Understanding
and Managing
Organizational
Behavior


This page intentionally left blank


Understanding
and Managing
Organizational
Behavior
SIXTH EDITION

Jennifer M. George
Jesse H. Jones Graduate School of Business
Rice University

Gareth R. Jones
Mays Business School
Texas A & M University

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Library of Congress Cataloging-in-Publication Data
George, Jennifer M.
Understanding and managing organizational behavior / Jennifer M. George, Gareth Jones. — 6th ed.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-13-612443-6
1. Organizational behavior. 2. Organizational effectiveness. I. Jones, Gareth R. II. Title.
HD58.7.G454 2012
658.3—dc22
2010045891

10 9 8 7 6 5 4 3 2 1

ISBN 10:
0-13-612443-7
ISBN 13: 978-0-13-612443-6



Brief Contents
Preface xxi
Chapter 1

PART 1

INDIVIDUALS IN ORGANIZATION

Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9

PART 2

Appendix

276

The Nature of Work Groups and Teams 276
Effective Work Groups and Teams 306
Leaders and Leadership 336
Power, Politics, Conflict, and Negotiation 370
Communicating Effectively in Organizations 400
Decision Making and Organizational Learning 434


ORGANIZATIONAL PROCESSES

Chapter 16
Chapter 17
Chapter 18

36

Individual Differences: Personality and Ability 36
Values, Attitudes, and Moods and Emotions 64
Perception, Attribution, and the Management of Diversity 94
Learning and Creativity 126
The Nature of Work Motivation 154
Creating a Motivating Work Setting 180
Pay, Careers, and Changing Employment Relationships 210
Managing Stress and Work-Life Balance 242

GROUP AND TEAM PROCESSES

Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15

PART 3

Introduction to Organizational Behavior 2
Appendix: A Short History of Organizational

Behavior Research 35

468

Organizational Design and Structure 468
Organizational Culture and Ethical Behavior 500
Organizational Change and Development 530
Research Methods in Organizational Behavior

Glossary 566
References 575
Name Index 624
Company Index 632
Subject Index 634

560


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Contents
Preface xxi
Chapter 1

Introduction to Organizational Behavior

2

Opening Case

Ursula Burns Succeeds Anne Mulcahy as CEO of Xerox

Overview 4
What Is Organizational Behavior?

5

The Nature of Organizational Behavior
Levels of OB

3

5

6

OB and Management

8

Managerial Functions

9

■ OB TODAY: How Joe Coulombe Used OB to Make Trader Joe’s

a Success Story

11


Managerial Roles

12

Managerial Skills

12

Challenges for OB 13
Challenge 1: The Changing Social and Cultural Environment
Developing Organizational Ethics and Well-Being

14

14

■ ETHICS IN ACTION: How Unethical Behavior Shut Down a Meat-packing

Plant

16

Dealing with a Diverse Workforce

17

Challenge 2: The Evolving Global Environment
Understanding Global Differences

19


19

■ GLOBAL VIEW: IKEA’s Worldwide Approach to OB

Global Learning

20

21

Global Crisis Management

22

Challenge 3: Advancing Information Technology 23
IT and Organizational Effectiveness

24

IT, Creativity, and Organizational Learning

24

Challenge 4: Shifting Work and Employment Relationships

25

■ YOU’RE THE MANAGEMENT EXPERT: Moving to Self-Managed Teams


26

SUMMARY 27
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 28
CLOSING CASE:
How Jeff Bezos Manages at Amazon.com 31

Appendix:

A Short History of OB

32

F. W. Taylor and Scientific Management 32
The Work of Mary Parker Follett 33
The Hawthorne Studies and Human Relations
Theory X and Theory Y 34
Theory X

33

34

Theory Y 34

PART 1

INDIVIDUALS IN ORGANIZATIONS


Chapter 2

36

Individual Differences: Personality and Ability
Opening Case
Nooyi’s Determination

Overview

36

37

38
VII


VIII

CONTENTS

The Nature of Personality

38

Determinants of Personality: Nature and Nurture
Personality and the Situation

39


39

■ FOCUS ON DIVERSITY: Liane Pelletier Transforms Alaska Communications

Personality: A Determinant of the Nature of Organizations

41

42

The Big Five Model of Personality 42
Extraversion

43

Neuroticism

44

Agreeableness

45

Conscientiousness

45

Openness to Experience


45

■ GLOBAL VIEW: Fujio Mitarai Cuts Costs, Develops New Products, and Protects

the Environment at Canon

47

■ YOU’RE THE MANAGEMENT EXPERT: Understanding a New Employee

Conclusions

49

Other Organizationally Relevant Personality Traits
Locus of Control

49

Self-Monitoring

49

Self-Esteem

49

50

Type A and Type B Personalities


51

Needs for Achievement, Affiliation, and Power
How Personality Is Measured

52

53

The Nature of Ability 53
Cognitive Ability
Physical Ability

53
54

Where Do Abilities Come from and How Are They Measured?
Emotional Intelligence: A Different Kind of Ability

The Management of Ability in Organizations
Selection
Placement
Training

55

56

57


58
58
58

SUMMARY 59
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 60
CLOSING CASE:
Mark Wilson Creates a Different Kind of Telemarketer

