sept. 2019. https://www.history.com/topics/early- 20th-century-us/triangle-shirtwaist-fire. Accessed 19 Feb. 2020.

35 Menegus, Bryan. “Amazon’s Aggressive Anti-Union Tactics Revealed in Leaked 45-Minute Video.” Gizmodo, 26 Sept. 2018. https://gizmodo.com/amazons-aggressive-anti-union-tactics-revealed-in-leake-1829305201. Accessed 19 Feb. 2020.

36 Evans, Will. “Ruthless Quotas at Amazon are Maiming Employees.” The Atlantic, 5 Dec. 2019. https://www.theatlantic.com/ technology/archive/2019/11/amazon-warehouse-reports-show-worker-injuries/602530/. Accessed 1 Apr. 2020.

37 Evans, Will. “Ruthless Quotas at Amazon are Maiming Employees.” The Atlantic, 5 Dec. 2019. https://www.theatlantic.com/ technology/archive/2019/11/amazon-warehouse-reports-show-worker-injuries/602530/. Accessed 1 Apr. 2020.

38 Kitroeff, Natalie. “Amazon and New York Unions Had ‘Productive Meeting,’ Then Came a Shock.” New York Times, 14 Feb. 2019. https://www.nytimes.com/2019/02/14/business/economy/amazon-union-cuomo.html. Accessed 19 Feb. 2020.

39 Del Valle, Gaby. “Amazon HQ2: The many layers of backlash against the company’s expansion, explained.” Vox, 13 Nov. 2018. https://www.vox.com/the-goods/2018/11/6/18065666/amazon-hq2-backlash. Accessed 19 Feb. 2020.

40 Taylor, Kate. “New Yorkers are storming one of Amazon’s stores in protest of HQ2. Here are all the reasons why people are furious.” Business Insider, 16 Nov. 2018. https://www.businessinsider.com/new-yorkers-storm-amazon-store-hq2- protest-2018-11. Accessed 19 Feb. 2020.

41 Spivack, Caroline. “City Council spars with Amazon, EDC over HQ2 cost concerns.” NY Curbed, 30 Jan. 2019. https://ny.curbed. com/2019/1/30/18204085/city-council-spars-with-amazon-edc-over-hq2-cost-concerns. Accessed 1 Apr. 2020.

42 Parilla, Joseph. “Amazon HQ2: How did we get here? What comes next?” The Brookings Institution, 28 Aug. 2018. https://www. brookings.edu/research/amazon-hq2-how-did-we-get-here-what-comes-next/. Accessed 19 Feb. 2020.

Endnotes (cont.)

W05C26 For the exclusive use of Z. mi, 2021.

This document is authorized for use only by Zengyang mi in 2021 Spring MHBO ERMCPS5010_H01_2021_1 taught by Patti Ippoliti, Columbia University from Dec 2020 to Apr 2021.

17

The Challenges of Siting a New Headquarters: Amazon Courts New York City

43 Taylor, Kate. “People are furious about Amazon’s reported decision to split its HQ2 between New York City and Virginia after months of deliberation.” Business Insider, 5 Nov. 2018. https://www.businessinsider.com/people-are-furious-about-amazon-hq2- reported-selection-2018-11. Accessed 19 Feb. 2020.

44 Roberts, Michael. “Bypassing Denver: Bullet Dodged.” Westword, 13 Nov. 2018. https://www.westword.com/news/twitter- reaction-to-amazon-hq2-bypassing-denver-bullet-dodged-11000743. Accessed 19 Feb. 2020.

45 Spivack, Caroline. “City Council spars with Amazon, EDC over HQ2 cost concerns.” NY Curbed, 30 Jan. 2019. https://ny.curbed. com/2019/1/30/18204085/city-council-spars-with-amazon-edc-over-hq2-cost-concerns. Accessed 1 Apr. 2020.

46 Bryan, Bob. “Amazon’s HQ2 deal with New York is officially off — and it means that the state and city will lose out on $27.5 billion in tax revenue.” Markets Insider, 8 Feb. 2019. https://markets.businessinsider.com/news/stocks/amazon-hq2-leaving-new- york-city-would-mean-tax-revenue-loss-2019-2-1027937857. Accessed 19 Feb. 2020.

