Organizational Behavior: University of Hargeisa College of Business and Public Administration

UNIVERSITY OF HARGEISA
College of Business and Public Administration
ORGANIZATIONAL BEHAVIOR
“Understanding and managing life at work”
A summarized sheet from the text book of: Gary Johns and Alan Saks, ORGANIZATIONAL
BEHAVIOR, 7th Edition, Pearson Prentice Hall, 2008.
Compiled by: Mohamed Ahmed Sulub

(Senior business and management lecturer)
2015
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Compiled by: Mr. Mohamed Ahmed Sulub (Senior lecturer of Business and Management) Via: [email protected]
Chapter One
“Organizational behavior and management”
Learning Objectives
After reading Chapter 1, you should be able to:
1. Define organizations and describe their basic characteristics.

2. Explain the concept of organizational behavior and describe the goals of the field.
3. Define management and describe what managers do to accomplish goals.
4. Contrast the classical viewpoint of management with that which the human relations
movement advocated.
5. Describe the contemporary contingency approach to management.
6. Explain what managers do—their roles, activities, agendas for action, and thought
processes.
7. Describe the societal and global trends that are shaping contemporary management
concerns.
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Chapter Summary
I. What Are Organizations?
A. Social Inventions
Organizations are social inventions for accomplishing common goals through group effort.
Their essential characteristic is the coordinated presence of people, not necessarily things.
Of primary interest is understanding people and managing them to work effectively.
B. Goal Accomplishment
Individuals are assembled into organizations for a reason. In the private sector, some
organizations have goals like selling cars, delivering news, or winning hockey games. In the
nonprofit and public sectors, organizations may have goals such as saving souls, promoting
the arts, helping the needy, or educating people. Virtually all organizations have survival as
a goal.
C. Group Effort
To achieve their goals, organizations are staffed with people who operate together in a
coordinated fashion. At times, individuals can accomplish much. But by combining greater
resources and wealth with effective teamwork, organizations have become the dominant
producing agents in the world. The field of organizational behaviour is concerned with how
to get people to practice effective teamwork.
II. What Is Organizational Behaviour?
Organizational behaviour refers to the attitudes and behaviours of individuals and groups

in organizations. The field of organizational behaviour involves the systematic study of
these attitudes and behaviours, and should be of interest to all students of management.
III. Why Study Organizational Behaviour?
There are at least three reasons why organizational behaviour is worth studying.
A. Organizational Behaviour is Interesting
Organizational behaviour is interesting because it is about people and human nature. You
should be interested in this field because you will find that the behaviour of people in an
organizational setting is fascinating.
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B. Organizational Behaviour is Important
Aside from being interesting, organizational behaviour is also important since most of us
are members of organizations. As well, what happens in organizations often has a profound
impact on people. Knowledge of organizational behaviour will help to make us more
effective in a variety of roles such as managers, employees, or consumers.
C. Organizational Behaviour Makes a Difference
Organizational behaviour is also worth studying because it not only has to do with the
attitudes and behaviour of people in organizations, but it also has implications for an
organization’s competitiveness and success. Many of the best companies to work for in
Canada use management practices that have their basis in organizational behaviour. In
addition, an increasing number of studies have confirmed the existence of linkages between
organizational behaviour and corporate performance and success. The main factor that
differentiates organizations is the workforce, and the most successful organizations are
those that effectively manage their employees.
IV. How Much Do You Know about Organizational Behaviour?
People are amazingly good at giving sensible reasons as to why a statement is true or false.
The ease with which people can generate such contradictory responses suggests that
“common sense” develops through unsystematic and incomplete experiences with
organizational behaviour. However, because common sense and opinions about
organizational behaviour affect management practice, practice should be based on
informed opinion and systematic study.
V. Goals of the Field
The field of organizational behaviour has a number of commonly agreed upon goals. Chief
among these are effectively predicting, explaining, and managing behaviour that occurs in
organizations.
A. Predicting Organizational Behaviour
Predicting the behaviour of others is an essential requirement for everyday life, both inside
and outside of organizations. The very regularity of behaviour in organizations permits the
prediction of its future occurrence. Through systematic study, the field of organizational
behaviour provides a scientific foundation that helps improve predictions of organizational
events.
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B. Explaining Organizational Behaviour
Another goal of organizational behaviour is explanation of events in organizations – why do

they occur? Organizational behaviour is especially interested in determining why people are
more or less motivated, satisfied, or prone to resign. The ability to understand behaviour is
a necessary prerequisite for effectively managing it.
C. Managing Organizational Behaviour
Management is defined as the art of getting things accomplished in organizations through

others. If behaviour can be predicted and explained, it can often be managed. If prediction
and explanation constitute analysis, then management constitutes action.
VI. Early Prescriptions Concerning Management
There are two basic phases in the pursuit of the “correct” way to manage an organization to
achieve its goal. Experts often call these phases the classical view and the human relations
view.
A. The Classical View and Bureaucracy
During the early 1900s, a number of experienced managers and consultants including Henri
Fayol, James D. Mooney, and Lyndall Urwick were the first writers to set down their
thoughts on organizing. This classical viewpoint is an early prescription on management
that advocated high specialization of labour, intensive coordination, and centralized
decision making. Frederick Taylor's approach, called Scientific Management, was focused
more on shop floor activities than the administrative prescriptions of the classical view.
Scientific Management was a system for using research to determine the optimum degree
of specialization and standardization of work tasks. Max Weber, a German academic,
described bureaucracy as an ideal type of organization that included a strict chain of
command, detailed rules, high specialization, centralized power, and selection and
promotion based on technical competence.
B. The Human Relations Movement and a Critique of Bureaucracy
The Hawthorne studies involved research conducted at the Hawthorne plant of Western

Electric in the 1920s and 1930s that illustrated how psychological and social processes
affect productivity and work adjustment. After World War II, researchers and theorists such
as Chris Argyris, Alvin Gouldner, and Rensis Likert took up the theme of the Hawthorne
studies. This human relations movement was a critique of classical management and
bureaucracy that advocated management styles that were more participative and oriented
toward employee needs.
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VII. Contemporary Management — the Contingency Approach
Contemporary scholars and managers recognize the merits of both the classical approach
and the human relations movement. This contingency approach to management recognizes
that there is no one best way to manage, and that an appropriate management style
depends on the demands of the situation.
VIII. What Do Managers Do?
Several research studies have explored what managers do and provide a context for
appreciating the usefulness of understanding organizational behaviour.
A. Managerial Roles
Henry Mintzberg conducted an in-depth study of the behaviour of managers and found a
rather complex set of roles played by managers. The relative importance of these roles will
vary with management level and organizational technology.
Interpersonal Roles
Interpersonal roles are those that are used to establish and maintain interpersonal
relations. These include the figurehead role, leadership role, and liaison role.
Informational Roles
Informational roles are concerned with various ways the manager receives and transmits
information. Roles in this group include the monitor role, disseminator role, and
spokesperson role.
Decisional Roles
Decisional roles deal with managerial decision making and include the entrepreneur role,
the disturbance handler role, the resource allocator role, and the negotiator role.
B. Managerial Activities
Fred Luthans and colleagues determined that managers engaged in four basic types of
activities: routine communications (exchanging information, handling paperwork);
traditional management (planning, decision making, controlling); networking (interacting
with outsiders, socializing, politicking); and human resource management (managing
conflict and motivating/reinforcing, staffing, training and development). One of the most
fascinating findings is how emphasis on these various activities relates to management
success. People who were promoted quickly tended to do more networking and less human
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resource management. However, if success is defined in terms of unit effectiveness and
employee satisfaction and commitment, the more successful managers were those who
devoted more time and effort to human resource management and less to networking.
C. Managerial Agendas
John Kotter has also studied the behaviours of successful general managers and found a
strong pattern of similarities that he grouped into the categories of agenda setting,
networking, and agenda implementation.
Agenda Setting
The managers all gradually developed agendas of what they wanted to accomplish for the
organization. These agendas were almost always informal and unwritten, and they were
much more concerned with “people issues” and less numerical than most formal strategic
plans.
Networking
The managers established a wide formal and informal network of key people both inside
and outside of their organizations. This network provided managers with information and
established cooperative relationships relevant to their agendas.
Agenda Implementation
The managers used networks to implement the agendas. They would go anywhere in the
network for help – up or down, in or out of the organization. The theme that runs through
Kotter’s findings is the high degree of informal interaction and concern with people issues
that were necessary for the managers to achieve their agendas.
D. Managerial Minds
Other researchers have examined not how managers act, but how managers think. Herbert
Simon and Darnel Isenberg stress the role of intuition in good management. Intuition is
problem identification and solving based on systematic education and experiences that
enable managers to locate problems within a network of previously acquired information.
E. International Managers
The style with which managers do what they do and the emphasis given to various activities
will vary greatly across cultures because of cross-cultural variations in values that affect
both managers' and employees' expectations about interpersonal interaction. Geert
Hofstede has done pioneering work on cross-cultural differences in values and how these
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differences promote contrasts in the general role that managers play across cultures.
National culture is one of the most important contingency variables in organizational
behaviour.
IX. Some Contemporary Management Concerns
The field of organizational behaviour can help one to understand and manage some of the
contemporary issues facing managers.
A. Diversity — Local and Global
Several factors are influencing the demographics of the North American workforce. As a
result, both the labour force and customers are becoming increasingly culturally diverse.
More women are entering the workforce, as are visible minorities, aboriginal people, and
persons with disabilities. Diversity of age is also a factor. Diversity is also coming to the fore
as many organizations realize that they have not treated certain segments of the population
fairly in many aspects of employment and that organizations have to be able to get the best
from everyone in order to be truly competitive. Both legal and social pressures have
contributed to this awareness. Multinational expansion, strategic alliances, and joint
ventures between global partners are also bringing people into contact with their
counterparts in organizations in other cultures as never before. Thus, managers must be
able to manage these issues effectively for organizations to benefit from the considerable
opportunities that a diverse workforce affords.
B. Employee-Organization Relationships
Downsizing, restructuring, and reengineering have had a profound effect on organizations

as firms respond to increased global competition and technological change. Surveys show
that the consequences of these events have been decreased trust, morale, lower job
satisfaction and organizational commitment, and shifting loyalties. Structural changes in
work arrangements such as part-time work and temporary and contract work are expected
to become the future standard forms of work and will forever influence the nature of
employee-organization relationships. The field of organizational behaviour offers many
potential solutions to these kinds of problems and on how to establish positive and
supportive employee-organization relationships.
C. A Focus on Quality, Speed, and Flexibility
Increasing competition and changes in the environment have led many organizations to
focus on quality in an attempt to achieve continuous improvement in the quality of an
organization's products and/or services. As well, organizations are learning to do things
faster as speed can be a real competitive advantage. Finally, organizations need to become
more flexible in order to respond and adapt to an increasingly uncertain, turbulent, and
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chaotic environment. The need for quality, speed, and flexibility requires a high degree of
employee involvement and commitment as well as teamwork.
D. Employee Recruitment and Retention
Many organizations today are struggling to find and keep skilled employees in order to
compete and survive. The shortage of skilled labour has become a big problem for
organizations and it is expected to get even worse in the coming years as the baby boomers
begin to retire. Organizational behaviour can help organizations improve their recruitment
and retention of employees. For example, providing opportunities for learning, improving
employees’ job satisfaction and organizational commitment, designing jobs that are
challenging and meaningful, providing recognition and monetary rewards for performance,
managing a diverse workforce, allowing for flexible work arrangements, and providing
effective leadership are just a few of the things that have their basis in organizational
behaviour that can improve recruitment and retention.
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Glossary
Bureaucracy:
Max Weber's ideal type of organization that included a strict chain of command, detailed
rules, high specialization, centralized power, and selection and promotion based on
technical competence.
Classical viewpoint:
An early prescription on management that advocated high specialization of labour,
intensive coordination, and centralized decision making.
Contingency approach:
An approach to management that recognizes that there is no one best way to manage, and
that an appropriate management style depends on the demands of the situation.
Hawthorne studies:
Research conducted at the Hawthorne plant of Western Electric in the 1920s and 1930s
that illustrated how psychological and social processes affect productivity and work
adjustment.
Human relations movement:

A critique of classical management and bureaucracy that advocated management styles
that were more participative and oriented toward employee needs.
Management:
The art of getting things accomplished in organizations through others.
Organizational behaviour:
The attitudes and behaviours of individuals and groups in organizations.
Organizations:
Social inventions for accomplishing common goals through group effort.
Scientific Management:
Frederick Taylor's system for using research to determine the optimum degree of
specialization and standardization of work tasks.
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Chapter Two
“Personality and learning”
1. Define personality and discuss its general role in influencing organizational

behaviour.
2. Describe the dispositional, situational, and interactionist approach to organizational
behaviour.
3. Discuss the Five-Factor Model of personality.
4. Discuss the consequences of locus of control, self-monitoring, and self-esteem.
5. Discuss positive and negative affectivity, proactive personality, general self-
efficacy, and core self-evaluations.
6. Define learning and describe what is learned in organizations.
7. Explain operant learning theory and differentiate between positive and negative
reinforcements.
8. Explain when to use immediate versus delayed reinforcement and when to use
continuous versus partial reinforcement.
9. Distinguish between extinction and punishment and explain how to use punishment
effectively.
10. Explain social learning theory.
11. Describe the various organizational learning practices
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Chapter Summary
I. What is Personality?
Personality is the relatively stable set of psychological characteristics that influences the
way an individual interacts with his or her environment. It is reflected in the way people
react to other people, situations, and problems.
II. Personality and Organizational Behaviour
Personality has a rather long and rocky history in organizational behaviour that is
demonstrated by the “person-situation.” According to the dispositional approach,
individuals possess stable traits or characteristics that influence their attitudes and
behaviours. According to the situational approach, characteristics of the organizational
setting such as rewards and punishment influence people’s feelings, attitudes, and
behaviour. According to the interactionist approach, organizational behaviour is a function
of both dispositions and the situation. The interactionist approach is the most widely
accepted perspective within organizational behaviour. The role of personality in
organizational settings is strongest in “weak” situations where there are loosely defined
roles and few rules. In strong situations which have more defined roles, rules, and
contingencies, personality tends to have less impact. Thus, the extent to which personality
influences people’s attitudes and behaviours depends on the situation.
A. The Five-Factor Model of Personality
Psychologists have discovered that there are about five basic, but general dimensions that
describe personality:
 Extraversion. Sociable, talkative vs. withdrawn, shy.

 Emotional Stability/Neuroticism. Stable, confident vs. depressed, anxious.
 Agreeableness. Tolerant, cooperative vs. cold, rude.
 Conscientiousness. Dependable, responsible vs. careless, impulsive.
 Openness to Experience. Curious, original vs. dull, unimaginative.
There is evidence that each of the “Big Five” dimensions is related to job performance. High
conscientiousness is related to performance for all occupations and the best predictor of
performance of all the “Big Five” dimensions. The “Big Five” dimensions have also been
found to be related to motivation, job satisfaction, and career success.
B. Locus of Control
Locus of control is a set of beliefs about whether one's behaviour is controlled mainly by
internal or external forces. High "externals" see their behaviours controlled by factors like
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fate, luck and powerful people. High "internals" see stronger effects on their behaviour as a
consequence of self-initiative, personal actions and free will.
Locus of control influences organizational behaviour in a variety of occupations. Internals

are more satisfied with their jobs, earn more money, and achieve higher organizational
positions. In addition, they seem to perceive less stress, to cope with stress better, and to
engage in more careful career planning.
C. Self-Monitoring
Self-monitoring is the extent to which people observe and regulate how they appear and
behave in social settings and relationships. Individuals low in self-monitoring are said to
"wear their hearts on their sleeves." They act like they feel and say what they think without
regard to the situation. Individuals high on self-monitoring behave somewhat like actors,
taking great care to observe and control the images that they project. In particular, they
tend to show concern for socially appropriate behaviour, tune in to social cues, and respond
accordingly.
High self-monitors tend to gravitate toward jobs that require a degree of role-playing such
as sales, law, public relations, and politics. In social settings that require a lot of verbal
interaction, high self-monitors tend to emerge as leaders.
D. Self-Esteem
Self-esteem is the degree to which a person has a positive self-evaluation. People with high
self-esteem have favourable self-images. According to behavioural plasticity theory, people
with low self-esteem tend to be more susceptible to external and social influences than
those who have high self-esteem. People with low self-esteem tend to react badly to
negative feedback – it lowers their subsequent performance and they do not react well to
ambiguous and stressful situations. Despite a possible downside to excessive esteem,
organizations will generally benefit from a workforce with high self-esteem. Such people
tend to make more fulfilling career decisions, they exhibit higher job satisfaction, and they
are generally more resilient to the strains of everyday work life.
E. Recent Developments in Personality and Organizational Behaviour
Five more recent personality variables that are important for organizational behaviour are
positive and negative affectivity, proactive personality, general self-efficacy, and core self-
evaluations.
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Positive and Negative Affectivity
People who are high on positive affectivity have a propensity to view the world, including
oneself and other people, in a positive light. People who are high on negative
affectivity have a propensity to view the world, including oneself and other people, in a
negative light. People who have high positive affectivity report higher job satisfaction while
those with high negative affectivity report lower job satisfaction. People with high negative
affectivity tend to experience more stressful conditions at work and report higher levels of
workplace stress and strain.
Proactive Personality
Proactive personality is a stable disposition that reflects a tendency to behave proactively

and to effect positive change in one’s environment. Individuals with a proactive personality
are relatively unconstrained by situational forces and act to change and influence their
environment. Proactive personality is related to a number of work outcomes including job
performance, tolerance for stress in demanding jobs, leadership effectiveness, participation
in organizational initiatives, work team performance, entrepreneurship, and career success.
General Self-Efficacy
General self-efficacy (GSE) is a general trait that refers to an individual’s belief in his or her
ability to perform successfully in a variety of challenging situations. It is a motivational trait
rather than an affective trait. Individuals with high GSE are better able to adapt to novel,
uncertain, and adverse situations and have higher job satisfaction and job performance.
Core Self-Evaluations
Core self-evaluations refer to a broad personality concept that consists of more specific

traits that reflect the evaluations people hold about themselves and their self-worth. The
four specific traits that make up a person’s core self-evaluations are self-esteem, general
self-efficacy, locus of control, and neuroticism (emotional stability). Core self-evaluations
are positively related to job satisfaction, job performance, and life satisfaction.
III. What is Learning?
Learning occurs when practice or experience leads to a relatively permanent change in

behaviour potential. We assume that learning has occurred when we see a change in our
individual behaviour or performance. Employees must learn four general types of learning
content: practical, intrapersonal, and interpersonal skills, and cultural awareness. Practical
skills refer to job-specific skills, knowledge, and technical competence required to perform
one’s job. Intrapersonal skills refer to skills such as problem solving, critical thinking, and
risk-taking. Interpersonal skills refer to interactive skills such as communication and
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teamwork. Cultural awareness refers to the cultural norms and expectations that exist in an
organization.
IV. Operant Learning Theory
According to operant learning theory, the subject learns to operate on the environment to
achieve certain consequences. Operantly learned behaviour is controlled by the
consequences that follow it. The consequences depend on the behaviour, and it is this
connection that is learned. Operant learning can be used to increase or reduce the
probability of behaviour.
V. Increasing the Probability of Behaviour
One of the best methods of promoting behaviour is reinforcement, or the process by which
stimuli strengthen behaviours. The two main types of reinforcement are positive
reinforcement and negative reinforcement.
A. Positive Reinforcement
Positive reinforcement increases or maintains the probability of some behaviour by the

application or addition of a stimulus to the situation in question. This stimulus is called the
positive reinforcer. Although positive reinforcers tend to be pleasant stimuli, this is not
always true since the resultant increase or maintenance of behaviour determines whether
or not a given stimulus was a positive reinforcer.
B. Negative Reinforcement
Negative reinforcement increases or maintains the probability of some behaviour by the

removal of a stimulus from the situation in question. Although negative reinforcers tend to
be unpleasant, they are defined only by what they do and how they work, not by their
unpleasantness. A confusing point about negative reinforcers is that they increase the
probability of behaviour, since we learn to repeat behaviours that remove or prevent the
onset of negative stimuli.
C. Organizational Errors Involving Reinforcement
Managers sometimes make errors in trying to use reinforcement. The most common errors
are confusing rewards with reinforcers, neglecting diversity in preferences for reinforcers,
and neglecting important sources of reinforcement.
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 Confusing Rewards with Reinforcers.
If rewards, such as pay, promotions, fringe benefits, and the opportunity for overtime are
not made contingent on specific behaviour, workers might tend to become confused, since
they would not know why benefits were given.
 Neglecting Diversity in Preferences for Reinforcers.
At times organizations fail to take individual differences into account when using
reinforcers. Thus, what makes one worker happy, like a longer vacation, might not please a
workaholic whose only pleasure in life is work.
 Neglecting Important Sources of Reinforcement.
Positive feedback upon the successful completion of a task is often a neglected source of
reinforcement. At times, informal methods of reinforcement such as a smile or a pat on the
back can be just as effective as more tangible rewards.
D. Reinforcement Strategies
To obtain the fast acquisition of some response, continuous reinforcement, which is applied
by the reinforcer whenever the behaviour of interest occurs, and immediate reinforcement
which is applied by the reinforcer without delay, should be employed. Behaviour tends to
be persistent when partial reinforcement and delayed reinforcement are employed. In
partial reinforcement, not every instance of the behaviour is reinforced during learning,
while with delayed reinforcement there is a time lapse between a behaviour and its
reinforcement. In general, reinforcement strategies have to be altered over time to achieve
the desired results, and these strategies must be altered when the needs of the situation
change.
VI. Reducing the Probability of Behaviour
At times, we might wish to eliminate behaviours considered to be undesirable. Two

strategies that can reduce the probability of learned behaviour are extinction and
punishment.
A. Extinction
Extinction involves the gradual dissipation of behaviour following the termination of

reinforcement. If workers, for example, spend too much time chatting during coffee breaks,
limiting such breaks to certain hours or delivering coffee to desks, might help solve the
situation.
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B. Punishment
Punishment involves following an unwanted behaviour with some unpleasant, aversive

stimulus. In general, organizations rely too heavily on punishment, and it should be used
carefully and only when other methods of reinforcement fail to work.
C. Using Punishment Effectively
Very often when punishment is applied, another activity desired by the organization should
be employed as a substitute. This will soften the effects of the punishment and indicate to
the employee the activities the organization deems positive.
There are several principles that can increase the effectiveness of punishment:
 Make sure the chosen punishment is truly aversive.