Chapter 3

63

Values, Attitudes, and Moods and Emotions

64

Opening Case
Satisfied, Committed, and Happy Employees at Nugget Markets

Overview 66
Values, Attitudes, and Moods and Emotions
The Nature of Values

65

66


67

■ ETHICS IN ACTION: Gentle Giant Moving Company Values Honesty

The Nature of Work Attitudes

71

The Nature of Moods and Emotions

71

Relationships Between Values, Attitudes, and Moods and Emotions

Job Satisfaction

74

75

■ OB TODAY: Job Satisfaction Declines in the United States

Determinants of Job Satisfaction

Theories of Job Satisfaction

76

79


The Facet Model of Job Satisfaction

80

Herzberg’s Motivator-Hygiene Theory of Job Satisfaction

81

76

70

48


IX

CONTENTS

The Discrepancy Model of Job Satisfaction

82

The Steady-State Theory of Job Satisfaction
Measuring Job Satisfaction

83

83


Potential Consequences of Job Satisfaction
Does Job Satisfaction Affect Job Performance?
Absenteeism
Turnover

83

83

85

85

Organizational Citizenship Behavior
Employee Well-Being

87

87

Organizational Commitment

88

Determinants of Affective Commitment

88

■ YOU’RE THE MANAGEMENT EXPERT: Increasing Affective Commitment


Potential Consequences of Affective Commitment

SUMMARY 89
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 90
CLOSING CASE:
Paetec’s Values Lead to a Satisfied and Committed Workforce

Chapter 4

88

89

93

Perception, Attribution, and the Management of Diversity
Opening Case
Effectively Managing Diversity is an Ongoing Journey

Overview 96
The Nature of Perception

97

Motivation and Performance
Fairness and Equity
Ethical Action

95


98

98

99

Characteristics of the Perceiver

99

Schemas: The Perceiver’s Knowledge Base

100

■ FOCUS ON DIVERSITY: Discrimination in Layoff Decisions

The Perceiver’s Motivational State
The Perceiver’s Mood

101

102

103

Characteristics of the Target and Situation
Ambiguity of the Target

103


104

Social Status of the Target

104

Impression Management by the Target
Information Provided by the Situation

105
106

Standing Out in the Crowd: The Effects of Salience in a Situation

107

■ ETHICS IN ACTION: Disabled Employees Key to Success at Habitat

International

109

Biases and Problems in Person Perception
Primacy Effects

111

Contrast Effects


111

Halo Effects

110

111

Similar-to-Me Effects

112

Harshness, Leniency, and Average Tendency Biases
Knowledge-of-Predictor Bias

112

112

Attribution Theory 113
Internal and External Attributions
Attributional Biases

114

115

■ YOU’RE THE MANAGEMENT EXPERT: Helping a Coworker

Effectively Managing a Diverse Workforce


116

Securing Top-Management Commitment to Diversity

117

116

94


X

CONTENTS

Diversity Training
Education

117

117

Mentoring Programs
Sexual Harassment

118
119

SUMMARY 120

EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 121
CLOSING CASE:
Sodexo and Principle Financial Group Recognized for the Effective
Management of Diversity 125

Chapter 5

Learning and Creativity 126
Opening Case
UPS Is Very Serious About Learning

Overview 128
The Nature of Learning 129
Learning through Consequences

127

129

Encouraging Desired Behaviors through Positive and Negative Reinforcement
Shaping

130

133

Discouraging Undesired Behaviors through Extinction and Punishment
Organizational Behavior Modification
Ethical Issues in OB MOD


Learning from Others

136

136

■ GLOBAL VIEW: Vicarious Learning at the Ritz-Carlton

Learning on Your Own

138

140

Beliefs about One’s Ability to Learn: The Role of Self-Efficacy
Sources of Self-Efficacy

133

135

141

142

Learning by Doing 143
Continuous Learning through Creativity 143
The Creative Process


143

Characteristics of Employees That Contribute to Creativity

145

■ OB TODAY: Jim Newton’s Openness to Experience Helps Others Be Creative

Characteristics of the Organizational Situation That Contribute to Creativity
The Interaction of Personality and Situational Factors

147

■ YOU’RE THE MANAGEMENT EXPERT: Encouraging Independent Thinking

The Learning Organization

148

SUMMARY 149
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 150
CLOSING CASE:
Continuous Learning and Innovation 153

Chapter 6

The Nature of Work Motivation
Opening Case
High Motivation at Enterprise Rent-A-Car


154
155

Overview 156
What is Work Motivation? 157
Direction of Behavior
Level of Effort

157

158

Level of Persistence

158

The Distinction Between Motivation and Performance
Intrinsic and Extrinsic Motivation
Theories of Work Motivation

160

159

145

146

158


148


XI

CONTENTS

Need Theory

160

Maslow’s Hierarchy of Needs
Alderfer’s ERG Theory
The Research Evidence

Expectancy Theory

161

162
163

163

Valence: How Desirable Is an Outcome?

164

■ OB TODAY: Motivating Loyal Employees at the Container Store


164

Instrumentality: What Is the Connection Between Job Performance and Outcomes?