47 Bryan, Bob. “Amazon’s HQ2 deal with New York is officially off — and it means that the state and city will lose out on $27.5 billion in tax revenue.” Markets Insider, 8 Feb. 2019. https://markets.businessinsider.com/news/stocks/amazon-hq2-leaving-new- york-city-would-mean-tax-revenue-loss-2019-2-1027937857. Accessed 19 Feb. 2020.

48 Spivack, Caroline. “City Council spars with Amazon, EDC over HQ2 cost concerns.” NY Curbed, 30 Jan. 2019. https://ny.curbed. com/2019/1/30/18204085/city-council-spars-with-amazon-edc-over-hq2-cost-concerns. Accessed 1 Apr. 2020.

49 DePillis, Lydia. “Helipads and everything else Amazon is getting out of its deals with New York and Virginia.” CNN, 14 Nov. 2018. https://www.cnn.com/2018/11/13/business/amazon-hq2-subsidies/index.html. Accessed 19 Feb. 2020.

50 Spivack, Caroline. “City Council spars with Amazon, EDC over HQ2 cost concerns.” NY Curbed, 30 Jan. 2019. https://ny.curbed. com/2019/1/30/18204085/city-council-spars-with-amazon-edc-over-hq2-cost-concerns. Accessed 1 Apr. 2020.

51 “NYC-Queens Community District 1 – Astoria & Long Island.” Census Reporter. Data from ACS 2018 1-Year estimates. https:// censusreporter.org/profiles/79500US3604101-nyc-queens-community-district-1-astoria-long-island-city-puma-ny/. Accessed 19 Feb. 2020.

52 Staub, Alexandra. “Amazon’s HQ will gentrify neighborhoods. At what social cost?” Fast Company, 30 Nov. 2018. https://www. fastcompany.com/90274295/is-gentrification-ever-ethical. Accessed 19 Feb. 2020.

53 Del Ray, Jason. “Amazon’s grave HQ2 mistake: The political landscape changed but the company’s playbook didn’t.” Vox, 15 Feb. 2019. https://www.vox.com/2019/2/15/18225316/amazon-queens-hq2-new-york-location-missed-opportunity. Accessed 19 Feb. 2020.

54 Del Valle, Gaby. “Amazon HQ2: The many layers of backlash against the company’s expansion, explained.” Vox, 13 Nov. 2018. https://www.vox.com/the-goods/2018/11/6/18065666/amazon-hq2-backlash. Accessed 19 Feb. 2020.

55 Del Valle, Gaby. “Amazon HQ2: The many layers of backlash against the company’s expansion, explained.” Vox, 13 Nov. 2018. https://www.vox.com/the-goods/2018/11/6/18065666/amazon-hq2-backlash. Accessed 19 Feb. 2020.

56 Goodman, David. “Amazon hires lobbyists for NY site and tries to fend off Ocasio-Cortez’s supporters.” New York Times, 11 Dec. 2018. https://www.nytimes.com/2018/12/11/nyregion/amazon-queens-lobbyists.html. Accessed 19 Feb. 2020.

57 Ghaffary, Shirin. “Amazon’s HQ2 was supposed to be a win for New York City. Instead it has become a huge political battle.” Vox, 30 Jan. 2019. https://www.vox.com/2019/1/30/18202825/amazon-hq2-new-york-city-political-battle-de-blasio-queens. Accessed 19 Feb. 2020.

58 “New Yorkers Give Amazon a Prime 2-1 Welcome, Quinnipiac University Poll Finds, But Voters Are Divided on Tax Breaks to Make The Deal.” Quinnipiac University Poll, 5 Dec. 2018. https://poll.qu.edu/new-york-city/release-detail?ReleaseID=2589. Accessed 19 Feb. 2020.

59 Perez, Sarah. “Amazon to fund computer science classes in 130 NYC high schools.” Techcrunch, 29 Jan. 2019. https://techcrunch. com/2019/01/29/amazon-to-fund-computer-science-classes-in-over-130-nyc-high-schools/. Accessed 19 Feb. 2020.

