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Attachment 1












9 78 1 25 9 732645

9 0000


ISBN 978-1-259-73264-5 MHID 1-259-73264-9


organizational behavior





Angelo Kinicki Arizona State University

Mel Fugate University of South Australia

A Practical, Problem-Solving Approach Second Edition

Organizational Behavior


Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2018 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous edition © 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 LMN 21 20 19 18 17

ISBN 978-1-259-73264-5 MHID 1-259-73264-9 ISBN 978-1-259-91546-8 (Instructor’s Edition) MHID 1-259-91546-8

Chief Product Officer, SVP Products & Markets: G. Scott Virkler Vice President, General Manager, Products & Markets: Michael Ryan Vice President, Content Design & Delivery: Betsy Whalen Managing Director: Susan Gouijnstook Director: Michael Ablassmeir Director, Product Development: Meghan Campbell Lead Product Developer: Kelly L. Delso Content Editor: Elisa Adams Senior Product Developer: Lai T. Moy Director of Marketing: Robin Lucas Senior Market Development Manager: Nicole Young Marketing Managers: Necco McKinley/Debbie Clare Editorial Coordinator: Haley Burmeister Director, Content Design & Delivery: Terri Schiesl Executive Program Manager: Mary Conzachi Content Project Managers: Mary Powers/Danielle E. Clement Buyer: Susan K. Culbertson Design: Jessica Cuevas Content Licensing Specialist: Shannon Manderscheid /Ann Marie Jannette Cover Image: Sergey Skleznev/iStock/Getty Images Compositor: Aptara®, Inc. Printer: LSC Communications

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

Library of Congress Cataloging-in-Publication Data Names: Kinicki, Angelo, author. | Fugate, Mel, author. Title: Organizational behavior : a practical, problem-solving approach / Angelo Kinicki, Arizona State University, Mel Fugate, Southern Methodist University. Description: Second edition. | New York, NY : McGraw-Hill Education, [2018] Identifiers: LCCN 2016046078 | ISBN 9781259732645 (alk. paper) | ISBN 1259732649 (alk. paper) Subjects: LCSH: Organizational behavior. Classification: LCC HD58.7 .K52638 2018 | DDC 658—dc23 LC record available at https://lccn.loc.gov/2016046078

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.



To Dr. Doo-Sang Cho, a true friend, my favorite golf partner, and a great medical doctor. I treasure our friendship.

— Angelo

I dedicate this work to the many outstanding students in my career who have made the teaching aspect of my job so rewarding. It is the high-caliber students and professionals, like many of you, who motivate me to always raise my own game. I also want to thank my sweet wife, Donna, and my wonderful family. They support me in all that I do.

— Mel


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journals. His current research interests focus on the dynamic relationships among leader- ship; organizational culture; organizational change; and individual, group, and organiza- tional performance. Angelo has published over 95 articles in a variety of academic journals and proceedings and is co-author of eight textbooks (31 including revisions) that are used by hundreds of universities around the world. Several of his books have been trans- lated into multiple languages, and two of his books were awarded revisions of the year by McGraw-Hill.

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 organi- zational change aimed at increasing organiza- tional effectiveness and profitability. He has worked with many Fortune 500 firms as well as numerous entrepreneurial organizations in diverse industries. His expertise includes facilitating strategic/operational planning sessions, diagnosing the causes of organiza- tional and work-unit problems, conducting organizational culture interventions, imple- menting performance management systems, designing and implementing performance appraisal systems, developing and administer- ing surveys to assess employee attitudes, and leading management/executive education programs. He developed a 3600 leadership feedback instrument called the Performance Management Leadership Survey (PMLS) that is used by companies throughout the world.

Angelo and his wife of 35 years, Joyce, have enjoyed living in the beautiful Arizona desert for 34 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 passion 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 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

Courtesy of Angelo Kinicki


Mel Fugate is an associate professor of management in the Center for Workplace Excellence at the University of South Australia. He teaches executive, MBA, and postgraduate courses. He has won seven teaching awards across undergraduate and graduate levels. Prior to the University of South Australia he was on the faculty at the Cox School of Business at Southern Methodist University. He also has served as a visiting assistant professor of Organizational Behavior at Tulane University’s A.B. Freeman College of Business and the EM Lyon School of Manage- ment in Lyon, France. Before earning his PhD in Management from Arizona State University, Mel performed consulting services in marketing and business development and was a sales representative and manager in the

pharmaceutical industry. He also has a BS in engineering and business administration from Michigan State University.

Mel’s primary research interests involve employee reactions to organizational change and transitions at work. This includes but is not limited to downsizings, mergers and acquisi- tions, restructurings, and plant closings. Another research stream involves the develop- ment of a dispositional perspective of employ- ability and its implications for employee careers and behavior. Current interests also include the influence of leadership, as well as the influence of emotions at work, and organizational culture on performance and the influence of emotions on behavior at work. He has published in a number of premier management and applied psychology journals. His current consulting work includes many industries (e.g., health care, legal, energy, aged care and social services, information technology, and financial services) and aims to enhance individual and organizational performance by utilizing a variety of practical, research-based tools.

Professor Fugate’s research and comments have been featured in numerous media outlets: The Wall Street Journal, The New York Times, Financial Times, FastCompany, Dallas Morning News, CNN, Fox, ABC, and NBC.

Mel and his wife, Donna, are both very active and enjoy fitness, traveling, live music, and catering to their sweet and savage Jack Russell terrier, Mila.

Courtesy of Mel Fugate


Features In this new edition, we have better integrated the 3-Step Problem-Solving Approach throughout, as well as clarified its relationship to the Organizing Framework for Understanding and Applying OB, (formerly called the Integrative Framework). You will also see new boxed features in every chapter:

Connect In our continuing efforts to help students move from comprehension to application, and to ensure they see the personal relevance of OB, we have added these new application exercises to our already robust Connect offering:

• Implications for Me/Implications for Managers explains in direct terms practical applications of chapter content from the student’s perspective as an employee and as a manager.

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

• Applying OB offers students “how-to” guidance on applying OB knowledge in professional and other arenas of their lives.

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

• iSeeIt Videos: Brief, contemporary introductions to key course concepts that often perplex students, this series will enhance your student-centered instruction by offering your students dynamic illustrations that guide them through the basics of core OB concepts such as motivation, leadership, socialization, and more. The idea behind the series is if a student came to your office and asked you to explain one of these topics in a few minutes, how might you explain it? Practical and applicable, consider using these resources before class as an introduction, during class to launch your lecture, or even after class as a summative assessment.

• 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.

• Self-Assessments: Self-awareness is a fundamental aspect of professional and personal development. Our 90 researched-based self-assessments give students frequent opportunities to see how organizational behavioral concepts apply to them personally. New to this edition is structured feedback that explains how students should interpret their scores. This feedback is followed immediately by self-reflection quizzes that assess students’ understanding of the characteristics being measured and the action steps they may want to take for improvement.

• Cumulative Case: This capstone activity provides students the opportunity to

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



CHAPTER 1 • Clarified explanation of the problem-

solving approach, more accurately framing it as a 3-step versus a 3-stop approach.

• Clarified the purpose and function of the Organizing Framework for Understanding and Applying OB, adding a new section that summarizes the framework. Included a comprehensive application of the framework focusing on how to solve the problem of employee turnover.

• Refined and increased focus on the career implications of OB and the importance of self-awareness.

• Expanded and updated coverage of cheating and the importance of ethics for employees and employers, as well as added a new section on the ethics of applying for jobs.

• Expanded and refined treatment of person–situation distinction (instead of person–environment).

CHAPTER 2 • Restructured content on Schwartz’s

value theory. • Created new applications for putting

Ajzen’s theory of planned behavior into action.

• Included new research on outcomes associated with employee engagement.

• Provided new data on U.S. levels of job satisfaction.

• Updated statistics on telecommuting. • Added a new section on accounting/

financial performance and customer service/satisfaction as outcomes of job satisfaction.

CHAPTER 3 • Added new material related to proactivity

and entrepreneurship, including multiple new examples.

• Added new section on introversion, its prevalence, and how to thrive as an introvert at work.

• Expanded discussion and new treatment of personality testing at work, including reasons, prevalence, performance, technology and methods, and advice.

• Revised section on emotional intelligence (EI), including new Figure 3.5 that summarizes the relationships between EI and various individual differences and outcomes, and a take- away application on EI.

CHAPTER 4 • Added a new Section 4.1, “Person

Perception.” • Updated research on stereotypes. • Updated coverage of diversity, including

new discussion of assumptions about diversity, demographic statistics regarding workforce diversity, barriers to managing diversity, and how companies are responding to diversity challenges.

• Updated research on affirmative action. • Expanded discussion of LGBT to include

LGBTQ. • Provided new examples of how

companies are managing millenials. • Added a new subsection to Section 4.5

titled “Education Levels: Mismatch between Education and Organizational Needs.”

CHAPTER 5 • Provided a new illustration of extrinsic

motivation. • Added new examples to illustrate such

key theories as Maslow’s theory, acquired-needs theory, self- determination theory, equity theory.

• Updated research on equity and justice theories.

• Added new discussion on the role of goal setting in VW emissions scandal.

• Included a new example to illustrate application of the job characteristics model.

• Updated research on job design, job crafting, and ideals.

Chapters In each chapter we have refreshed examples, research, figures, tables, statistics, and photos, as well as streamlined design to ease navigation and improved 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. While the following list does not encompass all the updates and revisions, it does highlight some of the more notable changes.


CHAPTER 6 • Updated statistics related to negative

perceptions and flaws associated with performance management practices.

• Dramatically revised section on feedback: new coverage of why we don’t get and give more more feedback, the value of feedback, who seeks it, who doesn’t, and whether that matters, when to use positive versus negative feedback, and trends in feedback today.

• Expanded section on the practices and benefits of exit and stay interviews.

• Revised section on reward distribution criteria.

• Added new section on alternatives to money and promotions.

• Added new section pertaining to why rewards often fail to motivate, including a new Take-Away Application.

• Restructured section on pay for performance, including coverage of piece rate, commissions, aligning objectives and awards.

• Added new section on how to make pay for performance work.

CHAPTER 7 • New model in Section 7.1 to frame the

entire chapter, titled “A Framework of Positive OB.”

• Updated the section titled “Doing Well and Doing Good.”

• Added a new section on “positive emotions are contagious.”

• Added new material and research on mindfulness, including examples of applications of corporate mindfulness.

• Updated the section titled “Hope = Willpower + Waypower.”

• Added a new section on signature strengths.

• Deepened coverage of positive climates and added new examples of practices that promote positive climates.

CHAPTER 8 • Significantly revised content related to

roles and norms. • Added new section and material related

to punctuated equilibrium. • Added and updated material related to

different types of teams—projects teams,

work teams, cross-functional, self- managed, and virtual.

• Added a section on team interdependence.

• Revised content related to social loafing. • Significantly revised introduction to trust. • Completely revamped introduction to

team effectiveness. • Completely revised section related to

collaboration and team rewards, including a new table and how to reward teams.

• Dramatically revised sections related to self-managed and cross-functional teams.

• Updated and expanded treatment of virtual teams.

CHAPTER 9 • Revised section on selecting the right

communication medium, including new content related to media richness and situation complexity.

• Added a set of practical tips for improving nonverbal communication.

• Added a new brief explanation of the neuroscience explanation of defensiveness.

• Added a new section on empathy and its role in communication.

• Updated material on generational differences around the role of digital devices and communication expectations and norms.

• Completely revamped section on cost of social media with new statistics, implications, and examples.

• Added examples and figure related to crowdsourcing.

• Revised highly practical content related to use of e-mail and managing it productively.

• Expanded section and inserted new material related to social media and privacy at work.

• Added new material related to social media etiquette (cell-phone use) and videoconferencing.

• Substantially revised section related to crucial conversations, including a new Take-Away Application.

CHAPTER 10 • Added a new self-assessment opener

related to interpersonal conflict tendencies.


• Completely restructured Section 10.1 addressing functional/dysfunctional conflict, causes, escalation, and why people avoid conflict.

• Rewrote the section on why people avoid conflict.

• Substantially revised section on personality conflicts.

• Enhanced and updated section on psychological safety climate.

• Added new material on conflict spillover effects.

• Updated section on bullying and cyber bullying and harassment.

• Significantly updated section on work–family conflict, including examples of Sheryl Sandberg (Facebook) and Anne-Marie Slaughter (formerly with US State Department).

• Added section on when to avoid conflict.

• Rewrote section on alternative dispute resolution, including the benefits of these approaches and a new table on various forms.

• Drastically changed the section on negotiation to reflect more current approaches—position versus interest- based, including a new table and “how to apply” section.

CHAPTER 11 • Added a new section on Kahneman’s

two ways of thinking. • Added new data on use of heuristics by

physicians. • Added new examples of bounded

rationality, intuition, use of big data, analytical decision making, and creativity.

• Added new statistics about use of big data.

• Provided data on data analytic jobs and majors.

• Added new examples on group decision making.

• Added new and updated material on creativity, including examples on fostering creative behavior, discussion of person and situation factors affecting creativity, practical recommendations for increasing creativity, and the use of extrinsic rewards on creativity.

CHAPTER 12 • Revised and enhanced material related

to positive and negative legitimate power.

• Updated nearly all examples related to bases of power.

• Revised section on psychological empowerment at the team and organizational levels.

• Added new section on influence in virtual teams, including influence tactics particular to this context.

• Substantially restructured section on political tactics, including opening with a self-assessment, new sections on “When Politics Are Good” and “When Politics Are Bad.”

• Expanded explanation of blame and politics to include the implications for entrepreneurs.

• Added new section on using politics to tour advantage.

• Restructured and revised section on good impressions, including a new table for how to make a good first impression.

• Added new section on impression management and job interviews, including deception detection and interviewers impressing interviewees.

• Modified and refocused content related to apologies.

• Added new section on ethics and impression management.

CHAPTER 13 • Added new statistics on why leadership

is critical in today’s organizations. • Added new research and examples of

leadership prototypes. • Added new material on “global

mind-set.” • Updated research on leadership traits

and task and relational leadership. • Updated material on the four ways of

creating psychological empowerment, using Jeff Bezos as the example.

• Added new section on ethical leadership.

• Added new list of suggestions for dealing with a passive leader.

• Added new key-term material on all components of Fiedler’s theory.


• Revised material on transformational leadership, including updated research and new illustrations of the four key behaviors associated with transformational leadership.

• Updated research on transformational leadership and leader-member exchange.

• Added new section on humility.

CHAPTER 14 • Added new illustrations on the

importance of organizational culture. • Added illustrations on the four cultural

types in the competing values framework.

• Added new table summarizing meta-analytic research on organizational culture.

• Added practical lessons from organizational culture research.

• Added new section on subcultures. • Added examples for the 12 ways to

change organizational culture. • Included examples for the three stages

of socialization. • Added sections on the phases and

benefits of mentoring. • Added new section on how human and

social capital enhance the benefits of mentoring.

CHAPTER 15 • Added new tips for working virtually. • Updated research on learning

organizations. • Added discussion of how to improve

organizational learning. • Added illustrations of the seven types of

organizational structure.

• Added section on contingency design and internal alignment, which includes new material on contingency factors, the six organizational characteristics of internal alignment, and how to apply the material.

• Added new section on assessing organizational effectiveness, which includes new material on the balanced scorecard: a dashboard-based approach to measuring organizational effectiveness; strategy mapping: visual representation of the path to organizational effectiveness using Dr. Pepper Snapple Group as an example.

• Added a section on organizational innovation, which includes new material on approaches toward innovation, characteristics of an innovation system, four agility techniques, and office design.

CHAPTER 16 • Completely updated section on external

and internal forces for change, using new content and examples.

• Revamped an OB in Action feature related to Cisco Systems.

• Restructured and rewrote section on resistance to change, including new table on common pitfalls of change agents and OB in Action feature— “Should a New Leader Clean House?”

• Revised material on stress, which includes a refocus on job stress and updated content related to good and bad stress.

• Updated content on fatigue along with statistics and the problems associated with presenteeism.

• Added new closing section that pulls together topics of change and stress.


pr ef

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∙ “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 reason, we designed Organizational Behavior, 2e, to help students become more effective problem solvers. Students who are ef- fective problem solvers today become valued leaders tomorrow.

The second edition of Organizational Be- havior 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) implement a solution. This approach is introduced in Chapter One and used multiple

times in each subsequent chapter. To comple- ment the 3-Step Approach, we also developed the new Organizing Framework for Under- standing and Applying OB. This framework is used in two ways. First, it provides students a means for organizing OB concepts into three categories (inputs, processes, and outcomes) as they learn them. This facilitates student learning and shows how concepts relate to each other. Second, it is an important and com- plementary tool for problem solving. Problems are often defined in terms of outcomes 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.

We provide many opportunities for students to practice using the 3-Step Problem-Solving Approach. Problem-Solving Application Mini- Cases are inserted throughout each chapter. These provide numerous opportunities for students to apply their OB knowledge and practice their problem solving skills to real  companies and people. The longer Problem-Solving Application Case at the end of each chapter presents more complex and current business cases containing one or more problems that illustrate OB concepts in- cluded in a particular chapter. A version of the Organizing Framework is presented in each chapter and is populated with relevant con- cepts from that chapter, which students then use to define and solve problems presented in the various features. This capstone Cumulative Case activity provides students the opportu- nity to apply the 3-Step Problem-Solving Approach on an actual situation affecting a specific firm (Volkswagen).

We carry the 3-Step Problem-Solving Approach into Connect, McGraw-Hill’s market-leading digital platform, and provide students with numerous opportunities to observe how different decisions can lead to different outcomes. We also offer new criti- cal-thinking application exercises tied to the


questions. They provide an effective tool to assessing student’s ability to solve problems using OB concepts and theories. SmartBook is another key component. This adaptive and data-driven reading experience gives students ample opportunity to develop mastery of key learning objectives tied to core OB concepts, while also providing instructors real-time snapshots of student comprehension.

User-Centric Approach It is important for us to offer users, whether stu- dents or instructors, a tool that is easy to navi- gate, easy to digest, and exceptionally practical. We therefore have taken great care to create content, craft our writing, and include features that focus on the needs and interests of the user. To that end, Major Questions open the main sections of each chapter and immediately place students in a personal, practical learning mode. These questions introduce key concepts by ask- ing students to consider the practical value of the concepts for them personally.

We also present content in digestible chunks of text, with frequent opportunities to engage with or reflect on the material. The Winning at Work feature opens each chapter with a list of practical tips related to a highly relevant topic for work and/or school, such as negotiating a salary for a new job or a pay raise, or how to manage meetings more effec- tively. Self-Assessments in Connect allow students to evaluate personal characteristics related to OB concepts, as well as to reflect on their own characteristics and behavior. Take- Away Applications ask students to apply the material and concepts immediately after read- ing. What Did I Learn provides students with a review of the chapter’s key concepts, an invi- tation to answer the chapter’s opening Major Questions, and a summary of the Organizing Framework for a given chapter.

Connect Tabs give instructors the founda- tions for creating a Connect course that fits their individual teaching needs. A new Teach- ing Resource Manual offers a playbook for creating and delivering a discussion-based learning environment in which students practice and apply concepts in a more active manner. The extensively revised Test Bank now offers greater opportunity to assess students on OB concepts at a higher level. The updated Test Bank includes essay and scenario-based ques- tions to engage students’ problem-solving skills.

Problem-Solving Application boxes and Problem-Solving Application Cases, giving students additional practice with applying the 3-Step Approach. These activities are a com- bination of case analyses, video cases, and click-and-drag exercises.

Applied, Practical Approach The second edition repeatedly demonstrates the practical value of OB concepts in solving real-world problems in students’ professional and personal lives. New OB in Action boxes illustrate OB concepts or theories in action in the real world, featuring well-known compa- nies. New Applying OB boxes offer students “how-to” guidance on applying their knowl- edge in both their professional and personal lives. Appearing at the end of each chapter are new Implications boxes that explain to stu- dents the practical value of OB concepts—one for their personal use now (Implications for Me) and the other for managers (Implications for Managers).

Legal/Ethical Challenges ask students to choose from several proposed courses of action or invent their own to resolve a business situa- tion that falls into a gray area of ethics at work.

Connect provides a multitude of opportuni- ties for active practice and application of con- cepts learned during class or while completing assigned reading. For example, new to this edition are short problem-solving application mini cases that can be used as essay exam

“Focuses on the practical applications of OB versus only theory.”

Charla Fraley —Columbus State Community College

“The text uses a problem- solving approach framework to demonstrate OB and help students apply OB theories to real-life issues.”

Jennifer Malarski —Metropolitan State University


Developing Effective Problem Solvers Today, Valued Leaders Tomorrow Organizational Behavior, 2e, explicitly ad- dresses OB implications for students’ jobs and careers, showing how OB provides them with the higher-level soft skills employers seek, such as problem solving, critical thinking, leadership, and decision making. We strongly believe that applying OB theories and con- cepts provides tremendous value to students’ lives today and throughout their careers. The understanding and application of OB enhances student effectiveness at school and work, both today and tomorrow.

“The method used by Kinicki/ Fugate allows students to think about the concepts presented in a way that is relevant to their lives. This allows them to understand how these concepts relate to the ‘real world.’”

Gabriela Flores, University of Texas —El Paso



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We could not have completed this product without the help and support of a great number of people. It all began with the vision of our director, Michael Ablassmier. He assembled a fantastic team to help create a truly unique product and pushed us to create new and ap- plied features valued by the market. Among our first-rate team at McGraw-Hill, we want to acknowledge key contributors: Lead Product Developer Ann Torbert’s assistance was in- strumental in structuring the editorial process; Elisa Adams, content developer, and Lai T. Moy, senior product developer, helped us real- ize our vision and enhance that appeal; Nicole Young, senior market development manager, and Necco McKinley, marketing manager, for creative and proactive marketing; Mary Pow- ers, lead content project manager, and Danielle Clement, senior content project manager, led the core and Connect components through the production process; Jessica Cuevas, designer, and Debra Kubiak, design manager, worked with us to streamline the design and come up with a creative new cover concept; and Haley Burmeister, editorial coordinator, provided tre- mendous support behind the scenes.

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We hope you enjoy this textbook. Best wishes for happiness, health, and success!

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Daniel F. Nehring Morehead State University Jeananne Nicholls Slippery Rock University Dr. Floyd Ormsbee Clarkson University John Pepper The University of Kansas Samuel Rabinowitz Rutgers University-Camden Jude A. Rathburn University of Wisconsin- Milwaukee Alicia J. Revely Miami University Katherine Robberson Southern Illinois University- Edwardsville David Ruderman University of Colorado Denver Frances McKee Ryan University of Nevada, Reno Gordon Bruce Schmidt Indiana University- Purdue University Fort Wayne Dr. Marina Sebastijanovic University of Houston Ravi Shanmugam University of Kansas Richard G. Sims, Lead Faculty Chair Business University of Phoenix Dr. Atul Teckchandani California State University Fullerton Mussie T. Tessema Winona State University Linda Thiede Thomas Bellevue University Mary L. Tucker Ohio University Wellington Williams, Jr. University of Phoenix Robert M. Wolter IUPUI School of Engineering and Technology

We also gratefully acknowledge these individuals for their contributions to the first edition:

James Bishop, New Mexico State University, Las Cruces Brenda D. Bradford, Missouri Baptist University Chris Bresnahan, University of Southern California Holly Buttner, University of North Carolina, Greensboro Dean Cleavenger, University of Central Florida Matthew Cronin, George Mason University Kristen DeTienne, Brigham Young University Ken Dunegan, Cleveland State University Steven M. Elias, New Mexico State University Aimee Ellis, Ithaca College John D. Fuehrer, Baldwin Wallace University Cynthia Gilliand, University of Arizona Early Godfrey, Gardner Webb University Roy Lynn Godkin, Lamar University Connie Golden, Lakeland Community College Wayne Hochwarter, Florida State University Madison Holloway, Metropolitan State University of Denver


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s PART ONE Individual Behavior 1

1 MAKING OB WORK FOR ME What Is OB and Why Is It Important? 2

2 VALUES AND ATTITUDES How Do They Affect Work-Related Outcomes? 44

3 INDIVIDUAL DIFFERENCES AND EMOTIONS How Does Who I Am Affect My Performance? 78

4 SOCIAL PERCEPTION AND MANAGING DIVERSITY Why Are These Topics Essential for Success? 122

5 FOUNDATIONS OF EMPLOYEE MOTIVATION How Can I Apply Motivation Theories? 160

6 PERFORMANCE MANAGEMENT How Can You Use Goals, Feedback, Rewards, and Positive Reinforcement to Boost Effectiveness? 200

7 POSITIVE ORGANIZATIONAL BEHAVIOR How Can I Flourish at School, Work, and Home? 250

PART TWO Groups 293

8 GROUPS AND TEAMS How Can Working with Others Increase Everybody’s Performance? 294

9 COMMUNICATION IN THE DIGITAL AGE How Can I Become a More Effective Communicator? 334

10 MANAGING CONFLICT AND NEGOTIATIONS How Can These Skills Give Me an Advantage? 376

11 DECISION MAKING AND CREATIVITY How Critical Is It to Master These Skills? 420

12 POWER, INFLUENCE, AND POLITICS How Can I Apply Power, Influence, and Politics to Increase My Effectiveness? 462

13 LEADERSHIP EFFECTIVENESS What Does It Take to Be Effective? 502

PART THREE Organizational Processes 543

14 ORGANIZATIONAL CULTURE, SOCIALIZATION, AND MENTORING How Can I Use These Concepts to Fit, Develop, and Perform? 544

15 ORGANIZATIONAL DESIGN, EFFECTIVENESS, AND INNOVATION How Can Understanding These Key Processes and Outcomes Help Me Succeed? 588

16 MANAGING CHANGE AND STRESS How Can You Apply OB and Show What You’ve Learned? 632



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What Is OB and Why Is It Important? 2


1.1 THE VALUE OF OB TO MY JOB AND CAREER 4 How OB Fits into My Curriculum and Influences My

Success 5 OB IN ACTION: Google Search: How Can We

Keep Talented Employees? 6 SELF-ASSESSMENT 1.1: How Strong Is My

Motivation to Manage? 7 Employers Want Both Hard and Soft Skills 8 How OB Fits into My Career 9

1.2 RIGHT VS. WRONG—ETHICS AND MY PERFORMANCE 12 Cheating 12 Ethical Lapses—Legality, Frequency, Causes, and

Solutions 13 OB IN ACTION: Wrong? Absolutely! Illegal?

Seemingly Not. 14 OB IN ACTION: The Whistle-Blower’s Dilemma 15 SELF-ASSESSMENT 1.2: Assessing My

Perspective on Ethics 19

1.3 APPLYING OB TO SOLVING PROBLEMS 21 A 3-Step Approach 21 Tools to Reinforce My Problem-Solving Skills 23 SELF-ASSESSMENT 1.3: Assessing My

Problem-Solving Potential 23


Situation Factor that Affects My Performance 25 Levels—Individual, Group/Team, and

Organization 27 Applying OB Concepts to Identify the Right

Problem 27

1.5 THE ORGANIZING FRAMEWORK FOR UNDERSTANDING AND APPLYING OB 28 A Basic Version of the Organizing Framework 28 Using the Organizing Framework for Problem

Solving 29 OB IN ACTION: Life Is Sweeter on Mars 30 Applied Approaches to Selecting a Solution 31 Basic Elements for Selecting an Effective

Solution 32

1.6 PREVIEW AND APPLICATION OF WHAT I WILL LEARN 33 The 3-Step Problem-Solving Approach 33 The Organizing Framework 33 Hypothetical Problem-Solving Scenario 35 Our Wishes for You 37

What Did I Learn? 38 PSAC: United Airlines: How Do We Get There from Here? 41 Legal/Ethical Challenge: To Tell or Not to Tell? 43

PART ONE Individual Behavior 1



How Does Who I Am Affect My Performance? 77



3.2 INTELLIGENCES: THERE IS MORE TO THE STORY THAN IQ 82 Intelligence Matters . . . And We Have More Than We Think 82 Practical Implications 85 OB IN ACTION: Smarts and Money 86

3.3 PERSONALITY, OB, AND MY EFFECTIVENESS 87 There Is More to Personality Than Liking and Fit 87 The Big Five Personality Dimensions 88 SELF-ASSESSMENT 3.1: What Is My Big Five Personality

Profile? 89 Hail the Introverts 89 Proactive Personality 89 OB IN ACTION: How to Thrive as an Introvert 90 SELF-ASSESSMENT 3.2: How Proactive Am I? 91 Personality and Performance 92 Personality Testing at Work 93 APPLYING OB: Acing Employee Tests 93 There Is No “Ideal Employee” Personality 94


Locus of Control: Who’s Responsible—Me or External Factors? 99 Emotional Stability 100 OB IN ACTION: Alphabet’s Financial Chief Avoided Pitfalls that

Stymied Others 101 Three Practical Considerations for Core Self-Evaluations 102 SELF-ASSESSMENT 3.3: How Positively Do I See Myself? 103

3.5 THE VALUE OF BEING EMOTIONALLY INTELLIGENT 104 What Is Emotional Intelligence? 104 SELF-ASSESSMENT 3.4: What Is Your Level of Emotional

Intelligence? 105 PROBLEM-SOLVING APPLICATION: “Some days you’re the

fire hydrant and some days you’re the dog.” 106 Benefits of EI 107

3.6 UNDERSTAND EMOTIONS TO INFLUENCE PERFORMANCE 109 Emotions—We All Have Them, but What Are They? 109 Emotions as Positive or Negative Reactions to Goal

Achievement 110 APPLYING OB: Do You Procrastinate? Blame Your

Emotions! 110 Besides Positive and Negative, Think Past vs. Future 111 How Can I Manage My Negative Emotions at Work? 111 OB IN ACTION: The Good and Bad of Anger at Work 112

What Did I Learn? 114 PSAC: Amazon to Competition: We Will Crush You! Amazon to Employees: We Will Churn You! 117 Legal/Ethical Challenge: Companies Shift Smoking Bans to Smoker Ban 119


How Do They Affect Work-Related Outcomes? 44


2.1 PERSONAL VALUES 46 Schwartz’s Value Theory 46 SELF-ASSESSMENT 2.1: What Are My Core Values? 49 The Dynamics of Values 49


Target Causes of Turnover 51 Personal Attitudes: They Represent Your Consistent Beliefs and

Feelings about Specific Things 51 Attitudes Affect Behavior via Intentions 53 PROBLEM-SOLVING APPLICATION: Southwest Pilots Stage

an Informational Picket. What Should Management Do? 54

2.3 KEY WORKPLACE ATTITUDES 56 Organizational Commitment 56 Employee Engagement 58 SELF-ASSESSMENT 2.2: To What Extent Am I Engaged in My

Studies? 60

OB IN ACTION: Companies Foster Employee Engagement in Different Ways 60

Perceived Organizational Support 61

2.4 THE CAUSES OF JOB SATISFACTION 62 SELF-ASSESSMENT 2.3: How Satisfied Am I with My Present

Job? 62 At a Glance: Five Predominant Models of Job Satisfaction 63 A Shorter Walk to Work 64


Bullying 67 Behavioral Outcomes of Job Satisfaction 68 Organizational-Level Outcomes of Job Satisfaction 71

What Did I Learn? 72 PSAC: Employee Attitudes and Turnover Are Issues at Yahoo! 75 Legal/Ethical Challenge: What Should Management Do About an Abusive Supervisor? 77



How Can I Apply Motivation Theories? 160


5.1 THE WHAT AND WHY OF MOTIVATION 162 Motivation: What Is It? 162 The Two Fundamental Perspectives on Motivation:

An Overview 163

5.2 CONTENT THEORIES OF MOTIVATION 164 McGregor’s Theory X and Theory Y 164 Maslow’s Need Hierarchy Theory: Five Levels of Needs 164 Acquired Needs Theory: Achievement, Affiliation,

and Power 165 SELF-ASSESSMENT 5.1: Assessing Your Acquired Needs? 166 Self-Determination Theory: Competence, Autonomy, and

Relatedness 168 Herzberg’s Motivator-Hygiene Theory: Two Ways to Improve

Satisfaction 169 PROBLEM-SOLVING APPLICATION: What’s Going on at the

Arizona Department of Child Safety 171

5.3 PROCESS THEORIES OF MOTIVATION 173 Equity/Justice Theory: Am I Being Treated Fairly? 173 SELF-ASSESSMENT 5.2: Measuring Perceived Interpersonal

Treatment 176 Expectancy Theory: Does My Effort Lead to Desired

Outcomes? 178


Why Are These Topics Essential for Success? 122


4.1 PERSON PERCEPTION 125 A Model of Person Perception 125 OB IN ACTION: How Perception of Apologies Differs in the

United States and Japan 128 Managerial Implications of Person Perception 129

4.2 STEREOTYPES 131 Stereotype Formation and Maintenance 131 Managerial Challenges and Recommendations 132

4.3 CAUSAL ATTRIBUTIONS 133 Kelley’s Model of Attribution 133 Attributional Tendencies 135 Managerial Application and Implications 135

4.4 DEFINING AND MANAGING DIVERSITY 136 Layers of Diversity 136 Affirmative Action vs. Managing Diversity 138

4.5 BUILDING THE BUSINESS CASE FOR MANAGING DIVERSITY 140 Business Rationale 140 OB IN ACTION: Companies Develop Products to Fit the

Laundry Habits of Men 140

Trends in Workforce Diversity 142 SELF-ASSESSMENT 4.1: What Are Your Attitudes Toward

Working with Older Employees 145


Climate 148

4.7 ORGANIZATIONAL PRACTICES USED TO EFFECTIVELY MANAGE DIVERSITY 149 Framework of Options 149 How Companies Are Responding to the Challenges of

Diversity 150 PROBLEM-SOLVING APPLICATION: 64-Year-Old Male

Sues Staples for Wrongful Termination and Age Discrimination 152

SELF-ASSESSMENT 4.3: How Does My Diversity Profile Affect My Relationships with Other People? 153

What Did I Learn? 154 PSAC: White, Male, and Asian: The Diversity Profile of Technology Companies 157 Legal/Ethical Challenge: Swastikas and Neonatal Care 159

PROBLEM-SOLVING APPLICATION: Corporate Boards Decide to Lower the Instrumentalities between CEO Performance and Pay 180

PROBLEM-SOLVING APPLICATION: A High School Principal Uses Principles of Expectancy Theory to Motivate Students 182

Goal-Setting Theory: How Can I Harness the Power of Goal Setting? 183

5.4 MOTIVATING EMPLOYEES THROUGH JOB DESIGN 185 Top-Down Approaches—Management Designs Your Job 186 OB IN ACTION: Job Swapping Is the Latest Application of Job

Rotation 187 Bottom-Up Approaches—You Design Your Own Job 190 SELF-ASSESSMENT 5.3: To What Extent Have I Used Job

Crafting? 191 Idiosyncratic Deals (I-Deals)—You Negotiate the Design

of Your Job 192 SELF-ASSESSMENT 5.4: Creating an I-Deal 192

What Did I Learn? 193 PSAC: Dan Price, CEO of Gravity Payments, Established a Minimum Salary of $70,000 for All Employees 196 Legal/Ethical Challenge: Should Senior Executives Receive Bonuses for Navigating a Company through Bankruptcy 198



How Can I Flourish at School, Work, and Home? 250


7.1 THE VALUE OF POSITIVE ORGANIZATIONAL BEHAVIOR 253 Two Scenarios—Which Do You Prefer? 253 A Framework of Positivity 254 The Benefits of Positive OB Extend beyond Good

Performance 255 PROBLEM-SOLVING APPLICATION: Whole Foods Market:

More than Profits and More than Organics 259

7.2 THE POWER OF POSITIVE EMOTIONS 260 Beyond Happy vs. Sad 260 Positive Emotions Are Contagious 261 How Much Positivity Is Enough? 263 SELF-ASSESSMENT 7.1: Learn Your Positivity Ratio? 265

7.3 FOSTERING MINDFULNESS 266 Mindlessness vs. Mindfulness 266 OB IN ACTION: Does the Use of Headphones Help Achieve

Mindfulness? 267 Inhibitors of Mindfulness 268 Benefits of Mindfulness 269


How Can You Use Goals, Feedback, Rewards, and Positive Reinforcement to Boost Effectiveness? 200


6.1 PERFORMANCE MANAGEMENT PROCESSES 203 Effective Performance Management 203 Common Uses of Performance Management 204 PROBLEM-SOLVING APPLICATION: How Much Would You

Pay Fannie and Freddie? 205 What Goes Wrong with Performance Management 205 The Importance of Management and Leadership 206 OB IN ACTION: The Deloitte Way: “Snapshots” and

“Check-ins” 207

6.2 STEP 1: DEFINE PERFORMANCE—EXPECTATIONS AND SETTING GOALS 209 Do You Want to Perform or Learn? 209 Managing the Goal-Setting Process 210 Contingency Approach to Defining Performance and

Setting Goals 213

6.3 STEP 2: PERFORMANCE MONITORING AND EVALUATION 214 Monitoring Performance—Measure Goals Appropriately and

Accurately 215 OB IN ACTION: The Challenges Grow as Employee Monitoring

Becomes More Sophisticated and Pervasive 215 Evaluating Performance 217

6.4 STEP 3: PERFORMANCE REVIEW, FEEDBACK, AND COACHING 219 What Effective Feedback Is . . . and Is Not 219 The Value of Feedback 220 If Feedback Is So Helpful, Why Don’t We Get and Give More? 220 Two Functions of Feedback 221 Important Sources of Feedback—Including Those Often

Overlooked 221 OB IN ACTION: How Do You Spell Feedback and

Self-Improvement? Z-A-P-P-O-S! 223

Who Seeks Feedback, Who Doesn’t, and Does It Matter? 224 Your Perceptions Matter 225 SELF-ASSESSMENT 6.1: What Is My Desire for Performance

Feedback? 227 Feedback Do’s and Don’ts 227 Today’s Trends in Feedback 227 Coaching—Turning Feedback into Change 228

6.5 STEP 4: PROVIDING REWARDS AND OTHER CONSEQUENCES 229 Key Factors in Organizational Rewards 229 Types of Rewards 229 SELF-ASSESSMENT 6.2: What Rewards Do I Value

Most? 230 Distribution Criteria 231 Desired Outcomes of the Reward System 231 Be Sure You Get the Outcomes You Desire 232 Total and Alternative Rewards 233 OB IN ACTION: Foosball? No Thanks. Stock that Matters?

Sign Me Up! 234 Why Rewards Often Fail and How to Boost Their

Effectiveness 234 PROBLEM-SOLVING APPLICATION: Garbage . . . Not Just the

Work but the Outcomes Too 235 Pay for Performance 236 Making Pay for Performance Work 237

6.6 REINFORCEMENT AND CONSEQUENCES 238 The Law of Effect—Linking Consequences and Behaviors 238 Using Reinforcement to Condition Behavior 238 Contingent Consequences 239 Positive Reinforcement Schedules 240 Work Organizations Typically Rely on the Weakest Schedule 242

What Did I Learn? 244 PSAC: Why Are Some Companies Yanking Forced Ranking? 247 Legal/Ethical Challenge: Fined Billions, but Still Admired and Handsomely Rewarded 249


OB IN ACTION: Applications of Mindfulness 270 SELF-ASSESSMENT 7.2: What Is My Level of Mindfulness? 271 Practicing Mindfulness 271

7.4 DEVELOPING PSYCHOLOGICAL CAPITAL AND SIGNATURE STRENGTHS 273 Hope = Willpower + “Waypower” 273 Efficacy 274 Resilience 274 Optimism 275 OB IN ACTION: Life Is Good . . . Spread the Power of

Optimism 275 How I Can Develop My PsyCap 276 SELF-ASSESSMENT 7.3: What Is My Level of PsyCap? 277 Signature Strengths 277 SELF-ASSESSMENT 7.4: What Are My Signature Strengths? 278

7.5 CREATING A CLIMATE THAT FOSTERS POSITIVE ORGANIZATIONAL BEHAVIOR 279 Organizational Values 279 Organizational Practices 280 Virtuous Leadership 281


at Parnassus Fund 282 Positive Emotions 283 OB IN ACTION: Pirch Spreads Joy 284 Engagement 285 Relationships 285 Meaningfulness 285 Achievement 286

What Did I Learn? 287 PSAC: Does Forever 21 Foster Positivity? 290 Legal/Ethical Challenge: Does GPS Tracking of Employee Actions Foster a Positive Work Environment? 292


How Can Working with Others Increase Everybody’s Performance? 294


8.1 GROUP CHARACTERISTICS 297 Formal and Informal Groups 298 Roles and Norms: The Social Building Blocks for Group and

Organizational Behavior 299 SELF-ASSESSMENT 8.1: Group and Team Role Preference

Scale 302

8.2 THE GROUP DEVELOPMENT PROCESS 304 Tuckman’s Five-Stage Model of Group Development 304 Punctuated Equilibrium 306

8.3 TEAMS AND THE POWER OF COMMON PURPOSE 307 A Team Is More Than Just a Group 307 SELF-ASSESSMENT 8.2: Is This a Mature Work Group or a

Team? 308 OB IN ACTION: Team Building Is an Important Part of Talent

Management 308 Being a Team Player Instead of a Free Rider 309 SELF-ASSESSMENT 8.3: Evaluate Your Team Member

Effectiveness 310 Types of Teams 311

OB IN ACTION: The Art of the Self-Managing Team 312

Virtual Teams 313 Team Interdependence 315

8.4 TRUST BUILDING AND REPAIR—ESSENTIAL TOOLS FOR SUCCESS 317 Three Forms of Trust 318 Building Trust 319 SELF-ASSESSMENT 8.4: How Much Do You Trust

Another? 319 Repairing Trust 320

8.5 KEYS TO TEAM EFFECTIVENESS 321 Characteristics of High-Performing Teams 321 The 3 Cs of Effective Teams 321 Collaboration and Team Rewards 323 PROBLEM-SOLVING APPLICATION: Together,

Hospitals Combat a Common Foe 324 OB IN ACTION: Exemplary Teamwork at NASA 325

What Did I Learn? 327 PSPAC: Optimizing Team Performance at Google 320 Legal/Ethical Challenge: When Would You Fire the Coach? The President? 332

PART TWO Groups 293



How Can These Skills Give Me an Advantage? 376


10.1 A CONTEMPORARY VIEW OF CONFLICT 379 SELF-ASSESSMENT 10.1: Interpersonal Conflict Tendencies 379 Conflict Is Everywhere and It Matters 379 A Modern View of Conflict 380 A Conflict Continuum 380 Functional vs. Dysfunctional Conflict 380 Common Causes of Conflict 381 Escalation of Conflict 381 OB IN ACTION: First a Question, Then a Major Altercation 382 Why People Avoid Conflict 382 Desired Outcomes of Conflict Management 384

10.2 CONVENTIONAL FORMS OF CONFLICT 385 Personality Conflicts 385 How to Deal with Personality Conflicts 386 OB IN ACTION: The CEO Who Planned a “Food Fight” 386 PROBLEM-SOLVING APPLICATION: Butt Your Heads Together

and Fix the Problem 387 Intergroup Conflict 388 How to Handle Intergroup Conflict 389 SELF-ASSESSMENT 10.2: Psychological Safety Climate 391

10.3 FORMS OF CONFLICT INTENSIFIED BY TECHNOLOGY 392 Work–Family Conflict 392 SELF-ASSESSMENT 10.3: School–Non-School Conflict 393 OB IN ACTION: At United Shore Financial—Give Me Only 40 or

You’re Fired 394 Incivility—Treating Others Poorly Has Real Costs 396 SELF-ASSESSMENT 10.4: Bullying Scale—Target and

Perpetrator 399

10.4 EFFECTIVELY MANAGING CONFLICT 400 Programming Functional Conflict 400 Conflict-Handling Styles 402 SELF-ASSESSMENT 10.5: Preferred Conflict-Handling

Style 403 Third-Party Interventions: Alternative Dispute Resolution 405

10.5 NEGOTIATION 407 Two Basic Types of Negotiation 407 Emotions and Negotiations 409 OB IN ACTION: Take It from an FBI International Hostage

Negotiator 410 Ethics and Negotiations 411

What Did I Learn? 413 PSAC: What About McDonald’s Other Customers? 416 Legal/Ethical Challenge: Arbitration and a Snowball’s Chance 418


How Can I Become a More Effective Communicator? 334


9.1 BASIC DIMENSIONS OF THE COMMUNICATION PROCESS 337 Defining Communication 337 How the Communication Process Works 338 OB IN ACTION: The Priceline Group Works Hard to Avoid

Noise with Its Global Customers 339 Selecting the Right Medium 340

9.2 COMMUNICATION COMPETENCE 342 SELF-ASSESSMENT 9.1: Assessing Your Communication

Competence 342 Sources of Nonverbal Communication 342 Listening 344 SELF-ASSESSMENT 9.2: Assessing Your Listening Style 345 Nondefensive Communication 345 Connecting with Others via Empathy 347 OB IN ACTION: Ford Designs Products by Using Empathy 347

9.3 GENDER, GENERATIONS, AND COMMUNICATION 348 Communication Patterns between Women and Men 348 Generational Differences in Communication 349 Improving Communications between the Sexes and

Generations 350

9.4 SOCIAL MEDIA AND OB 351 Social Media and Increased Productivity 352 OB IN ACTION: Expanding Organizational Boundaries with

Crowdsourcing at GE, Lego, and YOU 354 Costs of Social Media 355 PROBLEM-SOLVING APPLICATION: A Very Expensive

Fantasy 355 Make E-mail Your Friend, Not Your Foe 356 Social Media Concerns and Remedies—What Companies and

You Can Do 357 SELF-ASSESSMENT 9.3: Assessing Social Media

Readiness 358 OB IN ACTION: Coca-Cola’s Online Social Media

Principles 360

9.5 COMMUNICATION SKILLS TO BOOST YOUR EFFECTIVENESS 363 Presenting—Do You Give Reports or Do You Tell Stories? 363 Crucial Conversations 366 Managing Up 368

What Did I Learn? 370 PSAC: What Can You Say About Your Employer on Social Media? Whatever You Want, Maybe 373 Legal/Ethical Challenge: Should Employers Monitor Employees’ Social Media Activity? 375



How Critical Is It to Master These Skills? 420


11.1 RATIONAL AND NONRATIONAL MODELS OF DECISION MAKING 423 Two Ways of Thinking 423 Rational Decision Making: Managers Make Logical and Optimal

Decisions 424 OB IN ACTION: Northwestern University Helps Students Deal

with Bounded Rationality while Solving Problems 426 Nonrational Models of Decision Making: Decision Making Does

Not Follow an Orderly Process 427 SELF-ASSESSMENT 11.1: Assessing Your Intuition 430


for BP Oil Spill 432

11.3 EVIDENCE-BASED DECISION MAKING 435 Using Evidence to Make Decisions 436 Big Data: The Next Frontier in Evidence-Based

Decision Making 437 PROBLEM-SOLVING APPLICATION: Kroger Uses Big Data

to Improve Customer Service and Profits 438

11.4 FOUR DECISION-MAKING STYLES 439 Value Orientation and Tolerance for Ambiguity 439 The Directive Style: Action-Oriented Decision Makers Who

Focus on Facts 439 The Analytical Style: Careful and Slow Decision Makers Who

Like Lots of Information 440 The Conceptual Style: Intuitive Decision Makers Who Involve

Others in Long-Term Thinking 441

The Behavioral Style: Highly People-Oriented Decision Makers 441

Which Style Are You? 441 SELF-ASSESSMENT 11.2: What Is My Decision-Making

Style? 441


11.6 GROUP DECISION MAKING 444 Advantages and Disadvantages of Group Decision

Making 445 Groupthink 445 SELF-ASSESSMENT 11.3: Assessing Participation in Group

Decision Making 447 Practical Contingency Recommendations about Group Decision

Making 447 Reaching Consensus: The Goal of Group Problem-Solving

Techniques 447 Practical Problem-Solving Techniques 447 PROBLEM-SOLVING APPLICATION: Rosemont Center

Addresses Employee-Related Issues 449

11.7 CREATIVITY 450 A Model of Creativity 450 SELF-ASSESSMENT 11.4: Assessing Climate for

Creativity 452 Practical Recommendations for Increasing Creativity 453

What Did I Learn? 454 PSAC: Don’t Drink the Water in Flint, Michigan 458 Legal/Ethical Challenge: Should Apple Comply with the US Government’s Requests to Unlock iPhones? 460


How Can I Apply Power, Influence, and Politics to Increase My Effectiveness? 462


12.1 POWER AND ITS BASIC FORMS 465 Five Bases of Power 465 OB IN ACTION: Former Government Officials Wielding

Influence at Consulting Group 467 SELF-ASSESSMENT 12.1: What Kind of Power Do I

Prefer? 468 Position vs. Personal Power 468 Power, but for What Purpose? 469

12.2 POWER SHARING AND EMPOWERMENT 472 Structural Empowerment 472 Psychological Empowerment 474 How to Empower Individuals, Teams, and Organizations 475 PROBLEM-SOLVING APPLICATION: Empowering a Team of

Your Peers 476

12.3 EFFECTIVELY INFLUENCING OTHERS 477 Common Influence Tactics 477 SELF-ASSESSMENT 12.2: Which Influence Tactics Do I

Use? 478 Match Tactics to Influence Outcomes 478 Influence in Virtual Teams 479



What Does It Take to Be Effective? 502


13.1 MAKING SENSE OF LEADERSHIP THEORIES 505 An Integrated Model of Leadership 506 What Is the Difference between Leading and Managing? 507 SELF-ASSESSMENT 13.1: Assessing Your Readiness to

Assume a Leadership Role? 507

13.2 TRAIT THEORIES: DO LEADERS POSSESS UNIQUE TRAITS AND PERSONAL CHARACTERISTICS? 508 What Core Traits Do Leaders Possess? 508 What Role Does Emotional Intelligence Play in Leadership

Effectiveness? 509 Do Women and Men Display the Same Leadership

Traits? 510 How Important Are Knowledge and Skills? 510 Do Perceptions Matter? 510 What Are the Take-Aways from Trait Theory? 511 OB IN ACTION: MasterCard and InterContinental Hotels Group

(IHG) Develop Employees’ “Global Mind-set” 512

13.3 BEHAVIORAL THEORIES: WHICH LEADER BEHAVIORS DRIVE EFFECTIVENESS? 513 Task-Oriented Leader Behavior 513 OB IN ACTION: Nick Saban Uses Task-Oriented Leadership to

Achieve National Championships in Football 514 Relationship-Oriented Leader Behavior 515 SELF-ASSESSMENT 13.2: Assessing Your Task- and

Relationship-Oriented Leadership Behavior 515 SELF-ASSESSMENT 13.3: Assessing Your Servant

Orientation 517 Passive Leadership 518

OB IN ACTION: Passive Leadership at Petrobas 519 What Are the Take-Aways from Behavioral Theory? 519


Sorenson to Be CEO over His Son 522 House’s Path-Goal Theory 523 Applying Contingency Theories 526

13.5 TRANSFORMATIONAL LEADERSHIP: HOW DO LEADERS TRANSFORM EMPLOYEES’ MOTIVES? 527 A Model of Transformational Leadership 527 How Does Transformational Leadership Work? 529 SELF-ASSESSMENT 13.4: Assessing Your Boss’s

Transformational Leadership? 530

13.6 ADDITIONAL PERSPECTIVES ON LEADERSHIP 531 The Leader-Member Exchange (LMX) Model

of Leadership 531 SELF-ASSESSMENT 13.5: Assessing Your Leader-Member

Exchange 533 The Power of Humility 534 The Role of Followers in the Leadership Process 534

What Did I Learn? 536 PSAC: The University of Virginia President Leads through Multiple Crises 540 Legal/Ethical Challenge: Martin Shkreli, former CEO of Turing Pharmaceuticals, Exorbitantly Raises the Price of a Much-Needed Drug 542

Six Principles of Persuasion 480 Apply Your Knowledge 481

12.4 POLITICAL TACTICS AND HOW TO USE THEM 482 Organizational Politics—The Good and the Bad 482 SELF-ASSESSMENT 12.3: How Political Am I? 482 Major Causes of Political Behavior 483 Frequently Used Political Tactics 484 Blame and Politics 485 Three Levels of Political Action 486 Using Politics to Your Advantage 487

12.5 IMPRESSION MANAGEMENT 489 What Is Impression Management? 489 Good Impressions 489

OB IN ACTION: Impression Management, Venture Capital Style 491

SELF-ASSESSMENT 12.4: Your Impression Management—How and Who 492

Impression Management and Job Interviews 492 How to Create Bad Impressions 493 Ethics and Impression Management  494 Apologies 494

What Did I Learn? 496 PSAC: Comcast’s Influence Went Only So Far 499 Legal/Ethical Challenge: Sharapova, You’re Out. But Not Woods, Not Vick, Not Armstrong, Not Bryant, Not . . . 500



How Can I Use These Concepts to Fit, Develop, and Perform? 544


14.1 THE FOUNDATION OF ORGANIZATIONAL CULTURE: UNDERSTANDING ITS DRIVERS AND FUNCTIONS 547 Defining Culture and Exploring Its Impact 547 The Three Levels of Organizational Culture 548 OB IN ACTION: Unilever Promotes a Sustainability

Culture 550 The Four Functions of Organizational Culture 551

14.2 THE IMPACT OF ORGANIZATIONAL CULTURE TYPES ON OUTCOMES 554 Identifying Culture Types with the Competing Values

Framework 554 PROBLEM-SOLVING APPLICATION: Dabbawalas Rely on a

Hierarchical Culture to Efficiently Deliver Food 558 OB IN ACTION: Activision Blizzard Integrates Clan and

Adhocracy Cultures 559 SELF-ASSESSMENT 14.1: What Is the Organizational Culture

at My Current Employer? 561 Outcomes Associated with Organizational Culture 561 Subcultures Matter 562

14.3 MECHANISMS OR LEVERS FOR CULTURE CHANGE 563 12 Mechanisms or Levers for Creating Culture Change 564

OB IN ACTION: Salo LLC Uses Rites and Rituals to Embed a Clan and Market Culture 568

SELF-ASSESSMENT 14.2: What Type of Organizational Culture Do I Prefer? 570

14.4 EMBEDDING ORGANIZATIONAL CULTURE THROUGH THE SOCIALIZATION PROCESS 571 A Three-Phase Model of Organizational Socialization 571 OB IN ACTION: Companies Use Different Approaches to

Onboard Employees 573 SELF-ASSESSMENT 14.3: Have You Been Adequately

Socialized? 575 Practical Application of Socialization Research 575

14.5 EMBEDDING ORGANIZATIONAL CULTURE THROUGH MENTORING 578 Functions of Mentoring 578 Human and Social Capital Enhance the Benefits of

Mentoring 579 Personal Implications 581 SELF-ASSESSMENT 14.4: Assessing My Level of

Mentoring 581

What Did I Learn? 582 PSAC: Zenefits Experiences the Pain of Growth 585 Legal/Ethical Challenge: Should the Citadel Change Its Socialization Practices? 587

PART THREE Organizational Processes 543


How Can Understanding These Key Processes and Outcomes Help Me Succeed? 588


15.1 THE FOUNDATION OF AN ORGANIZATION 591 What Is an Organization? 591 Organization Charts 592 An Open-System Perspective of Organizations 593 Learning Organizations 594 SELF-ASSESSMENT 15.1: Are You Working for a Learning

Organization? 597

15.2 ORGANIZATIONAL DESIGN 598 Three Categories 599 Seven Types of Organizational Structures 600 OB IN ACTION: W.L. Gore & Associates Operates with a

Horizontal Design 601 SELF-ASSESSMENT 15.2: What Is Your Preference for

Telecommuting? 602 PROBLEM-SOLVING APPLICATION: Freelancers Use the

Internet to Obtain Work 603



How Can You Apply OB and Show What You’ve Learned? 632


16.1 FORCES FOR CHANGE 635 SELF-ASSESSMENT 16.1: Assessing Your Attitudes toward

Change at Work 635 External Forces 635 Internal Forces 639 OB IN ACTION: Conflicts and Solutions at iPhone

Manufacturers 640

16.2 TYPES AND MODELS OF CHANGE 642 Three General Types of Change 642 OB IN ACTION: Cisco Thrives on (Radical) Innovation 643 Common Elements of Change 644 Lewin’s Change Model 644 OB IN ACTION: Unfreezing at Facebook 645 A Systems Model of Change 646 SELF-ASSESSMENT 16.2: What Is Your Readiness for

Change? 649 Kotter’s Eight-Stage Organizational Change Process 650 Creating Change through Organization Development (OD) 650

16.3 UNDERSTANDING RESISTANCE TO CHANGE 652 A Dynamic View of Resistance 652 Causes of Resistance to Change 653 OB IN ACTION: Should a New Leader Clean House? 655

16.4 THE GOOD AND THE BAD OF STRESS 656 Stress—Good and Bad 656 A Model of Occupational Stress 656 OB IN ACTION: Terminal Stress on Wall Street 658 OB IN ACTION: Barrie D’Rozario DiLorenzo (BD’D) Takes

Advertising, Marketing, and Employee Stress Very Seriously! 661

16.5 EFFECTIVE CHANGE AND STRESS MANAGEMENT 662 Applying the Systems Model of Change—Strategic Planning and

Diagnosis 662 PROBLEM-SOLVING APPLICATION: Emergency in the

Emergency Department 662 How to Overcome Resistance to Change 663 How to Manage Stress 665 Pulling It All Together—Change Management Tips for

Managers 667 Parting Words for Change and OB 668

What Did I Learn? 669 PSAC: Best Buy ... The Best House on a Bad Block 672 Legal/Ethical Challenge: Can Employers Ethically Force You to Change and Be Healthy? 673



Is Moving from an Organic to a Mechanistic Structure 608

Internal Alignment 609 What Does This Mean to Me? 610

15.4 ASSESSING ORGANIZATIONAL EFFECTIVENESS 611 The Balanced Scorecard: A Dashboard-Based

Approach to Measuring Organizational Effectiveness 611

SELF-ASSESSMENT 15.3: Assessing the Learning and Growth Perspective of the Balanced Scorecard 614

Strategy Mapping: Visual Representation of the Path to Organizational Effectiveness 614

15.5 ORGANIZATIONAL INNOVATION 616 Approaches toward Innovation 616 An Innovation System: The Supporting Forces for

Innovation 618 PROLEM-SOLVING APPLICATION: Extended Stay America

Tries to Increase Innovation 620 SELF-ASSESSMENT 15.4: How Innovative Is the

Organizational Culture? 620 OB IN ACTION: Design Thinking Your Way to Innovative

Solutions 621 Office Design 623

What Did I Learn? 625 PSAC: Zappos CEO Asks Employees to Commit to Teal, or Leave 628 Legal/Ethical Challenge: Does Tax-Exempt Status for Universities Make Them Good Organizational Citizens? 630

Individual Behavior

pa rt

o ne

1 Major Topics I’ll Learn and Questions I Should Be Able to Answer

1.1 The Value of OB to My Job and Career MAJOR QUESTION: How can I use knowledge of OB to enhance my job performance and career?

1.2 Right vs. Wrong—Ethics and My Performance MAJOR QUESTION: Why do people engage in unethical behavior, even unwittingly, and what lessons can I learn from that?

1.3 Applying OB to Solving Problems MAJOR QUESTION: How can I apply OB in practical ways to increase my effectiveness?

1.4 Structure and Rigor in Solving Problems MAJOR QUESTION: How could I explain to a fellow student the practical relevance and power of OB to help solve problems?

1.5 The Organizing Framework for Understanding and Applying OB MAJOR QUESTION: How can the Organizing Framework help me understand and apply OB knowledge to solve problems?

1.6 Preview and Application of What I Will Learn MAJOR QUESTION: How can I use my knowledge about OB to help me achieve professional and personal effectiveness?

What Is OB and Why Is It Important?


In this chapter you’ll learn that the study and practice of OB often organizes the work- place into three levels—the individual, the group or team, and the organization. Thus we’ve structured this book the same way—Part One is devoted to individual-level phe- nomena ( job satisfaction), Part Two to groups and teams (team cohesiveness), and Part Three to the organizational level (innovation). Make sure you read the final sec- tion of Chapter 1 for a preview of the many concepts you’ll learn in the book. You’ll also find a summary and application of the Organizing Framework for Understanding and Applying OB and the 3-Step Problem-Solving Approach. These are fundamental tools we created not only to help you learn more effectively, but also to help you apply and realize the true value of OB for you personally.


Winning at Work Your Future

What’s Ahead in This Chapter You’ll learn how OB can drive your job and career suc- cess. You’ll grasp the difference between hard and soft skills and the value of developing both, as well as the importance of self-awareness. We’ll show that ethics are integral to long-term individual and organizational suc- cess, and we’ll introduce a problem-solving approach you can use in a wide variety of situations at school, at work, and in life. But what really powers this book is our Organizing Framework for Understanding and Applying OB, which we introduce mid-chapter. This framework will help you organize and apply OB concepts and tools as you learn them. To show you the power of the Orga- nizing Framework, we conclude the chapter with a pre- view of the many concepts, theories, and tools you will learn. We then show you how to apply this knowledge using our 3-Step Problem-Solving Approach. We think you’ll be intrigued by this glimpse into all that you will learn in this book and course. Let’s get started!

critical thinking, ethical decision making, and problem solving. However, no more than 37 percent of employers thought students were well prepared in any of these skills, though many students believe they are (especially in criti- cal thinking and oral communication).2 This skill gap has motivated companies such as Mindtree, a digital solutions firm, to build its own $20 million learning center. Krishnan KS, head of culture and competence, said the center is in- tended to teach its engineers “21st century skills: commu- nication, collaboration, cooperation, management, decision making, and problem solving.”3

Employers Want Problem Solving and Critical Thinking Regardless of your area of study, arguably the greatest benefit of your education is developing problem-solving and critical-thinking skills. A recent National Association of Colleges and Employers (NACE) survey revealed the three skills most valued by employers: critical thinking, problem solving, and teamwork.4 Building your skills in these areas and others is the overarching goal of this book.

Imagine you are about to walk in the door and start your first full-time job. It’s the job you’ve always wanted. Or, if you are currently employed, imagine you’ve finally won the promotion you’ve worked so hard for, and you’re about to enter your new office, new department, or new work area. Either case is full of excitement—your professional life has so much promise!

Now take stock of your existing knowledge, skills, expe- riences, and other qualities. Even if these are well devel- oped at this point in your career, wouldn’t you want to give yourself an even greater advantage and translate your tal- ent into better performance and opportunities? Of course you would, and this is why we study OB.

Knowledge Is Not Enough Knowledge alone does not solve business problems. For de- cades, managers believed that if workers had the necessary knowledge and technical training, results would automati- cally follow. But organizations have realized that knowledge and training alone do not guarantee success—what people know and what they do often don’t align. Experts label this disparity the knowing-doing gap.1 The  knowing-doing gap  is the difference between what people know and what they actually do. For instance, everybody knows that treat- ing people with respect is a good idea, but some managers don’t always do this. Closing such gaps is an important ele- ment of your own success at school, work, and home. It also is a major focus of OB and this book.

The Limits of Common Sense You may feel that common sense will go a long way toward solving most business and career challenges. But if com- mon sense were all that mattered, managers would always treat employees fairly, businesses would never make “stu- pid” decisions, and you and other (new) employees would make very few mistakes. Everybody would perform better and be happier. However, this certainly isn’t true of all employers and managers. And for their part, entry-level employees are often ill-prepared and thus underperform.

Where Employers Say New Hires Fall Short Results published by the Association of American Colleges and Universities showed that employers and students largely agree on the most important skills, such as teamwork,

4 PART 1 Individual Behavior


The term  organizational behavior (OB)  describes an interdisciplinary field dedicated to understanding and managing people at work. To achieve this goal, OB draws on research and practice from many disciplines, including:

• Anthropology • Political science • Economics • Psychology • Ethics • Sociology • Management • Statistics • Organizational theory • Vocational counseling

From this list you can see that OB is very much an applied discipline that draws from many sources. This book will make it as relevant and useful for you as possible.

Let’s look at how OB compares to your other courses, explain the contingency per- spective (the premise of contemporary OB), and explore the importance of both hard and soft skills.


How can I use knowledge of OB to enhance my job performance and career?


Are you uncertain about the value of organizational behavior (OB) and how it fits into your

school curriculum or your professional life? This section will explain how OB can be valuable

to you. You’ll see how OB knowledge and tools go far beyond common sense and can en-

hance your personal job performance and career success. For instance, you will learn about

what it takes to get hired versus what it takes to get promoted, the importance of both hard

and soft skills, and the role of self-awareness in your success.

Our professional lives are extremely busy and challenging. Effectiveness requires a host of both hard and soft skills. Your understanding and application of OB concepts and tools will help you meet the many challenges, perform better, and create more attractive opportunities throughout your career. © Stuart McCall/Photographer’s Choice/Getty Images

5Making OB Work for Me CHAPTER 1

How OB Fits into My Curriculum and Influences My Success Organizational behavior is an academic discipline focused on understanding and managing people at work. This includes managing yourself, as well as others up, down, and sideways in the organization. But unlike jobs associated with functional disciplines such as account- ing, marketing, and finance, you will not get a job in OB.

What, then, is the benefit to learning about OB? The answer is that the effective ap- plication of OB is critical to your success in all disciplines of work and all job levels. As you’ll learn, technical knowledge associated with any given job is important, but your ability to influence, get along with, manage, and get things done through others is what makes the difference. People skills!

Applying OB knowledge and tools gives you opportunities, sets you apart from your peers and competition, and contributes to your success. An important part of your success is your ability to know which tools to use and under what circumstances. This is de- scribed as a contingency approach to managing people and is the foundation of contem- porary OB.

A Contingency Perspective—The Contemporary Foundation of OB A  contingency approach  calls for using the OB concepts and tools that best suit the situation, instead of trying to rely on “one best way.” This means there is no single best way to manage people, teams, or organizations. A particular management practice that worked today may not work tomorrow. What worked with one employee may not work with another. The best or most effective course of action instead depends on the situation.

Harvard’s Clayton Christensen puts it like this: “Many of the widely accepted prin- ciples of good management are only situationally appropriate.”5 In other words, don’t use a hammer unless the job involves nails. You’ll learn in Chapter 13, for instance, that there is no single best style of leadership. In this way, OB differs from many of your other courses in that answers here are rarely black and white, right or wrong, but instead the best answer—the most appropriate behavior—depends on the situation. The explicit con- sideration of situational factors is fundamental to OB and is emphasized throughout this book.

Thus, to be effective you need to do what is appropriate given the situation, rather than adhering to hard-and-fast rules or defaulting to personal preferences or organizational norms. Organizational behavior specialists, and many effective managers, embrace the contingency approach because it helps them consider the many factors that influence the behavior and performance of individuals, groups, and organizations. Taking a broader, contingent perspective like this is a fundamental key to your success in the short and the long term.

The following OB in Action box illustrates how Google has applied the contingency approach and changed some of its benefits to more precisely meet employees’ preferences for work–life balance and parenthood.

Effectively applying the contingency approach requires knowing yourself—your own skills, abilities, weaknesses, strengths, and preferences. Such knowledge is called self- awareness, and it is key to your success in both the short and long term.

How Self-Awareness Can Help You Build a Fulfilling Career The Stanford Graduate School of Business asked the members of its Advisory Council which skills are most important for their MBA students to learn. The most frequent answer was self- awareness.6 The implication is that to have a successful career you need to know who you are, what you want, and how others perceive you. Larry Bossidy (former CEO of Honeywell) and Ram Charan (world-renowned management expert) said it best in their book Execution: “When you know yourself, you are comfortable with your strengths and not crippled by your shortcomings. . . . Self-awareness gives you the capacity to learn

6 PART 1 Individual Behavior

from your mistakes as well as your successes. It enables you to keep growing.”9 They also argue that you need to know yourself in order to be authentic—real and not fake, the same on the outside as the inside. Authenticity is essential to influencing others, which we discuss in detail in Chapter 12. People don’t trust fakes, and it is difficult to influence or manage others if they don’t trust you.

As professors, consultants, and authors, we couldn’t agree more! To help you in- crease your self-awareness we include multiple Self-Assessments in every chapter. These are an excellent way to learn about yourself and see how OB can be applied at school, at work, and in your personal life. Go to Connect, complete the assessments, and then an- swer the questions included in each of the Self-Assessment boxes.

Let’s start with your motivation to manage others. Many employees never manage others. Some don’t choose to, and some don’t get the chance. But what about you? How motivated are you to manage others? Go to connect.mheducation.com and Self- Assessment 1.1 to learn about your motivation for managing others. What you learn might surprise you. Whether it does or not, more precisely understanding your motivation to manage others can guide your course selection in college and your job choices in the marketplace.

While Google’s talent is constantly being poached by its competitors, some em- ployees simply quit, especially women. The company noticed that many women were leaving, or more precisely, not returning after maternity leave. Some chose to stay home with their children. But they were leaving at twice the average rate of all employees. So Google explored the possibility that its policies might be playing a role.

The Industry Standard Generally, the tech industry, Silicon Valley firms in par- ticular, offers 12 weeks of paid time off for maternity leave and seven weeks for employees outside California.

New Plan Google’s response was to begin offering five months of full pay and full benefits, exceeding the industry standard. Better still, new mothers can split the time, taking some before the birth, some after, and some later still when the child is older.

New Plan Plus Improved benefits were extended to all Google employees, even those outside of Silicon valley, including fathers. All new fathers, and new mothers outside of Silicon valley, now enjoy seven weeks of new-parent leave. This en- ables new mothers and fathers the opportunity to manage their time and focus on the new baby.7 Many companies now have similar practices. For example, Alston & Bird, an Atlanta-based law firm, provides employees $10,000 and 90 days of paid leave for adoptive parents and covers infertility treatment in its health plan.8


1. If you alone could make policies at Google (or your workplace), what would you do to keep valuable employees?

2. How could you apply the contingency approach to make these and other policies more effective?

3. What else would you do? Why?

Google Search: How Can We Keep Talented Employees?

OB in Action

7Making OB Work for Me CHAPTER 1

A central feature of most any successful development program is self- awareness. Knowing who you are and your preferences are important considerations in personal development. © Lana Isabella/Getty Images RF

How Strong Is My Motivation to Manage? Please be prepared to answer these questions if your instructor has assigned Self-Assessment 1.1 in Connect.

1. Does this instrument accurately assess your potential as a manager? Explain.

2. Which of the seven dimensions do you think is likely the best predictor of managerial success? Which is the least? Explain.

3. The instrument emphasizes competition with others in a win-lose mentality. Describe the pros and cons of this approach to management.


Uncommon Sense Let’s return to common sense. At first glance the contingency perspective may look like simple common sense. But it’s different. Common sense is of- ten based on experience or logic, both of which have limits, and it suffers three major weaknesses you need to be aware of and avoid:

• Overreliance on hindsight. Common sense works best in well-known or stable situations with predictable outcomes—what worked before should work again. But modern business situations are complex and uncertain and require adapting to change. Common sense is especially weak in responding to the unknown or unex- pected. And because it focuses on the past, common sense lacks vision for the future.

• Lack of rigor. People comfortable with common-sense responses may not apply the effort required to appropriately analyze and solve problems. If you lack rigor, then you are unlikely to define the problem accurately, identify the true causes, or recommend the right courses of action.

• Lack of objectivity. Common sense can be overly subjective and lack a basis in science. In such cases we are not always able to explain or justify our reasoning to others, which is a sign that common sense lacks objectivity.

In BusinessNewsDaily, Microsoft researcher Duncan Watts says we love common sense because we prefer narrative: “You have a story that sounds right and there’s nothing to

8 PART 1 Individual Behavior

contradict it.” Watts contrasts a more effective, scientific approach in his book Everything Is Obvious Once You Know the Answer: How Common Sense Fails Us. “The difference [in a scientific approach] is we test the stories and modify them when they don’t work,” he says. “Storytelling is a useful starting point. The real question is what we do next.”10

OB is a scientific means for overcoming the limits and weaknesses of common sense. The contingency approach in OB means you don’t settle for options based simply on ex- perience or common practice if another solution may be more effective. Thus the goal of OB is to give you more than common sense and thus enhance your understanding of situ- ations at work and guide your behaviors. This in turn will make you more attractive to potential employers and more effective once hired. Let’s explore this idea in more detail, beginning with the importance of possessing and developing both hard and soft skills.

Employers Want Both Hard and Soft Skills Most of us know the difference between hard and soft skills.

•  Hard skills  are the technical expertise and knowledge required to do a par- ticular task or job function, such as financial analysis, accounting, or operations.

•  Soft skills  relate to human interactions and include both interpersonal skills and personal attributes.

“People rise in organizations because of their hard skills and fall due to a dearth of soft skills.”11 Maybe that’s why firms tend to weigh soft skills so heavily when hiring for top positions. The most sought-after skills for MBA graduates are problem solving, lead- ership, and communication.12 These skills also are the most difficult to find.

And results from a recent CareerBuilder survey tell a similar story for undergraduates and entry-level positions:

The problem isn’t that new grads don’t have the right degrees or technical know-how. Only 10% of employers said there weren’t enough graduates with the appropriate degrees and just 13% said students lacked computer or technical skills. But employers are troubled by graduates’ lack of soft skills. Many report that college grads are lacking in people skills and have trouble solving problems and thinking creatively. . . . Having a college degree and technical skills isn’t enough to land their first job.13


Learning about My Soft and Hard Skills

You just learned that soft and hard skills both affect your success. Take a moment to apply this new knowledge and make it personal and relevant for you.

1. List what you think are your two strongest soft skills. Also briefly, and specifically, explain how they can or do benefit you at school and work.

2. List what you think are your two strongest hard skills. Explain specifically how they can or do benefit you at work and school.

Table 1.1 shows four sought-after skills, along with a brief explanation of how we directly address them in this book.

What do you notice about these four items? Which are hard skills? None! Instead, all are soft skills, the skills you need to interact with, influence, and perform effectively when working with others. Debra Eckersley, a managing partner of human capital at PricewaterhouseCoopers, says the rise of soft skills is a consequence of managers “listen- ing to clients and what they value.”14

One other key aspect of soft skills is that they are not job specific. They are instead  portable skills,  more or less relevant in every job, at every level, and throughout

9Making OB Work for Me CHAPTER 1


Skill Description This Book

1. Critical thinking Using logic and reasoning to identify the strengths and weaknesses of alternate solutions, conclusions, or approaches to problems.

Fundamental to this book and woven throughout. We designed features and exercises to help you think critically and apply your OB knowledge and tools.

2. Problem solving Identifying complex problems and reviewing related information to develop and evaluate options and implement solutions.

Our problem-solving approach is used throughout the book. We repeatedly ask you to apply your knowledge to solve problems at school, at work, and in life.

3. Judgment and decision making

Considering the relative costs and benefits of potential actions to choose the most appropriate ones.

Integral to problem solving and success. We integrate judgment and decision making in all problem-solving content and devote an entire chapter to these soft skills.

4. Active listening Giving full attention to what other people are saying; taking time to understand the points being made; asking questions as appropriate and not interrupting.

Key success factor at work. We address this directly in the chapters on influencing others and leadership.

Adapted from M. Elliott, “5 Skills College Grads Need to Get a Job,” May 1, 2015, CheatSheet.com, http://www.cheatsheet.com/personal-finance/5-skills-todays- college-grads-need-to-get-a-job.html/?a=viewall.

your career.15 All these and many more soft skills are represented by OB topics covered in this book, whether as personal or interpersonal attributes:

Personal attributes Interpersonal skills (with which we build goodwill and (with which we foster respectful trust and demonstrate integrity) interactions) • Attitudes (Chapter 2) • Active listening (Chapters 12 and 13) • Personality (Chapter 3) • Positive attitudes (Chapters 2 and 7) • Teamwork (Chapter 8) • Effective communication (Chapter 9) • Leadership (Chapter 13)

The take-away for you? Good interpersonal skills can make even a candidate with a less- marketable degree an appealing hire, while a lack of people skills may doom a college grad to unemployment.16

How OB Fits into My Career Hard skills are of course important. For instance, accountants need to understand debits and credits, financial analysts need to derive net present value, and both need to under- stand cash flows. However, to be competitive and give employers what they want, you need to develop your soft skills as well. In fact, some soft skills will increase in impor- tance over your career and help set you apart from your competition.17 To highlight this point, think about the criteria used for hiring workers versus promoting them.

What It Takes to Get Hired Regardless of where you are in your career today, ask yourself: What criteria were used to hire you for your first job? What factors did your hir- ing manager consider? (If your first job is still ahead of you, what factors do you think will be most important?) You and most of your peers will identify things like education, grades, interpersonal skills, and internship or other experience. In short, for most jobs you are selected for your technical skills, your ability to do the given job.

10 PART 1 Individual Behavior

Applying OB

Everybody knows that jobs are won or lost during interviews. Here are a few simple tips to help you finish on top.

1. Create an elevator pitch. Imagine you’re in the elevator with the interviewer and have only 60 seconds to sell yourself. Select your three best selling points (strengths) and concisely explain how each would benefit the company. Stay focused—keep your pitch short and meaningful.

2. Finish strong. At the end of the interview state and show your enthusiasm for the opportunity. Also restate your one or two best selling points and how they will benefit the company.

3. Prepare for situational questions. Anticipate questions such as, “Why do you want this job?” and, “Tell me about a time when you had a conflict at work and what you did about it.” Be prepared to answer them by describing the situation, your behavior, and the resulting impact. Also consider describing what you learned in that situation.

4. Make your research social. Reach out to your network, privately (you don’t want everybody to know you’re looking), and learn whether anybody has worked for or interviewed with your target company. Learn about the person you’re interviewing with on LinkedIn—education, past jobs, positions within the target company. Glassdoor.com and other sites can be a wealth of information on employee expe- riences and compensation.

5. Don’t trip up on the money. It’s generally best to wait until you have a formal offer in hand before discussing pay. If asked about your salary requirement during the interview, respond by saying, “Are you making me an offer?” The answer will likely be, “No, not yet.” But if the interviewer persists, say, “I would prefer to have all the details in hand in order to determine what would be most appropriate and fair. Once I have those, I will happily discuss compensation.”18

How to Ace Your Next Interview

An understanding of OB can give you extremely valuable knowledge and tools to help “sell” yourself during job interviews. Applying OB knowledge can also enhance your chances for promotions. © Chris Ryan/agefotostock RF

What It Takes to Get Promoted Now ask yourself, what criteria are being used for promotions? Of course, performance in your current job is often a primary consid- eration. However, you and many other em- ployees may fail to realize that your perceived ability to get things done through others and to manage people will be an- other important deciding factor. If you and three of your coworkers are all vying for an open job in management, then it’s likely all four of you perform at a high level. Therefore, performance isn’t the only de- ciding factor. Instead, it may be your per- ceived ability to directly or indirectly manage others!

Roxanne Hori, an associate dean at New York University’s Stern School of Business, echoes this argument: “Yes, your knowledge of the functional area you’re

11Making OB Work for Me CHAPTER 1

pursuing is important. But to succeed longer term . . . having strong team skills and knowing how to build and manage relationships were seen as just as important.” One executive she interviewed suggested that students should “take as much organizational behavior coursework as possible . . . because as you move into leadership roles, the key skills that will determine your success will be around your ability to interact with others in a highly effective fashion.”19

Some career experts, such as Chrissy Scivicque, the CEO of a career develop- ment and training firm and writer for Forbes and The Wall Street Journal, go so far as to say that most people have the technical skills to succeed at higher-level jobs. And even if some new technical knowledge is needed, it generally is easy to learn. However, as you rise through the hierarchy, your job generally will require a more developed set of soft skills. Skills like communication, emotional intelligence, eth- ics, and stress management.20 And mentions of critical thinking in job postings have doubled since 2009.21

We make this point visually in Figure 1.1. It illustrates how technical or job-specific skills decline in importance as you move to levels of higher responsibility, while personal skills increase.

Performance Gives Me Credibility Performance matters because it gives you cred- ibility with your peers and those you may manage. Just be aware that early in your career your bosses will be looking for more. They will evaluate your management potential, and their opinion will affect your opportunities. So even in a line (nonmanagement) position, you need to know how to:

• Apply different motivational tools (Chapter 5). • Provide constructive feedback (Chapter 6). • Develop and lead productive teams (Chapters 8 and 13). • Understand and manage organizational culture and change (Chapters 14 and 16).

Knowledge of OB, therefore, is critical to your individual performance, your ability to work with and manage others, and your career success (promotions, pay raises, in- creased opportunities). And because ethics can similarly make or break you at every step of your career, we cover it next.



Low Job Level

Importance Personal Skills

Technical Skills


SOURCE: Adapted from M. Lombardo and R. Eichinger, Preventing Derailment: What to Do Before It’s Too Late (Greensboro, NC: Center for Creative Leadership, 1989).

12 PART 1 Individual Behavior

 Ethics  guides behavior by identifying right, wrong, and the many shades of gray in between. We will weave discussions of ethics throughout the book for three key reasons.

1. Employees are confronted with ethical challenges at all levels of organizations and throughout their careers.

2. Unethical behavior damages relationships, erodes trust, and thus makes it difficult to influence others and conduct business.

3. Unethical behavior also reduces cooperation, loyalty, and contribution, which hurts the performance of individuals, teams, and organizations.

Ethics also gets priority because many OB topics have a direct and substantial influence on the conduct of individuals and organizations. Notably, reward systems (Chapter 6), decision making (Chapter 11), leader behavior (Chapter 13), and organi- zational culture (Chapter 14) all can powerfully call upon our ethical standards at work. Let’s begin by describing cheating and other forms of unethical conduct at school and work.

Cheating The news now routinely reports about cheating in sports, such as alleged match-fixing by a number of professional tennis players and scores of instances of the use of performance- enhancing drugs: the Russian Olympic team’s systematic use and cover-up, cyclist Lance Armstrong’s public confession of drug use during each of his Tour de France victories (legal charges were ultimately filed), and Major League Baseball’s lifetime ban of pitcher Jenrry Mejia for three separate steroid violations. But cheating occurs in every other area of our lives too.

What about cheating at school? Anonymous surveys by the Josephson Institute of more than 23,000 students at private and public high schools across the United States found 59 percent admitted cheating on a test in the past academic year, and 32 percent reported plagiarizing material found on the Internet.22 Fifty-seven percent of participating high school students agreed with the statement “In the real world, successful people do what they have to do to win, even if others consider it cheating.”23


Why do people engage in unethical behavior, even unwittingly, and what lessons can I learn from that?


If you were asked, “Do you know right from wrong? Are you secure in your ethics?” you would

likely answer yes to both questions. What’s interesting is that most people who suffer ethical

lapses also answer yes. OB can teach you about the drivers of unethical behavior and, in the

process, improve your awareness and enable you to reduce your risk. You’ll learn that even

though most unethical behavior is not illegal, it still causes tremendous damage to people,

their jobs and careers, and their employers. Fortunately, the OB concepts and tools you pick

up through this course will help you recognize and navigate ethical challenges.


13Making OB Work for Me CHAPTER 1

The story doesn’t get any better in college. Turnitin.com, the plagiarism-checking service, reported finding 156 million matches between college student papers and previ- ously published Internet material. The two top sources? Wikipedia and Yahoo Answers. As an example, 125 of 279 members of a particular government class at Harvard Univer- sity were suspected of cheating on a take-home final.24 These are just a few examples and statistics of a very long list. What percentage of students at your school do you think cheat on homework assignments? Exams? Take-home finals?

Cheating isn’t limited to students. Nearly three dozen Atlanta-area school administra- tors and teachers were indicted for changing, fabricating, or otherwise falsifying student scores on statewide aptitude tests from at least 2001 to 2009. Some took plea deals and others are serving prison time.25 Goldman Sachs fired 20 analysts in 2015 for cheating on internal training exams, and JPMorgan Chase reported that it terminated 10 employees for similar offenses.26

Now let’s explore other forms of unethical conduct and their legality, frequency, causes, and solutions.

Ethical Lapses—Legality, Frequency, Causes, and Solutions The vast majority of managers mean to run ethical organizations, yet corporate corrup- tion is widespread.27 Some of the executives whose unethical behavior bankrupted the organizations they led, destroyed the lives of many employees, and caused enormous losses for employees, investors, and customers in the last few decades are Michael Milken (Drexel Burnham Lambert, 1990), Kenneth Lay and Jeff Skilling (Enron, 2001), Bernie Ebbers (WorldCom, 2002), Bernie Madoff (Madoff Investment Securities LLC, 2009), Hisao Tanaka (Toshiba, 2015), and Sepp Blatter (FIFA, 2015). None of these leaders acted alone.

Indictments and verdicts are a matter for the courts. Our point, rather, is that each of these disgraced executives led companies or organizations that in most cases employed thousands of other people. Surely these organizations did not advertise for and hire the criminally minded to help the leaders in their unethical endeavors. Most employees prob- ably knew little or nothing about any unethical or illegal activities, while others were deeply involved. How does the work environment produce unethical conduct, sometimes

In early 2016, tennis star Maria Sharapova (left photo) tested positive for a performance- enhancing drug. She quickly admitted to the finding and apologized. Sepp Blatter (right photo), former president of soccer’s international governing body FIFA, was at the heart of a scandal that rocked the organization, cost Blatter and others their jobs, and led to formal investigations across the globe. Investigators uncovered a well-entrenched and long-lasting pattern of bribes and other financial misconduct. (Left) © Damian Dovarganes/AP Photo; (right) © Valeriano Di Domenico/AFP/Getty Images

14 PART 1 Individual Behavior

One. That is the number of Wall Street executives who actually went to jail for actions leading up to the financial crisis of 2008–2009, and that one conviction didn’t happen until 2014.30 Of the more than 14,000 financial fraud cases brought during the period of the crisis, only 17 named CEOs and other respon- sible executives.

Two central figures during that time had telling and damning comments. Eric Holder, the former US attorney general, said the conduct that led to the crisis was “unethical and irresponsible.” And “some of this behavior—while morally reprehensible—may not necessarily have been criminal.”31 Ben Bernanke, former chair of the Federal Reserve Bank, said, “. . . more corporate executives should have gone to jail for their misdeeds . . . since everything that went wrong or was illegal was done by some individual, not by an abstract firm.”32


1. If you think executives (and perhaps other employees) of financial institutions should be punished for their roles in the crisis, describe what you think is appropriate.

2. If you think they should not be punished, explain why. 3. Is it appropriate for the firms to pay fines, but for the executives to avoid

consequences? Justify your answer.

Wrong? Absolutely! Illegal? Seemingly Not. OB in Action

on an extreme scale, from people who are otherwise good, well intentioned, and on the right side of the law? Knowledge of OB helps you answer this question.

Unethical Does Not Mean Illegal While extreme examples of unethical and il- legal conduct make headlines, they are the exception. The truth is that very few un- ethical acts are also illegal, most are not punished in any way, and even if illegal, few are prosecuted.

This means you should not rely on the legal system to manage or assure ethical conduct at work. For instance, FoxConn, Apple Computer’s top supplier in China, was in the spotlight for its highly publicized ill-treatment of 1.2 million Chinese employ- ees, who suffered 14-hour workdays, six- to seven-day workweeks, low wages, and retaliation for protesting.28

American Airlines pilots provided another example in 2012 when they created wide- spread slowdowns in flights to pressure the company in negotiations with their union. American’s on-time performance dropped from 80 percent to 48 percent, versus 77 per- cent for Southwest and 69 percent for Delta. The slowdowns resulted in enormous costs and inconveniences for thousands of customers.29

None of the conduct in these examples was illegal. The following OB in Action box provides another notable instance of how widespread unethical behavior has resulted in virtually no legal consequences.

Why Ethics Matters to Me and My Employer Criminal or not, unethical behavior negatively affects not only the offending employee but also his or her coworkers and em- ployer. Unethical behavior by your coworkers, including company executives, can make you look bad and tarnish your career.