165

Expectancy: What Is the Connection Between Effort and Job Performance? 166
The Combined Effects of Valence, Instrumentality, and Expectancy on Motivation

167

Equity Theory 168
Equity

168

Inequity

169

Ways to Restore Equity

169

The Effects of Inequity and the Research Evidence

170

Organizational Justice Theory 170

Forms of Organizational Justice

170

■ YOU’RE THE MANAGEMENT EXPERT: When Equal Treatment

Backfires

171

■ ETHICS IN ACTION: Organizational Justice at Genentech

Consequences of Organizational Justice

173

174

SUMMARY 175
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 175
CLOSING CASE:
Motivating Employees at the SAS Institute 178

Chapter 7

Creating a Motivating Work Setting

180


Opening Case
High Motivation Results in Exceptional Customer Service at Zappos

Overview 182
Job Design: Early Approaches
Scientific Management

181

183

183

Job Enlargement and Job Enrichment

185

Job Design: The Job Characteristics Model 186
Core Job Dimensions

186

■ OB TODAY: Tough Economic Times Result in Changes in Job Design

The Motivating Potential Score
Critical Psychological States

188

192


Work and Personal Outcomes

193

The Role of Individual Differences in Employees’ Responses to Job Design
The Research Evidence

193

195

Job Design: The Social Information Processing Model 195
■ YOU’RE THE MANAGEMENT EXPERT: Redesigning Jobs

The Role of the Social Environment
The Role of Past Behaviors

197

Job Design Models Summarized

198

■ FOCUS ON DIVERSITY: Job Sharing a Viable Option

Organizational Objectives

196


196

199

200

■ GLOBAL VIEW: Offshoring Expands Into Many Kinds of Jobs

Goal Setting

202

What Kinds of Goals Lead to High Motivation and Performance?
Why Do Goals Affect Motivation and Performance?

203

202

201

188


XII

CONTENTS

Limits to Goal-Setting Theory
Management by Objectives


204
204

Goal Setting and Job Design as Motivation Tools

205

SUMMARY 205
EXERCISES IN UNDERSTANDING AND MANAGING ORGANIZATIONAL
BEHAVIOR 206
CLOSING CASE:
Motivating Employees at Google 209

Chapter 8

Pay, Careers, and Changing Employment Relationships
Opening Case
Changing Employment Relations in Tough Economic Times

Overview 212
Psychological Contracts

210

211

213

Determinants of Psychological Contracts

Types of Psychological Contracts

213

214

■ GLOBAL VIEW: Changing Employment Relations in Japan

When Psychological Contracts Are Broken

216

216

Performance Appraisal 217
Encouraging High Levels of Motivation and Performance
Providing Information for Decision Making

217

219

Developing a Performance Appraisal System

219

■ YOU’RE THE MANAGEMENT EXPERT: Promoting High-Quality Customer

Service


222

Potential Problems in Subjective Performance Appraisal

Pay and the Employment Relation
Merit Pay Plans

225

226

226

■ OB TODAY: Acknowledging High Performers During a Recession

226

Should Merit Pay Be Based on Individual, Group, or Organizational Performance?
Should Merit Pay Be in the Form of a Salary Increase or a Bonus?
Examples of Merit Pay Plans

228

The Ethics of Pay Differentials and Comparable Worth

Careers

228

229


230

The Nature of Careers
Types of Careers
Career Stages

230

231
231

Contemporary Career Challenges

235

SUMMARY 237
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 238
CLOSING CASE:
Valuing Employees at Costco 241

Chapter 9

Managing Stress and Work-Life Balance 242
Opening Case
Job Loss and Its Consequences

Overview 244
The Nature of Stress


243

245

■ ETHICS IN ACTION: Violence in the Workplace

Individual Differences and Stress
Consequences of Stress

Sources of Stress

251

Personal Stressors

252

248

247

246

227


CONTENTS

Job-Related Stressors


254

Group- and Organization-Related Stressors
Stressors Arising Out of Work-Life Balance
Environmental Uncertainty

256
258

258

■ GLOBAL VIEW: Coping with Grief and Loss

Coping with Stress

259

260

Problem-Focused Coping Strategies for Individuals

260

Emotion-Focused Coping Strategies for Individuals

261

Problem-Focused Coping Strategies for Organizations


262

■ YOU’RE THE MANAGEMENT EXPERT: Coping with the Stress

of a Challenging New Job

264

■ FOCUS ON DIVERSITY: On-Site Child Care and Family Friendly Benefits

at Guerra DeBerry Coody

266

Emotion-Focused Coping Strategies for Organizations

267

■ OB TODAY: Alleviating Stress Through Organizational

Support 268
SUMMARY 270
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 271
CLOSING CASE:
Stress and Burnout Among Entrepreneurs and the Self-Employed

PART 2

GROUP AND TEAM PROCESSES


Chapter 10

276

The Nature of Work Groups and Teams
Opening Case
Teams and Innovation at Cisco Systems

Overview 278
Introduction to Groups
Types of Work Groups

276

277

279

279

Group Development Over Time: The Five-Stage Model

Characteristics of Work Groups
Group Size

281

282


282

Group Composition
Group Function
Group Status

283

285
285

Group Efficacy

286

Social Facilitation

287

How Groups Control Their Members: Roles and Rules
Roles

275

288

288

Written Rules


289

■ OB TODAY: Zingerman’s “Steps” to Success

289

How Groups Control Their Members: Group Norms
Why Do Group Members Conform to Norms?
Idiosyncrasy Credit