 Punish immediately.
 Do not reward unwanted behaviours before or after punishment.
 Do not inadvertently punish desirable behaviour.
Punishment can be an effective means of stopping undesirable behaviour when it is applied

very carefully and deliberately. In general, reinforcing correct behaviours and extinguishing
unwanted responses are safer strategies for managers than the frequent use of
punishment.
VII. Social Learning Theory
Learning in organizations often takes place without the conscious control of positive and
negative reinforcers by managers. In addition to learning by directly experiencing the
consequences of behaviour, people also learn by interacting with and observing the
behaviour of others. This form of learning is called social learning and is explained by social
learning theory. Social learning theory involves modelling, self-efficacy, and self-
management.
A. Modeling
< B>Modeling is the process of imitating the behaviour of others. At times, workers learn to
behave in a certain fashion through modeling or the process of imitating behaviour they
observe. Thus, an aspiring executive might seek to dress the way the CEO does, or a junior
clerk might even smoke a certain brand of cigar if upper level managers do. When the
observed behaviour results in positive consequences, then the observer is likely to imitate
the behaviour and to expect similar consequences when the behaviour is learned. In
general, dynamic, successful people are more often used as models than boring,
unsuccessful individuals.
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B. Self-Efficacy
Self-efficacy refers to beliefs people have about their ability to successfully perform a

specific task. It is a cognitive belief that is task specific and is the result of four sources of
information: experience performing the task; observation; verbal persuasion and
encouragement; and physiological state. Self-efficacy influences the activities people
choose to perform, the amount of effort and persistence devoted to a task, affective and
stress reactions, and job performance.
C. Self-Management
When employees use learning principles to manage their own behavior, they are
practicing self-management. Self-management involves self-observation, observation of
others, goal setting, rehearsal, and self-reinforcement. Self-management has been found to
improve learning, attendance, and job performance.
VIII. Organizational Learning Practices
Organizations employ a number of practices to enhance employee learning. These practices

include organizational behaviour modification, employee recognition programs, training
and formal learning, informal learning, and career development.
A. Organizational Behaviour Modification
Organizational behaviour modification (O.B. Mod.) involves the systematic use of learning

principles to influence organizational behaviour. For example, in one study the use of a slide
show illustrating safe, versus unsafe practices resulted in an immediate improvement.
When the reinforcers were terminated, however, the percentage of safe practices returned
to the old level. The effects of O.B. Mod. on task performance tend to be stronger in
manufacturing than in service organizations. As well, money, feedback, and social
recognition have all been found to be effective forms of positive reinforcement and the use
of all three together has the strongest effect on task performance.
B. Employee Recognition Programs
Employee recognition programs are formal organizational programs that publicly recognize

and reward employees for specific behaviours. To be effective, a formal employee
recognition program must specify (a) how a person will be recognized, (b) the type of
behaviour being encouraged, (c) the manner of the public acknowledgement, and (d) a
token or icon of the event for the recipient.
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C. Training and Formal Learning
Training refers to planned organizational activities that are designed to facilitate knowledge

and skill acquisition in order to change behaviours and improve performance. It is one of
the most common types of formal learning in organizations.
D. Informal Learning
Informal learning refers to learning experiences that are not planned and designed by the
organization. They tend to be more spontaneous, immediate, and task specific than formal
learning experiences. It has been reported that up to 70 percent of learning in organizations
takes place informally.
E. Career Development
Career development is an ongoing process in which individuals progress through a series of

stages that consist of a unique set of issues, themes, and tasks. This usually involves a
career planning and career management component. Career planning involves the
assessment of an individual’s interests, skills, and abilities in order to develop goals and
career plans. Career management involves taking the necessary steps that are required to
achieve an individual’s goals and career plans.
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Glossary
Behavioral plasticity theory:

People with low self-esteem tend to be more susceptible to external and social influences
than those who have high self-esteem.
Career development:
An ongoing process in which individuals progress through a series of stages that consist of a
unique set of issues, themes, and tasks.
Core self-evaluations:
A broad personality concept that consists of more specific traits that reflect the evaluations
people hold about themselves and their self-worth.
Employee recognition programs:

Formal organizational programs that publicly recognize and reward employees for specific
behaviours.
Extinction:
The gradual dissipation of behaviour following the termination of reinforcement.
General self-efficacy:
A general trait that refers to an individual's belief in his or her ability to perform successfully
in a variety of challenging situations.
Informal learning:
Learning experiences that are not planned and designed by the organization.
Learning:
A relatively permanent change in behaviour potential that occurs due to practice or
experience.
Locus of control:
A set of beliefs about whether one's behaviour is controlled mainly by internal or external
forces.
Modelling:
The process of imitating the behaviour of others.
Negative affectivity:
Propensity to the view world, including oneself and other people, in a negative light.
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Negative reinforcement:
The removal of a stimulus that, in turn, increases or maintains the probability of some
behaviour.
Operant learning:
The subject learns to operate on the environment to achieve certain consequences.
Organizational behaviour modification:

The systematic use of learning principles to influence organizational behaviour.
Personality:
The relatively stable set of psychological characteristics that influences the way an
individual interacts with his or her environment.
Positive affectivity:
Propensity to the view world, including oneself and other people, in a positive light.
Positive reinforcement:
The application or addition of a stimulus that increases or maintains the probability of some
behaviour.
Proactive personality:
A stable personal disposition that reflects a tendency to behave proactively and to effect
positive change in one's environment.
Punishment:
The application of an aversive stimulus following some behaviour designed to decrease the
probability of that behaviour.
Reinforcement:
The process by which stimuli strengthen behaviours.
Self-efficacy:
Beliefs people have about their ability to successfully perform a specific task.
Self-esteem:
The degree to which a person has a positive self-evaluation.
Self-management:
The use of learning principles to manage one's own behaviour.
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Self-monitoring:
The extent to which people observe and regulate how they appear and behave in social
settings and relationships.
Training:
Planned organizational activities that are designed to facilitate knowledge and skill
acquisition in order to change behaviour and improve performance.
Learning Objectives
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1. Define motivation, discuss its basic properties, and distinguish it from performance.

2. Compare and contrast intrinsic and extrinsic motivation.
3. Explain and discuss the different factors that predict performance and define general
cognitive ability and emotional intelligence.
4. Explain and discuss need theories of motivation.
5. Explain and discuss expectancy theory.
6. Explain and discuss equity theory.
7. Explain and discuss goal setting theory.
8. Discuss the cross-cultural limitations of theories of motivation.
9. Summarize the relationship among the various theories of motivation, performance,
and job satisfaction.
Chapter Summary
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I. Why Study Motivation?
Motivation is one of the most traditional topics in organizational behaviour and it has
become more important in contemporary organizations as a result of the need for
increased productivity to be globally competitive and the rapid changes that organizations
are undergoing.
II. What is Motivation?
When we speak about motivation we usually mean that a person "works hard," "keeps at"
his or her work, and directs his or her behaviour toward appropriate outcomes.
A. Basic Characteristics of Motivation
Motivation is the extent to which persistent effort is directed toward a goal.
The four basic characteristics of motivation are effort, persistence, direction, and goals.
Effort. This refers to the strength of a person's work-related behaviour.
Persistence. This refers to the persistence that individuals exhibit in applying effort to their
work tasks.
Direction. This refers to the quality of a person's work related behaviour.
Goals. This refers to the ends towards which employees direct their effort.
B. Extrinsic and Intrinsic Motivation
Experts in organizational behaviour distinguish between intrinsic and extrinsic

motivation. Intrinsic motivation stems from the direct relationship between the worker and
the task and it is usually self-applied. Extrinsic motivation stems from the work
environment external to the task and it is usually applied by someone other than the
person being motivated. The extrinsic/intrinsic motivation relationship suggests that if
intrinsic outcomes and extrinsic outcomes are both highly attractive, they should contribute
to motivation in an additive fashion. In general, research has shown that both extrinsic and
intrinsic rewards are necessary to enhance motivation in actual work settings.
C. Motivation and Performance
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Performance can be defined as the extent to which an organizational member contributes
to achieving the objectives of the organization. Although there is a positive relationship
between motivation and performance, the relationship is not one-to-one because other
factors such as personality, general cognitive ability, emotional intelligence, task
understanding, and chance can intervene.
General Cognitive Ability. General cognitive ability refers to a person’s basic information

processing capacities and cognitive resources. General cognitive ability predicts learning
and training success as well as job performance in all kinds of jobs and occupations. It is an
even better predictor of performance for more complex and higher-level jobs that require
the use of more cognitive skills.
Emotional Intelligence. Emotional intelligence (EI) has to do with an individual’s ability to

understand and manage his or her own and others’ feelings and emotions. Peter Salovey
and John Mayer have developed an EI model that consists of four interrelated sets of skills
or branches. The four skills represent sequential steps that form a hierarchy. Beginning
from the first and most basic level, the four branches are: Perception of emotions,
integration and assimilation of emotions, knowledge and understanding of emotions, and
management of emotions. EI predicts performance in a number of areas including work
performance and academic performance and is particularly important in jobs that involve a
lot of social interaction and emotional labour.
III. Need Theories of Work Motivation
Need theories of motivation attempt to specify the kinds of needs people have and the
conditions under which they will be motivated to satisfy these needs in a way that
contributes to performance. Needs are physiological and psychological wants or desires
that individuals can satisfy by acquiring certain incentives or achieving particular goals. It is
the behaviour stimulated by this acquisition process that reveals the motivational character
of needs:
NEEDS --> BEHAVIOUR --> INCENTIVES AND GOALS
Need theories are concerned with “what” motivates workers (needs and their associated
incentives or goals). They can be contrasted with process theories, which are concerned
with exactly “how” various factors motivate people. Need theories and process theories are
complementary rather than contradictory.
A. Maslow's Hierarchy of Needs
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Psychologist Abraham Maslow developed a theory based on satisfying certain
needs. Maslow’s hierarchy of needs is a five-level hierarchical need theory of motivation
that specifies that the lowest-level unsatisfied need has the greatest motivating potential.
These needs include physiological needs, safety needs, belongingness needs, esteem needs,
and self-actualization needs. According to Maslow's hierarchy of needs, motivation depends
on the person’s position in the need hierarchy. Individuals are motivated to satisfy their
physiological needs before they show interest in their self-esteem or safety needs. When
needs at a particular level of the hierarchy are satisfied, the individual turns his or her
attention to the next higher level. Maslow's hierarchy also implies that a satisfied need is no
longer an effective motivator.
B. Alderfer's ERG Theory
Another need-based theory called ERG theory was developed by Clayton Alderfer. ERG
theory is a three level hierarchical need theory of motivation that allows for movement up
and down the hierarchy. The name ERG stems from the compression of Maslow’s five-
category need system into three categories of needs: existence, relatedness, and growth
needs.
Alderfer's theory differs from Maslow's theory in that there is not a rigid hierarchy of needs
and that if higher-level needs are ungratified, individuals will increase their desire for the
gratification of lower-level needs.
C. McClelland's Theory of Needs
Psychologist David McClelland has developed a need theory based on the specific
behavioural consequences of needs rather than a hierarchy of needs. McClelland’s theory
of needs is a nonhierarchical need theory of motivation that outlines the conditions under
which certain needs result in particular patterns of motivation. Individuals have needs for
achievement, affiliation, and power. The theory outlines the conditions under which these
needs result in particular patterns of motivation.
People high in the need for achievement have a strong desire to perform challenging tasks.
The also exhibit the following characteristics:
A preference for situations in which personal responsibility can be taken for outcomes.
A tendency to set moderately difficult goals that provide for calculated risks. A
desire for performance feedback.
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People high in the need for affiliation have a strong desire to establish and maintain
friendly, compatible interpersonal relationships. People high in the need for power have a
strong desire to influence others, making a significant impact or impression. McClelland
predicts that people will be motivated to seek out and perform well in jobs that match their
needs.
D. Research Support for Need Theories
Research results show that need theories are valid under certain circumstances. The
simplicity and flexibility of ERG theory seem to capture the human need structure better
than the greater complexity and rigidity of Maslow’s theory. Research on McClelland's
theory is generally supportive of the idea that particular needs are motivational when the
work setting permits the satisfaction of these needs.
E. Managerial Implications of Need Theories Need theories have some important things to
say about managerial attempts to motivate employees.
 Appreciate Diversity. Managers must be adept at evaluating the needs of individual

employees and offering incentives or goals that correspond to their needs.
 Appreciate Intrinsic Motivation. Need theories also serve the valuable function of
alerting managers to the existence of higher-order needs. Therefore, need theories
indicate the importance of appreciating diversity and intrinsic motivation.
IV. Process Theories of Work Motivation
Need theories of motivation concentrate on what motivates individuals, while process

theories concentrate on how motivation occurs. Three important process theories are
expectancy theory, equity theory, and goal setting theory.
A. Expectancy Theory The basic idea underlying expectancy theory is the belief that
motivation is determined by the outcomes that people expect to occur as a result of their
actions on the job. There are a number of basic components of expectancy theory.
 Outcomes are the consequences that may follow certain work behaviours. First-level
outcomes are of interest to the organization, such as productivity. Second-level
outcomes are consequences of first-level outcomes and of interest to individual
workers, such as pay.
 Instrumentality is the probability that a particular first-level outcome (such as high
productivity) will be followed by a particular second-level outcome (such as pay).
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 Valence is the expected value of outcomes; the extent to which they are attractive
or unattractive to the individual. The valence of a first-level outcome depends on the
extent to which it leads to favourable second-level outcomes.
 Expectancy is the probability that a particular first-level outcome can be achieved.
 Force is the effort directed toward a first-level outcome and is the end product of
the other components of the theory. We expect that an individual's effort will be
directed toward the first-level outcome that has the highest force product (force =
first-level valence x expectancy). The main concepts of expectancy theory are that
people will be motivated to engage in those work activities that they find attractive
and that they feel they can accomplish. The attractiveness of various work activities
depends upon the extent to which they lead to favourable personal consequences.
B. Research Support for Expectancy Theory
Tests have provided moderately favourable support for expectancy theory. In particular,
there is especially good evidence that the valence of first-level outcomes depends on the
extent to which they lead to favourable second-level consequences. Experts in motivation
generally accept expectancy theory.
C. Managerial Implications of Expectancy Theory
The motivational practices suggested by expectancy theory involve “juggling the numbers”
that individuals attach to expectancies, instrumentalities, and valences.
Boost Expectancies. One of the most basic things managers can do is ensure that their
employees expect to be able to achieve first-level outcomes that are of interest to the
organization. Low expectancies might be due to poor equipment or tools; lazy co-workers;
employees might not understand what is considered to be good performance; or
employees might not understand how to obtain a good performance rating. Expectancies
can usually be enhanced by providing proper equipment and training, demonstrating
correct work procedures, carefully explaining how performance is evaluated, and listening
to employee performance problems. The point is to clarify the path to beneficial first-level
outcomes.
Clarify Reward Contingencies. Managers should also attempt to ensure that the paths
between first- and second-level outcomes are clear. Employees should be convinced that
first-level outcomes desired by the organization are clearly instrumental in obtaining
positive second-level outcomes and avoiding negative outcomes.
Appreciate Diverse Needs. Managers should also analyze the diverse preferences of
particular workers and attempt to design individualized “motivational packages” to meet
their needs.
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D. Equity Theory
Equity theory is a process theory that states that motivation stems from a comparison of
the inputs that one invests in a job and the outcomes one receives in comparison with the
inputs and outcomes of another person or group. According to the theory, individuals are
motivated to maintain an equitable exchange relationship. Inequity is unpleasant and
tension producing and people will devote considerable energy to reducing inequity and
achieving equity. Individuals that perceive inequity might use a number of tactics to regain
equity:
Perceptually distort one's own inputs or outcomes.
Perceptually distort the inputs or outcomes of the comparison other or group.
Choose another comparison person or group.
Alter one's inputs or alter one's outcomes.
Leave the exchange relationship.
The first three tactics for reducing inequity are essentially psychological, while the last two
involve overt behaviour.
Gender and Equity. Both women and men have some tendency to choose same-sex
comparison persons when judging the fairness of the outcomes that they receive.
Research Support for Equity Theory. Research on equity theory is very supportive of the
theory when inequity occurs because of underpayment. For example, when workers are
underpaid on an hourly basis, they tend to lower their inputs by producing less work. Also,
when workers are underpaid on a piece-rate basis, they tend to produce a high volume of
low-quality work. Finally, there is also evidence that underpayment inequity leads to
resignation. The theory’s predictions regarding overpayment inequity have received less
support.
Managerial Implications of Equity Theory. The most straightforward implication of equity

theory is that perceived underpayment will have a variety of negative motivational
consequences for the organization, including low productivity, low quality, theft, and /or
turnover. Managers must understand that feelings of inequity stem from a perceptual social
comparison process in which the worker “controls the equation,” that is, employees decide
what are considered relevant inputs, outcomes, and comparison persons, and management
must be sensitive to these decisions. Understanding the role of comparison people is
especially crucial.
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E. Goal Setting Theory
Goal setting is a motivational technique that uses specific, challenging, and acceptable goals
and provides feedback to enhance performance.
F. What Kinds of Goals Are Motivational?
Goals are most motivational when they are specific, challenging, and when organizational
members are committed to them. In addition, feedback about progress toward goal
attainment should also be provided. Goal Specificity. Specific goals specify an exact level of
achievement for people to accomplish in a particular time frame.
Goal Challenge. Goals should be difficult but attainable.
Goal Commitment. Goals are not really goals unless people are committed to them and
accept them.
Goal Feedback. Specific and challenging goals have the most beneficial effect when they are
accompanied by ongoing feedback that enables the person to compare current
performance with the goal.
G. Enhancing Goal Commitment
Some of the factors that might affect commitment to challenging and specific goals are
participation, rewards and management support.
Participation. Research results are mixed, but participation can often increase commitment
when a climate of mistrust exists between supervisor and employee. Also, participation can
increase performance when competition or team spirit increase the difficulty of goals an
employee is willing to attempt to reach.
Rewards. While there is little doubt that extrinsic rewards like money will increase
commitment, there is also ample evidence that simply being challenged to do the job
"right" can produce goal commitment. Goal setting has led to performance increases
without the introduction of monetary incentives for goal accomplishment.
Supportiveness. There is considerable agreement that a coercive approach to goal setting

on the part of supervisors will reduce goal commitment. For goal setting to work properly,
supervisors must demonstrate a desire to assist employees in goal accomplishment and
behave supportively if failure occurs, even adjusting the goal downward if it proves to be
unrealistically high.
H. Goal Orientation
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Individuals have been found to differ in their goal orientation. Learning goals are process-
oriented goals that focus on leaning and enhance understanding of a task and the use of
task strategies. Performance goals are outcome-oriented goals that focus attention on the
achievement of specific performance outcomes. A learning goal orientation has been found
to be related to greater effort, self-efficacy, goal-setting level, and performance.
I. Research Support for and Managerial Implications of Goal Setting Theory
Goal setting has led to increased performance on a wide variety of tasks. As well, the effects
of goal setting appear to persist over a long enough time to have practical value. The effect
of group goal setting on group performance is similar to the effect of individual goal setting.
The effects of goals on performance are due to four mechanisms: direction, effort,
persistence, and task-relevant strategies. The managerial implications of goal setting theory
are straightforward: Set specific and challenging goals and provide ongoing feedback so that
individuals can compare their performance with their goals. The performance impact of
goal setting is strongest for simpler jobs rather than more complex jobs.
V. Do Motivation Theories Translate Across Cultures?
In general, motivational theories which explain the behaviour of workers in North American
companies do not always apply to workers elsewhere. It is safe to assume that most
theories that revolve around human needs will come up against cultural limitations to their
generality. For example, in more collective societies, self-actualization is not the motivator
that it is in North America. In collective cultures, there is a tendency to favour reward
allocation based on equality rather than equity. Because of its flexibility, expectancy theory
is very effective when applied cross-culturally. Finally, setting specific and challenging goals
should also be motivational when applied cross-culturally. However, to be effective, careful
attention is required to adjust the goal-setting process in different cultures. For example,
individual goals are not likely to be accepted or motivational in collectivist cultures. Thus,
appreciating cultural diversity is critical in maximizing motivation.
VI. Putting it all Together: Integrating Theories of Work Motivation
Each of the theories of motivation helps us to understand the motivational process and
together they form an integrative model of motivation. For example, expectancy and
instrumentality from expectancy theory and goals from goal setting theory should lead to
higher levels of motivation. Motivation along with the intervening factors of personality,
general cognitive ability, emotional intelligence, task understanding, and chance will
influence performance. When performance is followed up with rewards that satisfy workers
needs (need theory) and are positively valent (expectancy theory) they will lead to higher
levels of motivation and job satisfaction provided they are perceived as equitable (equity
theory). Job satisfaction also leads to performance.
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Glossary
Emotional intelligence:
The ability to understand and manage one's own and other's feelings and emotions.
Equity theory:
A process theory that states that motivation stems from a comparison of the inputs one invests
in a job and the outcomes one receives in comparison with the inputs and outcomes of another
person or group.
ERG theory:
A three-level hierarchical need theory of motivation (existence, relatedness, growth) that
allows for movement up and down the hierarchy.
Expectancy theory:
A process theory that states that motivation is determined by the outcomes that people expect
to occur as a result of their actions on the job.
Expectancy:
The probability that a particular first-level outcome can be achieved.
Extrinsic motivation:
Motivation that stems from the work environment external to the task; it is usually applied by
others.
Force:
The effort directed toward a first-level outcome.
General cognitive ability:

A person's basic information processing capacities and cognitive resources.
Goal setting:
A motivational technique that uses specific, challenging, and acceptable goals and provides
feedback to enhance performance.
Instrumentality:
The probability that a particular first-level outcome will be followed by a particular second-level
outcome.
Intrinsic motivation:
Motivation that stems from the direct relationship between the worker and the task; it is
usually self-applied.
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Learning goals:
Process-oriented goals that focus on learning and enhance understanding of a task and the use
of task strategies.
Maslow's hierarchy of needs:

A five-level hierarchical need theory of motivation that specifies that the lowest-level
unsatisfied need has the greatest motivating potential.
McClelland's theory of needs:

A nonhierarchical need theory of motivation that outlines the conditions under which certain
needs result in particular patterns of motivation.
Motivation:
The extent to which persistent effort is directed toward a goal.
Need for achievement:

A strong desire to perform challenging tasks well.
Need for affiliation:

A strong desire to establish and maintain friendly, compatible interpersonal relationships.
Need for power:

A strong desire to influence others, making a significant impact or impression.
Need theories:
Motivation theories that specify the kinds of needs people have and the conditions under which
they will be motivated to satisfy these needs in a way that contributes to performance.
Outcomes:
Consequences that follow work behaviour.
Performance:
The extent to which an organizational member contributes to achieving the objectives of the
organization.
Performance goals:
Outcome-oriented goals that focus attention on the achievement of specific performance
outcomes.
Process theories:
Motivation theories that specify the details of how motivation occurs.
Valence:
The expected value of work outcomes; the extent to which they are attractive or unattractive.
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Learning Objectives
1. Define and discuss the role of both formal and emergent leadership.

