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Organizational Behavior: The Quest for People-CenteredOrganizations

Learning Objectives

When you finish studying the material in this chapter, you should be able to:

1 Define the term organizational behavior, and explain why OB is ahorizontal discipline.

2 Contrast McGregor’s Theory X and Theory Y assumptions aboutemployees.

3 Identify the four principles of total quality management (TQM).

4 Define the term e-business, and specify at least three OB-related issuesraised by e-leadership.

5 Contrast human and social capital, and explain why we need to buildboth.

6 Specify the five key dimensions of Luthans’s CHOSE model of positiveorganizational behavior (POB).

7 Define the term management, and identify at least five of the elevenmanagerial skills in Wilson’s profile of effective managers.

8 Characterize 21st-century managers.

9 Describe the sources of organizational behavior research evidence.

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The plaque outside the ramshackletwo-family house at 367 Addison St. inPalo Alto, Calif., identifies the dustyone-car garage out back as the “birth-place of Silicon Valley.” But the site,where Dave Packard and Bill Hewlettfirst set up shop, in 1938, is more thanthat. It’s the birthplace of a new ap-proach to management, a West Coastalternative to the traditional, hierarchi-cal corporation. Sixty-five years later,the methods of Hewlett and Packardremain the dominant DNA for techcompanies—and a major reason forU.S. preeminence in the InformationAge.

The partnership began when thepair met as students at Stanford Uni-versity. Packard, an opinionated starathlete from the hardscrabble town ofPueblo, Colo., had a commanding pres-ence to match his 6-ft.-5-in frame.Hewlett, whose technical genius wasobscured from teachers by undiag-nosed dyslexia, favored dorm-roompranks and bad puns.While differentin temperament, the two soon dis-covered a shared passion for camp-ing and fishing—and for turningengineering theory into break-through products.

The result was one of the most influ-ential companies of the 20th century.Hewlett-Packard Co. (they flipped acoin to decide whose name went first)cranked out a blizzard of geeky elec-tronic tools that were crucial to thedevelopment of radar, computers, andother digital wonders. Still, the pair’sgreatest innovation was managerial,nottechnical. From the first days in thegarage, they set out to create a com-pany that would attract like-mindedtechies.They shunned the rigid hierar-chy of companies back East in favor ofan egalitarian, decentralized systemthat came to be known as “the HPWay.” The essence of the idea,radical atthe time, was that employees’ brain-power was the company’s most impor-tant resource.

To make the idea a reality, the youngentrepreneurs instituted a slew of pio-neering practices. Starting in 1941,they granted big bonuses to all em-ployees when the company improved

Bill Packard and Bill Hewitt

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Hewlett-Packard’s founders did more than talk about the importance of theirpeople; they trusted, empowered, and listened to them. They created whatStanford University’s Jeffrey Pfeffer calls a “people-centered” organization.Research evidence from companies in both the United States and Germany

shows the following seven people-centered practices to be strongly associated with muchhigher profits and significantly lower employee turnover:

1. Job security (to eliminate fear of layoffs).

2. Careful hiring (emphasizing a good fit with the company culture).

3. Power to the people (via decentralization and self-managed teams).

4. Generous pay for performance.

5. Lots of training.

6. Less emphasis on status (to build a “we” feeling).

7. Trust building (through the sharing of critical information).2

Importantly, these factors are a package deal, meaning they need to be installed in a coor-dinated and systematic manner—not in bits and pieces.

According to Pfeffer, only 12% of today’s organizations have the systematic approaches andpersistence to qualify as true people-centered organizations, thus giving them a competitive ad-vantage.3 Dan Rosensweig, Yahoo’s chief operating officer, knows what it takes. He recentlytold Fast Company magazine: “From the outside, my guess is most people think about the in-credible technology we have. But what really matters is our people.”4

To us, an 88% shortfall in the quest for people-centered organizations represents a tragicwaste of human and economic potential. There are profound ethical implications as well.Each of us needs to accept the challenge to do better, whatever our role(s) in society—employer/entrepreneur, employee, manager, stockholder, student, teacher, voter, elected of-ficial, social/political activist. Toward that end, the mission of this book is to help increasethe number of people-centered organizations around the world to improve the general qual-ity of life.5

4

its productivity.That evolved into one of the first all-company profit-sharing plans.When HP went public in1957, the founders gave shares to all employees. Later,they were among the first to offer tuition assistance,flex time, and job sharing.

Even HP’s offices were unusual. To encourage thefree flow of ideas, employees worked in open cubicles.Even supply closets were to be kept open. Once,Hewlett sawed a lock off a closet and left a note:

“HP trusts its employees.”If HP’s policies were progressive, there was nothing

coddling about either man. Until his death in 1996,Packard was a fearsome paragon of corporate integrity.He was famous for flying to distant branches to makea show of firing managers who skirted ethical lines.Neither man would hesitate to kill a business if itwasn’t hitting its profits goals. The result: HP grewnearly 20% a year for 50 years without a loss.

Today, the behavior of the two founders remains abenchmark for business. Hewlett, who died in 2001,and Packard expected employees to donate their timeto civic causes.And they gave more than 95% of theirfortunes to charity. “My father and Mr. Packard feltthey’d made this money almost as a fluke,” saysHewlett’s son Walter. “If anything, the employees de-served it more than they did.” It’s an insight thatchanged Corporate America—and the lives of workerseverywhere.1

FOR DISCUSSIONWhich of HP’s employee-friendly practices do youthink had the greatest motivational impact?

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The purpose of this first chapter is to define organizational behavior (OB), examine itscontemporary relevance, explore its historical and managerial contexts, and introduce atopical roadmap for the balance of this book.

Welcome to the World of OBOrganizational behavior deals with how people act and react in organizations of all kinds.Think of the many organizations that touch your life on a regular basis; organizations thatemploy, educate, serve, inform, feed, heal, protect, and entertain you. Cradle to grave, weinterface with organizations at every turn. According to Chester I Barnard’s classic defini-tion, an organization is “a system of consciously coordinated activities or forces of two ormore persons.”6 Organizations are a social invention helping us to achieve things collec-tively that we could not achieve alone. For better or for worse, they extend our reach. Con-sider the inspiring example of the World Health Organization:

In 1967, 10 to 15 million people around the globe were struck annually by smallpox.Thatyear, the World Health Organization set up its smallpox-eradication unit. In 13 years it wasable to declare the world free of the disease. In 1988, 350,000 people were afflicted bypolio when the WHO set up a similar eradication unit. Since then it has spent $3 billionand received the help of 20 million volunteers from around the world.The result: in 2003there were only 784 reported cases of polio.7

On the other hand, organizations such as Al Qaeda kill and terrorize, and others such as En-ron squander our resources. Organizations are the chessboard upon which the game of lifeis played. To know more about organizational behavior—life within organizations—is toknow more about the nature, possibilities, and rules of that game.

Organizational Behavior: An Interdisciplinary FieldOrganizational behavior, commonly referred to as OB, is an interdisciplinary field dedi-cated to better understanding and managing people at work. By definition, organizationalbehavior is both research and application oriented. Three basic levels of analysis in OB areindividual, group, and organizational. OB draws upon a diverse array of disciplines, in-cluding psychology, management, sociology, organization theory, social psychology, sta-tistics, anthropology, general systems theory, economics, information technology, politicalscience, vocational counseling, human stress management, psychometrics, ergonomics,decision theory, and ethics. This rich heritage has spawned many competing perspectivesand theories about human work behavior. By 2003, one researcher had identified 73 dis-tinct theories about behavior within the field of OB.8

Some FAQs about Studying OBThrough the years we (and our colleagues) have fielded some frequently asked questions(FAQs) from our students about our field. Here are the most common ones, along with ouranswers.

Why Study OB? If you thoughtfully study this book, you will learn more aboutyourself, how to interact effectively with others, and how to thrive (not just survive) in or-ganizations. Lots of insights about your own personality, emotions, values, job satisfaction,

Chapter One Organizational Behavior:The Quest for People-Centered Organizations 5

OrganizationSystem of con-sciously coordinatedactivities of two ormore people.

OrganizationalbehaviorInterdisciplinary fielddedicated to betterunderstanding andmanaging people atwork.

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perceptions, needs, and goals are available in Part Two. Relative to your interpersonal ef-fectiveness, you will learn about being a team player, building trust, managing conflict, ne-gotiating, communicating, and influencing and leading others. We conclude virtually everymajor topic with practical how-to-do-it instructions. The idea is to build your skills in ar-eas such as self-management, making decisions, avoiding groupthink, listening, copingwith organizational politics, handling change, and managing stress. Respected OB scholarEdward E. Lawler III created the “virtuous career spiral” in Figure 1–1 to illustrate howOB-related skills point you toward career success. “It shows that increased skills and per-formance can lead to better jobs and higher rewards.”9

If I’m an Accounting (or Other Technical Major), Why ShouldI Study OB? Many students in technical fields such as accounting, finance, computerscience, and engineering consider OB to be a “soft” discipline with little or no relevance.You may indeed start out in a narrow specialty, but eventually your hard-won success willcatch up with you and you will be tapped for some sort of supervisory or leadership posi-tion. Your so-called “soft” people skills will make or break your career at that point. Also,in today’s team-oriented and globalized workplace, your teamwork, cross-cultural, com-munication, conflict handling, and negotiation skills and your powers of persuasion will beneeded early and often. Our advice: Build a solid base of OB-related skills now to be readyfor whatever comes along (see Real World/Real People).

Can I Get a Job in OB? Organizational behavior is an academic designation.With the exception of teaching/research positions, OB is not an everyday job category suchas accounting, marketing, or finance. Students of OB typically do not get jobs in organiza-tional behavior, per se. This reality in no way demeans OB or lessens its importance in ef-

6 Part One The World of Organizational Behavior

Job

Job

Rewards

Rew

ar

dsPerformance Skills

Motivation and Satisfaction

Performance Skills

Figure 1–1 OB-Related Skills Are the Ticket to Ride the Virtuous CareerSpiral

SOURCE: Edward E Lawler III, Treat People Right! How Organizations and Individuals Can Propel Each Other into aVirtuous Spiral of Success (San Francisco: Jossey-Bass, 2003), p 21.

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fective organizational management. OB is a horizontal discipline cutting across virtuallyevery job category, business function, and professional specialty. Anyone who plans tomake a living in a large or small, public or private, organization needs to study organiza-tional behavior.

A Historical Perspective of OBA historical perspective of the study of people at work helps in studying organizational be-havior. According to a management history expert, this is important because

Historical perspective is the study of a subject in light of its earliest phases and subsequentevolution. Historical perspective differs from history in that the object of historical per-spective is to sharpen one’s vision of the present, not the past.10

In other words, we can better understand where the field of OB is today and where it ap-pears to be headed by appreciating where it has been and how it is being redirected. Let usexamine five significant landmarks in the understanding and management of people in theworkplace.

1. The human relations movement.

2. The quality movement.7

An Entrepreneur’s Odyssey: Lawyer, Baker, Manager

Real PeopleRea

l World

Four years ago,Warren Brown walked away from a job asa federal litigator to bake cakes. It all started on New Year’s1999 when Brown, an able cook, resolved to become anexpert baker as well. After work, he began to whip upcakes. He found that baking provided release from theworkaday stress.

[In Washington, DC,] he moved into a 600-square-footstorefront that he christened Cake Love. He funded thebusiness with credit cards and then a $125,000 loanbacked by the Small Business Administration. . . .

With about four of his 16 bakery employees present atany one time . . . and a steady stream of customers, CakeLove is easily crowded. Brown opened the Love Caféacross the street in 2002 to provide a little breathingroom.The café. . . serves sandwiches and soups as well ascake. . . .

Though he spends more time managing than frostingcakes these days, he still bakes most mornings.

SOURCE: Excerpted from Cliff,“Because Only in America Will Someone Quit a Secure Job as a Lawyer to Start a Bakery,” Inc., April 2005, p 77.

Warren Brown

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3. The e-business revolution.

4. The age of human and social capital.

5. The emerging area of positive OB.

The Human Relations MovementA unique combination of factors during the 1930s fostered the human relations movement.First, following legalization of union–management collective bargaining in the UnitedStates in 1935, management began looking for new ways of handling employees. Second,behavioral scientists conducting on-the-job research started calling for more attention to the“human” factor. Managers who had lost the battle to keep unions out of their factoriesheeded the call for better human relations and improved working conditions. One suchstudy, conducted at Western Electric’s Chicago-area Hawthorne plant, was a prime stimu-lus for the human relations movement. Ironically, many of the Hawthorne findings haveturned out to be more myth than fact.

The Hawthorne Legacy Interviews conducteddecades later with three subjects of the Hawthorne studiesand reanalysis of the original data with modern statisticaltechniques do not support initial conclusions about the pos-itive effect of supportive supervision. Specifically, money,fear of unemployment during the Great Depression, mana-gerial discipline, and high-quality raw materials—not sup-portive supervision—turned out to be responsible for highoutput in the relay assembly test room experiments.11

Nonetheless, the human relations movement gathered mo-mentum through the 1950s, as academics and managersalike made stirring claims about the powerful effect that in-dividual needs, supportive supervision, and group dynam-ics apparently had on job performance.

The Writings of Mayo and Follett Essen-tial to the human relations movement were the writings ofElton Mayo and Mary Parker Follett. Australian-bornMayo, who headed the Harvard researchers at Hawthorne,advised managers to attend to employees’ emotional needsin his 1933 classic, The Human Problems of an IndustrialCivilization. Follett was a true pioneer, not only as a womanmanagement consultant in the male-dominated industrialworld of the 1920s, but also as a writer who saw employees

as complex combinations of attitudes, beliefs, and needs. Mary Parker Follett was wayahead of her time in telling managers to motivate job performance instead of merely de-manding it, a “pull” rather than “push” strategy. She also built a logical bridge between po-litical democracy and a cooperative spirit in the workplace.12

McGregor’s Theory Y In 1960, Douglas McGregor wrote a book entitled The HumanSide of Enterprise, which has become an important philosophical base for the modern view ofpeople at work.13 Drawing upon his experience as a management consultant, McGregor for-mulated two sharply contrasting sets of assumptions about human nature (see Table 1–1). His


These relay assembly test room employees in the classicHowthorne Western Electric studies turned in record per-formance Why? No one knows for certain, and debatecontinues to this day. Supportive supervision was long be-lieved to be the key factor. Whatever the reason,Howthorne gave the budding human relations movementneeded research credibility. Property of AT & T Archives;reprinted with permission of AT&T

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Theory X assumptions were pessimistic and negative and, according to McGregor’s interpre-tation, typical of how managers traditionally perceived employees. To help managers breakwith this negative tradition, McGregor formulated his Theory Y, a modern and positive set ofassumptions about people. McGregor believed managers could accomplish more through oth-ers by viewing them as self-energized, committed, responsible, and creative beings.14

According to this recent overview from HR Magazine, McGregor’s Theory Y is still adistant vision in the American workplace:

With strikingly similar statistics, several highly respected research and consulting organiza-tions have found that there’s a huge population of workers—roughly half of all Americansin the workforce—who show up, do what’s expected of them,but don’t go that extra mile,don’t turn on the creative juices, don’t get inspired to create great products or services.

Perhaps the most significant finding:These are people, for the most part, who want togo above and beyond, to be an integral part of the company’s success. Something—oftena disconnect with an immediate supervisor or a feeling that the organization doesn’t careabout them—is getting in the way.There is a huge, untapped potential that many execu-tives, managers and employees do not recognize and, therefore, have not addressed. Andit’s sapping organizations’ potential.

“We’re running as an economy at 30% efficiency” because so many workers are notcontributing as much as they could, says Curt Coffman [from the Gallup Organization].15

New Assumptions about Human Nature Unfortunately, unsophisticatedbehavioral research methods caused the human relationists to embrace some naive and mis-leading conclusions.16 For example, human relationists believed in the axiom, “A satisfiedemployee is a hardworking employee.” Subsequent research, as discussed later in this book,shows the satisfaction—performance linkage to be more complex than originally thought.


Theory YMcGregor’s modernand positive assump-tions about employ-ees being respons-ible and creative.