290

291

291

The Pros and Cons of Conformity and Deviance
Balancing Conformity and Deviance

292

292

■ OB TODAY: Deviance and Conformity in Design Teams

at IDEO

294

Ensuring that Group Norms are Functional for the Organization

■ YOU’RE THE MANAGEMENT EXPERT: Aligning Goals

295

296

Socialization: How Group Members Learn Roles, Rules, and Norms
Socialization and Role Orientation
Socialization Tactics

297

296

296

XIII


XIV

CONTENTS

SUMMARY 300
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 301
CLOSING CASE:
Teams Fuel Global Innovation at Whirlpool 304

Chapter 11


Effective Work Groups and Teams

306

Opening Case
How Nokia Uses Teams to Increase Global Effectiveness

Overview 308
Process Losses, Process Gains, and Group Effectiveness
Potential Performance?

307

308

308

Process Losses and Performance

309

■ OB TODAY: Process Losses Can Have Deadly Consequences

in Hospitals

310

Process Gains and Performance


311

■ OB TODAY: The Rolling Stones Learn to Play Together

312

Social Loafing: A Problem in Group Motivation and Performance
Group Size and Social Loafing

314

Ways to Reduce Social Loafing

314

313

■ OB TODAY: How GlaxoSmithKline Used Groups to Boost

Productivity

316

How Task Characteristics Affect Group Performance
Pooled Interdependence

316

317


Sequential Interdependence

317

Reciprocal Interdependence

319

■ YOU’RE THE MANAGEMENT EXPERT: What Kinds of Groups

and Tasks?

321

Group Cohesiveness and Performance

321

Factors that Contribute to Group Cohesiveness
Consequences of Group Cohesiveness

322

Important Organizational Groups

325

The Top Management Team
Self-Managed Work Teams


325
325

■ OB TODAY: Dick’s Drive-In Restaurants

Research and Development Teams
Virtual Teams

321

327

328

330

SUMMARY 331
EXERCISE IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 322
CLOSING CASE:
Why Microsoft’s Measurement System Led to Problems with Group
Performance 335

Chapter 12

Leaders and Leadership

336

Opening Case

How Sony’s “Gaijin” CEO Changed Its Leadership Approach

337

Overview 338
Introduction to Leadership 339
Early Approaches to Leadership 340
The Leader Trait Approach

340

The Leader Behavior Approach

340

■ OB TODAY: John Chambers of Cisco Systems Develops a Collaborative

Leadership Approach

342


CONTENTS

The Behavior Approach: Leader Reward and Punishing Behavior
Measuring Leader Behaviors

343

343


What Is Missing in the Trait and Behavior Approaches?

Fiedler’s Contingency Theory of Leadership
Leader Style

XV

344

345

345

Situational Characteristics
The Contingency Model

346
347

Contemporary Perspectives on Leadership

349

Path-Goal Theory: How Leaders Motivate Followers

349

■ OB TODAY: A Sister Act Helped Claire’s Stores to Sparkle


351

The Vroom and Yetton Model: Determining the Level of Subordinate Participation
in Decision Making 352
Leader–Member Exchange Theory: Relationships Between Leaders and Followers

Does Leadership Always Matter in Organizations?
Leadership Substitutes

354

Leadership Neutralizers

355

The Romance of Leadership

355

■ YOU’RE THE MANAGEMENT EXPERT: How to Lead Me

New Topics in Leadership Research

356

356

Transformational and Charismatic Leadership

356


■ GLOBAL VIEW: Avon is Calling Everywhere

Leader Mood

353

354

357

359

Gender and Leadership

359

■ OB TODAY: Female Manufacturing Plant Managers Help Increase

Product Quality

360

Ethical Leadership

361

■ OB TODAY: Whole Foods Markets Leads Through Ethics

and Social Responsibility


362

Recap of Leadership Approaches

363

SUMMARY 363
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 365
CLOSING CASE:
Tammy Savage and the NETGENeration 368

Chapter 13

Power, Politics, Conflict, and Negotiation

370

Opening Case
Pfizer’s John MacKay Uses Power and Politics to Increase
Performance 371

Overview 372
The Nature of Power and Politics 372
Sources of Individual Power 373
Sources of Formal Individual Power

374


■ ETHICS IN ACTION: New York City Taxi Drivers Make a Fast Buck

Sources of Informal Individual Power

■ YOU’RE THE MANAGEMENT EXPERT: Identifying Who Has Power

Sources of Functional and Divisional Power
Ability to Control Uncertain Contingencies
Irreplacability
Centrality

375

376

377

377

377

378

378

■ ETHICS IN ACTION: Two Judges Use Their Power and Control Over Their Courts

to Corrupt Them 378
Ability to Control and Generate Resources


379


XVI

CONTENTS

Organizational Politics: The Use of Power
Tactics for Increasing Individual Power

380

380

■ OB TODAY: Bob Iger Uses His Political Skills to Change

Walt Disney

382

Managing Organizational Politics

383

■ GLOBAL VIEW: Mining Companies Act Tough in Australia

384

What Is Organizational Conflict? 384
Sources of Organizational Conflict

Differentiation

385

385

Task Relationships

386

Scarcity of Resources

386

Pondy’s Model of Organizational Conflict
Latent Conflict

Perceived Conflict
Felt Conflict

386

386
387

387

■ OB TODAY: Manifest Conflict Erupts Between eBay and

Its Sellers


387

Manifest Conflict

388

Conflict Aftermath

389

■ OB TODAY: When Partners Battle for Control of Their Company

Negotiation: Resolving Conflict

391

Individual-Level Conflict Management
Group-Level Conflict Management
Promoting Compromise

