fred-luthans-organizational-behavior-_-an-evidence-based-approach-twelfth-edition-mcgraw-hill_irwin-2010.pdf

The Twelfth Edition of Organizational Behavior: An Evidence-Based Approach is ideal for 12E those who wish to take an up-to-date, evidence-based approach to organizational behavior and management. This latest edition continues the tradition of narrowing the theory/r...

The Twelfth Edition of Organizational Behavior: An Evidence-Based Approach is ideal for 12E those who wish to take an up-to-date, evidence-based approach to organizational behavior and management. This latest edition continues the tradition of narrowing the theory/research — Organizational Behavior effective application/practice gap by incorporating recent breakthrough research to provide and add to the evidence on the theories and techniques presented throughout the text. Fred New to the Twelfth Edition: Luthans > The new subtitle “An Evidence-Based Approach” reaffirms the importance of the research foundation to the text. A new major section has been added to Chapter 1 that explains why An Evidence-Based Approach this evidence-based focus is so critical and what it entails. > Because communication, decision making, and perception continue to be important to or- ganizational behavior, Chapter 8, “Communication and Decision Making,” has been com- pletely revised and the concept of perception has been added to Chapter 5, “Personality, Perception and Employee Attitudes.” > Besides updating the evidence-base and providing new real-world examples in each chapter, breakthroughs on important new topics such as the following are included: on organizational behavior MD DALIM #1059756 11/19/09 CYAN MAG YELO BLK 12th Edition Luthans www.mhhe.com/luthans12e Organizational ISBN 978-0-07-353035-2 MHID 0-07-353035-2 Behavior 90000 An Evidence-Based Approach EAN 9 780073 530352 www.mhhe.com Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page i Organizational Behavior An Evidence-Based Approach Twelfth Edition Fred Luthans George Holmes Distinguished Professor of Management, University of Nebraska Lut30352_FM_i-xviii.qxd 12/5/09 9:56 AM Page ii ORGANIZATIONAL BEHAVIOR: An Evidence-Based Approach Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2011, 2008, 2005, 2002, 1998, 1995, 1992, 1989, 1985, 1981, 1977, 1973 by The McGraw-Hill Companies, Inc. All rights reserved. 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 The McGraw-Hill Companies, Inc., 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 0 WDQ/WDQ 1 0 9 8 7 6 5 4 3 2 1 0 ISBN: 978-0-07-353035-2 MHID: 0-07-353035-2 Vice president and editor-in-chief: Brent Gordon Publisher: Paul Ducham Director of development: Ann Torbert Managing development editor: Laura Hurst Spell Editorial coordinator: Jane Beck Vice president and director of marketing: Robin J. Zwettler Associate marketing manager: Jaime Halteman Vice president of editing, design and production: Sesha Bolisetty Senior project manager: Harvey Yep Senior production supervisor: Debra R. Sylvester Design coordinator: Joanne Mennemeier Media project manager: Suresh Babu, Hurix Systems Pvt. Ltd. Cover design: Joanne Mennemeier Cover image: Digital Vision Typeface: 10.5/12 Times Roman Compositor: Glyph International Printer: Worldcolor Library of Congress Cataloging-in-Publication Data Luthans, Fred. Organizational behavior : an evidence-based approach / Fred Luthans.—12th ed. p. cm. Includes index. ISBN-13: 978-0-07-353035-2 (alk. paper) ISBN-10: 0-07-353035-2 (alk. paper) 1. Organizational behavior. I. Title. HD58.7.L88 2011 658.4—dc22 2009041522 www.mhhe.com Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page iii For Kay, Kristin, Brett, Kyle, and Paige Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page iv About the Author Fred Luthans is the George Holmes Distinguished Professor of Management at the University of Nebraska–Lincoln. He received his B.A., M.B.A., and Ph.D. from the University of Iowa where he received the distinguished alumni award in 2002, and did postdoctoral work at Columbia University. While serving as a Captain in the U.S. Army, he taught at the U.S. Military Academy at West Point. He has been at the University of Nebraska since 1967, his entire academic career, and won the distinguished teaching award in 1986, the excellence in graduate education award in 2000, and in 2008 the high- est award in the system for outstanding research. In 2003, he received an honorary doc- torate from DePaul University. A prolific writer, he has published a number of major books and about 200 articles in applied and academic journals. His book Organizational Behavior Modification, coauthored with Robert Kreitner, won the American Society of Personnel Administration award for outstanding contribution to human resource man- agement, and another book entitled Real Managers is the result of a four-year research study that observed managers in their natural settings. International Management, coau- thored with the late Richard Hodgetts and Jonathon Doh, also published by McGraw-Hill, is in its seventh edition. He also has two recent books, The High Impact Leader (with Bruce Avolio, McGraw-Hill, 2006) and Psychological Capital (with Carolyn Youssef and Bruce Avolio, Oxford, 2007). The co-editor-in-chief of the Journal of World Business, Professor Luthans is also the editor for Organizational Dynamics and Journal of Lead- ership and Organizational Studies. He has been very active in the Academy of Man- agement over the years and was elected a fellow in 1981. He is a former president of the National Academy in 1986 and, in 1997, received the Academy’s distinguished edu- cator award. In 2000 he became an inaugural member of the Academy’s Hall of Fame for being one of the “Top Five” all-time published authors in the prestigious Academy journals. Also active in the Decision Sciences Institute (DSI), he was elected a fellow in 1987. Professor Luthans has a very extensive research program at the University of Nebraska. Most recently, he has developed positive organizational behavior, or POB (outlined in 2002 articles in the Academy of Management Executive and Journal of Organizational Behavior), and is conducting research on positive psychological capital and, with close colleague Bruce Avolio, authentic leadership. He has been a visiting scholar at a number of universities in the United States and has lectured at universities and conducted workshops for managers in many countries around the world. In recent years, he has been actively involved in Germany, China, Thailand, Singapore, Russia, Albania, and Macedonia. In addition, he has been on the executive committee of the annual Pan Pacific Conference since its beginning in 1984 and in 1995 was elected a fel- low. This international research and experience is reflected in his approach to the field of organizational behavior. In addition, he is an active consultant and trainer to both private- (such as Walmart and Ameritas Life Insurance, Inc.) and public-sector organizations. Since 1998 he has been a senior research scientist with the Gallup Organization. He is an avid golfer and University of Nebraska sports fan. He and Kay, his wife of 47 years, have four grown children and so far six adorable grandchildren. iv Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page v Preface Here is the twelfth edition. As I indicated in the last edition, I am still in what positive psychologists call “flow.” I am so engrossed and passionate about my field of organiza- tional behavior that time just flies. As I have said before, I take considerable pride in the sustainability of this text. It took me four years to write the first edition, and then about a year to do each subsequent edition. Because of the rapidly expanding body of knowl- edge in organizational behavior, these revised editions through the years have become increasingly challenging. However, I am still—actually even more than