60 Streitfeld, David. “Protesters block Google buses in San Francisco, citing Techsploitation.” New York Times, 31 May 2018. https:// www.nytimes.com/2018/05/31/us/google-bus-protest.html. Accessed 19 Feb. 2020.

Endnotes (cont.)

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__MACOSX/._The Challenges of Siting a New Headquarters Amazon Courts New York City.pdf
Textbook!!Organizational Behavior A Practical, Problem-Solving Approach 3rd Edition.pdf
Angelo Kinicki

Behavior Organizational

A Practical, Problem-Solving Approach

3e

Angelo Kinicki Arizona State University

Kent State University

Organizational Behavior

A Practical, Problem-Solving Approach

Third Edition

ORGANIZATIONAL BEHAVIOR: A PRACTICAL, PROBLEM-SOLVING APPROACH, THIRD EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2021 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2018 and 2016. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 LWI 24 23 22 21 20

ISBN 978-1-260-07507-6 (bound edition) MHID 1-260-07507-9 (bound edition) ISBN 978-1-260-51625-8 (loose-leaf edition) MHID 1-260-51625-3 (loose-leaf edition)

Executive Portfolio Manager: Michael Ablassmeir Lead Product Developer: Kelly Delso Product Developer: Anne Ehrenworth Executive Marketing Manager: Debbie Clare Content Project Managers: Harvey Yep (Core) / Keri Johnson (Assessment) Buyer: Susan K. Culbertson Design: Matt Diamond Content Licensing Specialist: Carrie Burger Cover Image: © malerapaso/Getty Images Compositor: Aptara®, Inc.

All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.

Library of Congress Control Number: 2019920084

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites.

mheducation.com/highered

DEDICATION To the thousands of students I encountered during my career. Thank you for making me a better teacher and writer.

— Angelo

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o r nizational performance. Angelo has published over 95 articles in a variety of academic journals

and proceedings and is co-author of eight text- books (32 including revisions) that are used by hundreds of universities around the world. Several of his books have been translated into multiple languages, and two of his books were awarded revisions of the year by McGraw-Hill. Angelo also was identified as being among the top 100 most influential (top .6%) Organizational Behavior authors in 2018 out of a total of 16,289 academics.

Angelo is a busy international consultant and is a principal at Kinicki and Associates, Inc., a management consulting firm that works with top management teams to create organizational change aimed at increasing organizational effec- tiveness and profitability. He has worked with many Fortune 500 firms as well as numerous entrepreneurial organizations in diverse indus- tries. His expertise includes facilitating strategic/ operational planning sessions, diagnosing the causes of organizational and work-unit problems, conducting organizational culture interventions, implementing performance management sys- tems, designing and implementing performance appraisal systems, developing and administering surveys to assess employee attitudes, and lead- ing management/executive education programs. He developed a 3600 leadership feedback instrument called the Performance Management Leadership Survey (PMLS) that is used by com- panies throughout the world.

Angelo and his wife of 37 years, Joyce, have enjoyed living in the beautiful Arizona desert for 36 years. They are both natives of Cleveland, Ohio. They enjoy traveling, hiking, and spending time in the White Mountains with Gracie, their adorable golden retriever. Angelo also has a pas- sion for golfing.

Angelo Kinicki is an emeritus professor of management and held the Weatherup/Overby Chair in Leadership from 2005 to 2015 at the W.P. Carey School of Business at Arizona State University. He joined the faculty in 1982, the year he received his doctorate in business administration from Kent State University. He was inducted into the W.P. Carey Faculty Hall of Fame in 2016. Angelo currently is the Dean’s Scholar in Residence at Kent State University. He is teaching in the MBA program and serves on the Dean’s National Advisory Board.