15Making OB Work for Me CHAPTER 1

SAC Capital Advisors, for example, is one of the most suc- cessful hedge funds in recent years. But the fund and its founder, Steven Cohen, were dogged throughout 2012–2016 by suspicions of insider trading, and many traders with ties to SAC were convicted. Before any formal charges were made against the firm itself or its founder, clients withdrew nearly $2 billion in assets.33 SAC investors ultimately withdrew even more money, nearly $2 billion in fines were levied, and the fund was ordered to close. Cohen reopened the company as a “family office” that trades only his personal fortune. He ultimately set- tled charges brought against him personally, without admitting guilt, which resulted in his paying no personal fines and being banned only from trading other people’s money for two years.34

To make this more real for you, imagine you are inter- viewing for a job. How would you explain your past employment history if it included jobs at SAC, Enron, Countrywide, MF Global, or Madoff Investment Securities? It certainly is possible and even likely that you did nothing wrong. However, it is likely that you would always be concerned about what others thought or suspected about

your involvement. Would suspicions always be in the back of your future colleagues’ minds? Would that cost you opportunities? Cause you stress?

Thankfully, research provides us with clear ways to avoid such problems:

. . . sustainable businesses are led by CEOs who take a people-centered, inclusive approach rather than a controlling, target-driven one. They are people who listen, who foster cultures in which employees are not scared to point out problems and in which staff feel they have a personal responsibility to enact corporate values, be they health and safety concerns or putting the client’s interests first.35

Ethical Dilemmas  Ethical dilemmas  are situations with two choices, neither of which resolves the situation in an ethically acceptable manner. Such situations surround us at work and school. They highlight the fact that choosing among available options is not always a choice between right and wrong. Because such dilemmas are so frequent and potentially con- sequential, we include an Ethical/Legal Challenge feature at the end of each chapter that asks you to consider what you might do if confronted with difficult ethical choices at work.

An excellent example is provided by managers responsible for determining which employees are downsized. When Audi of North America decided to relocate a large percentage of its operations from one part of the United States to another, one of the finance managers was responsible for “working the numbers” on how many people would be invited to relocate, how many would be terminated, and what types of severance pack- ages would be offered and to whom.

All this was necessary and needed to be done by somebody in the company. The problem, however, was that many of these people were friends and colleagues of the per- son doing the analyses. She had the “hit list” (as it was called) for weeks and was unable to share the information with the others, even as they worked side by side, had lunch, and interacted socially in the meantime.

Stephen A Cohen and many of his hedge fund’s employees were the focus of multiple investigations and lawsuits by regulators for several years. © Ronda Churchill/Bloomberg/Getty Images

Whistle-blowing often creates a particularly challenging type of ethical dilemma. Peo- ple do wrong, unethical, and even illegal things at work, and you and other employees may know that they did. The dilemma is what to do about it. Many times you’re

The Whistle-Blower’s Dilemma OB in Action

16 PART 1 Individual Behavior

tempted to reveal the behavior to management or to the authorities— blow the whistle. This seems like the “right thing to do.” Depending on the situation, you may even profit, but you might also pay.

Whistle-Blowing for Profit The Dodd-Frank Act of 2010 and some regulatory agencies provide incen- tives for whistle-blowers. Some can receive up to 30 percent of any settlement if regulators collect more than $1 million due to the in- fraction.36 Bradley Birkenfeld, an ex-banker for UBS, was awarded $104 million for exposing the way his bank helped US clients hide money in Swiss accounts. Cheryl Eckard was awarded $96 million for revealing manufacturing flaws in the production of some of Glaxo- SmithKline’s pharmaceuticals.37

Dr. William LaCorte of Louisiana seems to be a serial whistle-blower. He has filed multiple lawsuits against pharmaceutical companies (Pfizer and Merck) and received awards totaling nearly $100 million.38 Olympus Corp., a global medical device company, was ordered to pay $646 million in civil and criminal penalties for providing kickbacks, bribes, and other inappropriate forms of influence to win business. The whistle-blower and former chief compliance officer, John Slowik, reported the violations internally. But nothing was done, so he escalated the matter to federal officials. His reward: $51 million.39

The Costs As a vice president at Chase Bank, Linda Almonte was asked to review more than 20,000 past-due credit card accounts before they were sold to another company. Almonte’s team reported back to her that nearly 60 percent contained some sort of major error, including discrepancies about the amount or whether the court had indeed ruled for the bank. Concerned, Almonte went up the chain of com- mand, flagging the errors and encouraging management to halt the sale. Instead, the bank fired Almonte and completed the deal.40 Nobody would hire her, which ruined her professionally and financially. She and her family ultimately moved to another state, where they lived in a hotel while she continued to look for work.

Ultimately, Chase was ordered to pay $200 million in fines and restitution. The company also settled a suit for an undisclosed amount with Almonte.41

What’s the Lesson? Don’t underestimate the likelihood and costs of retaliation. Codes of ethics that forbid retaliation are just empty words if unethical people aren’t held accountable. And a lack of accountability is the hallmark of corrupt organizations. Doing the right thing can be very costly.


1. What can employers do to encourage whistle-blowers? 2. How can organizations ensure that whistle-blowers are protected, other than

simply making it a policy ( just words)? 3. What can you do as an individual employee when you witness or become

aware of unethical conduct?

Sherron Watkins became one of the most famous whistle-blowers in history when she helped undo Enron. Enron was an energy and trading company that soared in the 1990s and failed in one of the most calamitous ethical scandals in modern business. Watkins now earns a living speaking about her experience and ethics more generally, which likely pays far less than jobs in the energy sector. © Scott J Ferrell/Congressional Quarterly/Alamy

17Making OB Work for Me CHAPTER 1


Ill-Conceived Goals

Motivated Blindness

Indirect Blindness

The Slippery Slope

Overvaluing Outcomes

Description: We set goals and incentives to promote a desired behavior, but they encourage a negative one.

We overlook the unethical behavior of another when it’s in our interest to remain ignorant.

We hold others less accountable for unethical behavior when it’s carried out through third parties.

We are less able to see others’ unethical behavior when it develops gradually.

We give a pass to unethical behavior if the outcome is good.

Example: The pressure to maximize billable hours in accounting, consulting, and law firms leads to unconscious padding.

Baseball officials failed to notice they’d created conditions that encouraged steroid use.

A drug company deflects attention from a price increase by selling rights to another company, which imposes the increases.

Auditors may be more likely to accept a client firm’s questionable financial statements if infractions have accrued over time.

A researcher whose fraudulent clinical trial saves lives is considered more ethical than one whose fraudulent trial leads to deaths.

Remedy: Brainstorm unintended consequences when devising goals and incentives. Consider alternative goals that may be more important to reward.

Root out conflicts of interest. Simply being aware of them doesn’t necessarily reduce their negative effect on decision making.

When handing off or outsourcing work, ask whether the assignment might invite unethical behavior and take ownership of the implications.

Be alert for even trivial ethical infractions and address them immediately. Investigate whether a change in behavior has occurred.

Examine both “good” and “bad” decisions for their ethical implications. Reward solid decision processes, not just good outcomes.

SOURCE: Harvard Business Review. “Ethical Breakdowns: Good People Often Let Bad Things Happen” by M. Bazerman and A. Tenbrunsel, April 2011. Copyright © 2011 by the Harvard Business School Publishing Corporation; all rights reserved.

What Causes Unethical Behavior? Harvard professor Max Bazerman and Ann Tenbrunsel of the University of Notre Dame have studied ethical and unethical conduct extensively. They concluded that while criminally minded people exist in the workplace, most employees are in fact good people with good intentions. Bazerman and Tenbrunsel contend that instead of ill intent, cognitive biases and organizational practices “blind managers to unethical behavior, whether it is their own or that of others.”42 Table 1.2, which summarizes their findings, outlines causes of unethical behavior and what we can do to address that behavior as employees and managers.


Identifying Unethical Behavior at School and Work

1. Identify the three most common forms of unethical behavior at school or where you work. Be specific.

2. Using Table 1.2, identify the likely causes for each.

3. Describe one thing that can be done to prevent or remedy each of the behaviors you noted in question 1. Use Table 1.2 for ideas/suggestions.

18 PART 1 Individual Behavior

What about Unethical Behavior in College and When Applying for Jobs? A study of graduate students in the United States and Canada, including MBAs, found that peer behavior was by far the strongest predictor of student cheating, followed by se- verity of penalties and certainty of being reported.43 Students are more likely to cheat if their classmates cheat, and/or they think the probability of being caught is small, and if caught that the penalties will not be severe.

However, don’t be too quick to blame this bad behavior on your lying, cheating classmates. The same researchers acknowledge that there are many other potential rea- sons for cheating, such as perceived unfairness in grading. It also is possible that stu- dents see different degrees of cheating—for instance, in homework assignments versus on exams.

As for job hunting, an analysis of 2.6 million job applicant background checks by ADP Screening and Selection Services revealed that “44 percent of applicants lied about their work histories, 41 percent lied about their education, and 23 percent falsified cre- dentials or licenses.”44 Figure 1.2 highlights some of the most common and most outra- geous lies told on résumés. Can you imagine being a recruiter? If you believe these numbers, half the people you interview could be lying to you about something! Many

Most Creative Liars The best lies came from those who claimed to …

Liar, Liar, Résumé on Fire

More than half of hiring and HR managers have caught a lie on a résumé. Here are some results from a survey of more than 2,500 hiring professionals.






Most Common Lies


Academic degrees

Job titles

Employment dates


Skill sets

10060 8040

Be a Nobel Prize winner.

Be a former CEO of the company to which the person was applying.

Have worked in a jail (when the person really was serving time there).

Have attended a college that didn’t exist.

Be employed at three di�erent companies in three di�erent cities simultaneously.

Be HVAC-certified and later asked the hiring manager what “HVAC” meant.



SOURCE: K Gurchiek, “Liar, Liar, Resume on Fire,” SHRM, September 2, 2015, https://www.shrm.org/resourcesandtools/hr-topics/ talent-acquisition/pages/lying-exaggerating-padding-resume.aspx.

19Making OB Work for Me CHAPTER 1

potential reasons for unethical behavior at work exist, beyond those listed in Table 1.2, such as:

1. Personal motivation to perform (“I must be No. 1”). 2. Pressure from a supervisor to reach unrealistic performance goals along with threats

for underperforming. 3. Reward systems that honor unethical behavior. 4. Employees’ perception of little or no consequences for crossing the line.45

Some people don’t see their actions as unethical. Despite both Enron executives be- ing convicted, Jeff Skilling proclaims his innocence to this day, as did Ken Lay until he died. Nevertheless, it will be helpful for you to learn more specifically about your own ethical tendencies. Some people view ethics in ideal terms, which means that ethical prin- ciples or standards apply universally across situations and time. Others, however, take a relativistic view and believe that what is ethical depends on the situation. Take Self- Assessment 1.2 to learn about your own views.

Assessing My Perspective on Ethics Please be prepared to answer these questions if your instructor has assigned Self- Assessment 1.2 in Connect.

1. Are your views more idealistic or more relativistic?

2. What do you think about students cheating on homework assignments in school? What about cheating on exams?

3. Are your answers consistent with your score? Explain.

4. Suppose you’re a manager. What does your score imply about the way you would handle the unethical behavior of someone you manage? What about your boss’s unethical behavior?


What Can I Do about It? Like most others, you have or likely will witness question- able or even blatantly unethical conduct at work. You might be tempted to think, This is common practice, the incident is minor, it’s not my responsibility to confront such issues, and loyal workers don’t confront each other. While such rationalizations for not confront- ing unethical conduct are common, they have consequences for individuals, groups, and organizations. What can you do instead? Here are a few suggestions:

1. Recognize that it’s business and treat it that way. Ethical issues are business is- sues, just like costs, revenues, and employee development. Collect data and present a convincing case against the unethical conduct just as you would to develop a new product or strategy.

2. Accept that confronting ethical concerns is part of your job. Whether it is explicit in your job description or not, ethics is everybody’s job. If you think something is questionable, take action.

3. Challenge the rationale. Many lapses occur despite policies against them. If this is the case, ask, “If what you did is common practice or OK, then why do we have a policy forbidding it?” Alternatively, and no matter the rationale, you can ask, “Would you be willing to explain what you did and why in a meeting with our superiors or customers, or during an interview on the evening news?”

20 PART 1 Individual Behavior

4. Use your lack of seniority or status as an asset. While many employees rely on their junior status to avoid confronting ethical issues, being junior can instead be an advantage. It enables you to raise issues by saying, “Because I’m new, I may have misunderstood something, but it seems to me that what you’ve done is out of bounds or could cause problems.”

5. Consider and explain long-term consequences. Many ethical issues are driven by temptations and benefits that play out in the short term. Frame and explain your views in terms of long-term consequences.

6. Suggest solutions—not just complaints. When confronting an issue, you will likely be perceived as more helpful and be taken more seriously if you provide an alternate course or solution. Doing so will also make it more difficult for the offender to disre- gard your complaint.46

What Role Do Business Schools Play? Each of us is first and foremost responsi- ble for our own ethical conduct. However, we also know that our conduct is shaped by the environment and people around us. Leaders have particular influence on the ethical policies, practices, and conduct of organizations. For instance, a recent study reported that 35 percent of all undergraduate degrees are awarded in business fields, yet 75 per- cent of business schools do not require ethics courses.47 If ethics are so important, why the gap?

The researchers asked this question and found that the gender and academic back- ground of deans, along with whether the school was public or private, predicted the likeli- hood that ethics courses were required. Female deans with a background in management were most likely to require ethics courses, while men with economics and finance back- grounds were least likely. Private and religiously affiliated schools were more likely than public schools to require classes in ethics.48 What is the case at your school? Does it align with these findings?

Now that you have a good understanding of the importance of ethics at school and work, we’ll turn our attention to using OB to solve problems. Applying OB to solve problems is a major part of what makes this knowledge so valuable.

Edward Snowden blew the whistle on the National Security Agency’s monitoring of US citizens’ phone and Internet communications. His actions had enormous impact on his own life, as well as on policies and practices within and between companies, industries, and even countries. © AP Photo

21Making OB Work for Me CHAPTER 1


How can I apply OB in practical ways to increase my effectiveness?


Now that you know that OB is not just common sense, the challenge is to find a way to

organize and apply its many concepts and theories. In this section, we explain how you can

apply OB to effectively solve problems at work, at school, and in your life. We use a 3-Step

Problem-Solving Approach.

We all encounter problems in our lives. A  problem  is a difference or gap between an actual and a desired state or outcome. Problems arise when our goals (desired out- comes) are not being met (actual situation). So it is important to carefully consider what your goal or desired outcome is in order to define the problem appropriately. In turn,  problem solving  is a systematic process for closing these gaps.

For example, Jeff Bezos, CEO and founder of Amazon, downplays the importance of meeting quarterly numbers to please Wall Street. Instead, he defines his problem as delivering superior service to customers, today, tomorrow, and forever. His problem-solving efforts are thus more likely to focus on innovative products and delivery times than on profit margins and earnings per share.

Problem-solving skills are increasingly needed in today’s complex world. Loren Gary, former asso- ciate director at Harvard’s Center for Public Leader- ship, supports this assertion: “The ability to identify the most important problems and devising imagina- tive responses to them is crucial to superior perfor- mance in the modern workplace, where workers at all levels of the organization are called upon to think critically, take ownership of problems, and make real-time decisions.”49

To help you increase your personal performance and well-being at school, work, and home, we cre- ated an informal approach you can use to apply OB tools and concepts to solving problems. It’s simple, practical, and ready for you to use now!

A 3-Step Approach There are many approaches to problem solving, and these approaches vary greatly in their practicality and effectiveness. We discuss a number of these in Chap- ter 11 when learning about decision making. Knowing


Reed Hastings, CEO of Netflix, has faced a number of problems in the past few years. The company implemented a very unpopular pricing change for its DVD and streaming services that it eventually abandoned. More recently, one of the most persistent problems is to get approval to operate in and manage the expansion into more than 130 countries. © Francois Guillot/AFP/Getty Images

22 PART 1 Individual Behavior

this, it was important for us as professors and authors to provide you with an approach that is both practical and effective across a variety of situations you encounter. The 3-Step Approach presented in this book is the result of our combined consulting experience of applying our knowledge of OB to help real-world employees and organizations solve problems. Our intent is to help you apply your knowledge to boost your own effectiveness at school, at work, and in life.

Basics of the 3-Step Approach Here are the three steps in our applied approach to problem solving.

Step 1: Define the problem. Most people identify problems reactively—after they happen—which causes them to make snap judgments or assumptions, often plagued by common sense, that incorrectly define the problem and its causes and solutions. All of us would likely benefit from Albert Einstein’s comment, “If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it.” Let’s take Professor Einstein’s advice. The following tip will serve you well when defining problems throughout this course and your professional life. • Define problems in terms of desired outcomes. Then test each one by asking,

“Why is this a problem?” Define problems in terms of desired outcomes or end states—compare what you want to what you have. Resist the urge to assume or infer you “know” what the problem and underlying causes are. Instead, start with available facts or details. Then ask yourself, “Why is this gap a problem?” For example, suppose you are disengaged from your work. How do you know this? What is the evidence? Perhaps you no longer go out of your way to help your coworkers and you stop responding to e-mails after work hours. You’ve defined your problem using evidence (or data). Now ask, “Why is this a problem?” Be- cause when you are engaged, your coworkers benefit from you sharing your knowledge and experience. Coworkers and customers benefit from your respon- siveness and willingness to respond to e-mails on their time line, even when it isn’t necessarily convenient for you (after hours).

Step 2: Identify potential causes using OB concepts and theories. Essential to ef- fective problem solving, regardless of your approach, is identifying the appropriate causes. So far you have OB concepts like the contingency perspective and ethics— and many more are coming—to use as potential causes. The more options you have to choose from, the more likely you will identify the appropriate cause(s) and recommendation(s). To improve your ability to accurately identify potential causes, we provide the following tip for Step 2. • Test your causes by asking, “Why or how does this cause the problem?” Once you have confidently defined the problem in Step 1—disengagement—you need to identify potential causes (Step 2). Ask, “Why am I disengaged?” One common reason, backed by science, is that you perceive you were evaluated un- fairly in your recent performance review. “Why or how did this cause disengage- ment?” Because if you feel unappreciated for what you’ve done, you are not motivated to go the extra mile to help your coworkers or customers. Asking “why” multiple times and following the line of reasoning will lead you to define and identify problems and causes more accurately.

Step 3: Make recommendations and (if appropriate) take action. In some work- place situations you will make recommendations, and in others you will also im- plement the recommendations. Here is a simple suggestion to improve the quality of your recommendations and overall problem solving. • Map recommendations onto causes. Be certain your recommendations address the causes you identified in Step 2. The rationale is when you remedy the causes, then you solve or at least ease the underlying problem. Returning to our engage- ment example, the perceived fairness of performance reviews can be improved if

23Making OB Work for Me CHAPTER 1

managers use multiple raters, such as peers and the employee him- or herself (you’ll learn about multiple raters in Chapter 6). Now, map this recommendation onto the cause (unfair performance review) to ensure it is appropriate and will effectively address the cause and resulting problem. Fixing the cause eliminates the problem.

How This Problem-Solving Approach Develops Throughout the Book As we introduce more OB concepts and tools, the 3-Step Approach will become richer and more useful. For instance, you’ll see in Chapter 11 that this approach to problem solving is an abbreviated version of the rational approach to decision making.

Tools to Reinforce My Problem-Solving Skills Because of the value of problem solving at school, work, and home, we created numerous opportunities for you to master this skill while applying OB. Each chapter, for instance, includes the following features:

• Problem-Solving Application Mini-Cases—These mini-cases present a prob- lem or challenge for you to solve. You are asked to apply the 3-Step Approach to each.

• Self-Assessments—Validated instruments allow you to immediately assess your personal characteristics related to OB concepts, frequently with a personal problem- solving focus, and often followed by a Take-Away Application (see below).

• Take-Away Applications—You are asked to apply what you just learned to your own life at school, at work, or socially.

• End-of-Chapter Problem-Solving Application Cases—The full-length cases re- quire you to apply the OB knowledge gained in that particular chapter to define the problem, determine the causes, and make recommendations.

• Ethical/Legal Challenge—Mini-cases present provocative ethical dilemmas in to- day’s workplace. You are asked to consider, choose, and justify different courses of action.

How good are your problem-solving skills? To get you started, take Self-Assessment 1.3 to measure your problem-solving skills. It will help you understand:

• What types of things you consider when solving problems. • How you think about alternate solutions to problems. • Which approach you prefer when solving problems.

This assessment will help you learn about OB and apply it to improve your own per- formance. (Tip: Take this assessment again at the end of the course to see whether your skills have increased.)

Assessing Your Problem-Solving Potential Please be prepared to answer these questions if your instructor has assigned Self- Assessment 1.3 in Connect.

1. What do items 1–3 tell you about your ability to define problems?

2. Do your scores on items 4–6 match your perceptions of your ability to generate effective solutions?

3. Using the individual items, describe the pros and cons of your tendencies toward implementing solutions.


24 PART 1 Individual Behavior


How could I explain to a fellow student the practical relevance and power of OB to help solve problems?


When struggling to solve a problem, have you ever felt the solution was beyond your reach?

Sometimes the solution is a matter of organizing or structuring the problem and its elements.

OB can help. We show you useful tools to assist you in organizing and applying your OB

knowledge as it grows. You can use these same tools to solve problems more rigorously and

more effectively.


It’s easier to understand and apply OB if you categorize or organize your knowledge as you learn it. The first and most fundamental distinction is between elements that are re- lated to you and those related to the situation.

The Person–Situation Distinction OB concepts and theories can be classified into two broad categories: person factors and situation factors. The person–situation distinction is foundational to OB knowledge and application.50

•  Person factors  are the infinite characteristics that give individuals their unique identities. These characteristics combine to influence every aspect of your life. In your job and career, they affect your goals and aspirations, the plans you make to achieve them, the way you execute such plans, and your ultimate level of achievement. Part One of this book is devoted to person factors.

This is simple and makes perfect sense, but as we all know reality is seldom simple. Things get in the way, and these “things” often are situation factors.

•  Situation factors  are all the elements outside ourselves that influence what we do, the way we do it, and the ultimate results of our actions. A potentially infinite number of situation factors can either help or hinder you when you are try- ing to accomplish something (see the following Problem-Solving Application box). This is why situation factors are critically important to OB and your performance. Parts Two and Three of this book are devoted to situation factors.

Hundreds, if not thousands, of studies have shown that many person–situation factors influence a host of important outcomes, such as job satisfaction, performance, and turn- over. But which is more powerful—the person or the situation?

Which Influences Behavior and Performance More—Person or Situation Factors? Researchers and managers have debated for decades whether person or situ- ation factors are more influential. They ask, for instance, about the relative impacts of “nature versus nurture” and whether leaders are “born or made.” We address these de- bates in Chapter 3 and Chapter 13, respectively, but the relative impacts of person and situation factors on behavior and performance are fundamental to OB.

25Making OB Work for Me CHAPTER 1

Many observers believe some people are by their nature better suited than others to perform well at work (“born winners”). In contrast, others believe some people are clearly better in a given job or situation. No particular person could outperform every other per- son in every possible job! Nobody is the best at everything.

This second view is supported by research in psychology and OB. The interactional perspective states that behavior is a function of interdependent person and situa- tion factors.51 The following quotation captures this reality: “Different people may per- ceive similar situations in different ways and similar people may perceive different situations in the same way.”52

People and Situations Are Dynamic People change, situations change, and the two change each other. To illustrate:

• People bring their abilities, goals, and experiences to each and every situation, which often changes the situation.

• Conversely, because situations have unique characteristics, such as opportunities and rewards, they change people. What you value in a job will likely differ between now and the time you are trying to make a move to senior management.

• It also is true that the current job market and employer expectations differ from those at the height of the technology bubble in the late 1990s or in the depths of the Great Recession in 2007–2009. In the first scenario employees changed, and in the second the situation or environment changed.

• Finally, your manager—a situation factor—can change what you do, the way you do it, and your effectiveness. You can exert the same influence on your manager.

The bottom-line implication for OB and your work life is that knowledge of one type of factor without the other is insufficient. You need to understand the interplay between both person and situation factors to be an effective employee and manager.

How Does the Person–Situation Distinc- tion Help Me Apply OB Knowledge? Categorizing your knowledge in terms of per- son and situation factors will be immensely helpful when applying your OB knowledge to solve problems. Consider downsizing.

Many companies restructure indiscrimi- nately and cut large percentages from their employee ranks. Assume you and five co- workers, who all do the same job, are down- sized. You all experience the same event, but your reactions will vary. For instance, you might not feel too bad if you didn’t like the job and were considering going to graduate school anyway. Two of your coworkers, however, may be devastated and depressed.

Nevertheless, because the downsizing event was the same for all of you (the situation factors were identical), we can assume that the differences in everyone’s reactions were due to things about you as individuals (person factors), such as other job opportunities, how much each of you likes the job you just lost, your ratio of savings to debt, and whether you have kids, mortgages, or a working spouse. The person–situation distinction, therefore, provides a means for classifying OB concepts and theories into causes of behavior and problems.

The energy industry is cyclical, and the most recent downturn has been prolonged and especially tough for the hundreds of thousands of workers who have lost their jobs. Such industry and economic characteristics are important situation factors for these employees. © iStock/Getty Images RF

Technology: A Situation Factor that Affects My Performance

Technology is both helpful and detrimental to employee performance and well-being. To set the stage, consider that roughly two-thirds of all full-time workers own smartphones,53 and some reports show that nearly 50 percent of Internet users regularly perform job tasks outside work.54

What are the benefits of technology? More companies are using smartphones to save time and money. For example, at Rudolph & Sletten, a contractor located in Redwood City, California, workers use blue- print software on their iPads. “The digitized documents partly replace hundreds of pages of construction blueprints that need to be updated so often that student interns handle the monotonous work.” The company estimates that using digitized blueprints can save from $15,000 to $20,000 on a large build- ing contract. This also leads to fewer construction errors because workers are using up-to-date informa- tion. Coca-Cola Enterprises similarly uses mobile-centric devices to streamline the workday of its restaurant service technicians. The company estimates that the technology saves about 30 minutes a day per employee.55

So what’s the downside of technology? More employees are work- ing more hours because they use their smartphones and e-mail after hours. This helps explain a Glassdoor report that 61 percent of em- ployees reported working while on vacation.56 If you’re wondering why so many do this, the same report offered some insights:

1. 40 percent are concerned about the pile of work that will accu- mulate in their absence.

2. 35 percent feel only they can do their jobs. 3. 25 percent are concerned about being replaced while away

and thus losing their jobs.57

Do you get paid for this “overtime”? Another part of this problem created by technology is the payment of overtime. According to the Fair Labor Standards Act, employees should be compensated for work wherever it happens and when it exceeds their defined work- week (40 hours). This can create a problem if employees respond to or send e-mails after hours. For example, T-Mobile settled a law- suit brought against them because salespeople in its stores were expected to work 10 to 15 hours “off the clock” responding to e-mails and texts from customers (they were required to give out their phone numbers and e-mail addresses). Many similar suits have been filed, such as by Chicago police officers and satellite dish installers, both of whom were expected if not required to do uncompensated work remotely.58

Problem-Solving Application

© David Jones/Getty Images RF

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problem described in this example.

Step 2: Identify two potential causes (be sure to link the causes to the problem you identified).

Step 3: Make a recommendation aimed at each cause that you feel will improve or remove the prob- lem. (Be sure your recommendations link to the causes.)

26 PART 1 Individual Behavior

27Making OB Work for Me CHAPTER 1

Levels—Individual, Group/Team, and Organization We saw above that OB distinguishes among three levels at work: individual, group/team, and organizational. To illustrate how considering levels helps in solving real-world prob- lems, think about the many reasons people quit their jobs.

• Some people quit because their job doesn’t fulfill what they value, such as chal- lenging and stimulating work (an individual-level input).

• Others quit because of conflicts with their boss or because they have nothing in common with their coworkers (a group/team-level process).

• A common reason people quit is a faulty reward system that unfairly distributes raises, bonuses, and recognition (an organizational-level process).

Understanding and considering levels increases your problem-solving effectiveness and performance. This is highlighted in the problem-solving example in Section 1.6.

Applying OB Concepts to Identify the Right Problem Nothing causes more harm than solving the wrong problem. To illustrate, assume that many people in your department at work are quitting. What could be the reason? The person–situation distinction allows you to consider unique individual factors as well as situation factors that might be the source of the problem. And considering the levels of individual, group, and organization will allow you to look at each for possible causes.

For example: • Person factors. Do your departing coworkers have something in common? Is there

anything about their personalities that makes work difficult for them, such as a preference to work collaboratively rather than independently? What about their ages? Gender? Skills?

• Situation factors. Have there been changes in the job market, such as a sudden increase in employment opportunities at better wages? Have working conditions such as promotion opportunities become less attractive in your organization?

• Individual level. Has the job itself become boring and less meaningful or reward- ing to the employees who quit?

• Group/team level. Have there been any changes to the work group, including the manager, that might make work less satisfying? How does turnover in your depart- ment compare to that in other departments in the organization? Why?

• Organizational level. Has the organization changed ownership, or rewritten com- pany policies, or restructured such that the most desirable positions are now at the headquarters in another state?

By following this approach and asking these questions, you widen your focus and review a larger number of possible causes, increasing the likelihood you will identify the right problem. If you don’t quite follow this example, then have no fear. We analyze a turnover scenario in the last section of this chapter and provide a more detailed application. Stay tuned!

We now move on to the Organizing Framework for Understanding and Applying OB. This tool is not only helpful for learning OB, but it also serves as an essential tool for using OB to solve problems.

28 PART 1 Individual Behavior

Using your knowledge of the person–situation distinction and levels (individual, group/ team, and organizational), you are now ready to learn about the Organizing Framework for Understanding and Applying OB. We created this framework (see Figure 1.3) for two reasons. The first is to help you organize OB concepts and theories into three causally related buckets called Inputs, Processes, and Outcomes. This in turn leads to the second reason for creating the Organizing Framework. It helps you solve problems, thereby enhanc- ing your problem-solving skills and marketability to employers. We explain this application later in this section.

A Basic Version of the Organizing Framework The foundation of the Organizing Framework is a systems model wherein inputs influ- ence outcomes through processes. The person and situation factors are inputs. We’ve or- ganized processes and outcomes into the three levels of OB—individual, group/team, and organizational.

This framework implies that person and situation factors are the initial drivers of all outcomes that managers want to achieve. This is the case because inputs affect processes, and processes affect outcomes. And because events are dynamic and ongoing, many outcomes will in turn affect inputs and processes. See Figure 1.3. The relationships



How can the Organizing Framework help me understand and apply OB knowledge to solve problems?


You’re about to learn about the single best tool for understanding and applying OB’s many

concepts and tools—the Organizing Framework for Understanding and Applying OB. The

framework also helps tremendously in improving your problem-solving abilities at school,

work, and home. In the final section, we give you practical and effective guidance on how to

choose among alternate solutions to problems.


© 2014 by Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without express permission of the authors.


Personal Factors Situation Factors

Individual Level Group/Team Level Organizational Level

Individual Level Group/Team Level Organizational Level

29Making OB Work for Me CHAPTER 1

between outcomes at one point in time and inputs and processes at another are shown as feedback loops in the Organizing Framework (the black arrows at the bottom of the figure).

EXAMPLE A study of 111 people over one week showed that taking time away from work led employees to feel rested (an outcome) and to experience higher lev- els of work engagement (a process). Such breaks also enabled them to recover better during the workday, and this reenergized them for their remaining work (an input).59

As you work through this book you will notice that each chapter begins with a ver- sion of the Organizing Framework that helps introduce the concepts discussed in that particular chapter. Each chapter repeats the same version of the framework at the end as part of the chapter review. If you add up the content of all the chapters, you’ll end up with something that looks like the fully populated or complete Organizing Framework. We provide the complete version in the next section of this chapter. Not only is this framework a useful preview of all you will learn, but it also is an effective review tool for preparing for a comprehensive final exam.

By definition, frameworks (and models) are simplifications of reality; they neces- sarily exclude information. This means the complete Organizing Framework will not show every OB concept that might affect employee behavior and performance. But the basic elements of the framework will help you understand and apply any OB topic you encounter. The following OB in Action box illustrates the value of the Organizing Framework and its components—inputs, processes, and outcomes. Be sure to answer the “Your Thoughts?” questions; they will show you how to apply your new OB knowledge and tools.

Let’s now consider the details of the Organizing Framework and apply it to the 3-Step Problem-Solving Approach.

Using the Organizing Framework for Problem Solving You can use the Organizing Framework at all three steps of the problem-solving process to add rigor, intelligently apply your OB knowledge, and in turn improve your performance.

Step 1: Define the problem. Problems can be defined in terms of outcomes in the Organizing Framework, and these outcomes occur at three levels.

Step 2: Identify causes. Causes are often best thought of in terms of inputs (person or situation) or processes at various levels (individual, group/team, organizational).

Step 3: Make recommendations. Consider the most appropriate solutions using your OB knowledge and tools. Then map these onto the causes (inputs or processes).

Your ultimate problem-solving success will be determined by the effectiveness of your recommendation and resulting solution. So let’s discuss this next.

Selecting a Solution and Taking Action (if appropriate) Selecting solutions is both art and science. Some managers like to rely largely on intuition (discussed in Chap- ter 11) and experience. While these approaches can work, others use more analytical or systematic methods to select a solution.

EXAMPLE Intel has long been famous for its data-driven decision-making practices. When employees encounter and notify their managers of problems, it is common if not expected that managers automatically reply: “Call me when you’ve worked through your seven-step,” referring to a companywide problem-solving process.

30 PART 1 Individual Behavior

Whether it is the well-known candy they make (M&M’s, Snick- ers, Life Savers) or the cat and dog foods (Whiskas and Pedi- gree), life is indeed sweet for the employees of Mars. The Organiz- ing Framework can help us ex- plain and understand why the 75,000 employees feel they have it so good, and why the company again made the Fortune 100 Best Companies to Work For in 2015.

Inputs The environment at Mars lacks the perks touted by many tech companies— no Foosball tables, no free gourmet lunches, and no premier health clubs. More than this, some work practices are downright old school. For instance, all employ- ees, including the president, have to punch a time clock each day and are docked 10 percent of their pay for the day if late.

But what Mars may seem to lack in style it makes up for with its culture. For- mer President Paul S. Michaels explains how the company aligns its values and practices by asking: “Does it add value for the consumer to pay for marble floors and Picassos?” If it doesn’t, then the company doesn’t provide it. Employees seem to love the place and have very positive relationships at work; many families have three generations working at Mars. The culture seems to be one big family inter- ested in cats, dogs, and candy. At one facility more than 200 employees bring their dogs to work each day. (Leash rules apply.)

This family-type environment flows from the founding Mars family, which still tightly controls the company according to the “Five Principles of Mars”: quality, responsibility, mutuality, efficiency, and freedom. Employees can recite these prin- ciples and live them.

Processes While some practices seem frugal, the company reportedly awards bonuses of 10 to 100 percent of employees’ salaries. The company also invests heavily in the community via its Mars Volunteers and Mars Ambassadors pro- grams. In 2014, about 21,500 employees volunteered over 85,000 hours at local organizations!60

Outcomes Mars posts a very low turnover rate (5 percent), a sign that employ- ees are highly satisfied with their jobs. And the fact that the company has man- aged to grow consistently for decades and remain private is compelling evidence of its strong financial performance.61 For instance, it recently built its first new US chocolate factory in 35 years. It employs 200 people and produces 39 million M&Ms per day.62


1. What positive outcomes does Mars produce at the individual level? 2. What positive outcomes does Mars produce at the organizational level? 3. What inputs and processes help produce each of these outcomes?

Life Is Sweeter on Mars OB in Action

© Press Association/AP Photo

31Making OB Work for Me CHAPTER 1

Intel’s problem-solving process is so entrenched that employees use a common PowerPoint template to fill in and ultimately present the relevant details of their proposed solutions. (Intel illustrates an organizational-level process approach that is similar to the rational approach to decision making we’ll discuss in Chapter 11.)

Don’t Forget to Consider Constraints As a matter of practicality, most people lack the time, knowledge, or access to data to routinely follow such a rigorous procedure. Therefore, your selection most often requires you to consider various constraints—on time, money, your own authority, and information—that can occur at different levels. We close this chapter with practical pointers on how to select the best solution.

Applied Approaches to Selecting a Solution You can save time and hassle with the following practical advice from renowned problem- solving expert and professor Russell Ackoff. Ackoff recommends first deciding how complete a response you are looking for. Do you want the problem to be resolved, solved, or dissolved?

• Resolving problems is arguably the most common action managers take and sim- ply means choosing a satisfactory solution, one that works but is less than ideal. Putting on a “doughnut” or temporary spare tire fixes a flat, but it certainly is not ideal and is unlikely to last.

© Scott Carson/ZUMA Press, Inc/Alamy

32 PART 1 Individual Behavior

• Solving problems is the optimal or ideal response. For instance, you could buy a new, high-quality, full-size spare to keep in your trunk (not the typical doughnut or the “run-flats” that manufacturers frequently provide).

• Dissolving problems requires changing or eliminating the situation in which the problem occurs. Keeping with our example, the city you live in could build and utilize effective public transportation and thus remove the necessity of having cars (and tires) altogether.63

Making this decision first helps guide your choice among alternatives. It helps you decide what you need, whether it is realistic, and what level of effort and resources to use.

Basic Elements for Selecting an Effective Solution After deciding whether to resolve, solve, or dissolve your identified problem, you need to select the most effective solution. A problem-solving expert says: “The essence of suc- cessful problem solving is to be willing to consider real alternatives.”64 To help you choose among alternatives identified in Step 2, we distilled three common elements that will help you qualify the best solution:

1. Selection criteria. Identify the criteria for the decision you must make, such as its effect on: • Bottom-line profits. • You and classmates or coworkers. • Your organization’s reputation with customers or the community. • Your own values. • The ethical implications.

2. Consequences. Consider the consequences of each alternative, especially trade-offs between the pros and the cons, such as: • Who wins and who loses. • Ideal vs. practical options. • Perfection vs. excellence. • Superior vs. satisfactory results.

3. Choice process. Decide who will participate in choosing the solution. (If more than one person, agree on the method. Will you vote? Will the vote be public or secret? Unanimous or simple majority?): • You • Third party • Team

In every case, consider the necessary resources, including which people will be key sources of support for (and resistance to) your ultimate selection. Consider who can help and who can hurt your efforts—what’s in it for them?

Putting it all together, the OB knowledge and tools you’ll learn in this book will help tremendously in selecting and implementing your best solution given the situation you face. The final section of this chapter provides a preview of what you will learn in this book, along with an example application of the Organizing Framework and the 3-Step Problem-Solving Approach.

33Making OB Work for Me CHAPTER 1

We wrote this preview to serve three primary functions: (1) It is a sneak peek and fore- shadows all that you will learn in this book; (2) it illustrates how to use the Organizing Framework when solving problems with the 3-Step Problem Solving Approach; and (3) it serves as a review for a comprehensive final exam for this course.

We begin this section by briefly reviewing the 3-Step Problem-Solving Approach and the components of the Organizing Framework. We then apply these tools to an example problem-solving scenario. The purpose is to be a tutorial of how you are expected to apply your knowledge and these particular tools throughout the rest of the book.

The 3-Step Problem-Solving Approach This chapter began by showing you that common sense often is not common practice. We instead showed you how to think critically and add rigor and structure to your problem solving by using three steps, recapped as follows:

Step 1: Define the problem. To be an effective problem solver, you must define the problem accurately. It all starts here.

Step 2: Identify potential causes using OB concepts and theories. The many OB theories and concepts you will learn are extremely useful in helping identify the underlying causes of the problem you defined in Step 1.

Step 3: Make recommendations and (if appropriate) take action. Once you have identified the problem and its causes, you can plan and implement recommenda- tions, applying your OB knowledge and tools.

Improving your problem-solving abilities will lead to better performance for you, your team, and your organization. This is important given that problem solving is one of the most sought after skills of employers across jobs and industries.

The Organizing Framework Figure 1.4 illustrates a summary version of the Organizing Framework. It shows the OB concepts and theories you will learn and includes chapter references for finding details


How can I use my knowledge about OB to help me achieve professional and personal effectiveness?


This final section of Chapter 1 provides a high-level overview of what you will learn in this

book, and it shows a summary Organizing Framework for Understanding and Applying OB.

A thorough application of the 3-Step Problem Solving Approach is also provided to illus-

trate its power and applicability.


34 PART 1 Individual Behavior


Personal Factors (associated chapters) Hard and soft skills: 1 • Ethical behavior: 1 • Values: 2 • Attitudes: 2 • Intelligence: 3 • Cognitive abilities: 3 • Personality: 3 • Core self-evaluations: 3 • Emotional intelligence: 3 • Stereotypes: 4 • Diversity: 4 • Motivation: 5, 6, 7 • Positive OB: 7 • Emotions: 3, 7 • Mindfulness: 7 • Psychological capital: 7 • Communication: 9 • Social media: 9 • Decision making: 11 • Creativity: 11 • Resistance to change: 16 Situation Factors • Ethical behavior of others:

1, 10, 12 • Leadership: 1, 8, 13 • Job design: 5 • Human resource policies,

practices, and procedures: 6, 9, 14

• Relationship quality: 8 • Decision making: 11 • Organization culture and

climate: 7, 10, 13, 14, 15 • Mentoring: 14 • Organizational design: 15 • Forces for change: 16 • Resistance to change

(coworker and organizational): 16

• Organizational mission and vision: 16

Individual Level (associated chapters) • Emotions: 3, 7 • Perceptions: 4, 6 • Attributions: 4 • Motivation: 5, 6, 7 • Job design: 5 • Performance management

practices: 6 • Communication: 7, 8, 9 • Trust: 8 • Decision making: 11, 15 • Creativity: 11 • Leadership: 1, 8, 13 • Mentoring: 14 Group/Team Level • Group/team dynamics:

3, 4, 8, 11, 14, 16 • Communication: 7, 8, 9 • Group roles and norms: 8 • Group development: 8 • Trust: 8 • Team effectiveness: 8 • Conflict and negotiation: 10 • Decision making: 11 • Creativity: 11 • Power, influence, and

politics: 12 • Structural and psychological

empowerment: 12 • Impression management: 12 • Organizational culture and

climate: 7, 10, 13, 14, 15 • Organizational socialization: 14 • Mentoring: 14 • Organizational design: 15 Organizational Level • Managing diversity: 4 • Human resource policies,

practices, and procedures: 6, 8, 14

• Communication: 7, 8, 9 • Organizational culture and

climate: 7, 10, 13, 14, 15 • Decision making: 11 • Creativity: 11 • Leadership: 1, 8, 13 • Organizational socialization: 14 • Organizational design: 15 • Leading and managing

change and stress: 16

Individual Level (associated chapters) • Task performance: all but 15 • Work attitudes: all but 11, 15 • Turnover: all but 11, 15 • Career outcomes:

1, 3, 4, 8, 10, 11, 12, 13, 14, 16 • Well-being/flourishing:

2, 3, 4, 7, 13, 16 • Citizenship behavior/

counterproductive behavior: 2, 5, 6, 7, 8, 10, 12, 13, 16

• Intrinsic and extrinsic motivation: 5

• Creativity: 6, 7, 8, 10, 11, 13, 15 • Physical health: 7 • Stress (physical and

emotional): 12, 15, 16 • Resistance to change: 15, 16 • Accidents: 16 • (Un)Ethical behavior: all but

3, 7, 15 Group/Team Level • Group/team performance: all

but 1, 2 • Group satisfaction:

3, 4, 6, 8, 9, 10, 12, 13, 16 • Group/team cohesion and

conflict: 6, 7, 8, 10, 11, 12, 14, 16 • Group/team collaboration:

13, 15 • Innovation: 6, 8, 10, 11, 14, 15, 16 • Resistance to change: 16 • (Un)Ethical behavior: all but

3, 7, 15 Organizational Level • Accounting/financial

performance: 2, 3, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16

• Customer service/satisfaction: 2, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 16

• Survival: 3, 6, 16 • Reputation: 3, 4, 6, 9, 10, 12, 16 • Employer of choice: 4, 6 • Innovation: 6, 8, 10, 11, 14, 15, 16 • Organizational effectiveness:

7, 15, 16 • Legal liability: 9, 11 • Product/service quality: 14 • Operational efficiency: 14, 15 • (Un)Ethical behavior: all but

3, 7, 15

© 2014 by Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without express permission of the authors.


35Making OB Work for Me CHAPTER 1

about them. The framework further illustrates how the various concepts are related to each other: Inputs affect processes, which in turn influence outcomes. Remember, prob- lems are generally identified by looking for gaps in desired versus actual outcomes, and causes can be found in inputs and processes.

Here are a few important insights from Figure 1.4. • There are more person factors that affect processes than situation factors. Pay par-

ticular attention to person factors when looking for causes of problems. • Solving problems requires you to think across levels. Notice the many different

concepts listed under individual-, group/team-, and organizational-level processes and outcomes.

• OB concepts are both inputs and processes. Leadership is a good example. This reinforces the dynamic nature of organizational behavior and underscores the consideration of connections between inputs and processes when solving problems.

• Knowledge about OB is important. Simply look at the outcomes box! It shows over two dozen different outcomes are affected by OB-related inputs and pro- cesses. The framework further shows the frequency with which various out- comes are important to managers. Notice the number of chapters in which individual task performance, work attitudes, turnover, group/team perfor- mance, innovation, accounting/financial performance, and customer service/ satisfaction are discussed. And more personally, observe that career outcomes (an individual-level outcome) are related to concepts included in nearly every chapter.

Using the Framework for Learning When you first read or learn about a new concept we recommend you attempt to categorize it in terms of whether it is a person factor, such as values and work attitudes (Chapter 2), personality and emotions (Chapter 3), and perceptions and diversity (Chapter 4); or a situation factor like human resource policies, practices, and procedures (Chapter 6), leader behavior (Chapter 13), and organizational culture (Chapter 14). Doing this will improve your learning by organizing concepts and helping you understand how they are related to each other.

We also encourage you to consider the issue of levels as you progress in learning about OB. Not only do many OB concepts exist at particular levels, such as personality at the individual level, but some concepts like performance management and conflict are processes that can affect outcomes across all levels.

Breadth and Power of OB You should conclude from this that OB matters in busi- ness. More importantly it matters to you—your job and your career. And anybody (other textbooks, classmates, coworkers, bosses) who says OB is simply common sense, or that it only affects employee commitment, satisfaction, and performance, clearly does not un- derstand the full and true power and value of OB. After taking this course you’ll know better and won’t make such mistakes!

Hypothetical Problem-Solving Scenario Observation and practice are two excellent ways to learn. Let’s do both. We will work through a problem-solving scenario and show you how to use the Organizing Framework and the 3-Step Approach.

The scenario involves the problem of employee turnover, an individual-level out- come we used earlier in the chapter. For this application assume you are a valued junior

36 PART 1 Individual Behavior

employee who is thinking of quitting, and that many other talented junior employees have quit your department in the past couple of years.

Step 1: Define the Problem To reiterate, a problem is a gap between a current situ- ation and a desired situation or outcome. First review the outcomes box in the Organiz- ing Framework, because many problems are gaps between one or more current and desired outcomes. For instance, in this hypothetical scenario your organization has a turnover problem. Why is this a problem? Because it wants to have the appropriate num- ber of talented people in its most crucial jobs. Note that defining the problem this way is different from saying more people quit your company this year than last year, or that your employer has higher turnover than its competitors. (Note: If your worst performers quit instead of your best, then you could argue that your organization is better off due to the reduction in “dead wood” rather than having a problem.) It also isn’t necessarily a prob- lem to lose people, especially underperformers or those with obsolete skills. But if your organization’s most valuable and high-performing people (like you) quit, then a problem likely exists. This sort of reasoning highlights the importance of defining the problem accurately.

Now that we’ve confidently completed the first step and defined the problem accurately—turnover of talented, high-performing, junior employees—let’s continue the process and identify the potential causes of this turnover problem.

Step 2: Use OB to Highlight the Causes While people quit for a variety of rea- sons, a good place to start is to consider both person and situation inputs and then vari- ous processes as potential causes of your organization’s turnover problem. Look at the summary Organizing Framework for guidance (see Figure 1.4).

• Potential Cause 1—Person factors often represent key causes of turnover. Possi- bly the junior employees are quitting because their jobs don’t fulfill their personal values (see Chapter 2). Low job satisfaction (Chapter 2) and demotivating job char- acteristics (see Chapter 5) also might cause turnover.

• Potential Cause 2—Situation factors frequently are causes of turnover. For ex- ample, people may be quitting because they have poor relationships with their bosses (see Chapter 13) or are working in a culture (see Chapter 14) characterized by damaging political behavior (see Chapter 12).

• Potential Cause 3—Individual, group/team, and organizational processes can also cause turnover. Conflict (with your boss), a team-level process (see Chapter 10), may constitute a cause of turnover. Another is a faulty performance management system (an organizational-level process—Chapter 6), one that unfairly distributes raises, bonuses, and recognition. As you will learn in Chapter 5, perceived injustice is often a powerful driver of employee turnover.

Notice that the potential causes are located in different components (inputs and processes) and different levels within the Organizing Framework. Using the Organiz- ing Framework to identify potential causes increases the likelihood that you’ll iden- tify the appropriate ones, essential to creating and implementing the best solution in Step 3.

Step 3: Generate Effective Recommendations Using OB Now it’s time to re- view the potential causes and identify the most likely and significant ones for the problem you defined in Step 1. Returning to our scenario, we list brief recommendations for each of the potential causes outlined above. We’ll address all three to highlight how much you will learn and the practical value of that knowledge.

37Making OB Work for Me CHAPTER 1

• Response to Cause 1: Recommendations for Improving Person Factors. OB provides a host of ideas for solving problems. The needs of your most valuable employees could be better satisfied if they were allowed to work on projects that satisfy their values of self-direction or achievement (Chapters 2 and 5). Job satis- faction might be increased through rewards that equitably meet employees’ needs. Finally, motivation can be enhanced if people are allowed to assume more respon- sibility for projects (job enrichment) and decide how and when to do their work (autonomy).

• Response to Cause 2: Recommendations for Improving Situation Factors. Manager–employee relationships can suffer for many reasons, but let’s assume some key and more junior employees in your department feel they are in the “out group,” instead of the “in group,” which consists mostly of older and more senior employees who have known and worked with your manager for many years. This cause sounds like poor leader–member exchange (LMX in Chapter 13), which can be remedied if managers are trained to be more inclu- sive and implement formal mentoring and development programs. Managers can improve the political behavior driving a negative culture by acknowledging its existence and discontinuing the practice of rewarding people who are too political. Finally, team building (see Chapter 8) can reduce conflict among employees.

• Response to Cause 3: Recommendations for Improving Processes. Along with the knowledge you will gain related to justice and goal setting, Chapter 6 provides a host of ideas for improving performance management practices. A good place to start is to use Table 6.1 and clearly define and communicate performance goals and expectations. If these goals are SMART, then they are more likely to be achieved. Finally, rewards are more effective if the links between particular levels of performance and rewards are made clear. Rewards and their consequences should be fair and based on accurate performance evaluations.

Are you surprised by the many causes and potential solutions for this problem? As we just illustrated, the 3-Step Approach, combined with the Organizing Framework, can help you to more effectively solve problems. This in turn will contribute to your profes- sional (and personal) effectiveness and opportunities.

Our Wishes for You Knowledge by itself is not an advantage. To get ahead, you must apply your knowledge. We encourage you to continually apply your new OB knowledge as you learn it. This book provides many, many opportunities. Applying your knowledge is key to achieving a more successful and fulfilling career. This is our ultimate wish for you and our goal for writing this book. Enjoy the rest of your journey!

38 PART 1 Individual Behavior

You learned that OB is an interdisciplinary field that focuses on understanding and managing people at work. The same rich collection of OB tools and insights that can help you succeed at work can also help at school and at home. Your understanding of the practical value of OB knowl- edge was increased further with the Organizing Framework for Understanding and Applying OB and the 3-Step Problem-Solving Approach. Reinforce your learning with the chapter’s Key Points listed below. Next, consolidate your learn- ing using the Organizing Framework, shown in Figure 1.5. Then, challenge your mastery of the material by answering the chapter’s Major Ques- tions in your own words.

Key Points for Understanding Chapter 1 You learned the following key points.


• OB is an interdisciplinary and applied field that involves managing the behaviors of indi- viduals, groups/teams, and organizations.

• The practical benefits of OB are based on the contingency approach, which says that the best or most effective approach requires us to apply the knowledge and tools appropriate to a given situation, rather than relying on one best way across all situations.

• Self-awareness is critically important to both applying the contingency approach and achieving short- and long-term success at work and school.

• OB helps you enhance your attractiveness to employers, who want employees with both hard and soft skills.

• OB is far more than common sense. Common sense has limits and inherent pitfalls that OB knowledge and tools help you avoid and overcome.


• Ethics is concerned with behavior—right, wrong, and the many shades of gray in be- tween. Unethical behavior thus has many forms and causes.

• The vast majority of unethical conduct at work is not illegal.

• Unethical conduct negatively affects the indi- vidual targets, the perpetrators, coworkers, and entire organizations.

• Employees often encounter ethical dilemmas, or situations in which none of the potential so- lutions are ethically acceptable.

• Whistle-blowers are rarely protected and of- ten suffer substantial emotional and profes- sional costs.


• A problem is a difference or gap between a current and a desired outcome or state.

• Problem solving is a systematic means for closing such differences or gaps.

• The 3-Step Problem Solving Approach defines the problem, uses OB concepts and theories to understand the causes of the problem, and makes recommendations and action plans to solve the problem.


• The person–situation distinction is a funda- mental way to organize, understand, and ap- ply OB concepts.

• Person factors are the many characteristics that give individuals their unique identities.

• Situation factors consist of all the elements outside ourselves that influence what we do, the way we do it, and the ultimate results of our actions.

• Workplace behavior occurs at three levels— individual, group or team, and organizational.

What Did I Learn?

39Making OB Work for Me CHAPTER 1


• The Organizing Framework is a tool that helps you to organize, understand, and apply your knowledge to solve problems.

• The systems approach—inputs, processes, outcomes—is the basis of the Organizing Framework. Person and environment factors are inputs, and the processes and outcomes are organized into individual, group/team, and organizational levels.

• The Organizing Framework is extremely valuable when applied to the 3-Step Problem-Solving Approach. It helps you define problems, identify their causes, and generate recommendations.


• The 3-Step Problem-Solving Approach is a simple and effective way to apply your grow- ing knowledge of OB concepts and tools.

• The fully populated Organizing Framework is an excellent preview of the breadth, depth, and practical knowledge you will gain during this course.

• A hypothetical scenario illustrates how rigor- ous and structured problem solving gener- ates greater accuracy and success.

The Organizing Framework for Chapter 1 In this chapter we introduced our first applica- tion of the Organizing Framework, showing the

basic structure of inputs, processes, and out- comes (see Figure 1.5). The basic framework shown here will help you organize new con- cepts, theories, and tools as they are intro- duced, as well as help you retain and apply them. We’ll use the Organizing Framework at the end of each chapter as an aid to review and apply what you’ve just learned. We hope you are impressed by all that you will learn, as illustrated in the Summary Organizing Framework (Figure 1.4). The same framework can help you understand and manage behavior and solve problems in many different organizational contexts (clubs, sports teams, and other social groups).

Challenge: Major Questions for Chapter 1 You now should be able to answer the following major questions. Unless you can, have you really processed and internalized the lessons in the chapter? Refer to the Key Points, Figure 1.5, the chapter itself, and your notes to revisit and an- swer the following major questions:

1. How can I use knowledge of OB to enhance my job performance and career?

2. Why do people engage in unethical behavior, even unwittingly, and what lessons can I learn from that?

3. How can I apply OB in practical ways to in- crease my effectiveness?

4. How could I explain to a fellow student the practical relevance and power of OB to help solve problems?



Personal Factors Situation Factors

Individual Level Group/Team Level Organizational Level

Individual Level Group/Team Level Organizational Level

© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.

40 PART 1 Individual Behavior

5. How can the Organizing Framework help me understand and apply OB knowledge to solve problems?

6. How can I use my knowledge about OB to help me achieve professional and personal effectiveness?

IMPLICATIONS FOR ME First, consider the skills most sought by employers (like critical thinking, problem solving, decision making, active listening) and decide which are strengths and weaknesses of yours. Second, be sure you also develop and apply both hard and soft skills. Effective em- ployees can no longer rely on just technical expertise. Third, use the self-assessments in this book to identify the skills you have and decide which need development. Give your employers what they want! Be sure to highlight those valued skills you possess during interviews, and then explore and seize opportunities to develop the others. Fourth, because unethical conduct can be so damaging to you and your career, identify the most common forms of unethical conduct in your job, determine their possible causes using Table 1.2, and be sure to confront and/or avoid these as we suggested. Most unethi- cal conduct is not illegal, which means that legal action is rarely a viable solution. Also, be aware of the possible consequences of whistle-blowing. Finally, applying rigor and struc- ture to problem solving can help you avoid the pitfalls of common sense and make you more successful at work, at school, and in life.

IMPLICATIONS FOR MANAGERS Chapter 1 contains several practical implications for managers. First, identify the key skills needed to be top performers in the jobs you manage. You might consider an existing or past top performer. But we also suggest determining to what extent your current employ- ees possess soft skills and the other skills noted as important in the most current research. Select and develop employees focusing on these skills. Second, determine the most com- mon forms of unethical conduct for managers like you, as well as for those you manage. Identify the likely causes (see Table 1.2) and clearly explain what you expect from your employees when they are confronted with such situations. Third, realize that performance and all other employee behavior is a function of both the person and the situation. Don’t be too quick to simply attribute bad (or good) behavior to the employee. Situation factors may also be at play. Finally, improve your own effectiveness and that of those you manage by applying the 3-Step Problem-Solving Approach. Be sure you define problems accurately and look for causes at multiple levels—individual, group/team, and organizational. Organi- zations and people are complex, and managing them requires you to consider this com- plexity and deal with it effectively. Models like the Organizing Framework can help.

41Making OB Work for Me CHAPTER 1

How do we get there from here? That’s the question three successive United Airlines CEOs, thousands of employees, tens of thousands of customers, and a sim- ilarly large number of investors have been asking themselves for several years. All travelers have stories to tell, and those told by some of United’s passengers sound like clips from a horror movie. Some passengers were held over for 20 hours in a military barracks in Canada, at one point all flights across the globe were canceled due to a computer glitch, and champion golfer Rory McIlroy’s clubs were lost on the way to a tournament.

These stories are reflections of deeper, more perva- sive problems at the airline. United has been at or near the bottom in industry performance since its merger with Continental in 2010. This is true despite its com- petitors also executing large mergers (American with U.S. Air, Delta with Northwest) and confronting the same economic pressures. Besides suffering generally declining revenues and profits over many years, United was the target of 43 percent of all traveler com- plaints filed against US-based airlines in 2015 and ranked last in customer satisfaction among its peers. The company also paid $2.8 million in fines for leaving passengers stranded on the tarmac and mistreating those with handicaps. One passenger with cerebral palsy had to crawl off the plane because a wheelchair was unavailable.65

CUTTING TO GET AHEAD Management’s intense focus on cutting costs—through layoffs, furloughs, and the outsourcing of baggage handling—has demoralized employees, the same em- ployees who have to deal with unhappy travelers whose flights have been delayed or canceled, or who have horrible coffee or lost luggage. Employees also complained that their new uniforms are cheap and of poor quality.

The airline has long struggled to sign contracts with flight attendants, mechanics, pilots, and gate agents. An airline analyst for Bloomberg Intelligence described the situation this way: “Unhappy mechanics do not tend to go the extra mile—or the extra foot—to get the airplane ready to go.” The seriousness and pervasive- ness of employee problems are captured by the fol- lowing passenger quote about United’s employees: “As individuals they are really nice people . . . but they

are in such a horrible situation, constantly trying to deal with customers that are not happy, and they’re completely powerless.”66

WHO’S TO BLAME? Who is responsible for sustained poor performance? Many point to the CEO. United has had three since 2010. Jeff Smisek, who led Continental, orchestrated the merger with United at that time and was responsi- ble for implementing (or not) many of the changes since. The merger of the two airlines’ many operating systems was done all at once and not effectively. For instance, the program used to schedule pilots actually lost track of pilots and led to widespread flight cancel- lations. The same faulty system even assigned flights to pilots who were retired or dead.67

Smisek was ousted from the top spot, along with two other executives, due to allegations of unethical conduct. The three were accused of trading favors with David Samson, chair of the Port Authority and in charge of Newark Liberty International Airport (a major hub for United). Samson was to allocate millions of dol- lars to upgrade gates and terminals used by United in exchange for the airline reinstating a flight from Newark to Columbia, South Carolina, where Samson had a summer home. The unprofitable flight, later known as the “chairman flight,” was not only reinstated, but it also was scheduled to take off and land at times con- venient for weekend travel. (The flight was immedi- ately canceled after Smisek’s dismissal.)

Oscar Munoz was then appointed CEO, but he suf- fered a heart attack weeks later. In his absence, Brett Hart, United’s general counsel, served as the interim CEO. Munoz eventually returned, but the dismissals and the generally difficult situation have caused many other executives to leave, including some who were poached by competitors. The result is a “management suite rife with openings, and three key executives have ‘acting’ before their titles.”68 All told, it may be difficult for United to attract top talent in the near future.

It may be no surprise that in the midst of manage- ment turmoil the airline lost sight of its customers. Most notably United failed to make a priority of ensuring that flights departed and arrived on time. The airline has historically relied on linear routing, which entails send- ing one plane from New York to Chicago, then to Denver, and ultimately to Seattle. While this practice


United Airlines: How Do We Get There from Here?

42 PART 1 Individual Behavior

C. Use details in the case to determine the key problem. Don’t assume, infer, or create problems that are not included in the case.

D. To refine your choice, ask yourself, Why is this a problem? Explaining why a particular outcome is a problem helps refine and focus your thinking. It is useful if you focus on topics in the current chapter, as we generally select cases that illustrate concepts in the current chapter.

Step 2: Identify causes of the problem by using material from this chapter, which has been summarized in the Organizing Framework for Chapter 1. Causes will tend to show up in either the Inputs box or the Processes box.

A. Start by looking at the Organizing Framework and determine which person factors, if any, are most likely causes to the defined problem. For each cause, explain why this is a cause of the problem. Asking the “why” question multiple times is more likely to lead you to root causes of the problem. For example, are characteristics related to the CEO(s), employees, or customers causes of the problem you defined in Step 1? This might lead to the conclusion that Smisek’s unethical behavior is a root cause of the problem.

B. Follow the same process for the situation factors. In the context of this case, situation factors can be external to the organization, such as competitors and the economic environment. They also can be internal to the company but outside the employee, such as leadership and organizational culture. For each factor, ask yourself, Why is this a cause? For example, United’s competitors improved their processes and customer service, which likely led passengers to choose to fly their airlines instead. Why did this happen? United’s leadership made cost-cutting a priority above all else, including customer and employee satisfaction. This eroded employee morale and further diminished customer satisfaction. By following the process of asking why multiple times you are likely to arrive at a more complete and accurate list of causes. Again, look to the Organizing Framework for this chapter for guidance.

C. Now consider the Processes box in the Organizing Framework. Are any processes at the individual, group/team, or organizational level potential causes of your defined problem? It certainly seems that poor leadership and/or ineffective change management are potential causes. For any process you consider, ask yourself, Why is this a cause? Again, do this for several iterations to arrive at the root causes.

maximizes profits by keeping the plane in the air all day, loaded with revenue-generating travelers, it also means that if something goes wrong at one airport, such as bad weather or equipment failure, many other flights and their passengers are affected. In contrast, Delta Air Lines, the industry leader, made on-time per- formance a priority and has effectively eliminated flight cancellations unrelated to storms.

Some attempts at United to improve the efficiency and speed of boarding also went astray and actually resulted in passengers spending more time in line and boarding. Finally, United is widely known to have one of the oldest fleets in the sky.69 This fact has implica- tions for everybody—pilots, flight attendants, mechan- ics, baggage handlers, and, of course, customers.

POSSIBLE SIGNS OF RECOVERY There is some light on the horizon. In early 2016, Munoz returned to work as CEO, bringing knowledge and credibility to the job. He worked outside the airline industry before becoming United’s chief operating officer, plus he had been on the board of Continental Airlines. In his short time at the helm, he has visited employees on the job, crashed employee parties at bars, and reached out to employees in other ways. Coffee suppliers have been changed, and the airline began providing free snacks in economy class. Prog- ress has been reported in some contract negotiations. Profits are up, as they are at all airlines since oil prices have dropped, reducing the cost of fuel. One person described the current situation this way: “The airline was just incredibly sick and Oscar Munoz is like a shot of penicillin. It’s going to get better, but it has to have some time to actually settle in and work.”70


Step 1: Define the problem.

A. Look first to the Outcome box of the Organizing Framework to help identify the important problem(s) in this case. Remember that a problem is a gap between a desired and current state. State your problem as a gap, and be sure to consider problems at all three levels. If there is more than one desired outcome that is not being accomplished, decide which one is most important and focus on it for steps 2 and 3.

B. Cases have protagonists (key players), and problems are generally viewed from a particular protagonist’s perspective. Therefore, you need to determine from whose perspective— employee, manager, team, or the organization— you’re defining the problem.

43Making OB Work for Me CHAPTER 1

Remember to consider the OB in Action boxes, as these contain insights into what others have done. Details of this case, for instance, describe how the board replaced the first CEO due to the alleged ethics violations. This might be part of the solution, but is this sufficient?

B. Be sure to consider the Organizing Framework— both person and situation factors, as well as processes at different levels.

C. Create an action plan for implementing your recommendations.

D. To check the accuracy or appropriateness of the causes, be sure to map them onto the defined problem.

Step 3: Make recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recommendation is desirable and feasible?

A. Given the causes identified in Step 2, what are your best recommendations? Use the material in the current chapter that best suits the cause.


To Tell or Not to Tell?

Assume you are a nursing director for a nursing home. You’ve been working at your facility for a few short months when you learn the company that owns the home has been improperly overbilling Medicare for the care and services provided to your residents. You bring this to the attention of the company’s managers, but they do nothing. You then notify the appropriate authorities (becoming a whistle-blower) and, dismayed by the fraud and other problems, you quit.

Several months later you interview for a new posi- tion as nursing director at another company. The inter- view is with a panel of 10 decision makers, including the CEO, medical director, and other administrators, who will decide whether you get the job.

One other important detail: This facility is just two miles from the one you reported to the authorities before quitting. Nursing, like other industries, tends to be a very close circle of people who often cross paths repeatedly in different jobs over time.

Your Response What would you do about divulging information re- garding your allegations against your previous em- ployer? Choose your answer from the options below. Be sure to explain and justify your choice.

1. Do not divulge the whistle-blowing.

2. Wait until you learn the outcome of the interview; if you don’t get the offer, don’t share the information.

3. Wait until you learn the outcome of the panel interview; if you get a job offer, then tell the person who makes you the offer about the allegations.

4. Tell all members of the panel during your interview.

5. Create and explain another course of action.

2 Major Topics I’ll Learn and Questions I Should Be Able to Answer

2.1 Personal Values MAJOR QUESTION: What role do values play in influencing my behavior?

2.2 Personal Attitudes and Their Impact on Behavior and Outcomes MAJOR QUESTION: How do personal attitudes affect workplace behavior and work-related outcomes?

2.3 Key Workplace Attitudes MAJOR QUESTION: Why should management pay attention to workplace attitudes?

2.4 The Causes of Job Satisfaction MAJOR QUESTION: How can changes in the workplace improve job satisfaction?

2.5 Major Correlates and Consequences of Job Satisfaction MAJOR QUESTION: What work-related outcomes are associated with job satisfaction?

How Do They Affect Work-Related Outcomes?


The Organizing Framework for Understanding and Applying OB shown in Figure 2.1 summa- rizes what you will learn in this chapter. Chapter 2 begins your study of the way values, personal attitudes, and intentions serve as inputs to a host of individual- and organizational-level out- comes. Remember, we generally define problems as gaps between the current and the desired state of one or more outcomes. In this chapter, pay attention to the way values and personal attitudes might become causes of problematic outcomes, such as low task performance, poor workplace attitudes, low well-being/flourishing, low citizenship behavior/counterproductive be- havior, and high turnover. These inputs also might contribute to explaining the organizational- level outcomes of poor firm performance and low customer service or satisfaction.


Person Factors • Values • Personal Attitudes • Intentions Situation Factors

Individual Level Group/Team Level Organizational Level

Individual Level • Task performance • Workplace attitudes • Well-being/flourishing • Citizenship behavior/counter-

productive behavior • Turnover Group/Team Level Organizational Level • Accounting/financial performance • Customer service/satisfaction


© 2014 by Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without express permission of the authors.


Winning at Work Learning to Combat Bullying

What’s Ahead in This Chapter Now that you have new tools to make OB work for you— tools like the Organizing Framework and the 3-Step Problem Solving Approach—you’re ready to put them to work. With this chapter we begin exploring how individual- level factors influence a host of important outcomes. Specifically, we look at the way individual-level factors such as values affect workplace attitudes and behavior. We help you explore how your personal values affect your own workplace attitudes and behavior. We’ll outfit you with OB concepts to understand key work-related attitudes—organizational commitment, employee engage- ment, and perceived organizational support—which lead to important outcomes at the individual and organiza- tional levels. Before you’re done, you will understand the causes and consequences of job satisfaction, an important outcome for both employees and managers.

date, and place and details of what happened and what was said. Be specific and truthful and stick to the facts. If the bullying occurs electronically, all you need do is keep a copy of the messages.

• Plan Your Interactions. Bullies are more active when they are alone with their victims. If you must continue working with the bully, avoid being alone with him or her. Make sure someone is within ear- shot of any interactions, and consider using a smart- phone to record aggressive behavior.

• Confront the Bully. Tell the bully how you feel about his or her behavior. Use an I message, such as, “I felt humiliated when you called me stupid in the meeting yesterday.” You might consider confronting the bully with others who have been victimized. Presenting a united front is more effective in certain cases.

• Escalate the Situation. If the bully is your boss, speak with your boss’s boss, a member of human resources, or your state’s employee assistance program. You may want to request a transfer if you are afraid of re- taliation. If the bully is a peer or someone else in the organization, arrange a one-on-one with your boss.

• Stay Calm, but Take Care of Yourself. Resist the temptation to strike back. This can cost you your job or reputation. Finally, seek social support from fam- ily and friends with whom you can discuss the issue and let off some steam. They also may provide use- ful tips.7

Most folks think they left bullying back in the school yard. Sometimes they are wrong. Consider Carl Dessureault, a bus driver repeatedly harassed by coworkers because his appearance was similar to that of a rape suspect sought by police. He was asked questions like, “What’s it like to rape women?” and “Who’s your next victim?” Dessureault sought counseling, was put on antidepressants, and ultimately committed suicide.1

 Bullying  “occurs when an individual experiences a number of negative behaviors repeatedly over a period of time.”2 One occurrence is not considered bullying unless the behavior has the potential to become threatening in the future. We discuss bullying here as an example of a behavior that is partly driven by an individual’s values. For example, people are more likely to be a bully if they possess “power- oriented” values. Values associated with benevolence and tradition would be less likely to promote bullying.

Frequency and Source of Bullying Research conducted by the Workplace Bullying Institute estimates that 27 percent of the US workforce has been bullied. Another 21 percent of workers have witnessed bul- lying. All told, then, nearly half the US workforce has been exposed to bullying. Interestingly, most bullies are bosses, and the majority are men (about 60 percent). Women tend to be bullied more than men.3

Types of Bullying Behavior Bullying includes various behaviors. It can be acts of physi- cal aggression, such as pushing, pinching, or cornering. It can be verbal taunts and threats, such as name calling, jokes at someone’s expense, and humiliation. It can be re- lational aggression, such as gossip, rumors, and social iso- lation. It can be cyber-aggression, such as posting negative or derogatory images, text messages, or e-mail. Bullying also is more likely to occur in small than large firms.4

Consequences of Bullying Short-term effects of being bullied include increased anxi- ety, panic attacks, health-related symptoms, and counter- productive behavior along with decreased job satisfaction, self-esteem, attendance at work, and job performance. Long term, bullying can lead to employee turnover, depres- sion, symptoms akin to post-traumatic stress disorder, and suicide.5 Experts estimate it can cost a firm up to $100,000 per year in health-related claims and lost productivity for each bullied employee.6

Combating Bullying What can you do to combat bullying if you are the target?

• Keep a Record. The bully is going to deny your ac- cusations, so include information about the time,

46 PART 1 Individual Behavior


 Values  are abstract ideals that guide our thinking and behavior across all situations. They stem from our parents’ values, our experiences in childhood and throughout life, and our religious or spiritual beliefs. Values are relatively stable and can influence our behavior without our being aware of it.

Understanding the way values affect our behavior matters for two reasons. First, val- ues guide our actions across all situations. Knowing this helps you to self-manage, such as by choosing a major or career for which you are well suited. Second, you will be more effective at influencing others’ attitudes and behaviors when you are armed with an un- derstanding of values and their effects.

Renowned researcher Shalom Schwartz created a theory of personal values that many managers and OB professionals find useful for understanding the motivational impact of our values. Let’s look at this theory.

Schwartz’s Value Theory Schwartz proposed that broad values motivate our behavior across any context. He cate- gorized these values into two opposing or bipolar dimensions, as outlined in Table 2.1. The first dimension ranges from concern for the welfare of others (which Schwartz calls self-transcendence) to pursuit of one’s own interests (self-enhancement). The second


What role do values play in influencing my behavior?


You may already have a good understanding of your personal values and the role they play in

your life. In an organization, personal values contribute to workplace attitudes and behavior.

So it’s important to understand how the full range of potential human values affects our atti-

tudes and behavior at work. Then you can use this knowledge to influence outcomes in the

Organizing Framework for Understanding and Applying OB.



Self-Transcendence Self-Enhancement

Concern for the welfare and interests of others (universalism, benevolence).

Pursuit of one’s own interests and relative success and dominance over others (power, achievement).


Openness to Change Conservation

Independence of thought, action, and feelings and readiness for change (stimulation, self-direction).

Order, self-restriction, preservation of the past, and resistance to change (conformity, tradition, security).

47Values and Attitudes CHAPTER 2

dimension ranges from self-directed independence (which Schwartz calls openness to change) to conformity (conservation). Schwartz stressed that it is the relative importance we give to these two dimensions of opposing values that drives our behavior.8 For exam- ple, if you value achievement (self-enhancement) over universalism (self-transcendence), you will spend your evening studying hard to get an A in this class rather than attending a meeting about fighting climate change. Our values help us to make these types of choices.

Schwartz categorized 10 broad values within these two bipolar dimensions. Figure 2.2 shows those 10 values as the slices of a pie, with the underlying bipolar dimension shown outside the circle. Schwartz located the 10 values in a circular-motivation structure to illustrate their compatibility. In general, adjacent values (like self-direction and univer- salism) are more compatible. That is, these values share a common focus that promotes their acceptance within an individual. Values that are farther apart (like self-direction and power) are less compatible or in conflict. Opposing values are less likely to be held by an individual.

In Figure 2.2, Schwartz noted that one set of values is in opposition to the other set, as suggested by the use of color. Notice the unique treatment of several values: Tradition and conformity share a single wedge, supporting the same broad motivational goal. Conformity is toward the center because it does not conflict with the opposing value quite as much as does tradition, which is toward the outside. See also that hedonism shares elements of both openness to change and self-enhancement.

Protesting is often driven by values-based issues such as global warming. These protesters might be expressing the self-transcendence value of universalism and the self-direction value associated with openness to change. In contrast, completing a college degree might reflect values associated with achievement, power, and stimulation. The point to remember is that values affect our interests, behavior, attitudes, and performance. (left): © McGraw-Hill Education/John Flournoy, photographer; (right): © moodboard/SuperStock RF

48 PART 1 Individual Behavior

Workplace Application of Schwartz’s Theory You can feel comfortable applying this theory because research supports its basic structure and its prediction of behavior. Research also confirms the theory’s relevance cross-culturally for both children and adults. As you might expect, the priorities given to Schwartz’s values do vary across countries.9

Managers can better supervise workers by using Schwartz’s model to understand their values and motivation. For example, if a manager knows that an employee values universalism and benevolence, then it would be wise to assign this employee to projects or tasks that have social value. Managers can also use Figure 2.2 to reduce the chances of employees’ experiencing conflict between their values and their work assignments, when options are available. An employee who values tradition and conformity over achieve- ment, for example, will not be happy about being asked to work on a holiday or to miss a child’s school play for work.

Managers can also reduce employee turnover by trying to reduce the gap between an employee’s values and the values that support the organization’s culture. (We discuss or- ganizational culture in Chapter 14.) For example, an employee who wants security and tradition (two values that are part of the conservation motive) will likely be dissatisfied with a job that provides little direction and changing job requirements (two values that are part of the openness to change motive).

Excitement, novelty, and challenge in life (daring, a varied life, an exciting life)

Pleasure and sensuous gratification for oneself (pleasure, enjoying life)

Independent thought and action, choosing, creating, exploring (creativity, freedom, independent, curious, choosing own goals)

Understanding, appreciation, tolerance and protection of the welfare of all people and of nature (broad-minded, wisdom, social justice, equality, a world at peace, a world of beauty, unity with nature, protecting the environment)

Preservation and enhancement of the welfare of people with whom one is in frequent personal contact (helpful, honest, forgiving, loyal, responsible)

Restraint of actions, inclinations, and impulses likely to upset or harm others and violate social expectations or norms (politeness, obedient, self- discipline, honoring parents and elders)

Personal success through demonstrating competence according to social standards (successful, capable, ambitious, influential)

Social status and prestige, control or dominance over people and resources (social power, authority, wealth)

Safety, harmony, and stability of society, of relationships, and of self (family security, national security, social order, cleanliness, reciprocation of favors)

Self-Direction Universalism



Security Power



Hedonism Tradition

Respect, commitment, and acceptance of the customs and ideas that traditional culture or religion provides the self (humble, accepting my portion in life, devout, respect for tradition, moderate)

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Self-Enhancement Co

ns er

va tio




SOURCE: Graphic from S. H. Schwartz, “An Overview of the Schwartz Theory of Basic Values,” Online Readings in Psychology and Culture 2(1), December 1, 2012, http://dx.doi.org/10.9707/2307-0919.1116. Definitions from A. Bardi and S. H. Schwartz, “Values and Behavior: Strength and Structure of Relations,” Personality & Social Psychology Bulletin, October 2003, 1208.

49Values and Attitudes CHAPTER 2

Personal Application of Schwartz’s Theory Schwartz’s model can help you de- termine whether your values are consistent with your goals and whether you are spending your time in a meaningful way. Complete a Self-Assessment that measures the worth to you of Schwartz’s 10 values, and then incorporate the results into a Take-Away Application.

What Are My Core Values? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 2.1 in Connect.

1. Rank your scores for the values from high to low. Do you agree with this rank order?

2. What are your top five values? Which do you think has the greatest impact on your personal goals?

3. Do you think you may want to focus more on any of the five lowest-rated values as you graduate from school and pursue a career? Explain.



Aligning My Values and Goals

1. Identify the three most important goals in your life.

2. Now consider the extent to which your personal goals are aligned with the top five values identified in the Self-Assessment. Are your goals and values aligned?

3. If any values are inconsistent with your goals, theory suggests you should either change your values or change your goals. Because values don’t easily change, it is usually wiser to change your goals. Identify what you might do to align your goals more closely with your values.

The Dynamics of Values In general, our values are relatively stable across time and situations. This means that positive employee attitudes and motivation are greatest when the work environment is consistent with employee values. For example, outdoor gear retailer Recreational Equip- ment, Inc. (REI), attempts to attract and motivate employees by letting them “use kayaks, skis, and other equipment for free [which they can buy new at a deep discount].”10 The company does this because it believes that its employees are motivated to participate in outdoor activities.

Values tend to vary across generations because they are influenced by events in child- hood and youth. For example, our parents lived through the Depression, which lasted through the 1930s and part of the 1940s. This experience led them to value security and to be conservative with their money. They did not like debt, and they opposed the use of credit cards. Do you know anyone with values like these? In contrast, the values held by baby boomers, people born between 1946 and 1964, are influenced by events like the as- sassination of President John F. Kennedy, the Vietnam War, and the shooting deaths of student protesters at Kent State University: One of the authors of this text (Angelo) at- tended Kent State two years after the tragic event. In contrast, Millennials, people born between 1980 and 2001, have been influenced by events like September 11, the wars in Iraq and Afghanistan, and the financial crisis of 2008. Their values are different too. We discuss generational differences thoroughly in Chapter 4.

50 PART 1 Individual Behavior


How do personal attitudes affect workplace behavior and work-related outcomes?


Closely related to values are personal attitudes, which also operate as an input in the Orga-

nizing Framework for Understanding and Applying OB. (In contrast, workplace attitudes are

defined as outcomes in the framework.) Personal attitudes have three components—affective,

cognitive, and behavioral. Knowing these components helps us understand how and when

personal attitudes affect behavior. Have you ever been stopped short by something that

didn’t seem to make sense? When personal attitudes collide with reality, the result is cogni-

tive dissonance. From an OB perspective, your personal attitudes affect your behavior via

your intentions.


In this section, we discuss the components of personal attitudes and examine the connec- tion between personal attitudes and behavior.

Personal attitudes affect behavior at a different level than do values. While values represent global beliefs that influence behavior across all situations, personal attitudes relate only to behavior directed toward specific objects, persons, or situations. We sum- marize the differences between the two in Table 2.2.

 Attitudes  represent our feelings or opinions about people, places, and objects and range from positive to negative. They are important because they influence our behavior. For example, you are more likely to select chocolate ice cream over vanilla if you are more positively disposed toward chocolate. In contrast,  workplace attitudes  are an outcome of various OB-related processes, including leadership. In this chap- ter we reserve the term workplace attitudes for attitudes that have resulted from the inter- action of various individual, group, and organizational processes. We examine the effects of workplace attitudes later in Section 2.3.

As predictors of likely behavior, attitudes attract serious attention. Hardly a day goes by without the popular media reporting the results of another effort to take the pulse of public opinion (attitudes). Political consultants use poll results, for instance, to draft mes- sages meant to nudge the public’s attitudes toward desired results. In the workplace, man- agers conduct attitude surveys to monitor workplace attitudes like job satisfaction and employee engagement, and to identify the causes of employee turnover.

Concept Scope Influence Affects Behavior

Personal Values Global Broad: All situations Variously

Personal Attitudes Specific Targeted: Specifically Via intentions


51Values and Attitudes CHAPTER 2

Personal Attitudes: They Represent Your Consistent Beliefs and Feelings about Specific Things Consider a work example. If you have a positive attitude about your job (specifically, you like what you are doing), you should be more willing to extend yourself by working lon- ger and harder. This example illustrates that attitudes propel us to act in a specific way in a specific context.

The hospitality industry is using attitude surveys to identify the causes of employee dissatisfaction and turnover and perhaps discover why there is a shortage of good cooks. A recent survey conducted by Culinary Agents revealed that career devel- opment opportunities were very important to kitchen and dining room employees. Managers use results from surveys like this to make organizational changes. One restaurant, for instance, implemented a Sous Chef Supper Series, in which under- chefs can introduce original dishes to the public. Others are making it easier for their cooks to stay healthy. Chef Tony Maws of Craigie on Main in Cambridge, Massachusetts, offers company-sponsored yoga classes for employees. At SPQR in San Francisco, executive chef Matthew Accarrino has led his kitchen staff on bike rides to the Napa Valley to visit the restaurant’s partnering farm.11


1. What are the pros and cons of using results from attitude surveys to create organizational changes?

2. Do you think the changes described above will reduce employee turnover for cooks? Explain.

Hospitality Industry Uses Attitude Surveys to Target Causes of Turnover

OB in Action

The chef in the foreground appears to be enjoying her job. Not only does this attitude positively impact her performance, but it is contagious to others in the kitchen. Do you think we have a choice in our work attitudes? In other words, do people choose to be positive at work? © Image Source RF

52 PART 1 Individual Behavior

Values and attitudes are generally in harmony, but not always. A manager who strongly values helpful behavior may have a negative attitude toward helping an unethical coworker.

The Three Components of Attitudes: Affective, Cognitive, and Behavioral Our overall attitudes toward someone or something are a function of the combined influ- ence of three components of attitudes:

1. The affective component—“I feel.” The  affective component  of an attitude con- tains our feelings or emotions about a given object or situation. For example, how do you feel about people who talk on their cell phones in restaurants? If you feel annoyed with such people, you are experiencing a negative affect toward them.

2. The cognitive component—“I believe.” The  cognitive component  of an attitude reflects our beliefs or ideas about an object or situation. What do you think about people who talk on cell phones in restaurants? Your idea that such behavior is rude (or not) represents the cognitive component of your attitude.

3. The behavioral component—“I intend.” The  behavioral component  refers to the way we intend or expect to act toward someone or something. For example, how would you intend to respond to someone talking on a cell phone during dinner at a restaurant if this individual were sitting near you and your guest?

All three components influence behavior. You are unlikely to say anything to some- one using a cell phone in a restaurant if you are not irritated by this behavior (affective), if you believe cell phone use helps people manage their lives (cognitive), and if you have no intention of confronting the individual (behavioral).

When Attitudes and Reality Collide: Consis- tency and Cognitive Dissonance Have you ever been accused of being a hypocrite—saying one thing and then behaving differently? Like most peo- ple, you probably want to maintain consistency be- tween your attitudes and your behavior.

But sometimes attitudes conflict with reality. Suppose that Samantha has a positive attitude about helping others. One day her boss asks her to work on a special project for an important new client—and it must get done in two months. The project represents significant revenue, and her boss even promises a  bonus for successfully completing it on time. Samantha would like to use the bonus to purchase a new car. The rub is that two of her peers have also come to her seeking help on their project. Samantha believes she is well suited to help them given her past experience, but she feels it would take time away from completing her special project. Should she make time to help her peers or focus solely on the special project? According to social psychologist Leon Festinger, Samantha’s situation is creating cognitive dissonance.

 Cognitive dissonance  represents the psy- chological discomfort a person experiences when simultaneously holding two or more conflicting cognitions (ideas, beliefs, values, or emotions).12 Festinger was fascinated by the way people are moti- vated to maintain consistency (and avoid dissonance) among their attitudes and beliefs, and the way they

We are more likely to purchase a car when we have positive attitudes toward it. These attitudes might pertain to make, model, color, price, and quality. What are your attitudes toward purchasing a white used car? Which component of attitudes is most strongly affecting your overall attitude toward white used cars? © Paul Bradbury/agefotostock RF

53Values and Attitudes CHAPTER 2

resolve inconsistencies that drive cognitive dissonance. From observation, he theorized that we can reduce cognitive dissonance in three ways:

1. Change your attitude or behavior or both. Samantha could either (a) tell herself that she can’t help her peers because the special project is too important for the company or (b) schedule extra time each day or week to help her peers.

2. Belittle the importance of the inconsistent behavior. Samantha could belittle (in the sense of “make small”) the belief that she needs to help peers every time they ask for assistance.

3. Find consonant elements that outweigh dissonant ones. Samantha could tell herself that she can’t help because the company needs the revenue and she needs the bonus.

Attitudes Affect Behavior via Intentions Psychologists I. Ajzen and M. Fishbein further explored the reasons our attitudes and be- havior can be misaligned. Based on this work, Ajzen developed and refined a model focus- ing on intentions as the key link between attitudes and planned behavior. See Figure 2.3.

Determinants of Intention Figure 2.3 suggests that three key general motives (in the three gold circles) predict or at least influence intention and behavior.

1. Attitude toward the behavior: the degree to which a person has a favorable or unfa- vorable evaluation of the behavior in question.

2. Subjective norm: a social factor representing the perceived social pressure for or against the behavior.

3. Perceived behavioral control: the perceived ease or difficulty of performing the be- havior, assumed to reflect past experience and anticipated obstacles.13

Consider the intention of donating blood. You would have a positive intention if you thought donating was valuable for society (attitude toward the behavior), if your friends were going to join you (subjective norm), and if you had the time to participate (per- ceived control).