ever—in flow in trying to keep this first mainline organizational behavior text totally up-to-date with the very latest and relevant theory building, basic and applied research, and best-practice applications. I decided with this edition to give special recognition of this scientific foun- dation by adding the subtitle—An Evidence-Based Approach. As is now emphasized in the introductory chapter, the time has come to help narrow the theory/research—effective application/practice gap. This has been my mission from the beginning of this text and my now over 20-year editorship of the journal Organizational Dynamics. As “hard evidence” for this theory/research base for this text, I can say unequivocally that no other organizational behavior text has close to the num- ber of footnote references. For example, whereas a few texts may have up to 40 or even 50 references for some chapters, the chapters of this text average more than twice that amount. This latest edition continues the tradition by incorporating recent breakthrough research to provide and add to the evidence on the theories and techniques presented throughout. Before getting into the specific additions of this new edition, I would like to again point out the distinguishing features that no other organizational behavior textbook can claim: 1. I am convinced at this stage of development of the field of OB, we need a compre- hensive theoretical framework to structure our introductory textbooks. Instead of a potpourri of chapters and topics, and maybe using an inductive (or should it be deduc- tive?) sequencing, there is now the opportunity to have a sound conceptual framework to present our now credible (evidence-based) body of knowledge. I use the widely recognized, very comprehensive social cognitive theory to structure this text. I present the background and theory building of this framework in the introductory chapter and also provide a specific model (Figure 1.5) that fits in all 14 chapters. Importantly, the logic of this conceptual framework requires two chapters not found in other texts and the rearrangement and combination of several others. For example, in the organizational context part there is Chapter 4, “Reward Systems,” and in the cognitive processes part, Chapter 7, “Positive Organizational Behavior and Psychological Capital,” that no other text contains. 2. Besides having the only comprehensive theoretical framework for an introductory OB text, a second unique feature is one or more OB Principles at the end of each chap- ter. Importantly, these principles are derived from meta-analytic research findings. The reason for including meta-analytically derived principles is that the field of organiza- tional behavior has matured to the point where there are not just isolated studies but a stream of research on a number of topics that now need to be systematically (quan- titatively) summarized for students and practitioners. For example, Alex Stajkovic and I have completed a meta-analysis of the studies with which I have been most closely associated over the past 35 years, focusing on the positive effect that organizational behavior modification (O.B. Mod.) has on task performance. (This analysis is published v Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page vi vi Preface in the Academy of Management Journal; a follow-up research study conducted in the largest credit card processing company in the world is in a subsequent issue of AMJ; another meta-analysis of all behavioral management studies with emphasis on the dif- ferent types of interventions was published in Personnel Psychology; and most recently nonfinancial rewards were found to be as impactful on unit performance out- comes and employee retention over time as were financial rewards, published in the Journal of Applied Psychology with Suzanne Peterson). In addition, Alex and I pub- lished in Psychological Bulletin a meta-analysis (114 studies, 21,616 subjects) that found a very strong positive relationship between self-efficacy and task-related per- formance. These provide end-of-chapter evidence-based OB Principles. 3. A third unique feature is an “Evidence-Based Consulting Practices” summary to open up each major part of the text. Specifically, in addition to my long academic appoint- ment at the University of Nebraska, since 1998 I have been a senior research scien- tist with the Gallup Organization. Mostly known for the famous Gallup Poll, this world-class firm also has a widely known management consulting practice. About half of the “Fortune 50” are among Gallup’s recent clients. With my input, Tim Hodges, executive director of Gallup University, drew from Gallup’s tremendous sur- vey research-base consisting of thousands of organizations and millions of people over the years. We provide Gallup’s evidence-based practices relevant to each major part of the text. 4. The fourth unique feature reflects my continuing basic research program over the years. Chapter 7 contains my most recent work on what I have termed “Positive Organizational Behavior” and “Psychological Capital” (or PsyCap). To meet the inclusion criteria (positive; theory and research based; valid measures; open to development; and manage for performance improvement), for the first time the top- ics of optimism, hope, happiness/subjective well-being, resiliency, emotional intel- ligence, self-efficacy, and the overall core construct of psychological capital have been given chapter status. Because of my involvement in the emerging Positive Psy- chology movement through Gallup and my research on PsyCap and authentic lead- ership with colleagues in the University of Nebraska’s Leadership Institute, I feel the time has come to incorporate this positive approach into the mainstream orga- nizational behavior field. Besides these truly significant four unique features, there are a number of specific revisions and additions to this edition. These include: 1. The new subtitle “An Evidence-Based Approach” reaffirms the importance of the research foundation to the text. A new major section has been added to Chapter 1 that explains why this evidence-based focus is so critical and what it entails. 2. Because communication, decision making, and perception continue to be important to organizational behavior, in this edition there is a new Chapter 8, “Communication and Decision Making” and perception is added to Chapter 5, “Personality, Perception, and Employee Attitudes.” 3. To make room for the new chapter, the separate chapter on job design and goal setting is now incorporated into Chapter 6, “Motivational Needs, Processes, and Applications.” 4. Besides updating the evidence-base and providing new real-world examples in each chapter, breakthroughs on important new topics such as the following are included: Contextual impact of the recent financial crisis and stock market crash on organi- zational behavior Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page vii Preface vii Collins’ “Good to Great” expectations Managing the global workforce Global mindset Diversity management skills Glass ceiling outside the United States Corporate social responsibility (CSR) Ethics of downsizing “Hollow” organization design Modular organization design Organization culture in an economic crisis Incentive/rewards analysis of the financial crisis Costs of obesity Neuroscience explanations Health-Relationships-Work (H-R-W) well-being model Intentional component of psychological capital (PsyCap) Background on PsyCap Performance impact and research summary of PsyCap PsyCap development model and research summary Evidence-based happiness Broaden and Build Theory of positivity Use of Facebook Gen X and Gen Y Stress from 24/7 technology and job loss threat Stress levels around the world Bullying problem “Slacker teammate” problem Followership Positive and authentic leadership research Just as real-world management can no longer afford to evolve slowly, neither