Angelo is the recipient of six teaching awards from Arizona State University, where he taught in its nationally ranked MBA and PhD programs. He also received several research awards and was selected to serve on the editorial review boards for four scholarly journals. His current research interests focus on the dynamic relationships among leadership; organizational culture; organi- zational change; and individual, group, and orga-

Courtesy of Angelo Kinicki

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nwe have included a variety of new exercises to our already robust Connect offering:• Problem-Solving Application Case Analyses: All problem-solving application mini-cases and end-of-chapter cases are now assignable as case analyses in Connect. These exercises give students the opportunity to analyze a situation and to apply the 3-Step Problem- Solving Approach. Student knowledge and proficiency are assessed using high-level multiple-choice questions that focus on both the problem-solving approach and on the key topics of each chapter.

• Application-Based Activities: Students can gain valuable practice using problem- solving skills to apply their knowledge to realistic scenarios. Included in this edition are two types of Application-Based Activities: Role-Playing mini-simulations that allow students to make decisions and see, in real time, the impact of those decisions; and Self-Assessments, which are research-based surveys that students can take to gain fur- ther introspection into how organizational behavioral concepts apply to them.

• Cumulative Case: This capstone activity provides students the opportunity to apply the 3-Step Problem-Solving Approach on an actual situation affecting a specific firm (Tesla). Because the case examines issues at the individual, group, and organizational levels of analysis at Tesla, it can be used in parts or as a comprehensive assignment or exam. All told, this activity presents stu- dents with a rich and practical example to apply their OB knowledge and problem- solving skills.

• iSeeIt Videos: Brief, contemporary intro- ductions to key course concepts that often perplex students, this series will enhance your student-centered instruction by offer- ing your students dynamic illustrations that guide them through the basics of core OB concepts such as motivation, leadership, socialization, and more.

• Manager’s Hot Seat Videos: These vignettes allow students to assume the role of a man- ager as they immerse themselves in real-life situations. Students see how managers deal with employees and complex issues, and use critical-thinking skills in defining their approach and course of action--while learning from the manager’s mistakes.

We are pleased to share these exciting updates and new additions to the third edition of Organizational Behavior!

Features In this new edition, we have better integrated the 3-Step Problem-Solving Approach through- out, and clarified its relationship to the Orga- nizing Framework for Understanding and Applying OB. In addition:

• Winning at Work boxes at the beginning of every chapter offer career-readiness guid- ance for students on a variety of timely, pertinent topics.

• OB in Action boxes illustrate OB concepts or theories in action in the real world, featuring well-known companies and individuals.

• Applying OB boxes offer students “how-to” guidance on applying OB knowledge in their lives. The importance of career readiness is stressed in many of these boxes throughout the book, indicated with a “Career Readiness” label.

• Problem-Solving Application boxes provide a minicase for students to analyze, using the 3-Step Problem-Solving Approach.

• Takeaways for Me and Takeaways for Managers conclude each chapter, explaining in direct terms practical appli- cations of the chapter content from the student’s perspective as an employee and a manager.

• Problem-Solving Application Cases at the end of each chapter provide a complex and current case with one or more problems that pertain to concepts discussed in the chapter.

• Legal/Ethical Challenges provide a conclud- ing exercise in each chapter and ask stu- dents to choose from several courses of action or invent their own to resolve a business situation involving ethics at work.

Connect In our continuing efforts to help students move from comprehension to application, and to ensure they see the personal relevance of OB,

vi NEW TO THE THIRD EDITION

Chapters In each chapter we have refreshed examples, research, figures, tables, statistics, and photos, as well as streamlined design to ease navigation and improve readability. We have also largely replaced the topics in such popular features as Winning at Work, Legal/Ethical Challenges, Problem-Solving Application mini cases, and Problem-Solving Application Cases. New in this edition, each chapter concludes with a sec- tion entitled “Making Connections,” in which we provide a list of specific applications of chapter content for students and managers. Beyond these valuable changes, the following outlines some of the more notable changes by chapter.

CHAPTER 1 • New content on the implications of OB for

students’ jobs and careers.

• Expanded and enhanced section on ethics, including expanded treatment on the preva- lence of cheating and other forms of unethi- cal conduct at school and work; revised and further developed section on ethical dilem- mas and whistleblowers; revised and enhanced content on the importance of soft versus hard skills; expanded explanation of the importance of self-awareness for personal development and job and career success.

