;.~, ' .

..•..

LEARNING OBJECTIVES

After reading this chapter, you sho uld be able to do the fol lowing:

II Define organizational behavior. D Understand th e diversity of organizations in

S Identity four action steps for responding -
positively in times of change.
mIde ntity t he importa nt syste m compone nts
of an organization.
,mDescribe t he formal a nd in fo rmal elements
of an organiza[io n.
the eco no my, as exempl ifi ed by the six focus
organizations.
I!!il Recognize the opportun ities that change
creates for organizational behavior.
Ell Demonstrate the valu e of objective
knowledge and ski ll deve lopment in the
study of o rganizational behavior .

2 PART 1 INTRODUCTION

-.
THDNB{GN G AJ-ll EAIT}: CARMAX

Changing the Used-Car Business .

.
T here a re a vari ety of preconceptio ns and stereotypes about <!l ~
>
the used-car busin ess in modem Ame rican mythology. Jokes ~
~
about used-car salesmen have been kicked aro und for decades.

CarMax decided to entcr a nd change the used-car busi ness.

The way car buyin9 ~ be. · I
Man}' of the in d ustry's analysts were skeptical about the abi ll ry of the new kid on the block in the

early 19905. By the la te 2000s, CarMax had in fact made a pos itive impact, one chat AuwNarion

atte mpted to rep li ca te an d fa iled, exirin .:; t he used-car busi ness in 1999. Ca rMax has succeeded

through its own un iq ue fo rmu la rather than through intcnsel)' competitive , cutthroat tacrics. They a re

,
winn ing rh e gam e in rhe used·ca l- industry and they are winni ng it the CarMax way, their- way.l
.
Th e CarMax way is to emphasize ethical business deali ngs, no- haggle pricing, and customer ser-

vice. These a re th e three p illars o f t he co m pa ny's success. Wh il e most used-car dea lers tcll you th a t

t hey do not put fra me or structurall y damaged cars on their lots. a nd most repu table dealers in fact

do not, CarMax goes t he extra m il e in showi ng rhat it does nOt do so. Integrit}, is at the co re of the

C HAPT E R 1 ORGANIZATI ONAL BEHAV I OR AND OPPORTUNITY 3


iii Define organizotionof behavior.
opportunities
Favorable rimes or cha nces for
progress and advancement.
change
Th e transformation or
modification of an orga nization
and/ or its stakeholders.
challenge
The call to competition, contest,
or battle.
organizational behavior
The study of individ ual behavior
and gro up dyn am ics in
orga nizations .
company's ethical business practices. In add ition to good used cars, CarMax does not engage in
high pressure pricing or haggling. They are upfront abo ut the pricing and exp lain to customers
what is goi ng to happen at every step alo ng the path to owning that used car. The low.keyed
sales approach was viewed very skeptically in the early years yet the company has done very well,
with over 100 used·car superstores in their system by 2010. Th e low· key approach does not
mean low profitability. CarMax averages $1,878 in gross profit on each used car, compared with
$1 ,700 in g ro ss profit for new car dealerships that se ll used cars.
Customers are not going to pay extra for no re ason; they are not stupid. The third leg in
CarMax's three· pronged approach is[Q emp hasize custome r service. Customers wa lk into on e of
the company's superstores and most of them walk away very satisfied with the experience. They
do not feel that the sales people are atte mp ting to extract money from them. Along w ith the
integri ty of ethical business practices is the focus on the customer and the customer's needs. A
satisfied custo mer is ohen a repeat custo mer over the long term. After more than a decade o f
success , however, Cal'Max faced a real challenge to its business model du ring the sharp 200 8-
2009 economi c downturn. Wo ul d the company's three·way approach be enough to meet the
challenges brought about by a weake ning economy and slowing auto sales?
HUMAN BEHAViOR IN ORGANIZATIONS
Human behavior in organizarions is complex and ofren difficulr ro undersrand.
Organizarions have been described as clockworks in which human behavior is logi-
ca l and rational, but they ofren seem like snake pirs ro rhose who work in them.'
The clockwork metaphor reflecrs an orderly, idealized view of organizarional behav-
ior devoid of confl icr or dilemma beca use all rhe worki ng parrs (rhe people) mesh
smoorhly. The snake pir-meraphor conveys rhe daily conflict, stress, and srruggle
in organizarions. Each meraphor reflecrs reality from a different perspecrive-the
organization 'S versus the individual' s point of view. These metaphors reflect the
complexity of human behavior, the dark side of w hich is seen in cases of air rage
and workplace violence. On rhe posirive side, rhe Gallup Organizarion's Marcus
Buckingham suggesrs rhar people's psychological makeup is at rhe heart of rhe
emotional eco nomy .J
This chapter is an inrroduction to organizational behavior. The first sectio n pro-
vides an overview of human behavior in organizations, its interdisciplinary origins,
and behavior in times of change. The second section presents an organizational con-
texr within which behavior occurs and briefly introduces the six focli s companies
used selectively in the book. The third section highlights the oppo1'tunities thar exist
in rimes ' of change and cha.lIenge for people ar work. 4 The fourth section addresses
rhe ways people learn abour organizarional behavior and expla ins how rhe rext's
pedagogical features relate to the various ways of learning. The final section of the
chapter presents rhe plan for rhe book.
Organizational behavior is individual behavior and group dynamics in orga-
nizarions. The study of organizarional behavior is primarily concerned w ith the
psychosocial, interpersonal, and behavioral dynam ics in organization s. However,
PART 1 INTRODU C T I ON
 organizational variables that affect human behavior at work are also relevant to
the study of organizational behavior. These organizationa l variables include jobs,
tbe design of work, com munication, performance appraisal, o rga nizational design,
and organ izational structure. Therefore, although individual behavior and g roup
dynamics are the primary concerns in the study of organizational behavior, organi-
za tiona l variables a're also important.
This section briefl y contrasts two perspectives for und ersta nding human behav-
ior, the external and th e internal perspectives. The section then discusses six scien-
tific disciplines from which the study of organizational behavior has emerged and
concludes with a discussion of behavior in times of change.

Unde rst anding Huma n Be havior

The vast majority of theories and models of human behaviot fall inro o ne of twO
basic categories. One category has an internal perspective, a nd the other has an
external perspective. The internal perspective considers factors inside the person
ro und ersta nd behavior. This view is psychodynamically oriented. People who sub-
scribe ro th is view understand human behaviot in terms of the thoughts, feelings,
past experiences, and needs of the individual. The internal perspective expJains peo-
ple's actions and behavior in terms of their history and personal value systems. The
internal processes of thinking, feeling, perceiving, and jud ging lead people to act in
specifi c ways. The internal perspective has given rise to a w ide range of motivationa l
and leadership theoties. Thi s petspective implies that people ate best undersrood
from the inside and that theit behavior is best interpreted afrer und erstand ing theit
thoughts and feelings.
The other category of theories and models of human behavior takes an external
perspective. This perspective focuses on factors outside the person to understand
behavior. People who subscribe to th is view understand human behavio r in terms
of external events, consequences of behavior, a nd the environmental forces to which
a person is subject. From the external perspective, a person's history, feelings,
thoughts, and personal va lue systems are not very impo rrant in interpreting actio ns
and behavior. This perspective has given rise to an alternative set of motivational
and leadership theories, which are covered in Chapters 5 and 12 of th e text. The
external perspective implies that a person's behaviot is best undersrood byexamin-
ing the surrounding external events and envirownental forces.
The internal and external perspectives offer alternative explanations for human
behavior. For example, the internal perspective might say Mary is an outstand ing
emp loyee because she has a high need for achievement, whereas th e external per-
spective might say Mary is an outstand ing employee because she is paid exttemel y
well for her work. Kurt Lewin captured both perspectives in saying that behavior is
a funct ion of both the person and the environment. s

Interd isciplinary Influe nces

Organizational behavior is a blended discipline that has grown out of contribu -
tions from numerous earlier fields of srudy, only one of which is the psychological
discipline ftom which Kurt Lewin came. These i"terdisciplinary influences ate the
roots for what is increasingly recognized as the independent discipline of organiza-
tional behavior. The sciences of psychology, sociology, engineering, anthropology,
m anagement, and medicine have each contributed to our und erstanding of human
behavior in o rganizati ons . psycho logy
Psychology is the science of human behavior and dates back to the closing decades The science of human behavior.
of the nineteenth century. Psychology traces its o\·vn origins to ph ilosophy and the