Subjective norm Intention Behavior

Attitude toward the behavior

Perceived behavioral



SOURCE: I. Ajzen, “The Theory of Planned Behavior,” Organizational Behavior and Human Decision Processes, Vol. 50, No. 2, Copyright © 1991.

Southwest Pilots Stage an Informational Picket. What Should Management Do?

Southwest Airlines pilots conducted their first-ever informational picket at Dallas Love Field in 2016. This action was long coming. Let’s consider some background.

In 2015, the president and negotiating committee of the Southwest Airlines Pilots’ Association (SWAPA) all resigned. They did this because 62 percent of the company’s pilots rejected a proposed la- bor contract that included pay raises and increased company retirement contributions but also would have affected work rules and flying schedules. Captain Mike Panebianco, the union’s vice president, said the president resigned because he supported heavily the deal he presented to members, which they rejected.14

The new union president, Captain Jon Weaks, expressed his frustration with the current state of affairs. He said, “Shared sacrifice and shared success have been historical tenets of Southwest. We are approaching four years of negotiations and we have sacrificed much during this period to contribute to the company’s record-breaking financial success. We are long past overdue for our company to share that success with hardworking professional pilots of SWAPA. After nearly four years of protracted negotiations, SWAPA has decided that it is time to publicly demonstrate our collective dissatisfaction and unified resolve to management, the flying public, and Southwest shareholders.”15

Pilots at the picket line commented on the erosion of Southwest’s company culture of shared sacri- fice and shared success. Weaks commented that “culture prioritizes employees.” He and other pilots feel that the company does not value employees as much as it did in the past.16

Southwest’s record profits and the rejected contract might have influenced the pilots’ attitudes and behavior when they decided to picket. In 2015 Southwest earned a fourth-quarter profit of $536 million, almost three times what it was a year earlier. As a whole, 2015 was a record year for profits. The company planned to use some of this money to purchase more planes and reward its shareholders.17

Captain Paul Jackson, former president of SWAPA, responded to Southwest’s financial success by saying, “The airline has grown significantly in profitability, market share, and share- holder value. Everybody has double-digit and triple-digit growth, but the pilots haven’t had a raise since 2012.”18

To make matters worse for Southwest, SWAPA believes Southwest’s pilots are currently 12 percent underpaid relative to Delta and American Airlines contracts. The union further contends that Southwest pilots would be 20 percent underpaid relative to a contract that was being negotiated with Delta pilots: It was not ratified.19 SWAPA would like to see a 15 percent increase in base wages with a “modestly higher profit-sharing as a minimum to get a deal done.”

Problem-Solving Application

PART 1 Individual Behavior54

Apply the 3-Step Problem-Solving Approach

Action 1: What is the problem in this case.

Action 2: Identify the causes of the problem.

Action 3: Make a recommendation to correct the situation.

55Values and Attitudes CHAPTER 2

Putting the Theory into Practice We provide a case regarding Southwest Airlines as a context for applying this theory. Once you identify the problem in the case, Ajzen’s theory can be used to explain why the pilots are picketing. You do this by considering whether or not the three determinants of intentions are influencing the pilots’ behavior of picketing. If you conclude that one or more of these determinants is a cause for the picket- ing, then propose what management can do to change the situation. For example, if you believe that pilots have a positive attitude about picketing, then what should management do to change these attitudes?

Research and Practical Applications According to the Ajzen model, someone’s intention to engage in a given behavior is a strong predictor of that behavior. For example, if you want a quick way to determine whether a worker will quit his or her job, have an objective third party ask the worker what he or she intends. The answer is likely to be ac- curate. Research supports this conclusion20 and the prediction that intentions are influ- enced by the three general motives in Ajzen’s model.21

So if we want to change behavior, we should look at intentions and ways we might modify them by working on the three general motives shown in Figure 2.3. Managers may be able to influence behavioral change by doing or saying things that affect the three determinants of employees’ intentions to exhibit a specific behavior: attitude toward the behavior, subjective norms, and perceived behavioral control. In your own life, if you want to exercise more, you should start by changing your intentions about exercising and your associated beliefs about it.

Let’s consider another practical illustration. Have you ever wanted a classmate to in- crease the quality of his or her work on a team project? If so, Ajzen’s model can help you. Start by trying to create a positive attitude toward contributing high-quality work. You might do this by telling the person that getting a good grade on the project will increase everyone’s chances of getting higher grades for the course and ultimately a better job upon graduation. Next, model the desired behavior by producing good work yourself and recognizing others who do the same. This should strengthen the subjective norm about doing high-quality work. Finally, talk to the individual about any obstacles getting in the way of high-quality work and discuss solutions for overcoming them. This should in- crease the person’s perceived behavioral control.


Applying the Theory of Planned Behavior

1. Based on the theory of planned behavior, how might you improve your attitude about studying for this course?

2. How can you influence the social norms about studying for classes?

3. Assume you want to get a good job upon graduation. What does the theory of planned behavior suggest that you should do or continue doing?

56 PART 1 Individual Behavior


Why should management pay attention to workplace attitudes?


Of the many workplace attitudes we might see as outcomes in the Organizing Framework

for Understanding and Applying OB, researchers have identified a small number that

are especially potent. These key attitudes allow you to track a limited number of work-

place attitudes to gauge how the organization is doing. When you try to make sense of

the workplace on either side of a manager’s desk, these are the important attitudes to


Savvy managers will track four key workplace attitudes:

1. Organizational commitment 2. Employee engagement 3. Perceived organizational support 4. Job satisfaction

These attitudinal measures serve a dual purpose. First, they represent important out- comes that managers may be working to enhance directly. Second, they link to other sig- nificant outcomes that managers will want to improve where possible. For example, low job satisfaction and low employee engagement imply lower task performance and higher employee turnover.22 This is why managers should track key workplace attitudes and un- derstand their causes and consequences.

EXAMPLE Earls, a Canadian chain of 65 restaurants with as many as 8,000 employ- ees, has truly adopted the recommendation to survey employees’ work attitudes. The company sends short surveys measuring workplace attitudes to employees’ mobile devices every three months. According to The Wall Street Journal, Earls does this because management has concluded “the components of engagement— employee happiness and commitment to the business—are exactly what drives sales, and therefore the bottom line.”23

This section specifically examines the first three of the four attitudes: organizational commitment, employee engagement, and perceived organizational support. Job satisfac- tion, the most studied workplace attitude, will be covered in a later section.

Organizational Commitment OB researchers define commitment as “a force that binds an individual to a course of action of relevance to one or more targets.”24 This definition highlights the way OB researchers link commitment to behavior and the way workers can commit to multiple targets or entities. For example, an individual can be committed to his or her job, family, girl- or boyfriend, faith, friends, career, organization, and/or a variety of profes- sional associations. Let us now consider the application of commitment to a work organization.


57Values and Attitudes CHAPTER 2

 Organizational commitment  reflects the extent to which an individual identi- fies with an organization and commits to its goals. Committed individuals tend to display two outcomes:

• Likely continuation of their employment with the organization. • Greater motivation toward pursuing organizational goals and decisions.

What Drives Organizational Commitment? Many factors inspire organizational commitment, but let’s start with a basic one. Organizational commitment exists to the degree that your personal values match the values that pervade your company’s organiza- tional culture. For example, if you value achievement and your employer rewards peo- ple for accomplishing goals, you are more likely to be committed to the company. This consistency between personal and company values is called person–culture fit and is discussed in Chapter 14.

Throughout this book we will cover other drivers of organizational commitment, including:25

• Personality. • Meaningfulness of the work being performed. • Organizational climate. • Leader behavior. • Organizational culture.

Finally, commitment depends on the quality of an employee’s psychological con- tracts.  Psychological contracts  represent an individual’s perception about the reciprocal exchange between him- or herself and another party. In a work environ- ment, the psychological contract represents an employee’s beliefs about what he or she is entitled to receive in return for what he or she provides to the organization. Research shows that an employer breach of the psychological contract is associated with lower organiza- tional commitment, job satisfaction, and performance and with greater intentions to quit.26

How Can Managers Increase Employees’ Commitment? To highlight how managers can increase employees’ commitment, we review three general best practices and then discuss approaches used by Edward Jones, Cisco, and Google.

General Best Practices

• Hire people whose personal values align with the organization’s. • Make sure that management does not breach its psychological contracts. • Treat employees fairly and foster trust between managers and employees.

Example Company: Edward Jones

• Fortune listed it as the sixth best company to work for in 2015. • Close-knit culture is promoted across 12,000 offices. • Partnership/ownership structure allows for profit sharing. • Mentoring is a valued tradition. Advisers mentor others rather than competing with

each other. • Paid time off is granted to volunteer. • About 75 percent of new hires come from employee referrals.27

Example Company: Cisco

• Fortune listed it as the 70th best company to work for in 2015. • Great pay and recognition are hallmarks; 57,000 employees were recognized in

2015 for displaying Cisco’s corporate values.

58 PART 1 Individual Behavior

• Flextime helps employees achieve work–life balance. Flextime  is a policy of giving employees flexible work hours so they can come and go at different times, as long as they work a set number of hours.

• Five of Cisco’s largest campuses offer fitness and health centers. • Employees are given time off to volunteer, and the company matches this time with

financial contributions to the volunteers’ programs. • Employees get 30 days of holiday and vacation time following one year of


Example Company: Google

• Google was Fortune’s No. 1 best company to work for from 2013 to 2015. • Volunteerism is encouraged and supported both globally and locally. • To expand employees’ perspectives, the company sponsors visits from authors,

performers, politicians, and celebrities. • Staff attend weekly group sit-downs with Google founders Larry Page and

Sergey Brin. • Benefits include up to 12 weeks of paid parental leave, 28 days of holiday and va-

cation time after one year of employment, unpaid sabbaticals, on-site child care, and flexible scheduling.

• The company maintains three wellness centers.29

Employee Engagement Observing workers at a summer camp and an architecture firm in 1990, William Kahn defined  employee engagement  as “the harnessing of organization members’ selves to their work roles; in engagement, people employ and express themselves

This employee looks highly engaged with his work. Note the attention and focus he uses to measure aspects of this skull. Would you find this type of work meaningful? © Adam Gault/agefotostock RF

59Values and Attitudes CHAPTER 2

physically, cognitively, and emotionally during role performance.”30 The essence of this definition is the idea that engaged employees “give their all” at work. Further study identified its components as four feelings:

• Urgency • Intensity • Focus • Enthusiasm31

Have you ever felt at work or school that time seems to fly by? If yes, then you under- stand why academics, consultants, and managers want to understand how they can har- ness the power of employee engagement.

How Much of the US Workforce Is Actively Engaged? The US workforce ap- pears to be achieving at above the global average. Consulting firm Aon Hewitt has tracked data on employee engagement around the globe for over 15 years, studying millions of employees. Recent figures for North America (of which the United States is the largest component) are shown in Table 2.3.32 The US workforce leads several regions but is out- paced by Latin America and Africa-Middle East.

What Contributes to Employee Engagement? Let’s use the Organizing Frame- work for Understanding and Applying OB to identify key drivers of employee engagement.

Person Factors

• Personality. • Positive psychological capital. • Human and social capital.33

Situation Factors

• Job characteristics. People are engaged when their work contains variety and when they receive timely feedback about performance.

• Leadership. People are more engaged when their manager is supportive and main- tains a positive, trusting relationship with them.34

• Organizational climate can range from positive and inspiring to negative and de- pleting. Positive climates obviously foster engagement.

• Stressors.  Stressors  are environmental characteristics that cause stress. Engagement is higher when employees are not confronted with a lot of stressors.35

What Outcomes Are Associated with Employee Engagement? Consulting firms such as Gallup, Hewitt Associates, and Blessing White have been in the forefront of collecting proprietary data supporting the practical value of employee engagement. For example, Gallup estimates that an organization whose employees are highly engaged can

Location of Employees

Percent of Highly or Moderately Engaged Employees

1. The World 62%

2. North America 66

3. Europe 57

4. Asia Pacific 64

5. Latin America 71

6. Africa-Middle East 67


60 PART 1 Individual Behavior

achieve 12 percent higher customer satisfaction/loyalty, 18 percent more productivity, and 12 percent greater profitability.36 Other recent academic studies similarly showed a posi- tive relationship between employee engagement, performance, and physical and psycho- logical well-being and corporate-level financial performance and customer satisfaction.37

Now that you know engagement is correlated with performance at work, try the fol- lowing Self-Assessment to measure your level of engagement with your studies. Can you improve your performance in the classroom?

How Can Managers Increase Engagement? As a manager you will have many opportunities to improve employee engagement, even if you can’t offer the lavish perks of the richest corporations. One way is to make sure inputs in the Organizing Framework are positively oriented. Organizations do this by measuring, tracking, and responding to sur- veys of employee engagement.

EXAMPLE The Ritz-Carlton was able to significantly lower employee turnover (to 18 percent vs. an industry average of 158 percent) and increase both customer satisfaction and customer spending by making changes based on results from engagement surveys.38

Other ideas include creating career and developmental opportunities for employees, recognizing people for good work, effectively communicating and listening, allowing people to exercise during the workday, creating a physically attractive and stimulating work environment, giving employees meaningful work to do, and empowering them.

To What Extent Are You Engaged in Your Studies? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 2.2 in Connect.

1. Is your level of engagement what you expected?

2. How might you increase it?

3. To what extent do your professors influence your level of engagement? How might they foster more engagement from you?


• Red Bull. Red Bull created a stimulating work environment in its Amsterdam office to engage its employees, according to a dispatch in Bloomberg Busi- nessweek. “Employees who chug too much of the merchandise, from seven Red Bull-stocked fridges, can burn off excess energy in ‘The Beast,’ the half of the office dedicated to play. It includes an Xbox connected to a giant screen made up of four LG Flatron TVs.” At 5:30 p.m. on Fridays employees “stop answering their phones, and take turns DJ-ing as beer and wine are served.”39

• Booz Allen Hamilton. Management and technology consulting firm Booz Allen Hamilton supports employee engagement through its Total Rewards

Companies Foster Employee Engagement in Different Ways

OB in Action

61Values and Attitudes CHAPTER 2

program. The “program is designed to provide not only competitive compensation, retirement benefits, health benefits, and work-life and wellness programs, but also flexible work arrangements, leave programs, career growth opportunities, and much more.” Additional pro- grams include a year-long onboarding process, training and development courses, tuition assistance, mentor- ing, and career planning resources. All told, these rewards and programs en- hance engagement because they allow employees to learn new skills, prepare for new roles, and experiment with skills needed for their next promotion.40

• Duke Energy. James Rogers, president and CEO of Duke Energy, uses “listen- ing sessions” to enhance engagement. He regularly meets with groups of 90 to 100 managers and encourages them to raise any issues on their minds. He also asks these employees to anonymously grade his performance.41


1. What do you think about these approaches to engagement? 2. Which company approach would be most effective for you as an employee?


Red Bull employees having fun at work. © Stuart C Wilson/ Red Bull/Getty Images

Perceived Organizational Support  Perceived organizational support  (POS) reflects the extent to which employees believe their organization values their contributions and genuinely cares about their well-being. Your POS would be negative if you worked for a bad boss or a company that did not provide good health benefits or career opportunities. It would more likely be positive if you worked for The Everett Clinic in Washington. The Everett Clinic pays employees a $10,000 bonus for referring physicians, covers 100 percent of health ex- penses, and offers profit sharing up to 5 percent of pay.42

How Does POS Affect Employees? People are willing to work hard and commit to their organizations when they believe the company truly cares about their best interests. Quite simply, we are motivated by the norm of reciprocity to return the favor when some- one treats us well. This is why we are more likely to reciprocate with hard work and dedication when our employer treats us favorably. But the favorable treatment must be voluntary, not imposed by external constraints such as government or union rules. Voluntary actions demonstrate that the giver genuinely values and respects us.

Benefits of POS Managers cannot go wrong in providing organizational support. Re- search shows that it is positively associated with employee engagement, organizational commitment, job satisfaction, organizational citizenship behavior, greater trust, innovation, and lower tendency to quit.43

How can managers foster positive POS? They can treat employees fairly, avoid political behavior, provide job security, em-

power employees, reduce stressors in the work environment, eliminate abusive supervi- sion, and fulfill the psychological contract.44

62 PART 1 Individual Behavior

Job satisfaction essentially reflects the extent to which an individual likes his or her job. Formally defined, job satisfaction  is an affective or emotional response toward var- ious facets of your job. Notice that job satisfaction is not a monolithic concept. Rather, a person can be relatively satisfied with one aspect of her or his job and dissatisfied with one or more others.

Managers and organizations measure job satisfaction in one of two ways. The sim- plest is to use a single overall rating, such as, “How satisfied are you with your job?” People respond on a rating scale that might run from (1) very dissatisfied to (5) very sat- isfied. Have you ever completed a survey like this? The second method assess satisfaction along a series of facets. For example, researchers at Cornell University developed the Job Descriptive Index (JDI) to assess satisfaction with the following: work, pay, promotions, coworkers, and supervision.45 This type of assessment provides more detailed and action- able information about job satisfaction. If desired, managers or researchers can add the ratings across facets to arrive at a total score.

We use a facet measure of job satisfaction in the following Self-Assessment. Complet- ing it will inform you about your level of satisfaction for a current or past job and make the rest of the chapter more practical for you. Are you curious about where you stand?


How can changes in the workplace improve job satisfaction?


Job satisfaction is the most frequently studied outcome in the Organizing Framework. To help

you understand it better, this section provides you with the five major models of job satisfac-

tion. These models can help you manage others and yourself, leading to an increased sense

of satisfaction at work or school for you and others.


Do you think job satisfaction across the United States has been going up or down over the past few years? A national survey conducted by the Society for Human Resource Management attempted to answer this question by assessing 43 facets of job satisfaction for 600 US employees. Results revealed that 86 percent were satisfied with their jobs in

How Satisfied Are You with Your Present Job? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 2.3 in Connect.

1. What are your relative levels of satisfaction with recognition, compensation, and supervision?

2. Which of these three aspects of satisfaction is most important to you? Explain.

3. What can you do to increase your level of job satisfaction?

Source: Adapted from D.J. Weiss, R.V. Dawis, G.W. England and L.H. Lofquist, Manual for the Minnesota Satisfaction Questionnaire (Minneapolis: Industrial Relations Center, University of Minnesota, 1967). Used with permission.


63Values and Attitudes CHAPTER 2

2014, the highest level since 2004. The top three facets of satisfaction were feeling safe at work, having good relationships with coworkers, and having a good relationship with an immediate supervisor.46 US workers are highly satisfied overall; the significance of this will become more apparent after you read the final section of this chapter.

At a Glance: Five Predominant Models of Job Satisfaction If you want insight into the drivers of your own job satisfaction or that of others, consider five models of these causes, summarized as follows. We look at each in more detail in Table 2.4.


Model How Management Can Boost Job Satisfaction

Need fulfillment Understand and meet employees’ needs.

Met expectations Meet employees’ expectations about what they will receive from the job.

Value attainment Structure the job and its rewards to match employee values.

Equity Monitor employees’ perceptions of fairness and interact with them so they feel fairly treated.

Dispositional/genetic components

Hire employees with an appropriate disposition. (See qualifications below.)

Brief Review: Five Predominant Models of Job Satisfaction Let’s take a closer look at these models. It will increase your understanding if you person- alize each model to your own past experiences.

Need Fulfillment Need fulfillment models propose that satisfaction is determined by the extent to which the characteristics of a job allow an individual to fulfill her or his needs. Needs  are physiological or psychological deficiencies that arouse behavior. All of us have different needs, which means that managers need to learn about employ- ees’ needs if they want to increase employees’ job satisfaction.

EXAMPLE A 2014 national survey of 600 individuals by the Society for Human Re- source Management asked employees to choose the aspects of their job that were very important to their job satisfaction. Their top five choices were respectful treat- ment of all employees, trust between employees and senior management, benefits, compensation, and job security.47 Are any of these aspects important to you?

Research generally supports the conclusion that need fulfillment is correlated with job satisfaction.48

Met Expectations Met expectations  represent the difference between what an individual expects to receive from a job, such as good pay and promotional oppor- tunities, and what she or he actually receives. When expectations are greater than what is received, a person will be dissatisfied. On the other hand, he or she will be satis- fied when outcomes are above and beyond expectations. Research strongly supports the conclusion that met expectations are significantly related to job satisfaction.49

64 PART 1 Individual Behavior

Value Attainment The idea underlying value attainment  is that satisfaction re- sults from the perception that a job allows for fulfillment of an individual’s important values. Research consistently supports this perspective. Managers can enhance employee satisfaction by providing work assignments and rewards that reinforce employees’ values.

Equity Equity theory builds on the notion that satisfaction rests on how “fairly” an in- dividual is treated at work. If we perceive that our work outcomes, relative to our inputs, compare favorably with someone else’s outcomes and inputs, we will be satisfied. Re- search has strongly supported the theory behind this model.50 Managers thus are encour- aged to monitor employees’ fairness perceptions and to interact with employees in such a way that they feel equitably treated. Chapter 5 explores how this can be accomplished.

Dispositional/Genetic Components Ever notice that some coworkers or friends remain satisfied in situations where others always seem dissatisfied? The dispositional/ genetic model posits that job satisfaction is a function of both personal traits and genetic factors. Indeed, the model implies that stable individual differences are at least as power- ful as characteristics of the work environment in their impact on satisfaction.

Few studies have tested these propositions in depth, but they do show that disposi- tional factors are significantly associated with only selected aspects of job satisfaction. Dispositions had stronger relationships with intrinsic aspects of a job (such as having autonomy) than with extrinsic aspects (such as the receipt of rewards).51 Genetic factors also were found to significantly predict life satisfaction, well-being, and general job satis- faction.52 Overall, researchers estimate that 30 percent of an individual’s job satisfaction is associated with dispositional and genetic components.53

EXAMPLE Consider Pete and Laura Wakeman, founders of Great Harvest Bread Company. They have used the dispositional/genetic model of job sat- isfaction while running their company for more than 25 years. Pete Wakeman sees it this way: “Our hiring ads say clearly that we need people with ‘strong personal loves as important as their work.’ This is not a little thing. You can’t have a great life unless you have a buffer of like-minded people all around you. . . . If you want a happy company, you can do it only by hiring naturally happy people . . . you can’t really ‘make’ peo- ple any way that they aren’t already.”54

Caveat: Although the Wakemans’ hiring approach is consistent with the dispositional/ genetic model of job satisfaction, it raises legal and ethical concerns. Hiring “like- minded” people could lead to discriminatory decisions. Managers must not discriminate on the basis of race, gender, religion, color, national origin, and age.

A Shorter Walk to Work Now that we have looked at the predominant models of job satisfaction, let’s highlight one element that allows people to balance their work and family lives: the opportunity to telecommute. Telecommuting  allows employees to do all or some of their work from home, using advanced telecommunications technology and Internet tools to send work electronically from home to the office, and vice versa.

This diverse group of employees from Great Harvest Bread Company displays the company’s products. © Damien Dawson/ The Daily Progress/AP Photo

65Values and Attitudes CHAPTER 2

• About 30 to 40 percent of the US workforce telecommutes for at least part of the time spent working.

• The number of people telecommuting has grown 103 percent between 2005 and 2015. Experts estimate that 50 percent of the US workforce has a job compatible with teleworking.

• The need for flexibility is a key reason people like telecommuting.55

• Studies confirm telecommuting enhances productivity and retention and decreases absenteeism.56

These positive statistics imply that the opportunity to telecommute could improve job satisfaction. To make such programs successful, consider the recommendations in the Applying OB box below.

Applying OB

1. Employees must have the proper technology and technological support.

2. Not all people or all jobs are ready for telecommunting. Managers should assess the readiness of both people and jobs for telecommuting.

3. Establish clear expectations with em- ployees about the goals of the pro- gram and details about how the program works. This requires organi- zations to create a telecommuting policy.

4. Evaluate the program’s effectiveness, which includes an assessment of em- ployee performance.

5. Pay attention to the availability and security of the communications net- work. Telecommuting won’t work if the system frequently crashes or the information being transmitted isn’t secure.57

This telecommuter appears to have a well organized office, including the dog at this feet. Telecommuters can obviously dress more casually and arrange their offices in ways that fit their style and needs. © Kidstock/Blend Images/ Getty Images RF

Best Practices for Implementing Telecommuting


Increasing My Job Satisfaction?

Complete this activity by reviewing the results of Self-Assessment 2.3.

1. Which causes of job satisfaction are affecting your level of satisfaction?

2. Describe two things you might do to improve your job satisfaction.

3. If you could ask your boss or employer to change one thing to improve your job satisfaction, what would you suggest?

66 PART 1 Individual Behavior

Thousands of studies have examined the relationship between job satisfaction and other organizational variables. We consider a subset of the most important variables from the standpoint of managerial relevance. Ten key outcomes correlate to job satisfaction—four attitudinal and four behavioral, and two organizational-level outcomes. Job satisfaction has significant correlations with:


• Motivation • Job involvement • Withdrawal cognitions • Perceived stress


• Job performance • Organizational citizenship behavior (OCB) • Counterproductive work behavior (CWB) • Turnover

Organizational Level

• Accounting/financial performance • Customer service/satisfaction

Attitudinal Outcomes of Job Satisfaction We examine four attitudinal outcomes of job satisfaction that are important to OB re- searchers and managers: motivation, job involvement, withdrawal cognitions, and per- ceived stress.

Motivation Employee motivation represents a psychological process that arouses our in- terest in doing something, and it directs and guides our behavior. As you might expect, em- ployee motivation positively correlates to job satisfaction. Managers can enhance employees’ motivation with a host of techniques and recommendations discussed throughout this book.


What work-related outcomes are associated with job satisfaction?


The documented relationship between job satisfaction and other positive organizational out-

comes is good news. It means that employers have economic reasons for fostering job satis-

faction to improve results. You’re about to learn four key attitudinal and behavioral outcomes

and two organizational-level outcomes associated with this relationship.


Job Involvement  Job involvement  represents the extent to which an indi- vidual is personally engaged in his or her work role. Many years of research have demonstrated that job involvement is moderately related to job satisfac- tion.58 Managers can foster satisfying work environments to fuel employees’ job involvement.

Withdrawal Cognitions Although some people quit their jobs impulsively or in a fit of anger, most first go through a process of thinking about whether they should quit.  Withdrawal cognitions  capture this thought process by repre- senting an individual’s overall thoughts and feelings about quitting. Low job satisfaction is believed to be one of the most significant contributors to thoughts of quitting.

EXAMPLE A study of managers, salespersons, and auto mechanics from a national automotive retail store chain demonstrated that job dissatisfaction caused employ- ees to begin the process of thinking about quitting.59 Results from this study imply that managers can indirectly help to reduce employee turnover by enhancing em- ployee job satisfaction.

Perceived Stress Stress has negative effects on many different OB-related outcomes. For instance, it is positively related to absenteeism, turnover, coronary heart disease, and viral infections. As you would expect, it also has a strong negative relationship to job sat- isfaction and employee engagement. Managers should attempt to reduce the negative ef- fects of stress by improving job satisfaction and by encouraging employees to detach from work during off-job time (stop thinking about work and don’t “take it home with you”).60

Have you ever felt like this when studying for exams? Unfortunately, too much stress impairs our ability to perform at school and at work. Extended feelings of stress can also lead to thoughts of quitting and ultimately turnover. © Radius Images/Alamy RF

What to Do about Bullying

Let’s return to the issue of bullying with which we started this chapter. Consider how you might have resolved the situation faced by Stuart McGregor. McGregor’s goal was to be a chef, and he received a highly prestigious apprenticeship just before turning 17. Soon after starting his apprenticeship, he expe- rienced verbal abuse at work, and colleagues began making innuendos about his sexuality. He was once given a large bag of peas by the kitchen managers and asked to count them.

McGregor was told by his colleagues that he was going to receive an award. Excitedly, he called his family and could not wait to receive the award later in the day. Unknown to him, however, his peers had broken into his car and stolen the knob of his gear stick. They then wrapped it up and gave it to him as his “award” in front of the entire staff.

McGregor was regularly asked to perform tasks he did not know how to do and then was ridiculed when he did them incorrectly. Shortly before the conclusion of the apprenticeship period, he was invited to go on a camping trip with his workmates. Sadly, the kitchen managers threatened him with bodily harm if he went. McGregor was afraid for his safety and made excuses to avoid the trip.

Problem-Solving Application

67Values and Attitudes CHAPTER 2

68 PART 1 Individual Behavior

Behavioral Outcomes of Job Satisfaction Job satisfaction has a positive association with two constructive individual-level behav- ioral outcomes—job performance and organizational citizenship behavior (OCB). It also has a negative relationship with two potentially negative behaviors—counterproductive work behavior (CWB) and turnover. The following discussion is more practical when you consider that these individual-level outcomes in the Organizing Framework are driven by processes at the group and organizational level, which, further upstream, are influenced by environmental characteristics.

Job Performance One of the biggest controversies within OB research centers on the relationship between job satisfaction and job performance. This is more complicated than it might first appear; OB experts have identified at least eight ways in which these vari- ables are related. Here is what we know from research.62

A team of researchers analyzed data from 312 samples involving more than 54,000 individuals.63 They made two key findings:

• Job satisfaction and performance are moderately related. This supports the be- lief that employee job satisfaction is a key workplace attitude managers should consider when attempting to increase employees’ job performance.

• The relationship between them is complex. Researchers now believe both variables indirectly influence each other through a host of person factors and environmental characteristics contained in the Organizing Framework.

Organizational Citizenship Behavior Organizational citizenship behavior (OCB)  is defined as “individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the  effective functioning of the organization.”64 This definition highlights two key points:

• OCBs are voluntary. • OCBs help work groups and the organization to effectively achieve goals.

Examples of organizational citizenship behavior include such gestures as: • Constructive statements about the department. • Expression of personal interest in the work of others. • Suggestions for improvement. • The training of new people. • Respect for the spirit as well as the letter of housekeeping rules.

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problem in this case.

Step 2: Identify what OB concepts or theories help explain McGregor’s situation and reaction.

Step 3: Recommend what you would do if you were McGregor and also if you were the manager of the restaurant.

Another employee ultimately complained about being bullied, and investiga- tors questioned McGregor about his experience. He denied being bullied, proba- bly out of fear for his safety, fear of losing his job, or because he thought he could handle the situation.61

69Values and Attitudes CHAPTER 2

• Care for organizational property. • Punctuality and attendance well beyond standard or enforceable levels.65

Managers certainly would like employees to exhibit these behaviors, and research clearly supports their value. OCBs have a moderately positive correlation with job satis- faction.66 Moreover, they are significantly related to both individual-level consequences (performance appraisal ratings, intentions to quit, absenteeism, and turnover) and organi- zational-level outcomes (productivity, efficiency, lower costs, customer satisfaction, and unit-level satisfaction and turnover).67

These results are important for two reasons. First, exhibiting OCBs is likely to create positive impressions about you among your colleagues and manager. In turn, these im- pressions affect your ability to work with others, your manager’s evaluation of your per- formance, and ultimately your promotability. Second, the aggregate amount of employees’ OCBs affects important organizational outcomes. It is thus important for managers to foster an environment that promotes organizational citizenship behaviors.

Counterproductive Work Behavior You already know from personal experience and OB research that the absence of satisfaction may be associated with some types of undesirable behavior, such as low employee engagement and performance. In contrast to the helping nature of OCBs,  counterproductive work behavior (CWB)  harms other employees, the organization as a whole, and/or organizational stakeholders such as customers and shareholders. CWBs represent a particularly negative work-related outcome. Examples include bullying, theft, gossiping, backstabbing, drug and alcohol abuse, destruction of organizational property, violence, deliberately poor or incorrect work, Internet surfing for personal reasons, excessive socializing, tardiness, sabotage, and sexual harassment.68

EXAMPLE A Maryland man swiped 32 laptops from his nonprofit health-care employer and put them on eBay.

EXAMPLE A chief financial officer changed the color of the type on some spread- sheet data from black to white so as to render fake numbers invisible while boosting the totals—and his bonus.

Volunteerism is a form of citizenship behavior as it is discretionary and it promotes a positive organizational image. This group of volunteers is helping to build a home for someone in need. What personal values lead someone to volunteer for such a task? © Ariel Skelley/Blend Images LLC RF

70 PART 1 Individual Behavior

EXAMPLE One regional vice president for sales billed his corporate card $4,000 for Victoria’s Secret lingerie—and not for his wife.69

CWB has a strong negative relationship with job satisfaction, so managers should find ways to reduce it. Here are three key ways.

1. Hire individuals who are less prone to engage in counterproductive behavior. Cogni- tive ability is associated with many measures of success, so it is a logical quality to screen for in hiring decisions. Personality tests also may be relevant.

2. Design jobs that promote satisfaction, and root out and eliminate managers who treat others in an abusive manner.70

3. Respond quickly and appropriately if an employee does engage in CWBs, defining the specific behaviors that are unacceptable and the requirements for acceptable behavior.

Turnover Turnover can be a good thing when a low-performing person like George Costanza from Seinfeld quits or is fired. This result enables managers to replace the Georges of the world with better or more diverse individuals or to realign the budget. In losing a good employee, however, the organization loses valuable knowledge and experi- ence and it can be costly. Experts estimate that the cost of turnover for an hourly em- ployee is roughly 20 percent of his or her annual salary, higher for professional employees with specialized skills.71

Job satisfaction has a moderately strong negative relationship with turnover. Manag- ers are well served by enhancing employees’ job satisfaction, especially for high perform- ers.72 For example, a survey of 20,000 high-potential employees indicated that 27 percent planned to find another job within a year.73

All these considerations suggest several practical steps employers can take to tackle a turnover problem. See the Applying OB box.

Applying OB

1. Hire people who fit the organization’s culture. Person-culture fit is discussed in Chapter 14.

2. Spend time fostering employee engagement. Engaged employees are less likely to quit.

3. Hire selectively. Human resource data analytics uses large data sets to answer questions like “Why are people quitting?” and “What skills are needed to do the job?” Google, for example, has developed an algorithm to predict employee turn- over. It also uses an algorithm to hire people based on a set of individual charac- teristics. A consultant told HR Magazine that his company saved a global transportation company $27 million over three years by using human resource data analytics.74

4. Provide effective onboarding.75  Onboarding programs  help employees to inte- grate, assimilate, and transition to new jobs by making them familiar with cor- porate policies, procedures, culture, and politics and clarifying work-role expectations and responsibilities.76

5. Recognize and reward high performers because they are more likely to quit than average performers.77

Suggestions for Reducing Employee Turnover

71Values and Attitudes CHAPTER 2

Organizational-Level Outcomes of Job Satisfaction Job satisfaction is positively associated with the organizational-level outcomes of accounting/financial performance and customer service/satisfaction.

Accounting/Financial Performance Earlier we noted that job satisfaction was moderately associated with an individual’s performance. It thus makes sense to hypoth- esize that the aggregate level of employee job satisfaction should be positively associ- ated with a company’s accounting/financial performance. Two large studies of more than 2,000 business units supported this prediction. However, the association between job satisfaction and this outcome is lower than that between job satisfaction and customer-oriented outcomes, productivity, turnover, and safety.78 This makes sense be- cause many other factors besides job satisfaction impact accounting/financial perfor- mance.

Customer Service/Satisfaction Why do we expect satisfied employees to pro- vide higher-quality service to customers? The answer is the spillover effect. Spillover occurs when attitudes in one part of our lives spill over to another. Employees’ positive work attitudes might spill over to improve their behaviors toward customers. In support of this idea, research supports a positive association between job satisfaction and cus- tomer satisfaction.79


Improving My Workplace Attitudes

1. What are the three most important things you want from a job and its working conditions?

2. How can you determine whether a future job opportunity offers these things?

3. Assume you are in a job that is not meeting your needs and that you cannot quit. How would you improve your workplace attitudes in this situation?

72 PART 1 Individual Behavior

You learned that bullying is a harmful behavior that can and should be stopped at work. Values and at- titudes directly affect a variety of organizational outcomes, and companies pay attention to them to achieve improved performance. You learned how companies track the work attitude of job satisfac- tion because it positively correlates with other pos- itive workplace attitudes (such as motivation, job involvement, and reduced stress) and behavior (like job performance, OCB, customer satisfaction, and reduced CWB and turnover). Reinforce your learning with the chapter’s Key Points listed below. Next, consolidate your learning using the Organiz- ing Framework, shown in Figure 2.4. Then, chal- lenge your mastery of the material by answering the chapter’s Major Questions in your own words.

Key Points for Understanding Chapter 2 You learned the following key points.

2.1 PERSONAL VALUES • Values are abstract ideals that guide your

thinking and behavior across all situations. • Schwartz proposed that 10 core values

guide behavior across contexts and time (see Figure 2.2).

• The 10 core values each relate to one of four themes: self-transcendence, conservation, self-enhancement, and openness to change (see Figure 2.2).

• Managers can use the Schwartz model to mo- tivate employees and to reduce the chances of employees’ experiencing conflict between their values and their work assignments.


• Attitudes represent your feelings or opinions about people, places, and objects and range from positive to negative. Workplace attitudes

are outcomes in the Organizing Framework for Understanding and Applying OB.

• The three components of attitudes are affec- tive, cognitive, and behavioral.

• Cognitive dissonance represents the psycho- logical discomfort an individual experiences when his or her attitudes or beliefs are incom- patible with his or her behavior.

• Intentions are the key link between attitudes and behavior in Ajzen’s model. Three deter- minants of the strength of an intention are our attitude toward the behavior, subjective norms, and perceived behavioral control (see Figure 2.3).

2.3 KEY WORKPLACE ATTITUDES • Organizational commitment reflects how

strongly a person identifies with an organization and is committed to its goals. It is influenced by a host of factors in the Organizing Framework, including personality, leader behavior, organiza- tional culture, meaningfulness, organizational climate, and psychological contracts.

• Employee engagement occurs when employ- ees give it their all at work. It includes feelings of urgency, focus, intensity, and enthusiasm.

• Employee engagement is influenced by a host of personal factors and environmental characteristics contained in the Organizing Framework.

• Perceived organizational support reflects the extent to which employees believe their orga- nization values their contributions and genu- inely cares about their well-being. Employees are happier and work harder when they feel supported.


• Job satisfaction is an affective or emotional response toward various facets of the job. It is a key OB outcome.

What Did I Learn?

73Values and Attitudes CHAPTER 2

• The five major causes of job satisfaction are need fulfillment, met expectations, value at- tainment, equity, and dispositional/genetic components.

• Telecommuting allows people to balance their work and family lives. It uses telecommunica- tion technology and Internet tools to send and receive work between home and office.


• Job satisfaction is significantly associated with the following attitudinal variables: moti- vation, job involvement, withdrawal cogni- tions, and perceived stress.

• Job satisfaction is significantly related to five key behavioral outcomes: job performance, organizational citizenship behavior, counter- productive work behavior, turnover, and customer satisfaction.

The Organizing Framework for Chapter 2 As shown in Figure 2.4, values, personal atti- tudes, and intentions serve as inputs that lead

to a host of outcomes. Although this chapter fo- cused on workplace attitudes as an outcome, future chapters will look at other outcomes in more detail.

Challenge: Major Questions for Chapter 2 You should now be able to answer the following major questions. If you can’t, have you really processed and internalized the lessons in the chapter? Refer to the Key Points, Figure 2.4, the chapter itself, and your notes to revisit and answer the following major questions:

1. What role do values play in influencing my behavior?

2. How do personal attitudes affect workplace behavior and work-related outcomes?

3. Why should management pay attention to workplace attitudes?

4. How can changes in the workplace improve job satisfaction?

5. What work-related outcomes are associated with job satisfaction?


Person Factors • Values • Personal Attitudes • Intentions Situation Factors

Individual Level Group/Team Level Organizational Level

Individual Level • Task performance • Workplace attitudes • Well-being/flourishing • Citizenship behavior/counter-

productive behavior • Turnover Group/Team Level Organizational Level • Accounting/financial performance • Customer service/satisfaction


© 2014 by Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without express permission of the authors.

74 PART 1 Individual Behavior

IMPLICATIONS FOR ME We see five additional things you can do to turn this chapter’s lessons into positive change in your life. First, identify your core values. This can help you make decisions about careers, companies to work for, relationships, and ways to manage others. Second, realize the power of your beliefs and intentions. Your intentions will drive your behavior, but it is beliefs that create your intentions. If you want to change a behavior, such as losing weight or studying more, the first step is to analyze and change your be- liefs about the behavior. Third, engagement is partly a choice on your part, and it all starts with doing meaningful work. Identify what types of work you find meaningful. Fourth, if your manager or organization is not providing support, consider moving on. There are many great companies that understand the value of organizational support. Finally, before quitting a job, consider doing a cost-benefit analysis. Write down the costs of staying and compare them to the perceived benefits of leaving. Making an emo- tional decision might feel good in the short run, but it is less likely to lead to positive results.

IMPLICATIONS FOR MANAGERS There are five key implications for managers. First, hire people whose values match the values that underlie the organization’s culture. Such employees are more likely to be productive and to stay. Second, influence employees’ behavior by reinforcing appropri- ate beliefs. For example, if you want to improve employee retention, underscore the value of staying at the company. Third, employee commitment is strongly associated with emotional connections at work.80 Create positive team spirit and engage in social activi- ties that promote friendships among employees. Fourth, employees won’t be engaged if you display negative emotions. Stay positive and model engagement. Finally, there is a trend for employees to quit just after one year on the job. Discuss their expectations when you hire, and socialize new employees effectively. Socialization is discussed in Chapter 14.

75Values and Attitudes CHAPTER 2

Marissa Mayer, former vice president of Google Prod- uct Search, left the company to become CEO of Yahoo! in October 2012. At that time, Yahoo’s stock was sell- ing for $15.74. In January 2016, it was selling for $29.77, after reaching a high of $52.28 in 2014. In- vestors were not happy with the drop in revenue—and market share—from 2014 to 2016. Some felt the com- pany’s strategies were lacking and that new leadership was needed. Hedge fund investor Starboard Value LP demanded that the board fire Mayer.81

Let’s take a more detailed look at what happened at Yahoo!

According to a Dow Jones reporter, “Yahoo’s ex- penses have risen while revenue has declined in the three-and-a-half years since Mayer took the reins. In the first nine months of 2015, operating expenses to- taled $3.9 billion, up 20 percent from the same period in 2014. During that same time, revenue excluding commissions paid to search partners dropped 4 percent to $3.09 billion.” Yahoo! also has been cutting costs via layoffs. The head count in 2016 was 10,700, down from a peak of 14,000 before Mayer arrived.82

It is estimated that 33 percent of the workforce left the company in 2015. A CNBC reporter noted that Mayer’s concern about brain drain led her to approve “hefty retention packages—in some cases, millions of dollars—to persuade people to reject job offers from other companies. But those bonuses have had the side effects of creating resentment among other Yahoo! employees who have stayed loyal and not sought jobs elsewhere.”83

Even more troubling is the manner in which some of these layoffs were executed. In 2014, “managers called in a handful of employees each week and fired them,” recalled one reporter. “No one knew who would be next, and the constant fear paralyzed the company, according to people who watched the process.” In March 2015, the situation got worse. “Mayer told the staff at an all-hands meeting that the bloodletting was finally over. Shortly thereafter, she changed her mind and demanded more cuts.”84

In January 2016, Mayer jokingly told employees at a company meeting that “there are going to be no lay- offs ‘this week.’” Insiders say these types of comments are eroding employee morale and leading to the exo- dus of key employees.85

Key human resource decisions and policies likely contributed to poor employee work attitudes and

turnover. The first was the company’s decision that em- ployees could no longer telecommute. The head of human resources at the time, Jackie Reses, said, “We need to be one Yahoo!, and that starts with physically being together.” She defended the decision by stating, “Some of the best decisions and insights come from hallway and cafeteria discussion, meeting new people, and impromptu team meetings.” Reses believed that telecommuting hurt the company. “Speed and quality are often sacrificed when we work from home,” she said.86 But the decision also created bad press for the company.

A reporter noted, “The new rule didn’t just frustrate Yahoo employees who were directly affected, it also set off a fair amount of debate and criticism on Twitter from entrepreneurs, tech company employees and journalists who cover the industry.”87 This in turn likely created a negative impact on Yahoo!’s ability to recruit highly talented employees.

The second human resource decision was Mayer’s implementation of the quarterly performance review (QPR) system. This process allegedly led to the firings of more than 600 people in 2013. The system works by first having managers rank their employees into five categories, each with a quota: greatly exceeds expec- tations (10 percent of employees), exceeds (25 percent), achieves (50 percent), occasionally misses (10 per- cent), and misses (5 percent). Two “misses” ratings in recent quarters can result in termination. Many manag- ers see this system as a forced curve, though Mayer contends the rankings instead serve as guidelines.

Anonymous postings on an internal message board suggested that managers did not agree with Mayer. Here is what one manager had to say:

“I was forced to give an employee an occasionally misses, [and] was very uncomfortable with it. Now I have to have a discussion about it when I have my QPR meet- ings. I feel so uncomfortable because in order to meet the bell curve, I have to tell the employee that they missed when I truly don’t believe it to be the case. I un- derstand we want to weed out mis-hires/people not meeting their goals, but this practice is concerning. I don’t want to lose the person mentally. How do we justify?”88

Other employees felt the system was vulnerable to human bias and was not fairly applied across levels of management. One commented:

“Will the ‘occasionally misses’ classification apply to L2 and L3 execs also? At every goals meeting, we find


Employee Attitudes and Turnover Are Issues at Yahoo!

76 PART 1 Individual Behavior

protagonist’s perspective. You need to determine from whose perspective—employee, manager, team, or the organization—you’re defining the problem.

C. Use details in the case to identify the key problem. Don’t assume, infer, or create problems that are not included in the case.

D. To refine your choice, ask yourself, Why is this a problem? Answering this question helps refine and focus your thinking. Focus on topics in the current chapter, because we generally select cases that illustrate concepts in the current chapter.

Step 2: Identify causes of the problem by using material from this chapter, which has been summarized in the Organizing Framework shown in Figure 2.4. Causes will tend to appear in either the Inputs box or the Processes box.

A. Start by looking at Figure 2.4 to decide which person factors, if any, are most likely causes of the defined problem. For each cause, ask yourself, Why is this a cause of the problem? For example, if you think personal attitudes—an input in the Organizing Framework—are a cause, ask yourself why. This might lead you to the conclusion that Mayer’s attitudes about telecommuting are related to her prior work experience. This may have led her to make decisions that are adversely affecting employees. Asking why several times will lead you to a more complete list of causes.

B. Follow the same process for the situation factors.

C. Because no processes were specifically discussed in this chapter, you can skip an analysis of this component of the Organizing Framework.

D. To check the accuracy or appropriateness of the causes, be sure to map them onto the defined problem.

Step 3: Make recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recommendation is desirable and feasible?

• Given the causes identified in Step 2, what are your best recommendations? Use the material in Chapter 2 (or in Chapter 1) to propose a solution.

• Find potential solutions in the OB in Action and Applying OB boxes within the chapter. These fea- tures provide insights into what other individuals or companies are doing regarding the topic at hand.

• Create an action plan for implementing your recommendations.

senior staff who missed even the 70 percent goals. Thus, by definition, they should be classified as ‘occa- sionally misses.’ Two such classifications, and that per- son should be let go, amiright? How about we set an example for the rest of the company and can a few of the top execs who miss (or who sandbag their goals to make sure they ‘meet’)?”89

Employees have become even more fearful of the process given the number of layoffs.

Sadly, employee morale does not appear to be im- proving. Surveys conducted by Glassdoor revealed that “only 34 percent of Yahoo!’s current employees foresee the company’s fortunes improving. That com- pares to 61 percent at tanking, scandal-struck Twitter and 77 percent at Google.”90

Another issue that may be causing feelings of ineq- uity involves Mayer’s compensation package. “Execu- tive pay at Yahoo! is essentially based on Alibaba’s stock price,” which is outside her control: Yahoo! has a 15 percent stake in Chinese web giant Alibaba, valued at $25.7 billion. “Of Mayer’s $365 million pay over five years, only 3.3 percent will actually be affected by her performance.”91 This policy goes against the com- mon managerial practice of paying people for their performance.

So where does this leave Mayer and Yahoo! as a whole? Broadly speaking, threats of layoffs continue. The company, which lost $4.4 billion in the last quarter of 2015, announced it would lay off 15 percent of its workforce in 2016.92 Under pressure from investors such as Starboard Value LP, Yahoo sold its core busi- ness to Verizon Communications Inc. for $4.83 billion in 2016. The sale included Yahoo’s e-mail business, websites dedicated to news, finance, and sports; ad- vertising tools; real estate; and some patents. It does not include “Yahoo’s cash or its shares in Alibaba Group and Yahoo Japan. After the deal closes, these assets will become a publicly traded investment com- pany with a new name.”93


Step 1: Define the problem.

A. Look first at the Outcome box of the Organizing Framework in Figure 2.4 to identify the important problem(s) in this case. Remember that a problem is a gap between a desired and a current state. State your problem as a gap, and be sure to consider problems at all three levels. If more than one desired outcome is not being accomplished, decide which one is most important and focus on it for steps 2 and 3.

B. Cases have protagonists (key players), and problems are generally viewed from a particular

77Values and Attitudes CHAPTER 2


What Should Management Do About an Abusive Supervisor?

This challenge involves the behavior of Bernadine Pearce. Pearce was the supervisor of Michelle Ruppert, a clerk in the Office of the Tax Collector in the Borough of Point Pleasant, New Jersey. Pearce worked at the local government for about 40 years.

Ruppert filed a lawsuit claiming that her boss and the office allowed a hostile work environment to exist. She had worked at the office for about three years at the time of the suit.

The hostility allegedly began on Ruppert’s first day at work. Upon arriving, Pearce showed her the “Wall of Shame.” Placed conspicuously in the main office, it contained a funeral urn with the “ashes of problem em- ployees.” Ruppert noted that it resembled “the way Adolf Hitler treated the disabled and the Jews during the Holocaust,” with “various nameplates of the em- ployees who were ‘exterminated’” or fired by Pearce.

The lawsuit alleges that Pearce stated “that all per- sonnel of her office should be ‘perfect humans,’ as she believed she was.”94

Media reports about the situation allege that “Pearce threw papers at Ruppert and called her a ‘waste of a human being,’ encouraged Pearce’s daugh- ter and coworker to give Ruppert the middle finger, and referred to Ruppert as a ‘mess up’ who should just ‘quit her job.’”95

Ruppert ultimately experienced stress and anxiety and took sick leave for medical and psychiatric treat- ment. When she returned to work, Ruppert alleges that Pearce relocated her desk so that she had to look at the Wall of Shame, which now contained her name along with the others.96

Addressing the Challenge What would you do if you were the manager responsi- ble for the entire office?

1. Settle the lawsuit and allow Bernadine Pearce to retire. While Pearce’s behavior is bad, she did give the city 40 years of her life.

2. According to what we learned about counterproductive behavior, you would settle the lawsuit and fire Pearce. Assuming the allegations are accurate, Pearce’s behavior deserves to be punished.

3. Settle the lawsuit and then retire because you allowed this abusive situation to exist.

4. Fight the lawsuit. If nothing else, this may help you reduce the payment that will be awarded to Ruppert.

5. Invent other options.

3 Major Topics I’ll Learn and Questions I Should Be Able to Answer

3.1 The Differences Matter MAJOR QUESTION: How does understanding the relative stability of individual differences benefit me?

3.2 Intelligences: There Is More to the Story Than IQ MAJOR QUESTION: How do multiple intelligences affect my performance?

3.3 Personality, OB, and My Effectiveness MAJOR QUESTION: How does my personality affect my performance at school and work?

3.4 Core Self-Evaluations: How My Efficacy, Esteem, Locus, and Stability Affect My Performance MAJOR QUESTION: How do self-evaluations affect my performance at work?

3.5 The Value of Being Emotionally Intelligent MAJOR QUESTION: What is emotional intelligence and how does it help me?

3.6 Understand Emotions to Influence Performance MAJOR QUESTION: How can understanding emotions make me more effective at work?

How Does Who I Am Affect My Performance?


The Organizing Framework for Understanding and Applying OB shown in Figure 3.1 summarizes the key concepts in Chapter 3. This chapter builds on Chapters 1 and 2 and explores a number of additional person factors, such as intelligence, personality, proactive personality, self-efficacy, self-esteem, locus of control, and emotional intelli- gence. We add to this an important individual-level process—emotions. Personality and the other person factors are related not only to emotions, but also to a host of other processes and outcomes across levels in the Organizing Framework. While reading this chapter, pay attention to the way these person-factor inputs influence in- dividual-level outcomes, such as task performance, workplace attitudes ( job satisfac- tion), well-being/flourishing, citizenship behaviors/counterproductive behaviors, turnover, and career outcomes. These inputs also might contribute to explaining group/team conflict and performance, as well as organizational-level outcomes such as poor firm performance and low customer satisfaction.



© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.


Person Factors • Intelligences • Personality • Proactive personality • Core self-evaluations • Self-efficacy • Locus of control • Self-esteem • Emotional intelligence Situation Factors

Individual Level • Emotions Group/Team Level • Group/team dynamics Organizational Level

Individual Level • Task performance • Work attitudes • Well-being/flourishing • Turnover • Career outcomes Group/Team Level • Group/team performance • Group satisfaction Organizational Level • Financial performance • Survival • Reputation

A seemingly infinite number of characteristics make us who we are as individuals. It therefore is helpful to organize these individual differences so we can better understand and use them to manage people at work. One method is to categorize characteristics in terms of their malleability. These photos illustrate this method. For instance, just by looking we can determine the gender of these two people. We also can approximate their ages. Your gender and age are fixed traits, characteristics we cannot change. These photos also show very different emotions. The woman appears to be surprised and the man angry. Unlike gender and age, our emotions can and do change easily and often. Organizations and managers can use such knowledge, such as selecting and hiring people on relatively fixed traits (intelligence), but training them on the appropriate or most effective emotions to display with customers. (left): © Ingram Publishing RF; (right): © gulfimages/Alamy Stock Photo RF


Winning at Work Does Your Potential Boss Get the Job?

What’s Ahead in This Chapter In this chapter you’ll explore individual differences (IDs), which are the many attributes that distinguish all of us from one another. Recognizing and understanding IDs is critical to effectively applying OB knowledge and tools. For managers, it is fundamental to attracting, motivating, retaining, and improving the performance of others. Your exploration of IDs begins with an explanation of the relative stability of these differences. Next, you’ll delve into a subset of individual differences researchers have found to be particularly important in the work con- text: (1) intelligence, (2) cognitive abilities, (3) personality, (4) core self-evaluations, (5) attitudes (also covered in  Chapter 2), and (6) emotions (including emotional intelligence).

4. Know what is expected of you. Learning what the job entails seems obvious enough but is often overlooked. Ask, “What are your key expectations of me?” And, “If I’m a top performer, which I expect to be, what should my track record look like in 30, 60, or 90 days?” Ask, “How do people get ahead here? How do they fall behind?”

5. Ask where others have gone. Assuming your man- ager has been in the position for a while, he or she has likely managed a number of other employees in the position for which you are interviewing. Ask: “Where have others you’ve managed gone?” You want to know whether they have been promoted or quit the organi- zation. The first is encouraging, the second a potential red flag. It may be a sign of a miserable boss, or at least one who is not especially developmental.

6. Meet people like you. Do what you can to meet and learn from other employees—those doing the same job today or in the past. Sometimes you can find infor- mation online, and other times the company’s inter- view process may bring you into interactions with these employees. Learn what was good, bad, ugly. Ask, “If you were me, what would you want to know?” And, “If I’m going to be successful, then what do I need to do and not do with this person as my manager?” You may not get much detail, but it is worth trying to learn this information. Your own future may depend on it.

You may have heard that “People quit managers, not their jobs or companies.”1 This saying highlights the impact your direct supervisor can have on your life at work—particularly on Organizing Framework individual-level outcomes such as task performance, work attitudes, well-being/flourishing, turnover, and career outcomes. Your manager can make life either wonderful or awful. Therefore, when you’re searching for a job, it is critically important for you to interview your prospective manager, just as she or he is interviewing you.

We offer the following tips and questions to help you learn whether the interviewer is worthy of being your manager.

1. Know what you want. If you simply want a job, or aren’t sure what you want in a job and where you want it to lead, then you are obviously more likely to accept a po- sition with a bad boss. To gain more clarity about your boss, ask yourself what kind of relationship you want with him or her. Do you want one that is hands-on, nur- turing, and developmental? Or do you want a boss who is hands-off and will let you do your own thing? Do you desire a true mentor and champion, or simply adequate support and a bit of direction? Asking these questions is a critical first step in evaluating your potential new boss.

2. Look for good and bad. While signing on with a bad boss can make you miserable, missing the opportunity to work with a good boss is costly too. Don’t wear rose-colored glasses and overlook red flags, but don’t be overly harsh either. Finding a boss willing to be a real advocate and champion for you and your career is invaluable. Make a list of your prospective boss’s pros and cons and review it honestly.

3. Think of the job and the manager separately. The job and the manager often go hand in hand, but your de- termination to get an offer may blur your views of one or the other. For instance, the job may sound like it has great potential and is a good fit for you. However, you may lose sight of the possibility that your manager could be a nightmare to work for, or vice versa (great manager but boring job). To make your decision, con- sider how comfortable you will be going to this person for guidance. Do you feel he or she will be honest in communicating and dealing with you? Do you think you’ll be treated fairly? You can draw cues from the way you are treated, the tone of communications (both face-to-face and e-mail), and the boss’s degree of can- dor in sharing information.

81Individual Differences and Emotions CHAPTER 3


 Individual differences (IDs)  are the many attributes, such as traits and behaviors, that describe each of us as a person. IDs are a big part of what gives each of us our unique identities, and they are fundamental to the understanding and application of OB. So, what is it that makes us different? Is it our genetics or our environment? The answer is both.2 And while the way you are raised, along with your experiences and opportuni- ties, indeed helps shape who you are, a large volume of research on twins suggests that genetics matters more. But what is more important at work is recognizing the many at- tributes that make us unique individuals, regardless of whether they are due to nature or nurture.

To help you understand and apply the knowledge you will gain about IDs, we organize and discuss them according to Figure 3.2.

On the left-hand side of Figure 3.2 we arrange individual differences on a continuum. At the top of the continuum are intelligence and cognitive abilities, which are relatively fixed. This means they are stable over time and across situations and are difficult to change. At the bottom are attitudes (which we discussed in Chapter 2) and emotions, which are relatively flexible. Emotions change over time and from situation to situation, and they can be altered more easily. To elaborate, you aren’t more or less intelligent at school than you are at work or home, although your emotions commonly change within and between all of these places. Of course both your intelligence and emotions, as well as many other individual characteristics in- fluence the many outcomes included in the right side of Figure 3.2.

The distinction between relatively fixed and flexible individual differences has great practical value. Wise managers know they have little or no impact on fixed IDs. You can’t change an employee’s level of intelligence or remake an employee’s personality.3 But you can help employees manage their attitudes and emotions. For instance, many effective managers (and their employers) select employees based on positive, job-relevant, but


How does understanding the relative stability of individual differences benefit me?


You undoubtedly notice that your friends behave differently in different situations, such

as in class, watching a sporting event, cramming for an exam, or coping with a new

job. However, what you probably don’t pay much attention to are the characteristics and

behaviors that don’t change. To help you understand and use this knowledge, we’ll

arrange all of the individual attributes on a continuum based on their relative stability.

At one end are relatively fixed or stable traits (like intelligence), and at the other end

are more flexible states (like emotions), with various trait-like and state-like characteris-

tics in between.

82 PART 1 Individual Behavior

relatively stable IDs. This hiring strategy enables managers to capitalize on the personal strengths that someone brings to a job because these stable strengths affect behavior and performance in most every work situation.4 Intelligence and analytical abilities, for ex- ample, are beneficial in front of customers, in teams with coworkers, and when working alone on a project.

In contrast, managers can have more influence on relatively flexible IDs that influ- ence individual-level work outcomes, like performance and job satisfaction. They can do this by implementing policies that raise employees’ core self-evaluations, attitudes, and emotions. For example, as a manager you’ll likely see better results from assigning work with new products and new markets to employees who are open to experience than to employees with low levels of this attribute. Similarly, you could help build new employ- ees’ confidence about selling to tough customers if you role-model how to do this effec- tively, give them experience presenting to easy customers first, and provide verbal encouragement before and constructive feedback after.

Managers also are wise to pay attention to the effect of employee attitudes and emo- tions on turnover. Low job satisfaction and high negative emotions can predict which employees are likely to quit. Thankfully, however, attitudes and emotions can be changed more easily than other IDs.

Next, let’s discuss an individual difference that has historically received considerable attention at school and less at work—intelligence.

Environment/External Context

Organizational/Internal Context

Important Individual Di�erences at Work • Intelligence • Cognitive abilities • Personality • Core self-evaluations > Self-efficacy > Self-esteem > Locus of control > Emotional stability • Attitudes • Emotions

Individual-Level Work Outcomes • Job performance • Job satisfaction • Turnover • Organizational citizenship behaviors • Counterproductive work behaviors

Relatively Fixed

Relatively Flexible


83Individual Differences and Emotions CHAPTER 3

Although experts do not agree on a specific definition, many say  intelligence  repre- sents an individual’s capacity for constructive thinking, reasoning, and problem solving. Most people think of intelligence in terms of intelligence quotient or IQ, the fa- mous score on tests we often take as children. Thus many people typically view intelli- gence and IQ as one big attribute of brainpower. However, intelligence, intelligence testing (for IQ), and related research are more complex.

The concept of intelligence has expanded over the years and today is thought of and discussed in terms of general mental abilities. Of course, people are different in terms of such abilities, but this isn’t what is important at work. What is important is to understand intelligence or mental abilities so you can manage people more effectively. Put another way, the reason we highlight intelligence and mental abilities is that they are related to performance at work.5 This section provides a brief overview of intelligence and mental abilities and then highlights practical implications.

Intelligence Matters . . . and We Have More Than We Think Historically, intelligence was believed to be purely genetic—passed from one generation to another—so you were either born “smart” or not. Do you agree with this belief? What are the implications of believing that intelligence is a gift of birth? Regardless of your personal views, research has shown that intelligence, like personality, can be altered or modified in a number of ways.6 Think about it. No matter who you are or where your starting point in education or experience is, if you engage in more constructive thinking, reasoning, and problem solving, you will get better at these skills. You’ll be more intelli- gent. If you buy this argument, then after reading this book and studying OB you’ll be more intelligent due to the practice in critical thinking and problem solving you’ll gain. Your intellectual development can also be damaged or diminished by environmental fac- tors such as drugs, alcohol, and poor nutrition.7

Am I More Intelligent than My Parents? If you answer yes to this question, re- search might just support your claim. A steady and significant rise in average intelligence among those in developed countries has been observed over the last 70 years. Why? Ex- perts at an American Psychological Association conference concluded, “Some combina- tion of better schooling, improved socioeconomic status, healthier nutrition, and a more technologically complex society might account for the gains in IQ scores.”8 So, if you think you’re smarter than your parents and your teachers, despite their saying you don’t know important facts they do, you’re probably right!


How do multiple intelligences affect my performance?


You may be smarter than you think. You may already know your IQ, and your grades may also

reflect intellectual intelligence. But you can be intelligent in other ways too. We explain vari-

ous forms of intelligence because all are inputs to the Organizing Framework and all affect

your performance.


84 PART 1 Individual Behavior

Dr. Evangelo Katsioulis reportedly has an IQ of 198—the highest in the world. He is a Greek psychiatrist and has degrees in philosophy, psychopharmacology, and research technology. Hall of Fame baseball player Reggie Jackson’s IQ is 160, the same as that of physicist Stephen Hawking (left) and movie director Quentin Tarantino (right). People who score less than 70 are identified as intellectually disabled; over 130, gifted; and over 165, genius. Two-thirds of people score in the normal range of 85–115. (left) © Jason Bye/Alamy; (right) © London Entertainment/Alamy

Multiple Intelligences (MI) While many people think of intelligence in general terms, such as IQ, it is more common and more practical to think in terms of multiple intelligences, or an intelligence for something specific. Howard Gardner, a professor at Harvard’s Graduate School of Education, investigated the nature of intelligence for years and summarized his findings in his 1983 book Frames of Mind: The Theory of Multiple Intelligences.9 The eight different intelligences he identified, listed in Table 3.1, include not only mental abilities but social and physical abilities and skills as well.

EXAMPLE Attorney Elizabeth Cabraser has led some of the largest class-action lawsuits of our time, such as against big tobacco, makers of silicon breast implants, BP (for the Deepwater Horizon oil spill), and Toyota, GM, Takata, and VW for safety violations. Cabraser is an introvert and soft-spoken in court and out. Her acclaim and success undoubtedly reflect considerable practical intelligence. And being so successful in class-action suits highlights her linguistic as well as intra- and interper- sonal intelligences. These would help immensely both in and out of court with clients and other attorneys. She also appears to have considerable musical intelligence; in college she played drums and toured with bands. But now she plays and collects drums only in her spare time.10

Class action attorney Elizabeth Cabraser epitomizes the concept of multiple intelligences. © Jeff Chiu/AP Photo

85Individual Differences and Emotions CHAPTER 3


Type of Intelligence Example

Linguistic intelligence: potential to learn and use spoken and written languages.

Madeline Johnson, CEO of marketing and PR firm Market Council, speaks Spanish, Italian, Portuguese, along with her native English. She consults for multinational companies, and linguistic intelligence enables her to develop richer and more productive relationships quicker.11

Logical-mathematical intelligence: potential for deductive reasoning, problem analysis, and mathematical calculation.

Did this intelligence help or hurt you on your college entrance exam?

Musical intelligence: potential to appreciate, compose, and perform music.

Do you play the drums? Have you heard Marco Minnemann? He is widely considered a virtuoso drummer, one of the best on the planet. If you were to measure this form of intelligence, Minneman’s musical intelligence score would likely be very high.

Bodily-kinesthetic intelligence: potential to use mind and body to coordinate physical movement.

Serena Williams, tennis player extraordinaire, says her mind helps her realize her tremendous physical talent.

Spatial intelligence: potential to recognize and use patterns.

Fighter pilots are excellent examples of people gifted with spatial intelligence.

Interpersonal intelligence: potential to understand, connect with, and effectively work with others.

Compare Warren Buffett (CEO of Berkshire Hathaway) to Larry Ellison (former CEO of Oracle). Critics see the first as approachable and friendly, the second as arrogant.

Intrapersonal intelligence: potential to understand and regulate yourself.

Any secretary of state for the United States, such as John Kerry and Condoleezza Rice, must have enormous self-awareness and control to endure the constant criticism and conflict in the job.

Naturalist intelligence: potential to live in harmony with your environment.

Rose Marcario, the CEO of clothing and outdoor sports retailer Patagonia, supports the company’s famous ad— “don’t buy this jacket.” The company has a long tradition of environmental responsibility in which it encourages customers not to buy more than they need to limit the strain on Earth’s resources.12

Many believe the concept of multiple intelligences has important implications for employee selection, training, and performance. For example, one-size-fits-all training programs often fall short when diversity of intelligences is taken into consideration. When clinical training for undergraduate nursing students was designed to draw on and apply their eight intelligences, for example, they acquired greater proficiency in clinical skills. This type of training also enabled them to utilize and develop their interpersonal intelligence, extremely important for effective patient care.13

Near the end of this chapter, you will encounter the concept of emotional intelli- gence, which managers can apply for employee selection and other purposes. Future breakthroughs in the area of multiple intelligences will attract more OB researchers and practicing managers.

86 PART 1 Individual Behavior


Learning about My Intelligences

Using the list of intelligences in Table 3.1 and discussed above, consider the following:

1. Which do you think are your strongest intelligences? Your weakest?

2. Which do you think are most important for this course? For your current and/or most desired jobs?

3. Which do you think are least important?

4. Describe how you could use this knowledge to improve your performance in this class (and your job if you’re working).

Practical Implications Many educators and parents have embraced the idea of multiple intelligences because it helps explain how a child could score poorly on a standard IQ test yet be obviously gifted in other ways such as music, sports, or relationship building. It then follows that we need to help each child develop in his or her own unique way and at his or her own pace. Many people make the same arguments about college students and employees. Of course, everybody has strengths and weaknesses. But what is important as a matter of practice is to identify intelligences relevant to the job, and then to select, place, and de- velop individuals accordingly. What is your view? Do you see any value in testing for various forms of intelligence at work? Why or why not?

Not Just Kid Stuff The interest in improving intelligence now goes far beyond children and school. A number of companies, including Lumosity, Cogmed, and even Nintendo, have recently entered the business of brain training, claiming that adult intel- ligence can be increased. Through games or training, subjects and customers have been shown to improve scores on IQ and other related tests.

One piece of evidence to support this case is a study that showed a six-point boost on an IQ test. Researchers, however, recommend caution. They note that intelligence is still largely a fixed trait, and that improvements are modest and typically the result of intensive, long-term interventions. The Federal Trade Commission recently fined Lumosity $2 million for falsely claiming that its training could prevent memory loss, dementia, and Alzheimer’s disease.15 And more recent reviews and research call into question the suggested links between IQ and performance in school and on the job. Part of the criticism is based on the fact that IQ tests measure things taught in school, such as linguistics (language) and analytics (math). This means that if you do well in school you’re likely to do well on the test and vice versa (we’re testing what is taught and teach- ing what is tested).16

Practical Intelligence We can draw practical benefits from Gardner’s notion of mul- tiple intelligences. For instance, Yale’s Robert J. Sternberg applied Gardner’s “naturalist intelligence” to the domain of leadership under the heading practical intelligence. He explains: “ Practical intelligence  is the ability to solve everyday problems by utilizing knowledge gained from experience in order to purposefully adapt to, shape, and select environments. It thus involves changing oneself to suit the environment (adaptation), changing the environment to suit oneself (shaping), or finding a new environment within which to work (selection). One uses these skills to (a) manage oneself, (b) manage others, and (c) manage tasks.”14

87Individual Differences and Emotions CHAPTER 3

Intelligence in its various forms is important because of its link to performance. For example, a study of stock traders in Finland revealed that those with high IQs were more likely to: (1) sell losing stocks, (2) engage in tax-loss selling, and (3) hold stocks at 30-day highs—all profitable strategies. Their performance was also bet- ter than that of their lower-IQ counterparts, by as much as 2.2 percent per year.19

NFL—Intelligence Testing? Yes. Not only does the National Football League have an intelligence test for players, but also it has been using it since the 1970s! The Dallas Cowboys began the practice with the popular Wonderlic test (50 ques- tions with a 12-minute time limit). Only one player has had a perfect score so far (wide receiver Pat McInally of the Cincinnati Bengals from 1976 to 1985). Pro quarterback Ryan Fitzpatrick seemingly has smarts no matter how you measure it. He scored 48 on the Wonderlic (the third-best score of all time), completed the test in the shortest time ever, and also scored 1580 out of 1600 on his SAT.20

Today, many NFL teams have developed their own tests. The theory is that the scores can help identify players who will get along with teammates and make it to meetings on time and also indicate how best to teach them the playbook (in writ- ten form, with visual aids, or on the field).21

Be Smart and Protect Your Investments Both financial advisers and profes- sional football teams make multimillion-dollar investments—the former in stocks and the latter in their players. It seems that influential people in both industries believe intelligence matters.


1. When interviewing financial advisers, would you compare their IQs? Why or why not?

2. If you were the coach, general manager, or owner of a professional sports team, would you use intelligence testing? Why or why not?

3. If you were a hiring manager for your company, how much weight would you give intellectual intelligence?

4. Would you require an IQ test? Explain your answer.

Smarts and Money OB in Action

Some Proof? Several leading researchers in the area argue that there is no convincing evidence that intelligence training works, while others are more measured. One put it this way: “Demonstrating that subjects are better on one reasoning test after cognitive training doesn’t establish that they are smarter. It merely establishes that they’re better on one reasoning test.”17 This seems to suggest that someone with “pure intellectual heft is like someone who can bench-press a thousand pounds. But so what, if you don’t know what to do with it?”18

Regardless of your personal view on the practical value of intelligence at school or work, the following OB in Action box offers compelling endorsements of the value of mental abilities and IQ.

88 PART 1 Individual Behavior


How does my personality affect my performance at school and work?


You probably feel you know yourself better than anyone else, but you’re about to learn some

tools that will help you see how others see you. One such tool is the Big Five personality

profile, which summarizes hundreds of personality traits into five categories. Another useful

approach centers on proactivity. These tools will help you understand the managerial implica-

tions of other people’s views of you. We explore these topics because personality is a funda-

mental driver of your behavior and performance at work, and an important input in the

Organizing Framework for Understanding and Applying OB.


 Personality  is the combination of stable physical, behavioral, and mental charac- teristics that gives individuals their unique identities. These characteristics or traits— including the way we look, think, act, and feel—are the product of interacting genetic and environmental influences and are stable over time and across situations and cultures.22 Personality is a person input in the Organizing Framework.

There Is More to Personality Than Liking and Fit Like most people, you may often think of personality in terms of whether you like or dis- like someone. For instance, if you’re asked to describe your professor for this class you might say: “She’s great. I love her personality.” Or if asked to describe your boss you might say: “He’s a difficult individual, he’s unethical, many of his colleagues won’t as- sociate with him, and he is widely disrespected and should be fired.” If you are recruiting somebody for a job (or your fraternity or sorority) you might say: “I really like his/her personality . . . I think he/she will fit in great with the rest of us.”

What Can I Do with “Like”? While “liking” and “fit” matter (recall our discussion of fit from Chapter 2), these general and evaluative types of descriptions aren’t very use- ful from a management standpoint. If you think of personality only in these terms, then what type of guidance would you give your recruiters for hiring new employees? “Go find people you like and be sure they fit” won’t take you very far. And just because you like somebody doesn’t mean that you should hire that person, that he or she will perform well, or that he or she will be a good addition to your organization.

Be Precise to Be Effective To be effective at managing people you need to be more precise (and scientific) about personality. This challenge has motivated a tremen- dous amount of research about personality in psychology and in OB. What we need are more specific definitions of what personality is, tools to measure it, and data about the effect it has on important processes and outcomes across all levels of the Organizing Framework.

89Individual Differences and Emotions CHAPTER 3

Lars Sorensen (left), CEO of pharmaceutical giant Novo Nordisk, was recently ranked the world’s No. 1 CEO by Harvard Business Review. Sorensen earned his ranking in part because of his belief that “In the long term, social and environmental issues become financial issues.” He leads by consensus, and if one isn’t reached, he sends the issue to the company’s board.23 Steve Jobs (right), the late Apple Inc. CEO, couldn’t have been more different. It was “his way or the highway,” and consensus was achieved when everybody agreed with him. Yet Apple enjoyed unparalleled success under his leadership. The lesson: Don’t look too hard for “likable” personalities. If you started a company you’d be delighted to have either Sorensen or Jobs work for you! (left) © John Mcconnico/Bloomberg/Getty Images; (right) © ZUMA Press, Inc/Alamy

The Big Five Personality Dimensions Defining something as complex as personality is quite a challenge. Fortunately, psychol- ogists and researchers have distilled long lists of qualities and characteristics into the  Big Five Personality Dimensions  that simplify more complex models of personality. The dimensions are extroversion, agreeableness, conscientiousness, emotional stability, and openness to experience.24 Table 3.2 details the five personality dimen- sions. For example, someone scoring high on extroversion will be an extrovert—outgoing, talkative, sociable, and assertive. Someone scoring low on emotional stability will likely be nervous, tense, angry, and worried.

A person’s scores on the Big Five reveal a personality profile as unique as his or her fingerprints. To discover your own Big Five profile, complete Self-Assessment 3.1. In the process you’ll learn there is more to personality than just being likable or fitting in. This Self-Assessment will increase your self-awareness and illustrate some of the concepts just described. Many companies use personality profiles for hiring and promotions, so your profile should provide practical insights.


The Big Five Personality Dimensions

Personality Characteristic

1. Extroversion Outgoing, talkative, sociable, assertive

2. Agreeableness Trusting, good-natured, cooperative, softhearted

3. Conscientiousness Dependable, responsible, achievement-oriented, persistent

4. Emotional stability Relaxed, secure, unworried

5. Openness to experience Intellectual, imaginative, curious, broad-minded

SOURCE: Adapted from M. R. Barrick and M. K. Mount, “Autonomy as a Moderator of the Relationships between the Big Five Personality Dimensions and Job Performance,” Journal of Applied Psychology, February 1993, 111–118.

90 PART 1 Individual Behavior

But one important question lingers: Are personality models unique to the culture in which they were developed? Cross-cultural research on the Big Five suggests the answer is no. Specifically, the Big Five personality structure held up very well in a study of women and men from Russia, Canada, Hong Kong, Poland, Germany, and Finland.25 As a comprehensive analysis of Big Five studies revealed, “To date, there is no compelling evidence that culture affects personality structure.”26

Hail the Introverts Personality is not monolithic. Every person is a combination of the various dimensions— not 100 percent of one dimension with zero of the others. This means, for instance, that you and everybody else has some amount of introversion. That said, introverts often are stereotyped and seen as less effective than extroverts or those who are conscientious. (You’ll learn much more about stereotyping and perceptions more generally in Chapter 4.) If this is your own view, then you have more to learn. Bill Gates, Larry Page, and Mark Zuckerberg are all perceived as introverts, and their accomplishments are legendary. Regardless of your own level of introversion, the following OB in Action box provides guidance on how to thrive as an introvert.

Proactive Personality A  proactive personality  is an attribute of someone “relatively unconstrained by situational forces and who effects environmental change. Proactive people identify opportunities and act on them, show initiative, take action, and persevere until meaningful change occurs.”27 In short, people with proactive personalities are hard- wired to change the status quo. It therefore is no surprise that this particular individual difference has received growing attention from both researchers and managers. Think about it. Companies, and their managers, routinely say they want employees who take initiative and are adaptable. Many argue that today’s hypercompetitive and fast-changing workplace requires such characteristics.

In support of these desired traits, research shows that those with proactive personali- ties positively influence many of the work outcomes shown in Figure 3.2 (and later in Figure 3.5). For example, proactivity is related to increased performance, satisfaction, affective organizational commitment (genuine desire to remain a member of an organiza- tion), and social networking.28 Particularly interesting is the finding that those with proac- tive personalities tend to increase the supportiveness of their supervisors (a true benefit), and they also modify their work situations so they have more control.

What Is My Big Five Personality Profile? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 3.1 in Connect.

1. What are your reactions? Do you agree with the scores on your Big Five profile?

2. Which dimension(s) is (are) your highest? In which situations would they be most beneficial?

3. Which one or two dimensions do you think are likely the best predictors of managerial success? Which is the least? Explain.

4. What are the implications of your Big Five profile for working in teams at school or work?


91Individual Differences and Emotions CHAPTER 3

Having an introverted personality is an individual difference that you, Larry Page, Bill Gates, Mark Zuckerberg, and many successful people you know personally may share. But regardless of your own level of success, you can benefit from the advice of Russ Fujioka, president of the Americas for cloud accounting company Xero. Fujioka is a self-proclaimed and successful introvert. 1. Be self-aware. Be aware that introverts can be perceived as disinterested or

aloof when they seem less engaged in conversations and social interactions. They may or may not be disinterested, of course, but they are more likely to show it if they are. And in business situations, they must make the effort nec- essary to appear interested and force themselves to be engaged.

2. Calibrate your intensity. When engaging others, especially groups of people or teams at work, try to push your personal intensity level to 10 on a 10-point scale. If you feel your volume, body language, and interactions are maxed out, realize that if you were an extrovert you’d probably be playing at only 7 in- stead of 10. Your perception of intense and loud is lower than what others will perceive. (Soliciting feedback, which is discussed in Chapter 6, is a good way of calibrating your intensity.)

3. Play to your strengths. Because engaging others is typically quite draining for introverts, it is a good idea to talk about and stick to topics you person- ally know and care about. This will make you naturally more energized and comfortable.

4. Get team practice. Join a team. Whether you join a recreational sports team or a club of some sort, being a member will help you practice and get comfort- able with interacting with others. If it is a non-work team, the pressure and stress of work won’t be part of the experience, making it easier to engage. This will help build your skills for when it really counts, at work!29


1. Overall, do you think you are more of an introvert or extrovert? 2. Describe a situation at work (or school if you’re currently not working) in which

the attributes of introversion can benefit you. 3. Describe in detail how you can apply any two of the four recommendations

outlined above. Be sure to include the situation, what specifically you can do, and how or why this would be a benefit.

How to Thrive as an Introvert OB in Action

Proactive Managers What about your manager? Interesting recent work showed that the ideal scenario is for both you and your manager to be proactive. This results in a better fit and better relationship between the two of you, and it also increases your level of job performance, job satisfaction, and affective commitment.30 The same study also showed that the worst scenario in terms of performance was low proactivity for both you and your manager, followed by a highly proactive manager and a low proactivity follower. Thus proactivity is a highly valued characteristic in the eyes of employers. And being proactive has direct and indirect benefits for your performance. Given these facts, how proactive do you believe you are? How might you increase your proactivity? To help answer these questions, learn about your own proactivity, and explore the potential benefits for you, complete Self-Assessment 3.2.

92 PART 1 Individual Behavior

Proactivity and Entrepreneurs Besides leading to increases in job performance, job satisfaction, and affective commitment (as discussed in Chapter 2), proactive person- ality is also linked to intentions to be entrepreneurial. This really should not be surpris- ing, but it is helpful to know that scientific OB research substantiates this belief. Building on this, we can say that employees with proactive personalities are more likely to be en- gaged (again, see Chapter 2) and creative at work.31

Successful entrepreneurs often exemplify the proactive personality. Consider Dan Goldie, former professional tennis player and successful financial adviser. Goldie’s youthful passion was tennis, and his talent led him to junior championship titles, a scholarship at Stanford, and a ranking of 27th on the pro tour. Now he considers himself more successful at managing money than he ever was at tennis. Impressive to be sure.

But perhaps more interesting about Goldie’s story is that proactivity has been a hall- mark of his entire journey. He knew he wanted to go to college, and the only way to pay for it was with a scholarship. He trained, competed, and earned it. He dreamed of play- ing professionally, so he aimed for colleges with top tennis programs (like Stanford). He valued money, so he turned professional as soon as possible. And, realizing he would not be a top player and that tennis would not last forever, he completed an MBA while on tour. He also utilized his standing to associate with and learn about finance from top professionals in that industry. Later, and finally, he leveraged his tennis relationships to land some of his first and most significant clients as a money manager.32

Another entrepreneurial example is Sal Khan’s Khan Academy. Now world famous, this organization provides Internet-based learn- ing for nearly every scholastic subject under the sun. Here’s how it started. Khan, who has three graduate degrees, offered to help his cousin with one of her classes via the Internet. She learned, the word spread, and a company was born. Khan Academy has now delivered over 580 million lessons, and users have completed more than 3.8 billion educational exercises.33

Fascinating statistics, shown in Table 3.3, highlight other notable individual differences of entrepreneurs. How do you match up?

Table 3.3 contains only averages. Even if you don’t possess these qualities, you still can succeed as an entrepreneur. To help make this point, let’s explore the link between personality and performance.

How Proactive Am I? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 3.2 in Connect.

1. Do you see a pattern among the questions on which you scored the highest? The lowest?

2. What are the implications of your highest-scoring answers for your success in school? In other words, how can these aspects of your proactivity help you?

3. How can knowledge of your proactive personality score help you when you look for a job? Be specific.


Sal Khan’s influence in online learning is epic. It is likely that a number of his individual differences (e.g., intelligence and proactivity) contribute to his entrepreneurial success. © Larry Busacca/Getty Images

93Individual Differences and Emotions CHAPTER 3

Personality and Performance Instead of simply assuming personality affects performance, let’s see what research has to say and how this knowledge can make you more effective. First, and most generally, your personality characteristics are likely to have the greatest influence and effect on perfor- mance when you are working in situations that are unstructured and with few rules.34 This makes sense. You’re more likely to show your true colors (your personality) when the situation is open and lacks constraints.

As for the Big Five, knowledge of these stable personality dimensions can assist in selecting the right people and assigning them responsibilities that will set them up to win.

• Conscientiousness has the strongest (most positive) effects on job performance and training performance. Individuals who exhibit traits associated with a strong sense of purpose, obligation, and persistence generally perform better than those who do not. They also tend to have higher job satisfaction.35 This trait has consistently been shown to be the most influential when it comes to performance at work.

• Extroversion is associated with success for managers and salespeople, and more generally for jobs that require social skills. It is also a stronger predictor of job performance than agreeableness, across all professions.

• Introverts have been shown to score their extroverted and disagreeable coworkers more harshly than their similarly introverted coworkers. The implication is that intro- verts focus on interpersonal skills more than extroverts when evaluating coworkers’ performance.36 How might this affect you in peer evaluations at school and/or work?

• Agreeable employees are more likely to stay with their jobs (not quit). They tend to be kind and get along with others, and thus they often have positive relationships and experiences at work.37

• Openness seems to lead to higher turnover. Open employees are curious and likely to seek out new opportunities, even when they are satisfied with their current jobs.38 This characteristic seems like a double-edged sword for employers. On the one hand they want open and flexible employees, but these are also the same em- ployees who are likely to quit. How might you deal with this as a manager or the owner of a business?


40 Average and median age

95.1% Have bachelor’s degrees

47% Have advanced degrees

71.5% Come from middle-class backgrounds

< 1% Come from extremely rich or extremely poor backgrounds

70% Used own savings as major source of funding

42.5% Were firstborn

3.1 Average number of siblings

51.9% First in family to start a business

69.9% Married when they launched first business

59.7% Had at least one child

73% Think luck is an important factor in the success of their venture

SOURCE: “By the Numbers: Taking the Measure of Entrepreneurs,” The Wall Street Journal, November 12, 2012.

94 PART 1 Individual Behavior

• Emotional stability, along with conscientiousness and agreeableness, is associated with a greater focus on and practice of workplace safety. Imagine you are a man- ager in a chemical plant. How might you use this knowledge in selecting new em- ployees? In assigning and training existing employees?

Personality Testing at Work Personality testing is a commonly used tool for making decisions about hiring, training, and promotion. Current estimates are that approximately 76 percent of organizations with more than 100 employees now use some sort of pre- or post-hiring assessment, including personality tests,39 spending more than $500 million annually on such services.40 A few of the major reasons organizations use such tests are that they:

1. Reduce time and cost of recruiting and hiring. 2. Reduce biases in the interview process. 3. Increase the pool of candidates (because such tests can be administered electronically

and remotely). 4. Complement candidate information found in résumés and interviews.41

Personality tests, in particular, are more widely used at the management level than at the entry level (80 percent and 59 percent of the time, respectively).42 However, despite this widespread use, many experts argue that the typical personality test is not a valid predictor of job performance.43 One reason might be that many test takers don’t describe themselves accurately but instead try to guess what answers the employer is looking for.44

Applying OB As in every other test situation, on an employment test you want to perform well. Get- ting hired or promoted may depend on it, tempting you to provide the answers you think the employer wants to hear. Faking is ill-advised, though. Many tests are in- tended to assess fit, and if you don’t answer honestly, you might get a job you hate! Instead consider the following tips:

1. Practice. Yes, like other tests (GMAT, SAT, MCAT, LSAT) you can practice for em- ployment tests. In fact, practice can help increase scores by 20 percent, according to research. Practicing works because you become more comfortable taking such tests, you develop effective test-taking strategies, and you actually learn what you’re being tested on. Taking GRE practice exams is a good way to sharpen rea- soning, numerical, and verbal skills.

2. Play to your own rhythms. If you are sharpest in the afternoon, try to avoid taking employment tests in the morning. Also beware of what you eat and drink. Don’t overdo the caffeine, unless that is what you’ve done for every test you’ve ever taken.