• Updated survey results outlining skills most sought by employers.

• New Winning at Work feature provides insight and guidance on how to deal with challenges in the hiring process, including the growing role of artificial intelligence and how to effectively get past these virtual gatekeepers.

• New Applying OB feature on how self- awareness can help one build a fulfilling career.

• Updated and refined the 3-Step Approach to Solving Problems Using OB.

CHAPTER 2 • New content on the factors that shape the

values of Generation Z; increasing employee commitment, with best practices used by Hilton, Salesforce, and Cisco.

• New examples clarify content about Schwartz’s value theory and explain cognitive dissonance.

• Updated statistics on employee engagement around the world; new data on employee

satisfaction in the U.S.; new statistics on telecommuting; new research on accounting/ financial performance and customer service/satisfaction as outcomes of job satisfaction.

• New Winning at Work feature on creating your own sense of employee engagement.

• New Problem-Solving Application features on McDonald’s workers protesting sexual harassment at work; Netflix’s approach to sexual harassment in the workplace.

• New OB in Action feature on how compa- nies foster employee engagement.

• New Applying OB features on ways to implement telecommuting for employees; using job satisfaction to reduce employee turnover.

• New end-of-chapter Problem-Solving Application Case on Walmart’s values under scrutiny.

CHAPTER 3 • New section on the dark side of personal-

ity, the dark triad: narcissism, psychopathy, and Machiavellianism; new coverage of emotional intelligence, including the most recent research and ways in which to develop one’s EI; new content on the potential and actual success of introverts in the workplace; new content on how to manage emotions during the job search process.

• Expanded section on brain training, using current research findings and applications; streamlined treatment of multiple intelli- gences with new, compelling examples; updated and streamlined material related to core self-evaluations.

• Updated research and practical implications of intelligences, linking Big 5 personality dimensions to performance.

• New Winning at Work feature illustrating the career implications of OB, with guidance on which interview questions students should be prepared to answer and ask.

• New Applying OB features on what to look for in a manager; managing emotions during the job search.

• New OB in Action features on intelligence testing; one of the richest self-made women in America (who also epitomizes self- efficacy).

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research and examples on job design, job crafting, and i-deals.

• New Winning at Work feature on how to negotiate for a pay raise at work.

• New Problem-Solving Applications about employee benefits at Walmart; symphony orchestra members going on strike.

• New OB in Action feature about job swap- ping and job rotation opportunities.

• New end-of-chapter Problem-Solving Appli- cation Case on why Amazon workers are not feeling motivated.

• New Legal/Ethical Challenge about whether Sears executives should receive bonuses while taking the company through bankruptcy.

CHAPTER 6 • New content on the primary outputs and

functions of performance management; applied goalsetting to jobs and careers; the major reasons performance manage- ment is criticized; the growing role of technology in performance management; contemporary performance management, highlighting that it is now continual and includes more coaching and ongoing feedback; how to improve performance monitoring.

• Revised Winning at Work feature on best practices for productivity.

• New Applying OB features on goal-setting; responding to negative feedback; effective coaching.

• New OB in Action features on ID checks; monitoring for performance; com- pensation.

• New Problem-Solving Application on incen- tivizing teachers in one underperforming school district.

• New end-of-chapter Problem-Solving Application Case on the consequences resulting from Wells Fargo’s use of incentives.

• New Legal/Ethical Challenge on the practice of employers’ asking about current salary.

CHAPTER 7 • New content on positive and negative

deviance; how students can increase their

• New Problem-Solving Application on Uber’s former CEO, Travis Kalanick.

• New end-of-chapter Problem-Solving Application Case on the fall of John Schnatter, founder of Papa John’s Pizza.

• New Legal/Ethical Challenge on drug testing with the recent legalization of marijuana in some states.

CHAPTER 4 • New, expanded discussion and illustration

of the four stages of social perception; new content on diversity, including new discussion of assumptions about diversity and new examples about the use of quotas when it comes to hiring practices; new example to elaborate on the self-serving bias.