C H APTE R 1 ORGANIZATIONAL BEHAVIOR AND OPPORTUNITY


suciology
The sCience of soclery.
engineering
The applied science of energy and
matter.
anthropology
The science of the learned
behavior of human beings .
management
Tne study of overseeing activities
and supervismg people in
organ izations.
medicine
The applied science of healing
or treatment of diseases to
enhance an individual's health
and well-being.
'.
science of physiology. One of the mOSt prominent early psychologists, William James,
actually held a degree in medicine (M,D, ), Since its origin, psychology has itself
become differentiated into a number of specialized fields, such as clinical, experi-
mental, military, organizational, and social psychology. Organizational psychology
includes the study of man y topics, such as work motivation, which are also covered
by organizational behavior' Earll' psychological research for the American military
during World War I had later implications for sophisticated personnel selection
methods used by corporations such as Johnson & Johnson, Valero Energy, and Texas
Instruments. 7
Sociology, the science of society, has made important contributions to knowl-
edge about group and intergroup dynamics in the study of organizational behavior.
Because sociology rakes societ y rather than the individual as its point of departure,
the sociologist is concerned with the variety of roles within a society or culture, the
norms and sta ndards of behavior in groups, and the conseq uences of compliant
and deviant behavior. For exa mple, the concept of role set, a key contribution to
role theory in 1957 by Robert Merton, was used by a team of Harvard educarors
to study the school superintendent role in Massachuserrs. &More recently, the role
ser concept has been used ro study rhe effecrs of codes of erh ics in organizarions. q
Engineering is the applied science of energy and matter. Engineering has made
important contributions ro our understanding of the design of work. By taking basic
engineering ideas and app lying them ro human behavior ar work, Frederick Taylor
had a profound influence on the early years of the Study of organizational behav-
iOr,1O Taylor'S engineering background led him to place special emphasis on human
productivity and efficiency in work behavior. His notions of perfo rman ce standards
and differenria l piece-rate systems have had lasting impact. Tay lor's original ideas
are embedded in organizational goal-setting programs, such as those at Black &
Decker, IBM, and \\7eyerhaeuser. 1l
Anthropo!og)'. the science of human learned behavior, is especially important to
underStanding organiza tional culture. Cultural anthropology focuses on the origins
of culture and the patterns of behavior as culture is communicated symbol ica ll y.
Research in this tradition has examined the effects of efficient cultures o n organiza-
tion performance" a nd how pathological personalities may lead ro dysfunctional
organizational cultures, IJ Schwartz used a psychodynamic, anthropological mode of
inquiry in exploring corporate decal' at General Morors and NASA,"
Management, origi,oa ll y ca ll ed administrative science, is a discipline concerned
wirh rhe study of overseeing acriviries and supervising people in organizarions. lr
emphasizes the design, implementarion, and management of various administrative
and organizatio nal systems. March and Simon take the human organization as their
point of deparrure and co ncern themselves with the ad minisrrative practices thar
will enhance the effectiveness of the system . lS Management is the first discipline to
take the modern corporation as the unit of analysis, and this viewpoi nt distinguishes
the discipline's contribution to the study of organi za tional behavior.
N1edicine is rhe applied science of healing or trearment of diseases to enhance
an indi vidu al's hea lth and well-being, Medicine has long-sta nding concern for both
physical a nd psychological health, as well as for industrial mental health" More
recently, as the war against acute diseases is being won, medical attention has
shifted [Q more chro nic piseases, such as hyperrensioll, and to occupational health
an d well-being." Individual behavior and lifeStyle patterns play important roles in
trearing chronic diseasesY; These trends have conrributed to th e growth of corpo-
rate well ness programs, such as Johnson & Johnson's "Live for Life Program." The
su rge in health care costs over the past twO decades has contributed to increased
orga nizational concern with medicine and health care in the workplace,l '
PART 1 INTRODU CTION
 Behavior in Times of Change
Early research \\lith individ uals, groups, and organizations in the m idst o f enviro n- a Identify four action Steps for
mental change fo und that change is often experienced as a threat that leads to a responding positively in times of
reliance on well-learn ed and dominant forms of behavior.20 That is, in the midst change.
of cha nge, people often become ri gid and reactive, ra ther than open a nd respon-
sive. This may be useful if the cha nge is neither dramatic nor rapid beca use we are
often effective at coping with incremental change. Howeve r, if significant change
occurs, then rigid and well-learned behavior may be co unterproductive. Leaders
ma y interpret these responses as resistance to change. Strong leaders recognize these
behaviors as an opportunity to learn from their criti cs, to understand th e rigid-
ity and resistance, and to facilitate pos iti ve pathwa.ys through the change. 2 1 The
pracrice of o u tsourci ng is a sig nifica nt change in American in dustry that has been
facilitated by dramatic advances in the In ternet and nerwo rking technolog y." Big
changes disrupt people's habitual behavior and require learni ng if th ey are to be
managed successfull y. Eric Brown, ProLine Internationa l's VI' of G lo bal Busi ness
Devel opmen t, offers some sage words of advice ro see the opportunity in change .23
H e recommends adapting to change by seeing it as positive and seeing challenge
as good rather than bad. His action sreps for doin g thi s are to (1) ha ve a posirive
attirude, (2 ) ask q uesti ons, (3) listen to the answers, and (4 ) be committed to suc-
cess . We see in the accompanying Science feature how important a positive attitude
toward change is.
Howeve r, success is never guaranteed, and change sometimes resu lts in fa ilure. If
this ha ppens, do nor des pair. Some of th e world 's greatesr lea ders, such as Winston

A Strong, Positive Attitude Toward Change

Th is research studied the dynamic and changing nature
of organizations. There are a number of va ri ab les ro un d
to be associated with orga nizational changes that serve
as mediators of outcomes of th e change process. Not
al l changes res ult in good outcomes a nd not al l cha nge
res ults in bad outcomes. What makes the difference?
This stud y examined three variables th at might affect
the att itudes of 258 police officers toward a change
aimed at restructuring its organizational design. The
three va ri a bles were loc us of control, growth need
strength, and interna l work motivation. Locus of con·
trol co ncerns one's personal beliefs abo ut how much
self·con tro l o ne has ve rsu s how much control is due
to chance or events in the environment. Growth need
strength assesses how much a person needs to experi -
ence wo rk as stim ulating and challenging. Internal wo rk
motivation assesses one's self· ini tiative and personal
drive. Th ese three va riables influence one's attitude
toward change, which may be positive, as in look-
ing forwa rd to change, or weak, as in not looking
forward to change. These a ll influence o rganizational
commitment following t he cha nge. The res ults found
t hat strong, positive atti tud es towa rd change led to
higher levels of organization a l commitment as we ll as
more suc cessful implementation of change in itiatives.
The practical implicatio ns of this study s uggest that
employees with strong. positive attitude toward change
work to ensure that a cha nge in itiative is successful. On
the other hand , employees with weak attitudes toward
change are likely to resist and potentially sabotage a
change initiative.
SOURCE: S. M. Elias, "Employee Commitment in Times of Change:
Assessing the Importance of Attitudes Toward Organizational
Change, " Jot/mal o{Managemenr 35 (2009 ): 37-55.

C HAPTER 1 O RGANI ZAT IONAL BEHAV I OR AND O PPORTUNITY

 Analyze Yo u r Pe r ceptio n s o f a Ch a nge
Everyone perceives change differently. Think of a change situation you a re currently experiencing. It can be any
business, school-related, or' per~onal experience t hat requires a sig nificant change in your attitude or behavior.
Rate you r fee lings about this . c hange using the following scales. For -j'n sca nce, i(you fee l the change is more of a
threat than an opportunity, you would circle 0, 2 , or 4 on the first scale.

1. Threat 0 2 4 6 8 1.0 Opportunity

2. Holding on to the past 0 2 4 6. 8 10 Reach ing for the future
3. fmmob ilized 0 2 4 6 8 10 Activated
4. Rigid 0 2 4 6 8 10 Versatile
5. A loss ·0 2 4 6 8 10 A gain
6. Victim of change 0 2 4 6 8 lO Agent of change
7. Reactive 0 2 4 6. 8 10 Proactive
8. Focused on the past 0 2 4 6 8 10 Focused on the -future
9. Separate from change 0 2 4 6 8 '10 · Involved with change
10. Confused 0 2 4 6 8 10 Clear
How positive a re your perceptions of this change?

SOURCE: H. Woodward a nd S. Buchholz, Aftershock: Helping People Through Corporate Change, 1 S. Copyright <0 1987 John Wiley & Sons, Inc.
Reprinted by permission of John Wiley & Sons, Inc.

Church ill, experienced dramatic fa ilure before achieving lasting success. The key to
their eventual success was their capaciry to learn from the failure and to respond
positively to the opportuniti es presented to them. One venture capitalist with whom
the authots have worked likes to ask those seek ing to build a business to tell him
about theif greatest fa ilure. What the venture capita list is looking for in the answer
is how the executive responded to the fai lure and what he or she learned from th e
experience. ~rh il e change ca rries with it the risk of fa ilure as we ll as th e o pportu-
nity for success, it is often ho\..., we behav e in the midst of change that determin es
which outCome results~ Success ca n come th rough t he accumulation of small wins
a nd through the use of m icrop rocesses, as has bee n found with middl e m anagers
engaged in in stituti onal dunge. N What are yo u r perceptions of ch ange? Complete
You 1.1 and assess your own behavior in t imes of change.

THE ORGA Ni ZATIONAL CONTE XT

IE! Identify the imponant system
components of an organization.
A co mp let e understa ndin g of organ izatio nal behavior req uires a n understanding of
botb.. human behavior a nd the orga nizatio n a l context where behavior is e nacted .
This section discusses th e organizati onal context. First, organizations are presented
as syste m s. Second, th e form a l a nd informal organizations are discussed. Finally, six
focus companies are p resented as contemporar y exa mpl es and drawn o n through our
the text.

Organizations as Open Systems

As with human behav ior, twO di ffere nt pe rspec tives offe r complementary explana-
t ions of o rga niza ti ons . Organizations are ope n systems of interact ing components,

PART 1 IN TRODUCTION
 which are people, tasks, technology, and structure. These internal components also
interact wjrh components in the organ ization's task environment. Organizations as
open systems have people, technology, structure, and purpose. which interact with
elements in the organ ization's environment.
What, exactly, is an organi zation? Today, the corporation is the dominant orga-
nizational form for much of the Western world, but other organizational forms have
dominated other times and societies. Some societies have been dominated by rel i-
gious organizations, such as the temple corporations of ancient Mesopotamia and
the churches in colonial America .2s Other societies have been dominated by military
organ izarions, such as the clans of the Scottish Highlands and rhe regiona l arm ies
of rhe People's Republic of Ch ina."·27 All of these societies are woven togerher by
family organizations, which themselves may vary from nuclear and extended fami-
lies to small, collective commun ities. 28•29 The purpose and structure of the religious,
military, and family organizational forms may vary, but people's behavior in these
organizations may be very similar. In fact, early discoveries abour power and lead-
ersh ip in work organizations were remarkabl y similar to findings about power and
leadership within families. "
Organizations may manufacture products, such as aircraft components or steel,
or deliver services, such as managi ng money or providing insurance protecti on .
To understand how organizations do these things requires an understanding of
the open system components of the organization and the componen ts of its task task
environment. An organization's mission ,
Katz, Kahn, and Leavitt set our open system frameworks for understanding purpose, or goal for existing.
organ izations.3 ! The four major internal components-task, people, technology,
peopl e
and structure-along w ith the organization 's inputs, outputs, and key elements in The human resources of the
the task environment, are depicted in Figure 1.1. The task of the organization is its organization.
mission, purpose, or goal for existing. The people are the human resources of the

FIGURE

1.1 An Open Systems View of 0'llanization

Task e nvironment:
Competitors
Unions
Regulatory agencies
Clients

////....
.... --- ------------ --- ------- ............ ~~
" ......
/ "-
/ "-
/
/ ''
I \
I \\
/ \
I \
Inputs : I \ Outputs:
Material - - --;.-11 rl - ---.- Products
Capital \ I Services
Human \ I
\ /
\ /
\ I
\
,, /
/
/

'...... //

"""............
............ _-- --///
~-

------------
- -- __ Organizational boundar)' _ - - - - -

SOURCE: Based on Harold l eaVitt, "Applied Organ1z,Hlonai Change In Industry: Strucwr:J,l, Technolog1cal, and Human1stlc Approaches, ~ In J. G. March , ed.,
Handbook o(Organizations (Ch icago: Rand McNally, 1965), 114 5. Reprinted by permiSSion of James G. March.