can the academic side of the field. With the uncertain, very turbulent environment most organizations face today, drastically new ideas, approaches, and techniques as repre- sented above are needed both in the practice of management and in the way we study and apply the field of organizational behavior. This revision mirrors these needed changes. Social Cognitive Conceptual Framework. The book contains 14 chapters in four major parts. Social cognitive theory explains organizational behavior in terms of both environ- mental, contextual events and internal cognitive factors, as well as the dynamics and out- comes of the organizational behavior itself. Thus, Part One provides the evidence-based and organizational context for the study and application of organizational behavior. The introductory chapter provides the environmental perspective, historical background, methodology, theoretical framework, and specific social cognitive model for the field of organizational behavior in general and specifically for this text. This is followed by an overall environmental context chapter: Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page viii viii Preface Chapter 2, “Environmental Context: Globalization, Diversity, and Ethics (with major sections on globalization, diversity, and a major ending section on the impact of ethics on “bottom-line” outcomes). After this broad environmental context is laid out in Chapter 2, there are two chapters for the organizational context of the social cognitive framework: Chapter 3, “Organizational Context: Design and Culture” (with special emphasis given to the learning organization and horizontal, hollow, modular, network, and vir- tual designs; best-practice cultures; and a major section on the culture clashes from mergers and acquisitions) and Chapter 4, “Organizational Context: Reward Systems” (a unique chapter with spe- cial emphasis given to money as a reward, effectiveness of pay, forms of “new pay,” recognition systems, and benefits). The second part of the text recognizes the well-known micro-oriented cognitive processes of the social cognitive framework plus unique topics such as the following: Chapter 5, “Personality, Perception, and Employee Attitudes” (with unique major sec- tions on the role of heredity and the brain and emphasis given to “Big Five” personality traits, the Myers-Briggs personality indicator, the perceptual process, and organiza- tional citizenship behavior); Chapter 6, “Motivational Needs, Processes, and Applications” (with major sections on extrinsic versus intrinsic motives, procedural justice, attribution theory, job design and goal setting); and Chapter 7, the most unique chapter, not only for this text, but any other, on “Posi- tive Organizational Behavior and Psychological Capital.” In addition to the focus on the unique POB psychological states of efficacy, optimism, hope, resiliency, and over- all psychological capital, there are also major sections on emotion, multiple intelli- gences, and general mental abilities. Parts Three and Four are concerned with the dynamics and behavior management and leadership dimensions of organizational behavior in the social cognitive framework. Part Three contains, in addition to widely recognized topics, the following four chapters: Chapter 8, “Communication and Decision Making” with particular emphasis given to nonverbal and interpersonal communication and behavioral dimensions, styles, and techniques of decision making. Chapter 9, “Stress and Conflict” (with material on stress and conflict from advanced technology and globalization, burnout, and work-family initiatives); Chapter 10, “Power and Politics” (with material on empowerment, trust, resource dependency, and the dynamics of power and politics in the new environment); and Chapter 11, “Groups and Teams” (with material on the punctuated equilibrium model of groups, group/team effectiveness, role conflict and ambiguity, social loafing, cross- functional teams, virtual teams, and cultural/global issues with the use of teams). The final Part Four gives an applied emphasis to the text. It focuses on how to man- age and lead for high performance. These applied organizational behavior chapters include the following: Chapter 12, “Behavioral Performance Management” (with material on the role of social cognition, critical analysis of reinforcement theory, pay for performance, social Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page ix Preface ix recognition, and the latest research on contingencies with type of organization and interventions for O.B. Mod. effectiveness). Chapter 13, “Effective Leadership Processes” (with major sections on the historical studies, traditional and modern theories of leadership and the new “authentic leader- ship” being developed at the University of Nebraska’s Leadership Institute, and lead- ership across cultures and the GLOBE project). Chapter 14, “Great Leaders: An Evidence-Based Approach” (with major sections on leading in the new environment, leadership styles, including the new positive, authentic style, the activities and skills of leadership, and leadership development programs). Pedagogical Features. Besides the many unique features already described, there are also several strong pedagogical features that have characterized the text over the years. To reflect and reinforce the applications orientation of the text, highlighted, currently rele- vant, boxed real-world OB in Action examples appear in each chapter. In this twelfth edition there are many new real-world examples drawn from BusinessWeek articles. In addition to these application boxes, the text also features experiential exercises at the end of each part. The exercises get participants involved in solving simulated problems or experiencing firsthand organizational behavior issues. Also there are end-of-chapter Internet exercises to get students involved in online relevant resources and vehicles for discus- sion and critique. Besides the usual end-of-chapter short organizational behavior discussion cases, there is also at least one Real Case at the end of each chapter. These cases are drawn from recent real-world events (excerpted from current BusinessWeek articles) and are intended to enhance the relevancy and application of the theories and research results presented in the chapter. These end-of-chapter real cases serve as both examples and discussion vehicles. It is suggested that students read them even if they are not discussed directly in class. The intent is that they can serve as supplemental readings as well as discus- sion cases. This edition also contains learning objectives at the start of each chapter. These objec- tives should help students better focus and prepare for what follows in the chapter. Finally, the chapters have the usual end-of-chapter summaries and review and discussion questions. Intended Audience. Despite the four unique features and very extensive updating (hav- ing anywhere from 5–30 or more new references per chapter) throughout, the purpose and intended audience of the book remain the same. As in the earlier editions, this edi- tion is aimed at those who wish to take a totally up-to-date, evidence-based approach to organizational behavior and management. It does not assume the reader’s prior knowledge of either management or the behavioral sciences. Thus, the book can be used effectively in the first or only course in either four-year or two-year colleges. It is aimed primarily at the required organizational behavior course, at the undergradu- ate level or in the M.B.A. program. I would like to especially acknowledge and thank colleagues in countries around the world who have used previous editions of the book and point out that the continued international perspective and coverage should make this new edition relevant and attractive. Finally, the book should be helpful to practicing managers who want to understand and more effectively manage their most important assets—their human resources. Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page x x Preface Acknowledgments. Every author owes a great deal to others, and I am no exception. First and foremost, I would like to acknowledge the help on this as well as many other writing projects over the years that I received from my deceased friend and colleague, Professor Richard M. Hodgetts of Florida International University. Next, I would like to acknowledge the total support and standards of excellence provided by my friend and longtime department chairman, Sang M. Lee and my former colleague now at the Uni- versity of Washington, Bruce Avolio. Special thanks goes to Cathy Watson from the Management Department staff who has been very helpful to me over the years. I can never forget the education, encouragement, and scholarly values I received from Pro- fessors Henry H. Albers and the deceased Max S. Wortman when starting out in my academic career. Over the years, I have been very lucky to have been associated with excellent doctoral students. I would like to thank them all for teaching me as much as I have taught them. In particular, I would like to thank Don Baack, Steve Farner, and Suzanne Peterson who have helped on previous editions. I am also very grateful to those professors who used the previous editions of the book and gave me valuable feedback for making this revision. The reviewers for this edition are Charles B. Daniels, Old Dominion University; Laura Finnerty Paul, Skidmore College; and James Harbin, Texas A&M University–Texarkana. Finally, as always, I am deeply appreciative and dedicate Organizational Behavior, twelfth edition, to my wife and now grown children and their families, who have provided me with a loving, supportive relationship and climate needed to complete this and other projects over the years. Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page xi Contents in Brief PART ONE PART THREE Environmental and Organizational Dynamics of Organizational Behavior 245 Context 1 8 Communication and Decision 1 Introduction to Organizational Behavior: Making 247 An Evidence-Based Approach 5 9 Stress and Conflict 277 2 Environmental Context: Globalization, 10 Power and Politics 312 Diversity, and Ethics 31 11 Groups and Teams 339 3 Organizational Context: Design and Culture 57 4 Organizational Context: Reward PART FOUR Systems 88 Managing and Leading for High Performance 373 12 Behavioral Performance PART TWO Management 378 Cognitive Processes of Organizational Behavior 123 13 Effective Leadership Processes 413 5 Personality, Perception, and Employee 14 Great Leaders: An Evidence-Based Attitudes 125 Approach 445 6 Motivational Needs, Processes, and Footnote References and Supplemental Applications 156 Readings 482 7 Positive Organizational Behavior and References for Application Boxes and Psychological Capital 199 Real Cases 548 INDEX 551 xi Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page xii Contents About the Author iv Organizational Behavior Case: Conceptual Model: Dream or Reality? 30 Preface v Chapter 2 PART ONE Environmental Context: Globalization, Diversity, and Ethics 31 ENVIRONMENTAL AND ORGANIZATIONAL CONTEXT 1 Learning Objectives 31 Globalization 31 Evidence-Based Consulting Practices 1 Diversity in the Workplace 34 Reasons for the Emergence of Diversity 35 Chapter 1 Developing the Multicultural Organization 38 Introduction to Organizational Behavior: Individual Approaches to Managing Diversity 39 An Evidence-Based Approach 5 Organizational Approaches to Managing Diversity 41 Ethics and Ethical Behavior in Organizations 46 Learning Objectives 5 The Impact of Ethics on “Bottom-Line” Outcomes 47 The Challenges Facing Management 6 Summary 49 Undergoing a Paradigm Shift 8 Ending with Meta-Analytic Research Findings 50 A New Perspective for Management 10 Questions for Discussion and Review 52 Evidence-Based Management 12 Internet Exercise: Ethical Issues in the Workplace 52 Historical Background: The Hawthorne Studies 13 Organizational Behavior Case: How Far-Reaching Are The Illumination Studies: A Serendipitous Discovery 13 Globalization and Technology? 52 Subsequent Phases of the Hawthorne Studies 14 Organizational Behavior Case: I Want Out 53 Implications of the Hawthorne Studies 15 Real Case: Not Treating Everyone the Same 53 Research Methodology to Determine Valid Organizational Behavior Case: Changing with the Evidence 16 Times 54 The Overall Scientific Perspective 16 Real Case: The Ethics of Downsizing 55 Starting with Theory 17 The Use of Research Designs 18 Chapter 3 The Validity of Studies 19 Organizational Context: Design Defining Organizational Behavior 20 and Culture 57 Theoretical Foundation for Organizational Behavior 20 Learning Objectives 57 Cognitive Framework 20 The Organizational Theory Foundation 58 Behavioristic Framework 21 Historical Roots 58 Social Cognitive Framework 22 Modern Theoretical Foundation 58 The Conceptual Framework for the Text 25 What Is Meant by a Learning Organization? 59 Summary 25 Organizational Behavior in the Learning Ending with Meta-Analytic Research Findings 26 Organization 60 Questions for Discussion and Review 27 Learning Organizations in Action 61 Internet Exercise: Nonjobs or Telecommuting 27 Modern Organization Designs 63 Real Case: The Big Squeeze on Workers 28 Horizontal Organizations 64 Organizational Behavior Case: How Is This Stuff Contemporary Designs: Hollow and Modular 65 Going to Help Me? 29 Network Designs 66 Organizational Behavior Case: Too Nice to People 29 The Virtual Organization 68 xii Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page xiii Contents xiii The Organizational Culture Context 71 Exercise: Work-Related Organizational Behavior: Definition and Characteristics 71 Implications for the Course 118 Uniformity of Culture 73 Exercise: Organizations 119 Creating and Maintaining a Culture 74 How Organizational Cultures Start 75 Maintaining Cultures through Steps of Socialization 76 PART TWO Changing Organizational Culture 79 COGNITIVE PROCESSES OF Summary 83 ORGANIZATIONAL BEHAVIOR 123 Ending with Meta-Analytic Research Findings 84 Evidence-Based Consulting Practices 123 Questions for Discussion and Review 84 Internet Exercise: The Structure and Culture of Chapter 5 Organizations 85 Personality, Perception, and Employee Real Case: Web-Based Organizations 85 Attitudes 125 Organizational Behavior Case: The Outdated Structure 86 Learning Objectives 125 Organizational Behavior Case: Keeping Things the The Meaning of Personality 125 Same 86 The Role of Heredity and the Brain 126 Organizational Behavior Case: Out with the Old, Self-Esteem 128 In with the New 87 Person-Situation Interaction 129 The Socialization Process 129 Chapter 4 The “Big Five” Personality Traits 132 Myers-Briggs Type Indicator (MBTI) 134 Organizational Context: Reward The Perception Process 135 Systems 88 Sensation versus Perception 136 Learning Objectives 88 Subprocesses of Perception 137 Pay: The Dominant Organizational Reward 90 Social Perception 138 The Theoretical Background on Money as a Reward 90 Characteristics of Perceiver and Perceived 138 Research on the Effectiveness of Pay 92 Stereotyping 139 Traditional Methods of Administering Pay 93 The Halo Effect 139 Pay for Performance 95 Work-Related Attitudes: PA/NA 140 New Pay Techniques 99 Employee Attitudes 141 Recognition as an Organizational Reward 100 What Is Meant by Job Satisfaction? 