• New research on how a person’s appear- ance affects our perception and their ability to get hired; updated research on stereo- types; new results of gender research; updated trends and statistics related to diversity, including the topic of pay equity for men and women and research on unwel- coming workplace environments.

• New Applying OB features on developing cultural awareness to enhance perception; the best companies for Millennial workers.

• New OB in Action features on the use of vir- tual technologies for job interviews and recruit- ment; how U.S. companies are using product design to reach a diverse customer base.

• New Problem-Solving Application about firefighters suing for age discrimination.

• Updated end-of-chapter Problem-Solving Application Case on the diversity profile of technology companies.

• New Legal/Ethical Challenge about patient requests versus employees’ civil rights.

CHAPTER 5 • New content on equity sensitivity.

• New illustrations of extrinsic and intrinsic motivation; new examples to illustrate key theories including Maslow’s theory, self- determination theory, and equity/justice theory; new examples to illustrate the concept of goal setting and the application of the job characteristics model.

• New research on employees’ opinions about performance feedback and pay; updated

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• Expanded and refined content on team effectiveness, including new material on the characteristics of high performing teams and how to use conflict to improve teamwork.

• Revised and expanded research and appli- cation related to social-loafing (how to prevent and overcome it); updated research and content on team adaptive capacity.

• New Applying OB features on cultivating cohesiveness to improve the function of groups and teams; the benefits of microinternships for both employers and students.

• New OB in Action features on how T-Mobile has changed their customer service approach by working in teams; how conflict and tension can be the key to better teams.

• New end-of-chapter Problem-Solving Application Case on the predicaments that Boeing faces with its 737 Max airliner.

CHAPTER 9 • New content on media richness; social

listening; generational differences regarding the role of digital devices and communica- tion expectations and norms; social media and OB.

• New subsection on phubbing (phone snubbing) and FOMO (fear of losing out); new discussion on nondefensive communi- cation.

• New research on media richness, managers’ use of empathy; tips on managing e-mail; statistics on social media and OB.

• New OB in Action features on communica- tion transparency at a skin-care company; how empathy is good for business; crowd- sourcing success stories at Lego and Frito- Lay.

• New Applying OB feature on how to ace a video job interview.

• New end-of-chapter Problem-Solving Application Case about United Airlines’ turbulent communications strategy.

• New Legal/Ethical Challenge on whether social media posts impact the cost of life insurance premiums.

flourishing at school; turning rejection in the job search process into positive motivation.

• Updated and expanded section on doing well and doing good, including three quali- fying criteria and further development of how this occurs across levels of OB ( individual, group, and organizational); expanded material on how to insert more positivity in one’s work; organizational cli- mate; revised material on the history and current role of positivity in OB; prosocial behaviors.

• Refined, updated, and expanded research, applications, and benefits of mindfulness at work; updated research and applications of resilience, optimism, and signature strengths at work.

• New Winning at Work feature on boosting performance with productivity.

• New Applying OB features on how managing internal responses can improve performance; boosting positivity with a fun work environ- ment; fostering positive candidate experi- ences during job interviews.

• New OB in Action features on socially- responsible investing; mindfulness at major healthcare, biotech, and industrial compa- nies; employee wellness via resistance training at a major health system; how one fast-casual health food business fosters posi- tive culture

• New Problem-Solving Application on Amazon’s acquisition of Whole Foods and reckoning of the two companies’ values.

• New end-of-chapter Problem-Solving Application Case on how aggressive mar- keting created an opioid epidemic.

• New Legal/Ethical Challenge on hiring those with criminal pasts.

CHAPTER 8 • New section differentiating groups

and teams using three characteristics: dependence, accountability, and time.

• Revised and updated content on formal and informal groups and their respective func- tions; group and team norms; types of teams, especially related to virtual team challenges and solutions; updated and expanded content on trust: what it is, why it is important, and how to repair it when damaged.

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new research on the importance of creativity and curiosity within organizations.

• New Winning at Work feature about how to practice critical thinking skills for decision making.