3. Be yourself . . . sort of. Don’t lie. Well-designed tests can often detect inaccuracies, and most skilled interviewers unveil inconsistencies with ease. But also beware of being too extreme. Ambition is generally good, but extreme ambition can be dysfunctional. A strong work ethic is preferred, but too high a level is a red flag. In a word—moderation. Don’t be too much of even good things. And when interviewing, take the lead from what others have said about you. If somebody has recommended or endorsed you, learn what they said and then emphasize these same attributes. Sell yourself the way your endorsers are selling you. You want the interviewer’s data points to align.

D. Meinert, “Heads Up: Personality Assessments Are Being Used More Often in the Hiring Process. But What Do They Really Tell You?,” HR Magazine, June 2015, 88–98.

Acing Employment Tests

95Individual Differences and Emotions CHAPTER 3


Researchers, test developers, and organizations that administer personality assessments offer the following suggestions for getting started with testing or for evaluating whether tests already in use are appropriate for forecasting job performance:

• Determine what you hope to accomplish. If you are looking to find the best fit between job and applicant, analyze the aspects of the position that are most critical for it.

• Look for outside help to determine if a test exists or can be developed to screen applicants for the traits that best fit the position. Industrial psychologists, professional organizations, and a number of Internet sites provide resources.

• Insist that any test recommended by a consultant or vendor be validated scientifically for the specific purpose that you have defined. Vendors should be able to cite some independent, credible research supporting a test’s correlation with job performance.

• Ask the test provider to document the legal basis for any assessment: Is it fair? Is it job-related? Is it biased against any racial or ethnic group? Does it violate an applicant’s right to privacy under state or federal laws? Get legal advice to assure that a test does not adversely affect any protected class.

• Make sure that every staff member who will be administering tests or analyzing results is educated about how to do so properly and keeps results confidential. Use the scores on personality tests with other factors you believe are important to the job—such as skills and experience—to create a comprehensive evaluation of the merits of each candidate, and apply those criteria identically to each applicant.

SOURCE: S. Bates, “Personality Counts,” HR Magazine, February 2002, 34. Reprinted with permission of the Society for Human Resource Management (www.shrm.org), Alexandria, VA, publisher of HR Magazine.

Another reason for inaccurate results is that personality tests are typically bought off the shelf and often given indiscriminately by people who aren’t trained or qualified. And while rigorous research shows that personality actually is related to performance, the effects are small. Moreover, and perhaps more importantly, personality tests are designed to measure personality, not to identify the individual differences needed to perform at a high level in a particular job. This means that managers need different and better ways to measure personal- ity if they want to select employees based on performance-conducive personality traits.

To help overcome these shortcomings, researchers have used technology and ad- vances in brain science to create a new breed of tests. Companies such as Pymetrics and Knack use games that help assess cognitive abilities, thought processes, and other charac- teristics. The intended advantage is that prospective employees will be assessed on how they play or what they actually do, rather than on their answers to multiple-choice ques- tions or a self-report instrument.

Genetic testing is also on the rise. It hasn’t been used for hiring yet, but scientists, em- ployers, and regulators are considering the potential pros and cons of such applications.45

Wise managers learn about personality and the tools used to measure it before invest- ing in and/or utilizing the data they yield. Table 3.4 provides some insights.

There Is No “Ideal Employee” Personality Given the complexity of today’s work environments, the diversity of today’s workforce, and recent research evidence, the quest for an ideal employee personality profile is sheer folly. Just as one shoe does not fit all people, one personality profile does not fit all job situations. Good managers take the time to get to know each employee’s unique combina- tion of personality traits, abilities, and potential and then create a productive and satisfy- ing person–job fit. In other words, a contingency approach to managing people is best (recall the discussion of contingency in Chapter 1).

96 PART 1 Individual Behavior


How do self-evaluations affect my performance at work?


You can significantly improve your self-awareness by understanding your core self-evaluations

(CSEs). Such self-evaluations provide broad and useful ways to describe personality in terms

of our individual differences in self-efficacy, self-esteem, locus of control, and emotional sta-

bility. CSEs and their component dimensions are more flexible than IQ but more stable than

emotions. Your knowledge of CSEs can improve your performance at work, in your career,

and in your life.


So far we’ve discussed both general and spe- cific, or narrow, individual differences. A nar- row perspective on personality enables us to describe individuals more precisely than gen- eral personality traits do. For example, it is more insightful to say that Steve Vai, a phenom- enal progressive rock guitarist and a favorite of one of your authors, has incredible musical in- telligence than to say that he is intelligent.

A broader perspective, in contrast, allows us to more effectively predict behavior. The rea- son is that broader concepts provide a more comprehensive and practical account of an indi- vidual’s behavior.46 This view suggests that part of Vai’s guitar-playing prowess likely is due to other factors beyond his musical intelligence.

There is no clear answer as to which of these approaches is more accurate. However, research- ers have identified a broad or general personality trait with significant relationships to a host of in- dividual-level work outcomes included in Figure 3.2 and the Organizing Framework. This trait is called core self- evaluations (CSEs). Core self- evaluations (CSEs)  represent a broad per- sonality trait made up of four narrow and positive individual traits: (1) generalized self- efficacy, (2) self-esteem, (3) locus of control, and (4) emotional stability. (See Figure 3.3.) People with high core self-evaluations see them- selves as capable and effective. This section dis- cusses the component traits and highlights research and managerial implications for each.

Steve Vai studied with rock guitarist and teacher Joe Satriani and attended the renowned Berklee College of Music in Boston. Early in his career Vai transcribed music and played for the legendary musician Frank Zappa. He is widely considered a virtuoso and would be expected to score very highly on musical intelligence. What other intelligences might influence his guitar playing, composing, and song writing? © epa european pressphoto agency bv/Alamy

97Individual Differences and Emotions CHAPTER 3

Why should you care about CSEs? CSEs have desirable effects on many outcomes in the Organizing Framework, such as increased job performance, job and life satisfaction, motivation, organizational citizenship behaviors, and better adjustment to international assignments. Better still, CSEs can be developed and improved.47 They also have been studied in the executive suite. A study showed that CEOs with high core self-evaluations had a positive influence on their organization’s drive to take risks, innovate, and seek new opportunities. This effect was especially strong in dynamic business environments.48

Now let’s explore the component dimensions.

Self-Efficacy—“I Can Do That” Have you noticed that those who are confident about their ability tend to succeed, while those who are pre- occupied with failing tend to fail? At the heart of such performance differences is self-efficacy.  Self-efficacy  is a person’s belief about his or her chances of suc- cessfully accomplishing a specific task.

Self-efficacy can be developed. Helpful nudges in the right direction from parents, role models, and men- tors are central to the development of high self-efficacy. For example, a study of medical residents showed that guidance and social support from their mentors im- proved the residents’ clinical self-efficacy.49

Mechanisms of Self-Efficacy A detailed model of self-efficacy is shown in Figure 3.4. To apply this model, imagine you have been told to prepare and deliver a 10-minute talk to an OB class of 50 stu- dents on how to build self-efficacy. How confident are you that you can complete this task? Part of your self-efficacy calculation is to evaluate the interaction between person and situation factors described in the Organizing Framework.

On the left-hand side of Figure 3.4, among the sources of self-efficacy beliefs, prior experience takes first position as the most potent of the four sources. This is why it connects to self-efficacy beliefs with a solid line. Past success in public speaking would boost your self-efficacy, and poor experiences would diminish it. Other sources of your beliefs about your- self—behavior models, persuasion from others, and physical and emotional factors—might also affect your self-confidence. As weaker sources, they con- nect to beliefs with dashed lines in the figure.


1. Generalized Self-E�cacy

2. Self-Esteem

Core Self-Evaluation

3. Locus of Control

4. Emotional Stability

Sara Blakely, the founder of Spanx, epitomizes self-efficacy. Not only is she the youngest self-made female billionaire, but also her path to the top contained more failures than successes. She failed to get into law school, worked at Disney World, did stand-up comedy, and sold fax machines all before designing and making her modern and fashionable girdles and selling them from her apartment and car. Think of some of your own “failures” and the way you responded. How did these experiences affect your self-efficacy? © ZUMA Press, Inc/Alamy

98 PART 1 Individual Behavior

Your evaluation of the situation yields your self-efficacy level—ranging from high to low expectations for success. High expectations are not mere bravado; they are deep convictions supported by experience. Your self-efficacy beliefs in turn affect your be- havioral patterns (right-hand portion of Figure 3.4). If you have high self-efficacy about giving your 10-minute speech, you will work harder, longer, and more creatively when preparing for your talk than would a low-self-efficacy classmate. Better perfor- mance will follow.

People program themselves for success or failure by enacting their self-efficacy be- liefs. Positive or negative results subsequently act as feedback and become the basis of personal experience and future levels of self-efficacy.

Managerial Implications Self-efficacy has been extensively studied in the work- place. The data support a number of recommendations. As a general rule, managers are encouraged to nurture self-efficacy in themselves and others because it is related to im- proved job performance and job satisfaction (both are important individual-level out- comes). Table 3.5 provides a number of specific means for building self-efficacy. Nearly all are explained in detail in other chapters of this book.

SOURCE: Adapted from discussion in A. Bandura, “Regulation of Cognitive Processes through Perceived Self-Efficacy,” Developmental Psychology, September 1989, 729–735, and R. Wood and A. Bandura, “Social Cognitive Theory of Organizational Management,” Academy of Management Review, July 1989, 361–84


Prior Experience

Sources of self-e�cacy beliefs


Behavioral patterns Results

Behavior Models

Persuasion from Others

Assessment of Physical/ Emotional


High “I know I can do this job.”


Self-E�cacy Beliefs

Low “I don’t think I can get the job done.”


• Be active—select best opportunities. • Manage the situation— avoid or neutralize obstacles. • Set goals—establish standards. • Plan, prepare, practice. • Try hard; persevere. • Creatively solve problems. • Learn from setbacks. • Visualize success. • Limit stress.

• Be passive. • Avoid di cult tasks. • Develop weak aspirations and low commitment. • Focus on personal deficiencies. • Don’t even try—make a weak e…ort. • Quit or become discouraged because of setbacks. • Blame setbacks on lack of ability or bad luck. • Worry, experience stress, become depressed. • Think of excuses for failing.

99Individual Differences and Emotions CHAPTER 3

Self-Esteem—“Look in the Mirror”  Self-esteem  is your general belief about your own self-worth. Personal achievements and praise tend to bolster self-esteem, while prolonged unemployment and destructive feedback tend to erode it. Researchers measure self-esteem by having people indicate their agreement with positive and negative statements about themselves. An example of a positive statement is, “I feel I am a person of worth, the equal of other people.” An ex- ample of a negative statement is, “I feel I do not have much to be proud of.” Those who agree with the positive statements and disagree with the negative statements have high self-esteem. They see themselves as worthwhile, capable, and accepted. People with low self-esteem view themselves in negative terms. They do not feel good about themselves and are hampered by self-doubts.53

Nationality, Life Span, and Gender Some have argued that self-esteem is largely a Western or even an American concept. To address this allegation, researchers surveyed more than 13,000 students from 31 countries. They found that self-esteem and life satis- faction were moderately related on a global basis. However, the relationship was stronger in individualistic cultures (United States, Canada, New Zealand, and the Netherlands) than in collectivist cultures (Korea, Kenya, and Japan). The likely reason is that individu- alistic cultures socialize people to focus more on themselves and value their own attri- butes and contributions, compared to people in collectivist cultures who “are socialized to fit into the community and to do their duty” (value the group more than oneself).54

Some notable practical recommendations: • Nationality—Global managers should de-emphasize self-esteem when doing busi-

ness in collectivist (“we”) cultures, as opposed to emphasizing it in individualistic (“me”) cultures.


Application Explanation

1. Job Design Complex, challenging, and autonomous jobs tend to enhance perceived high self-efficacy. Boring, tedious jobs generally do the opposite.

2. Training and Development

Managers can improve employees’ self-efficacy expectations for key tasks through guided experiences, mentoring, and role modeling.

3. Self-Management Training related to goal setting, action planning, and self-motivation all enhance self-efficacy expectations.

4. Goal Setting and Quality Improvement

Goal difficulty needs to match the individual’s perceived self-efficacy.50 As self-efficacy and performance improve, goals and quality standards can be made more challenging.

5. Creativity Supportive managerial actions—encouraging risk taking and providing “blue sky time”—can enhance the strong link between self-efficacy beliefs and workplace creativity.51

6. Coaching Those with low self-efficacy and employees hampered by learned helplessness need lots of constructive pointers and positive feedback.52

7. Leadership Leadership talent surfaces when top management gives high self-efficacy managers a chance to prove themselves under pressure.

100 PART 1 Individual Behavior

• Life span—You can expect your self-esteem to remain fairly stable over the course of your life, especially after age 30.

• Gender—Self-esteem differences between men and women are small at best.

While research suggests that self-esteem is relatively consistent within cultures, over time, and among men and women, we can still ask: Can it be improved?

Can Self-Esteem Be Improved? The short answer is yes. So if your self-esteem is lower than you’d like now, don’t despair. It has been shown, for example, that supportive clinical mentors improved medical residents’ self-esteem.55 But not everyone is convinced.

Case for: Researchers have found one method especially effective for improving self-esteem. Low self- esteem can be raised more by having the person think of desirable characteristics possessed rather than of undesirable characteristics from which he or she is free.56

Case against: Some researchers believe performing at a high level boosts your self- esteem, not the other way round. Therefore, they reason it’s a mistake to focus on self-esteem. We all know people who “talk big” but “deliver small” and thus seem to suffer from delusions of competency.

Our recommendation: Apply yourself to things that are important to you. If getting an A in your OB course affects your sense of self-worth, then you will be moti- vated to work harder and presumably perform better.

Locus of Control: Who’s Responsible— Me or External Factors?  Locus of control  is a relatively stable personality characteristic that describes how much personal responsibility we take for our behavior and its consequences. We tend to attribute the causes of our behavior primarily to either ourselves or environmental

Many individual differences influence performance. Of those discussed so far in this chapter, which do you think are most important for surgeons? Would you rather have a surgeon with high self-efficacy or high self-esteem? © Pixtal/agefotostock RF

101Individual Differences and Emotions CHAPTER 3

factors. (Recall our discussion of the person– situation distinction in Chapter 1.) Locus of control thus has two fundamental forms—internal and external.57

Internal Locus of Control People who believe they control the events and con- sequences that affect their lives are said to possess an  internal locus of control.  Such people, called internals, tend to attribute positive outcomes to their own abilities and negative outcomes to their personal shortcomings. Many entrepreneurs eventually succeed because their internal locus of control helps them overcome setbacks and disap- pointments.58 They see themselves as masters of their own fate and not as simply lucky. Those who willingly take high-stakes jobs in the face of adversity (such as pulling a company back from scandal or bankruptcy) likely also have a high internal locus of con- trol. Although Yahoo! continued to struggle in 2016 and will likely be sold, CEO Marissa Mayer undoubtedly has a high internal locus. This partly explains her willingness to take on the challenge of turning the company around in the face of great difficulties and criticism.59

External Locus of Control In contrast, those who believe their performance is the product of circumstances beyond their immediate control possess an  external locus of control  and tend to attribute outcomes to environmental causes, such as luck or fate. An “external” would attribute a passing grade on an exam to something external like an easy test and attribute a failing grade to an unfair test or distractions at work.

Locus in the Workplace The outcomes of internals and externals differ widely at work.


• Display greater work motivation. • Have stronger expectations that effort leads to performance. • Exhibit higher performance on tasks that require learning or problem solving,

when performance leads to valued rewards. • Derive more job satisfaction from performance.


• Demonstrate less motivation for performance when offered valued rewards. • Earn lower salaries and smaller salary increases. • Tend to be more anxious.60

Don’t mistakenly assume, however, that internal locus is always good and external is always bad. High internals can implode, burn out, or otherwise underperform in situ- ations that offer them little or no control, such as during organizational changes in which they have no input or influence. An external locus would be more helpful here. Encour- agingly, research shows managers can increase the degree of one’s internal locus of control over time by providing more job autonomy (something you’ll learn about in Chapter 5).61

Emotional Stability As described in our discussion of the Big Five and in Table 3.2, individuals with high levels of  emotional stability  tend to be relaxed, secure, unworried, and less likely to experience negative emotions under pressure. In contrast, if you have low levels of emotional stability, you are prone to anxiety and tend to view the world negatively. How is this knowledge useful at work? Employees with high levels of emotional stability have been found to have higher job performance and to perform more organizational citizen- ship behaviors. Recall that organizational citizenship behaviors (OCBs) are actions that go above and beyond your job responsibilities to benefit the organization. Emotionally

102 PART 1 Individual Behavior

stable employees also exhibit fewer counterproductive work behaviors (CWBs), actions that undermine their own or others’ work. Both OCBs and CWBs were discussed in Chapter 2 and are individual-level outcomes illustrated in Figure 3.2 and the Organizing Framework. For an illustration of the way emotional stability affects an individual’s pro- fessional and personal life, see the OB in Action box about Alphabet (Google) Chief Financial Officer Ruth Porat.

Ruth Porat is the chief financial officer of Alphabet (now the parent company of Google). Before taking the job in 2015 she was the CFO of Morgan Stanley and considered one of the most powerful women on Wall Street. Despite her impres- sive résumé and reputation, she is not an accountant and had never worked in a finance department. She has, however, effectively leveraged her Stanford eco- nomics degree and Wharton MBA. More impressive, she has overcome many ad- versities during her rise to the corporate suite.

Not a Crash Porat started in finance in 1987 at Morgan Stanley, just before the stock market crashed. She survived the resulting business downturn, and a few years later she moved to Smith Barney. In 1996 she made her way back to Morgan Stanley and eventually became a technology banker during the tech boom, and bust, of the late 1990s.

Not a Bubble Porat then transformed herself into a financial services banker and rode out the financial crisis of 2008–2010, becoming CFO of Morgan Stanley. Many of her colleagues on the Street cautioned her about her new role. They noted that the last two female CFOs for Wall Street firms—Erin Callan of Lehman Brothers and Sally Krawcheck of Citigroup—had become casualties of the crisis, as did Zoe Cruz, formerly a co-president at Morgan Stanley.

Not Even Cancer and Childbirth But once again Porat was undaunted. Despite also weathering two bouts of breast cancer in the 2000s, she stayed the career course. Her colleagues recognize her as one of the smartest, hardest-working, and most unshakable people with whom they have worked. She even made client calls in the delivery room during the birth of her first child. She also insisted on finishing a business presentation while lying on a conference room table after throwing her back out!

While these are not necessarily admirable stories, they do suggest that Porat has a positive self-view and is relaxed, secure, and unworried in the face of adver- sity (emotionally stable).


1. What are the advantages and disadvantages of displaying such high levels of emotional stability at school and work?

2. Do you think such high emotional stability is necessary to be a successful ex- ecutive on Wall Street? How do your answers change (if they do) for a female executive?

3. How would you evaluate Porat on the other three CSE traits of self-efficacy, self-esteem, and locus of control?

Alphabet’s Financial Chief Avoided Pitfalls that Stymied Others62

OB in Action

103Individual Differences and Emotions CHAPTER 3

Three Practical Considerations for Core Self-Evaluations Before we leave core self-evaluations, we’ll briefly touch on three areas of interest:

• Is having more of a CSE component always better? • Is the whole of the CSE components greater than its parts? • How can managers use CSEs?

Is More Always Better? Like having more self-esteem, having greater emotional stabil- ity is not always better. Researchers found curvilinear, or inverted-U, relationships between emotional stability and outcomes. This suggests that as your emotional stability increases, so too will your job performance and organizational citizenship behaviors, but only to a point.

Effect on organizational citizenship behaviors. As emotional stability continues to increase, OCBs decline, likely because you focus your attention on the task at hand and not on your coworkers. Typically, that’s a good thing. However, at a certain level emo- tional stability becomes problematic if you begin obsessing over details and lose sight of the larger objectives and those with whom you work.

Effect on counterproductive work behaviors. Research found that emotional sta- bility buffered or protected participants against stressors at work (trouble with their su- pervisors, unfair policies, and too much work). Thus they were less bothered and less likely to act out by committing CWBs. But there was a tipping point when the stress be- came too much and emotional stability could not prevent counterproductive behaviors.63

What is the lesson for you? Emotional stability is an asset for many types of jobs, but it will take you only so far.

Is the Whole of CSE Greater than Its Parts? As shown in Figure 3.3, core self- evaluations are composed of self-esteem, self-efficacy, locus of control, and emotional

The Cleveland Cavaliers won the 2016 NBA Championship. Although many consider LeBron James, the team’s marquee player, as the best player in all of basketball, he certainly could not have won the game or series alone. Can you think of non-sports examples where the whole is greater than the sum of the parts? © Beck Diefenback/AFP/Getty Images

104 PART 1 Individual Behavior

stability. To clarify the value of a CSE as a whole versus that of its component traits, think of basketball as a metaphor.

Clearly a team outperforms any individual playing alone. Even the greatest player ever would have no chance against an entire team. The five greatest players ever, playing individually, still have no chance against an entire team. Individually they would never score! Thus the sum of their solo efforts would be zero.

However, if you assembled a team of the five greatest players, they would likely perform very well. We don’t want to overemphasize the team concept (addressed in detail in Chap- ter 8), but the combination of (talented) players in a team does enable individual players to do things they couldn’t otherwise do on their own. Moreover, history tells us that teams with the best individual players (“all-star teams”) don’t win every game. The fact that they can lose shows that indeed the whole is greater than the sum of the parts—sometimes for their com- petitors! CSEs and its component traits are much the same. Core self-evaluation is the team and the traits are the individual players—the whole is greater than the sum of the parts.

How Can I Use CSEs? Especially in a managerial role, you can use your knowledge of CSEs in many practical ways, such as:

• Employee selection. It is more efficient to select employees using CSEs as one broad personality characteristic rather than using its four component traits. Em- ployers can determine the link between one characteristic (CSE) and performance in a particular job, rather than having to determine the relationships between each of the four components parts and performance. This is one relationship versus four. Doing so also enables managers and employers to take advantage of the many ben- eficial outcomes described above.

• Training. The training potential of CSEs is limited because most of its components are trait-like or relatively fixed (self-esteem, locus of control, and emotional stabil- ity). That said, self-efficacy is more flexible than the other three components and can be enhanced as explained above. (Figure 3.4 is an excellent “how to” guide.)

Before moving on, we encourage you to assess your own core self-evaluations in Self-Assessment 3.3. Knowledge of your CSEs helps you understand other components of your personality beyond the Big Five discussed and assessed earlier. Awareness of your self-esteem, self-efficacy, locus, and emotional stability can help guide many as- pects of your work life, such as what types of jobs to look for and what types of develop- ment opportunities may be most useful for you.

How Positively Do I See Myself? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 3.3 in Connect.

1. What is your CSE score? A score greater than 48 is high, between 36 and 48 moderate, and less than 36 low.

2. What are the implications for your performance in school? Work?

3. Now consider a scenario: You’re on a three-member team for a project in this class that requires research, a paper, and a presentation. Your CSE score is high, one team member’s is moderate, and the other’s is low. Describe the potential implications for the three of you working together and your ultimate perfor- mance on the paper and presentation.


Let’s continue our discussion of individual differences and learn about emotional intelligence (EI) next. EI is an increasingly popular OB concept, one that is relatively more flexible than CSEs and the others discussed thus far.

105Individual Differences and Emotions CHAPTER 3


As we know, people deal with their emotions in many different ways, which is one rea- son we are discussing emotions in the chapter on individual differences. For a long time many people considered skill in managing emotions as simply a matter of maturity. However, since the mid-1990s researchers, consultants, and managers have increas- ingly described emotional maturity by using the phrase emotional intelligence (EI). Today, EI is big business. Hundreds of consulting companies provide EI products and services, and estimates suggest that approximately 75 percent of Fortune 500 compa- nies use them.64

What Is Emotional Intelligence?  Emotional intelligence  is the ability to monitor your own emotions and those of others, to discriminate among them, and to use this information to guide your thinking and actions. Referred to by some as EI (used in this book) and by others as EQ, emotional intelligence is a mixture of personality and emotions and has four key compo- nents (see also Table 3.6):

1. Self-awareness 2. Self-management 3. Social awareness 4. Relationship management65

The first two dimensions constitute personal competence and the second two feed into social competence. Recall the discussion earlier in the chapter of inter- and intra-personal intelligences described by Gardner. EI builds on this work.

Before learning more about emotional intelligence, complete Self-Assessment 3.4. Self-awareness is fundamental to EI, and having this knowledge in hand is helpful in exploring the benefits of EI and learning how to develop it.


What is emotional intelligence and how does it help me?


You likely already know that intelligence doesn’t tell us everything we need to know about

performance. The smartest student doesn’t always get the best grades, and the smartest can-

didate for a job is not necessarily the best choice. While you almost certainly agree with both

these statements, what is even more certain is that people perform better if they have emo-

tional intelligence—smart or not. When you understand the concept of emotional intelligence

from an OB perspective, you’ll understand why it is an important person-factor input in the

Organizing Framework.

106 PART 1 Individual Behavior


Personal Competence


Capability Description

Self-Awareness Emotional self-awareness

Reading one’s own emotions and recognizing their impact; using “gut sense” to guide decisions

Accurate self-assessment Knowing one’s strengths and limits

Self-confidence A sound sense of one’s self-worth and capabilities

Self-Management Emotional self-control Keeping disruptive emotions and impulses under control

Transparency Displaying honesty and integrity; trustworthiness

Adaptability Flexibility in adapting to changing situations or overcoming obstacles

Achievement The drive to improve performance to meet inner standards of excellence

Initiative Readiness to act and seize opportunities

Optimism Seeing the upside in events

Social Competence


Capability Description

Social Awareness Empathy Sensing others’ emotions, understanding their perspective, and taking active interest in their concerns

Organizational awareness Reading the currents, decision networks, and politics at the organizational level

Service Recognizing and meeting follower, client, or customer needs

Relationship Management

Inspirational leadership Guiding and motivating with a compelling vision

Influence Wielding a range of tactics for persuasion

Developing others Bolstering others’ abilities through feedback and guidance

Change catalyst Initiating, managing, and leading in a new direction

Conflict management Resolving disagreements

Building bonds Cultivating and maintaining a web of relationships

Teamwork and collaboration Cooperation and team building

SOURCE: D. Goleman, R. Bovatzis, and A. McKee, Primal Leadership: Realizing the Power of Emotional Intelligence (Boston, MA: Harvard Business School Publishing Corporation, 2002), p. 39.

What Is Your Level of Emotional Intelligence? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 3.4 in Connect.

1. Which of the four dimensions is highest for you? What are the implications for you at school and/or work?

2. Which dimension is the lowest? What are the implications for you at school and/ or work?

3. Do you have greater personal or social competence? What are the implications for you at school and/or work?


107Individual Differences and Emotions CHAPTER 3

“Some days you’re the fire hydrant and some days you’re the dog.”

This quote is by Parker Conrad, from an interview he gave after he was forced to resign as CEO of Zenefits, a company he founded. Zenefits’ software serves as both insurance broker and benefits ad- ministrator for companies, essentially eliminating the need for intermediaries like conventional insur- ance brokers. While the idea and its growth are impressive, the company has many problems, and these have been attributed to Conrad’s personality and behavior.66

It seems that Conrad was especially determined to pursue hyper-growth at any cost. As the founder and chief, he ran the company his way and according to the mantra, “Ready, fire, aim!”67 His aggressive, confrontational, and emotional nature pervaded his adult life. When asked in an interview about the fu- ture for insurance brokers, he answered, “They are (expletive).” In response to a lawsuit from ADP (a competitor and major player in the payroll processing, tax, and HR business), Conrad launched a Twitter hashtag—#ADPeeved.68

Conrad also resisted adding members to the company’s board to provide more oversight and guid- ance, as well as attempts to slow its growth and hiring.69 Employees described him as “demanding, undisciplined, and unable to build a sustainable company . . . there were celebrations and tears of relief” when he resigned.

His experiences at Zenefits seem to fit a pattern. He was forced to leave his previous start-up (SigFig) because of a falling out with the cofounder. He also had to take a leave of absence from Harvard (although he eventually graduated), when he neglected his classes while working at the school newspaper.70

Although Parker Conrad has already stepped down as CEO, assume he hasn’t, and apply the 3-Step Problem-Solving Approach below.

Problem-Solving Application

Now that you have some knowledge of your EI you might wonder, Why another type of intelligence, and how is EI different from IQ? Those who developed the concept of EI argue that traditional models of IQ are too narrow, failing to consider interpersonal com- petence. They also argue from a practical perspective that EI is more flexible than IQ and can be developed throughout your working life. This is consistent with Figure 3.2 and the practical benefits of relatively flexible IDs. Let’s explore the benefits of EI and how to develop yours.

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problem in the example.

Step 2: Identify the OB concepts and theories that may point to the cause of the problem. For example, what role has Parker Conrad’s emotional intelligence played in the problem you defined? Which personality attributes are evident, and how might they have contributed?

Step 3: Assuming Conrad were still CEO, make a recommendation to correct the situation. Think both short-term and long-term.

108 PART 1 Individual Behavior

Benefits of EI What Research Tells Us EI has been linked to better social relationships, well- being, and satisfaction across all ages and contexts, including work.71 For instance, store managers’ EI was shown to foster greater team cohesiveness (covered in Chap- ter 8) among sales associates, and this in turn boosted sales.72 EI has also been linked with creativity, helping employees manage their emotions amid the challenges of the creative process in order to stay on task and remain in the creative space. EI further enables individuals to apply positive emotions to their work, improving their creative outcomes.73

Meg Whitman, No. 7 on Fortune’s Most Influential Women list, holds the three top executive titles at Hewlett-Packard—CEO, chairperson, and president. She also is orchestrating the splitting of the company into two divisions. HP has been losing market share, competitive position, and market capitalization for years, and Whitman is determined to fix it. She has implemented more than 80,000 job cuts and endured a 30 percent decline in stock price in 2015 alone. To deal with stakeholders, including employees, shareholders, customers, and board members, many of them angry, she must possess and utilize a tremendous amount of emotional intelligence.74

© Visual China Group/Getty Images

Figure 3.5 summarizes the relationships between EI and a number of individual differences we’ve covered as well as several outcomes. EI does not contain any strong relationships with other inputs or outcomes contained in the Organizing Framework. In fact, there are an equal number of weak and moderate relationships. Most importantly, EI was not found to be the big driver of performance as suggested by some consultants and academics.

Practical Take-Aways EI certainly makes common sense and is appealing on the surface. However, despite its popularity and the millions of dollars spent on EI programs every year, the research results are mixed. Proceed with caution.75 Beware of individuals and companies claiming EI is the silver bullet of performance. It is but another individual difference, and no single such attribute explains all behavior. Nevertheless you should identify and develop your own EI to realize the clear interpersonal benefits. Table 3.6 can serve as a guide.

109Individual Differences and Emotions CHAPTER 3


Understanding My Own Emotional Intelligence

1. Using Table 3.6, evaluate and develop a plan to enhance your EI. What are your personal strengths and weaknesses in terms of both personal and social compe- tence? Be honest.

2. Think of an example where your EI has helped you and an example where you would have benefited from having greater EI.

3. Identify one aspect of personal competence from Table 3.6 and describe how you can improve it. Be specific.

4. Identify one aspect of social competence from Table 3.6 and describe how you can improve it. Be specific.

Now that you’ve learned about emotional intelligence, let’s explore emotions themselves.


V ar

ia bl

es Extroversion


Emotional Stability

Cognitive Ability


Supervisor-rated Job Performance

Self-rated Job Performance

Subjective Well-being

Mental Health

Physical Health

Strength of Relationship Not significant Weak Moderate Strong

SOURCE: N. Sánchez-Álvarez, N. Extremera, and P. Fernández-Berrocal, “The Relation between Emotional Intelligence and Subjective Well-Being: A Meta-Analytic Investigation,” Journal of Positive Psychology, May 2016, 276–285; D. Joseph, J. Jin, D. A. Newman, and E. H. O’Boyle, “Why Does Self-Reported Emotional Intelligence Predict Job Performance? A Meta-Analytic Investigation of Mixed EI,” Journal of Applied Psychology, March 2015, 298–342; A. Martins, N. Ramalho, and E. Morin, “A Comprehensive Meta-Analysis of the Relationship between Emotional Intelligence and Health,” Personality and Individual Differences, October 2010, 554–564.

110 PART 1 Individual Behavior


Many people believe employees should check their emotions at the door when they come to work. The reality is that this is impossible. Like personality and the other IDs discussed thus far, emotions are an integral part of who we are as people, a fun- damental part of the human experience, and they greatly influence our performance. Given this reality, you will want to understand emotions so you can manage them as a process to benefit you, your team, and your employer. This will help make emotions a practical tool for you to use, rather than something to avoid, ignore, or suppress.

Emotions—We All Have Them, but What Are They?  Emotions  are complex, relatively brief responses aimed at a particular target, such as a person, information, experience, or event. They also change psycho- logical and/or physiological states.76 Researchers distinguish between felt and dis- played emotions.77 For example, if your boss informs you that you’ve been passed over for a promotion, you might feel disappointed and/or angry (felt emotion). You might keep your feelings to yourself or you might begin to cry. Both reactions are instances of displayed emotions. It’s just that in the first case you are choosing not to show emotion, which means your display is “no emotion.” Your display can affect the outcomes, in this case your manager’s reactions. Taxi drivers, waiters, and hairdressers all received higher tips when they were trained to manage what they felt and the way they displayed these feelings.78

Emotions also motivate your behavior and are an important means for commu- nicating with others.79 A smile on your face signals that you’re happy or pleased, while a scowl and a loud, forceful tone of voice may reflect anger. We also know that our emotions can and often do change moment to moment and thus are more flexible than the other IDs discussed thus far. For these reasons, emotions have im- portant implications for you at school, at work, and in every other social arena of your life.


How can understanding emotions make me more effective at work?


The human experience is awash in emotions. You won’t be surprised then to learn that emo-

tions are important both at work and as an individual-level process in the Organizing Frame-

work. You’re about to learn the difference between felt versus displayed emotions and how

emotions serve as an important means of communication with both ourselves and others.

Most of your experiences elicit a mix of positive and negative emotions, and these emotions

also are tightly related to your goals.

111Individual Differences and Emotions CHAPTER 3

Emotions as Positive or Negative Reactions to Goal Achievement You’ll notice from the definition that you can think of emotions, whether positive, nega- tive, or mixed, in terms of your goals.80

• Positive. If your goal is to do well in school and you graduate on time and with honors, you are likely to experience positive emotions such as joy, gratitude, pride, satisfaction, contentment, and relief. These emotions are positive because they are congruent (or consistent) with your goal.

• Negative. Negative emotions are triggered by frustration and failure to meet goals. They are said to be goal incongruent. Common negative emotions are anger, fright, anxiety, guilt, shame, sadness, envy, jealousy, and disgust. Which of these are you

Applying OB

Most people procrastinate at least occasionally. Some seem to procrastinate all the time. We often attribute this to poor time management or even laziness. But it seems that research has revealed a true cause—emotions. Researchers say procrastination is way to deal with stress. That’s right. Putting off studying for your next exam, for ex- ample, is a way of dealing with the stress of actually preparing for it. The rationale is that many things you do while procrastinating are often things that make you feel good or that you enjoy, such as shopping, going out with friends, watching TV, or playing video games. They help ease the anxiety associated with the task you need to do (study for an exam). Compounding this further, it seems that people who are more impulsive tend to be more anxious, and the more anxiety they experience, the more likely they are to procrastinate to make themselves feel better. With this in mind, what can occasional and chronic procrastinators do to help themselves?

1. Set subgoals. Whatever the needed or dreaded task is, break it into smaller parts or subgoals and specify a particular start and end time for each. Doing this will help the task seem less daunting, which will reduce your associated anxiety and the temptation to do something else more enjoyable (procrastinate).

2. Just do it. We’re not talking about going for a run or playing sports, which while healthy may be another form of procrastination. Instead, we’re saying just get started and do part of the task. Once you’ve begun, completing it will seem less difficult.

3. Envision the benefits and feelings. How will you feel when you’re finished? What will you be able to do? This seems obvious enough, but research has shown that people rarely think of such benefits when they are procrastinating.

4. Reward yourself. Building on No. 3, reward yourself for achieving the subgoals, as well as the overall goal or task.

Blaming your emotions won’t get your term paper done or help you prepare suffi- ciently for the upcoming client presentation. Understanding the role emotions play, however, may indeed help you recognize and overcome your tendencies. With this advice in mind, get to work!

Adapted from S. Wang, “To Stop Procrastinating, Start by Understanding the Emotions Involved,” The Wall Street Journal, August 31, 2015, http://www.wsj.com/articles/to-stop-procrastinating-start-by-understanding-whats-really-going-on-1441043167.

Do You Procrastinate? Blame Your Emotions!

112 PART 1 Individual Behavior

likely to experience if you fail the final exam in a required course? Failing would be incongruent with your goal of graduating on time with a good GPA. Typically, the more important the goal, the more intense the emotion.

• Mixed. Meeting or failing to meet our goals can also generate mixed emotions. Say you receive a well-earned promotion that brings positives like more responsi- bility and higher pay—but only if you relocate to another state, which you don’t want to do.

Besides Positive and Negative, There’s Past vs. Future The negative–positive distinction matters—you’re happy, you’re sad. However, an- other characteristic of emotions can be especially useful for managers. Assume you’re a manager in a company that just downsized 15 percent of its employees. This is stressful for all those who lost their jobs, but let’s focus on two fictitious employees who survived the cuts—Shelby and Jennifer. Both feel negatively about the job cuts, but in different ways.

Shelby: Her dominant emotion is anger. People are typically angry about things that happened (or didn’t happen) in the past. This means that anger is a backward- looking or retrospective emotion.

Jennifer: Her dominant emotion is fear. People are typically fearful of things that might happen in the future. Fear is thus a forward-looking or prospective emotion.

Practical implications for managers. Knowing these emotions tells you that Shelby is likely most concerned with something that happened in the past, such as the way deci- sions were made about whom to terminate. She may think the process was unfair and caused a number of her favorite colleagues to be let go. As for Jennifer, knowing she is dominated by fear tells you that it is uncertainty about the future—perhaps her job might be cut next—that concerns her most. As their manager, you can use this more specific knowledge of Shelby’s and Jennifer’s emotions to guide your own actions. The following Take-Away Application builds on this scenario.


Managing Others’ Emotions

Assume you are their manager and you know Shelby’s dominant emotion related to the downsizing is anger and Jennifer’s is fear.

1. What are two specific things you could do to alleviate Shelby’s anger?

2. What are two specific things you could do to reduce Jennifer’s fear?

3. What other things could you do to increase their positive emotions related to the changes?

How Can I Manage My Negative Emotions at Work? Theoretically, to manage your emotions at work you could simply translate your felt emo- tions into displayed emotions—unfiltered. Besides being unrealistic, however, this would be disastrous. Organizations have  emotion display norms,  or rules that dictate which types of emotions are expected and appropriate for their members to show.81

113Individual Differences and Emotions CHAPTER 3

Andrew Cornell, CEO of Cornell Iron Works, understands the days of the scream- ing boss are numbered. He deals with anger toward his employees by holding frequent and brief meetings, “rather than ‘waiting until the end, throwing a nuclear bomb and leaving blood all over the wall.’”82

Screaming takes other forms too. At work you might receive a hostile e-mail berating you, and copied to your coworkers, in ALL CAPS. Science supports the many people who believe yelling, whether by e-mail or face to face, is inappro- priate and counterproductive. You may have been in a group meeting when someone was so angry he or she began to scream and bully another person. Both are unprofessional and uncalled for, and they damage the reputation of the perpetrator.

Costs of Negative Emotions Growing research evidence confirms the sus- pected undesirable outcomes of negative emotions. For instance, managers need to be careful about generating feelings of shame and/or anger when giving feedback to employees, because these particular emotions have been linked to counterproductive work behaviors such as abuse of others and theft.83

Unhappy Customers May Suffer Twice Customers’ negative emotional dis- plays, such as verbal aggression, have been shown to negatively affect employee job performance. Specifically, receivers of the aggression made more mistakes recalling and processing the customers’ complaints.84 You may want to think twice before venting on a customer service representative.

What About the Benefits of Anger? Expressing your anger sometimes can actu- ally solve the problem. Your message is communicated, though forcefully, which can lead to better understanding. Displays of anger also are more likely to be beneficial if they are directed at organizational issues and problems instead of at individuals. Being angry at the problem rather than the person is likely to be perceived more constructively and less defensively.85


1. What advice would you give to managers on how to handle their own anger and other negative emotions at work?

2. What advice would you give to managers on how to handle the anger and negative emotions felt (and expressed) by their direct reports?

3. What has been the most productive way for you to deal with your negative emotions?

The Good and Bad of Anger at Work OB in Action

But what can you do when, as is inevitable, sometimes you feel negative emotions at work? The OB in Action box describes the costs and benefits of displaying anger at work.

Anger isn’t the only negative emotion. Table 3.7 provides guidance on a variety of negative emotions and how to deal with them. As you study the table, think of your own experiences and reactions and how the recommendations could have helped you handle them.

114 PART 1 Individual Behavior

When executives get angry, they can get rude. In 2001, unhappy with an investor in a conference call who noted Enron seemed unable to produce its balance sheet, CEO Jeff Skilling said, “Well, thank you very much, we appreciate that, A–hole.” Enron later declared bankruptcy in one of the biggest financial scandals at the start of the century. Skilling was convicted on 19 counts of securities and wire fraud in 2006. © Jessica Kourkounis/AP Photo

Carol Bartz, CEO of Yahoo! from 2009 to 2011, told staff that if anyone leaked company secrets, she would “drop-kick” them “to f—ing Mars.” Like Skilling’s comment, Bartz’s statement was widely reported. Bartz was fired, though most likely for business reasons and not for tough talk. © Manu Fernandez/AP Photo


If You’re Feeling . . .

Then You Might Want To . . .

Fearful Step back and try to see the situation objectively. Ask yourself: “Is my business or career truly at risk?” If not, then you may just be feeling nervous and excited rather than fearful.

Rejected Do you respect the opinion of the person rejecting you? If the comment came from someone you don’t respect, rejection may actually be a backhanded compliment. If you do respect the person, you may want to clarify by asking: “The other day you said ________ and I felt hurt. Can you clarify what happened?”

Angry Get some distance from the situation to avoid blowing your top in the heat of the moment. Once you calm down, pinpoint the reason you are angry. Most often the reason is that somebody violated a rule or standard that is deeply important to you. Find a way to communicate the importance of the rule or standard to the person so it doesn’t happen again.

Frustrated We can all get frustrated at work when results don’t meet our expectations, given the amount of time and energy we’ve applied. The goal often is achievable, but progress is slow. First, reassess your plan and behavior. Do they need modification? If not, then perhaps you simply need to be patient.

Inadequate Even those with the highest self-esteem feel they don’t measure up at times. Our discussion of self-efficacy and how to build it in Table 3.5 can guide your solution to this emotion.

Stressed Time constraints are a major source of stress. Too many commitments, too little time. You need to prioritize! Do what is important rather than what is urgent. For example, most e-mail is urgent but not important.

SOURCE: Adapted from G. James, “Feeling Negative? How to Overcome It,” Inc. November 26, 2012.

115Individual Differences and Emotions CHAPTER 3

You learned that who you are affects performance because individual differences (IDs) play an im- portant and often fundamental role in the way you perform at school, at work, and in other contexts. Many practical applications of this learning will al- low you to improve your own performance and work more effectively in any organizational set- ting, including one where you manage others. Re- inforce your learning with the Key Points below. Consolidate your learning using the Organizing Framework. Then challenge your mastery of the material by answering the Major Questions in your own words.

Key Points for Understanding Chapter 3 You learned the following key points.

3.1 THE DIFFERENCES MATTER • Individual differences (IDs) is a broad cate-

gory used to describe the vast number of at- tributes (traits and behaviors) that describe a person.

• It is helpful to think of IDs in terms of their rel- ative stability. Intelligence is relatively fixed, while attitudes and emotions are more flexi- ble and under a person’s control.


• Intelligence represents an individual’s capac- ity for constructive thinking, reasoning, and problem solving. It is more than IQ.

• Howard Gardner, in his theory of multiple intelligences, describes eight different intelligences—linguistic, logical, musical, kinesthetic, spatial, interpersonal, intraper- sonal, and naturalist.

• Practical intelligence is the ability to solve everyday problems by utilizing knowledge

gained from experience in order to purpose- fully adapt to, shape, and select environments.

• Knowledge of various forms of intelligence is useful for identifying intelligences relevant to particular jobs, which we can use to select, place, and develop individuals accordingly.


• Personality is the combination of stable physi- cal, behavioral, and mental characteristics that give individuals their unique identities.

• A useful way to describe personality is using the Big Five personality profiles. Its dimen- sions are extroversion, agreeableness, con- scientiousness, emotional stability, and openness to experience.

• People with proactive personalities are rela- tively unconstrained by situational forces and often affect environmental change. Proactive people identify opportunities and act on them, show initiative, take action, and perse- vere until meaningful change occurs.

• Employers use personality tests to select and place employees. There is no ideal personal- ity, however, and personality testing often has flaws.


• Core self-evaluations (CSEs) represent a broad personality trait consisting of four nar- row and positive individual traits: (1) self- efficacy, (2) self-esteem, (3) locus of control, and (4) emotional stability.

• Self-efficacy is a person’s belief about his or her chances of successfully accomplishing a specific task.

• Self-efficacy beliefs can be improved via ex- perience, behavior models, persuasion from others, and emotional state.

What Did I Learn?

116 PART 1 Individual Behavior

• Most experiences at and outside work are a mixture of positive and negative emotions, rather than purely one or the other.

• Besides positive and negative, we distinguish emotions in terms of whether they have a future orientation (anxiety) or a past orientation (anger).

• Organizations have emotion display norms, or rules, that dictate which types of emotions are expected and appropriate for their members to show. It therefore is important to learn how to recognize and manage emotions.

The Organizing Framework for Chapter 3 As shown in Figure 3.6, you learned how individ- ual differences can present themselves through the process of emotions (both felt and expressed) at the individual level, affecting many workplace outcomes at both the individual and group/team levels.

Challenge: Major Questions for Chapter 3 You should now be able to answer the following questions. Unless you can, have you really

• Managers can realize the practical value of CSEs by selecting employees based on them and then training them to enhance elements of their CSEs.


• Emotional intelligence (EI) is the ability to monitor our own and others’ feelings and emotions, to discriminate between them, and to use this information to guide our thinking and actions.

• EI is associated with higher sales and im- proved retention, as well as leadership emer- gence, behavior, and effectiveness.

• An individual can develop EI by building per- sonal competence (self-awareness and self- management) and social competence (social awareness and relationship management).


• Emotions are complex, relatively brief re- sponses aimed at a particular target, such as a person, information, experience, or event.


© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.


Person Factors • Intelligences • Personality • Proactive personality • Core self-evaluations • Self-efficacy • Locus of control • Self-esteem • Emotional intelligence Situation Factors

Individual Level • Emotions Group/Team Level • Group/team dynamics Organizational Level

Individual Level • Task performance • Work attitudes • Well-being/flourishing • Turnover • Career outcomes Group/Team Level • Group/team performance • Group satisfaction Organizational Level • Financial performance • Survival • Reputation

117Individual Differences and Emotions CHAPTER 3

3. How does my personality affect my perfor- mance at school and work?

4. How do self-evaluations affect my perfor- mance at work?

5. What is emotional intelligence and how does it help me?

6. How can understanding emotions make me more effective at work?

processed and internalized the lessons in the chapter? Refer to the Key Points, Figure 3.6, the chapter itself, and your notes to revisit and an- swer the following major questions:

1. How does understanding the relative stability of individual differences benefit me?

2. How do multiple intelligences affect my performance?

IMPLICATIONS FOR ME From a practical standpoint, increasing your knowledge of the many individual differences, such as personality, intelligences, CSEs, and EI—what they are, how they operate, and why they matter—will increase your own performance. Use your new knowledge, along with the self-assessments and concepts learned in Chapter 2, to enhance your self-awareness. Then use this knowledge to identify the pros and cons of particular IDs for you at school and work. We also recommend applying your knowledge of the many IDs to create profiles of the managers and leaders where you work (or where you want to work if you’re not cur- rently employed). Profiling the “important people” in this way will not only illustrate the concepts you’ve learned, but it also will serve as a template or prototype of what is valued at a particular employer. In other words, create a profile of what successful people look like. Use this knowledge to highlight those same qualities you possess during job interviews and also to guide your own development. Be sure to include emotional intelligence, be- cause despite mixed research results, we have shown that it can make or break individuals.

IMPLICATIONS FOR MANAGERS IDs have great practical significance for managers. First, it is useful to explicitly include the individual differences that matter most in job descriptions. This means you are well served to list job responsibilities and the employee characteristics you think are most important to be successful in a particular job. Second, use your knowledge of the continuum when se- lecting and training employees. Realize that you often will want to hire and test for rela- tively fixed traits (intelligence and personality), because these are not easy to change, and consider training or coaching the others. You should also assess your own emotional intel- ligence, paying explicit attention to both personal and social competence. Don’t simply make a summary judgment—“I have high EI,” or “My EI is pretty good.” Given the potential consequences of low EI, you are wise to put in the effort to learn about and improve both aspects of yours (if needed). After doing this, you will be better prepared to assess the emotional intelligence of those you manage and those you consider hiring. These actions will benefit you, them, other coworkers, and the larger organization.

118 PART 1 Individual Behavior

Amazon is not just a surviving company of the 1990s tech boom; it is now one of the largest and most suc- cessful companies in the world in any industry. It has leveraged its game-changing approach to selling books to sell almost everything to almost everybody almost anywhere. Today Amazon is a leader in all things customer service, and it has achieved this lead- ing position through groundbreaking technological in- novation. Technological innovation also has made Amazon one of the largest web services companies in the world and much more than an formidable retailer. All these legendary accomplishments are the result of the commitment and contributions of thousands of ex- tremely talented Amazonians. As you would certainly expect, the standards for hiring are exceptionally high. But what it takes to thrive and survive at the company is even more challenging.

IT’S NOT ALL SUNSHINE AND ROSES While Amazon’s accomplishments and future endeav- ors are widely reported, until recently relatively little was known about its approach to managing employ- ees. But recent reports describe a “punishing corpo- rate environment: long hours, disparaging bosses, high stress, no time or space to recover, all resulting in uncommonly high employee turnover.”86 Just how bad is it? PayScale ranked Amazon 464th among the For- tune 500, with median employee tenure of approxi- mately one year! (A competing estimate puts average tenure at 18 months.)87

What pressures drive such high turnover? In a letter to shareholders in 1997, founder and CEO Jeff Bezos wrote: “You can work long, hard, or smart, but at Amazon you can’t choose two out of three.”88 This sug- gests that employees must always be on, be in the game, and play it well. Amazonians experience many of the common pressures of today’s workplace— 80-plus-hour workweeks, 24/7 connectivity, no real vacations or holidays (no surprise given that Amazon is the largest retailer on the planet).

Amazon’s “always on” culture is manifest in a num- ber of chilling stories, such as that of an employee who negotiated a 7 to 4:30 schedule with her boss after having her first child. The problem was that her co- workers didn’t see her arrive early and crushed her in

anonymous peer feedback (which employees are en- couraged to use). Her boss said he couldn’t defend her in her performance review if her own coworkers were critical of her. Can it get worse? Yes. Amazon also uses a “rank and yank” performance management sys- tem. Employees are ranked by their managers, and those near the bottom are terminated every year. This leaves little room for taking a breath or backing off, even if you have a miscarriage, take care of an ailing parent, or receive treatment for cancer. There are sto- ries of employees in all these predicaments who were essentially told that their lives were incompatible with working at Amazon. It is no wonder one former em- ployee said, “Nearly every person I worked with, I saw cry at their desk.”89 Amazon disputes some of these claims as simply those of disgruntled former employ- ees. And because it has so many, even a small per- centage is a big number.

WE CAN MEASURE “THAT” . . . AND “THAT” MATTERS Another key contributor to the pressure cooker envi- ronment is that everything is measured. For instance, warehouse employees are monitored using sophisti- cated systems to track how many boxes they pack per hour. White-collar employees participate in routine “business review” meetings, for which they need to prepare, read, and absorb 50 to 60 pages of reports amounting to thousands of data points. During these review meetings employees are often quizzed on par- ticular numbers by their managers, and it is not uncom- mon to hear managers say that responses are “stupid” or tell workers to “just stop it.”90

To be sure, the company succeeds in large part be- cause of the immense customer data it collects and uses to select and sell its products. The plan is to use data the same way to make performance management an efficient and effective everyday process, rather than a once-a-year event. However, many employees describe the result as “purposeful-Darwinism”91 in which every employee constantly competes with other employees. Such relentless and pervasive competi- tion, while well intended, has many undesirable conse- quences. For instance, it is common for employees to hoard ideas and talent, because sharing becomes a


Amazon to Competition: We Will Crush You! Amazon to Employees: We Will Churn You!

119Individual Differences and Emotions CHAPTER 3

most valuable asset is ground up and discarded in such a way and at such a high rate.96

To be fair, surely some percentage of the company’s more than 150,000 employees are quite satisfied and successful. The system works for some, and for many it works for some period of time. And the incredibly high bar, marquee name, and extreme work ethic required to get hired at Amazon make former Amazonians very valuable to the company’s competitors and many other companies both inside and outside the technology industry.


Step 1: Define the problem.

A. Look first at the Outcome box of the Organizing Framework in Figure 3.6 to help identify the important problem(s) in this case. Remember that a problem is a gap between a desired and current state. State your problem as a gap, and be sure to consider problems at all three levels. If more than one desired outcome is not being accomplished, decide which one is most important and focus on it for steps 2 and 3.

B. Cases have protagonists (key players), and problems are generally viewed from a particular protagonist’s perspective. You need to determine from whose perspective—employee, manager, team, or the organization—you’re defining the problem. As in other cases, whether you choose the individual or organizational level in this case can make a difference.

C. Use details in the case to determine the key problem. Don’t assume, infer, or create problems that are not included in the case.

D. To refine your choice, ask yourself, Why is this a problem? Focus on topics in the current chapter, because we generally select cases that illustrate concepts in the current chapter.

Step 2: Identify causes of the problem by using ma- terial from this chapter, which has been summarized in the Organizing Framework and is shown in Figure 3.1. Causes will tend to appear in either the Inputs box or the Processes box.

A. Start by looking at the Organizing Framework (Figure 3.1) and determine which person factors, if any, are most likely causes of the defined problem. For each cause, explain why this is a cause of the problem. Asking why multiple times is more likely to lead you to root causes of the problem. For example, do particular individual differences employees possess help explain the

personal loss for the sharer and a gain for somebody else. Moreover, other’s ideas are not just scrutinized; they are undermined. Groups of employees often con- spire against others on the peer feedback system to get ahead (or to put somebody else behind). As for managers, they must both defend the direct reports they deem most valuable to their own performance, and at the same time determine whom they can sacri- fice—not everybody can pass the performance test.92

AMAZON = BEZOS Much of the praise and many of the complaints are di- rected to Jeff Bezos. Not only is he the founder and CEO, but he also is the chief architect of all things Amazon. His personality is embodied in the company values and the way it operates. Like Bezos himself, employees are expected to use data, confront, perse- vere, and win. This approach appeals to and is sustain- able for only a very specific type of employee. One former employee described Amazon’s hiring process as “panning for gold.”93 The company is looking for the rare stars who can thrive in its demanding environ- ment, and it must sift through many, many people to find them.

This strategy is a real challenge for Amazon. Its size, growth rate, and turnover require the company to hire thousands and thousands of employees every year, and this doesn’t include the thousands of temporary workers it hires to meet the holiday rush. Interviews with male employees in their 40s revealed that many are convinced Amazon will replace them with employ- ees in their 30s, who worry in turn that the company prefers employees in their 20s. The implication? Younger employees have fewer commitments and more energy.94

WHAT ARE WE GOING TO DO ABOUT IT? To combat the churn, Amazon has structured its stock options to vest (transfer to the employee as owner) on an unusual schedule. Instead of vesting evenly over a period of years, Amazon employee options vest at 5 percent in year one, 15 percent in year two, 40 per- cent in year three, and 40 percent in year four. Employ- ees who leave within one year of hire must repay part of their signing bonus, and if within two years they must repay their relocation package if any. Many ex- perts question the effectiveness of such policies, how- ever. Lindsey Thorne, manager at a Seattle recruiting firm that places many former Amazon employees, says, “The potential payout of waiting for stock to vest won’t tie down unhappy employees who are ready to jump ship.”95 Still others question whether Amazon can continue to innovate and lead in the marketplace if its

120 PART 1 Individual Behavior

cause? Again, do this for several iterations to arrive at the root causes.

D. To check the accuracy or appropriateness of the causes, be sure to map them onto the defined problem.

Step 3: Make recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5)? Which recommendation is desirable and feasible?

A. Given the causes identified in Step 2, what are your best recommendations? Use the material in the current chapter that best suits the cause. Remember to consider the OB in Action and Applying OB boxes, because these contain insights into what others have done. Details of this case, for instance, describe how Amazon has particular stock vesting practices to help ensure retention. This might be part of the solution, but is it sufficient?

B. Be sure to consider the Organizing Framework— both person and situation factors, as well as processes at different levels.

C. Create an action plan for implementing your recommendations.

problem you defined in Step 1? This might lead to the conclusion that the characteristics Amazon uses to select and hire employees contribute to the problem.

B. Follow the same process for the situation factors. For each ask yourself, Why is this a cause? For example, Amazon’s HR practices likely have some effect on the problem you defined. If you agree, which specific practices and why? Leaders (managers and Bezos) greatly influence employees’ experiences at Amazon. Do they cause the problem you defined in Step 1? If yes, then why? By following the process of asking why multiple times you are likely to arrive at a more complete and accurate list of causes. Again, look to the Organizing Framework for guidance.

C. Now consider the Processes box in the Organizing Framework. Are any processes at the individual, group/team, or organizational level potential causes of your defined problem? It certainly seems that their emotions are notable aspects of Amazon employee experiences. Do they help explain the problem defined in Step 1? What about performance management? For any process you consider, ask yourself, Why is this a


Companies Shift Smoking Bans to Smoker Ban

An increasing number of companies are using smok- ing as a reason to turn away job applicants. Employers argue that such policies increase worker productivity, reduce health care costs, and encourage healthier life- styles. They raise the ante on earlier and less effective efforts, such as no-smoking work environments, cessa- tion programs, and higher health care premiums for smokers.

“Tobacco-free hiring” often requires applicants to submit to a urine test for nicotine, and violations by new hires are cause for termination. The shift from “smoke-free” to “smoker-free” workplaces has prompted sharp debate about employers intruding into employees’ private lives and regulating legal behaviors.

Some state courts have upheld the legality of re- fusing to employ smokers. For example, hospitals in  Florida, Georgia, Massachusetts, Missouri, Ohio, Pennsylvania, Tennessee, and Texas, among others,

stopped hiring smokers. Some justified the new poli- cies as ways to reduce health care costs and to ad- vance their institutional missions of promoting personal well-being.

Supporters of these policies note that smoking con- tinues to be the leading cause of preventable death. About 17 percent of U.S. adults still smoke,97 and smokers cost approximately $5,800 per person per year in lost productivity and additional health care ex- penses.98 Moreover, smokers are not recognized as a protected class, which means they typically are not covered by anti-discrimination laws. Opponents argue that such policies are a slippery slope. Some say that, legality aside, implementing anti-smoker policies is in principle the same as discriminating on the basis of gender, race, or disease (alcoholism). Furthermore, successful nonsmoker policies may lead to limits on other legal employee behaviors, like drinking alcohol, eating fast food, and participating in dangerous sports.

121Individual Differences and Emotions CHAPTER 3

Many companies add their own wrinkle to the smok- ing ban and even forbid nicotine patches and other forms of tobacco consumption. And while most com- panies apply the rules only to new employees, grand- fathering existing employees, a few have eventually mandated that existing employees must quit smoking or lose their jobs.

Managing Emotions While Managing a Smoking Problem 1. Legality aside, do you agree in principle that

forbidding smokers is discriminatory? Explain.

2. Assume you are the employee representative on the executive board at your company. You know the vice president of human resources plans to propose a smoker ban to begin June 1 for all new hires and the following January for all

existing employees. However, you’ve been asked to keep the plans quiet. What would you do and why?

3. Now assume you have permission to share the information. You know employees’ responses are likely to be emotional (some positive and some negative). How would you present the information to them?

4. More generally, under what circumstances do companies have the right to consider and ban legal employee behaviors during the hiring process, as many are doing now with tobacco consumption? Explain.

5. What is your position regarding policy changes (like a smoker ban) and applying them to existing employees who were hired under different guidelines? Explain your position.

4 Major Topics I’ll Learn and Questions I Should Be Able to Answer

4.1 Person Perception MAJOR QUESTION: How do I form perceptions of others?

4.2 Stereotypes MAJOR QUESTION: How can I use awareness of stereotypes to make better decisions and manage more effectively?

4.3 Causal Attributions MAJOR QUESTION: How do I tend to interpret employee performance?

4.4 Defining and Managing Diversity MAJOR QUESTION: How does awareness about the layers of diversity help organizations effectively manage diversity?

4.5 Building the Business Case for Managing Diversity MAJOR QUESTION: What is the business rationale for managing diversity?

4.6 Barriers and Challenges to Managing Diversity MAJOR QUESTION: What are the most common barriers to implementing successful diversity programs?

4.7 Organizational Practices Used to Effectively Manage Diversity MAJOR QUESTION: What are organizations doing to effectively manage diversity, and what works best?

Why Are These Topics Essential for Success?


The Organizing Framework shown in Figure 4.1 summarizes the key concepts dis- cussed in Chapter 4. We discuss the impact of three important person factors—diversity, demographics, and stereotypes, and the situation factor of diversity climate on a host of processes at the individual, group/team, and organizational levels. These person and situation factors affect the individual level processes pertaining to perception, attribu- tions, and psychological safety. They also influence processes at the group/team and organizational levels. One of the biggest takeaways from this chapter is the fact that the combination of inputs and processes shown in Figure 4.1 have a broad effect on indi- vidual, group/team, and organizational level outcomes. Try to observe how the inputs and processes affect individual level outcomes such as task performance, work atti- tudes, well-being flourishing, turnover, and career outcomes such as promotions. At the same time, you should learn that concepts discussed in this chapter also effect group/ team level outcomes of performance and satisfaction as well as organizational out- comes like being an employer of choice, customer satisfaction, and reputation.



© 2014 by Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without express permission of the authors.


Person Factors • Diversity • Demographics • Stereotypes Situation Factors • Diversity climate

Individual Level • Perceptions • Attributions • Psychological safety Group/Team Level • Group/team dynamics Organizational Level • Options to manage


Individual Level • Task performance • Work attitudes • Well-being/flourishing • Turnover • Career outcomes Group/Team Level • Group/team performance • Group satisfaction Organizational Level • Employer of choice • Customer satisfaction • Reputation

This team of medical professionals is totally focused on saving the patient’s life. Success in this effort requires coordination among a diverse set of people, and this is not always an easy task. Research and anecdotal evidence reveals that diversity can promote greater performance once people learn how to effectively work with people different from themselves. This takes acceptance, appreciation, and positive attitudes towards diverse people. This chapter helps you understand how companies are attempting to manage diversity and identifies obstacles that must be overcome. © monkeybusinessimages/Getty Images RF

Winning at Work Perception Plays a Key Role in Getting a Job

What’s Ahead in This Chapter We want to help you enhance your understanding of the perceptual process so you won’t fall victim to common perceptual errors—yours or other people’s. This chapter will show you, for instance, how perception influences the way managers manage diversity. Diversity should matter to you because the way a business deals with diversity affects the way you are perceived as an indi- vidual. Diversity matters to your organization too, be- cause it allows you to take advantage of the fullest range of human skill and talent. We also discuss barriers and challenges to managing diversity, and the practices organizations use to overcome them.

Do’s • Be aware of each platform’s pol-

icies and procedures because they tend to vary.

• Focus on the quality of your posts rather than the quantity.

• Use Twitter and LinkedIn to play up your professional interests (like sharing relevant news articles).

• Cross-check your résumé and LinkedIn profile to make sure there are no discrepancies.

• Share information about your volunteer activities and work with professional associations.

• Make sure there are no typos or grammatical errors in your materials.

• Remember to continuously update your profiles.

Don’ts • Don’t bad-mouth a current or former employer, col-

league, or company. • Avoid foul language and negative remarks. • Don’t post when you are impaired, or even when

you are overly tired or emotional. • Don’t post anything that might be perceived as rac-

ist, biased, sexually oriented, or illegal.5

More recruiters than ever are using social media to find good employ- ees. A recent US survey of 1,400 recruiters by Jobvite revealed that 96 percent planned to use social media as part of the recruiting pro- cess. Results also showed that 58 percent viewed social and pro- fessional networks as great sources for finding the “best” candidates.1 This belief is driven partly by the expectation that competi- tion will increase for high-quality employees like yourself.

The experience of Jeff Winter, Thumbtack Inc. director of technical recruiting, is a good example. He told The Wall Street Journal that it has been getting harder “to close the deal. Offer acceptance rates have fallen about 5 percentage points from last year [2015], and more candidates tell him they’re talking with behemoths like Google Inc., attracted to the security that established companies can offer.”2

Perceptions Start with Social Media Posts Although the Internet is a gold mine of information for re- cruiters, a poorly managed online image can hurt your chances of finding a job. Photos of drunken behavior, rants with foul language, and posts critical of your current em- ployer will damage any recruiter’s perception of you. You need to be careful about your online presence because 87 percent, 55 percent, and 47 percent of Jobvite’s re- cruiter sample used LinkedIn, Facebook, and Twitter, re- spectively, to help screen employees.3

Consider the experience of Pete Maulik, chief strategy of- ficer at Fahrenheit 212. Maulik was ready to make an offer to an applicant, but after checking out the man’s LinkedIn profile he decided the applicant was not a team player. “He took credit for everything short of splitting the atom,” Maulik said. “Everything was ‘I did this.’ He seemed like a lone wolf. He did everything himself.”

Maulik recalls another seemingly good applicant who used his Twitter account “to disparage just about every new innovation in the marketplace.” Maulik concluded the ap- plicant “was much more comfortable as the critic than the collaborative creator.”4 This candidate was not hired either.

Recommended Tips The following suggestions can help you manage the im- pression you are projecting based on the information you post on social media.


125Social Perception and Managing Diversity CHAPTER 4


Imagine you are driving on a winding mountain road at dusk and suddenly see something in the road. Is it an animal, a rock, or a person? Should you stop or just maneuver around it? Suppose you’re in a team meeting and one of your teammates makes a negative state- ment about your work. Is the person being political or just having a bad day? Your mind is trying to quickly answer these questions before you respond.

Perception is key to resolving the above ques- tions.  Perception  is a cognitive process that en- ables us to interpret and understand our surroundings. Recognition of objects is one of this process’s major functions. But because organizational behavior’s (OB’s) principal focus is on people, our discussion will emphasize person perception rather than object perception.

Perception is important to OB because behavior is based on our perception of reality, not on reality it- self. Our exploration of this important process begins by considering a model of person perception. The model provides a practical framework for under- standing how we form perceptions of others. We then consider the managerial implications of person perception.

A Model of Person Perception Figure 4.1 showed that perception is an important process in the Organizing Framework for Understand- ing and Applying OB because it affects our actions and decisions. Consider dieting. Weight Watchers In- ternational Inc. has stopped using the word diet in its advertising because of the word’s negative perception. Company CEO James Chambers noted that people “aren’t thinking of diet and deprivation as the path they want to take; they’re thinking much more holisti- cally.”6 The 52-year-old company re-branded its weight-loss program around the slogan “Beyond the Scale.” Weight Watchers clearly is trying to use the perception process to increase sales.

Perception is influenced by three key compo- nents: the characteristics of the perceiver, of the


How do I form perceptions of others?


Understanding person perception will help you see how perception affects a variety of

important processes and outcomes within the Organizing Framework for Understanding and

Applying OB. It can also assist in managing the perceptions people form about you.

Oprah Winfrey is not only following the Weight Watchers’ Plan, but she also purchased a 10 percent stake in the company and joined its board. She has filmed a company commercial and is actively involved with marketing and program issues. The company hopes that her star power can help reverse the company’s financial decline. Do you think more people will join Weight Watchers because of Winfrey’s involvement? © Helga Esteb/Shutterstock RF

126 PART 1 Individual Behavior

target—the person or group being observed—and of the situation (see Figure 4.2).7 Let’s take a closer look at how these components work.

Characteristics of the Perceiver Figure 4.2 shows six key perceiver characteristics that affect our perceptions of others.8 As you read, consider how they might have influ- enced your perceptions in the past.

• Direction of gaze. Gaze is the first step in the perception process because it focuses your attention and tells the brain what you think is important in the immediate envi- ronment. When scanning people, we also tend to pay attention to others who are gaz- ing at us. We usually remember people when we make direct eye contact with them.

• Needs and goals. We are more likely to perceive whatever is related to our goals and needs. For example, we perceive examples of food if we are hungry. If we are looking for a friend at a party, we scan the room for familiar faces and fail to per- ceive strangers.

• Experience with target. Our perception of a target is influenced by our past experience with him or her. You might perceive someone’s firm handshake negatively, for instance, if you know this person has attempted to exert power and control over you in the past. The same handshake is positive if you remember the target as a friendly, caring person.

• Category-based knowledge. Category-based knowledge consists of perceptions, including stereotypes, that we have stored in memory about various categories of people (professors, singers, artists, police, politicians, and so on). We use this in- formation to interpret what we see and hear. For instance, if you believe professors in general are intelligent, you are more likely to perceive that those teaching your current courses are intelligent. If your memory tells you that people who lie cannot

Characteristics of the perceiver • Direction of gaze • Needs and goals • Experience with target • Category based knowledge • Gender and emotional status • Cognitive load

Characteristics of the target • Direction of gaze • Facial and body shape characteristics • Nonverbal cues • Appearance or dress • Physical attractiveness

Characteristics of the situation • Context of interaction • Culture and race consistency between perceiver and target

Interactions between perceivers

and targets.

Person Perception


127Social Perception and Managing Diversity CHAPTER 4

be trusted, you are likely to perceive a politician as untrustworthy who is caught in a lie. We discuss stereotypes in the next section.

• Gender and emotional status. Women recognize emotions more accurately than men, and both men and women are more likely to recognize a target’s emotions when they are consistent with their own. Experiencing negative emotions such as anger and frustration is likely to make your perceptions more negative. The oppo- site is true for positive emotions such as optimism and love.

• Cognitive load. Cognitive load represents the amount of activity going on in your brain. If you are tired and distracted after working a long day, your perceptions are more likely to be distorted and susceptible to stereotypical judgments.

Characteristics of the Target Figure 4.2 identifies five important characteristics of the target that affect our person perception.9 The characteristics are:

• Direction of gaze. We form different perceptions of people based on whether they are looking at us while conversing. Direct eye contact suggests interest, whereas eyes darting across a room suggests the opposite.

• Facial features and body shape. We often use faces as markers for gender, race, and age, but face and body characteristics can lead us to fall back on cultural stereotypes. For example, height has been associated with perceptions of prosperity—high income—and occupational success. Excess weight can be stereotypically associated with negative traits such as laziness, incompetence, and lack of discipline.

• Nonverbal cues. Communication experts tell us that nonverbal actions are highly influential in perception. Gestures, touching, facial expressions, eye contact, and body movements like slouching all convey messages. You might perceive that someone is defensive if you observe folded arms, a facial scowl, or crossed legs. In many cultures appropriate touching conveys an impression of warmth and caring.

• Appearance or dress. We all are susceptible to being influenced by appearance. We may conclude someone who shows up for work in dirty, tattered clothes is lazy or uncaring. A recent experimental study showed that people performed better in mock negotiations when they wore business suits and dress shoes.10

• Physical attractiveness. While attractiveness is culturally determined, the beauty-is- good stereotype leads us to perceive attractive people positively. High attractiveness has been associated with better job opportunities, higher performance ratings, and the potential for increased earnings. One team of researchers concluded, “The effects of facial attractiveness are robust and . . . attractiveness is a significant advantage for both children and adults in almost every domain of judgment, treatment, and behavior.”11

Characteristics of the Situation Figure 4.2 shows two key situational characteris- tics that affect perception: the context of the interaction, and the culture and race consis- tency between perceivers and targets.

• Context of interaction. Perceptions are affected by the social context in which the interaction occurs. For example, your parent will likely perceive your eating food from the kitchen when you visit home differently than will a coworker whose food you take from the office refrigerator. Texting someone while eating dinner with friends is per- ceived differently than texting during a business meeting. Context matters!

• Culture and race consistency. We more accurately recognize emotions displayed by people from our own culture or from other familiar cultures. We also better un- derstand and remember facial expressions displayed by people from our own race. For instance, both authors do consulting around the world, and we find it harder to accurately perceive group dynamics in foreign than in US companies. Angelo re- calls telling a joke to a group of Finnish managers. No one laughed or made any facial expressions, and he thought the joke had bombed until someone told him at a break that he was really funny. What a perceptual surprise! The OB in Action box highlights how differently apologies are viewed in the United States and Japan.

128 PART 1 Individual Behavior

The frequency and meaning of apologies like “I’m sorry” vary around the world. For example, a study revealed that US students apologized 4.51 times a week, while Japanese students used some type of apology 11.05 times a week. The findings highlight the importance of social perception.12

What Does an Apology Mean? A team of researchers concluded “Americans see an apology as an admission of wrongdoing, whereas Japanese see it as an expression of eagerness to repair a damaged relationship, with no culpability nec- essarily implied.” US students’ response is also consistent with the “psychological tendency among Westerners to attribute events to individuals’ actions.”13 In con- trast, Japanese students apologized even when they were not responsible. This response is partly due to the fact that Asian countries hold more collective or group-oriented values that focus on doing things for the greater good over self- interests.

Never Apologize, Never Explain An old John Ford film, She Wore a Yellow Rib- bon, followed a cavalry brigade posted in the US West in the 1800s; it popularized a strand of US individualism in a phrase you may still hear today. John Wayne’s character says, “Never apologize and never explain. It’s a sign of weakness.” But apologies do have a role in US business.

The Business Impact of Apologies Apologizing can acknowledge wrongs, and it can save money. A study of medical malpractice suits revealed that 16 percent of plaintiffs would not have sued had the hospital offered an apology. The Univer- sity of Michigan Medical Center put these results into practice and “adopted a policy of ‘full disclosure for medical errors,’ including an apology; its rate of law- suits has since dropped 65 percent.”14

“Apologizing by admitting a mistake—to coworkers, employees, customers, clients, the public at large—tends to gain credibility and generate confidence in one’s leadership,” says Linda Stamato of the Center for Negotiation and Conflict Resolution.15

It’s important when apologizing to convey remorse and to choose the right words. Consider the apology made by Mary Barra, CEO of General Motors, to the US Congress while it was investigating the company’s ignition-switch recall. “Today’s GM will do the right thing,” Barra said. “That begins with my sincere apologies to . . . the families and friends [of those] who lost their lives or were in- jured. I am deeply sorry.”16 GM ultimately agreed to pay a $900 million settlement to end criminal investigations.17

When a company such as GM has committed a wrong, a simple apology is not enough. The apology should be followed by tangible actions aimed at correcting the situation. GM did this by conducting an internal review, restructuring the engi- neering and quality departments, and placing two engineers on leave.18


1. Do you think it pays to apologize in a business setting even if you did not do something wrong? Explain.

2. What is your opinion about hospitals apologizing for medical errors? 3. What are some right ways and wrong ways to apologize in business settings?

How Perception of Apologies Differs in the United States and Japan

OB in Action

129Social Perception and Managing Diversity CHAPTER 4

Managerial Implications of Person Perception Person perception is the window through which we all observe, interpret, and prepare our responses to people and events. It affects a wide variety of mana- gerial activities, organizational processes, and quality-of-life issues. We’ll touch on hiring, perfor- mance appraisal, and leadership.

Hiring Interviewers make hiring decisions based on their impression of how an applicant fits the perceived requirements of a job. Unfortunately, many of these decisions are made on the basis of implicit cognition. Implicit cognition  represents any thoughts or beliefs that are automatically acti- vated from memory without our conscious aware- ness. The existence of implicit cognition leads people to make biased decisions without realizing they are doing so.19 A recent study of job applicants’ résumés, for instance, demonstrated that recruiters evaluated women more favorably than men for cus- tomer service jobs, probably based on gender-role stereotypes.20

Experts recommend three solutions for reducing the biasing effect of implicit cognition. First, manag- ers can be trained to understand and recognize this type of hidden bias. Second, they can use structured rather than unstructured interviews. Interviewers ask the same sequence of questions to all applicants in a structured interview, which leads to more reliable evaluations. Finally, managers can rely on evaluations from multiple interviewers rather than just one or two people. More com- panies now are using virtual interviews as a tool for reducing problems associated with implicit cognition (see the OB in Action box).

Performance Appraisal Faulty perceptions about performance can lead to inaccu- rate performance appraisals, which erode morale. Consider the results of a recent study of commanding officers in the US military.

The research looked at 193 commanding officers who were assigned legal advisers. The advisers were all professionals with a law degree, and the commanding officers were responsible for conducting their performance evaluations. On average, female advisers received lower performance ratings than males as their pay grade approached that of the boss. Male advisers did not have this experience.21 The only good news from the study is that this form of bias occurred only when evaluators had high social dominance orienta- tion, a personal characteristic in which someone prefers to dominate other groups of peo- ple, in this case women.22

Perceptual biases in performance appraisals can be reduced by the use of more objec- tive measures of performance. While this is a good idea, it is hard to implement for jobs that require interdependent work, mental work, or work that does not produce objective outcomes.

Companies can also reduce bias by providing managers a mechanism for accurately recalling employee behavior, such as a performance diary. Finally, it would be useful to train managers about perceptual biases and about how they can avoid them in perfor- mance evaluations.23

Do you think that this woman may have any implicit cognitions that are affecting her dinner selection? Because she is drinking white wine, maybe this choice already activated a preference for fish or chicken. Do implicit cognitions affect your choices when dining out? © Dave Mason/Blend Images RF

130 PART 1 Individual Behavior

Recruiters are increasingly using one of three types of virtual interviews as part of the hiring process.24 The first type relies on video software to make a one-way recording of an applicant answering questions. Ocean Spray, a cranberry-growing cooperative in Massachusetts, sends applicants an e-mail link that contains preset interview questions. The answers are recorded via webcam.

The second type is a two-way, real-time virtual interview, often using Skype. The last type is an audio-only virtual interview, often used for evaluating candi- dates for customer-service jobs performed over the phone.

Benefits of Virtual Interviews Standardization drives several benefits of virtual interviews.

Consistency. Video-enabled interviews standardize the process, which leads to more reliable evaluations. For example, Walmart uses video interviews to obtain a better idea of how candidate pharmacists will interact with customers. T.G.I. Friday’s restaurant selects restaurant managers through video interviews for the same reason.

Collaboration. Whether they are recorded or live, video interviews can encourage collaboration among those making hiring decisions. And experts suggest more input leads to better candidate selection.

Saving Time and Money. Ocean Spray was spending an average of $1,000 per candidate for in-person interviews. Martin Mitchell, the company’s manager of tal- ent and diversity, said, “Video interviews eliminated these costs” and allowed the company to interview applicants more quickly, and without forcing them to take time off work to travel for an interview.25


1. The above discussion focuses on the positive aspects of video interviews; are there negative aspects of this strategy? If so, what are they?

2. How would you prepare for a video interview? 3. If you were relying on videos to select candidates for a job, what would you

look for?

Virtual Interviews Can Improve the Accuracy of Job Interviews and Reduce Costs

OB in Action

Leadership Research demonstrates that employees’ evaluations of leader effective- ness are influenced strongly by their categorical knowledge of what constitutes good and poor leaders. For example, a team of researchers found that the following behaviors are representative of effective leadership:

1. Assigning specific tasks to group members. 2. Telling others they have done well. 3. Setting specific goals for the group. 4. Letting other group members make decisions. 5. Trying to get the group to work as a team. 6. Maintaining definite standards of performance.26

131Social Perception and Managing Diversity CHAPTER 4


How can I use awareness of stereotypes to make better decisions and manage more effectively?


Don’t say you don’t use stereotypes; they help us process information faster and thus are part

of the way we humans think. But stereotypes can also lead to bad decisions and undermine

personal relationships. Being aware of them can save you from such pitfalls.


“A stereotype  is an individual’s set of beliefs about the characteristics or attributes of a group.”27 We need to recognize how stereotypes affect our perception because we use them without intending to or even being consciously aware that we are.28

Stereotypes are not always negative. For example, the belief that engineers are good at math is certainly part of a stereotype and is positive. Stereotypes also may or may not be accurate. Engineers may in fact be better at math than the general population.

Unfortunately, stereotypes can lead to poor decisions. Consider people diagnosed with cancer, about 40 percent of men and women living in the United States.29 A recent study of the retail industry showed that managers made discriminatory decisions about individuals whose job applications indicated they were cancer survivors.30 All told, stereotypes can create barriers for women, older individuals, people of color, and people with disabilities, all while undermining loyalty and job satisfaction. Let’s look at examples. Gender. A summary of research revealed that:

• Men were preferred for male-dominated jobs (e.g., firefighters), but there was no preference for either gender in female-dominated jobs (e.g., nurse).

• Women have a harder time than men in being perceived as effective leaders. (The exception: Women were seen as more effective when the organization faced a crisis and needed a turnaround.)

• Women of color are more negatively affected by sex-role stereotypes than are white women or men in general.31

Race. Studies of race-based stereotypes demonstrated that people of color experienced more perceived discrimination and less psychological support than whites.32 Perceived racial discrimination was also associated with more negative work attitudes, physical health, psychological health, and organizational citizenship behavior.33 Age. Another example of an inaccurate stereotype is the belief that older workers are less motivated, more resistant to change, less trusting, less healthy, and more likely to have prob- lems with work–life balance. A recent study refuted all these negative beliefs about age.34

Stereotype Formation and Maintenance We build stereotypes through a four-step process:

1. Categorization. We categorize people into groups according to criteria (such as gen- der, age, race, and occupation).

2. Inferences. Next, we infer that all people within a particular category possess the same traits or characteristics: women are nurturing, older people have more job- related accidents, African Americans are good athletes.

132 PART 1 Individual Behavior

3. Expectations. We form expectations of others and interpret their behavior according to our stereotypes.

4. Maintenance. We maintain stereotypes by: • Overestimating the frequency of stereotypic behaviors exhibited by others. • Incorrectly explaining expected and unexpected behaviors. • Differentiating minority individuals from ourselves.

Research shows that it takes accurate information and motivation to reduce the use of stereotypes.35

Managerial Challenges and Recommendations The key managerial challenge is to reduce the extent to which stereotypes influence deci- sion making and interpersonal processes throughout the organization. We suggest three ways that this can be achieved.

1. Managers should educate people about stereotypes and how they can influence our behavior and decision making. Many people may not understand how stereo- types unconsciously affect their perception. For example, people evaluating sym- phony orchestra musicians for jobs were found to be biased toward men. This unconscious tendency was reduced by using a curtain to block the evaluation com- mittee from seeing applicants. Significantly more females were hired under this un- biased approach.36

2. Managers should create opportunities for diverse employees to meet and work together in cooperative groups of equal status. Social scientists believe positive interpersonal contact among mixed groups is the best way to reduce stereotypes be- cause it provides people with more accurate data about the characteristics of others.

3. Managers should encourage all employees to increase their awareness of stereo- types. Awareness helps reduce the application of stereotypes when making decisions and interacting with others.

What stands out in this photo? Did you notice the man working from a wheelchair? Do you think some people have negative stereotypes about those with disabilities? Research shows many people do. © Pixtal/agefotostock RF

133Social Perception and Managing Diversity CHAPTER 4


How do I tend to interpret employee performance?


Consciously or unconsciously, you use causal attributions when you seek to explain the

causes of behavior. So do most managers. You can avoid the fundamental attribution bias

and self-serving bias if you learn how they distort our interpretation of observed behavior.


Attribution theory is based on a simple premise: Rightly or wrongly, people infer causes for their own and others’ behavior. Formally defined, causal attributions  are sus- pected or inferred causes of behavior. Managers need to understand how people for- mulate these attributions because they profoundly affect organizational behavior. Consider Table 4.1, in which the manager’s understanding of observed behavior leads to very different actions.

Kelley’s Model of Attribution Current models of attribution build on the pioneering work of the late Fritz Heider. Heider, the founder of attribution theory, proposed that behavior can be attributed either to internal factors  within a person   (such as ability) or to external factors within the environment (such as a difficult task). Following Heider’s work, Harold Kelley attempted to pinpoint some specific antecedents of internal and external attri- butions. Kelley hypothesized that people make causal attributions by observing three dimensions of behavior: consensus, distinctiveness, and consistency.37 These dimen- sions vary independently, forming various combinations and leading to differing attributions.

• Consensus  compares an individual’s behavior with that of his or her peers. There is high consensus when someone acts like the rest of the group and low con- sensus when he or she acts differently.

• Distinctiveness  compares a person’s behavior on one task with his or her behavior on other tasks. High distinctiveness means the individual has performed the task in a significantly different manner than he or she has performed other tasks.

• Consistency  judges whether the individual’s performance on a given task is consistent over time. Low consistency is undesirable for obvious reasons and implies that a person is unable to perform a certain task at some standard level. High consistency implies that a person performs a certain task the same way, with little or no variation over time.


Observed Behavior

Manager’s Attribution

Managerial Action

Employee fails to meet minimum standards Lack of effort Reprimand

Employee fails to meet minimum standards Lack of ability Training

134 PART 1 Individual Behavior

Figure 4.3 provides sample charts of these dimensions in both low and high incidence.

How do these three dimensions of behavior lead to specific attributions? Kelley theo- rized that people attribute behavior to either internal causes (personal factors) or external causes (environmental factors) depending on the way they rank consensus, distinctive- ness, and consistency as shown in Table 4.2:

EXAMPLE You would make an internal attribution to Mary if she displayed extraor- dinary performance relative to her peers and this level of performance was typical for Mary over the past year. In contrast, you would arrive at an external attribution if Mary’s performance was similar to her peers, but the performance on the task you observed was lower than usual for Mary over the past year.

While other combinations are possible, the two options shown below have been most frequently studied. Note: For another view of Kelley’s theory, return to Figure 4.3. In the figure, we provided charts that, taken together, indicate internal attributions on the left- hand side and external attributions on the right-hand side.


SOURCE: K. A. Brown, “Explaining Group Poor Performance: An Attributional Analysis,” Academy of Management Review, January 1984, p. 56.

In the Low Consensus chart, Person C is not in consensus. In the High Consensus chart, all persons are in consensus.

In the Low Distinctiveness chart, all tasks are similar. In the High Distinctiveness chart, Task 4 is especially distinct.

For reasons we’ll share soon, we switched order of high and low. The High Consistency chart shows no change over time. The Low Consistency chart shows lack of consistency.

Conse nsus

(amon g peo


Distin ctiven


(acros s task


Consi stenc


(over time)



1 52 3 4 1 52 3 4


Low High

High Low



Consensus (People)

Distinctiveness (Tasks)

Consistency (Time)

Internal Low Low High

External High High Low

135Social Perception and Managing Diversity CHAPTER 4

Attributional Tendencies Researchers have uncovered two attributional tendencies that distort our interpretation of observed behavior—fundamental attribution bias and self-serving bias.

Fundamental Attribution Bias The fundamental attribution bias  reflects our tendency to attribute another person’s behavior to his or her personal characteris- tics, rather than to situation factors. This bias causes perceivers to ignore important environmental factors (again refer to the Organizing Framework), which often signifi- cantly affect behavior. Such bias leads to inaccurate assessments of performance, which in turn fosters inappropriate responses to poor performance.

Self-Serving Bias The self-serving bias  represents our tendency to take more personal responsibility for success than for failure. The self-serving bias suggests em- ployees will attribute their success to internal factors (high ability or hard work) and their failures to uncontrollable external factors (tough job, bad luck, uncooperative coworkers or boss). This tendency plays out in all aspects of life.