2. Explain and critically evaluate the trait approach to leadership.
3. Explain the task function and social-emotional function of emergent leadership and
the concepts of consideration and initiating structure and their consequences.
4. Describe and evaluate Fiedler's Contingency Theory.
5. Describe and evaluate House's Path-Goal Theory.
6. Explain how and when to use participative leadership.
7. Describe and evaluate Leader-Member Exchange Theory.
8. Discuss the merits of transformational leadership and charisma.
9. Discuss the merits of developmental leadership.
10. Describe and evaluate strategic and global leadership.
11. Explain the concepts of leadership neutralizers and substitutes.
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Chapter Summary
I. What is Leadership?
Leadership is the influence that particular individuals exert on the goal achievement of
others in an organizational context. Although any organizational member can influence
other members, individuals with titles such as manager, executive supervisor, and
department head are in assigned leadership roles and are expected to exert formal
leadership and influence others.
II. Are Leaders Born or Made? The Search for Leadership Traits
Throughout history, social observers have been fascinated by obvious examples of

successful interpersonal influence. The implicit assumption is that those who become
leaders and do a good job of it possess a special set of traits that distinguish them from the
masses of followers. Trait theories of leadership, however, did not receive serious scientific
attention until the 1900s.
A. Research on Leadership Traits
During World War I, the US military began to search for those traits which would help in
identifying future officers. Traits are individual characteristics such as physical
characteristics, intellectual ability, and personality. While many traits are not related to
leadership, research shows some traits are associated with leadership although the
connections are not very strong.
In recent years, there has been a renewed interest in the study of leadership traits, and a
number of studies have shown that certain traits are closely linked to leadership including
emotional intelligence and several of the “Big Five” personality dimensions (agreeableness,
extraversion, and openness to experience). However, the usefulness of these findings and
the trait approach is questionable.
B. Limitations of the Trait Approach
There are several reasons why the trait approach is not the best means of understanding
and improving leadership. First, it is difficult to determine if traits make the leader or if
opportunity for leadership produces the traits. Second, we have few clues about what
leaders actually do to influence others successfully. Third, the most crucial problem of the
trait approach to leadership is its failure to take into account the situation in which
leadership occurs. However, traits are a precondition for certain actions that a leader must
take in order to be successful.
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III. Lessons from Emergent Leadership
Following the discouragement with the trait approach, psychologists began to investigate
what leaders do in group settings. These studies concentrated on emergent leadership or
the behaviours in which certain group members exhibit that cause them to become leaders.
Two leadership roles were apparent. The task leader is a leader who is concerned with
accomplishing a task by organizing others, planning strategy, and dividing labour.
The social-emotional leader is a leader who is concerned with reducing tension, patching
up disagreements, settling arguments, and maintaining morale. Both of these functions are
important leadership roles. Thus, in general, leaders must be concerned with both the
social-emotional and task functions.
IV. The Behaviour of Assigned Leaders
What are the crucial behaviours that leaders engage in, and how do these behaviours
influence subordinate performance and satisfaction?
A. Consideration and Initiating Structure
The most involved, systematic study of leadership began at Ohio State University. This
research had employees describe their superiors along a number of behavioural
dimensions. This revealed two basic types of leadership behaviour. Consideration involves
the extent to which the leader is approachable and shows personal concern for
employees. Initiating structure involves the degree to which the leader concentrates on
group goal attainment.
B. The Consequences of Consideration and Structure
In general, the effects of consideration and initiating structure depend on characteristics of

the task, the employee, and the setting in which the work is performed. These
contingencies will determine which behaviour is most appropriate and when it is to be
employed. Thus, the leader who is high in both consideration and structure will not always
perform better than other types of leaders. In some cases, one type of behaviour or the
other might be unhelpful or even damaging to employees performance or satisfaction.
V. Situational Theories of Leadership
The situation refers to the setting in which influence attempts occur. The setting includes
the characteristics of the employees, the nature of the task they are performing, and
characteristics of the organization. Two of the best known and most studied leadership
theories are Fiedler’s Contingency Theory and House’s Path-Goal Theory.
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A. Fiedler's Contingency Theory
Fred Fiedler has developed a situational theory of leadership called Fiedler's
Contingency Theory. According to the theory, the association between leadership

orientation and group effectiveness is contingent on (depends on) the extent to which the
situation is favourable for the exertion of influence.
Leadership Orientation. Fiedler has measured leadership orientation by having leaders

describe their Least Preferred Co-worker (LPC), a current or past co-worker with whom the
leader has had a difficult time accomplishing a task. Fiedler has argued that the LPC score
reveals a personality trait that reflects the leader's motivational structure. The leader who
describes the LPC relatively favourably (a high LPC score) can be considered relationship
oriented. The leader who describes the LPC unfavourably (a low LPC score) can be
considered task oriented.
Situational Favourableness. This is the "contingency" part of Contingency
Theory. Factors affecting situational favourableness include: leader-member relations, task

structure, and position power. In general, the situation is most favourable for leadership
when leader-member relations are good, the task is structured, and the leader has strong
position power.
The Contingency Model. According to the theory, a task orientation (low LPC) is most
effective when the leadership situation is very favourable or when it is very unfavourable. A
relationship orientation (high LPC) is most effective in conditions of medium favourability.
Evidence and Criticism. Although there is reasonable support for Fiedler's Contingency
Theory, several studies have found some evidence to be contradictory suggesting that
theory needs some adjustment.
B. House's Path-Goal Theory
House's Path-Goal Theory is concerned with the situations under which various leader
behaviours (directive, supportive, participative, achievement-oriented) are most effective.
The Theory. According to House, effective leaders form a connection between employee
goals and organizational goals. In order to provide job satisfaction and leader acceptance,
leader behaviour must be perceived as immediately satisfying or as leading to future
satisfaction. Leader Behavior. Path-Goal Theory is concerned with four specific kinds of
leader behaviour:
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Directive behaviour. Directive leaders schedule work, maintain performance standards, and
let employees know what is expected of them.
Supportive behaviour. Supportive leaders are friendly, approachable, and concerned with
pleasant interpersonal relationships.
Participative behaviour. Participative leaders consult with employees about work-related

matters and consider their opinions.
Achievement-oriented behaviour. Achievement-oriented leaders encourage employees to

strive for a high level of goal accomplishment.
Situational Factors. Path-Goal Theory is concerned with two primary classes of situational
factors - employee characteristics and environmental factors.
Different types of employees need or prefer different forms of leadership. Thus, employees
who are for example, high need achievers, prefer to be told what to do, or who feel that
they have low task abilities will each respond best to certain types of leadership.
Also, according to the theory, the effectiveness of leadership depends on the particular
work environment. Thus, routine tasks, challenging but ambiguous tasks, and frustrating,
dissatisfying jobs each require specific leader behaviours for leadership to be effective.
Effective leaders should take advantage of the motivating and satisfying aspects of jobs
while offsetting or compensating for those job aspects that demotivate or dissatisfy.
Evidence and Criticism. In general, there is some research support for the situational
propositions of the theory. In general, supportive or considerate leader behaviour is most
beneficial in supervising routine, frustrating, or dissatisfying jobs. Directive or structuring
leader behaviour is most effective on ambiguous, less structured jobs. As well, the theory is
more effective in predicting employee job satisfaction and acceptance of the leader than in
predicting employee performance.
VI. Participative Leadership: Involving Employees in Decisions
An important topic of leadership is participative leadership.
A. What is Participation?
Participative leadership involves employees in making work-related decisions. Leaders can

vary in the extent to which they involve employees in decision- making. Participative
leadership should not, however, be confused with abdication of leadership, which is almost
always ineffective. Participation can involve individual employees or the entire group of
employees that reports to the leader.
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B. Potential Advantages of Participative Leadership There are several advantages of
participative leadership.
Motivation. Participation can increase the motivation of employees. Participation leads to

the establishment of work goals and can increase intrinsic motivation by enriching
subordinates’ jobs.
Quality. Participation can lead to higher-quality decisions and empower employees to take
direct action to solve problems.
Acceptance. Participation can increase employees’ acceptance of decisions especially when

issues of fairness are involved.
C. Potential Problems of Participative Leadership There are several difficulties associated

with participation.
Time and Energy. Participation involves specific behaviours on the part of the leader and
these behaviours use time and energy.
Loss of Power. Some leaders feel that a participative style will reduce their power and
influence.
Lack of Receptivity or Knowledge. Employees might not be receptive to participation or

might lack the knowledge to contribute effectively to decisions.
D. A Situational Model of Participation
Victor Vroom and Arthur Jago have developed a model that attempts to specify in a
practical manner when leaders should use participation and to what extent they should use
it.
This model takes into account various degrees of participation that can be exhibited by the
leader including autocratic, consultative, and group consensus. The most effective strategy
depends on the situation or problem at hand. In general, the leader’s goal should be to
make high-quality decisions to which employees will be adequately committed without
undue delay. To do this, he or she must consider a number of questions in a decision tree.
By taking a problem through the decision tree, the leader can determine the correct degree
of participation for the problem solving situation. Following the model’s prescriptions is
more likely to lead to successful managerial decisions than unsuccessful decisions. The
model has been used frequently in management development seminars.
E. Does Participation Work?
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In general, employees who participate in job-related decisions are more satisfied than those
who do not. Thus, most workers seem to prefer a participative work environment.
However, the effects of participation on productivity are still open to question. Participation
should work best when employees feel favourably toward it, when they are intelligent and
knowledgeable about the issue at hand, and when the task is complex enough to make
participation useful.
VII. Leader-Member Exchange (LMX) Theory
Leader Member Exchange or LMX Theory is a theory of leadership that focuses on the
quality of the relationship between a leader and an employee. High quality relationships or
high LMX involve a high degree of mutual influence and obligation as well as trust, loyalty,
and respect between a leader and an employee. Low-quality relationships or low LMX is
characterized by low trust, respect, obligation, and mutual support. The quality of LMX is
related to employee job performance, overall satisfaction, satisfaction with supervision,
commitment, role conflict, role clarity, and turnover intentions.
VIII. Transformational Leadership and Charisma
Traditional theories of leadership deal with what we can call transactional leadership.
Transactional leadership is leadership that is based on a fairly straightforward exchange
between the leader and the followers – employees perform well, and the leader rewards
them; the leader uses a participatory style, and employees come up with good ideas. Such
leadership is routine. However, some leaders have a more profound effect on followers by
giving them a new vision that instills true commitment. Such leadership is
called transformational leadership because the leader provides followers with a new vision
that instills true commitment.
Three qualities set transformational leaders apart from transactional leaders: intellectual
stimulation, individualized consideration, and charisma.
A. Intellectual Stimulation
This contributes in part to the “new vision” aspect of transformational leadership. People
are stimulated to think about problems, issues, and strategies in new ways.
B. Individualized Consideration
This involves treating employees as distinct individuals, indicating concern for their personal
development, and serving as a mentor when appropriate. The emphasis is a one-on-one
attempt to meet the needs of the individual in the context of the overall goal or mission.
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C. Charisma
Charisma is the third and by far the most important, aspect of transformational
leadership. Charisma is a term stemming from a Greek word meaning favoured or gifted.
Charismatic leaders have personal qualities that give them the potential to have
extraordinary influence over others. They tend to command strong loyalty and devotion,
and this, in turn, inspires enthusiastic dedication and effort dedicated toward the leader’s
chosen mission. Charisma provides the emotional aspect of transformational leadership.
Charismatic Stages. The emergence of charisma can be portrayed as a stage-like process. In

the first stage, the leader carefully evaluates the status quo for opportunities for change. In
the second stage, the leader formulates a vision or mission that challenges the status quo,
but that somehow corresponds to the followers’ needs and aspirations. In the final stage,
the leader actually gets employees to achieve the new vision or mission. Research evidence
suggests that employees perceive transformational leaders as especially effective in
stimulating both satisfaction and effort. Charismatic leadership is related to firm
performance, especially under conditions of environmental uncertainty.
IX. Developmental Leadership
Transactional theories of leadership treat leadership as a form of control in which leaders

use their formal authority and power to command and control the behaviour of their
followers. Developmental leadership involves working with organizational members as
partners and using persuasion and negotiation rather than formal power and authority to
achieve high levels of commitment rather than compliance.
Developmental leadership consists of the following components: Self-management.

Development leaders teach, encourage, and reinforce others in the skills of self-
management.
Empowerment. Developmental leaders empower employees and teams by giving them the
authority and opportunity to take initiative and solve organizational problems.
Persuasion and negotiation. Developmental leaders influence the behaviour of others by

using persuasion and negotiation rather than power and authority.
Strategic Leadership
Strategic leadership refers to a leader’s “ability to anticipate, envision, maintain

flexibility, think strategically, and work with others to initiate changes that will create a
viable future for the organization.”
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There are six components to effective strategic leadership in the 21st century:
 Determining the Firm’s Purpose or Vision.

 Exploiting and Maintaining Core Competencies.
 Developing Human Capital.
 Sustaining an Effective Organizational Culture.
 Emphasizing Ethical Practices.
 Establishing Balanced Organizational Controls.
In addition to these six elements, strategic leaders must also focus on growth
opportunities, create, manage, and mobilize knowledge and intellectual capital, be open
and honest in their interactions with all of the organization’s stakeholders, and focus on
the future.
XI. Global Leadership
Global leadership involves having leadership capabilities to function effectively in

different cultures and being able to cross language, social, economic, and political
borders. Global leaders have the following four characteristics:
 Unbridled Inquisitiveness. Global leaders relish the opportunity to see and

experience new things. Constant learning and inquisitiveness are necessary for
success.
 Personal Character. Global leaders form an emotional connection to people from
different cultures and exhibit uncompromising integrity.
 Duality. Global leaders must be able to manage uncertainty and balance global and
local tensions.
 Savvy. Global leaders have business and organizational savvy. They understand the
conditions they face in different countries and they are well informed of their
organization’s capabilities and international ventures.
Individuals with the potential to become global leaders have experience working or living in
different cultures, they speak more than one language, and have an aptitude for global
business. However, in order to become true global leaders, they require extensive training
and development that includes: travel; working in teams with members of diverse
backgrounds; instruction on topics such as international and global strategy, business, and
ethics as well as cross-cultural communication and multicultural team leadership; and
action learning projects.
Although most organizations report that they do not have enough global leaders now or for
the future, Canadian organizations are way ahead of most organizations in big countries like
the United States because Canada is a middle economy and Canadian leaders need to
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understand and empathize with persons in other cultures. As well, living in a multicultural
environment like Canada is excellent preparation for being a global leader.
XII. Gender, Culture, and Leadership Style
Research by Eagley and Johnson concludes that there are differences in leadership style
between men and women. Women are more apt to adopt a participative and democratic
style than men. This may be because of negative reactions to women adopting
stereotypically male styles such as directive or autocratic. Women leaders have also been
found to be more transformational than men leaders, and they also engaged in more of the
contingent reward behaviours of transactional leadership. Men leaders engaged in more of
the other components of transactional leadership such as management by exception and a
laissez-faire style of leadership.
While some universality in leadership across cultures is likely, preferences for style will vary
with cultural values. Research generally supports the applicability of leadership theories
across cultures.
XIII. Does Leadership Matter?
Whether or not leadership is important may depend on the presence of neutralizers and
substitutes. Neutralizers of leadership are factors in the work setting that reduce a leader’s
opportunity to exercise influence. When such factors are not present, the leader might have
an important effect on employee satisfaction and performance.Substitutes for
leadership are factors in the work setting that can take the place of active leadership,
making it unnecessary or redundant. In other words, some employee, task, and
organizational characteristics might operate to make leadership unnecessary or redundant.
Leadership should “matter” most when neutralizers and substitutes are not present in
employees’ skills and attitudes, task design, or the organizational design. The presence of
neutralizers and substitutes should reduce the impact of formal leadership.
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Glossary
Charisma:
The ability to command strong loyalty and devotion from followers and thus have the
potential for strong influence among them.
Consideration:
The extent to which a leader is approachable and shows personal concern for employees.
Contingency Theory:
Fred Fiedler's theory that states that the association between leadership orientation and
group effectiveness is contingent on how favourable the situation is for exerting influence.
Developmental leadership:
A style of leadership that involves working with organizational members as partners and
using persuasion and negotiation rather than formal power and authority to achieve high
levels of commitment rather than compliance.
Global leadership:
A set of leadership capabilities required to function effectively in different cultures and the
ability to cross language, social, economic, and political borders.
Initiating structure:
The degree to which a leader concentrates on group goal attainment.
Leader-Member Exchange (LMX) Theory:

A theory of leadership that focuses on the quality of the relationship that develops between
a leader and an employee.
Leadership:
The influence that particular individuals exert on the goal achievement of others in an
organizational context.
Least Preferred Co-Worker:

A current or past co-worker with whom a leader has had a difficult time accomplishing a
task.
Neutralizers of leadership:
Factors in the work setting that reduce a leader's opportunity to exercise influence.
Participative leadership:
Involving subordinates in making work-related decisions.
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Path-Goal Theory:
Robert House's theory concerned with the situations under which various leader behaviours
(directive, supportive, participative, achievement-oriented) are most effective.
Social-emotional leader:
A leader who is concerned with reducing tension, patching up disagreements, settling
arguments, and maintaining morale.
Strategic leadership:
Leadership that involves the ability to anticipate, envision, maintain flexibility, think
strategically, and work with others to initiate changes that will create a viable future for the
organization.
Substitutes for leadership:

Factors in the work setting that can take the place of active leadership, making it
unnecessary or redundant.
Task leader:
A leader who is concerned with accomplishing a task by organizing others, planning
strategy, and dividing labour.
Traits:
Individual characteristics such as physical attributes, intellectual ability, and personality.
Transformational leadership:
Providing followers with a new vision that instills true commitment.
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Learning Objectives
1. Define communication and explain why communication by the strict chain of

command is often ineffective.
2. Discuss barriers to effective manager-employee communication.
3. Explain the organizational grapevine and discuss its main features.
4. Review the role of verbal and nonverbal communication at work.
5. Discuss gender differences in communication and how they can cause
communication problems.
6. Discuss challenges relating to cross-cultural communication and identify useful
strategies to deter miscommunication.
7. Define computer-mediated communication and highlight its strengths and
weaknesses.
8. Review personal strategies and organizational initiatives aimed at enhancing
communication.
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Chapter Summary
I. What is Communication?
Communication is the process by which information is exchanged between a sender and a

receiver. The sender must encode his or her thoughts into some form that can be
transmitted to the receiver. The receiver must perceive the message and accurately decode
it to achieve understanding. Feedback involves yet another communication episode that
tells the original sender whether the receiver received and understood the
message. Effective communication occurs when the right people receive the right
information in a timely manner.
II. Basics of Organizational Communication
There are a number of basic issues about organizational communication.
A. Communication by Strict Chain of Command
When communication flows in accordance with an organization chart, we say that

communication follows along the chain of command or lines of authority and formal
reporting relationships.
In downward communication, information flows from the top of the organization toward
the bottom. In upward communication, information flows from the bottom of the
organization toward the top. Horizontal communication refers to information that flows
between departments or functional units, usually as a means of coordinating effort.
A lot of organizational communication follows the formal lines of authority shown on

organizational charts. However, the reality of organizational communication shows that the
formal chain of command is an incomplete and sometimes ineffective path of
communication.
B. Deficiencies in the Chain of Command
Sticking strictly to the chain of command is often ineffective. Informal Communication. The
formal chain of command fails to consider informal communication between members. This
type of communication might not benefit the organization since inaccurate rumours might
be spread across the organization.
Filtering. At times, effective communication using the chain of command is inhibited

by filtering, which is the tendency for a message to be watered down or stopped altogether
at some point during transmission. Employees use upward filtering to keep negative
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performance information out of their supervisor's hands. Supervisors use downward
filtering to play the "information is power" card.
To prevent filtering, some organizations have an open-door policy in which any

organizational member can communicate directly with a manager without going through
the chain of command. Managers may also wish to go outside normal channels if
information has broad applications.
Slowness. Even when the chain of command relays information accurately, it is painfully
slow especially for horizontal communication between departments.
III. Manager-Employee Communication
Manager-employee communication consists of one-to-one exchange of information

between a boss and an employee. It represents a key element in upward and downward
communication in organizations. Most employees prefer their immediate supervisors as a
source of organizational information.
A. How Good Is Manager-Employee Communication?
Research indicates that managers and employees often disagree in their perceptions of
such fundamental workplace issues as employee use of time, how long it takes to learn a
job, pay, authority, employee skills and abilities, performance, and the manager's
leadership style.
These differences indicate a lack of openness in communication which might contribute to

role conflict and ambiguity and reduce employee satisfaction.
B. Barriers to Effective Manager-Employee Communication
In addition to basic differences in personality and perception, a number of factors can cause
communication problems between managers and employees.
Conflicting Role Demands. Many managers have difficulties balancing the social-emotional
needs of workers and the role demands of the task.
The Mum Effect. The mum effect is the tendency to avoid communicating unfavourable
news to others. People often prefer to “keep mum” than convey bad news that might
provoke negative reactions on the part of the receiver. The mum effect applies to both
employees and managers.
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IV. The Grapevine
A great deal of information travels quickly through organizations as a result of the

grapevine.
A. Characteristics of the Grapevine
The grapevine is the informal communication network that exists in any organization. The
grapevine cuts across formal lines of communication. Although the grapevine is generally
thought of as involving word of mouth, written notes, e-mail and fax messages have may
also be involved. Organizations may have several loosely coordinated grapevine systems,
and the grapevine may transmit information that is relevant to the performance of the
organization as well as personal gossip. Non-controversial organizationally related
information is often accurate while personal information that is emotionally charged is
likely to be distorted.
B. Who Participates in the Grapevine?
Personality characteristics play a role in the grapevine. Extroverts are more likely to pass on
information than introverts. The physical location and task elements of members are also
related to their opportunities to participate in the grapevine. Locations that receive a lot of
traffic or employees that must travel through the organization in the course of their jobs
both facilitate the operation of the grapevine.
C. Pros and Cons of the Grapevine
At times, the grapevine can be a regular substitute for formal communication either by
managerial default or as a deliberate attempt to "test the waters" on some proposed
initiative by "leaking" information. The grapevine can also add a little interest and diversion
to the work setting.
A problem can occur in the grapevine when it spreads too many rumours. A rumour is an
unverified belief that is in general circulation. When false rumours get out of hand,
companies must institute rumour control through early and accurate communication.
V. The Verbal Language of Work
Jargon is the specialized language used by job holders or members of particular occupations
or organizations to communicate with each other. Although it is efficient for communicating
with peers and insiders, jargon can serve as a barrier to communicating with outsiders and
the general public, as well as adding to the burden of spouses attempting to relate to their
partner's work.
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VI. The Nonverbal Language of Work
Nonverbal communication refers to the transmission of messages by some medium other

than speech or writing. It can be a very powerful part of the communication process since
the information provided is sometimes "the real stuff" while words serve as a smoke
screen.
A. Body Language
Body language is nonverbal communication that occurs by means of the sender's bodily
motions, facial expressions, or the sender's physical location in relation to the receiver. Two
important messages are the extent to which the sender likes and is interested in the
receiver and the sender’s views concerning the relative status of the sender and the
receiver. Senders who feel themselves to be of higher status than the receiver act more
relaxed than those who perceive themselves to be of lower status.
One area in which research shows that body language has an impact is on the outcome of
employment interview decisions.
B. Props, Artifacts, and Costumes
Nonverbal communication can also occur through the use of various objects such as props,
artifacts, and costumes.
Office Décor and Arrangement. The decor and arrangement of furniture in a person’s office
conveys nonverbal information to visitors.
Does Clothing Communicate? Research has also shown that the clothes we wear are indeed
forms of nonverbal communication. The clothing organizational members wear sends
signals about their competence, seriousness, and promotability. Proper clothing can
enhance one's esteem and self-confidence, while improper clothing will hurt the image of a
worker in the eyes of executives and supervisors.
VII. Gender Differences in Communication
According to Deborah Tannen, there are gender differences in communication styles and
these differences influence the way that men and women are perceived and treated in the
workplace. Gender differences in communication revolve around what Tannen refers to as
the “One Up, One Down” position. Men tend to be more sensitive to power dynamics and
will use communication as a way to position themselves in a one-up situation and avoid a
one-down position.
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Females are more concerned with rapport building and they communicate in ways that
avoid putting others down. As a result, women often find themselves in a one-down
position which can have a negative effect on the rewards they receive and their careers.
There are a number of key differences in male and female communication styles and rituals
that often place women in a one-down position:
 Getting credit. Men are more likely to blow their horn about something they have
done compared to women and as a result men are more likely to receive credit for
their contributions.
 Confidence and boasting. Men tend to be more boastful about themselves and their
capabilities and minimize their doubts so they are perceived as more confident.
 Asking questions. Men are less likely than women to ask questions in situations that
can put them in a one-down position and threaten their independence.
 Apologies. Women and men differ in their use of apologies. Men avoid ritual
apologies because it is a sign of weakness that can place them in a one-down
position.
 Feedback. Women often blunt criticism with praise while men are more blunt and
straightforward.
 Compliments. Women exchange compliments as part of a common ritual. Men are
more concerned about being in a one-up position and placing others in a one-down
position so they do not compliment others as frequently.
 Ritual opposition. Men often use ritual opposition or fighting as a form of
communication and the exchange of ideas. Many women have difficulty working in
such an environment and tend to come across as insecure and unable to defend
their ideas.
 Managing up and down. Men spend much more time communicating with their
superiors and talking about their achievements. Women tend to downplay their
superiority leading others to believe that they are not capable of projecting their
authority and are incompetent.
 Indirectness. Women in positions of authority tend to be indirect when giving
orders.
The differences in communication styles between men and women almost always reflect
negatively on women and place them in a one-down position. Problems and
misunderstandings arise when those communicating do not understand the rituals and
styles of each other. Therefore, it is important to recognize that people have different
linguistic styles and adopt a flexible style so you can adjust your style when necessary.
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VIII. Cross-Cultural Communication
Many failures between members of different cultures stem from problems in cross-cultural
communication. There are a number of important dimensions of such communication.
A. Language Differences
Communication is generally better between individuals or groups that share similar cultural
values. This is all the more so when they share a common language. Even though English is
becoming the language of international business, learning a second language should
provide better insight into the nuances of a business partner’s culture.
B. Nonverbal Communication Across Cultures
People in different nations generally are good at decoding basic, simple emotions in facial
expressions. Gestures and gazes do not translate well across cultures nor does touch. In
some countries, people stand close to and touch each other. In other nations these
activities are considered signs of rudeness.
C. Etiquette and Politeness Across Cultures
Cultures differ considerably in how etiquette and politeness are expressed. This often
involves saying things that one does not literally mean. The problem is that the exact form
that this takes varies across cultures and careful decoding is necessary. Learning these
differences is important for managers who seek to deal with their counterparts in other
nations.
D. Social Conventions Across Cultures
These are cross-cultural differences in social conventions such as the directness of business
dealings, greetings and how people say hello, the "proper" degree of loudness of speech,
punctuality, the pace of life, and the practice of nepotism. All of these should be taken into
account when dealing with people of other nations.
E. Cultural Context
Cultural context is the cultural information that surrounds a communication episode. Some
cultures, including many Oriental, Latin American, African and Arab cultures are high-
context cultures meaning that communication is highly influenced by the context in which it
takes place. This is in contrast to low-context cultures like North America, Australia,
Northern Europe (except France), and Scandinavia, where more meaning resides in the
message than the context. These differences are important in many business situations,
especially cross-cultural business negotiations.
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IX. Computer-Mediated Communication
Information richness is the potential information-carrying capacity of a communication

medium. Face-to-face transmission of information is very high in richness because the
sender is personally present, audio and visual channels are used, body language and verbal
language are occurring, and feedback to the sender is immediate and ongoing.
Communicating via numeric computer output lacks richness because it is impersonal and
uses only numeric language. Feedback on such communication might also be very slow.
Two important dimensions of information richness are the degree to which information is
synchronous between senders and receivers, and the extent to which both parties can
receive nonverbal and paraverbal cues. Highly synchronous communication, such as face-
to-face speech, is two-way, in real time. On the low side of synchronization, memos, letters,
and even e-mails are essentially a series of one-way messages, although e-mail has the clear
potential for speedy response. Face-to-face interaction and video-conferencing are high in
nonverbal (e.g., body language) and paraverbal (e.g., tone of voice) cues, while these are
essentially absent in the text-based media.
E-mail, chat systems, tele-conferencing, and video-conferencing are commonly classified

as computer-mediated communication in that they rely on computer technology to
facilitate information exchange. All of these media permit discussion and decision making
without employees having to be in the same location, potentially saving time, money, and
travel hassles. Research has found that group decision support systems enhance the
number of ideas regarding some problem generated under “brainstorming” conditions.
However, by almost any criterion other than generating ideas, computer-mediated groups
perform more poorly than face-to-face groups. Thus, less routine communication requires
richer communication media.
Personal Approaches to Improving Communication
There are a number of personal approaches for improving your ability to communicate
better with others.
A. Basic Principles of Effective Communication
Several basic principles of effective communication apply to upward, downward, horizontal,

and outside communication:
Take the Time. Developing an awareness of context factors and selecting the appropriate
medium to ensure good communication takes time.
Be Accepting of the Other Person. Empathy will go much farther than arrogance.
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Don't Confuse the Person with the Problem. Focus on behaviours rather than attributing
motives. Try to be descriptive instead of evaluative.
Say What You Feel. Be sure that your words, thoughts, feelings, and actions exhibit
congruence. Congruence is the condition in which a person's words, thoughts, feelings, and
actions all contain the same message.
Listen Actively. Effective communication requires good listening and good communicators
employ active listening. Active listening is a technique for improving the accuracy of
information reception by paying close attention to the sender. It includes: watching your
body language; paraphrase what the speaker means; show empathy; ask questions; and
wait out pauses.
Give Timely and Specific Feedback. Speed maximizes the reinforcement potential of the
message, and explicitness maximizes its usefulness to the recipient.
B. When in Rome...
In addition to the basic principles above, several others are particularly useful in a cross-
cultural communication situation.
Assume Differences Until You Know Otherwise. Projection and a foreign speaker's good
command of English can tempt us to assume that culture is not an issue leading us to ignore
differences. Assume that differences exist until proven wrong.
Recognize Differences within Cultures. Avoid culture-based stereotypes and be alert for
occupational and social class differences that can be more difficult to decipher in other
countries.
Watch Your Language (and Theirs). Speak slowly, clearly, and simply. Avoid cliches, jargon,
and slang. Don't assume that those who are very fluent in English are necessarily smarter,
more skilled, or more honest than those who are not.
XI. Organizational Approaches to Improving Communication
There are a number of organizational techniques that can improve communication.
A. 360 Degree Feedback
Traditionally, employee performance appraisal has been viewed as an exercise in

downward communication in which the boss tells the employee how he or she is doing.
More recently, performance appraisal has become a two-way communication process in
which employees are also able to have upward impact concerning their appraisal.360
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feedback is performance appraisal that uses the input of supervisors, employees, peers,
and clients or customers of the appraised individual. It usually focuses on required
behavioural competencies and is used for employee development rather than salary
administration. Upward feedback occurs when supervisors receive performance ratings
from multiple employees.
B. Employee Surveys and Survey Feedback
An employee survey is an anonymous questionnaire that enables employees to state their

candid opinions and attitudes about an organization and its practices. It can be a useful
means of upward communication. Downward communication can be enhanced when
survey results are fed back to employees along with management responses and any plans
for changes. Plans for changes in response to survey concerns indicate a commitment to
two-way communication.
C. Suggestion Systems and Query Systems
Suggestion systems are programs designed to enhance upward communication by soliciting

ideas for improved work operations from employees. They represent a formal attempt to
encourage useful ideas and prevent their filtering through the chain of command. Much
better are programs that reward employees for suggestions that are actually adopted and
provide feedback as to how management evaluated each suggestion. Query systems
provide a formal means of answering questions that employees may have about the
organization and foster two-way communication. An example might be a column of
questions and answers in an employee newsletter.
D. Telephone Hotlines, TV Networks, and Intranets
Telephone hotlines may be query systems in which employees can call in for answers to
their questions. More common are news format hotlines that provide up-dated employee
information. Some large organizations such as Ford Motor Company have expanded this
concept to company-owned TV networks which are one of the fastest growing techniques
for promoting good communication. Intranets represent an important information source
on various topics of interest to employees and can also allow employees to communicate
information to the organization, such as changes of address or in benefits enrolment.
E. Management Training
The evidence suggests that proper training can improve the communication skills of
managers. Training should emphasize the use of models to demonstrate specific skills
followed by role-playing and reinforcement. The manager who can communicate effectively
downward can expect increased upward communication in return.
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Glossary
360 degree feedback:

Performance appraisal that uses the input of supervisors, subordinates, peers, and clients
or customers of the appraised individual.
Active listening:
A technique for improving the accuracy of information reception by paying close attention
to the sender.
Body language:
Nonverbal communication by means of a sender's bodily motions, facial expressions, or
physical location.
Chain of command:
Lines of authority and formal reporting relationships.
Communication:
The process by which information is exchanged between a sender and a receiver.
Computer-mediated communication:
Communication that relies on computer technology to facilitate information exchange.
Congruence:
A condition in which a person's words, thoughts, feelings, and actions all contain the same
message.
Cultural context:
The cultural information that surrounds a communication episode.
Downward communication:
Information that flows from the top of the organization toward the bottom.
Effective communication:
The right people receive the right information in a timely manner.
Employee survey:
Anonymous questionnaire that enables employees to state their candid opinions and
attitudes about an organization and its practices.
Filtering:
The tendency for a message to be watered down or stopped during transmission.
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Grapevine:
An organization's informal communication network.
Horizontal communication:
Information that flows between departments or functional units, usually as a means of
coordinating effort.
Information richness:
The potential information-carrying capacity of a communication medium.
Jargon:
Specialized language used by job holders or members of particular occupations or
organizations.
Mum effect:
The tendency to avoid communicating unfavourable news to others.
Nonverbal communication:
The transmission of messages by some medium other than speech or writing.
Open door policy:

The opportunity for employees to communicate directly with a manager without going
through the chain of command.
Rumour:
An unverified belief that is in general circulation.
Suggestion systems:
Programs designed to enhance upward communication by soliciting ideas for improved
work operations from employees.
Upward communication:
Information that flows from the bottom of the organization toward the top.
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Learning Objectives
1. Define decision making and differentiate well-structured and ill-structured problems.

2. Compare and contrast perfectly rational decision making with decision making under
bounded rationality.
3. Discuss the impact of framing and cognitive biases on the decision process.
4. Explain the process of escalation of commitment to an apparently failing course of
action.
5. Consider how emotions and mood affect decision making.
6. Summarize the pros and cons of using groups to make decisions, with attention to
the groupthink phenomenon and risk assessment.
7. Discuss techniques for improving organizational decision making.
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Chapter Summary
I. What is Decision Making?
Decision making is the process of developing a commitment to some course of action. This
is a process that involves making a choice, and it also involves making a commitment of
resources such as time, money or personnel.
A problem exists when a gap is perceived between some existing state and some desired
state. Decision making is also a process of problem solving.
A. Well-Structured Problems
In a well-structured problem, the existing state is clear, the desired state is clear, and how
to get from one state to the other is fairly obvious. Organizations prefer aprogram or
standardized way of solving a problem when dealing with well-structured problems.
Programs short-circuit the decision-making process by enabling the decision-maker to go
directly from problem identification to solution. Many of the problems encountered in
organizations are well structured and programmed. Decision making is a useful means of
solving these problems.
B. Ill-Structured Problems
In an ill-structured problem, the existing and desired states are unclear, and the method of
getting to the desired state is unknown. These problems are usually unique, complex, and
have not been encountered before. Ill-structured problems cannot be solved with
programmed decisions. In dealing with these problems, organizations use non-programmed
decision making which means that they will gather more information and be more self-
consciously analytical in their approach. Ill-structured problems can entail high risk and
stimulate political considerations.
II. The Complete Decision Maker — A Rational Decision-Making Model
When a rational decision maker identifies a problem, he or she is likely to search for
information to clarify the problem and suggest alternatives; evaluate the alternatives and
choose the best for implementation. The implemented solution is then monitored over time
to ensure its immediate and continued effectiveness. If difficulties occur at any point in the
process, repetition or recycling may be effected.
A. Perfect versus Bounded Rationality
Perfect rationality involves a decision strategy that is completely informed, perfectly logical,
and oriented toward economic gain. While useful for theoretical purposes, these
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characteristics do not exist in real decision makers. According to Herbert Simon,
administrators use bounded rationality rather than perfect rationality. While they try to act
rationally, they are limited in their capacity to acquire and process information, and time
constraints and political considerations also act as bounds to rationality. Framing and
cognitive biases illustrate the operation of bounded rationality.
Framing refers to aspects of the presentation of information about a problem that are

assumed by decision makers. How problems and decisions are framed can have a powerful
impact on resulting decisions.
Cognitive biases are tendencies to acquire and process information in an error-prone way.

They involve assumptions and shortcuts that can improve decision making efficiency but
frequently lead to serious errors in judgment.
B. Problem Identification and Framing
The perfectly rational decision maker, infinitely sensitive and completely informed, should
be a great problem identifier. Bounded rationality, however, can lead to several difficulties
in problem identification:
 Perceptual defence. The perceptual system may act to defend the perceiver against
unpleasant perceptions.
 Problem defined in terms of functional specialty. Selective perception can cause
decision makers to view a problem as being in the domain of their own specialty.
 Problem defined in terms of solution. This form of jumping to conclusions short-
circuits the rational decision-making process.
 Problem diagnosed in terms of symptoms. A consideration on surface symptoms will
provide the decision maker with few clues about an adequate solution.
C. Information Search
Once a problem has been identified, a search for information is instigated. The perfectly
rational Economic Person has free and instantaneous access to all information necessary to
clarify the problem and develop alternative solutions. Bounded rationality, however,
suggests that information search might be slow and costly.
Too little information. Decision makers may collect insufficient information to make a good
decision because people are mentally lazy and tend to use whatever information is available
in memory. Unfortunately, our memory is more selective then representative — we
remember vivid, recent events. Overconfidence in decision making is also a problem and it
is reinforced by confirmation bias - the tendency to seek out information that conforms to
one's own definition of or solution to a problem. These biases lead people to shirk the
acquisition of additional information.
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Too much information. Information overload is the reception of more information than is
necessary to make effective decisions. Information overload can lead to errors, omissions,
delays, and cutting corners. Decision makers often attempt to use all of the information and
get confused and permit low quality information or irrelevant information to influence their
decisions. While information overload causes decision quality to deteriorate, decision
makers become more confident of their decisions.
D. Alternative Development, Evaluation, and Choice
At times a decision maker may exhibit maximization which is the choice of a decision

alternative with the greatest expected value. Unfortunately, the decision maker operating
under bounded rationality may not know all alternative solutions and may be ignorant of
the ultimate values and probabilities of success for known alternatives.
People are weak intuitive statisticians. They have trouble with base rates, sample size,
probability estimates of multiple event scenarios, and the revision of estimates. An example
of this last problem is the anchoring effect which is the inadequate adjustment of
subsequent estimates from an initial estimate that serves as an anchor. This occurs even
when subsequent estimates are far more sophisticated than the original, naive estimate.
The perfectly rational decision maker can evaluate alternative solutions against a single
criterion – economic gain. The decision maker who is bounded by reality might have to
factor in other criteria as well, such as the political acceptability of the solution to other
organizational members. This increases the complexity of the decision-making task.
As a consequence of the overwhelming complexity of rational decision making, the decision

maker operating under bounded rationality frequently “satisfices” rather than
maximizes. Satisficing means that the decision maker establishes an adequate level of
acceptability for a solution to a problem and then screens solutions until one that exceeds
this level is found.
E. Risky Business
The role of risk in decision making is also fertile ground for the issue of framing. Research by
Kahneman and Tversky shows that when people view a problem as a choice between
losses, they tend to make risky decisions, rolling the dice in the face of a sure loss. When
people frame the alternatives as a choice between gains, they tend to make conservative
decisions, protecting the sure win.
F. Solution Implementation
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Once a decision is reached, the solution must be implemented. Decision makers are often
dependent on others to implement decisions, and it might be difficult to anticipate their
ability or motivation to do so.
G. Solution Evaluation
The perfectly rational decision maker should be able to evaluate the effectiveness of
decisions with calm, objective detachment. However, the bounded decision maker might
encounter problems at this stage of the process.
Justification. People tend to be overconfident about the adequacy of their decisions. Many
organizations are lax when it comes to evaluating the effectiveness of expensive programs.
If bad news cannot be avoided, erring decision makers might devote energy to trying to
justify a faulty decision. The justification of faulty decisions is best seen in the irrational
treatment of sunk costs. Sunk costs are permanent losses of resources incurred as the
result of a decision. The key word here is “permanent.” Since these resources have been
lost (sunk) due to a past decision, they should not enter into future decisions. However,
people often do “throw good resources after bad,” acting as if they can recoup sunk costs.
This process is escalation of commitment to an apparently failing course of action, in which
the escalation involves devoting more and more resources to actions implied by the
decision. One reason for this is dissonance reduction. As well, because changing one's mind
is often perceived as a weakness, many wrong decisions continue to be endorsed in the
name of consistency. Escalation of commitment might also be due to the way in which
decision makers frame the problem once some resources have been sunk. Attempts to
prevent the escalation of commitment might include the following:
 Reframe the problem from one of spending to one of saving.