• New OB in Action features on improving an airport terminal under bounded rationality; how big data helps advance the health care industry; how shaking up your routine may spark creativity.

• New Problem-Solving Application on how cognitive bias was partly to blame for California’s devastating wildfires.

• New end-of-chapter Problem-Solving Application Case on Airbus’s decision to cease production of its A380 airliner.

• New Legal/Ethical Challenge on whether college students should be expelled if their parents cheated to get them into school.

CHAPTER 12 • Revised content on common influence

tactics, including current and compelling examples of students, #MeToo, and employ- ees; political tactics, highlighting the increasing activism by employees, students, and other groups; political behavior, uncer- tainty, performance, and change; the tactic of blame and levels of political action; apologies—when and how to use them effectively.

• Updated and expanded research on the five bases of power, with a focus on negative legitimate and referent power.

• New Applying OB features on social media influencers; etiquette in the hiring process; body art in the workplace.

• New OB in Action features on giving tax breaks and other incentives to billion-dollar companies; employee activism; the effects of student activism on companies and corporations.

• New end-of-chapter Problem-Solving Application Case on Nike and the MeToo Movement.

• New Legal/Ethical Challenge on companies who impose their leaders’ values on employees.

CHAPTER 10 • New section on harassment—what it is and

how to prevent it at work.

• New content on functional versus dysfunc- tional conflict: causes and outcomes; intergroup conflict material; creating the climate for psychological safety; framing negotiation as a skill, task, or even a game— with the goal of improving your attitude related to negotiation and thus improving the outcomes.

• Revised and updated content related to conflict avoidance, including reasons why people avoid conflict, how to avoid avoiding conflict, and the desired outcomes of conflict management.

• Expanded and updated sections related to work-life conflict, with a new focus on har- mony or integration of life’s; modern con- flict at work; civility at work, including its forms, prevalence, and costs; programming functional conflict and conflict handling styles; ethics and negotiations.

• New Applying OB features on how to explain your departure from one job while interviewing for another; psychological safety at Google; how to ask for a larger s alary or a raise.

• New OB in Action features on dealing with conflict; the battle between two unions involved in the creation of shows and movies.

• New Problem-Solving Application on the Fair Food Program.

• New Problem-Solving Application Case on Facebook’s struggles with protection of data and privacy.

• New Legal/Ethical Challenge on arbitration versus litigation.

CHAPTER 11 • New section on artificial intelligence and its

increasing use in decision making.

• Expanded discussion of Kahneman’s two ways of thinking; updated information on data analytic jobs and majors; new exam- ples for the four types of decision-making styles; new examples of bounded rationality, intuition, big data, analytical decision mak- ing, and creativity.

• New data on use of heuristics by physi- cians; new statistics about use of big data;

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• New Applying OB feature about key strate- gies for cultivating a network and mentor- ing relationship.

• New end-of-chapter Problem-Solving Application Case about the culture clashes at Ford Motor Company.

CHAPTER 15 • New introductory section and illustration

that provide an overview of how organiza- tional structure and innovation impact organizational effectiveness.

• Shifted discussion of assessing organiza- tional effectiveness to the end of the chapter to provide a clearer link between implementing organizational design and evaluating its effectiveness using various metrics, including the Balanced Scorecard.

• Updated examples on learning organiza- tions; the seven types of organizational structure; innovation in organizations.

• New research on the effects of open-office design on individual, group, and organiza- tional outcomes; updated research related to learning organizations and innovation in organizations.

• New Problem-Solving Applications about gig workers’ growing influence in the labor market; AMD and its struggles to innovate.

• New end-of-chapter Problem-Solving Application Case about one major book- seller and the challenges it faces to stay in business.

• Updated Legal/Ethical Challenge about universities’ tax-exempt status and the response from their local communities.

CHAPTER 16 • New section on confronting and effectively

overcoming failures at work.

• New material contrasting fatigue versus tiredness and consequences at work; the role and characteristics of change agents; tips on overcoming resistance to change.

• Revised and expanded content on forces for change; updated material on using missions to motivate change; revised content on resistance to change—its causes and how to overcome it; revised content on stress at work, including statistics, causes, and costs.