CHAPTER' ORGANIZATIONAL BEHAVIOR AND OPPORTUNITY


D Describe the fonnal
and info nnal elements of an
organization.
technology
The wols, knowledge, and/ or
techniques used to transform
inpurs into outputs.
str'ucture
The systems of communication,
authority and roles, and workflow.
fonnal or'ganization
The official, legitimate, and most
visible part of the system.
infor'mal o,..ganization
The unofficial and less visible part
of the system.
Hawthorne studies
Studies conducted during the
1920s and 1930s that discovered
the existence of the informal
organization.
"H'M
orgamzation. The technology is the wide range of tools, knowledge, and/or tech-
niques used to transform the inputs into Outputs. The structure is the systems of
communication, the systems of authority, and the systems of workf1ow.
In add ition to these major internal components, the organization as a system
also has an external task environment. The task environment is composed of dif-
ferent constituents, such as suppliers, customers, and federal regulators. Thompson
describes the task environment as that element of the environment related to the
organization'S degree of goal attainment; that is, it is composed of those elements
of the environment related to the organization'S basic task.32 There are a number of
organizations that are using or considering the use of Twitter as a way of nerwork-
ing elements of their task environments. 33 For example, NASA is using Twitter to
update interested parties on fhe status of upcoming space shuttle fl ights . Originally
a tool for persona l nerworking and sharing daily life events, Twitter has become a
powerful marketing and communication device for companies.
The organization system works by taking inputs, converting them into
throughputs, and delivering OUtputs to its task environment. Inputs consist of the
human, informational, material, and financial resou rces used by the organization.
Throughputs are the materials and resources as they are rransfotmed by the organi-
zation's technology component. Once the transformation is complete, they become
outputs for customers, consumers, and clients. The actions of suppliers, customers,
regulators, and other elements of the task environment affect the organization and
the behavior of people at work . For example, Onsire Engineering and Management
experienced a rhreat ro irs su rvival in rhe mid-1980s by being rotally dependent on
one large utility for its outputs. By broadening its client base and improving the
qual ity of its services (i.e., its outputs) over the next several years, Onsite became
a healthier, more successful small company. Transforming inputs into high-quality
outputS is critical to an organization'S success.
The Formal and informal Organization
The open systems' view of organization may lead one to see the design of an orga-
nization as a clockwork with a neat, precise, interrelated functioning. The formal
organization is the official, legitimate, and most visible part that enables people to
think of organizations in logical and rational wavs . The snake pit organizational
metaphor mentioned -earlier has its roots in the study and examination of the
in/ormal organization, \vhich is unofficial and less visible. The informal elements
were first fully appreciared as a result of the Hawthome studies, conducred dur-
ing the 1920s and 1930s. lr was during the interview study, the third of the four
Hawthorne studies, that the research ers began ro deve lop a deeper understanding
of the informal elements of the Hawthorne Works as al1 organizarion." The formal
and informal elements of the organization are depicted in Figure 1.2.
Potential conflict between the formal and informal organization makes an
understanding of both imporrant. Conflicts between these twO elements erup ted
in many organi::ations during the early yea rs of the twentieth century and were
embodied in the un ion-management strife of that era. The conflicts escalated into
violence in a number of cases. For example, during the 1920s, supervisors at the
Homestead Works of U.•. Steel were issued pisrols and boxes of ammunirion "jusr
in case" it became necessary to shoot unruly, dangerous steelworkers. Such poten-
tial formal-informal, management-labor confl ict does not characterize all organi-
zations. During the same era, Eastman Kodak was very progressive. The company
helped with financial backing for employees' neighborhood communities, such as
Meadowbrook in Rochester, New York. Kodak's concern for employees and atten-
rio'n to informal issues made unions unnecessary with in the company .
PART 1 INTROD UCT I ON
 F I GURE

,---
i

Social surface

The informal elements of the organization are frequent points of diagnostic and
intervention activities in organization development, though the formal elements must
always be considered as well beca use they provide the context for the informal. 3S
These informal elements are important because people's feelings, thoughts, and
aniwdes about their work do make a difference in their behavior and performance.
Individual behavior plays out in the context of the formal a nd informal elements
of the system, becoming organizational behavior. The uncovering of the informal
elements in an organization was one of the major discoveries of the Hawthorne
stud ies. The importance of employees' moods, emotions, and disposi tional affect is
being re-recognized as a key influence on critical organizational outcomes, such as
job performance, decision making, creativity, turnover, teamwork, negotiation, and
leadership."

Six Focus Organizations

Organizational behavior always occurs in the context of a specific organizational D Understand the diversity of
setti ng. Most attempts at explaining or predicting organizational behavior rel y o rganizations in the econom}"
heavily on factors within the organization and gi'l..e less weight to external environ- as exemplified by the six focus
mental considerations ..l 7 Students can benefit from being sensitive to the industr ial organizations.

Context of organizations and from deve;oping an appreciation for each organization

as a whole ..l B In this vein, six organizations each appear three times for a total of
eighteen Thinking Ahead and Looking Back features. CarMax is illustrated in this
chapter. We challenge you in each chapter to anticipate what is in the Looking Back
feature once you read Thinking Ahead.

CHAPTER 1 ORGANIZATIONAL BEHAVIOR AND OPPORTUNITY

 The U.S. economy is the largest in the world, with a gross domestic product
of more than $14.2 trillion in 2008. Figure 1.3 shows the major sectors of the
economy. The largest sectors are service (43 percent) and product manufacture of
nondurable goods (2 1 percent) and durable goods (7 percent). All together, the
manufacture of products and the delivery of services account for 71 percent of
the U.S. economy . Government and fixed investments account for the remaining
29 percent. Large and small organizations operate in each sector of the economy
shown in Figure 1.3.
The private sectors are an important parr of the economy. The n1anufacruring
sector includes the production of basic materials, such as secel, and the production
of finished products, such as automobiles and electronic equ ipment. The service
sector includes transportation, financ ial services, insurance, and retail sales. Th e
government sectors, which provide essential infrastructure, and nonprofit organiza -
tions are also important to our collective well-being because they meet needs not
addressed in these economic sectors. "'\X1e have chosen organizations that reflect a
broad cross section of business : CarMax, Facebook, No rdstrom, IKEA, Research in
Motion, and Deloitte.
Each of these six organizations makes an important and unique contribution to
the manufactuting or service sectors of the national economy andlor to our national
well-being. These organizations are not alone, however. Hundreds of other small,
medium, and large organizations are making valuable and significant contributions
to the economic health and human welfare of the United States. Brief examples
from many orga nizations are used throughout the book. We hope that by better
understanding these organizations, yo u may have a greater appreciation for your
own organization and o thers within the diverse world of ptivate business enterprises
and nonprofit organizations.

FIG u It E

1 .3 11."5. GrossDomesticProduct (Approximately $14.4Trillion for 2008)

Federal
Personal government
consumption- purchases
durable goods (7%)
(Il"/o)

Fixed

PART' INTRODUCTION
 CarM ax CarMax is a Fortune 500 company and is the largest retailer of used cars
in the United States . Founded in 1992 as a concept fo r revolutionizing the way
Americans buy cars, CarMa x opened its first store in 1993 wirh a fleer of 500 used
vehicles. The company recorded irs firsr annual profir in the year 2000 and, five
years lacer, was listed on Fortune magazine's "100 Best Companies to Work For "
list. CarMax has earned that distinction each year since debuting on the list in 2005,
advancing from number forty-six in 2008 to nwnber thirry-one in 2009.
CarMax prides itself on changing the perceprion of rhe used car-buying experi-
ence, from the ordinary to the extraordinary. From the moment car shoppers step
foor on rhe lot, rhey are mer with a sa lesperson rhat remains with them throughout
the ent ire process, from th e greeting to the financing. Customers don't haggle for pric-
ing. They don't bave ro haggle since the prices of vehicles are disclosed righr away.
CarMax goes out of its way to ensure customer confidence in the veh icles it sells by
inspecting, reconditioning, and backing them with limited warra nties. CarMax's goal
is to make rhe car-buying experience painless and fun. According to its CEO, Tom
Folliard, "CarMax was founded on the fundamental principle of integriry, reflected
in the way we serve our customers, treat each other and deliver our products." This
is evidenced by the company being only one of two North American companies to
receive the Better Business Burea u·s highest honor in recognition of ethical business
pracrices, rhe Internarional Torch Award fo r Marketplace Excellence.
CatMax is hcadquartered in Richmond, Virginia, and currently opera res 100
used-car superstores in 46 markers. The company reported ner sa les and opera ring
revenues of $6.97 billion and ner earn ings of $59 .2 mill ion in fiscal year 2009 -'9

Facebook Facebook is the second most-trafficked social networking Web site in

rhe world. The company was founded in February 2004 by Mark Zuckerberg and
his classmates from Harvard University, Chris Hughes, Dustin Moskovitz, and
Eduardo Saverin. Facebook was first launched in their dorm room and wa s avail-
able for only Harvard students. Throughout 2004, Facebook expanded its nerwork
to orher colleges and by the end of the year, the site had over 1 mill ion active users.
Now, anyone can join Facebook; the site has over 200 mill ion active users and is
availab le in 40 translations with 50 more in development.
Since inceprion, the company has developed numerous technologies to help the
sharing of information through one's social graph, the digiral mapping of user's
real-world social connections, and has made an,..enormous impact on th e way people
communicate all over the world. Facebook has
gone far beyond a communica tion rool for effi~
cienrl y inreracting with friends and families, and
is now, for example, a marketing tool, a means to
screen job ca ndidates, and a way to rally support
for political campaigns and policies. As a forum
for over 200 million users and with so many uses,
Facebook is navigating uncharted waters with
issues such as user privacy and allowable COntent
which they are addressing with innovative solu-
tions such as customer participation in decision
making. b

Facebook has over 850 employees and is

headquartered in Palo Alto, California, with its
internat ional headquarters in Dublin, lreland.
Addirionally, the compan y has offices in Atlanta,
Ch icago, Dallas, Detroit, New York, Venice Beach, Facebook.com worker Ginnie Chan, left, won(s at Faccbool, headquartcrs in Palo Alto,
Califomia.
London, and Paris ."

CHAPTER 1 ORGANIZATIONAL BEHAVIOR ANO OPPORTUNITY

 Nordstrom Nordstrom is a fashion specia lty chain with a focus on customer ser-
vice, generalis size ranges, and a selection of fine apparel, shoes, and accessories for
the whole family. The first Nordstrom store was opened as a shoe store in Searrle,
Washington, in 1901, under the name Wallin & Nordsrrom. John W. Nordstrom
and Carl Walli n founded this store on the principles of exceptional service, selec-
tion, quality, and value. In the late 1920s, boch Wallin and Nordstrom sold rheir
stake in the company to Nordstrom's sons, and members of the Nordstrom family
have been involved in the company ever since.
Nordsrrom also strives to be socia lly responsible. Every year, the company
. donates millions of dollars to nonprofits, it prints on Forest Stewardship Council
(FSC)-ccrrified paper wirh 30 percent recycled content, and in 2007, the com-
pany decided to pursue a more organized and comprehensive social responsibility
strategy focusing on four primary areas: Supponing Commun ities, Sustaining the
Environment, Protecting Human Rights, and Caring for OUf People.
Nordstrom has a long-standing philosophy for hiring personality and moriva-
tion and training the skills. When they find the righr employee, they treat them
well. They were one of the first companies to offer profit-sharing to employees. The
company also has generous 401K, and in 2008, Nordstrom was listed on Forttme
magazine's 2008 list of "100 Best Compa nies to Work For."
Today, Nordstrom is still headquartered in Seattle and is one of the nation 's
leading fashion specialty retailers with 177 U.S. stores in twenty-eight states."