Table 1–1 McGregor’s Theory X and Theory Y

Outdated (Theory X) Assumptions about Modern (Theory Y) Assumptions about People at Work People at Work

1. Most people dislike work; they avoid it when they can.

2. Most people must be coerced and threatened with punishment before they will work. People require close direction when they are working.

3. Most people actually prefer to be directed.They tend to avoid responsibility and exhibit little ambition.They are interested only in security.

SOURCE:Adapted from D McGregor, The Human Side of Enterprise (New York: McGraw-Hill, 1960), Ch 4.

1. Work is a natural activity, like play or rest.

2. People are capable of self-direction andself-control if they are committed toobjectives.

3. People generally become committed toorganizational objectives if they arerewarded for doing so.

4. The typical employee can learn to acceptand seek responsibility.

5. The typical member of the generalpopulation has imagination, ingenuity, andcreativity.

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Despite its shortcomings, the human relations movement opened the door to more pro-gressive thinking about human nature. Rather than continuing to view employees as pas-sive economic beings, managers began to see them as active social beings and took stepsto create more humane work environments.

The Quality MovementIn 1980, NBC aired a television documentary titled “If Japan Can . . . Why Can’t We?” Itwas a wake-up call for North American companies to dramatically improve product qual-ity or continue losing market share to Japanese electronics and automobile companies. Afull-fledged movement ensued during the 1980s and 1990s. Much was written, said, anddone about improving the quality of both goods and services.17 Thanks to the concept oftotal quality management (TQM) and Six Sigma programs, the quality of the goods andservices we purchase today is significantly better than in years past. The underlying prin-ciples of TQM are more important than ever given customers’ steadily rising expectations:

Establish a reputation for great value, top quality, or pulling late-night miracles in time forcrucial client meetings, and soon enough, the goalposts move.“Greatness” lasts only as longas someone fails to imagine something better. Inevitably, the exceptional becomes the ex-pected.

Call it the performance paradox: If you deliver, you only qualify to deliver more. Greatcompanies and their employees have always endured this treadmill of expectations. Butthese days, the brewing forces of technology, productivity, and transparency have acceler-ated the cycle to breakneck speed.18

TQM principles have profound practical implications for managing people today.19

What Is TQM? Experts on the subject offered this definition of total quality man-agement:

TQM means that the organization’s culture is defined by and supports the constant at-tainment of customer satisfaction through an integrated system of tools, techniques, andtraining.This involves the continuous improvement of organizational processes, resulting inhigh-quality products and services.20

Quality consultant Richard J Schonberger sums up TQM as “continuous, customer-centered, employee-driven improvement.”21 TQM is necessarily employee driven becauseproduct/service quality cannot be continuously improved without the active learning andparticipation of every employee. Thus, in successful quality improvement programs, TQMprinciples are embedded in the organization’s culture. In fact, according to the results of afield experiment, bank customers had higher satisfaction after interacting with bank em-ployees who had been trained to provide excellent service.22

The Deming Legacy TQM is firmly established today thanks in large part to thepioneering work of W Edwards Deming.23 Ironically, the mathematician credited withJapan’s post–World War II quality revolution rarely talked in terms of quality. He insteadpreferred to discuss “good management” during the hard-hitting seminars he delivered rightup until his death at age 93 in 1993.24 Although Deming’s passion was the statistical mea-surement and reduction of variations in industrial processes, he had much to say about howemployees should be treated. Regarding the human side of quality improvement, Demingcalled for the following:


Total qualitymanagementAn organizationalculture dedicatedto training, continu-ous improvement,and customersatisfaction.

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11

Toyota Wrote the Book on ContinuousImprovement

Real PeopleRea

l World

The soul of the Toyota production system is a principlecalled kaizen. The word is often translated as “continuousimprovement,” but its essence is the notion that engineers,managers, and line workers collaborate continually to sys-tematize production tasks and identify incrementalchanges to make work go more smoothly.

Toyota strives to keep inventories as close to zero aspossible, not only to minimize costs but also to ferret outinefficiencies the moment they occur. Toyota deliberatelyruns production lines at full tilt.And workers are given au-thority to stop the process and summon assistance at thefirst sign of trouble.

At the Tsutsumi plant in Toyota City, 6,600 employeesworking two shifts on two separate production lines canturn out 500,000 vehicles a year in eight model variationsat a rate of one per minute. It is a ballet of astonishing pre-cision, enhanced by a myriad of tiny improvements on thefactory floor.

SOURCE: C Chandler,“Full Speed Ahead,” Fortune, February 7, 2005,p 82.

• Formal training in statistical process control techniques and teamwork.

• Helpful leadership, rather than order giving and punishment.

• Elimination of fear so employees will feel free to ask questions.

• Emphasis on continuous process improvements rather than on numerical quotas.

• Teamwork.

• Elimination of barriers to good workmanship.25

One of Deming’s most enduring lessons for managers is his 85–15 rule.26 Specifically,when things go wrong, there is roughly an 85% chance the system (including management,machinery, and rules) is at fault. Only about 15% of the time is the individual employee atfault. Unfortunately, as Deming observed, the typical manager spends most of his or hertime wrongly blaming and punishing individuals for system failures. Statistical analysis isrequired to uncover system failures.

Principles of TQM Despite variations in the language and scope of TQM pro-grams, it is possible to identify four common TQM principles:

1. Do it right the first time to eliminate costly rework and product recalls.

2. Listen to and learn from customers and employees.

3. Make continuous improvement an everyday matter (See Real World/Real People).

4. Build teamwork, trust, and mutual respect.27

Deming’s influence is clearly evident in this list.28 Once again, as with the human relationsmovement, we see people as the key factor in organizational success.

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In summary, TQM advocates have made a valuable contribution to the field of OB byproviding a practical context for managing people. The case for TQM is strong because, asdiscovered in two comprehensive studies, it works!29 When people are managed accordingto TQM principles, more of them are likely to get the employment opportunities and high-quality goods and services they demand.30 As you will see many times in later chapters, thisbook is anchored to Deming’s philosophy and TQM principles.

The Internet and E-Business RevolutionExperts on the subject draw an important distinction between e-commerce (buying and sell-ing goods and services over the Internet) and e-business, using the Internet to facilitate everyaspect of running a business.31 Says one industry observer: “Strip away the highfalutin talk,and at bottom, the Internet is a tool that dramatically lowers the cost of communication. Thatmeans it can radically alter any industry or activity that depends heavily on the flow of in-formation.”32 Relevant information includes everything from customer needs and productdesign specifications to prices, schedules, finances, employee performance data, and corpo-rate strategy. Intel has taken this broad view of the Internet to heart. The computer-chip gi-ant is striving to become what it calls an e-corporation, one that relies primarily on theInternet to not only buy and sell things, but to facilitate all business functions, exchangeknowledge among its employees, and build partnerships with outsiders as well. Intel is onthe right track according to this survey finding: “firms that embraced the Internet averageda 13.4% jump in productivity . . . compared with 4.9% for those that did not.”33

E-business has significant implications for OB because it eventually will seep intoevery corner of life both on and off the job. Thanks to the Internet, we are able to makequicker and better decisions because of speedy access to vital information. The Internetalso allows us to seemingly defy the laws of physics by being in more than one place at atime. For example, consider this futuristic situation at Hackensack University MedicalCenter in New Jersey:

Doctors can tap an internal Web site to examine X-rays from a PC anywhere. Patients canuse 37-inch plasma TVs in their rooms to surf the Net for information about their medicalconditions.There’s even a life-size robot, Mr Rounder, that doctors can control from theirlaptops at home.They direct the digital doc, complete with white lab coat and stethoscope,into hospital rooms and use two-way video to discuss patients’ conditions.34

In short, organizational life will never be the same because of e-mail, e-learning,35

e-management, e-leadership (see Table 1–2), virtual teams, and virtual organizations.

The Age of Human and Social CapitalKnowledge workers, those who add value by using their brains rather than the sweat offtheir backs, are more important than ever in today’s global economy. What you know andwho you know increasingly are the keys to both personal and organizational success36 (seeFigure 1–2). In the United States, the following “perfect storm” of current and emergingtrends heightens the importance and urgency of building human and social capital:

• Spread of advanced technology to developing countries with rapidly growing middleclasses (e.g., China, India, Russia, and Brazil).

• Offshoring of increasingly sophisticated jobs (e.g., product design, architecture,medical diagnosis).


E-businessRunning the entirebusiness via the Internet.

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• Comparatively poor math and science skills among America’s youth.

• Post-9/11 decline in highly skilled immigrants and graduate students.

• Massive brain drain caused by retiring post–World War II baby-boom generation.37

What Is Human Capital? (Hint: Think BIG) A team of human resourcemanagement authors recently offered this perspective:

We’re living in a time when a new economic paradigm—characterized by speed, innova-tion, short cycle times, quality, and customer satisfaction—is highlighting the importance ofintangible assets, such as brand recognition, knowledge, innovation, and particularly humancapital.38

Human capital is the productive potential of an individual’s knowledge and actions.39

Potential is the operative word in this intentionally broad definition. When you are hungry,money in your pocket is good because it has the potential to buy a meal. Likewise, a pres-ent or future employee with the right combination of knowledge, skills, and motivation toexcel represents human capital with the potential to give the organization a competitive ad-vantage. Computer chip maker Intel, for example, is a high-tech company whose future de-pends on innovative engineering. It takes years of math and science studies to makeworld-class engineers. Not wanting to leave the future supply of engineers to chance, Intelannually spends millions of dollars funding education at all levels. The company encour-ages youngsters to study math and science and sponsors science competitions with gener-ous scholarships for the winners.40 Additionally, Intel encourages its employees tovolunteer at local schools by giving the schools $200 for every 20 hours contributed.41 Willall of the students end up working for Intel? No. That’s not the point. The point is much big-ger—namely, to build the world’s human capital.


Table 1–2 The Brave New World of E-Leadership

Because it involves electronically mediated interactions, in combination with the traditionalface-to-face variety, experts say e-leadership raises these major issues for modernmanagement:

1. Leaders and followers have more access to information and each other, and this ischanging the nature and content of their interactions.

2. Leadership is migrating to lower and lower organizational levels and out through theboundaries of the organization to both customers and suppliers.

3. Leadership creates and exists in networks that go across traditional organizational andcommunity boundaries.

4. Followers know more at earlier points in the decision-making process, and this ispotentially affecting the credibility and influence of leaders.

5. Unethical leaders with limited resources can now impact negatively a much broaderaudience of potential followers.

6. The amount of time and contact that even the most senior leaders can have with theirfollowers has increased, although the contact is not in the traditional face-to-face mode.

Making wise hiring and job assignment decisions, nurturing productive relationships, andbuilding trust are more important than ever in the age of e-leadership.

SOURCE: Six implications excerpted from B J Avolio and S S Kahai,“Adding the ‘E’ to E-Leadership: HowIt May Impact Your Leadership,” Organizational Dynamics, no. 4, 2003, p 333.

Human capitalThe productive potential of one’sknowledge and actions.

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What Is Social Capital? Our focus now shifts from the individual to social units(e.g., friends, family, company, group or club, nation). Think relationships. Social capitalis productive potential resulting from strong relationships, goodwill, trust, and cooperativeeffort.42 Again, the word potential is key. According to experts on the subject: “It’s true: thesocial capital that used to be a given in organizations is now rare and endangered. But thesocial capital we can build will allow us to capitalize on the volatile, virtual possibilities oftoday’s business environment.”43 Relationships do matter. In a recent general survey, 77%of the women and 63% of the men rated “Good relationship with boss” extremely impor-tant. Other factors—including good equipment, resources, easy commute, and flexiblehours—received lower ratings.44


Strategicassumption:

People, individuallyand collectively, are the key toorganizational

success

Organizationallearning

(Shared knowledge)

Individual human capital• Intelligence/abilities/ knowledge• Visions/dreams/aspirations• Technical and social skills• Confidence/self-esteem• Initiative/entrepreneurship• Adaptability/flexibility• Readiness to learn• Creativity• Enthusiasm• Motivation/commitment• Persistence• Ethical standards/courage• Honesty• Emotional maturity

Social capital• Shared visions/goals• Shared values• Trust• Mutual respect/goodwill• Friendship/support groups• Mentoring/positive role modeling• Participation/empowerment• Connections/sources• Networks/affiliations• Cooperation/collaboration• Teamwork• Camaraderie• Assertive (rather than aggressive) communication• Functional (rather than dysfunctional) conflict• Win-win negotiations• Philanthropy/volunteering

Figure 1–2 The Strategic Importance and Dimensions of Human andSocial Capital

SOURCES: Based on discussions in P S Adler and S Kwon,“Social Capital: Prospects for a New Concept,”Academy of Management Review, January 2002, pp 17–40; and C A Bartlett and S Ghoshal,“Building CompetitiveAdvantage through People,” MIT Sloan Management Review, Winter 2002, pp 34–41.

Social capitalThe productive potential of strong,trusting, and coop-erative relationships.

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Building Human and Social Capital Various dimensions of human and so-cial capital are listed in Figure 1–2. They are a preview of what lies ahead in this book, in-cluding our discussion of organizational learning in Chapter 17. Formal organizationallearning and knowledge management programs, as discussed in Chapter 10, need socialcapital to leverage individual human capital for the greater good. It is a straightforward for-mula for success. Growth depends on the timely sharing of valuable knowledge. After all,what good are bright employees who do not network, teach, and inspire? Moreover, the richarray of factors in Figure 1–2 can be an agenda for progressive people who want to join ourquest for more people-centered organizations (See Real World/Real People).

The Emerging Area of Positive OrganizationalBehavior (POB)OB draws heavily on the field of psychology. So major shifts and trends in psychologyeventually ripple through to OB. One such shift being felt in OB is the positive psychologymovement. This exciting new direction promises to broaden the scope and practical rele-vance of OB.45

15

What Some Companies Are Doing to BuildHuman and Social Capital

Real PeopleReal World

Company Human Capital Program or Activity

General MillsMinneapolis, MN19,019 employees

MITREMcLean,VA and Bedford, MA5,383 employees

AflacColumbus, GA3,904 employees

Valero EnergySan Antonio,TX15,882 employees

Cisco SystemsSan Jose, CA24,433 employees

TDIndustriesDallas,TX1,426 employees

SOURCE: Data and excerpts from R Levering and M Moskowitz,“The 100 Best Companies to Work For,” Fortune, January 24, 2005, pp 72–90.

“This food company makes it easy for employees to get smart. It reimbursestuition at 100% up to $6,000 per year, even for new employees.”

“This technology consultant to the Pentagon flies a Johns Hopkins professor toBedford, Mass., every week so employees can earn a master’s degree in systemsengineering.”

“As long as . . . [employees’] college-age children or grand-children receive aGPA of 2.5 or higher, the company will pay 100% of their tuition, up to $20,000per year.”

Social Capital Program or Activity

“This 25-year-old oil refiner and gas retailer has never laid off an employee.”

“Cisco employees surveyed say they love the company’s efforts to make theworkplace fun, from ‘nerd lunches’ in which experts lead a discussion of techtopics to movie-themed chow in Cisco’s cafés on Oscar night.”

“If an employee [at this building supply company] falls ill or a relative dies, anassigned partner helps with household tasks and the like.”