141 Recognition versus Money 100 Influences on Job Satisfaction 142 Examples of Effective Formal Recognition Systems 102 Outcomes of Job Satisfaction 144 Benefits as Organizational Rewards 106 Organizational Commitment 146 Traditionally Offered Benefits 106 The Meaning of Organizational Commitment 147 Newer Types of Benefits 108 The Outcomes of Organizational Commitment 148 Summary 111 Guidelines to Enhance Organizational Ending with Meta-Analytic Research Findings 112 Commitment 148 Questions for Discussion and Review 113 Organizational Citizenship Behaviors (OCBs) 149 Internet Exercise: Rewards in the Workplace 114 Summary 150 Real Case: CEOs Get Fewer Perks 114 Ending with Meta-Analytic Research Real Case: Rewarding Teamwork in the Plains 115 Findings 151 Real Case: Different Strokes for Different Folks 116 Questions for Discussion and Review 152 Organizational Behavior Case: Huge Benefits, Little Internet Exercise: Assessing Your Personality 153 Understanding or Use 117 Real Case: It’s All a Matter of Personality 153 Organizational Behavior Case: Same Accident, Experiential Exercises for Part One 118 Different Perceptions 154 Exercise: Synthesis of Student and Instructor Organizational Behavior Case: Ken Leaves the Needs 118 Company 155 Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page xiv xiv Contents Chapter 6 Chapter 7 Motivational Needs, Processes, Positive Organizational Behavior and Applications 156 and Psychological Capital 199 Learning Objectives 156 Learning Objectives 199 The Basic Motivation Process 157 Positive Psychology 200 Primary Motives 157 Self-Efficacy/Confidence 202 Secondary Motives 158 The Theoretical Background and Meaning of Intrinsic versus Extrinsic Motives 160 Efficacy 202 Work-Motivation Theories 161 The Process and Impact of Self-Efficacy 204 Maslow’s Hierarchy of Needs: An Important Historical Sources of Efficacy 206 Contribution 162 Implications for Efficacy in the Workplace Herzberg’s Two-Factor Theory of Motivation 165 and POB 209 The Porter-Lawler Expectancy Theory of Work Optimism 212 Motivation 167 The Dimensions of Optimism 212 Equity Theory of Work Motivation 169 Optimism in the Workplace 214 The Relationship between Equity Theory and Hope 217 Organizational Justice 172 Resiliency 218 Attribution Theory 173 Psychological Capital (PsyCap) 219 Other Work Motivation Theories: Control and Agency 177 Background and Research on PsyCap 220 Motivational Application through Job Design 178 PsyCap Development 221 Job Rotation 179 Other Positive Constructs 222 Job Enlargement 179 Happiness or Subjective Well-Being (SWB) 222 Job Enrichment 179 The Background on SWB 224 The Job Characteristics Approach to Task Design 180 Emotional Intelligence (EI) 225 Practical Guidelines for Redesigning Jobs 182 The Role of Intelligence 229 Motivational Application through Goal Setting 183 Emotional Intelligence 231 Theoretical Understanding of Goal Setting 183 Summary 234 Research Evidence on the Impact of Goal Setting 184 Ending with Meta-Analytic Research Findings 236 Other Performance Management Application Techniques Questions for Discussion and Review 236 Associated with Goal Setting 187 Internet Exercise: What Is Your IQ and EQ? 237 Impact on the Psychological Contract 189 Real Case: High Tech—High Fear 238 Summary 189 Organizational Behavior Case: People Problems Ending with Meta-Analytic Research Findings 190 at HEI 238 Questions for Discussion and Review 192 Internet Exercises: What Types of Jobs Motivate Experiential Exercises for Part Two 240 You? 193 Exercise: Self-Perception and Development Internet Exercise: What Is the Motivation Potential of of the Self-Concept 240 Jobs at Southwest Airlines? 193 Exercise: Job Design Survey 240 Real Case: At UPS Managers Learn to Empathize Exercise: Motivation Questionnaire 242 with Their Employees 194 Real Case: Making It a Nice Place to Work 195 PART THREE Organizational Behavior Case: What Do They DYNAMICS OF ORGANIZATIONAL Want? 196 BEHAVIOR 245 Organizational Behavior Case: Tom, Dick, and Harry 196 Evidence-Based Consulting Practices 245 Organizational Behavior Case: The Rubber Chicken Chapter 8 Award 197 Organizational Behavior Case: Specific Goals for Communication and Decision Making 247 Human Service 197 Learning Objectives 247 Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page xv Contents xv Background of the Role of Communication 248 The Causes of Stress 280 The Definition of Communication 249 Extraorganizational Stressors 281 Nonverbal Communication 250 Organizational Stressors 282 Body Language and Paralanguage 250 Group Stressors 282 Improving Nonverbal Effectiveness 252 Individual Stressors: The Role of Dispositions 284 Interpersonal Communication 252 Intraindividual Conflict 288 Importance of How to Talk to Others 254 Conflict Due to Frustration 288 The Importance of Feedback 254 Goal Conflict 290 Other Important Variables in Interpersonal Role Conflict and Ambiguity 290 Communication 256 Interactive Conflict 292 Interactive Communication in Organizations 256 Interpersonal Conflict 292 The Extent and Implications of Interactive Intergroup Behavior and Conflict 293 Communication 257 The Effects of Stress and Intraindividual Conflict 294 The Purposes and Methods of Interactive Physical Problems Due to Stress and Conflict 295 Communication 257 Psychological Problems Due to Stress and The Decision-Making Process 259 Conflict 295 Behavioral Decision Making 260 Behavioral Problems Due to Stress and Conflict 296 Decision Rationality 260 Coping Strategies for Stress and Conflict 297 Decision-Making Styles 262 Individual Coping Strategies 298 Participative Decision-Making Techniques 264 Organizational Coping Strategies 300 Creativity and Group Decision Making 265 Negotiation Skills: Going Beyond Conflict The Process of Creativity 265 Management 302 Psychological Definition and Analysis of Creativity 267 Traditional Negotiation Approaches 302 Creativity Techniques for Management Decision Contemporary Negotiation Skills 304 Making 268 Summary 305 Group Decision Making 269 Ending with Meta-Analytic Research Findings 306 Summary 270 Questions for Discussion and Review 307 Ending with Meta-Analytic Research Findings 271 Internet Exercise: Managing Stress in Questions for Discussion and Review 272 Organizations 308 Internet Exercise: Communication in the Workplace 272 Real Case: When Workers Just Can’t Cope 308 Internet Exercise: Decision Making Real Case: Round-the-Clock Stress 309 in Organizations 273 Organizational Behavior Case: Sorry, No Seats Are Real Case: Online Communication to Share Left; Have a Nice Flight 310 Knowledge 273 Organizational Behavior Case: A Gnawing Organizational Behavior Case: Doing Stomachache 311 My Own Thing 274 Organizational Behavior Case: Drinking Up the Organizational Behavior Case: Bad Brakes 274 Paycheck 311 Real Case: Putting a Human Face on Rational Decisions 275 Chapter 10 Organizational Behavior Case: Harry Smart—Or Power and Politics 312 Is He? 276 Learning Objectives 312 Chapter 9 The Meaning of Power 313 The Distinctions among Power, Authority, Stress and Conflict 277 and Influence 313 Learning Objectives 277 The Classifications of Power 314 The Emergence of Stress 277 Contingency Approaches to Power 318 Contemporary Environment Demands 277 The Special Case of Empowerment 322 What Stress Is, and Is Not 278 The Complexity of Empowerment 323 What about Burnout? 279 Putting Empowerment into Action 324 Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page xvi xvi Contents Political Implications of Power 326 Experiential Exercises for Part Three 365 A Political Perspective of Power in Organizations 327 Exercise: Groups and Conflict Resolution 365 Specific Political Strategies for Power Acquisition 330 Exercise: NASA Moon Survival Task 367 A Final Word on Power and Politics 333 Exercise: TGIF (Thank God It’s Friday!) 