IKEA IKEA was founded in 1943 by Ingvar Kamprad in Sweden . The name IKEA
came from the founders' inirials (I.K .) and Elmtaryd (E) and Agunnaryd (A), the
farm and village where he grew up. Kamprad starred by buying sma ll items such
as pens, wallets, and picrure frames in bulk and selling them by making individual
sales calls. H e sold the items for a profit but still at greatly reduced prices. He very
quickly outgrew his ability to make sa les calls and started a ma il -order business
using the local milk man to deliver products to the train station . In 1950s, Kamprad
discovered the cost-saving and transportation advantages of not fuJly assembling its
furniture. For the next fifty years, "flat-packs" have served IKEA well as the com-
pany has expanded throughout Europe, Asia, the Middle East, and North America
as well as developed a Web presence.
IKEA takes corpora te social responsibility seriousl y. Despite its low-coSt
model, IKEA does nO(.l:ut COStS at any price . They do not produce products with
hazardous materials, they do not use wood from devastated forests, child labor is
unacceptable, and suppliers musr have a responsible attitude toward the environ-
ment. IKEA coworkers are on-site monitoring suppliers, monitoring forests, and
discouraging child labor. Funhermore, IKEA supportS initiatives of organizations
such as UNICEF, Save the Children, and Ameri ca n Forests. Every new employee
at IKEA goes through environmental training and each Store has an environmental
coord inator who acrively works toward saving energy and educating employ-
ees and customers on reducing waste. For this focus on responsibility, in 2006,
IKEA received the Foreign Policy Association Award for Global Corpor2te Social
Responsibility.
!KEA has been recognized as a good place to work' as well. For four consecutive
years beginning in 2003~ IKEA was on Working Mother magazine's annual list of
the " 100 BeSt Companies for Working Mothers." IKEA was also on Training maga-
zine's a nn'~allist of tOP companies that excel at human capital development for five
consecutive years beginning in 2002. Additionally, lKEA was lisred on Fortune's
"100 Best Compdnies to Work For" in 2005, 2006, and 2007.

PART 1 INTRODUCTI ON
 Currently, there are more than 250 IKEA Stores in 34 counuies, including 29
in the United States, where IKEA p lans to open 3-5 stores a year. lKEA has abou t
128,000 employees in 39 countries and posted $21.2 billion in 2008 revenues"

Research In Motion (RIM) RIM was founded in 1984 by its President and co·
CEO Mike Lazaridis, who was joined by Jim Balsillie as co-CEO in 1992. What
began as a witeless email solution for enterprise clients has evolved into a multifac-
eted and robust wireless platform that suppOrtS a wide range of communications,
information, and entertainment applications for both businesses and consumers.
RIM is the maker of the hugely populat BlackBerry (a favorite amo ng many busi-
ness executi ves) and a host of other wireless solutio ns for the worldwide mobile
communications market.
The competition for the global converged device marketshare is heating up, and
RIM is on pace to be a major contender. It opened its BlackBerry App World in
April 2009 to compete directly for a piece of Apple's fast-growing iPhone business
and broaden irs appeal beyond irs well-established base in the corporate wo rld.
The BlackBerry boasted approximarely 3.9 million net new subscribers during
the fourth quarter of 2009, bringing its total subscriber base to approximately
25 million. By 2009, RIM had shipped over 50 million BlackBerry smartp hones
and had grown its revenues by an impressive 170,000 percent. Strengthened by irs
core values of teamwork and egal itarianism, RLM is confident that it will continue
to flourish and "stay in motion . l)

RIM is based in Waterloo, Ontario, Canada and has offices in North America,
Europe, and Asia -Pacific. The firm posted revenues of $11.07 billion for fiscal year
ended February 28, 2009. 43

Deloitte Deloitte is one of rhe world's largest accounting and professional service
delivery firms, providing aud it, tax, consulting, and financial advisory services to
some of the largest companies in more than twenty industries. It is currently num-
ber fo ur of the top fo ur auditing firms. Bur being number four of the "Big Four"
doesn't intimidate Delaine. Instead of selling off its consulting business as its major
competitors have done, Deloitte expanded that side of its offerings a nd is by far the
largest in terms of headcount, footprint of services, and global delivery.
Deloitte's origins can be traced from William Welch Deloitte's public accou n-
tancy apprenticeship in 1833 with London's B3ofolkruptcy Court to the merger of his
own accountancy office \vith George Touche's firm in 1990. This merger created
Deloitte & Touche. Today, the "Deloitte" brand encompasses a g lobal network of
70 firms in 142 countries operating under the name Deloitte Touche Tohmatsu. Sun
I'harma, Reliance, and Tata Morors are among Deloitte's biggest clients.
As an employer, Deloine has received pra ise for its cu lture of diversity and inclu-
sion, professional development, and workplace flexibility. In 2008, it was named
one of Workil1g Mother's "Best Companies for Multicultural Women" and marked
its fifteenth consecutive year on Workil1g Mother's "100 Best Companies" list.
Deloitte's emphasis on high-level recruiting, training programs, and attention to
employee benefits has made it a tOP choice for Generation Y workers starting their
professional careers.
Deloitte's leadership team includes its CEO James Quigley and U.S. CEO Barry
Salzberg. Sharon Allen is the U.S . Chairman of the Board and sits on Deloitte
Touche Tohmatsu's global board of direcrors. The firm is headquartered in New
York and had a tota l headcount of 44,375 employees in 2008, up nearly 3,400 in
2007. Deloitte reported $27.4 billion in rota l revenues in fiscal year 2008."

CHAPTER 1 ORGANIZATIONAL BEHAV I OR AND OPPORTUN ITY

 MccDolliald's Leal"lI1Is from Different Countries
American corporations typically launched in Sweden. France,
do things t he American way as o ne of the company's best-
they globalize and extend their performing and busiest coun-
reach into all parts of the world. t ri es, has the . Croque MeDa,
The process of standardization is I wh ich is ham and Swiss cheese
a uniquely American way of bus i- on toast. The Neth erl ands has
ness since the adventofthe Model
j- t he McKroket, which is a deep-
T by Henry Ford. McDo nald's ~~ fried patty of beef. South Korea
has shown that it does not have ~ has the Bulgogi Burger, which
to be that way. There was a time i is a pork patty marinated in
McDonald's has learned about countries a nd their unique
when McDonald 's was vilified taStes. Opernt ions around the world arc now able to invent soy-based sa uce. Taiwan has
for pushing America onto the t h eir own uni'lue products. ~ the Rice Burger, which is shred-
wo rld, large sectors of which ded beef between two rice pat-
resented being Americanized. McDonald's has turned ties. Because man y Indians do not eat beef, they have the
the tables and begun to learn about other countries Maharaja Mac, which is two chicken patties with smoke
and their unique tastes. McDonald's operations around flavored mayo. McDonald's current global success is
the world are now able to invent their own buns, bags, being achieved through accommodation, not through
and business practices. The approach has been a huge domination.
success for the co mpany, most of whose busi ness now
comes from global markets. Rather than a Big Mac, the SOURCE: P. Gumbel, "Big Mac's Local Flavor," Fortune 157(9 )
really successful Big Tasty was invented in Germany and (2008), 114-121.

CHANGE CREATES OPPORTUNITIES

lIm! Recognize the opportunities
that change c reates for
organizational behavior.
C hange creates opponunities a nd risks, as mentioned earlier in the chapter. Global
competition is a leading-force driving change at work a nd American compan ies can
learn from the competition. McDonald's did just that as we see in The Real World 1.1.
Competition in the United States and world economies has increaseci sign ificantly dur-
ing the past couple of decades, especia lly in industries such as banking, finance, and air
transportation. Corporate competition creares performance and cost pressures, which
have a ripple effect on people and their behavior a t work. While o ne risk for employ-
ees is [he marginalization of parr-time professionals, good management practice can
ensure the integtation of these part-time professionals." The competition mal' lead to
down sizing and restructuring, yet it p rovides the opponunity for revitalization as well."
Further, smalJ companies are not necessarily the losers in this competitive environment.
Scientech, a small power and ene rgy company, found it had to enha nce its managerial
talent a nd service quality to meet the challenges of growth and big-company competi-
tors. Product a nd se rvice qua li ty is one tool that can help compa nies become w inners
in a competitive environment. Problem-solving skills ate another tool used by IBM,
Control Data Setvices, 11>c., Northwest Airlines, and Southwest Airl ines to help achieve
high-quality products and services.
Too m uch change leads to chaos; too little change leads to stagnation. Some
companies lead the way in creating change and transforming industries, as CarMax
did in th e used-car ind ustry over the past two decades . Winn ing in a competitive

·PM PART 1 IN TROOUCT I ON

 industry can be a transient victory howeverj continuous change is required to stay
ahead of the competition . One way that CarMax stayed ahead of the competiti o n
was through its ethical business practices as we saw in Thinking Ahead. CarMax
has been a game changer in their industry.

Three Challenges for Managers Reiated to Change

Chapter 2 develops three challenges for managers related to cha nge in contemporary
organizati ons: global ization, workforce diversity, and ethics. These are three dri ving
torces creating and shaping changes at work. Further, success in global competi-
tion requires organizations to be mo re res ponsive to ethn ic, religious, and gender
diversity as well as persona l integrity in the workfo rce, in addition to responding
positivel y ro the competition in the international marketplace. Workforce demo-
graphic change and diversity are critical cha llenges in themselves for the stud y a nd
management of organ izational behav ior. 47 Th e theories of motivation, lead ership,
a nd gro up behavior based on resea rch in a workforce of one composition may
not be appl icable in a workforce of a very differenccomposition." This may be
especially problematic if ethnic, gender, and/or religious differences lead to conflict
berween leaders and followers in organizations. For example, the Russian military
establishment found ethnic and religious conflicts between th e officers and en li sted
corps a serious imped iment to unit cohes ion and performance.

Global Competition in Business

Managers and executives in the United States face radical change in response to
increased globa l competition. According to noted economist Lester Thurow, this
competition is characterized by intense rivalry between the United States, Japan,
and Europe in core industries. 49 Econom ic competition places pressure on all cat-
egories of employees to be producti ve and to add va lue to the firm. The uncertainty
of unemployment resulting from corporate warfare and competition is an ongoing
feature of organizational life for people in compani es or industries that pursue cost-
cutting strategies to achieve economic success. The global competition in the auto-
motive industry among the Japanese, U.S., and European car compan ies embodies
the intensity that can be expected in other industri es in the future.
Some people feel that the furure must be the-focus in coming to grips with this
international competiti o n; others believe we can deal with the future o nl y by study-
ing the pasr. 50 Global, economic, and organ izational changes have dramatic effects
o n the stud y and management of o rgani zatio nal behavior. For exa mple, American
college students are fou nd to have a much more positive atti tu de abour globalization
than the general public and older generations. 51 How positive were your perceptions
of the change you analyzed in You 1.1? Are you an optimist who sees opportunity
or a pessimist who sees threat?