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The Positive PsychologyMovement Something curioushappened to the field of psychologyduring the last half of the 20th century.It took a distinctly negative turn. The-ory and research became preoccupiedwith mental and behavioral patholo-gies; in other words, what was wrongwith people! Following the traditionalmedical model, most researchers andpracticing psychologists devoted theirattention to diagnosing what waswrong with people and trying to makethem better. At the turn of the 21st cen-tury, bits and pieces of an alternativeperspective advocated by pioneeringpsychologists such as AbrahamMaslow and Carl Rogers were pulledtogether under the label of positive psy-chology. This approach recommendedfocusing on human strengths and po-tential as a way to possibly preventmental and behavioral problems and

improve the general quality of life. A pair of positive psychologists described their newmulti-level approach as follows:

The field of positive psychology at the subjective level is about valued subjective experi-ences: well-being, contentment, and satisfaction (in the past); hope and optimism (for thefuture); and flow and happiness (in the present).At the individual level, it is about positiveindividual traits: the capacity for love and vocation, courage, interpersonal skill, aestheticsensibility, perseverance, forgiveness, originality, future mindedness, spirituality, high talent,and wisdom.At the group level, it is about the civic virtues and the institutions that moveindividuals toward better citizenship: responsibility, nurturance, altruism, civility,moderation,tolerance, and work ethic.46

This is an extremely broad agenda for understanding and improving the human condition.However, we foresee a productive marriage between the concepts of human and social cap-ital and the positive psychology movement, as it evolves into POB.47

Positive Organizational Behavior:Definition and Key DimensionsUniversity of Nebraska OB scholar Fred Luthans defines positive organizational behav-ior (POB) as “the study and application of positively oriented human resource strengthsand psychological capacities that can be measured, developed, and effectively managed forperformance improvement in today’s workplace.”48 His emphasis on study and measure-ment (meaning a coherent body of theory and research evidence) clearly sets POB apartfrom the quick-and-easy self-improvement books commonly found on best-seller lists.Also, POB focuses positive psychology more narrowly on the workplace. Luthans createdthe CHOSE acronym to identify five key dimensions of POB (see Table 1–3). (See Chap-ter 5 for more on self-efficacy and emotional intelligence.) Progressive managers alreadyknow the value of a positive workplace atmosphere, as evidenced by the following situa-tions: At Perkins Coie, in Seattle, “ ‘Happiness committees’ roam the law firm’s halls leav-


President George W. Bush hosts the 2005 Intel Science Talent Search (STS) final-ists.The global economy needs this sort of pre-college human capital if the worldis to become a better place to live, work, and raise families.The Intel Foundationpumps millions of dollars into sponsoring the STS and funding scholarships forthese and other aspiring scientists.Who knows, one of them might be the Presi-dent some day.

Positive organizational behavior (POB)The study and improvement of employees’ positiveattributes and capabilities.

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ing baskets of candies and other thank-you treats on employees’ desks.”49 In a similar vein,Synovus, a Georgia bank, has developed a “pat-on-the-back culture.”50 Meanwhile, in At-lanta, at Barton Protective Services, “ ‘Love’ appears nine times in this security-guardagency’s outline of company values.”51

POB promises to make helpful contributions to the quest for more people-centered or-ganizations in the years to come.

The Managerial Context: GettingThings Done with and through OthersLike the organizations they run, managers touch our lives in many ways. Schools, hospi-tals, government agencies, and large and small businesses all require systematic manage-ment. Formally defined, management is the process of working with and through others toachieve organizational objectives in an efficient and ethical manner. From the standpoint oforganizational behavior, the central feature of this definition is “working with and throughothers.” Managers play a constantly evolving role.52 Today’s successful managers are nolonger the I’ve-got-everything-under-control order givers of yesteryear. Rather, they needto creatively envision and actively sell bold new directions in an ethical and people-friendlymanner. Effective managers are team players empowered by the willing and active supportof others who are driven by conflicting self-interests. Each of us has a huge stake in howwell managers carry out their evolving role. Henry Mintzberg, a respected managementscholar, observed: “No job is more vital to our society than that of the manager. It is themanager who determines whether our social institutions serve us well or whether theysquander our talents and resources.”53

Let us take a closer look at the skills managers need to perform and the future directionof management.

What Do Managers Do? A Skills ProfileObservational studies by Mintzberg and others have found the typical manager’s day to bea fragmented collection of brief episodes.54 Interruptions are commonplace, while large


Table 1–3 Luthans’ CHOSE Model of Key POB Dimensions

Confidence/self-efficacy: One’s belief (confidence) in being able to successfully execute aspecific task in a given context.Hope: One who sets goals, figures out how to achieve them (identify pathways), and is self-motivated to accomplish them, that is, willpower and “waypower.”Optimism: Positive outcome expectancy and/or a positive causal attribution, but is stillemotional and linked with happiness, perseverance, and success.Subjective well-being: Beyond happiness emotion, how people cognitively process andevaluate their lives, the satisfaction with their lives.Emotional intelligence: Capacity for recognizing and managing one’s own and others’emotions—self-awareness, self-motivation, being empathetic, and having social skills.

SOURCE: From F. Luthans, The Acodemy of Management Executive:The Thinking Manager’s Source. Copyright© 2002 by Academy of Management. Reproduced with permission of Academy of Management viaCopyright Clearance Center.

ManagementProcess of workingwith and throughothers to achieveorganizational objectives efficientlyand ethically.

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blocks of time for planning and reflective thinking are not. In one particular study, four top-level managers spent 63% of their time on activities lasting less than nine minutes each.Only 5% of the managers’ time was devoted to activities lasting more than an hour.55 Butwhat specific skills do effective managers perform during their hectic and fragmentedworkdays?

Many attempts have been made over the years to paint a realistic picture of what man-agers do.56 Diverse and confusing lists of managerial functions and roles have been sug-gested. Fortunately, a stream of research over the past 20 years by Clark Wilson and othershas given us a practical and statistically validated profile of managerial skills57 (see Table1–4). Wilson’s managerial skills profile focuses on 11 observable categories of manage-rial behavior. This is very much in tune with today’s emphasis on managerial compe-tency.58 Wilson’s unique skills-assessment technique goes beyond the usual self-reportapproach with its natural bias. In addition to surveying a given manager about his or her11 skills, the Wilson approach also asks those who report directly to the manager to an-swer questions about their boss’s skills. According to Wilson and his colleagues, the resultis an assessment of skill mastery, not simply skill awareness.59 The logic behind Wilson’sapproach is both simple and compelling. Who better to assess a manager’s skills than thepeople who experience those behaviors on a day-today basis—those who report directlyto the manager?

The Wilson managerial skills research yields four useful lessons:

1. Dealing effectively with people is what management is all about. The 11 skills inTable 1–4 constitute a goal creation/commitment/feedback/reward/accomplishmentcycle with human interaction at every turn.

2. Managers with high skills mastery tend to have better subunit performance andemployee morale than managers with low skills mastery.60

3. Effective female and male managers do not have significantly different skillprofiles,61 contrary to claims in the popular business press in recent years.62


Table 1–4 Skills Exhibited by an Effective Manager*

1. Clarifies goals and objectives for everyone involved.2. Encourages participation, upward communication, and suggestions.3. Plans and organizes for an orderly work flow.4. Has technical and administrative expertise to answer organization-related

questions.5. Facilitates work through team building, training, coaching, and support.6. Provides feedback honestly and constructively.7. Keeps things moving by relying on schedules, deadlines, and helpful reminders.8. Controls details without being overbearing.9. Applies reasonable pressure for goal accomplishment.

10. Empowers and delegates key duties to others while maintaining goal clarity andcommitment.

11. Recognizes good performance with rewards and positive reinforcement.

SOURCES:Adapted from material in F Shipper,“A Study of the Psychometric Properties of theManagerial Skill Scales of the Survey of Management Practices,” Educational and Psychological Measurement,June 1995, pp 468–79; C L Wilson, How and Why Effective Managers Balance Their Skills:Technical,Teambuilding, Drive (Columbia, MD: Rockatech Multimedia Publishing, 2003).

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4. At all career stages, derailed managers (those who failed to achieve their potential)tended to be the ones who overestimated their skill mastery (rated themselves higherthan their employees did). This prompted the following conclusion from theresearcher: “when selecting individuals for promotion to managerial positions, thosewho are arrogant, aloof, insensitive, and defensive should be avoided.”63

(See Real World/Real People.)

21st-Century ManagersToday’s workplace is indeed undergoing immense and permanent changes.64 Organizationshave been “reengineered” for greater speed, efficiency, and flexibility.65 Teams are pushingaside the individual as the primary building block of organizations.66 Command-and-con-trol management is giving way to participative management and empowerment.67 Ego-cen-tered leaders are being replaced by customer-centered leaders. Employees increasingly arebeing viewed as internal customers. All this creates a mandate for a new kind of manager inthe 21st century. After conducting a Gallup Organization survey of 80,000 managers anddoing follow-up studies of the top performers, Marcus Buckingham came to this conclusion:

I’ve found that while there are as many styles of management as there are managers, thereis one quality that sets truly great managers apart from the rest: They discover what isunique about each person and then capitalize on it. Average managers play checkers,while great managers play chess.The difference? In checkers, all the pieces are uniform andmove in the same way; they are interchangeable.You need to plan and coordinate theirmovements, certainly, but they all move at the same pace, on parallel paths. In chess, eachtype of piece moves in a different way, and you can’t play if you don’t know how eachpiece moves. More important, you won’t win if you don’t think carefully about how youmove the pieces. Great managers know and value the unique abilities and even the ec-centricities of their employees, and they learn how best to integrate them into a coordi-nated plan of attack.68

Table 1–5 contrasts the characteristics of past and future managers. As the balance of thisbook will demonstrate, the managerial shift in Table 1–5 is not just a good idea, it is an ab-solute necessity in the new workplace.

19

Managers’ Egos Take a Back Seat at JetBlue Airways

Real PeopleRea

l World

JetBlue’s officers don’t act aloof and sit at their desks allday.We roll up our sleeves to understand what’s going on,because our leaders shouldn’t treat others as inferiors.Acouple of years ago, we promoted our middle managerswithout giving them leadership training.They became littledictators, and favoritism started to creep in.

So we had to create a leadership program to reset theexpectations of what leaders should do. But we didn’t hirea bunch of slick facilitators to talk about principles. Instead,

the people who were actually living them at JetBlue werethe ones teaching the courses. Now 40 of our top man-agers spend two days a year leading the group.

In addition, our 23 corporate officers each focus on adifferent city every year.Once a quarter, they go to the cityand listen to the airport staff.

SOURCE: JetBlue CEO David Neeleman, as quoted in B Finn,“Howto Turn Managers into Leaders,” Business 2.0, September 2004, p 70.

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The Contingency Approach:Applying Lessons from Theory,Research, and PracticeScholars have wrestled for many years with the problem of how best to apply the diverseand growing collection of management tools and techniques. Their answer is the contin-gency approach. The contingency approach calls for using management techniques in asituationally appropriate manner, instead of trying to rely on “one best way.” According toa pair of contingency theorists,

[Contingency theories] developed and their acceptance grew largely because they re-sponded to criticisms that the classical theories advocated “one best way” of organizingand managing.Contingency theories, on the other hand, proposed that the appropriate or-ganizational structure and management style were dependent upon a set of “contingency”factors, usually the uncertainty and instability of the environment.69

The contingency approach encourages managers to view organizational behavior withina situational context. According to this modern perspective, evolving situations, not hard-and-fast rules, determine when and where various management techniques are appropriate.For example, as discussed in Chapter 16, contingency researchers have determined that thereis no single best style of leadership. Organizational behavior specialists embrace the contin-gency approach because it helps them realistically interrelate individuals, groups, and or-ganizations. Moreover, the contingency approach sends a clear message to managers intoday’s global economy: Carefully read the situation and then be flexible enough to adapt.70


Table 1–5 Evolution of the 21st-Century Manager

Past Managers Future Managers

Primary role

Learning and knowledge

Compensation criteriaCultural orientationPrimary source of influence

View of peoplePrimary communication pattern

Decision-making style

Ethical considerationsNature of interpersonal relationships

Handling of power and key information

Approach to change

Facilitator, team member, teacher,advocate, sponsor, coach

Continuous life-long learning,generalist with multiple specialties

Skills, resultsMulticultural, multilingualKnowledge (technical and interpersonal)

Primary resource; human capitalMultidirectional

Broad-based input for joint decisions

ForethoughtCooperative (win–win)

Share and broaden access

Facilitate

Order giver, privileged elite,manipulator, controller

Periodic learning, narrow specialist

Time, effort, rankMonocultural, monolingualFormal authority

Potential problemVertical

Limited input for individual decisions

AfterthoughtCompetitive (win–lose)

Hoard and restrict access

Resist

ContingencyapproachUsing managementtools and techniquesin a situationally appropriate manner;avoiding the one-best-way mentality.

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As a human being, with years of interpersonal experience to draw upon, you alreadyknow a good deal about people at work. This point is underscored by the title of Ann Crit-tenden’s new book: If You’ve Raised Kids, You Can Manage Anything: Leadership Beginsat Home.71 But more systematic and comprehensive understanding is possible and desir-able. A working knowledge of current OB theory, research, and practice can help you de-velop a tightly integrated understanding of why organizational contributors think and act asthey do. In order for this to happen, however, prepare yourself for some intellectual sur-prises from theoretical models, research results, or techniques that may run counter to yourcurrent thinking. Research surprises not only make learning fun, they also can improve thequality of our lives both on and off the job. Let us examine the dynamic relationship be-tween OB theory, research, and practice and the value of each.

Figure 1–3 illustrates how theory, research, and practice are related. Throughout thebalance of this book, we focus primarily on the central portion, where all three areas over-lap. Knowledge of why people behave as they do and what managers can do to improveperformance is greatest within this area of maximum overlap. For each major topic, webuild a foundation for understanding with generally accepted theory. This theoretical foun-dation is then tested and expanded by reviewing the latest relevant research findings. Af-ter interpreting the research, we discuss the nature and effectiveness of related practicalapplications.

Sometimes, depending on the subject matter, it is necessary to venture into the areas out-side the central portion of Figure 1–3. For example, an insightful theory supported by con-vincing research evidence might suggest an untried or different way of managing. In otherinstances, an innovative management technique might call for an explanatory theoreticalmodel and exploratory research. Each area—theory, research, and practice—supports and,in turn, is supported by the other two.72 Each area makes a valuable contribution to our un-derstanding of, and ability to, manage organizational behavior.


Theory Research

Practice

Most complete information for better

understanding and managing organizational

behavior

Figure 1–3 Learning about OB through a Combination of Theory,Research, and Practice

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Learning from TheoryA respected behavioral scientist, Kurt Lewin, once said there is nothing as practical as agood theory. According to one management researcher, a theory is a story that explains“why.”73 Another calls well-constructed theories “disciplined imagination.”74 A good OBtheory, then, is a story that effectively explains why individuals and groups behave as theydo. Moreover, a good theoretical model

1. Defines key terms.

2. Constructs a conceptual framework that explains how important factors areinterrelated. (Graphic models are often used to achieve this end.)

3. Provides a departure point for research and practical application.

Indeed, good theories are a fundamental contributor to improved understanding and man-agement of organizational behavior.75

Learning from ResearchBecause of unfamiliar jargon and complicated statistical procedures, many current and fu-ture managers are put off by behavioral research.76 This is unfortunate because practicallessons can be learned as OB researchers steadily advance the frontier of knowledge. Letus examine the various sources and uses of OB research evidence.

Five Sources of OB Research Insights To enhance the instructional valueof our coverage of major topics, we systematically cite “hard” evidence from five differentcategories. Worthwhile evidence was obtained by drawing upon the following priority ofresearch methodologies:

• Meta-analyses. A meta-analysis is a statistical pooling technique that permitsbehavioral scientists to draw general conclusions about certain variables from manydifferent studies.77 It typically encompasses a vast number of subjects, often reachingthe thousands. Meta-analyses are instructive because they focus on general patternsof research evidence, not fragmented bits and pieces or isolated studies.78

• Field studies. In OB, a field study probes individual or group processes in anorganizational setting. Because field studies involve real-life situations, their resultsoften have immediate and practical relevance for managers.

• Laboratory studies. In a laboratory study, variables are manipulated and measuredin contrived situations. College students are commonly used as subjects. The highlycontrolled nature of laboratory studies enhances research precision. But generalizingthe results to organizational management requires caution.79

• Sample surveys. In a sample survey, samples of people from specified populationsrespond to questionnaires. The researchers then draw conclusions about the relevantpopulation. Generalizability of the results depends on the quality of the sampling andquestioning techniques.

• Case studies. A case study is an in-depth analysis of a single individual, group, ororganization. Because of their limited scope, case studies yield realistic but not verygeneralizable results.80


TheoryA story defining keyterms, providing aconceptual frame-work, and explainingwhy something occurs.