 Set specific goals that must be met before additional resources are invested.
 Evaluate managers on how decisions are made instead of outcomes.
 Separate initial and subsequent decision making.
 Hindsight. The careful evaluation of decisions is also inhibited by faulty
hindsight. Hindsight refers to the tendency to review a decision-making process to
find out what was done right or wrong. People practicing hindsight are exhibiting the
knew-it-all-along effect which assumes after the fact that we knew all along what the
outcome of a decision would be. Another form of faulty hindsight is the tendency to
take personal responsibility for successful decision outcomes while denying
responsibility for unsuccessful outcomes.
H. How Emotion and Mood Affect Decision Making
Emotions also play a role in decision making. Strong emotions frequently figure in the
decision-making process that corrects ethical errors (Chapter 12) and strong (positive)
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emotion has also been implicated in creative decision making and the proper use of
intuition to solve problems. Such intuition (Chapter 1) can lead to the successful short-
circuiting of the steps in the rational model when speed is of the essence. There are also
many cases in which strong emotions are a hindrance such as when people experiencing
strong emotions are often self-focused and distracted from the actual demands of the
problem at hand.
Mood affects what and how people think when making decisions and it has the greatest
impact on uncertain, ambiguous decisions of the type that are especially crucial for
organizations. Research on mood and decision making has found that:
 People in a positive mood tend to remember positive information.

 People in a positive mood tend to evaluate objects, people, and events more
positively.
 People in a good mood tend to overestimate the likelihood that good events will
occur and underestimate the occurrence of bad events.
 People in a good mood adopt simplified, short-cut decision-making strategies, more
likely violating the rational model. People in a negative mood are prone to approach
decisions in a more deliberate, systematic, detailed way.
 Positive mood promotes more creative, intuitive decision making.
The impact of mood on decision making is not necessarily dysfunctional. If the excesses of
optimism can be controlled, those in a good mood can make creative decisions. If the
excesses of pessimism can be controlled, those in a negative mood can actually process
information more carefully and effectively.
I. Rational Decision Making — A Summary
Research shows that for complex, unfamiliar decisions the rational model provides a pretty
good picture of how people actually make decisions. However, there is plenty of case
evidence that in organizations the rational decision-making process is often short-circuited
in part because of the biases discussed above. This might explain why about half of the
decisions made in organizations have been found to be failures.
III. Group Decision Making
Many organizational decisions are made by groups rather than individuals, especially when
problems are ill-structured. There are both advantages and problems of group decision
making.
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A. Why Use Groups?
There are a number of reasons for employing groups to make organizational decisions.
Decision Quality. Groups or teams can make higher quality decisions than individuals. This
argument is based on several assumptions:
 Groups are more vigilant than individuals.

 Groups can generate more ideas than individuals.
 Groups can evaluate ideas better than individuals.
Decision Acceptance and Commitment. Groups are often used to make decisions on the
premise that a decision made in this way will be more acceptable to those involved. There
are several assumptions underlying this premise:
 People wish to be involved in decisions that will affect them.

 People will better understand a decision in which they participated.
 People will be more committed to a decision in which they invested personal time
and energy.
Diffusion of Responsibility. A weakness in the use of groups can occur because of diffusion
of responsibility, a term which describes the ability of group members to share the burden
of the negative consequences of a poor decision. Thus, no one person will be singled out for
punishment.
 B. Do Groups Actually Make Higher-Quality Decisions Than Individuals Do? In general,

groups usually produce more and better solutions to problems than individuals working
alone. More specifically, groups should perform better than individuals when
 the group members differ in relevant skills and abilities, as long as they do not differ
so much that conflict occurs;
 some division of labour can occur;
 memory for facts is an important issue; and
 individual judgments can be combined by weighting them to reflect the expertise of
the various members.
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C. Disadvantages of Group Decision Making
There are a number of potential disadvantages to group decision making. Time. Groups
seldom work quickly or efficiently because of process losses and coordination.
Conflict. Participants in group decisions often have their own personal axes to grind or their
own resources to protect and as a result, decision quality may take a back seat to political
wrangling and infighting.
Domination. The advantages of group decision making will seldom be realized if meetings
are dominated by a single individual or a small coalition.
Groupthink. The most serious potential disadvantage is groupthink. This happens when
group pressures lead to reduced mental efficiency, poor testing of reality, and lax moral
judgment of decision-making groups. Unanimous acceptance of decisions is stressed over
quality of decisions.
Group cohesiveness that is too high, excessive concern for approval from the group, and
isolation of the group from other sources of information can lead to groupthink. However,
the promotion of a particular decision by the group leader appears to be the strongest
cause. The symptoms of groupthink include:
 Illusion of invulnerability.
 Rationalization.
 Illusion of mortality.
 Stereotypes of outsiders.
 Pressure for conformity.
 Self-censorship.
 Illusion of unanimity.
 Mindguards.
Victims of groupthink operate in an atmosphere of unreality that should lead to low-quality

decisions. Leaders should be careful to avoid exerting undue pressure for a particular
decision outcome and concentrate on good decision processes.
D. How Do Groups Handle Risk?
Problems that are suitable for group decision making involve some degree of risk and
uncertainty. Research into group decision making processes has explored two apparently
contradictory tendencies. Risky shift is the tendency for groups to make riskier decisions
than the average risk initially advocated by their individual members.Conservative shift is
the tendency for groups to make less risky decisions than the average risk initially
advocated by their individual members. Both phenomena are seen to occur because group
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discussion seems to polarize or exaggerate the initial position of the group by supplying
new arguments and setting the stage for one-upmanship behaviours.
IV. Improving Decision Making in Organizations
Organizational decision making can improve if decision makers follow more closely the
rational decision-making model. A number of techniques can also help.
A. Training Discussion Leaders
When discussion leaders are trained, they can be more effective in guiding groups to
effective decisions. Role-playing training is an effective technique for developing leadership
skills that has increased the quality and acceptance of group decisions.
B. Stimulating and Managing Controversy
Although full-blown controversy is to be avoided, some managed controversy can avoid the
dangers of groupthink and escalation of commitment. A devil's advocate is a person
appointed to identify and challenge the weaknesses of a proposed plan or strategy.
Evidence indicates that the controversy promoted by the devil’s advocate improves
decision quality.
C. Traditional and Electronic Brainstorming
Brainstorming is an attempt to increase the number of creative solution alternatives to

problems by focusing on idea generation rather than evaluation. Despite its acceptance into
common usage, brainstorming is not an effective group technique for idea generation. In
general, an equivalent number of single individuals will come up with more ideas working
on their own. However, brainstorming can provide advantages that extend beyond the
mere number of ideas generated.
Electronic brainstorming involves the use of computer-mediated technology to improve

traditional brainstorming practices. Research has shown that once over the size of two
members, electronic brainstorming groups perform better than face-to-face groups in both
the quantity and quality of ideas. Also, as electronic groups get larger, they tend to produce
more ideas, but the ideas-per-person measure remains stable. In contrast, as face-to-face
groups get bigger, fewer and fewer ideas per person are generated.
D. Nominal Group Technique
Unlike brainstorming, the nominal group technique (NGT) is a structured group decision-

making technique in which ideas are generated without group interaction and then
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systematically evaluated by the group. Unlike brainstorming, NGT is concerned with both
the generation of ideas and the evaluation of these ideas and carefully separates the two.
E. The Delphi Technique
The Delphi technique is a method of pooling a large number of expert judgments by using a

series of increasingly refined questionnaires. Participants do not engage in face-to-face
interactions and they do not actually make a final decision; rather, they provide information
for organizational decision makers. A major disadvantage of this method is the time
involved. The Delphi is an efficient method of pooling a large number of expert judgments,
while avoiding the problems of conformity and domination that can occur in interacting
groups.
Glossary
Anchoring effect:
The inadequate adjustment of subsequent estimates from an initial estimate that serves as an
anchor.
Bounded rationality:
A decision strategy that relies on limited information and that reflects time constraints and
political considerations.
Brainstorming:
An attempt to increase the number of creative solution alternatives to problems by focusing on
idea generation rather than evaluation.
Cognitive biases:
Tendencies to acquire and process information in an error-prone way.
Confirmation bias:
The tendency to seek out information that conforms to one's own definition of or solution to a
problem.
Conservative shift:
The tendency for groups to make less risky decisions than the average risk initially advocated by
their individual members.
Decision making:
The process of developing a commitment to some course of action.
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Delphi technique:
A method of pooling a large number of expert judgments by using a series of increasingly
refined questionnaires.
Devil's advocate:
A person appointed to identify and challenge the weaknesses of a proposed plan or strategy.
Diffusion of responsibility:
The ability of group members to share the burden of the negative consequences of a poor
decision.
Electronic brainstorming:
The use of computer-mediated technology to improve traditional brainstorming practices.
Escalation of commitment:
The tendency to invest additional resources in an apparently failing course of action.
Framing:
Aspects of the presentation of information about a problem that are assumed by decision
makers.
Groupthink:
The capacity for group pressure to damage the mental efficiency, reality testing, and moral
judgment of decision-making groups.
Hindsight:
The tendency to review the decision-making process to find what was done right or wrong.
Ill-structured problem:
A problem for which the existing and desired states are unclear, and the method of getting to
the desired state is unknown.
Information overload:
The reception of more information than is necessary to make effective decisions.
Maximization:
The choice of the decision alternative with the greatest expected value.
Nominal group technique:

A structured group decision-making technique in which ideas are generated without group
interaction and then systematically evaluated by the group.
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Perfect rationality:
A decision strategy that is completely informed, perfectly logical, and oriented toward
economic gain.
Problem:
A perceived gap between an existing state and a desired state.
Program:
A standardized way of solving a problem.
Risky shift:
The tendency for groups to make riskier decisions than the average risk initially advocated by
their individual members.
Satisficing:
Establishing an adequate level of acceptability for a solution to a problem and then screening
solutions until one that exceeds this level is found.
Sunk costs:
Permanent losses of resources incurred as the result of a decision.
Well-structured problem:
A problem for which the existing state is clear, the desired state is clear, and how to get from
one state to another is fairly obvious.
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Learning Objectives
1. Define power and review the bases of individual power.

2. Explain how people obtain power in organizations.
3. Discuss the concept of empowerment.
4. Review various influence tactics.
5. Provide a profile of power seekers.
6. Explain strategic contingencies and discuss how subunits obtain power.
7. Define organizational politics and discuss its various forms.
8. Define ethics and review the ethical dilemmas that managers face.
9. Define sexual harassment and discuss what organizations can do to prevent it and
how they should respond to allegations.
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Chapter Summary
I. What Is Power?
Power is the capacity to influence others who are in a state of dependence. This does not
necessarily imply that a poor relationship exists between the power holder and the target,
as most friendships involve reciprocal influence processes.
Power can flow in any direction in an organization, although members at higher levels
typically have more power. Power is a broad concept that applies to individuals as well as to
groups.
II. The Bases of Individual Power
Power can be found in the position that you occupy in the organization or the resources
that you are able to command. Legitimate power is dependent on one's position or job. The
other bases (reward, coercion, referent, and expert power) involve the control of important
resources.
A. Legitimate Power
Legitimate power derives from a person's position or job in the organization. It constitutes

the organization's judgment about who is formally permitted to influence whom, and it is
often called authority. As we move up the organization's hierarchy, we find that members
possess more and more legitimate power. Legitimate power works because people have
been socialized to accept its influence. Even across various cultures, employees cite
legitimate power as a major reason for following their boss's directions.
B. Reward Power
Reward power exists when the power holder can exert influence by providing positive
outcomes and preventing negative outcomes. It corresponds to the concept of positive
reinforcement. It is often used to back up legitimate power.
C. Coercive Power
Coercive power is available when the power holder can exert influence by the use of
punishment and threat. Although it too is employed as a support for legitimate power, its
use by managers is generally ineffective and can provoke employee resistance.
D. Referent Power
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Referent power exists when the power holder is well liked by others. It is potent because it
stems from identification with the power holder and represents a truer or deeper base of
power than reward or coercion. Second, anyone in the organization may possess referent
power.
E. Expert Power
Expert power is derived from having special information or expertise that is valued by an
organization. This power can be obtained by lower-level organizational members and is
especially likely to exist for those members in scientific and technical areas. Of all the bases
of power, expertise is most consistently associated with employee effectiveness. Employees
perceive women managers as more likely than male managers to be high on expert power.
III. How Do People Obtain Power?
People get power by doing the right things and cultivating the right people.
A. Doing the Right Things
Activities lead to power when they are extraordinary, highly visible, and especially relevant
to the solution of organizational problems.
Extraordinary Activities. Excellent performance in unusual or nonroutine activities is

required to obtain power. Such activities include occupying new positions, managing
substantial changes, and taking great risks.
Visible Activities. Extraordinary activities will fail to generate power if no one knows about
them. Therefore, people who seek power must try to publicize their efforts and ensure that
they are visible.
Relevant Activities. Extraordinary, visible work may fail to generate power if no one cares.
Activities must be relevant to the needs of the organization for power to accrue. Therefore,
being in the right place at the right time and doing the right things are important in the
effort to gain power.
B. Cultivating the Right People
To obtain power, one must develop informal relationships with the right people. The right
people can include organizational subordinates, peers, and superiors as well as crucial
outsiders.
Outsiders. Establishing good relationships with key people outside one's organization can
lead to increased power within the organization.
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Subordinates. An individual can gain influence if she is closely identified with certain up-
and-coming subordinates. Subordinates can also provide power when a manager can
demonstrate that he or she is backed by a cohesive team.
Peers. Cultivating good relationships with peers is mainly a means of ensuring that nothing
gets in the way of one's future acquisition of power. As one moves up through the ranks,
favours can be asked of former associates.
Superiors. Liaisons with key superiors probably represent the best way of obtaining power
through cultivating others. Mentors, for example, can provide special information and
useful introductions to other "right people."
Power need not be seen as something of fixed quantity which must necessarily be in short
supply at the bottom of the organization if it is largely held at the top.Empowerment gives
people the authority, opportunity, and motivation to take initiative and solve organizational
problems. Authority comes from pushing legitimate power down to lower levels so that
decisions can be made by those with the information to make them. Opportunity means
freedom from bureaucratic barriers and any relevant training and information about the
impact of one's actions on other parts of the organization. The motivation part of
empowerment works when people are intrinsically motivated by power and opportunity
and see their rewards linked to their performance. People who are empowered have a
strong sense of self-efficacy, the feeling that they are capable of doing their jobs well and
"making things happen." Empowering lower-level employees can be critical in service
organizations, where providing customers with a good initial encounter or correcting any
problems that develop can be essential for repeat business.
V. Influence Tactics-Putting Power to Work
Power is the potential to influence others. Influence tactics are tactics that are used to
convert power into actual influence over others. These tactics include assertiveness,
ingratiation, rationality, exchange, upward appeal, and coalition formation. Which tactics
are used may be influenced by the power bases of the individual exercising power and who
you are trying to influence. Men using rationality as an influence tactic received better
performance evaluations, earned more money, and experienced less work stress. A
particularly ineffective influence style is a "shotgun" style that is high on all tactics with
particular emphasis on assertiveness and exchange.
VI. Who Wants Power?
The old concepts of power seekers were that they were neurotics covering up feelings of
inferiority; striving to compensate for childhood deprivation; and substituting power for
lack of affection. There is little doubt that these characteristics do apply to some power
seekers and some seek it for its own sake and use it irresponsibly.
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According to psychologist David McClelland, power can also be used responsibly to
influence others. Need for power is the need to have strong influence over others. It is a
reliable personality characteristic.
Some individuals have a need for power which can make them effective managers when
used in a responsible and controlled manner. In addition to having a high need for power,
they use their power to achieve organizational goals; they adopt a participative or
"coaching" leadership style; and they are relatively unconcerned with how much others like
them.
McClelland calls these managers institutional managers because they use their power for
the good of the institution. He stresses the greater effectiveness of these managers
compared to personal power managers, who use their power for personal gain,
and affiliative managers, who are more concerned with being liked than with exercising
power.
VII. Controlling Strategic Contingencies - How Subunits Obtain Power
Subunit power is the degree of power held by various organizational subunits, such as
departments. They obtain this power through the control of strategic contingencies, which
are critical factors affecting organizational effectiveness that are controlled by a key
subunit. This means that the work performed by other subunits is contingent on the
activities and performance of a key subunit. Again, we see the critical role of dependence in
power relationships. The conditions under which subunits can control strategic
contingencies involve scarcity, uncertainty, centrality, and substitutability.
A. Scarcity
Subunits tend to acquire power when they are able to secure scarce resources that are
important to the organization as a whole. When resources such as budget dollars become
scarce, subunits that are able to secure additional resources from outside the organization
can obtain power. For example, university departments that have the ability to bring in
external funding through consulting contracts and research grants gain power in this way.
B. Uncertainty
Since organizations dislike uncertainty, those subunits with the ability to cope with the
unexpected are most likely to obtain power. Those functions that can provide the
organization with greater control over what it finds problematic and can create more
certainty will acquire more power. The intervention of governments into human resource
policies in recent years has allowed human resource departments to gain power by coping
with the various uncertainties.
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C. Centrality
Subunits whose activities are most central to the workflow of the organization are more apt
to obtain power than those whose activities are more peripheral. They are central to the
extent that they influence the work of most other subunits; when they have an especially
crucial impact on the quantity or quality of the organization's key product or service; or
their impact is more immediate compared to other subunits.
D. Substitutability
A subunit will have relatively little power if others inside or outside the organization can
perform its activities. If the subunit's staff is nonsubstitutable, however, it can acquire
power. One crucial factor here is the general labour market for the specialty performed by
the subunit. For example, engineers will have more power when there are few of them,
than when their numbers increase. Having refined technical skills also impacts
substitutability as does the ability of an organization to subcontract for skills outside. If
work can be contracted out, the power of the subunit that usually performs these activities
is reduced.
VIII. Organizational Politics - Using and Abusing Power
Not all uses of power constitute politics as described below.
A. The Basics of Organizational Politics
Organizational politics is the pursuit of self-interest in an organization, whether or not this

self-interest corresponds to organizational goals. Generally, this activity is self-conscious
and intentional, and it is possible for benefits to accrue to the organization even though
outcomes are achieved by questionable tactics. Politics can be conceived as either an
individual activity or subunit activity.
Politics involves using means of influence that the organization does not sanction and/or
pursuing ends or goals that are not sanctioned by the organization. A means/ends matrix
may be used to explore these relationships. It is the association between influence means
and influence ends that determines whether activities are political and whether these
activities benefit the organization.
I. Sanctioned means/sanctioned ends. Here, power is used routinely to pursue agreed-

on goals.
II. Sanctioned means/nonsanctioned ends. In this case, acceptable means of influence
are abused to pursue goals that the organization does not approve.
III. Nonsanctioned means/santioned ends. Here, ends that are useful for the
organization are pursued through questionable means.
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IV. Nonsanctioned means/nonsanctioned ends. This quadrant may exemplify the most
flagrant abuse of power, since disapproved tactics are used to pursue disapproved
outcomes.
Political activities tend to occur under particular conditions and locations in an organization
such as among middle and upper management levels; in subunits with vague goals and
complex tasks; and issues such as budget allocation. In general, scarce resources,
uncertainty, and important issues provoke political activity.
B. Machiavellianism - The Harder Side of Politics
Machiavellianism is a set of cynical beliefs about human nature, morality, and the
permissibility of using various tactics to achieve one's ends. For example, compared with
"low Machs", "high Machs" are more likely to advocate the use of lying and deceit to
achieve desired goals. High Machs are especially adept at getting their way when situations
are unstructured and face-to-face dealing under emotional circumstances is the mode of
interaction. They are cool and calculating and assume that many people are excessively
gullible and do not know what is best for themselves. In summary, high Machs are likely to
be enthusiastic organizational politicians.
C. Networking - The Softer Side of Politics
A more common and more subtle form of political beahviour involves

networking. Networking can be defined as establishing good relations with key
organizational members and/or outsiders in order to accomplish one's goals. If these goals
are beneficial to the organization, we can describe networking as functional political
behaviour. In essence, networking involves developing informal social contacts to enlist the
cooperation of others when their support is necessary. Some networking is a function of
one's location in the organization's workflow and formal communication channels.
D. Defensiveness-Reactive Politics
Political behaviour can also involve the defence or protection of self-interest. The goal here
is to reduce threats to one's own power by avoiding actions that do not suit one's political
agenda or avoiding blame for events that might threaten one's political capital.
Blake Ashforth and Ray Lee suggest a number of tactics for avoiding actions and blame.
Avoiding action may be accomplished by stalling, overconforming, or buck passing. Avoiding
blame can involve bluffing or scapegoating.
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IX.Ethics in Organizations
Ethics can be defined as systematic thinking about the moral consequences of decisions.