Customer Focused for High Qua'ity

Global co mpetition has challenged organizations to become more customer focused,
to meet changing product and service dema nds, alfld to exceed customers' expecta-
tions of high quality. Quality has the potential for giv ing o rga nizat ions in viable
ind ustries a competitive edge in meeting internati onal competition . In Thinking
Ahead, we saw tha t CarMax has a strong customer focu s.
Q uality became a rubric for products a nd services of high starus. T otal qual-
ity is defined in many wa ys." Toral qua li ry manage menr (TQM ) is the complere
dedication to co ntinu o us impro vement and to customers so that their needs ate

C H APTER 1 ORGANIZATIONAL BEHA VIOR A ND OPPORTUN ITY

 met and their ex pectations exceeded . Quality is a customer-oriented philosophy
of managemen t with important implications for virtually all aspects of organiza-
tional behavior. Q uali ty cannOt be optim ized, because customer needs and expec-
tations are always changing. It- is a cultural value embedded in highly successful
organizations. Ford Moror Company's dramat ic metamorphosis as an automotive
leader is artributable to the decision to "make qual ity Job One" in all aspects of
the design and manufacture of cars. W hi le TQM management consulting went
through a boom-tO-bust cycle, its sol id technical foundation means that it is here
to stay.53
QuaLty improvement enhances the probabil ity of organiza tional success in increas-
ingly competitive ind usuies. One study of 193 general med ical hospitals examined
seven TQM practices and found them positively related to the financial performance
of the hospitak 54 Qualiey improvement is an enduring feature of an organization's
culture and of the economic competition we face today. It leads to competitive advan-
tage through custOmer responsiveness, results acceleration, and resource effective-
ness" T he three key questions in eva luating quality improvement ideas for people at
work are as follows: (1) Does the idea improve custOmer response? (2) Does the idea
accelerate results? (3) Does the idea increase the effectiveness of resources? A "yes"
answer means the idea shou ld be implemented to improve quality.
Six Sigma is a philosophy for company-wide quality improvement developed
by MotOro la and popu larized by General Electric. The Six Sigma program is
characterized by its customer-driven approach, its emphasis on decision making
based on quanritative data, and its priority on saving money .56 It has evolved
into a high-performance system to execute business strategy, Part of its quality
program is a 12-srep problem-solving method specifica ll y designed to lea d a Six
Sigma "Black Belt" to significant improvement with in a defined process. It tackl es
problems in four p hases : (1) measure, (2) analyze, (3 ) improve, and (4) control. In
addition, it demands that executives be aligned to the right objective and 'targets,
quality improvement teams be mobil ized for action, results be accelerated, and
sustained improvement be monitored. Six Sigma is set up in a way that it can be
applied to a range of problems and areas, from manufacturing settings to service
work environments. Table 1. 1 contrasts Six Sigma and TQM. One study com-
pared Six Sigma with two other methods for qua li ty improvement (s pecifically,
Taguchi 's methods and the Shainin system) an d found it to be the most complete
strategy of the three ~w ith a stro ng emphasis on exploiting statistical modeling
techniques.57

TAB l E

' -;J .•1 J:"Ontr:a:stin~5ix5!gma"'ndTDtal QlJalityiMan"ogement .1

Six Sigma Total Quality Ma nage m e nt

Executive ownership Self-d irected work teams

Business strategy execution system Quality initiative

Tru ly cross-fu nctional ,. Largely with in a single function

Six Sigm a
A high· performance system to Focused training with veri fiable No mass train ing in statistics a nd quality
execute business strategy that
Return on investment Return on investment
is customer driven, emphasizes
quantitative decision making, and Bus iness resu lts orie nted Quali ty oriented
places a priority on saving money.
SOURCE: M. Barney, "Motorola's Second Generation," Sile Sigma FOfllm Magazine (May 2002): 13.

PART 1 INTRODUCTION
 Behavior and Quality at Work
Whereas rota I quality may draw on reliability engineering or just-in-ti me manage-
ment, rotal qualiry improvement can be successful only when em pl oyees have the
skills and autho rity ro respond to customer needs." Total qua lity has direct and
important effects on the behavior of employees at all levels in the orga ni zation, nor
just on employees working direedy w ith customers. Chief executi ves can advance
total quality by engaging in participative management, being w ill ing ro change
everyth ing, focusing quality efforts on cusromer serv ice (not cost cutting), including
quality as a criterion in rewa rd systems, improving the flow of information regard-
ing qua li ty improvement successes or fa ilures, and being active ly and personally
involved in qualit)1 efforts. Wh ile serv ing as chairman of Motorola, George Fisher
e J11pJ~asized the behavioral attributes of leadership, cooperati on, commun ication,
and participation as imporrant elemen ts in the com pan y's Six Sigma program.
Quality improvement con tinu es to be impo rtant to O Uf competiti veness. The
U.S. Department of Commerce's sponsorship of an a nnual award in the name of
Malcolm Ba ldrige, former secretary of commerce iD the Reagan administration,
recognizes companies excelling in quality improvement and management. The
Malcolm Baldrige Nationa l Quality Award examina tion eval uates an organiza tion
in seven categories: leadership, information and analys is, strategic quality pla nn ing,
human reSOurce uti liza tio n! quality assurance of prod ucts and services, qua li ty
results, and cuSto mer satisfaction.
Accord ing to former Presiden t Geo rge H . W . Bush, quality manage ment is not
JUSt a strategy. It must be a new style of wo rking, even a new style of thinking. A
dedication to quality and exce ll ence is more than good business. It is a way of life,
giving something back to society, offering yo ur best to others .
Q uality is one watchword for competitive success. Many factors can affect ser-
vice qua li ty, and o ne study in th e airline industry fou nd that multimarket contact
led to dela ys in o n-time arri vals, one ke y indicator of quality for airlin e passengers. 59
Organizati ons rhar do not respond to custOmer needs lind rheir customers choosing
alternative prod uct and service suppliers who are w ill ing ro exceed their expecta-
tions . W ith this sa id, yo u sho ul d not concl ude that total quality is a panacea for all
organizations Or that it guarantees unqualified success.

M anaging Organizat ional Behavior in Changing Times

Over and above the challenge of quality improvement to meet international compe-
tition, managing organizational behavior dur ing changing times is challenging for at
least three reasons: (1) the in creasing global ization of organizations! operatin g ter ri-
tory, (2) the increasing diversity of organizational workfo rces, and (3) the contin u-
ing demand fo r higher levels of motal and erhica l behavior at work . These a re the
important issues to address in managing people. For example! a federa l governmenr
study found diversity management strongly linked to both work group performance
and job satisfaction .60 1n addi tion, people of color saw benefits from diversity man-
agement above and beyond those experienced by white emp loyees.
Each of these three issues is explored in detail in Chapter 2 and highlighted
throughout the text because th ey are in tertwined in the con temporary practice of
organizational behavior. For example, the issue of women in the workplace con-
cerns workforce diversity and at the same time overlaps rhe global ization issue.
Gend~r ro les a re often defined differentl y in vario us cultures, an d sexual harassmenr
is a frequent ethica l problem for orga nizat ions in the United Stares, Europe, Israe l,
and SOllth Africa . For another examp le, the public demand for ethical behavior in
business is grov./ ing and the mean in g of corporate codes of eth ics can no longer be

C HAPTER 1 ORGA NI ZATIONAL BEHAVIOR AND OPPORTUNITY

 An Ethics Czar foe- President Obama Will You T al<e the Job?
Early in his administration, President to demonstrate these qualities in all the
Obama appointed an impressive array things you think, say, and do. Second ,
of policy leaders to tackle the country's praise generously. Providing corrective
ever-mounting social and economic feedback at critical times can save
problems. Tough times call for creative lives and withholding praise when well
solutions and so the president looked deserved can kill initiative. Third, criti-
to the-best and the brightest to help cize to build up, not tear down. Legitimate
lead the nation. There was the Energy ~ criticism is linked to careful, accurate
Czar, the Health Reform Czar, the
Technology Czar, and the Green Czar;
i
observation; it is not negative. Fourth ,
§ kind, unwind. Learn to relax and let
be
how about the Ethics Czar? Rather
than federalizing the oversight of ethi-
~ the small stuff go. Most of it is small
•ui stuff. Fifth, punish fairly. When punish-
cal behavior, the government could u
~ ment is needed, it must be adminis-
outsource the job . That is, make every ~ tered justly. Sixth, if it is to be, it is up to
American personally responsible for President Bamck Obama "nnounces thee. Some problems solve themselves.
ethics and integrity. Will you be a n a nomination. However, most problems are solved by
Ethics Czar? That is right, yo u! CEOs, problem solvers. Be a problem solver
managers, leaders, entrepreneurs, and cabinetmakers at work and take personal responsibility for what hap-
can all set high standards in their companies and make pens in your space and in your place of work.
a positive difference. Here is a Code of Conduct for
Ethics Czars who accept the appointment. First, ,lead by SOURCE: B. Weinstein, "We Need an Ethics Czar to Battle Widespread
example. The best way to promote ethics and integrity is Breakdown in Standards,': BusincssWeek (March 16, 2009).

taken for granted, which means that integrating ethical reasoning inro work is the
only way to maximize business opportunities." Should President Obama involve
the federal government with an Ethics Czar' Read about it in The Real World 1.2.
Therefore, students of organi zational behavior mUSt appreciate and understand
these important issues . ..

lEARNING ABOUT ORGANiZATIONAL BEHAVIOR

~ Demonstrate the valu e of
objective knowledge and skill
development in the study of
organizational behavior.
objective knowledge
Knowledge that results from
research and scientific activities.
skill development
The mastery of abilities essential
to successfu l function ing in
organizations.
Organizational behavior is based on scientific knowledge and applied practice. It
involves the study of abstract ideas, such as valence and expectancy in motivation.
as well as the study of concrete matters, such as observable behaviors an d medical
symptoms of distress at work. Therefore, learning about orga nizational behavior
includes at least three activities, as shown in Figure 1.4. First, the science of orga-
nizational behavior requires the mastery of a certain body of objective knowledge.
Objective knowledge results from research and scientific activities, as reflected in
the Science feature in each chapter. Second, the practice of organizational behavior
requires skill development based on knowledge and an understanding of yourself
in order to master the abilities essential to success. The You features in each chap-
ter challenge you to know yourself and apply what you are learning. Third, both
objective knowledge and skill development must be applied in real-world settings.
The Real World features in each chapter open windows into organizational realities
where science and sk ills are applied.

PART 1 IN TRODUCTION
 -------1
F I GURE

Learning Act1vity Pedagogical Feature; - -

Theories
Research
Articles

Exercises
Questionnaires

Organizational
and Work
Context

Learning is challenging and fun because we are all different. Some would deny
our diversity, as the French have in not wanting to acknowledge differences in eth-
nic origin .62 Within learning environments, student diversiry is best addressed in the
learning process through more options for students and greater responsibility on the
part of students as coproducers in the effort and fun of learning. 63 For those who are
blind or have vision impairments, learning can be a special challenge. The alignment
of teaching styles with learning styles is importaor for the best fit, and teaching is no
longer just verbal and visual bur also virtual with a new generation of students.'" To
gain a better understanding of yourself as a learner, thereby maximizing your poten-
tial and developing strategies in specific learrung.environments, you need [0 evaluate
the way you prefer to learn and process information. You 1.2 offers a quick way
of assessing your learning style. If you are a visual learner, then use charts, maps,
PowerPoint slides, videos, the Internet, notes, or flash cards, and write things out for
visual review. If you are an aud itory learner, then lisren, take notes during lectures,
and consider raping them so you can fill in gaps later; review your notes frequently;
and recite key concepts our loud. If you are a tactile learner, trace words as you are
saying them, write down facts several times, and make study sheets.