Meta-analysisPools the results ofmany studiesthrough statisticalprocedure.

Field studyExamination of variables in real-lifesettings.

LaboratorystudyManipulation andmeasurement ofvariables in con-trived situations.

Sample surveyQuestionnaire re-sponses from a sam-ple of people.

Case studyIn-depth study of asingle person, group,or organization.

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Three Uses of OB Research FindingsOrganizational scholars point out that managers canput relevant research findings to use in three differ-ent ways:81

1. Instrumental use. This involves directlyapplying research findings to practicalproblems. For example, a managerexperiencing high stress tries a relaxationtechnique after reading a research reportabout its effectiveness.

2. Conceptual use. Research is put toconceptual use when managers derivegeneral enlightenment from its findings. The effect here is less specific and moreindirect than with instrumental use. Forexample, after reading a meta-analysisshowing a negative correlation betweenabsenteeism and age,82 a manager mightdevelop a more positive attitude towardhiring older people.

3. Symbolic use. Symbolic use occurs when research results are relied on to verifyor legitimize already held positions. Negative forms of symbolic use involveself-serving bias, prejudice, selective perception, and distortion. For example,tobacco industry spokespersons routinely deny any link between smoking and lung cancer because researchers are largely, but not 100%, in agreementabout the negative effects of smoking. A positive example would be managers maintaining their confidence in setting performance goals afterreading a research report about the favorable impact of goal setting on job performance.

By systematically reviewing and interpreting research relevant to key topics, this bookprovides instructive insights about OB. (For more about OB research methods, see Learn-ing Module C at www.mhhe.com/kreitner.)

Learning from PracticeLearning to deal effectively with people and eventually manage them is like learning to ridea bicycle. You watch others do it. Sooner or later, you get up the courage to try it yourself.You fall off and skin your knee. You climb back on the bike a bit smarter, and so on, untilwobbly first attempts turn into a smooth ride. Your chances of becoming a successful or-ganizational participant and manager can be enhanced by studying the theory, research, andpractical examples in this textbook. Figuratively speaking, however, you eventually mustclimb aboard the “organizational bicycle” and learn by doing.83

The theory➝research➝practice sequence discussed in this section will help you betterunderstand each major topic addressed later in this book. Attention now turns to a topicalmodel that provides a road map for what lies ahead.


SOURCE: L. Schwadron, Harvard Business Review, January 2005, p 72.

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A Topical Model for Understandingand Managing OBFigure 1–4 is a topical road map for our journey through this book. Our destination is or-ganizational effectiveness through continuous improvement. Four different criteria for de-termining whether or not an organization is effective are discussed in Chapter 17. The studyof OB can be a wandering and pointless trip if we overlook the need to translate OB les-sons into effective and efficient organized endeavor.

At the far left side of our topical road map are managers and team leaders, those who areresponsible for accomplishing organizational results with and through others. The three cir-cles at the center of our road map correspond to Parts Two, Three, and Four of this text.Logically, the flow of topical coverage in this book (following introductory Part One) goesfrom individuals, to group processes, to organizational processes. Around the core of ourtopical road map in Figure 1–4 is the organization. Accordingly, we end our journey withorganization-related material in Part Four. Organizational structure and design are coveredthere in Chapter 17 to establish and develop the organizational context of organizationalbehavior. Rounding out our organizational context is a discussion of organizational changein Chapter 18. Chapters 3 and 4 provide a cultural context for OB.


External Environment (Cultural Context)

Organization (Structure, Culture, Change)

Understanding and managing

individual behavior

Understanding and managing

group and social processes

Understanding and managing organizational processes and

problems

Managers and teamleaders responsible

for achieving organizational

results with andthrough others

Organizational effectiveness

through continuous

improvement

Figure 1–4 A Topical Model for What Lies Ahead

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The dotted line represents a permeable boundary between the organization and its envi-ronment. Energy and influence flow both ways across this permeable boundary. Truly, no or-ganization is an island in today’s highly interactive and interdependent world. Relative to theexternal environment, international cultures are explored in Chapter 4. Organization–-environment contingencies are examined in Chapter 17.

Chapter 2 examines the OB implications of significant demographic and social trends,and Module A explores important ethical considerations. These discussions provide a re-alistic context for studying and managing people at work.

Bon voyage! Enjoy your trip through the challenging, interesting, and often surprisingworld of OB.

Summary of Key Concepts1. Define the term organizational behavior and explain why

OB is a horizontal discipline. Organizational behavior(OB) is an interdisciplinary field dedicated to betterunderstanding and managing people at work. It is bothresearch and application oriented. Except for teaching/research positions, one does not normally get a job inOB. Rather, because OB is a horizontal discipline, OBconcepts and lessons are applicable to virtually everyjob category, business function, and professionalspecialty.

2. Contrast McGregor’s Theory X and Theory Y assumptionsabout employees. Theory X employees, according totraditional thinking, dislike work, require closesupervision, and are primarily interested in security.According to the modern Theory Y view, employeesare capable of self-direction, of seeking responsibility,and of being creative.

3. Identify the four principles of total quality management(TQM). (a) Do it right the first time to eliminate costlyrework. (b) Listen to and learn from customers andemployees. (c) Make continuous improvement aneveryday matter. (d) Build teamwork, trust, and mutualrespect.

4. Define the term e-business, and specify at least three OB-related issues raised by e-leadership. E-businessinvolves using the Internet to more effectively andefficiently manage every aspect of a business. Six OB-related issues raised by the advent of e-leadership are(a) greater access to information for everyone,(b) leadership is migrating to lower levels and outsidethe organization, (c) development of nontraditionalleadership networks, (d) followers have moreinformation earlier in the decision making process,

(e) greater influence for unethical leaders with limitedresources, and (f) more contact between senior leadersand their followers.

5. Contrast human and social capital, and explain why we need to build both. The first involves individualcharacteristics, the second involves social relationships.Human capital is the productive potential of anindividual’s knowledge and actions. Dimensions includesuch things as intelligence, visions, skills, self-esteem,creativity, motivation, ethics, and emotional maturity.Social capital is productive potential resulting fromstrong relationships, goodwill, trust, and cooperativeeffort. Dimensions include such things as shared visionsand goals, trust, mutual respect, friendships,empowerment, teamwork, win–win negotiations, andvolunteering. Social capital is necessary to tap individualhuman capital for the good of the organization throughknowledge sharing and networking.

6. Specify the five key dimensions of Luthans’s CHOSE modelof positive organizational behavior (POB). The CHOSEacronym stands for confidence/self-efficacy, hope,optimism, subjective well-being, and emotionalintelligence.

7. Define the term management, and identify at least five ofthe eleven managerial skills in Wilson’s profile of effectivemanagers. Management is the process of working withand through others to achieve organizational objectivesin an efficient and ethical manner. According to theWilson skills profile, an effective manager (a) clarifiesgoals and objectives, (b) encourages participation,(c) plans and organizes, (d) has technical andadministrative expertise, (e) facilitates work throughteam building and coaching, (f) provides feedback,(g) keeps things moving, (h) controls details, (i) appliesreasonable pressure for goals accomplishment,

25

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(j) empowers and delegates, and (k) recognizes andrewards good performance.

8. Characterize 21st-century managers. They will be teamplayers who will get things done cooperatively byrelying on joint decision making, their knowledgeinstead of formal authority, and their multicultural skills.They will engage in life-long learning and becompensated on the basis of their skills and results.They will facilitate rather than resist change, sharerather than hoard power and key information, and bemultidirectional communicators. Ethics will be a

forethought instead of an afterthought.They will begeneralists with multiple specialties.

9. Describe the sources of organizational behavior researchevidence. Five sources of OB research evidence aremeta-analyses (statistically pooled evidence fromseveral studies), field studies (evidence from real-lifesituations), laboratory studies (evidence fromcontrived situations), sample surveys (questionnairedata), and case studies (observation of a single person,group, or organization).

Discussion Questions1. Why do we need people-centered organizations?

2. What reasons do you have for wanting (or not wanting)to study OB?

3. What is your personal experience with Theory X andTheory Y managers (see Table 1–1)? Which did youprefer? Why?

4. How would you respond to someone who said TQMwas just a Fad, it’s not relevant today?

5. What are your personal experiences with e-leadership?What practical lessons have you learned?

6. What are you doing to build human and social capital?

7. What appeals to you most (or least, or both) about theconcept of positive organizational behavior (POB)?

8. Based on either personal experience as a manager oron your observation of managers at work, are the 11 skills in Table 1–4 a realistic portrayal of whatmanagers do?

9. What is your personal experience with 21st-centurymanagers or managers who were stuck in the past?Describe their impact on you and the organization.

10. What “practical” theories have you formulated toachieve the things you want in life (e.g., graduating,keeping fit, getting a good job, meeting that specialsomeone)?

26

OB in Action Case Study

IBM’s Donna Riley Strives for “Collaborative Influence”84

It was at a client meeting in San Francisco in October 2002 thatSam Palmisano, IBM’s new CEO, first unveiled the initiativehe hoped would transform his company. His idea: The Internetreally did change everything (the crash of the New Economynotwithstanding). In a hyperconnected world, IBM’s clientsneeded to become “on-demand” companies, their every busi-ness process exquisitely calibrated to respond instantly towhatever got thrown at them. And to help them, IBM wouldhave to do exactly the same thing.

When she heard about the new strategy, Donna Riley,IBM’s vice president of global talent, remembers wonderingwhether the company had the right managers for its new di-rection. “If leadership is stuck in the past, and the business haschanged, we have a problem,” she says. By the spring of 2003,Palmisano and his leadership development team realized thestrategy would indeed demand a new breed of boss—leaderswho were as sensitive to changes in their environment as In-dian scouts.

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For help, Riley turned to the Hay Group, a consultancythat specializes in executive development. Hay had donework for IBM before, most notably in 1994 when, at formerCEO Lou Gerstner’s behest, the firm had interviewed a groupof the company’s top managers. As part of his turnaroundstrategy for the troubled company, Gerstner wanted to de-velop a new style of leader who could help transform itsfailed culture. Ultimately, Hay distilled 11 competenciesfrom the interviews that would guide IBMers’ performanceas they pulled off one of the most remarkable corporate re-bounds in history.

In the summer of 2003, Hay Group returned to conduct an-other set of interviews with 33 executives who had been iden-tified as outstanding leaders in the new on-demand era—thefolks who really got the new strategy and who were on the cut-ting edge in a high-performance culture. They were drawnfrom every division of the business, every part of the world,united by their extraordinary ability to get the job done. Theplan was to put these top players under a microscope, to divinehow they thought about their jobs and the company; how theyinteracted with clients, peers, and subordinates; how they setgoals and went about meeting them—in short, to extract thebest practices from the best leaders to see if they could be du-plicated.

In a series of three-and-a-half-hour interviews, the man-agers discussed circumstances in which they had been suc-cessful—or not. The interviews were supplemented bysurveys of the people they worked with. Researchers thencombed through the stories and accompanying data, lookingfor characteristics and qualities that distinguished these highperformers.

The results were stunning. “The experts predicted maybe athird of the competencies would be the same, a third would beslightly different, and a third would be brand new,” says Riley.“Much to their surprise—and ours—we found it truly is a newbook,” requiring all new skills.

To begin with, the best executives no longer thought of thefolks to whom they sold stuff as customers; they saw them asclients. The difference? “A customer is transactional,” saysHarris Ginsberg, IBM’s director of global executive and or-ganization capability. “A client is somebody with whom youhave a longstanding relationship and a personal investment.”It’s no longer enough to sell a customer a server. An IBMershould be so focused on becoming a long-term trusted partnerthat she might even discourage a client from buying somenew piece of hardware if it’s in the client’s best interest tohold off.

The 33 leaders were also adept at a skill IBM calls “col-laborative influence.” In a highly complex world, where mul-tiple groups might need to unite to solve a client’s problems,

old-style siloed thinking just won’t cut it, and command-and-control leadership doesn’t work. “It’s really about winninghearts and minds—and getting people whose pay you don’tcontrol to do stuff,” says Mary Fontaine, vice president andgeneral manager of Hay’s McClelland Center for Researchand Innovation.

For example, Frank Squillante, an IBM vice president, hasonly four direct reports. To do his job—devising the strategyfor the company’s intranet, and then developing and deployingapplications for 325,000 people and 100,000 business part-ners—he must be a master at cajoling people over whom hehas no real power. “I use ‘collaborative influence’ everyminute of every day,” he says. “If I tried to pull one of these,‘I’m in charge so you have to do this’ maneuvers, the wholething would break down.”

Riley’s team is now training IBM’s executives in the newcompetencies. This year, only top management will be as-sessed against them. The next group—some 4,000 execu-tives—will have a year to study the goals before being heldaccountable. But the new approach has already spurred somemore flexible, collaborative efforts. Cross-functional teamsfrom IBM’s global services, software, and systems groupshave helped Mobil Travel Guides transform itself from a travelcontent provider to a real-time, customized travel-planningservice; a team of staffers from Big Blue’s research, software,and consulting services helped Nextel dramatically improveits customer-care services.

In an interconnected world, such horizontal, collaborativenetworks of people clearly make more sense than rigid hierar-chies. And leading in such a challenging environment is an ac-quired skill. “Leadership is a personal journey for eachperson,” says Riley, “but I think having a culture that says thisstuff matters—particularly when it’s linked to your businessstrategy—is a very powerful combination.”

Questions for Discussion1. What role, if any, does McGregor’s Theory Y play in

IBM’s drive to create a new breed of manager/leader?

2. What evidence of the e-leadership issues presented inTable 1–2 can you detect in this case? Explain.

3. How does the building of human and social capital (Fig-ure 1–2) factor into this case?

4. Which three or four of Wilson’s 11 managerial skills(Table 1–4) will be most important for IBM’s managers inthe years ahead? Explain your choices.

5. What is the linkage between the 21st-century manager,profiled in Table 1–5, and IBM’s notion of collaborativeinfluence?

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Personal Awareness and Growth Exercise

How Strong Is Your Motivation to Manage?Objectives1. To introduce a psychological determinant of managerial

success.

2. To assess your readiness to manage.

3. To discuss the implications of motivation to manage,from the standpoint of global competitiveness.

IntroductionBy identifying personal traits positively correlated with bothrapid movement up the career ladder and managerial effec-tiveness, John B Miner developed a psychometric test formeasuring what he calls motivation to manage. The question-naire assesses the strength of seven factors relating to the tem-perament (or psychological makeup) needed to manage others.One word of caution. The following instrument is a shortenedand modified version of Miner’s original. Our version is for in-structional and discussion purposes only. Although we believeit can indicate the general strength of your motivation to man-age, it is not a precise measuring tool.

InstructionsAssess the strength of each of the seven dimensions of yourown motivation to manage by circling the appropriate numberson the 1 to 7 scales. Then add the seven circled numbers to getyour total motivation to manage score.

Scoring and InterpretationArbitrary norms for comparison purposes are as follows: Totalscore of 7–21 � Relatively low motivation to manage; 22–34� Moderate; 35–49 � Relatively high. How do you measureup? Remember, though, high motivation to manage is onlypart of the formula for managerial success. The right combi-nation of ability and opportunity is also necessary.

Years of motivation-to-manage research by Miner andothers has serious implications for America’s future globalcompetitiveness. Generally, in recent years, college studentsin the United States have not scored highly on motivation to manage.85 Indeed, compared with samples of US collegestudents, samples of students from Japan, China, Mexico,

Factor Description Scale

1. Authority figures

2. Competitive games

3. Competitive situations

4. Assertive role

5. Imposing wishes

6. Standing out from group

7. Routine administrative functions

A desire to meet managerial role requirements in terms of positive relationships with superiors.

A desire to engage in competition with peers involving games or sports and thus meet managerial role requirements in this regard.

A desire to engage in competition with peers involving occupational or work-related activities and thus meet managerial role requirements in this regard.

A desire to behave in an active and assertive manner involving activities that in this society are often viewed as predominantly masculine and thus to meet managerial role requirements.