390

392

392

394

SUMMARY 395

EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 396
CLOSING CASE:
Mixing Business and Family Causes Conflict 399

Chapter 14

Communicating Effectively in Organizations
Opening Case
Toyota Is Accused of Being a Poor Communicator

400

401

Overview 402
What Is Communication? 402
The Functions of Communication

403

■ ETHICS IN ACTION: A Peanut Company’s Use of Communication Causes Many

Problems

406

Communication Networks in Organizations

The Communication Process

The Sender and the Message
Encoding

407

409
409

410

The Medium

411

The Receiver: Decoding and the Feedback Loop

Barriers to Effective Communication
Filtering and Information Distortion

413

413

414

■ OB TODAY: Why Communication Is Vital on an Airliner

Poor Listening

414


416

■ OB TODAY: The Consequences of Poor Listening Skills

Lack of or Inappropriate Feedback
Rumors and the Grapevine
Workforce Diversity

417

417

417

Differences in Cross-cultural Linguistic Styles

418

416


CONTENTS

XVII

■ GLOBAL VIEW: Honda and Foxconn Have a Communication Problem

in China


418

Selecting an Appropriate Communication Medium 419
Information Richness

419

■ OB TODAY: Telemarketing Turns-Off Customers

Trade-Offs in the Choice of Media
Using Advanced IT

421

422

422

Persuasive Communication

423

■ YOU’RE THE MANAGEMENT EXPERT: How to Speed Product Development

A Model of Persuasive Communication

424

■ OB TODAY: A Failure in Communication


Communication in Crisis Situations

426

427

SUMMARY 428
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 429
CLOSING CASE:
How Chrysler’s Tom Lasorda Learned How to Talk to Employees

Chapter 15

433

Decision Making and Organizational Learning 434
Opening Case
Mattel Wins the War in Toyland

Overview 436
Types of Decisions

435

436

Nonprogrammed Decisions

437


■ OB TODAY: Steve Jobs’s and Apple’s Engineers Excel at Nonprogrammed

Decision Making

438

Programmed Decisions

439

Ethical Decision Making

440

■ ETHICS IN ACTION: Guidant’s Major Ethical Lapse

The Decision-Making Process

The Classical Model of Decision Making

442

March and Simon’s Administrative Model of Decision Making

Sources of Error in Decision Making
Heuristics and Their Effects

445


Escalation of Commitment

446

The Role of Information Technology

443

444

447

■ GLOBAL VIEW: SAP’s ERP System

Group Decision Making

441

442

448

449

Advantages of Group Decision Making

449

Disadvantages of Group Decision Making


450

Other Consequences of Group Decision Making
Decision Making in Crisis Situations

452

453

■ YOU’RE THE MANAGEMENT EXPERT: Solving Competition Between

Teams

453

Group Decision-Making Techniques
Brainstorming

454

454

The Nominal Group Technique
The Delphi Technique

455

455

Group Decision-Making Techniques Used in Total Quality Management


455

■ OB TODAY: How Plexus Decided It Could Make Flexible Manufacturing

Pay Off

456

Organizational Learning

457

Types of Organizational Learning

458

424


XVIII

CONTENTS
■ OB TODAY: IDEO Helps Organizations “Learn How to Learn”

Principles of Organizational Learning

■ OB TODAY: How to Create a Learning Organization

Leadership and Learning


458

459

461

462

SUMMARY 462
EXERCISES IN UNDERSTANDING AND
MANAGING ORGANIZATIONAL BEHAVIOR 463
CLOSING CASE:
Turnaround Decision Making at Liz Claiborne 466

PART 3

ORGANIZATIONAL PROCESSES

Chapter 16

468

Organizational Design and Structure 468
Opening Case
Avon Reorganizes Its Global Structure

Overview 470
Designing Organizational Structure
The Organizational Environment

Technology

469

470

471

471

Human Resources and the Employment Relationship
Organic and Mechanistic Structures

473

473

Grouping Jobs into Functions and Divisions

474

■ YOU’RE THE MANAGEMENT EXPERT: Which Work System Is

the Best?

474

Functional Structure

475


Divisional Structures: Product, Market, and Geographic

476

■ OB TODAY: Why the Houston ISD Changed to a Market Structure

Advantages of a Divisional Structure

Disadvantages of a Divisional Structure
Matrix Structure
Summary

477

478
479

480

481

Coordinating Functions and Divisions
Allocating Authority

481

481

■ OB TODAY: Caterpillar Gets Leaner and More Focused


484

■ OB TODAY: To Centralize or Decentralize—That Is the Question

Mutual Adjustment and Integrating Mechanisms

485

486

■ GLOBAL VIEW: A Product Team Structure Can “Insure” High

Performance

488

Standardization

489

New IT-Enabled Forms of Organizational Design and Structure
The Effects of IT Inside Organizations