Objective Knowledge
Objective knowledge, in any field of stud y, is developed through basic and applied
research. Research in organizational behavior has fon tinued since early research on
scientific management. Acquiring objective knowledge requires the cognitive mas-
tery of theories, conceptual models, and research findings. In this book, the objec-
tive knowledge in each chapter is reflected in the nOtes that support the text and in
the Science fearure included in each chapter. Mastering the concepts and ideas that
come from these notes enables you to intelligently discuss topics such as motivation,
performance, leadership,65 and executive stress. 66

C HAPTER 1 ORGANIZATI ONAL BEHAVIOR AND OPPORTUN ITY

.'
 \~ V'

J1 \(JXLl l.
L.earning Style inventory
Directions: This 24-irem survey is not ti med. Answer eac h qu estion as honestly as you can. Place a check on the
appropriate line after each statement.

OFTEN SOMETIMES SELDOM

1. Ca n remember more about a subject through the lec ture

method with information , explanations, and disc ussion.
2. Prefer info rmation to be written on t he chalkboard, with the
use of vis ual aids and assigned readings.
3. Like to write things down or CO take notes for visual review.
4. Prefe r to use posters, models, or actual practice and some
act ivities in class.
S. Req u ire explanations of diagrams, graphs , or visual directions.
6. Enjoy working with my ha nds or ma king things.
7. Am skillful wit h and enjoy developing and making gra phs
a nd charts.
8. Can tell if sounds ma tc h when presented with pairs of sounds.
9. Remember best by writing things down several t imes .
10. Can understand and follow directions on maps.
11. Do b etter at academic subjects by liste nin g to lectures and tapes.
12. Play with coins or keys in pockets.
13. Lea rn to spell better by repeat ing the word out loud than by
wri tin g the wo rd on paper.
14. Can better understand a news development by reading about
it in the pa per than by listen ing to the ra dio.
15. Chew gu m, smoke, or snack during studies.
16. Feel the best way to remem ber is to picture it in yo ur he ad.
17. Learn spel ling by "finger spelling" words.
18. Wo u ld rathe r listen to a good lecture or speech than read
abou t t he sam e material in a textbook.
19. Am good at working a nd solving jigsaw puzzl~s a nd mazes.
20. Grip objects in hands durin g learning period.
21. Prefer liste nin g to th e news on the radio rather than reading
abo ut it in the newspaper.
22. Obtain inform atio n o n a n interesting subject by reading
relevant materials.
23. Feel very comfortable touching ot hers, hugging,
hand-shak ing, etc.
24. Follow oral directions better than written ones.

Scoring Pro cedure s :

Score 5 points fo r each OFTEN, 3 points for each SOM ETI MES, an d 1 point for each SELDOM.
Vis ual Preference Score: 5 points for questions 2 + 3"+ 7 + 10 + 14 + 16 + 19 + 22 = _ __
Auditory Preference Score: 5 points for questions 1 + 5 + 8 + 11 + 13 + 18 + 21 + 24 = _ __
Tacti le Preference Score: 5 points for questions 4 + 6 + 9 + 12 + 15 + 17 + 20 + 23 = __
SOURCE: Adapted fromJ. N. Gardner and A.J. Jewler, Your College &pemnce: Strategies (or Success, Third C: .1cise Edition (Belmont, CA : Wad sworth/
ITP , 1998), 62-63: E. Jensen , Student Success Secrets, 4th ed . (Hauppauge , NY: Barron 's, 1996), 33 - 36.

PART 1 INTRODU C TION

 We encourage instructors and students of organizational behavior to think cri ti-
cally about the objective knowledge in organizational behavior. Only by engaging
in cri tical thin kin g can one question or challenge the results of specifi c resea rch an d
responsibly consider how to apply research results in a particular wo rk setti ng. Rote
memorization does not enab le rhe student to appreciate th e complexir y of specific
theories or the interrelationships among concepts, ideas, and top ics. Good critical
th in kin g, by contrast, enables the stu dent to identify in consistencies and limitatio ns
in the current body of objective knowledge_
Critical thinking, based on knowledge and understanding of basic ideas, leads to
inquis iti ve exp loration and is a key to accepting the responsibility of coproducer in
the learning process. A questioning, pro bing atti tu de is at the core of critical t hink-
ing. The student of organizational behavior shou ld evolve into a critica l consumer
of knowledge related to organizational behavior- one who is able to intelligenrly
q uestion the latest research results and distingu ish plausible, sound new approaches
from fads that lac k substance or adequate foundation . Ideally, the student of orga ni-
zationa l behavior develops in to a scientific professional manager who is knowl edge.
able in the art and science of organizational behavior.

Skill Develo pment

Learning about organizational behavior requires doing as well as knowi ng. The
developmenr of sk ills and abi lities requires tha t students be challenged by the
instructOr and by themselves. Skill development is a very active component of the
learning process. The Yo u featu res in each chapter give yo u a chance to lea rn about
yourself, challenge yo urself, a nd developmentally apply what you a te learning.
The U.S. Department of Labor wants people to achieve the necessary ski lls to
be successful in the workplace. " The essentia l skills identified by the Department of
Labor are (1 ) resource management sk ill s such as time management; (2) informa-
tion managemem skills such as data interpreta tion; (3) persona l interaction skill s
such as teamwork; (4 ) systems behavior and performance skills such as cause- effect
relationships; and (5) technology utilization ski lls such as troubleshooting. Many
of these skill s, Stich as decision making and informacion management, are direerly
related to the study of organizational behavior"
Developing skills is different from acquiting objective knowledge in that it
requires stru ctured p ractice and feedback. A key function of exper iential learning
is ro engage the srudent in indi vidual or group activities that arc systematica lly
rev iewed, leading to new sk ills and understandings. Objective knowledge acquisi-
tion and skill development are interrelated. The process for learn ing from structured
or experiential activities is depicted in Figure 1.5. The studenr engages in an indi-
vid ual or group-str uctured activi ty and systematicall y reviews that activity, which
leads to new or modified knowledge a nd skills.
If skill development and strucrured learning occur in this way, there sho uld be
an inherentl y self-correcting elemenr to learning because of the modification of th e
srudent's knowledge and skills over time'· To ensure that sk ill development does
occur and that the learning is self-correcting as it occurs, one must fo ll ow three basic
assumptions that underlie the previous model..
First, each student must accept responsibility for his or her own behavior,
actions, and learning. This is a key to the coprod ucer role in the learning process.
A group cannot learn for its m embers . Each member must accept responsibiliry for
what he o r she does and learns. Denial of responsibility helps no one, least of all
the learner.
Second, each student must actively participate in the individual or group-struc-
tuted lea rnin g activ ity. Structured learn ing is an act ive process. In g roup act ivities,

CHAP TER 1 ORGANIZATIONAL BEHAV I OR ANO OPPORTUNITY

F1GURE

-;Systematic review :~
,.u f 1he :structured ';
~'activjty ' (e.g., compare :'.7
,' lndividual :and ,group i.:;
results) t;
'.:,

. ; -'.: 'i~
~'~tcDn' clusions based i.;!
~.,:orl;the'5ystematic Fi
1~t~lIlew..ie,g.;rthe '.
1i9l"~"P'~ld;betterL,,,,,,;;
--_._-_...__._.. __.._ .. _ - -

everyone suffers if just one person adopts a passive attitude. Hence, all must activel y
participate.
Third, each student must be open to new information, new skills, new ideas, and
experimentation. This does not mean that students should be indiscriminate. It does
mean that they should have a nondefensive, open attitude so that change is possible
through the learning process.
Participating in group activ ities helps to ensure skill devtloprnent and that learn-
ing is self-correcting as it occurs .

Application of Knowledge and Skills

The Real World features in each chapter give you a window into organizational
realities and help you assess yo ur own knowledge of the real world at work.
Understanding the real world is one essential aspect of appreciating organizational
behavior, the other twO being understanding scientific knowl edge and understand-
ing yourself.
One of the advantages of structured, experiential learning is that a person can
explo re new behaviors and skills in a compara tively safe environment. Losing your
temper in a classroom activity and learning about the potential adverse impa ct on
other people will have dramatically different consequences from doing so with an
important customer in a tense work situati on . Learning spaces that encourage the
interface of student learning sryles with institutional learning environm ents create
safe spaces to engage the bra in to form abstract hypotheses, to actively test these
hypotheses through concrete experience, and to reflectively observe the outcomes in
behavior and experience .7o The ultimate objective of skill application and experien-
tiallearning is that students be able to transfer the learning process they employed
in structured classroom activities and learning spaces to unstructured opportunities
in the workplace.
Although organizational behavior is an applied discipline, students a re not
"tra ined" in organizational behavior. Rather, they are "educated" in organ iza tional

PART 1 INTRODUCTION
 behavior and are a coproducer in learning. The distinction between these two
modes of learning is found in the degtee of direct and immediate applicability of
either knowledge or skills. As an activity, training more nearly ties direct objective
knowledge or sk ill development to specific applications. By con tra st, education
enhances a person's residual pool of objective knowledge an d sk ills that may then
be selectively applied later-sometimes significantl y later-when the opportunity
presents itself. Hence, education is highly consistent with the concept of lifelong
learning. Especially in a growing area of knowledge such as organizational behav-
ior, the student ca n think of the first course as the outset"of lifelong learning about
the topi cs and subject.

PLAN FOR THE SOOB<

Cha llenge and opportunity are watchwords in organizations during these changing
times. Managets and employees alik e are challenged to meet change in positive and
optimistic ways: change in how work gets done, change in psychological and legal
contracts between individual s and organizations, change in who is working in th e
organiza tion , and change in the basis for organ ization. Three challenges for man-
agers are the global environment, workplace diversity, and ethica l issues at work.
These rh.tee challenges, which are discussed in detail in Chaprer 2, are shaping the
changes occurring in organizations throughout the world. For example, the increas-
ing globalization of business has led to intense international competi tion in core
industries, and the changing demographics of the workplace have led to gender, age,
racial, and ethnic diversity among working populations.
The first two chapters compose Part 1 of the book, the introduction . Against the
backdrop of the challenges discussed here, we develop and explore the specific sub-
jects i.n organizational behavior. In addition to the introduction, the text has three
major partS. Part 2 addtesses indi vidual processes and behav ior. Part 3 addtesses
interpersonal processes and behavior. Parr 4 addresses organizational processes and
structure.
The five chapters in Part 2 are designed to help the reader understand specific
aspects of human behavior. Chapter 3 discusses personality, perception, and attri-
bution. Chapter 4 examines 3ttiwcies, values, and ethics. What was your anirucie
toward change in You I.]? Chapters 5 and 6 adJ.ress the broad range of motivational
theories, learning, and performance management in orga nizations. Finally, Chapter
7 considers stress and well-be ing, including healthy aspects of life, ar work.
Part 3 is composed of six chapters designed to help the reader better understand
interpersonal and group dynamics in organ iza tions. Chaprer 8 addresses comm uni-
cation in organizations. Chapter 9 focuses on teamwork and groups as an increas-
ingly prominent featu te of the wotkplace. Chapter 10 examines how individuals
and grou ps make decisions. Chapter 11 is about power and politics, one very
dynamic aspeer of organizational life. Chapter 12 addresses the companion topics
of leadership and followership. Finally, Chapter 13 exa mines conflict at work, nOt
all of which we consider bad.
The five chapters in rarr 4 are designed to help the reader bettet understand orga-
nizational processes and the orga nizati onal contexr of behavio r at work. Chapter
14 examines traditional and contempotary approaches to job design. Chapter] 5
develops the topics of organizational design and structu re, g iving special attention
to contemporary forces reshaping organizations and ro emerging forms of orga ni za -
tion. Chapter 16 addresses the culture of the otganization. Chapter] 7 focuses on
the important issue of careet management. Finally, Chapter 18 brings closure to the
text and the main theme of change by addressing the top ic of managing change.