Moral consequences can be framed in terms of the potential for harm to any stakeholders
in the decision. Stakeholders are people inside or outside of an organization who have the
potential to be affected by organizational decisions.
A. The Nature of Ethical Dilemmas
A recent survey indicated that conflicts of interest, questionable gift giving, and sexual
harassment top the list of ethical concerns. Especially noteworthy is the high percentage of
firms that report problems in dealing with foreign business practices that are contrary to
their own ethical norms. A standardized set of moral standards for decision making that
managers can strive to achieve can help them to deal with ethical dilemmas including
honest communication, fair treatment, special consideration, fair competition,
responsibility to the organization, corporate social responsibility, and respect for the law.
B. Causes of Unethical Behaviour
Although difficult to research, evidence does suggest a number of causes of unethical

behaviour.
Gain. The anticipation of healthy reinforcement for following an unethical course of action,
especially if no punishment is expected, should promote unethical decisions.
Role Conflict. Many ethical dilemmas that occur in organizations are actually forms of role
conflict that get resolved in an unethical way.
Competition. Stiff competition for scarce resources and the absence of competition can
stimulate unethical behaviour.
Personality. An individual with a strong economic value orientation is more likely to behave
unethically as well as those with a high need for personal power (especially a "high Mach"),
and a relatively unsophisticated understanding of moral issues.
Organizational and Industry Culture. Aspects of an organization's culture (and its

subcultures) can influence ethics. The ethical values of a given organization are often
shaped by how the behaviour of highly visible role models is rewarded. Also, some
industries seem to have more ethical crises than others although competition may be a
factor.
C. Is Playing Politics Ethical?
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Different stakeholders such as political opponents, employees, and the organization itself
have legitimate interests when politics are played. Although politics are natural in all
organizations, by definition, they promote an individual's self-interest. Thus, whether or not
the playing of politics is ethical may depend on the ends that one pursues (in the case of the
organization) as well as the influence means that are used (in the case of who "gets hurt"
along the way).
D. Sexual Harassment - When Power and Ethics Collide
Sexual harassment is near the top of the list of ethical concerns. Sexual harassment is a
form of unethical behaviour that stems in part from the abuse of power and the
perpetuation of a gender power imbalance in the workplace. While the most severe forms
of sexual harassment are committed by supervisors, the most frequent perpetrators are
actually co-workers. Sexual harassment is also prevalent in hostile work environments that
perpetuate the societal power imbalance between men and women.
Many organizations are slow to react to complaints of sexual harassment and many do
nothing about it until the complainant has reported it. This phenomenon has been refereed
to as the "deaf ear syndrome" which refers to the "the inaction or complacency of
organizations in the face of charges of sexual harassment".
Organizations can effectively deal with allegations of sexual harassment and increase their
responsiveness by taking a number of important measures:
 Examine the Characteristics of Deaf Ear Organizations.

 Foster Management Support and Education.
 Stay Vigilant.
 Take Immediate Action.
 Create a State of the Art Policy.
 Establish Clear Reporting Procedures.
In general, organizations that are responsive to complaints of sexual harassment have top
management support and commitment, comprehensive education and training programs,
continuously monitor the work environment, respond to complaints in a thorough and
timely manner, and have clear policies and reporting procedures.
E. Employing Ethical Guidelines
Many organizations have invested in ethical programs. There is evidence that formal
education in ethics does have a positive impact on ethical attitudes. Some simple guidelines
should help in the ethical screening of decisions. The point is to think seriously about the
moral implications of your decisions before they are made.
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 Identify the stakeholders.
 Identify the costs and benefits of various alternatives to these stakeholders.
 Consider the relevant moral expectations that surround a particular decision.
 Be familiar with the common ethical dilemmas in your specific role or profession.
 Discuss ethical matters with decision stakeholders and others.
 Convert your ethical judgments into appropriate action.
These guidelines should enable you to recognize ethical issues, make ethical judgments, and
then convert these judgments into behaviour. Training and education in ethics have
become popular in North American organizations and does have a positive impact on
ethical attitudes.
Glossary
Coercive power:
Power derived from the use of punishment and threat.
Empowerment:
Giving people the authority, opportunity, and motivation to take initiative and solve
organizational problems.
Ethics:
Systematic thinking about the moral consequences of decisions.
Expert power:
Power derived from having special information or expertise that is valued by an
organization.
Influence tactics:
Tactics that are used to convert power into actual influence over others.
Legitimate power:
Power derived from a person's position or job in an organization.
Machiavellianism:
A set of cynical beliefs about human nature, morality, and the permissibility of using various
tactics to achieve one's ends.
Networking:
Establishing good relations with key organizational members and/or outsiders in order to
accomplish one's goals.
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Organizational politics:
The pursuit of self-interest in an organization, whether or not this self-interest corresponds
to organizational goals.
Power:
The capacity to influence others who are in a state of dependence.
Referent power:
Power derived from being well liked by others.
Reward power:
Power derived from the ability to provide positive outcomes and prevent negative
outcomes.
Stakeholders:
People inside or outside of an organization who have the potential to be affected by
organizational decisions.
Strategic contingencies:
Critical factors affecting organizational effectiveness that are controlled by a key subunit.
Subunit power:
The degree of power held by various organizational subunits, such as departments.
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Learning Objectives
1. Define interpersonal conflict and review its causes in organizations.

2. Explain the types of conflict and the process by which conflict occurs.
3. Discuss the various modes of managing conflict.
4. Review a range of negotiation techniques.
5. Discuss the merits of stimulating conflict.
6. Distinguish among stressors, stress, and stress reactions.
7. Discuss the role that personality plays in stress.
8. Review the sources of stress encountered by various organizational role occupants.
9. Describe behavioural, psychological, and physiological reactions to stress and discuss
techniques for reducing or coping with stress.
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Chapter Summary
I. What Is Conflict?
Interpersonal conflict is a process that occurs when one person, group, or organizational
subunit frustrates the goal attainment of another. In its classic form, conflict often involves
antagonistic attitudes and behaviours such as name calling, sabotage, or even physical
aggression.
II. Causes of Organizational Conflict
It is possible to isolate a number of factors that contribute to organizational conflict.
A. Group Identification and Intergroup Bias
This is the tendency of people to develop a more positive view of their own "in-group" and
a less positive view of "out-groups" of which they are not a member.
This tendency appears to develop even when group membership is essentially arbitrary. The
best prognosis is that people who identify with some groups will tend to be leery of out-
group members.
B. Interdependence
When individuals or subunits are mutually dependent on each other to accomplish their
own goals, the potential for conflict exists. The potential for the abuse of power in such
relationships and the on-going need for coordination are both potential problem areas.
C. Differences in Power, Status, and Culture Conflict can erupt when parties differ
significantly in power, status, or culture.
Power. If dependence is not mutual, but one-way, an imbalance in power can arise and the
potential for conflict increases.
Status. Status differences have the greatest potential for conflict when a reversal of
expected roles occurs; that is, when a high status person like an executive, finds themselves
being educated on computer usage by their administrative assistant. Some executives are
defensive about this reversal of roles.
Culture. When two or more very different cultures develop in an organization, the clash in
beliefs and values can result in overt conflict.
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D. Ambiguity
Ambiguous goals, jurisdictions, or performance criteria can lead to conflict. Under such
ambiguity, the formal and informal roles that govern interaction break down and it may be
difficult to determine responsibility. Ambiguous performance criteria are a frequent cause
of conflict between managers and employees.
E. Scarce Resources
Differences in power are magnified when common resources are in short supply. Resources
may also act as buffers in sufficient quantities which, when removed, allow conflict to
surface. Scarcity has a way of turning latent or disguised conflict into overt conflict.
III. Types of Conflict
Relationship conflict concerns interpersonal tensions among individuals that have to do

with their relationship per se, not the task at hand. So-called “personality clashes” are
examples of relationship conflicts. Task conflict concerns disagreements about the nature
of the work to be done.
Differences of opinion about goals or technical matters are examples of task

conflict. Process conflict involves disagreements about how work should be organized and
accomplished. Disagreements about responsibility, authority, resource allocation, and who
should do what all constitute process conflict. In the context of work groups and teams,
task, relationship, and process conflict tend to be detrimental to member satisfaction and
team performance.
IV. Conflict Dynamics
A number of events occur when one or more of the causes of conflict takes effect. As a
conflict begins, "winning" becomes very important, the parties conceal information from
each other, each group becomes more cohesive, contact with the opposite party is
discouraged, negative stereotypes of the opposite party develop, and an aggressive leader
skilled at engaging in conflict may emerge. Based on these internal dynamics, the elements
of this process work against the achievement of a peaceful solution and the conflict
continues to cycle "on its own steam."
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V. Modes of Managing Conflict
Conflict expert Kenneth Thomas has developed a set of five conflict management styles or
strategies that are a function of both how assertive you are in trying to satisfy your own or
your group’s concerns, and how cooperative you are in trying to satisfy those of the other
party or group. Each style might have its place given the situation in which the conflict
episode occurs.
A. Avoiding
Avoiding is a conflict management style characterized by low assertiveness of one's own

interests and low cooperation with the other party. This is the "hiding the head in the sand"
response to conflict. Its effectiveness is often limited.
B. Accommodating
Accommodating is a conflict management style in which one party cooperates with the
other party, while not asserting one's own interests. This may be seen as a sign of
weakness.
C. Competing
Competing is a conflict management style that maximizes assertiveness for your own
position and minimizes cooperative responses. The conflict tends to be framed in strict win-
lose terms.
D. Compromise
Compromise is a conflict management style that combines intermediate levels of

assertiveness and cooperation. This tends to be a satisficing approach — neither true
competition nor true accommodation. Compromise does not always result in the most
creative response to conflict.
E. Collaborating
Collaborating is a conflict management style that maximizes both assertiveness and

cooperation. Collaboration works as a problem-solving approach where the object is to
determine a win-win solution to the conflict that fully satisfies the interests of both parties.
It is assumed that the solution to the conflict can leave both parties in a better condition.
Effective collaboration frequently enhances productivity and achievement. Collaboration
between organizational departments is particularly important for providing good customer
service.
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VI. Managing Conflict with Negotiation
Negotiation is a decision-making process among interdependent parties who do not share

identical preferences. Labour and management negotiate over wages and conditions, but
job applicants also negotiate for starting salaries, employees negotiate for better job
assignments, and people with sick kids negotiate to leave work early. Negotiation
constitutes conflict management, in that it is an attempt either to prevent conflict or to
resolve existing conflict. It is an attempt to reach a satisfactory exchange among or between
the parties.
It has become common to distinguish between distributive and integrative negotiation

tactics. Distributive negotiation assumes a zero-sum, win-lose situation in which a fixed
amount of assets is divided between parties.
Integrative negotiation is a win-win negotiation that assumes that mutual problem solving
can enlarge the assets to be divided between the parties. Distributive and integrative
negotiations can take place simultaneously.
A. Distributive Negotiation Tactics
Distributive negotiation is essentially single-issue negotiation. Reaching an acceptable

resolution in distributive negotiation involves both parties arriving at a point in the
"settlement range", an area of overlap between each party's target and their resistance
point. Several techniques can influence how that point is determined.
Threats and Promises. Threats consist of implying that punishment will be forthcoming if
the opponent does not concede to your position. Promises are pledges that concessions will
lead to rewards in the future.
Firmness versus Concessions. Intransigence — not moving — is often met by the same and
the negotiations are deadlocked. A series of small concessions early in the process will often
be matched.
Persuasion. Verbal persuasion or debate is common in negotiations. It is an attempt to

change the attitudes of the other party toward your target position.
B. Integrative Negotiation Tactics
The effort and creativity required to move past "fixed-pie" bargaining can be well worth the
effort. A number of factors can help to make it happen.
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Copious Information Exchange. Parties need to give away non-critical information early to
start the ball rolling, ask lots of questions and listen to the answers. Trust must be built
slowly so that "positions" will give way to the communication of true interests.
Framing Differences as Opportunities. Differences need not represent mutually exclusive

options. Explore them for the opportunity to satisfy both parties without compromise.
Cutting Costs. If you can somehow cut the costs that the other party associates with an
agreement, the chance of an integrative settlement increases. Integrative solutions are
especially attractive when they reduce costs for all parties in a dispute.
Increasing Resources. The ultimate solution to "fixed-pie" bargaining is to have the parties
use their combined power to obtain greater resources which they can then divide.
Introducing Superordinate Goals. Superordinate goals are attractive outcomes that can be

achieved only by collaboration. Neither party can achieve the goal on its own.
Superordinate goals represent the best example of creativity in integrative negotiation
because they change the entire landscape of the negotiation episode.
C. Third Party Involvement
Third parties may come into play to intervene between negotiating parties when an
impasse is reached (labour/management disputes) or may be involved from the start as a
normal part of the process of bargaining (real estate agents). Two approaches to third party
involvement are mediation and arbitration.
Mediation. This occurs when a neutral third party helps to facilitate a negotiated agreement
by aiding the process / atmosphere of bargaining or by intervening in the content of the
negotiation. Mediation has a fairly successful track record in dispute resolution.
Arbitration. This occurs when a third party is given the authority to dictate the terms of
settlement of a conflict. This usually happens when negotiation has broken down and the
arbitrator has to make a final distributive allocation. In conventional arbitration, the
arbitrator can choose any outcome, such as splitting the difference between the two
parties. In final offer arbitration, each party makes a final offer and the arbitrator chooses
one of them.
VIII. Is All Conflict Bad?
Traditionally, there has been an emphasis on the negative, dysfunctional aspects of conflict.
Recently, though, there has been growing awareness of the potential benefits of
organizational conflict. Some experts feel that conflict creates necessary organizational
change which is necessary for adaptation and survival:
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CONFLICT --> CHANGE --> ADAPTATION --> SURVIVAL
For organizations to survive, they must adapt to their environment. This requires changes in
strategy that may be stimulated through conflict. This suggest that there are times when
managers might use a strategy of conflict stimulation. Conflict stimulation is a strategy of
increasing conflict in order to motivate change. This can occur when peaceful relationships
take precedence over organizational goals or when differences are suppressed or down
played. Scarcity and ambiguity can be manipulated by managers to stimulate conflict and
change.
VIII. A Model of Stress in Organizations
Stress has become a serious concern for individuals and organizations. Stress can be part of
the everyday routine of organizations. A model of a stress episode can provide a better
understanding of stress.
A. Stressors
Stressors are environmental events or conditions that have the potential to induce stress.
These can include a person's job, a person's co-workers, conditions like extreme heat and
cold, as well as the hostility of others.
A person's personality often determines the extent to which a potential stressor becomes a
real stressor and actually induces stress.
B. Stress
Stress is a psychological reaction to the demands inherent in a stressor that has the
potential to make a person feel tense or anxious because the person does not feel capable
of coping with these demands. All stress is not intrinsically bad since moderate levels of
stress can serve as stimulation.
However, stress does become a problem when it leads to especially high levels of anxiety
and tension.
C. Stress Reactions
Stress reactions are the behavioural, psychological, and physiological consequences of

stress. Some of these reactions are passive over which the individual has little control such
as elevated blood pressure. Others are active attempts to cope with some aspect of the
stress episode. Reactions that are useful for the individual in dealing with stress may be
very costly for the organization. Hence, organizations should be interested in the stress
their employees experience.
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D. Personality and Stress
Personality can affect both the extent to which potential stressors are perceived as stressful
and the types of stress reactions that occur. Three key personality traits are locus of control,
Type A behaviour pattern, and negative affectivity.
Locus of Control. Locus of control refers to a set of beliefs about whether one’s behaviour is

controlled mainly by internal or external factors. Compared with internals, externals are
more likely to feel anxious in the face of potential stressors since they feel less in control.
Internals are also more likely to confront stressors directly, while externals are more prone
to simple anxiety-reduction strategies that only work in the short term.
Type A Behaviour Pattern. Type A behaviour pattern is a personality pattern that includes

aggressiveness, ambitiousness, competitiveness, hostility, impatience, and a sense of time
urgency. Type B individuals do not exhibit these extreme characteristics. Type A people
report heavier workloads, longer work hours, and more conflicting work demands. They
either encounter more stressful situations than Type Bs or they perceive themselves as
doing so.
Type A individuals are likely to exhibit adverse physiological reactions in response to stress
including elevated blood pressure, elevated heart rate, and modified blood chemistry.
Negative Affectivity. Negative affectivity is the propensity to view the world, including

oneself and other people, in a negative light. People high in negative affectivity tend to be
pessimistic and downbeat. As a consequence, they tend to report more stressors in the
work environment and to feel more subjective stress. They are particularly likely to feel
stressed in response to the demands of a heavy workload.
IX. Stressors in Organizational Life
Some stressors can affect almost everyone in any organization, while others seem especially
likely to affect people who perform particular roles in organizations.
A. Executive and Managerial Stressors
Executives and managers make key organizational decisions and direct the work of others
which leads them to experience special forms of stress.
Role Overload. Role overload occurs when one must perform too many tasks in too short a
time period. This is an especially common stressor for managers. Management is an
ongoing process, and few managers get time to rest or even to think about a new work
strategy.
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Heavy Responsibility. Since managers also have heavy responsibilities, they must always be
aware of the consequences of their actions. Hence, firing employees, million dollar
decisions, closing a money-losing plant, or ending a strike can all serve as stressors to
executives.
B. Operative-Level Stressors
Operatives are individuals who occupy nonprofessional and nonmanagerial positions in

organizations. The occupants of operative positions are sometimes exposed to a special set
of stressors.
Poor Physical Working Conditions. Operative-level employees are more likely than
managers and professionals to be exposed to physically unpleasant or dangerous working
conditions.
Poor Job Design. Jobs that are too simple or not challenging enough can act as stressors.
Monotony and boredom can prove extremely frustrating to people who feel capable of
handling more complex tasks. The job demands-job control model is a model that asserts
that jobs promote high stress when they make high demands while offering little control
over work decisions.
C. Boundary Role Stressors, Burnout, and Emotional Labour
Boundary roles are positions in which organizational members are required to interact with
members of other organizations or with the public. Occupants of boundary role positions
are especially likely to experience stress as they straddle the imaginary boundary between
the organization and its environment.
A particular form of stress experienced by some boundary role occupants is

burnout. Burnout is a combination of emotional exhaustion, depersonalization, and
reduced personal accomplishment among those who work with people. Teachers, nurses,
social workers, paramedics, and police are especially likely candidates for burnout. Burnout
follows a stage like process that begins with emotional exhaustion, followed by
depersonalization, and finally feelings of low personal accomplishment. Much boundary
role stress stems from the frequent need for employees to engage in “emotional labour”.
The suppression of negative emotions takes a toll on cognitive and emotional resources
over time.
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C. Some General Stressors
Some stressors are probably experienced equally by occupants of all roles.
Interpersonal Conflict. The entire range of conflict, from personality clashes to intergroup
strife, is especially likely to cause stress when it leads to real or perceived attacks on our
self-esteem or integrity.
Work-Family Conflict. Increases in dual career families, single parent families, and life spans
are all contributing to conflicting demands of work and family. Many managers remain
unaware of the impact of these changes on child-care and eldercare concerns and there is
evidence to suggest that these demands fall disproportionately on women's shoulders with
career limiting results.
Job Insecurity and Change. Major organizational changes have left many workers
unemployed and threatened the security of those who have been fortunate enough to
remain in their jobs. The fear of job loss has become a way of life for employees at all
organizational levels. No level of the organization is immune to this stressor. Technological
changes threaten the operative level. Professionals may find themselves "overqualified" in a
narrow specialty no longer required. Executives are often let go as organizations thin their
ranks.
Role Ambiguity. Stress often results from the lack of direction which exists when the goals
of one's job or the methods of performing it are unclear. Such a lack of direction can prove
stressful, especially for people who are low in their tolerance for such ambiguity.
Sexual Harassment. Sexual harassment is a major workplace stressor with serious

consequences for employees and the organization that are similar to or more negative than
other types of job stressors. Organizations in which sexual harassment is most likely to be a
problem are those that have a climate that is tolerant of sexual harassment and where
women are working in traditional male-dominated jobs and in a male-dominated
workplace.
X. Reactions to Organizational Stress
Reactions to organizational stress can be divided into behavioural, psychological, and

physiological.
A. Behavioural Reactions to Stress
Behavioural reactions to stress are overt activities that the stressed individual uses in an
attempt to cope with the stress and include problem solving, withdrawal, and the use of
addictive substances.
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Problem Solving. In general, problem solving is directed toward terminating the stressor or
reducing its potency. It is reality oriented and generally routine, sensible, and the obvious
approach that an objective observer might suggest. Problem solving responses will often
reduce stress and stimulate performance. Some examples include: delegation, time
management, talking it out, asking for help, and searching for alternatives.
Withdrawal. Withdrawal from the stressor is one of the most basic reactions to stress. In
organizations, withdrawal takes the form of absence or turnover. Absenteeism fails to
attack the stressor directly. A well-planned resignation in which the intent is to assume
another job that should be less stressful should benefit both the individual and the
organization rather than a person resigning from a stressful job on the spur of the moment
merely to escape stress. Use of Addictive Substances. Smoking, drinking and drug use
represent the least satisfactory behavioural response to stress for both the individual and
the organization. These activities fail to terminate stress episodes, and they leave
employees less physically and mentally prepared to perform their jobs.
B. Psychological Reactions to Stress
Psychological reactions to stress primarily involve emotions and thought processes, rather
than overt behaviour, although these reactions are frequently revealed in the individual’s
speech and actions. The most common psychological reaction to stress is the use of defence
mechanisms. Defence mechanisms are psychological attempts to reduce the anxiety
associated with stress. Thus, they concentrate on anxiety reduction. Some common defence
mechanisms include the following:
 Rationalization is attributing socially acceptable reasons or motives to one's actions