CHAPTER 13 • New section on abusive supervision and

what strategies organizations can imple- ment to eliminate such behavior.

• New content on the leadership model devel- oped by Kouzes and Posner; the four ways of creating psychological empowerment; the four behaviors demonstrated by trans- formational leaders.

• New statistics on why leadership is so important in today’s organizations; new research on leadership traits and task and relational leadership; new research about leader- member exchange model of leadership.

• New OB in Action features on how one university used task leadership to help reclaim the national college football championship; abusive leadership at a local pharmacy.

• New Problem-Solving Application on Barnes & Noble’s search for a new CEO.

• New end-of-chapter Problem-Solving Application Case on Elon Musk and his leadership behavior.

• New Legal/Ethical Challenge on whether store managers should force employees to pierce childrens’ ears against their wishes.

CHAPTER 14 • Expanded discussion of sustainability as a

key driver of organizational success.

• New examples for the three levels of organi- zational culture; the four cultural types in the competing values framework; the 12 mechanisms to change organizational culture; the three stages of socialization; the career and psychosocial functions of mentoring; how human and social capital enhance the benefits of mentoring.

• Updated research for the three stages of socialization; new illustrations on the importance of organizational culture; new examples of the career and psychosocial functions of mentoring.

• New OB in Action feature about compa- nies that demonstrate sustainability leadership.

• New Problem-Solving Application about Sprouts Farmers Market and its organiza- tional culture.

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• Streamlined and updated research and examples related to common models of change; forces for change; managing stress.

• New Winning at Work feature on relocating.

• New OB in Action features on turnover among CEOs; improving lives with shoes.

• New Applying OB features on answering behavioral interview questions; how to rant productively.

• New Problem-Solving Application on the AT&T/Time Warner merger.

• New end-of-chapter Problem-Solving Application Case on the reinvention of Toys R Us.

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“My students have embraced the problem-solving approach . . . and are excelling as a result. They tell me in their feedback that they ‘get it.’ To me, that proves success and that learning has taken place.”

David D. Mull —Columbia College of Missouri

• “I want a good job, one that I like and is fulfilling. How do I know which job and company are a good fit for me?”

• “I know that this job and company provide good opportunities for me, but what can I do to be sure I actually realize these opportunities?”

• “I can’t stand my job, but I need the money. Should I talk to my boss or just quit?”

• “I am taking a class with 50 percent of the grade due to teamwork. My team has four members and two of us are doing all the work. I’ve been talking to the team, but the two members still aren’t doing their share. I am at a loss for what to do.”

• “How do I negotiate a salary and benefits for my new job, or a raise for the one I have?”

Each of these scenarios presents a problem. We all are faced with problems every day, and our ability to solve problems can set us apart from others in our jobs and careers. In fact, surveys consistently show that problem solving is one of the skills most valued by employers. For this rea- son, we designed Organizational Behavior, 3e, to help students become more effective problem solvers. Students who are effective problem solvers today become valued leaders tomorrow.

The third edition of Organizational Behavior relies on three key strategies to help students use OB knowledge to solve problems:

• Consistent 3-Step Problem-Solving Approach. • Applied, practical features. • User-centric design.

3-Step Problem-Solving Approach Given problem solving is one of the skills most sought by employers, we help students develop instead of hone this skill. We teach them to use a 3-Step Problem-Solving Approach—(1) define the problem, (2) identify the causes, and (3) recom- mend a solution. This approach is introduced in Chapter One and used multiple times in each subsequent chapter. To complement the 3-Step Approach, we also developed the Organizing Framework for Understanding and Applying OB. This framework is used in two ways. First, it pro- vides students a means for organizing OB con- cepts into three categories (inputs, processes, and outcomes) as they learn them. This facili- tates student learning and shows how concepts relate to each other. Second, it is an important

and complementary tool for problem solving. Problems are often defined in terms of out- comes in the Organizing Framework, and the causes are commonly found in the inputs and processes elements. Students use this framework in every chapter to solve problems confronted by real organizations and employees.