A desire to tell others what to do and to utilize sanctions in influencing others, thus indicating a capacity to fulfill managerial role requirements in relationships with subordinates.

A desire to assume a distinctive position of a unique and highly visible nature in a manner that is role-congruent for managerial jobs.

A desire to meet managerial role requirements regarding activities often associated with managerial work that are of a day-to-day administrative nature.

Weak 1–2–3–4–5–6–7 Strong







Total � _________________

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Group Exercise

Timeless AdviceObjectives1. To get to know some of your fellow students.

2. To put the management of people into a lively and inter-esting historical context.

3. To begin to develop your teamwork skills.

IntroductionYour creative energy, willingness to see familiar things in un-familiar ways, and ability to have fun while learning are keysto the success of this warm-up exercise. A 20-minute, small-group session will be followed by brief oral presentations anda general class discussion. Total time required is approxi-mately 40 to 45 minutes.

InstructionsYour instructor will divide your class randomly into groups offour to six people each. Acting as a team, with everyone offer-ing ideas and one person serving as official recorder, eachgroup will be responsible for writing a one-page memo to yourcurrent class. Subject matter of your group’s memo will be“My advice for managing people today is. . . .” The fun part ofthis exercise (and its creative element) involves writing thememo from the viewpoint of the person assigned to your groupby your instructor.

Among the memo viewpoints your instructor may assignare the following:

• Bill Hewlett (chapter-opening vignette).

• An ancient Egyptian slave master (building the great pyr-amids).

• Mary Parker Follett.

• Douglas McGregor.

• A Theory X supervisor of a construction crew (see McGregor’s Theories X and Y in Table 1–1).

• W Edwards Deming.

• A TQM coordinator at 3M Company.

• A contingency management theorist.

• A Japanese auto company executive.

• The chief executive officer of IBM in the year 2030.

• Commander of the Starship Enterprise II in the year 3001.

• Others, as assigned by your instructor.

Use your imagination, make sure everyone participates,and try to be true to any historical facts you’ve encountered.Attempt to be as specific and realistic as possible. Remember,the idea is to provide advice about managing people from an-other point in time (or from a particular point of view at thepresent time).

Make sure you manage your 20-minute time limit care-fully. A recommended approach is to spend 2 to 3 minutes put-ting the exercise into proper perspective. Next, take about 10to 12 minutes brainstorming ideas for your memo, with yourrecorder jotting down key ideas and phrases. Have yourrecorder use the remaining time to write your group’s one-page memo, with constructive comments and help from theothers. Pick a spokesperson to read your group’s memo to theclass.

Korea, and Taiwan consistently scored higher on motivationto manage.86 Miner believes the United States may conse-quently lag in developing sufficient managerial talent for atough global marketplace.87

In a study by other researchers, MBA students with highermotivation-to-manage scores tended to earn more money aftergraduation. But students with a higher motivation to managedid not earn better grades or complete their degree programany sooner than those with a lower motivation to manage.88

Questions for Discussion1. Do you believe our adaptation of Miner’s motivation to

manage instrument accurately assessed your potential asa manager? Explain.

2. Which of the seven dimensions do you think is probablythe best predictor of managerial success? Which is theleast predictive? Why?

3. Miner puts heavy emphasis on competitiveness by an-choring two of the seven dimensions of motivation tomanage to the desire to compete. Some observers believethe traditional (win–lose) competitive attitude is beingpushed aside in favor of a less competitive (win–win) at-titude today, thus making Miner’s instrument out of date.What is your position on this competitiveness debate?Explain.

4. Do you believe Miner is correct in saying that low moti-vation to manage hurts the United States’s global com-petitiveness? Explain.

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Questions for Discussion1. What valuable lessons about managing people have you

heard?

2. What have you learned about how not to manage people?

3. From the distant past to today, what significant shifts inthe management of people seem to have taken place?

4. Where does the management of people appear to beheaded?

5. All things considered, what mistakes are today’s man-agers typically making when managing people?

6. How well did your group function as a “team”?

Ethical Dilemma

Liar! Liar!89

Calling in with a manufactured cough and a fake, throaty “I’mnot feeling well” can seem rather dull compared to some ex-cuses employers hear. . . .

Career-Builder.com, . . . commissioned a nationwide sur-vey of 1,600 people and found that more than one-third of U.S.workers called in sick at least once last year when they feltwell. . . .

Among the most unusual excuses that have been heard:

• My bus broke down and was held up by robbers.

• I was arrested as a result of mistaken identity.

• I hurt myself bowling.

• My curlers burned my hair and I had to go to the hair-dresser.

• I eloped.

• My cat unplugged my alarm clock.

• I forgot to come back to work after lunch.

• I totaled my wife’s Jeep in a collision with a cow.

• I had to be there for my husband’s grand jury trial.

• A hit man was looking for me.

If you were a manager, how would you respond to question-able excuses such as these? (what are the ethical implicationsof your answer?)

1. “I call in sick sometimes when I’m not, so it would be un-fair to pick on others who do the same.” (So you’ll donothing?)

2. “When someone lies to me it not only insults my intelli-gence, it destroys any trust I might have in that person.Employees with lame excuses for not being here need tobe held accountable.” (Explain how.)

3. “It just shows you can’t trust people. You give them aninch, they’ll take a mile. Flagrant rule-breakers need to bepunished as a warning to others.” (Explain how.)

4. “Look, people are people. If I cut them a little slack theywill return the favor by doing something extra on the job.”(What about repeat offenders?)

5. Invent other responses. Discuss.

For the Chapter 1 Internet Exercise featuring The building ofhuman capital at Intel Corp. (www.intel.com), visit our Website at www.mhhe.com/kreitner.

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Learning Module AEthics and Organizational Behavior

The loud message comes from one company after another: Surging health carecosts for retired workers are creating a giant burden. So companies have beencutting health benefits for their retirees or requiring them to contribute more ofthe cost.

Time for a reality check: In fact, no matter how high health care costs go, well over halfof large American corporations face only limited impact from the increases when it comesto their retirees. They have established ceilings on how much they will ever spend per re-tiree for health care. If health costs go above the caps, it’s the retiree, not the company,who’s responsible.

Yet numerous companies are cutting retirees’ health benefits anyway. One possible fac-tor: When companies cut these benefits, they create instant income. This isn’t just the sav-ings that come from not spending as much. Rather, thanks to complex accounting rules, thevery act of cutting retirees’ future health care benefits lets companies reduce a liability andgenerate an immediate accounting gain.

In some cases it flows straight to the bottom line. More often it sits on the books like acookie jar, from which a company takes a piece each year that helps it meet earnings esti-mates. . . .

The fate of retirees can be very different. When Robert Eggleston retired from Interna-tional Business Machines Corp. 12 years ago, he was paying $40 a month toward healthcare premiums for himself and his wife, LaRue, with IBM paying the rest. In 1993, IBMset ceilings on its own health care spending for retirees. For those on Medicare, which pro-vides basic hospital and doctor-visit coverage, the cap was $3,000 or $3,500, depending onwhen they retired. For those younger than 65, the cap was $7,000 or $7,500. Spending hitthe caps for the older retirees in 2001, the company says, pushing future health cost in-creases onto retirees’ shoulders.

Mr Eggleston, 66 years old, has seen his premiums jump to $365 a month for the cou-ple. Deductibles and copayments for drugs and doctor visits added $663 a month last year.“It just eats up all the pension,” which is $850 a month, Mrs Eggleston says. Her husbandhas brain cancer. Though he gets free supplies of a tumor-fighting drug through a programfor low-income families, he has cashed in his 401(k) account, and he and LaRue have takenout a second mortgage on their Lake Dallas, Texas, home.

IBM retirees as a group saw their health care premiums rise nearly 29% in 2003, on theheels of a 67%-plus increase in 2002. For IBM, with its caps in place, spending on retireehealth care declined nearly 5%, after a drop of 18% the year before.

IBM confirms that retirees’ spending has risen as its own has fallen.1

FOR DISCUSSIONDo you think it is ethical for a company like IBM to raise retirees’ contributions tohealth benefits while its own decrease? Explain.

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Real People

Real World

Merck Attacks Critics of Big-SellingPainkiller Vioxx

As academic researchers increasingly raised questionsabout Vioxx’s heart safety, the company struck back hard.It even sued one Spanish pharmacologist, trying unsuc-cessfully to force a correction of an article he wrote. In an-other case, it warned that a Stanford University researcherwould “flame out” unless he stopped giving “anti-Merck”lectures, according to a letter of complaint written toMerck by a Stanford professor.A company training docu-ment listed potential tough questions about Vioxx and saidin capital letters,“DODGE!”

The revelations shed new light on the interplay be-tween marketing and science at Merck as bad news piledup about a blockbuster drug used by some 20 millionAmericans. Amid growing danger signs, Merck fought arearguard action for four and a half years,clinging to a hopethat somehow Vioxx’s safety could be confirmed—eventhough its research chief had already privately acknowl-edged its risks.

SOURCE: Excerpted from A W Mathews and B Martinez,“PainfulDrug: E-Mails Suggest Merck Knew Vioxx’s Dangers at Early Stage,”The Wall Street Journal, November 1, 2004, p A1.

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What are the frequency and consequences of unethical behavior? Although it is difficultto obtain precise statistics on the frequency of unethical behavior, a 2005 nationwide surveyof 581 human resource professionals revealed that 62% of the respondents occasionally ob-served unethical behavior at their companies.2 Unethical behavior occurs from the bottomto the top of organizations. For example, a survey of job applicants for executive positionsindicated that 64% had been misinformed about the financial condition of potential em-ployers, and 58% of these individuals were negatively affected by this misinformation.3 It isvery likely that some of these affected individuals moved their families and left their friendsonly to find out the promise of a great job in a financially stable organization was a lie.

Experts estimated that US companies lose about $600 billion a year from unethical andcriminal behavior.4 Studies in the United States and the United Kingdom further demon-strated that corporate commitment to ethics can be profitable. Evidence suggested that prof-itability is enhanced by a reputation for honesty and corporate citizenship.5 Ethics can alsoimpact the quality of people who apply to work in an organization. A recent online surveyof 1,020 individuals indicated that 83% rated a company’s record of business ethics as“very important” when deciding to accept a job offer. Only 2% rated it as “unimportant.”6

As you will learn in this learning module, there are a variety of individual and organi-zational characteristics that contribute to unethical behavior. OB is an excellent vantagepoint for better understanding and improving workplace ethics. If OB can provide insightsabout managing human work behavior, then it can teach us something about avoiding mis-behavior.

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Ethics involves the study of moral issues and choices. It is concerned with right versuswrong, good versus bad, and the many shades of gray in supposedly black-and-white is-sues. Moral implications spring from virtually every decision, both on and off the job. Man-agers are challenged to have more imagination and the courage to do the right thing.

For example, do you think Merck acted ethically when researchers began raising ques-tions about the heart risks associated with its big-selling painkiller Vioxx (see Real World/Real People)? Merck responded this way even after its research chief, Edward Scolnick,had e-mailed colleagues in March 2000 that “the cardiovacuslar events ‘are clearly there’and called it a ‘shame.’ ”7

To enhance your understanding about ethics and organizational behavior, we discuss(1) a conceptual framework of ethical behavior, (2) a decision tree for diagnosing ethicaldecisions, (3) whether moral orientations vary by gender, (4) general moral principles formanagers, and (5) how to improve an organization’s ethical climate.

A Model of Ethical BehaviorEthical and unethical conduct is the product of a complex combination of influences (seeFigure A–1). At the center of the model in Figure A–1 is the individual decision maker. Heor she has a unique combination of personality characteristics, values, and moral principles,leaning toward or away from ethical behavior. Personal experience with being rewarded orreinforced for certain behaviors and punished for others also shapes the individual’s ten-dency to act ethically or unethically. Finally, gender plays an important role in explainingethical behavior. Men and women have different moral orientations toward organizationalbehavior.8 This issue is discussed later in this section.

• Personality• Values• Moral principles• History of reinforcement• Gender

Ethicalbehavior

Internal organizationalinfluences

• Ethical codes• Organizational culture• Organizational size• Structure• Perceived pressure for results• Corporate strategy

Neutralizing/enhancing factors

Top management teamcharacteristics

• Age• Length of service• Military service• Homogeneity/heterogeneity

External organizationalinfluences

• Political/legal• Industry culture• National culture• Environment

Individual

Roleexpectations

Figure A–1 A Model of Ethical Behavior in the Workplace

SOURCE: Based in part on A J Daboub,A M A Rasheed, R L Priem, and D A Gray,“Top Management Team Characteristics and CorporateIllegal Activity,” Academy of Management Review, January 1995, pp 138–70.

EthicsStudy of moral issues and choices.

Learning Module A Ethics and Organizational Behavior 33

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Next, Figure A–1 illustrates two major sources of influence on one’s role expectations.People assume many roles in life, including those of employee or manager. One’s expecta-tions for how those roles should be played are shaped by a combination of internal and ex-ternal organizational factors. Let us now examine how various internal and externalorganizational influences impact ethical behavior and how these effects are neutralized orenhanced by characteristics possessed by an organization’s top management team.

Internal Organizational InfluencesFigure A–1 shows six key internal organizational influences on ethical behavior.9 Corpo-rate ethical codes of conduct and organizational culture, discussed in Chapter 2, clearlycontribute to reducing the frequency of unethical behavior. Consider the example of Rud-der Finn, the world’s largest privately owned public relations agency.

Rudder Finn established an ethics committee early on in its history because the foundersmaintain that public relations professionals have a special obligation to believe in what theyare doing. David Finn, co-founder and CEO, chairs every ethics committee meeting todemonstrate how seriously he takes this issue. In part, these meetings perform the functionof a training program in that all members of staff are invited to participate in an open fo-rum, during which actual ethical problems are freely discussed and an outside adviser pro-vides objectivity. “Employees have to trust that if they go to a line manager to discuss adelicate situation or seek advice, they can do so without fear of repercussions,” says Finn.10

This example also illustrates the importance of top management support in creating an eth-ical work environment.

A number of studies have uncovered a positive relationship between organizational sizeand unethical behavior: Larger firms are more likely to behave illegally. Interestingly, re-search also reveals that managers are more likely to behave unethically in decentralized or-ganizations. Unethical behavior is suspected to occur in this context because lower-levelmanagers want to “look good” for the corporate office. In support of this conclusion, manystudies have found a tendency among middle- and lower-level managers to act unethicallyin the face of perceived pressure for results. Further, this tendency is particularly pro-nounced when individuals are rewarded to accomplish their goals.11 By fostering apressure-cooker atmosphere for results, managers can unwittingly set the stage for unethi-cal shortcuts by employees who seek to please and be loyal to the company.

External Organizational InfluencesFigure A–1 identifies four key external influences on role expectations and ethical behav-ior. The political/legal system clearly impacts ethical behavior. As previously mentioned,the United States is currently experiencing an increase in the extent to which its political/legal system is demanding and monitoring corporate ethical behavior. In contrast, othercountries such as China do not put as much emphasis on monitoring unethical and poten-tially illegal actions. Consider the case of counterfeit business. The World Customs Orga-nization estimates counterfeiting cost companies $512 billion in lost revenue in 2004.China is the largest contributor to counterfeiting in the world, accounting for nearly two-thirds of all the fake goods worldwide.12 Past research also uncovered a tendency for firmsin certain industries to commit more illegal acts. Researchers partially explained this find-ing by speculating that an industry’s culture, defined as shared norms, values, and beliefsamong firms, predisposes managers to act unethically.


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Moreover, Figure A–1 shows that national culture affects ethical behavior (national cul-tures are discussed in Chapter 4).13 This conclusion was supported in a multi-nation study(including the United States, Great Britain, France, Germany, Spain, Switzerland, India,China, and Australia) of management ethics. Managers from each country were asked tojudge the ethicality of the 12 behaviors used in the OB Exercise. Results revealed signifi-cant differences across the 10 nations.14 That is, managers did not agree about the ethical-ity of the 12 behaviors. What is your attitude toward these behaviors? (You can find out bycompleting the OB Exercise.) Finally, the external environment influences ethical behav-ior. For example, unethical behavior is more likely to occur in environments that are char-acterized by less generosity and when industry profitability is declining.