368 Summary 334 Exercise: Power and Politics 371 Ending with Meta-Analytic Research Findings 335 Questions for Discussion and Review 336 Internet Exercise: The Uses and Abuses of PART FOUR Power 336 MANAGING AND LEADING FOR HIGH Real Case: Fighting Back 337 PERFORMANCE 373 Organizational Behavior Case: Throwing Away a Golden Opportunity 337 Evidence-Based Consulting Practices 373 Chapter 11 Chapter 12 Groups and Teams 339 Behavioral Performance Management 378 Learning Objectives 339 Learning Objectives 378 The Nature of Groups 339 Learning Theory Background 379 The Meaning of a Group and Group Dynamics 340 Behavioristic Theories 379 The Dynamics of Group Formation 340 Cognitive Theories 381 Types of Groups 343 Social Learning and Social Cognitive Theory 382 Implications from Research on Group and Team Principles of Learning: Reinforcement and Dynamics 345 Punishment 384 Group/Team Effectiveness 346 Laws of Behavior 384 The Dynamics of Informal Groups 347 Critique of Reinforcement Theory 384 Norms and Roles in Informal Groups 347 Reinforcement as Used in Behavioral Management 386 The Informal Organization 348 Positive and Negative Reinforcers 386 The Dysfunctions of Groups and Teams 350 The Use of Punishment 387 Norm Violation and Role Ambiguity/Conflict 350 The Role of Organizational Reward Systems 389 The Groupthink, Conformity Problem 350 Analysis of Money as a Reinforcer 390 Risky Shift Phenomenon 351 Nonfinancial Rewards 391 Dysfunctions in Perspective 351 Behavioral Performance Management, Social Loafing 352 or O.B. Mod. 394 Work Teams 352 Step 1: Identification of Performance Behaviors 398 The Nature of a Team 353 Step 2: Measurement of the Behavior 399 Cross-Functional Teams 354 Step 3: Functional Analysis of the Behavior 399 Virtual Teams 355 Step 4: Development of an Intervention Strategy 400 Self-Managed Teams 356 Step 5: Evaluation to Ensure Performance How to Make Teams More Effective 356 Improvement 403 Summary 360 Application of Behavioral Management 404 Ending with Meta-Analytic Research Findings 361 Manufacturing versus Service Applications 405 Questions for Discussion and Review 361 Summary 406 Internet Exercise: Work Environment in Team-Based Ending with Meta-Analytic Research Findings 406 Organizations 362 Questions for Discussion and Review 408 Real Case: There Are Teams, and There Are Internet Exercise: Applying Behavior Management Teams 362 Principles to Athletic Performance 408 Organizational Behavior Case: The Schoolboy Real Case: The Elite Circle of $1 CEOs 408 Rookie 363 Organizational Behavior Case: Contrasting Styles 410 Organizational Behavior Case: The Blue-Ribbon Organizational Behavior Case: Volunteers Can’t Be Committee 364 Punished 410 Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page xvii Contents xvii Organizational Behavior Case: Up the Piece Leadership in the New Environment 446 Rate 411 Leadership Styles 448 Organizational Behavior Case: A Tardiness Style Implications of the Classic Studies and the Modern Problem 411 Theories 449 Classic Styles 451 Chapter 13 Leadership Styles in Perspective 452 Effective Leadership Processes 413 An Evidence-Based Positive, Authentic Leadership Style 454 Learning Objectives 413 The Roles and Activities of Leadership 455 What is Leadership? 413 Leader/Manager Roles 455 The Historically Important Studies Activities of Successful and Effective Leaders: The Real on Leadership 415 Managers Study 457 The Iowa Leadership Studies 416 Leadership Skills 463 The Ohio State Leadership Studies 416 What Skills Do Leaders Need? 463 The Early Michigan Leadership Studies 418 Traditional Leadership Development Programs 466 Traditional Theories of Leadership 418 Contemporary Leadership Development Trait Theories of Leadership 419 Approaches 468 From Traits to States and Skills Development 420 Other Indirect Techniques for Developing Leadership Group and Exchange Theories of Leadership 421 Effectiveness 469 Contingency Theory of Leadership 423 Summary 471 Path-Goal Leadership Theory 426 Ending with Meta-Analytic Research Findings 472 Modern Theoretical Processes of Leadership 428 Questions for Discussion and Review 472 Charismatic Leadership Theories 428 Internet Exercise: Leaders as Coaches 473 Transformational Leadership Theory 430 Real Case: Jeanne P. Jackson: A Retailing Leader 473 Substitutes for Leadership 431 Real Case: For Leaders, Ignorance Isn’t Bliss 474 Authentic Leadership 433 Organizational Behavior Case: The Puppet 475 Leadership across Cultures 434 Project GLOBE and the Future of International Experiential Exercises for Part Four 476 Leadership Studies 436 Exercise: Role Playing and O.B. Mod. 476 Summary 439 Exercise: Leadership Questionnaire 477 Ending with Meta-Analytic Research Findings 440 Exercise: Paper Plane Corporation 480 Questions for Discussion and Review 441 Internet Exercise: Leading in Times of Crisis 442 Real Case: No Organization Chart and an 80-Blank- Footnote References and Supplemental Pages Policy Manual 442 Readings 482 Real Case: The Seven Secrets of Inspiring Leaders 443 References for Application Boxes and Real Cases 548 Chapter 14 Index 551 Great Leaders: An Evidence-Based Approach 445 Learning Objectives 445 Lut30352_FM_i-xviii.qxd 11/27/09 12:03 PM Page xviii Lut30352_ch01_001-030.qxd 11/25/09 4:16 PM Page 1 Part One Environmental and Organizational Context 1. Introduction to Organizational Behavior: An Evidence-Based Approach 5 2. Environmental Context: Globalization, Diversity, and Ethics 31 3. Organizational Context: Design and Culture 57 4. Organizational Context: Reward Systems 88 EVIDENCE-BASED CONSULTING PRACTICES A major component of the evidence-based theme of this text and the link to practice are these part openers from the world-famous Gallup Organization. Gallup draws from its internationally recognized survey science and cadre of internal and external researchers (e.g., the author of this text and a Nobel Prize winner in behav- ioral economics are Gallup Senior Scientists), publishes its findings in the top academic journals such as Journal of Applied Psychology, and provides this evidenced-based perspective and representative practices for each text part. Gallup is the recognized world leader in the measurement and analysis of human attitudes, opinions, and behavior, building on over three-quarters of a century of success. Gallup employs many of the world’s leading scientists in management, economics, psychology, and sociology. Gallup performance management systems help organiza- tions maximize employee productivity and increase customer engagement through measurement tools, management solutions, and strategic advisory services. Gallup’s 2000 professionals deliver services on-site at client organizations, through the Web, at Gallup University’s campuses, and in 40 offices around the world. Gallup has subsidiary operations in 20 countries, covering 75 percent of the world’s GNP. Gallup clients include top-performing organizations such as Toyota, Marriott, Wal-Mart, Wells Fargo, and Best Buy. The details and depth of Gallup’s consulting practices can be found in the best- selling books such as First, Break All the Rules (Simon & Schuster, 1999) Now, Discover Your Strengths (The Free Press, 2001), How Full Is Your Bucket (Gallup Press, Lut30352_ch01_001-030.qxd 11/25/09 4:16 PM Page 2 2 Part One Environmental and Organizational Context 2004), and Strength Finder 2.0 (Gallup Press, 2007), which recently passed the million copies sold mark. These books are all authored by Gallup scientists and prac- tice leaders. All the part opening Gallup practices for this text are written by Tim Hodges, Executive Director of the Gallup University, with some input by former Gallup Senior Analyst Dr. Dennis Hatfield and this author. The following gives an introductory overview of the Gallup evidenced-based approach, and the other openers are more directly concerned with the theme of the respective part. AN INTRODUCTION TO THE GALLUP EVIDENCE-BASED APPROACH: THE GALLUP PATH According to numerous think tanks, recent global competition caused corporate executives to pose one common, all-consuming question: What is the role of human nature in driving business outcomes? As described in Coffman and Gonzalez-Molina’s Follow This Path, the Gallup Organization sorted through unprecedented bits of economic information and data from customers and employees to develop The Gallup Path™ management theory, answering the question concerning the role of human nature in