so that they appear reasonable and sensible.
 Projection is attributing one's own undesirable ideas and motives to others so that
they seem less negative.
 Displacement is directing feelings of anger at a "safe" target rather than expressing
them where they may be punished.
 Reaction formation is expressing oneself in a manner that is directly opposite to the
way one truly feels, rather than risking negative reactions to one’s true position.
 Compensation is applying one's skills in a particular area to make up for failure in
another area.
Used occasionally to temporarily reduce anxiety, defence mechanisms appear to be a useful

reaction. However, when the use of defence mechanisms becomes a chronic reaction to
stress, it can become a problem as the basic conflict or frustration remains in operation.
C. Physiological Reactions to Stress
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There is evidence that work stress is associated with electrocardiogram irregularities and
elevated levels of blood pressure, cholesterol, and pulse. Workplace stress can double the
risk of heart attacks. Stress has also been associated with the onset of diseases such as
respiratory and bacterial infections.
XI. Reducing or Coping with Stress
There are a number of personal and organizational strategies that can help reduce or cope
with stress.
A. Job Redesign
Organizations can redesign jobs to reduce their stressful characteristics. Most formal job
redesign efforts have involved enhancing operative-level jobs to make them more
stimulating and challenging. This is usually accomplished by giving employees more control
over the pace of their work and permitting them to use more of their skills and abilities. Job
design is an important method of dealing with stress because it attempts to remove
stressors rather than simply helping employees to cope with stressors.
B. Social Support
The support of others can help us deal with stress. Social support refers to having close ties
with other people. People with stronger social networks exhibit better psychological and
physical well being. When people encounter stressful events, those with good social
networks are likely to cope more positively. Thus, the social network acts as a buffer against
stress. One's spouse, family, and friends as well as co-workers can provide needed social
support to stress-prone individuals. Co-workers and superiors might be the best sources of
support for dealing with work-related stress.
C. "Family Friendly" Human Resource Policies
In order to reduce stress associated with dual careers, child care, and elder care, many
organizations are beginning to institute "family friendly" human resource policies. These
policies usually include some combination of formalized social support (newsletters,
support groups), material support (corporate daycare), and increased flexibility (flex-time,
telecommuting, and job sharing) to adapt to employee needs.
D. Stress Management Programs
Some organizations use programs designed to help employees “manage” work-related

stress. Although the exact content of programs varies, most involve one or more of the
following techniques: meditation; muscle relaxation exercises; biofeedback training to
control physiological processes; training in time management; and training to think more
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positively and realistically about sources of job stress. Tentative evidence suggests that
these applications are useful in reducing physiological arousal, sleep disturbances, and self-
reported tension and anxiety.
E. Work-Life Balance Programs
An increasing number of organizations are providing work-life balance programs and

employees are beginning to demand them. These are programs that are designed to help
employees’ lead more productive and balanced lives and can include mental and physical
fitness programs, coffee bars, and cafeteria health food. Work-life programs are believed to
result in lower-health care costs in part due to stress reduction.
Glossary
Accommodating:
A conflict management style in which one cooperates with the other party, while not
asserting one's own interests.
Avoiding:
A conflict management style characterized by low assertiveness of one's own interests and
low cooperation with the other party.
Boundary roles:
Positions in which organizational members are required to interact with members of other
organizations or with the public.
Burnout:
Emotional exhaustion, depersonalization, and reduced personal accomplishment among
those who work with people.
Collaborating:
A conflict management style that maximizes both assertiveness and cooperation.
Competing:
A conflict management style that maximizes assertiveness and minimizes cooperation.
Compromise:
A conflict management style that combines intermediate levels of assertiveness and
cooperation.
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Conflict stimulation:
A strategy of increasing conflict in order to motivate change.
Defence mechanisms:
Psychological attempts to reduce the anxiety associated with stress.
Distributive negotiation:
Win-lose negotiation in which a fixed amount of assets is divided between parties.
Integrative negotiation:
Win-win negotiation that assumes that mutual problem solving can enlarge the assets to be
divided between parties.
Interpersonal conflict:
A process that occurs when one person, group, or organizational subunit frustrates the goal
attainment of another.
Job demands-job control model:

A model that asserts that jobs promote high stress when they make high demands while
offering little control over work decisions.
Locus of control:
A set of beliefs about whether one's behaviour is controlled mainly by internal or external
forces.
Negative affectivity:
Propensity to view the world, including oneself and other people, in a negative light.
Negotiation:
A decision-making process among interdependent parties who do not share identical
preferences.
Process conflict:
Disagreements about how work should be organized and accomplished.
Relationship conflict:
Interpersonal tensions among individuals that have to do with their relationship per se, not
the task at hand.
Role overload:
The requirement for too many tasks to be performed in too short a time period.
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Stress:
A psychological reaction to the demands inherent in a stressor that has the potential to
make a person feel tense or anxious.
Stress reactions:
The behavioural, psychological, and physiological consequences of stress.
Stressors:
Environmental events or conditions that have the potential to induce stress.
Superordinate goals:
Attractive outcomes that can be achieved only by collaboration.
Type A behaviour pattern:

A personality pattern that includes aggressiveness, ambitiousness, competitiveness,
hostility, impatience, and a sense of time urgency.
Task conflict:
Disagreements about the nature of the work to be done.
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Learning Objectives
1. Define organizational structure and explain how it corresponds to division of labour.

2. Discuss the relative merits of various forms of departmentation.
3. Review the more basic and more elaborate means of achieving
organizational coordination.
4. Discuss the nature and consequences of traditional structural characteristics.
5. Explain the distinction between organic and mechanistic structures.
6. Discuss the emergence of network, virtual, modular, and boundaryless organizations.
7. Review important considerations concerning downsizing.
8. Identify symptoms of structural problems in organizations.
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Chapter Summary
I. What Is Organizational Structure?
Organizational structure is the manner in which an organization divides its labour into
specific tasks and achieves coordination among these tasks. It broadly refers to how the
organization’s individuals and groups are put together or organized to accomplish work.
Organizational structure intervenes between goals and organizational accomplishments and
thus influences organizational effectiveness. Structure affects how effectively and efficiently
group effort is coordinated. To achieve its goals, an organization has to divide labour among
its members and then coordinate what has been divided.
II. The Division and Coordination of Labour
Labour has to be divided because individuals have physical and intellectual limitations.
There are two basic dimensions to the division of labour, a vertical dimension and a
horizontal dimension. Once labour is divided, it must be coordinated to achieve
organizational effectiveness.
A. Vertical Division of Labour
The vertical division of labour is concerned primarily with apportioning authority for
planning and decision making. A couple of key themes or issues underlie the vertical
division of labour.
Autonomy and Control. The domain of decision making and authority is reduced as the
number of levels in the hierarchy increases. A flatter hierarchy pushes authority lower and
involves people further down the hierarchy in more decisions. Communication. As labour is
progressively divided vertically, timely communication and coordination can become harder
to achieve. As the number of levels in the hierarchy increases, filtering is more likely to
occur.
B. Horizontal Division of Labour
The horizontal division of labour involves grouping the basic tasks that must be performed
into jobs and then into departments so that the organization can achieve its goals. Just as
organizations differ in the extent to which they divide labour vertically, they also differ in
the extent of horizontal division of labour. A couple of key themes or issues underlie the
horizontal division of labour.
Job Design. Job design is an important component in the horizontal division of labour. The
horizontal division of labour strongly affects job design and it has profound implications for
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the degree of coordination necessary. It also has implications for the vertical division of
labour and where control over work processes should logically reside.
Differentiation. Differentiation is the tendency for managers in separate functions or

departments to differ in terms of goals, time spans, and interpersonal styles. As
organizations engage in increased horizontal division of labour, they usually become more
and more differentiated.
C. Departmentation
One way of grouping jobs is to assign them to departments. The assignment of jobs to
departments is called departmentation. It represents one of the core aspects of horizontal
division of labour. There are several methods of departmentation.
Functional departmentation. Under functional departmentation, employees with closely

related skills and responsibilities (functions) are located in the same department. The main
advantage of functional departmentation is efficiency. It works best in small to medium-
sized firms that offer relatively few product lines or services.
Product departmentation. Under product departmentation, departments are formed on

the basis of a particular product, product line, or service. Each of these departments can
operate fairly autonomously. A key advantage is better coordination and fewer barriers to
communication among the functional specialists who work on a particular product line.
They also have more potential for responding to customers in a timely way. A disadvantage
is that product-oriented departments might actually work at cross purposes.
Matrix departmentation. Matrix departmentation is an attempt to capitalize

simultaneously on the strengths of both functional and product departmentation.
Employees remain members of a functional department while also reporting to a product or
project manager. As a result, it is very flexible. Problems could arise when product or
project managers do not see eye-to-eye with various functional managers and because
employees assigned to a product or project team in essence report to a functional manager
as well as a product or project manager.
Other Forms of Departmentation. Several other forms of departmentation also exist.

Under geographic departmentation, relatively self-contained units deliver the
organization's products or services in specific geographic territories.
Under customer departmentation, relatively self-contained units deliver the organization's

products or services to specific customer groups.
The obvious goal is to provide better service to each customer group through specialization.
Finally, it is not unusual to see hybrid departmentation, which involves some combination
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of these structures. In other words, a structure based on some mixture of functional,
product, geographic, or customer departmentation. They attempt to capitalize on the
strengths of various structures, while avoiding the weaknesses of others.
D. Basic Methods of Coordinating Divided Labour
The tasks that help organizations achieve its goals must be coordinated so that goal
accomplishment is realized. Coordination is the process of facilitating timing,
communication, and feedback among work tasks. There are five basic methods of
coordination.
Direct Supervision. This is a very traditional form of coordination. Working through the
chain of command, designated supervisors or managers coordinate the work of their
subordinates.
Standardization of Work Processes. Some jobs are so routine that the technology itself
provides a means of coordination and little direct supervision is necessary for them to be
coordinated. Work processes can also be standardized by rules and regulations.
Standardization of Outputs. Coordination can also be achieved through the standardization

of work outputs. The concern shifts to ensuring that the work meets certain physical and
economic standards.
Standardization of Skills. Coordination can be achieved through the standardization of skills.

This is the case when technicians and professionals know what to expect of each other
because of their standard training.
Mutual Adjustment. Mutual adjustment relies on informal communication to coordinate

tasks. It is useful for coordinating the most simple and the most complicated divisions of
labour.
The five methods of coordinating divided labour can be crudely ordered in terms of the
degree of discretion they permit individual workers in terms of task performance. Direct
supervision permits little discretion. Standardization of processes and outputs permits
successively more discretion. Finally, standardization of skills and mutual adjustment put
even more control into the hands of those who are actually doing the work.
E. Other Methods of Coordination
Sometimes coordination problems require more customized, elaborate mechanisms. This is

especially the case for lateral coordination across highly differentiated
departments. Integration is the process of attaining coordination across differentiated
departments.
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In ascending order of elaboration, three methods of achieving integration include the use of
liaison roles, task forces, and full-time integrators. Liaison Roles. A liaison roleis occupied by
a person in one department who is assigned, as part of his or her job, to achieve
coordination with another department. The person serves as a part-time link between two
departments.
Task Forces and Teams. Task forces are temporary groups set up to solve coordination
problems across several departments. Representatives from each department are included
on a full-time or part-time basis.
Integrators. Integrators are organizational members who are permanently assigned to

facilitate coordination between departments. They are especially useful for dealing with
conflict between (1) highly interdependent departments, (2) which have very diverse goals
and orientations, (3) in a very ambiguous environment.
II. Traditional Structural Characteristics
Over the years, management scholars and practising managers have agreed on a number of
characteristics that summarize the structure of organizations.
A. Span of Control
The span of control is the number of subordinates supervised by a manager. The larger the
span, the less potential there is for coordination by direct supervision. As the span
increases, the attention that a supervisor can devote to each subordinate decreases. Spans
at the upper levels tend to be smaller.
B. Flat versus Tall
A flat organization refers to an organization with relatively few levels in its hierarchy of

authority, while a tall organization refers to an organization with many levels in its
hierarchy of authority. Thus, flatness versus tallness is an index of the vertical division of
labour. Flatter structures tend to push decision-making powers downward and generally
enhance vertical communication and coordination.
C. Formalization
Formalization refers to the extent to which work roles are highly defined by the
organization. A very formalized organization tolerates little variability in the way members
perform their tasks. Detailed, written job descriptions, thick procedure manuals, and the
requirement to “put everything in writing” are evidence of formalization that stems from
rules, regulations, and procedures.
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D. Centralization
Centralization refers to the extent to which decision-making power is localized in a

particular part of the organization. In the most centralized organization, the power for all
key decisions would rest in a single individual, such as the president. In a more
decentralized organization, decision-making power would be dispersed down through the
hierarchy and across departments.
E. Complexity
Complexity refers to the extent to which organizations divide labour vertically, horizontally,

and geographically. The essential characteristic of complexity is variety, and as an
organization grows in complexity it has more kinds of people performing more kinds of
tasks in more places, whether these places are departments or geographic territories.
IV. Summarizing Structure - Organic versus Mechanistic
Mechanistic structures are organizational structures characterized by tallness, narrow

spans, specialization, high centralization, and high formalization. Organic structures are
organizational structures characterized by flatness, wider spans, fewer authority levels, less
specialization, less formalization, and decentralization.
In general, more mechanistic structures are called for when an organization's environment
is more stable and its technology is more routine. Organic structures tend to work better
when the environment is less stable and the technology is less routine.
V. Contemporary Organic Structures
Recent years have seen the advent of new, more organic organizational structures.
A. Network and Virtual Organizations
In a network organization, various functions are coordinated as much by market

mechanisms as by managers and formal lines of authority. Emphasis is placed on who can
do what most effectively and economically rather than on fixed ties dictated by an
organizational chart. All of the assets necessary to produce a finished product or service are
present in the network as a whole, not held in-house by one firm.
The most interesting networks are dynamic or virtual organizations. In a virtual

organization an alliance of independent companies share skills, costs, and access to one
another’s markets. It consists of a network of continually evolving independent companies.
Each partner in a virtual organization contributes only in its area of core competencies. The
key advantage of network and virtual organizations is their flexibility and adaptability.
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B. The Modular Organization
A modular organization is an organization that performs a few core functions and

outsources noncore activities to specialists and suppliers. Services that are often
outsourced include the manufacture of parts, trucking, catering, data processing, and
accounting. Thus, modular organizations are like hubs that are surrounded by networks of
suppliers that can be added or removed as needed. By outsourcing noncore activities,
modular organizations are able to keep unit costs low and develop new products more
rapidly. They work best when they focus on the right specialty and have good suppliers.
C. The Boundaryless Organization
In a boundaryless organization, the boundaries that divide employees such as hierarchy,

job function, and geography as well as those that distance companies from suppliers and
customers are broken down. A boundaryless organization seeks to remove vertical,
horizontal, and external barriers so that employees, managers, customers, and suppliers
can work together, share ideas, and identify the best ideas for the organization. Instead of
being organized around functions with many hierarchical levels, the boundaryless
organization is made up of self-managing and cross-functional teams that are organized
around core business processes that are critical for satisfying customers such as new-
product development or materials handling. The traditional vertical hierarchy is flattened
and replaced by layers of teams making the organization look more horizontal than vertical.
Some believe that the boundaryless organization is the perfect organizational structure for
the 21st century.
VI. The Impact of Size
Organizational size has a number of effects on the structure of organizations.
A. Size and Structure
In general, large organizations are more complex and less centralized than small
organizations. Larger organizations have greater horizontal specialization and require more
integrators and other coordination functions. Large organizations also rely more on
formalization and often display greater vertical and geographic complexity.
B. Downsizing
A reduction in workforce size, popularly called downsizing, has been an organizational trend

in recent years. Downsizing has a number of implications for organizational structure.
Downsizing and Structure. Downsizing is the intentional reduction of workforce size with

the goal of improving organizational efficiency or effectiveness. Downsizing usually results
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in a different organization, not just a smaller one. That is because there are different forces
at work than those which drive growth. Also, white collar managerial and staff jobs have
been hit hardest changing how organizations are structured. Downsizing is often
accompanied by reducing horizontal and vertical complexity. Organizations become flatter
and self-managed teams take over supervisory and quality control functions.
Problems with Downsizing. There can be a downside to downsizing. Many organizations

have not done a good job of anticipating and managing the structural and human
consequences of downsizing. Organizations have a tendency to become mechanistic,
particularly more formalized and centralized when threatened which works against needed
flexibility in times of change. Firms may also be overzealous in their cutting and end up sub-
contracting work to consultants which may be both inferior in quality and more expensive.
Removing levels from the organization may be a good idea, provided that it doesn't
overload the remaining staff and that everyone is comfortable with the greater levels of
delegation required. Finally, the process of downsizing must be considered. Surprising
people with workforce cuts is likely to result in low morale, reduced productivity, and
continuing distrust of management.
Research has shown that contrary to expectations, downsizing does not result in cost
reductions in the long run or improvements in productivity. However, when carefully and
properly implemented, downsizing can have positive consequences.
VII. A Footnote: Symptoms of Structural Problems
There are a number of symptoms of structural problems in organizations.
 Bad job design. There is a reciprocal relationship between job design and
organizational structure. Frequently, improper structural arrangements turn good
jobs into poor jobs in practice.
 The right hand doesn't know what the left is doing. If repeated examples of
duplication of effort occur, or if parts of the organization work at cross-purposes,
structure is suspect.
 Persistent conflict between departments. A failure of integration is often the source
of conflicts.
 Slow response times. Delayed responses might be due to improper structure.
 Decisions made with incomplete information. If decisions have been made with
incomplete information, and the information existed somewhere in the organization,
structure could be at fault.
 A proliferation of committees. When committee is piled on committee, or when task
forces are being formed with great regularity, it is often a sign that the basic
structure of the organization is being “patched up” because it does not work well.
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Glossary
Boundaryless organization:
An organization that removes vertical, horizontal, and external barriers so that employees,
managers, customers, and suppliers can work together, share ideas, and identify the best
ideas for the organization.
Centralization:
The extent to which decision-making power is localized in a particular part of an
organization.
Complexity:
The extent to which an organization divides labour vertically, horizontally, and
geographically.
Coordination:
A process of facilitating timing, communication, and feedback among work tasks.
Customer departmentation:
Relatively self-contained units deliver an organization's products or services to specific
customer groups.
Differentiation:
The tendency for managers in separate departments to differ in terms of goals, time spans,
and interpersonal styles.
Downsizing:
The intentional reduction in workforce size with the goal of improving organizational
efficiency or effectiveness.
Flat organization:
An organization with relatively few levels in its hierarchy of authority.
Formalization:
The extent to which work roles are highly defined by an organization.
Functional departmentation:
Employees with closely related skills and responsibilities are assigned to the same
department.
Geographic departmentation:
Relatively self-contained units deliver an organization's products or services in a specific
geographic territory.
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Hybrid departmentation:
A structure based on some mixture of functional, product, geographic, or customer
departmentation.
Integration:
The process of attaining coordination across differentiated departments.
Integrators:
Organizational members permanently assigned to facilitate coordination between
departments.
Liaison role:
A person is assigned to help achieve coordination between his or her department and
another department.
Matrix departmentation:
Employees remain members of a functional department while also reporting to a product or
project manager.
Mechanistic structures:
Organizational structures characterized by tallness, specialization, centralization, and
formalization.
Modular organization:
An organization that performs a few core functions and outsources noncore activities to
specialists and suppliers.
Network organization:
Liaisons between specialist organizations that rely strongly on market mechanisms for
coordination.
Organic structures:
Organizational structures characterized by flatness, low specialization, low formalization,
and decentralization.
Organizational structure:
The manner in which an organization divides its labour into specific tasks and achieves
coordination among these tasks.
Product departmentation:
Departments are formed on the basis of a particular product, product line, or service.
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Span of control:
The number of subordinates supervised by a manager.
Tall organization:
An organization with relatively many levels in its hierarchy of authority.
Task forces:
Temporary groups set up to solve coordination problems across several departments.
Virtual organization:
A network of continually evolving independent organizations that share skills, costs, and
access to one another's markets.
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Learning Objectives
1. Explain the environmental forces that motivate organizational change and describe
the factors that organizations can change.
2. Explain how organizations learn and what makes an organization a learning
organization.
3. Describe the basic change process and the issues that require attention at various
stages of change.
4. Explain how organizations can deal with resistance to change.
5. Define organizational development and discuss its general philosophy.
6. Discuss team building, survey feedback, total quality management, and
reengineering as organizational development efforts.
7. Discuss the problems involved in evaluating organizational development efforts.
8. Define innovation and discuss the factors that contribute to successful organizational
innovation.
9. Understand the factors that help and hurt the diffusion of innovations.
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Chapter Summary
I. The Concept of Organizational Change
Common experience indicates that organizations are far from static. They change and these
changes have a strong impact on people. In and of themselves, such changes are neither
good nor bad. Rather, it is the way in which the changes are implemented and managed
that is crucial to both customers and organizational members.
A. Why Organizations Must Change
All organizations face two basic source of pressure to change - external sources and internal
sources. External sources include the global economy, deregulation, and changing
technology. Internal sources include low productivity, conflict, strikes, sabotage, high
absenteeism, and turnover. As environments change, organizations must keep pace and
internal changes often occur in response to external pressures. Organizations should differ
in the amount of change they exhibit. Organizations in a dynamic environment must
generally exhibit more change to be effective than those operating in a more stable
environment. Also, change in and of itself is not a good thing, and organizations can exhibit
too much change as well as too little. vB. What Organizations Can Change
There are several specific domains in which modifications can occur as part of
organizational change. Factors that can be changed include:
 Goals and strategies. Organizations frequently change the goals and the strategies
they use to reach these goals.
 Technology. Technological changes can vary from minor to major.
 Job design. Companies can redesign individual groups of jobs to offer more or less
variety, autonomy, identity, significance, and feedback.
 Structure. Organizations can be modified from a functional to a product form or vice
versa. Traditional structural characteristics of organizations such as formalization
and centralization can also be changed.
 Processes. The basic processes by which work is accomplished can be changed.
 Culture. One of the most important changes that an organization can make is to
change its culture. Changing an organization's culture is considered to be a
fundamental aspect of organizational change.
 People. The membership of an organization can be changed either through a revised
hiring process or by changing the skills and attitudes of existing members through
training and development.
Three important points should be noted about the various areas in which organizations can
introduce change. First, a change in one area very often calls for changes in others. Failure
to recognize this systematic nature of change can lead to severe problems. Second, changes
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in goals, strategies, technology, structure, process, job design and culture almost always
require that organizations give serious attention to people changes. Third, in order for
people to learn, organizations much learn. Organizational learning refers to the process
through which organizations acquire, develop, and transfer knowledge throughout the
organization. Organizations learn through knowledge acquisition and knowledge
development.
A learning organization is an organization that has systems and processes for creating,
acquiring, and transferring knowledge in order to modify and change its behaviour to reflect
new knowledge and insights. There are four key dimensions that are critical for a learning
organization:
 Vision/support. Leaders must communicate a clear vision of the organization's