491

491

■ GLOBAL VIEW: IBM and Accenture Create “Virtual” Organizations


The Effects of IT Between Organizations

493

SUMMARY 494
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 494
CLOSING CASE:
Home Depot’s Military-Style Structure 498

Chapter 17

Organizational Culture and Ethical Behavior
Opening Case
How a New CEO Transformed Ford’s Culture

Overview 502
What Is Organizational Culture? 502

501

500

492


CONTENTS

How Is an Organization’s Culture Transmitted to Its Members?
Socialization and Socialization Tactics


XIX

504

504

Stories, Ceremonies, and Organizational Language

505

■ OB TODAY: UPS and Walmart Know How to Build Persuasive

Cultures

507

■ YOU’RE THE MANAGEMENT EXPERT: A Culture of Cleanliness

Factors Shaping Organizational Culture

Characteristics of People Within the Organization
Organizational Ethics

508

509
509

510


■ ETHICS IN ACTION: Apple: Do You Protect Your Products or the Workers Who

Assemble Them?

511

The Employment Relationship

513

■ OB TODAY: How Making Employees Owners Can Change

Organizational Culture
Organizational Structure

514
515

Adaptive Cultures versus Inert Cultures

515

■ OB TODAY: How Google’s Founders Created a

Groovy Culture

516

Traits of Strong, Adaptive Corporate Cultures


Values from the National Culture

518

Hofstede’s Model of National Culture

519

Creating an Ethical Culture

517

522

Why Does Unethical Behavior Occur?

523

■ ETHICS IN ACTION: Jim McCormick’s ADE-51 “Bomb Detector”

Ways to Create an Ethical Culture

524

■ GLOBAL VIEW: Everything Is Not Coming Up Roses

525

SUMMARY 526

EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 527
CLOSING CASE:
Why 3M Has an Innovative Culture 529

Chapter 18

Organizational Change and Development
Opening Case
Dell Struggles to Regain Its Leadership

531

Overview 532
Forces for and Resistance to Organization Change
Forces for Change

530

533

533

■ ETHICS IN ACTION: Outsourcing and Sweatshops: Do They Go

Hand in Hand?

535

Impediments to Change


536

Organization-Level Resistance to Change
Group-Level Resistance to Change

537

538

Individual-Level Resistance to Change
Lewin’s Force-Field Theory of Change

538
538

Evolutionary and Revolutionary Change in Organizations
Evolutionary Change I: Sociotechnical Systems Theory
Evolutionary Change II: Total Quality Management

540

■ OB TODAY: Starwood’s Work to Satisfy Its Customers

Revolutionary Change I: Reengineering

542

■ OB TODAY: Hallmark Card Wakes Up


Revolutionary Change II: Restructuring
Revolutionary Change III: Innovation

544
545

543

539

539

541

524


XX

CONTENTS

Managing Change: Action Research
Diagnosis of the Organization

Determining the Desired Future State
Implementing Action

547

Evaluating the Action


548

546

547
547

■ YOU’RE THE MANAGEMENT EXPERT: Bringing Change

to a Restaurant

549

Institutionalizing Action Research

Organization Development

549

550

OD Techniques to Deal with Resistance to Change

550

■ OB TODAY: Crisis After Crisis Seem to Plague BP

OD Techniques to Promote Change


551

552

SUMMARY 555
EXERCISES IN UNDERSTANDING AND MANAGING
ORGANIZATIONAL BEHAVIOR 556
CLOSING CASE:
How United Technologies Manages the Change Process

Appendix

559

Research Methods in Organizational Behavior

Glossary 566
References 575
Name Index 624
Company Index 632
Subject Index 634

560


Preface
In the sixth edition of Understanding and Managing Organizational Behavior, we keep to our
theme of providing students with the most contemporary and up-to-date account of the changing
issues involved in managing people in organizations. In revising this book, we have continued
our focus on making our text relevent and interesting to students—something we have learned

from feedback received from instructors who tell us the text engages students and encourages
them to make the effort necessary to assimilate the text material. We continue to mirror the
changes taking place in the real world of work by incorporating recent developments in organizational behavior and research and by providing vivid, current examples of the way managers
and employees of companies large and small have responded to the changing workplace. Indeed,
we have increased our focus on small businesses and startups and the organizational behavior
challenges their employees face.
The number and complexity of the organizational and human resource challenges facing
managers and employees at all levels has continued to increase over time, especially because of
today’s hard economic times. In most companies, managers and employees are playing “catch-up”
as organizations work to meet these challenges by employing fewer employees and implementing
new and improved organizational behavior techniques and practices to increase performance.
Today, relatively small differences in performance between companies, for example, in the speed at
which they can bring new products to market, or in the ways they motivate their employees to find
ways to reduce costs or improve customer service, can combine to give one company a competitive
edge over another. Managers and companies that utilize proven organizational behavior (OB)
techniques and practices in their decision making increase their effectiveness over time. Companies
and managers that are slower to implement new OB techniques and practices find themselves at a
growing competitive disadvantage, especially because their best employees often depart to join
faster-growing companies.
Our challenge in revising Understanding and Managing Organizational Behavior has been
to incorporate and integrate the latest advances in theorizing and research and provide a thorough
and contemporary account of the factors that influence organizational behavior. Importantly, we
strived to convey this knowledge to students in a very readable, applied, hands-on format to
increase their understanding and enjoyment of the learning process.