driving business outcomes. The Gallup Path™ serves as Gallup’s premier management consulting model. At the model’s core is the theory that within every organization, every employee, at all levels, contributes to some degree to sales growth, profitability, and ultimately, share price. The path serves as the first management theory to track the connectedness of managers to employees, employees to customers, and customers to real financial outcomes. The “steps” along The Gallup Path™ progress from (1) individual’s identification of strengths to (2) finding the right fit to (3) great management to (4) engaged employees to (5) engaged customers to (6) sustainable business growth to (7) real profit increase to (8) stock increase. Just as The Gallup Poll reports the will of global citizens, The Gallup Path™ reports the will of customers and employees around the world through Gallup’s HumanSigma™ metrics. GALLUP’S GREAT PLACE TO WORK One of Gallup’s core practices involves the measurement and development of employee engagement, leading to the creation of “great places to work.” As described in Buckingham and Coffman’s First, Break All the Rules, Gallup consultants use the Q12® to provide a measure of the extent to which individuals are rightly placed and rightly managed, creating the great place to work. These Q12® questions are: (1) Do I know what is expected of me at work? (2) Do I have the materials and equipment I need to do my work right? (3) At work, do I have the opportunity to do what I do best every day? (4) In the last seven days have I received recognition or praise for good work? (5) Does my supervisor, or someone at work, seem to care about me as a person? (6) Is there someone at work who encourages Lut30352_ch01_001-030.qxd 11/25/09 4:16 PM Page 3 Part One Environmental and Organizational Context 3 my development? (7) At work, do my opinions seem to count? (8) Does the mission/purpose of my company make me feel like my work is important? (9) Are my coworkers committed to doing quality work? (10) Do I have a best friend at work? (11) In the last six months, have I talked with someone about my progress? (12) At work, have I had opportunities to learn and grow? (See Buckingham & Coffman, 1999, p. 28. These questions are the results of Gallup research, and as such they are proprietary. They cannot be reprinted or reproduced in any manner without the written consent of the Gallup Organization. Copyright © 1993–1998 The Gallup Organization, Washington, DC. All rights reserved). A recent issue of the Journal of Applied Psychology published a meta-analysis of 7,939 business units in 36 companies examining the relationship between employee engagement and work-related outcomes of customer satisfaction, profit, productiv- ity, turnover, and safety (Harter, Schmidt, & Hayes, 2002). Generalizable rela- tionships of substantial practical value were found for all outcome measures, providing research evidence of the connection between an employee’s level of engagement and the level of quality of his or her performance. Related published workplace studies (e.g., Schmidt & Rader, Personnel Psychology, 1999) have also illustrated the validity of the right fit and management of talent in predicting super- visory ratings of job performance, sales volumes, production records, and absenteeism. GALLUP’S APPROACH TO STRENGTHS-BASED DEVELOPMENT For decades following World War II, the science of psychology focused almost completely on what is wrong with people. Bucking this trend of negativity, Gallup scientists analyzed more than 30 years of research on what is right about people. This in-depth study of over two million individuals led to the creation of the StrengthsFinder, Gallup’s Web-based talent assessment tool and psychology’s first taxonomy of strengths. For his leadership in the development of the StrengthsFinder and for his thought leadership that changed the entire field of psychology, in 2003 Gallup’s former chairman and chief scientist, Dr. Donald O. Clifton, was officially named the “Father of Strengths Psychology” and “Grandfather of Positive Psychology” by the American Psychological Association. The StrengthsFinder serves as the starting point for self-discovery in all of Gallup’s strengths-based development programs. After an individual has completed the assessment, a list of developmental suggestions is customized to the individual’s top five themes of talent—called Signature Themes. Over the past several years, StrengthsFinder has been used in the development of millions of individuals across hundreds of roles including manager, salesperson, teacher, student, leader, pastor, nurse, and many more. StrengthsFinder is available in more than a dozen languages. Role-specific strengths-based developmental information is available through the following Gallup books (each including a personal ID number allowing the reader to complete the StrengthsFinder): Now, Discover Your Strengths (Buckingham & Clifton, 2001); StrengthsQuest (Clifton & Anderson, 2002); Discover Your Sales Strengths (Smith & Rutigliano, 2003); Living Your Strengths (Winseman, Clifton, & Liesveld, 2003); and StrengthsFinder 2.0 (Rath, 2007). Lut30352_ch01_001-030.qxd 11/25/09 4:16 PM Page 4 4 Part One Environmental and Organizational Context EXAMPLES OF CLIENT SUCCESS: GALLUP’S EVIDENCED-BASED PRACTICES IN ACTION An important aspect of Gallup’s evidence-based approach is measuring the value of client engagements, known as Business Impact Analysis. The following examples of recent client success illustrate the impact of Gallup’s research in action. 1. A national clothing retailer was experiencing declining business. The retailer brought Gallup in to create an integrated performance management system designed to provide each store manager with the tools to optimize employee and customer engagement. The client engagement consisted of several adminis- trations of employee and customer engagement, followed by in-depth analysis, executive consulting, and manager training. Gallup’s Business Impact Analysis uncovered a trend where employee and customer engagement significantly influ- enced each store’s financial performance. In fact, the group of stores with top- level performance on employee and customer engagement metrics realized a significant net benefit to the organization of approximately $114.8 million in sales, $47.6 million in margins, and $34.7 million in operating profit when compared to the group of stores with lower employee and customer engagement metrics. 2. Gallup’s extensive work in the health care sector has also led to valuable results for clients. For example, a relationship with one of the largest for-profit hospital networks created value for many years. Since the inception of an ongoing, systemwide program to improve employee engagement, more than 26,000 employ- ees of this hospital network have moved from being “not engaged” (neither positive nor negative about their work environment) or “actively disengaged” (fundamentally disconnected from their work) to being engaged, or emotionally invested, in their jobs. According to the client’s estimates, these engaged employees represent over $46 million in reduced absenteeism costs alone. Further, over a recent three-year period, systemwide employee engagement levels closely reflect steady, incremental increases in the client’s stock price. Positive multimillion dollar relationships between employee engagement and reduced malpractice claims, earnings per admission, patient loyalty, and decreased nurse turnover have also been realized over the course of this successful client partnership. 