Neutralizing/Enhancing FactorsIn their search for understanding the causes of ethical behavior, OB researchers uncov-ered several factors that may weaken or strengthen the relationship between the internaland external influencers shown in Figure A–1 and ethical behavior. These factors all re-volve around characteristics possessed by an organization’s top management team(TMT): A TMT consists of the CEO and his or her direct reports.15 The relationship be-tween ethical influencers and ethical behavior is weaker with increasing average age andincreasing tenure among the TMT. This result suggests that an older and more experi-enced group of leaders is less likely to allow unethical behavior to occur. Further, the eth-ical influencers are less likely to lead to unethical behavior as the number of TMTmembers with military experience increases and when the TMT possesses heterogenouscharacteristics (e.g., diverse in terms of gender, age, race, religion, etc.). This conclusionhas two important implications.

First, it appears that prior military experience favorably influences the ethical behaviorof executives. While OB researchers are uncertain about the cause of this relationship, itmay be due to the military’s practice of indoctrinating recruits to endorse the values ofduty, discipline, and honor. Regardless of the cause, military experience within a TMT ispositively related to ethical behavior. Organizations thus should consider the merits of including military experience as one of its selection criteria when hiring or promoting

Although China is the largest contribu-tor to counterfeit business around theworld, officials like these in ZhejiangProvidence have been increasing theirattempts to confiscate fake products.These officials found 460,000 fake Sonybrand batteries and 30,000 fake Sonybrand earphones.Would you buy a de-signer “knock-off” if the price was right?


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OB in Action Case Study

How Ethical Are These Behaviors?InstructionsEvaluate the extent to which you believe the following behaviors are ethical. Circle your responses on the ratingscales provided. Compute your average score and compare it to the norms.

Neither Ethical Very Unethical Unethical nor Unethical Ethical Very Ethical

Accepting gifts/favors in exchange for 1 2 3 4 5preferential treatment

Giving gifts/favors in exchange for 1 2 3 4 5preferential treatment

Divulging confidential information 1 2 3 4 5

Calling in sick to take a day off 1 2 3 4 5

Using the organization’s materials and 1 2 3 4 5supplies for personal use

Doing personal business on work time 1 2 3 4 5

Taking extra personal time (breaks, etc.) 1 2 3 4 5

Using organizational services for 1 2 3 4 5personal use

Passing blame for errors to an innocent 1 2 3 4 5co-worker

Claiming credit for someone else’s work 1 2 3 4 5

Not reporting others’ violations of 1 2 3 4 5organizational policies

Concealing one’s errors 1 2 3 4 5Average score � _________________

Norms (average scores by country)

United States � 1.49

Great Britian � 1.70

Australia � 1.44

France � 1.66

China � 1.46

Average of all 10 countries � 1.67

SOURCE:The survey behaviors were taken from T Jackson,“Cultural Values and Management Ethics: A 10-Nation Study,” Human Relations,October 2001, pp. 1287–88.

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managers. Second, organizations are encouraged to increase the diversity of its TMT ifthey want to reduce the chances of unethical decision making. Chapter 4 thoroughly dis-cusses how employee diversity can increase creativity, innovation, group problem solv-ing, and productivity.

A Decision Tree for Ethical DecisionsEthical decision making frequently involves trade-offs. The opening vignette to this learn-ing module is a good example. IBM’s decision to raise their retirees’ health benefit contri-butions saved the company money and thereby created a positive impact on shareholdervalue. On the other hand, individuals like Robert Eggleston were hurt by this decision. Heultimately had to take out a second mortgage on his home to pay for health-related ex-penses. This section presents a decision tree that managers can use to help navigate throughethical questions such as the one faced by IBM in the opening vignette.

The decision tree is shown in Figure A–2 and it can be applied to any type of decisionor action that an individual manager or corporation is contemplating.16 Looking at the tree,the first question to ask is whether or not the proposed action is legal. If the action is


Is it ethical?(To answer, weigh the effect on customers,employees, the community, the environment,and suppliers against the benefit to the shareholders.)

Would it be ethicalnot to take the action?(To answer, weigh the harm or cost thatwould be imposed on shareholders againstthe costs or benefits to other stakeholders.)

Yes

No

Yes

Yes

Do it.

No

No

Don't do it.

No Do it, but disclose theeffect of the action toshareholders.

Does it maximizeshareholder value?

Is the proposedaction legal?

Yes Don't do it.

Don't do it.

SOURCE: Reprinted by permission of Harvard Business Review. From Constance E Bagley,“The Ethical Leader’s Decision Tree,” HarvardBusiness Review, February 2003, p 19. Copyright © 2003 by Harvard Business School Publishing Corporation; all rights reserved.

Figure A–2 An Ethical Decision Tree

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illegal, do not do it. If the action is legal, then consider the impact of the action on share-holder value. A decision maximizes shareholder value when it results in a more favorablefinancial position (e.g., increased profits) for an organization. Whether or not an actionmaximizes shareholder value, the decision tree shows that managers still need to considerthe ethical implications of the decision or action. For example, if an action maximizesshareholder value, the next question to consider is whether or not the action is ethical. Theanswer to this question is based on considering the positive effect of the action on an or-ganization’s other key constituents (i.e., customers, employees, the community, the envi-ronment, and suppliers) against the benefit to the shareholders. According to the decisiontree framework, managers should make the decision to engage in an action if the benefitsto the shareholders exceed the benefits to the other key constituents. Managers should notengage in the action if the other key constituents benefit more from the action than share-holders.

Figure A–2 illustrates that managers use a slightly different perspective when their ini-tial conclusion is that an action does not maximize shareholder value. In this case, the ques-tion becomes “Would it be ethical not to take action?” This question necessitates that amanager consider the harm or cost of an action to shareholders against the costs or bene-fits to other key constituents. If the costs to shareholders from a managerial decision exceedthe costs or benefits to other constituents, the manager or company should not engage inthe action. Conversely, the manager or company should take action when the perceivedcosts or benefits to the other constituents are greater than the costs to shareholders. Let usapply this decision tree to the example in the opening vignette on IBM.

Is it legal for a company to decrease its contribution to retiree health care benefits whilesimultaneously raising retirees’ contributions? The answer is yes.17 Does an organizationmaximize shareholder value by decreasing its retiree health care expenses? Again, the an-swer is yes. We now have to consider the overall benefits to shareholders against the over-all benefits to other key constituents. The answer to this question is more complex than itappears and is contingent on an organization’s corporate values. Consider the following twoexamples. In company one, the organization is losing money and it needs cash in order toinvest in new product development. Management believes that new products will fuel thecompany’s economic growth and ultimate survival. This company’s statement of corporatevalues also reveals that the organization values profits and shareholder return more thanemployee loyalty. In this case, the company should make the decision to increase retirees’health care contributions. Company two, in contrast, is profitable and has been experienc-ing increased market share with its products. This company’s statement of corporate valuesalso indicates that employees are the most important constituent it has, even more thanshareholders: Southwest Airlines is a good example of a company with these corporate val-ues. In this case, the company should not make the decision to decrease its contribution toretirees’ benefits.

It is important to keep in mind that the decision tree cannot provide a quick formula thatmanagers and organizations can use to assess every ethical question. It does, however, pro-vide a framework for considering the trade-offs between managerial and corporate actionsand managerial and corporate ethics. Try using this decision tree the next time you are facedwith an ethical question or problem.

Do Moral Orientations Vary by Gender?It is interesting to note that two women, Sherron Watkins and Maureen Castaneda, playedkey roles as whistle-blowers (i.e., when an employee informs others about corporate


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wrongdoing) in the Enron fiasco.“Watkins, Enron’s vice president ofcorporate development, wrote theprescient memo to Enron’s chief ex-ecutive that warned him the com-pany was in deep financial trouble.Castaneda, Enron’s director of for-eign exchange, is the one who toldauthorities that Enron was stillshredding documents after its offi-cials were ordered to preserve everypiece of paper.”18 Does this suggestthat women are more likely to bewhistle-blowers because they havedifferent moral principles than men?

A study of 300 self-describedwhistle-blowers revealed that genderwas not related to employees’ report-ing wrongdoing.19 Still, other re-search suggests that men and womenview moral problems and situationsdifferently. Carol Gilligan, a well-known psychologist, proposed oneunderlying cause of these gender dif-ferences. Her research revealed that men and women differed in terms of how they perceivedmoral problems. Males perceived moral problems in terms of a justice perspective, whereaswomen relied on a care perspective. The two perspectives are described as follows:

A justice perspective draws attention to problems of inequality and oppression and holdsup an ideal of reciprocal rights and equal respect for individuals. A care perspective drawsattention to problems of detachment or abandonment and holds up an ideal of attentionand response to need.Two moral injunctions, not to treat others unfairly and not to turnaway from someone in need, capture these different concerns.20

This description underscores the point that men are expected to view moral problems interms of rights, whereas women are predicted to conceptualize moral problems as an issueof care involving empathy and compassion.

A meta-analysis of 113 studies tested these ideas by examining whether or not the jus-tice and care orientations varied by gender. Results did not support the expectation thatthe care perspective was used predominantly by females and the justice orientation pre-dominantly by males.21 The authors concluded that “although distinct moral orientationsmay exist, these orientations are not strongly associated with gender.”22 This conclusionsuggests that future research is needed to identify the source of moral reasoning differ-ences between men and women. Which moral perspective do you prefer: justice or care?

General Moral PrinciplesManagement consultant and writer Kent Hodgson has helpfully taken managers a stepcloser to ethical decisions by identifying seven general moral principles (see Table A–1).


Justice perspectiveBased on the idealof reciprocal rightsand driven by rulesand regulations.

Care perspectiveInvolves compassionand an ideal of attention and response to need.

Sherron Watkins, former Vice President for Corporate Development at Enron was one of the whistleblowers who brought the company’s unethical practices tolight. Former Enron Chief Executive Officer, Jeffrey Skilling, looks on as she testifiesbefore the Senate Commerce Committee on Enron. Do you think it took a lot ofcourage for Sherron to testify? What are the consequences of being a whistleblower?

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Hodgson calls them “the magnificent seven” to emphasize their timeless and worldwiderelevance. Both the justice and care perspectives are clearly evident in the magnificentseven, which are more detailed and, hence, more practical. Importantly, according toHodgson, there are no absolute ethical answers for decision makers. The goal for managersshould be to rely on moral principles so their decisions are principled, appropriate, anddefensible.23

ExxonMobil is a good example of a company trying to follow this recommendation. According to the company’s corporate citizenship statement,

We pledge to be a good corporate citizen in all the places we operate worldwide.We willmaintain the highest ethical standards, comply with all applicable laws and regulations, andrespect local and national cultures.We are dedicated to running safe and environmentallyresponsible operations.24


Table A–1 The Magnificent Seven: General Moral Principles for Managers

1. Dignity of human life: The lives of people are to be respected. Human beings, by the fact oftheir existence, have value and dignity.We may not act in ways that directly intend to harmor kill an innocent person. Human beings have a right to live; we have an obligation torespect that right to life. Human life is to be preserved and treated as sacred.

2. Autonomy: All persons are intrinsically valuable and have the right to self-determination.Weshould act in ways that demonstrate each person’s worth, dignity, and right to free choice.We have a right to act in ways that assert our own worth and legitimate needs.We shouldnot use others as mere “things” or only as means to an end. Each person has an equal rightto basic human liberty, compatible with a similar liberty for others.

3. Honesty:The truth should be told to those who have a right to know it. Honesty is also knownas integrity, truth telling, and honor. One should speak and act so as to reflect the reality of thesituation. Speaking and acting should mirror the way things really are.There are times whenothers have the right to hear the truth from us; there are times when they do not.

4. Loyalty: Promises, contracts, and commitments should be honored. Loyalty includes fidelity,promise keeping, keeping the public trust, good citizenship, excellence in quality of work,reliability, commitment, and honoring just laws, rules, and policies.

5. Fairness: People should be treated justly. One has the right to be treated fairly, impartially,and equitably. One has the obligation to treat others fairly and justly.All have the right tothe necessities of life—especially those in deep need and the helpless. Justice includes equal,impartial, unbiased treatment. Fairness tolerates diversity and accepts differences in peopleand their ideas.

6. Humaneness. There are two parts: (1) Our actions ought to accomplish good, and (2) weshould avoid doing evil.We should do good to others and to ourselves.We should haveconcern for the well-being of others; usually,we show this concern in the form ofcompassion, giving, kindness, serving, and caring.

7. The common good:Actions should accomplish the “greatest good for the greatest number” ofpeople. One should act and speak in ways that benefit the welfare of the largest number ofpeople, while trying to protect the rights of individuals.

SOURCE: From A Rock and a Hard Place: How to Make Ethical Business Decisions When the Choices Are Tough,(New York,American Management Association, 1992). Reprinted with permission of the author.

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How to Improve the Organization’sEthical ClimateA team of management researchers recommended the following actions for improving on-the-job ethics.25

• Behave ethically yourself. Managers are potent role models whose habits and actualbehavior send clear signals about the importance of ethical conduct. Ethical behavioris a top-to-bottom proposition.

• Screen potential employees. Surprisingly, employers are generally lax when it comesto checking references, credentials, transcripts, and other information on applicantrésumés. More diligent action in this area can screen out those given to fraud andmisrepresentation. Integrity testing is fairly valid but is no panacea.26

• Develop a meaningful code of ethics. Codes of ethics can have a positive impact ifthey satisfy these four criteria:

1. They are distributed to every employee.

2. They are firmly supported by top management.

3. They refer to specific practices and ethical dilemmas likely to be encountered bytarget employees (e.g., salespersons paying kickbacks, purchasing agents receivingpayoffs, laboratory scientists doctoring data, or accountants “cooking the books”).

4. They are evenly enforced with rewards for compliance and strict penalties fornoncompliance.

• Provide ethics training. Employees can be trained to identify and deal with ethicalissues during orientation and through seminar and video internet training sessions.27

• Reinforce ethical behavior. Behavior that is reinforced tends to be repeated, whereasbehavior that is not reinforced tends to disappear. Ethical conduct too often ispunished while unethical behavior is rewarded.

• Create positions, units, and other structural mechanisms to deal with ethics. Ethicsneeds to be an everyday affair, not a one-time announcement of a new ethical codethat gets filed away and forgotten. Boeing, for example, has hired an outside ethicswatchdog in response to several breaches of ethics. Ethics transgressions have costthe company billions of dollars in government contracts and resulted in the firing ofseveral top-level executives. The new external ethics compliance officer will overseeBoeing’s new ethics-compliance programs and will report directly to the US AirForce.28

Discussion Questions1. Use Figure A–1 to identify the most important influences on IBM’s decision to increase

retirees’ contributions to health benefits while decreasing its contributions.

2. Why do you think there is an increase in the number of indictments against executives in theUnited States?

3. If you were a professor at a university, what would you do to discourage students fromcheating on assignments and exams? Explain your recommendations.


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Group Exercise

Investigating the Difference in Moral Reasoning betweenMen and Women

42

Objectives1. To determine if men and women resolve moral/ethical

problems differently.

2. To determine if males and females use justice and careperspectives, respectively, to solve moral/ethical prob-lems.

3. To improve your understanding about the moral reason-ing used by men and women.

IntroductionMen and women view moral problems and situations dissimi-larly. This is one reason men and women solve identical moralor ethical problems differently. Some researchers believe thatmen rely on a justice perspective to solve moral problemswhereas women are expected to use a care perspective. Thisexercise presents two scenarios that possess a moral/ethical is-sue. You will be asked to solve each problem and to discuss thelogic behind your decision. The exercise provides you with theopportunity to hear the thought processes used by men andwomen to solve moral/ethical problems.