What’s New in This Edition
In response to the positive comments and support of our users and reviewers, we have continued
to refine and build on the major revisions we made to the last edition. The revised edition of
Understanding and Managing Organizational Behavior mirrors the changes taking place in the
world today, both on a global dimension and in terms of the ways the changing nature of work is

affecting organizational behavior.
First, we have extended our coverage of ethics, ethical behavior, and social responsibility
because of the continuing controversies and scandals that have involved a growing number of
well-known companies in the 2000s. We have more in-depth coverage of ethics both in terms of
new content areas within chapters and in the many kinds of company examples we use to illustrate
what organizations can do to curb individual self-interest and promote ethical organizational
behavior. Many specific issues such as ethical dilemmas, ethical leadership, building a socially
responsible culture, and the role of ethics officers are now included in the new edition. Second, the
increasing globalization of business and diversity of the workforce has led us to extend our coverage of the many opportunities and challenges globalization and diversity pose for understanding
and managing organizational behavior today. Some of the major specific changes or updates we
have made to our book include:
■

New opening chapter cases that deal with important contemporary issues. For example, the
Opening Case for Chapter 7 profiles how the innovative on-line retailer Zappos motivates
its employees to provide exceptional service to customers; the Opening Case for Chapter 9
provides a close look at the devastating effects that job loss has had for employees and
XXI


XXII

PREFACE

■

■

■


■

■

their families around the United States; and the Opening Case for Chapter 10 describes
how Cisco Systems relies on teams to innovate around the globe. In addition, new and
updated chapter boxes and new closing cases to encourage in-class discussion. For
example, the closing case for Chapter 2 describes how Mark Wilson, founder of Ryla Inc.,
created a different kind of customer contact business by providing a supportive, caring,
and developmental environment for employees; the closing case for Chapter 7 describes
how Google motivates employees; and the Global View box in Chapter 8 profiles the
changing nature of psychological contracts and employment relations in Japan. We have
carefully chosen a wide range of large and small companies to examine the issues facing
companies as they attempt to increase their effectiveness in an increasingly competitive
global environment.
New material on how tough economic times can spur employees to take proactive steps to
modify the design of their jobs via job crafting, which also leads managers to change the
design of jobs; what managers can do to motivate and reward employees when resources
are scarce, especially when their employees are also required to perform additional tasks or
work harder to maintain organizational performance; and new material about job loss and
its consequences, including rising stress, that arise because of economic concerns (for
example, new material on job satisfaction levels at record lows in the United States and
why layoffs can be so devastating for employees and hence the need for organizations to
managing layoffs in a humane fashion).
Expanded coverage of ethics and the steps organizations can take to improve the
way managers and employees make ethical choices, especially in uncertain
situations; and many new boxes on the way employees respond to ethical problems
and on how organizations are emphasizing the importance of enforcing codes
of ethics.
Increased coverage of issues that arise from increasing workforce diversity at a time

when millions of baby boomers are retiring and fewer middle managers exist because of
downsizings and layoffs; and how organizations such as Northrop Grumman and GE are
creating heterogeneous groups composed of younger and older, more experienced
employees, to help transfer job-specific knowledge and experience to younger,
inexperienced employees.
Expanded discussion of the role of personality, emotion, and mood in organizations and of
recent research on emotional intelligence (for example, new coverage about how people
reported to be somewhat introverted have been successful in their careers, including Bill
Gates, Warren Buffett, Charles Schwab, and Andrea Jung).
Increased coverage of the importance of organizational learning at all levels from CEO
to first-level employees and how increased training and education of employees is resulting
in many changes in the way organizations operate—at the task, job, group, and organizational levels.

Our intention has been to provide students with the most up-to-date, readable, succinct
account of organizational behavior on the market. To accomplish this, we have only drawn on the
theories and concepts that have received the most empirical research support and acceptance by
the academic community. We have also worked hard to streamline the discussion in the text and
make the material even more appealing to students.

Organization of the Book
Once again, in terms of the way our book is organized, Chapter 1 discusses contemporary
organizational behavior issues and challenges; it also provides an approach to understanding
and managing organizational behavior that sets the scene for the rest of the book. In Part One,
“Individuals in Organizations,” we underscore the many ways in which people can contribute
to organizations and how an understanding of factors such as personality, emotional intelligence, creativity, and motivation can help organizations and their members channel effort and
behavior in ways that promote the achievement of organizational objectives and the well-being
of all organizational stakeholders including employees. Chapters 2, 3, and 4 provide extensive