3. One of the largest banks in North America entered into a partnership with Gallup to improve sales performance in three call centers. Gallup consultants studied the call center structure and business strategy, reviewed job performance criteria, and studied the best performers in each role to identify the talents that contributed to their success. Gallup developed and implemented hiring systems for customer service representatives and inbound sales representatives. Not only did employees hired through the Gallup system deliver a higher sales success rate, high-scoring new hires substantially outperformed their lower-scoring counterparts in revenues, sales, call handling time, and loan accuracy. Many more examples of successful client partnerships, as well as actionable manage- ment insights and perspectives from Gallup experts, are available in the monthly online newsletter, the Gallup Management Journal (http://www.gallupjournal.com). Lut30352_ch01_001-030.qxd 11/25/09 4:16 PM Page 5 Chapter One Introduction to Organizational Behavior: An Evidence- Based Approach Learning Objectives Provide an overview of the major challenges and the paradigm shift facing management now and in the future. Outline an evidence-based approach to organizational behavior. Summarize the Hawthorne studies as the starting point of the study of organiza- tional behavior. Explain the methodology that is used to accumulate knowledge and facilitate understanding of organizational behavior. Relate the various theoretical frameworks that serve as a foundation for the study of organizational behavior. Present the social cognitive model of organizational behavior that serves as the conceptual framework for the text. Every era laments about daunting challenges. However, even previous generations would probably agree that effectively managing today’s organizations is very difficult. Ask anyone today—management professors, practitioners, or students—what the major challenges are in today’s environment, and the answer will be fairly consistent: A turbulent economy and dangerous geopolitics preoccupy everyone’s concerns. However, at the organization level, understanding global competition and diversity, and trying to solve ethical problems and dilemmas come to the fore. These are unquestionably major issues facing contempory organizations and are given major attention in this text. However, the basic premise and assumptions of the field of organizational behavior in general, and of this text in particular, are that managing the people—the human resources of an organization—have been, are, and will continue to be, the major challenge and critical competitive advantage. Globalization, diversity, and ethics serve as very important environmental or contextual dimensions for organizational behavior. However, as Sam Walton, the founder of Wal-Mart and richest person in the world when he died, declared to this author over lunch a number of years ago when asked what the answer was to successful organizations—“People are the 5 Lut30352_ch01_001-030.qxd 11/25/09 4:16 PM Page 6 6 Part One Environmental and Organizational Context key!” The technology can be purchased and copied; it levels the playing field. The people, on the other hand, cannot be copied. Although it may be possible to clone human bodies, their ideas, personalities, motivation, and organization cultural values cannot be copied. The human resources of an organization and how they are managed represent the compet- itive advantage of today’s and tomorrow’s organizations. A recent study of over three hun- dred companies for over 20 years provides evidence for this statement. The researchers found that management of human resources through extensive training and techniques such as empowerment resulted in performance benefits, but operational initiatives such as total quality management or advanced manufacturing technology did not.1 At first employees were considered a cost, then human resources, and now are becoming widely recognized as “human capital”2 (what you know—education, experience, skills). Recent research indicates that investing in this human capital results in desired performance outcomes such as increased productivity and customer satisfaction.3 Even going beyond human capital are more recently recognized “social capital”4 (who you know—networks, connections, friends) and “positive psychological capital”5 (who you are—confidence, hope, optimism, resiliency) and (who you are in terms of confidence, hope, optimism, resiliency, and, more importantly, who you can become, i.e., one’s possible authentic self). Although Chapter 7 will be specifically devoted to positive organizational behavior in gen- eral and psychological capital in particular, let it be simply noted here that there is growing research evidence that employees’ psychological capital is positively related to their per- formance and desired attitudes.6 As the ultimate “techie” Bill Gates astutely observed: “The inventory, the value of my company, walks out the door every evening.” Interestingly, whereas the technology dramatically changes, sometimes monthly or even weekly, the human side of enterprise has not changed and will not change that fast. As noted by well-known international management scholar Geert Hofstede, “Because management is always about people, its essence is dealing with human nature. Since human nature seems to have been extremely stable over recorded history, the essence of management has been and will be equally stable over time.”7 The nature of work and the workplace itself,8 the tradi- tional employment contract,9 and the composition of the workforce10 are all dramatically changing and given attention in this text. Yet, the overriding purpose of the first edition, now 38 years ago, of trying to better understand and effectively manage human behavior in organizations remains the essence of this twelfth edition. This introductory chapter gives the perspective, background, methodology, and evidence- based approach to the field. After a brief discussion of the current environmental challenges and the paradigm shift facing management and why an evidence-based approach is needed, the historical background is touched on. Particular attention is given to the famous Hawthorne studies, which are generally recognized to be the beginning of the systematic study and understanding of organizational behavior. Next, an overview of the methodology used in the scientific study of organizational behavior is given. The chapter concludes by defining exactly what is involved in organizational behavior and by providing a conceptual model for the rest of the text. THE CHALLENGES FACING MANAGEMENT The academic field of organizational behavior has been around for about a half century. However, as the accompanying OB in Action: Some Things Never Really Change clearly indicates, problems facing managers of human organizations have been around since the beginning of civilization. This case, with but a few word modifications, is taken from the Old (not New) Testament of the Bible (Exodus 18:13–27), recognized by the Jewish, Christian, Lut30352_ch01_001-030.qxd 11/25/09 4:16 PM Page 7 OB in Action: Some Things Never Really Change A powerful, charismatic leader is having problems. A character: They should be truthful, not driven by material well-known consultant is called in to help. The consultant gain. The new structure should resolve all daily issues at notices that the leader tries to handle all problems and the lowest possible level; only the big and difficult issues conflicts of his people himself. People queue up before should be brought before the leader. He should focus on his office; because he is overwhelmed, he cannot handle strategy—on dealing with the higher authority, on estab- all the business. So the consultant has a private talk with lishing new approaches and teaching these to the peo- the leader and tells him to structure his organization by ple, on showing them the way to go and the work to be delegating authority, empowering subordinates to han- done. The case states that the leader listens to the con- dle the workload. These subordinates should be selected sultant and carries out the reorganization, which is a suc- not only on