Managerial Applications and Implications Attribution models can explain how managers handle poorly performing employees. One study revealed that managers gave employees more immediate, frequent, and negative feedback when they attributed their performance to low effort. Another indicates that managers tended to transfer employees whose poor performance they attributed to a lack of ability. These same managers also decided to take no immediate action when poor performance was attributed to external factors beyond an individual’s control.38

These observations offer useful lessons for all of us: • We tend to disproportionately attribute behavior to internal causes. This bias

can result in inaccurate evaluations of performance, leading to reduced employee motivation. The Organizing Framework for Understanding and Applying OB of- fers a simple solution for overcoming this tendency. You must remind yourself that behavior and performance are functions of both person and situation factors.

• Other attributional biases may lead managers to take inappropriate actions. Such actions could include promotions, transfers, layoffs, and so forth. Inappropri- ate responses can dampen motivation and performance.

• An employee’s attributions for his or her own performance have dramatic ef- fects on motivation, performance, and personal attitudes such as self-esteem. For instance, people tend to give up, lower their expectations of future success, and experience decreased self-esteem when they attribute failure to lack of ability. Em- ployees are more likely to display high performance and job satisfaction when they attribute success to internal factors such as ability and effort.39


Applying Kelley’s Model

1. Think of someone who recently disappointed you. It could be work-related (a peer did not complete part of a group assignment) or personal (a friend failed to remember your birthday).

2. Use Kelley’s model to identify whether the unexpected behavior was due to in- ternal or external causes.

3. Based on this attribution, what should you say or do to ensure that this type of behavior does not happen again?

136 PART 1 Individual Behavior


How does awareness about the layers of diversity help organizations effectively manage diversity?


Like seashells on a beach, people come in a variety of shapes, sizes, and colors. All of us need

to be aware of the different layers of diversity and to know the difference between affirmative

action and diversity management.


Do you have any preconceived notions about diversity that are worth considering? Let’s take a reality check:

• Assumption: Gender diversity on boards of directors does not affect firm per- formance. Wrong, says a team of researchers who aggregated results from 140 research studies. Findings showed that firms were more profitable when women were members of the board of directors.40

• Assumption: Organizations had a hard time finding qualified employees during the 2014–2015 slow-growth economy. Yes, according to 2015 data from Indeed.com, the top employment-related website in the world. It seems that 56 percent of all job openings remained open after one month, and 33 percent were still active after three months. All told, Indeed.com estimated in 2015 that “over 330 million working hours are lost every month in the United States from unfilled job openings.” The most difficult jobs to fill across all industries were managerial and supervisory.41

• Assumption: Whites will constitute the majority among US racial groups through 2050. No, according to the US Census Bureau. Today whites represent 63 percent of the population, but that will drop below 50 percent in 2043.42

The United States is becoming more diverse in its gender, racial, educational, and age makeup. For example, there are now more working parents, more nonwhites, and more older people, and the consequences are not always what you might expect. Demographics  are the statistical measurements of populations and their quali- ties (such as age, race, gender, or income) over time. The study of demographics helps us better appreciate diversity and helps managers develop human resource policies and practices that attract, retain, and develop qualified employees. In the remainder of this chapter we will further your understanding of diversity and its man- agerial challenges.

Layers of Diversity Diversity  represents the multitude of individual differences and similarities that ex- ist among people, making it an input in the Organizing Framework for Understanding and Applying OB. As you will learn, however, managing diversity also affects a variety of processes and outcomes within the Organizing Framework.

Moreover, diversity pertains to everybody. It is not just an issue of age, race, or gen- der; of being heterosexual, gay, or lesbian; or of being Catholic, Jewish, Protestant, or

137Social Perception and Managing Diversity CHAPTER 4


Muslim. Diversity pertains to the host of individual differences that make each of us unique and different from all others.

Lee Gardenswartz and Anita Rowe, a team of diversity experts, identified four layers of diversity to help distinguish the important ways in which people differ (see Figure 4.4). Taken together, these layers define our personal identities and influence the way each of us sees the world.

Figure 4.4 shows that personality is at the center of the diversity wheel because it represents a stable set of characteristics responsible for a person’s identity. These are the dimensions of personality discussed in Chapter 3. The next layer of diversity is composed of internal dimensions, also referred to as surface-level dimensions of diversity. “Surface-level characteristics  are those that are quickly apparent to interactants, such as race, gender, and age.”43 Because we view these characteristics of others as unchangeable, they strongly influence our attitudes, expectations, and assumptions about them, which, in turn, influence our behavior. Take the experience of an African American middle manager sitting by the pool while vacationing at a resort. As she recalls, “A large 50-ish white male approached me and demanded that I get him extra towels. I said, ‘Excuse me?’ He then said, ‘Oh, you don’t work here,’ with no shred of embarrassment

*Internal dimensions and external dimensions are adapted from M. Locken and J. B. Rosener, Workforce America! (Homewood, IL: Business One Irwin, 1991).

SOURCE: L. Gardenswartz and A. Rowe, Diverse Teams at Work: Capitalizing on the Power of Diversity (Alexandria, VA: Society for Human Resource Management, 2008.

Inte rnal dimensions*

Extern al dimensions*

Functional level/ classification

Orga nizational dimensions

Geographic location



Marital status

Manage- ment status

Union a�liation

Work location


Division/ department/

unit/ group

Work content/


Parental status

Appear- ance

Work experience



Personal habits

Sexual orientation


Recreation- al habits


Physical ability

Educational background


138 PART 1 Individual Behavior

or apology in his voice.”44 Stereotypes regarding one or more of the internal dimensions of diversity most likely influenced this man’s behavior.

Figure 4.4 shows that the next layer of diversity consists of external influences. These are individual differences over which we have more control, such as where we live, our religious affiliation, our marital and parental status, and our work experience. These dimensions also exert a significant influence on our perceptions, behavior, and attitudes.

The final layer of diversity is organizational dimensions such as seniority, job title and function, and work location. Integrating these last two layers yields deep-level char- acteristics of diversity. “Deep-level characteristics  are those that take time to emerge in interactions, such as attitudes, opinions, and values.”45 These characteris- tics are definitely under our control.

Affirmative Action vs. Diversity Management Affirmative action and diversity management are driven by very different values and goals. This section highlights these differences.

Affirmative Action Affirmative action is not a law in and of itself. It is an out- growth of equal employment opportunity (EEO) legislation. The goal of this legisla- tion is to outlaw discrimination and to encourage organizations to proactively prevent discrimination. Discrimination  occurs when employment decisions about an in- dividual are based on reasons not associated with performance or related to the job. For example, organizations cannot legally discriminate on the basis of race, color, religion, national origin, sex, age, physical and mental disabilities, and preg- nancy. Affirmative action  is an intervention aimed at giving management a chance to correct an imbalance, injustice, mistake, or outright discrimination that occurred in the past.

Does the number of white males stand out in this picture of the US Congress? Congress is 80 percent white and 80 percent male and is sometimes criticized for its lack of diversity. © Susan Walsh/AP Photo

139Social Perception and Managing Diversity CHAPTER 4

Affirmative action • Can refer to both voluntary and mandatory programs. • Does not legitimize quotas. Quotas are illegal and can be imposed only by judges

who conclude that a company has engaged in discriminatory practices. • Does not require companies to hire unqualified people. • Has created tremendous opportunities for women and minorities. • Does not foster the type of thinking needed to manage diversity effectively.

Is the last point surprising? Research uncovered the following tendencies of affir- mative action plans. They are

1. Perceived more negatively by white males than by women and minorities, because white males see the plans as working against their interests.

2. Viewed more positively by people who are liberals and Democrats than by con- servatives and Republicans.

3. Not supported by people who hold rac- ist or sexist attitudes.46

4. Found to negatively affect the women and minorities expected to benefit from them. Supposedly hired on the basis of affirmative action, these groups feel negatively stigmatized as unqualified or incompetent.47

Helena Morrissey, CEO of Newton Investment Management, was asked by a re- porter to comment on women being selected to the company board to fill a quota. Morrissey replied, “I find quotas condescending. I wouldn’t want to be part of a board because I’m filling a quota.”48

Managing Diversity Managing diversity  enables people to perform to their maximum potential. Diversity management focuses on changing an organization’s cul- ture and infrastructure such that people work to the highest productivity possible. Ann Morrison, a diversity expert, attempted to identify the types of initiatives 16 companies used to successfully manage diversity. Her results found three key strategies at work: edu- cation, enforcement, and exposure. She describes them as follows:

• The educational component. Education “has two thrusts: one is to prepare non- traditional managers for increasingly responsible posts, and the other is to help traditional managers overcome their prejudice in thinking about and interacting with people who are of a different sex or ethnicity.”49

• The enforcement component. Enforcement “puts teeth in diversity goals and en- courages behavior change.”50

• The exposure component. Exposing people to others with different backgrounds and characteristics “adds a more personal approach to diversity by helping manag- ers get to know and respect others who are different.”51

In summary, both consultants and academics believe organizations should strive to manage diversity rather than being forced to use affirmative action.

Helena Morrissey, former CEO of Newton Investment Management, is an advocate for increasing the diversity of corporate boards of directors in the United Kingdom: Assets at the firm doubled during her 15 years at the helm. Newton also serves as the CEO of 30 Percent Club, which was founded in 2010. The group strives to increase the number of women appointed to public corporate boards. From 2010 to 2016 the number of women on public boards in the U.K. grew from 12.5 percent to 26 percent. © Chris Ratcliffe/Bloomberg/Getty Images

140 PART 1 Individual Behavior

Historically, women did the majority of household chores. But the trend may slowly be changing, particularly when it comes to laundry.52 A 2015 study by consumer research firm Mintel revealed that 67 percent of men between the ages 18 and 34 were mainly responsible for doing laundry, up from 44 percent in 2013. Fur- ther, about 60 percent of men between 35 and 54 were doing some laundry.53

Procter & Gamble Co., the largest US detergent maker, has responded by refer- ring to “him and her” in its laundry product ads. P&G adds also depict males as com- petent launderers, using NFL athletes as examples in an online video campaign.

According to The Wall Street Journal, “To target men, P&G has considered a Tide for Men variety, but ultimately decided to make detergents like Tide Plus Febreze Sport in fragrances including ‘Victory Fresh.’ Bounce for Men was intro- duced in 2014.”54

Sun Products Corp., maker of All detergent and Snuggle fabric softener, has also been studying male behavior and discovered that men don’t like to sort clothes. They tend to do fewer loads, putting too many items in the same load and risking the loss of crisp colors in fabrics.

Because men also tend to use the “normal” wash cycle for everything, Whirlpool Corp. developed a ColorLast washing machine cycle, which it says uses a combina- tion of water temperature, time, and movement to keep colors from fading.

Companies Develop Products to Fit the Laundry Habits of Men

OB in Action

The growing diversity in the United States is not a business initiative; it is a reality. Businesses can consciously choose to manage diversity or get caught short by the demo- graphic changes facing the country.

Business Rationale The rationale for managing diversity is more than the fact that it’s legally, socially, or morally desirable. Quite simply, it’s good business. The OB in Action box illustrates how companies can gain competitive advantage by producing products targeted at specific demographic groups—in this case, men who do laundry.


What is the business rationale for managing diversity?


After reviewing the business case for managing diversity, we also look at demographic

changes in the US workforce that make the need to manage diversity all the more urgent.

These demographic changes have major implications for OB.


141Social Perception and Managing Diversity CHAPTER 4

Managing diversity also gives an organization the ability to grow and maintain its business in an increasingly competitive marketplace. Here’s what William Weldon, for- mer chairman and CEO of Johnson & Johnson, said:

Diversity and inclusion are part of the fabric of our businesses and are vital to our future success worldwide. The principles of diversity and inclusion are rooted in Our Credo [the company’s values] and enhance our ability to deliver products and services to advance the health and well-being of people throughout the world. We cannot afford to reduce our focus on these critical areas in any business climate.57

Research supports the logic of this strategy. For example, a recent study of 739 retail stores found reinforcement for the access-and-legitimacy perspective, defined in the fol- lowing manner:

An access-and-legitimacy perspective  on diversity is based in recognition that the organization’s markets and constituencies are culturally diverse. It therefore behooves the organization to match the diversity in parts of its own workforce as a way of gaining access to and legitimacy with those markets and constituent groups.58

This particular study discovered that customer satis- faction and employee productivity were higher when the racial-ethnic composition of store employees matched that of customers.59

These favorable results were taken one step fur- ther by another team of researchers, who wanted to know whether customers would spend more money in stores when they perceived themselves as similar to the sales representatives. Results from 212 stores supported the idea that customer–employee similar- ity leads to more spending.60 Clearly it pays to man- age diversity, but organizations cannot use diversity as a strategic advantage if employees fail to contrib- ute their full talents, abilities, motivation, and com- mitment. Thus organizations must create an environment or culture that allows all employees to feel included and valuable. Managing diversity is a critical component of creating this environment.

Hero Clean, a company that sells cleaning products and laundry detergent, created a special detergent to fight tough stains that have been sitting in fabric for a long time. Mike Eaton, the company’s founder, wanted a product that would “accommodate men’s routine of clean, delay, delay, delay, then clean again.” The detergent’s formula is aimed at stains more commonly found on male clothing, including sweat, mustard, beer, grass, wine, and axle grease.55

Men are expected to continue doing more household chores like laundry. For one thing, more men are single today, about 47 percent of the US adult male popu- lation. Men are also increasingly working part time, which should give them more time for household chores. About 6.7 million males worked part time in 2014.56


1. Are you surprised that companies are designing products to fit the laundry habits of men? Explain.

2. Do you see any drawbacks to using demographics in the product design process? Discuss.

Companies increasingly recognize the value of having a workforce that matches the race of their customers. Here we see African American customers being helped by an employee of similar race. Why would customers prefer to be helped by someone like them? © Blend Images/Alamy RF

142 PART 1 Individual Behavior

A female’s career is thought to resemble a labyrinth like this. Note the twists and turns that are needed to get through this maze. Have you experienced twists and turns in your career? © Baur/Alamy RF

Trends in Workforce Diversity For managers, the study of demographics suggests unique ways of managing diverse em- ployees. For organizations, it helps signal whether human resource policies and proce- dures are appropriate to the characteristics of a diverse employee population. Let’s examine five categories on the internal dimension of the diversity wheel in Figure 4.4— gender, race, sexual orientation, physical/mental abilities, and age—and one category on the external dimension, educational level.

Women Break the Glass Ceiling—but Navigate a Labyrinth Coined in 1986, the term glass ceiling  identifies an invisible but absolute barrier that prevents women from advancing to higher-level positions. Various statistics support the exis- tence of the glass ceiling. Take the pay gap between men and women, for example. In 2014, the median weekly income in full-time management, professional, and related oc- cupations was $1,346 for men but $981 for women. Even among female and male MBA graduates who made about the same upon graduation in 2007–2009, by 2014 a gap had opened—women earned $140,000 and men $175,000.61

Some people think these pay differences come about because women leave the work- force to raise children, or because men perform better on the job. Although women are more likely than men to take time off to raise children, research spanning 30 years dem- onstrated that pay differences were not due to differences in performance evaluations.62 Other unknown causes are behind the gender pay gap.

Alice Eagly and Linda Carli conducted a thorough investigation into the organiza- tional life of women and in 2007 published their conclusions that women had finally broken through the glass ceiling.63 We’ve updated the data reported in Eagly and Carli’s book that led them to their conclusion. In 2016 there were many more female CEOs (21 within the Fortune 500 and two more expected by late 2016) and more women in managerial, professional, and related occupations than in the 1980s and 1990s.64 Statis- tics further showed that women had made strides along several measures.

1. Educational attainment: Women earned the majority of bachelor’s and master’s degrees in 2014.

2. Seats on boards of directors of Fortune 500 firms: Women held 9.6 percent of seats in 1995 and 19.7 percent in 2015.

3. Leadership positions in educational institutions and Congress: In 2016 women represented 23 percent of college presidents, and in 2014, 100 women served in Congress—the largest number ever.

4. Federal court appointments: In 2016, 35 percent of federal courts of appeals judges were female.65

You can interpret the above statistics in one of two ways.

• No Change. On the one hand, you might see proof that women remain underpaid and under- represented in leadership positions, victims of discriminatory organizational practices.

• Positive Change. Or you can agree with Eagly and Carli’s conclusion that “men still have more authority and higher wages, but women have been catching up. Because some women have moved into the most elite leadership roles, ab- solute barriers are a thing of the past.”66

Eagly and Carli propose that a woman’s career follows a pattern more characteristic of a path through a labyrinth. They believe a woman’s path to

143Social Perception and Managing Diversity CHAPTER 4

success is neither direct nor simple but rather contains twists, turns, and obstructions, particularly for married women with children.

Racial Groups Face Their Own Glass Ceiling and Perceived Discrimination The US workforce is becoming increasingly diverse. Between 2012 and 2060, the Census Bureau predicts the following changes in ethnic representation:

• Growth: The Asian population will grow from 5.1 percent to 8.2 percent of the total. • Growth: The Hispanic population will grow from 17 percent to 31 percent. • Mild growth: The African American population will rise from 13.1 percent to

14.7 percent. • Decline: Non-Hispanic whites will drop from 63 percent to 43 percent.67

In 2060 so-called minority groups will constitute approximately 57 percent of the work- force, according to the Census Bureau.68 And yet three additional trends suggest that current-day minority groups are stalled at their own glass ceilings:

Smaller percentage in the professional class. Hispanics, or Latinas/os, and African Americans have a smaller relative hold on managerial and professional jobs compared with whites. Women of color generally do better than men of color.

More discrimination cases. The number of race-based charges of discrimination that were deemed to show reasonable cause by the US Equal Employment Opportunity Commission increased from 294 in 1995 to 678 in 2015. Companies paid a total of $88.4 million to resolve these claims without litigation in 2015.69

Lower earnings. Minorities also tend to earn less personal income than whites. In 2015 median weekly earnings for workers 16 years and older were $847, $643, $1,091, and $624 for whites, blacks, Asians, and Hispanics, respectively. Asians had the highest median income.70

Sexual Orientation: LGBTQ People Become More Visible The term LGBT  is a widely recognized acronym to represent lesbian, gay, bisexual, and transgender. However a fifth letter has been gaining acceptance—Q—which according to the Human Rights Campaign can mean either “questioning” or “queer.”

Q for “questioning” refers to someone in the process of exploring his or her sexual iden- tity. “People use the term queer because it’s not specific to sexual orientation or to gender identify but is more of an umbrella term that can encompass a lot of people.” You may want to avoid using the term queer because it is offensive to some in the LGBT community.71

We are discussing sexual orientation because organizations cannot afford to allow between 1.2 and 6.8 percent of the workforce to feel disenfranchised. This represents the estimated number of people who identify as LGBT.72

Because LGBTQ employees often experience a lack of inclusion, their engagement, performance, and retention can be affected. A study by the Human Rights Campaign Foundation, for instance, revealed that unwelcoming environments can lead to a 30 per- cent decrease in employee engagement and an increase in turnover. Nine percent of LGBT employees reported leaving a job because of unwelcoming work environments.73

The good news is that a majority of Fortune 500 companies offer workplace protec- tions on the basis of sexual orientation and gender identify. In contrast, 29 states do not offer such protections.74

Physical and Mental Abilities: People with Disabilities Face Challenges Approximately 20 percent of Americans have a physical or cognitive disability, according to the US Census Bureau. The Americans with Disabilities Act  prohibits discrimina- tion against those with disabilities and requires organizations to reasonably accom- modate an individual’s disabilities.75

Not surprisingly, some people with disabilities have difficulty finding work. The US Bureau of Labor Statistics found that 10.4 percent were unemployed in July 2015, much higher than the 5.4 percent rate for those without disabilities. Contrary to negative

144 PART 1 Individual Behavior


Baby Boomers

Gen Xers

Millennials (Gen Y)

Gen 2020

Birth Time Span

1925–1945 1946–1964 1965–1979 1980–2001 2002–

Current Population

38.6 million 78.3 million 62 million 92 million 23 million

Key Historical Events

Great Depression, World War II, Korean War, Cold War era, rise of suburbs

Vietnam War; Watergate; assassinations of John and Robert Kennedy and Martin Luther King, Jr.; women’s movement; Kent State killings; first man on the moon

MTV, AIDS epidemic, Gulf War, fall of Berlin Wall, Oklahoma City bombing, 1987 stock market crash, Bill Clinton–Monica Lewinsky scandal

September 11 terrorist attack, Google, Columbine High School shootings, Enron and other corporate scandals, wars in Iraq and Afghanistan, Hurricane Katrina, financial crisis of 2008 and high unemployment

Social media, election of Barack Obama, financial crisis of 2008 and high unemployment

Broad Traits

Patriotic, loyal, disciplined, conformist, possessed of a high work ethic and respect for authority

Workaholic, idealistic, competitive, materialistic, possessed of a high work ethic, in search of personal fulfillment

Self-reliant, adaptable, cynical, independent, technologically savvy, distrustful of authority, in search of work–life balance

Entitled, civic minded, close parental involvement, cyberliteracy, appreciate diversity, multitasking, in search of work–life balance, technologically savvy

Multitasking, online life, cyberliteracy, communicate fast and online

Defining Invention

Fax machine Personal computer

Mobile phone Google and Facebook

Social media and iPhone apps

SOURCE: Adapted from J. C. Meister and K. Willyerd, The 2020 Workplace (New York: Harper Collins, 2010), 54–55; and R. Alsop, The Trophy Kids Grow Up (San Francisco: Jossey-Bass, 2008), 5.


stereotypes about hiring the disabled, such as that making reasonable accommodation is expensive, many organizations are finding this group of people to be a valuable source of talent. Walgreens, for example, is dedicated to hiring people with disabilities. Forty percent of the workforce at two of its distribution centers have disabilities.76

Generational Differences in an Aging Workforce The US population and work- force are getting older, and the workforce includes greater generational differences than ever before. We already see four generations of employees working together, soon to be joined by a fifth (see Table 4.3). Managers need to deal effectively with generational dif- ferences in values, attitudes, and behaviors. Many companies, including IBM, Lockheed Martin, Ernst & Young LLP, and Aetna, address this issue by providing training work- shops on generational diversity.

Table 4.3 summarizes generational differences using common labels: traditionalists, baby boomers, Gen Xers, Millennials/Gen Ys, and the incoming Gen 2020s. We use such

145Social Perception and Managing Diversity CHAPTER 4

What Are Your Attitudes Toward Working with Older Employees? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 4.1 in Connect.

1. What is your attitude about working with older employees? Are you surprised by the results?

2. What is your level of satisfaction when working with older employees?

3. Based on your results, what can you do to improve your satisfaction when work- ing with older employees?


labels (and resulting generalizations) for sake of discussion. There are always exceptions to the characterizations shown in Table 4.3.77

Millennials account for the largest block of employees in the workforce, followed by baby boomers. Thus Millennials are often managed by boomers, who possess very different values and personal traits. Conflicting values and traits are likely to create friction between people. Millennials also tend to change jobs more frequently than other categories of workers. For example, the median job tenure of people between 20 and 24 is less than 16 months. This puts pressure on companies to find ways to retain this talented segment of the workforce.78

Goldman Sachs Group Inc. is addressing the issue head on. According to The Wall Street Journal the firm is “rethinking the way it structures bankers’ early years at the firm. The bank is dangling carrots, including promises to speed the path to promotions and eliminating some of the grunt work that often falls to younger employees.” In addition to lightening workloads, the company started having “town-hall-style meetings to address grievances to keep young people on board.”79 Will other groups of employees view these changes as unfair? Time will tell.

Have age-related differences at school or work caused any conflicts for you? The fol- lowing Self-Assessment was created to assess your attitudes toward older employees. Because the term older is relative, define older employees in your own terms when com- pleting the assessment.

Educational Levels: Mismatch between Education and Organizational Needs There are three potential education–work mismatches:

• College graduates may be in jobs for which they are overqualified. The US Census Bureau estimates that 26.8 percent of the US workforce has at least a col- lege degree.80 Unfortunately, about a half a million college graduates are working minimum-wage jobs—260,000 with bachelor’s degrees and 200,000 with associ- ate’s degrees.81 These graduates are underemployed, working at jobs that re- quire less education than they have such as waiting tables, tending bar, painting, and other work that someone with less education could perform. Underemploy- ment is associated with poorer work attitudes, job performance, job satisfaction, motivation, and psychological well-being.82

• College graduates may not have the skills desired by employers. Recent studies show that college graduates, while technically and functionally competent, lack teamwork skills, critical-thinking ability, oral communication skills, and analytic reasoning.83 There is also a shortage of college graduates in technical fields related to science, math, and engineering.

• High-school dropouts and others may not have the literacy skills needed for many jobs. A recent study revealed that 7 percent of all US students between 16 and 24 dropped out of high school in 2013.84 The dropout rate is higher for males. This statistic, along with the fact that 14 percent of US adults read below a basic level, is a real problem for employers, because about 70 percent of on-the-job read- ing materials are written at or above a ninth-grade level.85

146 PART 1 Individual Behavior


What are the most common barriers to implementing successful diversity programs?


Wouldn’t you rather know what obstacles lay ahead, instead of discovering them too late? We

share 11 common challenges to effectively managing diversity.


The following is a list of the most common barriers to implementing successful diversity programs:86

1. Inaccurate stereotypes and prejudice. Mistaken perceptions manifest themselves in the belief that differences are weaknesses and that diversity hiring means sacrificing competence and quality. As a reporter for The Wall Street Journal noted, “Studies show that negative stereotypes about aging—for example, that older people inevitably grow less productive and more depressed—are as pervasive as they are inaccurate.”87 Inac- curate stereotypes like this limit the promotability and job satisfaction of older workers.

2. Ethnocentrism. The ethnocentrism barrier is based on the feeling that our cultural rules and norms are superior to or more appropriate than the rules and norms of an- other culture.

3. Poor career planning. Lack of opportunities for diverse employees to get work assignments that qualify them for senior management positions can stunt careers.

4. A negative diversity climate. We define organizational climate in Chapter 7 as em- ployee perceptions about an organization’s formal and informal policies, practices, and procedures. Diversity climate  is a subcomponent of an organization’s overall climate and is defined as the employees’ aggregate “perceptions about the organization’s diversity- related formal structure characteristics and informal values.”88 Diversity climate is positive when employees view the orga- nization as being fair to all types of em- ployees, which promotes employee loyalty and overall firm performance.89 It also en- hances psychological safety. Psychologi- cal safety  reflects the extent to which people feel free to express their ideas and beliefs without fear of negative consequences. As you might expect, psychological safety is positively associ- ated with outcomes in the Organizing Framework like innovation.90

There are over 11 different types of lightning. This is an anvil crawler. It travels horizontally and generally at high altitudes. A lightning storm like this can be dangerous and we must be careful to avoid being struck. The same is true for an organization’s diversity climate. It signals the extent to which an organization’s “internal climate” supports diversity initiatives. Bad climates, like bad lightning storms, result in people taking cover by withholding effort and talent. Have you ever worked in a company with a negative diversity climate? © Jason Weingart Photography RF

147Social Perception and Managing Diversity CHAPTER 4

5. A hostile working environment for diverse employees. Hostile work environments are characterized by sexual, racial, and age harassment and can be in violation of Equal Employment Opportunity law, such as Title VII of the Civil Rights Act.91 Whether perpetrated against women, men, older individuals, or LGBTQ people, hos- tile environments are demeaning, unethical, and appropriately called “work environ- ment pollution.” You certainly won’t get employees’ best work if they believe the work environment is hostile toward them. The Applying OB box illustrates how Chicago-based online lender Enova International Inc. is trying to create a work environment supportive of Millennials.

Applying OB

Enova was founded by two brothers in 2004 and grew rapidly. Soon it experienced challenges in retaining its technologically savvy employees because they were in high demand in the job market. The company then developed a three-part retention strat- egy targeted at Millennials:

1. Development. Millennials like to know their career game plan. According to a free- lance writer for HR Magazine, “Enova offers employees workshops on technology and soft skills, such as how to develop a professional presence and how to in- crease their emotional intelligence.” The company displays charts on its website that show career paths for employees.

2. Recognition. Millennials are known to like frequent and clear feedback. Enova ad- dresses this desire by using a “game-like recognition system in which employees can award points to their colleagues, whether peers or subordinates, for a job well done,” according to HR Magazine. Employees then cash the points in for prizes that include iPods and designer purses.

3. Perks. Millennials seem to prefer collaboration and the opportunity to stay con- nected with friends. Enova tried to accommodate these needs by building the “chill hub,” a room that contains a waterfall wall, board games, massage chairs, and exercise balls. Once a month employees are allowed to volunteer during the workday for a nonprofit of their choice. The company also offers a host of per- sonal perks that include onsite dry cleaning services, yoga classes, snacks and beverages, and Weight Watchers classes.92

Enova International Provides a Millennial Supportive Environment

6. Diverse employees’ lack of political savvy. Diverse employees may not get pro- moted because they do not know how to “play the game” of getting along and getting ahead in an organization. Research reveals that women and people of color are ex- cluded from organizational networks that could help them rise.93 Some organizations attempt to overcome this barrier by creating employee-resource groups that encour- age individuals with similar backgrounds to share common experiences and success strategies. American Express has 16 network groups and Cisco has 11.94

7. Difficulty balancing career and family issues. Women still assume most of the re- sponsibilities associated with raising children. This makes it harder for them to work evenings and weekends or to travel. Even without children in the picture, household chores take more of a woman’s time than a man’s.

148 PART 1 Individual Behavior

8. Fear of reverse discrimination. Some employees believe diversity management is a smoke screen for reverse discrimination. This belief leads to very strong resistance because it makes people feel one person’s gain is another’s loss.

9. Lack of organizational priority for diversity. Low priority for diversity leads to subtle resistance in the form of complaints and negative attitudes. Employees may complain about the time, energy, and resources devoted to diversity that could have been spent doing “real work.”

10. A poor performance appraisal and reward system. Performance appraisals and reward systems must reinforce the need to effectively manage diversity. Success must thus be based on a new set of criteria. For example, General Electric evaluates the extent to which its managers are inclusive of employees with different backgrounds. These evaluations are used in salary and promotion decisions.95

11. Resistance to change. Effectively managing diversity entails significant organi- zational and personal change. Sometimes this resistance is a function of cross- cultural values. In Japan, for example, women have a difficult time being promoted to senior management positions because of the practice of lifetime em- ployment and age-based promotions. This tradition still holds at both large and small companies.96

Are you curious about the diversity climate in a current or former employer? If yes, take the Self-Assessment below. It measures the components of an organization’s diver- sity climate and will enable you to determine whether your employer has or had a favor- able one.

Assessing an Organization’s Diversity Climate Please be prepared to answer these questions if your instructor has assigned Self- Assessment 4.2 in Connect.

1. What were the three highest- and lowest-rated survey items? What does this tell you about your employer?

2. Based on these scores, what advice would you give the human resources officer at the company you evaluated?


In summary, managing diversity is a critical component of organizational success. It is a challenge, but it is necessary if you want to create an environment that engages em- ployees and motivates them to do their best.

149Social Perception and Managing Diversity CHAPTER 4

What are organizations doing to effectively manage diversity? We can answer this ques- tion by first providing a framework for categorizing organizational initiatives.

Framework of Options One especially relevant framework was developed by R. Roosevelt Thomas Jr., a diversity expert. Thomas identified eight generic action options that organizations can use to ad- dress any type of diversity issue. After describing each option, we discuss relationships among them.97

Option 1: Include/Exclude Include/exclude is an outgrowth of affirmative action programs. Its primary goal is to either increase or decrease the number of diverse people at all levels of the organization. Shoney’s restaurant chain attempted to include diverse employees after settling a discrimination lawsuit. The company subsequently hired African Americans into positions of dining-room supervisors and vice presidents, added more franchises owned by African Americans, and purchased more goods and services from minority-owned companies.98

Option 2: Deny People may deny differences exist, saying that all decisions are color-, gender-, and age-blind and that success is determined solely by merit and per- formance. Novartis Pharmaceuticals agreed to a $152 million settlement in a gender discrimination lawsuit. Holly Waters, one of the plaintiffs, charged that “she was not only paid less than her male equivalents at Novartis, but was fired when she was seven months pregnant after taking a few weeks off on advice of her doctors.” Waters was the highest performer in her district.99 Novartis denied that gender discrimination was a companywide issue despite the fact that 5,600 women received compensation in the settlement.100

Option 3: Assimilate The idea behind assimilation is that, given time and reinforce- ment, all diverse people will learn to fit in or become like the dominant group. Organiza- tions initially assimilate employees through their recruitment practices and through orientation programs that describe their preferred values and standard operating proce- dures. Employees then are encouraged to refer to policies and procedures when confused about what to do in a specific situation. These practices create behavioral homogeneity among employees.


What are organizations doing to effectively manage diversity, and what works best?


Whether you manage a diverse work group or find yourself managed within a diverse work

group, you’ll do better by understanding the various ways in which organizations attempt to

manage diversity. You’ll be able to review eight options in the following section. Hint: We rec-

ommend mutual adaptation.


150 PART 1 Individual Behavior

Option 4: Suppress Differences are squelched or discouraged when suppres- sion is the diversity strategy. Managers and peers tell employees to quit whining and complaining about issues. Saying, “You’ve got to pay your dues” is another way to suppress differences and promote the sta- tus quo.

Option 5: Isolate Isolation maintains the status quo by setting the diverse person off to the side. Then he or she is unable to influence organizational change. Managers can isolate people and entire teams and departments by putting them on special projects, creating functionally independent entities often referred to as silos.

Option 6: Tolerate Toleration entails acknowledging differences but not valuing or accepting them. This live-and-let-live approach allows organizations to give lip service to the issue of managing diversity. It differs from isolation in that it allows for the inclusion of diverse people, but differences are still not truly valued or accepted.

Option 7: Build Relationships Relationship building is based on the premise that good relationships can overcome differences. It addresses diversity by fostering high- quality relationships—characterized by acceptance and understanding—among diverse groups. Marriott, for example, has paired younger and older employees in teams so they can more effectively capitalize on their strengths and weaknesses.101

Option 8: Foster Mutual Adaptation Mutual adaptation allows people to change their views for the sake of creating positive relationships with others. Employees and managers alike must be willing to accept differences and, most important, agree that everyone and everything is open for change. Diversity training is one way to kick-start mutual adaptation. Research shows that such training can positively enhance people’s attitudes and feelings about working with diverse employees.102

Conclusions about Action Options Although the action options can be used alone or in combination, some are clearly more effective than others. Exclusion, denial, assimi- lation, suppression, isolation, and toleration are the least preferred options. Inclusion, building relationships, and mutual adaptation are preferred. That said, Thomas reminds us that mutual adaptation is the only approach that unquestionably endorses the philoso- phy behind managing diversity.

Choosing how to best manage diversity is a dynamic process and is influenced by the context. For instance, some organizations are not ready for mutual adaptation. The best they might be able to achieve is the inclusion of diverse people.

How Companies Are Responding to the Challenges of Diversity We close this chapter by sharing some examples and models that demonstrate how com- panies are responding to the emerging challenges of managing diversity. Compare these to Thomas’s framework and you’ll find the greatest activity around Options 7 and 8, building relationships and fostering mutual adaptation.

These U.S. soldiers of the 101st Airborne Division are a great illustration of assimilation. Note the uniform dress and structured approach toward marching. Assimilation techniques used by the military create homogeneity in dress, behavioral expectations, and many other aspects of military life. Do you think non military organizations desire the same type of homogeneity? © Zoom Dosso/AFP/Getty Images

151Social Perception and Managing Diversity CHAPTER 4

Response: Paying Attention to Sexual Orientation The Transgender Law Cen- ter estimates that about 2 percent of the population is transgender. The term transgender  applies to anyone whose gender identity or gender expression is different from sex at birth. Although 61 percent of Fortune 500 firms forbid discrimination based on gender identity, transgender people are protected against discrimination in only 17 states and the District of Columbia.103 More companies recognize that they don’t want to alienate this segment of the population, however, and are implementing programs to help them transi- tion. Aetna, for example, has developed a policy that covers issues involving leave bene- fits, restroom use, and the transitioning employee’s preferred pronouns and names. It also includes medical coverage for therapy and surgery. Companies including Alcatel-Lucent and Glassdoor have addressed the needs of transgender employees by trying to create an inclusive culture. Mariah DeLeon, Glassdoor’s vice president of people, noted, “The phrase we have here is ‘Bring your whole self to work.’”104

Response: Addressing Changing Customer Demographics A Citizens Union Bank branch in Louisville, Kentucky, was designed and staffed with the goal of attracting more Latina/o customers. The interior contains “bright, colorful walls of yellows and blues, large-scale photos of Latin American countries, comfortable couches, sit-down desks, a children’s play area, a television tuned to Hispanic programming, and even a vending area stocked with popular Latin American-brand soft drinks and snacks.” The branch also took on a new name: Nuestro Banco, Spanish for “Our Bank.” Branch depos- its are setting records, and the CEO is planning to repeat the model in other locations.105

Response: Helping Women Navigate the Career Labyrinth Organizations can make career navigation easier by providing flexible work schedules and the developmen- tal assignments that prepare women for promotional opportunities. According to a busi- ness writer, the Boston Consulting Group “focuses heavily on recruiting and retaining women, offering part-time options, mentoring and professional-development programs.” On-ramping  programs encourage people to reenter the workforce after a tempo- rary career break. Companies such as McKinsey & Co. and Goldman Sachs Group offer these to women in particular. Goldman, for example, instituted “returnship” programs that offer short-term job assignments to former employees.106

Response: Helping Hispanics Succeed Miami Children’s Hospital and Shaw Industries Inc. in Dalton, Georgia, hope to raise employee productivity, satisfaction, and motivation by developing customized training programs to improve the communication skills of their Spanish-speaking employees.107 Research reveals that retention and career progression of minorities can be significantly enhanced through effective mentoring.

Response: Providing Community and Corporate Training to Reduce the Mismatch between Education and Job Requirements To combat education gaps on a more global level, JPMorgan started The Fellowship Initiative (TFI) in New York in 2010 and expanded it to Chicago and Los Angeles in 2014. The goal is to provide intensive academic and leadership training to young men of color. Jamie Dimon, chair and CEO of JPMorgan, is committed to the program. “These young men need access to high quality education and positive role models in and outside the classroom,” he said. Michael Bloomberg, then New York City’s mayor, applauded JPMorgan’s effort by con- cluding, “We need more civic-minded companies and organizations to step up and join this work, and I congratulate JPMorgan Chase for being a leader in this effort and for making a real difference in the lives of young men of color in our city.”108

At the individual corporate level, companies, including Wheeler Machinery Co. in Salt Lake City, have instituted specialized training programs that enable less-qualified people to perform more technically oriented jobs. Lockheed Martin and Agilent Tech- nologies also offer paid apprenticeships or internships to attract high-school students in- terested in the sciences.109

PART 1 Individual Behavior152

64-Year-Old Male Sues Staples for Wrongful Termination and Age Discrimination

Bobby Nickel, a 66-year-old facilities manager for Staples Contract and Commercial, Inc., and Staples, Inc., was fired. He claims the company discriminated against and harassed him and ultimately termi- nated him due to his age.

From 2002 to 2008 Nickel worked for Corporate Express, which Staples then acquired. He re- ceived positive performance evaluations for nine years before his termination.

“Because Corporate Express’ pay scale had been higher than the pay scale for employees hired by Staples, Nickel alleged in his complaint that his managers noted that they needed to ‘get rid of’ older, higher paid employees. Nickel’s complaint also explained how he became the regular butt of jokes at staff meetings and was referred to as ‘old coot’ and ‘old goat,” according to blogger Larry Bodine.112

Further, Nickel claimed that Lionel Marrero, his fulfillment center manager, regularly made harassing statements like, “Take a closer look at the older people. They are starting to drag and are slowing down. If they are not top performers, write them up and get rid of them.” It was also alleged that Marrero said, “We need young, energetic people. Walk around the facility with the older workers and if they cannot keep up, then get rid of them. . . . We need to get rid of old people because they are slow. And we can get younger people to work cheaper.”113

Nickel was ultimately pressed by a manager to resign. When he didn’t, he experienced increased incidents of harassment from coworkers and a manager. “This included being written up and suspended for ‘stealing,’ after taking a bell pepper valued at 68 cents from the company cafeteria.” A receptionist

Problem-Solving Application

Response: Retaining and Valuing Skills and Expertise in an Aging Workforce Here are seven initiatives that can help organizations to motivate and retain an aging workforce:

1. Provide challenging work assignments that make a difference to the firm. 2. Give employees considerable autonomy and latitude in completing a task. 3. Provide equal access to training and learning opportunities when it comes to new

technology. 4. Provide frequent recognition for skills, experience, and wisdom gained over the

years. 5. Provide mentoring opportunities whereby older workers can pass on accumulated

knowledge to younger employees. 6. Ensure that older workers receive sensitive, high-quality supervision. 7. Design a work environment that is both stimulating and fun.110

You’ll see a number of these tactics being used by BAE, a multinational defense and aerospace company, according to a writer for Bloomberg Businessweek. “When BAE learns that an employee with deep institutional knowledge plans to retire, whether in a few months or a couple of years, a knowledge-transfer group of about a half-dozen people of varying ages working in the same area is formed. The teams meet regularly over months to talk and exchange advice. Younger workers elicit tips, and in some cases older ones gradually hand off tasks to junior employees.”111

Some companies, such as Staples, have encountered problems managing older em- ployees; see the Problem-Solving Application box.

153Social Perception and Managing Diversity CHAPTER 4

told Nickel she had been instructed by management “to provide a false statement about Nickel’s con- duct but she refused to do so, said blogger Larry Bodine.114

Counsel for Staples contended that the company had cause to suspend Nickel because he violated “the company’s zero-tolerance policy when it came to ‘dishonesty of any kind, including theft or misap- propriation of company property.’”115

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problem in this case.

Step 2: Identify the OB concepts or theories that may be causing the problem. For example, are stereotypes, diversity climate, or frameworks for managing diversity causes of the problem?

Step 3: Recommend what you would do to correct the situation. Think both short term and long term.

Response: Resolving Generational Differences Traditional and boomer manag- ers are encouraged to consider their approach toward managing the technologically savvy Gen Xers and Gen Ys. Gen Xers and Ys, for instance, are more likely to visit social net- working sites during the workday, often perceiving this activity as a “virtual coffee break.” In contrast, traditional and boomer managers are more likely to view this activity as wasted time, leading them to adopt policies that attempt to prevent it. Experts suggest that restricting access to social media will not work in the long run if an employer wants to motivate younger employees.

Would you like to improve your working relationships with diverse people? If yes, Self-Assessment 4.3 can help. It asks you to compare yourself with a group of other people you interact with and then to examine the quality of the relationships between yourself and these individuals. This enables you to gain a better under- standing of how similarities and differences among people influence your attitudes and behavior.

How Does My Diversity Profile Affect My Relationships with Other People? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 4.3 in Connect.

1. Which diversity dimensions have the greatest influence on the quality of your in- terpersonal relationships?

2. Consider the person with whom you have the most difficulty working. Which dimensions of diversity may contribute to this relationship? What can you do to improve it?


154 PART 1 Individual Behavior

You learned that person perception and manag- ing diversity are essential for success. Why? Person perception helps you better understand the perception process, improve the way you are perceived, and adjust your own perception to avoid common perceptual errors. Managing diversity (represented by both diversity and de- mographics in our Organizing Framework) lets you better optimize diversity’s effect on individ- ual and group/team outcomes. Reinforce your learning with the Key Points below. Then con- solidate your learning using the Organizing Framework. Finally, challenge your mastery of the material by answering the Major Questions in your own words.

Key Points for Understanding Chapter 4 You learned the following key points.

4.1 PERSON PERCEPTION • Perception is a mental and cognitive process

that enables us to interpret and understand our surroundings.

• Person perception is influenced by three components: characteristics of the perceiver, characteristics of the target, and characteris- tics of the situation.

• Person perception affects a wide variety of organizational activities including hiring decisions, performance appraisals, and leadership.

4.2 STEREOTYPES • Stereotypes represent generalized beliefs

about the characteristics of a group. • Stereotypes are not always negative, and

they are not always inaccurate. • Common stereotypes exist about gender,

race, and age.

• Stereotyping is a four-step process that con- sists of categorization, inference, expectation formation, and maintenance.

• We maintain stereotypes by (a) overestimat- ing the frequency of stereotypic behaviors ex- hibited by others, (b) incorrectly explaining expected and unexpected behaviors, and (c) differentiating minority individuals from ourselves.

4.3 CAUSAL ATTRIBUTIONS • Causal attributions are suspected or inferred

causes of behavior. • According to Kelley’s model of causal attribu-

tion, we make external attributions when con- sensus and distinctiveness are high and consistency is low. We make internal (personal responsibility) attributions when consensus and distinctiveness are low and consistency is high.

• The fundamental attribution bias emphasizes personal factors more than situation factors while we are formulating attributions. In the self-serving bias we personalize the causes of our success and externalize the causes of our failures.


• Diversity represents the individual differences that make people unique from and similar to each other.

• Diversity varies along surface-level character- istics like race, gender, and age and along deep-level characteristics such as attitudes, opinions, and values.

• Affirmative action is an outgrowth of equal employment opportunity legislation and is an intervention aimed at giving management a chance to correct past discrimination.

• Managing diversity entails enacting a host of organizational changes that enable all people to perform to their maximum potential.

What Did I Learn?

155Social Perception and Managing Diversity CHAPTER 4

discrimination, (i) lack of organizational prior- ity, ( j) the need to revamp the organization’s performance appraisal and reward systems, and (k) resistance to change.


• Organizations have eight options for address- ing diversity issues: (a) include/exclude the number of diverse people at all levels of the organization, (b) deny that differences exist, (c) assimilate diverse people into the domi- nant group, (d) suppress differences, (e) iso- late diverse members from the larger group, (f ) tolerate differences among employees, (g) build relationships among diverse employ- ees, and (h) foster mutual adaptation to create positive relationships.

The Organizing Framework for Chapter 4 As shown in Figure 4.5, you learned that diversity, demographics, and stereotypes serve as key per- son factors, while diversity climate is an important situation factor. You also know there are relevant processes across the individual level (perception,


• Managing diversity is predicted to be good business because it aims to engage employ- ees and satisfy customers’ unique needs.

• There are six key demographic trends: (a) women are navigating a labyrinth after break- ing the glass ceiling, (b) racial groups are en- countering a glass ceiling and perceived discrimination, (c) recognition of sexual orien- tation is growing in importance, (d) people with disabilities face challenges, (e) genera- tional differences are growing in an aging workforce, and (f) a mismatch exists between workers’ educational attainment and organi- zational needs.


• There are 11 barriers to successfully imple- menting diversity initiatives: (a) inaccurate stereotypes and prejudice, (b) ethnocentrism, (c) poor career planning, (d) a negative diver- sity climate, (e) a hostile working environment for diverse employees, (f) diverse employees’ lack of political savvy, (g) difficulty balancing career and family issues, (h) fears of reverse


© 2014 by Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without express permission of the authors.


Person Factors • Diversity • Demographics • Stereotypes Situation Factors • Diversity climate

Individual Level • Perceptions • Attributions • Psychological safety Group/Team Level • Group/team dynamics Organizational Level • Options to manage


Individual Level • Task performance • Work attitudes • Well-being/flourishing • Turnover • Career outcomes Group/Team Level • Group/team performance • Group satisfaction Organizational Level • Employer of choice • Customer satisfaction • Reputation

156 PART 1 Individual Behavior

3. How do I tend to interpret employee performance?

4. How does awareness about the layers of di- versity help organizations effectively manage diversity?

5. What is the business rationale for managing diversity?

6. What are the most common barriers to imple- menting successful diversity programs?

7. What are organizations doing to effectively manage diversity, and what works best?

attributions, and psychological safety), the group/ team level (group/team dynamics), and the organi- zational level (options to manage diversity). These inputs and processes have critical outcomes.

Challenge: Major Questions for Chapter 4 1. How do I form perceptions of others? 2. How can I use awareness of stereotypes to

make better decisions and manage more effectively?

IMPLICATIONS FOR ME We see four additional things you can do to apply this chapter’s lessons. First, remember that your personal and professional success depends upon others’ perceptions of you. Because perceptions can override your good work, it is important to gain feedback on what others’ think about you. Second, it is normal to be affected by stereotypes. It would be helpful to reflect on your stereotypes and to try to avoid letting them bias your decisions and perceptions of others. Third, consider how you will respond when you hear negative or disparaging things about diverse people. It’s going to happen, and your response can make the difference in stopping such statements. Finally, celebrate your uniqueness, but remember that some people are uncomfortable with individual differences among people. We encourage you to just be yourself.

IMPLICATIONS FOR MANAGERS There are three key implications for managers. First, because managers make many types of judgments about people, it is important to try to make these judgments without being biased or using stereotypes. This can be difficult because such cognitive errors are a natu- ral and normal part of how we process information. Second, the fundamental attribution bias can lead to inaccurate interpretations of someone’s suitability for a job or a perfor- mance evaluation. Be aware of this attributional error, and try to consider both personal and situation factors when evaluating others. Third, managing diversity is good for individ- ual employees, managers, and organizations as a whole. Organizations, whether local or global, will compete more effectively when all employees feel included, supported, and valued. We all should try our best to be understanding and supportive of people who are different from the majority.

157Social Perception and Managing Diversity CHAPTER 4

Managing diversity is a hot topic among technology companies, some of which have started to display transparency by publishing their diversity profiles.

Google’s diversity report showed its workforce is 70 percent male and 30 percent female. Ethnicity data for its US workforce indicated 61 percent white, 30 percent Asian, 4 percent of two or more races, 3 percent Hispanic, 2 percent black, and 1 percent other. This pattern is similar to those of Apple (30 per- cent female and 55 percent white, and US ethnicity data showing 15 percent Asian, 11 percent Hispanic, 7 percent black, 2 percent of two or more races, 1 per- cent other, and 9 percent undeclared) and Facebook (31 percent female, and US ethnicity data of more than half white, 41 percent Asian, 3 percent Hispanic, and 1 percent black).116

Executives within the technology industry have started to implement a variety of programs and poli- cies to change the demographic profiles of their com- panies. For example, Intel established a 2015 hiring goal of 40 percent new hires from diverse back- grounds and 22.7 percent of technical employees who are female. Pinterest established a 2016 goal to have 30 percent of new engineering hires in engineering roles be female and 8 percent from underrepresented ethnic minorities.117

Is setting diversity hiring goals fair? While com- panies that set them note they are not meant to be quotas, some managers may perceive them that way. This would likely create feelings of reverse discrimination, fueling resistance to hiring diverse employees.

What has led to the skewed demographics at technology companies? Some experts believe the root cause goes back to patterns and norms in ele- mentary and high school, where girls are not encour- aged to focus on the STEM subjects (science, technology, engineering, and math). If this is true, fe- male high-school students are not developing the proficiency that would help them major in STEM sub- jects in college. Further, a writer for Forbes con- cluded that an unconscious bias exists “that science and math are typically ‘male’ fields while humanities are primarily ‘female’ fields, and these stereotypes further inhibit girls’ likelihood of cultivating an inter- est in math and science.”118

A related issue is the “information gap.” High-school students simply do not know which jobs are in high demand. For example, research shows that 24 percent of high-school seniors “have no idea of what career they want to pursue. Of high school seniors who have pinpointed a desired profession, 23 percent said they made their career choice based on something they saw on TV or in a movie.”119 This is a problem because TV shows often depict technology-oriented people as geeky males. Who wants to be a geek?

Others claim the industry has a pipeline problem. In other words, not enough females and minorities are majoring in STEM subjects in college. Statistics conflict on this subject. Some data indicate that fe- males earn fewer than 20 percent of college degrees in computer science, even though they achieve the majority of bachelor’s degrees in the United States.120 In contrast, other studies show that there is not a pipeline issue. According to Forbes writer Bonnie Marcus, there is “an equal number of high- school girls and boys participating in STEM elec- tives.” Marcus also notes that 50 percent of the introductory computer science students at Stanford and Berkeley are women.121 A USA study further showed that “top universities graduate black and Hispanic computer science and computer engineer- ing students at twice the rate that leading technology companies hire them.”122 There must be some rea- son these students are not being hired.

If the above data are accurate, then it is possible that companies have a systemic problem based on hiring managers’ beliefs, stereotypes, or unconscious biases. This occurred at Pinterest, for example, when it tried to increase the number of women and minorities being hired. Although recruiters found qualified applicants “from nontraditional backgrounds, managers often con- tinued to prioritize people from places like Stanford and MIT, which have less broad student bodies. And while Adam Ward, Pinterest’s head of recruiting, and Abby Maldonado, its diversity-programs specialist, had en- couraged colleagues to pass along résumés form a range of candidates, most of the referrals were still white or Asian,” according to FastCompany.123 Pinterest founder Evan Sharp believes technology companies may not be giving diversity the same type of attention given to product development initiatives.


White, Male, and Asian: The Diversity Profile of Technology Companies

158 PART 1 Individual Behavior

your thinking. Focus on topics in the current chapter, because we generally select cases that illustrate concepts in the current chapter.

Step 2: Identify causes of the problem by using ma- terial from this chapter, which has been summarized in the Organizing Framework shown in Figure 4.5. Causes will appear in either the Inputs box or the Processes box.

A. Start by looking at Figure 4.5 to identify which person factors, if any, are most likely causes of the defined problem. For each cause, explain why this is a cause of the problem. Asking why multiple times is more likely to lead you to root causes of the problem. For example, if you think demographics—an input in the Organizing Framework—is a cause, ask yourself why. This might lead to the conclusion that there are not enough females and minorities who are taking STEM majors in college. In turn, this might lead to the conclusion that a poor pipeline is a root cause of demographics at technology companies. Then ask yourself why this is happening. The cause might go all the way back to elementary and high school. By following this process of asking why multiple times, you will be more likely to arrive at a more complete list of causes.

B. Now consider the Processes box shown in Figure 4.5. Consider whether perception, attributions, psychological safety, group/team dynamics, or options to manage diversity are causes of the problem. For any concept that might be a cause, ask yourself, Why is this a cause? Again, do this for several iterations to arrive at root causes.

C. Follow the same process for the situation factors.

D. To check the accuracy or appropriateness of the causes, be sure to map them onto the defined problem.

Step 3: Make recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recom- mendation is desirable and feasible?

A. Given the causes identified in Step 2, what are your best recommendations? Use the content in Chapter 4 or one of the earlier chapters to propose a solution.

B. Potential solutions may be found in the OB in Action and Applying OB boxes within the chapter. These features provide insights about how other individuals or companies are handling the topic at hand.

C. Create an action plan for implementing your recommendations.

There may also be more overt causes of the un- derrepresentation of female and minority tech em- ployees. Consider results from an interview study of 716 women who had held technology positions. These women left the industry after seven years, and 27 percent cited “discomfort working in these companies.” Other top reasons were perceived dis- crimination in regard to gender, race, or sexual ori- entation, lack of flexible hours, and unsupportive work environments.124

Could something as subtle as gender-based com- munication contribute to the problem? The answer is yes according to a recent report presented in Fortune. A study of 1,100 technology résumés from 512 men and 588 women uncovered gender-related differ- ences that may affect a recruiter’s perceptions. For ex- ample, “women’s résumés are longer, but shorter on details. . . . Yet when it comes to providing details about previous jobs, the men present far more specific content than the women do,” according to the Fortune report. Women were also found to “lead with their cre- dentials and include more personal background. On average, the women’s résumés cite seven personal distinctions apiece, while the men’s cite four.” Overall, women tend to use more narrative while men are more precise about their experiences.125

Assume you are a senior leader at a technology company. What does the information in this case tell you about managing diversity?


Step 1: Define the problem.

A. Look first at the Outcome box of the Organizing Framework in Figure 4.5 to help identify the important problem(s) in this case. Remember that a problem is a gap between a desired and current state. State your problem as a gap, and be sure to consider problems at all three levels. If more than one desired outcome is not being accomplished, decide which one is most important and focus on it for steps 2 and 3.

B. Cases have protagonists (key players), and problems are generally viewed from a particular protagonist’s perspective. You need to identify the perspective—employee, manager, team, or the organization—from which you’re defining the problem.

C. Use details in the case to identify the key problem. Don’t assume, infer, or create problems that are not included in the case.

D. To refine your choice, ask yourself, Why is this a problem? Explaining why helps refine and focus

159Social Perception and Managing Diversity CHAPTER 4


Swastikas and Neonatal Care

This case describes an incident that occurred at Hurley Medical Center in Michigan and resulted in a lawsuit.

Tonya Battle, a veteran black nurse in Hurley’s neo- natal intensive care unit, was taking care of a baby when a man with a swastika tattoo walked into the unit and reached for the baby. Battle stopped him and asked to see the hospital wristband that identified him as the baby’s parent. “He abruptly told her he wanted to see her supervisor, who then advised Battle she should no longer care for the child,” according to USA Today.126 The man had requested that no African American nurses should take care of his child.

A note was subsequently put on the assignment clipboard saying, “No African American nurse to take care of baby.” Battle was “shocked, offended, and in disbelief that she was so egregiously discriminated against based on her race and reassigned, according to the lawsuit, which asks for punitive damages for emotional stress, mental anguish, humiliation, and damages to her reputation,” according to a reporter from the Arizona Republic.127 Battle could not under- stand why the hospital would accommodate the man’s request. Although the note was later removed, black nurses were not allowed to care for the child for about a month.

The Arizona Republic newspaper reported that the “American Medical Association’s ethics code bars doc- tors from refusing to treat people based on race, gen- der, and other criteria, but there are no specific policies for handling race-based requests from patients.”

Further, a survey of “emergency physicians found pa- tients often make such requests, and they are routinely accommodated. A third of doctors who responded said they felt patients perceive better care from provid- ers of shared demographics, with racial matches con- sidered more important than gender or religion.”128

Your Views What would you have done if you were a medical administrator at the time the request was made?

1. I would not have honored the man’s request. I would have explained why Tonya Battle and other African American nurses are best suited to take care of his child.

2. I would have done exactly what the hospital did. The man has a right to have his child taken care of by someone of a race or gender of his choosing.

What would you do about the lawsuit?

1. Fight it. It’s ridiculous that someone would feel emotional stress and humiliation from simply being reassigned.

2. Settle it and create a policy that prohibits honoring future requests like this.

3. Settle it but hold a hospitalwide meeting explaining the rationale for continuing to accommodate such requests.


© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors


Person Factors • Personality • Personal attitudes • Values—Theory X/Y • Needs Situation Factors • Hygiene factors • Motivating factors • Job characteristics • Job design • Leadership • Organizational climate

Individual Level • Equity/justice • Expectancy processes • Goal setting processes • Voice Group/Team Level • Climate for justice Organizational Level • Climate for justice

Individual Level • Intrinsic and extrinsic

motivation • Task performance • Work attitudes • Citizenship behavior/

counterproductive behavior • Turnover Group/Team Level • Group/team performance Organizational Level • Customer satisfaction

5 Major Topics I’ll Learn and Questions I Should Be Able to Answer

5.1 The What and Why of Motivation MAJOR QUESTION: What is motivation and how does it affect my behavior?

5.2 Content Theories of Motivation MAJOR QUESTION: How would I compare and contrast the content theories of motivation?

5.3 Process Theories of Motivation MAJOR QUESTION: How would I compare and contrast the process theories of motivation?

5.4 Motivating Employees Through Job Design MAJOR QUESTION: How are top-down approaches, bottom-up approaches, and “idiosyncratic deals” similar and different?

How Can I Apply Motivation Theories?


The Organizing Framework for Understanding and Applying OB shown in Figure 5.1 summa- rizes what you will learn in this chapter. Although Chapter 5 focuses on motivation, an individual- level process, a host of person and situation factors influence it. There are more situation than person factors in the figure. This reinforces the simple fact that managers significantly affect our motivation because they have more control over situation than person factors. Figure 5.1 further shows that processes across the individual, group/team, and organizational level influence a variety of important outcomes.


Winning at Work Discussing Pay at Work

What’s Ahead in This Chapter There are far too many dysfunctional organizations where managers don’t seem to have a clue about how to motivate workers. OB supplies proven methods of how to motivate employees. These aren’t just abstract theories. All spring from observation and study of the workplace, and they have been validated in real-life testing. Business professionals treasure them as tools for making work better and more productive. We’ll show you how these methods operate and give practical tips and suggestions for implementing them.

The Wall Street Journal recently offered advice for how companies should handle pay secrecy. Based on OB research covered in this chapter, the writer suggested com- panies should open up about pay and allow employees to freely talk about their pay concerns. This in- cludes showing pay data on com- pany intranets and performance information by unit. Showing the link

between pay and performance is one way to make pay de- cisions transparent.4

Should You Discuss Pay While at Work? The answer depends on your role and position. Experts contend that the National Labor Relations Act prohibits companies from stopping the rank and file (employees paid by the hour) from discussing salary and benefits packages outside work time. “Outside work time” means on social media as well. T-Mobile was recently found guilt of violating national labor laws by prohibiting employees from talking with each other about wages. The rules are different, how- ever, for managers and supervisors, who can legally be prevented from discussing their pay.5

If you decide to discuss pay at work, keep the following recommendations in mind: (1) understand your company’s policy on the matter, (2) restrict your conversations to peo- ple you trust, and (3) don’t brag about your pay. 

Ever wonder how your pay com- pares to that of a coworker? Brian Bader did. Bader had just been hired for a technology-support job at Apple for $12 per hour and was told not to discuss salary with other em- ployees. This requirement made him curious, so he decided to ask co- workers about their salary and found that most people were being paid between $10 and $12 per hour.

Pay Inequity Bader was not upset about his relative pay level at first, but it later became the reason he decided to quit his job. He learned from performance data shared with work teams that he was twice as productive as the lowest performer on the team yet earned only 20 percent more. “It irked me. If I’m doing double the work, why am I not seeing double the pay?” he said when interviewed for The Wall Street Journal.1 In OB we see Bader’s situation as an example of pay inequity.

How do Companies Handle Decisions about Pay? Many companies tell employees not to discuss pay with coworkers. Some threaten to fire those who do. Why? Quite simply, when such disparities become public, they lead to feelings of inequity, which in turn lowers employee engagement, motivation, and performance. Dr. Kevin Hallock, dean of industrial and labor relations at Cornell University, said companies keep pay secret because they “aren’t very good at explaining to employees why they’re being paid what they’re paid, or what they must do to earn more.”2

Pay secrecy does not sit well with younger employees like Millennials, who are more willing than earlier genera- tions to talk about pay and even discuss it on social media. Some companies, such as Whole Foods Market, SumAll, and Buffer, are less secretive. Buffer, a small social media marketing and analytics firm, posts all employees’ salaries online, including their names, along with revenue, sales, and the company’s formula for setting salaries.3 Would you like to work at Buffer?

162 PART 1 Individual Behavior


Motivation theories help us understand our own behaviors in organizational settings and provide us tools for motivating others.

Motivation: What Is It? Motivation explains why we do the things we do. It explains why you are dressed the way you are right now, and it can account for what you plan to do this evening. 

How Does It Work? The term motivation derives from the Latin word movere, mean- ing “to move.” In the present context, motivation  describes the psychological pro- cesses “that underlie the direction, intensity, and persistence of behavior or thought.”6 “Direction pertains to what an individual is attending to at a given time, inten- sity represents the amount of effort being invested in the activity, and persistence repre- sents for how long that activity is the focus of one’s attention.”7 

There are two types of motivation: extrinsic and intrinsic. • Extrinsic motivation  results from the potential or actual receipt of external

rewards. Extrinsic rewards such as recognition, money, or a promotion represent a payoff we receive from others for performing a particular task. For example, the Air Force is offering a bonus to drone pilots if they extend their commitment to remain in the military. These pilots can earn a $15,000 annual bonus by extending for either five or nine years, and they have the option to receive half the total bonus up front. The Air Force is doing this because the demand for drone pilots exceeds the supply.8

• Intrinsic motivation  occurs when an individual is inspired by “the positive internal feelings that are generated by doing well, rather than being dependent on external factors (such as incentive pay or compliments from the boss) for the motivation to work effectively.”9 We create our own intrinsic motivation by giving ourselves intrinsic rewards such as positive emotions, satisfaction, and self-praise. Consider the intrinsic motivation of the 2015 winners of Dancing with the Stars— Bindi Irwin and Derek Hough. The joy on their faces demonstrates the engagement and fun they are having while dancing.


What is motivation and how does it affect my behavior?


Motivation is a key process within the Organizing Framework for Understanding and Apply-

ing OB. Understanding the principles of motivation can help you both achieve personal goals

and manage others in the pursuit of organizational goals. 

163Foundations of Employee Motivation CHAPTER 5

The Two Fundamental Perspectives on Motivation: An Overview Researchers have proposed two general categories of motivation theories: content theo- ries and process theories. Content theories identify internal factors such as needs and satisfaction that energize employee motivation. Process theories explain the process by which internal factors and situational factors influence employee motivation.10 It’s impor- tant to understand both motivational perspectives because they offer different solutions for handling motivational problems. The following two sections discuss several theories for each theoretical perspective. 

Bindi Irwin, on the left, and Derek Hough won the 2015 Dancing with the Stars competition. The smiles on their faces show the intrinsic motivation that performers in many fields feel during and after competing. Performers in many arenas— not just competitive dancing—are motivated to excel by extrinsic factors, such as prize money, praise, recognition from others, and titles. However, often the key motivators are also, or instead, intrinsic, like a feeling of challenge and accomplishment. © Amanda Edwards/WireImage/Getty Images

164 PART 1 Individual Behavior


How would I compare and contrast the content theories of motivation?


Five OB theories deal with the internal factors that motivate individuals. Several come from

other disciplines. So you may have already encountered Maslow’s hierarchy of needs and

related content theories such as McGregor’s Theory X and Theory Y, acquired needs theory,

self-determination theory, and Herzberg’s motivator-hygiene theory.


Most content theories of motivation  are based on the idea that an employee’s needs influence his or her motivation. Content theorists ask, “What are the different needs that activate motivation’s direction, intensity, and persistence?” Needs  are de- fined as physiological or psychological deficiencies that arouse behavior. They can be strong or weak and are influenced by environmental factors. This tells you that human needs vary over time and place.

Content theories include: • McGregor’s Theory X and Theory Y. • Maslow’s need hierarchy theory. • Acquired needs theory. • Self-determination theory. • Herzberg’s motivator-hygiene theory.

McGregor’s Theory X and Theory Y Douglas McGregor outlined his theory in his book The Human Side of Enterprise.11 Draw- ing on his experience as a management consultant, McGregor formulated two sharply contrasting sets of assumptions about human nature. Theory X  is a pessimistic view of employees: They dislike work, must be monitored, and can be motivated only with rewards and punishment (“carrots and sticks”). McGregor felt this was the typical per- spective held by managers. To help them break with this negative tradition, McGregor formulated his own Theory Y. Theory Y  is a modern and positive set of assumptions about people at work: They are self-engaged, committed, responsible, and creative.

Consider the value of adopting a Theory Y approach toward people. One recent study demonstrated that employees and teams had higher performance when their managers displayed Theory Y behaviors. A second study uncovered higher levels of job satisfac- tion, organizational commitment, and organizational citizenship when managers engaged in Theory Y behaviors.12

Maslow’s Need Hierarchy Theory: Five Levels of Needs In 1943, psychologist Abraham Maslow published his now-famous need hierarchy theory of motivation. Although the theory was based on his clinical observation of a few neurotic individuals, it has subsequently been used to explain the entire spectrum of human

165Foundations of Employee Motivation CHAPTER 5

behavior. The need hierarchy theory  states that motivation is a function of five ba- sic needs: physiological, safety, love, esteem, and self-actualization. See Figure 5.2 for an explanation.

The Five Levels Maslow proposed that the five needs are met sequentially and relate to each other in a “prepotent” hierarchy (see Figure 5.2). Prepotent means the current most-pressing need will be met before the next need becomes the most powerful or po- tent. In other words, Maslow believed human needs generally emerge in a predictable stair-step fashion. Thus when physiological needs have been met, safety needs emerge, and so on up the need hierarchy, one step at a time. Once a need has been satisfied, it ac- tivates the next higher need in the hierarchy. This process continues until the need for self-actualization has been activated.13

Using Maslow’s Theory to Motivate Employees Although research does not clearly support its details, Maslow’s theory does offer practical lessons. It reminds us, for instance, that employees have needs beyond earning a paycheck. The hotel chain J.W. Marriott offers health care benefits, filling a physiological need, if hourly employees work 30 hours a week. The company also has companywide awards events, flexible scheduling, and steep travel discounts. The company’s headquarters includes a gym, dry cleaner, gift store, day care, and preferred parking for hybrid vehicles. Marriott also offers an array of wellness initiatives and an employee assistance line in multiple languages.14 

This theory tells us that a “one style fits all” approach to motivation is unlikely to work. For example, studies show that different motivators are needed for employees working at small firms. George Athan, CEO of MindStorm Strategic Consulting, aptly noted, “People go to small companies to be part of something that will grow. They like the flexibility, too. The more they are involved in decision making, the more they feel it’s their mini-company.”15 A final lesson of Maslow’s theory is that satisfied needs lose their motivational potential. Therefore, managers are advised to motivate employees by devis- ing programs or practices aimed at satisfying emerging or unmet needs. 

Acquired Needs Theory: Achievement, Affiliation, and Power David McClelland, a well-known psychologist, began studying the relationship between needs and behavior in the late 1940s. He proposed the acquired needs theory,  which states that three needs—for achievement, affiliation, and power—are the key driv- ers of employee behavior.16 McClelland used the term “acquired needs” because he believes we are not born with our needs; rather we learn or acquire them as we go about living our lives.


Most basic need. Entails having enough food, air, and water to survive.

Desire for self-fulfillment—to become the best one is capable of becoming.

The desire to be loved and to love. Includes the needs for aection and belonging.

Consists of the need to be safe from physical and psychological harm.

Need for reputation, prestige, and recognition from others. Also includes need for self-confidence and strength.





Self- Actualization

166 PART 1 Individual Behavior


The Three Acquired Needs McClelland’s theory directs managers to drive em- ployee motivation by appealing to three basic needs:

• Need for achievement,  the desire to excel, overcome obstacles, solve prob- lems, and rival and surpass others.

• Need for affiliation,  the desire to maintain social relationships, be liked, and join groups.

• Need for power,  the desire to influence, coach, teach, or encourage others to achieve.

People vary in the extent to which they possess these needs, and often one need domi- nates the other two (see Figure 5.3).

McClelland identified a positive and negative form of the power need. The positive side is called the need for institutional power. It manifests in the desire to organize people in the pursuit of organizational goals and help people obtain the feeling of competence. The negative face of power is called the need for personal power. People with this need want to control others, and they often manipulate people for their own gratification.

You can use this theory to motivate yourself, assuming you are aware of your need states. Can you guess which of the three needs is most dominant? Would you like to know which is helping or hindering the achievement of your personal goals? Check your per- ceptions by taking the acquired needs Self-Assessment.

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Power Ach. A�.


Balanced Needs Achievement Orientation A�liation Orientation Power Orientation

Assessing Your Acquired Needs Please be prepared to answer these questions if your instructor has assigned Self- Assessment 5.1 in Connect.

1. Which of the three needs is dominant for you? Are you surprised by this result?

2. Which is/are helping you to achieve your goals?

3. Are any of the needs affecting your level of well-being? Should you make any changes in your need states?


Using Acquired Needs Theory to Motivate Others The following OB in Action box illustrates how Cameron Mitchell’s acquired needs affected the way he ran his suc- cessful restaurant business.

You can apply acquired needs theory by appealing to the preferences associated with each need when you (1) set goals, (2) provide feedback, (3) assign tasks, and (4) design the job.17 Let’s consider how the theory applies to Cameron Mitchell.

• Need for achievement. People motivated by the need for achievement, like Cam- eron Mitchell, prefer working on challenging, but not impossible, tasks or projects. They like situations in which good performance relies on effort and ability rather than luck, and they like to be rewarded for their efforts. High achievers also want to

167Foundations of Employee Motivation CHAPTER 5

Cameron Mitchell has achieved his childhood dream of running a successful restaurant business. He currently runs 48 upscale res- taurants such as Hudson 29 and Ocean Prime in 18 cities. His business earns about $250 million in annual revenue.

Mitchell’s primary goal was “to create an extraordinary restaurant company known for great people delivering genuine hospitality.” He says, “In order to achieve this goal, I could not do it on my own! In fact, our past, present, and future success is directly attributed to our associates.”18

You might not have foreseen Mitchell’s success based on his difficult childhood. His parents divorced when he was 9, and he be- gan drinking alcohol and trying drugs in middle school. When he started dealing drugs in high school, his mom threatened to call child pro- tective services. Mitchell decided to run away.

He moved into a one-room apartment with other teens and sometimes went days without food. He decided to return home at 16 when he found himself think- ing about suicide. He went back to high school and took a job as a dishwasher at a local steak house. He loved the job and concluded, “The restaurant business was where I wanted to be the rest of my life.”

When Mitchell’s application to the Culinary Institute of America was rejected due to his poor grades, he became more driven. He started working double shifts so he could pay for community college. He eventually graduated from culinary school and began working as a sous chef. Mitchell opened his first restaurant in 1993 in Columbus, Ohio. It was a success!19

The growth of Mitchell’s business was based on an underlying philosophy of “people first.” The company’s website states that it “doesn’t just hire great people, it also treats them well. This inspires them to radiate a genuine hospitality that guests, vendors, and the community at large can feel and appreciate.”20 

The company’s commitment to its employees shows in the wide array of ben- efits it offers, which exceed industry standards. It also rewards restaurant manag- ers who support and develop their teams. Mitchell believes associates should have trusting, caring relationships with each other. He encourages managers’ au- tonomy by allowing them to provide input on menu and wine selection decisions. The company further reinforces the value of autonomy and effective decision making with leadership training programs. Managers are taught “how to think (rather than ‘how to do’). The goal is to encourage creative, appropriate problem- solving and idea generation,” according to the company’s website.”21


1. Which of the three acquired needs is most pronounced in this example? 2. Would you like to work for someone like Cameron Mitchell? Why?

Cameron Mitchell, Founder and CEO of Cameron Mitchell Restaurants, Exemplifies Acquired Needs

OB in Action

Cameron Mitchell Courtesy of Cameron Mitchell Restaurants

168 PART 1 Individual Behavior

receive a fair and balanced amount of positive and negative feedback. This enables them to improve their performance.  

• Need for affiliation. People motivated by the need for affiliation like to work in teams and in organizational climates characterized as cooperative and collegial. You clearly see this theme at work in Cameron Mitchell’s restaurants. 

• Need for power. People with a high need for power like to be in charge. They enjoy coaching and helping others develop. Cameron Mitchell seems to exemplify this need.

Self-Determination Theory: Competence, Autonomy, and Relatedness Self-determination theory was developed by psychologists Edward Deci and Richard Ryan. In contrast to McClelland’s belief that needs are learned over time, this theory identifies innate needs that must be satisfied for us to flourish. Self-determination theory  assumes that three innate needs influence our behavior and well-being—the needs for competence, autonomy, and relatedness.22

Self-Determination Theory Focuses on Intrinsic Motivation Self-determination theory focuses on the needs that drive intrinsic motivation. Intrinsic motivation is longer lasting and has a more positive impact on task performance than extrinsic motivation.23 The theory proposes that our needs for competence, autonomy, and relatedness produce intrinsic motivation, which in turn enhances our task performance. Research supports this proposition.24

The Three Innate Needs An innate need is a need we are born with. The three in- nate needs are:

1. Competence—“I need to feel efficacious.” This is the desire to feel qualified, knowledgeable, and capable to complete an act, task, or goal.

2. Autonomy—“I need to feel independent to influence my environment.” This is the desire to have freedom and discretion in determining what you want to do and how you want to do it.

3. Relatedness—“I want to be connected with others.” This is the desire to feel part of a group, to belong, and to be connected with others.

Although the above needs are assumed to be innate, according to Deci and Ryan their relative value can change over our lives and vary across cultures.

Using Self-Determination Theory to Motivate Employees Managers can apply self-determination theory by trying to create work environments that support and encour- age the opportunity to experience competence, autonomy, and relatedness. Here are some specific suggestions:

• Competence. Managers can provide tangible resources, time, contacts, and coach- ing to improve employee competence. They can make sure employees have the knowledge and information they need to perform their jobs. The J.W. Marriott ho- tel chain instills competence by providing employees developmental opportunities and training. Daniel Nadeau, general manager of the Marriott Marquis Washington, D.C., said, “The biggest perk is the opportunity.” He started at Marriott busing tables in high school and then worked his way up through sales, marketing, and operations. “A culture of mentorship is what pulled him along,” according to Nadeau.25

• Autonomy. Managers can empower employees and delegate meaningful assign- ments and tasks to enhance feelings of autonomy. This in turn suggests they should

169Foundations of Employee Motivation CHAPTER 5

support decisions their employees make. A recent study confirmed this conclusion. Employees’ intrinsic motivation was higher when they perceived that their man- ager supported them.26 Unilever implemented the Agile Working program in sup- port of autonomy. According to a writer for HR Magazine, the program allows “100,000 employees—everyone except factory production workers—to work any- time, anywhere, as long as they meet business needs. To support the effort, the company is investing in laptops, videoconferencing, soft-phones and smartphones, remote networks, webcams, and other technologies that help curtail travel.”27

• Relatedness. Many companies use fun and camaraderie to foster relatedness. Nug- get Market, an upscale supermarket chain in Sacramento, builds relatedness by creating a family-type work environment. One employee described the climate in this way: “The company doesn’t see this as a workplace; they see it as a family. This is our home, where customers are treated as guests.”28 A positive and inspir- ing corporate vision also can create a feeling of commitment to a common pur- pose. For example, Lars Sørensen, CEO of Novo Nordisk, a global health care company specializing in diabetes treatments, believes his employees are intrinsi- cally motivated by the thought of saving lives. “Without our medication,” he said, “24 million people would suffer. There is nothing more motivating for people than to go to work and save people’s lives.”29

Herzberg’s Motivator-Hygiene Theory: Two Ways to Improve Satisfaction Frederick Herzberg’s theory is based on a landmark study in which he interviewed 203 accountants and engineers.30 These interviews, meant to determine the factors re- sponsible for job satisfaction and dissatisfaction, uncovered separate and distinct clusters of factors associated with each. This pattern led to the motivator-hygiene theory,  which proposes that job satisfaction and dissatisfaction arise from two different sets of

John Willard Marriott, Jr., is the executive chairman and chairman of the board of Marriott International. He joined the company in 1956 and was promoted to president in 1964 and CEO in 1972. His leadership philosophy is one of being a servant leader. This belief focuses on placing the needs of others above self-interests. We suspect this is one reason Marriott International has a progressive stance toward developing and improving the lives of its employees. He has been married for over 50 years. © Nikki Kahn/The Washington Post/Getty Images

170 PART 1 Individual Behavior

factors—satisfaction comes from motivating factors and dissatisfaction from hygiene factors.

• Hygiene factors—What makes employees dissatisfied? Job dissatisfaction was associated primarily with factors in the work context or environment. Herzberg hypothesized that such hygiene factors—including company policy and admin- istration, technical supervision, salary, interpersonal relationships with super- visors, and working conditions—cause a person to move from a state of no dissatisfaction to dissatisfaction. He did not believe their removal created an immediate impact on satisfaction or motivation (for that, see motivating factors following). At best, Herzberg proposed that individuals will experience the ab- sence of job dissatisfaction when they have no grievances about hygiene factors.

• Motivating factors—What makes employees satisfied?  Job satisfaction was more frequently associated with factors in the work content of the task being per- formed. Herzberg labeled these motivating factors or motivators because each was associated with strong effort and good performance. He hypothesized that such motivating factors, or motivators—including achievement, recognition, characteristics of the work, responsibility, and advancement—cause a person to move from a state of no satisfaction to satisfaction. Therefore, Herzberg’s theory predicts managers can motivate individuals by incorporating motivators into an individual’s job.

For Herzberg, the groups of hygiene and motivating factors did not interact. “The op- posite of job satisfaction is not job dissatisfaction, but rather no job satisfaction; and similarly, the opposite of job dissatisfaction is not job satisfaction, but no dissatisfac- tion.”31 Herzberg conceptualizes dissatisfaction and satisfaction as two parallel contin- uums. The starting point is a null state in which both dissatisfaction and satisfaction are absent. Theoretically an organization member could have good supervision, pay, and working conditions (no dissatisfaction) but a tedious and unchallenging task with little chance of advancement (no satisfaction), as illustrated in Figure 5.4.

Managerial View of Job Satisfaction and Dissatisfaction Insights from Herzberg’s theory allow managers to consider the dimensions of both job content and job context so they can manage for greater overall job satisfaction. There is one aspect of this theory we think is wrong, however. We believe you can satisfy and motivate people by providing good hygiene factors. The Container Store, regularly rated as one of the top five companies to work for by Fortune, is a good example. The company pays retail hourly salespeople roughly double the industry average, approximately $50,000 a year in


No Satisfaction

Jobs that do not o�er achievement, recognition, stimulating work, responsibility, and advancement.

Jobs o�ering achievement, recognition, stimulating work, responsibility, and advancement.

Jobs with good company policies and administration, technical supervision, salary, interpersonal relationships with supervisors, and working conditions.

Jobs with poor company policies and administration, technical supervision, salary, interpersonal relationships with supervisors, and working conditions.

Satisfaction Motivators

No Dissatisfaction Dissatisfaction Hygiene Factors

Job Content Job Context

SOURCE: Adapted from D. A. Whitsett and E. K. Winslow, “An Analysis of Studies Critical of the Motivator-Hygiene Theory,” Personnel Psychology, Winter 1997, 391–415.

171Foundations of Employee Motivation CHAPTER 5

2014.32 Its rate of employee turnover, about 5.7 percent, is significantly lower than the industry average of 74.9.33

Other companies seem to agree with our conclusion, because they have been offering a host of hygiene factors in an attempt to attract and retain Millennials. A recent survey of 463 human resource managers revealed that “some 21 percent of employers offer on-site fitness centers, 22 percent provide free snacks and drinks, and 48 percent offer community-volunteer programs.”34

Using Herzberg’s Theory to Motivate Employees Research does not support the two-factor aspect of Herzberg’s theory, nor the proposition that hygiene factors are unre- lated to job satisfaction. However, three practical applications of the theory help explain why it remains important in OB.

1. Hygiene first. There are practical reasons to eliminate dissatisfaction before trying to use motivators to increase motivation and performance. You will have a harder time motivating someone who is experiencing pay dissatisfaction or otherwise struggling with Herzberg’s hygiene factors.

2. Motivation next. Once you remove dissatisfaction, you can hardly go wrong by building motivators into someone’s job. This suggestion represents the core idea be- hind the technique of job design that is discussed in the final section of this chapter.

3. A few well-chosen words. Finally, don’t underestimate the power of verbal recogni- tion to reinforce good performance. Savvy managers supplement Herzberg’s motiva- tors with communication. Positive recognition can fuel intrinsic motivation, particularly for people who are engaged in their work.

What’s Going on at the Arizona Department of Child Safety? 

The Arizona Department of Child Safety (DCS) is having motivational issues with its employees. The agency defines itself as “a human service organization dedicated to achieving safety, well-being and permanency for children, youth, and families through leadership and the provision of quality services in partnership with communities.”35 

The overall turnover rate at the agency is 24.5 percent. It’s even higher for caseworkers (36 per- cent), the people who directly work with the children and families. Among those who stay, the number taking time off under the federal Family and Medical Leave Act recently increased 68 percent over the preceding year.

Current and former employees complain about “crushing workloads and fear-based management.” Former employees said they quit because of stress associated with growing caseloads and unrealistic expectations from management. As of December 2015 caseloads were 30 to 50 percent higher than the agency’s standard.

When Greg McKay was hired to head the agency in 2015, he fired almost all senior managers and brought in his own team, promoting some from within. McKay is trying to make changes to reduce the caseload burden. The Arizona Republic reported that he is “seeking more support staff in the upcoming state budget to free caseworkers from some of the more clerical aspects of their jobs. He’s revamping the pay system to keep tenured staff on board, and has restored a training program in Tucson.”

Pay raises might help retain staff. The entry-level salary for caseworkers is $33,000. Overall, the average agency salary is $41,360.36

A study by the Annie E. Casey Foundation ranked Arizona’s child welfare system 46th in the nation. The ranking was based on the number of children that are experiencing out-of-home care. According to a Phoenix New Times reporter, this rating is partly due to the fact that “few frontline employees last

Problem-Solving Application

172 PART 1 Individual Behavior

beyond three years, and there are never enough caseworkers to meet demand. There’s a lack of funding for preventative and poverty-assistance programs, and because of a perpetual shortage of foster homes, kids frequently end up sleeping in DCS offices for a night or two before being placed with families.”37

The Phoenix New Times investigative report on the DCS revealed that problems may have gotten worse under McKay’s leadership. According to the office of state senator Debbie McCune Davis, she has received “all sorts of phone calls from all sorts of people who have been pushed out of the agency or have left voluntarily and just can’t believe what’s going on. We hear a lot about people leaving the agency out of frustration, about firings or other changes at the top.” McCune Davis said employees “are afraid to make decisions based on professional judgment because they’re scared of becoming scapegoats.”38

New Times quoted current and former employees who said McKay was “retaliatory and vindictive.” The report also noted that “DCS has become a place where people are regularly fired for unexplained reasons and where those remaining tiptoe around, waiting and wondering when they’ll be let go.”39

New Times concluded that McKay has a passion for child welfare. But it questioned “whether he has the skills and personality to make DCS succeed.”40

Apply the 3-Step Problem-Solving Approach 

Step 1: Define the problem in this case. 

Step 2: Identify the key causes of this problem. 

Step 3: Make your top two recommendations for fixing the problem at the DCS. 



Higher-level needs

Lower-level needs




Motivating factors

Hygiene factors









Acquired Needs Self-Determination Herzberg

Figure 5.5 illustrates the overlap among the need and satisfaction theories discussed in this section. As you can see, the acquired needs and self-determination theories do not include lower-level needs. Remember, higher-level need satisfaction is more likely to fos- ter well-being and flourishing.


Increasing My Higher-Level Needs

Consider the content theories of motivation.

1. Which ones include your highest needs?

2. Which needs are most important for your success in school? How about in terms of your current/last/most-desired job?

3. Given that flourishing is related to satisfying higher-order needs, what can you do to increase the degree to which you are satisfying your higher-level needs?

173Foundations of Employee Motivation CHAPTER 5


How would I compare and contrast the process theories of motivation?


Process theories examine the way personal factors and situation factors influence employee

motivation. You’ll be considering three major process theories: equity/justice theory, expectancy

theory, and goal-setting theory. Each offers unique ideas for motivating yourself or employees.


Process theories of motivation  describe how various person factors and situation factors in the Organizing Framework affect motivation. They go beyond content theo- ries by helping you understand why people with different needs and levels of satisfaction behave the way they do at work. 

In this section we discuss three process theories of motivation: • Equity/justice theory • Expectancy theory • Goal-setting theory

Equity/Justice Theory: Am I Being Treated Fairly? Defined generally, equity theory  is a model of motivation that explains how people strive for fairness and justice in social exchanges or give-and-take relationships. Ac- cording to this theory, people are motivated to maintain consistency between their beliefs and their behavior. Perceived inconsis- tencies create cognitive dissonance (or psychological discomfort), which in turn motivates corrective action. When we feel victimized by unfair social exchanges, the resulting cognitive dissonance prompts us to correct the situation. This can result in a change of attitude or behavior. Consider what happened when Michelle Fields, a former reporter for Breitbart News, a con- servative news and opinion website and radio program, was covering a press con- ference for Donald Trump during the 2016 presidential campaign.

After the conference concluded, Fields approached Trump to ask him a question. She alleges that Trump campaign manager Corey Lewandowski “grabbed her by the arm and yanked her away as she attempted to ask her question.” Photos revealed bruises on the reporter’s arm. Ben Terris, a reporter from The Washington Post, witnessed the incident and confirmed that Lewandowski grabbed Fields.