InstructionsYour instructor will divide the class into groups of four to six.(An interesting option is to use gender-based groups.) Eachgroup member should first read the scenario alone and thenmake a decision about what to do. Once this is done, use thespace provided to outline the rationale for your decision tothis scenario. Next, read the second scenario and follow thesame procedure: Make a decision and explain your rationale.Once all group members have completed their analyses forboth scenarios, meet as a group to discuss the results. One ata time, each group member should present his or her final de-cision and the associated reasoning for the first scenario.Someone should keep a running tally of the decisions so thata summary can be turned in to the professor at the end of yourdiscussion. Follow the same procedure for the second sce-nario.29

SCENARIO 1

You are the manager of a local toy store.The hottestChristmas toy of the year is the new “Peter Panda”stuffed animal.The toy is in great demand and almostimpossible to find.You have received your one and only

shipment of 12, and they are all promised to peoplewho previously stopped in to place a deposit and re-serve one. A woman comes by the store and pleadswith you, saying that her six-year-old daughter is in thehospital very ill, and that “Peter Panda” is the one toyshe has her heart set on. Would you sell her one,knowing that you will have to break your promise andrefund the deposit to one of the other customers?(There is no way you will be able to get an extra toyin time.)

Your Decision: _____

Would Sell Would Not Sell Unsure

MenWomen

Rationale for your decision:

SCENARIO 2

You sell corporate financial products, such as pensionplans and group health insurance.You are currently ne-gotiating with Paul Scott, treasurer of a Fortune 500firm, for a sale that could be in the millions of dollars.You feel you are in a strong position to make the sale,but two competitors are also negotiating with Scott,and it could go either way.You have become friendlywith Scott, and over lunch one day he confided in youthat he has recently been under treatment for manicdepression. It so happens that in your office there is astaff psychologist who does employee counseling.Thethought has occurred to you that such a trained pro-fessional might be able to coach you on how to actwith and relate to a personality such as Scott’s, so as topersuade and influence him most effectively. Wouldyou consult the psychologist?

Your Decision: _____

Would Consult Would Not Consult Unsure

MenWomen

Rationale for your decision:

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Questions for Discussion1. Did males and females make different decisions in re-

sponse to both scenarios? (Comparative norms can befound in Note30.)

2. What was the moral reasoning used by women and mento solve the two scenarios?31

3. To what extent did males and females use a justice andcare perspectives, respectively?

4. What useful lessons did you learn from this exercise?

43

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EndnotesCHAPTER 1

1P Burrows, “Architects of the Info Age,” Business Week, March29, 2004, p 22.

2Based on Jeffery Pfeffer, The Human Equation: Building Profitsby Putting People First (Boston: Harvard Business School Press,1998); and Jeffrey Pfeffer and John F. Veiga, “Putting PeopleFirst for Organizational Success,” Academy of ManagementExecutive, May 1999, pp 37–48.

3Data from Pfeffer and Veiga, “Putting People First forOrganizational Success,” p 47. Also see C A O’Reilly andPfeffer, Hidden Value: How Great Companies AchieveExtraordinary Results with Ordinary People (Boston: HarvardBusiness School Press, 2000); and J P Guthrie, “High-Involvement Work Practices, Turnover, and Productivity:Evidence from New Zealand,” Academy of ManagementJournal, February 2001, pp 180–90.

4As quoted in P B Brown, “What I Know Now,” Fast Company,February 2005, p 96.

5See T Butler and J Waldroop, “Understanding ‘People’ People,”Harvard Business Review, June 2004, pp 78–86; R Levering andM Moskowitz, “The 100 Best Companies to Work For,” Fortune,January 24, 2005, pp 72–90; A Harrington, “Hall of Fame,”Fortune, January 24, 2005, p 994; A Pomeroy, “How HR CanAffect the Bottom Line,” HR Magazine, February 2005, pp 14,16; D K Datta, J P Guthrie, and P M Wright, “Human ResourceManagement and Labor Productivity: Does Industry Matter?”Academy of Management Journal, February 2005, pp 135–45;and P Babcock, “Find What Workers Want,” HR Magazine, April2005, pp 50–56.

6C I Barnard, The Functions of the Executive (Cambridge, MA:Harvard University Press, 1938), p 73.

7F Zakaria, “The Education of Paul Wolfowitz,” Newsweek,March 28, 2005, p 37.

8See J B Miner, “The Rated Importance, Scientific Validity, andPractical Usefulness of Organizational Behavior Theories: AQuantitative Review,” Academy of Management Learning andEducation, September 2003, pp 250–68.

9Edward E Lawler III, Treat People Right! How Organizationsand Individuals Can Propel Each Other into a Virtuous Spiral ofSuccess (San Francisco: Jossey-Bass, 2003), p 19. Also seeD Rosato, “21 Ways to Jump Start Your Career,” Money, April2005, pp 162–66.

10B S Lawrence, “Historical Perspective: Using the Past toStudy the Present,” Academy of Management Review, April1984, p 307.

11Evidence indicating that the original conclusions of the famousHawthorne studies were unjustified may be found inR G Greenwood, A A Bolton, and R A Greenwood, “Hawthornea Half Century Later: Relay Assembly Participants Remember,”Journal of Management, Fall–Winter 1983, pp 217–31; andR H Franke and J D Kaul, “The Hawthorne Experiments: FirstStatistical Interpretation,” American Sociological Review,October 1978, pp 623–43. For a positive interpretation of theHawthorne studies, see J A Sonnenfeld, “Shedding Light on theHawthorne Studies,” Journal of Occupational Behaviour, April1985, pp 111–30.

12See M Parker Follett, Freedom and Coordination (London:Management Publications Trust, 1949).

13See D McGregor, The Human Side of Enterprise (New York:McGraw-Hill, 1960).

14For a story of a manager’s switch from Theory X to Theory Y,see D Dorsey, “Andy Pearson Finds Love,” Fast Company,August 2001, pp 78–86. Also see J S Nielsen, The Myth ofLeadership: Creating Leaderless Organizations (Palo Alto, CA:Davies-Black, 2004).

15S Bates, “Getting Engaged,” HR Magazine, February 2004,pp 44, 46.

16See D W Organ, “Elusive Phenomena,” Business Horizons,March–April 2002, pp 1–2.

17See, for example, R Zemke, “TQM: Fatally Flawed or SimplyUnfocused?” Training, October 1992, p 8.

18J McGregor, “The Performance Paradox,” Fast Company,April 2005, pp 29–30. Also see A Levin, “Fewer Crashes Causedby Pilots,” USA Today, March 2, 2004, p 1A.

19Instructive background articles on TQM are R Zemke, “ABluffer’s Guide to TQM,” Training, April 1993, pp 48–55;R R Gehani, “Quality Value-Chain: A Meta-Synthesis ofFrontiers of Quality Movement,” Academy of ManagementExecutive, May 1993, pp 29–42; P Mears, “How to StopTalking about, and Begin Progress toward, Total QualityManagement,” Business Horizons, May–June 1993, pp 11–14;and the Total Quality Special Issue of Academy of ManagementReview, July 1994.

20M Sashkin and K J Kiser, Putting Total Quality Managementto Work (San Francisco: Berrett-Koehler, 1993), p 39.

21R J Schonberger, “Total Quality Management Cuts a BroadSwath—Through Manufacturing and Beyond,” OrganizationalDynamics, Spring 1992, p 18. Also see R Gulati andJ B Oldroyd, “The Quest for Customer Focus,” HarvardBusiness Review, April 2005, pp 92–101; and A Tilin, “VespaGoes Back to School,” Business 2.0, April 2005, p 24.

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22Based on C Hui, S S K Lam, and J Schaubroeck, “Can GoodCitizens Lead the Way in Providing Quality Service? A FieldQuasi Experiment,” Academy of Management Journal, October2001, pp 988–95. Also See J Pfeffer, “How Companies GetSmart,” Business 2.0, January–February 2005, p 74.

23Deming’s landmark work is W E Deming. Out of the Crisis(Cambridge, MA: MIT, 1986).

24See M Trumbull, “What Is Total Quality Management?” TheChristian Science Monitor, May 3, 1993, p 12; J Hillkirk,“World-Famous Quality Expert Dead at 93,” USA Today,December 21, 1993, pp 1B–2B; and O Port, “The Kings ofQuality,” BusinessWeek, August 30, 2004, p 20.

25Based on discussion in M Walton, Deming Management atWork (New York: Putnam/Perigee, 1990).

26Ibid., p 20.

27Adapted from D E Bowen and E E Lawler III “Total Quality-Oriented Human Resources Management,” OrganizationalDynamics, Spring 1992, pp 29–41.

28See T F Rienzo, “Planning Deming Management for ServiceOrganizations,” Business Horizons, May–June 1993, pp 19–29.Also see M R Yilmaz and S Chatterjee, “Deming and the Qualityof Software Development,” Business Horizons,November–December 1997, pp 51–58.

29For details, see T J Douglas and W Q Judge, Jr, “Total QualityManagement Implementation and Competitive Advantage: TheRole of Structural Control and Exploration,” Academy ofManagement Journal, February 2001, pp 158–69; andK B Hendricks and V R Singhal, “The Long-Run Stock PricePerformance of Firms with Effective TQM Programs,”Management Science, March 2001, pp 359–68.

30For example, see J R Dew, “Learning from Baldrige Winnersat the University of Alabama,” Journal of OrganizationalExcellence, Spring 2001, pp 49–56; R B Chase and S Dasu,“Want to Perfect Your Company’s Service? Use BehavioralScience,” Harvard Business Review, June 2001, pp 79–84;A W Ulwick, “Turn Customer Input into Innovation,” HarvardBusiness Review, January 2002, pp 91–97; and S Thomke andE von Hippel, “Customers as Innovators: A New Way to CreateValue,” Harvard Business Review, April 2002, pp 74–81.

31See G Hamel, “Is This All You Can Build with the Net? ThinkBigger,” Fortune, April 30, 2001, 134–38; and B Rosenbloom,“The Ten Deadly Myths of E-Commerce,” Business Horizons,March–April 2002, pp 61–66. Internet and Web pioneers areprofiled in O Port, “He Made the Net Work,” BusinessWeek,September 27, 2004, p 20; and O Port, “Spinning the World’sWeb,” BusinessWeek, November 8, 2004, p 16.

32M J Mandel and R D Hof, “Rethinking the Internet,”BusinessWeek, March 26, 2001, p 118. Also see G T Lumpkinand G G Dess, “E-Business Strategies and Internet BusinessModels: How the Internet Adds Value,” OrganizationalDynamics, no. 2, 2004, pp 161–73; and T J Mullaney, “E-BizStrikes Again!” BusinessWeek, May 10, 2004, pp 80–82.

33A Bernasek, “Buried in Tech,” Fortune, April 16, 2001, p 52.

34T J Mullaney and A Weintraub, “The Digital Hospital,”BusinessWeek, March 28, 2005, p 77.

35See S Boehle, “Simulations: The Next Generation of E-Learning,” Training, January 2005, pp 22–31; and A Fisher,“Find Online Training That Pays Off,” Fortune, February 7,2005, p 34.

36See R J Grossman, “Blind Investment,” HR Magazine, January2005, pp 40–47; and A Pomeroy, “People Are Our GreatestAsset,” HR Magazine, April 2005, p 20.

37For details on these trends, see S Hamm, “Tech’s Future,”BusinessWeek, September 27, 2004, pp 82–89;J Puliyenthurunthel and M Kripalani, “Good Help Is Hard toFind,” BusinessWeek, February 14, 2005, p 52; J Pfeffer, “ABlueprint for Success,” Business 2.0, April 2005, p 66;S Clifford, “Employers Tackle a Tricky Math Problem,” Inc.,March 2005, p 28; S Ladika, “Unwelcome Changes,” HRMagazine, February 2005, pp 83–90; E E Gordon, “The 2010Crossroad,” Training, January 2005, pp 33–35; R J Grossman,“The Truth about the Coming Labor Shortage,” HR Magazine,March 2005, pp 46–53; A Fisher, “How to Battle the ComingBrain Drain,” Fortune, March 21, 2005, pp 121–28; andJ Puliyenthuruthel, “The Soft Underbelly of Offshoring,”BusinessWeek, April 25, 2005, p 52.

38B E Becker, M A Huselid, and D Ulrich, The HR Scorecard:Linking People, Strategy, and Performance (Boston: HarvardBusiness School Press, 2001), p 4.

39See D Stamps, “Measuring Minds,” Training, May 2000,pp 76–85; C A Bartlett and S Ghoshal, “Building CompetitiveAdvantage through People,” MIT Sloan Management Review,Winter 2002, pp 34–41; and R Rodriguez, “Meet the NewLearning Executive,” HR Magazine, April 2005, pp 64–69.

40See “Top High School Scientists Selected,” USA Today, March16, 2005, p 5D; and O Port, “Meet the Best and Brightest,”BusinessWeek, March 28, 2005, pp 88–91.

41Data from “The 100 Best Companies to Work For,” Fortune,February 4, 2002, p 84.

42Inspired by P S Adler and S Kwon, “Social Capital: Prospectsfor a New Concept,” Academy of Management Review, January2002, pp 17–40. Also see D Lidsky, “Winning the RelationshipGame,” Fast Company, October 2004, pp 113–15; J Steinberg,“One Heart at a Time,” Fast Company, November 2004, p 49;K H Hammonds, “A Lever Long Enough to Move the World,”Fast Company, January 2005, pp 60–63; and A C Inkpen andE W K Tsang, “Social Capital, Networks, and KnowledgeTransfer,” Academy of Management Review, January 2005,pp 146–65.

43L Prusak and D Cohen, “How to Invest in Social Capital,”Harvard Business Review, June 2001, p 93.

44Data from “What Makes a Job OK,” USA Today, May 15,2000, p 1B.

45See W L Garner and J R Schermerhorn Jr, “UnleashingIndividual Potential: Performance Gains through PositiveOrganizational Behavior and Authentic Leadership,”

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Organizational Dynamics, no. 3, 2004, pp 270–81; T A Wrightand R Cropanzano, “The Role of Psychological Well-Being inJob Performance: A Fresh Look at an Age-Old Quest,”Organizational Dynamics, no. 4, 2004, pp 338–51; andJ H Gavin and R O Mason, “The Virtuous Organization: TheValue of Happiness in the Workplace,” OrganizationalDynamics, no. 4, 2004, pp 379–92.

46M E P Seligman and M Csikszentmihalyi, “PositivePsychology: An Introduction,” American Psychologist, January2000, p 5. Also see the other 15 articles in the January 2000issue of American Psychologist; and M Elias, “What MakesPeople Happy: Psychologists Now Know,” USA Today,December 9, 2002, pp 1A–2A.

47See F Luthans, K W Luthans, and B C Luthans, “PositivePsychological Capital: Beyond Human and Social Capital,”Business Horizons, January–February 2004, pp 45–50; andF Luthans and C M Youssef, “Human, Social, and Now PositivePsychological Capital Management: Investing in People forCompetitive Advantage,” Organizational Dynamics, no. 2, 2004,pp 143–60.

48F Luthans, “The Need for and Meaning of PositiveOrganizational Behavior,” Journal of Organizational Behavior,September 2002, p 698. Also see T A Wright, “PositiveOrganizational Behavior: An Idea Whose Time Has TrulyCome,” Journal of Organizational Behavior, June 2003,pp 437–42.

49R Levering and M Moskowitz, “2004 Special Report: The 100Best Companies to Work For,” Fortune, January 12, 2004, p 78.

50A Harrington, “Hall of Fame,” Fortune, January 24, 2005,p 94. Also see S Zuboff, “The Case for Optimism,” FastCompany, April 2005, p 101.

51Levering and Moskowitz, “2004 Special Report: The 100 BestCompanies to Work For,” p 76.

52See P F Drucker, “What Makes an Effective Executive,”Harvard Business Review, June 2004, pp 58–63; M E Porter,J W Lorsch, and N Nohria, “Seven Surprises for New CEOs,”Harvard Business Review, October 2004, pp 62–72; D McGinn,“Building a Better CEO,” Newsweek, March 28, 2005, pp 38–39;and J Welch and S Welch, “How to Be a Good Leader,”Newsweek, April 4, 2005, pp 45–48.

53H Mintzberg, “The Manager’s Job: Folklore and Fact,”Harvard Business Review, July–August 1975, p 61. Also seeJ Gosling and H Mintzberg, “The Five Minds of a Manager,”Harvard Business Review, November 2003, pp 54–63; andH Mintzberg, “Third-Generation Management Development,Training and Development, March 2004, pp 28–38.