CHAPTER 1 ORGANIZATIONAL BEHAVIOR AND OPPORTUNITY

 MANAGERiAL IMPUCATBONS: FOUNDATIONS
FOR THE FUTURE

Managers must consider personal and e nvironmental factors to understand full y

how people behave in organizations and to help t hem reach their maximum
potential. Human behavior is complex and at times confusing. Characteristics of
the organizational system and formal-informal dynamics at work are importa nt
environmental factors thar influence people's behavior. Managers should look fo r
similarities and differences in manufacturing, service-oriented, nonprofit, and gov-
ernmental organizations.
Change may be seen as a ducat or as an opportunity by contemporary man-
agers. For example, hospital managers face nOt only clinical challenges but also
organizational learning and the implementation of effective high involvement man-
agement practices with a professional workforce. 71 Changing custonlcr deman ds
for high-quality outputs in othet indusrries challenges companies to beat th e glo ba l
competition. Globalization, workforce diversity, and ethics are three challenges for
managers that are deve loped in Chapter 2 . Another aspect of meeting the compe-
tition is learning. Managers must continua ll y upgrade rhe ir knowledge about all

W o m e n Triumph in Times of Recession-Really?

American women are finally in a position to surpass of full-time women remains a . fraction (between 77
men in the workforce, but it took an economic reces- and 80 percent) of men. Men continue to hold the
sion for them to do it. The layoffs and plam: closures majority of executive-level jobs. Finally, economists
experienced in the man ufacturing and construction have fo u nd that even when bo t h spouses work, work-
industries have hit working men terribly ha rd . .Some ing women devote much mo re time to child care and
estimate that 82 percent of the job losses during the housework than men. Many agree that the job for laid
recession have occurred for men. Why the differe~ce? off spouses-husbands especially-is not to settle into
Women tend to hold jobs in "safer" recession-proof a new support role in which they help with cooking,
industries like healthcare and education. cleaning, and running errands. His primary job is to
Women 's increased representation in the work- find another job.
force should be cause for celebration. However,
several issues loom beneath the surface that may 1. Do you believe an extended recession cO':lld
damper the festivities. First, good benefits came with completely change gender roles in the United
those good jobs in manufacturing and construction. States? Explain.
This allowed men to support their families at much 2. Do companies have a responsibility to raise
higher levels than women are able to do with their women 's salaries to accommodate their roles as
usafe" jobs. Women tend to work in part-time jobs primary breadwinners? Why or why not?
with little or no health or unemployment insurance.
And while the proportion of women in the wor'k- SOURCE: C. Rampell, "As Layoffs Surge, Women May Pass Me n
force may be on pace to surpass that of men, their in Job Force," New York Times (February 6, 2009): A1; O. Cauchon ,
positions and salaries have not. The average salary , "Women Take Over Job Market," ABCNews.com.

PART 1 IN T RODU C T I ON
 aspects of their businesses, to incl ude especia ll y the huma n side of the enterp rise.
They m ust ho ne both thei r tech nical a nd interperso nal ski lls, engaging in a lifelo ng
educational process. This is a fun an d somewhat unp redictable process that ca n at
times be frustrati ng, w hile always cha llenging and exciting.
Several business trends a nd ongoi ng changes are affecting managers across the
globe. T hese include continuing indust ri al restr ucturing, a d ra matic increase in
the amou nt and ava ilab ility of info rmation, a need ro attract and reta in the best
employees, a need to un derstan d a w ide ra nge of human a nd cultura l d iffe rences,
and a r ap id sho rtening of respo nse times in all asp ects of busi ness acci viries . Further,
rh e o ld company tow ns a re largely relics of the past, and managers are bei ng ca lled
on to fe-integrate th eir businesses w ith commu nities, cu ltures, and societies a t a
m uch broader level th a n has ever been req uired before. T rust, predi ctab ility, a nd a
sense of security become imporrant issues in this context. Reweaving the fab r ic of
h um an relat ionsh ips withi n, across, a nd outside [he orga nization is a cha llenge for
manage rs today .
Knowledge becom es power in tracking th ese trends a nd ad dressing th ese iss ues .
Facts a nd informa tion are twO elemen ts of knowledge in this con text. Theo ri es ar e
a th ird element of a m anage r 's knowledge base. Good rheo ri es are tools th at help
ma nage rs understand h um an and o rganizationa l behaviot, help them make good
business decisions, a nd inform them about actions ro ta ke o r [ 0 refra in fro m tak-
ing. Manage rs always use theories, if nOt those generated fro m systema tic resea rch,
then t hose evolved fro m the manager's imp licit observa ti on . Theo ri es tell us how
orga ni za tio ns, busin ess, an d people work-or do not wo rk. Therefo re, t he stud en t
is chall enged to mas ter th e th eories in each top ic a rea and then apply and test the
th eory in th e real wo rld o f o rganiza ti o na l life . The cha llenge fo r the stud ent a nd
the ma na ger is to see w hat w o rks and w hat d oes not wor k in th eir specific work
context.

"

I:..OOB{JNG BACH<: CARlY1 AX

Real Succes s in Challe ng ing T im es

T he sha rp eco nomic recess ion of 2008-2 0 09 alo ng with ., ~

the accompanyi ng fin a ncial cri sis placed t reme ndou!> "
~
~
>
pressures on the globa l ba nki ng a nd auto indu stri es, ~
The way ca r buying ~ be.· 8
among others. The U.S. car manufacturing companies

experienced a full-blown crisis, General Motors required federal financial assistance to survive,

and Chrys ler went into ba nkru ptcy court (0 dramatically restructure. Auto sales declined dra -

matica lly and many compared the crisis to that of the Great Depr'ess ion of the 1930s. These were

challenging times for ma nagers and employees in a wide range of industries. Unemployment

r'ates rose and people wo rri ed abo ut maki ng their home loan paymenLS to avoid fo reclosure.

While so m e compan ies an d ind ustries were hurt much worse than others , no one was ab le to

escape t he pressures, changes, and cha ll enges of th is pe r·iod.

C H AP T ER 1 ORGANIZATIONAL BEHAV I OR AND OPPORTUNITY

 In t he mid st of these challengi ng tim es, Ca rM ax co ntinued to display so lid success. In early

2009, CarMax was named one of Fortune's "l Oa Best Com panies to Work For.'>72 T hi s d isc; nc ·

tion was for the fifth straight year, beginnin g in 2005. Ranked numb er' 3 1 o n th e Fortune 2009

li st, Ca rMax cited the dedicatio n a nd inn ova6ve ness o f its many associates w h o m oved th e

compa ny forward in the cha ll enging times and difficu h: retail environ ment of t he pe l·iod. Rathe r

than pulling in during this period , whi ch is a common practice for companies in a c ris is, CarMax

associates I"cached out:. Participation in t he company's Vol unteer Tea m· Bui lder Program, wh ich

is ai med al community se rvice , rose signi fi ca ntly amo ng asso ciates. Givin g to t he ir com muni ties

is JUSt o ne aspect of making Ca rMax a great place to wo r k.

In add iti o n to be in g a great place to work, Ca rMax invests in its associates and was named

in Training magazine 's "Trainrng Top 1 25. "7.1 Each yea r, 125 orga nizati o ns that excel at associ-

ate developm e nt are selected, and 2009 was r.he second co nsecutive year in wh ich CarMa>: wa s

named. The companie s a re chosen based on criteri a s uch as best rraining practices, eva lu ation

method s, and out.c;tand ing training ini t iatives. In the case o f Ca r Max, th e company was cited for

three p rem ier train ing progl'ams: Extensive Sales T ,'ain ing, BASE Ca m p , a nd Culwl-e of Integrity

Training . Du ring challen gi ng a nd diffi cult times, so me co mpanies cut investmenr COStS aimed al

peo ple development. That ca n make the compa ny lean, a nd unfortunately weak. By investing in

its associates durin g cha ll engi ng times , CarMax a im s ro be fi t and strong for the lo ng run. Stron g,

compete nt peopl e meet the chal lenges of d ifficult times more effectively and s uccessfully.

Chapter Summary

1. Organizational behavior is individual behavior and 5, Manufacturing organizations, service organizations,

gro up dynamics in organ izati ons.
2. Change is an opportunity when one has a positive
attitude, asks questions, listens, and is committed to
succeed .
3. Organizations are open systems composed of people,
structure, and technology committed to a task.
4. Orga ni zations have formal and informal elements
within them.
privately owned compa nies, and nonprofit organiza-
tions all contribute to our national well-being.
6. The changes and challenges fac ing managers are
driven by international competition a nd c ustomer
demands .
7. Learning about organizational behavior requires a
ma srery of objecrive knowledge, specific skill devel-
opment, and thoughtful application.