On November 18, 2015, Michelle Fields, on the left of Donald Trump, approached Trump to ask a question. She was allegedly grabbed by Trump’s then campaign manager, Corey Lewandowski, shown behind and right of Trump, following a press conference. The response from Breitbart, her employer, created such feelings of inequity that Fields ultimately resigned. Feelings of inequity can stimulate high levels of motivation to resolve the inequity. © Richard Graulich/Newscom

174 PART 1 Individual Behavior

A senior editor-at-large from Breitbart concluded the event could not have taken place the way Fields described it, despite the eyewitness account and Lewandowski’s admission that he had grabbed her. The editor then instructed Breitbart staffers “not to publicly defend their colleague,” according to The Washington Post. Fields felt betrayed. This created dissonance between her positive views of the organization and the lack of support she received from management. She told a Post reporter, “I don’t think they [management] took my side. They were protecting Trump more than me.”41 She resigned, as did her managing editor in support of Fields.

Psychologist J. Stacy Adams pioneered the use of equity theory in the workplace. Let us begin by discussing his ideas and their current application. We then discuss the exten- sion of equity theory into justice theory and conclude by discussing how to motivate employees with both these tools.

The Elements of Equity Theory: Comparing My Outputs and Inputs with Those of Others The key elements of equity theory are outputs, inputs, and a com- parison of the ratio of outputs to inputs (see Figure 5.6).

• Outputs—“What do I perceive that I’m getting out of my job?” Organizations provide a variety of outcomes for our work, including pay/bonuses, medical benefits, challenging assignments, job security, promotions, status symbols,

FIGURE 5.6 ELEMENTS OF EQUITY THEORY Equity theory compares how well you are doing to how well others are doing in similar jobs. Instead of focusing just on what you get out of the job (outputs) or what you put into the job (inputs), equity theory compares your ratio of outputs to inputs to those of others.

Outpu ts

Pay, b enefit


assign ments

, etc.

Input s

Time, skills


educa tion, e


Resul ts

What am I getting out of

my job?

My Ratio

My Perceptions

What are others getting out of

their jobs?

What am I putting into my


What are others putting into their


Equity I’m satisfied.

I see myself as faring comparably

with others.

Negative Inequity I’m dissatisfied. I see myself as

faring worse than others.

Positive Inequity Am I satisfied? I see myself as

faring better than others.

(See note.)

Others’ Ratio


Note: Does positive inequity result in satisfaction? Some of us may feel so. But J. Stacy Adams recognized that employees often feel guilty about positive inequity, just as they might become angry about negative inequity. Your positive inequity is others’ neg- ative inequity. If your coworkers saw you as being favored unfairly in a major way, wouldn’t they be outraged? How effective could you be in your job then?

175Foundations of Employee Motivation CHAPTER 5

recognition, and participation in important decisions. Outcomes vary widely, de- pending on the organization and our rank in it. 

• Inputs—“What do I perceive that I’m putting into my job?” An employee’s inputs, for which he or she expects a just return, include education/training, skills, creativity, seniority, age, personality traits, effort expended, experience, and per- sonal appearance.

• Comparison—“How does my ratio of outputs to inputs compare with those of relevant others?” Your feelings of equity come from your evaluation of whether you are receiving adequate rewards to compensate for your collective inputs. In practice people perform these evaluations by comparing the perceived fairness of their output-to-input ratio to that of relevant others (see Figure 5.6). They divide outputs by inputs, and the larger the ratio, the greater the expected benefit. This comparative process was found to generalize across personalities and countries.42 

People tend to compare themselves to other individuals with whom they have close interpersonal ties, such as friends, and to whom they are similar, such as people perform- ing the same job or individuals of the same gender or educational level, rather than to dissimilar others. For example, we work for universities, so we consider our pay relative to that of other business professors, not the head football coach. 

The Outcomes of an Equity Comparison Figure 5.6 shows the three different equity relationships resulting from an equity comparison: equity, negative inequity, and positive inequity. Because equity is based on comparing ratios of outcomes to inputs, we will not necessarily perceive inequity just because someone else receives greater rewards. If the other person’s additional outcomes are due to his or her greater inputs, a sense of equity may still exist. However, if the comparison person enjoys greater outcomes for similar inputs, negative inequity will be perceived. On the other hand, a person will expe- rience positive inequity when his or her outcome-to-input ratio is greater than that of a relevant comparison person.

People tend to have misconceptions about how their pay compares to that of their col- leagues. These misconceptions can create problems for employers. Consider the implications of results from a recent study of 71,000 employees. Thirty-five percent of those who were paid above the market—positive inequity—believed they were underpaid, while only 20 per- cent correctly perceived that they were overpaid. Similarly, 64 percent of the people paid at the market rate—equity—believed they were underpaid.43 In both these cases, significant numbers of equitably treated people perceived a state of inequity. If management fails to cor- rect these perceptions, it should expect lower job satisfaction, commitment, and performance.

The Elements of Justice Theory: Distributive, Procedural, and Interactional Justice Beginning in the later 1970s, researchers began to expand the role of equity theory in explaining employee attitudes and behavior. This led to a domain of research called organizational justice. Organizational justice reflects the extent to which people perceive they are treated fairly at work. This, in turn, led to the identification of three dif- ferent components of organizational justice: distributive, procedural, and interactional.44

• Distributive justice  reflects the perceived fairness of the way resources and rewards are distributed or allocated. Do you think fairness matters when it comes to the size of people’s offices? Robert W. Baird & Co., a financial services firm ranked as Fortune’s  sixth-best place to work in 2016, did. The company de- cided to make everyone’s office the same size in its newly renovated headquarters.45

• Procedural justice  is the perceived fairness of the process and procedures used to make allocation decisions.

• Interactional justice  describes the “quality of the interpersonal treatment people receive when procedures are implemented.”46 Interactional justice does not pertain to the outcomes or procedures associated with decision making. Instead it focuses on whether people believe they are treated fairly when decisions are be- ing implemented. 

176 PART 1 Individual Behavior

Tools exist to help us improve our ability to gauge the level of fairness or justice that exists in a current or past job. Try Self-Assessment 5.2. It contains part of a survey devel- oped to measure employees’ perceptions of fair interpersonal treatment. If you perceive your work organization as interpersonally unfair, you are probably dissatisfied and have contemplated quitting. In contrast, your organizational loyalty and attachment are likely greater if you believe you are treated fairly at work.

Measuring Perceived Interpersonal Treatment Please be prepared to answer these questions if your instructor has assigned Self- Assessment 5.2 in Connect.

1. Does the level of fairness you perceive correlate to your work attitudes such as job satisfaction and organizational commitment?

2. What is causing your lowest level of perceived fairness? Can you do anything to change these feelings?

3. What do these results suggest about the type of company you would like to work for after graduation?


The Outcomes Associated with Justice Doesn’t it make sense that your perceptions of justice are related to outcomes in the Organizing Framework? Of course! This realization has generated much research into organizational justice over the last 25 years. We created Figure 5.7 to summarize these research findings. The figure shows the strength of relation- ships between nine individual-level outcomes and the three components of organizational justice. By and large, distributive and procedural justice have consistently stronger relation- ships with outcomes. This suggests that managers would be better off paying attention to these two forms of justice. In contrast, interactional justice is not a leading indicator in any instance.

You can also see that certain outcomes, such as job satisfaction and organizational commitment, have stronger relationships with justice. All told, however, the majority of relationships between justice and important OB outcomes are weak. This reinforces the conclusion that motivating people via justice works for some outcomes but not for others.

Using Equity and Justice Theories to Motivate Employees Figure 5.7 not- withstanding, managers can’t go wrong by paying attention to employees’ perceptions of equity and justice at work. Here are five practical lessons to help you apply equity and justice theories.

1. Employee perceptions count. No matter how fair management thinks the organiza- tion’s policies, procedures, and reward system are, each employee’s perception of the equity of those factors is what counts. For example, females were found to be more sensitive to injustice when it came to procedural and distributive issues regarding rewards.47 Further, justice perceptions can change over time.48 This implies that it is important for managers to regularly assess employees’ justice beliefs. Companies tend to do this by using annual employee work attitude surveys.

2. Employees want a voice in decisions that affect them. Employees’ perceptions of jus- tice are enhanced when they have a voice in the decision-making process. Voice  is “the discretionary or formal expression of ideas, opinions, suggestions, or alternative approaches directed to a specific target inside or outside of the organization with the intent to change an objectionable state of affairs and to improve the current functioning of the organization.”49 Managers are encouraged to seek employee input on organizational issues that are important to employees, even though many employees are reluctant to use their “voice.” Mission Produce Inc., a large producer of avocados, took this recommendation to heart. According to HR chief Tracy Malmos, the company

177Foundations of Employee Motivation CHAPTER 5

“implemented a pay structure in response to young employees’ requests to ‘take the mystery out of compensation.’”50 Managers can overcome these roadblocks to gaining employee input by creating a voice climate. A voice climate  is one in which employ- ees are encouraged to freely express their opinions and feelings.51

3. Employees should have an appeals process. Employees should be given the oppor- tunity to appeal decisions that affect their welfare. This opportunity fosters percep- tions of distributive and procedural justice.

4. Leader behavior matters. Employees’ perceptions of justice are strongly influenced by their managers’ leadership behavior and the justice-related implications of their de- cisions, actions, and public communications. For example, employees at Honeywell felt

FIGURE 5.7 OUTCOMES ASSOCIATED WITH JUSTICE COMPONENTS The three components of organizational justice have varying effects on workplace outcomes, listed here in rough order from strongest to weakest. Note that job satisfaction and organizational commitment lead the list and most strongly align with justice components.

Not Significant

Distributive Justice

Procedural Justice

Interactional Justice

Significant correlation to all outcomes and is mostly coequal with procedural justice in e�ect. It is the main leading indicator as to mental health. Only in performance is it a lagging indicator.

Significant correlation to all outcomes and is mostly coequal with distributive justice in e�ect. It is the main leading indicator as to performance. Only in mental health is it a lagging indicator.

Weakest correlation to all outcomes, as it is lagging behind or at best coequal to other indicators. For two outcomes (turnover and performance) it is not even significant. However, interactional justice remains of moderate significance in performance, and for some employees it could be significant across all categories.

Organizational Citizenship




Health Problems


Mental Health


Organizational Commitment

Job Satisfaction


O ut

co m


SOURCE: J. M. Robbins, M. T. Ford, and L. E. Tetrick, “Perceived Unfairness and Employee Health: A Meta-Analytic Integration,” Journal of Applied Psychology, March 2012, 235–272; N. E. Fassina, D. A. Jones, and K. L. Uggerslev, “Meta-Analytic Tests of Relationships between Organizational Justice and Citizenship Behavior: Testing Agent-System and Shared-Variance Models,” Journal of Organizational Behavior, August 2008, 805–828; Y. Chen-Charash and P. E. Spector, “The Role of Justice in Organi- zations: A Meta-Analysis,” Organizational Behavior and Human Decision Processes, November 2001, 278–321; and J. A. Colquitt, D. E. Conlon, M. J. Wesson, C. O. L. H. Porter, and K. Y. Ng, “Justice at the Millennium: A Meta-Analytic Review of 25 Years of Organizational Justice Research,” Journal of Applied Psychology, June 2001, 426.

178 PART 1 Individual Behavior

better about being asked to take furloughs—in which they go on unpaid leave but re- main employed—when they learned that David Cote, the company’s chair and CEO, did not take his $4 million bonus during the time employees were furloughed.52

5. A climate for justice makes a difference. Team performance was found to be higher in companies that possessed a climate for justice.53 Do you think it’s OK for custom- ers to yell at retail or service employees or treat them rudely? We don’t! A climate for justice incorporates relationships between employees and customers. Employees are more likely to provide poor customer service when managers allow customers to treat employees rudely or disrespectfully.54

And as for you? You can work to improve equity ratios through your behavior or your perceptions. For example, you could work to resolve negative inequity by asking for a raise or a promotion (raising your outputs) or by working fewer hours or exerting less effort (reducing your inputs). You could also resolve the inequity cognitively, by adjust- ing your perceptions of the value of your salary or other benefits (outcomes) or the value of the actual work you and your coworkers do (inputs).

Expectancy Theory: Does My Effort Lead to Desired Outcomes? Expectancy theory  holds that people are motivated to behave in ways that produce desired combinations of expected outcomes. Generally, expectancy theory can pre- dict behavior in any situation in which a choice between two or more alternatives must be made. For instance, it can predict whether we should quit or stay at a job, exert substantial or minimal effort at a task, and major in management, computer science, accounting, marketing, psychology, or communication.

Are you motivated to climb Mt. Everest? Expectancy theory suggests you would not be motivated to pursue this task unless you believed you could do it and you believed the rewards were worth the effort and risks. Erik Weihenmayer, shown climbing, was motivated to pursue his quest to become the first blind person to reach the summit. He made it! It is truly amazing what one can achieve when motivation is coupled with ability. © AF archive/Alamy

179Foundations of Employee Motivation CHAPTER 5

The most widely used version of expectancy theory was proposed by Yale professor Victor Vroom. We now consider the theory’s key elements and recommendations for its application.

The Elements of Vroom’s Expectancy Theory: Expectancy, Instrumentality, and Valence Motivation, according to Vroom, boils down to deciding how much effort to exert in a specific task situation. This choice is based on a two-stage sequence of expectations—moving from effort to performance and then from performance to out- come. Figure 5.8 shows the major components of this theory.

Let us consider the three key elements of Vroom’s theory.

1. Expectancy—“Can I achieve my desired level of performance?” An expectancy represents an individual’s belief that a particular degree of effort will be followed by a particular level of performance. Expectancies take the form of subjective proba- bilities. As you may recall from a course in statistics, probabilities range from zero to one. An expectancy of zero indicates that effort has no anticipated impact on perfor- mance, while an expectancy of one suggests performance is totally dependent on effort.

EXAMPLE Suppose you do not know how to use Excel. No matter how much effort you exert, your perceived probability of creating complex spreadsheets that com- pute correlations will be zero. If you decide to take an Excel training course and practice using the program a couple of hours a day for a few weeks (high effort), the probability that you will be able to create spreadsheets that compute correlations will rise close to one.

Research reveals that employees’ expectancies are affected by a host of factors. Some of the more important ones include self-efficacy, time pressures, task diffi- culty, ability and knowledge, resources, support from peers, leader behavior, and or- ganizational climate.55

2. Instrumentality—“What intrinsic and extrinsic rewards will I receive if I achieve my desired level of performance?” Instrumentality  is the perceived relationship between performance and outcomes. It reflects a person’s belief that a particular outcome is contingent on accomplishing a specific level of performance. Passing exams, for instance, is instrumental in graduating from college, or put another way, graduation is contingent on passing exams. Twitter decided to make bonuses instru- mental in employees’ staying around. That’s right! Because too many employees were leaving, some were offered bonuses ranging from $50,000 to $200,000 just for remaining at the company for six to 12 months.56 The Problem-Solving Application



“What are the chances of reaching

my performance goal?”

“What are the chances of receiving various outcomes if

I achieve my performance


“How much do I value the outcomes

I will receive by achieving my performance



E�ort Performance

Goal Outcomes

PART 1 Individual Behavior180

box illustrates how various boards of directors are reducing the instrumentality be- tween CEO pay and corporate performance. Do you think this is a good idea?  

3. Valence—“How much do I value the rewards I receive?” Valence  describes the positive or negative value people place on outcomes. Valence mirrors our per- sonal preferences. For example, most employees have a positive valence for receiv- ing additional money or recognition. In contrast, being laid off or being ridiculed for making a suggestion would likely be negative valence for most individuals. In Vroom’s expectancy model, outcomes are consequences that are contingent on per- formance, such as pay, promotions, recognition, or celebratory events. For example, Aflac hosted a six-day appreciation week for employees that included theme park visits, movie screenings, and daily gifts.57 Would you value these rewards? Your answer will depend on your individual needs.

Corporate Boards Decide to Lower the Instrumentalities between CEO Performance and Pay

Alpha Natural Resources, a coal producer, gave CEO Kevin Crutchfield a $528,000 bonus after having the largest financial loss in the company’s history. The board said it wanted to reward him for his “tre- mendous efforts” in improving worker safety. This “safety bonus” was not tied to any corporate goals, and the company had never before paid a specific bonus just for safety.

The board at generic drugmaker Mylan made a similar decision, giving CEO Robert Coury a $900,000 bonus despite poor financial results. The board felt the results were due to factors like the European sovereign-debt crisis and natural disasters in Japan. Not to be outdone, the board at Nation- wide Mutual Insurance doubled its CEO’s bonus, “declaring that claims from U.S. tornadoes shouldn’t count against his performance metrics.”

The New York Times reported that former Walmart US CEO Bill Simon also was rewarded for miss- ing his goals. He was promised a bonus of $1.5 million if US net sales grew by 2 percent. Net sales ulti- mately grew by 1.8 percent, but the company still paid the bonus. The Times said this occurred because the company “corrected for a series of factors that it said were beyond Simon’s control.” Hourly wage bonuses for Walmart associates who perform below expectations are zero. Apparently, what’s good for the company’s CEO is not good for associates.58

Is It Good to Relax Instrumentalities between Performance and Pay? Companies relax instrumentalities between performance and pay because they want to protect executives from being accountable for things outside their control, like a tornado or rising costs in natural resources. While this may make sense, it leaves open the question of what to do when good luck occurs instead of bad. Companies do not typically con- strain CEO pay when financial results are due to good luck. Blair Jones, an expert on executive compensa- tion, noted that changing instrumentalities after the fact “only works if a board is willing to use it on the upside and the downside. . . . If it’s only used for the downside, it calls into question the process.”59

Problem-Solving Application

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problem in this case.

Step 2: Identify the cause of the problem. Did the companies featured in this case use the principles of expectancy theory?

Step 3: Make a recommendation to the compensation committees at these companies. Should CEOs and hourly workers be held to similar rules regarding bonuses?

181Foundations of Employee Motivation CHAPTER 5

According to expectancy theory, your motivation will be high when all three ele- ments in the model are high. If any element is near zero, your motivation will be low. Whether you apply this theory to yourself or managers apply it to their employees, the point is to simultaneously consider the status of all three elements.


Applying Expectancy Theory

This activity focuses on a past work- or school-related project that was unsuccessful or that you consider a failure. Identify one such project and answer the following questions.

1. What was your expectancy for successfully completing the failed project? Use a scale from 1 (very low) to 5 (very high).

2. What were the chances you would receive outcomes you valued had you success- fully completed the project? Again use a scale from 1 (very low) to 5 (very high).

3. Considering the above two answers, what was your level of motivation? Was it high enough to achieve your performance goals?

4. What does expectancy theory suggest you could have done to improve your chances of successfully completing the project? Provide specific suggestions.

5. How might you use the above steps to motivate yourself in the future?

Using Expectancy Theory to Motivate Employees There is widespread agree- ment that attitudes and behavior are influenced when organizations link rewards to tar- geted behaviors. For example, a study of college students working on group projects showed that group members put more effort into their projects when instructors “clearly and forcefully” explained how high levels of effort lead to higher performance—an expectancy—and that higher performance results in positive outcomes like higher grades and better camaraderie—instrumentalities and valence outcomes.60

Expectancy theory has important practical implications for individual managers and organizations as a whole (see Table 5.1). Three additional recommendations are often


For Managers For Organizations

• Determine the outcomes employees value. • Reward people for desired performance, and do not keep pay decisions secret.

• Identify good performance so appropriate behaviors can be rewarded.

• Design challenging jobs.

• Make sure employees can achieve targeted performance levels.

• Tie some rewards to group accomplishments to build teamwork and encourage cooperation.

• Link desired outcomes to targeted levels of performance.

• Reward managers for creating, monitoring, and maintaining expectancies, instrumentalities, and outcomes that lead to high effort and goal attainment.

• Make sure changes in outcomes are large enough to motivate high effort.

• Monitor employee motivation through interviews or anonymous questionnaires.

• Monitor the reward system for inequities. • Accommodate individual differences by building flexibility into the motivation program.

PART 1 Individual Behavior182

overlooked. First, establish the right goal. Our consulting experience reveals that people fail at this task more often than you might imagine. Second, remember that you can better keep behavior and performance on track by creating more opportunities to link perfor- mance and pay. Shutterfly Inc. makes it possible for employees to receive bonuses four times a year. App designer Solstice Mobile also uses quarterly (not annual) reviews to reward high performers with promotions and bonuses.61 Finally, monetary rewards must be large enough to generate motivation, and this may not be the case for annual merit raises in the U.S. The average merit raise was around 3 percent the last five years. To overcome this limitation, organizations are starting to eliminate merit raises and replace them with bonuses only for high performers.62

The following Problem-Solving Application illustrates expectancy theory in action at Westwood High School in Mesa, Arizona.

A High School Principal Uses Principles of Expectancy Theory to Motivate Students

Tim Richard, principal at Westwood High School, decided to use a motivational program he called “Celebration” to improve the grades of 1,200 students who were failing one or more courses. The school has a total of 3,000 students.

How Does the Program Work? “Students are allowed to go outside and have fun with their friends for 28 minutes on four mornings a week,” the principal explained to the local newspaper. “But those who have even one F must stay inside for ‘remediation’—28 minutes of extra study, help from peer tutors, or meetings with teachers.” Richard, who successfully implemented the program at a smaller high school, believes the key to motivating students is to link a highly valued reward—socializing with friends out- side—with grades. Socializing includes playing organized games, dancing and listening to music, eating snacks, and just plain hanging out. Results suggest the program is working.

Positive results were found within two to three months of the motivation program’s start. The num- ber of students with failing grades dropped to 900. The principal’s goal is to achieve zero failing grades by the end of the year.

What Is the Student Reaction? Students like the program. Ivana Baltazar, a 17-year-old senior, said, “You really appreciate Celebration after you have been in remediation.” She raised an F in economics to a B after receiving help. Good academic students like Joseph Leung also like the program. Leung is a tutor to students with failing grades. He believes that “the tricky part is getting people out of the mind-set that they can’t succeed. . . . A lot of times they just haven’t done their homework. I try to help them understand that the difference between a person passing and failing is their work ethic.”63

Problem-Solving Application

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problem Tim Richard is trying to address.

Step 2: Identify the causes. What OB concepts or theories are consistent with Richard’s motivational program?

Step 3: Make recommendations for fixing the problem. Do you agree with Richard’s approach to im- proving student performance? Why or why not?

183Foundations of Employee Motivation CHAPTER 5

Goal-Setting Theory: How Can I Harness the Power of Goal Setting? Regardless of the nature of their specific achievements, successful people tend to have one thing in common: Their lives are goal- oriented. This is as true for politicians seeking votes as it is for world-class athletes  like Michael Phelps. Research also supports this conclusion. The results of more than 1,000 studies from a wide range of countries clearly show that goal setting helps individuals, teams, and organizations to achieve success.64

Next we review goal setting within a work context and then explain the mechanisms that make goal setting so effective. We will discuss the practical applications of goal setting in Chapter 6.

Edwin Locke and Gary Latham’s Theory of Goal Setting After studying four decades of research on goal setting, two OB experts, Edwin Locke and Gary Latham, proposed a straightforward theory of goal setting. Here is how it works.65

• Goals that are specific and difficult lead to higher performance than general goals like “Do your best” or “Improve performance.” This is why it is essential to set specific, challenging goals. Goal specificity  means whether a goal has been quantified. For example, a goal of increasing the score on your next OB test by 10 percent is more specific than the goal of trying to improve your grade on the next test.

• Certain conditions are necessary for goal setting to work. People must have the ability and resources needed to achieve the goal, and they need to be committed to the goal. If these conditions are not met, goal setting does not lead to higher perfor- mance. Be sure these conditions are in place as you pursue your goals.

• Performance feedback and participation in deciding how to achieve goals are necessary but not sufficient for goal setting to work. Feedback and participation enhance performance only when they lead employees to set and commit to a spe- cific, difficult goal. Take Jim’s Formal Wear, a tuxedo wholesaler in Illinois. “Once a week, employees meet with their teams to discuss their efforts and what changes should be made the next week. Employees frequently suggest ways to improve ef- ficiency or save money, such as reusing shipping boxes and hangers.”66 Goals lead to higher performance when you use feedback and participation to stay focused and committed to a specific goal.

• Goal achievement leads to job satisfaction, which in turn motivates employees to set and commit to even higher levels of performance. Goal setting puts in mo- tion a positive cycle of upward performance.

In sum, it takes more than setting specific, difficult goals to motivate yourself or others. You also want to fight the urge to set impossible goals. They typically lead to poor perfor- mance or unethical behavior, as they did at Volkswagen. The company has admitted to installing software on over 11 million cars that manipulated emission test results.67 Its engineers claimed they tampered with emissions data because targets set by Martin Winterkorn, the former Volkswagen chief executive, were too difficult to achieve.68 Set challenging but attainable goals for yourself and others.

Michael Phelps, seen here at the FINA Swimming World Championships in Melbourne, Australia in 2007, set a goal for the 2016 Rio Olympics that included winning more gold medals. His goal was achieved and he now has 28 medals, including 23 gold. Phelps is the most decorated Olympian in history. © Patrick B. Kraemer/EPA/Newscom

184 PART 1 Individual Behavior

What Are the Mechanisms Behind the Power of Goal Setting? Edwin Locke and Gary Latham, the same OB scholars who developed the motivational theory of goal setting just discussed, also identified the underlying mechanisms that explain how goals affect performance. There are four.

1. Goals direct attention. Goals direct our attention and effort toward goal-relevant activities and away from goal-irrelevant activities. If, for example, you have a term project due in a few days, your thoughts and actions tend to revolve around complet- ing that project. In reality, however, we often work on multiple goals at once. Pri- oritize your goals so you can effectively allocate your efforts over time.69 For example, NuStar Energy, one of the largest asphalt refiners and operators of petro- leum pipelines and product terminals in the United States, has decided to give safety greater priority than profits in its goals. This prioritization paid off when the com- pany celebrated three years of zero time off due to injuries, and corporate profits are doing just fine.70

2. Goals regulate effort. Goals have an energizing function in that they motivate us to act. As you might expect, harder goals foster greater effort than easy ones. Deadlines also factor into the motivational equation. We expend greater effort on projects and tasks when time is running out. For example, an instructor’s deadline for turning in your term project would prompt you to complete it instead of going out with friends, watching television, or studying for another course.

3. Goals increase persistence. Within the context of goal setting, persistence repre- sents the effort expended on a task over an extended period of time. It takes effort to run 100 meters; it takes persistence to run a 26-mile marathon. One of your textbook authors—Angelo Kinicki—knows this because he ran a marathon. What an experience! His goal was to finish in 3 hours 30 minutes. A difficult goal like this served as a reminder to keep training hard over a three-month period. When- ever he wanted to stop training or run slow sprints, his desire to achieve the goal motivated him. Although he missed his goal by 11 minutes, it still is one of his proudest accomplishments. This type of persistence happens when the goal is per- sonally important.

4. Goals foster the development and application of task strategies and action plans. Goals prompt us to figure out how we can accomplish them. This begins a cognitive process in which we develop a plan outlining the steps, tasks, or activities we must undertake. For example, teams of employees at Tornier, a medical device manufac- turer in Amsterdam, meet every 45, 60, or 90 days to create action plans for complet- ing their goals. Implementation of the plans can take between six and 18 months depending on the complexity of the goal.71 Setting and using action plans also re- duces procrastination. If this is sometimes a problem for you, break your goals into smaller and more specific subgoals.72 That will get you going.


Increasing My Success via Goal Setting

1. Set a goal for performance on the next exam in this class by filling in the follow- ing statement. “I want to increase my score on my next exam by ___ percent over the score on my previous exam.” If you have not had an exam yet, pick a percentage grade you would like to achieve on your first exam.

2. Create a short action plan by listing four or five necessary tasks or activities to help you achieve your goal. Identify actions that go beyond just reading the text.

3. Identify how you will assess your progress in completing the tasks or activities in your action plan.

4. Now work the plan, and get ready for success.

185Foundations of Employee Motivation CHAPTER 5


How are top-down approaches, bottom-up approaches, and “idiosyncratic deals” similar and different?


Job design focuses on motivating employees by considering the situation factors within the

Organizing Framework for Understanding and Applying OB. Objectively, the goal of job de-

sign is to structure jobs and the tasks needed to complete them in a way that creates intrinsic

motivation. We’ll look at how potential motivation varies depending on who designs the job:

management, you, or you in negotiation with management.


“Ten hours [a day] is a long time just doing this. . . . I’ve had three years in here and I’m like, I’m going to get the hell out. . . . It’s just the most boring work you can do.”

—Ford autoworker

“I love my job. . . . I’ve learned so much. . . . I can talk with biochemists, software engineers, all these interesting people. . . . I love being independent, relying on myself.

—Corporate headhunter

“We see about a hundred injuries a year and I’m amazed there aren’t more. The main causes are inexperience and repetition. . . . People work the same job all the time and they stop thinking.”

—Slaughterhouse human resources director

These quotations reflect the different outcomes that can result from job design.73 Job design,  also referred to as job redesign or work design, refers to any set of activi- ties that alter jobs to improve the quality of employee experience and level of pro- ductivity. As you can see from this definition, job design focuses on motivating employees by considering the situation factors within the Organizing Framework.

Figure 5.9 summarizes the approaches to job design that have developed over time.74 • Top-down. Managers changed employees’ tasks with the intent of increasing mo-

tivation and productivity. In other words, job design was management led.


Employee or Work Teams Design Job

Employee and Management Design Job

Idiosyncratic Deals (I-Deals) Approach

Bottom-Up Approach

Management Designs Job

Top-Down Approach

Historical Recent Emerging

186 PART 1 Individual Behavior

• Bottom-up. In the last 10 years, the top-down perspective gave way to bottom-up processes, based on the idea that employees can change or redesign their own jobs and boost their own motivation and engagement. Job design is then driven by em- ployees rather than managers.

• I-deals. The latest approach to job design, idiosyncratic deals, attempts to merge the two historical perspectives. It envisions job design as a process in which em- ployees and individual managers jointly negotiate the types of tasks employees complete at work. 

This section provides an overview of these three conceptually different approaches to job design.75 We give more coverage to top-down techniques and models because they have been used for longer periods of time and more research is available to evaluate their effectiveness.

Top-Down Approaches— Management Designs Your Job In top-down approaches, management creates efficient and meaningful combinations of work tasks for employees. If it is done correctly, in theory, employees will display higher performance, job satisfaction, and engagement, and lower absenteeism and turnover. The five principal top-down approaches are scientific management, job enlargement, job rota- tion, job enrichment, and the job characteristics model.

Scientific Management Scientific management draws from research in industrial engineering and is most heavily influenced by the work of Frederick Taylor (1856–1915). Taylor, a mechanical engineer, developed the principles of scientific management based on research and experimentation to determine the most efficient way to perform jobs. Scientific management  is “that kind of management which conducts a business or affairs by standards established by facts or truths gained through systematic ob- servation, experiment, or reasoning.”76

Designing jobs according to the principles of scientific management has both posi- tive and negative consequences. Positively, employee efficiency and productivity are in- creased. On the other hand, research reveals that simplified, repetitive jobs also lead to job dissatisfaction, poor mental health, higher levels of stress, and a low sense of

This automotive assembly line, which is using robotics, is a great example of scientific management. The principles of scientific management have aided auto manufacturers to produce cars more efficiently and with higher quality. © Glow Images RF

187Foundations of Employee Motivation CHAPTER 5

accomplishment and personal growth.77 Recognition of these negative consequences paved the way for the next four top-down approaches.

Job Enlargement Companies first used job enlargement in the late 1940s in re- sponse to complaints about tedious and overspecialized jobs created from the prin- ciples of scientific management. Job enlargement  puts more variety into a worker’s job by combining specialized tasks of comparable difficulty. Some call this strategy horizontally loading the job. Researchers recommend using job en- largement as part of a broader approach that uses multiple motivational methods, because by itself job enlargement does not have a significant and lasting positive effect on job performance.78

Job Rotation Like job enlargement, job rotation gives employees greater variety in their work. Job rotation  calls for moving employees from one specialized job to an- other. Rather than performing only one job, workers are trained and given the opportu- nity to perform two or more separate jobs on a rotating basis. Proposed benefits of job rotation include the following:79

• Increased engagement and motivation because employees have a broader perspec- tive on the organization.

• Increased worker flexibility and easier scheduling because employees are cross- trained to perform different jobs.

• Increased employee knowledge and abilities, which improves employees’ promot- ability and builds a pipeline of internal talent.

More companies are now hiring new college graduates into “rotational programs,” which allow them to work in different functional areas for short periods and learn many different parts of the business along the way. Finally, the technique of job rotation has evolved into job swapping, more common among senior-level managers. (See the OB in Action box.)

Job swapping can take place both externally, when people from different firms swap jobs, and internally, when employees within one company exchange jobs.

External Job Swapping Nadim Hossain, vice president of marketing at San Francisco-based PowerReviews, went to a recent meeting in which he met with a marketing team and provided input on a proposed ad. Interestingly, he did not do this for his employer. Fortune magazine reported on what he was up to: “He traded roles for the day with Jon Miller, VP of marketing and co-founder of San Mateo, California, software firm Marketo, hoping to gain some insight into his own role by experiencing someone else’s.” This experiment is an example of an external job swap. Both individuals felt they benefited from the experience. Hossain said he got many ideas about how to motivate his sales team, and Miller left with a better idea of the challenges faced by chief marketing officers.80

Another swap exchanged Rick Gill, a medical doctor, and Kevin Stephens, a farmer. The program was initiated by the Pike County, Alabama,  Chamber of

Job Swapping Is the Latest Application of Job Rotation

OB in Action

188 PART 1 Individual Behavior

Job Enrichment Job enrichment is the practical application of Frederick Herzberg’s motivator-hygiene theory of job satisfaction, discussed earlier in this chapter. Specifi- cally, job enrichment  modifies a job such that an employee has the opportunity to experience achievement, recognition, stimulating work, responsibility, and ad- vancement. These characteristics are incorporated into a job through vertical loading. Rather than giving employees additional tasks of similar difficulty (horizontal load- ing), vertical loading gives them more autonomy and responsibility. Intuit, for example, encourages employees “to spend 10 percent of their working time on projects and ideas of their own, even if they are not related to their assignments,” according to Fortune. The company finds that this practice has led to the creation of several successful new products.83

The Job Characteristics Model Two OB researchers, J. Richard Hackman and Greg Oldham, played a central role in developing the job characteristics approach. They proposed that intrinsic motivation was determined by three psychological states. In turn, these psychological states were fostered by the presence of five core job characteristics (see Figure 5.10).

The goal of the job characteristics model  is to promote high intrinsic motivation by designing jobs that possess the five core job characteristics. The five characteris- tics are as follows:

• Skill variety. The extent to which the job requires an individual to perform a vari- ety of tasks that require him or her to use different skills and abilities.

Commerce to help citizens appreciate the impact of different jobs on the county’s well-being. Dr. Gill spent a day on a farm, doing work that included picking cotton. Stephens’ time at the doctor’s office included removing staples from an incision and completing other small medical tasks. Both individuals raved about the expe- rience and noted that it increased their appreciation for someone else’s job. This type of swap has taken place each year since 1986.81

Internal Job Swapping Terri Lodwick, president of All American Window and Door Co. in Germantown, Wisconsin, began the company’s job swap program in 2001. Her reason? “We wanted to give everybody a hands-on view of each oth- ers’ job duties, [so they could gain] a greater appreciation and understanding of each team member. We also wanted to strengthen our customer service and take [our company] to the next level of excellence,” she said. 

All Lodwick’s employees ultimately swap jobs for up to 40 hours per year. A typical swap lasts four hours, and employees are encouraged to swap with people across all company departments. The company attempts to make the process meaningful and practical by having employees complete a short questionnaire after each swap. Sample questions include: “What did you learn/observe today? What suggestions do you have for the process you observed?”

Lodwick noted that the program led to increased productivity, teamwork, and customer service. It also was a prime contributor to the company’s receipt of sev- eral business awards.82


1. What are the pros and cons of job swaps? 2. What would be your ideal job swap? 3. If you managed a business, how would you feel about this option for your


189Foundations of Employee Motivation CHAPTER 5

• Task identity. The extent to which the job requires an individual to perform a whole or completely identifiable piece of work. Task identity is high when a person works on a product or project from beginning to end and sees a tangible result.

• Task significance. The extent to which the job affects the lives of other people within or outside the organization.

• Autonomy. The extent to which the job enables an individual to experience free- dom, independence, and discretion in both scheduling and determining the proce- dures used in completing the job.

• Feedback. The extent to which an individual receives direct and clear information about how effectively he or she is performing the job.84

Moderators. A moderator is a variable that changes the relationship between two other variables. Hackman and Oldham proposed that there are moderators that affect the success of job design, and they are shown in the moderator box of Figure 5.10. 

• Knowledge and skill (representing whether or not the person has the knowledge and skills to perform the enriched job).

• Growth need strength (representing the desire to grow and develop as an individual). • Context satisfactions (representing the extent to which employees are satisfied with

various aspects of their job, such as pay, coworkers, and supervision).


• Experienced meaningfulness of the work • Experienced responsibility for outcomes of the work • Gained knowledge of the actual results of the work activities

• High intrinsic work motivation • High growth satisfaction • High general job satisfaction • High work e�ectiveness


• Skill variety • Task identity • Task significance

• Autonomy

• Feedback from job

Core job characteristics

Critical psychological


Moderators Not everyone wants a job

covering all five characteristics. Job design is

moderated by:

These moderators will a�ect or moderate both the critical psychological states and the


1. Knowledge and skill 2. Growth need strength 3. Context satisfactions

SOURCE: J. Richard Hackman and Greg R. Oldham, Work Redesign (Prentice Hall Organizational Development Series), © 1980, 90.

190 PART 1 Individual Behavior

The takeaway is that job design is more likely to work when people have the required knowledge and skills, when they want to develop, and when they are satisfied with their jobs. Job design is not for everyone.

In Practice. Research identifies three practical implications of applying the job char- acteristics model.

1. Managers can increase employee job satisfaction.85

2. Managers can enhance employees’ intrinsic motivation and performance, while re- ducing absenteeism and stress.86

EXAMPLE Wegmans Food Markets, rated as the fourth best place to work by For- tune in 2016, increases autonomy by allowing employees “to write their own weekly schedule or take time off at the spur of the moment, no questions asked.” Medical device maker Stryker is interested in increasing the psychological state of meaning- fulness. It does this by encouraging employees to observe how customers use its products. Employees observe surgeries and attend trade shows, which enables them to see the products being applied in the field.87

3. Managers can find noticeable increases in the quality of performance after a job redesign program. Results from 21 experimental studies revealed that job redesign resulted in a median increase of 28 percent in the quality of performance.88

Bottom-Up Approaches— You Design Your Own Job As its name suggests, bottom-up job design is driven by employees rather than managers; it is also referred to as job crafting. Job crafting  represents employees’ at- tempts to proactively shape their work characteris- tics.89  The goal of job crafting is to help employees experience a sense of meaning in their jobs. This is more important than you might think. A recent survey of 20,000 employees revealed that only 36 percent felt they had meaningful work.90

Forms of Job Crafting Employees are viewed as “job crafters” according to the bottom-up model because they are expected to define and create their own job boundaries. Table 5.2 illustrates three forms of job craft- ing. The first changes the job’s task boundaries. You can do this by taking on more or fewer tasks or by altering their scope or nature. The second form changes the rela- tional nature of the job. Specifically, you can alter the quantity or quality of interactions you have with others at work, or you can establish new relationships. The third method is cognitive crafting. In this strategy you perceive or think differently about the existing tasks and relation- ships associated with your job.

Outcomes of Job Crafting The right-hand column in Table 5.2 outlines the potential impact of job crafting on employee motivation and performance. You can see that job crafting is expected to change the way employees

This employee of Swiss-based computer device producer Logitech is working on a computer mouse. He looks very focused on the task at hand. It may be that job crafting is partly behind his engagement. The company is using job crafting to increase employee engagement and job satisfaction. As part of this effort the company created a 90-minute workshop to help employees learn how to align their strengths and interests with tasks contained in their jobs. © epa european pressphoto agency b.v./Alamy

191Foundations of Employee Motivation CHAPTER 5

perceive their jobs. It should also result in more positive attitudes about the job, which is expected to increase employee motivation, engagement, and performance. Preliminary research supports this proposition.91

Computer accessories maker Logitech Inc. successfully implemented a job crafting pilot program. Jessica Amortegui, senior director of learning and development, said, “The company hopes helping employees find more intrinsic motivation in their work will be a powerful hiring draw. Logitech plans to begin using the [program] with all 3,000 of its workers.”92 

Given that job crafting can lead to higher levels of engagement and satisfaction, you may be interested in understanding how you can apply the technique to a former, current, or future job. The Self-Assessment 5.3 explores the extent to which you are applying job crafting to reduce job demands, seek resources, or seek challenges.


Changes in Approach Example Changes in Results

Task boundaries: Number, scope, and type of job tasks.

Design engineers engage in relational activities that move a project to completion.

Engineers are now guardians or movers of projects; they complete work in a more timely fashion.

Relational nature: Quality and/or amount of interaction with others encountered in a job.

Hospital cleaners actively care for patients and families and integrate themselves into the workflow of their floor units.

Cleaners are now helpers of the sick; they see the work of the floor unit as a vital part of an integrated whole.

Cognitive crafting: Perception of or thinking about tasks and relationships in your job.

Nurses take responsibility for all information and “insignificant” tasks so they can care more appropriately for a patient.

Nurses are now patient advocates; they provide high-quality, technical care.

SOURCE: Adapted from A. Wrzesniewski and J. E. Dutton, “Crafting a Job: Revisioning Employees as Active Crafters of Their Work,” Academy of Management Review, April 2001, 185.

To What Extent Have I Used Job Crafting? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 5.3 in Connect.

1. What are your strengths and weaknesses in terms of job crafting?

2. Were you happy in the job under consideration?

3. Do you think the average employee can affect all the suggestions measured in the survey? Explain.


192 PART 1 Individual Behavior

Idiosyncratic Deals (I-Deals)— You Negotiate the Design of Your Job The last approach to job design, idiosyncratic deals, represents a middle ground between top-down and bottom-up methods and attempts to overcome their limitations. For exam- ple, top-down approaches are constrained by the fact that managers cannot always create changes in task characteristics that are optimal for everyone. Similarly, job crafting is limited by the amount of latitude people have to change their own jobs. Idiosyncratic deals (i-deals)  represent “employment terms individuals negotiate for themselves, taking myriad forms from flexible schedules to career development.”93 Although “star performers” have long negotiated special employment contracts or deals, demo- graphic trends and the changing nature of work have created increased opportunities for more employees to negotiate i-deals.

I-deals tend to affect task and work responsibilities, schedule flexibility, location flexibility, and compensation.94 The goal of such deals is to increase employee intrinsic motivation and productivity by allowing employees the flexibility to negotiate employ- ment relationships that meet their own specific needs and values. RSM promotes and encourages the creation of i-deals among its 8,000 employees. The focus of its program is to create innovative and flexible ways of working.95

This relatively new approach to job design has begun to generate much research. Results confirm that i-deals are associated with higher perceived organizational support, job satisfaction, and perceived voice. Employees also are less likely to quit when they negotiate i-deals.96 Future study is needed to determine the generalizability of these en- couraging results.

Consider how you might one day create an i-deal for yourself. Self-Assessment 5.4 will help you think through the process.

Creating an I-Deal Please be prepared to answer these questions if your instructor has assigned Self-Assessment 5.4 in Connect.

1. What are your strengths and weaknesses in terms of creating an i-deal?

2. Assume you are applying for a job after graduation and you want to create an i-deal. What do your results suggest that you should discuss with your potential employer?



Increasing My Motivation with Job Crafting

Use the results from Self-Assessment 5.3 to complete the following:

1. Identify three job-crafting ideas you might use to increase your intrinsic motivation.

2. Using Table 5.2, identify two additional job-crafting ideas.

3. What are the roadblocks to implementing the ideas identified in the above two steps?

193Foundations of Employee Motivation CHAPTER 5

You learned that motivation, a key individual-level process, is influenced by inputs such as needs, perceptions of justice, expectancies and instru- mentalities, goals, and job design. You learned how various theories and models of motivation can be applied by managers to improve multiple outcomes. Reinforce your learning with the Key Points below. Consolidate your learning using the Organizing Framework. Then challenge your mas- tery of the material by answering the Major Ques- tions in your own words.

Key Points for Understanding Chapter 5 You learned the following key points.


• There are two types of motivation: intrinsic and extrinsic.

• Extrinsic motivation results from the potential or actual receipt of external rewards.

• Intrinsic motivation is driven by positive inter- nal feelings generated by doing well.


• Content theories are based on the idea that an employee’s needs influence motivation. There are five key content theories.

• Douglas McGregor proposed a theory of mo- tivation based on two opposing views of em- ployees. Theory X people believe employees dislike work and are motivated by rewards and punishment. Theory Y people believe employees are self-engaged, committed, and responsible.

• Abraham Maslow proposed that motivation is a function of five basic needs—physiological, safety, love, esteem, and self-actualization— arranged in a prepotent hierarchy.

• David McClelland’s acquired needs theory is based on the idea that motivation is a func- tion of three basic needs: achievement, affilia- tion, and power.

• Self-determination theory assumes that three innate needs influence motivation: compe- tence, autonomy, and relatedness.

• Frederick Herzberg’s motivator-hygiene the- ory is based on the premise that job satisfac- tion comes from motivating factors and dissatisfaction from hygiene factors.


• Process theories attempt to describe how various person factors and situation factors affect motivation.

• Equity theory explains how people strive for fairness and justice in social exchanges. Fair- ness or equity is determined by comparing our outputs and inputs with those of others.

• Three key types of justice are distributive, procedural, and interactive.

• Expectancy theory assumes that motivation is determined by our perceived chances of achieving valued outcomes. The three key el- ements of this theory are expectancies, in- strumentalities, and valence of outcomes.

• Goal-setting theory proposes that goals affect performance because they (1) direct our at- tention, (2) regulate effort, (3) increase persis- tence, and (4) encourage the development of action plans.


• Job design theories are based on the idea that motivation is primarily influenced by the tasks people perform and the characteristics of the immediate work environment.

• Three broad approaches to job design are top-down, bottom-up, and emerging.

What Did I Learn?

194 PART 1 Individual Behavior

voice and justice. Figure 5.11 further illustrates that motivational processes affect outcomes across the individual, group/team, and organiza- tional levels.

Challenge: Major Questions for Chapter 5 You should now be able to answer the following questions. Unless you can, have you really pro- cessed and internalized the lessons in the chapter? Review relevant portions of the text and your notes to answer the following major questions. With Figure 5.11 as your guide, look for inputs, processes, and outputs specific to each:

1. What is motivation and how does it affect my behavior?

2. How would I compare and contrast the con- tent theories of motivation?

3. How would I compare and contrast the pro- cess theories of motivation?

4. How are top-down approaches, bottom-up approaches, and “idiosyncratic deals” similar and different?

• The premise of top-down approaches is that management is responsible for creating effi- cient and meaningful combinations of work tasks for employees. Top-down approaches include scientific management, job enlarge- ment, job rotation, job enrichment, and the job characteristics model.

• Bottom-up approaches, also referred to as job crafting, are driven by employees rather than managers. Employees create their own job boundaries.

• Emerging approaches include idiosyncratic deals (i-deals). This approach views job de- sign as a process in which employees and managers jointly negotiate the types of tasks employees complete at work.

The Organizing Framework for Chapter 5 As shown in Figure 5.11, both person and situa- tion factors influence the process of motivation. You can also see that there are more situational than personal factors influencing motivation. This underscores the importance of leadership and creating a work environment that reinforces


© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.


Person Factors • Personality • Personal attitudes • Values—Theory X/Y • Needs Situation Factors • Hygiene factors • Motivating factors • Job characteristics • Job design • Leadership • Organizational climate

Individual Level • Equity/justice • Expectancy processes • Goal-setting processes • Voice Group/Team Level • Climate for justice Organizational Level • Climate for justice

Individual Level • Intrinsic and extrinsic

motivation • Task performance • Work attitudes • Citizenship behavior/

counterproductive behavior • Turnover Group/Team Level • Group/team performance Organizational Level • Customer satisfaction

195Foundations of Employee Motivation CHAPTER 5

IMPLICATIONS FOR ME You can do five things to personally apply the material from this chapter. First, identify the needs that are important to you today, recognizing they may change over time. This can help you identify the type of work you would like to do before and after graduation. Second, if your current job is low on hygiene or motivating factors, reflect on what you can do to change this situation. You may be able to create change by talking to your boss, asking for new work assignments, or getting a different job. Third, because fes- tering feelings of inequity are not good for you or those you interact with on a regular basis, make a plan to correct any feelings of inequity that exist in your life. Fourth, set specific, measurable goals for things you want to accomplish in your life. Develop an action plan that outlines the path to success, then be sure to reward yourself for ac- complishing the goals. Finally, if your current job is unfulfilling, try to find ways to incor- porate job crafting or i-deals into your work. If this does not work, you might consider changing jobs.

IMPLICATIONS FOR MANAGERS There are seven key implications for managers. First, recognize that intrinsic motivation can have longer-lasting effects than extrinsic motivation. Try to build Herzberg’s motiva- tors into employees’ work experiences. Second, acknowledging that needs drive em- ployee motivation, find a way to determine employee needs, such as employee surveys or one-on-one meetings. Third, because some needs are innate, consider people’s needs when they are first hired. Validated tests exist that will identify these. Fourth, un- cover employees’ perceptions about equity and justice and then correct any deficien- cies, such as by administering employee surveys or exit interviews. Fifth, incorporate the principles of expectancy theory by (1) ensuring that employees believe they can accomplish their goals and (2) linking performance to rewards that individual employees value. Sixth, participate with employees in setting challenging yet attainable goals and then establish action plans. Be sure employees have the resources needed to achieve the goals. Finally, consider different ways to design jobs so they foster intrinsic motiva- tion and meaningfulness.

196 PART 1 Individual Behavior

Dan Price grew up in a family of seven, whose evangelical Christian parents homeschooled him and his siblings until they were 12. The family had strong roots in reading and studying the Bible, which was a daily activity. Price was very interested in learning the scriptures and reached the finals of a Bible-memorization contest in the fifth and sixth grades.97

In 2004 Price, then 19, started Gravity Payments with his brother Lucas. The brothers initially had a 50-50 stake in the company, but about 18 months later Lucas Price ended his direct involvement in the company and Dan Price became the majority owner.

Gravity Payments is a credit card processing com- pany. According to an article about the company in Bloomberg Businessweek, “The day-to-day work at Gravity Payments is pretty unglamorous. Gravity is a middleman between merchants and payment net- works, namely Visa and MasterCard, which in turn con- nect to banks that issue credit cards.”98 The office is a conglomerate of “desks and computers in bland cubicles—but the space is reorganized every six months so people can sit near different colleagues.” Price does this because he doesn’t want people to get too comfortable.99

The corporate home page describes the com- pany as follows: “‘Take care of your team, and they’ll take care of your clients.’ Gravity Payments recognizes the value in establishing an entrepre- neurial, goal-oriented, rewarding, honest, and inno- vative culture, which is what makes our company such a remarkable place to work. We believe in a holistic and balanced lifestyle, supporting our team members with:

• $70,000 minimum wage  • Unlimited paid time off • Medical, dental, and vision insurance • Bonus opportunities • Flannel Fridays • Company-sponsored outings • Volunteer opportunities • Catered breakfasts and lunches”100

A survey of comments on Glassdoor reveals a combi- nation of pros and cons about working at Gravity. A sampling of comments include the following:


• “I have never worked for a company that cares for their customers more than Gravity. Company cul- ture is the best I have worked with.”

• “The company is built on a foundation of community and teamwork. I have built some long-lasting friendships. We are a community of people who are competitive, love to learn, and want to grow.”

• “I love the team of people I work with! They value the unique skills and experience that I have, sup- port me in accomplishing my goals, challenge me to bring my best, and inspire me to push to new heights.”

• “Gravity Payments offers an incredible opportunity for employees to seize responsibility and grow per- sonally and professionally. . . . You really do get out what you put in as far as effort being rewarded with additional responsibilities and trust.”

• “Management genuinely cares about your success and professional growth. Even though people work hard . . . the environment is fun and social.”


• “It can be intimidating to work with such high quality and capable people. Personal sacrifice is often necessary to provide a high level of service and support for our customers and teammates.”

• “It’s no secret that this industry is tough. As a rep you have to be very driven and handle plenty of rejection.”

• “Be prepared to work long hours . . .” • “Many days are filled with rejection and apathy.” • “This is not easy work. Anyone who is just looking

to do the minimum and collect their paycheck will not be happy nor successful here. Be prepared to operate at 100 percent at all times, as there is rarely down time.”101


Dan Price, CEO of Gravity Payments, Established a Minimum Salary of $70,000 for All Employees

197Foundations of Employee Motivation CHAPTER 5

size” and profitability. The company’s profit was $2.2 million in 2014. Bloomberg  Businessweek reported that “at private companies with sales like Gravity’s total revenue, salary and bonus for the top quartile of CEOs is $710,000. . . . At companies with sales like Gravity’s net revenue, the top quartile pay falls to about $373,000. At those with a similar number of employ- ees as Gravity, the top quartile of CEOs makes $470,000 in salary and bonus.”105

Price told a CNBC anchor in 2011 that he was mak- ing “probably $50,000” in 2011, which he noted was the “most I’d ever made in my life.” This statement con- trasts with data reported in a lawsuit filed by Lucas Price, who retains a 30 percent stake in the company. According to a reporter for Geekwire.com, “The filing discloses Price’s compensation as CEO dating back five years. It says Price received $957,811 in compen- sation in 2010, $908,950 in 2011, and more than $2 million in 2012, which represented more than 20 percent of Gravity Payment’s $9.9 million in sales that year.”106

Price’s compensation is at the heart of his brother’s lawsuit, filed about a month before the wage increase was announced. Lucas Price claims Dan Price was tak- ing millions out of the company, detracting from the fi- nancial benefits of being a minority owner. 

Bloomberg Businessweek reviewed court papers and stated that the lawsuit claims Price “‘improperly used his majority control of the company’ to overpay himself, in the process reducing what Lucas was due. ‘Daniel’s actions have been burdensome, harsh and wrongful, and have shown a lack of fair dealing toward Lucas,’ the suit alleges.”107 Lucas Price wants his brother to pay for damages and buy him out.

A judge ruled in July 2016 that Lucas Price had failed to “prove his claims that Dan had overpaid him- self and inappropriately used a corporate credit card for personal expenses. The judge also ordered Lucas to pay Dan’s legal fees,” according to a reporter for The New York Times.108 


Step 1: Define the problem.

A. Look first at the Outcome box of the Organizing Framework in Figure 5.11 to help identify the important problem(s) in this case. Remember that a problem is a gap between a desired and a current state. State your problem as a gap, and be sure to consider problems at all three levels. If more than one desired outcome is not being accomplished, decide which one is most important and focus on it for steps 2 and 3.

Price made international headlines in 2015 when he announced his plan to raise the minimum salary of his 120 employees to $70,000. At the time, the aver- age employee salary was $48,000.

He decided to phase in the salary increase over three years. The minimum starting salary became $50,000 in 2015 and $60,000 by December 2016 and $70,000 by December 2017. Price plans to pay for this increase without raising prices to customers by reducing his own salary from about $1 million to $70,000, and by diverting about 80 percent of com- pany profits for 2015.  This strategy is critically impor- tant because profit margins are slim in this industry, and any price increases are likely to result in a loss of customers.102

Many employees were ecstatic at the news of the salary rise. One hundred received an immediate pay increase, and 30 saw their pay double. Others were not so happy and perceived the decision as inequita- ble. Maisey McMaster, a 26-year-old financial manager, said, “He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump.” She felt it would have been fairer to give smaller increases with the opportunity to earn a future raise with more experience.

McMaster told Price about her feelings, and accord- ing to an interview in The New York Times, he sug- gested she was being selfish. She quit.

Grant Morgan had a similar reaction in his Times in- terview. “I had a lot of mixed emotions,” he said. His salary was raised to $50,000 from $41,000. “Now the people who were just clocking in and out were making the same as me. It shackles high performers to less motivated team members.” He also quit.

Some customers left the company because they viewed the pay increase as a political statement or a prelude to higher fees.103

A few key events seem to have prompted Price’s decision to raise wages. One was a 2011 conversa- tion with Jason Haley, a phone technician making about $35,000 a year. Haley told Price, “You’re rip- ping me off.” A surprised Price said, “Your pay is based on market rates.” Haley shot back that “the data doesn’t matter. I know your intentions are bad. You brag about how financially disciplined you are, but that just translates into me not making enough money to lead a decent life.”104 Price was shocked and upset.

Price also came to feel that pay inequality between himself and his employees was simply wrong. He told a reporter from The New York Times that income in- equality “just eats at me inside.” 

According to Bloomberg Businessweek,  Price’s original pay was “atypical for a company of Gravity’s

198 PART 1 Individual Behavior

C. Now consider the Processes box in Figure 5.11. Consider concepts listed at all three levels. For any concept that might be a cause, ask yourself, Why is this a cause? Again, do this for several iterations to arrive at root causes.

D. To check the accuracy or appropriateness of the causes, be sure to map them onto the defined problem.

Step 3: Make recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recom- mendation is desirable and feasible?

A. Given the causes identified in Step 2, what are your best recommendations? Use the content in Chapter 5 or one of the earlier chapters to propose a solution.

B. You may find potential solutions in the OB in Action boxes and Applying OB boxes within this chapter. These features provide insights into what other individuals or companies are doing in relationship to the topic at hand.

C. Create an action plan for implementing your recommendations.

B. Cases have protagonists (key players), and problems are generally viewed from a particular protagonist’s perspective. Identify the perspective from which you’re defining the problem—is it that of Dan Price, Lucas Price, or Gravity employees? 

C. Use details in the case to identify the key problem. Don’t assume, infer, or create problems that are not included in the case. 

D. To refine your choice, ask yourself, Why is this a problem? Explaining why helps refine and focus your thinking. Focus on topics in the current chapter, because we generally select cases that illustrate concepts in the current chapter.

Step 2: Identify causes of the problem by using ma- terial from this chapter, summarized in the Organizing Framework shown in Figure 5.11. Causes will appear in either the Inputs box or the Processes box.

A. Start by looking at Figure 5.11 to identify which person factors, if any, are most likely causes to the defined problem. For each cause, ask, Why is this a cause of the problem? Asking why multiple times is more likely to lead you to root causes of the problem.

B. Follow the same process for the situation factors.


Should Senior Executives Receive Bonuses for Navigating a Company through Bankruptcy?

Consider this report from The Wall Street Journal: “On the way to bankruptcy court, Lear Corp., a car-parts supplier, closed 28 factories, cut more than 20,000 jobs, and wiped out shareholders. Still, Lear sought $20.6 million in bonuses for key executives and other employees, including an eventual payout of more than $5.4 million for then-chief executive Robert Rossiter.” Does this seem appropriate from a justice or expec- tancy theory perspective?

The US Justice Department objected to these bo- nuses, arguing that they violated a federal law estab- lished in 2005. The goal of the law was to restrict companies from paying bonuses to executives before and during a bankruptcy process. However, a judge ruled that the bonuses were legal because they were tied to the individuals’ meeting specific earning mile- stones. A company spokesperson further commented

that the bonuses were “customary” and “fully market competitive.” Lear has subsequently rebounded, adding 23,000 jobs since completing the bankruptcy process.

The practice of giving bonuses to senior executives who navigate a company through bankruptcy is quite common. A Wall Street Journal study of 12 of the 100 biggest corporate bankruptcies revealed that CEOs from these firms were paid more than $350 million in various forms of compensation.

“Over the past few years, fights have erupted dur- ing a handful of Chapter 11 bankruptcy cases,” the newspaper reported. “The central argument has been over whether companies are adhering to federal laws when giving their executives the extra pay.” While judi- cial decisions regarding this issue have been mixed, consider the ethics of paying executives large bonuses

199Foundations of Employee Motivation CHAPTER 5

2. Yes, if all employees receive some sort of bonus for staying through a bankruptcy process. In other words, executives should be paid the same as other surviving employees. If everyone took a 10 percent pay cut or gets a 10 percent bonus, so should executives. What’s fair for one is fair for all.

3. Absolutely not. It just is not right to close plants, displace employees, and eliminate retirement benefits while simultaneously giving executives hefty bonuses.

What is your ideal resolution to the challenge?

when laying off workers, closing plants, and eliminat- ing health care and retirement benefits to retirees.109 Does this seem fair or just?

Finding Answers to Solve the Challenge Is it ethical to pay these bonuses? Respond to each of the following options.

1. Yes. Navigating a company through bankruptcy is hard work and requires hard decisions. Executives at Lear, for example, earned those bonuses by staying with the company to shepherd it through tough times, helping to turn it around.

6 Major Topics I’ll Learn and Questions I Should Be Able to Answer

6.1 Performance Management Processes MAJOR QUESTION: What are the elements of effective performance management, and how can this knowledge benefit me?

6.2 Step 1: Define Performance—Expectations and Goals MAJOR QUESTION: How can improving my goal setting give me an advantage?

6.3 Step 2: Performance Monitoring and Evaluation MAJOR QUESTION: How can performance monitoring and evaluation improve my performance and my ability to manage the performance of others?

6.4 Step 3: Performance Review, Feedback, and Coaching MAJOR QUESTION: How can I use feedback and coaching to review and improve performance?

6.5 Step 4: Providing Rewards and Other Consequences MAJOR QUESTION: How can I use consequences to generate desired outcomes?

6.6 Reinforcement and Consequences MAJOR QUESTION: How can I use reinforcement and consequences to improve performance?

How Can I Use Goals, Feedback, Rewards, and Positive Reinforcement to Boost Effectiveness?




© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.


Person Factors Situation Factors

Individual Level • Performance management

practices Group/Team Level Organizational Level

Individual Level • Task performance • Work attitudes • Well-being/flourishing • Citizenship behavior/

counterproductive behavior • Turnover • Career outcomes • Creativity Group/Team Level • Group/team performance • Group satisfaction • Group cohesion and

conflict Organizational Level • Survival • Accounting/financial

performance • Customer satisfaction • Reputation

Figure 6.1 summarizes what you will learn in this chapter. The main focus is perfor- mance management, which we position as an individual process in the Organizing Framework for Understanding and Applying OB. It could easily be considered a group- or organizational-level process, but we put it at the individual level because it is the performance of individuals that determines the performance of groups, teams, and organizations. Performance management is an umbrella phrase that includes a num- ber of important OB concepts, such as goal setting, performance measurement and appraisals, feedback, and rewards. Performance management therefore is an espe- cially important topic in OB. A variety of person and situation factors influence performance management prac- tices, and such practices impact performance management, which in turn affects nu- merous outcomes for individuals, groups/teams, and organizations. It also is a key contributor to other processes across levels, such as your individual motivation, trust and conflicts with supervisors and coworkers, and the effectiveness of organizational change efforts. The pervasive and important effects make performance management one of the most practical and valuable OB concepts.


Winning at Work How to Boost Your Personal Productivity

What’s Ahead in This Chapter Performance management encompasses many of the topics and tools you’ve learned thus far. In many ways this chapter serves as a sort of summary. And in other ways it serves as a rationale for taking the course. If you want to know why OB is important, and why its theories, models, and tools matter, the answer comes down to im- proving performance at all three levels of OB—individ- ual, team, and organizational. The discussion in this chapter focuses on several of the critical components of effective performance management: goal setting, feed- back, rewards, and reinforcement. To effectively man- age performance, managers and organizations need to identify and communicate clear expectations or goals, monitor and provide feedback regarding progress to- ward these goals, and then link and deliver appropriate consequences (rewards) for goal achievement. We also highlight how performance management serves as a powerful tool for motivating, developing, and retaining talent. We hope you will appreciate why effective perfor- mance management policies and practices often dra- matically affect many aspects of your work life.

the phone rings, you don’t have to answer it. If it’s im- portant the caller will leave a message, which you can listen to during the time you’ve allocated. Set times for particular tasks and stick to them. 

4. Take regular breaks. Recharging with a walk, music, or a brief chat has been shown to improve your concen- tration and boost productivity during the time you’re on task. Some research suggests that 90-minute inter- vals of work are best. This means you should set a plan for what you’ll accomplish in 90 minutes, then take a break. A series of intense, focused, and energized in- tervals is more productive than long stretches of unin- terrupted work.3

5. Trade social and gaming. Whatever amount of time you spend playing video games or connecting on so- cial media, try reallocating some of it to clearing e-mails or tackling other items on your to-do list. For example, make rules—no Facebook before lunch and/ or none after 7 p.m. This rule can be especially useful if you commute by bus or train or spend time waiting in lines. As long as you’re not driving, spend that time productively rather than gaming or posting.

Who doesn’t want to be more productive? You have your own tactics or techniques for getting things done, as does nearly everyone you know. But given that everybody has the same number of hours in a day, the only way for you to differentiate yourself is to spend your time more wisely. To help, we assembled the following collection of best prac- tices to make you more productive.

1. Learn how you spend your time. Fill out a time log to measure how much time you spend on various activi- ties. A useful time log requires genuine effort, since research shows that better than 80 percent of people are very poor at accurately estimating how they spend their time.1 Track your time and the way you spend it for two or three days to capture the things you com- monly do. Ideally, you’ll pause every hour or two and tabulate how much time you’ve spent on particular tasks. If this isn’t feasible, then be sure you tabulate your time twice in the morning, twice in the afternoon, and once in the evening. (Note: You cannot accurately tabulate the entire day at the end. This doesn’t work so don’t even try.) When you have two or three days re- corded, add up the time you spent on various tasks. Identify the three activities that consume the greatest amounts of your time. It is especially useful to deter- mine how much time you spend e-mailing, texting, playing games, and surfing the web, and then deter- mine how much of this effort is really related to school and/or work. You’ll likely be shocked. Use your time more wisely. 

2. Never touch things twice.  This means you should never put tasks in a holding pattern.2 If you open an e-mail, for instance, and then decide to respond later, you will have to look at it at least one more time. This advice also applies to phone calls and other items on your to-do list. You need to decide the first time you touch it—take action now, delegate it, or delete it. You may think, “Yeah, right, as if this is possible.” But being decisive is key to increasing productivity. You may have to do some less desirable or even undesirable tasks immediately instead of putting them off. Or you’ll have to figure out how to do certain things, like texting, only at certain times of the day.

3. Schedule e-mail, text, and phone time. Turn off notifications—all of them. Then set specific times in the day when you’ll check and tend to distracting tasks. For instance, you are wise to always  look at and re- spond to e-mail in the same space of time, such as at 11:00 each morning and 4:00 each afternoon. When

203Performance Management CHAPTER 6

This chapter focuses on improving individual job performance, notably yours, as well as on your ability to improve the performance of others. To do this, you need to draw on and apply many of the concepts and tools you’ve learned thus far, such as hard and soft skills, personality, perceptions, and of course motivation. The integration and ap- plication of this knowledge for the purposes of improved outcomes is called perfor- mance management.

Performance management  (PM) is a set of processes and managerial behav- iors that include defining, monitoring, measuring, evaluating, and providing con- sequences for performance expectations.4 Defined in this way, PM is far more than performance appraisal. Appraisals typically consist only of the actual performance review, an event. Effective PM, in contrast, is a continual process and a critically im- portant individual-level process. Performance management typically operates through an organization’s managers and human resources policies and practices. You will learn how it affects outcomes across all levels in the Organizing Framework, such as indi- vidual (job satisfaction, OCBs, and turnover), team (cohesiveness, conflict, and per- formance), and organizational (reputation, performance, survival, innovation, and employer of choice).

Effective Performance Management As illustrated in Figure 6.2, effective PM has four steps:

Step 1: Defining performance. Step 2: Monitoring and evaluating performance. Step 3: Reviewing performance. Step 4: Providing consequences.

Successfully managing performance is a powerful means for improving individual, group/team, and organizational effectiveness.5 Effective performance management influences important outcomes such as greater employee engagement and better


What are the elements of effective performance management, and how can this knowledge benefit me?


Performance management occurs in many arenas of your life, notably school and work. Be-

cause it is a process that generates grades at school and promotions and pay at work, it is

important to understand how it works. You’ll learn why performance management is one of

the most critical and far-reaching processes in the Organizing Framework. You’ll also see why

opinions about the usefulness and effectiveness of performance management practices are

often negative. However, you’ll also learn how performance management practices can be

beneficial, such as by helping signal and reinforce desired behaviors and outcomes across all

levels of OB.


204 PART 1 Individual Behavior

organizational performance.6 Managers who practice effective performance management generate exceptional results compared to those who don’t:

• 48% higher profitability. • 22% higher productivity. • 30% higher employee engagement scores. • 17% higher customer engagement scores. • 19% lower turnover.7

Common Uses of Performance Management Most performance management processes have three primary functions.

1. Make employee-related decisions. Your performance can be used to justify a pay raise, a promotion, and new assignments. PM can also generate documentation to help justify termination and reduce the chances of a wrongful dismissal lawsuit.

2. Guide employee development. Effective performance management helps identify em- ployees’ strengths, weaknesses, and development needs. One performance manage- ment expert said that PM “is one of the most powerful talent management practices we have as HR professionals.”8

3. Signal desired employee behavior. Performance management processes signal and otherwise communicate what is expected from employees, such as job performance and career advancement.

This final purpose also applies in school. Think about it: The components of your grade in this (or any) course signal what is important, what your professor expects you to do, and thus what is rewarded.

Step 1: Define Performance

Set goals and communicate performance expectations.

Step 3: Review Performance

Deliver feedback and coaching.

Step 2: Monitor & Evaluate Performance

Measure and evaluate progress and outcomes.

Step 4: Provide Consequences

Administer valued rewards and appropriate punishment.


SOURCE: Adapted from A. J. Kinicki, K. J. L. Jacobson, S. J. Peterson, and G. E. Prussia, “Development and Validation of the Performance Management Behavior Questionnaire,” Personnel Psychology, 2013, 1–45.

205Performance Management CHAPTER 6

How Much Would You Pay Fannie and Freddie?

Fannie Mae and Freddie Mac are organizations at the heart of the US housing industry. They buy mortgages from lenders and either hold them or package and sell them to investors. They were cen- tral players in the financial crisis and were subsequently taken over (bailed out) by the government. It has been a long road back, and Mel Watt, the regulator who oversees Fannie and Freddie, recom- mended that their CEOs each get raises of $3.4 million, taking their salaries from $600,000 to $4 million each. 

Watt argued that the increases were deserved and necessary. He said both CEOs have done a commendable job of turning their organizations around since the crisis. Some of these reasons were inspired by Timothy Mayopoulos, CEO of Fannie, when he expressed concerns about his present pay. Donald Layton, CEO of Freddie, is likely to retire in the near future, and Watt and other supporters claimed salaries of this level are necessary to attract qualified candidates to replace him. In fact, other senior Fannie and Freddie executives are paid more than the current CEOs.9 And earlier Fannie and Freddie CEOs earned $5.3 million and $3.8 million, respectively, as recently as 2011.10

The proposed raises met with strong opposition. President Obama and Congress blocked them, arguing that CEOs of organizations under government control should not be paid this much. Layton said in response, “I signed up for this job personally as a public service matter so compensation wasn’t the big attraction to me.” As to whether another qualified executive could be found at the lower pay level, Layton said, “I am of the belief there are other people like me who . . . would be willing to do a job as a public service matter.”11 

Problem-Solving Application

What Goes Wrong with Performance Management Volumes of research and employee surveys report that the majority of managers and or- ganizations do a poor job of managing employee performance.

• Fewer than 40% of employees say their systems do not provide clear goals or gen- erate honest feedback.12

• 66% of employees say it actually interferes with their productivity. • 65% say their company’s practices are irrelevant to what they actually do in their jobs.13

• 58% of 576 HR executives surveyed graded their company’s performance manage- ment systems as a C or worse.14

These unfortunate perceptions raise the question: Why do companies often do so poorly with performance management?

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problems confronting the regulator Mel Watt.

Step 2: Identify the potential causes of these problems.

Step 3: Make your recommendations.

206 PART 1 Individual Behavior

First, performance management practices are often obsolete. Customer needs and job responsibilities change frequently and quickly, but PM practices often fail to keep pace. This can result in a disconnect between the elements in your review and what you actually do day-to-day in your job. This can reduce the whole process to “chores” that require lit- tle more than checking boxes. 

Second, PM is time consuming. Some surveys report that managers spend on average 210 hours per year on PM activities.That equals 5.25 weeks, or more than a month! It is even more difficult to justify the time when 77 percent of HR executives feel their re- views do not accurately capture employee contributions.15  

Third, performance reviews are too narrow. This means managers administering them commonly focus on only a limited number of elements, which may not be the only or the most important ones. One reason for this narrow scope is that many companies include only what is measured instead of what should be measured. For example, law firms may say they want and need attorneys to focus on client service and community involvement, but the only thing they measure and link to rewards is billable hours with clients. This is largely what they get.

Applying all the elements of performance management discussed in this chapter will help you overcome these negative perceptions at work and show you that performance management is an important, practical process that connects many inputs and outcomes in the Organizing Framework of OB.

The Importance of Management and Leadership Performance fluctuates widely and unnecessarily in most companies, in no small part from a lack of consistency in how people are managed. Research consistently shows that over half of the most important drivers of employee engagement and performance are

The meeting in this photo is typical of many performance reviews: Once a year a manager and a subordinate sit on opposite sides of a table, the manager does most of the talking, both are uncomfortable, and each walks away less than happy with the results. This chapter will help you understand how and why you and your managers can do better. © Chris Ryan/agefotostock RF

207Performance Management CHAPTER 6

precisely the behaviors that define effective performance management: setting clear expectations, helping employees accomplish work, providing regular feedback, and find- ing new opportunities for employees to succeed and develop.16 This means that managing performance successfully requires that you have effective managers. PM policies and practices cannot substitute for poor management, yet effective managers can be under- mined by poor PM policies and practices.

Also critical is that leaders at all levels of the organization support and practice effec- tive performance management. Ed Lawler, a world-renowned management expert, stated it very clearly: “Role modeling needs to begin at the top and it needs to be demonstrated by the appraisals being done on all members of the organization. It can’t be what the middle does to people at the bottom of the organization.”17 

Who does your boss’s performance review? Who does that person’s review? On what elements is each of these people evaluated? Ask the same questions about the president or CEO of your employer. The answers can be very telling about how serious your organiza- tion is about performance management, and the extent to which leaders role-model PM and practice what they preach. The bottom line: Senior leaders need to develop and hire good managers, and they need to ensure that everybody practices effective PM.

Pervasive poor views of performance management practices have led many no- table companies including Adobe, GE, Juniper, Accenture, and Cigna to scrap exist- ing PM practices.18 One such company is Deloitte. The following OB in Action box illustrates how this accounting firm has tackled the challenges of performance management.

As part of a renewed commitment to developing its high-caliber workforce, De- loitte made a $100 million investment in The Leadership Center (called Deloitte University) in 2011. In the process it reviewed the role played by its performance management practices. 

The internal review and research revealed two things. First, performance, re- tention, and client satisfaction were all better when employees felt they were play- ing to their strengths in their jobs.19 Second, current PM practices were interfering. The company then embarked on a dramatic transformation of its practices. Its new approach is as interesting for what it excludes as for what it includes. Gone are once-a-year performance reviews, 360-degree feedback tools, and cascading goals.20 Included are the four steps of effective performance management out- lined above and described below.

Key Elements of Deloitte’s New Approach

Step 1: Setting Goals and Objectives. Like its many clients, Deloitte has objec- tives, financial and otherwise, it must achieve. All are important and consequential for employees. However, instead of goals being set centrally by senior manage- ment and cascading down through the organization, goals are now set per client, per team, per employee. This means that goal setting and expectations are much more local and are handled by team leaders, rather than global and done by se- nior executives at headquarters.

The Deloitte Way: “Snapshots” and “Check-ins”

OB in Action

208 PART 1 Individual Behavior

Now that you have a general understanding of the performance management pro- cess and its importance, let’s take a closer look at how to define performance expecta- tions and goals.

Step 2: Monitoring and Measuring Performance. The company still tracks and measures performance, but now it does so in the form of Snapshots. These are questions each team leader answers for each team member, whether quarterly, monthly, at the end of a project, or at any other meaningful point. Instead of rank- ing the team member, leaders indicate to what extent they agree with statements like, “Given what I know of this person’s performance, I would always want him or her on my team,” “This person is at risk for low performance,” and “If it were my money, I would award this person the highest possible compensation increase in bonus.”21

Step 3: Reviewing Performance and Providing Feedback. Performance re- views and feedback happen not once or twice a year but at regular check-ins. Check-ins are one-on-one, real-time discussions between team leaders and their team members. Their purpose is to discuss progress, expectations, feedback, and any other relevant details related to current or near-term work. The rationale is that performance is driven through conversations, and check-ins give frequent op- portunities for managers and employees to meet and talk. Check-ins are not man- dated or tracked. Deloitte simply prompts all employees via periodic e-mails that ask, “Did you have a check-in conversation with your team leader this week? Yes or No.”22  Snapshot responses are aggregated every quarter, and HR reviews and discusses the results with business leaders. Along with other metrics, such as rev- enue per employee, Snapshots give leaders a more holistic and timely view of in- dividual and unit performance. 

Step 4: Rewarding Performance. Snapshots provide regular and ongoing op- portunities to recognize and correct performance, and the quarterly reviews pro- vide yet another opportunity. All of this culminates in annual compensation decisions, which are now based on a wealth of information consistently captured throughout the year. 

Deloitte’s new system is viewed very positively and has been expanded to cover 2,000 employees, then 7,000, then 40,000, and now all business units are given the choice to participate.


1. From an employee’s perspective, what do you think are some of the pros and cons of Deloitte’s new PM system? Explain.

2. Assuming you are a team leader at Deloitte, describe one benefit and one challenge of the PM system for you.

3. What do you think are the major challenges in implementing Deloitte’s new PM practices?

209Performance Management CHAPTER 6


How can improving my goal setting give me an advantage?


Not all goals are the same. You’re about to learn the difference between performance

goals and learning goals. More importantly, you’ll pick up tips on how to manage the

goal-setting process. You’ll also benefit from practical guidance on what types of goals to

use when.


Here is what the CEO had to say when he accepted the Climate Leadership Award for Aggressive Goal Setting to reduce greenhouse gas emissions.23

As a family company, we’re committed to doing what’s right for people and the planet, and we believe that to make an impact, you have to set measurable goals. In addition to the 27 percent reduction we’ve achieved versus our 2005 U.S. baseline, we will continue to raise the bar and hold ourselves accountable. By 2016, we plan to further reduce our greenhouse gas emissions by an additional 7 percent absolute reduction, and we’re honored to be recognized for setting this goal.24

S. C. Johnson has since achieved its goal of a 7 percent reduction in greenhouse gases and earned yet another award, the very prestigious Excellence in Greenhouse Gas Management award given by the En- vironmental Protection Agency (EPA).25  Research supports the benefits of goal setting, as S. C. Johnson realizes. For instance, teams have been shown to in- novate more effectively when their team leaders help clarify their goals.26  This shouldn’t be a surprise. 

It makes sense that improving goal setting is a way to boost both your own performance and your ability to manage the performance of others. But once again, common sense is not common practice. According to Gallup’s “State of the American Man- ager” report, only 12 percent of employees strongly agreed that their manager helps them set perfor- mance goals.27 To improve your own goal setting, let’s begin by differentiating two general types of goals—performance and learning. 

Fisk Johnson, CEO of S. C. Johnson & Son, strongly believes in setting goals. S. C. Johnson is the world’s largest maker of household products, including Shout, Windex, Drano, and Scrubbing Bubbles. © Jim Spellman/WireImage/Getty Images

210 PART 1 Individual Behavior

Do You Want to Perform or Learn? One way to organize or differentiate your many goals is to categorize them as perfor- mance or learning. A performance goal  targets a specific end result, and a learning goal  promotes enhancing your knowledge or skill. Managers typically overemphasize the former and ignore the latter as they try to motivate greater effort and achieve results.

If you lack necessary skills, experience, or direction from your manager, then perfor- mance goals can be more frustrating than motivating. When skills are lacking, it often is helpful to set learning goals first and then set performance goals once you’ve developed some level of proficiency. Let’s illustrate using a golf analogy. Here a performance goal can deflect attention from the discovery of task-relevant strategies (learning goals). For example, if a novice golfer focuses on achieving a score of 95 (a performance goal), this may prevent the player from concentrating on the fundamental elements of a sound golf swing and club selection (learning goals). Both learning goals are essential for attaining that score. In short, the novice golfer must learn how to play the game before becoming concerned about reaching a challenging performance outcome (a score of 95).28  

This insight also applies in college (and later in life). Depending on socioeconomic sta- tus, between 55 and 80 percent of students who start college don’t graduate in six to eight years.29 One conclusion: Students’ goal-setting skills need more attention. A study of stu- dents who were struggling academically demonstrated the power of teaching people how to skillfully set and integrate both learning and performance goals. The students participated in an intensive online tutorial on how to write and achieve personal goals, which led to signifi- cant improvement in academic achievement four months later.30 The lesson? Learn about and apply goal setting to improve your grades now, if not also your performance at work.

Managing the Goal-Setting Process There are four general steps to follow when implementing a goal-setting program (for yourself or others). Deficiencies in one step cannot be made up for with strength in the others. You need to diligently execute all four steps. We label these Step A, Step B, and so on to avoid confusion with the numbered steps of the effective performance manage- ment system (compare Figure 6.2).

Step A: Set goals. Step B: Promote goal commitment. Step C: Provide support and feedback. Step D: Create action plans.

Top professional golfers, like Jordan Spieth, undoubtedly focus on learning goals while practicing. But given their level of proficiency and the expectations to win, many of their goals while on the course are performance goals. © Tom Pennington/Getty Images

In contrast, performance goals while playing are likely counterproductive for new golfers and those with high handicaps. They just don’t have the skill to perform. © John Cumming/Getty Images RF

211Performance Management CHAPTER 6

Step A: Set Goals Whether your manager sets your goals or you set them together, the goals should be “SMART.” SMART  applied to goals is an acronym for specific, measurable, attainable, results oriented, and time bound. Table 6.1 lists practical guidelines for writing SMART goals.

Specific State goals in precise rather than vague terms. For example, I will participate in 20 hours of training this quarter, versus I will do more training this year. Quantify your goals whenever possible.

Measurable You need to track progress and verify whether a goal is achieved or not. To do this requires some form of measurement or verification— quantity, quality, completed (yes or no), and other relevant details. If, for instance, the goal is to assess the characteristics of your company’s top-performing sales teams, then you likely will need to include both quantitative (sales) and qualitative (methods for building customer relationships) measures. To emphasize, goals should not be set without considering the interplay between quantity and quality of output.

Attainable Goals should be realistic, challenging, and attainable. Impossible goals reduce motivation because people do not like to fail. And remember, people have different levels of ability and skill. What is easy and “old hat” for one person, may be very difficult for another.

Results oriented

Corporate goals should focus on desired end results that support the organization’s vision. In turn, an individual’s goals should directly support the accomplishment of corporate goals. Activities that support the achievement of goals are outlined in action plans. To focus goals on desired end results, goals should start with the word to, followed by verbs such as complete, acquire, produce, increase, and decrease.

Time bound Specify target dates for goal completion. Recall the example of S. C. Johnson at the beginning of this section. Assign a date, even if you have to change it later.


SOURCE: Excerpted from J. Schroeder and A. Fishbach, “How to Motivate Yourself and Others? Intended and Unintended Consequences,” Research in Organizational Behavior, 2015, 123–141.


Applying SMART Goals

1. Select an important goal at school.

2. Make it “SMART” by being sure that it is specific, measurable, attainable, results oriented, and time bound.

3. Refine it further by ensuring that it begins with “To ______,” and pay particular attention to how it will be measured.

4. Do the same for a goal outside school.

Step B: Promote Goal Commitment Goal commitment is important because em- ployees are more motivated to pursue goals they view as personally relevant, obtain- able, and fair. Table 6.2 provides practical advice to increase your goal commitment, while at the same time improving the quality of your goals and boosting your likeli- hood of success.

212 PART 1 Individual Behavior

Step C: Provide Support and Feedback This step is about helping employees achieve their goals. (More detail related to feedback is provided later in this chapter.) Practical suggestions include:

• Make sure each employee has the necessary skills and information to reach his or her goals. Provide training if necessary, because it can boost people’s expectancy (Chapter 5).

• Similarly, pay attention to employees’ expectations about their perceived relation- ship between effort and performance (recall expectancy theory from Chapter 5), their perceived self-efficacy, and their reward preferences, and adjust accordingly.

• Give employees timely and task-specific feedback (knowledge of results) about what they are doing right and wrong.

• Provide monetary and nonmonetary incentives, and be sure to reward meaningful progress and not just goal accomplishment.32 

Write Your Goals Down You’ve heard it before, but writing your goals down makes a real difference. In addition to helping make them SMART, it provides a record that you can go back to and revise as you make progress toward your goal. It also is more efficient—you don’t have to keep the goals and details in your head.

Identify Key Obstacles and Sources of Support

Be proactive and try to identify who or what might get in your way. Conversely, think of who or what might be able to help you reach your goal.

Ask What’s in It for YOU?

List the benefits of achieving the goal. Keeping your eyes on the prize will help you stay motivated over time.

Break It Down Some goals are big and/or take considerable time to achieve. It is helpful to break them down into smaller, sub- or intermediate goals.

Visualize If you haven’t tried this, do it—it works! Imagine not only how you will benefit by achieving your goal, but also how you will feel. Adding the positive emotional component can boost your motivation.

Organize Preparation is key. It gives you clarity, makes you more efficient, and helps you avoid wasting energy and time.

Reward Yourself Reward yourself both for making progress while pursuing your goal and for attaining the ultimate outcome. It is important to reinforce your efforts. Building in small wins and rewards along the way can help motivate you and keep you on track.31



Building Commitment to My Goals

1. Using a SMART goal you created from the previous Take-Away Application box, ap- ply the recommendations from Table 6.2 to increase your commitment to that goal.

2. Set a grade goal for the next exam in one of your courses. Apply the Table 6.2 rec- ommendations to enhance your commitment and increase your chances of success.

213Performance Management CHAPTER 6

Step D: Create Action Plans What use is a goal without a plan for realizing it? For instance, planning the amount of time you intend to devote to training, rather than simply attending a session or doing it when you can, greatly improves the effectiveness of your learning. The same applies to studying—plan your study time and what you will study during that time, and research says you are more likely to stick with it and increase your learning.33

The first three steps all help tremendously in formulating your actions plans. Table 6.2 also offers useful tips. Besides these, we encourage you to look to your experience— what’s worked in the past when pursuing a similar goal? If you can’t rely on your own experience, then learn what others have done and follow their plan. No need to reinvent the wheel.

Next, visualize what achieving the goal looks like and work backward. This is an- other instance when the characteristics of SMART goals are extremely valuable. Being specific, results oriented, and time bound are fundamental characteristics of solid action plans. Finally, if you run into difficulties, we’ve already provided you with an excellent tool—the 3-Step Problem-Solving Approach. This can help you identify and remedy roadblocks in your goal setting and action plans.

Applying a contingency approach to goal setting is another way to be more effective and boost performance. Let’s explore this next.

Contingency Approach to Defining Performance and Setting Goals Recall the discussion in Chapter 1 about how effective employees and managers (you!) should use a contingency approach. Do what the situation requires rather than applying a one-size-fits-all approach, relying on personal preferences, or doing something “the way it’s always been done.” Fit the behavior, policy, or practice to the situation. You can apply this same wisdom to goal setting.

Learning and performance goals have their place, and setting SMART goals can give you a significant advantage over your competitors. However, another way to define goals is in terms of behavioral, objective, and task/project (see Table 6.3). Defining goals in this manner helps you assure your goals match the situation. For instance, not all perfor- mance can or should be defined and measured in dollars and cents.