54See, for example, H Mintzberg, “Managerial Work: Analysisfrom Observation,” Management Science, October 1971,pp B97–B110; and F Luthans, “Successful vs. Effective RealManagers,” Academy of Management Executive, May 1988,pp 127–32. For an instructive critique of the structuredobservation method, see M J Martinko and W L Gardner,“Beyond Structured Observation: Methodological Issues andNew Directions,” Academy of Management Review, October

1985, pp 676–95. Also see N Fondas, “A Behavioral JobDescription for Managers,” Organizational Dynamics, Summer1992, pp 47–58.

55See L B Kurke and H E Aldrich, “Mintzberg Was Right!: AReplication and Extension of The Nature of Managerial Work,”Management Science, August 1983, pp 975–84.

56For example, see H Bruch and S Ghoshal, “Beware the BusyManager,” Harvard Business Review, February 2002, pp 62–69.

57Validation studies can be found in E Van Velsor and J B Leslie,Feedback to Managers, Volume II: A Review and Comparison ofSixteen Multi-Rater Feedback Instruments (Greensboro, NC:Center for Creative Leadership, 1991); F Shipper, “A Study ofthe Psychometric Properties of the Managerial Skill Scales of theSurvey of Management Practices,” Educational andPsychological Measurement, June 1995, pp 468–79; andC L Wilson, How and Why Effective Managers Balance TheirSkills: Technical, Teambuilding, Drive (Columbia, MD:Rockatech Multimedia Publishing, 2003).

58For example, see S B Parry, “Just What Is a Competency?(And Why Should You Care?)” Training, June 1998, pp 58–64.

59See F Shipper, “Mastery and Frequency of ManagerialBehaviors Relative to Sub-Unit Effectiveness,” HumanRelations, April 1991, pp 371–88.

60Ibid.

61Data from F Shipper, “A Study of Managerial Skills of Womenand Men and Their Impact on Employees’Attitudes and CareerSuccess in a Nontraditional Organization,” paper presented at theAcademy of Management Meeting, August 1994, Dallas, Texas.The same outcome for on-the-job studies is reported inA H Eagly and B T Johnson, “Gender and Leadership Style: AMeta-Analysis,” Psychological Bulletin, September 1990,pp 233–56.

62For instance, see J B Rosener, “Ways Women Lead,” HarvardBusiness Review, November–December 1990, pp 119–25; andC Lee, “The Feminization of Management,” Training, November1994, pp 25–31.

63Based on F Shipper and J E Dillard Jr, “A Study of ImpendingDerailment and Recovery of Middle Managers across CareerStages,” Human Resource Management, Winter 2000,pp 331–45. Also see S Finkelstein, Why Smart Executives Fail:and What You Can Learn from Their Mistakes (New York:Portfolio, 2003); and B Stone, “The Music Stops for a RockStar,” Newsweek, February 21, 2005, pp 38–40.

64See S Cummings and D Angwin, “The Future Shape ofStrategy: Lemmings or Chimeras?” Academy of ManagementExecutive, May 2004, pp 21–36; and M C Mankins, “StopWasting Valuable Time,” Harvard Business Review, September2004, pp 58–65.

65Essential sources on reengineering are M Hammer andJ Champy, Reengineering the Corporation: A Manifesto forBusiness Revolution (New York: HarperCollins, 1993); andJ Champy, Reengineering Management: The Mandate for NewLeadership (New York: HarperCollins, 1995). Also see

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“Anything Worth Doing Is Worth Doing from Scratch,” Inc.,May 18, 1999 (20th Anniversary Issue), pp 51–52.

66See C A Beatty and B A Barker Scott, Building Smart Teams:A Roadmap to High Performance (Thousand Oaks, CA: Sage,2004).

67See, for example, W A Randolph and M Sashkin, “CanOrganizational Empowerment Work in Multinational Settings?”Academy of Management Executive, February 2002, pp 102–15;S E Seibert, S R Silver, and W A Randolph, “TakingEmpowerment to the Next Level: A Multiple-Level Model ofEmpowerment, Performance, and Satisfaction,” Academy ofManagement Journal, June 2004, pp 332–49; J L Kerr, “TheLimits of Organizational Democracy,” Academy of ManagementExecutive, August 2004, pp 81–97; and J Janove, “A 3,500-Year-Old Lesson in Delegating,” HR Magazine, March 2005,pp 109–22.

68M Buckingham, “What Great Managers Do,” HarvardBusiness Review, March 2005, pp 70–79. Also seeM Buckingham, One Thing You Need to Know: . . . About GreatManaging, Great Leading, and Sustained Individual Success(New York: Free Press, 2005).

69H L Tosi, Jr, and J W Slocum, Jr, “Contingency Theory:Some Suggested Directions,” Journal of Management, Spring1984, p 9.

70For empirical evidence in a cross-cultural study, see D I Jungand B J Avolio, “Effects of Leadership Style and Followers’Cultural Orientation on Performance in Groups and IndividualTask Conditions,” Academy of Management Journal, April 1999,pp 208–18.

71See Ann Crittenden, If You’ve Raised Kids, You Can ManageAnything: Leadership Begins at Home (New York: GothamBooks, 2004).

72See S L Rynes, J M Bartunek, and R L Daft, “Across the GreatDivide: Knowledge Creation and Transfer between Practitionersand Academics,” Academy of Management Journal, April 2001,pp 340–55.

73See R L Daft, “Learning the Craft of OrganizationalResearch,” Academy of Management Review, October 1983,pp 539–46.

74See K E Weick, “Theory Construction as DisciplinedImagination,” Academy of Management Review, October 1989,pp 516–31. Also see C C Lundberg, “Is There Really Nothing SoPractical as a Good Theory?” Business Horizons,September–October 2004, pp 7–14.

75Theory-focused versus problem-focused research is discussedin K E Weick, “Agenda Setting in Organizational Behavior: ATheory-Focused Approach,” Journal of Management Inquiry,September 1992, pp 171–82. Also see the collection of articlesabout theory in the March 2005 issue of Academy ofManagement Learning and Education, pp 74–113.

76For instance, see M R Buckley, G R Ferris, H J Bernardin, andM G Harvey, “The Disconnect between the Science and Practiceof Management,” Business Horizons, March–April 1998,

pp 31–38. Also see D Cohen, “Research: Food for FutureThought,” HR Magazine, May 2001, p 184.

77Complete discussion of this technique can be found inJ E Hunter, F L Schmidt, and G B Jackson, Meta-Analysis.Cumulating Research Findings across Studies (Beverly Hills,CA: Sage Publications, 1982); and J E Hunter andF L Schmidt, Methods of Meta-Analysis: Correcting Error andBias in Research Findings (Newbury Park, CA: SagePublications, 1990). Also see J Merritt and L Lavelle, “ADifferent Kind of Governance Guru,” BusinessWeek, August 9,2004, pp 46–47.

78Limitations of meta-analysis technique are discussed inP Bobko and E F Stone-Romero, “Meta-Analysis May BeAnother Useful Tool, but It Is Not a Panacea,” in Research inPersonnel and Human Resources Management, vol. 16, edG R Ferris (Stamford, CT: JAI Press, 1998), pp 359–97. Also seeR A Peterson and S P Brown, “On the Use of Beta Coefficientsin Meta-Analysis,” Journal of Applied Psychology, January2005, pp 175–181.

79For an interesting debate about the use of students as subjects,see J Greenberg, “The College Sophomore as Guinea Pig:Setting the Record Straight,” Academy of Management Review,January 1987, pp 157–59; and M E Gordon, L A Slade, andN Schmitt, “Student Guinea Pigs: Porcine Predictors andParticularistic Phenomena,” Academy of Management Review,January 1987, pp 160–63.

80Good discussions of case studies can be found in A S Lee,“Case Studies as Natural Experiments,” Human Relations,February 1989, pp 117–37; and K M Eisenhardt, “BuildingTheories from Case Study Research,” Academy of ManagementReview, October 1989, pp 532–50. The case survey technique isdiscussed in R Larsson, “Case Survey Methodology: Analysis ofPatterns across Case Studies,” Academy of Management Journal,December 1993, pp 1515–46.

81Based on discussion found in J M Beyer and H M Trice, “TheUtilization Process: A Conceptual Framework and Synthesis ofEmpirical Findings,” Administrative Science Quarterly,December 1982, pp 591–622. Also see S Albers Mohrman,C B Gibson, and A M Mohrman, Jr, “Doing Research That IsUseful to Practice: A Model and Empirical Exploration,”Academy of Management Journal, April 2001, pp 357–75.

82See J J Martocchio, “Age-Related Differences in EmployeeAbsenteeism: A Meta-Analysis,” Psychology & Aging,December 1989, pp 409–14.

83See J Beeson, “Building Bench Strength: A Tool Kit forExecutive Development,” Business Horizons,November–December 2004, pp 3–9.

84L Tischler, “IBM’s Management Makeover,” Fast Company,November 2004, pp 112–13. For more on IBM, see S Hamm,“Beyond Blue,” BusinessWeek, April 18, 2005, pp 68–76.

85These research results are discussed in detail in J B Miner andN R Smith, “Decline and Stabilization of Managerial Motivationover a 20-Year Period,” Journal of Applied Psychology, June1982, pp 297–305.

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86See J B Miner, J M Wachtel, and B Ebrahimi, “The ManagerialMotivation of Potential Managers in the United States and OtherCountries of the World: Implications for NationalCompetitiveness and the Productivity Problem,” in Advances inInternational Comparative Management, vol. 4, ed B Prasad(Greenwich, CT: JAI Press, 1989), pp 147–70; and J B Miner,C C Chen, and K C Yu, “Theory Testing under AdverseConditions: Motivation to Manage in the People’s Republic ofChina,” Journal of Applied Psychology, June 1991, pp 343–49.

87See J B Miner, B Ebrahimi, and J M Wachtel, “HowDeficiencies in Motivation to Manage Contribute to the UnitedStates’ Competitiveness Problem (and What Can Be Done aboutIt),” Human Resource Management, Fall 1995, pp 363–87.

88Based on K M Bartol and D C Martin, “Managerial Motivationamong MBA Students: A Longitudinal Assessment,” Journal ofOccupational Psychology, March 1987, pp 1–12.

89Excerpted from K Gurchiek, “I Can’t Make It to Work Today,Boss . . . Gotta Round Up My Ostriches,” HR Magazine, March2005, p 30.

LEARNING MODULE A

1Excerpted from Ellen E Schultz and Theo Francis, “FinancialSurgery: How Cuts in Retiree Benefits Fatten Companies’Bottom Lines,” The Wall Street Journal, Eastern Edition, March16, 2004, p A1. Copyright 2004 by Dow Jones & Co. Inc.Reproduced with permission of Dow Jones & Co. Inc. viaCopyright Clearance Center.

2Results can be found in “HR Poll Results,”http://hr2.blr.com/index.cfm/Nav/11.0.0.0/Action/Poll_Question/qid/170, accessed April 8, 2005.

3Results can be found in Matthew Boyle, “By the Numbers:Liarliar!” Fortune, May 26, 2003, p 44.

4See www.josephsoninstitute.org/pdf/workplace-flier_0604.pdf,accessed April 8, 2005.

5A discussion of ethics and financial performance is provided byR M Fulmer, “The Challenge of Ethical Leadership,”Organizational Dynamics, August 2004, pp 307–17.

6Results can be found in “Tarnished Employment Brands AffectRecruiting,” HR Magazine, November 2004, pp 16, 20.

7A W Mathews and B Martinez, “Painful Drug: E-Mails SuggestMerck Knew Vioxx’s Dangers at Early Stage,” The Wall StreetJournal, November 1, 2004, p A1.

8See C Gilligan, “In a Different Voice: Women’s Conceptions ofSelf and Morality,” Harvard Educational Review, November1977, pp 481–517.

9The following discussion is based on A J Daboub,A M A Rasheed, R L Priem, and D A Gray, “Top ManagementTeam Characteristics and Corporate Illegal Activity,” Academyof Management Review, January 1995, pp 138–70.

10L Simpson, “Taking the High Road,” Training, January2002, p 38.

11Supporting results can be found in M E Schweitzer,L Ordónez, and B Douma, “Goal Setting as a Motivator ofUnethical Behavior,” Academy of Management Journal, June2004, pp 422–32.

12These statistics, and counterfeiting in general, are discussed inF Balfour, “The Global Counterfeit Business Is Out of Control,Targeting Everything from Computer Chips to Life-SavingMedicines. It’s So Bad That Even China May Need to CrackDown,” Business Week, February 7, 2005, pp 54–64.

13Supporting research can be found in J B Cullen,K P Parboteeah, and M Hoegl, “Cross-National Differences inManagers’ Willingness to Justify Ethically Suspect Behaviors: ATest of Institutional Anomie Theory,” Academy of ManagementJournal, June 2004, pp 411–21.

14Results can be found in T Jackson, “Cultural Values andManagement Ethics: A 10-Nation Study,” Human Relations,October 2001, pp 1267–302.

15The following discussion is based on Daboub et al., “TopManagement Team Characteristics and Corporate IllegalActivity.”

16This discussion is based on Constance E Bagley, “The EthicalLeader’s Decision Tree,” Harvard Business Review, February2003, pp 18–19.

17For a thorough discussion of this issue, see Schultz andFrancis, “Financial Surgery: How Cuts in Retiree Benefits FattenCompanies’ Bottom Lines.”

18T Gutner, “Blowing Whistles—and Being Ignored,” BusinessWeek, March 18, 2002, p 107.

19Results are discussed in ibid.

20C Gilligan and J Attanucci, “Two Moral Orientations: GenderDifferences and Similarities,” Merril-Palmer Quarterly, July1988, pp 224–25.

21Results can be found in S Jaffee and J Hyde, “GenderDifferences in Moral Orientation: A Meta-Analysis,”Psychological Bulletin, September 2000, pp 703–26.

22Ibid, p 719.

23See Ch 6 in K Hodgson, A Rock and a Hard Place: How toMake Ethical Business Decisions When the Choices Are Tough(New York: AMACOM, 1992), pp 66–77.

24D Matten and A Crane, “Corporate Citizenship: Toward anExtended Theoretical Conceptualization,” Academy ofManagement Review, January 2005, p 167.

25Adapted from W E Stead, D L Worrell, and J Garner Stead,“An Integrative Model for Understanding and Managing EthicalBehavior in Business Organizations,” Journal of BusinessEthics, March 1990, pp 233–42.

26For an excellent review of integrity testing, see D S Ones andC Viswesvaran, “Integrity Testing in Organizations,” inDysfunctional Behavior in Organizations: Violent and DeviantBehavior, eds R W Griffin et al. (Stamford, CT: JAI Press, 1998),pp 243–76.

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27Guidelines for conducting ethics training are discussed byK Tyler, “Do the Right Thing,” HR Magazine, February 2005,pp 99–101.

28For details regarding Boeing, see “Boeing Hires Outsider toMonitor Its Ethics,” Arizona Republic, May 5, 2004, p D5.

29These scenarios were excerpted from L M Dawson, “Womenand Men, Morality, and Ethics,” Business Horizons, July–August1995, pp 62, 65.

30Comparative norms were obtained from Dawson, “Women andMen, Morality and Ethics.” Scenario 1: would sell (28% males,57% females); would not sell (66% males, 28% females); unsure(6% males, 15% females). Scenario 2: would consult (84%

males, 32% females); would not consult (12% males, 62%females); unsure (4% males, 6% females).

31The following trends were taken from Dawson, “Women andMen, Morality and Ethics.” Women were likely to primarilyrespect feelings, ask “who will be hurt?”, avoid beingjudgmental, search for compromise, seek solutions that minimizehurt, rely on communication, believe in contextual relativism, beguided by emotion, and challenge authority. Men were likely toprimarily respect rights, ask “who is right?”, value decisiveness,make unambiguous decisions, seek solutions that are objectivelyfair, rely on rules, believe in blind impartiality, be guided bylogic, and accept authority.

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