PREFACE


XXIII

coverage of personality, emotional intelligence, mood and emotion, values and ethics, and the
proactive management of diversity; importantly, we link these factors to important behaviors
and determinants of organizational effectiveness. Chapter 5 conveys the variety of ways in
which organizational members can and do learn, with a new emphasis on continuous learning
through creativity.
Our treatment of the important issue of work motivation is divided into two chapters. In
Chapter 6, we provide an integrated account of work motivation and the latest development in
motivation theory and research. Chapter 7 then focuses on how to create a motivating work
environment through job design, organizational objectives, and goal setting. Chapter 8 addresses
the changing nature of the employment relationship and the implications of factors such as
outsourcing, performance appraisal, pay differentials, and boundaryless careers for motivation
and performance. Lastly, in Chapter 9, we focus on the stressors people face, how they can be
effectively managed, and how to find a balance between work and other aspects of life. Overall,
Part One reflects both contemporary theorizing and research and the challenges and opportunities facing organizations and their members.
In Part Two, “Group and Team Processes,” we bring together the many ways in which
organizational members work together to achieve organizational objectives, the challenges they
face, and how to achieve real synergies. Chapters 10 and 11 focus on the key factors that lead to
effective work groups and teams. Chapter 12 provides an updated treatment of leadership, particularly transformational leadership in organizations. Chapter 13 contains our discussion of power,
politics, conflict, and negotiation. In Chapter 14, we discuss how the latest developments in
information technology have changed the nature of communication in and between organizations. The final chapter in this part, Chapter 15, provides updated coverage of decision making,
knowledge management, and innovation.
Part Three, “Organizational Processes,” separates our treatment of organizational structure and organizational culture to allow for an integrated treatment of organizational culture
and to underscore the importance of ethics. Chapter 16 focuses on organizational design,
structure, and control and the factors that affect important organizational design choices.
Chapter 17 presents an integrated treatment of organizational culture and ethical behavior. It
focuses on the informal and formal social processes in organizations that affect the ways
people behave, the sources of organizational culture, including organizational ethics, and the

nature, causes, and consequences of ethical behavior. We also discuss the factors that can lead
to unethical behavior. Finally, Chapter 18 provides updated coverage of organizational change
and development to reflect current realities in the very dynamic environment in which organizations operate.
In summary, the organization and content of our book keeps to its goal of providing
instructors and students with a cutting-edge coverage of organizational behavior topics and
issues that our users have appreciated in prior editions. For students, we provide a treatment of
organizational behavior that allows for self-assessment because it (1) is comprehensive,
integrated, and makes important theories and research findings accessible and interesting to
them; (2) is current, up-to-date, and contains expanded coverage of significant contemporary
issues including ethics, diversity, globalization, and information technology; (3) uses rich,
real-life examples of people and organizations to bring key concepts to life and provide clear
managerial implications; and, (4) is experiential and applied. Our extensive and engaging
end-of-chapter experiential exercises contained in “Exercises in Understanding and Managing
Organizational Behavior” give students the opportunity to catch the excitement of organizational behavior as a fluid, many-faceted discipline, and they allow students to develop and
practice their own skills.

Pedagogical Structure and Teaching Support
We believe no other organizational behavior textbook has the sheer range of learning features for
students that our book has. These features—some integrated into the text and some at the end of
each chapter or part—engage students’ interest and facilitate their learning of organizational
behavior. The overall objective of these features is to help instructors actively involve their
students in the chapter content. The teaching support includes the following:


XXIV

PREFACE

Instructor’s Resource Center
At www.pearsonhighered.com/educator, instructors can access a variety of print, media, and

presentation resources available with this text in downloadable, digital format. Registration is
simple and gives you immediate access to new titles and new editions. As a registered faculty
member, you download resource files and receive immediate access and instructions for
installing Course Management content on your campus server.
If you ever need assistance, our dedicated technical support team is ready to help with the
media supplements that accompany this text. Visit for
answers to frequently asked questions and toll-free user support phone numbers.
The following supplements are available to adopting instructors:
■
■
■
■
■

Instructor’s Manual
Test Item File
TestGen Test Generating Software
PowerPoints
DVD

Videos on DVD
Video segments illustrate the most pertinent topics in organizational behavior today and highlight relevant issues that demonstrate how people lead, manage, and work effectively. Contact
your Pearson representative for the DVD.

mymanagementlab
mymanagementlab (www.mymanagementlab.com) is an easy-to-use online tool that personalizes
course content and provides robust assessment and reporting to measure individual and class performance. All of the resources you need for course success are in one place and are flexible and easily adapted for your course experience. Some of the resources include an a Pearson eText version of
the textbook quizzes, video clips, simulations, assessments, and PowerPoint presentations that
engage you while helping you study independently.


CourseSmart eTextbooks
Developed for students looking to save on required or recommended textbooks, CourseSmart
eTextbooks save students money off the suggested list price of the print text. Students simply select
their eText by title or author and purchase immediate access to the content for the duration of the
course using any major credit card. With a CourseSmart eText, students can search for specific keywords or page numbers, take notes online, print out reading assignments that incorporate lecture
notes, and bookmark important passages for later review. For more information, or to purchase a
CourseSmart eTextbook, visit www.coursesmart.com.

Acknowledgments
Finding a way to coordinate and integrate the rich and diverse organizational behavior literature
is no easy task. Neither is it easy to present the material in a way that students can easily understand and enjoy, given the plethora of concepts, theories, and research findings. In writing
Understanding and Managing Organizational Behavior, we have been fortunate to have the
assistance of several people who have contributed greatly to the book’s final form. We are very
grateful to Eric Svendsen, our editor-in-chief, and Meg O’Rourke, editorial project manager, for
providing us with timely feedback and information from professors and reviewers that have
allowed us to shape the book to meet the needs of its intended market; and to Kerri Tomasso,
production editor, for ably coordinating the book’s progress. We also appreciate the wordprocessing and administrative support of Patsy Hartmangruber, Texas A&M University, and
Margaret R. De Sosa of Rice University.