Once you’ve clarified expectations and set effective goals, it is necessary to monitor and evaluate your progress and ultimate level of achievement. This is the focus of the next section.

Behavioral Goals Objective Goals Task or Project Goals

Can be used in most jobs.

Best for jobs with clear and readily measured outcomes.

Best for jobs that are dynamic, but in which nearer-term activities and milestones can be defined.

Most relevant for knowledge work.

Measure what matters, not just what can be measured.

Similar to SMART goals.

Example: Treat others with professionalism and respect; communicate clearly.

Examples: sales quotas, production rates, error rates.

Example: Complete your portion of the team project by Tuesday.


SOURCE: Adapted from M. Schrage, “Reward Your Best Teams, Not Just Star Players,” Harvard Business Review, June 30, 2015, https://hbr.org/2015/06/reward-your-best-teams-not-just-star-players.

214 PART 1 Individual Behavior



How can performance monitoring and evaluation improve my performance and my ability to manage the performance of others?


To ensure success, you’ll need to accurately measure and evaluate both your progress and

the ultimate completion of the goals you set in Step 1. In this section you’ll learn numerous

practical tips to help with monitoring and evaluating performance. Specifically, you’ll learn

how your perceptual errors can influence your evaluation of performance, and why 360-

degree feedback is commonly used to help overcome shortcomings in the measurement and

evaluation of performance.

Once you have defined and communicated performance expectations (goals), you are ready to monitor and evaluate your and others’ progress and ultimate performance. We emphasize the need to monitor and evaluate both progress toward the final goal and the ultimate level of goal achievement. Doing both instead of simply focusing on the final outcome boosts both motivation and performance. 

For instance, at school you prefer to learn how you’re performing sometime be- fore your final grade report, such as a midterm exam and/or homework assignments. If the only score you receive and the only time you learn this is on the final, then you have no op- portunity to take corrective ac- tion and improve the outcome. Moreover, your final exam may not appropriately capture all that you’ve done (performance) throughout the course. Despite this common-sense argument, many, many organizations and entire industries focus only on one final outcome, such as sales target (pharmaceuticals), wins (sports), and rankings (business schools). 

This is why accurately and ap- propriately monitoring and evalu- ating both progress and outcomes are critical components of effec- tive performance management and your personal effectiveness.

Grades are the ever famous means for monitoring and evaluating performance at school. Midterm and homework grades are a means for montioring your performance toward your overall or final grade in your courses. © Robert Payne/Getty Images RF

215Performance Management CHAPTER 6

Monitoring Performance—Measure Goals Appropriately and Accurately Monitoring performance  means measuring, tracking, or otherwise verifying prog- ress and ultimate outcomes. You use the information gathered through monitoring to identify problems (and successes) and to find opportunities to enhance performance dur- ing the pursuit of a goal. To be effective, you need to use or even create accurate and ap- propriate measures. Table 6.3 showed that many goals can be categorized as behavioral, objective, or task-oriented. The way you measure these goals should match their character.

Your measurement and monitoring can improve further still if you consider the fol- lowing (you’ll notice some overlap with Table 6.3):

Timeliness. Was the work completed on time? Many customer service roles require representatives to answer calls within a certain number of rings, or to respond to customer requests in a certain number of hours or days.

Quality. How well was the work done? A behavioral goal that could fit here is greet- ing customers warmly, personally, and with a smile. Measurement consists of ob- serving and/or reporting that these actually occurred.

Quantity. How much? Sales goals are common examples here, such as dollars or number of units sold.

Financial metrics. What are the profits, returns, or other relevant accounting/ financial outcomes? For instance, some law firms measure the performance of at- torneys and the larger firm by calculating profits in dollars per partner.34

It’s safe to assume that monitoring will only increase in the future, and the vast majority is well intended. But as in all things related to performance management, some practices are better than others. The following OB in Action box highlights some of the inherent benefits and costs to consider.

There was a time when some employers used tape measures to plot the distance and paths nurses followed on their patient rounds in hospitals.35 Today, such mon- itoring is done with hardware and software that provides real-time location and activity logs for employee activity. Patty Jo Toor, the chief nursing office at Florida Hospital Celebration Health, uses electronic badges to monitor how often nurses and other care providers visit patient rooms.36 One result was that the hospital found it could increase time with patients by stocking more medication on the floors during the night shift, cutting the time nurses had to spend ordering it. In a similar way, United Parcel Service (UPS) has used GPS to make drivers’ routes more efficient, saving time, gas, emissions, and money (millions of dollars every year).37 

Benefits to the Employer Monitoring data can help employers restructure work spaces, identify employees’ most productive work periods, simplify timekeeping, pinpoint training needs, evaluate performance, document poor behavior, and identify high-performing teams.38 Employers also use technology to protect them- selves and employees against theft, violence, and liability. Some companies equip

The Challenges Grow as Employee Monitoring Becomes More Sophisticated and Pervasive

OB in Action

216 PART 1 Individual Behavior

Applying OB

Legally, companies have considerable discretion (rights) to monitor employees. That said, the following tips can help realize the benefits of employee monitoring and avoid the pitfalls.

1. Establish clear motives for monitoring. Employers need first to ask themselves, Why are we monitoring employees? What do we hope to gain?  Is the purpose performance improvement, safety, theft avoidance?

2. Identify the boundaries. The answer to No. 1 above will help establish what is ap- propriate to measure, such as only time on premises or also time away from the office, or all web usage or just usage during work hours or on company-owned devices.

Monitor with Purpose and without Pain

Companies have considerable legal discretion to monitor employees. Nevertheless, monitoring has its pitfalls. Here are helpful tips to consider when utilizing monitoring at work.

their vehicles with video cameras in case of theft or accidents. Shuttle Express Inc., for example, used dashboard camera video to show that its driver was not at fault in an accident. It saved the company an estimated $100,000.39

Most employees would not fault employer monitoring that guards against im- proper sharing of trade secrets or other proprietary information. But as monitoring becomes more capable and more pervasive, we might ask: Just because employ- ers can monitor, should they?

Costs and Cautions for Employers Some employers have gone to extremes, such as counting keystrokes or measuring how long employees’ keyboards have been idle. Others check web searches, e-mails, and texts for keywords to identify inappropriate or proprietary content. Employers also are tracking the time lost to non-work activities, such as March Madness, Cyber Monday, and online gam- ing.40 Individual opinions will vary about each of these, but such constant monitor- ing also has the potential to cause stress, undermine employee morale and trust, and even be the grounds for lawsuits.

Intermix Wire Transfer was sued by an employee after she learned that the app she was required to download onto her phone enabled the company to track her location and driving speed, both during and after work hours. She “likened it to wearing a house arrest bracelet.” When she protested and uninstalled the app, she was fired.41


1. Assuming you own your company, make the case for monitoring your employees.

2. If you are working (or have worked), does your employer monitor employees? If yes, describe the costs and benefits to that employer.

3. If your employer does not monitor employees, what type of monitoring might be beneficial from the employer’s perspective?

4. Whether you are working or not, describe a type of monitoring that would be useful for your school.

217Performance Management CHAPTER 6

After you’ve defined your performance goals and monitored them using accurate and appropriate measures, it is time to evaluate the level or quality of performance.

Evaluating Performance Your measures of performance should be both relevant and accurate. There is nothing more discouraging than being measured on criteria that don’t matter or not being mea- sured on those that do. Evaluating performance  is the process of comparing perfor- mance at some point in time to a previously established expectation or goal.

Your midterm grade, for instance, helps you monitor your performance so far. But it isn’t the end of the story. You then evaluate it—did you perform as you expected? Why or why not? How will your midterm performance affect your grade for the course? The answers to these questions are important and are often influenced by your percep- tual processes.

Perceptual Errors in Evaluating Performance As you learned in Chapter 4, your attributions and perceptions can greatly influence the way you evaluate the information you gathered via monitoring. Table 6.4 lists common perceptual errors in monitoring employee performance and recommended solutions.

The best-laid goals from Step 1 can be completely undermined if performance to- ward them is not measured appropriately, or if performance is evaluated with bias. Many organizations and their managers have tried to overcome such problems using 360-degree feedback.

In 360-degree feedback  individuals compare perceptions of their own perfor- mance with behaviorally specific (and usually anonymous) performance informa- tion from their manager, subordinates, and peers. Such multi-rater feedback can also come from outsiders, such as customers or suppliers.

HCL Technologies, one of India’s three largest IT services companies, implements a 360-degree feedback program for the CEO and 3,800 managers. The CEO’s reviews are transparent, posted on the company’s internal website for all 50,000 employees to see. The managers’ results are posted too. Vineet Nayar, the former CEO who created the system, described the system as “reverse accountability,” wherein managers are account- able to employees, the opposite of the business norm.43

Collecting performance information from multiple sources helps the person being evaluated get a broad view of his or her performance, and it also highlights any biases and perceptual errors that might be occurring. Finally, using multiple raters also makes it

3. Avoid monitoring non-work areas. Common sense says not to monitor company bathrooms, locker rooms, or cafeterias and other areas in which work is not ex- pected to be conducted.

4. Communicate what, where, how, and why. Tell employees what is monitored, where, how, and especially why. Justify! The primary motive should be perfor- mance improvement. But if guarding against theft is also a goal, say so. Employ- ees may raise potential pitfalls you didn’t consider. Addressing them will help avoid lawsuits.

5. Focus on improvement, not punishment. Of course, if employees are stealing or engaging in other undesirable or unethical conduct, monitoring can identify them so they can be punished. However, monitoring works best when it’s used to help employees boost their performance. Avoid inducing fear and instead foster better performance.42  

6. Be consistent! If you’re going to monitor some employees, monitor all. Don’t make the mistake of monitoring employees’ Internet or smartphone use and not doing the same for managers and executives. 

218 PART 1 Individual Behavior

much more difficult for managers to unfairly favor or punish particular employees (recall our discussion of equity and fairness in Chapter 5).

A study of 360-degree feedback for 69,000 managers and 750,000 employees revealed fascinating results. Managers dramatically overrate their own capabilities— perhaps this is not a surprise. But those who underrated their prowess were viewed by employees as the most effective leaders. The underraters also had the most engaged em- ployees (an important individual-level outcome).44 

Research on 360-degree feedback, combined with our consulting experience, leads us to favor anonymity and also to discourage use of 360-degree feedback for pay and promotion decisions. When it is used for pay and promotions, managers often resist and/ or try to manipulate the process. However, multi-source feedback can be extremely help- ful for training and development purposes.

Now that you have a sense of the importance of monitoring and evaluating perfor- mance, as well as tips for doing this accurately, let’s move on to the next step and review performance. The next section also provides additional insights about feedback.

Perceptual Error



Recommended Solution: Keep Performance Notes

Halo effect To form an overall impression about a person or object and then use that impression to bias ratings about same.

Rating an employee positively across all dimensions of performance because the employee is so likable.

Record examples of positive and negative employee performance throughout the year. Remember employee behavior tends to vary across different dimensions of performance.

Leniency To consistently evaluate other people or objects in an extremely positive fashion.

Rating an employee high on all dimensions of performance regardless of actual performance.

Provide specific examples of both good and poor behavior so you can help the employee improve. Remember it does not help employees when they are given positive but inaccurate feedback. Be fair and realistic in evaluations.

Central tendency

To avoid all extreme judgments and rate people and objects as average or neutral.

Rating an employee as average on all dimensions regardless of actual performance.

Define an accurate profile, with high and low points, so you can help the employee improve. Remember it is normal to provide feedback that contains both positive and negative information.

Recency effect To over-rely on the most recent information. If it is negative, the person or object is evaluated negatively.

Rating an employee based only on the last portion of the review period.

Accumulate examples of performance over the entire rating period. Remember to look for trends but accept some variance as normal.

Contrast effect To evaluate people or objects by comparing them with characteristics of recently observed people or objects.

Rating an employee as average, from a comparison of the employee’s performance with the exceptional performance of a few top performers.

Evaluate employees against a standard, rather than against the performance of your highest- performing employees. Remember that each employee deserves the objectivity in evaluation that a standard can provide.


219Performance Management CHAPTER 6


Most people agree that feedback—both giving and receiving it—has the potential to boost performance. However, most people also admit that they neither receive nor pro- vide feedback as often or as well as they would like. We’ll help you understand some reasons this happens and what you can do about it. It is safe to say your feedback skills are some of the most valuable tools you can develop and use throughout your career. Now let’s convince you that this bold statement is true.

What Effective Feedback Is . . . and Is Not Students and employees alike appreciate feedback (at least those who are top performers do). Both want to know how they’re doing and how their performance compares to that of their peers. Feedback is an important, but not always present, cousin of goal setting. It enables you to learn how your performance compares to the goal, which you can then use to modify your behaviors and efforts. We therefore define feedback  as information about individual or collective performance shared with those in a position to im- prove the situation.

Effective feedback is only information—it is not an evaluation. Subjective assess- ments such as “You’re lazy” or “You have a bad attitude” do not qualify as effective feedback. They are simply opinions and often have little value. But hard data such as units sold, days absent, dollars saved, projects completed, customers satisfied, and quality re- jects are all candidates for effective feedback. Christopher Lee, author of Performance Conversations: An Alternative to Appraisals, clarifies the concept of feedback by con- trasting it with performance appraisals:

Feedback is the exchange of information about the status and quality of work prod- ucts. It provides a road map to success. It is used to motivate, support, direct, correct, and regulate work efforts and outcomes. Feedback ensures that the manager and employees are in sync and agree on the standards and expectations of the work to be performed. Traditional appraisals, on the other hand, discourage two-way com- munication and treat employee involvement as a bad thing. Employees are discour- aged from participating in a performance review, and when they do, their responses are often considered “rebuttals.”45


How can I use feedback and coaching to review and improve performance?


You’re about to learn how different forms of feedback influence performance and how to de-

liver feedback more effectively. You’ll also see how combining feedback with coaching is a

powerful means for managing and improving your performance and that of others.

220 PART 1 Individual Behavior

The Value of Feedback Mike Duke, former president and CEO of Walmart, is a strong advocate of linking goal setting and feedback.

Leadership is about . . . listening and getting feedback from a broad array of con- stituents. . . . It’s about setting aggressive goals and not being afraid to go after very aggressive goals and targets. I think it’s even better for a leader to set an ag- gressive goal and come up a little short than it would be to set a soft goal and to exceed it. . . . Hard feedback is in some environments viewed in a very threatening way, and people don’t want to hear feedback. In our environment, I think there is a desire to hear candid feedback. When we leave a meeting, before we’ll even drive away, I’ll ask, “Well, give me feedback.” I think a leader asking for feedback sets a good tone.46

Despite the clear and important role Mike Duke describes for feedback, it is dramati- cally underutilized in most every area of our lives. A Watson Wyatt Worldwide survey, for instance, revealed that 43 percent of employees “feel they don’t get enough guidance to improve their performance.” Sixty-seven percent felt they received too little positive feedback in general, and 51 percent too little constructive criticism from their bosses. Those who said they did not receive enough feedback were 43 percent less likely to rec- ommend their employer to others.47 Clearly, feedback can affect outcomes across levels of the Organizing Framework.

If Feedback Is So Helpful, Why Don’t We Get and Give More? This obvious question is worth answering. After surveying thousands of students and employees, researchers offer the most common responses:

1. Potential strain on relationships. It is easy for most people to deliver good news: “Susan, great job on the project. The customer was very pleased, and you made the team look good.” However, very few people like to deliver negative feedback (or bad news in general): “Susan, you were ill-prepared and really hurt our chances with that customer.” We worry about making the person feel bad and wonder how that person will act in the future because of it. After all, we often make friends at work, we genuinely like many of our coworkers, and we don’t want to make them feel bad, make ourselves and others uncomfortable, or harm our relationships.

2. Too little time. We’re all busy. Even true believers in the value of feedback often let it slide: “This week I plan to talk to Mark about how impressed I am with his fast start at the company.” But the week passes and you still haven’t done it. Next week. But then that passes too, and so on, and so on.

3. Lack of confidence. Very few people are trained to give effective feedback and so lack confidence in their abilities. This problem is compounded if the feedback is go- ing to include negative content and/or will be tied to a performance evaluation. After reading this chapter and book, you won’t have such an excuse. You’ll be equipped with both knowledge and tools to boost your confidence.

4. No consequences. As you’ll learn or may already be aware, the trend is toward giv- ing more frequent and considerably different forms of feedback than in the past. However, if managers are not evaluated on whether they provide feedback—effective or not—they are less likely to give it.

With these common obstacles in mind, let’s learn how to overcome them and do better, beginning with the two primary functions of feedback—to instruct and to motivate.

221Performance Management CHAPTER 6

Two Functions of Feedback Experts say feedback serves two functions for those who receive it: one is instructional and the other motivational. Feedback instructs when it clarifies roles or teaches new behavior. For example, an assistant accountant might be advised to handle a certain entry as a capital item rather than as an expense item. Feedback motivates when it serves as a reward or promises a reward (remember the discussion in Chapter 5). Hear- ing the boss say, “You’ve completed the project ahead of schedule; take the rest of the day off,” is a pleasant reward for hard work. More generally, however, many employees appreciate the attention and interest expressed by the very act of providing feedback, regardless of content.

Important Sources of Feedback— Including Those Often Overlooked The three common sources of feedback are

1. Others 2. Task 3. Self

It almost goes without saying that you receive feedback from others (peers, supervisors, lower-level employees, and customers). Perhaps less obvious is the fact that the task itself is a common source of objective feedback. For instance, many tasks—writing code, land- ing a plane, or driving a golf ball—provide a steady stream of feedback about how well or poorly you are doing. A third source of feedback is you, but self-serving bias and other perceptual problems can contaminate this source (recall Chapter 4).

Assume you’re one of the students learning CPR in the photo. Which type of feedback do you think would be more helpful and you would appreciate more—instructional or motivational? Regardless of your preference, you certainly would agree that both forms would be more effective than the instructor simply saying you did it wrong and that she is unhappy with your performance. Keep this in mind when you provide feedback to others. Keep it instructional or motivational and you’ll keep it appreciated and effective! © Hero Images/Getty Images RF

222 PART 1 Individual Behavior

Those high in self-confidence tend to rely on personal feedback more than those with low self-confidence. This effect becomes more common as we move up the organiza- tional hierarchy, because the higher someone’s rank, the more difficult it is to get useful feedback from others. These challenges aside, feedback can be made even more useful when it is supported by senior managers or is collected from departing employees and from customers. We discuss each of these next.

The Role of Senior Managers and Leaders Nobody likes to give the boss nega- tive feedback. And frankly, many bosses never ask for feedback because they don’t want it. For example, one of the authors has worked at multiple universities and companies in various industries, and none of his bosses have solicited feedback—not deans, not depart- ment chairs, not executives, not managers—no one. Another problem is that task feed- back is less feasible for senior managers because their day-to-day activities are more abstract than those of frontline employees (for instance, formulating strategy versus clos- ing a sale). The predicament for companies is consequential, as noted by Jim Boomer, a CPA and professional service firm consultant:

[I]f you don’t have a system for holding individuals accountable for their goals, all the work, time, and effort that goes into developing these plans is diminished and you’ve your wasted effort. . . . Leadership tends to hold junior employees accountable but shies away from a formalized system to measure performance at the [senior manager/ leader] level. . . . If [senior managers/leaders] are not willing to hold themselves accountable, employees will simply go through the motions and won’t buy into a firm-wide performance system.48

The value of feedback from subordinates is highlighted by recent research. It showed that when subordinates provided candid feedback, with details and facts, about reward alloca- tions they felt were unfair, their managers tended to make future decisions that were less self-interested and more fair to employees. However, when employees simply com- plained, managers’ subsequent decisions became even more self-interested and more un- fair.49 So what can executives or high-level managers do to improve their response to feedback?

1. They can seek feedback from others by creating an environment in which employees feel they can be honest and open.

2. Separating feedback from the performance review process also helps, especially for executives who typically are reviewed informally if at all.

3. They can create a mechanism to collect feedback anonymously. This is useful if the source of the feedback is not particularly important. For example, a CEO based at headquarters in Phoenix is curious about how she is perceived by the design team in Shanghai. In this instance, she doesn’t need to know the views of any specific em- ployee, just the views of employees from that location.

NO SURPRISES! Whoever conducts a performance review should ensure there are no surprises—good or bad! As a general rule, if you are surprised by something shared dur- ing your review, your manager is doing a poor job of managing your performance. It also is a sure sign that he or she is not giving you the appropriate quantity and quality of feed- back. Most often such surprises occur in performance management systems structured around an annual review. This means that regardless of how frequently performance in- formation is collected, it is communicated and discussed only once a year. 

To avoid surprises in your own reviews, check in with your manager periodically and informally ask, “Is there anything I should be aware of? I know we’ll have my review later this year, and I want to be sure there are no surprises . . . even positive ones.” If you conclude with a smile it is likely your manager will clearly understand your intent. 

The following OB in Action box describes the unique approach to employee feed- back at Zappos.

223Performance Management CHAPTER 6

One of the key elements that en- ables Zappos to have rock star status with its customers and more than 1,400 employees is the company’s approach to per- formance management. The company puts an extremely high premium on feedback, which it sees as fundamental to continu- ous improvement.50

Form of Feedback Managers are explicitly instructed to pro- vide only instructional feedback (such as the amount of time spent on calls with customers), not evaluative feedback. It is pre- sented as, for instance, the num- ber of times the manager witnessed a particular desirable behavior. The managers must give specific examples of the behavior.

Linked to Values These behaviors, and thus the feedback, are directly linked to the company’s 10 core values—deliver WOW through service, embrace and drive change, create fun and a little weirdness, be creative and open-minded, pursue growth and learning, build open and honest relationships with communication, build a positive team and family spirit, do more with less, be passionate and deter- mined, be humble. The company’s performance management and associated feedback are all driven by and based on these values.

Use and Frequency of Feedback The company no longer does once-a-year re- views. Instead managers are expected to provide feedback and recognize em- ployees continually, as they exhibit particular behaviors. This means managers decide how frequently to offer input. Moreover, “these assessments are not used for promotion, pay, or disciplinary purposes. Rather, their purpose is simply to pro- vide feedback on how employees are perceived by others.”51

Not Meeting Expectations? If someone’s performance is not up to standards, the company provides a number of free, on-site courses aimed at skill building and improvement.


1. What are the advantages to the Zappos approach to feedback? 2. What disadvantages are possible? 3. Explain why you would or would not want to be an employee with such a PM

system. 4. Assume you are a manager at Zappos. What are the pros and cons of this sys-

tem for you?

How Do You Spell Feedback and Self-Improvement? Z-A-P-P-O-S!

OB in Action

Zappos employees are not only allowed but encouraged to personalize their workspaces. This aligns with the company’s values—create fun and a little weirdness—and is believed to foster excellent customer service. © Ronda Churchill/Bloomberg/Getty Images

224 PART 1 Individual Behavior

Exit and Stay Interviews Employees quit jobs for many reasons, such as better job opportu- nities, dual-career issues, money, lack of fairness, bullying, and the most common—a horrible boss. Whatever the reason, exit interviews can provide the feedback that uncovers the true reasons.

When done well, exit interviews can:52

1. Build employee engagement. Collecting, sharing, and acting on the information gained signals to remaining employees that their views and experiences matter. This in turn can foster engagement.

2. Highlight needed action. Because poor management is a common cause of turnover, exit interviews can help pinpoint develop- ment needs for managers, such as help for those who tend to micromanage.

3. Help benchmark. Exiting employees often can reveal pay and benefits packages of competitors, as well as other factors that make them attractive to key talent.

4. Make former employees into recruiters. Providing exiting employees an opportu- nity to share opinions and experiences can build goodwill in their eyes. Favorable opinions may lead departed employees to recommend their former employer to friends and associates as a good place to work or do business.

5. Make former employees into customers or partners. Depending on the nature of the business, former employees may become or remain customers of their past em- ployer’s products or services. They may also partner and actually work together. In both cases the former employer wins. For instance, many attorneys leave law firms and go “in house” to work for clients. They then hire the law firm for legal services. 

Savvy managers also want to know why employees stay. It is better to ask than to rely on common sense or assume you know. Former Twitter CEO Dick Costolo told an interviewer he thinks exit interviews are overrated—“Everybody quits their manager.” He thinks it is more valuable to find out what the company is doing right in the eyes of its most valuable employees.53 Many HR professionals share Costolo’s view. The argu- ment is that exit interview information, even if actionable, arrives too late. The em- ployee is already gone. In contrast, stay interviews “build engagement by allowing your employees’ opinions to be heard, acted on and cared about . . . while they’re still your employees,” according to Curtis Odom, principal and managing partner and Prescient Strategists.54

Ideally, employers will do both. Exit and stay interviews have different purposes and provide different types of useful information. Stay interviews, in particular, can create an environment in which managers and employees have more open and frequent communi- cation about what is working and what is not.

Who Seeks Feedback, Who Doesn’t, and Does It Matter? Because both academics and managers agree about its value, feedback has been stud- ied extensively. This work enables us to identify attributes that predict who is more and less likely to seek feedback. The left-hand column of Table 6.5 lists characteristics of employees who are less likely to seek feedback and the right-hand column those who are more likely.

Exit interviews are an excellent means for obtaining feedback regarding reasons employees leave. More recently, some companies also are conducting stay interviews. The reasoning is simple—find out why people stay and do things to keep them. It is far more effective and cheaper to keep good employees than to replace them. © Gustavo Frazao/Shutterstock RF

225Performance Management CHAPTER 6

The above results are interesting and helpful. But does simply seeking feedback im- prove outcomes? Yes. Seeking feedback is linked with improved

• Job satisfaction • Proactive work behavior • Relationship building • Networking55

If any of these outcomes are meaningful to you, then you are well served to ask for feed- back. Now let’s explore how your perceptions and feedback are linked.

Your Perceptions Matter Another reason people don’t give or get more feedback is that they don’t want it. What are your attitudes toward feedback? Do you seek it out? Do you want to hear it only if it is positive? To answer these questions and better understand your desire for feedback, complete Self-Assessment 6.1.


Predictors of Seeking Less Feedback Predictors of Seeking More Feedback

Tenure with the organization High learning and performance goal orientation

Tenure in current job High self-esteem

Age High-quality relationships

SOURCE: Excerpted from F. Anseel, A. Beatty, W. Shen, F. Lievens, and P. Sackett, “How Are We Doing After 30 Years? A Meta-Analytic Review of the Antecedents and Outcomes of Feedback-Seeking Behavior,” Journal of Management, January 2015, 318–348.

What Is My Desire for Performance Feedback? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 6.1 in Connect.

1. Think of a recent instance when you were given feedback.

2. How does your score help explain your reaction to that feedback?

3. Describe a specific way your desire for feedback (your score) helps or hurts you in college and at work.

4. Given your score, think of ways you can improve your receptiveness for feedback.


Many other factors can affect your perceptions of feedback. For instance, whether the source is credible, the feedback system is fair, and the feedback is negative can all influ- ence your perceptions.

Factors that Affect Your Perceptions of Feedback Many factors influence the way we perceive feedback. For instance, all managers and employees are susceptible to the fundamental attribution bias (your manager attributes your poor performance entirely to you and things you control) and the self-serving bias (you are likely to take credit for positive performance outcomes and attribute poor performance to extrinsic factors). The following also can influence your perceptions of feedback:

1. Accuracy. A common criticism of PM systems is that they measure the wrong things or measure the right things the wrong way. Either way, the feedback is inaccurate.

226 PART 1 Individual Behavior

2. Credibility of the sources. If a member of your project team points out shortcomings in your work, you are likely to put more weight on the feedback if he or she is an “A” student or top performer. Trust is also critical here. If you don’t trust the person de- livering the feedback, you will likely be suspicious of his or her intentions and dis- count its value.

3. Fairness of the system. If you perceive the process or outcomes—recall equity theory from Chapter 5—as unfair, you are likely not only to discount the feedback but also to be outraged, withdraw, commit counterproductive work behaviors, and/or quit. Performance appraisals are one of the aspects of organizational life that most com- monly reveal issues of fairness.

4. Performance-reward expectancies. Effective performance management, particularly ongoing and open feedback between you and your supervisors, is an important means of managing such expectancies.

5. Reasonableness of the goals or standards. When it comes to goals, challenging is good, unattainable bad. If your manager says, “You can earn a bonus of up to 50 percent of your salary,” ask whether anybody has actually ever earned that much. If not, you may be the first, but more likely the goal is unreasonable.

Any feedback that fails to clear one or more of these cognitive hurdles will be re- jected or discounted. Personal experience largely dictates how you weigh these factors. For example, a review of research on disciplinary practices found that people have differ- ent perceptions of a disciplinary act based on the gender of the person delivering the discipline, the cultural characteristics of the people involved, and the supervisor’s use of apologies and explanations.56 Given these differences in perception, we recommend that supervisors utilize two-way communication, follow up with the employee to make sure the discipline was understood, use empathy (or apologies if appropriate) to lessen the employee’s negative reactions, and focus on helping the employee in the long run.

Negative Feedback Remember, feedback itself is simply information. It becomes positive or negative only when you compare it to a goal or expectation. Such compari- sons are the basis for improvement. (Note: Negative feedback is not negative reinforce- ment. You’ll learn the important difference later in this chapter.) Generally, people tend to perceive and recall positive feedback more accurately than they do negative feedback. But negative feedback (such as being told your performance is below average) can have a positive motivational effect. One study showed that those who were told they were below average on a creativity test subsequently outperformed those who were led to be- lieve their results were above average. The subjects apparently took the negative feed- back as a challenge and set and pursued higher goals. Those receiving positive feedback were less motivated to do better.57 

Nonetheless, feedback with a nega- tive message or threatening content needs to be administered carefully to avoid creating insecurity and defensive- ness. Put another way, perception mat- ters. Both negative and positive feedback need to provide clear guidance to im- prove performance. Feedback is most likely to be perceived accurately, and thus more likely to be acted on, when it is instructional and helps achieve an important or valued outcome. Table 6.6 provides guidance for using negative ver- sus positive feedback.

Negative feedback of course has its place at work—sometimes it is necessary. But be very careful when using it to avoid doing more harm than good. © Photographee.eu/Shutterstock RF

227Performance Management CHAPTER 6


SOURCE: © Dr. Alan J. Rowe, Distinguished Emeritus Professor. Revised December 18, 1998.

Positive Feedback Best When Receiver Is

Negative Feedback Best When Receiver Is

Near beginning of pursuing a goal Near end of pursuing a goal

A novice An expert

A distant relationship A close relationship


Don’t60 Do61

Don’t use feedback to punish, embarrass, or put somebody down.

Keep feedback relevant by relating it to existing goals.

Don’t provide feedback that is irrelevant to the person’s work.

Deliver feedback as close as possible to the time the behavior was performed.

Don’t provide feedback too late to do any good.

Provide specific and descriptive feedback.

Don’t provide feedback about something beyond the individual’s control

Focus the feedback on things employees can control.

Don’t provide feedback that is overly complex or difficult to understand.

Be honest, developmental, and constructive.

Self-efficacy also can be damaged by negative feedback, as discovered in a pair of experiments with business students. The researchers concluded, “To facilitate the devel- opment of strong efficacy beliefs, managers should be careful about the provision of negative feedback. Destructive criticism by managers which attributes the cause of poor performance to internal factors reduces both the beliefs of self-efficacy and the self-set goals of recipients.”58 Managers therefore need to be careful when delivering feedback, due to the effect of feedback on goals.

Feedback Do’s and Don’ts According to Anne Stevens and Greg Gos- tanian, principal consultants at ClearRock, an outplacement and executive coaching firm, “Giving feedback to employees— and receiving feedback yourself—is one of the most misunderstood and poorly executed human resource processes.”59 Table 6.7 lists important and fundamental do’s and don’ts for giving feedback.

Today’s Trends in Feedback Since 2012 there has been a three-fold increase in the number of companies that have abandoned or dramatically altered

Donna Morris, senior vice president of customer and employee experience at Adobe Systems, has spearheaded a dramatic transformation in the way her company manages performance. Regular “check-ins” and “snapshots” are mini and continual opportunities to provide and receive feedback. © Michael Nagle/Bloomberg/Getty Images

228 PART 1 Individual Behavior

the historical annual or biannual review. GE, Adobe, Accenture, and The Gap, among others, are now implementing ongoing and real-time performance conversations. Such continual feedback is often facilitated by technology that enables employees to leave real- time messages about each other’s performance.62 And these conversations are not only between boss and subordinate. Every employee is able to exchange feedback with all the others. This new development holds the promise of being truly more developmental and effective. If done well, it will capitalize on the pros and help limit the cons that were so common in the past (and still are today).

Coaching—Turning Feedback into Change Coaching  is a customized process between two or more people with the intent of enhancing learning and motivating change. Coaching can occur at any step in the PM process, but it most often follows the review and consequences of performance. 

One way to look at coaching is that it is an individualized and customized form of performance management. It is different from training, which typically consists only of skill building with the same content delivered to a group of people. It also differs from mentoring, which typically has a career rather than a per- formance focus and flows exclusively from more senior to more junior employees. All these processes differ from counseling, which usually aims to overcome a problem, conflict, or dysfunctional behavior.63

Effective coaching is developmental, has specific performance goals, and typically in- cludes considerable self-reflection, self- assessment, and feedback. In fact, “research from Gallup, McKinsey, and Harvard recom- mends that giving feedback should be the most used tool in a coach’s toolbox.”64 The Self-Assessments throughout this book can serve as important elements for your own coaching.65 When approached in this way, coaching is not only an important aspect of effective performance management, but it is also consistent with positive organizational behavior. Consider this: If coaching is done in the way described, who wouldn’t appreci- ate it or benefit from it?

Anne Hawley Stevens, founder of ClearRock, is recognized as one of Boston’s top executive coaches. © ClearRock, Inc

229Performance Management CHAPTER 6

Rewards are a critical component of performance management. And just as particu- lar motivational approaches affect people differently, so do rewards. Some employ- ees see their job as the source of a paycheck and little else. Others derive great pleasure from their job and association with coworkers. Even volunteers who donate their time to charitable organizations, such as Habitat for Humanity, walk away with rewards in the form of social recognition and the pride of having given unselfishly of their time. People often also see such work as highly meaningful (recall the Chap- ter 3 discussion). Hence, the subject of organizational rewards includes but goes far beyond monetary compensation. This section examines key factors of organizational reward systems.

Key Factors in Organizational Rewards Despite the fact that reward systems vary widely, they do share some common compo- nents. The model in Figure 6.3 diagrams the relationship of three components:

1. Types of rewards 2. Distribution criteria 3. Desired outcomes

Let us examine these components and then discuss pay for performance.

Types of Rewards Financial, material, and social re- wards qualify as extrinsic rewards  because they come from the envi- ronment. Psychic rewards, how- ever, are intrinsic rewards  because they are self-granted. If you work primarily to obtain rewards such as money or status, you are extrinsically motivated. If you derive your primary reward from the task itself, or the feeling that your work is meaningful


How can I use consequences to generate desired outcomes?


Of course you like being rewarded, but some rewards are more effective than others. In this

section you’ll learn common types of rewards and the potential outcomes of specific reward

systems. You’ll see how organizations use various criteria, such as results and behaviors, to

distribute rewards, as well as why rewards can fail to motivate as intended.


U.S. Air Force photo by Staff Sgt. Jamal D. Sutter/Released

230 PART 1 Individual Behavior

and gives you a sense of responsibility, then you are motivated by intrinsic rewards (re- call extrinsic and intrinsic motivation from Chapter 5). 

The relative importance of extrinsic and intrinsic rewards is a matter of culture and personal preferences, so it is critically important to know what types of rewards you and others value most. This knowledge can make the difference in your getting what you want personally, as well as in your ability to effectively manage others. It can also assist you in identifying employers with whom you fit.66

For example, if you’re hard-charging, a high income is very important to you, and you like to be rewarded based on your own efforts, then it would be advisable to look for companies whose reward system aligns with your preferences. You also can use your self- knowledge to “manage up.” One of the authors of this book routinely told his managers shortly after he was hired which of the rewards available for that particular job he valued most. This helped his managers choose and provide rewards that would have the most positive impact.

Self-Assessment 6.2 will help you identify the rewards you value most and also show you what a survey of employees revealed they valued most. Use your results to complete the Take-Away Application that follows.


Distribution Criteria

Results Behaviors and actions Nonperformance factors

Desired Outcomes

Attract Motivate Retain Develop Engage

Types of Rewards

Extrinsic—financial and nonfinancial Intrinsic—Meaningfulness and achievement

What Rewards Do I Value Most? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 6.2 in Connect.

1. Were your perceptions accurate? Why or why not?

2. What would Vroom’s expectancy theory (covered in Chapter 5) suggest you should do?

3. Would you generalize the actual survey results to all nonmanagerial employees? Why or why not?


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Distribution Criteria Organizations use three general criteria for distributing rewards:

• Results. Tangible results include quantity produced, quality, and individual, group, or organizational performance. These are often accounting-type measures—sales, profit, or error rate. Employers increasingly include customer satisfaction.

• Behavior and actions. Examples are teamwork, cooperation, risk taking, and creativity. • Nonperformance considerations. Examples are abundant, such as rewards linked to

seniority or job title. Associate attorneys’ salaries are often linked to the number of years out of law school—first-year associates get paid a set salary, which differs from second-year associates, and so on. Night or weekend shifts often pay differ- ently. Perks, like use of a company plane or membership to a golf club, often re- ceived by executives are nonperformance rewards. They get them just because they hold the job not because of what they do.67

Industries, companies, and jobs all differ, and so too should their performance and reward-distribution criteria. Many Internet-based companies, for example, track number of page views, registered users, and app downloads as performance criteria. These may or may not be relevant to individual employee, team, or organizational performance.

Netscape founder, and now legendary tech investor, Marc Andreessen is leading a charge to do away with what he calls “vanity” or “bull#$!% metrics.” He argues that many common metrics are meaningless and don’t capture performance. “Download counts can easily be inflated if an app developer is willing to pay.”68

Analytics company Mixpanel is attempting to help with this very problem. Suhail Doshi, one of Mixpanel’s founders, said: “Every business has a natural goal that corre- lates with its success. For instance, Yelp benefits most when it has more reviews, and Instagram when it has more photos uploaded. Measuring that ‘one key metric’ can lead to insights that are particular to that business, and optimizing for it can give the company an edge versus competitors that are not so fine-tuned.”69

An excellent example is Facebook. The company has well over 1 billion members, but more meaningful is the number of monthly active users. At the end of 2015 that stood at 1.49 billion, more than for WhatsApp, Twitter, and Instagram combined.70 This mea- sure is one way of comparing Facebook’s performance to competitors’. It also is an excel- lent measure of customer engagement, which is what many companies—not just social media companies—want.

In sum, effective PM includes measures, rewards, and distribution criteria that are aligned.71

Desired Outcomes of the Reward System As Figure 6.3 showed, a good reward system should not only attract and motivate talented people, but it should also foster development and keep talented people from leaving. A


Applying Knowledge of My Preferred Rewards

Using the results of Self-Assessment 6.2, answer the following:

1. Which rewards in the list are extrinsic? Intrinsic?

2. Do your personal top five most-valued items contain more intrinsic or extrinsic rewards?

3. What are your three most valued rewards from the list?

4. Assume you are job hunting. How can you find out whether a given company provides the three rewards you value most?

232 PART 1 Individual Behavior

prime example is Tulsa-based QuikTrip, a gas station and convenience store chain. Good employee wages and benefits, training, and a friendly and supportive culture result in an annual turnover rate of just 13 percent. The industry average is 59 percent! An employee was quoted as saying, “We actually have to open new markets to create movement to give our employees an opportunity to advance because no one leaves.” No wonder QuikTrip made Fortune’s list of Best Companies to Work For (especially for Millennials).72 

The Applying OB box below addresses the important topic of rewards and teams.

Applying OB

Many companies and leaders trumpet the importance of teamwork—we win or lose together. Yet most of these same companies reward individuals and not teams. Such inconsistencies undermine teamwork and the effectiveness of PM. If teamwork is truly important, then the following recommendations can ensure that PM practices send consistent signals.

1. Split 50-50. Awards, bonuses, and recognition should be split evenly. If there is an employee of the year, then be sure to have a team of the year. If money is allo- cated too, be sure teams and individuals get the same.

2. Acknowledge assistance. Don’t take team members’ help for granted. The sup- porting cast needs to be explicitly recognized.

3. Allocate credit. Acknowledging others is not enough. Also give them appropriate credit. If a plaque, check, or trip is given to a top-performing individual, then give the same to an entire team.

4. Show enthusiasm and fanfare. Be sure energy and attention for team incentives matches that for individuals.

5. Measure both! If teams are indeed valuable, create and utilize effective means for measuring team performance, just as you do for individuals.

Put the “I” in Team with Appropriate Incentives

Be Sure You Get the Outcomes You Desire Rewards are exchanges—you are given this for doing that. Professors sometimes give extra credit for doing well in an assignment or course. At work, you may be paid a cash bonus or your commission rate may increase for performing above and beyond your sales quota. Employees of design consulting firm Kimley-Horn and Associates are able to nominate coworkers for spot rewards of $50. Does it work? Last year 4,468 such rewards were given, totaling $245,000 in bonuses.73 

And as we’ll explore, rewards come in many forms—financial and nonfinancial. But whatever the case, whoever provides the reward should get what is desired or intended in exchange. There are three potential outcomes from rewards:

1. Desired outcome. You get more of what you intended and for which you are reward- ing people.

2. Nothing. The reward can have no effect. 3. Undesired side effects. Rewards reinforce or motivate the wrong behaviors.

For example, doctors and hospitals in the US health care system have historically been compensated for the services they provide. This means providers make more money when they run more tests and provide more treatments. Thus postoperative infections and procedure-related strokes are on average twice as profitable as cases that go smoothly.

233Performance Management CHAPTER 6

A study by Harvard Medical School, Bain Consulting Group, and Texas Health Systems found:

Private-insurance and Medicare payments soared when surgeries went awry, out- pacing extra treatment costs. In one example, a complication during an intestinal surgery . . . could lead to an intensive care stay, boosting payments five-fold. . . . On average, procedures with complications netted $15,700 versus $7,600 for proce- dures that went well.74

People should get paid for their expertise and work. But performance management is part of both the cause and the solution to this enormous challenge. This example also illustrates how the distribution of rewards can be both an input and a process in the Organizing Framework. 

The take-away: Be sure your performance management system produces the desired outcomes and be mindful of undesirable side effects.

Total and Alternative Rewards Including the usual paycheck, the variety and magnitude of organizational rewards have evolved into a mind-boggling array—from child adoption and partner benefits to college tuition reimbursement and stock grants and options. All these are extrinsic rewards, and it is common for nonwage benefits to be 50 percent or more of total compensation.

A report by the Society for Human Resource Management describes the current and broader perspective that is “total rewards.” Total rewards  encompass not only com- pensation and benefits, but also personal and professional growth opportunities and a motivating work environment that includes recognition, job design, and work–life balance. Table 6.8 lists and describes the key components of a total rewards perspective.

This broader view of rewards has grown partly in reaction to stiffer competition and challenging economic conditions, which have made it difficult for cost-conscious organi- zations to offer higher wages and more benefits each year. Employers have had to find alternative forms of rewards that cost less but still motivate employees to excel.

Alternatives to Money and Promotions McKinsey Consulting found that three noncash rewards were at least as effective as monetary rewards such as cash bonuses, in- creased pay, and stock options. Those rewards are: 

1. Praise from immediate managers (e-mail or handwritten notes, recognition in meetings). 2. Attention from leadership (one-on-one conversations with top leaders, lunch). 3. Opportunities to lead projects or task forces (such as for new products, new practices,

or market research).76 

Component Description

Compensation Base pay, merit pay, incentives, promotions, and pay increases

Benefits Health and wellness care, savings and retirement planning, and paid time off

Work–life effectiveness Policies and practices to help employees thrive at work and home

Recognition Formal and informal programs that acknowledge employee efforts and behaviors that support the organization’s strategies and objectives

Talent development Training, career development, and other support necessary to improve performance and advance careers


234 PART 1 Individual Behavior

Free food, beverages, foosball, and a wide assortment of additional perks are now common at many tech companies. Just as Microsoft, Google, and Facebook pio- neered these benefits, today’s start-ups are now leading the way on the employee benefit frontier. The motive for the new practices they’re introducing is to attract, retain, refresh, and boost performance. 

Stock that Pays Kik is a social-sharing technology start-up valued at $1 billion. Its approach to rewarding employees with company stock is novel. Historically, when employees left start-ups, they had 90 days to cash out their options or lose them. This often meant they had to borrow funds to buy the stock. Making matters worse, if they then sold the stock, taxes were due on the gains. That enormous expense is a major reason only about 5 percent of employee stock options are ever exercised. Kik founder and CEO Ted Livingston didn’t think this was fair or productive. Now Kik employees don’t have such time constraints for cashing out. Pinterest followed suit, giving its employees seven years. The leaders of both firms are convinced ending the time limit makes it easier to attract and retain talent.

Vacation You Must Take Kik, like other companies in the recent past, adopted an unlimited vacation policy. Take as much as you want, so long as your work is done. But employees took less rather than more, defeating the intention of giving them time to recharge. The solution? A must-take vacation policy that requires every employee to take at least one week every four months.

In an attempt to solve a similar problem, the app developer Evernote gives its employees $1,000 to spend if they take at least a week off. And the CEO of FullContact implemented a “paid paid vacation” policy. The company will “fund any trip an employee wanted to take to the tune of $7,500 as long as they actually went somewhere and didn’t check their work e-mail the entire time.”77


1. Describe three benefits of the stock reward practices at these companies. Explain not only the benefit but how or why it works.

2. Why do you think the companies noted had such difficulties getting employ- ees to take time off, even with unlimited vacation-time policies in place?

3. Assume you are a founder and CEO of a company. What are your concerns about implementing such policies?

Foosball? No Thanks. Stock that Matters? Sign Me Up! OB in Action

Why Rewards Often Fail and How to Boost Their Effectiveness Here are some of the reasons rewards often fail to motivate. 

1. Too much emphasis on monetary rewards. 2. Sense in recipient that extensive benefits are entitlements. 3. Fostering of counterproductive behavior (as discussed in Chapter 2). 4. Long delay between performance and reward. 5. One-size-fits-all rewards. 6. Use of one-shot rewards with short-lived motivational impact. 7. Continued use of demotivating practices such as layoffs, across-the-board raises and

cuts, and excessive executive compensation.78

One way to use these findings is as a checklist. The Take-Away Application box pro- vides you an opportunity to apply your new knowledge and help ensure that managers and employers get more for their reward bucks!


Understanding Why Some Rewards Fail to Motivate

Evaluate the rewards you receive at school, at work, and in other areas of life against the seven reasons listed above for why rewards fail to motivate. For school, try to think of a reward other than grades.

1. Decide whether any rewards you receive suffer one or more of these shortcomings.

2. If you were to improve the motivational effects of this award, what would you change? (Use the list as a guide, but feel free to include other suggestions.)

How to Boost the Effectiveness of Rewards One step that can improve the ef- fectiveness of almost any reward system is involving employees in devising the system. Recall the discussion of motivation and procedural justice in Chapter 5. Including them in the design, selection, and assessment of rewards programs increases the chance that employees will perceive the rewards as fair and valuable. (Valuable rewards are valence outcomes in expectancy theory from Chapter 5.) Involvement also fosters employee engagement—discussed in Chapter 2—because it makes them feel valued.

Despite these benefits, only 11 percent of respondents in one study said their compa- nies included employees in the design of reward programs,79 which means 89 percent of companies do not. This may present you and your current or future employers with an opportunity: Including employees is one way to get ahead of the competition.

Garbage. . . Not Just the Work but the Outcomes Too

City officials in Albuquerque, New Mexico, needed to cut costs. Among the targets they identified was over- time pay of trash collectors. The officials decided to pay trash collection crews for eight hours of work no matter how long it actually took them to finish their routes. The hope was that the crews would work more efficiently and quickly, given that they could then go home early and still get paid for eight hours of work.

This PM practice seemed like a success, and overtime costs dropped significantly. However, unin- tended consequences emerged. Crews overloaded their trucks to reduce the time they spent going to the dump, but strict weight limits resulted in fines when they arrived. So they drove faster, which re- sulted in more tickets and accidents. Sometimes they skipped trash pickups and truck maintenance, which generated customer complaints and more frequent vehicle breakdowns.80

Problem-Solving Application

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problem city officials wanted to fix.

Step 2: Identify the potential causes of this problem. (Consider also the common reasons rewards fail to motivate.)

Step 3: Make your recommendations.

235Performance Management CHAPTER 6

236 PART 1 Individual Behavior

Pay for Performance Pay for performance  is the popular term for monetary incentives that link at least some portion of pay directly to results or accomplishments. Pay for performance is compensation above and beyond basic wages and salary, and its use is consistent with recommendations derived from the expectancy theory of motivation.81 Many people refer to it simply as incentive or variable pay, which has consistently grown as a percentage of total compensation for decades. This means that over the course of your career, an in- creasing portion of your pay will be variable.

The general idea behind pay-for-performance schemes—including but not limited to merit pay, bonuses, and profit sharing—is to give employees an incentive for working harder and/or smarter. Supporters of incentive compensation say something extra is needed because hourly wages and fixed salaries do little more than motivate people to show up and put in the required hours. We look next at the types of pay for performance.

Piece-Rate Pay The most basic form of pay for performance is the traditional piece- rate plan, in which the employee is paid a specified amount of money for each unit of work. Many contractors use such plans, such as by paying a set amount for replacing a roof, number of homes connected to the Internet, or boxes of cookies sold.

Commissions Sales commissions, whereby a salesperson receives a specified amount of money for each unit sold, are another long-standing example of pay for performance. This approach is utilized very successfully by ride-sharing companies Uber and Lyft, as well as many other companies in the “gig economy.” In these arrangements companies contract with people to do work for a set fee or commission. The company benefits by not having to officially hire employees or pay the associated costs (such as taxes and benefits), while the workers get to control their hours, location, and amount of work they perform. 

Aligning Organizational Objective and Rewards Nutrisystem, the weight-loss program, meets many of its organizational objectives by using pay for performance. The company aims to increase sales, staff particular working hours, and expand its customer base. Its call- center sales associates are paid the greater of either an hourly rate ($10 an hour for the first 40 hours per week and $15 an hour for any additional hours) or a flat-rate

Selling Girl Scout cookies is a famous form of piece-rate work. Each year Girl Scouts sell approximately 200 million boxes and take in $776 million.82 © Jeff Greenberg/UIG/Getty Images

Uber has over 300,000 active drivers in the United States, who earn 70 to 80 percent of each fare they collect.83 © Andrew Harrer/Bloomberg/ Getty Images

237Performance Management CHAPTER 6

payment based on sales. Unlike conventional commissions, the flat rate is not tied to the sales price of the product. Instead, the payments vary depending on the shift during which the sale occurs and whether the sale resulted from an incoming or outgoing call. Higher payments are made for outgoing calls and for sales during off-peak times. Thus Nutrisystem incentivizes employees to work less-desirable hours and to make outgoing calls. The company also avoids overtime payments while at the same time rewarding desired employee behaviors.84 This example underscores the increasingly common practice of using performance criteria in reward systems.

Making Pay for Performance Work As in all other OB topics, we can use research and practice as a guide. Monetary rewards can work if they help people meet their basic needs, confer status, or allow people to pro- vide for their families.

However, monetary rewards do not increase knowledge, skills, and abilities, nor do they enrich jobs or enhance intrinsic motivation.85 Research shows mixed outcomes for pay for performance—sometimes increased performance results and sometimes de- creased performance. A comprehensive review of the literature found only a modest pos- itive relationship between financial incentives and performance quantity, and no impact on performance quality.86 The results are especially unimpressive for executive perfor- mance. Only a weak link was found between large executive bonuses paid out in good years and improvement in corporate profitability in subsequent years.87 

Bernie Marcus, cofounder and former board member of Home Depot, was an early advocate of pay for performance and supported clawing back bonuses from executives who didn’t meet performance expectations. In fact, during his time as a leader at the com- pany he often refused bonuses.

John Thain, former CEO of CIT Group, had his bonus cut 30 percent because he did not effectively integrate One-West, a company CIT Group acquired. The rationale was that he had “plenty of time to get his ducks in a row . . . Closing a deal is only the beginning. CIT’s approach, tying incentives to the actual achievement of the promised benefit of a merger, is the right one. . . Even when a merger is sensible, making it work is a crucial part of the job for a company’s leaders.”89

However, companies with the best pay-for- performance results

• Paid top performers substantially more than their other employees.

• Reduced “gaming” of the system by in- creasing transparency.

• Utilized multiple measures of performance. • Calibrated performance measures to

ensure accuracy and consistency.

A company’s culture should reinforce such practices, and leadership support is the most im- portant contributor to such a culture. Even with limited compensation dollars to spend, “the best pay for performance organizations often carve out funds for extra rewards to high performers and tend to see fewer employees whose perfor- mance is rated as high,” noted a PM consultant.90

John Thain is a three-time Wall Street CEO; he led the New York Stock Exchange, Merrill Lynch, and most recently CIT. Many people outside Wall Street know him best for being fired from Merrill Lynch after it was merged with Bank of America during the Wall Street meltdown of 2009. Not only was Thain accused of not disclosing Merrill Lynch’s true mortgage liabilities, but he also spent $1 million renovating his own office during the same period.88 © Scott Eells/Bloomberg/Getty Images

238 PART 1 Individual Behavior



How can I use reinforcement and consequences to improve performance?


In this section, you’ll learn about three especially effective and practical means for influenc-

ing your behavior and that of others: (1) the law of effect and the way it relates to respondent

and operant conditioning; (2) common types of reinforcement; and (3) the way managers can

increase the effectiveness of reinforcement using a variety of reinforcement schedules.

Providing consequences is the last stage of the performance management process. Do managers always get it right? Consider these scenarios:

• You stop making suggestions on how to improve your department because your boss never acts on your ideas.

• Your colleague, the ultimate political animal in your office, gets a great promotion, while her more skilled coworkers (like you) scratch their heads and gossip about the injustice.

In the first instance, a productive behavior faded away for lack of encouragement. In the second. unproductive behavior was unwittingly rewarded. The way rewards, and con- sequences more generally, are administered can make or break performance management efforts. Effective use of these OB tools is particularly important given that pay raises and promotions are often powerful career outcomes in the Organizing Framework. They often influence subsequent perceptions of fairness, intentions of quitting, emotions, and a range of behaviors at work.

The pioneering work of Edward L. Thorndike, B. F. Skinner, and many others since have outlined behavior modification and reinforcement techniques. These techniques help managers achieve the desired effect when providing feedback and granting rewards.

The Law of Effect—Linking Consequences and Behaviors During the early 1900s, psychologist Edward L. Thorndike observed in his lab that a cat would behave randomly when placed in a small box with a secret trip lever that opened a door. However, once the cat had accidentally tripped the lever and escaped, it would go straight to the lever when placed back in the box. Hence, Thorndike formulated his famous law of effect,  which says behavior with favorable consequences tends to be re- peated, while behavior with unfavorable consequences tends to disappear.91 This was a dramatic departure from previous notions that behavior was the product of instincts.

Using Reinforcement to Condition Behavior B. F. Skinner refined Thorndike’s conclusion that behavior is controlled by its conse- quences. Skinner’s field of work became known as behaviorism because he dealt strictly with observable behavior. He believed it was pointless to explain behavior in terms of unobservable inner states, such as needs, drives, attitudes, or thought processes.92 He

239Performance Management CHAPTER 6

instead drew an important distinction between two types of behavior: respondent and operant behavior.93 

Skinner labeled unlearned reflexes or stimulus–response (S–R) connections respondent behavior. This category of behavior describes a very small proportion of adult human behavior, like shedding tears while peeling onions and reflexively withdraw- ing your hand from a hot stove.94 

Skinner attached the label operant behavior  to behavior learned when we “oper- ate on” the environment to produce desired consequences. Some call this view the response–stimulus (R–S) model. Years of controlled experiments with pigeons in “Skinner boxes” led to the development of a sophisticated technology of behavior control, or operant conditioning.

For example, Skinner taught pigeons how to pace figure eights and how to bowl by reinforcing the underweight (and thus hungry) birds with food whenever they more closely approximated target behaviors. Skinner’s work has significant implications for OB because the vast majority of organizational behavior falls into the operant category.95

Contingent Consequences According to Skinner’s operant theory, contingent consequences control behavior in one of four ways: 

1. Positive reinforcement 2. Negative reinforcement 3. Punishment 4. Extinction

The term contingent here means there is a purposeful if-then link between the target behavior and the consequence. So you should first think of the target behavior and whether you want to increase or decrease it, and then choose the appropriate consequence (see Figure 6.4). We next look more closely at the four behavioral controls.

Increase Desired Behaviors Positive reinforcement  is the process of strength- ening a behavior by contingently presenting something pleasing. A behavior is strengthened when it increases in frequency and weakened when it decreases in fre- quency. For instance, in the wake of the BP oil spill in 2010, newly appointed CEO Bob Dudley based 100 percent of employees’ variable pay (bonuses) on safety for the fourth quarter of 2010.96 This was a reward or reinforcer for safe behaviors.


Nature of Consequence

Positive or Pleasing Negative or Displeasing

B eh

av io

r– C

on se

qu en

ce R

el at

io ns

hi p

Contingent Presentation

Contingent Withdrawal

Positive Reinforcement Behavioral outcome:

Target behavior occurs more often

Punishment Behavioral outcome:

Target behavior occurs less often

Punishment (response cost) Behavioral outcome:

Target behavior occurs less often

Negative Reinforcement Behavioral outcome:

Target behavior occurs more often

(no contingent consequence) Extinction

Behavioral outcome: Target behavior occurs less often

240 PART 1 Individual Behavior

Negative reinforcement  also strengthens a desired behavior by contingently withdrawing something displeasing. For example, many probationary periods for new hires are applications of negative reinforcement. During probation periods (often your first 30, 60, or 90 days on a new job) you need to have weekly meetings with your boss or have somebody sign off on your work. Once you’ve demonstrated your skill, these re- quirements are removed.

It’s easy to confuse negative reinforcement with negative feedback, which is a form of punishment. Negative reinforcement, as the word reinforcement indicates, strengthens a behavior because it provides relief from something undesirable (paperwork, meetings, or yelling).

Decrease Undesired Behaviors Punishment  is the process of weakening be- havior through either the contingent presentation of something displeasing or the contingent withdrawal of something positive. The U.S. Department of Transportation now fines airlines up to $27,500 per passenger for planes left on the tarmac for more than three hours. This policy reduced reported cases from 535 to 12 in the first year it was implemented.97 

And while approximately 69 percent of companies have employee health and well- ness programs, and 75 percent of these use incentives,98 some companies are now punish- ing employees for unhealthy behaviors. CVS Caremark, for instance, now requires its employees to participate in health screenings or pay an extra $600 for their health care premiums.99  

This practice is supported by research at the University of Pennsylvania. The admin- istrators offered different cash incentives for employee participation in “step programs,” with a goal that every employee should walk 7,000 steps per day. The incentives did not affect goal achievement any better than having no incentives. However, participants who would have been penalized for not walking 7,000 steps reached the goal 55 percent of the time. A related study produced similar results. Participants who were at risk of losing their $550 health insurance premium incentive for noncompliance with healthy behaviors were more successful than those that were rewarded for doing so.100

Weakening a behavior by ignoring it or making sure it is not reinforced is re- ferred to as extinction.  Discouraging a former boyfriend or girlfriend by blocking phone calls or texts or unfriending the person on Facebook is an extinction strategy. 

A good analogy for extinction is the fate of your houseplants if you stopped watering them. Like a plant without water, a behavior without occasional reinforcement eventually dies. Although they are very different processes, both punishment and extinction have the same weakening effect on behavior.

The bottom line: Knowing the difference between these various forms of contingent consequences provides you with a number of powerful tools with which to manage your- self and others. Put another way, you just learned four tools for influencing behavior. Most people think of and use only two—positive reinforcement and punishment (negative feedback). Apply your knowledge and get ahead!

Positive Reinforcement Schedules You can supercharge or at least enhance the effectiveness of positive reinforcement (re- wards) by managing the timing or schedule of reinforcement. Continuous and intermit- tent reinforcement schedules are two common means for timing the administration of reinforcers.

Continuous Reinforcement If every instance of a target behavior is reinforced, then a continuous reinforcement  (CRF) schedule is in effect. For instance, if you get paid every time you make a sale, this is a CRF schedule. The sale is the desired behavior and payment is the reinforcement. CRF is especially useful for making early links be- tween desired behaviors and outcomes, but they are susceptible to perceptions of entitle- ment and rapid extinction if the link is broken. 

241Performance Management CHAPTER 6

Just as you train your dog to do a new trick by providing a reward each time he or she does it successfully, CRF schedules are especially useful when employees learn a new task or skill. For example, assume you are asked to conduct an analysis of the indi- vidual purchasing patterns of your employer’s largest customers. Your manager could help you develop this skill by giving you feedback as you complete the analysis for each cus- tomer. This feedback and recognition rein- force your performance on this new task. However, you can see that while this rein- forcement is especially helpful and appreci- ated for the first few customer analyses, it likely loses its effect after the 10th, 20th, and 30th customer. Enough already!

One way to help guard against the fading benefit of reinforcers is to use intermittent schedules.

Intermittent Reinforcement Unlike CRF schedules, intermittent reinforcement  consists of reinforcement of some but not all instances of a target behavior. There are four subcategories of intermittent schedules. Table 6.9 shows them along with examples.

Like dogs, humans respond to reinforcement. To make this work for you, identify a behavior you want somebody to perform, and when they do be sure to shower them with praise, recognition, or some other form of reward they value and tell them it is because of what they did. The behavior will likely happen again. © Huntstock/Getty Images RF


Reinforcement Schedule




Fixed ratio Piece-rate pay; bonuses tied to the sale of a fixed number of units

Clear and predictable link between the behavior and the reinforcer

Costly to monitor performance and administer reinforcers (like money); reinforcers lose effect over time

Variable ratio Slot machines that pay after a variable number of pulls; lotteries that pay after a variable number of tickets sold

Strong motivation to continue until reinforcer is received; less costly than fixed ratio

Some desired behaviors will not be rewarded; potentially long periods between reinforcers (such as payouts)

Fixed interval Paychecks (every two weeks or once a month); annual bonuses; probationary periods

Clear and predictable link between the behavior and reinforcer; less costly than fixed ratio

Inconsistent effort and performance over the interval (majority of effort/ performance occurs near reinforcer)

Variable interval Random supervisor “pats on the back”; spot rewards; random audits (financial); random drug tests of athletes and employees; pop quizzes

Consistent and strong motivation to perform over time; least costly schedule due to relatively little monitoring and administration

Some desired behaviors will not be reinforced; potentially long periods between reinforcers (payouts)

242 PART 1 Individual Behavior

Work Organizations Typically Rely on the Weakest Schedule Generally, variable ratio and variable interval schedules of reinforcement produce the strongest behaviors that are most resistant to extinction. As gamblers will attest, variable schedules hold the promise of reinforcement after the next roll of the dice, spin of the wheel, or pull of the lever. In contrast, continuous and fixed schedules are the least likely to elicit the desired response over time. Nevertheless, the majority of work organizations rely on fixed intervals of reinforcement, such as hourly wages and annual reviews and raises.

Reinforcement Schedules and Performance Figure 6.5 illustrates the relative effect of the schedules on performance over time. Consider three professors who teach different sections of the same OB course. Assume their students are essentially equal in age, experience, and GPAs across the three sections. This is the scenario:

• Professor Blue bases student grades solely on short quizzes given at the beginning of every class (continuous reinforcement).

• Professor Black bases grades on a midterm and final exams of equal weight (fixed interval).

• Professor Red uses a number of unannounced or pop quizzes (variable interval).

We expect the level of preparation for each class and overall academic performance (preparation and learning) to follow the patterns in Figure 6.5. Professor Blue’s students will start fast and prepare diligently for each class. However, they will then settle into a routine and a common level of preparation. Over time they will figure out what is re- quired and do less. Some may even quit preparing once they have a clear sense of what their overall grade will be.

The pattern for Professor Black’s students is all too common. They start slowly, knowing there is plenty of time before the midterm. When it grows near, the intensity of their preparation increases and some begin cramming. Once the midterm passes, they disconnect for a while until they ramp up again for the final.

In contrast, Professor Red’s students will likely maintain a higher average level of preparation throughout the course, because there is a chance they will have a pop quiz and be graded in every session.


Midterm Exam 30 Days


Pe rf

or m

an ce

Final Exam 60 Days

Variable Avg PerformanceVariable


Avg PerformanceFixed


Avg PerformanceContinuous

SOURCE: © 2014 Mel Fugate.

243Performance Management CHAPTER 6

The bottom line: Students generally don’t like unannounced or pop quizzes. However, if the professor’s goal is increased student preparation and learning, then variable-interval grading is one means for generating a higher average level of performance.

These same patterns and results apply in business settings too. For instance, many sales and professional service jobs such as accounting and law have monthly numbers to meet, like sales or billable hours. This often means employees get far more work done in the last few days of the month than in the beginning (see Figure 6.5).

Practical Implications for Using the Strongest Schedule In general, any type of consequence—whether reward or punishment—is more effective when ad- ministered in proximity to the behavior. Effectiveness wears off as time passes.101 You are unlikely to change your professor’s grading format or the timing of your employer’s pay and bonus schedules. However, there are many ways you can put your knowledge of positive reinforcement schedules to use within the confines of existing practices.

Spot Rewards. At work, spot rewards are highly effective. If your coworker has worked hard to make your project a success, recognize her efforts via an e-mail to the entire team including your manager. Your manager, in turn, may decide to give Friday off to those who complete their current work satisfactorily and ahead of schedule.

Variable Rewards/Bonuses. Entrepreneurs can especially benefit from apply- ing knowledge of reinforcement schedules. Assume you started your own business and, like many new businesses owners, you are short on cash. You would like to provide regular bonuses and pay raises, but you can afford monetary rewards only when your company secures a new customer or a big order. The variable nature of these rewards not only recognizes employees’ efforts and success, but it also moti- vates them to work hard in the future because they know that such efforts are recog- nized and reinforced.

Celebrations. When it comes to school, we advocate celebrating and thus reinforc- ing “victories,” such as completing a paper, achieving a good score on an exam, and end- ing a semester in which you worked hard and performed well. Scattering these reinforcers throughout the semester can help motivate and reenergize you to work hard in the future, especially if you make these rewards contingent on good behavior.

All three of these examples apply variable schedules. Think of your own examples and consider their effectiveness. Reinforcement schedules, like the larger process of per- formance management, are often limited only by your creativity and willingness to apply your knowledge. Use the knowledge of PM you gained in this chapter to better under- stand existing practices and improve those you control.

244 PART 1 Individual Behavior

In our coverage of performance management, you learned how you can use goals, feedback, re- wards, and reinforcement to boost effectiveness. Reinforce your learning with the Key Points below. Consolidate it using the Organizing Framework. Then challenge your mastery of the material by answering the Major Questions in your own words.

Key Points for Understanding Chapter 6 You learned the following key points.


• Effective performance management (PM) is a process of defining, monitoring, reviewing, and providing consequences.

• PM is often used for employee-related deci- sions and development. It also is a powerful means for signaling what is wanted or not.

• Employee perceptions of the value and effec- tiveness of PM are often very low.

• Managers and leaders are critical to the per- ceived and actual success of PM.


• Goal setting is critical to effective PM. • Both learning and performance goals can be

used. • SMART goals are more likely to be achieved. • Goal commitment, support and feedback, and

action plans foster goal achievement. • PM can be improved using behavioral, objec-

tive, and task/project goals.


• Monitoring performance requires making effec- tive measurements of progress and/or outcomes, such as of the timeliness, quality, or quantity.

• Evaluation requires comparing performance measures to expectations or goals.

• Performance evaluation is often hampered by perceptual errors.

• Multi-rater or 360-degree feedback can make performance evaluation more accurate.


• Two basic functions of feedback are to in- struct and motivate.

• Sources of feedback include others, the task, and yourself.

• Leaders and managers often don’t receive useful feedback, yet both are critical in ensur- ing that others do receive it.

• The effectiveness of positive and negative feedback is greatly influenced by the receiv- er’s perceptions.

• Coaching helps translate feedback into de- sired change.


• Rewards can be extrinsic or intrinsic. • Results, behavior, and nonperformance con-

siderations are common criteria by which re- wards are distributed.

• Rewards are tools to help achieve desired outcomes, such as to attract, motivate, retain, develop, and engage employees.

• Alternate rewards practices increasingly com- mon today are total rewards, noncash, and pay for performance.


• According to the law of effect, behaviors are either repeated or diminished depending on the desirability of the consequences to which they are linked.

• Providing contingent consequences is funda- mental to effective reinforcement.

What Did I Learn?

245Performance Management CHAPTER 6

Challenge: Major Questions for Chapter 6 You should now be able to answer the following questions. Unless you can, have you really pro- cessed and internalized the lessons in the chap- ter? Refer to the Key Points, Figure 6.6, the chapter itself, and your notes to revisit and an- swer the following major questions:

1. What are the elements of effective perfor- mance management, and how can this knowl- edge benefit me?

2. How can improving my goal setting give me an advantage?

3. How can performance monitoring and evalua- tion improve my performance and my ability to manage the performance of others?

4. How can I use feedback and coaching to review and improve performance?

5. How can I use consequences to generate desired outcomes?

6. How can I use reinforcement and conse- quences to improve performance?

• Both positive and negative reinforcement in- crease desired behaviors.

• Punishment and extinction both decrease un- desirable behaviors.

• The schedule on which reinforcers are admin- istered can increase their effectiveness.

The Organizing Framework for Chapter 6 As shown in Figure 6.6, performance manage- ment practices are associated with nearly every outcome across the three levels of OB. At the indi- vidual level these outcomes are task performance, work attitudes, well-being/flourishing, citizenship and counterproductive behaviors, turnover, career outcomes, and creativity. Group and team-level performance, along with group satisfaction, cohe- sion, and conflict, are similarly related. As for the organizational level, performance management practices link to accounting/financial performance, customer satisfaction, reputation, and even an or- ganization’s overall survival.


© 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.


Person Factors Situation Factors

Individual Level • Performance management

practices Group/Team Level Organizational Level

Individual Level • Task performance • Work attitudes • Well-being/flourishing • Citizenship behavior/

counterproductive behavior • Turnover • Career outcomes • Creativity Group/Team Level • Group/team performance • Group satisfaction • Group cohesion and

conflict Organizational Level • Survival • Accounting/financial

performance • Customer satisfaction • Reputation

246 PART 1 Individual Behavior

IMPLICATIONS FOR ME We offer six notable applications. First, look for companies and managers with PM prac- tices that align with your personal values, preferences, and aspirations. If you like continual feedback and large differentials between top and low performers, find opportunities that match. Second, compare what managers and organizations say they value and what they reward. Many will say they value and reward performance, but they give everybody the same 3 percent raise or promote people based on tenure rather than performance. Third, use Table 6.2 to build your own goal commitment; this alone can set you apart from the competition. Fourth, if you’re not given regular feedback, ask for it. This step will help you avoid surprises during your reviews and boost your performance in between. Fifth, using Self-Assessment 6.2, identify the rewards you value most, then tell your managers which available rewards you value most. Be sure to think broadly about rewards, and don’t think only about the money. If you value time (vacation), autonomy (flexibility to work from home), or development (tuition benefits), making these part of your total rewards can enhance the value of your compensation.

IMPLICATIONS FOR MANAGERS The following seven take-aways may prove especially useful. First, you can immediately increase your management effectiveness by ensuring that you set clear expectations and provide regular and effective feedback for those you manage. Second, make explicit and clear links between what you reward and the behaviors and/or outcomes rewards are in- tended to signal. Third, practice the recommendations in Table 6.2 to boost goal commit- ment. This, along with ensuring your people set SMART goals, will help set them up to win. Fourth, guard against common perceptual errors when evaluating performance. Be sure you effectively measure the appropriate elements of performance (both quantitative and qualitative) for a particular job and individual. Fifth, provide more feedback! Apply what you learned here to make it more effective (see Table 6.6), and try to focus on development more than evaluation. Feedback is a skill. Practice it and you’ll get better. Sixth, be certain your rewards are delivering the intended outcomes. Clearly linking them to expectations helps. Finally, if teamwork is important and truly valued, then be certain your PM practices send such signals.

247Performance Management CHAPTER 6

Money is an important tool for both attracting and motivating talent. If you owned a company or were its CEO, you would likely agree and choose perfor- mance management practices to deliver such out- comes. You would probably also favor rewarding high performers and having an effective means for removing low performers. For decades, forced- ranking appraisal practices have helped organiza- tions and their managers differentiate employee performance and achieve both objectives—reward- ing top performers and providing grounds for termi- nating the low performers.

BROAD APPEAL These qualities made forced ranking (also known as forced distribution or “rank and yank”) a popular per- formance management tool for many marquee compa- nies, such as Ford Motor Company, 3M, and Intel. GE, for instance, made the approach famous using its “vitality curve” to rate employees into three catego- ries—top 20 percent, middle 70 percent, and bottom 10 percent. The top often received raises two to three times greater than the next group, while the bottom group was often put on probation or fired.102 Microsoft also used forced distribution to ensure it was always raising the bar on talent and performance. It replaced its lowest-performing employees with the best in the market and ensured there was always more exciting work than it had people to do it.103

One argument in support of forced ranking is in- creased accountability. It requires managers to do the difficult work of differentiating performance. While no- body likes to be the bearer of bad news, not confront- ing performance issues is an underlying cause of score inflation (grade inflation in school) and mediocrity. The implication is that not everybody can be a top per- former, and it is management’s job to know and ac- knowledge the differences. Forced ranking also can be used to remove “dead wood.” Employees who aren’t as driven, capable, or competitive are driven out and replaced with those who are.104

Another central supportive argument is that re- sources are constrained, notably people and money. Culling the workforce based on performance is a way to be sure your best employees are able to work on the company’s most important and valuable projects, products, and services. And it allows companies not

only to allocate more to their best employees, but also to create clear and often substantial differences be- tween different levels of performance and associated rewards.

THIS ALL MAKES SENSE, BUT WHY ARE MANY COMPANY’S YANKING THE PRACTICE? Performance management practices have com- pounded the challenges faced by Yahoo and Amazon. According to a spokesperson at Yahoo, the company’s program—quarterly performance review (QPR) recom- mended by McKinsey Consulting—is intended to “allow for high performers to engage in increasingly larger opportunities at our company, as well as for low performers to be transitioned out.”105 However, prob- lems arose when managers and employees accused the company of using it to fire employees “for perfor- mance” instead of laying them off. The scale of this issue is substantial, given that nearly one-third of the company’s workforce left or was terminated in 2015–2016, though the law requires at least 30 days’ notice for mass layoffs.106 Similar practices also were linked to discriminatory dismissals at Ford, Goodyear, and Capital One and caused them to change their practices.107

Amazon has embraced forced ranking to foster in- ternal competition and drive employees to always im- prove. Its organizational-level review (OLR) process requires managers to select which employees to sup- port and which to “sacrifice” (not all employees can pass). Even after an incredibly rigorous hiring process intended to select the best of the best, employees are distributed into high, average, and low performers—20, 60, and 20 percent, respectively. This means 80 per- cent of the company’s employees have stopped being stars by the time of their first performance review. The process is challenging for managers too, who must continually select talented subordinates to fire at every performance review.108

RANK AND YANK AT ADOBE Another company that championed forced ranking was Adobe. It had a rigorous, complex, technology- driven process for ranking its employees each year. Performance expectations were set and performance


Why Are Some Companies Yanking Forced Ranking?

248 PART 1 Individual Behavior

is most important and focus on it for steps 2 and 3.

B. Cases have protagonists (key players), and problems are generally viewed from a particular protagonist’s perspective. In this case you’re asked to assume the role of Donna Morris, senior VP of people and places.

C. Use details in the case to determine the key problem. Don’t assume, infer, or create problems that are not included in the case.

D. To refine your choice, ask yourself, Why is this a problem? Focus on topics in the current chapter, because we generally select cases that illustrate concepts in the current chapter.

Step 2: Identify causes of the problem by using ma- terial from this chapter, which has been summarized in the Organizing Framework for Chapter 6 and is shown in Figure 6.6. Causes will tend to show up in either the Inputs box or the Processes box.

A. Start by looking at the Organizing Framework (Figure 6.6) and determine which person factors, if any, are most likely causes to the defined problem. For each cause, explain why this is a cause of the problem. Asking why multiple times is more likely to lead you to root causes of the problem. For example, do particular skills, values, or personality profiles help explain the problem you defined in Step 1? This might lead to the conclusion that Adobe’s PM practices suit particular employees well and others not.

B. Follow the same process for the situation factors. For each ask yourself, Why is this a cause? For example, the quality of relationships between managers and subordinates might have some effect on the problem you defined. Other HR practices, aside from performance management, might contribute to the problem. If you agree, which specific practices and why? By following the process of asking why multiple times you are likely to arrive at a more complete and accurate list of causes. Again, look to the Organizing Framework for this chapter for guidance.

C. Now consider the Processes box in the Organizing Framework. Performance management processes are clearly part of the story, but are any other processes at the individual, group/team, or organizational level potential causes of your defined problem? For any process you consider, ask yourself, Why is this a cause? Again, do this for several iterations to arrive at the root causes.

was measured, documented, reviewed, and rewarded. The goals were to help the company improve em- ployee performance and ensure it had the best talent. However, what the company actually achieved was quite different.

Adobe calculated that its process of reviewing its 13,000 employees required approximately 80,000 hours from its 2,000 managers each January and Feb- ruary. This massive time commitment actually reduced employee performance, because this time wasn’t be- ing spent on productive work like developing products or cultivating and serving customers. And while the system was meant to ensure manager accountability, it actually allowed many to avoid confronting low per- formers until the annual review. This meant low per- formers were terminated only once a year.

Donna Morris, Adobe’s global senior vice president of people and places, described the PM flaws this way: “Especially troublesome was that the company’s ‘rank and yank’ system, which forced managers to identify and fire their least productive team members, caused so much infighting and resentment that, each year, it was making some of the software maker’s best people flee to competitors.”109  Moreover, the performance management practices did not align with the goals of employee growth and team work, both fundamental to Adobe’s success. It instead focused on past perfor- mance and compared employees to each other.

The shortcomings of the process were underscored by internal “employee surveys that revealed employ- ees felt less inspired and motivated afterwards—and turnover increased.”110  This last point compounded problems by causing the wrong employees—the high- performing ones—to quit.

Assume you are Donna Morris, Adobe’s global se- nior vice president of people and places. How does the information in the case inform your recommenda- tions about PM practices at Adobe?

APPLY THE 3-STEP PROBLEM- SOLVING APPROACH TO OB Use the Organizing Framework in Figure 6.6 and the 3-Step Problem-Solving Approach to help identify in- puts, processes, and outcomes relative to this case.

Step 1: Define the problem.

A. Look first to the Outcome box of the Organizing Framework to help identify the important problem(s) in this case. Remember that a problem is a gap between a desired and current state. State your problem as a gap, and be sure to consider problems at all three levels. If more than one desired outcome is not being accomplished, decide which one

249Performance Management CHAPTER 6

Remember to consider the OB in Action and Applying OB boxes, because these contain insights into what others have done. These insights might be especially useful for this case.

B. Be sure to consider the Organizing Framework— both person and situation factors, as well as processes at different levels.

C. Create an action plan for implementing your recommendations.

D. To check the accuracy or appropriateness of the causes, be sure to map them onto the defined problem.

Step 3: Make your recommendations for solving the problem. Consider whether you want to resolve it, solve it, or dissolve it (see Section 1.5). Which recom- mendation is desirable and feasible?

A. Given the causes identified in Step 2, what are your best recommendations? Use the material in the current chapter that best suits the cause.


Fined Billions, but Still Admired and Handsomely Rewarded

Jamie Dimon is the CEO and chairman of JPMorgan Chase. He has held both roles since 2005—that is, be- fore, during, and after the financial crisis. Few execu- tives on Wall Street are as respected and recognized, or as well compensated. For instance, in 2013 his compensation was approximately $11.5 million, in 2014 it was $20 million, and in 2015 $27 million.111

In one sense, this is typical of total executive com- pensation in the finance industry. Dimon’s straight salary is often $1.5 million and the rest (more than 90 percent) is tied to some measure of firm perfor- mance, such as stock price and profitability.

However, JPMorgan and others have come under considerable pressure for what the compensation package doesn’t consider directly—ethics. During this same period JPMorgan has settled legal claims in ex- cess of $25 billion! A few notable examples include $920 million for allowing traders to fraudulently over- value investments and conceal losses;112 $1 billion re- lated to securities fraud and concealment of losses in the “London Whale” trading fiasco (JPMorgan lost $6.2 billion apart from the fines); $13 billion in settle- ment of risky mortgages; and another $2 billion for not identifying the Madoff Ponzi scheme and the losses it caused its own investors.113  

To be fair, Dimon’s $11.5 million year was intended to reflect his role related to the London Whale debacle, but this bonus reduction took place only due to pres- sure from Congress (Dimon earned $23 million the year before). Defenders of Dimon, and the JPMorgan board of directors who granted the pay, say he de- serves such rewards for negotiating smaller fines and for producing industry-leading profitability. JPMorgan had record profits in 2015.

This scenario nevertheless raises an obvious ques- tion: Is JPMorgan’s pay for performance really pay for profits without consideration of other activities that are costing it billions of dollars in penalties and fines? Dimon was CEO before, during, and since all of these billions in penalties were paid. He did not inherit the problems of a previous executive. And a corporate eth- ics monitoring group reported that since the financial crisis of 2008 “there appears to be no change in the frequency of the ethical issues facing the company, which suggests different types of intervention are needed.”114 The combination of these details lead some to argue that Dimon should be fired.

What Would You Do? As you may know, the board of directors is ultimately responsible for the performance of the firm, its CEO, and all executive compensation. With this in mind, as- sume JPMorgan replaced its entire board. You are now the chair, and Jamie Dimon is only the CEO. What would you recommend?

1. Would you fire Dimon outright? Defend your choice.

2. Your answer to No. 1 aside, what recommendations do you have for the CEO’s compensation from here on? Explain.

3. Details of the case aside, describe how you could be sure pay for performance for the CEO also includes performance related to ethical conduct.

7 Major Topics I’ll Learn and Questions I Should Be Able to Answer

7.1 The Value of Positive Organizational Behavior  MAJOR QUESTION: How does understanding positive organizational behavior benefit me?

7.2 The Power of Positive Emotions MAJOR QUESTION: How can positive emotions make me more effective at school, at work, and in other arenas of life?

7.3 Fostering Mindfulness MAJOR QUESTION: How can mindfulness contribute to my effectiveness?

7.4 Developing Psychological Capital and Signature Strengths MAJOR QUESTION: How can my inner HERO and signature strengths benefit me at work and in my career?

7.5 Creating a Climate that Fosters Positive Organizational Behavior MAJOR QUESTION: How can managers create an organizational climate that fosters positive organizational behavior?

7.6 Flourishing: The Destination of Positive Organizational Behavior MAJOR QUESTION: What can I do to enhance my level of flourishing?

How Can I Flourish at School, Work, and Home?


Figure 7.1 summarizes what you will learn in this chapter. The focus is on positive or- ganizational behavior and how positive inputs and processes influence a host of out- comes across levels of OB. The Organizing Framework for Understanding and Applying OB illustrates how person factors such as mindfulness, psychological capital, and signature strengths form the basis for positive functioning at work. A variety of situation factors also affect the positivity of an organization’s processes. They include organizational culture, organizational climate, organizational values, virtuous leader- ship, and organizational practices. In turn the inputs and processes shown in the Orga- nizing Framework influence a host of outcomes at the individual, group/team, and organizational level. Most importantly, you will learn about a valuable new individual- level outcome labeled flourishing. Flourishing is a contemporary way of describing success or positive functioning at work.



SOURCE: © 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.


Person Factors • Emotions • Mindfulness • Psychological capital • Signature strengths Situation Factors • Organizational culture • Organizational climate • Organizational values • Virtuous leadership • Organizational practices

Individual Level • Communication • Decision making discretion • Interpersonal conflict Group/Team Level • Communication • Civility • Group Dynamics Organizational Level • Communication

Individual Level • Task performance • Work attitudes • Flourishing • Physical health • Citizenship behavior/

counterproductive behavior

• Turnover • Creativity Group/Team Level • Group/team performance • Group/team cohesion and

conflict Organizational Level • Accounting/financial

performance • Organizational

performance • Customer satisfaction

Flourishing is at the core of positive organizational behavior. We flourish when our lives contain positive emotions, engagement in our work, positive relationships with others, meaningfulness, and a sense of achievement. It appears that these employees from NASA’s Jet Propulsion Laboratory in Pasadena, California are experiencing some of flourishing’s components. Here they can be seen having fun waving to NASA’s Cassini spacecraft when it turned its imaging cameras to earth. The Cassini, which is an unmanned spacecraft, was on its journey to the planet Saturn. SOURCE: NASA/JPL-Caltech

Winning at Work What You Think About Is What You Get

What’s Ahead in This Chapter We’re concluding Part One and our discussion of the indi- vidual level by introducing you to one of the most exciting and fastest-growing areas of OB, positive organizational behavior (POB). Research suggests that you can enhance your life and job satisfaction by following some of the ideas presented in this chapter. We explore the value of positive organizational behavior and then expand on sev- eral elements that help you foster your own personal pos- itivity. Positive emotions are one such element (an individual-level process), as are mindfulness (a person in- put), positive psychological capital (a person input), and organizational climate (a situation factor). Combined, these elements create a positive workplace environment and enable people, teams, and organizations to flourish. Flour- ishing is the ultimate individual-level outcome of POB and consists of positive emotions, engagement, constructive relationships, meaningfulness, and achievement.

• Be aware of negative thoughts and beliefs. The brain has a built-in negativity bias. This allows nega- tive events to have more impact on us than positive ones, and we often think bad information about someone is more important than positive informa- tion.6 If you find yourself focusing on negativity, try to reframe your thoughts in a positive direction. For example, rather than worrying about your level of performance on an exam, tell yourself that you are prepared and will do just fine.

Because behavior is a product of our emotions, thoughts, beliefs, and experiences, it makes sense that managing these internal responses can improve our performance. Try these suggestions:

• Set intentions. Intentions   are the end point or goal you want to achieve. They drive your behav- ior.1 If you want to accomplish a specific result on a given day, start your day with a positive intention to do so. For example, one of your authors has a daily intention to meditate and exercise. Set your inten- tions around tasks and people that matter to you. 

• Express gratitude to someone. We are healthier both physically and mentally when we express grati- tude. People receiving gratitude also report these same positive outcomes.2 Your expression of thanks might be a small gesture, like thanking someone for holding a door open while you pass. It can also be bigger such as starting a college scholarship to help others in financial need. There are several ways you can increase expressions of gratitude. You can keep a gratitude journal at your bedside and write down one or two things that went well each day. You can write a thank-you note to someone. One of your authors thanked his mentor for all he did for him 35 years ago. He loved receiving the message! Look for positive ac- tions by others and then acknowledge them. 

• Do something helpful or positive for other people. You do not have to give a tangible gift, but instead offer someone a kind or positive gesture. It can be as simple as a smile, a compliment, or words of en- couragement. Volumes of research show that help- ing others is one of the most fulfilling things you can do. The more you give, the more you’ll get.3

• Become more hopeful. “Hope  is the belief that the future will be better than the present and that you have some power to make it happen.”4 The follow- ing process was found to increase hopefulness for college students: Identify an important goal, identify different ways to achieve the goal, identify obstacles to each pathway and develop a plan for overcoming these roadblocks, and work the plan.5 Taking these steps should give you a sense of hope and control.

• Focus on the positive side of life. Negative thoughts and worry are prime enemies of staying focused in the present moment. We often worry about things we can’t control, including events in the past. Don’t worry about the past (it’s done—you can’t go back) or what you can’t control. Try to stay focused on what is happening in the present moment.