,.
Key Terms

anth ropology (p. 6) formal organization (p. 10) medicine (p. 6)

challenge (p. 4 ) Hawthorne studies (p. J 0 ) objective knowledge (p. 20 )
cha nge (p. 4 ) informal organization (p . 10 ) opportunities (p. 4 )
engineering (p. 6) manageme nt (p. 6) organizational behavior (p. 4 )

28 PART 1 INT RODUCTION

 people (p. 9) sk ill development (p. 20)
psychology (p. 5) sociology (p. 6)
Six Sigma (p. 18) structure (p. 10)
Review Questions
1. Define organizational behavior. What is its focus?
2. Identify the four action steps for responding posi-
tively to cha nge .
3 . Wha t is an organization ? What are irs fOllf system
components? Give an example of each.
4. Briefly describe the elements of the fo rmal and the
informal organization. Give examp les of each.
Discussion and Communication Questions
1. How do the forma l aspects of your work environ-
ment affect you? What informal aspects of your
work environment are important?
2. What is the biggest competitive challenge or change
facing the businesses in yo ur industry today? Will
that be different in the next five yea rs ?
3. Describe the next chief executive of your company
and what she or he must do to succeed .
4 . Discuss rwo ways people learn about organizational
behavior.
5. Which of the focus companies is your own com -
pany most like? Do yo u work for one of these focus
companies? Which compan y would you most like to
work for?
6. (co111_munication question) Prepare a memo about
an organizational change occurring where rO ll work
Ethical Dilemma
Disco Global is an online and technology systems firm
based out of Atlanta, Georgia; the company has been
steadily acq uiring a significant market share for the
last five years. Founded by Melissa Young and Brian
Whitman, Disco Global's current strategic goal is to
penetrate international ma rkets w ithin the next three
years. When Melissa and Btian first conceived of Disco
Global, they envisioned growing a small niche company
into one that served the widest market available"while
they stay true to their professional values of corporate
social responsibility.
Given Disco Global's positioning, the company
has been adv ised to make inroads into the coveted
Asian market at this time. Both co-CEO Melissa and
Brian agree with this strategy and have secured a local
CHAPTER 1 ORGANIZAT I ONAL BEHAVIOR AND OPPORTUNITY
tas k (p . 9)
technology (p . 10)
5. Discuss the six foc lIs organizations used in the
book.
6. Describe how competiti on and total quali ty are
affecting organ izational behavior. Why is manag~
ing o rganizat io nal behavior in changing times
challenging?
or in your college or university . Write a 100-word
description of the change and, usi ng Figure 1.1,
id entify how it is affecting th e people, structure,
task, andlor technology of the organization.
7. (communication question) Develop an oral presen-
tation about the changes and challenges facing your
coll ege or uni versity based on an interview with a
faculty member or administrator. Be prepared to
describe the changes and challenges. Are these good
or bad changes? Why?
8. (communication. question) Prepare a brief descrip ~
rion of a service or manu.facturing company, entre-
preneurial venture, or nonprofit organization of
your choice. Go to the library and read abou t the
organization from severa l sources; then use these
multiple sources to write yo ur description.
marketing team in Hong Kong to help facilitate their
entrance in m China )s marketplace. Henry Chee Wan,
their liaison in Hong Kong, has developed a very tight
plan that everyone agrees will promote Disco Global in
a positive and effic ient manner.
During the cour,. of their work with Henry, Melissa
and Brian learn some facts about working w ithin the
Chinese governmerital structu re that have given th em
pause. In the compan y)s vision statement, Melissa and
Brian specifically incl uded a mention of freedom to
obtain knowledge. As they learn more about China's
Interner censorship practices, th ey g row more concerned
rhat in acquiescing to the government's cond itio ns, th ey
are moving too far away from their compa ny)s orig in al
goa ls and ethica l compass . Henry explains to Mel issa
29
and Brian that the Internet is heavily regulated in China
and that if their software or hardware was used with
criminal, seditious intent, they would be liable for help-
ing to reveal the user and cu lprit. Having their technol-
ogy being used as filters for what Chin ese people can
read and hear seems contrary [0 the conception of Disco
Global.
However, Melissa and Brian want to capitalize on
rhe ;\sian market, and they agree rhat if Disco Global
Experiential Exercises
1.1 What:'s Changing at Worl,?
This exercise provides an opportunity to discuss changes
occurring in your workplace and university. These
changes may be for the better or the worse. However,
rather than eval uating whether they are good or bad
changes, begin by simply identifying the changes that
are occurring. Later, yo u can evaluate whether th ey are
good or bad.
Srep 1. The class forms into groups of approximately
six members each. Each group elects a spokesperson
and answers the following questions. The group should
spend at least five minutes on each question . Make sure
that each mem ber of the group makes a contribution to
each question . The spokesperson for each group should
be ready to share the group's collecrive responses.
a. What are the changes occurring in ),our workplace
and university? Members should focus both on inter-
nal changes, such as reorganizations, and on external
changes, such as new customers or competitors.
Develop a list of rhe changes discussed in your group.
• Step 4. Your instructor may allow a few minutes at the
b. What are the forces that are driving the changes?
To answer this quesrion, look for the causes of the
changes members of the group are observing. For
1.2 My Absolute Worst Job
Purpose: To become acquainted with fell ow classmates.
G"Q1,lP size: Any number of groups of two.
Exercise schedule:
1. Write answers to the fo llowing questions :
a. What was rhe worst job YOll ever had? Describe
the following:
(1) The type of work you did
(2) Your boss
(3) Your coworkers
30
doesn't bring Internet and technology services to China,
someone else wi ll. Melissa and Brian now have to
decide which rhe best decision for Disco Global is : stay
true to their stated values or their strategic plan?
Questions:
1. Using conseq uential, cule-based and character theo-
ries, evaluate Melissa and Brian's options.
2. What should Melissa and Brian do? Why?
example, a reorganization may be caused by new
business opportunities, by new technologies, or by a
.combination of factors .
c. What signs of resistance to change do you see OCCUl'-
";,'g? Change is not always easy for people or orga-
ni zations. Do you see signs of resistance, such as
fr ustration, anger, increased absences, or other forms
of discomfort with th e changes you observe?
Step 2. Once you have answered the three questions in
Step 1, yo ur group needs ro spend some time evaluating
whether these changes are good or bad. Decide whether
each change on the list developed in Step 1a is good or
bad. In addition, answer the question "Why?" ThaT is,
why is this change good? Why is that change bad?
Step 3. Each group shares the results of its answers to
the questions in Step 1 and its evaluarion of the changes
completed in Step 2. Cross-team questions and discus-
sion follow.
end of rhe class period ro comment on his or her per-
ceptions of changes occurring w ithin the university, or
businesses with which he or she is fam iliar.
(4) The organization and irs policies
(5) What made the job so bad
b. What is your dream job '
2. Find someone yo u do nor know, and share your
responses.
,.
3. Get rogether with another dyad (pa ir), preferably
new people. Partner "a" of one dyad introduces
partner "b" to the other dyad; then "b" inrroduces
"a." The sa me process is followed by the other
dyad . The introd uction should follow th.i s format:
PART 1 INTRODUCTION
 "This is Mary Cullen. Her very worst job was put- 6. Your instructor gathers data on worst jobs from
ting appliques on bibs at a clothing factory, and each group and asks the groups to answer these
she disliked it for the fo ll owing reason. What she questions:
would rather do is be a financial analyst for a big a. W hat are the common characteristics of the worst
corporation. " jobs in your group?
4. Each group of four meets with another quartet and b. How did your coworkers feel about their jobs'
is introduced, as before.
c. What happens to morale and productivity when a
5. Your instructor asks for a show of hands on the worker hates the job?
number of people whose worst jobs fit into the
d. What was the difference between your own
following categories:
morale and productiviry in your worst job and in
a. Factory a job you really enjoyed?
b. Restaurant e. Why do organizations continue (0 allow unpleasant
c. Manual labor working conditions to exist?
d. Driving or delivery 7. Your instructor leads a group discussion on Parts
e. Professional (aJ through (e) of Question 6.
f. Health care
SOURCE: D. Marcie , "My Absolute WorstJob: An Icebreaker," Organizational
g. Pflone sales or communicati on
Behavior: Experiences and Cases (St. Paul, MN: West, 1989), 5-6. Copyright
h. Other 1988 Dorothy Marcie. All rights reserved. Reprinted by permission.

I,

C H APTER 1 ORGANIZATIONAL BEHAVIOR AND OPPORTUNITY 31

 BizFiix In Good Company
A corporate takeover brings star advertising executive Dan Foreman (Den nis Quaid) a
new boss who is half his age. Carrer Duryea (Topher Grace), Dan's new boss, wants to
prove his worth as the new marketing chief at Sports America, Waterman Publishing's
flagship magazine. Carrer applies his un ique approac hes while dating Dan's daughter,
Alex (Scarlett Johansson).
Organizational Behavior a nd Management: Sports America Magazine
This sequence starts with Caner Duryea entering Dan Foreman's office. lr follows
Foreman's reaction towatd the end of a speech g iven by Globecom CEO Teddy K.
(Malcolm McDowell ). Ca rrer Duryea enters while saying, "O h, my God, Dan. Oh, my
God." Mark Steckle (Clark Gregg ) soon follows. The sequence ends with Carrer asking,
"Any ideas?" Dan Forman says, IIOne. n

What to Watch for a nd Ask Yourse lf

• The fi lm seq uence shows three people interacting in a work environment. \X/hich
aspects of organizational behav ior and management discussed earl ier in this c hapter
appear in this seq uence?
• The three people in this sequence represent different management levels in th e com-
pany. Which levels do you attribute to Carrer Duryea, Dan Foreman, and Mark
Steckle?
• Critique th e behavior shown in the sequence. What are the positive and negative
aspects of the beha vior shown?

Workplace Video Ev~: Managing in a Global Environment

Fast-growing online retailer Eva has an exciting new problem : It has more international
customers than ever before. In 2001. the Seattle-based company began selling brand name
sk i-and -skate gear to U.S. consumers, and today Evo delivers products to places as far
away as Bahrain, Turkey, Jap an, and Ba li.
Selling to global markets is loaded w ith difficulties, and Evo's cusromer service tep-
resenratives tell stories about their cha ll eng ing interact ion s with internati onal shoppers.
For starters, overseas callers are often disappointed to learn thar they can not order items
due to interna tional lice nsing and distribution agreements . In addition, language barriers
between Eva's employees and international consumers make some orders impossi ble to
transact.
Daily operations have unusual twists as well, especially in the area of supply chain
management. «Manufacturers overseas can impact us," sa id Eva marketer Molly
H awkins. "There was a lock at all th e POrtS in Ch ina and we couldn't import any of their
products. Therefore, a lor of soft goods like jackets and pants couldn't be sh ipped."
And it's not just foreign POrts that Eva must worry about: globa li zation affects
 products, too. In addition to selling skis, snowboards, and related gear, Evo now offets an
international travel package for spOrt adventurers. Known as evoTRIP, the tra vel service
provides gu ided ski, snowboarding, and surf expeditions to exotic destinations in South
America, Japan, Indo nesia, and Switzerland. "This concept is near and dear to what all of
us value," said Bryce Phillips, Evo"'s fo under. "It's ge ttin g out there, learn ing more abo ut
different cu ltures, doing the activities in different parts of the world, and seeing beauti(ul
locations yo u've never seen before."
To offer the richest, most authentic cultural experience, evoTRIP hires local gu ides.
Professional ath letes from each country rravel with groups so tha t evoTrippets can experi-
ence the cultural nuances from place to place.
Despite his early success marketing within the United States, Bryce Phillips is excited
abour expanding his company's global reach. As licensing practices change to reflect the
boundary-free world of e-commerce, and as Eva becomes a global brand, ski-and-board
enthusiasts all over the world may soon identify themselves as loyal Eva customers.
Q uestio ns
1. What political and economic challenges co uld evoTRlP enco unter when conducting
business in ocher countries?
2. How might globalization affecr Eva's orga ni zarional context? Explai n.
3. Whar culrural differences should Evo and evoTRIP participants pay attention to
when traveling abroad?