strategy and goals in which learning is a critcial part and key to organizational
success.
 Culture. A learning organization has a culture that supports learning.
 Learning systems/dynamics. Employees are challenged to think, solve problems,
make decisions, and act according to a systems approach by considering patterns of
interdependencies and by "learning by doing."
 Knowledge management/infrastructure. Learning organizations have established
systems and structures to acquire, code, store, and distribute important information
and knowledge so that it is available to those who need it, when they need it.
Learning organizations have been found to be almost 50 percent more likely to have higher
overall levels of profitability than those organizations not rated as learning organizations,
and they are also better able to retain essential employees.
C. The Change Process
Change involves a sequence of organizational events or a psychological process that occurs

over time. This sequence or process involves three basic stages - unfreezing, changing, and
refreezing.
Unfreezing. Unfreezing occurs when recognition exists that some current state of affairs is

unsatisfactory. Crises are especially likely to stimulate unfreezing. Change.Change occurs
when some program or plan is implemented to move the organization and/or its members
to a more satisfactory state. Change efforts can range from minor to major.
Refreezing. Refreezing occurs when the newly developed behaviours, attitudes, or

structures become an enduring part of the organization. The effectiveness of the change
can be examined, and the desirability of extending the change further can be considered.
II. Issues in the Change Process
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There are several important issues that organizations must confront during the change
process. These issues represent problems that must be overcome if the process is to be
effective. These problems include diagnosis, resistance, evaluation, and institutionalization.
A. Diagnosis
Diagnosis is the systematic collection of information relevant to impending organizational

change. It contributes to unfreezing by showing that a problem exists, and further diagnosis
can clarify a problem and suggest just what changes should be implemented. Diagnosis can
take many forms and be performed by a variety of individuals. For more complex,
nonroutine problems, it is worth seeking out the diagnostic skills of a change agent. Change
agents are experts in the application of behavioural science knowledge to organizational
diagnosis and change. It is possible to obtain diagnostic information through a combination
of observations, interviews, questionnaires, and the scrutiny of records. Attention to the
views of customers or clients is critical. Careful diagnosis cannot be overemphasized as it
clarifies the problem and suggests what should be changed and the proper strategy for
implementing change without resistance.
B. Resistance
People are creatures of habit, and change is frequently resisted by those at whom it is
targeted. People may resist both unfreezing and change.
Causes of Resistance. Resistance to change occurs when people either overtly or covertly

fail to support the change effort. People might resist change for many reasons which
include:
 Politics and self-interest. People feel they might lose status, power, or even their
jobs.
 Low individual tolerance for change. Some people are just uncomfortable with
change.
 Misunderstanding. The reason for the change or exact course might be
misunderstood.
 Lack of trust. People might not trust the motives of those proposing the change.
 Different assessments of the situation. The targets of the change might feel that the
situation does not warrant change and the advocates have misread the situation.
 A resistant organizational culture. Some organizational cultures have stressed and
rewarded stability and tradition and as a result advocates of change are viewed as
misguided deviants or aberrant outsiders.
Underlying these various reasons for resistance are two major themes: (1) change is
unnecessary because there is only a small gap between the organization's current identity
and its ideal identity; (2) change is unobtainable (and threatening) because the gap
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between the current and ideal identities is too large. Therefore, a moderate identity gap is
probably the most conducive to increased acceptance of change because it unfreezes
people, while not provoking maximum resistance.
Dealing with Resistance. Low tolerance for change is mainly an individual matter, and it can
often be overcome with supportive, patient supervision. If politics and self-interest are at
the root of resistance, it might be possible to co-opt the reluctant by giving them a special,
desirable role in the change process or by negotiating special incentives for change.
Resistance to change can often be reduced by involving the people who are the targets of
change in the change process and ensuring good communication. Finally, transformational
leaders are particularly adept at overcoming resistance to change. One way they accomplish
this is by "striking while the iron is hot". The other way is to unfreeze current thinking by
installing practices that constantly examine and question the status quo. One research
study of CEOs who were transformational leaders found that they used a number of
unfreezing practices to create a revised vision for followers about what the organization can
do or be.
C. Evaluation and Institutionalization
Evaluating change includes a consideration of a range of variables:
Reactions - did participants like the change program?
Learning - what was acquired in the program?
Behaviour - what changes in job behaviour occurred?
Outcomes - what changes in productivity, absence, etc. occurred?
Many evaluations of change efforts never go beyond the measurement of reactions for fear
of political reprisal if it is demonstrated that the change has failed. If the outcome of change
is evaluated favourably, the organization will wish to institutionalize it. This means that the
change becomes a permanent part of the organizational system, a social fact that persists
over time, despite possible turnover among those who originally experienced the change.
Without hard proof of success it is very difficult to achieve institutionalization. As well, a
number of factors can inhibit institutionalization including a lack of extrinsic rewards,
unrealistic expectations, improper socialization, turnover among sponsoring executives, and
environmental pressures. Many of the problems of evaluation and institutionalization can
be overcome by careful planning and goal setting during the diagnostic stage.
III. Organizational Development: Planned Organizational Change
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Organizational development (OD) is a planned, ongoing effort to change organizations to
be more effective and more human. A strong emphasis is placed on interpersonal and group
processes. OD seeks to modify cultural norms and roles so that the organization remains
self-conscious and prepared for adaptation. OD recognizes that systematic attitude change
must accompany changes in behaviour.
IV. Some Specific Organizational Development Strategies There are a wide variety of

specific techniques for organizational development including job enrichment, management
by objectives, diversity training, self-managed and cross-functional teams, and
empowerment. Four additional strategies include team building, survey feedback, total
quality management, and reenginerring.
A. Team Building
Team building attempts to increase the effectiveness of work teams by improving

interpersonal processes, goal clarification, and role clarification. Thus, it can facilitate
communication and coordination. Team building involves regular diagnostic sessions to
paint a picture of strengths and weaknesses of the team followed by team building sessions
to implement the changes indicated by the diagnosis. Team building can also be used to
develop new work teams and to facilitate change.
B. Survey Feedback
Survey feedback involves the collection of data from organizational members and feeding
these data back to them in a series of meetings in which members explore and discuss the
data. The purpose of the meetings is to suggest or formulate changes that emerge from the
data. It tends to focus on the relationship between organizational members and the larger
organization. The data generally consist of either interviews or questionnaires completed by
organizational members. The feedback is most effective when it is presented to natural
working units in face-to-face meetings.
C. Total Quality Management (TQM)
Total Quality Management (TQM) is a systematic attempt to achieve continuous

improvement in the quality of an organization's products and/or services. Typical
characteristics of TQM programs include an obsession with customer satisfaction; a concern
for good relations with suppliers; continuous improvement of work processes; the
prevention of quality errors; frequent measurement and assessment; extensive training;
and high employee involvement and teamwork.
Prominent names associated with the quality movement include W. Edwards Deming,
Joseph Juran, and Philip Crosby. All three were concerned with using teamwork to achieve
continuous improvement to please customers. Each of these principles is associated with
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certain practices and specific techniques that typify TQM. TQM is mainly about achieving
small gains over a long period of time. A continuum of continuous improvement exists
which extends from reactive strategies such as responding to product or service problems
to more proactive strategies like preventing errors, upgrading performance, and creating
new products and services. Organizations with a real commitment to TQM make heavy use
of customer surveys, focus groups, mystery shoppers, and customer clinics to stay close to
their customers.
TQM is concerned with measurement and data collection. As well, TQM stresses teamwork
among employees and with suppliers and customers. Finally, TQM relies heavily on training
to achieve continuous improvement. TQM is particularly known for using specialized
training in tools that empower employees to diagnose and solve quality problems
themselves on an on-going basis. Some of these tools include:
 Flowcharts of work processes. Flowcharts illustrate graphically the operations and

steps in accomplishing some task.
 Pareto analysis. Pareto analysis collects frequency data on the causes of errors and
problems.
 Fishbone diagrams. Fishbone (cause-and-effect) diagrams illustrate graphically the
factors that could contribute to a particular quality problem.
 Statistical process control. Statistical process control gives employees hard data
about the quality of their own output that enables them to correct any deviations
from standard.
Despite some problems, the quality movement continues to be one of the most popular of
the more elaborate OD efforts.
D. Reengineering
Reengineering is the radical redesign of organizational processes to achieve major

improvements in factors such as time, cost, quality, or service. It is one of the most
fundamental and radical of all forms of change. It asks basic questions such as "What
business are we really in?" and "If we were creating this organization today, what would it
look like?" Then, jobs, structure, technology, and policy are redesigned around the answers
to these questions. A key part of reengineering is processes.Organizational processes are
activities or work that the organization must accomplish to create outputs that internal or
external customers value.
Reengineering has been stimulated in organizations where "creeping bureaucracy" has

become a problem and as a result of new advanced information technology that allows
organizations to radically modify important organizational processes.
Reengineering is oriented toward one or both of the following goals:
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 The number of mediating steps in a process is reduced, making the process more
efficient.
 Collaboration among the people involved in the process is enhanced.
Reengineering can include the following practices:
 Jobs are redesigned, and usually enriched.

 A strong emphasis is placed on teamwork.
 Work is performed by the most logical people.
 Unnecessary checks and balances are removed.
 Advanced technology is exploited.
Reengineering is most extensive in industries where (1) much creeping bureaucracy has set
in, (2) large gains were available with advanced technology, and (3) deregulation increased
the heat of competition. Because reengineering has the goal of radical change, it requires
strong CEO support and transformational leadership qualities. Strategic clarification is also
important before reengineering begins. Strong CEO support and a clear strategy are
important for overcoming resistance. Recent research shows that reengineering must be
both broad and deep to have long-lasting, bottom-line results.
V. Does Organizational Development Work?
Although most OD efforts are not carefully evaluated, two large-scale reviews of a wide
variety of OD techniques reached the following conclusions:
 Most OD techniques have a positive impact on productivity, job satisfaction, or other

work attitudes.
 OD seems to work better for supervisors or managers than for blue-collar workers.
 Changes that use more than one technique seem to have more impact.
 There are great differences across sites in the success of OD interventions.
In addition, TQM and reengineering programs are most likely to be successful when they
are accompanied by a change in organizational culture. In general, a high percentage of
studies have reported positive changes following an OD effort. However, many studies also
reported no change. This underlines the difficulty of introducing change, and it also
suggests that variations in how organizations actually implement change may greatly
determine its success. Weak methodology sometimes plagues research evaluations on the
success of OD interventions as well as the following specific problems:
 OD efforts involve a complex series of changes.

 Novelty effects or special treatment might produce short-term gains that do not
persist.
 Self-reports of changes after OD might be attempts to please the change agent.
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 Organizations may be reluctant to publicize failures. For these reasons and others,
OD continues to be characterized by both problems and promise.
VI. The Innovation Process
The innovation process can help us to understand the ability of some individuals and
organizations to think up and exploit innovative ideas.
A. What Is Innovation?
Innovation is the process of developing and implementing new ideas in an organization.

Innovations can be classified as product (including service) innovations or process
innovations. Product innovations have a direct impact on the cost, quality, style, or
availability of a product or service. Process innovations are new ways of designing products,
making products, or delivering services. New technology is a process innovation as are new
forms of management and work organization.
Innovation is often conceived of as a stage-like process that begins with idea generation and
proceeds to idea implementation. For some kinds of innovations, it is also hoped that the
implemented innovation will diffuse to other sites or locations:
IDEA GENERATION --> IDEA IMPLEMENTATION --> IDEA DIFFUSION
The conditions necessary to create new ideas might be very different from the conditions
necessary to get these ideas implemented and the innovation process is frequently highly
political. Both the champions of innovation and the resisters might behave politically to
secure or hold onto critical organizational resources.
B. Generating and Implementing Innovative Ideas vInnovation requires creative ideas,

someone to fight for these ideas, good communication, and the proper application of
resources and rewards. Individual Creativity. Creative thinking is at the core of the
innovation process.
Creativity involves the production of novel but potentially useful ideas. Creative people
tend to have an excellent technical understanding of their domain. What sets the creative
people apart are additional creativity-relevant skills such as the ability to tolerate ambiguity,
withhold early judgment, see things in new ways, and be open to new and diverse
experiences. Creative people are not necessarily lacking in social skills, but do tend to be
lower than average in their need for social approval.
Many creativity-related skills can actually be improved by training people to think in

divergent ways and withhold early evaluation of ideas. Methods such as electronic
brainstorming, nominal group, and Delphi techniques can be used to hone creative skills.
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Finally, people can be experts in their field and have creativity skills but still not be creative
if they lack intrinsic motivation for generating new ideas. As well, creativity itself is not very
susceptible to extrinsic rewards.
Idea Champions. Idea champions are people who recognize an innovative idea and help
guide it through to implementation. The role of idea champion is often an informal or
emergent role, and "guiding" the idea might involve talking it up to peers, selling it to
management, garnering resources for its development, or protecting it from political attack
by guardians of the status quo. Project champions have been found to exhibit more risk-
taking and innovative behaviours than nonchampions. They also exhibited signs of
transformational leadership to get people to see the potential of the innovation as well as a
wide variety of influence tactics.
Communication. Effective communication with the external environment and within the
organization are vital for successful innovation. The most innovative firms seem to be those
that are best at recognizing the relevance of new, external information, importing and
assimilating this information, and then applying it. Gatekeepers are people who span
organizational boundaries to import new information, translate it for local use, and
disseminate it.
In terms of internal communication, it is generally true that organic structures facilitate

innovation. Decentralization, informality, and a lack of bureaucracy all foster the exchange
of information that innovation requires. In general, internal communication can be
stimulated with in-house training, cross-functional transfers, and varied job assignments.
Although organic structures seem best in the idea generation and design phases of
innovation, more mechanistic structures might sometimes be better for actually
implementing innovations.
Resources and Rewards. Abundant resources greatly enhance the chances of successful
innovation. Both money and time are important resources for innovation. Reward systems
much match the culture that is seeded by the resource system. One study found that
freedom and autonomy were the most cited organizational factors leading to creativity.
B. Diffusing Innovative Ideas
When innovative efforts are judged successful, it seems logical to extend them to other
parts of the organization. Diffusion is the process by which innovations move through an
organization. However, a number of factors or barriers can prevent successful diffusion:
 Lack of support and commitment from top management.

 Significant differences between the technology or setting of the pilot project and
those of other units in the organization.
P115
 Attempts to diffuse particular techniques rather than goals that could be tailored to
other situations.
 Management reward systems that concentrate on traditional performance measures
and ignore success at implementing innovation.
 Union resistance.
 Fears that pilot projects begun in non-unionized locations could not be implemented
in unionized portions of the firm.
 Conflict between the pilot project and the bureaucratic structures in the rest of the
firm.
A number of factors have been found to be critical determinants of the rate of diffusion:
 Relative advantage. Diffusion is more likely when the new idea is perceived as truly
better than the one it replaces.
 Compatibility. Diffusion is easier when the innovation is compatible with the values,
beliefs, needs, and current practices of potential new adopters.
 Complexity. Complex innovations that are fairly difficult to comprehend and use are
less likely to diffuse.
 Trialability. If an innovation can be given a limited trial run, its chances of diffusion
will be improved.
 Observability. When the consequences of an innovation are more visible, diffusion
will be more likely to occur.
These determinants suggest that there is considerable advantage in thinking about how
innovations are "packaged" and "sold" so to increase their chances of widespread adoption.
They also suggest the value of finding strong champions to sponsor the innovation at the
new site.
P116
Glossary
Change:
The implementation of a program or plan to move the organization and/or its members to a
more satisfactory state.
Change agents:
Experts in the application of behavioural science knowledge to organizational diagnosis and
change.
Creativity:
The production of novel but potentially useful ideas.
Diagnosis:
The systematic collection of information relevant to impending organizational change.
Diffusion:
The process by which innovations move through an organization.
Gatekeepers:
People who span organizational boundaries to import new information, translate it for local
use, and disseminate it.
Idea champions:
People who recognize an innovative idea and guide it to implementation.
Innovation:
The process of developing and implementing new ideas in an organization.
Learning organization:
An organization that has systems and processes for creating, acquiring, and transferring
knowledge in order to modify and change its behaviour to reflect new knowledge and
insights.
Organizational development (OD):

A planned, ongoing effort to change organizations to be more effective and more human.
Organizational learning:
The process through which an organization acquires, develops, and transfers knowledge
throughout the organization.
P117
Organizational processes:
Activities or work that have to be accomplished to create outputs that internal or external
customers value.
Reengineering:
The radical redesign of organizational processes to achieve major improvements in factors
such as time, cost, quality, or service.
Refreezing:
The condition that exists when newly developed behaviours, attitudes, or structures
become an enduring part of the organization.
Resistance:
Overt or covert failure by organizational members to support a change effort.
Survey feedback:
The collection of data from organizational members and the provision of feedback about
the results.
Team building:
An effort to increase the effectiveness of work teams by improving interpersonal processes,
goal clarification, and role clarification.
Total quality management (TQM):

A systematic attempt to achieve continuous improvement in the quality of an organization's
products and/or services.
Unfreezing:
The recognition that some current state of affairs is unsatisfactory.
P118

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Organizational Behavior: University of Hargeisa College of Business and Public Administration

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UNIVERSITY OF HARGEISA

College of Business and Public Administration

Compiled by: Mohamed Ahmed Sulub

After reading Chapter 1, you should be able to:

1. Define organizations and describe their basic characteristics.

I. What Are Organizations?

II. What Is Organizational Behaviour?

Organizational behaviour refers to the attitudes and behaviours of individuals and groups

III. Why Study Organizational Behaviour?

A. Organizational Behaviour is Interesting

C. Organizational Behaviour Makes a Difference

IV. How Much Do You Know about Organizational Behaviour?

V. Goals of the Field

A. Predicting Organizational Behaviour

Another goal of organizational behaviour is explanation of events in organizations – why do

C. Managing Organizational Behaviour

Management is defined as the art of getting things accomplished in organizations through

VI. Early Prescriptions Concerning Management

A. The Classical View and Bureaucracy

B. The Human Relations Movement and a Critique of Bureaucracy

The Hawthorne studies involved research conducted at the Hawthorne plant of Western

VIII. What Do Managers Do?

IX. Some Contemporary Management Concerns

A. Diversity — Local and Global

Downsizing, restructuring, and reengineering have had a profound effect on organizations

C. A Focus on Quality, Speed, and Flexibility

D. Employee Recruitment and Retention

Human relations movement:

After reading Chapter 2, you should be able to:

1. Define personality and discuss its general role in influencing organizational

II. Personality and Organizational Behaviour

A. The Five-Factor Model of Personality

 Extraversion. Sociable, talkative vs. withdrawn, shy.

Locus of control influences organizational behaviour in a variety of occupations. Internals

E. Recent Developments in Personality and Organizational Behaviour

Proactive personality is a stable disposition that reflects a tendency to behave proactively

Core self-evaluations refer to a broad personality concept that consists of more specific

III. What is Learning?

Learning occurs when practice or experience leads to a relatively permanent change in

IV. Operant Learning Theory

V. Increasing the Probability of Behaviour

Positive reinforcement increases or maintains the probability of some behaviour by the

Negative reinforcement increases or maintains the probability of some behaviour by the

C. Organizational Errors Involving Reinforcement

 Neglecting Diversity in Preferences for Reinforcers.

 Neglecting Important Sources of Reinforcement.

VI. Reducing the Probability of Behaviour

At times, we might wish to eliminate behaviours considered to be undesirable. Two

Extinction involves the gradual dissipation of behaviour following the termination of

Punishment involves following an unwanted behaviour with some unpleasant, aversive

C. Using Punishment Effectively

 Make sure the chosen punishment is truly aversive.

Punishment can be an effective means of stopping undesirable behaviour when it is applied

VII. Social Learning Theory

Self-efficacy refers to beliefs people have about their ability to successfully perform a

VIII. Organizational Learning Practices

Organizations employ a number of practices to enhance employee learning. These practices

A. Organizational Behaviour Modification

Organizational behaviour modification (O.B. Mod.) involves the systematic use of learning