The brain and our thoughts powerfully impact our emotions and behavior. OB researchers are increasingly studying the neuroscience underlying our behavior. © Science Photo Library/Alamy RF


253Positive Organizational Behavior CHAPTER 7

Two Scenarios—Which Do You Prefer? Let’s set the stage by establishing two scenarios set out in an early presentation of positive organizational behavior.

First Scenario The first scenario begins, “Imagine a world in which almost all orga- nizations are typified by greed, selfishness, manipulation, secrecy, and a single-minded focus on winning.”7 Wealth is the ultimate measure of success. Feelings of distrust, anxi- ety, self-absorption, fear, burnout, and abuse are common. Members often experience conflict, treat each other disrespectfully, and break agreements with each other. Employ- ees in this context focus on problem solving, managing uncertainty, overcoming resis- tance, achieving profitability, and figuring out how to beat the competition.

Second Scenario Now imagine a world in which appreciation, collaboration, virtu- ousness, vitality, and meaningfulness are the rule. Well-being and thriving are the mark- ers for success among individuals, groups, and organizations alike. Trustworthiness, resilience, wisdom, humility, and positive energy are common features. Relationships and interactions are described as compassionate, loyal, honest, respectful, and forgiving. Em- ployees emphasize excellence, positive deviance, extraordinary performance, and posi- tive spirals of flourishing.

A Matter of Emphasis Rather than Rejection of Business Realities Many professionals who first encounter positive organizational behavior assume it simply re- jects the hard business realities in the first scenario: the need to solve problems, manage uncertainty, overcome resistance, achieve profitability, and compete successfully. But something else is happening.

Positive organizational behavior “does not reject the value and significance of the phenomena in the first worldview. Rather, it emphasizes the phenomena represented in the second.”8 A more recent review of positive organizational behavior described it like this:

Positive OB   focuses on positive human characteristics that can be measured, developed, and effectively managed for performance improvement.9


How does understanding positive organizational behavior benefit me?


You can benefit at school and at work by understanding positive organizational behavior

(positive OB or POB), a purposefully positive approach to managing the behavior of individu-

als, groups, and organizations. You’ll see some of these potential benefits when you explore

three ways in which positive OB affects a broader set of outcomes. You’ll then see the bene-

fits of positive OB illustrated in detail.


254 PART 1 Individual Behavior

Most real-world practice, research, and even teaching have until recently focused largely on the first view described above. We choose instead to complement this traditional view with a more contemporary and clearly more positive and constructive approach in this chapter. We will show you how identifying and applying the many posi- tive attributes of individuals, groups, and organizations is yet another and especially pow- erful way of increasing your effectiveness professionally and personally.

A Framework of Positivity We created Figure 7.2 to help you organize, understand, and apply your knowledge of positive organizational behavior. As you recall from the Organizing Framework of OB, person and situation factor inputs influence processes and outcomes across levels. Simi- larly, in Figure 7.2, positive emotions, mindfulness, psychological capital, and signature strengths are the inputs that help create positivity from person factors, and organizational climate is an input that helps create positivity from situation factors. Positivity from these two sources contribute to positive outcomes across levels of OB. Let’s consider how this process unfolds.

Positive outcomes arise because of three processes: the amplifying effect, the buffer- ing effect, and the positivity effect. Let’s discuss each in some detail.

Amplifying Effect In the amplifying effect,  positive practices from one individ- ual result in additional positive practices by others, which spur positivity in others, which generate other positive outcomes. The amplifying effect is often conveyed via positive emotions and social capital (your relationships and network). The idea is that positivity fuels more positivity, such that both the receiver and witnesses of kind acts are


Positive Emotions

Mindfulness Positivity fromPerson Factors

Positivity from Situation Factors

Psychological Capital and Signature Strengths

Positive Outcomes

Organizational Culture and


255Positive Organizational Behavior CHAPTER 7

likely to perform kind acts of their own. This results in reinforcing cycles or up- ward spirals of positivity. Such behaviors can then transform organizations into more compassionate and harmonious places.10

This perspective on positive emotions is the broaden-and-build theory, which proposes that positive emotions broaden our attention and make us more open to experience, creating an upward spiral of further positive emotions and even ac- tions. For instance, recent research shows that employees who supported and trusted their coworkers received support and trust in return. This may not surprise you; we all hope to reap what we sow. However, the positive spiral is notable. Support and trust resulted in even more support and trust in return.11 One implication for you is that if you want something, then give something. If you want more, give more. Do your own experiment and find out.

Fredrickson’s description under- scores the fact that people are more likely to exhibit prosocial behaviors when positive OB is taking place in their work environments. Prosocial behaviors  are positive acts performed without the expectation of anything in return.12

Buffering Effect To buffer means to reduce or counteract the effects of a negative force. In the buffering effect,  positive practices and resources reduce the impact of negative events and stressors. When we are confronted with stressors or otherwise undesirable experiences, we utilize various social and personal resources to buffer them.13 At work, we use social support from helpful coworkers to cope, and/or we may use per- sonal resources such as psychological capital. As you will learn later in this chapter, psychological capital is a set of personal characteristics that help us persevere and flour- ish when confronted with adversity or challenging obstacles.

Positivity Effect The positivity effect  “is the attraction of all living systems to- ward positive energy and away from negative energy, or toward that which is life giving and away from that which is life depleting.”14 Organizations that use positive practices are more likely to create an atmosphere of positive energy, which in turn fuels increased performance.15

The Benefits of Positive OB Extend Beyond Good Performance Positive OB is more than simply seeing the good side of people, sharing examples of good performance, or treating employees well. Positive OB focuses on creating excep- tionally positive inputs, processes, and outcomes at all levels in the Organizing Frame- work. Exceptionally positive means above and beyond expectations, more than simply making the grade. This level of achievement is often referred to as positive deviance. Gretchen Spreitzer and Kim Cameron from the University of Michigan describe positive deviance  as “successful performance that dramatically exceeds the norm in a posi- tive direction.”16 We suspect you would like to be accused of being positively deviant!

Helping others, especially when you expect nothing in return, has been shown both to make you feel better and motivate those people to help others. © Fuse/Getty Images RF

256 PART 1 Individual Behavior

Positively Deviant Employees Aren’t Just Happy and Satisfied—They Are Much, Much More Job satisfaction is an important outcome in the Organizing Framework. You also learned, however, that job satisfaction is not the strongest or best predictor of job performance. Positive OB provides you with additional useful insights beyond job satisfaction and other attitudes that predict performance. For in- stance, a study published in the Harvard Business Review showed employees who flourish (a key positive outcome of positive OB shown in Figure 7.2 and discussed later) reported:

• 16 percent higher overall performance. • 125 percent less burnout. • 32 percent more commitment to their employers. • 46 percent more job satisfaction. • Fewer sick days.17

These outcomes are compelling. What can organizations do to enjoy them? Some answers are found in Table 7.1.

Doing Well and Doing Good Positive businesses do well and they do good. They do well by being profitable and performing at a high level, but they also do good by making the well-being of their employees and other stakeholders (suppliers, customers, and com- munities) a priority.

Good to Employees = Good to Shareholders Positive organizations empower, sup- port, and develop employees not only because leaders believe doing so is valuable in and of itself, but also because it helps meet shareholder expectations. Kip Tindell, founder of the Container Store, evokes this belief in his philosophy about the value of employees:

One great employee is equal to three good. If you really believe that, a lot of things happen. We try to pay 50 to 100 percent above industry average. That’s good for the employee, that’s good for the customer, but it’s good for the company too, because you get three times the productivity at only two times the labor cost.18


Organizational Practice

Description and Benefit

Provide decision- making discretion

Allowing employees to make decisions gives them a sense of control and greater opportunities for learning.

Share information Information helps employees see the impact of their work and how it fits into the big picture, like the vision and goals of the organization.

Minimize incivility Poor treatment, such as bullying and rude behavior, has dramatic negative effects on outcomes in the Organizing Framework and often leads to incivil behavior by the victims. Organizations need to select employees based on civility and take swift and appropriate action when incivility occurs.

Provide feedback Feedback can be both motivational and instructional.

SOURCE: Adapted from G. Spreitzer and C. Porath, “Creating Sustainable Performance,” Harvard Business Review, January–February 2012.

257Positive Organizational Behavior CHAPTER 7

Doing good can indeed enhance well-being, even when there is no monetary reward. And it can happen at all levels in the Organizing Framework.

• Individual Level Credit Acceptance, 37th on Fortune’s Best Places to Work list, has an officer of security and first impressions who greets employees and job can- didates at the door everyday. He says his job is “putting smiles on team members’ faces.”19

• Team/Unit Level Whole Foods Market (see also the Problem-Solving Applica- tion in this section) truly empowers team members to run each store as they see fit. Store-level employees decide whom to hire and whether to retain them after a probationary period. They also are responsible for developing team members, scheduling work, choosing suppliers, setting compensation, stocking, staffing, and evaluating performance. Given the level of empowerment and transparency (team members know the performance ratings and compensation of all team members), Whole Foods employees are both personally and collectively account- able for the performance of their respective stores.20

• Organizational Level Southwest Airlines has always and explicitly ranked em- ployees as its most important stakeholder. The expectation is that happy employees will delight customers, they in turn will be loyal customers, and together they will generate superior returns to shareholders.21

Applying OB

KIND is not just the name of the company; it’s the culture and leadership philosophy. Rather than pressuring employees to per- form, Daniel Lubetzky, founder and CEO of the snack food company, achieves ex- traordinary performance via kindness. Since the company’s beginning in 2004, Lubetzky has grown sales to 450,000 units with distribution in 150,000 retail outlets.22 KIND is now one of the fastest- growing US companies in its industry. The competition is taking notice not only be- cause of its sales and growth, but also be- cause of its approach to business. Central to Lubetzky’s approach is and, not or, thinking. He is determined to make a profit and make an impact on customers and employees. He believes he can “build his company and build the community. Achieve mass distribution and make his products healthy. Deliver outstanding performance and create a fun, nurturing corporate culture.”23

Daniel Lubetzky, founder and CEO of KIND, provides an example of how doing good and doing well are mutually reinforcing rather than mutually exclusive. © Stephen Lovekin/Getty Images

Do the KIND Thing

258 PART 1 Individual Behavior

Give in Order to Get Giving financially doesn’t necessarily detract from outcomes. Researchers studied the links between the amount of discounted care and the quality of all care provided by a number of hospitals in Southern California. Discounted care is given to those who cannot pay or can pay only a reduced rate; sometimes it amounts to a financial loss for the hospital. The researchers found that hospitals providing more dis- counted care also reported lower incidences of pneumonia and heart failure in patients, as well as better surgical outcomes and fewer readmissions.28 This seems to suggest that al- truism and high performance are not mutually exclusive.

However, balancing the needs of multiple stakeholders—employees, customers, communities, investors—is a major challenge. Despite what particular leaders may say, most give clear priority to one, often at the expense of the others. But some truly attempt to satisfy all stakeholders. For instance, Whole Foods founder and co-CEO John Mackey has been quite successful at meeting financial goals while also serving other aims. He said the following when asked about how to deal with business challenges such as pres- sure to meet earnings targets:

The first step for such a company is to clearly define its higher purpose beyond maximizing profits. It should then start to design everything it does around creating value for its stakeholders. It should get rid of all metrics that are not connected to value creation for stakeholders. It should then create new metrics that are leading indicators of future performance, measures such as employee passion and customer advocacy.29

The following Problem-Solving Application describes Whole Foods’ self-reinforcing practices and exemplify the way profitably and doing good can coexist.

He also provides the following advice for those interested in leading with kindness:

1. Give productive not personal feedback. A kind business is one in which people are valued and feel valued. Candid but developmental feedback is essential. “Setting a precedent of open and honest communication helps minimize backroom gossip and, in turn, lays the groundwork for a culture of trust, loyalty, and professional development.”24

2. Fire the firing mind-set. “At KIND we’ve challenged the team to approach depar- tures from a more empathetic place . . . other than in cases of serious or deliberate misconduct, nobody is summarily terminated.”25 The company instead engages in coaching to boost skills or moves the person to another, better-fitting position within the firm. 

3. Use empathy. Being open to another’s perspective, and letting people know you are genuinely considering things from their view, is a powerful and often over- looked business skill. Showing such regard for others often leads them to more thoroughly consider your own perspective. The company’s KINDOs program is a way employees send “kudos” to each other for work well done, acts of kindness, or other notable behaviors. The recognized employees are then celebrated each month.

4. Let everybody play a role. From the newest to the most senior, employees “have entered an implicit pact to think of our shared enterprise ahead of ourselves” that “requires doing whatever it takes to get the job done . . . there’s no task too small or insignificant for me—or any of us—to do.”26

Lubetzky also said, “I’m on my fourth business now—it has become clearer that em- pathy and kindness offer a distinct competitive advantage.”27 Leaders and organiza- tions need to beware of and not buy into false compromises. You can do well by doing good!

259Positive Organizational Behavior CHAPTER 7

Whole Foods Market: More than Profits and More than Organics

It is difficult to overestimate Whole Foods Market’s impact on the marketing of organic food in the United States. Besides being a perennial favorite on Fortune’s 100 Best Companies to Work For list,30 the company sets the standard for organic foods: no syn- thetic chemicals, no toxic or persistent pesticides or herbicides, no sewer sludge or synthetic fertilizers, no genetically modified or- ganisms (GMOs), no antibiotics, no synthetic growth hormones, and no irradiation.31

Yet, despite his firm’s success, CEO John Mackey feels that “organic has grown stale. Its guidelines prohibit the use of syn- thetic fertilizers and pesticides, which is a good thing . . . But they don’t address all the burgeoning issues—from excessive water us- age to the treatment of migrant laborers—facing agriculture today. And once farmers are certified as organic, Mackey believes they have little incentive to improve their practices. ‘Organic is a great system, but it’s not a complete solution,’ he said.”32 Current prac- tices do not appropriately consider and influence energy conser- vation, waste reduction, and farm worker welfare. 

Accordingly, Whole Foods launched a new and expanded initiative–Responsibly Grown—to address these stated short- comings. Suppliers that meet the Responsibly Grown criteria qualify to sell their products to Whole Foods. Before this pro- gram, only suppliers that were certified organic qualified. This has caused great unrest among many existing suppliers. Organic farmers and food producers across the land have built their en- tire businesses around Whole Foods standards for organic. If they complied with those standards, then this gave them an edge on other nonorganic farmers. Now, however, they feel that the Responsibly Grown program al- lows many nonorganic farmers to qualify as suppliers via a different set of standards. Conventional (nonorganic) farmers can now become certified suppliers because they implement recycling pro- grams and/or use alternative energy but still do not meet the organic food standards. Existing or- ganic farmers are concerned about their own viability in light of the new program and new competitors it allows. They feel it diminishes their hard-won distinctiveness and competitive advan- tage, not to mention their average investment of up to $20,000 to meet the Responsibly Grown standards.33

Problem-Solving Application

Apply the 3-Step Problem-Solving Approach

Step 1: Define the problem as explained by Mackey.

Step 2: Identify the causes of the problem. Which inputs and processes from the Organizing Frame- work are evident?

Step 3: Make recommendations to Mackey and Whole Foods regarding the company’s Responsibly Grown program and its suppliers.

John Mackey, CEO of Whole Foods, is a longtime champion of sustainability. His practices and those of his company epitomize a broad stakeholder approach by focusing on people, planet, and profits. In fact, the company’s motto is “Whole foods, whole people, whole planet.” © Dustin Finkelstein/SXSW/Getty Images

260 PART 1 Individual Behavior

Referring to Figure 7.2, note that positive emotions help drive positivity from person fac- tors. Recall that in Chapter 3 we introduced emotions as relatively brief psychological and physiological reactions that have a particular target, such as a person (an unethical and bullying boss), a situation (a night out with your closest friends), or an event (scoring well on an exam). Our discussion then focused on negative emotions and how to manage their expression. We now turn to positive emotions.

Like their negative cousins, positive emotions are relatively flexible individual dif- ferences and are important processes in the Organizing Framework. And while you may think of emotions simply in terms of positive or negative, there is much more to the story.

Beyond Happy vs. Sad Positive and negative emotions are not polar opposites. The world of emotions is not sim- ply happy versus sad. Negative emotions spur you to act in quite narrow or specific ways. Fear may motivate you to flee, and anger may motivate you to fight. Positive emotions, in contrast, tend to broaden your mind-set and open you to consider new, different, and pos- sibly better alternatives when trying to solve a problem.

Positive Emotions as Resources If you think of emotions in this way, you can see that negative emotions are limiting and positive emotions are resources that fuel individual, group, and organizational flourishing. (Flourishing is discussed in detail in the last section of this chapter.) Barbara Fredrickson explains positive emotions this way:

To get a feel for the ways positive emotions can build life resources, envision for a moment something that made you feel joyful, playful, or intensely alive—when you wanted to smile, cheer, or jump up and dance around. Maybe it was . . . sharing a meal with lots of laughter with a friend you haven’t seen in ages . . . maybe it was dancing with the group of friends as your favorite band played. Whatever comes to mind for you, take a moment to relive the experience in your mind, letting joy rekindle. Consider how you felt and what you felt like doing. What we’ve learned about joyful experiences like these is that the playful urges they carry build resources, and in times of trouble, these gains in resources can help you in important ways—strengthen relationships, boost performance at school and work, and improve your health.34


How can positive emotions make me more effective at school, at work, and in other arenas of life?


OB recognizes emotions as an important and ever-present individual-level process. In the

section ahead you can see whether your positive emotional experience matches our list of

the 10 most common positive emotions. Then you’ll see how positivity is more than happi-

ness and painting a smile on your face. You’ll also find tips on how to foster your own positive

emotions and how to apply them at school, work, and home.


261Positive Organizational Behavior CHAPTER 7

The bottom line is that positive emotions help you build resources in the form of: • Social relationships that are supportive, fulfilling, and lasting. • Psychological well-being that leads to personal growth, meaningful goals, and self-

acceptance.35 • Physical well-being in the form of lower stress and a healthy heart.

These resources support your efforts and effectiveness in all arenas of your life—school, work, and family. 

Benefits of Positive Emotions Positive emotions are processes that influence many of the outcomes in the Organizing Framework. They have desirable effects on:

• Organizational commitment • Creativity • Decision making • Intentions to quit • Performance36 • Stress37  

Table 7.2 lists the 10 most common positive emotions from the most to the least frequently experienced. Love is a special case, however. Despite being at the bottom of the list, it is actually the most frequently experienced positive emotion. After reading about each of the other positive emotions, you’ll understand why it was inserted last in the table.


Creating More Positive Emotions in My Life

Complete the following to apply your new knowledge regarding positive emotions.

1. Choose three emotions, other than love, from Table 7.2.

2. Think of a time when you experienced each. What were the circumstances?

3. What were the benefits to you?

4. Did anybody else benefit? If so, how?

5. Think of ways you can create and experience each of these same three emotions at school, work, or home.

Positive Emotions Are Contagious It has been shown time and again that if you help somebody in a meaningful or even a small way, that person is more likely to help others. As Barbara Fredrickson says, “Be- yond the dance of positivity between you and the person you helped, those who witness your good deed may well feel inspired, their hearts uplifted and elevated.”38 

This means that not only do you reap the benefits of helping somebody else, but that person also benefits, and so does the person he or she helps, and so on. This self- reinforcing and perpetuating aspect of positive emotions, and positivity more generally, is what leads to upward spirals of positivity,  in which your positive behaviors, feelings, and attitudes generate the same in others in a continually reinforcing process.

Positivity spirals also work in the other direction. In diverse customer service jobs— such as financial consulting, medical care, retail banking, hair care, and grocery stores— customers who showed delight with the service generated positive emotions in the

262 PART 1 Individual Behavior


Positive Emotion


Joy Visualize this: Your surroundings are safe and familiar. Things are going your way, even better than you expected. Choice requires little effort on your part. Colors are more vivid. There’s a spring in your step. And your face lights up with a smile and an inner glow.

Gratitude Imagine you’ve realized that someone has gone out of his or her way to do something different. Your mentor gently steers your career in the right direction. Your physician meets you at the office on the weekend. Gratitude opens your heart and generates an urge for you to give back, to do something good in return, either for the person who helped you or for someone else.

Serenity Like joy, serenity includes safe and familiar surroundings and requires little effort on your part. But unlike joy, serenity is low key. It comes when you go on a long, leisurely ride or walk, engage in fulfilling conversation, or get wrapped up in a good book while relaxing on vacation.

Interest Something novel or different draws your attention, filling you with a sense of possibility or mystery. Unlike the case for joy and serenity, the circumstances call for effort on your part. You’re pulled to immerse yourself in what you’re discovering.

Hope Hope is different from most other positive emotions, which you experience when you’re safe and/or satisfied. You are hopeful when something isn’t going your way, but you believe that it can.

Pride You know pride’s evil cousins—shame and guilt—and the painful feelings that overcome you when you are to blame for something. Pride is the opposite; you’re responsible for something good, something for which you can take credit or that made a positive difference to someone else. (However, unchecked pride is hubris.)

Amusement Sometimes something unexpected happens that simply makes you laugh. Amusement is social; it most often happens in the company of and as a result of others. Heartfelt laughter often accompanies amusement.

Inspiration When you’re inspired you are moved to do something extraordinary, something you might otherwise feel is beyond your abilities. This same feeling often rivets your attention, warms your heart, and draws you in. Inspiration doesn’t simply feel good; it makes you want to act, to improve, or even to be the best you can be.

Awe Closely related to inspiration, awe happens on a grand scale. You feel overwhelmed, small, and humble. Awe makes you stop in your tracks. Sometimes people are awed by nature, such as the Grand Canyon or Niagara Falls.

Love Love is not a single positive emotion but incorporates many of the others. When these good feelings stir our hearts within a safe, often close relationship, we call it love. Early stages of such relationships involve intense interest in everything and anything the person says. You share amusements and laughter together. As your relationship builds great joy, you begin to share your hopes and dreams for the future together. When the relationship becomes more solid, you experience serenity and can be proud of your partner’s achievements, as if they are your own.

SOURCE: Adapted from B. L. Fredrickson, Positivity (New York: Three Rivers Press, 2009).

provider and a subsequent increase in that person’s organizational commitment and job satisfaction. We’re often pleased when we help somebody and they show they appreciate it. However, better still, the benefits extend to future customers via improved service be- haviors.39 This illustrates the lasting or enduring effects of positivity.

This contagion occurs in teams too. Positive emotions spread to create team-level emotions that help members new and old feel safe, welcome, and truly part of the team. These benefits lead to improved team performance.40  

263Positive Organizational Behavior CHAPTER 7

How Much Positivity Is Enough? Don’t overlook the valuable role of negative emotions—life is not all sunshine and roses. Negative emotions can motivate you to try harder and improve, and they can also protect you against harmful situations and communicate to others your need for help or support.41 And forcing yourself to feel or act as if everything is great all the time is absurd and would certainly undermine your effectiveness, health, and overall well-being. Even the most positive person feels the intense emotional pain associated with experiences of loss and betrayal. Positive people get angry when they or others are treated unfairly. So how much positivity is enough?

Multiple Positives for Every Negative Thankfully, research gives us some guid- ance. While some researchers have argued for specific optimal ratios of positive to nega- tive and others have disputed specific numbers, they all agree that positive and negative experiences are not equivalent. You can’t simply remedy a negative experience with a positive one.

Instead, to flourish and experience the benefits of positive OB discussed in this chap- ter, you must have three, five, or more positive experiences for every negative.42 You don’t need to focus on which positive emotions you feel at a particular time. Just be sure you have multiple positives for every negative one.

Why? Because, as has been well-established, our brains respond differently to posi- tive and negative experiences.

• Negative experiences activate a survival orientation, which leads us to be more responsive to negative information. Our brains actually look harder for negative than for positive information and stimuli during daily activities.43 This probably helps explain why managers tend to give more negative than positive feedback to employees.

• Positive experiences activate a supportive orientation, which leads us to be more responsive to positive information. This is part of the reason managers, and people more generally, seem receptive to new ideas when they are in a good mood.

We often think of service encounters from the customer’s perspective. However, research shows that positive customers help generate positive feelings and behaviors in employees. Better still these positive effects can “spiral” beyond a particular encounter to positively affect the employee’s other behaviors. © Peathegee Inc/Blend Images LLC RF

264 PART 1 Individual Behavior

This discussion reveals why managers should focus on the good things employees are doing, and why all of us should focus on the positive qualities of coworkers, classmates, partners, friends, and spouses. Yes, you might be saying, but how?

Strategies to Increase Your Positivity The following activities can help you in- crease your positive experiences and decrease your negative ones.44

Create high-quality connections. Any social interaction, whether with family, co- workers, classmates, or the person ahead of you in line, is a chance to create a high- quality connection. Such connections are energizing and enhance your positivity. To transform ordinary interactions into high-quality connections, try the following tips:

1. Make someone the only person in the room. Engage the other person by being present, attentive, and affirming. Act as if he or she is the only person in the room.

2. Support. Do what you can to encourage the person and help him or her achieve a goal or attain success.

3. Give trust. Believe you can depend on this person to meet your expectations, and let it show.

4. Goof off. Play! Have no goals or intentions other than to goof off with others.

Cultivate kindness. Set a goal of performing five new acts of kindness in a single day. Aim for actions that really make a difference and come at no cost to you. Assess what those around you might need most and make a plan, but execute your plan so your acts of kindness all occur on the same day to further enhance the impact.

Develop distractions. One of the best ways to break from negativity is to distract yourself. Brainstorm and think of ways—old and new—to distract yourself from negative thoughts. Be sure to try to think of things you can do at school, at home, or at work. Make two lists: healthy distractions and unhealthy distractions. Healthy distractions can be go- ing for a run, taking a bike ride, or playing your favorite sport. Unhealthy distractions might be drinking, eating junk food, watching TV, or playing video games. Be careful of these, and for each unhealthy one, challenge yourself to add another healthy distraction to your list. Negativity can creep in anywhere and at any time, so keep your lists of distrac- tions handy and practical.

Playing video games is a fun and effective way to create high quality connections. These two seem to be enjoying the friendly competition and each other’s company. Fun and positivity at home transfers to positive emotions and higher performance at work. © James Woodson/Getty Images RF

265Positive Organizational Behavior CHAPTER 7

Dispute negative self-talk and thoughts. Write on 3×5-inch cards your most frequent negative thoughts or emotions about yourself, a relationship, or a situation at school, work, or home. Then, in a private place where nobody can hear you, read the cards aloud one at a time. After reading each, immediately dispute or counter it. Don’t stop to think, but beat it down and disprove it with something positive about yourself, the situation, or the facts. Be sure to do this with enthusiasm, to build your conviction. Practice. Your goal is to learn to dispute negative thoughts as quickly as they enter your mind.

Platitudes = Fake = Bad Outcomes Remember that simply uttering positive words or forcing a smile isn’t enough. Humans are excellent detectors of insincerity.45 If your positivity is not heartfelt and genuine, you will not reap any of the benefits of im- proved performance, relationships, and health we’ve discussed. Insincere attempts at positivity may even do harm, because your lack of authenticity can erode others’ trust in you and reduce your influence and credibility with them. 

My Level of Positivity To make this discussion come to life for you, find out the relative frequency of your positive to negative emotions. This knowledge can help you understand many things about yourself, such as how likely you are to reap the benefits of positive emotions and positive OB. Remember that emotions are short-lived, and that any measure of your emotions captures your feelings about a specific event, per- son, or dimension of your life at only a particular point in time. We encourage you to take Self-Assessment 7.1 for the past day of your life, which is intended to capture your positivity more generally. Then, do it focusing on school as your target. If you’re working, calculate your ratio of positive to negative emotions for work and compare it to your ratio for life more generally. This will give you knowledge of your positivity in various arenas of your life and help you better understand this important personal resource.

Learn Your Positivity Ratio Please be prepared to answer these questions if your instructor has assigned Self-Assessment 7.1 in Connect.

1. What is your reaction to the results?

2. Considering the individual differences (IDs) we discussed in Chapter 3, which ones do you think are contributing to your ratio?

3. Do others see you as more or less positive than your ratio suggests? Why?

4. If you conduct this self-assessment for two different dimensions of your life (such as school and work), to what do you attribute the differences in the ratios?

5. Describe three things you can do to improve your positivity ratio for school.

SOURCE: Positivity: Groundbreaking Research Reveals How to Embrace the Hidden Strength of Positive Emotions, Overcome Negativity, and Thrive, by Barbara Fredrickson, Copyright © 2009 by Barbara Fredrickson, Ph.D. Used by permission of Crown Books, an imprint of the Crown Publishing Group, a division of Random House LLC. All rights reserved.


266 PART 1 Individual Behavior


How can mindfulness contribute to my effectiveness?


You may be more aware of mindfulness by its absence, that is, when you realize you’ve done

something foolish or thoughtless. In this section you will find that you can improve your focus

and attention through practice. You’ll learn what inhibits mindfulness and two effective tech-

niques you can use to increase it.


Figure 7.2 showed that mindfulness is another person factor that creates positivity in work environments. Although the concept of mindfulness has been studied for over 30 years, it is new to the field of organizational behavior.46 Yet a recent survey by Fidelity Investments and the National Business Group on Health estimated that 22 percent of all US employers already offer some form of mindfulness training.47 You will learn more about this later in the section.

Mindfulness can have a positive impact on many of the outcomes in the Organiz- ing Framework. It can enhance your decision making and your ability to use the managerial skills associated with performance management, like giving feedback, coaching, and recog- nizing others. This section reviews the difference between mindfulness and mindlessness, the inhibitors of mindfulness, its benefits, and techniques you can use to practice it.

Mindlessness vs. Mindfulness Mindlessness  “is a state of reduced attention. It is expressed in behavior that is rigid,” or thoughtless.48 Life’s dynamics put all of us into occasional states of mindless- ness. Our brains simply can’t keep up with all the stimuli we receive, according to noted psychiatrist Edward Hallowell. “Never in history has the human brain been asked to track so many data points,” Hallowell says. He believes overloading of our brains is a primary cause of poor performance at school and work: “We’re simply expecting more of our brains than they have the energy to handle.”49

Mindlessness characterizes the tasks we do automatically, like driving to and from school or work. We get in the car, take off, and suddenly arrive at our destination wonder- ing how we got there. Mindlessness can also be purposeful, as when we refuse to “ac- knowledge or attend to a thought, emotion, motive, or object of perception.”50 An example is failing to focus on a new person’s name when being introduced, so we forget it 30 sec- onds later. Our lack of attention simply sends the name into our pile of forgotten informa- tion. Not surprisingly, mindlessness is associated with poor mental and physical health, less satisfying relationships, and lower task performance.51 Mindfulness is completely different.

Mindfulness  is “the awareness that emerges through paying attention on pur- pose, in the present moment, and nonjudgmentally to the unfolding of experience moment by moment.”52 We can be mindful of both our inner world, such as our feelings and thoughts, and our outer world, including the feelings, thoughts, and interactions of others. Mindfulness requires effort because our brains work in ways that inhibit staying focused. For example, we all have a “thinking mind” that likes to judge everything we see and hear. This creates a kind of mental chatter that detracts from the inner quiet we need to stay focused on and aware of what is going on around us. Further, it’s simply easier to

267Positive Organizational Behavior CHAPTER 7

let the mind wander, on an automatic-pilot setting of unawareness, than to concentrate on the present moment. Unless we make an effort, we drift toward mindlessness.53

Mindfulness improves our interpersonal communications because it keeps us focused on others and what they are saying. Here is what Doug Parker, chair and CEO of American Airlines, had to say about a typical interaction with Herb Kelleher, former CEO of South- west Airlines: “He is completely engaged and never looks over your shoulder to see who else is in the room. It’s not out of principle; it’s just who he is.” Parker told a Fortune re- porter that he had changed his own approach to communicating with employees based on observing Kelleher.54 

Mindfulness requires attentional balance, or the ability to maintain sustained, non- emotional attention in a specific situation. Does wearing headphones at work or study help or hinder attentional balance? The OB in Action box below discusses some research conclusions.

More companies now allow employees to use earbuds and noise-canceling head- phones at work. Some people listen to music, while others just want to reduce the general level of noise. Employees believe the practice helps block distractions like loud coworkers, ringing phones, and machine-related noises. Not all compa- nies agree, however, and some have banned headphone use.

Does the Use of Headphones Help Achieve Mindfulness?

OB in Action

268 PART 1 Individual Behavior

Lyrics Distract During Work and Study. Research with students provided little support for the value of listening to music while studying. A study of Taiwanese students revealed that concentration levels went down when participants studied while listening to music with lyrics. Adult reading-test scores also were lower when people listened to hip-hop music while reading.

Neuroscientists believe that “listening to music with lyrics while trying to read or write can distract employees by overtaxing verbal-processing regions of the brain.” Dr. Robert Desimone, director of Brain Research at MIT, concluded, “The prefrontal cortex, the brain’s control center, must work harder to force itself not to process any strong verbal stimuli, such as catchy lyrics, that compete with the work you’re attempting.”55

Individual Differences Exist. Research shows that people pay more attention to music they like and thus are more distracted by it. Familiar music without lyrics was found to serve as a sound-blocker. Some individuals benefit from noise- canceling headphones because they reduce perceptions of the high-frequency sound and general activity in an office environment.

At the same time, the use of earbuds and headphones can cause conflict and resentment at work. It becomes hard for colleagues to get each other’s attention, for instance, and some believe the use of such equipment violates norms of office etiquette.

Do Headphones Help? We don’t recommend headphones when you are reading or studying. Otherwise, it seems that individual differences and office norms should rule.56


1. If you are going to listen to music while working, what artists or types of music are most suitable for you?

2. Assume you’re on a team project with other students. Would it bother you if some of them wore headphones and listened to music while you are working together? Explain.

3. Assume you’ve been promoted to supervise a group of employees at work. Would it bother you if some workers in the group wore headphones and lis- tened to music? Explain.

Let’s consider the inhibitors of attentional balance.

Inhibitors of Mindfulness The two key inhibitors of mindfulness are attentional deficit and attentional hyperactiv- ity.57 You’ll need to understand these so you can avoid them.

Attentional Deficit Attentional deficit  is the inability to focus vividly on an object. This deficit can easily occur in a classroom when students feel bored, listless, or uninterested. Multitasking on digital devices is another key contributor. For exam- ple, research suggests that electronic gadgets are in use in 10 percent of all pedestrian injuries. Other research shows that adults’ use of smartphones may be the culprit be- hind a 10 percent increase in unintentional childhood injuries.58 Kids seem to take risky actions like throwing objects or going down a slide headfirst when caregivers are not paying attention.

269Positive Organizational Behavior CHAPTER 7

Attentional Hyperactivity Attentional hyperactivity  happens when our minds are racing or wandering, resulting in compulsive daydreaming or fantasizing. This is also called rumination. Rumination is “the uncontrollable repetitive dwelling on causes, meanings, and implications of negative feelings or events in the past.” Worry, which focuses on the future, such as what will happen if I lose my job, also contributes to rumination.59

We all do a lot of mind wandering. Best-selling author and psychology professor Daniel Gilbert estimates that our minds wander for about 50 percent of the workday. Mind wondering reduces performance, particularly for complex tasks.60 Gilbert’s re- search reveals that most mind wandering is centered on personal rather than business concerns.61 When your mind wonders, don’t be overly attentive to it and don’t be mad at yourself for doing it. Just give soft recognition to the fact that your mind is wandering and return your focus to the present moment.

Benefits of Mindfulness There are four broad benefits of mindfulness.

1. Increased physical, mental, and interpersonal effectiveness. Effectiveness in- creases because, when they are mindful, people are more aware of physical sensa- tions, personal feelings, personal emotions, and the feelings and emotions of others. Mindfulness also promotes better sleep and helps reduce chronic pain.62

2. More effective communications and decision making. Mindfulness fosters more effective listening, greater use of empathy, and more attention to nonverbal cues dur- ing conversations.63

3. More balanced emotions. Paying attention to internal emotions and the emotions of others leads us to be more emotionally balanced and less reactive. This in turn helps reduce conflict with others.64

4. Performance and satisfaction. Mindfulness can increase productivity and job satisfaction.65

This sign in Stockholm, Sweden, illustrates the dangers of attentional deficits associated with texting and walking. It’s easy to bump into people or trip over a curb when walking and texting. Has this ever happened to you? © Johan Jeppsson/Bloomberg/Getty Images

270 PART 1 Individual Behavior

As illustrated in the OB in Action box, organizations have discovered the benefits of mindfulness for a variety of members, including Google employees, National Football League players, and grade school children.

Would you like to improve your overall well-being? How about the effectiveness of your social interactions and relationships? If yes, you will gain valuable insight about your level of mindfulness by taking Self-Assessment 7.2. You can use your scores to de- velop an improvement plan in pursuit of mindfulness’s positive outcomes.

• Chade-Meng Tan heads Google’s mindfulness training program. His goal is to “enlighten minds, open hearts, and create world peace.” He believes that mindfulness “opens the doorway to loving kindness, which is at the heart of business success.” Google has trained more than 2,000 employees in its Search Inside Yourself mindfulness course. Ninety-one percent of participants reported more clarity of mind.66

• General Mills employees, including 400 executives, have been practicing meditation and yoga for more than seven years. Re- sults include the following: 80 percent of participants report bet- ter decision making, 89 percent believe they became better listeners, 83 percent took time to focus on personal productivity, and 82 percent eliminated nonessential tasks.67

• Aetna employees with high stress levels were spending $2,500 more per year for health care than others. Then 200 of them participated in a 12-week training course that in- cluded meditation and yoga, resulting in demonstrated reduced stress and medical costs. Six thousand employees have subsequently taken the free class.68

• Pete Carroll, head coach of the Seattle Seahawks, hired a sports psychologist to teach the players “tactical breathing, vi- sualization, and mental-imaging techniques to cultivate full presence and conviction in the moment.”69  Carroll believes these techniques help players perform at their maximum potential.

• Goldie Hawn’s foundation created the MindUp program to teach mindfulness to children. A set of 15 lessons based on neuroscience has been taught to several hundred thou- sand children. Demonstrated results include increased optimism, happiness, empathy, compassion, and academic performance as well as reduced bullying and aggression.70 


1. Are you surprised by the diverse applications of mindfulness? Explain. 2. Which of these applications do you find most interesting? Why?

Applications of Mindfulness OB in Action

271Positive Organizational Behavior CHAPTER 7

Practicing Mindfulness The goal of practicing mindfulness is to help you become more calm and collected in all circumstances. The 2009 book The Leader’s Way explains: “When the mind is disturbed by anger, jealousy, hate, impatience, fear, lack of self-confidence, or negative emotions about things that happened in the past, it is wasting valuable time that instead should be used for constructive thinking.”71 Practicing mindfulness helps you focus your mind on productive activities while constraining counterproductive thinking and mind wandering.

The good news is that you can learn mindfulness by using a variety of simple medita- tive techniques on a regular basis. Although there are many good books and articles you can consult for details regarding these techniques,72 we review two approaches that are easily learned: a breathing meditation and a walking meditation. Research shows that practicing short meditative techniques like these reduces stress and negative emotions and increases emotional regulation, task performance, and memory.73 You will find both physiological and cognitive benefits from practicing mindfulness. Give it a try!

Breathing Meditation Breathing meditations are easy and can be done almost any- where. Focusing on breath reminds us of the here and now because it brings us back to a fundamental and vital function of life. This technique requires nothing more than tuning into the physical sensations associated with breathing in and out. Two experts recom- mend the following simple approach for getting started:

• Place your hand on your stomach a couple of inches beneath the upside-down V at the center of your rib cage. Look down, breathe normally, and watch your hand. You’ll probably see it move only a little bit, and more or less up and down. Your belly should expand when you inhale and contract on the exhale.

• Leaving your hand in place, now breathe in such a way that your hand moves out and back, perpendicular to your chest. Try to breathe into your hand with real oomph, so that it travels back and forth half an inch or more with each breadth.74

Start by trying these two steps for about 10 to 20 breaths. Once you are comfortable with this form of diaphragm breathing, you can take your practice to the next level with these additional instructions:

• Sit comfortably in a chair, feet firmly on the ground and your back relatively erect. Feel like you are a “proud mountain” of stability. Close your eyes and take a deep inhale that fills your belly and lungs. Now exhale, noticing how your belly con- tracts. Do this twice.

• Add counting to four or five as you both inhale and exhale, to ensure that you are taking deep breaths. Try doing this for five minutes twice a day. You can extend the length of time you practice breathing meditations as you become more com- fortable with the technique.

What Is My Level of Mindfulness? Please be prepared to answer these questions if your instructor has assigned Self-Assessment 7.2 in Connect.

1. What questions identified your greatest inhibitors? (Select the three items with the lowest scores.)

2. What is the cause of these inhibitors?

3. Examine the techniques listed in the next section and decide which one might be best suited for your needs. Start using the technique on a daily basis.


272 PART 1 Individual Behavior

Your mind is likely to wander during these exercises. You also will notice sounds around you. That’s normal. Acknowl- edge the thoughts and sounds and return your focus to your breath. Don’t try to chase the thoughts away or give the sounds much attention. Just recognize them and let them pass. The thoughts will move away like a white cloud being blown by the wind in a blue sky.

Walking Meditation This is one of your authors’ favorite forms of meditation because it can be done any time you are walking, and no one will know you are doing it. Start this tech- nique by forming an intention. An intention  is an end point or desired goal you want to achieve. It sends a signal to the mind that guides its attentiveness and awareness during the meditative practice.75 A sample intention is, “I will focus on the act of walking while ignoring other sounds and thoughts.” 

Begin walking and keep your intention in mind. Concen- trate on placing one foot after the other. Feel the rhythmic nature of your steps. Focus on how it feels to lift and place your feet on the surface. Train your mind to be aware of your foot- steps. Notice the speed at which you walk and the pressure be- ing felt by your feet. Consider changing the length of your stride and notice how it feels. If your mind starts to wander or you begin thinking about something you have to do, just recognize the thought and then drop it. Return your attention and aware- ness to your intention, which is the act of walking. You will be amazed at what you can observe.76 Try this for five minutes.

A variation on this technique is to focus your intention on sound or smell. For example, “I will focus on all sounds during my walk,” and “I will focus on all smells during my walk.” If you use an intention aimed at sound, begin walking and concentrate on what you hear. Listen for all types of sounds like footsteps, birdsong, mechanical objects operating, wind, tree branches rustling, voices, clanging of objects, airplanes overhead, and so on. The key is to allow your mind to focus on anything that can be heard. Again, recognize stray or wandering thoughts, and then let them passively go away by returning to your intention. Try this for five to 10 minutes.

Practice Makes Perfect Mindfulness can be learned via practice, and though it takes time and commitment, the benefits are substantial. The techniques above can get you started, and helpful apps can also guide you through meditative experiences.77 In ad- dition, your local gym might offer classes. For example, 24 Hour Fitness is exploring the use of special meditative pods that use sound and light to help people meditate.78

Walking in nature can be very meditative and has been found to improve our mood and general outlook. If you want to make a walk like this meditative, take breaks now and then to focus on what you are seeing, hearing, or smelling. © Darryl Leniuk/Blend Images RF


Practicing Mindfulness

• Begin by thinking of a time when you were not paying attention in class.

1. What do you think was the cause of your lack of mindfulness? Was it atten- tional deficit or attentional hyperactivity?

2. What can you do in class to stay focused on the moment?

• Think of a time when you were talking with someone and you completely missed part of what he or she said because your mind was wandering.

3. How can you remain mindful in one-on-one conversations?

273Positive Organizational Behavior CHAPTER 7


How can my inner HERO and signature strengths benefit me at work and in my career?


Positive psychological capital is a relatively new concept in OB and is part of the positive OB

movement. It is a key person input in the Organizing Framework. Often you’ll find it explained

in terms of its components: hope, efficacy, resiliency, and optimism (HERO). You’re about to

learn how to develop and benefit from your inner HERO or psychological capital. We also ex-

plore signature strengths, in keeping with a contemporary movement that focuses on utiliz-

ing individuals’ positive attributes instead of attempting to overcome weaknesses.


In this section you’ll learn how both psychological capital and signature strengths con- tribute to positivity from person factors, as shown in Figure 7.2. Individuals with high levels of positive psychological capital (PsyCap)  possess considerable hope, effi- cacy, resilience, and optimism (HERO). These traits are characterized by the following:

H Hope. Persevering toward goals and, when necessary, redirecting paths in or- der to succeed.

E Efficacy. Having the confidence to take on challenging tasks and put in the effort necessary to succeed.

R Resilience. When beset by problems and adversity, sustaining and bouncing back and even beyond to attain success.

O Optimism. Making a positive attribution about succeeding now and in the future.79

Fortunately, you can develop your PsyCap. As we discussed in Chapter 3, individual traits that are relatively flexible, such as emotional intelligence, present opportunities for you and other managers to harness, develop, and utilize your strengths. Not only is your PsyCap flexible; it also has been shown to improve many outcomes in the Organiz- ing Framework, such as by increasing job satisfaction, organizational commitment, and well-being and decreasing intentions to quit, job stress, anxiety, and counterproductive work behaviors.80 This section provides the information you need to develop your PsyCap and that of others by focusing on the HERO traits.

Hope = Willpower + Waypower You’re probably thinking, “Of course I know what hope is; what else is there to know?” You also likely see yourself as more hopeful than the average person. If this is your view, you might be surprised to learn that hope actually has two components. Knowing about them can help you understand why hope works, when it doesn’t, and how to build it.

The two components of hope are willpower and waypower. This means to have hope  you need to have a goal and the determination to achieve it—willpower—and you also need to see one or more paths to achieve your goal, even when faced with

274 PART 1 Individual Behavior

adversity—waypower.81 Hope therefore requires both a goal and a means for achieving that goal.

Ben Horowitz, the renowned technology venture cap- italist, puts a high premium on the willpower of entrepre- neurs. Willpower, along with genius, are in his mind the two most crucial characteristics of successful entrepre- neurs. “Building a company is hard and lonely. It demands relentless focus. And no matter how well you do, you must be ready to be pummeled again and again.”82 It takes will- power to persist. Horowitz himself demonstrated enor- mous willpower when Loudcloud, an earlier venture with Marc Andreessen, nearly failed half a dozen times before ultimately being revived, strengthened, and sold to HP for $1.6 billion. Horowitz used “force of personality and will- power to make a business out of it,” said Herb Allen III, the CEO of Allen & Co.83

In a practical sense, hope supports adaptability and change. A series of studies showed that hope led to increased adaptability for police officers and insurance sales agents, and in the case of the agents, it also led to increased sales commissions.84 You can build hope in yourself and others via effective goal setting (Chapter 6).85 The problem- solving approach also can help, because it can assist you in identifying potential obsta- cles, sources of support, and feasible alternate paths by which to reach your goal.

Ben Horowitz is one of the top tech investors. He believes that willpower and the ability to persist are critical to entrepreneurs’ success. © Patrick T. Fallon/Bloomberg/Getty Images


Increasing My Level of Hope

Complete the following to apply your new knowledge regarding hope. These steps should make you more hopeful of having a positive influence.

1. Think of a situation at school, work, or home that you’d like to positively influence.

2. Now describe a specific goal you’d like to achieve.

3. Formulate a plan of action to achieve this goal.

4. To increase your level of hope for achieving your goal, think of a plan B or alternative to your first plan. 

Efficacy We discussed efficacy in Chapter 3; remember efficacy also is a component of your core self-evaluations (CSEs) and represents your confidence in your ability to achieve. Thus it influences the way you perceive the world around you and your ability to deal with chal- lenges and opportunities. Figure 3.4 provides a guide for improving your self-efficacy. Applying your knowledge of self-efficacy will help you realize its important role in your positive psychological capital—greater efficacy makes you more confident, more posi- tive, and more effective.

Resilience If you’re resilient  you have the capacity to consistently bounce back from adversity and to sustain yourself when confronted with challenges. Resilience helps you when things go your way and when they don’t; it is your built-in shield and recovery character- istic. Fred Luthans, the father of psychological capital, and his colleagues stated that re- silience “is arguably the most important positive resource to navigating a turbulent and stressful workplace.”86 What gives resilience its power? Resilient people are open to new experiences, flexible to changing demands, and emotionally stable when confronted with

275Positive Organizational Behavior CHAPTER 7

adversity.87 It is therefore no wonder that resilience is a component of psychological cap- ital and positive OB. Resilience can be improved with support such as coaching or help from others during trying times or experiences. The work climate, discussed in the next section of this chapter, can make employees feel safe enough to take risks and to make mistakes, thus enhancing their resilience.88 

Optimism Optimists are both realistic and flexible. Think about it. If we aren’t realistic, then we are setting ourselves up to fail. And if we fail too often, then even the most optimistic of us lose our motivation and inspiration. 

Similarly, true optimists are flexible. This means they are willing to revise their views as situations change. (Recall the contingency approach to management discussed in Chapter 1.) To clarify, optimists don’t see everything as positive. If they did they would be unrealistic or delusional.

Also recall from Chapter 4 that optimists perceive the causes of events in a particular way. That is, optimists  often attribute successes to “personal, permanent, and per- vasive causes, and negative events to external, temporary, and situation-specific ones.”89 Scientists argue that optimism is part of what alters our views of the likely out- comes in our lives and motivates us to act.90 The following OB in Action box illustrates the power of optimism for two successful entrepreneurs.

Brothers Bert and John Jacobs are the founders of Life Is Good (LIG). The company is probably best known for its Life Is Good T-shirts, but it now sells more than 900 items in 4,500 stores in 30 coun- tries.91 The company’s mission is to spread the power of optimism “through art, a passionate com- munity, and groundbreaking nonprofit work.”92

The brothers’ road to success was long and tough. The two spent years driving a used van up and down the East Coast selling T-shirts printed with their artwork. They survived on peanut butter and jelly, slept in the van, and rarely showered. After five years they had $78 in the bank, but that didn’t cause them to give up.93 Their break- through occurred when they realized they wanted to “counter the daily flood of negative news”94 bombarding people every day in the media. 

“That led to a keg party at our apartment where we put drawings up on a wall. We had done a lot of music-inspired, cool, funky designs. But when we asked friends to write notes next to the drawings, we got a lot of comments about one drawing [a stick figure that smiled]. We de- cided to pair the figure with the words ‘LIFE IS GOOD’ and printed up 48 T-shirts with it. We went to a street fair and sold all of them in the first hour. It confirmed that people were craving something positive that focused on the good, instead of what’s wrong with the world.” The rest is history.95

Life Is Good . . . Spread the Power of Optimism OB in Action

Brothers John (left) and Bert Jacobs started Life Is Good T-shirts with very few resources. Through a combination of hope and the belief that optimism is powerful, they have built a $100 million apparel business. © Rachel Murray/Getty Images

276 PART 1 Individual Behavior

Did you ever wonder why people are optimistic in the first place? What function does optimism serve? One school of thought claims it is self-inspiration, our mind’s way of motivating us to move forward even if the future is uncertain. The rationale is that if hu- mans didn’t think the future would be bright—an improvement over today—they might be crippled with fear and uncertainty, never take risks, and never better themselves or their situation. After all, humans have the unique ability to think ahead and to realize they will die some day. If the mind didn’t have some way of combating this, many people would be preoccupied with gloom and wouldn’t save money or invest in their children.

Therefore, a belief that things can or will be better in the future not only helps keep our minds at ease, but it also reduces stress (discussed in Chapter 16) and helps us paint our decisions in a positive, appealing light. It keeps us moving forward.

How I Can Develop My PsyCap Like other more conventional forms of capital (cash, facilities, patents, equipment), PsyCap is a resource you invest in or develop with the expectation of future returns or benefits. It can help you flourish in your professional and personal life. And its compo- nents are mutually reinforcing—developing one often helps develop the others.98 Try putting the following recommendations into practice to develop your PsyCap.

• Hope development. Generate a work-related goal that is important to you and at- tainable yet challenging; create multiple plans for achieving this goal. Share these with others—coworkers or classmates—to get their feedback and recommendations.

• Efficacy development. Besides recommendations from Chapter 3, break your larger goal into smaller subgoals as discussed in Chapter 6. Create plans for achiev- ing the subgoals and share them with others to get feedback and recommendations.

• Resilience development. Make a list of your personal talents, skills, and social networks; specify how these can help you achieve your goal; identify potential obstacles and decide how to avoid them or reduce their impact.99

• Optimism development. Hope development bolsters your optimism, but it also is helpful to identify obstacles and negative expectations. On your own, check to see whether the obstacles you identify are valid, and then have others challenge your assumptions.

Today, revenue exceeds $100 million annually, which provides the brothers the means to invest in other opportunities and help fulfill their mission of spread- ing optimism. The No. 1 criterion they use when evaluating opportunities is a “clear, unifying goal or mission.”96 The other details, while important, are simply a vehicle for delivering or realizing the mission.

The brothers offer the following advice to other entrepreneurs:97

1. Start with a purpose or mission. “It makes it easier to withstand setbacks, to motivate yourself and others, to recruit and unite a team around your idea. . . . We all crave meaning in our lives—build it into your adventure.”

2. Remain open to feedback. “Rejection can be your best teacher. It forces you to make adjustments and grow smarter and stronger.”

3. Work and play. Be sure you play at work. Everything is better when it includes laughter and fun.


1. What are the potential sources of the Jacobs brothers’ optimism? 2. How could you apply their approach to your own life—at school, work, or

personally? 3. What are the potential downsides to optimism? Explain.

277Positive Organizational Behavior CHAPTER 7

Learning your personal PsyCap score can help you understand and improve your ability to find a job, increase your creativity and innovativeness, and reduce the stress in your life.100 Your score will also serve as the basis for developing hope, efficacy, resil- iency, and optimism, as described above.

What Is My Level of PsyCap? Please be prepared to answer these questions if your instructor has assigned Self- Assessment 7.3 in Connect. 

1. Which score is the highest? The lowest? Complete the PsyCap development steps, and be sure to utilize your highest or strongest component. Pay extra at- tention to developing the lowest or weakest.

2. In the Organizing Framework identify a process at all three levels—individual, group, and organizational—that PsyCap is likely to influence.

3. Describe one thing you can do to further develop each component of your PsyCap.

Adapted from F. Luthans, C. M. Youseff, and B. J. Avolio, Psychological Capital: Developing the Human Competitive Edge (Oxford, UK: Oxford University Press, 2006).


Let’s conclude this section with an exploration of signature strengths. 

Signature Strengths Signature strengths  “are positive human traits that influence thoughts, feelings, and behaviors and provide a sense of fulfillment and meaning.”101 Signature strengths are a subset, typically three to seven for most individuals, of a larger collection of 24 character strengths (see Table 7.3). What helps differentiate signature strengths from the rest is that “a person owns, celebrates, and frequently exercises”102 them, and these strengths are “core to people’s identities, and they feel authentic, exciting, and invigorat- ing when used.”103 Signature strengths can be developed, too.

A Departure from Past and Present The “strengths movement” represents a dra- matic departure from conventional management research and practice. Historically, and still, the vast majority of writing, research, and actual managing focuses on how to fix what is wrong and who is underperforming or otherwise not meeting expectations.

Many large and successful organizations are putting the strengths approach to the test, such as VMware, Wayfair, and the Boston Consulting Group. The primary focus now is on employee successes and potential, rather than on missteps and


Creativity Zest Modesty

Curiosity Love Prudence

Judgment Kindness Self-regulation

Love of learning Social intelligence Beauty

Perspective Teamwork Gratitude

Bravery Fairness Hope

Perseverance Leadership Humor

Honesty Forgiveness Religiousness

278 PART 1 Individual Behavior

deficiencies.104 Research by the Gallup organization on employee strengths shows some impressive findings. Employees who report using their strengths every day at work are: 

• Three times more likely to report having an excellent quality of life. • Six times more likely to be engaged at work. • 8 percent more productive. • 15 percent less likely to quit.105

Would you like to be more engaged with school, work, and leisure activities? If yes, then your signature strengths are the key. Self-Assessment 7.4 will help you identify your sig- nature strengths. You can use your scores to assess how you might build your strengths into your daily activities at school, work, and life.

What Are My Signature Strengths? Please be prepared to answer these questions if your instructor has assigned Self-Assessment 7.4 in Connect.

1. What are your highest-scoring strengths?

2. What are your weaknesses (the components with the lowest scores)?

3. Which of your strengths are you using on a daily basis?

4. What can you do to incorporate your strengths into your school, work, and leisure activities?


Applying Strengths at Work Consultants who work for Gallup, a firm who has been instrumental in the strengths movement, said: “Giving employees a chance to excel by do- ing what they do best every day seems like a no-brainer. In too many organizations, though, encouraging employees to know and use their strengths at work is limited to a guerrilla movement.”106 This quotation highlights that the fundamental obstacles to realizing the benefits associated with signature strengths are situation factors, such as leaders, manag- ers, performance management practices, and organizational culture. Put another way, of course it is necessary to be aware of your strengths, but it also is necessary to be in situa- tions that allow you to use them.107 To help with this, we provide the following guidance on how organizations can create environments that foster and utilize employees’ strengths: 1. Look in the mirror. Like most work endeavors, a strengths approach requires leader

support to succeed. Begin with leaders learning their own strengths and being open about them. For instance, leaders who show vulnerability and admit to their own mis- takes and limitations can serve as powerful role models for the larger organization.”108

2. Build strengths into performance management. Strengths need to be supported by expectations, measurement, review, and rewards. It is an uphill battle to talk about, encourage, and celebrate strengths if the performance management practices do not support them.109

3. Know your purpose. Leaders need to be clear on why they and the organization are focusing on strengths—what is the intended benefit? Is it greater collaboration, increased customer satisfaction, innovation, or reduced turnover? Employees need to understand why and how strengths are important to the organization and its objectives.110

4. Coach and develop strengths-oriented managers. A strengths approach is not common, and implementing it effectively requires effort. Set your managers up to win by providing appropriate coaching and support.111

Now that you have a sense of two flexible and very important positive individual differences—psychological capital and signature strengths—we move to the group/team level in the next section and discuss organizational climate. You’ll learn how policies and practices can help foster and realize the positive attributes of employees.

279Positive Organizational Behavior CHAPTER 7

Just as a car needs gasoline or electric power to run, Positive OB needs the right environ- ment to flourish. Figure 7.2 revealed that organizational culture and climate are the situa- tion factors that promote positive work environments. We focus on organizational climate in this section because organizational culture is thoroughly discussed in Chapter 14.

Organizational climate  consists of employees’ perceptions “of formal and in- formal organizational policies, practices, procedures, and routines.”112 In plain lan- guage, organizational climate reflects employees’ beliefs about what they see going on at work and what is happening to them. These perceptions can range from positive and up- lifting to negative and debilitating. Positive climates, such as one that supports safety, lead to positive outcomes like fewer accidents at work.113 In contrast, negative climates that support abusive supervision or fear are associated with negative outcomes, such as less cooperation, less citizenship behavior, and lower performance.114 What type of cli- mate do you think is most likely to promote positivity from situation factors?

The answer is simple, according to the authors of Fortune’s study of the 100 Best Companies to Work For. “The key to creating a great workplace,” they said, “was not a prescriptive set of employee benefits, programs, and practices, but the building of high- quality relationships in the workplace.”115 Figure 7.3 presents a model showing that posi- tive climates are a function of organizational values, organizational practices, and virtuous leadership. Let us consider each of these situation factors.

Organizational Values We defined values in Chapter 2 as abstract ideals that guide our thinking and behavior across all situations. In the context of organizational climate, organizational values repre- sent the ideals that are endorsed, shared, and supported by the organization as a whole. A team of researchers identified three global values that are essential for promoting positive organizational behavior (see Figure 7.3). Each value is defined below.116

1. Restorative justice  reflects “a shared belief in the importance of resolving con- flict multilaterally through the inclusion of victims, offenders, and all other stake- holders.”117 Organizations that subscribe to restorative justice tend to resolve conflict by giving all parties a chance to express their thoughts and feelings. This in turn leads to healing when there has been hurt or offense, thereby producing solutions that focus on the greater good. Rudeness, in contrast, was found to spread like a disease, causing destructive relationships at work.118 We should all try to avoid being rude.  



How can managers create an organizational climate that fosters positive organizational behavior?


OB has a term for the way you and your cohorts might evaluate the school you attend or the

workplace you share: organizational climate.  A positive climate is one component that makes

positive organizational behavior work. You’re about to find out how organizations and man-

agers can foster such a climate.

280 PART 1 Individual Behavior

2. Compassion  is a shared value that drives people to help others who are suffering. It is associated with behaviors related to sympathy, kindness, tenderness, warmth, and love.119

3. Temperance  is a shared belief in showing restraint and control when faced with temptation and provocation. Temperance promotes self-control, humility, and prudence. It helps people avoid egocentric and heated emotional responses and prac- tice patience and restraint.120

Organizational Practices Organizational practices  are the procedures, policies, practices, routines, and rules that or- ganizations use to get things done. Figure 7.3 shows that training programs, support programs, and human resource practices and policies repre- sent three key sets of practices that shape organiza- tional climate.121 For example, Bath & Body Works is trying to improve its climate by ending its policy of on-call scheduling. Although the policy helps stores to flexibly manage their staff, it “leaves workers with unpredictable schedules and incomes,” according to The Wall Street Journal.122

Employees have greater commitment, satis- faction, citizenship behavior, and performance— and lower absenteeism and intentions to quit—when they believe organizational practices support them professionally or personally.123 The Container Store, for instance, bucked recent trends by providing part-time workers with health insur- ance and reducing their deductibles and co-pays. Medical device maker Arthrex offers employees free catered lunches and year-end profit sharing.124 

Organizational Climate That

Fosters Positive Organizational


• Restorative Justice • Compassion • Temperance

Organizational Values

• Training • Support Programs • Human Resource Practices, Programs, and Policies

Organizational Practices

• Greater Good • Trust • Integrity • Forgiveness

Virtuous Leadership


Nashville Apple store worker Andrew Wall—on the right—showed compassion to 9-year-old James Rink. Rink, who has Down syndrome, was shopping with his mom for an iPad when he inadvertently walked into the store’s glass wall and fell. Wall joined Rink on the floor and asked “Are you OK? What can I do for you?” Wall continued to work with Rink in the middle of the floor and ultimately made the sale. Rink and his mom were overjoyed with the encounter. Courtesy of Lynn Rink

281Positive Organizational Behavior CHAPTER 7

Virtuous Leadership Virtuousness  represents “what individuals and organizations aspire to be when they are at their very best.”125 The focus of virtuous leadership is to help individuals, groups, and organizations to elevate, enrich, and flourish. Although Chapter 12 provides a broad discussion of leadership, we consider it here as well due to its significant relation- ship with organizational climate.126

Virtuous leadership will not positively affect organizational climate unless it is vol- untary and performed as an end in itself. In other words, an act is virtuous only when it is done for the purpose of doing good. If your purpose is instead to get someone to help you, your actions are manipulative rather than virtuous.127 Let us examine the key components of virtuous leadership and its consequences.

Components of Virtuous Leadership OB scholars have proposed a variety of traits and individual differences that underlie virtuous leadership. The four shown in Fig- ure 7.3 were selected because they are most frequently discussed in OB research. Virtu- ous leaders are more focused on the greater good than on self-interest. They tend to do things that benefit the largest possible number of people. Starbucks, for instance, imple- mented its College Achievement Plan to make all employees eligible for an online degree from Arizona State University, at no expense and with no obligation to remain at the company. Scott Pitasky, the company’s top human resources executive, said, “Starbucks’ goal of creating a positive work experience for its employees is only part of the compa- ny’s loftier vision. . . . At a very high level, we are looking for ways to create and integrate economic and social value.”128

Virtuous leaders tend to promote trust by making sure their words match their actions, and by treating people with respect and dignity. Integrity, which comes from being guided by morals and honesty, also fosters positive OB. For example, people who lied less over 10 weeks were found to have improved mental and physical health than people who lied more frequently.129 That said, a neurological study of lying revealed that it takes self-control to display integrity because lying is often associated with positive consequences.130

The final component of virtuous leadership, forgiveness,  is “the capacity to foster collective abandonment of justified resentment, bitterness, and blame, and, in- stead, it is the adoption of positive, forward-looking approaches in response to harm or damage.”131 In addition to promoting posi- tive outcomes, forgiveness can affect your health. Research shows that unforgiveness is associated with bitterness, anger, health problems, and prema- ture death.132

Effects of Virtuous Leadership Research is starting to accumulate on the impact of virtuous leadership. It has been associated with financial per- formance, customer satisfaction, organizational cli- mate, and subjective measures of organizational effectiveness one to two years later.133 In contrast, lack of virtuous leadership negatively affects indi- viduals and organizations alike. Consider what hap- pened at Rutgers University. Head men’s basketball coach Mike Rice was fired in 2013 after a video sur- faced that showed him “kicking players and throw- ing basketballs at them while using gay slurs.” The athletic director resigned and the university experi- enced backlash from the investment community. In- vestors in state and local bonds have demanded extra yield for university securities since the video of Rice surfaced.134 

Mike Rice, former men’s basketball coach at Rutgers University, was fired because of his behavior toward players. Would you like to be coached by someone who threw basketballs at players during practice? Can people learn to be more virtuous? © Frank Franklin II/AP Photo

282 PART 1 Individual Behavior


What can I do to enhance my level of flourishing?


Asked what you want out of life, you might reply that you want to be happy. One early leader in

the positive psychology movement eventually went beyond that goal and proposed another:

Flourishing. You may find this broadened goal to include even more of your true aspirations.

Flourishing, a key individual-level outcome in the Organizing Framework, includes five elements.

They are positive emotions, engagement, relationships, meaning, and achievement (PERMA).


Martin Seligman, a renowned psychologist from the University of Pennsylvania, has been studying happiness and well-being for over 30 years. He is credited as being the driver of today’s positive psychology movement, which is the forerunner of research on positive OB.135 Seligman originally believed that happiness was the most important outcome in our lives. He changed his mind over the years. He now feels that people equate happiness with being cheerful, and you don’t have to be cheerful to be physically or psychologically healthy. 

Seligman proposed that well-being  was the combined impact of five elements— positive emotions, engagement, relationships, meaning, and achievement (PERMA). Well-being comes from freely pursuing one or more of these five elements, according to Seligman.136

Flourishing  represents the extent to which our lives contain PERMA. PERMA is the most important outcome from the process of positivity shown in Figure 7.2 When we flourish, our lives result in “goodness . . . growth, and resilience.”137 We should all strive to flourish because of its association with other positive outcomes like lower cardiovascular risk, lower levels of inflammation, longer life, greater REM sleep, and positive mental health.138 PERMA elements also are positively related to important outcomes in the Organizing Framework— task performance, career satisfaction, organizational commitment, and low turnover.139

Jerome Dodson, fund manager for the Parnassus Fund, has taken the concept of flourish- ing to heart when he makes investment decisions. He uses the extent to which a company is socially responsible and cares about the greater good when it comes to employees and com- munities as one criterion for selecting investment opportunities (see the OB in Action box).

Parnassus Investments was started in 1984 by Jerome Dodson with $350,000 from friends and family. Today, the company manages over $15 billion in six funds. What’s unique about it is the selection criteria Dodson uses to identify investment opportunities. Dodson’s initial investment philosophy was grounded in the belief that ethical companies with positive working environments are good investments. As he says, “It made a lot of intuitive sense to me that companies that treat their

Values-Based Investing at Parnassus Fund OB in Action

283Positive Organizational Behavior CHAPTER 7

As you read about the elements contained in PERMA, keep in mind that research suggests that many people are not flourishing. For example, a recent survey of 160,000 people around the world revealed that 33 percent reported above-average stress.143 US data further showed that a majority of people lose sleep due to work-related stress and many people are abusing painkillers to combat it. Painkiller abuse costs employers about $25.5 billion a year in absenteeism and lost productivity.144

Positive Emotions Although we thoroughly discussed positive emotions earlier in this chapter, one as- pect of Barbara Fredrickson’s “broaden and build” theory bears repeating because it enhances your ability to experience the other components of PERMA. Positive emo- tions broaden your perspective about how to overcome challenges in your life. For example, the emotion of joy is more likely to lead you to envision creative ideas dur- ing a brainstorming session. Positive emotions also build on themselves, resulting in a spreading of positive emotions within yourself and those around you. Research shows that “people in groups ‘catch’ feelings from others through behavioral mim- icry and subsequent changes in brain function. If you regularly walk into a room smiling with high energy, you’re much more likely to create a culture of joy than if you wear a neutral expression.”145

Pirch, a California-based retailer that specializes in fixtures and appliances for kitchen, bath, and outdoors, has taken advantage of positive contagion (see the OB in Action box).

employees well should in return get good efforts from their employees and they should be more successful as a business.”140 Dodson admits that he makes in- vestment decisions by integrating old-fashioned financial research with informa- tion obtained by interviewing managers and employees at companies under consideration. He also assesses the “positivity” of work environments by examin- ing annual rankings contained in independent sources such as Fortune and Work- ing Mother.

Treating employees positively is not enough in Dodson’s view. He thinks com- panies should also be ethical and in some way contribute to the greater good of society. Thus his investments have excluded alcohol, tobacco, gaming, weapons, and nuclear-power-related companies since 1984. According to Barron’s, Dodson’s strategy has “kept Parnassus from owning Valeant, whose business model of huge price increases for drugs with a limited market made him recoil. Initially, Dodson says he wasn’t even aware of Valeant’s reliance on the mail-order pharmacy Philidor, which used questionable tactics to get insurers to pay for drugs: ‘It’s definitely not ethical investing.’”141

Let’s consider whether Dodson’s philosophy holds up by comparing returns achieved by the Parnassus Fund to those of the S&P 500. Looking backward from the start of 2016, Dodson’s fund realized 4.6 percent, 18.1 percent, and 15.7 per- cent gains for one-, three-, and five-year periods. In contrast, the S&P 500 ob- tained returns of –.01 percent, 13 percent, and 10.6 percent during the same periods.142


1. What is driving Dodson’s approach to investing? 2. What are the pros and cons to making investment decisions based on the way

a company treats its employees? 3. Do you think Dodson’s approach will continue to be effective over time? Explain.

284 PART 1 Individual Behavior

Pirch has eight locations across the United States. Its founders’ vision was to reinvent the way people shop for home appli- ances, as follows:

“We are not here to sell you what we want, rather our focus is to guide you to discover and fall in love with the best products that best suit how you live.” Pirch wants shoppers to view its stores like a playground where they have fun trying out various prod- ucts while sampling “complimen- tary chef-prepared sweet and savory bites and handcrafted coffees.”146

To turn this vision into reality, Pirch is pursuing a two-part strategy. The first al- lows shoppers to test products. For instance, customers can bring their bathing suits and soak in a $20,000 granite tub or unwind in a steam room. Putting the customer first is the second part of the strategy. This begins when customers cross the threshold of a store and are warmly greeted “with a fresh coffee and serving [of] complimentary food or snacks while they browse or complete a sale.”147

“Pirch urges all to ‘live joyfully,’ and sayings from its manifesto—‘Play more, think less,’ ‘Be crazy about something,’ and ‘Forgive’—are featured in every store.” To reinforce these ideas the company trains its employees to work joyfully. The training lasts five days and demonstrates how positive emotions influence cus- tomers. According to Pirch CEO Jeffrey Sears, “The emotion of the stores ema- nates from the smiles on people’s faces and the passion they have about serving others.”148

Training also “explores the company’s 23 ‘elements of joy’ and how those principles should guide actions.” Gratitude exercises are used to help employees bond, and everyone spends half a day with the CEO. According to Fortune, the CEO “gives frank answers to personal questions that can be painful to share, teaching the importance of building trust with customers.” Employees conclude training by visiting different luxury retailers to investigate how salespeople can shape a customer’s experience.149

It appears that an emphasis on joy and positivity is working for Pirch. Sales per square foot average more than $3,000, which places it above all but three U.S. retailers (Apple, Murphy USA, and Tiffany), according to eMarketer.150


1. What do you think about the concept of training employees to work joyfully? 2. Why would a salesperson’s display of joy and gratitude enhance a customer’s

experience? 3. Do you think Pirch is going overboard with respect to creating positivity in its

stores? Explain.

Pirch Spreads Joy OB in Action

Pirch’s philosophy hangs above the front door of its Costa-Mesa showroom. The sign says “Live Joyfully.” © Mark Steele/Pirch

285Positive Organizational Behavior CHAPTER 7

Engagement You may recall from Chapter 2 that employee engagement reflects the extent to which you are physically, cognitively, and emotionally engaged in an activity, task, or project. This state is sometimes called being in the “zone” or in a state of “flow.” Flow  “is the state of being completely involved in an activity for its own sake.”151 Flow is a positive state because our well-being benefits from our deep attention to and engagement with an activ- ity. A recent study of flow over a four-day period, for instance, revealed that people were more energized in the evenings if they experienced flow during the workday.152

Engagement and positive emotions are not one and the same. For example, when we are in flow, we are not necessarily thinking about anything; we are just doing! Our con- centration is so high during flow that we use all the cognitive and emotional resources normally needed for thought and feelings. 

How can you create engagement or flow for yourself? Seligman and others suggest that this is a two-part sequence consisting of (1) identifying your signature strengths and (2) learning to use them in your daily personal and work activities. For us, working on this book, teaching, and playing golf put us into flow. Once you have identified your strengths, you can work with your manager to determine how to incorporate them into your job.

Relationships Think of the last time you laughed boisterously, felt joyous, were inspired, or experienced awe. Were you with someone else at the time? We suspect so, because positive emotions are often associated with activities that include others.

Biologists have concluded that we are creatures of the hive. After studying insects such as wasps, termites, and ants, researchers concluded that the group is a natural unit of selection. In other words, insects and people both like to be in groups and to work collab- oratively with others in getting things done. For insects it’s building a fortress or hive, and for us it’s completing tasks and projects, socializing, sharing memories, and traveling.

While others sometimes get on our nerves, positive relationships are a strong con- tributor to our well-being. They buffer us from stressors and provide resources that enable us to more effectively get things done. Positive relationships fuel the giving and receiving of social support. Social support  is the amount of perceived helpfulness we derive from social relationships. There are four types.

• Esteem support: reassurance that a person is accepted and respected despite any problems or inadequacies.

• Informational support: help defining, understanding, and coping with problems. • Social companionship: time spent with others in leisure and recreational activities. • Instrumental support: financial aid, material resources, or needed services.153

You can enhance your level of flourishing by seeking social support, but you also will flourish by providing support to others, particularly in the form of kindness. Research re- veals that the exhibition of kindness produces significant increases in well-being.154 Con- duct a kindness exercise by doing a completely unexpected thing for someone else. It can be as simple as holding a door open for another to pass through or helping someone with direc- tions. Then notice how you feel. You should experience one or more positive emotions.

Meaningfulness Viktor Frankl, an Austrian neurologist and psychiatrist who survived the Holocaust, was a strong proponent of using meaningfulness to promote well-being. His best-selling book Man’s Search for Meaning chronicled his experiences in concentration camps and summarized what he learned from these events. Frankl’s conclusion was that “striving to find a meaning in one’s life is the primary motivational force” for people.155 In other words, it is the drive to find meaning in our lives that instills in us a sense of purpose and motivation to pursue goals.

286 PART 1 Individual Behavior

Meaningfulness  is the sense of “belonging to and serving something that you believe is bigger than the self.”156 In our case, for instance, we derive meaning from writing this book because we believe it can enrich your life and help you manage others more effectively. We have three suggestions for building meaning into your life.

1. Identify activities you love doing. Try to do more of these activities or find ways to build them into your work role. Employees at St. Jude Children’s Research Hospital embody this suggestion. They truly enjoy participating in the St. Jude Marathon weekend because it raises money for the children being treated at the hospital. One employee, a cancer sur- vivor, commented, “Each year it provides me with another opportunity to give back so that we can help countless other children have anniversaries of their own.”157

2. Find a way to build your natural strengths into your personal and work life. You assessed your signature strengths earlier in Self-Assessment 7.4.

3. Go out and help someone. Research shows that people derive a sense of meaning- fulness from helping others.158 Salesforce.com encourages this result by giving em- ployees six paid days a year to volunteer. All told, company employees logged over one million volunteer hours in 2015.159 Remember, helping others creates the upward spiral of positivity discussed earlier in this chapter.

Achievement The final component of PERMA, achievement, pertains to the extent to which you have a self-directed “achieving life.” In other words, we flourish when we pursue achievement for its own sake. Doing so fosters feelings of competence and mastery, which in turn en- hances our self-esteem and self-efficacy. Companies help employees achieve by provid- ing both skills-based training and professional developmental activities. Training magazine created a list of the top 125 U.S. companies that invest in such training. The top five in 2016 were Jiffy Lube, Keller Williams Realty, Inc., CHG Healthcare Services, Capital BlueCross, and Blue Cross Blue Shield of Michigan.160

What types of support do you see in this photo of the aftermath of the 2013 Boston marathon bombing? What other aspects of PERMA would be activated by helping others in a tragedy like this? © MetroWest Daily News, Ken McGagh/AP Photo

287Positive Organizational Behavior CHAPTER 7

In this chapter, you learned that positive OB fo- cuses on creating work environments in which people flourish, and that a number of techniques can help you increase your positivity at school and home. Reinforce your learning with the Key Points below. Then consolidate your learning us- ing the Organizing Framework. Challenge your mastery of the material by answering the Major Questions in your own words.

Key Points for Understanding Chapter 7 You learned the following key points.


• Positive OB emphasizes positive emotion, mindfulness, psychological capital, signature strengths, and organizational climate to foster positive outcomes across all three levels of OB.

• Positive OB operates via three principle ef- fects: amplifying, buffering, and positivity. Combined, these generate positive outcomes.

• Positivity is more than positive thinking and hap- piness, and it improves more than performance. It can also support stronger relationships, more prosocial behaviors, stronger bodies and im- mune systems, and original thinking.


• Negative emotions cause you to narrow your focus, while positive emotions cause you to broaden your thinking.

• Positive emotions are contagious and can be actively increased. 

• Research shows that you need multiple posi- tive experiences to overcome or compensate for each negative.

7.3 FOSTERING MINDFULNESS • Mindlessness is a state of reduced attention,

while mindfulness is fostered by paying attention to the present moment in a nonjudgmental way.

• Two key inhibitors of mindfulness are atten- tional deficits and attentional hyperactivity.

• Mindfulness can be learned through a variety of simple “meditative” techniques practiced on a regular basis.


• Positive psychological capital consists of hope, efficacy, resilience, and optimism (HERO).

• Hope includes not only a goal and determina- tion to achieve it, but also one or more clear paths for achieving it.

• Resilience is your ability to bounce back after adversity and sustain yourself.

• Optimism attributes positive events to per- sonal, permanent, and pervasive factors.

• Signature strengths are a handful of personal attributes that influence your thoughts, feelings, and behaviors. You feel authentic, excited, and invigorated when you exercise them.


• Organizational climate represents employees’ perceptions of an organization’s policies, practices, procedures, and routines.

• Positive organizational climates are a function of organizational values, organizational prac- tices, and virtuous leadership.

• Positive climates are driven by values pertain- ing to (1) restorative justice, (2) compassion, and (3) temperance.

• The key components of virtuous leadership are a focus on the greater good, trust, integ- rity, and forgiveness.


• Flourishing reflects the extent to which our lives contain five elements: positive emotions,

What Did I Learn?

288 PART 1 Individual Behavior

the organizational level, outcomes include financial performance, overall organizational performance, and customer satisfaction.

Challenge: Major Questions for Chapter 7 You should now be able to answer the following questions. Refer to the Key Points, Figure 7.4, the chapter itself, and your notes to revisit and an- swer the following major questions:

1. How does understanding positive organiza- tional behavior benefit me?

2. How can positive emotions make me more ef- fective at school, at work, and in other arenas of life?

3. How can mindfulness contribute to my effectiveness?

4. How can my inner HERO and signature strengths benefit me at work and in my career?

5. How can managers create an organizational climate that fosters positive organizational behavior?

6. What can I do to enhance my level of flourishing?

engagement, relationships, meaning, and achievement (PERMA). It is a key outcome in the Organizing Framework.

• Positive emotions have a contagion effect. • You can increase your engagement by using

your signature strengths in everyday activities. • Four key types of social support are esteem

support, informational support, social com- panionship, and instrumental support.

The Organizing Framework for Chapter 7 Figure 7.4 shows that four person factors and five situation factors contribute to positive outcomes across the three levels of OB. You can also see that there are processes at the individual, group/team, and organizational level that affect outcomes. As for outcomes affected by the inputs and processes shown in Figure 7.4, individual-level ones include task performance, work attitudes, flourishing, phys- ical health, citizenship behavior/counterproductive behavior, turnover, and creativity. At the group/ team level, outcomes include group/team perfor- mance and group cohesion and conflict. Finally, at


SOURCE: © 2014 Angelo Kinicki and Mel Fugate. All rights reserved. Reproduction prohibited without permission of the authors.


Person Factors • Emotions • Mindfulness • Psychological capital • Signature strengths Situation Factors • Organizational culture • Organizational climate • Organizational values • Virtuous leadership • Organizational practices

Individual Level • Communication • Decision making discretion • Interpersonal conflict Group/Team Level • Communication • Civility • Group Dynamics Organizational Level • Communication

Individual Level • Task performance • Work attitudes • Flourishing • Physical health • Citizenship behavior/

counterproductive behavior

• Turnover • Creativity Group/Team Level • Group/team performance • Group/team cohesion and

conflict Organizational Level • Accounting/financial

performance • Organizational

performance • Customer satisfaction

289Positive Organizational Behavior CHAPTER 7

IMPLICATIONS FOR ME There are six ways you can apply the material in this chapter. First, since positive practices amplify positive outcomes, you can improve your work environment by identifying and em- phasizing such practices, like sharing important information and providing effective feed- back. Second, if you are upset with your partner or coworker, try to think of at least three things you like or appreciate about him or her. Similarly, if someone is upset with you, real- ize that you need several characteristics or actions to compensate for each negative. Third, develop a plan to be more mindful. Techniques such as meditation and yoga can enhance your ability to focus and hold your attention. Many good books and apps can help in this pursuit. Fourth, making your goals SMART and formulating effective action plans will help build your level of hope (goal + path = hope). Hope should boost your goal commitment and success. Fifth, you can contribute to a positive organizational climate by adhering to the values your employer endorses and by trying to be more virtuous. Finally, develop a plan to build PERMA into your life by focusing on those components over which you have more control. You can make a choice to be more positive, you can work on building more positive relationships in your life, and you can strive for achievement.

IMPLICATIONS FOR MANAGERS There are seven key implications for managers. First, identify existing positive practices, such as appropriately and regularly recognizing performance, and be sure to emphasize them. Role-model these practices and watch your people flourish. Second, realize that your emo- tions are contagious. To build a positive environment for your people, be positive yourself. Random acts of kindness can go a long way (give somebody a spot bonus or an afternoon off, or throw an impromptu celebration in the office). Third, model mindfulness by being focused on the present moment whenever you are talking or meeting with others. You can also estab- lish a policy of not using web-based or mobile technologies during meetings. Fourth, encour- age your employer to train employees in mindfulness techniques. Fifth, learn about and utilize your strengths and those of the people you manage. Be sure to verbally acknowledge others’ strengths and create opportunities for them to be used. Sixth, endorse and model your em- ployer’s stated corporate values and try to engage in more virtuous leadership. Finally, support your employees’ level of PERMA by engaging in one or more of the following: (1) display posi- tive emotions at work, (2) identify the tasks or responsibilities that engage your employees and find ways to design them into their jobs, (3) provide the four sources of social support when possible, (4) use I-deals, discussed in Chapter 5, to help employees find meaning in their work, and (5) encourage creative approaches to achieving goals.

290 PART 1 Individual Behavior

Forever 21 was founded in downtown Los Angeles in 1984 by a Korean-American immigrant couple, Do Won Chang and Jin Sook. They are known as Mr. and Mrs. Chang and still run the privately held company. Today, it employs about 35,000 people and runs 600 stores worldwide, with operations in the United States, Canada, China, Europe, Hong Kong, India, Israel, Japan, Korea, Latin America, Mexico, the Philippines, and the United Kingdom.161 The company made about $4.5 billion in 2015.

The Changs are born-again Christians and try to run their business using Christian values. Mrs. Chang told Bloomberg Businessweek that she prayed about whether to open their first store. God told her to do so and promised she would succeed. The couple attend a daily prayer meeting at their church, where Mr. Chang leads a Bible study and Mrs. Chang is a deacon. The pastor noted that the Changs have contributed millions of dollars to worldwide missions.

The Changs’ faith is represented in their stores, where every bright yellow shopping bag includes a reference to John 3:16. This Bible verse says, “For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.”162

FOREVER 21’S KEY VALUES  1. Supplier and Vendor Social Compliance and

Ethical Sourcing. The company commits to caring “not only for our employees but also for the employees of hundreds of vendor manufacturing facilities throughout the world which make our products. We want all of these employees also to work in safe and healthy environments.”

2. Support Charities. “At Forever 21, one of our core values is to encourage giving, to lend a helping hand to those who need it most.”

3. Environmental Sustainability. “Forever 21 is committed to reducing its environmental footprint throughout its global operations.”163

ARE THESE VALUES BEING LIVED AT THE COMPANY? Forever 21 has experienced a number of lawsuits and controversies regarding different aspects of its operations.

• The US Department of Labor issued a subpoena in 2012 to force Forever 21 to reveal “how much the company’s suppliers pay the workers who make its clothes. Anecdotal evidence suggests the salaries are well under the current US federal minimum wage of $7.25 an hour.” After the company failed to provide the information, a US District Court judge ordered the company to provide the re- quested data.164

• A class-action lawsuit accuses the company of “failing to provide meal breaks, rest periods and overtime wages. Plaintiffs . . . claim that requisite bonuses weren’t paid which qualify as overtime, and that the company failed to cover business expenses as required under law.” Although the case has not been settled, plaintiffs “may be entitled to up to $4,000 in penalties as well as any due wages.”165

• The company decided to reclassify 1 percent of its workforce to part-time status, working a maximum of 29.5 hours a week. This level of work is just “un- der the 30-hour full-time designation assigned by the Affordable Care Act, which requires companies who employ 50 or more workers to provide health insurance coverage for their full-time employees or face a penalty. Newly part-time workers who were enrolled in medical, dental, vision and voluntary plans will also see their coverage cut off on August 31 [2013], and they won’t be able to receive paid time off.”166 These actions led to a social media firestorm, resulting in comments such as, “A true Christian thinks of others first and is not greedy. Tell me, just how rich do you need to be?” Another person wrote, “Jesus Christ would never, NEVER do this to anyone, ever.”167

• Forever 21 agreed to pay $100,000 in penalties to the Occupational Safety and Health Administration (OSHA) for safety violations at its Westfarms Mall store in Farmington, Connecticut. A store inspec- tion revealed that emergency exits and hallways were blocked by store inventory. Boxes were “piled as high as 10 feet and stacked in an unstable man- ner so that they blocked exit routes or could fall onto workers. The company contested the citations and penalties but has now reached an agreement in which it agrees to abate the cited hazards.”168 The company has been cited 12 times for similar violations at other locations.169


Does Forever 21 Foster Positivity?

291Positive Organizational Behavior CHAPTER 7

• Two recent lawsuits involve LGBTQ issues. Mickael Louis claimed extensive harassment that occurred while he was working at Forever 21 in Brooklyn. One boss said, “I love muscular black guys like you,” and another showed him “cell phone videos of him having sex with men.” Louis’s boss “constantly addressed Louis as ‘Honey,’ [and] an- other manager—Andy Liu—allegedly came up with a different offensive nickname—‘Nutella.’” Liu also told Louis, “Look out for the black people, they are going to steal.”170 The second case pertains to Alexia Daskalakis, 22, formerly known as Anthony Daskalakis. Daskalakis claimed her problem began when she began transitioning to a woman. Her boss allegedly started treating her with “‘increasing contempt’—yelling at her in front of coworkers and calling her ‘useless.’” Another manager called her a “hot mess.” She wa